88 Vodafone Group Plc Annual Report 2025 Governance continued Audit and Risk Committee continued Significant financial reporting judgements
Strategic report
Governance
Financials
Other information
Area of focus
Actions taken
The areas considered and actions taken by the Committee in relation to the 2025 consolidated financial statements are outlined below. For each area, the Committee was satisfied with the accounting and disclosures in the consolidated financial statements. Area of focus Actions taken Impairments The Committee met with the European Markets CEO and the Global Finance Director of Markets to review
The Committee reviewed the appropriateness of the Group’s accounting judgements in relation to potential liabilities under the payment mechanism agreed with VIL. These reviews occurred at the September 2024, November 2024, March 2025 and May 2025 Committee meetings. The Committee met with the Director of Litigation in November 2024 and May 2025 in advance of the half-year and year-end reporting, respectively. The Committee reviewed and challenged management’s assessment of the status of the most significant claims, together with relevant legal advice received by the Group, to form a view on the level of provisioning and appropriateness of disclosures in the consolidated financial statements. The Committee met with the Group Tax Director in November 2024 and May 2025 in advance of the half-year and year-end financial reporting, respectively. The Committee challenged the judgements underpinning tax provisioning, deferred tax assets and related disclosures. The accounting policy for and related disclosure requirements of IFRS 15 that have been presented in the Annual Report were reviewed in March and May 2025. The Committee considered the scope of EY’s planned revenue audit procedures and their related audit findings and observations at its meetings in November 2024 and May 2025.
India accounting matters The disclosure and accounting judgements in relation to the Group’s conditional and capped obligations to make certain payments to Vodafone Idea Limited (‘VIL’) under a payment mechanism agreed at the time of the merger between Vodafone India and Idea Cellular in 2017. See note 22 ‘Capital and financial risk management’ and note 29 ‘Contingent liabilities and legal proceedings’ in the consolidated financial statements. Liability provisioning The Group is subject to a range of claims and legal actions from a number of sources, including, but not limited to, competitors, regulators, customers and suppliers. See note 16 ‘Provisions’ and note 29 ‘Contingent liabilities and legal proceedings’ in the consolidated financial statements. Taxation The Group is subject to a range of tax claims and related legal actions in several jurisdictions where it operates. Furthermore, the Group has extensive accumulated tax losses, and a key management judgement is whether a deferred tax asset should be recognised in respect of those losses. See note 6 ’Taxation’ and note 29 ’Contingent liabilities and legal proceedings’ in the consolidated financial statements. Revenue recognition Revenue is a risk area given the inherent complexity of IFRS 15 accounting requirements and the underlying billing and related IT systems. See note 1 ‘Basis of preparation’ in the consolidated financial statements.
Judgements in relation to impairment testing relate primarily to the assumptions underlying the calculation of the value in use of the Group’s businesses, being the achievability of the long-term business plans and the macroeconomic and related valuation model assumptions. Updated expectations of the future financial performance of Vodafone Germany were reflected in the Group’s annual impairment testing. This received particular focus given the reduced headroom between the recoverable amount and the carrying value of Vodafone Germany reported at the time of the Group’s half-year results announcement and Q3 trading update. Impairments of €4,350 million and €165 million were recognised at 31 March 2025 in respect of Vodafone Germany and Vodafone Romania, respectively. See note 4 ‘Impairment losses’ in the consolidated financial statements. Portfolio changes The Group completed the disposals of Vodafone Spain and Vodafone Italy on 31 May 2024 and 31 December 2024, respectively. These entities were classified as discontinued operations in the prior financial year. See note 7 ‘Discontinued operations and assets held for sale’ in the consolidated financial statements.
the turnaround plan of Vodafone Germany. Ahead of the Q3 trading update published in February 2025, the Committee reviewed the proposed disclosures in relation to the impairment risk for Vodafone Germany. The Committee met with the Group Head of Financial Planning & Analysis and the Group Financial Controlling and Operations Director in November 2024, March 2025 and May 2025 to discuss the impairment assessments undertaken for both the half-year and year-end results and to challenge the appropriateness of assumptions made, including: – The financial performance of Vodafone Germany; – Management’s valuation methodology; – The achievability of the Group’s five-year business plans; – The potential impacts of market factors on the Group’s businesses and their business plans; – The long-term growth assumed for the Group’s businesses at the end of the plan period; and – The discount rates assumed in the valuation of the Group’s businesses. The Committee met with the Group Financial Controlling and Operations Director in March 2025 and May 2025 who outlined the key accounting and disclosure impacts in relation to the transactions in the consolidated financial statements. The Committee also considered the key accounting implications of the merger of Vodafone and Three in the UK.
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