Vodafone 2024 Annual Report

155 Vodafone Group Plc Annual Report 2024 155

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Vodafone Group Plc Annual Report 2024

Year ended 31 March 2024 The Group performs its annual impairment test for goodwill and indefinite lived intangible assets at 31 March and when there is an indicator of impairment of an asset. At each reporting period date, judgement is exercised by management in determining whether any internal or external sources of information observed are indicative that the carrying amount of any of the Group’s cash generating units is not recoverable. Refer to note 7 for cash-generating units recognised as 'Discontinued operations and assets held for sale' in the current year. Climate change As a large owner of infrastructure and consumer of energy, the Group has exposure to climate change related risks such as energy cost increases, asset damage and service disruption. The long range plans used in the Group’s impairment testing include forecast energy costs and other costs that are embedded in the planning process to deliver the Group’s zero carbon targets. The long range plans also include capital expenditure in relation to the Group’s use of durable and energy efficient infrastructure and the costs of the Group’s extensive and ongoing network maintenance programme. Climate change has not had a material impact on the outcome of the Group’s impairment testing. Indus Towers Limited Management determines the recoverable amount of the Group’s investment in Indus Towers on a fair value less costs to sell basis. Indus Towers’ share price is observable in a quoted market and is considered a level 1 input under the IFRS 13 fair value hierarchy. The share price of INR 291.15 per share implied a recoverable amount of INR 165 billion (€1.8 billion), which exceeds the carrying value of the Group’s investment at the same date. The increase in recoverable amount supports the reversal of the prior year impairment of €64 million. Value in use assumptions The table below shows key assumptions used in the value in use calculation for Germany as its carrying amount of goodwill is significant in comparison with the Group’s total carrying amount of goodwill: Assumptions used in value in use calculations Germany % Pre-tax discount rate 8.3 Long-term growth rate 1.0 Projected adjusted EBITDAaL CAGR 1 2.4 Projected capital expenditure 2 17.4-19.9 Sensitivity analysis The estimated recoverable amounts of the Group’s operations in Germany and the UK exceed their carrying values by €2.3 billion and €1.6 billion respectively. If the assumptions used in the impairment review were changed to a greater extent than as presented in the following table, the changes would, in isolation, lead to an impairment loss being recognised for the year ended 31 March 2024. Change required for carrying value to equal recoverable amount Germany UK pps pps Pre-tax discount rate 0.5 2.2 Long-term growth rate (0.4) (2.1) Projected adjusted EBITDAaL CAGR 1 (1.2) (2.9) Projected capital expenditure 2 3.9 4.9 Notes: 1 Projected adjusted EBITDAaL CAGR is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing. 2 Projected capital expenditure, which excludes licences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five years for all cash-generating units of the plans used for impairment testing.

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