186 Vodafone Group Plc Annual Report 2026
Strategic report
Governance
Financials
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For trade receivables the expected credit loss provision is calculated using a provision matrix, in which the provision increases as balances age, and for receivables paid in instalments and contract assets a weighted loss rate is calculated to reflect the period over which the amounts become due for payment by the customer. Trade receivables and contract assets are written off when each business unit determines there to be no reasonable expectation of recovery and enforcement activity has ceased. Movements in the allowance for expected credit losses during the year were as follows: Trade receivables held Trade receivables held at fair value through Contract assets at amortised cost other comprehensive income 2026 2025 2026 2025 2026 2025 €m €m €m €m €m €m 1 April 46 20 865 765 77 78 Exchange movements (1) 1 (24) (7) – – Amounts charged to credit losses on financial assets 48 85 319 360 62 31 Other 1 4 (60) (229) (253) (78) (32) 31 March 97 46 931 865 61 77 Note: 1. Primarily utilisation of the provision by way of write-off. Expected credit losses are presented as net credit losses on financial assets within operating profit and subsequent recoveries of amounts previously written off are credited against the same line item. The majority of the Group’s trade receivables are due for maturity within 90 days and largely comprise amounts receivable from consumers and business customers. The table below presents information on trade receivables past due¹ and their associated expected credit losses:
22. Capital and financial risk management (continued) Financing activities The Group invests in government securities on the basis they generate a fixed rate of return and are amongst the most creditworthy of investments available. Investments are made in accordance with established internal treasury policies which dictate the scaled maximum exposure permissible in relation to an investment’s long-term credit rating. The Group invests in AAA unsecured money market mutual funds, where the investment is limited to 10% of each fund; A to AAA government securities, both directly and through money market mutual funds; and has two managed investment funds that hold securities with an average credit quality of AA. In respect of financial instruments used by the Group’s treasury function, the aggregate credit risk the Group may have with one counterparty is limited by reference to the long-term credit ratings assigned for that counterparty. Furthermore, collateral support agreements reduce the Group’s exposure to counterparties who must post cash or non-cash collateral when there is value due to the Group under outstanding derivative contracts that exceeds a contractually agreed threshold amount. When value is due to the counterparty the Group is required to post collateral on identical terms. Such cash collateral is adjusted daily as necessary. Non-cash collateral is not recognised in the statement of financial position but it would become payable to the Group in the event of a counterparty default on the related derivative financial assets. In the event of any default, ownership of the collateral would revert to the respective holder at that point. Detailed below is the value of the cash collateral, which is reported within current borrowings, held by the Group at 31 March. 2026 2025 €m €m Collateral liabilities (note 21) 1,644 2,357 In addition, as discussed in note 29 ‘Contingent liabilities and legal proceedings’, the Group has covenanted to provide security in favour of the trustee of the Vodafone Group UK Pension Scheme in respect of the funding deficit in the scheme. The Group has also pledged cash as collateral against derivative financial instruments as disclosed in note 13 ‘Other investments’. Operating activities Customer credit risk is managed by the Group’s business units which each have policies, procedures and controls relating to customer credit risk management. Outstanding trade receivables and contract assets are regularly reviewed to monitor any changes in credit risk with concentrations of credit risk considered to be limited given that the Group’s customer base is large and unrelated. The Group applies the simplified approach and records lifetime expected credit losses for trade receivables and contract assets. Expected credit losses are measured using historical cash collection data for periods of at least 24 months wherever possible and grouped into various customer segments based on product or customer type. The historical loss rates are adjusted where macroeconomic factors, for example changes in interest rates or unemployment rates, or other commercial factors are expected to have a significant impact when determining future expected credit loss rates.
Trade receivables at amortised cost past due
30 days or less
31–60 days 252 €m (30) 222 31–60 days 134 €m (27) 107
61–180 days 280 (126) 154 €m 61–180 days 284 (129) 155 €m
180 days+ €m 889 (673) 216 180 days+ €m 736 (583) 153
Due €m
Total €m
31 March 2026 Gross carrying amount Expected credit loss allowance Net carrying amount
€m
2,878 2,825
538 489
4,837 3,906
(53)
(49)
(931)
Trade receivables at amortised cost past due
30 days or less
Due €m
Total €m
31 March 2025 Gross carrying amount Expected credit loss allowance Net carrying amount
€m
2,553 2,486
400 341
4,107 3,242
(67)
(59)
(865)
Note: 1. Contract assets relate to amounts not yet due from customers. These amounts will be reclassified as trade receivables before they become due. Trade receivables at fair value through other comprehensive income are not materially past due.
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