Vodafone 2026 Annual Report

Vodafone Group Plc Annual Report 2026

Strategic report

Governance

Financials

Other information

Our financial performance continued

Cash flow and funding Analysis of cash flow

Outflow from investing activities increased by €8,997 million to €4,238 million, primarily due to proceeds from the disposals of 10% of Oak Holdings 1 GmBH (€1,336 million), 18% of Indus Towers Limited (€1,684 million) and Vodafone Spain (€3,669 million) in the comparative period, which outweighed lower cash outflows from discontinued operations, settlement in the current year of redeemable preference shares provided by Zegona Communications Plc as part of the disposal of Vodafone Spain and a higher net inflow in respect of short-term investments. Short-term investments include highly liquid government and government-backed securities and managed investment funds that are in highly rated and liquid money market investments with liquidity of up to 90 days. Outflows from financing activities decreased by €3,472 million to €11,806 million resulting from lower repayment of borrowings, higher proceeds from the issue of long-term borrowings, lower cash inflows from discontinued operations and lower dividends paid, which were partly offset by higher payments in respect of the purchase of treasury shares.

Reported change %

FY26 €m

FY25 €m

Reported change %

Adjusted EBITDAaL 1 Capital additions 2 Working capital 3

11,351 10,932 (7,291) (6,862)

3.8

FY26 €m

FY25 €m

Inflow from operating activities (Outflow)/inflow from investing activities Outflow from financing activities Net cash (outflow)/ inflow Cash and cash equivalents at the beginning of the financial year Exchange loss on cash and cash equivalents Cash and cash equivalents at the end of the financial year

57 48

14,291 15,373

(7.0)

Disposal of property, plant and equipment and intangible assets Restructuring costs including working capital movements 4 Integration capital additions

(209) (213) (404) (1,119) (914) 557 (245) 177 (1,093) (2,041) (172) 1,212

(31) (246) (421) (1,147) (728) 530 (249)

(4,238) 4,759 (189.1) (11,806) (15,278) 22.7 (1,753) 4,854 (136.1)

Licences and spectrum Interest received and paid 5,6

Taxation

Dividends received from associates and joint ventures Dividends paid to non-controlling shareholders in subsidiaries

Other

1,795 1,850 (2,715) 13,917

(3.0)

Free cash flow 1 Acquisitions and disposals Equity dividends paid Share buybacks Foreign exchange loss Other movements in net debt 6 Net debt (increase)/decrease 1 Opening net debt 1 Closing net debt 1 Free cash flow 1 Adjustments: – Licences and spectrum – Integration capital additions Adjusted free cash flow 1

10,893 6,114

(1,787) (1,868) (182) (1,085)

(227)

(75)

8,913 10,893 Cash inflow from operating activities decreased to €14,291 million, reflecting cash inflows from discontinued operations in the prior year.

(3,014) 10,845 (22,397) (33,242) (25,411) (22,397) 1,795 1,850

(13.5)

404 213 209

421 246 31

– Restructuring costs including working capital movements 4

2,621 2,548

Notes: 1. Adjusted EBITDAaL, Free cash flow, Adjusted free cash flow and Net debt are non-GAAP measures. See page 226 for more information. 2. See page 235 for an analysis of tangible and intangible additions in the year. 3. Includes the impact of €128 million of Trade payables for which the Group has extended payment terms from 30 to 90 days through the use of reverse factoring at 31 March 2026 (31 March 2025: €148 million). 4. Includes working capital in respect of integration capital additions. 5. Interest received and paid excludes €577 million outflow (FY25: €451 million outflow) in relation to the cash portion of interest on lease liabilities included within Adjusted EBITDAaL. 6. Other movements in net debt for FY26 includes €771 million in relation to gains on certain bonds bought back prior to their maturity date, €974 million in relation to the settlement of redeemable preference shares provided by Zegona Communications Plc as part of the disposal of Vodafone Spain and €188 million in relation to a capital return from TPG Telecom Limited, which outweighed a €520 million net issue of borrowings in respect of licences arising principally from 5G spectrum acquired in Türkiye. Other movements in net debt for FY25 includes a net outflow from discontinued operations of €120 million and the repayment of borrowings secured against Indian assets of €1,794 million (including €547 million of accrued interest) following the disposal of the Group’s interest in Indus Towers, offset by payments from Swisscom and Zegona in respect of the future use of the Vodafone brand of €491 million and €328 million in respect of proceeds from the disposal of the Group’s residual 3% interest in Indus Towers, which was classified as an Other investment.