64 Vodafone Group Plc Annual Report 2026
Strategic report
Governance
Financials
Other information
Principal risks and uncertainties continued Long-term viability statement (‘LTVS’)
on our revenue, as well as limiting our access to funding and increasing refinancing costs in response to higher interest rates. Cyber threat Heightened geopolitical tensions and the rapid pace of technological development increase the likelihood of sophisticated cyber attacks. As a provider of critical national infrastructure with extensive customer data, we remain an attractive target for cyber attacks. Cyber attacks can lead to customer service disruption, data breach, regulatory sanctions, financial loss and reputational damage. Supply chain disruption Geopolitical instability, including tensions between major global economies and the conflict in the Middle East, could disrupt the supply of essential network equipment and technology through increased trade barriers and vendor restrictions, higher costs, and logistical constraints. This may lead to delays in network deployment and maintenance as well as reduced operational resilience. Assessment of long-term prospects The Board undertakes a robust review and challenge of the strategy and assumptions. Each year the Board conducts a strategy session, reviewing the internal and external environment, as well as significant threats and opportunities to the sustainable creation of long-term shareholder value (note that known emerging factors related to each principal risk are described on pages 61 and 62). As an input to the strategy discussion, the Board considers the key risks (including the identified principal and watchlist risks) with the focus on identifying underlying opportunities and setting the Group’s future strategy. The output from this session is reflected in the strategic section of the
The preparation of the LTVS includes an assessment of the Group’s long-term prospects in addition to the assessment of its ability to meet future commitments and liabilities as they fall due over the three-year review period. Assessment of viability The Board has chosen a three-year period to assess Vodafone Group’s viability. This is the period in which we believe our principal risks tend to develop. This time horizon is also in line with the structure of long-term management incentives and the outputs from the long-range business- planning cycle. We continue to conduct financial stress testing and sensitivity analysis, considering revenue at risk. The viability assessment started with the available headroom as of 31 March 2026 and considered the plans and projections assembled as part of the forecasting cycle, which include the Group’s cash flow, planned commitments, required funding, and other key financial ratios. We also assumed that debt refinancing will remain available in all plausible market conditions. Finally, we assessed the potential impact of severe but plausible scenarios on our three‑year plan. We also performed a combined stress test reflecting key risk interdependencies, modelling the simultaneous materialisation of the following risks over the period. Adverse macroeconomic, liquidity, funding and market risk The current geopolitical environment, including the conflict in the Middle East, poses the risk of sustained macroeconomic disruption through energy price increases, inflationary pressures, and volatility in foreign exchange and financial markets. Adverse changes in the macroeconomic environment weaken economic growth, leading to lower customer spending and putting pressure
Outlook, strategy and business model Outlook of possible long-term scenarios expected in the sector and the Group’s current position to face them Assessment of the key principal risks that may influence the Group’s long-term prospects Articulation of the main levers in the Group’s strategy and business model to sustain value creation Assessment of prospects
Long-Range Plan is the three-year forecast approved by the Board on an annual basis and used to calculate cash position and headroom Assessment of viability
Headroom is calculated using cash, cash equivalents and other available facilities, at year end
Sensitivity analysis to assess the level of decline in performance that the Group could withstand, if a major unexpected event were to occur Sensitivity analysis
Principal risks
Combined scenario
Quantification of the cash impact of combined scenarios where multiple risks materialise across one or more markets, over the three-year period
Severe but plausible scenarios modelled to quantify the cash impact of an individual principal risk materialising over the three-year period
Long-term viability statement Directors confirm that they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the three-year period Viability results from comparing the cash impact of severe but plausible scenarios to the available headroom, considering additional liquidity options
Annual Report (page 86), which provides a view of the Group’s long-term prospects. Conclusions The Board assessed the prospects and viability of the Group in accordance with provision 31 of the UK Corporate Governance Code, considering the Group’s strategy and business model, and the principal risks to the Group’s future performance, solvency, liquidity, and reputation. This includes the impact of prospective M&A transactions in relation to VodafoneThree and Safaricom PLC. The assessment took into account possible mitigating actions available to management if any risk or combination of risks to materialise.
Cash and cash equivalents available of €8.9 billion (page 180) at 31 March 2026, along with options available to reduce cash outgoings over the period considered, provide the Group with sufficient positive headroom in all scenarios tested. Reverse stress testing on revenue and adjusted EBITDAaL over the review period confirmed that the Group has sufficient headroom available to face uncertainty. The Board deemed the stress test conducted to be adequate, and therefore confirmed that it has a reasonable expectation that the Group will remain in operation and be able to meet its liabilities as they fall due up to 31 March 2029.
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