231 Vodafone Group Plc Annual Report 2024 231 Vodafone Group Plc Annual Report 2024
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Cash flow hedges Cash flow hedging is used by the Company to hedge certain exposures to variability in future cash flows. The portion of gains or losses relating to changes in the fair value of derivatives that are designated and qualify as effective cash flow hedges is recognised in other comprehensive income; gains or losses relating to any ineffective portion are recognised immediately in the income statement. However, when the hedged transaction results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously recognised in other comprehensive income and accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non- financial liability. When the hedged item is recognised in the income statement, amounts previously recognised in other comprehensive income and accumulated in equity for the hedging instrument are reclassified to the income statement. When hedge accounting is discontinued, any gain or loss recognised in other comprehensive income at that time remains in equity and is recognised in the income statement when the hedged transaction is ultimately recognised in the income statement. If a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in the income statement. New accounting pronouncements To the extent applicable the Company will adopt new accounting policies as set out in note 1 ‘Basis of preparation’ in the consolidated financial statements. 2. Fixed assets Accounting policies Shares in Group undertakings are stated at cost less any provision for impairment and capital related to share-based payments. Contributions in respect of share-based payments are recognised in line with the policy set out in note 7 ‘Share-based payments’. The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable. If any such indication of impairment exists, the Company makes an estimate of the recoverable amount. If the recoverable amount of the cash-generating unit is less than the value of the investment, the investment is considered to be impaired and is written down to its recoverable amount. An impairment loss is recognised immediately in the income statement. Where there has been a change in the estimates used to determine recoverable amount and an impairment loss subsequently reverses, the carrying amount of the cash-generating unit is increased to the revised estimate of its recoverable amount, not to exceed the carrying amount that would have been determined had no impairment loss been recognised for the cash-generating unit in prior years and an impairment loss reversal is recognised immediately in the income statement. The Company applies the same methodology and assumptions used by the Group for goodwill impairment testing purposes, as set out in note 4 ‘Impairment losses’ to the consolidated financial statements. For the purposes of the Company’s own impairment assessment, the Group’s operations are considered to be a single cash generating unit (‘CGU’) held within the Company’s principal subsidiary, Vodafone European Investments. The pooling of the Company’s interests within a single CGU significantly reduces the risk that movements in individual assumptions used during the goodwill impairment testing will impact the result of the investment impairment assessment. Whilst the underlying assumptions used are a source of estimation uncertainty, they do not give rise to a significant risk of adjustment within the next financial year. Shares in Group undertakings 2024 2023 €m €m Cost 1 April 84,471 84,334 Additions – 782 Disposals (261) (667) Capital contributions arising from share-based payments 115 135 Contributions received in relation to share-based payments (72) (113) 31 March 84,253 84,471 Accumulated impairment losses 1 April 1,044 928 Disposals (261) – Impairment loss recognised 1 – 116 31 March 783 1,044 Net book value 31 March 83,470 83,427 Note: 1. €116 million of capital contribution and resulting impairment related to an intercompany reorganisation exercise completed during the prior year. At 31 March 2024 the Company had the following principal subsidiary: Name Principal activity Country of incorporation Percentage shareholding Vodafone European Investments Holding Company England 100 Details of direct and indirect related undertakings are set out in note 31 ‘Related undertakings’ to the consolidated financial statements.
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