185 Vodafone Group Plc Annual Report 2026
Strategic report
Governance
Financials
Other information
Credit risk Credit risk is the risk that a counterparty will not meet its obligations under a financial asset leading to a financial loss for the Group. The Group is exposed to credit risk from its operating, investing and financing activities. The Group considers its maximum exposure to credit risk at 31 March to be: 2026 2025 €m €m Cash and bank deposits (note 19) 5,274 8,871 Money market funds (note 19) 3,708 2,130 Managed investment funds (note 13) 3,214 3,141 Bonds and debt securities (note 13) 1,220 4,013 Collateral assets (note 13) 1,169 1,010 Other investments (note 13) 2,170 1,134 Derivative and other financial instruments (note 14) 2,975 4,197 Trade receivables (note 14) 1 6,473 5,717 Contract assets and other receivables (note 14) 4,829 4,605 Financial Guarantees 2 1,034 1,518 32,066 36,336 Notes: 1. Includes amounts guaranteed under sales of trade receivables €1,868 million (2025: €1,765 million). 2. Principally comprises Vodafone Group Plc’s guarantee of the Group’s share in a multicurrency loan facility, amounting to US$0.5 billion and €0.6 billion (2025: US$1.0 billion and €0.6 billion), which forms part of its overall joint venture investment in TPG Telecom Ltd. The Group’s share of these loan balances is included in the net investment in joint venture (see note 12 'Associates and joint arrangements').
22. Capital and financial risk management (continued) Sale of trade receivables
During the year, the Group sold certain trade receivables to a number of financial institutions. Whilst there are no repurchase obligations in respect of these receivables, the Group provided credit guarantees which would only become payable if default rates were significantly higher than historical rates. The credit guarantee is not considered substantive and substantially all risks and rewards associated with the receivables passed to the purchaser at the date of sale, therefore the receivables were derecognised. The maximum payable under the guarantees at 31 March 2026 was €1,868 million (2025: €1,765 million). No provision has been made in respect of these guarantees as the likelihood of a cash outflow has been assessed as remote. Supply chain financing arrangements The Group offers eligible suppliers the opportunity to use supply chain financing, allowing suppliers that decide to use it to receive payment earlier than the invoice due date (see note 15 ‘Trade and other payables’). The Group does not provide any financial guarantees to the financial institutions that run the supply chain financing programme and continues to cash settle supplier payables in accordance with their contractual terms. Financial risk management The Group’s treasury function centrally manages the Group’s funding requirement, net foreign exchange exposure, interest rate management exposures and counterparty risk arising from investments and derivatives. Treasury operations are conducted within a framework of policies and guidelines authorised and reviewed by the Board, most recently in May 2025. Treasury risk management is overseen by a committee comprising of the Group’s Chief Financial Officer, Group General Counsel and Company Secretary, Group Corporate Finance Director, Group Treasury Director and Group Director of Financial Controlling and Operations. The committee receives management information relating to treasury activities on a quarterly basis. The Group’s Internal Auditor reviews the internal control environment regularly. Certain borrowings in Vodacom Group are subject to a maximum leverage ratio covenant that is tested on a periodic basis. Vodacom Group was in compliance with all financial covenants throughout the reporting period. No bonds issued by the Group or the Revolving Credit Facilities are subject to financial covenant ratios. Approximately €30 billion (2025: €30 billion) of issued bonds have a change of control clause. The Group uses derivative instruments for currency and interest rate risk management purposes that are transacted by specialist treasury personnel. The Group mitigates banking sector credit risk by the use of collateral support agreements. The Group’s financial risk management policies seek to reduce the Group’s exposure to any future disruption to financial markets, including any future impacts from global economic and political uncertainty and other macro economic events. The Group has combined cash and cash equivalent and investments included in net debt of €13.3 billion, providing significant headroom over short-term liquidity requirements. Additionally the Group maintains undrawn revolving credit facilities of €7.6 billion euro equivalent. As at 31 March 2026 and after hedging, substantially all the Group’s borrowings are held on a fixed interest basis, mitigating exposure to interest rate risk. The Group has no significant currency exposures other than positions in economic hedging relationships. The Group’s credit risk under financing activities is spread across a portfolio of highly rated institutions to reduce counterparty exposures and derivative balances are substantially all collateralised. The Group’s operating activities result in customer credit risk, for which provisions for expected credit losses are recognised.
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