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Vodafone Group Plc
Annual Report 2016
76 Directors statement ofresponsibility
78 Report of independent registered public accounting firm
79 Audit report on the consolidated and parent company financial statements
87 Consolidated financial statements:
87 Consolidated income statement 87 Consolidated statement
ofcomprehensive income88 Consolidated statement
offinancial position89 Consolidated statement ofchanges
in equity 90 Consolidated statement ofcashflows
91 Notes to the consolidated financialstatements:
91 1. Basis of preparation Income statement96 2. Segmental analysis99 3. Operating profit/(loss)100 4. Impairment losses 104 5. Investment income and
financingcosts105 6. Taxation109 7. Discontinued operations and assets
held for sale111 8. Earnings per share111 9. Equity dividends Financial position 112 10. Intangible assets114 11. Property, plant and equipment116 12. Investments in associates and
jointarrangements119 13. Other investments120 14. Inventory121 15. Trade and other receivables122 16. Trade and other payables123 17. Provisions124 18. Called up share capital Cash flows125 19. Reconciliation of net cash flow from
operating activities 125 20. Cash and cash equivalents126 21. Borrowings 130 22. Liquidity and capital resources134 23. Capital and financial risk
management Employee remuneration139 24. Directors and key management
compensation140 25. Employees 141 26. Post employment benefits 145 27. Share-based payments Additional disclosures147 28. Acquisitions and disposals148 29. Commitments149 30. Contingent liabilities and legal proceedings153 31. Related party transactions153 32. Subsequent events154 33. Related undertakings162 34. Subsidiaries exempt from audit
163 Other unaudited financial information:
163 Prior year operating results
168 Company balance sheet ofVodafone Group Plc
169 Notes to the Company financialstatements:
169 1. Basis of preparation171 2. Fixed assets171 3. Debtors171 4. Other investments172 5. Creditors172 6. Share capital173 7. Share-based payments173 8. Reserves 173 9. Equity dividends174 10. Contingent liabilities and legal proceedings 174 11. Other matters
Reporting our financial performanceWe continue to review the format of our consolidated financial statements with the aim of making them clear and easier to follow. This year, we have changed the order of certain notes to the financial statements so as to incorporate a full listing of all the Groups related undertakings, including subsidiaries, joint arrangements and associates, in note 33, as now required by Company Law. We hope these changes help youto navigate to the information that is important to you.
Vodafone Group Plc
Annual Report 2016
Directors statement of responsibility
Financial statements and accounting recordsCompany 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:
a select suitable accounting policies and apply them consistently;
a make judgements and estimates that are reasonable and prudent;
a present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
a state whether the consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the EU and Article 4 of the EU IAS Regulations. The Directors also ensure that the consolidated financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (IASB);
a state for the Company financial statements whether applicable UKaccounting standards have been followed; and
a prepare the financial statements on a going concern basis unless it isinappropriate to presume that the Company and the Group will continue in business.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and of the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006 andfor the consolidated financial statements, Article 4 of the EU IAS Regulation. They are also responsible for the system of internal control, for safeguarding the assets of the Company and the Group and, hence, for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the Companys website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Directors responsibility statementEach of the Directors, whose names and functions are listed on pages 40 and 41 confirm that, to the best of their knowledge:
a the consolidated financial statements, prepared in accordance with IFRS as issued by the IASB and IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group;
a the parent company financial statements, prepared in accordance with United Kingdom generally accepted accounting practice, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and
a the strategic report includes a fair review of the development and performance of the business and the position of the Group together with a description of the principal risks and uncertainties that it faces.
The Directors are responsible for preparing the Annual Report in accordance with applicable law and regulations. Having taken advice from the Audit and Risk Committee, the Board considers the report and accounts, taken as a whole, is fair, balanced and understandable and that it provides the information necessary for shareholders to assess the Companys position and performance, business model and strategy.
Neither the Company nor the Directors accept any liability to any person in relation to the Annual Report except to the extent that such liability could arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with section 90A and schedule 10A of the Financial Services and Markets Act 2000.
Disclosure of information to the auditorHaving made the requisite enquiries, so far as the Directors are aware, there is no relevant audit information (as defined by section 418(3) of the Companies Act 2006) of which the Companys auditor is unaware and the Directors have taken all the steps they ought to have taken to make themselves aware of any relevant audit information and to establish that the Companys auditor is aware of that information.
Going concernThe Groups business activities, performance, position and principal risks and uncertainties and how these are managed or mitigated are set out in the strategic report on pages 1 to 37.
In addition, the financial position of the Group is included in Borrowings, Liquidity and capital resources and Capital and financial risk management in notes 21, 22 and 23 respectively to the consolidated financial statements, which include disclosure in relation to the Groups objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.
The Group believes it adequately manages or mitigates its solvency andliquidity risks through two primary processes, described below.
Business planning process and performance managementThe Groups forecasting and planning cycle consists of three in-year forecasts, a budget and a long-range plan. These generate income statement, cash flow and net debt projections for assessment by Group management and the Board.
Each forecast is compared with prior forecasts and actual results so as to identify variances and understand the drivers of the changes and their future impact so as to allow management to take action where appropriate. Additional analysis is undertaken to review and sense check the key assumptions underpinning the forecasts.
The Directors are responsible for preparing the financial statements in accordance with applicable law and regulations and keeping proper accounting records. Detailed below are statements made by the Directors in relation to their responsibilities, disclosure of information to the Companys auditor, going concern and managements report on internal control over financial reporting.
Vodafone Group Plc
Annual Report 2016
Cash flow and liquidity reviewsThe business planning process provides outputs for detailed cash flow and liquidity reviews, to ensure that the Group maintains adequate liquidity throughout the forecast periods. The prime output is a one year liquidity forecast which is prepared and updated on a daily basis which highlights the extent of the Groups liquidity based on controlled cash flows and the headroom under the Groups undrawn revolving credit