Independent auditor’s report to the members of Vodafone Group Plc (continued) 126 Vodafone Group Plc Annual Report 2024 Strategic report Governance Financials
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Our key observations – The directors’ assessment forecasts that the Group will maintain sufficient liquidity throughout the going concern assessment period. This included the scenario of non-refinancing of certain debt maturities in the assessment period and also the continuing availability of the Group’s €7.8 billion revolving credit facilities, undrawn as at 31 March 2024. – Furthermore, management’s reverse stress test to model the extent of the EBITDAaL reduction compared to forecasts required to breach liquidity during the going concern assessment period is considered by management to have only a remote possibility of occurring when compared to historical financial performance. The stress test included downside sensitivities in relation to the completion of both the Vodafone Spain and Vodafone Italy disposals for which the estimated proceeds are included within the base case. – With the exception of the cessation of share buyback plans anticipated post-completion of business disposals, the controllable mitigating actions available to increase liquidity over the going concern assessment period were not modelled by management due to the level of headroom in the directors’ assessment forecasts. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and Parent company’s ability to continue as a going concern for a period from when the financial statements are authorised for issue to 30 June 2025. In relation to the Group and Parent company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s ability to continue as a going concern. Overview of our audit approach Audit scope – We performed an audit of the complete financial
An overview of the scope of the Parent company and Group audits Tailoring the scope Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each company within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. We take into account size, risk profile, the organisation of the Group and effectiveness of group-wide controls, changes in the business environment and the potential impact of climate change and other factors such as recent Internal audit results when assessing the level of work to be performed at each component. In assessing the risk of material misstatement to the consolidated financial statements, and to ensure we had adequate quantitative coverage of significant accounts in the consolidated financial statements, of the 319 reporting components of the Group, we selected 19 components covering entities within Germany, South Africa, Italy, United Kingdom, Spain, Turkey, Greece, Egypt, Luxembourg and corporate entities, which represent the principal business units within the Group. Of the 19 components selected, we performed an audit of the complete financial information of nine components (“full scope components”) which were selected based on their size or risk characteristics. For four components (“specific scope components”), we performed full audit procedures on specific accounts within that component that we considered had the potential for the greatest impact on the significant accounts in the financial statements either because of the size of these accounts or their risk profile. For the remaining six components (“specified procedures components”), we performed certain audit procedures on specific accounts within that component that we considered had the potential for the greatest impact on the significant accounts in the financial statements, either because of the size of these accounts or their risk profile. Depending on the component or type of procedures, these procedures were undertaken by the primary audit team or a separate component audit team under the primary audit team’s direction. The audit scope of these components may not have included testing of all significant accounts of the component, but will have contributed to the coverage of significant accounts tested for the Group. For the remaining components where we did not perform full audit procedures, together these represent 28% of the Group’s Adjusted EBITDAaL from continuing operations, and none generate more than 5% of the Group’s Adjusted EBITDAaL from continuing operations. For these remaining components which are not full scope, specific scope or specified procedures scope, we performed other procedures, which may include analytical review at both the Group or individual component levels and the use of customised data analytics tools over the purchase to pay process, fixed assets balances and leases, to profile trends and identify items for further investigation, inquiry of management, testing entity level and group-wide controls and testing of journals we deemed higher risk, across these remaining components, in order to respond to identified potential risks of material misstatement to the consolidated financial statements.
information of 9 components, 2 of which were classified as ‘held for sale’ and discontinued operations. We also performed full audit procedures on specific balances for 4 components, specified audit procedures on specific balances for a further 6 components and other procedures on the remaining 300 components. – In respect of continuing operations, the components where we performed full audit procedures accounted for 72% of Adjusted EBITDAaL and where we performed full or specified audit procedures in respect of revenue accounted for 79% of Revenue.
Key audit matters – Carrying value of cash generating units, including goodwill – Recognition and recoverability of deferred tax assets on tax losses – Luxembourg – Revenue recognition Materiality – Overall Group materiality of €220m (FY23: €300m) has been calculated based on Adjusted EBITDAaL as defined in the ‘Our application of materiality’ section of this report. This materiality represents 2% of the Group’s Adjusted EBITDAaL as reported in Note 2 in the Consolidated financial statements.
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