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Vodafone – Financials Contents Directors’ Statement of Responsibility 83 Audit Report on Internal Controls 84 Critical Accounting Estimates 85 Consolidated Financial Statements Consolidated Income Statement for the years ended 31 March 88 Consolidated Statement of Recognised Income and Expense for the years ended 31 March 88 Consolidated Balance Sheet at 31 March 89 Consolidated Cash Flow Statement for the years ended 31 March 90 Notes to the Consolidated Financial Statements: 1. Basis of preparation 91 2. Significant accounting policies 91 3. Segment analysis 96 4. Operating profit/(loss) 98 5. Investment income and financing costs 99 6. Taxation 100 7. Equity dividends 102 8. Earnings/(loss) per share 102 9. Intangible assets 103 10. Impairment 104 11. Property, plant and equipment 107 12. Principal subsidiary undertakings 108 13. Investments in joint ventures 109 14. Investments in associated undertakings 110 15. Other investments 110 16. Inventory 111 17. Trade and other receivables 111 18. Cash and cash equivalents 112 19. Called up share capital 112 20. Share-based payments 113 21. Transactions with equity shareholders 115 22. Movements in accumulated other recognised income and expense 115 23. Movements in retained losses 115 24. Borrowings 116 25. Post employment benefits 121 26. Provisions 123 27. Trade and other payables 123 28. Acquisitions 124 29. Disposals and discontinued operations 125 30. Reconciliation of net cash flows from operating activities 127 31. Commitments 127 32. Contingent liabilities 128 33. Directors and key management compensation 129 34. Related party transactions 129 35. Employees 130 36. Subsequent events 130 37. New accounting standards 131 82 Vodafone Group Plc Annual Report 2008 Audit Report on the Consolidated Financial Statements 132 Audit Report on the Company Financial Statements 133 Company Financial Statements of Vodafone Group Plc 134 Notes to the Company Financial Statements: 1. Basis of preparation 135 2. Significant accounting policies 135 3. Fixed assets 136 4. Debtors 136 5. Creditors 137 6. Share capital 137 7. Share-based payments 138 8. Reserves and reconciliation of movements in equity shareholders’ funds 138 9. Equity dividends 139 10. Contingent liabilities 139
Directors’ Statement of Responsibility Financial statements and accounting records Company law of England and Wales requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and of the Group at the end of the financial year and of the profit or loss of the Group for that period. In preparing those financial statements, the directors are required to: • • • • • select suitable accounting policies and apply them consistently; make judgements and estimates that are reasonable and prudent; state whether the Consolidated Financial Statements have been prepared in accordance with IFRS as adopted for use in the EU; state for the Company Financial Statements whether applicable UK accounting standards have been followed; and prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company and the Group will continue in business. The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and of the Group and to enable them to ensure that the financial statements comply with the Companies Act 1985 and Article 4 of the EU IAS Regulation. They are also responsible for the system of internal control, for safeguarding the assets of the Company and the Group and, hence, for taking reasonable steps for the prevention and detection of fraud and other irregularities. Directors’ responsibility statement The Board confirms to the best of its knowledge: • • the Consolidated Financial Statements, prepared in accordance with IFRS as issued by the IASB and IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; and the Directors’ Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces. Neither the Company nor the directors accept any liability to any person in relation to the Annual Report except to the extent that such liability could arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with section 90A of the Financial Services and Markets Act 2000. Disclosure of information to auditors Having made the requisite enquiries, so far as the directors are aware, there is no relevant audit information (as defined by Section 234ZA of the Companies Act 1985) of which the Company’s auditors are unaware, and the directors have taken all the steps they ought to have taken to make themselves aware of any relevant audit information and to establish that the Company’s auditors are aware of that information. Going concern After reviewing the Group’s and the Company’s budget for the next financial year, and other longer term plans, the directors are satisfied that, at the time of approving the financial statements, it is appropriate to adopt the going concern basis in preparing the financial statements. Management’s report on internal control over financial reporting As required by section 404 of the Sarbanes-Oxley Act of 2002, management is responsible for establishing and maintaining adequate internal control over financial reporting for the Group. The Company’s internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurance that transactions are recorded as necessary permit the preparation of financial statements in accordance with IFRS, as adopted by the European Union and IFRS as issued by the IASB, and that receipts and expenditures are being made only in accordance with authorisation of management and the directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Any internal control framework, no matter how well designed, has inherent limitations, including the possibility of human error and the circumvention or overriding of the controls and procedures, and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or because the degree of compliance with the policies or procedures may deteriorate. Management has assessed the effectiveness of the internal control over financial reporting at 31 March 2008 based on the Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Management has not evaluated the internal controls of Vodacom Group (Pty) Limited (“Vodacom”), which is accounted for using proportionate consolidation and the conclusion regarding the effectiveness of internal control over financial reporting does not extend to the internal controls of Vodacom. Management is unable to assess the effectiveness of internal control at Vodacom due to the fact that it does not have the ability to dictate or modify its controls and does not have the ability, in practice, to assess those controls. Key sub-totals that result from the proportionate consolidation of Vodacom, whose internal controls have not been assessed, are set out below. Vodacom 2008 £m Total assets 1,093 Net assets 400 Revenue 1,609 Profit for the financial year 260 Management is not required to evaluate the internal controls of entities accounted for under the equity method. Accordingly, the internal controls of these entities, which contributed a net profit of £2,876 million (2007: £2,728 million) to the profit (2007: loss) for the financial year, have not been assessed, except relating to controls over the recording of amounts relating to the investments that are recorded in the Group’s Consolidated Financial Statements. During the period covered by this Annual Report, there were no changes in the Company’s internal control over financial reporting that have materially affected or are reasonably likely to materially affect the effectiveness of the internal controls over financial reporting. Based on management’s assessment, management has concluded that the internal control over financial reporting was effective at 31 March 2008. The Company’s internal control over financial reporting, as at 31 March 2008, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, who also audit the Group’s Consolidated Financial Statements. Their audit report on internal controls over financial reporting is on page 84. By Order of the Board Stephen Scott Secretary 27 May 2008 Vodafone Group Plc Annual Report 2008 83
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Vodafone Group Plc Annual Report Fo
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Vodafone - Executive Summary Highli
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Total shareholder return April 2007
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Messaging revenue increased by 8.1%
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As well as driving growth in our ex
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Services Voice Messaging Data Fixed
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Strategy Vodafone’s five key stra
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EMAPA Deliver strong growth in emer
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Voice Voice services continue to ma
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• • Access & transmission netwo
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Research and development (“R&D”
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It also allows an open exchange of
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Sponsorships Vodafone’s global sp
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Voice services continue to make up
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The Group offers a number of produc
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Enables customers to utilise the se
Page 33 and 34: Strategic KPIs Year ended 31 March
Page 35 and 36: Adjusted operating profit increased
Page 37 and 38: Mobile telecommunications KPIs Germ
Page 39 and 40: Germany Adjusted operating profit f
Page 41 and 42: Mobile telecommunications KPIs 2008
Page 43 and 44: Associates 2008 2007 Verizon Wirele
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Page 53 and 54: Outlook 2009 financial year Adjuste
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Page 57 and 58: Equity dividends The table below se
Page 59 and 60: Funding The Group’s consolidated
Page 61 and 62: Corporate Responsibility The Board
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Page 67 and 68: Corporate Governance The Board of t
Page 69 and 70: Re-election of directors Although n
Page 71 and 72: provisions of the Companies Act 198
Page 73 and 74: Directors’ Remuneration Dear Shar
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Page 79 and 80: Audited information Remuneration fo
Page 81 and 82: Long term incentives Performance sh
Page 83: Beneficial interests The directors
Page 87 and 88: Critical Accounting Estimates The G
Page 89 and 90: Taxation The Group’s tax charge o
Page 91 and 92: Consolidated Balance Sheet at 31 Ma
Page 93 and 94: Notes to the Consolidated Financial
Page 95 and 96: determined had no impairment loss b
Page 97 and 98: Capital market and bank borrowings
Page 99 and 100: A reconciliation of adjusted operat
Page 101 and 102: 5. Investment income and financing
Page 103 and 104: Deferred tax Analysis of movements
Page 105 and 106: 9. Intangible assets Licences and s
Page 107 and 108: Key assumptions used in the value i
Page 109 and 110: 11. Property, plant and equipment L
Page 111 and 112: 13. Investments in joint ventures P
Page 113 and 114: 16. Inventory 2008 2007 £m £m Goo
Page 115 and 116: 20. Share-based payments The Compan
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Page 119 and 120: would reduce or increase profit bef
Page 121 and 122: Bank loans also include INR66 billi
Page 123 and 124: 25. Post employment benefits Backgr
Page 125 and 126: 26. Provisions Asset retirement Oth
Page 127 and 128: Pro forma full year information The
Page 129 and 130: 30. Reconciliation of net cash flow
Page 131 and 132: 33. Directors and key management co
Page 133 and 134: 37. New accounting standards The Gr
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Audit Report on the Company Financi
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Notes to the Company Financial Stat
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5. Creditors 2008 2007 £m £m Amou
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9. Equity dividends 2008 2007 £m
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Shareholders and other interested p
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any connected person) is a sharehol
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This section describes, primarily f
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Vodafone - Additional Information R
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EMAPA Eastern Europe Poland The NRA
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Impact Impact of of foreign acquisi
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Item Form 20-F caption Location in
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Definition of Terms 3G broadband 3G
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Contact Details Investor Relations
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