UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 20-F
 
 o
    
    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, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
 o
    
    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: 1-10086
 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)
 Stephen Scott (Group General Counsel and Company Secretary) tel +44 (0)1635 33251, fax +44 (0)1635 45713
 Vodafone House, The Connection, Newbury, Berkshire RG14 2FN, England
 (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
  Name of each exchangeTitle of each class
    
    on which registeredSee Schedule A
    
    See Schedule A
 None
 None
  Ordinary Shares of 11 3/7 US cents each
    
    
    53,122,559,3907% Cumulative Fixed Rate Shares of £1 each
    
    
    50,000
  Yes þ
    
    No o
  Yes o
    
    No þ
  Yes þ
    
    No o
  Large accelerated filer þ   
    Accelerated filer o
    Non-accelerated filer o
    Smaller reporting company
o(Do not check if a smaller reporting company)
  US GAAP o
    
    International Financial Reporting þ
    
    Other oStandards as issued by theInternational AccountingStandards Board
  Item 17 o
    
    Item 18 o
  Yes o
    
    No þ
 
  Name of each exchangeTitle of each class
    
    on which registeredOrdinary shares of 11 3/7 US cents each
    
    New York Stock Exchange*American Depositary Shares (evidenced by American Depositary 
Receipts) each representing ten ordinary shares
    
    New York Stock ExchangeFloating Rate Notes due June 2011
    
    New York Stock Exchange5.5% Notes due June 2011
    
    New York Stock Exchange5.35% due Feb 2012
    
    New York Stock ExchangeFloating Rate Notes due Feb 2012
    
    New York Stock Exchange5% Notes due December 2013
    
    New York Stock Exchange5.375% Notes due January 2015
    
    New York Stock Exchange5% Notes due September 2015
    
    New York Stock Exchange5.75% Notes March 2016
    
    New York Stock Exchange5.625% Notes due Feb 2017
    
    New York Stock Exchange4.625% Notes due July 2018
    
    New York Stock Exchange6.25% Notes due November 2032
    
    New York Stock Exchange6.15% Notes due Feb 2037
    
    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.




---



##### 



raphic Appears Here]




---



##### 



Our goal is to be the communications leader in an increasingly connected world
1 Highlights
2 Chairmans Statement
4 Chief Executives Review
8 Performance at a Glance
10 Operating Environment and Strategy
12 Group at a Glance
Governance*
62 Board of Directors and Group Management
65 Corporate Governance
71 Directors Remuneration
14 Business Overview
16 Technology and Resources
20 People
22 Brand and Distribution
24 Products and Services
30 Key Performance Indicators
32 Operating Results
51 Outlook
52 Principal Risk Factors and Uncertainties
54 Financial Position and Resources
59 Corporate Responsibility
Additional information
140 Shareholder
Information*
146 History
and
Development*147
Regulation*150 Non-GAAP
Information*
152 Form 20-F Cross
Reference Guide 154
Cautionary Statement
Regarding Forward-Looking
Statements*155 Definition of
Terms 156 Financial
Highlights
Financials
82 Contents
83 Directors Statement of Responsibility*
84 Audit Report on Internal Controls
85 Critical Accounting Estimates
88 Consolidated Financial Statements
132 Audit Report on the
Consolidated Financial
Statements 133 Audit
Report on the Company
Financial Statements 134
Company Financial
Statements
* These sections make up the Directors Report.
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) and is dated 9 June 2008. 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 1985
applicable to companies reporting under IFRS, dated
27 May 2008, as updated or supplemented at the time
of filing of the Form 20-F with the SEC. Details of
events occurring subsequent to the approval of the
Annual Report on 27 May 2008 are summarised on page
A-1. 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 or the
Companys Annual Report.
In the discussion of the Groups reported financial
position, operating results and cash flows for the
year ended 31 March 2008, 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. For
further information see Non-GAAP Information on
pages 150 to 151 and Definition of Terms on page
155.
The terms Vodafone, the Group, we, our
and us refer to the Company and, as applicable,
its subsidiary undertakings and/or its interests
in joint ventures and associated undertakings.
This Annual Report 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 business management and strategy,
plans and objectives for the Group. For further
details, please see Cautionary Statement Regarding
Forward-Looking Statements on page 154 and
Principal Risk Factors and Uncertainties on pages
52 and 53 for a discussion of the risks associated
with these statements.
Vodafone, the Vodafone logo, Vodafone live!,
Vodafone Mobile Connect, Vodafone Office, Vodafone
Wireless Office, Vodafone Passport, Voda
fone At
Home, Vodafone Zuhause, Vodafone Applications
Service, Vodafone Email Plus, Vodafone M-PESA,
Vodafone Money Transfer, Vodafone Betavine and
Vodacom are trademarks of the Vodafone Group. The
RIM® and BlackBerry® families of trademarks, images
and symbols are the exclusive properties and
trademarks of Research in Motion Limited, used by
permission. RIM and BlackBerry are registered with
the US Patent and Trademark Office and may be
pending or registered in other countries. Windows
Mobile is either a registered trademark or trademark
of Microsoft Corporation in the United States and/or
other countries. Palm and Treo are among trademarks
or registered trademarks owned by or licensed to
Palm, Inc. SAP is a registered trademark of SAP AG
in Germany and in several other countries. Other
product and company names mentioned herein may be
the trademarks of their respective owners.




---



##### 



Vodafone  Executive            Summary
Highlights
[Graphic Appears Here]
Progress            towards            strategic            objectives

 

Europe: 2.0% revenue growth with outgoing usage up 20.1% and data revenue up 35.7%, all on an
organic basis 9.9% mobile capital intensity for Europe and common functions EMAPA: revenue growth
of 45.1%, reflecting acquisitions in India and Turkey. Organic growth of 14.5% Group data revenue
up 52.7% to £2.2 billion, with organic growth of 40.6%
Key financials
·
·
Adjusted earnings per share up 11.0% to 12.50 pence. Basic earnings per share of 12.56 pence Free
cash flow of £5.5 billion. Net cash flow from operating activities of £10.5 billion
Other highlights
  
Final dividend            per share of 5.02 pence, giving total dividends per share of 7.51 pence
Dividend pay out ratio of 60%, in line with policy, and a total payout of £4.0 billion for the
financial year 1stin UK and 11thglobally in the BrandZ most powerful brands
ranking
Vodafone Group Plc Annual Report 2008 1




---



##### 



Vodafone  Executive Summary
Chairmans            Statement
We took a major step forward in building our developing market presence with the acquisition of
Vodafone Essar in India last year.
[Graphic Appears Here]
Dividends            per share +11.1%
7.51p
(2007: 6.76p)
I am pleased to report that your Company made further progress during the year, with continuing
execution of our strategy and delivery of our financial targets. This is reflected in our results,
with total dividends for the year of 7.51 pence, up 11.1%. The share price increased 21% since the
beginning of the year, while the FTSE 100 index was down 4% during the same period.
Vodafone is a truly international company, with more than 260 million proportionate customers
across 25 markets and partner networks in 42 more countries .
With more than two thirds of the worlds population now able to benefit from mobile phone coverage,
there are approximately 3.5 billion mobile customers globally, a figure that industry analysts
expect to rise by around 10% per year in the near future.
Approximately half of the worlds GNP now comes from emerging markets and this year we reported
that, for the first time, over half our customers are in our EMAPA region. Independent research
shows clear evidence of an inextricable link between the rate of mobile penetration in developing
markets and the rate of economic growth, where we can also see the social benefits of mobile as it
frees people to leave home in their search for jobs and can become a method for remitting payments
to their families in some countries .
We took a major step forward in building our developing market presence with the acquisition of
Vodafone Essar in India last year. The business, which now operates under the Vodafone brand, is
already our largest controlled business in terms of customer numbers at over 44 million. The
Vodafone Group Board visited India earlier this year; we gained a very positive impression of the
business and our prospects in this huge, dynamic market. We are adding around 1.5 million customers
each month in India, which operates a very different cost model, especially when revenue
is on average equivalent to only 2 US cents per minute. We have much to learn from this successful
business and much to contribute .
Your Board will continue to be alert to other developing market acquisition opportunities . At
present, our EMAPA region represents more than 25% of our revenue; we see this increasing in the
years ahead.
In Europe, our challenges are very different given the relative maturity of the markets, most of
which have over 100% penetration . Here we are countering pressure on our traditional revenue by
becoming more productive and we are establishing new sources of revenue .
We are seeing benefits from the major efficiency programmes we established several years ago and
this year we undertook further initiatives to expand our network sharing with other operators, thus
reducing both capital and recurrent expenditure .
Data services (including email, music and the internet) in Europe are an important source of
growth, producing significant increases in revenue . Additionally, revenue from our business
customers is growing much faster than the consumer sector, which plays to our strong franchise in
Europe and in an increasingly mobile business world.
In the US, our investment in Verizon Wireless continues to do well and in our judgement is an
appreciating asset, which generates very strong levels of cash flow. We are cooperating closely
with Verizon Wireless in a number of important areas, including 4G technology and servicing
international companies .
Our industry remains very much in the regulatory spotlight and your Board monitors the regulatory
environment carefully as it has significant economic consequence
s for shareholders .
2Vodafone Group Plc Annual Report 2008




---



##### 



Total shareholder return April 2007 to May 2008
Vodafone +26%
FTSE 100 +2%
Vodafone            share price +25% vs FTSE 100
oVodafone Group
o___FTSE 100 index
[Graphic Appears Here]
April 2007 May 2008
Whether it relates to pricing, taxation or spectrum, what we would like is a public policy
framework which provides clarity, accountability and which facilitates growth, investment and fair
competition . This is important in all areas of policy, including the allocation of spectrum which
today remains in the hands of governments around the world.
Spectrum is our licence to do business . If we buy too much, we do not use our shareholders
capital optimally . If we buy too little, we drop our customers calls  and, of course, we can
only buy it when it is available . The upfront costs of spectrum are ultimately borne by our
customers and shareholders, the effect on the government finances is to receive cash in advance but
to reduce tax payments later, as the capital cost is amortised against profits over the life of the
spectrum .
This is a period of unprecedented change in our business . The industry is changing shape as mobile
phones, new technology and the internet converge, enabling us to expand the services that we can
offer. This is also bringing new competitors both from within the industry and from outside.
We are very proud of the work of our 22 Foundations around the world, which represents a charitable
network investing £41 million each year in projects and programmes supporting the communities where
we operate.
During the year, we established the Vodafone India Foundation, which will focus on helping to
improve the skills set of young people in India as they compete for jobs in the global market.
After five years in the role our Chief Executive, Arun Sarin, has decided to retire and will be
stepping down at the conclusion of our AGM. He has done a tremendous job, having led the Company
with distinction and navigated Vodafone through
a period of rapid change. He developed a new strategy for the business and significantly expanded
our footprint in emerging markets . The Board has a great deal to thank him for and I would like
personally to thank him for all he has done for the business and wish him and his family all the
best for the future. In Vittorio Colao we have a fine successor and I am looking forward to working
with him in his new role.
Non-executive directors Michael Boskin, who joined the Board in 1999 on the Companys merger with
AirTouch Communications Inc., and Jürgen Schrempp, who became a Director in 2000 when Vodafone
completed its acquisition of Mannesmann, will not be seeking re-election at the AGM on 29 July
2008. I would like to thank Michael and Jürgen for their contributions and for the different and
important perspectives each has brought to our Board. They have served with distinction and I am
particularly grateful to them for their tireless work on our committees .
We conducted our annual Board evaluation internally this year and this generated good ideas for
improving our performance .
Your Company operates in a challenging environment where rapid change is impacting our customers
and therefore our business . Wherever I go, I am enormously impressed by the talented Vodafone
people I meet and on behalf of the Board, I would like to thank all of them for what they have
achieved during the year.
Your Board is confident that we are well positioned to build on our success in the coming years.
[Graphic Appears Here]
Chairman
Vodafone            Group Plc Annual Report 2008 3




---



##### 



Vodafone  Executive Summary
Chief            Executives            Review
Our strategy is delivering results and continuing to position us as a leader in the communications
industry .
[Graphic Appears Here]
Our cash flow generation remains strong, supporting our robust financial position and shareholder
returns, with free cash flow of £5.5 billion. Adjusted earnings per share increased by 11.0% to
12.50 pence, enabling dividends per share to increase by 11.1% to 7.51 pence.
Group revenue increased by 14.1% to £35.5 billion, or 4.2% on an organic basis. In Europe, organic
revenue growth was 2.0% with competitive and regulatory pressures continuing to impact on solid
underlying growth. EMAPA delivered further strong growth with revenue increasing by 45.1%, or 14.5%
on an organic basis, with double digit growth across many markets . Group adjusted operating profit
increased by 5.7% to £10.1 billion, with a continued strong contribution from Verizon Wireless in
the US, which continues to be an important and attractive market. We remain committed to our
investment in Verizon Wireless, which continues to perform very well on all key metrics, with
constant currency growth of 14.5% in revenue and 24.8% in adjusted operating profit and market
leadership in contract customers, churn and profitability .
We invested £5.1 billion in capitalised fixed asset additions, including £1.0 billion in our
operations in India, in line with our plans, to support the rapid growth.
Vodafone now has over 260 million proportionate mobile customers worldwide with strong growth
during the year in our EMAPA region, in particular in our new business in India which has been
successfully integrated into the Group and now has over 44 million customers, with over 50% pro
forma revenue growth.
In a challenging operating environment, we are stimulating greater usage and introducing new
services to offset falling
prices and continue to drive cost efficiency across the Group. Importantly, we have positioned
ourselves to deliver total communications to our customers by investing significantly in our mobile
broadband networks, establishing fixed broadband capability across our European markets and
developing services specifically for the mobile internet .
There have been a number of key achievements against our five strategic objectives in the last 12
months which are discussed below, together with an overview of how the communications environment
is evolving and why we believe Vodafone is uniquely positioned to succeed .
Revenue stimulation and cost reduction in Europe
Our core revenue initiatives continue to focus on offering innovative tariffs, larger minute
bundles and targeted promotions to stimulate additional usage as well as improving customer
lifetime value. Overall, voice usage increased by 16.7% in the year, with good growth across our
major markets . We are particularly strong in the business segment where our unique footprint and
innovative services have enabled us to create a market leading position, which we strengthened
earlier in the year by establishing Vodafone Global Enterprise to service our largest multinational
customers .
Pricing pressure from competition and regulation remains strong, with a 15.8% fall in the effective
voice price per minute for our Europe region, offsetting the benefits from growth in usage.
4 Vodafone Group Plc Annual Report 2008




---



##### 



Messaging revenue increased by 8.1% on an organic basis, with a 28.1% increase in the total number
of text and picture messages sent. This reflects strong performances in the year in Italy and the
UK, primarily through targeted promotions and tariffs.
In 2006, we set out a number of core cost reduction programmes that are now delivering results and
have contributed to the key cost targets we met this year, with savings of around £300 million
during the year, bringing the cumulative savings to date to around £550 million. We have achieved
mobile capital expenditure at 10% of mobile revenue for 2008, with important contributions from
centralising key purchasing activities and consolidating our data centres, while having enhanced
the speed and data capability of our mobile networks . These programmes, together with the
outsourcing of certain IT operations, have also contributed to maintaining broadly stable operating
expenses for 2008 compared to 2006. This has been achieved in a period when customers have
increased on an organic basis by 19%, voice minutes by 36% and data volumes by over tenfold.
Innovate and deliver on our customers total communications needs
Our strategy is to expand beyond our core mobile services to offer a choice of communications,
entertainment and internet services, with a focus on four key areas. These areas generated around
13% of Group revenue this year and we expect this to increase to around 20% in 2010.
Over the year, data revenue increased by 40.6% on an organic basis to £2.2 billion, principally
driven by continued strong growth in business email and PC connectivity devices, which in total
nearly doubled to 5.8 million. We have seen strong take up this year of USB modems, which provide
easy to use mobile broadband access for PCs and laptops to consumers and business customers . For
consumers, we also took the opportunity to refresh our mobile internet offerings during the year in
eight markets, resulting in 2 million customers signing up to flat rate mobile internet access.
[Graphic Appears Here]
Our data revenue growth is being enabled by the investment in our 3G networks which now offer up to
3.6 Mbps and by the end of the year will begin to offer 14.4 Mbps, which will provide a compelling
alternative to fixed broadband for many customers . We have a clear technology path which will
ultimately lead to 4G technology but not before 2010. Unlike the transition from 2G to 3G, we are
shaping 4G today together with Verizon Wireless and China Mobile to ensure a smoother transition
for the industry, with no step change in cost.
In addition, some customers need the data speeds of fixed broadband and during the year we
established fixed broadband capability in our European markets as part of our strategy to deliver
total communications . We are leveraging our brand, distribution and customer relationships to
provide an attractive, integrated proposition . At the end of the year we had 3.6 million fixed
broadband customers in 13 markets, principally in Germany and in our newly acquired businesses in
Italy and Spain.
We are substituting fixed line voice services for mobile in the home or the office by offering
fixed location pricing plans giving customers fixed line prices when they call from within or
around their home or office. We have made good progress over the year and now have 4.4 million
Vodafone At Home customers and over 3 million Vodafone Office customers, up from 3.3 million and
2.3 million, respectively, a year ago.
Mobile advertising is another focus area for us and we have been trialling various business models,
including targeted demographic advertising through display and search advertising, and now have
agreements with over 40 leading brands. We believe mobile advertising represents a significant
opportunity for us and, throughout the year, have put in place the right foundations to grow this
business in the future.
D
eliver strong growth in emerging markets
Our emerging market assets continue to perform well. Vodafone Essar in India is delivering very
strong growth and performing in line with our acquisition plan. Revenue increased by over 50%
during the year on a pro forma basis, driven by rapid expansion of the customer base, with an
average of 1.5 million net customer additions per month since acquisition . We have also
established an independent tower company with two other operators to drive further strong, cost
efficient growth.
Vodacom recorded constant currency revenue growth of 16.9% from its market leading position
in South Africa and strong growth in its southern Africa operations . We also saw revenue growth of
29.9% in Egypt, 20.3% in Romania and pro forma growth of 24% in Turkey, all on a constant currency
basis. The value of our investment in China Mobile has increased by over 60% since the beginning of
the year to £4.8 billion currently, with its customer base increasing 24% to 392.1 million and
market penetration at 41%.
In addition to strong customer growth, we are differentiating ourselves through a number of
initiatives . Most significantly, we are leveraging the Groups scale to provide low cost handsets,
which retail for as little as $20 and enable us to address developing economies without the need
for subsidies . We shipped 7 million handsets in the year, mostly to India, making us the second
largest supplier of handsets in that market.
Vodafone            Group Plc Annual Report 2008 5




---



##### 



Vodafone   Executive Summary
Chief            Executives            Reviewcontinued
Actively            manage            our portfolio            to maximise            returns
We completed the acquisition of Vodafone Essar in India in May 2007. We also strengthened our total
communications offerings in Italy and Spain through the purchase of Tele2s assets in those
countries in December 2007 and in May 2008 acquired the minority interests in Arcor. In December
2007, we won the auction for the second mobile licence in Qatar through a consortium with the Qatar
Foundation, in which we are the controlling partner. All our transactions are subject to strict
financial criteria so as to deliver superior returns to our shareholders .
We now have 42 partner market agreements . These arrangements enable us to increase the presence of
our brand and services without the need for direct equity investment, either because the investment
opportunity does not exist or the returns are unattractive .
Align capital structure and shareholder returns policy to strategy
The Board remains committed to its policy of distributing 60% of adjusted earnings per share by way
of dividend . Our robust financial and operating performance, together with a positive impact from
foreign currency exchange rates, offset the dilution arising from the India acquisition and
delivered 11% growth in adjusted earnings per share and therefore in dividends per share.
Notwithstanding the increase in net debt to £25.1 billion, our long term credit ratings currently
remain at low single A on average, in line with our Group policy.
Evolving environment
Two years ago we updated our strategy to reflect developments in our industry and have made strong
progress executing against our objectives since then. The communications industry continues to
evolve and our five strategic objectives continue to position us well in this environment .
Firstly, customer needs and preferences in particular continue to evolve. We are transitioning from
being a provider of core mobile voice and messaging services to offering a wide range of
communications and one of the key advancements in the past year has been the mobile internet .
Customers are taking content and applications from their PC to their mobile and this needs a
compelling mobile internet experience .
We are, therefore, developing a range of internet services and content specifically for mobile by
enhancing our successful Vodafone live! offering to include email, instant messaging and social
networking while leveraging the power of mobile through location based services . We are also
ensuring that devices are developed with innovative functionality and intuitive user interfaces
that are suitable for the mobile internet, with features such as touch screen technology . Our
investment in high speed data networks provides the platform to deliver these services to
customers, as does the ongoing development
of our customer information and support systems . However, these developments in our industry also
challenge our traditional business model as partners such as software providers, internet companies
and handset manufacturers also become competitors .
The industry is changing and, although the majority of our revenue will continue to be from our
core mobile business, we are positioning ourselves for this change through our total communications
strategy to deliver broadband and internet offerings .
Secondly, competitive and regulatory pressures continue to reduce prices in the industry and
therefore we continue to stimulate additional r
evenue and reduce costs. On revenue, there is still
significant opportunity for growth in mobile usage. Average mobile usage levels per customer in
Europe remain well below markets such as the US and India and significant volumes of minutes
continue to be carried by fixed networks .
Our established major cost reduction programmes are now delivering results and we are continuing to
look at ways of managing our costs to maintain our market competitiveness . During the year, we
have recently centralised our handset design and procurement to not only drive cost savings but
also to facilitate the development of devices for the mobile internet . We also continue to
standardise our network design and deployment, particularly in the core network to take advantage
of an all IP infrastructure . One of the more important developments during the year has been the
extension of network sharing across our markets, with agreements reached in Italy and the UK,
resulting in site sharing in nine out of our ten Europe region markets . This is a key area of
focus for us and we aim to build on the current level of
around one third of sites shared and explore opportunities to extend the scope of network sharing.
We have made good progress on our cost saving initiatives over the past year.
Finally, while penetration is very high in Europe, across emerging markets it is on average still
much lower which, together with higher GDP growth prospects, provides a significant revenue growth
opportunity . Over time, we expect these markets will also show the same demand for entertainment
and internet based services that we are seeing in more developed markets and we are well placed to
meet such demand .
Our money transfer solution, Vodafone M-Pesa/Vodafone Money Transfer, was launched earlier in the
year and is proving to be a significant point of differentiation in Kenya as we provide some
banking capability through mobile phones to a largely cash based country. This is an evolving area
which we expect to bring to more countries and also has the potential to expand beyond the current
focus on money transfers and micro payments .
6 Vodafone Group Plc Annual Report 2008




---



##### 



As well as driving growth in our existing emerging market assets, we will continue to explore
further opportunities to expand our emerging market footprint through selective investments, with a
particular focus on Africa and Asia.
Uniquely positioned to deliver growth
We believe that Vodafone is uniquely positioned to capitalise on the evolving communications
environment . Our portfolio of assets provides the advantages of scale and exposure to attractive
growth, and leverages our strong customer franchise in both consumer and business segments
supported by a leading global brand.
We have a market leading position in mature, high cash flow generating markets in Europe combined
with an increasing exposure to higher growth emerging markets in Eastern Europe, Middle East,
Africa and Asia, in particular in India. We also have a material position in the attractive US
market through our stake in Verizon Wireless .
By expanding beyond our historic core mobile offerings to deliver data and fixed broadband services
through our total communications strategy, this enables us to continue to be a leader in the
increasingly integrated communications industry and therefore supports continued strong cash
generation and returns to shareholders .
Prospects for the year ahead
Operating conditions are expected to continue to be challenging in Europe given the current
economic environment and ongoing pricing and regulatory pressures but with continued positive
trends in messaging and data revenue and voice usage growth. We expect increasing market
penetration to continue to result in overall strong growth for the EMAPA region. Our geographically
diverse portfolio should provide some resilience in the current economic environment . We also
anticipate significant benefit from recent changes in foreign exchange rates compared to 2008,
particularly in respect of the euro, which we have assumed to be on average at 1.30 to sterling for
the year.
Our revenue expectations for the year ahead reflect our drive for growth, particularly in respect
of our total communications strategy for data and fixed broadband services and in emerging markets
        . Adjusted operating profit is therefore anticipated to reflect a greater proportion of lower
margin fixed broadband services together with continued strong performance from Verizon Wireless in
the US.
Capital expenditure on fixed assets includes an increase in investment in India to drive further
strong growth. Capital intensity is expected to be maintained at around 10% of revenue for the
total of our Europe region and common functions, with continued investment in growth. Free cash
flow excludes spectrum and licence payments and is after taking into account £0.3 billion from
payments for capital expenditure deferred from 2008.
Personal reflections
I recently announced my decision to retire as the Chief Executive of the Company following the AGM
on 29 July. It has been a privilege to lead Vodafone over the last five years. We have made
significant progress, changing our strategy from mobile to total communications, including
broadband and the internet . We have secured some important assets in markets including Turkey and
India, and we have integrated these acquired businesses to build a global company . Our Board and
employees are aligned behind the strategic direction of the business and the Company is well
positioned to succeed in the future. We have issued a strong set of 2008 annual results in line
with, or ahead of, guidance and the Company has built strong momentum in executing its strategy . I
have accomplished what I set out to achieve on taking the role as Chief Executive and therefore
felt the time was right to hand over responsibilities to a successor . I am delighted that Vittorio
Colao will be taking over as Chief Executive . He has the knowledge and vision to drive the
business towards future success .
I believe Vodafone is well p
ositioned to continue delivering value to both customers and
shareholders . I would like to thank the Board for its support, insight and counsel in recent
years. I would also like to thank our 72,000 employees for their ongoing customer focus and wish
them every success in the future.
[Graphic Appears Here]
Arun Sarin
Chief Executive
[Graphic Appears Here]
Vodafone            Group Plc Annual Report 2008 7




---



##### 



Vodafone  Executive Summary
Performance            at a Glance
Vodafone is the worlds leading international mobile communications group, providing a wide range
of communications services .
Regions
 Europe
 EMAPA (Eastern            Europe,
Middle East, Africa and Asia,
Pacific and Affiliates)
Analysis            of Group            Contribution            to Group
revenue 2008 (%) revenue            growth 2008 (%)
100
EMAPA 26 EMAPA 66
80
Europe 74
60
40
Europe 34
20
0
Analysis            of Group            adjusted            Contribution            to Group
operating            profit 2008 (%) adjusted            operating            profit
growth 2008 (%)
100
EMAPA 37 EMAPA 89
80
60
Europe 62
40
20
Europe 9
0
Where relevant, growth rates include the impact of acquisitions and disposals, in particular in
India.
8 Vodafone Group Plc Annual Report 2008




---



##### 



Europe
Registered proportionate            mobile customers (millions)
118 .8
Average            mobile customer            penetration (%)
100+
EMAPA
Registered proportionate            mobile customers (millions)
141 .7
Average            mobile customer            penetration (%)
36
2008 revenue
Europe £bn
26.1
EMAPA £bn
9.3
Group £bn
35.5
2008 adjusted operating            profit
£bn
6.2
Growth %
6.1
Growth %
0.8
Growth %
45.1
£bn
3.7
Growth %
15.0
Growth %
14.1
£bn
10.1
Growth %
5.7
Services
Voice            Messaging            Data            Fixed line & other
Vodafones            core service to            Text, picture and video messaging            Provides            email, mobile            Fixed broadband            offerings
customers            is to provide mobile            on mobile devices            connectivity            and internet            to meet customers total
voice communications            on your mobile            communications            needs
Outgoing            minutes            usage            SMS usage            PC connectivity            devices            Fixed broadband            customers
(billions of minutes) (billions of messages) (millions) (millions)
282 .9 131 .4 2.7 3.6
[Graphic Appears Here]
[Graphic Appears Here]
[Graphic Appears Here]
[Graphic Appears Here]
2008 revenue            by service
Voice £bn
Growth %
Messaging £bn
Growth %
24.9
11.7
4.1
13.7
Data £bn
Growth %
Fixed line & other £bn
Growth %
2.2
52.7
1.9
19.9
Group service revenue
£bn            Growth %
33.0
14.4
[Graphic Appears Here]
Vodafone            Group Plc Annual Report 2008 9




---



##### 



Vodafone  Executive Summary
Operating            Environment            and Strategy
Vodafone is seeing significant change in its operating environment . Traditional market boundaries
are shifting as customers benefit from a growing choice in communications services .
Our strategy, as set out in May 2006, continues to address the changing operating environment
Arun Sarin Chief Executive
Operating environment
The industry            landscape            continues            to evolve
Vodafone is seeing significant change in its operating environment . Traditional market boundaries
are shifting as customers benefit from a growing choice in communications services, devices and
providers that span mobile, broadband and the internet . This change is being driven by evolving
customer needs, the emergence of new technologies, intensifying price competition from both new and
established competitors and regulatory pressures .
Customers
Customers needs are changing, including the desire for faster access to services, simple and value
driven tariffs and easy to use devices. Customers increasingly want mobile data services, such as
email and internet access, so that they can use the internet on their mobile devices in much the
same way as they use it on their PC. In order to meet customers evolving needs, the Group is
building upon its traditional services of voice and messaging to include newer offerings such as
mobile and fixed broadband .
Technology
Technology within the mobile industry is evolving rapidly. Vodafone has been upgrading its networks
to enable the provision of high speed mobile internet and broadband in addition to core voice and
messaging services . Ongoing network enhancements are expected to provide even faster access and a
better user experience . In addition, the range and capability of mobile devices continues to
evolve in terms of speed, data capacity and multi-function capability . Against this background,
the Group continues to carefully assess, select and deploy the appropriate technology and devices
in order to improve both operational efficiency and customer service.
Competition
The communications market is very competitive, with a number of providers in most countries . The
Groups principal competitors are existing mobile network operators (MNOs) in each of its
geographic markets . In addition, the Group competes with mobile virtual network operators
(MVNOs) that lease network capacity from MNOs and fixed line operators offering combined fixed
and mobile services . New competitors are also beginning to enter the communications market,
including internet based companies, handset manufacturers and software providers . These companies
are being encouraged by the relative attractiveness of the industry and the opportunity to extend
their services to mobile.
Vodafones core European market has high mobile penetration of over 100% due to some customers
owning more than one subscriber identity module (SIM), which limits customer growth. The
combination of high penetration and competitive intensity is expected to continue to place
significant downward pressure on prices.
Regulation
Regulatory activities by both national and EU authorities continue to have a significant impact on
the telecommunications sector. Around 20% of the Groups revenue is directly subject to regulation
- mainly related to termination rates and international voice roaming . The competitive environment
is also impacted by regulation in a number of areas, including the allocation of radio spectrum,
the provision of network access to third parties an
d network sharing. Regulation is anticipated to
continue to have a major influence on both the Group and the telecommunications industry .
Vodafones            strategy            addresses            the changing            environment
The            external            environment            Strategic            objectives
Ongoing            regulatory            and competitive            pressures 1 Revenue            stimulation            and cost            reduction            in Europe
in Europe
Growing            choice of communication            services 2 Innovate            and deliver on our customers
and providers            total            communications            needs
Growing            demand            for mobile data and broadband
Growth            potential            in emerging            markets 3 Deliver strong growth in emerging            markets
Appropriate            return to shareholders 4 Actively manage            our portfolio            to            maximise            returns
5 Align capital structure            and shareholder            returns
policy to strategy
[Graphic Appears Here]
[Graphic Appears Here]
[Graphic Appears Here]
[Graphic Appears Here]
[Graphic Appears Here]
10 Vodafone            Group Plc Annual Report 2008




---



##### 



Strategy
Vodafones five key strategic objectives were set out in May 2006 to address the mobile industrys
changing environment and to draw upon the Groups strengths .
Revenue stimulation and cost reduction in Europe
Competition and regulation in Europe are placing significant pressure on pricing. In order to
offset these pressures, the Groups strategy is to drive additional revenue and reduce costs.
Revenue stimulation is focused on ways to encourage additional usage and revenue from core voice
and messaging services in Europe, where only around 40% of voice traffic is carried over mobile
networks and customers use their mobiles for around 170 minutes per month, around a quarter of
comparable US levels. The strategy is based on a market by market approach of targeted propositions
for key customer segments . Consumer offers include a range of attractive tariffs, which are
designed to offer both simplicity and value. Business propositions are focused on leveraging
Vodafones market leading presence among European business customers . For roaming customers,
Vodafones wide European footprint enables it to offer competitive and transparent price tariffs.
Cost reduction is being driven by leveraging the Groups local and regional scale. Key initiatives
are focused on centralising, sharing and outsourcing certain activities .
The Group has centralised bulk purchasing of networks, IT and services to drive cost efficiencies .
Parts of the networks have been shared with other operators to reduce the costs, as well as the
environmental impact, of network expansion and maintenance . In addition, certain functions have
been outsourced in markets where industry leading partners are able to realise greater scale and
cost efficiencies .
Business            units aligned to strategy
Europe
Key focus
Revenue            stimulation            and cost reduction
[Graphic Appears Here]
Innovate            and deliver on our customers total communications            needs
The communications environment is constantly evolving and customers increasingly want solutions to
meet all their communications needs from one provider . In this environment, Vodafone has broadened
its offerings beyond core voice and messaging to include total communications solutions, which is
comprised of data, fixed location services, fixed broadband and advertising .
Vodafone continues to benefit from strong data revenue growth, particularly due to mobile devices
and services that connect business and consumer users to their email and the internet . In
addition, through partnerships with leading internet companies, the Group provides products and
services that integrate the mobile and PC environments . This enables consumers to use their
mobiles to replicate fixed line internet activities .
Fixed location services have been developed to encourage customers to substitute fixed line usage
for mobile within their home and office environments . This includes services that allow customers
to make mobile calls from designated locations at prices similar to fixed line providers .
Vodafone offers fixed broadband services as a complement to its mobile broadband products . This
combination enables customers to have alternative means to access their internet applications
either at home, in the office or on the move. Fixed broadband is provided through a mixture of
owned assets and wholesale relationships with leading partners .
Mobile advertising is still in its infancy, but offers a potentially significant future revenue
stream. By using mobile devices, both advertisers and consumers have the opportunity to create and
receiv
e adverts that are more targeted to users interests and preferences than traditional media.
The Groups current focus is on building the appropriate distribution channels and content.
Total communications services contributed 13% of Group revenue during the year and are expected to
represent around 20% by the 2010 financial year.
Deliver strong growth in emerging markets
Emerging markets are expected to represent an increasing            proportion            of the
Group in the next few years due to organic growth and new investments .
Existing markets continue to benefit from strong customer growth due to low mobile penetration
rates of 36% on average. Additional value is being driven by measures to reduce costs and stimulate
revenue by leveraging the Groups global scale and best practice from within its more established
European operations .
The Group continues to pursue selective opportunities to invest in new markets as well as taking
opportunities to increase its stakes in existing markets . The focus is on attractive growth
regions such as the Middle East, Africa and Asia.
Actively            managing our portfolio            to maximise            returns
Estimated            mobile penetration            Europe (%)
At 31 December 2007
Germany 117
Italy 153
Spain 122
UK 122
Estimated mobile penetration EMAPA (%)
At 31 December 2007
Egypt 42
India 21
Romania 103
Turkey 80
US 86
Vodafone Group Plc Annual Report 2008 11




---



##### 



Vodafone  Executive Summary
Group            at a Glance
The Group has a significant global presence in 25 countries through equity interests and a further
42 countries            through partner market arrangements. The Group is organised            in two geographic            regions -Europe and EMAPA  with the objective            of aligning operations            with the Groups strategy            and focusing            the Groups businesses            according            to different            market and customer            requirements .
Europe
Revenue            stimulation            and cost reduction            in Europe
The Groups strategy is to drive additional usage and revenue from core mobile voice and messaging
services, which represent around 80% of revenue in Europe today, and to reduce its cost base.
The Europe region includes the Groups principal mobile subsidiaries located in Germany, Spain and
the UK, its principal joint venture in Italy, as well as the Groups principal fixed line
telecommunications subsidiary in Germany . Other businesses in the European region comprise
Albania, Greece, Ireland, Malta, the Netherlands and Portugal, as well as its associated
undertaking in France.
Size of circle
Number of proportionate            mobile customers (000)
Subsidiary
Joint venture Associate
All the Groups mobile subsidiaries in Europe and the joint venture in Italy operate under the
brand name Vodafone . The Groups fixed line subsidiary operates as Arcor and the Groups
associated undertaking in France operates as SFR and Neuf Cegetel.
[Graphic Appears Here]
Customer            market share (%) At 31 December 2007
[Graphic Appears Here]
Germany            Italy            Spain            UK
Italy
23,068
Albania
Spain
16,039
Portugal
5,209
1,130
[Graphic Appears Here]
[Graphic Appears Here]
200
Partner            markets
Partner markets are operations in which the Group has entered into a partnership agreement with a
local mobile operator, enabling a range of Vodafones global products and services to be marketed
in that operators territory . Under the terms of these partner market agreements, the Group and
its partners cooperate in the development and marketing of certain services, often under dual brand
logos. The Groups partner market strategy enables the Group to implement its global services in
new territories, extend its brand reach into new markets and create additional revenue without the
need for equity investment .
Similar arrangements also exist with a number of the Groups joint ventures, associated
undertakings and investments .
The resu
lts of partner markets are included within common functions, together with the net result
of unallocated central costs and recharges to the Groups operations, including royalty fees for
the use of the Vodafone brand. Partnership agreements in place at 31 March 2008, excluding those
with the Groups joint ventures, associated undertakings and investments, are shown in the table.
Since 31 March 2008, the Group has entered into four further partner market agreements .
12Vodafone Group Plc Annual Report 2008




---



##### 



EMAPA
Deliver strong growth in emerging            markets
The Groups focus is to build on its strong record of creating value in emerging markets where
average market penetration is relatively low, offering significant customer and revenue growth
potential .
The EMAPA region covers Eastern Europe, Middle East, Africa and Asia, Pacific and Affiliates, and
includes the Groups subsidiary operations in the Czech Republic, Hungary, Romania, Turkey, Egypt,
India, Australia and New Zealand, joint ventures in Poland, Kenya, South Africa and Fiji, an
associated undertaking in the US and the Groups investments in China and India.
The Groups subsidiaries in EMAPA operate under the Vodafone brand. The joint ventures,
associated undertakings and investments operate under the following brands: China  China Mobile;
Fiji  Vodafone; India  Airtel; Kenya  Safaricom; Poland  Plus; South Africa  Vodacom; US -
Verizon Wireless .
[Graphic Appears Here]
Argentina            CTI Móvil(1) El Salvador            Claro(1) Luxembourg            LUXGSM
Austria            A1 Estonia            Elisa            Malaysia            Celcom
Bahrain            Zain            Finland            Elisa            Mexico            Telcel(1)
Belgium            Proximus            Guatemala            Claro(1) Nicaragua            Claro(1)
Brazil            Claro(1) Guernsey            Airtel-Vodafone            Norway            TDC
Bulgaria            Mobiltel            Honduras            Claro(1) Paraguay            Claro(1)
Caribbean (2) Digicel            Hong Kong            SmarTone -Vodafone            Peru            Claro(1)
Chile            Claro(1) Iceland            Vodafone            Singapore            M1
Colombia            Comcel (1) Indonesia   
         XL            Slovenia            Si.mobile-Vodafone
Croatia            VIPnet            Japan            SoftBank            Sri Lanka            Dialog
Cyprus            Cytamobile -Vodafone            Jersey            Airtel-Vodafone            Switzerland            Swisscom
Denmark            TDC            Latvia            Bité Uruguay            Claro (1)
Ecuador            Porta(1) Lithuania            Bité
Notes:
(1) Partnership through America Móvil.
(2) Partnership includes Bermuda and the following countries within the Caribbean: Anguilla,
Antigua and Barbuda, Aruba, Barbados, Bonaire, Curaçao, the Cayman Islands, Dominica, French West
Indies, Grenada, Jamaica, Haiti, St Lucia, St Kitts and Nevis, St Vincent, Trinidad and Tobago,
Turks and Caicos Islands and British Guyana.
Vodafone            Group Plc Annual Report 2008 13




---



##### 



Vodafone  Business
Business            Overview
This section explains how Vodafone operates, from the key assets it holds to the activities it
carries out to enable the delivery of products and services to the Groups customers .
Technology & Resourcespage 16 People page 20
Brand & Distribution            page 22
Licences
Vodafone has mobile licences in all the countries in which it operates as they are fundamental to
the provision of mobile telecommunications services
Network infrastructure
Connects all customers together and enables the Group to provide mobile and fixed voice, messaging
and data services
Supply chain management
Handsets, network equipment, marketing and IT services account for the majority of Vodafones
purchases, with the bulk being sourced from global suppliers
Research and development
The emphasis of the Group R&D work programme is providing technology analysis and a vision that can
contribute directly to business decisions
14Vodafone Group Plc Annual Report 2008




---



##### 



Customer            strategy            and management
Vodafone endeavours to ensure that customer needs are at the centre of all of the Groups actions
Marketing and brand
Vodafone has continued to focus on delivering a superior, consistent and differentiated customer
experience through its brand and communication activities
Direct Distribution
· Retail (owned and franchised)
· Tele-sales and internet
[Graphic Appears Here]
People
Vodafone employed approximately 72,000 people worldwide during the 2008 financial year, with a goal
to recruit, develop and retain the most talented and motivated people that are well aligned with
the Vodafone brand essence
Indirect Distribution
Third party service providers
Independent dealers, distributors and retailers
MVNOs
IT resellers
Products & Services page 24
Voice
Voice services continue to make up the largest portion of the Groups revenue
Messaging
Allows customers            to send and receive messages            using mobile devices
Data
The Group offers a number of products and services to enhance customers access to data services
Fixed line
Provides customers with data and fixed voice solutions to meet their total communications needs
Other
Includes            mobile advertising            and business            managed            services
[Graphic Appears Here]
Vodafone Group Plc Annual Report 2008 15




---



##### 



Vodafone  Business
Technology            and Resources
Vodafones key technologies and resources include the telecommunications licences it holds and the
related network infrastructure, which enable the Group to operate telecommunications networks in 22
controlled and jointly controlled markets around the world.
Licences
The Group is dependent on the licences it holds to operate mobile communication services . Further
detail on the issue and regulation of licences can be found in Regulation on page 147. The table
below summarises the significant mobile licences held by the Groups mobile operating subsidiaries
and the Groups joint venture in Italy at 31 March 2008. In addition, the Group also has a number
of licences to provide fixed line services in many countries in which it operates .
The Group holds sufficient spectrum in the majority of the Groups mobile operating subsidiaries
and joint ventures, which meet the medium term requirements for forecast voice and data growth.
There is also the possibility of enhancing the medium term needs for voice and data capacity
through the refarming of the Groups existing holdings to more efficient technologies . In areas
where the Group needs to increase capacity, it will participate on an opportunity basis in future
auctions .
Country by region 2G licence expiry date 3G licence expiry date
Europe
Germany            December 2016 December 2020
Italy            February 2015 December 2021
Spain            July 2023(1) April 2020
UK            See note 2 December 2021
Albania            June 2016 N/A  No licences            issued
Greece            August 2016(3) August 2021
Ireland            May 2011(4) October 2022
Malta(5) September 2010 August 2020
Netherlands            March 2013 December 2016
Portugal            October 2021 January 2016
EMAPA (6)
Australia            See note 7 October 2017
Czech Republic            January 2021 February 2025
Egypt            January 2022 January 2022
Hungary            July 2014(8) December 2019 (9)
India(10) November 2014 -
December 2026 N/A  No licences            issued
New Zealand            See note 11 March 2021(11)
Romania            December 2011 March 2020
Turkey            April 2023 N/A  No licences            issued
Notes:
(1) Date relates to 1800 MHz spectrum licence. Spain also has a separate 900 MHz spectrum licence
which expires in February 2020.
(2) Indefinite licence with a one year notice of revocation.
(3) Th
e licence granted in 1992 (900 MHz spectrum) will expire in September 2012. The licence
granted in 2001 (900 and 1800 MHz spectrum) will expire in August 2016.
(4) Date refers to 900 MHz licence. Ireland also has a separate 1800 MHz spectrum licence which
expires in December 2015.
(5) Malta also holds a WiMAX licence, granted in October 2005 and which expires in October 2020.
(6) In December 2007, a consortium including Vodafone was named as the successful applicant in the
auction for a mobile licence in Qatar. Subject to regulatory approvals, the licence is expected to
be awarded in June 2008.
Services are expected to be launched under the Vodafone brand by the end of the 2009 financial
year. (7) Australia holds a 900 MHz spectrum licence. This is a rolling five year licence which
expires in June 2012.
Vodafone Australia also holds two 1800 MHz spectrum licences. One of these licences expires in June
2013 and the other in March 2015.
(8) There is an option to extend this licence for seven years. (9) There is an option to extend
this licence.
(10) India is comprised of 23 service areas with a variety of expiry dates. There is an option to
extend these licences by ten years.
(11) By the end of March 2008, New Zealand owned two 900 MHz licences (each 2x7.5 MHz), which
expire in
November 2011 and in June 2012. These licences are expected to be renewed until November 2031.
Additionally, Vodafone New Zealand owns a 1800 MHz spectrum licence (2x15 MHz) and a 2100 MHz
licence (2x15 MHz), which expire in March 2021. All licences can be used for 2G and 3G at
Vodafones discretion.
16Vodafone            Group Plc Annual Report 2008




---



##### 



Network infrastructure
How Vodafones            network            infrastructure            works
Vodafones network infrastructure is fundamental to the Group being able to provide mobile and
fixed voice, messaging and data services . The Groups customers are linked to the access part of
the network, which links to the core network that manages the set-up of calls, transfer of messages
and data connections and allows the Group to provide a wide variety of other services .
2G/3G mobile access network
When a voice call or data transmission is made on a mobile device, voice or data is sent from the
device and transmitted by low powered radio signals to the nearest base station, which in turn is
connected to the Groups core network via the access transmission infrastructure . Each base
station provides coverage over a given geographic area, often referred to as a cell. Cells can be
as small as an individual building or as large as 20 miles across and each is equipped with its own
radio transmitter and receiver antenna . This network of cells provides, within certain
limitations, coverage over the service area. When a customer using a mobile device approaches the
boundary of one cell, the mobile network senses that the signal is becoming weak and automatically
hands over the call to the transmission unit in the next cell into which the device is moving.
Fixed broadband access network
When communication takes place over fixed line networks, the traffic flows over a traditional wired
infrastructure until the point it reaches the Vodafone access device (a DSLAM), where it connects
to the access transmission infrastructure . Additionally, corporate customers can connect their
local network to Vodafones access transmission infrastructure directly using a dedicated link.
In the UK market, Vodafone delivers fixed broadband services through a reseller agreement with the
local incumbent .
Access transmission infrastructure
The access transmission network is the connection between a base station, a DSLAM, or a corporate
customers dedicated line, and the core network . This consists of mainly leased lines or
Vodafones own transmission lines, such as microwave links.
Core network
The core network is responsible for setting up and controlling connections between mobile or fixed
line customers attached to access networks by locating the called party and routing voice calls
towards it. Additionally, the core network handles data traffic by allowing customers to access
service platforms offering services such as Vodafone live!, web browsing, email, mobile TV and
other data related services .
The core network comprises three domains, with each domain containing nodes with specific
functionality interconnected by transmission links:
·
The Circuit Switched domain enables voice and video calls. Its key nodes are switches (which manage
the set-up of connections) and user databases, storing the information needed to provide services
to each customer, such as location in the network, list of subscribed services and home/visited
network .
[Graphic Appears Here]
·
data services . Its key nodes are responsible for a variety of functions, such as the delivery of
data packets to and from mobile devices within a geographical service area, setting up data
connections and providing the gateway between the Vodafone network and external data networks,
including the internet and customers corporate networks .
The IP Multimedia Subsystem (IMS) domain is the first step of a wider evolutionary path from the
current core network to an all internet protocol (IP) next generation network . It enables
delivery of advanced multimedia services, both mobile and fixed, leveraging the flexibility a
nd
effectiveness of internet technologies . IMS is expected to be a key element in the future
infrastructure to support Vodafones total communications strategy, exploiting the technology of
convergence between the mobile telecommunications and the internet world.
If the voice call or data transmission is intended for delivery to another device which is not on
the Vodafone network in the same country, the information is transferred through a public
or private fixed line telephone            network or the internet .
Mobile network            technology 2G
Vodafone operates 2G networks in all its mobile operating subsidiaries, through Global System for
Mobile (GSM) networks, offering customers services such as voice, text messaging and basic data
services . In addition, all of the Groups controlled networks operate General Packet Radio
Services (GPRS), often referred to as 2.5G. GPRS allows mobile devices to be used for sending and
receiving data over an IP based network, enabling wireless access to data networks like the
internet .
access, allowing the customer to always be connected at download speeds slightly below a dial-up
modem . In some markets, Vodafone continues to further evolve data speeds with 2G evolutions beyond
GPRS capability .
3G
Vodafones 3G networks, operating the Wideband Code Division Multiple Access (W-CDMA) standard,
provide customers with faster data access. Vodafone has expanded its service offering on 3G
networks with high speed internet and email access, video telephony, full track music downloads,
mobile TV and other data services in addition to existing voice and data services .
High speed packet access (HSPA)
HSPA is a 3G wireless technology enhancement enabling significant increases in data transmission
speeds. It allows increased mobile data traffic and improves the customer experience through the
availability of 3G broadband services and significantly shorter data transfer times.
High Speed Downlink Packet Access (HSDPA) has been widely deployed on Vodafone 3G networks at up
to 3.6 Mbps (Mega bits per second) peak speed. In addition, starting in hotspots, the first
upgrades to up to 7.2 Mbps peak speed have already started to be deployed in several operating
subsidiaries . The figures are theoretical peak rates deliverable by the technology in ideal radio
conditions with no customer contention for resources . This is providing customers with faster
access speeds than historically experienced on 3G networks .
Vodafone Group Plc Annual Report 2008 17




---



##### 



Vodafone  Business
Technology            and Resources            continued
While HSDPA focuses on the downlink (network to mobile), Vodafone is also improving the data speeds
on the uplink (mobile to network) with HSUPA (High Speed Uplink Packet Access) . Operating
subsidiaries have already started deployments to achieve peak speeds of up to 1.4 Mbps on the
uplink.
Vodafone is actively driving additional 3G data technology enhancements to further improve the
customers experience, including evolutions of HSPA technology to upgrade both the downlink and
uplink speeds.
Current developments in the infrastructure
As growth in data traffic accelerates with the proliferation in, and adoption of, web services,
Vodafone is evolving its infrastructure through a range of initiatives .
Access transmission infrastructure evolution
Vodafone is upgrading its access transmission infrastructure from the base stations to the core
switching network as part of a transition to a scaleable and cost effective solution able to deal
with the increasing bandwidth demands and data dominated traffic mix driven by HSDPA and fixed
broadband .
Core network evolution
Vodafone has transformed its national transport networks in all subsidiaries, converging the
infrastructure to support all services using IP as the strategic technology . During the 2009
financial year, the Group expects that the transformation to IP services will start to be extended
to a European level, consolidating Vodafones ten national IP networks into a single IP backbone,
centralising IP operations, avoiding duplication and achieving simplicity and flexibility to deploy
new services to serve multiple markets .
Cost reduction
While evolving the Groups infrastructure, it is also important that the Group continues to have a
tight control over its cost base. This has been achieved through various measures .
Infrastructure sharing
Significant effort has been placed in reducing the costs to deploy mobile network infrastructure .
Important developments during the 2008 financial year included the extension of a tower sharing
agreement in Italy as well as the formation of a company for the purposes of network sharing with
other operators in India. Agreements have also been made on network sharing in Spain and the UK.
Vodafone continues to investigate opportunities to share network infrastructure where it makes
commercial sense based on local market conditions .
Innovation
In 3G network deployments, Vodafone is driving the use of new technology enhancements such as
Remote Radio Heads that are a new type of lower cost base station equipment, which improve
coverage and enable improvements to the customer experience . In addition, all aspects of wireless
access point site design are being targeted to reduce energy consumption .
Another type of innovation being considered by Vodafone is the potential for 3G femtocells to
address capacity and coverage needs in certain network deployments . Femtocells are a new way to
deliver 3G wireless coverage to a small area at low cost compared to traditional macro network
technologies . Effectively, a femtocell would give a customer a small 3G base station connected to
the Vodafone network via a fixed broadband line.
IT
The scope of the Groups outsourcing of IT application development and maintenance operations is
expanding . Service commencement is now complete in all 12 selected markets of the first phase. The
second phase of the project, principally outsourcing to India, is now in progress .
Vodafone has successfully completed outsourcing of its Indian IT estate to a specialist
organisation with capability to match the Groups scale and growth requirements .
In addition to the above initiatives, there are a number of IT cost saving initiatives that have
been acc
elerated, which include the consolidation of European data centres and the outsourcing of
internal help desks.
Supply chain management
Handsets, network equipment, marketing and IT services account for the majority of Vodafones
purchases, with the bulk of these purchases from global suppliers . The Groups Supply Chain
Management (SCM) team is responsible for managing the Groups relationships with all suppliers,
except for handsets .
The transformation of the supply chain organisation into a single community under one leadership
and the application of global material category strategies, in conjunction with local market
expertise, have enabled savings across all operating companies . This is supported by a uniform
savings methodology applied across all operating companies and the alignment of objectives across
all material categories, operations and enabling functions . Innovative sourcing methods such as
eAuctions and seamless business to business applications form a vital part in utilising the Groups
scale. The Vodafone Procurement Company S.a.r.l. was founded in Luxembourg in the 2008 financial
year and is expected to enable additional leverage of scale and scope through a leaner procurement
model.
SCM is a major contributor to the European cost reduction programme . The publicly announced goal
to save 8% of the external networks spend over two years has been overachieved .
SCM won two major industry awards in 2007: the European Leaders in Procurement Award for Corporate
Responsibility and the European Supply Chain Excellence Award in Sourcing and Procurement .
The major suppliers to Vodafone are required to comply with the Groups Code of Ethical Purchasing
        . Further detail on this can be found in Corporate Responsibility on page 61.
The China Sourcing Centre based in Beijing, founded in March 2007, has enabled Vodafone to
introduce new suppliers from emerging markets to further enhance competitive advantage .
It is the Groups policy to agree terms of transactions, including payment terms, with suppliers
and it is the Groups normal practice that payment is made accordingly . The number of days
outstanding between receipt of invoices and date of payment, calculated by reference to the amount
owed to suppliers at the year end as a proportion of the amounts invoiced by suppliers during the
year, was 37 days (2007: 34 days) in aggregate for the Group.
18Vodafone Group Plc Annual Report 2008




---



##### 



Research            and development (R&D)
The Group R&D function comprises an international team for applied research in mobile and internet
communications and their related applications . Group R&D teams are located in Newbury, Maastricht,
Munich, California and Madrid, and there is an affiliated team in Paris belonging to Vodafones
associated undertaking in France, SFR. A small team was set up at the end of 2007 in the Vodafone
Beijing office to work in close collaboration with China Mobile and a number of Chinese vendors .
Function of Group R&D
Group R&D works beyond the traditional established markets of Vodafone in search of technology
based business opportunities by:
·
·
·
delivering a systematic programme of demand inspired research and development in wireless and
internet communications that is positioned between basic research and commercial product
development; leading Vodafones work with technical standards bodies and its intellectual property
activities; and providing a route for start-up companies to engage with Vodafone . Group R&D is
also in the process of establishing a laboratory in Newbury to evaluate start-up technologies .
Typically, Group R&D starts working on developments that are expected to be introduced into the
business in three to five years, and leads them until a year or so before full commercialisation .
Currently the horizon covers some significant business developments that can already be anticipated
        . For example, Group R&D leads the introduction of wireless technology beyond 3G and is researching
the next phase of the emergence of the internet as a personal communications platform  including
radio technologies for accessing the internet in emerging markets .
Governance is provided by the Group R&D Board, which is chaired by the Group R&D Director and
consists of the chief technology officers from six of the operating subsidiaries in Europe, the
heads of Business Strategy and Global Terminals and a representative from EMAPA.
Group R&D work programme
The emphasis of the Group R&D work programme is on providing technology analysis and a vision that
contributes directly to business decisions, enabling new applications of mobile communications,
technology for new services and research for improving operational efficiency and quality of the
Groups networks . This is done by:
·
·
·
·
pioneering the adoption of new technologies, business opportunities and innovations through
technology analysis, trials, invention and prototypes; making the Group aware of market
opportunities or threats posed by new technologies and business models and helping the Company to
exploit or resist them; providing technology leadership by working with the industry to define and
standardise the technology Vodafone uses; and securing intellectual property and technology
ownership for the Group.
The work of Group R&D is delivered through a portfolio of programmes and cross industry activities
with a substantial number of trials, demonstrations and prototypes . All work is set in a business
and social context, and must lead to intellectual property rights or to Vodafone having significant
influence on the technology it will deploy in the future. Group R&D also provides leadership for
funding research into health and safety aspects of mobile communications and technical leadership
for the Groups spectrum strategy .
The main themes currently            being researched            are as follows:
   
the next generation of mobile technologies; consumable software for mobile phones; electronic
newsmedia; and new GSM based services .
There have been several significant            advances            during the 2008 financial year including:




next generation technology field trials have been announced with Verizon Wireless and China Mobile
and are expected to begin in summer 2008; a system has been designed and standardised to enable the
SIM in GSM phones to control nearfield communications for transport ticketing and other
applications, with commercial trials planned for late 2008; demonstration of mobile software,
social networks and the open source innovation platform called Vodafone Betavine at the Mobile
World Congress and at Cebit; and research into the application of mobile communications to health
and well being and to energy use.
The R&D programme provides the Group with long term technical policy, strategy and leadership, as
well as providing technical underpinning for the Groups public policies and government relations .
It is shared with all Group functions and Vodafone operating companies . Commercialisation of Group
R&D results is through submissions to international standards bodies, intellectual property filings
and directly with Vodafone operating companies .
Collaborative work
Much of the work of Group R&D is done in collaboration with others, both within the Group and
externally, with the Groups traditional suppliers and increasingly with other companies in the
communications, media and internet industries . During the 2008 financial year the following has
been achieved:
·
· 
·
·
·
a research collaboration was started with IBM which has led to the development of a mobile private
social network called BuddyCom; a research agreement was also established with Huawei; a continuing
programme of work with academic institutions, which includes student placements in Vodafone
laboratories during summer vacations; the continued development of Vodafone Betavine, a web based
research and innovation platform; the hosting of an academic conference where academic partners
were brought together to launch a new programme  3D internet; and academic collaborations in India
have started.
Vodafone Group Plc Annual Report 2008 19




---



##### 



Vodafone  Business
People
Vodafone employed approximately 72,000 people worldwide during the 2008 financial year, with a goal
to recruit, develop and retain the most talented, motivated people that are well aligned with the
Vodafone brand essence . The Group aims to do this by providing a productive and safe working
environment, treating people with respect and offering attractive performance based incentives and
opportunities .
Red
Being passionate and energetic
Rock Solid
Being reliable and following through on promises
Restless
Continually            striving for improvement            and challenging            the status quo
Vodafones global people strategy was embedded during the 2008 financial year and aims to increase
employee engagement by setting out a framework that enables Vodafone to be clear about the employee
experience the Group wants to create. This enables Vodafone to engage employees to deliver to
customers and to increase business performance .
Additionally, during the 2008 financial year, the Group further embedded the Vodafone brand
essence, Red, Rock Solid, Restless, which communicates a common way of behaving that is designed
to enhance business performance and customer orientation . This has been reinforced at the local
level through workshops that encourage teams to apply the Vodafone values to their specific work
concentrating on improving the experience of their customers . In addition, human resources (HR)
processes such as induction and training have been developed to explicitly provide people with a
deeper understanding of how to demonstrate the behaviours in their daily work.
Training and development
Training and development programmes help employees to develop their skills and experience and to
reach their full potential, benefiting themselves and the Company .
During the 2008 financial year, the Group delivered a training programme to build total
communications awareness and capabilities within the Groups employees . The training was designed
to equip employees to understand the Groups new total communications strategy, the competitive
landscape, key technologies and resources and Vodafones products and services . Over 4,500
managers across the Group (more than 99% of the managerial population) completed 36,000 hours of
dedicated total communications training. Feedback on the programme has been overwhelmingly
positive. During the coming financial year, the Group will ensure all employees receive the same
training via an online learning tool and that awareness is maintained through monthly webinars (web
seminars), a daily blog and a wiki site (a collaborative website where content can be edited by
anyone who has access to it).
Vodafone operates a global Performance Dialogue process for every employee . The process ensures
that employees can make a clear connection between their goals and the business objectives . Each
individuals performance is discussed with their manager and career development goals are set. 93%
of managers completed the Performance Dialogue process in the 2007 calendar year and 83% of
employees approved development goals with their manager .
People Survey
In October 2007, Vodafone carried out its third global People Survey and had an 83% response rate
globally, with 50,548 people giving their views on 68 questions . Vodafone India was not included
in the survey as it had only been acquired in May 2007. For the first time, the Manager Index was
also introduced to the People Survey, a subset of questions focused on the experience a manager
creates for their team. A strong set of results were achieved with a number of key strengths and
improvements:




Employee            engagement            was high at a steady 71 out of 100 in the 2007 People Survey,
compared to 73 out of 100 in the 2005 People Survey and 70 out of 100 in the April 2007 Pulse
Survey (Pulse surveys are smaller surveys carried out in between People Surveys) .
The first Manager Index scored 69 out of 100 globally, with individual questions showing that
managers are growing stronger in coaching, (which scored 8 points higher when compared to the 2005
People Survey), feedback, (which scored 10 points higher when compared to the 2005 People Survey)
and recognition, (which scored 7 points higher when compared to the April 2007 Pulse Survey).
Leadership continued its strong trend upwards, with confidence in the strategy strengthening
further. Confidence in operating company senior management increased by 8 points, and trust and
confidence in the function/business/ department increased by 8 points in the six months since the
April 2007 Pulse Survey.
Employees are feeling more cared for, with wellbeing questions showing considerable improvement .
57% of employees rated their operating company favourably on taking a genuine interest in the
wellbeing of its people (+15 points on 2005 People Survey and +5 points on April 2007 Pulse
Survey). 70% of employees rated their manager favourably on supporting them to achieve a work-life
balance, which is +13 points on the high performing norm (externally benchmarked best in class
companies who have excellent engagement coupled with strong financial performance) .
Vodafone is focused on continual improvement and values the feedback that the People Survey
provides . Specifically in response to employee feedback from last year, the Global Change
Framework was developed, a practical set of guidelines with training to help employees effectively
manage change within the business .
The Group plans to carry out another full global survey in November 2008. Targets have been set by
each operating company and Group functions to ensure that Vodafone continues to drive engagement
across the business .
Communications and involvement
Employee engagement remains a key driver for Vodafone . Effective employee communication and the
need to create dialogue with its people is championed at Board level. Vodafone continues to use its
own products and services to reach out to staff  the use of mobile technologies such as SMS, video
clips and mobile intranet sites is commonplace, all assisting in sharing knowledge amongst
employees, creating a sense of global community and demonstrating the flexibility of Vodafones
products, allowing employees to become advocates of the brand.
Visibility and access to the Executive Committee helps create Vodafones open and honest
communication culture. The Chief Executive and other members of the Executive Committee continue to
host the Talkabout programme, which puts executives on tour to visit the Groups operating
companies . The Executive Committee use these sessions to discuss the Groups strategic goals,
listen to employee views and provide an opportunity to discuss the issues that most matter to
employees .
99%+ of managers globally received training in the total communications strategy, products and
marketplace
20 Vodafone Group Plc Annual Report 2008




---



##### 



It also allows an open exchange of views and suggestions on how Vodafone can best continue to serve
its customers . Monthly messages from the Chief Executive, using a wiki platform and video-cast,
provides another opportunity for the Vodafone employees to understand how the Group is progressing
against its goals and to provide feedback direct to the Chief Executive .
Face to face communication, particularly with employees line managers, is a fundamental principle
of good employee engagement and is critical for communicating change effectively . Performance and
transnational change issues are also discussed with employee representatives from the European
subsidiaries, who meet annually with members of the Executive Committee in the Vodafone European
Employee Consultative Council.
Equal opportunities and diversity
Vodafone does not condone unfair treatment of any kind and operates an equal opportunities policy
for all aspects of employment and advancement, regardless of race, nationality, sex, age, marital
status, disability or religious or political belief. In practice, this means that the Group is able
to select the best people available for positions on the basis of merit and capability, making the
most effective use of the talents and experience of people in the business and providing them with
the opportunity to develop and realise their potential .
In April 2008, Vodafone implemented a new strategy to improve gender diversity across the Group.
This includes carrying out senior leadership training on diversity, and plans to build a more
inclusive culture.
Vodafone is conscious of the difficulties experienced by people with disabilities . Every effort is
made to ensure ready access to the Groups facilities and services and a range of products have
been developed for people with special needs. In addition, disabled people are assured of full and
fair consideration for all vacancies for which they offer themselves as suitable candidates and
efforts are made to meet their special needs, particularly in relation to access and mobility .
Where possible, modifications to workplaces are made to provide access and, therefore, job
opportunities for the disabled . Every effort is made to continue the employment of people who
become disabled via the provision of additional facilities, job design and the provision of
appropriate training.
Reward and recognition
To support the goal of building the best global team by attracting and retaining the best people,
the Groups aim is to provide competitive and fair rates of pay and benefits in each local market
where we operate.
Within Vodafone, there are initiatives that reward our employees based on their contribution to the
success of the business . In the 2009 financial year, the Group expects to continue to extend
reward differentiation based on individual contribution, through the global reward programmes,
including the Global Long Term Incentive Plan.
A variety of share plans are offered to incentivise and retain our employees and, in July 2007, all
eligible employees across the Group were granted 320 shares under the All Shares plan.
Retirement benefits are provided to employees and vary depending on the conditions and practices in
the countries concerned . These are provided through a variety of arrangements including defined
benefit and defined contribution schemes .
Measurement of employees views of their reward, recognition and benefits is undertaken through the
global People Survey. In the 2007 People Survey, the overall Vodafone Group employee response
relating to reward and recognition had increased favourably .
Health, safety and wellbeing
The health, safety and wellbeing (HS&W) of the Groups customers, employees and others who could
be affected by its activities are of paramount importance to Vodafone and the Group applies
rigorous standards to all its operations .
This year has seen a clear focus on ex
ecution of the global HS&W initiatives across the business .
Work progressed on three key focus areas agreed with the Global HS&W Board and Group HR for the
2008 financial year. These included continued delivery of employee wellbeing initiatives as part of
the Global People Strategy implementation, integration of HS&W into Group Supply Chain activities,
particularly the Supplier Performance Management processes, and updating, communicating and
implementing Vodafones policy on mobile phones and driving.
Improvement of Group wide governance continued with integration of serious
incident reporting systems for network service providers and improved policy and processes for
managing supplier terminals compliance .
Employment policies
The Groups employment policies are consistent with the principles of the United Nations Universal
Declaration of Human Rights and the International Labour Organisation Core Conventions and are
developed to reflect local legal, cultural and employment requirements . High standards are
maintained wherever the Group operates, as Vodafone aims to ensure that the Group is recognised as
an employer of choice. Employees at all levels and in all companies are encouraged to make the
greatest possible contribution to the Groups success . The Group considers its employee relations
to be good.
Allocation of Groups 72,000 employees by activity (%)
3
1
2
1Administration  51.7%
2 Selling and distribution  30.5%
3Operations  17.8%
Vodafone            Group Plc Annual Report 2008 21




---



##### 



Vodafone  Business
Brand            and Distribution
Vodafones products and services are available directly, via Vodafone stores and country specific
Vodafone websites, and indirectly via third party service providers, independent dealers,
distributors and retailers, to both consumer and business customers in the majority of markets
under the Vodafone brand.
BrandZ UK ranking
Customer            strategy            and management
Vodafone endeavours to ensure that customer needs are at the centre of all of the Groups actions.
The Group seeks to use its understanding to deliver relevance and value to each customer and
communicate to them on an individual, household, community or business level, with the ultimate aim
of encouraging customers to stay with Vodafone for longer and use and promote the Groups services
more.
For this reason, the Group has created a Global Customer Value Management team to support operating
companies with their aim to engage with customers directly through a data driven approach, linking
all the elements of customer interactions to deliver exceptional service and consistency in the
Groups approach while financially optimising decisions made via a branded customer experience
across all touchpoints . Recent examples of this include: rollout of a consistent and innovative
store design to eight countries, successful trial of an innovative handset based self service
solution and creation of a global training academy for customer facing staff.
Vodafones customer knowledge driven organisation aims to make the most of its deep customer
understanding by approaching customers with the most appropriate product through a channel they
enjoy at a time that is best for them. This approach firmly places Vodafone as an organisation that
listens to customers, delivers value and enhances their experience .
Vodafone continues to use a customer measurement system called customer delight to monitor and
drive customer satisfaction in the Groups controlled markets at a local and global level. This is
a proprietary diagnostic system, which tracks customer satisfaction across all points of
interaction with Vodafone and identifies the drivers of customer delight and their relative impact.
This information is used to identify any areas for improvement and focus.
During the 2008 financial year, further econometric tools were developed and employed to better
quantify the commercial impact of improved customer experience by linking customer feedback
directly to business performance . Results from the study are used to generate the Customer Delight
Index (CDI), which is one element of Vodafones short term incentive plan (GSTIP), thereby
directly linking employee remuneration with customer satisfaction performance . The CDI result for
the 2008 financial year was 73.1 points on a 100 point scale, which was 2.0 percentage points ahead
of the average competitor .
1st
In the BrandZ most powerful brands ranking . Ranked 11th globally .
Customer            Delight Index
73.1
(2007: 70.6, 2006: 69.9)
22Vodafone Group Plc Annual Report 2008




---



##### 



Marketing and brand
Brand and customer            communications
Vodafone has continued to focus on delivering a superior, consistent and differentiated customer
experience through its brand and communications activities . A new Marketing Framework has been
developed and implemented across the business, which includes a new vision of expanding the Groups
category from mobile only to total communications to be the communications leader in an
increasingly connected world. Brand and customer experience continues to implement Vodafones
promise of helping customers make the most of their time. The brand function has also developed a
methodology to develop competitive local market brand positioning, with local brand positioning
projects now implemented in 12 markets .
To enable the consistent use of the Vodafone brand, a set of guidelines has been developed in areas
such as advertising, retail, online and merchandising, all including detail on how to make the
brand work across every touchpoint . Since June 2006, eight markets have implemented the global
retail design.
In September 2007, Vodafone welcomed India with the Hutch is now Vodafone campaign . The
migration from Hutch to Vodafone was one of the fastest and most comprehensive brand transitions in
the history of the Group, with 400,000 multi brand outlets, over 350 Vodafone stores, over 1,000
mini stores, over 35 mobile stores and over 3,000 touchpoints rebranded in two months, with 60%
completed within 48 hours of the launch.
Vodafone regularly conducts Brand Health Tracking, which is designed to measure the brand
performance against a number of key metrics and generate insights to assist the management of the
Vodafone brand across all Vodafone branded operating companies . This tracking has been in place
since 2002 and provides continuous historical data against key metrics in all
19 Vodafone branded operating markets . Each operating company manages a study that complies with
the standards and methodology set by Vodafone Group Insights. An external accredited and
independent market research organisation provides global coordination of the methodology, reporting
and analysis . As a result of these activities the Vodafone brand is now ranked number 11 in the
BrandZ Top 100 global brands list, recently published in The Financial Times, with an estimated
value attributable to the brand of £18.7 billion.
For the 2008 financial year, Vodafone brand preference among its own users reached 81.9%, up 2.0
percentage points on the previous financial year, and a performance level that is 1.0 percentage
point higher than its closest competitors . In addition, the brand consideration among non-users of
the brand has increased in the 2008 financial year to 33.5%, 1.8 percentage points above its market
share.
Sponsorships
Vodafones global sponsorship strategy has delivered a strong set of results across all Vodafone
markets . Central sponsorship agreements, including the UEFA Champions League and the title
sponsorship of the Vodafone McLaren Mercedes F1 team, have supported multiple business objectives
and enabled Vodafone to provide customers with differentiating brand and product experiences .
The strong performance of the Vodafone McLaren Mercedes F1 team during the 2007 season enabled
Vodafone to maintain a dominant presence in one of the worlds most popular annual sporting events.
Vodafone successfully integrated the sponsorship into a wide variety of business activities
including communications, events, content and the launch of three bespoke handsets .
In Vodafones first year as a sponsor of the UEFA Champions League, Vodafone became recognised as a
leading sponsor of the competition (Source: TNS Soccerscope, May 2007) and used this association to
showcase a variety of products and services in a manner desi
gned to build greater affinity with
football fans across all relevant territories .
In January 2008, Vodafone became a global partner of the Laureus Foundation, which tackles various
social challenges worldwide through a programme of sports related community development initiatives
        . This agreement complements Vodafones long standing relationship with sport and aims to help
Laureus to use sport as a catalyst for inspiring positive social change.
To maintain a relevant and strategic role for global sponsorship investments, Vodafone is
continually reviewing the portfolio to maintain pace with business and customer needs. On this
basis, Vodafone has decided to discontinue the UEFA Champions League sponsorship at the end of the
2008/9 competition and increase emphasis in global music opportunities . Musics broad appeal and
product relevance provides a host of new and exciting opportunities for the business and the
Groups customers .
Distribution
Direct distribution
Vodafone directly owns and manages over 1,150 stores. These stores sell services to new customers,
renew or upgrade services for existing customers, and in many cases also provide customer support .
A standard store format, which was tested in 2006, was rolled out in 11 markets during the 2008
financial year. The store footprint is constantly reviewed in response to market conditions which
resulted in, for example, Vodafone opening a further 90 stores in Spain and 21 stores in Romania
during the year. Additionally, all stores in India were rebranded as Vodafone and over 40 stores
were refurbished to the Groups standard format.
The Group also has 6,500 Vodafone branded stores, which sell Vodafone products and services
exclusively, by way of franchise and exclusive dealer arrangements .
The internet is a key channel to promote and sell Vodafones products and services and to provide
customers with an easy, user friendly and accessible way to manage their Vodafone services and
access support . As a result, a specific Group wide programme is currently being rolled out across
all controlled markets, in order to ensure Vodafone websites have state of the art online
capabilities and provide the customer with an excellent and consistent online experience .
Additionally, in most operating companies, sales forces are in place to sell directly to business
customers and some consumer segments .
Indirect distribution
The extent of indirect distribution varies between markets but may include using third party
service providers, independent dealers, distributors and retailers .
The Group hosts MVNOs in a number of markets . These are operators who buy access to existing
networks and resell that access to customers under a different brand name and proposition . Where
appropriate, Vodafone seeks to enter mutually profitable relationships with MVNO partners as an
additional route to market. During the past year new relationships established include Asda in the
UK, Euskaltel in Spain and Carrefour in Italy.
Number of directly owned stores
1,150
Number            of branded stores
6,500
Vodafone            Group Plc Annual Report 2008 23




---



##### 



Vodafone   Business
Vodafone  Business
Products            and Services
Vodafone offers voice, messaging, data and fixed broadband services through multiple solutions and
supporting technologies to deliver on its total communications strategy . The advancements in 3G
networks and download speeds, handset capabilities and the mobilisation of internet services, have
contributed to an acceleration of data services usage growth.
Group service revenue is still predominantly generated by voice services, though these services as
a percentage of revenue are slowly declining as price competition and regulatory pressures increase
in many markets and the contribution of data grows. At the forefront of the Groups total
communications strategy are initiatives targeted at providing propositions to customers that
replace traditional fixed line providers, as well as developing new and innovative ways for
customers to enjoy the benefits of mobility, with the aim to increase the proportion of Group
service revenue that is generated by data and fixed line services .
So that customers can utilise the services that Vodafone offers, many different tariffs and
propositions are available, targeted at different customer segments and adapted for any localised
customer preferences and needs. These propositions often bundle together voice, data, messaging
and, increasingly, fixed services so that customers can experience all the different services that
Vodafone has to offer. Typically, customers are classified either as prepay or contract customers .
Prepay customers pay in advance and are generally not bound to minimum contractual commitments,
while contract customers usually sign up for a predetermined length of time and are invoiced for
their services, typically on a monthly basis.
As different tariffs and propositions are launched, the Group is increasingly leveraging the
positive experiences in one market to provide initiatives across the Group. Offers with strong
customer appeal and commercial benefit are being quickly adapted and rolled out to other markets .
An example includes a range of Out of Credit solutions for prepay customers, through which
Vodafone provides temporary credit to a customer which is then repaid when the customer next
tops-up. Reverse charging capabilities have also been introduced across most markets . These
facilities are very popular with prepay customers and have been launched in most European markets .
The experience gained in the Groups more mature markets is also being used to develop more
sophisticated offers across the emerging markets, many of which have a very high percentage of
prepay customers, and Vodafone is leveraging established bonus and reward prepay pricing
mechanisms, which incentivise higher usage and spend at an individual customer level.
The Group is also growing usage and account penetration in the business segment . Vodafone Global
Enterprise (VGE) provides
[Graphic Appears Here]
over 140 of Vodafones largest multinational customers with consistent levels of service, support
and commercial terms worldwide, by taking specific responsibility for managing these multinational
customers .
Over the last year, VGE launched a number of new products and services, including, in July 2007,
the launch of Vodafone Applications Service, a service hosted by Vodafone and available in ten
countries, enabling companies to mobilise applications such as SAP®, Siebel and Salesforce .com to
a choice of mobile devices. VGE has also developed a globally consistent pricing structure for
global business customers and has launched a new voice roaming tariff that can be used for both
domestic and international voice usage that is available across five European markets . A data
roaming package has also been developed that is simple, predictable, capped and available across
ten European markets
..
Having traditionally been a key player in the provision of corporate and small and medium
enterprises (SME) voice solutions in many markets, Vodafone is increasingly offering tailored and
innovative solutions for small business and professional business customers . Many of these offers
use the capabilities already developed for larger companies and provide benefits such as virtual
private network services and Vodafone Wireless Office solutions to much smaller entities.
Summary of Group products and services at 31 March 2008
Number of markets available
Partner            Number of
Europe            EMAPA            markets            customers (1)
Vodafone            at Home 8 3    4.4 million
Vodafone            Wireless            Office 9 5    3.0 million
Vodafone            Passport 11 3 3 17.5 million
Vodafone            live!   Internet            on your mobile 9       2.0 million
Vodafone            Mobile Connect            data card or
Vodafone            Mobile Connect            USB modem 11 8 25 2.7 million
Note:
· Customers are presented on a controlled (fully consolidated) and jointly controlled
(proportionately consolidated) basis in accordance with the Groups current segments.
24 Vodafone Group Plc Annual Report 2008




---



##### 



Voice revenue
£24,879m
Voice services continue to make up the largest portion of the Groups revenue . The Group has
undertaken a wide range of activities to stimulate growth in voice usage in the past year.
Innovative tariffs
Many different tariffs and propositions are available, targeted at different customer segments and
adapted for any localised customer preferences and needs.
Voice roaming
Roaming allows users to make and receive calls using a mobile network in the country they are
visiting. A roaming tariff, Vodafone Passport, enables customers to take their home tariff
abroad.
[Graphic Appears Here]
(2007: £22,268m, 2006: £21,304m)
Voice minutes            usage growth for the Groups principal            mobile markets (1)
Voice
[Graphic Appears Here]
Vodafone            At Home
A range of offers designed to introduce Vodafone into the household as a total communications
provider .
Vodafone Office
A series of products and services designed to meet all business customers communications needs.
Outgoing
[Graphic Appears Here]
Fixed Location
[Graphic Appears Here]
Voice services
Revenue from voice services, earned when customers make and receive calls, is classified primarily
as outgoing voice, incoming voice and voice roaming . In addition, the Group is delivering on
customers total communications needs and driving greater voice usage through offering integrated
fixed location based communications services .
Outgoing voice
The fees charged to a Vodafone mobile customer who initiates a call are classified in outgoing
voice revenue . Despite price pressures in many markets due to the competitive environment,
increased outgoing voice usage generated from the success of the wide range of tariffs and
propositions on offer and the overall increase in the customer base in the Group has led to
outgoing voice revenue staying relatively stable as a proportion of Group service revenue .
Propositions relating to voice services feature heavily in the tariffs and promotions that the
Group offers its customers . In particular, the development of a range of unlimited value offers
has been particularly appealing to customers and has stimulated voice usage growth. An example
includes free weekend calling, which had strong customer acceptance in markets such as the UK,
Germany and Ireland. These offers increase customer engagement with their mobile phone and Vodafone
services in general, driving a broader increase in usage.
Incoming voice
Incoming voice revenue is generated when a Vodafone mobile customer receives a call from a user on
another fixed or mobile network . Fees classified as incoming voice revenue are generally not
charged to the Vodafone customer receiving the call but, rather, the telecommunications company
that routed the call to the Vodafone network .
These fees are generally based on termination rates determined by local regulators . Due to
regulation in many markets it has been the trend for these rates to fall in recent years, and for
the year ended 31 March 2008 incoming voice revenue generated 14% of the Groups total service
revenue . This has declined from 15% and 17% in the previous two financial years respectively . For
further details see Additional Information  Regulation on page 147.
Voice roaming
When travelling abroad, roaming allows Vodafones customers to use the Groups services on a mobile
network in a country they are visiting. The Group continued to expand its
roaming coverage and services during the 2008 financial year. The focus was to drive customer
satisfaction through greater value, transparency and simplicity across Vodafones roaming
propositions .
Vodafones flagship roaming tariff, Vodafone Passport, enables
customers to take their home tariff
abroad, offering greater price transparency and certainty to customers when they are roaming .
While abroad, customers can make calls using their domestic tariff, in some cases including free
minute bundles, and receive calls at no charge for a one-off connection fee per call.
Incoming
[Graphic Appears Here]
Note:
(1) Germany, Italy, Spain and the UK
Vodafone            Group Plc Annual Report 2008 25




---



##### 



Vodafone   Business Vodafone   Business
Products            and            Services            continued
Customer usage patterns continue to show that, on average, Vodafone Passport customers both talk
more and pay less per call when abroad. Customer research also indicates that Vodafones customers
have a greater preference for Vodafone Passport over the regulated roaming rates, which has been
substantiated by the relative uptake of the two propositions since the summer of 2007.
Vodafone Passport was not directly affected by regulation relating to roaming prices introduced by
the European Union in June 2007. However, by 31 August 2007, all of Vodafones
12 European markets had reduced the price of their Vodafone World tariff in order to comply with
the regulation .
Fixed location based services
The Group is delivering on customers total communications needs and driving greater voice usage
through offering integrated communications services.
Vodafone At Home
Vodafone At Home comprises a range of offers designed to introduce Vodafone into the household as a
total communications provider . Vodafone At Home voice propositions offer customers the opportunity
to satisfy their communications needs through one operator and with a single device.
Continued progress has been made to drive customer uptake of Vodafone At Home voice services with
an option for at home calling now available in most of the Groups European markets . These take
the form of either zonal tariffs, through which customers can call for a reduced rate when in their
home area,
or alternatively in several markets unlimited calling to fixed line numbers for a fixed
subscription has been introduced, providing a strong incentive for customers to use their mobile
rather than their fixed line in the home environment .
The development of Vodafones total communications capability, including the increasing
availability of fixed broadband in many markets, will widen the range of services which can now be
offered as part of the Vodafone At Home portfolio .
Vodafone Office
Vodafone Office is the umbrella name for a series of products and services designed to meet all
business customers communications needs.
Vodafone Wireless Office provides companies the opportunity to embrace the benefits of mobilising
their workforce and reduce their number of fixed desk phones, facilitating the transfer of voice
minutes from the fixed to the mobile network . The solution includes a closed user group tariff,
allowing employees to call each other for a flat monthly fee. In Germany, Spain, Greece, Italy and
Portugal, the offer has been expanded to include location based office zone charging, giving
preferential rates when calling from an office location . Additionally, in some markets, geographic
numbers have been introduced, enabling further fixed to mobile substitution .
Additionally, the Group is actively promoting fixed line telephony to business customers in six
controlled markets, in line with its total communications strategy .
Messaging revenue
SMS
Allows customers            to send and receive simple text messages .
£4,079m
[Graphic Appears Here]
(2007: £3,587m, 2006: £3,289m)
All of the Groups mobile operations offer messaging services, which allow customers to send and
receive messages using mobile handsets and various other devices .
[Graphic Appears Here]
MMS
Allows customers to send and receive multiple media, such as pictures, music, sound, video and
text.
SMS usage for the Groups principal mobile markets (1)
Billions of messages
[Graphic Appears Here]
MMS messaging
MMS messaging, offering customers the ability to send and receive multiple media, such
 as pictures,
music, sound, video and text, to and from other compatible devices, is also available in all Group
mobile operations . MMS usage experienced a 15.8% growth in the 2008 financial year across the
Group through improved service quality, value focused pricing and a broader portfolio of devices.
operations offer messaging services, and receive messages using other devices.
Note:
(1) Germany, Italy, Spain and the UK
customers to send and receive simple text usage growth of 38.9% in the year ended 31 March 2008,
driven by improved marketing analytics to support best practice sharing and value focused pricing.
26 Vodafone Group Plc Annual Report 2008




---



##### 



Data revenue
£2,180m
The Group offers a number of products and services to enhance customers access to data services,
including Vodafone live! for consumers, as well as a suite of products for business users
consisting of Vodafone Mobile Connect data cards, internet based email solutions and Vodafone
Office.
Vodafone live!
Offers a combination of browsing, Google search, full track music downloads, games and television
services .
Data roaming
Provides access to the Groups services in the country a customer is visiting. The Group continued
to improve the simplicity and value for money offered to data customers .
Mobile applications
Vodafone Email Plus, Windows Mobile® Email from Vodafone and BlackBerry ® from Vodafone provide
customers with wireless access to business and internet based email solutions .
Vodafone Mobile Connect
Provides simple and secure access to existing business systems such as email, corporate
applications, company intranets and the internet for customers on the move.
Vodafone strengthened its global games portfolio by offering popular titles such as Pro Evolution
Soccer 2008 from Konami. The game was launched simultaneously across markets with extensive
marketing and advertising through different mediums, including in-console game Vodafone brand
advertising . The user access and user experience continues to be improved by embedding a selection
of the latest games onto handsets .
Mobile TV is available in 21 controlled and jointly controlled markets with an average of 20
channels offered. Video content is sourced both locally and internationally in order to provide
value for money to customers and ensure that the offering reflects the unique culture and attitudes
of specific countries . Vodafone has local agreements with broadcasters, such as the BBC, ZDF, RAI,
Pro-Sieben, Channel 4 and RTL. Internationally, content is sourced from HBO, Fox, NBC Universal,
Warner Brothers, UEFA Champions League, Vodafone McLaren Mercedes and MTV. Vodafone now has a
monthly average of 850,000 customers subscribing to Mobile TV.
Data roaming
When travelling abroad, roaming allows Vodafones customers to use the Groups services on a mobile
network in the country they are visiting. Vodafone continued to improve the simplicity, price
predictability and value for money offered to customers for data roaming services . For Vodafone
Mobile Connect users, Vodafone complemented the monthly roaming bundle launched in 2005 with a
daily roaming tariff, appealing to both the regular and less frequent international travellers
alike. At 31 March 2008, the monthly and daily tariff was available in nine of Vodafones European
markets . Vodafone will continue to support the growth of data roaming services through simple,
easy to understand pricing.
Mobile applications
There has been an increasing demand for handheld solutions that allow real time access to email,
calendar, address book and other applications . Vodafone Email Plus, Windows Mobile® Email from
Vodafone and BlackBerry from Vodafone provide business customers, ranging from small start up
companies to multinational corporates, with wireless access to their business and internet based
email solutions .
Vodafone Mobile Connect
The Vodafone Mobile Connect offering allows laptop and PC users access to the internet and to
business customers systems such as email, corporate applications and company intranets via
Vodafone Mobile Connect data cards, or Vodafone Mobile Connect USB modems . These are discussed in
more detail on page 29.
[Graphic Appears Here]
Data
[Graphic Appears Here]
(2007: £1,428m, 2006: £1,098m)
Data services
The Group offers a number of products and services to enhance customers access to data services .
These include services supporting access to the internet via laptops and PCs and access to the
internet, music, games and television services through the Vodafone live! portal on customer
handset
s .
Vodafone live!  Internet on Your Mobile
During the 2008 financial year, Vodafone introduced Internet on Your Mobile, which offers a
combination of easy to use and secure customer browsing, Google search, a tariff for unlimited
browsing and integrated services from leading internet brand partners . Customers can now use their
mobile to access and update their profile on the social networks of their choice, view or upload
YouTube videos from their mobile, buy or sell items on eBay and check locations on Google Maps. To
date, this service has been fully launched in Germany, Italy, Spain, the UK, Greece, the
Netherlands, Portugal, Ireland and France. Two million customers were benefiting from this service
at 31 March 2008.
The Group has been developing its presence in the converging communications and PC space by signing
instant messaging partnerships with Yahoo! and MSN. Instant messaging enables users to communicate
to one or more friends through interactive sessions using a dedicated and easy interface . These
services are primarily available in the more mature markets, such as Germany Italy, Spain, the UK,
the Netherlands, Portugal and France. Vodafone also partnered with Microsoft to develop a
communications service for the PC, presented at the Cebit exhibition in March 2008.
Vodafone live!  music, games, television services
Throughout the 2008 financial year, the Group continued to improve the customer experience for
music, games and television offerings available through Vodafone live!.
The full track music downloads service was significantly improved by the launch of a new mobile and
PC music player. The service allows Vodafones customers to search for music, artists pages and
previews from a catalogue of more than 750,000 songs, including some of the worlds greatest
artists through agreements with Universal Music, Sony BMG Music Entertainment, EMI, Warner Music
and independent record labels. Additionally, Vodafone has exclusively distributed and promoted
Madonnas single 4 minutes in a number of markets, including the UK, Spain, Italy, Greece,
France, Turkey, India and Australia .
Two million Internet            on Your Mobile customers
at 31 March 2008
Vodafone            Group Plc Annual Report 2008 27




---



##### 



Vodafone   Business Vodafone   Business
Products            and            Services            continued
Fixed line revenue
Fixed services
An increased number of fixed broadband offerings allow the Group to assist customers in meeting
their total communications needs.
£1,874m
(2007: £1,580m, 2006: £1,391m)
To assist customers in meeting their total communications needs and to provide additional revenue
streams to the Group, Vodafone has diversified and expanded the services it provides .
[Graphic Appears Here]
Mobile advertising
Vodafone has been extending its business model to generate revenue from advertising by partnering
with advertising specialists in individual markets .
[Graphic Appears Here]
Fixed and other
[Graphic Appears Here]
Business            managed            services
Vodafone is developing new ways of enabling business customers to mobilise and increase the
efficiency of their workforce .
Business managed services
As part of the total communications strategy, Vodafone is offering our business customers solutions
which meet a wider variety of their communications needs, and also developing new ways of enabling
them to mobilise and increase the efficiency of their workforce . Vodafone is at the forefront of
the market in a number of these solutions, including:
Over one billion advert impressions
in the year to 31 March 2008
Fixed services
During the 2008 financial year, Vodafone pursued the development of fixed broadband services in
many of the Groups markets, in order to provide customers with data and fixed voice solutions to
meet their total communications needs, mainly through Digital Subscriber Line (DSL) technology .
As a result, fixed broadband active lines have increased to 3.6 million at 31 March 2008, up from
2.1 million active lines one year earlier.
In December 2007, Vodafone completed the acquisition of Tele2 in Italy and Spain (Tele2), which
had almost 800,000 fixed broadband customers . Vodafone branded consumer fixed broadband offers
were also launched in Greece, the Netherlands, Portugal, New Zealand and Egypt during the 2008
financial year.
Business fixed broadband offers have been recently launched in the Czech Republic and in Italy,
while a fixed broadband WiMax offer was launched in Malta.
Other services
Mobile advertising
The Group has been extending its business model to generate revenue from mobile advertising by
partnering with advertising specialists in individual markets . Vodafone introduced mobile
advertising in nine markets and the core capabilities continue to be developed, such as WAP banners
and messaging formats, as well as more sophisticated targeting offers.
A critical area of activity required to grow the market is the development of common standards that
can be adopted by all market participants . Vodafone is taking a leading role in this activity,
which has achieved its first results:
·
·
secure remote access  a service enabling customer employees to access their network through their
laptop, on the move, both while in their home country and when roaming; and applications  many
software programs have been developed for use on mobile devices and Vodafone can integrate these
into the customers mobile portfolio . These applications can satisfy many needs, such as: -
enabling a workforce to have up to date sales information fully aligned across the business and
available at any time, anywhere; and  providing workforce scheduling to mobile employees which can
be updated centrally and in real time, ensuring the customer can satisfy all their own customer
needs quickl
y and efficiently .
These solutions open up a new revenue stream for Vodafone by providing an end to end solution,
integrating these into the customers infrastructure and subsequently managing the service.
·  
Banners for WAP display formats have been defined by the Mobile Marketing Association (MMA);
Messaging format definition activity has recently commenced; and Agreement was reached in the UK
between Vodafone, O2, Orange, T-mobile and Hutchison to progress an inter-operator standard for
mobile advertising in the 2008 calendar year.
28Vodafone Group Plc Annual Report 2008




---



##### 



Enables            customers            to utilise the services that Vodafone            offers.
Handsets
A wide ranging handset portfolio covering different customer segments, price points and a variety
of designs .
[Graphic Appears Here]
Devices
Vodafone            Mobile Connect
Provides simple and secure access to the internet and to business customers  systems such as
email, corporate applications and company intranets .
[Graphic Appears Here]
Devices
To enable customers to utilise the services that Vodafone offers, the Group also offers a wide
range of devices to access those services, such as handsets, the Vodafone Mobile Connect card with
3G broadband and the Vodafone Mobile Connect USB modem.
Handsets
The Groups operating companies and partner markets benefit from a wide ranging handset portfolio,
covering different customer segments, price points and an increasing variety of designs. During the
2008 financial year, Vodafone launched 75 new models, ranging from handsets for core voice services
up to premium multimedia devices. The handset portfolio was also expanded into the entry segment to
better address emerging markets and the prepaid market in Europe. In May 2008, Vodafone signed an
agreement with Apple to sell the iPhone in ten markets  Australia, Czech Republic, Egypt, Greece,
Italy, India, Portugal, New Zealand, South Africa and Turkey. Vodafone and Apple are working
together to introduce the product in each market during the 2009 financial year.
Vodafone live! portfolio
Vodafone continues to drive 3G penetration and increased the sales share of 3G handsets as a
percentage of total phones sold up to 53% for the year ended 31 March 2008. With the launch of the
exclusive Sony Ericsson V640i and an exclusive Mobile Internet variant of the Nokia 6120c, Vodafone
also pushed HSDPA into the mid-tier price segments to provide 3G broadband experience for the mass
market. Sales of handsets that support HSDPA represented 26% of total 3G handset sales for the year
ended 31 March 2008.
The introduction of the new Internet on Your Mobile services was supported with a selection of 15
consumer handsets . These have been customised for the internet experience on mobile handsets,
including the three high-end devices Nokia N95 8GB, Sony Ericsson W910i and Samsung SGH-F700V
QBowl.
Open Operating System (OS) devices are now playing a strong role in supporting an application
-centric service delivery model. In September 2007, Vodafone and its partners announced the first
two devices launching under the Microsoft Windows Mobile collaboration, the Palm® Treo 500V and
the Samsung SGH-i640V, as well as a range of S60 devices from Nokia and Samsung . Sales of Open OS
devices represented 23% of 3G devices sales for the year ended 31 March 2008.
Vodafone branded device portfolio
In the 2008 financial year, Vodafone offered nine consumer handsets under its own brand and shipped
over 10 million devices in over 30 markets . On 21 May 2007, Vodafone announced the Vodafone 125
and Vodafone 225, the first ultra low cost handsets under the Vodafone brand, providing operating
companies and partner markets with the lowest cost mobile phone ever launched by the Group. The
Vodafone 125 and Vodafone 225 played an important role in supporting the Vodafone brand launch in
India. In December 2007, the Vodafone 720 and the Vodafone Mobile Connect USB Modem were introduced
        . The Vodafone Mobile Connect USB Modem and the Vodafone 720 have won the iF design award, which
recognises the best product design in the world and is run by the International Design forum in
Hanover,
Germany .
Business            portfolio
Vodafone            continues            to expand the business            portfolio .
Two exclusive devices were introduced for the business customer: the Palm Treo 500v and the
BlackBerry® Curve 8310 Smartphone . Both of these devices are designed to offer a blend of
business grade email combined with Vodafone live! consumer services, such as Google
Maps, internet browsing and instant messaging . In addition, the BlackBerry 8100 series and the
BlackBerry 8110 series continue to create strong market demand . The broadening of the Nokia E
series range increasingly drives sales in the business segment, and has capability to leverage the
consumer relevant services deployed in the Nokia N series.
Vodafone Mobile Connect
The Vodafone Mobile Connect card with 3G broadband offers enhanced speeds which can be up to 7.2
Mbps downlink and up to 2.0 Mbps uplink by utilising HSPA technology .
Built-in 3G broadband from Vodafone is now available across a portfolio of 44 laptop models.
Vodafones partners Acer, Dell, HP and Lenovo fit a Vodafone SIM at point of manufacture into
laptops which include a built-in modem and collaborate with Vodafone in sales and marketing
activities .
The Group has a range of Vodafone Mobile Connect USB modems with exclusive designs, including USB
sticks, all benefiting from plug and go software . Their ease of use and attractive designs
support their deployment through consumer channels .
10 million branded handsets shipped
in the year to 31 March 2008
Vodafone            Group Plc Annual Report 2008 29




---



##### 



Vodafone  Performance
Key Performance            Indicators
The Board and the Executive            Committee            monitor Group and regional            performance against budgets            and forecasts using
financial            and non-financial            metrics. In addition            to these metrics, the Group has also identified            certain Key Performance
Indicators (1) (KPIs) to measure            progress            against the Groups strategic            objectives .
Financial            KPIs
Year ended 31 March
KPI            Purpose of KPI 2008 2007 2006
Group
Revenue            and related            Measure            of the Groups            success   
         in growing            revenue            given £ 35,478 m £ 31,104 m £ 29,350 m
organic growth(2) its strategic            objectives            to stimulate  
          revenue            in the Europe 4.2 % 4.3 % 7.5 %
region and to deliver strong growth in            emerging         
   markets
Also used in determining            managements    
        remuneration .
Adjusted            operating        
    profit            Measure     
       used for the            assessment            of    
        operating            performance £ 10,075 m £ 9,531 m £ 9,399 m
and related organic growth(2) as it represents     
       the operating            profitability
            of the Group 5.7 % 4.2 % 11.8 %
excluding            non- operating       
     income of associates, impairment
losses and other income and            expense .
Also used in determining            managements    
        remuneration .
Free cash flow(2) Provides         
   an evaluation            of the cash generated            by the £ 5,540 m £ 6,119 m £ 7,119 m
Groups            operations            and            available            for            reinvestment,
shareholder            returns or debt            reduction .
Also used in determining            managements            remuneration .
Capitalised            fixed asset additions            Measure            of the Groups            investment            in capital            ex
penditure £ 5,075 m £ 4,208 m £ 4,005 m
to deliver services            to            customers .
Adjusted            earnings            per share(2) Measure            of the Groups            operating            performance            after taking 12.50 p 11.26 p 10.11 p
into account            taxation            and financing            costs. Impacts            the level
of dividend            payout as the Groups dividend            policy is based
on adjusted            earnings            per share.
Also used in determining            managements            remuneration .
Operational            KPIs
Year ended 31 March KPIs            Purpose of KPI 2008 2007 2006
Group
Mobile            customer      
      net additions            Measure            of the Groups            success            at attracting            new 40.5 m 23.9 m 26.6 m
and retaining            existing            customers .
3G registered            devices and            Measure            of the            number            of 3G            devices, which are key 27.0 m 15
..9 m 7.9 m
related organic growth            enablers            of future data            revenue            growth. 67.5 % 105.6 % 461.1 %
Customer            delight index            Measure            of customer            satisfaction            across the Groups            controlled 73.1 70.6 69.9
markets            and its jointly            controlled            market in Italy.
Also used in determining            managements            remuneration .
Notes:
(1) Definition of the key terms are provided on page 155.
(2) See Non-GAAP information on page 150 for further details on the use of non-GAAP measures.
(3) Measurement of total communications revenue began on 1 April 2006, following the launch of
current strategy in May 2006.
(4) KPI includes the results of common functions. For the year ended 31 March 2006, the KPI
excludes the impact of Vodafone Sweden which was disposed of in January 2006.
30 Vodafone Group Plc Annual Report 2008




---



##### 



Strategic            KPIs
Year ended 31 March
KPI            Purpose of KPI 2008 2007 2006
Group Innovate            and deliver on our            customers total communications            needs
Total communications            revenue            Measures            the Groups growth in total communications £ 4,565 m £ 3,310 m            See note 3
revenue, a key driver in the growth of the            business            for the future.
Also used in determining managements            remuneration
Total communications            revenue            Measures            progress            against the Groups target to increase            total 12.9 % 10.6 % See note 3
as a percentage            of Group revenue            communications            revenue            to 20% of total Group revenue            by
the 2010 financial year.
Data revenue            and related            Data revenue            growth is expected            to be a key driver of £ 2,180 m £ 1,428 m £ 1,098 m
organic growth(2) the future growth of the business . 40.6 % 30.7 % 51.8 %
Europe Revenue            stimulation and            cost reduction            in Europe
Revenue            and related            Revenue            and revenue            growth is an indicator            of the £ 26,081 m £ 24,592 m £ 24,733 m
organic growth(2) success            of the revenue stimulation            strategy . 2.0 % 1.4 % 5.6 %
Adjusted            operating            profit            Measure            of profitability            and also used to track         
   success £ 6,206 m £ 6,159 m £ 6,425 m
and related organic growth(2) in stimulating            revenue and reducing            costs. (1.5) % (3.7) % 5.2 %
Operating            expenses            as a            Measure            of how operating expenses            are being            controlled 23.4 %
23.8 % 22.8 %
percentage            of service            revenue            and is an            indicator of the success            of the cost            reduction
measures            within the Europe region.
Voice usage (millions            of minutes) Voice usage is an important            driver of revenue            growth 182,613 156,546 135,933
especially            in light of continuing            price reductions            due
to the competitive            and regulatory            environment .
Mobile capital intensity (4) Measures            the Groups performance            against its target 9.9 % 11.8 % 12.4 %
to reduce European            mobile capital expenditure            to
revenue            ratio to 10% for the 2008 financial            year.
EMAPA Deliver            strong growth in emerging            markets
Revenue            and related            Revenue            growth is an indicator            of the success            of the £ 9,345 m £ 6,441 m £ 4,554 m
organic growth(2) strategy            to deliver growth in emerging            markets . 14.5 % 21.1 % 19.4 %
Adjusted            operating            profit and 
           Measure            of profitability            and also used to ensure £ 3,729 m £ 3,244 m £ 2,763 m
related organic growth (2) EMAPA is delivering strong profitable            growth 20.9 % 27.4 % 16.0 %
Operating            expenses            as a            Measure            of how operating expenses            are being 25.9 % 24.7 % 25.1 %
percentage            of service            revenue            controlled            in an environment            of strong growth
Mobile customers            and            The number            of closing mobile            customers            in the customer 119.1 m 61.9 m 39.8 m
related organic growth            base and the related growth is an indicator            of the success 21.2 % 26.7 % 38.3 %
of the strategy            to deliver growth in emerging            markets
Vodafone Group Plc Annual Report 2008 31




---



##### 



Vodafone  Performance
Operating            Results
This section presents            the Groups operating            performance            for the 2008 financial            year compared            to the 2007 financial    
        year and for the 2007 financial            year compared            to the 2006 financial            year, providing            commentary            
on how the revenue            and the adjusted            operating            profit performance            of the Group and its operating            segments            within th
e Europe and EMAPA regions have developed            in the last three years.
2008 Financial            Year            Compared            to the 2007 Financial            Year
Group
Common            Group            Group
Europe            EMAPA            functions (2) Eliminations 2008 2007 % Change
£m £m £m £m £m £m £ organic
Voice revenue (1)___
/GUUCIKPI_TGXGPWG___
&CVC_TGXGPWG___
Fixed line            revenue (1)___
1VJGT_UGTXKEG_TGXGPWG___
Service            revenue ___28,871 14.4 ___4.3
___
#ESWKUKVKQP_TGXGPWG___
4GVGPVKQP_TGXGPWG___
Other revenue 257 143 170 (11) 559 473
Revenue 26,081 9,345 170 (118) 35,478 31,104 14.1 4.2
+PVGTEQPPGEV_EQUVU___
1VJGT_FKTGEV_EQUVU___
#ESWKUKVKQP_EQUVU___
4GVGPVKQP_EQUVU___
Operating            expenses (5,719) (2,257) 97 11 (7,868) (6,719)
#ESWKTGF_KPVCPIKDNGU ___
_COQTVKUCVKQP_
2WTEJCUGF_NKEGPEG_CO ___
QTVKUCVKQP_
&GRTGEKCVKQP_CPF_QVJ ___
GT_COQTVKUCVKQP_
Share of result in associates (3)___
Adjusted            operating            profit ___
Adjustments            for:
___+ORCKTOGPV_NQUUGU___
Other income and expense (28) 502
___0QP_QRGTCVKPI_KPEQOG ___
_QH_CUUQEKCVGU_
Operating            profit/(loss) 10,047 (1,564)
Non-operating            income and expense 254 4
Investment            income 714 789
Financing            costs (2,014) (1,612)
Profit/(loss) before taxation 9,001 (2,383)
Income tax expense (2,245) (2,423)
Profit/(loss) for the financial            year from continuing            operations 6,756 (4,806)
        . QUU_HQT_VJG_HKPCPEKC ___
N_[GCT_HTQO_FKUEQPVK
PWGF_QRGTCVKQPU_
Profit/(loss) for the financial            year 6,756 (5,297)
Notes:
(1) Revenue relating to fixed line activities provided by mobile operators, previously classified
within voice revenue, is now presented as fixed line revenue, together with revenue from fixed line
operators and fixed broadband. All prior periods have been adjusted accordingly.
(2) Common functions represents the results of the partner markets and the net result of
unallocated central Group costs and recharges to the Groups operations, including royalty fees for
use of the Vodafone brand.
(3) During the year ended 31 March 2008, the Group changed its organisational structure and the
Groups associated undertaking in France, SFR, is now managed within the Europe region and reported
within Other Europe. The results are presented in accordance with the new organisational structure.
Revenue
Revenue increased by 14.1% to £35,478 million for the year ended 31 March 2008, with organic growth
of 4.2%. The impact of acquisitions and disposals was 6.5 percentage points, primarily from
acquisitions of subsidiaries in India in May 2007 and Turkey in May 2006 as well as the acquisition
of Tele2s fixed line communication and broadband operations in Italy and Spain in December 2007.
Favourable exchange rate movements increased revenue by 3.4 percentage points, principally due to
the 4.2% change in the average euro/£ exchange rate, as 60% of the Groups revenue for the 2008
financial year was denominated in euro.
Revenue            grew in the Europe and EMAPA regions by 6.1% and 45.1%, respectively, with growth in the EMAPA region benefiting            from a 27.5 percentage            point impact from acquisitions            and disposals . On an organic basis, Europe reco
rded growth of 2.0%, while EMAPA delivered an increase of 14.5%. EMAPA accounted            for 62.1% of the organic growth for the Group.
Organic revenue growth was driven by the higher customer           
 base and successful            usage stimulation            initiatives, partially offset by ongoing price reductions            and the impact of regulatory            driven reductions . Growth in data revenue was particularly   
         strong, up 40.6% on an organic basis to £2,180 million, reflecting            an increasing            penetration            of mobile PC connectivity            devices and improved 
           service offerings. Operating            result
Operating profit increased to £10,047 million for the year ended 31 March 2008 from a loss of
£1,564 million for the year ended 31 March 2007. The loss in the 2007 financial year was mainly the
result of the £11,600 million of impairment charges that occurred in the year, compared with none
in the 2008 financial year.
32 Vodafone Group Plc Annual Report 2008




---



##### 



Adjusted operating profit increased to £10,075 million, with 5.7% growth on both a reported and
organic basis. The net impact of acquisitions and disposals reduced reported growth by 0.8
percentage points. The net impact of foreign exchange rates was to increase adjusted operating
profit by 0.8 percentage points, as the impact of the 4.2% increase in the average euro/£ exchange
rate was partially offset by 5.7% and 7.2% decreases in the average US$/£ and ZAR/£ exchange rates,
respectively . 59%, 25% and 4% of the Groups adjusted operating profit for the 2008 financial year
was denominated in euro, US$ and ZAR, respectively .
On an organic basis, the EMAPA region generated all of the Groups growth in adjusted operating
profit, with the 20.9% increase in the region driven by a higher customer base and the resulting
increase in service revenue . Europes adjusted operating profit declined by 1.5% on an organic
basis compared to the 2007 financial year, resulting from the continuing challenges of highly
penetrated markets, regulatory activity and continued price reductions .
In Europe, adjusted operating profit was stated after a £115 million benefit from the release of a
provision following a revised agreement in Italy relating to the use of the Vodafone brand and
related trademarks, which is offset in common functions, and was also impacted by higher
interconnect, acquisition and retention costs and the impact of the Groups increasing focus on
fixed line services, including the acquisition of Tele2 in Italy and Spain.
In the EMAPA region, adjusted operating profit was impacted by the investment in growing the
customer base and the impact of the acquisition in India during the year and the inclusion of
Turkey for a whole year. Both Vodafone Essar and Turkey generated lower operating profits than the
regional average, partially as a result of the investment in rebranding the businesses to Vodafone,
increasing the customer base and improving network quality in Turkey.
Business acquisitions led to the increase in acquired intangible asset amortisation and these
acquisitions, combined with the continued investment in network infrastructure, resulted in higher
depreciation charges .
The Groups share of results from associates grew by 5.5%, or 15.1% on an organic basis. The
organic growth was partially offset by a 5.5 percentage point impact from the disposal of the
Groups interests in Belgacom Mobile S.A. and Swisscom Mobile A.G. during the 2007 financial year
and a 4.1 percentage point impact from unfavourable exchange rate movements . The organic growth
was driven by 24.8% growth in Verizon Wireless .
Other income and expense for the year ended 31 March 2007 included the gains on disposal of
Belgacom S.A. and Swisscom Mobile A.G., amounting to £441 million and £68 million, respectively .
Investment            income            and financing            costs
2008 2007
£m £m
Investment            income 714 789
Financing            costs (2,014) (1,612)
(1,300) (823)
Analysed            as:
Net            financing            costs before dividends            from investments (823) (435)
Potential            interest   
         charges            arising on settlement            of
outstanding            tax issues (399) (406)
Dividends            from investments 72 57
Foreign exchange (1) (7) (41)
Changes            in fair value of equity put rights and
similar arrangements (2) (143) 2
(1,300) (823)
Notes:
(1) Comprises foreign exchange differences reflected in the Consolidated Income Statement in
relation to certain intercompany balances and the foreign exchange differences on financial
instruments received as consideration in the disposal of Vodafone Japan to SoftBank.
(2) Includes the fair value movement in relation to put rights and similar arrangements held by
minority
interest holders in certain of the Groups subsidiaries. The valuation of these financial
liabilities is inherently unpredictable and changes in the fair value could have a material impact
on the future results and financial position of Vodafone. Also includes a charge of £333 million
representing the initial fair value of the put options granted over the Essar Groups interest in
Vodafone Essar, which has been recorded as an expense. Further details of these options are
provided on page 58.
Net financing costs before dividends from investments increased by 89.2% to £823 million due to
increased financing costs, reflecting higher average debt and effective interest rates. After
taking account of hedging activities, the net financing costs before dividends from investments are
substantially denominated in euro. At 31 March 2008, the provision for potential interest charges
arising on settlement of outstanding tax issues was £1,577 million (2007: £1,213 million).
Taxation
The effective tax rate is 24.9% (2007: 26.3% exclusive of impairment losses). The rate is lower
than the Groups weighted average statutory tax rate due to the structural benefit from the ongoing
enhancement of the Groups internal capital structure and the resolution of historic issues with
tax authorities . The 2008 financial year tax rate benefits from the cessation of provisioning for
UK Controlled Foreign Company (CFC) risk as highlighted in the 2007 financial year. The 2007
financial year additionally benefited from one-off additional tax deductions in Italy and
favourable tax settlements in that year.
The 2007 effective            tax rate including            impairment            losses was (101.7)%. The negative tax rate arose from no tax benefit being recorded            for the impairment            losse
s of £11,600 million.Earnings/(loss) per shareAdjusted earnings per share increased by 11.0% from 11.26 pence to 12.50 pence for the year to 31
March 2008, primarily due to increased adjusted operating profit and the lower weighted average
number of shares following the share consolidation which occurred in July 2006. Basic earnings per
share from continuing operations were 12.56 pence compared to a basic loss per share from
continuing operations of 8.94 pence for the year to 31 March 2007.
2008 2007
£m £m
Profit/(loss) from continuing            operations
attributable            to            equity            shareholders 6,660 (4,932)
Adjustments:
Impairment            losses    11,600
Other income and expense (1) 28 (502)
Share of            associated            undertakings
non-operating            income and            expense    (3)
Non-operating            income and            expense (2) (254) (4)
Investment            income and financing            costs(3) 150 39
Taxation 44 13
Adjusted            profit            from            continuing
operations            attributable            to
equity shareholders 6,628 6,211
Weighted average            number            of
shares outstanding
Basic 53,019 55,144
Diluted(4) 53,287 55,144
Notes:
(1) The amount for the 2008 financial year represents a pretax charge offsetting the tax benefit
arising on recognition of a pre-acquisition deferred tax asset.
(2) The amount for the 2008 financial year includes £250 million representing the profit on
disposal of the Groups 5.60% direct investment in Bharti Airtel Limited (Bharti Airtel). (3) See
notes 1 and 2 in investment income and financing costs.
(4) In the year ended 31 March 2007, 215 million shares have been excluded from the calculation of
diluted loss per share as they are not dilutive.
Vodafone Group Plc Annual Report 2008 33




---



##### 



Vodafone   Performance
Operating            Results            continued
Europe
Germany            Italy            Spain            UK            Arcor            Other          
  Eliminations            Europe      % change
£m £m £m £m £m £m £m £m £ Organic
Year            ended 31 March 2008
Voice revenue (1) 3,791 3,169 3,792 3,601 10 3,408 (286) 17,485
Messaging            revenue 710 689 425 923 1 547 (33) 3,262
Data revenue 583 274 341 383    291 (45) 1,827
Fixed line revenue (1) 21 137 86 24 1,596 49 (86) 1,827
Other service revenue 2 4 2 21          29
Service            revenue 5,107 4,273 4,646 4,952 1,607 4,295 (450) 24,430 6.3 2.1
Acquisition            revenue 178 129 268 300 25 142 (3) 1,039
Retention            revenue 43 27 143 46    96    355
Other revenue 69 6 6 126    50    257
Revenue 5,397 4,435 5,063 5,424 1,632 4,583 (453) 26,081 6.1 2.0
Interconnect            costs (593) (725) (719) (1,121) (382) (854) 414 (3,980)
Other direct costs (312) (238) (418) (484) (353) (283) 24 (2,064)
Acquisition            costs (627) (325) (620) (766) (166) (378) 10 (2,872)
Retention            costs (384) (106) (536) (389)    (341)    (1,756)
Operating            expenses (1,139) (883) (964) (1,233) (406) (1,099) 5 (5,719)
Acquired            intangibles            amortisation    (31) (14) (22)    (11)    (78)
Purchased            licence amortisation (354) (80) (6) (333)    (73)    (846)
Depreciation            and other amortisation (723) (474) (504) (645) (100) (539)    (2,985)
Share of result in associates (2)                425    425
Adjusted            operating            profit 1,265 1,573 1,282 431 225 1,430    6,206 0.8 (1.5)
Year            ended 31 March 2007
Voice revenue (1) 3,981 3,307 3,415 3,604    3,297 (343) 17,261
Messaging            revenue 746 563 380 760    501 (25) 2,925
Data revenue 413 189 247 295    194 (38) 1,300
Fixed line revenue (1) 15 22 20 17 1,419 26 (26) 1,493
Other service revenue 1 2    5          8
Service            revenue 5,156 4,083 4,062 4,681 1,419 4,018 (432) 22,987
Acquisition            revenue 172 124 307 274 22 108 (3) 1,004
Retention            revenue 40 36 124 52    102    354
Other revenue 75 2 7 117    47 (1) 247
Revenue 5,443 4,245 4,500 5,124 1,441 4,275 (436) 24,592
Interconnect            costs (645) (628) (675) (1,001) (338) (813) 432 (3,668)
Other direct costs (332) (242) (352) (452) (262) (275) 1 (1,914)
Acquisition            costs (560) (249) (642) (677) (178) (301) 3 (2,604)
Retention            costs (351) (107) (398) (372)    (315)    (1,543)
Operating            expenses (1,126) (870) (866) (1,163) (396) (1,041)    (5,462)
Acquired            intangibles            amortisation          (11)    (11)    (22)
Purchased            licence amortisation (340) (75) (37) (333)    (64)    (849)
Depreciation            and other amortisation (735) (499) (430) (604) (96) (524)    (2,888)
Share of result in associates (2)                517    517
Adjusted            operating            profit 1,354 1,575 1,100 511 171 1,448    6,159
Change            at constant            exchange            rates      % % % % % %
Voice revenue (1) (8.3) (7.9) 6.6 (0.1)    (0.6)
Messaging            revenue (8.7) 17.2 7.3 21.4    4.7
Data revenue 34.7 38.8 32.2 29.8    44.0
Fixed line revenue (1) 38.6 489.7 318.5 41.2 7.7 73.0
Other service revenue 63.6 104.8    320.0    -
Service            revenue (4.8) 0.6 9.7 5.8 8.5 2.7
Acquisition            revenue (0.4) (0.5) (15.5) 9.5 9.1 26.9
Retention            revenue 0.9 (27.0) 10.9 (11.5)    (9.0)
Other revenue (10.2) 250.0 (22.7) 7.7    2.1
Revenue (4.7) 0.4 8.0 5.9 8.5 3.0
Interconnect            costs (11.2) 10.9 2.4 12.0 8.7 0.8
Other direct costs (10.1) (6.1) 13.6 7.1 27.2 (2.2)
Acquisition            costs 7.6 24.5 (7.1) 13.1 (10.0) 21.0
Retention            costs 5.1 (3.4) 28.7 4.6    3.8
Operating            expenses (2.7) (2.6) 6.8 6.0 (1.1) 1.3
Acquired            intangibles            amortisation          100.0    -
Purchased            licence amortisation    2.6 (88.9)       9.0
Depreciation            and other amortisation (6.0) (8.8) 16.1 6.8 (1.0) (0.7)
Share of result in associates (2)                (20.7)
Adjusted            operating            profit (10.1) (3.8) 12.2 (15.7) 25.5 (4.7)
Notes:
(1) Revenue relating to fixed line activities provided by mobile operators, previously classified
within voice revenue, is now presented as fixed line revenue, together with revenue from fixed line
operators and fixed broadband. All prior periods have been adjusted accordingly.
(2) During the year ended 31 March 2008, the Group changed its organisational structure and the
Groups associated undertaking in France, SFR, is now managed within the Europe region and reported
within Other Europe. The results are presented in accordance with the new organisational structure.
34Vodafone Group Plc Annual Report 2008




---



##### 



Mobile telecommunications            KPIs
Germany
Italy
Spain
UK
Other
Europe
Closing customers ( 000 )    2008 34,412 23,068 16,039 18,537 18,515 110,571
   2007 30,818 21,034 14,893 17,411 17,007 101,163
Closing 3G devices (000)    2008 5,836 5,905 5,264 3,632 3,555 24,192
   2007 3,720 3,762 2,890 1,938 2,353 14,663
Voice usage (millions            of minutes)    2008 42,010 37,447 35,031 37,017 31,108 182,613
   2007 33,473 32,432 30,414 31,736 28,491 156,546
See page 155 for            definition            of terms
The Groups strategy in the Europe region is to drive additional usage and revenue from core mobile
voice and messaging services and to reduce the cost base in an intensely competitive environment
where unit price declines are typical each year. The 2008 financial year saw a strong focus on
stimulating additional usage by offering innovative tariffs, larger minute bundles, targeted
promotions and focusing on prepaid to contract migration . Data revenue growth was strong
throughout the region, mainly due to the higher take up of mobile PC connectivity devices. The
Groups ability to provide total communications services was enhanced through the acquisition of
Tele2s fixed line communication and broadband services in Italy and Spain in the second half of
the year.
Revenue
Revenue growth of 6.1% was achieved for the year ended 31 March 2008, comprising 2.0% organic
growth, a 0.7 percentage point benefit from the inclusion of acquired businesses, primarily Tele2,
and 3.4 percentage points from favourable movements in exchange rates, largely due to the
strengthening of the euro against sterling. The impact of acquisitions and exchange rate movements
on service revenue and revenue growth in Europe are shown below:
Impact of
exchange            Impact of
Organic            rates            acquisitions            Reported
growth            Percentage            Percentage            growth
% points            points      %
Service            revenue
Germany (4.8) 3.8    (1.0)
Italy (2.0) 4.1 2.6 4.7
Spain 8.1 4.7 1.6 14.4
UK 5.8       5.8
Arcor 8.5 4.7    13.2
Other Europe 2.4 4.2 0.3 6.9
Europe 2.1 3.4 0.8 6.3
Revenue   Europe 2.0 3.4 0.7 6.1
Service revenue grew by 6.3%, or by 2.1% on an organic basis, with strong growth in data revenue
being the main driver of organic growth. Revenue was also positively impacted by the 9.3% rise in
the total registered mobile customer base to 110.6 million at 31 March 2008. These factors more
than offset the negative effects of termination rate cuts, the cancellation of top up fees on
prepaid cards in Italy resulting from new regulation issued in March 2007 and the Groups ongoing
reduction of European roaming rates. Business segment service revenue, which represents 28% of
European service revenue, grew by approximately 5% on an organic basis, driven by a 21% growth in
the average business customer base, including strong growth in closing handheld business devices
and mobile PC connectivity devices.
Voice revenue increased by 1.3%, bu
t declined by 1.8% on an organic basis, with the difference
being due to the effect of favourable movements in exchange rates. The organic decrease was
primarily due to the effect of lower prices resulting from Group initiatives and regulation -driven
reductions .
·
·
·
Outgoing voice revenue remained stable on an organic basis, as the 20.1% increase in outgoing call
minutes, driven by the 9.0% higher outgoing usage per customer and the higher customer base, was
offset by the fall in the effective rate per minute reflecting continued price reductions and the
effect of the cancellation of top up fees in Italy. Incoming voice revenue fell by 4.6% on an
organic basis as a result of ongoing termination rate reductions throughout the region. The
effective annual rate of decline of 12%, driven by termination rate cuts in Germany, Italy and
Spain, was partially mitigated by the 8.3% growth in incoming voice minutes . Roaming and
international visitor revenue declined by 8.0% on an organic basis, as expected, principally from
the impact of the Groups initiatives on retail and wholesale roaming and regulatory -driven price
reductions, which more than offset growth of 13.3% in voice minute volumes .
Messaging revenue grew by 11.5%, or by 8.1% on an organic basis, driven by good growth in usage, up
28.1%, particularly in Italy and the UK, resulting from the success of a number of promotions and
the higher take up of tariff bundles and options.
Strong growth of 40.5%, or 35.7% on an organic basis, was achieved in data revenue, primarily from
a 61.5% rise in the number of mobile PC connectivity devices, including the successful launch of
the Vodafone Mobile Connect USB modem in the business and consumer segments, coupled with the
strong promotion of data tariffs across many European markets .
Fixed line revenue increased by 22.4%, or by 4.7% on an organic basis, with 12.5 percentage points
of this reported growth being contributed by the acquisition of Tele2s operations in Italy and
Spain in December 2007. Organic growth was mainly due to the increase in Arcors service revenue .
At 31 March 2008, Europe had 3.5 million fixed broadband customers .
Germany
At constant exchange rates, service revenue declined by 4.8%, mainly due to an 8.3% decrease in
voice revenue resulting from a reduction in termination rates, the full year impact of significant
tariff cuts introduced in the second half of the 2007 financial year and reduced roaming rates.
This was partially offset by 32.1% growth in outgoing voice minutes, driven by a 9.1% increase in
the average customer base and higher usage per customer . Messaging revenue fell 8.7% at constant
exchange rates due to lower usage by prepaid customers and new tariffs with inclusive messages sent
within the Vodafone network, which stimulated an 8.8% growth in volumes but was more than offset by
the resulting lower rate per message . These falls were partially offset by 34.7% growth in data
revenue at constant exchange rates, largely due to a 71.9% increase in the combined number of
registered mobile PC connectivity devices and handheld business devices, particularly in the
business segment, as well as increased Vodafone HappyLive! bundle penetration in the consumer
segment .
Vodafone Group Plc Annual Report 2008 35




---



##### 



Vodafone  Performance
Operating            Results continued
Italy
Service revenue increased by 0.6%, as a 7.9% fall in voice revenue was offset by 17.2% and 38.8%
increases in messaging and data revenue, respectively, all at constant exchange rates, as well as
the contribution from the Tele2 acquisition in the second half of the year. On an organic basis,
service revenue fell by 2.0%. The regulatory cancellation of top up fees and reduction in
termination rates led to the fall in voice revenue but were partially mitigated by a 20.1% rise in
outgoing voice usage, benefiting from a 23.2% increase in average consumer and business contract
customers, successful promotions and initiatives driving usage within the Vodafone network, and
elasticity arising from the top up fee removal . The success of targeted promotions and tariff
options contributed to the 31.8% growth in messaging volumes, while the increase in data revenue
was driven by a 108.0% growth in registered mobile PC connectivity devices.
Spain
Spain delivered service revenue growth of 9.7%, with 6.6% growth in voice revenue and 32.2% growth
in data revenue, all at constant exchange rates, as well as the contribution from the Tele2
acquisition in the second half of the year. Organic growth in service revenue was 8.1%, with lower
organic growth of 5.8% in the second half of the year resulting from a slowing average customer
base in an increasingly competitive market. Outgoing voice and messaging revenue benefited from the
9.1% growth in the average customer base and an increase in usage volumes of 13.8% and 12.7%,
respectively, driven by various usage stimulation initiatives . A 101.1% increase in registered
mobile PC connectivity devices led to the increase in data revenue .
UK
The UK recorded service revenue growth of 5.8%, with an 8.9% increase in the average customer base,
following the success of the new tariff initiatives introduced in September 2006. Sustained market
performance and increased penetration of 18 month contracts, leading to lower contract churn for
the year, contributed to the growth in the customer base. Voice revenue remained stable as the
lower prices were offset by a 16.6% increase in total usage. Messaging revenue increased by 21.4%
following a 36.7% rise in usage, driven by the higher take up of messaging bundles . Growth of
29.8% was achieved in data revenue due to improved service offerings for business customers and the
benefit of higher registered mobile PC connectivity devices.
Arcor
Arcor generated an 8.5% increase in service revenue at constant exchange rates, principally driven
by the growth in fixed broadband customers . Arcors own customers increased from 2.1 million to
2.4 million in the financial year and an additional 0.2 million customers were acquired through
Vodafone Germany, bringing the closing German fixed broadband customer base to 2.6 million. The
volume increase more than offset pricing pressure in the market. Revenue also benefited from strong
growth in Arcors carrier business, including that with Vodafone Germany, which lowered overall
Group costs.
Other Europe
Other Europe had service revenue growth of 6.9%, or 2.4% on an organic basis, with strong organic
growth in data revenue of 44.0%. Portugal and the Netherlands delivered service revenue growth of
7.2% and 9.0%, respectively, at constant exchange rates, both benefiting from strong customer
growth. These were mostly offset by a 6.2% decline in service revenue in Greece at constant
exchange rates, which arose from the impact of termination rate cuts in June 2007 and the cessation
of a national roaming agreement in April 2007.
36Vodafone Group Plc Annual Report 2008




---



##### 



Adjusted operating            profit
The impact of acquisitions            and exchange            rate movements            on Europes adjusted operating            profit is shown below:
Impact of
exchange            Impact of
Organic            rates            acquisitions            Reported
growth            Percentage            Percentage            growth
% points            points      %
Adjusted            operating            profit
Germany (10.1) 3.5    (6.6)
Italy (1.4) 3.7 (2.4) (0.1)
Spain 14.4 4.3 (2.2) 16.5
UK (15.7)       (15.7)
Arcor 25.5 6.1    31.6
Other Europe (4.2) 3.5 (0.5) (1.2)
Europe (1.5) 3.4 (1.1) 0.8
Adjusted operating profit increased by 0.8% for the year ended 31 March 2008, with a decline of
1.5% on an organic basis, with the difference primarily due to favourable exchange rate movements .
Adjusted operating profit included the benefit from the release of a provision following a revised
agreement in Italy related to the use of the Vodafone brand and related trademarks, which is offset
in common functions . Adjusted operating profit was also impacted by higher interconnect,
acquisition and retention costs and the impact of the Groups increasing focus on fixed line
services, including the acquisition of Tele2 in Italy and Spain.
Interconnect costs rose by 8.5%, or by 4.1% on an organic basis, as the higher volume of outgoing
calls to other networks more than offset the cost benefit obtained from termination rate cuts
throughout the region. The main increases were recorded in the UK and Italy, partially offset by a
decline in Germany .
Other direct costs grew by 7.8%, although only 1.3% on an organic basis, as increases in the UK and
Arcor were partially offset by a reduction in Germany .
A 10.3%, or 6.0% organic, rise in acquisition costs resulted from increases across most of the
region, reflecting the continued focus on attracting higher value contract and business customers,
particularly in the UK and Italy. Acquisition costs per customer increased across the region, with
the exception being Germany due to a higher proportion of wholesale and prepaid connections .
Retention costs increased by 13.8%, or by 10.1% on an organic basis, largely driven by higher costs
in Spain, with smaller increases occurring across the rest of the region.
Operating expenses were flat on an organic basis, as a result of the successful control of costs
and the benefit from the release of the brand royalty provision . Various initiatives were
implemented at both central and local levels. Central initiatives included the consolidation and
optimisation of data centres, restructuring within central functions, continued migration from
leased lines to owned transmission and further renegotiation of contracts relating to various
network operating expenses . Locally there were restructuring programmes in Germany and Italy and,
more recently, in the UK.
Depreciation and other amortisation was 3.4% higher, or broadly stable on an organic basis, as the
add
itional charges resulting from the acquisition of Tele2 operations in Italy and Spain and
unfavourable exchange rate movements were partially offset by savings from lower capital
expenditure and the consolidation and optimisation of data centres.
Germany
Adjusted operating profit fell by 10.1% at constant exchange rates, primarily due to the reduction
in voice revenue . Total costs decreased at constant exchange rates, mainly as a result of an 11.2%
fall in interconnect costs, which benefited from the termination rate cuts, and a 10.1% reduction
in other direct costs, mainly from fewer handset sales to third party distributors and lower
content costs than the 2007 financial year. Operating expenses fell by 2.7% at constant exchange
rates, reflecting targeted cost saving initiatives, despite the growing
customer base. Acquisition costs rose by 7.6% at constant exchange rates due to a higher volume of
gross additions and the launch of a fixed broadband offer, while retention costs increased by 5.1%
at constant exchange rates due to a higher cost per upgrade from an increased focus on higher value
customers .
Italy
Adjusted operating profit decreased by 0.1%, or 1.4% on an organic basis, primarily as a result of
the fall in voice revenue due to the regulatory cancellation of top up fees. On an organic basis,
total costs fell as higher interconnect and acquisition costs were offset by a 15.8% fall in other
direct costs after achieving lower prepaid airtime commissions and a 7.4% reduction in operating
expenses as a result of the release of the provision for brand royalty payments following agreement
of revised terms. Interconnect costs increased by 6.2% on an organic basis, reflecting the growth
in outgoing voice minute volumes, partially offset by a higher proportion of calls and messages to
Vodafone customers, while acquisition costs rose by 18.7% on an organic basis due to the investment
in the business and higher value consumer contract segments .
Spain
Spain generated growth of 16.5% in adjusted operating profit, or 14.4% on an organic basis, due to
the increase in service revenue, partially offset by a 28.3% rise on an organic basis in retention
costs driven by the higher volume of upgrades and cost per contract upgrade . The proportion of
contract customers within the total closing customer base increased by 3.2 percentage points to
58.0%. Acquisition costs decreased by 9.0% on an organic basis following the reduction in gross
additions . Interconnect costs were flat on an organic basis as the benefit from termination rate
cuts was offset by the higher volumes of outgoing voice minutes . Operating expenses increased by
4.0% on an organic basis but fell as a percentage of service revenue as a result of good cost
control.
UK
Although service revenue grew by 5.8%, adjusted operating profit fell by 15.7% as a result of the
rise in total costs, partially offset by a £30 million VAT refund. The UK business continued to
invest in acquiring new customers in a highly competitive market, leading to a 13.1% increase in
acquisition costs. Interconnect costs increased by 12.0% due to the 19.0% growth in outgoing mobile
minutes, reflecting growth in the customer base and larger bundled offers. The 7.1% increase in
other direct costs was due to cost of sales associated with the growing managed solutions business
and investment in content based data services . Operating expenses increased by 6.0%, although
remained stable as a percentage of service revenue, with the increase due to a rise in commercial
operating costs in support of sales channels and customer care activities and a £35 million charge
for the restructuring programmes announced in March 2008, with savings anticipated for the 2009
financial year.
Arcor
Adjusted operating profit increased by 25.5% at constant exchange rates, due to the growth in
service revenue, which exceeded increases in the cost base. Other direct costs rose by 27.2% at
constant exchange rates, largely driven by higher access line fee
s from the expanding customer
base, which also resulted in an 8.7% increase at constant exchange rates in interconnect costs. The
residual cost base was relatively stable.
Other Europe
In Other Europe, adjusted operating profit fell by 1.2%, or 4.2% on an organic basis, largely
driven by a 20.7% fall at constant exchange rates in the share of results of associates following
increased acquisition and retention costs and higher interest and tax charges, which more than
offset a 6.5% rise in revenue at constant exchange rates. The growth in adjusted operating profit
of subsidiaries was primarily driven by increases in Portugal and the Netherlands of 20.2% and
13.2%, respectively, at constant exchange rates, resulting from the growth in service revenue, as
well as good cost control in Portugal . These more than offset the 7.1% fall at constant exchange
rates in Greece, where results were affected by a decline in service revenue, increased retention
and marketing costs and a regulatory fine.
Vodafone Group Plc Annual Report 2008 37




---



##### 



Vodafone   Performance
Vodafone   Performance
Operating            Results            continued
EMAPA
Eastern            Middle East, Associates
Europe(2) Africa & Asia            Pacific            US            Other            Eliminations          
  EMAPA      % change
£m £m £m £m £m £m £m £ Organic(2)
Year            ended 31 March 2008
Voice revenue (1) 2,584 3,818 1,085 (1) 7,486
Messaging            revenue 333 210 281    824
Data revenue 108 187 64    359
Fixed line revenue (1) 16 7 25    48
Other service revenue       1    1
Service            revenue 3,041 4,222 1,456 (1) 8,718 46.1 14.4
Acquisition            revenue 61 261 128    450
Retention            revenue 27 1 6    34
Other revenue 25 63 55    143
Revenue 3,154 4,547 1,645 (1) 9,345 45.1 14.5
Interconnect            costs (522) (623) (247) 1 (1,391)
Other direct costs (445) (625) (284)    (1,354)
Acquisition            costs (322) (395) (222)    (939)
Retention            costs (97) (103) (59)    (259) Operating            expenses (769) (1,078) (410)    (2,257)
Acquired            intangibles            amortisation (223) (425)       (648)
Purchased            licence amortisation (19) (28) (16)    (63)
Depreciation            and other amortisation (425) (503) (226)    (1,154)
Share of result in associates (3)    2    2,447       2,449
Adjusted            operating            profit 332 769 181 2,447       3,729 15.0 20.9
Year            ended 31 March 2007
Voice revenue (1) 2,037 2,098 942 5,077
Messaging            revenue 271 142 254 667
Data revenue 70 26 42 138
Fixed line revenue (1) 14 66 7 87
Service            revenue 2,392 2,332 1,245 5,969
Acquisition            revenue 53 223 105 381
Retention            revenue 19    2 21
Other revenue 13 10 47 70
Revenue 2,477 2,565 1,399 6,441
Interconnect            costs (433) (364) (248) (1,045)
Other direct costs (314) (246) (224) (784)
Acquisition            costs (219) (291) (167) (677)
Retention            costs (78) (84) (50) (212)
Operating            expenses (614) (509) (349) (1,472)
Acquired            intangibles            amortisation (285) (105) (2) (392)
Purchased            licence amortisation (19) (17) (7) (43)
Depreciation            and other amortisation (331) (255) (193) (779)
Share of result in associates (3)          2,077 130 2,207
Adjusted            operating            profit 184 694 159 2,077 130 3,244
Change            at constant            exchange            rates      % % % % %
Voice revenue (1) 20.3 90.3 7.0
Messaging            revenue 13.2 53.8 2.6
Data revenue 48.1 646.0 43.0
Fixed line revenue (1) 16.4 (89.9) 201.2
Service            revenue 20.2 88.6 8.6
Acquisition            revenue 12.3 25.9 13.7
Retention            revenue 34.0    195.2
Other revenue 80.3 569.1 7.8
Revenue 20.5 85.2 9.2
Interconnect            costs 13.5 78.1 (7.4)
Other direct costs 29.8 163.1 17.4
Acquisition            costs 36.6 45.7 24.0
Retention            costs 20.7 30.0 10.6
Operating            expenses 17.7 120.4 9.6
Acquired            intangibles            amortisation (26.4) 316.7 (100.0)
Purchased            licence amortisation (5.0) 75.0 128.6
Depreciation            and other amortisation 21.1 104.5 8.1
Share of result in associates (3)          24.8 (100.0)
Adjusted            operating            profit 93.3 15.3 4.6 24.8 (100.0)
Notes:
(1) Revenue relating to fixed line activities provided by mobile operators, previously classified
within voice revenue, is now presented as fixed line revenue, together with revenue from fixed line
operators and fixed broadband. All prior periods have been adjusted accordingly.
(2) On 1 October 2007, Romania rebased all of its tariffs and changed its functional currency from
US dollars to euros. In calculating all constant exchange rate and organic metrics which include
Romania, previous US dollar amounts have been translated into euros at the 1 October 2007 US$/euro
exchange rate.
(3) During the year ended 31 March 2008, the Group changed its organisational structure and the
Groups associated undertaking in France, SFR, is now managed within the Europe region and reported
within Other Europe. The results are presented in accordance with the new organisational structure.
38Vodafone Group Plc Annual Report 2008




---



##### 



Mobile telecommunications            KPIs
2008
2007
Eastern            Middle East, Eastern            Middle East,
Europe            Africa & Asia            Pacific            EMAPA            Europe            Africa & Asia      
      Pacific            EMAPA
Closing customers (000) 33,547 79,289 6,279 119,115 28,975 27,160 5,750 61,885
Closing 3G devices (000) 686 885 1,297 2,868 347 367 778 1,492
Voice usage (millions            of minutes) 48,431 189,747 12,845 251,023 39,658 37,449 11,371 88,478
See page 155 for            definition            of terms
Vodafone has continued to execute on its strategy to deliver strong growth in emerging markets
during the 2008 financial year, with the acquisition of Vodafone Essar (formerly Hutchison Essar)
in India and with strong performances in Turkey, acquired in May 2006, Romania and Egypt. The Group
is beginning to differentiate itself in its emerging markets, with initiatives such as the
introduction of Vodafone branded handsets and the Vodafone M-PESA/Vodafone Money Transfer service.
On 8 May 2007, the Group continued to successfully increase its portfolio in emerging markets by
acquiring companies with interests in Vodafone Essar, a leading operator in the fast growing Indian
mobile market, following which the Group controls Vodafone Essar. The business was rebranded to
Vodafone in September 2007.
In conjunction with the Vodafone Essar acquisition, the Group signed a memorandum of understanding
with Bharti Airtel, the Groups former joint venture in India, on infrastructure sharing and
granted an option to a Bharti group company to buy its 5.60% direct interest in Bharti Airtel,
which was exercised on 9 May 2007.
An initial public offering of 25% of Safaricom shares held by the Government of Kenya closed to
applicants on 23 April 2008. Share allocations are expected to be announced on, or around, 30 May
2008, following which Safaricom will be accounted for as an associate, rather than as a joint
venture. The Groups effective equity interest will remain unchanged .
Revenue
Revenue growth for the year ended 31 March 2008 was 45.1% for the region, or 14.5% on an organic
basis, with the key driver for organic growth being the increase in service revenue of 46.1%, or
14.4% on an organic basis. The impact of acquisitions, disposal and foreign exchange movements on
service revenue and revenue growth are shown below:
Impact of            Impact of
exchange            acquisitions
Organic            rates            and disposal(1) Reported
growth            Percentage            Percentage            growth
% points            points      
%
Service            revenue
Eastern Europe 9.7 6.9 10.5 27.1
Middle East, Africa and Asia 22.3 (7.6) 66.3 81.0
Pacific 8.6 8.3    16.9
EMAPA 14.4 3.4 28.3 46.1
Revenue   EMAPA 14.5 3.1 27.5 45.1
Note:
· Impact of acquisitions and disposal includes the impact of the change in consolidation status of
Bharti Airtel from a joint venture to an investment in February 2007.
On an organic basis, voice revenue grew by 12.8% and messaging revenue and data revenue rose by
6.5% and 87.9%, respectively, as a result of the 26.2% organic increase in the average customer
base, driven primarily by increasing penetration in emerging markets . Strong performances in
Turkey, Egypt, Romania and India contributed to the growth in service revenue .
EasternEurope
In Eastern Europe, service revenue increased            by 27.1%, or 9.7% on an organic basis, driven by the acquisition            of Turkey in the 2007 financial year and a good performance            in Romania .
At constant exchange rates, Turkey delivered revenue growth of 24%, assuming the Group owned the
business for the whole of both periods, with 25.2% growth in the average customer base compared to
the 2007 financial year. While growth rates remained high, they slowed in the last quarter of the
year, but remained consistent with the overall growth rate for the market. In order to maintain
momentum in an increasingly competitive environment, the business is concentrating on targeted
promotional offers and focusing on developing distribution, as well as continued investment in the
brand and completing the planned improvements to network coverage . The revenue performance year on
year was principally as a result of the increase in voice revenue driven by the rise in average
customers, but also benefited from the growth in messaging revenue, resulting from higher volumes .
In Romania, service revenue increased by 15.0%, or 19.6% at constant exchange rates, driven by an
18.3% rise in the average customer base following the impact of initiatives focusing on business
and contract customers, as well as growth in roaming revenue and a strong performance in data
revenue, which grew by 92.6%, or 97.7% at constant exchange rates, to £41 million following
successful promotions and a growing base of mobile data customers . However, service revenue growth
slowed in the last quarter, when compared to the same quarter in the 2007 financial year, in line
with lower average customer growth, which is in turn driven by increased competition in the market,
with five mobile operators now competing for market share.
Middle East, Africa and Asia
Service revenue growth in Middle East, Africa and Asia increased by 81.0%, or 22.3% on an organic
basis, with the acquisition of Vodafone Essar being the main reason for the difference between
reported and organic growth. The growth in organic service revenue was as a result of strong
performances in Egypt, Vodacom and Safaricom, the Groups joint venture in Kenya.
At constant exchange rates, Vodafone Essar has performed well since acquisition, with growth in
revenue of 55% assuming the Group owned the business for the whole of both periods. Since
acquisition, there have been 16.4 million net customer additions, bringing the total customer base
to 44.1 million at 31 March 2008. Penetration in mobile telephony increased following falling
prices of both handsets and tariffs and network coverage increases . The market remains competitive
with prepaid offerings moving to lifetime validity products, which allow the customer to stay
connected to the network without requiring any top ups, following price reductions in the market.
Revenue continues to grow as the customer base increases, particularly in outgoing voice as service
offerings drive
 greater usage.
In Egypt, service revenue growth was 27.1%, or 31.2% at constant exchange rates, benefiting from a
52.7% increase in the average customer base and an increase in voice revenue, with the fall in the
effective rate per minute being offset by a 60.1% increase in usage. The success of recent prepaid
customer offerings, such as the Vodafone Family tariff, contributed to the 45.8% growth in closing
customers compared to the 2007 financial year.
Vodafone Group Plc Annual Report 2008 39




---



##### 



Vodafone  Performance
Operating            Results continued
Vodacoms service revenue increased by 8.6%, or 16.5% at constant exchange rates, which was
achieved largely through average customer growth of 23.1%. The customer base was impacted by a
change in the prepaid disconnection policy, which resulted in 1.45 million disconnections in
September 2007 and a higher ongoing disconnection rate. Vodacoms data revenue growth remained very
strong, driven by a rapid rise in mobile PC connectivity devices.
Pacific
In the Pacific, service revenue increased by 16.9%, or 8.6% at constant exchange rates. Australia
was a key driver of the increase, with service revenue growth of 15.1%, or 7.5% at constant
exchange rates, which was achieved despite the sharp regulatory driven decline in termination rates
during the year. Revenue growth in Australia reflected an 8.0% increase in the average customer
base and the mix of higher value contract customers . New Zealand also saw strong growth in service
revenue, which increased by 20.0%, or by 10.1% at constant exchange rates, driven primarily by a
16.7% increase in the average contract customer base and strong growth in data and fixed line
revenue .
Adjusted operating            profit
Adjusted operating            profit increased            by 15.0% for the year ended 31 March 2008, or 20.9% on an organic basis, due to strong performances            in Romania, Vodacom, Egypt and Verizon Wireless .
The table below sets out the reconciliation            between            reported            and organic growth, showing the effect of acquisitions, disposals            and exchange    
        rate movements            on adjusted            operating            profit:
Impact of            Impact of
exchange            acquisitions
Organic rates            and disposals (1) Reported
growth Percentage            Percentage            growth
% points            points      %
Adjusted            operating            profit
Eastern Europe 21.2 (12.9) 72.1 80.4
Middle East, Africa and Asia 13.3 (4.5) 2.0 10.8
Pacific 4.6 9.2    13.8
EMAPA 20.9 (5.4) (0.5) 15.0
Note:
· Impact of acquisitions and disposals includes the impact of the change in consolidation status of
Bharti Airtel from a joint venture to an investment in February 2007.
The acquisitions in Turkey and India led to a rise in acquired intangible asset amortisation, which
reduced the reported growth in adjusted operating profit, while the continued investment in network
infrastructure in the region resulted in higher depreciation charges . Reported growth in adjusted
operating profit was also impacted by the disposals of B
elgacom Mobile S.A. and Swisscom Mobile
A.G. in the 2007 financial year.
Eastern Europe
Adjusted operating profit increased by 80.4%, or by 21.2% on an organic basis, with the main
contributors being Turkey and Romania . The organic increase in adjusted operating profit was
driven by growth in service revenue, offsetting the impact of the higher cost base, particularly an
organic increase in interconnect costs and operating expenses of 7.5% and 5.7%, respectively .
Depreciation and amortisation increased by 16.0% on an organic basis, primarily due to continued
investment in network infrastructure, as well as network expansion into rural areas and increased
3G capacity to support data offerings in Romania .
Turkey generated strong growth in adjusted operating profit, assuming the Group owned the business
for the whole of both periods, driven by the increase in revenue . The closing customer base grew
by 21.8% following additional investment in customer acquisition activities,
with the new connections in the year driving the higher acquisition costs. Other direct costs were
up, mainly due to ongoing regulatory fees which equate to 15% of revenue . Operating expenses
remained constant as a percentage of service revenue but increased following continued investment
in the brand and network in line with the acquisition plan. There was also a decrease in acquired
intangible asset amortisation, following full amortisation of the acquired brand by March 2007 as a
result of the rebranding to Vodafone .
40 Vodafone Group Plc Annual Report 2008




---



##### 



Romanias adjusted operating profit grew by 31.4%, or 37.7% at constant exchange rates, with
increases in costs being mitigated by service revenue performance . Interconnect costs grew by
24.7%, or 29.4% at constant exchange rates, reflecting the 18.3% rise in the average customer base.
As a percentage of service revenue, acquisition and retention costs increased by 0.7% to 13.3% as a
result of the increased competition for customers . Increases in the number of direct sales and
distribution employees, following the market trend towards direct distribution channels, led to a
6.6% increase in operating expenses, or 11.0% at constant exchange rates, while depreciation
charges rose by 23.0%, or 27.6% at constant exchange rates, due to network development to support
3G data offerings and to increase network coverage in the rural areas.
Middle East, Africa and Asia
Adjusted operating profit rose by 10.8%, or 13.3% on an organic basis, with the acquisition of
Vodafone Essar and strong performances in Egypt and Vodacom being the main factors for the reported
increase . The main organic movements in the cost base were in relation to other direct costs and
operating expenses, which increased by 38.0% and 23.4%, respectively . Depreciation and
amortisation increased by 36.3% on an organic basis, primarily due to enhancements in the network
in Egypt in order to increase capacity and support 3G offerings . In addition, the expansion of the
network in India, where approximately 1,950 base stations have been constructed per month since
acquisition, increased reported depreciation .
The Indian mobile market continued to grow, with penetration reaching
23% by the end of March 2008. Vodafone Essar, which successfully adopted the Vodafone brand in
September 2007, continued to perform well, with adjusted operating profit slightly ahead of the
expectations held at the time of the completion of the acquisition . This was partially due to the
Groups rapid network expansion in this market together with improvements in operating expense
efficiency, particularly in customer care. The outsourcing of the IT function was implemented
during January 2008 and is expected to lead to the faster roll out of more varied services to
customers, while delivering greater cost efficiencies .
In December 2007, the Group announced, alongside Bharti Airtel and Idea Cellular Limited, the
creation of an independent tower company, Indus Towers Limited, to accelerate the expansion of
network infrastructure in India, to reduce overall costs and generate revenue from third party
tenants.
In Egypt, adjusted operating profit increased by 6.3%, or 10.1% at constant exchange rates.
Interconnect costs grew by 41.8%, or 46.2% at constant exchange rates, in line with the growth in
outgoing revenue, with other direct costs rising by 48.1%, or 52.4% at constant exchange rates, due
to prepaid airtime commission increases and 3G licence costs, both of which were offset by the rise
in revenue . Within operating expenses, staff investment programmes, higher publicity costs and
leased line costs increased during the year, although operating expenses remained stable as a
percentage of service revenue .
Vodacoms adjusted operating profit rose by 11.8%, or 19.1% at constant exchange rates. The main
cost drivers were operating expenses, which increased by 10.8%, or 19.2% at constant exchange
rates, and other direct costs which grew by 13.9%, or 22.3% at constant exchange rates, primarily
as a result of increased prepaid airtime commission following the growth of the business . Growth
at constant exchange rates was in excess of reported growth as Vodacoms reported performance in
the 2008 financial year was impacted by the negative effect of exchange rates arising on the
translation of its results into sterling.
Pacific
Adjusted operating profit in the Pacific rose by 13.8%, or 4.6% at constant exchange rates. A
favourable performance
 in Australia was a result of the higher contract customer base, achieved
through expansion of retail distribution, with higher contract revenue offsetting the increase in
customer acquisition costs of 36.8%, or 27.6% at constant exchange rates.
Associates
2008 2007 Verizon Wireless change
Verizon            Verizon
Wireless            Other(1) Total            Wireless            Other(1) Total £ $
£m £m £m £m £m £m      % %
Share of result of associates
Operating            profit 2,771    2,771 2,442 167 2,609 13.5 20.3
Interest (102)    (102) (179) 2 (177) (43.0) (39.3)
Tax (166)    (166) (125) (39) (164) 32.8 41.0
Minority            interest (56)    (56) (61)    (61) (8.2) (1.8)
2,447    2,447 2,077 130 2,207 17.8 24.8
Verizon            Wireless (100% basis)
Total revenue (£m) 22,541 20,860 8.1 14.5
Closing            customers (000) 67,178 60,716
Average            monthly            ARPU ($) 53.9 52.5
Blended            churn 14.7 % 13.9 %
Messaging            and data as a percentage
of service revenue 19.8 % 14.4 %
Note:
· Other associates in 2007 include the results of the Groups associated undertakings in Belgium
and Switzerland until the announcement of their disposal in August 2006 and December 2006,
respectively.
Verizon Wireless increased its closing customer base by 10.6% in the year ended 31 March 2008,
adding 6.5 million net additions to reach a total customer base of 67.2 million. The performance
was particularly robust in the higher value contract segment and was achieved in a market where the
estimated mobile penetration reached 88% at 31 March 2008.
The strong customer growth was achieved through a combination of higher gross additions and Verizon
Wireless strong customer loyalty, with the latter evidenced through continuing low levels of
churn. The 12.3% growth in the average mobile customer base combined with a 2.7% increase in ARPU
resulted in a 15.2% increase in service revenue . ARPU growth was achieved through the continued
success of non-voice services, driven predominantly by data cards, wireless email and messaging
services . Verizon Wireless operating profit was impacted by efficiencies in other direct costs
and operating expenses, partly offset by a higher level of customer acquisition and retention
costs.
During the 2008 financial year, Verizon Wireless consolidated its spectrum position through the
Federal Communications Commissions Auction 73, winning the auction for a nationwide spectrum
footprint plus licences for individual markets for $9.4 billion, which will be fully funded by
debt. This spectrum depth will allow Verizon Wireless to continue to grow revenue, to preserve its
reputation as the nations most reliable wireless network, and to continue to lead in data services
to satisfy the next wave of services and consumer electronics devices.
The Groups share of the tax attributable to Verizon Wireless for the year ended 31 March 2008
relates only to the corporate entities held by the Verizon Wireless partnership . The tax
attributable to the Groups share of the partnerships pre-tax profit is included within the Group
tax charge.
Investme
nts
China Mobile, in which the Group has a 3.21% stake and which is accounted for as an investment,
increased its closing customer base by 24.0% in the year to 392.1 million. Dividends of £72 million
were received by the Group in the 2008 financial year.
Vodafone Group Plc Annual Report 2008 41




---



##### 



Vodafone   Performance
Operating            Results            continued
2007 Financial            Year Compared            to the 2006 Financial            Year
Group
Common            Group            Group
Europe            EMAPA            Functions (2) Eliminations 2007 2006 % change
£m £m £m £m £m £m £ Organic
Voice revenue (1)___
/GUUCIKPI_TGXGPWG___
&CVC_TGXGPWG___
Fixed line            revenue (1)___
1VJGT_UGTXKEG_TGXGPWG___
5GTXKEG_TGXGPWG___
#ESWKUKVKQP_TGXGPWG___
4GVGPVKQP_TGXGPWG___
Other revenue 247 70 168 (12) 473 525
Revenue 24,592 6,441 168 (97) 31,104 29,350 6.0 4.3
+PVGTEQPPGEV_EQUVU___
Other direct costs (1,914) (784) (66) 3 (2,761) (2,096)
#ESWKUKVKQP_EQUVU___
4GVGPVKQP_EQUVU___
Operating            expenses (5,462) (1,472) 206 9 (6,719) (6,166)
#ESWKTGF_KPVCPIKDNGU_COQTVKUCVKQP___
2WTEJCUGF_NKEGPEG_COQTVKUCVKQP___
&GRTGEKCVKQP_CPF_QVJGT_COQTVKUCVKQP___
Share of result in            associates (3)___
#FLWUVGF_QRGTCVKPI_RTQHKV___
Adjustments            for:
Impairment            losses (11,600) (23,515)
Other income and            expense 502 15
Non-operating            income of associates 3 17
Operating            loss (1,564) (14,084)
Non-operating            income and expense 4 (2)
Investment            income 789 353
Financing            costs (1,612) (1,120)
Loss            before taxation (2,383) (14,853)
Income tax expense (2,423) (2,380)
Loss for            the financial            year from continuing            operations (4,806) (17,233)
Loss for the financial            year from discontinued            operations (491) (4,588)
Loss for            the financial            year (5,297) (21,821)
Notes:
(1) Revenue relating to fixed line activities provided by mobile operators, previously classified
within voice revenue, is now presented as fixed line revenue, together with revenue from fixed line
operators and fixed broadband. All prior periods have been adjusted accordingly.
(2) Common functions represents the results
of partner markets and the net result of unallocated
central Group costs and recharges to the Groups operations, including royalty fees for use of the
Vodafone brand.
(3) During the year ended 31 March 2008, the Group changed its organisational structure and the
Groups associated undertaking in France, SFR, is now managed within the Europe region and reported
within Other Europe. The results for all periods are presented in accordance with the new
organisational structure.
Revenue
Revenue increased by 6.0% to £31,104 million in the year to 31 March 2007, with organic growth of
4.3%. The net impact of acquisitions and disposals contributed 3.3 percentage points to revenue
growth, offset by unfavourable movements in exchange rates of 1.6 percentage points, with both
effects arising principally in the EMAPA region.
The Europe region recorded organic revenue growth of 1.4%, while the EMAPA region delivered organic
revenue growth of 21.1%. As a result, the EMAPA region accounted for more than 70% of the organic
growth in Group revenue . Strong performances were recorded in Spain and a number of the Groups
emerging markets .
An increase in the average mobile customer base and usage stimulation initiatives resulted in
organic revenue growth of 2.5% and 7.0% in voice and messaging revenue, respectively . Data revenue
is an increasingly important component of Group revenue, with organic growth of 30.7%, driven by
increasing penetration from 3G devices and growth in revenue from business services .
The Europe region and common functions contributed 79% of Group revenue, of which approximately 63%
was euro denominated, with the remaining 16% being denominated in sterling. The remaining 21% was
generated in the EMAPA region where no single currency was individually significant .
42Vodafone            Group Plc Annual Report 2008




---



##### 



Operating            result
Adjusted operating profit increased by 1.4% to £9,531 million, with organic growth of 4.2%. The net
impact of acquisitions and disposals and unfavourable exchange rate movements reduced reported
growth by 0.3 percentage points and 2.5 percentage points, respectively, with both effects arising
principally in the EMAPA region. The Europe region declined 3.7% on an organic basis, while the
EMAPA region recorded organic growth of 27.4%. Strong performances were delivered in Spain, the US
and a number of emerging markets .
Adjusted operating profit is stated after charges in relation to regulatory fines in Greece of £53
million and restructuring costs within common functions, Vodafone Germany, Vodafone UK and Other
Europe of £79 million. The EMAPA region accounted for all of the Groups reported and organic
growth in adjusted operating profit.
Adjusted operating profit for the 2007 financial year was principally denominated in euro (55%), US
dollar (22%) and sterling (5%), with the remaining 18% being denominated in other currencies .
The acquisitions and stake increases led to the rise in acquired intangible asset amortisation, and
these acquisitions, combined with the continued expansion of network infrastructure in the EMAPA
region, resulted in higher depreciation charges.
The Groups share of results from associates increased by 13.0%, mainly due to Verizon Wireless
which reported record growth in net additions and increased ARPU. The growth in Verizon Wireless
was offset by a reduction in the Groups share of results from its other associated undertakings,
which fell due to the disposals of Belgacom Mobile S.A. and Swisscom Mobile A.G. as well as the
impact of reductions in termination rates and intense competition experienced by SFR in France.
Operating loss was £1,564 million compared with a loss of £14,084 million in the 2006 financial
year following lower impairment charges . In the year ended 31 March 2007, the Group recorded an
impairment charge of £11,600 million (2006: £23,515 million) in relation to the carrying value of
goodwill in the Groups operations in Germany (£6,700 million) and Italy (£4,900 million). The
impairment in Germany resulted from an increase in long term interest rates, which led to higher
discount rates, along with increased price competition and continued regulatory pressures in the
German market. The impairment in Italy resulted from an increase in long term interest rates and
the estimated impact of legislation cancelling the fixed fees for the top up of prepaid cards and
the related competitive response in the Italian market. The increase in interest rates accounted
for £3,700 million of the reduction in value during the 2007 financial year.
Certain of the Groups cost reduction and revenue stimulation initiatives are managed centrally
within common functions . Consequently, operating and capital expenses are incurred centrally and
recharged to the relevant countries, primarily in Europe. This typically results in higher
operating expenses with a corresponding reduction in depreciation for the countries concerned .
Other income and expense for the year ended 31 March 2007 included the gains on disposal of
Belgacom Mobile S.A. and Swisscom Mobile A.G., amounting to £441 million and £68 million,
respectively .
Investment            income            and financing            costs
2007 2006
£m £m
Investment            income 789 353
Financing            costs (1,612) (1,120)
(823) (767)
Analysed            as:
Net financing            costs before dividends            from investments (1) (435) (318)
Potential            interest            charges            arising on settlement            of
outstanding            tax issues (406) (329)
Dividends            from investments 57 41
Foreign exchange (2) (41) -
Changes            in the fair value of equity put rights and
similar arrangements (3) 2 (161)
Net financing            costs (823) (767)
Notes:
(1) Includes a one off gain of £86 million related to the Group renegotiating its investments in
SoftBank.
(2) Comprises foreign exchange differences reflected in the Consolidated Income Statement in
relation to certain intercompany balances and the foreign exchange differences on financial
instruments received as consideration in the disposal of Vodafone Japan to SoftBank, which
completed in April 2006.
(3) Includes the fair value movement in relation to the put rights and similar arrangements held by
minority interest holders in certain of the Groups subsidiaries. The valuation of these financial
liabilities is inherently unpredictable and changes in the fair value could have a material impact
on the future results and financial position of Vodafone. Details of these options can be found on
page 58.
Net financing costs before dividends from investments increased by 36.8% to £435 million as
increased financing costs, reflecting higher average debt and interest rates, and losses on mark to
market adjustments on financial instruments more than offset higher investment income resulting
from new investments in SoftBank, which arose on the sale of Vodafone Japan during the 2007
financial year, including an £86 million gain related to the renegotiation of these investments .
At 31 March 2007, the provision for potential interest charges arising on settlement of outstanding
tax issues was £1,213 million.
Taxation
The effective tax rate, exclusive of impairment losses, was 26.3% (2006: 27.5%), which was lower
than the Groups weighted average tax rate due to the resolution of a number of historic tax issues
with tax authorities and additional tax deductions in Italy. The 2006 financial year benefited from
the tax treatment of a share repurchase in Vodafone Italy and favourable tax settlements .
A significant event in the 2007 financial year was a European Court decision in respect of the UK
CFC legislation, following which Vodafone has not accrued any additional provision in respect of
the application of UK CFC legislation to the Group.
The effective tax rate including impairment losses was (101.7)% compared to (16.0)% for the 2006
financial year. The negative tax rates arose from no tax benefit being recorded for the impairment
losses of £11,600 million (2006: £23,515 million).
Loss per share
Adjusted earnings per share increased by 11.4% from 10.11 pence to 11.26 pence for the year to 31
March 2007. Basic loss per share from continuing operations decreased from 27.66 pence to 8.94
pence for the year ended 31 March 2007.
2007 2006
£m £m
Loss from            continuing            operations
attributable            to equit
y            shareholders (4,932) (17,318)
Adjustments:
Impairment            losses(1) 11,600 23,515
Other income and expense (502) (15)
Share of            associated            undertakings
non-operating            income (3) (17)
Non-operating            income and expense (4) 2
Investment            income and financing            costs(2) 39 161
Tax on the above items 13 -
Adjusted            profit from            continuing
operations            attributable            to
equity shareholders 6,211 6,328
Weighted            average            number            of
shares outstanding
Basic and diluted(3) 55,144 62,607
Notes:
(1) See note 10 to the Consolidated Financial Statements. (2) See note 2 and 3 in investment income
and
financing costs.
(3) In the year ended 31 March 2007, 215 million (2006: 183 million) shares have been excluded from
the calculation of diluted loss per share as they are not dilutive.
Vodafone Group Plc Annual Report 2008 43




---



##### 



Vodafone  Performance
Operating            Results continued
Europe
Germany            Italy            Spain            UK            Arcor            Other       
     Elimination            Europe      % change
£m £m £m £m £m £m £m £m £ Organic
Year ended 31 March 2007
Voice            revenue (1)___
/GUUCIKPI_TGXGPWG___
&CVC_TGXGPWG___
Fixed line revenue (1) 15 22 20 17 1,419 26 (26) 1,493
1VJGT_UGTXKEG_TGXGPWG___
Service            revenue 5,156 4,083 4,062 4,681 1,419 4,018 (432) 22,987 0.1 2.0
Acquisition            revenue 172 124 307 274 22 108 (3) 1,004
4GVGPVKQP_TGXGPWG___
1VJGT_TGXGPWG___
Revenue 5,443 4,245 4,500 5,124 1,441 4,275 (436) 24,592 (0.6) 1.4
Interconnect            costs (645) (628) (675) (1,001) (338) (813) 432 (3,668)
Other direct costs (332) (242) (352) (452) (262) (275) 1 (1,914)
Acquisition            costs (560) (249) (642) (677) (178) (301) 3 (2,604)
4GVGPVKQP_EQUVU___
1RGTCVKPI_GZRGPUGU___
#ESWKTGF_KPVCPIKDNGU_COQTVKUCVKQP___
2WTEJCUGF_NKEGPEG_COQTVKUCVKQP___
___
&GRTGEKCVKQP_CPF_QVJGT_COQTVKUCVKQP___
___
Share of result in associates (2)___
#FLWUVGF_QRGTCVKPI_RTQHKV___
Year            ended 31 March 2006
Voice            revenue (1)___
/GUUCIKPI_TGXGPWG___
&CVC_TGXGPWG___
Fixed line revenue (1) 22 24 17 16 1,305 22 (34) 1,372
Service            revenue 5,394 4,170 3,615 4,568 1,305 4,349 (444) 22,957
#ESWKUKVKQP_TGXGPWG___
4GVGPVKQP_TGXGPWG___
1VJGT_TGXGPWG___
Revenue 5,754 4,363 3,995 5,048 1,320 4,697 (444) 24,733
Interconnect            costs (732) (681) (634) (862) (368) (906) 444 (3,739)
1VJGT_FKTGEV_EQUVU___
___
#ESWKUKVKQP_EQUVU___
___
4GVGPVKQP_EQUVU___
1RGTCVKPI_GZRGPUGU___
#ESWKTGF_KPVCPIKDNGU_COQTVKUCVKQP___
2WTEJCUGF_NKEGPEG_COQTVKUCVKQP___
___
&GRTGEKCVKQP_CPF_QVJGT_COQTVKUCVKQP___
___
Share of result in associates (2)___
#FLWUVGF_QRGTCVKPI_RTQHKV___
Change            at constant            exchange            rates      % % % % % %
Voice            revenue (1)___
/GUUCIKPI_TGXGPWG___
&CVC_TGXGPWG___
Fixed line reve
nue (1) (33.3) (6.9) 17.9 6.3 9.5 19.8
Service            revenue (3.9) (1.5) 13.1 2.5 9.5 (7.2)
Acquisition            revenue (6.4) 32.9 14.7 (3.9) 46.1 (35.7)
4GVGPVKQP_TGXGPWG___
1VJGT_TGXGPWG___
Revenue (4.8) (2.2) 13.3 1.5 9.9 (8.6)
Interconnect            costs (11.4) (7.2) 7.0 16.1 (7.6) (9.7)
Other direct costs 18.9 0.8 7.8 27.3 41.6 1.0
Acquisition            costs 2.2 45.9 19.0 1.8 21.2 (28.6)
4GVGPVKQP_EQUVU___
Operating            expenses 5.1 6.6 14.3 6.9 2.3 (5.5)
#ESWKTGF_KPVCPIKDNGU_COQTVKUCVKQP___
2WTEJCUGF_NKEGPEG_COQTVKUCVKQP___
Depreciation            and other amortisation (14.0) (4.5) 28.9 2.0 6.8 (11.2)
Share of result in associates (2)___
Adjusted            operating            profit (9.0) (5.4) 14.3 (26.8) 24.5 0.5
Notes:
(1) Revenue relating to fixed line activities provided by mobile operators, previously classified
within voice revenue, is now presented as fixed line revenue, together with revenue from fixed line
operators and fixed broadband. All prior periods have been adjusted accordingly.
(2) During the year ended 31 March 2008, the Group changed its organisational structure and the
Groups associated undertaking in France, SFR, is now managed within the Europe region and reported
within Other Europe. The results for all periods are presented in accordance with the new
organisational structure.
44 Vodafone Group Plc Annual Report 2008




---



##### 



Mobile telecommunications            KPIs
Germany            Italy            Spain            UK            Other            Europe
Closing customers ( 000 )    2007 30,818 21,034 14,893 17,411 17,007 101,163
   2006 29,191 18,490 13,521 16,304 15,692 93,198
Closing 3G devices (000)    2007 3,720 3,762 2,890 1,938 2,353 14,663
   2006 2,025 2,250 902 1,033 1,230 7,440
Voice usage (millions            of minutes)    2007 33,473 32,432 30,414 31,736 28,491 156,546
   2006 26,787 29,604 23,835 28,059 27,648 135,933
See page 155 for            definition            of terms
The Europe region, where market penetration exceeds 100%, experienced intense competition from
established mobile operators and new market entrants as well as ongoing regulator imposed rate
reductions on incoming calls. As part of the implementation of the Groups strategy, the 2007
financial years performance saw a strong focus on stimulating additional usage in a way that
enhances value to the customer and revenue, including significant tariff repositioning to maintain
competitiveness in the UK and Germany . On the cost side, the centralisation of global service
platform operations was completed in the 2007 financial year, with good progress made in the
consolidation and harmonisation of the data centres, and a number of new initiatives to reduce the
cost structure were implemented .
Customer growth in the region was strong in most markets, including 21.7% and 16.9% growth in the
closing contract customer base in Spain and Italy, respectively . The UK reported a 7.7% growth in
the closing contract base following a much improved performance in the second half of the 2007
financial year. Contract churn across the region was stable or falling in most markets due to the
continued focus on retention and longer contract terms being offered, while prepaid churn rose due
to intensified competition and customer self-upgrades . Prepaid markets remained vibrant, with
prepaid net additions accounting for around 65% of the total net additions reported for the region.
Within the Europe region, Spain and Arcor contributed
Revenue            growth, partly offset by declines     
       in Germany, Italy and Other Europe. In Spain,
Revenue            decreased        
    slightly by 0.6% for the year ended 31 March 2007, consisting            of            despite the            increasing         
   challenge            in the marketplace
a 1.4% organic increase            in revenue, offset by a 0.5 percentage            point adverse impact            the launch of a fourth operator            and branded            resellers,
from exchange            rate movements            and a 1.5 percentage            point            decrease            resulting          
  of 13.
1% at            constant            exchange            rates was achieved
from the            disposal         
   of the Groups            operations   
         in Sweden in January 2006. The organic       
     to a 14.2% increase            in the            average            mobile customer
revenue            growth was mainly due to the increase            in organic service revenue . successful            promotions            and competitive            tariffs, particularly
customers, which at 31 March 2007 account            for 54.8% of the customer
Service            revenue            growth was 0.1% for the Europe region. Organic growth of 2.0% compared            to 49.6% at 31 March 2006. Arcor also
was driven by a 7.7% increase            in the average            mobile            customer            base, together            with            servi
ce            revenue            compared            to the 2006 financial            year, driven primarily
a 17.0 % increase            in total voice usage and 27.1% reported 
           growth in data revenue, increase      
      in fixed            broadband  
          customers            to 2,081,000
driven by innovative            products      
      and services, successful           
 promotions            and competitive      
      of new            competitive  
          tariffs leading to particularly       
     good growth since
tariffs in the marketplace, although            in turn organic growth was largely offset            Despite high competition            and structural            price declines,
by the downward            pressure      
      on voice pricing and termination           
 rate cuts in certain            in the UK     
       accelerated            throughout 
           the 2007 financial
markets . The estimated            impact of termination            rate cuts and other adjustments            contract            customer            base and increased  
          usage            resulting
on the growth in service revenue            and revenue    
        is shown below. offerings . In Other Europe, reported      
      service            revenue
underlying            service revenue            increased            by 4.8% following
Estimated            average            mobile            customer            base, and particularly            strong growth in messaging
impact of            data revenue            in the Netherlands            and Portugal            where new tariffs and
termination
Mobile            Connect            data card            initiatives            proved            particularly
rate cuts
Impact of            and other            Growth
exchange            Impact of            adjustments (1) excluding            Germany            and Italy reported      
      declines            in service            revenue
Reported            rates            disposal            Organic            on revenue            these            rates of 3.9% and 1.5%, respectively,
 largely as a result of termination
growth            Percentage      
      Percentage            growth 
           growth         
   items            Underlying            service revenue            in Italy grew by 3.6%, with acceleration
% points            points      % % % half of the year due in particular            to increasing            messaging
Service            revenue
achieved            through            new tariffs and offers targeted            to specific segments,
)GTOCP[___the            loss            incurred ___in March 2007 following
___revenue ___
+VCN[___decision            to            eliminate            the top up fee on prepaid cards. In ___Germany,
___
5RCKP___service            revenue            declined ___slightly as a result of the ___
7 -___in Germany ___and the launch of new tariffs in ___October
#TEQT___
Other Europe (7.6) 0.4 7.3 0.1 4.7 4.8
Europe 0.1 0.5 1.4 2.0 3.5 5.5
4GXGPWG___WTQRG___
Note:
(1) Revenue for certain arrangements            is presented net of associated direct costs.
Vodafone Group Plc Annual Report
 2008 45




---



##### 



Vodafone   Performance
Operating            Results continued
Voice revenue
Voice revenue decreased            by 2.6%, or by 0.6% on an organic basis, with strong growth in voice usage offset by pressures            on pricing resulting            from competition            and from termination      
      rate cuts.
Across the Europe region, outgoing voice minutes increased by 20.7%, or by 22.3% on an organic
basis, driven by the increased customer base and various usage stimulation initiatives and
competitive tariff ranges. In Germany, outgoing voice usage increased by 35.7%, with continued
success from the Vodafone Zuhause product, which promotes fixed to mobile substitution in the home
and which achieved 2.4 million registered customers at 31 March 2007. Additionally, new tariffs
were launched in Germany in October 2006, which provided improved value bundles for customers
allowing unlimited calls to other Vodafone customers and fixed line customers, all of which
significantly contributed to increasing outgoing voice usage. In Italy, the increase in outgoing
voice usage of 12.1% was mainly driven by demand stimulation initiatives such as fixed price per
call offers and focus on high value customers and business customers . In Spain, the improved
customer mix and success of both consumer and business offerings assisted in increasing outgoing
voice usage by 34.2%. New and more competitive tariffs launched in the UK in July 2006 and
September 2006 and various promotions specifically aimed at encouraging usage contributed to the
16.7% increase in Vodafone UKs outgoing voice usage.
Offsetting the organic growth in outgoing voice usage was the impact of pricing pressures in all
markets due to increased competition, which led to outgoing voice revenue per minute decreasing by
16.8% in the year ended 31 March 2007.
Termination rate cuts were the main factor in the 7.4% decline in organic incoming voice revenue,
with all markets except the UK experiencing termination rate cuts during the year. Announced
termination rate cuts after 30 September 2006 included a cut of 7% to 11.35 eurocents per minute in
Spain effective from October 2006 and a 20% cut to 8.8 eurocents per minute in Germany effective
from November 2006. The impact of the termination rate cuts in the Europe region was to reduce the
average effective incoming price per minute by around 13% to approximately 7 pence. Further
termination rate cuts of 0.87 eurocents every six months occurred in Spain with effect from April
2007, reducing the rate to 7.0 eurocents by April 2009, while in Italy reductions in July 2007 and
July 2008 of 13% below the retail price index have also been announced .
The success of Vodafone Passport, a competitively priced roaming proposition with over 11 million
customers at 31 March 2007, contributed to increasing the volume of organic roaming minutes by
15.8%. Around 50% of the Groups roaming minutes within Europe were on Vodafone Passport by 31
March 2007. Organic roaming revenue increased by 1.2% as the higher usage was largely offset by
price reductions, due to increasing adoption of Vodafone Passport and also the Groups commitment
to reduce the average cost of roaming in the EU by 40% by April 2007 when compared to summer 2005.
Non-voice revenue
Messaging revenue increased by 3.1%, or by 4.6% on an organic basis, mainly due to growth in Italy,
Other Europe and particularly Spain and the UK, partly offset by declines in Germany . In Spain,
the increase was driven by the larger c
ustomer base, while in the UK, SMS volumes increased by
25.0% following higher usage per customer . The growth in Italy was driven by an increase in SMS
usage of 9.5%, with sharp acceleration in the second half of the 2007 financial year following
successful demand stimulation initiatives . In Germany, messaging volumes declined, resulting from
the attraction of bigger voice bundles and the fact that promotional activity that had occurred
relating to messaging in the 2006 financial year was not repeated in the 2007 financial year.
46 Vodafone Group Plc Annual Report 2008




---



##### 



Data revenue grew by 27.1%, or by 29.5% on an organic basis, with the growth being stimulated by
the 97.1% increase in registered 3G enabled devices on the Groups networks at 31 March 2007,
encouraged by an expanded portfolio and competitively priced offerings . Strong growth was
experienced in all Europes segments, though Germany demonstrated particularly strong growth of 50%
as a result of attractive tariff offerings, including flat rate tariff options, and the benefit of
improved coverage of the HSDPA technology enabled network, facilitating superior download speeds
for data services . Growth in Italy, Spain and the UK was assisted by the expansion of HSDPA
network coverage and increased penetration of Vodafone Mobile Connect data cards, of which 74%, 64%
and 53% were sold during the 2007 financial year as HSDPA enabled devices in each of these markets
respectively . The launch of a modem which provides wireless internet access for personal computers
also made a positive contribution to data revenue . In Other Europe, successful Vodafone Mobile
Connect data cards initiatives in the Netherlands and Portugal were the primary cause of growth in
data revenue .
Fixed line revenue increased            by 8.8%, mainly due to Arcors increased            customer            base.
Adjusted            operating            profit
Adjusted operating profit fell by 4.1%, or by 3.7% on an organic basis, with the disposal of the
Groups operations in Sweden being the main cause of the decline. The growth in operating expenses
and other direct costs, including the charge in relation to a regulatory fine in Greece of £53
million, also had an adverse effect on adjusted operating profit.
Interconnect costs remained stable for the 2007 financial year, once the effect of the disposal of
Sweden was excluded, with the increased outgoing call volumes to other networks offset by the cost
benefit from the impact of the termination rate cuts.
Reported acquisition and retention costs for the region decreased by 2.5%, but remained stable on
an organic basis, when compared to the 2006 financial year. In Spain, the main drivers of the
increased costs were the higher volumes of gross additions and upgrades, especially with regard to
the higher proportion of contract gross additions, which were achieved with higher costs per
customer as competition intensified . In Italy, costs increased slightly due to an increased focus
on acquiring high value contract customers and an increased volume of prepaid customers . In
Germany, retention costs declined as the cost per upgrade was reduced and volumes slightly
decreased . The UK saw a reduction in retention costs resulting from a change in the underlying
commercial model with indirect distribution partners, where a portion of commissions are now
recognised in other direct costs. Acquisition costs in Other Europe decreased, primarily as a
result of lower gross contract additions in Greece and a reduction in cost per gross addition in
the Netherlands .
Other direct costs increased by 14.9%, or by 16.7% on an organic basis, primarily caused by the
regulatory fine in Greece and commissions in the UK discussed above. Arcor saw an increase in
direct access charges primarily as a result of having a higher customer base.
Operating expenses increased by 4.2%, or by 7.4% on an organic basis, primarily caused by increased
intercompany recharges, a result of the centralisation of data centre and service platform
operations, which were offset by a corresponding reduction in depreciation expense, and a 14.3%
increase in Spains operating expenses at constant exchange rates as a result of th
e growth in this
operating company, but which only slightly increased as a percentage of service revenue . Increased
publicity spend in the UK, Italy and Greece, and restructuring costs in Germany, the UK and
Ireland, also adversely affected operating expenses during the 2007 financial year.
As many of the cost reduction initiatives are centralised in common functions, as described
earlier, the Groups target in respect of operating expenses for the total of the Europe region
(excluding Arcor) includes common functions but excludes the developing and delivering of new
services and business restructuring costs. On this basis, these costs grew by 3.5% in the 2007
financial year for the reasons outlined in the preceding paragraph .
Associates
SFR, the Groups associated undertaking in France, achieved an increase of 3.5% in its customer
base, higher voice usage and strong growth in data services . However, service revenue was stable
at constant exchange rates as the impact of these items was offset by a 5.7% decline in ARPU due to
the increase in competition and significant termination rate cuts imposed by the regulator . The
voice termination rate was cut by 24% to 9.5 eurocents per minute with effect from 1 January 2006
and by a further 21% to 7.5 eurocents per minute with effect from 1 January 2007. France is the
first European Union country to impose regulation on SMS termination rates, which were cut by 19%
with effect from 1 January 2006 and a further 30% with effect from mid September 2006 to 3
eurocents per SMS.
Cost reduction initiatives
The Group has set targets in respect of operating expenses and capitalised fixed asset additions .
The operating expense and capitalised fixed asset additions targets relate to the Europe region
(excluding Arcor) and common functions in aggregate . During the 2007 financial year, the
implementation of a range of Group wide initiatives and cost saving programmes commenced, designed
to deliver savings in the 2008 financial year and beyond. The key initiatives were as follows:
·
·
·
·
·
The supply chain management initiative focused on centralising supply chain management activities
and leveraging Vodafones scale in purchasing activities . Through the standardisation of designs
and driving scale strategies in material categories, the Group aimed to increase the proportion of
purchasing performed globally . The alignment of all objectives and targets across the entire
supply chain management was completed during the 2007 financial year. The IT operations initiative
created a shared service organisation to support the business with innovative and customer focused
IT services . This organisation consolidated localised data centres into regionalised northern and
southern European centres and consolidated hardware, software, maintenance and system integration
suppliers to provide high quality IT infrastructure, services and solutions . The Group commenced a
three year business transformation programme to implement a single integrated operating model,
supported by a single enterprise resource planning (ERP) system covering human resources, finance
and supply chain functions . The network team focused on network sharing deals in a number of
operating companies, with the principal objectives of cost saving and faster network rollout. Many
of the Groups operating companies participated in external cost benchmarking studies and used the
results to target local cost reductions . Initiatives implemented in the 2007 financial year
included reductions to planned network rollout, outsourcing and off-shoring of customer services
operations, property rationalisation, replacing leased lines with owned transmission, network site
sharing and renegotiation of supplier contracts and service agreements .
·
The application development and maintenance initiative focused on driving cost and productivity
efficiencies through outsourcing the application development and maintenance for key IT systems .
In Octo
ber 2006, the Group announced that EDS and IBM had been selected to provide application
development and maintenance services to separate groupings of operating companies within the Group.
The initiative was in the execution phase in the 2007 financial year and was progressing ahead of
plan, with a number of operating companies having commenced service with their respective vendors .
Vodafone Group Plc Annual Report 2008 47




---



##### 



Vodafone  Performance
Operating            Results continued
EMAPA
Eastern            Middle East, Associates            Associates
Europe            Africa & Asia            Pacific            US            Other            EMAPA      % change
£m £m £m £m £m £m £ Organic
Year ended 31 March 2007
Voice revenue (1 ) 2,037 2,098 942 5,077
Messaging            revenue 271 142 254 667
Data revenue 70 26 42 138
Fixed line revenue (1) 14 66 7 87
Service            revenue 2,392 2,332 1,245 5,969 42.3 20.4
Acquisition            revenue 53 223 105 381
4GVGPVKQP_TGXGPWG___
Other revenue 13 10 47 70
Revenue 2,477 2,565 1,399 6,441 41.4 21.1
Interconnect            costs (433 ) (364 ) (248 ) (1,045 )
Other direct costs (314 ) (246 ) (224 ) (784 )
Acquisition            costs (219 ) (291 ) (167 ) (677 )
Retention            costs (78 ) (84 ) (50 ) (212 )
Operating            expenses (614 ) (509 ) (349 ) (1,472 )
Acquired            intangibles            amortisation (285 ) (105 ) (2 ) (392 )
Purchased            licence amortisation (19 ) (17 ) (7 ) (43 )
Depreciation            and other amortisation (331 ) (255 ) (193 ) (779 )
Share of result in associates (2)___
Adjusted            operating            profit 184 694 159 2,077 130 3,244 17.4 27.4
Year            ended 31 March 2006
Voice revenue (1) 1,176 1,503 957 3,636
Messaging            revenue 146 91 217 454
Data revenue 36 12 38 86
Fixed line revenue (1) ___
Service            revenue 1,358 1,625 1,212 4,195
Acquisition            revenue 54 147 76 277
4GVGPVKQP_TGXGPWG___
Other revenue 10 12 46 68
Total revenue 1,435 1,784 1,335 4,554
Interconnect            costs (296) (251) (247) (794)
Other direct costs (77) (159) (206) (442)
Acquisition            costs (148) (198) (121) (467)
Retention            costs (51) (48) (40) (139)
Operating            expenses (335) (359) (359) (1,053)
Acquired            intangibles            amortisation (121) (33) (1) (155)
Purchased      
      licence amortisation (13) (34) (16) (63)
Depreciation            and other amortisation (218) (179) (205) (602)
Share of result in associates (2)___
Adjusted            operating            profit 176 523 140 1,732 192 2,763
Change            at constant            exchange            rates      % % % % %
Voice revenue (1) 79.0 56.8 5.3
Messaging            revenue 88.7 74.8 25.4
Data revenue 100.1 142.6 17.2
Fixed line revenue (1)    286.0 -
Service            revenue 81.7 61.2 10.0
Acquisition            revenue 1.4 78.0 43.0
Retention            revenue 50.0    217.5
Other revenue 15.4 (7.8) 12.8
Revenue 78.0 62.1 12.1
Interconnect            costs 49.8 62.3 7.1
Other direct costs 316.4 73.2 15.8
Acquisition            costs 53.9 70.8 45.0
Retention            costs 59.3 106.7 31.1
Operating            expenses 88.4 61.0 3.4
Acquired            intangibles            amortisation 135.5 222.2 78.6
Purchased            licence amortisation 48.0 (47.1) (49.8)
Depreciation            and other amortisation 55.9 56.1 1.6
Share of result in associates (2)          27.6 (31.2)
Adjusted            operating            profit 12.1 49.8 25.4 27.6 (31.2)
Notes:
(1) Revenue relating to fixed line activities provided by mobile operators, previously classified
within voice revenue, is now presented as fixed line revenue, together with revenue from fixed line
operators and fixed broadband. All prior periods have been adjusted accordingly.
(2) During the year ended 31 March 2008, the Group changed its organisational structure and the
Groups associated undertaking in France, SFR, is now managed within the Europe region and reported
within Other Europe. The results for all periods are presented in accordance with the new
organisational structure.
48 Vodafone Group Plc Annual Report 2008




---



##### 



Mobile telecommunications            KPIs
2007 2006
Eastern            Middle East, Eastern            Middle East,
Europe            Africa & Asia            Pacific            EMAPA            Europe            Africa & Asia         
   Pacific            EMAPA
Closing customers (000) 28,975 27,160 5,750 61,885 12,579 21,884 5,346 39,809
Closing 3G devices (000) 347 65 758 1,170 ___416
Voice usage (millions            of minutes) 39,658 37,449 11,371 88,478 13,302 18,300 9,811 41,413
See page 155 for            definition            of terms
A part of Vodafones strategy is to build on the Groups track record of creating value in emerging
markets . Vodafone continued to execute on this strategy, with strong performances in the Czech
Republic, Egypt, Romania and South Africa.
The Group continued to successfully build its emerging markets portfolio through acquisitions in
Turkey and, subsequent to 31 March 2007, India. Since its acquisition on 24 May 2006, Vodafone
Turkey has shown a performance in excess of the acquisition plan.
In December 2006, the Group increased its equity interest in Vodafone Egypt from 50.1% to 54.9%,
positioning the Group to capture further growth in this lower penetrated market. The Group also
entered into a new strategic partnership with Telecom Egypt, the minority shareholder in Vodafone
Egypt, to increase cooperation between both parties and jointly develop a range of products and
services for the Egyptian market.
EMAPAs growth has benefited from the 2006 financial year acquisitions in the Czech Republic and
the stake in Bharti Airtel in India, as well as the stake increases in Romania and South Africa and
the 2007 financial year acquisition in Turkey. Bharti Airtel was accounted for as a joint venture
until 11 February 2007, following which the Groups interest has been accounted for as an
investment .
Revenue
Revenue            increased            by 41.4%, or 21.1% on an organic basis, driven by organic service revenue growth of 20.4%. The impact of acquisitions, disposal and exchange            rates on service revenue and revenue growth is shown below.
Organic service revenue growth in Eastern Europe was principally driven by Romania . As a result of
the growth in the customer base and a promotional offer of lower tariffs, which led to higher voice
usage, constant currency service revenue in Romania grew by 29.4%, calculated by applying the
Groups equity interest at 31 March 2007 to the whole of the 2006 financial year. The continued
expansion of 3G network coverage, the successful launch of 3G broadband, together with introductory
promotional offers, and increased sales of Vodafone Mobile Connect data cards, resulted in data
revenue growth of 66.7% at constant exchange rates.
In the Czech Republic, a focus on existing customers, including a Christmas campaign of free
weekend text messages available to all existing as well as new customers, and the success of a

business offering allowing unlimited on and off net calls within a customers virtual private
network for a fixed monthly fee, had a positive impact on gross additions and drove the increase in
average mobile customers . This led to growth of 11.1% in service revenue at constant exchange
rates, calculated by applying the Groups equity interest at 31 March 2007 to the whole of the 2006
financial year.
Vodafone Turkey performed ahead of the expectations the Group had at the time of the completion of
the acquisition, with customer numbers, usage and adjusted operating profit ahead of plan.
Improvements in network reliability and coverage have contributed to strong customer growth and
allowed an increase in prepaid tariffs, resulting in service revenue growth. Telsim was rebranded
to Vodafone in March 2007, with the launch of a new tariff with inclusive on and off net calls, a
first for the Turkish market.
Middle            East, Africa            and Asia
Impact of            Impact of            The service revenue            growth of 43.5% in the Middle East, Africa and Asia resulted
exchange            acquisitions
primarily            from the stake increases            in South Africa in February 2006 and Egypt in
Organic            rates            and disposal(1) Reported
growth            Percentage            Percentage            growth            December 2006, together            with the acquisition            
of the Groups interest in Bharti
% points            points      % Airtel in India in December 2005, offset by an adverse movement            in            exchange
Service            revenue            rates. Strong organic growth was            achieved            in all markets, particularly            in Egypt
Eastern Europe 20.0 (5.6) 61.7 76.1 and South Africa, driven by the 40.2% increase            in the average            mobile            customer
Middle East, Africa and Asia 27.7 (17.7) 33.5 43.5 base compared            to the 2006 financial            year.
2CEKHKE___
EMAPA 20.4 (10.9) 32.8 42.3 Strong            customer            growth, driven by
 prepaid tariff reductions, the availability            of
lower cost handsets            and high customer            satisfaction            with the            Vodafone            service,
4GXGPWG___/#2#___contributed            to the 39.5% ___constant            currency ___service revenue            growth in Egypt.
Note:
· Impact of acquisitions and disposal includes the impact of the change in consolidation status of
Bharti Airtel from a joint venture to an investment.
Organic service revenue growth was driven by the 30.2% organic increase in the average mobile
customer base and the success of usage stimulation initiatives, partially offset by declining ARPU
in a number of markets due to the higher proportion of lower usage prepaid customer additions .
Particularly            strong customer            growth was achieved in Eastern Europe and the Middle East, Africa and Asia, where markets are typically less penetrated            than in Western Europe or the Pacific area.
Non-service revenue increased            by 31.5%, or 28.9% on an organic basis, primarily due to an increase in the level of gross additions            in a number of countries
Eastern            Europe
In Eastern Europe, service revenue grew by 76.1%, with the key driver of growth being the
acquisitions in the Czech Republic and Turkey, as well as the stake increase in Romania . Good
customer growth in all Eastern European markets contributed to the organic service revenue growth.
Innovative new products and services, including a new hybrid tariff offering guaranteed airtime
credit every month with the ability to top up as required, and successful promotions, led to an
increase in the average mobile customer base and 21.6% constant currency organic service revenue
growth in South Africa, while the continued rollout of the 3G network led to strong growth in data
revenue .
Bharti Airtel continued to perform well with strong growth in customers and revenue, demonstrating
the growth potential in the Indian market.
Pacific
Service revenue increased by 2.7%, with the impact of adverse foreign exchange movements reducing
reported growth by 7.3 percentage points. In Australia, a continued focus on higher value customers
delivered constant currency service revenue growth of 13.7%, with improvements in both prepaid and
contract ARPU. The performance in Australia more than offset the reduced growth in constant
currency service revenue in New Zealand, where constant currency service revenue growth was 2.7%
following a cut in termination rates, which reduced reported service revenue growth by 4.1%. After
the negative impact of foreign exchange movements, reported service revenue in New Zealand declined
by 7.9%.
Vodafone Group Plc Annual Report 2008 49




---



##### 



Vodafone  Performance
Operating            Results continued
Adjusted            operating            profit            Associates
The impact of acquisitions, disposal            and            exchange            rates on            adjusted            operating 2007 % change
profit is shown below. Verizon            Verizon
Wireless            Other            Total            Wireless
Share of result of associates £m £m £m £ $
Impact of            Impact of
exchange            acquisitions            Operating            profit 2,442 167 2,609 15.6 22.9
Organic            rates            and disposal(1) Reported            Interest (179) 2 (177) (12.3) (7.0)
growth            Percentage            Percentage            growth            Tax (125) (39) (164) 7.8 14.6
% points            points      % Minority            interest (61)    (61) 1.7 6.7
Adjusted            operating            profit 2,077 130 2,207 19.9 27.6
Eastern Europe 49.2 (7.6) (37.1) 4.5
Middle East, Africa and Asia 18.5 (16.9) 31.1 32.7 2006
Pacific 25.4 (11.8)    13.6 Verizon
EMAPA 27.4 (8.7) (1.3) 17.4 Wireless            Other            Total
Share of result of associates £m £m £m
Note: Operating            profit 2,112 263 2,375
(1) Impact of acquisitions            and disposal includes the impact of the change in consolidation            status            Interest (204) 1 (203)
of Bharti Airtel from a joint venture to an investment . Tax (116) (72) (188)
Minority            interest (60)    (60)
Adjusted            operating       
     profit increased            by 17.4%. On an organic basis, growth was 27.4%, 1,732 192 1,
924
as the            acquisitions            and stake            increases            led to the rise in acquired            intangible          
  asset
amortisation            reducing            reported            growth in operating            profit. These acquisitions, % change
combined            with the continued            expansion            of network            infrastructure            in the region, Verizon Wireless (100% basis) 2007 2006 £ $
including 3G and HSDPA upgrades, resulted            in higher depreciation            charges . Total revenue (£m) 20,860 18,875 10.5 17.4
Organic growth in            adjusted            operating            profit was driven by a strong performance            Closing            customers ( 000 ) 60,716 53,020
in Romania, Egypt, South Africa and the Groups            associated            undertaking            in the US. Average            monthly            ARPU ($) 52.5 51.4
Blended            churn 13.9 % 14.7 %
Eastern            Europe            Mobile non-voice service
Interconnect            costs increased            by 46.3%, or 23.8% on an organic basis, principally            revenue            as a percentage            of
as a result of the higher usage in Romania . An            ongoing            regulatory            fee in Turkey            mobile service revenue 14.4 % 8.9 %
amounting            to 15% of revenue            increased            other direct costs            compared            to the 2006
financial            year. Verizon            Wireless            produced            another year of record growth in organic net            additions,
increasing            its customer            base by 7.7 million in the year ended 31 March 2007.
Acquisition            costs fell as a percentage            of service            revenue            throughout            most of           
 The perfo
rmance            was            particularly            robust in the higher value contract            segment
Eastern Europe, with increased            investment    
        in the direct distribution           
 channel            in         
   and was            achieved      
      in a market where the estimated            closing mobile penetration
Romania            resulting         
   in lower            subsidies     
       on            handsets . Retention            costs decreased            as            reached 80%.
a percentage            of service revenue, but increased            on an organic basis due to a focus
on retaining            customers            through            loyalty            programmes            in response            to the   
         increasing            The strong customer            growth was            achieved through            a combination            of higher gross
competition            in Romania, which had a positive impact on contract            and prepaid churn. additions            and improvements            in Verizon Wireless customer            loyalty, wit
h the latter
evidenced            through            lower levels of churn. The 15.4% growth in the average            mobile
Operating            expenses            increased            by 1.0 percentage            point as a percentage            of service            c
ustomer            base combined            with a 2.1% increase            in ARPU resulted            in a 17.8%
revenue, primarily            as a result of inflationary            pressures            in Romania            and investment            increase           
 in service            revenue . ARPU growth was            achieved            through            the            continued
in Turkey. success of data services, driven            predominantly            by data cards, wireless            email and
messaging            services . Verizon Wireless operating            profit also improved            due to
Middle            East, Africa and            Asia            efficiencies            in other direct costs and operating            expenses, partly offset by a higher
Interconnect            costs increased            by 45.0%, or 26.8% on an organic basis, due to the            level of            customer            acquisition        
    and            retention            activity.
usage            stimulation            initiatives            throughout            the region.
Acquisition costs remained stable as a percentage of service revenue, while retention costs
increased, principally due to increased investment in retaining customers in Egypt ahead of the
launch of services by a new operator after 31 March 2007 and in South Africa in response to the
introduction of mobile number portability during the 2007 financial year, with the provision of 3G
and data enabled device upgrades for contract customers and a loyalty point scheme . Operating
expenses remained stable as a percentage of service revenue .
Pacific
The improved profitability in Australia was more than offset by the lower profitability in New
Zealand resulting from the increased cost of telecommunications service obligation regulation, the
impact of the acquisition of ihug and adverse foreign exchange rates.
Acquisition and retention costs increased as a percentage of service revenue due to the investment
in higher value customers in Australia, which also had a favourable impact on contract churn and
were partially offset by savings in network costs and operating expenses .
Verizon Wireless continued to lay the foundations for future data revenue growth through the launch
of both CDMA EV-DO Rev A, an enhanced wireless broadband service, and broadcast mobile TV services
during the first calendar quarter of 2007. In addition, Verizon Wireless consolidated its spectrum
position during the year with the acquisition of spectrum through the Federal Communications
Commissions Advanced Wireless Services auction for $2.8 billion.
The Groups share of the tax attributable to Verizon Wireless for the year ended 31 March 2007
relates only to the corporate entities held by the Verizon Wireless partnership . The tax
attributable to the Groups share of the partnerships pre-tax profit is included within the Group
tax charge.
The Groups other associated undertakings in EMAPA have been impacted by intense competition and
reduction in termination rates, similar to the experiences of the Groups controlled businesses in
the Europe region, which have had a negative impact on revenue . The Group disposed of its
associated undertakings in Belgium and Switzerland on 3 November 2006 and 20 December 2006,
respectively, for a total cash consideration of £3.1 billion. Results are included until the
respective dates of the announcement of disposal .
50 Vodafone Group Plc Annual Report 2008




---



##### 



Outlook 2009 financial year Free cash flow is expected to be in the range of £5.1 billion to £5.6 billion,
excluding spectrum and licence payments. This is after taking into
account £0.3 billion from Adjusted Capitalised operating fixed asset Free payments for capital expenditure deferred from
the 2008 financial year. Revenue profit additions cash flow £bn £bn £bn £bn The Group will invest £0.2 billion in Qatar in respect of the second mobile
licence 2008 performance 35.5 10.1 5.1 5.5(1) won in December 2007. During the 2009
financial year, Vodafone Qatar is expected 2009 outlook(2)(3) 39.8 to 40.7 11.0 to 11.5
5.3 to 5.8 5.1 to 5.6(4) to pay £1.0 billion for the licence with the balance of the
funding being provided by the other shareholders in Vodafone Qatar. Notes:
(1) The amount for the 2008 financial year includes £0.4 billion benefit from deferred payments for
capital expenditure but is stated after £0.7 billion of tax payments, including associated The
Group continues to make significant cash payments for tax and associated interest, in respect of a
number of long standing tax issues. interest in respect of long
standing tax issues. The Group does not expect
(2) Includes assumption of average foreign exchange rates for the 2009 financial year of resolution
of the application of the UK Controlled Foreign Company legislation
approximately £1:  1.30 (2008: 1.42) and £1:US$1.96 (2008: 2.01). A substantial majority of the Groups revenue, adjusted
operating profit, capitalised fixed asset additions and free to the Group in the near term. cash
flow is denominated in currencies other than sterling, the
Groups reporting currency. A 1% change in the euro to sterling exchange rate would impact revenue by approximately The
adjusted effective tax rate percentage is expected to be in the high
20s for £250 million and adjusted operating profit by approximately £70 million. the 2009 financial year,
with the Group targeting the high 20s in the medium term. (3) The outlook does not include the impact of a change in the Groups effective interest in Neuf
Cegetel or any impact from Verizon Wireless potential acquisition of Alltel Corp. (4) Excludes
spectrum and licence payments, but includes estimated payments in respect of long standing tax
issues. 2008 financial year The outlook ranges reflect the Groups assumptions for average foreign exchange Capitalised rates
for the 2009 financial year. In respect of the euro to sterling exchange rate, Adjusted fixed this
represents an approximate 10% change to the 2008 financial year, resulting operating asset Free in
favourable year on year increases in revenue, adjusted operating profit and free Revenue profit
additions cash flow(1) cash flow and adverse changes in capitalised fixed asset
additions. £bn £bn £bn £bn Outlook  May 2007(2) 33.3
to 34.1 9.3 to 9.9 4.7 to 5.1 4.0 to 4.5 Operating conditions are expected to continue to be challenging in Europe given Outlook  November
2007(3) 34.5 to 35.1 9.5 to 9.9 4.7 to 5.1 4.4 to 4.9 the current economic environment
and ongoing pricing and regulatory pressures Foreign exchange(4) 0.7 0.1 0.1 0.1 but
with continued positive trends in messaging and data revenue and voice Adjusted
outlook(5) 35.2 to 35.8 9.6 to 10.0 4.8 to 5.2 4.5 to 5.0 usage growth. Increasing
market penetration is expected to continue to result 2008 performance 35.5 10.1 5.1 5.5 in overall
strong growth for the EMAPA region. The Group considers that its Notes: geographically diverse
portfolio should provide some resilience in the current (1) The amount for the 2008 financial year
includes £0.4 billion benefit from deferred payments economic environment. for capital expenditure
but is stated after £0.7 billion of tax payments, including associated interest, in respect of a
number of long standing tax issues. (2) The Groups outlook from May 2007
reflected expectations for average foreign exchange Revenue is expected to be in the range of £39.8 billion to £40.7 billion. The Group rates for the
2008 financial year of approximately £1:  1.47 and £1:US$1.98. continues to drive revenue growth,
particularly in respect of its total communications (3) The Groups outlook, as updated in November
2007, reflected improvements in operational strategy for data and fixed broadband services and in
emerging markets. Revenue performance, the impact of the Tele2 acquisition and updated expectations
for average includes the first full year post acquisition of Vodafone Essar in India and the Tele2
foreign exchange rates for the 2008 financial year of approximately
£1:  1.45 and £1:US$2.04. (4) These amounts represent the difference between the forecast exchange rates used in the businesses
in Italy and Spain. November 2007 update and rates used to translate actual results including
£1:  1.42 and £1:US$2.01. Adjusted operating profit is expected to be in the range of £11.0 billion to (5) Outlook from
November 2007 adjusted solely for exchange rate differences as discussed in note 4 above. £11.5 billion. The Group margin is expected to decline
by a similar amount as in the 2008 financial year but with a greater impact from lower margin fixed broadband services. Verizon Wireless, the Groups US
associate, is expected to continue to perform strongly. Total depreciation and amortisation charges are anticipated to be around £6.5 billion to £6.6 billion,
higher than the 2008 financial year, primarily as a result of the ongoing investment in capital expenditure in India and the impact of changes in
foreign exchange rates. The Group expects capitalised fixed asset additions to be in the range of £5.3 billion to £5.8 billion, including an increase in
investment in India. Capitalised fixed asset additions are anticipated to be around 10% of
revenue for the total of the Europe region and common functions, with
continued investment in growth. Vodafone Group Plc Annual Report 2008 51




---



##### 



Vodafone  Performance
Principal            Risk Factors and Uncertainties
Regulatory            decisions            and changes            in the regulatory            environment            could adversely            affect
the Groups business .
Because the Group has ventures in a large number of geographic areas, it must comply with an
extensive range of requirements that regulate and supervise the licensing, construction and
operation of its telecommunications networks and services . In particular, there are agencies which
regulate and supervise the allocation of frequency spectrum and which monitor and enforce
regulation and competition laws which apply to the mobile telecommunications industry . Decisions
by regulators regarding the granting, amendment or renewal of licences, to the Group or to third
parties, could adversely affect the Groups future operations in these geographic areas. The Group
cannot provide any assurances that governments in the countries in which it operates will not issue
telecommunications licences to new operators whose services will compete with it. In addition,
other changes in the regulatory environment concerning the use of mobile phones may lead to a
reduction in the usage of mobile phones or otherwise adversely affect the Group. Additionally,
decisions by regulators and new legislation, such as those relating to international roaming
charges and call termination rates, could affect the pricing for, or adversely affect the revenue
from, the services the Group offers. Further details on the regulatory framework in certain
countries and regions in which the Group operates, and on regulatory proceedings can be found in
Regulation on page 147.
Increased competition may reduce market share or revenue .
The Group faces intensifying competition . Competition could lead to a reduction in the rate at
which the Group adds new customers and to a decrease in the size of the Groups market share as
customers choose to receive telecommunications services, or other competing services, from other
providers . Examples include, but are not limited to, competition from internet based services and
MVNOs.
The focus of competition in many of the Groups markets continues to shift from customer
acquisition to customer retention as the market for mobile telecommunications has become
increasingly penetrated . Customer deactivations are measured by the Groups churn rate. There can
be no assurance that the Group will not experience increases in churn rates, particularly as
competition intensifies . An increase in churn rates could adversely affect profitability because
the Group would experience lower revenue and additional selling costs to replace customers .
Increased competition has also led to declines in the prices the Group charges for its mobile
services and is expected to lead to further price declines in the future. Competition could also
lead to an increase in the level at which the Group must provide subsidies for handsets .
Additionally, the Group could face increased competition should there be an award of additional
licences in jurisdictions in which a member of the Group already has a licence.
Delays in the development of handsets and network compatibility and components may hinder the
deployment of new technologies .
The Groups operations depend in part upon the successful deployment of continuously evolving
telecommunications technologies . The Group uses technologies from a number of vendors and makes
significant capital expe
nditures in connection with the deployment of such technologies . There can
be no assurance that common standards and specifications will be achieved, that there will be
inter-operability across Group and other networks, that technologies will be developed according to
anticipated schedules, that they will perform according to expectations or that they will achieve
commercial acceptance . The introduction of software and other network components may also be
delayed . The failure of vendor performance or technology performance to meet the Groups
expectations or the failure of a technology to achieve commercial acceptance could result in
additional capital expenditures by the Group or a reduction in profitability .
52Vodafone            Group Plc Annual Report 2008
Expected            benefits            from cost reduction            initiatives            may not be realised .
The Group has entered into several cost reduction initiatives principally relating to the
outsourcing of IT application development and maintenance, data centre consolidation, supply chain
management and a business transformation programme to implement a single, integrated operating
model using one ERP system. However, there is no assurance that the full extent of the anticipated
benefits will be realised.
Changes in assumptions underlying the carrying value of certain Group assets could result in
impairment .
Vodafone completes a review of the carrying value of its assets annually, or more frequently where
the circumstances require, to assess whether those carrying values can be supported by the net
present value of future cash flows derived from such assets. This review examines the continued
appropriateness of the assumptions in respect of highly uncertain matters upon which the carrying
values of certain of the Groups assets are based. This includes an assessment of discount rates
and long term growth rates, future technological developments and timing and quantum of future
capital expenditure, as well as several factors which may affect revenue and profitability
identified within other risk factors in this section such as intensifying competition, pricing
pressures, regulatory changes and the timing for introducing new products or services . Due to the
Groups substantial carrying value of goodwill under IFRS, the revision of any of these assumptions
to reflect current or anticipated changes in operations or the financial condition of the Group
could lead to an impairment in the carrying value of certain assets in the Group. 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 impairments would not affect the
Companys reported distributable reserves and therefore its ability to make distributions to its
shareholders or repurchase its shares. See Critical Accounting Estimates on page 85.
The Groups geographic expansion may increase exposure to unpredictable economic, political and
legal risks.
Political, economic and legal systems in emerging markets historically are less predictable than in
countries with more developed institutional structures . As the Group increasingly enters into
emerging markets, the value of the Groups investments may be adversely affected by political,
economic and legal developments which are beyond the Groups control.
Expected benefits from acquisitions may not be realised .
The Group has made significant acquisitions, which are expected to deliver benefits resulting from
the anticipated growth potential of the relevant markets . However, there is no assurance as to the
successful integration of companies ac
quired by the Group or the extent to which the anticipated
benefits resulting from the acquisitions will be achieved .
The Companys strategic objectives may be impeded by the fact that it does not have a controlling
interest in some of its ventures .




---



##### 



Some of the Groups interests in mobile licences are held through entities in which it is a
significant but not controlling owner. Under the governing documents for some of these partnerships
and corporations, certain key matters such as the approval of business plans and decisions as to
the timing and amount of cash distributions require the consent of the partners . In others, these
matters may be approved without the Companys consent . The Company may enter into similar
arrangements as it participates in ventures formed to pursue additional opportunities . Although
the Group has not been materially constrained by the nature of its mobile ownership interests, no
assurance can be given that its partners will not exercise their power of veto or their controlling
influence in any of the Groups ventures in a way that will hinder the Groups corporate objectives
and reduce any anticipated cost savings or revenue enhancement resulting from these ventures .
Expected benefits from investment in networks, licences and new technology may not be realised .
The Group has made substantial investments in the acquisition of licences and in its mobile
networks, including the roll out of 3G networks . The Group expects to continue to make significant
investments in its mobile networks due to increased usage and the need to offer new services and
greater functionality afforded by new or evolving telecommunications technologies . Accordingly,
the rate of the Groups capital expenditures in future years could remain high or exceed that which
it has experienced to date.
There can be no assurance that the introduction of new services will proceed according to
anticipated schedules or that the level of demand for new services will justify the cost of setting
up and providing new services . Failure or a delay in the completion of networks and the launch of
new services, or increases in the associated costs, could have a material adverse effect on the
Groups operations .
The Group may experience a decline in revenue or profitability notwithstanding its efforts to
increase revenue from the introduction of new services .
As part of its strategy, the Group will continue to offer new services to its existing customers
and seek to increase non-voice service revenue as a percentage of total service revenue . However,
the Group may not be able to introduce these new services commercially, or may experience
significant delays due to problems such as the availability of new mobile handsets, higher than
anticipated prices of new handsets or availability of new content services . In addition, even if
these services are introduced in accordance with expected time schedules, there is no assurance
that revenue from such services will increase ARPU or maintain profit margins .
The Groups business and its ability to retain customers and attract new customers may be impaired
by actual or perceived health risks associated with the transmission of radio waves from mobile
telephones, transmitters and associated equipment .
Concerns have been expressed in some countries where the Group operates that the electromagnetic
signals emitted by mobile telephone handsets and base stations may pose health risks at exposure
levels below existing guideline levels and may interfere with the operation of electronic equipment
        . In addition, as described under the heading Legal proceedings in note 32 to the Consolidated
Financial Statements, several mobile industry participants, including the Company and Verizon
Wireless, have had lawsuits filed against them alleging various health consequences as a result of
mobile phone usage, including brain cancer. While the Company is not aware that such health risks
have been substantiated, there can be no assurance that the actual, or perceived, risks associated
with radio wave transmission will not impair its ability to retain custo
mers and attract new
customers, reduce mobile telecommunications usage or result in further litigation . In such event,
because of the Groups strategic focus on mobile telecommunications, its business and results of
operations may be more adversely affected than those of other companies in the telecommunications
sector.
The Groups business would be adversely affected by the non-supply of equipment and support
services by a major supplier .
Companies within the Group source network infrastructure and other equipment, as well as network
-related and other significant support services, from third party suppliers . The withdrawal or
removal from the market of one or more of these major third party suppliers would adversely affect
the Groups operations and could result in additional capital or operational expenditures by the
Group.
Vodafone Group Plc Annual Report 2008 53




---



##### 



Vodafone  Performance
Financial            Position            and Resources
Consolidated            Balance            Sheet
2008 2007
£m £m
Non-current            assets
Intangible            assets 70,331 56,272
Property, plant and equipment 16,735 13,444
Investments            in associated            undertakings 22,545 20,227
Other non-current assets 8,935 6,861
118,546 96,804
Current            assets 8,724 12,813
Total            assets 127,270 109,617
Total equity shareholders            funds 78,043 67,067
Total minority            interests (1,572) 226
Total            equity 76,471 67,293
Liabilities
Borrowings
Long term 22,662 17,798
Short term 4,532 4,817
Taxation            liabilities
Deferred            tax liabilities 5,109 4,626
Current taxation            liabilities 5,123 5,088
Other non-current            liabilities 1,055 954
Other current liabilities (2) 12,318 9,041
50,799 42,324
Total            equity and            liabilities 127,270 109,617
Non-current            assets
Intangible            assets
At 31 March 2008, the Groups intangible assets were £70.3 billion, with goodwill comprising the
largest element at £51.3 billion (2007: £40.6 billion). The increase in intangible assets was
primarily as a result of £7.9 billion of favourable exchange rate movements and £7.6 billion
arising on the acquisitions of Vodafone Essar and Tele2, partially offset by amortisation of £2.5
billion. Refer to note 28 to the Consolidated Financial Statements for further information on the
business acquisitions .
Property, plant and equipment
Property, plant and equipment increased from £13.4 billion at 31 March 2007 to £16.7 billion at 31
March 2008, predominantly as a result of £4.1 billion of additions, a £1.2 billion increase due to
acquisitions during the year and £1.6 billion of favourable foreign exchange movements, which more
than offset the £3.4 billion of depreciation charges and £0.1 billion reduction due to disposals .
Investments in associated undertakings
The Groups investments in associated undertakings increased from £20.2 billion at 31 March 2007 to
£22.5 billion at 31 March 2008, as a result of a £2.9 billion increase from the Groups share of
the results of its associates, after the deductions of interest, tax and minority interest, mainly
arising from the Groups investment in Verizon Wireless and favourable foreign exchange movements
of £0.3 billion, partially offset by £0.9 billion of dividends received .
Other non-current assets
Other non-current assets mainly relates to other investments held by the G
roup, which totalled £7.4
billion at 31 March 2008 compared to £5.9 billion at 31 March 2007. The movement primarily
represents an increase of £1.8 billion in the investment in China Mobile as a result of the
increase in the listed share price, partially offset by the disposal of the Groups 5.60% stake in
Bharti Airtel.
54Vodafone            Group Plc Annual Report 2008




---



##### 



Current            assets
Current assets decreased            to £8.7 billion at 31 March 2008 from £12.8 billion at 31 March 2007, mainly as a result of decreased            cash holdings            following            the
completion            of the Vodafone            Essar acquisition .
Total equity            shareholders funds
Total equity shareholders funds increased from £67.1 billion at 31 March 2007 to £78.0 billion at
31 March 2008. The increase comprises primarily of the profit for the year of £6.8 billion less
equity dividends of £3.7 billion, a £5.8 billion benefit from the impact of favourable exchange
rate movements and the unrealised holding gains on other investments discussed above.
Borrowings
Long term borrowings and short term borrowings increased to £27.2 billion at 31 March 2008 from
£22.6 billion at 31 March 2007, mainly as a result of foreign exchange movements and written put
option liabilities assumed on the completion of the Vodafone Essar acquisition .
Taxation liabilities
The deferred tax liability increased            from £4.6 billion at 31 March 2007 to
£5.1 billion at 31 March 2008, which arose mainly from £0.5 billion in relation to the acquisition            of Vodafone            Essar.
Other current            liabilities
The increase in other current liabilities from £9.0 billion to £12.3 billion is primarily to due
foreign exchange differences arising on translation and other current liabilities in the newly
acquired Vodafone Essar.
Contractual            obligations
A summary            of the Groups principal contractual            financial obligations            is shown below. Further details on the items included            can be found in the notes to the Consolidated Financial 
           Statements .
Payments            due by period £m
1-3 3-5
Contractual            obligations (1) Total <1year            years            years >5 years
Borrowings (2) 34,537 5,492 10,150 4,728 14,167
Operating            lease
commitments (3) 4,441 837 1,081 771 1,752
Capital
commitments (3)(4) 1,620 1,262 213 84 61
Purchase
commitments 2,347 1,548 439 283 77
Total contractual
cash obligations (1) 42,945 9,139 11,883 5,866 16,057
Notes:
(1) The above table of contractual obligations excludes commitments in respect of options over
interests in Group businesses held by minority shareholders (see Option agreements and similar
arrangements) and obligations to pay d
ividends to minority shareholders (see Dividends from
associated undertakings and to minority shareholders). The table excludes current and deferred tax
liabilities and obligations under post employment benefit schemes, details of which are provided in
notes 6 and 25 to the Consolidated Financial Statements, respectively.
(2) See note 24 to the Consolidated Financial Statements. (3) See note 31 to the Consolidated
Financial Statements. (4) Primarily related to network infrastructure.
Contingencies
Details of the Groups contingent            liabilities            are included in note 32 to the Consolidated Financial Statements .
Equity dividends
The table below sets out the amounts            of interim, final and total cash dividends paid or, in the case of the final dividend            for the 2008 financial year, proposed, in respect of each financial year, indicated            in pence per ordinary share.
Pence per ordinary share
Year ended 31 March            Interim            Final            Total
2004 0.9535 1.0780 2.0315
2005 1.91 2.16 4.07
2006 2.20 3.87 6.07
2007 2.35 4.41 6.76
2008 2.49 5.02 (1) 7.51
Note:
· The final dividend for the year ended 31 March 2008 was proposed on 27 May 2008 and is payable on
1 August 2008 to holders of record as of 6 June 2008. For American Depositary Share (ADS)
holders, the dividend will be payable in US dollars under the terms of the ADS depositary
agreement.
The Company has historically paid dividends semi-annually, with a regular interim dividend in
respect of the first six months of the financial year payable in February and a final dividend
payable in August. The Board expects that the Company will continue to pay dividends semi-annually
        . In November 2007, the directors announced an interim dividend of 2.49 pence per share,
representing a 6.0% increase over last years interim dividend .
In considering the level of dividends, the Board takes account of the outlook for earnings growth,
operating cash flow generation, capital expenditure requirements, acquisitions and divestments,
together with the amount of debt and share purchases .
The Board remains committed to its existing policy of distributing 60% of adjusted earnings per
share by way of dividend . The Group targets a low single A rating in line with the policy
established by the Board in 2006. The Group has no current plans for share purchases or one-time
returns.
Accordingly, the directors announced a proposed final dividend of 5.02 pence per share,
representing a 13.8% increase on last years final dividend .
Cash dividends, if any, will be paid by the Company in respect of ordinary shares in pounds
sterling or, to holders of ordinary shares with a registered address in a country which has adopted
the euro as its national currency, in euro, unless shareholders wish to elect to continue to
receive dividends in sterling, are participating in the Companys Dividend Reinvestment Plan, or
have mandated their dividend payment to be paid directly into a bank or building society account in
the UK. In accordance with the Companys Articles of Association, the sterling: euro exchange rate
will be determined by the Company shortly before the payment date.
The Company will pay the ADS Depositary, The Bank of New York, its dividend in US dollars. The
sterling: US dollar exchange rate for this purpose will be determined by the Company up to ten New
York and London b
usiness days prior to the payment date. Cash dividends to ADS holders will be paid
by the ADS Depositary in US dollars.
Liquidity and capital resources
The major sources of Group liquidity for the 2008 and 2007 financial years were cash generated from
operations, dividends from associated undertakings, borrowings through short term and long term
issuances in the capital markets and, particularly in the 2007 financial year, investment and
business disposals . The Group does not use off-balance sheet special purpose entities as a source
of liquidity or for other financing purposes .
The Groups key sources of liquidity for the foreseeable future are likely to be cash generated
from operations and borrowings through long term and short term issuances in the capital markets,
as well as committed bank facilities .
The Groups liquidity and working capital may be affected by a material decrease in cash flow due
to factors such as reduced operating cash flow resulting from further possible business disposals,
increased competition, litigation, timing of tax payments and the resolution of outstanding tax
issues, regulatory rulings, delays in the development of new services and networks, licences and
spectrum payments, inability to receive expected revenue from the introduction of new services,
reduced dividends from associates and investments or increased dividend payments to minority
shareholders . Please see the section titled Principal Risk Factors and Uncertainties, on pages
52 and 53. In particular, the Group continues to anticipate significant cash tax
payments and associated interest payments            due to the resolution            of long standing tax issues.
The Group is also party to a number of agreements            that may result in a cash outflow in future periods. These agreements            are discussed            further in Option agreements            and similar arrangements at the end of this section.
Wherever possible, surplus funds in the Group (except in Egypt and India) are transferred to the
centralised treasury department through repayment of borrowings, deposits, investments, share
purchases and dividends . These are then on-lent or contributed as equity to fund Group operations,
used to retire external debt or invested externally .
Cash flows
During the 2008 financial year, the Group increased its net cash inflow from operating activities
by 1.4% to £10,474 million. The Group generated £5,540 million of free cash flow from continuing
operations, a reduction of 9.6% on the 2007 financial year, primarily as a result of higher
payments for taxation and interest and an increase in capital expenditure .
2008 2007
£m £m
Net            cash flows from            operating            activities 10,474 10,328
Discontinued            operations    135
Continuing            operations 10,474 10,193
Taxation 2,815 2,243
Purchase            of intangible            fixed assets (846) (899)
Purchase            of property, plant and equipment (3,852) (3,633)
Disposal            of property, plant and            equipment 39 34
Operating            free cash            flow 8,630 8,073
Discontinued            operations    (8)
Continuing            operations 8,630 8,081
Taxation (2,815) (2,243)
Dividends            from associated            undertakings 873 791
Dividends            paid to minority            shareholders
in subsidiary            undertakings (113) (34)
Dividends            from investments 72 57
Interest            received 438 526
Interest            paid (1,545) (1,051)
Free            cash flow 5,540 6,119
Discontinued            operations    (8)
Continuing            operations 5,540 6,127
Net cash (outflow)/inflow            from            acquisitions            and disposals (5,957) 7,081
Other cash flows from investing            activities 689 (92)
Equity            dividends paid (3,658) (3,555)
Other cash flows from financing            activities (2,549) (4,712)
Net            cash flows in            the year (5,935) 4,841
Dividends from associated undertakings and to minority shareholders
Dividends from the Groups associated undertakings are generally paid at the discretion of the
Board of directors or shareholders of the individual operating and holding companies and Vodafone
has no rights to receive dividends, except where specified within certain of the companies
shareholders agreements, such as with SFR, the Groups associated undertaking in France.
Similarly, the Group does not have existing obligations under shareholders agreements to pay
dividends to minority interest partners of Group subsidiaries or joint ventures, except as
specified overleaf .
Vodafone Group Plc Annual Report 2008 55




---



##### 



Vodafone  Performance
Financial            Position            and Resources            continued
Included in the dividends received from associated undertakings and investments is an amount of
£414 million (2007: £328 million) received from Verizon Wireless . Until April 2005, Verizon
Wireless distributions were determined by the terms of the partnership agreement distribution
policy and comprised income distributions and tax distributions . Since April 2005, tax
distributions have continued . Current projections forecast that tax distributions will not be
sufficient to cover the US tax liabilities arising from the Groups partnership interest in Verizon
Wireless until 2015 and, in the absence of additional distributions above the level of tax
distributions during this period, will result in a net cash outflow for the Group. Under the terms
of the partnership agreement, the Board has no obligation to provide for additional distributions
above the level of the tax distributions . It is the current expectation that Verizon Wireless will
continue to re-invest free cash flow in the business and reduce indebtedness .
During the year ended 31 March 2008, cash dividends totalling £450 million
(2007: £450 million) were received from SFR in accordance with the shareholders agreement . It is
currently expected that future dividends from SFR will reduce, but by no more than 50%, between
2009 and 2011 inclusive, should SFR increase debt levels following completion of the purchase of an
additional stake in Neuf Cegetel.
Verizon Communications Inc. (Verizon) has an indirect 23.1% shareholding in Vodafone Italy and,
under the shareholders agreement, the shareholders have agreed to take steps to cause Vodafone
Italy to pay dividends at least annually, provided that such dividends will not impair the
financial condition or prospects of Vodafone Italy including, without limitation, its credit
rating. During the 2008
On 8 May 2007, the Group completed the acquisition of 100% of CGP Investments
(Holdings) Limited (CGP), a company with indirect interests in Vodafone Essar, from Hutchison
Telecommunications International Limited for cash consideration of £5,438 million, net of £51
million cash and cash equivalents acquired, of which £5,429 million was paid during the 2008
financial year. Following this transaction, the Group has a controlling financial interest in
Vodafone Essar. As part of this transaction, the Group also assumed gross debt of £1,483 million,
including £217 million related to written put options over minority interests, and issued a written
put to the Essar group for which the present value of the redemption price at the date of grant was
£2,154 million. See page 58 for further details on these options. The Group also entered into a
shareholders agreement with the Essar Group in relation to Vodafone Essar.
On 9 May 2007, in conjunction with the acquisition of Vodafone Essar, the Group entered into a
share sale and purchase agreement in which a Bharti group company irrevocably agreed to purchase
the Groups 5.60% direct shareholding in Bharti Airtel. During the year ended 31 March 2008, the
Group received £654 million in cash consideration for 4.99% of such shareholding . The Groups
remaining 0.61% direct shareholding was transferred in April 2008 for cash consideration of £87
million. The Group retains a 4.36% indirect stake in Bharti Airtel.
On 3 December 2007, the Group completed the acquisition of Tele2 Italia SpA (Tele2 Italy) and
Tele2 Telecommunication Services SLU (Tele2 Spain) from Tele2 AB Group for a cash consideration
of £452 million, of which
£451 million was paid during the 2008 financial year.
ILQDQFLDO_\HDU___9RGDIRQH_,WDO\_GHFODUHG_DQG_SDLG_D_JURVV_GLYLGHQG_RI___ELOOLRQ___
RI_ZKLFK___ELOOLRQ_ZDV_UHFHLYHG_E\_9HUL]RQ_QHW_RI_ZLWKKROGLQJ_WD[___Other returns
The Vodafone            Essar shareholders agreement            provides for the payment            of dividends to minority partners under certain circumstances            but not before May 2011.
Acquisitions            and disposals
The Group paid a net £5,268 million cash and cash equivalents from acquisition and disposal
activities, including investments, in the year to 31 March 2008. An analysis of the main
transactions in the 2008 financial year, including the changes in the Groups effective
shareholding, are shown in the table below. Further details of the acquisitions are provided in
note 28 to the Consolidated Financial Statements .
£m
Acquisitions (1):
Acquisition            of 100% of CGP Investments (Holdings) Limited
(CGP), a company            with indirect interests            in Vodafone            Essar
Limited (formerly            Hutchison            Essar Limited) (5,429)
Tele2 Spain and Italy (from nil to 100%) (451)
Disposals:
Partial            disposal            of Bharti Airtel (from 9.99% to 5.00%)(1) 654
Other net acquisitions            and disposals, including            investments (1) (42)
Total (5,268)
Note:
(1) Amounts are shown net of cash and cash equivalents acquired or disposed .
The Board will periodically            review the free cash flow, anticipated            cash requirements, dividends, credit profile and gearing of the Group and consider            additional     
       shareholder            returns.
Treasury            shares
The Companies Act 1985 permits companies to purchase their own shares out of distributable reserves
and to hold shares with a nominal value not to exceed 10% of the nominal value of their issued
share capital in treasury . If shares in excess of this limit are purchased they must be cancelled
        . While held in treasury, no voting rights or pre-emption rights accrue and no dividends are paid
in respect of treasury shares. Treasury shares may be sold for cash, transferred (in certain
circumstances) for the purposes of an employee share scheme, or cancelled . If treasury shares are
sold, such sales are deemed to be a new issue of shares and will accordingly count towards the 5%
of share capital which the Company is permitted to issue on a non pre-emptive basis in any one year
as approved by its shareholders at the AGM. The proceeds of any sale of treasury shares up to the
amount o
f the original purchase price, calculated on a weighted average price method, is attributed
to distributable profits which would not occur in the case of the sale of non-treasury shares. Any
excess above the original purchase price must be transferred to the share premium account . The
Company did not repurchase any of its own shares between 1 April 2007 and 31 March 2008.
Shares purchased are held in treasury in accordance with section 162 of the Companies Act 1985. The
movement in treasury shares during the financial year is shown below:
Number
million £m
1 April 2007 5,251 8,047
Re-issue of shares (118) (191)
31 March 2008 5,133 7,856
56 Vodafone Group Plc Annual Report 2008




---



##### 



Funding
The Groups consolidated            net debt position at 31 March was as follows:
2008 2007
£m £m
Cash and cash equivalents (as presented            in the
Consolidated            Balance            Sheet) 1,699 7,481
Trade and other receivables (1) 892 304
Trade and other payables (1) (544) (219)
Short term borrowings (4,532) (4,817)
Long term borrowings (22,662) (17,798)
(26,846) (22,530)
Net debt            shown in            the Consolidated            Balance            Sheet (25,147) (15,049)
Note:
(1) Trade and other receivables and payables included in net debt represent certain derivative
financial instruments (see notes 17 and 27 to the Consolidated Financial Statements). (2) The
amount for the 2008 financial year includes £2,625 million related to put options over minority
interests, including those in Vodafone Essar and Acror, which are reported as financial liabilities
At 31 March 2008, the Group had £1,699 million of cash and cash equivalents, with the decrease
since 31 March 2007 being due to the holding of funds at 31 March 2007 prior to the completion of
the Vodafone Essar transaction, which occurred on 8 May 2007. Cash and cash equivalents are held in
accordance with the Group treasury policy.
The Group holds its cash and liquid investments in accordance with the counterparty and settlement
risk limits of the Board approved treasury policy. The main forms of liquid investments at 31 March
2008 were money market funds, commercial paper and bank deposits .
Net debt increased to £25,147 million, from £15,049 million at 31 March 2007, as the impact of
business acquisitions and disposals, movements in the liability related to written put options and
equity dividend payments were partially offset by free cash flow. The impact of foreign exchange
rates increased net debt by £3,238 million, primarily as approximately 80% of net debt is
denominated in euro and the euro/£ exchange rate increased by 17.2% during the 2008 financial year.
Net debt represented approximately 31% of the Groups market capitalisation at 31 March 2008
compared with 16% at 31 March 2007. Average net debt at month end accounting dates over the 12
month period ended 31 March 2008 was £22,194 million and ranged between £14,876 million and £25,147
million during the year.
Consistent with the development of its strategy, the Group targets low single A long term credit
ratings, with its current credit ratings being P-2/F2/A-2 short term and Baa1 stable/A  stable/A -
stable long term from Moodys, Fitch Ratings and Standard & Poors, respectively . Credit ratings
are not a recommendation to purchase, hold or sell securities, in as much as ratings do not comment
on market price or suitability for a particular investor, and are subject to revision or withdrawal
at any time by the assigning rating organisation . Each rating should be evaluated independently .
The Groups credit ratings enable it to have access to a wide range of debt finance, including            commercial            paper, bonds and committed            bank facilities .
Commercial            paper programmes
Bonds
7KH_*URXS_KDV
_D___ELOOLRQ_(XUR_0HGLXP_7HUP_1RWH_SURJUDPPH_DQG_D_86_VKHOI___programme, which are
used to meet medium to long term funding requirements . At 31 March 2008, the total amounts in
issue under these programmes split by
FXUUHQF\_ZHUH___ELOOLRQ___e___ELOOLRQ___ELOOLRQ_DQG____ELOOLRQ_
In the year to 31 March 2008, bonds with a nominal value of £1.6 billion were issued under the US
shelf and the Euro Medium Term Note programme . The bonds issued during the year were:
US shelf/
Euro Medium
Term Note
Amount (EMTN)
Date of bond issue            Maturity of bond            Currency            Million            programme
6 June 2007 6 June 2014 EUR 1,250 EMTN
6 June 2007 6 June 2022 EUR 500 EMTN
24 October 2007 27 February 2037 USD 500 US shelf
At 31 March 2008, the Group had bonds outstanding            with a nominal value of e___PLOOLRQ___2Q___0D\___WKH_*URXS_LVVXHG___PLOOLRQ_RI___ERQGV___maturing            on 29 November 2012.
Committed            facilities
The following            table summarises            the committed            bank facilities available            to the Group at 31 March 2008.
Committed            bank facilities            Amounts drawn
24 June 2004
$6.1 billion Revolving            Credit            No drawings            have been made against this
Facility, maturing 24 June 2009. facility. The facility supports            the Groups
commercial            paper programmes            and may
be used for general corporate            purposes,
including            acquisitions .
24 June 2005
$5.2 billion Revolving            Credit            No drawings            have been made against this
Facility, maturing 22 June 2012. facility. The facility supports            the Groups
commercial            paper programmes            and may
be used for general corporate            purposes,
including            acquisitions .
21 December 2005
¥258.5 billion Term Credit            The facility was drawn down in full on
F
acility, maturing 16 March 2011, 21 December 2005. The facility is available
entered            into by            Vodafone            for general            corporate            purposes, although
Finance            K.K. and            guaranteed            amounts            drawn must be on-lent to the
by the            Company . Company .
16 November 2006
___DKNNKQP___.QCP_(CEKNKV[___QP maturing 14 February 2014 14 February 2007. The facility is
available for financing capital expenditure in the Groups Turkish operating company .
Under the terms and conditions of the $11.3 billion committed bank facilities, 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 of the Company . This is in addition
to the rights of lenders to cancel their commitment if the Company has committed an event of
default.
The Group currently has US and euro commercial paper programmes            of $15 billion and £5 billion, respectively, which are available to be used to meet short term
The facility agreements            provide for certain structural changes that do not affect the obligations of the Company to be specifically            excluded            from the definition
OLTXLGLW\_UHTXLUHPHQWV___PLOOLRQ___e___$W___0DUFK___PLOOLRQ___e___million and £33 million equivalent of other currencies            were drawn under the euro of a change of control.
commercial paper programme, with such funds being provided by counterparties external to the Group. There were no drawings            under the US commercial            paper programme. At 31 March 2007, $26 million (£13 million) was drawn under the US
Substantially            the same terms and conditions apply in the case of Vodafone            Finance K.K.s ¥258.5 billion term
credit facility, although            the change of control provision            is applicable            to any guarantor            of borrowings            under the term credit facility.
FRPPHUFLDO_SDSHU_SURJUDPPH_DQG___PLOOLRQ___e___PLOOLRQ___DQG_e___PLOOLRQ___were drawn under the euro commercial            paper programme . The commercial            paper Additionally, th
e facility agreement            requires Vodafone            Finance K.K. to maintain            a facilities were supported            by $11.3 billion (£5.7 billion) of committed            bank
facilities positive tangible net worth at the end of each financial year. As of 31 March 2008, (see Committed            facilities below), comprised            of a $6.1 billion Revolving            Credit            the Company            was the sole guarantor .
Facility that matures on 24 June 2009 and a $5.2 billion Revolving Credit Facility that matures on
22 June 2012. At 31 March 2008 and 31 March 2007, no amounts had been drawn under either bank
facility. On 8 May 2007, these facilities were increased from $5.9 billion and $5.0 billion,
respectively .
Vodafone Group Plc Annual Report 2008 57




---



##### 



Vodafone  Performance
Financial Position and Resources            continued
7KH_WHUPV_DQG_FRQGLWLRQV_RI_WKH___ELOOLRQ_ORDQ_IDFLOLW\_DUH_VLPLODU_WR_WKRVH_RI_WKH___In respect of Arcor, the Groups non-mobile operation            in Germany, the capital $11.3 billion committed            bank facilities, with the addition that, should the Groups structure            pr
ovides all partners, including            the Group, the right to withdraw            capital Turkish operating            company            spend less than the equivalent            of $0.8 billion on            from 31 December 2026 onwards and this right in relation to the minority capital expenditure, the Group will be required to repay the drawn amount of the partners has been recognised            as a financial liability. The Group acquired            the facility that exceeds 50% of the capital expenditure . outstanding
            minority interests            on 19 May 2008.
Furthermore, two of the Groups subsidiary undertakings are funded by external facilities which are
non-recourse to any member of the Group other than the borrower, due to the level of country risk
involved . These facilities may only be used to fund their operations . At 31 March 2008, Vodafone
India had facilities of INR 138 billion (£1.7 billion), of which INR 118 billion (£1.5 billion) is
drawn. Since 31 March 2008, Vodafone India has entered into additional facilities amounting to INR
71.5 billion (£898 million). Vodafone Egypt has a partly drawn EGP 1.7 billion (£156 million)
syndicated bank facility of EGP 4.0 billion (£369 million) that matures in March 2014.
In aggregate, the Group has committed facilities of approximately £9,870 million, of which £6,174
million was undrawn and £3,696 million was drawn at 31 March 2008.
The Group believes that it has sufficient funding for its expected working capital requirements .
Further details regarding the maturity, currency and interest rates of the Groups gross borrowings
at 31 March 2008 are included in note 24 to the Consolidated Financial Statements .
Financial assets and liabilities
Analyses of financial assets and liabilities, including the maturity profile of debt, currency and
interest rate structure, are included in notes 18 and 24 to the Consolidated Financial Statements .
Details of the Groups treasury management and policies are included within note 24 to the
Consolidated Financial Statements .
Option            agreements            and similar            arrangements
Potential            cash inflows
On 8 August 2007, the Group announced that it had decided not to exercise its rights under its
agreement with Verizon Communications (Verizon) to sell to Verizon up to $10 billion of the
Gr
oups interest in Verizon Wireless . There are no other agreements, which allow Vodafone to put
its interest in Verizon Wireless to Verizon.
Potential cash outflows
In respect of the Groups interest in the Verizon Wireless partnership, an option granted to Price
Communications, Inc. by Verizon Communications Inc. was exercised on 15 August 2006. Under the
option agreement, Price Communications, Inc. exchanged its preferred limited partnership interest
in Verizon Wireless of the East LP for 29.5 million shares of common stock in Verizon
Communications Inc. Verizon Communications Inc. has the right, but not the obligation, to
contribute the preferred interest to the Verizon Wireless partnership, diluting the Groups
interest. However, the Group also has the right to contribute further capital to the Verizon
Wireless partnership in order to maintain its percentage partnership interest. Such amount, if
contributed, would be $0.9 billion.
As part of the Vodafone Essar acquisition, the Group acquired less than 50% equity interests in
Telecom Investments India Private Limited (TII) and in Omega Telecom Holdings Private Limited
(Omega), which in turn have a 19.54% and 5.11% indirect shareholding in Vodafone Essar. The Group
was granted call options to acquire 100% of the shares in two companies which together indirectly
own the remaining shares of TII for, if the market equity of Vodafone Essar at the time of exercise
is less than US$25 billion, an aggregate price of US$431 million plus interest or, if the market
equity value of Vodafone Essar at the time of exercise is greater than US$25 billion, the fair
market value of the shares as agreed between the parties. The Group also has an option to acquire
100% of the shares in a third company which owns the remaining shares in Omega. In conjunction with
the receipt of these options, the Group also granted a put option to each of the shareholders of
these companies with identical pricing which, if exercised, would require Vodafone to purchase 100%
of the equity in the respective company . These options can only be exercised in accordance with
Indian law prevailing at the time of exercise .
The Group granted put options exercisable between 8 May 2010 and 8 May 2011 to members of the Essar
group of companies that, if exercised, would allow the Essar group to sell its 33% shareholding in
Vodafone Essar to the Group for US$5 billion or to sell between US$1 billion and US$5 billion worth
of Vodafone Essar shares to the Group at an independently appraised fair market value.
Off-balance sheet arrangements
The Group does 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 31 and 32 to the Consolidated Financial Statements for a
discussion of the Groups commitments and contingent liabilities .
Quantitative and qualitative disclosures about market risk
A discussion of the Groups financial risk management objectives and policies and the exposure of
the Group to liquidity, market and credit risk is included within note 24 to the Consolidated
Financial Statements .
58Vodafone            Group Plc Annual Report 2008




---



##### 



Corporate            Responsibility
The Board regards responsible behaviour in all Vodafones operations as underpinning the value of
the brand and has established being a responsible business as one of the Groups long term goals.
The Groups approach to corporate responsibility (CR) enables it to understand the expectations
of stakeholders, forecast trends in social, environmental and ethical requirements and to manage
the Groups performance in an appropriate manner.
More detail will be available in the online CR report with the full CR performance for the year
ended 31 March 2008 at www.vodafone .com/responsibility .
Business impact
CR issues present both risks and opportunities for Vodafone and a broad range of stakeholders are
increasingly interested in how Vodafone manages these issues. For example, the Groups licences to
operate are granted by governments that frequently seek evidence of responsible business practices
and in many markets consumers are becoming more concerned about CR issues, such as climate change,
content standards and mobile phones, masts and health.
The range of stakeholders            and the breadth of the issues involved indicate that CR is relevant across all aspects of Vodafones            activities            and therefore            the Group seeks to
integrate            its CR approach            into all key business            processes .
Strategy
The CR strategy, which addresses            CR issues material to the Group, has the following            main strands:
  
to capture the potential of mobile to bring socio-economic value in both emerging economies and
developed markets, through broadening access to communications to all sections of society; to
deliver against stakeholder expectations on the key areas of climate change, a safe and responsible
internet experience and sustainable products and services; and to ensure Vodafones operating
standards are of a consistent and appropriate level across the Group.
Key CR strategic            objectives
Core initiative: Access to communications
Safe and responsible internet experience
Climate change
Sustainable products            and services
Supported            by responsible            business            practices
Underpinned            by values, principles            and behaviours
CR governance
Vodafones approach to CR is underpinned by its business principles which cover, amongst other
things, the environment, employees, individual conduct and community and society. The business
principles are available on www.vodafone . com/responsibility/businessprinciples and are
communicated to employees in a number of ways, including induction processes, websites and face to
face meetings .
The Executive Committee receives regular information on CR and, for the last five years, the Board
has had an annual presentation on CR. A CR management structure is establ
ished in each local
operating company, with each one having a representative on its management board with
responsibility for CR. For the purposes of this section of the Annual Report, operating companies
refers to the Groups operating subsidiaries and the Groups joint venture in Italy. It includes
information for the first time for Turkey and Arcor, Vodafones fixed-line business in Germany, but
excludes the newly acquired operations in India and Tele2 in Spain and Italy. These newly acquired
operations will be included in the 2009 financial year.
CR performance is closely monitored and reported at most local operating company boards on a
regular basis. CR is also integrated into Vodafones risk management processes such as the formal
annual confirmation provided by each local operating company detailing the operation of their
controls system.
These processes are supported by stakeholder engagement, which helps to ensure Vodafone is aware of
the issues relevant to the business and to provide a clear understanding of expectations of
performance . Stakeholder consultations take place with customers, investors,
employees, suppliers, the communities where the Group operates and where networks are based,
governments and regulators and non-governmental organisations . In addition, the Group has
continued the Vodafone CR Dialogues programme of in-depth discussions on specific, emerging issues.
CR Dialogues this year focused on privacy, climate change, safe internet and emerging markets .
More information on this can be found at www.vodafone .com/responsibility .
Vodafones CR programme and performance as reported on the Groups online CR report has been
independently assured using the AccountAbility 1000 Assurance Standard (AA1000 AS) by the Groups
auditors, Deloitte & Touche LLP. The AA1000 AS requires Vodafone to report its responses and
performance on material issues. Deloittes assurance statement outlining the specific assurance
scope, procedures and reasonable assurance opinion is published in the Groups online CR report.
The Groups CR reporting comprises an online report and a printed CR summary focusing on strategy
and trends, while 12 operating companies also produce their own CR reports.
During the year, Vodafones 2007 CR report won the main accolade of the Corporate Register
Reporting Awards for the best report and was commended by the Association of Chartered Certified
Accountants (ACCA) for the best disclosure in Tax and Public Policy. Vodafone is included in the
FTSE4Good and Dow Jones Sustainability Index and rated fifth in the Global AccountAbility Rating,
published by Fortune.
Vodafone            Group Plc Annual Report 2008 59




---



##### 



Vodafone   Performance
Corporate            Responsibility            continued
Performance            in the 2008 financial            year
Access            to communications
Access to communications offers the single greatest opportunity for Vodafone to make a strong
contribution to society, with a considerable body of research showing that telecommunications  and
mobile communications in particular  has the potential to change peoples lives for the better, by
promoting economic and social development . During the 2008 financial year, Vodafone continued its
focus on mobile payment services and own brand handsets for emerging markets as follows:
Privacy and freedom of expression
In response to concerns raised about privacy and freedom of expression on the internet, Vodafone
continued to participate in a multi-stakeholder engagement initiative to agree principles for
companies on these issues. More than 20 academics, investors, companies and non-governmental
organisations are now involved in this process.
The Group launched mobile advertising activities in 11 markets, adopting a conservative approach to
content and privacy issues. Vodafone has begun to monitor conformance with the Groups global
guidance on advertising and is reviewing feedback on areas where the guidance should be clarified,
adapted or modified .
Climate change
Vodafone recognises that climate change is likely to result in profound consequences for the
environment, society and the economy . Limiting the Groups contribution is a priority and during
the year the Group announced that by 2020 it will reduce its CO2emissions by
50% against the 2007 financial year baseline of 1.23 million tonnes. The Group is currently
gathering data about the carbon footprint of its newly acquired businesses in India and Turkey, and
climate change targets for these businesses will be announced in due course.
·
·
Vodafone has continued with the ambition of extending access to communications in emerging markets
by increasing the portfolio of own branded handsets that introduce higher levels of technological
development and affordability so that more people are able to use more services . The Group has
shipped more than 10 million of these new handsets to more than 30 markets during the 2008
financial year.
Over two million people in Kenya have used the Vodafone M-PESA/Vodafone Money Transfer mobile
transaction service since its launch in February 2007, with an average of 200,000 more signing up
each month. Customers can pay in and withdraw cash at local agents, transfer money to other mobile
users via SMS and buy prepaid airtime credit. Vodafone M-PESA/Vodafone Money Transfer is being used
by customers for a wide range of money transfer
Partnering with local mobile operator Roshan, Vodafone is piloting a similar scheme in Afghanistan and plans further launches            in India and in other African countries .
The Group reviewed            the options for achieving            this target, including            carbon off-
WUDQVDFWLRQV___ZLWK_WKH_PDMRULW\_RI_WUDQVDFWLRQ_YDOXHV_EHLQJ_EHORZ___setting as a last resort, and concluded            that the most effective            strategy is to cut directly. The target is expected to
 be achieved            principally            through
CO2emissions
operational            changes and technological            innovation            to improve energy efficiency            in the networks . Renewable            energy will be used when and where possible .
The Group is also finding ways to make mobile phones easier to use, particularly for customers who
are elderly, deaf, hard of hearing, blind, visually impaired or have other disabilities . Examples
include a speaking phone for the visually impaired and special data tariffs for deaf customers .
The Group is currently conducting a strategic review of how best to address those issues and will
announce the development of a centre of excellence during the 2009 financial year.
Safe and trusted internet experience
Vodafones reputation depends on earning and maintaining the trust of its customers . The way the
Group deals with certain key consumer issues directly impacts trust in Vodafone . These include
responsible marketing, clear pricing, protecting customers privacy and developing a mobile
advertising proposition that customers find acceptable . During the year, Vodafone has re-drafted
its responsible marketing guidelines to ensure that customers can continue to trust the Groups
services in new areas such as mobile advertising, social networking and digital marketing .
Age-restricted content
During the 2008 financial year, the Groups research has shown that parents are increasingly
concerned about what their children see on the internet and it is anticipated that those concerns
will be transferred to childrens use of mobile devices as parents become more aware of mobile
internet .
Vodafones initiatives in these areas include:
In addition, as part of the climate strategy, the Group announced that it will also be focusing on
developing products and services which will help customers limit their own emissions . This is
expected to include exploring consumer related solutions such as solar-powered or universal
chargers as well as improving understanding of how mobile technology can enable lower emissions
through more efficient traffic management, logistic planning and scheduling and the remote
monitoring of utility meters.
Energy use associated with the operation of the network accounts for around 80% of the Groups
carbon dioxide emissions . In 2006, the Group set a target to per unit of data transmitted by 40%
by 2011. This target
reduce CO2emissions
has been achieved in 2008, three years in advance, with network carbon dioxide emissions per unit
of data transmitted decreasing by 50% from 0.034 Kg/Mb to 0.17 Kg/Mb. In the 2008 financial year,
Vodafones energy use was 2,996 GWh, equating to 1.45 million tonnes of carbon dioxide.
Sustainable products and services
Vodafone is developing programmes aimed at making delivery of its products and services more
sustainable . The key focus during the 2008 financial year was on the reuse and recycling of
handsets and accessories, and network equipment .
Mobile phones, accessories and the networks on which they operate require upgrading, replacement
and decommissioning . The Group complies with the EUs Waste Electronic and Electrical Equipment
directive through its handset recycling programmes in all operating companies where it applies. The
Group has also worked with suppliers to ensure substances prohibited by the Restriction of the use
of certain Hazardous Substances directive are phased out. During the 2008 financial year, 1.33
million phones were
 collected for reuse and recycling through collection programmes in 16 mobile
operating companies, achieving the Groups target. 11,849 tonnes of network equipment waste was
generated, with 96% of this sent for reuse or recycling, exceeding the target of 95%.
Mobile phones, masts and health
Vodafone recognises that there is public concern about the safety of Radio Frequency (RF) fields
from mobile phones and base stations . The Group contributes to funding of independent scientific
research to resolve scientific uncertainty in areas identified by the World Health Organisation
(WHO) . The WHO established an International EMF Project in 1996, which records global research
into mobile phones, masts and health and prioritises research needs. In 2006, they identified the
following three main areas for additional research: long term (more than 10 years) exposure to
low-level RF fields, possible health effects of mobile use in children and dosimetry (the way
levels of RF absorbed are calculated) .
·
All mobile operating companies that offer age-restricted content have implemented parental controls
        . These block access to age-restricted content on the Vodafone live! domain to those under 18 years
of age. Internet filters are offered by eight operating companies, which also enable parents to
prevent their children accessing inappropriate age-restricted content on the internet via their
mobile phones. The mobile operating companies that have not implemented the filter will remove
individual access to the internet completely on request.
Vodafone is leading a pan-European ICT Education Initiative in partnership with other ICT companies
and European Schoolnet, to develop online education resources . These will help teachers understand
new mobile and internet technology and encourage their students to use it responsibly .
Vodafone is a founding member of the Mobile Alliance against Child Sexual Abuse Content, launched
by the GSMA in February 2008 to prevent users from accessing websites identified as hosting child
sexual abuse content. A representative from Vodafone chaired the UK Home Office taskforce to
develop industry guidelines on social networking . Vodafone will develop its own social networking
guidelines for operating companies based on the industry guidelines to inform the way access is
offered to services like Bebo, Facebook, Flickr, MySpace and YouTube .



60 Vodafone            Group Plc Annual Report 2008




---



##### 



Vodafone requires manufacturers of the mobile devices it sells to test for Specific Absorption Rate
compliance when used both against the ear and against, or near, the body, using the US FCC Test
procedure . Vodafone is actively engaged with the IEC Standards Organisation in developing a new
global protocol for body worn phones and expects a new standard, which better reflects customers
use of mobile devices, to be adopted later this year. The Groups long term programme of
engagement, with a range of stakeholders, aims to reduce levels of concern amongst the public and
to demonstrate that Vodafone is acting responsibly .
Responsible network deployment
Vodafones mobile services rely on a network of radio base stations that transmit and receive
calls. The Group recognises that network deployment can cause concern to communities, usually about
the visual impact of base stations or health issues concerning RF fields. During the year, the
Group reviewed and updated its policy on responsible network deployment . In addition, nine mobile
operating companies have signed up to national industry codes of best practice on network
deployment .
By cooperating with other mobile operators to share sites, the Group is reducing the total number
of base stations required . This lowers costs, enables faster network deployment and reduces the
environmental footprint of the network without loss of quality or coverage . Vodafone has active or
passive network sharing agreements in 17 countries . In India, in partnership with Bharti Airtel
and Idea Cellular Limited, the Group announced the creation of Indus Towers, an independent mobile
infrastructure company that will provide infrastructure services to all telecommunications
operators on a non-discriminatory basis.
The Group has conducted audits of network deployment contractors in all its local operating
companies to verify adherence to the global responsible network deployment policy. As an example,
more than 1,000 site audits took place in Turkey, one of the newest operating companies and the
focus of significant network deployment during the year.
Vodafone aims to comply with local planning regulations but is sometimes found to be in breach.
This is normally related to conflicting local, regional or national planning regulations . During
the 2008 financial year, Vodafone was found in breach of planning regulations relating to 423 mast
sitings. Fines levied by regulatory bodies or courts in relation to offences under environmental
law or regulations were approximately £61,000 .
Key performance            indicators (1)
KPI
Supply            chain
The Group continues            to implement            Vodafones            Code of Ethical Purchasing, which sets out environmental            and labour standards            for suppliers .
The Group increased its CR capability in China by training all supply chain employees, establishing
two CR qualified auditors within the Groups offices in Beijing and Hong Kong and embedding CR in
supplier selection and management using the Groups global qualification process. A project with
two strategic Chinese suppliers was implemented to manage CR risk within sub-tier suppliers .
A total of 488 suppliers, including 63 strategic global suppliers, have been assessed using the
Groups supplier evaluation scorecard in which CR accounts for 10% of the total. The scorecard
evaluates the suppliers CR management systems, public reporting and approach to managing their
suppliers . Seven site evaluati
ons of high risk suppliers have been completed .
The duty to report programme provides suppliers with a means to report any ethical concerns .
Twelve incidents were reported in relation to managing the global supply chain in the 2008
financial year. All have been investigated and resolved satisfactorily .
Social investment
The Vodafone            Group Foundation            and its network of 21 local operating            company            and associate            foundations   
         have continued            to implement            a global social investment            programme .
During the 2008 financial year, the Company made a charitable grant of £24.0 million to the
Vodafone Group Foundation . The majority of foundation funds are distributed in grants through
operating company foundations to a variety of local charitable organisations meeting the needs of
the communities in which they operate.
The Vodafone Group Foundation made additional grants to charitable partners engaged in a variety of
global projects . Its areas of focus are: sport and music as a means of benefiting some of the most
disadvantaged young people and their communities, and disaster relief and preparedness .
In addition, operating companies donated a further £12.9 million to their foundations and a further
£4.2 million directly to a variety of causes. Total donations for the year ended 31 March 2008 were
£44.9 million and included donations of £3.8 million towards foundation operating costs.
2008(2)
2007(3)
2006(4)
Number            of mobile operating            subsidiaries            undertaking
independent            RF field monitoring 15 15 15
Total energy use (GWh) (direct and            indirect) (5) 2,996 2,690 2,900
Total carbon dioxide emissions (millions            of tonnes)(5) 1.45 1.23 1.31
Percentage            of energy sourced            from renewables 18 17 12
Number            of phones collected            for reuse and recycling (millions) 1.33 1.03 1.37
Network            equipment waste            generated (tonnes) 12,096 9,960 2,950
Percentage            of network equipment            waste sent for reuse or recycling 96 97 97
Notes:
(1) These performance indicators were calculated using actual or estimated data collected by the
Groups mobile operating companies. The data is sourced from invoices, purchasing requisitions,
direct data measurement and estimations where required. The carbon dioxide emissions figure is
calculated using the kWh/CO2 conversion factor for the electricity provided by the national grid
and for other en
ergy sources in each operating company. The Groups joint venture in Italy is
included in all years.
(2) The data for the 2008 financial year excludes the newly acquired Vodafone Essar in India and
Tele2 in Italy and Spain.
(3) The data for the 2007 financial year excludes the newly acquired operations in Turkey and the
operations in Japan that were sold during the 2007 financial year.
(4) The data for the 2006 financial year excludes the acquired businesses in Czech Republic and
Romania and the business in Sweden that was sold during the 2006 financial year, but does include
the business in Japan that was disposed of during the 2007 financial year.
(5) The 2007 figure includes Arcor.
Vodafone Group Plc Annual Report 2008 61




---



##### 



Vodafone  Governance
Board of Directors            and Group Management
[Graphic Appears Here]
[Graphic Appears Here]
Directors            and senior            management
The business            of the Company            is managed            by its board of directors (the Board). Biographical            details of the directors    
        and senior management            at the date of this report are as follows:
Board of directors
Chairman
1. Sir John Bond, aged 66, became Chairman of Vodafone Group Plc in July 2006, having
previously served as a non-executive director of the Board, and is Chairman of the Nominations and
Governance Committee . Sir John is a non-executive director of Ford Motor Company, USA, and A.P.
Møller  Mærsk A/S and is a director of Shui On Land Limited (Hong Kong SAR). He retired from the
position of Group Chairman of HSBC Holdings plc in May 2006, after 45 years of service. Other
previous roles include Chairman of HSBC Bank plc and director of The Hong Kong and Shanghai Banking
Corporation and HSBC North America Holdings Inc. Previous non-executive directorships include the
London Stock Exchange, Orange plc, British Steel plc and the Court of the Bank of England .
Executive directors
2. Arun Sarin, Chief Executive, aged 53, became a member of the Board in June 1999. He
was appointed Chief Executive in July 2003. Arun joined Pacific Telesis Group in San Francisco in
1984 and has served in many executive positions in his career in telecommunications, which spans
more than 20 years. He was a director of AirTouch Communications, Inc. from July 1995 and was
President and Chief Operating Officer from February 1997 to June 1999. He was Chief Executive
Officer for the Vodafone United States and Asia Pacific region until 15 April 2000, when he became
a non-executive director. He has served as a director of The Gap, Inc., The Charles Schwab
Corporation and Cisco Systems, Inc., and is a non-executive director of the Court of the Bank of
England . He will retire as Chief Executive at the conclusion of the Companys AGM on 29 July 2008.
3. Vittorio Colao, Deputy Chief Executive and CEO of the Groups Europe region, aged 46, joined the
Board in October 2006. He spent the early part of his career as a partner in the Milan office of
McKinsey & Co working on media, telecommunications and industrial goods and was responsible for
recruitment . In 1996, he joined Omnitel Pronto Italia, which subsequently became Vodafone Italy,
and he was appointed Chief Executive in 1999. He was then appointed Regional Chief Executive
Officer, Southern Europe for Vodafone Group Plc in 2001, became a member of the Board in 2002 and
was appointed to the role of Regional Chief Executive Officer for Southern Europe, Middle East and
Africa for Vodafone in 2003. In 2004, he left Vodafone to join RCS MediaGroup, the leading Italian
publishing company, where he was Chief Executive until he rejoined Vodafone . He will become Chief
Executive at the conclusion of the Companys AGM on 29 July 2008.
4. Andy Halford , Chief Financial Officer, aged 49, joined the Board in July 2005. Andy joined
Vodafone in 1999 as Financial Director for Vodafone Limited, the UK operating company, and in 2001
he became Financial Director for Vodafones Northern Europe, Middle East and Afri
ca region. In
2002, he was appointed Chief Financial Officer of Verizon Wireless in the US and is currently a
member of the Board of Representatives of the Verizon Wireless partnership . Prior to joining
Vodafone, he was Group Finance Director at East Midlands Electricity Plc. Andy holds a bachelors
degree in Industrial Economics from Nottingham University and is a Fellow of the Institute of
Chartered Accountants in England and Wales.
Deputy Chairman and senior independent director
5. John Buchanan §, aged 64, became Deputy Chairman and senior independent director in
July 2006 and has been a member of the Board since April 2003. He retired from the board of
directors of BP Plc in 2002 after six years as Group Chief Financial Officer and executive
director, following a wide-ranging career with the company . He was a member of the United Kingdom
Accounting Standards Board from 1997 to 2001. He is Chairman of Smith & Nephew plc, a non-executive
director of AstraZeneca PLC and senior independent director of BHP Billiton Plc.
Non-executive directors
6. Dr Michael Boskin§, aged 62, became a member of the Board in June 1999 on completion
of the merger with AirTouch Communications, Inc. and is Chairman of the Audit Committee . He was a
director of AirTouch from August 1996 to June 1999. He has been a Professor of Economics at
Stanford University since 1971 and was Chairman of the Presidents Council of Economic Advisers
from February 1989 until January 1993. Michael is President and Chief Executive Officer of Boskin &
Co., an economic consulting company, and is also a director of Exxon Mobil Corporation, Shinsei
Bank Limited and Oracle Corporation . He will retire from the Board at the conclusion of the
Companys AGM on 29 July 2008.
7. Alan Jebson §, aged 58, joined the Board in December 2006. He retired in May 2006
from his role as Group Chief Operating Officer of HSBC Holdings Plc, a position which included
responsibility for IT and Global Resourcing . During a long career with HSBC, Alan held various
positions in IT, including the position of Group Chief Information Officer. His roles included
responsibility for the Groups international systems, including the consolidation of HSBC and
Midland systems following the acquisition of Midland Bank in 1993. He originally joined HSBC as
Head of IT Audit in 1978 where, building upon his qualification as a chartered accountant, he built
an international audit team and implemented controls in the Groups application systems . He is
also a non-executive director of Experian Group plc and McDonald Dettwiler in Canada.
§ Audit Committee
Nominations and Governance Committee  Remuneration Committee
62 Vodafone            Group Plc Annual Report 2008




---



##### 



[Graphic Appears Here]
[Graphic Appears Here]
8. Nick Land§, aged 60, joined the Board in December 2006. Solely for the purposes of
relevant legislation, he is the Boards appointed financial expert on the Audit Committee . In June
2006, he retired as Chairman of Ernst & Young LLP after a distinguished career spanning 36 years
with the firm. He became an audit partner in 1978 and held a number of management appointments
before becoming Managing Partner in 1992. He was appointed Chairman and joined the Global Executive
Board of Ernst & Young Global LLP in 1995. He is a non-executive director of Royal Dutch Shell,
Alliance Boots, BBA Aviation and the Ashmore Group. He also sits on the Advisory Board of Three
Delta, is Chairman of the Practices Advisory Board of the Institute of Chartered Accountants in
England and Wales and of the Board of Trustees of Farnham Castle, and is a member of the Finance
and Audit Committees of the National Gallery.
9. Simon Murray CBE, aged 68, joined the Board in July 2007. His career has been
largely based in Asia, where he has held positions with Jardine Matheson, Deutsche Bank and
Hutchison Whampoa where, as Group Managing Director, he oversaw the development and launch of
mobile telecommunications networks in many parts of the world. He remains on the Boards of Cheung
Kong Holdings Limited, Compagnie Financière Richemont SA, Macquarie (HK) Limited and Orient
Overseas (International) Limited and is an Advisory Board Member of the China National Offshore Oil
Corporation . He also sits on the Advisory Board of Imperial College in London.
10. Anne Lauvergeon §, aged 48, joined the Board in November 2005. She is Chief
Executive Officer of AREVA Group, the leading French energy company, having been appointed to that
role in July 2001. She started her professional career in 1983 in the iron and steel industry and
in 1990 she was named Adviser for Economic International Affairs at the French Presidency and
Deputy Chief of its Staff in 1991. In 1995, she became a Partner of Lazard Frères & Cie,
subsequently joining Alcatel Telecom as Senior Executive Vice President in March 1997. She was
responsible for international activities and the Groups industrial shareholdings in the energy and
nuclear fields. In 1999, she was appointed Chairman and Chief Executive Officer of AREVA NC. Anne
is currently also Vice Chairman of the Supervisory Board of Safran, a member of the Advisory Board
of the Global Business Coalition on HIV/AIDS and a non-executive director of Total and Suez.
[Graphic Appears Here]
[Graphic Appears Here]
11. Professor Jürgen Schrempp , aged 63, has been a member of the Board since May
2000. He is a former Chairman of the Board of Management of DaimlerChrysler and one of the
principal architects of Daimler-Benzs merger with Chrysler in 1998. He became Chairman of
Daimler-Benz in 1995. Jürgen continues to hold the position of Non-Executive Chairman of Mercedes
-Benz of South Africa Limited and is a non-executive director of the South African Coal, Oil and
Gas Corporation (SASOL), Compagnie Financière Richemont SA, Switzerland and South African Airways .
Jürgen is Chairman Emeritus of the Global Business Coalition on HIV/AIDS and holds South Africas
highest civilian award, the Order of Good Hope, conferred upon him by President Nelson Mandela . He
will retire from the Board at the conclusion of the Companys AGM on 29 July 2008.
12. Luc Vandevelde , aged 57, joined the Board in September 2003 and is Chairman of
the Remuneration Committee . He is a director of Société Générale and the Founder and Managing
Director of Change Capital Partners LLP, a private equity fund. Luc was formerly Chairman of the
Supervisory Board of Carrefour SA, Chairman of Marks & Spencer Group Plc and Chief Executive
Officer of Promodes, and he has held senio
r European and international roles with Kraft General
Foods.
13. Anthony Watson , aged 63, was appointed to the Board in May 2006. Prior to joining
Vodafone, he was Chief Executive of Hermes Pensions Management Limited, a position he had held
since 2002. Previously he was Hermes Chief Investment Officer, having been Managing Director of
AMP Asset Management and the Chief International Investment Officer of Citicorp Investment
Management from 1991 until joining Hermes in 1998. He is Chairman of Marks & Spencer Pension Trust
Ltd, the Strategic Investment Board in Northern Ireland and the Asian Infrastructure Fund. He is
also a non-executive director of Hammerson Plc and Witan Investment Trust Plc, and was formerly a
member of the Financial Reporting Council.
14. Philip Yea, aged 53, became a member of the Board in September 2005. He is the
Chief Executive Officer of 3i Group plc, having been appointed to that role in July 2004. Prior to
joining 3i, he was Managing Director of Investcorp and, from 1997 to 1999, the Group Finance
Director of Diageo plc following the merger of Guinness plc, where he was Finance Director, and
Grand Metropolitan plc. He has previously held non-executive roles at HBOS plc and Manchester
United plc.
Vodafone Group Plc Annual Report 2008 63




---



##### 



Vodafone  Governance
Board of Directors            and Group Management            continued
Executive            Committee
Chaired by Arun Sarin, this committee focuses on the Groups strategy, financial structure and
planning, succession planning, organisational development and Group-wide policies. The Executive
Committee membership comprises the executive directors, details of whom are shown on page 62, and
the senior managers who are listed below.
Senior management
Members            of the Executive            Committee            who are not also executive            directors            are regarded            a
s senior managers            of the Company .
Paul Donovan , Chief Executive Officer, EMAPA, aged 49, was appointed to this position in May 2006.
He joined Vodafone UK in 1999 as Managing Director  Commercial and became Chief Executive Officer
of Vodafone Ireland in 2001. In January 2005, he became Chief Executive Officer, Other Vodafone
Subsidiaries, managing 15 markets in which Vodafone operated . Paul has over 16 years experience
in the telecommunications and IT industries, gained at Apple Computer, BT and Cable and Wireless,
as well as Vodafone . He began his career in sales and marketing at the Mars Group before becoming
Marketing Director at Coca-Cola and Schweppes Beverages .
Warren Finegold , Chief Executive Officer, Global Business Development, aged 51, was appointed to
this position and joined the Executive Committee in April 2006. He was previously a Managing
Director of UBS Investment Bank and head of its technology team in Europe. He is responsible for
business development, mergers and acquisitions and partner networks .
Terry Kramer , Group Strategy and Human Resources Director and Chief of Staff, aged 48, joined
Vodafone in January 2005 as Chief of Staff and was appointed Group Human Resources Director in
December 2006. Terrys role was recently expanded to include Vodafone Group Strategy . Prior to his
appointment, he was Chief Executive Officer of Q Comm International, a publicly traded provider of
transaction processing services for the telecommunications industry . He also worked for 12 years
at PacTel/AirTouch Communications in a variety of roles including President AirTouch Paging, Vice
President Human Resources -AirTouch Communications, Vice President Business Development -AirTouch
Europe and Vice President & General Manager -AirTouch Cellular Southwest Market. Prior to that, he
was an Associate with Booz Allen & Hamilton, a management consulting firm. Terry is a trustee of
The Vodafone Group Foundation .
Simon Lewis, Group Corporate Affairs Director, aged 49, joined Vodafone in November 2004. He
previously held senior roles at Centrica Plc including Managing Director, Europe, and Group
Director of Communications and Public Policy. Prior to that, he was Director of Corporate Affairs
at NatWest Group and the Head of Public Relations at S.G. Warburg plc. He was President of the
Institute of Public Relations in 1997 and is a Visiting Professor at the Cardiff School of
Journalism . In 1998, he was seconded to Buckingham Palace for two years as the first
Communications Secretary to The Queen. He is Chairman of the UK Fulbright Commission and a trustee
of The Vodafone Group Foundation .
Steve Pusey, Chief Technology Office
r, aged 46, joined Vodafone in
September 2006 and is responsible for all aspects of Vodafones networks, IT capability, research
and development and supply chain management . Prior to joining Vodafone, he held the positions of
Executive Vice President and President, Nortel EMEA, having joined Nortel in 1982, gaining a wealth
of international experience across both the wireline and wireless industries and in business
applications and solutions . Prior to Nortel, he spent several years with British Telecom .
Frank Rovekamp , Group Chief Marketing Officer, aged 53, was appointed to this position and joined
the Executive Committee in May 2006. He joined Vodafone in 2002 as Marketing Director and a member
of the Management Board of Vodafone Netherlands and later moved to Vodafone Germany as Chief
Marketing Officer and a member of the Management Board. Before joining Vodafone, he held roles as
President and Chief Executive Officer of Beyoo and Chief Marketing Officer with KLM Royal Dutch
Airlines. He is a trustee of The Vodafone Group Foundation .
Stephen Scott, Group General Counsel and Company Secretary, aged 54, was appointed
to this position in 1991, prior to which he was employed in the Racal Group legal department, which
he joined in 1980 from private law practice in London. He is a director of the Companys UK pension
trustee company and of ShareGift (the Orr Mackintosh Foundation Limited) and is a director and
trustee of LawWorks (the Solicitors Pro Bono Group).
Strategy Board
The Strategy Board meets three times each year to discuss strategy . This is attended by Executive
Committee members and the Chief Executive Officers of the major operating companies and other
selected individuals based on Strategy Board topics.
Other Board and Executive            Committee            members
The following            members            also served on the Board or the Executive            Committee            during the 2008 financial year:
Lord Broers was a member            of the Board, the Audit Committee and the Nominations            and Governance Committee            until the conclusion            of the AGM on 24 July 2007.
Alan Harper was Group Strategy and New Business            Director and was a member of the Executive Committee until 1 September 2007.
64Vodafone Group Plc Annual Report 2008




---



##### 



Corporate            Governance
The Board of the Company            is committed            to high standards            of corporate            governance, which it considers are critical to business            integrity            and to maintaining            investors trust in the Company . The Group expects all its directors            and employees            to act with honesty, integrity            and fairness. The Group will strive to a
ct in accordance            with the laws and customs            of the countries            in which it operates; adopt proper standards            of business            practice and procedure; operate with int
egrity; and observe and respect the culture of every1 country in which it does business .
For each of the annual reports issued since 2004, Governance Metrics International, a global
corporate governance ratings agency, ranked the Company amongst the top UK companies, with an
overall global corporate governance rating of eight and a half and above out of ten.
In the Companys profile report by Institutional Shareholder Services Inc. (ISS), dated 1 May
2008, the Companys governance practices outperformed 95.9% of the companies in the ISS developed
(excluding US) universe, 88.1% of companies in the telecommunications sector group and 96.5% of the
companies in the UK.
Compliance with the Combined Code
The Companys ordinary shares are listed in the UK on the London Stock Exchange . In accordance
with the Listing Rules of the UK Listing Authority, the Company confirms that throughout the year
ended 31 March 2008 and at the date of this Annual Report, it was compliant with the provisions of,
and applied the principles of, Section 1 of the 2006 FRC Combined Code on Corporate Governance (the
Combined Code). The following section, together with the Directors Remuneration section on
pages 71 to 81, provides details of how the Company applies the principles and complies with the
provisions of the Combined Code.
Board organisation            and structure
The role of the Board
The Board is responsible            for the overall conduct of the Groups business            and has the powers, authorities            and duties vested in it by and pursuant            to the relevant laws of England and Wales and the Articles of Association . Th
e Board:
Board meetings
The Board meets at least eight times a year and the meetings are structured to allow open
discussion . All directors participate in discussing the strategy, trading and financial
performance and risk management of the Company . All substantive agenda items have comprehensive
briefing papers, which are circulated one week
before the meeting .
The following table shows the number of years directors have been on the Board at 31 March 2008 and
their attendance at scheduled Board meetings they were eligible to attend during the 2008 financial
year:
Years            Meetings
on Board            attended
Sir John Bond 3 8/8
John Buchanan 5 8/8
Arun Sarin 8 8/8
Vittorio Colao 1 8/8
Andy Halford 2 8/8
Dr Michael Boskin 8 8/8
Alan Jebson 1 8/8
Nick Land 1 8/8
Anne Lauvergeon 2 7/8
Simon Murray (from 1 July 2007) < 1 6/7
Professor Jürgen Schrempp 7 7/8
Luc Vandevelde 4 8/8
Anthony Watson 2 8/8
Philip Yea 2 8/8
Lord Broers (until 24 July 2007) n/a 2/2


 
In addition to regular Board meetings, there are a number of other meetings            to deal with specific
matters. Directors unable to attend a Board meeting because of another engagement are nevertheless
provided with all the papers and information relevant for such meetings and are able to discuss
issues arising in the meeting with the Chairman or the Chief Executive .
Division of responsibilities
The roles of the Chairman and Chief Executive are separate and there is a division of
responsibilities that is clearly established, set out in writing and agreed by the Board to ensure
that no one person has unfettered powers of decision . The Chairman is responsible for the
operation, leadership and governance of the Board, ensuring its effectiveness and setting its
agenda. The Chief Executive is responsible for the management of the Groups business and the
implementation of Board strategy and policy.
Board balance and independence
The Companys Board consists of 14 directors, 13 of whom served throughout the 2008 financial year.
At 31 March 2008, in addition to the Chairman, Sir John Bond, there were three executive directors
and ten non-executive directors .
The Deputy Chairman, John Buchanan, is the nominated senior independent director and his role
includes being available for approach or representation by directors or significant shareholders
who may feel inhibited from raising issues with the Chairman . He is also responsible for
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 Company considers all of its present non-executive directors to be fully independent . 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 names and biographical details of the
current directors are given on pages 62 and 63. Changes to the commitments of the directors are
reported to the Board.
Vodafone Group Plc Annual Report 2008 65




---



##### 



has final responsibility for the management, direction and performance of the Group and its
businesses; is required to exercise objective judgement on all corporate matters independent from
executive management; is accountable to shareholders for the proper conduct of the business; and is
responsible for ensuring the effectiveness of and reporting on the Groups system of corporate
governance .
The Board has a formal schedule            of matters reserved to it for its decision and these include:
      
Group strategy; major capital projects, acquisitions or divestments; annual budget and operating            plan;
Group financial structure, including            tax and treasury; annual and half-yearly financial results and shareholder            communications; system of internal control and risk management; and senior management            structure, responsibilities            an
d succession            plans.
The schedule is reviewed periodically . It was last formally reviewed by the Nominations and
Governance Committee in September 2005, at which time it was determined that no amendments were
required . Its continued validity was assessed as part of the performance evaluations conducted in
the 2008 financial year.
Other specific responsibilities are delegated to Board committees which operate within clearly
defined terms of reference . Details of the responsibilities delegated to the Board committees are
given on pages 67 to 68.
Vodafone   Governance
Corporate            Governance            continued
Under the laws of England and Wales, the executive and non-executive directors are equal members of
the Board and have overall collective responsibility for the direction of the Company . In
particular, non-executive directors are responsible for:
·
·
· 
·
bringing a wide range of skills and experience to the Group, including independent judgement on
issues of strategy, performance, financial controls and systems of risk management; constructively
challenging the strategy proposed by the Chief Executive and executive directors; scrutinising and
challenging performance across the Groups business; assessing risk and the integrity of the
financial information and controls of the Group; and ensuring appropriate remuneration and
succession planning arrangements are in place in relation to executive directors and other senior
executive roles.
Board            effectiveness
Appointments            to the Board
There is a formal, rigorous and transparent procedure, which is based on merit and against
objective criteria, for the appointment of new directors to the Board. This is described in the
section on the Nominations and Governance Committee set out on page 67. Individual non-executive
directors are generally expected to serve two three-year terms. At the end of the second three-year
term, a rigorous and detailed analysis is undertaken and only then would a non-executive director
be invited to serve a third term. The non-executive directors are generally not expected to serve
for a period exceeding nine years. The terms and conditions of appointment of the non-executive
directors are available for inspection at the Companys registered office and will be available for
inspection at the AGM from 15 minutes before the meeting until i
t ends.
Information and professional development
Each member of the Board has immediate access to a dedicated online team room and can access
monthly information including actual financial results, reports from the executive directors in
respect of their areas of responsibility and the Chief Executives report which deals, amongst
other things, with investor relations, giving Board members an opportunity to develop an
understanding of the views of major investors . These matters are discussed at each Board meeting .
From time to time, the Board receives detailed presentations from non-Board members on matters of
significance or on new opportunities for the Group. Financial plans, including budgets and
forecasts, are regularly discussed at Board meetings . The non-executive directors periodically
visit different parts of the Group and are provided with briefings and information to assist
them in performing their duties.
The Chairman is responsible for ensuring that induction and training programmes are provided and
the Company Secretary organises the programmes . Individual directors are also 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 .
On appointment, individual directors            undergo an induction            programme            covering, amongst            other things:
   
the business            of the Group; their legal and regulatory            responsibilities            as directors            of the Company; briefings            and presentations     
       from relevant executives; and opportunities            to visit business            operations .
If appropriate, the induction will also include briefings on the scope of the Internal Audit
function and the role of the Audit Committee, meetings with the external auditor and other areas
the Company Secretary deems fit, considering the directors area of responsibility .
66 Vodafone Group Plc Annual Report 2008




---



##### 



The Company Secretary provides a programme of ongoing training for the directors, which covers a
number of sector specific and business issues, as well as legal, accounting and regulatory changes
and developments relevant to individual directors areas of responsibility . Throughout their
period in office, the directors are continually updated on the Groups businesses and the
regulatory and industry specific environments in which it operates . These updates are by way of
written briefings and meetings with senior executives and, where appropriate, external sources.
The Company Secretary ensures that the programme to familiarise the non-executive directors with
the business is maintained over time and kept relevant to the needs of the individuals involved .
The Company Secretary confers with the Chairman and senior independent director to ensure that this
is the case.
Performance evaluation
Performance evaluation of the Board, its committees and individual directors takes place on an
annual basis and is conducted within the terms of reference of the Nominations and Governance
Committee with the aim of improving individual contributions, the effectiveness of the Board and
its Committees and the Groups performance . Prior to the 2007 financial year, the evaluation was
internally facilitated .
Following            on from the externally            facilitated            evaluation            of the Boards performance            during the 2007 financial year, the Board has
undertaken            a formal self-evaluation            of its own performance . The process involved the Chairman:
  

sending a template questionnaire to each Board member which was completed and returned; undertaking
individual meetings with each Board member on Board performance; producing a report on Board
performance, with the assistance of an external agency, using the completed questionnaire and notes
from the individual meetings; and preparing a summary which was sent with the report to Board
members for discussion at the following Board meeting .
The evaluation was designed to determine whether the Board continues to be capable of providing the
high level judgement required and whether, as a Board, the directors were informed and up to date
with the business and its goals and understood the context within which it operates . The
evaluation also included a review of the administration of the Board covering the operation of the
Board, its agenda and the reports produced for the Boards consideration . The Board will continue
to review its procedures, its effectiveness and development in the financial year ahead.
The Chairman leads the assessment of the Chief Executive and the non-executive directors, the Chief
Executive undertakes the performance reviews for the executive directors and the senior independent
director conducts the review of the performance of the Chairman by having a meeting with all the
non-executive directors together and individual meetings with the executive directors and the
Company Secretary . Following this process, the senior independent director produces a written
report which is discussed with the Chairman .
The evaluation of each of the Board committees was undertaken using an online questionnaire that
each member of the committees and others who attend committee meetings or interact with committee
members are required to complete . The results of the questionnaires were discussed with the
Chairman of the Board and the members of the committees .
The evaluations found th
e performance of each director to be effective and concluded that the Board
provides the effective leadership and control required for a listed company . 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 2008 continue to be effective and that the Company
should support their re-election .
Re-election of directors
Although not required by the Articles, in the interests of good corporate governance, the directors
have resolved that they will all submit themselves for annual re-election at each AGM of the
Company . Accordingly, at the AGM to be held on 29 July 2008, all the directors will be retiring
and, with the exception of Arun Sarin, Michael Boskin and Jürgen Schrempp who will not offer
themselves for re-election, being eligible and on the recommendation of the Nominations and
Governance Committee, will offer themselves for re-election .
Independent            advice
The Board recognises            that there may be occasions            when one or more of the directors
feel 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.
Indemnification            of directors
In accordance with the Companys 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 respect of those matters for which the directors may not
be indemnified, the Company maintained a directors and officers liability insurance policy
throughout the financial year. This policy has been renewed for the next financial year. Neither
the Companys indemnity nor the insurance provides cover in the event that the director is proven
to have acted dishonestly or fraudulently .
Board committees
The Board has established an Audit Committee, a Nominations and Governance Committee and a
Remuneration Committee, each of which has formal terms of reference approved by the Board. The
Board is satisfied that the terms of reference for each of these committees satisfy the
requirements of the Combined Code and are reviewed internally on an ongoing basis by the Board. The
terms of reference for all Board committees can be found on the Companys website at www.vodafone
        .com or a copy can be obtained by application to the Company Secretary at the Companys registered
office.
The committees are provided with all necessary resources to enable them to undertake their duties
in an effective manner. The Company Secretary or his delegate acts as secretary to the committees .
The minutes of committee meetings are circulated to all directors .
Each committee has access to such information and advice, both from within the Group and
externally, at the cost of the Company as it deems necessary . This may include the appointment of
external consultants where appropriate . Each committee undertakes an annual review of the
effectiveness of its terms of reference and makes recommendations to the Board for changes where
appropriate .
Audit Committee
The members            of the Audit Committee            during the year, together            with a record of their attendance            at scheduled            meetings  
          which they were eligible to attend, are set out below:
Meetings attended
Dr Michael            Boskin, Chairman 4/4
John Buchanan 4/4
Alan Jebson (from 23 July 2007) 3/3
Nick Land 4/4
Anne Lauvergeon 3/4
Lord Broers (until 23 July 2007) 1/1
The Audit Committee is comprised of financially literate members having the necessary ability and
experience to understand financial statements . Solely for the purpose of fulfilling the
requirements of the Sarbanes -Oxley Act and the Combined Code, the Board has designated Nick Land,
who is an independent non-executive director satisfying the independence requirements of Rule 10A-3
of the US Securities Exchange Act 1934, as its financial expert on the Audit Committee . Further
details on Nick Land can be found in Board of Directors and Group Management on page 63.
The Audit Committees            responsibilities            include the following:
 
   

overseeing the relationship with the external auditors; reviewing the Companys preliminary results
announcement, half-yearly results and annual financial statements; monitoring compliance with
statutory and listing requirements for any exchange on which the Companys shares and debt
instruments are quoted; reviewing the scope, extent and effectiveness of the activity of the Group
Internal Audit Department; engaging independent advisers as it determines is necessary and to
perform investigations; reporting to the Board on the quality and acceptability of the Companys
accounting policies and practices including, without limitation, critical
accounting policies and practices; and playing an active role in monitoring the Companys
compliance efforts for Section 404 of the Sarbanes -Oxley Act and receiving progress updates at
each of its meetings .
At least twice a year, the Audit Committee meets separately with the external auditors and the
Group Audit Director without management being present. Further details on the work of the Audit
Committee and its oversight of the relationships with the external auditors can be found under
Auditors and the Report from the Audit Committee which are set out on pages 69 and 70.
Nominations            and Governance            Committee
The members            of the Nominations            and Governance            Committee            during the year, together            with a record of their attendance       
     at scheduled            meetings            which they were eligible to attend, are set out below:
Meetings attended
Sir John Bond, Chairman 6/6
Lord Broers (until 23 July 2007) 2/2
John Buchanan 5/6
Arun Sarin 6/6
Professor            Jürgen Schrempp 4/6
Luc Vandevelde 6/6
The Nominations and Governance Committees key objective is to ensure that the Board comprises
individuals with the requisite skills, knowledge and experience to ensure that
 it is effective in
discharging its responsibilities . The Nominations and Governance Committee:
·  
·
leads the process for identifying and making recommendations to the Board of candidates for
appointment as directors of the Company, giving full consideration to succession planning and the
leadership needs of the Group; makes recommendations to the Board on the composition of the
Nominations and Governance Committee and the composition and chairmanship of the Audit and
Remuneration Committees; regularly reviews the structure, size and composition of the Board,
including the balance of skills, knowledge and experience and the independence of the non-executive
directors, and makes recommendations to the Board with regard to any change; and is responsible for
the oversight of all matters relating to corporate governance, bringing any issues to the attention
of the Board.
The Nominations and Governance Committee meets periodically when required . No one other than a
member of the Nominations and Governance Committee is entitled to be present at its meetings .
Other non-executive directors and external advisers may be invited to attend. The Nominations and
Governance Committee usually meets two or three times each year but this year, in order to address
the matter of the Chief Executives succession, it met six times as a body. Committee members were
also additionally involved in the assessment and interview of potential successors to the Chief
Executive, a process in which they were supported by MWM Consulting .
Vodafone            Group Plc Annual Report 2008 67




---



##### 



Vodafone   Governance
Corporate            Governance            continued
Remuneration            Committee
The members            of the Remuneration            Committee            during the year, together            with a record of their attendance            at scheduled 
           meetings            which they were eligible to attend, are set out below:
Meetings attended
Luc Vandevelde, Chairman 5/5
Simon Murray (from 23 July 2007) 3/4
Professor            Jürgen Schrempp 4/5
Anthony            Watson 5/5
Philip Yea 5/5
Dr Michael            Boskin (until 23 July 2007) 2/2
·
·  
hosting investors and analysts sessions at which senior management from relevant operating
companies deliver presentations which provide an overview of each of the individual businesses and
operations; attendance by senior executives across the business at relevant meetings and
conferences throughout the year; responding to enquiries from shareholders and analysts through the
Companys Investor Relations team; and a section dedicated to shareholders on the Companys
corporate website, www.vodafone .com.
The responsibilities of the Remuneration Committee include the following:
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
rests with the Chairman, who 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 senior independent director has a specific responsibility to be available
to shareholders who have concerns, for whom contact with the Chairman, Chief Executive or Chief
Financial Officer has either failed to resolve their concerns, or for whom such contact is
inappropriate .
At the 2007 AGM, the shareholders approved amendments to the Articles which enabled the Company to
take advantage of the provision in the Companies Act 2006 (effective from 20 January 2007) to
communicate with its shareholders electronically . Following that approval, unless a shareholder
has specifically asked to receive a hard copy, they will receive notification of the availability
of the Annual Report on the Companys website www.vodafone .com. For the 2008 financial year,
shareholders will receive the Notice of Meeting and form of proxy in paper through the post unless
they have previously opted to receive email communications . Shareholders continue to have the
option to appoint proxies and give voting instructions electronically .
The principal communication with private investors is via the Annual Report and through the AGM, an
occasion which is attended by all the Companys directors and at which all shareholders present are
given the opportunity to question the Chairman and the Board as well as the Chairmen of the Audit,
Remuneration and Nominations and Governance Committees . After the AGM, shareholders can meet
informally with directors .
A summary presentation of results and development plans is also given at the AGM before the
Chairman deals with the formal busine
ss of the meeting . The AGM is broadcast live on the Groups
website, www.vodafone .com, and a recording of the webcast can subsequently be viewed on the
website. All substantive resolutions at the Companys AGMs are decided on a poll. The poll is
conducted by the Companys Registrars and scrutinised by Electoral Reform Services . The proxy
votes cast in relation to all resolutions, including details of votes withheld, are disclosed to
those in attendance at the meeting and the results of the poll are published on the Companys
website and announced via the regulatory news service. Financial and other information is made
available on the Companys website, www.vodafone .com, which is regularly updated .
Political donations
At the 2006 AGM, the directors sought and received a renewal of shareholders approval for a period
of three years (until the AGM in 2009) to enable the Group to make donations to EU Political
Organisations or EU Political Expenditure, under the relevant provisions of the Political Parties,
Elections and Referendums Act 2000. The approval given restricts such expenditure for each year
until the AGM in 2009 to an aggregate amount of £100,000 (£50,000 in respect of donations to EU
Political Organisations and £50,000 in respect of EU Political Expenditure) .
Neither the Company nor any if its subsidiaries have made any political donations during the year.
With effect from 1 October 2007, the relevant provisions governing political donations in the
Companies Act 1985 have been replaced by similar provisions in Part 14 of the Companies Act 2006.
Although the existing shareholder approval in respect of political donations does not expire until
the Companys AGM in 2009, Part 14 of the Companies Act 2006 is technically different to the
relevant
·
·
·
determining, on behalf of the Board, the Companys policy on the remuneration of the Chairman, the
executive directors and the senior management team of the Company; determining the total
remuneration packages for these individuals, including any compensation on termination of office;
and appointing any consultants in respect of executive directors remuneration .
The Chairman and Chief Executive may attend the Remuneration Committees meetings by invitation .
They do not attend when their individual remuneration is discussed and no director is involved in
deciding his own remuneration .
Further information            on the Remuneration            Committees            activities            is contained            in Directors Remuneration on pages 71 to 81.
Executive            Committee
The executive directors, together with certain other Group functional heads and regional chief
executives, meet 12 times a year as the Executive Committee under the chairmanship of the Chief
Executive . The Executive Committee is responsible for the day-to-day management of the Groups
businesses, the overall financial performance of the Group in fulfilment of strategy, plans and
budgets and Group capital structure and funding. It also reviews major acquisitions and disposals .
The members of the Executive Committee and their biographical details are set out on pages 62 and
64.
Company Secretary
The Company Secretary acts as Secretary to the Board and to the committees of the Board and, with
the consent of the Board, may delegate responsibility for the administration of the Committees to
other suitably qualified staff. He:
·  
assists the Chairman in ensuring that all directors have full and timely access to all relevant
information; is responsible for ensuring that the correct Board p
rocedures are followed and advises
the Board on corporate governance matters; and administers the procedure under which directors can,
where appropriate, obtain independent professional advice at the Companys expense .
The appointment            or removal of the Company            Secretary            is a matter for the Board as a whole.
Relations            with shareholders
The Company is committed to communicating its strategy and activities clearly to its shareholders
and, to that end, maintains an active dialogue with investors through a planned programme of
investor relations activities . The investor relations programme includes:



formal presentations            of full year and half-yearly results and interim management            statements; briefing
meetings with major institutional shareholders in the UK, the US and in Continental Europe after
the half-yearly results and preliminary announcement, to ensure that the investor community
receives a balanced and complete view of the Groups performance and the issues faced by the Group;
regular meetings with institutional investors and analysts by the Chief Executive and the Chief
Financial Officer to discuss business performance;
68 Vodafone Group Plc Annual Report 2008




---



##### 



provisions of the Companies Act 1985 and, consequently, to avoid any confusion, the directors, on a
precautionary basis, are bringing this matter again to shareholders and the terms of this years
resolution have been adjusted to reflect the different technical requirements of Part 14 of the
Companies Act 2006.
It remains the policy of the Company not to make political donations or incur political expenditure
as those expressions are normally understood . However, the directors consider that it is in the
best interests of shareholders for the Company to participate in public debate and opinion-forming
on matters which affect its business . To avoid inadvertent infringement of the Companies Act 2006,
the directors are seeking shareholders authority for the Company and its subsidiaries to make
political donations and to incur political expenditure during the period from the date of the AGM
to the conclusion of the AGM in 2012 or 29 July 2012, whichever is the earlier, up to a maximum
aggregate amount of £100,000 per year.
Internal control
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 process of managing the risks associated with social, environmental and ethical
impacts is also discussed under Performance  Corporate Responsibility on pages 59 to 61.
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 approval of the Annual Report. These procedures, which are subject to regular review,
provide an ongoing process for identifying, evaluating and managing the significant risks faced by
the Group. See page 83 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:




a formal annual confirmation provided by the Chief Executive Officer and Chief Financial Officer of
each Group company certifying the operation of their control systems and highlighting any
weaknesses, the results of which are reviewed by regional management, the Audit Committee and the
Board; a review of the quality and timeliness of disclosures undertaken by the Chief Executive and
the Chief Financial Officer which includes formal annual meetings with the operating company or
regional chief executives and chief financial officers and the Disclosure Committee; periodic
examination of business processes on a risk basis including reports on controls throughout the
Group undertaken by the Group Internal Audit Department who report directly to the Audit Committee;
and reports from the external auditors, Deloitte & Touche LLP, on certain internal controls and
relevant financial reporting matters, presented to the Audit Committee and management .
Any controls and procedures, no matter how well designed and operated, can provide only reasonabl
e
and not absolute assurance of achieving the desired control objectives . Management is required to
apply judgement in evaluating the risks facing the Group in achieving its objectives, in
determining the risks that are considered acceptable to bear, in assessing the likelihood of the
risks concerned materialising, in identifying the Companys ability to reduce the incidence and
impact on the business of risks that do materialise and in ensuring that the costs of operating
particular controls are proportionate to the benefit.
Review of effectiveness
The Board and the Audit 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 2007 to the date of approval 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.
Disclosure            controls            and procedures
The Company maintains disclosure controls and procedures, as such term is defined in Exchange Act
Rule 13a-15(e), that are designed to ensure that information required to be disclosed in reports
the Company files or submits under the Exchange Act is recorded, processed, summarised and reported
within the time periods specified in the Securities and Exchange Commission rules and forms, and
that such information is accumulated and communicated to management, including the Companys Group
Chief Executive and Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure .
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 are effective at the end of the period covered by this Annual
Report.
Auditors
Following a recommendation by the Audit Committee and, in accordance with Section 384 of the
Companies Act 1985, a resolution proposing the reappointment of Deloitte & Touche LLP as auditors
to the Company will be put to the 2008 AGM.
In its assessment of the independence of the auditors and in accordance with the US Independence
Standards Board Standard No. 1, Independence Discussions with Audit Committees, the Audit
Committee receives in writing details of relationships between Deloitte & Touche LLP and the
Company 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 SEC.
In addition, the Audit Committee pre-approves the audit fee after a review of both the level of the
audit fee against other comparable companies, including those in the telecommunications industry,
and the level and nature of non-audit fees, as part of its review of the adequacy and objectivity
of the audit process.
In a further measure to ensure auditor independence is not compromised, policies provide for the
pre-approval by the Audit Committee of permitted non-audit services by Deloitte & Touche LLP. For
certain specific permitted services, the Audit Committee has pre-approved that Deloitte & Touche
LLP can be engaged by Group management subject to specified fee limits for individual engagements
and fee limits for each type of specific service permitted . For all other services, or those
permitted services that exceed the specified fee limits, the Chairman of the Audit Committee, or in
his absence another member, can pre-approve services which have not
been pre-approved by the Audit
Committee .
In addition to their statutory duties, Deloitte & Touche LLP are also employed where, as a result
of their position as auditors, they either must, or are best placed to, perform the work in
question . This is primarily work in relation to matters such as shareholder circulars, Group
borrowings, regulatory filings and certain business acquisitions and disposals . Other work is
awarded on the basis of competitive tender.
During the year, Deloitte & Touche LLP and its affiliates charged the Group £7 million (2007: £7
million, 2006: £4 million) for audit and audit-related services and a further £2 million (2007: £3
million, 2006: £4 million) for non-audit assignments . An analysis of these fees can be found in
note 4 to the Consolidated Financial Statements .
Vodafone            Group Plc Annual Report 2008 69




---



##### 



Vodafone   Governance
Corporate            Governance            continued
US listing            requirements
The Companys ADSs are listed on the NYSE and the Company is, therefore, subject to the rules of
the NYSE as well as US securities laws and the rules of the SEC. The NYSE requires US companies
listed on the exchange to comply with the NYSEs corporate governance rules but foreign private
issuers, such as the Company, are exempt from most of those rules. However, pursuant to NYSE Rule
303A.11, the Company is required to disclose a summary of any significant ways in which the
corporate governance practices it follows differ from those required by the NYSE for US companies .
The differences are as follows:
Independence
·  
The Companys Nominations and Governance Committee and Remuneration Committee have terms of
reference and composition that comply with the Combined Code requirements .
The Nominations and Governance Committee is chaired by the Chairman of the Board, and its other
members are non-executive directors of the Company and the Chief Executive .
The Audit Committee is composed entirely of non-executive directors whom the Board has determined
to be independent and who meet the requirements of Rule 10A-3 of the Securities Exchange Act.
The Company considers that the terms of reference of these committees, which are available on its
website at www.vodafone .com, are generally responsive to the relevant NYSE rules but may not
address all aspects of these rules.
Corporate            governance            guidelines


NYSE rules require that a majority of the Board must be comprised            of independent            directors and the rules include detailed tests that US companies must use for determining            independence .
The Combined            Code requires a companys            board of directors            to assess and make a determination            as to the independence            of its directors .


While the Board does not explicitly take into consideration the NYSEs detailed tests, it has
carried out an assessment based on the requirements of the Combined Code and has determined in its
judgement that all of the non-executive directors are independent within those requirements . At
the date of this Annual Report, the Board comprised the Chairman, three executive directors and ten
non-executive directors .
Committees
Under NYSE rules, US companies            must adopt and disclose corporate            governance            guidelines .
Vodafone has posted its statement of compliance with the Combined Code on its website at
www.vodafone .com. The Company has also adopted a Group Governance and Policy Manual which provides
the first level of the framework within which its businesses operate. The Manual applies to all
directors and employees .
The Company considers that its corporate governance guidelines are generally responsive to, but may
not address all aspects of, the relevant NYSE rules.
The Co
mpany has also adopted a corporate Code of Ethics for senior executives, financial and
accounting officers, separate from and additional to its Business Principles . A copy of this code
is available on the Groups website at www.vodafone .com.
External auditors
The Committee reviewed the letter from Deloitte & Touche LLP confirming their independence and
objectivity . It also reviewed and approved the scope of non-audit services provided by Deloitte &
Touche LLP to ensure that there was no impairment of independence .
The Committee approved the scope and fees for audit services provided by Deloitte & Touche LLP and
confirmed the wording of the recommendations put by the Board to the shareholders on the
appointment and retention of the external auditors .
Private meetings            were held with Deloitte & Touche LLP to ensure that there were no restrictions            on the scope of their audit and to discuss any items the auditors did not wish to raise with management            present.
Internal            audit
The Committee            engaged            in discussion and review of the Group Audit Departments            audit plan for the year, together            with its resource requirements . Private meetings were held with the Group Audit Director .
Audit Committee            effectiveness
The Audit Committee            conducts            a formal review of its effectiveness            annually            and concluded            this year that it was effective  
          and able to fulfil its terms of reference .
[Graphic Appears Here]
Dr Michael            Boskin
On behalf of the Audit Committee
·
NYSE rules require US companies to have a nominating and corporate governance committee and a
compensation committee, each composed entirely of independent directors with a written charter that
addresses the Committees purpose and responsibilities .
Report            from the Audit            Committee
The composition            of the Audit Committee            is shown in the table on page 67 and its terms of reference            are discussed            under Board committees   Audit Committee .
During the year ended 31 March 2008, the principal            activities            of the Committee            were as follows:
Financial            statements
The Committee considered reports from the Chief Financial Officer and the Director of Financial
Reporting on the half-year and annual financial
statements . It also considered reports from the
external auditors, Deloitte & Touche LLP, on the scope and outcome of the half-year review and
annual audit.
The financial statements            were reviewed            in the light of these reports and the results of that review reported            to the Board.
Risk management            and internal            control
The Committee reviewed the process by which the Group evaluated its control environment, its risk
assessment process and the way in which significant business risks were managed . It also
considered the Group Audit Departments reports on the effectiveness of internal controls,
significant frauds and any fraud that involved management or employees with a significant role in
internal controls . The Committee was also responsible for oversight of the Groups compliance
activities in relation to section 404 of the Sarbanes -Oxley Act.
The Committee also reviewed arrangements by which staff could, in confidence, raise concerns about
possible improprieties in matters of financial reporting or other matters. This was achieved
through using existing reporting procedures and a website with a dedicated anonymous email feature.
70Vodafone            Group Plc Annual Report 2008




---



##### 



Directors Remuneration
Dear Shareholder
The Vodafone Remuneration Committee commissioned a review of the reward package for the executive
directors during the 2008 financial year. The objective was to consider the effectiveness of the
reward arrangements in aligning with our strategy and shareholder interests . As a result, the
Remuneration Committee has updated the remuneration policy, reward structure and market positioning
for the coming years.
The key principles            adopted for the updated Vodafone            remuneration            policy are as follows:




ensure a competitive total remuneration package as benchmarked against relevant companies and
markets; provide the opportunity for significant reward upside only if:  truly exceptional
performance is delivered; and  participants invest their own money; deliver a high proportion of
total remuneration through performance related equity payments; and drive alignment to our
strategy, to create shareholder value, and reinforce shareholder alignment .
In order to fulfil this policy, the following            key changes are being made to the components            of directors remuneration:
  
the long term incentive structure is being simplified  awards will be made in performance shares
only; the vesting of performance shares will be based upon a combination of operational and equity
performance measures; and participants will be invited to invest their own money in order to
maximise their long term award.
The Remuneration Committee continues to monitor how well incentive awards made in previous years
align with the Companys performance . We are confident that forecast rewards are commensurate with
performance . This financial year we have taken the opportunity to further align the Vodafone
reward package to the strategy and shareholder interests . In particular, this Remuneration Report
outlines the detailed changes to the Global Long Term Incentive Plan (GLTI) for the 2009
financial year. This plan operates under the existing plan rules which were approved in 2006. As a
result there will be no separate resolution for the amendments . However, the Remuneration
Committee always takes an active interest in shareholder views and the voting on the Remuneration
Report. As such, it hopes to receive your support at the AGM on 29 July 2008.
[Graphic Appears Here]
Luc Vandevelde
Chairman            of the Remuneration            Committee 27 May 2008
Remuneration            Committee
The Remuneration Committee is comprised to exercise independent judgement and consists only of
independent non-executive directors . The Remuneration Committee had five scheduled and a number of
other ad hoc meetings during the year. For further details, the terms of reference can be found on
page 68.
Remuneration            Committee
Chairman            Luc Vandevelde
Committee members            Dr Michael            Boskin (left on 23 July 2007)
Simon Murray (joined on 25 July 2007)
Professor            Jürgen Schrempp
Anthony            Watson
Philip Yea
Management            attendees
Chief Executive            Arun Sarin
Group HR Director            Terry Kramer
Group Reward & Recognition            Director            Tristram            Roberts
External advisers
During the year, Towers Perrin supplied market data and advice on market practice and governance .
PricewaterhouseCoopers LLP and Kepler Associates provided performance analysis and advice on plan
design and performance measures .
The advisers also provided advice to the Company on general human resource and compensation related
matters. In addition, PricewaterhouseCoopers LLP also provided a broad range of tax, share scheme
and advisory services to the Group during 2008.
Contents
The detail of this Remuneration            Report is set out over the following            pages, as follows:
       
Review of the executive            directors remuneration
How the executive            directors            were paid in the 2008 financial year
Changes to how the executive directors will be paid in the 2009 financial year Grants made and
payouts received in the 2008 financial year Other elements of directors packages Non-executive
directors remuneration Other considerations Audited information
Vodafone            Group Plc Annual Report 2008 71




---



##### 



Vodafone   Governance
Directors Remuneration            continued
Review            of the executive            directors remuneration
The Remuneration            Committee            commissioned            a full review of the reward arrangements            for the Vodafone          
  executive            directors            in the 2008 financial year.
The remuneration            policy was last amended            in 2002.
Remuneration            policy
Vodafone wishes to provide a level of remuneration which attracts, retains and motivates executive
directors of the highest calibre. To maximise the effectiveness of the remuneration policy, careful
consideration will be given to aligning the remuneration package with shareholder interests and
with best practice .
The aim is to target an appropriate level of remuneration for managing the business in line with
the strategy . There will be the opportunity for executive directors to achieve significant upside
for truly exceptional performance .
In setting total remuneration, the Remuneration Committee will consider a relevant group of
comparators . Comparators will be selected on the basis of the role being considered . Typically,
no more than three reference points will be used. These will be as follows: top European companies,
top UK companies and, particularly for scarce skills, the relevant market in question .
These comparators reflect the fact that currently the majority of the business is in Europe, the
Companys primary listing is in the UK and that the Remuneration Committee is aware that in some
markets, the competition is tough for the very best talent.
A high proportion of total remuneration will be awarded through short term and long term
performance related remuneration . The Remuneration Committee believes that incorporating and
setting appropriate performance measures and targets in the package is paramount  this will be
reflected in an appropriate balance of operational and equity performance .
Finally, to fully embed the link to shareholder alignment, all executive directors are expected to
meet and comply with the rigorous and stretching share ownership requirements set by the
Remuneration Committee .
Changes            to the package
The review of executive            directors remuneration            has had the following            high level impact on the package for the 2009 financial year:
Rationale            for changes
The key purposes            of making the changes are as follows:

Link to strategy
Focusing            on driving the key measures            of underlying            business    
        performance together            with upside for strong market value performance .

Shareholder            alignment
Increasing            the co-investment            opportunity and moving it from a two year deferral to a three year investment should increase the participants holdings in the Company .

Simplification
Moving to one long-term incentive            vehicle (shares) simplifies            the long-term arrangements .
Impact            of changes            on package
Comparison            of estimated            values for the Chief Executive            in the 2008 financial            year and the 2009 financial            year
The estimated values are used to represent the level of different elements of the package . The
analysis below assumes a one times salary co-investment, which is in line with the current
opportunity under the DSB plan. The estimated value will be greater the more a participant
co-invests (up to two times net salary).
Base GLTI options
Bonus GLTI performance            shares
DSB Co-investment
2008 financial year estimated value
2009 financial year estimated value
[Graphic Appears Here]
0
2,000
4,000
6,000
8,000
Estimated value of components            of package £000
Comparison            of package            structure            for the Chief Executive            in the 2008 financial            year and the 2009 financial   
         year
The Remuneration            Committee            continues            to be comfortable            with the structure of remuneration . Therefore, there is no significant            change to:
  
no change to the base salary policy; no significant change to the annual bonus arrangement; and
long term incentives will be awarded in the form of performance shares with an opportunity to
co-invest. The Remuneration Committee does not foresee a requirement to award options or use the
Deferred Share Bonus (DSB) in the immediate future. Vesting will be based on a performance matrix
comprised of operational and equity performance .
 
the split between            fixed and variable pay; or the split between            short term and long term pay (though note that all long term remuneration            is now received            over three years).
The actual percentages            depend on the participants            level of co-investment .
These            changes            are summarised            in the following            table:
Reward            elements 2007/08 measures 2008/09 measures
Annual            bonus            Business            KPIs            Business            KPIs
DSB            Free cash flow            Not applicable
Share            options            EPS            Not applicable
Performance            shares            Total shareholder            return (TSR) Free cash flow and TSR
Co-investment            Not applicable            Free cash flow and TSR
72Vodafone            Group Plc Annual Report 2008




---



##### 



How the executive directors were paid in the 2008 financial year The table below summarises the plans used to reward the executive directors in the 2008 financial
year. Details on performance measures, the link to strategy and grant policy are also included. 2007/08 performance measure(s) Purpose  link to strategy Grant policy Base salary
2007/08  Not applicable  Reflects competitive market level, role and individual  Set annually at 1 July contribution
Annual bonus 2007/08 Group Short  Adjusted operating profit (30%)  One year KPIs against budget and linked to
performance  Target bonus is 100% of Term Incentive Plan  Free cash flow (20%) targets  delivered in either cash or deferred into shares salary earned over the (GSTIP)(1) 
Service revenue (25%) (see DSB below) financial year, with 200% · Total communications  Three key measures: Adjusted
operating profit, service maximum available for revenue (10%) revenue and free cash flow  cover the key financial elements exceptional performance
· Customer delight (15%) of the strategy (revenue stimulation, cost control  The Remuneration and overall growth in EMAPA)
Committee reviews and · Total communications revenue continues to focus attention sets the GSTIP on this important element of the strategy performance
targets · Customer delight  satisfied customers directly impact on an annual basis our key financial metrics Bonus deferral
arrangement 2007 Deferred Share  Two year cumulative adjusted  If executive directors choose to defer their
annual bonus  The entire bonus must Bonus (DSB) free cash flow into shares, then they will be
eligible for an award of be deferred into shares to · The target for the June 2007 matching shares under
the DSB arrangement equal to 50% participate in the DSB award was a hurdle of 85% of of the value of the deferred bonus conditionally awarded
· 50% of the value of the the Long Range Plan target over in shares deferred bonus the 2008 and 2009 financial years  The matching award is
earned by achievement of the conditionally awarded performance target over the following two years in shares · Incentivises the purchase of shares to meet share ownership
guidelines. This acts as a key part of alignment with shareholders interests Long term incentives
2007 Global Long Term  Three year cumulative growth  GLTI share options have a ten year term and
will vest after  Annual grants are made Incentive Plan (GLTI) in adjusted EPS three years,
subject to performance achievement. To the in July share options  For the July 2007 grants, the
extent that the performance target is not met, the options  The number of shares performance range
was 5%  8% p.a. will lapse (re-testing is not permitted) granted are based on · As in previous years, 25%  The share options
incentivise underlying business growth expected values vests at threshold (5% p.a.) through earnings and only deliver value if the share price 
For the Chief Executive, with a straight line up to increases. The price at which shares can be acquired on the expected value is 75% 100% vesting
at maximum option exercise will be no lower than the market value of of base salary (8% p.a.) the shares on the day prior to the date of grant of
the options  For the other executive · In setting this target, the directors the expected Remuneration Committee took value is 60% of base salary the internal Long
Range Plan, market expectations and market practice into account 2007 GLTI performance  Relative Total Shareholder Return  Awards will vest to the extent that the
performance  Annual grants are made shares (TSR) against the top 50% of condition has been satisfied at the end of the three-year in July companies in the FTSE Global performance period. To
the extent that the performance  The number of shares Telecommunications Index by target is not met, the awards will be forfeited
granted are based on market capitalisation  The performance shares focus on shareholder alignment expected values · 25% vests for achieving median through the TSR
performance condition and through the  For the Chief Executive, performance in the comparator delivery of the award in shares the
expected value is group with a straight line up to 175% of base salary 100% vesting for achieving upper  For the other executive quintile
performance relative to directors expected value is the comparator group 140% of base salary Note: (1) GSTIP targets are not disclosed as
they are commercially sensitive. Vodafone Group Plc Annual Report 2008 73




---



##### 



Vodafone   Governance
Directors Remuneration            continued
Changes            to how the executive            directors            will be paid in the 2009 financial            year
The following            page sets out the changes made as part of the 2008 review together            with further details of the long term incentive            plan.
2008/09 performance            measure(s)
Base salary
2008/09  No changes
Annual            bonus
2008/09 Group Short  Adjusted            operating            profit (25%)
Term            Incentive            Plan  Free cash flow (25%)
 Total service revenue (25 %)
 Total communications
revenue (10 %)
 Customer            delight (15%)
Long term incentives
All long term  Three year cumulative            adjusted
arrangements            free cash flow
 Relative            TSR out- performance
over three years against the
peer group
Change and rationale
Grant policy
 No changes
 Set annually            on 1 July
· Rebalancing of the performance measures  free cash flow weighting increased by 5%, operating profit weighting reduced by 5%
· The existing measures are felt to cover the key short term measurable elements of the strategy
· Target bonus is 100% of salary earned over the financial year, with 200% maximum available for exceptional performance
· The Remuneration Committee reviews and sets the GSTIP performance targets on an annual basis
· No share option awards or Deferred Share Bonus awards will be made in the 2009 financial year
· There will be a GLTI base award, delivered in shares after three years subject to free cash flow and TSR performance measures
· There will be the opportunity to co-invest in order to receive an award of shares, which will mirror the conditions of the GLTI base award
· Annual awards made in July
· The base award for the Chief Executive will have a maximum face value of 550%
· The matching award will depend on the level of co-investment
2009 financial            year GLTI performance            shares
The long term incentive will be delivered in performance shares. Vesting will be subject to a
combination of two performance conditions  adjusted free cash flow and relative total shareholder
return.
Award and co-investment
The vesting percentages are applied to the face values awarded under the base and matching awards.
The base award for the Chief Executive will have a face value of 137.5% of base salary. This base
award can vest up to a maximum of 550% of base salary (i.e. 137.5% multiplied by maximum vesting of
400%) (see the combined vesting matrix below).
In addition, participants will have the opportunity to co-invest their own money in order to
receive a m
atching award (subject to performance  consistent with base award). Participants will
be able to co-invest up to two times net salary. The co-investment will
receive a matching award with a face value of 50% of the grossed -up investment . The matching            award will vest in the same way as the base award (see the combined vesting matrix below).
The co-investment element is designed            to further increase shareholder            alignment, by encouraging            executive            directors to attain their stretching share ownership   
         
guidelines            earlier.
Underlying operational            performance   adjusted            free cash flow
The free cash flow performance            is based on a three year cumulative            adjusted            free cash flow figure. The target and range are set out in the table below:
Vesting
Performance £bn            percentage
Threshold 15.5 50 %
Target 17.5 100 %
Superior 18.5 150 %
Maximum 19.5 200 %
TSR out-performance of a peer group median
The out-performance of a peer group median is felt to be the most appropriate TSR measure . The
rationale for this is that Vodafone has a limited number of peers, therefore using a smaller group
makes operating a ranking system more complicated .
The peer group for the TSR out-performance            measure            for the awards to be made in the 2009 financial year is as follows:
     
BT Group Deutsche            Telekom France Telecom Telecom Italia Telefonica
Emerging            market composite   made up of the average TSR performance            of three companies: Bharti, MTN and Turkcell
The TSR performance will act as a multiplier on the percentage vesting under the operational
performance . There will be no increase in vesting until TSR performance exceeds median, at which
point the multiplier will increase up to two times on a linear basis to upper quintile performance,
as set out in the vesting table below:
Out-performance
Performance            of peer group median            Increase
Median 0.0% p.a. No            increase
65th percentile 4.5% p.a. 1.5 times
80th percentile (upper quintile) 9.0% p.a. 2.0 times
The performance            measure            has been calibrated            using statistical            techniques .
Combined            vesting            matrix
The combination            of the performance            measures            gives a final vesting matrix
as follows:
Free cash flow performance            TSR performance
Up to Median 65 th 80 th
Threshold 50 % 75 % 100 %
Target 100 % 150 % 200 %
Superior 150 % 225 % 300 %
Maximum 200 % 300 % 400 %
The target free cash flow level is set by reference            to the Companys            three year plan and market expectations . The Remuneration            Committee            consider            the t
arget to be a stretching            one.
74Vodafone Group Plc Annual Report 2008




---



##### 



Grants made and
payouts received in the 2008 financial year(1) Annual bonus and share grants made to executive directors in the 2008 financial year (percentages
of base salary) Annual Bonus            Arun
Sarin            Vittorio Colao            Andy Halford Target award/Maximum award 100%/200% 100%/200% 100%/200%
Bonus deferral arrangement Face value of DSB matching shares awarded in June 2007 50% of bonus deferred 50% of bonus deferred 50% of bonus deferred Long term incentives
Face value of GLTI performance shares awarded in July 2007 389% 311% 311% Face value of GLTI share options awarded in July 2007 750% 600% 600%
What the executive directors received in the 2008 financial year(2)
Base salary            Arun Sarin      
      Vittorio Colao            Andy Halford
Basic salary received £1,310,160 £830,000 £631,500
Annual Bonus Target            Actual   
         Target            Actual            Target            Actual 2007/08 GSTIP(3) £1,310,160 £2,130,320 £830,000 £1,290,650 £631,500 £1,026,819
Bonus deferral arrangement Shares granted Shares vested Shares granted Shares vested Shares granted
Shares vested STIP matching shares awarded in June 2005 1,260,747 1,180,479 N/A N/A N/A N/A
Long term incentives Shares granted Shares vested Shares granted Shares vested Shares granted
Shares vested(4) GLTI performance shares awarded in July 2004 2,016,806 576,806 N/A N/A
135,617 135,617 GLTI share options awarded in July 2004 7,058,823 3,536,470 N/A N/A 226,808 226,808
Notes: (1) More information on KPIs, against which Group performance is measured, can be found in
Performance  Key Performance Indicators on pages 30 to 31. (2) The amounts shown in the
table are also disclosed in the appropriate tables in the audited information section,
beginning on page 77. (3) The 2008 financial year GSTIP bonus targets were exceeded. The
payout achieved for the Chief Executive was 162.6%. (4) These awards
were granted prior to joining the Executive Committee and different performance conditions apply.
Other elements of directors packages Share ownership requirements
Pensions The share ownership requirements for executive directors are set out in the table below.
Ownership against these requirements is reviewed at 31 March and 30 Arun Sarin is provided with a
defined contribution pension arrangement to which September each year. the Company contributes 30%
of base salary. Required percentage of basic salary Vittorio Colao has elected to take a cash allowance of 30% of base salary in lieu of Chief
Executive 400% pension contributions. Other executive directors 300% Other Executive Committee
members 200% Andy Halford is a contributing member of the Vodafone Group Pension Scheme, a UK defined benefit
scheme approved by HM Revenue & Customs (HMRC). The Service contracts of executive directors
scheme provides a benefit of two-thirds of pensionable salary after a minimum The Remuneration
Committee has determined that, after an initial term of up to of 20 years service. The normal
retirement age is 60 but directors may retire two years duration, executive directors contracts
should thereafter have rolling from age 55 with a pension proportionately reduced to account for
their shorter terms and be terminable on no more than one years notice. All current executive
service, but with no actuarial reduction. Andys pensionable salary is capped directors contracts
have an indefinite term (to normal retirement date) and one in line with the Vodafone Group Pension
Scheme Rules at £110,000. Andy has year notice periods. No payments should normally be payable on
termination elected to take a cash allowance of 30% of base salary in lieu of pension other than
the salary due for the notice period and such entitlements under contributions on salary above the
scheme cap. incentive plans and benefits that are consistent with the terms of such plans. Further
details of the pension benefits earned by the directors in the 2008 Fees retained for external
non-executive directorships financial year can be found on page 78. Liabilities in respect of the
pension Executive directors may hold positions in other companies as non-executive schemes in which
the executive directors participate are funded to the extent directors. In the 2008 financial year,
Arun Sarin was the only executive director described in note 25 to the Consolidated Financial
Statements. with such a position, held at the Bank of England. He retained fees of £6,000 in
relation to this position. Fees were retained in accordance with Group policy. All the individuals
referred to above 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
Vodafone Group Plc Annual Report 2008 75




---



##### 



Vodafone  Governance
Directors Remuneration            continued
All-employee share incentive            schemes
The executive directors            are also eligible to participate            in the all-employee plans.
Plan            Summary of arrangement
Global All-Employee            Share Plan The Remuneration            Committee approved a grant of 320 shares to be made on 2 July 2007 to all permanent            employees .
The shares awarded            vest after two years.
Other considerations
Cascade to senior management
The principles of the policy are cascaded, where appropriate, to the other members            of the Executive Committee            as set out below.
Cascade of policy to Executive Committee   2009 financial year
Total remuneration            and base salary Methodology            consistent with the
Main Board.
The annual bonus is based on the same measures . However, in some circumstances            these are across a business area rather than across the whole Group. Policy consistent            with the Main Board.
Sharesave
The Vodafone Group 1998 Sharesave Scheme is an HMRC approved scheme open to all UK eligible
employees . Options under the scheme are granted at up to a 20% discount to market value. Executive
directors participation is included in the option tables on pages 79 and 80. The Vodafone Share
Incentive Plan is an HMRC approved plan open to all eligible UK employees . Participants may
contribute up to £125 per month, 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 .
Annual bonus
Long term incentive
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 awards, including executive and all-employee share awards, is
approximately 3.0% of the Companys share capital at 31 March 2008 (2.9% at 31 March 2007).
Funding
A mixture of newly issued shares, treasury shares and shares purchased
in the market by the employee
benefit trust is used to satisfy share-based awards. This policy is kept under review.
Other matters
The Share Incentive Plan and the DSB include restrictions on the transfer of shares while the
shares are subject to the plan. Where, under an employee share plan operated by the Company,
participants are the beneficial owners of the shares, but not the registered owner, the voting
rights are normally exercised by the registered owner at the discretion of the participant .
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, subject to
t
he satisfaction of any performance conditions at that time.
TSR performance (audited            information)
The following            chart shows the performance            of the Company            relative to the FTSE100 index.
Share Incentive            Plan
Non-executive            directors remuneration
The remuneration            of non-executive            directors            is annually            reviewed            by the Board, excluding   
         the non-executive            directors . The fees payable are as follows:
Fees payable (£000s)
From            From
Position/role 1 April 2007 1 April 2008
Chairman 525 560
Deputy Chairman 145 155
Non-executive director 105 110
Chairmanship of Audit Committee 25 25
Chairmanship of Remuneration            Committee 20 20
Chairmanship of Nominations            and Governance            Committee 15 15
In addition, an allowance            of £6,000 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 .
Details of each non-executive            directors            remuneration            for the 2008 financial year are included            in the table on page 77.
Non-executive directors do not participate in any incentive or benefit plans. The Company does not
provide any contribution to their pension arrangements . The Chairman is entitled to use of a car
and a driver whenever and wherever he is providing his services to or representing the Company .
Chairman            and non-executive            directors            service            contracts
The Chairman, Sir John Bond, has a contract, that may be terminated            by either party on one years notice.
Non-executive directors, including the Deputy Chairman, are engaged on letters of appointment that
set out their duties and responsibilities . The appointment of non-executive directors may be
terminated without compensation .
The terms and conditions of appointment of non-executive directors are available for inspection by
any person at the Companys register
ed office during normal business hours and at the AGM (for 15
minutes prior to the meeting and during the meeting) .
Five year historical            TSR performance            growth in the value of a hypothetical £100 holding over five years. FTSE 100 and FTSE Global Telecoms            comparison            based on spot values
[Graphic Appears Here]
- G[___o FTSE 100
o Vodafone Group o FTSE Global Telecoms
Graph provided            by Towers Perrin and calculated            according            to a methodology            that is compliant with the requirements of Schedule 7A of the Companies            Act of
 1985 Data Sources: FTSE and Datastream .
Note: Performance            of the Company shown by the graph is not indicative of vesting levels under the Companys            various incentive plans.
76Vodafone            Group Plc Annual Report 2008




---



##### 



Audited            information
Remuneration            for the year ended 31 March 2008
The remuneration            of current executive            directors (1) receiving            remuneration            during the year ended 31 March 2008 was as follows:
Incentive            Cash in
Salary/fees            schemes(2) lieu of pension            Benefits            Total
2008 2007 2008 2007 2008 2007 2008 2007 2008 2007
£ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000
Chief Executive
Arun Sarin 1,310 1,272 2,130 1,928       155 49 3,595 3,249
Executive            directors
Vittorio Colao 830 383 1,291 500 249 115 594 58 2,964 1,056
Andy Halford 632 592 1,027 897 156 145 31 56 1,846 1,690
Total 2,772 2,247 4,448 3,325 405 260 780 163 8,405 5,995
Notes:
(1) Former executive director, Thomas Geitner, received the final payments under his compromise
agreement during the year ended 31 March 2008. These included cash payments of £287,000 and benefit
costs of £1,000. These payments were disclosed within the total compensation costs for Thomas
Geitner in the 2007 Annual Report. The payments were staggered, and conditional on not joining a
competitor.
(2) These figures are the cash payouts from the 2008 financial year Vodafone Group Short Term
Incentive Plan applicable to the year ended 31 March 2008. These awards are in relation to the
performance against targets in adjusted operating profit, service revenue, free cash flow, total
communications revenue and customer delight for the financial year ended 31 March 2008.
The remuneration of the non-executive directors serving during the year(1) ended 31
March 2008 was as follows:
Salary/fees            Benefits            Total
2008 2007 2008 2007 2008 2007
£ 000 £ 000 £ 000 £ 000 £ 000 £ 000
Chairman
Sir John Bond 540 363 13 11 553 374
Deputy            Chairman
John            Buchanan 145 119 10 15 155 134
Non-executive            directors
Dr Michael            Boskin 166 139 12    178 139
Lord Broers 35 95    14 35 109
Anne            Lauvergeon 105 95       105 95
Professor            Jürgen Schrempp 105 95       105 95
Luc Vandevelde 125 110 10 1 135 111
Philip Yea 105 95       105 95
Anthony            Watson 105 87 8    113 87
Nick Land 105 32 10    115 32
Alan Jebson 135 32 12    147 32
Simon Murray 79          79 -
Total 1,750 1,262 75 41 1,825 1,303
Note:
(1) Former non-executive            director, Lord MacLaurin, received consulting            fees of £125,000 during the year, together with continued            benefits valued at £34,000 from his previous arrangements .
The aggregate            remuneration            paid by the Company            to its collective            senior management (1)for services         
   for the year ended 31 March 2008, is set out below. The
aggregate            number            of senior management            at 31 March 2008 was seven, one fewer than at 31 March 2007.
2008 2007
£ 000 £ 000
Salaries            and fees 3,255 3,817
Incentive            schemes (2) 4,964 4,752
Cash in lieu of pension 279 248
Benefits/Other 1,713 6,980
Total 10,211 15,797
Notes:
(1) Aggregate remuneration for senior management is in respect of those individuals who were
members of the Executive Committee during the year ended 31 March 2008, other than executive
directors, and reflects compensation paid from either 31 March 2007 or date of appointment to the
Executive Committee, to 31 March 2008 or date of leaving, where applicable.
(2) Comprises the incentive scheme information for senior management on an equivalent basis to that
disclosed for directors in the table at the top of this page. Details of share incentives awarded
to directors and senior management are included in footnotes to Medium term incentives and Long
term incentives on pages 78 and 79.
Vodafone Group Plc Annual Report 2008 77




---



##### 



Vodafone  Governance
Directors Remuneration            continued
Pensions
Pension benefits earned by the directors            serving during the year ended 31 March 2008 were:
Transfer            value            Employer
Change            in            Change            in            of change in            allocation/
Change            in            transfer            value            accrued            accrued            contribution
Total accrued            accrued            Transfer            Transfer            over year less            benefit in            benefit net of 
           to defined
benefit at 31 benefit over            value at 31 value at 31 member            excess of            member            contribution
March 2008(1) the year(1) March 2007(2) March 2008(2) contributions            inflation            contributions    
        plans(3)
£000 £000 £000 £000 £000 £000 £000 £000
Arun Sarin                      393.0
Vittorio Colao(4)                      -
Andy Halford(5) 20.6 3.7 223.4 316.4 89.1 3.0 42.3 -
Notes:
(1) The accrued pension benefits earned by the directors are those which would be paid annually on
retirement, based on service to the end of the year, at the normal retirement age. The increase in
accrued pension excludes any increase for inflation.
(2) The transfer values have been calculated on the basis of actuarial advice in accordance with
the Faculty and Institute of Actuaries Guidance Note GN11. No director elected to pay additional
voluntary contributions. The transfer values disclosed above do not represent a sum paid or payable
to the individual director. Instead they represent a potential liability of the pension scheme. (3)
Arun Sarins pension contributions were split between £169,000 into the Vodafones UK defined
contribution scheme and £224,000 into an unfunded defined contribution arrangement.
The latter gives rise to a liability held on the Consolidated Balance Sheet.
(4) Vittorio Colao has elected to t
ake a 30% pension allowance as cash. This allowance is included
in the cash in lieu of pension category for the year in the table on page 77.
(5) Andy Halford is a member of the Vodafones UK defined benefit scheme for salary up to the
scheme cap of £110,000. On base salary in excess of this cap he receives 30% pension allowance,
which he has elected to take as cash. This allowance is included in the cash in lieu of pension
category for the year in the table on page 77.
In respect of senior management, the Group has made aggregate            contributions            of £1.1 million into pension schemes .
Directors interests            in the shares            of the Company
Medium            term incentives
Conditional awards of ordinary shares made to executive directors under the STIP/Deferred Share
Bonus, and dividends on those shares paid under the terms of the Companys dividend reinvestment
plan, are shown below. STIP shares which vested and were sold or transferred during the year ended
31 March 2008 are also shown below.
Total interest            Conditional            DSB            matching            Shares sold or            transferred            Shares
forfeited            during the
in STIP/DSB            at            awards made in the            during the year in respect            year in respect of the            Total interest     
       in DSB
1 April 2007 2008 financial            year            of the 2005 financial            year(1) 2005 financial            year            at 31 Mar
ch 2008
Value at date            In respect            In respect of            In respect            In respect of
Number            Number            of award(2)(3) of base            enhancement            of base            enhancement 
           Number            Total value(5)
of shares            of shares £000 awards  
          shares            awards            shares            of shares(4) £000
Arun Sarin 1,880,051 592,974 964 840,498 339,981    80,268 1,212,278 1,829
Vittorio Colao    153,671 250             153,671 232
Andy Halford 240,840 275,820 448             516,660 780
Notes:
(1) Shares in respect of the STIP awards for the 2005 financial year were transferred on 2 July
2007.
(2) Previously disclosed as the annual incentive value with the directors emoluments for the year
ended 31
March 2007.
(3) For awards granted during the 2008 financial year, the value at date of award is based on the
price of the Companys ordinary shares on 15 June 2007 of 162.6 pence.
The performance period for this grant ends on 31 March 2009, with the shares vesting on 15 June
2009.
(4) There are two outstanding awards, which have performance periods ending on 31 March 2008 and 31
March 2009.
(5) The value at 31 March 2008 is calculated using the closing middle market price of the Companys
ordinary shares at 31 March 2008 of 150.9 pence.
The aggregate            number of shares conditionally            awarded            during the year under the Deferred            Share Bonus to the Companys            senior management, other than execu
tive directors, is 969,346 . For a description            of the performance            and vesting conditions, see 2007 Deferred            Share Bonus in the table on page 73.
78 Vodafone            Group Plc Annual Report 2008




---



##### 



Long term incentives
Performance            shares
Conditional            awards of ordinary shares made to executive            directors            under the Vodafone            Group Plc 1999 Long Term Stock Incentive            Plan and the
 Vodafone            Global Incentive            Plan are shown below. Long term incentive            shares that vested and were sold or transferred            during the year ended 31 March 2008 are also shown below.
Total            interest            Shares            Shares sold
in performance            forfeited            or            transferred
            shares at            in respect of            in respect of
1 April 2007 Shares conditionally            awards for            awards for
or date of            awarded            during the            the 2005 the 2005 Total interest            in long term
appointment (1 ) 2008 financial            year            financial            year            financial            year            
incentives            at 31 March 2008
Value at date
Number            Number 
           of
award(2)
Number            
Number            
Number            
Total value(5)
of shares            of shares £000 of shares (3) of shares (3) of shares(4) £000
Arun Sarin 6,242,306 3,065,872 5,145 1,440,000 576,806 7,291,372 11,003
Vittorio Colao 1,073,465 1,557,409 2,613       2,630,874 3,970
Andy Halford 1,622,150 1,190,305 1,997    135,617 2,676,838 4,039
Notes:
(1) Restricted share awards under the Vodafone Group Plc 1999 Long Term Stock Incentive Plan and
the Vodafone Global Incentive Plan.
(2) The value of awar
ds granted during the year under the Vodafone Global Incentive Plan is based
on the price of the Companys ordinary shares on 29 June 2007 of 167.8 pence. These awards have a
performance period running from 1 April 2007 to 31 March 2010. The vesting date will be in July
2010.
(3) Shares in respect of awards made in the 2005 financial year, granted on 28 July 2004, were sold
or transferred on 28 July 2007. The closing middle market price of the Companys ordinary shares
was 119.0 pence on 2 July 2004, the date of the award. The closing middle market price was 162.1
pence on 5 July 2007 (the date of vesting of Andy Halfords 2004 share grant) and 148.1 pence on 30
July 2007 (the date of vesting of Arun Sarins 2004 share grant).
(4) The total interest at 31 March 2008 includes awards over three performance periods ending on 31
March 2008, 31 March 2009 and 31 March 2010. (5) The value at 31 March 2008 is calculated using the
closing middle market price of the Companys ordinary shares at 31 March 2008 of 150.9 pence.
The aggregate            number of shares conditionally            awarded            during the year to the Companys            senior management            is 4,391,443 shares. For a description            of the performance and vesting conditions see 2007 GLTI performance            shares on page 73.
Share options
The following            information            summarises            the directors options under the Vodafone            Group 1998 Sharesave            Scheme, the Vodafone            Group 1998 Company            Share Option Scheme, Vodafone            Group Plc 1999 Long Term Stock Incentive            Plan and the Vodafone            Global Incentive          
  Plan, which are all HMRC approved            schemes . The table also summarises            the directors options under the Vodafone            Group 1998 Executive            Share Option Scheme, which is not HM Revenue & Customs 
           approved . No other directors            have options under any of these schemes . Options have only been granted to directors            during the 2008 financial year under the Vodafone            Global Incentive            Plan (under which GLTI options were granted) . For a description            of the performance            and vesting conditions            see 2007 GLTI share options on page 73.
Under the Vodafone Group 1998 Sharesave Scheme, options may be 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
        .
Options            Options            Options            Weighted
Options held at            granted            exercised            lapsed during            average
1 April 2007 during the            during the            the 2008 Options            exercise            Earliest
or date of 2008 financial 2008 financial            financial            held at            price at            date from            Latest
appointment (1) year            year            year 31 March 2008 31 March 2008 which            expiry
Number            Number            Number            Number            Number            Pence            exercisable            date
Arun Sarin 28,281,629 5,912,753    3,522,353 30,672,029 132.4 July 2006 July 2017
Vittorio Colao 3,472,975 3,003,575       6,476,550 150.5 November 2009 July 2017
Andy Halford 5,767,986 2,295,589       8,063,575 141.0 July 2002 July 2017
Note:
· The weighted average exercise price of options over shares in the Company granted during the year
and listed above is 167.8 pence. The earliest date from which they are exercisable is July 2010 and
the latest expiry date is July 2017. For a description of the performance and vesting conditions
see 2007 GLTI share options on page 73.
The aggregate number of options granted during the year to the Companys senior management, other
than executive directors, is 8,469,214 . The weighted average exercise price of the options granted
to senior management during the year is 167.8 pence. The earliest date from which they are
exercisable is July 2010 and the latest expiry date is July 2017.
Vodafone Group Plc Annual Report 2008 79




---



##### 



Vodafone  Governance
Directors Remuneration            continued
Further details of the options outstanding            at 31 March 2008 as disclosed            on the previous            page are as follows:
Exercisable            Exercisable
Market price greater than            Option price greater than
option price(1) market price(1) Not yet exercisable
Weighted            Weighted            Weighted
average            average            average
Options            exercise            Latest            Options            exercise            Latest            Options  
          exercise            Latest
held            price            expiry            held            price            expiry            held    
        price            expiry
Number            Pence            date            Number            Pence            date            Number   
         Pence            date
Arun Sarin 10,915,924 119.2 July 2014          19,756,105 139.6 July 2017
Vittorio Colao                   6,476,550 150.5 July 2017
Andy Halford 554,585 114.2 July 2014 344,800 214.6 July 2011 7,164,190 139.6 July 2017
Note:
· Market price is the closing middle market price of the Companys ordinary shares at 31 March 2008 of 150.9 pence. During the year, the share price moved between a high of 197.5 pence and a low of 137.5 pence.
The Companys            register of directors interests (which is open to inspection) contains full details of directors shareholdings            and options to subscribe . These options by exercise price were:
Options            Options            Options            Options
held at            granted            exercised            lapsed
1 April 2007 during the            during the            during the            Options
Option            or date of 2008 2008 2008 held at
price            appointment            financial year            financial year            financial year 31 March 2008
Pence            Number            Number            Number            Number            Number
Vodafone            Group 1998 Executive            Share Option Scheme (Unapproved) 255.00 114,000          114,000
282.30 66,700          66,700
Vodafone            Group 1998 Company            Share Option Scheme (Approved) 255.00 11,500          11,500
282.30 200          200
Vodafone            Group 1998 Sharesave            Scheme 95.30 16,710          16,710
91.64 10,202          10,202
Vodafone            Group Plc 1999 Long Term Stock Incentive            Plan(1) 151.56 152,400          152,400
90.00 94,444          94,444
119.25 7,612,787          7,612,787
119.00 7,285,631       3,522,353 3,763,278
145.25 7,507,295          7,507,295
Vodafone            Group Plc Global Incentive            Plan(1) 115.25 11,177,746          11,177,746
135.50 3,472,975          3,472,975
167.80    11,211,917       11,211,917
37,522,590 11,211,917    3,522,353 45,212,154
Note:
· The Vodafone Group Plc 1999 Long Term Stock Incentive Plan and Vodafone Group Plc Global Incentive Plan are both HMRC approved. However, note that the actual awards made under these plans may be approved or unapproved.
80Vodafone            Group Plc Annual Report 2008




---



##### 



Beneficial            interests
The directors beneficial            interests            in the ordinary shares of the Company, which includes interests            in the Vodafone            Share Incentive            Plan, but which excl
udes            interests in the Vodafone            Group share option schemes, and the Vodafone            Group short term or long term incentives, are shown below:
1 April 2007 or
23 May 2008 31 March 2008 date of appointment
Sir John Bond 224,926 224,926 207,620
Dr John Buchanan 200,009 200,009 191,913
Arun Sarin(1) 7,776,629 7,776,629 5,994,854
Vittorio Colao 180,063 180,063 -
Andy Halford 782,134 781,826 350,632
Dr Michael Boskin 10,000 10,000 10,000
Anne Lauvergeon 27,125 27,125 27,125
Professor Jürgen Schrempp 8,750 8,750 8,750
Luc Vandevelde 17,500 17,500 17,500
Philip Yea 61,250 61,250 61,250
Anthony Watson 100,000 100,000 100,000
Nick Land 25,000 25,000 25,000
Alan Jebson 75,000 75,000 75,000
Simon Murray(2) 157,500 157,500 157,500
Notes:
(1) Arun Sarin also has a non-beneficial interest as the trustee of two family trusts, each holding
5,005 shares. (2) Simon Murray was appointed as a non-executive director on 1 July 2007.
At 31 March 2008, and during the period from 1 April 2008 to 23 May 2008, no director had any interest in the shares of any subsidiary            company. Other than those individuals included            in the table above who were Board members at 31 March 2008, members            of the Groups Executive
 Committee, at 31 March 2008, had an aggregate beneficial interest in 2,598,326 ordinary shares of the Company. At 23 May 2008, Executive Committee members            had an aggregate            beneficial            interest in 2,599,250 ordinary shares of the Company, none of whom had an individual 
           beneficial            interest amounting            to greater than 1% of the Companys            ordinary shares.
Interests            in share options of the Company            at 23 May 2008
At 23 May 2008, there had been no change to the directors interests            in share options from 31 March 2008.
Other than those individuals            included in the table above, at 23 May 2008, members            of the Groups Executive            Committee at that date held options for 25,229,599 ordinary shares at prices ranging from 91.6 pence to 293.7 pence
per ordinary share, with a weighted            average exercise price of 139.5 pence per ordinary share exercisable at dates ranging from July 2002 to July 2017.
Sir John Bond, John Buchanan, Dr Michael Boskin, Alan Jebson, Anne Lauvergeon, Nick Land, Professor            Jürgen Schrempp, Luc Vandevelde, Philip Yea, Anthony            Watson and Simon Murray held no options at 23 May 2008.
Directors interests            in contracts
None of the current directors            had a material interest in any contract of significance            to which the Company            or any of its subsidiary            undertakings            was a party
during the financial year.
[Graphic Appears Here]
Luc Vandevelde
On behalf of the Board
Vodafone            Group Plc Annual Report 2008 81




---



##### 



Vodafone  Financials
Contents
| | |
{ Audit Report on the Consolidated Financial Statements } 132
  
{ Audit Report on the Company Financial Statements } 133
  
{ Company Financial Statements of Vodafone Group Plc } 134
  
| | |
Notes to the Company Financial Statements: 1 . Basis of preparation 135 2 . Significant accounting policies 135
3 . Fixed assets 136
4 . Debtors 136
5 . Creditors 137
6 . Share capital 137
7 . Share-based payments 138
8 . Reserves and reconciliation of movements in equity shareholders funds 138
9 . Equity dividends 139
10 . Contingent liabilities 139
    
Separate financial statements required by Rule 3-09
of Regulation S-X            B-1
  
Report of Independent Registered Public
Accounting Firm            B-25

Directors Statement of Responsibility 83
  
Audit Report on Internal Controls 84
  
Critical Accounting Estimates 85
  
Consolidated Financial Statements
Consolidated Income Statement for the years ended 31 March 88
Consolidated Statement of Recognised Income and Expense for
the years ended 31 March 88
Consolidated Balance Sheet at 31 March 89
Consolidated Cash Flow Statement for the years ended 31 March 90
  
Notes to the Consolidated Financial Statements:
1. Basis of preparation 91
2. Significant accounting policies 91
3. Segment analysis 96
4. Operating profit/(loss) 98
5. Investment income and financing costs 99
6. Taxation 100
7. Equity dividends 102
8. Earnings/(loss) per share 102
  
9. Intangible assets 103
10. Impairment 104
11. Property, plant and equipment 107
12. Principal subsidiary undertakings 108
13. Investments in joint ventures 109
14. Investments in associated undertakings 110
15. Other investments 110
16. Inventory 111
17. Trade and other receivables 111
18. Cash and cash equivalents 112
19. Called up share capital 112
20. Share-based payments 113
21. Transactions with equity shareholders 115
22. Movements in accumulated other recognised income and expense 115
23. Movements in retained losses 115
24. Borrowings 116
25. Post employment benefits 121
26. Provisions 123
27. Trade and other payables 123
28. Acquisitions 124
29. Disposals and discontinued operations 125
30. Reconciliation of net cash flows from operating activities 127
31. Commitments 127
32. Contingent liabilities 128
33. Directors and key management compensation 129
34. Related party transactions 129
35. Employees 130
36. Subsequent events 130
37. New accounting standards 131
  
82 Vodafone Group Plc Annual Report 2008




---



##### 



Directors Statement            of Responsibility
Financial            statements            and accounting            records
Company law of England and Wales requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the Company and of the
Group at the end of the financial year and of the profit or loss of the Group for that period. In
preparing those financial statements, the directors are required to:
·  
·
·
select suitable accounting policies and apply them consistently; make judgements and estimates that
are reasonable and prudent; state whether the Consolidated Financial Statements have been prepared
in accordance with IFRS as adopted for use in the EU; state for the Company Financial Statements
whether applicable UK accounting standards have been followed; and prepare the financial statements
on a going concern basis unless it is inappropriate to presume that the Company and the Group will
continue in business .
The Companys internal control over financial reporting includes policies and procedures that
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
transactions and dispositions of assets; provide reasonable assurance that transactions are
recorded as necessary permit the preparation of financial statements in accordance with IFRS, as
adopted by the European Union and IFRS as issued by the IASB, and that receipts and expenditures
are being made only in accordance with authorisation of management and the directors of the
Company; and provide reasonable assurance regarding prevention or timely detection of unauthorised
acquisition, use or disposition of the Company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 2008 based on the Internal Control  Integrated Framework, issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) .
Management has not evaluated the internal controls of Vodacom Group (Pty) Limited (Vodacom),
which is accounted for using proportionate consolidation and the conclusion regarding the
effectiveness of internal control over financial reporting does not extend to the internal controls
of Vodacom . Management is unable to assess the effectiveness of internal control at Vodacom due to
the fact that it does not have the ability to dictate or modify its controls and does not have the
ability, in practice, to assess those controls .
Key sub-totals that result from the proportionate consolidation of Vodacom, whose internal controls
have not been assessed, are set out below.
Vodacom
2008
£m
Total assets 1,093
Net assets 400
Revenue 1,609
Profit for the financial year 260
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 1985 and Article 4 of the EU IAS
Regulation . They are also responsible for the system of internal cont
rol, 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:


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 or loss of the Group; and 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.
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 of the Financial Services and Markets
Act 2000.
Disclosure of information to auditors
Having made the requisite enquiries, so far as the directors are aware, there is no relevant audit
information (as defined by Section 234ZA of the Companies Act 1985) of which the Companys auditors
are 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 auditors are aware of
that information .
Going concern
After reviewing the Groups and the Companys budget for the next financial year, and other longer
term plans, the directors are satisfied that, at the time of approving the financial statements, it
is appropriate to adopt the going concern basis in preparing the financial statements .
Managements report            on internal            control            over financial            reporting
As required by section 404 of the Sarbanes -Oxley Act of 2002, management            is responsible            for establishing            and maintaining            adequate            internal control over fina
ncial reporting            for the Group.
Management is not required to evaluate the internal controls of entities accounted for under the
equity method . Accordingly, the internal controls of these entities, which contributed a net
profit of £2,876 million (2007: £2,728 million) to the profit (2007: loss) for the financial year,
have not been assessed, except relating to controls over the recording of amounts relating to the
investments that are recorded in the Groups Consolidated Financial Statements .
During the period covered by this Annual Report, there were no changes in the Company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 .
Based on managements assessment, management has concluded that the internal control over financial
reporting was effective at 31 March 2008.
The Companys internal control over financial reporting, as at 31 March 2008, has been audited by
Deloitte & Touche LLP, a
n independent registered public accounting firm, who also audit the Groups
Consolidated Financial Statements . Their audit report on internal controls over financial
reporting is on page 84.
By Order of the Board
[Graphic Appears Here]
Secretary
27 May 2008
Vodafone            Group Plc Annual Report 2008 83




---



##### 



Vodafone  Financials
Audit Report on Internal Controls
Report            of Independent            Registered            Public            Accounting            Firm to the Members            of
Vodafone            Group            Plc
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 2008 based on criteria
established in Internal Control  Integrated Framework 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 Vodacom Group (Pty)
Limited (Vodacom), as the Group does not have the ability to dictate, modify or assess the
controls . Vodacom constitutes 0.5 percent and 0.9 percent of net assets and total assets,
respectively, 4.5 percent of revenue, and 3.9 percent of net income of the consolidated financial
statement amounts as of and for the year ended 31 March 2008. Accordingly, our audit did not
include the internal control over financial reporting at Vodacom . 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 mana
gement 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 .
84 Vodafone Group Plc Annual Report 2008




---



##### 



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 2008, based on the criteria established in Internal Control -
Integrated Framework 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 2008, prepared in conformity with International Financial Reporting Standards
(IFRS), as adopted by the European Union and IFRS as issued by the International Accounting
Standards Board (IASB). Our report dated 27 May 2008 expressed an unqualified opinion on those
financial statements .
[Graphic Appears Here]
Deloitte & Touche LLP
Chartered            Accountants            and Registered            Auditors London United Kingdom 27 May 2008
Critical Accounting            Estimates
The Group prepares its Consolidated Financial Statements in accordance with IFRS as issued by the
International Accounting Standards Board and IFRS as adopted by the European Union, the application
of which often requires judgements to be made by management when formulating the Groups financial
position and results. Under IFRS, the directors are required to adopt those accounting policies
most appropriate to the Groups circumstances for the purpose of presenting fairly the Groups
financial position, financial performance and cash flows.
In determining and applying accounting policies, judgement is often required in respect of items
where the choice of specific policy, accounting estimate or assumption to be followed could
materially affect the reported results or net asset position of the Group should it later be
determined that a different choice would be more appropriate .
Management considers the accounting estimates and assumptions discussed below to be its critical
accounting estimates and, accordingly, provides an explanation of each below.
The discussion below should also be read in conjunction with the Groups disclosure of significant
IFRS accounting policies, which is provided in note 2 to the Consolidated Financial Statements,
Significant accounting policies .
Management            has discussed            its critical accounting            estimates            and associated            disclosures            
with the Companys            Audit Committee .
Impairment            reviews
Asset recoverability is an area involving management
 judgement, requiring assessment as to whether
the carrying value of assets can be supported by the net present value of future cash flows derived
from such assets using cash flow projections which have been discounted at an appropriate rate. In
calculating the net present value of the future cash flows, certain assumptions are required to be
made in respect of highly uncertain matters, as noted below.
IFRS requires management to undertake an annual test for impairment of indefinite lived assets and,
for finite lived assets, to test for impairment if events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable . Group management currently undertakes an
annual impairment test covering goodwill and other indefinite lived assets and also reviews finite
lived assets and investments in associated undertakings at least annually to consider whether a
full impairment review is required .
Assumptions
There are a number of assumptions and estimates involved in calculating the net present value of
future cash flows from the Groups businesses, including managements expectations of:  growth in
EBITDA, calculated as adjusted operating profit before depreciation and amortisation;  timing and
quantum of future capital expenditure;  uncertainty of future technological
developments;  long term growth rates; and  the selection of discount rates to reflect the risks
involved .
The Group prepares and internally approves formal ten year plans for its businesses and uses these
as the basis for its impairment reviews. Management uses the initial five years of the plans,
except in markets which are forecast to grow ahead of the long term growth rate for the market. In
such cases, further years will be used until the forecast growth rate trends towards the long term
growth rate, up to a maximum of ten years.
For mobile businesses where the first five years of the ten year management plan are used for the Groups value in use calculations, a long term growth rate into perpetuity has been determined            as the lower of:
 
the nominal GDP rates for the country of operation; and the long term compound annual growth rate in EBITDA in years six to ten of the management plan.
For mobile businesses where the full ten 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:
 
the nominal GDP rates for the country of operation; and the compound            annual growth rate in EBITDA in years nine to ten of the management            plan.
For non-mobile businesses, no growth is expected            beyond managements            plans for the initial five year period.
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, results.
The Groups review includes the key assumptions            related to sensitivity            in the cash flow projections .
The following            changes to the assumptions  
          used in the impairment            review would have led to an impairment            loss being recognised            in the year ended 31 March 2008:
Increase            Decrease
by 2% by 2%
£bn £bn
Discount            rate 0.3 -
Budgeted            EBITDA(1)    0.2
Capital            expenditure (2)    -
Long term growth rate    -
Notes:
(1) Represents the compound annual growth rate for the initial five years of the Groups approved
financial plans.
(2) Represents capital expenditure as a percentage of revenue in the initial five years of the
Groups approved plans.
Business combinations
Goodwill only arises in business combinations . The amount of goodwill initially recognised is
dependent on the allocation of the purchase price to the fair value of the identifiable assets
acquired and the liabilities assumed . The determination of the fair value of the assets and
liabilities is based, to a considerable extent, on managements judgement .
Allocation of the purchase price affects the results of the Group as finite lived intangible assets
are amortised, whereas indefinite lived intangible assets, including goodwill, are not amortised
and could result in differing amortisation charges based on the allocation to indefinite lived and
finite lived intangible assets.
On the acquisition of mobile network operators, the identifiable intangible assets may include
licences, customer bases and brands. The fair value of these assets is determined by discounting
estimated future net cash flows generated by the asset, assuming no active market for the assets
exist. The use of different assumptions for the expectations of future cash flows and the discount
rate would change the valuation of the intangible assets.
Vodafone Group Plc Annual Report 2008 85




---



##### 



Vodafone  Financials
Critical Accounting            Estimates            continued
On transition            to IFRS, the Group elected not to apply IFRS 3, Business
Combinations, retrospectively as the difficulty in applying these requirements to the large number
of 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, after adjusting
for items including the impact of proportionate consolidation of joint ventures, 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 and increase in licences, customer bases, brands
and related deferred tax liabilities recognised on acquisition .
Intangible assets, excluding goodwill
Other intangible assets include the Groups aggregate amounts spent on the acquisition of 2G and 3G
licences, computer software, customer bases, brands and development costs. These assets arise from
both separate purchases and from acquisition as part of business combinations .
The relative size of the Groups intangible            assets, excluding            goodwill, makes the judgements surrounding the estimated            useful lives critical to the Groups financial position and performance .
At 31 March 2008, intangible            assets, excluding            goodwill, amounted            to £18,995 million (2007: £15,705 million) and represented 14.9% (2007: 14.3%) of the Groups total assets.
Estimation            of useful            life
The useful life used to amortise intangible assets relates to the future performance of the assets
acquired and managements judgement of the period over which economic benefit will be derived from
the asset. The basis for determining the useful life for the most significant categories of
intangible assets is as follows:
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. Using the licence term reflects the period over which the Group will
receive economic benefit. For technology specific licences with a presumption of renewal at
negligible cost, the estimated useful economic life reflects the Groups expectation of the period
over which the Group will continue to receive economic benefit from the licence. The economic lives
are periodically reviewed, taking into consideration such factors as changes in technology .
Historically, any changes to economic lives have not been material following these reviews.
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.
Historically, changes to the estimated useful lives have not had a significant impact on the
Groups results and financial position.
Capitalised software
The useful life is determined by management at the time the software is acquired and brought into
use and is regularly reviewed for a
ppropriateness . For computer software licences, the useful life
represents managements view of expected benefits over which the Group will receive benefits from
the software, but not exceeding the licence term. For unique software products controlled by the
Group, the life is based on historical experience with similar products as well as anticipation of
future events, which may impact their life, such as changes in technology .
Historically, changes in useful lives have not resulted in material changes to the Groups amortisation            charge.
Property, plant and equipment
Property, plant and equipment also represent a significant proportion of the asset base of the
Group, being 13.1% (2007: 12.3%) of the Groups total assets. Therefore, the estimates and
assumptions made to determine their carrying value and related depreciation are critical to the
Groups financial position and performance .
Estimation of useful life
The charge in respect of periodic depreciation is derived after determining an estimate of an
assets expected useful life and the expected residual value at the end of its life. Increasing an
assets expected life or its residual value would result in a reduced depreciation charge in the
Consolidated Income Statement .
The useful lives of Group assets are determined by management at the time the asset is acquired and
reviewed annually for appropriateness . The lives are based on historical experience with similar
assets as well as anticipation of future events, which may impact their life, such as changes in
technology . Furthermore, network infrastructure is only depreciated over a period that extends
beyond the expiry of the associated licence under which the operator provides telecommunications
services, if there is a reasonable expectation of renewal or an alternative future use for the
asset.
Historically, changes in useful lives have not resulted in material changes to the Groups
depreciation charge.
Cost capitalisation
Cost includes the total purchase price and labour costs associated with the Groups own employees
to the extent that they are directly attributable to construction costs, or where they comprise a
proportion of a department directly engaged in the purchase or installation of a fixed asset.
Management judgement is involved in determining the appropriate internal costs to capitalise and
the amounts involved . For the year ended 31 March 2008, internal costs capitalised were £245
million (2007: £244 million) and represented approximately 5% (2007: 6%) of expenditure on
property, plant and equipment and computer software .
86 Vodafone Group Plc Annual Report 2008




---



##### 



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 necessarily involves a degree of
estimation and judgement in respect of certain items whose tax treatment cannot be finally
determined until resolution has been reached with the relevant tax authority or, as appropriate,
through a formal legal process. The final resolution of some of these items may give rise to
material profit and loss and/or cash flow variances . See Financial Position and Resources on
page 54.
The complexity of the Groups structure following its geographic expansion makes the degree of
estimation and judgement more challenging . The resolution of issues is not always within the
control of the Group and it is often dependent on the efficiency of the legal processes in the
relevant taxing jurisdictions in which the Group operates . Issues can, and often do, take many
years to resolve. Payments in respect of tax liabilities for an accounting period result from
payments on account and on the final resolution of open items. As a result, there can be
substantial differences between the tax charge in the Consolidated Income Statement and tax
payments .
Significant items on which the Group has exercised accounting judgement include a provision in
respect of an enquiry from UK HMRC with regard to the CFC tax legislation (see note 32 to the
Consolidated Financial Statements), potential tax losses in respect of a write down in the value of
investments in Germany (see note 6 to the Consolidated Financial Statements) and litigation with
the Indian tax authorities in relation to the acquisition of Vodafone Essar (see note 32 to the
Consolidated Financial Statements) . The amounts recognised in the Consolidated Financial
Statements in respect of each matter are derived from the Groups best estimation and judgement, as
described above. However, the inherent uncertainty regarding the outcome of these items means
eventual resolution could differ from the accounting estimates and therefore impact the Groups
results and cash flows.
Recognition of deferred tax assets
The recognition of deferred tax assets is based upon whether it is more likely than not that
sufficient and suitable taxable profits will be available in the future, against which the reversal
of temporary differences can be deducted . Recognition, therefore, involves judgement regarding the
future financial performance of the particular legal entity or tax group in which the deferred tax
asset has been recognised .
Historical            differences            between            forecast and actual taxable profits have not resulted in material adjustments            to the recognition            of deferred tax assets.
Revenue            recognition            and presentation
Revenue from mobile telecommunications comprises amounts charged to customers in respect of monthly
access charges, airtime charges, messaging, the provision of other mobile telecommunications
services, including data services and information provision, fees for connecting users of other
fixed line and mobile networks to the Groups network, revenue from the sale of equipment,
including handsets, and revenue arising from the Groups partner network agreements .
Arrangements with multiple deliverables
In revenue arrangements including more than one deliverable, the arrangement consideration is
allocated to each deliverable based on the fair value of the individu
al element . 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 .
Deferral period
Customer connection fees, when combined with related equipment revenue, in excess of the fair value
of the equipment are deferred and recognised over the expected life of the customer relationship .
The life is determined by reference to historical customer churn rates. An increase in churn rates
would reduce the expected customer relationship life and accelerate revenue recognition .
Historically, changes to the expected customer relationship lives have not had a significant impact
on the Groups results and financial position .
Any excess upgrade or tariff migration fees over the fair value of equipment provided are deferred
over the average upgrade or tariff migration period as appropriate . This time period is calculated
based on historical activity of customers who upgrade or change tariffs. An increase in the
time period would extend the period over which revenue is recognised .
Presentation
When deciding the most appropriate basis for presenting revenue or costs of revenue, both the legal
form and substance of the agreement between the Group and its business partners are reviewed to
determine each partys respective role in the transaction .
Where the Groups role in a transaction is that of principal, revenue is recognised on a gross
basis. This requires revenue to comprise the gross value of the transaction billed to the customer,
after trade discounts, with any related expenditure charged as an operating cost.
Where the Groups role in a transaction            is that of an agent, revenue is recognised            on a net basis, with revenue representing            the margin earned.
Vodafone Group Plc Annual Report 2008 87




---



##### 



Vodafone  Financials
Consolidated            Income            Statement
for the years ended 31 March
2008 2007 2006
Note £m £m £m
Revenue 3 35,478 31,104 29,350
Cost of            sales (21,890) (18,725) (17,070)
Gross            profit 13,588 12,379 12,280
Selling            and distribution            expenses (2,511) (2,136) (1,876)
Administrative            expenses (3,878) (3,437) (3,416)
Share of            result            in            associated            undertakings 14 2,876 2,728 2,428
Impairment            losses 10    (11,600) (23,515)
Other            income            and expense 29 (28) 502 15
Operating            profit/(loss) 3,4 10,047 (1,564) (14,084)
Non-operating            income and            expense 29 254 4 (2)
Investment            income 5 714 789 353
Financing            costs 5 (2,014) (1,612) (1,120)
Profit/(loss) before            taxation 9,001 (2,383) (14,853)
Income            tax expense 6 (2,245) (2,423) (2,380)
Profit/(loss) for            the            financial            year            from continuing            operations 6,756 (4,806) (17,233)
Loss for            the financial            year            from            discontinued            operations 29    (491) (4,588)
Profit/(loss) for            the            financial            year 6,756 (5,297) (21,821)
Attributable            to:
- Equity            shareholders 23 6,660 (5,426) (21,916)
- Minority            interests 96 129 95
6,756 (5,297) (21,821)
Basic            earnings/(loss) per            share
Profit/(loss) from            continuing            operations 8 12.56 p (8.94) p (27.66) p
Loss            from discontinued            operations 8,29    (0.90) p (7.35) p
Profit/(loss) for            the financial            year 8 12.56 p (9.84) p (35.01) p
Diluted            earnings/(loss) per            share
Profit/(loss) from            continuing            operations 8 12.50 p (8.94) p (27.66) p
Loss            from discontinued            operations 8,29    (0.90) p (7.35) p
Profit/(loss) for            the financial            year 8 12.50 p (9.84) p (35.01) p
Consolidated            Statement            of
Recognised            Income            and            Expense
for the years            ended 31 March
2008 2007 2006
Note £m £m £m
Gains on            revaluation            of available -for-sale investments, net            of tax 22 1,949 2,108 705
Exchange            differences            on translation            of            foreign operations, net of tax 22 5,537 (3,804) 1,494
Net actuarial (losses)/gains            on            defined            benefit pension            schemes, net            of tax 22 (37) 50 (30)
Revaluation            gain 22       112
Foreign            exchange (gains)/losses            transferred            to the Consolidated            Income Statement 22 (7) 838 36
Fair            value            gains            transferred            to            the Consolidated            Income   
         Statement
22 (570)    -
Other 22 37    -
Net gain/(loss) recognised            directly            in            equity 6,909 (808) 2,317
Profit/(loss) for            the financial            year 6,756 (5,297) (21,821)
Total recognised            income            and            expense            relating            to            the   
         year 13,665 (6,105) (19,504)
Attributable            to:
- Equity            shareholders 13,912 (6,210) (19,607)
- Minority            interests (247) 105 103
13,665 (6,105) (19,504)
The accompanying            notes are an integral part of these Consolidated            Financial            Statements
88Vodafone            Group Plc Annual Report 2008




---



##### 



Consolidated            Balance            Sheet
[Graphic Appears Here]
at 31 March
2008 2007
Note £m £m
Non-current            assets
Goodwill 9 51,336 40,567
Other intangible            assets 9 18,995 15,705
Property, plant and equipment 11 16,735 13,444
Investments            in associated            undertakings 14 22,545 20,227
Other investments 15 7,367 5,875
Deferred            tax            assets 6 436 410
Post employment            benefits 25 65 82
Trade and            other receivables 17 1,067 494
118,546 96,804
Current            assets
Inventory 16 417 288
Taxation            recoverable 57 21
Trade and            other receivables 17 6,551 5,023
Cash and            cash equivalents 18 1,699 7,481
8,724 12,813
Total            assets 127,270 109,617
Equity
Called up            share capital 19 4,182 4,172
Share premium            account 21 42,934 43,572
Own            shares            held 21 (7,856) (8,047)
Additional            paid-in capital 21 100,151 100,185
Capital redemption            reserve 21 10,054 9,132
Accumulated            other recognised            income and expense 22 10,558 3,306
Retained            losses 23 (81,980) (85,253)
Total            equity            shareholders funds 78,043 67,067
Minority            interests 1,168 226
Written            put            options over            minority            interests (2,740) -
Total minority            interests (1,572) 226
Total            equity 76,471 67,293
Non-current            liabilities
Long            term borrowings 24 22,662 17,798
Deferred            tax            liabilities 6 5,109 4,626
Post employment            benefits 25 104 123
Provisions 26 306 296
Trade an
d            other payables 27 645 535
28,826 23,378
Current            liabilities
Short            term            borrowings 24,34 4,532 4,817
Current            taxation            liabilities 5,123 5,088
Provisions 26 356 267
Trade and            other payables 27 11,962 8,774
21,973 18,946
Total            equity            and liabilities 127,270 109,617
The Consolidated            Financial            Statements            were approved            by the Board of directors            on 27 May 2008 and were signed on its behalf by:
Arun            Sarin            Andy            Halford
[Graphic Appears Here]
Chief Executive            Chief Financial            Officer
The accompanying notes are an integral part of these Consolidated
Financial Statements .
Vodafone Group Plc Annual Report 2008 89




---



##### 



Vodafone  Financials
Consolidated            Cash            Flow            Statement
for the years ended 31 March
2008 2007 2006
Note £m £m £m
Net cash flows from operating            activities 29, 30 10,474 10,328 11,841
Cash            flows            from investing            activities
Purchase            of interests            in subsidiary            undertakings            and            joint ventures, net of            cash acqui
red (5,957) (2,805) (4,186)
&KURQUCN_QH_KPVGTGUVU_KP_UWDUKFKCT[_WPFGTVCMKPIU___PGV_QH_ECUJ_FKURQUGF___
&KURQUCN_QH_KPVGTGUVU_KP_CUUQEKCVGF_WPFGTVCMKPIU___
Purchase            of intangible            assets (846) (899) (690)
Purchase            of property, plant            and            equipment (3,852) (3,633) (4,481)
Purchase            of investments (96) (172) (57)
Disposal            of property, plant            and            equipment 39 34 26
Disposal            of investments 785 80 1
Dividends            received            from associated            undertakings 873 791 835
Dividends            received            from investments 72 57 41
Interest            received 438 526 319
Net            cash flows            from investing            activities 29 (8,544) 3,865 (7,593)
Cash            flows            from financing            activities
Issue of            ordinary            share            capital            and            reissue of treasury            shares 310 193 356
Net            movement            in short term            borrowings (716) 953 708
Proceeds            from            issue of long            term            borrowings 1,711 5,150 5,256
Repayment            of            borrowings (3,847) (1,961) (1,371)
        . QCPU_TGRCKF_VQ_CUUQEKCVGF_WPFGTVCMKPIU___
2WTEJCUG_QH_VTGCUWT[_UJCTGU___
$_UJCTG_ECRKVCN_TGFGORVKQP___
$_UJCTG_RTGHGTGPEG_FKXKFGPFU_RCKF___
Equity            dividends            paid (3,658) (3,555) (2,749)
Dividends            paid            to minority            shareholders            in subsidiary            undertakings (113) (34) (51)
Interest            paid (1,545) (1,051) (721)
Net            cash flows            from financing            activities 29 (7,865) (9,352) (5,076)
Net            cash flows (5,935) 4,841 (828)
Cash            and cash            equivalents            at beginning            of the            financial            year 18 7,458 2,932 3,726
Exchange            gain/(loss) on            cash            and cash            equivalents 129 (315) 34
Cash            and cash            equivalents            at            end of            the financial            year 18 1,652 7,458 2,932
The accompanying            notes are an integral part of these            Consolidated            Financial            Statements
_
_
___
90Vodafone            Group Plc Annual Report 2008




---



##### 



Notes to the Consolidated            Financial            Statements
1. Basis of preparation
The Consolidated Financial Statements are prepared in accordance with
International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB). The Consolidated Financial Statements are also prepared in accordance
with IFRS adopted by the European Union (EU), the Companies Act 1985 and Article 4 of the EU IAS
Regulations .
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. For a discussion on the Groups
critical accounting estimates see Critical Accounting Estimates on page 85. 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.
2.Significant            accounting            policies
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            and entities controlled, both unilaterally and jointly, by the Comp
any.
Accounting            for subsidiaries
A subsidiary            is an entity controlled            by the Company . Control is achieved            where the Company            has the power to govern the financial and operating            policies of a
n entity so as to obtain benefits from its activities .
The results of subsidiaries acquired or disposed of during the year are included in the income
stateme
nt 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 .
Minority interests in the net assets of consolidated subsidiaries are identified separately from
the Groups equity therein. Minority interests consist of the amount of those interests at the date
of the original business combination and the minoritys share of changes in equity since the date
of the combination . Losses applicable to the minority in excess of the minoritys share of changes
in equity are allocated against the interests of the Group except to the extent that the minority
has a binding obligation and is able to make an additional investment to cover the losses.
Business combinations
The acquisition of subsidiaries is accounted for using the purchase 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 in exchange for
control of the acquiree, plus any costs directly attributable to the business combination . The
acquirees identifiable assets and liabilities are recognised at their fair values at the
acquisition date.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the
excess of the cost of the business combination over the Groups interest in the net fair value of
the identifiable assets, liabilities and contingent liabilities recognised .
The interest of minority shareholders            in the acquiree            is initially measured            at the minoritys proportion of the net fair value of the assets, liabilities            and contingent       
     liabilities recognised .
Previously            held identifiable            assets, liabilities and contingent            liabilities of the
acquired            entity are revalued            to their fair value at the date of acquisition, being the date at which the Group achieves            control of the acquiree . The movement            in fair value is taken to the asset revaluation 
           surplus.
Interests            in joint ventures
A joint venture is a contractual arrangement whereby the Group and other parties undertake an
economic activity that is subject to joint control; that is, when the strategic financial and
operating policy decisions relating to the activities require the unanimous consent of the parties
sharing control.
The Group reports its interests in jointly controlled entities using proportionate consolidation .
The Groups share of the assets, liabilities, income, expenses and cash flows of jointly controlled
entities are combined with the equivalent items in the results 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 .
Investments in 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 is not control or joint control
over those policies.
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 balance sheet 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 . Losses of an associate in excess of the Groups interest in that associate are
not recognised . Additional losses are provided for, and a liability is recognised, only to the
extent that the Group has incurred legal or constructive obligations or made payments on behalf of
the associate .
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 recognised at the date
of acquisition is recognised as goodwill . The goodwill is included within the carrying amount of
the investment .
The licences of the Groups associated undertaking in the US, Verizon Wireless, are indefinite
lived assets as they are subject to perfunctory renewal . Accordingly, they are not subject to
amortisation but are tested annually for impairment, or when indicators exist that the carrying
value is not recoverable .
Intangible assets
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 held in the currency of the acquired entity and revalued
to the closing rate at each balance sheet date.
Goodwill is not subject to amortisation            but is tested for impairment .
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 .
Vodafone Group Plc Annual Report 2008 91




---



##### 



Vodafone  Financials
Notes to the Consolidated            Financial            Statements            continued
2. Significant            accounting            policies            continued
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 .
Licence and spectrum fees
Licence and spectrum fees are stated at cost less accumulated amortisation . The amortisation
periods range from 3 to 25 years and 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 service of the network .
Computer            software
Computer            software            licences are capitalised            on the basis of the costs incurred to acquire and bring into use the specific software . These costs are amortised            over their estimated      
      useful lives, being 3 to 5 years.
Costs that are directly associated with the production of identifiable and unique software products
controlled by the Group, and that are expected to generate economic benefits exceeding costs beyond
one year, are recognised as intangible assets. Direct costs include software development employee
costs and directly attributable overheads .
Software            integral to a related item of hardware equipment is accounted for as property, plant and equipment.
Costs associated            with maintaining            computer software programs            are recognised            as an expense when they are incurred .
Research            and development expenditure
Expenditure            on research activities            is recognised as an expense in the period in which it is incurred .
An internally -generated intangible            asset arising from the Groups development activity is recognised            only if all of the following            conditions            are met:
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 or valuation            of assets, other than land and properties            under construction, using the straight-line method, over their estimated            useful lives, as follows:
Freehold buildings 25  50 years
Leasehold premises            the term of the lease
Equipment, fixtures and fittings:
 Network infrastructure 3  25 years
 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 the sales proceeds and the carrying amount of the asset and
is recognised in the income statement .
Impairment of assets
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 reversed in a subsequent period.
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 internally approves formal ten year management plans for its businesses .
The first five years of these plans are used for the value in use calculations, except in markets
which are forecast to grow ahead of the long term growth rate. In such cases, the ten year plan is
used until the forecast growth rate trends towards the long term growth rate, up to a maximum of
ten years. Long range growth rates are used for cash flows into perpetuity beyond the relevant five
or ten year period.
Property, plant and equipment and finite lived intangible assets
At each balance sheet 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 . 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
  
an asset is created that can be separately            identified; it is probable            that the asset created will generate            future economic            benefits; and the development            cost
 of the asset can be measured            reliably.
Internally -generated intangible assets are amortised on a straight-line basis over their estimated
useful lives. Where no internally -generated intangible asset can be recognised, development
expenditure is charged to the income statement in the period in which it is incurred .
Other intangible assets
Other intangible assets with finite lives are stated at cost less accumulated amortisation and
impairment losses. Amortisation is charged to the income statement on a straight-line basis over
the estimated useful lives of intangible assets from the date they are available for use. The
estimated useful lives are as follows:
Brands
Customer bases
Property, plant and equipment
1  10 years 2  5 years
Land and buildings            held for use are stated in the balance sheet at their cost, less any subsequent accumulated            depreciation            and subsequent            accumulated            impair
ment losses.
Equipment, fixtures and fittings 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 rea
dy for their intended            use.
92 Vodafone            Group Plc Annual Report 2008




---



##### 



determined had no impairment loss been recognised for the asset or cash-generating unit in prior
years. A reversal of an impairment loss is recognised immediately in the income statement .
Disposal groups held for sale
Disposal groups held for sale are stated at the lower of carrying value and fair value less costs to sell.
Revenue
Group revenue comprises            revenue of
the Company            and its subsidiary 
           undertakings     
       plus the Groups share of the revenue of its joint
ventures            and excludes            sales taxes and discounts .
Revenue from mobile telecommunications comprises amounts charged to customers in respect of monthly
access charges, airtime usage, messaging, the provision of other mobile telecommunications
services, including data services and information provision, fees for connecting users of other
fixed line and mobile networks to the Groups network, revenue from the sale of equipment,
including handsets, and revenue arising from partner market agreements .
Access charges and airtime used by contract customers are invoiced and recorded as part of a
periodic billing cycle and recognised as revenue over the related access period, with unbilled
revenue resulting from services already provided from the billing cycle date to the end of each
period accrued and unearned revenue from services provided in periods after each accounting period
deferred . Revenue from the sale of prepaid credit is deferred until such time as the customer uses
the airtime, or the credit expires.
Other revenue from mobile telecommunications primarily comprises equipment sales, which are
recognised upon delivery to customers, and customer connection revenue . 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 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.
Incentives are provided to customers in various forms and are usually offered on signing a new
contract or as part of a promotional offering . Where such incentives are provided on connection of
a new customer or the upgrade of an existing customer, revenue representing the fair value of the
incentive, relative to other deliverables provided to the customer as part of the same arrangement,
is deferred and recognised in line with the Groups performance of its obligations relating to the
incentive .
For equipment sales made to intermediaries, revenue is recognised if the significant risks
associated with the equipment 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 handset to an end customer by the intermediary or the expiry of the
right of return.
Intermediaries are incentivised by the Group to connect new customers and upgrade existing
customers . Where such incentives are separable from the initial sale of equipment to an
intermediary, the incentive is accounted for as an expense upon connection, or upgrade, of th
e
customer .
Revenue from other businesses primarily comprises amounts charged to customers of the Groups fixed
line businesses, mainly in respect of access charges and line usage, invoiced and recorded as part
of a periodic billing cycle.
In revenue arrangements including more than one deliverable, the arrangement consideration is
allocated to each deliverable based on the fair value of the individual element . 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 .
Inventory
Inventory is stated at the lower of cost and net realisable            value. Cost is determined on the basis of weighted            average costs and comprises            direct materials            and, where applicable, direct
labour costs and those overheads            that have been incurred in bringing the inventories            to their present location and condition .
Leasing
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 balance sheet 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.
Foreign currencies
In preparing the financial statements of the individual entities within the Group, transactions in
currencies other than the entitys functional currency are recorded at the rates of exchange
prevailing on the dates of the transactions . At each balance sheet date, monetary items
denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet
date. Non-monetary items carried at fair value that are denominated in foreign currencies are
retranslated at the rate prevailing on the date when fair value was determined . Non-monetary items
that are 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 and liabilities are reported as part of
the fair value gain or loss. Translation differences on non-monetary financial assets, such as
investments in equity securities classified as available for sale, are included in equity.
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 on the balance sheet date. Income and expense items and cash flows are tran
slated
at the average exchange rates for the period and exchange differences arising are recognised
directly in equity. Such translation differences are recognised in the income statement in the
period in which a foreign operation is disposed of.
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 gains recognised in the Consolidated Income Statement for continuing
operations is £373 million (2007: £92 million loss, 2006: £36 million loss). A loss of £794 million
was recognised in the 2007 financial year for discontinued operations .
Vodafone Group Plc Annual Report 2008 93




---



##### 



Vodafone  Financials
Notes to the Consolidated            Financial            Statements            continued
2.Significant            accounting            policies            continued
Borrowing            costs
All borrowing            costs are recognised            in the income statement            in the period in which they are incurred .
Post employment            benefits
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 balance
sheet. Scheme liabilities are assessed using the projected unit funding method and applying the
principal actuarial assumptions as at the balance sheet date. Assets are valued at market value.
During the year ended 31 March 2006, the Group early adopted the amendment to IAS 19, Employee
Benefits, and applied it from 1 April 2004. Accordingly, actuarial gains and losses are taken to
the statement of recognised income and expense 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 as at 1 April 2004, the date of transition            to IFRS, have been recognised            in the balance sheet.
Taxation
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 balance sheet 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 balance sheet 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 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 goodwill .
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in
subsidiaries and associates, and interests in joint ventures, 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 balance sheet date and adjusted to
reflect changes in probability 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 balance sheet 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 directly to equity, in which case the tax is also recognised directly in equity.
Financial            instruments
Financial            assets and financial liabilities, in respect of financial instruments, are recognised            on the Groups balance sheet when the Group becomes            a party to the contractual            provisions   
         of the instrument .
The Group has applied the requirements of IFRS to financial instruments for all periods presented
and has not taken advantage of any exemptions available to first time adopters of IFRS in this
respect. During the year ended 31 March 2006, the Group early adopted IFRS 7, Financial
Instruments: Disclosures, amendments to IAS 39, Financial Instruments: Recognition and
Measurement and IFRS 4, Insurance Contracts, regarding Financial Guarantee Contracts and
amendments to IAS 39 regarding The Fair Value Option and Cash Flow Hedge Accounting of Forecast
Intragroup Transactions and applied them from 1 April 2004.
Trade receivables
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 .
Other investments
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 cost, including transaction
costs.
Other inve
stments classified 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 costs 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 .
Cash and cash equivalents
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 valu
e.
Trade payables
Trade payables            are not interest bearing and are stated at their nominal value.
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.
94 Vodafone Group Plc Annual Report 2008




---



##### 



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 fair value hedge. Any difference
between the proceeds net of transaction costs and the settlement or redemption of borrowings is
recognised over the term of the borrowing .
Equity instruments
Equity instruments            issued by the Group are recorded            at the proceeds            received, net of direct issue costs.
Derivative            financial instruments            and hedge accounting
The Groups activities            expose it to the financial risks of changes in foreign exchange            rates and interest rates.
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 .
Derivative            financial instruments are initially measured            at fair value on the contract date and are subsequently            re-measured to fair value at each reporting            date.
The Group designates            certain derivatives            as either:


hedges of the change of fair value of recognised assets and liabilities (fair value hedges); or 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 .
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 . The ineffective portion 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 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 recognised income and expense . 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. During the year ended 31 March 2006, the Group adopted the Amendments to
IAS 21, The Effect of Changes in Foreign Exchange Rates, with effect from 1 April 2004, being the
date of transition to IFRS for the Group.
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 other than 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 fair
value within borrowings with a corresponding charge directly to equity. The charge to equity is
recognised separately as written put options over minority interests, adjacent to minority
interests in the net assets of consolidated subsidiaries . The Group recognises the cost of
writing such put options, determined as the excess of the fair 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.
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event and
it is probable that the Group will be required to settle that obligation . Provisions are measured
at the directors best estimate of the expenditure required to settle the obligation at the balance
sheet date and are discounted to present value where the effect is material .
Share -based payments
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 .
Fair value is measured using a binomial pricing model, being a lattice-based option valuation
model, which is calibrated using a Black-Scholes framework . The expected life used in the model
has been adjusted, based on managements best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations .
The Group uses historical data to estimate option exercise and employee termination within the
valuation model; separate groups of employees that have similar historical exercise behaviour are
considered separately for valuation purposes . The expected life of options granted is derived from
the output of the option valuation model and represents the period of time that options are
expected to be outstanding . Expected volatilities are based on implied volatilities as determined
by a simple average of no less than three international banks, excluding the highest and lowest
numbers . The risk-free rates for periods within the contractual life of the option are based on
the UK gilt yield curve in effect at the time of grant.
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 volatility of the ranking over a three
year period is used to determine the probable weighted percentage number of shares that could be
expected to vest and hence affect fair value.
The fair value of awards of non-vested shares to the Board of directors and Executive Committee is
equal to the closing price of the Vodafones shares on the date of grant, as these awards are
entitled to dividend equivalents during the vesting period. Awards of non-vested shares to other
employees are not entitled to dividends during the vesting period and the fair value reflects a
discount to the closing share price of Vodafones shares on the date of grant equal to the present
value of expected dividends to be received over the vesting period.
Vodafone Group Plc Annual Report 2008 95




---



##### 



Vodafone- Financials
Notes to the Consolidated            Financial            Statements            continued
3.Segment analysis
The Group has a single group of related services and products, being the supply of communications            services and products . Segment            information            is provided            on the basis of geographic        
    areas, being the basis on which the Group manages its world wide interests . Revenue            is attributed to a country or region based on the location of the Group company            reporting the revenue . Inter-segment            sales are charged at arms length prices. The Group uses adjusted            operating            profit for internal performance            analysis and, therefore, the Groups measure            of segment            profit is adjusted            operating            profit, being operating            profit excluding            non-operating            income of associates, impairment            losses and other income and ex
pense .
During the year ended 31 March 2008, the Group early adopted IFRS 8 Operating            Segments . The Group also changed            its organisation            structure            such that the Groups associated            undertaking            in France, SFR, is now managed            within the Europe region and reported            within Other Europe. As a result, prior period disclosures            have been amended            to conform to the current year presentation .
Adjusted
Segment            Common            Intra-region            Regional            Inter-region            Group            operating
revenue            functions            revenue            revenue            revenue            revenue            profit
£m £m £m £m £m £m £m
31 March 2008
Germany 5,397 (128) 5,269 (10) 5,259 1,265
Italy 4,435 (33) 4,402 (6) 4,396 1,573
Spain 5,063 (96) 4,967 (4) 4,963 1,282
UK 5,424 (46) 5,378 (10) 5,368 431
Arcor 1,632 (86) 1,546 (1) 1,545 225
Other            Europe(1) 4,583 (64) 4,519 (3) 4,516 1,430
Europe 26,534 (453) 26,081 (34) 26,047 6,206
Eastern            Europe 3,154    3,154 (35) 3,119 332
Middle            East, Africa & Asia(2) 4,547 (1) 4,546 (24) 4,522 769
Pacific 1,645    1,645 (14) 1,631 181
Associates   US                2,447
EMAPA 9,346 (1) 9,345 (73) 9,272 3,729
Common            functions (3)    170    170 (11) 159 140
Group 35,880 170 (454) 35,596 (118) 35,478 10,075
31 March 2007
Germany 5,443 (123) 5,320 (9) 5,311 1,354
Italy 4,245 (44) 4,201 (5) 4,196 1,575
Spain 4,500 (106) 4,394 (3) 4,391 1,100
UK 5,124 (54) 5,070 (9) 5,061 511
Arcor 1,441 (27) 1,414    1,414 171
Other            Europe(1) 4,275 (82) 4,193 (4) 4,189 1,448
Europe 25,028 (436) 24,592 (30) 24,562 6,159
Eastern            Europe 2,477    2,477 (31) 2,446 184
Middle            East, Africa & Asia(2) 2,565    2,565 (9) 2,556 694
Pacific 1,399    1,399 (11) 1,388 159
Associates   US                2,077
Associates   Other                130
EMAPA 6,441    6,441 (51) 6,390 3,244
Common            functions (3)    168    168 (16) 152 128
Group 31,469 168 (436) 31,201 (97) 31,104 9,531
31 March 2006
Germany 5,754 (143) 5,611 (9) 5,602 1,496
Italy 4,363 (39) 4,324 (4) 4,320 1,672
Spain 3,995 (100) 3,895 (2) 3,893 968
UK 5,048 (50) 4,998 (10) 4,988 698
Arcor 1,320 (34) 1,286    1,286 139
Other            Europe(1) 4,697 (78) 4,619 (3) 4,616 1,452
Europe 25,177 (444) 24,733 (28) 24,705 6,425
Eastern            Europe 1,435    1,435 (14) 1,421 176
Middle            East, Africa & Asia(2) 1,784    1,784 (15) 1,769 523
Pacific 1,335    1,335 (14) 1,321 140
Associates   US                1,732
Associates   Other                192
EMAPA 4,554    4,554 (43) 4,511 2,763
Common            functions (3)    145    145 (11) 134 211
Group 29,731 145 (444) 29,432 (82) 29,350 9,399
Notes:
(1) Adjusted operating profit includes £425 million (2007: £517 million; 2006: £479 million
),
representing the Groups share of results in associated undertakings. (2) Adjusted operating profit
includes £2 million (2007: £nil; 2006: £nil), representing the Groups share of results in
associated undertakings.
(3) Adjusted operating profit includes £2 million (2007: £1 million; 2006: £8 million),
representing the Groups share of results in associated undertakings.
96Vodafone            Group Plc Annual Report 2008




---



##### 



A reconciliation            of adjusted            operating            profit to operating            profit/(loss) is shown below. For a reconciliation            
of operating            profit/(loss) to profit/(loss) before taxation, see the Consolidated            Income Statement            on page 88.
2008 2007 2006
£m £m £m
Adjusted            operating            profit 10,075 9,531 9,399
Impairment            losses    (11,600) (23,515)
Other            items (28) 505 32
Operating            profit/(loss) 10,047 (1,564) (14,084)
Other
Capitalised            expenditure            Depreciation
Non-current            fixed asset            on intangible            and            Impairment
assets(1) additions(2) assets            amortisation            of goodwill
£m £m £m £m £m
31 March 2008
Germany 18,267 392 14 1,067 -
Italy 16,215 411 1 582 -
Spain 14,589 533    500 -
UK 7,930 465    973 -
Arcor 862 221    100 -
Other            Europe 8,303 469 11 616 -
Europe 66,166 2,491 26 3,838 -
Eastern            Europe 6,879 633    665 -
Middle            East, Africa & Asia 11,958 1,554 7 954 -
Pacific 1,346 212    245 -
EMAPA 20,183 2,399 7 1,864 -
Common            functions 717 185 8 207 -
Group 87,066 5,075 41 5,909 -
31 March 2007
Germany 16,233 425    1,063 6,700
Italy 13,722 421 26 556 4,900
Spain 12,289 547    449 -
UK 8,483 661    930 -
Arcor 627 189    144 -
Other            Europe 7,187 489 6 586 -
Europe 58,541 2,732 32 3,728 11,600
Eastern            Europe 6,235 435    349 -
Middle            East, Africa & Asia 3,079 574 276 272 -
Pacific 1,249 251    194 -
EMAPA 10,563 1,260 276 815 -
Common            functions 612 216    568 -
Group 69,716 4,208 308 5,111 11,600
31 March 2006
Germany 592    1,167 19,400
Italy 541 1 588 3,600
Spain 502    395 -
UK 665 11 924 -
Arcor 129    140 -
Other            Europe 511 4 645 515
Europe 2,940 16 3,859 23,515
Eastern            Europe 280    231 -
Middle            East, Africa & Asia 426    216 -
Pacific 247    209 -
EMAPA 953    656 -
Common            functions 112    189 -
Group 4,005 16 4,704 23,515
Notes:
(1) Includes goodwill, other intangible assets and property, plant and equipment.
(2) Includes additions to property, plant and equipment and computer software, reported within
intangible assets.
Vodafone Group Plc Annual Report 2008 97




---



##### 



Vodafone  Financials
Notes to the Consolidated            Financial            Statements            continued
4. Operating            profit/(loss)
Operating            profit /(loss) has been arrived at after charging/(crediting):
2008 2007 2006
£m £m £m
Net            foreign exchange (gains)/losses (27) 6 -
Depreciation            of            property, plant and equipment (note 11 ):
Owned            assets 3,400 2,994 3,069
Leased            assets 27 17 10
Amortisation            of            intangible            assets (note 9) 2,482 2,100 1,625
Impairment            of            goodwill (note 10)    11,600 23,515
Research            and development            expenditure 234 222 206
Staff            costs (note 35) 2,698 2,466 2,310
Operating            lease            rentals            payable:
Plant            and machinery 43 35 35
Other            assets            including            fixed line rentals 1,117 984 933
Loss on            disposal            of property, plant and equipment 70 43 69
Own            costs capitalised            attributable            to the construction            or acquisition            of property, plant and equipment (245) (244) (256)
The total            remuneration            of the Groups auditor, Deloitte & Touche LLP, and its affiliates            for services            provided            to the Group is analysed  
          below:
2008 2007 2006
£m £m £m
Audit fees:
Parent company 1 1 1
Subsidiary            undertakings 5 4 3
6 5 4
Fees for            statutory            and            regulatory            filings(1) 1 2 -
Audit            and            audit-related            fees 7 7 4
Other            fees:
Taxation 1 1 1
Corporate            finance transactions       1
Other(2) 1 2 2
2 3 4
Total            fees 9 10 8
Notes:
(1) Amounts for 2008 and 2007 include mainly audit fees in relation to Section 404 of the US
Sarbanes-Oxley Act of 2002.
(2) Amounts for 2007 and 2006 include fees mainly relating to the preparatory work required in
advance of the implementation of Section 404 of the US Sarbanes-Oxley Act of 2002 and general
accounting advice.
The total remuneration            includes £nil (2007: £nil, 2006: £1 million) in respect of the Groups discontinued            operations            in Japan. In addition to the above, the Groups joint ventures and associated            un
dertakings            paid fees totalling £2 million (2007: £2 million, 2006: £2 million) and £3 million (2007: £4 million, 2006: £4 million), respectively, to Deloitte & Touche LLP and its affiliates during the year. Deloitte & Touche LLP and its affiliates have also received            amounts            totalling less than £1 million in each of the last three years in respect of services provided            to pension schemes            and charitable            foundations            associated            to the Group.
A description            of the work performed            by the Audit Committee            in order to safeguard            auditor independence            when non-audit services are provided            is set out in Corporate Governance on page 69.
98 Vodafone            Group Plc Annual Report 2008




---



##### 



5. Investment income and financing costs 2008 2007 2006 £m £m £m Investment income: Available-for-sale investments: Dividends received 72 57 41 Other(1)  86  Loans and receivables at amortised cost(2) 451 452 153 Fair value through the income statement (held for trading): Derivatives  foreign exchange contracts 125 160 159 Other(3) 66  - Equity put rights and similar arrangements(5)  34  714 789 353 Financing c
osts: Items in hedge relationships: Other loans 612 548 510 Interest rate swaps 61 (9) (118) Dividends on redeemable preference shares 42 45 48 Fair value hedging instrument (635) 42 213 Fair value of hedged item 601 (47) (186) Other financial liabilities held at amortised cost: Bank loans and overdrafts 347 126 126 Other loans(4) 390 276 78 Potential interest charge on settlement of tax issues 399 406 329 Equity put rights and similar arrangements(5) 143 32 161 Finance leases 7 4 7 Fair valu
e through the income statement (held for trading): Derivatives  forward starting swaps and futures 47 71 (48) Other(6)  118  2,014 1,612 1,120 Net financing costs 1,300 823 767 Notes: (1) Amount for 2007 includes a gain resulting from refinancing of SoftBank related investments received as part of the consideration for the disposal of Vodafone Japan on 27 April 2006. (2) Amount for 2007 includes £77 million of foreign exchange gains arising from hedges of a ne
t investment in a foreign operation. (3) Includes foreign exchange gain on certain intercompany balances and investments held following the disposal of Vodafone Japan to SoftBank. (4) Amount for 2008 includes £72 million of foreign exchange losses arising from hedges of a net investment in a foreign operation. (5) Includes amounts in relation to the Groups arrangements with its minority partners in India, its fixed line operations in Germany and, in respect of prior years, Tel
ecom Egypt. Further information is provided in Option agreements and similar arrangements on page 58. (6) Amount for 2007 includes foreign exchange losses on certain intercompany balances and investments held following the disposal of Vodafone Japan to SoftBank. Vodafone Group Plc Annual Report 2008 99




---



##### 



Vodafone  Financials Notes to the Consolidated Financial Statements continued 6. Taxation Income tax expense 2008 2007 2006 £m £m £m United Kingdom corporation tax (income)/expense at 30%: Current year  - Adjustments in respect of prior years (53) (30) (15) (53) (30) 154 Overseas current tax expense/(income): Current year 2,539 2,928 2,077 Adjustments in respect of prior years (293) 215 (418) 2,246 3,143 1,659 Total cur
rent tax expense 2,193 3,113 1,813 Deferred tax on origination and reversal of temporary differences: United Kingdom deferred tax (125) (49) 444 Overseas deferred tax 177 (641) 123 Total deferred tax expense/(income) 52 (690) 567 Total income tax expense from continuing operations 2,245 2,423 2,380 Tax (credited)/charged directly to equity 2008 2007 2006 £m £m £m Current tax credit (5) (2) (6) Deferred tax (credit)/charge (65) 11 (11) Total tax (credited)/charged
 directly to equity (70) 9 (17) Factors affecting tax expense for the year The table below explains the differences between the expected tax expense on continuing operations, at the UK statutory tax rate of 30% for 2008, 2007 and 2006, and the Groups total tax expense for each year. Further discussion of the current year tax expense can be found in the section titled Operating Results on page 33. Subsequently, the UK statutory tax rate reduced to 28%, effective from 1 April 
2008, and the impact on year end tax balances is included within Effect of current year changes in statutory tax rates below. 2008 2007 2006 £m £m £m Profit/(loss) before tax on continuing operations as shown in the Consolidated Income Statement 9,001 (2,383) (14,853) Expected income tax expense/(income) on profit from continuing operations at UK statutory tax rate 2,700 (715) (4,456) Effect of taxation of associated undertakings, reported within operating profit 134 119 133 Impai
rment losses with no tax effect  3,480 Expected income tax expense at UK statutory rate on profit from continuing operations, before impairment losses and taxation of associates 2,834 2,884 2,732 Effect of different statutory tax rates of overseas jurisdictions 320 346 411 Effect of current year changes in statutory tax rates 66 1 (15) Deferred tax on overseas earnings 255 (373) (78) Assets revalued for tax purposes (16) (197) (142) Effect of previously unrecognised temporary difference
s including losses (833) (562) (95) Adjustments in respect of prior years (254) 145 (470) Expenses not deductible for tax purposes and other items 321 577 480 Exclude taxation of associated undertakings (448) (398) (443) Income tax expense from continuing operations 2,245 2,423 2,380 100 Vodafone Group Plc Annual Report 2008




---



##### 



Deferred tax Analysis of movements in the net deferred tax balance during the year: 2008 £m 1 April 2007 (4,216) Charged to the income statement (52) Credited directly to equity 65 Acquisitions and disposals (480) Exchange movements 10 31 March 2008 (4,673) Deferred tax assets and liabilities in respect of continuing operations, before offset of balances within countries, are as follows: Net Amount recognised credited/ Gross Gross Less
deferred tax (charged) deferred deferred tax amounts asset/ in income tax asset liability unrecognised (liability) statement £m £m £m £m £m Accelerated tax depreciation 576 (1,635) (25) (1,084) 326 Tax losses 25,792  (25,433) 359 (6) Deferred tax on overseas earnings  (3,535)  (3,535) (255) Other short term timing differences 3,807 (2,223) (1,997) (413) (117) 31 March 2008 30,175 (7,393) (27,455) (4,673) (52) Analysed in the balan
ce sheet, after offset of balances within countries, as: £m Deferred tax asset 436 Deferred tax liability (5,109) 31 March 2008 (4,673) Net Amount recognised credited/ Gross Gross Less deferred tax (charged) deferred deferred tax amounts asset/ in income tax asset liability unrecognised (liability) statement £m £m £m £m £m Accelerated tax depreciation 386 (1,720) (25) (1,359) 112 Tax losses 13,619  (13,334) 285 (264) Deferred tax on overseas earnings  (3,296)  (3,296) 373 Other short term timing differences 4,147 (1,615) (2,378) 154 469 31 March 2007 18,152 (6,631) (15,737) (4,216) 690 Analysed in the balance sheet, after offset of balances within countries, as: £m Deferred tax asset 410 Deferred tax liability (4,626) 31 March 2007 (4,216) Factors affecting the tax charge in future years Factors that may affect the Groups future tax charge include the impact of corporate restructuring, the resolution of open issues, futur
e planning opportunities, corporate acquisitions and disposals, the use of brought forward tax losses and changes in tax legislation and tax rates. For example, in June 2007, the UK Government issued a discussion document about the taxation of companies foreign profits and invited comments from business in order to develop more detailed proposals for further consultation and potential legislation in the 2009 calendar year. Vodafone is routinely subject to audit by tax authorities in the territori
es in which it operates and the following items have reached litigation. The Group 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 overall profitability and cash flows of the Group in future periods. The Groups subsidiary Vodafone 2 is responding to an enquiry by HM Revenue & Customs (HMRC) with regard to the UK tax treatment of one of its Luxembo
urg holding companies under the controlled foreign companies (CFC) rules. Further details in relation to this enquiry are included in note 32 Contingent liabilities. A Spanish subsidiary, Vodafone Holdings Europe SL (VHESL), is in disagreement with the Spanish tax authorities regarding the tax treatment of interest expenses claimed by VHESL in the accounting periods ended 31 March 2003 and 31 March 2004. The matter is now being pursued through the Spanish court
system. Vodafone Group Plc Annual Report 2008 101




---



##### 



Vodafone  Financials Notes to the Consolidated Financial Statements continued 6. Taxation continued At 31 March 2008, the gross amount and expiry dates of losses available for carry forward are as follows: Expiring Expiring within within 5 years 6-10 years Unlimited Total £m £m £m £m Losses for which a deferred tax asset is recognised 275 24 901 1,200 Losses for which no deferred tax is recognised 226 332 86,780 87,338 501 356 87,681 88,538 Included above are losses amounting to £1,969 million (2007: £1,938 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. The losses above also include £82,204 million (2007: £41,298 million) that have arisen in overseas holding companies as a result of revaluations of those companies investments for local GAAP purposes. Since it is uncertain whether these losses will be utilised, no deferred tax asset has been recognised. In addition to the losses described above, the Group has potential tax losses of £40,181 million (2007: £34,292 million) in respect of a write down in the value of investments in Germany. These losses have to date been denied by the German tax authorities. Vodafone is in continuing discussions with them regarding the availability of the losses. Howev
er, the outcome of these discussions and the timing of the resolution are not yet known. The Group has not recognised the availability of the losses, nor the income statement benefit arising from them, due to this uncertainty. If upon resolution a benefit is recognised, it may impact both the amount of current income taxes provided since the date of initial deduction and the amount of the benefit from tax losses the Group will recognise. The recognition of these benefits could affect the overall profitabili
ty of the Group in future periods. The £5,889 million increase compared to the position at 31 March 2007 is due to foreign exchange, as a result of sterling weakening against the euro. The Group holds provisions in respect of deferred taxation that would arise if temporary differences on investments in subsidiaries, associates and interests in joint ventures were to be realised after the balance sheet date. No deferred tax liability has been recognised in respect of a further £49,000 million (2007: £34,946 million) of unremitted earnings of subsidiaries, associates and joint ventures because the Group is in a position to control the timing of the reversal of the temporary difference and it is probable that such differences will not reverse in the foreseeable future. It is not practicable to estimate the amount of unrecognised deferred tax liabilities in respect of these unremitted earnings. 7. Equity dividends 2008 2007 2006 £m £m £m Declared during the financ
ial year: Final dividend for the year ended 31 March 2007: 4.41 pence per share (2006: 3.87 pence per share, 2005: 2.16 pence per share) 2,331 2,328 1,386 Interim dividend for the year ended 31 March 2008: 2.49 pence per share (2007: 2.35 pence per share, 2006: 2.20 pence per share) 1,322 1,238 1,367 3,653 3,566 2,753 Proposed after the balance sheet date and not recognised as a liability: Final dividend for the year ended 31 March 2008: 5.02 pence per share (2007: 4.41 pence per share, 2006:
 3.87 pence per share) 2,667 2,331 2,328 8. Earnings/(loss) per share 2008 2007 2006 Millions Millions Millions Weighted average number of shares for basic earnings/(loss) per share 53,019 55,144 62,607 Effect of dilutive potential shares: restricted shares and share options(1) 268  - Weighted average number of shares for diluted earnings/(loss) per share 53,287 55,144 62,607 £m £m £m Earnings/(loss) for basic and diluted earnings per share: Continuing operations 6,660 (4,932) (17,318)
Discontinued operations(2)  (494) Total 6,660 (5,426) (21,916)
Notes: (1) In the years ended 31 March 2007 and 2006, 215 million and 183 million shares, respectively, have been excluded from the calculation of diluted loss per share as




---



##### 



9. Intangible assets Licences and spectrum Computer Goodwill fees software Other Total £m £m £m £m £m Cost: 1 April 2006 76,130 16,991 3,572 755 97,448 Exchange movements (2,321) (431) (55) (99) (2,906) Arising on acquisition 1,746 707 18 257 2,728 Additions  308 799  1,107 Transfer to other investments (487) (319)  (48) (854) Disposals  - (29)  (29) 31 March 2007 75,068 17,256 4,305 865
 97,494 Exchange movements 12,406 1,707 573 59 14,745 Arising on acquisition 4,316 3,045 8 256 7,625 Additions  33 993 8 1,034 Disposals  (1) (79)  (80) Other(1) (28)  -  (28) 31 March 2008 91,762 22,040 5,800 1,188 120,790 Accumulated impairment losses and amortisation: 1 April 2006 23,524 2,359 2,339 108 28,330 Exchange movements (623) (61) (45) (14) (743) Amortisation charge for the year  1,088 719 293 2,100 Impairment losses 11,600  -  11,600 Transfer to other investments  (30)  (11) (41) Disposals  - (24)  (24) 31 March 2007 34,501 3,356 2,989 376 41,222 Exchange movements 5,925 433 436 28 6,822 Amortisation charge for the year  1,343 802 337 2,482 Disposals  - (67)  (67) 31 March 2008 40,426 5,132 4,160 741 50,459 Net book value: 31 March 2007 40,567 13,900 1,316 489 56,272 31 March 2008 51,336 16,908 1,640 447 70,331 Note: (1) Represents a pre-tax ch
arge against goodwill offsetting the tax benefit arising on recognition of a pre-acquisition deferred tax asset. For licences and spectrum fees and other intangible assets, amortisation is included within the cost of sales line within the Consolidated Income Statement. The net book value at 31 March 2008 and expiry dates of the most significant purchased licences are as follows: 2008 2007 Expiry date £m £m Germany December 2020 5,089 4,684 UK December 2021 4,579 4,912 Vodafone Group
 Plc Annual Report 2008 103




---



##### 



Vodafone  Financials Notes to the Consolidated Financial Statements continued 10. Impairment Impairment losses The impairment losses recognised in the Consolidated Income Statement, as a separate line item within operating profit, in respect of goodwill are as follows: 2008 2007 2006 Reportable segment £m £m £m Germany Germany  6,700 19,400 Italy Italy  4,900 3,600 Sweden Other Europe  - 515  11,600 23,515 Germany Du
ring the year ended 31 March 2007, the goodwill in relation to the Groups mobile operation in Germany was impaired by £6.7 billion following a test for impairment triggered by an increase in long term interest rates and increased price competition in the German market along with continued regulatory pressures. The impairment loss for the year ended 31 March 2006 of £19.4 billion was determined as part of the annual test for impairment and was as a result of the intensific
ation in price competition, principally from new market entrants, together with high levels of penetration and continued regulated reductions in incoming call rates. The pre-tax risk adjusted discount rate used in the testing at 31 March 2007 was 10.6% (31 January 2007: 10.5%, 30 September 2006: 10.4%, 31 January 2006: 10.1%). Italy During the year ended 31 March 2007, the goodwill in relation to the Groups mobile joint venture in Italy was impaired by £4.9 billion.
During the second half of the 2007 financial year, £3.5 billion of the impairment loss resulted from the estimated impact of legislation cancelling the fixed fees for the top up of prepaid cards and the related competitive response in the Italian market. At 30 September 2006, the goodwill was impaired by £1.4 billion, following a test for impairment triggered by an increase in long term interest rates. The impairment loss for the year ended 31 March 2006 of £3.6 billi
on was due to competitive pressures increasing with the mobile network operators competing aggressively on subsidies and, increasingly, on price. The pre-tax risk adjusted discount rate used in the testing at 31 March 2007 was 11.5% (31 January 2007: 11.2%, 30 September 2006: 10.9%, 31 January 2006: 10.1%). Sweden The impairment of the carrying value of goodwill of the Groups mobile operation in Sweden in the year ended 31 March 2006 resulted from fierce competition in the Swe
dish market combined with onerous 3G licence obligations. Prior to its disposal in the year ended 31 March 2006, the carrying value of goodwill was tested for impairment as increased competition provided an indicator that the goodwill may have been further impaired. The recoverable amount of the goodwill was determined as the fair value less costs to sell, reflecting the announcement on 31 October 2005 that the Groups 100% interest in Vodafone Goodwill The carrying value of goodwill at 31 Ma
rch was as follows: 2008 2007 £m £m Germany 10,984 9,355 Italy 13,205 11,125 Spain 12,168 10,285 36,357 30,765 Other 14,979 9,802 51,336 40,567 104 Vodafone Group Plc Annual Report 2008




---



##### 



Key assumptions used in the value in use calculations The key assumptions used in determining the value in use are: Assumption How determined Budgeted EBITDA Budgeted EBITDA, calculated as adjusted operating profit before depreciation and amortisation, has been based on past experience adjusted for the following:  voice and messaging revenue is expected to benefit from increased usage from new customers, the introduction of new services and traffic
 moving from fixed networks to mobile networks, though these factors will be partially offset by increased competitor activity, which may result in price declines, and the trend of falling termination rates;  non-messaging data revenue is expected to continue to grow strongly as the penetration of 3G enabled devices rises and new products and services are introduced; and  margins are expected to be impacted by negative factors such as an increase in the cost of acquiring and retain
ing 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 includes the ongoing capital expenditure required 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 mobile businesses where the first five years of the ten year management plan are used for the Groups value in use calculations, a long term growth rate into perpetuity has been determined as the lower of:  the nominal GDP rates for the country of operation; and  the long term compound annual growth rate in EBITDA in year
s six to ten of the management plan. For mobile businesses where the full ten 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:  the nominal GDP rates for the country of operation; and  the compound annual growth rate in EBITDA in years nine to ten of the management plan. For non-mobile businesses, no growth is expected beyond managements plans for the initial five year p
eriod. Pre-tax risk adjusted discount rate The discount rate applied to the cash flows of each of the Groups operations is based on the risk free rate for ten year bonds issued by the government in the respective market, 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 a
nd 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. Key assumptions for the Groups operations in Germany and Italy are disclosed below under Sensitivity to changes in assumptions. During the year ended 31 March 
2008, the most recent value in use calculation for Groups operations in Spain
 was based on a pre-tax risk adjusted discount rate of 10.6% (2007: 9.7%) and long term growth rate of 1.4% (200




---



##### 



Vodafone  Financials Notes to the Consolidated Financial Statements continued 10. Impairment continued Sensitivity to changes in assumptions 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. 31 March 2008 As of 31 January 2008, the date of the Groups annual impairment test, the
 estimated recoverable amount of the Groups operations in Germany and Italy exceeded their carrying value by £2,700 million and £3,400 million respectively. The table below shows the key assumptions used in the value in use calculation and the amount by which each key assumption must change in isolation in order for the estimated recoverable amount to be equal to its carrying value in both cases. Assumptions used in value in Change required for carrying value use calculation to equ
al the recoverable amount Germany Italy Germany Italy % % Percentage points Percentage points Pre-tax adjusted discount rate 10.2 11.5 1.6 2.7 Long term growth rate 1.2 0.1 (1.7) (3.0) Budgeted EBITDA(1) (2.2) 1.4 (2.0) (4.2) Budgeted capital expenditure(2) 7.5 to 8.7 5.8 to 9.5 4.2 6.6 Notes: (1) Budgeted EBITDA is expressed as the compound annual growth rates in the initial five years of the Groups approved management plans. (2) Budgeted capital expenditure is expressed as the range of cap
ital expenditure as a percentage of revenue in the initial five years of the Groups approved management plans. 31 March 2007 Germany The estimated recoverable amount of the Groups operations in Germany equalled its carrying value and, consequently, any adverse change in a key assumption could have caused a further impairment loss to be recognised. The last value in use calculation during the year ended 31 March 2007 was based on the following assumptions:  Pre-tax risk adj
usted discount rate of 10.6%;  Long term growth rate of 1.2%;  Budgeted EBITDA, expressed as the compound annual growth rates in the initial five years of the Groups approved management plans, of (4.2)%; and  Budgeted capital expenditure, expressed as the range of capital expenditure as a percentage of revenue in the initial five years of the Groups approved management plans, of 7.5-7.0%. Italy The estimated recoverable amount of the Groups operations
 in Italy equalled its carrying value and, consequently, any adverse change in a key assumption could have caused a further impairment loss to be recognised. The last value in use calculation during the year ended 31 March 2007 was based on the following assumptions:  Pre-tax risk adjusted discount rate of 11.5%;  Long term growth rate of 1.0%;  Budgeted EBITDA, expressed as the compound annual growth rates in the initial five years of the Groups approved ma
nagement plans, of (3.8)%; and  Budgeted capital expenditure, expressed as the range of capital expenditure as a percentage of revenue in the initial five years of the Groups approved management plans, of 11.4-8.7%. 106 Vodafone Group Plc Annual Report 2008




---



##### 



11. Property, plant and equipment Equipment, Land and fixtures buildings and fittings Total £m £m £m Cost: 1 April 2006 1,112 25,731 26,843 Exchange movements (22) (839) (861) Arising on acquisition  172 172 Additions 87 3,322 3,409 Transfer to other investments (1) (268) (269) Disposals (9) (692) (701) Reclassifications (4) 4 -Other 77  77 31 March 2007 1,240 27,430 28,670 Exchange movements 201 3,898 4,
099 Arising on acquisition 14 1,150 1,164 Additions 94 3,988 4,082 Disposals (10) (761) (771) Reclassifications (109) 109  31 March 2008 1,430 35,814 37,244 Accumulated depreciation and impairment: 1 April 2006 353 12,830 13,183 Exchange movements (7) (349) (356) Charge for the year 72 2,939 3,011 Transfer to other investments  (31) (31) Disposals (4) (605) (609) Other 28  28 31 March 2007 442 14,784 15,226 Exchange movements 77 2,456 2,533 Charge fo
r the year 79 3,348 3,427 Disposals (10) (667) (677) Reclassifications (66) 66  31 March 2008 522 19,987 20,509 Net book value: 31 March 2007 798 12,646 13,444 31 March 2008 908 15,827 16,735 The net book value of land and buildings and equipment, fixtures and fittings includes £110 million and £51 million, respectively (2007: £49 million and £116 million) in relation to assets held under finance leases (see note 24). 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 £28 million and £1,013 million, respectively (2007: £13 million and £998 million). Property, plant and equipment with a net book value of £1,503 million (2007: £73 million) has been pledged as security against borrowings. Vodafone Group Plc Annual Report 2008 107




---



##### 



Vodafone  Financials Notes to the Consolidated Financial Statements continued 12. Principal subsidiary undertakings At 31 March 2008, the Company had the following principal subsidiary undertakings carrying on businesses which affect the profits and assets of the Group. Unless otherwise stated, the Companys principal subsidiary undertakings all have share capital consisting solely of ordinary shares and are indirectly held. The country of incor
poration or registration of all subsidiary undertakings is also their principal place of operation. Country of incorporation Percentage(1) Name Principal activity or registration shareholdings Arcor AG & Co. KG(2) Fixed line operator Germany 73.7 Vodafone Albania Sh.A. Mobile network operator Albania 99.9 Vodafone Americas Inc.(3) Holding company USA 100.0 Vodafone Czech Republic a.s. Mobile network operator Czech Republic 100.0 Vodafone D2 GmbH Mobile network operator Germany 100.0 Vodafone Egypt Tele
communications S.A.E. Mobile network operator Egypt 54.9 Vodafone España S.A. Mobile network operator Spain 100.0 Vodafone Essar Limited(4) Mobile network operator India 51.6 Vodafone Europe B.V. Holding company Netherlands 100.0 Vodafone Group Services Limited(5) Global products and services provider England 100.0 Vodafone Holding GmbH Holding company Germany 100.0 Vodafone Holdings Europe S.L. Holding company Spain 100.0 Vodafone Hungary Mobile Telecommunications Limited Mobile network operator Hunga
ry 100.0 Vodafone International Holdings B.V. Holding company Netherlands 100.0 Vodafone Investments Luxembourg S.a.r.l. Holding company Luxembourg 100.0 Vodafone Ireland Limited Mobile network operator Ireland 100.0 Vodafone Libertel B.V. Mobile network operator Netherlands 100.0 Vodafone Limited Mobile network operator England 100.0 Vodafone Malta Limited Mobile network operator Malta 100.0 Vodafone Marketing S.a.r.l. Provider of partner network services Luxembourg 100.0 Vodafone Network Pty Limited Mobil
e network operator Australia 100.0 Vodafone New Zealand Limited Mobile network operator New Zealand 100.0 Vodafone-Panafon Hellenic Telecommunications Company S.A. Mobile network operator Greece 99.9 Vodafone Portugal-Comunicações Pessoais, S.A.(6) Mobile networkoperatorPortugal100.0 VodafoneRomaniaS.A.MobilenetworkoperatorRomania100.0 VodafoneTelekomunikasyonA.S.MobilenetworkoperatorTurkey100.0 Notes: (1) Rounded to nearest tenth of one percent. (2) Arcor AG & Co. KG is a partnersh
ip and, accordingly, its share capital is comprised solely of partners capital rather than share capital. (3) Share capital consists of 395,834,251 ordinary shares and 1.65 million class D and E redeemable preference shares, of which 100% of the ordinary shares are held by the Group. (4) The Group owns 100% of CGP Investments (Holdings) Limited (CGP), which owns a 51.58% indirect shareholding in Vodafone Essar Limited. As part of its acquisition of CGP, Vodafone acquired a l
ess than 50% equity interest in Telecom Investments India Private Limited (TII) and in Omega Telecom Holdings Private Limited (Omega), which in turn have a 19.54% and 5.11% indirect shareholding in Vodafone Essar Limited. The Group was granted call options to acquire 100% of the shares in two companies which together indirectly own the remaining share of TII and an option to acquire 100% of the shares in a third company, which owns the remaining shares in Omega. The Group also grante
d a put option to each of the shareholders of these companies, which if exercised, would require Vodafone to purchase 100% of the equity in the respective company. If these options were exercised, which can only be done in accordance with Indian law prevailing at the time of exercise, the Group would own 66.98% of Vodafone Essar Limited. (5) The entire issued share capital of Vodafone Group Services Limited is held directly by Vodafone Group Plc. (6) 38.6% of the issued share capital of Vodafone P
ortugal-Comunicações Pes
soais, S.A. is held directly by Vodafone Group Plc. 108 Vodafone Group Plc Annual Report 2008




---



##### 



13. Investments in joint ventures Principal joint ventures Unless otherwise stated, the Companys principal joint ventures all have share capital consisting solely of ordinary shares, which are indirectly held, and the country of incorporation or registration is also their principal place of operation. Country of incorporation Percentage(1) Name Principal activity or registration shareholdings Indus Towers Limited Tower company India 21.7(2)Polkomtel S.A.
Mobile network operator Poland 19.6 Safaricom Limited(3)(4) Mobile network operator Kenya 35.0(5)Vodacom Group (Pty) Limited Holding company South Africa 50.0 Vodafone Fiji Limited Mobile network operator Fiji 49.0(5)Vodafone Omnitel N.V.(6) Mobile network operator Netherlands 76.9(7) Notes: (1) Rounded to nearest tenth of one percent. (2) Vodafone Essar, in which the Group has a 51.58% equity interest, owns 42.0% of Indus Towers Limited. (3) The Group also holds two non-voting shares. (4) An initial public offering of 25% of Safaricom shares held by the Government of Kenya closed to applicants on 23 April 2008. Share allocations are expected to be announced on, or around, 30 May 2008, following which Safaricom will be accounted for as an associate, rather than as a joint venture. The Groups effective equity interest will remain unchanged. (5) The Group holds substantive participating rights which provide it with a veto over the significant financial and operating poli
cies of these entities and which ensure it is able to exercise joint control over these entities with the respective majority shareholder. (6) The principal place of operation of Vodafone Omnitel N.V. is Italy. (7) The Group considered the existence of substantive participating rights held by the minority shareholder provide that shareholder with a veto right over the significant financial and operating policies of Vodafone Omnitel N.V., and determined that, as a result of these rights, the Group
does not have control over the financial and operating policies of Vodafone Omnitel N.V., despite the Groups 76.9% ownership interest. Effect of proportionate consolidation of joint ventures The following presents, on a condensed basis, the effect of including joint ventures in the Consolidated Financial Statements using proportionate consolidation: 2008 2007 2006 £m £m £m Revenue 6,448 6,232 5,756 Cost of sales (3,225) (3,077) (2,832) Gross profit 3,223 3,155 2,924 Selling, distributio
n and administrative expenses (1,155) (1,121) (885) Impairment losses  (4,900) (3,600) Operating profit/(loss) 2,068 (2,866) (1,561) Net financing costs (119) 46 27 Profit/(loss) before tax 1,949 (2,820) (1,534) Income tax expense (829) (614) (711) Profit/(loss) for the financial year 1,120 (3,434) (2,245) 2008 2007 £m £m Non-current assets 19,102 16,594 Current assets 235 1,062 Total assets 19,337 17,656 Total shareholders funds 16,036 17,754 Minority interests 13 8 Tot
al equity 16,049 17,762 Non-current liabilities 352 333 Current liabilities 2,936 (439) Total liabilities 3,288 (106) Total equity and liabilities 19,337 17,656 Vodafone Group Plc Annual Report 2008 109




---



##### 



Vodafone  Financials Notes to the Consolidated Financial Statements continued 14. Investments in associated undertakings The Companys principal associated undertakings all have share capital consisting solely of ordinary shares, unless otherwise stated, and are all indirectly held. The country of incorporation or registration of all associated undertakings is also their principal place of operation. Country of incorporation Percentage(1) Name Princi
pal activity or registration shareholdings Cellco Partnership(2) Mobile network operator USA 45.0 Société Française du Radiotéléphone S.A. Mobile network and fixed line operator France 44.0 Notes: (1) Rounded to nearest tenth of one percent. (2) Cellco Partnership trades under the name Verizon Wireless. The principal office of the partnership is One Verizon Way, Basking Ridge, New Jersey, 07920 USA while the registered office is CSC  the Corporation Service Company,
2711 Centreville Road, Suite 400, Wilmington, DE 19808, USA. The Groups share of the aggregated financial information of equity accounted associated undertakings is set out below. The comparative information includes the share of results in Belgacom Mobile S.A. and Swisscom Mobile A.G. up to the date of their disposal on 3 November 2006 and 20 December 2006, respectively (see note 29). 2008 2007 2006 £m £m £m Revenue 13,630 12,919 12,480 Share of result in associated unde
rtakings 2,876 2,728 2,428 2008 2007 £m £m Non-current assets 25,951 25,120 Current assets 2,546 1,998 Share of total assets 28,497 27,118 Non-current liabilities 1,830 2,067 Current liabilities 3,736 4,438 Minority interests 386 386 Share of total liabilities and minority interests 5,952 6,891 Share of equity shareholders funds in associated undertakings 22,545 20,227 15. Other investments Other investments comprise the following, all of which are classified as available-for-sale, with the
exception of other debt and bonds, which are classified as loans and receivables, and cash held in restricted deposits: 2008 2007 £m £m Listed securities: Equity securities 4,813 3,915 Unlisted securities: Equity securities 949 634 Public debt and bonds 24 20 Other debt and bonds 1,352 1,046 Cash held in restricted deposits 229 260 7,367 5,875 The fair values of listed securities are based on quoted market prices and include the Groups 3.2% investment in China Mobile Limited, which is listed
 on the Hong Kong and New York stock exchanges and incorporated under the laws of Hong Kong. China Mobile Limited is a mobile network operator and its principal place of operation is China. Unlisted equity securities include a 26% interest in Bharti Infotel Private Limited, through which the Group has a 4.36% economic interest in Bharti Airtel Limited. Unlisted equity investments are recorded at fair value where appropriate, or at cost if their fair value cannot be reliably measured as there is no active ma
rket upon which they are traded. For public debt and bonds and cash held in restricted deposits, the carrying amount approximates fair value. Other debt and bonds include preferred equity and a subordinated loan received as part of the disposal of Vodafone Japan to SoftBank. The fair value of these instruments cannot be reliably measured as there is no active market in which these are traded. 110 Vodafone Group Plc Annual Report 2008




---



##### 



16. Inventory 2008 2007 £m £m Goods held for resale 417 288 Inventory is reported net of allowances for obsolescence, an analysis of which is as follows: 2008 2007 2006 £m £m £m 1 April 100 97 121 Transfer in respect of discontinued operations  - (40) Exchange movements 11 (2) 1 Amounts charged to the income statement 7 5 15 31 March 118 100 97 Cost of sales includes amounts related to
 inventory amounting to £4,320 million (2007: £3,797 million; 2006: £3,662 million). 17. Trade and other
receivables 2008 2007 £m £m Included within non-current assets: Trade receivables 49 42 Other receivables 66 45 Prepayments and accrued income 121 183 Derivative financial instruments 831 224 1,067 494 Included within current assets: Trade receivables 3,549 2,844 Amounts owed by associated undertakings 21 14 Other receivables 494 226 Prepayments and accrued income 2,426 1,859 Derivative financial ins
truments 61 80 6,551 5,023 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: 2008 2007 2006 £m £m £m 1 April 473 431 474 Transfer in respect of discontinued operations  - (41) Exchange movements 73 (16) 4 Amounts charged to administrative expenses 293 201 168 Trade receivables written off (175) (143) (174) 31 March 664 473 431 The carrying
 amounts of trade and other receivables approximate their fair value. Trade and other receivables are predominantly non-interest bearing. 2008 2007 £m £m Included within Derivative financial instruments : Fair value through the income statement (held for trading): Interest rate swaps 70 60 Foreign exchange swaps 42 78 112 138 Fair value hedges: Interest rate swaps 780 166 892 304 The fair values of these financial instruments are calculated by discounting the future cash flows to net p
resent values using appropriate market interest and foreign currency rates prevailing at 31 March. Vodafone Group Plc Annual Report 2008 111




---



##### 



Vodafone  Financials Notes to the Consolidated Financial Statements continued 18. Cash and cash equivalents 2008 2007 £m £m Cash at bank and in hand 451 827 Money market funds 477 5,525 Repurchase agreements 478 -Commercial paper 293 1,129 Cash and cash equivalents as presented in the balance sheet 1,699 7,481 Bank overdrafts (47) (23) Cash and cash equivalents as presented in the cash flow statement 1,652 7,458 Bank balances and money mark
et funds comprise cash held by the Group on a short term basis with original maturity of three months or less. The carrying amount of these assets approximates their fair value. All commercial paper investments and repurchase agreements have a maturity of less than three months and the carrying value approximates the fair value. 19. Called up share capital 2008 2007 Number £m Number £m Authorised: Ordinary shares of 11 3/7 US cents each (2007: 11 3/7 US cents) 68,250,000,000 4,875 68,250,000,000 4
,875 B shares of 15 pence each 38,563,935,574 5,784 38,563,935,574 5,784 Deferred shares of 15 pence each 28,036,064,426 4,206 28,036,064,426 4,206 Ordinary shares allotted, issued and fully paid(1): 1 April 58,085,695,298 4,172 66,251,332,784 4,165 Allotted during the year 169,360,427 10 118,241,919 7 Consolidated during the year  - (8,283,879,405)  31 March 58,255,055,725 4,182 58,085,695,298 4,172 B shares allotted, issued and fully paid(2): 1 April 132,001,365 20  -Issued dur
ing the year  - 66,271,035,240 9,941 Redeemed during the year (44,572,227) (7) (38,102,969,449) (5,715) Converted to deferred shares and subsequently cancelled during the year  - (28,036,064,426) (4,206) 31 March 87,429,138 13 132,001,365 20 Notes: (1) At 31 March 2008, the Group held 5,132,496,335 (2007: 5,250,617,951) treasury shares with a nominal value of £368 million (2007: £377 million). The market value of shares held was £7,745 million (2007:
£7,115 million). During the year, 101,466,161 treasury shares (2007: 91,595,624 treasury shares) were reissued under Group share option schemes. (2) On 31 July 2006, Vodafone Group Plc undertook a return of capital to shareholders via a B share scheme and associated share consolidation. A total of 66,271,035,240 B shares were issued on that day, and 66,271,035,240 existing ordinary shares of 10 US cents each were consolidated into 57,987,155,835 new ordinary shares of 11 3/7 cents each.
B shareholders were given the alternatives of initial redemption or future redemption at 15 pence per share or the payment of an initial dividend of 15 pence per share. The initial redemption took place on 4 August 2006 with future redemption dates on 5 February and 5 August each year until 5 August 2008 when the Company expects to exercise its right to redeem all B shares still in issue at their nominal value of 15 pence. B shareholders that chose future redemption are entitled to receive a conti
nuing non-cumulative dividend of 75 per cent of sterling LIBOR payable semi-annually in arrear until they are redeemed. The continuing B share dividend is shown within financing costs in the income statement. B shareholders are only entitled to receive notice of (or attend, speak or vote at) any general meeting if the business includes a resolution for the winding up of the Company. If the Company is wound up, the holders of the B shares are entitled, before any payment to the ordinary shareholders, to repa
yment of the amount paid up on each B share together with any outstanding entitlement to the B share continuing dividend. By 31 March 2008, total capital of £9,011 million had been returned to shareholders, £5,720 million by way of capital redemption and £3,291 million by way of initial dividend (note 21). The outstanding B share liability at 31 March 2008 has been classified as a financial liability. During the period, a transfer of £7 million (2007: £
9,004 million) in respect of the B shar
es has been made from retained losses (note 23) to the capital redemption reserve (note 21). The redemptions and initial dividend are shown within cash flows from financing activities in the cash flow s




---



##### 



20. Share-based payments The Company currently uses a number of equity settled share plans to grant options and shares to its directors and employees. The maximum aggregate number of ordinary shares which may be issued in respect of share options or share plans will not (without shareholder approval) exceed:  10% of the ordinary share capital of the Company in issue immediately prior to the date of grant, when aggregated with the total number of or
dinary shares which have been allocated in the preceding ten year period under all plans; and  5% of the ordinary share capital of the Company in issue immediately prior to the date of grant, when aggregated with the total number of ordinary shares which have been allocated in the preceding ten year period under all plans, other than any plans which are operated on an all-employee basis. Share options Vodafone Group Sharesave Scheme The Vodafone Group 1998 Sharesave Scheme (the Sharesave
Scheme) enables UK staff to acquire shares in the Company through monthly savings of up to £250 over a three or five year period, at the end of which they 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. Vodafone Group executive schemes The Vodafone Global Incentive Plan is a discretio
nary plan under which share options are granted to directors and certain employees. Some of the share options are subject to performance conditions. Options are normally exercisable between three and ten years from the date of grant. The Company has a number of discretionary share option plans, under which awards are no longer made: the Vodafone Group 1998 Company Share Option Scheme and Vodafone Group 1988 Executive Share Option Scheme (which are UK HM Revenue and Customs approved); the Vodafone Group 1998
 Executive Share Option Scheme and the Vodafone 1988 Share Option Scheme (which are unapproved); and the Vodafone Group 1999 Long Term Incentive Plan. Some of the options are subject to performance conditions. Options are normally exercisable between three and ten years from the date of grant. For grants made to US employees, prior to 7 July 2003 the options have phased vesting over a four year period and are exercisable in respect of ADSs. For grants made from 7 July 2003, options are normally ex
ercisable between three and ten years from the date of grant, subject to the satisfaction of predetermined performance conditions and are exercisable in respect of ADSs. Other share option schemes Share option schemes are operated by certain of the Groups subsidiary undertakings although awards are no longer made under these schemes. Share plans Vodafone Share Incentive Plan The Share Incentive Plan enables UK staff to acquire shares in the Company through monthly purchases of up to £125 per mont
h or 5% of salary, whichever is lower. For each share purchased by the employee, the Company provides a free matching share. Vodafone Group AllShares All permanent employees at 1 April 2007 received a conditional award of 320 shares (2007: 340) in Vodafone Group Plc on 2 July 2007, under the Vodafone Global Incentive Plan. The awards vest after two years and are not subject to performance conditions but are subject to continued employment. Vodafone Group executive plans Under the Vodafone Global I
ncentive Plan and its predecessor the Vodafone Group Plc 1999 Long Term Stock Incentive Plan, awards of performance shares are granted to directors and certain employees. The release of these shares is conditional upon achievement of performance targets measured over a three year period. Under the Vodafone Group Deferred Share Bonus Plan, directors and certain employees may defer their annual bonus into shares. Subject to continued employment and retention of the deferred shares for two years, additional sh
ares are released at th
e end of this two year period if a performance condition has been satisfied. Movements in ordinar




---



##### 



Vodafone  Financials Notes to the Consolidated Financial Statements continued 20. Share-based payments continued Summary of options outstanding and exercisable at 31 March 2008 Outstanding Exercisable Weighted Weighted average average Weighted remaining Weighted remaining Outstanding average contractual Exercisable average contractual shares exercise life shares exercise life Millions
price Months Millions price Months Vodafone Group Savings Related
and Sharesave Scheme: £0.01  £1.00 12 £0.93
27  - -£1.01  £2.00 12 £1.21 32  -
 24 £1.07 30  -  Vodafone Group Executive Schemes: £1.01  £2.00 5 £1.60 6 5 £1.60 6 £2.01  £3.00 23 £2.75 25 23 £2.75 25 28 £2.53 22 28 £2.53 22 Vodafone Group 1999 Long Term Stock Incentive Plan: £0.01  £1.00 69 £0.90 51 69 £0.90 51 £1.01  £2.00 247 £1.47 70 141 £1.49 46 316 £1.34 66 210 £1.29 48
Other Share Option Plans: £1.01  £2.00 2 £1.21 43 2 £1.21 43 £2.01  £3.00 2 £2.05 47 2 £2.05 47 Greater than £3.01 1 £3.20 33 1 £3.20 33 5 £1.78 43 5 £1.78 43 Vodafone Group 1999 Long Term Stock Incentive Plan: $10.01  $30.00 1 $18.15 48 1 $17.59 46 Fair value ADS options Ordinary share options Board of directors and Other Executive Committee Other 2008 2007 2
006 2008 2007 2006 2008 2007 2006 4-5 5-6 8-9 4-5 5-6 6-7 4-5 5-7 8-9
Expected share price volatility 25.5-33.5% 27.3-28.3% 17.9-18.9% 25.7-27.7% 24.0-27.7% 17.6-18.6% 25.5-33.5% 25.5-28.3% 17.9-18.9% Dividend yield 3.8-4.2% 5.1-5.5% 2.8-3.2% 4.0-4.4% 4.8-5.5% 2.6-3.0% 3.8-4.2% 5.1-6.1% 2.8-3.2% Risk free rates 4.4-5.7% 4.8% 4.2% 5.5% 4.7-4.9% 4.2% 4.4-5.7% 4.6-4.9% 4.2% Exercise price(1) £1.67-1.76 £1.15 £1.36 £1.68 £1.15-1.36 £1.45 £1.67-1.76 £1.14-1.16 £1.36 N
ote: (1) In the years ended 31 March 2008 and 31 March 2007,
there was more than one option grant. The fair value of options is estimated
at the date of grant using a lattice-based option valuation model, which incorporates ranges of assumptions for inputs as disclosed above. Certain options granted to the Board of directors and Executive Committee have a market based performance condition attached and hence the assumptions are disclosed separately. Share awards Movements in non-vested shares
 during the year ended 31 March 2008 are as follows: All Shares Other
Total Weighted Weighted Weighted average fair average fair average fair value
at value at value at Millions grant date Millions grant date Millions grant date 1 April 2007 33 £1.13 197 £1.04 230 £1.05 Granted 19 £1.55 89 £1.38 108 £1.41 Vested (15) £1.26 (50) £1.11 (65) £1.15 Forfeited (3) £1.26 (23) £1.09 (26) £1.11 31 March 2008 34 £1.30 213 £1.16 247 £1.18 Other information The weighted average grant date fair value of options
granted during the 2008 financial year was £0.34 (2007: £0.22, 2006: £0.30). The total fair value of shares vested during the year ended 31 March 2008 was £75 million (2007: £41 million, 2006: £18 million). The compensation cost included in the Consolidated Income Statement in respect of share options and share plans for continuing operations was £107 million (2007: £93 million, 2006: £109 million), which is comprised entirely of
equity-settled transactions. Including discontinued operations, the compensation cost included in the Consolidated Income Statement in respect of share options and share plans in total was £107 million (2007: £93 million, 2006: £114 million). The average share price for the year ended 31 March 2008 was 166 pence. 114 Vodafone Group Plc Annual Report 2008




---



##### 



21. Transactions with equity shareholders Share
Additional Capital premium Own shares paid-in redemption account held capital reserve £m £m £m £m 1 April 2005 52,284 (5,121) 100,081 -Issue of new shares 152  (44) -Purchase of own shares  (6,500)  -Own shares released on vesting of share awards 8 370 (8) -Cancellation of own shares held  3,053  128 Share-based payment charge,
inclusive of tax credit of £9  - 123million  31 March 2006 52,444 (8,198) 100,152 128 Issue of
new shares 154  (44) -Own shares released on vesting of share awards  151  -Share
consolidation (9,026)  - -B share capital redemption  -  5,713 B share preference dividend  -  3,291 Share-based payment charge, inclusive of tax charge of £16  - 77 million  31 March 2007 43,572 (8,047) 100,185 9,132 Issue of new shares 263  (134) -Own shares rel
eased on vesting of share awards 14 191 (14) -B share capital redemption  - 
7 Transfer of B share nominal value in respect of (915)own shares  - deferred 915 Share-based payment charge, inclusive of tax credit of £7  - 114million  31 March 2008 42,934 (7,856) 100,151 10,054 22. Movements in accumulated other recognised income and expense Available- for-sale Asset Translation Pensions investments revaluation reserve reserve reserve surplus Other Total £m £m
£m £m £m £m 1 April 2005 1,521 (79) 339  - 1,781
Gains/(losses) arising in the year 1,486 (43) 710 112  2,265 Transfer to the income
statement on disposal 36  -  - 36 Tax effect  13 (5)  - 8 31 March 2006 3,043 (109) 1,044 112  4,090 (Losses)/gains arising in the year (3,802) 65 2,108  - (1,629) Transfer to the income statement on disposal 838  -  - 838 Tax effect 22 (15)  -  7 31 March 
2007 101 (59) 3,152 112  3,306 Gains/(losses) arising in the year 5,827 (47) 1,949  37 7,766 Transfer to the income statement on disposal (7)  (570)  - (577) Tax effect 53 10  -  63 31 March 2008 5,974 (96) 4,531 112 37 10,558 23. Movements in retained losses 2008 2007 2006 £m £m £m 1 April (85,253) (67,356) (39,511) Profit/(loss) for the financial year 6,660 (5,426) (21,916) Equity dividends (note 7) (3,653) (3,566) (2,753) Gain on
 expiration of equity put right  142  Loss on issue of treasury shares
(60) (43) (123) B share capital redemption (7) (5,713) -B share preference dividend 
(3,291) -Cancellation of shares  - (3,053) Grant of equity put right(1) 333  - 31 March (81,980) (85,253) (67,356) Note: (1) In the year ended 31 March 2008, a charge of £333 million, representing the fair value of put options granted by the Group over the Essar groups interest in Vodafone Essa
r, has been recognised as an expense. The offsetting credit was recognised in retained
losses, as no equivalent liability arose in respect of the fair value of the put options
granted. Vodafone Group Plc Annual Report 2008 115




---



##### 



Vodafone  Financials Notes to the Consolidated Financial Statements continued 24. Borrowings 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 annually by the Companys Board, most recently on 25 September
 2007. A Treasury Risk Committee, comprising of the Groups Chief Financial Officer, Group General Counsel and Company Secretary, Group Treasurer and Director of Financial Reporting, meets at least annually to review treasury activities and its members receive management information relating to treasury activities on a quarterly basis. In accordance with the Group treasury policy, a quorum for meetings is four members and either the Chief Financial Officer or Group General Counsel and Company Secr
etary must be present at each meeting. The Group accounting function, which does not report to the Group Treasurer, provides regular update reports of treasury activity to the Board. The Groups internal auditors review the internal control environment regularly. The Group uses a number of derivative instruments that are transacted, for risk management purposes only, by specialist treasury personnel. There has been no significant change during the financial year, or since the end of the year, to the ty
pes of financial risks faced by the Group or the Groups approach to the management of those risks. Capital management The following table summarises the capital of the Group: 2008 2007 £m £m Cash and cash equivalents (1,699) (7,481) Derivative financial instruments (348) (85) Borrowings 27,194 22,615 Net debt 25,147 15,049 Equity 76,471 67,293 Capital 101,618 82,342 The Groups policy is to borrow centrally, using a mixture of long term and short term capital market issues and borr
owing facilities, to meet anticipated funding requirements. These borrowings, together with cash generated from operations, are on-lent or contributed as equity to certain subsidiaries. The Board has approved three debt protection ratios, being: net interest to operating cash flow (plus dividends from associated undertakings); retained cash flow (operating cash flow plus dividends from associated undertakings less interest, tax, dividends to minorities and equity dividends) to net debt; and operating cash f
low (plus dividends from associated undertakings) 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. Credit risk The Group considers its exposure to credit risk at 31 March to be as follows: 2008 2007 £m £m Bank deposi
ts 451 827 Repurchase agreements 478 -Money market fund investments 477 5,525 Commercial paper investments 293 1,129 Derivative financial instruments 892 304 Other investments  debt and bonds 1,376 1,066 Trade receivables 3,598 2,886 7,565 11,737 Investments in commercial paper and money market deposits are in accordance with established internal Treasury policies which dictate that an investments long term credit rating is no lower than single A. Additionally, the Group invests in AAA unsecured
 money market mutual funds where the investment is limited to 10% 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 denominated in euros 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 2008: 2008 2007 £
m £m So
vereign 418 -Supranational 60  478  The majority of the Groups trade receivables are due for maturity within 90 days and largely comprise a
mount




---



##### 



would reduce or increase profit before tax by approximately £3 million (2007: increase or reduce by £24 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 s
hare price represents the value of its future multi-currency cash flows, principally in euro, sterling and US dollars, 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 mo
re debt in emerging market currencies will be drawn. As such, at 31 March 2008, 119% of net debt was denominated in currencies other than sterling (80% euro, 27% US dollar and 12% other), while 19% 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 exp
osure, as interest costs will be denominated in foreign currencies. Yen debt is used as a hedge against the value of yen assets as the Group has minimal yen cash flows. A relative weakening in the value of sterling against certain currencies in which the Group maintains cash and cash equivalents has resulted in an increase in cash and cash equivalents of £129 million from currency translation differences. Under the Groups foreign exchange management policy, foreign exchange transaction expos
ure in Group companies is generally maintained at the lower of 5 million per currency per month period. The Group is exposed to profit and loss account volatility on the retranslation of certain investments received upon the disposal of Vodafone Japan to SoftBank which are yen denominated financial instruments but are owned by legal entities with either a sterling or euro functional currency. In addition, a US dollar denominated financial liabilit
y arising from the put rights granted over the Essar Groups interests in Vodafone Essar in the 2008 financial year and discussed on page 118, were granted by a legal entity with a euro functional currency. A 10%, 2% or 1% (2007: 2%, 5% or rates would have a £47 million, £17 million or £23 million (2007: £8 million, £33 million and nil) impact on profit or loss in relation to these financial instruments. The Group recognises foreign exchange movements i
n 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 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 currencies in which it transacts. The percentage movement applied to each currency is
based on the average movements in the previous three annual reporting periods. The analysis has been performed based on the movement occurring at the start of the reporting period and is calculated by retranslating the adjusted operating profit of each entity whose functional currency is either euro or US dollar. 2008 £m Euro 6% change  Adjusted operating profit 357 US dollar 7% change  Adjusted operating profit 177 At 31 March 2007, sensitivity of the Groups adjusted operating p
rofit was analysed for euro 3% change and US$ 8% change, representing £175
  million and £176 million respectively. month or 15 million per currencyEquity risk The Group has equity investments, primarily in China Mobile Limited and Bharti Infotel Priva




---



##### 



Vodafone  Financials Notes to the Consolidated Financial Statements continued 24. Borrowings continued The fair value and carrying value of the Groups long term borrowings is as follows: Fair value Carrying value 2008 2007 2008 2007 £m £m £m £m Financial liabilities measured at amortised cost: Bank loans 2,669 2,086 2,669 2,086 Redeemable preference shares 985 818 985 818 Finance lease obligations 60 59 60 59 Bonds: Euro FRN due
July 2008  849  858 Euro FRN due February 2009  102  102 Euro FRN due February 2010 237 204 240 205 US dollar FRN due June 2011 227 224 176 178 Euro FRN due January 2012 775 683 805 685 Euro FRN due January 2012 232 205 241 197 US dollar FRN due February 2012 236 254 253 255 Euro FRN due September 2013 644 582 679 579 Euro FRN due June 2014 930  998  5.125% euro 500m bond due April 2015 397 350 427 365 5% euro 750m bond du
e June 2018 578 515 620 529 Other liabilities(1) 2,984 156 2,945 156 Loans in fair value hedge relationships: 5.5% euro 400m bond due July 2008  32  34 6.25% sterling 250m bond due July 2008  251  249 6.25% sterling 150m bond due July 2008  151  149 6.65% US dollar 500m bond due May 2008  129  132 4.0% euro 300m bond due January 2009  203  204 4.25% euro 1.4bn bond due May 2009 1,112 950 1,135 965 4.25% euro 500m
bond due May 2009 397 339 408 348 4.75% euro 3bn bond due May 2009 695 596 709 602 7.75% US dollar 2.75bn bond due February 2010 1,466 1,480 1,492 1,467 5.5% US dollar 750m bond due June 2011 386385410390 5.35%USdollar500mbonddueFebruary2012 255255271256 3.625%euro750mbonddueNovember2012 564487584492 6.75%Australiandollar265mbonddueJanuary2013121108119110 5.0%USdollar1bnbonddueDecember2013 532464541502 4.625%sterling350mbonddueSeptember2014 319321347334 5.375%USdollar500mbonddueJanuary20
15 256250268249 5.375%USdollar400mbonddueJanuary2015 205200215199 5.0%USdollar750mbonddueSeptember2015 419423406375 5.75%USdollar750mbonddueMarch2016375384415384 4.75%euro300mbonddueJune2016227204245209 4.75%euro200mbonddueJune2016151136164140 5.625%USdollar1.3bnbonddueFebruary2017 640650716661 4.625%USdollar500mbonddueJuly2018227231257235 5.375%euro500mbondJune2022374-420-5.625%sterling250mbonddueDecember2025 220242259253 7.875%USdollar750mbonddueFebruary2030 409441514481 5.9%sterling450mbonddueNovember203
2 410454458451 6.25%USdollar495mbonddueNovember2032 258250275252 6.15%USdollar1.2bnbonddueFebruary2037 568609665603 6.15%USdollar500mbonddueFebruary2037 237-271- Long term borrowings 21,777 17,712 22,662 17,798 Note: (1) Amount at 31 March 2008 includes £2,476 million (2007 : £nil) in relation to the written put options disclosed in note 12 and written put options granted to the Essar Group that, if exercised, would allow the Essar Group to sell its 33% shareholding in Vodafone Essa
r to the Group for US$5 billion or to sell between US$1 billion and US$5 billion worth of Vodafone Essar shares at an independently appraised fair market value. Fair values are calculated using discounted cash flows with a discount rate based upon forward interest rates available to the Group at the balance sheet date. Banks loans include a ZAR7.2 billion loan held by Vodafone Holdings SA Pty Limited (VHSA), which directly and indirectly owns the Groups 50% interest in
Vodacom Group (Pty) Limited. VHSA has pledged its 100% equity shareholding in Vodafone Investments SA (VISA) as security for its loan obligations. The terms and conditions of the pledge mean that should VHSA not meet all of its loan payment and performance obligations, the lenders may sell the equity shareholding in its subsidiary VISA at market value to recover their losses, with any remaining sales proceeds being returned to VHSA. Vodafone International Holdings B.V. and VISA have also guarant
eed this loan with recourse o
nly to the VHSA and Vodafone Telecommunications Investment SA (VTISA) shares they have respectively pledged. The terms and conditions of the security arrangement mean the lenders may be able to sell these respective shares in preference to the VISA shares held by VHSA. An arrangement has been put in




---



##### 



Bank loans also include INR66 billion of loans held by Vodafone Essar Limited (VEL) and its subsidiaries (the VEL Group, a total of eight legal entities), which form the operating companies in India. The VEL Group has a number of security arrangements supporting its secured loan obligations comprising its physical assets and certain share pledges of the shares under VEL. The terms and conditions of the security arrangements mean tha
t should members of the VEL Group not meet all of their loan payment and performance obligations, the lenders may sell the pledged shares and/or assets to recover their losses, with any remaining sales proceeds being returned to the VEL Group. Six of the eight legal entities provide cross guarantees to the lenders. 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: Redeemable Finance Loans in fair Bank preference lease Other value hedge loans shares obligations Bonds liabilities relationships Total £m £m £m £m £m £m £m Within one year 838 43 12 1,368 1,788 1,443 5,492 In one to two years 369 104 12 464 110 4,168 5,227 In two to three years 1,490 77 12 214 2,732 398 4,923 In three to four years 346 43 12 1,671  1,016 3,088 In four to five years
 142 43 11 139 223 1,082 1,640 In more than five years 423 1,132 26 2,990 137 9,459 14,167 3,608 1,442 85 6,846 4,990 17,566 34,537 Effect of discount/financing rates (133) (457) (16) (1,282) (258) (5,197) (7,343) 31 March 2008 3,475 985 69 5,564 4,732 12,369 27,194 Within one year 116 43 11 1,853 2,225 1,464 5,712 In one to two years 142 43 11 1,100 21 1,346 2,663 In two to three years 153 43 10 334  3,802 4,342 In three to four years 1,265 43 10 123 51 355 1,847 In four to five years 265 43 9 1
,430  979 2,726 In more than five years 384 1,187 32 1,707 84 9,140 12,534 2,325 1,402 83 6,547 2,381 17,086 29,824 Effect of discount/financing rates (145) (584) (17) (946)  (5,517) (7,209) 31 March 2007 2,180 818 66 5,601 2,381 11,569 22,615 The maturity profile of the Groups financial derivatives (which include interest rate and foreign exchange swaps), using undiscounted cash flows, is as follows: 2008 2007 Payable Receivable Payable Receivable £m £m £m £m With
in one year 14,931 14,749 15,163 15,163 In one to two years 433 644 611 626 In two to three years 378 441 503 587 In three to four years 399 430 403 398 In four to five years 380 406 400 387 In more than five years 3,662 4,637 3,577 3,596 20,183 21,307 20,657 20,757 The currency split of the Groups foreign exchange derivatives, all of which mature in less than one year, is as follows: 2008 2007 Payable Receivable Payable Receivable £m £m £m £m Sterling 2,126 8,262 1,000 5,477 Euro
10,111  7,204 -US dollar 2,076 4,992 6,178 8,166 Japanese yen 27 15  106 Other 42 797 84 747 14,382 14,066 14,466 14,496 Payables and receivables are stated separately in the table above as settlement is on a gross basis. The £316 million net payable (2007: £30 million net receivable) in relation to foreign exchange financial instruments in the table above is split £358 million (2007: £48 million) within trade and other payables and £42 million (
2007: £78 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: 2008 2007 £m £m Within one year 9 7 In two to five years 37 30 In more than five years 24 29 Vodafone Group Plc Annual Report 2008 119




---



##### 



Vodafone  Financials Notes to the Consolidated Financial Statements continued 24. Borrowings continued Interest rate and currency of borrowings Total Floating rate Fixed rate Other borrowings borrowings borrowings(1) borrowings Currency £m £m £m £m Sterling 1,563 1,563  -Euro 10,787 9,673 1,114 -US dollar 10,932 8,456  2,476 Japanese yen 1,516 1,516  -Other 2,396 2,396  -
31 March 2008 27,194 23,604 1,114 2
,476 Sterling 1,520 1,520  -Euro 9,295 8,382 913 -US dollar 9,687 9,687  -Japanese yen
1,118 1,118  -Other 995 995  - 31 March 2007 22,615 21,702 913  (1) The weighted average interest rate for the Groups euro denominated fixed rate borrowings is 5.1% (2007: 5.1%). The weighted average time for which the rates are fixed is 8.8 years (2007: 9.8 years). Other borrowings of £2,476 million are the liabilities arising under put options granted ove
r interests in Vodafone Essar. Interest on floating rate borrowings is generally based on national LIBOR equivalents or government bond rates in the relevant currencies. The figures shown in the tables above take into account interest rate swaps used to manage the interest rate profile of financial liabilities. At 31 March 2008, the Group had entered into foreign exchange contracts to decrease its sterling, US dollar and other currency borrowings above by amounts equal to
£6,136 million, £2,916 million and £755 million respectively and to increase its euro and Japanese Yen
borrowings above by amounts equal to £10,111 million and £12 million respectively. At 31 March 2007, the Group had entered into foreign exchange contracts to decrease its sterling, US dollar, Japanese yen and other currency borrowings above by amounts equal to £4,477 million, £1,988 million, £106 million and £663 million respectively and to i
ncrease its euro borrowings above by amounts equal to £7,204 million. Further protection from euro and Japanese yen interest rate movements on debt is provided by interest rate swaps. At 31 March 2008, the Group had euro denominated interest rate swaps for amounts equal to £796 million. The average effective rate which has been fixed, is 2.62%. In addition, the Group has entered into euro denominated forward starting interest rate swaps for amounts equal to £3,183 million
and £796 million, which cover the periods June 2008 to June 2009 and September 2008
to September 2009, respectively. The effective rates, which have been fixed, range from 2.87% per
annum to 3.02% per annum. Borrowing facilities At 31 March 2008, the
Groups most significant committed borrowing facilities comprised two bank facilities of
$6,125 million (£3,083 million) and $5,200 million (£2,617 million)
expiring between two and five year
s and in more than five years, respectively (2007: two bank facilities of $5,925 million
(£3,010 million) and $5,025 million (£2,553 million)), a ¥259 billion
(£1,306 million, 2007: ¥259 billion (£1,117 million)) term credit facility,
which expires between two and five years and a
400 million (£318 million, expires in more than five years. The US dollar bank facilities
 remained undrawn throughout the financial year, the ¥259 billion term credit facility was fully
 drawn down on 21 December 2005 and the down on 14 February 2007. Under the terms and conditions
of the $6,125 million and $5,200 million 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 interes
t period. The facility agreement provides 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. Substantially the same terms and conditions apply in the case of Vodafone Finance K.K.s ¥259 billion term credit facility, although the change of control provision is applicable to any guarantor of borrowings under the




---



##### 



25. Post employment benefits Background At 31 March 2008, the Group operated a number of pension plans for the benefit of its employees throughout the world, which vary 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 principal defined benefit pension scheme of the Group is in the United Kingdom. This tax approved final salary scheme was closed to new entrants from 1 January 2006. The assets of the scheme are held in an external trustee administered fund. In addition, the Group operates defined benefit schemes in Germany, Greece, India, Ireland, It
aly, Turkey and the United States. Defined contribution pension schemes are currently provided in Australia, Egypt, Greece, Hungary, Ireland, Italy, Kenya, Malta, the Netherlands, New Zealand, Portugal, South Africa, Spain and the United Kingdom. Income statement expense 2008 2007 2006 £m £m £m Defined contribution schemes 63 32 28 Defined benefit schemes 28 62 52 Total amount charged to the income statement (note 35) 91 94 80 Defined benefit schemes The principal actuarial assumptions used f
or estimating the Groups benefit obligations are set out below: 2008(1) 2007(1) 2006(1) Weighted average actuarial assumptions used at 31 March: Rate of inflation 3.1% 2.7% 2.5% Rate of increase in salaries 4.3% 4.4% 4.2% Rate of increase in pensions in payment and deferred pensions 3.1% 2.7% 2.5% Discount rate 6.1% 5.1% 4.8% Expected rates of return: Equities 8.0% 7.8% 7.3% Bonds(2) 4.4% 4.8% 4.2% Other assets 1.3% 5.3% 3.4% Notes: (1) Figures shown represent a weighted average assumption of the
 individual schemes. (2) For the year ended 31 March 2008 the expected rate of return for bonds consisted of a 4.7% rate of return for corporate bonds (2007: 5.1%) and a 3.5% rate of return for government bonds (2007: 4.0%). The expected return on assets assumptions are derived by considering the expected long term rates of return on plan investments. The overall rate of return is a weighted average of the expected returns of the individual investments made in the group plans. The long term rates
of return on equities and property are derived from considering current risk free rates of return with the addition of an appropriate future risk premium from an analysis of historic returns in various countries. The long term rates of return on bonds and cash investments are set in line with market yields currently available at the balance sheet date. Mortality assumptions used are consistent with those recommended by the individual scheme actuaries and reflect the latest available tables, adjusted for the
 experience of the Group where appropriate. The largest scheme in the Group is the UK scheme and the tables used for this scheme indicate a further life expectancy for a male/female pensioner currently aged 65 of 22.0/24.8 years (2007: 19.4/22.4 years, 2006: 17.8/20.7 years) and a further life expectancy for a male/female non-pensioner member currently aged 40 of 23.2/26.0 years (2007: 22.1/25.1 years, 2006: 20.3/23.3 years) from age 65. Measurement of the Groups defined
benefit retirement obligations are particularly sensitive to changes in certain key assumptions, including the discount rate. An increase or decrease in the discount rate of 0.5% would result in a £135 million decrease or a £145 million increase in the defined benefit obligation, respectively. Charges made to the Consolidated Income Statement and Consolidated Statement of Recognised Income and Expense (SORIE) on the basis of the assumptions stated above are: 2008 2007 2006
£m £m £m Current
 service cost 53 74 57 Interest cost 69 61 52 Expected return on pension assets (89) (73) (57) Curtailment (5)  - Total included within staff costs 28




---



##### 



Vodafone  Financials Notes to the Consolidated Financial Statements continued 25. Post employment benefits continued Fair value of the assets and present value of the liabilities of the schemes The amount included in the balance sheet arising from the Groups obligations in respect of its defined benefit schemes is as follows: 2008 2007 2006 £m £m £m Movement in pension assets: 1 April 1,251 1,123 874 Reclassification as held for
sale  - (3) Expected return on pension assets 89 73 57 Actuarial (losses)/gains (176) 26 121 Employer cash contributions 86 55 85 Member cash contributions 13 13 11 Benefits paid (42) (32) (27) Exchange rate movements 50 (7) 5 31 March 1,271 1,251 1,123 Movement in pension liabilities: 1 April 1,292 1,224 998 Reclassification as held for sale  - (31) Current service cost 53 74 57 Interest cost 69 61 52 Member cash contributions 13 13 11 Actuarial (gains)/losses
 (129) (39) 164 Benefits paid (42) (32) (27) Other movements (6) 4 (8) Exchange rate movements 60 (13) 8 31 March 1,310 1,292 1,224 An analysis of net assets/(deficits) is provided below for the Groups principal defined benefit pension scheme in the UK and for the Group as a whole. UK Group 2008 2007 2006 2005 2008 2007 2006 2005 £m £m £m £m £m £m £m £m Analysis of net assets/(deficits): Total fair value of scheme assets 934 954 835
 628 1,271 1,251 1,123 874 Present value of funded scheme liabilities (902) (901) (847) (619) (1,217) (1,194) (1,128) (918) Net assets/(deficits) for funded schemes 32 53 (12) 9 54 57 (5) (44) Present value of unfunded scheme liabilities  -  - (93) (98) (96) (80) Net assets/(deficits) 32 53 (12) 9 (39) (41) (101) (124) Net assets/(deficits) are analysed as: Assets 32 53  9 65 82 19 12 Liabilities  - (12)  (104) (123) (120) (136) It is expected
 that contributions of £82 million will be paid into the Groups defined benefit retirement schemes during the year ending 31 March 2009. Actual return on pension assets 2008 2007 2006 £m £m £m Actual return on pension assets (87) 99 178 Analysis of pension assets at 31 March is as follows: % % % Equities 68.5 72.1 71.9 Bonds 17.7 27.5 26.5 Property 0.3 0.4 0.4 Other 13.5  1.2 100.0 100.0 100.0 The schemes have no direct investments in the Groups equity se
curities or in property currently used by the Group. History of experience adjustments 2008 2007 2006 2005 £m £m £m £m Experience adjustments on pension liabilities: Amount (5) (2) (4) (60) Percentage of pension liabilities  -  6% Experience adjustments on pension assets: Amount (176) 26 121 24 Percentage of pension assets (14%) 2% 11% 3% 122 Vodafone Group Plc Annual Report 2008




---



##### 



26. Provisions Asset retirement Other obligations Legal provisions Total £m £m £m £m 1 April 2006 148 99 157 404 Exchange movements (4) (2) (6) (12) Amounts capitalised in the year 17  - 17 Amounts charged to the income statement  34 186 220 Utilised in the year  payments (2) (11) (45) (58) Amounts released to the income statement  (4) (4) (8) 31 March 2007 159 116 288 563 Exchange movements 2
7 21 15 63 Arising on acquisition 11  2 13 Amounts capitalised in the year 27  - 27 Amounts charged to the income statement  57 167 224 Utilised in the year  payments (6) (5) (72) (83) Amounts released to the income statement  (11) (106) (117) Other (10)  (18) (28) 31 March 2008 208 178 276 662 Provisions have been analysed between current and non-current as follows: 2008 2007 £m £m Current liabilities 356 267 Non-current liabilities 306 296
662 563 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 exiting and ceasing their use. The associated cash outflows are generally expected to occur at the dates of exit of the assets to which they relate, which are long term in nature. Legal The Group is involved in a number of legal and other disputes, including notification of possible claims. The directors of the Company, after taki
ng legal advice, have established provisions after taking into account the facts of each case. The timing of cash outflows associated with legal claims cannot be reasonably determined. For a discussion of certain legal issues potentially affecting the Group, refer to note 32 Contingent liabilities. Other provisions Included within other provisions are amounts provided for property and restructuring costs. The associated cash outflows for restructuring costs are substantially short term in nature
.. The timing of the cash flows associated with property is dependent upon the remaining term of the associated lease. 27. Trade and other payables 2008 2007 £m £m Included within non-current liabilities: Derivative financial instruments 173 156 Other payables 99 67 Accruals and deferred income 373 312 645 535 Included within current liabilities: Trade payables 2,963 2,238 Amounts owed to associated undertakings 22 24 Other taxes and social security payable 666 467 Derivative financial instruments
371 63 Other payables 442 480 Accruals and deferred income 7,498 5,502 11,962 8,774 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. 2008 2007 £m £m Included within Derivative financial instruments : Fair value through the income statement (held
 for trading): Interest rate swaps 160 68 Foreign exchange swaps 358 48 518 116 Fair value hedges: Interest rate swaps 26 103 544 219 Vodafone Group Plc Annual Report 2008 123




---



##### 



Vodafone  Financials Notes to the Consolidated Financial Statements continued 28. Acquisitions The aggregate cash consideration in respect of acquisitions during the year ended 31 March 2008 was £6,058 million. After deducting aggregate cash and cash equivalents acquired of £59 million, the net cash outflow related to acquisitions completed in the year ended 31 March 2008 was £5,999 million, of which
£5,957 million was paid during the year. The aggregate cash consideration included £5,489 million for Vodafone Essar, £457 million for Tele2 and £112 million for other acquisitions. Total goodwill acquired was £4,316 million and included £3,950 million in relation to Vodafone Essar, £256 million in relation to Tele2 and £110 million in relation to other acquisitions. Vodafone Essar Limited (formerly Hutchison Essar Limited) On 8 May 2007,
 the Group completed the acquisition of 100% of CGP Investments (Holdings) Limited (CGP), a company with indirect interests in Vodafone Essar Limited (Vodafone Essar), from Hutchison Telecommunications International Limited for cash consideration of US$10.9 billion (£5.5 billion). Following this transaction, the Group has a controlling financial interest in Vodafone Essar. Fair value Book value adjustments Fair value £m £m £m Net assets acquired: Identif
iable intangible assets 121 3,068 3,189(1)Property, plant and equipment 1,215 (155) 1,060 Other investments 199  199 Inventory 5 (2) 3 Taxation recoverable 5  5 Trade and other receivables 277 13 290 Cash and cash equivalents 51  51 Deferred tax asset/(liability) 36 (512) (476) Short and long term borrowings(2) (1,467) (16) (1,483) Provisions (11)  (11) Trade and other payables (534) (35) (569) (103) 2,361 2,258 Minority interests (936) Written put optio
ns over minority interests(2) 217 Goodwill 3,950 Total consideration (including £34 million of directly attributable costs)(3) 5,489 Notes: (1) Identifiable intangible assets of £3,189 million consist of licences and spectrum fees of £3,045 million and other intangible assets of £144 million. The weighted average lives of licences and spectrum fees, other intangible assets and total intangibles assets are 11 years, two years and 11 years, respectively.
(2) Included within short term and long term borrowings are liabilities of £217 million related to written put options over minority interests. (3) After deducting cash and cash equivalents acquired of £51 million, the net cash outflow related to the acquisition was £5,438 million, of which £5,429 million was paid during the 2008 financial year. The goodwill is attributable to the expected profitability of the acquired business and the synergies expected to
arise after the Groups acquisition of CGP. The results of the acquired entity have been consolidated in the income statement from the date of acquisition. From the date of acquisition, the acquired entity contributed a £219 million loss to the profit attributable to equity shareholders of the Group. As a result of the acquisition of Vodafone Essar, the Group disposed of its 5.60% direct shareholding in Bharti Airtel Limited (see note 29). Tele2 On 3 December 2007, the Group completed th
e acquisition of 100%(1)of the issued share capital of Tele2 Italia SpA and Tele2 Telecommunications Services SLU (together referred to as Tele2) from Tele2 AB Group for cash (1) The initial purchase price allocation has been determined to be provisional pending the completion of the final valuation of the fair value of assets acquired. Fair value Book value adjustments Fair value £m £m £m Net assets acquired: Identifiable intangible assets 5 106 111 Property, plant and equip
ment 115 (11) 104 Trade and other receivables 149  149 Cash and cash equivalents 5  5 Deferred tax asset/(liability) 36 (39) (3
) Short and long term borrowings (6)  (6) Provisions (1) (1) (2) Trade and other payables (159) 2 (157) 144 57 201 Goodwill 256 Total consideration (including £6 million of directly attributable costs)(1)(2) 457 Notes: (1)The Group acquired Tele2 for cash consideration of 747 million. 100% of the co




---



##### 



Pro forma full year information The following unaudited pro forma summary presents the Group as if CGP and Tele2 had been acquired on 1 April 2007. The impact of other acquisitions on the pro forma amounts disclosed below is not significant. The pro forma amounts include the results of CGP and Tele2, amortisation of the acquired intangible assets recognised on acquisition and the interest expenses on debt issued as a result of the acquisitions. The pro for
ma amounts do not include any possible synergies from these 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. 2008 £m Revenue 35,931 Profit for the financial year 6,665 Profit attributable to equity shareholders 6,575 Pence per share Basic earnings per share 12.40 Diluted earnings per share 12.34 Other T
he Group completed a number of smaller acquisitions for aggregate cash consideration of £112 million, gross of £3 million cash and cash equivalents acquired in the 2008 financial year. £77 million of the net cash consideration was paid during the year. The aggregate fair values of goodwill, identifiable assets, and liabilities of the acquired operations were £110 million, £29 million and £27 million, respectively. 29. Disposals and discontinued ope
rations India  Bharti Airtel Limited On 9 May 2007 and in conjunction with the acquisition of Vodafone Essar, the Group entered into a share sale and purchase agreement in which a Bharti group company irrevocably agreed to purchase the Groups 5.60% direct shareholding in Bharti Airtel Limited. During the year ended 31 March 2008, the Group received £654 million in cash consideration for 4.99% of such shareholding and recognised a net gain on disposal of £250 million
, reported in non-operating income and expense. The Groups remaining 0.61% direct shareholding was transferred in April 2008 for cash consideration of £87 million. Japan  Vodafone K.K. On 17 March 2006, the Group announced an agreement to sell its 97.7% holding in Vodafone K.K. to SoftBank. The transaction completed on 27 April 2006, with the Group receiving cash of approximately ¥1.42 trillion (£6.9 billion), including the repayment of intercompany debt o
f ¥0.16 trillion (£0.8 billion). In addition, the Group received non-cash consideration with a fair value of approximately ¥0.23 trillion (£1.1 billion), comprised of preferred equity and a subordinated loan. SoftBank also assumed debt of approximately ¥0.13 trillion (£0.6 billion). Vodafone K.K. represented a separate geographical area of operation and, on this basis, Vodafone K.K. was treated as a discontinued operation in Vodafone Group Plcs annual repor
t for the year ended 31 March 2006. Income statement and segment analysis of discontinued operations 2007 2006 £m £m Segment revenue 520 7,268 Inter-segment revenue  (2) Net revenue 520 7,266 Operating expenses (402) (5,667) Depreciation and amortisation(1)  (1,144) Impairment loss  (4,900) Operating profit/(loss) 118 (4,445) Net financing costs 8 (3) Profit/(loss) before taxation 126 (4,448) Taxation relating to performance of discontinued operations (15) 7 L
oss on disposal(2) (747) -Taxation relating to the classification of the discontinued operations 145 (147) Loss for the financial year from discontinued operations(3) (491) (4,588) Notes: (1) Including gains and losses on disposal of fixed assets. (2) Includes £794 million of foreign exchange differences transferred to the income statement on disposal. (3) Amount attributable to equity shareholders for the year to 31 March 2008 was nil (2007: £(494) million; 2006:
£(4,598) million). Loss per share from discontinued operations 2007 2006 Pence Pence per
share per share Basic loss per share (0.90) (7.35) Diluted loss per share (0.90) (7.35) Vodafone Group Plc Annual Report 2008 125




---



##### 



Vodafone  Financials Notes to the Consolidated Financial Statements continued 29. Disposals and discontinued operations continued Cash flows from discontinued operations 2007 2006 £m £m Net cash flows from operating activities 135 1,651 Net cash flows from investing activities (266) (939) Net cash flows from financing activities (29) (536) Net cash flows (160) 176 Cash and cash equivalents at the beginning of the financial year 16
1 4 Exchange loss on cash and cash equivalents (1) (19) Cash and cash equivalents at the end of the financial year  161 Assets and liabilities of discontinued operations 27 April 2006 £m Intangible assets 3,943 Property, plant and equipment 4,562 Other investments 29 Cash and cash equivalents 124 Inventory 148 Trade and other receivables 1,147 Deferred tax asset 636 Total assets 10,589 Short and long term borrowings (674) Trade and other payables(1) (2,342) Deferred tax liabilities
 (245) Other liabilities (40) Total liabilities (3,301) Net assets 7,288 Minority interest (87) Net assets disposed 7,201 Total consideration 7,245 Other effects: foreign exchange recycled to the income statement on disposal (794) Other 3 Net loss on disposal (747) £m Net cash inflow arising on disposal: Cash consideration 6,141 Cash to settle intercompany debt 793 Cash and cash equivalents disposed (124) 6,810 Other (12) 6,798 Note: (1) Includes £793 millio
n of intercompany debt. Belgium and Switzerland  Belgacom Mobile S.A. and Swisscom Mobile A.G. During the year ended 31 March 2007, the Group disposed of its 25% interest in Belgacom Mobile S.A. to Belgacom S.A. and its 25% interest in Swisscom Mobile A.G. to Swisscom A.G. These transactions completed on 3 November 2006 and 20 December 2006, respectively. The carrying value of these investments at disposal and the cash effects of the transactions are summarised in the table below: Belga
com Swisscom Mobile Mobile £m £m Net assets disposed 901 1,664 Total cash consideration 1,343 1,776 Other effects(1) (1) (44) Net gain on disposal(2) 441 68 Notes: (1) Other effects include foreign exchange gains and losses transferred to the income statement and professional fees related to the disposal. (2) Reported in other income and expense in the Consolidated Income Statement. 126 Vodafone Group Plc Annual Report 2008




---



##### 



30. Reconciliation of net cash flows from operating activities 2008 2007 2006 £m £m £m Profit/(loss) for the financial year from continuing operations 6,756 (4,806) (17,233) Loss for the financial year from discontinued operations  (491) (4,588) Adjustments for(1): Share-based payments 107 93 114 Depreciation and amortisation 5,909 5,111 5,834 Loss on disposal of property, plant and equipment 70 44 88 Share of result in associated undertaki
ngs (2,876) (2.728) (2,428) Impairment losses  11,600 28,415 Other income and expense 28 (502) (15) Non-operating income and expense (254) (4) 2 Investment income (714) (789) (353) Financing costs 2,014 1,604 1,123 Income tax expense 2,245 2,293 2,520 Loss on disposal of discontinued operations  747  (Increase)/decrease in inventory (78) (23) 23 (Increase)/decrease in trade and other receivables (378) (753) 54 Increase/(decrease) in trade and other payables 460 1,1
75 (33) Cash generated by operations 13,289 12,571 13,523 Tax paid (2,815) (2,243) (1,682) Net cash flows from operating activities 10,474 10,328 11,841 Note: (1) Adjustments include amounts relating to continuing and discontinued operations. 31. Commitments 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 righ
ts, none of which are individually significant to the Group. Future minimum lease payments under non-cancellable operating leases comprise: 2008 2007 £m £m Within one year 837 718 In more than one year but less than two years 606 577 In more than two years but less than three years 475 432 In more than three years but less than four years 415 367 In more than four years but less than five years 356 321 In more than five years 1,752 1,360 4,441 3,775 The total of future minimum sublease payments ex
pected to be received under non-cancellable subleases is £154 million (2007: £107 million). Capital and other financial commitments Company and subsidiaries Share of joint ventures Group 2008 2007 2008 2007 2008 2007 £m £m £m £m £m £m Contracts placed for future capital expenditure not provided in the financial statements(1) 1,477 1,060 143 89 1,620 1,149 Note: (1) Commitment includes contracts placed for property, plant and equipment and intangible ass
ets. In December 2007, a consortium comprising Vodafone and the Qatar Foundation for Education, Science and Community Development (the Qatar Foundation) was named as the successful applicant in the auction to become the second mobile operator in Qatar. Subject to regulatory approvals, the licence is expected to be awarded by 30 June 2008. The licence will be owned by Vodafone Qatar, of which 45% is expected to be owned by the joint venture formed between Vodafone (owning 51%) and the Q
atar Foundation (owning 49%), 15% to be owned by Qatari government institutions and the remaining 40% to be made available to Qatari citizens through a public offering expected to be completed in the 2008 calendar year. Following the public offering, the Group expects its effective equity interest in Vodafone Qatar to be 22.95%. The Group also currently expects that Vodafone Qatar will be accounted for as a subsidiary, as Vodafone expects to control management decisions. By 30 June 2008, Vodafone Qatar
 expects to pay QAR 4,630 million (£626 million), representing 60% of the cost of the mobile licence, with the balance of the licence cost to be paid following completion of the public offering. The Group could be required to fund up to a maximum of QAR 1,551 million (£210 million) of the total licence cost, with the precise amount dependent on the success of the public offering. The remainder of the licence cost will be funded by the other shareholders in Vodafone Qatar. Servi
ces are expected to be launched under the Vodafone brand by the
end of the 2009 financial year. Vodafone Group Plc Annual Report 2008 127




---



##### 



Vodafone  Financials Notes to the Consolidated Financial Statements continued 32. Contingent liabilities 2008 2007 £m £m Performance bonds 111 109 Credit guarantees  third party indebtedness 29 34 Other guarantees and contingent liabilities 372 90 Performance bonds 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 contract
s. Group performance bonds include £26 million (2007: £57 million) in respect of undertakings to roll out 3G networks in Spain. Credit guarantees  third party indebtedness Credit guarantees comprise guarantees and indemnities of bank or other facilities, including those in respect of the Groups associated undertakings and investments. Other guarantees and contingent liabilities Other guarantees principally comprise commitments to the Spanish tax authorities of £197 
million (2007: £nil). The Group also enters into lease arrangements in the normal course of business, which are principally in respect of land, buildings and equipment. Further details on the minimum lease payments due under non-cancellable operating lease arrangements can be found in note 31. 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, th
at are incidental to their operations. However, save as disclosed below, the Company and its subsidiaries are not involved currently 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 twelve months preceding the date of this report, a significant effect on the financial position or profitability of the Company and its subsidiaries. With the exception of the Vodafone 2 enquiry, due to inherent uncer
tainties, no accurate quantification of any cost which may arise from any of the legal proceedings outlined below can be made. The Company is one of a number of co-defendants in four actions filed in 2001 and 2002 in the Superior Court of the District of Columbia in the United States alleging personal injury, including brain cancer, from mobile phone use. The Company is not aware that the health risks alleged in such personal injury claims have been substantiated and is vigorously defending such claims. In
August 2007, the Court dismissed all four actions against the Company on the basis of the federal pre-emption doctrine. The plaintiffs have appealed this dismissal. A subsidiary of the Company, Vodafone 2, is responding to an enquiry (the Vodafone 2 enquiry) by HMRC with regard to the UK tax treatment of its Luxembourg holding company, Vodafone Investments Luxembourg SARL (VIL), under the Controlled Foreign Companies section of the UKs Income and Corporation Taxes Act 1988
 (the CFC Regime) relating to the tax treatment of profits earned by the holding company for the accounting period ended 31 March 2001. Vodafone 2s position is that it is not liable for corporation tax in the UK under the CFC Regime in respect of VIL. Vodafone 2 asserts, inter alia, that the CFC Regime is contrary to EU law and has made an application to the Special Commissioners of HMRC for closure of the Vodafone 2 enquiry. In May 2005, the Special Commissioners referred certai
n questions relating to the compatibility of the CFC Regime with EU law to the European Court of Justice (the ECJ) for determination (the Vodafone 2 reference). HMRC subsequently appealed against the decision of the Special Commissioners to make the Vodafone 2 reference but its appeal was rejected by both the High Court and Court of Appeal. The Vodafone 2 reference has still to be heard by the ECJ. Vodafone 2s application for closure was stayed pending delivery of the ECJ
s judgment. In September 2006, the ECJ determined in t
he Cadbury Schweppes case (C-196/04) (the Cadbury Schweppes Judgment) that the CFC Regime is incompatible with EU law unless it applies only




---



##### 



33. Directors and key management compensation Directors Aggregate emoluments of the directors of the Company were as follows: 2008 2007 2006 £m £m £m Salaries and fees 5 5 6 Incentive schemes 4 3 5 Benefits 1 1 2 Other(1)  4  10 13 13 Note: (1) Other includes the value of the cash allowance taken by some individuals in lieu of pension contributions and payments in respect of loss of office. The aggregate gross pre-tax gain made o
n the exercise of share options in the year ended 31 March 2008 by directors who served during the year was £nil (2007: £3 million, 2006: less than £1 million). Further details of directors emoluments can be found in Directors Remuneration on pages 71 to 81. Key management compensation Aggregate compensation for key management, being the directors and members of the Group Executive Committee, was as follows: 2008 2007 2006 £m £m £m Short t
erm employee benefits 20 29 26 Post-employment benefits: Defined benefit schemes 1 1 2 Defined contribution schemes 1 1 2 Share-based payments 10 6 16 32 37 46 34. Related party transactions The Groups related parties are its joint ventures (see note 13), associated undertakings (see note 14), pension schemes, directors and members of the Executive Committee. Group contributions to pension schemes are disclosed in note 25. Compensation paid to the Companys Board and members of the Executive Comm
ittee is disclosed in note 33. Transactions with joint ventures and associated undertakings Related party transactions can arise with the Groups joint ventures and associates and primarily comprise fees for the use of Vodafone products and services including, network airtime and access charges, and cash pooling arrangements. Except as disclosed below, 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. 2008 2007 2006 £m £m £m Transactions with associated undertakings: Sales of goods and services 165 245 288 Purchase of goods and services 212 295 268 Amounts owed by/(owed to) joint ventures(1) 127 (842) (378) Net interest payable to joint ventures(1) 27 20 15 Note: (1) Amounts arise through Vodafone Italy being part of a Group cash pooling arrangement and represent amounts not eliminated on consolidation. Interest is paid in line with market rates. Amounts ow
ed by and owed to associated undertakings are disclosed within notes 17 and 27. Dividends received from associated undertakings are disclosed in the consolidated cash flow statement. Transactions with directors other than compensation During the three years ended 31 March 2008, and as of 23 May 2008, 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 2008, an
d as of 23 May 2008, 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. Vodafone Group Plc Annual Report 2008 129




---



##### 



Vodafone  Financials Notes to the Consolidated Financial Statements continued 35. Employees The average employee headcount during the year by nature of activity and by segment is shown below. 2008 2007 2006 Number Number Number By activity: Operations 12,891 12,630 12,541 Selling and distribution 22,063 18,937 17,315 Administration 37,421 34,776 31,816 72,375 66,343 61,672 By segment: Germany 9,691 10,383 10,124 Italy 6,669 7,030 7,123 Spain 4,057 4,066 4
,052 UK 10,367 10,256 10,620 Arcor 3,940 4,038 4,086 Other Europe 8,645 8,797 9,778 Europe 43,369 44,570 45,783 Eastern Europe 10,398 9,194 5,763 Middle East, Africa & Asia 12,622 6,839 4,640 Pacific 3,030 2,791 2,858 EMAPA 26,050 18,824 13,261 Common functions 2,956 2,949 2,628 Total continuing operations 72,375 66,343 61,672 Discontinued operations: Japan  233 2,733 The cost incurred in respect of these employees (including directors) was(1): 2008 2007 2006 Continuing operations £m £m
 £m Wages and salaries 2,175 1,979 1,879 Social security costs 325 300 242 Share-based payments 107 93 109 Other pension costs (note 25) 91 94 80 2,698 2,466 2,310 Note: (1) The cost incurred in respect of employees (including directors) from discontinued operations was £nil (2007: £16 million, 2006: £155 million). 36. Subsequent events On 16 May 2008, Vodafone acquired 100% of ZYB, a privately-owned company based in Denmark, which operates a social networking and onl
ine management tool enabling mobile phone users to back-up and share their handsets On 19 May 2008, the Group acquired 26.4% of Arcor previously held transaction, Vodafone owns 100% of Arcor. 130 Vodafone Group Plc Annual Report 2008




---



##### 



37. New accounting standards The Group has not adopted and does not intend to early adopt the following pronouncements, which have been issued by the IASB or the International Financial Reporting Interpretations Committee (IFRIC), but have not yet been endorsed for use in the EU. An amendment to IFRS 2 Share-based Payment: Vesting Conditions and Cancellations was issued in January 2008 and will be effective retrospectively for annua
l periods beginning on or after 1 January 2009. This amendment clarifies that vesting conditions are service conditions and performance conditions only, and as such, any other features of a share-based payment are not vesting conditions. It also specifies that all cancellations, whether by the entity or by other parties, should receive the same accounting treatment. The Group is currently assessing the impact and expected timing of adoption of this amendment on the Groups results and financial po
sition. IFRS 3 (Revised) Business Combinations was issued in January 2008 and will apply to business combinations occurring on or after 1 April 2010. The revised standard introduces a number of changes in the accounting for business combinations that will impact the amount of goodwill recognised, the reported results in the period that a business acquisition occurs and future reported results. Assets and liabilities arising from business combinations before 1 April 2010 will not b
e restated and thus there will be no effect on the Groups results or financial position on adoption. However, this standard is likely to have a significant impact on the accounting for business acquisitions post adoption. IAS 1 (Revised) Presentation of Financial Statements was issued in September 2007 and will be effective for annual periods beginning on or after 1 January 2009. The revised standard introduces the concept of a statement of comprehensive income, which enables use
rs of the financial statements to analyse changes in a companys equity resulting from transactions with owners separately from non-owner changes. The revised standard provides the option of presenting items of income and expense and components of other comprehensive income either as a single statement of comprehensive income or in two separate statements. The Group does not currently believe the adoption of this revised standard will have a material impact on the consolidated results or financial posi
tion of the Group. IAS 23 (Revised) Borrowing Costs was issued in March 2007 and will be effective for annual periods beginning on or after 1 January 2009. It requires the capitalisation of borrowing costs, to the extent they are directly attributable to the acquisition, production or construction of a qualifying asset. The existing option of immediate recognition of those borrowing costs as an expense has been removed. The Group is currently assessing the impact and expected timing of
 adoption of this standard on the Groups results and financial position. An amendment to IAS 27 Consolidated and Separate Financial Statements was issued in January 2008 and is effective for annual periods beginning on or after 1 July 2009. The amendment requires that when a transaction occurs with non-controlling interests in Group entities that do not result in a change in control, the difference between the consideration paid or received and the recorded non-controlling intere
st should be recognised in equity. In cases where control is lost, any retained interest should be remeasured to fair value with the difference between fair value and the previous carrying value being recognised immediately in the income statement. Transactions occurring before 1 April 2010 will not be restated and thus there will be no effect on the Groups results or financial position on adoption. However, the Group has historically entered into transactions that are within the scope of this st
andard and may do so in the future. Am
endments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements  Puttable Financial Instruments and Obligations A




---



##### 



Vodafone  Financials Audit Report on the Consolidated Financial Statements Report of Independent Registered Public Accounting Firm to the Members of Vodafone Group Plc We have audited the Consolidated Financial Statements of Vodafone Group Plc which comprise the consolidated balance sheet at 31 March 2008 and 2007, the consolidated income statement, the consolidated cash flow statement, the consolidated statement of recognised income and expense for
each of the three years in the period ended 31 March 2008 and the related notes numbered 1 to 37. These Consolidated Financial Statements have been prepared under the accounting policies set out therein. We have also audited the information in the directors remuneration report that is described as having been audited. We have reported separately on the parent Company Financial Statements of Vodafone Group Plc for the year ended 31 March 2008. Respective responsibilities of directors and audi
tors The directors responsibilities for preparing the annual report, the directors remuneration report and the Consolidated Financial Statements in accordance with applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union are set out in the statement of directors responsibilities. Our responsibility is to audit the Consolidated Financial Statements in accordance with relevant legal and regulatory requirements and International Standa
rds on Auditing (UK and Ireland). We report to you our opinion as to whether the Consolidated Financial Statements give a true and fair view, whether the Consolidated Financial Statements have been properly prepared in accordance with the Companies Act 1985 and Article 4 of the IAS Regulation and whether the part of the directors remuneration report described as having been audited has been properly prepared in accordance with the Companies Act 1985. We also report to you whether, in our opinion, the i
nformation given in the directors report is consistent with the Consolidated Financial Statements. In addition, we report to you if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors transactions with the Company and other members of the Group is not disclosed. We review whether the corporate governance statement reflects the Companys compliance with the nine provisions of the 2006 Combined Code specifi
ed for our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We are not required to consider whether the boards statement on internal control covers all risks and controls, or form an opinion on the effectiveness of the Groups corporate governance procedures or its risk and control procedures. We read the other information contained in the annual report as described in the contents section and consider whether it is consistent with the audited Consoli
dated Financial Statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the Consolidated Financial Statements. Our responsibilities do not extend to any further information outside the annual report. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board and with the standards of the Public Company Accounting Oversight Board (
United States). An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the Consolidated Financial Statements and the part of the directors remuneration report to be audited. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the Consolidated Financial Statements, and of whether the accounting policies are appropriate to the Groups circumstances, consistently applied and
adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in orde




---



##### 



Audit Report on the Company Financial Statements Independent Auditors Report to the Members of Vodafone Group Plc We have audited the parent Company Financial Statements of Vodafone Group Plc for the year ended 31 March 2008 which comprise the balance sheet and the related notes 1 to 10. These parent Company Financial Statements have been prepared under the accounting policies set out therein. We have reported separately on the Consolidated Financial
 Statements of Vodafone Group Plc for the year ended 31 March 2008 and on the information in the directors remuneration report that is described as having been audited. Respective responsibilities of directors and auditors The directors responsibilities for preparing the Annual Report and the parent Company Financial Statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the Statement of Dir
ectors Responsibilities. Our responsibility is to audit the parent Company Financial Statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the parent Company Financial Statements give a true and fair view and whether the parent Company Financial Statements have been properly prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the Directors
 Report is consistent with the parent Company Financial Statements. In addition we report to you if, in our opinion, the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors remuneration and other transactions is not disclosed. We read the information contained in the Annual Report for the above year as described in the contents section and consider whether it
is consistent with the audited parent Company Financial Statements. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the parent Company Financial Statements. Our responsibility does not extend to any further information outside the annual report. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination,
 on a test basis, of evidence relevant to the amounts and disclosures in the parent Company Financial Statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the parent Company Financial Statements, and of whether the accounting policies are appropriate to the Companys circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we con
sidered necessary in order to provide us with sufficient evidence to give reasonable assurance that the parent Company Financial Statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the parent Company Financial Statements. Opinion In our opinion:  the parent Company Financial Statements give a true and fair view, in accordance with United Kingdom
 Generally Accepted Accounting Practice, of the state of the Companys affairs as at 31 March 2008;  the parent Company Financial Statements have been properly prepared in accordance with the Companies Act 1985; and  the information given in the Directors Report is consistent with the parent Company Financial Statements. Deloitte & Touche LLP Chartered Accountants and Registered Auditors London United Kingdom 27 May 2008 Vodafone Group Plc Annual Report 20
08 133




---



##### 



Vodafone  Financials Company Financial Statements of Vodafone Group Plc at 31 March 2008 2007 Note £m £m Fixed assets Shares in Group undertakings 3 64,922 67,139 Current assets Debtors: amounts falling due after more than one year 4 821 227 Debtors: amounts falling due within one year 4 126,099 99,404 126,920 99,631 Creditors: amounts falling due within one year 5 (98,784) (76,415) Net current assets 28,136 23,216
Total assets less current
 liabilities 93,058 90,355 Creditors: amounts falling due after more than one year 5 (14,582) (14,388) 78,476 75,967 Capital and reserves Called up share capital 6 4,182 4,172 Share premium account 8 42,934 43,572 Capital redemption reserve 8 10,054 9,132 Capital reserve 8 88 88 Other reserves 8 942 1,026 Own shares held 8 (7,867) (8,044) Profit and loss account 8 28,143 26,021 Equity shareholders funds 78,476 75,967 The Company Financial Statements were approved by the Board of
directors on 27 May 2008 and were signed on its behalf by: Arun Sarin Andy Halford Chief Executive Chief Financial Officer The accompanying notes are an integral part of these Financial Statements. 134 Vodafone Group Plc Annual Report 2008




---



##### 



Notes to the Company Financial Statements 1. Basis of preparation The separate financial statements of the Company are drawn up in accordance with the Companies Act 1985 and UK generally accepted accounting principles (UK GAAP). The preparation of Company Financial Statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
 disclosure of contingent assets and liabilities at the date of the Company Financial Statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects
 both current and future periods. As permitted by Section 230 of the Companies Act 1985, the profit and loss account of the Company is not presented in this Annual Report. These separate financial statements are not intended to give a true and fair view of the profit or loss or cash flows of the Company. The Company has not published its individual cash flow statement as its liquidity, solvency and financial adaptability are dependent on the Group rather than its own cash flows. The Company has taken a
dvantage of the exemption contained in FRS 8 Related party disclosures and has not reported transactions with fellow Group undertakings The Company has taken advantage of the exemption contained in FRS 29 Financial Instruments: Disclosures and has not produced any disclosures required by that standard, as disclosures that comply with FRS 29 are available in the Vodafone Group Plc Annual Report for the year ended 31 March 2008. 2. Significant accounting policies The Company
s significant accounting policies are described below. Accounting convention The Company Financial Statements are prepared under the historical cost convention and in accordance with applicable accounting standards of the UK Accounting Standards Board and pronouncements of the Urgent Issues Task Force. Investments Shares in Group undertakings are stated at cost less any provision for impairment. The Company assesses investments for impairment whenever events or changes in circumstances indicate that the car
rying value of an investment may not be recoverable. If any such indication of impairment exists, the Company makes an estimate of the recoverable amount. If the recoverable amount of the cash-generating unit is less than the value of the investment, the investment is considered to be impaired and is written down to its recoverable amount. An impairment loss is recognised immediately in the profit and loss account. For available-for-sale investments, gains and losses arising from changes in fair value are r
ecognised directly in equity, until the investment 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. Foreign currencies In preparing the Company Financial Statements, transactions in currencies other than the Companys functional currency are recorded at the rates of exchange prevailing on the dates of the transactions. At each
 balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rate prevailing on the date when fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on the retranslation of mon
etary ite
ms, are included in the profit and loss account for the period. Exchange differences ar




---



##### 



Vodafone  Financials Notes to the Company Financial Statements continued 2. Significant accounting policies continued Fair value hedges The Company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 Company designates these as fair value hedges of interest rate risk
with changes in fair value of the hedging instrument recognised in the profit and loss account 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. The ineffective portion is recognised immediately in the profit and loss account. Share-based payments The Group operates a number of equity settled share based compensation plans for the employees of subsidiary undertakings using the Companys equity instruments. The fai
r value of the compensation given in respect of these share based compensation plans is recognised as a capital contribution to the Companys subsidiary undertakings over the vesting period. The capital contribution is reduced by any payments received from subsidiary undertakings in respect of these share-based payments. Dividends paid and received Dividends paid and received are included in the Company Financial Statements in the period in which the related dividends are actually paid or received or,
in respect of the Companys final dividend for the year, approved by shareholders. Pensions The Company is the sponsoring employer of the Vodafone Group Pension Scheme, a defined benefit pension scheme. The Company is unable to identify its share of the underlying assets and liabilities of the Vodafone Group Pension Scheme on a consistent and reasonable basis. Therefore, the Company has applied the guidance within FRS 17 to account for defined benefit schemes as if they were defined contribution scheme
s and recognise only the contribution payable each year. The Company had no contributions payable for the years ended 31 March 2008 and 31 March 2007. 3. Fixed assets Shares in Group undertakings £m Cost: 1 April 2007 72,322 Additions 24 Capital contributions arising from share-based payments 107 Contributions received in relation to share-based payments (191) Disposals (2,069) 31 March 2008 70,193 Amounts provided for: 1 April 2007 5,183 Amounts provided for during the ye
ar 88 31 March 2008 5,271 Net book value: 31 March 2007 67,139 31 March 2008 64,922 At 31 March 2008, the Company had the following principal subsidiary undertakings: Country of Percentage Name Principal activity incorporation shareholding Vodafone European Investments Holding company England 100.0 Vodafone Group Services Limited Global products and services provider England 100.0 4. Debtors 2008 2007 £m £m Amounts falling due within one year: Amounts owed by subsidiary underta
kings 125,838 99,071 Taxation recoverable 137 137 Other debtors 124 196 126,099 99,404 Amounts falling due after more than one year: Deferred taxation 4 3 Other debtors 817 224 821 227 136 Vodafone Group Plc Annual Report 2008




---



##### 



5. Creditors 2008 2007 £m £m Amounts falling due within one year: Bank loans and other loans 4,442 3,656 Amounts owed to subsidiary undertakings 93,891 72,568 Group relief payable 42 101 Other creditors 393 82 Accruals and deferred income 16 8 98,784 76,415 Amounts falling due after more than one year: Other loans 14,409 14,216 Other creditors 173 172 14,582 14,388 Included in amounts falling due after more than one year are other loans of £8,279
 million, which are due in more than five years from 1 April 2008 and are payable otherwise than by instalments. Interest payable on this debt ranges from 3.625% to 7.875%. 6. Share capital 2008 2007 Number £m Number £m Authorised: Ordinary shares of 11 3/7 US cents each (2007: 11 3/7 US cents) 68,250,000,000 4,875 68,250,000,000 4,875 B shares of 15 pence each 38,563,935,574 5,784 38,563,935,574 5,784 Deferred shares of 15 pence each 28,036,064,426 4,206 28,036,064,426 4,206 Ordinary sh
ares allotted, issued and fully paid(1): 1 April 58,085,695,298 4,172 66,251,332,784 4,165 Allotted during the year 169,360,427 10 118,241,919 7 Consolidated during the year  - (8,283,879,405)  31 March 58,255,055,725 4,182 58,085,695,298 4,172 B shares allotted, issued and fully paid(2): 1 April 132,001,365 20  -Issued during the year  - 66,271,035,240 9,941 Redeemed during the year (44,572,227) (7) (38,102,969,449) (5,715) Converted to deferred shares and subsequently can
celled during the year  - (28,036,064,426) (4,206) 31 March 87,429,138 13 132,001,365 20 Notes: (1) At 31 March 2008, the Company held 5,127,457,690 (2007: 5,245,547,674) treasury shares with a nominal value of £368 million (2007: £377 million) and 50,000 (2007: 50,000) 7% cumulative fixed rate shares of £1 each were authorised, allotted, issued and fully paid by the Company. (2) On 31 July 2006, Vodafone Group Plc undertook a return of capital to shar
eholders via a B share scheme and associated share consolidation. A total of 66,271,035,240 B shares were issued on that day, and 66,271,035,240 existing ordinary shares of 10 US cents each were consolidated into 57,987,155,835 new ordinary shares of 11 3/7 cents each. B shareholders were given the alternatives of initial redemption or future redemption at 15 pence per share or the payment of an initial dividend of 15 pence per share. The initial redemption took place on 4 August 2006 with future redem
ption dates on 5 February and 5 August each year until 5 August 2008 when the Company expects to exercise its right to redeem all B shares still in issue at their nominal value of 15 pence. B shareholders that chose future redemption are entitled to receive a continuing non-cumulative dividend of 75 per cent of sterling LIBOR payable semi-annually in arrear until they are redeemed. B shareholders are only entitled to receive notice of (or attend, speak or vote at) any general meeting if the business in
cludes a resolution for the winding up of the Company. If the Company is wound up, the holders of the B shares are entitled, before any payment to the ordinary shareholders, to repayment of the amount paid up on each B share together with any outstanding entitlement to the B share continuing dividend. By 31 March 2008, total capital of £9,011 million had been returned to shareholders, £5,720 million by way of capital redemption and £3,291 million by way of initial dividend
 (note 8). The outstanding B share liability at 31 March 2008 has been classified as a financial liability and is disclosed within other creditors falling due within one year (note 5). During the period, a transfer of £7 million (2007: £9,004 million) in respect of the B shares has been made from the profit and loss account reserve (note 8) to the capital redemption reserve (note 8). Allotted during the year Nominal Net value proceeds Number £m £m UK share awards and optio
n scheme awards 152,400,497 9 249 US share awards and
option scheme awards 16,959,930 1 24 Total for share awards and option scheme awards 169,360,427 10 273 Vodafone Group Plc Annual Report 2008 137




---



##### 



Vodafone  Financials Notes to the Company Financial Statements continued 7. Share-based payments The Company currently uses a number of equity settled share plans to grant options and shares to the directors and employees of its subsidiary undertakings, as listed below. Share option schemes  Vodafone Group savings related and Sharesave schemes  Vodafone Group executive schemes  Vodafone Group 1999
Long Term Stock Inc
entive Plan and ADSs  Other share option plans Share plans  Share Incentive Plan  Restricted share plans At 31 March 2008, the Company had 373 million ordinary share options outstanding (2007: 584 million) and 1 million ADS options outstanding (2007: 3 million). The Company has made a capital contribution to its subsidiary undertakings in relation to share-based payments. At 31 March 2008, the cumulative capital
contribution net of payment
s received from subsidiary undertakings was £313 million (31 March 2007: £397 million, 1 April 2006: £383 million). During the year ended 31 March 2008, the capital contribution arising from share-based payments was £107 million (2007: £93 million), with payments of £191 million (2007: £79 million) received from subsidiary undertakings. Full details of share-based payments, share option schemes and share
plans are disclosed
 in note 20 to the Consolidated Financial Statements. 8. Reserves and reconciliation of movements in equity shareholders funds Share Capital Own Profit Total equity Share premium redemption Capital Other shares and loss shareholders capital account reserve reserve reserves held account funds £m £m £m £m £m £m £m £m 1 April 2007 4,172 43,572 9,132 88 1,026 (8,044) 26,021 75,967 Allotments of shares 10 277  -  - 
287 Own shares release
d on vesting of share awards  -  -  177  177 Profit for the financial year  -  -  - 5,782 5,782 Dividends  -  -  - (3,653) (3,653) Capital contribution given relating to share-based payments  -  - 107  - 107 Contribution received relating to share-based payments  -  - (191)  - (191) Transfer of B share nominal value issued in respect of own shares deferred and cancelled  (915) 915
 - 
- -B share capital redemption  - 7  -  (7)  31 March 2008 4,182 42,934 10,054 88 942 (7,867) 28,143 78,476 The profit for the financial year dealt with in the accounts of the Company is £5,782 million (2007: £11,126 million). Under English law, the amount available for distribution to shareholders is based upon the profit and loss reserve of the Company and is reduced by the amount of own shares held and is limited by statutory or other
restrictions. The audi
tors remuneration for audit services and non-audit services to the Company was less than £1 million (2007: £1 million) and £0.4 million (2007: £0.5 million), respectively. The directors are remunerated by Vodafone Group Plc for their services to the Group as a whole. No remuneration was paid to them specifically in respect of their services to Vodafone Group Plc for either year. Full details of the directors remuneration are disclosed in
Directors Remuneration on pages 71 to 81. There were no employees other than directors of the Company throughout the current or the preceding year. 138 Vodafone Group Plc Annual Report 2008




---



##### 



9. Equity dividends 2008 2007 £m £m Declared during the financial year: Final dividend for the year ended 31 March 2007: 4.41 pence per share (2006: 3.87 pence per share) 2,331 2,328 Interim dividend for the year ended 31 March 2008: 2.49 pence per share (2007: 2.35 pence per share) 1,322 1,238 3,653 3,566 Proposed after the balance sheet date and not recognised as a liability: Final dividend for the year ended 31
March 2008: 5.02 pence
 per share (2007: 4.41 pence per share) 2,667 2,331 10. Contingent liabilities 2008 2007 £m £m Performance bonds 30 87 Credit guarantees  third party indebtedness 4,208 1,278 Other guarantees and contingent liabilities 255 10 Performance bonds Performance bonds require the Company to make payments to third parties in the event that the Company or its subsidiary undertakings do not perform what is expected of them under the terms of any related contracts. Company
 performance bonds include £26 million (2007: £57 million) in respect of undertakings to roll out third generation networks in Spain. Credit guarantees  third party indebtedness Credit guarantees comprise guarantees and indemnities of bank or other facilities. During the year ended 31 March 2008, a subsidiary of the Company granted put options exercisable between 8 May 2010 and 8 May 2011 to members of the Essar group of companies that, if exercised, would allow the Essar group to sell its 33% sh
areholding in Vodafone Essar to the Group for US$5 billion or to sell between US$1 billion and
 US$5 billion worth of Vodafone Essar shares to the Group at an independently appraised fair market value. The Company has guaranteed payment of up to US$5 billion related to these options. At 31 March 2008, the Company had also guaranteed debt of Vodafone Finance K.K. amounting to £1,303 million (2007: £1,117 million) and issued guarantees in respect of notes issued by
Vodafone Americas, Inc. amounting to £163 million (2007: £161 million). The Japanese
facility expires by March 2011 and the majority of Vodafone Americas, Inc. bond guarantees expire by July 2008. Other guarantees and contingent liabilities Other guarantees principally comprise of a guarantee relating to a bid for a second licence in Qatar of £57 million (2007: nil) and a commitment to the Spanish tax authorities of £197 million (2007: nil). Legal proceeding
s Details regarding certain legal actions which involve the Company are set out in note 32 to the Consolidated Financial Statements. Vodafone Group Plc Annual Report 2008 139




---



##### 



Vodafone  Additional Information Shareholder Information Financial calendar for the 2009 financial year Announcement for quarter ending 30 June 2008 22 July 2008 Half-yearly financial results announcement 11 November 2008 Announcement for quarter ending 31 December 2008 29 January 2009 Preliminary announcement of full year results 19 May 2009 The Company does not publish results announcements in the press; they are available
online at www.vodafone.com. Dividends Full details on the dividend amount per share can be found on page 55. Set out below is information relevant to the final dividend for the year ended 31 March 2008. Ex-dividend date 4 June 2008 Record date 6 June 2008 Dividend reinvestment plan last election date 11 July 2008 Dividend payment date(1) 1 August 2008 Note: (1) Payment date for both ordinary shares and ADSs. Dividend payment methods Holders of ordinary shares can: 
 have cash dividends paid direct to a bank or building society account; or  have cash dividends paid in the form of a cheque; or  elect to use the cash dividends to purchase more Vodafone shares under the Dividend Reinvestment Plan (see below). If a holder of ordinary shares does decide to receive cash dividends, it is recommended that these are paid directly to the shareholders bank or building society account via BACS for UK account holders or EFTS for Irish account holders
.. Ordinary shareholders resident outside the UK and Eurozone can also have their dividends paid into their bank account directly via the Companys Registrars Global Payments service. Details and terms and conditions may be viewed at www.computershare.com/uk/investor/GPS. This avoids the risk of cheques being lost in the post and means the dividend will be in the shareholders account on the dividend payment date. The shareholder will be sent a tax voucher confirming the amount of dividend an
d the account into which it has been paid. Please contact the Companys Registrars for further details. Holders of ADSs can:  have cash dividends paid direct to a bank account; or  have cash dividends paid by cheque; or  elect to have the dividends reinvested to purchase additional Vodafone ADSs. Dividend reinvestment The Company offers a Dividend Reinvestment Plan which allows holders of ordinary shares who choose to participate to use their cash dividends to acq
uire additional shares in the Company. These are purchased on their behalf by the Plan Administrator through a low cost dealing arrangement. For ADS holders, The Bank of New York Mellon maintains a Global BuyDIRECT Plan for the Company, which is a direct purchase and sale plan for depositary receipts, with a dividend reinvestment facility. Final B share redemption date In accordance with the terms of the 2006 return of capital and share consolidation, the Company currently intends to redeem all B shares the
n in issue on 5 August 2008 at their nominal value of 15 pence per B share. Telephone share dealing A telephone share dealing service with the Companys Registrars is available for holders of ordinary shares. The service is available from 8.00 am to 4.30 pm, Monday to Friday, excluding bank holidays, on telephone number +44 (0)870 703 0084. Detailed terms and conditions are available on request by calling the above number. Internet share dealing An internet share dealing service is available
for holders of ordinary shares who want either to buy or sell ordinary shares. Further information about this service can be obtained from the Companys Registrars on +44 (0)870 702 0198 or by logging onto www.computershare.com/dealing/uk. Online shareholder services The Company provides a number of shareholder services online at www.vodafone. com/shareholder, where shareholders may:  register to receive electronic shareholder communications. Benefits to shareholders include faster re
ceipt of communications, such as annual reports, with cost and time savin
gs for the Company. Electronic shareholder communications are also more environmentally friendly;  view a live webcast of the AGM of the Company on 29 July 2008. A recordi




---



##### 



Shareholders and other interested parties can also receive Company press releases, including London Stock Exchange announcements, by registering for Vodafone News via the Companys website at www.vodafone.com/start/misc/ register_for_news.html. Registering for Vodafone News will enable users to:  access the latest news from their mobile; and  have news automatically e-mailed to them. Annual General Meeting The twenty-fourth AGM of
 the Company will be held at The Queen Elizabeth II Conference Centre, Broad Sanctuary, Westminster, London SW1 on 29 July 2008 at 11.00 a.m. A combined Review of the Year and Notice of AGM, including details of the business to be conducted at the AGM, will be circulated to shareholders and can be viewed at the Companys website  www.vodafone.com/agm. The AGM will be transmitted via a live webcast and can be viewed at the Companys website  www.vodafone.com/start/investor_relation
s/agm.html  on the day of the meeting and a recording will be available to view after that date. ShareGift The Company supports 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. Donating shares to cha
rity gives rise neither to a gain nor a loss for UK Capital Gains Tax purposes and UK taxpayers may also be able to claim income tax relief on the value of the donation. ShareGift transfer forms specifically for the Companys shareholders are available from the Companys Registrars, Computershare Investor Services PLC, and, even if the share certificate has been lost or destroyed, the gift can be completed. The service is generally free. However, there may be an indemnity charge for a lost or dest
royed share certificate where the value of the shares exceeds £100. Further details about ShareGift can be obtained from its website at www.ShareGift.org or at 17 Carlton House Terrace, London SW1Y 5AH (telephone: +44 (0)20 7930 3737). The Unclaimed Assets Register The Company participates in the Unclaimed Assets Register, which provides a search facility for financial assets which may have been forgotten and which donates a proportion of its public search fees to a group of three UK charities (Ag
e Concern, NSPCC and Scope). For further information, contact The Unclaimed Assets Register, Cardinal Place, 6th Floor, 80 Victoria Street, London SW1E 5JL (telephone: +44 (0)870 241 1713), or visit its website at www.uar.co.uk. Share price history Upon flotation of the Company on 11 October 1988, the ordinary shares were valued at 170 pence each. On 16 September 1991, when the Company was finally demerged, for UK taxpayers the base cost of Racal Electronics Plc shares 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 re
stated as 11.333 pence and 22.133 pence, respectively. The share price at 31 March 2008 was 150.9 pence (31 March 2007: 135.5 pence). The share price on 23 May 2008 was 160.4 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, (ii) the reported high and low sales prices of ordinary shares on the Frankfurt Stock Exchange, and (iii) the reported high and low sales p
rices of ADSs on t
he NYSE. The Companys ordinary shares were listed on the Frankfurt Stock Exchange from 3 April 2000 until 23 March 2004 and, therefore, information has not been provi




---



##### 



Vodafone  Additional Information Shareholder Information continued Foreign currency translation The following table sets out the pounds sterling exchange rates of the other principal currencies of the of the EU Member States which have adopted the euro as their currency, and US dollars, $, cents or ¢, the currency of the United States. At year ended Change Currency (=£1) 2008 2007 % Average: Euro 1
..42 1.48 (4.1) US dollar 2.01 1.89 6.3 At 31 March: Euro 1.26 1.47 (14.3) US dollar 1.99 1.97 1.0 The following table sets out, for the periods and dates indicated, the period end, average, high and low exchanges rates for pounds sterling expressed in US dollars per £1.00. Year ended 31 March Period end Average High Low 2004 1.84 1.69 1.90 1.55 2005 1.89 1.85 1.96 1.75 2006 1.74 1.79 1.92 1.71 2007 1.97 1.89 1.98 1.74 2008 1.99 2.01 2.11 1.94 Month High Low November 2007 2.11 2.05 December 20
07 2.07 1.98 January 2008 1.99 1.95 February 2008 1.99 1.94 March 2008 2.03 1.98 April 2008 2.00 1.96 Markets Ordinary shares of Vodafone Group Plc are traded on the London Stock Exchange and, in the form of ADSs, on the NYSE. The Company had a total market capitalisation of approximately £86.8 billion at 23 May 2008, making it the third largest listing in The Financial Times Stock Exchange 100 index and the 24th largest company in the world based on market capitalisation
at that date. ADSs, each representing ten ordinary shares, are traded on the NYSE under the symbol VOD. The ADSs are evidenced by ADRs issued by The Bank of New York Mellon, as Depositary, under a Deposit Agreement, dated as of 12 October 1988, as amended and restated as of 26 December 1989, as further amended and restated as of 16 September 1991, as further amended and restated as of 30 June 1999, and as further amended and restated as of 31 July 2006 between the Compan
y, the Depositary and the holders from time to time of ADRs issued thereunder. ADS holders are not members of the Company but may instruct The Bank of New York Mellon on the exercise of voting rights relative to the number of ordinary shares represented by their ADSs. See Memorandum and Articles of Association and applicable English law  Rights attaching to the Companys shares  Voting rights on page 143. Shareholders at 31 March 2008 Number of % of total Number of ordinary
 shares held accounts issued shares 1  1,000 443,176 0.21 1,001  5,000 81,173 0.30 5,001- 50,000 25,087 0.55 50,001  100,000 1,158 0.14 100,001- 500,000 1,142 0.45 More than 500,000 1,757 98.35 553,493 100.00 Geographical analysis of shareholders At 31 March 2008, approximately 51.58% of the Companys shares were held in the UK, 33.64% in North America, 11.73% in Europe (excluding the UK) and 3.05% in the rest of the world. Major shareholders The Bank of New York Mellon, as custo
dian of the Companys ADR programme, held approximately 12.6% of the Companys ordinary shares ofbeing: euros,  or $0.11 3/7 each at 23 May 2008 as nominee. The total number of ADRs outstanding at 23 May 2008 was 670,777,009. At this date, 1,182 holders of record of ordinary shares had registered addresses in the United States and in total held approximately 0.006% of the ordinary shares of the Company. At 23
 May 2008, 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: Shareholder Shareholding AXA S.A. 5.81% Legal & General Group Plc 4.53% 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 23 May 2008, of a
ny other interest of 3% or more in the ordinary share capital of the Company. The Company is not directly or indirectly owne
d 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. Memorandum and Articles of Association and applic
able




---



##### 



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, (e) relating to the arrangement of any employee benefit in which the director will share equally with other employees and (f) relating to any insurance that the Company p
urchases 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 166 of the Companies Act 1985. In accordance with the Companys Articles of Association, directors retiring at each AGM are those last elected or re-elected at or before the AGM held in the third calendar year before the current year. 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 in this regard, the Board has decided, in the interests of good corporate governance, that all of the directors should offer themselves for re-election annually. Accordingly, all the directors not retiring will submit themselves for re-election at the 2008 AGM. No person is disqualified from being a director or is required to vacate that office by reason of age. Directors a
re 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 71 to 81). The report is also subject to a shareholder vote. Rights attaching to the Companys shares At 31 March 2008, the issued share capital of the Company was comprised of 50,000 7% cumulative fixed rate shares of £1.00 each, 53,127,598,035 ordinary shares (excluding treasury shares) of US$0.11 3/
7 each and 87,429,138 B shares of 15 pence 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 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 will be announced in pounds sterling. Holders of ordinary shares with a registered address in a euro zone country (defined, for
this purpose, as a country that has adopted the euro as its national currency) will receive their dividends in euros, exchanged from pounds sterlin




---



##### 



Vodafone 
Additional Information Shareholder
Information continued entitlement to the B share continuing dividend up to the future redemption date of the Companys
ADSs are entitled to receive notices under the terms of the immediately before the liquidation. The
holders of B shares do not have any other Deposit Agreement relating to the ADSs. right to share in
the Companys surplus assets. Under Section 336 of the Companies Act 2006, the annual general meeting Pre-emptive rights and
new issues of shares of shareholders must be held each calendar year and within six months of the
Under Section 80 of the Companies Act 1985, directors are, with certain Companys year end.
exceptions, unable to allot relevant securities without the authority of the shareholders in a
general meeting. Relevant securities as defined in the Electronic communications Companies Act
include the Companys ordinary shares or securities convertible The Company may, subject to and in
accordance with the Companies Act 2006, into the Companys ordinary shares. In addition, Section 89
of the Companies Act communicate all shareholder information by electronic means, including by 1985
imposes further restrictions on the issue of equity securities (as defined in making such
information available on a website, with notification that such the Companies Act, which include
the Companys ordinary shares and securities information shall be available on the website.
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 Variation of rights allow
shareholders to authorise directors for a period up to five years to allot If, at any time, the
Companys share capital is divided into different classes of shares, (a) relevant securities
generally up to an amount fixed by the shareholders and the rights attached to any class may be
varied, subject to the provisions of the (b) equity securities for cash other than in connection
with a rights issue up to Companies Acts, either with the consent in writing of the holders of
three fourths an amount specified by the shareholders and free of the restriction in Section 89. in
nominal value of the shares of that class or upon the adoption of an extraordinary In accordance
with institutional investor guidelines, the amount of relevant resolution passed at a separate
meeting of the holders of the shares of that class. securities to be fixed by shareholders is
normally restricted to one third of the existing issued ordinary share capital, and the amount of
equity securities to be At every such separate meeting, all of the provisions of the Articles of
Association issued for cash other than in connection with a rights issue is restricted to 5%
relating to proceedings at a general meeting apply, except that (a) the quorum is of the existing
issued ordinary share capital. 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
Disclosure of interests in the Companys shares or, if such quorum is not present on an adjourned
meeting, one person who holds There are no provisions in the Articles of Association whereby
persons acquiring, shares of the class regardless of the number of shares he holds, (b) any person
holding or disposing of a certain percentage of the Companys shares are required present in person
or by proxy may demand a poll, and (c) each shareholder will to make disclosure of their ownership
percentage, although such requirements have one vote per share held in that particular class in the
event a poll is taken. exist under rules derived by the Disclosure and Transparency Rules (DTRs).
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 The basic
disclosure requirement upon a person acquiring or disposing of shares of the Company or by a
redemption or repurchase of the shares by the Company. 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 Limitations on voting and shareholding
of the persons voting rights which he holds
as shareholder or through his direct As far as the Company is aware, there are no limitations
imposed on the transfer, or indirect holding of financial instruments (falling within DTR 5.3.1R)
reaches holding or voting of the Companys shares other than those limitations that would or
exceeds 3% and reaches, exceeds or falls below each 1% threshold thereafter. generally apply to all
of the shareholders. No shareholder has any securities carrying special rights with regard to
control of the Company. 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 Documents on display believe is, or was
during the preceding three years, interested in the Companys The Company is subject to the
information requirements of the US Securities and shares to indicate whether or not that is correct
and, if that person does or did Exchange Act of 1934 applicable to foreign private issuers. In
accordance with hold an interest in the Companys shares, to provide certain information as set
these requirements, the Company files its Annual Report on Form 20-F and other out in the Companies
Act 2006. DTR 3 deals with the disclosure by persons related documents with the SEC. These
documents may be inspected at the discharging managerial responsibility and their connected
persons of the SECs public reference rooms located at 100 F Street, NE Washington, DC 20549.
occurrence of all transactions conducted on their account in the shares in the Information on the
operation of the public reference room can be obtained in the Company. Part 28 of The Companies Act
2006 sets out the statutory functions US by calling the SEC on +1-800-SEC-0330. In addition, some
of the Companys of the Panel on Takeovers & Mergers (the Panel). The Panel is responsible for
SEC filings, including all those filed on or after 4 November 2002, are available on issuing and
administering the Code on Takeovers & Mergers and governs disclosure the SECs website at
www.sec.gov. Shareholders can also obtain copies of the requirements on all parties to a takeover
with regard to dealings in the securities Companys Memorandum and Articles of Association from the
Vodafone website of an offeror or offeree company and also on their respective associates during at
www.vodafone.com or from the Companys registered office. the course of an offer period.
Debt securities General meetings and notices Pursuant to an Agreement of Resignation, Appointment and Acceptance,
dated Annual general meetings are held at such times and place as determined by the as of 24 July
2007, by and among the Company, The Bank of New York Mellon directors of the Company. The directors
may also, when they think fit, convene and Citibank N.A, The Bank of New York Mellon has become the
successor trustee an extraordinary general meeting of the Company. General meetings may also to
Citibank N.A. under the Companys Indenture dated as of 10 February 2000. be convened on
requisition as provided by the Companies Acts. Material contracts An annual general meeting and an extraordinary general meeting called for the At the date of this
Annual Report, the Group is not party to any contracts that are passing of a special resolution
needs to be called by not less than twenty-one considered material to the Groups results or
operations, except for its $11.3 billion days notice in writing and all other extraordinary
general meetings by not less credit facilities which are discussed under Financial Position and
Resources on than fourteen days notice in writing. The directors may determine that persons page
57. 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 Exchange controls twenty-one
days before the date the relevant notice is sent. The notice may also There are no UK government
laws, decrees or regulations that restrict or affect specify the record date, which shall not be
more than forty-eight hours before the export or import of capital, including but not limited to,
foreign exchange the time fixed for the meeting. controls on remittance of dividends on the
ordinary shares or on the conduct of the Groups operations, except as otherwise set out under
Taxation below. Shareholders must provide the Company with an address or (so far as the Companies
Acts allow) an electronic address or fax number in the United Kingdom Taxation in order to be
entitled to receive notices of shareholders meetings and other As this is a complex area,
investors should consult their own tax adviser regarding notices and documents. In certain
circumstances, the Company may give notices the US federal, state and local, the UK and other tax
consequences of owning and to shareholders by advertisement in newspapers in the United Kingdom.
Holders disposing of shares and ADSs in their particular circumstances.
144 Vodafone Group Plc Annual Report 2008




---



##### 



This section relates to shares and ADSs in the Company. Certain specific UK and A US holder is not
subject to a UK withholding tax. The US holder includes in gross other tax consequences of a return
of capital share consolidation are discussed income for US federal income tax purposes only the
amount of the dividend on pages C-1 to C-3. This section describes, primarily for a US holder (as
defined actually received from the Company, and the receipt of a dividend does not entitle below),
in general terms, the principal US federal income tax and UK tax the US holder to a foreign tax
credit. 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, Dividends must be included in income
when the US holder, in the case of shares, cover the tax consequences for members of certain
classes of holders subject or the Depositary, in the case of ADSs, actually or constructively
receives the to special rules including officers of the Company, employees and holders that,
dividend and will not be eligible for the dividends-received deduction generally directly or
indirectly, hold 10% or more of the Companys voting stock. allowed to US corporations in respect
of dividends received from other US corporations. Dividends will be income from sources outside the
United States. A US holder is a beneficial owner of shares or ADSs that is for US federal income
Dividends paid in taxable years beginning before 1 January 2007 generally will tax purposes: be
passive or financial services income, and dividends paid in taxable years beginning after 31
December 2006 generally will be passive or general  a citizen or resident of the United
States; income, which in either case is treated separately from other types of income  a US
domestic corporation; for the purposes of computing any allowable foreign tax credit.
· an estate, the income of which is subject to US federal income tax regardless of its source; or
In the case of shares, the amount of the dividend distribution to be included  a trust, if a US
court can exercise primary supervision over the trusts in income will be the US dollar value of
the pound sterling payments made, administration and one or more US persons are authorised to
control all determined at the spot pound sterling/US dollar rate on the date of the dividend
substantial decisions of the trust. distribution, regardless of whether the payment is in fact
converted into US dollars. Generally, any gain or loss resulting from currency exchange
fluctuations If a partnership holds the shares or ADSs, the US federal income tax treatment of
during the period from the date the dividend payment is to be included in income a partner will
generally depend on the status of the partner and the tax treatment to the date the payment is
converted into US dollars will be treated as ordinary of the partnership. A partner in a
partnership holding the shares or ADSs should income or loss. Generally, the gain or loss will be
income or loss from sources consult its tax advisor with regard to the US federal income tax
treatment of an within the United States for foreign tax credit limitation purposes. investment in
the shares or ADSs. Taxation of capital gains This section is based on the Internal Revenue Code of 1986, as amended, its UK taxation legislative
history, existing and proposed regulations thereunder, published A US holder may be liable for both
UK and US tax in respect of a gain on the rulings and court decisions, and on the tax laws of the
United Kingdom and the disposal of the Companys shares or ADSs if the US holder is: Double
Taxation Convention between the United States and the United Kingdom (the Treaty), all as
currently in effect. These laws are subject to change,  a citizen of the United States resident or
ordinarily resident for UK tax purposes possibly on a retroactive basis. in the United Kingdom;
· a citizen of the United States who has been resident or ordinarily resident for This section
is further based in part upon the representations of the Depositary UK tax purposes in the United
Kingdom, ceased to be so resident or ordinarily and assumes that each obligation in the Deposit
Agreement and any related resident for a period of less than five years of assessment and who
disposed of agreement will be performed in accordance with its terms. the shares or ADSs during
that period (a Temporary Non-Resident), unless the shares or ADSs were also acquired during that
period, such liability arising on Based on this assumption, for purposes of the Treaty and the
US-UK double that individuals return to the UK; taxation convention relating to estate and gift
taxes (the Estate Tax Convention),  a US domestic corporation resident in the United Kingdom by
reason of being and for US federal income tax and UK tax purposes, a holder of ADRs evidencing
centrally managed and controlled in the United Kingdom; or ADSs will be treated as the owner of the
shares in the Company represented by  a citizen of the United States or a US domestic corporation
that carries on a those ADSs. Generally, exchanges of shares for ADRs, and ADRs for shares, will
not trade, profession or vocation in the United Kingdom through a branch or agency be subject to US
federal income tax or to UK tax, other than stamp duty or stamp or, in the case of US domestic
companies, through a permanent establishment duty reserve tax (see the section on these taxes
below). 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 Taxation of dividends of such
branch or agency or permanent establishment. UK Taxation Under current UK tax law, no withholding tax will be deducted from dividends paid Under the Treaty,
capital gains on dispositions of the shares or ADSs are generally by the Company. A shareholder
that is a company resident for UK tax purposes subject to tax only in the country of residence of
the relevant holder as determined in the United Kingdom will not be taxable on a dividend it
receives from the under both the laws of the United Kingdom and the United States and as required
Company. A shareholder in the Company who is an individual resident for UK tax by the terms of the
Treaty. However, individuals who are residents of either the purposes in the United Kingdom is
entitled, in calculating their liability to UK United Kingdom or the United States and who have
been residents of the other income tax, to a tax credit on cash dividends paid on shares in the
Company jurisdiction (the US or the UK, as the case may be) at any time during the six years or
ADSs, and the tax credit is equal to one-ninth of the cash dividend. 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 US Federal Income Taxation not only in the country of which the holder is
resident at the time of the disposition, Subject to the PFIC rules described below, a US holder is
subject to US federal but also in that other country (although, in respect of UK taxation,
generally only income taxation on the gross amount of any dividend paid by the Company out to the
extent that such an individual comprises a Temporary Non-Resident). of its current or accumulated
earnings and profits (as determined for US federal income tax purposes). Dividends paid to a
non-corporate US holder in tax years US federal income taxation beginning before 1 January 2011
that constitute qualified dividend income will Subject to the PFIC rules described below, a US
holder that sells or otherwise disposes be taxable to the holder at a maximum tax rate of 15%,
provided that the ordinary of the Companys shares or ADSs will recognise a capital gain or loss
for US federal shares or ADSs are held for more than 60 days during the 121 day period income tax
purposes equal to the difference between the US dollar value of the beginning 60 days before the
ex-dividend date and the holder meets other amount realised and the holders tax basis, determined
in US dollars, in the shares holding period requirements. Dividends paid by the Company with
respect to the or ADSs. Generally, a capital gain of a non-corporate US holder that is recognised
shares or ADSs will generally be qualified dividend income. in tax years beginning before 1 January
2011 is taxed at a maximum rate of 15%, provided the holder has a holding period of more than one
year. The gain or loss will generally be income or loss from sources within the United States for
foreign tax credit limitation purposes. The deductibility of losses
is subject to limitations. Vodafone Group Plc Annual Report 2008 145




---



##### 



Vodafone  Additional Information Shareholder Information continued Additional tax considerations UK inheritance tax An individual who is domiciled in the United States (for the purposes of the Estate Tax Convention) and is not a UK national will not be subject to UK inheritance tax in respect of the Companys 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 a
pplicable US federal gift or estate tax is paid, unless the shares or ADSs are part of the business property of a UK permanent establishment or pertain to a UK fixed base used for the performance of independent personal services. Where the shares or ADSs have been placed in trust by a settlor, they may be subject to UK inheritance tax unless, when the trust was created, the settlor was domiciled in the United States and was not a UK national. Where the shares or ADSs are subject to both UK inheritance tax a
nd 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 shares in the Company 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 t
he 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. In accordance with the terms of the Deposit Agreement, any tax or duty payable on deposits of shares by the Depositary or the Custodian of the Depositary will be charged to the party to whom ADSs are delivered against such deposits. No stamp duty will be payable on any transfer of ADSs of the Company,
provided that the ADSs and any separate instrument of transfer are executed and retained at all times outside the United Kingdom. A transfer of shares in the Company 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 shares in the Company in registered form at 0.5% of the amount or value of the consideration for the tr
ansfer, 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 the ADSs of the Company will not give rise to SDRT. PFIC Rules The Company does not believe that the shares or ADSs will be treated as stock of a passive foreign investment company, or PFIC, for US federal income tax p
urposes. This conclusion is a factual determination that is made annually and thus is subject to change. If the Company is 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 th
e 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 Vodafone would not be eligible for the preferential tax rate applicable to qualified dividend income for certain non-corporate holders. History and Development The Company was incorporated under English law in 1984 as Racal Strategic Radio Limited (reg
istered number 1833679). After various name changes, 20% of Racal Telecom Plc capital was of




---



##### 



Regulation The Groups 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 (anti-trust) law applicable to all activities. Some regulation implements commitments made by governments under the Basic Telecommunications Accord of the World Trade Organisation
to facilitate market entry and establish regulatory frameworks. The following section describes the regulatory framework and the key regulatory developments at the global and regional level and in selected countries in which the Group has significant interests. 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, the Group is unable to attach a specific level of financial r
isk to the Groups performance from such matters. World Radiocommunication Conference During October and November 2007, the World Radiocommunication Conference of the International Telecommunications Union met in Geneva to consider changes to the Radio Regulations. The next such Conference will be held in 2011. The Conference establishes, by means of international treaty, the basis upon which radio frequency bands may be used in the signatory countries (which include all markets in which Vodafone
has interests). Such agreements are required to prevent interference between users in different countries and to facilitate the development of scalable technologies such as GSM or UMTS. The most important outcome of the 2007 conference for Vodafone was the identification of additional spectrum in the UHF band for mobile services and, in particular, the identification of spectrum in the 790-862 MHz range for mobile services in Europe. European Union The EU Regulatory Framework for the communications sector (
the EU Framework) was adopted in 2002 and has been implemented by all EU Member States although there remain both ongoing and new infringement proceedings against a number of Member States for late or inadequate implementation. The EU Framework consists of four principal Directives outlining matters such as:  the objectives to be pursued by national regulatory authorities (NRAs);  the way in which telecommunications operators are to be licensed;  measures to be taken to protect consumers; and  ensuring universal provision of certain telecommunications services and the terms and basis upon which operators interconnect and provide access to each other. The EU Framework seeks to align the techniques for defining where sector specific regulation may be applied, and the threshold for when such regulation can be applied, with those already employed in EU competition law. It is also intended to ensure consistency of approach amongst NRAs wit
hin the Member States. All NRAs are required to take utmost account of a list of markets which are specified by the European Commission (the Commission) in a Recommendation when deciding which markets to investigate. The second such Recommendation was published by the Commission in November 2007 and for the mobile industry includes only the market at a wholesale level for voice call termination on individual mobile networks. Two markets included the first Recommendation, one for
 the wholesale national market for international roaming and the market for access and call origination on public mobile networks, have been removed. NRAs may still review other markets subject to satisfying certain tests. Under the EU Framework, regulation can only be applied to undertakings with significant market power (SMP), either individually or collectively, in the relevant markets, subject to the Commissions consent. SMP under the EU Framework accords with t
he concept of dominance under existing EU competition law. For in
dividual dominance, this generally implies a market share of at least 40%, although other factors may also be taken into consid




---



##### 



Vodafone  Additional Information Regulation continued Europe Germany Vodafones 900 MHz licence was extended to 2016. In April 2008, the NRA published the rules for auctioning further 2.0 GHz, 2.6 GHz and 1800 MHz spectrum, with auctions expected in 2009. In April 2008, the German Supreme Administration Court rejected lawsuits filed by the four mobile network operators against the NRAs decision to regulate mobile
termination rates on
an ex ante basis. The German Competition Authority has commenced an investigation into the use by Vodafone
 Germany and T-Mobile Germany of on-net pricing. During the year, the NRA reduced Vodafones termination rate by 9.8% to 7.92 eurocents, valid until March 2009. Italy The NRA launched a public consultation for the assignment of 900 MHz, 1800 MHz and 2.1 GHz spectrum and on the implementation of 900 MHz refarming. The Italian Ministry of Communications assigned 5 MHz of 900 MHz spectrum to Wind
 on a temporary basis in 16 main cities. The NRA published proposals to licence DVB-H services. The Italian National Competition Authority (NCA) closed its investigation into alleged anti-competitive practices by mobile network operators, including Vodafone Italy, in relation to network access for MVNOs and other matters. Undertakings in relation to network access were submitted by Vodafone Italy and accepted by the NCA, and the case has been closed without sanction for Vodafone. A new law was e
nacted prohibiting fees or other charges in addition to airtime for prepaid services and introducing measures to enable consumers to terminate contracts without penalty. The Italian NRA published guidelines requiring operators to reimburse or transfer any remaining prepaid airtime of customers switching networks. The Italian NRA and Government commenced discussions with Telecom Italia about proposed voluntary separation of the Telecom Italia fixed network. Vodafone currently purchases certain services from
Telecom Italia in order to provide fixed broadband services in the Italian market and it is possible that both
 existing and future arrangements between Vodafone and Telecom Italia would be affected if such proposals were to be implemented. During the year, the NRA reduced Vodafones termination rate by 11.0% to 9.97 eurocents, with the NRA foreseeing further reductions to 8.85 eurocents in July 2008, 7.70 eurocents in July 2009, 6.60 eurocents in July 2010 and 5.90 eurocents in July 2011. Spain The NRA commenced a review of the wholesale market for SMS termination. The Spanish Competition Authority commenced an investigation against the three largest mobile operators in Spain, including Vodafone, alleging that the firms colluded when setting call set-up charges. A new law was passed requiring telecommunications operators to retain certain data for a 12 month period and requiring operators to register the identity of new prepay customers and to register the identity of existing pr
epay customers within a two year period. The NRA commenced a review to determine the operators obliged to contribute to the national universal service fund and the criteria for distribution of the fund. During the year, the NRA reduced Vodafones termination rate by 15.3% to 9.61 eurocents. In April 2008, the NRA reduced the rate to 8.74 eurocents, with reductions to 7.87 eurocents in October 2008 and 7.00 eurocents in April 2009. United Kingdom An auction of 2.6 GHz spectrum is expected
 to commence in September 2008 and the NRA also proposes to auction 112 MHz of digital dividend spectrum in the 550-860 MHz range during 2009. The NRA published proposals to allow refarming of 900 MHz spectrum, but proposed that Vodafone, and O2, first release 2 x 7.5 MHz each for reallocation to other parties. Following consultation, the NRA has decided to reconsider these proposals. The appeal by certain stakeholders against the NRAs decision on setting call termination rates until 2
011 is being considered by the UK Competition Commission and Competition Appeal Tribunal. Vodafone UK filed an appeal against the proposals of the NRA to reform t




---



##### 



EMAPA Eastern Europe Poland The NRA concluded an analysis of the market for access and call origination on mobile public networks, concluding that no operator had SMP. Romania The Government commenced a process to issue a sixth mobile licence in the 410-415 MHz band. Mobile number portability is expected to be implemented in October 2008. Turkey The Government undertook an auction of 2.1 GHz licences in August 2007. The auction was subsequently revoke
d and no licences were issued. The NRA may recommence the award of 3G licences in late 2008 or 2009. The NRA has applied certain restrictions on the on-net retail pricing practices of Turkcell, which are subject to appeal by Turkcell. Mobile number portability is expected to be implemented in the autumn of 2008. Middle East, Africa and Asia Egypt The NRA extended Vodafone Egypts 2G licence until 2013 and its 3G licence until 2022. The third entrant, ETISALAT, launched GSM services in the Egyptian mark
et in May 2007. ETISALAT was awarded an International Gateway Licence in October 2007. Mobile number portability was introduced in Egypt in April 2008. India The NRA has issued recommendations to the Department of Telecommunications (DoT) on the licence terms and capping the number of licensees. The DoT has permitted CDMA operators to apply for GSM spectrum to enable them to provide GSM services alongside their CDMA operations. It has revised the customer number threshold at which
 licensees become eligible for incremental spectrum allocation, with the threshold being made significantly more stringent. The DoT has also issued new licences for up to seven new licences in each licence area. It has commenced the process of allocating GSM spectrum to these new licensees, with Vodafone Essar being awarded initial GSM spectrum in seven service areas in the 2008 financial year. The DoT issued guidelines to permit active infrastructure sharing between licensees. It has issued guidelines on m
obile number portability, which is to be launched in four Metro cities by the fourth quarter of the 2008 calendar year, before being extended nationwide. The DoT has also issued broad guidelines on 3G mobile services and broadband wireless access. The NRA has recommended the abolition of the Access Deficit Contribution, a 0.75% charge levied on adjusted gross revenue of operators. Kenya The Kenya Communications Amendment Bill 2007 was withdrawn by the Government. The NRA has granted Telkom Kenya a licence f
or the provision of Mobile Cellular Services. It is expected that Telkom Kenya will roll out GSM services during 2008 under the Orange East Africa brand. The third Kenyan mobile licence has been awarded to Econet Wireless, which plans to roll out its GSM services during 2008. South Africa The NRA is proceeding with the implementation of the Electronic Communications Act (ECA) of 2006 and the associated licence conversion process. The NRA plans to issue service licences by July 2008 and comp
lete regulations before the end of 2008. Vodacom has announced its commitment to a transaction in 2008 under the South Africa Governments programme of Broad-Based Black Economic Empowerment (BBBEE). The Information Communications Technologies BBBEE Sector Code (Code) was submitted to the Minister of Trade and Industry in March 2008 for approval. To date, the Minister has not published the Code for the 60 day public comment process required before the Minister may give
 his approval. Vodacom remains subject to the generic Department of Trade and Industry Codes of Good Practice until the Code is approved. As part of the implementation of the ECA, the NRA is consulting on the process of determining wholesale and retail regulations (i.e. interconnection, facilities leasing and essential facilities). The NRA is expected to conclude this by the end of June 2008. Call termination remains under investigation by the NRA. In January 2007, the NRA issued proposals to decl
are Vodacom, MTN an
d Cell C as having SMP mobile call termination on individual networks. Qatar In December 2007, a consortium comprising Vodafone




---



##### 



Vodafone  Additional Information Non-GAAP Information Group adjusted operating profit and adjusted earnings per share Group adjusted operating profit excludes non-operating income of associates, impairment losses and other income and expense. Adjusted earnings per share also excludes changes in fair value of equity put rights and similar arrangements and certain foreign exchange differences, together with related tax effects. The
Group believes that it is
 both useful and necessary to report these measures for the following reasons:  these measures
are used by the Group for internal performance analysis;  these measures are used in setting director and management remuneration;  it is useful in connection with discussion with the investment analyst community and debt rating agencies; and  adjusted operating profit is used as the Groups measure of segment performance. Reconciliation of adjusted operatin
g profit and adjusted earnings per share to the respective closest equivalent GAAP measure, operating
profit/(loss) and basic earnings/(loss) per share, is provided in Operating Results beginning on page 32. Cash flow measures In presenting and discussing the Groups reported results, free cash flow and operating free cash flow are calculated and presented even though these measures are not recognised within IFRS. The Group believes that it is both useful and necessary to communicate free c
ash flow to investors and other interested parties, for the following reasons:  free cash flow
 allows the Company and external parties to evaluate the Groups liquidity and the cash generated by the Groups operations. Free cash flow does not include 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 the Group has an obligation to incur. However, it does reflect the cash available for such discretionary activities, to strengthen the Consolidated Balance Sheet or to provide returns to shareholders in the form of dividends or share purchases;  free cash flow facilitates comparability of results with other companies, although the Groups measure of free cash flow may not be directly comparable to similarly titled measures used by other
companies;  these measures are used by management for planning, reporting and incentive purposes; and  these measures are useful in connection with discussion with the investment analyst community and debt rating agencies. A reconciliation of net cash inflow from operating activities, the closest equivalent GAAP measure, to operating free cash flow and free cash flow, is provided in Financial Position and Resources on page 55. Other Certain of the statements within the section titled
Chief Executives Review on pages 4 to 7 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 Outlook on page 51 contain forward-looking non-GAAP financial information which at this time cannot be quantitatively reconciled to comparable GAAP financial information. Orga
nic growth The Group believes that organic growth, which is not intended to be a substitute, or superior to, reported growth, provides useful and necessary information to investors and other interested parties for the following reasons:  it provides additional information on underlying growth of the business without the effect of factors unrelated to the operating performance of the business;  it is used by the Group for internal performance analysis; and 
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 c
omparable with similarly titled measures reported by other companies. Reconciliation of organic growth




---



##### 



Impact Impact of of foreign acquisitions Organic exchange and disposals Reported growth Percentage Percentage growth % points points % 31 March 2008 Europe Interconnect costs 4.1 3.2 1.2 8.5 Other direct costs 1.3 3.9 2.6 7.8 Acquisition costs 6.0 3.2 1.1 10.3 Retention costs 10.1 3.5 0.2 13.8 Operating expenses 0.1 3.3 1.3 4.7 Depreciation and amortisation 0.2 2.9 0.3 3.4 Italy Total costs (1.0) 4.4 5.2 8.6 Interconnect costs
6.2 4.5 4.7 15.4 Other direct
 costs (15.8) 4.4 9.7 (1.7) Acquisition costs 18.7 6.0 5.8 30.5 Operating expenses (7.4) 4.1 4.8 1.5 Spain Service revenue for the six months ended 31 March 2008 5.8 10.1 3.1 19.0 Interconnect costs (0.1) 4.1 2.5 6.5 Acquisition costs (9.0) 3.7 1.9 (3.4) Retention costs 28.3 6.0 0.4 34.7 Operating expenses 4.0 4.5 2.8 11.3 EMAPA Voice revenue 12.8 2.6 32.0 47.4 Messaging revenue 6.5 6.5 10.5 23.5 Data revenue 87.9 8.9 63.3 160.1 Eastern Europe  interconnect costs 7.5 7.1 6.0 20.6
Eastern Europe  operating expenses 5.7 7.5 12.0 25.2 Eastern Europe  depreciation and amortisation 16.0 8.7 3.7 28.4 Middle East, Africa & Asia  other direct costs 38.0 (9.0) 125.1 154.1 Middle East, Africa & Asia  operating expenses 23.4 (8.6) 97.0 111.8 Middle East, Africa & Asia  depreciation and amortisation 36.3 (5.5) 66.5 97.3 31 March 2007 Group Voice revenue(1) 2.5 (1.8) 3.8 4.5 Messaging revenue 7.0 (1.3) 3.4 9.1 Data revenue 30.7 (0.8) 0.2 30.1 Europe
Voice revenu
e(1) (0.6) (0.4) (1.6) (2.6) Incoming voice revenue (7.4) (0.4) (1.2) (9.0) Roaming revenue 1.2 (0.4) (2.8)
(2.0) Messaging revenue 4.6 (0.5) (1.0) 3.1 Data revenue 29.5 (0.7) (1.7) 27.1 Other direct costs 16.7 (0.5)
(1.3) 14.9 Acquisition and retention costs 0.1 (0.4) (2.2) (2.5) Operating expenses 7.4 (0.4) (2.8) 4.2
Adjusted operating profit(2) (3.7) (0.5) 0.1 (4.1) EMAPA Non-service revenue 28.9 (13.7) 16.3 31.5 Eastern
Europe  interconnect costs 23.8 (3.2) 25.7 46.3 Middle East, Africa & Asi
a  interconnect costs 26.8 (19.0) 37.2 45.0 Notes: (1) Revenue relating to fixed line activities
provided by mobile operators, previously classified within voice revenue, is now presented as fixed line revenue, together with revenue from fixed line operators and fixed broadband. All prior periods have been adjusted accordingly. (2) During the year ended 31 March 2008, the Group changed its organisational structure and the Groups associated undertaking in France, SFR, is now manage
d within the Europe region and reported within Other Europe. The results are presented in accordance with the new organisational structure. Vodafone Group Plc Annual Report 2008 151




---



##### 



Vodafone  Additional Information Form 20-F Cross Reference Guide Certain of the information in this document that is referenced in the following table is included in the Companys Annual Report on Form 20-F for 2008 filed with the SEC (the 2008 Form 20-F). No other information in this document is included in the 2008 Form 20-F or incorporated by reference into any filings by the Company under the US Securities Act of 1933, as amended. Ple
ase see Documents on display on page 144 for information on how to access the 2008 Form 20-F as filed with the SEC. The 2008 Form 20-F has not been approved or disapproved by the SEC nor has the SEC passed judgement upon the adequacy or accuracy of the 2008 Form 20-F. Item Form 20-F caption Location in this document Page 1 Identity of Directors, Senior Management and Advisers Not applicable  2 Offer Statistics and Expected Timetable Not applicable  3 Key Information 3A Sele
cted financial data Financial Highlights 156 Shareholder Information  Inflation and foreign currency translation 141 3B Capitalisation and indebtedness Not applicable  3C Reasons for the offer and use of proceeds Not applicable  3D Risk factors Principal Risk Factors and Uncertainties 52 4 Information on the Company 4A History and development of the company History and Development 146 Contact Details IBC 4B Business overview Group at a Glance 12 Business Overview 14 Brand and Distribution
22 Operating Results 32 Operating Environment and Strategy 10 4C Organisational structure Shareholder Information  Material contracts 144 Note 12 Principal subsidiary undertakings 108 Note 13 Investments in joint ventures 109 Note 14 Investments in associated undertakings 110 Note 15 Other investments 110 4D Property, plant and equipment Technology and Resources 16 Financial Position and Resources 54 Corporate Responsibility 59 4A Unresolved Staff Commen
ts None  5 Operating and Financial Review and Prospects 5A Operating results Operating Results 32 Note 24 Borrowings 116 Shareholder Information  Inflation and foreign currency translation 141 Regulation 147 5B Liquidity and capital resources Financial Position and Resources  Liquidity and capital resources 55 Note 24 Borrowings 116 5C Research and development, patents and licences, etc. Technology and Resources 16 5D Trend information Operating Environment and
 Strategy 10 5E Off-balance sheet arrangements Financial Position and Resources  Off-balance sheet arrangements 58 Note 31 Commitments 127 Note 32 Contingent liabilities 128 5F Tabular disclosure of contractual obligations Financial Position and Resources  Contractual obligations 54 5G Safe harbor Cautionary Statement Regarding Forward-Looking Statements 154 6 Directors, Senior Management and Employees 6A Directors and senior management Board of Directors and Group Manage
ment 62 6B Compensation Directors Remuneration 71 6C Board practices Corporate Governance 65 Directors Remuneration 71 Board of Directors and Group Management 62 6D Employees People 20 Note 35 Employees 130 6E Share ownership Directors Remuneration 71 Note 20 Share-based payments 113 7 Major Shareholders and Related Party Transactions 7A Major shareholders Shareholder Information  Major shareholders 142 7B Related party transactions Directors Remuneratio
n 71 Note 34 Related party transactions 129 Note 32 Contingent liabilities 128 7C Interests of experts and counsel Not applicable  152 Vodafone Group Plc Annual Report 2008




---



##### 



Item Form 20-F caption Location in this document Page 8 Financial Information 8A Consolidated statements and other financial Financials(1) 82 information Audit Report on the Consolidated Financial Statements 132 Note 32 Contingent liabilities 128 Financial Position and Resources 54 8B Significant changes Note 36 Subsequent events 130 Subsequent events A-1 9 The Offer and Listing 9A Offer and listing details Shareholder Informat
ion  Share price history 141 9B Plan of distribution Not applicable  9C Markets Shareholder Information  Markets 142 9D Selling shareholders Not applicable  9E Dilution Not applicable  9F Expenses of the issue Not applicable  10 Additional Information 10A Share capital Not applicable  10B Memorandum and Articles of Association Shareholder Information  Memorandum and Articles of Association and applicable English law 142 10C Material contracts Shareholder Infor
mation  Material contracts 144 10D Exchange controls Shareholder Information  Exchange controls 144 10E Taxation Shareholder Information  Taxation 144 10F Dividends and paying agents Not applicable  10G Statement by experts Not applicable  10H Documents on display Shareholder Information  Documents on display 144 10I Subsidiary information Not applicable  11 Quantitative and Qualitative Disclosures About Market Risk Note 24 Borrowings 116 12 Description
of Securities Other than Equity Securities Not applicable  13 Defaults, Dividend Arrearages and Delinquencies Not applicable  14 Material Modifications to the Rights of Security Holders and Use of Proceeds Shareholder Information  Debt securities 144 15 Controls and Procedures Corporate Governance 65 Directors Statement of Responsibility  Managements report on internal control over financial reporting 83 Audit Report on Internal Controls 84 16 16A Audit committee financia
l expert Corporate Governance  Board committees 67 16B Code of ethics Corporate Governance 65 16C Principal accountant fees and services Note 4 Operating profit/(loss) 98 Corporate Governance  Auditors 69 16D Exemptions from the listing standards for audit committees Corporate Governance  Board committees 67 16E Purchase of equity securities by the issuer Financial Position and Resources 54 and affiliated purchasers Note 21 Transactions with equity shareholders 115
17 Financial Statements Not applicable  18 Financial Statements Financials(1) 82 19 Exhibits Filed with the SEC  Note: (1) The Company Financial Statements, and the Audit Report and Notes relating thereto, on pages 133 to 139 should not be considered to form part of the Companys Annual Report on Form 20-F. Vodafone Group Plc Annual Report 2008 153




---



##### 



Vodafone  Additional Information Cautionary Statement Regarding Foward-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  Vodafones expectations as to launch and roll out dates for products, services or technologies offered by Vodafone;  expectations regarding the operating environment and market conditions;  intentions regarding the development of products, services and initiatives introduced by Vodafone or by Vodafone in conjunction with third parties;  revenue and growth expected from our total communications strategy;  the development and impact of new m
obile technology including the development of 4G technology and the launch of faster data speeds;  anticipated benefits to the Group from cost efficiency programmes,including outsourcing of IT functions and network sharing agreements;  growth in customers and usage;  expected growth prospects in Europe and the EMAPA region;  expectations regarding the performance of investments, associates, joint ventures and newly acquired businesses, including the expect
ed performance of Verizon Wireless;  the Groups expectations for revenue, adjusted operating profit, average foreign exchange rates, depreciation and amortisation charges, capitalised fixed asset additions, capital intensity, free cash flow, cash payments for tax and associated interest, payments of deferred capital expenditures, adjusted effective tax rates and foreign exchange rate changes contained within the Chief Executives Review on pages 4 to 7 and the Outlook statement on page 51
of this document, and expectations for the Groups future performance generally, including average revenue per user, costs, capital expenditures, operating expenditures and margins;  the expected contribution to the Groups revenue of voice services, messaging services, data services, broadband services, fixed location pricing, internet services and mobile advertising;  the rate of dividend growth by the Group or its existing investments;  the expected contri
butions to the Groups revenue from our business segment;  expectations regarding the Groups access to adequate funding for its working capital requirements;  possible future acquisitions, including increases in ownership in existing investments, the timely completion of pending acquisition transactions and pending offers for investments, including licence acquisitions, and the expected funding required to complete such acquisitions or investments;  mobile p
enetration and coverage rates and the Groups ability to acquire spectrum;  the impact of regulatory and legal proceedings involving Vodafone and of scheduled or potential regulatory changes;  expectations with respect to long term shareholder value growth; and  overall market trends and other trend projections. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as anticipates, 
aims, could, may, should, expects, believes, intends, plans 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 b
y these forward-looking statements. These factors include, but are not limited to, the following:  changes in economic or political conditions in markets served by operations of the Group that would adversely affect the level of demand for mobile services;  greater than anticipated competitive activity, from both
existing competitors and new market entrants, including Mobile Virtual Network Operators, which could require changes




---



##### 



Definition of Terms 3G broadband 3G services enabled with High Speed Downlink Packet Access (HSDPA) technology which enables data transmission at speeds of up to 7.2 megabits per second. 3G device A handset or device capable of accessing 3G data services. Acquired intangibles Amortisation relating to intangible assets identified and recognised separately in respect of a business combination in excess of the amortisation intangible assets recognised
by the acquiree prior to acquisition. Acquisition costs The total of connection fees, trade commissions and equipment costs relating to new customer connections. Capitalised fixed asset additions This measure includes the aggregate of capitalised property, plant and equipment additions and capitalised software costs. Change at constant exchange Growth or change calculated by restating the prior periods results as if they had been generated at the current periods exchange rates rates. Also referr
ed to as constant currency. Churn Total gross customer disconnections in the period divided by the average total customers in the period. Controlled and jointly controlled Controlled and jointly controlled measures include 100% for the Groups mobile operating subsidiaries and the Groups proportionate share for joint ventures. Customer delight The Group uses a proprietary customer delight system to track customer satisfaction across its controlled markets and jointly contr
olled market in Italy. Customer delight is measured by an index based on the results of surveys performed by an external research company which cover all aspects of service provided by Vodafone and incorporates the results of the relative satisfaction of the competitors customers. An overall index for the Group is calculated by weighting the results for each of the Groups operations based on service revenue. Data revenue Data revenue includes all non-voice service revenue excluding messaging rev
enue and fixed line revenue. Depreciation and other This measure includes the profit or loss on disposal of property, plant and equipment and computer software. amortisation DSL A Digital Subscriber Line which is a fixed line enabling data to be transmitted at high speeds. Handheld business device A wireless connection device which allows access to business applications and push and pull email. HSDPA High Speed Downlink Packet Access is a wireless technology enabling network to mobile data transmission spee
ds of up to 7.2 megabits per second. HSUPA High Speed Uplink Packet Access is a wireless technology enabling mobile to network data transmission speeds of up to 1.4 megabits per second. 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. Messaging revenue Messaging revenue includes all SMS and MMS revenue including wholesale messaging revenue, revenue from the use of messaging services by Vodafone cu
stomers roaming away from their home network and customers visiting the local network. 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, except telemetric applications. Telemetric applications include, but are not limited to, asset and equipment tracking, mobile payment and billing functionality, e.g. vending ma
chines and meter readings, and include voice enabled customers whose usage is limited to a central service operation, e.g. emergency response applications in vehicles. Mobile pc connectivity A connection device which provides access to 3G services to users with an active PC or laptop connection. This includes Vodafone device Mobile Connect Cards with 3G broadband, Vodafone Mobile Connect 3G/GPRS data cards and Vodafone Mobile Connect USB modems. Net debt Long term borrowings, short term borrowings and mark
to market
 adjustments on financing instruments less cash and cash equivalents. Organic growth The percentage movemen




---



##### 



Vodafone  Additional Information Financial Highlights 2008 2007 2006 2005 At/year ended 31 March £m £m £m £m Consolidated Income Statement data Revenue 35,478 31,104 29,350 26,678 Operating profit/(loss) 10,047 (1,564) (14,084) 7,878 Adjusted operating profit (non-GAAP measure)(1) 10,075 9,531 9,399 8,353 Profit/(loss) before taxation 9,001 (2,383) (14,853) 7,285 Profit/(loss) for the financial year from continuing operations 6,756 (4,
806) (17,233) 5,416 Profit/(loss) for the financial year 6,756 (5,297) (21,821) 6,518 Consolidated Balance Sheet data Total assets 127,270 109,617 126,738 147,197 Total equity 76,471 67,293 85,312 113,648 Total equity shareholders funds 78,043 67,067 85,425 113,800 Earnings Per Share (EPS)(2) Weighted average number of shares (millions)  Basic 53,019 55,144 62,607 66,196  Diluted 53,287 55,144 62,607 66,427 Basic earnings/(loss) per ordinary share  Profit/(loss) from cont
inuing operations 12.56p (8.94)p (27.66)p 8.12p  Profit/(loss) for the financial year 12.56p (9.84)p (35.01)p 9.68p Diluted earnings/(loss) per ordinary share  Profit/(loss) from continuing operations 12.50p (8.94)p (27.66)p 8.09p  Profit/(loss) for the financial year 12.50p (9.84)p (35.01)p 9.65p Cash dividends(2)(3)(4) Amount per ordinary share (pence)(5) 7.51p 6.76p 6.07p 4.07p Amount per ADS (pence)(5) 75.1p 67.6p 60.7p 40.7p Amount per ordinary share (US cents)(2)(5) 14.91c 13.28c 10.
56c 7.68c Amount per ADS (US cents)(2)(5) 149.1c 132.8c 105.6c 76.8c Other data Ratio of earnings to fixed charges(6) 3.9  - 7.0 Deficit  (4,389) (16,520)  Notes: (1) Refer to Non-GAAP Information on page 150 for a reconciliation of this non-GAAP measure to the most comparable GAAP measure and a discussion of this measure. (2) See note 8 to the Consolidated Financial Statements, Earnings/(loss) per share. Earnings and dividends per ADS is calculated by mul
tiplying earnings per ordinary share by ten, the number of ordinary shares per ADS. Dividend per ADS is calculated on the same basis. (3) The final dividend for the year ended 31 March 2008 was proposed by the directors on 27 May 2008. (4) The cash dividend per ordinary share for the year ended 31 March 2004 was 2.0315p (amount per ADS: 20.315p). (5) The final dividend for the year ended 31 March 2008 was proposed on 27 May 2008 and is payable on 1 August 2008 to
 holders of record as of 6 June 2008. This dividend has been translated into US dollars at 31 March 2008 for ADS holders but will be payable in US dollars under the terms of the ADS depositary agreement. (6) For the purposes of calculating these ratios, earnings consist of profit before tax adjusted for fixed charges, dividend income from associated undertakings, share of profits and losses from associated undertakings and profits and losses on ordinary activities before taxation from discont
inued operations. Fixed charges comprise one-third of payments under operating leases, representing the estimated interest element of these payments, interest payable and similar charges and preferred share dividends. 156 Vodafone Group Plc Annual Report 2008




---



##### 



Contact Details Investor Relations Telephone: +44 (0) 1635 664447 Media Relations Telephone: +44 (0) 1635 664444 Corporate Responsibility Fax: +44 (0) 1635 674478 E-mail: responsibility@vodafone.com Website: www.vodafone.com/responsibility We want to keep the environmental impact of the documents in our Annual Report package to a minimum. We have therefore given careful consideration to the production process. This document is prin
ted on Revive 75 Silk, manufactured in the EU at mills with ISO 14001 accreditation and comprising 75% de-inked post consumer waste and 25% virgin fibre. The FSC logo identifies products which contain wood from well-managed forests certified in accordance with the rules of the Forest Stewardship Council. Printed by St Ives in accordance with the ISO 14001 environmental management system using vegetable-based inks. The printer holds FSC Chain of Custody (certificate number SGS-COC-1732). All the steps we hav
e taken demonstrate our commitment to making sustainable choices. Printed in the United Kingdom Designed and produced by Addison Corporate Marketing




---



##### 



Vodafone Group Plc Registered Office Vodafone House The Connection Newbury Berkshire RG14 2FN England Registered in England No. 1833679 Tel: +44 (0) 1635 33251 Fax: +44 (0) 1635 45713 www.vodafone.com




---



##### 



Events occurring subsequent approval of the Companys Annual Report on 27 May 2008
Verizon Wireless acquisition of Alltel Corp.
On 5 June 2008, Verizon Wireless (VZW), the Groups associated undertaking in the US, agreed to
acquire Alltel Corp. (Alltel) for a total enterprise value US$28.1 billion in cash and assumed
debt. Alltel is the fifth largest mobile operator in the US, delivering voice and advanced data
services to more than 13 million customers across 34 states.
The VZW Board agreed that it will review distributions from VZW on an annual basis. When
considering whether distributions will be made each year, the VZW Board will take into account its
debt position, the relationship between debt levels and maturities and overall market conditions in
the context of the five-year business plan. It is expected that VZWs free cash flow will be
deployed in servicing and reducing the VZW debt, including the Alltel acquisition financing, for
approximately three years after the closing of the Alltel transaction. In addition, following the
closing of the Alltel transaction, the VZW Board has agreed to certain additional tax distributions.
VZW has agreed to pay TPG Capital and GS Capital Partners (GSCP) a total cash consideration of
US$5.9 billion for their aggregated 100% stake in Alltel, of which US$1.4 billion will come from
projected cash on Alltels balance sheet at closing. Net debt at closing is projected to be US$22.2
billion. Neither Vodafone nor Verizon is contributing any equity to fund the transaction.
The transaction remains subject to customary regulatory approvals and is targeted to complete by the end of 2008.
Regulatory developments
The follow section updates certain information within Regulation on pages 149 to 151.
EU call termination
On 3 June 2008, the European Regulators Group (ERG) adopted a common view on mobile termination
rates and communicated it to the European Commission. Noting that in the past four years average
mobile termination rates have fallen by almost 40% and that differences in rates across Europe are
also narrowing, ERG members committed to continue along this path.
United Kingdom
An auction of 2.6 Ghz spectrum expected in September 2008 will now be delayed following a legal challenge.
A-1




---



##### 



Cellco Partnership (d/b/a Verizon Wireless) Report of Independent Registered Public Accounting Firm Consolidated Financial Statements For the years ended December 31, 2007, 2006 and 2005 B-1




---



##### 



Table of Contents Cellco Partnership (d/b/a Verizon Wireless) Consolidated Statements of Operations and Comprehensive Income For the years ended December 31, 2007, 2006 and 2005 2 Consolidated Balance Sheets December 31, 2007 and 2006 3 Consolidated Statements of Cash Flows For the years ended December 31, 2007, 2006 and 2005 4 Consolidated Statements of Changes in Partners Capital For the years ended December 31, 2007, 2006 and 2005 5
 Notes to Consolidated Financial Statements 6-23 B-2




---



##### 



CELLCO PARTNERSHIP (d/b/a Verizon Wireless) Consolidated Statements of Operations and Comprehensive Income (in Millions) FOR THE YEARS ENDED DECEMBER 31, 2007 2006 2005 OPERATING REVENUE Service revenue $ 38,016 $ 32,796 $ 28,131 Equipment and other 5,866 5,247 4,170 Total operating revenue 43,882 38,043 32,301 OPERATING COSTS AND EXPENSES Cost of service (excluding depreciation and amortization related to network assets included below) 5,294 4,698 4,154 Cost o
f equipment 8,162 6,793 5,239 Selling, general and administrative 13,477 12,039 10,768 Depreciation and amortization 5,154 4,913 4,760 Total operating costs and expenses 32,087 28,443 24,921 Operating income 11,795 9,600 7,380 OTHER INCOME (EXPENSES) Interest expense, net (249) (451) (597) Minority interests (255) (251) (226) Other, net 28 22 29 Income before provision for income taxes 11,319 8,920 6,586 Provision for income taxes (714) (599) (434) INCOME BEFORE CUMULATIVE EFFECT OF ACCO
UNTING CHANGE 10,605 8,321 6,152 Cumulative effect of accounting change  (124)  NET INCOME 10,605 8,197 6,152 OTHER COMPREHENSIVE INCOME (LOSS) Defined benefit pension and postretirement plans, net 13 (11) (10) COMPREHENSIVE INCOME $ 10,618 $ 8,186 $ 6,142 See Notes to Consolidated Financial Statements. 2 B-3




---



##### 



CELLCO PARTNERSHIP (d/b/a Verizon Wireless) Consolidated Balance Sheets (in Millions) AS OF DECEMBER 31, 2007 2006 ASSETS Current assets Cash $ 408 $ 383 Receivables, net of allowances of $217 and $201 3,732 3,235 Due from affiliates, net 178 73 Unbilled revenue 252 301 Inventories, net 1,098 889 Prepaid expenses and other current assets 306 297 Total current assets 5,974 5,178 Property, plant and equipment, net 25,971 24,659 Wireless licenses, net 51,485 51,11
5 Other intangibles, net 32 44 Deferred charges and other assets, net 531 502 Total assets $ 83,993 $ 81,498 LIABILITIES AND PARTNERS CAPITAL Current liabilities Due to affiliate $ 3,391 $  Accounts payable and accrued liabilities 5,838 4,836 Advance billings 1,227 1,055 Other current liabilities 147 103 Total current liabilities 10,603 5,994 Due to affiliate 2,578 12,933 Deferred tax liabilities, net 5,833 5,739 Other non-current liabilities 944 1,559 Total liabilities 19,958 26,225 Minority in
terests in consolidated entities 1,681 1,659 Partners capital subject to redemption  10,000 Commitments and contingencies (see Notes 13 and 15) Partners capital Capital 62,404 43,677 Accumulated other comprehensive loss (50) (63) Total partners capital 62,354 43,614 Total liabilities and partners capital $ 83,993 $ 81,498 See Notes to Consolidated Financial Statements. 3 B-4




---



##### 



CELLCO PARTNERSHIP (d/b/a Verizon Wireless) Consolidated Statements of Cash Flows (in Millions) FOR THE YEARS ENDED DECEMBER 31, 2007 2006 2005 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 10,605 $ 8,197 $ 6,152 Add: Cumulative effect of accounting change  124  Income before cumulative effect of accounting change 10,605 8,321 6,152 Adjustments to reconcile income to net cash provided by operating activities: Depreciation and amortization 5,154
4,913 4,760 Provision for uncollectible receivables 395 273 250 Provision for deferred income taxes 98 122 74 Equity in income of unconsolidated entities, net of distributions received (14) (19) (27) Minority interests 255 251 226 Net loss (gain) on disposal of assets (1) 15 11 Changes in certain assets and liabilities (net of the effects of purchased businesses): Receivables and unbilled revenue, net (914) (726) (604) Inventories, net (209) 10 (235) Prepaid expenses and other
current assets 14 9 54 Deferred charges and other assets (28) (14) 54 Accounts payable and accrued liabilities (118) 658 527 Other current liabilities 189 133 43 Other operating activities, net 732 598 212 Net cash provided by operating activities 16,158 14,544 11,497 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (6,503) (6,618) (6,484) Acquisitions of businesses and licenses, net of cash acquired (180) (2,866) (4,282) Wireless licenses deposit  - (307) Other investing activ
ities, net (340) (103) (166) Net cash used in investing activities (7,023) (9,587) (11,239) CASH FLOWS FROM FINANCING ACTIVITIES Net (payments to) proceeds from affiliates (6,964) (901) 3,537 Net change in short-term obligations  (2,505) (1,533) Contribution from partner, net  - 512 Distributions to partners (1,918) (1,260) (2,469) Distributions to minority investors, net (228) (236) (148) Net cash used in financing activities (9,110) (4,902) (101) Increase in cash 25 55 157
Cash, beginning of year 383 328 171 Cash, end of year $ 408 $ 383 $ 328 See Notes to Consolidated Financial Statements. 4 B-5




---



##### 



CELLCO PARTNERSHIP (d/b/a Verizon Wireless) Consolidated Statements of Changes in Partners Capital (in Millions) Accumulated Other Total Comprehensive Partners Capital Loss Capital Balance at January 1, 2005 $ 22,450 $ (42) $ 22,408 Net income 6,152  6,152 Contribution from partner, net 512  512 Distributions to partners (2,469)  (2,469) Defined benefit pension and postretirement plans  (10) (10) Balance at December
 31, 2005 26,645 (52) 26,593 Net income 8,197  8,197 Distributions to partners (1,260)  (1,260) Reclassification of portion of Vodafones partners capital 10,000  10,000 Other 95  95 Defined benefit pension and postretirement plans  (11) (11) Balance at December 31, 2006 43,677 (63) 43,614 Cumulative effect of adoption of FIN 48 (19)  (19) Balance at January 1, 2007 43,658 (63) 43,595 Net income 10,605  10,605 Distr
ibutions to partners (1,918)  (1,918) Reclassification of portion of Vodafones partners capital 10,000  10,000 Other 59  59 Defined benefit pension and postretirement plans  13 13 Balance at December 31, 2007 $ 62,404 $ (50) $ 62,354 See Notes to Consolidated Financial Statements. 5 B-6




---



##### 



CELLCO PARTNERSHIP (d/b/a Verizon Wireless) Notes to Consolidated Financial Statements Years Ended December 31, 2007, 2006 and 2005 1. Description of Business and Summary of Significant Accounting Policies Description of Business Cellco Partnership (the Partnership), doing business as Verizon Wireless, provides wireless voice and data services and related equipment to consumers and business customers in the markets in which it operates. The Par
tnership is the largest domestic wireless carrier in terms of total revenue and the most profitable, as measured by operating income. The Partnership offers wireless voice and data services and other value added services and equipment across one of the most extensive wireless networks in the United States. The Partnership continues to expand its wireless data, messaging and multi-media offerings for both consumer and business customers. The Partnership is a general partnership formed by Bell Atlantic Corpor
ation (Bell Atlantic) and NYNEX Corporation that began conducting business operations on July 1, 1995 as Bell Atlantic NYNEX Mobile. In April and June 2000, through the U.S. Wireless Alliance Agreement (the Alliance Agreement) dated September 21, 1999, Bell Atlantic, now known as Verizon Communications Inc. (Verizon), Vodafone Group Plc (Vodafone), and GTE Corporation agreed to combine their respective U.S. wireless assets into the Partnership,
which then began doing business under the Verizon Wireless brand name. Verizons and Vodafones partnership interests are 55% and 45%, respectively. 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 8 and 14). Consolidated Financial Statements and Basis of Presentation The consolidated financial statements of the Partnership incl
ude the accounts of its majority-owned subsidiaries, the partnerships in which the Partnership exercises control, and the variable interest entity in which the Partnership is deemed to be the primary beneficiary as defined by Financial Accounting Standards Board (FASB) Interpretation No. 46(R), Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51. Investments in businesses and partnerships in which the Partnership does not have control, but has the a
bility to exercise significant influence over operating and financial policies, are accounted for under the equity method of accounting. All significant intercompany balances and transactions between these entities have been eliminated. Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the discl
osure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates are used for, but not limited to, the accounting for: allowances for uncollectible accounts receivable, unbilled revenue, fair values of financial instruments, depreciation and amortization, useful lives and impairment of assets, accrued expenses, inventory reserves, equity in income of un
consolidated entities, employee benefits, income taxes, contingencies and allocation of purchase prices in connection with business combinations. Estimates and assumptions are periodically reviewed and the effects of any material revisions are reflected in the consolidated financial statements in the period that they are determined to be necessary. Revenue Recognition The Partnership earns revenue by providing access to the network (access revenue) and for usage of the network (usage revenue), which include
s roaming revenue. In general, access revenue is billed one
 month in advance and is recognized when earned; the unearned portion is classified in advance billings. Ac




---



##### 



The Partnerships revenue recognition policies are in accordance with the Securities and Exchange Commissions (SEC) Staff Accounting Bulletin (SAB) No. 101, ''Revenue Recognition in Financial Statements, SAB No. 104, Revenue Recognition, and EITF Issue No. 00-21. Allowance for Doubtful Accounts The Partnership maintains allowances for uncollectible accounts receivable for estimated losses resul
ting from the inability of customers to make required payments. Estimates are based on the aging of the accounts receivable balances and the historical write-off experience, net of recoveries. Inventory Inventory consists primarily of wireless equipment held for sale. Equipment held for sale is carried at the lower of cost (determined using a first-in, first-out method) or market. The Partnership maintains estimated inventory valuation reserves for obsolete and slow moving device inventory based on analysis
 of inventory agings and changes in technology. 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 of three to five years. Costs incurred in the
 preliminary project stage of development and maintenance are expensed as incurred. Capitalized software of $657 million and $541 million and related accumulated amortization of $367 million and $254 million as of December 31, 2007 and 2006, respectively, have been included in deferred charges and other assets, net in the consolidated balance sheets. Property, Plant and Equipment Property, plant and equipment primarily represents costs incurred to construct and expand capacity and n
etwork coverage on Mobile Telephone Switching Offices and cell sites. The cost of property, plant and equipment is depreciated over its estimated useful life using the straight-line method of accounting. Periodic reviews are performed to identify any category or group of assets within property, plant 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 p
lanned retirements. Changes in these estimates resulted in a net increase in depreciation expense of $295 million and $327 million for the years ended December 31, 2007 and 2006, respectively. Leasehold improvements are amortized over the shorter of their estimated useful lives or the term of the related lease. 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 inc
urred. Upon the sale or retirement of property, plant and equipment, the cost and related accumulated depreciation or amortization is eliminated from the accounts and any related gain or loss is reflected in the statement of operations and comprehensive income in selling, general and administrative expense. 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 property, p
lant and equipment and recorded as construction in progress until the projects are completed and placed into service. Valuation of Assets Long-lived assets, including property, plant 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 resul
t from the use
 and eventual disposition of the asset. The impairment loss, if determined to be necessary, would be measured as the amount by which the carry




---



##### 



transactions. SFAS No. 123(R) also eliminated the alternative to use the intrinsic value method of accounting that was provided in SFAS No. 123, Accounting for Stock-Based Compensation. The Partnership recorded a cumulative effect of adoption of as of January 1, 2006 to recognize the effect of initially measuring the VARs granted under the 2000 Verizon Wireless Long-Term Incentive Plan at fair value utilizing a Black-Scholes model. Th
e Partnership records a charge or benefit in the consolidated statements of operations and comprehensive income in selling, general and administrative expense each reporting period based on the change in the estimated fair value of the awards during the period (see Note 11). Advertising Costs The Partnership expenses advertising costs as incurred. Total advertising expense amounted to $1,507 million, $1,388 million, and $1,210 million for the years ended December 31, 2007, 2006, and 2005
, respectively. 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 recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. Concentrations To the extent the P
artnerships customer receivables become delinquent, collection activities commence. No single customer is large enough to present a significant financial risk to the Partnership. The Partnership maintains an allowance for doubtful accounts based on the expected collectibility of accounts receivable. The Partnership relies on local and long-distance telephone companies, some of whom are related parties (see Note 14), and other companies to provide certain communication services. Although management bel
ieves alternative telecommunications facilities could be found in a timely manner, any disruption of these services could potentially have an adverse impact on operating results. Although the Partnership attempts to maintain multiple vendors for each required product, its network assets, which are important components of its operations, are currently acquired from only a few sources. If the suppliers are unable to meet the Partnerships needs as it builds out its network infrastructure and sells servic
e and equipment, delays and increased costs in the expansion of the Partnerships network infrastructure or losses of potential customers could result, which would adversely affect its operating results. Comprehensive Income Comprehensive income consists of net income and other gains and losses affecting partners capital that, under generally accepted accounting principles, are excluded from net income. Other comprehensive income is comprised of adjustments for defined benefit pension and post re
tirement plans. Recently Issued Accounting Pronouncements In September 2006, the FASB issued SFAS No. 157, Fair Value Measurement. SFAS No. 157 defines fair value, expands disclosures about fair value measurements, establishes a framework for measuring fair value in generally accepted accounting principles and establishes a hierarchy that categorizes and prioritizes the sources to be used to estimate fair value. The Partnership is required to adopt SFAS No. 157 effective Jan
uary 1, 2008 on a prospective basis, except for those items where the Partnership has elected a partial deferral under the provisions of FASB Staff Posi




---



##### 



items for which the fair value option has been elected. The Partnership is required to adopt SFAS No. 159 effective January 1, 2008. The Partnership does not expect this standard to have an impact on the financial statements. In December 2007, the FASB issued SFAS No. 141(R), Business Combinations. This standard replaces SFAS No. 141, Business Combinations. SFAS No. 141(R) requires that all
business combinat
ions be accounted for by applying the acquisition method. Under the acquisition method, the acquirer measures and recognizes the acquiree, as a whole, and the assets acquired and the liabilities assumed at their fair values as of the acquisition date. The Partnership is required to adopt SFAS No. 141(R) effective January 1, 2009 on a prospective basis. The Partnership is currently evaluating the impact this new standard will have on its financial statements. In December 2007,
the FASB issued
SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements. This statement amends Accounting Research Bulleting (ARB) No. 51, Consolidated Financial Statements, by establishing accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The Partnership is required to adopt SFAS No. 160 effective January 1, 2009 on a prospective basis, except for the
presentation and di
sclosure requirements, which must be applied retrospectively. The Partnership is currently evaluating the impact this new standard will have on its financial statements. In June 2006, the EITF reached a consensus on EITF No. 06-3, How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement. EITF No. 06-3 permits that such taxes may be presented on either a gross basis or a net basis as long as that
presentation is used co
nsistently. The adoption of EITF No. 06-3 on January 1, 2007 did not impact our consolidated
financial statements. We present the taxes within the scope of EITF No. 06-3 on a net basis. In
September 2006, the EITF reached a consensus on EITF No. 06-1, Accounting for Consideration Given by a Service Provider to Manufacturers or Resellers of Equipment Necessary for an End-Customer to Receive Service from the Service Provider. EITF No. 06-1 provides guidance regarding
whether the consideration given by a service provider to a manufacturer or reseller of specialized equipment should be characterized as a reduction of revenue or an expense. The Partnership is required to adopt EITF 06-1 effective January 1, 2008 as a change in accounting principle through retrospective application unless it is impracticable to do so. The Partnership does not expect the impact to the financial statements to be material. 2. Wireless Licenses and Other Intangibles, Net The
Partnerships principal intangible assets are licenses, including licenses associated with equity method investments, which provide the Partnership with the exclusive right to utilize certain radio frequency spectrum to provide wireless communication services. While licenses are issued for only a fixed time, generally 10 to 15 years, such licenses are subject to renewal by the Federal Communications Commission (FCC). Renewals of licenses have occurred routinely and at nominal cost. Moreover, the Par
tnership 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 have been treated as an indefinite life intangible asset under the provisions of SFAS No. 142 and have not been amortized but rather were tested for impairment. The Partnership reevaluates the useful life determination for wireless licenses at least annually to determine wheth
er events and circumstances continue to support an indefini
te useful life. The Partnership evaluates its wireless licenses for potential impairment annually, and more frequently if indications of impairment exist. The Partnership tests its licenses on an aggreg




---



##### 



The changes in the carrying amount of wireless licenses are as follows: Wireless Licenses Wireless Licenses, Associated with Equity (Dollars in Millions) Net (a) Method Investments (b) Total Balance, net, as of January 1, 2006 $ 47,781 $ 24 $ 47,805 Wireless licenses acquired 3,203  3,203 Capitalized interest on wireless licenses 240  240 Other (109) (2) (111) Balance, net, as of December 31, 2006 51,115 22
51,137 Wireless l
icenses acquired 170  170 Capitalized interest on wireless licenses 203  203 Other (3)  (3) Balance, net, as of December 31, 2007 $ 51,485 $ 22 $ 51,507 ___(a) Wireless licenses of approximately $3.0 billion and $6.9 billion were not in service at December 31, 2007 and 2006, respectively. (b) Included in Deferred charges and other assets, net. Other intangibles, net consist of the following: December 31, (Dollars in Millions) 2007 2006 Cu
stomer lists (4-7 yrs.) (a) $ 96 $ 108 Other (8-18 yrs.) 23 21 119 129 Less: accumulated amortization (b) 87 85 Other intangibles, net $ 32 $ 44 ___(a) The Partnership retired approximately $16 of fully amortized customer lists during the year ended December 31, 2007. (b) Based solely on amortizable intangible assets existing at December 31, 2007, the estimated amortization expense for the five succeeding fiscal years and thereafter is as follows: For the year ended 12/3
1/2008 $ 11 For the year ended 12/31/2009 $ 6 For the year ended 12/31/2010 $ 6 For the year ended 12/31/2011 $
5 For the year ended 12/31/2012 $ 2 Thereafter $ 2 3. Business Combinations and Other Transactions Acquisitions
in the year ended December 31, 2007 consisted of various individually immaterial partnership interests and
wireless licenses. On November 29, 2006, the Partnership was granted 13 FCC licenses won in the FCCs
Advanced Wireless Services spectrum auction (Auction 66) that concluded on September 18, 2006. The Partnership was the high bidder on these licenses with bids totaling $2.8 billion. The 13 licenses cover the eastern half of the United States and a population of approximately 200 million. The Partnership has made all required payments to the FCC for these licenses. Vista PCS LLC (Vista), a joint venture between the Partnership and Valley Communications, LLC (Valley), was high bidder on 37 of 242 Personal Communications S
ervice (PCS) licenses auctioned by the FCC in February 2005. These licenses were available only to entities qualifying as an entrepreneur under FCC rules. Vista qualified as an entrepreneur under FCC rules. Vista is also a Variable Interest Entity as defined by FIN 46(R). Vistas results are consolidated by the Partnership because the Partnership deems itself to be the primary beneficiary of Vista, in accordance with FIN 46(R). Valley has voting control of Vista
 in that it has two of the three votes on Vistas Management Committee while the Partnership has the remaining vote. Vistas winning bids in the FCC auction totaled $332 million. The 37 licenses cover a population of approximately 34.4 million, including approximately 2.2 million in markets where the Partnership did not hold licenses. The licenses cover major markets such as Charlotte, Cincinnati, Houston, Norfolk, Pittsburgh and Seattle. The FCC granted Vista these licenses in Marc
h 2006. On August 3, 2005, the Partnership completed the purchase of 23 PCS licenses and related network assets from Cricket Communications, Inc., a subsidiary of Leap Wireless International, Inc., and certain of its affiliates, for approximately $103 million in cash, which included purchase price adjustments and deferred consideration of approximately $3 million. The licenses cover the Michigan BTAs of Battle Creek, Flint, Kalamazoo and Jackson, and 16 other markets in Michigan, Wiscons
in, 10 B-11




---



##### 



Alabama, Arkansas, Mississippi and New York. These licenses provide for additional expansion into markets in Michigan, Arkansas, Alabama, Mississippi and Wisconsin, and necessary capacity for existing markets in Michigan, Arkansas, Alabama, Mississippi and upstate New York. On May 13, 2005, the Partnership was granted 26 FCC licenses won in the FCC auction that concluded on February 15, 2005 of 242 PCS licenses (Auction 58). The Partnershi
p was the high bidder on these licenses with bids totaling $365 million. The 26 licenses cover a population of approximately 20 million, including approximately 2.2 million in markets where the Partnership did not previously hold licenses. The licenses cover major markets, such as Charlotte, Cleveland, St. Louis and San Diego. The Partnership has made all required payments to the FCC for these licenses. On May 11, 2005, the Partnership acquired a PCS license in the San Francisco basic tr
ading area (BTA) from Metro PCS, Inc. for $230 million. The license covers a population of approximately 7.3 million and provides spectrum capacity in the San Francisco, Oakland and San Jose markets. On April 13, 2005, the Partnership completed the purchase of all of the stock of NextWave Telecom Inc., whereby it acquired 23 PCS licenses and certain tax net operating losses for approximately $3 billion in cash. The licenses cover a population of approximately 73 million
and provide spectrum capacity in key markets such as New York, Los Angeles, Boston, Washington D.C. and Detroit, and expand the Partnerships licensed footprint into Tulsa, Oklahoma. On March 4, 2005, the Partnership completed the purchase from Qwest Wireless, LLC of all of its PCS licenses and related network assets for $419 million in cash, including post-closing adjustments. The licenses cover a population of approximately 30.9 million in 62 markets, and provide needed spectrum capaci
ty in certain of the Partnerships existing major markets, such as Denver, Portland, Phoenix, Salt Lake City and Seattle. Other acquisitions in the years ended December 31, 2006 and 2005 consisted of various individually immaterial partnership interests and wireless licenses. All of the acquisitions of businesses included above were accounted for under the purchase method of accounting with results of operations included in the consolidated statements of operations from the date of acquisition. Ha
d the acquisitions of businesses been consummated on January 1 of the year preceding the year of acquisition, the results of these acquired operations would not have had a significant impact on the Partnerships consolidated results of operations for any of the periods presented. The following table presents information about the Partnerships acquisitions for the years ended December 31, 2007, 2006 and 2005: Other Net Assets and Purchase Wireless Tangible Liabilities, (Dollars in Millions) A
cquisition Date Price (a) Licenses Assets net 2007 Various Various $ 180 $ 170 $ 2 $ 8 2006 Auction 66 November 2006 $ 2,809 $ 2,809 $  $  Vista PCS March 2006 $ 332 $ 353 $  $ (21) Various Various $ 57 $ 41 $ 7 $ 9 2005 Leap (b) August 2005 $ 103 $ 95 $ 8 $  Auction 58 May 2005 $ 365 $ 365 $  $  Metro PCS May 2005 $ 230 $ 230 $  $  NextWave Telecom Inc (c) April 2005 $ 3,003 $ 4,408 $  $ (1,405) Qwest Ma
rch 2005 $ 419 $ 393 $ 39 $ (13) Various Various $ 200 $ 190 $ 2 $ 8 ___(a) Purchase price includes cash, assumption of debt, other liabilities, as well as the fair value of assets exchanged, as applicable. (b) Includes approximately $3 million of purchase price adjustments and deferred consideration. (c) Included in the transaction is the recording of a deferred tax liability, net. Adjustments of ($2) million & $148 million to deferred taxes were recorde
d in 2007 and 2006, respectively. 11 B-12




---



##### 



4. Variable Interest Entity In November 2004, the Partnership and Valley Communications, LLC (Valley) entered into an LLC Agreement (the Agreement) to form Vista PCS, LLC (Vista) in order to bid on PCS licenses. For the year ended December 31, 2004, Vista had no business activity other than its initial capitalization upon formation. On February 15, 2005, the FCC concluded an auction of 242 PCS licenses. Vista w
as the high bidder on 37 of these licenses. The Partnership has provided capital contributions and debt financing to Vista. Under the Agreement, the Partnership has an 80% non-controlling interest in Vista, while Valley has the remaining 20% interest. Also, under the Agreement, Valley has voting control of Vista in that it has two of the three votes on Vistas Management Committee. The Partnership has the remaining vote. Additionally, pursuant to a Management Agreement, the Partnership provides Vista a
ssistance in building the wireless networks in the areas in which Vista owns the licenses purchased in the FCC auction. The Partnership considers Vista to be a variable interest entity (VIE) because its voting rights are not proportional to its ownership interest and the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support. The Partnership deems itself to be the primary beneficiary of Vista. 5. Verizon
Wireless of the East On August 15, 2002, the Partnership acquired substantially all of the operating assets of Price Communications Wireless, Inc. (Price), a subsidiary of Price Communications Corp., pursuant to an agreement dated as of December 18, 2001, as amended. On December 17, 2001 a new limited partnership, Verizon Wireless of the East LP, was formed for the purpose of acquiring the assets to be contributed by Price and subsidiaries of the Partnership. The Partnership contr
ibuted certain of its assets to the new limited partnership in exchange for a managing general partner interest and a limited partner interest. In exchange for its contributed assets, Price received a preferred limited partnership interest in Verizon Wireless of the East LP that was exchangeable under certain circumstances into equity of Verizon Wireless (if an initial public offering of such equity occurred) or mandatorily into common stock of Verizon on the fourth anniversary of the asset contribution (Au
gust 15, 2006) if a qualifying initial public offering of Verizon Wireless equity had not occurred prior to such anniversary (the mandatory exchange). Pursuant to the limited partnership agreement, the profits of Verizon Wireless of the East LP were allocated on a preferred basis to Prices capital account quarterly. Prices initial capital account balance for its preferred interest was included in minority interests in consolidated entities in the consolidated balance sheets. On
August 15, 2006, Price exchanged its preferred limited partnership interest in Verizon Wireless of the East LP for 29.5 million shares of Verizons common stock. Verizons interest in Verizon Wireless of the East LP of $1,179 million is included in minority interests in consolidated entities on the consolidated balance sheets. Verizon is not allocated any of the profits of Verizon Wireless of the East LP. Verizon Wireless of the East LP is controlled and consolidated by the Partners
hip. 6. Supplementary Financial Information Supplementary Balance Sheet Information December 31, (Dollars in Millions) 2007 2006 Receivables, Net: Accounts receivable $ 3,533 $ 3,124 Other receivables 416 312 3,949 3,436 Less: allowance for doubtful accounts 217 201 Receivables, net $ 3,732 $ 3,235 12 B-13




---



##### 



Balance at Additions Write-offs, Balance at beginning of charged to net of end of the (in millions) the year operations recoveries year Accounts Receivable Allowances: 2007 $ 201 $ 395 $ (379) $ 217 2006 $ 193 $ 273 $ (265) $ 201 2005 $ 223 $ 250 $ (280) $ 193 Inventory Allowances: 2007 $ 55 $ 25 $ 4 $ 84 2006 $ 47 $ (1) $ 9 $ 55 2005 $ 59 $ (13) $ 1 $ 47 December 31, (Dollars in Millions) 2007 2006 Property, Plant and Equipment, Net: Land and improvements
 $ 146 $ 158 Buildings (8-40 yrs.) 7,064 6,229 Wireless plant equipment (3-15 yrs.) 37,706 34,738 Furniture, fixtures and equipment (5 yrs.) 3,502 3,293 Leasehold improvements (5 yrs.) 2,469 1,993 50,887 46,411 Less: accumulated depreciation 24,916 21,752 Property, plant and equipment, net (a)(b) $ 25,971 $ 24,659 ___(a) Construction-in-progress included in certain of the classifications shown in property, plant and equipment, principally wireless plant equipment, amounted to $1,864 and $1,
998 at December 31, 2007 and 2006, respectively. (b) Interest costs of $93 and $78 and network engineering costs of $264 and $240 were capitalized during the years ended December 31, 2007 and 2006, respectively. December 31, (Dollars in Millions) 2007 2006 Accounts Payable and Accrued Liabilities: Accounts payable $ 2,843 $ 2,863 Accrued liabilities 2,995 1,973 Accounts payable and accrued liabilities $ 5,838 $ 4,836 Supplementary Statements of Operations Information For the Years Ended
December 31, (Dollars in Millions) 2007 2006 2005 Depreciation and Amortization: Depreciation of property, plant and equipment $ 5,028 $ 4,668 $ 4,207 Amortization of other intangibles 18 137 464 Amortization of deferred charges and other assets 108 108 89 Total depreciation and amortization $ 5,154 $ 4,913 $ 4,760 Interest Expense, Net: Interest expense $ (547) $ (770) $ (849) Interest income 2 1 4 Capitalized interest 296 318 248 Interest expense, net $ (249) $ (451) $ (597) 13 B-14




---



##### 



Supplementary Cash Flows Information For the Years Ended December 31, (Dollars in Millions) 2007 2006 2005 Net cash paid for income taxes $ 564 $ 439 $ 250 Interest paid, net of amounts capitalized $ 264 $ 445 $ 581 Supplemental investing and financing non-cash transactions: Reclassification of deposits to wireless licenses $ 1 $ 332 $ 31 Debt and net liabilities assumed, less cash $  $  $ 7 Reclassification of portion of Vodafones partne
rs capital (see Note 15) $ 10,000 $ 10,000 $  7. Debt Fixed and Floating Rate Notes In December 2001, the Partnership and Verizon Wireless Capital LLC, a wholly-owned subsidiary of the Partnership, co-issued a private placement of $1.5 billion floating rate notes, originally maturing in December 2003, and $2.5 billion fixed rate notes, maturing in December 2006. The net cash proceeds were used to reduce outstanding amounts under a bank credit facility. Verizon Wireless C
apital LLC, a Delaware limited liability company, was formed for the sole purpose of facilitating the offering of the notes and additional debt securities of the Partnership. Other than acting as co-issuer of the Partnership indebtedness, Verizon Wireless Capital LLC had no material assets, operations or revenues. The Partnership was jointly and severally liable with Verizon Wireless Capital LLC for the notes. On July 10, 2002, the Partnership filed a registration statement on Form S-4 to exchange the
privately placed notes for a new issue of notes with identical terms registered under the Securities Act of 1933. The registration statement was declared effective and the exchange offer commenced on October 11, 2002. The exchange offer expired and closed on November 12, 2002. On November 17, 2003, the Partnership and Verizon Wireless Capital LLC co-issued another private placement of $1.5 billion floating rate notes. The net proceeds from the sale of the notes were used to repay the $1.
5 billion floating rate notes that matured in December 2003 and a $24 million bank credit facility. On May 23, 2005, the Partnership repaid these floating rate notes with proceeds obtained through intercompany borrowings. The $2.5 billion, net of an original $12 million discount, fixed rate notes bore interest at a rate of 5.375% due semi-annually on each June 15 and December 15. On December 15, 2006, the Partnership repaid these fixed rate notes with proceeds ob
tained through intercompany borrowings. 8. Due from/to Affiliates December 31, (Dollars in Millions) 2007 2006 Receivable from affiliates, net $ 178 $ 73 Payables to affiliates: Short term note payable to affiliate 3,391  Long term notes payable to affiliate 2,578 12,933 Total due to affiliates $ 5,791 $ 12,860 Receivable from Affiliates, Net The Partnership has agreements with certain Affiliates for the provision of services in the normal course of business, including but not limited to direct a
nd office telecommunications and general and administrative services. Term Notes Payable to Affiliates In conjunction with its acquisition of the operating assets of Price in August 2002, Verizon Wireless of the East LP obtained a $350 million term note from Verizon Investments Inc., a wholly-owned subsidiary of Verizon. These funds were used to partially fund the redemption of debt assumed from Price. In September 2006, Verizon Wireless of the East LP repaid in full and cancelled this note u
sing the proceeds of a $350 million floating rate note payable by Verizon Wireless of the East LP to the 14 B-15




---



##### 



Partnership, with a maturity date of February 18, 2011. This note bears interest at a rate per annum computed monthly based upon the weighted cost of the Partnerships outstanding borrowings during the month. The Partnership financed this new note using intercompany borrowings from an affiliate of Verizon. On February 18, 2005, the Partnership signed a floating rate promissory note with Verizon Global Funding Corp. (VGF), a wholly-own
ed subsidiary of Verizon, that permits the Partnership to borrow, repay and re-borrow from time-to-time up to a maximum principal amount of $6.5 billion with a maturity date of February 22, 2008. Amounts borrowed under the note bear interest at a rate per annum equal to one-month LIBOR plus 20 basis points for each interest period, with the interest rate being adjusted on the first business day of each month. Borrowings under this note as of December 31, 2007 were approximately $891 mill
ion. This borrowing is classified as due to affiliate (current liabilities) on the accompanying consolidated balance sheet as of December 31, 2007. On December 15, 2006, the Partnership signed a fixed rate promissory note in the amount of $2.5 billion payable to Verizon Financial Services LLC, due on December 15, 2008. Amounts borrowed under this note bear interest at a rate of approximately 5.3% per annum. Proceeds from the note were used to repay $2.5 billion fixed rate notes that
 matured in December 2006. Borrowings under this note at December 31, 2007 were $2.5 billion. This borrowing is classified as due to affiliate (current liabilities) on the accompanying consolidated balance sheet as of December 31, 2007. On September 1, 2005, the Partnership signed a floating rate promissory note in the amount of approximately $2.4 billion payable to VGF, and due on August 1, 2009. Amounts borrowed under this note bear interest at a rate per annum equal to
one-month LIBOR plus 20 basis points for each interest period, with the interest rate being adjusted on the first business day of each month. This note was effective as of July 1, 2005, and replaced a prior $2.4 billion term note due in 2009 to VGF, which was cancelled as a result. Borrowings under this note at December 31, 2007 were approximately $2.4 billion. This borrowing is classified as due to affiliate (non-current liabilities) on the accompanying consolidated balance sheet as of
December 31, 2007. Also on September 1, 2005, the Partnership signed a fixed rate promissory note that permits the Partnership to borrow, repay and re-borrow from time-to-time up to a maximum principal amount of $9.0 billion from VGF, with a maturity date of August 1, 2009. Amounts borrowed under this note bear interest at a rate of 5.8% per annum. This note was effective as of July 1, 2005, and replaced a prior demand note due to VGF, which was cancelled as a result. Borrowings und
er this note at December 31, 2007 were approximately $147 million. This borrowing is classified as due to affiliate (non-current liabilities) on the accompanying consolidated balance sheet as of December 31, 2007. Effective February 1, 2006, VGF was merged with and into Verizon, making Verizon the lender on all of our notes previously payable to VGF. On March 1, 2006, Verizon assigned these notes to a wholly-owned subsidiary, Verizon Financial Services LLC (VFSL). 9. Fin
ancial Instruments Fair Value The carrying amounts and fair values of the Partnerships financial instruments as of December 31 consist of the following: December 31, 2007 2006 Carrying Fair Carrying Fair (Dollars in Millions) Value Value Value Value Term notes due to affiliates $ 5,969 $ 5,990 $ 12,933 $ 13,116 Partners capital subject to redemption $  $  $ 10,000 $ 10,000 The Partnerships trade receivables and payables are short term in nature. Accordingly, these in
struments carrying value approximates fair value. A discounted future cash flows method is used to determine the fair value of the term notes due to affiliates. 15 B-16




---



##### 



10. Employee Benefit Plans Employee Savings and Profit Sharing Retirement Plans The Partnership maintains the Verizon Wireless Savings and Retirement Plan (the VZW Plan) for the benefit of its employees. Employees of the Partnership are eligible to participate as soon as practicable following their commencement of employment. Under the employee savings component of the VZW Plan, employees may contribute, subject to IRS limitations, up to a total of
25% of eligible compensation, on a before-tax or after-tax basis, or as a combination of before-tax and after-tax contributions, under Section 401(k) of the Internal Revenue Code of 1986, as amended. In 2007, employees were able to contribute up to a total of 25% of eligible compensation. Up to the first 6% of an employees eligible compensation contributed to the VZW Plan is matched 100% by the Partnership. The Partnership recognized approximately $174 million, $146 million and $118 mil
lion of expense related to matching contributions for the years ended December 31, 2007, 2006, and 2005, respectively. Under the profit sharing component of the VZW Plan the Partnership may elect, at the sole discretion of the Human Resources Committee of the Board of Representatives (the HRC), to contribute an additional amount to the accounts of employees who have completed at least 12 months of service by December 1 of the year the profit sharing is offered in the form of a profit s
haring contribution. The HRC declared profit sharing contributions of 3% of employees eligible compensation for 2007, 2006 and 2005, respectively. The Partnership recognized approximately $92 million, $81 million and $70 million of expense related to profit sharing contributions for 2007, 2006, and 2005, respectively. 11. Long-Term Incentive Plan Effective January 1, 2006, the Partnership adopted SFAS No. 123(R), which eliminates the alternative to use the intrinsic value meth
od of accounting that was provided in SFAS No. 123. The Partnership recorded a $124 million
cumulative effect of adoption as of January 1, 2006 to recognize the effect of initially measuring the
outstanding liability for Value Appreciation Rights (VARs) granted under the 2000 Verizon Wireless
 Long Term Incentive Plan at fair value utilizing a Black-Scholes model. Verizon Wireless Long Term Incentive
Plan The 2000 Verizon Wireless Long-Term Incentive 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, VARs and Restricted Partnership Units (RPUs) are granted to eligible employees. The aggregate number of VARs and RPUs that may be issued under the Plan is approximately 343 million. VARs reflect the change in the value of the Partnership, as defined in the plan,
 similar to stock options. 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. VARs are fully exercisable three years from the date of grant with a maximum term of 10 years. All VARs are granted at a price equal to the estimated fair value of the Partnership, as defined in the plan, at the date of the grant. On July 24, 2003, the
Verizon Wireless Board of Representatives approved a long-term incentive grant of RPUs to all eligible employees. RPUs were very similar to restricted stock in that at the time of vesting, each RPU was worth the entire value of the unit. The RPUs vested in full on December 31, 2005, and were paid on January 31, 2006. 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 appro
ach uses future net cash flows discounted at market rates of return to arrive at an indication of fair value, as defined in the plan. For the years ended December 31, 2007 and 2006




---



##### 



With the adoption of SFAS No. 123(R), the Partnership began estimating the fair value of VARs granted using a Black-Scholes option valuation model. The following table summarizes the assumptions used in the model during the years ended December 31, 2007 and 2006: The risk-free rate is based on the U.S. Treasury yield curve in effect at the measurement date. The expected term of the VARs was estimated using a combination of the simplified method as pre
scribed in SAB No. 107, Share-Based Payment, historical experience, and management judgment. 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, and calculated on a monthly basis. The Partnership does not pay dividends. For the years ended December 31, 2007, 2006, and 2005, the intrinsic value of VARs exercised during the period was $488 mil
lion, $80 million, and $375 million, respectively. Cash paid to settle VARs for the years ended December 31, 2007, 2006, and 2005 was $452 million, $74 million, and $351 million, respectively. Awards outstanding at December 31, 2007, 2006 and 2005 under the Wireless Plan are summarized as follows: Weighted Average Exercise Price Vested RPUs (a) VARs (a) of VARs (a) VARs(a) Outstanding, January 1, 2005 15,122,393 160,661,318 $ 15.63 66,939,006 Granted (7
2) 9,845 14.85 Exercised  (47,964,458) 12.27 Cancelled (669,557) (3,783,534) 15.17 Outstanding,
December 31, 2005 14,452,764 (b) 108,923,171 17.12 63,596,655 Granted 173,197  - Exercised
(14,607,439) (7,448,447) 13.00 Cancelled/Forfeited (18,522) (7,007,944) 23.25 Outstanding, December 31,
 2006  94,466,780 16.99 52,041,606 Granted  134,375 13.89 Exercised  (30,848,164) 15.07
Cancelled/Forfeited  (3,341,283) 24.12 Outstanding, December 31, 2007  60,411,708 $ 17.58 60,411,708 ___(a) The weighted average exercise price is presented in actual dollars; VARs and RPUs are presented in actual units. (b) RPUs, totaling approximately $303 million vested in full on December 31, 2005 and were paid and cancelled on January 31, 2006. The following table summarizes the status of the Partnerships VARs as of December 31, 2007: ___(a) As of December 31, 2007 the aggregate intrinsic value of V
ARs outstanding and VARs vested was $963 million. (b) For the years ended December 31, 2007, 2006 and 2005, the fair value of VARs vested during the period was $716 million, zero, and $588 million, respectively. 17 B-18




---



##### 



Verizon Communications Long Term Incentive Plan The Verizon Communications Long Term Incentive Plan (the Verizon Plan), permits the grant of nonqualified stock options, incentive stock options, restricted stock, restricted stock units, performance shares, performance share units and other awards. The maximum number of shares for awards is 207 million. Restricted Stock Units The Verizon Plan provides for grants of restricted stock units (R
SUs) that vest at the end of the third year after the grant. The RSUs are classified as liability awards because the RSUs are paid in cash upon vesting. The RSU award liability is measured at its fair value at the end of each reporting period and, therefore, will fluctuate based on the performance of Verizons stock. The Partnership had approximately 3.6 million RSUs outstanding under the Verizon Plan as of December 31, 2007. Performance Share Units The Verizon Plan also provides for gr
ants of performance share units (PSUs) that vest at the end of the third year after the grant. 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 performance of Verizons stock as well as a performance measure. The Partnership had approximately 5.4 million PSUs outstanding under the Verizon Plan as of Decemb
er 31, 2007. Stock-Based Compensation Expense As of December 31, 2007, unrecognized compensation expense related to the unvested portion of the Partnerships RSUs and PSUs was approximately $99 million and is expected to be recognized over the next two years. For the years ended December 31, 2007, 2006 and 2005, the Partnership recognized compensation expense for stock based compensation related to RSUs and PSUs of $144 million, $72 million and $27 million, respective
ly. 12. Income Taxes Provision for Income Taxes The provision for income taxes consists of the following: For the Years Ended December 31, (Dollars in Millions) 2007 2006 2005 Current tax provision: Federal $ 437 $ 355 $ 275 State and local 179 122 85 616 477 360 Deferred tax provision: Federal 93 94 82 State and local 5 28 (8) 98 122 74 Provision for income taxes $ 714 $ 599 $ 434 18 B-19




---



##### 



A reconciliation of the income tax provision computed at the statutory tax rate to the Partnerships effective tax rate is as follows: For the Years Ended December 31, (Dollars in Millions) 2007 2006 2005 Income tax provision at the statutory rate $ 3,962 $ 3,123 $ 2,305 State income taxes, net of U.S. federal benefit 130 107 46 Interest and penalties 4  - Partnership income not subject to federal or state income taxes (3,382) (2,631) (1,917) Pr
ovision for income tax $ 714 $ 599 $ 434 Deferred taxes arise because of differences in the book and tax bases of certain assets and liabilities. The significant components of the Partnerships deferred tax assets and (liabilities) are as follows: December 31, (Dollars in Millions) 2007 2006 Deferred tax assets: Bad debt $ 10 $ 7 Accrued expenses 14 8 Net operating loss carryforward 163 272 Other state tax deduction 108  Total deferred tax assets $ 295 $ 287 Deferred tax liabilities: Pr
operty, plant and equipment $ (428) $ (468) Intangible assets (5,562) (5,429) Total deferred tax liabilities $ (5,990) $ (5,897) Net deferred tax asset-current (a) $ 138 $ 129 Net deferred tax liability-non-current $ (5,833) $ (5,739) ___(a) Included in prepaid expenses and other current assets in the accompanying consolidated balance sheets. Net operating loss carryforwards of $586 million expire at various dates principally from December 31, 2017 through December 31, 2
025. Uncertainty in Income Taxes Effective January 1, 2007, the Partnership adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), which requires the use of a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return and disclosures regarding uncertainties in income tax positions. As a result of the implementation of FIN 48, the Partnership recorded a $19 million reduct
ion to partners capital with an offsetting increase in the liability for unrecognized tax benefits as of January 1, 2007. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: (Dollars in Millions) Balance as of January 1, 2007 $ 70 Additions based on tax positions related to the current year 12 Additions for tax positions of prior years 1 Reductions due to lapse of applicable statute of limitations (16) Balance as of December 31, 2007 $ 67
 Included in the total unrecognized tax benefits at December 31, 2007, is $30 million of unrecognized tax benefits 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 Partnership recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. We had approximately $17 million for the payment of interest and penalties accrued a
s of December 31, 2007, relating to the $67 million of unrecognized tax benefits reflected above. 19 B-20




---



##### 



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 or state income examinations by tax authorities for years before 2000. The Internal Revenue Service (IRS) is currently examining the Partnerships U.S. income tax returns for years 2000 through 2003. One local municipality is currently examining the tax r
eturns for years 1998 through 2002. It is reasonably possible that the unrecognized tax benefits may be adjusted within the next twelve months as a result of the settlement of that local municipalitys exam. An estimate of the amount of the change attributable to such settlement cannot be made at this time. Management believes any settlement will not have a material impact on results from operations. 13. Leases Operating Leases The Partnership has entered into operating leases for facilities and equipm
ent used in its operations. Lease contracts include 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. The noncancellable lease term used to calculate the amount of the straight-line rent expense is generally determined to be the initial lease term, and considers any optional renewal terms that are reasonably assured. Leasehold improvements related to these operating l
eases are amortized over the shorter of their estimated useful lives or the noncancellable lease term. For the years ended December 31, 2007, 2006, and 2005, the Partnership recognized rent expense related to payments under these operating leases of $737 million, $706 million, and $603 million, respectively, in cost of service and $339 million, $313 million, and $287 million, respectively, in selling, general and administrative expense in the accompanying consolidated stat
ements of operations and comprehensive income. The aggregate future minimum rental commitments under noncancellable operating leases, excluding renewal options that are not reasonably assured for the periods are as follows: Operating (Dollars in Millions) Leases Years 2008 $ 918 2009 789 2010 630 2011 458 2012 291 2013 and thereafter 931 Total minimum payments $ 4,017 14. Other Transactions with Affiliates In addition to transactions with Affiliates in Notes 5 and 8, other significant transactions with Affi
liates are summarized as follows: For the Years Ended December 31, (Dollars in Millions) 2007 2006 2005
Revenue related to transactions with affiliated companies $ 105 $ 113 $ 97 Cost of service (a) $ 1,148 $ 945 $
 742 Certain general and administrative expenses (b) $ 154 $ 105 $ 73 Interest expense, net (c) $ 532 $ 629 $
677 ___(a) Affiliate cost of service primarily represents cost of long distance, direct
telecommunication and roaming charges from transactions with affiliates. (b) Affiliate general and administrative expenses includes direct billings from affiliates, as well as services billed from the Verizon Service Organization (VSO) for functions performed under service level agreements. (c) Interest costs of $296, $318 and $248 were capitalized in wireless licenses, net and property, plant and equipment, net in the years ended December 31, 2007, 2006 and 2005, respectively. Under the terms of the partnership agreement between Verizon and Vodafone, the P
artnership is required to make annual distributions to its partners to pay taxes. Additionally, through April 2005, the Partnership was required, subject to compliance with specified financial tests, to pay distributions to the partners based upon a calculation specified in the partnership agreement. 20 B-21




---



##### 



The Partnership made distributions to its partners for the following periods: (Dollars in Millions) Period Paid Distribution Measurement Period Distribution Amount (a) November 2007 July through September 30, 2007 $ 438 (b) August 2007 April through June 30, 2007 $ 499 (b) May 2007 January through March 31, 2007 $ 511 (b) February 2007 October through December 31, 2006 $ 470 (b) November 2006
 July through September 30, 2006 $ 467 (c) August 2006 April through June 30, 2006 $ 193 May 2006 January through March 31, 2006 $ 308 (c) February 2006 October through December 31, 2005 $ 292 November 2005 July through September, 30, 2005 $ 153 August 2005 April through June 30, 2005 $ 190 May 2005 January through March 31, 2005 $ 129 February 2005 July through December 31, 2004 $ 1,997 ___(a) The Partnership m
ade a distribution of $571 million in February 2008 for the distribution measurement period October through December 31, 2007. This amount includes state tax payments of approximately $22 million, paid on behalf of our partners and subsequently reimbursed. (b) Includes state tax payments of approximately $17 million, $51 million, $10 million, and $6 million paid in the 1st, 2nd, 3rd, and 4th quarters of 2007, respectively. These amounts were paid on behalf of our
 partners and subsequently reimbursed. (c) Includes state tax payments of approximately $2 million and $4 million paid in the 2nd and 4th quarters of 2006, respectively. These amounts were paid on behalf of our partners and subsequently reimbursed. On October 14, 2003, the Partnership received, on behalf of our partners, a final purchase payment in respect of the disposition of the Chicago market that had previously been beneficially owned jointly by Verizon and Vodafone. The receipt of
this payment triggered an obligation of Verizon and Vodafone pursuant to Section 7.6 of the Alliance Agreement to calculate certain payments received and expenses paid by Verizon, Vodafone and each of their respective affiliates in connection with overlap market dispositions, together with certain adjustments. Also pursuant to this provision, upon completion of this calculation, either Verizon or Vodafone was required to make a payment to the Partnership under certain circumstances. On September 1
, 2005, Verizon and Vodafone finalized this calculation. As a result, the Partnership received a capital contribution, net, from Verizon through the payment of approximately $512 million, which was used to reduce the debt owed to Verizon. This payment did not alter the percentage interests of either of the partners in the Partnership. The Partnership had agreements with an entity owned by Verizon and Vodafone that operated overlapping properties in Chicago, Houston and Richmond that the Partnership was
 required to dispose of pursuant to FCC regulations and which has since been sold. Pursuant to the agreements, the Partnership provided transition services and products and employee services and licensed trademarks and copyrighted materials. On September 2, 2005, the Partnership received a total payment of $172 million from Verizon and Vodafone representing payment in full of the outstanding accounts receivables relating to these transition services. 15. Commitments and Contingencies Under the ter
ms of an agreement entered into among the Partnership, Verizon, and Vodafone on April 3, 2000, Vodafone obtained the right to require the Partnership to purchase up to an aggregate of $20 billion of Vodafones interest in the Partnership, at its then fair market value. Up to $10 billion was redeemable during the 61-day periods that opened on June 10 and closed on August 9 in 2004 and 2005. Vodafone did not exercise its redemption rights during those periods. As
a result, $20 billion, not to exceed $10 billion in any one year, remained redeemable during the 61-day periods opening on June 10 and closing on August 9 in 2006 and 2007. Vodafone did not exercise its redemption rights during those periods. Accordingly, $10 billion of partners capital classified as redeemable in the December 31, 2006




---



##### 



protection laws and other statutes and defrauded customers through misleading billing practices or
statements. These matters may involve indemnification obligations by third parties and/or
affiliated parties covering all or part of any potential damage awards against the Partnership
and/or insurance coverage.
All of the above matters are subject to many uncertainties, and outcomes are not predictable with
assurance. Consequently, the ultimate liability with respect to these matters as of December 31,
2007 cannot be ascertained. The potential effect, if any, on the consolidated financial statements
of the Partnership, in the period in which these matters are resolved, may be material.
In addition to the aforementioned matters, the Partnership is subject to various other legal
actions and claims in the normal course of business. While the Partnerships legal counsel cannot
give assurance as to the outcome of each of these other matters, in managements opinion, based on
the advice of such legal counsel, the ultimate liability with respect to any of these actions, or
all of them combined, will not materially affect the consolidated financial statements of the
Partnership.
In late July 2007, the Partnership announced that it has entered into an agreement to acquire Rural
Cellular Corporation (Rural Cellular), for $45 per share in cash ($757 million). As a result of
the acquisition, the Partnership will assume Rural Cellulars outstanding debt. The total
transaction value is approximately $2.67 billion. Rural Cellular has more than 700,000 customers in
markets adjacent to the Partnerships existing service areas. Rural Cellulars networks are
located in the states of Maine, Vermont, New Hampshire, New York, Massachusetts, Alabama,
Mississippi, Minnesota, North Dakota, South Dakota, Wisconsin, Kansas, Idaho, Washington, and
Oregon. Rural Cellulars shareholders approved the transaction on October 4, 2007. The acquisition,
which is subject to regulatory approvals, is expected to close in the third quarter of 2008.
On December 3, 2007, the Partnership signed a definitive exchange agreement with AT&T, in
connection with the Partnerships purchase of Rural Cellular. Under the terms of the agreement, the
Partnership will receive cellular operating markets in Madison and Mason, KY, and 10MHz PCS
licenses in Las Vegas, NV; Buffalo, NY; Sunbury-Shamokin and Erie, PA; and Youngstown, OH. The
Partnership will also receive minority interests held by AT&T in three entities in which the
Partnership also holds an interest plus a cash payment. In exchange, the Partnership will give to
AT&T six cellular operating markets in Burlington, Franklin and the northern portion of Addison,
VT; Franklin, NY; and Okanogan and Ferry, WA; and a cellular license for the Kentucky 6 market.
The operating markets the Partnership is exchanging are among those it is slated to acquire from
Rural Cellular. The exchange with AT&T, which is subject to regulatory approvals, is expected to
close in the second half of 2008.
16. Subsequent Events
On January 24, 2008, the FCC began conducting an auction of spectrum in the 700 MHz band (Auction
73). This spectrum is currently used for UHF television operations but by law those operations
must cease no later than February 17, 2009. The Partnership filed an application on December 3,
2007, to qualify as a bidder in this auction, and on January 14, 2008, the FCC announced that the
Partnership and 213 other applicants had qualified as eligible to bid in the auction. On January 4,
2008, the Partnership paid to the FCC an $885 million deposit in order to obtain 590 million
bidding eligibility units for participation in this auction. On March 20, 2008, the FCC announced
the results of its Auction 73 for wireless spectrum licenses. The Partnership was the successful
bidder for twenty-five 12 MHz licenses in the A-Block
frequency, seventy-seven 12 MHz licenses in
the B-Block frequency and seven 22 MHz licenses (nationwide with the exception of Alaska) in the
C-Block frequency, with an aggregate bid price of $9.4 billion. On April 3, 2008, the Partnership
paid to the FCC an additional $988 million down payment relating to the wireless spectrum licenses
on which the Partnership was the high bidder. Subsequently, on April 17, 2008 the Partnership paid
the balance of approximately $7.5 billion to the FCC. The Partnership expects the licenses to be
granted by the FCC late in the second quarter of 2008.
On February 22, 2008, the Partnership repaid the floating rate promissory note payable to VFSL on
the maturity date with proceeds obtained through intercompany borrowings.
On March 31, 2008, the Partnership signed a floating rate promissory note that permits the
Partnership to borrow up to a maximum principal amount of approximately $9.4 billion from VFSL,
with a maturity date of March 31, 2010. Amounts outstanding under this note bear interest at a
rate of 3.10% until May 1, 2008, and thereafter, at a rate per annum equal to one-month LIBOR plus
28 basis points for each interest period, with the interest rate being adjusted on the first
business day of each month. Proceeds from the note can only be used to fund the acquisition of
wireless spectrum licenses in the recently completed 700 MHz wireless spectrum auction conducted by
the FCC. On April 1, 2008, the Partnership borrowed $885 million under this note. These proceeds
were used to refinance the deposit amount previously paid to the FCC to participate in Auction 73. On April 3, 2008, the Partnership borrowed an additional $988 million to
finance the down payment due to the FCC on the same day. On April 17, 2008, the Partnership
borrowed approximately $7.5 billion to finance the balance due to the FCC for the wireless spectrum
licenses won in Auction 73. B-23




---



##### 



On May 9, 2008, the Partnership completed the purchase of spectrum licenses and operating assets of
SureWest Wireless from SureWest Communications for $69 million. The licenses cover a population of
approximately 3.8 million in the greater Sacramento area, and will expand the Partnerships
spectrum capacity in that area.
On June 5, 2008, the Partnership signed a definitive agreement to acquire Alltel Corporation
(Alltel) in a cash merger. Under the terms of the agreement, the Partnership will acquire the
equity of Alltel for approximately $5.9 billion. In connection with entering into the merger
agreement, the Partnership will also acquire approximately $5.0 billion in Alltel debt from various
Alltel lenders. Based on Alltels projected net debt at closing of $22.2 billion, the aggregate
value of the transaction is estimated to be $28.1 billion. Alltel has approximately 13 million
customers in 34 states. The merger is targeted to close by end of 2008, subject to obtaining
regulatory approvals. The Partnership expects to fund its obligations at closing through additional
borrowings. On June 5, 2008, the Partnership entered into a senior unsecured 364-day credit
facility of approximately $7.6 billion. B-24




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Representatives and Partners of
Cellco Partnership d/b/a Verizon Wireless:
We have audited the accompanying consolidated balance sheets of Cellco Partnership d/b/a Verizon
Wireless (the Partnership) as of December 31, 2007 and 2006, and the related consolidated
statements of operations and comprehensive income, changes in partners capital, and cash flows
for each of the three years in the period ended December 31, 2007. 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. 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 Partnership as of December 31, 2007 and 2006, and the results of
its operations and its cash flows for each of the three years in the period ended December 31,
2007, in conformity with accounting principles generally accepted in the United States of
America.
As discussed in Notes 1 and 11 to the consolidated financial statements, the Partnership adopted
the provisions of Statement of Financial Accounting Standards No. 123(R), Share-Based Payment,
on January 1, 2006.
As discussed in Note 12 to the consolidated financial statements, the Partnership adopted the
provisions of Financial Accounting Standards Board Interpretation No. 48, Accounting for
Uncertainty in Income Taxes, on January 1, 2007.
Deloitte & Touche LLP
New York, New York
February 22, 2008 (June 6, 2008 as to Note 16 and the 6th and 7th paragraphs
of Note 15) B-25




---



##### 



Return of Capital and Share Consolidation Background
The Company implemented a transaction to return capital to shareholders (the Return of Capital) during the year ended 31 March 2007 by way of an issue (the Bonus Issue) of redeemable, non-cumulative preference shares (the B Shares) to shareholders in proportion to their holding of ordinary shares or ADRs immediately prior to the Bonus Issue (the Pre-existing Shares and the Pre-existing ADRs respectively). Under the Return of Capital, holders o
f the Pre-existing Shares could elect to have one of the following alternatives apply (with certain classes of persons located in the US along with holders of Pre-existing ADRs only permitted to participate in the second alternative below):
(i) the shareholder could elect to redeem the B Shares at their nominal value on 4 August 2006 (the Initial Redemption);
(ii) the shareholder could elect to receive a single dividend of an amount equal to the nominal value of the B Shares on a specified date in
August 2006 (the Initial B Share Dividend) following which the shares automatically converted into unlisted deferred shares (the Deferred Shares); or (iii) the shareholder could elect to redeem the B Shares at their nominal value at a later date being 5 February or 5 August in the calendar year 2007 or 2008 (the Future Redemption) with the shareholder receiving a continuing, non-cumulative preferential dividend on the B Shares in the meantime.
At the same time, the Pre-existing Shares and the Pre-existing ADRs were sub-divided and consolidated (the Share Capital
Consolidation). The Share Capital Consolidation and the Bonus Issue are together referred to as the Capital Reorganisation. The shares and ADRs following sub-division and consolidation are referred to below as New Shares or New ADRs in order to distinguish them from the Pre-existing Shares and Pre-existing ADRs.
UK Taxation
The comments below are intended only as a general guide to the current tax position under the laws of the United Kingdom and practice of Her Majestys Revenue and Customs primarily in respect of US holders who are (except where specifically addressed) solely resident in the United Kingdom for tax purposes and who hold their shares beneficially as investments and not on trading account. This is a complex area and shareholders should consult their tax advisers in order to be certain of their individual p
osition.
1. Capital Reorganisation
For the purposes of United Kingdom taxation of capital gains and corporation tax on chargeable gains (CGT):
1.1 the receipt of the B Shares and the New Shares arising from the Capital Reorganisation was a reorganisation of the share capital of the Company. Accordingly, a shareholder will not be treated as having made a disposal of all or part of their holding of Pre-existing Shares by reason of the Capital Reorganisation; 1.2 the B Shares and New Shares acquired as a result of the Capital Reorganisation are to be treated as the same asset as the shareholders holding of Pre-existing Shares, and as having bee
n acquired at the same time as the shareholders holding of Pre-existing Shares were acquired; and 1.3 any proceeds of sale of fractional entitlements returned to shareholders are not to be treated as proceeds of disposal but the amount will be deducted from the base cost on acquisition of the Pre-existing Shares.
2. Initial B Share Dividend 2.1 Income Tax
The Company did not (and was not required to) withhold tax at source when paying the Initial B Share Dividend.
A United Kingdom resident individual shareholder liable to income tax at the starting or basic rate pays no tax on the Initial B Share Dividend unless it has taken that shareholders income into a higher rate tax band.
A United Kingdom resident individual shareholder liable to income tax at the higher rate, is liable to pay tax equal to 25% of the cash divi
dend received to the extent that the gross dividend when treated as the top slice of that shareholders income falls above the threshold for higher rate income tax.
United Kingdom resident taxpayers not liable to United Kingdom tax on dividends, are not generally liable to pay tax on the Initial B Share Dividend.
United Kingdom resident corporate shareholders are generally not subject to corporation tax on the Initial B Share Dividend.
2.2 Taxation of chargeable gains
For CGT purposes, the Initial B Share Dividend (and the consequent conversion of the B Shares into Deferred Shares) should not be treated as having given rise to a disposal or part disposal of the B Shares.




---



##### 



Shareholders who have received the Initial B Share Dividend should note that, consequent to the
Capital Reorganisation, a proportion of the base cost, for CGT purposes, of their original holdings
of Pre-existing Shares is to be attributed to the B Shares and this amount is to continue to be
attributed to those B Shares following their conversion into Deferred Shares (notwithstanding that
the Deferred Shares have limited rights or value). Correspondingly, only a proportion of the base
cost of the holding of Pre-existing Shares is available on any disposal of New Shares.
A transfer of the Deferred Shares is to be treated as a disposal and might result in a shareholder
realising a capital loss. However, shareholders liable to corporation tax should note that it is
possible that Section 30 of the Taxation of Chargeable Gains Act 1992 could apply to such a
shareholder who elected for the Initial B Share Dividend. If it were so applied, the effect is
broadly to deny any loss attributable to the payment of that Initial B Share Dividend from being
allowed on disposal of the Deferred Shares.
3. Redemption of B Shares
3.1 On redemption (whether an Initial Redemption or a Future Redemption) of all or any of the B
Shares, a shareholder might, depending on their particular circumstances, be subject to CGT on the
amount of any chargeable gain realised. Any gain is measured by reference to the excess of the
redemption price over the shareholders allowable expenditure for the B Shares redeemed. The
shareholders allowable expenditure in relation to his Pre-existing Shares is to be apportioned
between the New Shares and the B Shares by reference to their respective market values on the first
day on which market values or prices were quoted or published for the New Shares.
3.2 No part of the proceeds received by a shareholder on redemption is an income distribution in
the shareholders hands.
3.3 On any disposal, otherwise than by way of redemption, of the whole or part of a shareholders
holding of New Shares or B Shares, a shareholder may, depending on his circumstances, be subject to
CGT on the amount of any chargeable gain realised. Please refer to paragraph 3.1 above for details
of the manner in which the shareholders allowable expenditure is allocated as between the New
Shares and the B Shares.
4. Dividends on New Shares and B Shares other than the Initial B Share Dividend
Dividends payable on the New Shares and the B Shares are subject to United Kingdom tax under the
rules applicable to dividends. Under current United Kingdom taxation legislation, no tax is
withheld at source from dividends paid on the New Shares or on the B Shares. The current rules and
rates of tax correspond to those outlined in paragraph 2.1 above.
5. Stamp Duty and Stamp Duty Reserve Tax
5.1 Except in relation to depositary receipt arrangements or clearance services where special rules
apply:
· no stamp duty or stamp duty reserve tax (SDRT) is payable on the issue of the B
Shares and New Shares; and
· an agreement to sell B Shares or New Shares normally gives rise to liability on the
purchaser to SDRT, at the rate of 0.5% of the actual
consideration paid. If an instrument of transfer of the B Shares is subsequently produced it would
generally be subject to stamp duty at the rate of 50 pence for every £100 (or part thereof) of the
actual consideration paid. When such stamp duty is paid, the SDRT charge is cancelled and any SDRT
already paid is refunded. Stamp duty and SDRT is generally the liability of the purchaser.
5.2 Where shareholders elect to redeem B Shares, the redemption of those B Shares by the Company
does not give rise to a liability to stamp duty or SDRT.
5.3 In relation to the special rules applicable to depositary receipt arrangements, no stamp duty
or SDRT should be payable in respect of the issue of the B Shares or Deferred Shares to the
Depositary for the Holders of Pre-existing ADRs. Nor will any such charge arise in con
nection with
the issue of New ADRs.
6. Section 703 Income and Corporation Taxes Act 1988 (ICTA) and Section 684 Income Tax Act 2007
(ITA)
The Company has been advised that the provisions of section 703 of ICTA (and, as rewritten for
income tax purposes, section 684 of ITA) (anti-avoidance provisions relating to transactions in
shares) should not apply in relation to shareholders who received B Shares in the Capital
Reorganisation. The Company did not apply for clearance under section 707 of ICTA (or section 701
of ITA) in this regard.
US Taxation
The discussion below summarises certain US federal income tax consequences for US holders subject
to alternative (ii) described above, the Initial B Share Dividend, and does not describe potential
consequences to investors that receive one of the other alternatives described above. This section
only addresses US Holders that hold their Pre-existing Shares as capital assets and does not
address tax consequences applicable to Shareholders subject to special treatment under the US
federal income tax laws (for example, dealers or traders in securities or currencies, banks,
insurance companies, tax-exempt organisations, partnerships or other pass-through entities, persons
who own 10% or more of the voting stock of the Compay, persons holding Pre-existing Shares as part
of a straddle, hedging, integrated or similar transaction, and persons whose functional currency is
not the US dollar). This summary is based upon the provisions of the Internal Revenue Code of 1986,
as amended (the Code), and regulations, rulings and judicial decisions as of the date hereof.
Those authorities may be changed, perhaps retroactively, so as to result in US federal income tax
consequences different from those discussed below.
If a partnership holds Pre-existing Shares, the tax treatment of a partner will generally depend
upon the status of the partner and the




---



##### 



activities of the partnership. If you are a partner of a partnership which held Pre-existing
Shares, you should consult your tax advisers.
This summary assumes that the Deferred Shares have no value, and therefore receipt of the Deferred
Shares have no consequences for US federal income tax purposes.
Each Shareholder should consult its own tax advisers concerning the US federal income tax
consequences in light of its particular situation as well as any consequences arising under the
laws of any other taxing jurisdiction.
The Initial B Share Dividend
To the extent paid out of the current or accumulated earnings and profits of the Company (as
determined under US tax principles), beneficial owners of Pre-existing Shares should be treated as
receiving a dividend for US federal income tax purposes upon the receipt of the Initial B Share
Dividend and should not be separately taxed upon the receipt of the B Shares, the conversion of
Pre-existing Shares into New Shares (except to the extent of any cash received in respect of
fractional shares) or the conversion of B Shares into Deferred Shares. Such beneficial owners
should generally have the same holding period and basis in the New Shares received as they had in
their Pre-existing Shares (except such basis may be reduced to the extent attributable to any
fractional shares for which cash is received).
However, there is no direct authority addressing the treatment of securities similar to the B
Shares or the associated conversion of Pre-existing Shares into New Shares and US Holders should
consult their own tax advisers with respect to the appropriate US federal income tax treatment of
receiving the Initial B Share Dividend.
The dividend is treated as ordinary income from foreign sources. With respect to US Shareholders
that do not hold Pre-existing ADRs, the amount of the dividend treated as received generally equals
the US dollar value of the sterling received by you calculated by reference to the exchange rate in
effect on the date of the Initial B Share Dividend regardless of whether the sterling is converted
into US dollars. If the sterling received is not converted into US Dollars on the date of receipt,
such US Shareholder has a tax basis in the sterling equal to such US dollar value and any gain or
loss realised on a subsequent conversion or other disposal of the sterling will be treated as US
source ordinary income or loss. Amounts payable to holders of Pre-existing ADRs in respect of the
Initial B Share Dividend are paid in US dollars by the Depositary (less US withholding taxes, if
any). For individuals, such dividends are generally taxed at a reduced maximum tax rate of 15%,
subject to certain limitations, including a holding period requirement. Such reduced rate is not
available to Shareholders that elect to treat dividend income as investment income pursuant to
section 163(d)(4) of the Code or that are obligated to make related payments with respect to
positions in substantially similar or related property. Individuals should consult their own tax
advisers regarding their eligibility to claim such reduced rate based on their particular
circumstances.
Such dividend is not eligible for the dividends received deduction generally allowed to
corporations under the Code.
To the extent that the amount of the Initial B Share Dividend exceeds a US Holders allocable share
of the Companys current and accumulated earnings and profits, the distribution is first treated as
a tax-free return of capital, causing a reduction in the adjusted basis of the Pre-existing Shares
(thereby increasing the amount of gain, or decreasing the amount of loss, recognised on a
subsequent disposition of the New Shares), and the balance in excess of adjusted basis is taxed as
US source capital gain recognised on a sale or exchange. However, the Company expects that the
distribution will not exceed its current and accumulated earnings and profits.
C-3




---



##### 



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/ Stephen Scott Stephen Scott Company Secretary Date: 9 June 2008




---



##### 



Index to Exhibits to Form 20-F for year ended 31 March 2008
 1.1
    
    Memorandum, as adopted on June 13, 1984 and including all amendments made on July
28, 2000, July 26, 2005 (incorporated by reference to Exhibit 1 to the Companys Annual
Report of Form 20-F for the financial year ended March 31, 2006).1.2
    
    Articles of Association, as adopted on June 30, 1999 and including all amendments made
on July 25, 2001, July 26, 2005, July 25 2006 and July 24 2007 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
Amendment No. 1 to the Companys Registration Statement on Form F-3, dated November
24, 2000). (File No. 333-10762)).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.4.1
    
    Agreement for US $5,525,000,000 5 year Revolving Credit Facility (subsequently increased
by accession of further lenders to US$5,925,000,000), dated 24 June 2004, among, inter
alia, the Company, ABN Amro Bank N.V.; Banco Bilbao Vizcaya Argentaria S.A.; Bank of
America, N.A.; Barclays Bank PLC; Bayerische Hypo-und Vereinsbank AG; BNP Paribas ;
CALYON; Citibank, N.A.; Commerzbank Aktiengesellschaft, London Branch; Deutsche
Bank AG; HSBC Bank plc; ING Bank, N.V.; JPMorgan Chase Bank; Lehman Brothers
Bankhaus AG; Lloyds TSB Bank plc; Morgan Stanley Dean Witter Bank Limited and
Morgan Stanley Bank; Mizuho Corporate Bank, Ltd.; National Australia Bank Limited ABN
12 004 044 937; Sumitomo Mitsui Banking Corporation Europe Limited; The Bank of
Tokyo-Mitsubishi, Ltd.; The Royal Bank of Scotland Plc; UBS AG; WestLB AG; Banco
Santander Central Hispano, S.A.; William Street Commitment Corporation; Banca Intesa
SpA; KBC Bank NV; Standard Chartered Bank; TD Bank Europe Limited; and The Bank of
New York with The Royal Bank of Scotland plc as Agent and US Swingline Agent, as
amended and restated on 24 June 2005 by Supplemental Agreement among, inter alia,
the Company, ABN AMRO Bank N.V.; Banc of America Securities Limited; Banco Bilbao
Vizcaya Argentaria S.A.; Banco Santander Central Hispano, S.A. London Branch; Barclays
Capital; Bayerische Hypo-und Vereinsbank AG; BNP Paribas; Calyon; Citigroup Global
Markets Limited; Commerzbank Aktiengesellschaft, London Branch; Deutsche Bank AG
London; HSBC Bank Plc; ING Bank N.V., London Branch; JPMorgan Chase Bank, N.A.;
J.P. Morgan Plc; Lehman Commercial Paper Inc.; Llloyds TSB Bank Plc; Mizuho Corporate
Bank, Ltd; Morgan Stanley Bank International Limited; National Australia Bank Limited ABN
12 004 044 937; Sumitomo Mitsui Banking Corporation Europe Limited; The Bank of
Tokyo-Mitsubishi, Ltd.; The Royal Bank of Scotland Plc; UBS Limited; WestLB AG, London
Branch; William Street Commitment Corporation; Banca Intesa SpA; KBC Bank NV;
Standard Chartered Bank; TD Bank Europe Limited; The Bank of New York; ABN AMRO
Bank N.V.; Banca Intesa SpA; Banco Bilbao Vizvcaya Argentaria S.A.; Banco Bilbao
Vizvcaya Argentaria S.A. (New York Branch); Banco Santander Central Hispano, S.A.
London Branch; Bank of America, N.A.; Barclays Bank Plc; Bayerische Hypo-und
Vereinsbank AG; BNP Paribas (London Branch); BNP Paribas (acting through its New York
Branch); Calyon; Citibank, N.A.; Commerzbank Aktiengesellschaft, London Branch;
Commerzbank Aktiengesellschaft, New York Branch; Deutsche Bank AG London;
Deutsche Bank AG New York; HSBC Bank Plc; ING Bank N.V., London Branch; JPMorgan
Chase Bank, N.A.; KBC Bank NV; Lehman Commercial Paper Inc.; Lloyds TSB Bank Plc;
Mizuho Corporate Bank, Ltd.; Morgan Stanley Bank; Morgan Stanley Bank International
Limited; National Australia Bank Limited ABN 12 004 044 937; Standard Chartered Bank;




---



##### 



Sumitomo Mitsui Banking Corporation Europe Limited; TD Bank Europe Limited; The Bank
of New York; The Bank of Tokyo-Mitsubishi, Ltd.; The Royal Bank of Scotland Plc; The
Royal Bank of Scotland Plc (New York Branch); UBS AG, London Branch; UBS AG,
Stamford Branch; UBS Loan Finance LLC; WestLB AG, London Branch; WestLB AG, New
York Branch; William Street Commitment Corporation; and The Royal Bank of Scotland Plc
with The Royal Bank of Scotland Plc (New York Branch) as Agent and U.S. Swingline
Agent (incorporated by reference to Exhibit 4.1 to the Companys Annual Report on Form
20-F for the financial year ended March 31, 2006)4.2
    
    Lender Accession Agreement with Merrill Lynch International Bank Limited, effective as of
May 8, 2007 (incorporated by reference to Exhibit 4.2 of the Companys Annual Report on
Form 20-F for the financial year ended March 31, 2007).4.3
    
    Agreement for US$4,675,000,000 7 year Revolving Credit Facility (subsequently increased
by accession of further lenders to US$5,025,000,000), dated June 24, 2005, among, inter
alia, the Company, Banc of America Securities Limited; Banca Intesa SpA; Banco Bilboa
Vizcaya Argentaria S.A.; Banco Santander Central Hispano, S.A. London Branch; Barclays
Capital; Bayerische Hypo-und Vereinsbank AG; BNP Paribas; Calyon; Citigroup Global
Markets Limited; Deutsche Bank AG London; HSBC Bank Plc; ING Bank N.V., London
Branch; J.P. Morgan Plc; Lehman Commercial Paper Inc., UK Branch; Lloyds TSB Bank
Plc; Mizuho Corporate Bank, Ltd; Morgan Stanley Bank International Limited; National
Australia Bank Limited ABN 12 004 044 937; The Bank of Tokyo-Mitsubishi, Ltd; The Royal
Bank of Scotland Plc; UBS Limited; Unicredit Banca dImpresa SpA; WestLB AG, London
Branch; William Street Commitment Corporation; Commerzbank Aktiengesellschaft, Filiale
Düsseldorf; KBC Bank NV; Standard Chartered Bank; TD Bank Europe Limited; The Bank
of New York; Banca Intesa SpA; Banco Bilbao Vizcaya Argentaria S.A.; Banco Bilbao
Vizcaya Argentaria S.A. (New York Branch); Banco Santander Central Hispano, S.A.
London Branch; Bank of America, N.A., Barclays Bank Plc; Bayerische Hypo-und
Vereinsbank AG; BNP Paribas (London Branch); BNP Paribas, New York Branch; Calyon;
Citibank, N.A.; Commerzbank Aktiengesellschaft, Filiale Düsseldorf; Deustche Bank AG
London; Deutsche Bank AG New York; HSBC Bank Plc; ING Bank N.V., London Branch;
JPMorgan Chase Bank, N.A.; KBC Bank NV; Lehman Commercial Paper Inc., UK Branch;
Lloyds TSB Bank Plc; Mizuho Corporate Bank, Ltd.; Morgan Stanley Senior Funding, Inc.;
Morgan Stanley Bank International Limited; National Australia Bank Limited ABN 12 004
044 937; Standard Chartered Bank; TD Bank Europe Limited; The Bank of New York; The
Bank of Tokyo-Mitsubishi, Ltd.; The Royal Bank of Scotland Plc; The Royal Bank of
Scotland Plc (New York Branch); UBS AG, London Branch; UBS Loan Finance LLC;
Unicredit Banca dImpresa SpA; WestLB AG, London Branch; WestLB AG, New York
Branch; William Street Commitment Corporation; and The Royal Bank of Scotland plc with
The Royal Bank of Scotland Plc (New York Branch) as Agent and US Swingline Agent.
(incorporated by reference to Exhibit 4.2 to the Companys Annual Report on Form 20-F for
the financial year ended March 31, 2006)4.4
    
    Lender Accession Agreement with Merrill Lynch International Bank Limited, effective as of
May 8, 2007 (incorporated by reference to Exhibit 4.4 of the Companys Annual Report on
Form 20-F for the financial year ended March 31, 2007).4.5
    
    Vodafone Group Long Term Incentive Plan (incorporated by reference to Exhibit 4.5 to the
Companys Annual Report on Form 20-F for the financial year ended March 31, 2001).4.6
    
    Vodafone Group Short Term Incentive Plan (incorporated by reference to Exhibit 4.6 to the
Companys Annual Report on Form 20-F for the financial year ended March 31, 2001).




---



##### 



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 1998 Company Share Option Scheme (incorporated by reference to
Exhibit 4.8 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2001).4.9
    
    Vodafone Group 1998 Executive Share Option Scheme (incorporated by reference to
Exhibit 4.9 to the Companys Annual Report on Form 20-F for the financial year ended
March 31, 2001).4.10
    
    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).4.11
    
    Service Contract of Arun Sarin (incorporated by reference to Exhibit 4.20 to the Companys
Annual Report on Form 20-F for the financial year ended March 31, 2003).4.12
    
    Service Contract 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).4.13
    
    Agreement for Services for Sir John Bond (incorporated by reference to Exhibit 4.13 to the
Companys Annual Report on Form 20-F for the financial year ended March 31, 2007).4.14
    
    Letter of Appointment of Dr. Michael Boskin (incorporated by reference to Exhibit 4.9 to the
Companys Annual Report on Form 20-F for the financial year ended March 31, 2003).4.15
    
    Letter of Appointment of Professor Sir Alec Broers, now Lord Broers (incorporated by
reference to Exhibit 4.10 to the Companys Annual Report on Form 20-F for the financial
year ended March 31, 2003; at a meeting of the Directors of the Company held on
September 16, 2003, the term of office of Professor Sir Alec Broers was extended until
December 31, 2006).4.16
    
    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).4.17
    
    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).4.18
    
    Letter of Appointment of Jurgen Schrempp (incorporated by reference to Exhibit 4.21 to the
Companys Annual Report on Form 20-F for the financial year ended March 31, 2004).4.19
    
    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).4.20
    
    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).4.21
    
    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).4.22
    
    Service contract of Vittorio Colao (incorporated by reference to Exhibit 4.2.2 to the
Companys Annual Report on Form 20-F for the financial year ended March 31, 2007).




---



##### 



4.23
    
    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).4.24
    
    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).4.25
    
    Letter of appointment of Simon Murray.7.
    
    Computation of ratio of earnings to fixed charges for the years ended March 31, 2008,
2007, 2006 and 2005.8.
    
    The list of the Companys subsidiaries is incorporated by reference to note 12 to the
Consolidated Financial Statements included in the Annual Report.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-F15.1
    
    Consent letter of Deloitte & Touche LLP, London.15.2
    
    Consent letter of Deloitte & Touche LLP, New York.