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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16
OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

Dated May 31, 2022

Commission File Number: 001-10086

VODAFONE GROUP
PUBLIC LIMITED COMPANY

(Translation of registrant’s name into English)

VODAFONE HOUSE, THE CONNECTION, NEWBURY, BERKSHIRE, RG14 2FN, ENGLAND
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F                   Form 40-F      

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): 

THIS REPORT ON FORM 6-K SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN EACH OF THE REGISTRATION STATEMENT ON FORM F-3 (FILE NO. 333-240163), THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-81825) AND THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-149634) OF VODAFONE GROUP PUBLIC LIMITED COMPANY AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.

This report on form 6-K includes the following items:

(a) Summary;
(b) Strategy;
(c) Our purpose;
(d) Financial performance;
(e) Cash flow and funding;
(f) Statement of financial position;
(g) Risk factors;
(h) Other significant developments;
(i) Regulation;
(j) Unaudited condensed consolidated financial statements;
(k) Non-GAAP measures;
(l) Definitions; and
(m) Forward-looking statements and other matters.

Certain information is taken from the previously published results of Vodafone Group Plc for the year ended 31 March 2021. This report on Form 6-K should be read in conjunction with the Group’s annual report on Form 20-F for the year ended 31 March 2021. In particular the following sections:

the information contained under “Key performance indicators” on pages 4 and 5;
the information contained under “Market and strategy” on pages 8 to 15;
the information contained under “Our financial performance” on pages 23 to 31; and
the consolidated financial statements on pages 121 to 208.

The terms “Vodafone”, the “Group”, “we”, “our” and “us” refer to Vodafone Group Plc (‘the Company’), and as applicable, its subsidiaries and/or its interest in joint ventures and/or associates.

2

Vodafone Group Plc FY22 Preliminary results

Summary Growth in revenue, profit and cash flow

    

    

FY22

    

FY21

    

Change1

 Financial results (unaudited)

Page

€m

€m

%

 Group revenue

 

6

 

45,580

 

43,809

 

4.0

 Group service revenue

 

6

 

38,203

 

37,141

 

2.6*

 Operating profit

 

6

 

5,664

 

5,097

 

11.1

 Profit for the financial year

 

6

 

2,624

 

536

 

  

 Basic earnings per share

 

6

 

7.20c

 

0.38c

 

  

 Cash inflow from operating activities

 

17

 

18,081

 

17,215

 

5.0

 Borrowings less cash and cash equivalents

 

17

 

(62,596)

 

(61,939)

 

  

 Total dividends per share

 

18

 

9.00c

 

9.00c

 

  

1. Amount marked with an * represents organic growth which presents performance on a comparable basis, excluding the impact of foreign exchange rates, mergers and acquisitions, and other adjustments to improve the comparability of results between periods. When calculating organic growth, the FY21 results for Vantage Towers and relevant operating entities have been adjusted to reflect a full year of operation on a pro forma basis in order to be comparable to FY22. Organic growth figures are non-GAAP measures. See non-GAAP measures on page 38 for more information.

Financial performance

Total revenue increased by 4.0% to 45.6 billion (FY21: 43.8 billion), driven by service revenue growth in Europe and Africa, and higher equipment revenue, and favourable foreign exchange movements.

Operating profit increased by 11.1% to 5.7 billion (FY21: 5.1 billion), reflecting improved performance, and lower depreciation and amortisation on owned assets, partly offset by lower other income.

The Group made a profit for the financial year of 2.6 billion (FY21: 0.5 billion). The profit increase was primarily driven by higher operating profit, and lower income tax expense.

Basic earnings per share was 7.20 eurocents, compared to basic earnings per share of 0.38 eurocents in the prior year.

Cash flow and funding

Cash inflow from operating activities increased by 5.0% to 18.1 billion (FY21: 17.2 billion).

Borrowings less cash and cash equivalents increased by 0.7 billion (FY21: 0.6 billion) from 61.9 billion to 62.6 billion. This reflects an increase in borrowings of 2.3 billion, principally driven by an increase of 2.0 billion on derivative collateral positions, which impacts both cash and short-term borrowings. This increase in borrowings was substantially offset by an increase of 1.6 billion in cash and cash equivalents.

Total dividends per share are 9.0 eurocents (FY21: 9.0 eurocents), including a final dividend per share of 4.5 eurocents. The ex-dividend date for the final dividend is 1 June 2022 for ordinary shareholders, the record date is 6 June 2022 and the dividend is payable on 5 August 2022.

3

Vodafone Group Plc FY22 Preliminary results

Strategy Committed to improving returns through growth

Our strategy focuses on driving shareholder returns through growth, and is delivered through three customer commitments and three enabling strategies. These work together towards our vision to become a new generation connectivity and digital services provider for Europe and Africa, enabling an inclusive and sustainable digital society.

We have made good progress with our strategy during FY22 and highlights include: further deepening of our customer relationships with lower customer churn; improved results from our increased capital investment with improvements in network quality; increasing penetration of financial services in Africa; and another successful year of digital enabled efficiencies. Our strategic progress has enabled us to deliver against our medium-term financial ambitions. The table below includes a selection of KPIs that illustrates progress in our key areas of focus.

    

Units

 

 

FY22

    

FY21

 Customer commitments

 

  

 

  

 

  

 Best connectivity products & services

 

  

 

  

 

  

Europe mobile contract customers1

 

million

 

66.4

 

65.4

Europe broadband customers1

 

million

 

25.6

 

25.6

Europe Consumer converged customers1

 

million

 

9.0

 

7.9

Europe mobile contract customer churn

 

%

13.6

 

13.7

Africa mobile customers2

 

million

 

184.5

 

178.0

Africa data users2

 

million

 

89.9

 

84.9

Business service revenue growth*

 

%

0.8

 

(0.6)

 Leading innovation in digital services

 

  

 

  

 

  

Europe TV subscribers1

 

million

 

21.9

 

22.2

IoT SIM connections

 

million

 

150.1

 

123.3

Africa M-Pesa customers2

 

million

 

52.4

 

48.3

Africa M-Pesa transaction volume2

 

billion

 

19.9

 

15.2

 Outstanding digital experiences

 

  

 

  

 

  

Digital channel sales mix3

%

25

 

26

End-to-end TOBi completion rate4 5

%

42.9

 

34.6

Enabling strategies

 

  

 

  

 

  

 Leading gigabit networks

 

  

 

  

 

  

5G available in European cities1

 

#

 

294

 

240

Europe on-net gigabit capable connections1

 

million

 

48.5

 

43.7

Europe on-net NGN broadband penetration1

%

30

 

30

 Simplified & most efficient operator

 

  

 

  

 

  

Europe markets where 3G switched off1

 

#

 

4

 

3

1. Including VodafoneZiggo | 2. Africa including Safaricom | 3. Based on Germany, Italy, UK, Spain only | 4. Group excluding Egypt | 5. Defined as percentage of total customer contacts resolved without human interaction through TOBi

4

Vodafone Group Plc FY22 Preliminary results

Our purpose We connect for a better future

We believe that Vodafone has a significant role to play in contributing to the societies in which we operate and we want to enable an inclusive and sustainable digital society. We continue to make progress against our purpose strategy and will provide a full update in our FY22 Annual Report on Form 20-F. Highlights and achievements from FY22 are summarised below.

Europes largest network, powered by 100% renewable electricity

From July 2021, our entire European operations including mobile and fixed networks, data centres, retail and offices are 100% powered by electricity from renewable sources. This marks a key step towards our goal of reducing our own carbon emissions to net zero by 2030 and across our entire value chain by 2040.

Eco Rating

In May 2021, we launched a new Eco Rating labelling scheme jointly with other major European operators. This is a pan-industry initiative to help consumers identify and compare the most sustainable mobile phones on the market, whilst also encouraging suppliers to reduce the environmental impact of devices. Eco rating evaluates the environmental impact of the entire production process, transportation, use and disposal of a handset, resulting in an overall score. The Eco Rating scheme was initially launched in 24 European countries and has since been rolled out in several countries in Latin America and by Vodacom in South Africa. More than 150 mobile phones from 15 manufacturers are now assessed by the Eco Rating initiative, nearly doubling the range of devices rated at launch.

M-Pesa

As of March 2022, over 52 million customers were using our mobile money platform, M-Pesa, to manage business transactions and to pay salaries, pensions, agricultural subsidies and government grants. M-Pesa provides financial services to millions of people who have a mobile phone but limited access to a bank account and also helps reduce the associated risks of robbery and corruption in a cash-based society. As we have now reached a milestone 52 million customers, we have exceeded our goal to connect 50 million people and their families to mobile financial services three years ahead of our original target date.

Ethnicity targets

In December 2021, we announced new ethnic diversity targets for our global leadership team, as well as our senior leadership and management teams in the UK and South Africa. These new targets reflect our ambition to be a company with a global workforce that reflects the customers, communities and businesses we serve, as well as the wider societies in which we operate. The data supporting our new targets has been informed by an internal campaign called #CountMeIn, which encourages employees to voluntarily self-declare their diversity demographics in line with local privacy and legal requirements.

5

Vodafone Group Plc FY22 Preliminary results

Financial performance Continued growth in both Europe and Africa

Group revenue increased by 4.0% to 45.6 billion mainly driven by service revenue growth in Europe and Africa
Ongoing delivery of our efficiency programme leading to a net 1.5 billion of savings during FY19-22
Operating profit increased by 11.1% to 5.7 billion, reflecting improved performance, and lower depreciation and amortisation on owned assets, partly offset by lower other income
Increase in profit for the financial year and basic earnings per share, due to higher operating profit and lower income tax expense

Group financial performance

    

FY221

    

FY21

    

Reported

€m

€m

change %

 Revenue

 

45,580

 

43,809

 

4.0

 - Service revenue

 

38,203

 

37,141

 

2.9

 - Other revenue

 

7,377

 

6,668

 

  

 Operating profit

 

5,664

 

5,097

 

11.1

 Investment income

 

254

 

330

 

  

 Financing costs

 

(1,964)

 

(1,027)

 

  

 Profit before taxation

 

3,954

 

4,400

 

  

 Income tax expense

 

(1,330)

 

(3,864)

 

  

 Profit for the financial year

 

2,624

 

536

 

  

 Attributable to:

 

  

 

  

 

  

 - Owners of the parent

 

2,088

 

112

 

  

 - Non-controlled interests

 

536

 

424

 

  

 Profit for the financial year

 

2,624

 

536

 

  

 Basic earnings per share

 

7.20c

 

0.38c

 

  

Note:

1. The FY22 results reflect average foreign exchange rates of €1:£0.85, €1:INR 86.59, €1:ZAR 17.25, €1:TRY 12.16 and €1: EGP 18.35.

6

Vodafone Group Plc FY22 Preliminary results

Organic growth

All amounts marked with an ‘*’ in the commentary represent organic growth which presents performance on a comparable basis, excluding the impact of foreign exchange rates, mergers and acquisitions, and other adjustments to improve the comparability of results between periods. When calculating organic growth, the FY21 results for Vantage Towers and relevant operating entities have been adjusted to reflect a full year of operation on a pro forma basis in order to be comparable to FY22. Organic growth figures are non-GAAP measures. See non-GAAP measures on page 38 for more information.

Segmental reporting

Following the IPO of Vantage Towers A.G. in March 2021, the business is a new reporting segment for the year ended 31 March 2022 (‘FY22’). Comparative information for the year ended 31 March 2021 has not been re-presented. Total revenue is unaffected because charges from Vantage Towers A.G. to operating companies are eliminated on consolidation. Segmental adjusted EBITDAaL and segmental adjusted EBITDAaL margin are both impacted by this change for certain segments which does affect year-on-year comparisons. The segmental results of Vantage Towers A.G. include the contribution from Cornerstone Technologies Infrastructure Limited as a joint operation with Telefonica in the UK.

Geographic performance summary

  

  

  

  

  

Other

  

  

Other

  

Vantage

  

Common

  

Elimi-

 FY22

Germany

Italy

UK

Spain

Europe

Vodacom

Markets

Towers

Functions1

nations

 

 

Group

 Total revenue (€m)

 

13,128

 

5,022

 

6,589

 

4,180

 

5,653

 

5,993

 

3,830

 

1,252

 

1,414

 

(1,481)

 

45,580

 Service revenue (€m)

 

11,616

 

4,379

 

5,154

 

3,714

 

5,001

 

4,635

 

3,420

 

 

522

 

(238)

 

38,203

 Adjusted EBITDAaL (€m)2

 

5,669

 

1,699

 

1,395

 

957

 

1,606

 

2,125

 

1,335

 

619

 

(197)

 

  

 

  

 Adjusted EBITDAaL margin (%)2

 

43.2%

33.8%

21.2%

22.9%

28.4%

35.5%

34.9%

49.4%

 

 

FY22

 Service revenue growth%

    

Q1

    

Q2

    

H1

    

Q3

    

Q4

    

H2

  

  

Total

 Germany

1.1

 

0.8

 

0.9

 

0.8

 

0.6

 

0.7

 

0.8

 Italy

(3.9)

 

(1.6)

 

(2.8)

 

(1.6)

 

0.1

 

(0.8)

 

(1.8)

 UK

5.3

 

4.7

 

5.0

 

6.3

 

8.9

 

7.6

 

6.3

 Spain

0.5

 

(2.0)

 

(0.7)

 

(1.8)

 

(4.5)

 

(3.1)

 

(2.0)

 Other Europe

4.9

 

2.7

 

3.8

 

3.5

 

0.7

 

2.1

 

2.9

 Vodacom

18.5

 

14.6

 

16.5

 

11.0

 

10.6

 

10.8

 

13.5

 Other Markets

(1.3)

 

10.0

 

4.3

 

7.6

 

(3.1)

 

2.1

 

3.3

 Vantage Towers

 

 

 

 

 

 

 Group

3.1

 

3.4

 

3.2

 

3.1

 

1.9

 

2.5

 

2.9

FY22

 Organic service revenue growth %*2

    

Q1

    

Q2

    

H1

    

Q3

    

Q4

    

H2

  

  

Total

 Germany

 

1.4

 

1.0

 

1.2

 

1.1

 

0.8

 

1.0

 

1.1

 Italy

 

(3.6)

 

(1.4)

 

(2.5)

 

(1.3)

 

(0.8)

 

(1.0)

 

(1.8)

 UK

 

2.5

 

0.6

 

1.2

 

0.9

 

2.0

 

1.4

 

1.3

 Spain

 

0.8

 

(1.9)

 

(0.6)

 

(1.6)

 

(5.1)

 

(3.4)

 

(2.0)

 Other Europe

 

4.2

 

2.4

 

3.3

 

2.9

 

2.7

 

2.8

 

3.0

 Vodacom

 

7.9

 

3.1

 

5.4

 

4.4

 

3.1

 

3.7

 

4.6

 Other Markets

 

18.4

 

19.7

 

19.1

 

19.8

 

19.8

 

19.8

 

19.4

 Vantage Towers

 

 

 

 

 

 

 

 Group

 

3.3

 

2.4

 

2.8

 

2.7

 

2.0

 

2.3

 

2.6

Notes:

1. Common Functions Adjusted EBITDAaL includes a charge in relation to the impairment of prior year receivables.
2. Organic service revenue growth is a non-GAAP measure. See page 38 for more information.

7

Vodafone Group Plc FY22 Preliminary results

Germany 30% of Group service revenue

    

FY22

    

FY21

    

Reported

    

Organic

€m

€m

change %

  

change %*

 Total revenue

 

13,128

 

12,984

 

1.1

 

  

 - Service revenue

 

11,616

 

11,520

 

0.8

 

1.1

 - Other revenue

 

1,512

 

1,464

 

  

 

  

 Adjusted EBITDAaL1

 

5,669

 

5,634

 

0.6

 

6.5

 Adjusted EBITDAaL margin

 

43.2%

43.4%

  

 

  

Note:

1. When calculating organic growth for Adjusted EBITDAaL, the FY21 results are adjusted for Vantage Towers A.G. on a pro forma basis to be comparable to FY22.

Total revenue increased by 1.1% to €13.1 billion, driven by service revenue and equipment revenue growth.

On an organic basis, service revenue grew by 1.1%* (Q3: 1.1%*, Q4: 0.8%*), driven by broadband ARPU growth, good growth in Business, and higher roaming and visitor revenue. This was partially offset by a reduction in mobile termination rates, and lower variable call usage revenue. Retail service revenue grew by 1.6%* (Q3: 1.7%*, Q4: 1.2%*).

Fixed service revenue grew by 0.5%* (Q3: 0.7%*, Q4: -0.4%*), as continued broadband ARPU growth was partially offset by lower variable call usage revenue compared to the prior year, as usage began to normalise post-pandemic, and a lower TV customer base. The decline in fixed service revenue in Q4 FY22 was primarily driven by a lower customer base, partly impacted by specific operational challenges related to the implementation of policies to comply with a new telecommunications law, which came into effect in December 2021. We added 20,000 cable customers during the year, including 66,000 migrations from legacy DSL broadband. Half of our cable broadband customers now subscribe to speeds of at least 250Mbps, and gigabit speeds are available to 23.8 million households across our hybrid fibre cable network.

Our TV customer base declined by 309,000, as reduced retail activity during the COVID-19 pandemic led to fewer gross customer additions, and was also impacted by broadband customer losses due to challenges related to compliance with the new telecommunications law. During the year, we accelerated convergence penetration as a result of successful campaigns and our converged customer base increased by 718,000 to 2.4 million Consumer converged accounts. Our converged propositions, led by the ‘GigaKombi’ products, allow customers to combine their mobile, landline, broadband and TV subscriptions for one monthly fee.

Mobile service revenue increased by 1.8%* (Q3: 1.7%*, Q4: 2.4%*), reflecting a higher customer base in both the Consumer and Business segments, as well as higher roaming and visitor revenue, which more than offset the impact of a reduction in mobile termination rates. The increased rate of service revenue growth in Q4 FY22 also benefited from certain immaterial year-end adjustments which are not expected to re-occur. We added 19,000 contract customers during the year and contract churn remained broadly stable year-on-year at 12.3%, despite the impact of operational challenges related to compliance with the new telecommunications law. In June, we successfully launched our digital-only second brand, SIMon mobile. We added a further 6.4 million IoT connections during the year, supported by strong demand from the automotive sector.

Adjusted EBITDAaL grew by 6.5%*, supported by higher service revenue, cost synergy delivery, and several settlements which are not expected to re-occur. The Adjusted EBITDAaL margin was 2.1* percentage points higher year-on-year at 43.2%.

We have now achieved our €425 million cost and capital expenditure synergy target for the integration of the Unitymedia assets acquisition, over two years ahead of plan. We see further opportunities for cost reduction including through the planned termination of our Transitional Service Agreements (TSAs) with Liberty Global.

We switched off our 3G network on 1 July 2021, with spectrum re-assigned to increase the capacity, speed and coverage of our 4G networks. Our 5G network is now available to more than 45 million people. We launched Europe’s first 5G standalone network in April 2021. Standalone 5G enables higher speeds, enhanced reliability and ultra-low latency, in addition to using 20% less energy on customers’ devices.

8

Vodafone Group Plc FY22 Preliminary results

Italy 11% of Group service revenue

    

FY22

    

FY21

    

Reported

    

Organic

€m

€m

change %

  

change %*

 Total revenue

 

5,022

 

5,014

 

0.2

 

  

 - Service revenue

 

4,379

 

4,458

 

(1.8)

 

(1.8)

 - Other revenue

 

643

 

556

 

  

 

  

 Adjusted EBITDAaL

 

1,699

 

1,597

 

6.4

 

6.4

 Adjusted EBITDAaL margin

 

33.8%

31.9%

  

 

  

Total revenue was stable at €5.0 billion as lower service revenue was offset by higher equipment revenue.

On an organic basis, service revenue declined by 1.8%* (Q3: -1.3%*, Q4: -0.8%*) as good growth in Business digital services revenue, higher MVNO revenues, and higher roaming and visitor revenue was offset by continued price pressure, and a reduction in mobile termination rates.

Mobile service revenue declined by 3.2%* (Q3: -2.9%*, Q4: -3.1%*) reflecting greater competition in the value segment and a lower active prepaid customer base. This was partly offset by targeted pricing actions and the positive contribution from PostePay MVNO customer migrations onto our network, which completed in early August. The decline in mobile service revenue in Q4 FY22 was impacted by a reduction in mobile termination rates. Market mobile number portability volumes continued to improve versus prior year levels. Our second brand ‘ho.’ continued to grow, with 342,000 net additions, supported by our best-in-class net promoter score, and now has 2.8 million customers.

Fixed service revenue increased by 2.0%* (Q3: 3.1%*, Q4: 5.3%*) driven by broadband customer base growth in Consumer, as well as good demand for our Business digital services, such as cloud & security. The acceleration in fixed service revenue growth in Q4 FY22 was driven by new Business customer additions, supported by a strong share of EU recovery funding voucher customers, as well as our pricing actions. We added 73,000 fixed-wireless access customers during the period, which are included in our mobile customer base. We now have 3.1 million broadband customers, and 52.6% of our broadband base is converged. Our total Consumer converged customer base is 1.3 million, an increase of 163,000 during the period. Through our own next generation network and partnership with Open Fiber, our broadband services are now available to 9.0 million households. We also cover 3 million households with fixed-wireless access, offering speeds of up to 100Mbps.

Adjusted EBITDAaL increased by 6.4%*, reflecting a 6.6 percentage point benefit from a €105 million legal settlement, partially offset by lower service revenue. Excluding the impact of a legal settlement, Adjusted EBITDAaL was stable* year-on-year. The Adjusted EBITDAaL margin was 1.9* percentage points higher year-on-year at 33.8%.

9

Vodafone Group Plc FY22 Preliminary results

UK 13% of Group service revenue

    

FY22

    

FY21

    

Reported

    

Organic

€m

€m

change %

  

change %*

 Total revenue

 

6,589

 

6,151

 

7.1

 

  

 - Service revenue

 

5,154

 

4,848

 

6.3

 

1.3

 - Other revenue

 

1,435

 

1,303

 

  

 

  

 Adjusted EBITDAaL1

 

1,395

 

1,367

 

2.0

 

3.3

 Adjusted EBITDAaL margin

 

21.2%

  

22.2%

  

 

  

Note:

1. When calculating organic growth for Adjusted EBITDAaL, the FY21 results are adjusted for Vantage Towers A.G. on a pro forma basis to be comparable to FY22.

Total revenue increased by 7.1% to €6.6 billion, due to higher service revenue and equipment revenue, and an appreciation of the pound sterling versus the euro.

On an organic basis, service revenue grew by 1.3%* (Q3: 0.9%*, Q4: 2.0%*), driven by Consumer segment growth, and supported by higher MVNO, roaming and visitor revenue. This was partially offset by a slowdown in Business, and a reduction in mobile termination rates.

Mobile service revenue grew by 2.8%* (Q3: 2.6%*, Q4: 5.9%*) driven by commercial momentum in Consumer, partially offset by the post-pandemic normalisation of Business connections. The increase in mobile service revenue growth rate in Q4 FY22 was partially due to higher wholesale MVNO revenue. During the year, we added 338,000 mobile contract customers, supported by our ‘Vodafone EVO’ proposition, which offers customers a combination of flexible contracts, trade-in options, and early upgrades. We also benefited from good iPhone demand and improved customer loyalty. Contract churn improved by 0.5 percentage points year-on-year to 12.5%. Our digital sub-brand ‘VOXI’ also continued to grow, with 104,000 customers added in the year. Our digital sales now account for 33% of total sales. We also announced an exclusive retail partnership with the Dixons Carphone Group, covering 300 stores and digital channels, with improved terms compared to our previous arrangement.

Fixed service revenue declined by 2.3%* (Q3: -3.3%*, Q4: -7.0%*), impacted by lower Business revenue, with a further slowdown in the segment in Q4 FY22. Our performance was also driven by the decision to end a large but unprofitable multinational contract, and a reseller entering into administration in the first half of the year. Our commercial momentum in Consumer remained strong, with good demand for our Vodafone ‘Pro Broadband’ product. With 139,000 broadband net additions during the year, we now have over one million customers, of which 527,000 are converged. In November 2021, we announced the expansion of our long-term strategic partnership agreement with CityFibre. In conjunction with our existing partnership with Openreach, our NGN broadband services are now available to 29.3 million households.

Adjusted EBITDAaL increased by 3.3%*, driven by growth in service revenue, and continued cost control. Our Adjusted EBITDAaL margin was 0.3* higher year-on-year at 21.2%.

10

Vodafone Group Plc FY22 Preliminary results

Spain 10% of Group service revenue

    

FY22

    

FY21

    

Reported

    

Organic

€m

€m

change %

  

change %*

 Total revenue

 

4,180

 

4,166

 

0.3

 - Service revenue

 

3,714

 

3,788

 

(2.0)

(2.0)

 - Other revenue

 

466

 

378

 

  

  

 Adjusted EBITDAaL1

 

957

 

1,044

 

(8.3)

(1.1)

 Adjusted EBITDAaL margin

 

22.9%

25.1%

  

  

Note:

1. When calculating organic growth for Adjusted EBITDAaL, the FY21 results are adjusted for Vantage Towers A.G. on a pro forma basis to be comparable to FY22.

Total revenue was stable at €4.2 billion, as higher equipment revenue was offset by lower service revenue.

On an organic basis, service revenue declined by 2.0%* (Q3: -1.6%*, Q4 -5.1%*) as the impact of continued price competition in the value segment, and a reduction in mobile termination rates, were partially offset by higher roaming and visitor revenue. The quarterly slowdown in service revenue in Q4 was largely driven by a tougher prior year comparative, due to the full quarter impact of our more-for-more pricing actions in the prior year, and a reduction in mobile termination rates in FY22.

The market remained highly competitive in the Consumer value segment. In mobile, our contract customer base remained stable in the year, supported by strong public sector demand, and a gradual improvement in our commercial performance towards the end of the year, reflecting our continued focus on improving customer loyalty. Mobile contract churn increased by 0.5 percentage points year-on-year to 20.7% due to an exceptionally low churn in the prior year as a result of portability restrictions. Our second brand ‘Lowi’ added 310,000 customers during the period and now has a total customer base of 1.5 million.

Our broadband customer base declined by 164,000 as a result of higher competitive intensity in the Consumer value segment, and the temporary impact of our retail channel optimisation. Our TV customer base decreased by 88,000, impacted by continued competitive intensity. We have renewed our exclusive agreement with HBO Max, and through our partnerships with other content providers such as Disney, we have the most extensive library of movies and TV series in the market.

During the year, a digital toolkit platform for small and medium sized enterprises was launched by the Spanish government as part of the EU recovery funding initiatives. This scheme enables businesses to access fully subsidised digital services on a single platform. We have already received a significant number of registration requests from customers and will achieve an attractive Adjusted EBITDAaL margin on this incremental revenue. A second phase of this scheme is expected to launch in June 2022.

Adjusted EBITDAaL declined by 1.1%* and the Adjusted EBITDAaL margin was 0.3* percentage points lower year-on- year at 22.9%. The marginal decrease in Adjusted EBITDAaL reflects lower service revenue, largely offset by further efficiency savings.

During the year we announced a restructuring plan, mainly affecting owned retail stores, as part of our operational transformation. In November, we completed the optimisation of our retail footprint, with all branded stores now operating under a franchise model.

11

Vodafone Group Plc FY22 Preliminary results

Other Europe 13% of Group service revenue

    

FY22

    

FY21

    

Reported

    

Organic

€m

€m

change %

  

change %*

 Total revenue

 

5,653

 

5,549

 

1.9

 

  

 - Service revenue

 

5,001

 

4,859

 

2.9

 

3.0

 - Other revenue

 

652

 

690

 

  

 

  

 Adjusted EBITDAaL1

 

1,606

 

1,760

 

(8.8)

 

1.4

 Adjusted EBITDAaL margin

 

28.4%

31.7%

  

 

  

Note:

1. When calculating organic growth for Adjusted EBITDAaL, the FY21 results are adjusted for Vantage Towers A.G. on a pro forma basis to be comparable to FY22.

Total revenue increased by 1.9% to €5.7 billion, primarily reflecting service revenue growth, also supported by the appreciation of local currencies versus the euro.

On an organic basis, service revenue increased by 3.0%* (Q3: 2.9%*, Q4: 2.7%*), with all markets other than Romania growing during the year. The growth in service revenue was supported by customer base growth, higher roaming and visitor revenue, partially offset by a reduction in mobile termination rates.

In Portugal, service revenue grew due to strong fixed line revenue growth, higher mobile ARPU, and roaming and visitor revenue growth. During the period, we added 161,000 mobile contract customers and 64,000 fixed broadband customers. In October, we announced that Vodafone Portugal had acquired 90MHz of 3,600MHz and 2x10MHz of 700MHz spectrum, with a 20-year licence through to 2041. The spectrum will enable us to significantly expand network capacity to meet growing demand for reliable, high-quality voice and data services.

In Ireland, service revenue increased, reflecting mobile contract customer growth, and higher roaming and visitor revenue, partially offset by a reduction in mobile termination rates. During the period, our mobile contract customer base increased by 77,000 and mobile contract customer loyalty rates improved, with churn reducing 1.5 percentage points year-on-year to 8.4%.

Service revenue in Greece increased, reflecting higher roaming and visitor revenue as international tourism grew year-on-year, partially offset by a reduction in mobile termination rates. During the year, we added 38,000 mobile contract customers and 145,000 prepaid customers.

Adjusted EBITDAaL increased by 1.4%*, supported by revenue growth and further efficiency savings, partially offset by the impact of a provision in Greece which is not expected to re-occur, and higher direct cost. The Adjusted EBITDAaL margin decreased by 0.2* percentage points and was 28.4%.

We continued to make progress on integrating the assets acquired from Liberty Global in Central and Eastern Europe and we have now delivered 60% of our cost and capital expenditure synergy target.

12

Vodafone Group Plc FY22 Preliminary results

Vodacom 12% of Group service revenue

    

FY22

    

FY21

    

Reported

    

Organic

€m

€m

change %

  

change %*

 Total revenue

 

5,993

 

5,181

 

15.7

 

  

 - Service revenue

 

4,635

 

4,083

 

13.5

 

4.6

 - Other revenue

 

1,358

 

1,098

 

  

 

  

 Adjusted EBITDAaL

 

2,125

 

1,873

 

13.5

 

3.4

 Adjusted EBITDAaL margin

 

35.5%

36.2%

  

 

  

Total revenue increased by 15.7% to €6.0 billion and Adjusted EBITDAaL increased by 13.5%, primarily due to the strengthening of the local currencies versus the euro.

On an organic basis, Vodacom’s total service revenue grew by 4.6%* (Q3: 4.4%*, Q4 3.1%*) with growth in both South Africa and Vodacom’s international markets.

In South Africa, service revenue grew year-on-year, supported by sustained demand, incremental wholesale services, Business demand and financial services growth. We added 1.8 million mobile prepaid customers and 272,000 mobile contract customers, with the latter supported by our new more-for-more ‘Vodafone Red’ proposition introduced in June. Financial services revenue in South Africa increased by 12.4%* to €155 million, reflecting the expansion of our service offerings, and 69.4% of our mobile customer base now uses data services.

In October 2021, we launched our new ‘VodaPay’ super-app in South Africa, bringing consumer and business capabilities under one platform. The application enables customers to access financial, insurance and eCommerce services and supports businesses with additional resource planning and ‘business-to-business’ functionalities. We now have 1.6 million registered users on the platform, and over 2.2 million downloads of the application.

In March, we announced that Vodacom South Africa had acquired 2x10MHz of 700MHz, 1x80MHz of 2600MHz and 1x10MHz of 3500MHz spectrum, with a 20-year licence through to 2042. The spectrum will enable us to significantly expand network capacity and coverage, and help accelerate post-pandemic economic recovery and digital inclusion.

In Vodacom’s international markets, service revenue increased during the year. Growth was supported by an increase in M-Pesa transaction volumes and data revenue. This benefit was partially offset by the introduction of mobile money levies in Tanzania, and a stronger prior year comparative in Mozambique and the DRC, reflecting the reinstatement of fees on person-to-person M-Pesa transfers in the prior year. M-Pesa transaction value increased by 10.9%, while M-Pesa revenue as a share of total service revenue increased by 2.0 percentage points to 22.7%, and 65.1% of our customer base is now using data services.

Vodacoms Adjusted EBITDAaL increased by 3.4%* supported by revenue growth, and positive operational leverage in Vodacoms international operations. This was partially offset by an increase in technology operating expenses in South Africa, as we invested in further improving the resilience of our network. The Adjusted EBITDAaL margin decreased by 1.0* percentage point and was 35.5%.

On 10 November 2021, Vodacom Group announced it had entered into an agreement to acquire Vodafone Egypt from Vodafone for a total consideration of €2.4 billion. The proposed acquisition presents a unique opportunity to advance Vodacom Group’s strategic connectivity and financial services ambitions in one of Africa’s premier telecom operators. Vodafone Egypt is a clear market leader that will diversify and accelerate Vodacom Group’s growth profile. The transaction is expected to receive Egyptian regulatory approval in the near term.

Vodacom also announced that it had agreed to acquire a co-controlling 30% interest in the fibre assets currently owned by Community Investment Ventures Holdings (Pty) Limited (‘CIVH’). CIVH owns Vumatel and Dark Fibre Africa, which are South Africa’s largest open access fibre operators. Vodacom’s investment and strategic support will further accelerate the growth trajectory of fibre roll-out in South Africa helping close the digital divide. The transaction is subject to regulatory approvals in South Africa.

13

Vodafone Group Plc FY22 Preliminary results

Other Markets 9% of Group service revenue

    

FY22

    

FY21

    

Reported

    

Organic

€m

€m

change %

  

change %*

 Total revenue

 

3,830

 

3,765

 

1.7

 - Service revenue

 

3,420

 

3,312

 

3.3

 

19.4

 - Other revenue

 

410

 

453

 

  

 

  

 Adjusted EBITDAaL

 

1,335

 

1,228

 

8.7

 

23.0

 Adjusted EBITDAaL margin

 

34.9%

32.6%

  

 

  

Total revenue increased by 1.7% to €3.8 billion, as higher service revenue was partially offset by the depreciation of local currencies versus the euro.

On an organic basis, service revenue increased by 19.4%* (Q3: 19.8%*, Q4: 19.8%*) as a result of higher customer base and ARPU growth across our markets.

Service revenue in Turkey accelerated as a result of mobile customer base and ARPU growth, with ongoing repricing actions to reflect increasing inflation in a difficult macroeconomic environment. Mobile contract customer additions were 1.3 million including migrations from prepaid customers. We also added 120,000 broadband customers during the year. Mobile contract churn improved by 3.9 percentage points year-on-year to 15.4%.

We expect Turkey to be designated as a hyper-inflationary economy under IFRS during the first quarter of FY23, in which case Vodafone Turkey’s results will be presented on a revised basis. See note 1 of the unaudited condensed consolidated financial statements for further information.

Service revenue in Egypt grew ahead of inflation, supported by customer base growth and increased data usage. During the year, we added 237,000 mobile contract customers and 877,000 prepaid mobile customers.

Adjusted EBITDAaL increased by 23.0%* and the Adjusted EBITDAaL margin increased by 1.1* percentage points, despite the inflationary pressure on our cost base due to worsening macroeconomic conditions. The Adjusted EBITDAaL margin was 34.9%.

Vantage Towers Delivering on our plan

    

FY22

    

FY211

    

Reported

    

Organic

€m

€m

change %

  

change %*

 Total revenue

 

1,252

 

 

  

 - Service revenue

 

 

 

 - Other revenue

 

1,252

 

 

  

  

 Adjusted EBITDAaL

 

619

 

 

 Adjusted EBITDAaL margin

 

49.4%

 

  

  

Note:

1. Vantage Towers is a new reporting segment for the year ended 31 March 2022 and hence no comparative information is presented. See page 7 for more information.

Total revenue increased to €1.3 billion, with 1,700 new tenancies added during the year, bringing the tenancy ratio to 1.44x. Vantage Towers concluded a number of new partnership agreements during the year, including an agreement with 1&1 in December 2021 for the provision of passive tower infrastructure access to at least 3,800 sites throughout Germany by the end of 2025, and potentially up to 5,000 sites, for the next 20 years, with an option to extend until 2060.

Vantage Towers reported its results on 16 May 2022.

14

Vodafone Group Plc FY22 Preliminary results

Associates and joint ventures

    

FY22

    

FY21

€m

€m

VodafoneZiggo Group Holding B.V.

 

(19)

 

(232)

Safaricom Limited

 

217

 

217

Indus Towers Limited

 

 

274

Other

 

13

 

83

 Share of results of equity accounted associates and joint ventures

 

211

 

342

VodafoneZiggo Joint Venture (Netherlands)

The results of VodafoneZiggo, in which Vodafone owns a 50% stake, are reported here under US GAAP, which is broadly consistent with Vodafone’s IFRS basis of reporting.

Total revenue grew by 1.4% to €4.1 billion, primarily driven by mobile contract customer base and ARPU growth, supported by higher roaming and visitor revenue. This was partially offset by a slowdown in Consumer fixed revenue growth in the second half of FY22.

During the year, VodafoneZiggo added 196,000 mobile contract customers, supported by its’ best-in-class net promoter score, mainly driven by higher Consumer demand. Strong Business fixed performance was due to an increase in the customer base, as well as higher demand for unified communications. The number of converged households increased by 25,000, with 45% of broadband customers now converged, delivering significant NPS and customer loyalty benefits. VodafoneZiggo now offers 1 gigabit speeds to 5.8 million homes and is on track to provide nationwide coverage in 2022.

During the year, Vodafone received €350 million in dividends from the joint venture, as well as €49 million in interest payments. The joint venture also drew down an additional loan from shareholders to fund an instalment arising from spectrum licences acquired in July 2020, with Vodafone’s share being €104 million.

Safaricom Associate (Kenya)

Safaricom service revenue grew to €2.2 billion due to Business fixed demand, and a recovery in M-Pesa revenue as transaction volumes increased and peer-to-peer transaction fees normalised.

Indus Towers Associate (India)

The Group’s interest in Indus Towers has been provided as security against certain bank borrowings secured against Indian assets and partly to the pledges provided to the new Indus Towers entity (‘Indus’) under the terms of the merger between erstwhile Indus Towers and Bharti Infratel. Indus has been classified as held for sale in the unaudited condensed consolidated statement of financial position since 31 March 2021 and the Group’s share of Indus’ results is not reflected in the Group’s consolidated income statement for the year ended 31 March 2022.

Vodafone Idea Limited Joint Venture (India)

See note 3 ‘Contingent liabilities and legal proceedings’ in the unaudited condensed consolidated financial statements on page 34 for further information.

TPG Telecom Limited Joint Venture (Australia)

In July 2020, Vodafone Hutchison Australia Pty Limited (‘VHA’) and TPG Telecom Limited (‘TPG’) completed their merger to establish a fully integrated telecommunications operator in Australia. The merged entity was admitted to the Australian Securities Exchange (‘ASX’) on 30 June 2020 and is known as TPG Telecom Limited. Vodafone and Hutchison Telecommunications (Australia) Limited each own an economic interest of 25.05% in the merged unit.

15

Vodafone Group Plc FY22 Preliminary results

Net financing costs

    

FY22

    

FY21

    

Reported

€m

€m

change %

 Investment income

 

254

 

330

 

  

 Financing costs

 

(1,964)

 

(1,027)

 

  

 Net financing costs

 

(1,710)

 

(697)

 

(145.3)

 Adjustments for:

 

  

 

  

 

  

Mark-to-market gains

 

(256)

 

(1,091)

 

  

Foreign exchange losses

 

284

 

23

 

  

 Adjusted net financing costs1

 

(1,682)

 

(1,765)

 

4.7

Note:

1. Adjusted net financing costs is a non-GAAP measure. Adjusted net financing costs exclude mark-to-market and foreign exchange gains/losses.

Net financing costs increased by €1,013 million, primarily due to lower mark-to-market gains on options held relating to the Group’s mandatory convertible bonds and increased foreign exchange losses on intercompany funding arrangements. Adjusted net financing costs remained broadly stable year-on-year, reflecting consistent average borrowing balances and weighted average borrowing costs for both periods.

Taxation

    

FY22

    

FY21

    

Change

%

  

%

  

pps

 Effective tax rate

 

33.6%

87.8%

(54.2)

The Group’s effective tax rate for the year ended 31 March 2022 was 33.6%. The effective tax rate includes a €1,468 million charge (2021: €2,128 million*) for the utilisation of losses in Luxembourg which arises from an increase in the valuation of investments based upon local GAAP financial statements and tax returns. The current year charge was principally driven by increases in the value of our listed investments. The effective tax rate also includes €327 million (2021: €320 million) relating to the use of losses in Luxembourg and a credit of €699 million relating to the recognition of a deferred tax asset in Luxembourg because of higher interest rates increasing our forecasts of future profits. The year ended 31 March 2021 included a charge of €699 million* relating to the de-recognition of a deferred tax asset in Luxembourg. These items change the total losses we have available for future use against our profits in Luxembourg and neither item affects the amount of tax we pay in other countries.

The effective tax rate also includes an increase in our deferred tax assets in the UK of €593 million (2021: €nil) following the increase in the corporate tax rate to 25% and €273 million (2021: €nil) following the revaluation of assets for tax purposes in Italy.

*

During the year ended 31 March 2022, we revised the calculation of certain impairment reversals recognised by our Luxembourg holding companies for the year ended 31 March 2021; this had no impact on the amount of deferred tax assets recognised at that date but has changed the amount of our unrecognised deferred tax assets by €0.7 billion (unrecognised losses of €2.8 billion).

16

Vodafone Group Plc FY22 Preliminary results

Earnings per share

    

    

    

Reported

FY22

FY21

change

eurocents

eurocents

eurocents

 Basic earnings per share

 

7.20c

 

0.38c

 

6.82c

Basic earnings per share was 7.20 eurocents, compared to 0.38 eurocents for the year ended 31 March 2021.

Cash flow and funding

Analysis of cash flow

    

FY22

    

FY21

    

Reported

€m

€m

change %

 Inflow from operating activities

 

18,081

 

17,215

 

5.0

 Outflow from investing activities

 

(6,868)

 

(9,262)

 

25.8

 Outflow from financing activities

 

(9,706)

 

(15,196)

 

36.1

 Net cash inflow/(outflow)

 

1,507

 

(7,243)

 

120.8

 Cash and cash equivalents at beginning of the financial year

 

5,790

 

13,288

 

  

 Exchange gain/(loss) on cash and cash equivalents

 

74

 

(255)

 

  

 Cash and cash equivalents at end of the financial year1

 

7,371

 

5,790

 

  

Note:

1. Net of bank overdrafts of €125 million (FY21: €31 million).

Cash inflow from operating activities increased by 5.0% to €18,081 million, primarily due to higher operating profit.

Outflow from investing activities decreased by 25.8%, or €2,394 million, to €6,868 million, primarily due to a decrease of €2,409 million (2021: €1,993 million increase) in collateral assets held against derivative liabilities, partially offset by purchases of other short-term investments (being managed funds, bonds and debt securities), and property, plant and equipment.

Outflows from financing activities decreased by 36.1%, or €5,490 million, to €9,706 million, driven by an increase of €1,952 million (2021: €4,330 million decrease) in collateral liabilities held against derivative assets and lower borrowing repayments compared to the previous year, partially offset by the purchase of treasury shares of €2,087 million in the current year. In the prior year, inflows from transactions with non-controlling shareholders, mostly from the Vantage Towers public offering, were partially offset by payments to purchase shares from KDG minorities.

Borrowings and cash position

    

FY22

    

FY21

    

Reported

€m

€m

change %

 Non-current borrowings

 

(58,131)

 

(59,272)

 

  

 Current borrowings

 

(11,961)

 

(8,488)

 

  

 Borrowings

 

(70,092)

 

(67,760)

 

  

 Cash and cash equivalents

 

7,496

 

5,821

 

  

 Borrowings less cash and cash equivalents

 

(62,596)

 

(61,939)

 

(1.1)

Borrowings principally includes bonds of €48,031 million (FY21: €46,885 million) and lease liabilities of €12,539 million (FY21: €13,032 million).

The increase in borrowings of €2,332 million is principally driven by an increase of €1,952 million on derivative collateral positions, which impacts both cash and short-term borrowings.

17

Vodafone Group Plc FY22 Preliminary results

Funding facilities

The Group has undrawn revolving credit facilities of €7.6 billion comprising euro and US dollar revolving credit facilities of €4.0 billion and US$4.0 billion (€3.6 billion) which mature in 2025 and 2027 respectively. Both committed revolving credit facilities support US and euro commercial paper programmes of up to US$15 billion and €10 billion respectively.

Post employment benefits

At 31 March 2022, the Group’s net surplus of scheme assets over scheme liabilities was €274 million (2021: €453 million net deficit). The next triennial actuarial valuation of the Vodafone Section and CWW Section of the Vodafone UK Group Pension Scheme will be as at 31 March 2022.

Dividends

Dividends will continue to be declared in euros, aligning the Group’s shareholder returns with the primary currency in which we generate cash flow, and paid in euros, pounds sterling and US dollars. The foreign exchange rate at which future dividends declared in euros will be converted into pounds sterling and US dollars will be calculated based on the average World Markets Company benchmark rates over the five business days during the week prior to the payment of the dividend.

The Board is recommending total dividends per share of 9.0 eurocents for the year. This includes a final dividend of 4.5 eurocents compared to 4.5 eurocents in the prior year.

The ex-dividend date for the final dividend is 1 June 2022 for ordinary shareholders, the record date is 6 June 2022 and the dividend is payable on 5 August 2022. Dividend payments on ordinary shares will be paid directly into a nominated bank or building society account.

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Vodafone Group Plc FY22 Preliminary results

Statement of financial position

The consolidated statement of financial position is set out on page 30. Details on the major movements of both our assets and liabilities in the year are set out below.

Assets

Goodwill and other intangible assets decreased by €0.3 billion between 31 March 2021 and 31 March 2022 to €53.2 billion. This primarily reflects the amortisation of computer software and licence and spectrum fees, partially offset by additions in the year.

Property, plant and equipment decreased by €0.4 billion between 31 March 2021 and 31 March 2022 to €40.8 billion. This reflects a net decrease in the carrying value of leased assets by €0.6 billion, partially offset by an increase in the carrying value of owned assets.

Other non-current assets decreased by €0.6 billion between 31 March 2021 and 31 March 2022 to €31.4 billion, primarily due to a €2.5 billion decrease in deferred tax assets offset by a €1.6 billion increase in trade and other receivables which is largely due to the movement in the fair value of derivative financial instruments by €1.3 billion. The decrease in deferred tax assets comprises a €1.5 billion decrease stemming from a restructuring in Germany where €1.5 billion is now offset with deferred tax liabilities and a further €1.1 billion decrease relates to the use of deferred tax assets on losses in Luxembourg.

Assets held for sale at 31 March 2021 and 31 March 2022 comprise the Group’s interest in Indus Towers Limited.

Current assets increased by €0.6 billion between 31 March 2021 and 31 March 2022 to €27.6 billion, primarily due to an increase of €1.7 billion in cash and cash equivalents, a €0.2 billion increase in inventory, offset by a €1.2 billion decrease in other investments. The decrease in other investments primarily reflects a decrease of €2.4 billion in collateral assets, offset by an increase of €0.8 billion in short-term investments and €0.4 billion in other items.

Total equity and liabilities

Total equity decreased by €0.8 billion between 31 March 2021 and 31 March 2022 to €57.0 billion, due to comprehensive income for the period of €5.0 billion, share-based payments of €0.1 billion, an increase of €0.2 billion arising from transactions with non-controlling interests in subsidiaries, offset by €3.0 billion of dividends paid to the Group’s shareholders and the purchase of treasury shares of €3.1 billion.

Non-current liabilities decreased by €5.2 billion between 31 March 2021 and 31 March 2022 to €63.3 billion, primarily due to a €2.4 billion decrease in trade and other payables largely due to the movement in the fair value of derivative financial instruments, a €1.6 billion decrease in deferred tax liabilities primarily relating to the German restructuring where deferred tax liabilities of €1.5 billion can now be offset against deferred tax assets, as set out above, a €1.1 billion decrease in borrowings, and a €0.2 billion decrease in post employment benefits.

Current liabilities increased by €4.9 billion between 31 March 2021 and 31 March 2022 to €33.6 billion, primarily due to a €3.5 billion increase in borrowings, a €1.6 billion increase in trade and other payables, offset by a €0.2 billion decrease in provisions. The increase in trade and other payables reflects an increase of €1.3 billion in accruals which includes €1.4 billion (FY21: €0.3 billion) payable in relation to the irrevocable and non-discretionary share buyback programme, an increase of €0.6 billion in trade payables and a decrease of €0.3 billion in other payables.

Inflation

Inflation did not have a significant effect on the Group’s consolidated results of operations and financial condition during the year ended 31 March 2022.

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Vodafone Group Plc FY22 Preliminary results

Risk factors

Principal risks

Cyber threat

An external attack, insider threat or supplier breach could cause service interruption or confidential data breaches.

This risk manifested in February 2022 when Vodafone Portugal was the target of a deliberate cyber attack which impacted our services in that market. The preparedness and skill or our technology team ensured that most services were recovered very quickly.

Supply chain disruption

Disruption in our supply chain could mean that we are unable to execute our strategic plans, resulting in increased cost and reduced choice as well as service quality.

Adverse political and policy environment

An adverse political and policy environment could impact our strategy and result in increased costs, create competitive disadvantage or have negative impact on our return on capital employed.

Strategic transformation

Failure to effectively execute the transformational activities to deliver on our strategy could result in loss of business value and/or additional cost.

Disintermediation

Failure to effectively respond to threats from emerging technology or disruptive business models could lead to a loss of customer relevance, market share and new/existing revenue streams.

Adverse changes in macro-economic conditions

Adverse changes to economic conditions could result in reduced customer spending, higher interest rates, adverse inflation, or foreign exchange rates. Adverse conditions could also lead to limited debt refinancing options and/or increase in costs.

Infrastructure competitiveness

Failure to meet customers’ expectations with best available broadband technology in our fixed and mobile networks could lead to a loss of revenue.

Portfolio transformation

Failure to effectively execute on plans to transform and shape the portfolio could result in failure to deliver growth in revenue and improved returns.

Adverse market conditions

Increasing competition could lead to price wars, reduced margins, loss of market share and/or damage to market value.

Technology resilience and future readiness

Network, IT or platform outages and/or any delays delivering our IT modernisation programme could lead to dissatisfied customers and/or impact revenue.

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Vodafone Group Plc FY22 Preliminary results

Risk factors

Key changes to our principal risks

The scope of the Strategic transformation principal risk has been clarified to focus on sub-risks that are more within our control internally. We have included product innovation and delivery as a sub-risk, which was previously reported in the Disintermediation principal risk. The Portfolio transformation element has been removed and now forms a standalone risk.

A new risk Supply chain disruption has been introduced. This risk expands on the geopolitical elements, (previously covered within Geopolitical risk in supply chain principal risk) and covers a broader range of supply chain risks.

Technology failure has been combined with IT transformation in a new risk Technology resilience and future readiness.

Global economic disruption has been renamed Adverse changes in macro-economic conditions. The risk includes inflation, interest rates and exchange rates, in addition to liquidity and market access which were included in previous years.

A new risk Infrastructure competitiveness, was included as a principal risk.

Legal and regulatory compliance has been removed from the principal risk list, however, it will still be tracked trough our risk watchlist (see section below).

Watchlist risks

Our watchlist risk process enables us to monitor material risks to Vodafone Group which fall outside of our top principal risks list. These include, but are not limited to:

Legal compliance

The legal compliance risk is made up of multiple sub-risks (sanctions and trade controls, competition law, anti- bribery and anti-money laundering). Controls are in place to monitor and manage these risks and for compliance with the relevant regulations and legislation.

Data management and privacy

As data volumes continue to grow and regulatory and customer scrutiny increases, it is important that we manage our privacy risks effectively.

Electromagnetic field (‘EMF’)

The health and safety of our customers and the wider public has always been, and continues to be, a priority for us. We know that some people are concerned about whether there are risks to health from mobile phones and radio masts. We refer to the current body of scientific evidence so that the services and products we provide are within prescribed safety limits and adhere to all relevant standards and national laws.

Climate change

As part of our commitment to operate ethically and sustainably, we are dedicated to understanding climate-related risks and opportunities and embedding responses to these into our business strategy and operations.

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Vodafone Group Plc FY22 Preliminary results

Risk factors

Emerging risks

We have a number of uncertainties where an emerging risk may potentially impact us in the longer term. In some cases, there may be insufficient information to understand the likelihood, impact of velocity of the risk. We also might not be able to fully define a mitigation plan until we have a better understanding of the threat.

We continue to identify new emerging risk trends, using the input from analysis of the external environment. Furthermore, we have strengthened the identification process by involving our functional experts and our global risk community in this emerging risk scanning exercise.

Once the emerging risks are prioritised by the functional experts, scenarios are created to assist in the analysis of each risk. These emerging risks and scenarios are provided to the Risk and Compliance Committee and the Audit and Risk Committee for further scrutiny. During the year, three additional emerging risks were added to our list:

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Inflation (beyond a three-year period);

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Generation Z as customers; and

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Disintermediation (beyond a three-year period).

Macro factors affecting the risk profile

We continue to closely monitor the ongoing effects on the economy and operations brought on by the turmoil from the COVID-19 pandemic. We continue to implement treatment plans throughout our business to reduce the impact.

Given that the current geopolitical environment is evolving and continues to develop we continue to consider the consequential impacts for the Group and its operations. Multiple scenarios have been evaluated to identify consequential risks and what management actions would be required.

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Vodafone Group Plc FY22 Preliminary results

Other significant developments

Board changes

Deborah Kerr was appointed as a non-executive director on 1 March 2022.

On 6 May 2022, Vodafone announced that Delphine Ernotte Cunci and Simon Segars will be appointed as non- executive directors following the Annual General Meeting on 26 July 2022, subject to shareholder approval.

On 12 May, Vodafone announced that Stephen A. Carter will be appointed as non-executive director following the Annual General Meeting on 26 July 2022, subject to shareholder approval.

Executive Committee changes

On 19 April 2022, Vodafone announced that Hannes Ametsreiter will step down from his role as CEO of Vodafone Germany, and as a member of the Group Executive Committee, effective 30 June 2022. Philippe Rogge will become CEO of Vodafone Germany and a member of the Group Executive Committee on 1 July 2022.

Indus Towers

On 24 February 2022, Vodafone confirmed the sale of 63.6 million shares in Indus Towers Limited (‘Indus’) through an accelerated book build offering (the ‘Placing’), generating net proceeds of approximately INR 14.2 billion (€169 million). The Group sold a further 127.1 million shares in Indus Bharti Airtel Limited (‘Bharti’) on 29 March 2022, generating additional net proceeds of approximately INR 29.9 billion (€283 million). The Indus shares related to the Placings and the agreement with Bharti were all subject to the security arrangements entered into between Vodafone and Indus.

Following completion of the sale of shares to Bharti, Vodafone retains 567.1 million shares in Indus, equivalent to a 21.0% shareholding (the ‘Residual Shareholding’). Vodafone continues to be in discussions with several interested parties in relation to a proposed sale of the Residual Shareholding.

Major shareholder announcement

On 14 May 2022, Vodafone was informed by Emirates Telecommunications Group Company (‘Etisalat’) that they have become the Group’s largest shareholder with a 9.8% stake.

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Vodafone Group Plc FY22 Preliminary results

Regulation

Introduction

Our operating companies are generally subject to regulation governing their business activities. Such regulation typically takes the form of industry-specific law and regulation covering telecommunications services and general competition (antitrust) law applicable to all activities. The following section describes the regulatory frameworks and the key regulatory developments at national and regional level and in the European Union (‘EU’), in which we had significant interests during the year ended 31 March 2022. Many of the regulatory developments reported in the following section involve ongoing proceedings or consideration of potential proceedings that have not reached a conclusion. Accordingly, we are unable to attach a specific level of financial risk to our performance from such matters.

European Union (‘EU’)

The European Electronic Communications Code (‘Code’) has updated the telecoms regulatory framework in Europe. The Code should have been transposed by Member States in Europe by December 2020. However, as of the end of March 2022, only some of the EU governments within our footprint have done that: Germany, Italy, Hungary, Greece, Czech Republic, Netherlands (and UK). In other markets – namely Spain, Portugal, Romania and Ireland – the law is still in the review and/or approval process. Given the delay, the European Commission (‘EC’) has started infringement procedures and warned the remaining Member States that in case of further delays the breach will be referred to the Court of Justice of the European Union (‘CJEU’).

In April 2021, the EC published its AI regulation (‘AI Act’) setting out a number of prohibited AI use cases and new requirements for providers of high-risk AI. Negotiations on the AI Act are progressing slowly, with the Council of the European Union (‘Council’) looking to conduct a first reading on the file before the end of the French Presidency in June 2022, and the European Parliament aiming to adopt its position in a plenary vote in November 2022, paving the way for trilogue talks on the file to conclude in early/mid 2023.

Negotiations on the Digital Services Act package (consisting of the Digital Services Act (‘DSA’) and the Digital Markets Act (‘DMA’)) continue. On 24 March 2022, political negotiators in the EU Institutions reached agreement on the text of the DMA. This included a number of technical amendments from the December 2021 text, and compromises relevant to the financial thresholds for those platforms that fall within scope, the exact nature of some of the specific obligations (e.g. interoperability) and also fines (under the agreed text, gatekeepers can be sanctioned up to 10% of their annual worldwide turnover in the case of first infringements, and up to 20% in the case of repeated infringements). The DMA is expected to be formally adopted in 2022, and enter into force in early 2023. Negotiations on the DSA are progressing and will likely be concluded during the Czech Presidency in the second half of 2022.

In February 2022, the EC published its proposal for a regulation laying down harmonised rules on fair access to and fair use of data (the ‘Data Act’). The Data Act will be a regulation that aims to facilitate the sharing and reuse of non-personal data in the single market, removing current obstacles and clarifying the rights of various parties involved in generating and sharing data. The regulation applies to manufacturers of connected devices, data holders, recipients, and providers of data processing services (cloud service providers) who will be subject to new requirements to support switching and interoperability, while maintaining a minimum service functionality.

In February 2021, the EC proposed the prolongation of the Roaming Regulation for 10 years in order to ensure the continuation of Roam-Like-at-Home (‘RLAH’). The political agreement between the European Parliament and the Council was reached in December 2021 and the new regulation shall enter into force on 1 July 2022. The new regulation reduces the wholesale caps for all services (data, voice and SMS) and brings new measures on transparency (including on the use of non-terrestrial networks), quality of service and access to emergency communications.

In March 2021, the EC published a ‘Connectivity Toolbox’, which is a joint deliverable of Member States and the EC containing best practices on network cost reduction, spectrum authorisation for 5G, the environmental footprint and environmental impact assessment of networks as well as electronic magnetic fields (‘EMF’). Member States are in the process of implementing the toolbox. The objective of this toolbox is to reduce the cost of broadband deployment in Europe for network operators while the EC is in the process of revising the Broadband Cost Reduction Directive (‘BCRD’). The BCRD proposal is expected to be published in September 2022.

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Vodafone Group Plc FY22 Preliminary results

In September 2021, the EC published a legislative proposal for a Decision of the European Parliament and of the Council establishing the 2030 Policy Programme ‘Path to the Digital Decade’. The proposal sets ambitious targets to be met by Member States by 2030 on the following four key pillars: a digitally skilled population and highly skilled digital professionals; secure and sustainable digital infrastructures (target is to have all European households connected to gigabit speeds and all populated areas covered by 5G); digital transformation of businesses; and digitisation of public services. The European Parliament and Council will need to endorse the targets through the regular EU legislative procedure. Furthermore, in February 2022 the EC proposed European digital rights and principles, covering issues including inclusion, freedom of choice online, online safety and security, and sustainable digitisation.

Addressing the challenges posed by the COVID-19 pandemic, the Next Generation EU package is the Union’s means to support the recovery processes in EU Member States. The bulk of the proposed recovery measures are funded by a new temporary recovery instrument, the EU Recovery and Resilience Facility (‘RRF’), worth nearly €750 billion, which was adopted in December 2020. A significant amount is allocated towards digital and green initiatives, with a minimum threshold of 20% of the RRF to be allocated to digital and 37% to green initiatives. As of 31 March 2022, the EC had approved the national plans under the RRF for 24 EU Member States, of which Czech Republic, Germany, Greece, Ireland, Italy, Portugal, Romania and Spain are within Vodafone’s footprint.

In March 2022, the European Body of Regulators (‘BEREC’) published a draft update to the BEREC Guidelines on Net Neutrality, in response to the recent CJEU rulings on zero-rating practices. BEREC interprets the rulings to prohibit all price-differentiation practices that are not application agnostic. This would include Vodafone Pass tariff, which is currently offered in eight EU markets. Stakeholders had until 14 April 2022 to provide feedback, and BEREC intends to publish the final Guidelines in June 2022.

Germany

In October 2021, the national regulatory authority (‘BNetzA’) published its draft regulation regarding the wholesale access markets (so-called Market 3a). In the draft, BNetzA proposes no significant changes in relation to the regulation of the copper network access but has suggested a light touch regulation of fibre access (‘FTTH’).

For the first time in Germany, an access regime based on full equivalence of input (‘EoI’) is intended to enforce the equal treatment of wholesale demand and Deutsche Telekom’s (‘DT’) retail arm. In addition, BNetzA proposes improved access to DT’s passive infrastructure (ducts, masts) with significant market power (‘SMP’) obligations to open DT’s passive network, including regulated prices for the first time. This would ensure Vodafone Germany’s wholesale-based very high-speed digital subscriber line (‘VDSL’) business in the future, improve cost effective build out of Vodafone Germany’s own networks using ducts, and eliminate the risk of complete deregulation of DT’s fibre networks. The final regulation for the wholesale access markets is expected by the end of the second quarter of 2022.

Licences for frequency allocations at 800MHz, parts of 1800MHz, and 2600MHz will expire at the end of 2025. Vodafone Germany currently holds allocations at 800MHz and 2600MHz. BNetzA is therefore assessing its options on how to proceed on the reallocation of this spectrum. It may either re-auction the spectrum, or prolong the existing licences, or a combination of these. BNetzA is currently consulting with stakeholders on approach and is expected to make a final decision on next steps by the end of 2023 at the latest.

In response to a preliminary reference from the National Court in Germany, on 2 September 2021, the CJEU issued three judgments related to zero-rated commercial offers of Vodafone Germany and DT. The judgements concluded that the specific zero-rated offers that were the subject of the judgments, and which included an exclusion of roaming or tethering, or a limitation on the bandwidth for certain categories of application respectively, were not compliant with the Open Internet Regulation (‘OIR’). On 27 April 2022, BNetzA consequently issued an order, announcing that Vodafone Pass is not compliant with OIR, and that Vodafone Germany must, firstly, stop marketing Pass from 1 July 2022 and must migrate existing Pass customers to alternative tariffs by 31 March 2023.

The IT Security Draft Law (‘IT SiG 2.0’), which lays down rules for using vendors of critical components in critical infrastructure, was adopted in May 2021. IT SiG 2.0 envisages two pillars to ensure network security based on, firstly, mandatory certification of critical components and, secondly, establishing the trustworthiness of the vendors of such critical components following clearly defined criteria and processes. To the extent these are not met, there will be the possibility of removing components from untrustworthy vendors. Components are deemed critical when they are used for ‘critical functions’, which are defined by BNetzA in agreement with the Federal Office for Information Security (‘BSI’).

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Vodafone Group Plc FY22 Preliminary results

Italy

In March 2017, the national regulatory authority (‘AGCOM’) imposed a minimum billing period of one month for fixed and convergent offers, effective by the end of June 2017. The operators appealed AGCOM’s resolution before the Administrative Court and the appeal was rejected in February 2018. Vodafone Italy filed an appeal before the Council of State and after the public hearing held in July 2020, the Council of State issued a preliminary referral to the CJEU in order to assess if AGCOM has the power to impose minimum and binding billing periods under EU law. The date for the first hearing has not yet been set.

In January 2020, the national competition authority (‘AGCM’) ruled that Vodafone Italy, Telecom Italia (‘TIM’), Fastweb and WindTre had coordinated their commercial strategies relating to the transition from four-week billing (28 days) to monthly billing, with the maintenance of an 8.6% price increase, in violation of Art.101 of Treaty on the Functioning of the EU (‘TFEU’). In July 2021, the Administrative Tribunal published its judgment annulling the AGCM’s decision and fine against Vodafone Italy for lack of evidence, accepting all of Vodafone Italy’s defensive arguments. According to the Tribunal, the alleged infringement was in fact the outcome of the companies’ independent choices to comply with legislation imposing an obligation to issue customer bills on a monthly basis. Prior to the Tribunal decision, Vodafone Italy had agreed to pay the €60 million fine in 15 monthly instalments of €4 million each. Following the Tribunal decision, Vodafone Italy started the process to be reimbursed for the two instalments, totalling €8 million, paid so far. The AGCM has submitted an appeal against the Tribunal decision to the Council of State. The process is ongoing.

The frequencies in the 2.1GHz band have been renewed until 2029. Vodafone Italy paid €240 million in April 2021 for the renewal.

In April 2021, AGCOM started a public consultation on the co-investment commitments presented by TIM in January 2021. On the basis of the public consultation, AGCOM asked TIM to make some amendments to the co-investment offer. TIM accepted the amendments and published a final version of the co-investment offer on their website in January 2022. AGCOM is now considering the monitoring activity that will be implemented on the co-investment offers, but this is still subject to approval.

In accordance with Article 76 of the Code, once a network co-investment is approved, then a national regulatory authority (‘NRA’) may deregulate any new fibre network developed through the co-investment offer. Therefore, upon receiving the final co- investment offer from TIM in December 2021, AGCOM commenced a consultation on its proposed de-regulation of any network rolled out on the basis of the co-investment offer. The consultation process is now closed, and on 16 May 2022, AGCOM notified the final co-investment offer of TIM, and its proposal to de-regulate networks created under the co-investment offer, to the EC. The EC has 30 days to evaluate the proposals and issue an opinion. If there are no objections from the Commission, AGCOM will adopt its final decision.

United Kingdom

In March 2021, Vodafone Ltd acquired 40MHz of 3.6GHz spectrum expiring in 2041 for £176 million. Within the negotiation stage of the auction, Vodafone Ltd and Telefónica agreed to trade spectrum, subject to regulatory approval, so that Vodafone Ltd’s holdings in the 3.4-3.6GHz band will be sufficiently proximate to be efficiently used by network equipment. Regulatory approval was granted in August 2021, and there will now be a transition period until 2025 as the trade is implemented. Vodafone Ltd’s total holdings in 3.4-3.6GHz are 90MHz, with fees payable from 2038.

The 2100MHz band, originally awarded for 3G usage, became liable to £17 million per annum fees from January 2022, coinciding with depreciation of the fee paid at auction (the national regulatory authority (‘Ofcom’) levies annual fees on spectrum after an initial 20-year term).

Ofcom is conducting a review of the UK mobile market, which commenced in May 2021. It is the first review of its kind, seeking to review the overall market structure and the ability of the market to fulfil the investment challenges that lie ahead. It runs alongside the government’s Wireless Infrastructure Strategy review, which is focused on future technologies and infrastructure evolution in the sector, with a particular focus on outcomes in the second half of the decade. Both projects are expected to conclude in the next 12 months.

Ofcoms review of Net Neutrality rules is also underway. While the UK is still committed to high-level open internet alignment under the terms of the UK/EU trade deal, there is recognition that some reform is needed to ensure the potential of applications, devices and future technology is not constrained by the current rules. Ofcom has not published an indicative timeline for the completion of its review.

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Vodafone Group Plc FY22 Preliminary results

In November 2021, the Telecommunications Security Act (‘TSA’) was passed into legislation. This modified the Communications Act to allow the Secretary of State to issue High Risk Vendor (‘HRV’) designations that restrict the usage of named equipment suppliers. In February 2022, a draft HRV designation relating to Huawei products, which Vodafone Ltd uses in its radio access network, was issued for consultation. Measures being consulted on restrict the use of Huawei in the UK’s telecoms networks, including the removal of Huawei from 5G networks by the end of 2027. The consultation closed in March 2022. The TSA also allows the Secretary of State to issue security regulations requiring providers of electronic communications networks and services to comply with a specified Code of Practice. In March 2022, the Department for Digital, Culture, Media and Sport also launched a consultation on the contents of these security regulations and associated Code of Practice. Ofcom is similarly consulting on the compliance regime associated with the Code of Practice.

Spain

In February 2020, Vodafone Spain requested that the national regulatory authority (‘CNMC’) extend and modify the commitments in relation to the Movistar-DTS merger in 2015 (which were due to end in April 2020). The CNMC issued a Resolution in July 2020, extending most of the initial commitments for an additional period of three years, in particular ensuring access to Movistar Estrenos and Movistar Series channels. The Resolution also removed the commitment that limited the terms (exclusivity, validity period and period of exploitation) in which Telefónica could acquire subscription video on demand content. Vodafone Spain has appealed this removal.

In November 2021, the government initiated the parliamentary process to approve the new Audiovisual Communication Bill Project. The most relevant changes are: (i) amending RTVE Financing law, to eliminate the requirement on MNOs to contribute 0.9% telco revenues to the public corporation RTVE; and (ii) including over-the-top service providers in the requirement to provide 1.5% audiovisual revenue to RTVE. The text is now in parliamentary process. Final approval is expected in the second half of 2022.

In October 2021, the CNMC has approved the regulation of the wholesale markets for broadband access (Market 3a and 3b). In particular, it expanded the geographic areas where CNMC requires Telefónica to maintain access obligations for ducts and poles and copper local loop unbundling. In addition, the CNMC brought forward the date by which Telefónica must close its copper exchanges. This will lead to an expedited obligation on Vodafone Spain to remove its collocated equipment from these exchanges.

In April 2021, the government approved a Royal Decree-Law amending the General Telecommunications Act. The amendments increase the duration of spectrum band concessions to a minimum of 20 years and allow for the possibility to extend this initial period, from a minimum of five and maximum of 20 years. The amendments also make it possible to extend existing concessions by 20 years, but only upon specific approval by the Ministry.

In November 2021, the government initiated the parliamentary process to approve the new Telecommunications Bill. The most relevant points included in the draft Bill presented to the Congress by the government are: (i) the possibility of renewal of spectrum licences for all bands that are already assigned, (ii) the possibility of extending contracts for the same duration as the initial period (up to 24 months) and (iii) no specific obligations on OTTs to register as public electronic communications service providers, in line with the Code. The text was submitted to Congress to start its parliamentary process for final approval, expected in the second quarter of 2022.

In February 2022, the Ministry for Economy and Enterprise approved a Ministerial Decree that regulates the reassignment of the frequencies in the existing 3.4-3.8GHz concessions. This reassignment is a consequence of the granting of two new concessions in 2021. The Ministerial Decree foresees a six-month period in which the four operators holding concessions, Vodafone Spain included, must carry out a coordinated migration of the frequencies according to its new organisation.

In July 2021, the spectrum auction for the 700MHz band took place. Vodafone Spain, Orange and Telefónica each won spectrum, with 2x10MHz each. Vodafone Spain paid €350 million. The concessions were formalised by the Ministry for Economy and Enterprise in December 2021, and the operators began the deployment of new 700MHz radio stations network in January 2022.

In November 2021, the government published the draft bill regulating customer service for consumers, which will introduce new requirements around the provision of customer care and managing customer complaints, and compensation. It is anticipated that the bill will be approved in the first quarter of 2023.

In November 2021, the government approved the modification of the Consumer Law in order to incorporate the Directive (EU) 2019/2161 as regards to better enforcement and modernisation of EU consumer protection rules. This new regulation will enter into force on 28 May 2022.

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Vodafone Group Plc FY22 Preliminary results

In December 2021, the National State Budget 2022 was approved. The law sets a reduction of spectrum fees for a temporary period of two years, which will result in €11.2 million savings for Vodafone Spain.

In January 2022, the government launched a consultation for all stakeholders regarding the upcoming auction on the 26GHz band (24.25 – 27.50GHz), to assess demand and technical readiness. Vodafone Spain responded to the consultation in January 2022. The auction is expected to take place during the fourth quarter of 2022.

In June 2021, the CNMC approved the merger between MásMóvil and Euskaltel on grounds that the transaction does not significantly alter the competitive situation. The Ministerial Council and Spain’s financial markets regulator (‘CNMV’) have now also approved the proposed takeover. A few months later, in March 2022, Orange and the newly merged MásMóvil announced the start of negotiations to merge their operations in Spain. The transaction is expected to be signed in the second quarter of 2022, and should be completed by the second quarter of 2023, once the appropriate approvals are obtained from the relevant administrative, competition and regulatory authorities.

In April 2022, Parliament ratified the Royal Decree-Law of Cybersecurity (‘Cybersecurity Law’). The Cybersecurity Law introduces the concept of high-risk suppliers (‘HRS’) and creates a new framework: (i) for identifying HRS; (ii) limiting the use of HRS in both the Core and the Access networks, including the introduction of timeframes for the removal of HRS from the core and parts of the access network; and (ii) for 5G operators to develop a risk assessment on their networks, and a vendor diversification strategy.

Vodacom: South Africa

In March 2021, the national regulatory authority (‘ICASA’) published a findings document on its market inquiry into mobile broadband services. ICASA found insufficient competition and designated Vodacom South Africa (‘Vodacom SA’) as having SMP in several relevant markets at wholesale (site access, national roaming) and retail levels, proposing remedies primarily at the wholesale level. ICASA published the Draft Regulations for comment and held public hearings in August 2021. On 31 March 2022, ICASA published the final regulations and reasons document, bringing this process to a conclusion.

On 8 March 2022, the spectrum auction commenced in South Africa, which involved an opt-in round for qualifying (non-Tier 1 operators) bidders. The main auction for all the applicants began on 10 March 2022 and concluded on 17 March 2022. Vodacom SA secured 110MHz of spectrum comprising two blocks of 2x5MHz in the 700MHz spectrum band, 80MHz in 2600MHz spectrum band, and 10MHz in 3500MHz spectrum band.

On 8 September 2021, e.TV commenced a motion with respect to ICASA and the Minister of Communications and Digital Technologies, with a view to delaying the digital migration process. The motion was heard by the High Court in March 2022, with Vodacom SA intervening to support the Minister and ICASA. The High Court dismissed e.TV’s application, but also deferred the analogue switch off date from 30 March 2022 to 30 June 2022. e.TV has indicated it will appeal against the judgment.

On 11 March 2022, the Minister of Communications and Digital Technologies published proposed amendments to the Policy for High Demand Spectrum and Policy direction for comment, specifically on the licensing of the Wholesale Open Access Network (‘WOAN’). Under the proposals, the WOAN is removed as the means to achieve a number of policy objectives i.e. increased service based competition, and empowerment and instead, the policy objectives will be realised using the next generation Radio Frequency Spectrum policy which is currently being drafted for consultation.

In May 2021, ICASA published a notice announcing the start of the Review of the Pro-competitive Conditions imposed on relevant licensees in terms of the Call Termination Regulations, to be completed by March 2022. ICASA has now completed the review and published its findings document. This will be followed by cost modelling, to be completed by August 2022, and final regulations, to be published by September 2022.

28

Vodafone Group Plc FY22 Preliminary results

Unaudited condensed consolidated financial statements

Consolidated income statement

Year ended 31 March

2022

2021

    

€m

    

€m

 Revenue

 

45,580

 

43,809

 Cost of sales

 

(30,574)

 

(30,086)

 Gross profit

 

15,006

 

13,723

 Selling and distribution expenses

 

(3,358)

 

(3,522)

 Administrative expenses

 

(5,713)

 

(5,350)

 Net credit losses on financial assets

(561)

(664)

 Share of results of equity accounted associates and joint ventures

 

211

 

342

 Other income

 

79

 

568

 Operating profit

 

5,664

 

5,097

 Investment income

 

254

 

330

 Financing costs

 

(1,964)

 

(1,027)

 Profit before taxation

 

3,954

 

4,400

 Income tax expense

 

(1,330)

 

(3,864)

 Profit for the financial year

 

2,624

 

536

 Attributable to:

 

  

 

  

 – Owners of the parent

 

2,088

 

112

 – Non-controlling interests

 

536

 

424

 Profit for the financial year

 

2,624

 

536

 Profit per share

 

  

 

  

 Total Group:

 

 

  

 – Basic

 

7.20c

 

0.38c

 – Diluted

 

7.17c

 

0.38c

Consolidated statement of comprehensive income/expense

Year ended 31 March

2022

2021

    

€m

    

€m

 Profit for the financial year

 

2,624

 

536

 Other comprehensive income/(expense):

 

 

 Items that may be reclassified to the income statement in subsequent periods:

 

 

 Foreign exchange translation differences, net of tax

 

(25)

 

133

 Foreign exchange translation differences transferred to the income statement

19

(17)

 Other, net of tax1

 

1,863

 

(3,743)

 Total items that may be reclassified to the income statement in subsequent years

 

1,857

 

(3,627)

 Items that will not be reclassified to the income statement in subsequent years:

 

 

 Net actuarial gains/(losses) on defined benefit pension schemes, net of tax

 

483

 

(555)

 Total items that will not be reclassified to the income statement in subsequent years

 

483

 

(555)

 Other comprehensive income/(expense)

 

2,340

 

(4,182)

 Total comprehensive income/(expense) for the financial year

 

4,964

 

(3,646)

 Attributable to:

 

 

 – Owners of the parent

 

4,402

 

(4,069)

 – Non-controlling interests

 

562

 

423

 

4,964

 

(3,646)

Note:

1. Principally includes the impact of the Group’s cash flow hedges deferred to other comprehensive income during the year.

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

29

Vodafone Group Plc FY22 Preliminary results

Unaudited condensed consolidated financial statements

Consolidated statement of financial position

    

31 March

31 March

2022

2021

    

€m

    

€m

 Non-current assets

 

  

 

  

 Goodwill

 

31,884

 

31,731

 Other intangible assets

 

21,360

 

21,818

 Property, plant and equipment

 

40,804

 

41,243

 Investments in associates and joint ventures

 

4,268

 

4,670

 Other investments

 

1,073

 

925

 Deferred tax assets

 

19,089

 

21,569

 Post employment benefits

 

555

 

60

 Trade and other receivables

 

6,383

 

4,777

 

125,416

 

126,793

 Current assets

 

 

 Inventory

 

836

 

676

 Taxation recoverable

 

296

 

434

 Trade and other receivables

 

11,019

 

10,923

 Other investments

 

7,931

 

9,159

 Cash and cash equivalents

 

7,496

 

5,821

 

27,578

 

27,013

 Assets held for sale

 

959

 

1,257

 Total assets

 

153,953

 

155,063

 Equity

 

 

 Called up share capital

 

4,797

 

4,797

 Additional paid-in capital

 

149,018

 

150,812

 Treasury shares

 

(7,278)

 

(6,172)

 Accumulated losses

 

(122,118)

 

(121,587)

 Accumulated other comprehensive income

 

30,268

 

27,954

 Total attributable to owners of the parent

 

54,687

 

55,804

 Non-controlling interests

 

2,290

 

2,012

 Total equity

 

56,977

 

57,816

 Non-current liabilities

 

 

 Borrowings

 

58,131

 

59,272

 Deferred tax liabilities

 

520

 

2,095

 Post employment benefits

 

281

 

513

 Provisions

 

1,881

 

1,747

 Trade and other payables

 

2,516

 

4,909

 

63,329

 

68,536

 Current liabilities

 

 

 Borrowings

 

11,961

 

8,488

 Financial liabilities under put option arrangements

494

492

 Taxation liabilities

 

864

 

769

 Provisions

 

667

 

892

 Trade and other payables

 

19,661

 

18,070

 

33,647

 

28,711

 Total equity and liabilities

 

153,953

 

155,063

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

30

Vodafone Group Plc FY22 Preliminary results

Unaudited condensed consolidated financial statements

Consolidated statement of changes in equity

    

Additional

    

    

Accumulated

    

Equity

    

Non-

    

Share

paid-in

Treasury

comprehensive

attributable to

controlling

capital

capital1

shares

losses2

the owners

interests

Total equity

    

€m

    

€m

    

€m

    

€m

    

€m

    

€m

    

€m

 1 April 2020 brought forward

4,797

152,629

(7,802)

(88,214)

61,410

1,215

62,625

 Issue or reissue of shares

 

 

(1,943)

 

2,033

 

(87)

 

3

 

 

3

 Share-based payments

 

 

126

 

 

 

126

 

10

 

136

 Transactions with non-controlling shareholders in subsidiaries

 

 

 

 

1,149

 

1,149

 

748

 

1,897

 Comprehensive (expense)/ income

 

 

 

 

(4,069)

 

(4,069)

 

423

 

(3,646)

 Dividends

 

 

 

 

(2,412)

 

(2,412)

 

(384)

 

(2,796)

 Purchase of treasury shares

(403)

(403)

(403)

 31 March 2021

 

4,797

 

150,812

 

(6,172)

 

(93,633)

 

55,804

 

2,012

 

57,816

 1 April 2021 brought forward

 

4,797

150,812

(6,172)

(93,633)

55,804

2,012

 

57,816

 Issue or reissue of shares

 

(1,902)

2,000

(98)

 

 Share-based payments

 

108

108

11

 

119

 Transactions with non-controlling shareholders in subsidiaries

 

(38)

(38)

237

 

199

 Comprehensive (expense)/ income

 

4,402

4,402

562

 

4,964

 Dividends

 

(2,483)

(2,483)

(532)

 

(3,015)

 Purchase of treasury shares

 

(3,106)

(3,106)

 

(3,106)

 31 March 2022

 

4,797

 

149,018

 

(7,278)

 

(91,850)

 

54,687

 

2,290

 

56,977

Notes:

1. Includes share premium, capital reserve, capital redemption reserve, merger reserve and share-based payment reserve. The merger reserve was derived from acquisitions made prior to 31 March 2004 and subsequently allocated to additional paid-in capital on adoption of IFRS.
2. Includes accumulated losses and accumulated other comprehensive income.

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

31

Vodafone Group Plc FY22 Preliminary results

Unaudited condensed consolidated financial statements

Consolidated statement of cash flows

Year ended 31 March

2022

2021

    

€m

    

€m

 Inflow from operating activities

    

18,081

    

17,215

 

 

  

 Cash flows from investing activities

 

 

  

 Purchase of interests in subsidiaries, net of cash acquired

 

 

(136)

 Purchase of interests in associates and joint ventures

 

(445)

 

(13)

 Purchase of intangible assets

 

(3,262)

 

(3,227)

 Purchase of property, plant and equipment

 

(5,798)

 

(5,413)

 Purchase of investments

 

(2,009)

 

(3,726)

 Disposal of interests in subsidiaries, net of cash disposed

157

 Disposal of interests in associates and joint ventures

446

420

 Disposal of property, plant and equipment and intangible assets

 

33

 

43

 Disposal of investments

 

3,282

 

1,704

 Dividends received from associates and joint ventures

 

638

 

628

 Interest received

 

247

 

301

 Outflow from investing activities

 

(6,868)

(9,262)

 

  

 

  

 Cash flows from financing activities

 

  

 

  

 Proceeds from issue of long-term borrowings

 

2,548

 

4,359

 Repayment of borrowings

 

(8,248)

 

(12,237)

 Net movement in short-term borrowings

 

3,002

 

(2,791)

 Net movement in derivatives

(293)

279

 Interest paid1

 

(1,804)

 

(2,152)

 Payments for settlement of written put options

(1,482)

 Purchase of treasury shares

 

(2,087)

 

(62)

 Issue of ordinary share capital and reissue of treasury shares

 

 

5

 Equity dividends paid

 

(2,474)

 

(2,427)

 Dividends paid to non-controlling shareholders in subsidiaries

 

(539)

 

(391)

 Other transactions with non-controlling shareholders in subsidiaries

 

189

 

1,663

 Other movements with associates and joint ventures

 

 

40

 Outflow from financing activities

 

(9,706)

 

(15,196)

 

  

 

  

 Net cash inflow/(outflow)

 

1,507

 

(7,243)

 Cash and cash equivalents at beginning of the financial year2

 

5,790

 

13,288

 Exchange gain/(loss) on cash and cash equivalents

 

74

 

(255)

 Cash and cash equivalents at end of the financial year2

 

7,371

 

5,790

Notes:

1. Interest paid includes €58 million of cash inflow (FY21: €9 million inflow) on derivative financial instruments for the share buyback related to maturing tranches of mandatory convertible bonds.
2. Comprises cash and cash equivalents as presented in the consolidated statement of financial position of €7,496 million (FY21: €5,821 million), together with overdrafts of €125 million (FY21: €31 million).

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

32

Vodafone Group Plc FY22 Preliminary results

Notes to the unaudited condensed consolidated financial statements

1

Basis of preparation

These unaudited condensed consolidated financial statements of Vodafone Group Plc and its subsidiaries (the ‘Group’) apply the same accounting policies, presentation and methods of calculation as those followed in the preparation of the Group’s consolidated financial statements for the year ended 31 March 2021, which were prepared in accordance with International Financial Reporting Standards (‘IFRS’), as issued by the International Accounting Standards Board (‘IASB’) and with the requirements of the Companies Act 2006.

The information relating to the year ended 31 March 2021 is extracted from the Group’s Annual Report on Form 20-F for that year.

The preparation of the unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the end of the reporting period and the reported amounts of revenue and expenses during the reporting period. Actual results could vary from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Going concern

The Group has a strong liquidity position with €7.4 billion of cash and cash equivalents available at 31 March 2022 which, together with undrawn revolving credit facilities of €7.6 billion, cover all of the Group’s reasonably expected cash requirements over the going concern period. The Directors have reviewed trading and liquidity forecasts for the Group, which were based on current trading conditions, and considered a variety of scenarios including not being able to access the capital markets during the assessment period. In addition to the liquidity forecasts prepared, the Directors considered the availability of the Group’s revolving credit facilities which were undrawn as at 31 March 2022. As a result of the assessment performed, the Directors have concluded that the Group is able to continue in operation for a period of at least 12 months from the date of approving the consolidated financial statements and that it is appropriate to continue to adopt the going concern basis in preparing the consolidated financial statements.

Critical accounting judgements and estimates

The Group’s critical accounting judgements and estimates are disclosed in the Group’s Annual Report for the year ended 31 March 2022. The impact of recent energy price inflation, exacerbated by the war in Ukraine, has been factored into our latest forecasts and considered in our impairment review.

New accounting pronouncements adopted

On 1 April 2021, the Group adopted certain new accounting policies where necessary to comply with amendments to IFRS, none of which had a material impact on the consolidated results, financial position or cash flows of the Group. Further details are provided in the Group’s annual report for the year ended 31 March 2021.

Basis of preparation changes to be adopted on or after 1 April 2022

It is expected that Turkey will meet the requirements to be designated as a hyper-inflationary economy under IAS 29 ‘Financial Reporting in Hyper-Inflationary Economies’ in the quarter ended 30 June 2022 and that the Group’s financial reporting relating to Turkey during the year ending 31 March 2023 will be in accordance with IAS 29. Under IAS 29, Turkish Lira results and non-monetary asset and liability balances are revalued to present value equivalent local currency amounts (adjusted based on an inflation index) before translation to euros at reporting-date exchange rates.

33

Vodafone Group Plc FY22 Preliminary results

Notes to the unaudited condensed consolidated financial statements

2

Equity dividends

2022

2021

    

€m

    

€m

 Declared and paid during the financial year:

 

  

 

  

 Final dividend for the year ended 31 March 2021: 4.5 eurocents per share (2020: 4.5 eurocents per share)

 

1,254

 

1,205

 Interim dividend for the year ended 31 March 2022: 4.5 eurocents per share (2021: 4.5 eurocents per share)

 

1,229

 

1,207

 

2,483

2,412

 Proposed after the end of the year and not recognised as a liability:

 

 

 Final dividend for the year ended 31 March 2022: 4.5 eurocents per share (2021: 4.5 eurocents per share)

1,265

1,260

3

Contingent liabilities and legal proceedings

Vodafone Idea

As part of the agreement to merge Vodafone India and Idea Cellular in 2017, the parties agreed a mechanism for payments between the Group and Vodafone Idea Limited (‘VIL’) pursuant to the difference between the crystallisation of certain identified contingent liabilities in relation to legal, regulatory, tax and other matters, and refunds relating to Vodafone India and Idea Cellular. Cash payments or cash receipts relating to these matters must have been made or received by VIL before any amount becomes due from or owed to the Group. Any future payments by the Group to VIL as a result of this agreement would only be made after satisfaction of this and other contractual conditions.

The Group’s potential exposure under this mechanism is capped at INR 64 billion (€743 million) following payments made under this mechanism from Vodafone to VIL, in the year ended 31 March 2021, totalling INR 19 billion (€235 million). On 15 September 2021, the Government of India announced a relief package and a series of reforms designed to improve the liquidity and financial health of the telecom sector. The reforms include a four-year moratorium on spectrum and AGR payments and the option to convert payments due on spectrum and AGR payments to equity at the end of the moratorium period, with interest on due amounts being convertible during the moratorium period; VIL elected to accept the options in October and November 2021, respectively.

VIL raised INR 45 billion (€524 million) via the issue of new equity in March 2022, most of which was used to settle amounts due to Indus. VIL remains in need of additional liquidity support from its lenders and intends to raise additional equity capital. There are significant uncertainties in relation to VIL’s ability to make payments in relation to any remaining liabilities covered by the mechanism and no further cash payments are considered probable from the Group as at 31 March 2022. The carrying value of the Group’s investment in VIL is €nil and the Group is recording no further share of losses in respect of VIL. The Group’s potential exposure to liabilities within VIL is capped by the mechanism described above; consequently, contingent liabilities arising from litigation in India concerning operations of Vodafone India are not reported.

34

Vodafone Group Plc FY22 Preliminary results

Notes to the unaudited condensed consolidated financial statements

Indus Towers

VIL’s ability to satisfy certain payment obligations under its Master Services Agreements with Indus Towers (the ‘MSAs’) is uncertain and depends on a number of factors including its ability to raise additional funding. Under the terms of the Indus and Bharti Infratel merger in November 2020, a security package was agreed for the benefit of the newly created merged entity, Indus Towers, which could be invoked in the event that VIL was unable to make MSA payments. The security package included the following elements:

- A prepayment in cash of INR 24 billion (€279 million) by VIL to Indus Towers in respect of its payment obligations that are undisputed, due and payable under the MSAs after the merger closing. The prepayment was fully utilised during the year to 31 March 2022;
- A primary pledge over 190.7 million shares owned by Vodafone Group in Indus Towers having a value of INR 47 billion (€544 million) as at 31 March 2021; and
- A secondary pledge over shares owned by Vodafone Group in Indus Towers (ranking behind Vodafone’s existing lenders for the outstanding bank borrowings of €1.4 billion as at 31 March 2022 secured against Indian assets utilised to fund Vodafone’s contribution to the VIL rights issue in 2019) (‘the Bank Borrowings’) with a maximum liability cap of INR 42.5 billion (€504 million).

In the event of non-payment of relevant MSA obligations by VIL, Indus Towers would have recourse to the primary pledge shares and, after repayment of the Bank Borrowings in full, any secondary pledged shares, up to the value of the liability cap.

During February and March 2022, the Group announced the disposal of the 190.7 million shares that were subject to the primary pledge in two transactions for a combined INR 38.1 billion (€452 million). The Group invested INR 33.7 billion (€393 million) of the proceeds by subscribing to newly issued VIL equity, which VIL immediately used to partially settle outstanding MSA obligations to Indus Towers. This transaction resulted in an equivalent partial release of the primary pledge, with the remaining INR 4.4 billion (€52 million) proceeds of the share disposal remaining secured for further utilisation by Indus Towers.

Indus Towers has recourse against the secondary pledge to the maximum liability cap, from any proceeds remaining after the settlement of the Bank Borrowings.

Legal proceedings

The Group is currently involved in a number of legal proceedings, including inquiries from, or discussions with, government authorities that are incidental to its operations.

Legal proceedings where the Group considers that the likelihood of material future outflows of cash or other resources is more than remote are disclosed below. Where the Group assesses that it is probable that the outcome of legal proceedings will result in a financial outflow, and a reliable estimate can be made of the amount of that obligation, a provision is recognised for these amounts.

In all cases, determining the probability of successfully defending a claim against the Group involves the application of judgement as the outcome is inherently uncertain. The determination of the value of any future outflows of cash or other resources, and the timing of such outflows, involves the use of estimates. The costs incurred in complex legal proceedings, regardless of outcome, can be significant.

The Group is not involved in any material proceedings in which any of the Group’s Directors, members of senior management or affiliates are either a party adverse to the Group or have a material interest adverse to the Group.

Indian tax cases

In January 2012, the Supreme Court of India found against the Indian tax authority and in favour of Vodafone International Holdings BV (‘VIHBV’) in proceedings brought after the Indian tax authority alleged potential liability under the Income Tax Act 1961 for the failure by VIHBV to deduct withholding tax from consideration paid to the Hutchison Telecommunications International Limited group (‘HTIL’) in connection with its 2007 disposal to VIHBV of its interests in a wholly-owned Cayman Island incorporated subsidiary that indirectly held interests in Vodafone India Limited (‘Vodafone India’).

35

Vodafone Group Plc FY22 Preliminary results

Notes to the unaudited condensed consolidated financial statements

The Finance Act 2012 of India, which amended various provisions of the Income Tax Act 1961 with retrospective effect, contained provisions 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 sought to subject a purchaser, such as VIHBV, to a retrospective obligation to withhold tax. On 3 January 2013, VIHBV received a letter from the Indian tax authority reminding it of the tax demand raised prior to the Supreme Court of India’s judgement and updating the interest element of that demand to a total amount of INR142 billion, which included principal and interest as calculated by the Indian tax authority but did not include penalties. On 12 February 2016, VIHBV received a notice dated 4 February 2016 of an outstanding tax demand of INR221 billion (plus interest). On 29 September 2017, VIHBV received an electronically generated demand in respect of alleged principal, interest and penalties in the amount of INR190.7 billion.

VIHBV initiated arbitration proceedings under the Netherlands-India Bilateral Investment Treaty (‘Dutch BIT’) on 17 April 2014. In September 2020, the arbitration tribunal issued its award unanimously ruling in Vodafone’s favour. The Indian Government applied to set aside the award primarily on jurisdictional grounds. The proceedings have been transferred to the Singapore International Commercial Court (‘SICC’).

Separately, on 24 January 2017, Vodafone Group Plc and Vodafone Consolidated Holdings Limited formally commenced arbitration with the Indian Government under the United Kingdom-India Bilateral Investment Treaty (‘UK BIT’). Although relating to the same underlying facts as the claim under the Dutch BIT, the UK BIT claim is a separate and distinct claim under a different treaty and includes independent claims relating to disputes between the Indian tax authority and Vodafone India Services Private Limited (‘VISPL’) (see below). In 2020, following attempts by the Indian Government to obtain a court injunction preventing Vodafone from progressing the UK BIT arbitration, the Delhi High Court ordered that Vodafone shall proceed with the UK BIT arbitration only if the award already published under the Dutch BIT is set aside.

In August 2021 the Indian Parliament passed new legislation which affects the retrospective effect of the Finance Act 2012. The impact of this legislation on the Dutch and UK BIT proceedings, in particular whether the Indian Government will withdraw its challenge to the arbitration award in the Dutch BIT, is unknown as of the date of this report. The SICC granted a stay in the Dutch BIT proceedings to 15 June 2022.

VIHBV and Vodafone Group Plc will continue to defend vigorously any allegation that VIHBV or Vodafone India is liable to pay tax in connection with the transaction with HTIL. Based on the facts and circumstances of this matter, including the outcome of legal proceedings to date, the Group considers that it is more likely that not that no present obligation exists at 31 March 2022.

VISPL tax claims

VISPL is involved in a number of tax cases. The total value of the claims is approximately €500 million plus interest, and penalties of up to 300% of the principal.

Of the individual tax claims, the most significant is in the amount of approximately €254 million (plus interest of €614 million), which VISPL has been assessed as owing in respect of (i) a transfer pricing margin charged for the international call centre of HTIL prior to the 2007 transaction with Vodafone for HTIL assets in India; (ii) the sale of the international call centre by VISPL to HTIL; and (iii) the acquisition of and/or the alleged transfer of options held by VISPL in Vodafone India. A stay of the tax demand on a deposit of £20 million and a corporate guarantee by VIHBV for the balance of tax assessed are in place. On 8 October 2015, the Bombay High Court ruled in favour of Vodafone in relation to the options and the call centre sale. The Indian Tax Authority has appealed to the Supreme Court of India. The appeal hearing has been adjourned indefinitely.

While there is some uncertainty as to the outcome of the tax cases involving VISPL, the Group believes it has valid defences and does not consider it probable that a financial outflow will be required to settle these cases.

Other cases in the Group

Spain and UK: TOT v Vodafone Group Plc, VGSL, and Vodafone UK

The Group has been defending cases brought against it in Spain and the UK by TOT Power Control and Top Optimized Technologies (jointly ‘TOT’) alleging breach of confidentiality and patent infringement. In November 2021 TOT withdrew all of its claims against the Group in Spain and the UK as part of an agreed settlement.

Further background relating to these claims is provided in the Group’s Annual Report for the financial year ended 31 March 2021.

36

Vodafone Group Plc FY22 Preliminary results

Notes to the unaudited condensed consolidated financial statements

Germany: Kabel Deutschland takeover - class actions

The German courts have been determining the adequacy of the mandatory cash offer made to minority shareholders in Vodafone’s takeover of Kabel Deutschland. Hearings took place in May 2019 and a decision was delivered in November 2019 in Vodafone’s favour, rejecting all claims by minority shareholders. A number of shareholders appealed which was rejected by the court in December 2021. Several minority shareholders have filed a further appeal before the Federal Court of Justice. The appeal process is ongoing. While the outcome is uncertain, the Group believes it has valid defences and that the outcome of the appeal will be favourable to Vodafone.

Italy: Iliad v Vodafone Italy

In July 2019, Iliad filed a claim for €500 million against Vodafone Italy in the Civil Court of Milan. The claim alleges anti-competitive behaviour in relation to portability and certain advertising campaigns by Vodafone Italy. Preliminary hearings have taken place, including one at which the Court rejected Iliad’s application for a cease and desist order against alleged misleading advertising by Vodafone. The main hearing on the merits of the claim took place on 8 June 2021 and we are waiting to receive the judgement.

The Group is currently unable to estimate any possible loss in this claim in the event of an adverse judgement but while the outcome is uncertain, the Group believes it has valid defences and that it is probable that no present obligation exists.

Greece: Papistas Holdings SA, Mobile Trade Stores (formerly Papistas SA) and Athanasios and Loukia Papistas v Vodafone Greece

In October 2019, Mr. and Mrs. Papistas, and companies owned or controlled by them, filed several new claims against Vodafone Greece with a total value of approximately €330 million for purported damage caused by the alleged abuse of dominance and wrongful termination of a franchise arrangement with a Papistas company. Lawsuits which the Papistas claimants had previously brought against Vodafone Group Plc and certain Directors and officers of Vodafone were withdrawn. Vodafone Greece filed a counter claim and all claims were heard in February 2020. All of the Papistas claims were rejected by the Greek Court because the stamp duty payments required to have the merits of the case considered had not been made. Vodafone Greece’s counter claim was also rejected. The Papistas claimants and Vodafone Greece have each filed appeals and, subject to the Papistas claimants paying the requisite stamp duty, the hearing on the merits of these appeals will take place in early 2023.

The amount claimed in these lawsuits is substantial and, if the claimants are successful, the total potential liability could be material. However, we are continuing vigorously to defend the claims and based on the progress of the litigation so far the Group believes that it is highly unlikely that there will be an adverse ruling for the Group. On this basis, the Group does not expect the outcome of these claims to have a material financial impact.

UK: Phones 4U in Administration v Vodafone Limited and Vodafone Group Plc and Others

In December 2018, the administrators of former UK indirect seller, Phones 4U, sued the three main UK mobile network operators (‘MNOs’), including Vodafone, and their parent companies. The administrators allege collusion between the MNOs to pull their business from Phones 4U thereby causing its collapse. Vodafone and the other defendants filed their defences in April 2019 and the Administrators filed their replies in October 2019. Disclosure has taken place and witness statements were filed in December 2021. The judge has also ordered that there should be a split trial between liability and damages. The first trial started in May 2022.

Taking into account all available evidence, the Group assesses it to be more likely than not that a present obligation does not exist and that the allegations of collusion are completely without merit; the Group is vigorously defending the claim. The value of the claim is not pleaded but we understand it to be the total value of the business, allegedly equivalent to approximately £1 billion with the addition of alleged exemplary damages. Vodafone’s alleged share of the liability is also not pleaded. The Group is not able to estimate any possible loss in the event of an adverse judgment.

37

Vodafone Group Plc FY22 Preliminary results

Non-GAAP measures

In the discussion of the Group’s reported operating results, non-GAAP measures are presented to provide readers with additional financial information that is regularly reviewed by management. 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 a measure defined under GAAP. Such measures should not be viewed in isolation or as an alternative to the equivalent GAAP measure.

The non-GAAP measures discussed in this document are listed below.

Non-GAAP measure

    

Defined on page

    

Closest equivalent GAAP measure

    

Reconciled on page

Performance metrics