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** **

**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, 2015**

 

**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: 001-10086**

 

**VODAFONE GROUP PUBLIC LIMITED COMPANY**

*(Exact name of Registrant as specified in its charter)*

 

**England**

*(Jurisdiction of incorporation or organization)*

 

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

*(Address of principal executive offices)*

 

**Rosemary Martin (Group General Counsel and Company Secretary)**

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

 

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

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

 

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

 

 
| **Title of each class** |    | **Name of each exchange**

**on which registered** |
|-------------------------|--------------|----------------------------------------------------|
| See Schedule A          |    | See Schedule A                                     |

 

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

 

**None**

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

 

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**None**

 

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

 
|                                            |           |         |
|-------------------------------------------------|----------------|--------------|
| Ordinary Shares of 20 20/21 US cents each  | 26,512,038,085 |    |
| 7% Cumulative Fixed Rate Shares of £1 each | 50,000         |    |

 

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

 

Yes  þ    No  o

 

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

 

Yes  o    No  þ

 

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

 

Yes  þ    No  o

 

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

 

    Yes  o    No  o

 

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

 

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

 

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

 

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

 

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

 

Item 17  o    Item 18  o

 

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

 

Yes  o    No   þ

 

 

 

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SCHEDULE A

 

 
| **Title of each class**                                                                                        |    | **Name of each exchange   on which registered** |
|----------------------------------------------------------------------------------------------------------------|--------------|-------------------------------------------------|
| Ordinary shares of 20 20/21 US cents each                                                                 |    | NASDAQ Global Select Market*                    |
| American Depositary Shares (evidenced by American   Depositary Receipts) each representing ten ordinary shares |    | NASDAQ Global Select Market                     |
| Floating rate Notes due February 2016                                                                     |    | New York Stock Exchange                         |
| 5.625% Notes due February 2017                                                                            |    | New York Stock Exchange                         |
| 1.625% Notes due March 2017                                                                               |    | New York Stock Exchange                         |
| 1.25% Notes due September 2017                                                                            |    | New York Stock Exchange                         |
| 1.5% Notes due February 2018                                                                              |    | New York Stock Exchange                         |
| 4.625% Notes due July 2018                                                                                |    | New York Stock Exchange                         |
| 5.450% Notes due June 2019                                                                                |    | New York Stock Exchange                         |
| 4.375% Notes due March 2021                                                                               |    | New York Stock Exchange                         |
| 2.5% Notes due September 2022                                                                             |    | New York Stock Exchange                         |
| 2.95% Notes due February 2023                                                                             |    | New York Stock Exchange                         |
| 2.95% Notes due February 2023                                                                             |    | New York Stock Exchange                         |
| 7.875% Notes due February 2030                                                                            |    | New York Stock Exchange                         |
| 6.25% Notes due November 2032                                                                             |    | New York Stock Exchange                         |
| 6.15% Notes due February 2037                                                                             |    | New York Stock Exchange                         |
| 4.375% Notes due February 2043                                                                            |    | New York Stock Exchange                         |

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

 

 

 

 

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|  | Unifying   Vodafone Group Plc Communications Annual Report on Form 20-F 2015 Vodafone   Power to you |
|--|------------------------------------------------------------------------------------------------------|

 

Table of Contents

 

**Contents**

 

**Welcome to our**

**2015 report**

** **

 

 

 

 

**The Overview, Strategy Review and Performance sections constitute the Strategic Report and these are based on an assessment of our performance using the key strategic areas as set out on page 14. Our financial disclosure is based on the Group’s operating companies.**

 
| **Overview**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                           | **Strategy Review**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                          | **Performance**                                                  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------|------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                          |                                                             |
| An introduction to   the report covering who                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                           | A summary of the   changing landscape                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                          | Commentary on the   Group’s                                 |
| we are, the   Chairman’s reflections on the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                           | we operate in, and   how that has shaped our                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                          | operating   performance.                                         |
| year, notable   events, and a snapshot of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                           | strategy and   financial position. Plus a review                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                          | **38**                                                           | Chief Financial Officer’s review |
| where and how we do   business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                           | of performance   against our goals and our                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                          | **40**                                                           | Operating results |
| **01**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Performance highlights                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | approach to running   a sustainable business. |                                                             | **46** | Financial position and resources |
| **02**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Chairman’s statement                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | **14**                                        | Chief Executive’s strategic review                          |   |   |
| **04**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | About us                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | **18**                                        | Key performance indicators                                       |   |   |
| **06**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Project Spring                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | **22**                                        | Our strategy                                                     |   |   |
| **08**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Our business model                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                          | **22**                                                           | Consumer Europe |   |   |
| **12**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Market overview                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                          | **24**                                                           | Unified Communications |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | **26**                                        | Consumer Emerging Markets                                        |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | **27**                                        | Enterprise                                                       |   |   |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                           | **28**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Our people                                    |                                                             |   |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                           | **30**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Sustainable business                          |                                                             |   |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                           | **32**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Principal risk factors and uncertainties      |                                                             |   |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                           | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                          |                                                             |
| **Governance**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                           | **Financials**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                          | **Additional Information**                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                          |                                                             |
| We explain how we   are organised, what                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                           | The statutory financial statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                          | Find out about our   shares, information                         |
| the Board has   focused on and how                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                           | of both the Group and the Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                          | on our history and   development,                                |
| it has performed,   our diversity practices,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                           | and associated audit reports.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                          | regulatory matters   impacting our                               |
| how we communicate   with our                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                           | **93**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Contents                                      |                                                             | business, an   assessment of potential risks |
| shareholders and   how our                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                           | **94**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Directors’ statement of responsibility   |                                                             | to the Company, and   other statutory |
| Directors are   rewarded.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                           | **96**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Risk mitigation                               |                                                             | financial   information. |
| **50**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Chairman’s introduction                                   | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | **98**                                        | Report of independent   registered public   accounting firm |   | **186** | Shareholder information |
| **51**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Our governance framework                                       | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                          | **194**                                                          | History and development |
| **52**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Board of Directors                                             | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | **105**                                       | Consolidated   financial statements and    financial commentary  |   | **195** | Regulation |
| **54**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Executive Committee                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                          | **202**                                                          | Non-GAAP information |
| **56**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Board activities                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | **180**                                       | This page is intentionally left blank                       |   | **206** | Form 20-F cross reference guide |
| **58**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Board evaluation, induction and training                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** **                                    | ** **                                                       |   | **209** | Forward-looking statements |
| **60**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Board diversity                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** **                                    | ** **                                                       |   | **211** | Definition of terms |
| **62**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Shareholder engagement                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** **                                    | ** **                                                       |   | **213** | Selected financial data |
| **63**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Board committees                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** **                                    | ** **                                                       |   | Exhibit 2.3 |   | Exhibit 4.30 |   | Exhibit 12 |   | Exhibit 15.2 |
| **72**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Compliance with the   2012 UK Corporate   Governance Code |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** **                                    | ** **                                                       |   | Exhibit 4.9 |   | Exhibit 7 |   | Exhibit 13 |   | Exhibit 15.3 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | ** **                                                     | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                          | Exhibit 4.29                                                |   | Exhibit 8 |   | Exhibit 15.1 |   | Exhibit 15.4 |
| **74**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Our US listing requirements                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** **                                    | ** **                                                       |   |   |
| **75**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Directors’ remuneration                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** **                                    | ** **                                                       |   |   |
| **92**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Directors’ report                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | ** **                                    | ** **                                                       |   |   |
|  

Unless otherwise stated   references to “year” or “2015” mean the financial year ended 31   March 2015, to “2014” or “previous year” mean the financial year ended   31 March 2014, and to the “fourth quarter” or “Q4” are to the quarter   ended 31 March 2015. For other references please refer to page 48.

 

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

 

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

 

Website references   are for information only and are not incorporated by reference into our   Annual Report on Form 20-F. This report is dated 19 May 2015. |                                                           | This constitutes   the annual report on Form 20-F of Vodafone Group Plc (the ‘Company’) in   accordance with the requirements of the US Securities and Exchange Commission   (the ‘SEC’) for the year ended 31 March 2015 and is dated 8 June 2015.   This document contains certain information set out within the Company’s   annual report in accordance with International Financial Reporting Standards   (‘IFRS’) as issued by the International Accounting Standards Board (‘IASB’)   and with those parts of the UK Companies Act 2006 applicable to companies   reporting under IFRS, dated 19 May 2015, as updated or supplemented if   necessary. The content of the Group’s website (www.vodafone.com) should not   be considered to form part of this annual report on Form 20-F. |
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|  | Performance highlights progress   supported by Vodafone Italy for a full year and the acquisition of Ono. On an   organic basis, capital expenditure and we have increased more than offset by   a decline in Europe. February 2014), our acquisitions of Ono, Adjusted EBITDA   increased by £0.8 billion mainly through Our operating profit, which is our   profit for the reflecting ongoing revenue declines in Europe and the last   year, which included an impairment loss of the impact of recent acquisitions   and disposals, movements in foreign exchange partially offset by operating   efficiencies. Page 38 Capital expenditure Dividends per share More on our   strategy: 01 Vodafone Group Plc Annual Report on Form 20-F 2015 Overview   Strategy review Performance Governance Financials Additional information A   year of continued increased investment Financial highlights This year saw   strong growth in most of our emerging markets offset by a continued decline   in Europe, though many European markets are showing signs of stabilisation.   Our significant investment programme,Revenue Project Spring, has led to a   sharp rise in our Revenue increased by 10.1% over the year, mostly due to the   inclusion of our dividend per share.revenue declined by 0.8%* as strong   growth in our emerging markets was Our results this year include a full year   of Vodafone Italy (consolidated from£11.9bn £2.0bn Hellas Online and Cobra   Automotive and Adjusted EBITDA Operating profit a full year of Kabel   Deutschland.the inclusion of Vodafone Italy and the acquisition of Ono.year   before interest and tax, was £2.0 billion. Organic movements in this report   excludeOn an organic basis adjusted EBITDA declined by 6.9%*,This compares   with an operating loss of £3.9 billion growth in operating expenses as a   result of Project Spring,£6.6 billion. rates and certain other items. See   page 212 for more information. More on financial performance:£9.2bn 11.22p   Capital expenditure increased significantly duringWe have announced a final   dividend per share the year as we progressed with our Project Spring of 7.62   pence, giving total dividends per share of investment programme and from the   inclusion11.22 pence – a 2.0% increase year-on-year. of Italy and Ono.   Strategic highlights We have made significant progress this year, expanding   our 4G coverage and customer base in Europe, increasing take-up of 3G in   emerging markets and further developing our fixed business.4G customers We   now have over 20 million 4G customers across 18 markets, helping data traffic   Page 14–27grow by 80% across the Group. 446m12m Mobile customers Fixed   broadband customers We have grown our mobile customer base byWe have grown   our fixed broadband base by 15 million over the year, with significant   growth2.8 million over the year, through organic growth in our emerging   markets.and the acquisitions of Ono and Hellas Online. 19m72% 3G customers in   IndiaEuropean 4G population coverage We have grown our 3G customer base from   7 million We now have 72% 4G coverage compared with 46% to 19 million in   India, supported by the expansiona year ago and will reach over 90% by next   year. of our 3G coverage. |
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|  | Chairman’s statement A year of   significant investment We have achieved a lot in the last year. We have made   strong progress on our strategy, while making a significant contribution to   the economies in which we operate and providing substantial returns to our   shareholders. 30 years of mobile, but the future is unified communications   This year we celebrated 30 years since the first mobile phone call was made   in the UK. Today, Vodafone is an industry leader with 446 million customers,   mobile operations in 26 countries and fixed broadband operations in 17   countries. Vodafone is bringing the benefits of the mobile and digital   revolution to consumers and businesses across the world, from offering 4G   services in 18 countries to providing services such as machine-to-machine   (‘M2M’) technology and M-Pesa, the mobile payment service that provides   financial freedom to millions of people. Today, I see two areas in which   Vodafone can truly claim to be a leader: in our emerging markets operations,   and in our services to the enterprise segment. In markets such as India and   South Africa, and increasingly in Egypt and Turkey, we are building clear   differentiation in network quality, the power of our brand, and the depth and   breadth of our distribution. In enterprise, our international footprint and   our investment in growth areas such as M2M and Cloud and Hosting services are   making us a preferred partner to many major multinational businesses.   However, in our core European mobile business, we have been under pressure   for several years. Competition, regulation and the macroeconomic environment   have all played a part, but in addition we have lacked clear differentiation   in mobile, while also losing ground in some markets with the rapid adoption   of unified communications. And this is where the future lies – in the   provision of high quality voice, data, business and entertainment services   across multiple technologies and screens, in the home, in the office and on   the move. 02 Vodafone Group Plc Annual Report on Form 20-F 2015 |
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|  | Over the last   two years, our move into unified communications has taken significant steps   forward, both through acquisition and organic investment. 25% of European   service revenue now comes from fixed line services, and we have 12 million   fixed broadband customers across the Group.On 4G we have more than doubled   our footprint in Europe in the last 18 months, to 72% population coverage. In   India, we now provide 3G services in over 90% of our target urban areas. Data   traffic across the Group grew 80% during the year. These investments benefit   businesses as much as consumers. Building on the Cable & Wireless   Worldwide acquisition, which brought us global fibre infrastructure and   points of presence in 62 countries, we are taking new services into new   geographical areas to deepen customer relationships and grow revenue.   Aligning management pay to value creation and customer perception Our   remuneration policies continue to focus on rewarding long term value   creation. The annual bonus this year was slightly higher than last year,   reflecting improved performance against targets; but the failure to meet the   three year threshold on free cash flow resulted in a zero pay-out on the   long- term incentive plan. We have also made a number of changes to   management incentives in recent years The Board continues to consider the   ordinary dividend to be the core element of shareholder returns, and believes   in a consistent dividend policy. This year we raised the dividend per share   by 2.0%, and we intend to raise it annually hereafter. A major economic   contributor We have always invested at a high level to ensure we are a leader   in the quality of service we deliver to customers. With Project Spring we are   reinforcing that position, not only in Europe but across many emerging   markets too. However, macroeconomic decline in Europe, combined with the   consequences of past regulatory policies, has brought about a sharp reduction   in return on capital over recent years. This has been exacerbated by market   structures which remain fragmented both between and within member states.   This year, we published a report highlighting our overall economic impact   across the 12 EU countries in which we operate. In 2013/14 Vodafone   contributed €23.7 billion to the EU economy (measured in GVA or Gross Value   Added). In addition, Vodafone: a provided employment for 170,000 people   across its direct workforce and European supplier base, as of 31 March 2014;   a paid €2.4 billion to EU governments in direct taxation, spectrum costs and   other fees, and an additional €4.4 billion in indirect tax payments in   2013/14; and It will also be important for the Commission to pursue   harmonisation of rules on spectrum, data protection, copyright and other   areas, as well as to adopt a principles-based approach to the open internet   to support future innovation and investment. Our economic impact in emerging   markets is no less strongly felt, yet there too we face continued pressures   from regulatory and fiscal intervention. In South Africa, for example, the   significant mobile termination rate (‘MTR’) cuts of the last year had a   material financial impact on our business. While India represents an   excellent long term investment opportunity, the present regulatory challenges   are hampering economic development. Spectrum auction structures combined with   the piecemeal release of new spectrum, leaves less capital available for   investment in bringing high quality services to more of the country, and this   is exacerbated by other ongoing regulatory challenges. Changes to the Board   In January, Stephen Pusey informed the Board of his intention to step down as   Group CTO. His many achievements over eight years include the international   expansion of Vodafone’s 3G services, the launch of 4G in 18 countries and the   development of global IT, procurement and cyber security functions. More   recently, he has led the Project Spring investment programme, and has also   played a leading role in developing the Group’s convergence to limit total   pay, such as the reduction of the maximum achievable pay-out on the long-   term scheme and the payments made in lieu of pension contributions. This year   we have made a significant change to the criteria for the annual bonus   (‘GSTIP’) scheme. The substantial investments in networks need to be   supported by a clear step up in the customer experience and satisfaction, and   the Board wants this to be reflected in short term incentives. 40% of the   total GSTIP assessment will now be based on Customer Appreciation measures. a   since 2000, has paid EU governments a total of €20.8 billion for access to   spectrum to roll out 3G and 4G networks across Europe. The new European   Commission has identified as a priority the need to reboot Europe’s digital   strategy. We encourage the Commission to prioritise measures intended to   ensure fair and sustainable competition based on a level playing field for   all companies. strategy. Stephen’s successor, Johan Wibergh, was previously   Executive Vice President and Head of the Networks segment at Ericsson. During   the year there were a number of changes to the non-executive team and these   are set out in my Governance statement on page 50. /s/ Gerard Kleisterlee   Gerard Kleisterlee Chairman |
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|  | About us We have come a long way 30   years ago, the first mobile phone call on our UK network was made. Since then   we’ve grown from a UK mobile company to a multinational telecommunications   leader. How have we become one of the world’s largest telecommunications   companies, creating one of the world’s most powerful brands in the process?   By a relentless focus on providing high-quality services that allow our   customers to get the most out of an increasingly connected world. The first   mobile call The UK’s first-ever mobile phone call was made 30 years ago on   the newly-launched Vodafone network. Michael Harrison, the son of former   Vodafone Chairman Sir Ernest Harrison, was the first to test the system,   calling his father at midnight on 1 January, 1985. 04 Vodafone Group Plc   Annual Report on Form 20-F 2015 |
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|  | How we are   changing In recent years we have successfully evolved our business to address   new growth opportunities. We now do much more than mobile. We are unifying   communications. 05 Vodafone Group Plc Annual Report on Form 20-F 2015   Overview Strategy review Performance Governance Financials Additional   information How we are changing Over the last few years we have seen a rapid   transition in the telecoms industry, towards new areas of growth – data,   emerging markets, unified communications and total communications services   for enterprise customers. As a result we now do much more than provide mobile   to 446 million customers. With 12 million fixed broadband users, 9 million TV   customers, 22 million M2M connections, and 20 million M-Pesa mobile money   users – we are unifying communications. and mobile services infrastructure   Enterprise a single source for all including Vodafone One Net, Impact:   percentage of service revenue from enterprise 25%27% 20122015 Drivers of   change Actions a Mobility becoming strategica Invest in total a Companies   wanting communications solutions communication services Cloud and Hosting,   and M2M Consumer Emerging Markets Drivers of change Actions a Rapid   population anda Increase 3G/4G network economic growthcapability a Growing   demand for a Improve distribution data and lack of fixed a Expand M-Pesa a   Higher demand for mobile money services Impact: percentage of customers from   emerging markets 66%72% 20122015 Unified Communications Drivers of change   Actions a Competitors offering fixed a Grow fixed access via and mobile   bundles acquisition, investment a Fixed and mobileor wholesale arrangements   technology convergence a Launch bundles with fixed Impact: percentage of   service revenue from fixed line 8%20% 2012 2015 Consumer Europe Drivers of   change Actions a Increasing smartphonea Vodafone Red plans with penetration   generous data allowances a High speed 3G and a Provide content 4G technologya   Invest in 4G networks Impact: percentage of customers in Europe using mobile   data 35% 52% 2012 2015 |
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|  | Project Spring Driving network and   service differentiation Project Spring is our two-year, £19 billion   investment programme designed to place Vodafone at the forefront of growth in   mobile data and the increasing trend towards the convergence of fixed and   mobile services. We are now just over one year through the programme and are   making great progress. Progress so far In Europe, we have increased 4G   coverage to 72% and aim to get this to over 90% by next year. We have further   modernised our network to improve voice and data quality, with 83% of our   radio sites connected with high capacity backhaul and 81% with Single Radio   Access Network (‘RAN’) technology. All this means a significantly improved   experience for our customers, including more reliable connections, faster   data speeds, greater coverage and fewer dropped calls. We now reach 28   million homes with our owned cable and fibre infrastructure as a result of acquisitions   and fibre builds in Italy, Spain and Portugal. In our Africa, Middle East and   Asia Pacific (’AMAP’) region, we have increased 3G and 4G coverage (excluding   India) to 82% and aim to grow this further next year. In India we now cover   90% of the population in targeted urban areas with 3G and aim to increase   this to 95% by next year. More on Project Spring: Pages 22 to 27 Total build   since September 20132 March 2014 March 2015 March 2016 target New 2G sites   7,000 33,000 47,000 New 3G sites 13,000 42,000 73,000 New 4G sites 7,000   35,000 77,000 New single RAN installations 20,000 73,000 106,000 New high   capacity backhaul sites 17,000 63,000 87,000 88% of data sessions in Europe   are now delivered at the speeds required to enjoy a high definition video experience   Note: 1 Next-generation network (‘NGN’) technology, which includes   fibre-to-the-home, cable and very-high-bit-rate digital subscriber lines from   the cabinet or central office. Data shown to the nearest thousand. 06 2   Vodafone Group Plc Annual Report on Form 20-F 2015 European 4G population   coverageOver 90% 72%2016 – target 46%2015 20%2014 2013 European households   million passed with owned cable/fibre1 ailab 0 2013 2014 2015 30 28 20 19 10   Data av not le Total capital expenditure£ billion 0 2013 2014 2015 10.0 9.2   7.5 6.3 5.0 5.3 2.5 |
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|  | Consumer Europe   Unified Communications 4G population coverage, increased from 32% in   September 2013 and is expected to increase to over 90% by March 2016 Homes   reached in Europe with high-speed internet from our owned infrastructure We   have over five million next-generation network (‘NGN’) broadband customers   Dropped call rate, improved from 0.9% in September 2013 Page 24 Consumer   Emerging Markets Enterprise 3G coverage in India (targeted urban areas),   expected to increase to 95% by March 2016 Countries where we offer IP-VPN   services Countries where we offer M2M services 3G/4G coverage across AMAP   (excluding India), increasing to 84% by March 2016 07 Vodafone Group Plc   Annual Report on Form 20-F 2015 Overview Strategy review Performance   Governance Financials Additional information More on Enterprise: Page 27 More   on Consumer Emerging Markets: Page 22 More on Unified Communications: More on   Consumer Europe: Page 22 |
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|  | Our business model What we offer We   provide a wide range of services including voice, messaging and data across   mobile and fixed networks. Mobile Mobile services We provide a range of   mobile services to our customers, enabling them to call, text, access the internet,   stream music and watch videos wherever they are – at home, on the move or   even abroad with our roaming services. Fixed 40% of our customers now use   mobile data Mobile customers Active data users Notes: Our mobile assets We   provide these services through our network of over 283,000 base station sites   providing near nationwide voice coverage and extensive data coverage across   Europe and extensive coverage across our AMAP region. 3 3 Note: 3 Excludes   India. Fixed Fixed services We provide a range of fixed services in most of   our major markets including voice, broadband and TV services to consumers and   a wider range of services to our enterprise customers, including Cloud and   Hosting and IP-VPN. We are also one of the world’s largest carrier services business,   providing voice and data services to other operators using our network of   cable and fibre assets across the world. Our fixed line assets We provide   these services through a combination of owned and leased copper, cable and   fibre assets. Our focus is on next-generation networks (fibre or cable) and   we cover 28 million homes with our own infrastructure and 50 million homes   including wholesale arrangements. We have over nine million TV customers   across six markets 08 Vodafone Group Plc Annual Report on Form 20-F 2015   High-speed broadband coverage 50 million households passed with cable or   fibre across Europe (owned or leased) Fixed broadband customers million 0 2013   2014 2015 15 12.0 10 9.2 6.9 5 Mobile network population coverage 72% 94%   100% 82% 97% Europe Europe EuropeAMAP AMAP 4G 3G 2G 3G/4G 2G Mobile customers   (million) and active data users (%) 430.8445.8 0 2013 2014 2015 500 400 407.3   300 200 40% 36% 100 30% The services we provide Group service revenue 20151   Other2 4% 20% £38.5bn Mobile 76% 1 Excludes £3.7 billion of other revenue   that mainly relates to the sale of equipment. 2 Other service revenue   includes revenue from mobile virtual network operators (‘MVNOs’) and from our   partner markets. We have over 283,000 base station sites across our markets   Over 1.2 trillion minutes of voice calls carried over our network last year   Over 290 billion text messages sent and received by our network last year 982   petabytes of data were sent across our mobile network alone last year, nearly   double the amount handled in the previous year More on Strategy: Page 14 |
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|  | Where we   operate Our business is split across two geographic regions – Europe, and   Africa, Middle East and Asia Pacific (‘AMAP’), which includes our emerging   markets. 66% 32% Our markets Partner markets Joint ventures and associates   AMAP UK Italy Europe Our markets We provide mobile services in these 24   countries and fixed services in 17 of these. Together they account for 98% of   our revenue. Joint ventures and associates We also provide mobile services in   Australia and Kenya, taking our total markets to 26. We also part-own the   tower company Indus Towers in India. Partner markets These are the 55 markets   where we hold no equity interest but have partnership agreements with local   mobile operators for them to use our products and services and in some cases   our brand. 1 Note: Our main markets mobile market share3 revenue mobile   customers fixed market share3 mobile market share3 revenue mobile customers   fixed market share3 mobile market share3 revenue 68.5m Notes: 09 3 Vodafone   estimates for the quarter ended 31 March 2015. 4 Source: Telecom Regulatory   Authority of India, December 2014. Vodafone Group Plc Annual Report on Form   20-F 2015 Overview Strategy review Performance Governance Financials   Additional information Germany £8.5bn 33% 30.9m 20% Italy £4.6bn 32% 25.2m 6%   Vodacom Group £4.3bn 53% (South Africa) mobile customers UK £6.4bn 24%   revenue mobile market share3 18.4m 4% mobile customers fixed market share3   Spain £3.7bn30% revenue mobile market share3 14.2m 11% mobile customers fixed   market share3 India £4.3bn 23% revenue mobile market share4 183.8m mobile   customers Our reach and scale Group revenue 2015 Europe AMAP Germany Vodacom   AMAPIndia £42.2bn Other EuropeOther Spain Other (includes partner markets and   common functions) 2% 1 Common functions includes revenue from services   provided centrally or offered outside our operating company footprint,   including some markets where we have a licensed network operation, for   example offering IP-VPN services in Singapore. Europe We are the number one   or two mobile operator in most of our countries with market shares ranging   from around 20% to over 40%. We are typically smaller in fixed line, with   market shares ranging from low single-digit up to 20%. Albania Malta# Czech Republic#   Netherlands# Germany# Portugal# Greece# Romania# Hungary Spain# Ireland# UK#   Italy# AMAP We are the number one or two mobile operator in most of our   countries with market shares ranging from around 20% to over 50%. We have a   small but growing s hare in fixed line. Australia (joint venture)New Zealand#   Egypt# Qatar# Ghana# Turkey# India Vodacom Group# 2 Kenya (associate) Notes:   # Fixed broadband markets. 2 Democratic Republic of Congo (‘DRC’), Lesotho,   Mozambique, South Africa and Tanzania. |
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|  | Our business   model (continued) How we make money We invest in superior telecommunications   networks so that we can sustain high levels of cash generation, reward   shareholders and reinvest in the business – thus creating a virtuous circle   of investment, revenue, strong cash conversion and reinvestment. Spectrum,   network and IT infrastructure We use our spectrum licences to provide the   radio frequencies needed to deliver communications services. We combine our   base station sites and our expertise in network management to transmit   signals for mobile services. Through our fixed broadband assets (cable, fibre   and copper) and wholesale agreements with other operators, we provide   broadband, voice and TV services. Our IT estate provides our data centres,   customer relationship capability, customer billing services and online   resources. We also have strong local market share positions – as we are   typically the first or second largest mobile operator in each of our markets   with a share of more than 20%. This provides in-market scale efficiencies to   support our adjusted EBITDA margin, which in turn provides healthy cash flow.   Reinvestment Our cash flow helps us to maintain a high level of investment to   give our customers a superior network experience, which over time should   enable us to secure a premium positioning in most of our markets. We also   continue to participate in spectrum auctions to secure a strong portfolio of   spectrum. Over the last three years we have committed £21 billion in capital   investment in networks, IT and distribution, a further £4 billion on the   renewal and acquisition of spectrum and £13 billion on acquiring new fixed   line businesses. Revenue The majority of our revenue comes from selling   mobile voice, text and data. Mobile users pay either monthly via fixed term   contracts (typically up to two years in length) or prepay by topping up their   airtime in advance of usage. Enterprise customers are typically on contracts   that last between two to three years. Over 90% of our mobile customers are   individual consumers and the rest are enterprise customers. A growing share   of mobile revenue arises from monthly fees rather than metered access, which   is much more vulnerable to competitive and economic pressures. Fixed   customers typically pay via one to two year contracts, and as a result fixed   revenue streams are more stable than mobile. Shareholder returns The cash   generated from operations allows us to sustain generous shareholder returns   while also investing in the future prosperity of the business. In the 2014   calendar year we were the fifth largest dividend payer in the FTSE 100. Over   the last three years we have returned almost £13 billion to shareholders, in   the form of ordinary dividends, excluding share buy backs and the Verizon   Wireless Return of Value. In addition we have increased the dividend per   share every year for more than 15 years. Cash flow Our track record of   converting revenue into cash flow is strong – with some £11.2 billion   generated over the last three years. We achieve this by operating efficient   networks where we seek to minimise costs, thus supporting our gross margin.   10 Vodafone Group Plc Annual Report on Form 20-F 2015 Beyond financial value   – towards a sustainable business Our core business is founded on a powerful   social good: we help millions of customers communicate, share, create, learn   and grow, and the rapid expansion of our networks is having a profound impact   on the way people manage their daily lives. Everyone we deal with, from our   customers, shareholders, partners and suppliers, to our employees, regulators   and NGOs, rightly expect everyone at Vodafone to act responsibly and with   integrity at all times. The beliefs, aspirations and concerns of this diverse   range of stakeholders consequently shape our performance and success,   influencing the way we make decisions. We know that financial results alone   are not enough: the societies and communities within which we operate want   companies to focus on enhancing lives and livelihoods and overlooking that   expectation would risk undermining our prospects for long-term value   creation. More on Sustainable business: Page 30 |
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|  | How we set   ourselves apart We aim to differentiate ourselves from our competitors by   offering a leading network, leveraging the benefits of our large scale,   global reach and international brand; by our leading position in enterprise;   and by training and developing the best people. Network quality We aim to   have the best mobile network in each of our markets, combined with   competitive fixed networks in our main markets. This means giving our   customers broad coverage, a reliable connection, and increasing speeds and   data capacity. The transition towards unified communications is changing how   we reach customers and our fixed line businesses use door-to-door selling and   more telesales than our other services. Our mobile money service M-Pesa,   enables users to top up their airtime as well as providing access to   financial services. Read more about M-Pesa on pages 26 and 30. Branding and   marketing We communicate our services to customers through clear and   effective branding and marketing. The strength of our brand is a major driver   of purchasing decisions for consumers and enterprise customers alike. For   example, in only 30 months, Vodafone Red, our globally branded pricing plan   (providing bundles of unlimited voice, text and generous data allowances) has   over 20 million customers. Customer service We have over 17,000 employees   dedicated to providing customer service, supported by contractors and third   parties. All call centres are available 24 hours a day, seven days a week in   all our European markets, and this is now being rolled out across our   remaining markets outside Europe. In an increasingly digital age we also   offer live webchat capability, and self-care, either via a handset, tablet or   laptop, to enable customers to self-diagnose and resolve their own queries. Service   design The mobile services we provide are carefully designed to meet the   needs of targeted customer segments. For example, SIM-only plans which do not   include a handset for customers focused on value, shared data plans for   families, and bundles including generous data allowances, content, roaming,   cloud storage and internet security for those wanting worry-free solutions.   We can also design bespoke solutions to meet the needs of our business   customers, whatever their size. The majority of our fixed revenue is from   home and office broadband solutions, including TV and calls over a landline.   The remainder arises from carrying other operators’ international traffic   across sub-sea cable systems. Sales We sell our mobile services through a   variety of distribution channels. Our shops comprise exclusive branded   stores, distribution partners and third party retailers. Our branded stores   enable customers to test our products and services before they buy, obtain   advice from sales advisors, and top-up their price plans. Online channels,   whether accessed through a mobile device or PC, are becoming much more   important and we are upgrading our IT estate to meet this growing demand.   Branded channels (including online and telesales) account for around 60% of   new consumer contract customers and around 90% of contract renewals in   Europe. Third party channels account for around 40% of acquisitions. Our   large corporate customers are served by a direct sales team; small and   medium-sized companies are managed through a network of around 2,000 indirect   partners, and sole traders are serviced via our retail stores and telesales   capabilities. Notes: 1 P3 communications. 2 2015 Brand Finance Global 500. 11   Vodafone Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information Key differentiators:   a We are both a multinational and a multicultural company, and our diverse   workforce helps us better understand and meet the needs of our customers a We   employ people from over 130 countries, with 24 nationalities among our Senior   Leadership Team. For more information on our people see page 28 Key   differentiators: a Vodafone is the UK’s most valuable brand with an   attributed worth of US$27 billion2 Key differentiators: a We have over 16,000   exclusive branded shops across the globe a In India, we supplement our   branded stores with 1.8 million small-scale outlets for top-ups,   significantly more than our nearest competitor a In our established M-Pesa   markets of Kenya and Tanzania we are the market leaders for mobile money   services Key differentiators: a We are one of the world’s largest mobile   operators with 283,000 base station sites a We have the best or co-best   mobile data networks in 16 out of 20 markets1 a We have a leading holding of   spectrum in most of our key markets a We own the largest cable companies in   Germany and Spain a Project Spring, our £19 billion investment programme,   aims to strengthen further our network and service differentiation Key   differentiators: a We are typically either number one or number two in mobile   enterprise in most of our markets a We have a comprehensive portfolio of   total communication services including mobile, fixed, Cloud and Hosting, and   M2M business solutions |
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|  | Market overview The telecommunications   industry today The telecommunications industry is a large one, generating   around US$1.5 trillion of revenue annually, from seven billion mobile phone   customers and one billion fixed line customers. The global mobile market   Scale and structure The mobile industry has 7.2 billion users, generating   around one trillion US dollars of annual service revenue every year. Around   60% of revenue comes from traditional calls. However, over the last few years   the demand for mobile data services, such as watching videos and internet   browsing on a smartphone, has accelerated, and today around 40% of revenue is   from data, up from around 30% in 2011. The majority of mobile users, around   76%, are in emerging markets, such as India and Africa. This reflects the   typical combination of large populations and the lack of fixed line   infrastructure, which means that the mobile internet is often the only   connection to the internet for people in these regions. It is estimated that   in 2014 over half of the world’s mobile internet users came from emerging   markets1. In contrast, the reported proportion of the population with a phone   – or mobile penetration – tends to be high in mature markets (usually over   100%) – as some people have more than one device. Mobile penetration is   usually lower in emerging markets, particularly in rural areas, due mainly to   lower incomes and less network coverage. Growth The demand for mobile   services continues to grow strongly. In the last three years the number of   users increased by 20%. In 2011 global mobile penetration was only 87%, and   by 2014 it had risen to 101%. The global fixed market The fixed   communications market generates around US$500 billion of revenue annually.   Over the last three years, revenue from voice services has declined as the   demand for traditional fixed line calls has remained static at around one   billion users. In contrast, revenue from fixed broadband or internet usage is   growing with an estimated 690 million customers worldwide – an increase of   21% over the last three years. This growth has been spread across all forms   of broadband – copper, cable and fibre – and within this, there is a growing   preference for the high speed capability provided by cable and fibre. Most of   the increase in users has been from emerging markets due to favourable growth   drivers – young and expanding populations, faster economic growth, low but   rising mobile penetration, and less fixed line infrastructure. The other key   area of growth is data, which is being driven by increasing smartphone and   tablet penetration, better mobile networks, and an increased choice of   internet content and applications (‘apps’). Competition The mobile industry   is highly competitive, with many alternative providers. In each country there   are typically at least three to four mobile network operators (‘MNOs’) such   as Vodafone. Across Europe there are more than 100 MNOs. In addition, there   can be numerous mobile virtual network operators (‘MVNOs’) – suppliers that   rent capacity from mobile operators to sell on to their customers. There is   also competition from other communication providers using internet-based   rather than cellular services such as WiFi calling or instant messaging.   Regulation The mobile industry is heavily regulated by national and regional   authorities. Regulators continue to lower mobile termination rates (‘MTRs’)   which are the fees mobile companies charge for calls received from other   companies’ networks, and to limit the amount that operators can charge for   mobile roaming services. These two areas represent around 11% of service   revenue for Vodafone. See page 195 for more on regulation. Revenue trends In   an environment of intense competition and significant regulatory pressures,   the average global price per minute of a mobile call has fallen by over a   third in the last three years to five US cents2. However, with both more   mobile phone users, and more usage of mobile services, global mobile revenue   remains on a positive trend and expanded by 9% over the same period. 12   Vodafone Group Plc Annual Report on Form 20-F 2015 Mobile phone penetration%   by market3 0 World Germany UK India Kenya Mature markets Emerging markets 150   143 138 100 101 75 76 50 Mobile customers by market3 North America: 6% China:   19% Europe: 16% 7.3 Mature India: 13%(2013:Asia: 4% 6. South Emerging   America: 10% Asia: 15% 12% Middle East: 5% 20 14: billion 8 billion) Africa:   Telecommunications revenue3US$bn 02010 2011 2012 2013 2014 Fixed broadband Fixed   voice Mobile 959 983 1,500 864 903 940 1,000 500 340 319 297 277 258 184 196   209 217 225 |
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|  | Where the   industry is heading The pace of change in the industry is expected to remain   significant – the demand for data is accelerating, there is an ongoing shift   towards fixed and mobile bundles, networks are improving, and the market   environment is becoming more positive. Growing importance of The demand for   bundled services has been a feature of the enterprise market for several   years and is becoming more visible in the consumer market. We believe that   this demand, combined with technological advances delivering easier   connection of multiple data devices, will support strong data growth in the   future. Therefore this will need to be managed by access to next-generation   fixed networks, principally cable or fibre, to support increased speed and   meet capacity requirements. Internet-based providers often offer “free calls   and texts” services, so mobile operators increasingly sell unlimited voice   and text bundles, and combine this with a fixed fee for data usage. While we   expect the level of competition to remain robust, we have seen some encouraging   signs of consolidation among European telecoms operators which is supportive   of further investment. data, emerging markets and other new revenue areas   Traditional revenue sources – mobile voice and texts – have reached maturity   in a number of markets. Therefore, to deliver future growth opportunities, we   are investing in newer revenue areas such as data. It is estimated that   between 2014 and 2018 mobile data revenue will grow by 18%, compared to a 7%   decline in voice revenue over the same period. The demand for data will   continue to be driven by rising smartphone and tablet penetration and usage,   and improvements in mobile network capability. Already 95% of the world’s   total traffic on mobile networks is data. The data services most used are   video streaming and internet browsing which require high speed networks.   Therefore, operators are investing more in 4G in European markets and a   combination of 4G and 3G in emerging markets to provide much faster data   speeds. Emerging markets have significant potential for customer and revenue   growth driven by rising populations, strong economic growth, lower mobile   penetration and a lack of alternative fixed line infrastructure. By 2018 it   is expected that there will be 1.5 billion new mobile users in emerging markets,   taking their share of global users to 79%. Other new revenue streams are   being pursued which extend the use of mobile beyond everyday communication.   These include money transfers and payments using a handset, and M2M services   such as smart metering and the location monitoring of vehicles, through a SIM   card embedded in the vehicle. Improving business environment in Europe As   Europe represents the majority of our revenue, the environment is important   to us. The economic recession in Europe over the last few years has been a   key driver of the declining revenue trends in the region for many operators.   However, the return to GDP growth in 2014 bodes well for the future. The   regulatory environment in Europe remains challenging, as a result of ongoing   cuts to regulated revenues such as roaming and MTRs. The European Commission   has recently announced a new Digital Single Market package of legislative   measures. While this emphasises the need to improve the investment climate,   it still needs to translate into specific legislative measures which – if   rapidly adopted – would have a positive impact. Continued network innovation   The pace of innovation and development in the networks is increasing. For   example, 4G, which we only launched in 2010 already accounts for 30% of data   traffic on Vodafone’s European networks. Standard 4G provides speeds of up to   150 Mbps, which is more than three times the highest 3G speeds. The next   stage of 4G development is 4G+, which bonds together multiple spectrum blocks   to provide typical peak speeds of up to 450 Mbps. High-Definition voice is   another new mobile technology which provides customers with crystal clear   call quality. In the fixed broadband sector operators are investing more in   fibre which provides data speeds typically up to 300 Mbps to 1 Gbps, compared   with up to 24 Mbps on copper broadband. Continued high level of competition   The high level of competitive intensity in the communications industry is   expected to continue between established MNOs, MVNOs, fixed operators and internet-based   services providers. MVNOs and smaller mobile operators are often attractive   to value seekers. However, the high level of investment in 4G and unified   communications by larger MNOs, such as Vodafone, enables differentiation   through higher network and service quality. Fixed operators often bundle   their services with mobile, leading Vodafone to acquire fixed capability to   bundle with mobile, through investment in fibre networks, acquisitions and   wholesale agreements. Convergence of fixed and mobile into unified   communications We expect a continued trend towards unified communications or   bundled mobile, fixed and TV services so that customers can use data services   wherever they are and on whatever device they want. Notes: 1 ITU   Telecommunication Development Bureau. 2 Merrill Lynch. 3 Strategy analytics.   13 Vodafone Group Plc Annual Report on Form 20-F 2015 Overview Strategy   review Performance Governance Financials Additional information Share of   industry mobile users3 % 0 2014 2015 2016 2017 2018 Mature markets Emerging   markets 100 76 77 78 78 79 80 60 40 20 24 23 22 22 21 Share of industry %   mobile service revenue3 0 2014 2015 2016 2017 2018 Data/Text Voice 100 58 56   54 53 52 80 60 40 42 44 46 47 48 20 |
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|  | Chief Executive’s strategic review Making   substantial strategic progress It has been a year of continued progress, with   increasing signs of stabilisation in a number of European markets and   continued good growth in emerging markets. Our strategic investment in   Project Spring and unified communications is delivering a clear improvement   in our commercial performance. Communications Markets Demand for data is   rapidly We want to become the leading 14 Vodafone Group Plc Annual Report on   Form 20-F 2015 We expect these trends to shape our industry... More on Where   the industry is heading: Page 13 As a result our strategy will focus on... 3   Consumer Europe Unified Consumer Emerging Enterprise accelerating. We are   focused More and more businesses and It’s easy to conceive of Vodafone communications   provider for on providing the best fixed consumers are seeking unified as a   Europe-centric company,businesses across the world, and mobile data   experience,communications – converged but an increasing amount large or   small. We provide outstanding customer service fixed and mobile services –of   our revenue now comes a range of services including and a range of worry-free   price and we are adapting to meet from countries outside Europe,mobile,   fixed, Cloud and Hosting plans and additional services.these demands.and most   of this in fast-growingand M2M that are easy to use, emerging markets   whereworry-free and cost-effective. demand for data is taking off. Supported   by... Each of which is accelerated by... Project Spring Investing £19 billion in   mobile and fixed networks, products, services and our retail platform   Customer-focused and cost-efficient business model and operations An   excellent network experience 2 4 1 Improving business environment in Europe   High level of competition Strong demand from emerging markets Increasing   demand for unified communications Growing importance of data and other new   revenue areas |
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|  | Review of the   year It has been a year of continued strong growth in most of our emerging   markets, and signs of stabilisation in many European ones. A slight easing of   aggressive price competition in some countries, combined with a clear   inflection point in the growth of data usage, has underpinned our   performance. In addition, the increased commercial investments which we began   to make in the prior year have translated into an improved performance   relative to our competitors in Europe, with revenue trends improving in each   of the last three quarters. We have also made excellent progress on the core   pillars of our strategy – data, unified communications and enterprise – for   both European and emerging markets as I outline below. Across our markets we   have witnessed an acceleration in consolidation both within the mobile sector   and between fixed and mobile, as operators look to gain scale and position   themselves to seize the opportunity to deliver customers an enhanced   experience as demand for high speed data takes off. This mirrors our own   important strategic moves with the acquisitions of Kabel Deutschland (‘KDG’)   and Grupo Corporativo Ono, S.A. (‘Ono’), and our continued fixed   infrastructure build in a number of markets. In our core European markets, we   are increasingly positioning Vodafone as a top tier, fully integrated   provider of high speed fixed and mobile communications to consumers and   businesses. 15 Vodafone Group Plc Annual Report on Form 20-F 2015 Overview   Strategy review Performance Governance Financials Additional information   Continues on next page... |
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|  | Chief   Executive’s strategic review (continued) Project Spring First communicated in   detail in November 2013, Project Spring is our two-year, £19 billion   investment programme designed to place Vodafone at the forefront of the   growth in mobile data and the increasing trend towards the convergence of   fixed and mobile services. The key elements of the Spring infrastructure   build are: These investments have already seen the customer experience   improve significantly, with 88% of customers’ data sessions in Europe now at   3 Mbps or better (the level required to watch uninterrupted high-definition   video), and dropped call rates in Europe falling by 34%. In emerging markets,   the data story is equally positive. In India, for example, we already have 19   million 3G customers (up from 7 million a year ago), smartphone penetration   in urban areas is already 44%, and 3G data usage per customer is at similar   levels to Europe. For many, their first experience of the internet will be on   mobile, given the lack of fixed line infrastructure. Our rapid roll-out of 3G   networks this year is generating a rapid payback, with 3G browsing revenues   growing at 140% during the year. Data We have witnessed exceptional demand   for data this year, whether 4G in Europe or 3G in emerging markets, with data   growth totalling 80% for the full year, and accelerating every quarter in   Europe. As video and music services proliferate, and data coverage widens and   becomes more consistent, customers are increasingly using their smartphones   and tablets for entertainment, work and social interaction. We now provide 4G   services in 18 countries, with a further four countries launched during the   year. Our 4G customer base has quadrupled to 20.2 million. While progress has   been rapid, still only 13% of our European customer base is on 4G, providing   us with a very substantial opportunity for future growth. With quicker   network response times, better in-building penetration and higher peak   speeds, 4G is stimulating significant growth in data, with usage typically   doubling when customers migrate from 3G to 4G. In addition, our successful   commercial approach of bundling content packages with 4G in a number of   European markets is boosting data consumption further, and enabling us to   introduce larger data bundles to customers. Our ability to translate this   strong data demand into revenue growth will be a key driver of our financial   performance in the years ahead. Unified communications We are well on the way   to becoming a full service, integrated operator in our main markets. Through   organic investment and acquisition, we now cover 28 million households (and   thousands of businesses) across Europe with our own fibre or cable   infrastructure. In addition, we can reach a further 22 million households by   accessing the incumbent operators’ networks. In the 2015 financial year, 25%   of our service revenue in Europe came from fixed line, compared to just 10%   five years ago. We now have 11.3 million broadband customers and 9.1 million   TV customers in Europe. During the year we completed the acquisition of Ono,   Spain’s number one cable operator covering seven million homes. We made   strong progress on the integration of both Ono and KDG in Germany, combining   our fixed and mobile networks and beginning to migrate Vodafone broadband   customers to our new infrastructure. We are also demonstrating strong   commercial momentum. We increased our European broadband customer base by   over 850,000 (excluding acquisitions) during the year, with revenue trends   improving through the year. In the coming weeks, we will launch our consumer   broadband proposition in the UK, with TV to follow later in 2015, and as a   result will be offering integrated fixed and mobile services in all of our   major European markets. We have made significant progress on all of these elements   during the year, and are on track to hit our key March 2016 targets.   Highlights of our progress include: 16 Vodafone Group Plc Annual Report on   Form 20-F 2015 extending our European 4G footprint to 72% population   coverage, up from 32% in September 2013; adding a further 33,000 2G and   42,000 3G sites, to deepen our existing coverage and improve voice   reliability; reaching 90% of the population in targeted urban areas with 3G   in India; and covering an additional 3.9 million homes across Europe with our   own fibre. building 4G to over 90% of the population in our European markets   and 3G to up to 95% of the population in targeted areas of India; modernising   our mobile network, with high speed backhaul giving us the capacity to   provide a consistently good network experience to our customers; making calls   more reliable – still the number one priority for most customers; upgrading   our retail presence, to offer customers modern shops focused on service as   well as sales; increasing our next-generation fixed line infrastructure in   Spain, Italy and Portugal; and enhancing our suite of Enterprise products and   services, and taking them into new geographical areas. |
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|  | Enterprise   Services to business comprise around 27% of our Group service revenue, and   32% in Europe. Vodafone has a strong position in mobile enterprise,   leveraging our trusted brand and network reliability. We are increasingly   using this strong platform to win more international business and move more   deeply into fixed line, which is a rapidly growing trend within Enterprise as   well. Half of all new proposal requests in Vodafone Global Enterprise (‘VGE’)   ask for converged solutions, and fixed is now 25% of Enterprise service   revenue. At the same time, through Project Spring, we are investing in   strategic growth areas such as Cloud and Hosting and M2M, which promise to be   significant growth drivers in the future. VGE, which provides services to our   biggest international customers, achieved revenue growth of 1.8%*, as   multi-national corporations continued their trend of seeking a single   provider of services across borders. In M2M, we increased the number of   connections to 21.5 million from 16.1 million last year, and acquired Cobra   Automotive, a provider of value-added security and telematics services to the   automotive industry. M2M revenue grew 24.7%*. Unified communications   continues to be a rapidly growing trend within Enterprise. Vodafone One Net,   our cloud-based integrated fixed/mobile service, now has 3.9 million users   across 11 markets – up 13% year-on-year. Outlook There are strong reasons for   optimism over the future of the telecoms industry and Vodafone’s position   within it. We are leading the way in increasing investment, which will   significantly enhance the quality of service to customers. Ongoing   consolidation in the sector will lead to fewer, healthier companies, and   competition increasingly based on service differentiation rather than price   alone. On the regulatory front, headwinds in Europe are easing, although   India continues to introduce new measures that will limit growth in the short   term. The coming year will be another very important one for execution, as we   complete the Project Spring build programme and continue the integration of   KDG and Ono. At the same time, we will take further measures to stabilise   average revenue per user (‘ARPU’) as usage continues to grow strongly.Our   priority is to ensure that we give customers – whether individuals or   businesses, mobile or fixed – the best possible service. This is not just   about providing the best coverage and connectivity, but also about making   everything about being a Vodafone customer easier, clearer and more reliable.   Signing a contract, adding more services, understanding or challenging a   bill, seeking help and advice online, over the phone or in one of our shops:   we aim to improve every aspect of the customer relationship with Vodafone. By   the end of the coming financial year we expect that the clear improvements in   network performance delivered by Project Spring, combined with a more   consistent customer service experience, will begin to be reflected in   stronger customer satisfaction. This in turn should reduce churn and, combined   with continued strong growth in data usage, stabilise ARPU. Although cash   flow will continue to be depressed in the coming year given the high levels   of investment, our intention to continue to grow dividends per share annually   demonstrates our confidence in strong future cash flow generation.  /s/ Vittorio Colao Vittorio Colao Chief   Executive Dividend per share  pence   Growth in dividend per share We increased the dividend per share by 2.0% this   year and we intend to grow this annually 2013 2014 2015 |
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|  | Key performance indicators Monitoring   our strategic progress We track our performance against strategic, financial   and operational key performance indicators (‘KPIs’) which we judge to be the   best indicators of how we are doing. Pages 22 and 23 18 Vodafone Group Plc   Annual Report on Form 20-F 2015 Emerging markets active data users2 million   Data is a huge opportunity in our emerging markets and we are increasing our   data coverage across them all. Around half our customers still only   experience data on 2G so a key goal for us is to increase the number of   customers using 3G and 4G. 2013 2014 2015 Our active data customer base   continues to grow significantly with nearly 20 million added in the year,   half of which were in India. More and more of our data users are now using   3G, with 19 million 3G customers in India alone. We also currently offer 4G   services in South Africa, Kenya, Lesotho and Qatar and expect this to expand   in the future. 114.2 94.6 68.2 Achieved 3 Europe fixed 2 broadband customers   million As we expand our broadband coverage we are successfully growing our   broadband base. 2013 2014 2015 The total number of customers has been boosted   by the acquisitions of Kabel Deutschland (added 2.1 million) in the 2014   financial year and Ono (added 1.6 million) and Hellas Online (added 0.5   million) during this year. In addition to this, we added 853,000 customers   over the year across Europe and expect to continue to grow our base next year   and beyond. 11.3 8.5 6.1 Achieved Europe NGN coverage 2 (owned assets) million   homes passed As part of our evolution to a unified communications provider,   we are expanding our high-speed broadband coverage through a combination of   cable and fibre assets, through both acquisitions and self-building   programmes. not 2013 2014 2015 We now cover 28 million homes across Europe   with owned infrastructure, equivalent to 19% of our European footprint. We   expect this total to increase next year as we continue our building   programmes. The total coverage increases to 50 million (35% of households)   when including our wholesale access deals. Data available 28 19 Achieved   Europe average 1 smartphone data usage1 MB A key goal of our strategy in   Europe is to get customers to use more data as this should, with successful   monetisation, support revenue growth in the years ahead. 2013 2014 2015 The   average smartphone usage has doubled over the last two years, helped by our   worry-free Red plans and the uptake of 4G and content packages. We expect   this average to continue to increase next year and beyond. More on data   usage: 755 473 345 Achieved Europe 4G coverage 1 % Expanding our 4G coverage   is a key objective of Project Spring as it provides customers with a better   experience and stimulates higher data usage and improved monetisation. 2013 2014   2015 We have now reached 72% coverage across our European markets and expect   this to be over 90% by March 2016. 72 46 20 Achieved Europe 4G customers 1   million We previously reported smartphone penetration as a KPI, which is now   52% and above our 50% target for the year. While this metric remains crucial,   we are increasingly focused on ensuring as many our customers experience data   on 4G. 2013 2014 2015 We increased the number of 4G customers by 12.6 million   in the year and we expect this number to grow significantly in the coming   year as the majority of new contract connections are now on 4G. 0.5 15.9 3.3   Achieved |
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|  | Measuring   financial performance We use four main metrics to track our financial   performance. Financial indicators Our financial performance this year saw   strong performances across our emerging markets offset by continued weakness   across many of our European businesses, reflected in our service revenue and   adjusted EBITDA performance. Despite these pressures, and during a period of   significant investment through Project Spring, we met our financial guidance   for both adjusted EBITDA and free cash flow and increased our dividend per   share. Our results this year include a full year of Vodafone Italy   (consolidated from February 2014) and our acquisitions of Ono, Hellas Online   and Cobra Automotive. More on Financial performance: Page 38 Page 39 to   better align to our strategy and changing Spring. We have also expanded the   scope importance of unified communications and disposal of our interest in   Verizon Wireless the results of that through our financials. 19 Vodafone   Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information Changes to KPIs this   year We have updated our KPIs this year business model. For our strategic   KPIs, we have changed the focus of European mobile towards 4G and increasing   data usage to better reflect the investments we are making with Project of   our strategic KPIs to address the growing the growth of data in emerging   markets. With the financial KPIs, we have moved to an absolute measure of   adjusted EBITDA rather than margin and have removed adjusted operating   profit, following the in the 2014 financial year. We have also removed mobile   market share as a KPI as our focus is on improving our customer experience   and we monitor Dividend per share pence The ordinary dividend remains the   primary method of shareholder return and we have an outstanding record of   growth here. We intended to increase the dividend per share annually. 2013 2014   2015 We increased our dividend per share to 11.22 pence in the year. Our   intention remains to grow the dividend per share annually. 11.00 11.22 10.19   Achieved Free cash flow3 £ billion Cash generation is key to delivering   strong shareholder returns. Our free cash flow will be depressed during the   period of Project Spring as we increase our capital expenditure by around   half. Our guidance was for positive free cash flow in the year. 2013 2014 2015   Free cash flow fell by £3.3 billion over the year, with the £2.9 billion   increase in capital expenditure not offset by the free cash flow contribution   from Vodafone Italy and Ono. On a guidance basis, free cash flow was £1.3   billion, in line with the guidance range. More on free cash flow and   financial year guidance: Page 39 5.7 4.4 1.1 Achieved Adjusted EBITDA3 £   billion Growth in adjusted EBITDA supports our overall profitability and free   cash flow which helps fund investment and shareholder returns. Our guidance   was for adjusted EBITDA of £11.3 billion to £11.9 billion in the year,   excluding the results of Ono. 2013 2014 2015 Reported adjusted EBITDA of   £11.9 billion increased mainly due to the inclusion of Italy and Ono. On an   organic basis, adjusted EBITDA decreased by 6.9%*, reflecting the ongoing   competitive pressures in Europe and the increased operating costs as a result   of Project Spring. On a guidance basis, adjusted EBITDA was £11.7 billion, in   line with the guidance range. More on adjusted EBITDA and financial year   guidance: 11.9 11.5 11.1 Achieved Organic service revenue growth3 % Growth in   the top line demonstrates our ability to grow our customer base and stabilise   or increase ARPU. We aim to return to service revenue growth. 2013 2014 2015   We were unable to grow our organic service revenue this year, mainly as a   result of continued pressures in many European markets. We did, however, see   continued improvements in the growth trends throughout the year, with   positive growth in the final quarter of the year. -0.1 -2.6 -1.6 More work to   do |
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|  | Key performance   indicators (continued) performance 20 Vodafone Group Plc Annual Report on   Form 20-F 2015 Measuring operational We track our operational performance   against three key metrics that cover the experience we offer our customers   and the engagement and diversity of our employees. maternity policy in the   year. Pages 28 and 29 Notes: 1 Based on Android and iPhone devices. 2   Emerging markets comprise DRC, Egypt, Ghana, India, Lesotho, Mozambique,   Qatar, South Africa, Tanzania and Turkey. 3 Financials for 2013 and 2014 are   shown on the current statutory basis, including the results of the Group’s   joint ventures using the equity accounting basis. Free cash flow excludes   restructuring costs in all periods. out of 13 KPIs achieved versus 9 out of   12 in 2014 More on rewards for performance in the Remuneration report: Paying   for performance The incentive plans used to reward the performance of our   Directors and our senior managers, with some local variances, include   measures linked to our key performance indicators. The annual bonus (‘GSTIP’)   pay-out for the 2015 financial year was dependent upon our performance across   three financial measures (service revenue, adjusted EBITDA, and adjusted free   cash flow) and one strategic measure (Competitive Performance assessment),   with each having an equal 25% weighting. The Competitive Performance   assessment was based on a market-by-market assessment of measures including   NPS performance and relative revenue market share. We are making two changes   for the year ahead to underline the importance of providing the best possible   customer experience. We will rebalance the weightings of the performance   measures with 60% being equally split across the financial measures and 40%   weighted to the strategic measures. In light of this increase in weighting   the Competitive Performance assessment will be replaced by Customer   Appreciation KPIs which will continue to include an assessment of NPS and we   will add in Brand Consideration along with other customer measures. Pages 75   to 91 Percentage of women in senior management % Diversity increases the   range of skills and styles in our business and increased female   representation across our senior management (top c.1,600 employees) is one   measure of diversity. Our goal is simple, to increase the proportion each   year. 2013 2014 2015 We have not made progress on this metric this year, with   the proportion falling slightly. To help improve gender diversity further, we   launched a new More on Our people: 24 23 22 More work to do Consumer mobile   net promoter score out of 21 markets We use net promoter scores (‘NPS’) to   measure the extent to which our customers would recommend us to friends and   family. We aim to increase or maintain the number of markets where we are   ranked number one by NPS. 2013 2014 2015 This year we increased the number of   markets where we are ranked number one and our goal is to continue to   increase this number every year. We are now ranked first or joint first in   mobile in four of our top six markets (Italy, Spain, India and South Africa)   while we lag behind in the UK and Germany. 11 9 8 Achieved Employee   engagement index The employee engagement score measures employees’ level of   engagement – a combination of pride, loyalty and motivation. Our goal here is   to retain our top quartile position. 201320142015 Our employee engagement   score remains broadly stable and we retained a top quartile position. More on   Our people: Pages 28 and 29 78 77 77 Achieved |
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|  | impact in the   EU 21 Vodafone Group Plc Annual Report on Form 20-F 2015 Overview Strategy   review Performance Governance Financials Additional information Measuring our   economic Our substantial operations and investments in Europe have a positive   impact on the EU economy as a whole, with our digital networks and services   enabling businesses to enhance productivity and competitiveness, while   helping public institutions enhance efficiency in delivering public services.   For every €1 we add to the EU economy directly, we generate just under   another €1 indirectly, through the purchase of goods and services from   suppliers. Better productivity We provide jobs and the potential for a high   skills career path for our 54,000 employees in Europe. Our employees are 40%   more productive than the average across the telecommunications sectors in the   12 EU countries in which we operate1. For every full time equivalent Vodafone   job we generate an average of 2.2 full time employment opportunities among   our European suppliers. For more information see our EU Economic Impact   report online at vodafone.com/policy. Note: 1 KPMG analysis based on data   from Eurostat. |
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|  | Our strategy Consumer Europe While voice   and messaging remain crucial to our customers, the demand for data continues   to grow, both through mobile and through fixed. This growth provides a great   opportunity for Vodafone and for our customers as we work towards providing   the best data experience to more and more customers. 1 41% of service revenue   from consumers in Europe Growing data penetration Voice and messaging remain   crucial to all of our customers and we have improved voice quality   dramatically, with only around 1 in 170 calls dropped on average compared   with 1 in 110 in September 2013. However, the rise of smartphones and other   connected devices is leading more and more of our customers to use data on   the move. Already over half of our customers use data, with 52% smartphone   penetration across our base, and we have a great opportunity to extend this   further. To help data reach more and more people we provide low-priced entry   level plans with small allowances, and combine these with affordable   handsets, such as our Vodafone branded devices. During the year, we sold over   3.4 million Vodafone branded smartphones across Europe. We have 15.9 million   4G customers across Europe, compared to only 3.3 million a year ago. 4G is   driving an increase in data usage, both in absolute and per-user terms. On   average our 4G customers use twice as much data as our 3G customers and that   has helped average smartphone usage increase from 473MB to 755MB during the   year. This is supported by the large increase in video streaming, which now   accounts for 48% of data traffic. Bundling content with our 4G plans is also   helping to increase data usage, as discussed on page 23. Monetising increased   usage As customers use more and more data it is important that we monetise   this. Higher usage has helped drive higher revenues per customer in some   markets, especially in the UK where 4G data usage trends are particularly   strong. In some markets, average revenue per user (‘ARPU’) has continued to   fall as the benefit of increased data usage has not offset the fall in market   prices. 4G driving increased usage The arrival of 4G in Europe has had a   significant impact – both on our business and on the experience our customers   enjoy. 4G is attractive because it offers much faster speeds and a more   reliable experience, enabling customers to watch videos, stream music and   enjoy the internet better than ever before. data usage1 22 Note: 1 Based on   3G to 4G cohort analysis Vodafone Group Plc Annual Report on Form 20-F 2015   Roamers registered million on “Daily offer” 0 2013 2014 2015 30 20 20.0 14.2   10 3.0 Video as a % of data traffic % 0 2013 2014 2015 60 48 40 37 37 20 3G   vs. 4G average monthly GB 0 Netherlands Spain 2.0 1.9 1.5 1.6 1.0 0.9 0.7 0.5   European smartphone penetration % 30 2013 2014 2015 60 50 52 45 40 38 Context   More and more of our customers are using data, increasingly on 4G Average   smartphone data usage is accelerating, increasing 60% over the year Customers   want simplicity and worry-free bills We are now a major fixed broadband and   TV provider Where we are going We are encouraging more customers to switch to   data and to use more data We are expanding our 4G network to over 90%   population coverage by March 2016 We continue to enable worry-free usage   through our Vodafone Red and roaming plans We are stimulating data usage   through bundling content We are increasingly providing mobile and fixed   services together We are improving the experience we offer customers through   modernising our stores and investing in better customer service Project   Spring achievements Taking 4G coverage to 72% Reducing dropped calls to 0.6%   Increasing average smartphone data usage to 755MB Modernising around 3,250   retail stores |
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|  | Expanding our   worry-free propositions A crucial part of our strategy to encourage greater   data usage is to remove the concern many customers have about using data. The   main way we have done this is through our Vodafone Red plans. Vodafone Red   offers unlimited calls and texts with generous data allowances – letting our   customers use their phones without worrying about their bill. We now have   16.4 million Red customers across all our European markets, improving   customer satisfaction and reducing the level of customers deciding to leave   us. We have extended worry-free usage even further for some customers with   integrated European roaming, Secure Net (our mobile security software) and   cloud storage offered with many high-value plans. Vodafone Red also helps protect   our business against over-the-top voice and messaging services that let   customers use their data allowance rather than their voice and messaging   allowances. We now have 62% of our mobile service revenue in Europe coming   from customers’ committed bundles, up from 58% a year ago. Expanding   worry-free roaming We have continued to take the concern out of roaming for   our customers with our daily offer, which allows customers to take their home   tariff abroad for a small fee. We now have 20 million customers who have   registered for this offer compared with 14 million a year ago, accounting for   33% of consumer roamers. We now also offer 4G roaming in all our 4G markets,   letting our customers enjoy 4G abroad in up to 54 countries. Customers using   our daily offer typically use their phone more and generate higher roaming   ARPU than those on standard tariffs. Our unified communications strategy is   discussed in detail on the next two pages. Customer experience While our   strategy across Europe is focused on providing a great data experience, it is   important that we work on our everyday interactions with customers. As part   of Project Spring we are upgrading around 8,000 of our stores to enhance the   experience we offer customers. We have upgraded around 3,250 so far. We are   also upgrading our customer service, with 24/7 telephone support available in   all markets and significant increases in the use of our mobile and online   based care products. We now have 12.5 million ‘My Vodafone App’ users who can   check their balance and usage, and access help and support, wherever they   are. A major fixed operator The story is not just about mobile data. As a   result of recent acquisitions and our organic strategy, we now have 11.3   million fixed broadband customers and 9.1 million TV customers across Europe.   As we become a larger fixed operator, we are increasingly providing customers   with both mobile and fixed services. Consumers increasingly want one plan   that includes their fixed, mobile and TV packages and we are making progress   towards providing this across our markets. 23 Vodafone Group Plc Annual   Report on Form 20-F 2015 Overview Strategy review Performance Governance   Financials Additional information Bundling content encouraging data usage We   have also increased average data usage by offering customers content packages   as part of their price plans. We include services such as Netflix, Spotify   and Napster within selected plans across eight European markets. Customers   who sign up to these content packages typically use at least twice as much   data as similar customers who do not have bundled content. Mobile customers   with bundled price plans in Europe |
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|  | Our strategy (continued) Unified   Communications Our customers increasingly expect to connect to friends,   information and entertainment wherever they are, irrespective of the   underlying technology. We are growing our next-generation fixed capability to   meet their needs. 20% of service revenue from fixed services What is unified   communications? More and more customers are consuming bundled fixed and   mobile services which often provide better value for money, and increasingly,   one single bill and one single point of contact. To meet this evolving demand   requires seamless high speed connectivity through the integration of multiple   technologies such as 3G, 4G, WiFi, cable and fibre – which we call “unified   communications”. During the year our competitors launched new convergent   offers in several key European markets and we started to respond with our own   offers. Therefore, it is critical for us to continue to develop fixed   broadband services alongside our established mobile assets so that we can   compete in this growing segment. Our fixed strategy Our goal is to secure   access to high speed fixed broadband infrastructure in all our major European   markets. We will continue to do this either through building our own fibre,   wholesaling (renting) from incumbent fixed operators or acquisitions. We   decide which approach to adopt on a market-by-market basis, taking into   account the cost of building our own fibre, the economics of the wholesale   terms on offer, the speed of market development, and the availability of good   quality businesses to acquire. We have made good progress on our strategy.   During the year we completed the purchase of two fixed companies – Ono,   Spain’s largest cable company, and Hellas Online, a leading provider of fixed   telecom services in Greece. We are progressing well on the building of our   own fibre networks in Italy, Spain and Portugal, with preparations underway   in Ireland. The market opportunity We are well established in mobile, with a   market share in Europe of over 20%. In the fixed market, where we are   building our presence, our share is currently around 10%, giving us a real   opportunity to grow in this space. The bundling of fixed and mobile services   has been a feature of the enterprise market for several years and it is   becoming increasingly important for consumers too. In a number of key   European markets, a large share of households already take combined fixed and   mobile bundles – including 50% in Spain and 25% in Portugal – and we see   clear signs of this expanding to other countries. 24 Vodafone Group Plc   Annual Report on Form 20-F 2015 Fixed broadband and million TV customers 0 2013   2014 2015 Fixed broadband customers TV customers 15 12.1 10 9.1 9.2 8.3 6.9 5   0.2 Fixed service revenue % percentage of total service revenue 0 2013 2014 2015   20 20 15 16 12 10 5 Context Customers increasingly want access to their   content – photos, videos, music, internet – wherever they are, and on   whatever device they are using – phone, tablet, laptop or TV screen Customers   are agnostic about using fixed or mobile networks – the most important   requirement is a reliable connection We are seeing a growing demand for both   combined fixed and mobile bundles and pay TV and broadband packages The   growing demand for data requires a strong backhaul network with high speed   fixed fibre or microwave capability linked to the mobile radio network Where   we are going We expect fixed revenue to become more important to us over time   as we aim to increase our market share We aim to increase the number of fixed   broadband users We expect to pass more households with high speed fibre or   cable We aim to have the best in class converged services including TV and   all services on one single bill Project Spring achievements Increasing our   next-generation fixed line infrastructure to 28 million households Increasing   fixed broadband customers to 12 million Providing five million customers with   high speed fibre or cable broadband 2 |
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|  | In the coming   weeks we will launch residential broadband services in the UK, using the   infrastructure acquired with Cable & Wireless Worldwide (‘CWW’). Over   2,200 mobile base station sites in the UK have been connected to the CWW   network, which significantly increases both the amount and speed of data we   can carry. We remain on track to achieve the financial synergy targets we set   when we acquired CWW. We have made good progress on the integration of both   Ono in Spain and KDG in Germany, combining our fixed and mobile networks and   beginning to migrate Vodafone broadband customers to our new infrastructure.   For example, in Germany we have created one national backbone and 70% of all   traffic has already been migrated onto a single network. Read more about the integration   process on page 39. In emerging markets we are also building high speed fibre   capability to serve targeted urban areas. In South Africa we have launched   fibre to business services and begun to trial fibre to the home. In India we   laid around 16,000 kilometres of fibre to business areas during the year   taking the total to nearly 150,000 kilometres. Our subsidiary, Vodacom, is   awaiting regulatory approval to acquire Neotel, the second largest provider   of fixed telecommunications services in South Africa. According to external   estimates1 an increasing number of households in Europe take bundles of pay   TV and broadband packages. To ensure we can offer the best in class unified   communications solutions we also provide TV services. We already have nine   million TV customers in six markets through wholesale arrangements, and we   aim to expand this to several new markets this year. During the year our   fixed broadband base in Europe increased by nearly 2.8 million (including   acquisitions) to 11.3 million making us one of the largest providers of fixed   broadband services in Europe. The number of customers taking our high speed   fibre or cable broadband increased to five million. Our ambition is to expand   our broadband coverage further. Our converged solution for business   customers, Vodafone One Net, combines fixed and mobile services and a full   suite of cloud-based unified communications and collaboration services in one   easy to use package. During the year we expanded the service to more markets   and the number of users increased by 400,000 to 3.9 million. Our fixed   broadband assets and performance The successful execution of our strategy has   given us a strong unified communications footprint in Europe. We now pass 28   million households with our own high speed fixed fibre or cable   infrastructure. In addition, we can reach a further 22 million households via   wholesale agreements with fixed operators. This strategy is supporting good   commercial performance. Note: 1 Analysys Mason. 25 Vodafone Group Plc Annual   Report on Form 20-F 2015 Overview Strategy review Performance Governance   Financials Additional information Ono acquisition We spent €7.2 billion (£5.8   billion) during the year acquiring Ono in Spain, a leading provider of   telecommunications services including fixed telephony, broadband, pay-TV, and   mobile services. Ono has the largest cable network in Spain with 7.4 million   homes passed (around 40% of Spanish households). It serves 1.9 million   customers and is the market leader in ultrafast broadband, offering superior   speeds in excess of 200 Mbps. In April 2015 we launched our fully converged   offer, Vodafone One, which utilises the best of Vodafone and Ono to give   customers in Spain the next-generation converged service with the fastest 4G   mobile network, landline (fixed), internet and TV. |
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|  | Our strategy (continued) Consumer   Emerging Markets Today, fast growing emerging markets in Asia and Africa   generate a third of our revenue. We believe that these markets provide a   significant future growth opportunity, driven by rising wealth, expanding   populations and growing demand for mobile services. Increasing our network   quality We are delivering strong growth in emerging markets, reflected in a   7% rise in customers over the year to 321 million, representing 72% of the   total. However, mobile penetration is still less than 100%, compared with   nearly 140% in Europe, so we expect to see a lot more growth going forward.   To support and drive this growth opportunity we have made significant   progress on upgrading and further extending our mobile network, with 24,000   2G and 30,000 3G radio sites added in AMAP since Project Spring commenced. As   an example of progress, our 3G coverage in targeted urban areas across India   is now 90%, and customers are experiencing a 44% gain in download speeds. In   addition we have launched 4G networks in four emerging markets and in   selected countries we also provide even faster fixed fibre services to urban   areas. Driving the data opportunity Data usage in emerging markets is   expanding rapidly (doubling in the year) due to the growth in customers, the   expanding network and the greater range and affordability of handsets. During   the year we made good progress. We increased the number of data users by 21%   to 114 million, which is two thirds of the total across the Company; we   trebled the number of 3G data users in India to 19 million; Vodacom delivered   a 16% increase in active data users to 26 million or 39% of total customers;   and smartphone penetration in Turkey rose to 46% from 34% last year.   Enhancing customer experience We have a significant distribution footprint in   emerging markets with 10,000 branded or franchised stores. We have modernised   nearly 1,300 of these stores and are targeting to reach around 2,300 by 2016.   In India we have the largest footprint of 1.8 million recharge outlets,   significantly more than our nearest competitor. In South Africa we introduced   webchat, so customers can resolve their queries online, and enhanced the   MyVodacom app for smartphones, which allows customers to view their account   balance or top up their account, with new features such as data top-ups. To   ensure we provide value for money in our emerging markets we offer targeted   price plans based on customers’ usage patterns, and in South Africa we   reduced prepaid prices by 18%, leading to a significant uplift in usage.   M-Pesa: increasing access to mobile financial services Our mobile money   transfer and payment service, M-Pesa, enables people who have access to a   mobile phone, but limited or no access to a bank account, to send and receive   money, purchase goods, pay bills, and in some markets save money and receive   short-term loans. M-Pesa is available in nine countries via a network of   273,000 agents. We now have 19.9 million active M-Pesa customers, an increase   of 18% over last year. It represents around 20% of the service revenue and   over half of the mobile customer base in established M-Pesa markets such as   Kenya and Tanzania. During the year we launched our first international money   transfer corridor between Tanzania and Kenya; we also relaunched M-Pesa in   South Africa and completed the national roll-out in India. Context aaOur   emerging markets are India, South Africa, Turkey, Egypt, Ghana, Kenya, Qatar,   Tanzania and several other southern African countries aaThese markets are   growing quickly – reflected in a 20% growth in customers to 321 million in   just three years aaThe demand for mobile data in emerging markets is growing   rapidly – with data volumes doubling this year aaThere is strong demand for   mobile money services as many people in these markets have little or no   access to banking services Where we are going aaWe are increasing and   upgrading our base station sites to improve network coverage and quality aaWe   are managing the growing demand for data through the deployment of high speed   mobile networks and fibre based services to enterprise customers aaWe are   continuing to invest in market leading distribution and value for money   offers aaWe are enhancing our leading mobile money service, M-Pesa, by   increasing the range of mobile financial services it provides 3 Project   Spring achievements aaExtending our AMAP 3G/4G footprint (excluding India) to   82% population coverage (2016 target 84%) aaGrowing 3G coverage in targeted   urban areas in India to 90% (2016 target 95%) aaTaking 4G to Kenya, Lesotho   and Qatar, with more emerging markets to follow aaIncreasing M-Pesa to 19.9   million users 23% of service revenue from consumers in emerging markets (and   a further 6% from enterprise customers) Mobile customers in million emerging   markets 275.3 2013 2014 2015 302.4 321.4 0 300 200 100 400 Data users in   emerging markets million 68.2 2013 2014 2015 94.6 114.2 0 80 40 120 26 Vodafone   Group Plc Annual Report on Form 20-F 2015

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|  | Enterprise As businesses increasingly   look for more than just mobile services, and make mobility a central part of   their strategies, we are becoming a leading total communications provider.   Our portfolio includes a range of mobile, fixed, unified communications,   Cloud and Hosting and M2M services. 4 of service revenue from Enterprise   Context a Businesses of every size are facing the same challenges and   opportunities as the boundary between mobile and fixed communications and IT   blurs a They and their employees expect to be confidently connected to   people, customers, data and applications wherever they are and whenever they   want Where we are going a We are building a comprehensive total   communications portfolio, rooted in our core strength in mobile a Our   strategy is focused around three market segments – small and medium-sized   enterprises, large and multinational corporates and carriers a Investment is   concentrated on three high-growth markets – unified communications, Cloud and   Hosting and M2M Project Spring achievements a Extending our global IP-VPN   footprint to 62 countries via 256 points of presence a Launching our Cloud   and Hosting services in Germany Moving to Total Communications While the   majority of our revenue comes from mobile, we are increasingly moving to   total communications – providing many services beyond mobile. Vodafone One   Net, our flagship converged fixed and mobile communications offer, is   available for both large and multinational companies and for small and   medium-sized companies. Vodafone’s IP-VPN network provides private Wide Area   Network capability to connect our customers’ sites, assets and people together   securely. The Vodafone IP-VPN network is extensive, connecting 62 countries   directly. We also offer national fixed networks in many countries around the   world. The majority of our Enterprise business is managed in our country   operations, with the remainder managed by units that operate across   geographies (VGE, M2M and Cloud and Hosting). These account for 26% of all   Enterprise service revenue. Vodafone Global Enterprise Vodafone Global   Enterprise (‘VGE’) delivers Total Communications services to around 1,700 of   the world’s largest multinational companies in over 100 countries. VGE   simplifies operations for our customers by providing them with a single   account and service team, a single multi-country contract, single pricing   structures and a single portfolio of products and services. These are   underpinned by our fully integrated fixed and mobile networks, cloud-based   hosting platforms, M2M capability and other business services. Fixed as a   percentage of % enterprise service revenue M2M M2M is driving the “Internet   of Things” by connecting people, places and things to the Internet, turning   them into intelligent assets that communicate. Our M2M business serves   customers globally, across all sectors, with a focus on the high growth areas   of automotive, utilities and consumer electronics. We have expanded the   number of connections to 21.5 million from 16.2 million a year ago. In August   2014 we acquired Cobra Automotive to move up the M2M value chain in the   automotive industry and create a world leading “Connected Car” services   provider. Cloud and Hosting By combining our secure mobile and fixed   connectivity strength with our Cloud and Hosting services, we help   organisations move their data and applications to the Cloud and transform the   way they do business, reducing costs and increasing flexibility. Our Cloud   and Hosting business serves more than 1,200 public sector and enterprise   customers globally using our 18 data centres in the UK, Ireland, Germany and   Africa, complemented by a partner network of data centre facilities. Carrier   Services Our Carrier Services division manages the commercial relationships   with around 1,000 communication service providers globally and offers a broad   portfolio of fixed and mobile connectivity and other services. We are the   world’s largest international voice carrier and one of the world’s largest   investors in submarine cables that reach more than 100 countries. Split of   enterprise service % revenue 2015 VGE/M2M a Securing a US mobile virtual   network operator partner a Expanding our M2M footprint to a further four   markets 0 30 25 23 20 10 12 Vodafone Group Plc Annual Report on Form 20-F   2015 2013 2014 2015 /Cloud and Hosting 26% Managed in our country operations   74% 27 |
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|  | Our people During the year we employed   an average of 101,4431 people and had 105,970 employees as of March 2015, as   well as 25,267 contractors. The number of people in our business increased   during the year following our acquisitions of Ono in Spain, Cobra Automotive   in Italy and Hellas Online in Greece, plus the purchase of over 130 Phones 4u   stores in the UK. The following sections highlight our progress in the key   areas behind our people strategy. Increasing employee engagement For our   strategy to work we need our employees to believe in us. Every year all our   employees are invited to participate in a global survey which allows us to   measure engagement levels, compare ourselves with other large companies and   help us identify ways to improve how we do things. Our employee engagement   index measures how committed our employees are, their desire to continue   working for us and their willingness to recommend Vodafone as an employer.   The index remained stable this year at 77 points, still in the top quartile.   Our employee turnover rate, measuring the rate at which employees leave us,   increased to 18% reflecting the increased level of acquisitions and   integration in the business. We provide information to our employees in a   variety of ways, including our intranet sites, email, text and video   messages, as well as through individual teams. We also provide online   platforms for employees to feedback their comments. Valuing diversity We   believe that a diverse workforce helps us achieve our goals by helping us   better understand and meet the needs of our customers. We are both a   multinational and a multicultural company and employ people from 130   countries, with 24 nationalities in our Senior Leadership Team (our top 224   managers). Gender diversity is a key goal for us. At the end of the year we   employed 67,657 men (64%) and 38,313 women (36%). We have seen a slight   decrease in the proportion of women in senior management (top c.1,600   managers), now 23% compared with 24% a year ago, while the proportion in our   Senior Leadership Team has remained stable at 22%. To help push our progress   in gender diversity, we launched a new maternity policy in March 2015 that   provides mandatory minimum maternity benefits as standard across all our   markets, including 16 weeks’ full pay followed by full pay for a 30-hour week   for the first six months after employees return to work. We believe this will   help redress the gender balance in our business. We believe in treating all   employees equally and offer equal opportunities in all aspects of employment   and advancement regardless of race, nationality, gender, age, marital status,   sexual orientation, disability, religion or political beliefs. This year’s people   survey showed that 88% of employees believe that Vodafone treats people   fairly. Improving our customer focus All of our employees are expected to   work in the “The Vodafone Way”. This is about ensuring that we work with   speed, simplicity and trust so that we can be customer-obsessed at all times.   We have run development workshops for all our senior management for the   fourth consecutive year and will hold further workshops in the coming year.   Training our people We want people to grow their careers at Vodafone and   develop the skills and talent needed to grow our business. We do this through   formal training, on the job experience and regular coaching from managers. We   have global training academies for key areas such as marketing, technology,   enterprise sales, retail, finance and supply chain. Nationalities in top   senior % leadership roles Women in senior management % The people behind our   business Our people are behind every aspect of our strategy so it is   important that we attract, develop and retain exceptional people so we can   always deliver the best experience for our customers. Average number of   employees 91,272 2013 2014 2015 92,812 101,443 0 90,000 60,000 30,000 120,000   Employee engagement index 78 2013 2014 2015 77 77 0 75 50 25 100 Employee turnover   rates % 16 2013 2014 2015 15 18 0 15 10 5 20 26 2013 2014 2015 24 24 0 10 20   30 22 2013 2014 2015 24 23 0 10 20 30 Employees by location % Italy 6%   Vodacom 7% Germany 14% UK 16% India 18% Other 34% Spain 5% 28 Vodafone Group   Plc Annual Report on Form 20-F 2015 |
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|  | During the year   we trained around 18,000 people in our Technology Academy, around 13,000   people in our Retail Academy and over 8,000 in our Enterprise Sales Academy.   Next year we will introduce a Customer Experience Academy to help transform   our customer service. Developing future leaders We conduct regular talent   reviews to identify high-potential future leaders and accelerate the progress   of high-potential managers through our “Inspire” programme, which offers   development and executive coaching and may include an assignment to another   Vodafone market or function. Our “Discover” programme for graduates   accelerates the careers of high performing graduates, with over 600 people   recruited onto this programme during the year. We also have an international   assignment programme, “Columbus” which gives recent “Discover” graduates an   international assignment. Recognising performance We maintained our approach   of rewarding people based on their performance, potential and contribution to   our success. We benchmark roles regularly to ensure competitive, fair   remuneration in every country in which we operate. We also offer competitive   retirement and other benefit provisions which vary depending on conditions   and practices in local markets. Global short-term incentive plans are offered   to a large percentage of employees and global long-term incentive plans are   offered to our senior managers. Our incentive arrangements are subject to   company performance measures, comprising both financial and strategic   metrics, and individual performance measures. This ensures that variable pay   is demonstrably linked to both company and individual performance, and that   poor performance is not rewarded. Note: 1 Employee numbers are shown on a   full time employee basis. A statutory view is provided on page 157. An   ownership mentality is also a cornerstone of our reward programme and senior   executives are expected to build up and maintain a significant holding of   Vodafone shares. Simplifying and improving our business We continue to move   transactional and back office activities to our shared service centres in   Egypt, India, Hungary and Romania, with 16,800 employees and contractors in   these centres, compared with 13,300 a year ago. These centres allow us to   standardise many of our support functions and deliver a more consistent and   improved experience to our customers. These centres also support our cost   reduction goal as we benefit from lower labour costs. Doing what’s right We   have a “Code of Conduct” that sets out our business principles and what we   expect from employees to ensure they protect themselves as well as the   Company’s reputation and assets. We communicate these through our “Doing   What’s Right” campaign which covers topics including health and safety,   anti-bribery, privacy, security and competition law to ensure that people   know what’s expected of them and managers know what is expected of their   teams. Around 7,500 employees integrated in Germany and Spain this year Creating   a safe place to work We know from experience that failing to follow basic   health and safety standards can lead to our employees, the people we work   with and the people exposed to our activities being seriously injured or   killed. We believe that accidents and injuries are preventable and we do our   utmost to prevent them by promoting a culture where safety is an integral   part of every business decision across the Group. Our “Absolute Rules” help   employees follow best practice for safety and we focus on our top five risks:   road safety, working with electricity, working at height, working with   underground cables and working with contractors (where we have less control   over safety). The safety culture in Vodafone continues to improve with the   results of our latest people survey showing that 91% of employees believe   that our “Absolute Rules” are taken seriously compared with 89% last year. Despite   these measures, we greatly regret to report that ten people died while   undertaking work on behalf of Vodafone last year. Vehicle-related incidents   involving subcontractors in emerging markets remain our main cause of   fatalities and we continue to implement safe driving programmes in all of our   markets. Integrating our acquisitions As we develop our business towards   unified communications we need to combine with the companies we acquire and   ensure that all of our employees have the new skills that we increasingly   need, such as cable engineering and door-to-door selling. During the year we   integrated around 5,000 Kabel Deutschland employees in Germany and around   2,500 Ono employees in Spain as well as employees from our acquisitions of   Cobra Automotive in Italy, Hellas Online in Greece and our purchase of over   130 stores from Phones 4u in the UK. When we acquire a company we look to   include all new employees within Vodafone as soon as possible. Just two   months after the acquisition of Ono, all their employees had the same tools   as Vodafone employees and within six months we had moved all of Ono’s   headquarter employees into Vodafone’s main offices in Spain so we all sit   under one roof. Within eight months we had combined the management structure   so we are now truly one organisation. 29 Annual Report on Form 20-F 2015 |
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|  | Sustainable business Sustainable   business Our significant global footprint combined with the power of our   communications technology can help transform people’s lives. This enables us   to align our business growth with our goal to be a sustainable business.   Communications technology is acknowledged to be transformative in improving   people’s lives and livelihoods, as well as driving economic growth and   development. Estimates show that a 10% increase in mobile penetration in   emerging markets leads to a 4.2% rise in long-term productivity1. Vodafone   contributes to the socio-economic development of our customers by using   technology to tackle some of the most pressing challenges faced by society   today, with significant contributions in the areas of education and skills   development, access to financial services and resource efficiency. How we   achieve our goals is critical to the long-term success of the business. Our   approach is driven by a commitment to operate in an ethical and responsible   manner in all we do. This report highlights our progress in four critical   areas. Saving energy and reducing our carbon footprint Though we continue to   extend the reach of our network to more customers, who are using   ever-increasing amounts of data, our own carbon footprint has remained   relatively stable, despite significant acquisitions. The efficiency of our   operations has greatly improved, with emissions per base station at 9.9   tonnes of carbon dioxide equivalent (‘CO2e’), 33% lower than in 2007. Our   total carbon emissions in 2015 were 2.8 million tonnes of CO2e, an increase   on 2014 due to newly acquired operations and the expansion of our network. We   remain committed to reduce our energy consumption as far as possible, through   energy efficiency measures and renewable investments. As a market leader in   M2M solutions, we have a great opportunity to help our enterprise customers   to cut their carbon emissions, while delivering them significant cost   savings. Real-time tracking of vehicles, for example, helps fleet managers   revise routes, saving fuel and emissions. By March 2015, we had approximately   nine million active M2M connections with carbon reducing potential in the smart   metering, fleet management and automotive sectors. We estimate that we   delivered savings of 3.5 million tonnes of CO2e for our customers from our   M2M products and services, call conferencing and cloud and hosting solutions,   in 2015 – almost a million tonnes higher than our total emissions. We are now   working towards a new goal for our carbon footprint: within three years we   aim to enable our customers to reduce their carbon emissions by twice the   amount of carbon we generate through our own activities. Financial inclusion   M-Pesa continues to evolve beyond a traditional money transfer service. It   now enables people to save and borrow money, receive salaries and benefits,   send and receive money from overseas, and pay for goods and services,   regardless of whether they have a bank account. Launched two years ago in   Kenya, Lipa Na M-Pesa enables customers to make cash-free payments for goods   and services on a day-to-day basis, whether they are paying a supplier, or   shopping in a retail environment, with over £80 million worth of transactions   enacted just in March 2015. Our M-Pesa international money transfer service   continues to expand and it is now possible for people to send and receive   money between Kenya and Tanzania. Providing senders of cross-border money   transfers with more choice gives our customers a cheaper, more convenient way   to send and receive money. Vodafone Foundation: mobilising the community,   mobilising social change We believe that our communications technologies can   help to address some of the world’s most pressing humanitarian challenges and   thus improve people’s lives. To achieve this, the Vodafone Foundation invests   in projects in the communities within the countries in which Vodafone   operates, and is the centre of a network of global and local social   investment programmes. The total amount donated to the Vodafone Foundations   in 2015 was £48.2 million. Since its inception, Vodafone has donated over   £520 million to the charitable programmes led by our Foundations. Notes: 1   Deloitte and the GSMA. 2 Calculated using local market actual or estimated   data sourced from invoices, purchasing requisitions, direct data measurement   and estimations. Carbon emissions calculated in line with DEFRA guidance. For   full methodology see our Sustainability Report 2015. KDG and Ono data   included for 2015 only. Carbon emissions2 millions of tonnes CO2e Tonnes of   carbon emissions per base station 9.5 14.7 2007 2013 2014 2015 9.7 9.9 0 5 10   15 2.36 2013 2014 2015 2.55 2.80 0 2 1 3 Scope 1 (direct greenhouse gas (‘GHG’)   emissions) Scope 2 (indirect GHG emissions) 30 Vodafone Group Plc Annual Report   on Form 20-F 2015 |
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|  | M-Pesa is at   the heart of many of our transformational solutions in other areas,   particularly in agriculture and health. A new collaboration with the National   Rural Health Mission and Rural Employment Guarantee uses M-Pesa to disburse   government benefits in the states of Bihar and Jharkhand in India. In   Tanzania, our collaboration with the Commercial Bank of Africa, enables   M-Pesa customers to access interest-bearing savings accounts and small loans.   We are also rolling out a mobile solution to enable Anglo American, an   international mining company, to engage directly with local communities on a   monthly basis, in order to gain real-time feedback on the impact of their   operations. During 2014, Vodafone chaired the Telecommunications Industry   Dialogue on Freedom and Privacy of Expression, which continues to work in   collaboration with the Global Network Initiative (‘GNI’) to address the   issues of privacy and freedom of expression as they relate to the   telecommunications sector. Wherever we operate, we work to ensure that we do   not infringe human rights through our operations or business relationships.   We continue to work with our suppliers and others in our industry to raise   ethical, labour and environmental standards in our supply chain. We now   enable some of our suppliers’ workers to give direct, anonymous feedback on   their working conditions, using their mobile phones, in collaboration with   Good World Solutions. Responses to the surveys are aggregated anonymously and   provided directly to Vodafone and the supplier to identify areas for   improvement. Privacy and human rights The amount of data and personal   information transmitted over our networks continues to increase. Our   commitment to protecting that information and respecting our customers’ right   to privacy and freedom of expression remains critical in retaining their   trust. We are one of the first communications operators in the world to   provide a country-by-country analysis of demands received for access to our   customers’ data by law enforcement authorities, through the publication of   our Law Enforcement Disclosure report. This report explains our principles   and approach, as well as the policies and processes we follow when responding   to demands from government agencies and authorities. It also sets out the   framework within which we believe governments should act. For more   information see vodafone.com/sustainability. Enhancing our enterprise   customers’ sustainability efforts Our enterprise customers expect us to   support their commitment to operate in a sustainable way. In the 2015   financial year, over £1.5 billion worth of commercial bids and contracts   included a sustainability performance assessment. We are piloting and scaling   mobile solutions through the agriculture value chain with three of our   largest enterprise customers. Together, we are exploring how mobile money and   data, and M-Pesa specifically, can help to mobilise distribution channels and   create jobs, as well as how it can improve the efficiency and affordability   of water distribution in rural India. Our Instant Network Schools programme   to digital educational content and the internet via benefitted over 26,000   children been established in Kenya, DRC and South Sudan, 31 Vodafone Group   Plc Annual Report on Form 20-F 2015 Overview Strategy review Performance   Governance Financials Additional information Instant Classroom launched   During 2015 the Vodafone Foundation launched Instant Classroom, a digital   “school in a box” that can be set up in a matter of minutes, helping to give   children and young people in some of the world’s largest and most poorly   resourced refugee camps the opportunity to continue their education. The   Instant Classroom is shipped in a case which is equipped with a laptop, 25   tablets pre-loaded with educational software, a projector, a speaker and a   hotspot modem with 3G connectivity. The Instant Classroom was developed to   support the continued roll-out of the Vodafone Foundation’s Instant Network   Schools programme in partnership with the United Nations High Commissioner   for Refugees. These ‘schools’ are solar powered centres which provide access   tablets. So far, 16 Instant Network Schools have in Kenya, DRC and South   Sudan have benefiting over 26,000 children and 500 teachers. Over the next   two years the Instant Network Schools programme will be extended to support   additional schools in refugee camps in Kenya, DRC and Tanzania with the aim   of reaching 60,000 students. JustTextGiving JustTextGiving by Vodafone is the   headline programme of the Vodafone Foundation in the UK. It enables   individuals and charities to collect donations via text and is available to   all mobile customers on any UK network. Donors simply use a unique code to   send donations via text and 100% of the amount donated goes to the UK   registered charity. JustTextGiving is now being used by around 207,900   fundraisers and 21,600 charities and has helped raise more than £27 million   since its inception in May 2011. |
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|  | Principal risk factors and uncertainties   Identifying our risks We have a clear framework for identifying and managing   risk, both at an operational and strategic level. Our risk identification   process has been designed to be responsive to the ever-changing environments   in which we operate.Our risk management approach Vodafone recognises that   effective risk management is critical to enable us to meet our strategic   objectives. The Board has overall responsibility for the Group’s risk   management and internal controls system. The Audit and Risk Committee, under   delegation from the Board, monitors the nature and extent of risk exposure   against risk appetite for our principal risks. Details of the activities of   the Audit and Risk Committee are set out on pages 63 to 68 of this report. At   an operational level, risks are reviewed and managed by the Executive   Committee and through its delegated sub-committee, the Risk and Compliance   Committee. Details of the activities of the Risk and Compliance Committee are   set out on page 71 of this report. Identifying our principal risks Vodafone   identifies its principal risks through annual ‘bottom up’ and ‘top down’   exercises. The bottom up exercise is conducted by each majority-owned   subsidiary company in 25 markets, together with three major central companies   responsible for shared service centres, roaming and enterprise services. Each   of these 28 entities identifies their top ten risks together with their   tolerance for these risks. The top down exercise includes interviews with   around 30 senior executives. The output from the aggregated results of the   top down and bottom up exercises produces a list of principal risks that are   reviewed and agreed by the Executive Committee, prior to review by the Audit   and Risk Committee. Each principal risk is assigned to a senior executive who   is responsible for managing the risk and reporting on progress to the   Executive Committee. Our principal risks Vodafone’s principal risks are   relatively similar to those reported last year, although with some movement   on the relative ranking of these risks and two new risks added: (i) major   Enterprise contracts and (ii) superior customer experience. The risks are   each classified as financial, operational, compliance, strategic or   reputational. Vodafone’s decentralised operations and global scale reduces   the impact of many of its operational risks. Board/Audit& RiskCommittee a   Overall responsibility for Group’s risk management and internal controls   system a Monitors nature and extent of risk exposure against risk appetite   for principal risks Top down Group level Risk & Compliance Committee   (sub-committee of the Executive Committee) a Decides on principal risks a Determines   risk appetite a Decides risk response for risks that exceed tolerance a   Monitors risk management a Sets cultural tone Risk and Compliance Director a   Responsible for global risk management framework a Monitors Group level   risks, controls and actions a Supports the Executive Committee in monitoring   risk exposure versus appetite a Manages global risk community a Aligns risks   to assurance Group risk owners a Identify relevant controls a Manage global   remediation programmes a Report on progress to Risk and Compliance Director   Internal audit Supports Group/ local audit committees in reviewing the   effectiveness LocalChiefExecutives a Set local objectives and risk appetite   in line with Group guidance of the risk Bottom &ExecutiveCommittee a   Overall responsibility for culture, local risk management and controls   management up Entity Operational level framework level 32 a Local risk owners   – key functional owner for a principal local or global risk, responsible for   local programme to measure, manage, monitor and report on the risk a Local   risk coordinators – main point of contact in each market on risk, help to   coordinate all activities including enterprise risk management exercise and   reporting to the local Chief Executive on overall risk management a Local audit   committees – track remedial actions for principal risks in market |
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|  | 1. Malicious   attack on the network/IT infrastructure A successful cyber-attack on our   network could result in us not being able to deliver service to our   customers, resulting in serious damage to our reputation, consequential   customer and revenue loss and the risk of financial penalties. 2. Customer   data misuse or leakage Our networks carry and store large volumes of   confidential personal and business voice traffic and data. Failure to protect   or correctly use this data could result in unintentional loss of, or   unauthorised access to, customer data. This could adversely affect our   reputation and potentially lead to legal action. 33 Vodafone Group Plc Annual   Report on Form 20-F 2015 Overview Strategy review Performance Governance   Financials Additional information Risk description Operational risk Risk   description Operational risk |
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|  | Principal risk   factors and uncertainties (continued) 3. Adverse political pressure We face a   range of political pressures that could potentially lead to adverse   legislation or regulation for the business. For example, increased financial   pressures on governments may lead them to target foreign investors for   further licence fees, directly impacting profitability. Furthermore, changes   in local or international tax rules, for example prompted by the OECD’s   emerging recommendations on Base Erosion and Profit Shifting (a global   initiative to improve the fairness and integrity of tax systems), or new   challenges by tax or competition authorities, may expose us to significant   additional tax liabilities or impact the carrying value of our deferred tax   assets, which would affect the results of the business. We face competition   from providers who have the ability to sell converged services (combinations   of fixed line, broadband, public Wi-Fi, TV and mobile) on their existing   infrastructure which we either cannot replicate or cannot provide at a   similar price point potentially leading to higher customer churn and/or   significant downward pressure on our prices. Our own convergence strategy may   be compromised if we are unable to obtain regulated or equivalent access to   infrastructure and content, or acquire, rent or build the right assets, or if   we are unable to integrate effectively those businesses we do acquire into   our existing operations. 34 Vodafone Group Plc Annual Report on Form 20-F   2015 Strategic risk 4. Convergence Risk description Risk description External   risk |
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|  | 5. EMF related   health risks Concerns have been expressed that electromagnetic signals   emitted by mobile telephone handsets and base stations may pose health risks.   Authorities including the World Health Organization (‘WHO’) agree there is no   evidence that convinces experts that exposure to radio frequency fields from   mobile devices and base stations operated within guideline limits has any   adverse health effects. A change to this view could result in a range of   impacts from a change to national legislation, to a major reduction in mobile   phone usage or to major litigation. We have a number of high-value, ongoing   contracts with corporate customers, including some government agencies and   departments. Successful delivery is dependent on complex technologies deployed   across multiple geographies, as well as relative stability in the   requirements, strategies or businesses of our customers, Failure to deliver   these enterprise services may lead to a reduction in our expected revenue and   could impact our credibility to deliver on large, complex deals. 35 Vodafone   Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information Operational risk 6.   Major Enterprise contracts Risk description Risk description Reputational   risk |
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|  | Principal risk   factors and uncertainties (continued) 7. Unstable economic conditions   Economic conditions in many of the markets we operate in, especially in   Europe, remain unstable while many markets continue to stagnate or show   nominal levels of growth. These conditions have resulted in lower levels of   disposable income and may result in significantly lower revenues as customers   give up their mobile phones or move to cheaper tariffs. There is also a   possibility of unstable economic conditions impacting on currency exchange   rates in countries where the Group has operations, with potential adverse   implications for our profitability and the value of our financial and   non-financial assets. The development of messaging and voice applications   which make use of the internet as a substitute for some of our more   traditional services erode our revenue. Reduced demand for our core services   of voice and messaging, and the development of services by “over the top”   (OTT) competition, could significantly impact on our future profitability. A   limited number of suppliers of operating systems, terminals, IT and network   infrastructure, could lead to commercial exploitation and subsequent   increased costs of maintaining and extending our networks. 36 Vodafone Group   Plc Annual Report on Form 20-F 2015 Strategic risk 8. Disadvantaged by   existing and emerging technology players Risk description Risk description   External risk |
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|  | Operational   risk 9. Superior customer experience Risk description We operate in highly   competitive markets and failure to deliver a differentiated and superior   experience to our customers in store, online and on the phone, could diminish   our brand and reputation, and leave us vulnerable to aggressive pricing from   competitors and potentially a weakened relationship with our customers.   Operational risk 10. Network/IT infrastructure failure Risk description We   are dependent on the continued operation of our networks. Multiple network or   IT infrastructure failures (caused by non-malicious means including end of   life failure, natural disasters and weather-related failures) may result in   voice, video or data transmissions being significantly interrupted. This   could result in serious damage to our reputation, a consequential customer   and revenue loss and the risk of financial penalties. 37 |
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|  | Chief Financial Officer’s review Our   financial performance The increased commercial investments we began to make   in the prior year have translated into better performance with revenue trends   improving in each of the last three quarters. My priorities When I became CFO   last April, I highlighted three clear priorities which I believe will have a   significant impact on our future financial performance: the execution of   Project Spring according to the financial plan; the integration of   acquisitions, most notably KDG and Ono; and a continued focus on cost   efficiency. On all three, we are on track to deliver, but there is still much   more to do. Our results are reviewed in more detail on pages 40 to 48 of this   report, but overall I am satisfied that we have made important progress in   stabilising the financial performance of the business. Project Spring   execution Our £19 billion, two-year investment programme began in earnest   early in 2014. From both a logistical and financial perspective, we believe   this is the biggest and most intensive programme ever undertaken by any   telecoms operator. Vittorio has covered many aspects of the execution in his   review on page 16, demonstrating the clear progress we have made to date. I   am satisfied overall with deployment against plan. We are a little ahead on   our network rollout in AMAP, particularly India, and we are in line in   Europe, with a couple of exceptions. Our 4G build and network modernisation   in the UK is slightly behind schedule, hampered by the complexity of site   access and planning restrictions. In Italy, our fibre to the cabinet (‘FTTC’)   roll-out started late, as a result of negotiations with other operators in   the market which were eventually aborted. However, we are now making very   rapid progress. Capital spend is on target, with total capex for the year of   £9.2 billion – up 46% year-on-year. Cash flow generation was, as expected,   depressed by the level of spending. I remain very confident that, once   Project Spring is completed, we will return to a more normal level of capital   intensity and generate strong and growing cash flows. 38 Vodafone Group Plc   Annual Report on Form 20-F 2015 |
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|  | Acquisition   integration We commenced integration of KDG in April 2014 and of Ono in   August 2014. In total we expect to generate combined annual cost and capex   synergies of approximately €540 million in the 2018 financial year, mainly   from migrating fixed and mobile customers onto our own infrastructure and   combining backhaul and core networks. In terms of standalone business   performance, KDG has continued to grow strongly and even showed some   acceleration through the year, supported by firm pricing and improved   subscriber growth. Ono’s performance has been a little below expectations,   with ARPU coming under more pressure than anticipated as a result of   aggressive pricing at the premium end of the market. The teams have made   solid progress on all aspects of integration. In Germany, we have started to   connect Vodafone base station sites to KDG fibre backhaul, and have migrated   77,000 customers to date off our DSL platform (on which we pay high monthly   fees) onto KDG’s cable infrastructure. 70% of IP traffic has now been   combined, and we have launched our combined fixed/mobile proposition, “All in   One”. In Spain, we have so far connected over 500 mobile base station sites   to Ono’s fibre to save on backhaul costs. We also signed an agreement with   Telefónica, the host of Ono’s MVNO, to accelerate the migration of traffic to   our own network. We are launching a truly integrated, single-billed,   fixed/mobile proposition this summer. Cost efficiency Progress on costs was   good this year, with operating costs in Europe flat in organic terms, despite   the cost growth driven by the Project Spring network roll-out. Savings came   from further development of our shared services platform, increased   centralised procurement, headcount reductions and other efficiencies. Looking   ahead, for a relatively lean organisation such as Vodafone, a pure focus on   “cost cutting” can be an over-simplistic approach that could compromise the   quality of service we provide to customers, which would clearly be   self-defeating. Instead, we are looking at cost in two ways which can make a   significant long term difference to our overall efficiency. First, we are   focusing on productivity improvements – doing the same things better at a   lower cost, by developing cross-functional programmes and benchmarking more   forensically between different parts of the business. In some cases, this   will require us to invest more in the short term – for example, in new,   standardised IT systems – to deliver transformational efficiencies longer   term. Second, we are embedding a stronger cost-conscious culture at an   individual level throughout the business, including personal objectives on   efficiency targets for senior management incentives. Both of these elements   will be underpinned by more granular and consistent cost and productivity   reporting across markets and functions. We have instigated a programme called   “Fit for Growth” to encompass both of these objectives, and to develop an   organisation with improved competitiveness and agility for the long term.   Performance against 2015 financial year guidance Based on guidance foreign   exchange rates, our adjusted EBITDA was £11.7 billion, within our guidance   range of £11.3 billion to £11.9 billion set in May 2014, and our range of   £11.6 billion to £11.9 billion set in November 2014. On the same basis our free   cash flow was £1.3 billion, in line with our guidance of positive free cash   flow. Looking ahead The key goals for the year ahead are to build on the   improving commercial execution evident last year, and to complete the second   half of the Project Spring programme as successfully as the first half. We   expect adjusted EBITDA to be in the range of £11.5 billion to £12.0 billion1,   with further tight control on costs and good progress on the integration of   our cable acquisitions. We expect free cash flow to be positive1 even after   the second year of elevated Project Spring capex, giving us confidence that   we will return to a dividend that is comfortably covered by free cash flow   when capex returns to more normal levels in future years. /s/ Nick Read Nick   Read Chief Financial Officer Adjusted EBITDA £ billion Free cash flow and £   billion ordinary dividends paid Note: 1 Guidance for the 2016 financial year   is based on our current assessment of the global macroeconomic outlook and   assumes foreign exchange rates of £1:€1.37, £1:INR 95.2, £1:ZAR 18.1. It   excludes the impact of licences and spectrum purchases, material one-off   tax-related payments, restructuring costs and any fundamental structural   changes to the eurozone. It also assumes 0 no material change to the current   structure of the Group. 11.1 2013 2014 2015 4.4 2013 2014 2015 Free cash flow   Dividend |
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|  | Operating results Group1 Our financial   performance This section presents our operating performance, providing   commentary on how the revenue and the adjusted EBITDA performance of the   Group and its operating segments within the Europe and AMAP regions, together   with Common Functions, have developed over the last year. See pages 175 to   179 for commentary on the 2014 financial year. The results in this section   are presented on a statutory basis, in accordance with IFRS accounting   principles, as this is assessed as being the most insightful presentation and   is how the Group’s operating performance is reviewed by management. Revenue   28,071 13,482 754 (80) 42,227 38,346 10.1 (0.8) 9.4 (1.6) Service revenue   25,972 12,035 569 (79) 38,497 35,190 Other revenue 2,099 1,447 185 (1) 3,730   3,156 Adjusted EBITDA 7,924 4,097 (106) – 11,915 11,084 7.5 (6.9) Adjusted   operating profit 1,763 1,813 (69) – 3,507 4,310 (18.6) (24.1) Adjustments   for: Impairment loss Restructuring costs Amortisation of acquired customer   bases and brand intangible assets Other income and expense – (6,600) (157)   (355) (1,269) (551) (114) (717) Operating profit/(loss) Non-operating income   and expense Net financing costs Income tax credit 1,967 (3,913) (19) (149)   (853) (1,208) 4,765 16,582 Profit for the financial year from continuing   operations Profit for the financial year from discontinued operations 5,860   11,312 57 48,108 Profit for the financial year 5,917 59,420 Notes: 1 2015   results reflect average foreign exchange rates of £1:€1.28, £1:INR 98.51 and   £1:ZAR 17.82. 2 Common Functions primarily represent the results of the   partner markets and the net result of unallocated central Group costs.   Revenue Group revenue increased by 10.1% to £42.2 billion and service revenue   increased 9.4% to £38.5 billion. Reported growth rates reflect the   acquisitions of KDG in October 2013 and of Ono in July 2014, as well as the   consolidation of Italy after we increased our ownership to 100% in February   2014. In Europe, organic service revenue declined by 4.7%* as growing demand   for 4G and data services continues to be offset by challenging competitive   and macroeconomic pressures and the impact of MTR cuts. In AMAP, organic   service revenue increased by 5.8%* driven by continued growth in India,   Turkey, Ghana, Qatar and Egypt, partially offset by declines in Vodacom and   New Zealand. Adjusted EBITDA Group adjusted EBITDA rose 7.5% to £11.9   billion, with organic adjusted EBITDA down 6.9%*, mainly affected by revenue   declines in Europe. The Group adjusted EBITDA margin fell 0.7 percentage   points to 28.2%, or 1.8* percentage points on an organic basis. This reflects   ongoing revenue declines in Europe and the growth in operating expenses as a   result of Project Spring, partially offset by operating efficiencies. H2   adjusted EBITDA fell 3.6%*, with the improved trend supported by the better   revenue performance and continued good cost control. Operating profit   Adjusted operating profit excludes certain income and expenses that we have   identified separately to allow their effect on the results of the Group to be   assessed (see page 202). The items that are included in operating profit but   are excluded from adjusted operating profit are discussed below. No   impairment losses were recognised in the current financial year (2014: £6,600   million). Further detail is provided in note 4 to the Group’s consolidated   financial statements. Restructuring costs of £157 million (2014: £355   million) have been incurred to improve future business performance and reduce   costs. 40 |
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|  | Taxation   Amortisation of intangible assets in relation to customer bases and brands   are recognised under accounting rules after we acquire businesses and   amounted to £1,269 million (2014: £551 million). Amortisation charges   increased in the year as a result of the acquisitions of KDG, Vodafone Italy   and Ono. Other income and expense decreased by £0.6 billion due to the   inclusion in the prior year of £0.7 billion loss arising from our acquisition   of a controlling interest in Vodafone Italy. Including the above items,   operating profit increased to £2.0 billion from a £3.9 billion loss primarily   as a result of the £6.6 billion impairment charge in the year ended 31 March   2014. 2015 £m 2014 £m The recognition of the additional deferred tax assets   for the year ended 31 March 2015 includes an additional £3,341 million   deferred tax asset in respect of the Group’s historical tax losses in   Luxembourg recognised as a consequence of the financing arrangements for the   acquisition of Ono and an additional asset in the year of £2,127 million   arising from the revaluation of investments based upon the local GAAP   financial statements. The recognition of the additional deferred tax assets   for the year ended 31 March 2014 includes the recognition of additional   deferred tax assets in respect of the Group’s historical tax losses in   Germany of £1,916 million and Luxembourg of £17,402 million. Net financing   costs 2015 £m 2014 £m Net financing costs includes £526 million of foreign   exchange gains (2014: £21 million gain), £134 million of mark-to-market   losses (2014: £118 million gain) and in the prior year, a £99 million loss on   US bond redemption. Excluding these items, net financing costs decreased by   7.4% primarily due to the impact of lower average net debt levels following   the disposal of the Group’s investment in Verizon Wireless and the   acquisition of Ono. 2015 £m 2014 £m The statutory effective tax rate for the   year ended 31 March 2015 was (440.4)% compared to (33.4)% in the prior   period. The difference is primarily due to the absence of the gain on our   disposal of Verizon Wireless which did not result in any tax consequences and   the effect of the recognition of deferred tax assets in Luxembourg. 41   Vodafone Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information Total tax   (credit)/expense (4,822) (14,873) Profit before tax Continuing operations   1,095 (5,270) Discontinued operations – 49,817 Total profit before tax 1,095   44,547 Effective tax rate -440.4% -33.4% Investment income 883 346 Financing   costs (1,736) (1,554) Net financing costs (853) (1,208) Income tax expense:   Continuing operations before recognition of deferred tax 703 2,736   Discontinued operations (57) 1,709 Total income tax expense 646 4,445 Recognition   of additional deferred tax – continuing operations (5,468) (19,318) Total tax   (credit)/expense (4,822) (14,873) |
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|  | Operating   results (continued) Discontinued operations On 2 September 2013 the Group   announced it had reached an agreement with Verizon Communications Inc. to   dispose of its US group whose principal asset was its 45% interest in VZW.   The Group ceased recognising its share of results in VZW on 2 September 2013,   and classified its investment as a held for sale asset and the results as a   discontinued operation. The transaction completed on 21 February 2014.   Earnings per share Adjusted earnings per share from continuing operations, which   excludes the results and related tax charge of the Group’s former investment   in Verizon Wireless in the prior year and the recognition of deferred tax   assets in both years, was 5.55 pence, a decrease of 27.8% year-on-year,   reflecting the Group’s lower adjusted operating profit. Basic earnings per   share decreased to 21.75 pence (2014: 223.84 pence) due to the prior year   impact of the disposal of the Group’s investment in Verizon Wireless and the   recognition of a higher deferred tax asset in the prior year compared to the   current year, as described above, both of which have been excluded from   adjusted earnings per share. 2015 £m 2014 £m Million Million 42 Vodafone   Group Plc Annual Report on Form 20-F 2015 Weighted average number of shares   outstanding – basic 26,489 26,472 Weighted average number of shares   outstanding – diluted 26,629 26,682 Profit attributable to owners of the   parent 5,761 59,254 Adjustments: Impairment loss – 6,600 Amortisation of   acquired customer base and brand intangible assets 1,269 551 Restructuring   costs 157 355 Other income and expense 114 717 Non-operating income and   expense 19 149 Investment income and financing costs (see net financing costs   on page 41) (437) 78 1,122 8,450 Taxation (5,334) (17,511) Discontinued   operations (57) (48,108) Non-controlling interests (21) (50) Adjusted profit   attributable to owners of the parent 1,471 2,035 |
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|  | Europe % change   Germany £m Italy £m UK £m Spain Other Europe Eliminations £m Europe £m 2014   £m £m £m £ Organic Germany Service revenue decreased 3.2%* excluding KDG. Q4   service revenue was down 3.1%*. Mobile service revenue fell 3.5%*, mainly as   a result of price reductions in the prior year continuing to penetrate the   consumer customer base. The contract customer base grew, supported by a   stronger commercial performance as we look to increase our focus on direct,   branded channels, falling churn and the ongoing substantial investment in   network infrastructure. We increased our 4G coverage to 77% of the population   and significantly improved voice coverage and reliability, as evidenced in   independent tests. At the end of the period we had 5.0 million 4G customers.   Fixed service revenue excluding KDG fell 2.1%*, reflecting ongoing declines   in our Vodafone DSL customer base, in part from migrations to KDG cable   infrastructure. The rate of decline eased during the year (H1 -2.9%*; H2   -1.2%*), with an improving rate of gross customer additions and increasing   demand for high speed broadband (‘VDSL’), as well as stronger growth in   carrier services. KDG maintained its strong rate of growth, contributing   £1,492 million to service revenue and £676 million to adjusted EBITDA, and   adding 0.4 million broadband customers (excluding migrations from Vodafone   DSL) during the year. The integration of KDG has continued, including the   launch of a combined fixed/mobile proposition in H2. Adjusted EBITDA declined   10.9%*, with a 3.1* percentage point decline in adjusted EBITDA margin,   driven by lower service revenue and a higher level of customer investment   year-on-year, partially compensated by a year-on-year reduction in operating   expenses. Revenue increased 15.9%. M&A activity, including KDG, Ono and   the consolidation of Vodafone Italy, contributed a 26.6 percentage point   positive impact, while foreign exchange movements contributed a 6.5   percentage point negative impact. On an organic basis, service revenue   declined 4.7%*, driven primarily by price competition and the impact of MTR   cuts. Adjusted EBITDA increased 16.2%, including a 35.5 percentage point   positive impact from M&A activity and a 7.0 percentage point negative   impact from foreign exchange movements. On an organic basis adjusted EBITDA   declined 12.3%*, reflecting the weak organic revenue trend. Organic change %   Other activity1 pps Foreign exchange pps Reported change % Revenue – Europe   (4.2) 26.6 (6.5) 15.9 Service revenue Germany Italy UK Spain Other Europe   (3.2) (9.7) (1.2) (10.5) (2.1) 11.9 921.0 1.4 22.5 0.8 (7.5) (126.1) – (7.6)   (7.3) 1.2 785.2 0.2 4.4 (8.6) E=urope (4.7)26.1 (6.4)15.0 Adjusted EBITDA   Germany Italy UK Spain Other Europe Europe (10.9) (15.2) (12.5) (29.5) (2.8)   (12.3) 17.2 883.2 8.4 36.3 0.5 35.5 (7.3) (123.5) – (7.3) (7.0) (7.0) (1.0)   744.5 (4.1) (0.5) (9.3) 16.2 Italy Service revenue declined 9.7%*. Trends in   both mobile and fixed line improved in H2, and Q4 service revenue declined   3.7%*. Mobile service revenue fell 12.1%* as a result of a decline in the   prepaid customer base and lower ARPU following last year’s price cuts. We   took a number of measures to stabilise ARPU during the year, and in Q4,   consumer prepaid ARPU was up 6% year-on-year. We also began to take a more   active stance on stabilising the customer base in the second half of the   year, in what remains a very competitive market. Enterprise performed   strongly, returning to growth in H2. We now have 4G coverage of 84%, and 2.8   million 4G customers at 31 March 2015. Fixed service revenue was up 4.5%*.   Broadband revenue continued to grow and we added 134,000 broadband customers   over the year, but overall growth was partially offset by an ongoing decline   in fixed voice usage. We accelerated our fibre roll-out plans in H2, and by   March 2015 we had installed more than 5,000 cabinets. Adjusted EBITDA   declined 15.2%*, with a 2.6* percentage point decline in adjusted EBITDA   margin. The decline in service revenue was partially offset by continued   strong cost control, with operating expenses down 3.1%* and customer   investment down 3.0%*. Europe adjusted operating profit (40.2) 20.4 (4.6)   (24.4) Note: 1 “Other activity” includes the impact of M&A activity.   Refer to “Organic growth” on page 203 for further detail. 43 Vodafone Group   Plc Annual Report on Form 20-F 2015 Overview Strategy review Performance   Governance Financials Additional information Year ended 31 March 2015 Revenue   8,467 4,641 6,414 3,664 5,007 (122) 28,071 24,222 15.9 (4.2) Service revenue   7,829 4,116 6,109 3,371 4,664 (117) 25,972 22,592 15.0 (4.7) Other revenue   638 525 305 293 343 (5) 2,099 1,630 Adjusted EBITDA 2,670 1,537 1,360 783 1,574   – 7,924 6,821 16.2 (12.3) Adjusted operating profit 541 647 413 531 – 1,763   2,333 (24.4) (40.2) Adjusted EBITDA margin 31.5% 33.1% 21.2% 21.4% 31.4% 28.2%   28.2% |
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|  | Operating   results (continued) UK Service revenue fell 1.2%* as a good performance in   consumer mobile was offset by a decline in fixed line. The UK returned to service   revenue growth in H2. Q4 service revenue was up 0.6%*. Mobile service revenue   grew 0.5%*. Consumer contract service revenue grew strongly, supported by   customer growth and a successful commercial strategy bundling content with   4G. Enterprise mobile revenue returned to growth in H2, as a result of   growing data demand. During the year we acquired 139 stores from the   administrator of Phones 4U, taking our total portfolio to over 500 and   accelerating our direct distribution strategy. 4G coverage reached 63% at 31   March 2015 (or 71% based on the OFCOM definition), and we had 3.0 million 4G   customers at the year end. Fixed service revenue declined 5.8%*, excluding   the one-off benefit of a settlement with another network operator in Q4.   Underlying performance improved from -10.4%* in H1 to -1.3%* in H2, driven by   a strong pick-up in carrier services revenue and improving enterprise   pipeline conversion. We plan to launch our consumer fibre broadband   proposition in the coming weeks. Adjusted EBITDA declined 12.5%*, with a 2.5*   percentage point decline in adjusted EBITDA margin due mainly to a   reclassification of some central costs to the UK business. Reported adjusted   EBITDA benefited from one-off settlements with two network operators.   Adjusted EBITDA declined 29.5%* year-on-year, with a 5.0* percentage point   decline in adjusted EBITDA margin. The margin was impacted by falling mobile   service revenue and growth in lower margin fixed line revenue, partially   offset by lower direct costs and operating expenses, and the change in the   commercial model described above. Other Europe Service revenue declined 2.1%*   due to price competition, the generally weak macroeconomic environment and   MTR cuts. Again, we saw a recovery in H2, with Q3 service revenue -1.0%* and   Q4 service revenue -0.8%*. Hungary grew by 8.6%* for the full year, the   Netherlands and Czech Republic returned to growth in H2, and Greece and   Ireland showed a clear improvement in trends over the year. In the   Netherlands, we have nationwide 4G coverage, and the return to growth has   been driven by continued contract customer growth, stabilising ARPU and   growth in fixed revenue. In Portugal, we continue to see a decline in mobile   service revenue driven by convergence pricing pressure reflecting a prolonged   period of intense competition, partially offset by strong fixed revenue   growth. We now reach 1.6 million homes with fibre, including our network   sharing deal with Portugal Telecom. In Ireland, 4G coverage has reached 87%,   and we have begun trials on our FTTH roll-out, with a commercial launch   planned for later in 2015. In Greece, the steady recovery in revenue trends   through the year stalled in Q4 as a result of the worsening macroeconomic   conditions. The integration of Hellas Online is continuing in line with expectations.   Adjusted EBITDA declined 2.8%*, with a 0.1* percentage point increase in   adjusted EBITDA margin, as the impact of lower service revenue was largely   offset by strong cost control. Spain Service revenue declined 10.5%*   excluding Ono, as growth in fixed line continued to be offset by price   pressure in mobile and converged services. Q4 service revenue growth was   -7.8%*. Ono Q4 local currency revenue growth was -1.9% excluding wholesale.   Mobile service revenue fell 12.7%*, although there was some improvement in H2   with the contract customer base stabilising year-on-year. However, ARPU   continued to be under pressure throughout the year as a result of aggressive   convergence offers. During H2, we saw an increase in the take-up of handset   financing arrangements as a result of a change in the commercial model. We   reduced handset subsidies in Q4 and introduced bigger data allowances at   slightly higher price points. Our 4G network roll-out has now reached 75%   population coverage, and we had 2.9 million 4G customers at March 2015. We   continue to lead the market in net promoter scores (‘NPS’) in both consumer   and enterprise. Fixed service revenue rose 8.7%* excluding Ono, supported by   consistently strong broadband net additions. Since its acquisition in July   2014, Ono contributed £698 million to service revenue and £267 million to   adjusted EBITDA. Including our joint fibre network build with Orange, we now   reach 8.5 million premises with fibre. We have made good progress with the   integration of Ono, and launched in April 2015 a fully converged service,   “Vodafone One”, a new ultra high-speed fixed broadband service with Ono   Fibre, home landline, 4G mobile telephony and Vodafone TV. 44 Vodafone Group   Plc Annual Report on Form 20-F 2015 |
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|  | Africa, Middle   East and Asia Pacific % change India £m Vodacom £m Other AMAP £m Eliminations   £m AMAP £m 2014 £m £ Organic Revenue grew 0.1% as a result of a 7.4 percentage   point adverse impact from foreign exchange movements, particularly with   regards to the Indian rupee, South African rand and the Turkish lira. On an   organic basis service revenue was up 5.8%* driven by a growth in the customer   base, increased voice usage, strong demand for data and continued good   commercial execution. Overall growth was offset by MTR cuts, particularly in   South Africa. Excluding MTRs, organic growth was 7.1%. Adjusted EBITDA   declined 1.2%, including a 7.1 percentage point adverse impact from foreign   exchange movements. On an organic basis, adjusted EBITDA grew 5.8%* driven by   growth in India, Turkey, Qatar and gypt, offset by Vodacom and New Zealand.   E= In March 2015 we successfully bid for spectrum in 12 telecom circles for a   total cost of INR 258.1 billion (£2.78 billion). This included spectrum in   all six of our 900MHz circles due for extension in December 2015. We also   successfully bid for new 3G spectrum in seven circles, allowing us to address   88% of our revenue base with 3G services. We have continued to expand our   M-Pesa mobile money transfer service, and now have 89,000 agents, with a   nationwide presence. At March 2015 we had 3.1 million registered customers   and 378,000 active users. Our strategy is to focus on building scale on specific   migratory corridors. Adjusted EBITDA grew 16.3%*, with a 0.9* percentage   point improvement in adjusted EBITDA margin as economies of scale from   growing service revenue were partly offset by the increase in operating costs   related to the Project Spring network build and higher acquisition costs.   Organic Other Foreign Reported change activity1 exchange change % pps pps %   Revenue – AMAP 7.0 0.5 (7.4) 0.1 Service revenue India Vodacom Other AMAP   AMAP 12.6 (1.0) 5.5 5.8 – – 1.7 0.6 (2.9) (8.8) (9.2) (7.2) 9.7 (9.8) (2.0)   (0.8) Vodacom Vodacom Group service revenue declined 1.0%*, as the negative   impact of MTR cuts and a more competitive environment in South Africa offset   growth in Vodacom’s operations outside South Africa. Q4 service revenue was   -0.2%*, reflecting some easing of competition in South Africa. In South   Africa, organic service revenue declined -2.7%*. Excluding the impact of MTR   cuts, service revenue grew 1.4%*. Strong growth in smartphone penetration and   data adoption drove 23.4% growth in local currency data revenue, although   this was offset by aggressive voice price competition. We have increased our   3G footprint to 96% population coverage and 4G to 35% coverage as part of the   Project Spring programme, with 81% of sites now connected to high capacity   backhaul. During the year we began to trial our first fibre to the business   services, and fibre to the home. The regulatory authorities continue to   review our proposed acquisition of Neotel, a fibre-based fixed line operator.   Service revenue growth in Vodacom’s operations outside South Africa was   4.8%*, driven by customer base growth, data take-up and M-Pesa, Active M-Pesa   customers totalled 5.6 million, with M-Pesa now representing 23% of service   revenue in Tanzania. Vodacom Group adjusted EBITDA fell 2.1%*, with a 1.1*   percentage point decline in adjusted EBITDA margin. The significant negative   impact of MTR cuts on the adjusted EBITDA margin was substantially offset by   good cost control. Adjusted EBITDA India Vodacom Other AMAP AMAP 16.3 (2.1)   6.6 5.8 – – 0.3 0.1 (3.4) (8.9) (7.3) (7.1) 12.9 (11.0) (0.4) (1.2) AMAP   adjusted operating profit – –(6.9)(6.9) Note: 1 “Other activity” includes the   impact of M&A activity. Refer to “Organic growth” on page 203 for further   detail. India Service revenue increased 12.6%*, driven by continued customer   base growth, an acceleration in 3G data uptake and stable voice pricing. Q4   service revenue grew 12.1%*. We added 17.2 million mobile customers during   the year, taking the total to 183.8 million. Voice yields were relatively   flat after a period of improvement, but we saw a decline in average minutes   of use in H2 as competition increased in some circles. Customer demand for   data services has been very strong. Total data usage grew 86% year-on-year,   with the active data customer base increasing 23% to 64 million. Within this,   the 3G customer base increased to over 19 million, reflecting the significant   investment in our 3G network build. During the year we added 12,585 new 3G   sites, taking the total to over 35,000 and our coverage of target urban areas   to 90%. 3G internet revenue rose 140%. 45 Vodafone Group Plc Annual Report on   Form 20-F 2015 Overview Strategy review Performance Governance Financials   Additional information Year ended 31 March 2015 Revenue 4,324 4,341 4,828 (11)   13,482 13,473 0.1 7.0 Service revenue 4,306 3,489 4,251 (11) 12,035 12,130 (0.8)   5.8 Other revenue 18 852 577 – 1,447 1,343 Adjusted EBITDA 1,28 11,527 1,289 –   4,097 4,145 (1.2) 5.8 Adjusted operating profit 4571,030 326 – 1,813 1,947 (6.9)   – Adjusted EBITDA margin 29.6% 35.2% 26.7% 30.4% 30.8% |
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|  | Operating results (continued) Financial   position and resources Consolidated statement of financial position The   consolidated statement of financial position is set out on page 106. Details   on the major movements of both our assets and liabilities in the year are set   out below: Assets Goodwill and other intangible assets Our total intangible   assets decreased to £43.5 billion from £46.7 billion. The increase primarily   arose as a result of £2.6 billion additions as a result of the Group’s   acquisitions, primarily Ono, and other additions of £2.3 billion, including   £0.5 billion of spectrum acquired in India, Italy, Greece, Hungary and New   Zealand. This was offset by a reduction of £3.6 billion as a result of   unfavourable movements in foreign exchange rates and £4.5 billion of   amortisation. Property, plant and equipment Property, plant and equipment   increased to £26.6 billion from £22.9 billion, principally as a result of   £7.4 billion of additions and £3.4 billion arising from Group acquisitions.   This was partially offset by £5.0 billion of depreciation charges and £1.9   billion of adverse foreign exchange movements. Other non-current assets Other   non-current assets increased by £5.1 billion to £32.6 billion, mainly due to   a £3.2 billion increase in recognised deferred tax assets, primarily in respect   of tax losses in Luxembourg (see note 6 for details) and a £1.5 billion   increase in the value of derivative financial instruments. Total equity and   liabilities Total equity Total equity decreased by £4.0 billion to £67.7   billion mainly due to the total comprehensive expense for the year of £0.8   billion and dividends paid to equity shareholders and non-controlling   interests of £3.2 billion. Borrowings Total borrowings increased to £35.1   billion from £29.2 billion, primarily as the result of an increase in the   level of commercial paper to £5.1 billion (2014: £1.0 billion). A net debt   reconciliation is provided on page 47. Other current liabilities Other   current liabilities decreased to £16.3 billion (2014: £17.3 billion). Trade   payables at 31 March 2015 were equivalent to 35 days (2014: 40 days)   outstanding, calculated by reference to the amount owed to suppliers as a   proportion of the amounts invoiced by suppliers during the year. It is our   policy to agree terms of transactions, including payment terms, with   suppliers and it is our normal practice that payment is made accordingly. 46   Vodafone Group Plc Annual Report on Form 20-F 2015 Other AMAP Service revenue   increased 5.5%*, with growth in Turkey, Egypt, Qatar and Ghana partially   offset by a decline in New Zealand. Service revenue in Turkey was up 9.4%*,   reflecting continued strong growth in consumer contract and enterprise   revenue, including higher ARPU and data usage, partly offset by a 1.8   percentage point negative impact from voice and SMS MTR cuts. In Egypt,   service revenue grew 2.8%* as a result of an increase in data and voice usage   and a more stable economic environment. In New Zealand, service revenue was   down 2.6%* as a result of aggressive competition, but the contract mobile   base grew 4.6% year-on-year and the fixed base benefited from continued   uptake of VDSL, TV and unlimited broadband. Service revenue in Ghana grew   18.9%* driven by growth in customers, voice bundles and data. Total revenue   growth in Qatar was 16.0%*, but slowed in H2 due to significantly increased   price competition. Adjusted EBITDA grew 6.6%* with a 0.4* percentage point   decline in adjusted EBITDA margin. Associates Vodafone Hutchison Australia   (‘VHA’), in which Vodafone owns a 50% stake, continued its good recovery,   returning to local currency service revenue growth in Q4 as a result of   improving trends in both customer numbers and ARPU, supported by significant   network enhancements. Safaricom, Vodafone’s 40% associate which is the number   one mobile operator in Kenya, saw local currency service revenue growth of   12.9% for the year, with local currency adjusted EBITDA up 16.8%. The total   value of deposits, customer transfers, withdrawals and other payments handled   through the M-Pesa system grew 26% to KES 4,181 billion in the 2015 financial   year. Indus Towers, the Indian towers company in which Vodafone has a 42%   interest, achieved local currency revenue growth of 4.3%. Indus owns 116,000   towers, with a tenancy ratio of 2.19x. Our shares of Indus Towers’ adjusted   EBITDA and adjusted operating profit were £285 million and £19 million   respectively. |
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|  | Contractual   obligations and commitments A summary of our principal contractual financial   obligations and commitments is shown below. Liquidity and capital resources   Our liquidity and working capital may be affected by a material decrease in   cash flow due to a number of factors as outlined in “Principal risk factors   and uncertainties” on pages 32 to 37. We do not use non-consolidated special   purpose entities as a source of liquidity or for other financing purposes. In   addition to the commentary on the Group’s consolidated statement of cash   flows below, further disclosure in relation to the Group’s objectives,   policies and processes for managing its capital; its financial risk   management objectives; details of its financial instruments and hedging   activities; and its exposures to credit risk and liquidity risk can be found   in “Borrowings”, “Liquidity and capital resources” and “Capital and financial   risk management” in notes 21, 22 and 23 respectively to the consolidated   financial statements. Cash flows A reconciliation of cash generated by   operations to free cash flow, a non-GAAP measure used by management shown on   pages 202 and Payments due by period £m Contractual obligations and   commitments1 Total < 1 year 1–3 years 3–5 years >5 years Borrowings2   Operating lease commitments3 Capital commitments3,4 Purchase commitments5 40,373   13,366 7,297 4,859 14,851 6,378 1,339 1,627 1,205 2,207 4,957 2,769 322 426   1,440 8,302 4,064 3,692 234 312 Total 60,010 21,538 12,938 6,724 18,810   Notes: 1 This table includes commitments in respect of options over interests   in Group businesses held by non-controlling shareholders (see “Potential cash   outflows from option agreements and similar arrangements” on page 150) and   obligations to pay dividends to non-controlling shareholders (see “Dividends   from associates and to non-controlling shareholders” on page 151). The table   excludes current and deferred tax liabilities and obligations under post   employment benefit schemes, details of which are provided in notes 6   “Taxation” and 26 “Post employment benefits” respectively. The table also   excludes the contractual obligations of associates and joint ventures. See   note 21 “Borrowings”. See note 29 “Commitments”. Primarily related to   spectrum and network infrastructure. Primarily related to device purchase   obligations. 203. The reconciliation to net debt is shown below. 2015 £m 2014   £m 2 3 4 5 Dividends We provide returns to shareholders through equity   dividends and historically have generally paid dividends in February and   August in each year. The Directors expect that we will continue to pay   dividends semi-annually. The £2.9 billion equity dividend in the current year   comprises £2.0 billion in relation to the final dividend for the year ended   31 March 2014 and £0.9 billion for the interim dividend for the year ended 31   March 2015. This has decreased from total dividends of £5.1 billion in the   prior year following the “6 for 11” share consolidation effective from 24   February 2014. The interim dividend of 3.60 pence per share announced by the   Directors in November 2014 represented an 2.0% increase over last year’s interim   dividend. The Directors are proposing a final dividend of 7.62 pence per   share. Total dividends for the year increased by 2.0 % to 11.22 pence per   share. At 31 March 2015, Vodafone Group Plc had profits available for   distribution of approximately £20 billion. Further disclosures in relation to   profits available for distribution are set out on page 184. 47 Vodafone Group   Plc Annual Report on Form 20-F 2015 Overview Strategy review Performance   Governance Financials Additional information Adjusted EBITDA 11,915 11,084   Working capital (883) 1,181 Other 88 92 Cash generated by operations   (excluding restructuring and other costs)1 11,120 12,357 Cash capital   expenditure (8,435) (5,857) Capital expenditure (9,197) (6,313) Working   capital movement in respect of capital expenditure 762 456 Disposal of   property, plant and equipment 178 79 Operating free cash flow1 2,863 6,579   Taxation (758) (3,449) Dividends received from associates and investments 224   2,842 Dividends paid to non-controlling shareholders in subsidiaries (247)   (264) Interest received and paid (994) (1,315) Free cash flow1 1,088 4,393   Licence and spectrum payments (443) (862) Acquisitions and disposals (7,040)   27,372 Equity dividends paid (2,927) (5,076) Special dividend – (14,291)   Purchase of treasury shares – (1,033) Foreign exchange 895 2,423 Income   dividend from Verizon Wireless – 2,065 Other2 (144) (3,337) Net debt   (increase)/decrease (8,571) 11,654 Opening net debt (13,700) (25,354) Closing   net debt (22,271) (13,700) |
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|  | Financial   position and resources (continued) Notes: 1 Cash generated by operations,   operating free cash flow and free cash flow have been redefined to exclude restructuring   costs for the year ended 31 March 2015 of £336 million (2014: £210 million).   Cash generated by operations for the year ended 31 March 2015 also excludes   £387 million of other movements including a £365 million UK pensions   contribution payment and £116 million of KDG incentive scheme payments in   respect of liabilities assumed on acquisition. See also note 2 below. 2 Other   amounts for the year ended 31 March 2015 include £336 million of   restructuring costs (2014: £210 million), a £365 million UK pensions   contribution payment, £359 million of Verizon Wireless tax distributions   received after the completion of the disposal, £328 million of interest paid   on the settlement of the Piramal option, £116 million of KDG incentive scheme   payments in respect of liabilities assumed on acquisition, £176 million tax   refund (2014: £2,372 tax payment) relating to the rationalisation and   reorganisation of our non-US assets prior to the disposal of our stake in   Verizon Wireless and a £100 million (2014: £100 million) payment in respect   of the Group’s historical UK tax settlement. Other amounts for the year ended   31 March 2014 also includes a £1,387 million outflow relating to payment   obligations in connection with the purchase of licences and spectrum,   principally in India. Cash generated by operations Cash generated by   operations excluding restructuring costs decreased 10.0% to £11.1 billion,   primarily driven by working capital movements which more than offset the   higher adjusted EBITDA. Capital expenditure Capital expenditure increased   £2.9 billion to £9.2 billion primarily driven by investments in the Group’s   networks as a result of Project Spring. Taxation Payments for taxation   decreased 78.0% to £0.8 billion primarily as a result of the Group’s disposal   of its 45% interest in Verizon Wireless. Dividends received from associates   and investments Dividends received from associates and investments, decreased   by £2.6 billion to £0.2 billion principally as a result of the disposal of   our interests in Verizon Wireless in the prior year. Dividends received from   associates and investments excludes £0.4 billion of tax distributions from   Verizon Wireless received in the 2015 financial year after the completion of   the disposal (included in other cash flows) and the £2.1 billion prior year   income dividend from Verizon Wireless . Free cash flow Free cash flow   decreased to £1.1 billion compared to £4.4 billion in the prior year as lower   payments for taxation were offset by higher cash capital expenditure and   lower dividends received from associates and investments. Licence and   spectrum payments Cash payments for licences and spectrum totalled £0.4   billion in respect of the renewal and acquisition of spectrum in India,   Italy, Greece, Hungary and New Zealand. Acquisitions and disposals During the   year, we made a £2,945 million payment in relation to the acquisition of the   entire share capital of Ono plus £2,858 million of associated net debt   acquired, a £131 million payment in relation to the acquisition of the entire   share capital of Cobra plus £40 million of associated debt acquired and a   £563 million payment in relation to the acquisition of the remaining   non-controlling interests in Vodafone India Limited. Further details on the   assets and liabilities acquired are outlined in note 28 ”Acquisitions and   disposals”. In the prior year we disposed of our US Group whose principal   asset was its 45% interest in Verizon Wireless for consideration which   included net cash proceeds of £34.9 billion. Equity dividends paid Equity   dividends paid during the year decreased by 42% following the “6 for 11”   share consolidation effective from 24 February 2014. References to “Q4” are   to the quarter ended 31 March 2015 unless otherwise stated. References to the   “second half of the year” are to the six months ended 31 March 2015 unless   otherwise stated. References to the “year” or “financial year” are to the   financial year ended 31 March 2015 and references to the “prior financial   year” are to the financial year ended 31 March 2014 unless otherwise stated.   References to the “2015 financial year”, “2016 financial year”, “2017   financial year”, “2018 financial year” and the “2020 financial year” are to   the financial years ending 31 March 2015, 2016, 2017, 2018 and 2020,   respectively. Special dividend In the prior year, B share payments formed   part of the return of value to shareholders following the disposal of the   Group’s interest in Verizon Wireless. Purchase of treasury shares Prior year   cash payments of £1.0 billion relate to the completion of a £1.5 billion share   buyback programme that commenced following the receipt of a US$3.8 billion   (£2.4 billion) income dividend from VZW in December 2012. Foreign exchange A   foreign exchange gain of £0.9 billion was recognised on net debt due to   favourable exchange rate movements resulting primarily from the weakening of   the euro and the Indian rupee against pounds sterling. Section 219 SEC   filings of interest Vodafone Group Plc (‘Vodafone’) does not have any   subsidiaries, other equity investments, assets, facilities or employees   located in Iran, and Vodafone has made no capital investment in Iran. To the   best of its knowledge, no U.S. persons, including any U.S. affiliates of   Vodafone, are involved in the activities described below. Except as specified   below, to the best of Vodafone’s knowledge, neither it, its subsidiaries, nor   its affiliates have engaged in any conduct needing to be disclosed under   Section 13(r) of the Securities Exchange Act of 1934. Roaming and   interconnect Vodafone has wholesale roaming and interconnect arrangements   with mobile and fixed line operators in Iran. Vodafone has, or has had,   relationships with telecommunications operators in Iran in connection with   such roaming and interconnect arrangements, some of which it believes are or   may be government controlled entities. The approximate total gross revenues   attributable to the arrangements mentioned above for the financial year ended   31 March 2015 were £336,000. EPEG Project On 27 July 2012, Vodafone acquired   Cable & Wireless Worldwide Plc (‘CWW’), which (through a subsidiary) is a   member of a consortium made up of Telecommunication Infrastructure Company of   Iran (‘TIC’) (an entity controlled by the government of Iran), Rostelecom and   Omantel, that is building a high speed cable network from a landing point in   Oman, to Germany. Each member of the consortium is responsible for funding,   building and maintaining its section of the cable, with CWW owning and being   responsible for the segment from the Ukrainian border with Russia to   Frankfurt, Germany. No capacity sales have been made on this high speed cable   network yet; consequently there are no EPEG revenues or profits associated   with the EPEG project. Vodafone intends to continue its involvement in the   EPEG Project. Intellectual Property Vodafone, through one of its   subsidiaries, also makes some insignificant payments to Iran in order to   register certain domain names, register and renew certain trademarks, and   protect its brand globally an expects to continue to do so in the future.   Vodafone paid annual registration fees of £48 to IRNIC for the registration   of three domain names. Vodafone did not make any payments to Iran in order to   register or renew any of its trade marks during the fiscal year ended 31   March 2015. This year’s report contains a strategic report on pages 1 to 48,   which includes an analysis of our performance and position, a review of the   business during the year, and outlines the principal risks and uncertainties   we face. The strategic report was approved by the Board and signed on its behalf   by the Chief Executive and Chief Financial Officer. References to “calendar   Q3 2015” are to the quarter ended 30 September 2015, unless otherwise stated.   All amounts marked in this document with an “*” represent organic growth   which presents performance on a comparable basis, both in terms of merger and   acquisition activity and movements in foreign exchange. See page 202   “Non-GAAP information” for further details. /s/ Vittorio Colao Vittorio Colao   Chief Executive /s/ Nick Read Nick Read Chief Financial Officer 19 May 2015 |
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|  | 49 Vodafone   Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information Governance The   governance framework, including the role and effectiveness of the Board and   the alignment of the interests of management with long term value creation.   50 Chairman’s introduction 51 Our governance framework 52 Board of Directors   54 Executive Committee 56 Board activities 58 Board evaluation, induction and   training 60 Board diversity 62 Shareholder engagement 63 Board committees 72   Compliance with the 2012 UK Corporate Governance Code 74 Our US listing   requirements 75 Directors’ remuneration 92 Directors’ report |
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|  | Chairman’s introduction How we work is as   important as what we do Good corporate governance provides the foundation for   long-term value creation and is therefore a core focus for your Board. Dear   shareholder The Board’s primary role is to exercise objective and informed   judgement in determining the strategy of the Group, having the best team in   place to execute and closely monitor business performance and maintain a   framework of prudent and effective controls to mitigate risk. Two critical   factors determine the extent to which the Board is equipped to fulfil those   duties and obligations successfully: a a diverse and deep range of skills and   experiences around the boardroom table which, taken together, are both   complementary and highly relevant in the context of Vodafone’s strategic   opportunities and challenges; and Your Board believes that diversity, in the   boardroom and throughout the executive, is a key component of business   success. I am pleased to report that with effect from the date of our annual   general meeting this year we will have achieved our aspiration that women   should hold 25% of Board roles. Vodafone has a rigorous approach to the   assessment and management of risk which is coupled with clear policies and   standards that define the actions and behaviours expected from everyone who   works with us. A commitment to operating with integrity is central to the   Group’s culture; an overview of our Code of Conduct on page 92 provides an   insight into how that commitment is embedded within our decision- making   processes. a processes to ensure that all of the Directors develop a good   understanding of the Group’s operations and external environment and are   therefore well-placed to take informed decisions. We will continue to develop   the Directors’ understanding of market dynamics in a complex and   ever-changing sector. That intention is supported by the findings of an   internal evaluation during the year, The committee reports, beginning with   the Audit and Risk Committee report, can be found on pages 63 to 71. Further   detailed information on how the Group complied with the 2012 UK Corporate   Governance Code during the year is set out on pages 72 and 73. We comply with   the corporate governance statement requirements pursuant to the FCA’s   Disclosure and Transparency Rules by virtue of the information included in   this “Governance” section of the Annual Report together with information   contained in the “Shareholder information” section on pages 186 to 193 .   During the period under review, there were a number of changes to the Board.   In January 2015, we announced that our Group Technology Officer, Stephen   Pusey, intended to retire with effect from the annual general meeting on 28   July 2015. Stephen has played a pivotal role in developing the networks and   services that will drive Vodafone’s growth for years to come and leaves with   our thanks and best wishes. Sir Crispin Davis joined the Board as a   Non-Executive Director in July 2014 followed by Dame Clara Furse in   September. In December, it was announced that Omid Kordestani intended to   stand down from the Board with effect from the end of 2014. In April 2015, we   welcomed Dr Mathias Döpfner to the Board. We also announced the appointment   of Philip Yea as the Senior Independent Director with effect from the date of   the annual general meeting, replacing Luc Vandevelde who will stand down from   the Board on that date. On behalf of the Board, I would like to thank Luc for   his many years of service to Vodafone and also express our gratitude to Omid   for his contribution. set out on page 58. In this year’s report and in light   of the number of Board changes outlined above, on page 59 we also provide an   overview of the approach taken to provide Directors with a comprehensive   induction and training programme. Vodafone is undergoing a significant   strategic transformation as the data revolution gathers pace worldwide. Your   Board will continue to ensure the Group has the leadership and insights   necessary to achieve its ambitions. /s/ Gerard Kleisterlee Gerard Kleisterlee   Chairman 19 May 2015 50 |
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|  | Our governance framework organised 51   Vodafone Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information How we are We have a   strong and effective governance system throughout the Group. Responsibility   for good governance lies with your Board. Responsible for the overall conduct   of the Group’s business and: a is accountable to shareholders for the proper   conduct of Pages 56 and 57 Risk Committee Committee and Governance Group’s   financial results overall remuneration policy recommendations regarding and   performance of theimplementation of that policy composition, succession Page   71 Executive Committee a Focuses on strategy implementation, financial and   competitive performance, commercial and technological developments,   succession planning, organisational development More on: Audit and Remuneration   Nominations a Provides effectivea Sets, reviews and Committee governance over   the recommends the Group’s a Evaluates and makes a Reviews the activity and   strategy and reviews the Board and committee internal audit function and and   strategy planning and diversity external auditor a Oversees matters relating to   a Reviews the integrity, corporate governance adequacy and effectiveness of   the Group’s system of internal control and risk management More on: More on: More   on: Pages 63 to 68 Page 70 Pages 69 and 70 Chief Executive Vittorio Colao a   Manages the business and implements strategy and policy a Chairs Executive   Committee Board a is responsible for the long-term success of the Company; a   sets the Group strategy; a appoints senior management; a is responsible for   ensuring the effectiveness of and reporting on our system of corporate   governance; and the business. More on: Schedule of matters reserved for the   Board The Board has a formal schedule of matters reserved for its decision   and these include: a Group strategy and long-term plans; a appointment of   senior management; a major capital projects, acquisitions or divestments; a   annual budget and operating plan; a Group financial structure, including tax   and treasury; a approval of annual and half-year financial results and   shareholder communications; and a approval and oversight of the system of   internal control and risk management. Chairman Gerard Kleisterlee a Is   responsible for leadership of the Board a Sets the Board’s agenda a Meets   regularly with the Chief Executive and other key executives to stay informed |
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|  | Board of Directors Experienced,   effective and diverse leadership Our business is led by our Board of   Directors (‘the Board’). Biographical details of the Directors and senior   management as at 19 May 2015 are as follows (with further information   available at vodafone.com/board). Gerard Kleisterlee Chairman Vittorio Colao   Chief Executive – Executive Director Nick Read Chief Financial Officer –   Executive Director Tenure: 4 years Nationality: Dutch Tenure: 8 years   Nationality: Italian Tenure: 1 year Nationality: British Skills and   experience: Gerard has extensive experience of senior leadership of global   businesses both in the developed and emerging markets. He brings to the Group   a deep understanding of the consumer electronics, technology and lifestyle   industries gained from his career with Philips Electronics spanning over 30   years and continues to use this experience to oversee the development of   Vodafone’s strategy and the effectiveness of its operations as a total   communications company. Other current appointments: a Royal Dutch Shell –   non-executive director and member of the audit committee a IBEX Global   Solutions plc – non-executive director a ASML – member of supervisory board   Board Committees: Nominations and Governance (Chairman) Skills and   experience: With over 20 years’ experience working in the telecoms industry,   Vittorio has extensive leadership skills developed both within Vodafone and   the wider industry and is widely recognised as an outstanding leader in the   telecoms sector. Other current appointments: a Bocconi University, Italy –   international advisory board member a European Round Table of Industrialists   – steering committee member a McKinsey & Company – international advisory   board member a Oxford Martin School – advisory council member Board   Committees: None Skills and experience Nick combines strong operational   leadership with a detailed understanding of the industry and its challenges   and opportunities. Nick has wide-ranging experience in senior finance roles   both at Vodafone and other multi-national companies including United Business   Media plc and Federal Express Worldwide . Other current appointments: None   Board Committees: None Stephen Pusey Chief Technology Officer – Executive   Director Sir Crispin Davis Non-Executive Director Dr Mathias Döpfner   Non-Executive Director Tenure: 5 years Nationality: British Tenure: <1   year Nationality: British Tenure: <1 year Nationality: German Skills and   experience: With longstanding international experience within the telecoms   industry including previous positions at British Telecom and a 23 year career   at Nortel Networks Corporation, Stephen contributes a wealth of knowledge of   both wireline and wireless industries and extensive understanding of business   applications and solutions. Other current appointments: a Centrica plc –   non-executive director Board Committees: None Skills and experience: Sir   Crispin has broad-ranging experience as a business leader within   international content and technology markets from his roles as Chief   Executive of Reed Elsevier and the digital agency Aegis Group plc and group   managing director of Guinness PLC (now Diageo plc). He was knighted in 2004   for services to publishing and information He brings a strong commercial   perspective to Board discussions. Other current appointments: a Oxford   University-trustee and member of the university board a CVC Capital Partners   – adviser Board Committees: Audit and Risk Skills and experience: Mathias   brings wide-ranging experience within the global digital media industry to   his role. Having led his business, Axel Springer SE, through a highly   successful transition into digital and international markets, he will be able   to provide a digital perspective to the Board’s strategy. Other current   appointments: a Axel Springer SE – chairman and chief executive officer a   Time Warner and Warner Music Group – member of the board of directors a   American Academy, American Jewish Committee and the European Publishers   Council – holds honorary offices a St John’s College , University of   Cambridge – member Board Committees: None 52 Vodafone Group Plc Annual Report   on Form 20-F 2015 |
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|  | Dame Clara   Furse Non-Executive Director Valerie Gooding cbe Non-Executive Director Renee   James Non-Executive Director Tenure: <1 year Nationality: British and   Canadian Tenure: 1 year Nationality: British Tenure: 4 years Nationality:   American Skills and experience: Dame Clara brings to the Board a deep   understanding of international capital markets, regulation, services   industries and business transformation developed from her previous roles as   Chief Executive of the London Stock Exchange Group plc and Credit Lyonnais   Rouse Ltd. Her financial proficiency is highly valued as a member of the   Audit and Risk Committee. In 2008 she was appointed Dame Commander of the   Order of the British Empire. Other current appointments: Bank of England’s   Financial Policy Committee – member Nomura Holdings Inc – non-executive   director Amadeus Holding IT SA – non-executive director Board Committees:   Audit and Risk Committee Skills and experience: Valerie brings wealth of international   business experience obtained at companies with high levels of customer   service including British Airways and BUPA which, together with her focus on   leadership and talent, is greatly valuable to Board discussions. Other   current appointments: Premier Farnell plc – non-executive chairman TUI AG –   non-executive director English National Ballet – trustee Historic Royal   Palaces – trustee Royal Botanical Gardens, Kew – trustee The LTA Trust –   chairman Board Committees: Remuneration Skills and experience: Renee brings   comprehensive knowledge of the high technology sector developed from her   longstanding career at Intel Corporation where she was appointed President.   Her extensive experience of international management and the development and   implementation of corporate strategy is an asset to the Board and   Remuneration Committee. Other current appointments: Intel Corporation –   President US President’s National Security Advisory Committee – vice chair C200   – member Board Committees: Remuneration Samuel Jonah Non-Executive Director   Nick Land Non-Executive Director Luc Vandevelde Senior Independent Director   Tenure: 6 years Nationality: Ghanaian Tenure: 8 years Nationality: British   Tenure: 11 years Nationality: Belgian Skills and experience: After career   spanning 36 years at Ernst & Young where Nick was Managing Partner, he   brings strong financial expertise and experience of dealing with major   corporations in many parts of the world to his role as Chairman of the Audit   and Risk Committee. Other current appointments: Alliance Boots GmbH –   non-executive director Ashmore Group plc – senior independent director BBA   Aviation plc – senior independent director Farnham Castle – chairman of the   board of trustees Financial Reporting Council – non-executive director The   Vodafone Foundation – chairman of the board of trustees Dentons UKMEA LLP –   adviser Silicon Valley Bank, London – adviser Board Committees: Audit and   Risk (Chairman) Skills and experience: Luc has deep expertise leading   international consumer businesses and has particular skills in finance,   management and marketing, developed through his past directorships held at   Société Générale, Carrefour S.A and Marks and Spencer Group. He has served on   the Board for 11 years and his resulting knowledge of the Company has been significant   benefit to the Board and its committees. Other current appointments: Majid Al   Futtaim Ventures LLC – chairman Board Committees: Nominations and Governance   Remuneration (Chairman) Skills and experience: Samuel brings experience and understanding   of business operations in emerging markets, particularly Africa. Previously   Executive President of AngloGold Ashanti Ltd and member of the Advisory   Council of the President of the African Development Bank, he is able to   provide an international, commercial perspective to Board discussions. An   Honorary Knighthood was conferred on him by Her Majesty the Queen in 2003 and   in 2006 he was awarded Ghana’s highest national award, the Companion of the   Order of the Star. Other current appointments: Presidents of Togo and Nigeria   – adviser Iron Mineral Benefication Services – non-executive deputy chairman Jonah   Capital (Pty) Limited – executive chairman Metropolitan Insurance Company   Limited – chairman The Investment Climate Facility – member of trustee board   Board Committees: Remuneration Philip Yea Non-Executive Director Tenure: 9   years Nationality: British Skills and experience: Philip’s experience as   chief financial officer of Diageo plc and in the private equity industry at   Investcorp and 3i Group plc, together with his knowledge of the Vodafone   Group, makes him valued member of the Board. Philip’s financial expertise is   an asset to his role as member of the Audit and Risk Committee. Other current   appointments: Aberdeen Asian Smaller Companies Investment Trust PLC –   non-executive director Rocket Internet SE – member of the supervisory board bwin.party   digital entertainment plc – chairman British Heart Foundation – chairman of   the trustees The Francis Crick Institute – director of the trustee board Board   Committees: Nominations and Governance Audit and Risk 53 Vodafone Group Plc   Annual Report on Form 20-F 2015 Overview Strategy review Performance   Governance Financials Additional information Attendance at scheduled meetings   of the Board in the 2015 financial year Director Attendance Gerard   Kleisterlee7/7 Vittorio Colao7/7 Stephen Pusey 7/7 Nick Read 7/7 Sir Crispin   Davis(Appointed to the Board on 27 July 2014)5/6 Dame Clara Furse (Appointed   to the Board on 1 September 2014)5/5 Valerie Gooding 7/7 Renee James7/7 Alan   Jebson(Stepped down from the Board on 29 July 2014)2/2 Samuel Jonah7/7 Omid   Kordestani(Stepped down from the Board on 31 December 2014)5/5 Nick Land 7/7   Anne Lauvergeon(Stepped down from the Board on 29 July 2014)0/2 Luc   Vandevelde 7/7 Tony Watson(Stepped down from the Board on 29 July 2014)2/2 P   hilip Yea 7/7 |
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|  | Executive Committee The people powering   our strategy Chaired by Vittorio Colao, this committee focuses on our   strategy, technological and commercial developments, programme execution,   financial and competitive performance, succession planning, organisational   development and Group-wide policies. The Executive Committee includes the   Executive Directors, details of whom are shown on page 52, and the senior   managers who are listed below. From left to right: Warren Finegold; Matthew   Kirk; Serpil Timuray; Nick Read; Philipp Humm; Vittorio Colao; Nick Jeffery;   Paolo Bertoluzzo; Ronald Schellekens; Rosemary Martin; Stephen Pusey More on   the Executive Committee: Page 71 54 Vodafone Group Plc Annual Report on Form   20-F 2015 |
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|  | Paolo   Bertoluzzo Group Chief Commercial and Operations Officer Warren Finegold   Group Strategy and Business Development Director Philipp Humm Regional CEO   Europe Tenure: 2 years Nationality: German Tenure: 2 years Nationality:   Italian Tenure: 9 years Nationality: British Career history: Vodafone Group   Plc – chief executive officer, northern and central Europe (2012–2013) T-Mobile   USA – president and chief executive officer (2010–2012) T-Mobile   International – chief regional officer Europe; executive committee member   (2009–2010) T-Mobile Germany – chief executive officer; chief sales officer   (2005–2008) Entrepreneur (2002–2005) Amazon – managing director, Germany and   France; vice president Europe (2000–2002) Tengelmann (German grocery   retailer) – executive board member and chief executive officer of Plus   (food-discounter) (1992–1999) McKinsey & Company (1986–1992) Career   history: Vodafone Group Plc –chief executive officer, southern Europe   (2012–2013) Vodafone Italy – chief executive officer; chief operating   officer; chief commercial officer; consumer division director (2006–2013) Vodacom   – board member (2010–2012) Omnitel Pronto Italia S.p.A. (became Vodafone   Italy) – various senior roles including strategy & business development   director and commercial director (1999–2005) Bain & Company – manager   (1995–1999) Monitor Company – consultant (1991–1994) Career history: UBS   Investment Bank – managing director and head of its technology team in Europe   (1995–2006) Goldman Sachs International – executive director, holding   positions in New York and London (1985–1995) Hill Samuel & Co. Limited –   corporate finance executive (1981–1985) Nick Jeffery Group Enterprise   Director Matthew Kirk Group External Affairs Director Rosemary Martin Group   General Counsel and Company Secretary Tenure: 2 years Nationality: British   Tenure: 6 years Nationality: British Career history: Cable & Wireless   Worldwide – chief executive (2012–2013) Vodafone Global Enterprise – chief   executive (2006–2012) Vodafone Group Plc – marketing director (2004–2006) Ciena   – senior vice president (2003–2004) Microfone – founder (2002–2003) Cable   & Wireless plc (Mercury Communications) – led UK and international   markets business units (1991–2002) Career history: Vodafone Group Plc – group   director of external relationships (2006–2009) British Ambassador to Finland   (2002–2006) Member of the British Diplomatic Service for more than 20 years   Tenure: 5 years Nationality: British Career history: Practical Law Group –   chief executive officer (2008) Reuters Group Plc – group general counsel and   company secretary (2003–2008), company secretary (1999–2003), deputy company   secretary (1997–1999) Rowe & Maw – partner (1990–1997) Ronald Schellekens   Group Human Resources Director Serpil Timuray Regional CEO, Africa, Middle East   and Asia-Pacific Johan Wibergh Group Technology Officer Designate Tenure: 6   years Nationality: Dutch Tenure: < 1 year Nationality: Swedish Career   history: Royal Dutch Shell Plc – HR executive vice president for global   downstream business (2003–2008) PepsiCo – various international senior human   resources roles in England, South Africa, Switzerland and Spain (1994–2003) AT&T   Network Systems – human resources roles in the Netherlands and Poland   (1986–1994) Tenure: 1 year Nationality: Turkish Career history: Appointed to   the Executive Committee on 1 May 2015 Ericsson – executive vice president and   head of business unit networks (2008–2015) Ericsson – president and head of   market unit for Brazil (2006–2008), for Nordic & Baltics (2005–2006).   Various senior roles (1996–2005) Bull AB – Head of Systems Integration Unit   (1992–1996) Diab Data AB – SW Developer and R&D Manager of Datacom   Products (1987–1991) Career history: Vodafone Turkey – chief executive   officer (2009–2013) Danone Turkey – chief executive officer (2002–2008) Danone   Turkey – executive committee member and marketing and sales director   (1999–2002) Proctor & Gamble Turkey – several marketing positions   ultimately becoming executive committee member (1991–1999) 55 Vodafone Group   Plc Annual Report on Form 20-F 2015 Overview Strategy review Performance   Governance Financials Additional information |
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|  | Board activities Key areas of focus for   your Board Board activities are structured to assist the Board in achieving   its goal to support and advise executive management on the delivery of the   Group’s strategy within a transparent governance framework. 56 More on   Project Spring: Vodafone Group Plc Annual Report on Form 20-F 2015 Project   Spring We have made strong progress on Project Spring, which is designed to accelerate   further our network and service differentiation. We have substantially   increased European 4G population coverage, passed many more homes with our   own fibre or cable next-generation networks, and significantly developed our   suite of Enterprise products and services. Pages 6 and 7 KDG We commenced   integration of KDG in April 2014 and have made solid progress. We have   started to connect Vodafone base stations to KDG fibre backhaul, migrated   broadband customers from Vodafone’s broadband onto KDG’s cable   infrastructure, and launched our bundled fixed and mobile bundle product.   More on KDG integration: Page 39 Board activities in the 2015 financial year   Set out below are the key areas which the Board focused on during the year.   as we moved ahead in our strategyin the Group’s markets and on the Group’s   strategy, both organic and inorganic, in light in Spain and Kabel Deutschland   in Germany of this strategy. be developed; Strategy development The Board:   Last year was a year of change for Vodafonea had a strategy day including   presentations from executives about developments to become a total telecoms   provider. of these developments; We acquired the cable companies Onoa   received presentations from local management in Spain and Germany on Ono and   and disposed of our interest in Verizon Kabel Deutschland and our plans in   respect of them; Wireless. We also began our Project Spring received a   presentation on the acquisition reviews that had been undertaken for   programme, investing in the quality the earlier acquisitions of Cable &   Wireless Worldwide in the UK and Telstraclear of our networks. in New   Zealand; The 2015 financial year was a year in which was updated at each   Board meeting on the implementation of Project Spring; the Board monitored   our execution considered the Group’s portfolio of assets and whether, and   how, these should a considered the Group’s requirements for spectrum as and   when opportunities became available; a had a presentation on the Vodafone   brand and how it is being developed and managed; and a received a digital   strategy presentation. |
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|  | Performance   Governance At the relevant times throughout the year the Board dealt with   corporate governance matters, including: People The Board reviewed the   Company’s people management, including succession planning, talent, progress   on diversity and the results of the People Survey. Other reports from the   business The Board also received the following reports from the business: a   At each Board meeting there was a report from the Chief Executive (including   topics such as updates on the Enterprise business) and also from the Chief   Financial Officer (including topics such as financial performance, treasury   matters, acquisition reviews and insurance) a the appointment of new   Directors; a the annual budget and three year plan; a the Annual Report   including disclosures within the financial statements and the external audit   process; a At each Board meeting the Board received information on the   performance of the Group with network, customer satisfaction and quarterly   market share metrics being regularly provided a business development report;   a quarterly market share trends; a bond issuance; a External Affairs report;   a changes to the treasury policy and dealing mandate; a EMF report; a During   the course of the year the Board met with all the Executive Committee members   and with each of the chief executives of Vodafone Germany, Vodafone UK,   Vodafone Spain, Vodafone Italy, Vodafone Hungary, Vodafone Greece and   Vodafone’s Enterprise business to consider performance and future plans of   the businesses a renewal of the Group’s insurance arrangements; a Vodafone   Foundation; and a teach-in on fixed access technologies. a assessment of   risks and internal controls; a reports on compliance and litigation; a   reports on health & safety and EMF; a the Board effectiveness review; and   a reviews of the Board and committees’ composition and terms of reference. 57   Vodafone Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information Board’s visit to   Delhi, India In February 2015, Analjit Singh, Vodafone India’s Chairman, and   Marten Pieters, Vodafone India’s Chief Executive at the time, hosted a visit   by the Board to Vodafone India in Delhi. The Board visited shops and other   distribution outlets and heard from Vodafone India’s executive team about   Vodafone India’s business and operations. Two respected speakers, Suhel Seth   of Counselage, India and Uday Kotak, executive vice chairman and managing   director of Kotak Mahindra Bank, provided commentary on India’s political and   economic context. Evening receptions provided opportunities for the Board to   meet with Indian leaders and to hear about the work of the Vodafone India   Foundation. During the visit, the Board held Board, Remuneration Committee   and Nominations and Governance Committee meetings and a strategy day. |
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|  | Board evaluation, induction and training   Evaluating our performance and keeping up-to-date The Board recognises that   it continually needs to monitor and improve its performance. This is achieved   through annual performance evaluation, full induction of new Board members   and ongoing Board development activities. Chairman and the chairman of each   of the to discuss the reports. The Directors were things: strategic   oversight; priorities for effectiveness of the Board’s engagement internal   control; Board dynamics and the Recommendations for the 2016 financial year   Director led the review of the performance to develop its understanding of   the future challenges and trends in Vodafone’s sector, a specific self   assessment questionnaire. increase its focus on customers’ experience and it   should continue to monitor assessment also included input from in the   financial year ahead. senior management 58 Vodafone Group Plc Annual Report   on Form 20-F 2015 Board Evaluation Board effectiveness is reviewed by an   external performance evaluation every three years, and will be externally   conducted again in 2016. An internal performance evaluation was carried out   this year, with the assistance of Lintstock Limited (‘Lintstock’), a   London-based corporate advisory firm, which has no other connection with   Vodafone. This year’s process2014 financial year evaluation a Each Director   completed a confidential online questionnaire, designed by Lintstock and the   Company Secretary a Lintstock prepared a report based on the completed   questionnaires for the Board committees a The Chairman then held one-to-one   interviews with each of the Directors asked for their views on, amongst other   change; Board composition and expertise; with shareholders; risk management   and induction process for new Directors a The Chairman reviewed the   Directors’ contributions and the Senior Independent of the ChairmanThis   year’s findings included that the Board’s dynamic was good. It should   continue a Each Board committee undertookespecially convergence, technology   trends and the regulatory environment. It should The Audit and Risk   Committeemanagement’s success in delivering operational strategic objectives.   the external auditor and relevant The Board will continue to review its   procedures, its effectiveness and development a The Chairman of each Board   committee gave feedback on the evaluation of their committee to their   committees and to the Board at its meeting in March 2015 a The Chairman   discussed Lintstock’s report on the performance evaluation with the   Nominations and Governance Committee, and with the Board at its meeting in   March 2015 Recommendations Actions taken in 2015 financial year Diversity   Diversity had improved and it should The aspiration of 25% women Board   continue on that path. members was achieved in March 2015. Appointments to   the Board The process for appointing Directors The process for Director   recruitment has needed to be accelerated. been improved and three new   Directors have been appointed during the year. Information flow Board   arrangements and information flows During the year quarterly reports on were   generally satisfactory, but more focusmarket share were provided to Directors   could be given on market information and and the Chief Executive discussed   the changing regulatory and competitive changes in the regulatory and   competitive environment. Some further refinement of environment, when   relevant, during his the presentation of performance metricsregular reports   at each Board meeting. was agreed. Performance metrics were refined in line   with the recommendation. |
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|  | Board Induction   The Chairman is responsible for ensuring that each Director receives an   induction on joining the Board and receives the training he or she requires,   tailored to their specific requirements. This year, an induction programme   was provided for Nick Read, our new Chief Financial Officer. Valerie Gooding,   Dame Clara Furse and Sir Crispin Davis were also inducted into the Board.   Valerie Gooding’s induction had been mostly completed during the 2014   financial year but she continued her introductory visits during the 2015   financial year. During the induction process new Non-Executive Directors meet   with each of the Executive Committee members to hear about the aspects of   Vodafone’s business for which they are responsible. They also meet with the   Chief Executive of Vodafone UK and, when practicable, with at least one other   local market chief executive. The Directors being inducted also meet with the   Group General Counsel and Company Secretary, Group Audit Director and Group   Risk and Compliance Director. Briefings are provided by a law firm for those   Directors who are not already familiar with the laws and regulations   affecting listed companies. Keeping up-to-date Keeping up-to-date with key   business developments is essential for the Directors to maintain and enhance   their effectiveness. As part of the Board’s review of its effectiveness in   2015, the Directors assessed whether they had enough opportunities for   training and development. 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. This is achieved by: a receiving presentations from   executives in our business on matters of significance. This year the Board   had training sessions on topics that are increasingly relevant for Vodafone   as it executes its strategy, namely on fixed access technologies, content and   Vodafone’s digital strategy; a financial plans, including budgets and   forecasts are regularly discussed at Board meetings; a the Directors have the   opportunity to learn the views of major investors at planned investor   relations events throughout the year; a visits to different parts of the   Group. Details of the Board’s visit to Delhi in India is set out on page 57;   and a regular updates on the Group’s businesses and the regulatory and   industry specific environments in which we operate, by way of written   briefings and meetings with senior executives and, where appropriate,   external sources. 59 Vodafone Group Plc Annual Report on Form 20-F 2015   Overview Strategy review Performance Governance Financials Additional   information |
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|  | Board diversity Maintaining the right   balance We recognise that diversity is the key foundation for introducing   different perspectives into Board debate and for better anticipating the   risks and opportunities in building a long term, sustainable business. Board   diversity We launched the Board diversity policy in 2011 with the intention   of ensuring that diversity, in its broadest sense, remains a central feature   of the Board and that it extends beyond the boardroom and permeates all   levels of the organisation. Since the launch, the Board has made positive   steps in broadening the diversity not just of the Board, but of our senior   management. 25% female presence on the Board We have made good progress   refreshing the Board over the last four years, which has resulted in an   increase in the proportion of female Directors on the Board, to 25% in March   this year. Mathias Döpfner has since joined the Board, reducing this   percentage, though this level will be exceeded when Luc Vandevelde and   Stephen Pusey step down from the Board at the annual general meeting in July.   We remain committed to at least maintaining this level of female presence in   the medium term, whilst ensuring that diversity in its broadest sense remains   a central feature of the Board. That said, the Nominations and Corporate   Governance Committee will continue to recommend appointments to the Board   based on merit and uses the annual evaluation process to consider objectively   the Board’s composition and effectiveness including an assessment of the   Board’s diversity including gender. The Board remains committed to   strengthening the pipeline of senior female executives within the business   and endorses the Group’s “Recruiting and Managing People” policy, one of the   objectives of which is to “attract and develop a highly qualified and diverse   workforce and ensure that all selection decisions are based on merit”.   Strengthening the pipeline of executive talent Strengthening the pipeline of   executive talent in the Company has remained a key focus during the year. We   are continuing to learn and build on existing programmes while introducing   new initiatives to build, broaden and develop the significant talent which   exists across the business. Details of key initiatives include: Other   initiatives taking place within the Company which promote gender and other   forms of diversity During the year, the business has continued to embrace all   forms of diversity with the introduction or continuation of a number of   initiatives. a Launching a new global maternity policy that sets the standard   on benefits for our female employees in 30 countries. More on this initiative   on page 61 a an executive succession planning update is provided to the   Nominations and Governance Committee annually, mapping successional   candidates and opportunities; a Launching a Mobile Gender Equality steering   committee chaired by Serpil Timuray, an Executive Committee member, to   accelerate the focus on gender balance and the work we do with our female   customers, the work we do in communities and with our colleagues a disclosing   our gender diversity targets and progress against these as part of the   European Roundtable Table of Industrialists’ voluntary targets initiative and   using our membership to identify senior female employees suitable to serve on   non-executive boards of other companies; a Using a gender toolkit to enable a   consistent approach to improving gender diversity across all markets a   providing senior Vodafone women with the opportunity to learn about life as a   non-executive director through our sponsorship of the Professional Boards   Forum; and a Running inclusive leadership workshops for our most senior   leaders to highlight the business benefits of diversity and encourage them to   act as role models to promote diversity and inclusion across Vodafone a   senior management mentoring and coaching schemes. a With employees working in   many countries worldwide, it is our goal to operate as one company while   keeping our local roots. 24 nationalities are represented in our top   management team and 44% of our senior leaders have completed an international   assignment. In the 2015 financial year, we focused on improving our employees’   cultural awareness. We launched the Vodafone Cultural Navigator, an online   tool to help employees understand different cultural preferences so they can   work successfully with colleagues and customers around the world Best   practice executive search The Board continues to support the principles of   the Executive Search Firms Voluntary Code of Conduct on gender diversity,   demonstrated by remaining committed to engaging only executive search firms   which are signatories to this code. We continued to work with Korn Ferry   during the year. Korn Ferry also provide some of the middle and senior   recruitment solutions across some of our footprint. 60 Vodafone Group Plc   Annual Report on Form 20-F 2015 |
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|  | Board diversity   At 31 March 2015 Building the pipeline for Board diversity 23% 38% 38% 77% 8%   Telecoms Female 50% 25% goods 61 Vodafone Group Plc Annual Report on Form   20-F 2015 Overview Strategy review Performance Governance Financials   Additional information Setting the standard in maternity benefits for women   globally In 2015, we launched a global maternity policy that sets a worldwide   minimum level of maternity pay for women in 30 countries. Vodafone is one of   the first companies to do this. From Africa to the Middle East, women at all   levels of our organisation will be entitled to at least 16 weeks of fully   paid maternity leave and full pay for a 30-hour week for the first six months   after they return to work. Our policy will make a big difference to around   1,000 female Vodafone employees each year, especially those who work in   countries where there is little or no legislation to support them after having   a baby. This will be good for our business too. KPMG estimates that global   businesses could save around US$19 billion annually by providing 16 weeks of   fully paid maternity leave, because it helps cut recruitment costs and   retains valuable knowledge and experience within the business. Sector   experience of Board Media 16% Finance Technology Consumer 25% Gender of total   employees 36% Male 64% Geographic representation of Board Italian Ghanaian   Dutch Canadian British Belgian American Gender of senior management (top   c.1600 employees) Female Male Tenure of Non-Executive Directors 7+ years 0–3   years 4–6 years 24% Gender of Board Female 25% Male 75% |
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|  | Shareholder engagement our shareholders   with our shareholders and our roadshows have asked us this year activities.   We also respond to daily queries presentation of financial results is given   before a section of our website which is dedicated question the Board during   the meeting. We hold meetings with major institutional dividend cover;   com/investor. Our registrars, Computershare, a fixed broadband and TV   strategy; a performance outlook; and financial analysts to discuss the   business of our American Depositary Receipts (‘ADR’) by the appropriate mix   of Board Directors and to answer shareholder and ADR holder Chief Executive,   Executive Committee emerging markets; holdings such as dividend payments and   Relations team. Institutional investors also investor. 62 Vodafone Group Plc   Annual Report on Form 20-F 2015 Communicating with We are committed to   communicating our strategy and activities clearly to all our shareholders.   How we communicate Our annual general meeting What our shareholders We   maintained an active dialogue with our Our annual general meeting is attended   by our Common topics raised by our institutional shareholders throughout the   year through Board and Executive Committee and is open and individual   shareholders include: a planned programme of investor relationsto all our   shareholders to attend. A summarya 4G and data; from shareholders and   analysts through the Chairman deals with the formal businessa administration   of shareholding; our Investor Relations team and have of the meeting. All   shareholders present cana cash flow, capital expenditure, debt and to   shareholders and analysts: vodafone. and BNY Mellon (as custodians investors,   individual shareholder groups programme) also have a team of people performance   and strategy. These are attended a Project Spring strategy; queries in   relation to technical aspects of their senior management including our   Chairman, a regulation in Europe and shareholding balances. members, senior   leaders and the Investora shareholder returns; All of our financial results   presentations meet with the Chairman to discuss matters a spectrum renewal   costs; and are available on our website at vodafone.com/of governance. a the   Verizon Wireless transaction. Our investor calendar Set out below is a   calendar of our investor events attended by senior management throughout the   year. and Turkey a London, New York, Boston, Edinburgh, Statement published   Netherlands roadshows Statement published Stockholm and Helsinki roadshows   May 2014 September 2014 December 2014 a Preliminary Results published a   Several investor conferences in London a Investor conference in London a   London, New York, Boston, Toronto and a Investor meetings in Spain, Italy a   New York, Montreal and Edinburgh roadshows and Germany Toronto roadshows a   Investor meeting in Italy a Investor event in Tanzania a Chairman’s meeting   with investors June 2014 October 2014 January 2015 a Annual Report published   a M2M webinara Investor conference in Madrid a Switzerland, Netherlands and a   Investor meeting in Ireland a Italy roadshow Frankfurt roadshow a Investor   conference in London November 2014 February 2015 a Investor meetings in   Spain, Germany a Half-year results published a Q3 Interim Management a   Chairman’s London roadshow Paris, Frankfurt, Switzerland and a US west coast   roadshow July 2014 a Investor conference in Barcelona March 2015 a Q1 Interim   Management a US east coast, Asia, Copenhagen, a Annual general meeting in   London a Investor conference in London a Investor field trip to India |
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|  | Board committees The 2015 financial year   has seen the accounting and reporting together with the environment and   system of internal controls to PricewaterhouseCoopers LLP following the   Committee will work with the Board under include providing advice to the   Board on the of the principal risks facing the Group, system and its   effectiveness and providing been assessed in order to make the new, The   membership of the Committee changed Yea, in place of Anne Lauvergeon, Alan   Jebson were appointed after a rigorous process expertise required to provide   an effective level of the Committee are Non-Executive Directors I continue to   be designated as the financial of the US Sarbanes-Oxley Act and the item, on   the activity of the Committee and 63 Vodafone Group Plc Annual Report on Form   20-F 2015 Overview Strategy review Performance Governance Financials   Additional information Overview Committee’s activity directed towards the   integrity of the Group’s financial related external audit, the Group’s   control including the work of internal audit and the Sarbanes-Oxley Act   compliance process and the Group’s management of risk and compliance related   activities. During the year we also welcomed three new members onto the   Committee, as a result of Director retirements, and were actively involved in   the transition of the Group’s statutory audit their appointment at the 2014   AGM. Looking forward to the 2016 financial year, its expanded terms of   reference, which now assessment, management and mitigation monitoring the   Group’s risk management advice on how the Group’s prospects have longer term,   viability statement. Membership substantially in the year with the   appointment of Dame Clara Furse, Sir Crispin Davis and Philip and Anthony   Watson, all of whom retired from the Board at the 2014 AGM. The new members   to ensure the Committee has the necessary range of financial experience and   commercial of challenge to management. All the members of the Company. Given   my experience, expert on the Committee for the purposes UK Corporate   Governance Code. How the Committee operates The Committee met four times   during the year as part of its standard schedule of meetings. No   supplementary meetings were necessary in the year. For the next financial   year we have resolved to increase the standard number of meetings to five to   ensure we have adequate time to meet our increased responsibilities   particularly in relation to risk management. Meetings of the Committee   generally take place just prior to a Board meeting to maximise the efficiency   of interaction with the Board and I report to the Board, as a separate agenda   matters of particular relevance to the Board in the conduct of its work.   Audit and Risk Committee “The Committee has continued to focus its work on   the Group’s financial reporting, financial control and risk management and   compliance processes.” Membership Chairman and financial expert (pictured   right): Nick Land Independent Non-Executive Director Sir Crispin Davis   Independent Non-Executive Director Dame Clara Furse Independent Non-Executive   Director Philip Yea Independent Non-Executive Director Responsibilities: The   Board has approved terms of reference for the Committee which are available   at vodafone.com/governance. These provided the framework for the Committee’s   work in the year and can be summarised into five primary sets of activities.   These are oversight of the: a appropriateness of the Group’s external   financial reporting; a relationship with and performance of, the external   auditor; a Group’s system of internal control including the work of the   internal audit function; a Group’s system of risk management; and a Group’s   system of compliance activities. Following the publication of the revised UK   Corporate Governance Code, which will be adopted in the 2016 financial year,   the Board has approved amendments to the Committee’s terms of reference to   include: a providing advice to the Board on the assessment performed of the   principal risks facing the Group including their management and mitigation; a   monitoring the Group’s risk management system and reviewing its   effectiveness; and a providing advice to the Board on the form and basis   underlying the longer term viability statement and going concern statement to   be contained in future Annual Reports. Attendance at scheduled meetings   Director Attendance Nick Land 4/4 Dame Clara Furse (member from September   2014)3/3 Philip Yea (member from September 2014)3/3 Sir Crispin Davis(member   from September 2014)2/3 Alan Jebson(Stepped down from the Board in July   2014)1/1 Anne Lauvergeon(Stepped down from the Board in July 2014)0/1 Anthony   Watson(Stepped down from the Board in July 2014)1/1 Key objective: The   provision of effective governance over the appropriateness of the Group’s   financial reporting including the adequacy of related disclosures, the   performance of both the internal audit function and the external auditor and   oversight over the Group’s systems of internal control, business risks and   related compliance activities. |
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|  | Board   committees (continued) In addition to more recurring activities driven by the   Group’s external financial reporting calendar and related regulatory   obligations, the Committee conducts a rolling programme of “in-depth review”   sessions where the Group’s senior management provide briefings on key issues   and developments including in relation to aspects of risk management. These   reviews help us to understand more fully the context and challenges of their   business operations and thereby ensure the Committee’s time is used most   effectively. A summary of the reviews undertaken during the year are set out   within “Monitoring the Group’s risk management system and its effectiveness”   below. The external auditor, PricewaterhouseCoopers LLP, is invited to each   meeting together with the Chief Executive, the Chief Financial Officer, the   Group Financial Controller, the Group Financial Reporting Director, the Group   Audit Director, the Group Risk and Compliance Director, and the Group General   Counsel and Company Secretary. The Committee the Group’s senior management   and the external auditor. This confirmed that the Committee remained   effective at meeting its objectives. Main activities of the Committee during   the year I have set out below a summary of the major activities of the   Committee in the year. Appropriateness of Group’s external financial   reporting The Committee’s primary responsibility in relation to the Group’s   financial reporting is to review with both management and the external auditor   the appropriateness of the half-year and annual financial statements   concentrating on, amongst other matters: a the quality and acceptability of   accounting policies and practices; a material areas in which significant   judgements have been applied or where significant issues have been discussed   with the external auditor; Accounting policies and practices The Committee   received reporting from management in relation to the identification of   significant accounting policies including the proposed disclosure of these in   the 2015 Annual Report. Following this assessment and discussions with   PricewaterhouseCoopers LLP the Committee was satisfied with these judgements   and related disclosure which is set out on pages 109 to 113 of this Annual   Report. We have included detail in relation to IFRS 15 “Revenue from   contracts with customers” which is likely to have a very substantial effect   on the Group’s accounting when it is adopted, which is now likely to be in   the 2019 financial year. Further, the Committee discussed with management and   subsequently approved the critical accounting judgements and key sources of   estimation uncertainty outlined in note 1 “Basis of preparation” to the   consolidated financial statements. Significant judgements and issues The   significant areas of focus considered also regularly meets separately with   PricewaterhouseCoopers LLP, the Chief Financial Officer and the Group Audit   Director without others being present. We believe that the activities of the   Committee during the last year have enabled us to gain a good understanding   of the culture of the organisation, the risks and challenges faced and the   adequacy and timeliness of the actions being taken to address them. Similar   to last year, I, together with the Committee’s secretary, conducted an   internal review of effectiveness of the Committee a the clarity of the   disclosures and compliance with financial reporting standards and relevant   financial and governance reporting requirements; a any correspondence from   regulators in relation to our financial reporting; and a whether the Annual   Report, taken as a whole, is fair, balanced and understandable and provides   the information necessary for shareholders to assess the Company’s   performance, business model and strategy. by the Committee in relation to the   2015 accounts, and how these were addressed, are outlined below. We have   discussed these with the external auditor during the year. involving the   members of the Committee, 64 |
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|  | The Committee   received reports of work performed by management in relation to the   maintenance and development of these controls during the year together with   the results of related reviews performed by Internal Audit.   PricewaterhouseCoopers LLP included these key business controls on their   audit scope and reported to the Committee the results of their audit testing   in these areas. 65 Revenue recognition The timing of revenue recognition, the   recognition of revenue on a gross or net basis, the treatment of discounts,   incentives and commissions and the accounting for multi-element arrangements   are complex areas of accounting. See note 1 “Basis of preparation” for more   detail. In addition there is heightened risk in relation to the accounting   for revenue as a result of the inherent complexity in the underlying billing   and related IT systems. An in-depth review of revenue accounting was   undertaken by the Committee during the year. Management outlined the Group’s   approach to revenue recognition, particularly for more complex enterprise   transactions. PricewaterhouseCoopers LLP shared their approach to the audit   of revenue, as part of their presentation of the detailed audit plan. This   identified the primary risks attaching to the audit of revenue to be (a) the   controls over the underlying accuracy of rating by billing systems and (b)   presumed fraud risk. PricewaterhouseCoopers LLP reported on the results of   their work in relation to the revenue accounting cycle as part of their   Committee reporting from their half-year review and the year end audit.   Goodwill impairment testing This is an area of focus for the Committee given   the materiality of the Group’s goodwill balances (£22.5 billion at 31 March   2015) and the inherent subjectivity in impairment testing. The judgements in   relation to goodwill impairment continue to relate primarily to the   assumptions underlying the calculation of the value in use of the business,   being: a the achievability of the long-term business plan; and a the   macroeconomic and related modelling assumptions underlying the valuation   process. See note 4 “Impairment losses” for further detail. The Committee   received detailed reporting from management and challenged the   appropriateness of the assumptions made including: a the consistent   application of management’s methodology; a the achievability of the business   plans; a assumptions in relation to terminal growth in the businesses at the   end of the plan period; and a discount rates. A separate in-depth review on   setting discount rates for impairment purposes was also conducted in the   year. This remains an area of audit focus and PricewaterhouseCoopers LLP   provided detailed reporting on these matters to the Committee including   sensitivity testing. Liability provisioning The Group is subject to a range of   claims and legal actions from a number of sources including competitors,   regulators, customers, suppliers, and on occasion fellow shareholders in   Group subsidiaries. The level of provisioning for contingent and other   liabilities is an issue where management and legal judgements are important   and accordingly an area of Committee focus. The Committee received a   presentation from the Group’s General Counsel and the Director of Litigation   in both November 2014 and May 2015 on management’s assessment of the most   significant claims. As this is an area of audit focus PricewaterhouseCoopers   LLP also reviews these claims and relevant legal advice received by the   Group, to form a view on the appropriateness of the level of provisioning   that is shared with the Committee. Acquisitions and disposals The Group made   one significant business acquisition during the year being the purchase of   Ono in Spain. This gave rise to a number of complex accounting and disclosure   requirements particularly in relation to the valuation of acquired tangible   and intangible assets. See note 28 “Acquisitions and disposals” for further   details. Management outlined the key accounting and disclosure impacts in   relation to this transaction. The Committee received detailed reporting from   PricewaterhouseCoopers LLP on their assessment of the accounting and   disclosures made by management in both the half-year and annual financial   statements. IT controls in relation to privileged user access The Group’s IT   infrastructure platform hosts a number of financial reporting related   applications. In the 2014 financial year, an issue was identified in respect   of privileged user access controls within part of the IT infrastructure   platform which could have had an adverse impact on certain of the Group’s   controls and financial systems. Management has implemented new controls in   the year to provide assurance over access to these systems.   PricewaterhouseCoopers LLP tested these controls as part of their audit   approach and confirmed they were operating effectively. Key business controls   The Group has continued to concentrate resources on key business controls to   ensure a robust system of internal control. During the year this work has   included particular focus over controls over general ledger accounts given   the inherent risks and the high volume of related processing, and user access   to the Group’s core ERP system. This work was also responsive to both the   identification of a number of weaknesses and potential improvements to these   processes identified by Group Internal Audit. |
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|  | Board   committees (continued) Overseeing the relationship with and performance of,   the external auditor Appointment of PricewaterhouseCoopers LLP As a result of   the tender performed in the 2014 financial year, shareholders approved the   appointment of PricewaterhouseCoopers LLP as the Group’s external auditor at   the 2014 AGM. Throughout the year the Committee oversaw and helped facilitate   a smooth transition from the former auditor. It was a key objective of the   Committee to ensure that the new statutory auditor became fully familiar with   all aspects of the Group that were relevant to the external audit process as   part of their audit planning. Key to this was a formal “shadowing” by   PricewaterhouseCoopers LLP of Deloitte LLP through the 31 March 2014 year end   audit process at our major operating companies and at Group. This included   attendance at Group Audit and Risk Committee meetings before their formal   appointment. This was supplemented by PricewaterhouseCoopers LLP performing   detailed audit planning activities at all the Group’s material operating   locations throughout the late spring and summer and a review of Deloitte LLP   audit files at major locations. Following this work we received from   PricewaterhouseCoopers LLP a detailed audit plan for the 2015 financial year   identifying their audit scope, planning materiality and their assessment of   key risks. The PricewaterhouseCoopers LLP audit plan for the 2015 financial   year was a key output of the transition process and was rigorously reviewed   by the Committee. Looking forward, the Committee has recommended to the Board   the re-appointment of the external auditor under the current external audit   contract for the 2016 financial year. The Directors will be proposing the   reappointment of PricewaterhouseCoopers LLP at the AGM in July 2015. The   Committee will continue to review the auditor appointment and the need to   tender the audit, ensuring the Group’s compliance with the UK Corporate   Governance Code and the reforms of the audit market by the UK Competition and   Markets Authority and the European Union. In November 2013, having considered   the changes to the UK Corporate Governance Code and the notes on best   practice issued by the Financial Reporting Council, the Audit Committee   decided to put the audit for the 2015 financial year out to tender. The   Committee concluded the process in February 2014 and recommended to the Board   that PricewaterhouseCoopers LLP be appointed as the Group’s statutory   Regulators and our financial reporting The Group received an enquiry letter from   the UK Financial Reporting Review Panel (the ‘FRRP’) in relation to its 31   March 2014 Annual Report during the year. The Committee was involved at all   stages of the process, reviewing all correspondence between the Company and   the Panel. All matters have been fully addressed and the enquiry is now   closed. As a result the Group has agreed to make additional disclosure   particularly around the judgements in relation to the recognition of deferred   tax assets which is reflected in this Annual Report. Whether the Annual   Report, taken as a whole, is fair, balanced and understandable and provides   the information necessary for shareholders to assess the Company’s   performance, business model and strategy. As part of the Committee’s   assessment of the Annual Report to allow onward reporting to the Board, it   draws on the work of the Group’s Disclosure Committee and has discussions   with senior management. The processes and controls that underpin our   consideration include ensuring that: auditor. Accordingly, the engagement of   Deloitte LLP was not renewed in 2014. PricewaterhouseCoopers LLP became the   Group’s external auditor following completion of the audit of the Vodafone   Group Plc financial statements for the year ended 31 March 2014 and the audit   of the effectiveness of internal control over financial reporting as of 31   March 2014. Shareholders approved the appointment of PricewaterhouseCoopers   LLP as the Group’s external auditor at the 2014 AGM. During the two years   prior to 31 March 2015, (i) Deloitte LLP has not issued any reports on the   financial statements of the Group or on the effectiveness of internal control   over financial reporting that contained an adverse opinion or a disclaimer of   opinion, nor were the auditors’ reports of Deloitte LLP qualified or modified   as to uncertainty, audit scope, or accounting principles, (ii) there has not   been any disagreement over any matter of accounting principles or practices,   financial statement disclosure, or auditing scope or procedures, which   disagreements if not resolved to Deloitte LLP‘s satisfaction would have   caused it to make reference to the subject matter of the disagreement in   connection with its auditors’ reports, or any “reportable event” as described   in Item 16F(a)(1)(v) of Form 20-F. Further in the two years prior to 31 March   2015 we have not consulted with PricewaterhouseCoopers LLP regarding either   (i) the application of accounting principles to a specified transaction,   either completed or proposed, or the type of audit opinion that might be   rendered with respect to the consolidated financial statements of the Group;   or (ii) any matter that was the subject of a disagreement as that term is   used in Item 16F(a)(1)(iv) of Form 20-F or a “reportable event” as described   in Item 16F(a)(1)(v) of Form 20-F. Audit risk The audit risk identification   process is considered a key factor in the overall effectiveness of the   external audit process. For the 2015 financial year, the key risks identified   were a combination of those identified in the 2014 financial year, one new specific   risk arising from the Group’s ongoing organic investment programme, Project   Spring and one new risk in relation to the revenue accounting process, as   follows: Previously identified risks a senior managers providing the content   for the Annual Report are fully briefed on the fair, balanced and   understandable requirement; a a dedicated core team of senior managers is   responsible for the overall co-ordination of content submissions,   verification and detailed review and challenge; a confirmation from senior   management within the business that they consider the content in respect of   their area of responsibility to be fair, balanced and understandable; and a   the Disclosure Committee’s review and assessment of the Annual Report as a   whole. We also received an early draft of the Annual Report to enable timely   review and comment. These processes allowed us to provide positive assurance   to the Board to assist them in making the statement required by the UK   Corporate Governance Code. The Committee is committed to continuous   improvement in the effectiveness and clarity of the Group’s corporate   reporting and has provided support to management to adopt initiatives by   regulatory bodies which would enhance our reporting. a Carrying value of   goodwill a Provisioning for current tax liabilities a Recognition and   recoverability of deferred tax assets a Provisioning for legal and regulatory   claims a Accounting for significant acquisitions and disposals 66 a Revenue   recognition Vodafone Group Plc Annual Report on Form 20-F 2015 |
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|  | New specific   risks For certain specific permitted services, the Committee has pre-approved   that PricewaterhouseCoopers LLP can be engaged by management, subject to the   policies set out above, and subject to specified fee limits for individual   engagements, and fee limits for each type of specific service. For all other   services or those permitted services that exceed the specified fee limits, I,   as Chairman, or in my absence another Committee member, can pre-approve   permitted services. During the year, PricewaterhouseCoopers LLP and related   member firms charged the Group £12 million for statutory audit services. The   Committee approved these fees which represented the fee proposed as part of   the audit tender and scope changes during the 2015 financial year, including   the impact of business acquisitions which were primarily in relation to Ono.   The Committee received formal assurance from PricewaterhouseCoopers LLP that   the fees were appropriate for the scope of the work required. In addition to   the statutory audit fee, PricewaterhouseCoopers LLP and related member firms   charged the Group £4 million for audit-related and other assurance services, comprising   £3 million for services that had ceased by 30 June 2014 and £1 million of   other non-audit fees. Further details of the fees paid, for audit and   non-audit services to both PricewaterhouseCoopers LLP for the current   financial year and to Deloitte LLP for prior years, can be found in note 3 to   the consolidated financial statements. The observations from this assessment   for the 2015 financial year were presented and discussed at the May 2015   meeting. We also considered the firm-wide audit quality inspection report   issued by the FRC in relation to PricewaterhouseCoopers LLP in May 2014. The   Committee concluded that there had been appropriate focus and challenge on   the primary areas of audit focus and PricewaterhouseCoopers LLP had applied   robust challenge and scepticism throughout the audit. Management concurred   with this view. Independence and objectivity In its assessment of the   independence of the auditor and in accordance with the US Public Company   Accounting Oversight Board’s standard on independence, the Committee receives   details of any relationships between the Company and PricewaterhouseCoopers   LLP that may have a bearing on their independence and receives confirmation   that they are independent of the Company within the meaning of the securities   laws administered by the US Securities and Exchange Commission (‘SEC’). Prior   to the Board decision in February 2014 to recommend PricewaterhouseCoopers   LLP as the external auditor for the year ended 31 March 2015,   PricewaterhouseCoopers LLP were providing a range of non-audit services to   the Group. A significant joint exercise was undertaken to confirm their   independence from both a UK and US regulatory perspective. The Committee then   set the parameters for any ongoing and future activity. It was mandated that:   a Capitalisation of costs and asset lives a Billing accuracy as part of   revenue process At each meeting of the Committee, these risks were reviewed   and both management’s primary areas of judgement and the external auditor’s   key areas of audit focus were challenged. As part of this process, the risks   associated with the accounting and reporting of complex supplier arrangements   was assessed by both the Committee and the statutory auditor. This was not   assessed as being an incremental key risk for external audit purposes given   the nature of the agreements and the low level of accounting judgement   required to be applied. Working with the auditor We hold private meetings   with the external auditor at each Committee meeting to provide additional   opportunity for open dialogue and feedback from the Committee and the auditor   without management being present. Matters typically discussed include the   external auditor’s assessment of business risks and management activity   thereon, the transparency and openness of interactions with management,   confirmation that there has been no restriction in scope placed on them by   management, independence of their audit and how they have exercised   professional scepticism. I also meet with the external lead audit partner   outside the formal Committee process throughout the year. As a Committee, we   strongly support the professional scepticism, particularly in the areas of   key judgement and accounting disclosure, displayed by PricewaterhouseCoopers   LLP. External audit process effectiveness We have sought to evolve our   approach this year in relation to assessing the effectiveness of the external   audit process. The framework we used had a number of facets and comprised:   Oversight of the Group’s system of internal control including the internal   audit function Assessment of internal controls The Group has in place an   internal control environment to protect the business from the material risks   which have been identified. Management is responsible for establishing and   maintaining adequate internal controls over financial reporting and we have   responsibility for ensuring the effectiveness of these controls. We reviewed   the process by which the Group evaluated its control environment. Our work   here was driven primarily by the Group Audit Director’s reports on the   effectiveness of internal controls, significant identified frauds and any   identified fraud that involved management or employees with a significant   role in internal controls. We also held a number of detailed reviews of the   control environment in Vodafone Italy, Australia and the UK. Oversight of the   Group’s compliance activities in relation to section 404 of the   Sarbanes-Oxley Act also falls within the Committee’s remit. a all services   that were prohibited by the SEC for a statutory auditor to provide were to   cease by 31 March 2014; and a all engagements that were not prohibited by the   SEC but would not have met the Group’s own internal approval policy for   non-audit services were to cease by 30 June 2014 to enable a transition to   alternative suppliers, where required. These services had a value of   approximately £3 million through to completion. a an assessment by the   Committee of the performance of PricewaterhouseCoopers LLP, including   consideration of the speed in which they gained a detailed understanding of   the Group given the first year of their audit tenure; a detailed questioning   of management in operating companies and Group on a range of factors that we   considered relevant to audit quality. This covered the Group’s most senior   finance personnel exposed to the audit process; As one of the ways in which   it seeks to protect the independence and objectivity of the external auditor,   the Committee has a policy governing the engagement of the external auditor   to provide non-audit services. This precludes PricewaterhouseCoopers LLP from   providing certain services such as valuation work or the provision of   accounting services and also sets a presumption that PricewaterhouseCoopers   LLP should only be engaged for non-audit services where there is no legal or   practical alternative supplier. Except as noted above in relation to the   auditor transition, no material changes have been made to this policy during   the financial year. a feedback from the independent chairman of the Vodacom   local audit committee; and a feedback from PricewaterhouseCoopers LLP on   their performance against their own performance objectives. 67 Vodafone Group   Plc Annual Report on Form 20-F 2015 Overview Strategy review Performance   Governance Financials Additional information |
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|  | Board   committees (continued) The Committee has completed its review of the   effectiveness of the Group’s systems of internal control during the year and   up to the date of this Annual Report, in accordance with the requirements of   the revised Turnbull Guidance on Internal Control, published by the FRC. It   confirms that no significant failings or weaknesses were identified in the   review for the 2015 financial year. Where areas for improvement were   identified, processes are in place to ensure that the necessary action is   taken and that progress is monitored. Internal audit Monitoring and review of   the scope, extent and effectiveness of the activity of the Group Internal   Audit department is an agenda item at each Committee meeting. Reports from   the Group Audit Director usually include updates on audit activities,   progress of the Group audit plan, the results of any unsatisfactory audits   and the action plans to address these areas. On an annual basis the Committee   reviews and approves both the audit plan for the year and the resources   required to accomplish the agreed work programme. I play a major role in   setting the Group Audit Director’s annual objectives and I meet with him   regularly in the year to be briefed on his team’s activity and the nature of   any significant issues arising from their work. In the year, the Committee   appointed Ernst & Young LLP to perform an independent review of the effectiveness   of the Group’s internal audit department. This found that the department   continued to function well and was meeting its key objectives and had   addressed all of the recommendations from the last independent review,   performed in 2010. In the 2016 financial year, the Group Internal Audit team   in conjunction with other teams that form part of the Group’s internal   control systems will be implementing an integrated assurance mapping process   to provide a framework to allow the comprehensive assessment of the assurance   and compliance activities for the Group’s significant risks. Compliance with   section 404 of the US Sarbanes-Oxley Act The Committee takes an active role   in monitoring the Group’s compliance efforts in respect of section 404 of the   US Sarbanes- Oxley Act, receiving three separate reports from management in   the year covering scoping, the results of work performed and plans for the   evolution of the framework in response to ongoing business changes. The   external auditor reported the status of their work in relation to this matter   in each of their reports to the Committee. Monitoring the Group’s risk   management system and its effectiveness The Group’s risk assessment process   and the way in which significant business risks are managed is a key area of   focus for the Committee. Our activity here was driven primarily by the   Group’s assessment of its principal risks and uncertainties, as set out on   pages 32 to 37. A range of mitigations for risks faced by the Group are   included on pages 96 and 97. As part of this work the Committee maintains a   programme of in-depth reviews into specific financial, operational and   regulatory areas of the business. During the 2015 financial year, reviews   were undertaken in the areas of: a telecommunications network resilience and   related technology security; a IT controls including customer and non-   customer related data security; a the control environments in Vodafone Italy,   Vodafone Australia and Vodafone UK, with the latter focusing on the   integration of the recently acquired Cable and Wireless business and a major   new billing system project; a risks and controls within Vodafone Global   Enterprise focusing on contract management; a shared services and Finance   Operations, focused on risk management and the control environment; I also   visited the Group’s shared service centre in Pune, India to get a deeper   understanding of the finance activities managed from that location and the   control environment. These reviews are critical to the role of the Committee,   as they allow us to meet key business leaders responsible for these areas and   provide independent challenge to their activities. We also undertook a number   of reviews in relation to the Group’s risk management framework; we received   reports from the Group Audit Director on the Group’s risk evaluation process   and reviewed changes to significant risks identified at both operating entity   and Group levels. During the year management transferred the accountability   for risk management from Group Internal Audit to the Group Risk and Compliance   Director, a change supported by the Committee. This change was consistent   with the requirements of the 2014 UK Corporate Governance Code. Oversight of   the Group’s system of compliance The Group held two deep dive sessions on   compliance related matters in the year. These focused on the outputs of   monitoring activities of compliance with Group-wide policies, the activities   focused on driving a consistent culture of compliance within the   organisation, the results of the use of “Speak Up” channels in place to   enable employees to raise concerns about possible irregularities in financial   reporting or other issues such as breaches of the Code of Conduct, and the   outputs of any resulting investigations. Further, we received summaries of   investigations into known or suspected fraudulent activities by both third   parties and employees. We also met with the Group HR Director in relation to   the consequences for employees of non-compliance with Group policies. I also   meet privately with the Risk and Compliance Director outside the formal   committee process. /s/ Nick Land Nick Land On behalf of the Audit and Risk   Committee a revenue recognition including planning for the implementation of   FRS 15 “Revenue” which we currently expect to be effective for the first time   for the 2019 financial year; a review of the findings of an external review   over controls in relation to the M-Pesa money transfer service; and a setting   discount rates for impairment testing. 19 May 2015 68 |
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|  | No one other   than a member of the meetings; however, other Non-Executive of matters   arising concerning my membership meeting as required and the Board’s Senior   experience that could be usefully added. to be appointed who had experience   of content recommended to the Board that he be invited accepted the   recommendation and Dr Döpfner succession planning. It discussed this Group HR   Director and in private sessions as Chief Financial Officer and joined the   Board Board approved, were that with effect from Yea be appointed as Senior   Independent 69 Vodafone Group Plc Annual Report on Form 20-F 2015 Overview   Strategy review Performance Governance Financials Additional information   Committee meetings Committee is entitled to be present at its Directors, the   Chief Executive and external advisors may be invited to attend. In the event   of the Board, I would absent myself from the Independent Director would take   the chair. Main activities of the Committee during the year The Committee met   three times during the year. In May 2014, the Board reviewed the mix and   skills of the current and prospective Directors and it considered the skills   and The Committee identified that it would be valuable for a Non-Executive Director   and media sectors and who had experience as a chief executive. The Committee   was also conscious of the need to ensure that the Board was not too   UK-centric in its composition. Dr Mathias Döpfner was identified as meeting   these criteria. He was invited to meet with the members of the Committee and   following those meetings, the Committee to become a Non-Executive Director.   The Board accepted the Board’s invitation and became a Director with effect   from 1 April 2015. The Committee also focused on executive topic with the   Chief Executive and the of the Committee. During the year Nick Read was   appointed on 1 April 2014. Two senior executives (Stephen Pusey and Marten   Pieters) announced their retirement from Vodafone during the year. Johan   Wibergh joined Vodafone on 1 May and will succeed Stephen as Vodafone’s Chief   Technology Officer on 29 July 2015. Sunil Sood, formerly Vodafone India   Limited’s Chief Operating Officer, succeeded Marten Pieters as Chief   Executive of Vodafone India with effect from 1 April 2015. Omid Kordestani, a   Non-Executive Director, stepped down from the Board on 31 December 2014. Luc   Vandevelde, the Company’s Senior Independent Director, informed the Board   that he would not stand for re-election at the 2015 annual general meeting. The   Committee considered, and made recommendations to the Board, about various   changes to take account of this. These changes, which the 2015 annual general   meeting, Philip Director, and Valerie Gooding be appointed as Chair of the   Remuneration Committee and a member of the Nominations and Governance   Committee. Nominations and Governance Committee “The Nominations and   Governance Committee continues its work of ensuring the Board composition is   right and that our governance is effective.” Membership Chairman (pictured   right): Gerard Kleisterlee Chairman of the Board – Independent on appointment   Luc Vandevelde Senior Independent Director Philip Yea Independent   Non-Executive Director Responsibilities: a leads the process for identifying   and making recommendations to the Board regarding candidates for appointment   as Directors, giving full consideration to succession planning and the   leadership needs of the Group; a makes recommendations to the Board on the   composition of the Board’s committees; a regularly reviews and makes   recommendations in relation to the structure, size and composition of the   Board including the diversity and balance of skills, knowledge and   experience, and the independence of the Non-Executive Directors; a oversees   the performance evaluation of the Board, its committees and individual   Directors (see page 58); a reviews the tenure of each of the Non-Executive   Directors; and a is responsible for the oversight of all matters relating to   corporate governance, bringing any issues to the attention of the Board.   Attendance at scheduled meetings Director Attendance Gerard Kleisterlee3/3   Luc Vandevelde 3/3 Anthony Watson (Stepped down from the Board in July   2014)1/1 Philip Yea 3/3 Key objective: to make sure the Board comprises   individuals with the necessary skills, knowledge and experience to ensure   that it is effective in discharging its responsibilities and to have   oversight of all matters relating to corporate governance. |
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|  | Board   committees (continued) In March, the Committee reviewed the Board’s diversity   policy and agreed that since the Board had achieved its aspiration of 25%   female presence on the Board, the Board diversity policy should be updated to   reflect that achievement and should state the intention to maintain that   level, subject to suitable candidates being available. We continue to focus   on encouraging diversity of business skills and experience, recognising that   Directors with diverse skills sets, capabilities and experience gained from   different geographic and cultural backgrounds enhance the Board. Further   information, including the proportions of women in senior management, is   shown in “Our people” on pages 28 and in “Board Diversity” on page 61. During   the year, in the context of its corporate governance responsibilities, the   Committee received a report from the Group General Counsel and Company   Secretary on developments in corporate governance that affect the Company. It   also discussed the methodology to be adopted for the 2015 review of the   effectiveness of the Board, its committees and the Directors. The Committee   also assessed the independence of the Directors and whether there were any   potential conflicts of interest. The Committee concluded that all the   Non-Executive Directors were independent, notwithstanding in the cases of Luc   Vandevelde and Philip Yea (who did not participate in the relevant   discussions) that they had served on the Board for more than nine years. The   Committee, and the Board, considered the matter carefully and decided that   both these Non-Executive Directors continue to demonstrate the qualities of   independence and judgement in carrying out their roles, supporting the   Executive Directors and senior management in an objective manner. The   Committee reviewed the composition of the Board’s committees at the end of   the financial year. The Committee also reviewed its effectiveness and   discussed the outcomes of the overall 2015 Board effectiveness review, in advance   of the Board as a whole considering those outcomes. In the next financial   year, the Committee will meet four times, instead of three, to allow greater   focus on executive succession planning. In the year ahead the Committee will   continue to assess what enhancements should be made to the Board’s and   committees’ composition and will continue to monitor developments to ensure   the Company remains at the forefront of good governance practices. /s/ Gerard   Kleisterlee Gerard Kleisterlee On behalf of the Nominations and Governance   Committee 19 May 2015 70 Remuneration Committee “Our remuneration policy and   executive pay packages are designed to be competitive and drive behaviour in   order to achieve long-term strategic goals. When making decisions we are mindful   of the wider economic conditions and shareholder feedback.” Membership   Chairman (pictured right): Luc Vandevelde Independent Non-Executive Director   Valerie Gooding Independent Non-Executive Director Renee James Independent   Non-Executive Director Samuel Jonah Independent Non-Executive Director Key   objective: to assess and make recommendations to the Board on the policies   for executive remuneration and packages for the individual Executive   Directors. Responsibilities: a determining, on behalf of the Board, the   policy on the remuneration of the Chairman of the Board, the Executive   Directors and the senior management team; a determining the total   remuneration packages for these individuals including any compensation on   termination of office; a operating within recognised principles of good   governance; and a preparing an Annual Report on Directors’ remuneration.   Committee meetings No one other than a member of the Committee is entitled to   be present at its meetings. The Chairman of the Board and the Chief Executive   may attend the Committee’s meetings by invitation but they do not attend when   their individual remuneration is discussed. No Director is involved in   deciding his or her own remuneration. The Committee met five times during the   year. Main activities of the Committee during the year A detailed report to   shareholders from the Committee on behalf of the Board in which, amongst   other things, I have included a description of the Committee’s activities   during the year, is contained in “Directors’ remuneration” on pages 75 to 91.   Attendance at scheduled meetings Director Attendance Luc Vandevelde 5/5   Philip Yea (member until November 2014) 3/3 Renee James 5/5 Samuel Jonah 5/5   Valerie Gooding (member from February 2015) 2/2 |
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|  | Risk and   Compliance Committee reports can be made to the Audit and markets, business   continuity management on the culture of compliance across the Up   whistleblowing channel, the results of the The Disclosure Committee,   appointed timeliness of Company disclosures, oversees information and other   information material to be fair, balanced and understandable. and Company   Secretary (the Chair), Regional Controller, the Group Investor Relations   Development Director and the Group External 71 Vodafone Group Plc Annual   Report on Form 20-F 2015 Overview Strategy review Performance Governance   Financials Additional information Other committees This is a sub-committee of   the Executive Committee comprising three Executive Committee members. It is   appointed to assist the Executive Committee to fulfil its accountabilities   with regard to risk management and policy compliance. In particular, the   Committee conducts deep dives into key compliance risks to assess whether   they are being effectively managed, approves changes to policies, and   maintains an overview of the status of compliance throughout Vodafone so   clear and accurate Risk Committee twice a year. Deep dives this year covered   the policies relating to network resilience, branded partner and the Group   Enterprise business. The Committee also received regular reports organisation   including the use of the Speak People Survey and completion of mandatory   training programmes on the Code of Conduct. Disclosure Committee by the Chief   Executive and Chief Financial Officer to ensure the accuracy and and approves   controls and procedures in relation to the public disclosure of financial to   shareholders. It also supports the Board in evaluating the Annual Report It   is composed of the Group General Counsel Financial Directors, the Group Financial   Director, the Group Strategy and Business Affairs Director. Executive   Committee Membership Chairman (pictured right): Vittorio Colao Chief   Executive The Executive Committee includes the Executive Directors and the   senior managers. Committee meetings The Executive Committee meets 11 times a   year. Topics covered by the Committee include: a strategy; a substantial   business developments and projects; a Chief Executive update on the business   and business environment; a regional Chief Executives’ updates; a Group   function heads’ updates; a talent; a presentations from various function   heads, for example, the Group Financial Controller, the Group Audit Director   and the Group Risk and Compliance Director; and a competitor performance   analysis. Annually, the Executive Committee, together with the chief   executives of the major operating companies, conducts a strategy review to   identify key strategic issues to be presented to the Board. The agreed   strategy is then used as a basis for developing the upcoming budget and three   year operating plans. The Committee members’ biographical details are set out   on pages 54 and 55 and at vodafone.com/exco. Key objective: Under the   leadership of the Chief Executive, is responsible for Vodafone’s overall   business and affairs including delivery of strategy, financial structure and   planning, financial and competitive performance and succession planning. |
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|  | Compliance with the 2012 UK Corporate   Governance Code Throughout the year ended 31 March 2015 and to the date of   this document, we complied with the provisions and applied the main   principles of the 2012 version of the UK Corporate Governance Code (the   ‘Code’). The Code can be found on the FRC website (frc.org.uk). We note that   the 2014 version of the UK Corporate Governance Code will apply to us for the   first time in the 2016 financial year and we intend to be in compliance. We   describe how we have applied the main principles of the 2012 Code in this   table, cross referring to other parts of this Annual Report for further   information on internal control and risk management and Directors’   remuneration. This table is intended to assist with the evaluation of our   compliance during the year and should be read in conjunction with the   Governance section as a whole. Headings in the table correspond to the   headings in the Code. A. Leadership A.1 – The role of the Board The Board’s   responsibilities are set out in the governance framework outlined on page 51.   The Board held seven scheduled meetings during the year and holds additional   meetings, as required. All Directors are expected, wherever possible, to   attend all Board and relevant Committee meetings, and the annual general meeting.   Details of Board meetings attendance for the year are set out on page 53. A.2   – Division of responsibilities The roles of the Chairman and Chief Executive   are separate and the key responsibilities of each are set out on page 51. A.3   – The Chairman The role of the Chairman is set out on page 51. Board meetings   are arranged to ensure sufficient time is available for the discussion of all   items. In accordance with the Code, the Chairman was independent on   appointment. B.4 – Development for nine years and, in accordance with the   Code, assists the Chairman in ensuring that all Directors Nick Read was   appointed as Chief Financial Officer and advises the Board on corporate   governance Furse were appointed as Non-Executive Directors is a matter for   the Board as a whole. Döpfner was appointed as a Non-Executive Director 72   Vodafone Group Plc Annual Report on Form 20-F 2015 B. Effectiveness B.1 – The   composition of the Board 2006. Where authorisation is granted, it would Our   Board consists of 13 Directors, ten of whom be recorded in a register of   potential conflicts and served throughout the year. There are nine   Non-reviewed periodically. Directors are responsible Executive Directors, in   addition to the Chairman for notifying the Company Secretary if they and three   Executive Directors on the Board. become aware of actual or potential   conflicts Changes made to the composition of the Board or a change in   circumstances relating to an existing and Committees during the year are set   out in the authorisation. The Executive Directors’ service Nominations and   Governance Committee Report. contracts and Non-Executive appointment letters   The balance and independence of our Board is kept are available for   inspection at our registered office under review by our Nominations and   Governance and will be available for inspection at our annual Committee. Luc   Vandevelde will be stepping down general meeting. from the Board at the   annual general meeting in July 2015, having served 11 years as a   Non-Executive Details of Board induction and training and Director. Philip   Yea will have served on the Board development is set out on page 59. the   Board has determined that Philip continues B.5 – Information and support to   demonstrate qualities of independence and The Board recognises that there may   be occasions judgement in carrying out his role, supporting when one or more   of the Directors feels the Executive Directors and senior management it is   necessary to take independent legal and/ in an objective manner. His length   of service and or financial advice at the Company’s expense. resulting   experience is of great benefit to the Board. There is an agreed procedure to   enable them Nick Land and Samuel Jonah have served on the to do so which is   managed by the Company Board for eight and six years respectively. The Board Secretary.   No such independent advice was sought considers that all of the Non-Executive   Directorsin the 2015 financial year. The Company Secretary bring strong   independent oversight and continue also assists the Chairman by organising   induction to demonstrate independence. and training programmes, is   responsible for ensuring B.2 – Appointments to the Board that the correct   Board procedures are followed, in April 2014 and Sir Crispin Davis and Dame   Clara have full and timely access to all relevant information in July and   September 2014 respectively. Dr Mathias matters. The removal of the Company   Secretary with effect from 1 April 2015. Further details on the B.6 –   Evaluation process leading to their appointments are set Information on Board   evaluation is set out out in the Nominations and Governance Report on page   58. on pages 69 and 70. B.7 – Election/Re-election B.3 – Commitment All   Directors have submitted themselves for re-During the year, the Board   considered the external election at the annual general meeting to be held   commitments of its Chairman, Senior Independent on 28 July 2015 with the   exception of Stephen Director and other Non-Executive Directors Pusey and Luc   Vandevelde who will step down and is satisfied that these do not conflict   with from the Board at the annual general meeting. their duties and time   commitments as Directors The Nominations and Governance Committee of the   Company. Details of our Directors’ other confirmed to the Board that the   contributions made commitments are set out in their biographies by the   Directors offering themselves for re-election on pages 52 and 53. Omid   Kordestani stood at the annual general meeting in July 2015 continue down as   a Non-Executive Director when he tookto be effective and that the Company   should support on an executive role at Google. Changes to the their   re-election. The biographies for our Directors commitments of all Directors   are reported to the can be found on pages 52 and 53. Board. Directors   complete an annual conflicts questionnaire. Any conflicts identified would be   submitted to the Board for consideration and, as appropriate, authorisation   in accordance with our articles of association and the Companies Act |
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|  | A.4 –   Non-Executive Directors Luc Vandevelde was Senior Independent Director during   the year. The responsibilities of the Senior Independent Director include   acting as a sounding board for the Chairman, serving as an intermediary for   the other Directors, being available to shareholders if they have concerns   which they have not been able to resolve through the normal channels,   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. In particular, Non-Executive Directors are responsible for   bringing a wide range of skills and experience, including independent   judgement on issues of strategy, performance and risk management,   constructively challenging the strategy proposed by the Executive Directors,   scrutinising and challenging performance across the Group’s business,   assessing the risk and integrity of the financial information and controls   and determining the Company’s policy for executive remuneration and the   remuneration packages for the Executive Directors and the Chairman. The   Chairman met with the Non- Executive Directors without the Executive   Directors being present at every Board meeting during the year and   individually with each Non-Executive Director as part of the Board   effectiveness review process. C. Accountability C.1 – Financial and business   reporting The Directors’ statement of responsibility regarding the financial   statements, including the going concern assessment, is set out on pages 94   and 95. A further statement is provided on page 94 confirming that the Board   considers that the Annual Report and accounts, taken as a whole, is fair,   balanced and understandable and provides the information necessary for   shareholders to assess the Company’s performance, business model and   strategy. C.2 – Risk management and internal control An overview of the   Group’s framework for identifying and managing risk is set out on pages 32 to   37. 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 mistreatment   or loss. The Board has established procedures that implement in full the   Turnbull Guidance “Internal Control: Revised Guidance for Directors on the   Combined Code” for the year under review and to the date of this Annual   Report. These procedures, which are subject to regular review provide an   ongoing process for identifying, evaluating and managing the significant   risks we face. Further information on the Board’s responsibility for system   of internal control and risk management can be found in the Director’s   statement of responsibility on page 95 and further information on the   oversight of the Group’s system of internal control and the monitoring of the   Group’s risk management system and its effectiveness can be found in the   Audit and Risk Committee report on pages 63 to 68. C.3 – Audit Committee and   auditor The Board has delegated a number of responsibilities to the Audit and   Risk Committee including governance over the appropriateness of the   performance of both the internal audit function and external auditor and   oversight of the Group’s systems of internal controls. Further details of the   composition of the Audit and Risk Committee and its activities are set out in   the Audit and Risk Committee Report on pages 63 to 68 and the terms of reference   for the Audit and Risk Committee can be found at vodafone.com/governance. D.   Remuneration D.1 – The level and components of remuneration The Remuneration   Committee assesses and makes recommendations to the Board on the policies for   the executive remuneration and packages for the individual Directors. For   more information, see the Remuneration Committee Report on page 70 and   Directors’ Remuneration on pages 75 to 91. D.2 – Procedure The Board has   delegated a number of responsibilities to the Remuneration Committee,   including determining the policy on remuneration of the Chairman, executives   and senior management team. Full details are set out in the terms of   reference for the Committee published at vodafone.com/governance. E.   Relations with shareholders E.1 – Dialogue with shareholders The Chairman has   overall responsibility for ensuring that there is effective communication   with investors and that the Board understands the views of major shareholders   on matters such as governance and strategy. The Chairman makes himself   available to meet shareholders for this purpose. The Senior Independent   Director and other members of the Board are also available to meet major   investors on request. Further information on how we engage with our   shareholders can be found on page 62. E.2 – Constructive use of the annual   general meeting Our annual general meeting will be held on 28 July 2015 and   is an opportunity for shareholders to vote on certain aspects of Group   business and present questions to the Board. A summary presentation of the   full year results is given before the Chairman deals with the formal business   of the meeting. All shareholders can question any member of the Board both   during the meeting and informally afterwards. The Board encourages   participation of investors at the annual general meeting. The annual general   meeting is also broadcast live and on demand on our website at   vodafone.com/agm. Voting on all resolutions at the annual general meeting is   on a poll. The proxy votes cast, including details of the votes withheld are   disclosed to those in attendance at the meeting and the results are published   on our website and announced via the Regulatory News Service. A copy of our   notice of meeting can be found at vodafone.com/agm. 73 |
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|  | Our US listing requirements 74 Vodafone   Group Plc Annual Report on Form 20-F 2015 As Vodafone’s American depositary   shares are listed on NASDAQ Stock Market LLC (‘NASDAQ’), we are required to   disclose a summary of any material differences between the corporate   governance practices we follow and those of US companies listed on NASDAQ.   Vodafone’s corporate governance practices are primarily based on UK   requirements but substantially conform to those required of US companies   listed on NASDAQ. The material differences are set out in the following   table: Board member independence Different tests of independence for Board   members are applied under the Code and the NASDAQ listing rules. The Board is   not required to take into consideration NASDAQ’s detailed definitions of   independence as set out in the NASDAQ listing rules. The Board has carried   out an assessment based on the independence requirements of the Code and has   determined that, in its judgement, each of Vodafone’s Non-Executive Directors   is independent within the meaning of those requirements. Committees The   NASDAQ listing rules require US companies to have a nominations committee, an   audit committee and a compensation committee, each composed entirely of   independent directors, with the nominations committee and the audit committee   each required to have a written charter which addresses the committee’s   purpose and responsibilities, and the compensation committee having sole authority   and adequate funding to engage compensation consultants, independent legal   counsel and other compensation advisors. a Our Nominations and Governance   Committee is chaired by the Chairman of the Board and its other members are   independent Non-Executive Directors a Our Remuneration Committee is composed   entirely of independent Non-Executive Directors a Our Audit and Risk   Committee is composed entirely of Non-Executive Directors, each of whom (i)   the Board has determined to be independent based on the independence   requirements of the Code and (ii) meets the independence requirements of the   Exchange Act a We have terms of reference for our Nominations and Governance   Committee, Audit and Risk Committee and Remuneration Committee, each of which   complies with the requirements of the Code and is available for inspection on   our website at vodafone.com/governance a These terms of reference are   generally responsive to the relevant NASDAQ listing rules but may not address   all aspects of these rules Code of Ethics and Code of Conduct Under the   NASDAQ listing rules, US companies must adopt a Code of Conduct applicable to   all directors, officers and employees that complies with the definition of a   “code of ethics” set out in section 406 of the Sarbanes-Oxley Act. a We have   adopted a Code of Ethics that complies with section 406 of the Sarbanes-Oxley   Act which is applicable only to the senior financial and principal executive   officers, and which is available on our website at vodafone.com/governance a   We have also adopted a separate Code of Conduct which applies to all   employees Quorum The quorum required for shareholder meetings, in accordance   with our articles of association, is two shareholders, regardless of the   level of their aggregate share ownership, while US companies listed on NASDAQ   are required by the NASDAQ listing rules to have a minimum quorum of 33.33%   of the shareholders of ordinary shares for shareholder meetings. Related   party transactions In lieu of obtaining an independent review of related   party transactions for conflicts of interests in accordance with the NASDAQ   listing rules, we seek shareholder approval for related party transactions   that (i) meet certain financial thresholds or (ii) have unusual features in   accordance with the Listing Rules issued by the FCA in the United Kingdom   (the ‘Listing Rules’), the Companies Act 2006 and our articles of   association. Further, we use the definition of a transaction with a related   party as set out in the Listing Rules, which differs in certain respects from   the definition of related party transaction in the NASDAQ listing rules.   Shareholder approval When determining whether shareholder approval is   required for a proposed transaction, we comply with both the NASDAQ listing   rules and the Listing Rules. Under the NASDAQ listing rules, whether   shareholder approval is required for a transaction depends on, among other   things, the percentage of shares to be issued or sold in connection with the   transaction. Under the Listing Rules, whether shareholder approval is required   for a transaction depends on, among other things, whether the size of a   transaction exceeds a certain percentage of the size of the listed company   undertaking the transaction. |
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|  | Directors’ remuneration 75 Vodafone   Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information Committee Chairman   During a year in which we celebrated the As noted above, and illustrated   elsewhere during 2015 Britain’s first ever mobile phone call, it is with progress   on the operational improvement performance against the four equally Company   and our industry have come that hard work demonstrated by our colleagues adjusted   EBITDA, adjusted free cash flow remuneration report.to expand our 4G coverage   in Europe whilst resulted in a payout equivalent to 56.0% for both Vodafone   and the wider industry, Further strengthening and expanding by below target   competitive performance. progress on Project Spring which represents a market   leader, and the first choice for data, In line with our commitment to the   disclosure in our history. In 2013 this project saw maintaining our position   as a leading provider targets for the 2015 GSTIP are provided continued   dedication to providing excellent a the continued progression of our Project 31   March 2015. Despite TSR performance through £9.2 billion of capital   expenditure behaviours and values demonstrated was not met, and therefore the   award lapsed to drive through the appropriate application now reaches over 20   million customers Looking forward – pleased to see shareholders display now   stands at 72% and is set to reach over The strong progress made in 2015 in   respect the Committee continues to review our a the growth in our fixed   broadband base it remains aligned with our Company organic growth and the   acquisition of Ono include customer care, our retail and Following our latest   review, no changes to our and the simplification of our tariff and policy are   proposed for 2016. Pages 22 to 27 these areas and combining them with the As   discussed below, this particular strategic Letter from the Remuneration Luc   Vandevelde Chairman of the Remuneration Committee Dear fellow shareholder Performance   during 2015 Remuneration outcomes 30th anniversary of our network carrying in   this report, 2015 saw us make strong Under our annual bonus plan (‘GSTIP’)   great perspective on how far both our phase of Project Spring. As a result of   the weighted measures of service revenue, I am pleased to present Vodafone’s   2015 throughout the Company, we have continued and competitive performance   assessment simultaneously accelerating our growth of maximum. This reflected   a stronger It is fitting that during a year in which in data traffic across   all of our markets. adjusted EBITDA and cash flow performance we celebrated   such a historic milestone against target which was partially offset the   backdrop for this year’s report is our our network is pivotal to our aim of   being the largest capital investment programme in our targeted emerging   markets whilst also of annual bonus targets, further details of the us commit   around £19 billion over two years in Europe. on page 84. to expand our   networks and services across It is in this context that I am pleased to   reflect The 2013 GLTI award (granted in July 2012) our major markets in   Europe, Asia and Africa. on the following strategic and operation alwas based   on a combination of adjusted free This programme is testament to our   objective headlines from the year: cash flow and TSR performance measured of   being an innovative market leader and our over the three financial years   ending customer experience. Spring investment programme, illustrated of 6.5%   above the median of the comparator Crucial to this continued success are the   during the year; group, the adjusted free cash flow target by our management   team, which we seek a the expansion of our 4G coverage which in full. of our   remuneration policy. I was therefore across 18 markets. Our European coverage   strategic focus for 2016 overwhelming support for our Policy 90% next year; of   the operational improvement phase Report, which was approved with a vote a   the increasing take-up of 3G amongst our of Project Spring has laid the   foundations of 96% at the 2014 annual general meeting. customers in emerging   markets; andrequired to implement the “customer Notwithstanding such strong   support, experience” phase of the programme. policy on an annual basis so as   to ensure by 2.8 million customers both through Key areas of focus during   this phase strategy and the views of our shareholders. and Hellas Online. digital   platforms, the roaming experience, More on Project Spring progress: product   offerings. By further strengthening significant investment made in our   network, we aim to deliver a “best in class” experience to all Vodafone   customers. focus for 2016 is reflected in the measures that will be used to   determine performance for the 2016 GSTIP, helping to ensure appropriate alignment   between our short-term variable incentive and immediate strategic priorities.   Contents of the remuneration report Remuneration policy Page 77 The   remuneration policy table Page 78 Chairman and Non-Executive Directors’   remuneration Page 82 Annual Report on remuneration Page 83 Remuneration   Committee Page 83 2015 remuneration Page 84 2016 remuneration Page 90 Further   remuneration information Page 91 |
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|  | Directors’   remuneration (continued) Application of policy in 2016 At the time of   presenting our Policy Report to shareholders for approval at the 2014 It is for   this purpose that the Committee retains the discretion to alter final   outcomes under our annual bonus plan a we offer competitive and fair rates of   pay and benefits to attract and retain the best people; annual general   meeting, it was envisaged where the formulaic payout is deemed  that the policy would remain unchanged for   three years. Following a review during the year, the Committee agreed that   the policy continues to remain both appropriate and effective, and therefore   no changes are proposed for the coming year. However in order to ensure our   arrangements are focused on driving our latest strategic priorities, a number   of changes to the GSTIP that remain within our policy framework have been   made. These changes are outlined below and follow on from consultation with a   number of our largest shareholders earlier this year: to be inappropriate.   This includes the potential to reduce any payout under the strategic element   of the bonus, if such a formulaic payout is deemed inappropriate in light of   wider financial performance. Whilst we will not be seeking approval of our   remuneration policy at the 2015 annual general meeting, the full policy   report has been included in this report for reference. Corporate governance   Vodafone continues to set demanding share ownership goals for our Executive   Directors. The Committee is pleased to see that all a our policy and   practices aim to drive behaviours that support our Company strategy and   business objectives; a our “pay for performance” approach means that our incentive   plans only deliver significant rewards if and when they are justified by   performance; and a our approach to share ownership is designed to help   maintain commitment over the long term, and to ensure that the interests of   our senior management team are aligned with those of shareholders.  three Executive Directors have voluntarily   Finally, following the conclusion of the 2015 a the balance of performance   measures for the 2016 GSTIP will be weighted 60% in respect of the financial   measures, and 40% in respect of the strategic measures. exceeded these   guidelines by a significant margin, including Nick Read who only joined the   Board this year. During the year, the UK Corporate annual general meeting   which is to be held on 28 July 2015, I will be stepping down both as Chairman   of the Remuneration Committee and from the Board. I would therefore like to   thank you, our shareholders, for the    Governance Code was updated to include, continued support and   engagement that you a in light of this increase in weighting, the Competitive   Performance assessment measure previously used under the GSTIP will be   replaced with Customer Appreciation KPIs. This will see brand consideration   metrics added to the strategic element of the GSTIP, with net promoter score   (‘NPS’) also retained as a measure. Other relevant indicators of strategic   performance will also be considered in assessing final outcomes. Further   information on how these measures will be assessed is provided on page 90. on   a comply or explain basis, a requirement to include malus and clawback   provisions in respect of all variable elements of executive remuneration. The   Committee determined that the current malus provisions, which allow unvested   awards to be lapsed either wholly or in part, will be retained for 2016. Further,   the Committee has agreed to introduce an appropriate clawback provision to   our remuneration policy on the next occasion that the policy report is put   forward for shareholder approval. Conclusion have displayed throughout my   tenure, as well as the other members of the Committee for ensuring debate has   always remained challenging, thought-provoking and, above all, focused on the   needs of our stakeholders. I will be succeeded by Valerie Gooding who I look   forward to introducing at our 2015 annual general meeting. /s/ Luc Vandevelde   Luc Vandevelde Chairman of the Remuneration Committee 19 May 2015  This is an exciting time to be a   shareholder The above changes remain in line with our shareholder approved   remuneration policy which allows up to 50% of GSTIP opportunity to be based   on strategic measures. The Committee is however aware of wider market   concerns regarding the formulaic calculation of annual bonus payouts, and the   potential for such arrangements to deliver value regardless of wider Company   performance. 76 of Vodafone, with the maturity of Project Spring set to lay   the foundations for the next step in our Company’s history. Whilst our   remuneration policy remains an important tool in driving these goals, the   Committee remains aware of external concerns regarding executive compensation   and will continue to work within the principles which underpin our approach   to executive remuneration to ensure our arrangements remain effective but   fair. These principles, which remain unchanged from last year, are as follows: |
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|  | Remuneration   policy In this forward-looking section we describe our remuneration policy   for the Board. This includes our considerations when determining policy, a   description of the elements of the reward package and an indication of the   potential future value of this package for each of the Executive Directors.   In addition we describe our policy applied to the Chairman and Non-Executive   Directors. Our remuneration policy was approved by shareholders at the 2014   annual general meeting, and took effect from this point. Whilst we do not   envisage making any changes to our policy prior to the 2017 annual general   meeting, we conduct annual reviews to ensure that it continues to support our   Company strategy. If we feel it is necessary to make a change to our policy   prior to the end of this three year period, we will seek shareholder   approval. No changes have been made to our policy since its approval at the   2014 annual general meeting which was held on 29 July 2014. Our approved   Policy Report is available on our website at vodafone.com, and has been   included in full below as set out in the 2014 Annual Report. Considerations   when determining remuneration policy Our remuneration principles which are   outlined on page 76 are the context for our policy. Our principal   consideration when determining remuneration policy is to ensure that it   supports our Company strategy and business objectives. The views of our   shareholders are also taken into account when determining executive pay. In   advance of asking for approval for the remuneration policy we have consulted   with our major shareholders. We invited our top 20 shareholders to comment on   remuneration at Vodafone and several meetings between shareholders and the   Remuneration Committee Chairman took place. The main topics of consultation   were as follows: a new share plan rules for which we will seek shareholder   approval at the 2014 annual general meeting; a changes to executive   remuneration arrangements (reduction of maximum long-term incentive vesting   levels and pension provision); and a impact of Project Spring on Free Cash   Flow performance under the global long-term incentive plan (‘GLTI’). We have   not consulted with employees on the executive remuneration policy nor is any   fixed remuneration comparison measurement used. However, when determining the   policy for Executive Directors, we have been mindful of the pay and   employment conditions of employees in Vodafone Group as a whole, with   particular reference to the market in which the executive is based. Further   information on our remuneration policy for other employees is given on page   80. Performance measures and targets Our Company strategy and business objectives   are the primary consideration when we are selecting performance measures for   our incentive plans. The targets within our incentive plans that are related   to internal financial measures (such as revenue, profit and cash flow) are   typically determined based on our budgets. Targets for strategic and external   measures (such as competitive performance and Total Shareholder Return   (‘TSR’)) are set based on Company objectives and in light of the competitive   marketplace. The threshold and maximum levels of performance are set to   reflect minimum acceptable levels at threshold and very stretching but   achievable levels at maximum. As in previous remuneration reports we will   disclose the details of our performance targets for our short and long-term   incentive plans. However, our annual bonus targets are commercially sensitive   and therefore we will only disclose our targets in the remuneration report   following the completion of the financial year. We will disclose the targets   for each long-term award in the remuneration report for the financial year   preceding the start of the performance period. At the end of each performance   period we review performance against the targets, using judgement to account   for items such as (but not limited to) mergers, acquisitions, disposals,   foreign exchange rate movements, changes in accounting treatment, material   one-off tax settlements etc. The application of judgement is important to   ensure that the final assessments of performance are fair and appropriate. In   addition, the Remuneration Committee reviews the incentive plan results   before any payments are made to executives or any shares vest and has full   discretion to adjust the final payment or vesting downwards if they believe   circumstances warrant it. In particular, the Committee may use discretion to   clawback any unvested share award (or vested but unexercised options) as it   sees appropriate, in which case the award may lapse wholly or in part, may   vest to a lesser extent than it would otherwise have vested or vesting may be   delayed. 77 Vodafone Group Plc Annual Report on Form 20-F 2015 Overview   Strategy review Performance Governance Financials Additional information |
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|  | Directors’   remuneration (continued) Remuneration policy (continued) The remuneration   policy table The table below summarises the main components of the reward   package for Executive Directors. Purpose and link to strategy Operation a   Performance over the financial year is measured against set at the start of   the financial year. a Long-term incentive base awards consist of performance   based on Group operational and external performance. 78 Vodafone Group Plc   Annual Report on Form 20-F 2015 Base salary a To attract and retain the best   talent. a Salaries are usually reviewed annually and fixed for 12 months   commencing 1 July. Decision is influenced by: a level of skill, experience   and scope of responsibilities of individual; a business performance, scarcity   of talent, economic climate and market conditions; a increases elsewhere   within the Group; and a external comparator groups (which are used for   reference purposes only) made up of companies of similar size and complexity   to Vodafone. Pension a To remain competitive within the marketplace. a   Executive Directors may choose to participate in the defined contribution   pension scheme or to receive a cash allowance in lieu of pension. Benefits a   To aid retention and remain competitive within the marketplace. a Travel   related benefits. This may include (but is not limited to) company car or   cash allowance, fuel and access to a driver where appropriate. a Private   medical, death and disability insurance and annual health checks. a In the   event that we ask an individual to relocate we would offer them support in   line with Vodafone’s relocation or international assignment policies. This   may cover (but is not limited to) relocation, cost of living allowance,   housing, home leave, education support, tax equalisation and advice. a Legal   fees if appropriate. a Other benefits are also offered in line with the   benefits offered to other employees for example, all-employee share plans,   mobile phone discounts, maternity/paternity benefits, sick leave, paid   holiday, etc. Annual Bonus – Global Short-Term Incentive Plan (‘GSTIP’) a To   drive behaviour and communicate the key priorities for the year. a To   motivate employees and incentivise delivery of performance over the one year   operating cycle. a The financial metrics are designed to both drive our   growth strategies whilst also focusing on improving operating efficiencies.   Measuring competitive performance with its heavy reliance on net promoter   score (‘NPS’) means providing a great customer experience remains at the   heart of what we do. a Bonus levels and the appropriateness of measures and   weightings are reviewed annually to ensure they continue to support our   strategy. stretching financial and non-financial performance targets a The   annual bonus is usually paid in cash in June each year for performance over   the previous year. Long-Term Incentive – Global Long-Term Incentive Plan   (‘GLTI’) base awards and co-investment awards (further details can be found   in the notes that follow this table) a To motivate and incentivise delivery   of sustained performance over the long term. a To support and encourage   greater shareholder alignment through a high level of personal financial   commitment. a The use of free cash flow as the principal performance measure   ensures we apply prudent cash management and rigorous capital discipline to   our investment decisions, whilst the use of TSR along with a performance   period of not less than three years means that we are focused on the   long-term interests of our shareholders. a Award levels and the framework for   determining vesting are reviewed annually to ensure they continue to support   our strategy. shares which are granted each year. a Individuals must   co-invest in Vodafone shares and hold them in trust for at least three years   in order to receive the full target award. a All awards vest not less than   three years after the award a Dividend equivalents are paid in cash after the   vesting date. |
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|  | Opportunity   Performance metrics performance measure. 79 Vodafone Group Plc Annual Report   on Form 20-F 2015 Overview Strategy review Performance Governance Financials   Additional information a Average salary increases for existing Executive   Committee members (including Executive Directors) will not normally exceed   average increases for employees in other appropriate parts of the Group.   Increases above this level may be made in specific situations. These   situations could include (but are not limited to) internal promotions,   changes to role, material changes to the business and exceptional company   performance. None. a The pension contribution or cash payment is equal to 30%   of annual gross salary. In light of pension levels elsewhere in the Group we   have decided to reduce the pension benefits level from 30% to no more than   24% from November 2015. None. a Benefits will be provided in line with   appropriate levels indicated by local market practice in the country of   employment. a We expect to maintain benefits at the current level but the   value of benefit may fluctuate depending on, amongst other things, personal   situation, insurance premiums and other external factors. None. a Bonuses can   range from 0–200% of base salary, with 100% paid for on-target performance.   Maximum is only paid out for exceptional performance. a Performance over each   financial year is measured against stretching targets set at the beginning of   the year. a The performance measures normally comprise of a mix of financial   and strategic measures. Financial measures may include (but are not limited   to) profit, revenue and cash flow with a weighting of no less than 50%.   Strategic measures may include (but are not limited to) competitive   performance metrics such as net promoter score and market share. a The basic   target award level is 137.5% of base salary for the Chief Executive (110% for   other Executive Directors). a The target award level may increase up to   237.5% of base salary for the Chief Executive (or 210% for others) if the   individual commits to a co-investment in shares equal in value to their base   salary. a Minimum vesting is 0% of target award level, threshold vesting is   50% and maximum vesting is 250% of the target award level. a Maximum   long-term incentive face value at award of 594% of base salary for the Chief   Executive (237.5% x 250%) and 525% for others. a The awards that vest accrue   cash dividend equivalents over the three year vesting period. a Awards vest   to the extent performance conditions are satisfied. There is a mandatory holding   period where 50% of the post-tax shares are released after vesting, a further   25% after the first anniversary of vesting, and the remaining 25% will be   released after the second anniversary. a Performance is measured against   stretching targets set at the beginning of the performance period. a Vesting   is determined based on a matrix of two measures: a adjusted free cash flow as   our operational performance measure; and a relative TSR against a peer group   of companies as our external |
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|  | Directors’   remuneration (continued) Remuneration policy (continued) Notes to the   remuneration policy table Existing arrangements We will honour existing   awards to Executive Directors, and incentives, benefits and contractual   arrangements made to individuals prior to their promotion to the Board. This   will last until the existing incentives vest (or lapse) or the benefits or   contractual arrangements no longer apply. Long-Term Incentive (‘GLTI’) When   referring to our long-term incentive awards we use the financial year end in   which the award was made. For example, the ‘2013 award’ was made in the   financial year ending 31 March 2013. The awards are usually made in the first   half of the financial year (the 2013 award was made in July 2012). The extent   to which awards vest depends on two performance conditions: a underlying   operational performance as measured by adjusted free cash flow; and a   relative Total Shareholder Return (‘TSR’) against a peer group median.   Adjusted free cash flow The free cash flow performance is based on the   cumulative adjusted free cash flow figure over the performance period. The   detailed targets and the definition of adjusted free cash flow are determined   each year as appropriate. The target adjusted free cash flow level is set by   reference to our long-range plan and market expectations. We consider the   targets to be critical to the Company’s long-term success and its ability to   maximise shareholder value, and to be in line with the strategic goals of the   Company. The Remuneration Committee sets these targets to be sufficiently   demanding with significant stretch where only outstanding performance will be   rewarded with a maximum payout. The cumulative adjusted free cash flow   vesting levels as a percentage of target are shown in the table below (with   linear interpolation between points): Performance Vesting percentage Below   threshold Threshold Target Maximum 0% 50% 100% 125% TSR outperformance of a   peer group median We have a limited number of appropriate peers and this   makes the measurement of a relative ranking system volatile. As such, the   outperformance of the median of a peer group is felt to be the most   appropriate TSR measure. The peer group for the performance condition is   reviewed each year and amended as appropriate. The relative TSR position   determines the performance multiplier. This will be applied to the adjusted   free cash flow vesting percentage. There will be no multiplier until TSR performance   exceeds median. Above median, the following table will apply (with linear   interpolation between points): Multiplier Median Percentage outperformance of   the peer group median equivalent to 65th percentile Percentage outperformance   of the peer group median equivalent to 80th percentile No increase 1.5 times   2.0 times In order to determine the percentages for the equivalent   outperformance levels above median, the Remuneration Committee seeks   independent external advice. Combined vesting matrix The combination of the   two performance measures gives a combined vesting matrix as follows (with   linear interpolation between points): TSR outperformance Up to Median 65th   percentile equivalent 80th percentile equivalent Adjusted free cash flow   measure Below threshold Threshold Target Maximum 0% 50% 100% 125% 0% 75% 150%   187.5% 0% 100% 200% 250% The combined vesting percentages are applied to the   target number of shares granted. Outstanding awards For the awards made in   the 2013 and 2014 financial years (vesting in July 2015 and June 2016   respectively) the award structure is as set out above, except that the   maximum vesting percentage for cumulative adjusted free cash flow was 150%   leading to an overall maximum of 300% of target award. Remuneration policy   for other employees While our remuneration policy follows the same   fundamental principles across the Group, packages offered to employees   reflect differences in market practice in the different countries, role and   seniority. For example, the remuneration package elements for our Executive   Directors are essentially the same as for the other Executive Committee   members, with some small differences, for example higher levels of share   awards. The remuneration for the next level of management, our senior   leadership team, again follows the same principles but with differences such   as local and individual performance aspects in the annual bonus targets and   performance share awards. They also receive lower levels of share awards   which are partly delivered in restricted shares. 80 Vodafone Group Plc Annual   Report on Form 20-F 2015 |
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|  | Estimates of   total future potential remuneration from 2015 pay packages The tables below   provide estimates of the potential future remuneration for each of the   Executive Directors based on the remuneration opportunity granted in the 2015   financial year and therefore do not reflect the latest remuneration   information. Potential outcomes based on different performance scenarios are   provided for each Executive Director. The assumptions underlying each   scenario are described below. Fixed Consists of base salary, benefits and   pension. Base salary is at 1 July 2014. Benefits are valued using the figures   in the total remuneration for the 2014 financial year table on page 78 (of   the 2014 report) and on a similar basis for Nick Read (promoted to the Board   on 1 April 2014). Pensions are valued by applying cash allowance rate of 30%   of base salary at 1 July 2014. Base (£’000) Benefits (£’000) Pension (£’000)   Total fixed (£’000) Chief Executive 1,150 38 345 1,533 Chief Financial   Officer 675 23 203 901 Chief Technology Officer 600 21 180 801 On target   Based on what a Director would receive if performance was in line with plan.   The target award opportunity for the annual bonus (‘GSTIP’) is 100% of base   salary. The target award opportunity for the long-term incentive (‘GLTI’) is   237.5% of base salary for the Chief Executive and 210% for others. We assumed   that TSR performance was at median. Maximum Two times the target award opportunity   is payable under the annual bonus (‘GSTIP’). The maximum levels of   performance for the long-term incentive (‘GLTI’) are 250% of target award   opportunity. We assumed that TSR performance was at or above the 80th   percentile equivalent. All scenarios Each executive is assumed to co-invest   the maximum allowed under the long-term incentive (‘GLTI’), 100% of salary,   and the long-term incentive (‘GLTI’) award reflects this. Long-term   incentives consist of share awards only which are measured at face value i.e.   no assumption for increase in share price or cash dividend equivalents   payable. 23% Recruitment remuneration Our approach to recruitment   remuneration is to pay no more than is necessary and appropriate to attract   the right talent to the role. The remuneration policy table (pages 78 and 79)   sets out the various components which would be considered for inclusion in   the remuneration package for the appointment of an Executive Director. Any   new Director’s remuneration package would include the same elements, and be   subject to the same constraints, as those of the existing Directors   performing similar roles. This means a potential maximum bonus opportunity of   200% of base salary and long-term incentive maximum face value of opportunity   at award of 594% of base salary. When considering the remuneration   arrangements of individuals recruited from external roles to the Board, we   will take into account the remuneration package of that individual in their   prior role. We only provide additional compensation to individuals for awards   foregone. If necessary we will seek to replicate, as far as practicable, the   level and timing of such remuneration, taking into account also any remaining   performance requirements applying to it. This will be achieved by granting   awards of cash or shares that vest over a timeframe similar to those   forfeited and if appropriate based on performance conditions. A commensurate   reduction in quantum will be applied where it is determined that the new   awards are either not subject to performance conditions or subject to   performance conditions that are not as stretching as those of the awards   forfeited. 81 Vodafone Group Plc Annual Report on Form 20-F 2015 Overview   Strategy review Performance Governance Financials Additional information   Stephen Pusey, Chief Technology Officer £’000 12,000 10,000 8,000 6,000 61%   £5,151 4,000 47% £2,661 2,000 £801 23% 30% 16% 0Fixed On target Maximum ¢   Salary and benefits ¢ Annual bonus ¢ Long-term incentive Nick Read, Chief   Financial Officer (appointed 1 April 2014) £’000 12,000 10,000 8,000 £5,795   6,000 61% 4,000 47% £2,994 23% 2,000 £901 23% 30% 16% 0Fixed On target Maximum   ¢ Salary and benefits ¢ Annual bonus ¢ Long-term incentive Vittorio Colao,   Chief Executive £’000 12,000 64% £10,661 10,000 8,000 £5,414 6,000 51% 4,000   £1,533 21% 22% 2,000 28% 14% 0Fixed On target Maximum ¢ Salary and benefits ¢   Annual bonus ¢ Long-term incentive |
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|  | Directors’ remuneration   (continued) Remuneration policy (continued) Service contracts of Executive   Directors After an initial term of up to two years Executive Directors’   contracts have rolling terms and are terminable on no more than 12 months’   notice. The key elements of the service contract for executives relate to   remuneration, payments on loss of office (see below), and restrictions during   active employment (and for 12 months thereafter). These restrictions include   non-competition, non-solicitation of customers and employees etc.   Additionally, all of the Company’s share plans contain provisions relating to   a change of control. Outstanding awards and options would normally vest and   become exercisable on a change of control to the extent that any performance   condition has been satisfied and pro-rated to reflect the acceleration of   vesting. Payments for departing executives In the table below we summarise   the key elements of our policy on payment for loss of office. We will of   course, always comply both with the relevant plan rules and local employment   legislation. Provision Policy Notice period and compensation for loss of   office in service contracts a 12 months’ notice from the Company to the   Executive Director. a Up to 12 months’ base salary (in line with the notice period).   Notice period payments will either be made as normal (if the executive   continues to work during the notice period or is on gardening leave) or they   will be made as monthly payments in lieu of notice (subject to mitigation if   alternative employment is obtained). a The annual bonus will be pro-rated for   the period of service during the financial year and will reflect the extent   to which Company performance has been achieved. Treatment of annual bonus   (‘GSTIP’) on termination under plan rules a The Remuneration Committee has   discretion to reduce the entitlement to an annual bonus to reflect the   individual’s performance and the circumstances of the termination. a An   Executive Director’s award will vest in accordance with the terms of the plan   and satisfaction of performance conditions measured at the normal completion   of the performance period, with the award pro-rated for the proportion of the   vesting period that had elapsed at the date of cessation of employment.   Treatment of unvested long-term incentive awards (‘GLTI’) and co-investment   awards on termination under plan rules a The Remuneration Committee has   discretion to vary the level of vesting as deemed appropriate, and in   particular to determine that awards should not vest in the case of a ‘bad   leaver’ which may include, at their absolute discretion, departure in case of   poor performance, departure without the agreement of the Board, or   detrimental competitive activity. a Generally pension and benefit provisions   will continue to apply until the termination date. Pension and benefits a   Where appropriate other benefits may be receivable, such as (but not limited   to) payments in lieu of accrued holiday and legal fees or tax advice costs in   relation to the termination. a Benefits of relative small value may continue   after termination where appropriate, such as (but not limited to) mobile   phone provision. In exceptional circumstances, an arrangement may be   established specifically to facilitate the exit of a particular individual   albeit that any such arrangement would be made within the context of   minimising the cost to the Group. We will only take such a course of action   in exceptional circumstances and where it is considered to be in the best   interests of shareholders. Chairman and Non-Executive Directors’ remuneration   Our policy is for the Chairman to review the remuneration of Non-Executive   Directors annually following consultation with the Remuneration Committee   Chairman. Fees for the Chairman are set by the Remuneration Committee.   Element Policy Fees a We aim to pay competitively for the role including   consideration of the time commitment required. We benchmark the fees against   an appropriate external comparator group. We pay fees to our Chairman and   Senior Independent Director that include fees for chairmanship of any   committees. We pay a fee to each of our other Non-Executive Directors and   they receive an additional fee if they chair a committee. Non-executive fee   levels are set within the maximum level as approved by shareholders as part   of our articles of association. Allowances a An allowance is payable each   time a non-Europe-based Non-Executive Director is required to travel to   attend Board and committee meetings to reflect the additional time commitment   involved. a Non-Executive Directors do not participate in any incentive   plans. Incentives a Non-Executive Directors do not participate in any benefit   plans. The Company does not provide any contribution to their pension   arrangements. The Chairman is entitled to the use of a car and a driver   whenever and wherever he is providing his services to or representing the   Company. We have been advised that for Non-Executive Directors, certain   travel and accommodation expenses in relation to attending Board meetings   should be treated as a taxable benefit therefore we also cover the tax   liability for these expenses. Benefits Non-Executive Director service   contracts Non-Executive Directors are engaged on letters of appointment that   set out their duties and responsibilities. The appointment of Non-Executive   Directors may be terminated without compensation. Non-Executive Directors are   generally not expected to serve for a period exceeding nine years. For   further information refer to the “Nomination and Governance Committee”   section of the Annual Report (pages 69 to 70). 82 Vodafone Group Plc Annual   Report on Form 20-F 2015 |
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|  | Annual Report   on remuneration Remuneration Committee In this section we give details of the   composition of the Remuneration Committee and activities undertaken over the   2015 financial year. The Committee is comprised to exercise independent   judgement and consists only of the following independent Non-Executive   Directors: Chairman: Luc Vandevelde Committee members: Valerie Gooding (from   29 July 2014); Renee James; Samuel Jonah; Philip Yea (until 29 July 2014) The   Committee regularly consults with Vittorio Colao, the Chief Executive, and   Ronald Schellekens, the Group HR Director, on various matters relating to the   appropriateness of awards for Executive Directors and senior executives,   though they are not present when their own compensation is discussed. In   addition, Adrian Jackson, the Group Reward and Policy Director, provides a   perspective on information provided to the Committee, and requests   information and analysis from external advisors as required. Rosemary Martin,   the Group General Counsel and Company Secretary, advises the Committee on   corporate governance guidelines and acts as secretary to the Committee.   External advisors The Remuneration Committee seeks and considers advice from   independent remuneration advisors where appropriate. The appointed advisors,   Towers Watson, were selected through a thorough process led by the Chairman of   the Remuneration Committee and were appointed by the Committee in 2007. The   Chairman of the Remuneration Committee has direct access to the advisors as   and when required, and the Committee determines the protocols by which the   advisors interact with management in support of the Committee. The advice and   recommendations of the external advisors are used as a guide, but do not   serve as a substitute for thorough consideration of the issues by each   Committee member. Advisors attend Committee meetings occasionally, as and   when required by the Committee. Towers Watson are a member of the   Remuneration Consultants’ Group and, as such, voluntarily operates under the   Remuneration Consultants’ Group Code of Conduct in relation to executive   remuneration consulting in the UK. This is based upon principles of   transparency, integrity, objectivity, competence, due care and   confidentiality by executive remuneration consultants. Towers Watson has   confirmed that they adhered to that Code of Conduct throughout the year for   all remuneration services provided to Vodafone and therefore the Committee   are satisfied that they are independent and objective. The Remuneration   Consultants’ Group Code of Conduct is available at   remunerationconsultantsgroup.com. Fees for services provided to the Committee   £’0001 Advisor Appointed by Services provided to the Committee Other services   provided to the Company Towers Watson Remuneration Advice on market practice;   Governance; Provide 56 Reward and benefits consultancy, provision of   benchmark data and pension administration Committee in 2007 market data on   executive and non-executive reward; Reward consultancy; Performance analysis   Note: 1 Fees are determined on a time spent basis. 2014 annual general   meeting At the 2014 annual general meeting there was a binding vote on our   Remuneration Policy and an advisory vote on our Remuneration Report. Details   of the voting outcomes are provided in the table below. Votes for % Votes   against % Total votes Withheld Remuneration Policy 16,620,036,145 95.97% 698,459,069   4.03% 17,318,495,214 227,447,313 Remuneration Report 16,547,116,308 97.29%   461,161,775 2.71% 17,008,278,083 537,651,184 Meetings The Remuneration   Committee had six formal meetings during the year. Outside these meetings   there are frequent discussions usually by conference call. The principal   agenda items at the formal meetings were as follows: Meeting Agenda items May   2014 a 2014 annual bonus achievement and 2015 targets and ranges a 2012   long-term incentive award vesting and 2015 targets and ranges a 2014   Directors’ remuneration report July 2014 a 2015 long-term incentive awards a   Large local market CEO remuneration a 2016 reward strategy a Executive   Committee remuneration a Corporate governance matters November 2014 a   Succession planning for Stephen Pusey December 2014 a 2016 annual bonus   framework February 2015 a 2015 reward packages for the Executive Committee a   Non-Executive Director fee levels a Chairman’s fees a 2015 Directors’   remuneration report a Committee’s effectiveness and terms of reference a Risk   assessment March 2015 83 Vodafone Group Plc Annual Report on Form 20-F 2015   Overview Strategy review Performance Governance Financials Additional   information |
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|  | Directors’   remuneration (continued) Annual Report on remuneration (continued) 2015   remuneration In this section we summarise the pay packages awarded to our   Executive Directors for performance in the 2015 financial year versus 2014.   Specifically we have provided a table that shows all remuneration that was   earned by each individual during the year and computed a single total   remuneration figure for the year. The value of the annual bonus (‘GSTIP’) was   earned during the year but will be paid out in cash in the following year and   the value of the long-term incentive (‘GLTI’) shows the share awards which   will vest in July 2015 as a result of the performance through the three year   period ended at the completion of our financial year on 31 March 2015. The   Remuneration Committee reviews all incentive awards prior to payment and uses   judgement to ensure that the final assessments of performance are fair and   appropriate. If circumstances warrant it, the Committee may adjust the final   payment or vesting downwards. On this occasion, the Committee did not   exercise its judgement considering the annual bonus (‘GSTIP’) payout and the   final vesting level of the long-term incentives awards (‘GLTI’) reflected   performance and were considered fair and appropriate. 2015 annual bonus   (‘GSTIP’) payout (audited) In the table below we disclose our achievement   against each of the performance measures and targets in our annual bonus   (‘GSTIP’) and the resulting total annual bonus payout level for the year   ended 31 March 2015 of 111.9%. This is applied to the target bonus level of   100% of base salary for each executive. Payout at target performance 100%   Payout at maximum performance 200% Target performance level £bn Actual   performance level1 £bn Actual payout % Performance measure Commentary Service   revenue Adjusted EBITDA Adjusted free cash flow Competitive performance   assessment, driven particularly by Net Promoter Score and relative market   share 25% 25% 25% 25% 50% 50% 50% 50% 23.5% 29.7% 38.5% 20.2% 39.0 11.8 0.9   38.9 12.0 1.3 Actual performance slightly below budget Above budgeted   performance in Europe Strong performance in both regions Net Promoter Score   now ranks first in 11 markets, however there remains scope for improvement in   Europe Compilation of market-by-market assessment Total annual bonus payout   level 100% 200% 111.9% Note: 1 These figures are adjusted to include the   removal of the impact of M&A, foreign exchange movements and any changes   in accounting treatment. Base salary £’000 Target bonus % of base salary 2015   payout % of target Actual payment £’000 2015 annual bonus (‘GSTIP’) amounts   Vittorio Colao Stephen Pusey Nick Read 1,150 600 675 100% 100% 100% 111.9%   111.9% 111.9% 1,287 671 755 84 Vodafone Group Plc Annual Report on Form 20-F   2015 Total remuneration for the 2015 financial year (audited) Vittorio Colao   Stephen Pusey Nick Read1 2015 £’000 2014 £’000 2015 £’000 2014 £’000 2015   £’000 2014 £’000 Salary/fees 1,140 1,110 594575 675– Taxable benefits2 40 38   2121 28– Annual bonus: GSTIP (see below for further detail) 1,287 982 671509   755– Total long-term incentive: – 5,550 –1,858 –– GLTI vesting during the   year3 – 4,716 –1,579 –– Cash in lieu of GLTI dividends4 – 834 –279 –– Cash in   lieu of pension 342 333 178173 203– Other5 1 1 –– 1– Total 2,810 8,014   1,4643,136 1,662– Notes: 1 Nick Read was appointed to the Board on 1 April   2014. 2 Taxable benefits include amounts in respect of: – Private healthcare   (2015: £1,854; 2014 £1,734); – Cash car allowance £19,200 p.a.; and – Travel   (2015: Vittorio Colao £18,022; Nick Read £7,164; 2014: Vittorio Colao   £17,155). 3 The value shown in the 2014 column is the award which vested on   28 June 2014 and is valued using the execution share price on 30 June 2014 of   196.19 pence. Please note that the values disclosed in this table in 2014 are   slightly different as the value was based on an average of the closing share   price over the last quarter of the 2014 financial year of 234.23 pence. 4   Participants also receive a cash award, equivalent in value to the dividends   that would have been paid during the vesting period on any shares that vest.   The cash in lieu of dividend value shown in 2014 relates to the award which   vested on 28 June 2014. 5 Reflects the value of the SAYE benefit which is   calculated as £250 x 12 months x 20% to reflect the discount applied based on   savings made during the year. |
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|  | Long-term   incentive (‘GLTI’) award vesting in July 2015 (audited) The 2013 long-term   incentive (‘GLTI’) awards which were made in July 2012 will lapse in full in   July 2015. The performance conditions for the three year period ending in the   2015 financial year are as follows: TSR outperformance TSR peer group BT   Group Deutsche Telekom Orange Telecom Italia Telefónica 0% (Up to median)   4.5% (65th percentile equivalent) 9% (80th percentile equivalent) Adjusted   free cash flow measure £bn Below threshold Threshold Target Maximum <15.4   15.4 17.9 20.4 0% 50% 100% 150% 0% 75% 150% 225% 0% 100% 200% 300% Emerging   market composite (consists of the average TSR performance of Bharti, MTN and   Turkcell) Adjusted free cash flow for the three year period ended on 31 March   2015 was £14.8 billion which compares with a threshold of £15.4 billion and a   target of £17.9 billion. The chart to the right shows that our TSR   performance against our peer group for the same period resulted in an   outperformance of the median by 6.5% a year. Using the combined payout matrix   above, this performance resulted in a payout of 0.0% of target. The combined   vesting percentages are applied to the target number of shares granted as   shown below. 146 140 106 104 110 107 97 103 102 93 100 100 Adjusted free cash   flow performance payout % of target Maximum number of shares Target number of   shares Value of shares vesting (‘000) Overall vesting % of target Number of   shares vesting 2013 GLTI performance share awards vesting in July 2015 TSR   multiplier Vittorio Colao Stephen Pusey Nick Read1 4,511,080 2,072,397   1,880,086 1,503,693 690,799 626,695 0.0% 0.0% 0.0% 1.7 times 1.7 times 1.7   times 0.0% 0.0% 0.0% 0 0 0 £0 £0 £0 Notes: 1 Nick Read was appointed to the   Board on 1 April 2014. His award in the table above reflects a grant made   prior to his appointment to the main Board. These share awards will lapse on   3 July 2015. Specified procedures are performed by PricewaterhouseCoopers LLP   over the adjusted free cash flow to assist with the Committee’s assessment of   performance. The performance assessment in respect of the TSR outperformance   of the peer group median is undertaken by Towers Watson. Details of how the   plan works can be found on pages 78 to 80. Long-term incentive (‘GLTI’)   awarded during the year (audited) The 2015 long-term incentive awards made in   June 2014 under the Global Long-Term Incentive Plan (‘GLTI’). The performance   conditions are a combination of adjusted free cash flow and TSR performance   as follows: TSR outperformance TSR peer group Bharti BT Group Deutsche   Telekom MTN Orange Telecom Italia Telefónica 0% (Up to median) 5% (65th percentile   equivalent) 10% (80th percentile equivalent) Adjusted free cash flow measure   £bn Below threshold Threshold Target Maximum <3.4 3.4 5.1 6.8 0% 50% 100%   125% 0% 75% 150% 187.5% 0% 100% 200% 250% The combined vesting percentages   are applied to the target number of shares granted. The adjusted free cash   flow figures shown above are considerably lower than prior years as they   include the impact of Project Spring. When considered on a like-for-like   basis with previous years (i.e. excluding the impact of Project Spring) the   adjusted cash flow target is £12.3 billion. In order to participate fully in   this award, executives had to co-invest personal shares worth 100% of salary.   The resulting awards to Executive Directors were as follows: Number of shares   awarded Face value of shares awarded1 Proportion of maximum award vesting at   minimum performance Target vesting level (40% of max) Maximum vesting level   Target vesting level Maximum vesting level Performance period end 2015 GLTI   performance share awards made in June 2014 Vittorio Colao Stephen Pusey Nick   Read 1,340,004 333,245 717,067 3,350,011 833,113 1,792,668 £2,543,328   £632,449 £1,360,993 £6,358,321 £1,581,248 £3,402,484 1/5th 1/5th 1/5th 31 Mar   2017 31 Mar 2017 31 Mar 2017 Note: 1 Face value calculated based on the share   prices at the date of grant of 189.8 pence. Dividend equivalents on the   shares that vest are paid in cash after the vesting date. 85 Vodafone Group   Plc Annual Report on Form 20-F 2015 Overview Strategy review Performance   Governance Financials Additional information 2013 GLTI award: TSR performance   (growth in the value of a hypothetical US$100 holding over the performance   period, six month averaging) 160154154 150145 142 130121 120121119121 9294   9003/1209/1203/1309/1303/1409/1403/15 Vodafone Group Median of peer group Outperformance   of median of 9% p.a. |
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|  | Directors’   remuneration (continued) Annual Report on remuneration (continued)   All-employee share plans The Executive Directors are also eligible to participate   in the UK all-employee plans. Summary of plans Share save The Vodafone Group   2008 Share save Plan is an HM Revenue & Customs (‘HMRC’) approved scheme   open to all staff permanently employed by a Vodafone Company in the UK as of   the eligibility date. Options under the plan are granted at up to a 20%   discount to market value. Executive Directors’ participation is included in   the option table on page 87. Share Incentive Plan The Vodafone Share   Incentive Plan (‘SIP’) is an HMRC approved plan open to all staff permanently   employed by a Vodafone Company in the UK. Participants may contribute up to a   maximum of £125 per month (or 5% of salary if less) which the trustee of the   plan uses to buy shares on their behalf. An equivalent number of shares are purchased   with contributions from the employing company. UK-based Executive Directors   are eligible to participate. Pensions (audited) Vittorio Colao, Stephen Pusey   and Nick Read received a cash allowance of 30% of base salary in lieu of   pension contributions during the 2015 financial year. No Executive Directors   accrued benefits under any defined contribution pension plans during the year   or have participated in a defined benefits scheme while an Executive   Director. The Executive Directors are provided benefits in the event of death   in service. They also have an entitlement under a long-term disability plan   from which two-thirds of base salary, up to a maximum benefit determined by   the insurer, would be provided until normal retirement date (aged 60). In   respect of the Executive Committee, the Group has made aggregate   contributions of £43,000 (2014: £53,000) into defined contribution pension   schemes. Alignment to shareholder interests (audited) All of our Executive   Directors have shareholdings in excess of their goals. Current levels of   ownership by the Executive Directors, and the date by which the goal should   be or should have been achieved, are shown below. The values are calculated   using an average share price over the six months to 31 March 2015 of 220.53 pence.   Value of shareholding (£m) Goal as a % of salary Current % of salary held %   of goal achieved Number of shares Date for goal to be achieved At 31 March   2014 Vittorio Colao Stephen Pusey Nick Read 400% 300% 300% 2,040% 581% 575%   510% 194% 192% 10,639,281 1,579,543 1,760,485 £23.5 £3.5 £3.9 July 2012 June   2014 April 2019 Collectively the Executive Committee including the Executive   Directors own more than 23 million Vodafone shares, with a value of over   £50.8 million. None of the Executive Committee members’ shareholdings amounts   to more than 1% of the issued shares in that class of share, excluding   treasury shares. Directors’ interests in the shares of the Company (audited)   A summary of interests in shares and scheme interests of the Directors who   served during the year is given below. More details of the performance shares   and options follows. Share plans Share options Unvested GLTI Shares Unvested   GLTR Shares SAYE (unvested without performance conditions) GIP (vested) (with   performance conditions) (without performance conditions) Total number of   interests in shares At 31 March 2015 Executive Directors Vittorio Colao   Stephen Pusey Nick Read 22,695,349 6,389,899 8,501,845 12,046,461 4,810,356   5,386,146 – – 159,544 9,607 – 10,389 – – 1,185,281 Total 37,587,093   22,242,963 159,544 19,996 1,185,281 The total number of interests in shares   includes interests of connected persons, unvested share awards and share   options. The unvested GLTR shares attributed to Nick Read reflect an award   made prior to his appointment to the Board. The award was made in June 2013   and, subject to Nick Read’s continued employment, will vest in June 2015. 86   Vodafone Group Plc Annual Report on Form 20-F 2015 |
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|  | Total number of   interests in shares At 31 March 2015 Non-Executive Directors Sir Crispin   Davis (appointed 28 July 2014) Dame Clara Furse (appointed 1 September 2014)   Valerie Gooding Renee James Alan Jebson (position at retirement on 31 July   2014) Samuel Jonah Gerard Kleisterlee Omid Kordestani (position at retirement   on 31 December 2014) Nick Land Anne Lauvergeon (position at retirement on 31   July 2014) Luc Vandevelde Anthony Watson (position at retirement on 31 July   2014) Philip Yea – – 4,038 27,272 44,912 30,190 107,078 10,000 42,090 17,151   73,608 62,727 33,408 At 19 May 2015 and during the period from 1 April 2015   to 19 May 2015, 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 2015, members of the Group’s Executive Committee at   31 March 2015 had an aggregate beneficial interest in 9,087,835 ordinary   shares of the Company. At 19 May 2015 the Directors had an aggregate   beneficial interest in 14,431,783 ordinary shares of the Company and the   Executive Committee members had an aggregate beneficial interest in 9,088,483   ordinary shares of the Company, which includes awards made under the Vodafone   Share Incentive Plan after 31 March 2015. None of the Directors or the   Executive Committee members had an individual beneficial interest amounting   to greater than 1% of the Company’s ordinary shares. During the period from 1   April 2015 to 19 May 2015, the Directors’ total number of interests in shares   did not change. Performance shares The maximum number of outstanding shares   that have been awarded to Directors under the long-term incentive (‘GLTI’)   plan are currently as follows: 2013 award Awarded: July 2012 Performance period   ending: March 2015 Vesting date: July 2015 Share price at grant: 179.4 pence   2014 award Awarded: June 2013 and September 20131 Performance period ending:   March 2016 Vesting date: June 2016 Share price at grant: 180.2 pence and   202.5 pence 2015 award Awarded: June 2014 Performance period ending: March   2017 Vesting date: June 2017 Share price at grant: 189.9 pence GLTI   performance share awards Vittorio Colao Stephen Pusey Nick Read 4,511,080   2,072,397 1,880,086 4,185,370 1,904,846 1,713,392 3,350,011 833,113 1,792,668   Note: 1 Due to a close period, Executive Directors were not able to make   co-investment commitments at the time of the main award in June 2013 and   therefore part of the award was made in September 2013. For details of the   performance conditions please see page 80. Share options The following   information summarises the Executive Directors’ options under the Vodafone   Group 2008 Share save Plan (‘SAYE’) and the Vodafone Group Incentive Plan   (‘GIP’). HMRC approved awards may be made under both of the schemes   mentioned. No other Directors have options under any schemes. Options under   the Vodafone Group 2008 Share save Plan were granted at a discount of 20% to   the market value of the shares at the time of the grant. No other options may   be granted at a discount. Options granted during the 2015 financial year   Options exercised during the 2015 financial year Options lapsed during the   2015 financial year At 1 April 2014 or date of appointment Options held at 31   March 2015 Market price on exercise Option price Date from which exercisable   Number of shares Number of shares Number of shares Number of shares Number of   shares Gain on exercise Pence1 Grant date Expiry date Pence Note: 1 The   closing trade share price on 31 March 2015 was 220.45 pence. The highest trade   share price during the year was 239.90 pence and the lowest price was 184.50   pence. 2 The options granted in July 2005 were subject to a three year   cumulative growth in adjusted earnings per share performance condition. The   options vested 100% in July 2008. 3 The options granted in July 2007 were   subject to a three year cumulative growth in adjusted earnings per share   performance condition. The options vested 100% in July 2010. 87 Vodafone   Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information Vittorio Colao SAYE   Jul 200916,568–(16,568)– SAYE Jul 2014–9,607–– 93.85 Sep 2014 Feb 2015   204.65£18,357 156.13 Sep 2019 Feb 2020–– – 9,607 Total 16,568 9,607 Nick Read   GIP2 Jul 2005 257,838 – – – GIP3 Jul 2007 927,443 – – – SAYE Jul 2012 10,389   – – – 136.00 Jul 2008 Jul 2015–– 167.80 Jul 2010 Jul 2017–– 144.37 Sep 2017   Feb 2018–– 257,838 927,443 10,389 Total 1,195,670 1,195,670 |
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|  | Directors’   remuneration (continued) Annual Report on remuneration (continued) At 19 May   2015 there had been no change to the Directors’ interests in share options   from 31 March 2015. Other than those individuals included in the table above,   at 19 May 2015 members of the Group’s Executive Committee held options for   24,378 ordinary shares at prices ranging from 144.37 pence to 156.13 pence   per ordinary share, with a weighted average exercise price of 150.12 pence   per ordinary share exercisable at dates ranging from 1 September 2015 to 1   September 2019. Paolo Bertoluzzo, Warren Finegold, Philipp Humm and Serpil   Timuray held no options at 19 May 2015. Loss of office payments (audited)   Andy Halford retired on 31 March 2014 having worked 6 months of his 12 month   notice period. As disclosed in last year’s Annual Report on remuneration,   Andy was entitled to receive payments in lieu of notice each month for the   remainder of his notice period – the total of which would not exceed £350,000   (six months’ salary), subject to mitigation if Andy was to start a new   executive role at another organisation. During the year Andy commenced   employment Standard Chartered plc, with his payment for lieu in notice   ceasing with effect from 16 June 2014. In total, Andy received payments in   lieu of notice of £145,833. In line with treatment detailed in last year’s   report, Andy’s 2013 and 2014 GLTI awards lapsed following the commencement of   employment with his new employer. Andy’s 2012 GLTI award, which was disclosed   under his 2014 single figure in last year’s report, vested on 28 June 2014.   As previously disclosed, Andy is in receipt of no further benefits aside from   the provision of a SIM card for his personal use at the Company’s expense until   31 March 2017. Payments to past Directors (audited) Other than mentioned   above no payments were made, or benefits given, to past Directors with value   of greater than our de minimis threshold (£5,000 p.a.) during the 2015   financial year. Fees retained for external non-executive directorships   Executive Directors may hold positions in other companies as non-executive   directors and retain the fees. None of the Executive Directors held a   non-executive directorship during the 2015 financial year. Assessing pay and   performance In the table below we summarise the Chief Executive’s single   figure remuneration over the past six years, as well as how our variable pay   plans have paid out in relation to the maximum opportunity. This can be   compared with the historic TSR performance over the same period. The chart   below shows the performance of the Company relative to the STOXX Europe 600   Index over a six year period. The STOXX Europe 600 Index was selected as this   is a broad-based index that includes many of our closest competitors. It   should be noted that the payout from the long-term incentive plan is based on   the TSR performance shown in the chart on page 85 and not this chart. 322 193   Financial year remuneration for Chief Executive (Vittorio Colao) 20101 2011   2012 2013 2014 2015 Single figure of total remuneration £’000 Annual variable   element (actual award versus maximum opportunity) Long-term incentive   (vesting versus maximum opportunity) 3,350 64% 25% 7,022 62% 31% 15,767 47%   100% 11,099 33% 57% 8,014 44% 37% 2,810 56% 0% Note: 1 The single figure   reflects share awards which were granted in 2006 and 2007, prior to his   appointment to Chief Executive in 2008. Change in the Chief Executive’s   remuneration In the table below we show the percentage change in the Chief Executive’s   remuneration (salary, taxable benefits and annual bonus payment) between the   2014 and 2015 financial years compared to the average for other Vodafone   Group employees who are measured on comparable business objectives and who   have been employed in the UK since 2014 (per capita). Vodafone has employees   based all around the world and some of these individuals work in countries   with very high inflation therefore a comparison to Vodafone’s UK-based Group   employees is more appropriate than to all employees. Percentage change from   2014 to 2015 Other Vodafone Group employees employed in the UK Item Chief   Executive: Vittorio Colao Base salary Taxable benefits Annual bonus 2.7% 5.3%   31.1% 2.8% 0.5% 30.0% 88 Vodafone Group Plc Annual Report on Form 20-F 2015   Six year historical TSR performance (growth in the value of a hypothetical   €100 holding over six years) 325 267 275279 215 225190227 17 0 175155168167   125100137 7503/0903/1003/1103/1203/1303/1403/15 Vodafone Group STOXX Europe   600 Index |
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|  | Relative spend   on pay The chart below shows both the dividends distributed in the year and   the total cost of remuneration in the Group. For more details on dividends   and expenditure on remuneration for all employees, please see pages 129 and   157 respectively. 2015 remuneration for the Chairman and Non-Executive   Directors (audited) Salary/fees Benefits1 Total 2015 £’000 2014 £’000 2015   £’000 2014 £’000 2015 £’000 2014 £’000 Notes: 1 We have been advised that for   Non-Executive Directors, certain travel and accommodation expenses in   relation to attending Board meetings should be treated as a taxable benefit.   The table above includes these travel expenses and the corresponding tax   contribution. 2 Salary/fees include an additional allowance of £6,000 per   meeting for Directors based outside of Europe. 89 Vodafone Group Plc Annual   Report on Form 20-F 2015 Overview Strategy review Performance Governance   Financials Additional information Chairman Gerard Kleisterlee 625600 6658 691   658 Senior Independent Director Luc Vandevelde 160160 611 166 171   Non-Executive Directors Sir Crispin Davis (appointed 28 July 2014) 78– 26–   104 – Dame Clara Furse (appointed 1 September 2014) 67– –– 67 – Valerie   Gooding 11519 5– 120 19 Renee James2 145139 115 156 144 Samuel Jonah2 151151   59 156 160 Nick Land 140140 11 141 141 Philip Yea 115115 –– 115 115 Former   Non-Executive Directors Alan Jebson2 (retired 31 July 2014) 56151 3240 88 191   Omid Kordestani2 (retired 31 December 2014) 116151 1433 130 184 Anne   Lauvergeon (retired 31 July 2014) 38115 15 39 120 Anthony Watson (retired 31   July 2014) 38115 41 42 116 Total 1,8441,856 171163 2,015 2,019 Relative   importance of spend on pay £m 50,000 40,566 40,000 30,000 20,000 10,000 2,930   3,875 4,194 02014201520142015 Distributed by way of dividends Overall   expenditure on remuneration for all employees |
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|  | Directors’   remuneration (continued) Annual Report on remuneration (continued) 2016   remuneration Details of how the remuneration policy will be implemented for   the 2016 financial year are set out below. 2016 base salaries The Remuneration   Committee considered business performance, salary increases for other UK   employees and external market information and decided to increase the salary   of the Chief Financial Officer by 3.7% (Nick Read). This constitutes Nick   Read’s first increase since appointment to the role of designate-CFO in   January 2014, and reflects how he is performing well in the role and has now   completed a full year in the position. The salaries of the Chief Executive   (Vittorio Colao) and Chief Technology Officer (Stephen Pusey) will remain   unchanged. The average salary increase for Executive Committee members will   be 1.7%; this compares to the salary increase budget in the UK of 2.0%. The   annual salaries for 2016 (effective 1 July 2015) are as follows: a Chief   Executive: Vittorio Colao £1,150,000; a Chief Financial Officer: Nick Read   £700,000; and a Chief Technology Officer: Stephen Pusey £600,000. 2016 annual   bonus (‘GSTIP’) In line with our strategic focus, customer appreciation KPIs   will replace competitive performance assessment as the strategic measure for   the 2016 GSTIP and, given the importance of this measure in the current phase   of our strategy, will constitute 40% of the total bonus. The performance   measures and weightings for 2016 are as follows: a Service revenue (20%); a   Adjusted EBITDA (20%); a adjusted free cash flow (20%); and a customer   appreciation KPIs (40%). This includes an assessment of net promoter score   (‘NPS’) and brand consideration measures. In respect of the measures included   under the customer appreciation KPIs, NPS is used as a measure of customer   advocacy whilst brand consideration acts as a measure of the percentage of   people who would consider using a certain brand as their telecoms provider.   Both measures utilise data collected in our local markets which is validated   for quality and consistency by independent third party agencies. The data is   sourced from studies involving both our own customers and customers of our   competitors for the NPS measure, and both Vodafone users and non-users for the   brand consideration measure. In formulating a final assessment of performance   under the customer appreciation KPIs, the Committee will also consider other   relevant customer factors such as churn, customer growth and service levels.   Annual bonus targets are commercially sensitive and therefore will be   disclosed in the 2016 remuneration report following the completion of the   financial year. Long-term incentive (‘GLTI’) awards for 2016 As described in   our policy on pages 78 to 80 the performance conditions are a combination of   adjusted free cash flow and TSR performance. The details for the 2016 award   are provided in the table below (with linear interpolation between points).   Following the annual review of the performance measure, the Committee decided   that for the 2016 award the TSR outperformance range should revert back to 0%   to 9%. This range was used in all years other than 2015, remains positioned   at the upper end of market practice and is considered appropriately   stretching against forecast performance. The Committee will keep the   calibration of the range under review and continue to only make changes where   there is sufficient evidence to suggest this is appropriate. TSR   outperformance TSR peer group 0% (Up to median) 4.5% (65th percentile   equivalent) 9% (80th percentile equivalent) Bharti BT Group Deutsche Telekom   MTN Orange Telecom Italia Telefónica Adjusted free cash flow measure £ bn   Below threshold Threshold Target Maximum <7.3 7.3 9.0 10.7 0% 50% 100%   125% 0% 75% 150% 187.5% 0% 100% 200% 250% The combined vesting percentages   are applied to the target number of shares granted. Long-term incentive   (‘GLTI’) awards vesting As discussed in detail in last year’s Annual Report,   Project Spring involves significant organic investment over the next two   years to enhance network and service leadership further. This investment will   have a significant impact on adjusted Free Cash Flow (‘FCF’), which is the   primary performance condition for the GLTI and we expect an initial drop in   FCF that will then build again as the investment pays off over the longer   term. The impact is predicted as follows: Financial year of award Performance   period end Impact 2014 March 2016 Targets for the 2014 awards were set prior   to the announcement of Project Spring therefore we will remove the impact on   FCF when calculating the vesting results following the end of the performance   period. The 2015 awards (and all future years) will have the full impact of   Project Spring included in the targets and no further adjustments will be   necessary. 2015 onwards March 2017 onwards 90 Vodafone Group Plc Annual   Report on Form 20-F 2015 |
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|  | 2016   remuneration for the Chairman and Non-Executive Directors For the 2016   review, the fees for our Chairman and non-executives have been benchmarked   against a comparator group of the FTSE 30 companies (excluding Financial   Services). Following the review there will be no increases to the fees of our   Chairman or Non-Executive Directors. Position/role Fee payable £’000 From 1   April 2015 Chairman1 625 Senior Independent Director 135 Non-Executive   Director 115 Additional fee for Chairmanship of Audit, Remuneration and Risk   Committees 25 Note: 1 The Chairman’s fee also includes the fee for the   Chairmanship of the Nominations and Governance Committee. For 2016, the allowance   payable each time a non-Europe-based Non-Executive Director is required to   travel to attend Board and Committee meetings to reflect the additional time   commitment involved is £6,000. Further remuneration information Dilution All   awards are made under plans that incorporate dilution limits as set out in   the guidelines for share incentive schemes published by the Investment   Association. The current estimated dilution from subsisting executive awards   is approximately 3.0% of the Company’s share capital at 31 March 2015 (3.2%   at 31 March 2014), whilst from all-employee share awards it is approximately   0.5% (0.6% at 31 March 2014). This gives a total dilution of 3.5% (3.8% at 31   March 2014). Service contracts The terms and conditions of appointment of our   Directors are available for inspection at the Company’s registered office   during normal business hours and at the annual general meeting (for 15   minutes prior to the meeting and during the meeting). The Executive Directors   have notice periods in their service contracts of 12 months. The   Non-Executive Directors’ letters of appointment do not contain provision for   notice periods or for compensation if their appointments are terminated. This   report on remuneration has been approved by the Board of Directors and signed   on its behalf by: /s/ Luc Vandevelde Luc Vandevelde Chairman of the   Remuneration Committee 19 May 2015 91 |
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|  | Directors’ report The Directors of the   Company present their report together with the audited consolidated financial   statements for the year ended 31 March 2015.This report has been prepared in   accordance with requirements outlined within The Large and Medium-sized   Companies and Groups (Accounts and Reports) Regulations 2008 and forms part   of the management report as required under Disclosure & Transparency Rule   (‘DTR’) 4. Certain information that fulfils the requirements of the   Directors’ report can be found elsewhere in this document and is referred to   below. This information is incorporated into this Directors’ report by   reference.Responsibility statement As required under the DTR a statement made   by the Board regarding the preparation of the financial statements is set out   on pages 94 and 95 which also provides details regarding the disclosure of   information to the Company’s auditor and management’s report on internal   control over financial information.Going concern The going concern statement   required by the Listing Rules and the Code is set out in the “Directors’   statement of responsibility” on page 94.Corporate governance statement The   information required by DTR 7.2.6R can be found in the “shareholder   information” section on pages 186 to 193.Strategic Report The Strategic Report   is set out on pages 1 to 48 and is incorporated into this Directors’ report   by reference.Directors and their interests Directors of the Company who   served during the financial year ended 31 March 2015 and up to the date of   signing the financial statements are as follows: Gerard Kleisterlee, Vittorio   Colao, Stephen Pusey, Nick Read, Sir Crispin Davis, Mathias Döpfner, Dame   Clara Furse, Valerie Gooding, Renee James, Alan Jebson, Samuel Jonah, Omid   Kordestani, Nick Land, Anne Lauvergeon, Luc Vandevelde, Anthony Watson and   Philip Yea. Details of Directors’ interests in the Company’s ordinary shares,   options held over ordinary shares, interests in share options and long-term   incentive plans are set out on pages 84 to 90.Directors’ conflicts of   interest Established within the Company is a procedure for managing and   monitoring conflicts of interest for Directors. Full details of this   procedure is set out on page 72. Directors’ indemnities In accordance with   our articles of association and to the extent permitted by law, Directors are   granted an indemnity from the Company in respect of liability incurred as a   result of their office. In addition, we maintained a Directors’ and officers’   liability insurance policy throughout the year. Neither our indemnity nor the   insurance provides cover in the event that a Director is proven to have acted   dishonestly or fraudulently.Disclosures required under Listing Rule 9.8.4 The   information on the amount of interest capitalised and the treatment of tax   relief can be found in notes 5 and 6 to the consolidated financial statements   respectively. The remaining disclosures required by Listing Rule 9.8.4 are   not applicable to Vodafone.Capital structure and rights attaching to shares   All information relating to the Company’s capital structure, rights attaching   to shares, dividends, the policy to repurchase the Company’s own shares and   other shareholder information is contained on pages 186 to 193.Dividends Full   details of the Company’s dividend policy and proposed final dividend payment   for the year ended 31 March 2015, is set out in the Chief Executive’s   strategic review on pages 14 to 17 and note 9 to the consolidated financial   statements.Sustainability Information about the Company’s approach to   sustainability risks and opportunities is set out on pages 30 and 31. Also   included on these pages are details of our greenhouse gas emissions.Political   donations No political donations under the Companies Act 2006 have been made   during the financial year. The Group policy is that no political donations be   made or political expenditure incurred.Financial risk management objectives   and policies Disclosures relating to financial risk management objectives and   policies, including our policy for hedging are set out in note 23 to the   consolidated financial statements and disclosures relating to exposure to   price risk, credit risk, liquidity risk and cash flow risk are outlined in   note 23. Important events since the end of the financial year Details of   those important events affecting the Group which have occurred since the end   of the financial year are set out in the strategic report and note 34 to the   consolidated financial statements.Future developments within the Group The   strategic report contains details of likely future developments within the Group.Research   and development Details of the Group’s activities relating to research and   development are contained in note 3 to the consolidated financial   statements.Group policy compliance Each Group policy is owned by a member of   the Executive Committee so that there is clear accountability and authority   for ensuring the associated business risk is adequately managed. Regional   chief executives and the senior leadership team member responsible for each   Group function have primary accountability for ensuring compliance with all   Group policies by all our markets and entities. Our Group compliance team and   policy champions support the policy owners and local markets in implementing   policies and monitoring compliance.Code of Conduct All of the key Group policies   have been consolidated into the Vodafone Code of Conduct. This is a policy   document applicable to all employees and those who work for or on behalf of   Vodafone. It sets out the standards of behaviour expected in relation to   areas such as insider dealing, bribery and raising concerns through the   whistle-blowing process (known internally as “Speak Up”).Branches The Group,   through various subsidiaries, has branches in a number of different   jurisdictions in which the business operates.Employee disclosures Our   disclosures relating to the employment of disabled persons, the number of   women in senior management roles, employee engagement and policies are   included in “Our people” on pages 28 and 29.By Order of the Board/s/ Rosemary   Martin  Rosemary Martin Company Secretary   19 May 2015 |
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|  | Contents FinancialsReporting our   financial performance We continue to review the format of our consolidated   financial statements with the aim of making them clear and easier to follow.   This year, we have simplified the consolidated financial statements by moving   the commentary on the primary financial statements to the strategic report at   the front of the Annual Report to help with the flow of information and keep   all commentary on the Group’s operational performance together. We hope this   format makes it easier for you to navigate to the information that is   important to you. Page 94 Directors’ statement of responsibility 96 Risk   mitigation 98  Report of independent   registered public accounting firm Page 109    Notes to the consolidated financial statements: 109 1. Basis of   preparation Income statement 114 2. Segmental analysis Page 175  Other unaudited financial information: 175   Prior year operating results 180 This page is intentionally left blank 181   This page is intentionally left blank 100 This page is intentionally left   blank 117 3. Operating profit/(loss)     118 4. Impairment losses 182 This page is intentionally left blank 101   This page is intentionally left blank 102 This page is intentionally left   blank 103 This page is intentionally left blank 123 5. Investment income and   financing costs 124 6. Taxation 183 This page is intentionally left blank 184   This page is intentionally left blank 185 This page is intentionally left   blank 104 This page is intentionally left blank 128 7. Discontinued   operations 129 8. Earnings per share A-1 Subsequent events B-1  Separate financial statements 105  Consolidated financial statements: 105   Consolidated income statement 105 Consolidated statement of comprehensive   income 106 Consolidated statement of financial position 107 Consolidated   statement of changes in equity 108 Consolidated statement of cash flows 129   9. Equity dividends Financial position 130 10. Intangible assets 132 11.   Property, plant and equipment 134 12. Investments in associates and joint   arrangements 137 13. Other investments 138 14. Inventory 139 15. Trade and   other receivables 140 16. Trade and other payables 141 17. Provisions 142 18.   Called up share capital  Cash flows 143   19. Reconciliation of net cash flow from operating activities 143 20. Cash   and cash equivalents 144 21. Borrowings 148 22. Liquidity and capital   resources 151 23. Capital and financial risk management  Employee remuneration 156 24. Directors and   key management compensation 157 25. Employees 158 26. Post employment   benefits 162 27. Share-based payments Additional disclosures 164 28.   Acquisitions and disposals 167 29. Commitments 168 30. Contingent liabilities   171 31. Related party transactions 171 32. Principal subsidiaries 174 33.   Subsidiaries exempt from audit 174 34. Subsequent events required by Rule   3-09  of Regulation S-X B-3  Report of independent registered  public accounting firm  93 |
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|  | Directors’ statement of responsibility   The Directors are responsible for preparing the financial statements in   accordance with applicable law and regulations and keeping proper accounting   records. Detailed below are statements made by the Directors in relation to   their responsibilities, disclosure of information to the Company’s auditors,   going concern and management’s report on internal control over financial   reporting. Financial statements and accounting records Company law of England   and Wales requires the Directors to prepare financial statements for each   financial year which give a true and fair view of the state of affairs of the   Company and of the Group at the end of the financial year and of the profit   or loss of the Group for that period. In preparing those financial statements   the Directors are required to: The Directors are responsible for preparing   the Annual Report in accordance with applicable law and regulations. Having   taken advice from the Audit and Risk Committee, the Board considers the report   and accounts, taken as a whole, as fair, balanced and understandable and that   it provides the information necessary for shareholders to assess the   Company’s performance, business model and strategy. Neither the Company nor   the Directors accept any liability to any person in relation to the Annual   Report except to the extent that such liability could arise under English   law. Accordingly, any liability to a person who has demonstrated reliance on   any untrue or misleading statement or omission shall be determined in   accordance with section 90A and schedule 10A of the Financial Services and   Markets Act 2000. a select suitable accounting policies and apply them   consistently; a make judgements and estimates that are reasonable and   prudent; a present information, including accounting policies, in a manner   that provides relevant, reliable, comparable and understandable information;   a state whether the consolidated financial statements have been prepared in   accordance with International Financial Reporting Standards (‘IFRS’) as   adopted for use in the EU and Article 4 of the EU IAS Regulations. The   Directors also ensure that the consolidated financial statements have been   prepared in accordance with IFRS as issued by the International Accounting   Standards Board (‘IASB’); Disclosure of information to the auditor Having   made the requisite enquiries, so far as the Directors are aware, there is no   relevant audit information (as defined by section 418(3) of the Companies Act   2006) of which the Company’s auditor is unaware and the Directors have taken   all the steps they ought to have taken to make themselves aware of any   relevant audit information and to establish that the Company’s auditor is   aware of that information. a state for the Company financial statements   whether applicable UK accounting standards have been followed; and Going   concern The Group’s business activities, performance, position and principal   risks and uncertainties and how these are managed are set out in the   strategic report on pages 1 to 48. A range of mitigations for risks faced by   the Group are included on pages 96 and 97. In addition, the financial   position of the Group is included within liquidity and capital resources on   pages 148 to 150, “Borrowings”, “Liquidity and capital resources” and   “Capital and financial risk management” in notes 21, 22 and 23 respectively   to the consolidated financial statements, which include disclosure in   relation to the Group’s objectives, policies and processes for managing its   capital; its financial risk management objectives; details of its financial   instruments and hedging activities; and its exposures to credit risk and   liquidity risk. The Group believes it adequately manages or mitigates its   solvency and liquidity risks through two primary processes, described below. Business   planning process and performance management The Group’s forecasting and   planning cycle consists of three in-year forecasts, a budget and a long-range   plan. These generate income statement, cash flow and net debt projections for   assessment by Group management and the Board. Each forecast is compared with   prior forecasts and actual results so as to identify variances and understand   the drivers of the changes and their future impact so as to allow management   to take action where appropriate. Additional analysis is undertaken to review   and sense check the key assumptions underpinning the forecasts. a prepare the   financial statements on a going concern basis unless it is inappropriate to   presume that the Company and the Group will continue in business. The   Directors are responsible for keeping proper accounting records which   disclose with reasonable accuracy at any time the financial position of the   Company and of the Group and to enable them to ensure that the financial   statements comply with the Companies Act 2006 and for the consolidated   financial statements, Article 4 of the EU IAS Regulation. They are also   responsible for the system of internal control, for safeguarding the assets   of the Company and the Group and, hence, for taking reasonable steps for the   prevention and detection of fraud and other irregularities. The Directors are   responsible for the maintenance and integrity of the company’s website.   Legislation in the United Kingdom governing the preparation and dissemination   of financial statements may differ from legislation in other jurisdictions.   Directors’ responsibility statement Each of the Directors, whose names and   functions are listed on pages 52 and 53 confirm that, to the best of their   knowledge: a the consolidated financial statements, prepared in accordance   with IFRS as issued by the IASB and IFRS as adopted by the EU, give a true   and fair view of the assets, liabilities, financial position and profit of   the Group; a the parent company financial statements, prepared in accordance   with United Kingdom generally accepted accounting practice, give a true and   fair view of the assets, liabilities, financial position and profit of the   Company; and a the strategic report includes a fair review of the development   and performance of the business and the position of the Group together with a   description of the principal risks and uncertainties that it faces. 94   Vodafone Group Plc Annual Report on Form 20-F 2015 |
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|  | Cash flow and   liquidity reviews The business planning process provides outputs for detailed   cash flow and liquidity reviews, to ensure that the Group maintains adequate   liquidity throughout the forecast periods. The prime output is a two year   liquidity forecast which is prepared and updated on a daily basis which   highlights the extent of the Group’s liquidity based on controlled cash flows   and the headroom under the Group’s undrawn revolving credit facility (‘RCF’).   The key inputs into this forecast are: a free cash flow forecasts, with the   first three months inputs being sourced directly from the operating companies   (analysed on a daily basis), with information beyond this taken from the   latest forecast/budget cycle; 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 2015 based on the updated Internal Control – Integrated   Framework, issued by the Committee of Sponsoring Organizations of the   Treadway Commission (‘COSO’) in 2013. Based on management’s assessment,   management has concluded that internal control over financial reporting was   effective a bond and other debt maturities; and a expectations for   shareholder returns, spectrum auctions and M&A activity. The liquidity   forecast shows two scenarios assuming either maturing commercial paper is   refinanced or no new commercial paper issuance. The liquidity forecast is   reviewed by the Group Chief Financial Officer and included in each of his   reports to the Board. In addition, the Group continues to manage its foreign   exchange and interest rate risks within the framework of policies and   guidelines authorised and reviewed by the Board, with oversight provided by   the Treasury Risk Committee. Conclusion The Group has considerable financial   resources, and the Directors believe that the Group is well placed to manage   its business risks successfully. After making enquiries, the Directors have a   reasonable expectation that the Company and the Group have adequate resources   to continue in operational existence for the foreseeable future. Accordingly,   the Directors continue to adopt the going concern basis in preparing the   Annual Report and accounts. Disclosure controls and procedures The Directors,   the Chief Executive and the Chief Financial Officer have evaluated the   effectiveness of the disclosure controls and procedures, including those   defined in the United States Securities Exchange Act of 1934, Rule 13a–15(e),   and, based on that evaluation, have concluded that the disclosure controls   and procedures were effective at the end of the period covered by this   report. Management’s report on internal control over financial reporting As   required by section 404 of the Sarbanes-Oxley Act, management is responsible   for establishing and maintaining adequate internal control over financial   reporting for the Group. The Group’s internal control over financial   reporting includes policies and procedures that: a pertain to the maintenance   of records that, in reasonable detail, accurately and fairly reflect   transactions and dispositions of assets; a are designed to provide reasonable   assurance that transactions are recorded as necessary to permit the   preparation of financial statements in accordance with IFRS, as adopted by   the EU and IFRS as issued by the IASB, and that receipts and expenditures are   being made only in accordance with authorisation of management and the   Directors of the Company; and a provide reasonable assurance regarding   prevention or timely detection of unauthorised acquisition, use or   disposition of the Group’s assets that could have a material effect on the   financial statements. at 31 March 2015. The updated Internal Control –   Integrated Framework superseded the original framework from 15 December 2014.   Accordingly, the new framework has been implemented during the year ended 31   March 2015. The Group’s existing controls have been mapped to the five   components and 17 principles in the updated Internal Control – Integrated   Framework. All gaps were evaluated and, where required, additional controls   identified, or existing controls enhanced. The assessment excluded the   internal controls over financial reporting relating to Grupo Corporativo Ono,   S.A. (‘Ono’) because it became a subsidiary during the year, as described in   note 28 “Acquisitions and disposals”. Ono will be included in the Group’s   assessment at 31 March 2016. Key amounts consolidated for Ono at 31 March   2015 are total assets of £5,473 million, net assets of £2,410 million, £691   million of revenue and a loss of £313 million to the profit attributable to   the owners of the parent. During the period covered by this document, there   were no changes in the Group’s internal control over financial reporting that   have materially affected or are reasonably likely to materially affect the   effectiveness of the internal controls over financial reporting. The Group’s   internal control over financial reporting at 31 March 2015 has been audited   by PricewaterhouseCoopers LLP, an independent registered public accounting   firm who also audit the Group’s consolidated financial statements. Their   audit report on internal control over financial reporting is on page 98. By   Order of the Board /s/ Rosemary Martin Rosemary Martin Company Secretary 19   May 2015      95 |
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|  | Risk mitigation Mitigations for risks   faced by the Group include: 1. Malicious attack on the network/IT   infrastructure This risk is possible in all markets in which we operate and   has the potential for significant impact. Certain systems operate at a Group   level and as such, a single attack on one of these systems has the potential   to impact multiple markets simultaneously, further magnifying the impact.   This risk has been separated from non-malicious network failure to recognise   the greater cross-market impact a malicious attack could have on the   business. a We have a well-established global security community; with our   Group security function working closely with our local market security teams   a We work closely with a variety of security communities of interest which   include relevant government bodies, commercial groups, suppliers and   enterprise customers a We are continually assessing our security policies, standards   and procedures and adjusting them so they are commensurate to the threat   profile we face. These assessments are used to create a focused security   investment programme that ensures that the required security controls are in   place and are effective a Each year we run security programmes to identify   and deliver additional activities with the aim of further strengthening our   control environment. Our aim is to ensure that our critical infrastructure is   enhanced to reduce the likelihood of unauthorised access and to reduce the   impact of any successful attack a We manage the risk of malicious attacks on   our infrastructure using our global security operations centre that provides   24/7 proactive monitoring of our global infrastructure a We have multiple layers   of assurance in place. Our activities include regular technical assurance and   audit activities including vulnerability scanning and ethical hacking   programmes 2. Customer data misuse or leakage This risk is possible in all   markets in which we operate. The impacts of this risk have the potential to   be major in mature markets with robust data protection regulations covering   personal information, voice traffic and data. Furthermore, we generally hold   a greater volume of confidential personal information in our mature markets,   due to the higher proportion of customers paying their bills by automated   bank transfer or credit card. a We have a data privacy programme aimed at   ensuring we use data in our possession appropriately. The programme is based   on existing regulations and internationally recognised standards a We closely   monitor the data privacy regulatory environment in relevant markets and   implement changes to our processes and procedures as appropriate a Both the   hardware and software applications which hold or transmit confidential   personal and business voice and data traffic include appropriate security   features a Security related reviews are conducted according to our policies   and security standards, focused on the highest risk applications and processes   a Our data centres are managed to international information security   standards a Security governance and compliance is managed and monitored   through software tools that are deployed to all local markets a We have an   ongoing awareness communications campaign in place that includes providing   security and privacy awareness training to all Vodafone employees, prior to   granting access to customer data a We have an assurance programme in place   that incorporates both internal reviews and reviews of third parties that   hold data on our behalf a We are implementing data access management tools to   monitor any unauthorised access and leakage of our confidential data 3.   Adverse political pressure In all markets where we are present, political   decisions can be made that can have an adverse effect on our business, in   relation to a range of issues, from retail price regulation to access to   next-generation networks. Additionally, disputes in regards to the level of   tax payable and any related penalties could be significant, as reflected in   our ongoing dispute in India. a We monitor political developments in our   existing and potential markets closely, identifying risks in our current and   proposed commercial propositions a Regular reports are made to our Executive   Committee on current political risks. These risks are considered in our   business planning process a Authoritative and timely intervention is made at   both national and international level in respect of legislative, fiscal and   regulatory proposals which we feel are disproportionate and not in the   interests of the Group a We have regular dialogue with trade groups that   represent network operators and other industry bodies to understand   underlying political pressures a We maintain constructive but robust   engagement with the tax authorities and relevant government representatives,   as well as active engagement with a wide range of international companies and   business organisations with similar issues a Where appropriate we engage   advisors and legal counsel to obtain opinions on tax legislation and   principles 4. Convergence This risk is more likely in mature markets where   more competitors have the assets to offer converged services. a In key   European and some non-European markets we are providing fixed line   telecommunication services (voice and broadband) a In all markets we actively   look for opportunities to provide services beyond mobile through organic   investment, acquisition, partnerships, or joint ventures a As part of Project   Spring, we have increased investment in our next-generation fixed line   infrastructure a For all significant transactions we develop and implement a   structured integration plan, led by a senior business leader a Integration   plans ensure that cost synergies and revenue benefits are delivered and that the   acquired businesses are successfully integrated through the alignment of   policies, processes and systems a Timely and coordinated intervention with   regulatory and competition authorities to ensure that dominant infrastructure   access and content providers cannot discriminate or restrict competition 5.   EMF related health risks This is an unlikely risk; however, it would have a   major impact on services used by our customers in all our markets –   particularly in countries that have a very low tolerance for environmental   and health related risks. a We have a global health and safety policy that   includes standards for electromagnetic fields (‘EMF’) that are mandated in   all our operating companies. Compliance to this policy is monitored and   overseen by the Risk and Compliance Committee a We have a Group EMF Board   that manages potential risks through cross sector initiatives and which   oversees a coordinated global programme to respond to public concern, and   develop appropriate advocacy related to possible precautionary legislation 96   a We monitor scientific developments and engage with relevant bodies to   support the delivery and transparent communication of the scientific research   agenda set by the WHO Vodafone Group Plc Annual Report on Form 20-F 2015   Unaudited information |
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|  | 6. Major   Enterprise contracts This risk is most evident across our multi-national   corporate and public sector customers. Delivery challenges for any national   critical service would have a particularly adverse impact on our reputation   to provide enterprise services. a We have created consistent and coordinated   KPI reporting, which we believe will enhance our ability to identify readily   and act upon potential enterprise delivery challenges a Work is currently   being undertaken to simplify and improve our delivery capabilities for our   largest corporate customers a We carry out regular reviews with key   enterprise customers to identify areas for improvement a A single sales   governance process has been developed and will be implemented across Vodafone   Global Enterprise and the local markets during the 2016 financial year. This   process will interlock with a single governance board for design, deliver,   operate and billing teams to support the business in identifying and   mitigating relevant enterprise delivery risks a We have launched a   standardised design methodology with appropriate training. This will reduce   inefficiencies and delays during the delivery cycle, thereby decreasing the   likelihood of financial penalties and dissatisfied enterprise customers 7.   Unstable economic conditions This risk is evident across a number of our   markets and in particular within our southern European markets where it may   continue to have a significant impact. Furthermore, the potential for   Eurozone instability may lead to further economic instability and subsequent   reductions in corporate and consumer confidence and spending. Another   potential consequence of Eurozone instability would be a prolonged impact on   capital markets that could restrict our refinancing requirements. a We are   closely monitoring economic and currency situations in both our AMAP and   European markets. We have developed detailed business continuity plans to   allow us to respond effectively to a country economic crisis leading to a   banking system freeze and/or a range of Eurozone or EU exits a We have   minimised our exposure to Euro denominated monetary assets since the end of   2008 and continue to do so a Given that we have operations in both Northern   and Southern Europe, we have a natural offset position in terms of the   translation of Euro revenue into Sterling should the Eurozone break up (with   either Northern Europe or the Southern European countries leaving the Euro) a   We have credit facilities with 29 relationship banks that are committed for a   minimum of five years and which total £5.5bn. Such facilities could be used   in the event of a prolonged disruption to the capital markets 8. Disadvantaged   by existing and emerging technology players The threat from OTT competition   is relevant for all markets where alternative services are commonly available   (e.g. VoIP), and has the potential for major impact on service revenues.   Regarding supplier concentration, this risk is relevant across all our   markets, with there being a limited number of global suppliers from which we   are able to purchase operating systems, devices and our IT and network   infrastructure. a We have developed strategies which strengthen our   relationships with customers by accelerating the introduction of integrated   voice, messaging and data price plans to avoid customers reducing their out   of bundle usage through internet/Wi-Fi based substitution a The loss of voice   and messaging revenue is partially offset by the increase in data revenue a   We regularly review the performance of key suppliers, both operationally and   financially, across individual markets and from the Group perspective a We   are continually assessing and testing potential new suppliers a Driven by   Project Spring we have been able to further consolidate demand across our   core and partner markets to manage our cost base effectively 9. Superior   customer experience This risk is relevant to all our markets, and   particularly to our consumer business. Differentiating based on a superior   customer experience will involve a number of areas: Clear and transparent   communication with all our customers; Managing roaming charges and bill   shocks; Delivering clear, understandable tariffs; and Suitable complaint   handling; and Providing a leading online and app customer experience. a   Customer experience has been prioritised as a key component of our strategy.   The Chief of Staff, supported by a programme office, is leading a programme   to improve customer experience related activities across Vodafone a We have   detailed plans in place across the business to deliver a range of system and   capability improvements to support an enhanced customer experience a We track   and monitor our performance in delivering a superior customer experience   through a range of KPIs; the most critical being our NPS and Brand   Consideration metrics a We have restructured our incentivisation programme to   strengthen the importance of key customer experience related metrics 10. Network/IT   infrastructure failure This risk is possible in all markets in which we   operate and has the potential for significant impact. For the majority of   such network and IT infrastructure failures, the associated impacts would be   confined to a single market. There are however some exceptions where data   centres and critical network sites serve multiple markets. a Specific back-up   and resilience policy and requirements are built into our networks and IT   infrastructure. Conformance with these requirements is monitored continually   a We monitor our ability to replace strategic equipment quickly in the event   of end-of-life or failure, and for high risk components, we maintain   dedicated back-up equipment ready for use a Network and IT contingency plans   are linked with our business continuity and disaster recovery plans which are   in place to cover the residual risks that cannot be mitigated a A crisis   management team and escalation processes are in place both nationally and   internationally. Crisis simulations are conducted annually Strengthening our   risk management approach Vodafone is in the process of making a number of   changes aimed at strengthening its Enterprise risk management. These include:   a transferring responsibility for risk from the Group Audit Director to the   Group Compliance Director (now Group Risk and Compliance Director); a   creating a new Head of Risk role to report to the Group Risk and Compliance   Director; a amending the terms of reference of the former Policy and   Compliance Committee to make a ensuring our global risk community is better   connected and therefore better placed to share best practices; and a   developing an integrated assurance plan to help identify any gaps and   overlaps in the management of our principal risks across the “three lines of   defence” in accordance with best practice risk management. it a Risk and   Compliance Committee; a improving accountability for, and tracking of,   principal risks across functions and local markets; 97 |
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|  | Report of independent registered public   accounting firm To the Board of directors and shareholders of Vodafone Group   Plc In our opinion, the accompanying consolidated statement of financial   position and the related consolidated income statement, consolidated   statement of comprehensive income, consolidated statement of changes in   equity and consolidated statement of cash flows present fairly, in all   material respects, the financial position of Vodafone Group Plc and its   subsidiaries at 31 March 2015, and the results of their operations and their   cash flows for the period ended 31 March 2015 in conformity with   International Financial Reporting Standards as issued by the International   Accounting Standards Board. Also in our opinion, the Company maintained, in   all material respects, effective internal control over financial reporting as   of 31 March 2015, based on criteria established in Internal Control –   Integrated Framework 2013 issued by the Committee of Sponsoring Organizations   of the Treadway Commission (‘COSO’). The Company’s management is responsible   for these financial statements, for maintaining effective internal control   over financial reporting and for its assessment of the effectiveness of   internal control over financial reporting, included in management’s report on   internal control over financial reporting. Our responsibility is to express   opinions on these financial statements and on the Company’s internal control   over financial reporting based on our integrated 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 audits to obtain reasonable assurance about whether the financial   statements are free of material misstatement and whether effective internal   control over financial reporting was maintained in all material respects. Our   audit of the financial statements included examining, on a test basis,   evidence supporting the amounts and disclosures in the financial statements,   assessing the accounting principles used and significant estimates made by   management, and evaluating the overall financial statement presentation. Our   audit of internal control over financial reporting included obtaining an   understanding of internal control over financial reporting, assessing the   risk that a material weakness exists, and testing and evaluating the design   and operating effectiveness of internal control based on the assessed risk.   Our audits also included performing such other procedures as we considered   necessary in the circumstances. We believe that our audits provide a   reasonable basis for our opinion. A company’s internal control over financial   reporting is a process designed to provide reasonable assurance regarding the   reliability of financial reporting and the preparation of financial   statements for external purposes in accordance with generally accepted   accounting principles. A company’s internal control over financial reporting   includes those policies and procedures that (i) pertain to the maintenance of   records that, in reasonable detail, accurately and fairly reflect the   transactions and dispositions of the assets of the company; (ii) 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 authorizations of management and Directors   of the company; and (iii) provide reasonable assurance regarding prevention   or timely detection of unauthorized acquisition, use, or disposition of the   company’s assets that could have a material effect on the financial   statements. Because of its inherent limitations, internal control over   financial reporting may not prevent or detect misstatements. Also,   projections of any evaluation of effectiveness to future periods are subject   to the risk that controls may become inadequate because of changes in   conditions, or that the degree of compliance with the policies or procedures   may deteriorate. As described in “Management’s report on internal control   over financial reporting”, management has excluded Grupo Corporativo Ono,   S.A. (‘Ono’) from its assessment of internal control over financial reporting   as of 31 March 2015 as the combination with Ono occurred during 2015. We have   also excluded Ono from our audit of internal control over financial   reporting. As of 31 March 2015, the Company owned 100% of Ono’s outstanding   shares; Ono’s total segment assets and total revenues represent 4.5% and   1.6%, respectively, of the related consolidated total assets and consolidated   revenues as of and for the year ended 31 March 2015. We also have audited the   adjustments to the 2014 and 2013 financial statements to retrospectively   reflect the change in presentation of the segment information, as described   in note 2. Our audit procedures that were applied to the restated disclosures   for comparative 2014 and 2013 reportable segments included: (i) agreeing the   adjusted amounts of each segment to the underlying records obtained from   management, and (ii) determining the mathematical accuracy of the   reconciliations of segment amounts to the consolidated financial statements.   In our opinion, such adjustments are appropriate and have been properly   applied. We were not engaged to audit, review, or apply any procedures to the   2014 and 2013 financial statements of the Company other than with respect to   the adjustments and, accordingly, we do not express an opinion or any other   form of assurance on the 2014 and 2013 financial statements taken as a whole.   /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP London, United   Kingdom 19 May 2015 98 |
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|  |  Report of Independent Registered Public   Accounting Firm to the members of Vodafone Group Plc We have audited, before   the effects of the retrospective adjustments to the segment disclosures   discussed in note 2 to the consolidated financial statements, the   accompanying consolidated statements of financial position of Vodafone Group   Plc and subsidiaries (the ‘Group’) as of 31 March 2014, and the related   consolidated income statements, consolidated statements of comprehensive   income, consolidated statements of changes in equity and consolidated   statements of cash flows for each of the two years in the period ended 31   March 2014 (the 2014 and 2013 consolidated financial statements before the   effects of the retrospective adjustments discussed in note 2 to the   consolidated financial statements are not presented herein). These financial   statements are the responsibility of the Group’s management. Our   responsibility is to express an opinion on the financial statements based on   our 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 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 audit provides a reasonable basis for our opinion. In our   opinion, such 2014 and 2013 consolidated financial statements, before the   effects of the retrospective adjustments to the segment disclosures discussed   in note 2 to the consolidated financial statements, present fairly, in all   material respects, the financial position of the Group as of 31 March 2014,   and the results of its operations and cash flows for each of the two years in   the period ended 31 March 2014, in conformity with International Financial   Reporting Standards (‘IFRS’) as issued by the International Accounting   Standards Board. We were not engaged to audit, review, or apply any   procedures to the retrospective adjustments to the segment disclosures   discussed in note 2 to the consolidated financial statements and,   accordingly, we do not express an opinion or any other form of assurance   about whether such retrospective adjustments are appropriate and have been   properly applied. Those retrospective adjustments were audited by other   auditors. /s/ Deloitte LLP Deloitte LLP London, United Kingdom 20 May 2014 99 |
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|  | Consolidated income statement for the   years ended 31 March for the years ended 31 March 105 Vodafone Group Plc   Annual Report on Form 20-F 2015 Overview Strategy review Performance   Governance Financials Additional information 2015 2014 2013 Note £m £m £m   Note: 1 Profit attributable to non-controlling interests solely derives from   continuing operations. Consolidated statement of comprehensive income 2015 2014   2013 Note £m £m £m Further details on items in the consolidated statement of   comprehensive income can be found in the consolidated statement of changes in   equity on page 107. Profit for the financial year 5,917 59,420657 Other   comprehensive income: Items that may be reclassified to profit or loss in   subsequent years: Gains/(losses) on revaluation of available-for-sale   investments, net of tax Foreign exchange translation differences, net of tax   Foreign exchange (gains)/losses transferred to the income statement Fair   value gains transferred to the income statement Other, net of tax 4 (119)(73)   (6,516) (4,104)362 (1) 1,4931 (9) (25) (12) 7 –(4) Total items that may be   reclassified to profit or loss in subsequent years Items that will not be   reclassified to profit or loss in subsequent years: Net actuarial   (losses)/gains on defined benefit pension schemes, net of tax (6,515)   (2,755)274 6, 26 (212) 37(182) Total items that will not be reclassified to   profit or loss in subsequent years Other comprehensive (expense)/income (212)   37(182) (6,727) (2,718)92 Total comprehensive (expense)/income for the year   (810) 56,702749 Attributable to: – Owners of the parent – Non-controlling   interests (1,076) 56,711604 266 (9)145 (810) 56,702749 Revenue Cost of sales   2 42,227 38,34638,041 (30,882) (27,942)(26,567) Gross profit Selling and   distribution expenses Administrative expenses Share of results of equity   accounted associates and joint ventures Impairment losses Other income and   expense 11,345 10,40411,474 (3,455) (3,033)(2,860) (5,746) (4,245)(4,159)   (63) 278575 4 – (6,600)(7,700) (114) (717)468 Operating profit/(loss)   Non-operating income and expense Investment income Financing costs 3 1,967   (3,913)(2,202) (19) (149)10 5 883 346305 5 (1,736) (1,554)(1,596)   Profit/(loss) before taxation Income tax credit/(expense) 1,095   (5,270)(3,483) 6 4,765 16,582(476) Profit/(loss) for the financial year from   continuing operations Profit for the financial year from discontinued   operations 5,860 11,312(3,959) 7 57 48,1084,616 Profit for the financial year   5,917 59,420657 Attributable to: – Owners of the parent – Non-controlling   interests1 5,761 59,254413 156 166244 Profit for the financial year 5,917   59,420657 Earnings/(loss) per share From continuing operations: – Basic –   Diluted 21.53p 42.10p(15.66p) 21.42p 41.77p(15.66p) Total Group: – Basic –   Diluted 8 21.75p 223.84p1.54p 8 21.63p 222.07p1.54p |
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|  | Consolidated   statement of financial position at 31 March 31 March 2015 31 March 2014 Note   £m £m Non-current assets Goodwill Other intangible assets Property, plant and   equipment Investments in associates and joint ventures Other investments   Deferred tax assets Post employment benefits Trade and other receivables  10 22,537 23,315 10 20,953 23,373 11 26,603   22,851 12 (3) 114 13 3,757 3,553 6 23,845 20,607 26 169 35 15 4,865 3,270   102,726 97,118 Current assets Inventory Taxation recoverable Trade and other   receivables Other investments Cash and cash equivalents Assets held for sale  14 482 441 575 808 15 8,053 8,886 13 3,855   4,419 20 6,882 10,134 – 34 19,847 24,722 Total assets 122,573 121,840 Equity   Called up share capital Additional paid-in capital Treasury shares   Accumulated losses Accumulated other comprehensive income  18 3,792 3,792 117,054 116,973 (7,045)   (7,187) (49,471) (51,428) 1,815 8,652 Total attributable to owners of the   parent 66,145 70,802 Non-controlling interests Put options over   non-controlling interests 1,595 1,733 (7) (754) Total non-controlling   interests 1,588 979 Total equity 67,733 71,781 Non-current liabilities   Long-term borrowings Taxation liabilities Deferred tax liabilities Post   employment benefits Provisions Trade and other payables  21 22,435 21,454 – 50 6 595 747 26 567 584   17 1,082 846 16 1,264 1,339 25,943 25,020 Current liabilities Short-term   borrowings Taxation liabilities Provisions Trade and other payables  21 12,623 7,747 599 873 17 767 963 16 14,908   15,456 28,897 25,039 Total equity and liabilities 122,573 121,840 The   consolidated financial statements on pages 105 to 174 were approved by the   Board of Directors and authorised for issue on 19 May 2015 and were signed on   its behalf by: /s/ Vittorio Colao /s/ Nick Read Vittorio Colao Nick Read   Chief Executive Chief Financial Officer 106 |
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|  | Consolidated   statement of changes in equity for the years ended 31 March Other   comprehensive income Additional share-Non-107 Vodafone Group Plc Annual   Report on Form 20-F 2015 Overview Strategy review Performance Governance   Financials Additional information Equity Share paid-in Treasury Retained Currency   Pensions Investment Revaluation holders’ controlling capital1 capital2 shares   losses reserve3 reserve reserve4 surplus5 Other6 funds interests Total £m £m £m   £m £m £m £m £m £m £m £m £m 1 April 20123,866 154,123(7,841) (84,217)   10,138(466)2201,04072 76,9351,267 78,202 Issue or reissue of shares   –2287(237)–––––52–52 Purchase of own shares ––(1,475)7––––––(1,475)–(1,475)   Share-based payments –1528–––––––152–152 Transactions with non-controlling   interests in subsidiaries ––– (7) –––– –(7) (17) (24) Comprehensive   income–––413462(182)(85) –(4) 604145749 Dividends–––(4,801)–––––(4,801)(384)   (5,185) Other –2–15–––––17–17 31 March 20133,866 154,279 (9,029) (88,834)   10,600(648)1351,04068 71,4771,011 72,488 Issue or reissue of shares   –2194(173)–––––23–23 Redemption or cancellation of shares(74)   741,648(1,648)–––––––– Capital reduction and creation of B and C shares16, 613   (37,470)–20,857–––––––– Cancellation of B shares(16,613)––1,115––––– (15,498)–   (15,498) Share-based payments –888 –––––––88–88 Transactions with   non-controlling interests in subsidiaries ––– (1,451)– ––– –(1,451)260(1,191)   Comprehensive income–––59,254 (2,436)37(119)–(25) 56,711 (9) 56,702   Dividends––– (40,566)––––– (40,566)(284) (40,850) Other –––18–––––18119 31   March 20143,792 116,973 (7,187) (51,428) 8,164(611)161,04043 70,802979 71,781   Notes: 1 See note 18 “Called up share capital”. 2 Includes share premium,   capital redemption reserve and merger reserve. The merger reserve was derived   from acquisitions made prior to 31 March 2004 and subsequently allocated to   additional paid-in capital on adoption of IFRS. 3 The currency reserve is   used to record cumulative translation differences on the assets and   liabilities of foreign operations. The cumulative translation differences are   recycled to the income statement on disposal of the foreign operation. 4 The   investment reserve is used to record the cumulative fair value gains and   losses on available-for-sale financial assets. The cumulative gains and   losses are recycled to the income statement on disposal of the assets. 5 The   revaluation surplus derives from acquisitions of subsidiaries made before the   Group’s adoption of IFRS 3 (Revised) on 1 April 2010 and comprises the   amounts arising from recognising the Group’s pre-existing equity interest in   the acquired subsidiary at fair value. 6 Includes the impact of the Group’s   cash flow hedges with £607 million net gain deferred to other comprehensive   income during the year (2014: £129 million net loss) and £649 million net   gain (2014: £171 million net loss) recycled to the income statement. 7 Amount   for 2013 includes a commitment for the purchase of own shares of £1,026   million. 8 Includes £7 million tax credit (2014: £12 million charge; 2013: £18   million credit). Issue or reissue of shares –2142(126) –––––18–18 Share-based   payments –958–– –––––95–95 Transactions with non-controlling interests in   subsidiaries ––(756) –––––(756)605(151) Comprehensive income –––5,761   (6,627)(212)(5) –7(1,076)266(810) Profit –––5,761 –––––5,7611565,917 OCI –   before tax –––– (6,842) (269) 4–12(7,095) 113 (6,982) OCI – taxes ––––   21657––(5) 268(3) 265 Transfer to the income statement –––– (1) –(9)––(10)   –(10) Dividends –––(2,930) ––––(2,930)(262) (3,192) Other –(16) –8 –––––(8)   –(8) 31 March 2015 3,792 117,054 (7,045) (49,471) 1,537(823)111,04050   66,1451,588 67,733 Profit – – – 59,254 – – – – – 59,254 166 OCI – before tax   – – – – (3,932) 57 (119) – 3 (3,991) (172) OCI – taxes – – – – 3 (20) – – (3)   (20) (3) Transfer to the income statement – – – – 1,493 – – – (25) 1,468 –   59,420 (4,163) (23) 1,468 Profit–––413–––––413244657 OCI – before   tax––––482(238)(73) –(6) 165(95) 70 OCI – taxes––––(21) 56––237(4) 33   Transfer to the income statement ––––1–(12)––(11) –(11) |
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|  | Consolidated   statement of cash flows for the years ended 31 March 108 Vodafone Group Plc   Annual Report on Form 20-F 2015 201520142013 Note £m £m £m During the year   ended 31 March 2014 there were a number of material non-cash investing and   financing activities that arose in relation to the disposal of our interest   in Verizon Wireless, the acquisition of the remaining 23% of Vodafone Italy   and the return of value to shareholders. Full details of these material   non-cash transactions are included in note 28 to the consolidated financial   statements. Net cash flow from operating activities 19 9,715 6,2278,824 Cash   flows from investing activities Purchase of interests in subsidiaries, net of   cash acquired Purchase of interests in associates and joint ventures Purchase   of intangible assets Purchase of property, plant and equipment Purchase of   investments Disposal of interests in subsidiaries, net of cash disposed   Disposal of interests in associates and joint ventures Disposal of property,   plant and equipment Disposal of investments Dividends received from   associates and joint ventures Dividends received from investments Interest   received 28 (3,093) (4,279)(1,432) (85) (11) (6) 10 (2,315) (2,327)(3,758) 11   (6,568) (4,396)(3,958) 13 (207) (214)(4,249) – –27 12 27 34,919– 11 178 79105   13 899 1,4831,523 583 4,8975,539 – 102 254 582461 Net cash flow from   investing activities (10,327) 30,743(5,746) Cash flows from financing   activities Issue of ordinary share capital and reissue of treasury shares Net   movement in short-term borrowings Proceeds from issue of long-term borrowings   Repayment of borrowings Purchase of treasury shares B and C share payments   Equity dividends paid Dividends paid to non-controlling shareholders in   subsidiaries Other transactions with non-controlling shareholders in   subsidiaries Other movements in loans with associates and joint ventures   Interest paid 18 18 3869 4,722 (2,887)1,581 2,432 1,0605,422 (4,070) (9,788)   (1,720) – (1,033)(1,568) – (14,291)– 9 (2,927) (5,076)(4,806) (247)   (264)(379) (718) (111) 15 (52) –168 (1,576) (1,897)(1,525) Net cash flow used   in financing activities (2,418) (34,249)(2,743) Net cash flow Cash and cash   equivalents at beginning of the financial year Exchange (loss)/gain on cash   and cash equivalents (3,030) 2,721335 20 10,112 7,5067,001 (221) (115)170   Cash and cash equivalents at end of the financial year20 6,861 10,1127,506 |
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|  | Notes to the   consolidated financial statements 109 Vodafone Group Plc Annual Report on   Form 20-F 2015 Overview Strategy review Performance Governance Financials   Additional information 1. Basis of preparation This section describes the   critical accounting judgements that management has identified as having a   potentially material impact on the Group’s consolidated financial statements   and sets out our significant accounting policies that relate to the financial   statements as a whole. Where an accounting policy is generally applicable to   a specific note to the accounts, the policy is described within that note. We   have also detailed below the new accounting pronouncements that we will adopt   in future years and our current view of the impact they will have on our   financial reporting. The consolidated financial statements are prepared in   accordance with IFRS as issued by the International Accounting Standards   Board (‘IASB’) and are also prepared in accordance with IFRS adopted by the   European Union (‘EU’), the Companies Act 2006 and Article 4 of the EU IAS   Regulations. The consolidated financial statements are prepared on a going   concern basis. The preparation of financial statements in conformity with   IFRS requires management to make estimates and assumptions that affect the   reported amounts of assets and liabilities and disclosure of contingent   assets and liabilities at the date of the financial statements and the   reported amounts of revenue and expenses during the reporting period. A   discussion on the Group’s critical accounting judgements and key sources of   estimation uncertainty is detailed below. Actual results could differ from   those estimates. The estimates and underlying assumptions are reviewed on an   ongoing basis. Revisions to accounting estimates are recognised in the period   in which the estimate is revised if the revision affects only that period;   they are recognised in the period of the revision and future periods if the revision   affects both current and future periods. Amounts in the consolidated   financial statements are stated in pounds sterling. Vodafone Group Plc is   incorporated and domiciled in England and Wales (registration number   1833679). IFRS requires the Directors to adopt accounting policies that are   the most appropriate to the Group’s circumstances. In determining and   applying accounting policies, Directors and management are required to make   judgements in respect of items where the choice of specific policy, accounting   estimate or assumption to be followed could materially affect the Group’s   reported financial position, results or cash flows; it may later be   determined that a different choice may have been more appropriate. Management   has identified accounting estimates and assumptions relating to revenue   recognition, taxation, business combinations and goodwill, joint   arrangements, finite lived intangible assets, property, plant and equipment,   post employment benefits, provisions and contingent liabilities and impairment   that it considers to be critical due to their impact on the Group’s financial   statements. These critical accounting judgements, assumptions and related   disclosures have been discussed with the Company’s Audit and Risk Committee   (see page 64). Critical accounting judgements and key sources of estimation   uncertainty Revenue recognition Arrangements with multiple deliverables In   revenue arrangements where more than one good or service is provided to the   customer, customer consideration is allocated between the goods and services   using relative fair value principles. The fair values determined for   deliverables may impact the timing of the recognition of revenue. Determining   the fair value of each deliverable can require complex estimates. The Group generally   determines the fair value of individual elements based on prices at which the   deliverable is regularly sold on a stand-alone basis after considering volume   discounts where appropriate. Gross versus net presentation When the Group   sells goods or services as a principal, income and payments to suppliers are   reported on a gross basis in revenue and operating costs. If the Group sells   goods or services as an agent, revenue and payments to suppliers are recorded   in revenue on a net basis, representing the margin earned. Whether the Group   is considered to be the principal or an agent in the transaction depends on   analysis by management of both the legal form and substance of the agreement   between the Group and its business partners; such judgements impact the   amount of reported revenue and operating expenses but do not impact reported   assets, liabilities or cash flows. Taxation The Group’s tax charge on   ordinary activities is the sum of the total current and deferred tax charges.   The calculation of the Group’s total tax charge involves estimation and   judgement in respect of certain matters where the tax impact is uncertain   until a conclusion is reached with the relevant tax authority or through a   legal process. The final resolution of some of these items may give rise to   material profits, losses and/or cash flows. Resolving tax issues can take   many years as it is not always within the control of the Group and often   depends on the efficiency of legal processes in the relevant tax   jurisdiction. Recognition of deferred tax assets Significant items on which   the Group has exercised accounting estimation and judgement include the   recognition of deferred tax assets in respect of losses in Luxembourg,   Germany, Spain, India and Turkey and capital allowances in the United   Kingdom. The recognition of deferred tax assets, particularly in respect of   tax losses, is based upon whether it is probable that there will be   sufficient and suitable taxable profits in the relevant legal entity or tax   group against which to utilise the assets in the future. Judgement is   required when determining probable future taxable profits. The Group assesses   the availability of future taxable profits using the same undiscounted five   year forecasts for the Group’s operations as are used in the Group’s value in   use calculations (see “Impairment reviews” below). Where tax losses are   forecast to be recovered beyond the five year period, the availability of   taxable profits is assessed using the cash flows and long-term growth rates   used for the value in use calculations. |
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|  | Notes to the   consolidated financial statements (continued) 1. Basis of preparation   (continued) The cash flows inherent in these forecasts include the   unsystematic risks of operating in the telecommunications business including   the potential impacts of changes in the market structure, trends in customer   pricing, the costs associated with the acquisition and retention of   customers, future technological evolutions and potential regulatory changes,   such as our ability to acquire and/or renew spectrum licences. Changes in the   assumptions which underpin the Group’s forecasts could have an impact on the   amount of future taxable profits and could have a significant impact on the   period over which the deferred tax asset would be recovered. The Group only   considers substantively enacted tax laws when assessing the amount and   availability of tax losses to offset against the future taxable profits. See   note 6 “Taxation” to the consolidated financial statements. Business   combinations and goodwill When the Group completes a business combination,   the fair values of the identifiable assets and liabilities acquired,   including intangible assets, are recognised. The determination of the fair   values of acquired assets and liabilities is based, to a considerable extent,   on management’s judgement. If the purchase consideration exceeds the fair   value of the net assets acquired then the incremental amount paid is   recognised as goodwill. If the purchase price consideration is lower than the   fair value of the assets acquired then the difference is recorded as a gain   in the income statement. Allocation of the purchase price between finite   lived assets (discussed below) and indefinite lived assets such as goodwill   affects the subsequent results of the Group as finite lived intangible assets   are amortised, whereas indefinite lived intangible assets, including   goodwill, are not amortised. On transition to IFRS the Group elected not to   apply IFRS 3 “Business combinations” retrospectively as the difficulty in   applying these requirements to business combinations completed by the Group   between incorporation and 1 April 2004 exceeded any potential benefits.   Goodwill recorded before the date of transition to IFRS amounted to £78,753   million. If the Group had elected to apply IFRS 3 retrospectively it may have   led to an increase or decrease in goodwill, licences, customer bases, brands   and related deferred tax liabilities recognised on acquisition. See note 28   “Acquisitions and disposals” to the consolidated financial statements for   further details. Joint arrangements The Group participates in a number of   joint arrangements where control of the arrangement is shared with one or   more other parties. A joint arrangement is classified as a joint operation or   as a joint venture, depending on management’s assessment of the legal form   and substance of the arrangement. The classification can have a material   impact on the consolidated financial statements. The Group’s share of assets,   liabilities, revenue, expenses and cash flows of joint operations are included   in the consolidated financial statements on a line-by-line basis, whereas the   Group’s investment and share of results of joint ventures are shown within   single line items in the consolidated statement of financial position and   consolidated income statement respectively. See note 12 “Investments in   associates and joint arrangements” to the consolidated financial statements.   Finite lived intangible assets Other intangible assets include amounts spent   by the Group acquiring licences and spectrum, customer bases and brands and   the costs of purchasing and developing computer software. Where intangible   assets are acquired through business combinations and no active market for   the assets exists, the fair value of these assets is determined by   discounting estimated future net cash flows generated by the asset. Estimates   relating to the future cash flows and discount rates used may have a material   effect on the reported amounts of finite lived intangible assets. Estimation   of useful life The useful life over which intangible assets are amortised   depends on management’s estimate of the period over which economic benefit   will be derived from the asset. Reducing the useful life will increase the   amortisation charge in the consolidated income statement. Useful lives are periodically   reviewed to ensure that they remain appropriate. The basis for determining   the useful life for the most significant categories of intangible assets is   discussed below. Licence and spectrum fees The estimated useful life is   generally the term of the licence unless there is a presumption of renewal at   negligible cost; this is adjusted if necessary, for example taking into   account the impact of any expected changes in technology. Customer bases The   estimated useful life principally reflects management’s view of the average   economic life of the customer base and is assessed by reference to customer   churn rates. An increase in churn rates may lead to a reduction in the   estimated useful life and an increase in the amortisation charge. Capitalised   software For computer software, the useful life is based on management’s   view, considering historical experience with similar products as well as   anticipation of future events which may impact their life such as changes in   technology. The useful life will not exceed the duration of a licence.   Property, plant and equipment Property, plant and equipment represents 21.7%   (2014: 18.8%) of the Group’s total assets; estimates and assumptions made may   have a material impact on their carrying value and related depreciation   charge. See note 11 “Property, plant and equipment” to the consolidated   financial statements for further details. Estimation of useful life The   depreciation charge for an asset is derived using estimates of its expected   useful life and expected residual value, which are reviewed annually.   Increasing an asset’s expected life or residual value would result in a   reduced depreciation charge in the consolidated income statement. Management   determines the useful lives and residual values for assets when they are   acquired, based on experience with similar assets and taking into account   other relevant factors such as any expected changes in technology. The useful   life of network infrastructure is assumed not to exceed the duration of   related operating licences unless there is a reasonable expectation of   renewal or an alternative future use for the asset. 110 Vodafone Group Plc   Annual Report on Form 20-F 2015 |
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|  | Post employment   benefits Management judgement is exercised when determining the Group’s   liabilities and expenses arising for defined benefit pension schemes.   Management is required to make assumptions regarding future rates of   inflation, salary increases, discount rates and longevity of members, each of   which may have a material impact on the defined benefit obligations that are   recorded. Further details, including a sensitivity analysis, are included in   note 26 “Post employment benefits” to the consolidated financial statements.   Provisions and contingent liabilities The Group exercises judgement in   measuring and recognising provisions and the exposures to contingent   liabilities related to pending litigation or other outstanding claims subject   to negotiated settlement, mediation, arbitration or government regulation, as   well as other contingent liabilities (see note 30 “Contingent liabilities” to   the consolidated financial statements). Judgement is necessary to assess the   likelihood that a pending claim will succeed, or a liability will arise, and   to quantify the possible range of any financial settlement. The inherent   uncertainty of such matters means that actual losses may materially differ   from estimates. Impairment reviews IFRS requires management to perform   impairment tests annually for indefinite lived assets and, for finite lived   assets, if events or changes in circumstances indicate that their carrying   amounts may not be recoverable. Impairment testing requires management to   judge whether the carrying value of assets can be supported by the net   present value of future cash flows that they generate. Calculating the net   present value of the future cash flows requires assumptions to be made in   respect of highly uncertain matters including management’s expectations of: a   growth in adjusted EBITDA, calculated as adjusted operating profit before   depreciation and amortisation; a timing and amount of future capital   expenditure; a long-term growth rates; and a appropriate discount rates to   reflect the risks involved. Management prepares formal five year forecasts   for the Group’s operations, which are used to estimate their value in use. In   certain developing markets ten year forecasts are used if it is considered   that the fifth year of a forecast is not indicative of expected long-term   future performance as operations may not have reached maturity. For   operations where five year forecasts are used for the Group’s value in use   calculations, a long-term growth rate into perpetuity has been determined as   the lower of: a the nominal GDP growth rates for the country of operation;   and a the long-term compound annual growth rate in adjusted EBITDA in years   six to ten estimated by management. For operations where ten year forecasts   are used for the Group’s value in use calculations, a long-term growth rate   into perpetuity has been determined as the lower of: a the nominal GDP growth   rates for the country of operation; and a the compound annual growth rate in   adjusted EBITDA in years nine to ten of the management plan. Changing the   assumptions selected by management, in particular the discount rate and   growth rate assumptions used in the cash flow projections, could   significantly affect the Group’s impairment evaluation and hence reported   assets and profits or losses. Further details, including a sensitivity   analysis, are included in note 4 “Impairment losses” to the consolidated   financial statements. Significant accounting policies applied in the current   reporting period that relate to the financial statements as a whole Accounting   convention The consolidated financial statements are prepared on a historical   cost basis except for certain financial and equity instruments that have been   measured at fair value. Basis of consolidation The consolidated financial   statements incorporate the financial statements of the Company, subsidiaries   controlled by the Company (see note 32 “Principal subsidiaries” to the   consolidated financial statements) and joint operations that are subject to   joint control (see note 12 “Investments in associates and joint arrangements”   to the consolidated financial statements). Foreign currencies The   consolidated financial statements are presented in sterling, which is the   parent company’s functional currency and the presentation currency of the   Group. Each entity in the Group determines its own functional currency and   items included in the financial statements of each entity are measured using   that functional currency. Transactions in foreign currencies are initially   recorded at the functional currency rate prevailing at the date of the   transaction. Monetary assets and liabilities denominated in foreign   currencies are retranslated into the respective functional currency of the   entity at the rates prevailing on the reporting period date. Non-monetary   items carried at fair value that are denominated in foreign currencies are   retranslated at the rates prevailing on the initial transaction dates.   Non-monetary items measured in terms of historical cost in a foreign currency   are not retranslated. Changes in the fair value of monetary securities   denominated in foreign currency classified as available-for-sale are analysed   between translation differences and other changes in the carrying amount of   the security. Translation differences are recognised in the income statement and   other changes in carrying amount are recognised in equity. 111 Vodafone Group   Plc Annual Report on Form 20-F 2015 Overview Strategy review Performance   Governance Financials Additional information |
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|  | Notes to the   consolidated financial statements (continued) 1. Basis of preparation   (continued) Translation differences on non-monetary financial assets, such as   investments in equity securities classified as available-for-sale, are   reported as part of the fair value gain or loss and are included in equity.   For the purpose of presenting consolidated financial statements, the assets   and liabilities of entities with a functional currency other than sterling   are expressed in sterling using exchange rates prevailing at the reporting   period date. Income and expense items and cash flows are translated at the   average exchange rates for the period and exchange differences arising are   recognised directly in equity. On disposal of a foreign entity, the   cumulative amount previously recognised in equity relating to that particular   foreign operation is recognised in profit or loss. Goodwill and fair value   adjustments arising on the acquisition of a foreign operation are treated as   assets and liabilities of the foreign operation and translated accordingly.   In respect of all foreign operations, any exchange differences that have   arisen before 1 April 2004, the date of transition to IFRS, are deemed to be   nil and will be excluded from the determination of any subsequent profit or   loss on disposal. The net foreign exchange gain recognised in the   consolidated income statement for the year ended 31 March 2015 is £273   million (31 March 2014: £1,688 million loss; 2013: £117 million loss). The   net gains and net losses are recorded within operating profit (2015: £8   million charge; 2014: £16 million charge; 2013: £21 million charge), other   income and expense and non-operating income and expense (2015: £1 million   credit; 2014: £1,493 million charge; 2013: £1 million charge), investment and   financing income (2015: £276 million credit; 2014: £180 million charge; 2013:   £91 million charge) and income tax expense (2015: £4 million credit; 2014: £1   million credit; 2013: £4 million charge). The foreign exchange gains and   losses included within other income and expense and non-operating income and   expense arise on the disposal of interests in joint ventures, associates and   investments from the recycling of foreign exchange gains previously recorded   in the consolidated statement of comprehensive income. New accounting   pronouncements adopted on 1 April 2014 On 1 April 2014 the Group adopted the   following new accounting policies to comply with amendments to IFRS. The   accounting pronouncements, none of which are considered by the Group as   significant on adoption, are: a Amendments to IAS 32 “Offsetting financial   assets and financial liabilities”; a Amendments to IAS 39 “Novation of   derivatives and continuation of hedge accounting”; a “Improvements to IFRS   2010–2012 cycle”. All the amendments were early adopted by the Group except   an amendment to IFRS 8 “Operating Segments”, which will be adopted on 1 April   2015; and a IFRIC 21 “Levies”. New accounting pronouncements to be adopted on   1 April 2015 The following pronouncements which are potentially relevant to   the Group have been issued by the IASB are effective for annual periods   beginning on or after 1 July 2014 and have been endorsed for use in the EU: a   Amendments to IAS 19 “Defined Benefit Plans: Employee Contributions”; a   “Improvements to IFRS 2010–2012 cycle” amendment to IFRS 8 “Operating   Segments”; and a “Improvements to IFRS 2011–2013 cycle”. The Group’s   financial reporting will be presented in accordance with the new standards   above, which are not expected to have a material impact on the consolidated   results, financial position or cash flows of the Group, from 1 April 2015.   New accounting pronouncements to be adopted on or after 1 April 2016 On 1   April 2016 the Group will adopt “Accounting for Acquisitions of Interests in   Joint Operations, Amendments to IFRS 11”, “Clarification of Acceptable   Methods of Depreciation and Amortisation, Amendments to IAS 16 and IAS 38”,   “Sale or Contribution of Assets between an Investor and its Associate or Joint   Venture, Amendments to IAS 10 and IAS 28”, “Improvements to IFRS 2012–2014   Cycle” and “Disclosure Initiative, Amendments to IAS 1” which are effective   for accounting periods on or after 1 January 2016 and which have not yet been   endorsed by the EU. The Group is currently confirming the impacts of the   above new pronouncements on its results, financial position and cash flows,   which are not expected to be material. 112 Vodafone Group Plc Annual Report   on Form 20-F 2015 |
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|  | IFRS 15   “Revenue from Contracts with Customers” was issued in May 2015; although it   is effective for accounting periods beginning on or before 1 January 2017,   the IASB has proposed to defer the mandatory adoption date by one year. IFRS   15 has not yet been adopted by the EU. IFRS 15 will have a material impact on   the Group’s reporting of revenue and costs as follows: a IFRS 15 will require   the Group to identify deliverables in contracts with customers that qualify   as “performance obligations”. The transaction price receivable from customers   must be allocated between the Group’s performance obligations under the   contracts on a relative stand-alone selling price basis. Currently revenue   allocated to deliverables is restricted to the amount that is receivable   without the delivery of additional goods or services; this restriction will   no longer be applied under IFRS 15. The primary impact on revenue reporting   will be that when the Group sells subsidised devices together with airtime   service agreements to customers, revenue allocated to equipment and   recognised when control of the device passes to the customer will increase   and revenue recognised as services are delivered will reduce. a Under IFRS   15, certain incremental costs incurred in acquiring a contract with a   customer will be deferred on the balance sheet and amortised as revenue is   recognised under the related contract; this will generally lead to the later   recognition of charges for some commissions payable to third party dealers   and employees. a Certain costs incurred in fulfilling customer contracts will   be deferred on the balance sheet under IFRS 15 and recognised as related   revenue is recognised under the contract. Such deferred costs are likely to   relate to the provision of deliverables to customers that do not qualify as   performance obligations and for which revenue is not recognised; currently   such costs are generally expensed as incurred. The Group is currently assessing   the impact of these and other accounting changes that will arise under IFRS   15; however, the changes highlighted above are expected to have a material   impact on the consolidated income statement and consolidated statement of   financial position. It is expected that the Group will adopt IFRS 15 on 1   April 2018. IFRS 9 “Financial Instruments” was issued in July 2014 to replace   IAS 39 “Financial Instruments: Recognition and Measurement”. The standard is   effective for accounting periods beginning on or after 1 January 2018 with   early adoption permitted but has not yet been endorsed for use in the EU. The   standard will impact the classification and measurement of the Group’s   financial instruments and will require certain additional disclosures. The   changes to recognition and measurement of financial instruments and changes   to hedge accounting rules are not currently considered likely to have any   major impact on the Group’s current accounting treatment or hedging   activities. The Group will not consider early adoption of IFRS 9 until the   standard has been endorsed by the EU which is currently expected in the   second half of 2015. 113 Vodafone Group Plc Annual Report on Form 20-F 2015   Overview Strategy review Performance Governance Financials Additional   information |
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|  | Notes to the   consolidated financial statements (continued) 2. Segmental analysis The   Group’s businesses are managed on a geographical basis. Selected financial   data is presented on this basis below. The Group’s operating segments are   established on the basis of those components of the Group that are evaluated   regularly by the chief operating decision maker in deciding how to allocate   resources and in assessing performance. The Group has a single group of   related services and products being the supply of communications services and   products. Revenue is attributed to a country or region based on the location   of the Group company reporting the revenue. Transactions between operating   segments are charged at arm’s-length prices. In the Annual Report for the   year ended 31 March 2014, the discussion of our revenues and adjusted EBITDA   by segment was performed under the “management basis”, which included the   results of our joint ventures on proportionate basis, as this was assessed as   being the most insightful presentation and was how the Group’s operating   performance was reviewed internally by management. For the year ended 31   March 2015 the discussion of our revenues and adjusted EBITDA by segment is   performed on an IFRS basis. Following the disposal of our US Group whose   principal asset was its 45% interest in Verizon Wireless and the acquisition   of a 100% interest in Vodafone Italy on 21 February 2014, this is now   assessed as being the most insightful presentation and reflects how the   Group’s operating performance was reviewed internally by management in the   year ended 31 March 2015. Segmental information for the years ended 31 March   2014 and 31 March 2013 below has been restated accordingly. Segment   information is provided on the basis of geographic areas, being the basis on   which the Group manages its worldwide interests, with each country in which   the Group operates treated as an operating segment. The aggregation of   operating segments into the Europe and AMAP regions reflects, in the opinion   of management, the similar economic characteristics within each of those   regions as well the similar products and services offered and supplied,   classes of customers and the regulatory environment. In the case of the   Europe region this largely reflects membership of the European Union, while   for the AMAP region this largely includes emerging and developing economies   that are in the process of rapid growth and industrialisation. Certain   financial information is provided separately within the Europe region for   Germany, Italy, the UK and Spain and within the AMAP region for India and   Vodacom, as these operating segments are individually material for the Group.   Accounting policies Revenue Revenue is recognised to the extent the Group has   delivered goods or rendered services under an agreement, the amount of   revenue can be measured reliably and it is probable that the economic   benefits associated with the transaction will flow to the Group. Revenue is   measured at the fair value of the consideration receivable, exclusive of   sales taxes and discounts. The Group principally obtains revenue from   providing the following telecommunication services: access charges, airtime   usage, messaging, interconnect fees, data services and information provision,   connection fees and equipment sales. Products and services may be sold   separately or in bundled packages. Revenue for access charges, airtime usage   and messaging by contract customers is recognised as services are performed,   with unbilled revenue resulting from services already provided accrued at the   end of each period and unearned revenue from services to be provided in   future periods deferred. Revenue from the sale of prepaid credit is deferred   until such time as the customer uses the airtime, or the credit expires.   Revenue from interconnect fees is recognised at the time the services are   performed. Revenue from data services and information provision is recognised   when the Group has performed the related service and, depending on the nature   of the service, is recognised either at the gross amount billed to the   customer or the amount receivable by the Group as commission for facilitating   the service. Customer connection revenue is recognised together with the   related equipment revenue to the extent that the aggregate equipment and   connection revenue does not exceed the fair value of the equipment delivered   to the customer. Any customer connection revenue not recognised together with   related equipment revenue is deferred and recognised over the period in which   services are expected to be provided to the customer. Revenue for device   sales is recognised when the device is delivered to the end customer and the   significant risks and rewards of ownership have transferred. For device sales   made to intermediaries, revenue is recognised if the significant risks   associated with the device are transferred to the intermediary and the   intermediary has no general right to return the device to receive a refund.   If the significant risks are not transferred, revenue recognition is deferred   until sale of the device to an end customer by the intermediary or the expiry   of any right of return. In revenue arrangements including more than one   deliverable, the arrangements are divided into separate units of accounting.   Deliverables are considered separate units of accounting if the following two   conditions are met: (i) the deliverable has value to the customer on a   stand-alone basis and (ii) there is evidence of the fair value of the item.   The arrangement consideration is allocated to each separate unit of   accounting based on its relative fair value. Revenue allocated to   deliverables is restricted to the amount that is receivable without the   delivery of additional goods or services. This restriction typically applies   to revenue recognised for devices provided to customers, including handsets.   Commissions Intermediaries are given cash incentives by the Group to connect   new customers and upgrade existing customers. For intermediaries who do not   purchase products and services from the Group, such cash incentives are   accounted for as an expense. Such cash incentives to other intermediaries are   also accounted for as an expense if: a the Group receives an identifiable benefit   in exchange for the cash incentive that is separable from sales transactions   to that intermediary; and a the Group can reliably estimate the fair value of   that benefit. 114 Cash incentives that do not meet these criteria are   recognised as a reduction of the related revenue. Vodafone Group Plc Annual   Report on Form 20-F 2015 |
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|  | Segmental   revenue and profit Segment revenue £m Intra-region revenue £m Regional   revenue £m Inter-region revenue £m Group revenue £m Adjusted EBITDA £m 31   March 2014 Germany Italy UK Spain Other Europe 8,272 522 6,427 3,518 5,525   (9) (1) (9) (14) (9) 8,263 521 6,418 3,504 5,516 (11) – (3) (2) (4) 8,252 521   6,415 3,502 5,512 2,698 182 1,418 787 1,736 Europe 24,264 (42) 24,222 (20)   24,202 6,821 India Vodacom Other AMAP 3,945 4,718 4,810 – – – 3,945 4,718   4,810 (3) – (10) 3,942 4,718 4,800 1,135 1,716 1,294 AMAP 13,473 – 13,473   (13) 13,460 4,145 Common Functions 686 – 686 (2) 684 118 Group 38,423 (42)   38,381 (35) 38,346 11,084 Discontinued operations Verizon Wireless1 9,955   4,274 31 March 2013 Germany Italy UK Spain Other Europe 7,857 – 5,150 3,904   7,115 (25) – (27) (35) (55) 7,832 – 5,123 3,869 7,060 (6) – (4) (2) (6) 7,826   – 5,119 3,867 7,054 2,831 – 1,210 1,021 2,120 Europe 24,026 (142) 23,884 (18)   23,866 7,182 India Vodacom Other AMAP 3,907 5,206 4,605 – – (1) 3,907 5,206   4,604 (4) – (19) 3,903 5,206 4,585 1,055 1,891 1,250 AMAP 13,718 (1) 13,717   (23) 13,694 4,196 Common Functions 481 – 481 – 481 88 Group 38,225 (143)   38,082 (41) 38,041 11,466 Discontinued operations Verizon Wireless1 Note:   21,972 8,831 1 Discontinued operations comprise our US group whose principal   asset was a 45% interest in Verizon Wireless, which was sold on 21 February   2014. Refer to note 7 “Discontinued operations” to the consolidated financial   statements for further details. Total revenue recorded in respect of the sale   of goods for the year ended 31 March 2015 was £3,211 million (2014: £2,660 million,   2013: £2,633 million). The Group’s measure of segment profit, adjusted   EBITDA, excludes depreciation, amortisation, impairment loss, restructuring   costs, loss on disposal of fixed assets, the Group’s share of results in   associates and joint ventures and other income and expense. A reconciliation   of adjusted EBITDA to operating profit/(loss) is shown overleaf. For a   reconciliation of operating profit/(loss) to profit for the financial year,   see the consolidated income statement on page 105. 115 Vodafone Group Plc   Annual Report on Form 20-F 2015 Overview Strategy review Performance   Governance Financials Additional information 31 March 2015 Germany 8,467(19)   8,448(22) 8,4262,670 Italy 4,641(13) 4,628(1) 4,6271,537 UK 6,414(38)   6,376(20) 6,3561,360 Spain 3,664(23) 3,641(2) 3,639783 Other Europe 5,007(29)   4,978(2) 4,9761,574 Europe 28,193(122)28,071(47)28,0247,924 India 4,324(11)   4,313(15) 4,2981,281 Vodacom 4,341–4,341–4,3411,527 Other AMAP   4,828–4,828(10) 4,8181,289 AMAP 13,493(11)13,482(25)13,4574,097 Common   Functions 754–754(8) 746(106) Group 42,440(133)42,307(80)42,22711,915 |
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|  | Notes to the   consolidated financial statements (continued) 2. Segmental analysis   (continued) 2015 £m 2014 £m 2013 £m Segmental assets and cash flow Other   expenditure on intangible assets £m Depreciation and amortisation £m   Non-current assets1 £m Capital expenditure2 £m Operating free cash flow3 £m   Impairment loss £m 31 March 2014 Germany Italy UK Spain Other Europe 22,780   7,984 8,031 3,653 8,736 1,312 180 932 511 800 3 – – – 273 2,036 164 1,290 587   1,047 4,900 – – 800 900 1,706 251 621 255 980 Europe 51,184 3,735 276 5,124   6,600 3,813 India Vodacom Other AMAP 7,824 4,560 4,850 633 663 711 1,938 3 11   828 593 932 – – – 812 1,174 619 AMAP 17,234 2,007 1,952 2,353 – 2,605 Common   Functions 1,121 571 – 83 – 161 Group 69,539 6,313 2,228 7,560 6,600 6,579 31   March 2013 Germany Italy UK Spain Other Europe 19,109 – 8,365 4,599 9,786   1,073 – 601 377 993 2 – 863 – 1,335 1,423 – 888 590 1,291 – 4,500 – 3,200 –   1,795 – 788 505 1,148 Europe 41,859 3,044 2,200 4,192 7,700 4,236 India   Vodacom Other AMAP 7,388 5,668 5,826 462 703 678 130 10 90 914 696 894 – – –   591 1,345 619 AMAP 18,882 1,843 230 2,504 – 2,555 Common Functions 982 405 –   (35) – (244) Group 61,723 5,292 2,430 6,661 7,700 6,547 Notes: 1 Comprises   goodwill, other intangible assets and property, plant and equipment. 2   Includes additions to property, plant and equipment and computer software,   reported within intangibles. Excludes licences and spectrum additions. 3 The   Group’s measure of segment cash flow, which primarily excludes capital   expenditure, is reconciled to the closest equivalent GAAP measure cash   generated by operations, on page 203. 116 Vodafone Group Plc Annual Report on   Form 20-F 2015 31 March 2015 Germany 19,521 2,0033 2,574– 1,002 Italy 6,938   1,10595 1,334– 544 UK 7,759 98015 1,363– 200 Spain 8,154 858– 954– (29) Other   Europe 8,189 1,083193 1,017– 543 Europe 50,561 6,029306 7,242– 2,260 India   8,599 882140 863– 332 Vodacom 4,712 7452 566– 762 Other AMAP 4,915 91935 900–   409 AMAP 18,226 2,546177 2,329– 1,503 Common Functions 1,306 6221 (6) – (900)   Group 70,093 9,197484 9,565– 2,863 Adjusted EBITDA 11,915 11,08411,466   Depreciation, amortisation and loss on disposal of fixed assets (8,345)   (7,098) (6,502) Share of results in associates and joint ventures (63) 324626   Adjusted operating profit 3,507 4,3105,590 Impairment loss – (6,600)(7,700)   Restructuring costs (157) (355)(311) Amortisation of acquired customer based   and brand intangible assets (1,269) (551)(249) Other income and expense (114)   (717)468 Operating profit/(loss) 1,967 (3,913)(2,202) |
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|  | 3. Operating   profit/(loss) Detailed below are the key amounts recognised in arriving at   our operating profit/(loss) 2015 £m 2014 £m 2013 £m Note: 1 Negative goodwill   arising on the acquisition of Cable & Wireless Worldwide Plc on 27 July   2012. The total remuneration of the Group’s auditor, PricewaterhouseCoopers   LLP and other member firms of PricewaterhouseCoopers International Limited, for   services provided to the Group during the year ended 31 March 2015 is   analysed below. PricewaterhouseCoopers LLP was appointed as the Group’s   auditor for the year ended 31 March 2015. Accordingly, comparative figures in   the table below for the years ended 31 March 2014 and 31 March 2013 are in   respect of remuneration paid to the Group’s previous auditor, Deloitte LLP   and other member firms of Deloitte Touche Tohmatsu Limited. 2015 £m 2014 £m   2013 £m Notes: 1 Relates to fees for statutory and regulatory filings. 2   Amount for 2014 primarily arose from regulatory filings and shareholder   documentation requirements in respect of the disposal of Verizon Wireless and   the acquisition of the outstanding minority stake in Vodafone Italy. 3 At the   time of the Board decision to recommend PricewaterhouseCoopers LLP as the   statutory auditor for the year ended 31 March 2015 in February 2014,   PricewaterhouseCoopers LLP were providing a range of services to the Group.   All services that were prohibited by the Securities and Exchange Commission   (‘SEC’) for a statutory auditor to provide, ceased by 31 March 2014. All   engagements that are not prohibited by the SEC, but would not have met the   Group’s own internal approval policy for non-audit services, ceased by 30   June 2014 to enable a transition to alternative suppliers, where required.   These services had a value of approximately £3 million through to completion   and are included in the table above. A description of the work performed by   the Audit and Risk Committee in order to safeguard auditor independence when   non-audit services are provided is set out in “Corporate governance” on page   67. 117 Vodafone Group Plc Annual Report on Form 20-F 2015 Overview Strategy   review Performance Governance Financials Additional information Parent company   2 11 Subsidiaries 10 87 Audit fees: 12 98 Audit-related fees1 1 11 Other   assurance services2, 3 1 3– Tax fees3 2 –– Non-audit fees: 4 41 Total fees 16   139 Net foreign exchange losses 8 1621 Depreciation of property, plant and   equipment (note 11): Owned assets 5,002 3,9903,600 Leased assets 44 4837   Amortisation of intangible assets (note 10) 4,519 3,5223,024 Impairment of   goodwill in subsidiaries, associates and joint arrangements (note 4) –   6,6007,700 Negative goodwill1 – –(473) Research and development expenditure   140 214307 Staff costs (note 25) 4,194 3,8753,620 Operating lease rentals   payable: Plant and machinery 774 651506 Other assets including fixed line   rentals 1,529 1,5021,297 Loss on disposal of property, plant and equipment 49   8577 Own costs capitalised attributable to the construction or acquisition of   property, plant and equipment (547) (455)(356) |
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|  | Notes to the   consolidated financial statements (continued) 4. Impairment losses Impairment   occurs when the carrying value of assets is greater than the present value of   the net cash flows they are expected to generate. We review the carrying   value of assets for each country in which we operate at least annually. For   further details on our impairment review process see “Critical accounting   judgements and key sources of estimation uncertainty” in note 1 “Basis of   preparation” to the consolidated financial statements. Accounting policies   Goodwill Goodwill is not subject to amortisation but is tested for impairment   annually or whenever there is an indication that the asset may be impaired.   For the purpose of impairment testing, assets are grouped at the lowest   levels for which there are separately identifiable cash flows, known as   cash-generating units. If the recoverable amount of the cash-generating unit   is less than the carrying amount of the unit, the impairment loss is   allocated first to reduce the carrying amount of any goodwill allocated to   the unit and then to the other assets of the unit pro-rata on the basis of   the carrying amount of each asset in the unit. Impairment losses recognised   for goodwill are not reversible in subsequent periods. The recoverable amount   is the higher of fair value less costs to sell and value in use. In assessing   value in use, the estimated future cash flows are discounted to their present   value using a pre-tax discount rate that reflects current market assessments   of the time value of money and the risks specific to the asset for which the   estimates of future cash flows have not been adjusted. The Group prepares and   approves formal five year management plans for its operations, which are used   in the value in use calculations. In certain developing markets the fifth   year of the management plan may not be indicative of the long-term future   performance as operations may not have reached maturity. For these   operations, the Group may extend the plan data for an additional five year   period. Property, plant and equipment and finite lived intangible assets At   each reporting period date, the Group reviews the carrying amounts of its   property, plant and equipment and finite lived intangible assets to determine   whether there is any indication that those assets have suffered an impairment   loss. If any such indication exists, the recoverable amount of the asset is   estimated in order to determine the extent, if any, of the impairment loss.   Where it is not possible to estimate the recoverable amount of an individual   asset, the Group estimates the recoverable amount of the cash-generating unit   to which the asset belongs. If the recoverable amount of an asset or   cash-generating unit is estimated to be less than its carrying amount, the   carrying amount of the asset or cash-generating unit is reduced to its   recoverable amount and an impairment loss is recognised immediately in the   income statement. Where an impairment loss subsequently reverses, the   carrying amount of the asset or cash-generating unit is increased to the   revised estimate of its recoverable amount, not to exceed the carrying amount   that would have been determined had no impairment loss been recognised for   the asset or cash-generating unit in prior years and an impairment loss   reversal is recognised immediately in the income statement. Impairment losses   Following our annual impairment review no impairment charges were recorded in   respect of the Group’s goodwill balances during the year ended 31 March 2015.   The impairment losses recognised in the consolidated income statement within   operating profit in respect of goodwill in the years ended 31 March 2014 and   31 March 2013 are stated below. The impairment losses were based on value in   use calculations. 2015 £m 2014 £m 2013 £m Cash-generating unit Reportable   segment Goodwill The remaining carrying value of goodwill at 31 March was as   follows: 2015 £m 2014 £m 118 Vodafone Group Plc Annual Report on Form 20-F   2015 Germany 9,019 10,306 Italy 2,641 3,017 Spain 2,755 1,662 14,415 14,985   Other 8,122 8,330 22,537 23,315 Germany Italy Spain Portugal Czech Republic   Romania Germany – 4,900– Italy – –4,500 Spain – 8003,200 Other Europe – 500–   Other Europe – 200– Other Europe – 200– – 6,6007,700 |
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|  | Key assumptions   used in the value in use calculations The key assumptions used in determining   the value in use are: Assumption How determined Budgeted adjusted EBITDA   Budgeted adjusted EBITDA has been based on past experience adjusted for the   following: a voice and messaging revenue is expected to benefit from   increased usage from new customers, especially in emerging markets, the   introduction of new services and traffic moving from fixed networks to mobile   networks, though these factors will be offset by increased competitor   activity, which may result in price declines, and the trend of falling   termination and other regulated rates; a non-messaging data revenue is   expected to continue to grow as the penetration of 3G (plus 4G where   available) enabled devices and smartphones rise along with higher data bundle   attachment rates, and new products and services are introduced; and a margins   are expected to be impacted by negative factors such as the cost of acquiring   and retaining customers in increasingly competitive markets and the   expectation of further termination rate cuts by regulators and by positive   factors such as the efficiencies expected from the implementation of Group   initiatives. The cash flow forecasts for capital expenditure are based on   past experience and include the ongoing capital expenditure required to roll   out networks in emerging markets, to provide 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. For businesses where   the five year management plans are used for the Group’s value in use   calculations, a long-term growth rate into perpetuity has been determined as   the lower of: a the nominal GDP rates for the country of operation; and a the   long-term compound annual growth rate in adjusted EBITDA in years six to ten estimated   by management. The discount rate applied to the cash flows of each of the   Group’s operations is generally based on the risk free rate for ten year   bonds issued by the government in the respective market. Where government   bond rates contain a material component of credit risk, high quality local   corporate bond rates may be used. These rates are adjusted for a risk premium   to reflect both the increased risk of investing in equities and the   systematic risk of the specific Group operating company. In making this   adjustment, inputs required are the equity market risk premium (that is the   required increased return required over and above a risk free rate by an   investor who is investing in the market as a whole) and the risk adjustment,   beta, applied to reflect the risk of the specific Group operating company   relative to the market as a whole. In determining the risk adjusted discount   rate, management has applied an adjustment for the systematic risk to each of   the Group’s operations determined using an average of the betas of comparable   listed mobile telecommunications companies and, where available and   appropriate, across a specific territory. Management has used a   forward-looking equity market risk premium that takes into consideration both   studies by independent economists, the average equity market risk premium   over the past ten years and the market risk premiums typically used by   investment banks in evaluating acquisition proposals. Budgeted capital   expenditure Long-term growth rate Pre-tax risk adjusted discount rate Year   ended 31 March 2015 During the year ended 31 March 2015, no impairment   charges were recorded in respect of the Group’s goodwill balances. The table   below shows key assumptions used in the value in use calculations.   Assumptions used in value in use calculation Germany % Italy % Spain %   Pre-tax risk adjusted discount rate Long-term growth rate Budgeted adjusted   EBITDA1 Budgeted capital expenditure2 8.2 0.5 3.2 11.6–21.7 10.5 1.0 0.8   12.5–25.6 9.8 1.5 11.0 11.5–23.3 Notes: 1 Budgeted adjusted EBITDA is   expressed as the compound annual growth rates in the initial five years for   all cash-generating units of the plans used for impairment testing. 2   Budgeted capital expenditure, which excludes licences and spectrum, is   expressed as the range of capital expenditure as a percentage of revenue in   the initial five years for all cash-generating units of the plans used for   impairment testing. 119 Vodafone Group Plc Annual Report on Form 20-F 2015   Overview Strategy review Performance Governance Financials Additional   information |
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|  | Notes to the   consolidated financial statements (continued) 4. Impairment losses   (continued) Sensitivity analysis Other than as disclosed below, management   believes that no reasonably possible change in any of the above key   assumptions would cause the carrying value of any cash-generating unit to   materially exceed its recoverable amount. The estimated recoverable amounts   of the Group’s operations in Germany, Italy and Spain exceed their carrying   values by £2.2 billion, £1.3 billion and £0.3 billion respectively. Change   required for carrying value to equal the recoverable amount Germany pps Italy   pps Spain pps Pre-tax risk adjusted discount rate Long-term growth rate   Budgeted adjusted EBITDA1 Budgeted capital expenditure2 0.8 (0.9) (7.3) 2.1   1.6 (1.8) (7.5) 2.9 0.3 (0.3) (2.6) 0.7 Notes: 1 Budgeted adjusted EBITDA is   expressed as the compound annual growth rates in the initial five years for   all cash-generating units of the plans used for impairment testing. 2   Budgeted capital expenditure, which excludes licences and spectrum, is   expressed as a percentage of revenue in the initial five years for all   cash-generating units of the plans used for impairment testing. Year ended 31   March 2014 During the year ended 31 March 2014 impairment charges of £4,900   million, £800 million, £500 million, £200 million and £200 million were   recorded in respect of the Group’s investments in Germany, Spain, Portugal,   Czech Republic and Romania respectively. The impairment charges relate solely   to goodwill. The recoverable amounts of Germany, Spain, Portugal, Czech   Republic and Romania were £23.0 billion, £3.3 billion, £1.3 billion, £0.6   billion and £1.2 billion respectively. The impairment charges were driven by   lower projected cash flows within the business plans resulting in our   reassessment of expected future business performance in the light of current   trading and economic conditions. The table below shows key assumptions used   in the value in use calculations. Assumptions used in value in use   calculation Germany % Italy % Spain % Portugal % Czech Republic % Romania %   Greece % Pre-tax risk adjusted discount rate Long-term growth rate Budgeted adjusted   EBITDA1 Budgeted capital expenditure2 7.7 0.5 2.8 12.5–21.7 10.5 1.0 (2.2)   11.1–25.5 9.9 1.9 (0.7) 9.0–23.5 11.1 1.5 (0.8) 11.0–28.3 8.0 0.8 (0.6)   15.9–21.2 11.0 1.0 1.7 10.5–17.3 24.3 1.0 4.7 7.6–12.2 Notes: 1 2 Budgeted   adjusted EBITDA is expressed as the compound annual growth rates in the   initial five years for all cash-generating units of the plans used for   impairment testing. Budgeted capital expenditure, which excludes licences and   spectrum, is expressed as the range of capital expenditure as a percentage of   revenue in the initial five years for all cash-generating units of the plans   used for impairment testing. 120 Vodafone Group Plc Annual Report on Form   20-F 2015 |
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|  | Sensitivity   analysis Other than as disclosed below, management believed that no   reasonably possible change in any of the above key assumptions would cause   the carrying value of any cash-generating unit to exceed its recoverable   amount. The estimated recoverable amounts of the Group’s operations in   Germany, Italy, Spain, Portugal, Czech Republic, Romania and Greece were   equal to, or not materially greater than, their carrying values;   consequently, any adverse change in key assumptions would, in isolation, have   caused a further impairment loss to be recognised. The changes in the   following table to assumptions used in the impairment review would have, in   isolation, led to an (increase)/decrease to the aggregate impairment loss   recognised in the year ended 31 March 2014. Germany Spain Portugal Increase   by 2pps £bn Decrease by 2pps £bn Increase by 2pps £bn Decrease by 2pps £bn   Increase by 2pps £bn Decrease by 2pps £bn Pre-tax risk adjusted discount rate   Long-term growth rate Budgeted adjusted EBITDA1 Budgeted capital expenditure2   (7.1) 4.9 0.8 (2.4) 4.9 (5.2) (0.8) 2.4 (0.9) 0.8 0.2 (0.8) 0.8 (0.8) (0.2)   0.8 (0.3) 0.4 0.1 (0.2) 0.4 (0.2) (0.1) 0.2 Czech Republic Romania Increase   by 2pps £bn Decrease by 2pps £bn Increase by 2pps £bn Decrease by 2pps £bn   Pre-tax risk adjusted discount rate Long-term growth rate Budgeted adjusted   EBITDA1 Budgeted capital expenditure2 (0.2) 0.2 – – 0.2 (0.2) – – (0.2) 0.2   0.1 – 0.2 (0.2) (0.1) – Notes: 1 Budgeted adjusted EBITDA is expressed as the   compound annual growth rates in the initial five years for all   cash-generating units of the plans used for impairment testing. 2 Budgeted   capital expenditure is expressed as a percentage of revenue in the initial   five years for all cash-generating units of the plans used for impairment   testing. Year ended 31 March 2013 During the year ended 31 March 2013   impairment charges of £4,500 million and £3,200 million were recorded in   respect of the Group’s investments in Italy and Spain respectively. The   impairment charges relate solely to goodwill. The recoverable amounts of   Italy and Spain were £8.9 billion and £4.2 billion respectively. The   impairment charges were driven by a combination of lower projected cash flows   within business plans, resulting from our reassessment of expected future   business performance in light of current trading and economic conditions and   adverse movements in discount rates driven by the credit rating and yields on   ten year government bonds. The table below shows key assumptions used in the   value in use calculations. Assumptions used in value in use calculation Italy   % Spain % Germany % Greece % Portugal % Romania % Pre-tax risk adjusted   discount rate Long-term growth rate Budgeted adjusted EBITDA1 Budgeted   capital expenditure2 11.3 0.5 (0.2) 9.9–15.2 12.2 1.9 1.7 11.2–15.2 9.6 1.4   2.5 11.3–12.6 23.9 1.0 0.4 7.8–11.0 11.2 0.4 (1.5) 10.0–18.9 11.2 3.0 0.8   10.1–15.5 Notes: 1 Budgeted adjusted EBITDA is expressed as the compound   annual growth rates in the initial five years for all cash-generating units   of the plans used for impairment testing. 2 Budgeted capital expenditure,   which excludes licences and spectrum, is expressed as the range of capital   expenditure as a percentage of revenue in the initial five years for all   cash-generating units of the plans used for impairment testing. The pre-tax   risk adjusted discount rate used for Czech Republic was 5.6%. 121 Vodafone   Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information |
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|  | Notes to the   consolidated financial statements (continued) 4. Impairment losses   (continued) Sensitivity analysis Other than as disclosed below, management   believed that no reasonably possible change in any of the above key   assumptions would cause the carrying value of any cash-generating unit to   exceed its recoverable amount. The estimated recoverable amounts of the   Group’s operations in Italy, Spain, Portugal and Greece were equal to, or not   materially greater than, their carrying values; consequently, any adverse   change in key assumptions would, in isolation, have caused a further   impairment loss to be recognised. The estimated recoverable amounts of the   Group’s operations in Germany and Romania exceeded their carrying values by   approximately £1,034 million and £184 million respectively. Change required   for carrying value to equal the recoverable amount Germany pps Romania pps   Pre-tax risk adjusted discount rate Long-term growth rate Budgeted adjusted   EBITDA1 Budgeted capital expenditure2 0.4 (0.5) (0.7) 1.1 1.0 (1.2) (1.7) 2.8   Notes: 1 Budgeted adjusted EBITDA is expressed as the compound annual growth   rates in the initial five years for all cash-generating units of the plans used   for impairment testing. 2 Budgeted capital expenditure is expressed as the   range of capital expenditure as a percentage of revenue in the initial five   years for all cash-generating units of the plans used for impairment testing.   The changes in the following table to assumptions used in the impairment   review would have, in isolation, led to an (increase)/decrease to the   aggregate impairment loss recognised in the year ended 31 March 2013: Italy   Spain Portugal Increase by 2pps £bn Decrease by 2pps £bn Increase by 2pps £bn   Decrease by 2pps £bn Increase by 2pps £bn Decrease by 2pps £bn Pre-tax risk   adjusted discount rate Long-term growth rate Budgeted adjusted EBITDA1   Budgeted capital expenditure2 (1.4) 1.8 0.5 (0.9) 1.8 (1.3) (0.5) 0.9 (0.7) –   – (0.6) – (0.7) (0.1) – (0.3) – – (0.2) – (0.3) (0.1) – Notes: 1 2 Budgeted   adjusted EBITDA is expressed as the compound annual growth rates in the   initial five years for all cash-generating units of the plans used for   impairment testing. Budgeted capital expenditure is expressed as a percentage   of revenue in the initial five years for all cash-generating units of the   plans used for impairment testing. 122 Vodafone Group Plc Annual Report on   Form 20-F 2015 |
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|  | 5. Investment   income and financing costs Investment income comprises interest received from   short-term investments, bank deposits, government bonds and gains from   foreign exchange contracts which are used to hedge net debt. Financing costs   mainly arise from interest due on bonds and commercial paper issued, bank   loans and the results of hedging transactions used to manage foreign exchange   and interest rate movements. 2015 £m 2014 £m 2013 £m Notes: 1 Amounts for   2015 include net foreign exchange gains of £526 million (2014: £21 million   gain; 2013: £91 million loss) arising from net foreign exchange movements on   certain intercompany balances. The Group capitalised £142 million of interest   expense in the year (2014: £3 million; 2013: £8 million). Amounts for 2015   include net foreign exchange losses of £250 million (2014: £201 million;   2013: £nil). Amounts for 2015, 2014 and 2013 include a reduction of the   provision for potential interest on tax issues. Includes amounts in relation   to the Group’s arrangements with its non-controlling interests. 2 3 4 5 123   Vodafone Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information Investment income:   Available-for-sale investments: Dividends received – 102 Loans and   receivables at amortised cost 324 184124 Fair value through the income   statement (held for trading): Derivatives – foreign exchange contracts –   82115 Other1 559 7064 883 346305 Financing costs: Items in hedge   relationships: Other loans 245 265228 Interest rate and cross currency   interest rate swaps (123) (196)(184) Fair value hedging instrument (461)   386(81) Fair value of hedged item 418 (363)112 Other financial liabilities   held at amortised cost: Bank loans and overdrafts2 842 557584 Other loans3   677 770736 Interest credit on settlement of tax issues4 (4) (15) (91) Equity   put rights and similar arrangements5 11 143136 Fair value through the income   statement (held for trading): Derivatives – forward starting swaps and   futures 131 1105 Other1 – 651 1,736 1,5541,596 Net financing costs 853   1,2081,291 |
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|  | Notes to the   consolidated financial statements (continued) 6. Taxation This note explains   how our Group tax charge arises. The deferred tax section of the note also   provides information on our expected future tax charges and sets out the tax   assets held across the Group together with our view on whether or not we   expect to be able to make use of these in the future. Accounting policies   Income tax expense represents the sum of the current tax payable and deferred   tax. Current tax payable or recoverable is based on taxable profit for the   year. Taxable profit differs from profit as reported in the income statement   because some items of income or expense are taxable or deductible in   different years or may never be taxable or deductible. The Group’s liability   for current tax is calculated using UK and foreign tax rates and laws that   have been enacted or substantively enacted by the reporting period date.   Deferred tax is the tax expected to be payable or recoverable in the future   arising from temporary differences between the carrying amounts of assets and   liabilities in the financial statements and the corresponding tax bases used   in the computation of taxable profit. It is accounted for using the statement   of financial position liability method. Deferred tax liabilities are   generally recognised for all taxable temporary differences and deferred tax   assets are recognised to the extent that it is probable that temporary   differences or taxable profits will be available against which deductible   temporary differences can be utilised. Such assets and liabilities are not   recognised if the temporary difference arises from the initial recognition   (other than in a business combination) of assets and liabilities in a   transaction that affects neither the taxable profit nor the accounting   profit. Deferred tax liabilities are not recognised to the extent they arise   from the initial recognition of non-tax deductible goodwill. Deferred tax   liabilities are recognised for taxable temporary differences arising on   investments in subsidiaries and associates, and interests in joint   arrangements, except where the Group is able to control the reversal of the   temporary difference and it is probable that the temporary difference will   not reverse in the foreseeable future. The carrying amount of deferred tax   assets is reviewed at each reporting period date and adjusted to reflect   changes in the Group’s assessment that sufficient taxable profits will be   available to allow all or part of the asset to be recovered. Deferred tax is   calculated at the tax rates that are expected to apply in the period when the   liability is settled or the asset realised, based on tax rates that have been   enacted or substantively enacted by the reporting period date. Tax assets and   liabilities are offset when there is a legally enforceable right to set off   current tax assets against current tax liabilities and when they either   relate to income taxes levied by the same taxation authority on either the   same taxable entity or on different taxable entities which intend to settle   the current tax assets and liabilities on a net basis. Tax is charged or   credited to the income statement, except when it relates to items charged or   credited to other comprehensive income or directly to equity, in which case   the tax is recognised in other comprehensive income or in equity. Income tax   expense 2015 £m 2014 £m 2013 £m UK operating profits are more than offset by   statutory allowances for capital investment in the UK network and systems   plus ongoing interest costs including those arising from the £6.8 billion of   spectrum payments to the UK government in 2000 and 2013. 124 Vodafone Group   Plc Annual Report on Form 20-F 2015 United Kingdom corporation tax expense:   Current year – – – 24 Adjustments in respect of prior years 11 17 11 1724   Overseas current tax expense: Current year 846 3,114 1,062 (249) Adjustments   in respect of prior years (149) (25) 697 3,089813 Total current tax expense   708 3,106837 Deferred tax on origination and reversal of temporary   differences: (52) United Kingdom deferred tax (39) 57 Overseas deferred tax   (5,434) (19,745)(309) Total deferred tax income (5,473) (19,688)(361) Total   income tax (income)/expense (4,765) (16,582)476 |
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|  | Tax on   discontinued operations 2015 £m 2014 £m 2013 £m Tax (credited)/charged   directly to other comprehensive income 2015 £m 2014 £m 2013 £m Tax   (credited)/charged directly to equity 2015 £m 2014 £m 2013 £m Factors   affecting the tax expense for the year The table below explains the   differences between the expected tax expense at the UK statutory tax rate of   21% (2014: 23% and 2013: 24%), and the Group’s total tax expense for each   year. 2015 £m 2014 £m 2013 £m Notes: 1 See commentary regarding deferred tax   asset recognition on page 127. 2 Includes the US tax charge of £2,210 million   on the rationalisation and reorganisation of non-US assets prior to the   disposal of our interest in Verizon Wireless. 125 Vodafone Group Plc Annual   Report on Form 20-F 2015 Overview Strategy review Performance Governance   Financials Additional information Continuing profit/(loss) before tax as   shown in the consolidated income statement 1,095 (5,270)(3,483) Expected   income tax expense/(income) at UK statutory tax rate 230 (1,212)(836) Effect   of different statutory tax rates of overseas jurisdictions 138 (328) (9)   Impairment losses with no tax effect – 1,9582,664 Disposal of Group   investments – 211(10) Effect of taxation of associates and joint ventures,   reported within operating profit 25 61129 Recognition of deferred tax assets   in Luxembourg and Germany1 (5,468) (19,318)– Tax charge on rationalisation   and re-organisation of non-US assets prior to VZW disposal2 – 1,365– Deferred   tax impact of previously unrecognised temporary differences including losses   (40) (164)(625) Current tax impact of previously unrecognised temporary   differences including losses – –(74) Effect of unrecognised temporary   differences 342 215(184) Adjustments in respect of prior years (245) (43) (234)   Gain on acquisition of CWW with no tax effect – –(164) Effect of secondary   and irrecoverable taxes 66 3794 Deferred tax on overseas earnings 38 4(4)   Effect of current year changes in statutory tax rates 118 158(2) Expenses not   deductible for tax purposes and other items 148 210 104 – Tax on income   derived from discontinued operations – 418 Exclude taxation of associates   (117) (154)(373) Income tax (income)/expense (4,765) (16,582)476 Current tax   (credit)/charge (4) 12(17) Deferred tax credit (3) –(1) Total tax   (credited)/charged directly to equity (7) 12(18) Current tax charge 2 –4   Deferred tax (credit)/charge (267) 23(37) Total tax (credited)/charged   directly to other comprehensive income (265) 23(33) Tax (credit)/charge on   profit from ordinary activities of discontinued operations (57) 1,7091,750   Tax charge relating to the gain or loss of discontinued operations – –– Total   tax (credit)/charge on discontinued operations (57) 1,7091,750 |
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|  | Notes to the   consolidated financial statements (continued) 6. Taxation (continued)   Deferred tax Analysis of movements in the net deferred tax balance during the   year: £m Deferred tax assets and liabilities, before offset of balances   within countries, are as follows: Amount (charged)/ credited in income   statement £m Net recognised deferred tax (liability)/ asset £m Gross deferred   tax asset £m Gross deferred tax liability £m Less amounts unrecognised £m   Deferred tax assets and liabilities are analysed in the statement of   financial position, after offset of balances within countries, as follows: £m   At 31 March 2014, deferred tax assets and liabilities, before offset of   balances within countries, were as follows: Amount (charged)/ credited in   income statement £m Net recognised deferred tax (liability)/ asset £m Gross   deferred tax asset £m Gross deferred tax liability £m Less amounts   unrecognised £m Accelerated tax depreciation Intangible assets Tax losses   Deferred tax on overseas earnings Other temporary differences (123) 255   19,433 (2) 125 993 72 28,569 – 1,186 (1,597) (1,409) – – (343) (40) 1 (7,418)   – (154) (644) (1,336) 21,151 – 689 31 March 2014 19,688 30,820 (3,349)   (7,611) 19,860 At 31 March 2014 deferred tax assets and liabilities were   analysed in the statement of financial position, after offset of balances   within countries, as follows: £m Deferred tax asset Deferred tax liability   20,607 (747) 31 March 2014 19,860 Factors affecting the tax charge in future   years Factors that may affect the Group’s future tax charge include the   impact of corporate restructurings, the resolution of open issues, future   planning, corporate acquisitions and disposals, the use of brought forward   tax losses and changes in tax legislation and tax rates. The Group is   routinely subject to audit by tax authorities in the territories in which it   operates and, specifically, in India these are usually resolved through the   Indian legal system. We consider each issue on its merits and, where   appropriate, hold provisions in respect of the potential tax liability that   may arise. However, the amount ultimately paid may differ materially from the   amount accrued and could therefore affect the Group’s overall profitability   and cash flows in future periods. See note 30 “Contingent liabilities” to the   consolidated financial statements. 126 Vodafone Group Plc Annual Report on   Form 20-F 2015 Deferred tax asset 23,845 Deferred tax liability (595) 31   March 2015 23,250 Accelerated tax depreciation 382 1,183(1,355) (61) (233)   Intangible assets 195 107(1,704) 13(1,584) Tax losses 4,866 28,080–   (4,430)23,650 Deferred tax on overseas earnings (38) –(40) –(40) Other   temporary differences 68 1,695(94) (144)1,457 31 March 2015 5,473   31,065(3,193) (4,622)23,250 1 April 2014 19,860 Exchange movements (2,977)   Credited to the income statement (continuing operations) 5,473 Charged to the   income statement (discontinued operations) – Credited directly to other   comprehensive income 267 Credited directly to equity 3 Reclassifications (12)   Arising on acquisition and disposals 636 31 March 2015 23,250 |
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|  | At 31 March   2015, the gross amount and expiry dates of losses available for carry forward   are as follows: Expiring within 5 years £m Expiring within 6–10 years £m   Unlimited £m Total £m At 31 March 2014, the gross amount and expiry dates of   losses available for carry forward are as follows: Expiring within 5 years £m   Expiring within 6–10 years £m Unlimited £m Total £m Losses for which a   deferred tax asset is recognised Losses for which no deferred tax is   recognised 274 1,281 461 519 79,115 26,318 79,850 28,118 1,555 980 105,433   107,968 Deferred tax assets on losses in Luxembourg Included in the table   above are losses of £70,576 million (2014: £73,734 million) that have arisen   in Luxembourg companies, principally as a result of revaluations of those   companies’ investments for local GAAP purposes. These losses do not expire. A   deferred tax asset of £20,755 million (2014: £18,150 million) has been   recognised in respect of these losses as we conclude it is probable that the   Luxembourg entities will continue to generate taxable profits in the future   against which we can utilise these losses. The Luxembourg companies income is   derived from the Group’s internal financing and procurement and roaming   activities. We have reviewed the latest forecasts for the Luxembourg   companies, including their ability to continue to generate income beyond the   forecast period under the tax laws substantively enacted at the balance sheet   date. The assessment also considered whether the structure of the Group would   continue to allow the generation of taxable income. Based on this, we   conclude that it is probable that the Luxembourg companies will continue to   generate taxable income in the future. Based on the current forecasts the   losses will be fully utilised over the next 55 to 65 years. A 5%–10% change   in the forecast income in Luxembourg would change the period over which the   losses will be fully utilised by between two and four years. Any future   changes in tax law or the structure of the Group could have a significant   effect on the use of losses, including the period over which the losses are   utilised. During the current year we recognised an additional deferred tax   asset of £3,341 million relating to the historic tax losses in Luxembourg as   a consequence of the financing arrangements for the acquisition of Grupo   Corporativo Ono, S.A. We also recognised an additional deferred tax asset of   £2,127 million arising from the revaluation of investments based upon the   local GAAP financial statements. We also have £7,642 million (2014: £7,642   million) of Luxembourg losses in a former Cable & Wireless Worldwide   Group company, for which no deferred tax asset has been recognised as it is   uncertain whether these losses will be utilised. Deferred tax assets on   losses in Germany The Group has tax losses of £13,600 million (2014: £15,290   million) in Germany arising on the write down of investments in Germany in 2000.   The losses are available to use against both German federal and trade tax   liabilities and they do not expire. A deferred tax asset of £2,086 million   (2014: £2,344 million) has been recognised in respect of these losses as we   conclude it is probable that the German business will continue to generate   taxable profits in the future against which we can utilise these losses. We   have reviewed the latest forecasts for the German business which incorporate   the unsystematic risks of operating in the telecommunications business (see   pages 32 to 37). In the period beyond the five year forecast, we have   reviewed the profits inherent in the value in use calculations and based on   these and our expectations for the German business, we believe it is probable   the German losses will be fully utilised. Based on the current forecasts the   losses will be fully utilised over the next 10 to 15 years. A 5%–10% change   in the profits of the German business would change the period over which the   losses will be fully utilised by up to one year. The recognition of the   additional deferred tax assets in Luxembourg and Germany in the year ended 31   March 2014 was triggered by the agreement to dispose of the US group whose   principal asset was its 45% interest in Verizon Wireless, which removed   significant uncertainty over the future structure of the Group including the   continuation of future income streams in Luxembourg and the availability of   the losses in Germany. Other tax losses During the year, the Group acquired   Grupo Corporativo Ono, S.A. and which had tax losses of £2,375 million in   Spain and which are available to offset against the future profits of the   Spanish business. The losses do not expire. A deferred tax asset of £603   million (2014: £nil) has been recognised in respect of these losses as we   conclude it is probable that the Spanish business will continue to generate   taxable profits in the future against which we can utilise these losses. We   have reviewed the latest forecasts for the Spanish business which incorporate   the unsystematic risks of operating in the telecommunications business (see   pages 32 to 37). In the period beyond the five year forecast, we have   reviewed the profits inherent in the value in use calculations and based on   these and our expectations for the Spanish business, we believe it is   probable the losses will be fully utilised. Based on the current forecasts   the losses will be fully utilised over the next eight to ten years. A 5%–10%   change in the profits of the Spanish business would not significantly alter the   utilisation period. We have losses amounting to £6,735 million (2014: £6,651   million) in respect of UK subsidiaries which are only available for offset   against future capital gains and since it is uncertain whether these losses   will be utilised, no deferred tax asset has been recognised. We recognised a   deferred tax asset (2014: £442 million) of these losses in the prior year.   The remaining losses relate to a number of other jurisdictions across the   Group. There are also £310 million (2014: £339 million) of unrecognised other   temporary differences. 127 Vodafone Group Plc Annual Report on Form 20-F 2015   Overview Strategy review Performance Governance Financials Additional   information Losses for which a deferred tax asset is recognised 104   6487,24687,414 Losses for which no deferred tax is recognised 1,124   54316,08417,751 1,228 607103,330105,165 |
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|  | Notes to the   consolidated financial statements (continued) 6. Taxation (continued) We hold   a deferred tax liability of £40 million (2014: £nil) 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 (see table above). No deferred tax liability has   been recognised in respect of a further £14,925 million (2014: £22,985   million) of unremitted earnings of subsidiaries, associates and joint   ventures because we are 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. Discontinued operations On 21 February 2014 we   completed the sale of our US group whose principal asset was its 45% interest   in Verizon Wireless. The results of these discontinued operations are   detailed below. Income statement and segment analysis of discontinued   operations 2015 £m 2014 £m 2013 £m Gain on disposal of discontinued   operations 2015 £m 2014 £m 2013 £m Note: 1 Includes dividends received from   Verizon Wireless after the date of the announcement of the disposal. Profit   for the financial year from discontinued operations 2015 £m 2014 £m 2013 £m   Earnings per share from discontinued operations 2015 Pence per share 2014   Pence per share 2013 Pence per share Total comprehensive income for the   financial year from discontinued operations 2015 £m 2014 £m 2013 £m Cash   flows from discontinued operations1 2015 £m 2014 £m 2013 £m Note: 1 During   the year ended 31 March 2015, the Group received a final tax distribution   from Verizon Wireless of £359 million and a taxation refund of £84 million in   relation to our disposed US Group. 128 Vodafone Group Plc Annual Report on   Form 20-F 2015 Net cash flows from operating activities – (2,617) (1,464)   4,798 Net cash flows from investing activities – 4,830 Net cash flows from   financing activities – (2,225)(5,164) Net (decrease)/increase in cash and   cash equivalents – (12) (1,830) 1,721 Cash and cash equivalents at the   beginning of the financial year – – Exchange gain/(loss) on cash and cash   equivalents – 12109 Cash and cash equivalents at the end of the financial   year – –– Attributable to owners of the parent 57 48,1084,616 – Basic 0.22p   181.74p 17.20p – Diluted 0.21p 180.30p 17.20p Profit for the financial year   from discontinued operations 57 1,5094,616 Net gain on disposal of   discontinued operations – 46,599– Profit for the financial year from   discontinued operations 57 48,1084,616 Gain on disposal of discontinued   operations before taxation (see note 28) – 44,996– Other items arising from   the disposal1 – 1,603– Net gain on disposal of discontinued operations –   46,599– Share of result in associates – 3,1916,422 Net financing   income/(costs) – 27(56) Profit before taxation – 3,2186,366 Taxation relating   to performance of discontinued operations 57 (1,709)(1,750) Post-tax profit   from discontinued operations 57 1,5094,616 |
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|  | 8. Earnings per   share Basic earnings per share is the amount of profit generated for the   financial year attributable to equity shareholders divided by the weighted   average number of shares in issue during the year. 2015 Millions 2014   Millions 2013 Millions 2015 £m 2014 £m 2013 £m On 19 February 2014, we   announced a “6 for 11” share consolidation effective 24 February 2014. This   had the effect of reducing the number of shares in issue from 52,821,751,216   ordinary shares (including 4,351,833,492 ordinary shares held in Treasury) as   at the close of business on 18 February 2014 to 28,811,864,298 new ordinary   shares in issue immediately after the share consolidation on 24 February   2014. 9. Equity dividends Dividends are one type of shareholder return,   historically paid to our shareholders in February and August. 2015 £m 2014 £m   2013 £m On 2 September 2013 Vodafone announced that it had reached agreement   to dispose of its US group whose principal asset was its 45% interest in   Verizon Wireless (‘VZW’) to Verizon Communications Inc. (‘Verizon’), for a   total consideration of US$130 billion (£79 billion). At a General Meeting of   the Company on 28 January 2014, shareholders approved the transactions and   following completion on 21 February 2014, Vodafone shareholders received all   of the Verizon shares and US$23.9 billion (£14.3 billion) of cash (the   ‘Return of Value’) totalling US$85.2 billion (£51.0 billion). The Return of   Value was carried out in the form of a B share scheme pursuant to a   Court-approved scheme of arrangement and associated reduction of capital (the   ‘Scheme’). The Scheme provided shareholders (other than shareholders in the   United States and certain other jurisdictions) with the flexibility to   receive their proceeds as either an income or capital return. Under the   Scheme, Vodafone shareholders were issued unlisted, non-voting bonus shares,   which were shortly thereafter either cancelled in consideration of the   relevant amount of Verizon shares and cash or the holders received the   relevant amount of Verizon shares and cash in satisfaction of a special   distribution on the bonus shares, depending on shareholder elections and   subject to applicable securities laws. 129 Vodafone Group Plc Annual Report   on Form 20-F 2015 Overview Strategy review Performance Governance Financials   Additional information Declared during the financial year: Final dividend for   the year ended 31 March 2014: 7.47 pence per share (2013: 6.92 pence per   share, 2012: 6.47 pence per share) 1,975 3,3653,193 Interim dividend for the   year ended 31 March 2015: 3.60 pence per share (2014: 3.53 pence per share,   2013: 3.27 pence per share) 955 1,7111,608 Special dividend for the year   ended 31 March 2015: nil (2014: 172.94 US cents per share – see below, 2013:   nil) – 35,490– 2,930 40,5664,801 Proposed after the end of the reporting   period and not recognised as a liability: Final dividend for the year ended   31 March 2015: 7.62 pence per share (2014: 7.47 pence per share, 2013: 6.92   pence per share) 2,020 1,9753,377 Basic earnings per share 21.75p 223.84p 1.54p   Diluted earnings per share 21.63p 222.07p 1.54p Earnings for basic and   diluted earnings per share 5,761 59,254413 Weighted average number of shares   for basic earnings per share 26,489 26,47226,831 Effect of dilutive potential   shares: restricted shares and share options 140 210– Weighted average number   of shares for diluted earnings per share 26,629 26,68226,831 |
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|  | Notes to the   consolidated financial statements (continued) 10. Intangible assets Our   statement of financial position contains significant intangible assets,   mainly in relation to goodwill and licences and spectrum. Goodwill, which   arises when we acquire a business and pay a higher amount than the fair value   of its net assets primarily due to the synergies we expect to create, is not   amortised but is subject to annual impairment reviews. Licences and spectrum   are amortised over the life of the licence. For further details see “Critical   accounting judgements” in note 1 “Basis of preparation” to the consolidated   financial statements. Accounting policies Identifiable intangible assets are   recognised when the Group controls the asset, it is probable that future   economic benefits attributed to the asset will flow to the Group and the cost   of the asset can be reliably measured. Goodwill Goodwill arising on the   acquisition of an entity represents the excess of the cost of acquisition   over the Group’s interest in the net fair value of the identifiable assets,   liabilities and contingent liabilities of the entity recognised at the date   of acquisition. Goodwill is initially recognised as an asset at cost and is   subsequently measured at cost less any accumulated impairment losses.   Goodwill is not subject to amortisation but is tested for impairment or   whenever there is evidence that it may be required. Goodwill is denominated   in the currency of the acquired entity and revalued to the closing exchange   rate at each reporting period date. Negative goodwill arising on an   acquisition is recognised directly in the income statement. On disposal of a   subsidiary or a jointly controlled entity, the attributable amount of   goodwill is included in the determination of the profit or loss recognised in   the income statement on disposal. Goodwill arising before the date of   transition to IFRS, on 1 April 2004, has been retained at the previous UK   GAAP amounts, subject to being tested for impairment at that date. Goodwill   written off to reserves under UK GAAP prior to 1998 has not been reinstated   and is not included in determining any subsequent profit or loss on disposal.   Finite lived intangible assets Intangible assets with finite lives are stated   at acquisition or development cost, less accumulated amortisation. The   amortisation period and method is reviewed at least annually. Changes in the   expected useful life or the expected pattern of consumption of future   economic benefits embodied in the asset are accounted for by changing the   amortisation period or method, as appropriate, and are treated as changes in   accounting estimates. Licence and spectrum fees Amortisation periods for   licence and spectrum fees are determined primarily by reference to the   unexpired licence period, the conditions for licence renewal and whether   licences are dependent on specific technologies. Amortisation is charged to   the income statement on a straight-line basis over the estimated useful lives   from the commencement of related network services. Computer software Computer   software comprises computer software purchased from third parties as well as   the cost of internally developed software. Computer software licences are   capitalised on the basis of the costs incurred to acquire and bring into use   the specific software. Costs that are directly associated with the production   of identifiable and unique software products controlled by the Group, and are   probable of producing future economic benefits, are recognised as intangible   assets. Direct costs include software development employee costs and directly   attributable overheads. Software integral to an item of hardware equipment is   classified as property, plant and equipment. Costs associated with   maintaining computer software programs are recognised as an expense when they   are incurred. Internally developed software is recognised only if all of the   following conditions are met: a an asset is created that can be separately   identified; a it is probable that the asset created will generate future   economic benefits; and a the development cost of the asset can be measured   reliably. Amortisation is charged to the income statement on a straight-line   basis over the estimated useful life from the date the software is available   for use. Other intangible assets Other intangible assets, including brands   and customer bases, are recorded at fair value at the date of acquisition.   Amortisation is charged to the income statement, over the estimated useful   lives of intangible assets from the date they are available for use, on a   straight-line basis, with the exception of customer relationships which are   amortised on a sum of digits basis. The amortisation basis adopted for each   class of intangible asset reflects the Group’s consumption of the economic   benefit from that asset. 130 Vodafone Group Plc Annual Report on Form 20-F   2015 |
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|  | Estimated   useful lives The estimated useful lives of finite lived intangible assets are   as follows: a Licence and spectrum fees 3–25 years a Computer software 3–5   years a Brands 1–10 years a Customer bases 2–7 years Licences and spectrum £m   Computer software £m Goodwill £m Other £m Total £m Cost: 1 April 2013   Exchange movements Arising on acquisition Additions Disposals Other 73,316   (3,054) 6,859 – – – 28,871 (1,757) 1,319 2,228 (74) 5 8,879 (375) 464 1,437   (296) 103 2,905 (434) 2,861 – – – 113,971 (5,620) 11,503 3,665 (370) 108 31   March 2014 77,121 30,592 10,212 5,332 123,257 Accumulated impairment losses   and amortisation: 1 April 2013 Exchange movements Amortisation charge for the   year Impairment losses Disposals Other 48,926 (1,720) – 6,600 – – 12,534 (732)   1,683 – (65) – 6,112 (261) 1,282 – (278) 9 2,260 (338) 557 – – – 69,832   (3,051) 3,522 6,600 (343) 9 31 March 2014 53,806 13,420 6,864 2,479 76,569   Net book value: 31 March 2014 23,315 17,172 3,348 2,853 46,688 For licences   and spectrum and other intangible assets, amortisation is included within the   cost of sales line within the consolidated income statement. Licences and   spectrum with a net book value of £2,059 million (2014: £3,885 million) have   been pledged as security against borrowings. The net book value and expiry   dates of the most significant licences are as follows: 2015 £m 2014 £m Expiry   date The remaining amortisation period for each of the licences in the table   above corresponds to the expiry date of the respective licence. A summary of   the Group’s most significant spectrum licences can be found on page 200. 131   Vodafone Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information Germany Italy UK   India Qatar Netherlands 2016/2020/2025 2,843 3,743 2018/2021/2029 1,094 1,301   2033 3,050 3,425 2015–2034 3,994 3,885 2028/2029 987 945 2016/2029/2030 940   1,188 31 March 2015 22,53715,3503,4132,19043,490 Exchange movements   (6,344)(717) (707)(234)(8,002) Amortisation charge for the year –1,751   1,4911,2774,519 Disposals –– (454)(12)(466) Other –– 8–8 31 March 2015   47,46214,454 7,2023,51072,628 Exchange movements (8,756) (1,235)   (1,036)(542)(11,569) Arising on acquisition 1,634– 489052,587 Additions –467   1,844172,328 Disposals –– (464)(12)(476) Other –(20) 11–(9) 31 March 2015   69,99929,804 10,6155,700116,118 |
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|  | Notes to the   consolidated financial statements (continued) 11. Property, plant and   equipment We make significant investments in network equipment and   infrastructure – the base stations and technology required to operate our   networks – that form the majority of our tangible assets. All assets are   depreciated over their useful economic lives. For further details on the   estimation of useful economic lives, see “Critical accounting judgements” in   note 1 “Basis of preparation” to the consolidated financial statements.   Accounting policies Land and buildings held for use are stated in the   statement of financial position at their cost, less any subsequent   accumulated depreciation and subsequent accumulated impairment losses.   Amounts for equipment, fixtures and fittings, which includes network   infrastructure assets and which together comprise an all but insignificant   amount of the Group’s property, plant and equipment, are stated at cost less   accumulated depreciation and any accumulated impairment losses. Assets in the   course of construction are carried at cost, less any recognised impairment   loss. Depreciation of these assets commences when the assets are ready for   their intended use. The cost of property, plant and equipment includes   directly attributable incremental costs incurred in their acquisition and   installation. Depreciation is charged so as to write off the cost of assets,   other than land, using the straight-line method, over their estimated useful   lives, as follows: Land and buildings a Freehold buildings 25–50 years a   Leasehold premises the term of the lease Equipment, fixtures and fittings a   Network infrastructure 3–25 years a Other 3–10 years Depreciation is not   provided on freehold land. Assets held under finance leases are depreciated   over their expected useful lives on the same basis as owned assets or, where   shorter, the term of the relevant lease. The gain or loss arising on the   disposal or retirement of an item of property, plant and equipment is   determined as the difference between any sale proceeds and the carrying   amount of the asset and is recognised in the income statement. 132 Vodafone   Group Plc Annual Report on Form 20-F 2015 |
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|  | Equipment,   fixtures and fittings £m Land and buildings £m Total £m Cost: 1 April 2013   Exchange movements Arising on acquisition Additions Disposals of subsidiaries   Disposals Transfer of assets to joint operations Other 1,598 (99) 113 127 –   (93) – – 42,448 (2,900) 6,286 4,743 (15) (1,224) (672) (103) 44,046 (2,999)   6,399 4,870 (15) (1,317) (672) (103) 31 March 2014 1,646 48,563 50,209   Accumulated depreciation and impairment: 1 April 2013 Exchange movements   Charge for the year Disposals of subsidiaries Disposals Transfer of assets to   joint operations Other 699 (20) 99 – (46) – – 25,763 (1,477) 3,939 (15)   (1,099) (476) (9) 26,462 (1,497) 4,038 (15) (1,145) (476) (9) 31 March 2014   732 26,626 27,358 Net book value: 31 March 2014 914 21,937 22,851 The net   book value of land and buildings and equipment, fixtures and fittings   includes £24 million and £468 million respectively (2014: £48 million and   £413 million) in relation to assets held under finance leases. Included in   the net book value of land and buildings and equipment, fixtures and fittings   are assets in the course of construction, which are not depreciated, with a   cost of £85 million and £1,705 million respectively (2014: £70 million and   £1,617 million). Property, plant and equipment with a net book value of £nil   (2014: £1 million) has been pledged as security against borrowings. 133   Vodafone Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information 31 March 2015   91525,68826,603 Exchange movements (62) (2,296)(2,358) Charge for the year   1184,9285,046 Disposals (24) (1,550)(1,574) Other (10) 3424 31 March 2015   75427,74228,496 Exchange movements (117)(4,107) (4,224) Arising on   acquisition 73,4433,450 Additions 1727,1817,353 Disposals (52) (1,664)(1,716)   Other 131427 31 March 2015 1,66953,43055,099 |
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|  | Notes to the   consolidated financial statements (continued) 12. Investments in associates   and joint arrangements We hold interests in several associates where we have   significant influence, with the most significant being Safaricom Limited   following the disposal of Verizon Wireless on 21 February 2014, as well as   interests in a number of joint arrangements where we share control with one   or more third parties. For further details see “Critical accounting   judgements” in note 1 “Basis of preparation” to the consolidated financial   statements. Accounting policies Interests in joint arrangements A joint   arrangement is a contractual arrangement whereby the Group and other parties   undertake an economic activity that is subject to joint control; that is,   when the relevant activities that significantly affect the investee’s returns   require the unanimous consent of the parties sharing control. Joint   arrangements are either joint operations or joint ventures. Joint operations   A joint operation is a joint arrangement whereby the parties that have joint   control have the rights to the assets, and obligations for the liabilities,   relating to the arrangement or that other facts and circumstances indicate   that this is the case. The Group’s share of assets, liabilities, revenue,   expenses and cash flows are combined with the equivalent items in the   financial statements on a line-by-line basis. Any goodwill arising on the   acquisition of the Group’s interest in a jointly controlled entity is   accounted for in accordance with the Group’s accounting policy for goodwill   arising on the acquisition of a subsidiary. Joint ventures A joint venture is   a joint arrangement whereby the parties that have joint control have the   rights to the net assets of the arrangement. At the date of acquisition, any   excess of the cost of acquisition over the Group’s share of the net fair   value of the identifiable assets, liabilities and contingent liabilities of   the joint venture is recognised as goodwill. The goodwill is included within   the carrying amount of the investment. The results and assets and liabilities   of joint ventures are incorporated in the consolidated financial statements   using the equity method of accounting. Under the equity method, investments   in joint ventures are carried in the consolidated statement of financial   position at cost as adjusted for post-acquisition changes in the Group’s   share of the net assets of the joint venture, less any impairment in the   value of the investment. The Group’s share of post-tax profits or losses are   recognised in the consolidated income statement. Losses of a joint venture in   excess of the Group’s interest in that joint venture are recognised only to   the extent that the Group has incurred legal or constructive obligations or   made payments on behalf of the joint venture. Associates An associate is an   entity over which the Group has significant influence and that is neither a   subsidiary nor an interest in a joint venture. Significant influence is the   power to participate in the financial and operating policy decisions of the   investee but do not have control or joint control over those policies. At the   date of acquisition, any excess of the cost of acquisition over the Group’s   share of the net fair value of the identifiable assets, liabilities and   contingent liabilities of the associate is recognised as goodwill. The   goodwill is included within the carrying amount of the investment. The   results and assets and liabilities of associates are incorporated in the   consolidated financial statements using the equity method of accounting.   Under the equity method, investments in associates are carried in the   consolidated statement of financial position at cost as adjusted for post-acquisition   changes in the Group’s share of the net assets of the associate, less any   impairment in the value of the investment. The Group’s share of post-tax   profits or losses are recognised in the consolidated income statement. Losses   of an associate in excess of the Group’s interest in that associate are   recognised only to the extent that the Group has incurred legal or   constructive obligations or made payments on behalf of the associate. Joint   operations The Company’s principal joint operation has share capital   consisting solely of ordinary shares and is indirectly held, and principally   operates in the UK. The financial and operating activities of the operation   are jointly controlled by the participating shareholders and are primarily   designed for all but an insignificant amount of the output to be consumed by   the shareholders. Country of incorporation or registration Percentage1   shareholdings Name of joint operation Principal activity Cornerstone   Telecommunications Infrastructure Limited Network infrastructure UK 50.0   Note: 1 Effective ownership percentages of Vodafone Group Plc at 31 March   2015, rounded to the nearest tenth of one percent. 134 Vodafone Group Plc   Annual Report on Form 20-F 2015 |
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|  | Joint ventures   and associates 2015 £m 2014 £m Joint ventures The financial and operating   activities of the Group’s joint ventures are jointly controlled by the   participating shareholders. The participating shareholders have rights to the   net assets of the joint ventures though their equity shareholdings. Unless   otherwise stated, the Company’s principal joint ventures all have share   capital consisting solely of ordinary shares and are all indirectly held. The   country of incorporation or registration of all joint ventures is also their   principal place of operation. Country of incorporation or registration   Percentage1 shareholdings Name of joint venture Principal activity Indus   Towers Limited2 Vodafone Hutchison Australia Pty Limited3 Network   infrastructure Network operator India Australia 42.0 50.0 Notes: 1 Effective   ownership percentages of Vodafone Group Plc at 31 March 2015 rounded to the   nearest tenth of one percent. 2 42% of Indus Towers Limited is held by   Vodafone India Limited (‘VIL’). 3 Vodafone Hutchison Australia Pty Limited   has a year end of 31 December. Joint ventures included the results of the   Vodafone Omnitel B.V. until 21 February 2014. On 21 February 2014, the Group   acquired the remaining 23.1% interest upon which date the results of the   wholly-acquired entity were consolidated in the Group’s financial statements.   The following table provides aggregated financial information for the Group’s   joint ventures as it relates to the amounts recognised in the income   statement, statement of comprehensive income and statement of financial   position. (Loss)/profit from continuing operations Other comprehensive income   Total comprehensive (expense)/income Investment in joint ventures 2015 £m   2014 £m 2013 £m 2015 £m 2014 £m 2013 £m 2015 £m 2014 £m 2013 £m 2015 £m   20142013 £m £m Note: 1 Prior to 21 February 2014, the other participating   shareholder held substantive veto rights such that the Group did not   unilaterally control the financial and operating policies of Vodafone Omnitel   B.V. The summarised financial information for each of the Group’s material   equity accounted joint ventures on a 100% ownership basis is set out below.   Vodafone Hutchison Australia Pty Limited Vodafone Omnitel B.V.1 Indus Towers   Limited 2015 £m 2014 £m 2013 £m 2015 £m 2014 £m 2013 £m 2015 £m 2014 £m 2013   £m Note: 1 Prior to 21 February 2014, the other participating shareholder   held substantive veto rights such that the Group did not unilaterally control   the financial and operating policies of Vodafone Omnitel B.V. The Group   received a dividend of £166 million in the year to 31 March 2015 (2014: £26   million; 2013: £46 million) from Indus Towers Limited. 135 Vodafone Group Plc   Annual Report on Form 20-F 2015 Overview Strategy review Performance   Governance Financials Additional information Income statement and statement   of comprehensive income Revenue – 4,931 6,186 1,580 1,547 1,489 1,838 2,032   2,497 Depreciation and amortisation – (937)(999) (407) (507)(256) (415)   (423)(454) Interest income – 12 29 208 2 106 Interest expense – (15) (6) (75)   (124)(103) (228) (212)(191) Income tax (expense)/income – (174)(430) (182)   39(53) – 13 Profit or loss from continuing operations – 339951 44 5134 (320)   (132)(446) Other comprehensive (expense)/income – –(6) – –– 2 –6 Total   comprehensive income/(expense) – 339945 44 5134 (318) (132)(440) Statement of   financial position Non-current assets – – 1,482 1,798 2,285 1,916 Current   assets – – 278 423 424 590 Non-current liabilities – – (686) (801) (3,473)   (3,150) Current liabilities – – (487) (532) (743) (661) Equity shareholders’   funds – – (587) (888) 1,507 1,305 Cash and cash equivalents within current   assets – – 6 143 90 60 Non-current liabilities excluding trade and other   payables and provisions – – (481) (701) (3,325) (3,060) Current liabilities   excluding trade and other payables and provisions – – (188) (258) (90) (97)   Vodafone Omnitel B.V.1 – – 8,441 – 261731 – –(5) – 261726 Indus Towers   Limited 247 373(26) 18 2115 – –– 18 2115 Vodafone Hutchison Australia Pty Limited   (667) (559)(609) (160) (66) (223) 1 –3 (159) (66) (220) Other 89 286 (9) 5(3)   – –2 (9) 5(1) Total (331) (158) 7,812 (151) 221520 1 –– (150) 221520   Investment in joint ventures Investment in associates (331) (158) 328 272 31   March (3) 114 |
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|  | Notes to the   consolidated financial statements (continued) 12. Investments in associates   and joint arrangements (continued) Associates Unless otherwise stated, the   Company’s principal associates all have share capital consisting solely of   ordinary shares and are all indirectly held. The country of incorporation or   registration of all associates is also their principal place of operation.   Country of incorporation or registration Percentage1 shareholdings Name of   associate Principal activity Safaricom Limited2,3 Network operator Kenya 40.0   Notes: 1 Effective ownership percentages of Vodafone Group Plc at 31 March   2015, rounded to the nearest tenth of one percent. 2 The Group also holds two   non-voting shares. 3 At 31 March 2015 the fair value of Safaricom Limited was   KES 273 billion (£1,989 million) based on the closing quoted share price on   the Nairobi Stock Exchange. On 21 February 2014, the Group disposed of its   45% interest in Cellco Partnership which traded under the name Verizon   Wireless. Results from discontinued operations are disclosed in note 7   “Discontinued operations” to the consolidated financial statements. The Group   received £4,828 million of dividends in the year to 31 March 2014 (2013:   £4,798 million) from Cellco Partnership. The following table provides   aggregated financial information for the Group’s associates as it relates to   the amounts recognised in the income statement, statement of comprehensive   income and consolidated statement of financial position. Profit/(loss) from   continuing operations Other comprehensive (expense)/income Total   comprehensive income/(expense) Investment in associates 2015 £m 2014 £m 2013   £m 2015 £m 2014 £m 2013 £m 2015 £m 2014 £m 2013 £m 2015 £m 2014 £m 2013 £m   The summarised financial information for each of the Group’s material equity   accounted associates on a 100% ownership basis is set out below. Cellco   Partnership 2015 £m 2014 £m 2013 £m 136 Vodafone Group Plc Annual Report on   Form 20-F 2015 Income statement and statement of comprehensive income Revenue   Depreciation and amortisation Interest income Interest expense Income tax   (expense)/income Post-tax profit from discontinued operations Other   comprehensive expense Total comprehensive income – 22,122 48,827 – (2,186)   (5,145) – 13 – (38) (60) – (111) 29 – 7,092 14,272 – (2) – – 7,090 14,272   Statement of financial position Non-current assets Current assets Non-current   liabilities Current liabilities Equity shareholders’ funds – – – – – – – – –   – Cash and cash equivalents within current assets Non-current liabilities excluding   trade and other payables and provisions Current liabilities excluding trade   and other payables and provisions – – – – – – Cellco Partnership – – 38,373 –   –– – (1) – – 3,1906,422 Other 328 272262 88 5755 – –– 88 5755 Total 328 272   38,635 88 5755 – (1)– 88 3,2476,477 |
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|  | 13. Other   investments We hold a number of other listed and unlisted investments, mainly   comprising US$5.25 billion of loan notes from Verizon Communications.   Accounting policies Other investments are recognised and derecognised on a   trade date where a purchase or sale of an investment is under a contract   whose terms require delivery of the investment within the timeframe established   by the market concerned, and are initially measured at fair value, including   transaction costs. Other investments classified as held for trading and   available-for-sale are stated at fair value. Where securities are held for   trading purposes, gains and losses arising from changes in fair value are   included in net profit or loss for the period. For available-for-sale   investments, gains and losses arising from changes in fair value are   recognised directly in equity, until the security is disposed of or is   determined to be impaired, at which time the cumulative gain or loss   previously recognised in equity, determined using the weighted average cost   method, is included in the net profit or loss for the period. Other   investments classified as loans and receivables are stated at amortised cost   using the effective interest method, less any impairment. 2015 £m 2014 £m The   listed and unlisted securities are classified as available-for-sale. Public   debt and bonds are classified as held for trading, and other debt and bonds   which are not quoted in an active market, are classified as loans and   receivables. Unlisted equity investments are recorded at fair value where   appropriate. Other debt and bonds includes loan notes of US$5.25 billion   (£3,547 million) issued by Verizon Communications Inc. as part of the Group’s   disposal of its interest in Verizon Wireless, of which US$250 million (£168   million) is recorded within current assets. The carrying amount of these loan   notes approximates fair value. Current other investments comprise the   following: 2015 £m 2014 £m Public debt and bonds are classified as held for   trading. Cash held in restricted deposits are classified as loans and   receivables and include amounts held in qualifying assets by Group insurance   companies to meet regulatory requirements. Other debt and bonds includes   £2,016 million (2014: £2,809 million) of assets held for trading which   include £2,016 million (2014: £1,979 million) of assets held in managed   investment funds with liquidity of up to 90 days and £nil (2014: £830   million) of short-term securitised investments with original maturities of up   to six months, and £38 million (2014: £144 million) of assets classified as   loans and receivables comprising collateral paid on derivative financial   instruments. Current public debt and bonds include government bonds of £830   million (2014: £852 million) which consist of highly liquid index linked   gilts with less than four years to maturity held on an effective floating   rate basis. For public debt and bonds, other debt and bonds and cash held in   restricted deposits, the carrying amount approximates fair value. 137   Vodafone Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information Included within current   assets: Debt securities: Public debt and bonds 982 938 Other debt and bonds   2,223 2,957 Cash and other investments held in restricted deposits 650 524   3,855 4,419 Included within non-current assets: Equity securities: Listed 4   13 Unlisted 222 228 Debt securities: Public debt and bonds 148 141 Other debt   and bonds 3,383 3,171 3,757 3,553 |
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|  | Notes to the   consolidated financial statements (continued) 14. Inventory Our inventory   primarily consists of mobile handsets and is presented net of an allowance   for obsolete products. Accounting policies Inventory is stated at the lower   of cost and net realisable value. Cost is determined on the basis of weighted   average costs and comprises direct materials and, where applicable, direct   labour costs and those overheads that have been incurred in bringing the   inventories to their present location and condition. 2015 £m 2014 £m   Inventory is reported net of allowances for obsolescence, an analysis of   which is as follows: 2015 £m 2014 £m 2013 £m Cost of sales includes amounts   related to inventory amounting to £5,701 million (2014: £5,340 million; 2013:   £5,107 million). 138 Vodafone Group Plc Annual Report on Form 20-F 2015 1   April (88) (89) (92) Exchange movements 8 6(6) Amounts credited/(debited) to   the income statement 6 (5) 9 31 March (74) (88)(89) Goods held for resale 482   441 |
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|  | 15. Trade and   other receivables Our trade and other receivables mainly consist of amounts   owed to us by customers and amounts that we pay to our suppliers in advance.   Trade receivables are shown net of an allowance for bad or doubtful debts.   Derivative financial instruments with a positive market value are reported   within this note. Accounting policies Trade receivables do not carry any   interest and are stated at their nominal value as reduced by appropriate   allowances for estimated irrecoverable amounts. Estimated irrecoverable   amounts are based on the ageing of the receivable balances and historical   experience. Individual trade receivables are written off when management   deems them not to be collectible. 2015 £m 2014 £m Notes: 1 31 March 2015   amount includes prepayments of £566 million and accrued income of £nil. 2 31   March 2015 amount includes prepayments of £938 million and accrued income of   £1,839 million. 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: 2015 £m 2014 £m 2013 £m The carrying   amounts of trade and other receivables approximate their fair value and are   predominantly non-interest bearing. The fair values of the derivative   financial instruments are calculated by discounting the future cash flows to   net present values using appropriate market interest rates and foreign   currency rates prevailing at 31 March. 2015 £m 2014 £m 139 Vodafone Group Plc   Annual Report on Form 20-F 2015 Overview Strategy review Performance   Governance Financials Additional information Included within “Derivative   financial instruments”: Fair value through the income statement (held for   trading): Interest rate swaps 2,378 1,262 Cross currency interest rate swaps   218 158 Foreign exchange contracts 33 68 2,629 1,488 Designated hedge   relationships: Interest rate swaps 88 609 Cross currency interest rate swaps   1,288 346 4,005 2,443 1 April 589 770799 Exchange movements (60) (67) (10)   Amounts charged to administrative expenses 541 347360 Trade receivables   written off (268) (461)(379) 31 March 802 589770 Included within non-current   assets: Trade receivables 288 232 Amounts owed by associates and joint   ventures 85 51 Other receivables 190 150 Prepayments and accrued income1 566   592 Derivative financial instruments 3,736 2,245 4,865 3,270 Included within   current assets: Trade receivables 3,944 3,627 Amounts owed by associates and   joint ventures 133 68 Other receivables 930 1,233 Prepayments and accrued   income2 2,777 3,760 Derivative financial instruments 269 198 8,053 8,886 |
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|  | Notes to the   consolidated financial statements (continued) 16. Trade and other payables   Our trade and other payables mainly consist of amounts we owe to our   suppliers that have been invoiced or are accrued. They also include taxes and   social security amounts due in relation to our role as an employer.   Derivative financial instruments with a negative market value are reported   within this note. Accounting policies Trade payables are not interest bearing   and are stated at their nominal value. 2015 £m 2014 £m Notes: 1 31 March 2015   amount includes accruals of £161 million and deferred income of £123 million.   2 31 March 2015 amount includes accruals of £6,408 million and deferred   income of £1,663 million. 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. 2015 £m 2014 £m 140 Vodafone Group Plc Annual Report   on Form 20-F 2015 Included within “Derivative financial instruments”: Fair   value through the income statement (held for trading): Interest rate swaps   672 430 Cross currency interest rate swaps 229 12 Options 11 – Foreign   exchange contracts 46 29 958 471 Designated hedge relationships Interest rate   swaps 10 205 Cross currency interest rate swaps 16 205 984 881 Included   within non-current liabilities: Other payables 86 72 Accruals and deferred   income1 284 456 Derivative financial instruments 894 811 1,264 1,339 Included   within current liabilities: Trade payables 5,054 4,710 Amounts owed to   associates and joint ventures 44 51 Other taxes and social security payable   1,028 1,047 Other payables 621 678 Accruals and deferred income2 8,071 8,900   Derivative financial instruments 90 70 14,908 15,456 |
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|  | 17. Provisions   A provision is a liability recorded in the statement of financial position,   where there is uncertainty over the timing or amount that will be paid, and   is therefore often estimated. The main provisions we hold are in relation to   asset retirement obligations, which include the cost of returning network   infrastructure sites to their original condition at the end of the lease, and   claims for legal and regulatory matters. For further details see “Critical   accounting judgements” in note 1 “Basis of preparation” to the consolidated   financial statements. Accounting policies Provisions are recognised when the   Group has a present obligation (legal or constructive) as a result of a past   event, it is probable that the Group will be required to settle that   obligation and a reliable estimate can be made of the amount of the   obligation. Provisions are measured at the Directors’ best estimate of the   expenditure required to settle the obligation at the reporting date and are   discounted to present value where the effect is material. Asset retirement   obligations In the course of the Group’s activities, a number of sites and   other assets are utilised which are expected to have costs associated with   de-commissioning. The associated cash outflows are substantially expected to   occur at the dates of exit of the assets to which they relate, which are   long-term in nature, primarily in periods up to 25 years from when the asset   is brought into use. Legal and regulatory The Group is involved in a number   of legal and other disputes, including notifications of possible claims. The   Directors of the Company, after taking legal advice, have established   provisions after taking into account the facts of each case. The timing of   cash outflows associated with the majority of legal claims are typically less   than one year, however, for some legal claims the timing of cash flows may be   long-term in nature. For a discussion of certain legal issues potentially   affecting the Group see note 30 “Contingent liabilities” to the consolidated financial   statements. Other provisions Other provisions comprises various provisions   including those for restructuring costs and property. The associated cash   outflows for restructuring costs are primarily less than one year. The timing   of the cash flows associated with property is dependent upon the remaining   term of the associated lease. Asset retirement obligations £m Legal and   regulatory £m Other £m Total £m 1 April 2013 Exchange movements Arising on   acquisition Amounts capitalised in the year Amounts charged to the income   statement Utilised in the year - payments Amounts released to the   income statement Other 467 (14) 62 14 – (26) – (18) 450 (33) 92 – 140 (35)   (32) (25) 653 (27) 5 – 374 (186) (61) 9 1,570 (74) 159 14 514 (247) (93) (34)   31 March 2014 485 557 767 1,809 141 Vodafone Group Plc Annual Report on Form   20-F 2015 Overview Strategy review Performance Governance Financials   Additional information Exchange movements (34) (18) (47) (99) Arising on   acquisition – 265985 Amounts capitalised in the year 58 ––58 Amounts charged   to the income statement – 277270547 Utilised in the year - payments   (13) (51) (385)(449) Amounts released to the income statement (30) (100)(96)   (226) Other – 143(19) 124 31 March 2015 466 8345491,849 |
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|  | Notes to the   consolidated financial statements (continued) 17. Provisions (continued)   Provisions have been analysed between current and non-current as follows: 31   March 2015 Asset retirement obligations £m Legal and regulatory £m Other £m   Total £m 31 March 2014 Asset retirement obligations £m Legal and regulatory   £m Other £m Total £m Current liabilities Non-current liabilities 14 471 271   286 678 89 963 846 485 557 767 1,809 18. Called up share capital Called up   share capital is the number of shares in issue at their par value. A number   of shares were allotted during the year in relation to employee share   schemes. Accounting policies Equity instruments issued by the Group are   recorded at the proceeds received, net of direct issuance costs. 2015 2014   Number £m Number £m Notes: 1 At 31 March 2015, the Group held 2,300,749,013   (2014: 2,371,962,907) treasury shares with a nominal value of £303 million   (2014: £312 million). The market value of shares held was £5,072 million   (2014: £5,225 million). During the year, 71,213,894 (2014: 103,748,921)   treasury shares were reissued under Group share option schemes. 2 On 19   February 2014, we announced a “6 for 11” share consolidation effective 24   February 2014. This had the effect of reducing the number of shares in issue   from 52,821,751,216 ordinary shares (including 4,351,833,492 ordinary shares   held in Treasury) as at the close of business on 18 February 2014 to   28,811,864,298 new ordinary shares in issue immediately after the share   consolidation on 24 February 2014. During the year to 31 March 2014, we   issued 14,732,741,283 B shares of US$1.88477 per share and 33,737,176,433 C   shares of US$0.00001 per share as part of the Return of Value following the   disposal of our US Group, whose principal asset was its 45% stake in Verizon   Wireless. The B shares were cancelled as part of the Return of Value. The C   shares were reclassified as deferred shares with no substantive rights as   part of the Return of Value and transferred to LDC (Shares) Limited (‘LDC’).   On 8 May 2015, we repurchased and then subsequently cancelled all deferred   shares. Allotted during the year Nominal value £m Net proceeds £m Number 142   Vodafone Group Plc Annual Report on Form 20-F 2015 UK share awards 863,970 –2   US share awards – –– Total share awards 863,970 –2 Ordinary shares of 2020/21   US cents each allotted, issued and fully paid:1 53,820,386,3093,866 1,423,737   – (24,009,886,918) – (1,000,000,000) (74) 1 April 28,811,923,1283,792   Allotted during the year 863,970– Consolidated during the year2 –– Cancelled   during the year –– 31 March 28,812,787,0983,792 28,811,923,1283,792 Current   liabilities 14311 442767 Non-current liabilities 452523 1071,082 466834   5491,849 |
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|  | 19.   Reconciliation of net cash flow from operating activities The table below   shows how our profit for the year from continuing operations translates into   cash flows generated from our operating activities. 2015 £m 2014 £m 2013 £m   Notes 20. Cash and cash equivalents The majority of the Group’s cash is held   in bank deposits, money market funds or in repurchase agreements which have a   maturity of three months or less to enable us to meet our short-term   liquidity requirements. Accounting policies Cash and cash equivalents   comprise cash in hand and call deposits, and other short-term highly liquid   investments that are readily convertible to a known amount of cash and are   subject to an insignificant risk of changes in value. 2015 £m 2014 £m Cash   and cash equivalents are held by the Group on a short-term basis with all   having an original maturity of three months or less. The carrying amount   approximates their fair value. Cash and cash equivalents of £1,722 million   (2014: £777 million) are held in countries with restrictions on remittances   but where the balances could be used to repay subsidiaries’ third party   liabilities. Of this balance, INR 57,863 million (£623 million) was used to   settle India spectrum licence obligations on 8 April 2015. 143 Vodafone Group   Plc Annual Report on Form 20-F 2015 Overview Strategy review Performance   Governance Financials Additional information Cash at bank and in hand 2,379   1,498 Money market funds 2,402 3,648 Repurchase agreements 2,000 4,799   Commercial paper 101 – Short-term securitised investments – 189 Cash and cash   equivalents as presented in the statement of financial position 6,882 10,134   Bank overdrafts (21) (22) Cash and cash equivalents as presented in the   statement of cash flows 6,861 10,112 Profit for the financial year Profit for   the financial year from discontinued operations 5,917 59,420657 7 (57)   (48,108)(4,616) Profit/(loss) for the financial year from continuing   operations Non-operating income and expense Investment income Financing costs   Income tax (credit)/expense 5,860 11,312(3,959) 19 149(10) (883) (346)(305)   1,736 1,5541,596 6 (4,765) (16,582)476 Operating profit/(loss) Adjustments   for: Share-based payments Depreciation and amortisation Loss on disposal of   property, plant and equipment Share of result of equity accounted associates   and joint ventures Impairment losses Other income and expense   (Increase)/decrease in inventory (Increase)/decrease in trade and other   receivables (Decrease)/increase in trade and other payables 1,967   (3,913)(2,202) 27 88 92124 10, 11 9,565 7,5606,661 3 49 8577 12 63 (278)(575)   4 – 6,6007,700 114 620(468) 14 (73) 456 15 (230) 526(199) 16 (1,146) 851320   Cash generated by operations Net tax paid 10,397 12,14711,494 (682)   (5,920)(2,670) Net cash flow from operating activities 9,715 6,2278,824 |
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|  | Notes to the   consolidated financial statements (continued) 21. Borrowings The Group’s   sources of borrowing for funding and liquidity purposes come from a range of   committed bank facilities and through short-term and long-term issuances in   the capital markets including bond and commercial paper issues and bank   loans. We manage the basis on which we incur interest on debt between fixed   interest rates and floating interest rates depending on market conditions   using interest rate derivatives. The Group enters into foreign exchange   contracts to mitigate the impact of exchange rate movements on certain   monetary items. Accounting policies Capital market and bank borrowings   Interest bearing loans and overdrafts are initially measured at fair value   (which is equal to cost at inception), and are subsequently measured at   amortised cost, using the effective interest rate method, except where they   are identified as a hedged item in a designated hedge relationship. Any   difference between the proceeds net of transaction costs and the amount due   on settlement or redemption of borrowings is recognised over the term of the   borrowing. Carrying value and fair value information 2015 2014 Short-term   borrowings £m Long-term borrowings £m Short-term borrowings £m Long-term   borrowings £m Total £m Total £m Notes: 1 2 At 31 March 2015, amount includes   £2,542 million (2014: £1,185 million) in relation to collateral support   agreements. Includes a £1.3 billion (2014: £1.4 billion) liability for   payments due to holders of the equity shares in Kabel Deutschland AG under   the terms of a domination and profit and loss transfer agreement. At 31 March   2014, amount includes £882 million in relation to the Piramal Healthcare   option. 3 Bank loans include INR 457 billion (£4.9 billion) (2014: INR 425 billion   (£4.3 billion)) of loans held by Vodafone India Limited (‘VIL’) and its   subsidiaries (the “VIL Group”). The VIL Group has a number of security   arrangements supporting certain licences secured under the terms of   agreements between the Group, the Department of Telecommunications and the   Government of India including certain share pledges of the shares within the   VIL Group. The terms and conditions of the security arrangements mean that,   should members of the VIL Group not meet all of their loan payment and   performance obligations, the lenders may sell the pledged shares and enforce   rights over the certain licences under the terms of the tri-party agreements   to recover their losses, with any remaining sales proceeds being returned to   the VIL Group. Each of the eight legal entities within the VIL Group provide   cross guarantees to the lenders in respect of debt contracted by the other   entities. The fair value and carrying value of the Group’s short-term   borrowings are as follows: Sterling equivalent nominal value Fair value   Carrying value 2015 £m 2014 £m 2015 £m 2014 £m 2015 £m 2014 £m 144 Vodafone   Group Plc Annual Report on Form 20-F 2015 Financial liabilities measured at   amortised cost 10,689 5,655 10,843 5,964 10,837 5,964 Bonds: 1,265 1,756   1,309 1,771 1,297 1,783 Euro floating rate note due June 2014 – 929 – 930 –   930 4.625% sterling 350 million bond due September 2014 – 302 – 307 – 315   4.625% sterling 525 million bond due September 2014 – 525 – 534 – 538 5.125%   euro 500 million bond due April 2015 361 – 362 – 379 – 6.25% euro 1,250   million bond due January 2016 904 – 947 – 918 – Bonds in designated hedge   relationships: 489 – 489 – 489 – 2.15% Japanese yen 3,000 million bond due   April 2015 17 – 17 – 17 – US dollar 700 million floating rate note due February   2016 472 – 472 – 472 – Short-term borrowings 12,443 7,411 12,641 7,735 12,623   7,747 Financial liabilities measured at amortised cost: 1,2634,6475,910 22–22   950–950 1,7834,4656,248 3,7291103,839 –12,23212,232 Bank loans   1,8765,1287,004 Bank overdrafts 21–21 Commercial paper 5,077–5,077 Bonds   1,2976,6847,981 Other liabilities1,2,3 3,8631333,996 Bonds in designated   hedge relationships 48910,49010,979 12,62322,43535,058 7,74721,45429,201 |
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|  | The fair value   and carrying value of the Group’s long-term borrowings are as follows:   Sterling equivalent nominal value Fair value Carrying value 2015 £m 2014 £m   2015 £m 2014 £m 2015 £m 2014 £m Fair values are calculated on the basis of   level 2 fair value hierarchy using quoted market prices or discounted cash   flows with a discount rate based upon forward interest rates available to the   Group at the reporting date. Further information can be found in note 23 “Capital   and financial risk management”. 145 Vodafone Group Plc Annual Report on Form   20-F 2015 Overview Strategy review Performance Governance Financials   Additional information Financial liabilities measured at amortised cost: Bank   loans 5,173 4,788 5,213 4,707 5,128 4,647 Other liabilities 133 110 133 110   133 110 Bonds: 6,002 4,272 6,908 4,620 6,684 4,465 5.125% euro 500 million   bond due April 2015 – 413 – 432 – 435 6.25% euro 1,250 million bond due   January 2016 – 1,032 – 1,020 – 943 4.75% euro 500 million bond due June 2016   268 302 283 328 287 441 6.5% euro 400 million bond due July 2017 – 330 – 351   – 347 5.375% sterling 600 million bond due December 2017 549 548 605 611 568   569 5% euro 750 million bond due June 2018 542 619 622 716 564 644 6.5% euro   700 million bond due June 2018 – 578 – 604 – 606 8.125% sterling 450 million   bond due November 2018 450 450 553 558 476 480 1% euro 1,750 million bond due   September 2020 1,265 – 1,283 – 1,263 – 4.65% euro 1,250 million bond January   2022 904 – 1,129 – 1,081 – 5.375% euro 500 million bond June 2022 361 – 475 –   484 – 1.875% euro 1,000 million bond due September 2025 723 – 768 – 721 –   5.625% sterling 250 million bond due December 2025 250 – 313 – 343 – 5.9%   sterling 450 million bond due November 2032 450 – 592 – 656 – 2.75% euro 332   million bond due December 2034 240 – 285 – 241 – Bonds in designated hedge   relationships: 9,397 10,951 10,201 11,797 10,490 12,232 2.15% Japanese yen   3,000 million bond due April 2015 – 17 – 18 – 18 US dollar 700 million   floating rate note due February 2016 – 420 – 420 – 420 5.625% US dollar 1,300   million bond due February 2017 876 779 946 874 920 836 1.625% US dollar 1,000   million bond due March 2017 674 599 679 607 672 597 1.25% US dollar 1,000   million bond due September 2017 674 599 670 594 672 597 1.5% US dollar 1,400   million bond due February 2018 943 839 942 827 941 837 4.625% US dollar 500   million bond due July 2018 337 300 367 332 375 343 5.45% US dollar 1,250   million bond due June 2019 842 749 955 859 938 833 4.375% US dollar 500 million   bond due March 2021 337 300 371 322 346 296 4.65% euro 1,250 million bond due   January 2022 – 1,032 – 1,213 – 1,194 5.375% euro 500 million bond due June   2022 – 413 – 509 – 536 2.5% US dollar 1,000 million bond due September 2022   674 599 654 551 667 557 2.95% US dollar 1,600 million bond due February 2023   1,078 959 1,066 903 1,121 939 5.625% sterling 250 million bond due December   2025 – 250 – 284 – 313 6.6324% euro 50 million bond due December 2028 36 41   109 93 86 81 7.875% US dollar 750 million bond due February 2030 505 450 711   603 771 698 5.9% sterling 450 million bond due November 2032 – 450 – 519 –   561 6.25% US dollar 495 million bond due November 2032 333 297 410 341 445   399 6.15% US dollar 1,700 million bond due February 2037 1,145 1,019 1,392 1,166   1,578 1,416 4.375% US dollar 1,400 million bond due February 2043 943 839 929   762 958 761 Long-term borrowings 20,705 20,121 22,455 21,234 22,435 21,454 |
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|  | Notes to the   consolidated financial statements (continued) 21. Borrowings (continued)   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: Loans in designated hedge   relationships £m Bank loans £m Commercial paper £m Other liabilities £m Bonds   £m Total £m Within one year In one to two years In two to three years In   three to four years In four to five years In more than five years 1,286 695   375 1,164 2,710 592 954 – – – – – 2,191 1,709 591 1,075 1,724 – 3,758 11 7 8   8 69 453 890 1,228 2,468 668 11,087 8,642 3,305 2,201 4,715 5,110 11,748 6,822   (912) 954 (4) 7,290 (1,042) 3,861 – 16,794 (4,562) 35,721 (6,520) Effect of   discount/financing rates 31 March 2014 5,910 950 6,248 3,861 12,232 29,201   The maturity profile of the Group’s financial derivatives (which include   interest rate swaps, cross currency interest rate swaps and foreign exchange   swaps), using undiscounted cash flows, is as follows: 2015 2014 Payable £m   Receivable £m Payable £m Receivable £m Payables and receivables are stated   separately in the table above as settlement is on a gross basis. The net   effect of discount/financing rates is £3,073 million (2014: £4,327 million),   leaving a £3,021 million (2014: £1,562 million) net receivable in relation to   financial instruments. This is split £984 million (2014: £881 million) within   trade and other payables and £4,005 million (2014: £2,443 million) within   trade and other receivables. Gains and losses recognised in the hedging   reserve in equity on cross currency interest rate swaps as at 31 March 2015   will be continuously released to the income statement within financing costs   until the repayment of certain bonds classified as loans designated in hedge   relationships in the table of maturities of non-derivative financial   liabilities above. The currency split of the Group’s foreign exchange derivatives   is as follows: 2015 2014 Payable £m Receivable £m Payable £m Receivable £m   Payables and receivables are stated separately in the table above as   settlement is on a gross basis. The net effect of discount/financing rates is   £192 million (2014: £7 million), leaving a £1,248 million (2014: £326   million) net receivable in relation to foreign exchange financial   instruments. This is split £291 million (2014: £246 million) within trade and   other payables and £1,539 million (2014: £572 million) within trade and other   receivables. 146 Vodafone Group Plc Annual Report on Form 20-F 2015 Sterling   11,461 12,578 8,9559,222 5,34211,364 10,6134,330 58917 1,8802,765 Euro 8,158   6,228 US dollar 5,598 9,908 Japanese yen 594 17 Other 3,238 1,374 29,049   30,105 27,37927,698 Within one year 2,647 3,537 1,2841,442 2,4543,656   4,4893,920 5,0403,138 1,7292,137 14,79912,737 In one to two years 5,457 4,005   In two to three years 4,179 4,617 In three to four years 1,430 1,942 In four   to five years 1,145 2,164 In more than five years 13,177 17,864 28,035 34,129   29,79527,030 Within one year 1,928 5,0921,5883,885 87313,366 In one to two   years 831 –61018 1,2562,715 In two to three years 1,090 –83111 2,6504,582 In   three to four years 920 –1,19112 6262,749 In four to five years 862 –13512 1,1012,110   In more than five years 1,660 –4,958115 8,11814,851 7,291 5,0929,3134,053   14,62440,373 Effect of discount/financing rates (287) (15) (1,332)(36)   (3,645)(5,315) 31 March 2015 7,004 5,0777,9814,017 10,97935,058 |
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|  | The present   value of minimum lease payments under finance lease arrangements under which   the Group has leased certain of its equipment is included within other   liabilities and is analysed as follows: 2015 £m 2014 £m Interest rate and   currency of borrowings is as follows: Total borrowings £m Floating rate   borrowings £m Fixed rate borrowings1 £m Other borrowings2 £m Currency   Sterling Euro US dollar Other 2,801 16,225 4,537 5,638 885 4,557 4,330 2,768   1,910 10,220 207 1,988 6 1,448 – 882 31 March 2014 29,201 12,540 14,325 2,336   Notes: 1 The weighted average interest rate for the Group’s sterling   denominated fixed rate borrowings is 6.3% (2014: 5.7%). The weighted average   time for which these rates are fixed is 8.1 years (2014: 2.5 years). The   weighted average interest rate for the Group’s euro denominated fixed rate   borrowings is 3.4% (2014: 4.4%). The weighted average time for which the   rates are fixed is 7.5 years (2014: 2.6 years). The weighted average interest   rate for the Group’s US dollar denominated fixed rate borrowings is 2.8%   (2014: 2.9%). The weighted average time for which the rates are fixed is 3.5   years (2014: 5.7 years). The weighted average interest rate for the Group’s   other currency fixed rate borrowings is 9.6% (2014: 10.2%). The weighted   average time for which the rates are fixed is 0.6 years (2014: 1.4 years). 2   At 31 March 2015 other borrowings of £1,314 million (2014: £2,336 million)   include a £1.3 billion (2014: £1.4 billion) liability for payments due to   holders of the equity shares in Kabel Deutschland AG under the terms of a   domination and profit and loss transfer agreement. The figures shown in the   tables above take into account interest rate swaps used to manage the   interest rate profile of financial liabilities. Interest on floating rate   borrowings is generally based on national LIBOR equivalents or government   bond rates in the relevant currencies. Additional protection from euro and US   dollar interest rate movements is provided by fixing interest rates or   reduced by floating interest rates using interest rate swaps or interest rate   futures. 2015 2014 2015 2014 US$1 US$1 EUR1 EUR1 Interest rate futures £m   Interest rate swaps £m Interest rate futures £m Interest rate swaps £m   Interest rate futures £m Interest rate swaps £m Interest rate futures £m   Interest rate swaps £m Notes: 1 In the table above, figures shown as positive   indicate an increase in fixed interest debt and figures shown in brackets   indicate a reduction in fixed interest debt. 2 Figures shown as “in more than   five years” relate to the periods from March 2020 to December 2043 (2014:   March 2019 to December 2043). 147 Vodafone Group Plc Annual Report on Form   20-F 2015 Overview Strategy review Performance Governance Financials   Additional information Within one year – – – – – – – – (5,722) (2,282)655   (3,716)5,814 (619)5,814 1,7265,814 4,9793,806 1032,802 –2,207 In one to two   years – – (5,722) 1,659– In two to three years – – (5,722) 3,000– In three to   four years – – (3,744) 1,687– In four to five years – – (2,755) (20) 4,782 In   more than five years2 – – (2,605) –(5,258) Sterling 2,108 552,0467 Euro   19,531 4,25213,9721,307 US dollar 7,962 7,782180– Other 5,457 2,8982,559– 31   March 2015 35,058 14,98718,7571,314 Within one year 14 21 In two to five   years 40 34 In more than five years 85 69 |
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|  | Notes to the   consolidated financial statements (continued) 21. Borrowings (continued)   Borrowing facilities Committed facilities expiry 2015 2014 Drawn £m Undrawn   £m Drawn £m Undrawn £m At 31 March 2015, the Group’s most significant   committed facilities comprised two revolving credit facilities which remained   undrawn throughout the year of US$3.9 billion (£2.6 billion) and €3.9 billion   (£2.8 billion) maturing in five years. Under the terms of these bank   facilities, lenders have the right, but not the obligation, to cancel their   commitment 30 days from the date of notification of a change of control of   the Company and have outstanding advances repaid on the last day of the   current interest period. The facility agreements provide for certain   structural changes that do not affect the obligations of the Company to be   specifically excluded from the definition of a change of control. This is in   addition to the rights of lenders to cancel their commitment if the Company   has committed an event of default. The terms and conditions of the Group’s   drawn facilities obtained in relation to projects in its Italian, German,   Turkish and Romanian operations of €1.6 billion in aggregate (£1.2 billion)   and the undrawn facilities in the Group’s UK and Irish operations totalling   £0.5 billion and the undrawn facility in the German operation of €0.4 billion   (£0.3 million) are similar to those of the US dollar and euro revolving   credit facilities. Further information on these facilities can be found in   note 22 “Liquidity and capital resources”. 22. Liquidity and capital   resources This section includes an analysis of net debt, which we use to   manage capital, and committed borrowing facilities. Net debt Net debt was   £22.3 billion at 31 March 2015 and includes liabilities for amounts payable   under the domination agreement in relation to Kabel Deutschland (£1.3   billion) and deferred spectrum licence costs in India (£1.8 billion). This   increased by £8.5 billion in the year as a result of the acquisition of Grupo   Corporativo Ono, S.A., payments for spectrum licences and equity shareholders   dividends which outweighed favourable foreign exchange movements and positive   free cash flow. Net debt represented 35.1% of our market capitalisation at 31   March 2015 compared to 23.5% at 31 March 2014. Average net debt at month end   accounting dates over the 12 month period ended 31 March 2015 was £19.8   billion and ranged between net debt of £14.1 billion and £22.9 billion. Our   consolidated net debt position at 31 March was as follows: 2015 £m 2014 £m   Notes: 1 2 At 31 March 2015 US$3,321 million was drawn under the US   commercial paper programme and €3,928 million was drawn under the euro   commercial paper programme. Includes a £1.3 billion (2014: £1.4 billion)   liability for payments due to holders of the equity shares in Kabel   Deutschland AG under the terms of a domination and profit and loss transfer   agreement. At 31 March 2015 the amount includes £2,542 million (2014: £1,185   million) in relation to cash received under collateral support agreements.   Comprises mark-to-market adjustments on derivative financial instruments   which are included as a component of trade and other receivables (2015:   £4,005 million; 2014: £2,443 million) and trade and other payables (2015:   £984 million; 2014: £881 million) and short-term investments primarily in   index linked government bonds and managed investment funds included as a   component of other investments (2015: £2,884 million; 2014: £3,805 million).   3 4 148 Vodafone Group Plc Annual Report on Form 20-F 2015 Cash and cash   equivalents 6,882 10,134 Short-term borrowings Bonds (1,786) (1,783)   Commercial paper1 (5,077) (950) Put options over non-controlling interests2   (1,307) (2,330) Bank loans (1,876) (1,263) Other short-term borrowings3   (2,577) (1,421) (12,623) (7,747) Long-term borrowings Put options over   non-controlling interests (7) (6) Bonds, loans and other long-term borrowings   (22,428) (21,448) (22,435) (21,454) Other financial instruments4 5,905 5,367   Net debt (22,271) (13,700) Within one year 1,065– 59070 45113 1712,643 56535   –3,188 1,728582 In one to two years 431– In two to three years 736– In three   to four years 757573 In four to five years 3172,790 In more than five years   1,0653,257 31 March 4,3716,620 3,5056,531 |
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|  | At 31 March   2015 we had £6,882 million of cash and cash equivalents which are held in   accordance with the counterparty and settlement risk limits of the Board   approved treasury policy. The main forms of liquid investment at 31 March   2015 were managed investment funds, money market funds, UK index linked   government bonds, tri-party repurchase agreements and bank deposits. The cash   received from collateral support agreements mainly reflects the value of our   interest rate swap and cross currency interest rate swap portfolios which are   substantially net present value positive. See note 23 for further details on   these agreements. Commercial paper programmes We currently have US and euro   commercial paper programmes of US$15 billion and £5 billion respectively which   are available to be used to meet short-term liquidity requirements. At 31   March 2015 amounts external to the Group of €3,928 million (£2,839 million)   were drawn under the euro commercial paper programme and US$3,321 million   (£2,237 million) were drawn down under the US commercial paper programme,   with such funds being provided by counterparties external to the Group. At 31   March 2014 amounts external to the Group of €731 million (£604 million) were   drawn under the euro commercial paper programme and US$578 million (£346   million) were drawn down under the US commercial paper programme, with such   funds being provided by counterparties external to the Group. The commercial   paper facilities were supported by US$3.9 billion (£2.6 billion) and €3.9   billion (£2.8 billion) of syndicated committed bank facilities (see   “Committed facilities” below). No amounts had been drawn under either bank   facility. Bonds We have a €30 billion euro medium-term note programme and a   US shelf programme which are used to meet medium to long-term funding   requirements. At 31 March 2015 the total amounts in issue under these   programmes split by currency were US$14.6 billion, £1.7 billion and €7.8   billion. At 31 March 2015 we had bonds outstanding with a nominal value of   £17,153 million (2014: £16,979 million). In the year ended 31 March 2015   bonds with a nominal value equivalent of £2.2 billion were issued under the   US shelf. The bonds issued in the year were: Nominal amount Sterling   equivalent Date of bond issue Maturity of bond €m £m Own shares The Group   held a maximum of 2,371,948,109 of its own shares during the year which   represented 8.2% of issued share capital at that time. Committed facilities   In aggregate we have committed facilities of approximately £10,991 million,   of which £6,620 million was undrawn and £4,371 million was drawn at 31 March   2015. The following table summarises the committed bank facilities available   to us at 31 March 2015. Committed bank facilities Amounts drawn Terms and   conditions 28 March 2014 €3.9 billion syndicated revolving No drawings have   been made against Lenders have the right, but not the obligation, to cancel   their commitments and have outstanding advances repaid no sooner than 30 days   after notification of a change of control. This is in addition to the rights   of lenders to cancel their commitment if we commit an event of default;   however, it should be noted that a material adverse change clause does not   apply. The facility matures on 28 March 2020, with each lender having the   option to extend the Facility for a further year prior to the second   anniversary of the Facility, if requested by the Company. credit facility,   maturing 28 March 2020. this facility. The facility supports our commercial   paper programmes and may be used for general corporate purposes including   acquisitions. 27 February 2015 US$3.9 billion syndicated revolving credit   facility, maturing 27 February 2020. No drawings have been made against this   facility. The facility supports our commercial paper programmes and may be   used for general corporate purposes including acquisitions. Lenders have the   right, but not the obligation, to cancel their commitments and have   outstanding advances repaid no sooner than 30 days after notification of a   change of control. This is in addition to the rights of lenders to cancel   their commitment if we commit an event of default; however, it should be   noted that a material adverse change clause does not apply. The facility   matures on 27 February 2020, with each lender having the option to (i) extend   the Facility for a further year prior to the first anniversary of the   Facility and should such extension be exercised, to (ii) extend the Facility   for a further year prior to the second anniversary of the Facility, in both   cases if requested by the Company. 27 November 2013 £0.5 billion loan   facility, maturing 12 December 2021. This facility was drawn down in full in   euros, as allowed by the terms of the facility, on 12 December 2014. As the   syndicated revolving credit facilities with the addition that, should our UK   and Irish operating companies spend less than the equivalent of £0.9 billion   on capital expenditure, we will be required to repay the drawn amount of the   facility that exceeds 50% of the capital expenditure. 149 Vodafone Group Plc   Annual Report on Form 20-F 2015 Overview Strategy review Performance   Governance Financials Additional information 11 September 2014 11 September   2014 1 December 2014 11 September 2020 1,7501,265 11 September 2025 1,000723   1 December 2034 332240 |
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|  | Notes to the   consolidated financial statements (continued) 22. Liquidity and capital   resources (continued) Committed bank facilities Amounts drawn Terms and   conditions 28 July 2008 €0.4 billion loan facility, maturing 12 August 2015.   This facility was drawn down in full on 12 August 2008. As the syndicated   revolving credit facilities with the addition that, should our Italian   operating company spend less than the equivalent of €1.5 billion on capital   expenditure, we will be required to repay the drawn amount of the facility   that exceeds 18% of the capital expenditure. 15 September 2009 €0.4 billion   loan facility, maturing 30 July 2017. This facility was drawn down in full on   30 July 2010. As the syndicated revolving credit facilities with the addition   that, should our German operating company spend less than the equivalent of   €0.8 billion on VDSL related capital expenditure, we will be required to   repay the drawn amount of the facility that exceeds 50% of the VDSL capital   expenditure. 29 September 2009 US$0.7 billion export credit agency loan   facility, final maturity date 19 September 2018. This facility is fully drawn   down and is amortising. As the syndicated revolving credit facilities with   the addition that the Company was permitted to draw down under the facility   based upon eligible spend with Ericsson up until the final draw down date of   30 June 2011. Quarterly repayments of the drawn balance commenced on 30 June   2012 with a final maturity date of 19 September 2018. 8 December 2011 €0.4   billion loan facility, maturing on 5 June 2020. This facility was drawn down   in full on 5 June 2013. As the syndicated revolving credit facilities with   the addition that, should our Italian operating company spend less than the   equivalent of €1.3 billion on capital expenditure, we will be required to   repay the drawn amount of the facility that exceeds 50% of the capital   expenditure. 20 December 2011 €0.3 billion loan facility, maturing 18 September   2019. This facility was drawn down in full on 18 September 2012. As the   syndicated revolving credit facilities with the addition that, should our   Turkish and Romanian operating companies spend less than the equivalent of   €1.3 billion on capital expenditure, we will be required to repay the drawn   amount of the facility that exceeds 50% of the capital expenditure. 4 March   2013 €0.1 billion loan facility, maturing 4 December 2020. This facility was   drawn down in full on 4 December 2013. 2 December 2014 US$0.85 billion loan   facility, maturing 2 June 2018. This facility is undrawn and has an   availability period of six months. As the syndicated revolving credit   facilities with the addition that the expenditure should be spent on projects   involving Canadian domiciled entities. 17 December 2014 €0.35 billion loan   facility, maturing on the seven year anniversary of the first drawing. This   facility is undrawn and has an availability period of 18 months. The facility   is available to finance a project to upgrade and expand the mobile network in   Germany. As the syndicated revolving credit facilities with the addition   that, should our German operating company spend less than the equivalent of   €0.7 billion on capital expenditure, we will be required to repay the drawn amount   of the facility that exceeds 50% of the capital expenditure. Furthermore,   certain of our subsidiaries are funded by external facilities which are   non-recourse to any member of the Group other than the borrower. These   facilities may only be used to fund their operations. At 31 March 2015   Vodafone India had facilities of INR 233 billion (£2.5 billion) of which INR   233 billion (£2.5 billion) was drawn. Vodafone Egypt had an undrawn revolving   credit facility of EGP 4.0 billion (£353 million). Vodacom had fully drawn   facilities of ZAR 1.0 billion (£55 million). Ghana had external facilities of   US$143 million (£96 million) and GHS 60 million (£11.0 million) both of which   were fully drawn. We believe that we have sufficient funding for our expected   working capital requirements for at least the next 12 months. Further details   regarding the maturity, currency and interest rates of the Group’s gross   borrowings at 31 March 2015 are included in note 21 “Borrowings”. Dividends   from associates and to non-controlling shareholders Dividends from our   associates are generally paid at the discretion of the Board of Directors or   shareholders of the individual operating and holding companies, and we have   no rights to receive dividends except where specified within certain of the   Group’s shareholders’ agreements. Similarly, other than ongoing dividend   obligations to the KDG minority shareholders should they continue to hold   their minority stake, we do not have existing obligations under shareholders’   agreements to pay dividends to non-controlling interest partners of our   subsidiaries or joint ventures. The amount of dividends received and paid in   the year are disclosed in the consolidated statement of cash flows. Potential   cash outflows from option agreements and similar arrangements Under the terms   of the sale and purchase agreement governing the disposal of the US Group,   including the 45% interest in Verizon Wireless, the Group retains the   responsibility for any tax liabilities of the US Group, excluding those   relating to the Verizon Wireless partnership, for periods up to the   completion of the transaction on 21 February 2014. Off-balance sheet   arrangements We do not have any material off-balance sheet arrangements as   defined in item 5.E.2. of the SEC’s Form 20-F. Please refer to notes 29 and   30 for a discussion of our commitments and contingent liabilities. 150   Vodafone Group Plc Annual Report on Form 20-F 2015 |
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|  | 23. Capital and   financial risk management This note details our treasury management and   financial risk management objectives and policies, as well as the exposure   and sensitivity of the Group to credit, liquidity, interest and foreign   exchange risk, and the policies in place to monitor and manage these risks.   Accounting policies Financial instruments Financial assets and financial   liabilities, in respect of financial instruments, are recognised on the   Group’s statement of financial position when the Group becomes a party to the   contractual provisions of the instrument. Financial liabilities and equity   instruments Financial liabilities and equity instruments issued by the Group   are classified according to the substance of the contractual arrangements   entered into and the definitions of a financial liability and an equity   instrument. An equity instrument is any contract that evidences a residual   interest in the assets of the Group after deducting all of its liabilities   and includes no obligation to deliver cash or other financial assets. The   accounting policies adopted for specific financial liabilities and equity   instruments are set out below. Put option arrangements The potential cash   payments related to put options issued by the Group over the equity of subsidiary   companies are accounted for as financial liabilities when such options may   only be settled by exchange of a fixed amount of cash or another financial   asset for a fixed number of shares in the subsidiary. The amount that may   become payable under the option on exercise is initially recognised at   present value within borrowings with a corresponding charge directly to   equity. The charge to equity is recognised separately as written put options   over non-controlling interests, adjacent to non-controlling interests in the   net assets of consolidated subsidiaries. The Group recognises the cost of   writing such put options, determined as the excess of the present value of   the option over any consideration received, as a financing cost. Such options   are subsequently measured at amortised cost, using the effective interest   rate method, in order to accrete the liability up to the amount payable under   the option at the date at which it first becomes exercisable; the charge   arising is recorded as a financing cost. In the event that the option expires   unexercised, the liability is derecognised with a corresponding adjustment to   equity. Derivative financial instruments and hedge accounting The Group’s   activities expose it to the financial risks of changes in foreign exchange   rates and interest rates which it manages using derivative financial   instruments. The use of financial derivatives is governed by the Group’s   policies approved by the Board of Directors, which provide written principles   on the use of financial derivatives consistent with the Group’s risk   management strategy. Changes in values of all derivatives of a financing   nature are included within investment income and financing costs in the   income statement unless designated in an effective cash flow hedge relationship   or a hedge of a net investment in foreign operations when changes in value   are deferred to other comprehensive income or equity respectively. 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 remeasured to fair value at each reporting   date. The Group designates certain derivatives as: a hedges of the change of   fair value of recognised assets and liabilities (“fair value hedges”); or a   hedges of highly probable forecast transactions or hedges of foreign currency   or interest rate risks of firm commitments (“cash flow hedges”); or a hedges   of net investments in foreign operations. Hedge accounting is discontinued when   the hedging instrument expires or is sold, terminated or exercised, or no   longer qualifies for hedge accounting, or if the Company chooses to end the   hedging relationship. Fair value hedges The Group’s policy is to use   derivative instruments (primarily interest rate swaps) to convert a   proportion of its fixed rate debt to floating rates in order to hedge the   interest rate risk arising, principally, from capital market borrowings. The   Group designates these as fair value hedges of interest rate risk with   changes in fair value of the hedging instrument recognised in the income   statement for the period together with the changes in the fair value of the   hedged item due to the hedged risk, to the extent the hedge is effective.   Gains or losses relating to any ineffective portion are recognised   immediately in the income statement. Cash flow hedges Cash flow hedging is   used by the Group to hedge certain exposures to variability in future cash   flows. The portion of gains or losses relating to changes in the fair value   of derivatives that are designated and qualify as effective cash flow hedges   is recognised in other comprehensive income; gains or losses relating to any   ineffective portion are recognised immediately in the income statement. When   the hedged item is recognised in the income statement, amounts previously   recognised in other comprehensive income and accumulated in equity for the   hedging instrument are reclassified to the income statement. However, when   the hedged transaction results in the recognition of a non-financial asset or   a non-financial liability, the gains and losses previously recognised in   other comprehensive income and accumulated in equity are transferred from   equity and included in the initial measurement of the cost of the   non-financial asset or non-financial liability. When hedge accounting is   discontinued, any gain or loss recognised in other comprehensive income at   that time remains in equity and is recognised in the income statement when   the hedged transaction is ultimately recognised in the income statement. If a   forecast transaction is no longer expected to occur, the gain or loss   accumulated in equity is recognised immediately in the income statement. 151   Vodafone Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information |
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|  | Notes to the   consolidated financial statements (continued) 23. Capital and financial risk   management (continued) Net investment hedges Exchange differences arising   from the translation of the net investment in foreign operations are   recognised directly in equity. Gains and losses on those hedging instruments   (which include bonds, commercial paper, cross currency swaps and foreign   exchange contracts) designated as hedges of the net investments in foreign   operations are recognised in equity to the extent that the hedging   relationship is effective; these amounts are included in exchange differences   on translation of foreign operations as stated in the statement of   comprehensive income. Gains and losses relating to hedge ineffectiveness are   recognised immediately in the income statement for the period. Gains and   losses accumulated in the translation reserve are included in the income   statement when the foreign operation is disposed of. Capital management The   following table summarises the capital of the Group: 2015 £m 2014 £m The   Group’s policy is to borrow centrally using a mixture of long-term and   short-term capital market issues and borrowing facilities to meet anticipated   funding requirements. These borrowings, together with cash generated from   operations, are loaned internally or contributed as equity to certain   subsidiaries. The Board has approved three internal debt protection ratios   being: net interest to operating cash flow (plus dividends from associates);   retained cash flow (operating cash flow plus dividends from associates less   interest, tax, dividends to non-controlling shareholders and equity   dividends) to net debt; and operating cash flow (plus dividends from   associates) to net debt. These internal ratios establish levels of debt that   the Group should not exceed other than for relatively short periods of time   and are shared with the Group’s debt rating agencies being Moody’s, Fitch   Ratings and Standard & Poor’s. Financial risk management The Group’s   treasury function provides a centralised service to the Group for funding,   foreign exchange, interest rate management and counterparty risk management.   Treasury operations are conducted within a framework of policies and   guidelines authorised and reviewed by the Board, most recently on 28 July   2014. A treasury risk committee comprising the Group’s Chief Financial   Officer, Group General Counsel and Company Secretary, Group Financial   Controller, Group Treasury Director and Director of Financial Reporting meets   three times a year to review treasury activities and its members receive   management information relating to treasury activities on a quarterly basis.   The Group’s accounting function, which does not report to the Group Treasury   Director, provides regular update reports of treasury activity to the Board.   The Group’s internal auditor reviews the internal control environment   regularly. The Group uses a number of derivative instruments for currency and   interest rate risk management purposes only that are transacted by specialist   treasury personnel. The Group mitigates banking sector credit risk by the use   of collateral support agreements. Credit risk The Group considers its   exposure to credit risk at 31 March to be as follows: 2015 £m 2014 £m 152   Vodafone Group Plc Annual Report on Form 20-F 2015 Bank deposits 2,379 1,498   Repurchase agreements 2,000 4,799 Cash held in restricted deposits 650 524 UK   government bonds 830 852 Money market fund investments 2,402 3,648 Derivative   financial instruments 4,005 2,443 Other investments – debt and bonds 5,906   5,525 Trade receivables 4,232 3,859 Other receivables 1,120 1,546 Short-term   securitised investments – 1,019 23,524 25,713 Financial assets: Cash and cash   equivalents (6,882) (10,134) Fair value through the income statement (held   for trading) (5,513) (5,293) Derivative instruments in designated hedge   relationships (1,376) (955) Financial liabilities: Fair value through the   income statements (held for trading) 958 471 Derivative instruments in   designated hedge relationships 26 410 Financial liabilities held at amortised   cost 35,058 29,201 Net debt 22,271 13,700 Equity 67,733 71,781 Capital 90,004   85,481 |
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|  | The Group   invested in UK index linked government bonds on the basis that they generated   a floating rate return in excess of £ LIBOR and are amongst the most   creditworthy of investments available. The Group has two managed investment   funds. These funds hold fixed income sterling securities and the average   credit quality is high double A. Money market investments are in accordance   with established internal treasury policies which dictate that an   investment’s long-term credit rating is no lower than mid BBB. Additionally,   the Group invests in AAA unsecured money market mutual funds where the   investment is limited to 7.5% of each fund. The Group has investments in   repurchase agreements which are fully collateralised investments. The   collateral is sovereign and supranational debt of major EU countries with at   least one AAA rating denominated in euros, sterling and US dollars and can be   readily converted to cash. In the event of any default, ownership of the   collateral would revert to the Group. Detailed below is the value of the   collateral held by the Group at 31 March 2015. 2015 £m 2014 £m In respect of   financial instruments used by the Group’s treasury function, the aggregate   credit risk the Group may have with one counterparty is limited by (i)   reference to the long-term credit ratings assigned for that counterparty by   Moody’s, Fitch Ratings and Standard & Poor’s; (ii) that counterparty’s   five year credit default swap (‘CDS’) spread; and (iii) the sovereign credit   rating of that counterparty’s principal operating jurisdiction. Furthermore,   collateral support agreements were introduced from the fourth quarter of   2008. Under collateral support agreements the Group’s exposure to a   counterparty with whom a collateral support agreement is in place is reduced   to the extent that the counterparty must post cash collateral when there is   value due to the Group under outstanding derivative contracts that exceeds a   contractually agreed threshold amount. When value is due to the counterparty   the Group is required to post collateral on identical terms. Such cash   collateral is adjusted daily as necessary. In the event of any default,   ownership of the cash collateral would revert to the respective holder at   that point. Detailed below is the value of the cash collateral, which is   reported within short-term borrowings, held by the Group at 31 March 2015:   2015 £m 2014 £m The majority of the Group’s trade receivables are due for   maturity within 90 days and largely comprise amounts receivable from   consumers and business customers. At 31 March 2015 £2,869 million (2014:   £2,360 million) of trade receivables were not yet due for payment. Overdue   trade receivables consisted of £1,141 million (2014: £1,219 million) relating   to the Europe region, and £222 million (2014: £280 million) relating to the   AMAP region. Accounts are monitored by management and provisions for bad and   doubtful debts raised where it is deemed appropriate. The following table   presents ageing of receivables that are past due and provisions for doubtful   receivables that have been established. 2015 2014 Gross receivables £m Less   provisions £m Net receivables £m Gross receivables £m Less provisions £m Net   receivables £m Concentrations of credit risk with respect to trade   receivables are limited given that the Group’s customer base is large and   unrelated. Due to this management believes there is no further credit risk   provision required in excess of the normal provision for bad and doubtful   receivables. Amounts charged to administrative expenses during the year ended   31 March 2015 were £541 million (2014: £347 million; 2013: £360 million) (see   note 15 “Trade and other receivables”). As discussed in note 30 “Contingent   liabilities”, the Group has covenanted to provide security in favour of the   Trustee of the Vodafone Group UK Pension Scheme in respect of the funding   deficit in the scheme. The security takes the form of an English law pledge   over UK index linked government bonds. Liquidity risk At 31 March 2015 the   Group had €3.9 billion and US$3.9 billion syndicated committed undrawn bank   facilities which support the US$15 billion and £5 billion commercial paper   programmes available to the Group. The Group uses commercial paper and bank   facilities to manage short-term liquidity and manages long-term liquidity by   raising funds in the capital markets. The €3.9 billion syndicated committed   facility has a maturity date of 28 March 2020 with the option to extend the   Facility for a further year prior to the second anniversary of the Facility   if requested by the Company. The US$3.9 billion syndicated committed facility   has a maturity of 27 February 2020 with the option to extend the facility for   a further year prior to the first anniversary and, if should such extension   be exercised, an option to extend for a further year prior to the second   anniversary of the facility. Both facilities have remained undrawn throughout   the financial year and since year end and provide liquidity support. 153   Vodafone Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information 30 days or less   417(61) 356 1,327(356)971 218(27) 191 187(53) 134 516(313)203 Between 31 and   60 days 231(35) 196 Between 61 and 180 days 288(67) 221 Greater than 180 days   1,205(615) 590 2,141(778) 1,363 2,248(749)1,499 Cash collateral 2,542 1,185   Sovereign 1,977 4,464 Supranational 23 335 2,000 4,799 |
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|  | Notes to the   consolidated financial statements (continued) 23. Capital and financial risk   management (continued) The Group manages liquidity risk on long-term borrowings   by maintaining a varied maturity profile with a cap on the level of debt   maturing in any one calendar year, therefore minimising refinancing risk.   Long-term borrowings mature between one and 28 years. Liquidity is reviewed   daily on at least a 12 month rolling basis and stress tested on the   assumption that all commercial paper outstanding matures and is not reissued.   The Group maintains substantial cash and cash equivalents which at 31 March   2015, amounted to £6,882 million (2014: £10,134 million). Market risk   Interest rate management Under the Group’s interest rate management policy,   interest rates on monetary assets and liabilities denominated in euros, US   dollars and sterling are maintained on a floating rate basis except for   periods up to six years where interest rate fixing has to be undertaken in   accordance with treasury policy. Where assets and liabilities are denominated   in other currencies interest rates may also be fixed. In addition, fixing is   undertaken for longer periods when interest rates are statistically low. For   each one hundred basis point fall or rise in market interest rates for all   currencies in which the Group had borrowings at 31 March 2015 there would be   an increase or decrease in profit before tax by approximately £36 million (2014:   increase or decrease by £42 million) including mark-to-market revaluations of   interest rate and other derivatives and the potential interest on outstanding   tax issues. There would be no material impact on equity. Foreign exchange   management As Vodafone’s primary listing is on the London Stock Exchange its   share price is quoted in sterling. Since the sterling share price represents   the value of its future multi-currency cash flows, principally in euro, South   African rand, Indian rupee and sterling, the Group maintains the currency of   debt and interest charges in proportion to its expected future principal   multi-currency cash flows and has a policy to hedge external foreign exchange   risks on transactions denominated in other currencies above certain de minimis   levels. As the Group’s future cash flows are increasingly likely to be   derived from emerging markets it is likely that a greater proportion of debt   in emerging market currencies will be drawn. At 31 March 2015, 129% of net   debt was denominated in currencies other than sterling (86% euro, 23% India   rupee 11% US dollar and 9% other) while 29% of net debt had been purchased   forward in sterling in anticipation of sterling denominated shareholder   returns via dividends. This allows euro, US dollar and other debt to be   serviced in proportion to expected future cash flows and therefore provides a   partial hedge against income statement translation exposure, as interest   costs will be denominated in foreign currencies. Under the Group’s foreign   exchange management policy, foreign exchange transaction exposure in Group   companies is generally maintained at the lower of €5 million per currency per   month or €15 million per currency over a six month period. The Group   recognises foreign exchange movements in equity for the translation of net   investment hedging instruments and balances treated as investments in foreign   operations. However, there is no net impact on equity for exchange rate   movements on net investment hedging instruments as there would be an offset   in the currency translation of the foreign operation. At 31 March 2015 the   Group held financial liabilities in a net investment against the Group’s   consolidated euro net assets. Sensitivity to foreign exchange movements on   the hedging liabilities, analysed against a strengthening of the euro by 5%   (FY14: 3%) would result in a decrease in equity of £876 million (FY14: £333   million) which would be fully offset by foreign exchange movements on the   hedged net assets. The following table details the Group’s sensitivity of the   Group’s adjusted operating profit to a strengthening of the Group’s major   currency in which it transacts. The percentage movement applied to the   currency is based on the average movements in the previous three annual   reporting periods. Amounts are calculated by retranslating the operating   profit of each entity whose functional currency is euro. 2015 £m 2014 £m   Note: 1 Operating profit before impairment losses and other income and   expense. At 31 March 2015 the Group’s sensitivity to foreign exchange   movements, analysed against a strengthening of the US dollar by 9% (FY14: 5%)   on its external US dollar exposure would decrease the profit before tax by   £71 million (FY14: £4 million). Foreign exchange on certain internal balances   analysed against a strengthening of the US dollar of 9% (FY14: 5%) and euro   of 5% (FY14: 3%) would decrease the profit before tax by £65 million (FY14:   US$190 million) and £186 million (FY14: £189 million) for US dollar and euro   respectively. Equity risk There is no material equity risk relating to the   Group’s equity investments which are detailed in note 13 “Other investments”.   154 Vodafone Group Plc Annual Report on Form 20-F 2015 Euro 5% (2014: 3%)   change – Operating profit 1 81 60 |
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|  | Fair value of   financial instruments The table below sets out the valuation basis 1 of   financial instruments held at fair value by the Group at 31 March 2015. Level   12 Level 23 Total 2015 £m 2014 £m 2015 £m 2014 £m 2015 £m 2014 £m Notes: 1   There were no changes made during the year to valuation methods or the   processes to determine classification and no transfers were made between the   levels in the fair value hierarchy. 2 Level 1 classification comprises   financial instruments where fair value is determined by unadjusted quoted   prices in active markets for identical assets or liabilities. 3 Level 2   classification comprises items where fair value is determined from inputs   other than quoted prices that are observable for the asset or liability,   either directly or indirectly. Derivative financial instrument fair values   are present values determined from future cash flows discounted at rates   derived from market sourced data. 4 Listed and unlisted securities are   classified as held for sale financial assets and fair values are derived from   observable quoted market prices for similar items. Details are included in   note 13 “Other investments”. Fair value and carrying value information The   fair values and carrying values of the Group’s financial assets and financial   liabilities held at amortised cost are set out in the table below 1. Unless   otherwise stated, the valuation basis is level 2, comprising financial   instruments where fair value is determined from inputs other than quoted   prices observable for the asset or liability either directly or indirectly.   Fair value Carrying value 2015 £m 2014 £m 2015 £m 2014 £m Notes: 1 2 3 4 5   The Group’s trade and other receivables and trade and other payables are not   shown in the table above. The carrying amounts of both categories approximate   their fair values. Cash and cash equivalents are held by the Group on a short   term basis with all having a maturity of three months or less. The carrying   value approximates their fair value. Other debt and bonds is predominantly   comprised of loan notes from Verizon Communications held at amortised cost.   Details included in note 13 “Other investments”. The Group’s bonds are held   at amortised cost with fair values available from market observable prices.   Commercial paper and other banks loans are held at amortised cost with fair   values calculated from market observable data where appropriate. 155 Vodafone   Group Plc Annual Report on Form 20-F 2015 Overview Strategy review Performance   Governance Financials Additional information (24,013) (15,140) (23,975)   (15,372) Cash and cash equivalents 2 Cash and other investments held in   restricted deposits 2 Other debt and bonds 3 6,882 10,134 6,882 10,134 650   524 650 524 3,551 3,171 3,551 3,171 11,083 13,829 11,083 13,829 Short-term   borrowings: Bonds 4 Commercial paper 5 Bank loans and other short-term   borrowings 5 (1,798) (1,771) (1,786) (1,783) (5,077) (950) (5,077) (950)   (5,766) (5,014) (5,760) (5,014) (12,641) (7,735) (12,623) (7,747) Long-term   borrowings: Bonds 4 Bank loans and other long-term borrowings 5 (17,109)   (16,417) (17,174) (16,697) (5,346) (4,817) (5,261) (4,757) (22,455) (21,234)   (22,435) (21,454) Financial assets: Fair value through the income statement –   – 3,184 4,019 3,184 4,019 Derivative financial instruments: Interest rate   swaps – – 2,466 1,871 2,466 1,871 Cross currency interest rate swaps – –   1,506 504 1,506 504 Foreign exchange contracts – – 33 68 33 68 Interest rate   futures – – 8 13 8 13 – – 7,197 6,475 7,197 6,475 Financial investments   available-for-sale: Listed equity securities 4 4 6 – – 4 6 Unlisted equity   securities 4 – – 222 154 222 154 4 6 222 154 226 160 4 6 7,419 6,629 7,423   6,635 Financial liabilities: Derivative financial instruments: Interest rate   swaps – – 682 635 682 635 Cross currency interest rate swaps – – 245 217 245   217 Interest rate options – – 11 – 11 – Foreign exchange contracts – – 46 29   46 29 – – 984 881 984 881 |
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|  | Notes to the   consolidated financial statements (continued) 23. Capital and financial risk   management (continued) Net financial instruments The table below shows the   Group’s financial assets and liabilities that are subject to offset in the   balance sheet and the impact of enforceable master netting or similar   agreements. At 31 March 2015 Related amounts not set off in the balance sheet   Amounts presented in balance sheet £m Right of set off with derivative   counterparties £m Gross amount £m Amount set off £m Cash collateral £m Net   amount £m At 31 March 2014 Related amounts not set off in the balance sheet   Amounts presented in balance sheet £m Right of set off with derivative   counterparties £m Gross amount £m Amount set off £m Cash collateral £m Net   amount £m Derivative financial assets Derivative financial liabilities 2,456   (881) – – 2,456 (881) (678) 678 (1,185) 130 593 (73) Total 1,575 – 1,575 –   (1,055) 520 Financial assets and liabilities are offset and the amount   reported in the consolidated balance sheet when there is a legally   enforceable right to offset the recognised amounts and there is an intention   to settle on a net basis or realise the asset and settle the liability   simultaneously. Derivative financial instruments that do not meet the   criteria for offset could be settled net in certain circumstances under ISDA   (International Swaps and Derivatives Association) agreements where each party   has the option to settle amounts on a net basis in the event of default from   the other. Collateral may be offset and net settled against derivative   financial instruments in the event of default by either party. The   aforementioned collateral balances are recorded in “other short-term   investments” or “short-term debt” respectively. 24. Directors and key   management compensation This note details the total amounts earned by the   Company’s Directors and members of the Executive Committee. Directors   Aggregate emoluments of the Directors of the Company were as follows: 2015 £m   2014 £m 2013 £m Note: 1 Includes the value of the cash allowance taken by   some individuals in lieu of pension contributions. The aggregate gross   pre-tax gain made on the exercise of share options in the year ended 31 March   2015 by Directors who served during the year was £nil (2014: £4 million;   2013: £2 million). Key management compensation Aggregate compensation for key   management, being the Directors and members of the Executive Committee, was   as follows: 2015 £m 2014 £m 2013 £m 156 Vodafone Group Plc Annual Report on   Form 20-F 2015 Short-term employee benefits 18 1717 Share-based payments 18   2123 36 3840 Salaries and fees 4 45 Incentive schemes 3 22 Other benefits 1 1   11 8 78 Derivative financial assets 4,005 –4,005 (726)(2,542)737 Derivative   financial liabilities (984) –(984) 72630(228) Total 3,021 –3,021 –(2,512)509 |
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|  | 25. Employees   This note shows the average number of people employed by the Group during the   year, in which areas of our business our employees work and where they are   based. It also shows total employment costs. 2015 Employees 2014 Employees   2013 Employees The cost incurred in respect of these employees (including   Directors) was: 2015 £m 2014 £m 2013 £m The Group has dialogue with   recognised labour unions if required. In particular, there are regular   meetings with the Vodafone European Employee Consultative Council (the   ‘EECC’). The delegates of this body are locally elected Vodafone employee   representatives, most of them union and works council members. There has been   no material disruption to operations as a result of union activity during the   financial year. 157 Vodafone Group Plc Annual Report on Form 20-F 2015   Overview Strategy review Performance Governance Financials Additional   information Wages and salaries 3,469 3,2612,989 Social security costs 442   364350 Other pension costs (note 26) 195 158157 Share-based payments (note 27)   88 92124 4,194 3,8753,620 By activity: Operations 17,602 14,94713,736 Selling   and distribution 35,629 31,34229,658 Customer care and administration 52,069   42,85739,198 105,300 89,14682,592 By segment: Germany 14,520 10,62311,088   Italy 6,757 1,123– Spain 5,324 3,5524,223 UK 12,437 12,9798,319 Other Europe   15,190 15,39219,995 Europe 54,228 43,66943,625 India 12,303 11,92511,339   Vodacom 7,260 7,1767,311 Other Africa, Middle East and Asia Pacific 14,312   16,00212,659 Africa, Middle East and Asia Pacific 33,875 35,10331,309   Non-Controlled Interests and Common Functions 17,197 10,3747,658 Total   105,300 89,14682,592 |
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|  | Notes to the   consolidated financial statements (continued) 26. Post employment benefits We   operate a number of defined benefit and defined contribution pension plans   for our employees. The Group’s largest defined benefit scheme is in the UK.   For further details see “Critical accounting judgements and key sources of   estimation uncertainty” in note 1 “Basis of preparation” to the consolidated   financial statements. Accounting policies For defined benefit retirement   plans, the difference between the fair value of the plan assets and the present   value of the plan liabilities is recognised as an asset or liability on the   statement of financial position. Scheme liabilities are assessed using the   projected unit funding method and applying the principal actuarial   assumptions at the reporting period date. Assets are valued at market value.   Actuarial gains and losses are taken to the statement of comprehensive income   as incurred. For this purpose, actuarial gains and losses comprise both the   effects of changes in actuarial assumptions and experience adjustments   arising because of differences between the previous actuarial assumptions and   what has actually occurred. The return on plan assets, in excess of interest   income, is also taken to other comprehensive income. Other movements in the   net surplus or deficit are recognised in the income statement, including the   current service cost, any past service cost and the effect of any   curtailments or settlements. The interest cost less the expected interest   income on assets is also charged to the income statement. The amount charged   to the income statement in respect of these plans is included within   operating costs or in the Group’s share of the results of equity accounted   operations, as appropriate. Cumulative actuarial gains and losses at 1 April   2004, the date of transition to IFRS, were recognised in the statement of   financial position. The Group contributions to defined contribution pension   plans are charged to the income statement as they fall due. Background At 31   March 2015 the Group operated a number of pension plans for the benefit of   its employees throughout the world, with varying rights and obligations   depending on the conditions and practices in the countries concerned. The   Group’s pension plans are provided through both defined benefit and defined contribution   arrangements. Defined benefit schemes provide benefits based on the   employees’ length of pensionable service and their final pensionable salary   or other criteria. Defined contribution schemes offer employees individual   funds that are converted into benefits at the time of retirement. The Group   operates defined benefit schemes in Germany, Ghana, India, Ireland, Italy,   the UK and the United States. Defined contribution pension schemes are   currently provided in Australia, Egypt, Germany, Greece, Hungary, India,   Ireland, Italy, the Netherlands, New Zealand, Portugal, South Africa, Spain   and the UK. Income statement expense 2015 £m 2014 £m 2013 £m 158 Vodafone   Group Plc Annual Report on Form 20-F 2015 Defined contribution schemes 155   124118 Defined benefit schemes 40 3439 Total amount charged to income   statement (note 25) 195 158157 |
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|  | Defined benefit   schemes At the start of the year, the Group had two main UK defined benefit   schemes being the Vodafone UK Group Pension Scheme (‘Vodafone UK plan’) and   the Cable & Wireless Worldwide Retirement Plan (‘CWWRP’). The Vodafone UK   plan and the CWWRP plan closed to future accrual on 31 March 2010 and 30   November 2013 respectively. Until 30 November 2013 the CWWRP allowed   employees to accrue a pension at a rate of 1/85th of their final salary for   each year of service until the retirement age of 60 with a maximum pension of   two thirds of final salary. Employees contributed 5% of their salary into the   scheme. On 6 June 2014, the assets and liabilities of the CWWRP were   transferred into a new section of the Vodafone UK plan. The CWWRP was then   wound up. There are now two segregated sections of the Vodafone UK plan, the   pre-existing assets and liabilities in the Vodafone Section and the former   CWWRP assets and liabilities in the CWW Section. The defined benefit plans   are administered by Trustee Boards that are legally separated from the Group.   The Trustee Board of each pension fund consists of representatives who are   employees, former employees or are independent from the Company. The Boards   of the pension funds are required by law to act in the best interest of the   plan participants and are responsible for setting certain policies, such as   investment and contribution policies, and the governance of the fund. The   defined benefit pension schemes expose the Group to actuarial risks such as   longer than expected longevity of members, lower than expected return on   investments and higher than expected inflation, which may increase the   liabilities or reduce the value of assets of the plans. The UK pensions   environment is regulated by the Pensions Regulator whose statutory objectives   are set out in legislation and include promoting and improving understanding   of the good administration of work-based pensions, protecting member benefits   and regulating occupational defined benefit and contribution schemes. The   Pensions Regulator is a non-departmental public body established under the   Pensions Act 2004 and sponsored by the Department for Work And Pensions,   operating within a legal regulatory framework set by the UK Parliament. The   Pensions Regulator’s statutory objectives and regulatory powers are described   on its website at thepensionsregulator.gov.uk. The Vodafone UK plan is   registered as an occupational pension plan with HMRC and is subject to UK   legislation and oversight from the Pensions Regulator. UK legislation   requires that pension schemes are funded prudently and that valuations are   undertaken at least every three years. Separate valuations are required for   the Vodafone Section and CWW Section. Within 15 months of each valuation   date, the plan trustees and the Group must agree any contributions required   to ensure that the plan is fully funded over time on a suitably prudent   measure. The most recent valuations for the Vodafone and CWWRP sections of   the Vodafone UK plan were carried out as at 31 March 2013 by independent   actuaries appointed by the plan Trustees. These valuations revealed a total   deficit of £437 million on the schemes’ funding basis. Following the   valuation, the Group paid special one-off contributions totalling £365   million in April 2014 (£325 million into the Vodafone Section and £40 million   into the CWW Section). These lump sum contributions represented accelerated   funding amounts that would otherwise have been due over the period to 31   March 2020. No further contributions are therefore currently due for the   Vodafone UK plan for the period to 31 March 2016. The next valuation date is   31 March 2016, at which point the position of the scheme will be assessed   again. Funding plans are individually agreed for each of the Group’s defined   benefit pension schemes with the respective trustees, taking into account   local regulatory requirements. It is expected that ordinary contributions   relating to future service of £39 million will be paid into the Group’s   defined benefit pension schemes during the year ending 31 March 2016. The   Group has also provided certain guarantees in respect of the Vodafone UK   plan; further details are provided in note 30 “Contingent liabilities” to the   consolidated financial statements. Actuarial assumptions The Group’s scheme   liabilities are measured using the projected unit credit method using the   principal actuarial assumptions set out below: 2015 % 2014 % 2013 % Notes: 1   Figures shown represent a weighted average assumption of the individual   schemes. 2 The rate of increase in pensions in payment and deferred payment   is the rate of inflation. Mortality assumptions used are based on   recommendations from the individual scheme actuaries which include   adjustments for the experience of the Group where appropriate. The Group’s   largest scheme is the Vodafone UK plan. Further life expectancies assumed for   the UK schemes are 24.5/25.8 years (2014: 23.3/24.7 years; 2013: 23.6/25.3   years) for a male/female pensioner currently aged 65 and 27.1/28.7 years   (2014: 25.9/27.5 years; 2013: 26.8/27.9 years) from age 65 for a male/female   non-pensioner member currently aged 40. 159 Vodafone Group Plc Annual Report   on Form 20-F 2015 Overview Strategy review Performance Governance Financials   Additional information Weighted average actuarial assumptions used at 31   March 1: Rate of inflation 2 3.0 3.23.3 Rate of increase in salaries 2.8   3.13.8 Discount rate 3.0 4.24.3 |
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|  | Notes to the   consolidated financial statements (continued) 26. Post employment benefits   (continued) Charges made to the consolidated income statement and   consolidated statement of comprehensive income (‘SOCI’) on the basis of the   assumptions stated above are: 2015 £m 2014 £m 2013 £m Note: 1 Amounts   disclosed in the SOCI are stated net of £57 million of tax (2014: £20   million, 2013: £56 million). Fair value of the assets and present value of   the liabilities of the schemes The amount included in the statement of   financial position arising from the Group’s obligations in respect of its   defined benefit schemes is as follows: Assets £m Liabilities £m Net deficit   £m 1 April 2013 Service cost Interest income/(cost) Return on plan assets   excluding interest income Actuarial gains arising from changes in demographic   assumptions Actuarial gains arising from changes in financial assumptions   Actuarial gains arising from experience adjustments Employer cash   contributions Member cash contributions Benefits paid Liabilities assumed in   business combinations Exchange rate movements Other movements 3,723 – 162   (114) – – – 51 7 (81) – (13) 107 (4,251) (14) (182) – 35 44 92 – (7) 81 (121)   17 (85) (528) (14) (20) (114) 35 44 92 51 – – (121) 4 22 31 March 2014 3,842   (4,391) (549) An analysis of net (deficit)/assets is provided below for the   Group as a whole. 2015 £m 2014 £m 2013 £m 2012 £m 2011 £m 160 Vodafone Group   Plc Annual Report on Form 20-F 2015 Analysis of net (deficit)/assets: Total   fair value of scheme assets 4,956 3,8423,7231,6041,558 Present value of   funded scheme liabilities (5,288) (4,325)(4,239)(1,853)(1,488) Net   (deficit)/assets for funded schemes (332) (483)(516)(249)70 Present value of   unfunded scheme liabilities (66) (66) (12)(12)(13) Net (deficit)/assets (398)   (549)(528)(261)57 Net (deficit)/assets are analysed as: Assets 169 35523197   Liabilities (567) (584)(580)(292)(40) Service cost –(37) (37) Interest   income/(cost) 176(179) (3) Return on plan assets excluding interest income   721– 721 Actuarial losses arising from changes in financial assumptions   –(982) (982) Actuarial losses arising from experience adjustments –(8) (8)   Employer cash contributions 404– 404 Member cash contributions 9(9) –   Benefits paid (95) 95 – Exchange rate movements (83) 116 33 Other movements (18)   41 23 31 March 2015 4,956(5,354) (398) Current service cost 37 1427 Net   interest charge 3 2012 Total included within staff costs 40 3439 Actuarial   losses/(gains) recognised in the SOCI1 269 (57) 238 |
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|  | An analysis of   net assets/(deficit) is provided below for the Group’s largest defined   benefit pension scheme in the UK, which is a funded scheme. Following the   merger of the Vodafone UK plan and the CWWRP plan on 6 June 2014 the assets   and liabilities of the CWW Section are segregated from the Vodafone Section   and hence are reported separately below. CWW Section1 Vodafone Section2 2015   £m 2014 £m 2013 £m 2015 £m 2014 £m 2013 £m 2012 £m 2011 £m Notes: 1 Cable   & Wireless Worldwide Retirement Plan until 6 June 2014. 2 Vodafone UK   plan until 6 June 2014. 3 Pension assets are deemed to be recoverable and   there are no adjustments in respect of minimum funding requirements as future   economic benefits are available to the Company either in the form of future   refunds or, for plans still open to benefit accrual, in the form of possible   reductions in future contributions. Duration of the benefit obligations The   weighted average duration of the defined benefit obligation at 31 March 2015   is 22.7 years (2014: 21.7 years; 2013: 21.4 years). Fair value of pension   assets 2015 £m 2014 £m Note: 1 Derivatives include collateral held in the   form of cash. The schemes have no direct investments in the Group’s equity   securities or in property currently used by the Group. Each of the plans   manages risks through a variety of methods and strategies including equity   protection, to limit downside risk in falls in equity markets, inflation and   interest rate hedging and, in the CWW Section of the Vodafone UK plan, a   substantial insured pensioner buy-in policy. The actual return on plan assets   over the year to 31 March 2015 was £897 million (2014: £48 million).   Sensitivity analysis Measurement of the Group’s defined benefit retirement   obligation is sensitive to changes in certain key assumptions. The   sensitivity analysis below shows how a reasonably possible increase or   decrease in a particular assumption would, in isolation, result in an   increase or decrease in the present value of the defined benefit obligation   as at 31 March 2015. Rate of inflation Rate of increase in salaries Discount   rate Life expectancy Decrease by 0.5% £m Increase by 0.5% £m Decrease by 0.5%   £m Increase by 0.5% £m Decrease by 0.5% £m Increase by 0.5% £m Increase by 1   year Decrease by 1 year £m £m (Decrease)/increase in present value of defined   obligation (474) 507 (29) 27 623 (584) 127 (128) The sensitivity analysis may   not be representative of an actual change in the defined benefit obligation   as it is unlikely that changes in assumptions would occur in isolation of one   another. In presenting this sensitivity analysis, the change in the present   value of the defined benefit obligation has been calculated on the same basis   as prior years using the projected unit credit method at the end of the   reporting period, which is the same as that applied in calculating the   defined benefit obligation liability recognised in the statement of financial   position. 161 Vodafone Group Plc Annual Report on Form 20-F 2015 Overview   Strategy review Performance Governance Financials Additional information Cash   and cash equivalents 97 65 Equity investments: With quoted prices in an   active market 1,489 1,318 Without quoted prices in an active market 154 102   Debt instruments: With quoted prices in an active market 2,567 1,320   Property: With quoted prices in an active market 7 7 Without quoted prices in   an active market 12 13 Derivatives:1 With quoted prices in an active market   99 495 Without quoted prices in an active market – 46 Annuity policies –   Without quoted prices in an active market 531 476 Total 4,956 3,842 Analysis   of net assets/(deficit): Total fair value of scheme assets 2,251 1,7801,827   1,912 1,3431,3281,2181,180 Present value of scheme liabilities (2,085)   (1,732)(1,874) (2,133) (1,677) (1,647)(1,444)(1,127) Net assets/(deficit) 166   48(47) (221) (334)(319)(226)53 Net assets/(deficit) are analysed as: Assets3   166 48– – –––53 Liabilities – –(47) (221) (334)(319)(226)– |
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|  | Notes to the   consolidated financial statements (continued) 27. Share-based payments We   have a number of share plans used to award shares to Directors and employees   as part of their remuneration package. A charge is recognised over the   vesting period in the consolidated income statement to record the cost of   these, based on the fair value of the award on the grant date. Accounting   policies The Group issues equity-settled share-based payments to certain   employees. Equity-settled share-based payments are measured at fair value   (excluding the effect of non-market-based vesting conditions) at the date of   grant. The fair value determined at the grant date of the equity-settled   share-based payments is expensed on a straight-line basis over the vesting   period, based on the Group’s estimate of the shares that will eventually vest   and adjusted for the effect of non-market-based vesting conditions. A   corresponding increase in retained earnings is also recognised. Fair value is   measured by deducting the present value of expected dividend cash flows over   the life of the awards from the share price as at the grant date. Some share   awards have an attached market condition, based on total shareholder return   (‘TSR’), which is taken into account when calculating the fair value of the share   awards. The valuation for the TSR is based on Vodafone’s ranking within the   same group of companies, where possible, over the past five years. The fair   value of awards of non-vested shares is equal to the closing price of the   Group’s shares on the date of grant, adjusted for the present value of the   delay in receiving dividends where appropriate. The maximum aggregate number   of ordinary shares which may be issued in respect of share options or share   plans will not (without shareholder approval) exceed: a 10% of the ordinary   share capital of the Company in issue immediately prior to the date of grant,   when aggregated with the total number of ordinary shares which have been   allocated in the preceding ten year period under all plans; and a 5% of the   ordinary share capital of the Company in issue immediately prior to the date   of grant, when aggregated with the total number of ordinary shares which have   been allocated in the preceding ten year period under all plans, other than   any plans which are operated on an all-employee basis. Share options Vodafone   Group executive plans No share options have been granted to any Directors or   employees under the Company’s discretionary share option plans in the year   ended 31 March 2015. There are options outstanding under the Vodafone Group   1999 Long-Term Stock Incentive Plan and the Vodafone Global Incentive Plan.   These options are normally exercisable between three and ten years from the   date of grant. The vesting of some of these options was subject to   satisfaction of performance conditions. Grants made to US employees are made   in respect of ADSs. Vodafone Group Sharesave Plan The Vodafone Group 2008   Sharesave Plan enables UK staff to acquire shares in the Company through   monthly savings of up to £250 over a three and/or five year period, at the   end of which they may also receive a tax free bonus. The savings and bonus   may then be used to purchase shares at the option price, which is set at the   beginning of the invitation period and usually at a discount of 20% to the   then prevailing market price of the Company’s shares. Share plans Vodafone   Group executive plans Under the Vodafone Global Incentive Plan awards of   shares are granted to Directors and certain employees. The release of these   shares is conditional upon continued employment and for some awards   achievement of certain performance targets measured over a three year period.   Vodafone Share Incentive Plan The Vodafone Share Incentive Plan enables UK   staff to acquire shares in the Company through monthly purchases of up to   £125 per month or 5% of salary, whichever is lower. For each share purchased   by the employee, the Company provides a free matching share. 162 Vodafone   Group Plc Annual Report on Form 20-F 2015 |
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|  | Movements in   outstanding ordinary share and ADS options ADS options Ordinary share options   2015 Millions 2014 Millions 2013 Millions 2015 Millions 2014 Millions 2013   Millions Summary of options outstanding and exercisable at 31 March 2015   Outstanding Exercisable Weighted average remaining contractual life Months   Weighted average remaining contractual life Months Weighted average exercise   price Weighted average exercise price Outstanding shares Millions Exercisable   shares Millions Share awards Movements in non-vested shares are as follows:   2015 2014 2013 Weighted average fair value at grant date Weighted average   fair value at grant date Weighted average fair value at grant date Millions   Millions Millions Other information The total fair value of shares vested   during the year ended 31 March 2015 was £84 million (2014: £90 million; 2013:   £107 million). The compensation cost included in the consolidated income   statement in respect of share options and share plans was £88 million (2014:   £92 million; 2013: £124 million) which is comprised entirely of   equity-settled transactions. The average share price for the year ended 31   March 2015 was 212.7 pence (2014: 212.2 pence; 2013: 173.0 pence). 163   Vodafone Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information 1 April 243£1.44 294   £1.27 352 £1.08 84 £1.58 91 £1.49 (81) £1.11 (118) £0.91 (54) £1.19 (31)   £1.19 Granted 83£1.63 Vested (62) £1.35 Forfeited (47) £1.35 31 March   217£1.56 243£1.44294£1.27 Vodafone Group savings related and Sharesave Plan:   £0.01–£1.00 – ––– –– £1.01–£2.00 23 £1.4832– –– 23 £1.4832– –– Vodafone Group   1999 Long-Term Stock Incentive Plan: £1.01–£2.00 2 £1.59222 £1.5922 1 April –1   27 4084 Granted during the year – –– 7 127 Forfeited during the year – –– (2)   (1) (1) Exercised during the year – –(1) (6) (22) (41) Expired during the   year – –– (1) (2) (9) 31 March – –– 25 2740 Weighted average exercise price:   1 April – US$22.16US$15.20 £1.42 £1.41£1.18 Granted during the year – ––   £1.56 £1.49£1.45 Forfeited during the year – –– £1.45 £1.34£1.64 Exercised   during the year – US$29.31US$13.88 £1.25 £1.43£1.05 Expired during the year –   –– £1.45 £1.37£0.98 31 March – –US$22.16 £1.49 £1.42£1.41 |
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|  | Notes to the   consolidated financial statements (continued) 28. Acquisitions and disposals   We completed a number of acquisitions during the year including, most   significantly, the acquisition of Grupo Corporativo Ono, S.A. (‘Ono’). The   note below provides details of these transactions as well as those in the   prior year. For further details see “Critical accounting judgements and key   sources of estimation uncertainty” in note 1 “Basis of preparation” to the   consolidated financial statements. Accounting policies Business combinations   Acquisitions of subsidiaries are accounted for using the acquisition method.   The cost of the acquisition is measured at the aggregate of the fair values   at the date of exchange of assets given, liabilities incurred or assumed and   equity instruments issued by the Group. Acquisition-related costs are   recognised in the income statement as incurred. The acquiree’s identifiable   assets and liabilities are recognised at their fair values at the acquisition   date. Goodwill is measured as the excess of the sum of the consideration   transferred, the amount of any non-controlling interests in the acquiree and   the fair value of the Group’s previously held equity interest in the   acquiree, if any, over the net amounts of identifiable assets acquired and   liabilities assumed at the acquisition date. The interest of the   non-controlling shareholders in the acquiree may initially be measured either   at fair value or at the non-controlling shareholders’ proportion of the net   fair value of the identifiable assets acquired, liabilities and contingent   liabilities assumed. The choice of measurement basis is made on an   acquisition-by-acquisition basis. Acquisition of interests from   non-controlling shareholders In transactions with non-controlling parties   that do not result in a change in control, the difference between the fair   value of the consideration paid or received and the amount by which the   non-controlling interest is adjusted is recognised in equity. Acquisitions   The aggregate cash consideration in respect of purchases of interests in   subsidiaries, net of cash acquired, is as follows: £m Note: 1 Charged to   other income and expense in the consolidated income statement. Total goodwill   on acquisitions was £1,634 million and included £1,423 million in relation to   Ono and £211 million in relation to other acquisitions completed during the   year. No amount of goodwill is expected to be deductible for tax purposes.   Grupo Corporativo Ono, S.A. (‘Ono’) On 23 July 2014, the Group acquired the   entire share capital of Ono for cash consideration of £2,945 million. The   primary reason for acquiring the business was to create a leading integrated   communications operator in Spain, offering customers unified communication   services. The results of the acquired entity have been consolidated in the   Group’s income statement from 23 July 2014 and contributed £691 million of   revenue and a loss of £313 million to the profit attributable to owners of   the parent during the year. The acquisition date fair values of the assets   and liabilities acquired are provisional. These may be further adjusted as we   gain a further understanding of the business. The provisional purchase price   allocation is set out in the table below: Fair value £m Notes: 1 Identifiable   intangible assets of £777 million consisted of customer contracts and   relationships of £710 million, brand of £33 million and software of £34   million. 2 The goodwill arising on acquisition is principally related to the   synergies expected to arise following the integration of the Ono business.   These principally relate to synergies expected to arise following integration   of the respective networks, operating cost rationalisation and revenue   synergies driven by the larger network footprint and incremental revenue   streams from integrated services. 3 Transaction costs of £11 million were   charged in the Group’s consolidated income statement in the year ended 31   March 2015. 164 Vodafone Group Plc Annual Report on Form 20-F 2015 Net assets   acquired: Identifiable intangible assets1 777 Property, plant and equipment   3,272 Other investments 7 Trade and other receivables 156 Cash and cash   equivalents 143 Current and deferred taxation 647 Short and long-term   borrowings (3,001) Trade and other payables (391) Provisions (83) Net   identifiable assets acquired 1,527 Non-controlling interests (5) Goodwill2   1,423 Total consideration3 2,945 Cash consideration paid: Grupo Corporativo   Ono, S.A. 2,945 Other acquisitions completed during the year 265 Fees paid in   respect of acquisitions1 18 3,228 Net cash acquired (135) 3,093 |
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|  | Pro-forma full   year information The following unaudited pro-forma summary presents the Group   as if the acquisition of Ono had been completed on 1 April 2014. The   pro-forma amounts include the results of Ono, application of Vodafone   accounting policies, amortisation of the acquired finite lived intangible   assets recognised on acquisition and interest expense on the increase in net debt   as a result of the acquisition. 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. 2015 £m Pence Other acquisitions   During the 2015 financial year, the Group completed a number of other   acquisitions for an aggregate net cash consideration of £265 million, all of   which was paid during the year. The aggregate fair values of goodwill,   identifiable assets and liabilities of the acquired operations were £211   million, £483 million and £429 million respectively. In addition, the Group   completed the acquisition of certain non-controlling interests for a net cash   consideration of £718 million. Kabel Deutschland Holding AG (‘KDG’) On 30   July 2013, the Group launched a voluntary public takeover offer for the   entire share capital of KDG and on 13 September 2013 announced that the 75%   minimum acceptance condition had been met. The transaction completed on 14   October 2013 with the Group acquiring 76.57% of the share capital of KDG for   cash consideration of £4,855 million. The primary reason for acquiring the   business was to create a leading integrated communications operator in   Germany, offering consumer and enterprise customers unified communications   services. The purchase price allocation is set out in the table below: Fair   value £m Notes: 1 2 3 Identifiable intangible assets of £1,641 million   consisted of customer relationships of £1,522 million, brand of £18 million   and software of £101 million. Non-controlling interests have been measured   using the net fair value of the identifiable assets acquired, liabilities and   contingent liabilities assumed. The goodwill is principally attributable to   cost and capital expenditure synergies expected to arise from the combination   of the acquired business and the Group’s existing operations in Germany, and   further revenue synergies from cross-selling to the respective customer base,   together with improved customer loyalty given the wider unified service   offering. Transaction costs of £17 million were charged in the Group’s   consolidated income statement in the year ended 31 March 2014. 4 Vodafone   Omnitel B.V. (‘Vodafone Italy’) On 21 February 2014, the Group acquired a   100% interest in Vodafone Italy, having previously held a 76.9% stake in   Vodafone Italy which was accounted for as a joint venture. The Group acquired   the additional 23.1% equity as part of the consideration received for the   disposal of the Group’s interests in Verizon Wireless (see “Disposals”   below). There was no observable market for Verizon shares and so the fair   value of consideration paid by the Group for the acquisition was considered   to be more reliably determined based on the acquisition-date fair value of   Group’s existing equity interest in Vodafone Italy. Using a value in use   basis, the consideration paid for the acquisition was determined to be £7,121   million, comprising £5,473 million for the Group’s existing 76.9% equity interest   and £1,648 million for the additional 23.1% equity interest. 165 Vodafone   Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information Net assets acquired:   Identifiable intangible assets1 1,641 Property, plant and equipment 4,381   Investment in associated undertakings 8 Inventory 34 Trade and other   receivables 154 Cash and cash equivalents 619 Current and deferred taxation   (1,423) Short and long-term borrowings (2,784) Trade and other payables   (1,190) Provisions (63) Post employment benefits (62) Net identifiable assets   acquired 1,315 Non-controlling interests2 (308) Goodwill3 3,848 Total   consideration4 4,855 Basic earnings per share 21.42 Diluted earnings per   share 21.30 Revenue 42,603 Profit for the financial year 5,829 Profit   attributable to equity shareholders 5,673 |
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|  | Notes to the   consolidated financial statements (continued) 28. Acquisitions and disposals   (continued) The purchase price allocation is set out in the table below: Fair   value £m Notes: 1 Identifiable intangible assets of £3,000 million consisted   of customer relationships of £1,319 million, licences and spectrum of £1,319   million and software of £362 million. 2 The goodwill is attributable to (i)   efficiencies from the ability to operate the business as a wholly owned   subsidiary; (ii) the non-recognition of certain intangible assets such as the   assembled workforce; and (iii) the value attributable to access future   customers. Disposals Verizon Wireless (‘VZW’) On 21 February 2014, the Group   sold its US sub-group which included its entire 45% shareholding in VZW to   Verizon Communications Inc. for a total consideration of £76.7 billion before   tax and transaction costs. The Group recognised a net gain on disposal of   £44,996 million, reported in profit for the financial year from discontinued   operations. £m Notes: 1 Consideration of £76.7 billion comprises cash of   £35.2 billion, shares in Verizon Communications Inc. of £36.7 billion, loan   notes issued by Verizon Communications Inc. of £3.1 billion and a 21.3%   interest in Vodafone Italy valued at £1.7 billion. 2 Other effects include   foreign exchange losses transferred to the consolidated income statement. 3   Reported in profit for the financial year from discontinued operations in the   consolidated income statement. 4 Transaction costs of £100 million were   charged in the Group’s consolidated income statement in the year ended 31   March 2014. The Group did not separately value the embedded derivatives   arising from the agreement to sell the US sub-group for a fixed consideration   on 2 September 2013 because it was not able to make a reliable estimate of   the value of this derivative due to the difficulty in estimating the fair   value of the shares in an unlisted entity in the period between 2 September   2013 and transaction completion on 21 February 2014. Vodafone Omnitel B.V. (‘Vodafone   Italy’) On 21 February 2014, the Group completed a deemed disposal of its   entire 76.9% shareholding in Vodafone Italy as part of the VZW disposal deal   for a total consideration of £5.5 billion before tax and transaction costs.   The Group recognised a net loss on disposal of £712 million, reported in   other income and expense. £m Notes: 1 Other effects include foreign exchange   gains transferred to the consolidated income statement. 2 Reported in other   income and expense in the consolidated income statement. 166 Vodafone Group   Plc Annual Report on Form 20-F 2015 Net assets disposed (8,480) Total   consideration 5,473 Other effects1 2,295 Net loss on disposal2 (712) Net   assets disposed (27,957) Total consideration1 76,716 Other effects2 (3,763)   Net gain on disposal3,4 44,996 Net assets acquired: Identifiable intangible   assets1 3,000 Property, plant and equipment 2,017 Inventory 89 Trade and   other receivables (net of provisions of £285 million) 1,745 Current and   deferred taxation (155) Short and long-term borrowings (19) Trade and other   payables (2,415) Provisions (96) Post employment benefits (52) Net   identifiable assets acquired 4,114 Goodwill2 3,007 Total consideration 7,121 |
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|  | 29. Commitments   A commitment is a contractual obligation to make a payment in the future,   mainly in relation to leases and agreements to buy assets such as network   infrastructure and IT systems. These amounts are not recorded in the   consolidated statement of financial position since we have not yet received   the goods or services from the supplier. The amounts below are the minimum   amounts that we are committed to pay. Accounting policies Leases are   classified as finance leases whenever the terms of the lease transfer   substantially all the risks and rewards of ownership of the asset to the   lessee. All other leases are classified as operating leases. Assets held   under finance leases are recognised as assets of the Group at their fair   value at the inception of the lease or, if lower, at the present value of the   minimum lease payments as determined at the inception of the lease. The   corresponding liability to the lessor is included in the statement of   financial position as a finance lease obligation. Lease payments are   apportioned between finance charges and reduction of the lease obligation so   as to achieve a constant rate of interest on the remaining balance of the   liability. Finance charges are recognised in the income statement. Rentals   payable under operating leases are charged to the income statement on a   straight-line basis over the term of the relevant lease. Benefits received   and receivable as an incentive to enter into an operating lease are also   spread on a straight-line basis over the lease term. Operating lease   commitments The Group has entered into commercial leases on certain   properties, network infrastructure, motor vehicles and items of equipment.   The leases have various terms, escalation clauses, purchase options and   renewal rights, none of which are individually significant to the Group.   Future minimum lease payments under non-cancellable operating leases   comprise: 2015 £m 2014 £m The total of future minimum sublease payments   expected to be received under non-cancellable subleases is £358 million   (2014: £313 million). Capital commitments Company and subsidiaries Share of   joint operations Group 2015 £m 2014 £m 2015 £m 2014 £m 2015 £m 2014 £m Note:   1 Commitment includes contracts placed for property, plant and equipment and   intangible assets. Capital commitments includes £2,682 million in relation to   spectrum acquired in 12 telecom circles in India. This included spectrum in   all six of our 900MHz circles due for extension in December 2015. We also   acquired new 3G spectrum in seven circles. 167 Vodafone Group Plc Annual   Report on Form 20-F 2015 Overview Strategy review Performance Governance   Financials Additional information Contracts placed for future capital   expenditure not provided in the financial statements1 4,871 2,307 86 28 4,957   2,335 Within one year 1,403 1,128 In more than one year but less than two   years 925 841 In more than two years but less than three years 797 678 In   more than three years but less than four years 698 557 In more than four   years but less than five years 550 477 In more than five years 2,207 2,051   6,580 5,732 |
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|  | Notes to the   consolidated financial statements (continued) 30. Contingent liabilities   Contingent liabilities are potential future cash outflows, where the   likelihood of payment is considered more than remote, but is not considered   probable or cannot be measured reliably. 2015 £m 2014 £m Notes: 1 Performance   bonds require the Group to make payments to third parties in the event that   the Group does not perform what is expected of it under the terms of any   related contracts or commercial arrangements. 2 Other guarantees principally   comprise Vodafone Group Plc’s guarantee of the Group’s 50% share of an AUD   1.7 billion loan facility and a US$3.5 billion loan facility of its joint   venture, Vodafone Hutchison Australia Pty Limited. UK pension schemes At the   start of the year, the Group had two main UK defined benefit schemes being   the Vodafone UK Group Pension Scheme (‘Vodafone UK plan’) and the Cable &   Wireless Worldwide Retirement Plan (‘CWWRP’). On 6 June 2014, all assets and   liabilities of the Cable & Wireless Worldwide Retirement Plan were   transferred into a new section of the Vodafone Group Pension Scheme. The   Cable & Wireless Retirement Plan was then wound up. There are now two   segregated sections of the Vodafone UK Group Pension Scheme, the Vodafone   Section and the CWW Section. The Group has covenanted to provide security in   favour of the Vodafone UK Group Pension Scheme – Vodafone Section whilst   there is a deficit in this section. The deficit is measured on a prescribed   basis agreed between the Group and Trustee. In 2010 the Group and Trustee   agreed security of a charge over UK index linked gilts (‘ILG’) held by the   Group. In December 2011, the security was increased by an additional charge   over further ILG due to a significant increase in the deficit at that time.   In April 2014, the security was reduced following a reduction in the deficit   following the results of the 2013 valuation and a £325 million company   contribution to the Scheme. The Scheme retains security over £264.5 million   (notional value) 2017 ILGs and £38 million (notional value) 2016 ILGs. The   security may be substituted either on a voluntary or mandatory basis. As and   when alternative security is provided, the Group has agreed that the security   cover should include additional headroom of 33%, although if cash is used as   the security asset the ratio will revert to 100% of the relevant liabilities   or where the proposed replacement security asset is listed on an   internationally recognised stock exchange in certain core jurisdictions, the   Trustee may decide to agree a lower ratio than 133%. The Company has also provided   two guarantees to the Vodafone Section of the scheme for a combined value up   to £1.25 billion to provide security over the deficit under certain defined   circumstances, including insolvency of the employers. The Company has also   agreed a similar guarantee of up to £1.25 billion for the CWW Section. An   additional smaller UK defined benefit scheme, the THUS Plc Group Scheme, has   a guarantee from the Company for up to £110 million. Legal proceedings The   Company and its subsidiaries are currently, and may from time to time become   involved in a number of legal proceedings including inquiries from, or   discussions with, governmental authorities that are incidental to their   operations. However, save as disclosed below, the Company and its   subsidiaries are not currently involved in (i) any legal or arbitration   proceedings (including any governmental proceedings which are pending or   known to be contemplated) which may have, or have had in the 12 months   preceding the date of this report, a significant effect on the financial   position or profitability of the Company and its subsidiaries; or (ii) any   material proceedings in which any of the Company’s Directors, members of   senior management or affiliates are either a party adverse to the Company or   its subsidiaries or have a material interest adverse to the Company or its   subsidiaries. Due to inherent uncertainties, no accurate quantification of   any cost, or timing of such cost, which may arise from any of the legal   proceedings outlined below can be made. Telecom Egypt arbitration In October   2009 Telecom Egypt commenced arbitration against Vodafone Egypt in Cairo   alleging breach of non-discrimination provisions in an interconnection   agreement as a result of lower interconnection rates paid to Vodafone Egypt   by Mobinil. Telecom Egypt also sought to join Vodafone International Holdings   BV (‘VIHBV’), Vodafone Europe BV (‘VEBV’) and Vodafone Group Plc to the   arbitration. In January 2015, the arbitral tribunal issued its decision. It   held unanimously that it had no jurisdiction to arbitrate the claim against   VIHBV, VEBV and Vodafone Group Plc. The tribunal also held by a three to two   majority that Telecom Egypt had failed to establish any liability on the part   of Vodafone Egypt. Telecom Egypt has applied to the Egyptian court to set   aside the decision. Indian tax case In August 2007 and September 2007,   Vodafone India Limited (‘VIL’) and VIHBV respectively received notices from   the Indian tax authority alleging potential liability in connection with an   alleged failure by VIHBV to deduct withholding tax from consideration paid to   the Hutchison Telecommunications International Limited group (‘HTIL’) in   respect of HTIL’s gain on its disposal to VIHBV of its interests in a   wholly-owned subsidiary that indirectly holds interests in VIL. In January   2012 the Indian Supreme Court handed down its judgement, holding that VIHBV’s   interpretation of the Income Tax Act 1961 was correct, that the HTIL   transaction in 2007 was not taxable in India, and that consequently, VIHBV   had no obligation to withhold tax from consideration paid to HTIL in respect   of the transaction. The Indian Supreme Court quashed the relevant notices and   demands issued to VIHBV in respect of withholding tax and interest. On 20   March 2012 the Indian Government returned VIHBV’s deposit of INR 25 billion   and released the guarantee for INR 85 billion, which was based on the demand   for payment issued by the Indian tax authority in October 2010, for tax of   INR 79 billion plus interest. On 28 May 2012 the Finance Act 2012 became law.   The Finance Act 2012 is intended to tax any gain on transfer of shares in a   non-Indian company, which derives substantial value from underlying Indian   assets, such as VIHBV’s transaction with HTIL in 2007. Further it seeks to   subject a purchaser, such as VIHBV, to a retrospective obligation to withhold   tax. 168 Vodafone Group Plc Annual Report on Form 20-F 2015 Performance   bonds1 766 442 Other guarantees and contingent liabilities2 2,539 2,500 |
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|  | VIHBV has not   received any formal demand for taxation in respect of the HTIL transaction   following the effective date of the Finance Act 2012, but it did receive a   letter on 3 January 2013 reminding it of the tax demand raised prior to the   Indian Supreme Court’s judgement and purporting to update the interest   element of that demand to a total amount of INR 142 billion. The separate   proceedings taken against VIHBV to seek to treat it as an agent of HTIL in   respect of its alleged tax on the same transaction, as well as penalties of   up to 100% of the assessed withholding tax for the alleged failure to have   withheld such taxes, remain pending despite the issue having been ruled upon   by the Indian Supreme Court. Should a further demand for taxation be received   by VIHBV or any member of the Group as a result of the new retrospective   legislation, we believe it is probable that we will be able to make a   successful claim under the Dutch-India Bilateral Investment Treaty (‘Dutch   BIT’). On 17 January 2014, VIHBV served an amended trigger notice on the   Indian Government under the Dutch BIT, supplementing a trigger notice filed   on 17 April 2012, immediately prior to the Finance Act 2012 becoming   effective, to add claims relating to an attempt by the Indian Government to   tax aspects of the transaction with HTIL under transfer pricing rules. On 17   April 2014, VIHBV served its notice of arbitration under the Dutch BIT,   formally commencing the Dutch BIT arbitration proceedings. An arbitrator has   been appointed by VIHBV. The Indian Government appointed an arbitrator but he   resigned in May 2015. The third arbitrator, who will act as chairman of the   tribunal, had been agreed by the two party-appointed arbitrators (prior to   the Government’s arbitrator’s resignation) but declined to accept the   appointment. There is now likely to be a delay in appointing the chairman   pending the Indian Government appointing a replacement for its party-appointed   arbitrator. If there is no subsequent agreement on appointment of a chairman,   the International Court of Justice will appoint the third arbitrator. We did   not carry a provision for this litigation or in respect of the retrospective   legislation at 31 March 2015, or at previous reporting dates. Other Indian   tax cases VIL and Vodafone India Services Private Limited (‘VISPL’) (formerly   3GSPL) are involved in a number of tax cases with total claims exceeding £1.5   billion plus interest, and penalties of up to 300% of the principal. VIL tax   claims The claims against VIL range from disputes concerning transfer pricing   and the applicability of value-added tax to SIM cards, to the disallowance of   income tax holidays. The quantum of the tax claims against VIL is in the   region of £1.3 billion. VIL is of the opinion that any finding of material   liability to tax is not probable. VISPL tax claims VISPL has been assessed as   owing tax of approximately £260 million (plus interest of £190 million) in   respect of (i) a transfer pricing margin charged for the international call   centre of HTIL prior to the 2007 transaction with Vodafone for HTIL assets in   India; (ii) the sale of the international call centre by VISPL to HTIL; and   (iii) the acquisition of and/or the alleged transfer of options held by VISPL   for VIL equity shares. The first two of the three heads of tax are subject to   an indemnity by HTIL under the VIHBV Tax Deed of Indemnity. The larger part   of the potential claim is not subject to any indemnity. VISPL unsuccessfully   challenged the merits of the tax demand in the statutory tax tribunal and the   jurisdiction of the tax office to make the demand in the High Court. The Tax   Appeal Tribunal has now heard the appeal and ruled in the Tax Office’s   favour. VISPL has lodged an appeal (and stay application) in the Bombay High   Court which was partially heard in April and concluded in early May 2015. In   the meantime, (i) a stay of the tax demand on a deposit of £20 million and   (ii) a corporate guarantee by VIHBV for the balance of tax assessed remains   in place pending a decision on the appeal in the Bombay High Court which is   expected during 2015. If VISPL loses the appeal, its terms of the stay of   demand may be revisited (and could be increased) while VISPL pursues a   further appeal in the Supreme Court. Indian regulatory cases Litigation   remains pending in the Telecommunications Dispute Settlement Appellate   Tribunal (‘TDSAT’), High Courts and the Supreme Court in relation to a number   of significant regulatory issues including mobile termination rates (‘MTRs’),   spectrum and licence fees, licence extension and 3G intra-circle roaming   (‘ICR’). Public interest litigation: Yakesh Anand v Union of India, Vodafone   and others The Petitioner brought a special leave petition in the Indian Supreme   Court on 30 January 2012 against the Government of India and mobile network   operators, including VIL, seeking recovery of the alleged excess spectrum   allocated to the operators, compensation for the alleged excess spectrum held   in the amount of approximately €4.7 billion and a criminal investigation of   an alleged conspiracy between government officials and the network operators.   A claim with similar allegations was dismissed by the Supreme Court in March   2012, with an order that the Petitioner should pay a fine for abuse of   process. The case is pending before the Supreme Court and is expected to be   called for hearing at some uncertain future date. One time spectrum charges:   Vodafone India v Union of India The Government of India has sought to impose   one time spectrum charges of approximately €525 million on certain operating   subsidiaries of VIL. We filed a petition before the TDSAT challenging the one   time spectrum charges on the basis that they are illegal, violate Vodafone’s   licence terms and are arbitrary, unreasonable and discriminatory. The   tribunal stayed enforcement of the Government’s spectrum demand pending   resolution of the dispute. The Indian Department of Telecommunications   (‘DoT’) recently proposed that, since several operators have brought similar   challenges in different jurisdictions, they move a transfer petition before   the Supreme Court. Accordingly, the matter in the TDSAT stands adjourned   until 11 August 2015. 3G inter-circle roaming: Vodafone India and others v   Union of India In April 2013, the DoT issued a stoppage notice to VIL’s   operating subsidiaries and other mobile operators requiring the immediate   stoppage of the provision of 3G services on other operators’ mobile networks   in an alleged breach of licences. The regulator also imposed a fine of   approximately €5.5 million. We applied to the Delhi High Court for an order   quashing the regulator’s notice. Interim relief from the notice has been   granted (but limited to existing customers at the time with the effect that   VIL was not able to provide 3G services to new customers on other operators’   3G networks pending a decision on the issue). The dispute was referred to the   TDSAT for decision, which ruled on 28 April 2014 that VIL and the other   operators were permitted to provide 3G services to their customers (current   and future) on other operators’ networks. The DoT has appealed the judgement,   which is pending before the Supreme Court. 169 Vodafone Group Plc Annual   Report on Form 20-F 2015 Overview Strategy review Performance Governance Financials   Additional information |
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|  | Notes to the   consolidated financial statements (continued) 30. Contingent liabilities   (continued) Extension of licences in Delhi, Mumbai and Kolkata: VIL and   others v Union of India We sought an extension of our existing licences in   Delhi, Mumbai and Kolkata. That extension was denied by the DoT by order   dated 21 March 2013. We appealed that decision to the TDSAT and by its order   dated 31 January 2014, the TDSAT denied the extension. In the meantime, in   order to maintain continuity of services, VIL sought and obtained spectrum in   these cities. The appeal to the Supreme Court was rejected on 14 May 2015.   Other cases in the Group Italy British Telecom (Italy) v Vodafone Italy The   Italian Competition Authority concluded an investigation in 2007 when   Vodafone Italy gave certain undertakings in relation to allegations that it   had abused its dominant position in the wholesale market for mobile   termination. In 2010, British Telecom (Italy) brought a civil damages claim   against Vodafone Italy on the basis of the Competition Authority’s   investigation and Vodafone Italy’s undertakings. British Telecom (Italy)   seeks damages in the amount of €280 million for abuse of dominant position by   Vodafone Italy in the wholesale fixed to mobile termination market for the   period from 1999 to 2007. A court appointed expert delivered an opinion to   the Court that the range of damages in the case should be in the region of   €10 million to €25 million which was reduced in a further supplemental report   published in September 2014 to a range of €8 million to €11 million. The   expert’s report will be considered by the Court before it passes judgement on   the case. FASTWEB v Vodafone Italy The Italian Competition Authority   concluded an investigation in 2007 when Vodafone Italy gave certain   undertakings in relation to allegations it had abused its dominant position   in the wholesale market for mobile termination. In 2010, FASTWEB brought a   civil damages claim against Vodafone Italy on the basis of the Competition   Authority’s investigation and Vodafone Italy’s undertakings. FASTWEB sought   damages in the amount of €360 million for abuse of dominant position by   Vodafone Italy in the wholesale fixed to mobile termination market. A court   appointed expert delivered an opinion to the Court that the range of damages   in the case should be in the region of €0.5 million to €2.3 million. On 15   October 2014, the Court decided to reject FASTWEB’s damages claim in its   entirety. Greece Papistas Holdings SA, Mobile Trade Stores (formerly Papistas   SA) and Athanasios and Loukia Papistas v Vodafone Greece, Vodafone Group Plc   and certain Directors and Officers of Vodafone In December 2013, Mr and Mrs   Papistas, and companies owned or controlled by them, brought three claims in   the Greek court in Athens against Vodafone Greece, Vodafone Group Plc and   certain Directors and officers of Vodafone Greece and Vodafone Group Plc for   purported damage caused by the alleged abuse of dominance and wrongful   termination of a franchise arrangement with a Papistas company. Approximately   €1.0 billion of the claim is directed exclusively at one former and one   current Director of Vodafone Greece. The balance of the claim (approximately   €285.5 million) is sought from Vodafone Greece and Vodafone Group Plc on a   joint and several basis. The cases are scheduled to come to trial in November   2015 and April 2016. Tanzania Cats-Net Limited v Vodacom Tanzania Limited In   2012, Cats-Net Limited brought a claim for US$500 million (US$200 million   compensatory and US$300 million punitive) in damages against Vodacom Tanzania   Limited in the Tanzanian High Court. Cats-Net Limited is also seeking an   order cancelling Vodacom Tanzania’s mobile telecommunications licence. The   claim is based on the actions of the Tanzanian Telecommunications Regulatory   Authority (‘TTRA’) who, following complaints by Vodacom Tanzania of   interference caused by transmissions of Cats-Net Limited, allegedly shut down   the operations of Cats-Net Limited after conducting its own investigation.   Cats-Net Limited alleges collusion between the TTRA and Vodacom Tanzania.   Vodacom Tanzania filed an application to strike out the claim. That   application has been argued and the parties await a decision of the Court.   170 Vodafone Group Plc Annual Report on Form 20-F 2015 |
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|  | 31. Related   party transactions The Group has a number of related parties including joint   arrangements and associates, pension schemes and Directors and Executive   Committee members (see note 12 “Investments in associates and joint   arrangements”, note 26 “Post employment benefits” and note 24 “Directors and   key management compensation”). Transactions with joint arrangements and   associates Related party transactions with the Group’s joint arrangements and   associates primarily comprise fees for the use of products and services   including network airtime and access charges, fees for the provision of   network infrastructure and cash pooling arrangements. No related party   transactions have been entered into during the year which might reasonably   affect any decisions made by the users of these consolidated financial   statements except as disclosed below. 2015 £m 2014 £m 2013 £m Note: 1 Amounts   arise primarily through Vodafone Italy, Vodafone Hutchison Australia, Indus   Towers and Cornerstone. Interest is paid in line with market rates. Dividends   received from associates and joint ventures are disclosed in the consolidated   statement of cash flows. Transactions with Directors other than compensation   During the three years ended 31 March 2015, and as of 19 May 2015, 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 2015, and as of 19 May 2015, 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. Dividends received from associates are disclosed   in the consolidated statement of cash flows. 32. Principal subsidiaries Our   subsidiaries are located around the world and each contributes to the   profits, assets and cash flow of the Group. We have a large number of   subsidiaries and so, for practical reasons, only the principal subsidiaries   at 31 March 2015 are detailed below. Accounting policies A subsidiary is an   entity controlled by the Company. Control is achieved where the Company has   existing rights that give it the current ability to direct the activities   that affect the Company’s returns and exposure or rights to variable returns   from the entity. The results of subsidiaries acquired or disposed of during the   year are included in the consolidated income statement from the effective   date of acquisition or up to the effective date of disposal, as appropriate.   Where necessary, adjustments are made to the financial statements of   subsidiaries to bring their accounting policies into line with those used by   the Group. All intra-group transactions, balances, income and expenses are   eliminated on consolidation. Non-controlling interests in the net assets of   consolidated subsidiaries are identified separately from the Group’s equity   therein. Non-controlling interests consist of the amount of those interests   at the date of the original business combination and the non-controlling   shareholder’s share of changes in equity since the date of the combination.   Total comprehensive income is attributed to non-controlling interests even if   this results in the non-controlling interests having a deficit balance. 171   Vodafone Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information Sales of goods and   services to associates 32 231238 Purchase of goods and services from   associates 85 10997 Sales of goods and services to joint arrangements 6 1227   Purchase of goods and services from joint arrangements 566 570568 Net interest   income receivable from joint arrangements1 79 7533 Trade balances owed: by   associates 3 321 to associates 4 320 by joint arrangements 182 82260 to joint   arrangements 48 17048 Other balances owed by joint arrangements1 61 571,065   Other balances owed to joint arrangements1 54 63– |
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|  | Notes to the   consolidated financial statements (continued) 32. Principal subsidiaries   (continued) Principal subsidiaries A full list of subsidiaries, joint   arrangements, associated undertakings and any significant holdings (as   defined in the Large and Medium-sized Companies and Groups (Accounts and   Reports) Regulations 2008) as at 15 August 2015 will be annexed to the   Company’s next annual return filed with the Registrar of Companies. No   subsidiaries are excluded from the Group consolidation. Unless otherwise   stated the Company’s principal subsidiaries all have share capital consisting   solely of ordinary shares and are indirectly held. The country of   incorporation or registration of all subsidiaries is also their principal   place of operation unless otherwise stated. Country of incorporation or   registration Percentage shareholdings1 Name Principal activity Vodafone GmbH   Kabel Deutschland Holding AG Vodafone Limited Vodafone Omnitel B.V.2 Vodafone   España, S.A.U. Cableuropa, S.A.U.3 Vodafone Albania Sh.A. Vodafone Czech   Republic a.s. Vodafone-Panafon Hellenic Telecommunications Company S.A.   Hellas Online S.A.4 Vodafone Magyarorszag Mobile Tavkozlesi Zartkoruen Mukodo   Reszvenytarsasag5 Vodafone Ireland Limited Vodafone Malta Limited Vodafone   Libertel B.V. Vodafone Portugal-Comunicações Pessoais, S.A.6 Vodafone Romania   S.A. Vodafone India Limited Vodacom Group Limited Vodacom (Pty) Limited7   Network operator Network operator Network operator Network operator Network   operator Network operator Network operator Network operator Network operator   Network operator Network operator Network operator Network operator Network   operator Network operator Network operator Network operator Holding company   Network operator Germany Germany England Netherlands Spain Spain Albania   Czech Republic Greece Greece Hungary Ireland Malta Netherlands Portugal   Romania India South Africa South Africa The Democratic Republic of Congo   Tanzania Mozambique Lesotho South Africa Egypt Ghana New Zealand Qatar Turkey   England England Italy England Spain Netherlands Netherlands Luxembourg   Luxembourg Luxembourg 100.0 76.7 100.0 100.0 100.0 100.0 99.9 100.0 99.9 97.8   100.0 100.0 100.0 100.0 100.0 100.0 100.0 65.0 60.9 Vodacom Congo (RDC)   s.p.r.l.7,8,9 Vodacom Tanzania Limited7 VM, S.A.7,10 Vodacom Lesotho (Pty)   Limited7 Vodacom Business Africa Group (PTY) Limited7 Vodafone Egypt   Telecommunications S.A.E. Ghana Telecommunications Company Limited Vodafone   New Zealand Limited Vodafone Qatar Q.S.C.9 Vodafone Telekomunikasyon A.S.   Vodafone Group Services Limited11 Vodafone Sales & Services Limited12   Cobra Automotive Technologies S.P.A.13 Vodafone 6 UK Vodafone Holdings Europe,   S.L.U. Vodafone Europe B.V. Vodafone International Holdings B.V. Vodafone   Investments Luxembourg S.a.r.l. Vodafone Procurement Company S.a.r.l.   Vodafone Roaming Services S.a.r.l. Network operator Network operator Network   operator Network operator Holding company Network operator Network operator   Network operator Network operator Network operator Global products and   services provider Group services provider Telematics products and services   provider Holding company Holding company Holding company Holding company   Holding company Group services provider Group services provider 33.2 53.4   55.3 52.0 65.0 54.9 70.0 100.0 23.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0   100.0 100.0 100.0 100.0 Notes: 1 2 3 4 5 6 7 8 9 Effective ownership   percentages of Vodafone Group Plc at 31 March 2015, rounded to nearest tenth   of one percent. The principal place of operation of Vodafone Omnitel B.V. is   Italy. Cableuropa, S.A.U, was acquired on 23 July 2014. Hellas Online S.A.   was acquired on 25 November 2014. Trades as Vodafone Hungary Mobile   Telecommunications Company Limited. 38.6% of the issued share capital of   Vodafone Portugal-Comunicações Pessoais, S.A. is directly held by Vodafone   Group Plc. Shareholding is indirect through Vodacom Group Limited. The   indirect shareholding is calculated using the 65.0% ownership interest in   Vodacom. The share capital of Vodacom Congo (RDC) s.p.r.l. consists of   1,000,000 ordinary shares and 75,470,588 preference shares. The Group has   rights that enable it to control the strategic and operating decisions of   Vodafone Qatar Q.S.C. and Vodacom Congo (RDC) s.p.r.l. 10 The share capital   of VM, S.A. consists of 60,000,000 ordinary shares and 548,350,646 preference   shares. 11 Share capital consists of 1,190 ordinary shares and one deferred   share, of which 100% of the shares are indirectly held by Vodafone Group Plc.   12 Vodafone Sales & Services Limited is directly held by Vodafone Group   Plc. 13 Cobra Automotive Technologies S.P.A. was acquired on 14 August 2014.   On 1 April 2015, it changed its name to Vodafone Automotive S.P.A. 172   Vodafone Group Plc Annual Report on Form 20-F 2015 |
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|  | The table below   shows selected financial data in respect of subsidiaries that have   non-controlling interests that are material to the Group. Vodafone Egypt   Telecommunications S.A.E. Vodacom Group Limited Vodafone Qatar Q.S.C. 2015 £m   2014 £m 2015 £m 2014 £m 2015 £m 2014 £m The voting rights held by the Group   equal the Group’s percentage shareholding as shown on page 172. 173 Vodafone   Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information Summary   comprehensive income information Revenue 4,341 4,718 1,191 1,163 394 342   Profit/(loss) for the financial year 603 730 156 165 (37) (43) Other   comprehensive expense (17) (9) – – – – Total comprehensive income/(expense)   586 721 156 165 (37) (43) Other financial information Profit/(loss) for the   financial year allocated to non-controlling interests 205 273 71 75 (29) (33)   Dividends paid to non-controlling interests 229 261 2 3 11 – Summary   financial position information Non-current assets 4,844 4,681 1,357 1,259   1,301 1,197 Current assets 1,405 1,275 518 405 76 52 Total assets 6,249 5,956   1,875 1,664 1,377 1,249 Non-current liabilities (490) (360) (57) (33) (8) (6)   Current liabilities (2,478) (2,005) (729) (721) (339) (267) Total assets less   total liabilities 3,281 3,591 1,089 910 1,030 976 Equity shareholders’ funds   2,722 2,899 673 575 237 224 Non-controlling interests 559 692 416 335 793 752   Total equity 3,281 3,591 1,089 910 1,030 976 |
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|  | Notes to the   consolidated financial statements (continued) 174 Vodafone Group Plc Annual   Report on Form 20-F 2015 33. Subsidiaries exempt from audit The following UK   subsidiaries will take advantage of the audit exemption set out within   section 479A of the Companies Act 2006 for the year ended 31 March 2015. Name   Registration number Cable & Wireless Worldwide plc 7029206 Cable &   Wireless UK Holdings Limited 3840888 Cable & Wireless Waterside Holdings   Limited 6859946 The Eastern Leasing Company Limited 1672832 Vodafone 24083193   Vodafone 4 UK 6357658 Vodafone 5 Limited 6688527 Vodafone 5 UK 2960479   Vodafone Americas 46389457 Vodafone Benelux Limited 4200960 Vodafone Cellular   Limited 896318 Vodafone Consolidated Holdings Limited 5754561 Vodafone   Enterprise Equipment Limited 1648524 Vodafone Euro Hedging Limited 3954207   Vodafone Euro Hedging Two 4055111 Vodafone European Investments 3961908   Vodafone European Portal Limited 3973442 Vodafone Europe UK 5798451 Vodafone   Finance Luxembourg Limited 5754479 Vodafone Finance Sweden 2139168 Vodafone   Finance UK Limited 3922620 Vodafone Financial Operations 4016558 Vodafone   Global Content Services Limited 4064873 Vodafone Holdings Luxembourg Limited 4200970   Vodafone Intermediate Enterprises Limited 3869137 Vodafone International Holdings   Limited 2797426 Vodafone International Operations Limited 2797438 Vodafone   Investments Australia Limited 2011978 Vodafone Investments Limited 1530514   Vodafone Investment UK5798385 Vodafone Marketing UK 6858585 Vodafone Mobile   Communications Limited 3942221 Vodafone Mobile Enterprises Limited 3961390   Vodafone Mobile Network Limited 3961482 Vodafone (New Zealand) Hedging   Limited 4158469 Vodafone Nominees Limited 1172051 Vodafone Oceania Limited   3973427 Vodafone Overseas Finance Limited 4171115 Vodafone Overseas Holdings   Limited 2809758 Vodafone Panafon UK 6326918 Vodafone Property Investments   Limited 3903420 Vodafone UK Limited 2227940 Vodafone Worldwide Holdings   Limited 3294074 Vodafone Yen Finance Limited 4373166 Voda Limited 1847509   Vodaphone Limited 2373469 Vodata Limited 2502373 34. Subsequent events No   material events occurred after our year end date of 31 March 2015 and before   the signing of this Annual Report on 19 May 2015. |
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|  | Other unaudited   financial information Prior year operating results This section presents our   operating performance for the 2014 financial year compared to the 2013   financial year, providing commentary on the revenue and adjusted EBITDA   performance of the Group and its regions. Consistent with the operating   results on pages 40 to 48, the results in this section have been presented on   a statutory basis in accordance with IFRS accounting principles, including   the results of the Group’s joint ventures and associates using the equity   accounting basis and the profit contribution from Verizon Wireless to 2   September 2013 as discontinued operations. This is consistent with how the   results and business performance are reviewed by management. Group1 Revenue   Europe £m AMAP £m Other2 £m Eliminations £m 2014 £m 2013 £m £ % change   Organic 24,222 13,473 686 (35) 38,346 38,041 0.8 (2.2) Service revenue 22,592   12,130 502 (34) 35,190 34,999 0.5 (2.6) Other revenue 1,630 1,343 184 (1)   3,156 3,042 Adjusted EBITDA 6,821 4,145 118 – 11,084 11,466 (3.3) (6.9)   Adjusted operating profit 2,333 1,947 30 – 4,310 5,590 (22.9) (22.0)   Adjustments for:   Impairment loss (6,600) (7,700) Restructuring   costs (355) (311) Amortisation of acquired customer bases and brand   intangible assets (551) (249) Other income and expense (717) 468 Operating   loss (3,913) (2,202) Non-operating income and expense (149) 10 Net financing   costs (1,208) (1,291) Income tax credit/(expense) 16,582 (476) Profit/(loss)   for the financial year from  continuing   operations 11,312 (3,959) Profit for the financial year from discontinued   operations 48,108 4,616 Profit for the financial year 59,420 657 Notes: 1 2014   results reflect average foreign exchange rates of £1:€1.19 and £1:US$1.59   (2013: £1:€1.23 and £1:US$1.58). 2 The “Other” segment primarily represents   the results of the partner markets and the net result of unallocated central   Group costs  Revenue Revenue increased by 0.8% to £38.3 billion driven by   revenue growth in our AMAP region and business acquisitions, partially offset   by revenue declines in Europe due to challenging trading conditions and by   unfavourable exchange rate movements. On an organic basis service revenue   declined 2.6%*. Adjusted EBITDA Adjusted EBITDA decreased 6.9%* with a 1.5*   percentage point decline in the adjusted EBITDA margin as the impact of steep   revenue declines in Europe offset improving margins in AMAP, notably in India   and Australia. Adjusted operating profit Adjusted operating profit fell   22.0%* year-on-year largely reflecting the decline in adjusted EBITDA and   higher depreciation and amortisation. Operating loss Operating loss increased   to £3.9 billion from £2.2 billion as lower impairment charges were offset by   lower adjusted operating profit and other income and expense. During the year   we recorded goodwill impairment charges of £6.6 billion relating to our   businesses in Germany, Spain, Portugal, Czech Republic and Romania. Other   income and expense comprises a loss of £0.7 billion arising largely from our   acquisition of a controlling interest in Vodafone Italy compared with a £0.5   billion gain on the acquisition of CWW in the prior year.     Note: * All amounts in the Operating Results   section marked with an “*” represent organic growth which presents   performance on a comparable basis, both in terms of merger and acquisition   activity and movements in foreign exchange rates. Refer to “Organic growth”   on page 203 for further detail. 175 |
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|  | Other unaudited   financial information (continued) Prior year operating results (continued)   Europe % change Germany £m Italy1 £m UK £m Spain £m Other Europe £m   Eliminations £m Europe £m £ Organic Year ended 31 March 2014 Revenue Service   revenue Other revenue Adjusted EBITDA Adjusted operating profit Adjusted   EBITDA margin 8,272 7,739 533 2,698 918 32.6% 522 465 57 182 371 34.9% 6,427   6,095 332 1,418 187 22.1% 3,518 3,230 288 787 181 22.4% 5,526 5,103 423 1,736   676 31.4% (43) (40) (3) – – 24,222 22,592 1,630 6,821 2,333 28.2% 1.4 2.0   (5.7) (5.0) (37.6) (8.3) (7.7) (15.3) (16.9) (41.5) Year ended 31 March 2013   Revenue Service revenue Other revenue Adjusted EBITDA Adjusted operating   profit Adjusted EBITDA margin 7,857 7,275 582 2,831 1,401 36.0% – – – – 739   0.0% 5,150 4,782 368 1,210 303 23.5% 3,904 3,629 275 1,021 421 26.2% 7,114   6,610 504 2,121 878 29.8% (141) (140) (1) – – 23,884 22,156 1,728 7,183 3,742   30.1% (3.4) (3.1) (6.2) (6.7) (19.8) (4.3) (4.2) (4.9) (4.4) (14.2) Note: 1   Adjusted operating profit for the year ended 31 March 2013 of £739 million in   respect of Italy represents the Group’s share of the net result of Vodafone   Italy. Revenue increased 1.4%, including a 2.4 percentage point favourable   impact from foreign exchange rate movements and a 7.3 percentage point   positive impact from M&A and other activity. On an organic basis service   revenue declined 7.7%*, driven by challenging macroeconomic conditions in   many markets, increased competition and the impact of MTR cuts, partially   offset by continued growth of mobile in-bundle revenue. Adjusted EBITDA   decreased 5.0%, including a 2.6 percentage point favourable impact from   foreign exchange rate movements and a 9.3 percentage point positive impact   from M&A and other activity. On an organic basis adjusted EBITDA   decreased 16.9%*, resulting from a reduction in service revenue in most   markets and higher customer investment, partially offset by efficiency in   operating costs. Organic change* % Other activity pps Foreign exchange pps   Reported change % Revenue – Europe (8.3) 7.3 2.4 1.4 Service revenue Germany   Italy1 UK Spain Other Europe Europe (6.2) (20.2) (4.4) (13.4) (7.1) (7.7) 9.0   20.2 31.9 (0.7) (17.5) 7.2 3.6 – – 3.1 1.8 2.5 6.4 – 27.5 (11.0) (22.8) 2.0   Adjusted EBITDA Germany Italy1 UK Spain Other Europe Europe (18.2) (30.3)   (9.8) (23.9) (14.0) (16.9) 10.2 30.3 26.9 (1.8) (6.2) 9.3 3.3 – 0.1 2.8 2.0   2.6 (4.7) – 17.2 (22.9) (18.2) (5.0) Adjusted operating profit Europe (41.5)   1.7 2.2 (37.6) Note: 1 Organic growth for Vodafone Italy only includes its   results for the period from 21 February 2014, the date the Group acquired a   100% interest, to 31 March 2014 compared to the same period the previous   year. Germany Service revenue decreased 6.2%*, with a slightly improving   trend in Q4 compared to Q3. Performance for the year was driven by intense   price competition in both the consumer and enterprise segments and an MTR cut   effective from December 2012, with Vodafone particularly impacted due to our   traditionally high ARPU. In a more competitive environment we launched both a   more aggressive 3G price plan (“Smart”) and pushed otelo in the entry-level   contract segment. Mobile in-bundle revenue increased 2.7%* as a result of   growth in integrated Vodafone Red offers, which was more than offset by a   decline in mobile out-of-bundle revenue of 22.6%*. We continue to focus on   Vodafone Red and 4G where we had nearly 3.0 million customers and 891,000   consumer contract customers respectively at 31 March 2014. 176 Vodafone Group   Plc Annual Report on Form 20-F 2015 |
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|  | Adjusted EBITDA   declined 18.2%*, with a 4.3* percentage point decline in adjusted EBITDA   margin, driven by lower service revenue and increased customer investment.   The roll-out of 4G services continued with a focus on urban areas, with   overall outdoor population coverage of 70% at 31 March 2014, which combined   with our ongoing network enhancement plan has resulted in a significant   improvement in voice and data performance in the second half of the year.   Following its acquisition on 14 October 2013, KDG contributed £702 million to   service revenue and £297 million to adjusted EBITDA in Germany. The   domination and profit and loss transfer agreement was registered on 14 March   2014 and the integration of Vodafone Germany and KDG began on 1 April 2014.   Italy Service revenue for the year declined 17.3% on a local currency basis   driven by the effect of the summer prepaid price war penetrating the customer   base and the negative impact of MTR cuts effective from January and July   2013. Mobile in-bundle revenue grew 15.5% on a local currency basis driven by   the take-up of integrated prepaid plans. Vodafone Red, which had nearly 1.5   million customers at 31 March 2014, continues to penetrate further into the   base leading to improving churn in the contract segment. Enterprise revenue   growth, while still negative, showed signs of improvement during the year   thanks to the success of “Zero”. Prepaid experienced a steep ARPU decline as   a result of the market move to aggressive bundled offers. 4G services are now   available in 202 municipalities and outdoor coverage has reached 35%. Fixed   line revenue for the year declined 3.0% on a local currency basis as a result   of declining fixed voice usage, partly offset by continued broadband revenue   growth supported by 77,000 net broadband customer additions during the year.   Vodafone Italy now offers fibre services in 37 cities and is progressing well   on its own fibre build plans. Adjusted EBITDA for the year declined 24.9% on   a local currency basis, with a 4.7 percentage point decline in the local   currency adjusted EBITDA margin, primarily driven by the lower revenue,   partially offset by strong efficiency improvements delivered on operating   costs which fell 6.9% on a local currency basis. UK Service revenue decreased   4.4%*, principally driven by declines in enterprise and prepaid and a 1.9   percentage point impact from MTR cuts, partially offset by consumer contract   service revenue growth. Mobile in-bundle revenue increased 0.6%* as the   positive impact of contract customer growth and greater penetration of   Vodafone Red plans into the customer base, with nearly 2.7 million customers   at 31 March 2014, offset pricing pressures. Mobile out-of-bundle declined   7.2%*, primarily driven by lower prepaid revenue. The activity to integrate   the UK operations of CWW was accelerated successfully and we continue to   deliver cash and capex synergies as planned. The sales pipeline is now   growing, which we expect to materialise into revenue increases in the 2015   financial year. The roll-out of 4G services continued following the launch in   August 2013, with services now available in 14 cities and over 200 towns,   with over 637,000 4G enabled plans (including Mobile Broadband) at 31 March   2014. We are making significant progress in network performance, particularly   in the London area. Adjusted EBITDA declined 9.8%*, driven by lower revenue   and a 1.0* percentage point decline in the adjusted EBITDA margin as a result   of higher customer investment. Spain Service revenue declined 13.4%*, as a   result of intense convergence price competition, macroeconomic price pressure   in enterprise and an MTR cut in July 2013. Service revenue trends began to   improve towards the end of the year. As a result of a stronger commercial   performance and lower customer churn from an improved customer experience,   the contract customer base decline slowed during the year and the enterprise   customer base remained broadly stable. Mobile in-bundle revenue declined   0.4%* driven by the higher take-up of Vodafone Red plans, which continue to   perform well, with over 1.2 million customers at 31 March 2014. We had   797,000 4G customers at 31 March 2014 and services are now available in all   Spanish provinces, 227 municipalities and 80 cities. Fixed line revenue   declined 0.2%* as we added 216,000 new customers during the year and added   276,000 homes to our joint fibre network with Orange. On 17 March 2014 we   agreed to acquire Grupo Corporativo Ono, S.A. (‘Ono’), the leading cable   operator in Spain and the transaction is, subject to customary terms and   conditions including anti-trust clearances by the relevant authorities,   expected to complete in calendar Q3 2014. Adjusted EBITDA declined 23.9%*,   with a 3.4* percentage point decline in adjusted EBITDA margin, primarily   driven by the lower revenue, partly offset by lower commercial costs and   operating cost reductions of 9.4%*. Other Europe Service revenue declined   7.1%* as price competition and MTR cuts resulted in service revenue declines   of 5.6%*, 8.4%* and 14.1%* in the Netherlands, Portugal and Greece   respectively. However, Hungary and Romania returned to growth in H2, and all   other markets apart from Portugal showed an improvement in revenue declines   in Q4. In the Netherlands mobile in-bundle revenue increased by 3.4%*, driven   by the success of Vodafone Red plans. In Portugal, the broadband customer   base and fixed line revenues continued to grow as the fibre roll-out gained   momentum in a market moving strongly towards converged offers, whilst in   Greece the customer base grew due to the focus on data. In Ireland, contract   growth remained good in a declining market. Adjusted EBITDA declined 14.0%*,   with a 2.1* percentage point reduction in the adjusted EBITDA margin, driven   by lower service revenue, partly offset by operating cost efficiencies. 177   Vodafone Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Additional information |
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|  | Other unaudited   financial information (continued) Prior year operating results (continued)   Africa, Middle East and Asia Pacific % change India £m Vodacom £m Other AMAP   £m Eliminations £m AMAP £m £ Organic Year ended 31 March 2014 Revenue Service   revenue Other revenue Adjusted EBITDA Adjusted operating profit Adjusted   EBITDA margin 3,945 3,927 18 1,135 326 28.8% 4,718 3,866 852 1,716 1,228   36.4% 4,810 4,337 473 1,294 393 26.9% – – – – – 13,473 12,130 1,343 4,145   1,947 30.8% (1.8) (3.5) 16.8 (1.2) 12.9 9.7 7.4 34.9 11.2 31.8 Year ended 31   March 2013 Revenue Service revenue Other revenue Adjusted EBITDA Adjusted   operating profit Adjusted EBITDA margin 3,907 3,878 29 1,055 158 27.0% 5,206   4,415 791 1,891 1,332 36.3% 4,606 4,276 330 1,250 235 27.1% (1) (1) – – –   13,718 12,568 1,150 4,196 1,725 30.6% (0.7) (1.2) 5.6 4.3 7.1 8.2 7.6 14.8   13.8 20.1 Revenue declined 1.8% mainly as a result of a 12.3 percentage point   adverse impact from foreign exchange rate movements, particularly with regard   to the Indian rupee, the South African rand and the Turkish lira. On an   organic basis service revenue grew 7.4%*, driven by a higher customer base,   increased customer usage and successful pricing strategies, partially offset   by the impact of MTR reductions and a general weakening in macroeconomic   conditions in certain countries. Growth was led by strong performances in   India, Turkey, Qatar and Ghana and robust performances in Vodacom and Egypt,   partly offset by service revenue declines in New Zealand. Adjusted EBITDA   decreased 1.2%, including a 13.5 percentage point adverse impact from foreign   exchange rate movements. On an organic basis, adjusted EBITDA grew 11.2%*,   driven primarily by strong growth in India, Turkey, Qatar and Ghana as well   as improved contributions from Egypt and Vodacom. Organic change* % Other   activity pps Foreign exchange pps Reported change % Revenue – AMAP 9.7 0.8   (12.3) (1.8) Service revenue India Vodacom Other AMAP AMAP 13.0 4.1 5.7 7.4 –   (2.8) 5.2 0.9 (11.7) (13.7) (9.5) (11.8) 1.3 (12.4) 1.4 (3.5) Adjusted EBITDA   India Vodacom Other AMAP AMAP 20.8 6.6 9.8 11.2 – 0.2 3.2 1.1 (13.2) (16.1)   (9.5) (13.5) 7.6 (9.3) 3.5 (1.2) Adjusted operating profit AMAP 31.8 (0.1)   (18.8) 12.9 178 Vodafone Group Plc Annual Report on Form 20-F 2015 |
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|  | India Service   revenue increased 13.0%*, driven by continued customer growth and data usage   as well as improved voice pricing. Mobile customers increased by 14.2 million   during the year, yielding a closing customer base of 166.6 million at 31   March 2014. Data usage grew 125% during the year, primarily resulting from a   39% increase in mobile internet users and a 67% increase in usage per   customer. At 31 March 2014 active data customers totalled 52 million   including seven million 3G customers. We progressively rolled out M-Pesa   across India over the year, reaching nationwide coverage by March 2014.   Adjusted EBITDA grew 20.8%*, with a 2.0* percentage point increase in   adjusted EBITDA margin, driven by the higher revenue and the resulting   economies of scale on costs. In February, Vodafone India successfully bid for   additional spectrum in 11 telecom circles in the Indian Government’s 900MHz   and 1800MHz spectrum auction, enabling the company to provide customers with   enhanced mobile voice and data services across the country. Of the total £1.9   billion cost of these spectrum licences, £0.5 billion was paid during the   financial year with the remainder payable in instalments starting in 2017.   Vodacom Service revenue grew 4.1%*, driven by strong growth in Vodacom’s mobile   operations outside South Africa. In South Africa, organic service revenue   increased 0.3%*, despite the adverse impact of an MTR cut, due to the strong   growth in data revenues of 23.5%*, driven by higher smartphone penetration   and the strong demand for prepaid bundles. Vodacom’s mobile operations   outside South Africa delivered service revenue growth of 18.9%* mainly from   continued customer base growth. M-Pesa continued to perform well and is now   operational in all of the Vodacom mobile operations outside of South Africa,   with over 4.4 million customers actively using the service. Adjusted EBITDA   increased 6.6%*, driven by revenue growth, optimisation in customer   investment and efficiencies in South Africa operating costs. The adjusted   EBITDA margin decline of 0.3* percentage points is the result of higher sales   of lower margin handsets. On 14 April 2014 Vodacom announced the acquisition   of the Vodacom customer base from Nashua, a mobile cellular provider for   South African mobile network operators, subject to the approval of the   Competition Authority. On 19 May 2014 Vodacom announced that it had reached   an agreement with the shareholders of Neotel Proprietary Limited (‘Neotel’),   the second largest provider of fixed telecommunications services for both   enterprise and consumers in South Africa, to acquire 100% of the issued share   capital in, and shareholder loans against, Neotel for a total cash   consideration of ZAR 7.0 billion (£0.4 billion). The transaction remains   subject to the fulfilment of a number of conditions precedent including   applicable regulatory approvals and is expected to close before the end of   the financial year. Other AMAP Service revenue increased 5.7%*, with growth   in Turkey, Egypt, Qatar and Ghana being partially offset by declines in New Zealand.   Service revenue growth in Turkey was 7.9%* after a 5.4 percentage point   negative impact from voice and SMS MTR cuts effective from 1 July 2013.   Mobile in-bundle revenue in Turkey grew 25.0%* driven by higher smartphone   penetration, the success of Vodafone Red plans and continued growth in   enterprise. In Egypt service revenue increased 2.6%*, driven by the growth in   the customer base, higher data usage and a successful pricing strategy.   Service revenue growth in Qatar came as a result of strong net customer   additions and the success of segmented commercial offers. In Ghana, service   revenue grew 19.3%*, driven by an increase in customers and higher data usage   in both consumer and enterprise. Adjusted EBITDA grew 9.8%* with a 0.1*   percentage point improvement in adjusted EBITDA margin, with improvements in   Turkey, Qatar and Ghana driven by the increase in scale and operating cost   efficiencies, and with robust contribution from Egypt, partially offset by a   decline in New Zealand. Our joint venture in Australia experienced a local   currency service revenue decline of 9.0%. The turnaround plan remains on   track, yielding improved levels of network performance, net promoter score   and customer base management. The local currency adjusted EBITDA margin was   improved by 14.6 percentage points, as a result of restructuring and stronger   cost discipline. Our associate in Kenya, Safaricom, increased local currency   service revenue by 17.2% driven by a higher customer base and continued   growth in M-Pesa. 179 Vodafone Group Plc Annual Report on Form 20-F 2015   Overview Strategy review Performance Governance Financials Additional   information |
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|  | Shareholder information Investor calendar   Ex-dividend date for final dividend Record date for final dividend Interim   management statement Annual general meeting Final dividend payment Half-year   financial results Ex-dividend date for interim dividend* Record date for   interim dividend* Interim dividend payment* 11 June 2015 12 June 2015 24 July   2015 28 July 2015 5 August 2015 10 November 2015 19 November 2015 20 November   2015 3 February 2016 Note: * Provisional dates. Dividends See pages 47 and   129 for details on dividend amount per share. Payment of dividends by direct   credit We pay cash dividends directly to shareholders’ bank or building   society accounts. This ensures secure delivery and means dividend payments   are credited to shareholders’ bank or building society accounts on the same   day as payment. A consolidated tax voucher covering both the interim and   final dividends paid during the financial year is sent to shareholders at the   time of the interim dividend in February. ADS holders may alternatively have   their cash dividends paid by cheque. Overseas dividend payments Holders of   ordinary shares resident in the Eurozone (defined for this purpose as a   country that has adopted the euro as its national currency) automatically   receive their dividends in euros. The sterling/ euro exchange rate is   determined by us in accordance with our articles of association up to 13   business days before the payment date. Holders resident outside the UK and   Eurozone automatically receive dividends in pounds sterling but may elect to   receive dividends in local currency directly into their bank account by   registering for our registrar’s (Computershare) Global Payments Service.   Visit investorcentre.co.uk for details and terms and conditions. Cash   dividends to ADS holders will be paid by the ADS depositary in US dollars.   The sterling/US dollar exchange rate for this purpose is determined by us up   to ten New York and London business days before the payment date. See   vodafone.com/dividends for further information about dividend payments or,   alternatively, please contact our registrar or the ADS depositary, as   applicable. See page 187 for their contact information. Dividend reinvestment   plan We offer a dividend reinvestment plan which allows holders of ordinary   shares who choose to participate to use their cash dividends to acquire   additional shares in the Company. These are purchased on their behalf by the   plan administrator through a low cost dealing arrangement. For ADS holders,   BNY Mellon maintains a Global BuyDIRECT Plan which is a direct purchase and   sale plan for depositary receipts with a dividend reinvestment facility.   Managing your shares via Investor Centre Computershare operates a portfolio   service for investors in ordinary shares, called Investor Centre. This   provides our shareholders with online access to information about their   investments as well as a facility to help manage their holdings online, such   as being able to: a update dividend mandate bank instructions and review   dividend payment history; a update member details and address changes; and a   register to receive Company communications electronically. Computershare also   offers an internet and telephone share dealing service to existing   shareholders. The service can be obtained at investorcentre.co.uk.   Shareholders with any queries regarding their holding should contact   Computershare. See page 187 for their contact details. Shareholders may also   find the investors section of our corporate website, vodafone.com/investor,   useful for general queries and information about the Company. Shareholder   communications A growing number of our shareholders have opted to receive   their communications from us electronically using email and web-based   communications. The use of electronic communications, rather than printed   paper documents, means information about the Company can be received as soon   as it is available and has the added benefit of reducing costs and our impact   on the environment. Each time we issue a shareholder communication,   shareholders registered for electronic communications will be sent an email   alert containing a link to the relevant documents. We encourage all our   shareholders to sign up for this service by providing us with an email   address. You can register your email address via our registrar at   investorcentre.co.uk or contact them via the telephone number provided on   page 187. See vodafone.com/investor for further information about this   service. Annual general meeting Our thirty first annual general meeting will   be held at the Hilton London Metropole Hotel, 225 Edgware Road, London W2   1JU, on Tuesday 28 July 2015 at 11.00 a.m. The annual general meeting will be   transmitted via a live webcast which can be viewed on our website at   vodafone.com/agm on the day of the meeting. A recording will be available to   view after that date. 186 Vodafone Group Plc Annual Report on Form 20-F 2015   Unaudited information |
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|  | ShareGift We   support ShareGift, the charity share donation scheme (registered charity   number 1052686). Through ShareGift, shareholders who have only a very small   number of shares, which might be considered uneconomic to sell, are able to   donate them to charity. Donated shares are aggregated and sold by ShareGift,   the proceeds being passed on to a wide range of UK charities. See   sharegift.org or call +44 (0)20 7930 3737 for further details. Warning to   shareholders (“boiler room” scams) Over recent years we have become aware of   investors who have received unsolicited calls or correspondence, in some   cases purporting to have been issued by us, concerning investment matters.   These callers typically make claims of highly profitable opportunities in UK   or US investments which turn out to be worthless or simply do not exist.   These approaches are usually made by unauthorised companies and individuals   and are commonly known as “boiler room” scams. Investors are advised to be   wary of any unsolicited advice or offers to buy shares. If it sounds too good   to be true, it often is. See the FCA website at fca.org.uk/consumers/scams   for more detailed information about this or similar activity. Landmark Asset   Search We participate in an online service which provides a search facility   for solicitors and probate professionals to quickly and easily trace UK   shareholdings relating to deceased estates. Visit www.landmarkfas.co.uk or   call +44 (0)844 844 9967 for further information. Share price history On   flotation of the Company on 11 October 1988 the ordinary shares were valued   at 170 pence each. When the Company was finally demerged on 16 September 1991   the base cost of Racal Electronics Plc shares for UK taxpayers was   apportioned between the Company and Racal Electronics Plc for capital gains   tax purposes in the ratio of 80.036% and 19.964% respectively. Opening share   prices on 16 September 1991 were 332 pence for each Vodafone share and 223   pence for each Racal share. On 21 July 1994 the Company effected a bonus   issue of two new shares for every one then held and on 30 September 1999 it   effected a bonus issue of four new shares for every one held at that date.   The flotation and demerger share prices therefore may be restated as 11.333   pence and 22.133 pence respectively. On 31 July 2006 the Group returned   approximately £9 billion to shareholders in the form of a B share   arrangement. As part of this arrangement, and in order to facilitate   historical share price comparisons, the Group’s share capital was   consolidated on the basis of seven new ordinary shares for every eight   ordinary shares held at this date. On 21 February 2014 the Group disposed of   its interest in Verizon Wireless (‘VZW’) to Verizon Communications Inc. As   part of this transaction the Group returned US$85 billion to shareholders in   cash and Verizon shares. On 24 February 2014 the Group’s share capital was   consolidated on the basis of six new ordinary shares for every eleven   existing ordinary shares. The closing share price at 31 March 2015 was 220.45   pence (31 March 2014: 220.25 pence). The closing share price on 18 May 2015   was 234.10 pence. The following tables set out, for the periods indicated,   (i) the reported high and low middle market quotations of ordinary shares on   the London Stock Exchange, and (ii) the reported high and low sales prices of   ADSs on NASDAQ. London Stock Exchange Pounds per ordinary share NASDAQ   Dollars per ADS Year ended 31 March High Low High Low 2011 2012 2013 2014   2015 1.85 1.84 1.92 2.52 2.40 1.27 1.54 1.54 1.80 1.85 32.70 29.46 30.07   41.57 38.26 18.21 24.31 24.42 27.74 29.67 London Stock Exchange Pounds per   ordinary share NASDAQ Dollars per ADS Quarter High Low High Low 2013/2014   First quarter Second quarter Third quarter Fourth quarter 2014/2015 First   quarter Second quarter Third quarter Fourth quarter 2015/2016 First quarter1   1.99 2.24 2.44 2.52 1.80 1.92 2.20 2.18 30.80 35.79 39.99 36.01 27.81 29.15   35.03 41.57 2.27 2.10 2.34 2.40 1.90 1.89 1.85 2.15 38.26 34.54 36.55 36.03   32.00 32.18 29.67 32.30 2.36 2.20 37.04 32.71 Note: 1 Covering period up to   18 May 2015. 187 Additional information Vodafone Group Plc Annual Report on   Form 20-F 2015 Overview Strategy review Performance Governance Financials   Registrar and transfer office The Registrar Holders of ordinary shares   resident in Ireland Computershare Investor Services PLC Computershare Investor   Services (Ireland) Ltd The Pavilions PO Box 9742 Bridgwater Road, Bristol   BS99 6ZZ, England Dublin 18, Ireland Telephone: +44 (0)870 702 0198 Telephone:   +353 (0)818 300 999   investorcentre.co.uk/contactusinvestorcentre.co.uk/contact us ADS depositary   BNY Mellon Shareowner Services PO Box 30170 College Station, TX 77842-3170   Telephone: +1 800 233 5601 (toll free) or, for calls outside the United   States, +1 201 680 6825 (not toll free) and enter company number 2160 Email:   shrrelations@cpushareownerservices.com |
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|  | Shareholder   information (continued) Unaudited information London Stock Exchange Pounds   per ordinary share NASDAQ Dollars per ADS Markets Ordinary shares of Vodafone   Group Plc are traded on the London Stock Exchange and in the form of ADSs on   NASDAQ. We had Month High Low High Low November 2014 2.34 2.04 36.55 32.73   December 2014 2.31 2.13 35.80 33.30 January 2015 2.40 2.15 36.03 32.62 February   2015 2.37 2.24 35.98 34.56 March 2015 2.28 2.16 34.62 32.30 April 2015 2.33   2.20 35.62 32.71 May 20151 2.36 2.29 37.04 34.75 Note: 1 Covering period up   to 18 May 2015. Inflation and foreign currency translation Inflation   Inflation has not had a significant effect on the Group’s results of   operations and financial condition during the three years ended 31 March   2015. Foreign currency translation The following table sets out the pound   sterling exchange rates of the other principal currencies of the Group,   being: “euros”, “€” or “eurocents”, the currency of the European Union (‘EU’)   member states which have adopted the euro as their currency, and “US   dollars”, “US$”, “cents” or “¢”, the currency of the US. a total market   capitalisation of approximately £62 billion at 18 May 2015 making us the   seventh largest listing in The Financial Times Stock Exchange 100 index and   the 75th largest company in the world based on market capitalisation at that   date. ADSs, each representing ten ordinary shares, are traded on NASDAQ under   the symbol “VOD”. The ADSs are evidenced by ADRs issued by BNY Mellon, as   depositary, under a deposit agreement, dated as of 12 October 1988, as   amended and restated on 26 December 1989, 16 September 1991, 30 June 1999, 31   July 2006 and 24 February 2015 between the Company, the depositary and the   holders from time to time of ADRs issued thereunder. ADS holders are not   members of the Company but may instruct BNY Mellon on the exercise of voting   rights relative to the number of ordinary shares represented by their ADSs.   See “Articles of association and applicable English law – Rights attaching to   the Company’s shares – Voting rights” on page 190. Shareholders at 31 March   2015 31 March Currency (=£1) Average: Euro 2015 1.28 2014 1.19 % Change 7.6 US   dollar 1.61 1.59 1.3 At 31 March: Euro 1.38 1.21 14.0 US dollar 1.48 1.67   (11.4) On 18 May 2015 (the latest practicable date for inclusion in this   report) the exchange rates between pound sterling and euros and between pound   sterling and US dollars were as follows: £1 = €1.38 and £1 = US$1.57. The   following table sets out, for the periods and dates indicated, the period   end, average, high and low exchanges rates for pound sterling expressed in US   dollars per £1.00. Year ended 31 March 31 March Average High Low 2011 1.61   1.56 1.64 1.43 2012 1.60 1.60 1.67 1.53 2013 1.52 1.58 1.63 1.49 2014 1.67   1.59 1.67 1.49 2015 1.48 1.61 1.71 1.46 The following table sets out, for the   periods indicated, the high and low exchange rates for pounds sterling   expressed in US dollars per £1.00. Y=ear ended 31 March High Low November   2014 1.60 1.56 December 2014 1.58 1.55 January 2015 1.56 1.49 February 2015   1.56 1.50 March 2015 1.54 1.46 April 2015 1.55 1.46 May 20151 1.58 1.51 Note:   1 Covering period up to 18 May 2015. Major shareholders BNY Mellon, as   custodian of our ADR programme, held approximately 15.63% of our ordinary   shares of 2020 21 US cents each at 18 May 2015 as nominee. The total number   of ADRs outstanding at 18 May 2015 was 414,482,128. At this date 1,469   holders of record of ordinary shares had registered addresses in the United   States and in total held approximately 0.008% of the ordinary shares of the   Company. At 31 March 2015 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 Black Rock Investment Management Ltd. 6.08% Legal & General   Investment Management Ltd.  3.32% No   changes in the interests disclosed under DTR 5 have been notified to the   Company between 31 March 2015 and 18 May 2015. Between 1 April 2012 and 18   May 2015, Capital Group Companies Inc. has held more than 3% of, or 3% of   voting rights attributable to, the ordinary shares of the Company. During   this period, and as notified, this holding reduced to below the 3% reporting   threshold. The rights attaching to the ordinary shares of the Company held by   these shareholders are identical in all respects to the rights attaching to   all the ordinary shares of the Company. The Directors are not aware, at 18   May 2015, of any other interest of 3% or more in the ordinary share capital   of the Company. The Company is not directly or indirectly owned or controlled   by any foreign government or any other legal entity. There are no   arrangements known to the Company that could result in a change of control of   the Company.  188 |
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|  | Articles of   association and applicable English law The following description summarises   certain provisions of the Company’s articles of association and applicable   English law. This summary is qualified in its entirety by reference to the   Companies Act 2006 of England and Wales and the Company’s articles of   association. See “Documents on display” on page 191 for information on where   copies of the articles of association can be obtained. The Company is a   public limited company under the laws of England and Wales. The Company is   registered in England and Wales under the name Vodafone Group Public Limited   Company with the registration number 1833679. All of the Company’s ordinary   shares are fully paid. Accordingly, no further contribution of capital may be   required by the Company from the holders of such shares. English law   specifies that any alteration to the articles of association must be approved   by a special resolution of the shareholders. Articles of association By a   special resolution passed at the 2010 annual general meeting the Company   removed its object clause together with all other provisions of its   memorandum of association which, by virtue of the Companies Act 2006, are   treated as forming part of the Company’s articles of association.   Accordingly, the Company’s articles of association do not specifically   restrict the objects of the Company. Directors The Company’s articles of   association provide for a Board of Directors, consisting of not fewer than   three Directors, who shall manage the business and affairs of the Company. The   Directors are empowered to exercise all the powers of the Company subject to   any restrictions in the articles of association, the Companies Act (as   defined in the articles of association) and any special resolution. Under the   Company’s articles of association a Director cannot vote in respect of any   proposal in which the Director, or any person connected with the Director,   has a material interest other than by virtue of the Director’s interest in   the Company’s shares or other securities. However, this restriction on voting   does not apply to resolutions (i) giving the Director or a third party any   guarantee, security or indemnity in respect of obligations or liabilities   incurred at the request of or for the benefit of the Company; (ii) giving any   guarantee, security or indemnity to the Director or a third party in respect   of obligations of the Company for which the Director has assumed   responsibility under an indemnity or guarantee; (iii) relating to an offer of   securities of the Company in which the Director is entitled to participate as   a holder of shares or other securities or in the underwriting of such shares   or securities; (iv) concerning any other company in which the Director   (together with any connected person) is a shareholder or an officer or is otherwise   interested, provided that the Director (together with any connected person)   is not interested in 1% or more of any class of the Company’s equity share   capital or the voting rights available to its shareholders; (v) relating to   the arrangement of any employee benefit in which the Director will share   equally with other employees; and (vi) relating to any insurance that the   Company purchases or renews for its Directors or any group of people   including Directors. The Directors are empowered to exercise all the powers   of the Company to borrow money, subject to the limitation that the aggregate   amount of all liabilities and obligations of the Group outstanding at any   time shall not exceed an amount equal to 1.5 times the aggregate of the   Group’s share capital and reserves calculated in the manner prescribed in the   articles of association unless sanctioned by an ordinary resolution of the   Company’s shareholders. The Company can make market purchases of its own   shares or agree to do so in the future provided it is duly authorised by its   members in a general meeting and subject to and in accordance with section   701 of the Companies Act 2006. Such authority was given at the 2014 annual   general meeting but no purchases were made during this financial year. At each   annual general meeting all Directors who were elected or last re-elected at   or before the annual general meeting held in the third calendar year before   the current year shall automatically retire. In 2005 the Company reviewed its   policy regarding the retirement and re-election of Directors and, although it   is not intended to amend the Company’s articles of association in this   regard, the Board has decided in the interests of good corporate governance   that all of the Directors wishing to continue in office should offer   themselves for re-election annually. Directors are not required under the   Company’s articles of association to hold any shares of the Company as a   qualification to act as a Director, although Executive Directors   participating in long-term incentive plans must comply with the Company’s   share ownership guidelines. In accordance with best practice in the UK for   corporate governance, compensation awarded to Executive Directors is decided   by a Remuneration Committee consisting exclusively of Non-Executive   Directors. In addition, as required by The Directors’ Remuneration Report   Regulations, the Board has, since 2003, prepared a report to shareholders on   the Directors’ remuneration which complies with the regulations (see pages 75   to 91). The report is also subject to a shareholder vote. Rights attaching to   the Company’s shares At 31 March 2015 the issued share capital of the Company   was comprised of 50,000 7% cumulative fixed rate shares of £1.00 each,   26,512,038,085 ordinary shares (excluding treasury shares) of 2020 /21 US   cents each and 33,737,176,433 deferred shares of US$0.00001 each. The   33,737,176,433 deferred shares were transferred to Vodafone Group Plc and   cancelled on 8 May 2015. Dividend rights Holders of 7% cumulative fixed rate   shares are entitled to be paid in respect of each financial year, or other   accounting period of the Company, a fixed cumulative preferential dividend of   7% per annum on the nominal value of the fixed rate shares. A fixed   cumulative preferential dividend may only be paid out of available   distributable profits which the Directors have resolved should be   distributed. The fixed rate shares do not have any other right to share in   the Company’s profits. Holders of the Company’s ordinary shares may, by   ordinary resolution, declare dividends but may not declare dividends in   excess of the amount recommended by the Directors. The Board of Directors may   also pay interim dividends. No dividend may be paid other than out of profits   available for distribution. Dividends on ordinary shares can be paid to   shareholders in whatever currency the Directors decide, using an appropriate   exchange rate for any currency conversions which are required. If a dividend   has not been claimed for one year after the date of the resolution passed at   a general meeting declaring that dividend or the resolution of the Directors   providing for payment of that dividend, the Directors may invest the dividend   or use it in some other way for the benefit of the Company until the dividend   is claimed. If the dividend remains unclaimed for 12 years after the relevant   resolution either declaring that dividend or providing for payment of that   dividend, it will be forfeited and belong to the Company. 189 Additional   information Vodafone Group Plc Annual Report on Form 20-F 2015 Overview   Strategy review Performance Governance Financials |
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|  | Shareholder   information (continued) Voting rights The Company’s articles of association   provide that voting on substantive resolutions (i.e. any resolution which is   not a procedural resolution) at a general meeting shall be decided on a poll.   On a poll, each shareholder who is entitled to vote and is present in person   or by proxy has one vote for every share held. Procedural resolutions (such   as a resolution to adjourn a general meeting or a resolution on the choice of   Chairman of a general meeting) shall be decided on a show of hands, where   each shareholder who is present at the meeting has one vote regardless of the   number of shares held, unless a poll is demanded. In addition, the articles   of association allow persons appointed as proxies of shareholders entitled to   vote at general meetings to vote on a show of hands, as well as to vote on a   poll and attend and speak at general meetings. The articles of association   also allow persons appointed as proxies by two or more shareholders entitled   to vote at general meetings to vote for and against a resolution on a show of   hands. Under English law two shareholders present in person constitute a   quorum for purposes of a general meeting unless a company’s articles of   association specify otherwise. The Company’s articles of association do not   specify otherwise, except that the shareholders do not need to be present in   person and may instead be present by proxy to constitute a quorum. Under   English law shareholders of a public company such as the Company are not permitted   to pass resolutions by written consent. Record holders of the Company’s ADSs   are entitled to attend, speak and vote on a poll or a show of hands at any   general meeting of the Company’s shareholders by the depositary’s appointment   of them as corporate representatives with respect to the underlying ordinary   shares represented by their ADSs. Alternatively holders of ADSs are entitled   to vote by supplying their voting instructions to the depositary or its   nominee who will vote the ordinary shares underlying their ADSs in accordance   with their instructions. Employees are able to vote any shares held under the   Vodafone Group Share Incentive Plan and “My ShareBank” (a vested nominee   share account) through the respective plan’s trustees. Holders of the Company’s   7% cumulative fixed rate shares are only entitled to vote on any resolution   to vary or abrogate the rights attached to the fixed rate shares. Holders   have one vote for every fully paid 7% cumulative fixed rate share.   Liquidation rights In the event of the liquidation of the Company, after   payment of all liabilities and deductions in accordance with English law, the   holders of the Company’s 7% cumulative fixed rate shares would be entitled to   a sum equal to the capital paid up on such shares, together with certain   dividend payments, in priority to holders of the Company’s ordinary shares.   The holders of the fixed rate shares do not have any other right to share in   the Company’s surplus assets. Pre-emptive rights and new issues of shares   Under section 549 of the Companies Act 2006 Directors are, with certain   exceptions, unable to allot the Company’s ordinary shares or securities   convertible into the Company’s ordinary shares without the authority of the   shareholders in a general meeting. In addition, section 561 of the Companies   Act 2006 imposes further restrictions on the issue of equity securities (as   defined in the Companies Act 2006 which include the Company’s ordinary shares   and securities convertible into ordinary shares) which are, or are to be,   paid up wholly in cash and not first offered to existing shareholders. The   Company’s articles of association allow shareholders to authorise Directors   for a period specified in the relevant resolution to allot (i) relevant   securities generally up to an amount fixed by the shareholders; and (ii)   equity securities for cash other than in connection with a pre-emptive offer   up to an amount specified by the shareholders and free of the pre-emption   restriction in section 561. At the 2014 annual general meeting the amount of   relevant securities fixed by shareholders under (i) above and the amount of   equity securities specified by shareholders under (ii) above were both in   line with corporate governance guidelines. The Directors consider it   desirable to have the maximum flexibility permitted by corporate governance   guidelines to respond to market developments and to enable allotments to take   place to finance business opportunities as they arise. In order to retain   such maximum flexibility, the Directors propose to renew the authorities   granted by shareholders in 2014 at this year’s annual general meeting.   Further details of such proposals are provided in the 2015 notice of annual   general meeting. Disclosure of interests in the Company’s shares There are no   provisions in the articles of association whereby persons acquiring, holding   or disposing of a certain percentage of the Company’s shares are required to   make disclosure of their ownership percentage although such requirements   exist under rules derived from the Disclosure and Transparency Rules   (‘DTRs’). The basic disclosure requirement upon a person acquiring or   disposing of shares that are admitted to trading on a regulated market and   carrying voting rights is an obligation to provide written notification to   the Company, including certain details as set out in DTR 5, where the   percentage of the person’s voting rights which he holds as shareholder or   through his direct or indirect holding of financial instruments (falling   within DTR 5.3.1R) reaches or exceeds 3% and reaches, exceeds or falls below   each 1% threshold thereafter. Under section 793 of the Companies Act 2006 the   Company may, by notice in writing, require a person that the Company knows or   has reasonable cause to believe is, or was during the preceding three years,   interested in the Company’s shares to indicate whether or not that is correct   and, if that person does or did hold an interest in the Company’s shares, to   provide certain information as set out in the Companies Act 2006. DTR 3 deals   with the disclosure by persons “discharging managerial responsibility” and   their connected persons of the occurrence of all transactions conducted on   their account in the shares of the Company. Part 28 of The Companies Act 2006   sets out the statutory functions of the Panel on Takeovers & Mergers (the   ‘Panel’). The Panel is responsible for issuing and administering the Code on   Takeovers & Mergers which includes disclosure requirements on all parties   to a takeover with regard to dealings in the securities of an offeror or   offeree company and also on their respective associates during the course of   an offer period. General meetings and notices Subject to the articles of   association, annual general meetings are held at such times and place as   determined by the Directors of the Company. The Directors may also, when they   think fit, convene other general meetings of the Company. General meetings   may also be convened on requisition as provided by the Companies Act 2006. An   annual general meeting needs to be called by not less than 21 days’ notice in   writing. Subject to obtaining shareholder approval on an annual basis, the   Company may call other general meetings on 14 days’ notice. The Directors may   determine that persons entitled to receive notices of meetings are those   persons entered on the register at the close of business on a day determined   by the Directors but not later than 21 days before the date the relevant   notice is sent. The notice may also specify the record date, the time of   which shall be determined in accordance with the articles of association and   the Companies Act 2006. Shareholders must provide the Company with an address   or (so far as the Companies Act 2006 allows) an electronic address or fax   number in the UK in order to be entitled to receive notices of shareholders’   meetings and other notices and documents. In certain circumstances the   Company may give notices to shareholders by publication on the Company’s   website and advertisement in newspapers in the UK. Holders of the Company’s   ADSs are entitled to receive notices under the terms of the deposit agreement   relating to the ADSs. 190 Vodafone Group Plc Annual Report on Form 20-F 2015   Unaudited information |
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|  | Exchange   controls There are no UK government laws, decrees or regulations that   restrict or affect the export or import of capital, including but not limited   to, foreign exchange controls on remittance of dividends on the ordinary   shares or on the conduct of the Group’s operations. Under section 336 of the   Companies Act 2006 the annual general meeting of shareholders must be held   each calendar year and within six months of the Company’s year end.   Electronic communications The Company has previously passed a resolution   allowing it to communicate all shareholder information by electronic means,   including making such information available on the Company’s website. Those   shareholders who have positively elected for website communication (or are   deemed to have consented to receive electronic communication in accordance   with the Companies Act 2006) will receive written notification whenever   shareholder documentation is made available on the website. Variation of   rights If at any time the Company’s share capital is divided into different   classes of shares, the rights attached to any class may be varied, subject to   the provisions of the Companies Act 2006, either with the consent in writing   of the holders of three quarters in nominal value of the shares of that class   or at a separate meeting of the holders of the shares of that class. At every   such separate meeting all of the provisions of the articles of association   relating to proceedings at a general meeting apply, except that (i) the   quorum is to be the number of persons (which must be at least two) who hold   or represent by proxy not less than one third in nominal value of the issued   shares of the class or, if such quorum is not present on an adjourned   meeting, one person who holds shares of the class regardless of the number of   shares he holds; (ii) any person present in person or by proxy may demand a   poll; and (iii) each shareholder will have one vote per share held in that   particular class in the event a poll is taken. Class rights are deemed not to   have been varied by the creation or issue of new shares ranking equally with   or subsequent to that class of shares in sharing in profits or assets of the   Company or by a redemption or repurchase of the shares by the Company.   Taxation As this is a complex area investors should consult their own tax   advisor regarding the US federal, state and local, the UK and other tax   consequences of owning and disposing of shares and ADSs in their particular   circumstances. This section describes, primarily for a US holder (as defined below),   in general terms, the principal US federal income tax and UK tax consequences   of owning or disposing of shares or ADSs in the Company held as capital   assets (for US and UK tax purposes). This section does not, however, cover   the tax consequences for members of certain classes of holders subject to   special rules including, for example, US expatriates and former long-term   residents of the US and officers of the Company; employees and holders that,   directly, indirectly or by attribution, hold 5% or more of the Company’s   voting stock; financial institutions; insurance companies; individual   retirement accounts and other tax-deferred accounts; tax-exempt   organisations; dealers in securities or currencies; investors that will hold   shares or ADSs as part of straddles, hedging transactions or conversion   transactions for US federal income tax purposes; investors holding shares or   ADSs in connection with a trade or business conducted outside of the US; or   investors whose functional currency is not the US dollar. A US holder is a   beneficial owner of shares or ADSs that is for US federal income tax   purposes: a a citizen or resident of the US; a a US domestic corporation; a   an estate, the income of which is subject to US federal income tax regardless   of its source; or Limitations on voting and shareholding As far as the   Company is aware there are no limitations imposed on the transfer, holding or   voting of the Company’s ordinary shares other than those limitations that   would generally apply to all of the shareholders. No shareholder has any   securities carrying special rights with regard to control of the Company. a a   trust, if a US court can exercise primary supervision over the trust’s   administration and one or more US persons are authorised to control all   substantial decisions of the trust, or the trust has validly elected to be   treated as a domestic trust for US federal income tax purposes. Documents on   display The Company is subject to the information requirements of the   Exchange Act applicable to foreign private issuers. In accordance with these   requirements the Company files its Annual Report on Form 20-F and other   related documents with the SEC. These documents may be inspected at the SEC’s   public reference rooms located at 100 F Street, NE Washington, DC 20549. Information   on the operation of the public reference room can be obtained in the United   States by calling the SEC on +1-800-SEC-0330. In addition, some of the   Company’s SEC filings, including all those filed on or after 4 November 2002,   are available on the SEC’s website at sec.gov. Shareholders can also obtain   copies of the Company’s articles of association from our website at   vodafone.com/governance or from the Company’s registered office. If an entity   treated as a partnership for US federal income tax purposes holds the shares   or ADSs, the US federal income tax treatment of a partner will generally   depend on the status of the partner and the tax treatment of the partnership.   Holders that are entities treated as partnerships for US federal income tax   purposes should consult their tax advisers concerning the US federal income   tax consequences to them and their partners of the ownership and disposition   of ADSs by the partnership. This section is based on the US Internal Revenue   Code of 1986, as amended, its legislative history, existing and proposed   regulations thereunder, published rulings and court decisions, and on the tax   laws of the UK and the Double Taxation Convention between the US and the UK   (the ‘treaty’), all as currently in effect. These laws are subject to change,   possibly on a retroactive basis. This section is further based in part upon   the representations of the depositary and assumes that each obligation in the   deposit agreement and any related agreement will be performed in accordance   with its terms. Material contracts At the date of this Annual Report the   Group is not party to any contracts that are considered material to the   Group’s results or operations except for its US$3.9 billion and €3.9 billion   revolving credit facilities which are discussed in note 22 “Liquidity and   capital resources” to the consolidated financial statements. 191 Additional   information Vodafone Group Plc Annual Report on Form 20-F 2015 Overview   Strategy review Performance Governance Financials |
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|  | Shareholder   information (continued) For the purposes of the treaty and the US–UK double   taxation convention relating to estate and gift taxes (the ‘Estate Tax   Convention’), and for US federal income tax and UK tax purposes, this section   is based on the assumption that a holder of ADRs evidencing ADSs will be   treated as the owner of the shares in the Company represented by those ADSs.   Investors should note that a ruling by the first-tier tax tribunal in the UK   has cast doubt on this view, but HMRC have stated that they will continue to   apply their long-standing practice of regarding the holder of such ADRs as   holding the beneficial interest in the underlying shares. Investors should   note, however, that this is an area of some uncertainty that may be subject   to further developments in the future. Generally exchanges of shares for ADRs   and ADRs for shares will not be subject to US federal income tax or to UK tax   other than stamp duty or stamp duty reserve tax (see the section on these   taxes on page 193). Taxation of dividends UK taxation Under current UK tax   law no withholding tax will be deducted from the dividends we pay.   Shareholders who are within the charge to UK corporation tax will be subject   to corporation tax on the dividends we pay unless the dividends fall within   an exempt class and certain other conditions are met. It is expected that the   dividends we pay would generally be exempt. A shareholder in the Company who   is an individual resident for UK tax purposes in the UK, is entitled in   calculating their liability to UK income tax, to a tax credit on cash   dividends we pay on our shares or ADSs and the tax credit is equal to   one-ninth of the cash dividend. US federal income taxation Subject to the   passive foreign investment company (‘PFIC’) rules described below, a US   holder is subject to US federal income taxation on the gross amount of any   dividend we pay out of our current or accumulated earnings and profits (as determined   for US federal income tax purposes). Dividends paid to a non-corporate US   holder will be taxable to the holder at the reduced rate normally applicable   to long-term capital gains provided that certain requirements are met.   Dividends must be included in income when the US holder, in the case of   shares, or the depositary, in the case of ADSs, actually or constructively   receives the dividend and will not be eligible for the dividends-received   deduction generally allowed to US corporations in respect of dividends   received from other US corporations. In the case of shares, the amount of the   dividend distribution to be included in income will be the US dollar value of   the pound sterling payments made determined at the spot pound sterling/ US   dollar rate on the date the dividends are received by the US holder   regardless of whether the payment is in fact converted into US dollars. If   dividends received in pounds sterling are converted into US dollars on the   day they are received, the US holder generally will not be required to   recognise foreign currency gain or loss in respect of the dividend income.   Taxation of capital gains UK taxation A US holder may be liable for both UK   and US tax in respect of a gain on the disposal of our shares or ADSs if the   US holder is: a a citizen of the US, resident for UK tax purposes in the UK;   a a citizen of the US who becomes resident for UK tax purposes in the UK,   having ceased to be so resident for a period of five years or less and who   was resident in the UK for at least four out of the seven tax years   immediately preceding the year of departure, and who disposed of the shares   or ADSs during the period of non-residence (a ‘temporary non-resident’),   (unless the shares or ADSs were also acquired during that period), such liability   arising on that individual’s return to the UK; a a US domestic corporation   resident in the UK by reason of being centrally managed and controlled in the   UK; or a a citizen of the US or a US domestic corporation that carries on a   trade, profession or vocation in the UK through a branch or agency or, in the   case of US domestic companies, through a permanent establishment and that has   used the shares or ADSs for the purposes of such trade, profession or   vocation or has used, held or acquired the shares or ADSs for the purposes of   such branch or agency or permanent establishment. Under the treaty, capital   gains on dispositions of the shares or ADSs are generally subject to tax only   in the country of residence of the relevant holder as determined under both the   laws of the UK and the US and as required by the terms of the treaty.   However, the treaty provides that individuals who are residents of either the   UK or the US and who have been residents of the other jurisdiction (the US or   the UK, as the case may be) at any time during the six years immediately   preceding the relevant disposal of shares or ADSs may be subject to tax with   respect to capital gains arising from the dispositions of the shares or ADSs   not only in the country of which the holder is resident at the time of the   disposition but also in that other country (although, in respect of UK   taxation, generally only to the extent that such an individual is a temporary   non-resident). US federal income taxation Subject to the PFIC rules described   below, a US holder that sells or otherwise disposes of our shares or ADSs   generally will recognise a capital gain or loss for US federal income tax   purposes equal to the difference between the US dollar value of the amount   realised and the holder’s adjusted tax basis, determined in US dollars, in   the shares or ADSs. This capital gain or loss will be long-term capital gain   or loss if the US holder’s holding period in the shares or ADSs exceeds one   year. The gain or loss will generally be income or loss from sources within   the US for foreign tax credit limitation purposes. The deductibility of   losses is subject to limitations. 192 Vodafone Group Plc Annual Report on   Form 20-F 2015 Unaudited information |
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|  | Additional tax   considerations UK inheritance tax An individual who is domiciled in the US   (for the purposes of the Estate Tax Convention) and is not a UK national will   not be subject to UK inheritance tax in respect of our shares or ADSs on the   individual’s death or on a transfer of the shares or ADSs during the   individual’s lifetime, provided that any applicable US federal gift or estate   tax is paid, unless the shares or ADSs are part of the business property of a   UK permanent establishment or pertain to a UK fixed base used for the   performance of independent personal services. Where the shares or ADSs have   been placed in trust by a settlor they may be subject to UK inheritance tax   unless, when the trust was created, the settlor was domiciled in the US and   was not a UK national. Where the shares or ADSs are subject to both UK   inheritance tax and to US federal gift or estate tax, the estate tax   convention generally provides a credit against US federal tax liabilities for   UK inheritance tax paid. UK stamp duty and stamp duty reserve tax Stamp duty   will, subject to certain exceptions, be payable on any instrument   transferring our shares to the custodian of the depositary at the rate of   1.5% on the amount or value of the consideration if on sale or on the value   of such shares if not on sale. Stamp duty reserve tax (‘SDRT’), at the rate   of 1.5% of the price or value of the shares, could also be payable in these   circumstances and on issue of our shares to such a person but no SDRT will be   payable if stamp duty equal to such SDRT liability is paid. A ruling by the   European Court of Justice has determined that the 1.5% SDRT charge on issue   of shares to a clearance service is contrary to EU law. As a result of that   ruling, HMRC indicated that where new shares are first issued to a clearance   service or to a depositary within the EU, the 1.5% SDRT charge will not be   levied. Subsequently, a decision by the first-tier tax tribunal in the UK   extended this ruling to the issue of shares (or, where it is integral to the   raising of new capital, the transfer of shares) to depositary receipts   systems wherever located. HMRC have stated that they will not seek to appeal   this decision and, as such, will no longer seek to impose 1.5% SDRT on the   issue of shares (or, where it is integral to the raising of new capital, the   transfer of shares) to a clearance service or to a depositary, wherever   located. Investors should, however, be aware that this area may be subject to   further developments in the future. No stamp duty will be payable on any   transfer of our ADSs provided that the ADSs and any separate instrument of   transfer are executed and retained at all times outside the UK. A transfer of   our shares in registered form will attract ad valorem stamp duty generally at   the rate of 0.5% of the purchase price of the shares. There is no charge to   ad valorem stamp duty on gifts. SDRT is generally payable on an unconditional   agreement to transfer our shares in registered form at 0.5% of the amount or   value of the consideration for the transfer, but is repayable if, within six   years of the date of the agreement, an instrument transferring the shares is   executed or, if the SDRT has not been paid, the liability to pay the tax (but   not necessarily interest and penalties) would be cancelled. However, an   agreement to transfer our ADSs will not give rise to SDRT. PFIC rules We do   not believe that our shares or ADSs will be treated as stock of a PFIC for US   federal income tax purposes. This conclusion is a factual determination that   is made annually and thus is subject to change. If we are treated as a PFIC,   any gain realised on the sale or other disposition of the shares or ADSs   would in general not be treated as capital gain unless a US holder elects to   be taxed annually on a mark-to-market basis with respect to the shares or   ADSs. Otherwise a US holder would be treated as if he or she has realised   such gain and certain “excess distributions” rateably over the holding period   for the shares or ADSs and would be taxed at the highest tax rate in effect   for each such year to which the gain was allocated. An interest charge in   respect of the tax attributable to each such year would also apply. Dividends   received from us would not be eligible for the reduced rate of tax described   above under “Taxation of Dividends – US federal income taxation”. Backup   withholding and information reporting Payments of dividends and other   proceeds to a US holder with respect to shares or ADSs, by a US paying agent   or other US intermediary will be reported to the Internal Revenue Service   (‘IRS’) and to the US holder as may be required under applicable regulations.   Backup withholding may apply to these payments if the US holder fails to   provide an accurate taxpayer identification number or certification of exempt   status or fails to comply with applicable certification requirements. Certain   US holders are not subject to backup withholding. US holders should consult   their tax advisers about these rules and any other reporting obligations that   may apply to the ownership or disposition of shares or ADSs, including   requirements related to the holding of certain foreign financial assets. 193   Additional information Vodafone Group Plc Annual Report on Form 20-F 2015   Overview Strategy review Performance Governance Financials |
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|  | History and development 10 September 2010   – China Mobile Limited: We sold our entire 3.2% to the public in October   1988. The Company was fully demerged 28.6 billion (£368 million). On 8   February 2012, they purchased and GTE to combine their US cellular operations   to create the largest of approximately INR 30.1 billion (£399 million) taking   Piramal’s total Group having a 45% interest in the combined entity; 9   November 2011 – Poland: We sold our entire 24.4% interest on 12 April 2000.   Through this transaction we acquired businesses €920 million (£784 million)   before tax and transaction costs. Française du Radio téléphone S.A. (‘SFR’);   Wireless Worldwide plc for a cash consideration of approximately we acquired   a 97.7% stake in Vodafone Japan. This was then disposed for a cash   consideration of NZ$840 million (£440 million). in Vodafone India Limited   (‘VIL’), formerly Vodafone Essar Limited, (£4.9 billion). for cash   consideration of ZAR 20.6 billion (£1.6 billion). On 18 May 194 Vodafone   Group Plc Annual Report on Form 20-F 2015 The Company was incorporated under   English law in 1984 as Racal Other significant transactions that have   occurred since 31 March 2010 Strategic Radio Limited (registered number   1833679). After various are as follows: name changes, 20% of Racal Telecom   Plc share capital was offered from Racal Electronics Plc and became an   independent company interest in China Mobile Limited for cash consideration   of £4.3 billion. in September 1991, at which time it changed its name to   Vodafone 16 June 2011 – SFR: We sold our entire 44% interest in SFR to   Vivendi Group Plc. for a cash consideration of €7.75 billion (£6.8 billion)   and received a final Since then we have entered into various transactions   which enhanced dividend from SFR of €200 million (£176 million). our   international presence. The most significant of these transactions1 June/1   July 2011 – India: We acquired an additional 22% stake were as follows: in   VIL from the Essar Group for a cash consideration of US$4.2 billion a the   merger with AirTouch Communications, Inc. which completed(£2.6 billion)   including withholding tax. on 30 June 1999. The Company changed its name to   Vodafone18 August 2011/8 February 2012 – Vodafone assigned its rights   AirTouch Plc in June 1999 but then reverted to its former name, to purchase   approximately 11% of VIL from the Essar Group to Piramal Vodafone Group Plc,   on 28 July 2000; Healthcare Limited (‘Piramal’). On 18 August 2011 Piramal   purchased a the completion on 10 July 2000 of the agreement with Bell   Atlantic5.5% of VIL from the Essar Group for a cash consideration of INR   mobile operator in the United States, Verizon Wireless, resulting in the a   further 5.5% of VIL from the Essar Group for a cash consideration   shareholding in VIL to approximately 11%. a the acquisition of Mannesmann AG   which completed in Germany and Italy and increased our indirect holding in   Sociétéin Polkomtel in Poland for cash consideration of approximately a   through a series of business transactions between 1999 and 200427 July 2012 –   UK: We acquired the entire share capital of Cable & of on 27 April   2006;£1,050 million. a on 8 May 2007 we acquired companies with controlling   interests31 October 2012 – New Zealand: We acquired Telstra Clear Limited,   for US$10.9 billion (£5.5 billion); and 13 September 2013 – Germany: We   acquired a 76.57% interest a on 20 April 2009 we acquired an additional 15.0%   stake in Vodacom in Kabel Deutschland Holding AG for cash consideration of   €5.8 billion 2009 Vodacom became a subsidiary. 21 February 2014 – On 2   September 2013 Vodafone announced that it had reached agreement to dispose of   its US Group whose principal asset was its 45% interest in Verizon Wireless   (‘VZW’) to Verizon Communications Inc. (‘Verizon’), Vodafone’s joint venture   partner, for a total consideration of US$130 billion (£79 billion) including   the remaining 23.1% minority interest in Vodafone Italy. Following completion   on 21 February 2014, Vodafone shareholders received Verizon shares and cash   totalling US$85 billion (£51 billion). March/April 2014 – India: In March   2014 we acquired the indirect equity interests in Vodafone India Limited held   by Analjit Singh and Neelu Analjit Singh, taking our stake to 89.03% and then   in April 2014 we acquired the remaining 10.97% of VIL from Piramal   Enterprises Limited for cash consideration of INR 89.0 billion (£0.9   billion), taking our ownership interest to 100%. 23 July 2014 – Spain: We   acquired the entire share capital of Grupo Corporativo Ono, S.A. (‘Ono’) for   total consideration, including associated net debt acquired, of €7.2 billion   (£5.8 billion). Unaudited information |
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|  | Regulation the operation of their   business activities. Such regulation typically In January 2015, the national   regulator, the Federal Network Authority telecommunications services and general   competition (antitrust) 900MHz, 1500MHz, and 1800MHz spectrum. The auction is   expected key regulatory developments at the global and supranational level on   a preliminary basis, and submitted them to the EU (consolidation the year   ended 31 March 2015. Many of the regulatory developments retrospective   effect. From 1 December 2014 to 30 November 2015 or consideration of   potential proceedings that have not reached eurocents per minute from 1   December 2015 until 30 November 2016. of financial risk to our performance   from such matters. European Union (‘EU’) plans to deploy VDSL vectoring   equipment in Deutsche Telekom’s (‘DT’) cabinet level must offer wholesale   access to the other operators. was appointed in 2014 and will be in place up   until 1 November for deployment of VDSL vectoring in “near range street   cabinets” Vice-President for the Digital Single Market and with Günther   Oettinger at the exchange. To offset this DT has proposed to offer a   “Layer-2” bit-delivered major regulatory proposals aimed at building a   telecoms is not expected until June 2015. Italy had their first reading in   March 2014 and have since been amended Vodafone Italy, Telecom Italia and   Wind, prompted by a complaint produced on behalf of the European Council.   From January 2015 the The Antitrust Authority (‘AGCM’) reached the conclusion   that there was a common European Council position on the “Connected   Continent” against Vodafone, while both Telecom Italia and Wind were required   roaming and the introduction of net neutrality regulation. In May 2016, the   European Commission published the Digital Single role in forcing the   companies providing maintenance services of the The strategy is arranged   around three pillars: better access for other licensed operators. AGCM’s   decision is expected by June 2016. Europe, creating the right conditions for   digital networks and services economy. As part of this, the Telecoms reform   review will start in 2016, decision which found that Telecom Italia had   abused its dominant a consistent approach of the rules and to provide   economies of scale paid the imposed fine of €104 million and filed an appeal   before the regulatory institutional framework, including a single market   approach is based on this ruling. The Council of State heard the appeal in   April and protection of consumers and the incentivising investment in high   speed Italy, overturning the national regulator’s (‘AGCOM’) injunction that   had In October 2014, the EU recommendation to remove ex ante regulation   Regulation in relation to domestic tariffs. In July 2014, Vodafone Italy   extended its 900MHz and 1800MHz came into force. (However, these markets can   still be reviewed if market business connectivity access and the termination   of calls to both mobile auction rules for L Band assignment from which the Italian   Government In May 2014, a Directive on reducing Next Generation Access   broadband the regulatory guidelines for the mobile termination market over   the out high-speed electronic communications networks by promoting between   operators currently favouring Hutchison 3G Limited; reducing existing civil   infrastructure of telecoms operators. It has to be transposed and to define   asymmetrical rates for MVNOs. A final decision is expected to all owners of   infrastructure whether they are dominant or not. 195 Additional information   Vodafone Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials Our operating companies are generally   subject to regulation governing Europe region takes the form of industry   specific law and regulation covering Germany law applicable to all   activities.(‘BNetzA’) published its final decision on the auction of 700MHz,   The following section describes the regulatory frameworks and the to be held   in May 2015. and in selected countries in which we have significant interests   during BNetzA has approved new Mobile Termination Rates (‘MTRs ‘) reported in   the following section involve ongoing proceedings proceedings). BNetzA will   release the final rate decisions with a conclusion. Accordingly, we are unable   to attach a specific level the MTR is set at 1.72 eurocents per minute which   then reduces to 1.66 In July 2014, the vectoring register opened for   operators to submit their The new European Commission, led by Jean-Claude   Juncker, cabinets. The operator that obtains the right to deploy VDSL at the   2019, with Andrus Ansip, the former Estonian Prime Minister the In February   2015, DT filed a request to BNetzA to gain approval as the Commissioner for   Digital Economy and Society. preventing other operators from deploying their   own VDSL equipment In September 2013, the European Commission (“the   Commission”) stream service on a wholesale basis. BNetzA’s decision on DT’s   request single market and delivering a “Connected Continent”. These proposals   by the European Parliament and a compromise text has been The investigation   into an alleged competition issue involving Latvian Presidency continued   discussions with Member States to find lodged by an Italian MVNO in 2012, was   closed at the end of 2014. regulatory proposals which are now focused on the   abolition of retail no ground for the investigation to be carried on and   dismissed the case to implement their proposed changes. Market strategy,   aimed at producing a true digital single market. The AGCM is investigating if   Telecom Italia has been playing a significant consumers and businesses to   online e-goods and services across fixed network to keep their prices   artificially high to the detriment of the to flourish and maximising the   growth potential of the European digital In May 2014, the Regional   Administrative Tribunal upheld the AGCM intending to deliver a level playing   field for all market players with position in the fixed broadband market.   Telecom Italia subsequently for efficient network operators and service providers   with an effective Council of State. Vodafone Italy’s €1 billion claim against   Telecom Italia to spectrum policy and management. It will also include for   the the ruling is due by July 2015. broadband networks. In May 2014, the   Administrative Tribunal found in favour of Vodafone EU recommendations on   relevant markets required them to adopt all the measures required under the   Roaming for voice wholesale markets as they were deemed to be competitive   failures occur.) This has seen a reduction in the number of regulated   licences from 1 February 2015 to 30 June 2018. markets from seven to the   following four – fixed network access, In February 2015, AGCOM opened the   public consultation on the and fixed networks. is aiming to raise €700   million. Fixed network regulation In March 2015, AGCOM closed its public   consultation that will determine deployment costs was passed. It will make it   easier and cheaper to roll next three years. The proposal aims to delete the   MTR asymmetry the joint use of infrastructure, such as electricity, gas,   sewage pipes and MTRs on a three year glide path to 0.92 eurocents per minute   by 2017 in each member state no later than 1 July 2016. 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|  | Regulation   (continued) In April 2015, AGCOM closed its public consultation for the   wholesale access market. The analysis compares the current approach of imposing   on Telecom Italia the same obligations on all national market participants with   the alternative of imposing geographically differentiated obligations on   them. The final decision and adoption is expected to be completed by July   2016. For information on litigation in Italy, see note 30 “Contingent liabilities”   to the consolidated financial statements. United Kingdom In August 2014 and   again in February 2015, the national regulator Ofcom published consultations   on revising the annual licence fees payable on licences for the use of   spectrum in the 900MHz and 1800MHz bands, to reflect full market value following   the completion of the 4G auction. In March 2015, Ofcom published a statement   setting MTRs for the three year period from 1 April 2015 to 31 March 2018.   The MTR is forecast to decline over the three year period from its current   level of £0.845 pence per minute to £0.507 pence per minute and will be   adjusted in line with the retail price index. Spain The fines applied to   Telefónica, Orange and Vodafone Spain in December 2012 for abuse of dominant   position by imposing excessive pricing of wholesale SMS/MMS services on   MVNOs, remain suspended until the judicial review is concluded. In April   2014, Vodafone Spain was permitted to withdraw its €160 million security   deposit after fulfilling all of its obligations in the roll out of 900MHz   spectrum. In June 2014, Vodafone Spain presented a complementary writ to the   competition authority, the National Markets and Competition Commission   (‘CNMC’), that cited Telefónica’s abuse of its dominant position in both its   fibre roll-out and fibre retail offers. The writ is in relation to Telefónica   offering a TV service at no cost when upgrading its customers to fibre. In   July 2014, the acquisition of Ono (the main cable operator in Spain) was   successfully completed after it was cleared without conditions by the   European Commission under the EU merger regulation. In September 2014,   further to Vodafone Spain’s competition complaint against Telefónica and Yoigo   for the unauthorised transfer of use of Yoigo’s spectrum by Telefónica and to   other restrictive effects in the market, the CNMC’s Statement of Objections   found that the agreement between Yoigo and Telefónica contained anticompetitive   components. This view was confirmed in its Proposal for Resolution presented   to the Council in December 2014 . In May 2015, Telefónica completed its acquisition   of Canal+ España following approval by CNMC. As a condition of the deal,   Telefónica must make available a wholesale offering of up to 50% of its own   premium content channels to Vodafone Spain and other Pay-TV operators in Spain.   Netherlands The Dutch government is planning a renewal of the existing 2.1GHz   licences that will expire by the end of 2016. The renewal for a period of   four years (2017–2020), could potentially allow for a simultaneous auction with   the 700 MHz band. The fees to be paid for the renewal have not been announced   but are likely to be based in part on the fees paid in the 2012 multi-band   auction. The national regulator, the Authority for Consumers and Markets   (‘ACM’) followed the Commission’s recommendation that as of September 2013,   the termination rates should be based on the “pure Bottom Up Long Run Incremental   Cost” (‘BULRIC’) methodology. This resulted in maximum MTRs of 1.019   eurocents per minute. In August 2014, the Court of Appeal (CBb) annulled   ACM’s decision and imposed the current tariffs based on ‘pure BULRIC’ of   1.861 eurocents per minute for mobile, as an interim measure during the ongoing   appeal procedure. In October 2014, the CBb decided to refer the case to the   European Court of Justice (ECJ) regarding the legal status of the recommendation   to use ‘pure BULRIC’. The CBb will be able to issue its final decision once it   has received the ruling of the ECJ, which is not expected before December   2015. Ireland In December 2012, Vodafone Ireland judicially challenged the   decision of the national regulator, the Commission for Communications Regulation   (‘ComReg’), to impose an interim MTR based on a Body of European Regulations   for Electronic Communications (‘BEREC’) benchmark rather than a MTR based on   a full cost model. In August 2013, the Irish High Court found the decision to   be unlawful and by Court order, set a maximum MTR for the Irish market of   2.60 eurocents per minute, to apply from 1 July 2013. This rate will apply   until a MTR based on a fully modelled price is available which is expected   sometime in 2015. ComReg has appealed the Irish High Court’s decision, to the   Irish Supreme Court. In May 2014, the Commission cleared Hutchison 3G Limited’s   acquisition of Telefónica O2 Ireland subject to conditions. Vodafone Ireland   has requested that ComReg ensures that the allocation of spectrum following   the merger is efficient and non-discriminatory. ComReg has declined to take   any positive steps (such as a market review) to satisfy itself that there is   efficiency in the market now that the 2012 auction caps have been exceeded.   Vodafone Ireland is now seeking a court order by way of judicial review proceedings,   to require ComReg to act in accordance with its statutory powers (on the basis   that it is unreasonable for them not to do so), to ensure that the new   spectrum allocations are efficient and non-discriminatory. In October 2014,   the Commission unconditionally cleared Vodafone Ireland’s open access joint   venture agreement with the Electricity Supply Board to roll out fibre to the   building (‘FTTB’) nationwide, with the first phase expected to be completed   by the end of 2018. Portugal In November 2014, the Portuguese Competition   Authority dismissed Optimus’s complaint against TMN and Vodafone Portugal of   a potential individual dominant position abuse on the mobile communications   services retail markets. In July 2014, Vodafone Portugal and Portugal Telecom   announced an agreement to deploy and share fibre networks reaching 900,000   homes in Portugal. The agreement commences in December 2014, and runs for 25   years. Both Vodafone Portugal and Portugal Telecom will maintain complete   autonomy and flexibility in designing their respective retail offers under   the agreement. In April 2015, the National Communications Regulator   (‘Anacom’) published its draft decision on MTRs. It proposes a glide path with   a maximum of 0.83 eurocents after publication, falling to 0.73 eurocents by   July 2017. Romania In June 2013, a cross-border spectrum coordination   agreement with Ukraine was signed ensuring interference free use of the E-GSM   900MHz band at the border. Although the agreement entered into force on 1   January 2014, there is still E-GSM spectrum interference on Vodafone Romania’s   network, especially on the south-east side of the country. 196 Vodafone Group   Plc Annual Report on Form 20-F 2015 Unaudited information |
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|  | In April 2014,   the spectrum licences comprising of 2x10MHz in 800MHz, 2x10MHz in 900MHz,   2x30MHz in 1800MHz and 1x15MHz in 2.6GHz, came into force. In April 2014, the   maximum termination rates in Romania decreased from 0.67 to 0.14 eurocents   per minute for fixed call termination and from 3.07 to 0.96 eurocents per minute   for mobile call termination. Greece In February 2014, the tender process   commenced for the National Rural Broadband Network construction. The fixed incumbent   (OTE) and the consortium of Intrakat, Intracom Holdings and Hellas Online are   the only two parties in the tender process. An announcement is outstanding. In   August 2014, Cyta MVNO was launched on Vodafone Greece’s network. In September   2014, Vodafone Greece’s acquisition of Hellas Online S.A. was approved by the   Hellenic Telecommunications & Post Commission and the Competition Authority.   In October 2014, Vodafone Greece participated in the national 800MHz and   2.6GHz spectrum auction and secured its target of 2x10MHz in the 800MHz band   and 2x20MHz+20MHz unpaired in the 2.6GHz band for €125 million. In January   2015, the MTR decreased from 1.189 eurocents per minute to 1.103 eurocents   per minute. At the same time the FTR was also reduced from 0.0735 eurocents   per minute to 0.0695 eurocents per minute. Czech Republic In June 2014, the   CTU opened a consultation on the unsold spectrum from the 2013 auction   (1800MHz frequencies reserved for a new entrant and part of 2.6GHz frequencies).   The start of the auction is due sometime in 2015. As part of the obligations   associated with Vodafone Czech Republic’s purchase of 800MHz spectrum in   2013, a public reference offer for MVNO access was implemented in September   2014. The offer allows an MVNO to provide data services on the 800MHz   spectrum. In June 2014, the CTU deregulated MTRs for non-European Economic   Area traffic. Hungary In October 2014, following the Commission withdrawing its   infringement procedure against the Hungarian telephony tax in 2013, the   Hungarian government announced its intention to introduce a tax on internet   traffic. The plan to impose a tax on every gigabyte of traffic, irrespective   of the type of internet access was unpopular with both businesses and citizens.   Ten days after the announcement of the planned tax, the draft tax bill was withdrawn.   Vodafone Hungary has participated in the National Media and Infocommunications   Authority of Hungary’s (‘NMHH’) multi-band spectrum auction that included 4G   800MHz and 2.6GHz and secured, at a total reserve price of HUF 30.2 billion   (£75 million), 2x10MHz in the 800MHz band; 2x20MHz+25MHz unpaired in the   2.6GHz band (plus 2x1MHz in the 900MHz band). In April 2015, the NMHH reduced   the MTR to 1.71 HUF per minute. Albania Further to the Albanian Competition   Authority’s (‘CA’) recommendations to the national regulator, the Electronic   and Postal Communications Authority (‘AKEP’) to reduce differentiation of   on-net and off-net calls, AKEP approved a further decrease of MTRs targeting   pure long run incremental cost (‘LRIC’) benchmarking levels with a glide-path   reducing current MTRs to 1.05 eurocents per minute starting from January   2015. The proposed launch of Plus Communication’s 3G service did not occur as   they did not make payment for the 2x5MHz block of 2.1GHz spectrum needed for   the service. Vodafone successfully bid for one 5MHz block of 2.1GHz spectrum   at a cost of €1.5 million. In March 2015, AKEP conducted a public tender with   sealed bids for 1800MHz spectrum for GSM/LTE/UMTS/WiMAX (36MHz of spectrum   split in six blocks of 2x6MHz). Vodafone Albania secured a total of 2x14.4MHz   at a cost of €8.6 million. In April 2015, Vodafone Albania successfully   appealed against CA’s interim decision to equalise on-net and off-net tariffs   by May 2015 while it investigates Plus Communication’s complaint that alleged   Vodafone Albania had abused its dominant position between January 2013 and   June 2014. In April 2015 the 2.6GHz band for WCDMA usage (fourteen blocks of   5MHz each, was made available for tender. Vodafone Albania secured a total of   2x20MHz and 1x20MHz at a cost of €3.3 million. In May 2015, Vodafone Albania   secured 2x1.2MHz in the 900MHz band at a cost of €600,000. Malta In March   2014, the MCA set the MTR at 0.40 eurocents per minute to which Vodafone has   submitted an appeal to the Administrative Review Tribunal on the basis that   there was a lack of transparency in the consultation process. Africa, Middle   East and Asia Pacific region India In March 2015, the Supreme Court partially   heard Vodafone India’s appeal against the Department of Telecommunications’   (‘DoT’) refusal to extend its existing spectrum licences in Delhi, Mumbai and   Kolkata. Vodafone India has also challenged DoT’s decision not to extend the   spectrum licences in the six circles in which our licences were due to expire   in December 2015. Different operators have taken the DoT to court on elements   related to auction design which are currently sub-judice. The spectrum auction   was held in March 2015 for 800MHz, 900MHz, 1800MHz and 2.1GHz bands. Vodafone   India won spectrum in all six circles, thus ensuring continuity of business. It   also won an additional 2.1GHz spectrum in six service areas. The total auction   spend by Vodafone was INR 258 billion (£2.75 billion). In February 2015, the   Telecommunications Regulatory Authority of India (‘TRAI’) announced its revised   regulation on MTRs, reducing the rate from 20 paisa to 14 paisa per minute   for mobile termination. The FTR regulation that reduces the rate from 20 paisa   to zero paisa per minute creates a concern that it is an undesirable arbitrage   opportunity and deviates from the TRAI principle of cost and the work done as   the basis for termination rate recommendations. Vodafone India is studying   the regulations with a view to challenging the decisions in the courts. Prime   Minister Narendra Modi has allocated budget in this fiscal year for the   Government’s Digital India agenda and in April 2015 the TRAI issued its   recommendations on the implementation measures required to accelerate the delivery   of broadband, including the release of additional spectrum to facilitate wireless   broadband. It has also launched a consultation on the regulatory framework   for Over-The-Top (‘OTT’) services. For information on litigation in India,   see note 30 “Contingent liabilities” to the consolidated financial   statements. Vodacom: South Africa In October 2013, the Ministry of Trade and Industry   published revised generic Codes of Good Practice on Broad-based Black Economic   Empowerment (‘BBB-EE Codes’). These revised codes became effective on 1 May   2015. 197 Additional information Vodafone Group Plc Annual Report on Form   20-F 2015 Overview Strategy review Performance Governance Financials |
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|  | Regulation   (continued) In October 2014, the Broad-based Black Economic Empowerment   Amendment Act, Act 46 of 2013 (the ‘BBB-EE Act’) came into force. The trumping   provision which enables the BBB-EE Act to take precedence on all matters of   BEE regulation, over any other sector-specific legislations, is due to come into   force on 1 October 2015. The Independent Communication Authority of South Africa   (‘ICASA’) published their draft Radio Frequency Spectrum (‘RFS’) Regulations in   March 2015, determining the qualifications for application and transfer of   RFS licences to be pegged at Level 4 under the BBB-EE Act and BBB-EE Codes or   30% equity ownership in the hands of historically disadvantaged persons   (‘HDPs’) under the aegis of the Electronic Communications Act. In March 2014,   the court ruled in favour of Vodacom and MTN in their challenge to ICASA’s   Call Termination Regulations (‘CTR’) decision announced in February 2014. This   led to ICASA initiating another consultation process and in September 2014   they published the final CTR that reduces the rate to ZAR 0.13 cents per minute   by October 2016. In December 2014, Cell C served ICASA (including other interested   parties such as Vodacom and MTN) with a notice of motion in terms of which it   is seeking an order for the review and setting aside by the South Gauteng High   Court, of the September 2014 CTRs. Vodacom has filed a notice to oppose Cell   C’s application. In May 2014, CompCom confirmed its intention to proceed with   the investigation into an allegation by Cell C that Vodacom and MTN have   abused their market dominance in contravention of Section 8 of the Competition   Act. In May 2014, Vodacom entered into a sale agreement in terms of which it   would acquire 100% of the issued share capital and shareholders loan and claims   against Neotel. The transaction remains subject to the fulfilment of a number   of conditions precedent, foremost of which are regulatory approvals by both ICASA   and the Competition Commission of South Africa (“CompCom”). All decisions are   expected to be finalised by the end of 2015. In November 2014, the Ministry   of Telecommunications and Postal Services (‘DTPS’) published the National Integrated   ICT Policy discussion paper for comment that flowed from the Green Paper published   for comment in January 2014. The key policy matters raised in the aforesaid discussion   paper include net neutrality, policy options for the deployment of broadband infrastructure,   and strengthening of governance. This discussion paper will form the basis of   a white paper for communications policy in South Africa. In March 2015, ICASA   published their final IMT Radio Frequency Spectrum Assignment Plans (‘RFSAP’)   determining that all spectrum in 700MHz, 800MHz and 2.6GHz bands will be assigned   by means of an Invitation to Apply (‘ITA’) process. ICASA have not finalised   the assignment plans for the 850MHz band which specifically deals with   Neotel’s assignment. Vodacom: Democratic Republic of Congo In January 2015,   the National Intelligence Agency (‘ANR’) requested all SMS and internet services   to be suspended indefinitely due to political unrest and violence. Following   significant engagement with the DRC government, SMS and internet services   were re-opened on 9 February 2015. In February 2015, the national regulator,   the Regulating Authority for Post and Telecommunications (‘ARPTC’) issued   regulations setting the on-net voice price floor at US$5.10 cents per minute   and off net US$8.50 cents per minute from 1 March 2015 for 12 months, suspended   for three months pending the issue of new promotion regulations. International   promotions comprise voice retail rates; data and SMS prices not included in   the price floor, will be subject to a further regulatory decision-making   process. In October 2014, in line with the glide path rates, MTRs were   reduced to US$3.40 cents per minute. Vodacom: Tanzania In July 2014, the Minister   of Communications commenced a consultation on draft regulations which requires   all telecoms licencees to list 35% of their local shareholding on the Dar   Stock Exchange. Vodacom Tanzania is participating in this consultation with   other industry operators. Vodacom: Mozambique In February 2015, the new Minister   of Communications ordered all operators to comply with subscriber registration   requirements within a 30 day period or unregistered subscribers will be disconnected.   Operators collectively have sought an extension and are participating in a   regulator-industry consultation process to determine a new subscriber registration   process. International roaming in Africa In November 2014, Southern African   Development Community (‘SADC’) Ministers of Communications met and set the   National Regulatory Authorities (‘NRAs’) a deadline of 31 March 2015 to implement   wholesale and retail three year glide paths based on the formula recommended   by SCF Associates’ report commissioned by the SADC. In November 2014, East   Africa Community (‘EAC’) Ministers of Communications met and set the NRAs the   deadline of 31 June 2015 to implement “Phase 1” price caps for wholesale   (US$0.07 cents per minute) and retail (US$0.10 cents per minute), and then a   “Phase 2” Single Area Network regulation, following a study to be commissioned.   Turkey From July 2014, the Retail Price Cap for mobile-to-mobile and mobile-to-fixed   voice termination was increased in line with the rate of inflation (5.3%) to   46.25 kr per second. In August 2014, the national regulator, the Information   and Communications Technologies Authority (‘ICTA’) announced their decision   to broaden the scope of the 3G coverage obligation to include the new   metropolitan areas. Vodafone Turkey submitted a letter of objection to the ICTA   on the basis that their coverage commitment is restricted to the original   areas defined as metropolitan at the time the agreement was signed. Vodafone   Turkey has appealed against the ICTA decision in the administrative court. In   August 2014, the Ministry of Transport, Maritime Affairs and Communications   of Turkey issued an amendment to the Rights of Way Regulation, which reinforces   the obligations of the incumbent operator to respond to operators’ requests   for access to their network in a manner in line with the terms and conditions   currently provided within the Facility Sharing Obligation. In September 2014,   Clauses 126 and 127 of Basket Law No. 6552 were passed, amending the Internet   Law that grants the Presidency of Telecommunication and Communication   (‘TİB’) extensive powers over internet use. With the new amendment, all internet   traffic data will be collected by TİB and the Head of TİB will be   able to order closure of a website on the basis of “preventing criminal acts,   and securing national security and public order”. In October 2014, Law No.   6563, the Regulation of Electronic Commerce (the ‘Law’) was passed and will   come into force in May 2015. The law includes protection of consumers against   unsolicited SMS messaging by introducing opt-in and opt-out requirements for   electronic communication services. In March 2015, the Ministry announced the   details for the 4G auction planned in May 2015. The auction includes a total   of 390MHz from 800MHz, 900MHz, 1800MHz, 2.1GHz and 2.6GHz spectrum bands. One   block will be reserved for a possible fourth operator on 2.6GHz with, as yet,   undisclosed limited obligations. Total reserve tender prices exceed €2.0 billion.   198 Vodafone Group Plc Annual Report on Form 20-F 2015 Unaudited information |
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|  | Australia In   December 2014, the federal government put the final policy touches to their   revised National Broadband Network (‘NBN’) policy which gives greater scope   for infrastructure competition provided those investing fixed access networks   wholesale their network on a structurally separated basis. NBN Co, the   government-owned company responsible for the design, build and operation of   the NBN, has also finalised new Telstra and Optus deals that now passes   ownership of the copper and coaxial networks to NBN. While these steps are an   improvement on the previous government’s arrangements they still provide   Telstra with a significant new revenue stream (AUD 20 billion over the next   ten years). Vodafone is asserting that this payment and the increased market   strength of Telstra will have significant impacts on competition in Australia.   After extensive lobbying by the industry, the government has commenced the   most comprehensive review of spectrum management in 15 years. Vodafone   Australia are asking for a framework that better considers the competition   effects of spectrum policy (60% of regional spectrum is held by Telstra) and   the establishment of more market orientated spectrum licences and a better   renewal process and more flexible payment terms. The Australian Communications   and Media Authority (‘ACMA’) has also announced that they will auction up to   60MHz of regional 1800MHz spectrum to be made available in two to three   years’ time (currently allocated for fixed link wireless services). This will   also clear the way for some portions of currently unused regional spectrum to   be provided on an interim basis. Egypt The Administrative Court ruling in   favour of Vodafone Egypt’s case filed against Telecom Egypt and the national   regulator (‘NTRA’) regarding the NTRA’s authority to set MTRs between   operators is yet to be implemented. The finalisation and implementation of   the Unified Licence is still pending and is, under a decision made by NTRA in   December 2014, dependent on the finalisation of ‘KAYAN’, the proposed second infrastructure   company. Telecom Egypt is expected to exit Vodafone Egypt within 12 months   once a unified licence has been approved and activated. For information on litigation   in Egypt, see note 30 “Contingent liabilities” to the consolidated financial   statements. Ghana The national regulator, the National Communication Authority   (‘NCA’) announced in the last quarter of 2014, that in line with its plans to   introduce unified licences in 2019, from 23 December 2014, all existing licensed   MNOs became entitled to apply for a fixed access service licence, to provide   services including fixed telephony, broadband and other value added services.   Vodafone Ghana and Airtel Ghana were the only MNOs with fixed licences prior   to this announcement. In December 2014, the NCA announced the mobile and fixed   wholesale termination rates for the period from 2015 to 2017. SMS rates will   remain at 5 peswas per minute up until 2017 and both FTRs and MTRs will increase   to 6 peswas per minute in the same period. Additionally, from 1 January 2016,   operators will be entitled to a 20% discount of the MTR and FTR based on the   traffic volume exchanged between two operators. The asymmetric rate or discount   on the MTR and FTR will apply where the outgoing traffic is equal to or   greater than 60% of the total traffic exchanged between two operators in a   calendar month. New Zealand In June 2014, Vodafone New Zealand secured   2x15MHz of 700MHz for NZ$68 million (£35 million), securing blocks that   support devices covering both of the “APT700” sub-bands. In September 2014,   the incumbent government announced its intention, if re-elected, to increase   government funding to expand the existing Ultra-fast Broadband FTTP initiative   from 75% to 80% of premises passed at a projected cost between NZ$152 million   and NZ$210 million. In addition, a further NZ$150 million was committed to improve   broadband and mobile coverage in rural areas by extending the Rural Broadband   Initiative. In April 2014, the MTR rate reduced from NZ$ 3.72 cents per minute   to NZ$ 3.56 cents per minute. Safaricom: Kenya In June 2014, the national   regulator, the Communications Authority of Kenya (‘CAK’) renewed Safaricom’s   operating and spectrum licence for ten years with effect from July 2014 up   until June 2024. The renewed licence includes Safaricom’s spectrum resources in   2x10MHz in the 900MHz band and 2x10MHz in the 1800MHz band. Safaricom still   maintains the 2x10 2.1GHz under a separate 15 year licence issued in 2007. In   December 2014, Safaricom acquired the base transceiver station assets and   spectrum of Essar Telecom Kenya Limited, one of the three other licensed mobile   operators in Kenya (this was a joint acquisition with Airtel Kenya who acquired   the business and operating licences). Safaricom acquired Essar’s spectrum   assets of 2x7.5 in the 900MHz band and 2x10 in the 1800MHz band under a ten   year licence which the CAK aligned with our previously renewed spectrum licence   to run from July 2014 up to June 2024. Safaricom is in the process of acquiring   additional spectrum in the 4G band. Specifically, the government will grant   Safaricom 2x15MHz in the 800MHz band ( total allocation is expected to be   2x20 after full migration out of the band by broadcasters). From February   2015, Safaricom was given access to the 2x15MHz on a trial basis for a three   month period, after which a full commercial licence will be issued. In July   2014, the Central Bank of Kenya requested that each mobile network operator   submit its views on interoperability of their money transfer services. The   National Payment Systems Regulations took effect in August 2014 and now provides   the management framework for payment services in Kenya. No timelines have   been set for the implementation of interoperability. In July 2014, the MTR   was reduced from KES 1.15 to KES 0.99 per minute. This is the last step in   the CAK’s imposed glide-path. Qatar In December 2013, the Ministry of Information   and Communications Technology (‘MICT’) released a national broadband plan.   One objective of the plan, is for 98% of households to have access to 100   Mbps download and 50 Mbps upload speeds and a choice of at least two service   providers. This includes an intention to consolidate the access network infrastructure   of the incumbent Ooredoo and the Qatar National Broadband Network (‘QNBN’),   both of which are deploying FTTP networks. The Communications Regulatory   Authority (‘CRA’) granted Vodafone Qatar additional spectrum of 2x5MHz in the   1800MHz band and 2x10MHz in the 800MHz band, to support 4G deployment. During   the CRA’s review of three retail mobile markets, the CRA amended the remedies   applied to the Significant Market Power (‘SMP’) operator (Ooredoo) in those   markets without notice or consultation. Both of these amendments were   successfully appealed with the MICT’s Appeals Advisory Committee finding the   amendments to be legally invalid. The CRA announced a shift in emphasis to   wholesale regulation. This includes requesting reference offers for passive infrastructure   from Ooredoo and QNBN. Vodafone and Ooredoo are also required to prepare   reference offers for interconnection. 199 Additional information Vodafone   Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials |
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|  | Regulation   (continued) In February 2015, the CRA issued the proposed revised MTRs. The   rates proposed remain under consultation but are expected to take effect from   1 April 2015. The CRA has also proposed new rates for leased lines provided   by the incumbent. In February 2015, the MICT commenced the Telecommunications   Reform Project and issued the document which sets out the general principles   proposed for the new Telecommunications Law. The new law is required to   reflect the establishment of the MICT and the CRA. In March 2015, the draft   Telecommunications Law was published for consultation and Vodafone Qatar has   prepared and submitted its response. Overview of spectrum licences at 31   March 2015 800MHz 900MHz 1800MHz 2.1GHz 2.6GHz Quantity1 Quantity1 Quantity1   Quantity1 Quantity1 Country by region Expiry date Expiry date Expiry date Expiry   date Expiry date Europe region Germany 20202 2025 2021 2x10 2025 2x12 2016   2x5 2016 2x10+ 5 2x5 2x15 + 5 2x20 + 25 2025 20183 2029 See note4 2030 2030   2015 20306 20217 2027 2029 20268 2016 2021 2029 20229 Italy 2x10 2029 2x10   2018 2x15 2x5 2x6 2x20 2x20 2x15 2x25 2x6 2x14 2x30 2x10 2x15 2x18 2x4 2x15   2x15 2029 See note4 2028 2030 2030 See note4 2030 20165 2022 UK Spain   Netherlands Ireland 2x10 2x10 2x10 2x10 2033 2030 2029 2030 2x17 2x10 2x10   2x10 2x15 2x15 + 5 2x20 + 5 2X15 + 5 2x20 + 25 2x20 + 20 2x10 2033 2030 2030   n/a Portugal 2x10 2027 2x8 2x5 2x10 2x15 20217 20277 2029 2027 2x20 2016 2x20   + 25 2027 Romania Greece 2x10 2x10 2029 2030 2x15 + 5 2x20 + 5 2020 2021 1x15   2x20 + 20 2029 2030 Czech Republic 2x10 2029 2x10 2021 2x20 2025 2x20 2029   20229 20299 2016 20299 Hungary 2x10 2029 2x10 2x1 2x8 2x15 2019 2x20 + 25   Albania n/a 2x9 2x12 2x25 2016 2x15 + 5 2x5 2x20 + 5 2025 2029 2020 n/a Malta   n/a 2x15 2026 2026 n/a Africa, Middle East and Asia Pacific India10 Vodacom:   South Africa Turkey n/a n/a n/a 2028 2015–203410 2015–203410 2030 See note11   2029 2016 n/a n/a n/a n/a 2x11 2x11 2x8 See note11 2023 2028 2x12 See note11   n/a annual 2x15 + 5 2x15 + 5 2x25 + 5 Australia12 2x10 (850MHz band) 2x30   Egypt New Zealand n/a 2031 2x12.5 2x15 2022 2031 2x10 2x25 2022 2021 2x15   2x25 + 10 2022 2021 n/a 2028 2x15 (700MHz band) 2x15 2x15 + 5 Safaricom:   Kenya Trial 2x10 2x713 2x8 2x11 2024 2024 2019 2028 2x10 2x1013 2x10 2x20 2x5   2024 2024 2019 2028 2029 2x10 2022 n/a 202314 2028 Ghana Qatar n/a 2029 2x15   2x15 n/a n/a 2x10 Notes: 1 2 3 4 5 6 7 Single (or unpaired) blocks of   spectrum are used for asymmetric data (non-voice) use. Block quantity has   been rounded to the nearest whole number. Germany – 2x5MHz (out of 2x15MHz)   of 2.1GHz spectrum will expire in December 2025. Italy – 2x5MHz (out of   2x20MHz) of 1800MHz spectrum will expire in 2029. UK – 900MHz, 1800MHz and   2.1GHz – indefinite licence with a five year notice of revocation.   Netherlands – Ministry plans to extend licence to 2020 without an auction Ireland   – The licence for 2x25MHz spectrum commences in 2015. Portugal – 2x3MHz (out   of 2x13MHz) of 900MHz must be released by December 2015 . 2x5Mhz (out of   2x13MHz) of 900MHz and 2x14MHz (out of 2x20MHz) of 1800MHz spectrum does not   expire until March 2027. Greece – 2x15MHz (out of 2x25MHz) of the 1800MHz spectrum   will expire in August 2016. Hungary – 900MHz and 1800MHz – conditional options   to extend these licences to 2034. 8 9 10 India comprises 22 separate service   area licences with a variety of expiry dates, including those won in the   March 2015 auction that are subject to a Supreme Court hearing – see note 30   “Contingent liabilities” to the consolidated financial statements. 11   Vodacom’s South African spectrum licences are renewed annually. As part of   the migration to a new licensing regime the national regulator has issued   Vodacom a service licence and a network licence which will permit Vodacom to   offer mobile and fixed services. The service and network licences have a 20   year duration and will expire in 2028. Vodacom also holds licences to provide   2G and/or 3G services in the Democratic Republic of Congo, Lesotho, Mozambique   and Tanzania. 12 Australia – VHA has 2x5MHz in 850MHz rural; 2x25MHz in   1800MHz and 2x20MHz in 2.1GHz in Brisbane/Adelaide/Perth; 2x5MHz in 1800MHz   and 2x10MHz in 2.1GHz in Canberra/Darwin/ Hobart; 2x5MHz in 2.1GHz in rural   13 Safaricom: Kenya – Spectrum from acquisition of Essar Telecom Kenya Ltd 14   Ghana – The national regulator has issued provisional licences with the intention   of converting these to full licences once the national regulator board has   been reconvened. 200 Vodafone Group Plc Annual Report on Form 20-F 2015 Unaudited   information |
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|  | Mobile   Termination Rates (‘MTRs’) National regulators are required to take utmost   account of the Commission’s existing recommendation on the regulation of   fixed and mobile termination rates. This recommendation requires MTRs to be   set using a long run incremental cost methodology. Over the last three years   MTRs effective for our subsidiaries were as follows: 20131 20141 20151 1   April 20152 Country by region Europe Germany (€ cents) Italy (€ cents) UK (GB   £ pence) Spain (€ cents) Netherlands (€ cents) Ireland (€ cents) Portugal (€   cents) Romania (€ cents) Greece (€ cents) Czech Republic (CZK) Hungary (HUF)   Albania (ALL) Malta (€ cents) 1.84 1.50 1.50 2.89 2.40 2.60 1.27 3.07 1.27   0.41 7.06 4.57 2.07 1.79 0.98 0.85 1.09 1.86 2.60 1.27 0.96 1.19 0.27 7.06   2.66 2.07 1.72 0.98 0.67 1.09 1.86 2.60 1.27 0.96 1.099 0.27 7.06 1.48 0.40   0.94 (from January 2016) 0.68 (from May 2015) 1.09 TBD TBD TBD 0.96 1.099   1.71 1.48 0.40 Africa, Middle East and Asia Pacific India (rupees) Vodacom:   South Africa (ZAR)4 Turkey (lira) Australia (AUD cents) Egypt (PTS/piastres)   New Zealand (NZD cents) Safaricom: Kenya (shilling) Ghana (peswas) Qatar   (dirhams) 0.143 0.20 0.0258 3.60 10.00 3.56 1.15 4.00 16.60 0.20 0.49 0.0258   4.80 10.00 3.97 1.44 4.50 16.60 0.20 0.40 0.0258 3.60 10.00 3.72 1.15 4.00   16.60 0.15 (from October 2015) 0.0258 5.00 9.00 Notes: 1 2 3 4 All MTRs are   based on end of financial year values. MTRs established from 1 April 2015 are   included where a glide path or a final decision has been determined by the   regulatory authority. The MTR is under appeal. Please see Vodacom: South   Africa on page 197. 201 Additional information Vodafone Group Plc Annual   Report on Form 20-F 2015 Overview Strategy review Performance Governance   Financials |
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|  | Non-GAAP information In the discussion of   our reported financial position, operating results and cash flows,   information is presented to provide readers with additional financial information   that is regularly reviewed by management. However, this additional   information presented is not uniformly defined by all companies including   those in the Group’s industry. Accordingly, it may not be comparable with   similarly titled measures and disclosures by other companies. Additionally,   certain information presented is derived from amounts calculated in   accordance with IFRS but is not itself an expressly permitted GAAP measure.   Such non-GAAP measures should not be viewed in isolation or as an alternative   to the equivalent GAAP measure. Adjusted EBITDA Adjusted EBITDA is operating   profit excluding share in results of associates, depreciation and   amortisation, gains/losses on the disposal of fixed assets, impairment   losses, restructuring costs, other operating income and expense and   significant items that are not considered by management to be reflective of   the underlying performance of the Group. We use adjusted EBITDA, in   conjunction with other GAAP and non-GAAP financial measures such as adjusted   operating profit, operating profit and net profit, to assess our operating   performance. We believe that adjusted EBITDA is an operating performance   measure, not a liquidity measure, as it includes non-cash changes in working   capital and is reviewed by the Chief Executive to assess internal performance   in conjunction with adjusted EBITDA margin, which is an alternative sales   margin figure. We believe it is both useful and necessary to report adjusted   EBITDA as a performance measure as it enhances the comparability of profit   across segments. Because adjusted EBITDA does not take into account certain   items that affect operations and performance, adjusted EBITDA has inherent   limitations as a performance measure. To compensate for these limitations, we   analyse adjusted EBITDA in conjunction with other GAAP and non-GAAP operating   performance measures. Adjusted EBITDA should not be considered in isolation   or as a substitute for a GAAP measure of operating performance. A   reconciliation of adjusted EBITDA to the closest equivalent GAAP measure,   operating profit, is provided in above and in note 2 “Segmental analysis” to   the consolidated financial statements. Group adjusted operating profit and   adjusted earnings per share Group adjusted operating profit excludes non-operating   income of associates, impairment losses, restructuring costs, amortisation of   customer bases and brand intangible assets, other operating income and   expense and other significant one-off items. Adjusted earnings per share also   excludes certain foreign exchange rate differences, together with related tax   effects. We believe that it is both useful and necessary to report these   measures for the following reasons: a these measures are used for internal   performance reporting; a these measures are used in setting director and   management remuneration; and a they are useful in connection with discussion   with the investment analyst community and debt rating agencies. A   reconciliation of adjusted operating profit to the respective closest   equivalent GAAP measure, operating profit, is provided above and in note 2   “Segmental analysis” to the consolidated financial statements. A   reconciliation of adjusted earnings per share to basic earnings per share is   provided in the “Operating results” on page 42. Cash flow measures In   presenting and discussing our reported results, free cash flow and operating   free cash flow are calculated and presented even though these measures are   not recognised within IFRS. We believe that it is both useful and necessary   to communicate free cash flow to investors and other interested parties, for   the following reasons: a free cash flow allows us and external parties to   evaluate our liquidity and the cash generated by our operations. Free cash   flow does not include payments for licences and spectrum included within   intangible assets, items determined independently of the ongoing business,   such as the level of dividends, and items which are deemed discretionary,   such as cash flows relating to acquisitions and disposals or financing   activities. In addition, it does not necessarily reflect the amounts which we   have an obligation to incur. However, it does reflect the cash available for   such discretionary activities, to strengthen the consolidated statement of   financial position or to provide returns to shareholders in the form of   dividends or share purchases; a free cash flow facilitates comparability of   results with other companies although our measure of free cash flow may not   be directly comparable to similarly titled measures used by other companies;   a these measures are used by management for planning, reporting and incentive   purposes; and a these measures are useful in connection with discussion with   the investment analyst community and debt rating agencies. Cash generated by   operations, operating free cash flow and free cash flow have been redefined   to exclude restructuring costs for the year ended 31 March 2015 of £336   million (2014: £210 million, 2013: £167 million). A reconciliation of cash   generated by operations, the closest equivalent GAAP measure, to operating   free cash flow and free cash flow, is provided below. 202 Vodafone Group Plc   Annual Report on Form 20-F 2015 Unaudited information |
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|  | Restated1 2014   Restated1 2013 2015 £m £m £m Notes: 1 Operating free cash flow and free cash   flow have been redefined to exclude restructuring costs for the year ended 31   March 2015 of £336 million (2014: £210 million; 2013: £167 million). 2 Other   movements for the year ended 31 March 2015 include a £365 million UK pensions   contribution payment and £116 million of KDG incentive scheme payments in   respect of liabilities assumed on acquisition. Other Certain of the   statements within the section titled “Chief Executive’s strategic review” on   pages 14 to 17 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 “Looking ahead” on page   39 contains forward-looking non-GAAP financial information which at this time   cannot be quantitatively reconciled to comparable GAAP financial information.   Organic growth All amounts in this document marked with an “*” represent   organic growth which presents performance on a comparable basis, both in   terms of merger and acquisition activity and foreign exchange rates. We   believe that “organic growth”, which is not intended to be a substitute for   or superior to reported growth, provides useful and necessary information to   investors and other interested parties for the following reasons: a it   provides additional information on underlying growth of the business without   the effect of certain factors unrelated to the operating performance of the   business; a it is used for internal performance analysis; and a it   facilitates comparability of underlying growth with other companies, although   the term “organic” is not a defined term under IFRS and may not, therefore,   be comparable with similarly titled measures reported by other companies. For   the 2015 financial year, the Group’s organic service revenue growth rate has   been adjusted to exclude the beneficial impact of a settlement of an historical   interconnect rate dispute in the UK, the beneficial impact of an upward   revision to interconnect revenue in Egypt from a re-estimation by management   of the appropriate historical mobile interconnection rate and the adverse   impact of an adjustment to intercompany revenue. The adjustments in relation   to Vodafone UK and Vodafone Egypt also impact the disclosed organic growth   rates for those countries. Reconciliation of organic growth to reported   growth is shown where used, or in the table below: Organic change % Other   activity1 pps Foreign exchange pps Reported change % Period 31 March 2015   Group Revenue Service revenue Fixed line revenue Vodafone Global Enterprise   service revenue Machine-to-machine revenue Adjusted EBITDA Percentage point   change in adjusted EBITDA margin Adjusted operating profit Adjusted EBITDA FY   FY FY FY FY FY FY FY H2 (0.8) (1.6) 3.5 1.8 24.7 (6.9) (1.8) (24.1) (3.6)   17.8 17.7 38.6 – 29.5 21.4 1.2 11.0 18.4 (6.9) (6.7) (6.9) (4.0) (8.5) (7.0)   (0.1) (5.5) (5.3) 10.1 9.4 35.2 (2.2) 45.7 7.5 (0.7) (18.6) 9.5 Europe   Germany – mobile service revenue Germany – fixed line revenue Italy – mobile   service revenue Italy – fixed line revenue Italy – operating expenses Italy –   customer costs UK – mobile service revenue FY FY FY FY FY FY FY (3.5) (2.1)   (12.1) 4.5 (3.1) (3.0) 0.5 0.1 38.7 902.8 1,022.0 1,079.3 775.9 – (6.6) (9.9)   (124.4) (135.1) (149.3) (108.1) 0.0 (10.1) 26.7 766.3 891.4 926.9 664.8 0.6   203 Additional information Vodafone Group Plc Annual Report on Form 20-F 2015   Overview Strategy review Performance Governance Financials Cash generated by   operations (refer to note 19) 10,397 12,14711,493 Capital expenditure (9,197)   (6,313)(5,292) Working capital movement in respect of capital expenditure 762   45674 Disposal of property, plant and equipment 178 79105 Restructuring costs   336 210167 Other movements2 387 –– Operating free cash flow1 2,863 6,5796,547   Taxation (758) (3,449)(2,570) Dividends received from associates 224   2,8423,132 Dividends paid to non-controlling shareholders in subsidiaries   (246) (264)(379) Interest received and paid (995) (1,315)(1,058) Free cash   flow1 1,088 4,3935,672 |
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|  | Non-GAAP   information (continued) Organic change % Other activity1 pps Foreign exchange   pps Reported change % Period UK – fixed line revenue Spain – mobile service   revenue Spain – fixed line revenue Hungary – service revenue Germany –   percentage point change in adjusted EBITDA margin Italy – percentage point   change in adjusted EBITDA margin UK – percentage point change in adjusted   EBITDA margin Spain – percentage point change in adjusted EBITDA margin Other   Europe – percentage point change in adjusted EBITDA margin Other Europe –   service revenue Germany – service revenue Italy – service revenue UK –   service revenue Spain – service revenue Other Europe – service revenue   Germany – fixed line revenue Germany – fixed line revenue UK – fixed line   revenue UK – fixed line revenue FY FY FY FY FY FY FY FY FY Q3 Q4 Q4 Q4 Q4 Q4   H1 H2 H1 H2 (5.8) (12.7) 8.7 8.6 (3.1) (2.6) (2.5) (5.0) 0.1 (1.0) (3.1)   (3.7) 0.6 (7.8) (0.8) (2.9) (1.2) (10.4) (1.3) 5.1 5.7 172.5 – 2.0 1.0 1.6   4.0 (0.2) 0.8 1.5 134.5 5.6 34.6 2.6 93.3 6.7 – 10.2 – (6.3) (19.4) (10.8) –   (0.1) – – 0.1 (6.6) (10.0) (28.6) 0.1 (13.0) (10.6) (10.8) (8.6) – (0.1)   (0.7) (13.3) 161.8 (2.2) (1.1) (1.7) (0.9) (1.0) – (6.8) (11.6) 102.2 6.3   13.8 (8.8) 79.6 (3.1) (10.4) 8.8 AMAP South Africa – service revenue South   Africa – service revenue excluding the impact of MTR cuts Vodacom’s   international operations – service revenue Turkey – service revenue Egypt –   service revenue Ghana – service revenue New Zealand – service revenue Qatar –   revenue India – percentage point change in adjusted EBITDA margin Vodacom – percentage   point change in adjusted EBITDA margin Other AMAP – percentage point change   in adjusted EBITDA margin Vodacom – service revenue India – service revenue   FY FY FY FY FY FY FY FY FY FY FY Q4 Q4 (2.7) 1.4 4.8 9.4 2.8 18.9 (2.6) 16.0   0.9 (1.1) (0.4) (0.2) 12.1 – – – – 6.4 – – – – – (0.3) – – (9.7) (9.7) (5.3)   (13.3) (5.5) (40.2) (2.7) (0.8) (0.1) (0.1) 0.5 1.4 9.3 (12.4) (8.3) (0.5)   (3.9) 3.7 (21.3) (5.3) 15.2 0.8 (1.2) (0.2) 1.2 21.4 31 March 2014 Group   Revenue Service revenue Adjusted EBITDA Percentage point change in adjusted   EBITDA margin Adjusted operating profit Europe Germany – mobile in-bundle   revenue Germany – mobile out-of-bundle revenue UK – mobile in-bundle revenue   UK – mobile out-of-bundle revenue Spain – mobile in-bundle revenue Spain – fixed   line revenue Spain – operating expenses Netherlands – service revenue   Netherlands – mobile in-bundle revenue Portugal – service revenue Greece –   service revenue Germany – percentage point change in adjusted EBITDA margin   UK – percentage point change in adjusted EBITDA margin Spain – percentage   point change in adjusted EBITDA margin Other Europe – percentage point change   in adjusted EBITDA margin FY FY FY FY FY (2.2) (2.6) (6.9) (1.5) (22.0) 5.5   5.5 6.0 0.3 (15.4) (2.5) (2.4) (2.4) – 14.5 0.8 0.5 (3.3) (1.2) (22.9) FY FY   FY FY FY FY FY FY FY FY FY FY FY FY FY 2.7 (22.6) 0.6 (7.2) (0.4) (0.2) 9.4   (5.6) 3.4 (8.4) (14.1) (4.3) (1.0) (3.4) (2.1) - 0.3 – – – – – (0.6) – (0.6)   (0.8) 0.8 (0.4) (0.4) 3.6 3.5 2.9 – – 3.4 3.4 (3.3) 3.4 3.5 3.3 3.2 0.1 – 0.1   0.1 6.2 (19.4) 0.6 (7.2) 3.0 3.2 6.1 (2.8) 6.9 (5.7) (11.7) (3.4) (1.4) (3.7)   1.6 204 Vodafone Group Plc Annual Report on Form 20-F 2015 Unaudited   information |
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|  | Organic change   % Other activity1 pps Foreign exchange pps Reported change % Period AMAP   South Africa – service revenue South Africa – data revenue Vodacom’s   international operations – service revenue Turkey – service revenue Turkey –   mobile in-bundle revenue Egypt – service revenue Ghana – service revenue   India – percentage point change in adjusted EBITDA margin Vodacom –   percentage point change in adjusted EBITDA margin Other AMAP – percentage   point change in adjusted EBITDA margin FY FY FY FY FY FY FY FY FY FY 0.3 23.5   18.9 7.9 25.0 2.6 19.3 2.0 (0.3) 0.1 – – – (0.5) – – (0.2) – 0.8 (0.4) (16.2)   (20.3) (3.9) (11.6) (14.1) (11.2) (17.3) (0.2) (0.4) – (15.9) 3.2 15.0 (4.2)   10.9 (8.6) 1.8 1.8 0.1 (0.3) 31 March 2013 Group Revenue Service revenue   Other revenue Adjusted EBITDA Adjusted operating profit FY FY FY FY FY 0.4   0.1 3.1 2.3 11.3 3.5 3.7 1.7 1.5 (1.4) (5.9) (5.9) (5.9) (6.1) (3.3) (2.0)   (2.1) (1.1) (2.3) 6.6 Europe Revenue Service revenue Other revenue Adjusted   EBITDA Adjusted operating profit FY FY FY FY FY (4.3) (4.2) (4.9) (4.4)   (14.2) 5.4 5.6 2.8 2.3 (1.1) (4.5) (4.5) (4.1) (4.6) (4.5) (3.4) (3.1) (6.2)   (6.7) (19.8) AMAP Revenue Service revenue Other revenue Adjusted EBITDA   Adjusted operating profit FY FY FY FY FY 8.2 7.6 14.8 13.8 20.1 (0.3) (0.3)   0.1 (0.2) (2.5) (8.6) (8.5) (9.3) (9.3) (10.5) (0.7) (1.2) 5.6 4.3 7.1 Note:   1 “Other activity” includes the impact of M&A activity. Refer to “Organic   growth” on page 212 for further detail. 205 Additional information Vodafone   Group Plc Annual Report on Form 20-F 2015 Overview Strategy review   Performance Governance Financials |
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|  | Form 20-F cross reference guide This   annual report on Form 20-F for the fiscal year ended 31 March 2015 has not   been approved or disapproved by the SEC nor has the SEC passed judgement upon   the adequacy or accuracy of this document. The table below sets out the   location in this document of the information required by SEC Form 20-F. Item   Form 20-F caption Location in this document Page 1 Identity of Directors,   senior management and advisors Not applicable – 2 Offer statistics and   expected timetable Not applicable – 3 Key information 3A Selected financial   data Selected financial data Shareholder information: Inflation and foreign   currency translation Not applicable Not applicable Principal risk factors and   uncertainties 213 188 – – 32 to 37 3B Capitalisation and indebtedness 3C   Reasons for the offer and use of proceeds 3D Risk factors 4 Information on   the Company 4A History and development of the Company History and development   Contact details Shareholder information: Registrar and transfer office   Shareholder information: Articles of association and applicable English law   Chief Executive’s strategic review Chief Financial Officer’s review Note 1   “Basis of preparation” Note 2 “Segmental analysis” Note 11 “Property, plant   and equipment” Note 28 “Acquisitions and disposals” Note 29 “Commitments”   Project Spring Performance highlights About us: How we are changing Project   Spring Our business model: What we offer Our business model: Where we operate   Our business model: How we make money Our business model: How we set ourselves   apart Market overview: The telecommunications industry today Market overview:   Where the industry is heading Our strategy: Consumer Europe Our strategy:   Unified communications Our strategy: Consumer emerging markets Our strategy:   Enterprise Operating results Financial position and resources Prior year   operating results Note 2 “Segmental analysis” – Segmental revenue and profit   Regulation Note 32 “Principal subsidiaries” Note 12 “Investments in   associates and joint arrangements” Note 13 “Other investments” Our business   model: How we make money Our business model: How we set ourselves apart   Financial position and resources Note 11 “Property, plant and equipment” 194   Back cover 187 189 14 to 17 38 and 39 109 to 113 114 to 116 132 and 133 164   to 166 167 6 1 5 6 8 9 10 11 12 13 22 and 23 24 and 25 26 27 40 to 46 46 to   48 175 to 179 115 195 to 201 171 to 173 134 to 136 137 10 11 46 to 48 132 and   133 4B Business overview 4C Organisational structure 4D Property, plant and   equipment 4A Unresolved staff comments None – 206 Vodafone Group Plc Annual   Report on Form 20-F 2015 Unaudited information |
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|  | Item Form 20-F   caption Location in this document Page 5 Operating and financial review and   prospects 5A Operating results Operating results 40 to 46 Financial position   and resources: Liquidity and capital resources 47 and 48 Prior year operating   results 175 to 179 Note 21 “Borrowings” 144 to 148 Shareholder information:   Inflation and foreign currency translation 188 Regulation 195 to 201 5B   Liquidity and capital resources Financial position and resources: Liquidity   and capital resources 47 and 48 Note 23 “Capital and financial risk   management” 151 to 156 Note 22 “Liquidity and capital resources” 148 to 150   Note 21 “Borrowings” 144 to 148 Note 29 “Commitments” 167 5C Research and   development, patents and licences, etc. Our strategy: Consumer Europe 22 and   23 Our strategy: Unified communications 24 and 25 Our strategy: Consumer   emerging markets 26 Our strategy: Enterprise 27 Note 3 “Operating   profit/(loss)” 117 Regulation: Licences 200 5D Trend information Chief   Executive’s strategic review 14 to 17 Market overview: The telecommunications   industry today 12 Market overview: Where the industry is heading 13 5E   Off-balance sheet arrangements Note 22 “Liquidity and capital resources” –   Off-balance sheet arrangements 150 Note 29 “Commitments” 167 Note 30   “Contingent liabilities” 168 to 170 5F Tabular disclosure of contractual   obligations Financial position and resources: Contractual obligations and   commitments 47 5G Safe harbor Forward-looking statements 209 and 210 6   Directors, senior management and employees 6A Directors and senior management   Board of Directors 52 and 53 Executive Committee 54 and 55 6B Compensation   Directors’ remuneration 75 to 91 Note 24 “Directors and key management   compensation” 156 6C Board practices Compliance with the 2012 UK Corporate   Governance Code 72 and 73 Shareholder information: Articles of association   and applicable English law 189 Directors’ remuneration 75 to 91 Board of   Directors 52 and 53 Board Committees 63 to 71 6D Employees Our people 28 and   29 Note 25 “Employees” 157 6E Share ownership Directors’ remuneration 75 to   91 Note 27 “Share-based payments” 162 and 163 7 Major shareholders and   related party transactions 7A Major shareholders Shareholder information:   Major shareholders 188 7B Related party transactions Directors’ remuneration   75 to 91 Note 30 “Contingent liabilities” 168 to 170 Note 31 “Related party   transactions” 171 C Interests of experts and counsel Not applicable – 8   Financial information 8A Consolidated statements and other financial   information Financials 105 to 179 Report of independent registered public   accounting firm 98 and 99 Note 30 “Contingent liabilities” 168 to 170   Separate financial statements required by Rule 3-09 of Regulation S-X B-1 to   B-28 Report of Independent Registered Public Accounting Firm B-3 8B   Significant changes Note 34 “Subsequent events” 174 Subsequent events A-1 207 |
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|  | Form 20-F cross   reference guide (continued) Unaudited information Item Form 20-F caption   Location in this document Page 9 The offer and listing 9A Offer and listing   details Shareholder information: Share price history 187 and 188 9B Plan of   distribution Not applicable – 9C Markets Shareholder information: Markets 188   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: Articles of association and applicable English law   189 10C Material contracts Shareholder information: Material contracts 191   10D Exchange controls Shareholder information: Exchange controls 191 10E   Taxation Shareholder information: Taxation 191 to 193 10F Dividends and   paying agents Not applicable – 10G Statement by experts Not applicable – 10H   Documents on display Shareholder information: Documents on display 191 10I   Subsidiary information Not applicable – 11 Quantitative and qualitative   disclosures about market risk Note 23 “Capital and financial risk management”   151 to 156 12 Description of securities other than equity securities 12A Debt   securities Not applicable – 12B Warrants and rights Not applicable – 12C   Other securities Not applicable – 12D American depositary shares ADR payment   information C-1 13 Defaults, dividend arrearages and delinquencies Not   applicable – 14 Material modifications to the rights of security holders and   use of proceeds Not applicable – 15 Controls and procedures Governance 49 to   74 Board Committees: Oversight of the Group’s system of internal control   including the internal control function 67 and 68 Directors’ statement of   responsibility: Management’s report on internal control over financial   reporting 95 Report of independent registered public accounting firm 98 and   99 16 16A Audit Committee financial expert Board Committees 63 to 71 16B Code   of ethics Our US listing requirements 74 16C Principal accountant fees and   services Note 3 “Operating profit/(loss)” 117 Board Committees: Audit and   Risk Committee – Overseeing the relationship with and performance of, the   external auditor 66 and 67 16D Exemptions from the listing standards for   audit committees Not applicable – 16E Purchase of equity securities by the   issuer and affiliated purchasers Not applicable – 16F Change in registrant’s   certifying accountant Board Committees: Audit and Risk Committee – Overseeing   the relationship with, and performance of, the external auditor 66 16G   Corporate governance Our US listing requirements 74 16H Mine safety   disclosure Not applicable – 17 Financial statements Not applicable – 18   Financial statements Financials 105 to 179 Report of Independent Registered   Public Accounting Firm 98 and 99 Separate financial statements required by   Rule 3-09 of Regulation S-X B-1 to B-28 Report of Independent Registered   Public Accounting Firm B-3 19 Exhibits Filed with the SEC Index to Exhibits  208 |
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|  | Forward-looking statements meaning of the   US Private Securities Litigation Reform Act of 1995 its working capital   requirements and share buyback programmes, and businesses and certain of the   Group’s plans and objectives. In particular, such forward-looking statements   include statements and of scheduled or potential regulatory changes. limited   to, the following: a general economic and political conditions in the   jurisdictions in which or by third parties, including new mobile   technologies, such as the market conditions, growth in the number of   worldwide mobile to deploy new technologies, products and services in a   timely usage and increased mobile penetration in emerging markets; a revenue   and growth expected from the Group’s enterprise and total of new products and   services to perform in accordance with expectations with respect to long-term   shareholder value growth; marketing efforts; cuts, the Group’s ability to   acquire spectrum, expected growth services with existing networks,   technologies, products and services; a the Group’s ability to generate and   grow revenue from both voice and and usage generally, and plans for sustained   investment in high a slower than expected customer growth, reduced customer   in existing investments, the timely completion of pending acquisition 209   Additional information Vodafone Group Plc Annual Report on Form 20-F 2015   Overview Strategy review Performance Governance Financials This document   contains “forward-looking statements” within the a expectations regarding the   Group’s access to adequate funding for with respect to the Group’s financial   condition, results of operations and the Group’s future dividends or its   existing investments; and a the impact of regulatory and legal proceedings   involving the Group with respect to: a the Group’s expectations and guidance   regarding its financial and Forward-looking statements are sometimes, but not   always, identified operating performance, including statements contained   within the by their use of a date in the future or such words as “will”,   “anticipates”, Chief Executive’s review on pages 14 to 17, statements   regarding “aims”, “could”, “may”, “should”, “expects”, “believes”, “intends”,   “plans” forward guidance on page 39, the performance of associates and or   “targets”. By their nature, forward-looking statements are inherently joint   ventures, other investments and newly acquired businesses predictive,   speculative and involve risk and uncertainty because they including CWW, KDG   and Ono, expectations regarding the Project relate to events and depend on   circumstances that will occur in the Spring organic investment programme and   expectations regarding future. There are a number of factors that could cause   actual results fixed revenue and broadband customers; and developments to   differ materially from those expressed or implied a intentions and   expectations regarding the development of products, by these forward-looking   statements. These factors include, but are not services and initiatives   introduced by, or together with, Vodafone Vodafone M-Pesa money transfer   service, M2M connections, the Group operates and changes to the associated   legal, regulatory Vodafone Red, cloud hosting, tablets and an increase in   download and tax environments; speeds, Vodafone One-Net, mWallet, Smartpass   and 4G/3G services; a increased competition, from both existing competitors   and new a expectations regarding the global economy and the market entrants,   including mobile virtual network operators; Group’s operating environment and   market position, including future a levels of investment in network capacity   and the Group’s ability phone users and other trends, including increased   mobile data manner, particularly data content and services; a rapid changes   to existing products and services and the inability communications strategy,   including data revenue growth, and its expectations, including as a result of   third-party or vendor a mobile penetration and coverage rates, mobile   termination rate a the ability of the Group to integrate new technologies,   products and prospects in the Europe and AMAP regions and growth in customers   speed data networks and the anticipated Group standardisation and non-voice   services and achieve expected cost savings; simplification programme; a a   lower than expected impact of new or existing products, services a   anticipated benefits to the Group from cost efficiency programmes; or   technologies on the Group’s future revenue, cost structure and a possible   future acquisitions, including increases in ownership capital expenditure   outlays; transactions and pending offers for investments, including licence retention,   reductions or changes in customer spending and and spectrum acquisitions, and   the expected funding required increased pricing pressure; to complete such   acquisitions or investments;a the Group’s ability to expand its spectrum   position, win 3G and 4G a expectations and assumptions regarding the Group’s   future revenue, allocations and realise expected synergies and benefits   associated operating profit, adjusted EBITDA, adjusted EBITDA margin, free   cash with 3G and 4G; flow, depreciation and amortisation charges, foreign   exchange rates, tax rates and capital expenditure; Unaudited information |
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|  | Forward-looking   statements (continued) Unaudited information a the Group’s ability to secure   the timely delivery of high quality, reliable handsets, network equipment and   other key products from suppliers;  Furthermore, a review of the reasons why   actual results and developments may differ materially from the expectations   disclosed or implied within forward-looking statements can be found under  “Principal risk factors and uncertainties”   on pages 32 to 37 of this a loss of suppliers, disruption of supply chains   and greater than anticipated prices of new mobile handsets; a changes in the   costs to the Group of, or the rates the Group may charge for, terminations   and roaming minutes; document. All subsequent written or oral forward-looking   statements attributable to the Company or any member of the Group or any   persons acting on their behalf are expressly qualified in their entirety by   the factors referred to above. No assurances can be given that  the forward-looking statements in this   document will be realised. a the impact of a failure or significant interruption   to the Group’s telecommunications, networks, IT systems or data protection   systems; a the Group’s ability to realise expected benefits from   acquisitions, partnerships, joint ventures, franchises, brand licences,   platform sharing or other arrangements with third parties, particularly those   related to the development of data and internet services; a acquisitions and   divestments of Group businesses and assets and the pursuit of new, unexpected   strategic opportunities which may have a negative impact on the Group’s   financial condition and results of operations; a the Group’s ability to   integrate acquired business or assets and the imposition of any unfavourable   conditions, regulatory or otherwise, on any pending or future acquisitions or   dispositions; a the extent of any future write-downs or impairment charges on   the Group’s assets, or restructuring charges incurred as a result of an   acquisition or disposition; a developments in the Group’s financial   condition, earnings and distributable funds and other factors that the Board   takes into account in determining the level of dividends; a the Group’s   ability to satisfy working capital requirements through borrowing in capital   markets, bank facilities and operations; a changes in foreign exchange rates,   including particularly the exchange rate of pounds sterling to the euro,   Indian rupee, South African rand and the US dollar; a changes in the   regulatory framework in which the Group operates, including the commencement   of legal or regulatory action seeking to regulate the Group’s permitted   charging rates; a the impact of legal or other proceedings against the Group   or other companies in the communications industry; and a changes in statutory   tax rates and profit mix, the Group’s ability to resolve open tax issues and   the timing and amount of any payments in respect of tax liabilities. Subject   to compliance with applicable law and regulations, Vodafone does not intend   to update these forward-looking statements and does not undertake any   obligation to do so. PricewaterhouseCoopers LLP has neither examined,   compiled, nor performed any procedures with respect to the forward looking   statements, and accordingly PricewaterhouseCoopers LLP does not express an   opinion or provide any other form of assurance on such information. Deloitte   LLP has neither examined, compiled, nor performed any procedures with respect   to the forward looking statements, and accordingly Deloitte LLP does not   express an opinion or provide any other form of assurance on such   information. 210 |
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|  | Definition of terms 211 Additional   information Vodafone Group Plc Annual Report on Form 20-F 2015 Overview   Strategy review Performance Governance Financials 2G2G networks are operated   using global system for mobile (‘GSM’) technology which offers services such   as voice, text messaging and low speed data. In addition, all the Group’s   controlled networks support general packet radio services (‘GPRS’), often   referred to as 2.5G. GPRS allows mobile devices to access IP based data   services such as the internet and email. 3GA cellular technology based on   wide band CDMA delivering voice and faster data services. 4G/LTE 4G or   long-term evolution (‘LTE’) technology offers voice and even faster data   transfer speeds than 3G/HSPA. Acquisition costs The total of connection fees,   trade commissions and equipment costs relating to new customer connections.   ADR American depositary receipts is a mechanism designed to facilitate   trading in shares of non-US companies in the US stock markets. The main   purpose is to create an instrument which can easily be settled through US   stock market clearing systems. ADS American depositary shares are shares   evidenced by American depositary receipts. ADSs are issued by a depositary   bank and represent one or more shares of a non-US issuer held by the   depositary bank. The main purpose of ADSs is to facilitate trading in shares   of non-US companies in the US markets and, accordingly, ADRs which evidence   ADSs are in a form suitable for holding in US clearing systems. AGM Annual   general meeting. AMAP The Group’s region: Africa, Middle East and Asia   Pacific. Applications (‘apps’) Apps are software applications usually   designed to run on a smartphone or tablet device and provide a convenient   means for the user to perform certain tasks. They cover a wide range of   activities including banking, ticket purchasing, travel arrangements, social   networking and games. For example, the My Vodafone app lets customers check   their bill totals on their smartphone and see the minutes, texts and data   allowance remaining. ARPU Average revenue per user, defined as mobile revenue   and mobile incoming revenue divided by average customers. Capital expenditure   (‘capex’)This measure includes the aggregate of capitalised property, plant   and equipment additions and capitalised software costs. CDMA This is a   channel access method used by various radio communication technologies. Churn   Total gross customer disconnections in the period divided by the average   total customers in the period. Cloud servicesThis means the customer has little   or no equipment at their premises and all the equipment and capability   associated with the service is run from the Vodafone network and data centres   instead. This removes the need for customers to make capital investments and   instead they have an operating cost model with a recurring monthly fee.   Controlled and jointly controlled Controlled and jointly controlled measures   include 100% for the Group’s mobile operating subsidiaries and the Group’s   share for joint ventures and the Group’s proportionate share for joint   operations. Customer costsCustomer costs include acquisition costs, retention   costs and expenses related to ongoing commissions. Depreciation and otherThe   accounting charge that allocates the cost of a tangible or intangible asset   to the income statement amortisationover its useful life. This measure   includes the profit or loss on disposal of property, plant and equipment and   computer software. Direct costs Direct costs include interconnect costs and   other direct costs of providing services. Adjusted EBITDA Operating profit   excluding share of results in associates, depreciation and amortisation,   gains/losses on the disposal of fixed assets, impairment losses,   restructuring costs and other operating income and expense. The Group’s   definition of adjusted EBITDA may not be comparable with similarly titled   measures and disclosures by other companies. Enterprise The Group’s customer   segment for businesses. FCA Financial Conduct Authority. Fixed broadband   customer A fixed broadband customer is defined as a customer with a   connection or access point to a fixed line data network. FRC Financial   Reporting Council. Free cash flowOperating free cash flow after cash flows in   relation to taxation, interest, dividends received from associates and   investments and dividends paid to non-controlling shareholders in   subsidiaries but before restructuring costs and licence and spectrum   payments. For the year ended 31 March 2014 and 31 March 2013, the income   dividends received from Verizon Wireless and payments in respect of a tax   case settlement were also excluded. HSPA+ An evolution of high speed packet   access (‘HSPA’) or third generation (‘3G’) technology that enhances the   existing 3G network with higher speeds for the end user. IFRS International   Financial Reporting Standards. ImpairmentA downward revaluation of an asset.   Interconnect costs A charge paid by Vodafone to other fixed line or mobile   operators when a Vodafone customer calls a customer connected to a different   network. IP Internet protocol (‘IP’) is the format in which data is sent from   one computer to another on the internet. IP-VPNA virtual private network   (‘VPN’) is a network that uses a shared telecommunications infrastructure,   such as the internet, to provide remote offices or individual users with   secure access to their organisation’s network. M2MMachine-to-machine. M2M   communications, or telemetry, enable devices to communicate with one another   via built-in mobile SIM cards. Unaudited information |
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|  | Definition of terms (continued) 212 Vodafone Group Plc Annual   Report on Form 20-F 2015 Mark-to-marketMark-to-market or fair value   accounting refers to accounting for the value of an asset or liability based   on the current market price of the asset or liability. Mobile broadband Also   known as mobile internet (see below). Mobile customerA mobile customer is   defined as a subscriber identity module (‘SIM’), or in territories where SIMs   do not exist, a unique mobile telephone number, which has access to the   network for any purpose, including data only usage. Mobile internetMobile   internet allows internet access anytime, anywhere through a browser or a   native application using any portable or mobile device such as smartphone,   tablet or laptop connected to a wireless network. Mobile termination rate   (‘MTR’)A per minute charge paid by a telecommunications network operator when   a customer makes a call to another mobile or fixed line network operator.   MVNO Mobile virtual network operators, companies that provide mobile phone   services under wholesale contracts with a mobile network operator, but do not   have their own licence of spectrum or the infrastructure required to operate   a network. Net debtLong-term borrowings, short-term borrowings and   mark-to-market adjustments on financing instruments less cash and cash   equivalents. Net promoter score (‘NPS’)Net promoter score is a customer   loyalty metric used to monitor customer satisfaction. Operating expenses   Operating expenses comprise primarily sales and distribution costs, network   and IT related expenditure and business support costs. Operating free cash   flowCash generated from operations after cash payments for capital   expenditure (excludes capital licence and spectrum payments) and cash   receipts from the disposal of intangible assets and property, plant and   equipment, but before restructuring costs. Organic growthAll amounts marked   with an “*” represent organic growth which presents performance on a   comparable basis, both in terms of merger and acquisition activity and   movements in foreign exchange rates. For the 2015 financial year, the Group’s   organic service revenue growth rate has been adjusted to exclude the   beneficial impact of a settlement of an historical interconnect rate dispute   in the UK, the beneficial impact of an upward revision to interconnect   revenue in Egypt from a re-estimation by management of the appropriate   historical mobile interconnection rate and the adverse impact of an   adjustment to intercompany revenue. The adjustments in relation to Vodafone   UK and Vodafone Egypt also impact the disclosed organic growth rates for   those countries. Partner markets Markets in which the Group has entered into   a partner agreement with a local mobile operator enabling a range of   Vodafone’s global products and services to be marketed in that operator’s   territory and extending Vodafone’s reach into such markets. Penetration   Number of SIMs in a country as a percentage of the country’s population.   Penetration can be in excess of 100% due to customers owning more than one   SIM. PetabyteA petabyte is a measure of data usage. One petabyte is a million   gigabytes. Pps Percentage points. RAN Radio access network is the part of a   mobile telecommunications system which provides cellular coverage to mobile   phones via a radio interface, managed by thousands of base stations installed   on towers and rooftops across the coverage area, and linked to the core nodes   through a backhaul infrastructure which can be owned, leased or a mix of   both. Reported growthReported growth is based on amounts reported in pounds   sterling as determined under IFRS. Retention costs The total of trade   commissions, loyalty scheme and equipment costs relating to customer   retention and upgrade. Roaming Allows customers to make calls, send and   receive texts and data on other operators’ mobile networks, usually while   travelling abroad. Service revenueService revenue comprises all revenue   related to the provision of ongoing services including, but not limited to, monthly   access charges, airtime usage, roaming, incoming and outgoing network usage   by non-Vodafone customers and interconnect charges for incoming calls.   Smartphone devices A smartphone is a mobile phone offering advanced   capabilities including access to email and the internet. Smartphone   penetrationThe number of smartphone devices divided by the number of   registered SIMs (excluding data only SIMs) and telemetric applications. SME   Small to medium-sized enterprise. SoHo Small-office home-office. Spectrum The   radio frequency bands and channels assigned for telecommunication services.   SupranationalAn international organisation, or union, whereby member states   go beyond national boundaries or interests to share in the decision-making   and vote on issues pertaining to the wider grouping. TabletsA tablet is a   slate shaped, mobile data or portable computing device equipped with a finger   operated touchscreen or stylus, for example, the Apple iPad.   TelemetricsTelemetric applications include, but are not limited to, asset and   equipment tracking, mobile payment and billing functionality, e.g. vending   machines and meter readings, and include voice enabled customers whose usage   is limited to a central service operation, e.g. emergency response   applications in vehicles. Telemetric customers are not included in mobile   customers. VZW Verizon Wireless, the Group’s former associate in the United   States. Unaudited information |
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|  | Selected financial data Unaudited   information The selected financial data shown below for the years ended 31   March 2015, 2014, 2013 and 2012 is presented on a statutory basis. The   financial data for the year ended 31 March 2011 has not been restated for the   adoption of IFRS 11 “Joint Arrangements” in the year ended 31 March 2014 as   it would involve unreasonable effort and expense. The financial data for the   year ended 31 March 2011 therefore includes the Group’s joint ventures on a   proportionate consolidation basis, rather than on an equity accounting basis.   Overview Strategy review At/for the year ended 31 March 2015 2014 2013 2012   2011 Consolidated income statement data (£m) Revenue 42,227 38,346 38,041   38,821 45,884 Operating profit/(loss) 1,967 (3,913) (2,202) 5,618 1,085   Profit/(loss) before taxation 1,095 (5,270) (3,483) 4,144 5,057 Profit/(loss)   for financial year from continuing operations 5,860 11,312 (3,959) 3,439   4,566 Profit for the financial year 5,917 59,420 657 6,994 7,870 Consolidated   statement of financial position data (£m) Total assets 122,573 121,840   138,324 135,450 151,220 Total equity 67,733 71,781 72,488 78,202 87,561 Total   equity shareholders’ funds 66,145 70,802 71,477 76,935 87,555 Earnings per   share1,2 Weighted average number of shares (millions) – Basic 26,489 26,472   26,831 27,624 28,586 – Diluted 26,629 26,682 26,831 27,938 28,926 Basic   earnings per ordinary share 21.75p 223.84p 1.54p 25.15p 27.87p Diluted   earnings per ordinary share 21.63p 222.07p 1.54p 24.87p 27.55p Basic earnings   per share from continuing operations 21.53p 42.10p (15.66p) 12.28p 16.32p   Cash dividends1,3 Amount per ordinary share (pence) 11.22p 11.00p 10.19p   13.52p 8.90p Amount per ADS (pence) 111.2p 110.0p 101.9p 135.2p 89.0p Amount   per ordinary share (US cents) 16.65c 18.31c 15.49c 21.63c 14.33c Amount per   ADS (US cents) 166.5c 183.1c 154.9c 216.3c 143.3c Other data Ratio of   earnings to fixed charges4 1.6 – 1.7 4.3 5.8 Deficiency between fixed charges   and earnings (£m)4 – 654 – – –Notes: 1 See note 8 to the consolidated   financial statements, “Earnings per share”. Earnings and dividends per ADS is   calculated by multiplying earnings per ordinary share by ten, the number of   ordinary shares per ADS. Dividend per ADS is calculated on the same basis. 2   On 19 February 2014, we announced a “6 for 11” share consolidation effective   24 February 2014. This had the effect of reducing the number of shares in   issue from 52,821,751,216 ordinary shares (including 4,351,833,492 ordinary   shares held in Treasury) as at the close of business on 18 February 2014 to   28,811,864,298 new ordinary shares in issue immediately after the share   consolidation on 24 February 2014. Earnings per share for the years ended 31   March 2013, 2012 and 2011 have been restated accordingly. 3 The final   dividend for the year ended 31 March 2015 was proposed by the Directors on 19   May 2015 and is payable on 5 August 2015 to holders of record as of 12 June   2015. The total dividends have been translated into US dollars at 31 March   2015 for purposes of the above disclosure but the dividends are payable in US   dollars under the terms of the ADS depositary agreement. 4 For the purposes   of calculating these ratios, earnings consist of loss or profit before tax   adjusted for fixed charges, dividend income from associates, share of profits   and losses from associates, interest capitalised and interest amortised.   Fixed charges comprise one third of payments under operating leases,   representing the estimated interest element of these payments, interest   payable and similar charges, interest capitalised and preferred share   dividends. Vodafone, the Vodafone Portrait, the Vodafone Speechmark, Vodacom,   M-Pesa, Vodafone One Net, Vodafone Red and JustTextGiving are trade marks of   the Vodafone Group. The Vodafone Rhombus is a registered design of the   Vodafone Group. Other product and company names mentioned herein may be the   trade marks of their respective owners. The content of our website   (vodafone.com) should not be considered to form part of this annual report or   our annual report on Form 20-F. © Vodafone Group 2015 Text printed on amadeus   75 silk which is made from 75% de-inked post-consumer waste and 25% virgin   fibre. The cover is on amadeus 100 silk, made entirely from de-inked   post-consumer waste. Both products are Forest Stewardship Council (‘FSC’)   certified and produced using elemental chlorine free (‘ECF’) bleaching. The   manufacturing mill also holds ISO 14001 accreditation for environmental   management. Designed and produced by Radley Yeldar ry.com Vodafone Group Plc Annual   Report on Form 20-F 2015 213 |
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|  | Vodafone Group Plc Registered Office: Vodafone House The   Connection Newbury Berkshire RG14 2FN England Registered in England No.   1833679 Telephone: +44 (0)1635 33251 Fax: +44 (0)1635 238080 vodafone.com   Contact details: Shareholder helpline Telephone: +44 (0)870 702 0198 (In   Ireland): +353 (0)818 300 999 Investor Relations ir@vodafone.co.uk vodafone.com/investor   Media Relations vodafone.com/media/contact Sustainability   vodafone.com/sustainability |
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** **

**Events occurring subsequent to the approval of the Company’s Annual Report on 19 May 2015**

 

On 5 June 2015 Vodafone confirmed that it was in the early stages of discussions with Liberty Global regarding a possible exchange of selected assets between the two companies. There is no certainty that any transaction will be agreed, nor is there certainty with respect to which assets will ultimately be involved. Vodafone is not in discussions with Liberty Global concerning a combination of the two companies.

 

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**Cellco Partnership**

(d/b/a Verizon Wireless)

Report of Independent Registered Public Accounting Firm

Consolidated Financial Statements

For the years ended

December 31, 2013, 2012 and 2011

 

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** **

**Cellco Partnership (d/b/a Verizon Wireless)**

 
| **Report of Independent Registered Public Accounting   Firm**      | **B-3**           |
|--------------------------------------------------------------------|-------------------|
|                                                               |              |
| **Consolidated Statements of Income**                              |              |
| *For the years ended   December 31, 2013, 2012 and 2011*      | **B-4**           |
|                                                               |              |
| **Consolidated Statements of Comprehensive Income**                |              |
| *For the years ended   December 31, 2013, 2012 and 2011*      | **B-5**           |
|                                                               |              |
| **Consolidated Balance Sheets**                                    |              |
| *As of   December 31, 2013 and 2012*                          | **B-6**           |
|                                                               |              |
| **Consolidated Statements of Cash Flows**                          |              |
| *For the years ended   December 31, 2013, 2012 and 2011*      | **B-7**           |
|                                                               |              |
| **Consolidated Statements of Changes in Partners’   Capital** |              |
| *For the years ended   December 31, 2013, 2012 and 2011*      | **B-8**           |
|                                                               |              |
| **Notes to Consolidated Financial Statements**                     | **B-9   to B-28** |

 

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Table of Contents

 

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

 

To the Board of Representatives of

Cellco Partnership d/b/a Verizon Wireless:

 

We have audited the accompanying consolidated balance sheets of Cellco Partnership and subsidiaries d/b/a Verizon Wireless (the “Partnership”) as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, cash flows and changes in partners’ capital for each of the three years in the period ended December 31, 2013. These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.

 

/s/ Deloitte & Touche LLP

 

New York, New York

February 27, 2014

 

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Table of Contents

 

**Consolidated Statements of Income**

**Cellco Partnership (d/b/a Verizon Wireless)**

 
| ** **                                                                                | ** ** | **Years Ended December 31,** |
|-------------------------------------------------------------------------------------------|------------|---------------------------------------------|
| (dollars in millions)                                                           | ** ** | **2013**                                    | ** ** | 2012 |   | 2011 |
| **Operating Revenue**(including $102, $83 and $87 from affiliates)                        |       |                                        |   |   |   |   |
| Service   revenue                                                                         | ** ** | **$**                                       | **69,033** |   | $ | 63,733 |   | $ | 59,157 |
| Equipment   and other                                                                     | ** ** |                                        | **11,990** |   |   | 12,135 |   |   | 10,997 |
| Total   operating revenue                                                                 | ** ** |                                        | **81,023** |   |   | 75,868 |   |   | 70,154 |
| ** **                                                                                |       |                                        |   |   |   |   |   |   |   |
| **Operating Costs   and Expenses**(including $2,295, $1,949 and   $1,708 from affiliates) |       |                                        |   |   |   |   |   |   |   |
| Cost   of service (exclusive of items shown below)                                        | ** ** |                                        | **7,295** |   |   | 7,711 |   |   | 7,994 |
| Cost   of equipment                                                                       | ** ** |                                        | **16,353** |   |   | 16,779 |   |   | 16,092 |
| Selling,   general and administrative                                                     | ** ** |                                        | **22,663** |   |   | 21,696 |   |   | 19,655 |
| Depreciation   and amortization                                                           | ** ** | ** **                                  | **8,202** |   |   | 7,960 |   |   | 7,962 |
| Total   operating costs and expenses                                                      | ** ** |                                        | **54,513** |   |   | 54,146 |   |   | 51,703 |
|                                                                                      |       |                                        |   |   |   |   |   |   |   |
| **Operating Income**                                                                      | ** ** |                                        | **26,510** |   |   | 21,722 |   |   | 18,451 |
|                                                                                      |       |                                        |   |   |   |   |   |   |   |
| **Other Income   (Expenses)**                                                             |       |                                        |   |   |   |   |   |   |   |
| Interest   expense, net                                                                   | ** ** |                                        | **(65)** |   |   | (442) |   |   | (610) |
| Other   income, net                                                                       | ** ** |                                        | **40** |   |   | 96 |   |   | 56 |
| **Income Before   Provision for Income Taxes**                                            | ** ** |                                        | **26,485** |   |   | 21,376 |   |   | 17,897 |
| Provision   for income taxes                                                              | ** ** |                                        | **(150)** |   |   | (201) |   |   | (947) |
| **Net Income**                                                                            | ** ** | **$**                                       | **26,335** |   | $ | 21,175 |   | $ | 16,950 |
|                                                                                      |       |                                        |   |   |   |   |   |   |   |
| Net income attributable to   noncontrolling interests                                     | ** ** | **$**                                       | **422** |   | $ | 304 |   | $ | 280 |
| Net income attributable to Cellco   Partnership                                           | ** ** |                                        | **25,913** |   |   | 20,871 |   |   | 16,670 |
| **Net Income**                                                                            | ** ** | **$**                                       | **26,335** |   | $ | 21,175 |   | $ | 16,950 |

 

See Notes to Consolidated Financial Statements.

 

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**Consolidated Statements of Comprehensive Income**

**Cellco Partnership (d/b/a/ Verizon Wireless)**

 
| ** **                                                             | ** ** | **Years Ended December 31,** |
|------------------------------------------------------------------------|------------|---------------------------------------------|
| (dollars in millions)                                        | ** ** | **2013**                                    | ** ** | 2012 |   | 2011 |
| **Net Income**                                                         | ** ** | **$**                                       | **26,335** |   | $ | 21,175 |   | $ | 16,950 |
| ** **                                                             |       |                                        |   |   |   |   |   |   |   |
| **Other   comprehensive income (loss), net of taxes**                  |       |                                        |   |   |   |   |   |   |   |
| Unrealized   gain (loss) on cash flow hedges                           | ** ** |                                        | **(32)** |   |   | 21 |   |   | 3 |
| Defined   benefit pension and postretirement plans                     | ** ** |                                        | **—** |   |   | — |   |   | (1) |
| Other comprehensive income (loss)   attributable to Cellco Partnership | ** ** |                                        | **(32)** |   |   | 21 |   |   | 2 |
| ** **                                                             | ** ** | ** **                                  | ** ** |   |   |   |   |   |   |
| **Total   Comprehensive Income**                                       | ** ** | **$**                                       | **26,303** |   | $ | 21,196 |   | $ | 16,952 |
|                                                                   | ** ** | ** **                                  | ** ** |   |   |   |   |   |   |
| Comprehensive income attributable   to noncontrolling interests        | ** ** | **$**                                       | **  422** |   | $ | 304 |   | $ | 280 |
| Comprehensive income attributable   to Cellco Partnership              | ** ** |                                        | **25,881** |   |   | 20,892 |   |   | 16,672 |
| **Total   Comprehensive Income**                                       | ** ** | **$**                                       | **26,303** |   | $ | 21,196 |   | $ | 16,952 |

 

See Notes to Consolidated Financial Statements.

 

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Table of Contents

 

**Consolidated Balance Sheets**

**Cellco Partnership (d/b/a Verizon Wireless)**

 
| ** **                                        | ** ** | **As of December 31,** |
|---------------------------------------------------|------------|---------------------------------------|
| (dollars in millions)                   | ** ** | **2013**                              | ** ** | 2012 |
| **Assets**                                        |       |                                  |   |   |
| Current   assets                                  |       |                                  |   |   |
| Cash   and cash equivalents                       | ** ** | **$**                                 | **4,005** |   | $ | 1,354 |
| Receivables,   net of allowances of $399 and $350 | ** ** |                                  | **7,204** |   |   | 6,657 |
| Due   from affiliates, net                        | ** ** |                                  | **245** |   |   | 106 |
| Inventories,   net                                | ** ** |                                  | **990** |   |   | 1,044 |
| Prepaid   expenses and other current assets       | ** ** |                                  | **1,459** |   |   | 525 |
| **Total current assets**                          | ** ** |                                  | **13,903** |   |   | 9,686 |
|                                              | ** ** | ** **                            | ** ** |   |   |   |
| Plant,   property and equipment, net              | ** ** |                                  | **35,932** |   |   | 34,546 |
| Wireless   licenses                               | ** ** |                                  | **75,796** |   |   | 77,642 |
| Goodwill                                          | ** ** |                                  | **17,941** |   |   | 17,737 |
| Other   intangibles and other assets, net         | ** ** |                                  | **2,249** |   |   | 2,102 |
| **Total assets**                                  | ** ** | **$**                                 | **145,821** |   | $ | 141,713 |
| ** **                                        |       |                                  |   |   |   |   |
| **Liabilities and   Partners’ Capital**      |       |                                  |   |   |   |   |
| Current   liabilities                             |       |                                  |   |   |   |   |
| Short-term   debt, including current maturities   | ** ** | **$**                                 | **41** |   | $ | 1,448 |
| Accounts   payable and accrued liabilities        | ** ** |                                  | **7,012** |   |   | 7,534 |
| Advance   billings                                | ** ** |                                  | **2,750** |   |   | 2,550 |
| Other   current liabilities                       | ** ** |                                  | **337** |   |   | 274 |
| **Total current liabilities**                     | ** ** |                                  | **10,140** |   |   | 11,806 |
|                                              | ** ** | ** **                            | ** ** |   |   |   |
| Long-term   debt                                  | ** ** |                                  | **5,231** |   |   | 8,665 |
| Deferred   tax liabilities, net                   | ** ** |                                  | **11,001** |   |   | 10,939 |
| Other   non-current liabilities                   | ** ** |                                  | **2,139** |   |   | 2,056 |
|                                              |       |                                  |   |   |   |   |
| Partners’   capital                          |       |                                  |   |   |   |   |
| Capital                                           | ** ** |                                  | **114,979** |   |   | 106,119 |
| Accumulated   other comprehensive income          | ** ** |                                  | **52** |   |   | 84 |
| Noncontrolling   interests                        | ** ** |                                  | **2,279** |   |   | 2,044 |
| **Total Partners’ capital**                  | ** ** |                                  | **117,310** |   |   | 108,247 |
| **Total liabilities and Partners’ capital**  | ** ** | **$**                                 | **145,821** |   | $ | 141,713 |

 

See Notes to Consolidated Financial Statements.

 

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**Consolidated Statements of Cash Flows**

**Cellco Partnership (d/b/a Verizon Wireless)**

 
| ** **                                                                                                | ** ** | **Years Ended December 31,** | ** ** |
|-----------------------------------------------------------------------------------------------------------|------------|---------------------------------------------|------------|
| (dollars   in millions)                                                                                   | ** ** | **2013**                                    |       | 2012 |   | 2011 |   |
| **Cash Flows   from Operating Activities**                                                                |       |                                        |       |   |   |   |   |
| Net income                                                                                                | ** ** | **$**                                       | **26,335** |   | $ | 21,175 |   | $16,950 |   |
| Adjustments to reconcile net income   to net cash provided by operating activities:                       |       |                                        |       |   |   |   |   |
| Depreciation and amortization                                                                             | ** ** | **8,202**                                   |       | 7,960 |   | 7,962 |   |
| Provision for uncollectible receivables                                                                   | ** ** | **703**                                     |       | 634 |   | 689 |   |
| Provision for deferred income taxes                                                                       | ** ** | **72**                                      |       | 123 |   | 368 |   |
| Changes in current assets and   liabilities, net of the effects of acquisition/disposition of businesses: |       |                                        |       |   |   |   |   |
| Receivables                                                                                               | ** ** | **(1,371**                                  | **)**      | (1,238 | ) | (624 | ) |
| Inventories, net                                                                                          | ** ** | **54**                                      |       | (137 | ) | 166 |   |
| Prepaid expenses and other current   assets                                                               | ** ** | **(35**                                     | **)**      | (107 | ) | 124 |   |
| Accounts payable and accrued   liabilities                                                                | ** ** | **(120**                                    | **)**      | 674 |   | (728 | ) |
| Other operating activities, net                                                                           | ** ** | **(487**                                    | **)**      | (419 | ) | 371 |   |
| Net cash provided by operating   activities                                                               | ** ** | **33,353**                                  |       | 28,665 |   | 25,278 |   |
|                                                                                                      |       |                                        |       |   |   |   |   |
| **Cash Flows   from Investing Activities**                                                                |       |                                        |       |   |   |   |   |
| Capital expenditures (including   capitalized software)                                                   | ** ** | **(9,425**                                  | **)**      | (8,857 | ) | (8,973 | ) |
| Acquisitions of investments and   businesses, net of cash acquired                                        | ** ** | **(52**                                     | **)**      | (188 | ) | (144 | ) |
| Acquisitions of wireless licenses                                                                         | ** ** | **(14**                                     | **)**      | (4,287 | ) | (26 | ) |
| Proceeds from dispositions of   wireless licenses                                                         | ** ** | **2,111**                                   |       | — |   | — |   |
| Other investing activities, net                                                                           | ** ** | **(873**                                    | **)**      | 843 |   | (490 | ) |
| Net cash used in investing activities                                                                     | ** ** | **(8,253**                                  | **)**      | (12,489 | ) | (9,633 | ) |
|                                                                                                      |       |                                        |       |   |   |   |   |
| **Cash Flows   from Financing Activities**                                                                |       |                                        |       |   |   |   |   |
| Repayments of long-term debt and   capital lease obligations                                              | ** ** | **(4,960**                                  | **)**      | (1,569 | ) | (4,862 | ) |
| Distributions to partners                                                                                 | ** ** | **(17,046**                                 | **)**      | (25,681 | ) | (3,082 | ) |
| Other financing activities, net                                                                           | ** ** | **(443**                                    | **)**      | (328 | ) | (276 | ) |
| Net cash used in financing activities                                                                     | ** ** | **(22,449**                                 | **)**      | (27,578 | ) | (8,220 | ) |
|                                                                                                      |       |                                        |       |   |   |   |   |
| Increase (decrease) in cash and cash   equivalents                                                        | ** ** | **2,651**                                   |       | (11,402 | ) | 7,425 |   |
| Cash and cash equivalents, beginning   of year                                                            | ** ** | **1,354**                                   |       | 12,756 |   | 5,331 |   |
| Cash and cash equivalents, end of   year                                                                  | ** ** | **$**                                       | **4,005**  |   | $ | 1,354 |   | $12,756 |   |

 

See Notes to Consolidated Financial Statements.

 

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**Consolidated Statements of Changes in Partners’ Capital**

**Cellco Partnership (d/b/a/ Verizon Wireless)**

 
|                                                              | ** ** | **Years Ended December 31,** |        |
|-------------------------------------------------------------------|------------|---------------------------------------------|-------------|
| (dollars in millions)                                             | ** ** | **2013**                                    |        | 2012 |   | 2011 |   |
| **Partners’   Capital**                                      |       |                                        |        |   |   |   |   |
| Balance at beginning of year                                      | ** ** | **$**                                       | **106,119** |   | $ | 100,961 |   | $ | 97,399 |   |
| Net income attributable to Cellco   Partnership                   | ** ** | **25,913**                                  |        | 20,871 |   | 16,670 |   |
| Contributed capital                                               | ** ** | **(7)**                                     |        | (32) |   | (26 | ) |
| Distributions declared to partners                                | ** ** | **(17,046)**                                |        | (15,681) |   | (13,082 | ) |
| Balance at end of year                                            | ** ** | **114,979**                                 |        | 106,119 |   | 100,961 |   |
| ** **                                                        |       |                                        |        |   |   |   |   |
| **Accumulated   Other Comprehensive Income**                      |       |                                        |        |   |   |   |   |
| Balance at beginning of year                                      | ** ** | **84**                                      |        | 63 |   | 61 |   |
| Unrealized gain (loss) on cash flow   hedges                      | ** ** | **(32)**                                    |        | 21 |   | 3 |   |
| Defined benefit pension and   postretirement plans                | ** ** | **—**                                  |        | — |   | (1 | ) |
| Other comprehensive income (loss)                                 | ** ** | **(32)**                                    |        | 21 |   | 2 |   |
| Balance at end of year                                            | ** ** | **52**                                      |        | 84 |   | 63 |   |
| Total Partners’ Capital Attributable   to Cellco Partnership | ** ** | **115,031**                                 |        | 106,203 |   | 101,024 |   |
|  

**Noncontrolling   Interests**                            |       |                                        |        |   |   |   |   |
| Balance at beginning of year                                      | ** ** | **2,044**                                   |        | 1,952 |   | 1,962 |   |
| Net income attributable to   noncontrolling interests             | ** ** | **422**                                     |        | 304 |   | 280 |   |
| Distributions                                                     | ** ** | **(403)**                                   |        | (342) |   | (280 | ) |
| Other                                                             | ** ** | **216**                                     |        | 130 |   | (10 | ) |
| Balance at end of year                                            | ** ** | **2,279**                                   |        | 2,044 |   | 1,952 |   |
|  

**Total   Partners’ Capital**                        | ** ** | **$**                                       | **117,310** |   | $ | 108,247 |   | $ | 102,976 |   |

 

See Notes to Consolidated Financial Statements.

 

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Table of Contents

 

**Notes to Consolidated Financial Statements**

**Cellco Partnership (d/b/a Verizon Wireless)**

 

**1. Description of Business and Summary of Significant Accounting Policies**

 

**Description of Business**

 

Cellco Partnership (the Partnership), a Delaware general partnership doing business as Verizon Wireless, provides wireless communication services across one of the most extensive wireless networks in the United States (U.S.) and has the largest fourth-generation (4G) Long-Term Evolution (LTE) technology and third-generation (3G) Evolution-Data Optimized (EV-DO) networks of any U.S. wireless service provider. The Partnership has one segment and operates domestically only. References to “the Partners” refers to Verizon Communications, and its subsidiaries (Verizon) and Vodafone Group Plc, and its subsidiaries (Vodafone). At December 31, 2013 Verizon owned 55% of the Partnership and Vodafone owned 45% of the Partnership. On February 21, 2014, Verizon acquired Vodafone’s interest in the Partnership and now owns 100% of the Partnership.

 

These consolidated financial statements include transactions between the Partnership and Verizon and Vodafone (Affiliates) for the provision of services and financing pursuant to various agreements (see Notes 5 and 11).

 

**Consolidated Financial Statements and Basis of Presentation**

 

The consolidated financial statements of the Partnership include the accounts of its majority-owned subsidiaries and the partnerships in which the Partnership exercises control. Investments in businesses and partnerships which the Partnership does not control, but has the ability to exercise significant influence over operating and financial policies, are accounted for under the equity method of accounting. Investments and partnerships which the Partnership does not have the ability to exercise significant influence over operating and financial policies are accounted for under the cost method of accounting. Equity and cost method investments are included in Other intangibles and other assets, net in the Partnership’s consolidated balance sheets. All significant intercompany accounts and transactions have been eliminated.

 

The Partnership has reclassified prior year amounts to conform to current year presentation.

 

The Partnership has evaluated subsequent events through February 27, 2014, the date these consolidated financial statements were available to be issued.

 

**Use of Estimates**

 

The Partnership prepares its consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates.

 

Examples of significant estimates include: the allowances for doubtful accounts, the recoverability of plant, property and equipment, the recoverability of intangible assets and other long-lived assets, unbilled revenues, fair values of financial instruments, unrecognized tax benefits, valuation allowances on tax assets, accrued expenses, contingencies and allocation of purchase prices in connection with business combinations.

 

**Revenue Recognition**

 

The Partnership offers products and services to its customers through bundled arrangements. These arrangements involve multiple deliverables which may include products, services, or a combination of products and services.

 

The Partnership earns revenue primarily by providing access to and usage of its network. In general, access revenue is billed one month in advance and recognized when earned; the unearned portion is classified in Advance billings in the consolidated balance sheets. Usage revenue is generally billed in arrears and recognized when service is rendered and included in unbilled revenue, within Receivables, net in the consolidated balance sheets. Equipment sales revenue associated with the sale of wireless handsets and accessories is recognized when the products are

 

B-9

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Table of Contents

 

delivered to and accepted by the customer, as this is considered to be a separate earnings process from providing wireless services. For agreements involving the resale of third-party services in which the Partnership is considered the primary obligor in the arrangements, the Partnership records revenue gross at the time of sale. For equipment sales, the Partnership generally subsidizes the cost of wireless devices. The amount of this subsidy is generally contingent on the arrangement and terms selected by the customer. In multiple deliverable arrangements which involve the sale of equipment and a service contract, the equipment revenue is recognized up to the amount collected when the wireless device is sold.

 

The Partnership reports taxes imposed by governmental authorities on revenue-producing transactions between the Partnership and its customers on a net basis.

 

**Advertising Costs**

 

Costs for advertising products and services as well as other promotional and sponsorship costs are charged to Selling, general and administrative expense in the periods in which they are incurred (see Note 9).

 

**Vendor Rebates and Discounts**

 

The Partnership recognizes vendor rebates or discounts for purchases of wireless devices from a vendor as a reduction of Cost of equipment when the related wireless devices are sold. Vendor rebates or discounts that have been earned as a result of completing the required performance under the terms of the underlying agreements but for which the wireless devices have not yet been sold are recognized as a reduction of inventory cost. Advertising credits are granted by a vendor to the Partnership as reimbursement of specific, incremental, identifiable advertising costs incurred by the Partnership in selling the vendor’s wireless devices. These advertising credits are restricted based upon a marketing plan agreed to by the vendor and the Partnership, and accordingly, advertising credits received are recorded as a reduction of those advertising costs when recognized in the Partnership’s consolidated statements of income.

 

**Cash and Cash Equivalents**

 

The Partnership considers all highly liquid investments with a maturity of 90 days or less when purchased to be cash equivalents. Cash equivalents are stated at cost, which approximates quoted market value, and includes approximately $3.5 billion and $0.7 billion at December 31, 2013 and 2012, respectively, held in money market funds that are considered cash equivalents.

 

**Inventory**

 

Inventory consists primarily of wireless equipment held for sale, which is carried at the lower of cost (determined using a first-in, first-out method) or market. The Partnership maintained inventory valuation reserves which were not significant as of December 31, 2013 and 2012.

 

**Capitalized Software**

 

Capitalized software consists primarily of direct costs incurred for professional services provided by third parties and compensation costs of employees which relate to software developed for internal use either during the application stage or for upgrades and enhancements that increase functionality. Costs are capitalized and amortized on a straight-line basis over their estimated useful lives. Costs incurred in the preliminary project stage of development and maintenance are expensed as incurred. For a discussion of the Partnership’s impairment policy for capitalized software costs, see “Valuation of Assets” below. Also see Note 3 for additional detail of internal-use non-network software reflected in the Partnership’s consolidated balance sheets.

 

**Plant, Property and Equipment**

 

Plant, property and equipment primarily represents costs incurred to construct and expand capacity and network coverage on Mobile Telephone Switching Offices and cell sites. The cost of plant, property and equipment is depreciated on a straight-line basis over its estimated useful life. Periodic reviews are performed to identify any

 

B-10

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category or group of assets within plant, property and equipment where events or circumstances may change the remaining estimated economic life. This principally includes changes in the Partnership’s plans regarding technology upgrades, enhancements, and planned retirements. Changes in these estimates resulted in an increase of $0.4 billion for the year ended December 31, 2011. Major improvements to existing plant and equipment are capitalized. Routine maintenance and repairs that do not extend the life of the plant and equipment are charged to expense as incurred. Leasehold improvements are amortized over the shorter of their estimated useful lives or the term of the related lease.

 

Upon the sale or retirement of plant, property and equipment, the cost and related accumulated depreciation or amortization is deducted from the plant accounts and any gains or losses on disposition are recognized in income.

 

Interest expense and network engineering costs incurred during the construction phase of the Partnership’s network and real estate properties under development are capitalized as part of plant, property and equipment and recorded as construction in progress until the projects are completed and placed into service.

 

**Valuation of Assets**

 

Long-lived assets, including plant, property and equipment and intangible assets with finite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset.

 

**Wireless Licenses**

 

The Partnership’s principal intangible assets are licenses, which provide the Partnership with the exclusive right to utilize designated radio frequency spectrum to provide wireless communication services. While licenses are issued for only a fixed time, generally ten years, such licenses are subject to renewal by the Federal Communications Commission (FCC). License renewals have occurred routinely and at nominal costs, which are expensed as incurred. Moreover, the Partnership has determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful life of the Partnership’s wireless licenses. As a result, the wireless licenses are treated as an indefinite lived intangible asset, and are not amortized. The Partnership reevaluates the useful life determination for wireless licenses at least annually to determine whether events and circumstances continue to support an indefinite useful life.

 

The Partnership tests its wireless licenses for potential impairment annually. In 2013, the Partnership performed a qualitative assessment to determine whether it is more likely than not that the fair value of its wireless licenses was less than the carrying amount. As part of the assessment, the Partnership considered several qualitative factors including the business enterprise value of the Partnership, macroeconomic conditions (including changes in interest rates and discount rates), industry and market considerations (including industry revenue and EBITDA (Earnings before interest, taxes, depreciation and amortization) margin projections), the projected financial performance of the Partnership, as well as other factors. Based on our assessment in 2013, we qualitatively concluded that it was more likely than not that the fair value of our wireless licenses significantly exceeded their carrying value and therefore, did not result in an impairment. In 2012, the Partnership’s quantitative assessment consisted of comparing the estimated fair value of the Partnership’s wireless licenses to the aggregated carrying amount as of the test date. Using the quantitative assessment, the Partnership evaluated its licenses on an aggregate basis using a direct value approach. The direct value approach estimates fair value using a discounted cash flow analysis to estimate what a marketplace participant would be willing to pay to purchase the aggregated wireless licenses as of the valuation date. If the fair value of the aggregated wireless licenses is less than the aggregated carrying amount of the licenses, an impairment is recognized. The Partnership’s annual quantitative impairment test for 2012 indicated that the fair value significantly exceeded the carrying value and, therefore, did not result in an impairment. The Partnership evaluated its wireless licenses for potential impairment as of December 15, 2013 and 2012.

 

Interest expense incurred while qualifying activities are performed to ready wireless licenses for their intended use is capitalized as part of wireless licenses. The capitalization period ends when a license is substantially complete and the license is ready for its intended use.

 

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**Goodwill**

 

Goodwill is the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. Impairment testing for goodwill is performed annually in the fourth fiscal quarter or more frequently if impairment indicators are present. The Partnership has the option to perform a qualitative assessment to determine if the fair value of the entity is less than its carrying value. However, the Partnership may elect to perform an impairment test even if no indications of a potential impairment exist. The impairment test for goodwill uses a two-step approach, which is performed for the Partnership’s one reporting unit. Step one compares the fair value of the reporting unit (calculated using a market approach and/or a discounted cash flow method) to its carrying value. If the carrying value exceeds the fair value, there is a potential impairment and step two must be performed. Step two compares the carrying value of the reporting unit’s goodwill to its implied fair value (i.e., fair value of reporting unit less the fair value of the unit’s assets and liabilities, including identifiable intangible assets). If the implied fair value of goodwill is less than the carrying amount of goodwill, an impairment is recognized. The Partnership completed its goodwill impairment test as of December 15, 2013 and 2012. The Partnership’s annual impairment tests for 2013 and 2012 indicated that the fair value significantly exceeded the carrying value and, therefore, did not result in an impairment.

 

**Fair Value Measurements**

 

Fair value of financial and non-financial assets and liabilities is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs used in the methodologies of measuring fair value for assets and liabilities, is as follows:

 

Level 1 – Quoted prices in active markets for identical assets or liabilities

Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities

Level 3 – No observable pricing inputs in the market

 

Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. The Partnership’s assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

 

See Note 4 for further details on the Partnership’s fair value measurements.

 

**Foreign Currency Translation**

 

The functional currency for all of the Partnership’s operations is the U.S. dollar. However, the Partnership has transactions denominated in a currency other than the local currency, principally debt denominated in Euros and British Pounds Sterling. Gains and losses resulting from exchange-rate changes in transactions denominated in a foreign currency are included in earnings.

 

**Derivative Instruments**

 

The Partnership uses derivatives from time to time to manage the Partnership’s exposure to fluctuations in the cash flows of certain transactions. The Partnership measures all derivatives at fair value and recognizes them as either assets or liabilities on its consolidated balance sheets. The Partnership’s derivative instruments are valued primarily using models based on readily observable market parameters for all substantial terms of the Partnership’s derivative contracts and thus are classified as Level 2. Changes in the fair values of derivative instruments not qualifying as hedges or any ineffective portion of hedges are recognized in earnings in the current period. Changes in the fair values of derivative instruments used effectively as fair value hedges are recognized in earnings, along with changes in the fair value of the hedged item. Changes in the fair value of the effective portions of cash flow hedges are reported in Other comprehensive income (loss) and recognized in earnings when the hedged item is recognized in earnings.

 

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**Employee Benefit Plans**

 

The Partnership maintains a defined contribution plan, the Verizon Wireless Savings and Retirement Plan (the Savings and Retirement Plan), for the benefit of its employees. The Savings and Retirement Plan includes both an employee savings and profit sharing component. Under the employee savings component, employees may contribute a percentage of eligible compensation to the Savings and Retirement Plan. Up to the first 6% of an employee’s eligible compensation contributed to the Savings and Retirement Plan is matched 100% by the Partnership. Under the profit sharing component, the Partnership may elect, at the sole discretion of the Human Resources Committee of the Board of Representatives, to contribute an additional amount in the form of a profit sharing contribution to the accounts of eligible employees (see Note 9).

 

**Long-Term Incentive Compensation**

 

The Partnership measures compensation expense for all stock-based compensation awards made to employees and directors based on estimated fair values (see Note 6).

 

**Income Taxes**

 

The Partnership is not a taxable entity for federal income tax purposes. Any federal taxable income or loss is included in the respective partners’ consolidated federal return. Certain states, however, impose taxes at the partnership level and such taxes are the responsibility of the Partnership and are included in the Partnership’s tax provision. The consolidated financial statements also include provisions for federal and state income taxes, prepared on a stand-alone basis, for all corporate entities within the Partnership. Deferred income taxes are recorded using enacted tax law and rates for the years in which the taxes are expected to be paid or refunds received. Deferred income taxes are provided for items when there is a temporary difference in recording such items for financial reporting and income tax reporting.

 

The Partnership uses a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return. The first step is recognition: the Partnership determines whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, the Partnership presumes that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. The second step is measurement: a tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in one or more of the following: an increase in a liability for income taxes payable, a reduction of an income tax refund receivable, a reduction in a deferred tax asset, or an increase in a deferred tax liability.

 

The Partnership recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense.

 

**Concentrations**

 

The Partnership relies on local and long-distance telephone companies, some of whom are related parties (see Note 11), and other companies to provide certain communication services. Although management believes alternative telecommunications facilities could be found in a timely manner, any disruption of these services could potentially have an adverse impact on the Partnership’s business, results of operations and financial condition.

 

No single customer receivable is large enough to present a significant financial risk to the Partnership.

 

**Recently Adopted Accounting Standards**

 

During the first quarter of 2013, the Partnership adopted the accounting standard update regarding testing of intangible assets for impairment. This standard update allows companies the option to perform a qualitative

 

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assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. An entity is not required to calculate the fair value of an indefinite-lived intangible asset and perform the quantitative impairment test unless the entity determines that it is more likely than not the asset is impaired. The adoption of this standard update did not have an impact on the Partnership’s consolidated financial statements.

 

During the first quarter of 2013, the Partnership adopted the accounting standard update regarding reclassifications out of Accumulated other comprehensive income. This standard update requires companies to report the effect of significant reclassifications out of Accumulated other comprehensive income on the respective line items in the Partnership’s consolidated statements of income if the amount being reclassified is required to be reclassified in its entirety to net income. For other amounts that are not required to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference to other required disclosures that provide additional detail about those amounts. See Note 12 for additional details.

 

During the third quarter of 2013, the Partnership adopted the accounting standard update regarding the ability to use the Federal Funds Effective Swap Rate as a U.S. benchmark interest rate for hedge accounting purposes. Previously the interest rates on direct Treasury obligations of the U.S. government and the London Interbank Offered Rate (LIBOR) were considered to be the only benchmark interest rates. The adoption of this standard update did not have a significant impact on the Partnership’s consolidated financial statements.

 

**Recent Accounting Standards**

 

In July 2013, the accounting standard update relating to the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists was issued. The standard update provides that a liability related to an unrecognized tax benefit should be offset against same jurisdiction deferred tax assets for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. The Partnership will adopt this standard update during the first quarter of 2014. The Partnership is currently evaluating the consolidated balance sheet impact related to this standard update.

 

**2. Acquisitions and Divestitures**

 

**Wireless Transaction**

 

On September 2, 2013, Verizon entered into a stock purchase agreement (the Stock Purchase Agreement) with Vodafone and Vodafone 4 Limited (Seller), pursuant to which Verizon agreed to acquire Vodafone’s indirect 45% interest in the Partnership, (and such interest, the Vodafone Interest) for aggregate consideration of approximately $130 billion.

 

On February 21, 2014, pursuant to the terms and subject to the conditions set forth in the Stock Purchase Agreement, Verizon acquired (the Wireless Transaction) from Seller all of the issued and outstanding capital stock (the Transferred Shares) of Vodafone Americas Finance 1 Inc., a subsidiary of Seller (VF1 Inc.), which indirectly through certain subsidiaries (together with VF1 Inc., the Purchased Entities) owned the Vodafone Interest. In consideration for the Transferred Shares, upon completion of the Wireless Transaction, Verizon (i) paid approximately $58.89 billion in cash, (ii) issued approximately $60.15 billion of Verizon’s common stock, par value $0.10 per share (the Stock Consideration), (iii) issued senior unsecured Verizon notes in an aggregate principal amount of $5.0 billion (the Verizon Notes), (iv) sold Verizon’s indirectly owned 23.1% interest in Vodafone Omnitel N.V. (Omnitel, and such interest, the Omnitel Interest), valued at $3.5 billion and (v) provided other consideration of approximately $2.5 billion. As a result of the Wireless Transaction, Verizon issued approximately 1.27 billion shares. The total cash paid to Vodafone and the other costs of the Wireless Transaction, including financing, legal and bank fees, were financed through the incurrence of third-party indebtedness.

 

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**Spectrum License Transactions**

 

Since 2012, the Partnership has entered into several strategic spectrum transactions including:

 

·                  During the third quarter of 2012, after receiving the required regulatory approvals, the Partnership completed the following previously announced transactions in which the Partnership acquired wireless spectrum that will be used to deploy additional 4G LTE capacity:

 

·                  The Partnership acquired Advanced Wireless Services (AWS) spectrum in separate transactions with SpectrumCo, LLC (SpectrumCo) and Cox TMI Wireless, LLC for which it paid an aggregate of $3.9 billion at the time of the closings. The Partnership has also recorded a liability of $0.4 billion related to a three-year service obligation to SpectrumCo’s members pursuant to commercial agreements executed concurrently with the SpectrumCo transaction.

 

·                  The Partnership completed license purchase and exchange transactions with Leap Wireless, Savary Island Wireless, which is majority owned by Leap Wireless, and a subsidiary of T-Mobile USA, Inc. (T-Mobile USA). As a result of these transactions, the Partnership received an aggregate $2.6 billion of AWS and Personal Communication Services (PCS) licenses at fair value and net cash proceeds of $0.2 billion, transferred certain AWS licenses to T-Mobile USA and a 700 megahertz (MHz) lower A block license to Leap Wireless, and recorded an immaterial gain.

 

·                  During the first quarter of 2013, the Partnership completed license exchange transactions with T-Mobile License LLC and Cricket License Company, LLC, a subsidiary of Leap Wireless, to exchange certain AWS licenses. These non-cash exchanges include a number of intra-market swaps that the Partnership expects will enable it to make more efficient use of the AWS band. As a result of these exchanges, the Partnership received an aggregate $0.5 billion of AWS licenses at fair value and recorded an immaterial gain.

 

·                  During the third quarter of 2013, after receiving the required regulatory approvals, the Partnership sold 39 lower 700 MHz B block spectrum licenses to AT&T Inc. (AT&T) in exchange for a payment of $1.9 billion and the transfer by AT&T to the Partnership of AWS (10 MHz) licenses in certain markets in the western United States. The Partnership also sold certain lower 700 MHz B block spectrum licenses to an investment firm for a payment of $0.2 billion. As a result, the Partnership received $0.5 billion of AWS licenses at fair value and the Partnership recorded a pre-tax gain of approximately $0.4 billion in Selling, general and administrative expense on its consolidated statement of income for the year ended December 31, 2013.

 

·                  During the fourth quarter of 2013, the Partnership entered into license exchange agreements with T-Mobile USA to exchange certain AWS and PCS licenses. These non-cash exchanges, which are subject to approval by the FCC and other customary closing conditions, are expected to close in the first half of 2014. The exchange includes a number of swaps that the Partnership expects will result in more efficient use of the AWS and PCS bands. As a result of these agreements, $0.9 billion of Wireless licenses are classified as held for sale and included in Prepaid expenses and other current assets on the Partnership’s consolidated balance sheet at December 31, 2013. Upon completion of the transaction, the Partnership expects to record an immaterial gain.

 

·                  Subsequent to the transaction with T-Mobile USA in the fourth quarter of 2013, on January 6, 2014, the Partnership announced two agreements with T-Mobile USA with respect to its remaining 700 MHz A block spectrum licenses. Under one agreement, the Partnership will sell certain of these licenses to T-Mobile USA in exchange for cash consideration of approximately $2.4 billion, and under the second agreement the Partnership will exchange the remainder of these licenses for AWS and PCS spectrum licenses. These transactions are subject to the approval of the FCC as well as other customary closing conditions. These transactions are expected to close in the middle of 2014.

 

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**Other**

 

During 2013, the Partnership acquired various other wireless licenses and markets for cash consideration that was not significant. Additionally, the Partnership obtained control of previously unconsolidated wireless partnerships, which were previously accounted for under the equity method and are now consolidated, which resulted in an immaterial gain. The Partnership recorded $0.2 billion of goodwill as a result of these transactions.

 

During 2012, the Partnership acquired various other wireless licenses and markets for cash consideration that was not significant and recorded $0.2 billion of goodwill as a result of these transactions.

 

**3. Wireless Licenses, Goodwill and Other Intangibles, Net**

 

**Wireless Licenses**

 

Changes in the carrying amount of Wireless licenses are as follows:

 
| (dollars in millions)            | ** ** | ** ** | ** ** |
|--------------------------------------------|------------|------------|------------|
| Balance as of January 1, 2012         |       | $          | 73,097     |   |
| Acquisitions (Note 2)                      |       | 4,544      |       |
| Capitalized interest on wireless licenses  |       | 205        |       |
| Reclassifications, adjustments and other   |       | (204       | )          |
| Balance as of December 31, 2012       |       | 77,642     |       |
| Acquisitions (Note 2)                      | ** ** | **579**    | ** ** |
| Dispositions (Note 2)                      | ** ** | **(2,195** | **)**      |
| Capitalized interest on wireless licenses  | ** ** | **540**    | ** ** |
| Reclassifications, adjustments and other   | ** ** | **(770**   | **)**      |
| **Balance as of December 31,   2013** | ** ** | **$**      | **75,796** | ** ** |

 

Reclassifications, adjustments and other includes $0.9 billion of Wireless licenses that are classified as held for sale and included in Prepaid expenses and other current assets on the Partnership’s consolidated balance sheet at December 31, 2013 as well as the exchanges of wireless licenses in 2013 and 2012. See Note 2 for additional details.

 

At December 31, 2013 and 2012, approximately $7.7 billion and $7.3 billion, respectively, of wireless licenses were under development for commercial service for which the Partnership was capitalizing interest costs.

 

The average remaining renewal period of the Partnership’s wireless license portfolio was 5.1 years as of December 31, 2013. See Note 1 for additional details.

 

**Goodwill**

 

Changes in the carrying amount of Goodwill are as follows:

 
| (dollars in millions)       |       |    |       |
|---------------------------------------|------------|---------|------------|
| Balance at January 1, 2012       |       | $       | 17,528     |   |
| Acquisitions (Note 2)                 |       | 209     |       |
| Balance at December 31, 2012     |       | 17,737  |       |
| Acquisitions (Note 2)                 | ** ** | **204** | ** ** |
| **Balance at December 31, 2013** | ** ** | **$**   | **17,941** | ** ** |

 

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**Other Intangibles, net**

 

Other intangibles, net are included in Other intangibles and other assets, net and consist of the following:

 
| ** **                        | ** ** | **At December 31, 2013** | ** ** | At December 31, 2012 | ** ** |
|-----------------------------------|------------|-----------------------------------------|------------|-------------------------------------|------------|
| ** **                        | ** ** | **Gross**                               | ** ** | **Accumulated**                     | ** ** | **Net** | ** ** | Gross |   | Accumulated |   | Net | ** ** |
| (dollars in millions)   | ** ** | **Amount**                              | ** ** | **Amortization**                    | ** ** | **Amout** | ** ** | Amount |   | Amortization |   | Amount | ** ** |
| Customer lists (6 to 8 years)     | ** ** | **$**                                   | **2,232**  | ** **                          | **$**      | **(1,803** | **)** | **$** | **   429** |   | $ | 2,187 |   | $ | (1,550 | ) | $ | 637 |   |
| Non-network internal-use software |       |                                    |       |                                |       |   |   |   |   |   |   |   |   |
| (5 to 7 years)                    | ** ** | **1,897**                               | ** ** | **(802**                            | **)**      | **1,095** |   | 1,462 |   | (589 | ) | 873 |   |
| Other (2 to 3 years)              | ** ** | **7**                                   | ** ** | **(1**                              | **)**      | **6** |   | 26 |   | (21 | ) | 5 |   |
| **Total**                         | ** ** | **$**                                   | **4,136**  | ** **                          | **$**      | **(2,606** | **)** | **$** | **1,530** |   | $ | 3,675 |   | $ | (2,160 | ) | $ | 1,515 |   |

 

The amortization expense for other intangible assets was as follows:

 
| **Years** | ** ** | (dollars in millions) | ** ** |
|-----------|------------|---------------------------------|------------|
| **2013**  | ** ** | **$ 476**                  | ** ** |
| 2012      |       | 465                             |       |
| 2011      |       | 513                             |       |

 

Estimated annual amortization expense for other intangible assets is as follows:

 
| Years |   | (dollars in millions) |   |
|-------|--------|---------------------------------|--------|
| 2014  |   | $ 434                      |   |
| 2015  |   | 360                             |   |
| 2016  |   | 279                             |   |
| 2017  |   | 192                             |   |
| 2018  |   | 146                             |   |

 

**4. Fair Value Measurements and Financial Instruments**

 

The following table presents the balances of assets measured at fair value on a recurring basis as of December 31, 2013:

 
| (dollars in millions)                                | ** ** | **Level 1** | ** ** | **Level 2** | ** ** | **Level 3** | ** ** | **Total** | ** ** |
|----------------------------------------------------------------|------------|------------------|------------|------------------|------------|------------------|------------|-----------|------------|
| **Assets:**                                                    |       |             |       |             |       |             |       |      |       |
| Other intangibles and other assets, net:                       |       |             |       |             |       |             |       |      |       |
| Derivative contracts—Cross currency swaps   (Non-current) |       | $                | —     |             | $          | 166              |       | $         | —     |   | $ | 166 |   |
|                                                                |            |                  |            |                  |            |                  |            |           |            |  |  |  |  |

 

Derivative contracts are valued using models based on readily observable market parameters for all substantial terms of the Partnership’s derivative contracts and thus are classified within Level 2. The Partnership uses mid-market pricing for fair value measurements of its derivative instruments. The Partnership’s derivative instruments are recorded on a gross basis.

 

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The Partnership recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers within the fair value hierarchy during 2013.

 

*Fair Value of Short-term and Long-term Debt*

 

The fair value of the Partnership’s debt is determined using various methods, including quoted market prices for identical terms and maturities, which is a Level 1 measurement, as well as quoted prices for similar terms and maturities in inactive markets and future cash flows discounted at current rates, which are Level 2 measurements. The fair value of the Partnership’s short-term and long-term debt, excluding capital leases, was as follows:

 
| ** **                                          | ** ** | **At December 31, 2013** | ** ** | At December 31, 2012 | ** ** |
|-----------------------------------------------------|------------|-----------------------------------------|------------|-------------------------------------|------------|
| ** **                                          | ** ** | **Carrying**                            | ** ** | **Fair**                            | ** ** | Carrying |   | Fair | ** ** |
| (dollars in millions)                     | ** ** | **Value**                               | ** ** | **Value**                           | ** ** | Value |   | Value | ** ** |
| Short- and long-term debt, excluding capital leases | ** ** | **$**                                   | **5,211**  | ** **                          | **$**      | **6,386** |   | $ | 10,105 |   | $ | 12,235 |   |
|                                                     |            |                                         |            |                                     |            |  |  |  |  |  |  |  |  |

 

**Derivative Instruments**

 

The Partnership has entered into derivative transactions to manage its exposure to fluctuations in foreign currency exchange rates and interest rates. The Partnership employs risk management strategies which may include the use of a variety of derivatives including cross currency swaps agreements. The Partnership does not hold derivatives for trading purposes.

 

*Cross Currency Swaps*

 

The Partnership previously entered into cross currency swaps designated as cash flow hedges to exchange approximately $1.6 billion of British Pound Sterling and Euro-denominated debt into U.S. dollars and to fix its future interest and principal payments in U.S. dollars, as well as to mitigate the impact of foreign currency transaction gains or losses. A portion of the gains and losses recognized in Other comprehensive income (loss) was reclassified to Other income, net to offset the related pretax foreign currency transaction gain or loss on the underlying debt obligations. The fair value of the outstanding swaps was not material at December 31, 2013 or December 31, 2012. During 2013 and 2012, the gains with respect to these swaps were not material.

 

**Concentrations of Credit Risk**

 

Financial instruments that subject us to concentrations of credit risk consist primarily of temporary cash investments, trade receivables and derivative contracts. The Partnership’s policy is to deposit its temporary cash investments with major financial institutions. Counterparties to the Partnership’s derivative contracts are also major financial institutions. The financial institutions have all been accorded high ratings by primary rating agencies. The Partnership limits the dollar amount of contracts entered into with any one financial institution and monitors its counterparties’ credit ratings. The Partnership generally does not give or receive collateral on swap agreements due to its credit rating and those of its counterparties. While the Partnership may be exposed to credit losses due to the nonperformance of its counterparties, the Partnership considers the risk remote and does not expect the settlement of these transactions to have a material effect on its results of operations or financial condition.

 

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**5. Debt**

 

Changes to debt during 2013 are as follows:

 
| ** **                                                         | ** ** | **Debt Maturing**        | ** ** | **Long-term** | ** ** | ** ** | ** ** |
|--------------------------------------------------------------------|------------|-------------------------------|------------|---------------|------------|------------|------------|
| (dollars in millions)                                    | ** ** | **within One Year** | ** ** | **Debt**      | ** ** | **Total**  | ** ** |
| Balance at January 1, 2013                                    | ** ** | **$**                         | **1,448**  | ** **    | **$**      | **8,665**  | ** ** | **$10,113** | ** ** |
| Repayments of long-term borrowings and capital   lease obligations | ** ** | **(1,460**                    | **)**      | **(3,500**    | **)**      | **(4,960** | **)**      |
| Other                                                              | ** ** | **53**                        | ** ** | **66**        | ** ** | **119**    | ** ** |
| **Balance at December 31, 2013**                              | ** ** | **$**                         | **41**     | ** **    | **$**      | **5,231**  | ** ** | **$5,272** | ** ** |

 

Outstanding long-term debt obligations are as follows:

 
| ** **                                                                                 | ** ** | ** **                     | ** ** | ** **      | ** ** | (dollars in millions) | ** ** |
|--------------------------------------------------------------------------------------------|------------|--------------------------------|------------|-----------------|------------|---------------------------------|------------|
| **At December 31,**                                                              | ** ** | **Interest Rates %** | ** ** | **Maturities**  | ** ** | **2013**                        | ** ** | 2012 | ** ** |
| Notes payable                                                                              | ** ** | **8.5 - 8.88**                 | ** ** | **2015 - 2018** | ** ** | **$**                           | **3,931**  |   | $ | 8,635 |   |
| Alltel assumed notes                                                                       | ** ** | **6.80 - 7.88**                | ** ** | **2016 - 2032** | ** ** | **1,300**                       |       | 1,500 |   |
| Capital lease obligations (average rate of 4.4% and   1.2% in 2013 and 2012, respectively) | ** ** | ** **                     | ** ** | ** **      | ** ** | **61**                          |       | 8 |   |
| Unamortized discount, net of premium                                                       | ** ** | ** **                     | ** ** | ** **      | ** ** | **(20**                         | **)**      | (30 | **)** |
| Total long-term debt, including current maturities                                         | ** ** | ** **                     | ** ** | ** **      | ** ** | **5,272**                       |       | 10,113 |   |
| Less long-term debt maturing within one year                                               | ** ** | ** **                     | ** ** | ** **      | ** ** | **41**                          |       | 1,448 |   |
| Total long-term debt                                                                       | ** ** | ** **                     | ** ** | ** **      | ** ** | **$**                           | **5,231**  |   | $ |  8,665 |   |

 

Verizon Wireless Capital LLC, a wholly-owned subsidiary of the Partnership, is a limited liability company formed under the laws of Delaware on December 7, 2001 as a special purpose finance subsidiary to facilitate the offering of debt securities of the Partnership by acting as co-issuer. Other than the financing activities as a co-issuer of the Partnership’s indebtedness, Verizon Wireless Capital LLC has no material assets, operations or revenues. The Partnership is jointly and severally liable with Verizon Wireless Capital LLC for co-issued notes.

 

Discounts, premiums, and capitalized debt issuance costs are amortized using the effective interest method.

 

*2013*

 

During November 2013, $1.25 billion of 7.375% Notes and $0.2 billion of 6.50% Notes matured and were repaid. Also during November 2013, the Partnership redeemed $3.5 billion of 5.55% Notes, due February 1, 2014 at a redemption price of 101% of the principal amount of the notes. Any accrued and unpaid interest was paid to the date of redemption.

 

*2012*

 

During February 2012, $0.8 billion of 5.25% Notes matured and were repaid. During July 2012, $0.8 billion of 7.0% Notes matured and were repaid.

 

*Term Notes Payable to Affiliate*

 

Under the terms of a fixed rate promissory note with Verizon Financial Services LLC (VFSL), a wholly-owned subsidiary of Verizon, the Partnership may borrow, repay and re-borrow up to a maximum principal amount of $0.8 billion. During July 2013, the maturity date of this note was extended to August 1, 2016 and the interest rate decreased from 5.8% to 4.5% per annum. As of December 31, 2013, outstanding borrowings under this note, included within Other current liabilities on the consolidated balance sheet, were immaterial.

 

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*Debt Covenants*

 

As of December 31, 2013, the Partnership is in compliance with all of its debt covenants.

 

*Maturities of Long-Term Debt*

Maturities of long-term debt outstanding at December 31, 2013 are as follows:

 
| **Years**  | ** ** | (dollars in millions) | ** ** |
|------------|------------|---------------------------------|------------|
| 2014       |       |                            | $          | 41 |   |
| 2015       |       |                            | 699        |   |
| 2016       |       |                            | 299        |   |
| 2017       |       |                            | 7          |   |
| 2018       |       |                            | 3,226      |   |
| Thereafter |       |                            | 1,000      |   |
|            |            |                                 |            |  |  |

 

**6. Long-Term Incentive Plan**

 

*Verizon Wireless Long-Term Incentive Plan (Wireless Plan)*

 

The Wireless Plan provides compensation opportunities to eligible employees and other participating affiliates of the Partnership. The plan provides rewards that are tied to the long-term performance of the Partnership. Under the Wireless Plan, Value Appreciation Rights (VARs) were granted to eligible employees. As of December 31, 2013, all VARs were fully vested. The Partnership has not granted new VARs since 2004.

 

VARs reflect the change in the value of the Partnership, as defined in the Wireless Plan. Similar to stock options, the valuation is determined using a Black-Scholes model. Once VARs become vested, employees can exercise their VARs and receive a payment that is equal to the difference between the VAR price on the date of grant and the VAR price on the date of exercise, less applicable taxes. All outstanding VARs are fully exercisable and have a maximum term of 10 years. All VARs were granted at a price equal to the estimated fair value of the Partnership, as defined in the Wireless Plan, at the date of the grant.

 

The Partnership employs the income approach, a standard valuation technique, to arrive at the fair value of the Partnership on a quarterly basis using publicly available information. The income approach uses future net cash flows discounted at market rates of return to arrive at an estimate of fair value, as defined in the plan.

 

The following table summarizes the assumptions used in the Black-Scholes model for the year ended December 31, 2013:

 

|                     | ** ** | **2013**                    |
|--------------------------|------------|-----------------------------|
|                     | ** ** | **End of Period** |
| Risk-free rate           | ** ** | **0.11%**                   |
| Expected term (in years) | ** ** | **0.12**                    |
| Expected volatility      | ** ** | **43.27%**                  |

 

The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the measurement date. Expected volatility was based on a blend of the historical and implied volatility of publicly traded peer companies for a period equal to the VARs expected life ending on the measurement date.

 

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For the years ended December 31, 2013, 2012 and 2011, the intrinsic value of VARs exercised during the period was $0.1 billion, respectively.

 

Cash paid to settle VARs for the years ended December 31, 2013, 2012 and 2011 was $0.1 billion, respectively.

 

Awards outstanding at December 31, 2013, 2012 and 2011 under the Wireless Plan are summarized as follows:

 
| ** **                                | ** ** | ** **      | ** ** | **Weighted-Average**    | ** ** | ** **      | ** ** |
|-------------------------------------------|------------|-----------------|------------|-------------------------|------------|-----------------|------------|
| ** **                                | ** ** | ** **      | ** ** | **Exercise Price** | ** ** | **Vested**      | ** ** |
| (shares in thousands)           | ** ** | **VARs****(a)** | ** ** | **of VARs****(a)** | ** ** | **VARs****(a)** | ** ** |
| Outstanding, January 1, 2011         |       | 11,569          |       | $                       | 13.11      |            | 11,569     |   |
| Exercised                                 |       | (3,303          | )          | 14.87                   |       |            |       |
| Cancelled/Forfeited                       |       | (52             | )          | 14.74                   |       |            |       |
| Outstanding, December 31, 2011       |       | 8,214           |       | 12.39                   |       | 8,214           |       |
| Exercised                                 |       | (3,427          | )          | 10.30                   |       |            |       |
| Cancelled/Forfeited                       |       | (21             | )          | 11.10                   |       |            |       |
| Outstanding, December 31, 2012       |       | 4,766           |       | 13.89                   |       | 4,766           |       |
| **Exercised**                             | ** ** | **(1,916**      | **)**      | **13.89**               |       |            |       |
| **Cancelled/Forfeited**                   | ** ** | **(3**          | **)**      | **13.89**               |       |            |       |
| **Outstanding, December 31,   2013** | ** ** | **2,847**       | ** ** | **$**                   | **13.89**  | ** **      | **2,847**  | ** ** |

 

(a)                 The weighted average exercise price is presented in dollars; VARs are presented in units. At December 31, 2013 all outstanding VARs had an exercise price of $13.89 and substantially all of the VARs expire in March 2014.

 

As of December 31, 2013, the aggregate intrinsic value of VARs outstanding and vested was $0.1 billion.

 

*Verizon Communications Inc. Long-Term Incentive Plan*

 

The Verizon Communications Inc. Long-Term Incentive Plan (the Verizon Plan) permits the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance stock units and other awards to Partnership employees. The maximum number of shares available for awards from the Verizon Plan is 119.6 million shares.

 

Restricted Stock Units

 

The Verizon Plan provides for grants of Restricted Stock Units (RSUs) that generally vest at the end of the third year after the grant. The RSUs are classified as equity awards because the RSUs will be paid in Verizon common stock upon vesting. The RSU equity awards are measured using the grant date fair value of Verizon common stock and are not remeasured at the end of each reporting period. Dividend equivalent units are also paid to participants at the time the RSU award is paid, and in the same proportion as the RSU award.

 

The Partnership had approximately 4.1 million and 4.7 million RSUs outstanding under the Verizon Plan as of December 31, 2013 and 2012, respectively.

 

Performance Stock Units

 

The Verizon Plan also provides for grants of Performance Stock Units (PSUs) that generally vest at the end of the third year after the grant. As defined by the Verizon Plan, the Human Resources Committee of the Board of Directors of Verizon determines the number of PSUs a participant earns based on the extent to which the corresponding performance goals have been achieved over the three-year performance cycle. The PSUs are classified as liability awards because the PSU awards are paid in cash upon vesting. The PSU award liability is measured at its fair value at the end of each reporting period and, therefore, will fluctuate based on the price of

 

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Verizon common stock as well as performance relative to the targets. Dividend equivalent units are also paid to participants at the time that the PSU award is determined and paid, and in the same proportion as the PSU award.

 

The Partnership had approximately 6.0 million and 7.0 million PSUs outstanding under the Verizon Plans as of December 31, 2013 and 2012, respectively.

 

As of December 31, 2013, unrecognized compensation expense related to the unvested portion of the Partnership’s RSUs and PSUs was approximately $0.1 billion and is expected to be recognized over a weighted-average period of approximately two years.

 

*Stock-Based Compensation Expense*

 

For each of the years ended December 31, 2013, 2012 and 2011, the Partnership recognized compensation expense for stock based compensation related to VARs, RSUs and PSUs of $0.2 billion, $0.3 billion and $0.2 billion, respectively.

 

**7. Income Taxes**

 

*Provision for Income Taxes*

 

The provision for income taxes consists of the following:

 
| ** **                              | ** ** | (dollars in millions) | ** ** |
|-----------------------------------------|------------|---------------------------------|------------|
| Years Ended December 31, | ** ** | **2013**                        | ** ** | 2012 |   | 2011 | ** ** |
| Current tax provision:                  |       |                            |       |   |   |   |   |
| Federal                                 | ** ** | **$**                           | **47**     |   | $ | 106 |   | $ | 476 |   |
| State and local                         | ** ** | **31**                          |       | (28 | ) | 103 |   |
|                                    | ** ** | **78**                          |       | 78 |   | 579 |   |
| Deferred tax provision:                 |       |                            |       |   |   |   |   |
| Federal                                 | ** ** | **60**                          |       | 35 |   | 369 |   |
| State and local                         | ** ** | **12**                          |       | 88 |   | (1 | ) |
|                                    | ** ** | **72**                          |       | 123 |   | 368 |   |
| Provision for income taxes              | ** ** | **$**                           | **150**    |   | $ | 201 |   | $ | 947 |   |

 

A reconciliation of the income tax provision computed at the statutory tax rate to the Partnership’s effective tax rate is as follows:

 
| ** **                                                        | ** ** | (dollars in millions) |       |
|-------------------------------------------------------------------|------------|---------------------------------|------------|
| Years Ended December 31,                           | ** ** | **2013**                        |       | 2012 |   | 2011 |   |
| Income tax provision at the statutory rate                        | ** ** |                            | **$**      | **9,270** |   |   | $ | 7,481 |   |   | $ | 6,264 |   |
| State and local income taxes, net of U.S. federal   benefit       | ** ** |                            | **45**     |   |   | 47 |   |   | 57 |   |
| Other                                                             | ** ** |                            | **(28**    | **)** |   | 3 |   |   | (7 | ) |
| Partnership income not subject to federal or state   income taxes | ** ** |                            | **(9,137** | **)** |   | (7,330 | ) |   | (5,367 | ) |
| Provision for income tax                                          | ** ** |                            | **$**      | **150** |   |   | $ | 201 |   |   | $ | 947 |   |

 

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Deferred taxes arise because of differences in the book and tax bases of certain assets and liabilities. Significant components of the Partnership’s deferred taxes are shown in the following table:

 
|                                   | ** ** | ** ** | (dollars in millions) | ** ** |
|----------------------------------------|------------|------------|---------------------------------|------------|
| At December 31,              | ** ** | **2013**   | ** **                      |       | 2012 | ** ** |
| Deferred tax assets:                   |       |       |                            |       |   |   |   |
| Net operating loss carryforward        | ** ** | **$**      | **165**                         |       |   | $ | 122 |   |   |
| Valuation allowance                    | ** ** | **(89**    | **)**                           |       | (55 | ) |   |
| Other                                  | ** ** | **207**    |                            |       | 134 |   |   |
|                                   |       |       |                            |       |   |   |   |
| Total deferred tax assets              | ** ** | **283**    |                            |       | 201 |   |   |
|                                   |       |       |                            |       |   |   |   |
| Deferred tax liabilities:              |       |       |                            |       |   |   |   |
| Intangible assets                      | ** ** | **9,457**  |                            |       | 9,355 |   |   |
| Plant, property and equipment          | ** ** | **1,407**  |                            |       | 1,445 |   |   |
| Other                                  | ** ** | **354**    |                            |       | 264 |   |   |
|                                   |       |       |                            |       |   |   |   |
| Total deferred tax liabilities         | ** ** | **11,218** |                            |       | 11,064 |   |   |
|                                   |       |       |                            |       |   |   |   |
| Net deferred tax asset-current(a)      | ** ** | **66**     |                            |       | 76 |   |   |
| Net deferred tax liability-non-current | ** ** | **$**      | **11,001**                      |       |   | $ | 10,939 |   |   |

 

(a)              Included in prepaid expenses and other current assets in the accompanying consolidated balance sheets.

 

At December 31, 2013, the Partnership had state net operating loss carryforwards of $3.6 billion. These net operating loss carryforwards expire at various dates principally from December 31, 2018 through December 31, 2033.

 

*Unrecognized Tax Benefits*

 

A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows:

 
|                                                           |       |       |   | (dollars in millions) |   |
|----------------------------------------------------------------|------------|------------|--------|---------------------------------|--------|
| ** **                                                     | ** ** | **2013**   |   | 2012                            |   | 2011 |   |
| Balance as of January 1                                   | ** ** | **$306**   |   | $267                            |   | $ | 393 |   |
| Additions based on tax positions related to the   current year | ** ** | **16**     |   | 13                              |   | 10 |   |
| Additions for tax positions of prior years                     | ** ** | **9**      |   | 72                              |   | 53 |   |
| Reductions for tax positions of prior years                    | ** ** | **(48**    | **)**  | (49                             | )      | (187) |   |
| Reductions due to lapse of applicable statute of   limitations | ** ** | **(73**    | **)**  | —                          |   | (2) |   |
| Settlements                                                    | ** ** | **—** |   | 3                               |   | — |   |
| **Balance as of December 31**                             | ** ** | **$210**   |   | $306                            |   | $ | 267 |   |

 

Included in the total unrecognized tax benefits balance is $0.1 billion, $0.2 billion and $0.2 billion as of December 31, 2013, 2012 and 2011, respectively, that, if recognized, would favorably affect the effective tax rate. The remaining unrecognized tax benefits relate to temporary items that would not affect the effective tax rate.

 

The after-tax accrual for the payment of interest and penalties in the balance sheet relating to the unrecognized tax benefits reflected above was not significant for the years ended December 31, 2013, 2012 and 2011.

 

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The net after-tax benefits (expenses) related to interest in the provision for income taxes were not significant for the years ended December 31, 2013, 2012 and 2011.

 

The Partnership or its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and local jurisdictions. The Partnership is generally no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2003. The Internal Revenue Service (IRS) is currently examining some of the Partnership’s subsidiaries. As a result of the anticipated resolution of various income tax matters within the next twelve months, the Partnership believes that it is reasonably possible that the unrecognized tax benefits may be adjusted. An estimate of the amount of the change attributable to any such settlement cannot be made until issues are further developed or examinations close.

 

**8. Leases**

 

*As Lessee*

 

The Partnership has entered into operating leases for facilities and equipment used in its operations. Lease contracts contain renewal options that include rent expense adjustments based on the Consumer Price Index as well as annual and end-of-lease term adjustments. Rent expense is recorded on a straight-line basis over the noncancelable lease term which is generally determined to be the initial lease term. Total rent expense under operating leases amounted to $2.0 billion in 2013, $1.8 billion in 2012 and $1.7 billion in 2011.

 

The aggregate future minimum rental commitments under noncancelable operating leases, excluding renewal options that are not reasonably assured for the periods shown at December 31, 2013, are as follows:

 
| (dollars in millions)  | ** ** | **Operating**          | ** ** |
|----------------------------------|------------|------------------------|------------|
| **Years**                        | ** ** | **Leases  ** | ** ** |
| 2014                             |       | $                      | 1,689      |   |
| 2015                             |       | 1,518                  |       |
| 2016                             |       | 1,290                  |       |
| 2017                             |       | 1,043                  |       |
| 2018                             |       | 822                    |       |
| Thereafter                       |       | 2,974                  |       |
| Total minimum rental commitments |       | $                      | 9,336      |   |

 

**9. Supplementary Financial Information**

 

*Supplementary Balance Sheet Information*

 
| ** **                            | ** ** | **At December 31,** |
|---------------------------------------|------------|-------------------------------|
| (dollars in millions)       | ** ** | **2013**                      | ** ** | 2012 | ** ** |
| **Receivables, Net:**                 |       |                          |   |   |   |
| Accounts receivable                   | ** ** | **$6,228**                    |   | $5,848 |   |
| Other receivables                     | ** ** | **1,067**                     |   | 864 |   |
| Unbilled revenue                      | ** ** | **308**                       |   | 295 |   |
|                                  | ** ** | **7,603**                     |   | 7,007 |   |
|                                  | ** ** | ** **                    | ** ** |   |   |
| Less: allowance for doubtful accounts | ** ** | **(399**                      | **)** | (350 | ) |
| *Receivables, net*                    | ** ** | **$7,204**                    |   | $6,657 |   |

 

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|                                      |       |                   | (dollars in millions) |
|-------------------------------------------|------------|------------------------|---------------------------------|
| **At December 31,**             | ** ** | **Lives (years)** | ** **                      | **2013** | ** ** | 2012 | ** ** |
| **Plant, Property and Equipment,   Net:** |       |                   |                            |   |   |   |   |
| Land                                      |       | —                 | ** **                      | **$** | **244** |   | $ | 244 |   |
| Buildings                                 |       | 20-45                  | ** **                      | **11,742** |   | 10,855 |   |
| Wireless plant and equipment              |       | 3-15                   | ** **                      | **60,550** |   | 54,867 |   |
| Furniture, fixtures and equipment         |       | 3-10                   | ** **                      | **3,700** |   | 3,603 |   |
| Leasehold improvements                    |       | 5                      | ** **                      | **4,728** |   | 4,310 |   |
| Construction-in-progress(b)               |       | —                 | ** **                      | **2,283** |   | 2,572 |   |
|                                      |       |                   | ** **                      | **83,247** |   | 76,451 |   |
| Less: accumulated depreciation(c)         |       |                   | ** **                      | **(47,315** | **)** | (41,905 | ) |
| *Plant, property and equipment,   net*(a) |       |                   | ** **                      | **$** | **35,932** |   | $ | 34,546 |   |

 

(a)              Interest costs of $0.1 billion and network engineering costs of $0.5 billion and $0.4 billion were capitalized during the years ended December 31, 2013 and 2012, respectively.

 

(b)             Construction-in-progress includes $0.9 billion and $1.2 billion of accrued but unpaid capital expenditures as of December 31, 2013 and 2012, respectively.

 

(c)              Depreciation of plant, property and equipment was $7.7 billion, $7.5 billion and $7.4 billion, for the years ended December 31, 2013, 2012 and 2011, respectively.

 
| ** **                                                | ** ** | (dollars in millions) | ** ** |
|-----------------------------------------------------------|------------|---------------------------------|------------|
| **At December 31,**                             | ** ** | **2013**                        | ** ** | 2012 | ** ** |
| **Accounts Payable and Accrued   Liabilities:**           |       |                            |       |   |   |
| Accounts payable, accrued interest and accrued   expenses | ** ** | **$4,176**                      |       | $4,538 |   |
| Accrued payroll and related employee benefits             | ** ** | **1,347**                       |       | 1,385 |   |
| Taxes payable                                             | ** ** | **651**                         |       | 687 |   |
| Accrued commissions                                       | ** ** | **838**                         |       | 924 |   |
| *Accounts payable and accrued   liabilities*              | ** ** | **$7,012**                      |       | $7,534 |   |

 

*Supplementary Statements of Income Information*

 
| ** **                             | ** ** |     | ** ** | ** ** | (dollars in millions) |
|----------------------------------------|------------|----------|------------|------------|---------------------------------|
| **For   the Years Ended December 31,** | ** ** | **2013** | ** ** | 2012       |                            | 2011 | ** ** | ** ** |
| **Advertising and Promotional Cost:**  | ** ** | **$**    | **1,856**  |       | $                               | 1,826 |   | $ | 1,925 |   |   |
|                                   |       |     |       |       |                            |   |   |   |
| **Employee Benefit Plans:**            |       |     |       |       |                            |   |   |   |
| Matching contribution expense          |       | $        | 251        |       | $                               | 247 |   | $ | 231 |   |   |
| Profit sharing expense                 |       | 152      |       | 60         |                            | 82 |   |   |
|                                   |       |     |       |       |                            |   |   |   |
| **Interest Expense, Net:**             |       |     |       |       |                            |   |   |   |
| Interest expense                       |       | $        | (720       | )          | $                               | (776 | ) | $ | (954 | ) |   |
| Capitalized interest                   |       | 655      |       | 334        |                            | 344 |   |   |
| *Interest expense, net*                |       | $        | (65        | )          | $                               | (442 | ) | $ | (610 | ) |   |
|                                        |            |          |            |            |                                 |  |  |  |  |  |  |  |  |  |

 

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*Supplementary Cash Flows Information*

 
| ** **                                                    | ** ** | ** **                       | ** ** | (dollars in millions) |   |                   | ** **                   |
|---------------------------------------------------------------|------------|----------------------------------|------------|---------------------------------|--------|------------------------|------------------------------|
| **For the Years Ended December 31,** | ** ** | **   2013**       | ** ** | 2012                            |   |    2011 | ** **                   |
| Net cash paid for income taxes                                | ** ** | **$    179** |       | $    245    |   |                   | $    505 |   |
| Interest paid, net of amounts capitalized                     | ** ** | **130**                          |       | 464                             |   |                   | 610                          |   |

 

**10. Noncontrolling Interests**

 

Noncontrolling interests in equity of subsidiaries were as follows:

 
| ** **                      | ** ** | (dollars in millions) | ** ** |
|---------------------------------|------------|---------------------------------|------------|
| **At December 31,**   | ** ** | **2013**                        | ** ** | 2012 | ** ** |
| Verizon Wireless of the East LP | ** ** | **$1,179**                      |       | $1,179 |   |
| Cellular partnerships - various | ** ** | **1,100**                       |       | 865 |   |
| Noncontrolling interests        | ** ** | **$2,279**                      |       | $2,044 |   |

 

*Verizon Wireless of the East LP*

 

Verizon Wireless of the East LP is a limited partnership formed in 2002 and is controlled and managed by the Partnership. Verizon held the noncontrolling interest of Verizon Wireless of the East LP at December 31, 2013 and 2012. As per the agreement between the Partnership and Verizon, Verizon has not been allocated any of the profits of Verizon Wireless of the East LP.

 

**11. Other Transactions with Affiliates**

 

In addition to transactions with Affiliates in Note 5, other significant transactions with Affiliates are summarized as follows:

 
| ** **                                                    | ** ** | ** **                 | ** ** | (dollars in millions)   | ** ** |
|---------------------------------------------------------------|------------|----------------------------|------------|-----------------------------------|------------|
| **For the Years Ended December 31,** | ** ** | **   2013** | ** ** |    2012            |       |    2011 | ** ** |
| Revenue related to transactions with affiliated   companies   | ** ** | **$   102** |       | $     83 |       | $     87 |   |
| Cost of service(a)                                            | ** ** | **1,378**                  |       | 1,365                             |       | 1,396 |   |
| Selling, general and administrative expenses(b)               | ** ** | **917**                    |       | 584                               |       | 312 |   |

 

(a)              Affiliate cost of service primarily represents charges for long distance, direct telecommunication and roaming services provided by affiliates.

 

(b)             Affiliate selling, general and administrative expenses include charges from affiliates for services provided, including insurance, leases, office telecommunications, and billing and lockbox services, as well as services billed from Verizon Corporate Services, Verizon Sourcing LLC, Verizon Corporate Resources Group and Verizon Data Solutions for functions performed under service level agreements.

 

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*Other Transactions with Affiliates*

 

Accounts payable and accrued liabilities as of December 31, 2013 and 2012 include $68 million and $92 million, respectively, due to affiliates primarily comprised of costs associated with services provided in the normal course of business and roaming services.

 

*Distributions to Partners*

 

In May 2013, the Board of Representatives of the Partnership declared a distribution to its owners, which was paid in the second quarter of 2013 in proportion to their partnership interests on the payment date, in the aggregate amount of $7.0 billion. As a result, Vodafone received a cash payment of $3.15 billion and the remainder of the distribution was received by Verizon.

 

In November 2012, the Board of Representatives of the Partnership declared a distribution to its owners, which was paid in the fourth quarter of 2012 in proportion to their partnership interests on the payment date, in the aggregate amount of $8.5 billion. As a result, Vodafone received a cash payment of $3.8 billion and the remainder of the distribution was received by Verizon.

 

In July 2011, the Board of Representatives of the Partnership declared a distribution to its owners, which was paid in the first quarter of 2012 in proportion to their partnership interests on the payment date, in the aggregate amount of $10 billion. As a result, Vodafone received a cash payment of $4.5 billion and the remainder of the distribution was received by Verizon.

 

As required under the Partnership Agreement, the Partnership paid aggregate tax distributions of $10.0 billion, $7.2 billion and $3.1 billion to its Partners during the years ended December 31, 2013, 2012 and 2011, respectively. In addition to quarterly tax distributions to its Partners, its Partners have directed the Partnership to make supplemental tax distributions to them, subject to the Partnership’s board of representatives’ right to reconsider these distributions based on significant changes in overall business and financial conditions. During the year ended December 31, 2013, the Partnership made supplemental tax distributions in the aggregate amount of $0.9 billion, which is included in the total distribution paid above.

 

During February 2014, the Partnership paid aggregate tax distributions of $1.8 billion to its Partners.

 

**12. Accumulated Other Comprehensive Income**

 

Comprehensive income consists of net income and other gains and losses affecting Partners’ capital that, under U.S. GAAP, are excluded from net income.

 

**Accumulated Other Comprehensive Income**

 

The changes in the balances of Accumulated other comprehensive income by component are as follows:

 
| ** **                            | ** ** | ** **                 | ** ** | **Defined benefit** | ** ** | ** ** | ** ** |
|---------------------------------------|------------|----------------------------|------------|--------------------------|------------|------------|------------|
| ** **                            | ** ** | **Unrealized loss**   | ** ** | **pension and**     | ** ** | ** ** | ** ** |
| ** **                            | ** ** | **on cash flow** | ** ** | **postretirement**       | ** ** | ** ** | ** ** |
| (dollars in millions)       | ** ** | **hedges**                 | ** ** | **plans**                | ** ** | **Total**  | ** ** |
| Balance at January 1, 2013       |       | $                          | 80         |                     | $          | 4          |       | 84 |   |
| Other comprehensive income            | ** ** | **13**                     | ** ** | **—**               | ** ** | **13**     | ** ** |
| Amounts reclassified to net income    | ** ** | **(45**                    | **)**      | **—**               | ** ** | **(45**    | **)**      |
| Net other comprehensive loss          | ** ** | **(32**                    | **)**      | **—**               | ** ** | **(32**    | **)**      |
| **Balance at December 31, 2013** | ** ** | **$**                      | **48**     | ** **               | **$**      | **4**      | ** ** | **52** | ** ** |

 

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The amounts presented above in net other comprehensive loss are net of taxes and noncontrolling interests, which are not significant. For the year ended December 31, 2013, all other amounts reclassified to net income in the table above are included in Other income, net on the Partnership’s consolidated statements of income.

 

**13. Commitments and Contingencies**

 

 

Bell Atlantic, now known as Verizon Communications, and Vodafone entered into an alliance agreement to create a wireless business composed of both companies’ U.S. wireless assets, as amended, which the Partnership refers to as the “Alliance Agreement”. The Alliance Agreement contains a provision, subject to specified limitations, that requires Verizon and Vodafone to indemnify the Partnership for certain contingencies, excluding PrimeCo Personal Communications L.P. contingencies, arising prior to the formation of the Partnership.

 

Where it is determined, in consultation with counsel based on litigation and settlement risks, that a loss is probable and estimable in a given matter, the Partnership establishes an accrual. In none of the currently pending matters is the amount of accrual material. An estimate of the reasonably possible loss or range of loss in excess of the amounts already accrued cannot be made at this time due to various factors typical in contested proceedings, including (1) uncertain damage theories and demands; (2) a less than complete factual record; (3) uncertainty concerning legal theories and their resolution by courts or regulators; and (4) the unpredictable nature of the opposing party and its demands. The Partnership continuously monitors these proceedings as they develop and adjusts any accrual or disclosure as needed. The Partnership does not expect that the ultimate resolution of any pending regulatory or legal matter in future periods will have a material effect on the Partnership’s financial condition, but it could have a material effect on the Partnership’s results of operations for a given reporting period.

 

Verizon has entered into reimbursement agreements with third-party lenders that permit these lenders to issue letters of credit to third parties on behalf of the Partnership and the Partnership’s subsidiaries.

 

The Partnership has several commitments primarily to purchase handsets and peripherals, equipment, software, programming and network services, and marketing activities, which will be used or sold in the ordinary course of business, from a variety of suppliers totaling $15.6 billion. Of this total amount, $13.6 billion is attributable to 2014, $1.0 billion is attributable to 2015 through 2016, $0.5 billion is attributable to 2017 through 2018 and $0.5 billion is attributable to years thereafter. These amounts do not represent the Partnership’s entire anticipated purchases in the future, but represent only those items that are the subject of contractual obligations. The Partnership’s commitments are generally determined based on the noncancelable quantities or termination amounts. Purchases against the Partnership’s commitments for 2013 totaled approximately $9.8 billion. The Partnership also purchases products and services as needed with no firm commitment.

 

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**20F Disclosure – Description of American Depositary Shares (Item 12D)**

 

**Fees payable By ADR Holders**

 

The Bank of New York Mellon, the depositary, collects its fees for delivery and surrender of ADRs directly from investors depositing shares or surrendering ADRs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors, including in connection with the payment of dividends, by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

 
| ** **

**Persons depositing or withdrawing**

**shares must pay:**                                                                                                                                  | ** **

**For:**                                                                                                                                                                                                                                       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| $5.00 (or less) per 100   ADRs (or portion of 100 ADRs)                                                                                                                                                  | ·  Issuance of ADRs, including issuances resulting from a   distribution of shares or rights or other property

 

·  Cancellation of ADRs for the purpose of withdrawal, including if   the deposit agreement terminates

  |
| $.02 (or less) per ADR (or   portion thereof). The current per ADR fee to be charged for an interim   dividend is $0.015 per ADR and for a final dividend is $0.02 per ADR.

                       | ·  Any cash distribution to ADR registered holders                                                                                                                                                                                               |
| A fee equivalent to the   fee that would be payable if securities distributed to you had been shares   and the shares had been deposited for issuance of ADRs

                                     | ·  Distribution of securities distributed to holders of deposited   securities which are distributed by the depositary to ADR registered holders                                                                                                 |
| Registration or transfer   fees                                                                                                                                                                          | ·  Transfer and registration of shares on our share register to or   from the name of the depositary or its agent when you deposit or withdraw   shares

                                                                                   |
| Expenses of the depositary                                                                                                                                                                               | ·  Cable, telex, facsimile transmissions and delivery expenses (when   expressly provided in the deposit agreement)

 

·  Converting foreign currency to US dollars

                                                       |
| Taxes and other   governmental charges the depositary or the custodian have to pay on any ADR   or share underlying an ADR, for example, stock transfer taxes, stamp duty or   withholding taxes

  | ·  As necessary

                                                                                                                                                                                                                           |
| Any charges incurred by   the depositary or its agents for servicing the deposited securities

                                                                                                     | ·  As necessary

                                                                                                                                                                                                                           |

 

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**Fees Payable By The Depositary To The Issuer**

 

As set out above, pursuant to the deposit agreement, the depositary may charge up to $0.02 per ADR in respect of dividends paid by us. We have agreed with the depositary that any dividend fee collected by it is paid to us, net of any dividend collection fee charged by it. For the year ended 31 March 2015, we agreed with the depositary that it will charge $0.015 per ADR in respect of any interim dividend and $0.02 per ADR in respect of any final dividend paid during that year.

 

As at 31 March 2015, we have received approximately $15.4 million arising out of fees charged in respect of dividends paid during the year. We also have an agreement with the depositary that it will absorb any of its out-of-pocket maintenance costs for servicing the holders of the ADRs up to $1,000,000 per calendar year. However, any of the depositary’s out-of-pocket maintenance costs which exceed the $1,000,000 annual aggregate limits will be reimbursed by us.

 

C-2

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Table of Contents

 

**Index to Exhibits**

 

**Index of Exhibits to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2015**

 
| 1.1    |   | Articles   of Association, as adopted on June 30, 1999 and including all amendments   made on July 25, 2001, July 26, 2005, July 25,   2006, July 24, 2007, July 29, 2008, July 28,   2009, July 27, 2010 and January 28, 2014, of the Company   (incorporated by reference to Exhibit 1.1 to the   Company’s Annual Report on Form 20-F for the financial year ended   March 31, 2014 (File No. 001-10086)). |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 2.1    |   | Indenture,   dated as of February 10, 2000, between the Company and Citibank, N.A.,   as Trustee, including forms of debt securities (incorporated by reference to   Exhibit 4(a) of Post Effective Amendment No. 1 to the   Company’s Registration Statement on Form F-3 (File No. 333-10762),   dated November 24, 2000).                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 2.2    |   | Agreement   of Resignation, Appointment and Acceptance dated as of July 24, 2007,   among the Company, Citibank N.A. and The Bank of New York Mellon   (incorporated by reference to Exhibit 2.2 to the Company’s Annual Report   on Form 20-F for the financial year ended March 31, 2008 (File   No. 001-10086)).                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 2.3    |   | Twelfth Supplemental Trust Deed dated 4   August 2014 between Vodafone Group Plc and law Debenture Trust   Corporation p.l.c. further modifying and restating the provisions of the   Trust Deed dated 16 July 1999 relating to a Euro 30,000,000,000 Euro   Medium Term Note Programme.                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.6    |   | Agreement   for €3,860,000,000 five year Revolving Credit Facility dated March 28,   2014 among the Company and various lenders (incorporated by reference to   Exhibit 4.6 to the Company’s Annual Report on Form 20-F for   the financial year ended March 31, 2014 (File No. 001-10086)).                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 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 (File No. 001-10086)).                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.8    |   | Vodafone   Group 2005 Global Incentive Plan (incorporated by reference to   Exhibit 4.8 to the Company’s Annual Report on Form 20-F for the   financial year ended March 31, 2006 (File No. 001-10086)).                                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.9    |   | Facility   Agreement dated 27 February 2015 US$3,935,000,000 revolving credit   facility for Vodafone Group Plc                                                                                                                                                                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.10   |   | 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 (File   No. 001-10086)).                                                                                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.11   |   | 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 (File   No. 001-10086)).                                                                                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.12   |   | 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 (File   No. 001-10086)).                                                                                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.13   |   | Letter   of Appointment of Philip Yea (incorporated by reference to Exhibit 4.27   to the Company’s Annual Report on Form 20-F for the financial year ended   March 31, 2006 (File No. 001-10086)).                                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.14   |   | Service   Agreement of Vittorio Colao (incorporated by reference to Exhibit 4.22   to the Company’s Annual Report on Form 20-F for the financial   year ended March 31, 2009 (File No. 001-10086)).                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.15   |   | 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 (File No. 001-10086)).                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 4.16   |   | Letter   of Appointment of Nick Land (incorporated by reference to Exhibit 4.24   to the Company’s Annual                                                                                                                                                                                                                                                                                                                                                                                          |

 

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Table of Contents

 
|   |   | Report   on Form 20-F for the financial year ended March 31, 2007 (File   No. 001-10086)).                                                                                                                                                                                                                                                                                                                        |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.17   |   | Letter   of Appointment of Samuel Jonah (incorporated by reference to   Exhibit 4.26 to the Company’s Annual Report on Form 20-F for the   financial year ended March 31, 2009 (File   No. 001-10086)).                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.18   |   | Service   Agreement of Stephen Pusey (incorporated by reference to Exhibit 4.28 to   the Company’s Annual Report on Form 20-F for the financial year ended   March 31, 2009 (File No. 001-10086)).                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.19   |   | Letter   of Indemnification for Steve Pusey (incorporated by reference to   Exhibit 4.27 to the Company’s Annual Report on Form 20-F for the   financial year ended March 31, 2010 (File   No. 001-10086)).                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.20   |   | Letter   of Indemnification for Philip Yea (incorporated by reference to   Exhibit 4.29 to the Company’s Annual Report on Form 20-F for the   financial year ended March 31, 2010 (File   No. 001-10086)).                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.21   |   | Letter   of Indemnification for Luc Vandevelde (incorporated by reference to   Exhibit 4.30 to the Company’s Annual Report on Form 20-F for the   financial year ended March 31, 2010 (File   No. 001-10086)).                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.22   |   | Letter   of Appointment of Renee James (incorporated by reference to Exhibit 4.35   to the Company’s Annual Report on Form 20-F for the financial year ended   March 31, 2011 (File No. 001-10086)).                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.23   |   | Letter   of Appointment of Gerard Kleisterlee (incorporated by reference to   Exhibit 4.36 to the Company’s Annual Report on Form 20-F for the   financial year ended March 31, 2011 (File   No. 001-10086)).                                                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.24   |   | Letter   of Appointment of Omid Kordestani (incorporated by reference to   Exhibit 4.28 to the Company’s Annual Report on Form 20-F for the   financial year ended March 31, 2013 (File   No. 001-10086)).                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.25   |   | Letter   of Appointment of Valerie Gooding (incorporated by reference to   Exhibit 4.30 to the Company’s Annual Report on Form 20-F for   the financial year ended March 31, 2014 (File No. 001-10086)).                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.26   |   | Service   Agreement of Nicholas Read (incorporated by reference to Exhibit 4.31 to the   Company’s Annual Report on Form 20-F for the financial year ended   March 31, 2014 (File No. 001-10086)).                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.27   |   | Letter   of Appointment of Sir Crispin Davis (incorporated by reference to   Exhibit 4.32 to the Company’s Annual Report on Form 20-F for   the financial year ended March 31, 2014 (File No. 001-10086)).                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.28   |   | Letter of   Appointment of Dame Clara Furse (incorporated by reference to   Exhibit 4.33 to the Company’s Annual Report on Form 20-F for   the financial year ended March 31, 2014 (File No. 001-10086)).                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.29   |   | Letter   of indemnification for Nick Read.                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.30   |   | Letter   of appointment for Dr Matthias Döpfner                                                                                                                                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.31   |   | Stock   Purchase Agreement dated September 2, 2013, by and among Verizon   Communications Inc., Vodafone Group Plc and Vodafone 4 Limited (incorporated   by reference to Exhibit 4.34 to the Company’s Annual Report on   Form 20-F for the financial year ended March 31, 2014 (File   No. 001-10086)).                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.32   |   | First   Amendment to Stock Purchase Agreement dated December 5, 2013 by and   among Vodafone Group Plc, Vodafone 4 Limited and Verizon Communications Inc,   amending the terms of the Stock Purchase Agreement dated September 2,   2013 (incorporated by reference to Exhibit 4.35 to the   Company’s Annual Report on Form 20-F for the financial year ended   March 31, 2014 (File No. 001-10086)). |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 7.     |   | Unaudited   Computation of Ratio of Earnings to Fixed Charges for the financial years   ended March 31, 2015, 2014, 2013, 2012 and 2011.                                                                                                                                                                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 8.     |   | The   list of the Company’s subsidiaries is incorporated by reference to Note 32 to   the Consolidated                                                                                                                                                                                                                                                                                                                                |

 

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|                                                                         |   | Financial   Statements included in the Annual Report on Form 20-F for the financial   year ended March 31, 2015.                                                                                       |
|------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                         |   |                                                                                                                                                                                                             |
| 12.                                                                          |   | Rule 13a   – 14(a) Certifications.                                                                                                                                                                |
|                                                                         |   |                                                                                                                                                                                                             |
| 13.                                                                          |   | Rule 13a   – 14(b) Certifications. These certifications are furnished only and are   not filed as part of the Annual Report on Form 20-F for the financial   year ended March 31, 2015. |
|                                                                         |   |                                                                                                                                                                                                             |
| 15.1                                                                         |   | Consent   letter of PricewaterhouseCoopers LLP.                                                                                                                                                                  |
|                                                                         |   |                                                                                                                                                                                                             |
| 15.2                                                                         |   | Consent   letter of Deloitte LLP, London.                                                                                                                                                                        |
|                                                                         |   |                                                                                                                                                                                                             |
| 15.3 Consent letter of   Deloitte & Touche LLP, New York.      |
|                                                                         |
| 15.4 Letter dated 8 June 2015 of   Deloitte LLP in respect of Item 16.F |

 

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Table of Contents

 

**SIGNATURE**

 

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

 
|                | VODAFONE   GROUP PUBLIC LIMITED COMPANY       |
|---------------------|-----------------------------------------------|
|                | (Registrant)                                  |
|                |                                          |
|                | /s/   R E S Martin                            |
|                | Rosemary   E S Martin                         |
|                | Group   General Counsel and Company Secretary |
| Date:   8 June 2015 |                                          |

 

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