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Empowering
everybody to
be condently
connected
Vodafone Group Plc
Annual Report 2014
Registered Ofî…»ce:
Telephone: +44
Fax: +44
Telephone: +44 (0) 870 702 0198
(In Ireland): +353 (0) 818 300 999
Access our online Annual Report at:

Table of contents

  • Page 1
    Empowering everybody to be confidently connected Vodafone Group Plc Annual Report 2014

  • Page 2
    ... sustainable business. 12 14 16 18 Chief Executive's review Crystallising value from Verizon Wireless Key performance indicators Market overview 21 Our strategy 22 Consumer Europe 24 Unified Communications 26 Consumer Emerging Markets 28 Enterprise 30 Network 32 Operations 34 Sustainable business...

  • Page 3
    ... our performance and position, a review of the business during the year, and outlines the principal risks and uncertainties we face. The strategic report was approved by the Board and signed on its behalf by the Chief Executive and Chief Financial Officer. Vittorio Colao Chief Executive Nick Read...

  • Page 4
    ... we acquired Kabel Deutschland in Germany and agreed the purchase of Ono in Spain - two leading cable companies in their respective markets. Finally, we have extended our very strong track record of balancing the long-term needs of the business with significant returns to shareholders. We ended the...

  • Page 5
    ... in the income statement and in a limited number of lines in the statement of cash flows, as well as on a management basis which includes our share of these joint ventures in both these statements on a line-by-line basis. The discussion of our revenues, EBITDA, adjusted operating profit, free cash...

  • Page 6
    ...April April June Expanding Vodafone Red We expanded Vodafone Red - our customer proposition offering unlimited calls and texts with generous data allowances - to 14 markets. By March 2014 we reached 20 markets. M-Pesa in India We launched M-Pesa, our money-transfer service in India. The initial...

  • Page 7
    ...history when it completed on 21 February 2014. As part of this transaction we increased our ownership of Vodafone Italy from 77% to 100%. See page 14 for more information. Project Spring We announced details of our Project Spring strategy to increase our organic investment over two years to deliver...

  • Page 8
    ... via our M-Pesa "Text to Treatment" programme. New brand strategy - Vodafone Firsts We launched our Firsts programme, inspiring people to do something remarkable for the first time using mobile technology. This new global brand engagement strategy will be launching across all our markets in 2014.

  • Page 9
    ... data services. The single largest return of value to shareholders Following the sale of our interest in Verizon Wireless, we completed the return of US$85 billion (£51 billion) to shareholders - the single largest in history. Ono We announced plans to acquire Ono, Spain's largest cable operator...

  • Page 10
    08 Vodafone Group Plc Annual Report 2014 Where we do business Breadth of services, scale and global reach We are one of the world's largest telecommunications companies providing a wide range of services including voice, messaging, data and fixed broadband. We have 434 million mobile customers ...

  • Page 11
    Overview Strategy review Performance Governance Financials Additional information 09 Our international reach Group revenue 2014 Europe £28.0bn AMAP £15.0bn Europe We are the number one or two mobile operator in most of our European markets with market shares ranging from around 25% to ...

  • Page 12
    10 Vodafone Group Plc Annual Report 2014 How we do business Consistent investment rewards our shareholders Our business model is based on continued high levels of investment to build a superior telecommunications network and customer experience, and to sustain high levels of cash generation with ...

  • Page 13
    ... service. Our call centres are available 24 hours a day, seven days a week in all our European markets. Supplier relationships In the last financial year we spent around £16 billion buying equipment, devices and services. Given our large scale and global reach, we tend to be a key strategic partner...

  • Page 14
    12 Vodafone Group Plc Annual Report 2014 Chief Executive's review A defining year for the Group...Our emerging markets are performing well, although our mature European markets continue to face challenging conditions. However, we have continued to make good progress in delivering our long-term ...

  • Page 15
    Overview Strategy review Performance Governance Financials Additional information 13 Where we aim to be five years from now Consumer Europe A leading mobile data provider Unified Communications Converged services in all key European markets Consumer Emerging Markets A strong leader and ...

  • Page 16
    14 Vodafone Group Plc Annual Report 2014 Crystallising value from Verizon Wireless Opening the next chapter in the history of Vodafone On 2 September 2013, we announced our agreement with Verizon to sell our US group, whose principal asset was its 45% interest in Verizon Wireless, for US$130 ...

  • Page 17
    ... consolidated our shares - exchanging every eleven old Vodafone shares for six new Vodafone shares. Overall, we believe we have struck the right balance between investing in the future of the Company and rewarding our shareholders for their long-term support of our US strategy. Following the sale...

  • Page 18
    ... in the decline in service revenue and EBITDA margin and the loss of market position. Despite this we met our financial guidance and increased our dividend per share and we have made clear progress in our operational and commercial KPIs. Organic service revenue growth 2014 2013 2012 More work to do...

  • Page 19
    ... over the year but gained share in some of our key emerging markets, including India, South Africa and Turkey. Ordinary dividend per share 2014 2013 2012 Achieved 9.52p 10.19p 11.00p The ordinary dividend remains the primary method of shareholder return and we have an outstanding record of growth...

  • Page 20
    ... price of mobile services has tended to reduce over time. However, with both more mobile phone users, mainly in emerging markets, and more data usage, global mobile revenue remains on a positive trend and expanded by 2% in 2013. Note: The industry data on this page is sourced from Strategy Analytics...

  • Page 21
    Overview Strategy review Performance Governance Financials Additional information 19 Supporting access to mobile Overcoming barriers to mobile ownership for women in emerging markets Our Connected Women report looked at the gender gap in mobile phone ownership in emerging economies and the ...

  • Page 22
    ... voice and texts, our traditional revenue sources, have reached maturity in a number of markets. To deliver future growth opportunities, we are investing in newer revenue areas such as data. It is estimated that between 2013 and 2017 data revenue for the telecommunications sector is set to grow...

  • Page 23
    ...Unmatched customer experience Number one in customer experience - in store, online, on the phone Consistent execution across markets Integrated worry-free solutions Simplest connectivity and price plans Converged enterprise product suite Innovator in new services, such as mobile payments Read more...

  • Page 24
    ...some cases TV package as well. We already have over 8.5 million fixed broadband customers in Europe and we are increasingly offering mobile and fixed services together. We expect unified communications to become more and more important over time - see page 24 for details on our strategy. Delivering...

  • Page 25
    Overview Strategy review Performance Governance Financials Additional information 23 European smartphone penetration 45 38 30 28 45 % % of European mobile service revenue in-bundle 60 51 40 58 % 15 20 data not available 2012 0 2012 2013 2014 0 2013 2014 The average data usage on ...

  • Page 26
    ...proposed) Italy (2013) Italy (planned for 2014) Spain Ono (proposed 2014) Market position Purchase price Annual revenue Homes passed Total customers Fixed broadband customers Germany (2013) Spain (2014) Germany Kabel Deutschland (2013) Netherlands (2013) Portugal (2010) UK Cable & Wireless...

  • Page 27
    ... Strategy review Performance Governance Financials Additional information 25 UnifiedCommunications Our market-leading unified communications solution in Portugal In Portugal we have developed a market-leading unified communications solution by combining our fibre-based fixed broadband...

  • Page 28
    ... point of sale sites for top-ups, significantly more than our nearest competitor, and to cater for our female customers we are opening a number of new "Angel" stores, which are run and managed exclusively by women. Increasing access to mobile financial services Our Vodafone money transfer service...

  • Page 29
    Overview Strategy review Performance Governance Financials Additional information 27 Mobile customers % Data users in emerging markets 100 92 68 million Europe: 29% 75 50 AMAP - Australia and New Zealand: 1% AMAP - emerging markets: 70% 25 0 26 2012 2013 2014 17 million M-Pesa ...

  • Page 30
    ... than 1,200 public sector and enterprise customers in multiple regions. Our 14 data centres in the UK, Ireland and South Africa are complemented by a partner network of data centre facilities that allow us to serve multinational customers globally. Our services include co-location, managed hosting...

  • Page 31
    ... Strategy review Performance Governance Financials Additional information 29 Vodafone enterprise service revenue 2014 % Share of Group service revenue 30 27 23 20 27 % Fixed: 23% 10 Mobile: 77% 0 2012 2013 2014 Over 40% of service revenue in the UK and New Zealand now from enterprise...

  • Page 32
    30 Vodafone Group Plc Annual Report 2014 Our strategy (continued) Network We aim to have the best mobile network in all our markets, be competitive in fixed services and provide the best converged fixed and mobile services to support the growing demand for unified communications. We are aiming to...

  • Page 33
    ... Strategy review Performance Governance Financials Additional information 31 Data traffic 600 544 400 331 200 216 petabytes Average data speeds 30 Mbps 20 20 10 0.1 0.05 1991 (2G) 8 1.5 2004 (3G) 10 0 2012 2013 2014 0 2014 (4G) n Download n Upload Over 263,400 mobile base...

  • Page 34
    32 Vodafone Group Plc Annual Report 2014 Our strategy (continued) Operations We are using the benefits of our global reach and scale to standardise and simplify the way we do business across the Group. This will both improve cost efficiency and reduce the time to launch new services and products ...

  • Page 35
    ... Strategy review Performance Governance Financials Additional information 33 Deploying Single Radio Access Network sites helps reduce costs 60 % of total Moving employees to shared services to reduce costs 15,000 13,300 40 34 20 24 45 10,000 10,700 9,500 5,000 0 2012 2013 2014...

  • Page 36
    ... Mobile money continues to be a driver of financial inclusion, offering people access to payments and financial services beyond the reach of traditional institutions. Our platform, M-Pesa, expanded its geographical reach in 2014, launching recently in Mozambique, Lesotho, Egypt, Romania and India...

  • Page 37
    Overview Strategy review Performance Governance Financials Additional information 35 Energy use 20141,2 GWh Carbon emissions2 3 2.23 2 2.36 2.55 Millions of tonnes CO2e Network: 4,690 Retail: 74 Office: 458 0 2012 2013 2014 n Scope 1 (direct greenhouse gas ('GHG') emissions) n Scope 2 (...

  • Page 38
    ... ensure that learning plans support our business strategy. Every employee also has a formal review once a year with their manager to review their performance and set clear goals and development plans for the year ahead. Our global learning academies in marketing, technology, sales, retail, finance...

  • Page 39
    Overview Strategy review Performance Governance Financials Additional information 37 Employees by location Spain: 4% Italy: 5% % Average number of employees 2014 2013 2012 86,373 91,272 92,812 Employee turnover rates 2014 2013 2012 15% 16% 15% Vodacom: 8% Other: 37% Germany: 12% ...

  • Page 40
    ...in our 2014 financial year results for five months to 2 September 2013, the date we announced its sale. Our share of Verizon Wireless' profits for this five month period amounted to £3.2 billion. The sale of the US group, whose principal asset was Verizon Wireless, led to a pre-tax gain on disposal...

  • Page 41
    ... Group's joint ventures, Vodafone Italy, Vodafone Hutchison Australia, Vodafone Fiji and Indus Towers, on a proportionate basis, including the profit contribution from Verizon Wireless to 2 September 2013. Statutory basis includes the results of the Group's joint ventures using the equity accounting...

  • Page 42
    ... profit, being primarily income tax, net finance costs and non-operating items, is performed on a statutory basis. Europe Germany £m Italy £m UK £m Spain £m Other Europe £m Eliminations £m Europe £m Restated 2013 £m % change £ Organic Year ended 31 March 2014 Revenue Service revenue...

  • Page 43
    ... to EBITDA in Germany. The domination and profit and loss transfer agreement was registered on 14 March 2014 and the integration of Vodafone Germany and KDG began on 1 April 2014. Italy Service revenue declined 17.1%* driven by the effect of the summer prepaid price war penetrating the customer base...

  • Page 44
    42 Vodafone Group Plc Annual Report 2014 Operating results (continued) Africa, Middle East and Asia Pacific India £m Vodacom £m Other AMAP £m Eliminations £m AMAP £m Restated 2013 £m % change £ Organic Year ended 31 March 2014 Revenue Service revenue Other revenue EBITDA Adjusted operating...

  • Page 45
    ..., 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...

  • Page 46
    ... assets in relation to customer bases and brands are recognised under accounting rules after we acquire businesses and amounted to £551 million (2013: £249 million). Amortisation charges increased in the year as a result of the acquisition of KDG and Vodafone Italy in the year. Other income...

  • Page 47
    ... Strategy review Performance Governance Financials Additional information 45 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...

  • Page 48
    ... Group Risk Co-ordinator Review and assessment Group Risk Co-ordinator, who is the Group Audit Director, consolidates the operating companies' and Group risks to compile the Group's key risks Senior management of Group functions Identify Senior management identify the key risks and develop...

  • Page 49
    ... Strategy review Performance Governance Financials Additional information 47 Key risks Network or IT systems failure Major failure or malicious attack on our network or IT systems may result in service interruption and consequential customer and revenue loss. Failure to protect customer...

  • Page 50
    48 Vodafone Group Plc Annual Report 2014 Governance 49 50 54 69 Chairman's overview Board of directors and Group management Corporate governance Directors' remuneration

  • Page 51
    ... for Vodafone, and your Board played a leading role in the conduct of the major transactions described in the Chief Executive's review on page 12. As the Group's strategy continues to evolve, the Board is focused on maintaining a strong alignment of the interests of management with long-term value...

  • Page 52
    ... Vodafone Group Plc - Chief Executive, Africa, Middle East and Asia Pacific (2008-2013) a Vodafone Limited (UK operating company ) - various senior roles, including Chief Financial Officer, Chief Commercial Officer and Chief Executive Officer (2002-2008) a United Business Media plc - Chief Financial...

  • Page 53
    ... Asset Management plc - Managing Director (1995-1998) a Citicorp Investment Management - Chief International Investment Officer (1991-1998) Skills and experience: a Private equity investor with experience of business and financial turnaround a 3i Group plc - Chief Executive (2004-2009) a HBOS plc...

  • Page 54
    ... also executive directors are regarded as senior managers of the Company. Paolo Bertoluzzo Group Chief Commercial and Operations Officer Age: 48 Tenure: 1 year Nationality: Italian a Vodafone Group Plc - Chief Executive Officer, Southern Europe (2012-2013) a Vodafone Italy - Chief Executive Officer...

  • Page 55
    Overview Strategy review Performance Governance Financials Additional information 53 Matthew Kirk Group External Affairs Director Age: 53 Tenure: 5 years Nationality: British Career history: a Vodafone Group Plc - Group Director of External Relationships (2006-2009) a British Ambassador to ...

  • Page 56
    ...: a Group strategy and long-term plans; a major capital projects, acquisitions or divestments; a annual budget and operating plan; a Group financial structure, including tax and treasury; a annual and half-year financial results and shareholder communications; and a system of internal control and...

  • Page 57
    ... receive accurate, timely and clear information. The Senior Independent Director Vittorio Colao The role of the Chief Executive is set out in writing and agreed by the Board. He is responsible for: a management of the Group's business; a implementation of the Company's strategy and policies...

  • Page 58
    56 Vodafone Group Plc Annual Report 2014 Corporate governance (continued) Board activities in the 2014 financial year Board activities are structured to assist the Board in achieving its goal to support and advise executive management on the delivery of the Group's strategy within a transparent ...

  • Page 59
    ... information and the changing regulatory and competitive environment. Some further refinement of the presentation of performance metrics was agreed. The Board was comfortable with the strong value system and control framework in the Company. Directors observed that executive succession planning...

  • Page 60
    58 Vodafone Group Plc Annual Report 2014 Corporate governance (continued) Board committees The Board has a Nominations and Governance Committee, an Audit and Risk Committee and a Remuneration Committee. Further details of these committees can be found in their reports on pages 58 to 65. The terms ...

  • Page 61
    ... and judgement in carrying out their roles, supporting the executive directors and senior management in an objective manner. Their length of service and resulting experience and knowledge of the Company is of great benefit to the Board and both directors will stand for re-election at the AGM...

  • Page 62
    ... issues and developments particularly in relation to aspects of risk management. A summary of the reviews undertaken during the year are set out within "Risk management" below. The Committee also regularly meets separately with Deloitte LLP, the Chief Financial Officer and the Group Audit Director...

  • Page 63
    ...of the annual report, it draws on the work of the Group's disclosure committee and also has discussions with senior management. The Committee's overall assessment forms the basis of the advice given to the Board to assist them in making the statement required by the UK Corporate Governance Code. The...

  • Page 64
    ... the disposal of Verizon Wireless, and the acquisition of interests in Kabel Deutschland and Vodafone Italy. This gave rise to a number of complex accounting and disclosure requirements in the financial statements. IT controls in relation to privileged user access The Group's IT infrastructure...

  • Page 65
    ... Strategy review Performance Governance Financials Additional information 63 Assessment of internal control We reviewed the process by which the Group evaluated its control environment. Our work here was driven primarily by the Group Audit Director's reports on the effectiveness of internal...

  • Page 66
    ...these fees following review of audit scope changes for the 2014 financial year, including the impact of business acquisitions and disposals which were primarily in relation to Kabel Deutschland, the disposal of Verizon Wireless and the acquisition of the remaining 23% interest in Vodafone Italy. The...

  • Page 67
    ... Financial Controller, the Group Audit Director and the Group Compliance Director; a competitor analysis; and a strategy. Annually, the Executive Committee, together with the chief executives of the major operating companies, conduct a strategy review to identify key strategic issues to be presented...

  • Page 68
    ..., e.g. the acquisition of Kabel Deutschland and the Verizon Wireless transaction; a regular meetings between institutional investors and analysts, and the Chief Executive and Chief Financial Officer, to discuss business performance, growth strategy and address any issues of concern; a meetings...

  • Page 69
    ... and Risk Committee have reviewed the effectiveness of the internal control system including financial, operational and compliance controls, and risk management in accordance with the Code for the period from 1 April 2013 to 20 May 2014 (the date of this annual report). No significant failings or...

  • Page 70
    ... (vodafone.com/governance). These terms of reference are generally responsive to the relevant NASDAQ listing rules but may not address all aspects of these rules. Code of Conduct Under the NASDAQ listing rules, US companies must adopt a code of conduct applicable to all directors, officers and...

  • Page 71
    ... growth in the share price and Total Shareholder Return ('TSR') which, when combined with adjusted free cash flow, result in a payout for the executive directors' long-term incentive awards of 37.2% of maximum. More details can be found on page 79. Strategic initiatives include: a the sale of our 45...

  • Page 72
    .... This brings our Executive Committee pension level in line with our UK senior management; and a the Remuneration Committee took account of business performance, salary increases for other UK employees and external market information when deciding to increase the annual base salaries of the Chief...

  • Page 73
    ...pay and employment conditions of employees in Vodafone Group as a whole, with particular reference to the market in which the executive is based. Further information on our remuneration policy for other employees is given on page 74. Performance measures and targets Our Company strategy and business...

  • Page 74
    ... 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. a Travel related benefits. This may include (but is not limited to) company car or...

  • Page 75
    ... 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...

  • Page 76
    ...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...

  • Page 77
    ... 2014. Base (£'000) Benefits (£'000) Pension (£'000) Total fixed (£'000) On target Maximum All scenarios Chief Executive 1,150 38 345 1,533 Chief Financial Officer 675 23 203 901 Chief Technology Officer 600 21 180 801 Based on what a director would receive if performance was in line with...

  • Page 78
    ...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...

  • Page 79
    ... the Executive Committee and Chairman's fees. a Risk assessment. May 2013 a 2013 directors' remuneration report. a Review of the effectiveness of the Committee. a Large local market CEO remuneration. a Impact of the Verizon transaction and Project Spring on incentives. a New share plan rules. a New...

  • Page 80
    ... shares acquired under Vodafone's Share Incentive Plan ('SIP'). Andy Halford is the only director who participated and the annual value of the matching shares is £1,500. 4 The value shown in the 2013 column is the award which vested on 28 June 2013 and is valued using the execution share price...

  • Page 81
    Overview Strategy review Performance Governance Financials Additional information 79 Long-term incentive ('GLTI') award vesting in June 2014 (audited) The 2012 long-term incentive ('GLTI') awards which were made in June 2011 will partially vest in June 2014. The performance conditions for the...

  • Page 82
    ...The Vodafone Group 2008 Sharesave Plan is an HM Revenue & Customs ('HMRC') approved scheme open to all staff permanently employed by a Vodafone Company in the UK as of the eligibility date. Options under the plan are granted at up to a 20% discount to market value. Executive directors' participation...

  • Page 83
    ...to directors under the long-term incentive ('GLTI') plan are currently as follows: 2012 award Awarded: June 2011 Performance period ending: March 2014 Vesting date: June 2014 Share price at grant: 163.2 pence 2013 award Awarded: July 2012 Performance period ending: March 2015 Vesting date: July 2015...

  • Page 84
    ... change in the Chief Executive's remuneration (salary, taxable benefits and annual bonus payment) between the 2013 and 2014 financial years compared to the average for other Vodafone Group employees who are measured on comparable business objectives and who have been employed in the UK since 2013...

  • Page 85
    Overview Strategy review Performance Governance Financials Additional information 83 Relative spend on pay The chart below shows both the dividends distributed in the year and the total cost of remuneration in the Group. Relative importance of spend on pay 50,000 40,566 40,000 30,000 20,000 ...

  • Page 86
    ... 2014 AGM, we intend to implement the remuneration policy as set out on pages 71 to 76. For the 2015 financial year the details are as follows: 2015 base salaries The Remuneration Committee considered business performance, salary increases for other UK employees and external market information and...

  • Page 87
    Overview Strategy review Performance Governance Financials Additional information 85 2015 remuneration for the Chairman and non-executive directors For the 2015 review, the fees for our Chairman and non-executives have been benchmarked against a comparator group of the FTSE 30 companies. ...

  • Page 88
    86 Vodafone Group Plc Annual Report 2014 Directors' report Directors' report The Directors of your Company present their report together with the consolidated financial statements for the year ended 31 March 2014. This report has been prepared in accordance with requirements outlined within The ...

  • Page 89
    Overview Strategy review Performance Governance Financials Additional information 87 Contents The "Consolidated financial statements" on pages 96 to 170 are presented on a statutory basis which, under IFRS accounting principles, includes the financial results of the Group's joint ventures ...

  • Page 90
    ...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: a select suitable accounting policies and apply them consistently...

  • Page 91
    Overview Strategy review Performance Governance Financials Additional information 89 Going concern The Group's business activities, performance, position and principal risks and uncertainties and how these are managed or mitigated are set out in the strategic report on pages 1 to 47. In ...

  • Page 92
    ... over financial reporting, management excluded from its assessment the internal control over financial reporting at Kabel Deutschland Holding AG, which became a subsidiary during the year and which accounted for £9,741 million of total assets, £4,709 million of net assets, £735 million of revenue...

  • Page 93
    ... Strategy review Performance Governance Financials Additional information 91 Audit report on the consolidated and parent company financial statements Independent auditor's report to the members of Vodafone Group Plc Opinion In our opinion: a the financial statements give a true and fair...

  • Page 94
    ... the availability of losses and future profitability. The accounting for the acquisition of Kabel Deutschland Holding AG required a significant amount of management estimation. Key judgements relate to the allocation of the purchase price to the assets and liabilities acquired and adjustments made...

  • Page 95
    ... the controls around the significant revenue and billing systems by our IT specialists. In addition to these procedures performed locally, we review the results of their work and attend the full scope audit close meetings; we also perform a detailed review to check that the Group accounting policies...

  • Page 96
    ... on the shared service centres, the Group functions and a further seven operating locations: the UK, Germany, Italy, Spain, India, Vodacom and Turkey. The scope for the year ended 31 March 2014 included the addition of Turkey and Cable & Wireless Worldwide (through the UK business) when compared...

  • Page 97
    ...required to review the part of the Corporate Governance Statement relating to the Company's compliance with nine provisions of the UK Corporate Governance Code. We have nothing to report arising from our review. Our duty to read other information in the Annual Report Under International Standards on...

  • Page 98
    96 Vodafone Group Plc Annual Report 2014 Consolidated income statement for the years ended 31 March 2014 £m Restated1 2013 £m Restated1 2012 £m Note Revenue Cost of sales Gross profit Selling and distribution expenses Administrative expenses Share of results of equity accounted ...

  • Page 99
    ... the year ended 31 March 2014 relate to the recycling of amounts in relation to our investment in Verizon Wireless and Vodafone Italy which were triggered, respectively, by the disposal and the acquisition of a controlling stake. Net actuarial gains/(losses) on defined benefit schemes, net of tax We...

  • Page 100
    98 Vodafone Group Plc Annual Report 2014 Consolidated statement of financial position at 31 March 31 March 2014 £m Restated1 31 March 2013 £m Restated1 1 April 2012 £m Note Non-current assets Goodwill Other intangible assets Property, plant and equipment Investments in associates and ...

  • Page 101
    ...statement of financial position has been materially impacted in the year by the sale of our interest in Verizon Wireless, the acquisition of Kabel Deutschland and the assumption of control over Vodafone Italy (jointly the 'Group's acquisitions'): Assets Goodwill and other intangible assets Our total...

  • Page 102
    100 Vodafone Group Plc Annual Report 2014 Consolidated statement of changes in equity for the years ended 31 March Additional paid-in capital2 £m Other comprehensive income Treasury shares £m Retained losses £m Currency reserve £m Pensions Investment Revaluation reserve reserve ...

  • Page 103
    ... and non-controlling interests. Equity shareholders' funds decreased by £0.7 billion as the profits on the sale of our investment in Verizon Wireless ('VZW') and from the recognition of a large deferred tax asset were offset by the return of value to shareholders, regular ordinary dividends and...

  • Page 104
    ... the year ended 31 March 2014 there were a number of material non-cash investing and financing activities that arose in relation to both the disposal of our interest in Verizon Wireless, the acquisition of the remaining 23% of Vodafone Italy and the return of value to shareholders. Full details...

  • Page 105
    ... on the Group's dividends are provided on page 101. Other transactions with non-controlling shareholders in subsidiaries During the year we acquired the non-controlling interests in Vodafone India Limited and commenced the legal process of acquiring the remaining shares in Kabel Deutschland. Cash...

  • Page 106
    ... Vodafone Group Plc Annual Report 2014 Notes to the consolidated financial statements 1. Basis of preparation This section describes the critical accounting judgements that management has identified as having a potentially material impact on the Group's consolidated financial statements and sets...

  • Page 107
    ... 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...

  • Page 108
    ... recognised in the income statement and other changes in carrying amount are recognised in equity. Translation differences on non-monetary financial assets, such as investments in equity securities classified as available-for-sale, are reported as part of the fair value gain or loss and are included...

  • Page 109
    ... £m Discontinued operations1 £m 2012 Restated £m Consolidated income statement and statement of comprehensive income Revenue Gross profit Share of results of equity accounted associates and joint ventures Operating profit/(loss) Profit/(loss) before tax Profit/(loss) for the financial year from...

  • Page 110
    ...impact on the consolidated results, financial position or cash flows of the Group. New accounting pronouncements to be adopted on or after 1 April 2015 On 1 April 2015 the Group will adopt Amendments to IAS 19 "Defined Benefit Plans: Employee Contributions" and "Improvements to IFRS 2011-2013 Cycle...

  • Page 111
    ... 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...

  • Page 112
    ... the Group's joint ventures, Vodafone Italy, Vodafone Hutchison Australia, Vodafone Fiji and Indus Towers, on a proportionate basis. The statutory basis includes the results of these joint ventures, using the equity accounting basis rather than on a proportionate consolidation basis. 2 Presentation...

  • Page 113
    ... profit £m Presentation adjustments4 £m Discontinued operations4 £m Adjusted operating profit £m 31 March 2014 Germany Italy UK Spain Other Europe Europe India Vodacom Other AMAP AMAP Non-Controlled Interests and Common Functions Group Discontinued operations Verizon Wireless 3 31 March 2013...

  • Page 114
    ... (loss)/profit to profit for the financial year, see the consolidated income statement on page 96. 2014 £m Restated 2013 £m Restated 2012 £m Adjusted operating profit Impairment loss Restructuring costs Amortisation of acquired customer base and brand intangible assets Other income and...

  • Page 115
    Overview Strategy review Performance Governance Financials Additional information 113 3. Operating (loss)/profit Detailed below are the key amounts recognised in arriving at our operating (loss)/profit. 2014 £m Restated 2013 £m Restated 2012 £m Net foreign exchange losses ...

  • Page 116
    ... Vodafone Group Plc Annual Report 2014 Notes to the consolidated financial statements (continued) 4. Impairment losses Impairment occurs when the carrying value of assets is greater than the present value of the net cash flows they are expected to generate. We review the carrying value of assets...

  • Page 117
    ...a the long-term compound annual growth rate in EBITDA in years six to ten estimated by management. Pre-tax risk adjusted discount rate The discount rate applied to the cash flows of each of the Group's operations is generally based on the risk free rate for ten year bonds issued by the government in...

  • Page 118
    ... plans, resulting from our reassessment of expected future business performance in light of current trading and economic conditions and adverse movements in discount rates driven by the credit rating and yields on ten year government bonds. The table below shows the key assumptions used in the value...

  • Page 119
    ...in Italy. The table below shows the key assumptions used in the value in use calculations. Assumptions used in value in use calculation Germany % Italy % Spain % Greece % Portugal % India % Romania % Pre-tax risk adjusted discount rate Long-term growth rate Budgeted EBITDA1 Budgeted capital...

  • Page 120
    ... rate movements. 2014 £m Restated 2013 £m Restated 2012 £m Investment income: Available-for-sale investments: Dividends received Loans and receivables at amortised cost Fair value through the income statement (held for trading): Derivatives - foreign exchange contracts Other1 Financing...

  • Page 121
    ... Strategy review Performance Governance Financials Additional information 119 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...

  • Page 122
    ... Vodafone Group Plc Annual Report 2014 Notes to the consolidated financial statements (continued) 6. Taxation (continued) Tax on discontinued operations 2014 £m 2013 £m 2012 £m Tax charge on profit from ordinary activities of discontinued operations Tax charge relating to the gain or loss...

  • Page 123
    ... Strategy review Performance Governance Financials Additional information 121 Deferred tax Analysis of movements in the net deferred tax balance during the year: £m 1 April 2013 restated Exchange movements Credited to the income statement (continuing operations) Charged to the income...

  • Page 124
    ...in overseas holding companies as a result of revaluations of those companies' investments for local GAAP purposes. A deferred tax asset of £18,150 million (2013: £1,325 million) has been recognised in respect of £62,980 million (2013: £4,535 million) of these losses which relate to tax groups in...

  • Page 125
    Overview Strategy review Performance Governance Financials Additional information 123 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...

  • Page 126
    ... (£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...

  • Page 127
    Overview Strategy review Performance Governance Financials Additional information 125 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 ...

  • Page 128
    126 Vodafone Group Plc Annual Report 2014 Notes to the consolidated financial statements (continued) 10. Intangible assets (continued) Goodwill £m Licences and spectrum £m Computer software £m Other £m Total £m Cost: 1 April 2012 restated Exchange movements Arising on ...

  • Page 129
    Overview Strategy review Performance Governance Financials Additional information 127 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 ...

  • Page 130
    128 Vodafone Group Plc Annual Report 2014 Notes to the consolidated financial statements (continued) 11. Property, plant and equipment (continued) Land and buildings £m Equipment, fixtures and fittings £m Total £m Cost: 1 April 2012 restated Exchange movements Arising on ...

  • Page 131
    ... 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...

  • Page 132
    ... Group's financial statements. Refer to note 28 "Acquisitions and disposals" for further information. Vodafone Omnitel B.V1. 2014 £m 2013 £m Indus Towers Limited 2014 £m 2013 £m Vodafone Hutchison Australia Pty Limited 2014 £m 2013 £m Other joint ventures 2014 £m 2013 £m 2014 £m Total 2013...

  • Page 133
    ... of Vodafone Group Plc at 31 March 2014, rounded to the nearest tenth of one percent. 2 The Group also holds two non-voting shares. 3 At 31 March 2014 the fair value of Safaricom Limited was KES 198 billion (£1,371 million) based on the closing quoted share price on the Nairobi Stock Exchange. On...

  • Page 134
    132 Vodafone Group Plc Annual Report 2014 Notes to the consolidated financial statements (continued) 13. Other investments We hold a number of other listed and unlisted investments, mainly comprising US$5.25 billion of loan notes from Verizon Communications. Accounting policies Other investments ...

  • Page 135
    ... Strategy review Performance Governance Financials Additional information 133 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...

  • Page 136
    134 Vodafone Group Plc Annual Report 2014 Notes to the consolidated financial statements (continued) 15. Trade and other receivables Our trade and other receivables mainly consist of amounts owed to us by customers and amounts that we pay to our suppliers in advance. Trade receivables are shown ...

  • Page 137
    ... taxes and social security amounts due in relation to our role as an employer. Derivative financial instruments with a negative market value are reported within this note. Accounting policies Trade payables are not interest bearing and are stated at their nominal value. 2014 £m Restated 2013...

  • Page 138
    136 Vodafone Group Plc Annual Report 2014 Notes to the consolidated financial statements (continued) 17. Provisions A provision is a liability recorded in the statement of financial position, where there is uncertainty over the timing or amount that will be paid, and is therefore often estimated. ...

  • Page 139
    ... 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...

  • Page 140
    ... to an insignificant risk of changes in value. 2014 £m Restated 2013 £m Cash at bank and in hand Money market funds Repurchase agreements Short-term securitised investments Cash and cash equivalents as presented in the statement of financial position Bank overdrafts Cash and cash equivalents...

  • Page 141
    Overview Strategy review Performance Governance Financials Additional information 139 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 ...

  • Page 142
    ... Vodafone Group Plc Annual Report 2014 Notes to the consolidated financial statements (continued) 21. Borrowings (continued) The fair value and carrying value of the Group's long-term borrowings is as follows: Sterling equivalent nominal value 2014 £m Restated 2013 £m 2014 £m Fair value...

  • Page 143
    Overview Strategy review Performance Governance Financials Additional information 141 Fair values are calculated using quoted market prices or discounted cash flows with a discount rate based upon forward interest rates available to the Group at the reporting date. Maturity of borrowings The...

  • Page 144
    ... for amounts payable under the domination agreement in relation to Kabel Deutschland. At 31 March 2013 other borrowings of £1,014 million include liabilities arising under options over direct and indirect interests in Vodafone India. The figures shown in the tables above take into account interest...

  • Page 145
    ...the US sub-group including our interest in Verizon Wireless, positive free cash flow and favourable foreign exchange movements more than offset the impact of the acquisition of Kabel Deutschland, payments for licences and spectrum, equity shareholder dividends, the return of value and share buybacks...

  • Page 146
    ... risk limits of the Board approved treasury policy. The main forms of liquid investment at 31 March 2014 were managed investment funds, money market funds, UK index linked government bonds, tri-party repurchase agreements and bank deposits. The cash received from collateral support agreements mainly...

  • Page 147
    ... line ('VDSL') project. 29 September 2009 US$0.7 billion export credit agency loan facility, final maturity date 19 September 2018. As the syndicated revolving credit facilities with the addition that, should our Italian operating company spend less than the equivalent of â,¬1.5 billion on capital...

  • Page 148
    ... in Vodafone India Limited ('VIL'), Piramal Healthcare ('Piramal') acquired approximately 11% shareholding in VIL from Essar during the 2012 financial year. In April 2014 Piramal sold its total shareholding in VIL to Vodafone Group. The combined consideration for these shares and the indirect equity...

  • Page 149
    ... Gains and losses accumulated in the translation reserve are included in the income statement when the foreign operation is disposed of. Capital management The following table summarises the capital of the Group: 2014 £m Restated 2013 £m Financial assets: Cash and cash equivalents Fair value...

  • Page 150
    ... 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...

  • Page 151
    ... the year ended 31 March 2014 were £347 million (2013: £360 million; 2012: £357 million) (see note 15 "Trade and other receivables"). As discussed in note 30 "Contingent liabilities", the Group has covenanted to provide security in favour of the Trustee of the Vodafone Group UK Pension Scheme in...

  • Page 152
    150 Vodafone Group Plc Annual Report 2014 Notes to the consolidated financial statements (continued) 23. Capital and financial risk management (continued) Market risk Interest rate management Under the Group's interest rate management policy, interest rates on monetary assets and liabilities ...

  • Page 153
    ... Strategy review Performance Governance Financials Additional information 151 Fair value of financial instruments The table below sets out the valuation basis1 of financial instruments held at fair value by the Group at 31 March 2014. Level 12 2014 £m Restated 2013 £m 2014 £m Level...

  • Page 154
    ...they are based. It also shows total employment costs. 2014 Employees Restated 2013 Employees Restated 2012 Employees By activity: Operations Selling and distribution Customer care and administration By segment: Germany Italy Spain UK Other Europe Europe India Vodacom Other Africa, Middle East...

  • Page 155
    ...Australia, Egypt, Germany, Greece, Hungary, India, Ireland, Italy, the Netherlands, New Zealand, Portugal, South Africa, Spain and the UK. Income statement expense 2014 £m Restated 2013 £m Restated 2012 £m Defined contribution schemes Defined benefit schemes Total amount charged to income...

  • Page 156
    154 Vodafone Group Plc Annual Report 2014 Notes to the consolidated financial statements (continued) 26. Post employment benefits (continued) Actuarial assumptions The Group's scheme liabilities are measured using the projected unit credit method using the principal actuarial assumptions set out ...

  • Page 157
    ...of financial position arising from the Group's obligations in respect of its defined benefit schemes is as follows: 2014 £m Restated 2013 £m Restated 2012 £m Movement in pension assets: 1 April Exchange rate movements Interest income Return on plan assets excluding interest income Employer...

  • Page 158
    ... of the defined benefit obligation at 31 March 2014 is 21.7 years (2013: 21.4 years, 2012: 23.6 years). Fair value of pension assets 2014 £m 2013 £m Cash and cash equivalents Equity investments: With quoted prices in an active market Without quoted prices in an active market Debt instruments...

  • Page 159
    ... Group executive plans No share options have been granted to any directors or employees under the Company's discretionary share option plans in the year ended 31 March 2014. There are options outstanding under the Vodafone Group 1999 Long-Term Stock Incentive Plan and the Vodafone Global Incentive...

  • Page 160
    ... Vodafone Group Plc Annual Report 2014 Notes to the consolidated financial statements (continued) 27. Share-based payments (continued) Movements in outstanding ordinary share and ADS options ADS options 2014 Millions 2013 Millions 2012 Millions 2014 Millions Ordinary share options 2013...

  • Page 161
    ... Strategy review Performance Governance Financials Additional information 159 28. Acquisitions and disposals We made a number of acquisitions during the year including the acquisition of a controlling interest in Kabel Deutschland Holding AG and the remaining interest in our business in Italy...

  • Page 162
    ...and enterprise customers unified communications services. The results of the acquired entity have been consolidated in the Group's income statement from 14 October 2013 and contributed £735 million of revenue and a loss of £210 million to the profit attributable to equity shareholders of the Group...

  • Page 163
    ...'s income statement from 27 July 2012 and contributed £1,234 million of revenue and a loss of £151 million to the profit attributable to equity shareholders of the Group during the year ended 31 March 2013. The purchase price allocation is set out in the table below: Fair value £m Net assets...

  • Page 164
    ... in the income statement from 31 October 2012 contributed £136 million of revenues and a loss of £23 million to the profit attributable to equity shareholders of the Group during the year ended 31 March 2013. The purchase price allocation is set out in the table below: Fair value £m Net assets...

  • Page 165
    ...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...

  • Page 166
    ...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...

  • Page 167
    ...of the retrospective legislation at 31 March 2014, or at previous reporting dates. Other Indian tax cases VIL and Vodafone India Services Private Limited ('VISPL') (formerly 3GSPL) are involved in a number of tax cases with total claims exceeding £1 billion plus interest, and penalties of up to 300...

  • Page 168
    ... million. Greece Papistas Holdings SA, Mobile Trade Stores (formerly Papistas SA) and Athanasios and Loukia Papistas v Vodafone Greece, Vodafone Group Plc and certain Directors and Officers of Vodafone In December 2013, Mr and Mrs Papistas, and companies owned or controlled by them, brought three...

  • Page 169
    ... pension schemes (see note 26 "Post employment benefits" to the consolidated financial statements) and directors and Executive Committee members (see note 24 "Directors and key management compensation" to the consolidated financial statements). Transactions with joint ventures and associates Related...

  • Page 170
    ... is Italy. 5 Vodafone Omnitel B.V. became a 100% owned subsidiary on 21 February 2014. 6 Trades as Vodafone Hungary Mobile Telecommunications Company Limited. 7 38.6% of the issued share capital of Vodafone Portugal-Comunicações Pessoais, S.A. is directly held by Vodafone Group Plc. 8 Shareholding...

  • Page 171
    Overview Strategy review Performance Governance Financials Additional information 169 The tables below show selected financial data in respect of subsidiaries that have non-controlling interests that are material to the Group. Vodacom Group Limited 2014 £m 2013 £m Vodafone Egypt ...

  • Page 172
    ... Vodafone Finance UK Limited Vodafone Financial Operations Vodafone Global Content Services Limited Vodafone Holdings Luxembourg Limited Vodafone Intermediate Enterprises Limited Vodafone International Holdings Limited Vodafone International Operations Limited Vodafone Investments Australia Limited...

  • Page 173
    ...markets and the net result of unallocated central Group costs 4 Presentation adjustments relate to the restatement of the Group's joint ventures from a proportionate consolidation basis to an equity accounting basis. 5 Discontinued operations relate to the results of Verizon Wireless. Revenue Group...

  • Page 174
    172 Vodafone Group Plc Annual Report 2014 Other unaudited financial information (continued) Prior year operating results (continued) Europe % change Germany £m Italy £m UK £m Spain £m Other Europe £m Eliminations £m Europe £m £ Organic Year ended 31 March 2013 Revenue Service revenue ...

  • Page 175
    Overview Strategy review Performance Governance Financials Additional information 173 UK Service revenue declined by 4.0%* driven by the impact of MTR cuts effective from April 2012, intense price competition and macroeconomic weakness, which led to lower out-of-bundle usage. Data revenue ...

  • Page 176
    ...Vodafone Group Plc Annual Report 2014 Other unaudited financial information (continued) Prior year operating results (continued) Africa, Middle East and Asia Pacific India £m Vodacom £m Other AMAP £m Eliminations £m AMAP £m % change £ Organic Year ended 31 March 2013 Revenue Service revenue...

  • Page 177
    Overview Strategy review Performance Governance Financials Additional information 175 Vodacom's mobile operations outside South Africa delivered strong service revenue growth of 23.4%*, excluding Vodacom Business Africa, driven by a larger customer base and increasing data take-up. M-Pesa ...

  • Page 178
    ...388 88 834 (9,103) 43,231 92,391 5 5 6 8 8 8 8 8 8 The Company financial statements were approved by the Board of directors on 20 May 2014 and were signed on its behalf by: Vittorio Colao Chief Executive Nick Read Chief Financial Officer The accompanying notes are an integral part of...

  • Page 179
    ...are available in the Vodafone Group Plc annual report for the year ended 31 March 2014. Significant accounting policies applied in the current reporting period that relate to the financial statements as a whole Accounting convention The Company financial statements are prepared under the historical...

  • Page 180
    ...changes in the fair value of the hedged item due to the hedged risk, to the extent the hedge is effective. The ineffective portion is recognised immediately in the profit and loss account. Pensions The Company is the sponsoring employer of the Vodafone Group pension scheme, a defined benefit pension...

  • Page 181
    ... than by instalments. Interest payable on these loans ranges from 2.5% to 7.875%. 6. Share capital Accounting policies Equity instruments issued by the Company are recorded at the proceeds received, net of direct issuance costs. 2014 Number £m Number 2013 £m Ordinary shares of 2020/21 US...

  • Page 182
    ... Vodafone Group Plc Annual Report 2014 Notes to the Company financial statements (continued) 7. Share-based payments Accounting policies The Group operates a number of equity-settled share-based compensation plans for the employees of subsidiaries using the Company's equity instruments. The fair...

  • Page 183
    ...Vodafone Group UK Pension Scheme and the Trustees of the Cable & Wireless Worldwide Retirement Plan and THUS Plc Group Scheme. Legal proceedings Details regarding certain legal actions which involve the Company are set out in note 30 "Contingent liabilities" to the consolidated financial statements...

  • Page 184
    ...Vodafone Group Plc Annual Report 2014 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...

  • Page 185
    ...and low sales prices of ADSs on the New York Stock Exchange ('NYSE')/NASDAQ. The Company transferred its ADS listing from the NYSE to NASDAQ on 29 October 2009. London Stock Exchange Pounds per ordinary share Year ended 31 March High Low High NYSE/NASDAQ Dollars per ADS Low 2010 2011 2012 2013 2014...

  • Page 186
    ... shares of Vodafone Group Plc are traded on the London Stock Exchange and in the form of ADSs on NASDAQ. We had a total market capitalisation of approximately £57 billion at 19 May 2014 making us the sixth largest listing in The Financial Times Stock Exchange 100 index and the 76th largest company...

  • Page 187
    ... 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...

  • Page 188
    ... 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...

  • Page 189
    ... discussed in note 22 "Liquidity and capital resources" to the consolidated financial statements and the stock purchase agreement for the sale of the Group's entire 45% shareholding in VZW to Verizon Communications Inc. Exchange controls There are no UK government laws, decrees or regulations that...

  • Page 190
    ... is to be included in income to the date the payment is converted into US dollars will be treated as ordinary income or loss. Generally the gain or loss will be income or loss from sources within the US for foreign tax credit limitation purposes. Taxation of capital gains UK taxation A US holder may...

  • Page 191
    ...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...

  • Page 192
    190 Vodafone Group Plc Annual Report 2014 History and development The Company was incorporated under English law in 1984 as Racal Strategic Radio Limited (registered number 1833679). After various name changes, 20% of Racal Telecom Plc share capital was offered to the public in October 1988. The ...

  • Page 193
    Overview Strategy review Performance Governance Financials Additional information 191 Regulation Our operating companies are generally subject to regulation governing the operation of their business activities. Such regulation typically takes the form of industry specific law and regulation ...

  • Page 194
    ...imposed new account separation rules, which apply to the mobile operators and fixed incumbent from 2014. AKEP is also reviewing MTR rates, targeting pure long run incremental cost ('LRIC') benchmarking levels with glide-path reducing current MTRs to 1.0 eurocents per minute in 2015. Vodafone Albania...

  • Page 195
    Overview Strategy review Performance Governance Financials Additional information 193 As a mandatory condition of acquiring the 900MHz spectrum in Delhi, Mumbai and Kolkata, Vodafone India has applied for the new Unified Licence and is negotiating the agreement of specific terms prior to the ...

  • Page 196
    194 Vodafone Group Plc Annual Report 2014 Regulation (continued) Overview of spectrum licences 800MHz Country by region Quantity1 Expiry date Quantity1 900MHz Expiry date Quantity1 1800MHz Expiry date Quantity1 2.1GHz Expiry date Quantity1 2.6GHz Expiry date Europe region Germany Italy UK Spain ...

  • Page 197
    ...20142 Europe Germany (â,¬ cents) Italy (â,¬ cents) UK (GB £ pence) Spain (â,¬ cents) Netherlands (â,¬ cents) Ireland (â,¬ cents) Portugal (â,¬ cents) Romania (â,¬ cents) Greece (â,¬ cents) Czech Republic (CZK) Hungary (HUF) Albania (ALL) Malta (â,¬ cents) Africa, Middle East and Asia Pacific India...

  • Page 198
    ...level of risk identifies the key risks and associated mitigations that are reviewed and approved by the Group Executive Committee, the Audit and Risk Committee and the Board. Changes from prior year risk assessment One new risk for 2014 has been added: a "The integration of newly acquired businesses...

  • Page 199
    ... or credit card, than in some of the emerging markets who have a more cash based pre-pay customer population. Mitigation: Both the hardware and software applications which hold or transmit confidential personal and business voice and data traffic include security features. Security related reviews...

  • Page 200
    ... to deliver these expected benefits and synergies which could result in an impairment of the carrying value of the acquired business. Assessment: This risk is possible in markets where major acquisitions have occurred (e.g. Cable & Wireless Worldwide in the UK and Kabel Deutschland in Germany) and...

  • Page 201
    ... Strategy review Performance Governance Financials Additional information 199 10. We may not satisfactorily resolve major tax disputes. Risk: We operate in many jurisdictions around the world and from time to time have disputes on the amount of tax due. In particular, in spite of the positive...

  • Page 202
    200 Vodafone Group Plc Annual Report 2014 Principal risk factors and uncertainties (continued) Risk of change in carrying amount of assets and liabilities The main potential short-term financial statement impact of the current economic uncertainties is the potential impairment of non-financial and...

  • Page 203
    ... how the business is managed, operated and reviewed by management, and includes the results of the Group's joint ventures, Vodafone Italy, Vodafone Hutchison Australia, Vodafone Fiji and Indus Towers, on a proportionate basis. This differs to the "Consolidated financial statements" on pages 96 to...

  • Page 204
    ... 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...

  • Page 205
    ... Strategy review Performance Governance Financials Additional information 203 Management basis1 Organic change % Other activity2 pps Foreign exchange pps Reported change % Presentation adjustments pps Statutory basis1 Reported change % Europe Revenue Service revenue Other revenue Europe...

  • Page 206
    ... EBITDA margin Australia - percentage point change in EBITDA margin Adjusted operating profit India - adjusted operating profit Vodacom - adjusted operating profit Other AMAP - adjusted operating profit 31 March 2013 Group Revenue Service revenue Other revenue EBITDA Adjusted operating profit Europe...

  • Page 207
    ... Strategy review Performance Governance Financials Additional information 205 Management basis1 Organic change % Other activity2 pps Foreign exchange pps Reported change % Presentation adjustments pps Statutory basis1 Reported change % AMAP Revenue Service revenue Other revenue India...

  • Page 208
    ... Financial highlights Our year Where we do business How we do business Crystallising value from Verizon Wireless Key performance indicators Market overview Strategy: Our strategy Strategy: Consumer Europe Strategy: Unified communications Strategy: Consumer emerging markets Strategy: Enterprise...

  • Page 209
    ... report on the consolidated and parent company financial statements1 Note 30 "Contingent liabilities" 8B Significant changes Not applicable The offer and listing 9A Offer and listing details Shareholder information - Share price history 9B Plan of distribution Not applicable 9C Markets Shareholder...

  • Page 210
    ... Vodafone Group Plc Annual Report 2014 Form 20-F cross reference guide (continued) Item Form 20-F caption Location in this document Page 10 Additional information 10A Share capital 10B Memorandum and articles of association 10C Material contracts 10D Exchange controls 10E Taxation 10F Dividends...

  • Page 211
    ... Executive's review on pages 12 to 13, statements regarding the Group's future dividends and the guidance statement for the 2015 financial year and free cash flow guidance on page 13 and 39, the performance of associates and joint ventures, other investments and newly acquired businesses including...

  • Page 212
    ...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...

  • Page 213
    ... the year ended 31 March 2014 and 31 March 2013 other items excluded the income dividends received from Verizon Wireless and payments in respect of a tax case settlement. FCA Financial Conduct Authority (previously Financial Services Authority). HSPA+ An evolution of high speed packet access ('HSPA...

  • Page 214
    ... revenue in the prior financial periods have been recalculated based on the new pricing structure to form the basis for our organic calculations. 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...

  • Page 215
    ... equity accounting basis. In addition, the results of the Group's investment in Verizon Wireless are disclosed in continuing operations for those years. At/for the year ended 31 March 2014 Restated 2013 Restated 2012 2011 2010 Consolidated income statement data (£m) Revenue Operating (loss)/profit...

  • Page 216
    ...: Shareholder helpline Telephone: +44 (0) 870 702 0198 (In Ireland): +353 (0) 818 300 999 Investor Relations [email protected] vodafone.com/investor Media Relations vodafone.com/media/contact Sustainability [email protected] vodafone.com/sustainability Access our online Annual Report at...