UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report . . . . . . . . . . . . . . . . . . .
For the transition period from to
Commission file number 001-10086
VODAFONE GROUP PUBLIC LIMITED COMPANY |
(Exact name of Registrant as specified in its charter) |
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As above |
(Translation of Registrant's name into English) |
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England |
(Jurisdiction of incorporation or organization) |
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Vodafone House, The Connection, Newbury, Berkshire RG14 2FN, England |
(Address of principal executive offices) |
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Maaike de Bie (Group General Counsel and Company Secretary) Telephone +44 (0) 1635 33251 email ir@vodafone.co.uk Vodafone House, The Connection, Newbury, Berkshire RG14 2FN, England |
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) |
Securities registered or to be registered pursuant to Section 12(b) of the Act.
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Title of each class |
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Trading symbol (s) |
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Name of each exchange on which registered |
Ordinary shares of 20 20/21 US cents each |
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VOD |
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NASDAQ Global Select Market* |
American Depositary Shares (evidenced by American Depositary Receipts) each representing ten ordinary shares |
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VOD |
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NASDAQ Global Select Market |
3.750% Notes due 16 January 2024 |
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VOD24 |
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The NASDAQ Stock Market |
US$1,000,000,000 Floating Rate Notes due 16 January 2024 |
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VOD24A |
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The NASDAQ Stock Market |
4.125% Notes due 30 May 2025 |
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VOD25 |
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The NASDAQ Stock Market |
4.375% Notes due 30 May 2028 |
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VOD28 |
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The NASDAQ Stock Market |
6.250% Notes due February 2032 |
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VOD32 |
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The NASDAQ Stock Market |
6.150% Notes due February 2037 |
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VOD37 |
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The NASDAQ Stock Market |
5.000% Notes due 30 May 2038 |
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VOD38 |
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The NASDAQ Stock Market |
4.375% Notes due February 2043 |
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VOD43 |
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The NASDAQ Stock Market |
5.250% Notes due 30 May 2048 |
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VOD48 |
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The NASDAQ Stock Market |
4.875% Notes due 19 June 2049 |
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VOD49 |
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The NASDAQ Stock Market |
4.250% Notes due 17 September 2050 |
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VOD50 |
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The NASDAQ Stock Market |
5.625% Notes due 10 February 2053 |
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VOD53 |
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The NASDAQ Stock Market |
5.125% Notes due 19 June 2059 |
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VOD59 |
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The NASDAQ Stock Market |
5.750% Notes due 10 February 2063 |
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VOD63 |
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The NASDAQ Stock Market |
Capital Securities due April 2079 |
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VOD79 |
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The NASDAQ Stock Market |
NC5.25 Capital Securities due 2081 |
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VOD81A |
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The NASDAQ Stock Market |
NC10 Capital Securities due 2081 |
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VOD81B |
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The NASDAQ Stock Market |
NC30 Capital Securities due 2081 |
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VOD81C |
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The NASDAQ Stock Market |
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
Ordinary Shares of 20 20/21 US cents each: |
28,818,256,058 |
7% Cumulative Fixed Rate Shares of £1 each: |
50,000 |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☑ No ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ☐ No ☑
Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☑ |
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Accelerated filer ☐ |
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Non-accelerated filer ☐ |
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Emerging growth company ☐ |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ◻
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
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U.S. GAAP ☐ |
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International Financial Reporting Standards as issued |
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Other ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☑
Vodafone Group Plc Annual Report on Form 20-F 2023 |
Contents Strategic report 1 S A new roadmap for Vodafone 2 S About Vodafone 3 S Operating in a rapidly changing industry 4 S Key performance indicators 6 Chair’s message 7 Chief Executive’s statement and strategic roadmap 8 Mega trends 10 Stakeholder engagement 13 Our people strategy 16 Our financial performance 26 S Purpose, sustainability and responsible business 28 Our purpose 29 – Digital Society 30 – Inclusion for All 35 – Planet 39 Contribution to Sustainable Development Goals 40 Responsible business 40 – Protecting data 44 – Protecting people 47 – Business integrity 50 Non-financial information 51 Principal risk factors and uncertainties 57 – Long-term viability statement 58 – TCFD disclosure Governance 60 S Governance at a glance 62 Chair’s governance statement 64 Our Company purpose, values and culture 65 Our Board 68 Our governance structure 69 Our Executive Committee 70 Division of responsibilities 71 Board activities and principal decisions 73 Board effectiveness 74 Nominations and Governance Committee 77 Audit and Risk Committee 83 ESG Committee 85 Remuneration Committee 87 Remuneration Policy 93 Annual Report on Remuneration 107 US listing requirements 108 Directors’ report Welcome to our Annual Report on Form 20-F 2023 This constitutes the Annual Report on Form 20-F of Vodafone Group Plc (the ‘Company’) in accordance with the requirements of the US Securities and Exchange Commission (the ‘SEC’) for the year ended 31 March 2023 and is dated 21 June 2023. This document contains consolidated financial statements set out within the Company’s Annual Report in accordance with International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board (‘IASB’). The content of the Group’s website (www.vodafone.com) and any other website referenced in this document is not incorporated into this document and should not be considered to form part of this Annual Report on Form 20-F. Financials 110 Reporting on our financial performance 111 Directors’ statement of responsibility 113 Risk mitigation 119 Report of independent registered public accounting firm 123 Consolidated financial statements and notes 212 This page is intentionally left blank Other information 219 Non-GAAP measures 230 Shareholder information 236 History and development 236 Regulation 242 Form 20-F cross reference guide 245 Forward-looking statements 246 Definition of terms Exhibits Exhibit 2.3 Exhibit 2.4 Exhibit 2.6 Exhibit 4.3 Exhibit 4.20 Exhibit 4.21 Exhibit 4.25 Exhibit 4.26 Exhibit 4.27 Exhibit 4.28 Exhibit 4.29 Exhibit 12 Exhibit 13 Exhibit 15.1 Exhibit 99.1 Exhibit 99.2 |
A new roadmap for Vodafone Our transformation FY23 performance Full year dividend maintained at 9.0 eurocents per share Read more about our financial performance in FY23 on pages 16 to 25 Click or scan to watch our Group Chief Executive, Margherita Della Valle, summarise our financial performance in FY23: investors.vodafone.com/videos Our financial performance was in line with expectations for the year but below our potential. Our purpose is to connect for a better future. We have a new roadmap for Vodafone based on three priorities: customers, simplicity and growth. We must make four key strategic shifts. Read more on page 7 Click or scan to watch our Group Chief Executive, Margherita Della Valle, introduce a new roadmap forVodafone: investors.vodafone.com/videos Key strategic shifts Customers Simplicity Growth Action plan Best-in-class telco in Europe & Africa Europe’s leading platform for Business Balanced focus on Business + Consumer Consumer back-to-basics to win in the market Leaner organisation focused on value Portfolio right-sized for growth Ambition 1 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Our business model About Vodafone How we govern We are a European and African telecommunications company which transforms the way our customers live and work through our innovation, technology, connectivity, platforms, products and services. Our business model is underpinned by our strong governance and risk management framework. Governance The Board held six scheduled meetings this year to discuss key strategic matters, our purpose and culture, our people and stakeholder interests. The Nominations and Governance Committee evaluates the composition and performance of the Board and ensures an appropriate balance of independence, skills, knowledge, experience and diversity. The Audit and Risk Committee provides effective governance over the appropriateness of financial reporting of the Group, including the adequacy of related disclosures, the performance of the internal audit function and the external auditor and oversight of the Group’s systems of internal control, risk management framework and compliance activities. The ESG Committee oversees our Environmental, Social and Governance (‘ESG’) programme, including our purpose pillars, sustainability and responsible business practices, and our contribution to the societies we operate in under our social contract. The Remuneration Committee advises the Board on policies for executive remuneration and reward packages for individual Executive Directors. The Committee also oversees general pay practices across the Group. Read more on pages 74 to 86 Click or scan to watch our Non-Executive Directors speak about their roles in short video interviews: investors.vodafone.com/videos Click or scan to watch our privacy and cyber experts explain how we protect customer data and our networks: investors.vodafone.com/videos Risk management Risks are not static and as the environment changes, so do risks – some diminish or increase, while new risks appear. We continuously review and improve our risk processes in order to ensure that the Company has the appropriate level of support in meeting its strategic objectives. Our risk framework clearly defines roles and responsibilities, and sets out a consistent end-to-end process for identifying and managing risks. We have embedded the risk framework across the Group as this allows us to take a holistic approach and to make meaningful comparisons. Our approach is continuously enhanced, enabling more dynamic risk detection, modelling of risk interconnectedness and the use of data, all of which are improving our risk visibility and our responses. Our Board oversees principal and emerging risks, which are reported to the various management committees and the Board throughout the year. Additionally, risk owners are invited to present in-depth reviews to ensure that risks are managed within the defined tolerance levels. Read more on pages 51 to 59 How we are structured and what we sell1 Our business is comprised of infrastructure assets, shared operations, growth platforms and retail and service operations. Our retail and service operations are split across three broad business lines: Europe Consumer, Vodafone Business and Africa Consumer. Core connectivity products and services in fixed and mobile account for the majority of our revenue. However, our portfolio also includes high return growth areas that leverage and complement our core connectivity business, such as digital services, the Internet of Things (‘IoT’) and financial services. We market and sell through digital and physical channels. Europe Consumer €19bn service revenue We provide a range of market leading mobile and fixed line connectivity services in our European markets. Our converged plans combine these offerings, providing simplicity and better value for our customers. Other value added services include our Consumer IoT propositions, as well as security and insurance products. Vodafone Business €10bn service revenue We serve private and public sector customers of all sizes with a broad range of connectivity services, supported by our dedicated global network. We have unique scale and capabilities, and are expanding our portfolio of products and services into growth areas such as unified communications, cloud & security, and IoT. Africa Consumer2 €6bn service revenue We provide a range of mobile services. The demand for mobile data is growing rapidly driven by the lack of fixed broadband access and by increased smartphone penetration. Together with Vodacom’s VodaPay super-app and the M-Pesa payment platform, we are the leading provider of financial services, as well as business and merchant services in Africa. Where we operate We operate mobile and fixed networks in 17 countries and have stakes in a further five countries through our joint ventures and associates. We also partner with mobile networks in 46 countries outside our footprint. Our portfolio of local markets is supported by corporate services and shared operations, which deliver benefits through scale and standardisation. Notes: 1. Performance across our markets is summarised on pages 16 to 22. 2. Including Turkey. 2 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Operating in a rapidly changing industry The long-term trends that are shaping our industry and driving new growth opportunities. Mega trends We are committed to maintaining good communications and building positive relationships with all of our stakeholders, as we see this as essential to strengthening our sustainable business. Our stakeholders Our customers 323m mobile customers1 28m broadband customers1 21m TV customers1 €45.7bn revenue across 19 operating markets2 Our people 104,000 employees and contractors €5.8bn benefits of job creation Our suppliers 9,000 suppliers €25bn spend, and €8.4bn capital additions Our local communities and non-governmental organisations (‘NGOs’) 98% network coverage recovered within days of earthquakes in Turkey €3m donated in contributions and in-kind services in response to the earthquakes in Turkey and surrounding areas Government and regulators €2.2bn total direct contribution across 62 markets in FY22 €9.9bn total tax and economic contribution in FY22 Our investors 1,000 interactions with institutional investors in FY23 €2.5bn paid in dividends in FY23 and €2.0bn interest paid in FY23 Read more on pages 10 to 12 Read more on pages 8 to 9 Notes: 1. Includes VodafoneZiggo and Safaricom. 2. Including Vodafone Hungary and Vodafone Ghana which were sold in January 2023 and February 2023 respectively. Hybrid Working Connected devices Adoption of cloud technology Digital and green transformation for the private and public sector Digital payments and financial services – Hybrid working is becoming a permanent feature of the modern working environment. – This requires continued investment in reliable, high-speed connections for both business and consumers. – Demand for connected devices, beyond smartphones, is growing rapidly. – The Internet of Things (‘IoT’) is expected to drive huge operational efficiencies, deliver real-time information, and can be employed in a broad range of use cases. – Large technology companies have invested heavily in advanced centralised data storage and processing capabilities that consumers can access remotely via cloud technology. – The cloud is increasingly utilised by businesses and consumers as a more efficient way of sharing capacity and services. – The European Union has launched a series of funding programmes under the banner ‘NextGenerationEU’, including a Recovery and Resilience facility which will also support the European Commission’s digital transformation agenda. – Companies are also increasingly looking to digitalise their operations to become more efficient and reduce their environmental impact. – The trend towards more digital forms of payment is growing, with a broader range of financial services now being delivered through apps and online. – In Africa, the growth in smartphone penetration is allowing consumers access to digital financial services for the first time. Digital services investor briefing Vodafone Business investor briefing Vodafone Business investor briefing Social contract investor briefing Digital services investor briefing 3 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Our progress Key Performance Indicators Financial and non-financial performance We measure our success by tracking key performance indicators that reflect our strategic, operational and financial progress and performance. Financial results summary 2023 2022 2021 Group revenue €m 45,706 45,580 43,809 Group service revenue €m 37,969 38,203 37,141 Operating profit1 €m 14,296 5,813 5,129 Profit for the financial year1 €m 12,335 2,773 483 Basic earnings per share1 €c 42.77 7.71 0.20 Cash inflow from operating activities €m 18,054 18,081 17,215 Borrowings less cash & cash equivalents €m (54,685) (62,596) (61,939) Total dividends per share €c 9.00 9.00 9.00 Operational key performance indicators 2023 2022 2021 Europe mobile contract customers3 million 64.8 66.4 65.4 Europe broadband customers3 million 24.7 25.6 25.6 Europe Consumer converged customers3 million 9.1 9.0 7.9 Europe mobile contract customer churn % 13.5 13.6 13.7 Africa mobile customers4 million 189.9 184.5 178.0 Africa data users4 million 94.8 89.9 84.9 Business service revenue growth2 % 2.6 0.8 (0.6) Europe TV subscribers3 million 20.7 21.9 22.2 IoT SIM connections million 162.3 150.1 123.3 Africa M-Pesa customers4 million 56.7 52.4 48.3 Africa M-Pesa transaction volume4 billion 26.0 19.9 15.2 Digital channel sales mix5 % 26 25 26 End-to-end TOBi completion rate6 % 56.2 42.9 34.6 5G available in European cities3 # 332 294 240 Europe on-net gigabit capable connections3 million 50.0 48.5 43.7 Europe on-net NGN broadband penetration3 % 29 30 30 Europe markets where 3G switched off 3 # 4 4 3 Notes: 1. FY22 and FY21 have been re-presented for the reclassification of Indus Towers Limited which is no longer reported as held for sale. See page 151 for more information. 2. Organic growth. This is a non-GAAP measure. See page 219 for more infoirmation. 3. Including 100% of VodafoneZiggo. 4. Africa including 100% of Safaricom, excluding Ghana. 5. Based on Germany, Italy, UK and Spain only. 6. Defined as percentage of total customer contacts resolved without human interaction through TOBi. Group excluding Egypt. 4 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Purpose, sustainability and responsible business We want to enable a digital, inclusive and sustainable society. To underpin the delivery of our purpose, we ensure that we operate in a responsible way. Acting lawfully and with integrity is critical to our long-term success. Digital Society 2023 2022 2021 Cumulative V-Hub unique visitors million 5.2 3.6 1.1 Registered farmers on agricultural platforms million 5.0 2.9 2.1 Inclusion for All 2023 2022 2021 4G population coverage (outdoor 1Mbps) – Europe1 % 99 99 98 4G population coverage (outdoor 1Mbps) – Africa2 % 70 65 62 4G population coverage (outdoor 1Mbps) – Group % 85 82 75 Our people Average number of employees and contractors3 thousand 104 104 105 Employee engagement index4 % 76 73 74 Employee turnover rate (voluntary) % 12 14 8 Women on the Board % 54 50 45 Women in management and senior leadership roles % 34 32 32 Women as a percentage of employees % 40 40 40 Planet5 2023 2022 2021 Energy use Total electricity cost €bn 1.2 0.8 0.8 Total energy use6 GWh 6,274 6,125 6,142 Mobile and fixed access network and technology centres energy use % 93 93 94 Percentage of purchased electricity from renewable sources % 81 77 55 Percentage of purchased electricity from renewable sources in Europe % 100 96 79 Greenhouse gas emissions (‘GHGs’) Total Scope 1 and Scope 2 GHG emissions (market-based method)6 m tonnes CO2e 0.97 1.08 1.42 Total Scope 3 GHG emissions6 m tonnes CO2e 10.1 9.6 9.4 Total customer emissions avoided due to our green digital solutions6 m tonnes CO2e 24.9 15.6 6.2 Waste Total network waste (including hazardous waste)6 metric tonnes 12,407 8,381 7,173 Network waste reused or recycled6 % 96 95 98 Responsible business 2023 2022 2021 Code of Conduct Completed ‘Doing What’s Right’ employee training % 92 89 84 Number of ‘Speak Up’ reports # 505 642 623 Health & safety Number of lost-time incidents – employees and contractors # 19 12 7 Lost-time incident rate per 1,000 employees and contractors # 0.2 0.11 0.06 Responsible supply chain Total spend €bn 25 24 24 Number of direct suppliers # 9 9 11 Number of site assessments conducted collectively by JAC7 initiative members # 83 71 76 Tax and economic contribution Total tax and economic contribution8 €bn – 9.9 9.6 Notes: 1. Changes to FY22 figures relate to alignment of the Europe segment to exclude Turkey. 2. Based on coverage in Africa, including Egypt. Ghana is included in 2021 and 2022 metrics. 3. Calculation considers employee pro-rated headcount. 4. The employee engagement index is based on a weighted average index of responses to three questions: satisfaction working at Vodafone; experiencing positive emotions at work; and recommending us as an employer. 5. Data calculated using local market actual or estimated data sources from invoices, purchasing requisitions, direct data measurement and estimations. Carbon emissions calculated in line with GHG Protocol standards. For full methodology see our ESG Addendum 2023. 6. Comparative metrics have been restated in lie with our updated methodology. See our ESG Addendum 2023 for more detail. 7. Joint Alliance for CSR. 8. Includes direct taxes, non-taxation based revenue mechanisms, such as payments for the right to use spectrum, and indirect taxes collected on behalf of governments around the world, excludes joint ventures and associates. The FY23 figure will be finalised during FY24. For more information, refer to our Tax and Economic Contribution reports, available at: vodafone.com/tax. 5 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
A new roadmap for Vodafone Chair’s message This year has been a challenging one for Vodafone and for many of our customers, following the rise in energy costs and broader inflation. We have taken a number of steps to mitigate the impact of these cost pressures. However, as a Board, we recognise that the Company has also underperformed, and that change is needed. This will require a transformation of the Group, so that Vodafone can realise its full potential. Group Chief Executive succession In December 2022, we announced that Nick Read would step down as Group Chief Executive. The Board and I would like to thank Nick for his commitment and significant contribution to Vodafone throughout his career spanning more than two decades with the Company. The Board has undertaken a rigorous internal and external search to find the best possible candidate, and in April 2023 I was delighted to announce the appointment of Margherita Della Valle as Group Chief Executive. Margherita has a strong track record during her long career at Vodafone in marketing, operational, commercial and financial positions. During her time as interim Group Chief Executive, the Board and I have been impressed with her pace and decisiveness to begin the necessary transformation of the Company. Margherita has the full support of myself and the Board for her plans for Vodafone to provide a better customer experience, become a simpler business and accelerate growth – and deliver value for our shareholders. Board composition As I wrote last year, my ambition for this year was to further enhance the Board’s experience within the telecommunications and technology sectors. I was therefore pleased to welcome four new Non-Executive Directors to the Board this year: Stephen Carter, Delphine Ernotte Cunci, Simon Segars and Christine Ramon. Their appointments bring extensive experience and strong track records of value creation, which will be of great support to the Group. On 10 May 2023, the Board approved the creation of a Technology Committee as a Committee of the Board. The Technology Committee, once established in due course, will oversee the technology strategy and how it supports the overall Company strategy. The creation of a Technology Committee – run by the highly experienced team of Simon Segars, Stephen Carter, Delphine Ernotte Cunci and Deborah Kerr – will be a great additional benefit to the Board and to Vodafone. On the same date, having completed either 9 years or almost 9 years, we also announced that Valerie Gooding, Sir Crispin Davis and Dame Clara Furse would not be seeking re-election at the 2023 Annual General Meeting (‘AGM’). I would like to thank my colleagues for their outstanding service to the Company and look forward to their continuing contribution until the AGM. In light of these retirements and following a review of committee membership, a number of Non-Executive Directors will take on new roles, including David Nish, who will be appointed Senior Independent Director. On 11 May 2023, we announced that we had agreed a strategic relationship with Emirates Telecommunications Group Company PJSC (“e&”). This marks the next phase in a strategic relationship that began last year, and I’m delighted we have strengthened our existing relationship with e&, which will bring additional telecoms experience to our Board in the future. FY23 financial performance Our financial results for FY23 have been in line with expectations for the year. Total revenue increased by 0.3% to €45.7 billion, with Group organic service revenue growing by 2.2% this year1 . This was driven by continued good growth in the UK, Other Europe and Africa, partially offset by declines in Germany, Italy and Spain. Results were impacted by higher energy costs and commercial underperformance in Germany. These factors more than offset the benefits of service revenue growth and a further €0.2 billion of savings from our ongoing European cost efficiency programme. Our reported financials were also impacted by adverse currency movements during the year. Group operating profit increased by 146% to €14.3 billion, largely reflecting a gain on disposal from Vantage Towers, and as a result basic earnings per share increased to 42.77 eurocents. Following the successful disposal of Vodafone Hungary and partial sale of Vantage Towers, our balance sheet position has also improved. The Board has declared a total dividend per share of 9.0 eurocents, implying a final dividend per share of 4.5 eurocents, which will be paid on 4 August 2023 following shareholder approval at our AGM. Taking a leadership role in shaping the future of digital connectivity Over the last few years, we have seen significant shifts in society and the direct role telecoms plays. Digital connectivity is an important priority for governments as it increasingly impacts the relative competitiveness and resilience of countries. Vodafone is firmly committed to supporting Europe and Africa in realising their digital ambitions. However, in order to do so, investment in digital infrastructure is critical. While the European Union has set out a clear vision and Digital Decade targets for a more sustainable and prosperous future, there is currently an estimated €300 billion gap between their ambitions and Europe’s current investment plans. This investment gap is primarily due to the unintended consequences of past policy and regulatory decisions, which have impacted returns for the telecommunications industry. Returns have remained below the cost of capital for over a decade, restricting the appetite for further investment. Whilst we welcome a number of positive reforms towards pro-investment policy, the current pace and magnitude of change is not enough. Further pro-investment policy reform is required to drive growth and scale in the sector. If delivered, it would enable operators to earn a sustainable return and support the much-needed investment required to safeguard Europe and Africa’s global competitiveness. Going forward On behalf of the Board, I would like to thank all of our colleagues across the Group who have continued to work tirelessly to support our customers – keeping them reliably connected. As we enter FY24, the macroeconomic outlook still remains uncertain. I am confident that under Margherita’s leadership we will improve the Company’s performance and drive value for all of our stakeholders. /s/ Jean-François van Boxmeer Jean-François van Boxmeer Chair Notes: 1. Organic growth is a non-GAAP measure. See page 219 for more information. 6 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
Chief Executive’s statement and strategic roadmap Delivery through Customers, Simplicity & Growth “Today I am announcing my plans for Vodafone. Our performance has not been good enough. To consistently deliver, Vodafone must change. My priorities are customers, simplicity and growth. We will simplify our organisation, cutting out complexity to regain our competitiveness. We will reallocate resources to deliver the quality service our customers expect and drive further growth from the unique position of Vodafone Business.” Margherita Della Valle, Group Chief Executive We set out below a new roadmap for Vodafone, following a strategic review conducted over the last five months. 1. Vodafone must change The circumstances of our industry and the position of Vodafone within it, require us to change. – The European telecommunications sector has amongst the lowest return on capital employed (‘ROCE’) of any sector in Europe, alongside the highest capital investment demands. This has resulted in ROCE being below the weighted average cost of capital (‘WACC’) for over a decade, impacting total shareholder returns. – More importantly, the comparative performance of Vodafone has worsened over time, which is connected to our customer experience. – Our market position and performance varies by geography and segment. Where we have the right combination of strong local execution and a rational market structure, we can grow and drive returns. There are also material differences between our Consumer and Business segments, with Business growing in nearly all of our European markets – Our turnaround must be built from our strengths, but we need to overcome some clear challenges. We are more complex than we need to be, which limits our local commercial agility. 2. Strategic shifts Our target is to be a best-in-class telco in Europe and Africa, and become Europe’s leading platform for Business. To achieve this, we must change in four essential areas. – We will rebalance our organisation to maximise the potential of Vodafone Business, which continues to accelerate growth, and we believe has a unique set of capabilities and has a strong position in a large and growing market as organisations digitalise. – In order to win in our consumer markets, we will refocus on the basics and deliver the simple & predictable experience our customers expect. – We will be a leaner and simpler organisation, to increase our commercial agility and free up resources. We will focus our resources on a portfolio of products and geographies that is right-sized for growth and returns over time. 3. Our action plan To execute the change in these four areas, we have an action plan already underway, focused around three priorities: Customers, Simplicity and Growth. Early examples of this action plan include: – Customers: Significant investment reallocated in FY24 towards customer experience and brand; – Simplicity: 11,000 role reductions planned over three years, with both headquarters and local markets simplification; and – Growth: Germany turnaround plan, continued pricing action and strategic review in Spain. We will change the level of ambition, speed and decisiveness of execution. We will have empowered markets focused on customers, scale up Vodafone Business and take out complexity to simplify how we operate. Our purpose is to connect for a better future. We have a new roadmap for Vodafone based on three priorities: customers, simplicity and growth. We must make four key strategic shifts. Customers Simplicity Growth Our transformation Best-in-class telco in Europe & Africa Europe’s leading platform for Business Action plan Key strategic shifts Balanced focus on Business + Consumer Consumer back-to-basics to win in the market Leaner organisation focused on value Portfolio right-sized for growth Click or scan to watch a more detailed outline of the new roadmap for the transformation of Vodafone: investors.vodafone.com/videos Ambition 7 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Mega trends Long-term trends shaping our industry Digital services and next-generation connectivity are increasingly central to everything we do – and will be the driving forces that redefine relationships between sectors, employers, employees, customers, and friends and family. There are five ‘mega trends’ that we believe will continue to shape our industry in the years ahead: hybrid working, connected devices, adoption of cloud technology, the digital and green transformation of public and private sectors, and digital payments. Hybrid working Over the past few years we have seen a dramatic shift in working patterns, which are now being maintained following the end of the COVID-19 pandemic. Companies have now moved from largely office-based environments to more ‘hybrid’ working models, thereby providing their employees with much greater flexibility as to how and where they work, whilst still ensuring high or even increased levels of productivity. This change in working patterns will continue to drive increased demand for fast and reliable fixed and mobile networks, as well as a range of supporting services such as cloud-based productivity and communication platforms. The majority of large multinationals already have remote working capabilities; however they are now moving to more efficient technologies. Smaller companies, ranging from corporates to small and medium-sized offices, rely on network operators such as Vodafone to provide secure remote working solutions. These solutions include virtual private networks, unified communication services and the migration of enterprise applications to the cloud. This is vital for business continuity, and it provides network operators with an opportunity to further deepen their customer relationships by offering a broad range of services. Connected devices The world is becoming ever more connected, and it is not just driven by smartphones. A wide range of new devices, across all sectors and applications, are increasingly being connected to the internet. This is driven by continued reductions in the cost of computing components, advances in cross-device operability and software, and the near-ubiquity of networks. For consumers, there is a growing range of applications such as smartwatches, tracking devices for pets, bags and bicycles, and connected vehicles – which can lower insurance premiums and enable a range of advanced in-vehicle solutions. For businesses, the demand for IoT and potential use cases is even more evident. These include solutions such as automated monitoring of energy usage across national grids, tracking consumption in smart buildings and detecting traffic and congestion in cities. In environments that are more localised, such as factories and ports, network operators are building and running Mobile Private Networks (‘MPNs’). MPNs offer corporate customers unparalleled security and bespoke network control. As an example, MPNs enable autonomous factories to connect to thousands of robots, enabling them to work in a synchronised way. Once a product leaves the factory it can also be tracked seamlessly through global supply chain management applications, whether it is delivered through the post, in a vehicle or even via drones. In areas where the same solution can be deployed across multiple sectors, network operators are moving beyond connectivity to provide complex end-to-end hardware and software solutions such as surveillance, smart metering and remote monitoring; it is often more efficient for these solutions to be created in-house. Scaled operators can leverage their unique position to co-create or partner with nimble start-ups at attractive economics. As the number of IoT devices increases, physical assets are also communicating with each other in real-time and new digital markets are being established. This is leading to the Economy of Things, where connected devices securely trade with each other on a user’s behalf, without human intervention. This presents businesses across multiple industries with exciting opportunities to transform goods into tradeable digital assets which can compete in new disruptive online markets. Adoption of cloud technology Over the past decade, large technology companies have invested heavily in advanced centralised data storage and processing capabilities that organisations and consumers can access remotely through connectivity services (commonly termed ‘cloud’ technology). As a result, organisations and consumers are increasingly moving away from using their own expensive hardware and device-specific software to using more efficient shared hardware capacity or services through the cloud. This is popular as it allows upfront capital investment savings, the ability to efficiently scale resources to meet demand, systems that can be easily updated and increased resilience. This is driving demand for fast, reliable and secure connectivity with lower latency. Many small businesses increasingly understand the benefits of cloud technology; however, they lack the technical expertise or direct relationships with large enterprise and cloud specialists. This presents an opportunity for network operators, particularly those with strong existing relationships, as they can effectively help customers navigate their move to the cloud at scale. Click or scan to watch our digital services and experiences investor briefing: investors.vodafone.com/digital-services 8 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
Digital and green transformation of the public and private sectors As a part of the fiscal response to the COVID-19 pandemic, the European Union has launched a series of funding programmes with €723.8 billion available under the banner ‘NextGenerationEU’. This includes the Recovery and Resilience facility, which combines €385.5 billion of loans and €338 billion of grants available to European Union Member States. Of these grants, approximately 70% are being allocated to European Union Member States in which Vodafone has an operating presence. The range of funding presents a direct and indirect opportunity given that at least 20% of the total funding is planned to support the European Commission’s digital transformation agenda. The UK and many of our African markets have similar stimulus measures in place. These support measures will help connect schools, hospitals and businesses to gigabit networks and provide hardware, such as tablets, to millions of school children. Similarly, the European Union has committed to be carbon-neutral by 2050. Mobile network operators across Europe will be able to benefit from these funds as they seek to limit their impact on the climate, and help their customers from across the private and public sectors reduce their own energy use and carbon emissions. Small and medium-sized enterprises (‘SMEs’) in Europe can often lag behind in terms of digital adoption. However, under various government-led support mechanisms, SMEs will be eligible for vouchers, grants and loans to transition to eCommerce, upskill employees, and move to cloud-based solutions whilst ensuring they are secure as they do so. SMEs will look to trusted and experienced network operators which can offer a full suite of solutions, whilst also help them navigate technical and regulatory processes. Finally, to ensure the benefits of these projects are spread equitably, funding is also being allocated towards rural inclusion to subsidise the building of network infrastructure where it is currently uneconomical for operators to do so. Read more about our purpose to enable an inclusive and sustainable digital society on pages 35 to 38 Digital payments Businesses in Europe continue to expand and migrate sales channels from physical premises to online channels such as websites and mobile applications. As a result, businesses increasingly transact through mobile-enabled payment services which remove the need for legacy fixed sales terminals. Consequently, businesses demand reliable and secure mobile connectivity. Consumers are also increasingly transitioning away from using cash to digital payment methods conducted directly via mobile phones or smartwatches, further increasing the importance of mobile networks. In Africa, digital payments are primarily conducted via mobile phones through payment networks owned and operated by network operators, and the annual value of mobile money transactions has reached a key milestone in 2021 with one trillion transactions globally1 . Consumers are also moving beyond peer-to-peer transactions as rising smartphone penetration drives the adoption of mobile payment applications. Network operators and a range of FinTech startups are using these applications to sell additional financial services focused products, ranging from advances on mobile airtime and device insurance to more complex offerings such as life insurance, loans and e-commerce marketplaces. This plays a critical role in improving financial inclusion for millions of people across Africa where the traditional banking sector has not been able to reach. Businesses are also increasingly reliant on operator-owned payment infrastructure for consumer-to-business payments and for large business-to-business transfers. These payment networks drive scale benefits for the largest operators by allowing customers to save on transaction fees whilst also driving both business and consumer customers to seek reliable and secure networks. Larger corporates, which may already use the cloud today, are progressively moving away from complex systems based on their own servers or single cloud solutions, to multi-cloud offers sold by network operators and their partners. This approach reduces supplier risk and increases corporate agility and resilience. Large corporates continue to drive higher demand for robust, secure and efficient connectivity services as they transition from their own legacy hardware and services. Cloud providers also recognise the criticality of telecommunications networks. Many cloud providers are partnering with the largest network operators, sometimes through revenue sharing agreements, to develop edge computing solutions which integrate data centres at the edge of telecommunication networks to deliver customers reduced latency. The opportunity is significant as the total addressable market in business-to-business cloud & security is expected to reach €82 billion by 2025 compared to €65 billion today. Consumers use cloud solutions for a variety of reasons, including digital storage, online media consumption or interacting through the metaverse. Consumer hardware can also in some cases be replaced by cloud-first solutions. For example, new cloud-based gaming services allow consumers to stream complex, bandwidth-heavy computer games directly to their phones or tablets, without the need for expensive dedicated hardware. Fast and reliable connectivity will act as a catalyst for further innovation and consumer applications, many of which do not currently exist today. Read more about how Vodafone’s leading gigabit connectivity infrastructure supports the digital society on pages 29 to 30 Click or scan to learn more about our IoT leadership and evolution in our Vodafone Business investor briefing: investors.vodafone.com/vbbriefing Click or scan to watch our digital services and experiences investor briefing: investors.vodafone.com/digital-services Note: 1. GSMA State of the Industry Report on Mobile Money 2022 9 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Stakeholder engagement Engaging regularly with our stakeholders is fundamental to the way we do business Regular engagement ensures we operate in a balanced and responsible way, in both the short and longer term. We are committed to maintaining good communications and building positive relationships with all of our stakeholders, as we see this as essential to strengthening our sustainable business. Section 172 factor Disclosure Location The likely consequences of any decision in the long term Key performance indicators Pages 4 to 5 Business model Page 2 Stakeholder engagement Pages 10 to 12 Our purpose Pages 28 to 39 Responsible business Pages 40 to 49 Principal risk factors and uncertainties Pages 51 to 59 Governance Pages 60 to 109 The interests of the Company’s employees Stakeholder engagement Pages 10 to 12 Our people strategy Pages 13 to 15 Key performance indicators Pages 4 to 5 Our purpose Pages 28 to 39 Responsible business Pages 40 to 49 Our Company purpose, values, and culture Page 64 Remuneration Committee, Remuneration Policy and Annual Report on Remuneration Pages 85 to 106 The need to foster the Company’s business relationships with suppliers, customers and others Business model Page 2 Stakeholder engagement Pages 10 to 12 Chief Executive’s statement and strategic roadmap Page 7 Our purpose Pages 28 to 39 Responsible business Pages 40 to 49 Principal risk factors and uncertainties Pages 51 to 59 Board activities and principal decisions Pages 71 to 72 Supplier financing arrangements Pages 37 and 177 The impact of the Company’s operations on the community and the environment Stakeholder engagement Pages 10 to 12 Our purpose Pages 28 to 39 TCFD disclosure Pages 58 to 59 Responsible business Pages 40 to 49 Contribution to Sustainable Development Goals Page 39 ESG Committee Pages 83 to 84 The desirability of the Company maintaining a reputation for high standards of business conduct Stakeholder engagement Pages 10 to 12 Responsible business Pages 40 to 49 Governance Pages 60 to 109 The need to act fairly as between members of the Company Stakeholder engagement Pages 10 to 12 Governance Pages 60 to 109 Shareholder information Pages 230 to 235 Vodafone is required to provide information on how the Directors have performed their duty under section 172 of the Companies Act 2006 to promote the success of Vodafone, and these matters are covered throughout this Annual Report and summarised in the table below. This includes how those matters and the interests of Vodafone’s key stakeholders have been taken into account by the Directors. We have also summarised our interactions with key stakeholders during the year in this section. The engagement mechanisms directly involving the Directors are indicated below with a B symbol. 10 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
Our customers We are focused on deepening our engagement with our customers to develop long-term valuable and sustainable relationships. We have hundreds of millions of customers across Europe and Africa, ranging from individual consumers to large multinational corporates. How did we engage with them? – Digital channels (MyVodafone app, TOBi chatbots, social media interaction and the Vodafone website), and call centres and branded retail stores What were the key topics raised? – Better value offerings and converged solutions for customers – Fast and reliable data networks and wider coverage – Making it simple and quick to deal with us, with prompt feedback and resolution of service-related issues – Managing the challenge of data-usage transparency How did we respond? – Improved efficiency and functionality of MyVodafone app – Expanded our 4G and 5G coverage – Stronger focus on Customer Experience (‘CX’) with new automated satisfaction tracking tools, setting up CX boards in all markets and increasing investments to reduce customer detraction – Continued to leverage our digital channels to support easy access for all of our customers – Enabled free international calling and roaming for our customers following the devastating earthquakes in Turkey and surrounding areas – Supported financially vulnerable customers in the cost of living crisis – Drove inclusion and affordability for smartphones and technology hardware by introducing trade-in & Flex propositions in nine markets – Entered an exclusive three-year partnership with WWF to collect one million phones for the planet to support the circular economy Our people Our people are critical to the successful delivery of our strategy. It is essential that they are engaged and embrace our purpose and values. Throughout the year we focused on a number of areas to ensure that everyone is highly motivated, and we remained focused on wellbeing. How did we engage with them? – Regular meetings with managers – B European Employee Consultative Committee – Inaugural Vodacom Group Employee Engagement Forum – B National Consultative Committee (South Africa) – B Executive Committee discussions – B Internal website and live webinars, newsletters and other digital communications – B Employee Speak Up channel – Global employee surveys, including onboarding and exit surveys What were the key topics raised? – Enhancing performance management and career development – A balanced hybrid working approach – Global and local market communication channels – Global Pulse and Spirit Beat survey actions – Increasing engagement amongst new hires – Importance of manager/employee relationships – Impacts of the macroeconomic environment – Supporting colleagues affected by the earthquakes in Turkey How did we respond? – Launched a new performance management system – Embedded our integrated skills and learning platform – Strengthened our global senior leadership programme – Reviewed our global hybrid ways of working policy – Refreshed manager learning and support guides – Redesigned our global onboarding processes and new starter support – Regular business and trading updates communicated to staff – Provided support for colleagues and their relatives affected by the earthquakes in Turkey; as well as free psychological and wellbeing guidance and matched employee donations Our suppliers Our business is helped by 9,000 suppliers who partner with us. These range from start-ups and small businesses to large multinational companies. Our suppliers provide us with the products and services we need to deliver our strategy and connect our customers. How did we engage with them? – Supplier audits and assessments – Safety forums, events, conferences and site visits – Purpose criteria in tenders relating to planet, diversity and safety What were the key topics raised? – Improving health and safety standards – Driving towards net zero emissions in supply chains – Supplier and product innovation How did we respond? – Held quarterly safety forums – Recognised suppliers through awards for health and safety, diversity and inclusion and planet efforts at our Arch Summit – Collaborated with industry peers and suppliers through the Joint Alliance for CSR (‘JAC’), formerly known as the Joint Audit Cooperation – Launched environmentally-linked supply chain finance programme Our local communities and non-governmental organisations (‘NGOs’) We believe that the long-term success of our business is closely tied to the success of the communities in which we operate. We interact with local communities and NGOs, seeking to be a force for good wherever we operate. How did we engage with them? – Through our products and services – Community and NGO interaction on education, health, agriculture and inclusive finance projects, and on our humanitarian response to global issues including the war in Ukraine – Participation in multi-stakeholder working groups on policy issues at the national and international level What were the key topics raised? – Increasing access to connectivity and digital services, by closing the digital divide, closing the rural gap and connecting SMEs – Human rights topics including digital child rights – Environmental topics including net zero and the circular economy – Delivery of global and national development goals including UN Sustainable Development Goals 11 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
How did we respond? – Our previous Group Chief Executive chaired a UN Broadband Commission working group on increasing smartphone access and co-chaired a pillar of the International Telecommunication Union’s Partner2Connect initiative – Participated in partnerships and working groups on human rights – Participated and engaged with key environmental initiatives, including the Science Based Targets initiative and CDP – Launched a response to the earthquakes in Turkey and surrounding areas with NGOs and charities Governments and regulators Our relationship with governments and regulators is important and we hope to work together on policies impacting our industry and customers, while also enabling them to better understand the positive impact we can have on the environment and communities we operate in. How did we engage with them? – B Participation and attendance at company and industry meetings with government and regulators, EU institutions, public forums and parliamentary processes – B Meetings with commissioners, ministers, elected representatives, policy officials and regulators – Hosting and participating in workshops and events to improve sector understanding of connectivity and digitalisation – B Our Chair chairs the European Round Table for Industrialists, which promotes competitiveness and prosperity and engages with European and global institutions, and governments What were the key topics raised? – Regulatory and policy environment and compliance – Responses to COVID-19 and the war in Ukraine – Security and supply chain resilience, and data protection and privacy – Digital societies, digital inclusion, the climate transition and the European Green Deal How did we respond? – Engaged on the digital and green transformation of the EU, and the Digital Decade targets such as the digitalisation of industries and SMEs – Communications on the impact of electromagnetic fields (‘EMF’) – Engaged on network investments, design and deployment, and issues such as the allocation of spectrum and the protection of consumers – Discussed policy and regulatory environment that facilitates investment in technology – Engaged with the EU with respect to the data economy, including data protection, digital principles, and data sharing – Engaged with the UN on digital inclusion via the ITU and UN Broadband Commission, and climate topics via COP27 Click to read more about our social contract in our latest investor briefing. The materials set out why a reset of the European regulatory framework is so important; how through our social contract we have taken a leadership role in improving our relationship with governments and policymakers; and what is need in terms of policy reform: investors.vodafone.com/social-contract Our investors Our investors include individual and institutional shareholders as well as debt investors. We maintain an active dialogue with our investors through our extensive investor relations programme. How did we engage with them? – B Personal meetings, roadshows, conferences – B Annual & interim reports and presentations – B Investor relations website used as primary digital communications tool and is available to all shareholders (institutional and retail), including over 12 hours of dedicated video content covering investor events and interviews with Non-Executive Directors – Stock Exchange News Service (‘SENS’) announcements – B Annual General Meeting (‘AGM’) – B Investor perception study and regular feedback survey – For FY24, further resources will be available to individual shareholders, such as online presentations hosted by the UK Individual Shareholders Society – Our Registrar, Equiniti, operates a portfolio service which provides shareholders with the ability to manage their holdings What were the key topics raised? – Strategy to deliver sustained financial growth and operational priorities – Allocation of capital, deleveraging strategy and dividend policy – Portfolio optimisation – Corporate governance practices – ESG strategy, targets and reporting How did we respond? – We conducted over 1,000 investor interactions through meetings with major institutional shareholders, debt investors, individual shareholder groups and financial analysts, and attended conferences – Meetings were attended by Directors and senior management, including our Chair, Group Chief Executive, Chief Financial Officer, and Executive Committee members Stakeholder engagement (continued) 12 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
Our people strategy is to create an inclusive environment for growth where everyone has the opportunity to thrive. Our engaged and experienced team are a key strength and will support us as we begin the transformation of Vodafone. The Spirit of Vodafone Our culture – the ‘Spirit of Vodafone’ – outlines the beliefs we stand for and the behaviours that enable our strategy and purpose. We foster our culture by developing individual habits that reinforce our Spirit, invest in leadership development to role model our beliefs, and ensure systems, processes and milestone activities are aligned with the Spirit of Vodafone. We measure our progress and identify where to take action via a bi-annual employee survey called ‘Spirit Beat’. In our latest Spirit Beat survey (September 2022), we had an 83% response rate and sustained high scores in engagement, connection to purpose and Spirit. Spirit Beat surveys Measurement Sept 2022 Apr 2022 Engagement 76 82 Purpose 88 93 Team Spirit Index1 84 87 Response rates 83 84 Note: This year we expanded our listening strategy and as part of this unified our scoring methodology to a 5-point scale and favourable percentage (from a 7-point scale and weighted average). This new scoring methodology provides less choice and greater distinction so any change between -3 to -5 points for Spirit Beat is likely due to the scale change, rather than a real decline. 1. The Team Spirit Index represents an overall view of how people are doing on the Spirit of Vodafone and takes into account each of our Spirit Behaviours. The Spirit Beat survey informs our priorities which include a focus on ensuring new starters and managers are engaged with our Spirit. New starters who joined during the pandemic were scoring slightly lower on Spirit and engagement compared to other colleagues (-1 point). In response, we redesigned our onboarding processes and support globally. In September 2022, new hires reported higher Spirit and engagement scores compared to other colleagues (+9 points), highlighting the impact that listening and focused action can have. Managers that act on Spirit outperform those who do not take action on average by 18 points on Spirit and 22 points on engagement. This has informed our new approach to performance development and how we support and hold managers accountable for their impact. We continue to evolve our employee listening strategy and deepen the connection between employee and customer experiences by opening up more channels. During the year, this included a pulse survey sent in June 2022, the results of which were used to inform our hybrid ways of working. Our listening strategy also includes standardising our onboarding and exit listening approach globally. Results show that 71% of leavers would recommend Vodafone as a great place to work (based on 2,066 responses). As part of our focus on one of our Spirit behaviours, earning customer loyalty, our Spirit Beat survey was extended in September to include contractors in customer-facing roles in five markets (76% response rate). This has enabled markets to celebrate high customer scores, while also identifying opportunities to be more effective. Based on the success of the pilot, we extended contractor measurement to further markets in April 2023. Once a quarter, we have a ‘Spirit of Vodafone Day’ which is dedicated time to focus on learning, connection and wellbeing. During our Spirit of Vodafone Day in February 2023, 80% more online learning hours were recorded compared to a typical day in the financial year up until that point. Colleagues took the opportunity to focus on earning customer loyalty and this was facilitated through new learning materials that include Consumer and Vodafone Business customer feedback and net promoter scores. Leadership at Vodafone Leadership is essential for enabling transformation, and we have continually invested in developing inclusive leaders who drive growth and innovation, act as role models, coach and empower teams, and lead with Spirit. In April 2022, we launched a Spirit Accelerator, which aims to increase accountability and ownership of our strategic priorities by our senior leaders. Further to this, we launched ‘CEO accelerator’, an exciting and varied programme of support to accelerate the leadership transition and develop new local market CEOs. We have introduced tools to support the development of our leaders and our selection process includes an independent assessment. Executive coaching is now available to all leaders through a platform-based approach and we support the broader leadership population through an internal network of accredited coaches. Senior leadership is accountable for our culture transformation, whilst the Board reviews progress on employee engagement and Spirit on a regular basis, and the Executive Committee monitors key achievements and considers further opportunities to embed Spirit. We continue to do this through Company policies and improvements to employee experience through our ‘moments that matter’ programme. We are supporting leaders to demonstrate Spirit as they transition with their teams into hybrid working and are using updated leadership assessment methodologies to reflect Spirit behaviours. We also run a global recognition programme that celebrates those who demonstrate our Spirit behaviours. Innovation at Vodafone We continue to develop ‘LaunchPad’, our global employee-led innovation platform which helps ‘Create the Future’. In the three years since it has been operational, our employees have submitted over 2,000 ideas, ranging from e-waste recycling, Internet of Things (‘IoT’) marketplaces and cloud smartphones. We are seeing the value these ideas have. For example, ‘Scam Signal’ is a Vodafone application that helps businesses combat fraud and cyber crime by utilising our network to identify bank transfer scams in real time. LaunchPad has delivered €15 million annualised value from ideas executed since inception and this year 360 colleagues provided ideas based on using Vodafone technology to solve environmental challenges. Simplified operating model We recently simplified the Group’s operating model to execute our strategy, accelerate and streamline performance, and improve customer experience. Key commercial decisions have moved back to markets, and this is supported by a new governance structure. Group functions will remain committed to governance, performance management, shared operations, and best practice programmes that uphold global standards. Read more about our headcount on page 33 Diverse talent and future ready skills In April 2022, we launched a new operating model for learning, talent, leadership, and skills – the global Vodafone Learning Organisation (‘VLO’) – which has already started to drive simplification across our markets, while enabling a high quality development experience for employees. We have already begun to realise the benefits of this operating model change with higher quality streamlined global learning offerings. We are focused on developing diverse talent with the skills to transform Vodafone and this is reflected by four strategic pillars which are summarised on the following page. Our people strategy Our people strategy 13 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Our people strategy (continued) 1. Enable a high impact performance & learning culture We continue to support the personal and professional growth of people through online learning initiatives. During the year, our employees accomplished two million hours of learning with an average of 1.7 hours per month. The annual average number of hours per employee has increased by 33% per employee since FY22, with each employee now spending 20 hours on average per annum on their learning. We invested an average of €301 for both mandatory and non-mandatory training for each employee to build future capabilities. To support customer experience, we have launched customer-centric programmes for all employees including a Company-wide customer experience curriculum. In April 2023, we launched a new performance management system and process to increase alignment and prioritisation of goals, enable greater employee ownership, and create a shared understanding of the impact an employee has on outcomes. Performance assessments consider the impact an employee has had on team, business, and customer outcomes and how the Spirit of Vodafone has been harnessed to deliver those outcomes. Reward will be linked to the individual’s impact and underpinned by minimum performance standards, including completion of our Doing What’s Right training, that reinforce our commitment to building an ethical culture. 2. Build the skills for the future This year, we strategically reviewed the skills that we need to support our business strategy. From April 2023 we started to deliver Skill Accelerators across the organisation for critical skill areas such as agile project management, software engineering, automation, and cyber security. In Italy, more than 300 people have been reskilled from contact centres to other internal functions. Large-scale programmes on digital skills have impacted employees in Italy, reflected by more than one million learning hours delivered. We are also introducing a global software engineering reskilling programme. Successful applicants began training in May 2023. As part of our ambition to hire 7,000 software engineers by 2025, we enhanced our employer brand awareness by launching a global recruiting playbook, investing in talent acquisition campaigns, running events across markets, and redesigning the global careers site. So far, we have hired 5,880 software engineers. This year, we also launched a specific ‘Always-on Software Engineer’ attraction campaign in Egypt, Germany, Spain, Turkey, Romania, Portugal and the UK. As a result, we have had 42.8 million impressions. Moreover, last year we were a platinum sponsor at the React Summit, an annual conference gathering thousands of software engineers from around the world. This had a positive impact as 77% of engineers we interacted with had an improved perception of Vodafone as a technology employer following the event. Our technical career path supports the attraction, retention and development of our technical experts and sits alongside a managerial/ leadership career path. The technical career path is designed to provide more formal ways to recognise and reward career progression for technical experts, giving choice in career direction. 3. Drive an efficient engine with the scale and expertise to deliver on our growth ambitions We simplified the operations of the VLO by leveraging vendor partnerships, and launching global product offerings on agile project management, languages and executive coaching. We removed duplicated activities across markets by continuing to expand our _VOIS shared services team. We also conducted global demand planning for our learning, talent, leadership and skills to align our investments with our strategic objectives. 4. Engage and retain diverse talent, and unlock potential through focused succession and people development We reviewed our talent and succession pools across senior roles. These are ultimately discussed and approved at the annual Executive Committee talent review and are also shared with the Board. Gender diversity of the executive succession pools increased to 50% from 38% in the prior year. This year, we also reviewed our commercial capabilities by reviewing the skills we need for the future, assessing the capability of current and future leaders, and developing learning journeys and targeted development actions. We further embedded these assessment tools and strategies into our overall processes for developing and recruiting senior leaders across the business. We continue to invest in youth hiring (5,731 hires, of which 942 were graduates) whilst providing digital learning experiences to 66,036 young people through local work experience programmes and training initiatives. During the year, we also hired 236 apprentices with local programmes that aim to grow future talent and skills in areas such as cyber security, network engineering and software engineering through work-based learning and qualifications. Read more about workplace equality on pages 33 to 34 Digital and personalised experience Future ready ways of working This year, we reviewed our Future Ready Vodafone global policy on hybrid working, which includes the option to work from another country during the year for a maximum of 20 days. To continue our commitment to hybrid ways of working, we believe a minimum of two days in the office is the right balance to achieve the benefits of in-person collaboration and our leaders are expected to clearly role-model this. We are not mandating a fixed day per week at a function or market level as this compromises the principle of flexibility that hybrid working is built on. Underpinning all our hybrid thinking is our continued commitment to the health, safety, and wellbeing of our teams. Office space The shift to hybrid working has redefined the role of the office and inspired us to create a new global office design primarily for collaboration and connection. We experimented in different countries last year, redesigned the Vodafone Turkey headquarters, and opened a new office in Valencia, and a new Innovation Hub in Malaga. These are great examples of the hybrid workplace improving the employees’ experience and being a magnet to attract talent, collaborate, and innovate. A new initiative called ‘Office in a Box’ was implemented to support employees’ wellbeing while working from home, providing a virtual office setup at home following a self-assessment. We are also improving the digital workplace experience with new booking systems for desks and collaboration spaces, access control, video conferencing, and presentation facilities to enhance the employee experience at the office. Click to read our technology employee articles: careers.vodafone.com/life-at-vodafone/projects-stories 14 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
To standardise and improve the experience of new joiners, we deployed a new digital onboarding tool in November 2022. It has received an effectiveness score of 86% from new joiners and 83% from hiring managers over a baseline of 80%. We continued to invest in our AI chatbot called, ‘TOBi’, to provide personalised instant responses and process administrative tasks. New features have been piloted in Vodacom Group and _VOIS India, with roll-out plans to UK employees in FY24. In FY23, TOBi resolved 53% of queries that would have been actioned by other support channels. We have also implemented a new quality tool to check and correct HR data against pre-set rules to enable richer and more accurate insights on employee experience. The tool has already fixed 98% of errors. We continue to invest in our data strategy by bringing together and visualising both HR and non-HR data through cloud-based data-lake functionality, and this is reflected in pilots in Greece and _VOIS. Workers’ councils and union engagement We respect freedom of association and recognise the rights of employees to join trade unions and engage in collective bargaining in accordance with local law. We continue to maintain strong relationships with workers’ councils and unions through their representatives and we have almost 23,000 people covered by collective bargaining agreements across our global footprint. As an example, unions in Spain are supported through infrastructure and resources which employees have access to through union halls, digital and physical forums, and regular newsletters. This year, we reached agreements with unions in Spain and Italy on items such as pay, hybrid working and training as we continued to shape the future of work. There were no material disruptions to operations as a result of union activity during the financial year or between the end of the financial year and the date of this Annual Report on Form 20-F. Employee forums We have a number of employee forums where elected employee representatives represent the views of their colleagues. During the year, the Board’s Workforce Engagement Lead, Valerie Gooding, attended employee forums to gather employee views, such as the European Employee Consultative Committee. Key discussion topics from the meetings included talent development, future ready ways of working, cost of living support, and business performance. Read more about the Board’s engagement with the employee voice on pages 62, 64 and 85 Pay and benefits As part of the people experience, we continue to ensure pay, benefits, and wellbeing propositions are competitive and fair. Pay is typically reviewed on an annual basis, with increases aligned to an individual’s level of skills and experience, as well as external factors like market competition and inflation. Our total reward approach also encourages collective performance and ‘in-the-moment’ recognition. For example, 21,335 peer-to-peer ‘Thank You’s’ and 65,258 cash Vodafone Star awards were issued through a digital recognition tool during the year. We continue to apply Fair Pay principles across all markets, working with the Fair Wage Network to ensure a good standard of living in each market. In the UK, our commitment to these principles is reflected in being an Accredited Living Wage employer. Read more about our Fair Pay principles on page 100 Click to read more about Fair Pay at Vodafone: vodafone.com/fair-pay Mental health and wellbeing We remain focused on physical and mental wellbeing, with training and services available in each market, including the provision of employee assistance and psychological support services. Market examples from the year include: – Vodafone Egypt became one of the first companies in the Middle East, as well as in our Vodafone markets, to be verified against ISO 45003:2021 for psychological health and safety at work. – In Italy, we organised awareness and training sessions, including mindfulness sessions, a webinar with a team of psychologists during Mental Health Week, and a session on social welfare services. – In the UK we continued our third year of support for the 245 mental health first aiders across the business. We facilitated six bi-monthly learning sessions across a range of topics on mental health. In May 2022, we delivered a two-hour workshop to 400 employees during UK Mental Health Awareness Week and introduced a new service for people to access professional therapy. – In South Africa, we launched an onsite financial coach and counselling clinic in February 2023 and established the Wellbeing Committee on employee wellbeing needs. We also held 10 wellbeing café sessions on a range of topics including mental health, finance, resilience, anxiety, and trauma (2,235 participants). – Finally in Spain, we launched the rercárgate wellbeing programme, engaging more than 1,260 colleagues in wellbeing programmes. Click to read more about mental health and wellbeing: vodafone.com/wellbeing Digital experience This year, we continued to focus on providing a digital and personalised experience to employees, informed by internal insights, and underpinned by our culture. This has included digitalising our core HR processes, ensuring we have the right tools and data to deliver the people strategy. In 2022, we launched ‘Grow with Vodafone’, an integrated talent acquisition, skills and learning platform that enhances the employee experience, whilst giving employees greater ownership of their learning and career development. The tool is split into three main features: – Grow your skills: Enables individuals to create their unique skills profile enabling personalised learning and career recommendations, as well as providing upskilling opportunities. – Grow your learning: Offers personalised learning recommendations to help each employee achieve their career goals, whilst also driving a culture where growing never stops. – Grow your career: Provides role recommendations based on skills and experience to candidates, and offers optimised recruiter and hiring manager experience by prioritising the most suitable applications. This has had the following impact: – Candidate experience: Job recommendations based on an individual’s skills and experience (driven by an AI role-matching engine). This is facilitated by 66% of roles being auto-calibrated. – Gender diversity: For management roles a higher proportion of women shortlisted, supported by efforts to remove unconscious bias during screening. – Recruiter capability: Increased effectiveness of recruiters, as reflected by a reduction in time-to-hire time by 49%, enabled through AI-based sourcing capabilities. 15 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
– Group revenue increased by 0.3% to €45.7 billion driven by growth in Africa and higher equipment sales, offset by lower European service revenue and adverse exchange rate movements. – Group service revenue trend was impacted by a decline in Germany, Italy, and Spain, offset by continued growth in the UK, Other Europe, and Africa. – Service revenue growth in Turkey increased to 47.6%* driven by higher inflation. Group service revenue growth excluding Turkey was 1.0%*. – Operating profit increased from €5.8 billion to €14.3 billion, largely reflecting a gain on disposal of Vantage Towers. – Inflationary cost pressures in Europe were mitigated by our ongoing cost efficiency programme, with a further €0.2 billion of savings in FY23. Financial performance in line with expectations Our financial performance Group financial performance FY231 €m Re-presented2 FY22 €m Reported change % Revenue 45,706 45,580 0.3 – Service revenue 37,969 38,203 (0.6) – Other revenue 7,737 7,377 Operating profit3 14,296 5,813 145.9 Investment income 248 254 Financing costs (1,728) (1,964) Profit before taxation 12,816 4,103 Income tax expense (481) (1,330) Profit for the financial year 12,335 2,773 Attributable to: – Owners of the parent 11,838 2,237 – Non-controlled interests 497 536 Profit for the financial year 12,335 2,773 Basic earnings per share 42.77c 7.71c Notes: 1. The FY23 results reflect average foreign exchange rates of €1:£0.86, €1:INR 83.69, €1:ZAR 17.69, €1:TRY 18.53 and €1: EGP 23.72. 2. The results for the year ended 31 March 2022 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. There is no impact on previously reported revenue. However, operating profit, profit before taxation and profit for the financial year have all increased by €149 million compared to amounts previously reported. Consequently, basic earnings per share increased by 0.51c compared to amounts previously reported. See note 7 ‘Discontinued operations and assets held for sale’ in the consolidated financial statements for more information. 3. Includes a gain on the disposal of Vantage Towers of €8,607 million, a gain on the disposal of Vodafone Ghana of €689 million, slightly offset by a loss on disposal of Vodafone Hungary of €69 million. Organic growth All amounts marked with an ‘*’ in the commentary represent organic growth which presents performance on a comparable basis, excluding the impact of foreign exchange rates, mergers and acquisitions, the hyperinflation adjustments in Turkey and other adjustments to improve the comparability of results between periods. Organic growth figures are non-GAAP measures. Read more about non-GAAP measures on page 219 16 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
Geographic performance summary FY23 Germany €m Italy €m UK €m Spain €m Other Europe €m Vodacom €m Other Markets €m Vantage Towers €m Common Functions €m Eliminations €m Group €m Total revenue 13,113 4,809 6,824 3,907 5,744 6,314 3,834 1,338 1,387 (1,564) 45,706 Service revenue 11,433 4,251 5,358 3,514 5,005 4,849 3,300 – 530 (271) 37,969 Adjusted EBITDAaL1 5,323 1,453 1,350 947 1,632 2,159 1,145 795 Adjusted EBITDAaL margin (%) 1 40.6% 30.2% 19.8% 24.2% 28.4% 34.2% 29.9% 59.4% Service revenue growth % Q1 Q2 H1 Q3 Q4 H2 Total Germany (0.5) (1.1) (0.8) (1.8) (2.8) (2.3) (1.6) Italy (2.2) (3.4) (2.8) (3.3) (2.8) (3.0) (2.9) UK 8.3 6.9 7.6 2.7 (1.6) 0.5 4.0 Spain (2.9) (6.1) (4.5) (8.7) (3.7) (6.3) (5.4) Other Europe 2.1 1.9 2.0 1.4 (5.2) (1.8) 0.1 Vodacom 7.8 9.9 8.9 5.3 (4.1) 0.5 4.6 Other Markets (1.8) (1.7) (1.8) (7.5) (3.0) (5.3) (3.5) Group 1.3 0.8 1.0 (1.3) (3.2) (2.2) (0.6) Organic service revenue growth %*1 Q1 Q2 H1 Q3 Q4 H2 Total Germany (0.5) (1.1) (0.8) (1.8) (2.8) (2.3) (1.6) Italy (2.3) (3.4) (2.8) (3.3) (2.7) (3.0) (2.9) UK 6.5 6.9 6.7 5.3 3.8 4.6 5.6 Spain (3.0) (6.0) (4.5) (8.7) (3.7) (6.2) (5.4) Other Europe 2.5 2.9 2.7 2.1 3.6 2.8 2.8 Vodacom 2.9 4.8 3.9 3.5 2.6 3.1 3.5 Other Markets 24.7 26.7 25.7 34.1 40.0 36.8 30.7 Group 2.5 2.5 2.5 1.8 1.9 1.8 2.2 Note: 1. Organic service revenue growth is a non-GAAP measure. See page 219 for more information. 17 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Germany: 30% of Group service revenue FY23 €m FY22 €m Reported change % Organic change* % Total revenue 13,113 13,128 (0.1) Service revenue 11,433 11,616 (1.6) (1.6) Other revenue 1,680 1,512 Adjusted EBITDAaL 5,323 5,669 (6.1) (6.1) Adjusted EBITDAaL margin 40.6% 43.2% Total revenue decreased by 0.1% to €13.1 billion, driven by lower service revenue partially offset by higher equipment sales. On an organic basis, service revenue declined by 1.6%* (Q3: -1.8%*, Q4: -2.8%*) due to broadband customer losses and a lower mobile ARPU, partially offset by higher roaming revenue and broadband ARPU growth. The slowdown in quarterly trends was primarily driven by small non-recurring benefits in Q4 last year and the impact of a multi-year IoT contract renewal. Fixed service revenue declined by 1.8%* (Q3: -2.0%*, Q4: -2.1%*), driven by a lower broadband customer base, primarily as a result of specific operational challenges related to the implementation of policies to comply with the 2021 Telecommunications Act, which are now resolved. This was partially offset by ARPU growth. In November 2022 we increased prices for new broadband customers, and in March 2023, we started to communicate price increases to some of our existing customers, which will be implemented during H1 FY24. Our cable broadband customer base declined by 119,000 and we lost 87,000 DSL broadband customers during the year. As expected, our commercial performance in Q4 was impacted by the decision to increase retail prices. Our TV customer base declined by 412,000 and our converged customer base decreased by 52,000 to 2.3 million Consumer converged accounts. These declines primarily reflect higher disconnections of broadband bundle customers, as well as fewer cross-selling opportunities. Ahead of changes to German TV laws, which take effect from July 2024 and end the practise of bulk TV contracting in Multi Dwelling Units (‘MDUs’), we are actively working with our Housing Association partners to manage this transition, and sign customers up to individual contracts. In total, we have 8.5 million MDU TV customers, and they generate around €800 million in basic-TV revenue. We have commenced our first trials to re-contract customers. Mobile service revenue declined by 1.2%* (Q3: -1.7%*, Q4: -3.7%*) primarily driven by lower contract ARPU reflecting mobile termination rate cuts and a change in customer mix, as well as lower MVNO revenue, partially offset by higher roaming revenue. The slowdown in quarterly trends was due to small benefits in the prior year which are not expected to re-occur, and the impact of a major IoT automotive contract renewal in Q4 which will enable us to capture additional future revenue opportunities. We added 68,000 contract customers in the year across both Business and Consumer. We also added 8.2 million IoT connections, driven by continued demand from the automotive sector. Adjusted EBITDAaL declined by 6.1%*, of which 0.8 percentage points was due to higher energy costs. Adjusted EBITDAaL growth was also impacted by lower service revenue and settlements in the prior year which are not expected to re-occur. The adjusted EBITDAaL margin was 2.6* percentage points lower year-on-year at 40.6%. On 8 March 2023 we announced the completion of our fibre-to-the-home (‘FTTH’) joint venture with Altice, which will deploy FTTH to up to seven million homes over a six-year period. This partnership is complementary to our upgrade plans for our existing hybrid fibre cable network. Italy: 11% of Group service revenue FY23 €m FY22 €m Reported change % Organic change* % Total revenue 4,809 5,022 (4.2) Service revenue 4,251 4,379 (2.9) (2.9) Other revenue 558 643 Adjusted EBITDAaL 1,453 1,699 (14.5) (14.5) Adjusted EBITDAaL margin 30.2% 33.8% Total revenue declined 4.2% to €4.8 billion due to lower service revenue and equipment sales. Service revenue declined by 2.9%* (Q3: -3.3%*, Q4: -2.7%*), as a result of continued price pressure in the mobile value segment, partly offset by Business demand in fixed line and digital services. Mobile service revenue declined by 5.4%* (Q3: -5.7%*, Q4: -5.4%*). Price competition in the mobile value segment has remained intense, resulting in a lower active prepaid customer base and ARPU. This was partially offset by targeted pricing actions taken during the year. Our second brand ‘ho.’ continued to grow and now has 3.0 million customers. Fixed service revenue increased by 3.3%* (Q3: 2.7%*, Q4: 3.6%*) supported by Business demand for connectivity and digital services, including a take up of the Business voucher programme, an initiative related to the EU Recovery and Resilience Facility that subsidises high-speed broadband connectivity. This was partially offset by a slightly lower customer base in Consumer broadband. Our broadband customer base declined by 55,000 during the year, however this was largely offset by 47,000 fixed-wireless additions which are reported in mobile. Our Consumer converged customer base now stands at 1.4 million, and in total 56% of our broadband customers are converged. Our next generation network (‘NGN’) broadband services are now available to 23.5 million households, including 9.4 million through our own network and our partnership with Open Fiber. In October 2022, we launched 5G fixed-wireless services and now cover 3.4 million households. This complements our 4G fixed-wireless access products, which covers an additional 2.2 million households. Adjusted EBITDAaL declined by 14.5%* including a 5.7 percentage point impact relating to a €105 million legal settlement received in the prior year, and 3.0 percentage points due to higher energy costs. Adjusted EBITDAaL growth was also impacted by lower mobile service revenue, partly offset by our continued focus on cost efficiency. The adjusted EBITDAaL margin was 3.6* percentage points lower year-on-year at 30.2%. Our financial performance (continued) 18 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
UK: 14% of Group service revenue FY23 €m FY22 €m Reported change % Organic change* % Total revenue 6,824 6,589 3.6 Service revenue 5,358 5,154 4.0 5.6 Other revenue 1,466 1,435 Adjusted EBITDAaL 1,350 1,395 (3.2) (1.4) Adjusted EBITDAaL margin 19.8% 21.2% Total revenue increased by 3.6% to €6.8 billion driven by service revenue growth, partly offset by the depreciation of the pound sterling against the euro. On an organic basis, service revenue increased by 5.6%* (Q3: 5.3%*, Q4: 3.8%*). This was driven by continued growth in Consumer and an acceleration in Business. The slowdown in quarterly trends was driven by lower MVNO revenues. Mobile service revenue grew by 8.0%* (Q3: 8.1%*, Q4: 2.8%*), driven by our commercial momentum and annual price increases in Consumer, growth in Business, and higher roaming revenue. The slowdown in quarterly trends reflected the complete migration of the Virgin Media MVNO off our network. We continued to deliver customer base growth, supported by our flexible proposition Vodafone ‘Evo’, adding 230,000 contract customers. Our digital prepaid sub-brand ‘VOXI’ also continued to grow, with 134,000 customers added in FY23. Our digital sales mix improved by 4 percentage points year-on-year to 37% of total sales. Fixed service revenue declined by 0.3%* (Q3: -1.6%*, Q4: 6.3%*) with growth in Consumer offset by a decline in Business. The improvement in quarterly trends was driven by Business, which returned to growth in Q4, supported by several large corporate contract wins and higher project work. Consumer growth was supported by our price actions and demand for our Vodafone ‘Pro Broadband’ and fibre products. Our broadband customer base increased by 173,000 during the year and we now have over 1.2 million broadband customers. Through our partnerships with CityFibre and Openreach we are able to reach over 11 million households with full fibre broadband, more than any other provider in the UK. Adjusted EBITDAaL declined by 1.4%*, of which 5.4 percentage points was due to higher energy costs. Adjusted EBITDAaL excluding energy grew, driven by service revenue growth, partially offset by other inflationary costs, a lower Virgin MVNO contribution and new annual licence fees. The adjusted EBITDAaL margin declined 1.3* percentage points year-on-year at 19.8%. On 14 June 2023, the Group and CK Hutchison Group Telecom Holdings Limited, a subsidiary of CK Hutchison Holdings Limited entered into binding agreements to combine their UK telecommunication businesses, respectively Vodafone UK and Three UK. See note 33 ‘Subsequent events’ in the consolidated financial statements for more information. Spain: 9% of Group service revenue FY23 €m FY22 €m Reported change % Organic change* % Total revenue 3,907 4,180 (6.5) Service revenue 3,514 3,714 (5.4) (5.4) Other revenue 393 466 Adjusted EBITDAaL 947 957 (1.0) (1.1) Adjusted EBITDAaL margin 24.2% 22.9% Total revenue declined by 6.5% to €3.9 billion due to lower service revenue and equipment sales. On an organic basis, service revenue declined by 5.4%* (Q3: -8.7%*, Q4: -3.7%*) driven by continued price competition in the value segment and a lower customer base. The improvement in quarterly trends was driven by inflation-linked price increases, which took effect at the end of January 2023, and increased Business demand for digital services. In mobile, our contract customer base declined by 159,000 reflecting disconnections of 123,000 relating to temporary business SIMs provided to schools and higher education providers during the pandemic, as well as ongoing price competition in both the Consumer and SoHo segments. Our Q4 commercial performance was impacted by our price increases. Consumer contract churn improved by 2.7 percentage points during the year, supported by our simplified and more transparent range of tariff plans. Our second brand ‘Lowi’ continued to grow, adding 200,000 customers. Our broadband customer base declined by 121,000 and our TV customer base decreased by 56,000 due to price competition and the ongoing shutdown of DSL. Our converged customer base remained broadly stable at 2.2 million. Adjusted EBITDAaL declined by 1.1%*, which included 6.7 percentage points of tax benefits which are not expected to re-occur and a 1.5 percentage point impact from higher energy costs. Excluding these impacts, adjusted EBITDAaL declined due to lower service revenue, partly offset by our ongoing cost efficiency programme. On 12 January 2023, we announced that Spain will become part of the ‘Europe Cluster’, managed by Serpil Timuray, CEO Europe Cluster. In March 2023, we announced that Mário Vaz, previously CEO of Vodafone Portugal, had been appointed as new CEO of Spain, effective from 1 April 2023. 19 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Vodacom: 13% of Group service revenue FY23 €m FY22 €m Reported change % Organic change* % Total revenue 6,314 5,993 5.4 Service revenue 4,849 4,635 4.6 3.5 Other revenue 1,465 1,358 Adjusted EBITDAaL 2,159 2,125 1.6 1.4 Adjusted EBITDAaL margin 34.2% 35.5% Total revenue increased by 5.4% to €6.3 billion driven by service revenue growth and higher equipment sales. On an organic basis, Vodacom’s service revenue grew by 3.5%* (Q3: 3.5%*, Q4: 2.6%*) with growth in both South Africa and Vodacom’s international markets. The slowdown in quarterly trends was driven by a tough prior year comparative in Vodacom Business within South Africa. In South Africa, service revenue growth was supported by contract price increases and prepaid ARPU growth, partially offset by repricing pressure from a government mobile contract renewal. We added 192,000 mobile contract customers in the year, and now have a contract base of 6.7 million. Across our active customer base, 74.9% of our mobile customers now use data services, an increase of 2.0 million year-on-year. Financial Services revenue grew by 10.6%* to €167 million, supported by demand for insurance services. Our VodaPay ‘super-app’ has continued to gain traction with 3.3 million registered users. In Vodacom’s international markets, service revenue growth was supported by growth in data, a higher customer base and M-Pesa growth. This was despite disruptions caused by heavy flooding in both Mozambique and the DRC during the year. M-Pesa revenue grew by 15.5% and now represents 25.0% of service revenue. Our mobile customer base now stands at 50.2 million with 63.5% of active customers using data services. Vodacom’s adjusted EBITDAaL increased by 1.4%*, including a 1.7 percentage point impact from higher energy costs. Excluding this, adjusted EBITDAaL was supported by service revenue growth and accelerated cost initiatives, partially offset by an increase in technology operating expenses as we continued to improve the resilience and capacity of our network. The adjusted EBITDAaL margin decreased by 1.2* percentage points to 34.2%. On 13 December 2022, Vodafone completed the transfer of its 55% shareholding in Vodafone Egypt to Vodacom. This transfer simplifies the management of our African assets. Vodafone received cash proceeds of €577 million and 242 million shares in Vodacom in exchange for Vodafone’s shareholding in Vodafone Egypt. Following completion, Vodafone’s shareholding in Vodacom has increased from 60.5% to 65.1%. Vodafone Egypt will be included within the Vodacom reporting segment from 1 April 2023. Other Europe: 13% of Group service revenue FY23 €m FY22 €m Reported change % Organic change* % Total revenue 5,744 5,653 1.6 Service revenue 5,005 5,001 0.1 2.8 Other revenue 739 652 Adjusted EBITDAaL 1,632 1,606 1.6 4.7 Adjusted EBITDAaL margin 28.4% 28.4% Total revenue increased by 1.6% to €5.7 billion driven by service revenue and equipment sales growth. On an organic basis, service revenue increased by 2.8%* (Q3: 2.1%*, Q4: 3.6%*), with growth in all markets other than Romania, which was impacted by a mobile termination rate reduction. The improvement in quarterly trends was driven by inflation-linked price increases in several markets, as well as Business growth in Greece. In Portugal, service revenue grew due to our commercial momentum, with 183,000 mobile contract customers and 48,000 fixed broadband customer additions during the year. In September 2022, we announced that we had entered into an agreement to buy Portugal’s fourth largest converged operator, Nowo Communications, from Llorca JVCO Limited, the owner of Masmovil Ibercom S.A. The transaction is conditional on regulatory approval, with completion expected in the second half of the 2023 calendar year. In Ireland, service revenue increased driven by customer base growth, higher roaming revenue, and contractual price increases. Our mobile contract customer base increased by 64,000 and our broadband customer base grew by 14,000. In October 2022, we announced that we had agreed a fixed wholesale network access agreement with Virgin Media Ireland. Vodafone is already the largest fibre-to-the home provider in Ireland, covering over 1 million households. Service revenue in Greece grew, reflecting higher roaming revenue, growth in Business fixed supported by several public sector contract wins relating to the EU Recovery Fund, and higher wholesale revenue. During the year we added 138,000 mobile contract customers, and our broadband customer base declined by 26,000. Adjusted EBITDAaL increased by 4.7%*, including a 3.4 percentage point impact from higher energy costs. Excluding this, adjusted EBITDAaL grew driven by service revenue growth, ongoing cost efficiencies and a provision in Greece which is not expected to re-occur. The adjusted EBITDAaL margin remained stable year-on-year at 28.4%. On 31 January 2023, we announced that we had completed the sale of Vodafone Hungary to 4iG Public Limited Company and Corvinus Zrt for a cash consideration of HUF 660 billion (€1.6 billion), representing a multiple of 8.4x Adjusted EBITDAaL for the year ended 31 March 2022. Our financial performance (continued) 20 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
Other Markets: 9% of Group service revenue FY23 €m FY22 €m Reported change % Organic change* % Total revenue 3,834 3,830 0.1 Service revenue 3,300 3,420 (3.5) 30.7 Other revenue 534 410 Adjusted EBITDAaL 1,145 1,335 (14.2) 22.2 Adjusted EBITDAaL margin 29.9% 34.9% Total revenue remained broadly unchanged at €3.8 billion, with service revenue growth offset by significant currency devaluations in both Turkey and Egypt. On an organic basis, service revenue grew by 30.7%* (Q3: 34.1%*, Q4: 40.0%) reflecting a higher contribution from Turkey, impacted by accelerating inflation, as well as customer base and ARPU growth. Service revenue growth in Turkey was driven by continued customer base growth and ongoing repricing actions to reflect the high inflationary environment. We maintained our commercial momentum, adding 1.6 million mobile contract customers during the year, including migrations of prepaid customers. Customer loyalty rates continued to improve, with mobile contract churn down by 1.5 percentage points year-on-year to 13.9%. Our Q4 performance was impacted by the earthquakes in Turkey. Service revenue in Egypt continued to grow, reflecting customer base growth and increased data usage. During the year, we added 153,000 contract customers and 2.5 million prepaid mobile customers. Adjusted EBITDAaL increased by 22.2%* despite significant inflationary pressure on our cost base. The adjusted EBITDAaL margin decreased by 3.8* percentage points year-on-year to 29.9%. On 21 February 2023, Vodafone completed the sale of our 70% shareholding in Vodafone Ghana (‘GTCL’) to Telecel Group, further simplifying our African portfolio. Hyperinflationary accounting in Turkey Turkey was designated as a hyperinflationary economy on 1 April 2022 in line with IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. See note 1 ‘Basis of preparation’ in the condensed consolidated financial statements for further information. During the year service revenue in Turkey increased by 47.6*% and adjusted EBITDAaL grew by 49.8%* due to ongoing repricing actions to reflect increasing inflation. Organic growth metrics exclude the impact of the hyperinflation adjustment in the period in Turkey. Group service revenue growth excluding Turkey was 1.0%* (Q3: 0.5%*, Q4: 0.5%*). Vantage Towers FY23 €m FY22 €m Reported change % Organic change* % Total revenue 1,338 1,252 6.9 Service revenue – – – – Other revenue 1,338 1,252 Adjusted EBITDAaL 795 619 28.4 7.9 Adjusted EBITDAaL margin 59.4% 49.4% Total revenue increased 6.9% to €1.3 billion in FY23, driven by 1,750 new tenancies and new macro sites. As a result, the tenancy ratio increased to 1.46x. Adjusted EBITDAaL increased 7.9%* to €795 million, driven by revenue growth, partly offset by increased costs relating to the ramp up of the build to suit programme and 1&1 rollout. On 23 March 2023, we announced the completion of our co-control partnership for Vantage Towers with a consortium of long-term infrastructure investors led by Global Infrastructure Partners and KKR. Reflecting the final take-up in the connected voluntary takeover offer and delisting offer, the co-control partnership, Oak Holdings GmbH., will own 89.3% of Vantage Towers. Vodafone has received initial net cash proceeds of €4.9 billion and now hold a 64% shareholding in Oak Holdings. The Consortium has the option to increase its ownership of Oak Holdings up to a maximum of 50% by 30 June 2023, subject to the outcome of its fundraising process. Click to find further information on Vantage Towers: vantagetowers.com Associates and joint ventures FY23 €m Re-presented1 FY22 €m VodafoneZiggo Group Holding B.V. 137 (19) Safaricom Limited 195 217 Indus Towers Limited 50 178 Other 51 13 Share of results of equity accounted associates and joint ventures 433 389 Note: 1. The results for the year ended 31 March 2022 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. The share of results from Indus Towers Limited has increased by €178 million compared to €nil as previously reported. See note 7 ‘Discontinued operations and assets held for sale’ in the consolidated financial statements for more information. VodafoneZiggo Joint Venture (Netherlands) The results of VodafoneZiggo, in which we own a 50% stake, are reported here under US GAAP, which is broadly consistent with our IFRS basis of reporting. Total revenue remained stable at €4.1 billion, as mobile contract customer base growth, higher roaming revenue and contractual price increases were offset by a decline in the fixed Consumer customer base. During the period, VodafoneZiggo added 181,000 mobile contract customers, supported by its net promoter score. VodafoneZiggo’s broadband customer base declined by 13,000 customers to 3.3 million due to ongoing price competition. The number of converged households increased by 21,000, with 46% of broadband customers now converged. VodafoneZiggo now offers nationwide 1 gigabit speeds across its fixed network. In FY23, we received €165 million in dividends from the joint venture, as well as €51 million in interest payments. Safaricom Associate (Kenya) Safaricom service revenue grew to €2.3 billion due to a higher customer base and continued data revenue and M-Pesa growth. In FY23, we received €249 million in dividends from Safaricom. Indus Towers Limited Associate (India) Following the sale of shares in Indus Towers Limited (‘Indus Towers’) in February and March 2022, the Group holds 567.2 million shares in Indus Towers, equivalent to a 21.0% shareholding. Vodafone Idea Limited Joint Venture (India) See note 29 ‘Contingent liabilities and legal proceedings’ in the consolidated financial statements for more information. 21 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
TPG Telecom Limited Joint Venture (Australia) We own an economic interest of 25.05% in TPG Telecom Limited, a fully integrated telecommunications operator in Australia. Hutchison Telecommunications (Australia) Limited owns an equivalent economic interest of 25.05%, with the remaining 49.9% listed as free float on the Australian stock exchange. We also hold a 50% share of a US$3.5 billion loan facility held within the structure that holds the Group’s equity stake in TPG Telecom. Net financing costs FY23 €m FY22 €m Reported change % Investment income 248 254 Financing costs (1,728) (1,964) Net financing costs (1,480) (1,710) (13.5) Adjustments for: Mark-to-market gains (534) (256) Foreign exchange losses 135 284 Adjusted net financing costs1 (1,879) (1,682) 11.7 Note: 1. Adjusted net financing costs is a non-GAAP measure. Adjusted net financing costs exclude mark-to-market and foreign exchange gains/losses. Net financing costs decreased by €230 million, primarily due to mark-to-market gains recycled from reserves on derivatives that were previously in cash flow hedge relationships and mark-to-market gains on embedded derivatives. Adjusted net financing costs increased by €197 million primarily due to interest movements on lease liabilities and tax provisions and other individually immaterial movements. Excluding items outside of borrowings, net financing costs remained broadly stable. Taxation FY23 % FY22 % Change pps Effective tax rate 3.8% 33.6% (29.8) The Group’s effective tax rate for the year ended 31 March 2023 was 3.8%, (2022: 33.6%). The rate is lower than the prior year’s due to gains on the disposals of Vantage Towers and Vodafone Ghana. These gains are largely exempt from tax, except for a €88 million charge relating to the disposal of Vantage Towers. The effective tax rate also includes a tax credit of €309m relating to the impacts of hyperinflation accounting in Turkey and a €33 million tax charge (2022: €327 million) relating to the use of losses in Luxembourg, which is lower than the prior period because of an internal restructuring which resulted in a loss in Luxembourg. As a result of the restructuring, the amount of losses in Luxembourg are no longer subject to changes in the value of investments. The year ended 31 March 2022 includes the following items: i) a charge of €1,468 million for the utilisation of losses against our profits in Luxembourg. This arose from an increase in the valuation of investments based upon local GAAP financial statements and tax returns; ii) a credit of €699 million relating to the recognition of a deferred tax asset in Luxembourg because of higher interest rates increasing our forecasts of future profits; iii) an increase in our deferred tax assets in the UK of €593 million following the increase in the corporate tax rate to 25% and; iv) €273 million following the revaluation of assets for tax purposes in Italy. Earnings per share FY23 eurocents Re-presented1 FY22 eurocents Reported change eurocents Basic earnings per share 42.77c 7.71c 35.06c Notes: 1. The results for the year ended 31 March 2022 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. Consequently, basic earnings per share increased by 0.51c, from 7.20c as previously reported, to 7.71c. See note 7 ’Discontinued operations and assets held for sale’ in the consolidated financial statements for more information. Basic earnings per share was 42.77 eurocents, compared to 7.71 eurocents for FY22. The increase is primarily attributable to the gains on disposal of Vantage Towers A.G. and Vodafone Ghana, partially offset by the loss on disposal of Vodafone Hungary. Consolidated statement of financial position The consolidated statement of financial position is set out on page 124. Details of the major movements of both our assets and liabilities in the year are set out below. Assets Goodwill decreased by €4.3 billion between 31 March 2022 and 31 March 2023 to €27.6 billion. This was primarily attributable to a decrease of €3.9 billion from the disposal of subsidiaries in the year (see note 27 ‘Acquisitions and disposals’ in the consolidated financial statements) and a net decrease of €0.4 billion from foreign exchange movements. Other intangible assets, which primarily comprises licence and spectrum, computer software and customer bases, decreased by €1.8 billion between 31 March 2022 and 31 March 2023 to €19.6 billion. This reflected an amortisation charge of €4.0 billion, a reduction from the disposal of subsidiaries of €0.8 billion and a net decrease from exchange movements of €0.6 billion, partly offset by additions of €3.3 billion in the year and an increase of €0.5 billion following the adoption of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’ (see note 1 ‘Basis of preparation’ in the consolidated financial statements’). Property, plant and equipment decreased by €2.8 billion between 31 March 2022 and 31 March 2023 to €38.0 billion. This primarily reflected additions in the year of €5.9 billion and an increase of €0.7 billion following the adoption of IAS 29 (see above), which was offset by a depreciation charge of €5.6 billion, a reduction of €2.7 billion arising from the disposal of subsidiaries in the year and a net decrease of €1.0 billion from foreign exchange movements. Right-of-use assets arising from the Group’s lease arrangements remain broadly consistent with the prior year with the recognition of lease arrangements on the de-consolidation of Vantage Towers A.G. offsetting disposals. Other non-current assets increased by €7.2 billion between 31 March 2022 and 31 March 2023 to €39.7 billion, primarily due to a €5.8 billion increase in investments in associates and joint ventures which now includes Oak Holdings 1 GmbH, the new co-control partnership of Vodafone, GIP and KKR (see note 12 ‘Investments in associates and joint arrangements’ in the consolidated financial statements). In addition, trade and other receivables increased by €1.5 billion primarily due to an increase in the carrying value of derivative financial instruments. Current assets increased by €3.1 billion between 31 March 2022 and 31 March 2023 to €30.7 billion, primarily due to an increase of €4.2 billion in cash and cash equivalents, partially offset by a €0.9 billion decrease in other investments. Our financial performance (continued) 22 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
Total equity and liabilities Total equity increased by €7.4 billion between 31 March 2022 and 31 March 2023 to €64.5 billion, primarily due to comprehensive income for the year of €11.6 billion and an opening adjustment of €0.6 billion for the adoption of IAS 29. This was partially offset by a decrease of €1.4 billion arising from transactions with non-controlling interests in subsidiaries, dividends paid to the Group’s shareholders of €2.9 billion and the purchase of treasury shares of €0.6 billion. Non-current liabilities decreased by €6.9 billion between 31 March 2022 and 31 March 2023 to €56.5 billion, primarily due to a €6.5 billion decrease in borrowings and a €0.3 billion decrease in trade and other payables. Current liabilities increased by €1.0 billion between 31 March 2022 and 31 March 2023 to €34.6 billion, primarily due to a €2.8 billion increase in borrowings, offset by a €1.4 billion decrease in trade and other payables as a result of settling the share buyback obligation from the prior year. Inflation The impact of inflation on the Group’s operations during the year is outlined on pages 18 to 21. Furthermore, Turkey has met the requirements to be designated as a hyperinflationary economy on 1 April 2022 in line with IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. See note 1 ‘Basis of preparation’ in the consolidated financial statements for more information. Cash flow and funding Analysis of cash flow FY23 €m FY22 €m Reported change % Inflow from operating activities 18,054 18,081 (0.1) Outflow from investing activities (379) (6,868) 94.5 Outflow from financing activities (13,430) (9,706) (38.4) Net cash inflow 4,245 1,507 181.7 Cash and cash equivalents at beginning of the financial year 7,371 5,790 Exchange gain on cash and cash equivalents 12 74 Cash and cash equivalents at end of the financial year 11,628 7,371 Cash inflow from operating activities decreased to €18,054 million, as favourable working capital movements were offset by lower operating profit, excluding a net gain resulting from the sale of Vantage Towers, Vodafone Ghana and Vodafone Hungary, and higher taxation payments. Outflow from investing activities decreased to €379 million, primarily in relation to proceeds resulting from the disposals of Vantage Towers and Vodafone Hungary, which outweighed a lower 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. Outflow from investing activities includes the purchase of property, plant and equipment. See the consolidated cash flow statement on page 126 for more information for the year ended 31 March 2023 and the comparative period. The Group continues to invest to further expand 5G roll-out coverage and capacity. Outflows from financing activities increased by 38.4% to €13,430 million, as higher outflows arising from the repayment of borrowings, including the repayment of debt in relation to licenses and spectrum, notably in Italy, outweighed higher proceeds from the issue of long-term borrowings. Borrowings and cash position FY23 €m FY22 €m Reported change % Non-current borrowings (51,669) (58,131) Current borrowings (14,721) (11,961) Borrowings (66,390) (70,092) Cash and cash equivalents 11,705 7,496 Borrowings less cash and cash equivalents (54,685) (62,596) 12.6 Borrowings principally includes bonds of €44,116 million (FY22: €48,031 million), lease liabilities of €13,364 million (FY22: €12,539 million) and cash collateral liabilities €4,886 million (FY22: €2,914 million). The decrease in borrowings of €3,702 million was principally driven by repayments of bonds of €5,742 million, payment of Italy licenses and spectrum liabilities of €1,739 million and a decrease of €2,188 million resulting from the disposal of our controlling interest in Vantage Towers, partially offset by bonds issued of €3,577 million, an increase in collateral liabilities of €1,972 million and lease liabilities of €825 million. Liquidity is reviewed daily on at least a 12 month rolling basis. The Group maintains substantial cash and cash equivalents which at 31 March 2023 amounted to cash of €11.7 billion (FY22: €7.5 billion). Additionally, the Group maintains undrawn revolving credit facilities of €7.7 billion euro equivalent. The Group manages liquidity risk on non-current borrowings by maintaining a varied maturity profile. See note 21 ‘Borrowings’ and note 22 ‘Capital and financial risk management’ in the consolidated financial statements for more information on the funding position of the Group and note 28 ‘Commitments’ for disclosure of the minimum amounts the Group was committed to pay at 31 March 2023 and for the comparative period. 23 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Prior year operating results Our operating performance for the last financial year ended 31 March 2022 compared to the financial year ended 31 March 2021 can be found on pages 24 to 33 of our Annual Report on Form 20-F filed with the United States Securities and Exchange Commission on 16 June 2022. Acquisitions and disposals See note 27 ‘Acquisitions and disposals’ in the consolidated financial statements for details of acquisition and disposal transactions for the years ended 31 March 2023 and 31 March 2022. In the year ended 31 March 2021, the aggregate cash consideration in respect of purchases of subsidiaries, net of cash acquired, was €136 million. The aggregate cash consideration in respect of the disposal of subsidiaries, net of cash disposed, was €157 million. Other transactions with non-controlling shareholders in subsidiaries during the year ended 31 March 2021 primarily comprised the following: Vantage Towers IPO The Group completed an initial public offering of Vantage Towers AG, with the first day of trading on the Regulated Market of the Frankfurt Stock Exchange being 18 March 2021. The offer consisted solely of a secondary sell-down of existing shares held by Vodafone GmbH. Cash consideration of €2,000 million was received in the year ended 31 March 2021. A further €217 million was received in April 2021, following completion of the market stabilisation period described in the Vantage Towers prospectus. Vodafone Towers Greece On 25 March 2021, the Group exercised its option to purchase the remaining 38% of Vantage Towers Greece for cash consideration of €288 million. Section 219 SEC filings of interest Vodafone Group Plc (‘Vodafone’) does not have any subsidiaries, other equity investments, assets, facilities or employees located in Iran, and Vodafone has made no capital investment in Iran. To the best of its knowledge, no U.S. persons, including any U.S. affiliates of Vodafone, are involved in the activities described below. Except as specified below, to the best of Vodafone’s knowledge, neither Vodafone, its subsidiaries, nor its affiliates have engaged in any conduct needing to be disclosed under Section 13(r) of the Securities Exchange Act of 1934. Vodafone has wholesale roaming and interconnect arrangements (including voice and data) with mobile and fixed line operators in Iran. Vodafone has, or has had, relationships with telecommunications operators in Iran in connection with such roaming and interconnect arrangements, some of which it believes are or may be government-controlled entities. Approximate gross revenue and costs attributable to the roaming and interconnect arrangements were €996,520 and €1,307,480, respectively, for the financial year ended 31 March 2023. During the financial year ended 31 March 2023, Vodafone provided telecommunications services to four Iranian national embassies and two consular officials located globally and three Iranian majority-government-owned or controlled entities in Germany. The approximate gross revenue attributable to these relationships during the financial year was €14,830. During the financial year ended 31 March 2023, Vodafone Global Network Limited (VGN) continued to be a member of a consortium made up of the Telecommunication Infrastructure Company of Iran (‘TIC’) (an entity controlled by the government of Iran), Rostelecom and Omantel, that has built a high-speed cable network from a landing point in Oman to Germany. Each member of the consortium is responsible for funding, building and maintaining its section of the cable, with VGN owning and being responsible for the segment from the Ukrainian border with Russia to Frankfurt, Germany. No consortium transactions or purchase of capacity took place during the financial year ended 31 March 2023 for which Vodafone was due any revenues. Netting arrangements are in place for the settlement of any such transactions which arise. Vodafone, through one of its subsidiaries, also makes insignificant payments to Iran in order to register and renew certain domain names and certain trademarks, and to protect its brand globally. Payments are made by the Dr Laghaee Law Firm in Tehran to The Domain Registry at the Institute for Studies in Theoretical Physics Mathematics organisation, which is the domain name registry and therefore the ultimate beneficiary. The costs of the registration and renewal of the domain names for the financial year ended 31 March 2023, including the professional fees associated therewith, were approximately €4,461 paid via the law firm Al Tamimi & Company. Vodafone continues to maintain Iranian trademarks in Iran. No fees were due to the Iranian trademarks office during the financial year ended 31 March 2023. Our financial performance (continued) 24 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
Share buybacks In March 2022, Vodafone started the first of two irrevocable and non-discretionary share buyback programmes, announced on 9 March 2022 and 16 November 2022 (the ‘programmes’), The sole purpose of the programmes was to reduce the issued share capital of Vodafone to offset the increase in the issued share capital as a result of the maturing of the second tranche of the mandatory convertible bond (‘MCB’) in March 2022. In order to satisfy the second tranche of the MCB, a total of 1,518.6 million shares were reissued from treasury shares in March 2022 at a conversion price of £1.326. This reflected the conversion price at issue (£1.3505) adjusted for the pound sterling equivalent of aggregate dividends paid in August 2019, February 2020, August 2020, February 2021, August 2021 and February 2022. The programmes completed on 15 March 2023. Details of the shares purchased under the programmes, including those purchased under irrevocable instructions, are shown below. Date of share purchase Number of shares purchased1 000s Average price paid per share inclusive of transaction costs Pence Total number of shares purchased under publicly announced share buyback programmes2 000s Maximum number of shares that may yet be purchased under the programmes3,4 000s March 2022 (from 17 March) 66,820 126.91 66,820 953,699 April 2022 115,416 128.71 182,236 838,283 May 2022 127,565 123.84 309,801 710,718 June 2022 121,490 127.04 431,291 589,228 July 2022 127,565 127.99 558,856 461,663 August 2022 133,639 120.66 692,495 328,024 September 2022 127,565 109.16 820,060 200,459 October 2022 127,565 101.08 947,625 72,894 November 2022 133,639 99.57 1,081,264 437,366 December 2022 121,461 87.00 1,202,725 315,905 January 2023 127,594 91.23 1,330,319 188,311 February 2023 121,487 97.49 1,451,806 66,824 March 2023 (to 15 March) 66,824 99.13 1,518,630 – Total5 1,518,630 110.51 1,518,630 – Notes: 1. The nominal value of shares purchased is 2021/22 US cents each. 2. No shares were purchased outside the publicly announced share buyback programmes. 3. In accordance with shareholder authority granted at the 2021 and 2022 Annual General Meetings. 4. The total shares repurchased under each programme were 1,014,444,506 shares completed on 15 November 2022 and 504,185,187 shares completed on 15 March 2023. 5. The total number of shares purchased represented 5.6% of our issued share capital, excluding treasury shares, at 15 June 2023. This year’s report contains the Strategic Report on pages 1 to 59, which includes an analysis of our performance and position, a review of the business during the year, and outlines the principal risks and uncertainties we face. The Strategic Report was approved by the Board and signed on its behalf by the Group Chief Executive and Chief Financial Officer. /s/ Margherita Della Valle Margherita Della Valle Group Chief Executive and Chief Financial Officer 21 June 2023 Dividends The Board is recommending total dividends per share of 9.0 eurocents for the year. This includes a final dividend of 4.5 eurocents which compares to 4.5 eurocents in the prior year. 25 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Our purpose pillars Below we have set out the main elements through which our approach to ESG is delivered. Our strategy helps to deliver our targets across three purpose pillars: Digital Society, Inclusion for All, and Planet, and ensures Vodafone acts responsibly and ethically, wherever we operate. Our social contract represents the partnership we wish to develop with governments, policy makers and civil society. We are also committed to supporting the delivery of the UN Sustainable Development Goals (‘SDGs’). Essential to our approach is transparency and measurement Social contract: Activation and acceleration of our purpose initiatives Read more on pages 29 to 30 Read more on pages 40 to 43 Read more on pages 47 to 49 Read more on pages 30 to 34 Inclusion for All Ensuring everyone has access to the benefits of a digital society. Access for all Finding new ways to roll out our network to rural locations in our markets. Propositions for equality Providing relevant products and services to address societal challenges such as gender equality and financial inclusion. Workplace equality Developing a diverse and inclusive global workforce that reflects the customers and societies we serve. Planet Reducing our environmental impact and helping society decarbonise. Climate change Working to reduce our environmental impact to reach net zero emissions across our full value chain by 2040. Carbon enablement Helping our customers reduce their own carbon emissions by 350 million tonnes by 2030. E-waste Driving action to reduce device waste and progressing against our target to reuse, resell or recycle 100% of our network waste. Digital Society Connecting people and things and digitalising critical sectors. Digitalising business Providing products and services to support business, particularly SMEs. Digitalising agriculture Supporting the digitalisation of agriculture with specific products and services. Digitalising healthcare Using our products, services and technology to support the digitalisation of healthcare. Read more on pages 35 to 38 Protecting data Customers trust us with their data and maintaining this trust is critical. Data privacy We respect the privacy preferences of our customers and help improve society through the responsible use of data. Cyber security As a provider of critical national infrastructure and connectivity that is relied upon by millions of customers, we prioritise cyber and information security across everything that we do. Protecting people Health and safety Creating a safe working environment for everyone working for and on behalf of Vodafone. Mobiles, masts and health Operating our networks within national regulations. Human rights Contributing to the protection and promotion of human rights and freedoms. Responsible supply chain Managing relationships with our direct suppliers, and evaluating their commitments to diversity, inclusion and the environment. Business integrity We are committed to ensuring that our business operates ethically, lawfully and with integrity wherever we operate. Tax and economic contribution As a major investor, taxpayer and employer, we make a significant contribution to the economies of the countries in which we operate. Anti-bribery, corruption and fraud We have a policy of zero tolerance towards bribery, corruption and fraud. Our policy provides guidance on what constitutes a bribe and prohibits giving or receiving any excessive or improper gifts and hospitality. Click or scan to learn more about how we help improve digital inclusion: investors.vodafone.com/videos Click or scan to learn more about our approach to cyber security: investors.vodafone.com/videos Click or scan to learn more about our net zero goal: investors.vodafone.com/videos Click or scan to learn more about our human rights approach: investors.vodafone.com/videos Click or scan to learn more about our approach to data privacy: investors.vodafone.com/videos Click or scan to learn more about our approach to tax: investors.vodafone.com/videos Our approach is underpinned by responsible business practices Read more on pages 44 to 47 Our approach to ESG We connect for a better future Purpose, sustainability and responsible business Our approach to ESG (Environmental, Social and Governance topics) is an integral part of our purpose and strategy to enable an inclusive and sustainable digital society. 26 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
ESG governance structure The Executive Committee has overall accountability to the Board for our sustainable business strategy and regularly reviews progress. Submissions to the ESG Committee are reviewed by the Purpose and Reputation Steering Committee that manages reputation risks and polices. We continue to include ESG measures in the long-term incentive plan for our senior leaders and each purpose pillar has an executive-level sponsor. Read more about remuneration on pages 85 to 106 The ESG Committee supports the Board in providing oversight of our ESG programme, sustainability and responsible business practices, as well as our contribution to the societies we operate in under our social contract. 60.7m million customers connected to our financial inclusion services We aim to connect 75 million customers to mobile money and financial inclusion services by 31 March 2026. 5.2m V-Hub unique visitors We aim to support seven million visitors to digitalise using V-Hub by 2025. 34% women in management and senior leadership roles We aim to have 40% women in management roles by 2030. 5.0m registered farmers on our agricultural platforms We are supporting small and large commercial farms to digitalise. 100% renewable electricity in European markets Target achieved from July 2021, four years ahead of our original 2025 target. 52% reduction in Scope 1 and 2 emissions since 2020 By 2030 we aim to achieve net zero emissions from our operations (Scope 1 and 2) and halve our Scope 3 emissions. Materiality We conducted a materiality assessment in 2021 to identify the material and emerging ESG issues relevant to our business, our stakeholders and the societies in which we operate. In FY23, we consider our material issues to be unchanged from the 2021 materiality assessment. Our Task Force on Climate-related Disclosures (‘TCFD’) report outlines an updated list of climate-related risks (reflecting the potential impact of society and environment on Vodafone). Click to read our materiality matrix: vodafone.com/sustainable-business Reporting frameworks Vodafone reports against a number of reporting frameworks to help stakeholders understand our sustainable business performance. Our Global Reporting Initiative (‘GRI’) 2023 disclosure is included in our 2023 ESG Addendum. Click to download our ESG Addendum: investors.vodafone.com/esgaddendum Disclosures prepared in accordance with the Task Force on Climate-related Disclosures (‘TCFD’) framework. Click to read our TCFD report: investors.vodafone.com/tcfd Disclosures prepared in accordance with the Sustainability Accounting Standards Board’s (‘SASB’) Standards. Click to read our SASB disclosures: investors.vodafone.com/sasb Vodafone supports the Ten Principles of the United Nations Global Compact (‘UNGC’). Click to read our 2023 UNGC Communication on Progress: unglobalcompact.org Vodafone participates in the CDP’s annual climate change questionnaire. Click to read our CDP response: vodafone.com/sustainability-reports GRI TCFD SASB UNGC CDP Read more on pages 35 to 36 Read more on page 32 Read more on page 33 Read more on page 29 Read more on page 29 Read more on pages 35 to 36 Our targets and achievements Over the last year we have made progress against many of our key purpose targets. Our Board-level ESG Committee provides oversight of our ESG programme and each of the purpose pillars has an executive-level sponsor. Read more about the Board’s oversight of material ESG topics on page 83 to 84 Read more about the governance underpinning our responsible business practices on pages 40 to 49 ESG Committee Executive Committee Board Digital Society Executive-level sponsor: Vinod Kumar 1 Inclusion for All Executive-level sponsor: Serpil Timuray Planet Executive-level sponsor: Joakim Reiter Purpose and Reputation Steering Committee Audit and Risk Committee 1. Vinod Kumar, CEO of Vodafone Business, will retire from Vodafone effective 31 December 2023. 27 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Our purpose Purpose Our purpose is to connect for a better future by using technology to improve lives and enable inclusive and sustainable digital societies. We achieve this by focusing on three pillars: Digital Society, Inclusion for All and Planet, which serve as the framework for everything we do at Vodafone. Our purpose is underpinned by our responsible business practices: protecting data, protecting people, and business integrity. Our three purpose pillars are focused on integrating environmental and social considerations into our business strategy and priorities. Our ESG Committee embeds this approach as a formal committee of the Board. This strives to provide strategic support for our ESG ambitions and ensures effective oversight of our ESG strategy. Read more on our ESG Committee on pages 83 to 84 The role of business in society continues to evolve to address the socioeconomic impacts triggered by the COVID-19 pandemic and humanitarian and refugee crises caused by natural catastrophes and conflicts, as well as the ongoing climate crisis. Recognising this, we continue to evolve our social contract, which represents the partnership we wish to develop with governments, policy makers and civil society. We use the social contract to understand what matters the most to the societies and economies we operate in, and activate our purpose around these. This year we transitioned our social contract to address societal challenges created by the significant rise in the costs of living affecting many of our customers, as well as providing humanitarian support relating to the ongoing war in Ukraine, and the earthquakes in Turkey and surrounding areas in February 2023. How we are keeping everyone connected through the cost of living crisis In today’s world, connectivity is an essential service; it underpins access to information, provision of services, and the ability to connect personally and professionally. However, as the cost of living increases, affording to stay connected is increasingly difficult for both individuals and businesses. To support our customers through this financially challenging time we offer low cost and social tariffs in all our markets. Whenever we can, we use government criteria for eligibility to ensure we implement social tariffs as fairly as possible, and we do not apply price increases to social tariffs at any point during the term of the contract. We also support customers who find themselves in financial difficulties fairly and appropriately, ensuring they get the right help, support, and services for their needs, including revised payment plans or other options. We seek to monitor the impact of our help for customers struggling to pay, listen to their feedback and improve our services as a result. We continue to work with governments, consult with consumer organisations and partner with providers to help raise awareness of the support available. Everyone connected Since its launch in June 2021, our everyone.connected programme has delivered £108 million in social value across the UK. Following the launch of our social broadband tariff Vodafone Essential Broadband, we are the first UK network operator to have both a social mobile and a fixed tariff alongside a social virtual network offering (VOXI for Now). We also reached the milestone of donating connectivity to one million people, and we have since committed to helping a further three million people cross the digital divide (the gap between those with access to the internet and those without it) by the end of 2025. For small and medium-sized enterprises (‘SMEs’) and small-office home-office (‘SOHO’) customers, we provide our V-Hub service, a digital advisory service offering free information, inspiration and insight to increase understanding, and benefits of digital tools and technology. V-Hub users also get access to an adviser who provides one-to-one tailored support and guidance. Read more about V-Hub on page 29 As global energy costs rise, we are managing our energy as efficiently as possible while providing solutions to help businesses and society save energy too. Read more about our approach to carbon enablement on page 37 Vodafone’s humanitarian response in support of Turkey and surrounding areas The earthquakes in Turkey and surrounding areas created an unprecedented humanitarian crisis impacting more than 13 million people in the region across an area of 110,000 square kilometres. Around 32,000 people lost their lives, including 27 Vodafone employees. The Vodafone Turkey Search & Rescue Team, formed voluntarily by Vodafone employees, worked tirelessly to assist the emergency response in the disaster zone and support customers, communities and society in the aftermath of the quakes. Restoring connectivity Vodafone has more than 3.7 million customers across 10 cities in the affected area in Turkey connected through more than 3,000 mobile base stations, most of which were destroyed or damaged during the earthquakes. We focused on restoring and keeping our networks operational, ensuring that our customers and their communities could be connected. Vodafone Turkey immediately mobilised engineering teams and over 1,000 power generators to work 24 hours a day to restore connectivity. As a result, Vodafone Turkey had restored almost 98% of its network coverage in the affected areas just days after the disaster. Supporting our employees Vodafone offered financial support for our employees and agents living in the affected areas. In some cases, our offices were repurposed in order to provide shelter and accommodation for people and their families. Keeping our customers connected In Turkey, Vodafone provided free calls, data, and texts to people in the impacted areas of the country. Many of our markets also provided their customers with free calls and texts into Turkey and Syria, or free roaming services when visiting the region so that people could keep connected with their families and friends. Charitable and fundraising activities The humanitarian part of our initial comprehensive response is coordinated under Vodafone Foundation in line with our policy for all charitable activities to be led and funnelled by our Foundations. A donation fund was established across Vodafone and its Foundation that has to date raised more than €3 million to be used for rescue and recovery initiatives in Turkey. Click to read more about our response to the humanitarian crisis: vodafone.com/news 28 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
Digital Society We believe in the power of connectivity and digital services to strengthen the resilience of societies. Our priority is to provide fixed networks to ensure that data flows at speed to connect people and communities. In doing so, we can contribute to societies becoming more inclusive, under our Inclusion for All pillar, and to decarbonising our economies, under our Planet pillar. As recent years have demonstrated, connectivity and digital services can be a lifeline, allowing people to work, learn, access healthcare, stay in touch with friends and family and more. Currently, we have over 300 million customers connected to our next-generation mobile and fixed networks. Informed by our social contract, we continue to focus the Digital Society pillar towards digitalising critical sectors. We have specifically focused on small and medium-sized enterprises (‘SMEs’), agriculture and health. We have also continued to invest in our network infrastructure and coverage. Aligned with our Planet pillar, our products and services enable customers to become more efficient and, in many cases, reduce their emissions, through the use of such products and services. Read more about our approach to carbon enablement on page 37 Digitalising business Goal: Support seven million visitors to digitalise using V-Hub by 2025 SMEs are the lifeblood of our economy, providing opportunities for socio-economic participation, as well as social mobility for women, young people, and ethnic minorities. Through Vodafone Business, we provide products and services which are specifically tailored for SME and small-office home-office (‘SOHO’) businesses, helping guide them through technology choices and improving their digital readiness. These segments also represent a significant commercial opportunity for Vodafone. We estimate that the total addressable market for SME and SOHO customers in our markets is €55 billion and we currently have almost seven million SME and SOHO customers. To better support SMEs across Europe and Africa, Vodafone Business launched V-Hub, its digital advice service. This free service provides access to online information and connects SMEs with experts who provide one-to-one advice and support on digitally transforming businesses in an ever-changing digital world. As of March 2023, V-Hub has been used by over 5.2 million unique visitors across 14 markets. Since its launch, the service has achieved a strong return rate of 25% on average, increasing to almost 30% in Q3 and 35% in Q4 of FY23. We have set an ambition to reach seven million visitors and help them digitalise their businesses through V-Hub by 2025. Over the next year, we plan to enhance the V-Hub offering, creating a signed-in environment to provide a more personal, secure, and efficient experience for SMEs. Once signed in, users will receive tailored content and a bespoke action plan for their business’ digitalisation. In turn, we will start to build a V-Hub membership of engaged SMEs on their digitalisation journey, creating reliable and relevant connections for peer-to-peer advice, business networking and local-to-global community. Beyond customers, we are working to support SMEs in our supply chain. We also offer optional supply chain financing which allows suppliers to leverage Vodafone’s credit position to access cheaper funding and liquidity. This has no impact on Vodafone’s commercially negotiated payment terms. In South Africa, Vodacom Financial Services has built a supplier portal called VodaTrade, where small suppliers can connect with bigger business partners. Currently, there are 127 SMEs registered on the VodaTrade portal, which provides them access to procurement opportunities with seven large retailers. Notes: 1. Food and Agriculture Organisation, 2017. 2. Eurostat, 2021. Digitalising agriculture According to the UN’s Food and Agriculture Organisation, by 2050, the world will need to produce 50% more food than current levels.1 There is also a growing need to address the environmental impact of agriculture. In Europe, agriculture accounts for 10% of total greenhouse gas emissions and over 40% of land use,2 in many cases leading to habitat loss and deforestation. A total of five million farmers are registered on our various agriculture platforms that manage and monitor resource consumption, which in turn can reduce their carbon footprint, protect biodiversity, and increase yields. Vodafone is working with partners across the value chain to introduce new applications and Internet of Things (‘IoT’) platforms to provide farmers with digital information and the opportunity to optimise resources. Through Vodacom’s subsidiary, Mezzanine, we have developed MyFarmWeb, an agricultural digital platform, to support commercial farms. Last year we expanded into Italy, Germany, Spain, Ireland and the UK and now almost 9,300 commercial farms use MyFarmWeb. The cloud-based web platform allows producers to capture key agriculture data (physical, chemical, microbial soil analysis, pest presence, and satellite and sensor) into a system that aggregates and calibrates the information to assist decision-making. This equips decision-makers with information to increase yields whilst not damaging the environment – all of which could enable carbon savings along the production process. MyFarmWebalso provides farmers with a platform that aims to allow them to use more productive and sustainable farming practices, which is becoming increasingly important to comply with the changing legislation to qualify for subsidy funding in the future. Mezzanine is also helping to digitalise agriculture in Sub-Saharan Africa through its eVuna and dairy management platforms amongst others. This enables smallholder farmers to access agricultural inputs, financial products, logistics suppliers, markets, and knowledge. Mezzanine’s eVoucher platform enables the distribution of digital vouchers for farming subsidies with over 4.6 million registered farmers and enables the distribution of disaster relief grants. We continue to support the Department of Agriculture, Land Reform and Rural Development and the Solidarity Fund in South Africa, as well as the Kenyan Ministry of Agriculture, Land and Fisheries and the Kenyan Ministry of Agriculture and Livestock. These programmes have issued over two million vouchers to smallholder farmers. Women and youth were focus demographics for some of the programmes, with the Solidarity Fund reporting that more than 69% of the beneficiaries were women. Over nine million vouchers have been issued through various disaster relief programmes. Click to read more about digitalising agriculture at vodafone.com/agriculture-digitalisation 29 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Purpose (continued) Inclusion for All Our Inclusion for All strategy seeks to ensure no one is left behind. It focuses on digital skills and improving equitable access to connectivity, and on offering products and services that facilitate access to education, healthcare, and finance for marginalised and vulnerable groups. At Vodafone, we aim to develop a diverse and inclusive global workforce that reflects the customers and societies we serve. In 2022, as the global population hit eight billion, 5.3 billion of us were online, while 2.7 billion remained offline, representing a stubborn digital divide. In Africa, 60% of the population is unconnected, and in the world’s least developed countries the figure rises to 64%. Globally, the growth rate for internet usage was 6.1%,1 which is well below growth requirements to achieve the UN’s target of universal and meaningful connectivity by the end of 2023. This target is further threatened by high inflation and the cost of living crisis, which has eroded real incomes and pushed millions more into poverty in Europe and Africa. The internet is a vital part of everyday life, enabling us to communicate, and access vital services. There are strong economic gains from increased usage of mobile broadband. Research from the World Bank shows that mobile broadband can reduce the number of households in extreme poverty by 4 percentage points, mainly due to increases in labour force participation among women.2 Furthermore, expanding broadband penetration across Africa by 10% could boost GDP per capita by 2.5%.2 Access for all and propositions for equality pillars within our overall Inclusion for All strategy focus on overcoming the five key barriers that create the digital divide; coverage, access to devices, affordability, digital skills, and creating relevant products and services for those most at risk of being unconnected, such as the elderly and women. In FY23, we made significant progress across these areas and continued to build on the partnerships that are crucial to achieving meaningful connectivity for all. Access for all Increasing coverage Connecting everyone to digital services, particularly across Africa, is a significant challenge. Fixed and mobile services are increasing globally, with mobile broadband networks reaching 95% of the world’s population, but coverage in Africa lags behind at 83%.3 Expanding coverage to rural networks remains a focus for us, with 25% of the EU population and 58% of the population in Sub-Saharan Africa living in rural areas.4 Expansion of rural networks can often be more challenging and have a lower return on investment due to lower population densities. New approaches, partnerships, and a blend of technologies help us to overcome some of these barriers and deliver more universal coverage. One example of such new approaches is our partnership with AST & Science LLC, which seeks to develop the first space-based mobile network designed to connect directly to consumers’ 4G and 5G devices without the need for specialised hardware. This year, AST successfully launched and deployed its first communications array and announced in April 2023 the first connection from space to a mobile with no specialised equipment. The space-based network has the potential to enable even those in the hardest-to-reach areas to connect to the internet, ultimately reaching an estimated 1.6 billion people across 49 countries. This will include a number of least-developed countries where coverage is currently the lowest. Notes: 1. ITU, 2022. 2. World Bank, 2022. 3. GSMA, 2022. 4. World Bank 2021. Notes: 1. Eurostat, 2021. 2. Vodafone Institute for Society Communications, 2021. Digitalising healthcare Recent years have seen several global events impact the mental and physical health of citizens, as well as causing major disruptions to health systems around the world. Hospital waiting lists are extending, some healthcare professionals are leaving the industry and delays in diagnoses are resulting in patients presenting significantly advanced medical issues.1 As part of the EU’s focus on building resilient health systems, over €40 billion has been set aside in EU Recovery and Resilience Plans to support health investments and reforms.1 A recent survey by the Vodafone Institute revealed that 92% of European citizens think the health sector needs urgent support.2 We aim to use our technology to play an active role and make the delivery of healthcare services more efficient and cost-effective for providers, and more inclusive for patients. Examples of how we are making a difference include: – Working together with University Clinic Düsseldorf, we have built Europe’s first 5G medical campus using Vodafone’s RedBox, a 5G network-in-a-box that provides multi-building low latency coverage. The 5G network enables new ways of working for medical professionals – for example, using 3D mixed reality to rehearse neurology and cardiology procedures before operating. – Vodafone will implement optical fibre backbone and internet access for thousands of hospitals and health centres across seven regions in Italy. This is part of the Italian government’s National Recovery and Resilience Plan as it looks to improve connectivity infrastructure across the healthcare system. – In Spain, we have helped Cruz Roja Español (Red Cross) by building a telecare solution that supports vulnerable people, including the elderly, victims of gender violence and people with disabilities. – We are among the largest global IoT connectivity providers, enabling over 25 million connected medical devices on our IoT network, and have been recognised by Gartner as a leader in Managed IoT Connectivity Services for nine consecutive years. – Health is the foundation upon which resilient, productive and fair societies are built and, as we look to the future, we are investing in our new Tech Innovation Centre in Dresden. Working with leading universities, hospitals, and health tech companies, we’re advancing the use of 5G, 6G and artificial intelligence (‘AI’) in digital healthcare. 30 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
In line with the recommendation to increase device financing options, Vodacom launched the Easy2Own payment plan during the year. Through the initiative, customers in South Africa can purchase a smartphone with a one-off deposit and complete the payment through affordable monthly payments over the following 11 months. Customers who settle their monthly instalment on time receive a 1GB data bundle, valid for seven days each month. Safaricom also runs a device-financing programme, Lipa Mdogo Mdogo (Pay Little by Little). The partnership between Safaricom and Google offers a flexible payment plan with an 95% reduction in the upfront cost of 500Ksh and an affordable daily fee of 20Ksh. Since the launch in 2020, over 935,000 4G devices have been connected through the Lipa Mdogo Mdogo initiative. Propositions for equality Addressing the digital gender gap The majority of those still unconnected are women. The digital gender gap continues to grow in many LDCs, creating a specific need to support digital gender equality. In 2022, 69% of men were using the internet, compared with 63% of women globally. In the LDCs, just 30% of women used the internet in 2022, compared to 92% in high-income countries.2 Research indicates that women who have access to mobile internet via a smartphone have 9%higher levels of wellbeing than women who have access via a basic or feature phone. However, across low and middle-income countries women are 18% less likely than men to own a smartphone and 16% lesslikely to use mobile internet.3 Focusing on creating relevant services for women is a key strategy to bring more women online, as an example, in many African markets gaining access to quality health information and antenatal care can be very difficult. Information delivered by mobile can help to bridge some of the gaps in crucial, basic information. Responding to this, our Mum & Baby service continues to grow, giving customers free access to maternal, neonatal and child health information in South Africa. The service has over 2.3 million registered users in South Africa, helping parents and caregivers to take positive actions to improve their children’s health. In DRC, Vodacom’s Je Suis Cap, or I am Capable programme, aims to empower women living with disabilities through digital inclusion. In phase 1 of this programme, 500 women received free financial education training by M-Pesa and Visa to support their entrepreneurship projects within their respective communities. Each participant received an M-Pesa kit, a smartphone, an equipped point of sale and financing of $275 to get their venture started. Vodafone Egypt launched the Egyptian Gender Alliance in partnership with the Ministry of Communications and Information Technology, National Council for Women, UN Women, and other private sector partners. The Alliance promotes the social and economic empowerment of women in Egypt through digital inclusion and skills training to increase their employability and economic participation. In order to drive digital inclusion to the hardest-to-connect communities, this year we made good progress on our goal to increase 4G population coverage to an additional 80 million people in Sub-Saharan Africa (as part of the UN Partner2Connect digital coalition since March 2022). This targeted intervention includes four of the least-developed counties (‘LDCs’): Mozambique, Tanzania, Lesotho and the Democratic Republic of the Congo (‘DRC’), and will help to close a particular gap in internet usage between urban communities and rural communities. This year we have added 4G technology to an additional 1,429 sites across these countries, giving access to millions more people in Sub-Saharan Africa. In Europe, as well as in Africa, we are also increasing investment in rural areas, helping farmers and other rural small businesses overcome barriers to connectivity and digitisation. FY23 network deployment 4G sites deployed (000s) 4G population coverage Europe 107.4 99% Africa 31.1 70% Group 164.3 85% Access to devices and affordability The digital divide goes beyond just coverage but also relates to usage of networks already deployed. We know that the vast majority of those offline live within mobile broadband coverage. There are many barriers preventing the use of mobile broadband, including lack of awareness, digital skills, and the prohibitive upfront cost of smartphones. Given that smartphones are increasingly the main gateway to digital services, lowering the cost of devices is key to addressing the digital divide. Smartphone ownership is lowest in emerging markets, with only 45% of adults owning a smartphone compared to 76% in advanced economies. Women are also less likely to own a smartphone than men. Affordability is one of the key challenges to smartphone adoption as it can cost over 70% of the average monthly income in vulnerable countries.1 We recognise that we cannot solve this issue by ourselves, and in 2022 we co-chaired the ITU/UNESCO Broadband Commission for Sustainable Development working group on smartphone access. This group represents the first multi-stakeholder group looking to address smartphone access challenges. The working group drew upon the expertise of a cross-sectoral body of commissioners and experts. The outcome report, ‘Strategies towards universal smartphone access’ identified key interventions to make smartphones accessible to all, including; increasing device financing options; introducing fair taxation and lower import duties; and improving distribution to remote areas. In addition, the working group recommended investigating further the use of device subsidies and pre-owned smartphones which was endorsed by the UN Broadband Commission at its annual meeting during the UN General Assembly in September 2022. Click to read the UN General Assembly Report: broadbandcommission.org Notes: 1. Alliance for Affordable Internet (A4AI), 2021. 2. ITU, 2022. 3. GSMA, 2022. 31 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Purpose (continued) Enabling quality education and digital skills Even before the COVID-19 crisis, an estimated 258 million children around the world were not in school, and more than half were not meeting the minimum expected standards in reading and mathematics.1 Within six months of the pandemic, at least a third of schoolchildren began to drop behind due to lack of access to remote learning,2 and we’re still seeing the effects of this today. The COVID-19 pandemic and its after-effects have highlighted the need to adapt teaching to the new realities of increasingly digital societies. We have continued to grow our Connected Education programme, providing access to our ready-made classroom which includes connectivity, devices, and collaboration software for students and teachers across the world. To date, around 1.7 million students and teachers in 5,500 educational institutions across 13 countries have benefited from this digital learning solution, helping to bridge the digital divide. In South Africa, the Vodacom e-School solution allows learners to access curriculm-aligned content and educators to access learning materials on their smartphones with no data charges. We currently have 1.4 million users on the platform. Research published by Vodafone Foundation in October 2022 revealed that while 92% of teachers surveyed believe that schools have a responsibility to promote digital literacy, a fifth feel that they themselves are not competent enough in the use of digital technologies.3 Vodafone Foundation is working to address this by equipping teachers with the digital skills and confidence to apply innovative methodologies in the classroom. Guided by the EU Digital Competence framework, our ‘SkillsUpload Jr’ solution provides digital skills training for teachers and students, tools for use in schools and access to teaching materials and lesson plans via online platforms. More than 2.3 million teachers and students have received training to date through SkillsUpload Jr. Vodafone Foundation also continues to scale Instant Network Schools, its partnership with United Nations High Commissioner for Refugees (‘UNHCR’), which provides education for refugee students and communities in the DRC, Egypt, Kenya, Tanzania and Mozambique. Since 2013, this partnership has worked with communities and education ministries to transform classrooms into multimedia learning hubs, complete with internet connectivity, sustainable solar power, classroom kits including tablets, laptops, projectors and speakers, localised digital content, and teacher training. In 2023, 84 Instant Network Schools were deployed, benefiting 247,000 students. By 2025, Vodafone Foundation aims to deploy 300 Instant Network Schools to support 500,000 refugee and host-community students and 10,000 teachers. Evolving platforms for financial inclusion Goal: To connect 75 million people and their families to mobile money services by 31 March 2026. Two billion people remain unbanked globally.1 Digital services are key to helping people access safe, secure financial services and without the ability to transfer money, people are limited in their ability to save, access loans, start a business and even be paid. Together with Safaricom, we developed the first mobile money platform, M-Pesa, which provides financial services to millions of people who have a mobile phone but limited access to a bank account. It is also widely used to manage business transactions and to pay salaries, pensions, agricultural subsidies and government grants, and reduces the associated risks of robbery and corruption in a cash-based society. In addition to its core service, we have developed a number of additional financial and business services to increase financial independence and health. For example, M-Koba provides a platform for groups (such as village savings groups) to safely store and manage funds. With security features like multiple approvals and group notifications of any transactions, the platform enables greater transparency and a more efficient way to save as a community. Small enterprises can also increase their efficiency by using Lipa Mdogo Mdogo and M-Pesa, allowing business owners to pay wages and suppliers, as well as withdraw funds to their M-Pesa mobile money wallet and other online bank accounts or to an agent. This year we published new research in partnership with the United Nations Development Programme (‘UNDP’) that showed mobile financial services can have a direct, positive impact on developing economies with a one percentage point higher GDP than in markets with no mobile money platforms. Based on previous World Bank research on the relationship between economic growth and reductions in the number of people living in poverty, this higher GDP per capita implies that countries with successful mobile money adoption could reduce poverty by around 2.6% as a result of these services. Furthermore, the research indicated that mobile money services resulted in 1.7 million fewer people living in poverty. Approximately 26 billion transactions were made in the year using M-Pesa, the equivalent of almost three million per hour on average through a network of more than 670,000 agents. As of the end of March 2023, 60.7 million customers were using Vodafone’s financial inclusion services, which includes 2.2 million in South Africa. Financial inclusion Financial inclusion customers (million) % of service revenue % penetration of base South Africa 2.2 – – Tanzania 8.2 34% 58% Mozambique 5.8 29% 73% Egypt 5.4 4% 14% Democratic Republic of the Congo 4.1 17% 34% Lesotho 1.1 14% 97% Vodacom Group 26.8 – – Ghana1 1.8 7% 63% Vodafone Group 28.6 – – Kenya (Safaricom) 32.1 40% 93% Note: 1. Ghana figures are detailed separately for the 11 months prior to its disposal on 28 February 2023. Notes: 1. UNESCO, 2018 2. UNICEF, 2020 3. 21st Century Teachers, Global Report, 2022 32 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
We continued to engage with colleagues and raise awareness of why inclusion matters. During the year, we held global sessions focused on gender and ethnic diversity, the LGBT+ community, disabilities, and wellbeing. These received over 10,000 viewers across all webinars. Gender diversity Goal: We aim to have 40% women in management roles by 2030 We have reached 34% which is on track towards our ambition. We continue to drive progress through programmes, policies and leadership incentives. 2023 2022 Women on the Board 54% 50% Women on the Executive Committee 33% 29% Women in senior leadership positions1 33% 31% Women in management and senior leadership roles2 34% 32% Women as a percentage of external hires 40% 42% Women as a percentage of graduates 44% 53% Women as a percentage of employees3 40% 40% Notes: 1. Percentage of senior women in our top 162 positions includes the Executive Committee and Senior Leadership Team (FY22: 191). 2. Percentage of women in our 6,328 management and leadership roles (FY22: 6,727). 3. Percentage of women based on 93,095 total employees (FY22: 94,789). The total number of employees represents the position on 31 March 2023 and does not include pro-rated headcount. The total excludes employees from Ghana, Hungary, Vantage Towers and those that left the Company on 31 March 2023. Further information on how employees are defined and calculated can be found in the ESG Addendum. We work to ensure there is gender diversity when resourcing for senior leadership roles and our leadership team is accountable for maintaining diversity and inclusion in their teams. Women in management targets are also embedded in our long-term incentive plans. Our progress and achievements to increase diversity have been recognised externally as Vodafone has been included in the Bloomberg Gender Equality Index for the fifth consecutive year. Across youth programmes, 50% of hires were women. We have also now connected with over 11,000 girls via the digital skills programme ‘Code Like a Girl’ since 2017. The introduction of digital sessions, and the increase in demand from markets affected by the pandemic, has enabled us to connect with more girls this year. Domestic violence Our global domestic violence policy sets out comprehensive workplace resources, support, security and other measures for employees at risk of experiencing, and recovering from, domestic violence and abuse. We continue to provide support in this area through global training, ‘Apps Against Abuse’, and a publicly available toolkit to support survivors. ‘Apps Against Abuse’ includes the Bright Sky app, which is a safe, easy-to-use app and website which provide support and information on how to respond to domestic abuse. The Vodafone Foundation’s portfolio of ‘Apps Against Abuse’ has connected 2.4 million people to information, advice and support (FY22: 1.6 million people). Menopause Our external research identified that 62% of women with symptoms of menopause found it impacted their work. We made a global ambition to support women experiencing menopause, including the release of a global toolkit which is freely available to download externally and menopause e-learning on common symptoms and the impact on work. Workplace equality As part of our purpose, we aim to make the world more connected, inclusive and sustainable, where everyone can truly be themselves and belong. We bring the human touch to our technology to create a better digital future for all, starting with our people. Our people We are developing a diverse and inclusive global workforce that reflects the customers and societies we serve. Key information 2023 2022 Average number of employees1 96,117 95,008 Average number of contractors1 8,227 8,784 Number of markets where we operate 17 19 Employee nationalities 146 134 Employees and contractors across the Group2 Europe3 45% 47% Africa3 18% 18% _VOIS and shared operations4 33% 32% Other5 3% 3% Employee experience Employee engagement index6 76 73 Alignment to purpose6 88% 93% Voluntary turnover rate7 12% 14% Involuntary turnover rate7 4% 3% Notes: 1. All headcount figures exclude non-controlled operations such as those in the Netherlands, Kenya, Australia and India. Further information on how headcount is defined and calculated can be found in the ESG Addendum. Calculation considers pro-rated headcount. 2. May not cast due to rounding. 3. Europe reflects employees based in: Germany, UK, Italy, Spain; Portugal, Ireland, Greece, Romania, Czech Republic, Albania, and Hungary (until disposal in January 2023). Africa reflects employees based in: Vodacom Group, including Egypt and Ghana (until disposal in February 2023). 4. _VOIS and shared operations constitute a significant number of employees. The figures presented above include _VOIS headcount across our footprint (Albania, Egypt, Hungary, India, Portugal, Romania and Spain), as well as headcount in our global Group entities. 5. Other includes employees based in Turkey and Vantage Towers. 6. More detail on the employee survey is included on page 13. The employee engagement index is based on a weighted average index of responses to three questions: satisfaction working at Vodafone; experiencing positive emotions at work; and recommending us as an employer. Alignment to purpose is based on a single question that asks whether employees feel their daily work contributes significantly to Vodafone’s purpose. Employee engagement index and purpose alignments scores reflect September 2022 data. 7. The voluntary turnover rate includes retirements and death-in-service. Further information on how this has been calculated is included in the ESG Addendum. Diversity and inclusion Our focus is on removing barriers to workplace equality. This year we have accelerated momentum on gender equality, sustained focus on LGBT+, built on our foundations on race and ethnicity, and taken actions to ensure the accessibility of our physical and digital workplace. An expanded focus on practising inclusion supports our ambition to create a global workforce that reflects the customers, communities and colleagues we serve, and the wider societies in which we operate. We believe that embedding inclusion to enable diversity is critical to achieving these goals in a sustainable way. Embedding inclusion Multiple employee networks operate across Vodafone including Women, VodAbility, LGBT+ Friends, Carers and Multicultural Inclusion. We actively support them and provide network chairs and sponsors with specific leadership development focused on effectively setting up and running an employee network. Global Withstander training has been rolled out in eleven languages to upskill employees on how to become active allies by challenging negative and inappropriate behaviours when they witness them. Over 43,000 employees completed the Withstander training during the year. 33 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Purpose (continued) Maternity and parental leave Our global maternity and parental leave policies are available across markets, providing 16 weeks of fully paid leave with a phased return to work over six months, where parents work the equivalent of four days and are paid for five days. This policy is open to all employees regardless of gender, sexual orientation, length of service, and whether their partner is having a baby, or they are welcoming a child through surrogacy or adoption. This year, over 2,300 women have utilised our maternity leave. Over 1,600 men have taken parental leave, with 72% of the latter taking four or more weeks of leave. Of those who identify as LGBT+, 2% have taken parental leave. LGBT+ Alongside gender equality, we retained our focus on supporting the LGBT+ community with over 3,600 allies and active support from senior executive sponsors. We continue to be recognised as a Top Global Employer by Stonewall. The Vodafone Foundation launched the Zoteria app in the UK to help the LGBT+ community and the wider public to come together and tackle the issue of LGBT+ hate crime. Race, ethnicity, and cultural heritage (‘REACH’) We continue greater workplace inclusion through allyship and anti-racism. REACH fluency training was first completed by all members of the Executive Committee, as well as their direct reports, to increase confidence and capability to talk about race. Since then, the training has been adapted to local context and been rolled out in our European markets. The plan also includes reciprocal mentoring, external cross-company mentoring and McKinsey Black Leadership Academy participation. In 2020, we set ethnic diversity targets at leadership level, which are summarised below. Ethnic category 31 March 2023 Long-term ambition Population Global Ethnically diverse background 18% 2030: 25% Global Senior Leadership Team (140 positions) UK Black, Asian, other diverse ethnicities 16% 2025: 20% UK-based senior leadership and management (1,323 positions) UK Black 2% 2025: 4% South Africa Ethnically diverse background 67% 2030: 75% South African- based senior leadership and management (411 positions) Read more about Board and executive management diversity on pages 75 to 76 Physical and digital accessibility in the workplace We have joined the ‘Valuable 500’ – a group of 500 companies committed to disability inclusion in business. The commitments are focused on creating a physically and digitally accessible work environment. During the year, we upskilled our people through continued promotion and education accessibility features available within Microsoft 365. We also have accessibility guidelines and these are reinforced by workshops and training for developers. Assessments were also conducted to improve the accessibility of our own products. We also partnered with Coventry University to understand the skills needed for effective remote working, with research taking place in the UK, Ireland, Czech Republic, and Turkey. Colleagues from Vodafone took part in a new ‘Remote4All’ research project that shed light on the remote working experiences of people with disabilities and neurodivergent people, including communications, accessibility and technology use, work-life balance, social isolation, and manager support. Leadership diversity To better understand representation across the organisation and inform our diversity and inclusion programmes, we launched ‘#CountMeIn’, an initiative which encourages employees to voluntarily self-declare their diversity demographics. These include race, ethnicity, disability, sexual orientation, gender identity and caring responsibilities, in line with local privacy and legal requirements1 . Our senior leadership positions have the highest self-declaration rate at 85% and this enables transparency of our diversity at senior leadership. Gender identity1 Sexual orientation2 Ethnic diversity3 Disability4 Representation in senior leadership positions 1% 4% 18% 5% Notes: 1. Self-identification of gender identity, including trans and non-binary identities, excluding cisgender. 2. Lesbian, gay, bisexual, and other sexual orientations, excluding heterosexual. 3. Asian, Arab, Black/African/Caribbean, Latinx, mixed ethnic groups, and ‘other’ identities. 4. Self-identification of disability, including long-term conditions, visible and non-visible disabilities. Policies, initiatives and targets Our commitment to diversity and inclusion is reflected across our global policies and principles, such as the Code of Conduct and our Fair Pay principles. Read more about these Fair Pay principles on page 100 Click to read more about Fair Pay at Vodafone: vodafone.com/fair-pay The achievement of our diversity targets is dependent on the attraction, engagement and retention of diverse talent and skills. To support this, we have inclusive initiatives such as: hybrid and flexible working, parental leave, a mental health toolkit, learning and development programmes, allyship training and menopause support, reinforced by the work of employee networks and executive sponsors. During the year, we refreshed our training for hiring managers and recruiters to support an inclusive candidate experience from application to offer stage. Programmes are designed to help employees through all life stages and challenge societal norms to create an environment where everyone can contribute at their best and thrive. Read more about diverse talent, future ready skills and personalised employee experience on pages 13 to 15 Note: 1. Markets not asking LGBT+ questions include: DRC, Tanzania, Turkey, and Egypt; the latter also does not ask ethnicity questions. #CountMeIn is not live in Mozambique. 34 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
Planet Reducing our environmental impact and helping to decarbonise society is a part of Vodafone’s purpose. Digital technology is key to saving energy, using natural resources more efficiently and creating a more circular economy to reduce e-waste. This year, the need for a green digital transition became ever more urgent, as the global climate crisis continued unabated while the energy crisis deepened. Our Planet strategy centres around three key areas: net zero, enablement and circularity. We have set ourselves near- and long-term goals across these strategic topics to focus our efforts where we believe we can have the greatest impact. This year, we continued to progress towards our Planet goals. We also continued to integrate environmental considerations into the way we operate as a business by strengthening governance, data and systems, risk management, and engagement with our people – all important foundations for accelerating future action. Our Planet goals 2025 – Purchase 100% of the electricity we use globally from renewable sources1 – Reuse, resell or recycle 100% of our network waste 2030 – Net zero emissions from our operations and from energy we purchase and use (Scope 1 & 2)1,2, 3 – Halve emissions from our value chain (Scope 3)1,2 – Enable 350 million tonnes of carbon emissions to be avoided through green digital solutions4 2040 – Net zero emissions across our full value chain (Scope 1, 2 & 3)2,3 Notes: 1. Near-term targets are SBTi approved (since 2020) and are subject to re-validation as part of the current process to seek SBTi approval of our long-term (2040) net zero target. Our current SBTi approved near-term target includes reducing Scope 1 and 2 emissions by 95% by 2030. 2. Against a baseline of financial year ending 31 March 2020. 3. This year we amended our terminology from ‘fully abate’ to ‘net zero’, to align with definitions in the SBTi’s Corporate Net Zero Standard. Going forward, we will seek to align our 2030 and 2040 net zero targets with the SBTi definition of net zero, which means that we will reduce our carbon emissions in absolute terms by 90-95% by our target year (in line with a science-based 1.5 degree pathway), and neutralise any residual emissions through high quality carbon offsetting. 4. Cumulatively from 2020 to 2030, based on carbon emissions avoided by our business customers through the use of our green digital solutions, products and services. Our performance1 Unit 2023 2022 Total Scope 1 and Scope 2 emissions (market-based) Million tonnes of CO2e 0.97 1.08 Scope 1 emissions Million tonnes of CO2e 0.28 0.28 Scope 2 emissions (market-based)2 Million tonnes of CO2e 0.69 0.80 Scope 2 emissions (location-based) Million tonnes of CO2e 2.08 1.99 Scope 3 emissions Million tonnes of CO2e 10.1 9.60 Investments Million tonnes of CO2e 3.03 3.04 Purchased goods and services and capital goods Million tonnes of CO2e 2.73 3.90 Use of sold products Million tonnes of CO2e 1.10 1.73 Fuel and energy-related activities Million tonnes of CO2e 0.78 0.81 All other scope 3 categories Million tonnes of CO2e 2.46 0.12 Renewable electricity Percentage of purchased electricity from renewable sources % 81 77 Percentage of purchased electricity from renewable sources in Europe % 100 96 GHG emissions intensity Scope 1 and 2 (market-based) GHG emissions per EURm revenue Tonnes of CO2e 21.2 23.6 Vodafone energy use Gigawatt hours 6,274 6,125 Mobile and fixed access network and technology centres Gigawatt hours/% 5,847/93 5,694/93 Offices and retail stores Gigawatt hours/% 241/4 249/4 Transport Gigawatt hours/% 185/3 181/3 Notes: 1. Data is calculated using local market actual or estimated data sources from invoices, purchasing requisitions, direct data measurement and estimations. Carbon emissions calculated in line with GHG Protocol standards. Scope 2 market-based emissions are reported using the market-based methodology as in effect as at the date of this report. For full methodology see our ESG Addendum 2023. 2. Scope 2 emissions for FY22 have been restated following the correction or inclusion of data points in line with our reporting methodology. In addition, emissions for the UK have been restated to apply the correct emissions factor. Click to download our ESG Addendum which includes detailed methodologies for ESG data, including GHG emissions and energy data: investors.vodafone.com/esgaddendum Read more about our TCFD disclosures on pages 58 to 59 Net Zero Goal: To reduce our own carbon emissions to net zero (Scope 1 & 2) by 2030 and across the full value chain (Scope 3) by 2040. We recognise the urgent need to address the global climate crisis. The information and communication sector (‘ICT’) is responsible for an estimated 1.8% to 2.8% of global greenhouse gas emissions.1 As we move towards an ever more digital society, with increasing volumes of internet use and mobile data traffic, we are committed to driving down our emissions in absolute terms as well as shifting our energy mix to renewable sources, in line with what is required by science to avoid negative impacts of climate change. In 2020 we set a SBTi approved 2030 Science-Based Target in line with reductions required to keep warming to 1.5°C, becoming the first major telecoms operator to follow the emission reduction pathway developed by SBTi for the ICT sector (setting out specific emissions reduction trajectories for mobile, fixed and data centres). This year, we progressed on our journey to net zero and developed business plans to implement the actions required to reduce our carbon emissions in line with this pathway. As a next step, we are developing our first climate transition plan outlining our key areas for action, collaboration, and advocacy to achieve our goal of net zero emissions across our full value chain by 2040. We are in the process of having our long-term (2040) net zero targets approved under the SBTi Corporate Net Zero Standard.2 Our FY23 performance: Our total Scope 1 and market-based method Scope 2 GHG emissions decreased by 10% to 0.97 million tonnes of CO2e (carbon dioxide equivalent), equivalent to a 52% reduction from our FY20 baseline. Our Scope 3 emissions increased by 5% to 10.1 million tonnes of CO2e, representing a 7% increase from our FY20 baseline, mainly due to improvements in our Scope 3 data and calculation methodology. Notes: 1. Freitag, C. et al. (2021), The real climate and transformative impact of ICT: A critique of estimates, trends, and regulations. 2. Continued validation of our long-term net zero target from SBTi, has faced delays due to a high volume of companies currently seeking target validation. Subject to the validation process by the SBTi, our long term net zero target may change as part of the validation process. 35 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Purpose (continued) Net zero operations (Scope 1 & 2 emissions) Our plans to reduce emissions from our operations (Scope 1 & 2 emissions) focus on driving energy efficiency across our mobile and fixed line networks, phasing out the use of fossil fuels and increasing renewable sources of energy for both our stationary equipment and vehicle fleet. Driving energy efficiency Despite the ever-growing use of data and expansion of our networks, this year our total Scope 1 and 2 GHG emissions decreased by 10% to 0.97 million tonnes of CO2e (carbon dioxide equivalent), due to our ongoing focus on energy efficiency and an increase in the proportion of renewable electricity purchased. We are committed to continually improving the energy efficiency of our mobile access network, fixed access networks and technology centres, which together account for 93% of our total global energy consumption. We are rolling out new generation network technology, software solutions to optimise energy use, and rationalising our property portfolio. During FY23, we invested €57 million of capital expenditure in energy efficiency and on-site renewable projects which has led to annual savings of 50 GWh. We continue to implement the ISO 50001 Energy Management Standard globally across our operations. To date, 12 operating companies and Safaricom have been awarded certification. This is underpinned by our energy data management and analytics system which collects and stores data feeds from our electricity suppliers and from smart meters. This system is now live across 12 markets in Europe, with smart meters installed at over 47,000 sites. Click to read more about our energy efficiency initiatives: vodafone.com Switching to renewables To achieve our goal of net zero carbon emissions from our operations by 2030, we are phasing out the use of fossil fuels such as diesel for stationary generators, and petrol or diesel for vehicle fuel. Our goal is to purchase 100% of the grid electricity we use globally from renewable sources by 2025. Since July 2021, 100% of the grid electricity used in our European network (FY22: 96%), and 81% globally (FY22: 77%), has been purchased from renewable sources. Click to read more about our self-powered mobile masts: vodafone.com/self-powered-mobile-masts On-site renewable generation This year, we continued to install and deploy new solar photovoltaic (‘PV’) systems at sites in the UK, Egypt and South Africa. This increased our annual on-site generation of renewable electricity to 14 GWh p.a. We are also collaborating with partners to develop new innovative solutions for renewable energy generation, with ongoing projects to install 750 micro wind turbines in Germany, trialling self-powered masts in the UK, and developing proof-of-concept mini-grid solutions in Mozambique and the DRC. Purchasing renewable electricity This was the first full year in which we matched all of the grid electricity we used in Europe with renewable sources1 (having been 100% renewable in Europe from July 2021). This is significantly ahead of our target to power 100% of our global operations with renewable energy by 2025 and a major milestone towards our net zero goal. We currently have purchase power agreements (‘PPAs’) in six countries having signed new PPAs in Germany, Greece, Italy, Portugal, Spain and the UK this year, through which we purchased 6% of our renewable grid electricity globally. When fully operational, these will generate approximately 40% or our grid electricity demand in Europe by 2025. PPAs provide us with more economic certainty against current volatile wholesale electricity prices. The remainder of our electricity consumption is matched with renewable energy certificates (‘RECs’). We are committed to making the same change to 100% renewable in Africa and 20% of our electricity supply in South Africa was matched with renewable energy certificates during FY23. We are also helping to build a more accessible market for renewables across some of our African markets. This year, we established a new agreement with the Egyptian government and embarked on discussions with the national energy provider in South Africa, Eskom, which aim to help us source more renewable power from the electricity grid. This year, we spent €1.2 billion on purchasing electricity. This is a year-on-year increase of approximately 40%, largely driven by exceptional and extreme wholesale market conditions. Click to read more about our renewable electricity purchasing strategy: vodafone.com/renewables Reducing diesel use We used 72.5 million litres of diesel in FY23 (a 3% increase from FY22: 70.3 million litres) mainly to fuel generators at sites that are off-grid or have unreliable grid electricity supply. We are seeking alternatives to diesel, including connecting off-grid sites to the grid where possible, fuel cell technology trials (including our successful ammonia fuel cell trial in Romania, launched in 2022) and small-scale on-site renewables. Electrification of our fleet This year, we progressed with increasing the proportion of electric vehicles (‘EVs’) in our company fleet (with EVs making up 49% of the fleet compared to 39% in FY22). We launched a global fleet dashboard to monitor carbon emissions from company vehicles, and progressed plans to phase out purchasing of new vehicles with internal combustion engines in our European operations. Net zero value chain (Scope 3 emissions) As part of our Science-Based Target, our goal is to halve the carbon emissions from our full value chain by 2030 and bring them to net zero by 2040 (against a 2020 baseline). This includes our indirect (Scope 3) emissions, which we estimate to be 10.1 million tonnes CO2e in FY23 (5% higher than the previous year), forming 91% of our total carbon emissions. Reliable and standardised data from across an entire value chain is fundamental to driving down Scope 3 emissions. Today, however, most companies are relying heavily on estimates and assumptions for their Scope 3 emissions. This year we have invested in enhanced ESG data capabilities to improve the quality of our data, including Scope 3 emissions. The increase in Scope 3 emissions this year is primarily due to improvements in the completeness and accuracy of data, and mapping to corresponding factors used for calculating emissions from our upstream supply chain (mainly purchased goods and services, and capital goods). In part, these calculations use a spend-based methodology, so this trend was also driven by an increase in procurement spend (of approximately €1 billion), which was further amplified by currency exchange rate fluctuations over the last year. To help us move away from a spend-based methodology in the future, in FY23 we completed a project to engage our top four suppliers of network equipment (representing 38% of Vodafone’s total network category spend), to improve sharing of product carbon footprint data and identify opportunities to reduce embedded carbon. We are committed to improving Scope 3 data quality to enable us to better understand the emissions from our value chain, and ultimately to manage them more effectively. Click or scan to watch a video summarising how we plan to reach net zero by 2040: investors.vodafone.com/videos Note: 1. We purchase renewable electricity in accordance with RE100’s Technical Criteria. 36 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
FY23 carbon enablement overview GHG estimated emission saving (million tonnes CO2e)1 2023 2022 Smart meters 3.7 1.6 Fleet management2 3.3 10.7 EV charging 0.9 – Healthcare 3.1 2.6 Other (e.g. cloud/remote working/connected solar) 0.5 0.6 Other transport solutions and logistics solutions 13.4 – Total 24.9 15.6 Cumulative total (FY20 to FY23) 46.7 – 2023 2022 Total GHG enablement saving (million tonnes of CO2e) 24.9 15.6 Scope 1 and Scope 2 emissions (million tonnes of CO2e) 0.97 1.08 Enablement ratio 25.7 14.5 Notes: 1. Enablement figures are estimates. The detailed methodology is available in our ESG Addendum. 2. Significant year-on-year reduction due to recategorisation of connected car into other transport solutions for FY23. In FY23, we rolled out a carbon enablement toolkit to support product teams to understand how the solutions they develop result in carbon emission reductions. The toolkit helps them to identify solutions in our existing product portfolio that have carbon enablement potential. As a result, we have been able to measure and report the carbon enablement impact of an expanded number of Vodafone Business products and services this year, such as remote working solutions, and IoT-enabled solutions for mobility and remote monitoring. In addition, we hosted a customer summit at this year’s London Green Tech Festival, and published our ‘Fit for the Future’ insights report, to actively engage our Vodafone Business customers to think about our collective role in the green digital transition. We continue to advocate for the green digital transition at forums such as the European Green Digital Coalition (‘EGDC’), GSMA and the European Roundtable of Industrialists, and by speaking at conferences and events, including at COP27. Circularity Goal: To reuse, resell or recycle 100% of our network waste by 2025 The UN estimates that as much as 50 million tonnes of electronic and electrical waste (e-waste) are produced globally each year, with only 20% formally recycled. As the use of technology expands and develops, we are playing our part to address the growing global e-waste problem. Our circular economy (or ‘circularity’) initiatives look at two main types of e-waste: network equipment (such as radio equipment used to run our fixed and mobile access networks) and the electronic devices that we sell to customers (such as smartphones). We reused, resold or recycled 96% of network waste in FY23, in comparison from our FY22 performance of 95% (which has been restated from 99% to include parts of our network operations and data centres that were previously omitted). Our asset marketplace contributed to this and we also launched and began to scale up a number of new circular devices initiatives. Our initiatives aim to raise consumer awareness of sustainable purchasing, extend the lifetime of devices, and improve collection rates for used devices so that they stay within a circular system. We continued to embed climate-related topics, among other ESG topics into our procurement process. In March 2023, we launched a new environmentally-linked supply chain financing programme, to provide financial incentives for our suppliers to disclose carbon data to the CDP and take action to improve their score over time. In partnership with CDP, we developed a framework consisting of 12 criteria from the CDP survey and sharing their performance score with their supply chain financing provider, our suppliers have the opportunity to receive preferential financing rates based on their ranking. The programme has initially been launched for suppliers using Citibank’s scheme, with a view to expanding to other supply chain financing providers over the next year. CDP plans to make a template of the framework available to other telecommunication industry players, to drive industry-wide adoption of the model. This work is a contributing factor in our being recognised by the CDP as a Supplier Engagement Leader in 2022. Activities to influence our downstream emissions include improving consumer awareness of the climate impact of smartphones, through marketing of Eco Rating scores that aim to provide consistent and accurate information on the environmental impact of products. Read more about Eco Rating on page 38 We are also engaging with our partners and supporting them on their decarbonisation journey. In June 2022, we held a summit for our global Vodafone sustainable business teams to share knowledge in which several of our joint venture partners participated. A review of emissions from our investments identified the need to update the calculation methodology and correct the underlying energy data for our joint ventures and associates, Vodafone Idea (which was determined to be incomplete in prior year emissions calculations). We have restated the Scope 3 category 15 data for all previous years to reflect these improvements to data and methodology. Industry collaboration and standardised reporting will be crucial to driving down Scope 3 emissions, and we will continue to work with partners and suppliers to increase the reliability of data. Click to read more about Scope 3 emissions in our ESG Addendum: investors.vodafone.com/esgaddendum Enablement Goal: To enable our business customers reduce their own carbon emissions by 350 million tonnes between 2020 and 2030 One of our most important contributions to protecting our planet is enabling our customers (which include consumers, businesses, and governments) to reduce their environmental footprint using our digital technologies and services. We have begun this journey with a focus on using green digital solutions to tackle climate change and help decarbonise society. This year, we estimate we have enabled an avoidance of 24.9 million tonnes CO2e, which is almost 26 times the emissions generated from our own operations (Scope 1 and 2). Since setting our carbon enablement target in 2020, we estimate we have enabled our customers to save a cumulative 47.6 million tonnes of carbon emissions. Our IoT service offer, including logistics, fleet management and smart metering, has been pivotal in delivering these savings so far. We estimate that 52% of our 162.3 million IoT connections directly enabled customers to reduce their emissions in the past year. 37 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Purpose (continued) We are also encouraging our customers to consider purchasing second-life devices. Purchasing a refurbished smartphone saves around 50kg of CO2e – making its contribution to climate change 87% lower than that of the equivalent, newly manufactured smartphone – and removes the need to extract 76.9 kg of raw materials.2 We are offering customers high quality and competitively priced refurbished smartphone ranges in UK, Turkey, and Vodacom. We also continue to collect, refurbish and reuse fixed line equipment (such as broadband routers) multiple times, to drive significant associated environmental and cost savings. Improving consumer awareness of product sustainability We are continuing our engagement in the Eco Rating labelling scheme jointly with other major European operators. Eco Rating is a pan-industry initiative to help consumers identify and compare the sustainability of mobile phones on the market, whilst also encouraging suppliers to reduce the environmental impact of devices. In November 2022, Eco Rating expanded to reach 35 countries, supported by 22 manufacturers and a total of eight operators. Since its introduction, the rating has contributed to improving the environmental performance of mobile phones on the market, illustrated by the increase of the average Eco Rating score from 74 to 76 out of a maximum 100 since it was launched 18 months ago. We now operate this initiative in 12 markets with over 200 handsets assessed and available to our customers. Reducing virgin plastic use We continue to reduce use of single-use plastics, replacing them with lower-impact alternatives across all our retail stores, offices and logistics operations in collaboration with our logistics providers. To reduce virgin plastic use in our SIM cards, we have continued to roll out half-size SIMs made from recycled plastics. Where plastic must be used, we aim to use recycled plastic. For example, our new Ultrahub broadband router uses 95% recycled plastic in the product housing and the packaging is made using 85% recycled materials, both of which are 100% recyclable at the end of life. Partnerships and collaboration Reducing our environmental impact is a challenge that we know we cannot achieve alone. Partnerships are essential to addressing the climate and nature crises. We work with a number of valued partners at a global and local level to deliver initiatives across our Planet strategy. Together with Vodafone Egypt and Vodacom, we re-affirmed our commitment to climate leadership through our headline sponsorship of the COP27 UN Climate Change Conference in Sharm El-Sheikh in November 2022. Our presence demonstrated our resolve for businesses to take an active role in bringing about the green digital transition. In addition to providing essential digital connectivity services for the conference and its delegates, we showcased examples of innovative green digital solutions that can help reduce global carbon emissions and optimise resource efficiency – including our agricultural platforms such as MyFarmWeb and Connected Farmer solutions, which are supporting over five million farmers across Africa to minimise agricultural inputs like vehicle fuel, water and chemicals, whilst maintaining crop yields. Read more about our agricultural programmes on page 29 Engaging our people on Planet We are engaging people across Vodafone to think about environmental impacts and risks as part of their own business decision-making. Our ‘#RedLovesGreen’ community is the largest employee group outside of core business topics on Workplace (Vodafone’s internal collaborative communication platform) with more than 12,000 colleagues who are engaged on environmental subjects. In FY23 we launched a series of webinars called ‘Green Talks’, covering topics including climate change science and net zero. FY23 network waste management (excluding hazardous waste) 2023 2022 Reused 2% 3% Recycled 94% 92% Disposed1 4% 5% Total network waste (metric tonnes) 8,920 5,979 Note: 1. Disposed network waste includes used network equipment that is disposed to landfill or incineration. Circularity of network waste Our global policy on waste management prioritises the reuse, resale or recycling of surplus or obsolete network equipment. We aim to keep resources in use for as long as possible, maximising the value employed, and then recover and reuse materials responsibly. We implement resource efficiency and waste disposal management programmes in all our markets to minimise environmental impacts from network waste and IT equipment waste. This year, we generated an estimated 12,400 tonnes of network waste equipment (including hazardous waste). We reused and recycled 96% of the non-hazardous waste; partly via our asset marketplace, which was established in 2020 to resell and repurpose excess or decommissioned network equipment, thus extending its useful life. This year, we estimate that we have saved €14.7 million of spend and avoided over 1,143 tonnes of CO2e through our asset marketplace platform. This is in addition to the reuse of equipment within individual operating companies. For example, Vodafone UK avoided an estimated 1,466 tonnes of CO2e in FY23 by reusing equipment. Circularity of devices Across our industry small IT equipment and electronics, such as devices, constitute around 9% of total e-waste generated.1 We aim to reduce our impact in this area by implementing circular devices initiatives in conjunction with our partners and other operators. Improving collection rates for used devices Our previous metric that measured weight of products collected via product take-back schemes is not reported in FY23 as we have retired it in place of our newly formed partnership with WWF. In November 2022 we launched our ‘1 million phones for the planet’ campaign, to raise consumer awareness of e-waste and incentivise our customers to bring back their used devices for trade-in, donation or recycling. WWF’s ability to deliver impactful environment projects, combined with Vodafone’s digital technology capabilities and our reach across a global consumer audience, will enable us to show how technology can help overcome sustainability and conservation challenges. This year we also we launched a new e-waste compensation partnership in Germany. Our ‘One for One’ campaign promises that for every phone purchased directly from us, our partners at Closing the Loop will collect one for recycling from an African country that does not have safe recycling infrastructure or systems. This diverts e-waste from landfill or incineration, whilst also enabling valuable materials such as gold and palladium to be recovered from otherwise hazardous waste. Our partnership with Closing the Loop aims to enable the safe collection and recycling of over one million scrap devices per year. Extending the lifetime of devices In partnership with Recommerce, our ‘Trade in’ campaign encourages customers to extend the lifetime of their device by trading it in to be refurbished and resold. Our digital trade-in platform, now live in four European markets, offers customers a guaranteed price to make the trade-in customer journey convenient, cost-effective and attractive. Notes: 1. GSMA, Strategy paper for circular economy: Mobile Devices, 2022 2. ADEME (2022) Assessment of the environmental impact of a set of refurbished products 38 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
We contribute to the Sustainable Development Goals The UN Sustainable Development Goals (‘SDGs’) provide a blueprint for human progress and a clear call to action for businesses to contribute to a better future. The confluence of the climate crisis and the macro economic downturn as a result of the COVID-19 pandemic has exacerbated existing challenges for society, particularly in less developed countries, and led to a reversal of progress on a number of SDGs. For example, we have seen the first rise in extreme poverty in a generation, with around 120 million people pushed back into extreme poverty1 . Furthermore, the UN estimates that COVID-19 has wiped out 20 years of educational gains, with secondary school completion rates at just 53%, and this is predicted to decline.1 Digital technology will be essential in reducing these impacts and helping progress towards delivering the SDGs. We are committed to playing our role and believe we can increase the speed and scale of delivery across a wide number of SDGs through leveraging our technology and services, and through partnering with others. Simultaneously, we can drive significant growth. For example, our M-Pesa mobile money platform, designed to enable financial inclusion, has 58.5 million active customers (including Ghana). Excluding Safaricom, M-Pesa revenue in FY23 was €444 million. Note: 1. UN, 2022. We enable inclusive and sustainable digital societies At Vodafone we are accelerating connectivity and digitalisation in order to meet the SDGs by 2030. We have identified two priority SDGs (SDG 9 build resilient infrastructure and innovation, and SDG 17 strengthen the means of implementation and partnerships for sustainable development) that will enable us and our partners to find lasting solutions to social, economic and environmental challenges and thereby accelerate the delivery of other SDGs. Read more about our partnerships on page 30 to 32 and 37 to 38 The SDGs will only be achieved in partnership, and we continue to pioneer new models of cooperation between business, governments, international organisations, and civil society to deliver process and scale. For example, we were a founding member of the International Telecommunication Union’s Partner2Connect coalition to connect the unconnected. We also initiated and co-led the first multi-stakeholder working group on smartphone access and affordability under the auspices of the Broadband Commission for Sustainable Development. This year, our partnership in Ethiopia with Safaricom, Sumitomo Corporation and CDC Group launched a new network in Ethiopia combining our innovation and technology to help solve customer and societal challenges in the region. We have also increased our partnerships to address the climate crisis. This includes our partnership with the Egyptian government and United Nations Framework Convention on Climate Change in COP27 in Egypt in November 2022, and our global partnership with WWF that will support our goals to reduce carbon emissions to net zero by 2040 and encourage a more circular economy for mobile phones. Through connectivity infrastructure, digital innovations and partnerships, we deliver impact across many of the SDGs. Examples of our projects and initiatives supporting the SDGs over the last year Read more about our contribution to the SDGs: vodafone.com/sdgs No poverty Our everyone.connected campaign in the UK has delivered £108 million in social value helping customers deal with the increased level of poverty due to cost of living increases. Read more about our approach to the cost of living: vodafone.com Sustainable cities and communities Our IoT solutions help local governments take control of their energy usage across multiple sites, improve air quality via monitors and optimise waste collection. Read more about our digital solutions to build sustainable cities: vodafone.com 12 of our European markets have launched Eco Rating schemes to provide consistent, accurate information on the environmental impact of products, including smartphones. Read more about Eco Rating for mobile phones: vodafone.com/eco-rating Responsible consumption Good health and wellbeing Our partnership with Deloitte will provide new and effective ways for medical professionals to diagnose, treat, and support patients. Read more about our partnership: vodafone.com/business/industry/health Quality education Our Connected Education programme has benefited over 1.7 million students and teachers in 5,500 education institutions across 13 countries. Click or scan to watch how Vodafone is providing digital learning through connected education. Gender equality We continue to design digital solutions to empower women such as Mum & Baby with over 2.3 million customers subscribing to our free maternal health programme. Read more about our Mum & Baby programme on page 31. Affordable and clean energy Since July 2021 our European network is powered 100% by electricity purchased from renewable sources and are forming new agreements to enable us to purchase renewable power in Africa. We are also partnering with others to innovate in renewable technologies for remote mobile sites. Read more about our Planet purpose pillar on pages 35-38. Read more about self-powered mobile masts providing sustainable solutions for rural communities: vodafone.com/self-powered-mobile-masts 39 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
To underpin the delivery of our purpose, we ensure that we operate in a responsible way. Acting ethically, lawfully and with integrity is critical to our long-term success. This section of the Strategic Report covers the elements underpinning our responsible business strategy. On this page, we explain how we embed an understanding of our Code of Conduct throughout the Group and provide our people and suppliers with access to a whistleblowing hotline (‘Speak Up’). This section also summarises our approach to protecting data and people, as well as how we ensure we behave ethically, lawfully and with integrity wherever we operate. Code of Conduct Our Code of Conduct sets out what we expect from every single person working for Vodafone, regardless of location. We also expect our suppliers and business partners to uphold the same standards as set out in our Code of Ethical Purchasing. Click here to read our Code of Conduct: vodafone.com/code-of-conduct Our Doing What’s Right (‘DWR’) training and communication programme is key to embedding a shared understanding of the Code of Conduct across Vodafone. Throughout the year, the Doing What’s Right communication programme promoted different areas of our Code of Conduct, including Speak Up, anti-bribery, privacy, competition law, security, and health and safety. In FY23, we launched a campaign to reinforce how line managers have a critical responsibility to be a role model for ethics and integrity at Vodafone and create a culture where we take decisions that foster trust and admiration. Training in our Code of Conduct is mandatory for all employees and is included in our standard induction process for new employees. This year we have upgraded our DWR learning strategy moving from training every two years to a learning intervention every year. Of those employees assigned Doing What’s Right training, 93% had completed the training as at 31 March 2023. From FY24 onwards, end-of-year reward linked to an individual’s impact will be underpinned by minimum standards, including completion of our Doing What’s Right training, that reinforce our commitment to building an ethical culture. We also strive to make compliance easy for our employees and continue to improve our digital Code of Conduct and Global Policy Portal, the internal platform where employees can find information about our policies and procedures. During FY23, 220,000 visits to these portals were logged which is an indicator that our employees are engaging with our policies. Our Code of Conduct is well understood throughout Vodafone. In our latest Spirit Beat employee survey, 95% of respondents agreed with the statement ‘Our team lives by the Code of Conduct’. Speak Up Everyone who works for or on behalf of Vodafone has a responsibility to report any behaviour at work that may be unlawful or criminal, or could amount to an abuse of our policies, systems or processes and therefore be a breach of our Code of Conduct. Employees are able to raise concerns with a line manager, with a colleague from human resources or through our anonymous confidential third-party hotline, Speak Up, which is accessible in local languages online or by telephone. We have a non-retaliation policy when a genuine concern has been reported. Everyone who raises a concern in good faith is treated fairly, with no negative consequences for their employment with Vodafone, regardless of the outcome of any subsequent investigation. Speak Up reports are confidentially investigated by local specialist teams, with a senior team in place to triage reports. Each grievance is monitored to verify that any corrective action plan or remediation has been conducted. Our Group Risk and Compliance Committee reviews the effectiveness of the Speak Up process and trends twice a year, and the Audit and Risk Committee receives an annual update, with additional ad hoc reviews also carried out where appropriate. Our employees trust our Speak Up process, as evidenced by our September 2022 Spirit Beat survey, with 85% of respondents agreeing that they believe appropriate action would be taken as a result of using the process. We also track the proportion of ‘named’ versus ‘anonymous’ reports as a higher number of named reports suggests higher levels of trust in the Speak Up process. During the year, 57% (FY22: 64%) of reports were ‘named’ and this was higher than available industry benchmarks. This year, 505 (FY22: 642) separate concerns were reported using Speak Up. Speak Up reports could relate to matters of unlawful behaviour or matters of integrity, such as bribery, fraud, price fixing, a conflict of interest, or a breach of data privacy. Reports could also relate to people issues such as discrimination, bullying or harassment, danger to the health and safety of employees or the public, or potential abuses of human rights. If we decide to proceed with an investigation, a qualified expert will investigate, keeping the person who raised the concern informed throughout the process. Where reports made to Speak Up require remedial action, this could include consequences at the individual level, or changes to internal processes and procedures. Speak Up is owned by the Chief Human Resources Officer and overseen by the Group Risk and Compliance Committee. In 2022, we undertook a review of the Speak Up process to check it against the UN Guiding Principles on Business and Human Rights requirements. Speak Up topics raised during the year Topic1 Speak Up reports Requiring remedial action People issues2 70% 35% Integrity 24% 51% Other 5% 41% Health and safety 1% 50% Notes: 1. There were no reports relating to modern slavery concerns reported during the period (FY22: zero reports). 2. Diversity & Inclusion topics accounted for 2% of the People issues reported during the year. Speak Up is also made available to our suppliers and is communicated through our Code of Ethical Purchasing. For suppliers that decide to maintain their own grievance mechanisms, we require that they inform us of any grievances raised relating to work done on behalf of Vodafone directly. Protecting data Millions of people communicate and share information over our networks, enabling them to connect, innovate and prosper. Customers trust us with their data and maintaining this trust is critical. Data privacy We believe that everyone has a right to privacy wherever they live in the world, and our commitment to our customers’ privacy goes beyond legal compliance. As a result, our privacy programme applies globally, irrespective of whether there are local data protection or privacy laws. Our privacy management policy is based on the European Union General Data Protection Regulation (‘GDPR’) and this is applied across Vodafone markets both inside and outside the European Economic Area. Our privacy management policy establishes a framework within which local data protection and privacy laws are respected and sets a baseline for those markets where there are no equivalent legal requirements. Responsible business Responsible business 40 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
Privacy risks As data volumes continue to grow and regulatory and customer scrutiny increases, it is important to be clear on the privacy risks we face, as well as how our policies and programmes can mitigate these risks. We categorise data privacy risk into three main areas: – Collection: collection of personal data without permissions or excessive collection of data; – Access & use: use of personal data for unauthorised purposes, excessive data retention or poor data quality; and – Sharing: unauthorised disclosure of personal data, including supplier non-compliance with the law or our own policies. To help us identify and manage evolving risks, we constantly evaluate our business strategy, new technologies, products and services, as well as government policies and regulation. Privacy principles Our privacy programme governs how we collect, use and manage our customers’ personal data to ensure we respect the confidentiality of their communications and any choices that they have made regarding the use of their data. Our privacy programme is based on the following principles: accountability; fairness and lawfulness; choice and access; security safeguards; privacy by design; openness and honesty; responsible data management; and balance. Click to read more about our privacy principles and how they guide the way our products are designed and built: vodafone.com/privacy Using customer data We want to enable our customers to get the most out of our products and services. To provide these services, we need to use our customers’ personal information. We aim to protect our customers’ data, use it for a stated and specific purpose, and we are always open about what customer data we collect, and why we collect it. Click to read more about uses of customer data: investors.vodafone.com/sasb Each local market publishes a Privacy Statement to provide clear, transparent and relevant information on how we collect and use personal data, what choices are available regarding its use and how customers can exercise their rights. Our product-specific privacy notices include details relating to a particular product. These statements and notices are available to customers online, in the MyVodafone app and in our retail stores. We provide our customers with access to their data through online and physical channels. These channels can be used also to request deletion of data that is no longer necessary, or for correction of outdated or incorrect data, or for data portability. Our customer privacy statements and other customer facing documents provide comprehensive information on how these rights can be exercised and how to raise complaints or contact the relevant data protection authority. Our frontline retail and customer support staff are trained to respond to customers’ requests. Our state-of-the-art, multi-channel permission management approach was deployed across our channels (MyVodafone app, website, call centres and retail stores) in 2018. This approach allows our customers to control how we use their data for marketing and other purposes at any time and the permissions are synchronised across our channels. For example, customers can: – Opt-in for processing of special categories of data; – Choose what data we collect through the MyVodafone app and how it is used; – Opt-out from marketing across different channels (call, SMS, notifications), or opt-in to the use of their communications metadata for marketing purposes or for receiving third-party marketing messages; and – Opt-out from the use of anonymised network and location data (‘Vodafone Analytics’). Click to read more about our privacy policies: vodafone.com/privacy We always seek to respect and protect the right to privacy, including our customers’ lawful rights to hold and express opinions and share information and ideas without interference. At the same time, as a licensed national operator, we are obliged to comply with lawful orders from national authorities and the judiciary, including law enforcement. Click or scan to watch our privacy experts summarise our approach to data privacy: investors.vodafone.com/videos Case study: Privacy-first digital advertising Following a trial of a new ‘TrustPid’ solution, we have formed a new joint venture with three other major European telecommunications operators. TrustPid is a technology for data protection-compliant digital marketing, allowing consumers to enjoy free content and the benefits of the open internet whilst maintaining control over their privacy. TrustPid requires express consent of the user to be activated and offers a centralised self-serve privacy portal enabling users to review and manage their consents across websites participating in the service at any time. Users can revoke their consents all at once or individually per website, as well as block the service. TrustPid works with secure, unique network-based digital tokens generated using the IP address of the user and multiple de-identification steps to break the ‘link-ability’ back to the users. The telecommunications providers are responsible for creating a pseudonymised network ID which is used by the TrustPid platform to generate the additional digital tokens. The telecommunications providers do not enhance the tokens with any customer or traffic data, nor is any other directly identifiable data, such as name or email address, shared or processed by the service in any other way. The digital tokens shared with advertisers and publishers are randomised, specific for each domain and have a limited lifespan of up to 90 days. These allow advertisers and publishers to provide users with a personalised experience on their websites, apps and services, without being able to trace them back to reveal the personal identity of the individuals, and always with the requirement that the user must have provided express prior consent for each individual site. These measures reduce the risk of uncontrolled cross-site tracking, data sharing and profiling across different partners – one of the big drawbacks for consumers in the way digital advertising works today. Transparency, control and data minimisation are key principles for TrustPid which seeks to provide a privacy first solution whereby only the minimum personal data for the service to work is processed and shared on a need-to-know basis. The European Commission has provided unconditional approval for the creation of the joint venture and the joint venture partners have now tested the platform with advertisers and publishers in Germany and Spain. All local data protection authorities were consulted before the trial was initiated. Following completion of the trial at the end of May 2023, the joint venture will outline its vision and strategy, including information about next steps and a commercial launch, which will be announced in due course by a new company called Utiq. Click to read more about Utiq: utiq.com 41 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Operating model We have an experienced team of privacy specialists dedicated to ensuring compliance with data protection laws and our policies in the countries where we operate. We apply a process-based approach to managing privacy risks across the data lifecycle and teams from across Vodafone ensure end-to-end coverage. Dedicated security teams ensure appropriate technical and organisational information security measures are applied to protect personal data against unauthorised access, disclosure, loss or use during transit and at rest. Read more about cyber security on pages 42 to 43 and 53 All products, services and processes are subject to privacy impact assessments as part of their development and throughout their lifecycle. We maintain personal data processing records, supplier privacy compliance, data breach management and individual rights processes, as well as internal and international data transfer compliance frameworks, and training and awareness programmes. In our supply chain, privacy and security requirements form a key part of our supplier management processes. All suppliers go through a thorough onboarding process to verify their adherence with these requirements, appropriate data protection agreements are agreed, and suppliers are subject to continuous monitoring. Our teams monitor and influence regulatory and industry developments and work to build and maintain relationships with local data protection authorities and other key stakeholders. Our privacy control frameworks are subject to continuous risk-based improvements. In addition to introducing updates to our global privacy controls, we also require every employee, and where possible contractors, to complete Doing What’s Right privacy training within six weeks of joining and then in line with our annual learning intervention cycle. We also have targeted training for high-risk roles which is aimed at teams with a key role in personal data processing. With this approach we aim to achieve a 90% completion rate on both types of training across all target groups across our global footprint. In FY23, 95% of assigned employees completed Doing What’s Right or more specific privacy training. The effectiveness of control implementation is subject to quarterly reporting, and annual evidence-based testing by the privacy teams, as well as internal audit. Control implementation is also reviewed by local market CEOs, the Group Risk and Compliance Committee and the Audit and Risk Committee. Any findings are subject to remedial actions by the responsible control operator, and completion is monitored. Governance The General Counsel and Company Secretary, a member of the Executive Committee, oversees the global privacy programme. The Group Privacy Officer, reporting to the General Counsel, is responsible for managing and overseeing the privacy programme on a day-to-day basis across the markets and provides regular status reports to the General Counsel and Company Secretary and an annual update to the Audit and Risk Committee. During the year, the Group Chief Executive also introduced regular compliance reviews to ensure operating companies were adhering to the Group’s policies and procedures. This included oversight of our privacy programme. Whilst each employee is responsible for protecting personal data they are trusted with, accountability for compliance sits with each operating company. A member of the local executive committee oversees the local implementation of our privacy programme. Each operating company also has a dedicated privacy officer, privacy legal counsel and other privacy specialists. Local privacy officers report to the Group Privacy Officer throughout the year. The Privacy Leadership team approves new standards and guidelines and monitors the implementation of global privacy plans. Operating companies also maintain privacy steering committees that bring together privacy and security teams and senior management from relevant business functions. Privacy incidents We have a strong culture of data privacy and our assurance and monitoring activities are designed to identify potential issues before they materialise. However, during the financial year, Vodafone was fined €1 million (FY22: €2 million) for separate data privacy issues, primarily relating to fraudulent SIM swaps, telesales and marketing without consent, human and system errors in data processing, and delayed execution of data subject rights. In response, we have introduced new standards and increased monitoring. Read more about how we respond to a data breach in the cyber security section on page 43 Cyber security Our role is to enable connectivity in society. As a provider of critical national infrastructure and connectivity that is relied upon by millions of customers, we prioritise cyber and information security across everything we do. Our customers use Vodafone products and services because of our next-generation connectivity, but also because they trust that their information is secure. Cyber attacks are part of the technology landscape today and will be in the future. All organisations, governments and people will be subject to cyber attacks and some will be successful. The telecommunications industry is faced with a unique set of risks as we provide connectivity services and handle private communication data. Our operating model is designed based on this knowledge and focused on how we prevent, detect and respond to attacks to minimise the impact. We have published a separate factsheet which provides more detail on our approach to managing cyber risk at Vodafone, as well as how we protect our customers from cyber threats. The following section is a summary of our approach. Click to read our cyber security factsheet: investors.vodafone.com/cyber Responsible business (continued) Our cyber security strategy Our vision is a secure connected future for our customers and society. We are motivated by a clear purpose to inspire customer trust and loyalty by providing sustained cyber security, ultimately contributing to a secure society and an inclusive future for all. Our cyber security strategy sets out how we plan to achieve these goals. It is aligned to, and forms part of, Vodafone’s 2025 technology strategy. Our cyber security strategy has six pillars: control evolution, secure by design, dynamic trust, real-time data & real-time response, Spirit of Vodafone and culture, and security for society. Identification of vulnerabilities and risks Cyber security is one of Vodafone’s principal risks. We understand that if not managed effectively, there could be major customer, financial, reputation, stakeholder or regulatory impacts. Risk and threat management are fundamental to maintaining the security of our services across every aspect of our business. To help us identify and manage emerging and evolving risks, we constantly evaluate and challenge our business strategy, new technologies, government policies and regulation, and cyber threats. We conduct regular reviews of the most significant security risks affecting our business and develop strategies and policies to detect, prevent and respond to them. Our cyber security strategy focuses on minimising the risk of cyber incidents that affect our networks and services. When incidents do occur, we identify the root causes and use them to improve our controls. Click or scan to watch our cyber security experts summarise our approach to cyber security: investors.vodafone.com/videos 42 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
Risk and control framework Controls can prevent, detect or respond to risks. Most risks and threats are prevented from occurring and most will be detected before they cause harm and need a response. A small minority will need recovery actions. We use a common global framework called the Cyber Security Baseline and it is mandatory across the entire Group. The baseline is based on an international standard and includes key security controls which significantly reduce cyber security risk by preventing, detecting or responding to events and attacks. We have effectiveness targets for the key controls that are monitored and reported to senior management for each market every month. The framework is regularly reviewed and new controls or new targets identified each year. As well as monitoring control effectiveness within Vodafone, we oversee the cyber security of our suppliers and third parties with a dedicated team. At supplier onboarding, security requirements are written into contracts, and we determine the inherent risk of the supplier based on the service they are providing. We then assess their controls to understand the residual risk, which informs the frequency of review. We follow up on open actions and ensure security incidents are tracked and managed. A dedicated assurance team reviews and validates the effectiveness of our security controls, and our control environment is subject to regular internal audit. The security of our mobile networks is also independently tested and benchmarked versus other telecommunications operators every year to assure we are maintaining the highest standards and our controls are operating effectively. We maintain independently audited information security certifications, including ISO 27001, which cover our global technology function and 15 local markets. In addition, our markets comply with national information security requirements where applicable. Read more about our identification of cyber threat as a principal risk on page 53 New technologies, industry practice and regulations We adopt new technologies to better serve our customers and gain operational efficiency. For every technology programme, new or existing, we follow our Security by Design process, evaluating suppliers’ hardware and software, modelling threats and understanding the risks before designing, implementing and testing the necessary security controls. We anticipate threats will continue from existing sources, but also evolve in areas such as 5G, IoT, vendor software integrity, quantum computing and the use of artificial intelligence (‘AI’) and machine learning. More broadly, we actively engage with stakeholders, including industry and government, in order to protect Vodafone, respond to cyber threats and work together to share best practice. Given our expertise and extensive experience, we also engage with a wide range of organisations to help improve the understanding of cyber security thinking and practice, and contribute to public policy, technical standards, information sharing and analysis, risk assessment, and governance. We expect a significant increase in security regulation over the next few years as governments respond to the heightened cyber threat landscape, recognising that telecommunications operators provide critical national infrastructure. We engage directly with governments and industry partners to promote proportionate, risk-based and cost-effective solutions to security threats. We look to establish shared approaches to reinforce standardisation and regulatory frameworks that apply equally to all market participants. Operating model We have implemented an operating model based on the leading industry security standards published by the US National Institute of Standards and Technology (‘NIST’). The model is designed to reduce risk through constantly protecting, defending and improving our security. We have an in-house international team of almost 1,000 employees and we also work with third-party experts in specialist areas. Our scale means we benefit from global collaboration, technology sharing and deep expertise, and ultimately have greater visibility of emerging threats. Although the cyber team leads on detect, respond and recover, preventative and protective controls are embedded across all our technology and throughout the entire business. Every employee has responsibility for cyber security and must follow the Vodafone Cyber Code, be sensitive to threats and report suspicious activity. Embedded in our Code of Conduct, the Cyber Code is the cornerstone of how we expect all employees to behave when it comes to best practice in cyber security. It consists of seven areas where employees need to follow security good practice. Click to read more about Vodafone’s Cyber Code in our Code of Conduct: vodafone.com/code-of-conduct Cyber security is included within our Doing What’s Right training programme and our latest module was translated for non-English-speaking markets during the year, having been launched in English last year. We are also about to launch a training manual for contractors. Training on our Code of Conduct and cyber security is included in our standard induction process for new employees, and we expect every employee to complete annual learning interventions when assigned. Governance The Chief Technology Officer and Chief Network Officer are the Executive Committee members responsible for managing the risks associated with cyber threats and information security. The Cyber Security, Technology Assurance and Strategy (‘CTAS’) Director is responsible for managing and overseeing the cyber security programme on a day-to-day basis and reports to the Chief Technology Officer. Reporting to the CTAS Director are the heads of the global cyber security functions and markets or regions. The local cyber security leads are part of their local management teams and responsible for the cyber agenda in their market or region. Key risk indicators for our most important controls and our security baseline are reported to senior management and the Executive Committee every month. Cyber threats and information security are a major area of focus for the Board’s Audit and Risk Committee and detailed updates including threat landscape, incidents, security position, residual risk and security strategy and programme progress were provided by the CTAS Director twice during the year, most recently in March 2023. Read more about the Audit and Risk Committee’s oversight of cyber security on pages 77 to 82 Cyber incidents As a global connectivity provider, we are subject to a range of cyber threats. We use our layers of controls to identify, block and mitigate threats and reduce any business or customer impact. Where a security incident occurs, we have a consistent incident management framework and an experienced team to manage our response. The focus of our incident responders is always fast risk mitigation and customer security. In the event of a cyber breach, disclosure is made in line with local regulations and laws, and based on a risk assessment considering customers, law enforcement and relevant authorities. The European Union’s GDPR provides a framework for notifying customers in the event there is a loss of customer data because of a data breach, and this framework is a baseline across all our markets. Vodafone classifies security incidents on a scale (S0-S4) according to severity, measured by business and customer impact. We attribute root causes to incidents and use the information to improve our control effectiveness. The highest severity category (S0) corresponds to a significant data breach or loss of service caused by the incident. There have been no cyber incidents classified at this level in the past financial year. Even with an increased threat landscape, we have seen a gradual decline in the numbers of more severe incidents. Click to read more about how we manage risks from technology disruptions in our SASB disclosure: investors.vodafone.com/sasb 43 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Protecting people Wherever we operate, we have an opportunity to contribute to the advancement of fundamental rights for our customers, colleagues and communities. We are also conscious of the risks associated with our operations and we work hard to mitigate negative impacts, ensuring we keep people safe. Health and safety Keeping people safe is one of the most important responsibilities we hold as an employer. Our ongoing focus is to provide a safe working environment for everyone working for and on behalf of Vodafone and the communities in which we operate. We want to ensure that everyone is safe when working with and for Vodafone. Our health and safety framework provides a consistent approach to safety leadership, planning, performance monitoring, governance and assurance. Our commitment to safety does not differentiate between employees, contractors and suppliers, all of whom benefit from the same focus on preventing harm, both on worksites and when working or moving between sites. Health and safety risks We continue to focus on our key health and safety risks, which account for the majority of reported incidents and remain a focus area globally: occupational road risk, falls from height, and working with electricity and fibre. Road traffic incidents continue to be the primary cause of major injuries and fatalities reported globally, accounting for 58% of incidents classified as ‘high potential’ during the year. We continue to focus on road safety and driver behaviour within our global health and safety strategy and operating company plans. In addition, local market road risk controls are reviewed as part of our internal assurance plans. In recognition of our key health and safety risks, we established the ‘Vodafone Absolute Rules’. These rules focus on risks that present the greatest potential for harm for anyone working for or on behalf of Vodafone. The Absolute Rules apply everywhere we work and provide clear expectations for safe behaviour for everyone to follow. The Absolute Rules must be followed by all Vodafone employees and contractors, as well as our suppliers’ employees and contractors. Where this requirement is not met, we take appropriate management actions. In the September 2022 Spirit Beat survey, 94% of employees agreed that the Absolute Rules are taken seriously at Vodafone. Leadership engagement Our Executive Committee and operating company executive committees provide visible and clear leadership in health and safety. These senior leaders are actively engaged and carry out regular face-to-face site tours throughout the year as they recognise the importance of connecting with teams and critical workers as they continue to maintain our networks, work in our retail stores and on customer sites. We ensure everyone has access to senior leadership support in health and safety matters, as this is critical to encouraging people to voice any concerns. We also launched our mandatory ‘Leading for Health & Safety at Work’ e-learning module. This module sets out the specific impact we expect our leaders to have, such as: – Set high and visible standards for health and safety, and continuously challenge others to do the same; – Build and sustain an authentic, preventative, and caring safety culture; – Empower and encourage their teams to take ownership; and – Be well informed about safety risks and controls and ensure open communication with their teams around best practice. The training module provides personal experiences, views, and advice from some of our global senior leaders. By 31 March 2023, 3,910 assigned leaders had completed the module. Health and safety governance Health and safety is managed through a global health and safety framework, which includes the monitoring and assessing of risks, setting targets, reviewing progress and reporting performance. Our global safety framework is based on international standards for occupational health and safety. It is aligned to internationally recognised best practice, and always meets or exceeds local requirements. In addition, some of our local markets have chosen to undergo independent external certification to ISO 45001, the international standard for occupational health and safety; 57% of our group’s workforce is externally certified to ISO 45001. All incidents relating to key risks and breaches of the Vodafone Absolute Rules are reported and investigated in adherence with timescales contained within our Incident Reporting Standard. We ensure that incidents are investigated in accordance with their severity, and appropriate remedial actions and improvements are identified and implemented. We strongly believe in the importance of prevention; however, we also believe that every incident should be treated as an opportunity for learning and improvement. Health and safety is a global policy and is included within our global risk and compliance governance programme. This year we resumed in-country audits, although remote validation continued as a complementary process. Our audits focused on fixed networks in Germany, Czech Republic, Romania and Albania in response to our key risks of working at height and working with electricity and fibre operations. Our audits in our _VOIS shared service centres in Egypt focused on occupational road risk. Visits were also made to South Africa, Turkey, Mozambique, Tanzania, and Ethiopia. These were focused on engagement and communication and included a combination of team meetings, site visits with contractors and suppliers, meetings with local community stakeholders and, where applicable, verification checks following any serious incidents. Employee engagement and consultation in our arrangements for health and safety are the foundations of our approach and all markets have Health and Safety consultative committees that meet on a regular basis. They include elected employee safety representatives, as well as representatives from unions and works councils, as appropriate to each market. Training We continue to include a health and safety module as part of our mandatory ‘Doing What’s Right’ training. The training module includes a video from our Chief Human Resources Officer demonstrating senior-level support for the Vodafone Absolute Rules. Every employee must complete the training within six weeks of joining and then follow our annual learning intervention cycle. During FY23, 93% of assigned Vodafone employees completed the health and safety module. Contractors are required to complete separate training relevant to their role and position. Each local market is also responsible for delivering health and safety training which supports the development of appropriate safety leadership skills, behaviours and identification of health and safety risks. Additional training is specific to an individual’s role and aligned to each market’s local safety legislation. Key performance indicators We have a global set of key performance indicators as part of our safety framework, which are reported monthly to the Executive Committee, and bi-annually to the Board: – Number of fatalities; – Number of employee lost time incidents (‘LTI’); and – Number of top safety risks, including breaches of our Absolute Rules. Responsible business (continued) 44 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
All fatalities that may be connected with our activities in any way, including those affecting employees, suppliers and members of the public are formally reported to the Group’s Executive Committee and to the Board by the Head of Health, Safety and Wellbeing (‘HSW’). Each incident is investigated by an investigation team to determine the facts and any actions required to prevent recurrence. The investigation’s findings are reviewed by the Chief Human Resources Officer at a formal review meeting to ensure the thoroughness of the investigation, suitability of corrective and preventive actions and to determine whether the fatal accident was within Vodafone’s control or not. All fatalities determined to be within Vodafone’s control are considered ‘recordable’ and are publicly reported. Our aim is to ensure no one gets hurt. Any injury is one too many and any loss of life related to our operations is unacceptable. It is therefore with great regret that we record a fatality additional to the one reported in the prior financial year (FY22), that has since been determined to be within Vodafone’s control. In Vodacom South Africa, a supplier’s employee fell from height whilst working on a telecoms tower. In response to the incident the following actions have been taken: – Held forums with employees and suppliers to share experiences and improve health and safety awareness; – Updated our policies to ensure only specialised suppliers are engaged to provide specific tasks, and those suppliers have received relevant training and use appropriate equipment; and – Updated our working at height training materials and procedures and shared these throughout Vodacom South Africa and its suppliers. There have been no recorded fatalities during FY23. We track and investigate incidents relating to our top health and safety risks and breaches of the Vodafone Absolute Rules. During the year, 2,059 breaches of Vodafone Absolute Rules and 484 incidents relating to our key risks were recorded. Each incident is investigated, and we seek to identify the root cause and ensure suitable corrective action is taken where necessary. An investigation into each incident is conducted at a scale proportionate to the indicative level of risk. By reporting, investigating and taking preventive action as a result of these events we believe we can continuously reduce the risk of future injury. Lost-time incident (‘LTI’) is the term we use when an employee is injured while carrying out a work-related task and is consequently unable to perform their regular duties for a complete shift or period of time after the incident. During the year, 19 employee LTIs were reported; three of these occurred whilst travelling for work, one occurred in a Vodafone office, three occurred in retail, four occurred in a public space, and eight occurred on work sites. In total these incidents account for 237 lost workdays. Key performance indicators 2023 2022 Work-related injuries or ill health (excluding fatalities) Employees and contractors 19 12 Suppliers’ employees and contractors 21 30 Lost-time incidents (‘LTI’) Number of lost-time employee and contractor incidents1 19 12 Lost-time incident rate per 1,000 employees and contractors 0.20 0.11 Total recordable fatalities Employees and contractors 0 0 Suppliers’ employees/contractors 0 22 Members of the public 0 2 Notes: 1. Lost-time incident means the loss of one or more work day as a result of injury. 2. Includes one additional incident reported to be within Vodafone’s control. Mobiles, masts and health The health and safety of our customers and the wider public has always been, and continues to be, a priority for us. Our masts fully comply with national regulations, which are typically based on, or go beyond, international guidelines set by the independent scientific body, the International Commission for Non-Ionizing Radiation Protection (‘ICNIRP’). There has been scientific research on mobile frequencies for decades, including those used by 5G. If exposure is within national regulations, the scientific consensus is that there is no adverse impact on health. We continually monitor and evaluate our mobile networks to make sure we meet all regulations. In addition, all the products we sell are rigorously evaluated to ensure they comply with international safety guidelines. As well as complying with national regulations, markets that have rolled out 5G apply the ‘Smart PowerLock’ (‘SPL’) feature. This innovative technology, designed for use with the adaptive antennas used for 5G, continuously monitors the transmitted radio frequency power of the antenna to ensure it is always below a threshold when averaged over a predefined time window. This guarantees compliance with electromagnetic field (‘EMF’) regulations under all possible operating conditions for 5G sites. This is now one of many software features that are routinely activated when a new 5G site is commissioned. SPL also includes statistics, that can be used to build evidence of compliance over several weeks for a given site if needed by regulators. National regulators have accepted the feature as effective. Science monitoring Scientific reviews have made a vital contribution to establishing industry guidelines and standards. We follow the results of these independent expert reviews to understand developments in scientific research related to mobile devices, base stations, and health. In February 2022, an EU-funded scientific study into the effect of mobile phone use by children and young people was published. The case study was conducted between 2010 and 2015 across 14 countries with more than 2,000 participants aged 10-24 years. The study found no evidence of a causal association between wireless phone use and brain tumours. We fund research into mobile devices, base stations, and health through funding bodies such as national governments to ensure that the research remains independent of industry influence, including our own. We also respond to requests from bodies conducting research by providing technical advice and information on the use of mobile devices. This helps to ensure scientists have access to the best-quality information available. Harmonisation with international science-based guidelines Following the opening in 2020 of updated international guidelines on electromagnetic frequencies, we have supported and promoted the transition from the previous guidelines from 1998 to this more up-to-date and appropriate set of guidelines. In EU Member States the EMF regulations are set nationally. With the exception of Italy and Greece, which have updated their national regulations, our other European markets continue to align with the EU Council Recommendation of 1999. We expect that this will be updated to reflect the ICNIRP 2020 guidelines. Click to read more about the ICNIRP 2020 guidelines: icnirp.org Operating model We have robust governance mechanisms in place and conduct regular compliance assessments to ensure that our products meet the standards set by the Group policy and national regulations. The Group EMF leadership team met four times during the year and submitted written reports to the Executive Committee and the Board. We conduct network measurements and calculations of EMF exposure from the network masts and review the test reports we receive on EMF testing on devices. During the year, end-to-end compliance reviews in two of our markets verified robust and optimised EMF risk management, and examples of best practice are shared across our footprint. All Vodafone markets participated in a compliance self-assessment programme with assurance provided through our compliance team. 45 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Human rights We want to make sure that we have a positive impact on people and society, which includes respecting human rights in all our operations. We are a long-standing member of the UN Global Compact (‘UNGC’) and follow the United Nations Guiding Principles on Business and Human Rights (‘UNGP’), which guide our approach. Click to read more about our human rights approach: vodafone.com/human-rights Our Human Rights Policy Statement details how we do this and is backed up by our internal Human Rights Policy which sets out how our people must ensure we respect human rights, including steps to take through our other aligned policies, such as those covering artificial intelligence, responsible minerals, health, safety and wellbeing, human resources, privacy management, marketing, business resilience and law enforcement assistance. Click to read our Human Rights Policy Statement: vodafone.com/human-rights-policy-statement Human rights risks As a global telecommunications operator, we connect people. This meansthat our most significant human rights risks relate to our customers’ rights to privacy (concerning their data that we safeguard) and freedom of expression (in terms of their access to information, through the connections we provide). Local laws and regulations can mandate that telecommunications operators must provide assistance to governments, and we must comply with lawful government requests as part of our operating licences. This might include the disclosure of customer information or limiting access to digital networks and services. However, our internal law enforcement assistance policy guides us in how to do this in a rights-respecting way and our transparency reporting provides data on certain requests we receive. Click to read more about how we handle law enforcement demands: vodafone.com/handling-law-enforcement-demands The risks to people working in our supply chain are another area of focus for us. We manage these risks through our supply chain management programme which assesses our suppliers for indicators such as forced labour and other risks to human rights, such as health and safety. We also believe in supporting the responsible sourcing of minerals globally. Although we do not source minerals ourselves, we follow the best practice of the OECD Due Diligence Guidance to understand whether our manufactured products include minerals which have been sourced from smelters taking a responsible approach to sourcing. Click to read more about our Conflict Minerals Reports and Statement: vodafone.com/responsibleminerals Our human rights programme also addresses a broader range of human rights risks, such as those relating to the design and deployment of artificial intelligence, children’s rights, data ethics and risks we may become connected with through our broader value chain, such as enterprise customers or partner markets. Responsible business (continued) Click or scan to watch a video summarising our human rights approach: investors.vodafone.com/videos Our approach We conduct due diligence to help make sure that we respect human rights. Due diligence comes in various forms and at different moments in our operations: it may be an independent human rights risk assessment for a new market entry, a thematic impact assessment such as the child rights assessment completed in FY21, or it may be the ongoing assessments we do when considering new partner markets. The nature of our business also means that we need to keep ahead on issues concerning data ethics. For example, this year our Group Data Governance Committee approved a new artificial intelligence policy to underpin our Artificial Intelligence Framework. Click to read more about our Artificial Intelligence Framework: vodafone.com/ai-framework We follow up assessments with mitigating actions, such as contractual commitments to respect human rights in our partner market agreements, and in our enterprise customer contracts. For example, Safaricom Ethiopia followed up the human rights impact assessment conducted in February 2021 with an updated independent assessment and implementation programme in FY23. In previous years, we reported that we had conducted a child rights assessment, and this year we have continued to implement its recommendations. This year, we updated our child protection policy by integrating it and including other child rights considerations into our internal human rights policy. We continue to review our processes. For example, this year we have reviewed and updated our Code of Ethical Purchasing and we have commissioned an independent review of our human rights risks, governance and controls. Next year we will report on the outcome of the review which we expect to conclude later in 2023. Anyone who works for us can use Speak Up to raise concerns about human rights issues. This year we reviewed Speak Up against the UNGP expectations for non-state grievance mechanisms. As a result, we have sought to improve the user experience for reporting any human rights concerns. Governance The Chief External and Corporate Affairs Officer oversees our human rights programme and is a member of the Executive Committee. The senior human rights manager manages our programme, with the support of a cross-functional internal Human Rights Advisory Group, comprising senior managers responsible for: privacy, security, responsible sourcing, and diversity and inclusion, amongst others. This year we have set up a community of human rights champions in each of our operating companies. We report regularly on our progress to the Purpose and Reputation Steering Committee, which assists the Executive Committee in fulfilling duties with regards to our purpose, reputation management and policy. This year our ESG Committee reviewed our approach to managing risks to freedom of expression and privacy in the context of government assistance requests. Read more about our ESG Committee on pages 83 to 84 Collaboration We play our part in developing the global understanding of what businesses should do to respect human rights. We are a member of initiatives such as the United Nations B-Tech Project which convenes business, civil society and government to advance implementation of the UN Guiding Principles in the technology sector. We were a member of the Global Network Initiative ‘GNI’ from 2017. Membership includes a requirement to undergo an independent assessment to assess progress in implementing the GNI Principles. We successfully completed our first GNI independent assessment in 2019, and in 2022 we completed our second independent assessment. The multi-stakeholder GNI Board considered the independent assessment in detail and determined that Vodafone is making good faith efforts to implement the GNI Principles on freedom of expression and privacy with improvement over time. Following the completion of our 2022 assessment, we chose to leave GNI, in order to focus our attention on our broader human rights risks and governance and controls at Group level. Simultaneously, Vodacom has applied for observer status at GNI to take increased ownership of human rights risk management across our Africa footprint. 46 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
Responsible supply chain We spend approximately €25 billion a year with 9,000 direct suppliers around the world to meet our business’ and customers’ needs across network infrastructure, IT and services related to fixed lines, mobile masts and data centres that run our networks. The majority of our external spend is managed by our Vodafone Procurement Company (‘VPC’), based in Luxembourg, and our shared services (‘_VOIS’), based in India. Another large area of spend is on the products we sell to our customers, including mobile phones, tablets, SIM cards, broadband routers, TV set-top boxes and IoT devices. This centralised approach helps to ensure that we maintain a consistent approach to supplier management across Vodafone, from onboarding and vetting a supplier, to raising orders and paying for delivered goods and services. Supply chain risks The main risks in our supply chain relate to three key areas; health and safety matters related to non-compliant fire safety measures, excessive working hours and environmental matters related to non-compliant chemical storage and lack of carbon reduction programmes. This year, these three risks made up 73% of all non-compliance issues found in our supply chain through our assessments. Suppliers that do not meet our standards are provided with a corrective action plan to address any areas for improvement and are required to submit evidence that this has been completed. Industry collaboration We work with other operators collaboratively on supply chain risks within the Joint Alliance for CSR (‘JAC’) formerly known as the Joint Audit Cooperation. We currently chair the JAC working group established to improve ethical, labour and environmental standards in the technology supply chain. We are engaged in workstreams to make progress on key risks in our supply chain, namely human rights, reducing Scope 3 emissions and driving a circular economy to reduce e-waste. JAC reports on progress with respect to third-party factory audits of common suppliers carried out on behalf of all its members in its own reporting. Click to read more about the Joint Alliance for CSR: jac-initiative.com Policy This year we updated our Code of Ethical Purchasing to reinforce the specific requirements that every supplier that works for Vodafone must comply with. These commitments extend down through the supply chain so that a supplier with which we have a direct contractual relationship (Tier 1 supplier) in turn is required to ensure compliance across its own direct supply chain (Tier 2 supplier from Vodafone’s perspective) and beyond. The Code of Ethical Purchasing is based on international standards, including the Universal Declaration of Human Rights and the International Labour Organization’s Fundamental Conventions on Labour Standards. It stipulates the social, ethical, and environmental standards that we expect, including areas such as child and forced labour, health and safety, working hours, discrimination and disciplinary processes. Click to read our Code of Ethical Purchasing: vodafone.com/code-of-ethical-purchasing Our approach When new suppliers tender for work, they are asked to demonstrate policies and procedures that support safe working, diversity in the workplace and to address carbon reduction, renewable energy, plastic reduction, circular economy and product life-cycle which account for up to 20% of the overall evaluation criteria. Commitments made by our suppliers are assessed against our own purpose strategy with respect to diversity & inclusion (5%), the environment (5%) and health & safety (10%) in categories where there is a safety risk. We have included purpose criteria in all FY23 tenders. We continue to assess risk during our on boarding process by using a Supplier Assurance Risk Management (‘SARM’) system to assess key risks associated with new suppliers. The system uses logic to identify suppliers with risks that are material to our business, related to money laundering, bribery, conflict minerals, conflict of interest, corporate security, cyber security, environment, health & safety, payment card industry, privacy, product safety, responsible sourcing and sanctions & trade control. Any identified risks require an independent policy expert to approve suppliers before they are on-boarded, and if necessary, to establish a mitigation plan. Our requirements are backed up by risk assessments, audits and operational improvement processes, which are included in suppliers’ contractual commitments. This year, we launched an improved supplier qualification process which uses a risk-based assessment to review compliance for any new suppliers across 16 countries. The rollout to remaining operations is subject to consultation with the respective workers’ councils. We report on our approach to preventing modern slavery and human trafficking in our business and supply chain in our annual Modern Slavery Statement. Click to read our Modern Slavery Statement: vodafone.com/modern-slavery-statement Governance The Chief Financial Officer oversees our supply chain and is a member of the Executive Committee and Board. Reporting to the Chief Financial Officer, the Chief Executive Officer of the VPC is responsible for the implementation of our Code of Ethical Purchasing. Progress is reported regularly to the Vodafone Procurement Company Board. Procurement is a highly centralised function within the business, with the majority of our external spend managed by VPC. This enables us to maintain a consistent approach to supplier management and makes it easier to monitor and improve supplier performance across our markets. Business integrity We are committed to ensuring that our business operates ethically, lawfully and with integrity wherever we operate as this is critical to our long-term success. Tax and economic contribution As a major investor, taxpayer and employer, we make a significant contribution to the economies of the countries where we operate. In addition to direct and indirect taxation, our financial contributions to governments also include other areas such as radio spectrum fees and spectrum auction proceeds. Click or scan to watch our Group Head of Tax summarise our approach to taxation: investors.vodafone.com/videos Tax transparency Our most recent tax report sets out our total contribution to public finances on a cash-paid basis for both 2021 and 2022. In 2022, we contributed, directly and indirectly, nearly €9.9 billion to public finances worldwide, compared with almost €9.6 billion in 2021. The year-on-year increase was due to higher spectrum payments, principally in Spain during 2022. In 2022, we paid over €2.2 billion in direct taxes, including more than €1.0 billion in corporate income taxes, nearly €1.7 billion via non-taxation based revenue mechanisms, such as payments for the right to use spectrum, and collected nearly €6.0 billion of indirect taxes for governments around the world. 47 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
We regularly monitor our anti-bribery programme to ensure it is implemented through conducting risk assessment, policy compliance reviews and internal audits. To support our approach, Vodafone is also a member of Transparency International UK’s Business Integrity Forum. Governance and risk assessment Our Group Chief Executive and Executive Committee oversee our efforts to prevent bribery. They are supported by local market Chief Executive Officers, who are responsible for ensuring that our anti-bribery programme isimplemented effectively in their local market. They in turn are supported by local specialists and by a dedicated Group team that is solely focused on anti-bribery policy and compliance. The Risk and Compliance Committee assists the Executive Committee in fulfilling duties with regards to risk management and policy compliance. As part of our anti-bribery programme, every Vodafone business must adhere to minimum global standards, which include: – Ensuring there is a due diligence process for suppliers and business partners at the start of the business relationship; – Completion of the global e-learning training for all employees, as well as tailored training for higher risk teams; and – Using Vodafone’s global online gift and hospitality registration platform, as well as ensuring there is a process for approving local sponsorships and charitable contributions. The risks we face evolve constantly but broadly fall into the areas summarised in the table below, which outlines the principal risk categories and the mitigation measures adopted. Engaging employees to raise awareness of bribery risk We run a multi-channel high-profile global communications programme, ‘Doing What’s Right’, to engage with employees and raise awareness and understanding of the policy. The ‘Doing What’s Right’ programme features e-learning training, including a specific anti-bribery module. Of those employees (including management) assigned training during the period, 93% had completed the training as at 31 March 2023. For higher-risk employees, additional tailored training programmes are used to cover relevant scenarios for those employees. We also conduct internal communication campaigns using a range of materials to highlight some of the key messages around zero tolerance of bribery and corruption. Acting with integrity in the creation and execution of our tax strategy, policies and practices is absolutely core to our approach to tax, as is our commitment to transparency. We disclose our financial contributions to governments at a country level, as we believe this is an important way to demonstrate that it is possible to achieve an effective balance between a company’s responsibilities to society as a whole, through the payment of taxes and other government revenue-raising mechanisms, and its obligations to its shareholders. The information we share aims to help our stakeholders understand our approach, policies, and principles. We also share our views on key topics of relevance, including the latest on the taxation of the digital economy, as well as publishing our OECD country-by-country disclosure, as submitted to the UK’s tax authority (HMRC), as well as how our disclosures compare to the B Team tax principles and the requirements of the Global Reporting Initiative. Our tax report for 2023 will be published by the end of the year, following the submission of our tax returns and payment of all applicable taxes. Click to read more about our tax and economic contribution to public finances: vodafone.com/tax Anti-bribery, corruption and fraud At Vodafone, we support and foster a culture of zero tolerance towards bribery, corruption or fraud in all our activities. Our anti-bribery policy Our policy on this issue is summarised in our Code of Conduct and statesthat employees or others working on our behalf must never offer or accept any kind of bribe. Our anti-bribery policy is consistent with the UK Bribery Act and the US Foreign Corrupt Practices Act and provides guidance about what constitutes a bribe and prohibits giving or receiving any excessive or improper gifts and hospitality. Any policy breaches can lead to dismissal or termination of contract. Click to read our Code of Conduct: vodafone.com/code-of-conduct Facilitation payments are strictly prohibited, and our employees are provided with practical training and guidance on how to respond to demands for facilitation payments. The only exception is when an employee’s personal safety is at risk. In such circumstances, when a payment under duress is made, the incident must be reported as soon as possible afterwards. Responsible business (continued) Risk Response Operating in high-risk markets We undertake biennial risk assessments in each of our local operating companies and at Group, so we can understand and limit our exposure to risk. Business acquisition and integration Anti-bribery pre and post acquisition due diligence are carried out on a target company. Red flags identified during the due diligence process are reviewed and assessed. Following acquisition, we implement our anti-bribery programme. Spectrum licensing To reduce the risk of attempted bribery, a specialist spectrum policy team oversees our participation in all negotiations and auctions. We provide appropriate training and guidance for employees who interact with government officials on spectrum matters. Building and upgrading networks Our anti-bribery policy makes it clear that we never offer any form of inducement to secure a permit, lease or access to a site. We regularly remind all employees and contractors in network roles of this prohibition, through tailored training sessions and communications. Working with third parties Suppliers and other relevant third parties working for or on behalf of Vodafone must comply with the principles set out in our Code of Conduct and Code of Ethical Purchasing, as well as have programmes in place to ensure suppliers’ employees and contractors are aware of these policies. Third-party due diligence is completed at the start of our business relationship with suppliers, other third parties and partners. Through their contracts with us, our suppliers, partners and other third parties make a commitment to implement and maintain proportionate and effective anti-bribery compliance measures. We regularly remind current suppliers of our policy requirements and complete detailed compliance assessments across a sample of higher-risk and higher-value suppliers. Select high-risk third parties are trained to ensure awareness of our zero-tolerance policy. Winning and retaining business We provide targeted training for our Vodafone Business and Partner Markets sales teams. In addition, we also maintain and monitor a global register of gifts and hospitality to ensure that inappropriate offers are not accepted or extended by our employees. 48 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
Assurance Implementation of the anti-bribery policy is monitored regularly in all local markets as part of the annual Group assurance process, which reviews key anti-bribery controls. This year we completed our end-to-end testing with respect to our businesses in Spain and Mozambique. Further to this, self-assessments and quality reviews were completed in Albania, Italy, Portugal, DRC, Germany, Ireland and South Africa. We tested key high-risk areas of the policy to ensure the markets are implementing the controls effectively. The key outcomes from the assurance activities and actions for the programme for the coming year are documented in the annual assurance paper, which is issued to the Group Risk and Compliance Committee. The results demonstrate good implementation of the Anti-bribery programme. The markets demonstrated that they have strong robust controls in place to manage bribery risks. A recurring focus area across a few markets is third-party risk management; necessary action plans have been put in place to improve this area. Fraud Fraud is a growing threat globally, impacting customers, reputation, and financial performance. The Executive Committee and the Audit and Risk Committee have recognised this through significant investment and focus on developing a future-ready fraud management capability to mitigate the risk of fraud to continue to provide a safe and secure environment for our customers. We successfully implemented a global organisation and operating model, including a fraud centre of excellence and shared services infrastructure, to manage fraud across local markets, share intelligence, and leverage best practices, to ensure quick and effective responses to any incidences of fraud that may occur and achieve real-time and proactive fraud risk management. We have invested in advanced fraud detection technologies that leverage artificial intelligence capabilities, which have delivered proven benefits across Vodafone by helping us detect and manage fraud’s impact more effectively. ESG cautionary statement In preparing the ESG-related information contained in this document, we have made a number of key judgements, estimations and assumptions. The processes, methodologies and issues involved in preparing this information are complex. The ESG data, models and methodologies used are often relatively new, are rapidly evolving and are not necessarily of the same standard as those available in the context of financial and other information, nor are they subject to the same or equivalent disclosure standards, historical reference points, benchmarks or globally accepted accounting principles. It is not possible to rely on historical data as a strong indicator of future trajectories, in the case of climate change and its evolution. Outputs of models, processed data and methodologies may be affected by underlying data quality, which can be hard to assess and we expect industry guidance, standards, market practice and regulations in this field to continue to evolve. There are also challenges faced in relation to the ability to access certain data on a timely basis and the lack of consistency and comparability between data that is available. This means the ESG-related forward-looking statements, information and targets discussed in this document carry an additional degree of inherent risk and uncertainty. 49 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Responsible business (continued) Reporting requirement Vodafone policies and approach Section within Annual Report Page(s) Environmental matters Planet performance Planet 35 to 38 Climate change risk Principal risk factors and uncertainties 51 to 59 Employees Code of Conduct Responsible business and anti-bribery, corruption and fraud 40 and 48 to 49 Occupational health and safety Health and safety 44 to 45 Diversity and inclusion Workplace equality 33 to 34 Social and community matters Driving positive societal transformation performance Inclusion for All 30 to 34 Digital Society 29 to 30 Stakeholder engagement Stakeholder engagement 10 to 12 Mobiles, masts and health Mobiles, masts and health 45 Human rights Human rights approach Human rights 46 Code of Ethical Purchasing Responsible supply chain 47 Modern Slavery Statement Responsible supply chain 47 Anti-bribery and corruption Code of Conduct Responsible business 40 to 49 Anti-bribery policy Anti-bribery, corruption and fraud 48 Speak Up process Responsible business 40 to 49 Policy embedding, due diligence and outcomes Purpose, sustainability and responsible business 26 to 49 Principal risk factors and uncertainties 51 to 59 Description of principal risks and impact of business activity Principal risk factors and uncertainties 51 to 59 Description of business model and strategy Business model Chief Executive’s statement and strategic roadmap 2 7 Non-financial key performance indicators Key performance indicators Purpose, sustainability and responsible business 4 to 5 26 to 49 UK Streamlined Energy and Carbon Reporting (‘SECR’) In accordance with SECR requirements, this provides a summary of GHG emissions and energy data1 for Vodafone UK, in comparison with global performance. Year ended 31 March 2023 Year ended 31 March 2022 Group (excluding Vodafone UK) Vodafone UK Vodafone UK as a proportion of Group data Group (excluding Vodafone UK) Vodafone UK Vodafone UK as a proportion of Group data Scope 1 GHG emissions (million tonnes CO2e) 0.27 0.01 4% 0.27 0.01 4% Scope 2 market-based GHG emissions (million tonnes CO2e)2 0.69 0.00 0% 0.79 0.01 1% Scope 2 location-based GHG emissions (million tonnes CO2e) 1.94 0.14 7% 1.86 0.13 7% GHG emissions per EUR million of revenue (tonnes of CO2e) 19.76 1.47 7% 20.66 3.04 13% Total energy consumption (GWh)3 5,618 656 10% 5,449 676 13% Notes: 1. Data is calculated using local market actual or estimated data sources from invoices, purchasing requisitions, direct data measurement and estimations. Carbon emissions calculated in line with GHG Protocol standards. Scope 2 market-based emissions are reported using the market-based methodology as in effect as at the date of this report. For full methodology see our ESG Addendum 2023. 2. Scope 2 emissions for FY22 have been restated following the correction or inclusion of data points in line with our reporting methodology. In addition, emissions for the UK have been restated to apply the correct emissions factor. 3. More information on energy efficiency initiatives implemented during the year can be found on page 36 and in our disclosures prepared in accordance with the SASB Standards. Non-financial information statement The table below outlines where the key content requirements of the non-financial information statement can be found within this document (as required by sections 414CA and 414CB of the Companies Act 2006). Vodafone’s sustainable business reporting also considers other international reporting frameworks, including the Global Reporting Initiative, the SASB Standards, CDP and the GHG Reporting Protocol. Click to download our ESG Addendum: investors.vodafone.com/esgaddendum Click to read our SASB disclosures: investors.vodafone.com/sasb 50 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
Principal risk factors and uncertainties Identifying our risks Overview of risk governance structure Board/Audit and Risk Committee – Provide oversight for Vodafone Group – Discuss, challenge and make a robust assessment of principal and emerging risks – Ensure appropriate risk culture is embedded throughout the organisation Local oversight committees Provide oversight for the local risk management programme Local market CEOs Set local objectives, identify priority risks and align tolerance levels with the Vodafone Group guidance Local risk owners Senior managers in local management teams are responsible for local risks and the local risk programme to manage, measure, monitor and report on the risks Risk and Compliance Committee – Reviews principal, watchlist and emerging risks – Reviews effectiveness of risk management across the Group Group risk team – Responsible for the application of the global risk management framework – Supports the Board/ExCo by creating programmes to strengthen our risk culture Group risk owners – ExCo risk owners have responsibility for management of the risk assigned to them – Senior executive risk champions identify and implement mitigating actions Assurance Assurance functions Review and provide assurance over selected controls for the Group and local markets Internal Audit Supports the Audit and Risk Committee in reviewing the effectiveness of the global risk management framework and management of individual risks Vodafone Group Local markets or Group entities We face a range of risks and uncertainties that could impact the delivery of our strategic initiatives. Therefore, our culture and day-to-day management of risk is an integral part of the way we do business. Governance and identifying our risks On behalf of the Board, the Audit and Risk Committee provides oversight for the principal, emerging and watchlist risks, as well as direction on risks that the Company is willing to take to achieve its strategic goals. The Board approves Vodafone’s strategy and has overall accountability that the risk management approach supports this strategy. The aim of the risk function is to make risk meaningful and relevant in the context of the delivery of our strategy. The risk function acts as an enabler for informed decision-making across our markets. We adopt an end-to-end approach to risk management. The process starts with local markets and Group entities identifying and evaluating risks which could affect their local strategy. These risks are then assessed and challenged centrally by the Group risk team. Next, a comprehensive list of these risks is compiled and presented to a selected group of senior leaders and executives within the Group, along with the findings from our external risk scanning exercise. With a Group-wide perspective in mind, these executives analyse and identify the most significant risks that require further exploration. The proposed principal risks (pages 52 to 55), emerging risks and risk watchlist (page 56) are agreed by our Executive Committee (‘ExCo’) before being submitted to the Audit and Risk Committee and the Board for scrutiny and approval. The diagram below shows a simplified, high-level governance structure for risk management. Local risk managers Are the contact point for each market/entity on risk, and facilitate all activities as defined by the global risk management framework 51 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Principal risks Adverse changes in macroeconomic conditions Financial Risk related to our financial status, standing and continued growth A Adverse changes in macroeconomic conditions Strategic Risks affecting the execution of our strategy B Disintermediation C Adverse political and policy environment D Strategic transformation E Adverse market competition Operational Risks impacting our operations F Cyber threat G Supply chain disruption H Technology resilience and future readiness I Data management and privacy J Organisational simplification Risks are ordered by category and not risk ranking Year-on-year risk ranking movement Increasing Decreasing No change New/change in scope Risk categorisation and interdependencies By analysing the correlation between risks we can identify those that have the potential to impact or increase other risks, to ensure they are weighted appropriately. This exercise also informs our scenario analysis, particularly the combined scenario used in the long-term viability statement. Read more about our long-term viability statement on page 57 Key: External Internal Bidirectional Unidirectional Principal risk factors and uncertainties (continued) Description Adverse changes to economic conditions could result in reduced customer spending, higher interest rates, adverse inflation, currency devaluations or movements in foreign exchange rates. Adverse conditions could also lead to limited debt refinancing options and/or an increase in costs. Risk ranking movement Risk owner Group Chief Financial Officer Scenario A severe contraction in economic activity leads to lower cash flow generation for the Group and disruption in global financial markets, which impacts our ability to refinance debt obligations as they fall due in a cost effective manner. Emerging factors Because this is an externally driven risk, the threat environment is continually changing. External factors such as the ongoing war in Ukraine and uncertainty in the banking sector could have future impacts on economic activity across our markets. The financial markets are experiencing high levels of volatility, and both sovereign debt levels and inflation have reached record levels. These factors could lead to a significant change in the availability and cost of capital. Operational Strategic Financial E C B A D J H I F G 52 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
Year-on-year risk ranking movement Increasing Decreasing No change New/change in scope Disintermediation Cyber threat Adverse political and policy environment Description Failure to effectively respond to threats from emerging technology or disruptive business models could lead to a loss of customer relevance, market share and new/existing revenue streams. Description An external attack, insider threat or supplier breach could cause service interruption or confidential data breaches. Description An adverse political and policy environment could impact our strategy and result in increased costs, create competitive disadvantage or have negative impact on our return on capital employed. Scenario Further developments in mobile handset technologies, such as eSIM, could lead to an increase in higher customer churn, higher costs, and lower revenue. Emerging factors In our Consumer segment, the widespread introduction of alternative technology solutions driving disintermediation could put pressure on our core business, while content producers seeking to engage directly with consumers could increase pressure on our TV propositions. In the Business segment, technology players could move deeper into the telecommunications value chain and look to control end-to-end service orchestration. Alternative connectivity networks with ‘free-to-use’ business models may begin to appeal to customers across both Consumer and Business segments. Scenario We have modelled scenarios including attacks on core infrastructure, a bulk data breach and loss of major customer-facing systems. An example includes threat actors using destructive malware to disable our ability to service new and existing customers. Emerging factors Cyber risk is constantly evolving in line with technological and geopolitical developments. We anticipate threats will continue from existing sources, and also evolve in areas such as 5G, IoT, vendor software integrity, quantum computing and the use of AI and machine learning. Click to read more about our approach to cyber security in our cyber security factsheet: investors.vodafone.com/cyber Scenario Exposure to additional liabilities and reputational damage, triggered by policy maker and/or regulatory authority interventions were to adversely change in the markets in which we operate. Emerging factors The war in Ukraine has generated ripple effects across the political and macroeconomic environment, in particular in Europe but also in some of our other markets. This has resulted in energy price fluctuations, accentuated inflation and worsened a cost of living crisis, requiring us to adapt accordingly. Goverments’ responses to these challenges may also impact on our business. Also, geopolitical tensions are increasing which amplifies the risk of protectionist responses, or other forms of state interventions and security-related requirements that could affect our operations, supply chains and conditions for competition in various ways. Risk ranking movement Risk owner Chief Commercial Officer / CEO Vodafone Business Risk ranking movement Risk owner Group Chief Technology Officer Risk ranking movement Risk owner Chief External and Corporate Affairs Officer 53 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Principal risk factors and uncertainties (continued) Strategic transformation Technology resilience and future readiness Supply chain disruption Description Network, system, or platform outages, or ineffective execution of the technology strategy could lead to dissatisfied customers and/or impact revenue. Description Failure to effectively execute our transformational activities, including shaping our portfolio and delivering on product innovation, could result in loss of business value and/or additional cost. Description Disruption in our supply chain could mean that we are unable to execute our strategic plans, resulting in increased cost, reduced choice and lower network quality. Risk ranking movement Risk owner Group Chief Technology Officer / Group Chief Network Officer Risk ranking movement Risk owner Group Chief Executive / Chief Commercial Officer Risk ranking movement Risk owner Chief Financial Officer Scenario We are not an active participant in in-market consolidation in key markets and do not benefit from the resulting synergies, or we are adversely impacted by market remedies imposed by regulators following in-market consolidation. Emerging factors Macroeconomic conditions, such as the current inflationary environment, may impact our transformational efforts. In addition, no change in the regulators’ approach to in-market consolidation may limit opportunities for value accretive in-market consolidation. Scenario Political decisions affecting our ability to use equipment from specific vendors could cause trade and supply chain disruptions. Emerging factors Changes in the political landscape outside Vodafone’s control (for example, US and China tensions or long-term impacts from the war in Ukraine) may significantly impact the upgrade and maintenance of our network, or impact product availability. Disruption may lead to an increase in our costs from areas such as raw material prices, energy costs, and shipping costs, while at the same time, triggering shortages or extended lead times for critical components. Additionally, economic instability might impact our suppliers’ ability to deliver. Scenario A major outage in a critical data centre or a failed IT transformation activity could reduce service to customers, affecting revenue and reputation. Emerging factors Due to the time frame to implement large IT transformation programmes, macroeconomic conditions and customer expectations might change for in-progress programmes. Extreme weather events may increase the likelihood or frequency of technology failure. Additionally, deliberate attacks on national critical infrastructure could increase during war or volatile periods. Year-on-year risk ranking movement Increasing Decreasing No change New/change in scope 54 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
Data management and privacy Adverse market competition Organisational simplification Description Data breaches, misuse of data, data manipulation, inappropriate data sharing, or data unavailability could lead to fines, reputational damage, loss of value, loss of business opportunity, and failure to meet our customers’ expectations. Description Significant activity by competition, such as price wars, new market entrants or business practices, may lead to reduced margins and market share, and increased customer churn. Description Failure to effectively execute on our goal to simplify our organisation and operating model could result in reduced speed of decision-making and delivery, reduced clarity on accountabilities, and higher cost. Risk ranking movement Risk owner Group General Counsel and Company Secretary / Group Financial Controller Risk ranking movement Risk owner Chief Commercial Officer Scenario Failure to manage the privacy of our stakeholders’ data effectively and compliantly could result in regulatory fines, paying significant reparation of damages to impacted individuals, and also reputational damage that could result in higher churn rates. Emerging factors Proliferation of Artificial Intelligence and related regulator and legislative action across our footprint requires a robust ethics and compliance approach. Geopolitisation of data will continue to negatively impact cross border data transfers. New European data regulations, such as the Artificial Intelligence Act or the Cyber Act, will introduce significant new legal requirements around data management of our business activities. Read more about our approach to data management and privacy on pages 40 to 42 Scenario Aggressive pricing, accelerated customer losses to low value players on mobile and fixed, and disruptive new market entrants in key European markets could result in greater customer churn and pricing pressures, impacting our financial position. In addition, high inflation levels and low confidence in economic outlook could have further impact. Emerging factors While emerging factors often depend on individual market structures and the competitive landscape, external factors such as the confidence in global economic systems, record high inflation, the ongoing war in Ukraine and slow post-pandemic economic recovery in many markets may impact household and individual connectivity spend. Scenario Unsuccessful attempts to drive organisational simplicity could result in lower employee engagement, higher talent attrition and failure to become a more efficient organisation. Emerging factors The increase in changes within the internal organisation and external macroeconomic environment requires all employees to show Spirit behaviours. As our customers’ needs and expectations change, we might have to adapt or change our simplification agenda to meet and exceed their requirements. Risk ranking movement Risk owner Group Human Resources Officer Year-on-year risk ranking movement Increasing Decreasing No change New/change in scope 55 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Principal risk factors and uncertainties (continued) Watchlist risks Our watchlist risk process enables us to monitor material risks to Vodafone Group which fall outside our principal risks. These include, but are not limited to: Legal compliance The legal compliance risk is made up of multiple sub-risks (sanctions and trade controls, competition law, anti-bribery, and anti-money laundering). Controls are in place to monitor and manage these risks and ensure compliance with the relevant regulations and legislation. Read more about ‘Doing What’s Right’ training on page 40 Electromagnetic field (‘EMF’) The health and safety of our customers and the wider public has always been, and continues to be, a priority for us. We refer to the current body of scientific evidence so that the services and products we provide are within prescribed safety limits and adhere to all relevant standards and national laws. Read more about EMF on page 45 Climate change As part of our commitment to operate ethically and sustainably, we are dedicated to understanding climate-related risks and opportunities and embedding responses to these into business strategy and operations. Read more about the Task Force on Climate-related Financial Disclosures (‘TCFD’) on pages 58 to 59 Infrastructure competitiveness We continue to provide the appropriate broadband technology in our fixed and mobile networks. Our Technology 2025 Strategy incorporates our fixed and mobile network evolution steps to enhance our coverage and network performance. Click to read more about our Technology 2025 Strategy in an investor briefing: investors.vodafone.com/vtbriefing Tax Tax risk covers our management of tax across the markets in which we operate and how we respond to changes in tax law, which may have an impact on the Group. We have controls in place to govern each of these areas in line with our tax principles. Read more about our tax risk and our approach to tax and our economic contribution on pages 47 to 48 Emerging risks We face a number of uncertainties where an emerging risk may potentially impact us. In some cases, there may be insufficient information to understand the likelihood, impact, or velocity of the risk. Also, we might not be able to fully define a mitigation plan until we have a better understanding of the threat. We continue to identify new emerging risk trends, using inputs from analysis of the external environment and internal sources. We evaluate our risks across different time periods, allowing us to provide the appropriate level of focus on these emerging risks. We work with the relevant experts across the business to assess the potential impacts and time horizon of these risks. Our emerging risks, within predefined risk categories, are provided to the Executive Committee and the Audit and Risk Committee for further scrutiny. Key changes to our principal risks: – The Adverse changes in macroeconomic conditions principal risk has increased. We constantly monitor the economic repercussions of the war in Ukraine and the effects of sovereign debt build-up during the COVID-19 pandemic. These factors contribute to an uncertain outlook. – The Disintermediation principal risk has increased as we consider the impacts of alternative technologies being developed/deployed in the near future. – The Data management and privacy risk was added to the principal risks from watchlist risk, as we continue to face increasing scrutiny from regulators, investors and customers. – As Vodafone continues to transform and simplify, we have included Organisational simplification as a new principal risk. – The Strategic transformation principal risk scope was redefined. The new scope includes the portfolio transformation risk (a previous principal risk), the management of joint ventures, as well as product innovation. The digital transformation sub-risk was removed from this risk. – The Infrastructure competitiveness risk was moved to our watchlist risks (see section below). 56 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
The preparation of the LTVS includes an assessment of the Group’s long-term prospects in addition to an assessment of the 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 2023 and considered the plans and projections assembled as part of the forecasting cycle, which include the Group’s cash flows, 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 estimated the impact of severe but plausible scenarios for all our principal risks on the three-year plan. We also stress tested a combined scenario taking into account the risk interdependencies as defined in the diagram on page 52, where the following risks were modelled as materialising in parallel over the three-year period: Cyber threat: A cyber-attack exploits vulnerabilities allowing unauthorised access to our systems, or a ransomware attack, impacting our ability to service customers for an extended period of time. Data management and privacy: A data breach, through malicious activities (e.g. cyber-attack), leading to an investigation and a subsequent GDPR fine. Adverse changes in macroeconomic conditions: Adverse changes in the macroeconomic environment could result in restricted ability to refinance, while prolonged high inflation rates, may lead to increased interest rates. Adverse political and policy measures: Adverse political and policy interventions could lead to increased cost of operations, and directly or indirectly reduce profitability. Long-term viability statement (‘LTVS’) 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 threats related to each principal risk are described on pages 52 to 55). As an input to the strategy discussion, the Board considers the principal risks (including Cyber threat, Data management and privacy, Adverse changes in macroeconomic conditions, and Adverse political and policy measures) 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 Annual Report (page 7), 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. The assessment takes into account possible mitigating actions available to management were any risk or combination of risks to materialise. Cash and cash equivalents available of €11.6 billion (page 170) as of 31 March 2023, 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 profitability 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 2026. Assessment of prospects Assessment of viability Outlook, strategy & 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 ensuring the sustainability of value creation Long Range Plan is the three-year forecast approved by the Board on an annual basis, used to calculate cash position and headroom 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, were a black swan event to occur Severe but plausible scenarios modelled to quantify the cash impact of an individual principal risk materialising over the three-year period Quantification of the cash impact of combined scenarios where multiple risks materialise across one or more markets, over the three-year period Viability results from comparing the cash impact of severe but plausible scenarios on the available headroom, considering additional liquidity options Long-term viability statement Directors confirm that they have 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 Sensitivity analysis Principal risks Combined scenario 57 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
TCFD disclosure Task Force on Climate-related Financial Disclosures We recognise that climate change poses a number of physical (i.e. extreme weather events) and transition-related (i.e. related to moving to a greener economy) risks and opportunities for our business. As part of our commitment to operate ethically and sustainably, we strive to understand climate-related risks and opportunities and embed responses to these into our business strategy and operations. We have been aligning our internal processes with the recommendations of the Task Force on Climate-related Financial Disclosures (‘TCFD’) and will continue to enhance our policies, processes and reporting with respect to the TCFD recommendations. Our progress is summarised in this section. TCFD recommendations For the year ending 31 March 2023, we are consistent with 10 out of 11 TCFD recommendations. There is one recommendation with which we are currently partially consistent: Metrics and targets (physical risks): We measure and have set ambitious targets for reducing our carbon emissions. We also have metrics in place to measure our energy use, which is one underlying factor in our exposure to transition risk. As a measure of the climate opportunity associated with developing and deploying products to help society decarbonise, we also report annually on the carbon emissions avoided through the use of green digital solutions. This year, we also began measuring our physical risk exposure and management based on the number of infrastructure assets that are at high or very high risk of climate impacts such as extreme weather events. Whilst these are important steps forward on our climate-related risk disclosure journey, we recognise that we do not yet have metrics and targets in place to measure our full suite of climate risks. Our disclosure this year improves upon our position in 2022, when we were only consistent with eight out of 11 recommendations. In this year’s report, we are pleased to include further detail on the impact of climate-related risks and opportunities on our business strategy and financial planning, and a quantitative measure of the number of assets at high or very high risk of physical climate change. As industry practices evolve and our internal programme matures, we aim to address the remaining gaps in our climate-related risk management and reporting approach over the next three years. TCFD reporting As with last year’s disclosure, we have once again published our comprehensive TCFD overview in a standalone report. This enables us to provide more detailed information for investors and other interested stakeholders in a more accessible format. Governance Our strategy is approved by the Board which has reviewed Vodafone’s purpose and Planet commitments to reduce our environmental impact, such as reaching ‘net zero’ emissions across our full value chain (Scope 1, 2 and 3) by 2040. The Board’s Audit and Risk Committee has oversight of our climate-related risks and opportunities. In addition, the ESG Committee provides oversight of the broader ESG strategy. Read more about the ESG Committee on pages 83 to 84 The Chief External and Corporate Affairs Officer, a member of the Executive Committee, is the sponsor for the Planet agenda as part of our purpose-led strategy and has overall accountability for climate change action within the Group. This includes providing updates to the Board on the progress towards our climate-related goals. The Chief Network Officer is responsible for the overall management of the physical risks to Vodafone due to the nature of our business. In addition, our Remuneration Policy incorporates our ESG priorities in the long-term incentive plan. For the 2023 award, the ESG measure under the long-term incentive plan includes an ambition on planet linked to our aim of reaching net zero for our own operations under Scope 1 and 2 by 2030. Read more about ESG measures in our long-term incentive plan on pages 93 to 106 TCFD recommendations We have considered our ‘comply or explain’ obligation under the UK’s Financial Conduct Authority Listing Rules and have detailed in the table below the 11 TCFD recommendations with which we are fully or partially consistent. Governance Progress a. Describe the Board’s oversight of climate-related risks and opportunities C b. Describe management’s role in assessing and managing climate-related risks and opportunities C Strategy Progress c. Describe the climate-related risks and opportunities the organisation has identified over the short, medium and long term C d. Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning C e. Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario C Risk Management Progress f. Describe the organisation’s processes for identifying and assessing climate-related risks C g. Describe the organisation’s processes for managing climate-related risks C h. Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organisation’s overall risk management C Metrics and Targets Progress i. Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process C j. Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks C k. Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets PC Key Consistent with the TCFD recommendations Partially consistent with the TCFD recommendations C PC 58 Strategic report Vodafone Group Plc Annual Report on Form 20-F 2023 Governance Financials Other information |
Strategy This year, we once again conducted our annual exercise to refresh the assessment of the top climate-related risks and opportunities to ensure we are incorporating any change in climate trends or science, as well as new risks and opportunities. The exercise confirmed that the identified risks and opportunities remain largely unchanged from the previous assessment, although some require more attention in the short term due to the macroeconomic environment and volatility in the energy market. Last year, we built on our previous climate scenario work and considered our resilience against key climate-related risks and opportunities. That work included mapping the current controls in place and the strength of those controls for each material risk and opportunity. Overall, we have controls in place for all identified key risks and this helps us build resilience against the potential impacts on the business. Physical risks are assessed and considered throughout the critical stages of the asset lifecycle. Environmental risks are assessed ahead of the acquisition of buildings and network equipment. We have teams and processes dedicated to disaster recovery and business continuity. In addition, we mitigate the financial impact of physical risks through insurance and damage response. Our broader Planet strategy, targets and external communications are designed to manage and mitigate the potential impacts of transition risks on the Group. We have specialist teams that monitor and drive progress to maintain and meet expectations from key stakeholders. This year, we took further steps to improve energy efficiency and limit exposure to energy market volatility as it is a key short-term risk. Similarly, harnessing our current climate and ESG strategy and monitoring market trends will enable us to also capture opportunities arising from the low‑carbon transition. Read more about how our products and services help our customers reduce their emissions on page 37 This year, we also conducted a scenario analysis focusing on the potential impact of physical climate-related risks on specific types of our infrastructure assets, with the aim of understanding how our infrastructure asset portfolio is expected to evolve in the long term under different climate change scenarios. This exercise will inform our longer-term resilience plans related to physical climate-related risks, such as damage to our infrastructure. Risk management We have aligned our climate-related risk management process with our overall risk management framework. Climate change was discussed and considered during the principal risk assessment process and it was once again placed on our risk watchlist. Read more about our risk management framework on pages 51 to 52 and 56 To ensure a robust identification and assessment of climate-related risks and opportunities we use the following data sources: – Climate-change publications and data; – Guidance from the TCFD on potential risks and opportunities; – Previous year’s assessments; and – Key stakeholders’ inputs via a survey and targeted discussions. We evaluate the materiality of the identified risks and opportunities by assessing their likelihood and impact using our global risk management framework. This process helps us determine the relative significance of the climate-related risks in relation to other risks. Due to the nature of the topic, there are many teams across Vodafone that are responsible for managing climate-related risks and we have multiple processes and policies in place to ensure we are managing them effectively. Metrics and targets We use a wide variety of metrics to measure the current and potential impacts of climate-related risks. We have been measuring and reporting on energy and carbon emissions since 2001 and have been responding to CDP’s climate change questionnaire since 2010. Our main carbon emissions metrics are also subject to independent limited assurance. In addition, we have set a number of targets to manage climate-related risks and reduce our impact on the environment, such as reaching ‘net zero’ emissions across our full value chain (Scope 1, 2 and 3) by 2040 and purchasing 100% renewable electricity in all markets by 2025. Since July 2021, our European network has been 100% powered by electricity from renewable sources. We constantly seek to refresh and improve our metrics and key risk indicators to better measure and manage climate-related risks and opportunities. We recognise that we need to mature further in this area as industry practices and better-quality data become available. Read more about our existing environmental KPIs on pages 35 to 38 Material climate-related risks and opportunities Physical risks: – Damage to infrastructure caused by increasing frequency and severity of extreme weather events, including wildfires, flooding, and storms – Interruption or reduction in the quality of services due to increased precipitation and extreme weather events – Supply chain disruption due to climate impacts on key suppliers – Increases in global temperatures leading to an increase in the consumption of energy for cooling Transition risks: – Increasing stakeholder scrutiny over our environmental performance impacting revenue, market share and reputation – Rising price of energy (renewable and non-renewable) – Emerging carbon regulations and carbon taxation – Changing mandates and regulations over infrastructure energy efficiency – Third-party dependency impacting our ability to meet carbon targets and improve efficiencies Opportunities: – Development of new product lines enabling customers to better manage climate-related impacts – Reduced costs through sustainable procurement 59 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
3 5 4 2 8 5 2 Environmental, Social and Governance Political/ Regulatory Technology/ Telecom Emerging Media markets Consumer Finance goods and services/ Marketing Skills and expertise of Non-Executive Directors Our Board Leadership, governance and engagement Governance at a glance Membership and attendance The table below details the Board and Committee meeting attendance during the year to 31 March 2023. The number of attendances is shown next to the maximum number of meetings the Director was entitled to attend. Ad hoc meetings of the Board and its Committees were also held as required during the year. Name Board Nominations and Governance Committee Audit and Risk Committee Remuneration Committee ESG Committee Stephen Carter1 4/4 2/2 – – – Delphine Ernotte Cunci1 4/4 – – 2/2 – Sir Crispin Davis 6/6 3/46 – – – Margherita Della Valle 6/6 – – – – Michel Demaré 6/6 4/4 4/57 4/57 – Dame Clara Furse 6/6 – – 5/5 2/2 Valerie Gooding 6/6 4/4 – 5/5 2/2 Deborah Kerr 5/64 – 4/54 – – Amparo Moraleda 6/6 – 5/5 – 2/2 David Nish 5/65 – 5/5 – – Christine Ramon2 2/2 – – – – Nick Read3 4/4 – – – – Simon Segars1 4/4 – – – 1/1 Jean-François van Boxmeer 6/6 4/4 – – – Notes: 1. Stephen Carter, Delphine Ernotte Cunci and Simon Segars joined the Board on 26 July 2022. 2. Christine Ramon joined the Board on 14 November 2022. 3. Nick Read stepped down from the Board on 31 December 2022. 4. Deborah Kerr was unable to attend one scheduled meeting of the Board due to ill health and one scheduled meeting of the Audit and Risk Committee due to personal reasons. 5. David Nish was unable to attend one scheduled meeting of the Board due to a scheduling conflict. 6. Sir Crispin Davis was unable to attend one scheduled meeting of the Nominations and Governance Committee due to time zone differences. 7. Michel Demaré was unable to attend one scheduled meeting of the Audit and Risk Committee and one scheduled meeting of the Remuneration Committee due to a family emergency. Board evaluation Progress in the year The 2023 Board evaluation reported improvements had been achieved in: – Appointing four new Non-Executive Directors, each bringing extensive technology and telecommunications experience; – devoting more time to strategy by holding several strategic deep-dive sessions during the year to enhance free-flowing discussions; and – establishing a Board sub-committee to consider mergers and acquisitions (‘M&A’) transactions. Read more on page 73 Tenure 4 6 3 0-3 years 6 7-10 years 4 4-6 years 3 Gender diversity 53.8% Male 6 Female 7 Independence 1 11 1 Independent 1 NED Chair Independent 11 Executive 1 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 White Ethnically diverse Ethnicity 10 11 10 10 13 12 11 11 11 12 1 1 1 1 1 2 1 1 1 Senior Board positions Chair Chief Executive1 Senior Independent Director Chief Financial Officer1 Male Female Note: 1. The roles of Chief Executive and Chief Financial Officer are held by Margherita Della Valle. The Nominations and Governance Committee regularly reviews the Board’s composition with a view to ensuring a diverse mix of backgrounds, skills, knowledge and experience as well as deep expertise in technology and telecommunications. Each year, the Board monitors and improves its performance by conducting an annual performance review. Note: As at 31 March 2023 60 Strategic report Governance Financials Other information Vodafone Group Plc Annual Report on Form 20-F 2023 |
Committee activities Nominations and Governance Committee In addition to keeping under review developments in corporate governance and the Company’s responses to them, the Nominations and Governance Committee makes recommendations to the Board about Board composition and ensures Board diversity and the necessary balance of skills. The Committee recognises the need to anticipate the skills and attributes that will be needed on the Board as the Company develops. A key focus for the Committee this year has been Board and Executive Committee composition. For the latter half of the year, the main activity has concerned succession planning for the Group Chief Executive. Read more on pages 74-76 Board changes Following shareholder approval at the Company’s Annual General Meeting on 26 July 2022, Stephen Carter, Delphine Ernotte Cunci and Simon Segars joined the Board as Non-Executive Directors. In addition, on 14 November 2022, Christine Ramon joined the Board as a Non-Executive Director. Christine brings extensive financial and strategic experience, along with telecommunications expertise. She also has comprehensive African market experience that will support the strategic aims of the Group. ESG Committee The Committee provides oversight of Vodafone’s ESG programme: purpose pillars (Digital Society, Inclusion for All and Planet), sustainability and responsible business practices as well as Vodafone’s contribution to the societies we operate in under the social contract. The Committee also monitors progress against key performance indicators and external ESG index results. Focus for this year centred on enhancing the approach to ESG disclosure and assurance and expanding agenda items to reflect the Committee’s purpose. Key discussion topics included ESG indices and rankings, digital inclusion, human rights and our Digital Society purpose pillar. Read more on pages 83-84 Remuneration Committee The Remuneration Committee sets, assesses and recommends for shareholder approval the Remuneration Policy for Executive Directors, sets the remuneration of the Executive Directors and approves the remuneration of the Chair of the Board and members of the Executive Committee. It also reviews remuneration arrangements across the Group to ensure they are aligned with our strategy, support our purpose and celebrate the ‘Spirit of Vodafone’. Fair pay principles: 1. Market competitive 4. Share in our successes 2. Free from discrimination 5. Provide benefits for all 3. Provide a good standard of living 6. Open and transparent During the year the Committee reviewed the Remuneration Policy ahead of it being put to shareholders’ vote at the 2023 Annual General Meeting. Details of this and the associated shareholder engagement can be found on pages 85 and 87. Read more on pages 85-106 To operate efficiently and to ensure matters are given the right level of focus, the Board delegates some of its responsibilities to its Committees. These provide focused oversight on: Board composition, performance, and succession planning; financial reporting, risk, internal processes and controls; remuneration practices; and environmental, sustainability and governance topics. Click or scan to watch the Chair of the Audit Committee, David Nish, explain his role: investors.vodafone.com/videos Click or scan to watch conversations with our new Non-Executive Directors: investors.vodafone.com/videos Click or scan to watch the Chair of the ESG Committee, Amparo Moraleda, explain her role: investors.vodafone.com/videos Click or scan to watch the Senior Independent Director and Chair of the Remuneration Committee, Valerie Gooding, explain her role: investors.vodafone.com/videos On 31 December 2022, Nick Read stood down as Group Chief Executive. Margherita Della Valle was appointed Group Chief Executive for an interim period with effect from 1 January 2023, in addition to her continuing role as Group Chief Financial Officer, whilst the Board undertook a rigorous internal and external search to find a permanent Group Chief Executive. On 27 April 2023, the Company announced the appointment of Margherita Della Valle as Group Chief Executive, Margherita will also continue as Group Chief Financial Officer until an external search for a new successor is completed. Audit and Risk Committee The Committee oversees the Group’s financial reporting, risk management, internal control and assurance processes and the external audit. This includes in-depth reviews of our principal risks, the review of our Annual Report and a programme of deep-dives across multiple business units with a focus on the risk and control environment. The Committee also monitors the activities and effectiveness of the Internal Audit function and has primary responsibility for overseeing the relationship with the external auditor. Deep-dive topics this year included reviews of adverse regulatory measures, technology resilience and readiness, cyber threats, infrastructure competitiveness and disintermediation risk. Entity deep-dives included Vodacom, the cluster of markets within the Other Europe segment, Vodafone Spain, Vodafone Germany, Vodafone Roaming Services and Vantage Towers. The Committee also has joint responsibility, with the ESG Committee, for reviewing the appropriateness and adequacy of ESG disclosures provided within the Annual Report and the ESG Addendum, including approving its content. Read more on pages 77-82 61 Strategic report Governance Financials Other information Vodafone Group Plc Annual Report on Form 20-F 2023 |
Dear shareholders, I am pleased to present the Corporate Governance Report for the year ended 31 March 2023 on behalf of the Board. The year in review This year, has again, been one of change and I am grateful to my fellow Directors, the executive team, and the people of Vodafone for their support, flexibility, and strong spirit throughout. In spite of the challenges faced we have functioned well and have continued to take seriously our commitment to strong and robust corporate governance to support the creation of long-term sustainable value for the benefit of all our stakeholders. This report provides details about the Board and an explanation of our individual roles and responsibilities as well as providing an insight into the activities of the Board and Committees over the year and how we seek to ensure the highest standards of corporate governance remain embedded throughout the Company, underpinning and supporting our business and the decisions we make. Board succession Executive Directors During the year, the Board and Nominations and Governance Committee reviewed the future leadership of the Company and, as announced on 5 December 2022, the Board agreed with Nick Read that he would step down as Group Chief Executive and as a Director of the Company on 31 December 2022. I would like to thank Nick for his commitment and significant contribution to Vodafone as Group Chief Executive and throughout his career spanning more than two decades with the Company. In addition to her role as Group Chief Financial Officer, Margherita Della Valle was appointed Group Chief Executive with effect from 1 January 2023 on an interim basis. The Board initiated a process with the support of Egon Zehnder, an independent external search firm, to find a permanent Group Chief Executive and on 27 April 2023, we announced the permanent appointment of Margherita Della Valle. The Board and I have been impressed with her pace and decisiveness to begin the necessary transformation of Vodafone. Tasked with accelerating the execution of the Company’s strategy to improve operational performance and deliver shareholder value the Board fully supports her. Margherita will also continue as Group Chief Financial Officer until an external search for a new Group Chief Financial Officer is complete. Non-Executive Directors The Board, together with the Nominations and Governance Committee, has continued to monitor the composition and skills matrix of the Board with a focus on succession planning for our Non-Executive Directors. Last year we indicated several upcoming scheduled retirements from the Board and on 10 May 2023 we announced that Valerie Gooding, Sir Crispin Davis and Dame Clara Furse would not be seeking re-election at the 2023 Annual General Meeting (‘AGM’). At the date of publication, Valerie Gooding has served more than nine years as a Director; however, she will remain on the Board until the conclusion of the 2023 AGM in order to allow for a gradual and smooth transition period of the Senior Independent Director role to David Nish, Remuneration Committee Chair role to Amparo Moraleda and Workforce Engagement Lead roles to Delphine Ernotte Cunci and Christine Ramon. Following evaluation, Valerie is still considered independent. In anticipation of these retirements, there have been a number of Board changes during the year, with the appointment of four new Non-Executive Directors, Stephen Carter, Delphine Ernotte Cunci, Simon Segars and Christine Ramon. I am delighted to welcome them to Vodafone’s Board. Their appointments bring extensive experience and track records of value creation across a variety of sectors which will be of great support to the Group. A full induction programme is underway for the new Non-Executive Directors, including meetings with executives leading our businesses and functions. Read more about the appointment process on page 74 Board diversity We remain firmly committed to having a Board that is diverse in all respects. With support from the Nominations and Governance Committee, we continue to monitor requirements and are proud to meet these including the target that at least 40% of the Board is composed of women. This includes our Group Chief Executive and Group Chief Financial Officer, Margherita Della Valle and our Senior Independent Director, Valerie Gooding. We have also met the Parker Review target to have at least one Director from a non-white ethnic minority. Read more about our Board Diversity Policy on page 75 Beyond the Board, we announced last year the introduction of a new ethnic diversity target that 25% of global senior leadership will come from ethnically diverse backgrounds by 2030. Read more on page 34 Board evaluation This year the Board undertook an internal evaluation led by myself with support from the Group General Counsel and Company Secretary. I am pleased to report the findings show there is clear consensus that the Board is operating well with effective leadership and where open discussion and input from all members is encouraged. Positive feedback was also received on the composition of the Board and the conduct of meetings and materials provided. Some areas for improvement were identified and we will look to progress these during the year ahead. Read more on page 73 Continued stakeholder engagement We recognise that Vodafone’s success is dependent on the Board taking decisions for the benefit of our shareholders and in doing so having regard to all our stakeholders. Throughout the year, I have interacted with institutional shareholders and engaged on topics such as the Company’s strategy, Board and Executive changes, and succession plans. I was delighted that as well as virtual meetings, we were able to host some meetings in person for the first time since the COVID-19 pandemic. The Board has also received updates on the investor perception study completed during the year. In her role as Chair of the Remuneration Committee, Valerie Gooding engaged with shareholders on the proposed updates to the Remuneration Policy and remuneration arrangements in respect of the forthcoming year. Read more on page 85 Valerie Gooding also continued to serve as the Board’s Workforce Engagement Lead, gathering the views of employees through a number of employee consultative committees across all our European and African markets. Key discussion topics from this year’s meetings included ‘Future Ready Vodafone’ ways of working, the ‘Grow with Vodafone’ personal development platform, economic uncertainty and the Race, Ethnicity and Cultural Heritage (‘REACH’) targets. We take seriously our commitment to strong and robust corporate governance Chair’s governance statement 62 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Compliance with the 2018 UK Corporate Governance Code (the ‘Code’) In respect of the year ended 31 March 2023 Vodafone Group Plc was subject to the Code (available from www.frc.org.uk). The Board is pleased to confirm that Vodafone applied the principles and complied with all the provisions of the Code throughout the year. Further information on compliance with the Code can be found as follows: This year, we have continued to publish ‘Board conversations’ with our recently appointed Non-Executive Directors, to give all shareholders the opportunity to hear directly from them. The Board is committed to understanding the views of all of Vodafone’s stakeholders to inform the decisions that we make. Read more on pages 10-12 Disclosure Guidance and Transparency Rules We comply with the Corporate Governance Statement requirements pursuant to the FCA’s Disclosure Guidance and Transparency Rules by virtue of the information included in this ‘Governance’ section of the Annual Report together with information contained in the ‘Shareholder information’ section on pages 230 to 235. Board leadership and Company purpose Read more Long-term value and sustainability 26-50 57 Culture 13-15 40 Shareholder engagement 10-12 62-63 Other stakeholder engagement 10-12 85 Conflicts of interest 75 Role of the Chair 70 Division of responsibilities Read more Non-Executive Directors 65-67 70 Independence 60 75 Composition, succession and evaluation Read more Appointments and succession planning 61-62 74-75 Skills, experience and knowledge 60 65-67 Length of service 60 65-67 Evaluation 60 73 Diversity 14 60 62 75-76 Audit, risk and internal control Read more Committee 77-82 Integrity of financial statements 57 78-82 112 Fair, balanced and understandable 79 111-112 Internal controls and risk management 81 External auditor 82 Principal and emerging risks 51-59 81 Remuneration Read more Policies and practices 85-106 Alignment with purpose, values and long-term strategy 85-89 Independent judgement and discretion 86 94 The 2022 AGM was held at Vodafone UK’s headquarters in Newbury, Berkshire and was available to watch live via a webcast for those shareholders who were unable to attend in person. Shareholders were able to pre-submit questions or, if attending in person, ask questions on the day, for consideration by the Directors at the meeting. We intend to hold the 2023 AGM in the same format. Click to read more about the AGM: vodafone.com/agm Purpose and the ‘Spirit of Vodafone’ Our purpose ‘We connect for a better future’ is at the core of our strategy, enabling inclusive and sustainable digital society. It has guided actions at every level throughout the year. Read more on pages 28-39 The Board understands the importance of culture and setting the tone of the organisation from the top and embedding it throughout the Group. We refer to our culture as the ‘Spirit of Vodafone’. It is a key component for our strategic, organisational and digital transformation. The aim of our people strategy is to create an environment where growing never stops and everyone can truly belong, innovate, and fulfil their potential. We continue to hold quarterly ‘Spirit of Vodafone’ days for our employees, designed to provide dedicated space for personal growth, wellbeing and connection. The Board receives regular updates on employee engagement and the ‘Spirit of Vodafone’, which enables it to make informed decisions where appropriate. Read more about our culture and people strategy on pages 13-15 The year ahead On 10 May 2023, the Board approved the creation of a Technology Committee as a new Board Committee. Once established, during the course of this year, the Committee will oversee the technology strategy and how it supports the overall Company strategy. Further information on this Committee will be shared in next year’s report. A key focus for myself and the Board will be completing the appointment process for a new Group Chief Financial Officer and supporting that individual as they step into the role alongside Margherita Della Valle. In addition, the Board will continue to drive for better returns for shareholders and will monitor the Company’s progress on the execution of Vodafone’s strategy focusing on Customers, Simplicity and Growth. The Board will keep the Group’s strategy under review, adapting it to anticipate or respond to opportunities and risks in the markets in which we operate. /s/ Jean-François van Boxmeer Jean-François van Boxmeer Chair of the Board Click or scan to watch conversations with our Non-Executive Directors: investors.vodafone.com/videos 63 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Our Company purpose, values and culture Purpose At Vodafone, our purpose is to connect for a better future by enabling inclusive and sustainable digital societies and it is supported by our three purpose pillars: Digital Society, Inclusion for All and Planet. Our purpose is championed by our Board, which is collectively responsible for the oversight and long-term success of the Company. It is aligned with our culture and strategy, placed at the forefront of our decision-making and strategy development, and the Board considers how the initiatives progressed by management throughout the year have advanced our purpose. Board oversight ensures that continued product development realises our ambition to connect for a better future. Read more about our purpose on pages 28-39 Strategy The Board monitors the Company’s progress against established strategic objectives and performance against competitors. Board meetings are planned with reference to the Company’s strategic priorities and meeting agendas are constructed to deliver information at appropriate junctures and from a broad range of management, to enable the Board to effectively review and challenge. Read more about the new roadmap for Vodafone on page 7 Governance The Board ensures the highest standard of corporate governance is maintained by regularly reviewing developments in governance best practice and ensuring these are adopted by the Company. The Board dedicated time during the year to thoroughly consider the independence and time commitment of all Directors, the arrangements in place to monitor conflicts of interest, as well as evaluating the effectiveness of the Board and each of the Directors. All Directors have access to the advice of the Company Secretary, who is responsible for advising the Board on all governance matters and ensuring the Board has access to the necessary policies, processes and resources required to operate efficiently and effectively. Read more about our governance structure and roles and responsibilities on pages 68-70 Values and culture The Board has a critical role in setting the tone of our organisation and championing the behaviours we expect to see throughout the Group. The ‘Spirit of Vodafone’ aligns with our purpose and strategy, which ultimately leads to a more motivated and productive workforce. The Board has continued to influence and monitor culture throughout the year and receives regular updates on the ‘Spirit of Vodafone’ initiatives, including ‘Spirit of Vodafone’ Days, the two Spirit Beat surveys and the additional global pulse survey. The cultural climate in Vodafone is measured through a number of mechanisms including policy and compliance processes, internal audit, and formal and informal channels for employees to raise concerns. The latter includes our bi-annual people survey and our whistleblowing programme, Speak Up, which is also available to the contractors and suppliers working with us. A series of communication materials were shared in April through ‘Workplace’, our internal digital platform, and other channels to address common misconceptions and encourage more employees to come forward with experiences and/or observations of those breaching the code of conduct. The Board is apprised of any material whistleblowing incidents. Alongside these mechanisms, the Board remains committed to engagement with the workforce and these opportunities continue to shape how the Board influences and understands the Company’s culture. Read more about Speak Up on page 40 Governance Employee engagement Given the geographical size and complexity of our business, we utilise several employee engagement methods and communication channels between the Board, the Executive Committee, and our workforce to enable meaningful engagement. The Board receives regular updates including an annual written report from Valerie Gooding, the designated Workforce Engagement Lead, detailing activities undertaken during the year to engage with employees. Examples of these initiatives include: Workforce Engagement Lead attendance at Employee Forums The Board was apprised of feedback from Valerie Gooding’s attendance at Employee Forums, namely the European Employee Consultative Committee. It is evident from these meetings that employee delegates continue to appreciate the opportunity to speak directly to a Board member. Through these means we understand that our people are engaged and interested in business strategy, mergers & acquisitions (‘M&A’) activity and opportunities for personal development. Workplace communications ‘Workplace’ is our internal digital platform that allows employees to start conversations and themed groups on topics of their choice. The Executive Committee and Internal Communications team regularly post relevant business updates on the platform, with employees able to directly respond with views and questions. Key highlights in the year include: Session Topic Grow with Vodafone People development Discussion focus: The Chief Human Resources Officer announced our new digital and intuitive career, skills and learning experience – Grow with Vodafone. The tool is designed to deliver learning and career recommendations based on individuals’ unique skills profiles in a connected and personal way. Global pride webinar D&I Discussion focus: The Group Chief Executive, Chief Human Resources Officer, expert guest speakers and colleagues from around the world joined our global pride webinar to help our employees understand the current challenges that LGBT+ people are facing, what we can do about them as individuals and what Vodafone is doing. 2022 highlights Our business Discussion focus: A highlight reel was published showcasing what employees across the business have accomplished together over the last year and provided inspiration to achieve even more next year by raising our ambition, being customer focused, and delivering growth. Board and Executive communications Sessions have been held and videos published to provide updates that matter most to our people, with key highlights in the year including: Session Topic #StayConnected Our business Discussion focus: Video updates where the Group Chief Executive speaks with various leaders both inside and outside our business about key topics of interest. There have been many communications this year, including a video address from the Chair following the change in Group Chief Executive to ensure employees are kept informed and reassured regarding developments across the business. Financial results and Group performance Our business strategy and performance Discussion focus: Quarterly trading update videos on financial results and Group performance were published as was a ‘WeConnect’ webinar, where the Group Chief Executive and Executive Committee members discussed key priorities. Employee listening We have extended the opportunities for employees to share their experiences throughout their time at Vodafone. For example, we proactively gather employee perspectives through the typical new joiner lifecycle by measuring sentiment in the first week, month, and 90 days. Exiting employees are also requested to submit feedback 48 hours after logging their notice. 64 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Our Board Our business is led by our Board of Directors. Biographical details of the Directors as at 21 June 2023 are provided below. Click to find full biographical information for the Directors: vodafone.com/board External appointments listed are only those required to be disclosed pursuant to Listing Rule 9.6. Jean-François van Boxmeer N Chair – Independent on appointment Tenure: 2 years Career and experience: Jean-François is highly regarded as having been one of the longest standing and most successful CEOs in Europe. He was the Chief Executive of Heineken for 15 years, having been with the company for 36 years. Jean-François held a number of senior roles in Africa and Europe before joining Heineken’s Executive Board in 2001 with worldwide responsibility for supply chain and technical services, as well as regional responsibility for the operating businesses in North-West Europe, Central and Eastern Europe and Sub-Saharan Africa. Skills and attributes which support strategy and long-term success: – Extensive international experience in driving growth through both business-to-business and business-to-consumer business models, both of which are integral components of the Company’s strategy and long-term success. – Exposure to overseeing the management of complex and far-reaching transformational projects, including specific hands-on experience of the countries in which the Company operates. – Skilled communicator with a strong track record of developing stakeholder relations and overseeing governance in the context of a large global firm, which, in his capacity as Chair of the Board, continues to be of great value to the Company. External appointments: – Heineken Holding N.V., non-executive director Margherita Della Valle Group Chief Executive and Chief Financial Officer – Executive Director Tenure: 4 years Career and experience: Margherita was appointed Group Chief Financial Officer in 2018, and Group Chief Executive on 1 January 2023. Margherita’s previous roles within Vodafone were Deputy Chief Financial Officer from 2015 to 2018, Group Financial Controller, Chief Financial Officer for Vodafone’s European region and Chief Financial Officer for Vodafone Italy. She joined Omnitel Pronto Italia – which later became Vodafone Italy – in 1994 and held key senior positions in consumer, marketing, business analytics and customer base management before moving to finance. After moving to a Group finance position in 2007, Margherita established a number of shared operations functions, which now employ over 30,000 people and provides a portfolio of services spanning IT operations, customer care, supply chain management, human resources and finance operations to 27 partners in other markets. Skills and attributes which support strategy and long-term success: – Strong commercial and operational leadership with expert knowledge of the global telecommunications landscape after close to three decades of direct industry experience. – Considerable corporate finance and accounting experience, translating into an expert understanding of capital allocation, operational efficiency and investment appraisal. – After almost 30 years at Vodafone, Margherita has a strong personal affiliation and understanding of the Company’s culture and values, which help her represent the Company to all stakeholders and develop and implement the strategy. – Proven record of developing the next generation of talent, including senior leadership within Vodafone and more broadly through her founding of NXT GEN Women in Finance, an initiative where European Chief Financial Officers identify, mentor and promote rising female stars in finance. External appointments: – Reckitt Benckiser Group plc, non-executive director and member of the audit committee Stephen A. Carter CBE N Non-Executive Director Tenure: <1 year Career and experience: Since becoming Group CEO of Informa plc in 2013, Stephen has led Informa plc through a transformation into an international leader in B2B events, digital services and academic markets and is now a FTSE 50 Company. Prior to Informa, Stephen was President and Managing Director at Alcatel-Lucent, where he played a key role in restructuring the business, and investing in next-generation mobile network equipment product development delivery. Stephen also served a term as the founding CEO of Ofcom, where he brought together five different regulatory authorities. After Ofcom, the UK’s telecommunication regulator, Stephen served as Chief of Strategy for the UK’s Prime Minister, and then as a Minister of State for Communications, Technology & Broadcasting. Stephen later served as a non-executive director for the Department for Business, Energy and Industrial Strategy from 2016-2020. Skills and attributes which support strategy and long-term success: – Track record of value creation, with specific experience in the telecoms and media sectors. – Experience in public policy, government affairs and regulatory engagement, which is welcomed in relation to the highly regulated environment within which the Company operates. External appointments: – Informa plc, group chief executive Michel Demaré A N R Non-Executive Director Tenure: 5 years Career and experience:: Michel began his career at Continental Bank SA, Belgium, before spending 18 years with The Dow Chemical Company in several finance and strategy responsibilities in Benelux, France, the US and Switzerland. He was Chief Financial Officer Europe for Baxter International from 2002 to 2005, and Chief Financial Officer at ABB Group from 2005 to 2013. He also served as Interim CEO of ABB during 2008. He was independent vice-chairman at UBS Group from 2009 to 2019, and vice-chairman/chairman of Syngenta AG from 2013 to 2017. Skills and attributes which support strategy and long-term success: – Proven multinational business leader with substantial international finance, strategy and M&A experience. – Highly skilled in governance and corporate stewardship, which Michel brings both to the Board and to each of the Committees of the Company on which he sits. External appointments: – AstraZeneca plc, non-executive chair, chair of the nomination and governance committee and member of the remuneration committee. Committee key Audit and Risk Committee ESG Committee Nominations and Governance Committee Remuneration Committee Solid background signifies Committee Chair A E N R 65 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Governance (continued) Delphine Ernotte Cunci Non-Executive Director Tenure: <1 year Career and experience: Since 2015, Delphine has been President of France Télévisions, the French national public television broadcaster. Her mandate was extended in 2020, the first time this has happened to an incumbent President. Prior to that, Delphine spent 26 years at Orange S.A., where she became Deputy CEO in 2010 and led the successful turnaround of Orange France. Skills and attributes which support strategy and long-term success: – Considerable experience in the telecoms sector and, more recently, in media and technology, which enhances Board understanding of trends relevant to the Company’s operations and the wider European regulatory environment. – Delphine’s engineering background and distinguished career at Orange provide a firm grounding to the Board’s evaluation of specific opportunities within the telecoms and connectivity space. Deborah Kerr A Non-Executive Director Tenure: 1 year Career and experience: Deborah is Managing Director at Warburg Pincus, where she serves as co-head of Value Creation. Deborah has previously held senior executive roles and non-executive appointments across a range of sectors, including senior executive roles at Sabre, the travel technology company, Fair Isaac Corp, the data analytics business, and Hewlett-Packard Company, where she was Chief Technology Officer for HP’s Enterprise Services operations. Until recently, Deborah was also a non-executive director of EXLservice Holdings Inc, the business process solutions company. Deborah has also held non-executive roles at International Airline Group, the airline conglomerate, DH Corporation, a global FinTech solutions and service provider, and Mitchell International Inc, a privately owned global technology business. Skills and attributes which support strategy and long-term success: – A wealth of technological expertise, including an understanding of complex digital transformations, which continues to be central to the next phase of the Company’s growth. – Detailed knowledge of the technology market, which, in the context of her role as a member of the Audit and Risk Committee, affords insights into the risk profile of the Company as well as the sectors and markets within which it operates. External appointments: – NetApp, INC, non-executive director and member of the audit committee – Chico’s FAS, Inc., non-executive director and member of the human resources, compensation and benefits committee, the corporate governance and nominating committee and the environmental, social and governance committee Amparo Moraleda A E Non-Executive Director Tenure: 5 years Career and experience: Amparo received a degree in Industrial Engineering from Comillas Pontifical University in Madrid and is also an IESE AMP graduate. She joined IBM in 1988 and spent more than 20 years with the company, becoming President of IBM Southern Europe in 2005. In 2009, Amparo joined Iberdrola S.A. where she was Chief Operating Officer of the International Division until 2012. Amparo is a member of the Royal Academy of Economic and Financial Sciences and was inducted into the Women in Technology International Hall of Fame in 2005. Skills and attributes which support strategy and long-term success: – A background in engineering, IT and technology allows Amparo to act as a balanced and highly knowledgeable sounding board in technical Board discussions and is of great utility to her role as a member of the Audit and Risk Committee. – Corporate social responsibility experience and her experience as a champion of inclusion and diversity are significant assets in the context of her role as Chair of the Company’s ESG Committee. External appointments: – Airbus Group, senior independent director, chair of nominations and governance committee and remuneration committee and member of ethics & compliance committee – CaixaBank S.A., non-executive director and chair of remuneration committee – A.P. Moller-Maersk A/S, non-executive director and member of the audit committee, remuneration committee and transformation and innovation committee David Nish A Tenure: 7 years Career and experience: David was Group Finance Director of Scottish Power Plc from 1999 to 2005 having joined the company as Deputy Finance Director in 1997. Additionally, he was the Chief Executive Officer of Standard Life Plc from January 2010 to September 2015 having joined the company as Group Finance Director in November 2006. David was also a former Partner at Price Waterhouse, where he began his career as a trainee. Previous non-executive positions held by David include boards of London Stock Exchange Group Plc, Zurich Insurance Group Ltd, UK Green Investment Bank plc, Northern Foods Plc, Thus Plc, HDFC Life (India) and Royal Scottish National Orchestra. He was Deputy Chairman of the Association of British Insurers. He was also formerly a member of the City UK Board Advisory Committee and the Financial Services Advisory Board of the Scottish Government. Skills and attributes which support strategy and long-term success: – Wide-ranging operational and strategic experience as a senior leader and a deep understanding of financial and capital markets. – Significant finance experience, bringing strong direction as the Chair of the Audit and Risk Committee through a focus on the risk and control environment and Group resilience. External appointments: – HSBC Holdings plc, senior independent director, chair of the audit committee and member of the risk committee and the nomination and corporate governance committee Christine Ramon A Non-Executive Director Tenure: <1 year Career and experience: Until recently Christine was Chief Financial Officer and executive director of AngloGold Ashanti Ltd, a global gold mining company. Prior to AngloGold Ashanti, she was Chief Financial Officer of Sasol Ltd, a South African energy and chemicals company. Christine was also a former Chief Executive Officer at Johnnic Holdings Ltd, an investment holding company with interests in media, entertainment and telecommunications prior to joining Sasol. Additionally, she has worked at Pepsi as a Financial Controller. Christine has held non-executive director roles at the International Federation of Accountants, the global organisation for the accountancy profession, MTN Group Ltd, a South African telecommunications company, Lafarge S.A., a cement company, and Transnet SOC Ltd, a South African rail, port and pipeline company. R 66 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Skills and attributes which support strategy and long-term success: – Considerable experience of African markets, which aid the Company with its ambition to be a best-in-class telco in Europe and Africa. – Up-to-date investor relations experience and strong ambassadorial skills developed through a distinguished executive career to date. – Highly experienced corporate financial executive with extensive board expertise. This will supplement the Board’s financial, commercial and strategic expertise. External appointments: – Clicks Group Limited, non-executive director Simon Segars E Non-Executive Director Tenure: <1 year Career and experience: Simon was previously the CEO of Arm Ltd., the global leader in the development of semiconductor intellectual property. He successfully led the business from 2013 to 2022 and generated significant value for investors during his tenure. During 2017-2021, Simon was also a Board member of the SoftBank Group. Prior to joining Arm in 1991, he was an engineer at Standard Telephones and Cables. Skills and attributes which support strategy and long-term success: – Possesses significant understanding of technology trends and how these are reshaping industry landscapes, which are important in charting the Company’s long-term strategic direction. – Proven history of business transformation and corporate strategy in dynamic and swiftly evolving commercial environments. External appointments: – Dolby Laboratories, Inc., non-executive director Committee key Audit and Risk Committee ESG Committee Nominations and Governance Committee Remuneration Committee Solid background signifies Committee Chair Retiring Directors Sir Crispin Davis, Dame Clara Furse and Valerie Gooding will not be seeking re-election at the 2023 Annual General Meeting and will therefore retire from the Board at the conclusion of the Meeting on 25 July 2023. The Company announced on 10 May 2023 that with effect from the conclusion of the 2023 AGM, David Nish shall be appointed the Senior Independent Director, Amparo Moraleda shall be appointed Chair of the Remuneration Committee and both Delphine Ernotte Cunci and Christine Ramon shall be appointed Workforce Engagement Leads. Sir Crispin Davis N Non-Executive Director Tenure: Almost 9 years Career and experience: Sir Crispin was formerly the Chief Executive of RELX Group plc (formerly Reed Elsevier) and the digital agency Aegis Group plc, and group managing director of Guinness plc (now Diageo plc). Sir Crispin began his executive career with Procter & Gamble, where he held a variety of senior management roles including as president of the company’s North American Food Business. In his non-executive career, Sir Crispin was the chairman of StarBev Consumer Industries B.V. from 2009 to 2012 and was a non-executive director on the board of GlaxoSmithKline plc from 2003 to 2013, where he chaired the remuneration committee. He was knighted in 2004 for services to publishing and information. Skills and attributes which support strategy and long-term success: – Sir Crispin’s wide-ranging experience as a business leader within the international technology market, which is key to the Company’s operational practice. – Strong commercial background, which has been leant on during his tenure in the Board’s evaluation of strategic investment decisions. Dame Clara Furse DBE E R Non-Executive Director Tenure: Almost 9 years Career and experience: Dame Clara was the Chief Executive of the London Stock Exchange Group plc from 2001 to 2009. She was also previously Group Chief Executive of Credit Lyonnais Rouse Ltd and Managing Director, Global Futures and Options at UBS AG. Dame Clara is also Chair of the UK Voluntary Carbon Markets Forum, which aims to operationalise London’s market for global voluntary carbon credits to accelerate the transition to net zero. Her previous non-executive career includes board appointments at Amadeus IT Group S.A. (2010-2022), Nomura Holdings Inc (2010 to 2017), Legal & General Group plc (2009 to 2013), Euroclear plc (2002 to 2009), Fortis (2006 to 2008) and LIFFE Holdings plc (1991 to 1999). In 2008 she was appointed Dame Commander of the Order of the British Empire. Skills and attributes which support strategy and long-term success: – Over her tenure, Dame Clara has brought a deep understanding of international capital markets, regulation, service industries and business transformation to Board discussions. – Direct and contemporaneous involvement in innovative initiatives to drive the transition to net zero has allowed Dame Clara to contribute significantly to the refinement of the Company’s ESG strategy as a member of its ESG Committee. External appointments: – Assicurazioni Generali S.p.A, non-executive director Valerie Gooding CBE E N R Senior Independent Director and Workforce Engagement Lead Tenure: 9 years Career and experience: Valerie held the position of Chief Executive of British United Provident Association (‘Bupa’) for 10 years between 1998 and 2008, following a successful tenure as Managing Director. Prior to joining Bupa, Valerie spent 23 years working with British Airways plc, where she held a number of positions, including head of Cabin Services, head of Marketing, director of Business Units and director for Asia Pacific. Valerie has also held a variety of non-executive positions in the past, including as non-executive chairman of Premier Farnell plc and Aviva UK, lead non-executive director at the Home Office and a non-executive director of Standard Chartered Bank plc, the BBC, J. Sainsbury plc, Compass Group plc, BAA plc and CWC Communications plc. Valerie was awarded a CBE in 2002 for services to business. Skills and attributes which support strategy and long-term success: – Valerie brought a wealth of international business experience obtained at companies with high levels of customer service, which is of critical importance to the Company’s future success. – Valerie’s varied experience of other organisations, industries and contexts through a large number of prior non-executive positions added a depth of perspective to Board discussions. – People-centric and highly personable leadership style which, together with her focus on leadership and talent, has been essential to roles as the Company’s Senior Independent Director, Remuneration Committee Chair and Workforce Engagement Lead. A E N R 67 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Our governance structure Nominations and Governance Committee Evaluates Board composition and ensures Board diversity and a balance of skills. Reviews Board and Executive Committee succession plans to maintain continuity of skilled resource. Oversees matters relating to corporate governance. Remuneration Committee Sets, reviews and recommends the policy on remuneration of the Chair, executives and senior management team. Monitors the implementation of the Remuneration Policy. Oversees general pay practices across the Group. The Board Responsible for the overall conduct of the Group’s business including our long-term success; setting our purpose; monitoring culture, values, standards and strategic objectives; reviewing our performance; and maintaining positive dialogue with our stakeholders. ESG Committee Oversees the ESG programme, purpose (Inclusion for All, Planet and Digital Society) and the social contract. Monitors progress against key performance indicators and external ESG index results. Oversees progress on ESG commitments and targets. Group Chief Executive Purpose and Reputation Steering Committee Assists the Executive Committee with the effective coordination of purpose activities and advises on reputational risks and policy matters. Global Products Board Supports the Executive Committee by providing visibility of global product strategy and lifecycle and identifies capital allocation opportunities. Executive Committee Focuses on strategy implementation, financial and competitive performance, commercial and technological developments, succession planning and organisational development. Group Chief Financial Officer The Board The Board is comprised of the Chair, Senior Independent Director, Non-Executive Directors, the Group Chief Executive, and the Group Chief Financial Officer. Our Non-Executive Directors bring independent judgement, and wide and varied commercial and financial experience to the Board and Committees. A summary of each role can be found on page 70 Board meetings are structured to allow open discussions. At each meeting the Directors are made aware of the key discussions and decisions of the principal Committees by the respective Committee Chairs. Minutes of Board and Committee meetings are circulated to all Directors after each meeting. Read more about the Board’s activities during the year on pages 71-72 The Board is collectively responsible for ensuring leadership through effective oversight and review. It sets the strategic direction with the goal of delivering sustainable stakeholder value over the longer term and has oversight of cultural and ethics programmes. The Board also oversees the implementation of risk assessment systems and processes to identify, manage and mitigate Vodafone’s principal risks. It is also responsible for matters relating to finance, audit and internal control, reputation, listed company management, corporate governance, remuneration and effective succession planning, much of which is overseen through its principal Committees. The Executive Committee The Executive Committee is comprised of Margherita Della Valle, the Group Chief Executive and Group Chief Financial Officer, a number of senior executives responsible for global commercial operations, human resources, technology, external affairs and legal, as well as the Chief Executive Officers of our largest operating companies in Germany, the UK, Italy, Europe Cluster and Vodacom Group. Led by the Group Chief Executive, the Executive Committee and other management committees are responsible for making day-to-day management and operational decisions, including implementing strategic objectives and empowering competitive business performance in line with established risk management frameworks, compliance policies, internal control systems and reporting requirements. The details of the Executive Committee members, range of experience, skills, and expertise can be found below. Some members also hold external non-executive directorships, giving them valuable board experience. Click to read more about the Executive Committee: vodafone.com/exco Click to read more about the responsibilities of each Board Committee: vodafone.com/board-committees Disclosure Committee Oversees the accuracy and timeliness of Group disclosures and approves controls and procedures in relation to the public disclosure of financial information. Risk and Compliance Committee Assists the Executive Committee in fulfilling its accountabilities with regard to risk management and policy compliance. Governance (continued) Audit and Risk Committee Reviews the adequacy of the Group’s system of internal control, including the risk management framework and related compliance activities. Monitors the integrity of financial statements, reviews significant financial reporting judgements, advises the Board on fair, balanced and understandable reporting and the long-term viability statement. The Committee also has joint responsibility, with the ESG Committee, to review the appropriateness and adequacy of ESG disclosures provided within the Annual Report and the ESG Addendum, including the approval of its content. 68 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Our Executive Committee Biographical details of the Executive Committee, as at 21 June 2023 are provided below. Margherita Della Valle Group Chief Executive and Chief Financial Officer Read more about the Group Chief Executive and Chief Financial Officer on page 65 Scott Petty Vodafone Group Chief Technology Officer (CTO) Scott joined Vodafone in 2009 and has held positions in Vodafone Business Product Management and Technology before becoming UK CTO in 2017. He has been the Chief Digital & Information Officer since April 2021 as part of a newly created integrated European-wide Technology team to drive the transformation to achieve Vodafone’s ambition to become a Next Generation Telco. Previously, Scott held a number of Executive roles at Dimension Data, as Group Executive – Services, Chief Operating Office – Australia and as Chief Information Officer – Australia. Scott joined the Executive Committee in January 2023. Alberto Ripepi Group Chief Network Officer (CNO) Since joining Vodafone in 2001, Alberto has held various roles in technology including CTO of Italy, CTO of Europe and Operational director for Group Technology. Alberto joined the Executive Committee in January 2023 and is responsible for strategy, architecture, design and operating the Vodafone network in Europe. Vinod Kumar CEO Vodafone Business Vinod Kumar joined Vodafone and the Executive Committee as CEO Vodafone Business in September 2019. He is responsible for Vodafone’s enterprise business globally. Prior to joining Vodafone, Vinod was the Managing Director and CEO of Tata Communications Ltd from 2011, after joining the company as Chief Operating Officer in 2004. He was also a member of the company’s board from 2007 to 2019. Leanne Wood Chief Human Resources Officer Leanne joined Vodafone as Chief Human Resources Officer and a member of the Executive Committee on 1 April 2019. She is responsible for leading Vodafone’s people and organisation strategy which includes developing strong talent and leadership, effective organisations, strategic capabilities and an engaging culture and work environment. Previously Leanne was the Chief People, Strategy and Corporate Affairs Officer for Burberry plc from 2015. Leanne was appointed to the Vodacom Group Board in July 2019 and is a current Non-Executive Director and member of the Audit, Corporate Responsibility and Nomination and Remuneration Committees at Compass Group plc. Joakim Reiter Chief External and Corporate Affairs Officer Joakim, an Executive Committee member since August 2017, is Vodafone’s Chief External and Corporate Affairs Officer, responsible for public relations and corporate affairs, including policy and regulation, communications, security, sustainability and charitable activities. He currently sits on the Board of the Swedish Space Corporation. Before joining Vodafone, Joakim served as Assistant Secretary-General of the United Nations and has also been Ambassador to the World Trade Organisation, served as a Swedish senior diplomat to the EU, a trade negotiator in the European Commission, and has had a longstanding career in the Swedish Foreign Service. Maaike de Bie Group General Counsel and Company Secretary Maaike de Bie was appointed Group General Counsel and Company Secretary on 1 March 2023 and has responsibility for the Group legal, compliance, risk and company secretariat functions as well as advising the Board on all aspects relating to corporate governance. She previously served as General Counsel and Company Secretary of easyJet plc and before that as General Counsel of Royal Mail plc. An experienced international lawyer, Maaike is dual qualified in both the US and UK, with almost 30 years of experience. Maaike is currently a Board Member of General Counsel for Diversity & Inclusion (GCD&I), an organisation which promotes greater diversity, equity and inclusion in the legal sector. She is also a Trustee of the charity, Blueprint for Better Business. Serpil Timuray CEO Europe Cluster Serpil is an Executive Committee member since January 2014 and was appointed as the CEO of the Europe Cluster in October 2018. She also oversees Vodafone’s interest in the joint venture companies in Netherlands, Australia and India as well as Vodafone Partner Markets in 48 countries. She is the Chairperson of Vodafone Turkey, the Vice-Chairperson of VodafoneZiggo in Netherlands and a Non-Executive Director of TPG Telecom plc in Australia. Prior to her current role, she was the Group Chief Commercial Operations and Strategy Officer. Philippe Rogge CEO Vodafone Germany Philippe joined the Executive Committee on 1 July 2022 and as CEO is responsible for Vodafone Germany business. Philippe joined Vodafone after more than a decade with Microsoft including his most recent role as President, Central and Eastern Europe, based in Germany. Amongst other responsibilities, he led sales, channels and marketing and accelerated annual growth to double digits. His global career at Microsoft included senior roles such as Chief Operating Officer China, General Manager Belgium and Luxembourg, and General Manager Portugal. Ahmed Essam CEO Vodafone UK With 20 years of experience in the fields of Telecommunications, Strategy, Financial Planning, Commercial Management and General Management, Ahmed joined the Executive Committee in 2016 and was appointed CEO of Vodafone UK effective 1 February 2021, where he is responsible for all Vodafone resources in country. Ahmed has been Group Chief Commercial Operations and Strategy Officer since 2018 and prior to this he was CEO of the Europe Cluster. Ahmed joined Vodafone in 1999 and has held a variety of roles including Customer Care Director and Consumer Business Unit Director and has also previously been the Group Management Director for Vodafone’s Africa, Middle East and Asia-Pacific region and has held a number of senior roles within Vodafone’s Group Commercial functions. Aldo Bisio Chief Commercial Officer and CEO Vodafone Italy Aldo was appointed Group Chief Commercial Officer in January 2023. He was appointed Chief Executive Officer of Vodafone Italia in January 2014 and joined the Executive Committee in October 2015. Aldo is responsible to drive Group’s commercial and brand strategy through CX Excellence and the delivery of new digital services for the consumer segment. As CEO of Italy he is fully accountable to steer local commercial strategy and drive operational excellence. Prior to joining Vodafone, Aldo held the position of Group Managing Director of Ariston Thermo Group from 2008 and he was then named Group Chief Executive Officer in 2010. Being part of McKinsey & Co previously, he held different positions in strategic consultancy focusing on the telecommunications and media industries. Shameel Joosub CEO Vodacom Group Shameel joined Vodafone in 1994 and currently serves as Chief Executive Officer at Vodacom Group Limited, a position he has held since 2012. He has extensive telco experience having operated at a senior level in various companies across the group for the last 22 years, including Managing Director at Vodacom South Africa and Chief Executive Officer at Vodafone Spain. Shameel holds board positions at Vodacom Group Ltd, Safaricom Plc and Vodafone Egypt Telecommunications S.A.E. He also sits on the board of Business Leadership South Africa. He was appointed to the Executive Committee in April 2020, and is responsible for the overall strategic direction and performance of all its African operations, comprising eight markets. 69 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Division of responsibilities Chair Jean-François van Boxmeer – Leads the Board, sets each meeting agenda and ensures the Board receives accurate, timely and clear information in order to monitor, challenge, guide and take sound decisions; – Promotes a culture of open debate between Executive and Non-Executive Directors and holds meetings with the Non-Executive Directors, without the Executive Directors present; – Regularly meets with the Group Chief Executive and other senior management to stay informed; – Ensures effective communication with shareholders and other stakeholders; – Promotes high standards of corporate governance and ensures Directors understand the views of the Company’s shareholders and other key stakeholders, and the section 172 Companies Act 2006 duties; – Promotes and safeguards the interests and reputation of the Company; and – Represents the Company to customers, suppliers, governments, shareholders, financial institutions, the media, the community and the public. Senior Independent Director and Workforce Engagement Lead Valerie Gooding, CBE – Provides a sounding board for the Chair and acts as a trusted intermediary for the Directors as required; – Meets with the Non-Executive Directors (without the Chair present) when necessary and at least once a year to appraise the Chair’s performance and communicates the results to the Chair; – Together with the Nominations and Governance Committee, leads an orderly succession process for the Chair; and – Engages with the workforce in key regions where the Group operates, answers direct questions from workforce-elected representatives, and provides the Board with feedback on the content and outcome of those discussions. Non-Executive Directors – Monitor and challenge the performance of management; – Assist in development, approval and review of strategy; – Review Group financial information and provide advice to management; – Engage with stakeholders and provide insight as to their views, including in relation to workforce and the culture of Vodafone; and – As part of the Nominations and Governance Committee, review the succession plans for the Board and key members of senior management. Company Secretary Maaike de Bie – Ensures the necessary information flows between the Board, Committees and between senior management and Non-Executive Directors in a timely manner; – Supports the Chair in ensuring the Board functions efficiently and effectively, and assists the Chair with organising Director induction and training programmes; – Provides advice and keeps the Board updated on all corporate governance developments; and – Is a member of the Executive Committee. Group Chief Executive Margherita Della Valle – Provides leadership of the Company, including representing the Company to customers, suppliers, governments, shareholders, financial institutions, employees, the media, the community and the public and enhances the Group’s reputation; – Leads the Executive Directors and senior management team in running the Group’s business, including chairing the Executive Committee; – Develops and implements Group objectives and strategy having regard to shareholders and other stakeholders; – Recommends remuneration, terms of employment and succession planning for the senior executive team; – Manages the Group’s risk profile and ensures appropriate internal controls are in place; – Ensures compliance with legal, regulatory, corporate governance, social, ethical and environmental requirements and best practice; and – Ensures there are effective processes for engaging with, communicating with, and listening to, employees and others working for the Company. Chief Financial Officer Margherita Della Valle – Supports the Chief Executive in developing and implementing the Group strategy; – Leads the global finance function and develops key finance talent; – Ensures effective financial reporting, processes and controls are in place; – Recommends the annual budget and long-term strategic and financial plan; – Oversees Vodafone’s relationships with the investment community; – Oversees shared services organisation (_VOIS); and – Leads on supply chain management, including the Vodafone Procurement Company. Click to read more about the Board’s role and responsibilities, matters reserved and the terms of reference for each Board Committee: vodafone.com/board Read more about our Board Committees, together with details of their activities, on pages 74-109 Governance (continued) 70 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Board activities and principal decisions Our Board is responsible for the overall leadership of the Group and throughout the year, Board activities and discussion have continued to focus on the Company’s strategic priorities. The Board oversees the Company’s strategic direction and supports the executive management with its delivery of the strategy within a transparent governance framework. Alongside the strategic priorities, the Board has considered topics including executive succession, the business plan, financial performance, digital and technology, and governance. Further detail on these topics is set out below. Key stakeholders are considered in the decision-making process in accordance with section 172 of the Companies Act 2006. Read more about Vodafone’s key stakeholders and how the Board has engaged with them during the year on pages 10-12 Customers Information in relation to the evolving needs of customers is regularly provided to the Board by the Executive Committee members and senior managers. Cost of living crisis The Board discussed pricing trends in Europe and considered the Company’s cost of living initiative. The initiative consisted of three elements: social or low cost tariffs in all markets; extra measures to ensure consumers and small businesses were supported; and leveraging technology and digital services to help customers reduce their energy usage. Customer experience In March 2023, the Board received a detailed analysis of customer satisfaction and experience in markets across the Group. Updates were provided on new tools to generate more actionable insights and the implementation of more impactful processes to improve customer experience. Noting the current pain points, the Board considered the planned actions for each market during the course of the next financial year. Vodafone Germany The Board received regular updates on customer trends in Germany throughout the year. The Board considered the performance of the network, the impact of shop closures, changes in regulation and the difficulties experienced with the rollout of a new IT system. Focus was also given to improving customer service. Digital and technology New technology operating model The Board received an update following the transition to a new technology operating model. The technology organisation changed from one per country to a common European organisation based on scaled domains and sub domains. The main aim of the model was to enable faster decision-making. Not only have significant cost savings been achieved, but operational performance has improved following the implementation. The employee Technology Spirit survey results had also improved during the transition following improvements to career development and the reputation of Vodafone as an employer of technologists. The Board considered the positive impact, along with improvements to innovation and customer experience. Digital and IT strategy The Board was kept updated on the progress of One Technology following its formation 18 months ago. As at September 2022, Vodafone led in 13 out of 15 categories of Gartner’s IT functionality index and a key aim of the project was to move away from big IT transformation projects and focus on investing in engineering, insourcing and modernisation. The Chief Information Officers and Chief Technology Officers in each local market were made members of their company’s executive team and many were given additional domain roles across the Group. Business plan and financial performance Business plan In the year, the Board discussed and approved the business plan. Financial performance The Board received regular updates on the financial performance of the Group. This year the Board reviewed the Group trading performance and financial forecast against the backdrop of rising energy prices, increased wage costs due to inflation, and the effect of the war in Ukraine. The Board also considered the Group’s debt position and agreed to reduce its debt in the long term. In March 2023, the Board received and approved the budget and long range plan. Dividend The decision to approve the dividend was supported by a robust assessment of the position, performance and viability of the business carried out by management. The Board was mindful that the Directors had continued to adopt the going concern basis in preparing the annual report and accounts and was also cognisant of available reserves to support the payment of the dividend. On 15 November 2022, we announced an interim dividend of 4.50 eurocents per share which was paid on 3 February 2023. We have recommended a final dividend of 4.50 eurocents per share to be paid on 4 August 2023. This was consistent with dividends declared during FY22 and the expectations of our shareholders. Investor relations The Board received regular updates on market share information and was kept updated on the results of an investor perception study. Annual roadshow feedback was also provided during the year. Read more about how the Board engaged with investors during the year on page 12 Strategy and business developments Strategy remained a key focus throughout the year. In addition to the usual meetings, the Board attended a strategy offsite session in South Africa. The deep-dive session focused on reviewing the Company’s portfolio and agreeing key priorities for the Company. UK On 3 October 2022, we confirmed that discussions were taking place with CK Hutchinson Holdings in relation to a possible combination of Vodafone UK and Three UK. The potential transaction is expected to bring benefits to customers through competitively priced access to a reliable, high-quality and secure 5G network throughout the UK. Vodafone Hungary This year the Board discussed the proposed sale of Vodafone Hungary and on 31 January 2023, we announced that Vodafone Group Plc had completed the sale of Vodafone Hungary to 4iG Public Limited Company and Corvinus Zrt. Proceeds from the sale were used for deleveraging. Vodafone Egypt The Board considered the growth plans for the Group and on 13 December 2022 we announced that Vodafone Group Plc had completed the transfer of its 55% shareholding in Vodafone Egypt to Vodacom (its African subsidiary). This transfer simplifies the management of Vodafone’s African assets, along with the Group’s structure, and supports Vodacom and Vodafone Egypt for future growth. 71 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Governance (continued) Vodafone Ghana The sale of Vodafone Group Plc’s 70% shareholding in Ghana Telecommunications Company Limited (GTCL) to Telecel Group was announced on 21 February 2023. Throughout the year, the Board was kept informed on regulatory discussions. The sale is a further step in simplifying the Group’s African portfolio. The transaction received regulatory approval and agreement from the Government of Ghana in February 2023, which will retain its 30% minority shareholding in GTCL. Modern slavery The Board monitors our compliance with the requirements of the UK Modern Slavery Act 2015 and approved our Modern Slavery Statement in May 2023. Inclusion and diversity The Board received an update on the programme to embed inclusion to support the expansion of key diversity areas, including gender, LGBT+, race, ethnicity, and cultural heritage (‘REACH’) and disability. Read more about inclusion on pages 30-34 The Board Diversity Policy is reviewed on an annual basis. The Board received an update on the diversity disclosure requirements from the Financial Conduct Authority and NASDAQ. Read more about our Board Diversity Policy on page 75 Other The Board has also spent time this year considering the following matters: – Health and safety: the Board received an update on upholding a culture of prevention and the steps being taken to refresh health and safety awareness following COVID-19. – Earthquakes in Turkey and the surrounding region: the response from Vodafone Turkey was commended. Focus was on ensuring network continuity, including providing generators to the region to help with power cuts, mobilising network engineers and provisioning mobile base stations to restore connectivity. Free minutes, data and texts/SMS to people in the impacted areas were also rolled out. Vodafone Turkey’s search and rescue team also supported the emergency response efforts. Vodafone continues to support our colleagues and their families who have been affected by the disaster. Read more about our response to the earthquakes in Turkey and the surrounding region on page 28 – Brand and reputation of the Group: the Board received updates on Vodafone’s reputation as measured by RepTrak. The Company’s reputation has continued to improve across multiple markets and stakeholders and is now ahead of the sector average. Stakeholder awareness of the Company’s ESG commitments and initiatives was also considered. – Internal controls and assessment of the viability statement: the Board receives at least an annual update from the Audit and Risk Committee following its review of the effectiveness of the Group’s system of internal controls, including risk management. Following recommendation from the Audit and Risk Committee, the Board approved the internal controls and viability statement disclosures for the Annual Report. The Board will continue to focus on the strategic priorities for the year and the appointment and onboarding of a permanent Chief Financial Officer. Vantage Towers Throughout the year, the Board received regular updates on the proposal to sell a stake in Vantage Towers in order to optimise capital and structure and generate upfront cash proceeds to support the Group’s deleveraging strategic priority. In November 2022, we announced that the Board had taken the decision to enter a co-control partnership with Global Infrastructure Partners and KKR for Vantage Towers. The partnership is with long-term investors with significant expertise in digital infrastructure and is expected to accelerate Vantage Tower’s growth and value creation, whilst retaining co-control over a strategically important asset. Key steps to date – May 2022: the Board discussed options for the proposed Vantage Towers transaction; – July 2022: the Board considered the benefits and challenges of co-control and the benefits of having an investor in Vantage Towers that had expertise in tower management; – September 2022: the Board received an update on potential investors; and – November 2022: the Board received an update on the proposed transaction and the respective bids. The Board provided constructive feedback and questioned the advisers on detailed aspects of the bids. Section 172 considerations In accordance with section 172 of the Companies Act, the Board, with the support of an external legal adviser, conducted a deep-dive analysis to consider stakeholder interests and whether the Vantage Towers transaction (and which of the proposed counterparts) was in the best interests of the Company’s members as a whole. The following factors were taken into consideration by the Board in its analysis and decision-making: – the respective valuations; – the terms proposed by each bid; – agreement changes; – funding and structure; – protection for risks in relation to minority shareholders; – regulatory, legal and governance considerations; and – the proceeds to the Company. The Board also discussed market perception and the need for effective communication with investors. Following deliberation, the Board concluded that the proposed transaction was in the best interests of the Company. CEO Succession On 27 April 2023, the Company announced the appointment of Margherita Della Valle as Group Chief Executive, following a rigorous internal and external search. In accordance with its Terms of Reference, the Nominations and Governance Committee led on the succession process and received regular updates. Read more about CEO succession in the Nominations and Governance Committee report on page 74 Risk During the year, the Board completed a review of the Company’s risk appetite, principal and emerging risks and how they are managed. Read more about our system of internal controls and risk management on page 81 Our people The Board considered the results of the employee ‘Spirit Beat’ survey in November 2022. Feedback was positive, however the cost of living crisis was highlighted as an ongoing concern. Read more about Spirit Beat on page 13 72 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Board effectiveness and improving our performance The Board recognises that it needs to continually monitor and improve its performance. Our annual performance evaluation provides the opportunity for the Board and its Committees to consider and reflect on the effectiveness of its activities, the quality of its decision-making, and the collective contribution made by each Board member. Process undertaken for our Board evaluation In accordance with the 2018 UK Corporate Governance Code recommendations and following two consecutive years of externally facilitated Board evaluations, the 2023 Board evaluation was conducted internally. Evaluation process The internal evaluation was led by the Chair and supported by the Group General Counsel and Company Secretary. The structure of the evaluation was agreed and the objectives of the review were to provide an assessment of Vodafone Group’s Board effectiveness and governance, including the effectiveness of its Committees. A tailored Board questionnaire was compiled to gather and distil feedback on topics including composition, diversity and how effectively members worked together to achieve objectives. The Directors’ responses were collated and a paper summarising the findings was presented to the Nominations and Governance Committee and the Board at the March 2023 meetings. Evaluation findings The Board discussed the findings from the evaluation and was encouraged by the strengths identified. In particular, the Board agreed that: – there has been effective leadership throughout the year and the Chair continued to actively encourage input from all Board members, facilitating open discussion and constructive challenge; – the conduct of the meetings and the materials provided supported the Board in discharging its responsibilities and ensuring that meetings ran effectively and efficiently; and – following the appointment of new Non-Executive Directors, good progress has been made in increasing sector experience and skills on the Board, which in turn has supported strategic discussion and decision-making. The Board also identified areas in which it could improve. Particular areas of focus for the coming year include: – Leadership: succession planning, including securing and on-boarding an outstanding Chief Financial Officer; – Operational Performance: prioritising time spent on the key strategic pillars of customer satisfaction, simplification and growth; and – Technology: increasing the Board’s focus on technology strategy and capital allocation. The composition, performance and effectiveness of each of the Board Committees was also evaluated and the Committee members agreed that each Committee was functioning effectively. Progress against actions identified following the 2022 external evaluation Action Progress made Refresh the composition of the Board to bring on more Directors with technology and/or telecommunications sector experience. Four new Non-Executive Directors have been appointed to the Board in FY23, each bringing extensive technology and telecommunications experience. Devote more time to strategy sessions to enhance free-flowing discussions and allow for additional topics to be discussed where required. The Board held several strategic deep-dive sessions during the year to enhance discussions. Topics requiring additional deep-dives could be bolstered by using smaller groups of the Board with specific expertise in the matter. A Board sub-committee has been set up to consider merger and acquisition transactions. 73 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
The Nominations and Governance Committee (the ‘Committee’) continues to monitor the composition, structure and size of the Board and its Committees to ensure that there is an appropriate balance of skills, knowledge, experience, and diversity so that responsibilities can be discharged effectively. The Committee oversees all matters relating to corporate governance and succession planning and makes recommendations to the Board as appropriate. Chair Jean-François van Boxmeer Members Sir Crispin Davis Valerie Gooding Michel Demaré Stephen A. Carter CBE (appointed as a member on 8 November 2022) Following the announcement on 10 May 2023, Sir Crispin Davis and Valerie Gooding will be stepping down as members of the Committee with effect from the conclusion of the 2023 AGM. David Nish will join the Committee with effect from the same date. The Committee is comprised solely of independent Non-Executive Directors. The Committee had four scheduled meetings during the year and additional ad hoc meetings as required. The attendance at Committee meetings can be found on page 60. Letter from Committee Chair On behalf of the Board, I am pleased to present the Nominations and Governance Committee Report for the year ended 31 March 2023. Board composition and succession planning The main areas of focus for the Committee this year have been Board and Executive Committee composition and succession planning, with a continued focus on the appointment of Non-Executive Directors with telecommunications, technology, and e-commerce expertise, as well as the process to identify a permanent Group Chief Executive. The Committee monitors the length of tenure and the skills of the Non-Executive Directors to assist with succession planning. We reported last year that there were several upcoming scheduled retirements from the Board and on 10 May 2023 we announced that Sir Crispin Davis, Dame Clara Furse and Valerie Gooding would not be seeking re-election at the 2023 AGM. In anticipation of these scheduled departures, the Committee focused on finding suitable Non-Executive Director successors to further enhance the Board’s experience and capabilities in the telecommunications and technology sectors. MWM Consulting, an independent external search firm, was appointed to support this process. Following shareholder approval at the Annual General Meeting on 26 July 2022, Stephen Carter, Delphine Ernotte Cunci and Simon Segars were appointed as Non-Executive Directors, each bringing a broad range of experience and expertise to the Board. In November 2022, we also announced the appointment of Christine Ramon who joined the Board as a Non-Executive Director on 14 November 2022. Christine brings extensive financial and strategic experience, along with telecommunications expertise. She also has comprehensive African market experience that will support the strategic aims of the Group and I am delighted to welcome her to Vodafone’s Board. In light of these Board changes and having reviewed the composition of the Board Committees, we announced that with effect from 8 November 2022, Stephen Carter became a member of the Nominations and Governance Committee, Delphine Ernotte Cunci a member of the Remuneration Committee and Simon Segars a member of the ESG Committee. Christine Ramon was appointed a member of the Audit and Risk Committee with effect from 28 March 2023. Nominations and Governance Committee Click or scan to watch our new Non-Executive Directors explain their role: investors.vodafone.com/videos The Committee has also considered the succession plans for the roles of Senior Independent Director, Workforce Engagement Lead and Chair of the Remuneration Committee in line with the expected retirement of Valerie Gooding this year, following nine years’ service to the Board. With effect from the conclusion of the 2023 AGM, David Nish will be appointed as Senior Independent Director, Delphine Ernotte Cunci and Christine Ramon will be appointed Workforce Engagement Leads, and Amparo Moraleda will be appointed Chair of the Remuneration Committee. The Committee is confident that the Board currently has the necessary mix of skills and experience to contribute to the Company’s strategic objectives. Read more about the details of the length of tenure of each Director and a summary of the skills and experience of the Non-Executive Directors on pages 60 and 65-67 Appointment process for Non-Executive Directors To begin the appointment process, the Company engages with an external search consultancy which it provides with a search specification. The consultancy then proposes a list of individuals with a diverse range of backgrounds and characteristics. Capturing the clear benefits of diversity of background and opinion, and identifying candidates with the requisite experience and capabilities, is at the forefront of this search. The shortlisted candidates are interviewed by the Committee members and they meet with the Group Chief Executive. A recommendation is made to the Board on the chosen candidate. Once a candidate is selected, appointment terms are drafted and agreed with the selected candidate. Executive Committee changes, succession planning and talent pipeline The Committee receives regular updates on succession planning and changes to the membership of the Executive Committee. This year, the Committee has discussed succession plans for executives below Board level. Following Nick Read stepping down from his role as Group Chief Executive in December 2022, Margherita Della Valle was appointed as Group Chief Executive on an interim basis with effect from 1 January 2023, whilst continuing her role as Group Chief Financial Officer. We are grateful to Nick Read for his significant commitment and contribution to Vodafone during his career. The Board announced on 27 April 2023, following a rigorous internal and external search, that Margherita was appointed as the permanent Group Chief Executive. She will also continue as Group Chief Financial Officer until an external search for a new Group Chief Financial Officer is complete. During the year the Committee discussed succession planning for a new Group Chief Technology Officer and Group General Counsel and Company Secretary following the respective retirements of Johan Wibergh on 31 December 2022 and Rosemary Martin on 1 March 2023. Both individuals also stepped down from the Executive Committee on their respective retirement dates. Following the recruitment process, we were pleased to announce the appointment of Maaike de Bie as Group General Counsel and Company Secretary with effect from 1 March 2023. Maaike also joined the Executive Committee with effect from the same date. With almost 30 years of experience, Maaike is an experienced international lawyer and is dual qualified in both the US and UK. She has held numerous senior roles in a variety of sectors, including at EY LLP, General Electric and the European Bank for Reconstruction and Development LLP. Maaike has also previously served as General Counsel and Company Secretary of easyJet plc and Royal Mail plc. Governance (continued) 74 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
The Committee continues to develop a deeper understanding of executive talent requirements and the capabilities required for the future. We were delighted to announce the appointment of Scott Petty as Group Chief Technology Officer on 1 January 2023, who joined Vodafone in 2009. Alberto Ripepi was appointed as Group Chief Network Officer on 1 January 2023 having joined in 2001 and both Scott and Alberto co-lead Vodafone Technology and joined the Group Executive Committee with effect from the same date. We also announced that Alex Froment-Curtil stepped down as Group Chief Commercial Officer and Executive Committee member with effect from 31 December 2022. Aldo Bisio was appointed as Chief Commercial Officer on 12 January 2023 in addition to his role as CEO Vodafone Italy. Vodafone Spain joined the Europe Cluster with effect from 12 January 2023 reporting to Europe Cluster CEO, Serpil Timuray. Colman Deegan stepped down as CEO of Vodafone Spain with effect from 31 March 2023. Governance The Committee continues to review action taken to comply with the Code and other legal and regulatory obligations during the year. The Committee receives regular governance updates and is satisfied that Vodafone has complied with the Code in full during the year. Independence In accordance with the Code, the independence of all the Non-Executive Directors was considered by the Committee. At the date of publication, Valerie Gooding has served more than nine years as a director; however, she will remain on the Board until the conclusion of the 2023 AGM in order to allow for a gradual and smooth transition period of the Senior Independent Director, Workforce Engagement Leads and Remuneration Committee Chair roles. Following evaluation, all Non-Executive Directors are considered independent, and they continue to make independent contributions and effectively challenge management. All Non-Executive Directors have submitted themselves for election or re-election, as applicable, at the 2023 AGM, other than Sir Crispin Davis, Dame Clara Furse and Valerie Gooding who will retire from the Board at the conclusion of the 2023 AGM as announced on 10 May 2023. The Executive Directors’ service contracts and Non-Executive Directors’ appointment letters are available for inspection at our registered office and at the 2023 Annual General Meeting. Conflicts of interest The Companies Act 2006 provides that directors have a duty to avoid a situation in which they have or may have a direct or indirect interest that conflicts or might conflict with the interests of the Company. This duty is in addition to the existing duty owed to the Company to disclose to the Board any interest in a transaction or arrangement under consideration by the Company. Our Directors must report any changes to their commitments to the Board, immediately notify the Company of actual or potential conflicts or a change in circumstances relating to an existing authorisation and complete an annual conflicts questionnaire. Any conflicts or potential conflicts identified are considered and, where appropriate, authorised by the Board in accordance with the Company’s Articles of Association. A register of authorised conflicts is also reviewed periodically. The Committee and the Board are satisfied that the external commitments of the Directors do not conflict with their duties and commitments as Directors of the Company. The Committee is comfortable that it has adequate measures in place to manage and mitigate any actual or potential conflicts of interests that may arise in the future. Time commitment In accordance with the Code, the Committee actively reviews the time commitments of the Board. All Directors are engaged in providing their external commitments to establish that they have sufficient time to meet their Board responsibilities. The Committee is satisfied that the Board does meet this requirement and all Directors provide constructive challenge, strategic guidance and hold management to account. Board evaluation In accordance with the Code, Vodafone conducts an annual evaluation of Board and Board Committee performance, which every Director engages in, and which is facilitated by an independent third party at least once every three years. This year, an internal evaluation of the performance of the Board and Committees took place led by the Chair, with support from the Group General Counsel and Company Secretary. Read more about the outcome of this review on page 73 Roles and responsibilities The terms of reference for the Nominations and Governance Committee set out the role and responsibilities of the Committee in further detail and were reviewed in March 2023. Click to read the Committee’s terms of reference: vodafone.com/board-committees Diversity The Board Diversity Policy reinforces the ongoing commitment of the Board to supporting diversity and inclusion in the boardroom in all its forms including age, gender ethnicity, sexual orientation, disability and socio-economic background. The Committee acknowledges the significant role diversity and inclusion has on the effective functioning of the Board and its Committees and believes a diverse board brings a broader perspective, which enables it to be better equipped to understand the views of our stakeholders as well as our shareholders in the decision-making process. The Committee reviews the Board Diversity Policy annually to ensure the objectives remain appropriate and sufficiently stretching. We also continue to monitor requirements as set by the Financial Conduct Authority, FTSE Women Leaders Review, NASDAQ listing rules and the Parker Review in terms of gender and ethnic diversity. Vodafone acknowledges that these targets are not just an end goal, but rather steps towards a drive for further progress. Whilst the Board Diversity Policy specifically focuses on diversity at Board and Committee level, commitment to diversity at Vodafone extends beyond the Board to the Executive Committee, talent pipeline and global workforce. The Board supports management in their efforts to build a diverse organisation throughout the Group. As at 31 March 2023, our Executive Committee has four positions held by women (33%) and 25% of the Executive Committee identifies as ethnically diverse. In the Senior Leadership Team, 49 roles are held by women (33%) and 18% of the Senior Leadership Team identify as ethnically diverse. Read more on Senior Leadership Team diversity on page 34 Read more about our workforce inclusion programmes on pages 30-34 75 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Governance (continued) Board diversity matrix This has been prepared in accordance with the guidance issued by NASDAQ. More information can be found here: listingcenter.nasdaq.com As of 31 March 2023 Country of Principal Executive Offices United Kingdom Foreign Private Issuer Yes Disclosure Prohibited under Home Country Law No Total Number of Directors 13 Part I: Gender Identity Female Male Non-Binary Did Not Disclose Gender Directors 7 6 0 0 Part II: Demographic Background Under-represented individual in Home Country Jurisdiction 1 LGBTQ+ 0 Did Not Disclose Demographic Background 1 The data contained in the tables on this page was collected as part of the annual declaration process, whereby the Board and the Executive Committee received declaration forms for self-completion. The declaration forms included, for all individuals whose data is being reported, the same questions relating to ethnicity, gender, sexual orientation and disabilities. The data is used for statistical reporting purposes and is provided with consent. The data in the above tables is as at 31 March 2023 and there have been no changes in the period between then and the date of this report. Whilst we commit to diversity and inclusion in all its forms, all appointments are made on merit and objective criteria to ensure the appropriate mix of skills and experience on the Board, valuing the unique contribution that an individual will bring. Key areas of focus for 2023/24 – Board and Committee composition, tenure and succession; – Senior leadership succession and onboarding; and – Continued onboarding of our recent Non-Executive Directors. /s/ Jean-François van Boxmeer Jean-François van Boxmeer On behalf of the Nominations and Governance Committee 21 June 2023 Diversity targets – progress update Target Progress The Board aspires to meet and ultimately exceed the target for at least 40% of Board positions to be held by women. We are pleased to report that as at 31 March 2023, 54% of our Board identified as women. That at least one of the positions of Chair, CEO, CFO or Senior Independent Director is held by a woman. As at 31 March 2023 our Senior Independent Director, Chief Executive and Chief Financial Officer positions are held by women.1 That at least one member of the Board is from a minority ethnic background. As at 31 March 2023, we currently have one Board member from a minority background, and we continually aspire to increase diverse representation on our Board. Note: 1. The positions of Chief Executive and Chief Financial Officer are held by Margherita Della Valle. Board and executive management diversity Prepared in accordance with UK Listing Rule 9.8.6R(10) as at 31 March 2023 Gender identity or sex1 Number of Board members Percentage of the Board Number of senior positions on the Board (CEO, CFO, SID and Chair)2 Number in executive management Percentage of executive management Men 6 46% 1 8 67% Women 7 54% 3 4 33% Other categories 0 0% 0 0 0% Not specified/prefer not to say 0 0% 0 0 0% Ethnic background Number of Board members Percentage of the Board Number of senior positions on the Board (CEO, CFO, SID and Chair)2 Number in executive management Percentage of executive management White British or other White (including minority-white groups) 12 92% 4 9 75% Mixed/Multiple Ethnic Groups 0 0% 0 0 0% Asian/Asian British 1 8% 0 2 17% Black/African/Caribbean/Black British 0 0% 0 0 0% Other ethnic group, including Arab 0 0% 0 1 8% Not specific/prefer not to say 0 0% 0 0 0% Notes: 1. The data reported is on the basis of gender identity. 2. The positions of Chief Executive and Chief Financial Officer are held by Margherita Della Valle. 76 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
The Committee oversees the governance of the Group’s financial reporting, the external audit process, risk management, internal control and related assurance processes. During the year, the Committee completed a series of deep dive reviews of principal key risks and additional reviews, with an ongoing focus on technology matters, particularly cyber threats and resilience. Chair and financial expert David Nish Members Michel Demaré Deborah Kerr Amparo Moraleda Christine Ramon (appointed as a member on 28 March 2023) Key responsibilities The responsibilities of the Committee are to: – Monitor the integrity of the financial statements, including the review of significant financial reporting judgements; – Monitor the Group’s risk management system, review of the principal risks and the management of those risks; – Provide advice to the Board on whether the Annual Report is fair, balanced and understandable and on the appropriateness of the long-term viability statement; – Review and monitor the external auditor’s independence and objectivity and the effectiveness of the external audit; – Review the system of internal financial control and compliance with section 404 of the US Sarbanes-Oxley Act; – Review and provide advice to the Board on the approval of the Group’s US Annual Report on Form 20-F; and – Monitor the activities and review the effectiveness of the Internal Audit function. Click to read the Committee’s terms of reference: vodafone.com/board-committees Letter from the Committee Chair I am pleased to present our report as Chair of the Audit and Risk Committee. This report provides an overview of how the Committee operates, an insight into the Committee’s activities during the year and its role in ensuring the integrity of the Group’s published financial information and the effectiveness of its risk management, controls and related processes. The Committee met five times during the year, which included a joint meeting with the ESG Committee. Amparo Moraleda will step-down from the Committee with effect from the conclusion of the 2023 AGM. The attendance by members at Committee meetings can be seen on page 60. Each meeting agenda included a range of topics across the Committee’s areas of responsibility. – External cyber threats continue to be a Group principal risk and the Group invests considerable resources in the technology teams working to prevent, identify and manage attempted cyber attacks. During the year, the Committee regularly met with the Chief Technology Officer and Cyber Security, Technology Assurance and Strategy Director to review and challenge the cyber security strategy and also undertook a deep dive review of this principal risk. Read more about cyber security on pages 42 to 43 – We performed deep dive reviews on several other principal risks, including technology resilience and future readiness with the Chief Technology Officer and Chief Network Officer, as well as threats from emerging technology and disruptive business models with the CEO of Vodafone Business and the Group Strategy Director. In addition, the Committee undertook a number of reviews of M-Pesa with a focus on risk management, the control environment, regulatory compliance and assurance activities; – We completed a series of reviews across multiple business units, typically with a focus on the risk and control environment. This was performed with the CEO and CFO of the Other Europe markets cluster, the CEO of Vantage Towers, the CEOs of Vodafone Germany, Vodafone Spain and Vodacom Group; and – At the September 2022 and March 2023 meetings, we considered the anticipated financial reporting matters impacting the half-year and year-end reporting. We also reviewed the half-year results announcement at our November meeting and the Annual Report and accompanying materials at our May meeting, prior to the Group’s results release. Our work included reviews of goodwill impairment testing, taxation judgements, legal contingencies and the Company’s work on going concern and the long-term viability statement. The Committee recognises the importance of Environmental, Social and Governance (‘ESG’) topics and the requirement for disclosures in accordance with the Task Force on Climate-Related Financial Disclosures (‘TCFD’) framework. We modified our terms of reference during the year to enhance the Committee’s oversight in these areas by having a joint meeting with the ESG Committee. During our joint meeting in May 2023, we challenged the disclosures included in this Annual Report and also the Group’s ESG Addendum which is available on our website. Our external auditor, Ernst & Young (‘EY’), provides robust challenge to management and its independent view to the Committee on specific financial reporting judgements and the control environment. /s/ David Nish David Nish On behalf of the Audit and Risk Committee 21 June 2023 Objective The objective of the Committee is the provision of effective governance over the appropriateness of financial reporting of the Group, including the adequacy of related disclosures, the performance of both the Internal Audit function and the external auditor and oversight of the Group’s systems of internal control, business risks and related compliance activities. Audit and Risk Committee Click or scan to watch the Chair of the Audit and Risk Committee explain his role: investors.vodafone.com/videos Committee governance Committee meetings normally take place the day before Board meetings. The Committee Chair reports to the Board, as a separate agenda item, on the activity of the Committee and matters of particular relevance. The Board has access to the Committee’s papers and receives copies of the Committee minutes. The Committee regularly meets separately with the external auditor, the Group Chief Executive and Group Chief Financial Officer, the Group Audit Director and the Group Head of Risk without others being present. The Chair also meets regularly with the external lead audit partner during the year, outside of the formal Committee process. The Chair is designated as the financial expert on the Committee for the purposes of the US Sarbanes-Oxley Act and the 2018 UK Corporate Governance Code (‘Code’). The Committee continues to have competence relevant to the sector in which the Group operates. Read more about the skills and experience of Committee members on pages 65 to 67 77 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Governance (continued) Financial reporting The Committee’s primary responsibility in relation to the Group’s financial reporting is to review, with management and the external auditor, the appropriateness of the half-year and annual consolidated financial statements. The Committee focuses on: – The quality and acceptability of accounting policies and practices; – Providing advice to the Board on the form and basis underlying the long-term viability statement; – Material areas in which significant judgements have been applied or where significant issues have been discussed with the external auditor; – An assessment of whether the Annual Report, taken as a whole, is fair, balanced, and understandable and whether our US Annual Report on Form 20-F complies with relevant US regulations; – The clarity of the disclosures and compliance with financial reporting standards and relevant financial and governance reporting requirements; and – Any correspondence from regulators in relation to our financial reporting. Accounting policies and practices The Committee received reports from management in relation to: – The identification of critical accounting judgements and key sources of estimation uncertainty, including the impact of climate change on the consolidated financial statements; – Significant accounting policies; and – Proposed disclosures of these in this Annual Report. Following discussions with management and the external auditor, the Committee approved the disclosures of the accounting policies and practices set out in note 1 ‘Basis of preparation’ and within other notes to the consolidated financial statements. Risk deep dive reviews The Committee performed a series of deep dives with management as part of the meeting agendas. These reviews are summarised below, together with the Group’s principal risk to which the review relates. Principal risk Area of focus Adverse changes in macroeconomic conditions Business resilience and crisis management The Committee met with the Chief External and Corporate Affairs Officer and the Global Corporate Security and Resilience Director to perform a deep dive on business resilience and crisis management planning. The Committee reviewed the Group’s crisis management plans and preparedness for responding to multiple concurrent crises. Adverse changes in macroeconomic conditions Financing The Committee met with the Group Treasury Director to perform an in-depth review of funding needs and related financing activities. This included the potential impact of adverse changes in the macro-economic and market conditions on financing plans over the short to medium term and, more broadly, how funding and financing risk is being managed. Disintermediation New technologies The Committee met with the CEO of Vodafone Business and the Group Strategy Director to review and challenge the Group’s activities and strategies to mitigate the potential risks from new industry challengers and technologies. Cyber threat Cyber security strategy The Committee met twice with the Chief Technology Officer and the Cyber Security, Technology Assurance and Strategy Director to review the Group’s cyber security strategy, the cyber control framework and related compliance and assurance activities. The deep dives included consideration of the threat landscape and the performance of the Group’s businesses in meeting the required compliance standards. Adverse political and policy environment Regulatory affairs The Committee met with the Chief External and Corporate Affairs Officer to deep dive on the political and regulatory developments impacting the industry. This included geo-political risks and the actions underway to respond to these risks. Strategic transformation Business reviews The Committee met with a range of markets and business units, with a focus on the operational landscape, local risk assessments and related activity, the control environment and progress against any findings from Internal Audit activities. This included: – Germany market review with the market CEO and CFO; – Spain market review with the market CEO and CFO; – Review of the Europe Cluster markets with the Europe Cluster CEO and CFO; – Business review of Vodacom with the Vodacom Group CEO and CFO; – Business review of Vantage Towers with the Vantage Towers CEO and CFO; and – Entity review of Vodafone Roaming Services with the Director of Roaming Services. Technology resilience and future readiness Technology risk The Committee met with the Chief Technology Officer and the Chief Network Officer to consider potential points of technology failure and the impact this could have on operational activities. Related business continuity plans were assessed and challenged. Technology resilience and future readiness Resilience and readiness The Committee met with the Chief Technology Officer and the Chief Network Officer to deep dive on the activities to maintain a robust, stable and resilient technology estate and on the transformation programmes in place to modernise aspects of our technology estate to ensure future readiness. Technology resilience and future readiness IT control assurance The Committee met with the Chief Technology Officer and IT Director to review and challenge the opportunities to increase the standardisation of IT controls and leverage automation across the Vodafone footprint. 78 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Area of focus Actions taken Portfolio changes The Group concluded several transactions during the second half of the financial year of which the most notable was the disposal of a controlling stake in Vantage Towers into a joint venture, the disposals of Vodafone Hungary and Vodafone Ghana and the transfer of the Group’s shareholding in Vodafone Egypt to its subsidiary, Vodacom Group Limited. The most significant disclosure and accounting judgements considered include: – The recognition and measurement of gains on the business disposals, including a partial deferral of the gain recognised from the sale of Vantage Towers due to the leaseback of tower space by the Group from Vantage Towers. See note 12 ‘Investments in associates and joint arrangements’ and note 27 ‘Acquisitions and disposals’ in the consolidated financial statements. The Committee met with the Group Financial Controlling and Operations Director in March 2023 to review and challenge the accounting treatment and disclosures in the 2023 consolidated financial statements, including the sale and leaseback accounting resulting from the disposal of Vantage Towers. 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; – The valuation of the security package provided by the Group to Indus Towers (‘Indus’) in respect of commitments of VIL to Indus and the Group’s obligation to the Total Return Swap (‘TRS’) lenders; – The valuation of a mark-to-market derivative asset in relation to the TRS; – The decision to cease reporting the Group’s investment in Indus as held for sale in the consolidated financial statements; and – The impairment of the Group’s investment in Indus. See note 7 ‘Discontinued operations and assets held for sale’ and note 29 ‘Contingent liabilities and legal proceedings’ in the consolidated financial statements. The Committee reviewed the appropriateness of the Group’s accounting judgements in relation to potential liabilities under the payment mechanism agreed with VIL, considering VIL’s ability to make any further material payments. The Committee also reviewed accounting judgements relating to Indus Towers, notably the terms of the remaining pledge contained in the security package, the reversal of the held for sale classification in the consolidated financial statements and the valuation of the TRS related derivative asset. These reviews occurred at the September 2022, November 2022, March 2023 and May 2023 Committee meetings. Impairments 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. See note 4 ‘Impairment losses’ in the consolidated financial statements. The Committee met with the Group Head of Financial Planning & Analysis in November 2022 and May 2023 to discuss the impairment exercise undertaken and to challenge the appropriateness of assumptions made, including: – The consistent application of management’s valuation methodology; – The achievability of the Group’s five-year business plans; – The potential impacts of (i) rising energy costs, (ii) inflation and (iii) climate change on the Group’s businesses and valuation assumptions; – 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. During the year, the Group recorded no material impairments of asset carrying values. Fair, balanced and understandable The Committee assessed whether the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy. This assessment is supported by the Group’s Disclosure Committee which is chaired by the Group General Counsel and Company Secretary who briefs the Committee on the Disclosure Committee’s work and findings. The Committee reviewed the processes and controls that underpin the Annual Report’s preparation, ensuring that all contributors and senior management are fully aware of the requirements and their responsibilities. This included the financial reporting responsibilities of the Directors under section 172 of the Companies Act 2006 to promote the success of the Company for the benefit of its members as well as considering the interests of other stakeholders which will have an impact on the Company’s long-term success. The Committee reviewed an early draft of the Annual Report to enable input and comment. The review is performed in conjunction with the ESG Committee which also reviews the TCFD and ESG-related disclosures. The Committee also reviewed the results announcement, supported by the work of the Group’s Disclosure Committee, which reviews and assesses the appropriateness of investor communications. This work enabled the Committee to provide positive assurance to the Board to assist it in making the statement required by the Code. Significant financial reporting judgements The areas considered and actions taken by the Committee in relation to the 2023 consolidated financial statements are outlined below and overleaf. For each area, the Committee was satisfied with the accounting and disclosures in the consolidated financial statements. 79 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Governance (continued) Regulators and our financial reporting The Financial Reporting Council (‘FRC’) publishes thematic reviews and other guidance to help companies improve the quality of corporate reporting through the provision of guidance and reviews of the quality of reporting across public companies. The Group routinely reviews FRC publications, the most relevant publications for the 2023 Annual Report being: – Key matters for 2022/23 reports and accounts; – Annual review of corporate reporting 2021/22; – Thematic review of existing disclosure requirements for (i) discount rates, (ii) judgements and estimates, (iii) earnings per share, (iv) deferred tax assets, (v) accounting and reporting for business combinations and (vi) TCFD and climate-related disclosures; – ‘What makes a good Annual Report and Accounts’ guidance; – Updated guidance on Strategic Reports; and – FRC Lab report on digital security risk disclosure. The Group already complied with the majority of the recommendations and the 2023 Annual Report has been updated to adopt best practice where appropriate. We also reviewed the draft standard for Audit Committees that was published by the FRC in the year. The final requirements will be reviewed once available although no significant impact is expected as we have assessed that the Committee follows the working practices outlined in the draft standard. During the year, the Financial Conduct Authority (‘FCA’) finalised new mandatory disclosure requirements on diversity and inclusion. The Committee welcomes these new disclosure requirements which are included in this Annual Report. We continue to track developments for the proposals in the ‘Restoring Trust in Audit and Corporate Governance’ paper issued by the Department for Business, Energy and Industrial Strategy (‘BEIS’). This will ensure we are well placed to implement the changes, as required, in the years ahead. During the year, the Group received a notification letter from the FRC that the Annual Report for the year ended 31 March 2022 had been included in their thematic review of company disclosures relating to deferred tax assets. In October 2022, we received confirmation that the FRC had no questions for the Group arising from the review. In December 2021, Vantage Towers A.G. (‘Vantage Towers’) received an enquiry letter from BaFin, the German Federal Financial Supervisory Authority, containing questions and requests for further information in relation to the Vantage Towers Annual Report for the year ended 31 March 2022. To date, two written responses in January and March 2023 have been submitted to BaFin as part of the ongoing enquiry. Area of focus Actions taken 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, suppliers and, on occasion, fellow shareholders in Group subsidiaries. See note 16 ‘Provisions’ and note 29 ‘Contingent liabilities and legal proceedings’ in the consolidated financial statements. The Committee met with the Director of Litigation in November 2022 and May 2023 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. 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. The Committee met with the Group Tax Director in November 2022 and May 2023 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. 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. 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 2023. The Committee considered the scope of EY’s planned revenue audit procedures, and their related audit findings and observations at its meetings in November 2022 and May 2023. Hyperinflation accounting in Turkey Turkey has met the requirements to be designated as a hyperinflationary economy under IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. The Group has therefore applied the requirements of IAS 29 for its Turkish operations with a Turkish lira functional currency. See note 1 ‘Basis of preparation’ in the consolidated financial statements. The Committee met with the Group Financial Controlling and Operations Director in November 2022, March 2023 and May 2023 to review and challenge the accounting treatment and disclosures in the half-year and year-end financial reporting, respectively. 80 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Internal control and risk management The Committee has the primary responsibility for the oversight of the Group’s system of internal control, including the risk management framework, the compliance framework, and the work of the Internal Audit function. Internal Audit The Internal Audit function provides independent and objective assurance over the design and operating effectiveness of the system of internal control, through a risk-based approach. The function reports into the Committee and, administratively, to the Chief Financial Officer. The function is composed of teams across Group functions and local markets. This enables access to specialist skills through centres of excellence and ensures local knowledge and experience. Cooperation with professional bodies and an information technology research firm has ensured access to additional specialist skills and an advanced knowledge base. Internal Audit activities are based on a robust methodology and the internal quality assurance improvement programme ensures conformity with the International Professional Practices framework, which includes the IIA standards and code of ethics, and the continuous development of the audit methodology applied. The conformity is reviewed and verified through an external quality assessment by an independent consultancy firm every three years. The Committee has a standing agenda item to cover Internal Audit related topics. Prior to the start of each financial year, the Committee reviews and approves the annual audit plan, assesses the adequacy of the budget and resources, and reviews the operational initiatives for the continuous improvement of the function’s effectiveness. The audit plan is determined by taking into account Internal Audit’s rolling review framework and the outputs of a data-driven risk assessment. The Committee reviews progress against the approved audit plan and the results of Internal Audit activities, with a stronger focus on unsatisfactory audit results and cross-entity audits, which are audits that are performed across multiple markets with the same scope. Audit results are analysed by process and entity to highlight both changes in the control environment and areas that require attention. During the year, Internal Audit coverage focused on principal risks, including cyber threat and strategic transformation. Relevant audit results are reported before the Committee’s in-depth review with the risk owner, which allows the Committee to have an integrated view on the way the risk is managed. Assurance was also provided across a broad range of areas, including: product development, customer base management, Vodafone Business sales opportunity governance, billing of Internet of Things services, compliance with the EU Electronic Communications Code, data management, data protection at third parties, asset verification and reconciliation, revenue and cost assurance controls, revenue accrual processes, lease accounting, active directory infrastructure security, Application Programming Interface security and M-Pesa operations. The activities performed by the shared service organisation also received ongoing focus due to their significance across many processes. Management is responsible for ensuring that issues raised by Internal Audit are addressed within an agreed timetable, and the Committee reviews their timely completion. The last independent review of the effectiveness of the Group’s Internal Audit function was performed by Deloitte LLP in January 2022 and the results have been presented to the Committee. The review concluded that the Internal Audit function operated in accordance with the Global Institute of Internal Auditors’ International Professional Practices Framework, is at the top of its peer group range and demonstrates areas of innovative practice. The Internal Audit function continues to invest in several initiatives to improve its effectiveness, particularly in the adoption of new technologies. The innovative use of data analytics has provided broader and deeper audit testing and driven increased insights. Assessment of the Group’s system of internal control, including the risk management framework The Group’s risk assessment process and the way in which significant business risks are managed is an area of focus for the Committee. The Committee’s activity here was led primarily, but not solely, by the Group’s assessment of its principal and emerging risks and uncertainties set out on pages 51 to 56 and a range of mitigations for risks as set out on pages 113 and 114. Cyber threats remain a major focus for the Committee given the continual threats in this area. The Group has an internal control environment designed to protect the business from the material risks which have been identified. Management is responsible for establishing and maintaining adequate internal controls and the Committee has responsibility for ensuring the effectiveness of those controls. The Committee reviewed the process by which Group management assessed the control environment, in accordance with the requirements of the Guidance on Risk Management, Internal Control and Related Financial and Business Reporting published by the FRC. This activity was supported by reports from the Group Audit Director and the Group Head of Risk and a range of functional specialists. As part of the Committee’s recurring agenda items, the Group Security Director provided a fraud update, the scope of which would include incidents of fraud involving management or employees with a significant role in internal controls. The Group operates a ‘Speak Up’ channel that enables employees to anonymously raise concerns about possible irregularities. The Committee received an update on the operation of the channel together with the output of any resulting investigations. The Committee has completed its review of the effectiveness of the Group’s system of internal control, including risk management, during the year and up to the date of this Annual Report. The review covered all material controls including financial, operating and compliance controls. The Committee confirms that the system of internal control operated effectively for the 2023 financial year. Where specific areas for improvement were identified, mitigating alternative controls and processes were in place. This allows us to provide positive assurance to the Board to help fulfil its obligations under the Code. Compliance with section 404 of the US Sarbanes-Oxley Act Oversight of the Group’s compliance activities in relation to section 404 of the US Sarbanes-Oxley Act and policy compliance reviews also fall within the Committee’s remit. Management is responsible for establishing and maintaining adequate internal controls over financial reporting and we have responsibility for ensuring the effectiveness of these controls. The Committee received updates on the Group’s work in relation to section 404 compliance and the Group’s broader financial control environment during the year. We continue to challenge management on ensuring the nature and scope of control activities evolve to ensure key risks continue to be adequately mitigated. For example, robust controls over our IT systems are critical and were discussed with the Chief Technology Officer and IT Director at the November 2022 meeting. The Committee also took an active role in monitoring the Group’s compliance activities, including receiving reports from management in the year covering programme-level strategy, the scope of compliance work performed and the results of controls testing. The external auditor also reports the status of its work in relation to controls in its reports to the Committee. 81 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Long-term viability statement and going concern assessment The Committee provides advice to the Board on the form and basis of conclusion underlying the long-term viability statement and the going concern assessment. Read more about the long-term viability statement on page 57 Read more about the going concern assessment on page 112 At our meeting in May 2023, the Committee challenged management on its financial risk assessment as part of its consideration of the long-term viability statement. This included scrutiny of forecast liquidity, balance sheet stress tests, the availability of cash and cash equivalents through new or existing financing facilities and a review of counter-party risk to assess the likelihood of third parties not being able to meet contractual obligations. This comprehensive assessment of the Group’s prospects made by management included consideration of: – The review period and alignment with the Group’s internal long‑term forecasts; – The assessment of the capacity of the Group to remain viable after consideration of future cash flows, expected debt service requirements, undrawn facilities, and access to capital markets; – The modelling of the financial impact of severe but plausible risk scenarios materialising, including the impact of energy price inflation; – The inclusion of clear and enhanced disclosures in the Annual Report as to why the assessment period selected was appropriate to the Group, what qualifications and assumptions were made and how the underlying analysis was performed, consistent with FRC pronouncements; and – Comprehensive disclosure in relation to the Group’s liquidity provided in the consolidated financial statements. See note 22 ‘Capital and financial risk management’ in the consolidated financial statements. External audit The Committee has primary responsibility for overseeing the relationship with the external auditor, EY. This includes making the recommendation on the appointment, reappointment, and removal of the external auditor, assessing its independence on an ongoing basis, and approving the statutory audit fee, the scope of the statutory audit and the appointment of the lead audit engagement partner. Alison Duncan has held this role for four years since the appointment of EY as external auditor for the year ended 31 March 2020. EY presented to the Committee its detailed audit plan for the 2023 financial year, which outlined its audit scope, planning materiality and its assessment of key audit risks. The identification of key audit risks is critical in the overall effectiveness of the external audit process. The Committee also received reports from EY on its assessment of the accounting and disclosures in the financial statements and financial controls. The Committee will continue to review the auditor appointment and anticipates that the audit will be put out to tender at least every 10 years. The Company has complied with the Statutory Audit Services Order 2014 for the financial year under review. The last external audit tender took place in 2019 which resulted in the appointment of EY. Independence and objectivity In its assessment of the independence of the auditor, and in accordance with the US Public Company Accounting Oversight Board’s (‘PCAOB’) standard on independence, the Committee received details of all relationships between the Company and EY that may have a bearing on its independence and received confirmation from EY that it is independent of the Company in accordance with US federal securities law and the applicable rules and regulations of the Securities and Exchange Commission (‘SEC’) and the PCAOB. Effectiveness of the external audit process The Committee reviewed the quality of the external audit process throughout the year and considered the performance of EY. This comprised the Committee’s own assessment and the results of a detailed feedback survey of senior personnel across the Group. Based on these reviews, the Committee concluded that there had been appropriate focus and challenge by EY on the primary areas of the audit and that EY had applied robust challenge and scepticism throughout the audit. EY audit and non-audit fees Total fees payable to EY for audit and non-audit services in the year ended 31 March 2023 amounted to €30 million (FY22: €25 million). Audit fees The Committee reviewed and discussed the fee proposal, was engaged in agreeing audit scope changes and, following the receipt of formal assurance that its fees were appropriate for the scope of the work required, agreed an audit fee of €27 million for statutory audit services in the year (FY22: €23 million). Non-audit fees To protect the independence and objectivity of the external auditor, the Committee has a policy for the engagement of the external auditor to provide non-audit services. The policy prohibits EY from playing any part in management or decision-making, providing certain services such as valuation work and the provision of accounting services. The Group’s non-audit services policy incorporates the requirements of the FRC’s Ethical Standard, including a ‘whitelist’ of permitted non-audit services which mirrors the FRC’s Ethical Standard. The Committee has pre-approved that EY can be engaged by management, subject to the policies set out above, and subject to: – A €60,000 fee limit for individual engagements; – A €500,000 total fee limit for services where there is no legal alternative; and – A €500,000 total fee limit for services where there is no practical alternative supplier. For those permitted services that exceed these specified fee limits, the Committee Chair pre-approves the service. Non-audit fees in the year were €3 million, comprising audit-related fees of €3 million. (FY22: €2 million, comprising audit-related fees of €2 million. Vodafone did not occur any tax fees and EY did not provide any products or services to Vodafone other than the audit and audit related fees described above. See note 3 ‘Operating profit’ in the consolidated financial statements. FY23 FY22 Audit fees €27 million €23 million Non-audit fees €3 million €2 million Audit-related fees €3 million €2 million Tax Fees – – All other fees – – Governance (continued) 82 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
The role of the ESG Committee is to provide oversight of Vodafone’s Environmental, Social and Governance (‘ESG’) programme, of sustainability and responsible business practices, as well as Vodafone’s contribution to the societies that we operate in under the social contract. Chair Amparo Moraleda Members Valerie Gooding Dame Clara Furse DBE Simon Segars (appointed as member in November 2022) On 10 May 2023, we announced that Valerie Gooding and Dame Clara Furse will be stepping down as members of the Committee with effect from the conclusion of the 2023 AGM. Jean-François van Boxmeer and Christine Ramon will join the Committee from the same date. Key responsibilities The responsibilities of the Committee are to: – Provide oversight of the Vodafone Group ESG strategy, the Purpose programme (Digital Society, Inclusion for All and Planet), sustainability and responsible business practices, as well as the contribution to the societies they operate in under their the social contract; – Monitor progress against key performance indicators and external ESG indices; and – Provide joint oversight and effective governance with the Audit and Risk Committee over the ESG content within the Annual Report, the TCFD report and the ESG Addendum. Click to read the Committee’s terms of reference: vodafone.com/board-committees Letter from Committee Chair On behalf of the Board, I am pleased to present Vodafone’s ESG Committee Report for the year ended 31 March 2023. The Committee was established in 2021 with the founding members selected to ensure a range of experience across the range of topics that fall within ESG. In November 2022, we welcomed our fourth Committee member, Simon Segars. Simon brings significant experience and insights to the ESG Committee, including how technology and connectivity are reshaping our digital societies. On 10 May 2023, it was announced that Valerie Gooding and Dame Clara Furse would be retiring following the conclusion of the 2023 AGM. I would like to thank them both for their contribution since this Committee was established two years ago. Jean-François van Boxmeer and Christine Ramon will be joining this Committee on the same date and their insights will be an excellent addition to the Committee. This year, the Committee met twice, in November 2022 and March 2023. Each meeting agenda included a range of topics across the Committee’s areas of responsibility. During FY23, the Committee undertook deep dives on each of Vodafone’s three purpose pillars, as well as Vodafone’s approach to responsible business. These deep dives were supplemented by committee training on key Planet-related topics by the Group Sustainability team, and other experts across the business. Now that the Committee has explored each of the key purpose themes in detail, we will move into receiving regular updates on progress against our key ESG strategy. In addition to these thematic deep dives, a key focus of the ESG Committee this year was oversight of Vodafone’s ESG data transformation and disclosure programme. High quality and timely data is a core component of a successful ESG strategy, both to ensure that we can track progress against targets, and to enable decision-making by investors, consumers, suppliers, governments and other stakeholders. Recognising this, the Board was pleased to see that management updated their approach to ESG reporting this year, by giving joint responsibility for ESG reporting to the Group Financial Reporting team and the Group Sustainable Business team. This allowed the teams to apply financial reporting principles to non-financial ESG data, including establishing a control framework on key data points. These changes have already yielded positive changes and set a firm basis from which to grow. However we acknowledge that there is a long road ahead before ESG disclosures will match similar levels of data quality to financial disclosures, not only for Vodafone, but for other corporates too. The absence of a clear framework for the calculation and reporting of ESG data exacerbates the challenge for all reporters. For example, we expect these challenges will come into sharper focus as Scope 3 emission reductions become a priority for corporates. In November 2022 the Committee reviewed its terms of reference and agreed to introduce new joint oversight of selected ESG matters between the ESG Committee and the Audit and Risk Committee. This will be executed through increased sharing of papers between the committees, and a new joint meeting each May to review ESG disclosures. On behalf of the Committee, I have reported this year’s work to the Board and I am looking forward to the next year chairing the Committee, starting with the joint ESG Committee and Audit and Risk Committee meeting in May 2023. The Committee will continue oversight and scrutiny of Vodafone’s ESG agenda, including further presentations from senior management and experts across the Group. We will review against Vodafone’s strategy and the pathways in place to achieve Vodafone’s targets across its three purpose pillars. Consideration of the following stakeholder interests will remain part of the Committee’s responsibility. We set out below some of our key stakeholders and examples of their ESG-related interests: – Investors: Board-level oversight of Vodafone’s ESG strategy and performance is a key part of an effective ESG programme; – Governments and regulators: Local and international legal and regulatory obligations on ESG topics to increase; – Local communities and NGOs: ESG topics affect the day-to-day lives of the people in the communities that we serve; – Suppliers and customers: Upholding high ethical standards throughout our value chain is critical for stakeholders when deciding whether they should do business with Vodafone; and – Employees: Employees take pride in working for a purpose-driven organisation that is enabling an inclusive and sustainable digital society. We believe the ESG Committee will continue to add value to the long-term success of Vodafone, for the benefit of our customers, key stakeholders, and the societies in which we operate. I will be available to engage with shareholders who have questions or comments about the work of the Committee at our 2023 AGM. /s/ Amparo Moraleda Amparo Moraleda On behalf of the ESG Committee 21 June 2023 ESG Committee Click or scan to watch the Chair of the ESG Committee explain her role: investors.vodafone.com/videos Click to read more about Vodafone’s approach to ESG reporting: vodafone.com/about-vodafone/reporting-centre 83 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Environment Read more Energy consumption and GHG emissions E Including energy sources, uses and targets 35-37 Circularity and other environmental topics E Including device and network waste, water and plastics 37-38 Environmental benefits from products & services E Including carbon & resource efficiency enablement 37 Climate change risk management A E Including alignment with TCFD recommendations 58-59 Social Read more Health and safety B 44-45 Diversity & inclusion and employee experience B 33-34 Employee rights B A Including collective bargaining, grievance mechanisms, Speak Up, Fair Pay, and labour standards 15 40 44 100 Responsible supply chain B E Including labour standards and sourcing of minerals 47 Human and digital rights A E Including privacy regulations, right to privacy and freedom of expression, and other human rights 40-43 46 Socio-economic benefits from products & services E Including digital inclusion 29-32 Governance Read more Mobile, masts and health B 45 Security A B Including cyber and other security topics 42-43 Anti-bribery and corruption A 48-49 Business conduct & ethics A Including taxation, business conduct and compliance 47-49 Corporate governance N 60-73 Reporting A B E Including Annual Report and Accounts, TCFD report, Modern Slavery Statement and voluntary ESG disclosures 27 47 58-59 Focus during the year The ESG Committee met twice during the year ended 31 March 2023. The following provides a summary of the topics covered. November 2022 – Review of the ESG reporting processes and disclosure accountabilities. Following ExCo alignment, the discussion clarified and adjusted the oversight for ESG disclosures between the ESG Committee, the Audit and Risk Committee, and the Disclosure Committee. – Review and approval of updates to the “Committee terms of reference” to introduce new joint oversight of selected ESG matters between the ESG Committee and the Audit and Risk Committee. – Review of Vodafone’s approach to managing human rights, including how Vodafone respects the rights to freedom of expression and privacy in the context of government law enforcement assistance requests. – Deep dive session on Vodafone’s Inclusion for All (I4A) purpose pillar, delivered by the ExCo sponsor Serpil Timuray. During this session, progress reports were delivered on the Inclusion for All metrics. – The Committee also considered Vodafone’s Conflict Minerals Report. March 2023 – Review of Vodafone’s approach to ESG disclosures in FY23 and update on assurance of ESG metrics, provided by Joakim Reiter, Chief External and Corporate Affairs Officer, and the Head of Group Financial Reporting. – Deep dive on the Digital Society purpose pillar, including a report on progress against the KPI to support seven million SMEs to digitalise using V-Hub. – An update for noting on Vodafone’s performance against Planet targets, as well as an update on Planet initiatives and increasing external requirements in this area. This followed the Planet deep dive the previous financial year. Key focus for the next year The key areas of focus for the next year: – Continuing to review progress of ESG strategy, including performance against targets and performance in ESG indices and rankings; – Reviewing progress in embedding key purpose targets and practices into Vodafone’s operations and commercial strategy; – Reviewing Vodafone’s alignment to external ESG disclosure standards; – Continued oversight of the ESG data management programme; and – Deep dive into renewable energy. Mapping of ESG topics When establishing the ESG Committee and setting its remit, we completed a mapping of all key ESG topics for Vodafone, to ensure clarity on the role of the ESG Committee alongside the Board and other relevant Committees. This is presented to the right, alongside further details of each ESG topic. Key Audit and Risk Committee ESG Committee Nominations and Governance Committee Full Board A E N B Governance (continued) 84 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Letter from the Remuneration Committee Chair On behalf of the Board, I present our 2023 Directors’ Remuneration Report. This report includes both our proposed Policy Report (which will be submitted for shareholder approval at the 2023 AGM), and our 2023 Annual Report on Remuneration, which sets out how our current policy was implemented during the year under review, and how, subject to its approval, our revised policy will be applied for the year ahead. Remuneration Policy review Our current Policy Report was approved at the July 2020 AGM, with a vote in favour of over 96%. Following the policy entering its third year of operation without amendment, the Committee has been reviewing our remuneration structures ahead of the regulatory requirement for a new policy to be submitted to shareholders at the 2023 AGM. The Committee is clear that consistency and flexibility should be maintained within the new policy and in the event material revisions are required before the end of its three-year regulatory lifecycle then the Committee will re-engage with shareholders. Following its review of the current arrangements, which the Committee is satisfied remain appropriate and operating as intended, and having made a significant number of best practice changes when the policy was last renewed, the Committee is not proposing to make any material changes at this time. Instead, some refinements to our framework and the implementation of our structures are proposed. These include the review of our short-term incentive to more fully support our priorities of Growth and Customers (further details of which are provided later in this letter under ‘Arrangements for 2024’). The Committee is also strengthening our clawback policy with the current list of trigger events expanded to include a breach of an executive’s restrictive or confidentiality covenants, reflecting the importance in our industry of retaining and protecting key talent and intellectual property. Clawback time frames are also being revised to ensure compliance with the recently announced SEC requirements, the vast majority of which our current arrangements already complied with. The implementation of our long-term incentive plan is subject to the Global Incentive Plan Rules which were last approved by shareholders at the 2014 AGM. In line with UK regulations, the Rules need to be approved by shareholders at least every 10 years and will be submitted for approval at the 2023 AGM. The Committee, with its external legal advisers, has reviewed the Rules to ensure they reflect latest market practice. Engagement during the year Shareholder feedback has always played a vital role in the development of our executive remuneration policy and this is reflected in this year’s shareholder consultation. As part of this engagement the Committee contacted shareholders with a combined holding of c.50% in Vodafone Group Plc. We also actively engaged with a variety of investor bodies and proxy agencies before finalising the Policy Report which will be submitted for approval at the 2023 AGM. I would like to thank all stakeholders that engaged in this year’s review. In terms of engaging the employee voice, as Workforce Engagement Lead, I attended meetings with both our European and African forums, with feedback and comments from the meetings subsequently presented back directly to the Board. The key topics raised by employee representatives this year focused on the cost of living support being provided, progress against our Race, Ethnicity and Cultural Heritage targets, internal talent development, and our wider business performance. I would like to thank the representatives from both forums for inviting me and for contributing to the discussions. When looking at the feedback from these forums and our other channels of engagement it is evident that our colleagues value the open and regular updates the business has given throughout the year, and the Board will ensure these continue in the year ahead. Read more about our stakeholder engagement activities on pages 10 to 12 of this Annual Report Fair pay It is recognised that rising inflation levels and the subsequent cost of living crisis have impacted colleagues across a number of our markets this year. To help alleviate the impact of these pressures, targeted support was provided in locations including the UK, Turkey and Egypt. Such measures included additional or accelerated salary reviews, the provision of extra cash allowances, and the careful consideration of wider market conditions when setting salary budgets for the 2023 review. When making decisions on executive remuneration the Committee considers pay in the wider context including arrangements elsewhere in the business, our fair pay principles and stakeholder considerations. Read more on page 100 Arrangements for 2024 Base salary and pension arrangements Following her appointment to the position of Group Chief Executive, Margherita Della Valle’s salary was set at £1,250,000. The Committee decided the new salary was appropriate when compared against the external market, was fair from a gender pay perspective given its long standing work on fair pay, as referenced above, and reflected both the responsibilities and demands of the role. During the year no additional salary payment or allowance has been made to Margherita Della Valle in respect of her carrying out the dual roles of Group Chief Executive and Group Chief Financial Officer. This will remain the approach going forward, and it is intended that Margherita will continue with her dual responsibilities until the search for a new Group Chief Financial Officer is complete. Pension arrangements for Executive Directors will continue to remain aligned with the wider UK workforce at 10% of base salary. Annual bonus (‘GSTIP’) In recent years the performance measures have normally been equally weighted across service revenue, adjusted free cash flow, adjusted EBIT, and customer appreciation. The Committee adjusted these weightings ahead of the start of the FY24 plan to ensure performance against the strategic priorities of Growth and Customers is fully incentivised. For the 2024 plan, measures under the annual bonus will be: – Growth (70%): service revenue (20%), adjusted EBIT (20%), adjusted free cash flow (20%) and revenue market share (10%). – Customers (30%): Net Promoter Score (20%), and churn (10%). Global long-term incentive (‘GLTI’) Following a comprehensive review of the GLTI structure the Committee determined that this will remain unchanged for 2024. The measures under the long-term incentive will continue to be weighted at 60% adjusted free cash flow, 30% relative TSR and 10% ESG. Read more on pages 104 and 105 Remuneration Committee Click or scan to watch the Senior Independent Director and Chair of the Remuneration Committee explain her role: investors.vodafone.com/videos 85 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Remuneration Committee (continued) Performance outcomes during 2023 GSTIP performance (1 April 2022 – 31 March 2023) Annual bonus performance during the year was measured against both financial and strategic measures. The four measures were equally weighted at 25% each, with financial metrics constituting service revenue, adjusted EBIT and adjusted free cash flow whilst the strategic measure was linked to customer appreciation KPIs. These KPIs covered metrics including churn, revenue market share, and Net Promoter Score. Performance under the service revenue, free cash flow and customer appreciation measures was above the mid-point of the target range whilst performance against EBIT was below the mid-point. The combined performance resulted in an overall bonus payout of 55.8% of maximum. Read more on pages 94 and 95 GLTI performance (1 April 2020 – 31 March 2023) The 2021 GLTI award (granted November 2020) was subject to adjusted free cash flow (60% of total award), relative TSR (30% of total award), and ESG (10% of total award) performance. All performance conditions were measured over the three-year period ending 31 March 2023. Final adjusted FCF performance finished above the mid-point of the range resulting in 72.7% of the adjusted FCF element vesting. Relative TSR performance was below the median of the peer group resulting in no vesting under this measure. ESG performance was assessed against three metrics and vested at 95.3%. This resulted in an overall vesting percentage for the 2021 GLTI of 53.2% of maximum. Read more on pages 95 and 96 Consideration of discretion The Committee reviewed the appropriateness of the outcomes of both the annual bonus and long-term incentive plan in light of both the relevant performance targets and wider internal and external considerations across the respective measurement periods. Outcomes were reviewed against the wider employee experience during the periods under review with the Committee noting the steps taken in markets to help employees with the cost of living. The Committee also acknowledged that no windfall gains had occurred under the long-term incentive plan. It was agreed that the outcomes were appropriate and that no adjustments were required. Looking forward Following the conclusion of the 2023 AGM I will be stepping down as Chair of the Remuneration Committee. Amparo Moraleda will be appointed as Chair of the Committee and Dame Clara Furse will be stepping down as a member of the Committee with effect from the same date. The rest of this report sets out both our proposed Policy Report, as will be submitted at the 2023 AGM, and our Annual Report on Remuneration, which sets out the decisions and outcomes summarised in this letter in further detail. /s/ Valerie Gooding Valerie Gooding Chair of the Remuneration Committee 21 June 2023 Remuneration at a glance Component 2023 (year ending 31 March 2023) 2024 (year ending 31 March 2024) Fixed pay Base salary Effective 1 July 2022: Chief Executive: £1,081,500. Chief Financial Officer: £721,000. Effective 1 January 2023: Group Chief Executive on an interim basis and Chief Financial Officer: £1,081,500. Effective 27 April 2023: Group Chief Executive and Chief Financial Officer: £1,250,000. Benefits Travel related benefits and private medical cover. Travel related benefits and private medical cover. Pension Pension contribution of 10% of salary. Pension contribution of 10% of salary. Annual bonus GSTIP Opportunity (% of salary): Target: 100%/Maximum: 200% Measures: Service revenue (25%), adjusted EBIT (25%), adjusted FCF (25%), and customer appreciation KPIs (25%). Opportunity (% of salary): Target: 100%/Maximum: 200% Measures: Service revenue (20%), adjusted EBIT (20%), adjusted FCF (20%), revenue market share (10%), Net Promoter Score (20%), and churn (10%). Long-term incentive GLTI Opportunity (% of salary – maximum): Chief Executive: 500%/Other Executive Directors: 450% Measures: Adjusted free cash flow (60%), relative TSR (30%), and ESG (10%). Performance/holding periods: Three-year performance + two-year holding period. Opportunity (% of salary – maximum): Chief Executive: 500%/Other Executive Directors: 450% Measures: Adjusted free cash flow (60%), relative TSR (30%), and ESG (10%). Performance/holding periods: Three-year performance + two-year holding period. 86 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Remuneration Policy Remuneration Policy In this forward-looking section we describe our Remuneration Policy for the Board. This includes our considerations when determining policy, a description of the elements of the reward package, including an indication of the potential future value of this package for the Executive Directors, and the policy applied to the Chair and Non-Executive Directors. We will be seeking shareholder approval for our Remuneration Policy at the 2023 Annual General Meeting (‘AGM’) and we intend to implement it at that point. A summary and explanation of the proposed changes to the current Remuneration Policy is provided on page 85. The proposed Remuneration Policy submitted for shareholders’ approval at the 2023 AGM does not differ substantively from the Remuneration Policy approved by shareholders in 2020 except for changes made to align the terms of the Remuneration Policy with the drafting of the rules of the new Global Incentive Plan 2023, which is also being submitted for shareholders’ approval at the 2023 AGM. Subject to approval, we will review our Remuneration Policy each year to ensure that it continues to support our Company strategy and, if it is necessary to make a change to our Remuneration Policy within the next three years, we will seek prior shareholder approval for the change. Considerations when determining our Remuneration Policy To avoid conflicts of interest, the Remuneration Committee is entirely comprised of Non-Executive Directors (who are not eligible to participate in the Company’s annual bonus or long-term incentive arrangements) and the Remuneration Committee ensures that individuals are not present when the Remuneration Committee discusses their own remuneration. A critical consideration for the Remuneration Committee when determining our Remuneration Policy is to ensure that it supports our Company purpose, strategy, and business objectives. A variety of stakeholder views are taken into account when determining executive pay, including those of our shareholders, colleagues, and external bodies. Further details of how we engage with, and consider the views of, each of these stakeholders are set out on page 100. In advance of submitting our Remuneration Policy for shareholder approval we ran a thorough consultation exercise with our major shareholders. We invited our top 25 shareholders (constituting a combined holding of c.50% of our issued share capital at the time of engagement) and a number of key governance stakeholders to comment on remuneration at Vodafone and to provide feedback on the proposed changes to the current Remuneration Policy which was approved at the 2020 AGM. A number of meetings between shareholders and the Remuneration Committee Chair took place during this consultation period. Listening to and consulting with our employees is very important and the Remuneration Committee is supportive of the activities undertaken to engage the employee voice. Our engagement with employees can take different forms in different markets but includes a variety of channels and approaches including our annual people survey which attracts very high levels of participation and engagement, regular business leader Q&A sessions, and a number of internal digital communication platforms. Our Workforce Engagement Lead also undertakes an annual attendance at our European employee forum, and a similar body which covers our African markets, with any questions or concerns raised by the employee representatives presented directly to the Board for consideration and discussion. Any actions taken by the Board are then fed back to these forums to ensure a two-way dialogue. Whilst we do not formally consult directly with employees on the Remuneration Policy nor is any fixed remuneration comparison measurement used when determining the Remuneration Policy for Executive Directors, the Remuneration Committee is briefed on pay and employment conditions of employees in the Vodafone Group, with particular reference to the market in which the executive is based. The Company operates Sharesave, a UK all-employee share plan, as well as other discretionary share-based incentive arrangements, which means that the wider workforce have the opportunity to become shareholders in the Company and be able to vote on the Remuneration Policy in the same way as other shareholders. Further information on our approach to remuneration for other employees is given on page 90. Performance measures and targets Our Company strategy and business objectives are the primary consideration when we are selecting performance measures for our incentive plans. The targets within our incentive plans that are related to internal financial measures (such as revenue, profit and cash flow) are typically determined based on our budgets. Targets for strategic and external measures (such as customer-focused metrics, ESG measures, and total shareholder return (‘TSR’)) are set based on Company objectives and in light of the competitive marketplace. The threshold and maximum levels of performance are set to reflect minimum acceptable levels at threshold and very stretching levels at maximum. As in previous Remuneration Reports, we will disclose the details of our performance metrics for our short- and long-term incentive plans. However, our annual bonus targets are commercially sensitive and therefore we will only disclose our targets in the Remuneration Report following the completion of the financial year. We will normally disclose the targets for each long-term award in the Remuneration Report for the financial year preceding the start of the performance period. At the end of each performance period we review performance against the targets, using judgement to account for items such as (but not limited to) mergers, acquisitions, disposals, foreign exchange rate movements, changes in accounting treatment, material one-off tax settlements etc. The application of judgement is important to ensure that the final assessments of performance are fair and appropriate. 87 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Remuneration Policy (continued) Malus and clawback The Remuneration Committee reviews the incentive plan results before any payments are made to executives or any shares vest and has full discretion to adjust the final payment or vesting if they believe circumstances warrant it. In particular, the Remuneration Committee has the discretion to use either malus or clawback as it sees appropriate. In the case of malus, the award may lapse wholly or in part, may vest to a lesser extent than it would otherwise have vested or vesting may be delayed. In the case of clawback, the Remuneration Committee may recover bonus amounts that have been paid up to three years after the relevant payment date, or recover share awards that have vested up to five years after the relevant grant date. In line with best practice guidance, the key trigger events for the use of the clawback arrangements include material misstatement of results, material miscalculation of performance condition outcomes, the Executive Director’s gross misconduct, or breach of their restrictive covenants, the Executive Director causing a material financial loss to the Group as a result of reckless or negligent conduct or inappropriate values or behaviour, corporate failure or serious reputational damage. Subject to approval of this Remuneration Policy, these arrangements will be applicable to all bonus amounts paid, or share awards granted, following the 2023 AGM. The current clawback arrangements, which are set out in the Remuneration Policy approved by shareholders at the 2020 AGM, have been applicable to all bonus amounts paid, or share awards granted, since the 2020 AGM. The Remuneration Policy table The table below summarises the main components of the reward package for Executive Directors. Fixed pay: Base salary Purpose and link to strategy To attract and retain the best talent Operation Salaries are usually reviewed annually and fixed for 12 months commencing 1 July. Decisions are influenced by: – the level of skill, experience and scope of responsibilities; – business performance, scarcity of talent, economic climate and market conditions; – increases elsewhere within the Group; and – external comparator groups (which are used for reference purposes only) made up of companies of similar size and complexity to Vodafone. Opportunity Average salary increases for existing Executive Committee members (including Executive Directors) will not normally exceed average increases for employees in other appropriate parts of the Group. Increases above this level may be made in specific situations. These situations could include (but are not limited to) internal promotions, changes to role, material changes to the business and exceptional Company performance. Performance metrics None. Fixed pay: Pension Purpose and link to strategy To remain competitive within the marketplace Operation – Executive Directors may choose to participate in the defined contribution pension scheme or to receive a cash allowance in lieu of pension. Opportunity – The pension contribution or cash payment is equal to the maximum employer contribution available to our UK employees under our Defined Contribution scheme (currently 10% of annual gross salary). Performance metrics None. Fixed pay: Benefits Purpose and link to strategy To aid retention and remain competitive within the marketplace Operation – Travel-related benefits. These may include (but are not limited to) a company car or cash allowance, fuel and access to a driver where appropriate. – Private medical, death and disability insurance and annual health checks for the Executive Directors and their families. – In the event that we ask an individual to relocate we would offer them support in line with Vodafone’s relocation and international assignment policies. This may cover (but is not limited to) relocation, cost of living allowance, housing, home leave, education support, and tax equalisation and advice. – Legal and tax support fees if appropriate. – Other benefits are also offered in line with the benefits offered to other employees, for example, our all-employee share plan, mobile phone discounts, maternity/paternity benefits, sick leave, paid holiday etc. Opportunity – Benefits will be provided in line with appropriate levels indicated by local market practice in the country of employment, though no monetary maximum has been set. – We expect to maintain benefits at the current level but the value of any benefit may fluctuate depending on, amongst other things, personal situation, insurance premiums and other external factors. Performance metrics None. 88 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Annual bonus – Global Short-Term Incentive Plan (‘GSTIP’) Purpose and link to strategy To drive behaviour and communicate the key priorities for the year. To motivate employees and incentivise delivery of performance over the one-year operating cycle. The financial metrics drive our growth strategies whilst also focusing on improving operating efficiencies. The strategic measures aim to ensure a great customer experience remains at the heart of what we do. Operation – Bonus levels and the appropriateness of measures and weightings are reviewed annually to ensure they continue to support our strategy. – Performance over the financial year is measured against stretching financial and non-financial performance targets set at the start of the financial year. – The annual bonus is usually paid in cash in June each year for performance over the previous year. A mandatory deferral of 25% of post-tax bonus earned into shares for two years will normally apply except where an Executive Director has met or exceeded their share ownership requirement. The Remuneration Committee retains the discretion to adjust the size of the bonus based on the achievement of the relevant performance conditions to reflect the Company’s and the Executive Director’s underlying performance and any other factors the Remuneration Committee considers appropriate. Opportunity – Bonuses can range from 0 to 200% of base salary, with 100% paid for on-target performance. Performance metrics – Performance over each financial year is measured against stretching targets set at the beginning of the year. – The performance measures normally comprise a mix of financial and strategic measures. Financial measures may include (but are not limited to) profit, revenue and cash flow with a weighting of no less than 50%. Strategic measures may include (but are not limited to) customer appreciation KPIs such as churn, revenue market share, and NPS. Long-term incentive – Global Long-Term Incentive Plan (‘GLTI’) Purpose and link to strategy To motivate and incentivise delivery of sustained performance over the long term. To support and encourage greater shareholder alignment through a high level of personal share ownership. The use of free cash flow as the principal performance measure ensures we apply prudent cash management and rigorous capital discipline to our investment decisions. The use of TSR along with a performance period of not less than three years means that we are focused on the long-term interests of our shareholders. The use of ESG metrics reflects the importance of our performance and progress against our long-term ambitions in this area. Operation – Award levels and the framework for determining vesting are reviewed annually. – Long-term incentive awards consist of awards of shares subject to performance conditions which are granted in respect of any financial year. – Awards will vest based on Group performance against the performance metrics set out below, measured over a period of normally not less than three years. In exceptional circumstances, such as but not limited to where a delay to the grant date is required, the Remuneration Committee may set a vesting period of less than three years, although awards will continue to be subject to a performance period of at least three years. – Awards may be subject to a mandatory two-year post-vesting holding period before the underlying shares can be sold. – Dividend equivalents are paid in cash and/or shares by reference to the vesting period (and holding period, if applicable) in respect of shares that vest. Opportunity – Maximum long-term incentive face value at award of 500% of base salary for the Chief Executive and 450% for other Executive Directors in respect of any financial year. – Threshold long-term incentive face value at award is 20% of maximum opportunity. Minimum vesting is 0% of maximum opportunity. Awards vest on a straight-line basis between threshold and maximum. – The Remuneration Committee retains the discretion to adjust the extent to which an award vests based on the achievement of the relevant performance conditions and to reflect the Company’s and Executive Director’s underlying performance and any other factors the Remuneration Committee considers appropriate. In addition, the Remuneration Committee has the discretion to reduce long-term incentive grant levels for Executive Directors who have neither met their shareholding guideline nor increased their shareholding by 100% of salary during the year. Performance metrics – Performance is measured against stretching targets set at the time of grant. – Vesting is determined based on the following measures: adjusted free cash flow as our operational performance measure, relative TSR against a peer group of companies as our external performance measure, and ESG as a measure of our external impact and commitment to our purpose. – Weightings will be determined each year and will normally constitute 60% on adjusted free cash flow, 30% on relative total shareholder return, and 10% on ESG. The Remuneration Committee will determine the actual weighting of an award prior to grant, taking into account all relevant information. 89 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Remuneration Policy (continued) Notes to the Remuneration Policy table Existing arrangements We will honour existing awards, incentives, benefits and contractual arrangements made to individuals prior to their promotion to the Board and/or prior to the approval and implementation of this Remuneration Policy. For the avoidance of doubt this includes payments in respect of any award granted under any previous Remuneration Policy. This will last until the existing incentives vest (or lapse) or the benefits or contractual arrangements no longer apply. Long-term incentive (‘GLTI’) When referring to our long-term incentive awards we use the financial year end in which the award was made. For example, the “2023 award” was made in the financial year ending 31 March 2023. The awards are usually made in the first half of the financial year. The extent to which awards vest depends on three performance conditions: – underlying operational performance as measured by adjusted free cash flow; – relative Total Shareholder Return (‘TSR’) against a peer group median; and – performance against our Environmental, Social, and Governance (‘ESG’) targets. Further details of these performance conditions are set out below. The Remuneration Committee reserves the right during the lifetime of the Remuneration Policy to change the performance conditions applicable to GLTI awards to other financial, shareholder return and strategic metrics, if the Remuneration Committee determines that to do so would be in the best interests of the Company. However, in such circumstances, the majority of the GLTI awards would continue to remain subject to financial performance targets. The Remuneration Committee would engage with major shareholders prior to changing the performance conditions applicable to GLTI awards in this way. Adjusted free cash flow The free cash flow performance is based on the cumulative adjusted free cash flow figure over the performance period. The detailed targets and the definition of adjusted free cash flow are determined each year as appropriate. The target adjusted free cash flow level is set by reference to our long-range plan and market expectations. The Remuneration Committee sets these targets to be sufficiently demanding and with significant stretch. The cumulative adjusted free cash flow vesting levels as a percentage of the award subject to this performance element are shown in the table below (with linear interpolation between points): Performance Vesting percentage (% of FCF element) Below threshold 0% Threshold 20% Maximum 100% Relative TSR We have a limited number of appropriate peers and this makes the measurement of a relative ranking system volatile. As such, the outperformance of the median of a peer group is felt to be the most appropriate TSR measure. The peer group and outperformance range for the performance condition are reviewed each year and amended as appropriate. The TSR vesting levels as a percentage of the award subject to this performance element are shown in the table below (with linear interpolation between points): Performance Vesting percentage (% of TSR element) Below threshold 0% Threshold (median) 20% Maximum (outperformance of median as determined per award) 100% In order to determine the percentages for the equivalent outperformance levels above median, the Remuneration Committee seeks independent external advice. ESG performance Our ESG targets are set on an annual basis (in accordance with our approach for our other performance measures) and are aligned to our externally communicated ambitions in this area. Where performance is below the agreed ambition, the Remuneration Committee will use its discretion to assess vesting based on performance against the stated ambition and any other relevant information. Remuneration policy for other employees While our remuneration policy follows the same fundamental principles across the Group, packages offered to employees reflect differences in market practice in the different countries, role and seniority. For example, the remuneration package elements for our Executive Committee are essentially the same as for the Executive Directors with some minor differences, for example smaller levels of share awards and local variances where appropriate. The remuneration for the next level of management, our Senior Leadership Team, again follows the same principles with local and/or individual performance aspects in the annual bonus targets and GLTI awards. They also receive lower levels of share awards which are partly delivered in conditional share awards without performance conditions. 90 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Estimates of total future potential remuneration from 2024 pay packages The tables below provide estimates of the potential future remuneration for Executive Directors based on the remuneration opportunity to be granted in the 2024 financial year. Potential outcomes based on different performance scenarios are provided in accordance with the relevant regulatory requirements. The assumptions underlying each scenario are described below. Fixed Consists of base salary, benefits and pension. Base salary is at 1 July 2023. Benefits are valued using the figures in the total remuneration for the 2023 financial year table on page 94 (of the 2023 annual report). Pensions are valued by applying cash allowance rate of 10% of base salary at 1 July 2023. Base (£’000) Benefits (£’000) Pension (£’000) Total fixed (£’000) Group Chief Executive and Chief Financial Officer 1,250 26 125 1,401 Mid-point Based on what a Director would receive if performance was in line with the Company’s business plan. The opportunity for the annual bonus (‘GSTIP’) is 100% of base salary under this scenario. The opportunity for the long-term incentive (‘GLTI’) reflects assumed achievement mid-way between threshold and maximum performance. Maximum The maximum award opportunity for the GSTIP is 200% of base salary. The maximum GLTI opportunity reflects full vesting based on the maximum award levels set out in this Remuneration Policy (i.e. 500% of base salary for the Chief Executive and 450% of base salary for the Chief Financial Officer). Maximum +50% The same assumptions apply as for ‘Maximum’ but with a 50% uplift in the value of the GLTI award. All scenarios Long-term incentives consist of share awards only which are measured at face value, i.e. no assumption is made for dividend equivalents which may be payable. 22% 14% 10% 13,276 71% 10,151 61% 6,401 59% 1,401 Mid-point Maximum Maximum (assuming 50% share price growth) Fixed Salary, Benefits, and Pension Annual Bonus Long-Term Incentive 25% 19% 19% Margherita Della Valle Group Chief Executive and Chief Financial Officer £’000 Recruitment remuneration Our approach to recruitment remuneration is to pay no more than is necessary and appropriate to attract the right talent to the role. The Remuneration Policy table (pages 88 and 89) sets out the various components which would be considered for inclusion in the remuneration package for the appointment of an Executive Director. Any new Director’s remuneration package will take into account the elements and constraints of those of the existing Directors performing similar roles and the individual circumstances of the new Director. This means a potential maximum bonus opportunity of 200% of base salary and long-term incentive maximum face value of opportunity at award of 500% of base salary. When considering the remuneration arrangements of individuals recruited from external roles to the Board, we will take into account the remuneration package of that individual in their prior role. We only provide additional compensation to individuals for awards forgone. If necessary we will seek to replicate, as far as practicable, the level and timing of such remuneration, taking into account also any remaining performance requirements applying to it. This will be achieved by granting awards of cash or shares that vest over a timeframe similar to those forfeited and, if appropriate, based on performance conditions. A commensurate reduction in quantum will be applied where it is determined that the new awards are either not subject to performance conditions or subject to performance conditions that are not as stretching as those of the awards forfeited. Where it is not practicable to grant these ‘buy-out’ awards using the GLTI rules submitted to shareholders at the 2023 AGM, the Company may grant these awards using bespoke arrangements. Service contracts of Executive Directors Executive Directors’ contracts have rolling terms and can be terminated with no more than 12 months’ notice. The key elements of the service contract for Executive Directors relate to remuneration, payments on loss of office (see next page), and restrictions during active employment (and for 12 months thereafter). These restrictions include non-competition and non-solicitation of customers and employees. 91 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Remuneration Policy (continued) Treatment of corporate events All of the Company’s share plans contain provisions relating to a change of control of the Company. Outstanding awards and options would normally vest and become exercisable on a change of control taking into account, in respect of GLTI awards, the extent to which, in the Remuneration Committee’s opinion, any relevant performance conditions are satisfied, the Company’s and the Executive Director’s performance, any other relevant factors and, unless the Remuneration Committee determines otherwise, the proportion of the vesting period that has elapsed. In the event of a demerger, distribution (other than an ordinary dividend) or other transaction which would affect the current or future value of any award, the Remuneration Committee may allow awards to vest on the same basis as for a change of control described above. Alternatively, an adjustment may be made to the number of shares if considered appropriate. Payments for departing Executive Directors In the table below we summarise the key elements of our Remuneration Policy on payments for loss of office. We will always comply both with the relevant plan rules and local employment legislation. The Remuneration Committee may make any statutory payment that is required in any relevant jurisdiction. Provision Policy Notice period and compensation for loss of office in service contracts – 12 months’ notice from the Company to the Executive Director. – Up to 12 months’ base salary and contractual benefits (in line with the notice period). Notice period payments will either be made as normal (if the Executive Director continues to work during the notice period or is on gardening leave) or they will be made as monthly payments in lieu of notice (subject to mitigation if alternative employment is obtained). Treatment of annual bonus (‘GSTIP’) on termination under plan rules – The annual bonus may be pro-rated for the period of service during the financial year and will reflect the extent to which Company performance has been achieved. The annual bonus may be paid in such proportions of cash and shares, and subject to such deferral arrangements, as the Remuneration Committee may determine. – The Remuneration Committee has discretion to adjust the entitlement to an annual bonus to reflect the individual’s performance and the circumstances of the termination. Treatment of unvested long-term incentive awards (‘GLTI’) on termination under plan rules – Normally, unvested GLTI awards will lapse when an Executive Director leaves the Group. However, an Executive Director’s award will vest in accordance with the terms of the plan to the extent determined by the Remuneration Committee taking into account applicable performance conditions, the underlying performance of the Company and of the Executive Director and any other relevant factors, if the Executive Director dies in service or leaves because of their ill health, injury, disability, redundancy or retirement, or the sale of their employing company or business out of the Group or for any other reason determined by the Remuneration Committee, more than five months after the month in which the award is granted. The Remuneration Committee has discretion to determine whether the award will vest at the normal vesting date or earlier. The Remuneration Committee will determine the satisfaction of performance conditions applicable to the award. Awards will, unless the Remuneration Committee determines otherwise, be pro-rated for the proportion of the vesting period that had elapsed at the date the Executive Director leaves the Group. – The Remuneration Committee has discretion to vary the level of vesting as deemed appropriate, and in particular to determine that awards should not vest for reasons which may include, at their absolute discretion, departure in case of poor performance, departure without the agreement of the Board, or detrimental competitive activity. Pension and benefits – Generally pension and benefit provisions will continue to apply until the termination date. – Where appropriate other benefits may be receivable, such as (but not limited to) payments in lieu of accrued holiday, legal fees, tax advice costs in relation to the termination and outplacement support. – Benefits of relatively small value may continue after termination where appropriate, such as (but not limited to) mobile phone provision. In exceptional circumstances, an arrangement may be established specifically to facilitate the exit of a particular individual albeit that any such arrangement would be made within the context of minimising the cost to the Group. We will only take such a course of action in exceptional circumstances and where it is considered to be in the best interests of shareholders. Chair and Non-Executive Directors’ remuneration Our policy is for the Chair to review the remuneration of Non-Executive Directors annually following consultation with the Remuneration Committee Chair. Fees for the Chair are set by the Remuneration Committee. Element Policy Fees – We aim to pay competitively for the role including consideration of the time commitment required. We benchmark the fees against an appropriate external comparator group. We pay a fee to our Chair which includes fees for chair of any committees. We pay a fee to each of our other Non-Executive Directors and they may receive an additional fee if they chair or are a member of a committee and/or hold the position of Senior Independent Director (although the Remuneration Committee does not currently intend to award additional fees for serving on a Board committee, other than for chairing that committee). Non-Executive Directors’ fee levels are set within the maximum level as approved by shareholders as part of our Articles of Association. We review the structure of fees from time to time and may, as appropriate, make changes to the manner in which total fees are structured, including but not limited to any additional chair or membership fees. Allowances – Under a legacy arrangement, an allowance is payable each time certain non-Europe-based Non-Executive Directors are required to travel to attend Board and committee meetings to reflect the additional time commitment involved. Incentives – Non-Executive Directors do not participate in any incentive plans. Benefits – Non-Executive Directors do not participate in any benefit plans. The Company does not provide any contribution to their pension arrangements. The Chair is entitled to the use of a car and a driver whenever and wherever they are providing their services to or representing the Company. We have been advised that for Non-Executive Directors, certain travel and accommodation expenses in relation to attending Board meetings should be treated as a taxable benefit, therefore we also cover the tax liability for these expenses. Non-Executive Director letters of appointment Non-Executive Directors are engaged on letters of appointment that set out their duties and responsibilities. The appointment of Non-Executive Directors may be terminated without compensation. Non-Executive Directors are generally not expected to serve for a period exceeding nine years. For further information refer to the Nominations and Governance Committee section of the Annual Report. 92 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Remuneration Committee In this section we give details of the composition of the Remuneration Committee (the ‘Committee’) and activities undertaken during the 2023 financial year. The Committee’s function is to exercise independent judgement and consists only of the following independent Non-Executive Directors: Chair: Valerie Gooding Committee members: Delphine Ernotte Cunci (appointed 8 November 2022), Michel Demaré and Dame Clara Furse Following the announcement on 10 May 2023, Valerie Gooding and Dame Clara Furse will be stepping down from the Committee with effect from the conclusion of the 2023 AGM. Amparo Moraleda will join as Committee Chair with effect from the same date. The Committee regularly consults with Margherita Della Valle, who was appointed as the Group Chief Executive effective 27 April 2023 (and also held the position on an interim basis effective 1 January 2023) and Leanne Wood, the Chief Human Resources Officer, on various matters relating to the appropriateness of awards for Executive Directors and senior executives, though they are not present when their own compensation is discussed. In addition, James Ludlow, the Group Reward and Policy Director, provides a perspective on information provided to the Committee, and requests information and analysis from external advisers as required. Maaike de Bie, the Group General Counsel and Company Secretary, advises the Committee on corporate governance guidelines and is Secretary to the Committee. External advisers The Committee seeks and considers advice from independent remuneration advisers where appropriate. The appointed advisers, WTW, were appointed by the Committee in 2007. The Chair of the Committee has direct access to these advisers as and when required, and the Committee determines the protocols by which these advisers interact with management in support of the Committee. The advice and recommendations of the external advisers are used as a guide, but do not serve as a substitute for thorough consideration of the issues by each Committee member. Advisers attend Committee meetings occasionally, as and when required by the Committee. WTW is a member of the Remuneration Consultants’ Group and, as such, voluntarily operates under the Remuneration Consultants’ Group Code of Conduct in relation to executive remuneration consulting in the UK. This is based upon principles of transparency, integrity, objectivity, competence, due care and confidentiality by executive remuneration consultants. WTW has confirmed that it adheres to that Code of Conduct throughout the year for all remuneration services provided to Vodafone and therefore the Committee is satisfied that it is independent and objective. The Remuneration Consultants’ Group Code of Conduct is available at remunerationconsultantsgroup.com. Adviser Appointed by Services provided to the Committee Fees for services provided to the Committee £’0001 Other services provided to the Company WTW Remuneration Committee in 2007 Advice on market practice; governance; provision of market data on executive reward; reward consultancy; and performance analysis. £179 Reward and benefits consultancy; provision of benchmark data; outsourced pension administration; and insurance consultancy services. Note: 1. Fees are determined on a time spent basis. 2020 Annual General Meeting – Remuneration Policy voting results At the 2020 Annual General Meeting there was a binding vote on our Remuneration Policy. Details of the voting outcomes are provided in the table below. Votes for % Votes against % Total votes Withheld Remuneration Policy 17,195,227,349 96.41 639,935,461 3.59 17,835,162,810 185,334,870 2022 Annual General Meeting – Remuneration Report voting results At the 2022 Annual General Meeting there was an advisory vote on our Remuneration Report. Details of the voting outcomes are provided in the table below. Votes for % Votes against % Total votes Withheld Remuneration Report 19,086,924,682 97.90 409,978,557 2.10 19,496,903,239 47,875,529 Meetings The Remuneration Committee normally has five scheduled meetings per year, held either in person or via conference call. Details of the principal agenda items for these meetings for the year under review are set out below. In addition to these scheduled meetings, ad hoc meetings or conference calls can also take place when required. Meeting attendance can be found on page 60. Meeting Agenda items May 2022 – 2022 annual bonus achievement and 2023 targets/ranges – 2020 long-term incentive award vesting and 2023 targets/ranges – External market update – 2022 Directors’ Remuneration Report – 2022 shareholder update July 2022 – 2022 AGM update – Remuneration Policy review – Share plan update November 2022 – 2023 shareholder engagement – Remuneration Policy review – 2024 short-term incentive structure – Share plan update January 2023 – 2023 shareholder engagement – Share plan update – External market update – Gender Pay Gap reporting March 2023 – Risk assessment of incentive plans – Remuneration arrangements across Vodafone – Committee’s terms of reference – Chair and Non-Executive Director fee levels – 2024 reward packages for the Executive Committee – 2023 Directors’ Remuneration Report Annual Report on Remuneration 93 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Annual Report on Remuneration (continued) 2023 remuneration In this section we summarise the pay packages awarded to our Executive Directors for performance in the 2023 financial year versus 2022. Specifically, we have provided a table that shows all remuneration that was earned by each individual during the year and computed a single total remuneration figure for the year. The value of the annual bonus (‘GSTIP’) reflects what was earned in respect of the year but will be paid out in cash in the following year. Similarly the value of the long-term incentive (‘GLTI’) reflects the share awards which will vest in August 2023 as a result of the performance through the three-year period ended at the completion of our financial year on 31 March 2023. Consideration of the use of discretion The Remuneration Committee reviews all incentive awards prior to payment and uses judgement to ensure that the final assessments of performance are fair and appropriate. If circumstances warrant it, the Committee may adjust the final payment or vesting. The Committee reviewed incentive outcomes at the May 2023 meeting and considered the appropriateness of outcomes in light of wider financial and business performance and the wider employee experience across the relevant measurement periods for both the short-term and long-term incentive plans. The Committee agreed the outcomes were appropriate and that no adjustments were required to either the short-term or long-term incentive outcomes this year, Board changes Throughout the year under review Margherita Della Valle held the position of Chief Financial Officer and, prior to her permanent appointment as Group Chief Executive on 27 April 2023, was also appointed Group Chief Executive on an interim basis effective 1 January 2023. Margherita’s 2023 single figure therefore reflects remuneration received in respect of her time in both of these executive positions, whereas her 2022 single figure reflects remuneration received solely in respect of her role as Chief Financial Officer. In line with the reporting regulations, the single figure for Nick Read reflects remuneration received in respect of services rendered as a Board Director (i.e. from 1 April 2022 to 31 December 2022). The single figure table and supporting notes do not include values in respect of Nick’s employment between 1 January 2023 to 31 March 2023 nor contractual loss of office payments which can instead be found on page 99. Total remuneration for the 2023 financial year Margherita Della Valle Nick Read 2023 £’000 2022 £’000 2023 £’000 2022 £’000 Salary/fees 806 700 803 1,050 Taxable benefits1 26 22 42 42 Annual bonus: GSTIP (see below for further detail) 1,206 968 904 1,452 Total long-term incentive: 1,570 927 2,045 1,523 GLTI awards 2,3 1,258 783 1,639 1,287 GLTI dividends 4 312 144 406 236 Pension/cash in lieu of pension 81 70 80 105 Other5 – – 1 1 Total 3,689 2,687 3,875 4,173 Total Fixed Remuneration 913 792 926 1,198 Total Variable Remuneration 2,776 1,895 2,949 2,975 Notes: 1. Taxable benefits include amounts in respect of: – Private healthcare (2023: Margherita Della Valle £2,575, Nick Read £1,931; 2022: Margherita Della Valle £2,153, 2022: Nick Read £2,189); – Cash car allowance £19,200 p.a.; and – Travel (2023: Margherita Della Valle £4,235, Nick Read £22,127; 2022: Margherita Della Valle £1,141, Nick Read £20,626). 2. The share prices used for the 2022 and 2023 values, as set out in note 3 below, are lower than the grant prices for the respective awards. As such, no amount of the value shown in the 2022 or 2023 column is attributable to share price appreciation during the performance or vesting periods. 3. The value shown in the 2022 column is the award which vested on 26 June 2022 in respect of Nick Read and Margherita Della Valle, and is valued using the execution share price on 26 June 2022 of 126.82 pence. The value shown in the 2023 column is the award which vests on 3 August 2023 and is valued using an average closing share price over the last quarter of the 2023 financial year of 93.85 pence. 4. Margherita Della Valle and Nick Read receive a cash award equivalent in value to the dividends that would have been paid during the vesting period on any shares that vest. The dividend value shown in 2023 relates to awards vesting on 3 August 2023. 5. Reflects the value of the SAYE benefit which is calculated as £375 x 20% per monthly contribution to reflect the discount applied based on savings made during the year. 2023 annual bonus (‘GSTIP’) payout In the table below we disclose our achievement against each of the performance measures and targets in our annual bonus (‘GSTIP’) and the resulting total annual bonus payout level for the year ended 31 March 2023 of 55.8% of maximum. This is applied to the maximum bonus level of 200% of base salary for each Executive Director. Commentary on our performance against each measure is provided on the next page. Performance measure Payout at maximum performance (% of salary) Actual payout (% of salary) Actual payout (% of overall bonus maximum) Threshold performance level €bn Target performance level €bn Maximum performance level €bn Actual performance level1 €bn Service revenue 50.0% 31.0% 15.5% 37.3 38.4 39.5 38.7 Adjusted EBIT 50.0% 16.6% 8.3% 5.2 6.0 6.7 5.7 Adjusted free cash flow 50.0% 36.4% 18.2% 4.5 5.0 5.5 5.2 Customer appreciation KPIs 50.0% 27.5% 13.8% See overleaf for further details Total annual bonus payout level 200.0% 111.5% 55.8% Note: 1. These figures are adjusted for the impact of M&A, foreign exchange movements and any changes in accounting treatment. 94 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Financial metrics As set out in the table above, service revenue and free cash flow finished above the mid-points of the respective target ranges whilst EBIT finished below the mid-point of the respective target range. Customer appreciation KPIs An assessment of performance under the customer appreciation KPIs measure was conducted on a market-by-market basis. Each market was assessed against a number of different metrics which included: – Churn – defined as total gross customer disconnections in the period divided by the average total customers in the period. – Revenue market share – based on our total service revenue and that of our competitors in the markets we operate in. – Net Promoter Score (‘NPS’) for both Consumer and Vodafone Business – defined as the extent to which our customers would recommend us. All measures utilise data from our local markets which is collected and validated for quality and consistency by independent third-party agencies where possible. Further details on our performance against each key metric is set out below. The business recorded positive churn results despite difficult and volatile market conditions linked to increasing price pressures. We experienced positive results across both mobile and fixed services in Portugal, and it was a particularly strong year for mobile churn in Italy, Turkey and South Africa. Network challenges in markets including Albania meant fixed service performance was more mixed although customer loyalty remained strong in a number of markets including the UK. We continued to perform against revenue market share despite fierce competition across our markets. Strong performance was recorded in the UK, Egypt, Romania, and Ireland all of which demonstrated competitive resilience against this backdrop. Intense competition and increasing price pressures, particularly in some of our larger European markets, was also reflected in our overall position against this metric. Consumer NPS performance during the year saw us retain market leader or co-leader positions in several markets including Italy and Egypt, with Portugal, Albania and Tanzania all retaining a significant lead. We also improved or defended our position to ‘next-best’ competitor in the UK, Spain and South Africa, although faced challenges in Greece and Turkey. Stable Business NPS performance was recorded in the year, reflected in leading positions retained or strengthened in several markets, including South Africa, Portugal and Albania. While there remains some market difficulties in Egypt and Spain, we have seen advancements in markets like Italy where we have attained a market leader position. It is within this context that overall performance against our customer appreciation KPI metrics during the year was judged to be above the mid-point of the target range. The aggregated performance for the Group is calculated on a revenue-weighted average to give an overall achievement. The overall Group achievement for the year was 55.0% of maximum. Overall outcome 2023 annual bonus (‘GSTIP’) amounts Base salary £’000 Maximum bonus % of base salary 2023 payout % of maximum Actual payment £’000 Margherita Della Valle 1,082 200% 55.8% 1,2061 Nick Read 1,082 200% 55.8% 9042 Notes: 1. 25% of Margherita Della Valle’s post-tax bonus will be deferred into shares for two years. 2. Reflects bonus paid in respect of services rendered as a Board Director for the period 1 April 2022 to 31 December 2022. Further details are provided on page 99. Long-term incentive (‘GLTI’) award vesting in August 2023 Vesting outcome The 2021 long-term incentive (‘GLTI’) awards which were made to executives in November 2020 will vest at 53.2% of maximum in August 2023. The performance conditions for the three-year period ending in the 2023 financial year are as follows: Adjusted FCF performance – 60% of total award (€bn) TSR outperformance – 30% of total award TSR peer group Below threshold <14.70 Below threshold Below median BT Group Orange Threshold 14.70 Threshold Median Deutsche Telekom Royal KPN Maximum 16.70 Maximum 8.50% p.a. Liberty Global Telecom Italia MTN Telefónica Telefónica Deutschland ESG performance – 10% of total award Purpose pillar ESG metric for 2021 GLTI Overall ambition at time of 2021 GLTI Baseline position for 2021 GLTI Ambition for 2021 GLTI (10% of total award) Planet Greenhouse gas reduction 50% reduction from FY17 baseline by 2025 11% reduction from FY17 baseline at 31 March 2020 40% reduction from FY17 baseline by 31 March 2023 Inclusion for All Women in management 40% representation of women in management by 2030 31% representation of women in management at 31 March 2020 34% representation of women in management by 31 March 2023 Digital Society M-Pesa connections Connect >50m people and their families to mobile money by 2025 40.5m connections at 31 March 2020 56m connections by 31 March 2023 95 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Annual Report on Remuneration (continued) 100 82 88 93 95 87 111 100 124 111 95 129 100 91 123 72 89 115 83 03/20 09/20 03/21 09/21 03/22 09/22 03/23 Vodafone Group Median of peer group Outperformance of median 8.5% p.a. 70 80 90 100 110 120 130 140 2021 GLTI award: TSR performance Growth in the value of a hypothetical US$100 holding over the performance period, six month averaging The vesting outcome when applied to the number of shares granted is set out in the table below. 2021 GLTI share awards subject to performance conditions vesting in August 2023 Maximum number of shares Adjusted free cash flow performance payout % of maximum Relative TSR performance payout % of maximum ESG performance payout % of maximum Weighted performance payout % of maximum Number of shares vesting Value of shares vesting (’000) Margherita Della Valle 2,522,017 72.7% 0% 95.3% 53.2% 1,340,956 £1,258 Nick Read 3,283,8761 72.7% 0% 95.3% 53.2% 1,746,036 £1,639 Note: 1. Reflects time pro-rated award in respect of services rendered as a Board Director to 31 December 2022. Specified procedures are performed by our internal audit team over the adjusted free cash flow to assist with the Committee’s assessment of performance. The performance assessment in respect of the TSR measure is undertaken by WTW. ESG performance is reviewed by the ESG Committee and the Audit and Risk Committee prior to being presented to the Remuneration Committee for consideration. Details of how the plan works can be found in the Remuneration Policy. Long-term incentive (‘GLTI’) awarded during the year The independent performance conditions for the 2023 long-term incentive awards made in July 2022, and subject to a three-year performance period ending 31 March 2025, are adjusted free cash flow (60% of total award), relative TSR (30% of total award) and ESG (10% of total award) performance as follows: Adjusted FCF performance (60% of total award) Adjusted FCF performance (€bn) Vesting percentage (% of FCF element) Below threshold <14.0 0% Threshold 14.0 20% Maximum 16.6 100% TSR performance (30% of total award) TSR outperformance Vesting percentage (% of TSR element) Below threshold Below median 0% Threshold Median 20% Maximum 8.50% p.a. 100% TSR peer group BT Group Deutsche Telekom Liberty Global MTN Orange Royal KPN Telecom Italia Telefónica Telefónica Deutschland The adjusted free cash flow for the three-year period ended on 31 March 2023 was €16.0 billion and equates to vesting under the FCF element of 72.7% of maximum. The chart to the right shows that our TSR performance over the three-year period ended on 31 March 2023 was below the median of the peer group resulting in no vesting under this measure. ESG performance across our three metrics was as follows: – GHG reduction – GHG reduction of 65% as at 31 March 2023 from the FY17 baseline. – Women In Management – 34% representation of women in management at 31 March 2023. – M-Pesa – 53.2m connections at 31 March 2023. The Committee reviewed the above performance and determined vesting under the ESG element of 95.3% of maximum. This reflected full achievement under the GHG reduction metric where the ambition was exceeded and the Women in Management metric where the ambition was achieved, and partial vesting under the M-Pesa metric where strong progress against the stretching ambition was made. 96 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
ESG performance – 10% of total award Purpose pillar ESG metric for 2023 GLTI Overall ambition Baseline position for 2023 GLTI Ambition for 2023 GLTI Planet Net zero Net zero under Scope 1 & 2 by 20301 46% reduction in Scope 1 & 2 emissions versus a FY20 baseline at 31 March 2022 80% reduction in Scope 1 & 2 emissions versus a FY20 baseline by 31 March 2025 Inclusion for All Female representation in management 40% representation of women in management by 2030 32% representation of women in management at 31 March 2022 35% representation of women in management by 31 March 2025 Digital Society/ Inclusion for All Financial inclusion customers >75m financial inclusion customers by 2026 54.5m financial inclusion customers at 31 March 2022 70.0m financial inclusion customers by 31 March 2025 Note: 1. This carbon reduction ambition has been approved by the Science Based Targets initiative. The table below sets out the conditional awards of shares made to the Executive Directors in July 2022. 2023 GLTI performance share awards made in July 20221 Maximum vesting level (number of shares) Maximum vesting level (face value2 ) Proportion of maximum award vesting at minimum performance Performance period end Margherita Della Valle 4,419,335 £5,407,498 1/5th 31 Mar 2025 Nick Read 4,290,617 £5,249,999 1/5th 31 Mar 2025 Notes: 1. GLTI awards were granted as conditional share awards over shares with a value equal to the percentages of salary referred to on page 86. Margherita’s maximum vesting reflects the 2023 GLTI award made in July 2022 and the subsequent top-up GLTI award made in February 2023 following her change in role. Nick’s maximum vesting reflects the number of shares granted at maximum in July 2022 and which will be pro-rated for time worked (see page 99 for further details). Dividend equivalents on the shares that vest are paid in cash after the vesting date. 2. Face value calculated based on the closing share price on 26 July 2022 (day immediately preceding the date of the July grant) of 122.4 pence. This share price was also used when calculating Margherita’s February 2023 grant. Outstanding awards The structure for awards made in August 2021 (vesting August 2024) and July 2022 (vesting July 2025) is set out on the previous page. Further details of the structure of these awards, and relevant targets, can be found in the Annual Report on Remuneration of the relevant year. All-employee share plans During the year the Executive Directors were eligible to participate in the Vodafone Group Sharesave Plan which is a HM Revenue & Customs (‘HMRC’) approved scheme. Options under the plan are granted at up to a 20% discount to market value and Executive Directors’ participation is included in the option table on page 99. Pensions During the 2023 financial year, Margherita Della Valle accrued benefits under the defined contribution pension plan of £3,999.96, with the remainder of her 10% of base salary pension benefit for the year delivered as a cash allowance. Nick Read received a pro-rated cash allowance of 10% of base salary. Margherita Della Valle has not participated in a Vodafone sponsored defined benefit scheme during her employment. Nick Read is a deferred member of the Vodafone Group Pension Scheme which closed to future accrual in 2010 before he was an Executive Director. The Executive Directors are provided benefits in the event of death in service. In the event of ill health, an entitlement to benefit of two-thirds of base salary, up to a maximum benefit determined by the insurer, may be provided up until state pension age. In respect of the Executive Committee members, the Group has made aggregate contributions of £147,507 (2022: £143,175) into defined contribution pension schemes. Alignment to shareholder interests Share ownership levels and requirements for individuals who held the position of Executive Director are set out in the table below. The values in respect of Margherita Della Valle reflect her ownership requirement as at 31 March 2023. Following her permanent appointment as Group Chief Executive on 27 April 2023, Margherita’s ownership requirement was increased to 500% of salary. As shown in the chart below, Margherita increased her shareholding level during the year but due to share price movement (93.85 pence for the 31 March 2023 measurement compared to 126.61 pence used for the 2022 measurement), saw her ownership, as a percentage of salary and as calculated for these reporting purposes, decrease. At 31 March 2023 Requirement as a % of salary Current % of salary held % of requirement achieved Number of shares owned Value of shareholding Date for requirement to be achieved Margherita Della Valle 400% 292% 73% 2,241,263 £2.1m July 2023 Nick Read (as at 31 December 2022) 500% 445% 89% 5,127,436 £4.8m July 2023 24% increase Margherita Della Valle (as at 31 March 2023) Actual holding (number of shares) Goal deadline: Holding scenario July 2023 (% of salary) 31/03 2023 31/03 2022 Goal Actual 31/03 2023 Illustrative 20% SP increase Illustrative 20% SP decrease Actual 31/03 2022 2.2m 1.8m 400% 292% 328% 234% 350% 97 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Annual Report on Remuneration (continued) The shareholding requirements include a post-employment condition whereby the Executive Directors will need to continue to hold shares equivalent to the value of their requirement at the date of departure (or actual holding on departure if the requirement has not been reached during employment) for a further two years post-employment. The Committee has a number of processes in place to ensure this condition is met, including executives agreeing to these terms prior to receiving an award, executives holding the majority of their shares (and at least up to the value of their requirement) in a Company accessible account, and the Committee having the ability to lapse any unvested GLTI awards if the condition is not met. Collectively the Executive Committee, including the Executive Director, owned 23,565,656 Vodafone shares at 31 March 2023, with a value of over £22.1 million. None of the Executive Committee members’ shareholdings amounts to more than 1% of the issued shares in that class of share, excluding treasury shares. Directors’ interests in the shares of the Company A summary of interests in shares and scheme interests of the Directors who served during the year is given below. More details of the outstanding shares subject to award and options are set out in the table below and on page 99. Share options At 31 March 2023 Total number of interests in shares (at maximum)1 Unvested with performance conditions (at target) Unvested with performance conditions (at maximum) SAYE (unvested without performance conditions) Executive Directors Margherita Della Valle 11,879,532 5,782,961 9,638,269 – Nick Read (as at 31 December 2022) 18,147,068 7,793,305 12,988,842 30,790 Total 30,026,600 13,576,266 22,627,111 30,790 Note: 1. This includes both owned shares and the maximum number of unvested share awards. The total number of interests in shares includes interests of connected persons, unvested share awards and share options. At 31 March 2023 Total number of interests in shares Non-Executive Directors Stephen A. Carter CBE (appointed 26 July 2022) 96,805 Delphine Ernotte Cunci (appointed 26 July 2022) 30,000 Sir Crispin Davis 34,500 Michel Demaré 100,000 Dame Clara Furse 150,000 Valerie Gooding 28,970 Deborah Kerr (ADRs) 12,0001 Maria Amparo Moraleda Martinez 30,000 David Nish 107,018 Christine Ramon (appointed 14 November 2022) – Simon Segars (appointed 26 July 2022) 40,000 Jean-François van Boxmeer 347,374 Note: 1. One ADR is equivalent to 10 ordinary shares. At 21 June 2023, and during the period from 1 April 2023 to 21 June 2023, no Director had any interest in the shares of any subsidiary company. Other than those individuals included in the tables above who were Board members at 31 March 2023, members of the Group’s Executive Committee at 31 March 2023 had an aggregate beneficial interest in 21,324,393 ordinary shares of the Company. At 21 June 2023, the Directors had an aggregate beneficial interest in 3,325,930 ordinary shares of the Company and the Executive Committee members had an aggregate beneficial interest in 18,116,851 ordinary shares of the Company. The change in the number of shares held by the Executive Committee reflects a change in membership following the year-end, None of the Directors or the Executive Committee members had an individual beneficial interest amounting to greater than 1% of the Company’s ordinary shares. Performance share awards The maximum numbers of shares subject to outstanding awards that have been granted to Directors under the long-term incentive (‘GLTI’) plan are currently as follows: GLTI performance share awards 2021 award Awarded: November 2020 Performance period ending: March 2023 Vesting date: August 2023 Share price at grant: 124.9 pence 2022 award Awarded: August 2021 Performance period ending: March 2024 Vesting date: August 2024 Share price at grant: 116.8 pence 2023 award Awarded: July 2022/February 2023 Performance period ending: March 2025 Vesting date: July 2025 Share price at grant: 122.4 pence Margherita Della Valle 2,522,017 2,696,917 4,419,335 Nick Read (as at 31 December 2022)1 4,203,362 4,494,863 4,290,617 Note: 1. These figures reflect the maximum number of shares subject to award as at 31 December 2022 and therefore do not reflect the impact of pro-ration for time worked which was applied following the end of Nick’s employment. Further details can be found on page 99. Details of the performance conditions for the awards can be found on pages 95 to 97 or in the Remuneration Report from the relevant year. Share options The following information summarises the Executive Directors’ options under the HMRC approved Vodafone Group 2008 Sharesave Plan (‘SAYE’). No other Directors have options under any schemes and, other than under the SAYE, no options have been granted since 2007. Options under the SAYE were granted at a discount of 20% to the market value of the shares at the time of the grant. No other options may be granted at a discount. 98 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Grant date At 1 April 2022 or date of appointment Options granted during the 2023 financial year Options exercised during the 2023 financial year Options lapsed during the 2023 financial year Options held at 31 March 2023 Option price Date from which exercisable Expiry date Market price on exercise Gain on Number of shares Number of shares Number of shares Number of shares Number of shares Pence exercise 1 Pence Nick Read (position at 31 December 2022) SAYE 2 Mar 17 4,854 – – 4,854 – 154.51 1 Apr 22 1 Oct 22 – – SAYE 14 Jul 17 8,438 – – – 8,438 177.75 1 Sep 22 1 Mar 23 – – SAYE 11 Jul 22 – 22,352 – – 22,352 100.66 1 Sep 27 1 Mar 28 – – Total 13,292 – – 4,854 30,790 – – Note: 1. The closing trade share price on 31 March 2023 was 89.30 pence. The highest trade share price during the year was 132.14 pence and the lowest price was 83.73 pence. At 21 June 2023 there had been no change to the Directors’ interests in share options from 31 March 2023. At 21 June 2023 members of the Group’s Executive Committee held options for 39,969 ordinary shares at prices ranging from 77.6 pence to 111.7 pence per ordinary share, with a weighted average exercise price of 94.6 pence per ordinary share exercisable at dates ranging from 1 September 2023 to 1 March 2026. Margherita Della Valle, Aldo Bisio, Maaike de Bie, Ahmed Essam, Shameel Joosub, Vinod Kumar, Alberto Ripepi, Philippe Rogge and Serpil Timuray held no options at 21 June 2023. Loss of office payments Nick Read stepped down as Group Chief Executive and as a Director of the Company on 31 December 2022. During the period 1 January 2023 to 31 March 2023. Nick remained available to the Board as an adviser and, for the remainder of his employment (to 31 March 2023), received his salary (£270,375), car allowance (£4,800), private medical cover (£608), and pension allowance (£27,038). Nick remained eligible for a 2023 GSTIP, subject to performance conditions, until the end of his employment on 31 March 2023. In line with the relevant reporting regulations, the proportion of Nick’s 2023 GSTIP payment in respect of his period of employment between 1 January 2023 and 31 March is £301,468, with the payment in respect of his time worked as a Director (1 April 2022 to 31 December 2022) set out on page 95. At 1 April 2023, Nick had worked 3 months and 27 days of his notice period. Nick is entitled to receive payments in lieu of his salary (£732,629), and continued participation in the Vodafone Group Private Medical Plan (£1,898), for the remainder of his 12-month notice period. Payments will be made in monthly instalments, subject to mitigation in accordance with his service contract, until 5 December 2023, when his notice period would otherwise have ended. Nick’s 2021, 2022, and 2023 GLTI awards will be pro-rated on a time worked basis and will vest, subject to performance, at the normal vesting dates in accordance with the share plan rules. Nick will receive a cash payment equivalent in value to the dividends that would have been paid during the vesting period on any shares that vest. Nick will receive a contribution of up to £7,000 (excluding VAT) towards legal fees incurred in connection with his departure and be entitled to outplacement support of up to £50,000 (excluding VAT) paid directly to the supplier. Nick received no further payments other than those stated above, and, other than the pro-rated GLTI awards and associated dividend equivalent cash payments detailed above, will receive no further payments or benefits aside from the provision of a SIM card for his personal use at the Company’s expense for a period of three years commencing 1 April 2023. Payments to past Directors During the 2023 financial year Lord MacLaurin received benefit payments in respect of security costs as per his contractual arrangements. These costs exceeded our de minimis threshold of £5,000 p.a. and, including the tax paid, were £24,657 (2022: £23,679). Fees retained for external non-executive directorships Executive Directors may hold positions in other companies as non-executive directors and retain the fees paid to them in respect of these services. During the year ended 31 March 2023, Margherita Della Valle served as a non-executive director on the board of Reckitt Benckiser Group plc where she retained fees of £118,000 (2022: £115,563). Nick Read served as a non-executive director on the board of Booking Holdings Inc. where he retained fees of US$250,343 in respect of the period to 31 December 2022 (2022: US$462,571). 2023 remuneration for the Chair and Non-Executive Directors Salary/fees Benefits1 Total 2023 £’000 2022 £’000 2023 £’000 2022 £’000 2023 £’000 2022 £’000 Chair Jean-François van Boxmeer 650 650 29 18 679 668 Senior Independent Director Valerie Gooding 165 165 10 9 175 174 Non-Executive Directors Stephen A. Carter CBE (appointed 26 July 2022) 79 – 2 – 81 – Delphine Ernotte Cunci (appointed 26 July 2022) 79 – 5 – 84 – Sir Crispin Davis 115 115 12 9 127 124 Michel Demaré 115 115 11 1 126 116 Dame Clara Furse 115 115 9 3 124 118 Deborah Kerr 115 10 14 1 129 11 Maria Amparo Moraleda Martinez 140 137 10 1 150 138 David Nish 140 140 19 10 159 150 Christine Ramon (appointed 14 November 2022) 44 – 1 – 45 – Simon Segars (appointed 26 July 2022) 79 – 12 – 91 – Total 1,836 1,447 134 52 1,970 1,499 Note: 1. This includes certain travel and accommodation expenses in relation to attending Board meetings which are treated as a taxable benefit. Values include these travel expenses and the corresponding tax contribution. 99 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Annual Report on Remuneration (continued) Pay in the wider context Fair pay at Vodafone As part of its review of executive remuneration arrangements, the Committee takes account of the pay policies in place across the wider business. This includes considering the structure of remuneration offerings at each level of the business to ensure there is a strong rationale for how packages evolve across the different levels of the organisation. During the year the Committee reviewed the remuneration structure across the business, which included how our arrangements aligned with our strategy, supported our purpose, and celebrated the Spirit of Vodafone. The update also set out the results of the latest annual fair pay review, including where the key focus areas were and what actions had been agreed locally to implement any required adjustments. In addition to being a core principle of the Committee, there is a clear culture in our business of ensuring we offer competitive and fair pay to all our people. Our approach across our business is guided by the six principles set out below. Our commitment to these principles is reflected in how the UK-based Living Wage Foundation has certified us as an Accredited Living Wage employer. 1. Market competitive The pay of our people is reflective of their skills, role and function and the external market. We annually review the pay of each person and actively manage any who fall below the market competitive range. 2. Free from discrimination Our pay should not be affected by gender, age, disability, gender identity and expression, sexual orientation, race, ethnicity, cultural heritage or belief. We annually compare the average position of our men and women against their market benchmark, grade and function to identify and understand any differences and take action if necessary. 3. Ensure a good standard of living We work with an independent organisation, the Fair Wage Network, to assess how our pay compares to the ‘living wage’ in each of our markets because we are committed to providing a good standard of living for our people and their families. 4. Share in our successes All our people should have the opportunity to share in our success by being eligible to receive some form of performance-related pay, e.g. a bonus, shares or sales incentive. 5. Provide benefits for all Our global standard is to offer all our people life insurance, parental leave and access to either Company or state provided healthcare and pension provision. 6. Open and transparent We ensure that our people understand their pay. We do this through a series of user-friendly guides, webpages and an annual reward statement, which help explain our people’s pay and outline the value of their core reward package. In addition, our people also receive monthly or weekly payslips and a payment schedule. Cost of living actions It is recognised that rising inflation levels and the subsequent cost of living crisis have impacted employees across a number of our markets this year. We have provided targeted support in a number of these locations, including the UK, Turkey and Egypt, to help alleviate the impact of these pressures and continue to monitor the market conditions across all of our locations’ entities. Such measures included additional or accelerated salary reviews, the provision of extra cash allowances, and the careful consideration of wider market conditions when setting salary budgets for the 2023 review. In the UK specifically, additional support has been provided to lower-paid employees who have been particularly impacted by increases to the consumer price index. This included a 10% base salary increase to employees with salaries of less than £25,000, whilst employees with a base salary of between £25,000 and £35,000 received a £1,000 cash payment. Click to read more about fair pay at Vodafone: vodafone.com/fair-pay Stakeholder engagement The Committee considers all stakeholder groups when setting executive pay including: Employees The Committee is fully briefed on pay arrangements across the business to ensure any decisions on executive pay are made within our wider business context and take into account wider employee pay conditions. We engage with our employees through a variety of means including employee forums, interactive webinars (including with our executives), global Spirit Beat surveys and digital platforms, all of which give our people the chance to voice their opinion on any area of interest, including all-employee and executive pay. Shareholders The Committee values the active participation of our shareholders during our consultations and fully considers all feedback as part of the review process. Government The Committee actively engages with external professional bodies and government departments when they issue consultations on proposed changes to legislation or reporting guidelines. Wider society The Committee is fully aware that society remains concerned about the risk of excessive executive pay practices in the wider market. The Committee believes that transparent reporting and active engagement in explaining both the operation of, and rationale for, executive pay decisions is key for businesses to retain trust in this area. 100 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
UK gender pay gap reporting Each year we publish our UK gender pay gap in line with the statutory UK methodology. The nature of the statutory calculation means the gap will fluctuate year on year, influenced by changes in our business structure, Company performance and the percentage of men and women at all levels and positions. The existence of a UK gender pay gap in our business is primarily a consequence of more men than women holding senior or specialist, and therefore higher-paid, roles. With our commitment to embed an inclusive culture, we continue our work to reduce the gap and have made good progress since the publication of our first report in 2017. Our global programmes aim to support women across different roles, areas, and geographies of our business and will, over time, reduce our specific UK gender pay gap which this year was calculated as 10.4% – a slight increase from our 2021 figure of 9.6%. We have been recognised by the Bloomberg Gender-Equality Index as a leader in creating equity for women. We are proud of the policies that we have put in place to support our employees and we remain committed to addressing female representation at senior levels and the gender pay gap. Click to learn more about our initiatives, case studies, and key statistics on our dedicated UK gender pay gap webpage: vodafone.com/uk-gender-pay-gap Relative spend on pay The chart below shows both the dividends distributed in the year and the total cost of remuneration in the Group. 5,334 5,842 2,483 2,502 Distributed by way of dividends Overall expenditure on remuneration for all employees 2022 2023 2022 2023 €m Read more details on dividends and expenditure on remuneration for all employees, on pages 152 and 187 respectively CEO pay ratio The following table sets out our CEO pay ratio figures: Year CEO single figure (£’000) Method 25th percentile pay ratio Median pay ratio 75th percentile pay ratio 20231 4,823 Option B 139:1 68:1 52:1 2022 4,173 Option B 113:1 73:1 48:1 2021 3,551 Option B 106:1 87:1 42:1 2020 3,529 Option B 113.1 69.1 45.1 2019 4,359 Option B 154:1 107:1 56:1 Note: 1. The CEO single figure used in the calculation of the 2023 ratios reflects a blended figure for Nick Read and Margherita Della Valle, recognising the change in incumbency for the role during this year. The CEO single figure used in the calculation of the 2019 ratios reflects a blended figure for Vittorio Colao and Nick Read, recognising the change in incumbency for the role during this year. 101 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Annual Report on Remuneration (continued) The pay ratio figures in the above table are calculated using the following total pay and benefits information: Year Supporting information 25th percentile pay ratio (£’000) Median pay ratio (£’000) 75th percentile pay ratio (£’000) 2023 Salary 26.5 56.1 75.6 Total pay and benefits 34.6 70.5 92.8 2022 Salary 31.7 47.1 71.5 Total pay and benefits 36.9 57.5 87.2 2021 Salary 30.0 37.1 71.2 Total pay and benefits 33.5 41.0 85.3 2020 Salary 28.0 42.8 65.0 Total pay and benefits 31.3 51.1 78.6 2019 Salary 23.1 36.4 65.0 Total pay and benefits 28.3 40.8 78.2 The calculation methodology used reflects Option B as defined under the relevant regulations. In line with the relevant regulations this utilises the most recently collected and disclosed data analysed within our Gender Pay Gap report, with employees at the three quartiles identified from this analysis and their respective single figure values calculated. To ensure this data accurately reflects individuals at such quartiles, the single figure values for individuals immediately above and below the identified employee at each quartile within the gender pay gap analysis were also reviewed. In recent years our ratios have remained relatively consistent, reflecting how the single figures for both the Chief Executive and employees at the quartile positions have remained stable when viewed over the period set out in the table above. In general we expect the ratios to be primarily driven by the valuation of the long-term incentive that is included in the Chief Executive’s single figure for the year. Change in remuneration for Directors and all employees In line with regulatory requirements, the table below calculates the percentage change in Directors’ remuneration (salary, taxable benefits and annual bonus payment) compared to the average remuneration for other Vodafone Group employees who are measured on comparable business objectives and who have been employed in the UK since 2021 (2021 to 2022) and 2022 (2022 to 2023) (per capita). Vodafone has employees based all around the world and some of these individuals work in countries with very high salary inflation; therefore Vodafone’s UK-based Group employees are deemed the most appropriate employee group for this comparison. Percentage change from 2022 to 2023 Percentage change from 2021 to 2022 Base salary/fees Taxable benefits Annual bonus Base salary/fees Taxable benefits Annual bonus Executive Directors Margherita Della Valle 15.1% 18.2% 24.6% 0.0% 4.8% 11.6% Nick Read (until 31 December 2022) -23.5% 0.0% -37.7% 0.0% 31.3% 11.6% Non-Executive Directors Jean-François van Boxmeer 0.0% 61.1% – 118.9% – – Valerie Gooding 0.0% 11.1% – 0.0% – – Stephen A. Carter CBE (appointed 26 July 2022) – – – – – – Delphine Ernotte Cunci (appointed 26 July 2022) – – – – – – Sir Crispin Davis 0.0% 33.3% – 0.0% 800.0% – Michel Demaré 0.0% 1,000.0% – 0.0% – – Dame Clara Furse 0.0% 200.0% – 0.0% – – Deborah Kerr (appointed 1 March 2022) 1,050.0% 1,300.0% – – – – Maria Amparo Moraleda Martinez 2.2% 900.0% – 19.1% – – David Nish 0.0% 90.0% – 0.0% 900.0% – Christine Ramon (appointed 14 November 2022) – – – – – – Simon Segars (appointed 26 July 2022) – – – – – – Other Vodafone Group employees employed in the UK 5.8% 5.2% -9.6% 2.5% 0.3% 80.0% The year-on-year increase in Margherita Della Valle’s pay reflects Margherita’s appointment as Group Chief Executive on an interim basis, in addition to her existing role as Chief Financial Officer, effective 1 January 2023. This change in role during the year under review is therefore reflected in Margherita’s 2023 figures compared to the 2022 figures which reflect Margherita’s role as Chief Financial Officer. The percentage increase in the table above does not reflect the actual increase during the year under review in respect of the salary payable for the role of Chief Executive which was increased by 3% effective 1 July 2022. The significant year-on-year increase in Deborah Kerr’s fees and taxable benefits reflect how the 2022 values reflect one month of service which covers the period between Deborah joining on 1 March 2022 and the year-end on 31 March 2022. By comparison, the 2023 figures reflect a full 12 months of time worked therefore resulting in a high year-on-year percentage increase despite there being no actual increase in the fees payable to the Non-Executive Directors during this period. Whilst some of the percentages within the ‘Taxable benefits’ column look significant, these actually reflect relatively small increases in value when viewed on an absolute basis. Where an individual had no taxable benefit values in 2022 it has not been possible to calculate a percentage for the table above. 102 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Assessing pay and performance In the table below we summarise the Chief Executive’s single figure remuneration over the past 10 years and how our variable pay plans have paid out in relation to the maximum opportunity. This can be compared with the historic TSR performance over the same period. The chart below shows the performance of the Company relative to the STOXX Europe 600 Index over a 10-year period. The STOXX Europe 600 Index was selected as this is a broad-based index that includes many of our closest competitors. It should be noted that the TSR element of the 2021 GLTI is based on the TSR performance shown in the chart on page 96 and not this chart. 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 10-year historical TSR performance Growth in the value of a hypothetical €100 holding over 10 years 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Financial year remuneration for Chief Executive 2,7401 3,8753 Single figure of total remuneration £’000 8,014 2,810 5,224 6,332 7,389 /1,6192 3,529 3,551 4,173 /9484 Annual bonus (actual award versus max opportunity) 44% 56% 58% 47% 64% 44% 52% 62% 69% 56% Long-term incentive (vesting versus max opportunity) 37% 0% 23% 44% 67% 40% 50% 22% 26% 53% Notes: 1. Reflects the single figure in respect of Vittorio Colao for the period of 1 April 2018 to 30 September 2018. 2. Reflects the single figure in respect of Nick Read for the period of 1 October 2018 to 31 March 2019. 3. Reflects the single figure in respect of Nick Read for the period of 1 April 2022 to 31 December 2022. 4. Reflects the single figure in respect of Margherita Della Valle for the period of 1 January 2023 to 31 March 2023. 0 10 20 30 40 50 60 70 80 90 100 LTI average 36% Annual bonus average 55% 148 149 158 138 190 100 124 149 143 118 145 127 132 128 101 84 108 207 110 215 81 Vodafone Group STOXX Europe 600 Index 103 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Annual Report on Remuneration (continued) 2024 remuneration Details of how the Remuneration Policy will be implemented for the 2024 financial year are set out below. Prior to reviewing executive remuneration arrangements, including those of the Executive Committee, the Committee was fully briefed on remuneration arrangements elsewhere in the business. This included a detailed discussion of the structure of remuneration offerings at each level of the business, how pay at these levels is determined, and the findings of the latest annual fair pay review. The Committee also considered the external context and decisions made in relation to our wider employee population. The cumulative effect of these discussions was that the Committee was able to make decisions in respect of executive remuneration in the context of the wider employee pay landscape within the business.1 2024 base salaries Following her appointment to the position of Group Chief Executive, Margherita Della Valle’s salary was set at £1,250,000. The Committee decided the new salary was appropriate when compared against the external market using the Committee’s normal comparator groups of the EuroTop 25-75 and FTSE 30 (both excluding financial services companies), was fair from a gender pay perspective given its long standing work on fair pay and reflected both the responsibilities and demands of the role. During the year no additional salary payment or allowance has been made to Margherita in respect of her carrying out the dual roles of Group Chief Executive and Group Chief Financial Officer. This will remain the approach going forward, and it is intended that Margherita will continue with her dual responsibilities until a new Group Chief Financial Officer is appointed. Pension Pension arrangements for Executive Directors will remain unchanged at 10% of salary, in line with the maximum employer contribution level for the wider UK population. 2024 annual bonus (‘GSTIP’) Following its annual review of the GSTIP structure, the Committee agreed that the 2024 plan should support the strategic priorities of Growth and Customers. The constituent performance measures remain unchanged with the key change from the 2023 plan being separation of Net Promoter Score, revenue market share, and churn into standalone measures. The performance measures and weightings for 2024 are outlined below: Growth (70% of total) Service revenue (20%); adjusted EBIT (20%); adjusted free cash flow (20%); and revenue market share (10%) Customers (30% of total) Net Promoter Score1 (20%); and churn (10%). Note: 1. The assessment of NPS utilises data collected in our local markets which is validated for quality and consistency by independent third-party agencies. Due to the potential impact on our commercial interests, annual bonus targets are considered commercially sensitive and therefore will be disclosed in the 2024 Remuneration Report following the completion of the financial year. Long-term incentive (‘GLTI’) awards for 2024 Awards for 2024 will be made in line with the arrangements described in our policy on pages 89 and 90. Vesting of the 2024 award will be subject to adjusted free cash flow (60% of total award), relative TSR (30% of total award), and ESG (10% of total award) performance. Performance will be measured over the three financial years ending 31 March 2026, and any net vested shares will be subject to an additional two-year holding period. It is anticipated that the final awards will be reviewed by the Committee at the July 2023 meeting and, subject to the Committee’s approval, will be granted shortly afterwards. Further details of the 2024 award targets are provided are on the following page. 104 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Adjusted free cash flow (60% of total award) Details of the final three-year adjusted free cash flow target range will be disclosed in the relevant market announcement at the time of grant and published in the 2024 Directors’ Remuneration Report. Relative TSR (30% of total award) Following the annual review of the performance measures which included a review of analysis provided by the Committee’s external advisers, the Committee determined that the TSR outperformance range for the 2024 award should be set at 7.0% p.a. at maximum. The Committee further determined that the TSR peer group should remain unchanged for the 2024. Further details are set out in the tables below. Relative TSR (30% of total award) TSR outperformance Vesting (% of relative TSR element) Below threshold Below median 0.0% Threshold Median 20.0% Maximum 7.0% p.a. 100.0% TSR peer group BT Group Deutsche Telekom Liberty Global MTN Orange Royal KPN Telecom Italia Telefónica Telefónica Deutschland Linear interpolation (i.e. straight-line vesting) occurs for performance between threshold and maximum. ESG (10% of total award) The table below sets out how performance under the ESG measure for the 2024 award will be assessed against three quantitative ambitions: Purpose pillar Metric for 2024 GLTI Overall ambition Baseline position for 2024 GLTI Ambition for 2024 GLTI Planet Net zero Net zero under Scope 1 & 2 by 20301 52% reduction in Scope 1 & 2 emissions versus a FY20 baseline at 31 March 2023 84% reduction in Scope 1 & 2 emissions versus a FY20 baseline by 31 March 2026 Inclusion for All Female representation in management 40% representation of women in management by 2030 34% representation of women in management at 31 March 2023 36% representation of women in management by 31 March 2026 Digital Society/ Inclusion for All Financial inclusion customers >75m financial inclusion customers by 2026 60.7m financial inclusion customers at 31 March 2023 70.0m financial inclusion customers by 31 March 2026 Note: 1. This carbon reduction ambition has been approved by the Science Based Targets initiative. Each ambition for the 2024 award has been set by considering both our externally communicated targets and our internal progress as at 31 March 2023. At the end of the performance period the Committee will assess achievement across the three metrics against the stated ambitions and determine vesting under this element. Full disclosure of the rationale for the final vesting decision will be provided in the relevant Directors’ Remuneration Report. 105 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
2024 remuneration for the Chair and Non-Executive Directors Fees for our Chair and Non-Executive Directors have been benchmarked against the FTSE 30 (excluding financial services companies). Following this year’s review it was agreed that the current fee levels, which are set out in the table below, would remain unchanged. Position/role Fee payable £’000 Chair1 650 Non-Executive Director 115 Additional fee for the Senior Independent Director 25 Additional fee for Chair of the Audit and Risk Committee 25 Additional fee for Chair of the ESG Committee 25 Additional fee for Chair of the Remuneration Committee 25 Note: 1. The Chair’s fee also includes the fee for the chairing of the Nominations and Governance Committee. Further remuneration information Dilution All awards are made under plans that incorporate dilution limits as set out in the guidelines for share incentive schemes published by the Investment Association. The current estimated dilution from subsisting executive awards is approximately 2.4% of the Company’s share capital at 31 March 2023 (2.7% at 31 March 2022), whilst from all-employee share awards it is approximately 0.3% (0.3% at 31 March 2022). This gives a total dilution of 2.7% (3.0% at 31 March 2022). Service contracts The terms and conditions of appointment of our Directors are available for inspection at the Company’s registered office during normal business hours and at the Annual General Meeting (for 15 minutes prior to the meeting and during the meeting). The Executive Directors have notice periods in their service contracts of 12 months. The Non-Executive Directors’ letters of appointment do not contain provision for notice periods or for compensation if their appointments are terminated. This report on remuneration has been approved by the Board of Directors and signed on its behalf by: /s/ Valerie Gooding Valerie Gooding Chair of the Remuneration Committee 21 June 2023 Annual Report on Remuneration (continued) 106 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
As Vodafone’s American Depositary Shares are listed on NASDAQ Stock Market LLC (‘NASDAQ’), we are required to disclose a summary of any material differences between the corporate governance practices we follow and those of US companies listed on NASDAQ. Vodafone’s corporate governance practices are primarily based on UK requirements but substantially conform to those required of US companies listed on NASDAQ. The material differences are set out in the following table: Our US listing requirements Board member independence Different tests of independence for Board members are applied under the 2018 UK Corporate Governance Code (the ‘Code’) and the NASDAQ listing rules. The Board is not required to take into consideration NASDAQ’s detailed definitions of independence as set out in the NASDAQ listing rules. The Board has carried out an assessment based on the independence requirements of the Code and has determined that, in its judgement, each of Vodafone’s Non-Executive Directors is independent within the meaning of those requirements. Committees The NASDAQ listing rules require US companies to have a nominations committee, an audit committee and a compensation committee, each composed entirely of independent directors, with the nominations committee and the audit committee each required to have a written charter which addresses the committee’s purpose and responsibilities, and the compensation committee having sole authority and adequate funding to engage compensation consultants, independent legal counsel and other compensation advisers. – Our Nominations and Governance Committee is chaired by the Chair of the Board and its other members are independent Non-Executive Directors. – Our Remuneration Committee is composed entirely of independent Non-Executive Directors. – Our Audit and Risk Committee is composed entirely of Non-Executive Directors, each of whom (i) the Board has determined to be independent based on the independence requirements of the Code; and (ii) meets the independence requirements of the Securities Exchange Act of 1934. – We have terms of reference for our Nominations and Governance Committee, Audit and Risk Committee and Remuneration Committee, all of which comply with the requirements of the Code and are available for inspection on our website at vodafone.com/governance. – These terms of reference are generally responsive to the relevant NASDAQ listing rules, but may not address all aspects of these rules. Code of Ethics and Code of Conduct Under the NASDAQ listing rules, US companies must adopt a Code of Conduct applicable to all directors, officers and employees that complies with the definition of a ‘Code of Ethics’ set out in section 406 of the Sarbanes-Oxley Act. – We have adopted a Code of Ethics that complies with section 406 of the Sarbanes-Oxley Act which is applicable only to the senior financial and principal executive officers. Click to read our Code of Ethics: vodafone.com/governance – We have also adopted a separate Code of Conduct which applies to all employees. Quorum The quorum required for shareholder meetings, in accordance with our Articles of Association, is two shareholders, regardless of the level of their aggregate share ownership, while US companies listed on NASDAQ are required by the NASDAQ listing rules to have a minimum quorum of 33.33% of the holders of ordinary shares for shareholder meetings. Related party transactions In lieu of obtaining an independent review of related party transactions for conflicts of interests in accordance with the NASDAQ listing rules, we seek shareholder approval for related party transactions that (i) meet certain financial thresholds, or (ii) have unusual features in accordance with the Listing Rules issued by the Financial Conduct Authority (FCA) in the UK (the ‘Listing Rules’), the Companies Act 2006 and our Articles of Association. Further, we use the definition of a transaction with a related party as set out in the Listing Rules, which differs in certain respects from the definition of related party transaction in the NASDAQ listing rules. Shareholder approval When determining whether shareholder approval is required for a proposed transaction, we comply with both the NASDAQ listing rules and the Listing Rules. Under the NASDAQ listing rules, whether shareholder approval is required for a transaction depends on, among other things, the percentage of shares to be issued or sold in connection with the transaction. Under the Listing Rules, whether shareholder approval is required for a transaction depends on, among other things, whether the size of a transaction exceeds a certain percentage of the size of the listed company undertaking the transaction. 107 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
The Directors of the Company present their report together with the audited consolidated financial statements for the year ended 31 March 2023. This report has been prepared in accordance with requirements outlined within The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 and forms part of the management report as required under Disclosure Guidance and Transparency Rule (‘DTR’) 4. Certain information that fulfils the requirements of the Directors’ report can be found elsewhere in this document and is referred to below. This information is incorporated into this Directors’ report by reference. Vodafone Group Plc is incorporated and domiciled in England and Wales (registration number 1833679). The registered address and contact number of the Company is Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN, England, telephone +44 (0)1635 33251. Responsibility statement As required under the DTRs, a statement made by the Board regarding the preparation of the financial statements is set out on pages 111-112 which also provides details regarding the disclosure of information to the Company’s auditor and management’s report on internal control over financial information. Going concern The going concern statement required by the Listing Rules and the UK Corporate Governance Code (the ‘Code’) is set out in the ‘Directors’ statement of responsibility’ on page 112. System of risk management and internal control The Board is responsible for maintaining a risk management and internal control system and for managing the principal risks faced by the Group. Such a system is designed to manage rather than eliminate business risks and can only provide reasonable and not absolute assurance against material mistreatment or loss. This is described in more detail in the Audit and Risk Committee Report on pages 77-82. The Board has implemented in full the Financial Reporting Council’s (‘FRC’) ‘Guidance on Risk Management, Internal Control and Related Financial and Business Reporting’ for the year end to the date of this Annual Report. The resulting procedures, which are subject to regular monitoring and review, provide an ongoing process for identifying, evaluating and managing the Company’s principal risks (which can be found on pages 51-57). Corporate Governance Statement The Corporate Governance Statement setting out how the Company complies with the Code is set out on page 63. This includes a description of the main features of our internal control and risk management arrangements in relation to the financial reporting process. The information required by DTR 7.2.6R can be found in the ‘Shareholder information’ section on pages 230-235. A description of the composition and operation of the Board and its Committees including the Board Diversity Policy is set out on page 68, pages 74-84 and page 93. The Code can be viewed in full at frc.org.uk. Strategic report The Strategic report is set out on pages 1-59 and is incorporated into this Directors’ report by reference. Directors and their interests The Directors of the Company who served during the financial year ended 31 March 2023 and up to the date of signing the financial statements are as follows: Jean-François van Boxmeer, Margherita Della Valle, Stephen A. Carter CBE (appointed 26 July 2022), Delphine Ernotte Cunci (appointed 26 July 2022), Sir Crispin Davis, Michel Demaré, Dame Clara Furse, Valerie Gooding, Deborah Kerr, Maria Amparo Moraleda Martinez, David Nish, Christine Ramon (appointed 14 November 2022) and Simon Segars (appointed 26 July 2022). Nick Read stepped down on 31 December 2022. A summary of the rules related to the appointment and replacement of Directors and Directors’ powers can be found on pages 231-232. Details of the Directors’ interests in the Company’s ordinary shares, options held over ordinary shares, interests in share options and long-term incentive plans are set out on pages 86-106. Directors’ conflicts of interest Established within the Company is a procedure for managing and monitoring conflicts of interest for Directors. Details of this procedure are set out on page 75. Directors’ indemnities In accordance with our Articles of Association and to the extent permitted by law, Directors are granted an indemnity from the Company in respect of liability incurred as a result of their office. In addition, we maintained a directors’ and officers’ liability insurance policy throughout the year. Neither our indemnity nor the insurance provides cover in the event that a Director is proven to have acted dishonestly or fraudulently. Disclosures required under Listing Rule 9.8.4 The information on the amount of interest capitalised and the treatment of tax relief can be found in notes 5 and 6 to the consolidated financial statements respectively. The remaining disclosures required by Listing Rule 9.8.4 are not applicable to Vodafone. Capital structure and rights attaching to shares Ordinary shares of Vodafone Group Plc are traded on the London Stock Exchange and in the form of American Depositary Shares (‘ADS’) on NASDAQ. ADSs, each representing 10 ordinary shares, are traded on NASDAQ under the symbol ‘VOD’. The ADSs are evidenced by American Depositary Receipts (‘ADR’) issued by J.P. Morgan, as depositary, under a deposit agreement, dated 15 February 2022 between the Company, the depositary and the holders from time to time of ADRs issued thereunder. ADS holders are not shareholders in the Company but may instruct J.P. Morgan on the exercise of voting rights relative to the number of ordinary shares represented by their ADSs. See ‘Articles of Association and applicable English law’ and ‘Rights attaching to the Company’s shares – Voting rights’ on pages 231-232. All information relating to the Company’s capital structure, rights attaching to shares, dividends, the policy to repurchase the Company’s own shares, details of Company share repurchases and details of other shareholder information is contained on pages 24-25 and pages 230-235. Directors’ report 108 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Change of control Details of change of control provisions in the Company’s revolving credit facilities are set out in note 22 ‘Capital and financial risk management’. Information on agreements between the Company and its Directors providing for compensation for loss of office of employment (including details of change of control provisions in share schemes) is set out on pages 91-92. Other than these, there are no agreements between the Company and its employees providing for compensation for loss of office or employment that occurs because of a takeover bid. Dividends Full details of the Company’s dividend policy and proposed final dividend payment for the year ended 31 March 2023 are set out on page 25 and note 9 to the consolidated financial statements. Sustainability Information about the Company’s approach to sustainability risks and opportunities is set out on pages 26-49 and on pages 51-59. Details of our greenhouse gas emissions are also included on these pages. Political donations No political donations or contributions to political parties under the Companies Act 2006 have been made during the financial year. The Group policy is that no political donations be made or political expenditure incurred. Financial risk management objectives and policies Disclosures relating to financial risk management objectives and policies, including our policy for hedging, are set out in note 22 to the consolidated financial statements and disclosures relating to exposure to credit risk, liquidity risk and market risk are outlined in note 22. Important events since the end of the financial year On 17 April 2023, the Group entered into an agreement to sell M-Pesa Holding Company Limited to Safaricom Plc, an associate entity of the Group. Further details can be found in note 33 to the consolidated financial statements. On 11 May 2023, the Company announced that it had agreed a strategic relationship with Emirates Telecommunications Group Company PJSC (“e&”). Further details can be found under ‘Material contracts’ on page 233. On 14 June 2023, the Group and CK Hutchison Group Telecom Holdings Limited, a subsidiary of CK Hutchison Holdings Limited entered into binding agreements to combine their UK telecommunication businesses, respectively Vodafone UK and Three UK. See note 33 ‘Subsequent events’ in the consolidated financial statements for more information. On 25 May 2023 the Group issued subordinated debt securities, under its euro medium-term note programme, with nominal amounts of €750 million and £500 million and on 6 June 2023 the Group repurchased €1,561 million and $324 million of outstanding subordinated debt securities as part of a liability management exercise. Further details can be found in note 33 to the consolidated financial statements. There were no other important events affecting the Company which have occurred since the end of the financial year. Future developments within the Group The Strategic report contains details of likely future developments within the Group. Group policy compliance Each Group policy is owned by a member of the Executive Committee so that there is clear accountability and authority for ensuring the associated business risk is adequately managed. Regional Chief Executives and the Senior Leadership Team member responsible for each Group function have primary accountability for ensuring compliance with all Group policies by all our markets and entities. Our Group compliance team and policy champions support the policy owners and local markets in implementing policies and monitoring compliance. All of the key Group policies have been consolidated into the Vodafone Code of Conduct which applies to all employees and those who work for or on behalf of Vodafone. It sets out the standards of behaviour expected in relation to areas such as insider dealing, bribery and raising concerns through the whistleblowing process (known internally as ‘Speak Up’). Read more on page 40 Branches The Group, through various subsidiaries, has branches in a number of different jurisdictions in which the business operates. Further details are included in note 31. Employee disclosures Vodafone is an inclusive employer and diversity is important to us. We give full and fair consideration to applications for employment by disabled persons and the continued employment of anyone incurring a disability while employed by us. Training, career development and promotion opportunities are equally applied for all our employees, regardless of disability. Our disclosures relating to the employment of women in senior management roles, diversity, employee engagement and policies are set out on page 11, pages 33 and 34, page 64, page 72, page 75 and page 76. The Directors’ Report was approved by the Board and signed on its behalf by the Group General Counsel and Company Secretary. /s/ Maaike de Bie Maaike de Bie Group General Counsel and Company Secretary 21 June 2023 109 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
111 Directors’ statement of responsibility 113 Risk mitigation 119 Report of independent registered public accounting firm 123 Consolidated financial statements 123 Consolidated income statement 123 Consolidated statement of comprehensive income 124 Consolidated statement of financial position 125 Consolidated statement of changes in equity 126 Consolidated statement of cash flows 127 Notes to the consolidated financial statements 127 1. Basis of preparation Income statement 134 2. Revenue disaggregation and segmental analysis 138 3. Operating profit 139 4. Impairment losses 145 5. Investment income and financing costs 146 6. Taxation 151 7. Discontinued operations and assets held for sale 152 8. Earnings per share 152 9. Equity dividends Financial position 153 10. Intangible assets 155 11. Property, plant and equipment 157 12. Investments in associates and joint arrangements 165 13. Other investments 166 14. Trade and other receivables 167 15. Trade and other payables 168 16. Provisions 169 17. Called up share capital Cash flows 170 18. Reconciliation of net cash flow from operating activities 170 19. Cash and cash equivalents 171 20. Leases 174 21. Borrowings 176 22. Capital and financial risk management Employee remuneration 186 23. Directors’ and key management compensation 187 24. Employees 188 25. Post employment benefits 192 26. Share-based payments Additional disclosures 194 27. Acquisitions and disposals 196 28. Commitments 196 29. Contingent liabilities and legal proceedings 200 30. Related party transactions 201 31. Related undertakings 210 32. Subsidiaries exempt from audit 210 33. Subsequent events 212 These pages are intentionally left blank 213 These pages are intentionally left blank 213 These pages are intentionally left blank 215 These pages are intentionally left blank 216 These pages are intentionally left blank 216 These pages are intentionally left blank 216 These pages are intentionally left blank 217 These pages are intentionally left blank 217 These pages are intentionally left blank 217 These pages are intentionally left blank 218 These pages are intentionally left blank 218 These pages are intentionally left blank 218 These pages are intentionally left blank 219 Non-GAAP measures (unaudited information) 229 Additional information (unaudited information) Reporting on our financial performance Index 110 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Directors’ statement of responsibility The Directors are responsible for preparing the financial statements in accordance with applicable law and regulations and keeping proper accounting records. Detailed below are statements made by the Directors in relation to their responsibilities, disclosure of information to the Company’s auditor, going concern and management’s report on internal control over financial reporting. Financial statements and accounting records Company law of England and Wales requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and of the Group at the end of the financial year and of the profit or loss of the Group for that period. In preparing those financial statements the Directors are required to: – Select suitable accounting policies and apply them consistently; – Make judgements and estimates that are reasonable and prudent; – Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; – State whether the consolidated financial statements have been prepared in accordance with UK-adopted International Accounting Standards (‘IAS’), with International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board (‘IASB’) and with the requirements of the UK Companies Act 2006 (the ‘Act’); – State for the Company’s financial statements whether applicable UK accounting standards have been followed; and – Prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company and the Group will continue in business. The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and of the Group and enable them to ensure that the financial statements are prepared in accordance with UK-adopted IAS, with IFRS as issued by the IASB and with the requirements of the Act. They are also responsible for the system of internal control, for safeguarding the assets of the Company and the Group, and for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Directors’ responsibility statement Each of the Directors, whose names and functions are listed on pages 65 to 67, confirms that, to the best of their knowledge: – The consolidated financial statements, prepared in accordance with UK-adopted IAS, with IFRS as issued by the IASB and with the requirements of the Act, give a true and fair view of the assets, liabilities, financial position and profit of the Group; – The Strategic Report includes a fair review of the development and performance of the business and the position of the Group, together with a description and robust assessment of the principal risks and uncertainties that it faces. The Directors are also responsible under section 172 of the Companies Act 2006 to promote the success of the Company for the benefit of its members as a whole and in doing so have regard for the needs of wider society and stakeholders, including customers, consistent with the Group’s core and sustainable business objectives. Having taken advice from the Audit and Risk Committee, the Board considers the Annual Report on Form 20-F, taken as a whole, is fair, balanced and understandable and that it provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy. Neither the Company nor the Directors accepts any liability to any person in relation to the Annual Report on Form 20-F except to the extent that such liability could arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with section 90A and schedule 10A of the Financial Services and Markets Act 2000. Disclosure of information to the auditors Having made the requisite enquiries, so far as the Directors are aware, there is no relevant audit information (as defined by section 418(3) of the Companies Act 2006) of which the Company’s auditor is unaware and the Directors have taken all the steps they ought to have taken to make themselves aware of any relevant audit information and to establish that the Company’s auditor is aware of that information. 111 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Going concern The Group’s business activities, performance, position, principal risks and uncertainties and the Directors’ assessment of its long-term viability are set out on page 57. A range of mitigations for risks faced by the Group are included on pages 113 and 114. In addition, the funding position of the Group is included in ‘Borrowings’ and ‘Capital and financial risk management’ in notes 21 and 22, respectively, to the consolidated financial statements. Notes 21 and 22 include disclosure in relation to the Group’s objectives, policies and processes for managing as well as details regarding its capital, its financial risk management objectives, details of its financial instruments and hedging activities, and its exposures to credit risk and liquidity risk. As noted on pages 177 to 178, the Group has access to substantial cash and financing facilities. The Group also believes it adequately manages or mitigates its solvency and liquidity risks through two primary processes, described below. Business planning process and performance management The Group’s forecasting and planning cycle consists of in-year forecasts, a budget and a long-range plan. These generate income statement, cash flow and borrowings projections for assessment by Group management and the Board. Each forecast is compared with prior forecasts and actual results to identify variances and understand the drivers of the changes and their future impact so management can take action where appropriate. Additional analysis is undertaken to review and sense check the key assumptions underpinning the forecasts. Cash flow and liquidity reviews The business planning process provides outputs for detailed cash flow and liquidity reviews, to ensure that the Group maintains adequate liquidity throughout the forecast periods. The prime output is a liquidity forecast which is prepared and updated at least on a monthly basis, which highlights the extent of the Group’s liquidity based on controlled cash flows and the headroom under the Group’s undrawn revolving credit facility. The key inputs into this forecast are: – Cash flow forecasts with information taken from the business planning process; – Bond and other debt maturities; and – Expectations for shareholder returns, spectrum auctions and M&A activity. The liquidity forecast is reviewed by the Group Chief Financial Officer and included in each of the reports to the Board. In addition, the Group continues to manage its foreign exchange and interest rate risks within the framework of policies and guidelines authorised and reviewed by the Board, with oversight provided by the Treasury Risk Committee. The Directors have also considered sensitivities in respect of potential downside scenarios in concluding that the Group is able to continue in operation for the period to 30 June 2024 from the date of approving the consolidated financial statements. Those sensitivities include the non-refinancing, with the exception of hybrid bonds, of debt maturities in the assessment period. A reverse stress test was also reviewed to understand how severe conditions would have to be to breach liquidity including the required reduction in profitability metrics. The Directors also considered the availability of the Group’s €7.7 billion undrawn revolving credit facilities as at 31 March 2023. In reaching their conclusion on the going concern assessment, the Directors also considered the findings of the work performed to support the statement on the long-term viability of the Group. As noted on page 57, this included key changes to relevant principal risks in light of global economic and political uncertainty, sensitivity analysis, scenario assessments, and combinations of these, over the viability assessment period. Conclusion Based on the review, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors continue to adopt the going concern basis in preparing the Annual Report and Accounts. Controls over financial reporting Disclosure controls and procedures The Directors and the Group Chief Executive and Chief Financial Officer have evaluated the effectiveness of the disclosure controls and procedures, including those defined in the United States Securities Exchange Act of 1934, Rule 13a–15I, and, based on that evaluation, have concluded that the disclosure controls and procedures were effective at the end of the period covered by this report. Management’s report on internal control over financial reporting As required by section 404 of the US Sarbanes-Oxley Act, management is responsible for establishing and maintaining adequate internal control over financial reporting for the Group. The Group’s internal control over financial reporting includes policies and procedures that: – Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; – Are designed to provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with UK-adopted IAS, with IFRS as issued by the IASB and with the requirements of the Act, and that receipts and expenditures are being made only in accordance with authorisation of management and the Directors of the Company; and – Provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the Group’s assets that could have a material effect on the financial statements. Any internal control framework, no matter how well designed, has inherent limitations including the possibility of human error and the circumvention or overriding of the controls and procedures, and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or because the degree of compliance with the policies or procedures may deteriorate. Management has assessed the effectiveness of the internal control over financial reporting at 31 March 2023 based on the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (‘COSO’) in 2013. Based on management’s assessment, management has concluded that internal control over financial reporting was effective at 31 March 2023. During the period covered by this document, there were no changes in the Group’s internal control over financial reporting that have materially affected or are reasonably likely to materially affect the effectiveness of the internal controls over financial reporting. The Group’s internal control over financial reporting at 31 March 2023 has been audited by Ernst & Young LLP, an independent registered public accounting firm who also audit the Group’s consolidated financial statements. Their audit report on internal control over financial reporting is on page 122. By order of the Board /s/ Maaike de Bie Maaike de Bie Group General Counsel and Company Secretary 21 June 2023 Directors’ statement of responsibility (continued) 112 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Risk mitigation Managing our risks Establishing the context and having a clear understanding of the environment in which we operate is important. Therefore, we assign each of our risks to a specific category (strategic, operational or financial) and identify whether the source of the threat is internal or external. This approach helps us to better understand how we should treat the risk most effectively and to provide the right level of oversight and assurance. Executive risk owners are accountable for confirming adequate controls are in place, and that the necessary treatment plans are used to bring the risk within an acceptable tolerance level. We continue to monitor the status of our risk treatment plans across the year, and we perform in-depth reviews of our risks which are presented to the relevant oversight committees. Read more about the Audit and Risk Committee on pages 77 to 82 We also develop severe but plausible scenarios for each principal risk. These provide additional insights into possible threats and improve the treatment strategy. Scenarios are also used for the purpose of assessing our viability. Read more about our long-term viability statement on page 57 Strengthening our framework We continue to enhance and embed the global risk management framework with the objective of maturing our approach. This promotes consistency across all the markets in which we operate. Over the course of the year, we have: – Developed a risk knowledge and skills matrix for our risk management community; – Enhanced reporting to our governance committees, which allows for better decision-making; – Performed a Group-wide risk awareness campaign in an effort to enhance our risk culture; and – Completed a cross-functional analysis of our operational resilience capabilities to identify gaps and areas for enhancements. Principal risks Adverse changes in macroeconomic conditions Description Adverse changes to economic conditions could result in reduced customer spending, higher interest rates, adverse inflation, currency devaluations or movements in foreign exchange rates. Adverse conditions could also lead to limited debt refinancing options and/or an increase in costs. Risk ranking movement Risk owner Group Chief Financial Officer Mitigation activities We have a relatively resilient business model. Our offers are competitive in the markets in which we operate. We are supporting our business customers’ efficiencies through our innovative products. We have a long average life of debt which reduces refinancing requirements, and all of our bond debt is effectively held at fixed interest rates. Year-on-year risk ranking movement Increasing Decreasing No change New/change in scope 113 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Risk mitigation (continued) Disintermediation Cyber threat Adverse political and policy environment Description Failure to effectively respond to threats from emerging technology or disruptive business models could lead to a loss of customer relevance, market share and new/existing revenue streams. Description An external attack, insider threat or supplier breach could cause service interruption or confidential data breaches. Description An adverse political and policy environment could impact our strategy and result in increased costs, create competitive disadvantage or have negative impact on our return on capital employed. Mitigation activities We are focused on strenghtening relationships with our customers through innovative and transformative products and services that go beyond our leading connectivity propositions. We aim to be less complex as an organisation, by simplifying our product portfolio, improving our operating model, and progressing with our digital transformation. Mitigation activities We have a risk-based approach to managing cyber security. We actively identify risks and threats, design layers of control, and implement controls across the Group. We implement controls that prevent the majority of attacks, in addition to controls to detect events and respond quickly to reduce harm. We perform regular cyber crisis simulations with senior management in our markets and Group functions using a tailored set of scenarios. Mitigation activities We actively scan the external horizon, gather intelligence to inform decision-making and address issues openly with policymakers, regulatory authorities, customers and impacted stakeholders to find mutually acceptable ways forward. As a last resort, we uphold our rights through legal means. Risk ranking movement Risk owner Chief Commercial Officer / CEO Vodafone Business Risk ranking movement Risk owner Group Chief Technology Officer Risk ranking movement Risk owner Chief External and Corporate Affairs Officer Year-on-year risk ranking movement Increasing Decreasing No change New/change in scope 114 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Strategic transformation Technology resilience and future readiness Supply chain disruption Description Network, system, or platform outages, or ineffective execution of the technology strategy could lead to dissatisfied customers and/or impact revenue. Description Failure to effectively execute our transformational activities, including shaping our portfolio and delivering on product innovation, could result in loss of business value and/or additional cost. Description Disruption in our supply chain could mean that we are unable to execute our strategic plans, resulting in increased cost, reduced choice and lower network quality. Risk ranking movement Risk owner Group Chief Technology Officer / Group Chief Network Officer Risk ranking movement Risk owner Group Chief Executive / Chief Commercial Officer Risk ranking movement Risk owner Chief Financial Officer Mitigation activities In relation to shaping our portfolio, we actively monitor and pursue opportunities to optimise our portfolio to deliver value for our shareholders and improve returns. We actively assess opportunities to i) generate and realise value from our assets; ii) deliver value accretive in-market consolidation to deliver sustainable market structures; and iii) streamline and simplify our portfolio. We are prioritising our efforts on three key areas: customers, simplicity and growth. To enable that, we have robust policies and governance structures in place, such as our Global Product Board, dedicated to steering our transformation efforts and ensuring we execute at scale. Lastly, we have been transforming our approach to product management to become more agile. Mitigation activities We are closely monitoring the evolution of the geopolitical environment. This enables us to respond to emerging challenges and to comply with regulations, economic sanctions and trade rulings. We also mitigate our exposure through having multi-year contracts with key suppliers, forecasting and forward ordering our inventory requirements in anticipation of extended lead-times as well as continuing to execute our logistics optimisation strategy for networks infrastructure logistics. Mitigation activities Recovery targets for critical assets are established to limit the impact of service outages. A global policy outlines the controls required to ensure that technology services are resilient and in alignment with these targets. We prioritise IT transformation and modernisation programmes to address specific technology resilience risks, while also supporting business process and portfolio simplification. IT transformation programmes carry risks of scope creep and cost overruns, therefore we are increasingly using an incremental delivery approach to be able to realise benefits and adapt faster while applying tight governance. Year-on-year risk ranking movement Increasing Decreasing No change New/change in scope 115 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Risk mitigation (continued) Data management and privacy Adverse market competition Organisational simplification Description Data breaches, misuse of data, data manipulation, inappropriate data sharing, or data unavailability could lead to fines, reputational damage, loss of value, loss of business opportunity, and failure to meet our customers’ expectations. Description Significant activity by competition, such as price wars, new market entrants or business practices, may lead to reduced margins and market share, and increased customer churn. Description Failure to effectively execute on our goal to simplify our organisation and operating model could result in reduced speed of decision-making and delivery, reduced clarity on accountabilities, and higher cost. Risk ranking movement Risk owner Group General Counsel and Company Secretary / Group Financial Controller Risk ranking movement Risk owner Chief Commercial Officer Mitigation activities We process data ethically, with integrity, securely, and always consistently with applicable laws and our values. We are known for our robust approach to privacy and strike the right balance between business objectives and customer and regulatory expectations. We manage this through various privacy and data management specific policies and related controls, measured by a global control effectiveness target for each related control and underpinned with mandatory training programmes. Mitigation activities We closely monitor the competitive environment in all markets and react accordingly to both consumer and business needs. We continue to evolve our tariffs and offers to provide a differentiated customer experience through benefits, such as flexible contract terms, refurbished devices and social tariffs. In addition, in many markets we utilise ‘second’ brands to compete more effectively and efficiently in the value segment. Mitigation activities We have a clear organisational strategy of simplification, which underpins the delivery of operational excellence and employee engagement, measured in our Spirit Beat survey annually. Robust communication plans and employee engagement activities throughout periods of change are further mitigation activities to encourage talent retention and engagement. We have specialist teams managing our organisation simplification agenda, working with leaders to design and embed changes. We also have governance structures, sponsored by the Executive Committee in place to align on potential changes while considering their implications, risks and mitigating actions across all relevant dimensions. Risk ranking movement Risk owner Group Human Resources Officer Year-on-year risk ranking movement Increasing Decreasing No change New/change in scope 116 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
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Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Vodafone Group Plc Opinion on the Financial Statements We have audited the accompanying consolidated statements of financial position of Vodafone Group Plc (the Group) as of 31 March 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended 31 March2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group at 31 March 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended 31 March 2023, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Group’s internal control over financial reporting as of 31 March 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organisations of the Treadway Commission (2013 framework) and our report dated 21 June 2023 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on the financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Carrying value of cash generating units, including goodwill Description of the matter As more fully described in Note 4 to the consolidated financial statements, in accordance with IAS 36 Impairment of Assets, the Group calculates the value in use (‘VIU’) for cash generating units (‘CGUs’) to determine whether an adjustment to the carrying value of the CGU, and therefore, goodwill, is required. As of 31 March 2023, the Group has recorded €27,615 million of goodwill. The Group’s assessment of the VIU of its CGUs involves estimation and judgement about the future performance of the local market businesses. In particular, the determination of the VIUs for the Germany, UK, Italy and Spain CGUs was sensitive to the significant assumptions of projected adjusted EBITDAaL growth, long-term growth rates and discount rates. Auditing the Group’s annual impairment test for the Germany, UK, Italy and Spain CGUs was complex and involved significant auditor judgement, given the estimation uncertainty related to the significant assumptions described above, as applied in the VIU models and the sensitivity of these VIU models to fluctuations in those assumptions. How we addressed the matter in our audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Group’s goodwill impairment review process, including management’s controls over the significant assumptions described above. For the annual impairment assessment as at 31 March 2023 we assessed, with the help of a valuation specialist, the methodology applied in the VIU models, as compared to the requirements of IAS 36 and tested the mathematical accuracy of the VIU models. For those CGUs mentioned above, we performed procedures to test and assess the significant assumptions used in the VIU models, which included evaluating projected adjusted EBITDAaL growth, for example by comparing underlying assumptions to external data such as economic and industry forecasts for the relevant markets and for consistency with evidence obtained from other areas of our audit. We also compared CGU EBITDAaL multiples to market listed peers and considered independent analyst valuations for individual CGUs, where available. For each CGU mentioned above, we compared the cash flow projections used in the VIU models to the information approved by the Group’s Board of Directors and evaluated the historical accuracy of management’s business plans, which underpin the VIU models, by comparing prior year forecasts to actual results in the current period. With the assistance of a valuation specialist, for the CGUs mentioned above, we compared long-term growth rates and discount rates against EY independently determined ranges and performed sensitivity analyses on the above-described assumptions in the VIU models, to evaluate the parameters that, should they arise, would cause an impairment of the CGU or would indicate additional disclosures were appropriate. We also assessed the adequacy of the related disclosures provided in Note 4 of the consolidated financial statements, in particular the sensitivity disclosures in relation to reasonably possible changes in assumptions that could result in impairment. 119 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Report of Independent Registered Public Accounting Firm (continued) Revenue Recognition Description of the matter As more fully described in Note 2, Note 14 and Note 15 to the consolidated financial statements, the Group reported revenue of €45,706 million, contract assets of €3,557 million and contract liabilities of €2,543 million for the year ended and at, 31 March 2023. Management records revenue according to the principles of IFRS 15, Revenue from Contracts with Customers, including following the 5-step model, as described in the accounting policy in Note 2 to the consolidated financial statements. Auditing the revenue recorded by the Group is complex, due to the multiple IT systems and tools utilised in the initiation, processing and recording of transactions, which includes a high volume of individually low monetary value transactions, as well as the potential for significant postings outside of the aforementioned IT systems. Furthermore, judgement and the involvement of IT professionals was required to determine the audit approach to test and evaluate the relevant data that was captured and aggregated, and to assess the sufficiency of the audit evidence obtained. How we addressed the matter in our audit We, together with our IT professionals, obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Group’s revenue recognition process, including controls over the appropriate flow of transactional data through the IT systems and tools and the reconciliation of the transactional data to the accounting records. For significant revenue streams in certain components, our audit procedures included performing a correlation analysis between invoiced revenue, receivables and cash receipts and performing incremental audit procedures, such as agreeing items to source documents, where the results of the correlation analysis was not as expected; For other components where correlation analysis was not performed, our audit procedures included, reperforming billing data to general ledger end-to-end reconciliations, which included assessing the accuracy of the data inputs to underlying source documentation, including contractual agreements, where relevant; testing the mathematical accuracy and completeness of the reconciliations and any material reconciling items, including testing significant revenue postings outside of the billing systems by reference to underlying source documentation; and We recalculated the revenue recognised to evaluate whether the processing of the revenue recognition by the Group’s IT systems and automated processes was in accordance with IFRS 15. 120 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Recoverability of deferred tax assets in Luxembourg Description of the matter As more fully described in Note 6 to the consolidated financial statements, the Group recognises deferred tax assets in accordance with IAS 12, Income Taxes, based on their estimated recoverability and whether management judges that it is probable that there will be sufficient and suitable taxable profits in the relevant legal entity or tax group against which to utilise the assets in the future. A deferred tax asset in Luxembourg of €16,269 million has been recognised in respect of losses, as management concluded it is probable that the Luxembourg entities will continue to generate taxable profits in the future, against which they can utilise these assets. Management estimates that the losses will be utilised over a period of 35-39 years. The Luxembourg companies’ income and therefore future taxable profits is derived from the Group’s internal financing and procurement and roaming activities. The forecast future finance income can vary based on forecast interest rates and intercompany debt levels, which in turn impacts the timeframe over which the deferred tax asset is forecast to be recovered. Furthermore, during the course of the year Luxembourg owned direct and indirect interests in the Group’s operating activities. The value of these investments is primarily based on the Group’s value in use calculations. Changes in the value of the interests in these operating activities, for the purposes of local Luxembourg statutory financial statements, can result in impairment reversals or charges, which are taxable or tax deductible, respectively, under local law. Auditing the Group’s recognition and recoverability of deferred tax assets in Luxembourg involves judgements and estimation uncertainty in relation to the availability of future taxable profits and the period of time over which it is expected to utilise these assets, results in increased estimation uncertainty. How we addressed the matter in our audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls around the recognition of deferred tax assets in Luxembourg, including the calculation of the gross amount of deferred tax assets recorded, the preparation of the prospective financial information used to determine the Luxembourg entities’ future taxable profits, and management’s identification and use of available commercial strategies. To test the realisability of the deferred tax assets in Luxembourg, with the support of tax professionals, our audit procedures included, among others, assessing the existence of available losses, including the impact of current year taxable profits resulting from procurement, roaming and finance income. Our procedures also included evaluating management’s position on the recoverability of the losses with respect to local tax law and tax planning strategies adopted, testing the calculation of the valuation of entities within the Luxembourg structure during the year by, among other procedures, to cashflow projections applied in the most recent value in use calculations, net asset valuations and share price data and assessing the Luxembourg ownership structure. We assessed the reasonableness of the forecasted procurement and roaming taxable profits utilised in management’s realisability assessment, by comparing to historical actual profits and with evidence obtained from other areas of our audit. To evaluate the forecast finance income, our procedures included, on a sample basis, recalculating finance income with reference to underlying agreements, comparing future interest rates utilised in the forecasts to relevant external benchmarks and the assumed reductions in intergroup debt, for consistency with our understanding of relevant guidance in respect of transfer pricing of financial transactions. We assessed whether evidence exists that is contrary to management’s stated intention that the financing structures will remain in place or that indicates it is not probable that sufficient future taxable profits will exist. We also assessed the adequacy of the disclosures in Note 6 of the consolidated financial statements, in respect of the Luxembourg deferred tax assets, against the requirements of IAS 12. /s/ Ernst & Young LLP We have served as the Group’s auditor since 2019. London, United Kingdom 21 June 2023 121 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
To the Shareholders and the Board of Directors of Vodafone Group Plc Opinion on Internal Control Over Financial Reporting We have audited Vodafone Group Plc’s (the Group) internal control over financial reporting as of 31 March 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Vodafone Group Plc maintained, in all material respects, effective internal control over financial reporting as of 31 March 2023, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Group as of 31 March 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended 31 March 2023, and the related notes and our report dated 21 June 2023 expressed an unqualified opinion thereon. Basis for Opinion The Group’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s report on Internal control over financial reporting on page 112. Our responsibility is to express an opinion on the Group’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP London, United Kingdom 21 June 2023 Report of Independent Registered Public Accounting Firm 122 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Consolidated income statement for the years ended 31 March Re-presented1 Re-presented1 2023 2022 2021 Note €m €m €m Revenue 2 45,706 45,580 43,809 Cost of sales (30,850) (30,574) (30,086) Gross profit 14,856 15,006 13,723 Selling and distribution expenses (3,329) (3,358) (3,522) Administrative expenses (6,092) (5,713) (5,350) Net credit losses on financial assets 22 (606) (561) (664) Share of results of equity accounted associates and joint ventures 12 433 389 374 Impairment loss 4 (64) – – Other income 3 9,098 50 568 Operating profit 3 14,296 5,813 5,129 Investment income 5 248 254 245 Financing costs 5 (1,728) (1,964) (1,027) Profit before taxation 12,816 4,103 4,347 Income tax expense 6 (481) (1,330) (3,864) Profit for the financial year 12,335 2,773 483 Attributable to: – Owners of the parent 11,838 2,237 59 – Non-controlling interests 497 536 424 Profit for the financial year 12,335 2,773 483 Group earnings per share (all from continuing operations)1 – Basic 8 42.77c 7.71c 0.20c – Diluted 8 42.62c 7.68c 0.20c Consolidated statement of comprehensive income for the years ended 31 March Re-presented1 Re-presented1 2023 2022 2021 Note €m €m €m Profit for the financial year 12,335 2,773 483 Other comprehensive income/(expense): Items that may be reclassified to the income statement in subsequent years: Foreign exchange translation differences, net of tax (1,236) (30) 138 Foreign exchange translation differences transferred to the income statement (334) 19 (17) Other, net of tax2 963 1,863 (3,743) Total items that may be reclassified to the income statement in subsequent years (607) 1,852 (3,622) Items that will not be reclassified to the income statement in subsequent years: Net actuarial (losses)/gains on defined benefit pension schemes, net of tax 25 (160) 483 (555) Total items that will not be reclassified to the income statement in subsequent years (160) 483 (555) Other comprehensive (expense)/income (767) 2,335 (4,177) Total comprehensive income/(expense) for the financial year 11,568 5,108 (3,694) Attributable to: – Owners of the parent 11,267 4,546 (4,117) – Non-controlling interests 301 562 423 Total comprehensive income/(expense) for the financial year 11,568 5,108 (3,694) Notes: 1 The resultsforthe years ended 31 March 2022 and 31 March 2021have been re-presentedto reflectthatIndus Towers Limited is no longerreported as held forsale.See note 7 ‘Discontinuedoperations and assets held for sale’ and note 8 ‘Earnings pershare’for more information. 2 Principally includesthe impact oftheGroup’s cash flowhedges deferred to other comprehensive income during the year. Furtherdetailsonitemsintheconsolidatedstatementofcomprehensiveincomecanbefoundintheconsolidatedstatementofchangesinequityonpage125. 123 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
124 VodafoneGroup Plc Annual Report 2023 20212020 Consolidated statement of financial position at 31 March Re-presented1 31 March 2023 31 March 2022 Note €m €m Non-current assets Goodwill 10 27,615 31,884 Other intangible assets 10 19,592 21,360 Property, plant and equipment 11 37,992 40,804 Investments in associates and joint ventures 12 11,079 5,323 Other investments 13 1,093 1,073 Deferred tax assets 6 19,316 19,089 Post employment benefits 25 329 555 Trade and other receivables 14 7,843 6,383 124,859 126,471 Current assets Inventory 956 836 Taxation recoverable 279 296 Trade and other receivables 14 10,705 11,019 Other investments 13 7,017 7,931 Cash and cash equivalents 19 11,705 7,496 30,662 27,578 Total assets 155,521 154,049 Equity Called up share capital 17 4,797 4,797 Additional paid-in capital 149,145 149,018 Treasury shares (7,719) (7,278) Accumulated losses (113,086) (122,022) Accumulated other comprehensive income 30,262 30,268 Total attributable to owners of the parent 63,399 54,783 Non-controlling interests 1,084 2,290 Total equity 64,483 57,073 Non-current liabilities Borrowings 21 51,669 58,131 Deferred tax liabilities 6 771 520 Post employment benefits 25 258 281 Provisions 16 1,572 1,881 Trade and other payables 15 2,184 2,516 56,454 63,329 Current liabilities Borrowings 21 14,721 11,961 Financial liabilities under put option arrangements 22 485 494 Taxation liabilities 457 864 Provisions 16 674 667 Trade and other payables 15 18,247 19,661 34,584 33,647 Total equity and liabilities 155,521 154,049 Note: 1 Balances as at 31 March 2022 have been re-presented to reflectthatIndus Towers Limited is no longerreported as held forsale. See note 7 ‘Discontinuedoperations and assets held forsale’formore information. The consolidated financialstatements on pages 123 to 211 were approved by the Board of Directors and authorised for issue on 21 June 2023 and were signed on its behalf by: /s/ Margherita Della Valle MargheritaDellaValle Group Chief Executive and Chief Financial Officer 124 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
124 VodafoneGroup Plc Annual Report 2023 20212020 Consolidated statement of financial position at 31 March Re-presented1 31 March 2023 31 March 2022 Note €m €m Non-current assets Goodwill 10 27,615 31,884 Other intangible assets 10 19,592 21,360 Property, plant and equipment 11 37,992 40,804 Investments in associates and joint ventures 12 11,079 5,323 Other investments 13 1,093 1,073 Deferred tax assets 6 19,316 19,089 Post employment benefits 25 329 555 Trade and other receivables 14 7,843 6,383 124,859 126,471 Current assets Inventory 956 836 Taxation recoverable 279 296 Trade and other receivables 14 10,705 11,019 Other investments 13 7,017 7,931 Cash and cash equivalents 19 11,705 7,496 30,662 27,578 Total assets 155,521 154,049 Equity Called up share capital 17 4,797 4,797 Additional paid-in capital 149,145 149,018 Treasury shares (7,719) (7,278) Accumulated losses (113,086) (122,022) Accumulated other comprehensive income 30,262 30,268 Total attributable to owners of the parent 63,399 54,783 Non-controlling interests 1,084 2,290 Total equity 64,483 57,073 Non-current liabilities Borrowings 21 51,669 58,131 Deferred tax liabilities 6 771 520 Post employment benefits 25 258 281 Provisions 16 1,572 1,881 Trade and other payables 15 2,184 2,516 56,454 63,329 Current liabilities Borrowings 21 14,721 11,961 Financial liabilities under put option arrangements 22 485 494 Taxation liabilities 457 864 Provisions 16 674 667 Trade and other payables 15 18,247 19,661 34,584 33,647 Total equity and liabilities 155,521 154,049 Note: 1 Balances as at 31 March 2022 have been re-presented to reflectthatIndus Towers Limited is no longerreported as held forsale. See note 7 ‘Discontinuedoperations and assets held forsale’formore information. The consolidated financialstatements on pages 123 to 211 were approved by the Board of Directors and authorised for issue on 21 June 2023 and were signed on its behalf by: /s/ Margherita Della Valle MargheritaDellaValle Group Chief Executive and Chief Financial Officer Consolidated statement of changes in equity for the years ended 31 March Additional Accumulated other comprehensive income Equity Non-Share paid-in Treasury Accumulated Currency Pensions Revaluation attributable controlling Total capital1 capital2 shares losses reserve3 reserve surplus4 Other5 to owners interests equity €m €m €m €m €m €m €m €m €m €m €m 1 April 2020 4,797 152,629 (7,802) (120,349) 28,308 (679) 1,227 3,279 61,410 1,215 62,625 Issue or reissue of shares7 – (1,943) 2,033 (87) – – – – 3 – 3 Share-based payments – 126 – – – – – – 126 10 136 Transactions with NCI in subsidiaries8 – – – 1,149 – – – – 1,149 748 1,897 Dividends – – – (2,412) – – – – (2,412) (384) (2,796) Comprehensive (expense)/income – – – 59 122 (555) – (3,743) (4,117) 423 (3,694) Profit – – – 59 – – – – 59 424 483 OCI - before tax – – – – 129 (686) – (4,630) (5,187) – (5,187) OCI - taxes – – – – 6 131 – 887 1,024 3 1,027 Transfer to the income statement ('IS') – – – – (13) – – – (13) (4) (17) Purchase of treasury shares ('TS')9 – – (403) – – – – – (403) – (403) 31 March 2021 Re-presented6 4,797 150,812 (6,172) (121,640) 28,430 (1,234) 1,227 (464) 55,756 2,012 57,768 Issue or reissue of shares7 – (1,902) 2,000 (98) – – – – – – – Share-based payments – 108 – – – – – – 108 11 119 Transactions with NCI in subsidiaries8 – – – (38) – – – – (38) 237 199 Dividends – – – (2,483) – – – – (2,483) (532) (3,015) Comprehensive income/(expense) – – – 2,237 (37) 483 – 1,863 4,546 562 5,108 Profit – – – 2,237 – – – – 2,237 536 2,773 OCI - before tax – – – – (56) 627 – 2,368 2,939 26 2,965 OCI - taxes – – – – – (144) – (505) (649) – (649) Transfer to the IS – – – – 19 – – – 19 – 19 Purchase of TS9 – – (3,106) – – – – – (3,106) – (3,106) 31 March 2022 Re-presented6 4,797 149,018 (7,278) (122,022) 28,393 (751) 1,227 1,399 54,783 2,290 57,073 Adoption of IAS 29 – – – – 565 – – – 565 – 565 1 April 2022 - b/forward 4,797 149,018 (7,278) (122,022) 28,958 (751) 1,227 1,399 55,348 2,290 57,638 Issue or reissue of shares – 1 122 (113) – – – – 10 – 10 Share-based payments – 126 – – – – – – 126 9 135 Transactions with NCI in subsidiaries – – – (287) – – – – (287) (1,118) (1,405) Dividends – – – (2,502) – – – – (2,502) (398) (2,900) Comprehensive income/(expense) – – – 11,838 (1,374) (160) – 963 11,267 301 11,568 Profit10 – – – 11,838 – – – – 11,838 497 12,335 OCI - before tax – – – – (1,469) (213) – 1,314 (368) (230) (598) OCI - taxes – – – – (3) 53 – (351) (301) (3) (304) Transfer to the IS – – – – (334) – – – (334) – (334) Translation of hyperinflationary results – – – – 432 – – – 432 37 469 Purchase of TS9 – – (563) – – – – – (563) – (563) 31 March 2023 4,797 149,145 (7,719) (113,086) 27,584 (911) 1,227 2,362 63,399 1,084 64,483 Notes: 1 Seenote17 ‘Calledup share capital’. 2 Includesshare premium, capitalreserve, capitalredemption reserve,mergerreserve andshare-based paymentreserve. Themergerreservewas derived fromacquisitions made priorto 31March 2004 andsubsequently allocatedto additional paid-incapital on adoptionof IFRS. 3 The currency reserve is used to record cumulative translation differences on the assets and liabilities of foreign operations. The cumulative translation differences are recycled to the income statement on disposal ofthe foreignoperation. 4 The revaluationsurplus derivesfromacquisitions ofsubsidiariesmade before theGroup’s adoption ofIFRS 3 (Revised)on 1 April 2010 and comprisesthe amounts arising fromrecognising theGroup’s pre-existing equity interestin the acquiredsubsidiary atfair value. 5 Principally includesthe impact oftheGroup’s cash flowhedgeswith €2,322 million net gain deferredto other comprehensive income duringthe year(2022:€3,704millionnet gain;2021:€5,892million netloss) and €896 millionnet gain (2022: €1,422millionnet gain;2021:€1,226 million netloss)recycledto the income statement. Thesehedges primarily relate to foreign exchange exposure on fixed borrowings,with any foreign exchange on nominal balances directly impacting income statementin each period butinterest cash flows unwinding to the income statement overthe life ofthe hedges(up to 2063). See note 22 ‘Capital and financialrisk management’forfurther details. 6 The resultsforthe years ended 31 March 2022 and 31 March 2021have been re-presentedto reflectthatIndus Towers Limited is no longer presented as held forsale.As at 31 March 2022, accumulatedlosses decreased by €96million,resulting in an increase of €96million in total equitycompared to amounts previously reported.As at 31 March 2021, accumulated losses decreased by €53 million, offset by an increase of€5million in accumulated other comprehensive income,resulting in a net decreaseof €48 million in total equity comparedto amounts previously reported. See note 7 ‘Discontinued operations and assets held forsale’. 7 Movementsinclude the re-issueof 1,427million shares(€1,944million) in March 2021 to satisfy the firsttranche and the re-issue of1,519 million shares(€1,903million) in March 2022to satisfy the second tranche ofthe MandatoryConvertible Bond issued in March 2019. 8 Principally relatesto transactionsin relation to Vantage Towers A.G.Seenote27 ‘Acquisitions and disposals’fordetails. 9 Representsthe irrevocable andnon-discretionaryshare buyback programmes announced on 19 March 2021, 19 May 2021, 23 July 2021,17November 2021, 9 March2022 and 16November 2022. 10 Includes a gainon disposalof Vantage Towers A.G. of€8,607million and a gainon disposal of VodafoneGhana of €689million,offset by a loss on disposalof VodafoneHungary of€69million. 125 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Consolidated statement of cash flows for the years ended 31 March 2023 2022 2021 Note €m €m €m Inflow from operating activities 18 18,054 18,081 17,215 Cash flows from investing activities Purchase of interests in subsidiaries, net of cash acquired 27 – – (136) Purchase of interests in associates and joint ventures 12 (78) (445) (13) Purchase of intangible assets (2,963) (3,262) (3,227) Purchase of property, plant and equipment (6,250) (5,798) (5,413) Purchase of investments (767) (2,009) (3,726) Disposal of interests in subsidiaries, net of cash disposed 27 6,976 – 157 Disposal of interests in associates and joint ventures – 446 420 Disposal of property, plant and equipment and intangible assets 98 33 43 Disposal of investments 1,650 3,282 1,704 Dividends received from associates and joint ventures 617 638 628 Interest received 338 247 301 Outflow from investing activities (379) (6,868) (9,262) Cash flows from financing activities Proceeds from issue of long-term borrowings 4,071 2,548 4,359 Repayment of borrowings (13,538) (8,248) (12,237) Net movement in short-term borrowings 3,172 3,002 (2,791) Net movement in derivatives 261 (293) 279 Interest paid1 (1,951) (1,804) (2,152) Payments for settlement of written put options2 (12) – (1,482) Purchase of treasury shares (1,867) (2,087) (62) Issue of ordinary share capital and reissue of treasury shares 17 10 – 5 Equity dividends paid 9 (2,484) (2,474) (2,427) Dividends paid to non-controlling shareholders in subsidiaries (400) (539) (391) Other transactions with non-controlling shareholders in subsidiaries 27 (692) 189 1,663 Other movements with associates and joint ventures – – 40 Outflow from financing activities (13,430) (9,706) (15,196) Net cash inflow/(outflow) 4,245 1,507 (7,243) Cash and cash equivalents at beginning of the financial year 19 7,371 5,790 13,288 Exchange gain/(loss) on cash and cash equivalents 12 74 (255) Cash and cash equivalents at end of the financial year 19 11,628 7,371 5,790 Notes: 1 Amountfor 2023 includes €26million of cash outflow(2022:€58million inflow; 2021: €9 million inflow)on derivative financial instrumentsforthe share buyback related tomaturingtranches ofmandatory convertible bonds. 2 Amountfor 2021 reflectsthe settlement of a tender offer made to othershareholders of Kabel Deutschland HoldingA.G. 126 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Consolidated statement of cash flows for the years ended 31 March 2023 2022 2021 Note €m €m €m Inflow from operating activities 18 18,054 18,081 17,215 Cash flows from investing activities Purchase of interests in subsidiaries, net of cash acquired 27 – – (136) Purchase of interests in associates and joint ventures 12 (78) (445) (13) Purchase of intangible assets (2,963) (3,262) (3,227) Purchase of property, plant and equipment (6,250) (5,798) (5,413) Purchase of investments (767) (2,009) (3,726) Disposal of interests in subsidiaries, net of cash disposed 27 6,976 – 157 Disposal of interests in associates and joint ventures – 446 420 Disposal of property, plant and equipment and intangible assets 98 33 43 Disposal of investments 1,650 3,282 1,704 Dividends received from associates and joint ventures 617 638 628 Interest received 338 247 301 Outflow from investing activities (379) (6,868) (9,262) Cash flows from financing activities Proceeds from issue of long-term borrowings 4,071 2,548 4,359 Repayment of borrowings (13,538) (8,248) (12,237) Net movement in short-term borrowings 3,172 3,002 (2,791) Net movement in derivatives 261 (293) 279 Interest paid1 (1,951) (1,804) (2,152) Payments for settlement of written put options2 (12) – (1,482) Purchase of treasury shares (1,867) (2,087) (62) Issue of ordinary share capital and reissue of treasury shares 17 10 – 5 Equity dividends paid 9 (2,484) (2,474) (2,427) Dividends paid to non-controlling shareholders in subsidiaries (400) (539) (391) Other transactions with non-controlling shareholders in subsidiaries 27 (692) 189 1,663 Other movements with associates and joint ventures – – 40 Outflow from financing activities (13,430) (9,706) (15,196) Net cash inflow/(outflow) 4,245 1,507 (7,243) Cash and cash equivalents at beginning of the financial year 19 7,371 5,790 13,288 Exchange gain/(loss) on cash and cash equivalents 12 74 (255) Cash and cash equivalents at end of the financial year 19 11,628 7,371 5,790 Notes: 1 Amountfor 2023 includes €26million of cash outflow(2022:€58million inflow; 2021: €9 million inflow)on derivative financial instrumentsforthe share buyback related tomaturingtranches ofmandatory convertible bonds. 2 Amountfor 2021 reflectsthe settlement of a tender offer made to othershareholders of Kabel Deutschland HoldingA.G. Notes tothe consolidated financial statements 1.Basisofpreparation Thissection describesthe critical accounting judgements and estimatesthat management hasidentified as having a potentiallymaterial impact on the Group’s consolidated financialstatements and sets out oursignificant accounting policiesthat relate to the financialstatements as a whole. Where an accounting policy is generally applicable to a specific note to the financialstatements,the policy is describedwithin that note. We have also detailed below the new accounting pronouncementsthat wewill adopt in future years and our current viewofthe impact theywill have on our financial reporting. The consolidated financialstatements are prepared in accordance with UK-adopted International Accounting Standards(‘IAS’), with International Financial Reporting Standards(‘IFRS’) asissued by the International Accounting Standards Board (‘IASB’) andwith the requirements of the Companies Act 2006 (the ‘Act’). The consolidated financialstatements are prepared on a going concern basis(see page 112). Vodafone Group Plc isincorporated and domiciled in England and Wales(registration number 1833679). The registered address of the Company is VodafoneHouse, The Connection, Newbury, Berkshire, RG14 2FN, England. IFRS requiresthe Directorsto adopt accounting policiesthat are the most appropriate to the Group’s circumstances. These have been applied consistently to all the years presented, unless otherwise stated. In determining and applying accounting policies, Directors and management are required tomake judgements and estimatesin respect of itemswhere the choice ofspecific policy, accounting judgement, estimate or assumption to be followed could materially affectthe Group’sreported financial position,results or cash flows and disclosure of contingent assets or liabilities during the reporting period; itmay later be determined that a different choice may have been more appropriate. The Group’s critical accounting judgements and key sources of estimation uncertainty are detailed below. Actual outcomes could differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisionsto accounting estimates are recognised in the period in which the estimate isrevised if the revision affects only that period; they are recognised in the period of the revision and future periodsif the revision affects both current and future periods. Managementregularly reviews, and revises as necessary, the accounting judgementsthatsignificantly impactthe amountsrecognised in the financialstatements and the estimatesthat are considered to be ‘critical estimates’ due to their potential to give rise to material adjustmentsin the Group’sfinancialstatementsin the year to 31 March 2024. As at 31 March 2023, management hasidentified critical judgementsin respect of revenue recognition, lease accounting, valuing assets and liabilities acquired in business combinations, the accounting for tax disputes, the classification of joint arrangements,whether to recognise provisions or to disclose contingentliabilities, held forsale accounting and the impacts of climate change. In addition,management hasidentified critical accounting estimatesin relation to the recovery of deferred tax assets, post employment benefits and impairment reviews; estimates have also been identified that are not considered to be critical in respect of the allocation of revenue to goods and services, the useful economic lives of finite lived intangible assets and property, plant and equipment. Themajority of the Group’s provisions are either long-term in nature (such as assetretirement obligations) or relate to shorter-termliabilities(such asthose relating to restructuring and property) where there is not considered to be a significantrisk of material adjustment in the nextfinancial year. Critical judgements exercised in respect of tax disputesinclude casesin India and a tax dispute related to financing costsin the Netherlands. These critical accounting judgements, estimates and related disclosures have been discussed with the Group’s Audit and Risk Committee. Critical accountingjudgementsandkeysourcesofestimationuncertainty Revenue recognition Revenue recognition under IFRS 15 necessitatesthe collation and processing of very large amounts of data and the use of management judgements and estimatesto produce financial information. Themostsignificant accounting judgements and source of estimation uncertainty are disclosed below. Gross versus net presentation If the Group has control of goods orservices when they are delivered to a customer, then the Group isthe principal in the sale to the customer; otherwise the Group is acting as an agent. Whether the Group is considered to be the principal or an agentin the transaction depends on analysis by management of both the legal formand substance of the agreement between the Group and its business partners;such judgementsimpactthe amount ofreported revenue and operating expenses(see note 2 ‘Revenue disaggregation and segmental analysis’) but do notimpactreported assets, liabilities or cash flows. Scenariosrequiring judgementto determine whether the Group is a principal or an agent include, for example, those where the Group deliversthird-party branded software orservices(such as premium music, TV content or cloud-based services) to customers and goods or those where services delivered to customersin partnershipwith a third-party. 127 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 1.Basisofpreparation(continued) Allocation ofrevenue to goods and services provided to customers Revenue isrecognisedwhen goods and services aredelivered to customers(see note 2 ‘Revenuedisaggregation and segmental analysis’).Goods and servicesmay be delivered to a customer at differenttimes underthe same contract,hence itis necessary to allocate the amount payable by the customer between goods and services on a ‘relative standalone selling price basis’;thisrequiresthe identification of performance obligations (‘obligations’) and the determination ofstandalone selling pricesforthe identified obligations. The determination of obligationsis,forthe primary goods and servicessold by theGroup, not considered to be a critical accounting judgement;theGroup’s policy on identifying obligationsis disclosed in note 2 ‘Revenuedisaggregation and segmental analysis’. The determination ofstandalone selling pricesforidentified obligationsis discussed below. Itis necessary to estimate the standalone pricewhen theGroup does notsell equivalent goods orservicesin similar circumstances on a standalone basis.When estimating the standalone price theGroupmaximisesthe use of external inputs;methodsfor estimating standalone pricesinclude determining the standalone price ofsimilar goods and servicessold by theGroup, observing the standalone pricesforsimilar goods and serviceswhen sold by third parties or using a cost-plusreasonablemargin approach (which issometimesthe case for devices and other equipment).Where itis not possible to reliably estimate standalone prices due to a lack of observable standalone sales or highly variable pricing,which issometimesthe case for services,the standalone price of an obligationmay be determined asthe transaction price lessthe standalone prices of other obligationsin the contract. The standalone pricedetermined forobligationsmaterially impactsthe allocation ofrevenue between obligations and impactsthe timing ofrevenue when obligations are provided to customers at differenttimes – for example,the allocation ofrevenue betweendevices,which are usually delivered up-front, and serviceswhich are typicallydelivered overthe contract period.However,there is not considered to be a significantrisk ofmaterial adjustment to the carrying value of contract-related assets orliabilitiesin the 12months afterthe balance sheet date ifthese estimateswere revised. Leaseaccounting Lease accounting underIFRS16 is complex andnecessitatesthe collation and processing of very large amountsof data and the increased use of managementjudgements and estimatesto produce financial information. Themostsignificant accounting judgements are disclosed below. Lease identification Whetherthe arrangementis considered a lease or a service contract depends on the analysis bymanagement of both the legalformand substance of the arrangement between theGroupand the counter-party to determine if control of an identified asset has been passed between the parties; if not,the arrangementis a service arrangement.Control existsiftheGroup obtainssubstantially all ofthe economic benefitfromthe use ofthe asset, and hasthe ability to directits use,for a period oftime.An identified asset existswhere an agreement explicitly orimplicitly identifies an asset or a physically distinct portion of an assetwhich the lessor has no substantive rightto substitute. The scenariosrequiring thegreatestjudgementinclude thosewhere the arrangementisforthe use offibre or otherfixed telecommunication lines. Generally,where theGrouphas exclusive use of a physical line itis determined thattheGroup can also directtheuse ofthe line and therefore leaseswill be recognised.Where theGroup provides accessto fibre or otherfixed telecommunication linesto another operator on awholesale basisthe arrangementwill generally be identified as a lease,whereaswhen theGroup providesfixed line servicesto an end-user, generally control oversuch lines is not passed to the end-user and a lease is notidentified. The impact of determiningwhether an agreementis a lease or a service depends onwhethertheGroup is a potential lessee orlessorin the arrangement and,where theGroup is a lessor,whetherthe arrangementis classified as an operating orfinance lease. The impactsfor each scenario are described belowwhere theGroup is potentially: - Alessee. The judgementimpactsthe nature and timing of both costs and reported assets and liabilities.Alease resultsin an asset and a liability being reported and depreciation and interest being recognised;the interest chargewill decrease overthe life ofthe lease.Aservice contractresultsin operating expenses being recognised evenly overthe life ofthe contract and no assets orliabilities being recorded (otherthan trade payables, prepayments and accruals). - An operating lessor. The judgementimpactsthe nature ofincome recognised.An operating lease resultsin lease income being recognisedwhilst a service contractresultsin service revenue. Both are recognised evenly overthe life ofthe contract. - Afinance lessor. The judgementimpactsthe nature and timing of both income and reported assets.Afinance lease resultsin the lease income being recognised at commencement ofthe lease and an asset(the netinvestmentin the lease) being recorded. Lease term Where leasesinclude additional optional periods after an initial lease term,significantjudgementisrequired indeterminingwhetherthese optional periodsshould be includedwhendetermining the lease term. The impact ofthisjudgementissignificantly greaterwhere theGroup is a lessee.As a lessee, optional periods are included in the lease termiftheGroup isreasonably certain itwill exercise an extension option orwill not exercise a termination option;this depends on an analysis bymanagement of allrelevantfacts and circumstancesincluding the leased asset’s nature and purpose, the economic and practical potentialforreplacing the asset and any plansthattheGrouphasin place forthe future use ofthe asset.Where a leased assetis highly customised (eitherwhen initially provided or as a result ofleasehold improvements) oritisimpractical or uneconomic to replace then the Group ismore likely to judge thatlease extension options are reasonably certain to be exercised. The value ofthe right-of-use asset and lease liabilitywill be greaterwhen extension options are included in the lease term. The normal approach adopted forlease termby asset classis described below. 128 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 1.Basisofpreparation(continued) Allocation ofrevenue to goods and services provided to customers Revenue isrecognisedwhen goods and services aredelivered to customers(see note 2 ‘Revenuedisaggregation and segmental analysis’).Goods and servicesmay be delivered to a customer at differenttimes underthe same contract,hence itis necessary to allocate the amount payable by the customer between goods and services on a ‘relative standalone selling price basis’;thisrequiresthe identification of performance obligations (‘obligations’) and the determination ofstandalone selling pricesforthe identified obligations. The determination of obligationsis,forthe primary goods and servicessold by theGroup, not considered to be a critical accounting judgement;theGroup’s policy on identifying obligationsis disclosed in note 2 ‘Revenuedisaggregation and segmental analysis’. The determination ofstandalone selling pricesforidentified obligationsis discussed below. Itis necessary to estimate the standalone pricewhen theGroup does notsell equivalent goods orservicesin similar circumstances on a standalone basis.When estimating the standalone price theGroupmaximisesthe use of external inputs;methodsfor estimating standalone pricesinclude determining the standalone price ofsimilar goods and servicessold by theGroup, observing the standalone pricesforsimilar goods and serviceswhen sold by third parties or using a cost-plusreasonablemargin approach (which issometimesthe case for devices and other equipment).Where itis not possible to reliably estimate standalone prices due to a lack of observable standalone sales or highly variable pricing,which issometimesthe case for services,the standalone price of an obligationmay be determined asthe transaction price lessthe standalone prices of other obligationsin the contract. The standalone pricedetermined forobligationsmaterially impactsthe allocation ofrevenue between obligations and impactsthe timing ofrevenue when obligations are provided to customers at differenttimes – for example,the allocation ofrevenue betweendevices,which are usually delivered up-front, and serviceswhich are typicallydelivered overthe contract period.However,there is not considered to be a significantrisk ofmaterial adjustment to the carrying value of contract-related assets orliabilitiesin the 12months afterthe balance sheet date ifthese estimateswere revised. Leaseaccounting Lease accounting underIFRS16 is complex andnecessitatesthe collation and processing of very large amountsof data and the increased use of managementjudgements and estimatesto produce financial information.Themostsignificant accounting judgements are disclosed below. Lease identification Whetherthe arrangementis considered a lease or a service contract depends on the analysis bymanagement of both the legalformand substance of the arrangement between theGroupand the counter-party to determine if control of an identified asset has been passed between the parties; if not,the arrangementis a service arrangement.Control existsiftheGroup obtainssubstantially all ofthe economic benefitfromthe use ofthe asset, and hasthe ability to directits use,for a period oftime.An identified asset existswhere an agreement explicitly orimplicitly identifies an asset or a physically distinct portion of an assetwhich the lessor has no substantive rightto substitute. The scenariosrequiring thegreatestjudgementinclude thosewhere the arrangementisforthe use offibre or otherfixed telecommunication lines. Generally,where theGrouphas exclusive use of a physical line itis determined thattheGroup can also directtheuse ofthe line and therefore leaseswill be recognised.Where theGroup provides accessto fibre or otherfixed telecommunication linesto another operator on awholesale basisthe arrangementwill generally be identified as a lease,whereaswhen theGroup providesfixed line servicesto an end-user, generally control oversuch lines is not passed to the end-user and a lease is notidentified. The impact of determiningwhether an agreementis a lease or a service depends onwhethertheGroup is a potential lessee orlessorin the arrangement and,where theGroup is a lessor,whetherthe arrangementis classified as an operating orfinance lease. The impactsfor each scenario are described belowwhere theGroup is potentially: - Alessee. The judgementimpactsthe nature and timing of both costs and reported assets and liabilities.Alease resultsin an asset and a liability being reported and depreciation and interest being recognised;the interest chargewill decrease overthe life ofthe lease.Aservice contractresultsin operating expenses being recognised evenly overthe life ofthe contract and no assets orliabilities being recorded (otherthan trade payables, prepayments and accruals). - An operating lessor. The judgementimpactsthe nature ofincome recognised.An operating lease resultsin lease income being recognisedwhilst a service contractresultsin service revenue. Both are recognised evenly overthe life ofthe contract. - Afinance lessor. The judgementimpactsthe nature and timing of both income and reported assets.Afinance lease resultsin the lease income being recognised at commencement ofthe lease and an asset(the netinvestmentin the lease) being recorded. Lease term Where leasesinclude additional optional periods after an initial lease term,significantjudgementisrequired indeterminingwhetherthese optional periodsshould be includedwhendetermining the lease term. The impact ofthisjudgementissignificantly greaterwhere theGroup is a lessee.As a lessee, optional periods are included in the lease termiftheGroup isreasonably certain itwill exercise an extension option orwill not exercise a termination option;this depends on an analysis bymanagement of allrelevantfacts and circumstancesincluding the leased asset’s nature and purpose, the economic and practical potentialforreplacing the asset and any plansthattheGrouphasin place forthe future use ofthe asset.Where a leased assetis highly customised (eitherwhen initially provided or as a result ofleasehold improvements) oritisimpractical or uneconomic to replace then the Group ismore likely to judge thatlease extension options are reasonably certain to be exercised. The value ofthe right-of-use asset and lease liabilitywill be greaterwhen extension options are included in the lease term. The normal approach adopted forlease termby asset classis described below. The lease terms can vary significantly by type and use of asset and geography. In addition,the exactlease termissubjectto the non-cancellable period and rights and optionsin each contract.Generally, lease terms are judged to be the longer oftheminimumlease termand: - Between5 and 10 yearsforland and buildings(excluding retail),with terms atthe top end ofthisrange ifthe lease relatesto assetsthat are considered to be difficultto exitsoonerfor economic, practical orreputationalreasons; - To the next contractual lease breakdate forretail premises(excluding breakswithin the next 12months); - Where leases are used to provide internal connectivity the lease termforthe connectivity is aligned to the lease termor useful economic life ofthe assets connected; - The customerservice agreementlength forleases oflocal loop connections or other assetsrequired to provide fixed line servicesto individual customers; and - Where there are contractual agreementsto provide services using leased assets,the lease termforthese assetsis generally setin accordancewith the above principles orforthe lease termrequired to provide the servicesforthe agreed service period, iflonger. InmostinstancestheGrouphas optionsto renewor extend leasesfor additional periods afterthe end ofthe lease termwhich are assessed using the criteria above. Lease terms are reassessed if a significant event or change in circumstances occursrelating to the leased assetsthatiswithin the control oftheGroup; such changes usually relate to commercial agreements entered into by theGroup, or business decisionsmade by theGroup. Where such changes change theGroup’s assessment ofwhetheritisreasonably certain to exercise optionsto extend, or notterminate leases,then the lease termis reassessed and the lease liability isremeasured,which inmost caseswill increase the lease liability. Taxation The Group’stax charge on ordinary activitiesisthe sum of the total current and deferred tax charges. The calculation of the Group’stotal tax charge involves estimation and judgementin respect of certain matters, being principally: Recognition of deferred tax assets Significantitems on which the Group has exercised accounting estimation and judgementinclude the recognition of deferred tax assetsin respect of lossesin Luxembourg, Germany, Italy and Spain aswell as capital allowancesin theUnited Kingdom. The recognition of deferred tax assets, particularly in respect of taxlosses, is based uponwhether managementjudge thatitis probable thattherewill be sufficient and suitable taxable profitsin the relevantlegal entity ortax group againstwhich to utilise the assetsin the future. The Group assessesthe availability of future taxable profits using the same undiscounted five year forecastsfor the Group’s operations as are used in the Group’s value in use calculations(see note 4 ‘Impairmentlosses’). In the case of Luxembourg, thisincludesforecasts of future income from the Group’sinternal financing, centralised procurement and roaming activities. Where taxlosses are forecastto be recovered beyond the five year period, the availability of taxable profitsis assessed using the cash flows and long-termgrowth rates used for the value in use calculations. The estimated cash flowsinherentin these forecastsinclude the unsystematic risks of operating in the telecommunications businessincluding the potential impacts of changesin themarketstructure, trendsin customer pricing, the costs associated with the acquisition and retention of customers, future technological evolutions and potentialregulatory changes,such as our ability to acquire and/or renew spectrum licences. Changesin the estimateswhich underpin the Group’sforecasts could have an impact on the amount of future taxable profits and could have a significantimpact on the period overwhich the deferred tax assetwould be recovered. The Group only considerssubstantively enacted taxlawswhen assessing the amount and availability of taxlossesto offset againstthe future taxable profits. See note 6 ‘Taxation’ to the consolidated financialstatements. See additional commentary relating to climate change below. Uncertain tax positions The taximpact of a transaction or item can be uncertain until a conclusion isreached with the relevanttax authority or through a legal process. The Group usesin-house tax expertswhen assessing uncertain tax positions and seeksthe advice of external professional advisors where appropriate. Themostsignificantjudgementsin this area relate to the Group’stax disputesin India and a tax dispute related to financing costsin the Netherlands. Further details of tax disputes are included in note 29 ‘Contingentliabilities and legal proceedings’ to the consolidated financialstatements. Business combinations andgoodwill When theGroup completes a business combination,the fair values ofthe identifiable assets and liabilities acquired, including intangible assets, are recognised. The determination ofthe fair values of acquired assets and liabilitiesis based,to a considerable extent,onmanagement’sjudgement. Ifthe purchase consideration exceedsthe fair value ofthe net assets acquired then the incremental amount paid isrecognised as goodwill. Ifthe purchase price consideration islowerthan the fair value ofthe assets acquired then the difference isrecorded as a gain in the income statement. Allocation ofthe purchase price between finite lived assets(discussed below) and indefinite lived assetssuch as goodwill affectsthe subsequentresults oftheGroup asfinite lived intangible assets are amortised,whereasindefinite lived intangible assets, including goodwill, are not amortised. See note 27 ‘Acquisitions and disposals’to the consolidated financialstatementsforfurther details. 129 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 1.Basisofpreparation(continued) Joint arrangements TheGroup participatesin a number of joint arrangementswhere control ofthe arrangementissharedwith one ormore other parties.Judgementis required to classify joint arrangementsin a separate legal entity as either a joint operation or as a joint venture,which depends onmanagement’s assessment ofthe legalformand substance ofthe arrangementtaking into accountrelevantfacts and circumstancessuch aswhetherthe owners have rightsto substantially allthe economic outputs and, in substance,settle the liabilities ofthe entity. The classification can have amaterialimpact on the consolidated financialstatements. TheGroup’sshare of assets, liabilities,revenue, expenses and cash flows ofjoint operations are included in the consolidated financialstatements on a line-by-line basis,whereastheGroup’sinvestment and share of results ofjoint ventures are shownwithin single line itemsin the consolidated statement offinancial position and consolidated income statement respectively. See note 12 ‘Investmentsin associates and joint arrangements’to the consolidated financialstatements. Finitelived intangibleassets Otherintangible assetsinclude amountsspent by theGroup acquiring licences and spectrum, customer bases and the costs of purchasing and developing computersoftware. Where intangible assets are acquired through business combinations and no activemarketforthe assets exists,the fair value ofthese assetsis determined by discounting estimated future net cash flows generated by the asset. Estimatesrelating to the future cash flows and discountrates used may have amaterial effect on the reported amounts offinite lived intangible assets. Estimation of useful life The useful life overwhich intangible assets are amortised depends onmanagement’s estimate ofthe period overwhich economic benefitwill be derived fromthe asset.Useful lives are periodically reviewed to ensure thatthey remain appropriate.Management’s estimates of useful life have amaterial impact on the amount of amortisation recorded in the year, butthere is not considered to be a significantrisk ofmaterial adjustmentto the carrying values ofintangible assetsin the yearto 31March2024 ifthese estimateswere revised. The basisfor determining the useful life forthemostsignificant categories ofintangible assets are discussed below. Customer bases The estimated useful life principally reflectsmanagement’s viewofthe average economic life ofthe customer base and is assessed by reference to customer churnrates.An increase inchurn ratesmay lead to a reduction inthe estimated useful life and an increase in the amortisation charge. Capitalised software For computersoftware,the estimated useful life is based onmanagement’s view, considering historical experiencewith similar products aswell as anticipation offuture eventswhichmay impacttheirlife such as changesintechnology. The useful lifewill not exceed theduration of a licence. Property,plant andequipment Property, plant and equipmentrepresents 24.4% oftheGroup’stotal assets(2022:26.5%). Estimates and assumptionsmademay have amaterial impact on their carrying value and related depreciation charge. See note 11 ‘Property, plant and equipment’to the consolidated financialstatementsforfurther details. Estimation of useful life The depreciation charge for an assetis derived using estimates ofits expected useful life and expected residual value,which are reviewed annually. Management’s estimates of useful life have amaterial impact on the amount of depreciation recorded in the year, butthere is not considered to be a significantrisk ofmaterial adjustmentto the carrying values of property, plant and equipmentin the yearto 31March 2024 ifthese estimateswere revised. Management determinesthe useful lives and residual valuesfor assetswhen they are acquired, based on experiencewith similar assets and taking into account otherrelevantfactorssuch as any expected changesin technology. See additional commentary relating to climate change, below. Postemploymentbenefits Management uses estimateswhen determining theGroup’sliabilities and expenses arising for defined benefit pension schemes.Managementis required to estimate the future rates ofinflation,salary increases, discountrates and longevity ofmembers, eachofwhichmay have amaterial impact on the defined benefit obligationsthat are recorded. Further details, including a sensitivity analysis, are included in note 25 ‘Post employment benefits’to the consolidated financialstatements. Contingentliabilities TheGroup exercisesjudgementto determinewhetherto recognise provisions and the exposuresto contingentliabilitiesrelated to pending litigations or other outstanding claimssubjectto negotiated settlement,mediation, arbitration or governmentregulation, aswell as other contingentliabilities(see note 29‘Contingentliabilities and legal proceedings’to the consolidated financialstatements).Judgementis necessary to assessthe likelihood that a pending claimwillsucceed, or a liabilitywill arise. Impairmentreviews IFRS requiresmanagementto performimpairmenttests annually forindefinite lived assets, and forfinite lived assets and for equity accounted investmentsif events or changesin circumstancesindicate thattheir carrying amountsmay not be recoverable. Managementisrequired tomake significantjudgments concerning the identification ofimpairmentindicators,the determination offair valuesfor assets andwhetherthe carryingvalue of assets can be supported by the net present value offuture cash flowsthatthey are expected to generate. 130 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 1.Basisofpreparation(continued) Joint arrangements TheGroup participatesin a number of joint arrangementswhere control ofthe arrangementissharedwith one ormore other parties.Judgementis required to classify joint arrangementsin a separate legal entity as either a joint operation or as a joint venture,which depends onmanagement’s assessment ofthe legalformand substance ofthe arrangementtaking into accountrelevantfacts and circumstancessuch aswhetherthe owners have rightsto substantially allthe economic outputs and, in substance,settle the liabilities ofthe entity. The classification can have amaterialimpact on the consolidated financialstatements. TheGroup’sshare of assets, liabilities,revenue, expenses and cash flows ofjoint operations are included in the consolidated financialstatements on a line-by-line basis,whereastheGroup’sinvestment and share of results ofjoint ventures are shownwithin single line itemsin the consolidated statement offinancial position and consolidated income statement respectively. See note 12 ‘Investmentsin associates and joint arrangements’to the consolidated financialstatements. Finitelived intangibleassets Otherintangible assetsinclude amountsspent by theGroup acquiring licences and spectrum, customer bases and the costs of purchasing and developing computersoftware. Where intangible assets are acquired through business combinations and no activemarketforthe assets exists,the fair value ofthese assetsis determined by discounting estimated future net cash flows generated by the asset. Estimatesrelating to the future cash flows and discountrates used may have amaterial effect on the reported amounts offinite lived intangible assets. Estimation of useful life The useful life overwhich intangible assets are amortised depends onmanagement’s estimate ofthe period overwhich economic benefitwill be derived fromthe asset.Useful lives are periodically reviewed to ensure thatthey remain appropriate.Management’s estimates of useful life have amaterial impact on the amount of amortisation recorded in the year, butthere is not considered to be a significantrisk ofmaterial adjustmentto the carrying values ofintangible assetsin the yearto 31March2024 ifthese estimateswere revised. The basisfor determining the useful life forthemostsignificant categories ofintangible assets are discussed below. Customer bases The estimated useful life principally reflectsmanagement’s viewofthe average economic life ofthe customer base and is assessed by reference to customer churnrates.An increase inchurn ratesmay lead to a reduction inthe estimated useful life and an increase in the amortisation charge. Capitalised software For computersoftware,the estimated useful life is based onmanagement’s view, considering historical experiencewith similar products aswell as anticipation offuture eventswhichmay impacttheirlife such as changesintechnology. The useful lifewill not exceed theduration of a licence. Property,plant andequipment Property, plant and equipmentrepresents 24.4% oftheGroup’stotal assets(2022:26.5%). Estimates and assumptionsmademay have amaterial impact on their carrying value and related depreciation charge. See note 11 ‘Property, plant and equipment’to the consolidated financialstatementsforfurther details. Estimation of useful life The depreciation charge for an assetis derived using estimates ofits expected useful life and expected residual value,which are reviewed annually. Management’s estimates of useful life have amaterial impact on the amount of depreciation recorded in the year, butthere is not considered to be a significantrisk ofmaterial adjustmentto the carrying values of property, plant and equipmentin the yearto 31March 2024 ifthese estimateswere revised. Management determinesthe useful lives and residual valuesfor assetswhen they are acquired, based on experiencewith similar assets and taking into account otherrelevantfactorssuch as any expected changesin technology. See additional commentary relating to climate change, below. Postemploymentbenefits Management uses estimateswhen determining theGroup’sliabilities and expenses arising for defined benefit pension schemes.Managementis required to estimate the future rates ofinflation,salary increases, discountrates and longevity ofmembers, eachofwhichmay have amaterial impact on the defined benefit obligationsthat are recorded. Further details, including a sensitivity analysis, are included in note 25 ‘Post employment benefits’to the consolidated financialstatements. Contingentliabilities TheGroup exercisesjudgementto determinewhetherto recognise provisions and the exposuresto contingentliabilitiesrelated to pending litigations or other outstanding claimssubjectto negotiated settlement,mediation, arbitration or governmentregulation, aswell as other contingentliabilities(see note 29‘Contingentliabilities and legal proceedings’to the consolidated financialstatements).Judgementis necessary to assessthe likelihood that a pending claimwillsucceed, or a liabilitywill arise. Impairmentreviews IFRS requiresmanagementto performimpairmenttests annually forindefinite lived assets, and forfinite lived assets and for equity accounted investmentsif events or changesin circumstancesindicate thattheir carrying amountsmay not be recoverable. Managementisrequired tomake significantjudgments concerning the identification ofimpairmentindicators,the determination offair valuesfor assets andwhetherthe carryingvalue of assets can be supported by the net present value offuture cash flowsthatthey are expected to generate. The Group performs an annual impairment testwhich focuses on determining a recoverable amountfor its assets based on value in use,rather than fair value less costs of disposal due to a lack of observable market data on fair valuesfor equivalent assets. Calculating the net present value ofthe future cash flowsrequires estimatesto be made in respect of highly uncertain mattersincluding management’s expectations of: − Growth in adjusted EBITDAaL, (see note 2 ‘Revenue disaggregation and segmental analysis’ for a reconciliation to the consolidated income statement); − Timing and amount of future capital expenditure, licence and spectrum payments; − Long-term growth rates; and − Appropriate discountratesto reflectthe risksinvolved. Changing the assumptionsselected by management, in particular projected adjusted EBITDAaL, long-termgrowth rate and discountrate assumptions, could significantly affect the Group’simpairment evaluation and hence reported assets and profits or losses. Further details, including a sensitivity analysis, are included in note 4 ‘Impairmentlosses’ to the consolidated financialstatements. Where the Group hasinterestsin listed entities, market data,such asshare price, is used to assessthe fair value of those interests. If the market capitalisation indicatesthattheir carrying amountsmay not be recoverable, possible adjustmentsto the share price are reviewed and,where information is available, a value in use calculation is performed to support a conclusion on impairment. For operationsthat are classified as held forsale, managementisrequired to determinewhether the carrying value of the discontinued operation can be supported by the fair value less costs of disposal. Where not observable in a quoted market,management has determined fair value less coststo sell by reference to the outcomesfrom the application of a number of potential valuation techniques, determined from inputs other than quoted pricesthat are observable forthe asset or liability, either directly or indirectly. For a number ofreasons, transaction values agreed as part of any business acquisition or disposal may be higher than the assessed value in use. See additional commentary relating to climate change, below. Heldfor saleaccounting When the value of a non-current asset or a group of assetsin a disposal groupwill be primarily recovered through a sale transaction and there is an active plan for the disposalsuch thatit is highly probable thatthe disposal will be completed within 12months(subject to certainmatters outside of the Group’s control) then the related assets will be classified as held forsale or as a discontinued operation. Judgementis applied by management in determining if assetsmeetthe requirementsto be classified as held forsale or as discontinued operations. Further detail is provided in note 7 ‘Discontinued operations and assets held forsale’. Climatechange The potential climate change-related risks and opportunitiesto which the Group is exposed, asidentified bymanagement, are disclosed in the Group’s TCFD disclosures on pages 58 and 59. Management has assessed the potential financial impactsrelating to the identified risks, primarily considering the useful lives of, and retirement obligationsfor, property, plant and equipment, the possibility of impairment of goodwill and other long-lived assets and the recoverability of the Group’s deferred tax assets. Management has exercised judgementin concluding thatthere are no furthermaterial financial impacts ofthe Group’s climate-related risks and opportunities on the consolidated financialstatements. These judgements will be kept under review by management asthe future impacts of climate change depend on environmental, regulatory and other factors outside of the Group’s control which are not all currently known. Significantaccountingpoliciesappliedinthecurrentreportingperiodthatrelatetothefinancial statementsasa whole Accountingconvention The consolidated financialstatements are prepared on a historical cost basis exceptfor certain financial and equity instrumentsthat have been measured atfair value and for the application of IAS 29 ‘Financial Reporting inHyperinflationary Economies’ for the Group’s entitiesreporting in Turkish lira (see below). Basis of consolidation The consolidated financialstatementsincorporate the financialstatements of the Company,subsidiaries controlled by the Company (see note 31 ‘Related undertakings’ to the consolidated financialstatements), joint operationsthat are subjectto joint control and the results of joint ventures and associates(see note 12 ‘Investmentsin associates and joint arrangements’ to the consolidated financialstatements). Basis of preparationchanges adoptedon 1April 2022 -Hyperinflation As anticipated in the Annual Reportfor the year ended 31 March 2022, Turkey metthe requirementsto be designated as a hyperinflationary economy under IAS 29 ‘Financial Reporting inHyperinflationary Economies’ in the quarter ended 30 June 2022. In addition, Ethiopia where the Group’s associate, Safaricom, has operations has also become a hyperinflationary economy in the year. The Group hastherefore applied hyperinflationary accounting, asspecified in IAS 29, atits Turkish operationswhose functional currency isthe Turkish lira and to Safaricom’s operationsin Ethiopia where the Ethiopian birr isthe functional currency for the reporting period commencing 1 April 2022. Thisresulted in an opening balance adjustment of €565 million to consolidated equity. In accordance with IAS 21 ‘The Effects of Changesin Foreign Exchange Rates’, comparative amounts have not been restated. 131 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 1.Basisofpreparation(continued) Turkish lira and Ethiopian birr results and non-monetary asset and liability balancesfor the currentfinancial year ended 31 March 2023 have been revalued to their present value equivalentlocal currency amount as at 31 March 2023, based on an inflation index, before translation to euros atthe reporting date exchange rate of €1: 20.85 TRL and €1:58.59 ETB,respectively. For the Group’s operationsin Turkey: − The gain or loss on netmonetary assetsresulting from IAS 29 application isrecognised in the consolidated income statement within Other income. − The Group also presentsthe gain or loss on cash and cash equivalents asmonetary itemstogether with the effect of inflation on operating, investing and financing cash flows as one number in the consolidated statement of cash flows. − The Group has presented the IAS 29 opening balance adjustmentto net assetswithin currency reservesin equity. Subsequent IAS 29 equity restatement effects and the impact of currency movements are presented within other comprehensive income because such amounts are judged tomeetthe definition of ‘exchange differences’. For Safaricom’s operationsin Ethiopia, the impacts of IAS 29 accounting are reflected as an increase to Investmentsin associates and joint ventures and an increase to Equity. The inflation indexin Turkey selected to reflectthe change in purchasing power wasthe consumer price index(CPI) issued by the Turkish Statistical Institute which hasrisen by 50.5% during the current financial year ended 31 March 2023.The inflation indexselected in Ethiopia isthe CPI issued by the Ethiopian Statistics Service which rose 31.3% in the year ended 31 March 2023. Themain impacts of the aforementioned adjustments on the consolidated financialstatements are shown below. Year ended 31 March Increase/(decrease) 2023 €m Revenue 85 Operating profit (87) Profit for the financial year (123) Non-current assets 814 Equity attributable to owners of the parent 777 Non-controlling interests 37 Foreigncurrencies The consolidated financialstatements are presented in euro, which is also the Company’sfunctional currency. Each entity in the Group determines its own functional currency and itemsincluded in the financialstatements of each entity aremeasured using thatfunctional currency. With the exception of the Group’s Turkish lira operations, which are subjectto hyperinflation accounting (see above), transactionsin foreign currencies are initially recorded atthe functional currency rate prevailing atthe date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity atthe rates prevailing on the reporting period date. Non-monetary items carried atfair value that are denominated in foreign currencies are retranslated atthe rates prevailing on the initial transaction dates.Non-monetary itemsmeasured in terms of historical costin a foreign currency are notretranslated. Share capital,share premium and other capital reserves are initially recorded atthe functional currency rate prevailing atthe date of the transaction and are not retranslated. For the purpose of presenting consolidated financialstatements, the assets and liabilities of entitieswith a functional currency other than euro are expressed in euro using exchange rates prevailing atthe reporting period date. Income and expense items and cash flows are translated atthe average exchange ratesfor each month and exchange differences arising are recognised directly in other comprehensive income. On disposal of a foreign entity, the cumulative amount previously recognised in the consolidated statement of comprehensive income relating to that particular foreign operation isrecognised in profit or lossin the consolidated income statement. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated accordingly. The netforeign exchange gain recognised in the consolidated income statementfor the year ended 31 March 2023 is €111 million (31 March 2022: €309 million loss; 2021: €13 million loss). The net gains and netlosses are recorded within operating profit(2023: €247 million credit; 2022: €24 million charge; 2021: €3million credit), financing costs(2023: €135million charge; 2022: €284 million charge; 2021 €23 million charge) and income tax expense (2023: €1 million charge; 2022: €1 million charge; 2021: €7 million credit). The foreign exchange gains and lossesincluded within other income arise on the disposal ofsubsidiaries, interestsin joint ventures, associates and investmentsfrom the recycling of foreign exchange gains and losses previously recognised in the consolidated statement of comprehensive income. 132 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 1.Basisofpreparation(continued) Turkish lira and Ethiopian birr results and non-monetary asset and liability balancesfor the currentfinancial year ended 31 March 2023 have been revalued to their present value equivalentlocal currency amount as at 31 March 2023, based on an inflation index, before translation to euros atthe reporting date exchange rate of €1: 20.85 TRL and €1:58.59 ETB,respectively. For the Group’s operationsin Turkey: − The gain or loss on netmonetary assetsresulting from IAS 29 application isrecognised in the consolidated income statement within Other income. − The Group also presentsthe gain or loss on cash and cash equivalents asmonetary itemstogether with the effect of inflation on operating, investing and financing cash flows as one number in the consolidated statement of cash flows. − The Group has presented the IAS 29 opening balance adjustmentto net assetswithin currency reservesin equity. Subsequent IAS 29 equity restatement effects and the impact of currency movements are presented within other comprehensive income because such amounts are judged tomeetthe definition of ‘exchange differences’. For Safaricom’s operationsin Ethiopia, the impacts of IAS 29 accounting are reflected as an increase to Investmentsin associates and joint ventures and an increase to Equity. The inflation indexin Turkey selected to reflectthe change in purchasing power wasthe consumer price index(CPI) issued by the Turkish Statistical Institute which hasrisen by 50.5% during the current financial year ended 31 March 2023.The inflation indexselected in Ethiopia isthe CPI issued by the Ethiopian Statistics Service which rose 31.3% in the year ended 31 March 2023. Themain impacts of the aforementioned adjustments on the consolidated financialstatements are shown below. Year ended 31 March Increase/(decrease) 2023 €m Revenue 85 Operating profit (87) Profit for the financial year (123) Non-current assets 814 Equity attributable to owners of the parent 777 Non-controlling interests 37 Foreigncurrencies The consolidated financialstatements are presented in euro, which is also the Company’sfunctional currency. Each entity in the Group determines its own functional currency and itemsincluded in the financialstatements of each entity aremeasured using thatfunctional currency. With the exception of the Group’s Turkish lira operations, which are subjectto hyperinflation accounting (see above), transactionsin foreign currencies are initially recorded atthe functional currency rate prevailing atthe date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity atthe rates prevailing on the reporting period date. Non-monetary items carried atfair value that are denominated in foreign currencies are retranslated atthe rates prevailing on the initial transaction dates.Non-monetary itemsmeasured in terms of historical costin a foreign currency are notretranslated. Share capital,share premium and other capital reserves are initially recorded atthe functional currency rate prevailing atthe date of the transaction and are not retranslated. For the purpose of presenting consolidated financialstatements, the assets and liabilities of entitieswith a functional currency other than euro are expressed in euro using exchange rates prevailing atthe reporting period date. Income and expense items and cash flows are translated atthe average exchange ratesfor each month and exchange differences arising are recognised directly in other comprehensive income. On disposal of a foreign entity, the cumulative amount previously recognised in the consolidated statement of comprehensive income relating to that particular foreign operation isrecognised in profit or lossin the consolidated income statement. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated accordingly. The netforeign exchange gain recognised in the consolidated income statementfor the year ended 31 March 2023 is €111 million (31 March 2022: €309 million loss; 2021: €13 million loss). The net gains and netlosses are recorded within operating profit(2023: €247 million credit; 2022: €24 million charge; 2021: €3million credit), financing costs(2023: €135million charge; 2022: €284 million charge; 2021 €23 million charge) and income tax expense (2023: €1 million charge; 2022: €1 million charge; 2021: €7 million credit). The foreign exchange gains and lossesincluded within other income arise on the disposal ofsubsidiaries, interestsin joint ventures, associates and investmentsfrom the recycling of foreign exchange gains and losses previously recognised in the consolidated statement of comprehensive income. Currentornon-current classification Assets are classified as currentin the consolidated statement of financial position where recovery is expectedwithin 12 months of the reporting date. All assetswhere recovery is expected more than 12 monthsfrom the reporting date and all deferred tax assets, goodwill and intangible assets, property, plant and equipment and investmentsin associates and joint ventures are reported as non-current. Liabilities are classified as current unlessthe Group has an unconditionalrightto defersettlement of the liability for atleast 12 months after the reporting date. For provisions, where the timing ofsettlementis uncertain, amounts are classified as non-currentwhere settlementis expected more than 12 monthsfrom the reporting date. In addition, deferred taxliabilities and post-employment benefits are reported as non-current. Inventory Inventory isstated atthe lower of cost and netrealisable value. Cost is determined on the basis of weighted average costs and comprises direct materials and,where applicable, direct labour costs and those overheadsthat have been incurred in bringing the inventoriesto their present location and condition. Newaccountingpronouncementsadoptedonorafter1April2022 The Group adopted the following new accounting policies on 1 April 2022 to comply with amendmentsto IFRS. The accounting pronouncements, none of which had a material impact on the Group’sfinancialreporting on adoption, are: − Annual Improvementsto IFRS Standards 2018-2020; − Amendmentsto IAS 16 ‘Property, Plant and Equipment: Proceeds before Intended Use’; − Amendmentsto IAS 37 ‘Onerous Contracts – Cost of Fulfilling a Contract’; and − Amendmentsto IFRS 3 ‘Reference to the Conceptual Framework’. Newaccountingpronouncements tobeadoptedonorafter1April2023 The following new standards and narrow-scope amendments have been issued by the IASB and are effective for annual reporting periods beginning on or after 1 January 2023: − IFRS 17 ‘Insurance Contracts’; − Amendmentsto IAS 1 ‘Disclosure of Accounting Policies’; − Amendmentto IAS 8 ‘Definition of Accounting Estimates’; and − Amendmentto IAS 12 ‘Deferred Taxrelated to Assets and Liabilities arising from a Single Transaction’. These amendments have been endorsed by the UK Endorsement Board. The Group’sfinancial reportingwill be presented in accordance with the above newstandardsfrom1 April 2023. The amendmentsto IAS 1, IAS 8 and IAS 12 are not expected to have a material impact on the consolidated income statement, consolidated statement of financial position or consolidated statement of cash flows. The impact of the adoption of IFRS 17 is addressed below. IFRS 17 ‘InsuranceContracts’ IFRS 17 sets outrevised principlesfor the recognition, measurement, presentation and disclosure of insurance contracts. The Group issues certain short and long-term insurance contractsincluding device insurance and the reinsurance of a third-party annuity policy issued to the Vodafone and CWW Sections of the VodafoneUK Group Pension Scheme. The adoption of IFRS 17 will resultin insurance and reinsurance liabilities being reclassified into a separate line item fromTrade and other payables and Provisions. The total reclassifications as at 1 April 2023 and for comparative periods are estimated to range from€400 million to €650million, the largest elementrelating to the reinsurance of the third-party annuity policy (see Note 15 ‘Trade and other payables’ and Note 25 ‘Post employment benefits’). Prior periodswill be re-presented on adoption of IFRS 17; nomaterial adjustments are expected to equity or to the Group’s Consolidated Income Statement on adoption. The Groupwill issue further details on the impact of adopting IFRS 17 as part of the InterimFinancial Statementsfor the six months ending 30 September 2023. Newaccountingpronouncements tobeadoptedonorafter1April2024 The following amendments have been issued by the IASB and are effective for annual periods beginning on or after 1 January 2024; they have not yet been endorsed by the UK Endorsement Board. − Amendmentsto IAS 1 ‘Classification of Liabilities as Current or Non-Current’; Amendmentsto IAS 1 ‘Non-current Liabilities and Covenants’; and − Amendmentsto IFRS 16 ‘Lease Liability in a Sale and Leaseback’. The Group is assessing the impact ofthese new standards and the Group’sfinancial reporting will be presented in accordance with these standards from1 April 2024 as applicable. 133 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 2.Revenuedisaggregationandsegmental analysis The Group’s businesses aremanaged on a geographical basis. Selected financial data is presented on this basis below. Accountingpolicies Revenue When the Group entersinto an agreementwith a customer, goods and services deliverable under the contract are identified asseparate performance obligations(‘obligations’) to the extent thatthe customer can benefitfrom the goods orservices on their own and that the separate goods and services are considered distinctfrom other goods and servicesin the agreement. Where individual goods and services do notmeetthe criteria to be identified asseparate obligationsthey are aggregatedwith other goods and/orservicesin the agreement until a separate obligation is identified. The obligationsidentifiedwill depend on the nature of individual customer contracts, butmighttypically be separately identified for mobile handsets, other equipmentsuch asset-top boxes and routers provided to customers and services provided to customerssuch asmobile and fixed line communication services. Where goods and services have a functional dependency (for example, a fixed line router can only be used with the Group’sservices) this does not, in isolation, prevent those goods orservicesfrom being assessed asseparate obligations. Activities relating to connecting customersto the Group’s network for the future provision ofservices are not considered tomeetthe criteria to be recognised as obligations exceptto the extentthatthe control of related equipment passesto customers. The Group determinesthe transaction price towhich it expectsto be entitled in return for providing the promised obligationsto the customer based on the committed contractual amounts, net ofsalestaxes and discounts. Where indirect channel dealers,such asretailers, acquire customer contracts on behalf of the Group and receive commission, any commissionsthatthe dealer is compelled to use to fund discounts or other incentivesto the customer are treated as paymentsto the customer when determining the transaction price and consequently are notincluded in contract acquisition costs. The transaction price is allocated between the identified obligations according to the relative standalone selling prices of the obligations. The standalone selling price of each obligation deliverable in the contractis determined according to the pricesthatthe Groupwould achieve by selling the same goods and/orservicesincluded in the obligation to a similar customer on a standalone basis; where standalone selling prices are not directly observable, estimation techniques are usedmaximising the use of external inputs. See ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 for details. Revenue isrecognised when the respective obligationsin the contract are delivered to the customer and cash collection is considered probable. Revenue for the provision ofservices,such asmobile airtime and fixed line broadband, isrecognised when the Group providesthe related service during the agreed service period. Revenue for device salesto end customersis generally recognised when the device is delivered to the end customer. For device sales made to intermediariessuch asindirect channel dealers,revenue isrecognised if control of the device hastransferred to the intermediary and the intermediary has no rightto return the device to receive a refund; otherwise revenue recognition is deferred untilsale of the device to an end customer by the intermediary or the expiry of any right ofreturn. Where refunds are issued to customersthey are deducted fromrevenue in the relevantservice period. When the Group has control of goods orservices prior to delivery to a customer, then the Group isthe principal in the sale to the customer. As a principal,receiptsfrom, and paymentsto,suppliers are reported on a gross basisin revenue and operating costs. If another party has control of goods orservices prior to transfer to a customer, then the Group is acting as an agentfor the other party and revenue in respect of the relevant obligationsisrecognised net of any related paymentsto the supplier and recognised revenue representsthemargin earned by the Group. See ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 for details. Customerstypically pay in advance for prepay mobile services and monthly for other communication services. Customerstypically pay for handsets and other equipment either up-front atthe time ofsale or over the termof the related service agreement. When revenue recognised in respect of a customer contract exceeds amountsreceived or receivable froma customer atthattime a contract asset isrecognised; contract assetswill typically be recognised for handsets or other equipment provided to customerswhere paymentisrecovered by the Group via future service fees. If amountsreceived or receivable froma customer exceed revenue recognised for a contract, for example if the Group receives an advance paymentfrom a customer, a contractliability isrecognised. When contract assets or liabilities are recognised, a financing componentmay existin the contract; thisistypically the case when a handset or other equipment is provided to a customer up-front but paymentisreceived over the term of the related service agreement, in which case the customer is deemed to have received financing. If a significantfinancing componentis provided to the customer, the transaction price isreduced and interest revenue isrecognised over the customer’s payment period using an interestrate reflecting the relevant central bank rates and customer creditrisk. Contract-related costs When costs directly relating to a specific contract are incurred prior to recognising revenue for a related obligation, and those costs enhance the ability of the Group to deliver an obligation and are expected to be recovered, then those costs are recognised on the consolidated statement of financial position asfulfilment costs and are recognised as expensesin line with the recognition ofrevenue when the related obligation is delivered. The direct and incremental costs of acquiring a contract including, for example, certain commissions payable to staff or agentsfor acquiring customers on behalf of the Group, are recognised as contract acquisition cost assetsin the consolidated statement of financial position when the related payment obligation isrecorded. Costs are recognised as an expense in line with the recognition of the related revenue that is expected to be earned by the Group; typically thisis over the customer contract period as newcommissions are payable on contractrenewal. Certain amounts payable to agents are deducted from revenue recognised (see above). 134 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 2.Revenuedisaggregationandsegmental analysis The Group’s businesses aremanaged on a geographical basis. Selected financial data is presented on this basis below. Accountingpolicies Revenue When the Group entersinto an agreementwith a customer, goods and services deliverable under the contract are identified asseparate performance obligations(‘obligations’) to the extent thatthe customer can benefitfrom the goods orservices on their own and that the separate goods and services are considered distinctfrom other goods and servicesin the agreement. Where individual goods and services do notmeetthe criteria to be identified asseparate obligationsthey are aggregatedwith other goods and/orservicesin the agreement until a separate obligation is identified. The obligationsidentifiedwill depend on the nature of individual customer contracts, butmighttypically be separately identified for mobile handsets, other equipmentsuch asset-top boxes and routers provided to customers and services provided to customerssuch asmobile and fixed line communication services. Where goods and services have a functional dependency (for example, a fixed line router can only be used with the Group’sservices) this does not, in isolation, prevent those goods orservicesfrom being assessed asseparate obligations. Activitiesrelating to connecting customersto the Group’s network for the future provision ofservices are not considered tomeetthe criteria to be recognised as obligations exceptto the extentthatthe control of related equipment passesto customers. The Group determinesthe transaction price towhich it expectsto be entitled in return for providing the promised obligationsto the customer based on the committed contractual amounts, net ofsalestaxes and discounts. Where indirect channel dealers,such asretailers, acquire customer contracts on behalf of the Group and receive commission, any commissionsthatthe dealer is compelled to use to fund discounts or other incentivesto the customer are treated as paymentsto the customer when determining the transaction price and consequently are notincluded in contract acquisition costs. The transaction price is allocated between the identified obligations according to the relative standalone selling prices of the obligations. The standalone selling price of each obligation deliverable in the contractis determined according to the pricesthatthe Groupwould achieve by selling the same goods and/orservicesincluded in the obligation to a similar customer on a standalone basis; where standalone selling prices are not directly observable, estimation techniques are usedmaximising the use of external inputs. See ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 for details. Revenue isrecognised when the respective obligationsin the contract are delivered to the customer and cash collection is considered probable. Revenue for the provision ofservices,such asmobile airtime and fixed line broadband, isrecognised when the Group providesthe related service during the agreed service period. Revenue for device salesto end customersis generally recognised when the device is delivered to the end customer. For device sales made to intermediariessuch asindirect channel dealers,revenue isrecognised if control of the device hastransferred to the intermediary and the intermediary has no rightto return the device to receive a refund; otherwise revenue recognition is deferred untilsale of the device to an end customer by the intermediary or the expiry of any right ofreturn. Where refunds are issued to customersthey are deducted fromrevenue in the relevantservice period. When the Group has control of goods orservices prior to delivery to a customer, then the Group isthe principal in the sale to the customer. As a principal,receiptsfrom, and paymentsto,suppliers are reported on a gross basisin revenue and operating costs. If another party has control of goods orservices prior to transfer to a customer, then the Group is acting as an agentfor the other party and revenue in respect of the relevant obligationsisrecognised net of any related paymentsto the supplier and recognised revenue representsthemargin earned by the Group. See ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 for details. Customerstypically pay in advance for prepay mobile services and monthly for other communication services. Customerstypically pay for handsets and other equipment either up-front atthe time ofsale or over the termof the related service agreement. When revenue recognised in respect of a customer contract exceeds amountsreceived or receivable froma customer atthattime a contract asset isrecognised; contract assetswill typically be recognised for handsets or other equipment provided to customerswhere paymentisrecovered by the Group via future service fees. If amountsreceived or receivable froma customer exceed revenue recognised for a contract, for example if the Group receives an advance paymentfrom a customer, a contractliability isrecognised. When contract assets or liabilities are recognised, a financing componentmay existin the contract; thisistypically the case when a handset or other equipment is provided to a customer up-front but paymentisreceived over the term of the related service agreement, in which case the customer is deemed to have received financing. If a significantfinancing componentis provided to the customer, the transaction price isreduced and interest revenue isrecognised over the customer’s payment period using an interestrate reflecting the relevant central bank rates and customer creditrisk. Contract-related costs When costs directly relating to a specific contract are incurred prior to recognising revenue for a related obligation, and those costs enhance the ability of the Group to deliver an obligation and are expected to be recovered, then those costs are recognised on the consolidated statement of financial position asfulfilment costs and are recognised as expensesin line with the recognition ofrevenue when the related obligation is delivered. The direct and incremental costs of acquiring a contract including, for example, certain commissions payable to staff or agentsfor acquiring customers on behalf of the Group, are recognised as contract acquisition cost assetsin the consolidated statement of financial position when the related payment obligation isrecorded. Costs are recognised as an expense in line with the recognition of the related revenue that is expected to be earned by the Group; typically thisis over the customer contract period as newcommissions are payable on contractrenewal. Certain amounts payable to agents are deducted from revenue recognised (see above). Revenuedisaggregationandsegmentalincomestatementanalysis Revenue reported for the year includesrevenue from contractswith customers, comprising service and equipmentrevenue, aswell as other revenue itemsincluding revenue from leases and interestrevenue arising from transactionswith a significantfinancing component. The tables below present Revenue and Adjusted EBITDAaL for the year ended 31 March 2023 and for the comparative years ended 31 March 2022 and 31 March 2021. The comparative information for the year ended 31 March 2021 is presented under the previoussegmental reporting structure. Revenue from Total Service Equipment contracts with Other Interest segment Adjusted 31 March 2023 revenue revenue customers revenue1 revenue revenue EBITDAaL €m €m €m €m €m €m €m Germany 11,433 1,313 12,746 350 17 13,113 5,323 Italy 4,251 426 4,677 122 10 4,809 1,453 UK 5,358 1,375 6,733 58 33 6,824 1,350 Spain 3,514 307 3,821 60 26 3,907 947 Other Europe 5,005 602 5,607 117 20 5,744 1,632 Vodacom 4,849 1,034 5,883 403 28 6,314 2,159 Other Markets 3,300 530 3,830 4 – 3,834 1,145 Vantage Towers – – – 1,338 – 1,338 795 Common Functions2 530 47 577 810 – 1,387 (139) Eliminations (271) (1) (272) (1,292) – (1,564) – Group 37,969 5,633 43,602 1,970 134 45,706 14,665 Revenue from Total Service Equipment contracts with Other Interest segment Adjusted 31 March 2022 revenue revenue customers revenue1 revenue revenue EBITDAaL €m €m €m €m €m €m €m Germany 11,616 1,126 12,742 365 21 13,128 5,669 Italy 4,379 525 4,904 108 10 5,022 1,699 UK 5,154 1,333 6,487 69 33 6,589 1,395 Spain 3,714 369 4,083 73 24 4,180 957 Other Europe 5,001 528 5,529 105 19 5,653 1,606 Vodacom 4,635 950 5,585 384 24 5,993 2,125 Other Markets 3,420 404 3,824 6 – 3,830 1,335 Vantage Towers – – – 1,252 – 1,252 619 Common Functions2 522 53 575 838 1 1,414 (197) Eliminations (238) (1) (239) (1,242) – (1,481) – Group 38,203 5,287 43,490 1,958 132 45,580 15,208 Revenue from Total Service Equipment contracts with Other Interest segment Adjusted 31 March 2021 revenue revenue customers revenue1 revenue revenue EBITDAaL €m €m €m €m €m €m €m Germany 11,520 1,055 12,575 380 29 12,984 5,634 Italy 4,458 446 4,904 97 13 5,014 1,597 UK 4,848 1,206 6,054 44 53 6,151 1,367 Spain 3,788 292 4,080 64 22 4,166 1,044 Other Europe 4,859 549 5,408 124 17 5,549 1,760 Vodacom 4,083 800 4,883 282 16 5,181 1,873 Other Markets 3,312 441 3,753 12 – 3,765 1,228 Common Functions2 470 36 506 862 – 1,368 (117) Eliminations (197) (1) (198) (171) – (369) – Group 37,141 4,824 41,965 1,694 150 43,809 14,386 Notes: 1 Otherrevenue includeslease revenue recognised underIFRS 16 ‘Leases’ (see note 20 ‘Leases’). 2 Comprises centralteams and businessfunctions. The total future revenue from the remaining term of Group’s contractswith customersfor performance obligations not yet delivered to those customers at 31 March 2023 is €18,521 million (2022: €20,013 million; 2021: €21,038 million); of which €11,941million (2022: €12,913 million; 2021: €14,110 million) is expected to be recognised within the next year and themajority of the remaining amountin the following 12 months. 135 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 2.Revenuedisaggregationandsegmentalanalysis(continued) Segmentalanalysis The Group’s operating segments are established on the basis of those components of the Group that are evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Group has determined the chief operating decision maker to be its Chief Executive. The Group has a single group ofsimilarservices and products, being the supply of communicationsservices and related products. Vantage Towers A.G. (‘Vantage Towers’) has been presented as a separate segment of the Group since 1 April 2021, following itsIPO in March 2021; the segmental presentation for the year ended 31 March 2021 was notrevised. Vantage Towers continued to be reported as a separate segment until the time of its disposal. From1 April 2023, the Groupwillrevise itssegments by moving Vodafone Egyptfrom the Other Marketssegmentto the Vodacom segmentto reflectthe effective date of changesmade to the Group’sinternalreporting structure, following the transfer of Vodafone Egyptto the Vodacom group in December 2022. Revenue is attributed to a country based on the location of the Group company reporting the revenue. Transactions between operating segments are charged at arm’s-length prices. With the exception of Vodacom,which is a legal entity encompassing South Africa and certain othersmaller African markets, and Vantage Towers, which comprises companies providingmobile tower infrastructure in a number of European markets,segmentinformation is primarily provided on the basis of geographic areas, being the basis onwhich the Groupmanagesitsworldwide interests. The operating segmentsfor Germany, Italy, UK, Spain and Vodacom are individuallymaterial for the Group and are each reporting segmentsfor which certain financial information is provided. In addition, the Vantage Towers operating segmentwas a separately listed part of the Group until its disposal into a joint venture on 22 March 2023 (see note 27 ‘Acquisitions and disposals’) and is presented as a reporting segment asitis considered to provide useful information to users of the financialstatements. The aggregation ofsmaller operating segmentsinto the Other Europe andOther Marketsreporting segmentsreflects, in the opinion of management, the similar local market economic characteristics and regulatory environments for each of those operating segments aswell asthe similar products and servicessold and comparable classes of customers. In the case of the Other Europe region (comprising Albania, Czech Republic, Greece,Hungary (to the date of its disposal), Ireland, Portugal and Romania), thislargely reflectsmembership or a close association with the European Union, while theOther Marketssegment(comprising Egypt, Ghana (to the date of its disposal) and Turkey) largely includes developing economieswith lessstable economic or regulatory environments. Common Functionsis a separate reporting segment and comprises activities which are undertaken primarily in central Group entitiesthat do notmeetthe criteria for aggregation with other reporting segments. A reconciliation of adjusted EBITDAaL, the Group’s measure ofsegment profit, to the Group’s profit or loss before taxation for the financial year is shown below. Re-presented1 Re-presented1 2023 2022 2021 €m €m €m Adjusted EBITDAaL 14,665 15,208 14,386 Restructuring costs (587) (346) (356) Interest on lease liabilities 436 398 374 Loss on disposal of owned assets (36) (28) (30) Depreciation and amortisation on owned assets (9,649) (9,858) (10,187) Share of results of equity accounted associates and joint ventures 433 389 374 Impairment loss2 (64) – – Other income 9,098 50 568 Operating profit 14,296 5,813 5,129 Investment income 248 254 245 Finance costs (1,728) (1,964) (1,027) Profit before taxation 12,816 4,103 4,347 Notes: 1 The resultsforthe years ended 31March 2022 and 31 March 2021 have been re-presented to reflectthatIndus Towers Limited is no longerreported as held forsale. In the year ended 31 March 2022, the share of result of equity accounted associates and joint ventures hasincreased by €178 million, otherincome has decreased by €29million and operating profit has increased by €149 million compared to amounts previously reported. In the year ended 31 March 2021, the share of result of equity accounted associates and joint ventures hasincreased by €32 million, operating profit hasincreased by €32 million and investmentincome has decreased by €85 million compared to amounts previously reported. See note 7 ‘Discontinued operations and assets held forsale’ formore information. 2 The FY23 impairmentlossrelatesto Indus Towers and isincluded in the Other Marketssegment. See overleaf andNote 4 ‘Impairmentlosses’. 136 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 2.Revenuedisaggregationandsegmentalanalysis(continued) Segmentalanalysis The Group’s operating segments are established on the basis of those components of the Group that are evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Group has determined the chief operating decision maker to be its Chief Executive. The Group has a single group ofsimilarservices and products, being the supply of communicationsservices and related products. Vantage Towers A.G. (‘Vantage Towers’) has been presented as a separate segment of the Group since 1 April 2021, following itsIPO in March 2021; the segmental presentation for the year ended 31 March 2021 was notrevised. Vantage Towers continued to be reported as a separate segment until the time of its disposal. From1 April 2023, the Groupwillrevise itssegments by moving Vodafone Egyptfrom the Other Marketssegmentto the Vodacom segmentto reflectthe effective date of changesmade to the Group’sinternalreporting structure, following the transfer of Vodafone Egyptto the Vodacom group in December 2022. Revenue is attributed to a country based on the location of the Group company reporting the revenue. Transactions between operating segments are charged at arm’s-length prices. With the exception of Vodacom,which is a legal entity encompassing South Africa and certain othersmaller African markets, and Vantage Towers, which comprises companies providingmobile tower infrastructure in a number of European markets,segmentinformation is primarily provided on the basis of geographic areas, being the basis onwhich the Groupmanagesitsworldwide interests. The operating segmentsfor Germany, Italy, UK, Spain and Vodacom are individuallymaterial for the Group and are each reporting segmentsfor which certain financial information is provided. In addition, the Vantage Towers operating segmentwas a separately listed part of the Group until its disposal into a joint venture on 22 March 2023 (see note 27 ‘Acquisitions and disposals’) and is presented as a reporting segment asitis considered to provide useful information to users of the financialstatements. The aggregation ofsmaller operating segmentsinto the Other Europe andOther Marketsreporting segmentsreflects, in the opinion of management, the similar local market economic characteristics and regulatory environments for each of those operating segments aswell asthe similar products and servicessold and comparable classes of customers. In the case of the Other Europe region (comprising Albania, Czech Republic, Greece,Hungary (to the date of its disposal), Ireland, Portugal and Romania), thislargely reflectsmembership or a close association with the European Union, while theOther Marketssegment(comprising Egypt, Ghana (to the date of its disposal) and Turkey) largely includes developing economieswith lessstable economic or regulatory environments. Common Functionsis a separate reporting segment and comprises activities which are undertaken primarily in central Group entitiesthat do notmeetthe criteria for aggregation with other reporting segments. A reconciliation of adjusted EBITDAaL, the Group’s measure ofsegment profit, to the Group’s profit or loss before taxation for the financial year is shown below. Re-presented1 Re-presented1 2023 2022 2021 €m €m €m Adjusted EBITDAaL 14,665 15,208 14,386 Restructuring costs (587) (346) (356) Interest on lease liabilities 436 398 374 Loss on disposal of owned assets (36) (28) (30) Depreciation and amortisation on owned assets (9,649) (9,858) (10,187) Share of results of equity accounted associates and joint ventures 433 389 374 Impairment loss2 (64) – – Other income 9,098 50 568 Operating profit 14,296 5,813 5,129 Investment income 248 254 245 Finance costs (1,728) (1,964) (1,027) Profit before taxation 12,816 4,103 4,347 Notes: 1 The resultsforthe years ended 31March 2022 and 31 March 2021 have been re-presented to reflectthatIndus Towers Limited is no longerreported as held forsale. In the year ended 31 March 2022, the share of result of equity accounted associates and joint ventures hasincreased by €178 million, otherincome has decreased by €29million and operating profit has increased by €149 million compared to amounts previously reported. In the year ended 31 March 2021, the share of result of equity accounted associates and joint ventures hasincreased by €32 million, operating profit hasincreased by €32 million and investmentincome has decreased by €85 million compared to amounts previously reported. See note 7 ‘Discontinued operations and assets held forsale’ formore information. 2 The FY23 impairmentlossrelatesto Indus Towers and isincluded in the Other Marketssegment. See overleaf andNote 4 ‘Impairmentlosses’. Segmentalassets The tables below presentthe segmental assetsfor the year ended 31 March 2023 and for the comparative years ended 31 March 2022 and 31 March 2021. The comparative information for the year ended 31 March 2021 is presented under the previoussegmentalreporting structure. Non-current Capital Right-of-use Other additions to Depreciation and 31 March 2023 assets1 additions2 asset additions intangible assets3 amortisation Impairment loss €m €m €m €m €m €m Germany 43,878 2,701 2,145 2 4,154 – Italy 10,235 833 916 5 1,970 – UK 6,629 892 1,639 – 1,562 – Spain 6,331 565 742 8 1,393 – Other Europe 7,815 927 1,104 151 1,363 – Vodacom 5,810 862 219 260 1,027 – Other Markets 2,488 495 177 13 830 64 Vantage Towers – 551 318 – 326 – Common Functions 2,013 839 127 – 993 – Group 85,199 8,665 7,387 439 13,618 64 Non-current Capital Right-of-use Other additions to Depreciation and 31 March 2022 assets1 additions2 asset additions intangible assets3 amortisation Impairment loss €m €m €m €m €m €m Germany 43,190 2,670 795 – 3,981 – Italy 10,519 840 670 255 1,929 – UK 6,226 832 580 229 1,905 – Spain 6,433 676 422 291 1,499 – Other Europe 8,548 1,009 502 126 1,511 – Vodacom 6,383 853 187 – 920 – Other Markets 2,467 530 229 – 598 – Vantage Towers 8,179 366 320 – 523 – Common Functions 2,103 844 123 – 979 – Group 94,048 8,620 3,828 901 13,845 – Non-current Capital Right-of-use Other additions to Depreciation and 31 March 2021 assets1 additions2 asset additions intangible assets3 amortisation Impairment loss €m €m €m €m €m €m Germany 47,563 2,772 1,133 1 4,836 – Italy 10,707 805 758 17 2,025 – UK 7,968 822 1,138 – 2,202 – Spain 7,213 772 700 9 1,579 – Other Europe 10,369 968 1,016 431 1,727 – Vodacom 5,839 703 174 – 872 – Other Markets 2,988 512 247 439 666 – Common Functions 2,145 829 140 – 194 – Group 94,792 8,183 5,306 897 14,101 – Notes: 1 Comprises goodwill, otherintangible assets and property, plant and equipment. 2 Includes additionsto property, plant and equipment(excluding right-of-use assets), computersoftware and development costs, reportedwithin Intangible assets. 3 Includes additionsto licences and spectrumand customer base acquisitions. 137 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 3.Operatingprofit Detailedbelowarethekeyamounts recognisedinarrivingatouroperatingprofit Re-presented1 Re-presented1 2023 2022 2021 €m €m €m Amortisation of intangible assets (Note 10) 4,031 4,044 4,421 Depreciation of property, plant and equipment (Note 11): Owned assets 5,627 5,857 5,766 Leased assets 3,960 3,944 3,914 Impairment loss (Note 4) 64 – – Staff costs (Note 24) 5,842 5,334 5,157 Amounts related to inventory included in cost of sales 5,950 5,671 5,160 Own costs capitalised attributable to the construction or acquisition of property, plant and equipment (1,267) (1,092) (995) Loss on disposal of Vodafone Hungary2 (Note 27) 69 – – Gain on disposal of Vodafone Ghana2 (Note 27) (689) – – Gain on disposal of Vantage Towers2 (Note 27) (8,607) – – Gain on disposal of Indus Towers Limited1,2 – 81 – Pledge arrangements in respect of Indus Towers Limited2 (Note 29) – (15) (429) Net gain on formation of TPG Telecom2 (Note 12) – – 1,043 Net gain on formation of Indus Towers Limited2 (Note 12) – – 292 Settlement of tender offer to KDG shareholders2 – – (204) Notes: 1 The resultsforthe years ended 31March 2022 and 31 March 2021 have been re-presented to reflectthatIndus Towers Limited is no longerreported as held forsale. In the year ended 31 March 2022, the gain on disposal of Indus Towers Limited has decreased by €29 million compared to the amount previously reported. There is no impact on the amount previously reported forthe year ended 31 March 2021. See note 7 ‘Discontinued operations and assets held forsale’ formore information. 2 Included in otherincome in the consolidated income statement. The total remuneration of the Group’s auditor, Ernst & Young LLP and other member firms of Ernst &Young Global Limited, forservices provided to the Group during the year ended 31 March 2023 is analysed below. 2023 2022 2021 €m €m €m Parent company 5 4 3 Subsidiaries 22 19 18 Audit fees1 27 23 21 Audit-related2 3 2 – Vantage Towers IPO3 – – 11 Non-audit fees 3 2 11 Total fees 30 25 32 Notes: 1 Includesfeesin connection with the interim review, preliminary announcement and controls auditrequired under Section 404 ofthe Sarbanes OxleyAct. In total this amounted to €1 million in each ofthe years presented. 2 Feesfor (i)special purpose audits and (ii)statutory and regulatory filings during the year. 3 Feesincurred forIPOservicesrelating to the IPOof Vantage Towers A.G. on 18 March 2021. 138 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 3.Operatingprofit Detailedbelowarethekeyamounts recognisedinarrivingatouroperatingprofit Re-presented1 Re-presented1 2023 2022 2021 €m €m €m Amortisation of intangible assets (Note 10) 4,031 4,044 4,421 Depreciation of property, plant and equipment (Note 11): Owned assets 5,627 5,857 5,766 Leased assets 3,960 3,944 3,914 Impairment loss (Note 4) 64 – – Staff costs (Note 24) 5,842 5,334 5,157 Amounts related to inventory included in cost of sales 5,950 5,671 5,160 Own costs capitalised attributable to the construction or acquisition of property, plant and equipment (1,267) (1,092) (995) Loss on disposal of Vodafone Hungary2 (Note 27) 69 – – Gain on disposal of Vodafone Ghana2 (Note 27) (689) – – Gain on disposal of Vantage Towers2 (Note 27) (8,607) – – Gain on disposal of Indus Towers Limited1,2 – 81 – Pledge arrangements in respect of Indus Towers Limited2 (Note 29) – (15) (429) Net gain on formation of TPG Telecom2 (Note 12) – – 1,043 Net gain on formation of Indus Towers Limited2 (Note 12) – – 292 Settlement of tender offer to KDG shareholders2 – – (204) Notes: 1 The resultsforthe years ended 31March 2022 and 31 March 2021 have been re-presented to reflectthatIndus Towers Limited is no longerreported as held forsale. In the year ended 31 March 2022, the gain on disposal of Indus Towers Limited has decreased by €29 million compared to the amount previously reported. There is no impact on the amount previously reported forthe year ended 31 March 2021. See note 7 ‘Discontinued operations and assets held forsale’ formore information. 2 Included in otherincome in the consolidated income statement. The total remuneration of the Group’s auditor, Ernst & Young LLP and other member firms of Ernst &Young Global Limited, forservices provided to the Group during the year ended 31 March 2023 is analysed below. 2023 2022 2021 €m €m €m Parent company 5 4 3 Subsidiaries 22 19 18 Audit fees1 27 23 21 Audit-related2 3 2 – Vantage Towers IPO3 – – 11 Non-audit fees 3 2 11 Total fees 30 25 32 Notes: 1 Includesfeesin connectionwith the interim review, preliminary announcement and controls auditrequired under Section 404 ofthe Sarbanes OxleyAct. In total this amounted to €1 million in each ofthe years presented. 2 Feesfor (i)special purpose audits and (ii)statutory and regulatory filings during the year. 3 Feesincurred forIPOservicesrelating to the IPOof Vantage Towers A.G. on 18 March 2021. 4.Impairmentlosses Impairment occurs when the carrying value of assetsis greater than the present value of the net cash flowsthey are expected to generate. We review the carrying value of assetsfor each country inwhichwe operate at least annually. For further details of our impairment review processsee ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 ‘Basis of preparation’ to the consolidated financialstatements. Accountingpolicies Goodwill Goodwill is notsubjectto amortisation butistested for impairment annually or whenever there is an indication thatthe assetmay be impaired. For the purpose of impairmenttesting, assets are grouped atthe lowestlevelsfor which there are separately identifiable cash flows, known as cash-generating units. The determination of the Group’s cash-generating unitsis primarily based on the geographic area where the Group supplies communicationsservices and products. If cash flowsfrom assetswithin one jurisdiction are largely independent of the cash flowsfrom other assets in thatsame jurisdiction and managementmonitors performance separately, multiple cash-generating units are identified within that geographic area. If the recoverable amount of the cash-generating unitislessthan the carrying amount of the unit, the impairmentlossis allocated firstto reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each assetin the unit. Impairment lossesrecognised for goodwill are notreversible in subsequent periods. The recoverable amountisthe higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discountrate thatreflects currentmarket assessments ofthe time value ofmoney and the risks specific to the assetfor which the estimates of future cash flows have not been adjusted. Management preparesformal five year plansfor the Group’s cash-generating units, which are the basisfor the value in use calculations. Property,plantandequipment,finite livedintangibleassetsandequity accountedinvestments At each reporting period date, the Group reviewsthe carrying amounts of its property, plant and equipment, finite lived intangible assets and equity-accounted investmentsto determine whether there is any indication thatthose assets have suffered an impairmentloss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairmentloss. Where itis not possible to estimate the recoverable amount of an individual asset, the Group estimatesthe recoverable amount of the cash-generating unittowhich the asset belongs. If the recoverable amount of an asset or cash-generating unitis estimated to be lessthan its carrying amount,the carrying amount of the asset or cash-generating unitisreduced to itsrecoverable amount and an impairmentlossisrecognised immediately in the income statement. Where there has been a change in the estimates used to determine recoverable amount and an impairmentlosssubsequently reverses, the carrying amount of the asset or cash-generating unitisincreased to the revised estimate of itsrecoverable amount, notto exceed the carrying amountthat would have been determined had no impairment loss been recognised for the asset or cash-generating unitin prior years and an impairmentloss reversal isrecognised immediately in the consolidated income statement. Impairmentloss Following our annual impairmentreview, the Group recognised an impairment lossin the consolidated income statement within operating profit relating to our investmentin Indus Towers of €64 million in the current year. Further detail on eventsthatled to the recognition of thislossis included on page 141.No impairments were recognised for any other cash-generating unitsin the three years ended 31 March 2023. Goodwill The remaining carrying value of goodwill at 31 March was asfollows: 2023 2022 €m €m Germany 20,335 20,335 Italy 2,481 2,481 Vantage Towers Germany – 2,565 Other 4,799 6,503 27,615 31,884 139 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 4.Impairmentlosses(continued) Keyassumptionsusedinthevalueinusecalculations The key assumptions used in determining the value in use are: Assumption How determined Projected adjusted EBITDAaL Projected adjusted EBITDAaL has been based on past experience adjusted for the following: - In Europe, mobile revenue is expected to benefit from increased usage as customers transition to higher data bundles, and new products and services are introduced. Fixed revenue is expected to continue to grow as penetration is increased and more products and services are sold to customers; - Outside of Europe, revenue is expected to continue to grow as the penetration of faster data-enabled devices rises along with higher data bundle attachment rates, and new products and services are introduced; and - Margins are expected to be impacted by negative factors such as the cost of acquiring and retaining customers in increasingly competitive markets and by positive factors such as the efficiencies expected from the implementation of Group initiatives. Projected capital expenditure The cash flow forecasts for capital expenditure are based on past experience and include the ongoing capital expenditure required to maintain our networks, provide products and services in line with customer expectations, including of higher data volumes and speeds, and to meet the population coverage requirements of certain of the Group’s licences. In Europe, capital expenditure is required to roll out capacity-building next generation 5G and gigabit networks. Outside of Europe, capital expenditure will be required for the continued rollout of current and next generation mobile networks in emerging markets. Capital expenditure includes cash outflows for the purchase of owned property, plant and equipment and computer software. Projected licence and spectrum payments To enable the continued provision of products and services, the cash flow forecasts for licence and spectrum payments for each relevant cash-generating unit include amounts for expected renewals and newly available spectrum. Beyond the five year forecast period, a long-run cost of spectrum is assumed. Long-term growth rate For the purposes of the Group’s value in use calculations, a long‑term growth rate into perpetuity is applied immediately at the end of the five year forecast period and is based on the lower of: - the nominal GDP growth rate forecasts for the country of operation; and - the long-term compound annual growth rate in adjusted EBITDAaL as estimated by management. Long-term compound annual growth rates determined by management may be lower than forecast nominal GDP growth rates due to the following market-specific factors: competitive intensity levels, maturity of business, regulatory environment or sector-specific inflation expectations. Pre-tax discount rate The pre-tax discount rate for each cash-generating unit is derived such that when applied to pre-tax cash flows it gives the same result as when the observable post-tax weighted average cost of capital is applied to post-tax cash flows. The assumptions used to develop discount rates for each cash-generating unit are benchmarked to externally available data. - The risk free rate is derived from an average yield of a ten year bond issued by the government in each cash-generating unit’s respective country of operations. - The forward-looking equity market risk premium (an investor’s required rate return over and above a risk free rate) is based on studies by independent economists, the long-term average equity market risk premium and the market risk premiums typically used by valuation practitioners. - The asset beta reflecting the systematic risk of the telecommunications segment relative to the market as a whole is determined from betas observed for comparable listed telecommunications companies. - The region-specific leverage ratios are estimated from ratios observed for comparable listed telecommunications companies. Each cash-generating unit’s discount rate is determined in nominal terms in order to match their nominal estimates of future cash flows. Rising risk free interest rates and lower asset betas have, respectively, increased and decreased the cash-generating unit discount rates in the current year. 140 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 4.Impairmentlosses(continued) Keyassumptionsusedinthevalueinusecalculations The key assumptions used in determining the value in use are: Assumption How determined Projected adjusted EBITDAaL Projected adjusted EBITDAaL has been based on past experience adjusted for the following: - In Europe, mobile revenue is expected to benefit from increased usage as customers transition to higher data bundles, and new products and services are introduced. Fixed revenue is expected to continue to grow as penetration is increased and more products and services are sold to customers; - Outside of Europe, revenue is expected to continue to grow as the penetration of faster data-enabled devices rises along with higher data bundle attachment rates, and new products and services are introduced; and - Margins are expected to be impacted by negative factors such as the cost of acquiring and retaining customers in increasingly competitive markets and by positive factors such as the efficiencies expected from the implementation of Group initiatives. Projected capital expenditure The cash flow forecasts for capital expenditure are based on past experience and include the ongoing capital expenditure required to maintain our networks, provide products and services in line with customer expectations, including of higher data volumes and speeds, and to meet the population coverage requirements of certain of the Group’s licences. In Europe, capital expenditure is required to roll out capacity-building next generation 5G and gigabit networks. Outside of Europe, capital expenditure will be required for the continued rollout of current and next generation mobile networks in emerging markets. Capital expenditure includes cash outflows for the purchase of owned property, plant and equipment and computer software. Projected licence and spectrum payments To enable the continued provision of products and services, the cash flow forecasts for licence and spectrum payments for each relevant cash-generating unit include amounts for expected renewals and newly available spectrum. Beyond the five year forecast period, a long-run cost of spectrum is assumed. Long-term growth rate For the purposes of the Group’s value in use calculations, a long‑term growth rate into perpetuity is applied immediately at the end of the five year forecast period and is based on the lower of: - the nominal GDP growth rate forecasts for the country of operation; and - the long-term compound annual growth rate in adjusted EBITDAaL as estimated by management. Long-term compound annual growth rates determined by management may be lower than forecast nominal GDP growth rates due to the following market-specific factors: competitive intensity levels, maturity of business, regulatory environment or sector-specific inflation expectations. Pre-tax discount rate The pre-tax discount rate for each cash-generating unit is derived such that when applied to pre-tax cash flows it gives the same result as when the observable post-tax weighted average cost of capital is applied to post-tax cash flows. The assumptions used to develop discount rates for each cash-generating unit are benchmarked to externally available data. - The risk free rate is derived from an average yield of a ten year bond issued by the government in each cash-generating unit’s respective country of operations. - The forward-looking equity market risk premium (an investor’s required rate return over and above a risk free rate) is based on studies by independent economists, the long-term average equity market risk premium and the market risk premiums typically used by valuation practitioners. - The asset beta reflecting the systematic risk of the telecommunications segment relative to the market as a whole is determined from betas observed for comparable listed telecommunications companies. - The region-specific leverage ratios are estimated from ratios observed for comparable listed telecommunications companies. Each cash-generating unit’s discount rate is determined in nominal terms in order to match their nominal estimates of future cash flows. Rising risk free interest rates and lower asset betas have, respectively, increased and decreased the cash-generating unit discount rates in the current year. Yearended31March2023 The Group performsits annual impairment testfor goodwill and indefinite lived intangible assets at 31 March and when there is an indicator of impairment of an asset. At each reporting period date judgementis exercised bymanagementin determiningwhether any internal or external sources of information observed are indicative thatthe carrying amount of any of the Group’s cash generating unitsis notrecoverable. For changes to the Group's cash-generating unitsin the current yearsee note 27 'Acquisitions and disposals'. Climatechange As a large owner of infrastructure and consumer of energy, the Group has exposure to climate change related riskssuch as energy costincreases, asset damage and service disruption. The long range plans used in the Group’simpairmenttesting include forecast energy costs and other costs that are embedded in the planning processto deliver the Group’s zero carbon targets. The long range plans also include capital expenditure in relation to the Group’s use of durable and energy efficientinfrastructure and the costs of the Group’s extensive and ongoing network maintenance programme. Climate change has not had a material impact on the outcome of the Group’simpairment testing. Indus Towers Limited The Group’sinvestmentin Indus Towers wastested for impairment at 31 March 2023 following a decline in Indus Towers’ quoted share price in the current year. Management concluded thatfair value less costs of disposal isthe appropriate basisto determine the recoverable amount of the Group’sinvestment. Indus Towers’share price is observable in a quotedmarket and is considered a level 1 input under the IFRS 13 fair value hierarchy. The share price of INR143.00 pershare implied a recoverable amount of INR 81 billion (€0.9 billion)which waslower than the carrying value of the investment atthe same date. An impairment charge of €64million wasrecognised to reduce the carrying value of the Group’s investmentto the recoverable amount in the Group’s consolidated statement of financial position. Valueinuse assumptions The table below shows key assumptions used in the value in use calculations, and separately presented cash-generating unitsfor which the carrying amount of goodwill issignificantin comparison with the Group’stotal carrying amount of goodwill: Assumptions used in value in use calculations Germany Italy % % Pre-tax discount rate 7.8 8.9 Long-term growth rate 0.6 1.5 Projected adjusted EBITDAaL CAGR1 1.8 1.0 Projected capital expenditure2 19.4-19.8 16.5-17.9 Sensitivity analysis The estimated recoverable amounts of the Group’s operationsin Germany, Italy, the UK, and Spain exceed their carrying values by €3.2 billion, €0.2 billion, €1.3 billion, and €0.4 billion respectively. If the assumptions used in the impairmentreview were changed to a greater extentthan as presented in the following table, the changes would, in isolation, lead to an impairmentloss being recognised for the year ended 31 March 2023. Change required for carrying value to equal recoverable amount Germany Italy UK Spain pps pps pps pps Pre-tax discount rate 0.6 0.2 1.6 0.5 Long-term growth rate (0.6) (0.2) (1.9) (0.6) Projected adjusted EBITDAaL CAGR1 (1.8) (0.5) (4.1) (1.5) Projected capital expenditure2 5.5 0.9 4.2 2.2 Notes: 1 Projected adjusted EBITDAaL CAGR is expressed asthe compound annual growth ratesin the initial five yearsfor all cash-generating units ofthe plans used forimpairmenttesting. 2 Projected capital expenditure,which excludeslicences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five yearsfor all cash-generating units ofthe plans used forimpairmenttesting. 141 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 4.Impairmentlosses(continued) For the Group’s operationsin Italy and Spain management has prepared the following sensitivity analysisfor changesin pre-tax discount rate and projected adjusted EBITDAaL CAGR1 assumptions. The associated impact of the change in each key assumption does not consider any consequential impact on other assumptions used in the impairmentreview. Recoverable amount less carrying value Italy Spain €bn €bn Base case as at 31 March 2023 0.2 0.4 Change in pre-tax discount rate Decrease by 1pps 1.4 1.3 Increase by 1pps (0.8) (0.3) Change in projected adjusted EBITDAaL CAGR1 Decrease by 5pps (1.6) (0.8) Increase by 5pps 2.3 1.8 Note: 1 Projected adjusted EBITDAaL CAGR is expressed asthe compound annual growth ratesin the initial five yearsfor all cash-generating units ofthe plans used forimpairmenttesting. Yearended31March2022 The disclosures below for the year ended 31 March 2022 are as previously disclosed in the 31 March 2022 Annual Report. The Group performsits annual impairmenttestfor goodwill and indefinite lived intangible assets at 31 March and when there is an indicator of impairment of an asset. At each reporting period date judgementis exercised bymanagement in determiningwhether any internal or external sources of information observed are indicative that the carrying amount of any of the Group’s cash-generating unitsis notrecoverable. As a large owner of infrastructure and consumer of energy, the Group has exposure to climate change related riskssuch as energy costincreases, asset damage and service disruption. The long range plans used in the Group’simpairmenttesting include forecast energy costs and other costs that are embedded in the planning processto deliver the Group’s zero carbon targets. The long range plans also include capital expenditure in relation to the Group’s use of durable and energy efficientinfrastructure and the costs of the Group’s extensive and ongoing network maintenance programme. Furthermore, the Groupwill continue to develop strong reactive initiativesto manage the unpredictable impacts of future climate-related risks. Climate change, therefore, has not had a material impact on the outcome of the Group’simpairmenttesting and the Groupwill continue to refine its approach tomodelling climate-related risks and opportunitiesin the value in use calculations. Asthe war in Ukraine continues, itis challenging to predictthe full extent and duration of itsimpact on the economy and the Group’s businesses. However, to assess a potential impact of this on the Group’simpairmenttesting, management prepared scenario analysis based on adjustmentsto the long range plansfor high level estimates of marketrisksimpacted by the war. This analysis did notindicate a risk of impairment at 31 March 2022. Managementwill update the cash flows and assumptions used in the Group’simpairment testing atfuture reporting dateswith latest best estimates. No impairmentswere recognised forthe Group’s cash-generating units during the year to 31 March 2022. Valueinuse assumptions The table below shows key assumptions used in the value in use calculations, and separately presented cash-generating unitsfor which the carrying amount of goodwill issignificantin comparison with the Group’stotal carrying amount of goodwill: Assumptions used in value in use calculations Germany Italy Vantage Towers Germany Other % % % % Pre-tax discount rate 7.4 9.3 6.1 6.2-22.5 Long-term growth rate 0.5 1.5 1.5 1.0-8.9 Projected adjusted EBITDAaL CAGR1 (0.1) (0.2) 11.0 (5.4)-13.0 Projected capital expenditure2 19.6-21.8 15.0-16.3 32.0-62.1 10.0-51.4 Notes: 1 Projected adjusted EBITDAaL CAGR is expressed asthe compound annual growth ratesin the initial five yearsfor all cash-generating units ofthe plans used forimpairment testing. Forthe purposes ofthis disclosure, Italy’s adjusted EBITDAaL forthe year ended 31 March 2022 excludesthe TIM settlement. 2 Projected capital expenditure,which excludeslicences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five yearsfor all cash-generating units ofthe plans used forimpairmenttesting. 142 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 4.Impairmentlosses(continued) For the Group’s operationsin Italy and Spain management has prepared the following sensitivity analysisfor changesin pre-tax discount rate and projected adjusted EBITDAaL CAGR1 assumptions. The associated impact of the change in each key assumption does not consider any consequential impact on other assumptions used in the impairmentreview. Recoverable amount less carrying value Italy Spain €bn €bn Base case as at 31 March 2023 0.2 0.4 Change in pre-tax discount rate Decrease by 1pps 1.4 1.3 Increase by 1pps (0.8) (0.3) Change in projected adjusted EBITDAaL CAGR1 Decrease by 5pps (1.6) (0.8) Increase by 5pps 2.3 1.8 Note: 1 Projected adjusted EBITDAaL CAGR is expressed asthe compound annual growth ratesin the initial five yearsfor all cash-generating units ofthe plans used forimpairmenttesting. Yearended31March2022 The disclosures below for the year ended 31 March 2022 are as previously disclosed in the 31 March 2022 Annual Report. The Group performsits annual impairmenttestfor goodwill and indefinite lived intangible assets at 31 March and when there is an indicator of impairment of an asset. At each reporting period date judgementis exercised bymanagement in determiningwhether any internal or external sources of information observed are indicative that the carrying amount of any of the Group’s cash-generating unitsis notrecoverable. As a large owner of infrastructure and consumer of energy, the Group has exposure to climate change related riskssuch as energy costincreases, asset damage and service disruption. The long range plans used in the Group’simpairmenttesting include forecast energy costs and other costs that are embedded in the planning processto deliver the Group’s zero carbon targets. The long range plans also include capital expenditure in relation to the Group’s use of durable and energy efficientinfrastructure and the costs of the Group’s extensive and ongoing network maintenance programme. Furthermore, the Groupwill continue to develop strong reactive initiativesto manage the unpredictable impacts of future climate-related risks. Climate change, therefore, has not had a material impact on the outcome of the Group’simpairmenttesting and the Groupwill continue to refine its approach tomodelling climate-related risks and opportunitiesin the value in use calculations. Asthe war in Ukraine continues, itis challenging to predictthe full extent and duration of itsimpact on the economy and the Group’s businesses. However, to assess a potential impact of this on the Group’simpairmenttesting, management prepared scenario analysis based on adjustmentsto the long range plansfor high level estimates of marketrisksimpacted by the war. This analysis did notindicate a risk of impairment at 31 March 2022. Managementwill update the cash flows and assumptions used in the Group’simpairment testing atfuture reporting dateswith latest best estimates. No impairmentswere recognised forthe Group’s cash-generating units during the year to 31 March 2022. Valueinuse assumptions The table below shows key assumptions used in the value in use calculations, and separately presented cash-generating unitsfor which the carrying amount of goodwill issignificantin comparison with the Group’stotal carrying amount of goodwill: Assumptions used in value in use calculations Germany Italy Vantage Towers Germany Other % % % % Pre-tax discount rate 7.4 9.3 6.1 6.2-22.5 Long-term growth rate 0.5 1.5 1.5 1.0-8.9 Projected adjusted EBITDAaL CAGR1 (0.1) (0.2) 11.0 (5.4)-13.0 Projected capital expenditure2 19.6-21.8 15.0-16.3 32.0-62.1 10.0-51.4 Notes: 1 Projected adjusted EBITDAaL CAGR is expressed asthe compound annual growth ratesin the initial five yearsfor all cash-generating units ofthe plans used forimpairment testing. Forthe purposes ofthis disclosure, Italy’s adjusted EBITDAaL forthe year ended 31 March 2022 excludesthe TIM settlement. 2 Projected capital expenditure,which excludeslicences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five yearsfor all cash-generating units ofthe plans used forimpairmenttesting. Sensitivity analysis The estimated recoverable amounts of the Group’s operationsin Germany, Italy, the UK and Spain exceed their carrying values by €7.3 billion, €0.4 billion, €1.3 billion and €0.1 billion respectively. However, if the assumptions used in the impairmentreviewwere changed to a greater extentthan as presented in the following table, the changeswould, in isolation, lead to an impairment loss being recognised for the year ended 31 March 2022. Change required for carrying value to equal recoverable amount Germany Italy UK Spain pps pps pps pps Pre-tax discount rate 1.4 0.3 1.3 0.1 Long-term growth rate (1.4) (0.3) (1.5) (0.1) Projected adjusted EBITDAaL CAGR1 (4.1) (0.9) (3.1) (0.4) Projected capital expenditure2 12.6 1.8 4.3 0.5 For the Group’s operationsin Germany, Italy, the UK and Spain management has considered the following reasonably possible changesin pre-tax discountrate, long-termgrowth rate and projected adjusted EBITDAaL CAGR1 assumptions, leaving all other assumptions unchanged. The sensitivity analysis presented is prepared on the basisthatthe reasonably possible change in each key assumption would not have a consequential impact on other assumptions used in the impairmentreview. The associated impact on the impairment assessment is presented in the table below. Management has concluded that no reasonably possible or foreseeable change in projected capital expenditure2 would cause the difference between the carrying value and recoverable amountfor any cash generating unitto be materially differentto the base case disclosed below. Recoverable amount less carrying value Germany Italy UK Spain €bn €bn €bn €bn Base case as at 31 March 2022 7.3 0.4 1.3 0.1 Change in pre-tax discount rate Decrease by 1pps 14.9 1.7 2.8 1.0 Increase by 1pps 1.7 (0.7) 0.3 (0.6) Change in long-term growth rate Decrease by 1pps 1.6 (0.6) 0.4 (0.5) Increase by 1pps 15.6 1.7 2.8 0.9 Change in projected adjusted EBITDAaL CAGR1 Decrease by 5pps (1.4) (1.6) (0.7) (1.1) Increase by 5pps 17.9 2.8 3.8 1.5 Note: 1 Projected adjusted EBITDAaL CAGR is expressed asthe compound annual growth ratesin the initial five yearsfor all cash-generating units ofthe plans used forimpairmenttesting. Forthe purposes ofthis disclosure, Italy’s adjusted EBITDAaL forthe year ended 31 March 2022 excludesthe TIM settlement. 2 Projected capital expenditure,which excludeslicences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five yearsfor all cash-generating units ofthe plans used forimpairmenttesting. Yearended31March2021 The disclosures below for the year ended 31 March 2021 are as previously disclosed in the 31 March 2021 Annual Report. Following the carve-out of Vodafone’stower infrastructure to Vantage Towers A.G. (‘Vantage Towers’) during the year in Germany, Spain, Portugal, Ireland, Greece, Romania, Czech Republic andHungary and the acquisitions by Vantage Towers of Vodafone UK’s 50% shareholding in Cornerstone TelecommunicationsInfrastructure Limited (‘CTIL’) and the remaining shareholding in the Vantage Towers Greece, management considers Vodafone’s operating companies and Vantage Tower’s operating companiesin the affected geographical areasto represent two cash-generating unitsfor the purpose of impairmenttesting as at 31 March 2021. Vodafone’sinvestment in Infrastrutture WirelessItaliane S.p.A. (‘INWIT’) was also transferred to Vantage Towers during the year. Goodwill has been allocated on a relative values basisto the Vantage Towers cash-generating units, where applicable, as part of the tower business carve outfrom Vodafone’s operations. The cash-generating units described below relate to Vodafone’smobile and fixed line trading businesses, unless otherwise indicated as being part of Vantage Towers. Valueinuse assumptions The table below shows key assumptions used in the value in use calculations. Assumptions used in value in use calculation Germany Italy Spain Ireland Romania Vantage Towers Germany % % % % % % Pre-tax discount rate 7.4 10.5 9.2 7.7 9.9 6.0 Long-term growth rate 0.5 0.5 0.5 0.5 1.0 1.5 Projected adjusted EBITDAaL CAGR1 1.2 2.1 4.9 0.5 0.9 8.4 Projected capital expenditure2 19.7-21.5 14.4-15.9 15.7-17.6 12.6-15.1 12.3-15.2 39.1-56.2 Notes: 1 Projected adjusted EBITDAaL CAGR is expressed asthe compound annual growth ratesin the initial five yearsfor all cash-generating units ofthe plans used forimpairmenttesting. A pro-rata adjustment has beenmade to true-up 31 March 2021 adjusted EBITDAaL to a full yearwhere the towers business carve-out occurred during the year. 2 Projected capital expenditure,which excludeslicences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five yearsfor all cash-generating units ofthe plans used forimpairmenttesting. 143 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 4.Impairmentlosses(continued) Sensitivity analysis The estimated recoverable amounts of the Group’s operationsin Germany, Italy, Spain, Ireland, Romania and Vantage Towers Germany exceed their carrying values by €7.4 billion, €0.6 billion, €0.3 billion, €0.1 billion, €0.1 billion and €3.5 billion,respectively. If the assumptions used in the impairmentreview were changed to a greater extent than as presented in the following table, the changeswould, in isolation, lead to an impairment loss being recognised for the year ended 31 March 2021. Change required for carrying value to equal recoverable amount Germany Italy Spain Ireland Romania Vantage Towers Germany pps pps pps pps pps pps Pre-tax discount rate 1.3 0.7 0.4 0.7 0.7 5.2 Long-term growth rate (1.3) (0.8) (0.5) (0.7) (0.9) (4.9) Projected adjusted EBITDAaL CAGR1 (4.0) (1.5) (1.5) (1.6) (1.9) (19.3) Projected capital expenditure2 12.7 3.0 1.6 2.8 1.9 162.6 Management considered the following reasonably possible changesin key assumptionsfor projected adjusted EBITDAaL CAGR1 and long-term growth rate, leaving all other assumptions unchanged. Consistentwith the prior year, and due to the uncertainty of future COVID-19 impacts, management’srange ofreasonably possible changesin projected adjusted EBITDAaL CAGR1 is plus or minus 5 percentage points(2020: +/- 5 percentage points). The sensitivity analysis presented is prepared on the basisthatthe reasonably possible change in each key assumption would not have a consequential impact on other assumptions used in the impairmentreview. The associated impact on the impairment assessment is presented in the table below. Management believesthat no reasonably possible or foreseeable change in the pre-tax discountrate or projected capital expenditure2 would cause the difference between the carrying value and recoverable amountfor any cash-generating unitto be materially differentfrom the base case disclosed below. Recoverable amount less carrying value Germany Italy Spain Ireland Romania Vantage Towers Germany €bn €bn €bn €bn €bn €bn Base case as at 31 March 2021 7.4 0.6 0.3 0.1 0.1 3.5 Change in projected adjusted EBITDAaL CAGR1 Decrease by 5pps (1.6) (1.3) (0.6) (0.2) (0.1) 2.4 Increase by 5pps 18.2 2.9 1.4 0.5 0.3 5.0 Change in long-term growth rate Decrease by 1pps 1.5 (0.1) (0.3) – – 2.2 Increase by 1pps 16.0 1.6 1.0 0.3 0.2 6.1 The carrying valuesfor Vodafone UK, Portugal, Czech Republic, andHungary include goodwill arising fromacquisitions and/or the purchase of operating licences orspectrum rights. The recoverable amountsfor these operating companies are also notmaterially greater than their carrying values and accordingly are disclosed below. If the assumptions used in the impairmentreview were changed to a greater extentthan as presented in the following table, the changes would, in isolation, lead to an impairmentloss being recognised in the year ended 31 March 2021. Change required for carrying value to equal recoverable amount UK Portugal Czech Republic Hungary pps pps pps pps Pre-tax discount rate 0.8 0.9 1.2 0.3 Long-term growth rate (0.8) (1.0) (1.3) (0.4) Projected adjusted EBITDAaL CAGR1 (1.7) (2.2) (3.0) (0.7) Projected capital expenditure2 2.5 3.7 7.5 1.5 Notes: 1 Projected adjusted EBITDAaL CAGR is expressed asthe compound annual growth ratesin the initial five yearsfor all cash-generating units ofthe plans used forimpairment testing. A pro-rata adjustment has beenmade to true up 31 March 2021 adjusted EBITDAaL to a full yearwhere the towers business carve-out occurred during the year. 2 Projected capital expenditure,which excludeslicences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five yearsfor all cash-generating units ofthe plans used forimpairmenttesting. 144 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 4.Impairmentlosses(continued) Sensitivity analysis The estimated recoverable amounts of the Group’s operationsin Germany, Italy, Spain, Ireland, Romania and Vantage Towers Germany exceed their carrying values by €7.4 billion, €0.6 billion, €0.3 billion, €0.1 billion, €0.1 billion and €3.5 billion,respectively. If the assumptions used in the impairmentreview were changed to a greater extent than as presented in the following table, the changeswould, in isolation, lead to an impairment loss being recognised for the year ended 31 March 2021. Change required for carrying value to equal recoverable amount Germany Italy Spain Ireland Romania Vantage Towers Germany pps pps pps pps pps pps Pre-tax discount rate 1.3 0.7 0.4 0.7 0.7 5.2 Long-term growth rate (1.3) (0.8) (0.5) (0.7) (0.9) (4.9) Projected adjusted EBITDAaL CAGR1 (4.0) (1.5) (1.5) (1.6) (1.9) (19.3) Projected capital expenditure2 12.7 3.0 1.6 2.8 1.9 162.6 Management considered the following reasonably possible changesin key assumptionsfor projected adjusted EBITDAaL CAGR1 and long-term growth rate, leaving all other assumptions unchanged. Consistentwith the prior year, and due to the uncertainty of future COVID-19 impacts, management’srange ofreasonably possible changesin projected adjusted EBITDAaL CAGR1 is plus or minus 5 percentage points(2020: +/- 5 percentage points). The sensitivity analysis presented is prepared on the basisthatthe reasonably possible change in each key assumption would not have a consequential impact on other assumptions used in the impairmentreview. The associated impact on the impairment assessmentis presented in the table below. Management believesthat no reasonably possible or foreseeable change in the pre-tax discountrate or projected capital expenditure2 would cause the difference between the carrying value and recoverable amountfor any cash-generating unitto be materially differentfrom the base case disclosed below. Recoverable amount less carrying value Germany Italy Spain Ireland Romania Vantage Towers Germany €bn €bn €bn €bn €bn €bn Base case as at 31 March 2021 7.4 0.6 0.3 0.1 0.1 3.5 Change in projected adjusted EBITDAaL CAGR1 Decrease by 5pps (1.6) (1.3) (0.6) (0.2) (0.1) 2.4 Increase by 5pps 18.2 2.9 1.4 0.5 0.3 5.0 Change in long-term growth rate Decrease by 1pps 1.5 (0.1) (0.3) – – 2.2 Increase by 1pps 16.0 1.6 1.0 0.3 0.2 6.1 The carrying valuesfor Vodafone UK, Portugal, Czech Republic, andHungary include goodwill arising fromacquisitions and/or the purchase of operating licences orspectrum rights. The recoverable amountsfor these operating companies are also notmaterially greater than their carrying values and accordingly are disclosed below. If the assumptions used in the impairmentreview were changed to a greater extentthan as presented in the following table, the changes would, in isolation, lead to an impairmentloss being recognised in the year ended 31 March 2021. Change required for carrying value to equal recoverable amount UK Portugal Czech Republic Hungary pps pps pps pps Pre-tax discount rate 0.8 0.9 1.2 0.3 Long-term growth rate (0.8) (1.0) (1.3) (0.4) Projected adjusted EBITDAaL CAGR1 (1.7) (2.2) (3.0) (0.7) Projected capital expenditure2 2.5 3.7 7.5 1.5 Notes: 1 Projected adjusted EBITDAaL CAGR is expressed asthe compound annual growth ratesin the initial five yearsfor all cash-generating units ofthe plans used forimpairment testing. A pro-rata adjustment has beenmade to true up 31 March 2021 adjusted EBITDAaL to a full yearwhere the towers business carve-out occurred during the year. 2 Projected capital expenditure,which excludeslicences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five yearsfor all cash-generating units ofthe plans used forimpairmenttesting. 5.Investmentincome andfinancingcosts Investment income comprisesinterest received from short-term investments and other receivables. Financing costs mainly arise from interest due on bonds and commercial paper issued, bank loans and the results of hedging transactions used tomanage foreign exchange and interest ratemovements. Re-presented1 Re-presented1 2023 2022 2021 €m €m €m Investment income Financial assets measured at amortised cost 212 249 221 Financial assets measured at fair value through profit and loss 36 5 24 248 254 245 Financing costs Financial liabilities measured at amortised cost Bonds 1,711 1,546 1,722 Lease liabilities 436 398 374 Bank loans and other liabilities2 430 469 463 Interest on derivatives (561) (428) (485) Mark-to-market on derivatives (423) (341) (1,070) Financial assets measured at fair value through profit and loss – 36 – Foreign exchange 135 284 23 1,728 1,964 1,027 Net financing costs 1,480 1,710 782 Notes: 1 The resultsforthe years ended 31March 2022 and 31 March 2021 have been re-presented to reflectthatIndus Towers Limited is no longerreported as held forsale. In the year ended 31 March 2021, investmentincome has decreased by €85 million compared to the amount previously reported. There is no impact on the amount previously reported forthe year ended 31 March 2022. See note 7 ‘Discontinued operations and assets held forsale’ formore information. 2 Interest capitalised forthe year ended 31 March 2023was €5million (2022: €17 million, 2021: €17 million). 145 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 6.Taxation This note explains how our Group tax charge arises. The deferred taxsection ofthe note also providesinformation on our expected future tax charges and sets out the tax assets held acrossthe Group together with our view onwhether or notwe expect to be able tomake use of these in the future. Accounting policies Income tax expense representsthe sum of the current and deferred taxes. Currenttax payable or recoverable is based on taxable profitfor the year. Taxable profit differsfrom profit asreported in the income statement because some items of income or expense are taxable or deductible in different years or may never be taxable or deductible. The Group’sliability for current taxis calculated using taxrates and lawsthat have been enacted orsubstantively enacted by the reporting period date. The Group recognises provisionsfor uncertain tax positionswhen the Group has a present obligation as a result of a past event and management judge thatitis probable thatthere will be a future outflow of economic benefitsfrom the Group to settle the obligation. Uncertain tax positions are assessed and measured on an issue by issue basis within the jurisdictionsthatwe operate either using management’s estimate of the most likely outcome where the issues are binary, or the expected value approach where the issues have a range of possible outcomes. The Group recognises interest on late paid taxes as part of financing costs, and any penalties, if applicable, as part of the income tax expense. Deferred taxisthe tax expected to be payable or recoverable in the future arising from temporary differences between the carrying amounts of assets and liabilitiesin the financialstatements and the corresponding tax bases used in the computation of taxable profit. Itis accounted for using the statement of financial position liability method. Deferred taxliabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extentthat itis probable thattemporary differences or taxable profitswill be available against which deductible temporary differences can be utilised. Such assets and liabilities are notrecognised if the temporary difference arisesfrom the initial recognition (other than in a business combination) of assets and liabilitiesin a transaction that affects neither the taxable profit nor the accounting profit. Deferred taxliabilities are not recognised to the extent they arise from the initial recognition of non-tax deductible goodwill. Deferred taxliabilities are recognised for taxable temporary differences arising on investmentsin subsidiaries and associates, and interestsin joint arrangements, exceptwhere the Group is able to control the reversal of the temporary difference and itis probable thatthe temporary difference will notreverse in the foreseeable future. The carrying amount of deferred tax assetsisreviewed at each reporting period date and adjusted to reflect changesin the Group’s assessment that sufficienttaxable profitswill be available to allowall or part of the assetto be recovered. Deferred taxis calculated atthe taxratesthat are expected to apply in the period when the liability issettled or the assetrealised, based on taxrates that have been enacted orsubstantively enacted by the reporting period date. Tax assets and liabilities are offsetwhen there is a legally enforceable rightto set off current tax assets against currenttaxliabilities and when they either relate to income taxeslevied by the same taxation authority on either the same taxable entity or on differenttaxable entities which intend to settle the currenttax assets and liabilities on a net basis. Taxis charged or credited to the income statement, exceptwhen itrelatesto items charged or credited to other comprehensive income or directly to equity, in which case the taxisrecognised in other comprehensive income or in equity. Income tax expense 2023 2022 2021 €m €m €m United Kingdom corporation tax expense: Current year 4 22 24 Adjustments in respect of prior years 4 17 3 8 39 27 Overseas current tax expense/(credit): Current year 924 993 872 Adjustments in respect of prior years (26) 81 (30) 898 1,074 842 Total current tax expense 906 1,113 869 Deferred tax on origination and reversal of temporary differences: United Kingdom deferred tax (71) (791) (94) Overseas deferred tax (354) 1,008 3,089 Total deferred tax (credit)/expense (425) 217 2,995 Total income tax expense 481 1,330 3,864 146 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 6.Taxation This note explains how our Group tax charge arises. The deferred taxsection ofthe note also providesinformation on our expected future tax charges and sets out the tax assets held acrossthe Group together with our view onwhether or notwe expect to be able tomake use of these in the future. Accounting policies Income tax expense representsthe sum of the current and deferred taxes. Currenttax payable or recoverable is based on taxable profitfor the year. Taxable profit differsfrom profit asreported in the income statement because some items of income or expense are taxable or deductible in different years or may never be taxable or deductible. The Group’sliability for current taxis calculated using taxrates and lawsthat have been enacted orsubstantively enacted by the reporting period date. The Group recognises provisionsfor uncertain tax positionswhen the Group has a present obligation as a result of a past event and management judge that itis probable thatthere will be a future outflow of economic benefitsfrom the Group to settle the obligation. Uncertain tax positions are assessed and measured on an issue by issue basis within the jurisdictionsthatwe operate either using management’s estimate of the mostlikely outcome where the issues are binary, or the expected value approach where the issues have a range of possible outcomes. The Group recognises interest on late paid taxes as part of financing costs, and any penalties, if applicable, as part of the income tax expense. Deferred taxisthe tax expected to be payable or recoverable in the future arising from temporary differences between the carrying amounts of assets and liabilitiesin the financialstatements and the corresponding tax bases used in the computation of taxable profit. Itis accounted for using the statement of financial position liability method. Deferred taxliabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extentthat itis probable thattemporary differences or taxable profitswill be available against which deductible temporary differences can be utilised. Such assets and liabilities are notrecognised if the temporary difference arisesfrom the initial recognition (other than in a business combination) of assets and liabilitiesin a transaction that affects neither the taxable profit nor the accounting profit. Deferred taxliabilities are notrecognised to the extent they arise from the initial recognition of non-tax deductible goodwill. Deferred taxliabilities are recognised for taxable temporary differences arising on investmentsin subsidiaries and associates, and interestsin joint arrangements, exceptwhere the Group is able to control the reversal of the temporary difference and itis probable thatthe temporary difference will notreverse in the foreseeable future. The carrying amount of deferred tax assetsisreviewed at each reporting period date and adjusted to reflect changesin the Group’s assessmentthat sufficienttaxable profitswill be available to allowall or part of the assetto be recovered. Deferred taxis calculated atthe taxratesthat are expected to apply in the period when the liability issettled or the assetrealised, based on taxrates that have been enacted orsubstantively enacted by the reporting period date. Tax assets and liabilities are offsetwhen there is a legally enforceable rightto set off current tax assets against currenttaxliabilities and when they either relate to income taxeslevied by the same taxation authority on either the same taxable entity or on differenttaxable entities which intend to settle the currenttax assets and liabilities on a net basis. Taxis charged or credited to the income statement, exceptwhen itrelatesto items charged or credited to other comprehensive income or directly to equity, in which case the taxisrecognised in other comprehensive income or in equity. Income tax expense 2023 2022 2021 €m €m €m United Kingdom corporation tax expense: Current year 4 22 24 Adjustments in respect of prior years 4 17 3 8 39 27 Overseas current tax expense/(credit): Current year 924 993 872 Adjustments in respect of prior years (26) 81 (30) 898 1,074 842 Total current tax expense 906 1,113 869 Deferred tax on origination and reversal of temporary differences: United Kingdom deferred tax (71) (791) (94) Overseas deferred tax (354) 1,008 3,089 Total deferred tax (credit)/expense (425) 217 2,995 Total income tax expense 481 1,330 3,864 Tax charged/(credited) directly to other comprehensive income 2023 2022 2021 €m €m €m Current tax 3 – (17) Deferred tax 304 648 (1,009) Total tax charged/(credited) directly to other comprehensive income 307 648 (1,026) Tax charged/(credited) directly to equity 2023 2022 2021 €m €m €m Deferred tax 6 – (2) Total tax charged/(credited) directly to equity 6 – (2) Factors affecting the tax expense for the year The table below explains the differences between the expected tax expense, being the aggregate of the Group’s geographical split of profits multiplied by the relevant local tax rates and the Group’s total tax expense for each year. Re-presented1 Re-presented1 2023 2022 2021 €m €m €m Continuing profit before tax as shown in the consolidated income statement 12,816 4,103 4,347 Aggregated expected income tax expense 3,848 1,231 1,111 Impairment loss with no tax effect 18 – – Disposal of Group investments2 (2,918) (8) (332) Effect of taxation of associates and joint ventures, reported within profit before tax (125) (111) 69 Deferred tax (credit)/charge following revaluation of investments in Luxembourg (393) 1,455 2,120 Previously unrecognised temporary differences we expect to use in the future, including in Luxembourg (16) (708) (45) Previously recognised temporary differences and losses we no longer expect to use in the future – 74 699 Current year temporary differences (including losses) that we currently do not expect to use 207 116 170 Adjustments in respect of prior year tax liabilities (35) 13 (10) Impact of tax credits and irrecoverable taxes 80 74 90 Deferred tax on overseas earnings (6) 2 – Effect of current year changes in statutory tax rates on deferred tax balances3 35 (667) (45) Financing costs not (taxable)/deductible for tax purposes (27) 46 (62) Revaluation of assets for tax purposes in Turkey and Italy4 (338) (357) – Expenses not deductible for tax purposes 151 170 99 Income tax expense 481 1,330 3,864 Notes: 1 Amountsforthe years ended 31 March 2022 and 31 March 2021 have been re-presented to reflectthatIndus Towers Limited is no longerreported as held forsale. See note 7 ‘Discontinued operations and assets held forsale’ formore information. 2 2023 relatesto the change in consolidation status ofVantage Towers and the tax exempt disposals of Vodafone Hungary and Vodafone Ghana. 2021 includesthe tax exempt gainsrelating to the TPGTelecomLimitedmergerin Australia and Indus Towers Limited in India.. 3 2022 includesthe increase in futureUK taxrate to 25%. 4 2023 relatesto a step of assetsfortax purposesin Turkey. 2022 relatesto step up of assetsfortax purposesin Italy and Turkey 147 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 6.Taxation(continued) Deferred tax Analysis of movements in the net deferred tax asset balance during the year: €m 1 April 2022 18,569 Foreign exchange movements (59) Credited the income statement 425 Charged directly to OCI (304) Charged directly to equity (6) Impact of hyperinflation accounting (191) Arising on acquisitions and disposals 111 31 March 20231 18,545 Deferred tax assets and liabilities, before offset of balances within countries, are as follows: Amount Net credited/ recognised (expensed) Gross Gross Less deferred tax in income deferred deferred tax amounts asset/ statement tax asset liability unrecognised (liability) €m €m €m €m €m Accelerated tax depreciation 136 2,761 (1,426) (47) 1,288 Intangible assets 324 630 (1,495) 15 (850) Tax losses (78) 28,035 – (9,540) 18,495 Treasury related items 2 623 (717) (588) (682) Temporary differences relating to revenue recognition (40) 19 (705) – (686) Temporary differences relating to leases 216 1,482 (1,054) (30) 398 Other temporary differences (135) 938 (296) (60) 582 31 March 20231 425 34,488 (5,693) (10,250) 18,545 Analysed in the balance sheet, after offset of balances within countries, as: €m Deferred tax asset 19,316 Deferred tax liability (771) 31 March 20231 18,545 At 31 March 2022, deferred tax assets and liabilities, before offset of balances within countries, were as follows: Amount Net credited/ recognised (expensed) Gross Gross Less deferred tax in income deferred deferred tax amounts asset/ statement tax asset liability unrecognised (liability) €m €m €m €m €m Accelerated tax depreciation 672 2,589 (1,361) (58) 1,170 Intangible assets 643 666 (1,801) 11 (1,124) Tax losses (1,450) 28,977 – (10,341) 18,636 Treasury related items (90) 616 (372) (562) (318) Temporary differences relating to revenue recognition (9) 3 (666) – (663) Temporary differences relating to leases (3) 1,754 (1,577) – 177 Other temporary differences 20 1,148 (379) (78) 691 31 March 20221 (217) 35,753 (6,156) (11,028) 18,569 At 31 March 2022, analysed in the balance sheet, after offset of balances within countries, as: €m Deferred tax asset 19,089 Deferred tax liability (520) 31 March 20221 18,569 Note: 1 The Group does not discount deferred tax assets. Thisisin accordancewith IAS 12. 148 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 6.Taxation(continued) Deferred tax Analysis of movements in the net deferred tax asset balance during the year: €m 1 April 2022 18,569 Foreign exchange movements (59) Credited the income statement 425 Charged directly to OCI (304) Charged directly to equity (6) Impact of hyperinflation accounting (191) Arising on acquisitions and disposals 111 31 March 20231 18,545 Deferred tax assets and liabilities, before offset of balances within countries, are as follows: Amount Net credited/ recognised (expensed) Gross Gross Less deferred tax in income deferred deferred tax amounts asset/ statement tax asset liability unrecognised (liability) €m €m €m €m €m Accelerated tax depreciation 136 2,761 (1,426) (47) 1,288 Intangible assets 324 630 (1,495) 15 (850) Tax losses (78) 28,035 – (9,540) 18,495 Treasury related items 2 623 (717) (588) (682) Temporary differences relating to revenue recognition (40) 19 (705) – (686) Temporary differences relating to leases 216 1,482 (1,054) (30) 398 Other temporary differences (135) 938 (296) (60) 582 31 March 20231 425 34,488 (5,693) (10,250) 18,545 Analysed in the balance sheet, after offset of balances within countries, as: €m Deferred tax asset 19,316 Deferred tax liability (771) 31 March 20231 18,545 At 31 March 2022, deferred tax assets and liabilities, before offset of balances within countries, were as follows: Amount Net credited/ recognised (expensed) Gross Gross Less deferred tax in income deferred deferred tax amounts asset/ statement tax asset liability unrecognised (liability) €m €m €m €m €m Accelerated tax depreciation 672 2,589 (1,361) (58) 1,170 Intangible assets 643 666 (1,801) 11 (1,124) Tax losses (1,450) 28,977 – (10,341) 18,636 Treasury related items (90) 616 (372) (562) (318) Temporary differences relating to revenue recognition (9) 3 (666) – (663) Temporary differences relating to leases (3) 1,754 (1,577) – 177 Other temporary differences 20 1,148 (379) (78) 691 31 March 20221 (217) 35,753 (6,156) (11,028) 18,569 At 31 March 2022, analysed in the balance sheet, after offset of balances within countries, as: €m Deferred tax asset 19,089 Deferred tax liability (520) 31 March 20221 18,569 Note: 1 The Group does not discount deferred tax assets. Thisisin accordancewith IAS 12. Factorsaffectingthetax chargeinfutureyears The Group’sfuture tax charge, and effective taxrate, could be affected by several factorsincluding; taxreform in countries around the world, including any arising from the OECD’s or European Commission’swork on the taxation of the digital economy and European Commission initiatives such asthe MinimumTax directive or as a consequence ofstate aid investigations, future corporate acquisitions and disposals, any restructuring of our businesses and the resolution of open taxissues(see below). The Group isroutinely subjectto audit by tax authoritiesin the territoriesin which it operates. The Group considers each issue on itsmerits and, where appropriate, holds provisionsin respect of the potential taxliability thatmay arise. As at 31 March 2023,the Group holds provisionsforsuch potential liabilities of €412million (2022: €463 million). These provisionsrelate tomultiple issues, acrossthe jurisdictionsin which the Group operates. The reduction followsthe resolution of a number of disputes during the year. Asthe taximpact of a transaction can be uncertain until a conclusion isreached with the relevanttax authority or through a legal process, the amount ultimately paid may differ materially from the amount accrued and could therefore affectthe Group's overall profitability and cash flowsin future periods. See Note 29 ‘Contingent liabilities and legal proceedings’ to the consolidated financialstatements. The tables below presentthe gross amount and expiry dates of losses available for carry forward for the year ended 31 March 2023 and the comparative year ended 31 March 2022. Expiring Expiring within beyond 31 March 2023 5 years 6 years Unlimited Total €m €m €m €m Losses for which a deferred tax asset is recognised 15 59 78,967 79,041 Losses for which no deferred tax is recognised 306 15,649 18,321 34,276 321 15,708 97,288 113,317 Expiring Expiring within beyond 31 March 2022 5 years 6 years Unlimited Total €m €m €m €m Losses for which a deferred tax asset is recognised 19 259 79,848 80,126 Losses for which no deferred tax is recognised 334 13,162 23,928 37,424 353 13,421 103,776 117,550 Deferred taxassets onlosses in Luxembourg Included in the table above are losses of €65,232 million (2022: €65,348million) that have arisen in Luxembourg companies. A deferred tax asset of €16,269 million (2022: €16,298million) has been recognised in respect of these losses, aswe conclude itis probable that the Luxembourg entities will continue to generate taxable profitsin the future againstwhich we can utilise these losses. These taxlosses principally arose fromhistorical impairments, primarily following the acquisition of the Mannesmann Group in 2000. These losses also arose prior to the 2017 taxreform in Luxembourg and are available to carry forward indefinitely. In December 2022, the Group undertook an internalrestructuring which saw the Luxembourg companies dispose of their investmentsin the Group’s operating companies. Thisresulted in the Luxembourg holding companiesrecording a tax deductible loss on the disposal in the local GAAP financialstatements. The investments are valued for the local GAAP financialstatements using the Group’srecoverable value calculations(see Note 4 – 'Impairmentlosses') and the carrying values and valuationmethodology differsfrom the goodwill assessment for the Group’s consolidated financialstatements. Lossesincurred after the 2017 taxreform in Luxembourg expire after 17 years and are only used after any pre-existing losses. In the year ended 31 March 2023 the Luxembourg companiesincurred additional taxlosses of €2,608million following the disposals of their investmentsin the Group’s operating companies.No deferred tax asset isrecognised for these losses on the basisthatthey are notforecastto be used prior to the expiry of their 17 year life. In a periodwhere pre-existing taxlosses are not utilised due to impairments, the forecast utilisation timeframe extends by one year. Following the restructuring, the lossesin Luxembourg are no longer impacted by changesin the value of the Group’s operating companies and the recovery of the deferred tax assetwill be driven by the recurring profits ofthe Luxembourg companies. These recurring profits are derived from the Group’sinternal financing, centralised procurement and internationalroaming activities. These activities have consistently generated taxable profits of over €1 billion per annum throughout their existence. The Group hasreviewed the latest 5 year forecastsfor the Luxembourg companies, including their ability to continue to generate income beyond this period. The forecasts consider the impact of the currentmarket conditions on the existing financing activities, including the current view of interestrates, levels of intragroup financing, aswell asthe future profits generated from the procurement and roaming activities. This assessment also included a review of the commercialstructuressupporting the profits generated from these activities and considered the factors, under the Group’s control, which could impactthe ability of these activitiesto generate taxable profits. We have assessed thatthe current structure continuesto be sustainable under the taxlawssubstantively enacted atthe balance sheet date and the Group’sintentionsto keep these activitiesin Luxembourg remains unchanged. 149 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 6.Taxation(continued) Based on the currentforecasts, €4,518 million (2022: €3,546 million) of the deferred tax asset isforecastto be used within the next 10 years, and €8,742 million (2022: €6,953 million) used within 20 years. The losses are projected to be fully utilised over the next 35 to 39 years. The decrease in the recovery period over the prior year is principally a result of higher interestrates, driving margins up on existing financing activities. In the year ended 31 March 2022 these same factors alsomeant the Group recognised €699 million of previously unrecognised deferred tax asset asthe forecasts produced atthattime, which reflected the same factors discussed above,showed these losseswill be used within 60 years. The Group did not previously recognise the asset asthe losseswere forecastto be used beyond 60 years. An increase or decrease in the forecastincome in Luxembourg in each year of 5%-10% would change the period over which the losses will be fully utilised by 2 to 4 years. The Group usesthese differentscenarios of forecastincome to understand the impactthat a change in interestrates or level of debt advanced by the Luxembourg companies could have on the recovery period of the losses. Any future changesin taxlaw, including those driven by OECD, EU or domestic taxreforms or the structure of the Group could have a significant effect on the use of the Luxembourg losses, including the period over which these losses can be utilised. The Group has continued tomonitor developmentsrelating to OECD’s Pillar 2 rules, including reviewing the administrative guidance published in December 2022 and does not anticipate a significantimpact on its ability to continue to use our lossesin Luxembourg. On the basisthatfuture changesin taxlaws are unknown, the profit forecasts assume that existing taxlaws continue. Based on the above factorsthe Group concludesthatitis probable thatthe Luxembourg companieswill continue to generate taxable profitsin the future against which itwill use these losses. In addition to the above, €15,925million (2022; €13,298 million) of the Group’s Luxembourg losses expire after 11-17 years and no deferred tax assetisrecognised astheywill expire before we can use these losses. The remaining losses do not expire. We also have €9,136 million (2022: €9,136 million) of Luxembourg lossesin a former Cable& Wireless Worldwide Group company, for which no deferred tax asset has been recognised asitis uncertainwhether these losseswill be utilised. Deferred taxassets onlosses inGermany The Group hastaxlosses of €12,932million (2022: €13,955 million) in Germany arising on the write down of investmentsin Germany in 2000. The losses are available to use against both German federal and trade taxliabilities and they do not expire. A deferred tax asset of €2,021 million (2022: €2,170 million) has been recognised in respect of these losses aswe conclude itis probable thatthe German businesswill continue to generate taxable profitsin the future againstwhich we can utilise these losses. The Group hasreviewed the latestforecastsfor the German businesswhich incorporate the unsystematic risks of operating in the telecommunications business(see Note 4 ‘Impairmentlosses’). In the period beyond the 5 year forecastwe have reviewed the profitsinherent in the terminal period and based on these and our expectationsfor the German businesswe believe it is probable the German losseswill be fully utilised. Based on the currentforecaststhe losseswill be fully utilised over the next 4 to 9 years. A 5%-10% change in the forecast profits of the German businesswould alter the utilisation period by 1 year. Deferred taxassets in Italy The Group has a recognised deferred tax asset of €425 million (2022: €411 million), including €152 million (2022: €71 million)relating to taxlosses in Italy. The Italian business has historically been profitable and isforecasted to return to profitability, absentthe tax deductions arising from the revaluation of assets undertaken in the year ended 31 March 2022, in the shortterm. The Group hasreviewed the latestforecastsfor the Italian business which incorporate the unsystematic risks of operating in the telecommunications business(see Note 4 ‘Impairmentlosses’). In the period beyond the 5 year forecastwe have reviewed the profitsinherentin the terminal period and based on these and our expectationsfor the Italian business we believe itis probable the Italian losses will be fully utilised. Deferred taxassets onlosses in Spain The Group hastaxlosses of €5,130million (2022: €4,627 million) which are available to offset againstthe future profits of the Grupo Corporativo ONO business. The losses do not expire, and no deferred tax assetisrecognised for these losses due to the trading environmentin Spain. Othertax losses The Group haslosses amounting to €2,377 million (2022: €8,444 million) in respect of UK subsidiarieswhich are only available for offset against future capital gains and since itis uncertain whether these losseswill be utilised, no deferred tax asset has been recognised, asin the prior year. The lossesreduced following the dissolution of a UK holding company which held capital losses. The remaining lossesrelate to a number of other jurisdictions acrossthe Group. There are also €2,443 million (2022: €2,365 million) of unrecognised temporary differencesrelating to treasury items and other items. Impactof climate risks The recovery of the Group’s deferred tax assetsis dependent on itsforecasts of future profitability and the climate related risks have been considered in the Group’s assessment of the recovery of those assets(see Note 4 ‘Impairmentlosses’). The Group does not expect the climate related risksto have an impact on the ability of Luxembourg to continue to provide the internal financing, procurement, and roaming activitiesto other members of the Group. Unremittedearnings No deferred taxliability has been recognised in respect of a further €26,371 million (2022: €8,599 million) of unremitted earnings ofsubsidiaries because the Group is able to controlthe timing of the reversal of the temporary difference, and itis probable thatsuch differences will notreverse in the foreseeable future. Itis not practicable to estimate the amount of unrecognised deferred taxliabilitiesin respect of these unremitted earnings. 150 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 6.Taxation(continued) Based on the currentforecasts, €4,518 million (2022: €3,546 million) of the deferred tax asset isforecastto be used within the next 10 years, and €8,742 million (2022: €6,953 million) used within 20 years. The losses are projected to be fully utilised over the next 35 to 39 years. The decrease in the recovery period over the prior year is principally a result of higher interestrates, driving margins up on existing financing activities. In the year ended 31 March 2022 these same factors alsomeant the Group recognised €699 million of previously unrecognised deferred tax asset asthe forecasts produced atthattime, which reflected the same factors discussed above,showed these losseswill be used within 60 years. The Group did not previously recognise the asset asthe losseswere forecastto be used beyond 60 years. An increase or decrease in the forecastincome in Luxembourg in each year of 5%-10% would change the period over which the losses will be fully utilised by 2 to 4 years. The Group usesthese differentscenarios of forecastincome to understand the impactthat a change in interestrates or level of debt advanced by the Luxembourg companies could have on the recovery period of the losses. Any future changesin taxlaw, including those driven by OECD, EU or domestic taxreforms or the structure of the Group could have a significant effect on the use of the Luxembourg losses, including the period over which these losses can be utilised. The Group has continued tomonitor developmentsrelating to OECD’s Pillar 2 rules, including reviewing the administrative guidance published in December 2022 and does not anticipate a significantimpact on its ability to continue to use our lossesin Luxembourg. On the basisthatfuture changesin taxlaws are unknown, the profit forecasts assume that existing taxlaws continue. Based on the above factorsthe Group concludesthatitis probable thatthe Luxembourg companies will continue to generate taxable profitsin the future against which itwill use these losses. In addition to the above, €15,925million (2022; €13,298 million) of the Group’s Luxembourg losses expire after 11-17 years and no deferred tax assetisrecognised astheywill expire before we can use these losses. The remaining losses do not expire. We also have €9,136 million (2022: €9,136 million) of Luxembourg lossesin a former Cable& Wireless Worldwide Group company, for which no deferred tax asset has been recognised asitis uncertainwhether these losseswill be utilised. Deferred taxassets onlosses inGermany The Group hastaxlosses of €12,932million (2022: €13,955 million) in Germany arising on the write down of investmentsin Germany in 2000. The losses are available to use against both German federal and trade taxliabilities and they do not expire. A deferred tax asset of €2,021 million (2022: €2,170 million) has been recognised in respect of these losses aswe conclude itis probable thatthe German businesswill continue to generate taxable profitsin the future againstwhich we can utilise these losses. The Group hasreviewed the latestforecastsfor the German businesswhich incorporate the unsystematic risks of operating in the telecommunications business(see Note 4 ‘Impairmentlosses’). In the period beyond the 5 year forecast we have reviewed the profitsinherent in the terminal period and based on these and our expectationsfor the German businesswe believe it is probable the German losseswill be fully utilised. Based on the currentforecaststhe losseswill be fully utilised over the next 4 to 9 years. A 5%-10% change in the forecast profits of the German businesswould alter the utilisation period by 1 year. Deferred taxassets in Italy The Group has a recognised deferred tax asset of €425 million (2022: €411 million), including €152 million (2022: €71 million)relating to taxlosses in Italy. The Italian business has historically been profitable and isforecasted to return to profitability, absentthe tax deductions arising from the revaluation of assets undertaken in the year ended 31 March 2022, in the shortterm. The Group hasreviewed the latestforecastsfor the Italian business which incorporate the unsystematic risks of operating in the telecommunications business(see Note 4 ‘Impairmentlosses’). In the period beyond the 5 year forecastwe have reviewed the profitsinherentin the terminal period and based on these and our expectationsfor the Italian business we believe itis probable the Italian losses will be fully utilised. Deferred taxassets onlosses in Spain The Group hastaxlosses of €5,130million (2022: €4,627 million) which are available to offset againstthe future profits of the Grupo Corporativo ONO business. The losses do not expire, and no deferred tax assetisrecognised for these losses due to the trading environmentin Spain. Othertax losses The Group haslosses amounting to €2,377 million (2022: €8,444 million) in respect of UK subsidiarieswhich are only available for offset against future capital gains and since itis uncertain whether these losseswill be utilised, no deferred tax asset has been recognised, asin the prior year. The lossesreduced following the dissolution of a UK holding company which held capital losses. The remaining lossesrelate to a number of other jurisdictions acrossthe Group. There are also €2,443 million (2022: €2,365 million) of unrecognised temporary differencesrelating to treasury items and other items. Impactof climate risks The recovery of the Group’s deferred tax assetsis dependent on itsforecasts of future profitability and the climate related risks have been considered in the Group’s assessment of the recovery of those assets(see Note 4 ‘Impairmentlosses’). The Group does not expect the climate related risksto have an impact on the ability of Luxembourg to continue to provide the internal financing, procurement, and roaming activitiesto other members of the Group. Unremittedearnings No deferred taxliability has been recognised in respect of a further €26,371 million (2022: €8,599 million) of unremitted earnings ofsubsidiaries because the Group is able to controlthe timing of the reversal of the temporary difference, and itis probable thatsuch differences will notreverse in the foreseeable future. Itis not practicable to estimate the amount of unrecognised deferred taxliabilitiesin respect of these unremitted earnings. 7.Discontinuedoperations andassetsheldfor sale The Group classifies certain of its assetsthat it expectsto dispose as either discontinued operations or as held forsale. The Group classifies non-current assets and assets and liabilitieswithin disposal groups(‘assets’) as held forsale if the assets are available immediately forsale in their present condition,managementis committed to a plan to sell the assets under usual terms, itis highly probable that their carrying amountswill be recovered principally through a sale transaction rather than through continuing use and the sale is expected to be completed within one year from the date of the initial classification. Assets and liabilities classified as held forsale are presented separately as current itemsin the consolidated statement of financial position and are measured atthe lower of their carrying amount and fair value less coststo sell. Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held forsale. Similarly, equity accounting ceasesfor associates and joint ventures held forsale. Where operations constitute a separately reportable segment(see note 2 ‘Revenue disaggregation and segmental analysis’) and have been disposed of, or are classified as held forsale, the Group classifiessuch operations as discontinued. Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after taxfrom discontinued operationsin the Group consolidated income statement. Discontinued operations are also excluded from segment reporting. All other notesto the financialstatementsinclude amountsfor continuing operations, unlessindicated otherwise. Discontinuedoperations The Group did not have any discontinued operationsin the year ended 31 March 2023 or the comparative years ended 31 March 2022 and 31 March 2021. Assetsheldfor sale ReclassificationofIndus Towers Limited In the consolidated financialstatementsfor the prior year ended 31 March 2022, the Group’s 21.0% interestin Indus Towers Limited wasreported within assets held forsale. Whilstthe Group remainsfocused on achieving a sale, the investmentis not assessed asmeeting the requirements of held forsale at 31 March 2023. Consequently, comparative balances as at 31 March 2022 have been re-presented in these consolidated financial statementsto reflectthatIndus Towers Limited is no longer reported as held forsale. Impact on the consolidated income statement The reclassification has no impact on previously reported revenue and gross profit, asreported in the consolidated income statement. In the year ended 31 March 2022, the share of results of equity accounted associates and joint venturesincreased by €178 million, offset by a decrease of €29 million in other income. Consequently, operating profit, profit before taxation and profitfor the financial year all increased by €149 million compared to amounts previously reported. Total comprehensive income for the financial year increased by €144 million,reflecting the increase in profitfor the financial year of €149 million, offset by a charge of €5 million included in other comprehensive income. In the year ended 31 March 2021, the share of results of equity accounted associates and joint venturesincreased by €32 million and therefore operating profitincreased by €32 million compared to the amount previously reported. Investment income decreased by €85 million and therefore profit before taxation and profitfor the financial year both decreased by €53 million compared to amounts previously reported. Total comprehensive expense for the financial year increased by €48 million,reflecting the decrease in profitfor the financial year of €53million, offset by a credit of €5 million included in other comprehensive income Impact on the consolidated statement of financial position The consolidated statement of financial position is on page 124 and has not been reproduced below in its entirety. The table below only discloses the impacted lines. As previously presented Impact of reclassification Re-presented 2022 2022 2022 €m €m €m Non-current assets Investments in associates and joint ventures 4,268 1,055 5,323 Assets held for sale 959 (959) – Total assets 153,953 96 154,049 Equity Accumulated losses (122,118) 96 (122,022) Total equity and liabilities 153,953 96 154,049 151 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 8.Earningsper share Basic earnings pershare isthe amount of profit generated forthe financial year attributable to equity shareholders divided by theweighted average number ofsharesin issue during the year. 2023 2022 2021 Millions Millions Millions Weighted average number of shares for basic earnings per share 27,680 29,012 29,592 Effect of dilutive potential shares: restricted shares and share options 95 97 91 Weighted average number of shares for diluted earnings per share 27,775 29,109 29,683 Re-presented1 Re-presented1 2023 2022 2021 €m €m €m Profit for earnings per share from continuing operations attributable to owners 11,838 2,237 59 Profit for basic and diluted earnings per share 11,838 2,237 59 Re-presented1 Re-presented1 2023 2022 2021 eurocents eurocents eurocents Basic earnings per share from continuing operations 42.77c 7.71c 0.20c Basic earnings per share 42.77c 7.71c 0.20c Re-presented1 Re-presented1 2023 2022 2021 eurocents eurocents eurocents Diluted earnings per share from continuing operations 42.62c 7.68c 0.20c Diluted earnings per share 42.62c 7.68c 0.20c Note: 1 The resultsforthe years ended 31March 2022 and 31 March 2021 have been re-presented to reflectthatIndus Towers Limited is no longerreported as held forsale. In the year ended 31 March 2022, profitfor basic and diluted earnings pershare hasincreased by €149 million (2021: €53 million decrease) compared to the amount previously reported. Consequently, basic earnings pershare increased by 0.51 eurocents(2021: 0.18 eurocents decrease) and diluted earnings pershare increased by 0.51 eurocents(2021: 0.18 eurocents decrease) compared to amounts previously reported. See note 7 ‘Discontinued operations and assets held forsale’ formore information. 9.Equitydividends Dividends are one type ofshareholder return, historically paid to ourshareholdersin February and August. 2023 2022 2021 €m €m €m Declared during the financial year Final dividend for the year ended 31 March 2022: 4.50 eurocents per share (2021: 4.50 eurocents per share, 2020: 4.50 eurocents per share) 1,265 1,254 1,205 Interim dividend for the year ended 31 March 2023: 4.50 eurocents per share (2022: 4.50 eurocents per share, 2021: 4.50 eurocents per share) 1,237 1,229 1,207 2,502 2,483 2,412 Proposed after the end of the year and not recognised as a liability Final dividend for the year ended 31 March 2023: 4.50 eurocents per share (2022: 4.50 eurocents per share, 2021: 4.50 eurocents per share) 1,215 1,265 1,260 152 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 8.Earningsper share Basic earnings pershare isthe amount of profit generated forthe financial year attributable to equity shareholders divided by theweighted average number ofsharesin issue during the year. 2023 2022 2021 Millions Millions Millions Weighted average number of shares for basic earnings per share 27,680 29,012 29,592 Effect of dilutive potential shares: restricted shares and share options 95 97 91 Weighted average number of shares for diluted earnings per share 27,775 29,109 29,683 Re-presented1 Re-presented1 2023 2022 2021 €m €m €m Profit for earnings per share from continuing operations attributable to owners 11,838 2,237 59 Profit for basic and diluted earnings per share 11,838 2,237 59 Re-presented1 Re-presented1 2023 2022 2021 eurocents eurocents eurocents Basic earnings per share from continuing operations 42.77c 7.71c 0.20c Basic earnings per share 42.77c 7.71c 0.20c Re-presented1 Re-presented1 2023 2022 2021 eurocents eurocents eurocents Diluted earnings per share from continuing operations 42.62c 7.68c 0.20c Diluted earnings per share 42.62c 7.68c 0.20c Note: 1 The resultsforthe years ended 31March 2022 and 31 March 2021 have been re-presented to reflectthatIndus Towers Limited is no longerreported as held forsale. In the year ended 31 March 2022, profitfor basic and diluted earnings pershare hasincreased by €149 million (2021: €53 million decrease) compared to the amount previously reported. Consequently, basic earnings pershare increased by 0.51 eurocents(2021: 0.18 eurocents decrease) and diluted earnings pershare increased by 0.51 eurocents(2021: 0.18 eurocents decrease) compared to amounts previously reported. See note 7 ‘Discontinued operations and assets held forsale’ formore information. 9.Equitydividends Dividends are one type ofshareholder return, historically paid to ourshareholdersin February and August. 2023 2022 2021 €m €m €m Declared during the financial year Final dividend for the year ended 31 March 2022: 4.50 eurocents per share (2021: 4.50 eurocents per share, 2020: 4.50 eurocents per share) 1,265 1,254 1,205 Interim dividend for the year ended 31 March 2023: 4.50 eurocents per share (2022: 4.50 eurocents per share, 2021: 4.50 eurocents per share) 1,237 1,229 1,207 2,502 2,483 2,412 Proposed after the end of the year and not recognised as a liability Final dividend for the year ended 31 March 2023: 4.50 eurocents per share (2022: 4.50 eurocents per share, 2021: 4.50 eurocents per share) 1,215 1,265 1,260 10.Intangibleassets The statement of financial position containssignificant intangible assets,mainly in relation to goodwill and licences and spectrum. Goodwill,which ariseswhenwe acquire a business and pay a higher amount than the fair value of its net assets primarily due to the synergies we expect to create, is not amortised but issubjectto annual impairmentreviews. Licences and spectrum are amortised over the life ofthe licence. For further detailssee ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 ‘Basis of preparation ‘ to the consolidated financialstatements. Accountingpolicies Identifiable intangible assets are recognised when the Group controlsthe asset, itis probable thatfuture economic benefits attributed to the asset will flow to the Group and the cost ofthe asset can be reliably measured. Identifiable intangible assets are recognised atfair valuewhen the Group completes a business combination. The determination of the fair values of the separately identified intangibles, is based, to a considerable extent, on management’sjudgement. Goodwill Goodwill arising on the acquisition of an entity representsthe excess of the cost of acquisition over the Group’sinterest in the netfair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Goodwill isinitially recognised as an asset at cost and issubsequently measured at costless any accumulated impairment losses. Goodwill is not subjectto amortisation butistested for impairment annually or whenever there is evidence thatitmay be impaired. Goodwill is denominated in the currency of the acquired entity and revalued to the closing exchange rate at each reporting period date. Negative goodwill arising on an acquisition isrecognised directly in the income statement. On disposal of a subsidiary or a joint arrangement, the attributable amount of goodwill isincluded in the determination of the profit or loss recognised in the income statement on disposal. Finitelivedintangibleassets Intangible assetswith finite lives are stated at acquisition or development cost, less accumulated amortisation. The amortisation period and method isreviewed atleast annually. Changesin the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period ormethod, as appropriate, and are treated as changesin accounting estimates. Licence andspectrumfees Amortisation periodsfor licence and spectrum fees are determined primarily by reference to the unexpired licence period, the conditionsfor licence renewal and whether licences are dependent on specific technologies. Amortisation is charged to the income statement on a straight-line basis over the estimated useful livesfromthe commencement ofrelated network services. Computer software Computersoftware comprisessoftware purchased from third parties aswell asthe cost of internally developed software. Computersoftware licences are capitalised on the basis of the costsincurred to acquire and bring into use the specific software. Coststhat are directly associated with the production of identifiable and unique software products controlled by the Group, and are probable of producing future economic benefits, are recognised asintangible assets. Direct costs ofsoftware developmentinclude employee costs and directly attributable overheads. Software integral to an item of hardware equipmentis classified as property, plant and equipment. Costs associated with maintaining software programs are recognised as an expense when they are incurred. Amortisation is charged to the income statement on a straight-line basis over the estimated useful life fromthe date the software is available for use. Otherintangible assets Other intangible assets, including brands and customer bases, are recorded atfair value atthe date of acquisition. Amortisation is charged to the income statement, over the estimated useful lives of intangible assetsfrom the date they are available for use, on a straight-line basis. The amortisation basis adopted for each class of intangible assetreflectsthe Group’s consumption of the economic benefit from that asset. Estimatedusefullives The estimated useful lives of finite lived intangible assets are asfollows: Licence and spectrum fees 3 - 40 years Computer software 3 - 5 years Brands 1 - 30 years Customer bases 2 - 37 years 153 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 10.Intangibleassets(continued) Licence and Computer Customer Goodwill spectrum fees software bases Other Total €m €m €m €m €m €m Cost 1 April 2021 99,364 33,528 17,833 12,308 466 163,499 Exchange movements (21) (148) (60) 80 1 (148) Arising on acquisition (10) – – 54 – 44 Additions – 901 2,727 – 7 3,635 Disposals – (356) (2,823) – (1) (3,180) Other – 1 36 – (10) 27 31 March 2022 99,333 33,926 17,713 12,442 463 163,877 Adoption of IAS 29 1,564 1,099 408 110 87 3,268 1 April 2022 brought forward 100,897 35,025 18,121 12,552 550 167,145 Exchange movements (783) (1,270) (504) (240) (53) (2,850) Disposal of subsidiaries (3,939) (443) (348) (458) (4) (5,192) Additions – 439 2,804 – 7 3,250 Disposals – (2) (1,831) – (1) (1,834) Hyperinflation impacts 729 557 232 51 40 1,609 31 March 2023 96,904 34,306 18,474 11,905 539 162,128 Accumulated impairment losses and amortisation 1 April 2021 67,633 22,043 12,496 7,324 454 109,950 Exchange movements (184) (35) (72) 70 1 (220) Amortisation charge for the year – 1,306 2,225 509 4 4,044 Disposals – (351) (2,821) – (1) (3,173) Other – – 39 – (7) 32 31 March 2022 67,449 22,963 11,867 7,903 451 110,633 Adoption of IAS 29 1,564 829 390 110 87 2,980 1 April 2022 brought forward 69,013 23,792 12,257 8,013 538 113,613 Exchange movements (414) (846) (351) (231) (50) (1,892) Disposal of subsidiaries (39) (147) (180) (80) (2) (448) Amortisation charge for the year – 1,133 2,343 554 1 4,031 Disposals – (2) (1,814) – (1) (1,817) Hyperinflation impacts 729 407 207 51 40 1,434 31 March 2023 69,289 24,337 12,462 8,307 526 114,921 Net book value 31 March 2022 31,884 10,963 5,846 4,539 12 53,244 31 March 2023 27,615 9,969 6,012 3,598 13 47,207 For licences and spectrumfees and other intangible assets, amortisation isincluded within the cost ofsalesline within the consolidated income statement. Included in the net book value of computersoftware are assetsin the course of construction, which are not depreciated, with a cost of €1,451 million (2022: €1,955 million). The net book value and expiry dates of the mostsignificant licences are asfollows: 2023 2022 Expiry dates €m €m Germany 2025/2033/2040 2,979 3,270 Italy 2029/2037 3,123 3,415 UK 2023/2033/2038/2041 1,055 1,209 Spain 2028/2030/2031/2038/2041 758 809 The remaining amortisation period for each of the licencesin the table above correspondsto the expiry date of the respective licence. A summary of the Group’s mostsignificantspectrum licences can be found on page 241. 154 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 10.Intangibleassets(continued) Licence and Computer Customer Goodwill spectrum fees software bases Other Total €m €m €m €m €m €m Cost 1 April 2021 99,364 33,528 17,833 12,308 466 163,499 Exchange movements (21) (148) (60) 80 1 (148) Arising on acquisition (10) – – 54 – 44 Additions – 901 2,727 – 7 3,635 Disposals – (356) (2,823) – (1) (3,180) Other – 1 36 – (10) 27 31 March 2022 99,333 33,926 17,713 12,442 463 163,877 Adoption of IAS 29 1,564 1,099 408 110 87 3,268 1 April 2022 brought forward 100,897 35,025 18,121 12,552 550 167,145 Exchange movements (783) (1,270) (504) (240) (53) (2,850) Disposal of subsidiaries (3,939) (443) (348) (458) (4) (5,192) Additions – 439 2,804 – 7 3,250 Disposals – (2) (1,831) – (1) (1,834) Hyperinflation impacts 729 557 232 51 40 1,609 31 March 2023 96,904 34,306 18,474 11,905 539 162,128 Accumulated impairment losses and amortisation 1 April 2021 67,633 22,043 12,496 7,324 454 109,950 Exchange movements (184) (35) (72) 70 1 (220) Amortisation charge for the year – 1,306 2,225 509 4 4,044 Disposals – (351) (2,821) – (1) (3,173) Other – – 39 – (7) 32 31 March 2022 67,449 22,963 11,867 7,903 451 110,633 Adoption of IAS 29 1,564 829 390 110 87 2,980 1 April 2022 brought forward 69,013 23,792 12,257 8,013 538 113,613 Exchange movements (414) (846) (351) (231) (50) (1,892) Disposal of subsidiaries (39) (147) (180) (80) (2) (448) Amortisation charge for the year – 1,133 2,343 554 1 4,031 Disposals – (2) (1,814) – (1) (1,817) Hyperinflation impacts 729 407 207 51 40 1,434 31 March 2023 69,289 24,337 12,462 8,307 526 114,921 Net book value 31 March 2022 31,884 10,963 5,846 4,539 12 53,244 31 March 2023 27,615 9,969 6,012 3,598 13 47,207 For licences and spectrumfees and other intangible assets, amortisation isincluded within the cost ofsalesline within the consolidated income statement. Included in the net book value of computersoftware are assetsin the course of construction, which are not depreciated, with a cost of €1,451 million (2022: €1,955 million). The net book value and expiry dates of the mostsignificant licences are asfollows: 2023 2022 Expiry dates €m €m Germany 2025/2033/2040 2,979 3,270 Italy 2029/2037 3,123 3,415 UK 2023/2033/2038/2041 1,055 1,209 Spain 2028/2030/2031/2038/2041 758 809 The remaining amortisation period for each of the licencesin the table above correspondsto the expiry date of the respective licence. A summary of the Group’s mostsignificantspectrum licences can be found on page 241. 11.Property,plant andequipment The Groupmakessignificant investmentsin network equipment and infrastructure – the base stations and technology required to operate our networks – that form themajority of our tangible assets. All assets are depreciated over their useful economic lives. For further details on the estimation of useful economic lives,see ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 ‘Basis of preparation ‘to the consolidated financial statements. Accountingpolicies Land and buildings held for use are stated in the statement of financial position attheir cost, less any accumulated depreciation and any accumulated impairmentlosses. Amountsfor equipment, fixtures and fittings, which includes network infrastructure assets are stated at costless accumulated depreciation and any accumulated impairmentlosses. Assetsin the course of construction are carried at cost, less any recognised impairment losses. Depreciation of these assets commenceswhen the assets are ready for their intended use. The cost of property, plant and equipment includes directly attributable incremental costsincurred in their acquisition and installation. Depreciation is charged so astowrite off the cost of assets, other than land, using the straight-line method, over their estimated useful lives, as follows: Land and buildings Freehold buildings 25 - 50 years Leasehold premises the term of the lease Equipment, fixtures and fittings Network infrastructure and other 1 - 35 years Depreciation is not provided on freehold land. Right-of-use assets arising from the Group’slease arrangements are depreciated over their reasonably certain lease term, as determined under the Group’sleases policy (see note 20 ‘Leases’ and ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 for details). The gain or loss arising on the disposal, retirement or granting of a finance lease on an item of property, plant and equipment is determined asthe difference between any proceedsfrom sale or receivables arising on a lease and the carrying amount of the asset and isrecognised in the income statement. 155 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 11.Property,plantandequipment(continued) Equipment, Land and fixtures buildings and fittings Total €m €m €m Cost 1 April 2021 2,315 75,974 78,289 Exchange movements 1 (265) (264) Arising on acquisition (74) 44 (30) Additions 41 5,845 5,886 Disposals (200) (2,280) (2,480) Other 263 2 265 31 March 2022 as reported 2,346 79,320 81,666 Adoption of IAS 29 15 1,776 1,791 1 April 2022 brought forward 2,361 81,096 83,457 Exchange movements (81) (2,648) (2,729) Disposal of subsidiaries (69) (7,210) (7,279) Additions 49 5,805 5,854 Disposals (253) (3,724) (3,977) Hyperinflation impacts 7 1,040 1,047 Other (17) 101 84 31 March 2023 1,997 74,460 76,457 Accumulated depreciation and impairment 1 April 2021 1,216 48,403 49,619 Exchange movements 3 (171) (168) Charge for the year 117 5,740 5,857 Disposals (191) (2,240) (2,431) Other 224 (223) 1 31 March 2022 as reported 1,369 51,509 52,878 Adoption of IAS 29 3 1,432 1,435 1 April 2022 brought forward 1,372 52,941 54,313 Exchange movements (28) (1,694) (1,722) Disposal of subsidiaries (18) (4,543) (4,561) Charge for the year 83 5,544 5,627 Disposals (170) (3,672) (3,842) Hyperinflation impacts 1 747 748 31 March 2023 1,240 49,323 50,563 Net book value 31 March 2022 977 27,811 28,788 31 March 2023 757 25,137 25,894 Included in the net book value of land and buildings and equipment, fixtures and fittings are assetsin the course of construction, which are not depreciated, with a cost of €10million (2022: €12 million) and €1,988 million (2022: €2,353 million)respectively. Also included in the book value of equipment, fixtures and fittings are assetsleased out by the Group under operating leases, with a cost of €2,170 million (2022: €2,998 million), accumulated depreciation of €1,393million (2022: €2,050 million) and net book value of €777 million (2022: €948 million). Right-of-use assets arising from the Group’slease arrangements are recordedwithin property, plant and equipment: 2023 2022 €m €m Property, plant and equipment (owned assets) 25,894 28,788 Right-of-use assets1 12,098 12,016 31 March 37,992 40,804 Note: 1 Additions of €7,387 million (2022: €3,828 million) and a depreciation charge of €3,960million (2022: €3,944million)were recorded in respect of right-of-use assets during the yearto 31 March 2023. 156 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 11.Property,plantandequipment(continued) Equipment, Land and fixtures buildings and fittings Total €m €m €m Cost 1 April 2021 2,315 75,974 78,289 Exchange movements 1 (265) (264) Arising on acquisition (74) 44 (30) Additions 41 5,845 5,886 Disposals (200) (2,280) (2,480) Other 263 2 265 31 March 2022 as reported 2,346 79,320 81,666 Adoption of IAS 29 15 1,776 1,791 1 April 2022 brought forward 2,361 81,096 83,457 Exchange movements (81) (2,648) (2,729) Disposal of subsidiaries (69) (7,210) (7,279) Additions 49 5,805 5,854 Disposals (253) (3,724) (3,977) Hyperinflation impacts 7 1,040 1,047 Other (17) 101 84 31 March 2023 1,997 74,460 76,457 Accumulated depreciation and impairment 1 April 2021 1,216 48,403 49,619 Exchange movements 3 (171) (168) Charge for the year 117 5,740 5,857 Disposals (191) (2,240) (2,431) Other 224 (223) 1 31 March 2022 as reported 1,369 51,509 52,878 Adoption of IAS 29 3 1,432 1,435 1 April 2022 brought forward 1,372 52,941 54,313 Exchange movements (28) (1,694) (1,722) Disposal of subsidiaries (18) (4,543) (4,561) Charge for the year 83 5,544 5,627 Disposals (170) (3,672) (3,842) Hyperinflation impacts 1 747 748 31 March 2023 1,240 49,323 50,563 Net book value 31 March 2022 977 27,811 28,788 31 March 2023 757 25,137 25,894 Included in the net book value of land and buildings and equipment, fixtures and fittings are assetsin the course of construction, which are not depreciated, with a cost of €10million (2022: €12 million) and €1,988 million (2022: €2,353 million)respectively. Also included in the book value of equipment, fixtures and fittings are assetsleased out by the Group under operating leases, with a cost of €2,170 million (2022: €2,998 million), accumulated depreciation of €1,393million (2022: €2,050 million) and net book value of €777 million (2022: €948 million). Right-of-use assets arising from the Group’slease arrangements are recordedwithin property, plant and equipment: 2023 2022 €m €m Property, plant and equipment (owned assets) 25,894 28,788 Right-of-use assets1 12,098 12,016 31 March 37,992 40,804 Note: 1 Additions of €7,387 million (2022: €3,828 million) and a depreciation charge of €3,960million (2022: €3,944million)were recorded in respect of right-of-use assets during the yearto 31 March 2023. 12.Investments inassociates andjoint arrangements The Group holdsinterestsin associatesin Kenya and in India,wherewe have significant influence, aswell asin a number of joint arrangements, notably in theNetherlands, India, Australia and now OakHoldings 1 GmbHand its markets,wherewe share controlwith one ormore third parties. For further detailssee ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 ‘Basis of preparation ‘to the consolidated financialstatements. Accountingpolicies Interests injointarrangements A joint arrangementis a contractual arrangement whereby the Group and other parties undertake an economic activity thatissubjectto joint control; thatis, when the relevant activitiesthatsignificantly affectthe investee’sreturnsrequire the unanimous consent of the partiessharing control.Joint arrangements are either joint operations or joint ventures. Gains or lossesresulting from the contribution orsale of a subsidiary as part of the formation of a joint arrangement are recognised in respect of the Group’s entire equity holding in the subsidiary. Jointoperations A joint operation is a joint arrangement whereby the partiesthat have joint control have the rightsto the assets, and obligationsfor the liabilities, relating to the arrangement or that other facts and circumstancesindicate thatthisisthe case. The Group’sshare of assets, liabilities,revenue, expenses and cash flows are combined with the equivalentitemsin the financialstatements on a line-by-line basis. Any goodwill arising on the acquisition of the Group’sinterestin a joint operation is accounted for in accordance with the Group’s accounting policy for goodwill arising on the acquisition of a subsidiary. Jointventures A joint venture is a joint arrangementwhereby the partiesthat have joint control have the rightsto the net assets of the arrangement. Atthe date of acquisition, any excess of the cost of acquisition over the Group’sshare of the netfair value of the identifiable assets, liabilities and contingentliabilities of the joint venture isrecognised as goodwill. The goodwill isincluded within the carrying amount of the investment. The results and assets and liabilities of joint ventures, other than those joint ventures or partthereof that are held forsale (see note 7 ‘Discontinued operations and assets held forsale’), are incorporated in the consolidated financialstatements using the equity method of accounting. Under the equity method, investments in joint ventures are carried in the consolidated statement of financial position at cost adjusted for post-acquisition changesin the Group’sshare of the net assets of the joint venture, less any impairmentin the value of the investment. The Group’sshare of post-tax profits or losses are recognised in the consolidated income statement. Losses of a joint venture in excess of the Group’sinterestin thatjoint venture are recognised only to the extentthatthe Group hasincurred legal or constructive obligations or made payments on behalf of the joint venture. Associates An associate is an entity over which the Group hassignificantinfluence and thatis neither a subsidiary nor an interestin a joint arrangement. Significantinfluence isthe power to participate in the financial and operating policy decisions of the investee butwhere the Group does not have control or joint control over those policies. Atthe date of acquisition, any excess of the cost of acquisition over the Group’sshare of the netfair value of the identifiable assets, liabilities and contingentliabilities of the associate isrecognised as goodwill. The goodwill isincluded within the carrying amount of the investment. The results and assets and liabilities of associates are incorporated in the consolidated financialstatements using the same equity method of accounting used for joint ventures, described above. Jointoperations On 22 March 2023, the Group completed the disposal of its principal joint operation as part of the transactionwith OakHoldings 1 GmbH. The financial and operating activities of the operation were jointly controlled by the participating shareholders and were primarily designed for all but an insignificant amount of the output to be consumed by the shareholders. Country of incorporation or registration Percentage shareholdings1 Percentage shareholdings1 Name of joint operation Principal activity 2023 2022 Cornerstone Telecommunications Infrastructure Limited Network infrastructure UK – 50.0 Note: 1 Effective ownership percentages of Vodafone Group Plc are rounded to the nearesttenth of one percent. 157 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 158 VodafoneGroup Plc Annual Report 2023 2020 12.Investmentsinassociatesandjointarrangements(continued) Jointventures andassociates 2023 2022 Re-presented1 €m €m Investments in joint ventures 9,578 3,781 Investments in associates 1,501 1,542 31 March 11,079 5,323 Note: 1 The resultsforthe year ended 31 March 2022 have been re-presented to reflectthatIndus Towers Limited is no longerreported as held forsale. In the year ended 31 March 2022, investmentsin associates have increased by €1,055 million compared to the amount previously reported. See note 7 ‘Discontinued operations and assets held forsale’ formore information. Joint ventures The financial and operating activities of the Group’sjoint ventures are jointly controlled by the participating shareholders. The participating shareholders have rightsto the net assets of the joint venturesthrough their equity shareholdings. Unless otherwise stated, the Company’s principal joint ventures all have share capital consisting solely of ordinary shares and are all indirectly held. The country of incorporation or registration of all joint venturesis also their principal place of operation. Country of incorporation or registration Percentage shareholdings1 Percentage shareholdings1 Name of joint venture Principal activity 2023 2022 Oak Holdings 1 GmbH Network infrastructure Germany 64.2 – VodafoneZiggo Group Holding B.V. Network operator Netherlands 50.0 50.0 OXG Glasfaser GmbH Fibre infrastructure Germany 50.0 – Vodafone Idea Limited2 Network operator India 32.3 47.6 TPG Telecom Limited3 Network operator Australia 25.1 25.1 INWIT S.p.A. Network infrastructure Italy – 33.2 Notes: 1 Effective ownership percentages of Vodafone Group Plc rounded to the nearesttenth of one percent. 2 At 31March 2023 the fair value ofthe Group’sinterestin Vodafone Idea LimitedwasINR 91 billion (€1,021million) (2022: INR 148 billion (€1,750 million)) based on the quoted share price on the National Stock Exchange of India. 3 At 31March 2023 the fair value ofthe Group’sinterestin TPGTelecom Limitedwas AUD 2,273million (€1,401 million) (2022: AUD2,818million (€1,902 million)) based on the quoted share price on ASX. OakHoldings1GmbH On 22 March 2023, the Group completed the disposal of itsinterestin Vantage Towers A.G. toOak Holdings 1 GmbH, the co-control partnership of Vodafone, GIP and KKR. Vodafone retained an interest of 64.2% inOakHoldings 1 GmbH,which owns 89.3% of Vantage Towers A.G. On 18 April 2023, the Management Board and the Supervisory Board of Vantage Towers A.G. published their jointreasoned statement on the public delisting tender offer ofOakHoldings 1 GmbH to the shareholders of Vantage Towers A.G. Both recommended that all remaining shareholders acceptthe delisting tender offer. OXGGlasfaserGmbH In March 2023, the Group entered into an agreement with Altice Luxembourg S.A. to create a joint venture, OXG Glasfaser GmbH (‘OXG’), with 50.0% shareholding held by each shareholder. Each shareholder is committed to contribute funding of up to €950million toOXG for the deployment of fibre-to-the-home in Germany. The funding is expected to be contributed between 2023 and 2029. The amount and timing of the funding depends on the speed and size of the fibre deploymentso the funding may be for a lower value or contributed over a longer period of time. The contribution can be in the form of free capitalreserves,shareholder loan, loan notes orsimilar instruments as agreed by the shareholders. Vodafone Idea Limited The Group’s carrying value in Vodafone Idea Limited (‘VIL’)reduced to €nil at 30 September 2019. The Group’sshare of VIL’slosses notrecognised at 31 March 2023 is €3,717 million (31 March 2022: €5,120 million). Significant uncertainties existin relation to VIL’s ability to generate the cash flow itrequiresto settle or its ability to refinance itsliabilities and guarantees asthey fall due (see note 29 ‘Contingentliabilities and legal proceedings’). The value of the Group’s 21.0% shareholding in Indus Towers Limited is, in part, dependent on the income generated by Indus Towers Limited from tower rentalstomajor customers, including VIL. Any inability of these major customersto pay such amountsin the future may impactthe carrying value (31 March 2023: €908 million) of the Group’sinvestmentin Indus Towers Limited. 158 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 158 VodafoneGroup Plc Annual Report 2023 2020 12.Investmentsinassociatesandjointarrangements(continued) Jointventures andassociates 2023 2022 Re-presented1 €m €m Investments in joint ventures 9,578 3,781 Investments in associates 1,501 1,542 31 March 11,079 5,323 Note: 1 The resultsforthe year ended 31 March 2022 have been re-presented to reflectthatIndus Towers Limited is no longerreported as held forsale. In the year ended 31 March 2022, investmentsin associates have increased by €1,055 million compared to the amount previously reported. See note 7 ‘Discontinued operations and assets held forsale’ formore information. Joint ventures The financial and operating activities of the Group’sjoint ventures are jointly controlled by the participating shareholders. The participating shareholders have rightsto the net assets of the joint venturesthrough their equity shareholdings. Unless otherwise stated, the Company’s principal joint ventures all have share capital consisting solely of ordinary shares and are all indirectly held. The country of incorporation or registration of all joint venturesis also their principal place of operation. Country of incorporation or registration Percentage shareholdings1 Percentage shareholdings1 Name of joint venture Principal activity 2023 2022 Oak Holdings 1 GmbH Network infrastructure Germany 64.2 – VodafoneZiggo Group Holding B.V. Network operator Netherlands 50.0 50.0 OXG Glasfaser GmbH Fibre infrastructure Germany 50.0 – Vodafone Idea Limited2 Network operator India 32.3 47.6 TPG Telecom Limited3 Network operator Australia 25.1 25.1 INWIT S.p.A. Network infrastructure Italy – 33.2 Notes: 1 Effective ownership percentages of Vodafone Group Plc rounded to the nearesttenth of one percent. 2 At 31March 2023 the fair value ofthe Group’sinterestin Vodafone Idea LimitedwasINR 91 billion (€1,021million) (2022: INR 148 billion (€1,750 million)) based on the quoted share price on the National Stock Exchange of India. 3 At 31March 2023 the fair value ofthe Group’sinterestin TPGTelecom Limitedwas AUD 2,273million (€1,401 million) (2022: AUD2,818million (€1,902 million)) based on the quoted share price on ASX. OakHoldings1GmbH On 22 March 2023, the Group completed the disposal of itsinterestin Vantage Towers A.G. toOak Holdings 1 GmbH, the co-control partnership of Vodafone, GIP and KKR. Vodafone retained an interest of 64.2% inOakHoldings 1 GmbH,which owns 89.3% of Vantage Towers A.G. On 18 April 2023, the Management Board and the Supervisory Board of Vantage Towers A.G. published their jointreasoned statement on the public delisting tender offer ofOakHoldings 1 GmbH to the shareholders of Vantage Towers A.G. Both recommended that all remaining shareholders acceptthe delisting tender offer. OXGGlasfaserGmbH In March 2023, the Group entered into an agreement with Altice Luxembourg S.A. to create a joint venture, OXG Glasfaser GmbH (‘OXG’), with 50.0% shareholding held by each shareholder. Each shareholder is committed to contribute funding of up to €950million to OXG for the deployment of fibre-to-the-home in Germany. The funding is expected to be contributed between 2023 and 2029. The amount and timing of the funding depends on the speed and size of the fibre deploymentso the funding may be for a lower value or contributed over a longer period of time. The contribution can be in the form of free capitalreserves,shareholder loan, loan notes orsimilar instruments as agreed by the shareholders. Vodafone Idea Limited The Group’s carrying value in Vodafone Idea Limited (‘VIL’)reduced to €nil at 30 September 2019. The Group’sshare of VIL’slosses notrecognised at 31 March 2023 is €3,717 million (31 March 2022: €5,120 million). Significant uncertainties existin relation to VIL’s ability to generate the cash flow itrequiresto settle or its ability to refinance itsliabilities and guarantees asthey fall due (see note 29 ‘Contingentliabilities and legal proceedings’). The value of the Group’s 21.0% shareholding in Indus Towers Limited is, in part, dependent on the income generated by Indus Towers Limited from tower rentalstomajor customers, including VIL. Any inability of these major customersto pay such amountsin the future may impactthe carrying value (31 March 2023: €908 million) of the Group’sinvestmentin Indus Towers Limited. TPGTelecom Limited TPG Telecom Limited islisted on the Australian Securities Exchange (‘ASX’). Vodafone andHutchison Telecommunications(Australia) Limited each own an economic interest of 25.05%, with the remaining 49.9% listed asfree float on the ASX. The financial information presented in the tables below includes debt held within the structure that holdsthe Group’sinterestin TPG. INWIT S.p.A. On 22 March 2023, the Group completed the disposal of its 33.2% interestin INWIT S.p.A. as part of the transaction with Oak Holdings 1 GmbH. Dividends received from joint ventures During the year ended 31 March 2023, the Group received dividendsincluded in the consolidated statement of cash flowsfrom VodafoneZiggo GroupHolding B.V. of €165 million (2022: €350million, 2021: €209 million), TPG Telecom Limited of €24 million (2022: €22 million, 2021: €nil) and INWIT S.p.A. of €103 million (2022: €96 million, 2021: €42 million). Aggregated financial information The table below provides aggregated financial information for the Group’sjoint ventures asitrelatesto the amountsrecognised in the income statement and consolidated statement of financial position. Investment in joint ventures Profit/(loss) from continuing operations1 2023 2022 2023 2022 2021 €m €m €m €m €m Oak Holdings 1 GmbH 8,634 – – – – VodafoneZiggo Group Holding B.V. 793 822 137 (19) (232) TPG Telecom Limited 108 84 48 (5) 98 INWIT S.p.A. – 2,851 30 27 3 Other 43 24 (15) (14) (15) Total 9,578 3,781 200 (11) (146) Notes: 1 Total Other comprehensive income/(expense)is notmaterially differentto profit/(loss) from continuing operations. 159 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 160 VodafoneGroup Plc Annual Report 2023 2020 12.Investmentsinassociatesandjointarrangements(continued) Summarisedfinancialinformation Summarised financial information for each of the Group’smaterial joint ventures on a 100% ownership basisisset out below and overleaf. As disclosed above, the Group’sinvestmentin VILwasreduced to €nil in the year ended 31 March 2020 and the Group has notrecorded any profit or lossin respect of itsshare of VIL’sresultssince that date. Financial information is presented for TPG Telecom Limited (‘TPG’) for the nine month period to, and as at 31 December 2022 on the basisthatfull-year information in relation to TPG has not been released atthe date of approval of these financialstatements and assuch ismarketsensitive for TPG. Financial information presented for INWIT S.p.A. for the yearsto 31 March 2023, 31 March 2022 and 31 March 2021 is based on the financialresults and financial position as at 31 December 2022, 31 December 2021 and 31 December 2020,respectively, being the latestfinancial information available to the Groupwhen completing the financialstatementsfor each year. VodafoneZiggo Group Holding B.V. Vodafone Idea Limited 2023 2022 2021 2023 2022 2021 €m €m €m €m €m €m Income statement Revenue 4,063 4,056 4,010 5,046 4,450 4,847 Operating expenses (2,124) (2,104) (2,058) (3,280) (2,802) (3,133) Depreciation and amortisation (1,527) (1,592) (1,658) (2,396) (2,390) (2,442) Other income – – 25 – (34) (2,135) Operating profit/(loss) 412 360 319 (630) (776) (2,863) Interest income – – – 9 14 32 Interest expense 11 (276) (658) (2,567) (2,297) (2,035) Profit/(loss) before tax 423 84 (339) (3,188) (3,059) (4,866) Income tax (expense)/credit (150) (121) (125) - 2 – Profit/(loss) from continuing operations1 273 (37) (464) (3,188) (3,057) (4,866) TPG Telecom Limited INWIT S.p.A. 2023 2022 2021 2023 2022 2021 €m €m €m €m €m €m Income statement Revenue 3,027 3,375 3,010 853 785 562 Operating expenses (1,870) (2,292) (2,096) (73) (70) (46) Depreciation and amortisation (700) (914) (769) (508) (513) (398) Operating profit 457 169 145 272 202 118 Interest income – – 1 – – – Interest expense (172) (122) (201) (81) (90) (101) Profit/(loss) before tax 285 47 (55) 191 112 17 Income tax (expense)/credit (25) (27) 495 (1) (30) (7) Profit from continuing operations1 260 20 440 190 82 10 Note: 1 Total Other comprehensive income/(expense)is notmaterially differentto profit/(loss) from continuing operations. 160 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 160 VodafoneGroup Plc Annual Report 2023 2020 12.Investmentsinassociatesandjointarrangements(continued) Summarisedfinancialinformation Summarised financial information for each of the Group’smaterial joint ventures on a 100% ownership basisisset out below and overleaf. As disclosed above, the Group’sinvestmentin VILwasreduced to €nil in the year ended 31 March 2020 and the Group has notrecorded any profit or lossin respect of itsshare of VIL’sresultssince that date. Financial information is presented for TPG Telecom Limited (‘TPG’) for the nine month period to, and as at 31 December 2022 on the basisthatfull-year information in relation to TPG has not been released atthe date of approval of these financialstatements and assuch ismarketsensitive for TPG. Financial information presented for INWIT S.p.A. for the yearsto 31 March 2023, 31 March 2022 and 31 March 2021 is based on the financialresults and financial position as at 31 December 2022, 31 December 2021 and 31 December 2020,respectively, being the latestfinancial information available to the Groupwhen completing the financialstatementsfor each year. VodafoneZiggo Group Holding B.V. Vodafone Idea Limited 2023 2022 2021 2023 2022 2021 €m €m €m €m €m €m Income statement Revenue 4,063 4,056 4,010 5,046 4,450 4,847 Operating expenses (2,124) (2,104) (2,058) (3,280) (2,802) (3,133) Depreciation and amortisation (1,527) (1,592) (1,658) (2,396) (2,390) (2,442) Other income – – 25 – (34) (2,135) Operating profit/(loss) 412 360 319 (630) (776) (2,863) Interest income – – – 9 14 32 Interest expense 11 (276) (658) (2,567) (2,297) (2,035) Profit/(loss) before tax 423 84 (339) (3,188) (3,059) (4,866) Income tax (expense)/credit (150) (121) (125) - 2 – Profit/(loss) from continuing operations1 273 (37) (464) (3,188) (3,057) (4,866) TPG Telecom Limited INWIT S.p.A. 2023 2022 2021 2023 2022 2021 €m €m €m €m €m €m Income statement Revenue 3,027 3,375 3,010 853 785 562 Operating expenses (1,870) (2,292) (2,096) (73) (70) (46) Depreciation and amortisation (700) (914) (769) (508) (513) (398) Operating profit 457 169 145 272 202 118 Interest income – – 1 – – – Interest expense (172) (122) (201) (81) (90) (101) Profit/(loss) before tax 285 47 (55) 191 112 17 Income tax (expense)/credit (25) (27) 495 (1) (30) (7) Profit from continuing operations1 260 20 440 190 82 10 Note: 1 Total Other comprehensive income/(expense)is notmaterially differentto profit/(loss) from continuing operations. 161 1 VodafoneGroup Plc Annual Report 2023 Oak Holdings 1 GmbH1 VodafoneZiggo Group Holding B.V. 2023 2023 2022 €m €m €m Statement of financial position Non-current assets 23,878 16,570 16,521 Current assets 749 719 739 Total assets 24,627 17,289 17,260 Equity shareholders’ funds 13,450 1,586 1,643 Non-controlling interests 1,262 – – Non-current liabilities 6,709 13,299 13,187 Current liabilities 3,206 2,404 2,430 Cash and cash equivalents within current assets 224 20 190 Non-current liabilities excluding trade and other payables and provisions 6,215 13,138 13,007 Current liabilities excluding trade and other payables and provisions 2,409 1,247 1,282 Vodafone Idea Limited2 TPG Telecom Limited 2023 2022 2023 2022 €m €m €m €m Statement of financial position Non-current assets 18,162 17,267 9,823 10,638 Current assets 2,174 2,693 1,009 898 Total assets 20,336 19,960 10,832 11,536 Equity shareholders’ (deficit)/funds (10,760) (10,214) 3,019 3,129 Non-current liabilities 24,730 23,266 6,702 7,227 Current liabilities 6,366 6,908 1,111 1,180 Cash and cash equivalents within current assets 96 365 290 435 Non-current liabilities excluding trade and other payables and provisions 24,707 23,241 6,595 7,173 Current liabilities excluding trade and other payables and provisions 2,699 3,334 86 121 INWIT S.p.A. 2022 €m Statement of financial position Non-current assets 14,532 Current assets 270 Total assets 14,802 Equity shareholders’ funds 8,595 Non-current liabilities 5,672 Current liabilities 535 Cash and cash equivalents within current assets 96 Non-current liabilities excluding trade and other payables and provisions 5,420 Current liabilities excluding trade and other payables and provisions 319 Note: 1 Includes balances which are provisional based on finalisation ofthe purchase price allocation. 2 Includes certain amountssubjectto an adjustmentmechanismagreed as part ofthe formation of Vodafone Idea Limited. See note 29 ‘Contingent liabilities and legal proceedings’. 161 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 162 VodafoneGroup Plc Annual Report 2023 2020 12.Investmentsinassociatesandjointarrangements(continued) The reconciliation ofsummarised financial information presented to the carrying amount of our interestin joint venturesisset out below. Oak Holdings 1 GmbH VodafoneZiggo Group Holding B.V. 2023 2023 2022 2021 €m €m €m €m Equity shareholders’ funds 13,450 1,586 1,643 Interest in joint ventures1 8,634 793 822 Carrying value 8,634 793 822 Profit/(loss) from continuing operations – 273 (37) (464) Share of profit/(loss)1 – 137 (19) (232) Vodafone Idea Limited TPG Telecom Limited 2023 2022 2021 2023 2022 2021 €m €m €m €m €m €m Equity shareholders’ (deficit)/funds (10,760) (10,214) 3,019 3,129 Interest in joint ventures1 (3,475) (4,863) 56 27 Impairment (242) (257) – – Goodwill – – 52 57 Investment proportion not recognised 3,717 5,120 – – Carrying value – – 108 84 (Loss)/profit from continuing operations (3,188) (3,057) (4,866) 260 20 440 Share of (loss)/profit1 (1,030) (1,357) (2,160) 48 (5) 98 Share of loss not recognised 1,030 1,357 2,160 – – – Share of profit/(loss)1 – – – 48 (5) 98 INWIT S.p.A. 2023 2022 2021 €m €m €m Equity shareholders’ funds – 8,595 8,801 Interest in joint ventures – 2,851 2,920 Carrying value – 2,851 2,920 Profit from continuing operations 190 82 10 Share of profit 63 27 3 Share of profit not recognised as held for sale (33) – – Share of profit 30 27 3 Note: 1 The Group’s effective ownership percentages ofOakHoldings 1 GmbH, VodafoneZiggo GroupHolding B.V., Vodafone Idea Limited and TPGTelecom Limited are 64.2%, 50.0%, 32.3% and 25.1%, respectively,rounded to the nearesttenth of one percent. 162 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 162 VodafoneGroup Plc Annual Report 2023 2020 12.Investmentsinassociatesandjointarrangements(continued) The reconciliation ofsummarised financial information presented to the carrying amount of our interestin joint venturesisset out below. Oak Holdings 1 GmbH VodafoneZiggo Group Holding B.V. 2023 2023 2022 2021 €m €m €m €m Equity shareholders’ funds 13,450 1,586 1,643 Interest in joint ventures1 8,634 793 822 Carrying value 8,634 793 822 Profit/(loss) from continuing operations – 273 (37) (464) Share of profit/(loss)1 – 137 (19) (232) Vodafone Idea Limited TPG Telecom Limited 2023 2022 2021 2023 2022 2021 €m €m €m €m €m €m Equity shareholders’ (deficit)/funds (10,760) (10,214) 3,019 3,129 Interest in joint ventures1 (3,475) (4,863) 56 27 Impairment (242) (257) – – Goodwill – – 52 57 Investment proportion not recognised 3,717 5,120 – – Carrying value – – 108 84 (Loss)/profit from continuing operations (3,188) (3,057) (4,866) 260 20 440 Share of (loss)/profit1 (1,030) (1,357) (2,160) 48 (5) 98 Share of loss not recognised 1,030 1,357 2,160 – – – Share of profit/(loss)1 – – – 48 (5) 98 INWIT S.p.A. 2023 2022 2021 €m €m €m Equity shareholders’ funds – 8,595 8,801 Interest in joint ventures – 2,851 2,920 Carrying value – 2,851 2,920 Profit from continuing operations 190 82 10 Share of profit 63 27 3 Share of profit not recognised as held for sale (33) – – Share of profit 30 27 3 Note: 1 The Group’s effective ownership percentages ofOakHoldings 1 GmbH, VodafoneZiggo GroupHolding B.V., Vodafone Idea Limited and TPGTelecom Limited are 64.2%, 50.0%, 32.3% and 25.1%, respectively,rounded to the nearesttenth of one percent. Associates Unless otherwise stated, the Company’s principal associates all have share capital consisting solely of ordinary shares and are all indirectly held. The country of incorporation or registration of all associatesis also their principal place of operation. Country of Percentage Percentage incorporation or shareholding1 shareholding1 Name of associate Principal activity registration 2023 2022 Safaricom PLC2 Network operator Kenya 39.9 40.0 Indus Towers Limited3 Network infrastructure India 21.0 21.0 Notes: 1 Effective ownership percentages of Vodafone Group Plc rounded to the nearesttenth of one percent. 2 At 31March 2023, the fair value ofthe Group’sinterestin Safaricom PLC was KES 290 billion (€2,012 million) (2022: KES 546 billion (€4,270 million)) based on the closing quoted share price on the Nairobi Stock Exchange. The Group also holdstwo non-voting shares. 3 At 31March 2023, the fair value ofthe Group’sinterestin Indus Towers LimitedwasINR 81 billion (€908million) (2022: INR 126 billion (€1,494 million)) based on the closing quoted share price on the National Stock Exchange of India. Aggregated financial information The table below provides aggregated financial information for the Group’s associates asitrelatesto the amountsrecognised in the income statement and consolidated statement of financial position. Investment in associates Profit/(loss) from continuing operations Re-presented1 Re-presented1 Re-presented1 2023 2022 2023 2022 2021 €m €m €m €m €m Safaricom PLC2 509 428 195 217 217 Indus Towers Limited 908 1,055 50 178 306 Other2 84 59 (12) 5 (3) Total 1,501 1,542 233 400 520 Note: 1 The resultsforthe years ended 31March 2022 and 31 March 2021 have been re-presented to reflectthatIndus Towers Limited is no longerreported as held forsale. In the year ended 31 March 2022, investmentsin associates hasincreased by €1,055million and profitfromcontinuing operations hasincreased by €178million (2021: €32 million) compared to the amounts previously reported. See note 7 ‘Discontinued operations and assets held forsale’ formore information. 2 Other comprehensive income includes profitfrom continuing operations, togetherwith €127million in respect ofthe application of IAS 29 to Safaricom’s operationsin Ethiopia. Dividends from associates During the year ended 31 March 2023, the Group received dividendsincluded in the consolidated statement of cash flowsfrom Indus Towers Limited of €75 million (2022: €nil, 2021: €201 million) and from Safaricom PLC of €250 million (2022: €170million, 2021: €171 million). 163 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 12.Investmentsinassociatesandjointarrangements(continued) Summarisedfinancialinformation Summarised financial information for each of the Group’smaterial associates on a 100% ownership basisisset out below. Safaricom PLC Indus Towers Limited 2023 2022 2021 2023 2022 2021 €m €m €m €m €m €m Income statement Revenue 2,468 2,318 2,083 3,343 3,122 2,421 Operating expenses (1,353) (1,164) (1,030) (2,240) (1,480) (1,247) Depreciation and amortisation (432) (309) (299) (588) (598) (477) Other income 68 – – – – 412 Operating profit 751 845 754 515 1,044 1,109 Interest income 13 9 12 26 – 61 Interest expense (69) (59) (27) (200) (140) (194) Profit before tax 695 795 739 341 904 976 Income tax expense (285) (270) (197) (102) (272) (168) Profit from continuing operations and total comprehensive income 410 525 542 239 632 808 Attributable to: - Owners of the parent 489 542 542 239 632 808 - Non-controlling interests (79) (17) – – – – Statement of financial position Non-current assets 3,007 2,173 5,243 5,359 Current assets 436 510 1,081 1,685 Total assets 3,443 2,683 6,324 7,044 Equity shareholders' funds 1,269 1,066 3,453 3,774 Non-controlling interests 532 312 – – Non-current liabilities 753 558 1,954 2,101 Current liabilities 889 747 917 1,169 Cash and cash equivalents within current assets 127 241 3 278 Non-current liabilities excluding trade and other payables and provisions 500 465 1,665 1,795 Current liabilities excluding trade and other payables and provisions 322 241 491 638 The reconciliation of summarised financial information presented to the carrying amount of our interest in the associate is set out below. Safaricom PLC Indus Towers Limited Re-presented1 Re-presented1 2023 2022 2021 2023 2022 2021 €m €m €m €m €m €m Equity shareholders' funds 1,269 1,066 3,453 3,774 Interest in associates2 507 425 727 794 Goodwill 2 3 181 261 Carrying value 509 428 908 1,055 Profit from continuing operations 489 542 542 239 632 808 Share of profit 195 217 217 50 178 306 Notes: 1 The resultsforthe years ended 31March 2022 and 31 March 2021 have been re-presented to reflectthatIndus Towers Limited is no longerreported as held forsale. In the year ended 31 March 2022, the carrying value ofthe Group’sinterestin the associate hasincreased by €1,055million and the Group’sshare of profit hasincreased by €178million (2021: €32 million) compared to the amounts previously reported.See note 7 ‘Discontinued operations and assetsheld forsale’ formore information. 2 The Group’s effective ownership percentages of Safaricom PLC and Indus Towers Limited are 39.9% and 21.0%, respectively, rounded to the nearesttenth of one percent. 164 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 12.Investmentsinassociatesandjointarrangements(continued) Summarisedfinancialinformation Summarised financial information for each of the Group’smaterial associates on a 100% ownership basisisset out below. Safaricom PLC Indus Towers Limited 2023 2022 2021 2023 2022 2021 €m €m €m €m €m €m Income statement Revenue 2,468 2,318 2,083 3,343 3,122 2,421 Operating expenses (1,353) (1,164) (1,030) (2,240) (1,480) (1,247) Depreciation and amortisation (432) (309) (299) (588) (598) (477) Other income 68 – – – – 412 Operating profit 751 845 754 515 1,044 1,109 Interest income 13 9 12 26 – 61 Interest expense (69) (59) (27) (200) (140) (194) Profit before tax 695 795 739 341 904 976 Income tax expense (285) (270) (197) (102) (272) (168) Profit from continuing operations and total comprehensive income 410 525 542 239 632 808 Attributable to: - Owners of the parent 489 542 542 239 632 808 - Non-controlling interests (79) (17) – – – – Statement of financial position Non-current assets 3,007 2,173 5,243 5,359 Current assets 436 510 1,081 1,685 Total assets 3,443 2,683 6,324 7,044 Equity shareholders' funds 1,269 1,066 3,453 3,774 Non-controlling interests 532 312 – – Non-current liabilities 753 558 1,954 2,101 Current liabilities 889 747 917 1,169 Cash and cash equivalents within current assets 127 241 3 278 Non-current liabilities excluding trade and other payables and provisions 500 465 1,665 1,795 Current liabilities excluding trade and other payables and provisions 322 241 491 638 The reconciliation of summarised financial information presented to the carrying amount of our interest in the associate is set out below. Safaricom PLC Indus Towers Limited Re-presented1 Re-presented1 2023 2022 2021 2023 2022 2021 €m €m €m €m €m €m Equity shareholders' funds 1,269 1,066 3,453 3,774 Interest in associates2 507 425 727 794 Goodwill 2 3 181 261 Carrying value 509 428 908 1,055 Profit from continuing operations 489 542 542 239 632 808 Share of profit 195 217 217 50 178 306 Notes: 1 The resultsforthe years ended 31March 2022 and 31 March 2021 have been re-presented to reflectthatIndus Towers Limited is no longerreported as held forsale. In the year ended 31 March 2022, the carrying value ofthe Group’sinterestin the associate hasincreased by €1,055million and the Group’sshare of profit hasincreased by €178million (2021: €32 million) compared to the amounts previously reported.See note 7 ‘Discontinued operations and assetsheld forsale’ formore information. 2 The Group’s effective ownership percentages of Safaricom PLC and Indus Towers Limited are 39.9% and 21.0%, respectively, rounded to the nearesttenth of one percent. 13.Otherinvestments The Group holds a number of other listed and unlisted investments, mainly comprising managed funds, deposits and government bonds. Accountingpolicies Other investments comprising debt and equity instruments are recognised and derecognised on a trade datewhere a purchase orsale of an investment is under a contract whose termsrequire delivery ofthe investment within the timeframe established by the market concerned, and are initially measured at fair value, including transaction costs. Debtsecuritiesthat are held for collection of contractual cash flowswhere those cash flowsrepresentsolely payments of principal and interest are measured at amortised cost using the effective interestmethod, less any impairment. Debtsecuritiesthat do not meet the criteria for amortised cost are measured at fair value through profit and loss. Equity securities are classified and measured at fair value through other comprehensive income, there is no subsequent reclassification of fair value gains and lossesto profit or lossfollowing derecognition ofthe investment. 2023 2022 €m €m Included within non-current assets Equity securities1 94 143 Debt securities2 999 930 1,093 1,073 Included within current assets Short-term investments: Bonds and debt securities3 1,338 1,446 Managed investment funds1 2,967 3,349 4,305 4,795 Collateral assets4 239 698 Other investments5 2,473 2,438 7,017 7,931 Notes: 1 Items measured at a fair value, €47million (2022: €91 million) of equity securities have a valuation basis of level 1 classification, which comprisesfinancial instruments where fair value is determined by unadjusted quoted pricesin active marketsforidentical assets and liabilities. The remaining items are measured atfair value and the basisislevel 2 classification, which comprisesitems where fair value is determined from inputs otherthan quoted pricesthat are observable forthe asset orliability, either directly orindirectly. 2 Items are measured at amortised cost and have a fair value of €803 million (2022: €830 million)with a valuation basis of level 1 classification. 3 Items are measured atfair value and the valuation basisislevel 1 classification. 4 Items are measured at amortised cost and the carrying amount approximatesfair value. 5 Includesinvestmentsmeasured at a fair value of €1,409million (2022: €1,460 million). The valuation basisislevel 1. The remaining items aremeasured at amortised cost and the carrying amount approximatesfair value. Non-current debtsecurities within non-current assetsinclude €885million (2022: €885 million) of loan notesissued by VodafoneZiggo Holding B.V. The Group investssurplus cash positions across a portfolio ofshort-term investmentsto manage liquidity and credit risk whilst achieving suitable returns. Collateral arrangements on derivative financial instrumentsresult in cash being paid/(held), repayablewhen the derivatives are settled. These assets do not meet the definition of cash and cash equivalents but are included in the Group’s net debt based on their liquidity. Bonds and debtsecuritiesincludes €899 million (2022: €681 million) of highly liquid Japanese; €290 million (2022: €nil) Dutch; €150 million (2022: €nil) German; €nil (2022: €501 million) Belgian; €nil (2022: €200 million) French governmentsecurities and €nil (2022: €64 million) of UK government bonds. Managed investment funds of €2,967 million (2022: €3,349 million) are in funds with liquidity of up to 90 days. Collateral assets of €239 million (2022: €698 million) represents collateral paid on derivative financial instruments. Other investments are excluded from net debt based on their liquidity and primarily consist of restricted debtsecuritiesincluding amounts held in qualifying assets by Group insurance companiesto meet regulatory requirements. 165 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 14.Tradeandotherreceivables Trade and other receivablesmainly consist of amounts owed to us by customers and amountsthatwe pay to our suppliersin advance. Derivative financial instrumentswith a positive market value are reportedwithin this note as are contract assets, which represent an asset for accrued revenue in respect of goods orservices delivered to customersfor which a trade receivable does not yet exist, and finance lease receivablesrecognisedwhere the Group acts as a lessor. See note 20 ‘Leases’ formore information on the Group’sleasing activities. Accounting policies Trade receivablesrepresent amounts owed by customers where the rightto receive payment is conditional only on the passage of time. Trade receivablesthat are recovered in instalmentsfrom customers over an extended period are discounted atmarketrates and interestrevenue is accreted over the expected repayment period.Other trade receivables do not carry any interest and are stated attheir nominal value. When the Group establishes a practice ofselling portfolios of receivablesfrom time to time these portfolios are recorded atfair value through other comprehensive income; all other trade receivables are recorded at amortised cost. The carrying value of all trade receivables, contract assets and finance lease receivablesrecorded at amortised costisreduced by allowancesfor lifetime estimated creditlosses. Estimated future creditlosses are firstrecorded on the initialrecognition of a receivable and are based on the ageing of the receivable balances, historical experience and forward looking considerations. Individual balances are written off whenmanagement deemsthemnotto be collectible. 2023 2022 €m €m Included within non-current assets Trade receivables 51 34 Trade receivables held at fair value through other comprehensive income 337 606 Net investment in leases 267 134 Contract assets 494 495 Contract-related costs 690 630 Other receivables 66 37 Prepayments 296 231 Derivative financial instruments1 5,642 4,216 7,843 6,383 Included within current assets Trade receivables 3,277 3,300 Trade receivables held at fair value through other comprehensive income 566 802 Net investment in leases 106 66 Contract assets 3,063 3,056 Contract-related costs 1,471 1,403 Amounts owed by associates and joint ventures 175 241 Other receivables 730 869 Prepayments 835 872 Derivative financial instruments1 482 410 10,705 11,019 Note: 1 Includes €198million (2022: €3million) of embedded derivative option forwhich fair value is based on level 3 ofthe fair value hierarchy (see section on fair value carrying value information within note 22 ‘Capital andRiskManagement’). All otheritems are measured atfair value and the valuation basisislevel 2 classification,which comprisesitems where fair value is determined from inputs otherthan quoted pricesthat are observable forthe asset orliability, either directly orindirectly. The Group’strade receivables and contract assets are classified at amortised cost unlessstated otherwise and are measured after allowancesfor future expected creditlosses,see note 22 ‘Capital and financialriskmanagement’ for more information on creditrisk. The carrying amounts of trade and other receivables, which are measured at amortised cost, approximate their fair value and are predominantly non-interest bearing. The Group’s contract-related costs comprise €2,078 million (2022: €1,967 million)relating to costsincurred to obtain customer contracts and €83 million (2022: €66 million)relating to costsincurred to fulfil customer contracts; an amortisation and impairment expense of €1,541 million (2022: €1,517 million)wasrecognised in operating profit during the year. Other than for the embedded derivative option described above, the fair values of the derivative financial instruments are calculated by discounting the future cash flowsto net present values using appropriate marketinterestrates and foreign currency rates prevailing at 31 March. 166 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 14.Tradeandotherreceivables Trade and other receivablesmainly consist of amounts owed to us by customers and amountsthatwe pay to our suppliersin advance. Derivative financial instrumentswith a positive market value are reportedwithin this note as are contract assets, which represent an asset for accrued revenue in respect of goods orservices delivered to customersfor which a trade receivable does not yet exist, and finance lease receivablesrecognisedwhere the Group acts as a lessor. See note 20 ‘Leases’ formore information on the Group’sleasing activities. Accounting policies Trade receivablesrepresent amounts owed by customers where the rightto receive payment is conditional only on the passage of time. Trade receivablesthat are recovered in instalmentsfrom customers over an extended period are discounted atmarketrates and interestrevenue is accreted over the expected repayment period.Other trade receivables do not carry any interest and are stated attheir nominal value. When the Group establishes a practice ofselling portfolios of receivablesfrom time to time these portfolios are recorded atfair value through other comprehensive income; all other trade receivables are recorded at amortised cost. The carrying value of all trade receivables, contract assets and finance lease receivablesrecorded at amortised costisreduced by allowancesfor lifetime estimated creditlosses. Estimated future creditlosses are firstrecorded on the initialrecognition of a receivable and are based on the ageing of the receivable balances, historical experience and forward looking considerations. Individual balances are written off whenmanagement deemsthemnotto be collectible. 2023 2022 €m €m Included within non-current assets Trade receivables 51 34 Trade receivables held at fair value through other comprehensive income 337 606 Net investment in leases 267 134 Contract assets 494 495 Contract-related costs 690 630 Other receivables 66 37 Prepayments 296 231 Derivative financial instruments1 5,642 4,216 7,843 6,383 Included within current assets Trade receivables 3,277 3,300 Trade receivables held at fair value through other comprehensive income 566 802 Net investment in leases 106 66 Contract assets 3,063 3,056 Contract-related costs 1,471 1,403 Amounts owed by associates and joint ventures 175 241 Other receivables 730 869 Prepayments 835 872 Derivative financial instruments1 482 410 10,705 11,019 Note: 1 Includes €198million (2022: €3million) of embedded derivative option forwhich fair value is based on level 3 ofthe fair value hierarchy (see section on fair value carrying value information within note 22 ‘Capital andRiskManagement’). All otheritems are measured atfair value and the valuation basisislevel 2 classification,which comprisesitems where fair value is determined from inputs otherthan quoted pricesthat are observable forthe asset orliability, either directly orindirectly. The Group’strade receivables and contract assets are classified at amortised cost unlessstated otherwise and are measured after allowancesfor future expected creditlosses,see note 22 ‘Capital and financialriskmanagement’ for more information on creditrisk. The carrying amounts of trade and other receivables, which are measured at amortised cost, approximate their fair value and are predominantly non-interest bearing. The Group’s contract-related costs comprise €2,078 million (2022: €1,967 million)relating to costsincurred to obtain customer contracts and €83 million (2022: €66 million)relating to costsincurred to fulfil customer contracts; an amortisation and impairment expense of €1,541 million (2022: €1,517 million)wasrecognised in operating profit during the year. Other than for the embedded derivative option described above, the fair values of the derivative financial instruments are calculated by discounting the future cash flowsto net present values using appropriate marketinterestrates and foreign currency rates prevailing at 31 March. 15.Tradeandotherpayables Trade and other payables mainly consist of amounts owed to suppliersthat have been invoiced or are accrued and contract liabilitiesrelating to consideration received from customersin advance. They also include taxes and social security amounts due in relation to the Group’srole as an employer. Derivative financial instruments with a negative market value are reportedwithin this note. Accountingpolicies Trade payables are notinterest-bearing and are stated attheir nominal value. 2023 2022 €m €m Included within non-current liabilities Other payables 520 452 Accruals 48 28 Contract liabilities 500 530 Derivative financial instruments1 1,116 1,506 2,184 2,516 Included within current liabilities Trade payables 7,662 7,327 Amounts owed to associates and joint ventures 329 40 Other taxes and social security payable 1,013 1,114 Other payables 2,080 2,032 Accruals2 4,814 6,991 Contract liabilities 2,043 1,991 Derivative financial instruments1 306 166 18,247 19,661 Notes: 1 Items are measured atfair value and the valuation basisislevel 2 classification, which comprisesitems where fair value is determined from inputs otherthan quoted pricesthat are observable forthe asset orliability, either directly orindirectly. 2 Includes €nil (2022: €1,434million) payable in relation to the irrevocable and non-discretionary share buyback programmes. The carrying amounts of trade and other payables approximate their fair value. Materially all of the €1,991 million recorded as current contractliabilities at 1 April 2022 wasrecognised asrevenue during the year. Other payablesincluded within non-current liabilitiesinclude €257 million (2022: €351million) in respect of the re-insurance of a third party annuity policy related to the Vodafone and CWWSections of the Vodafone UK Group Pension Scheme. The fair values of the derivative financial instruments are calculated by discounting the future cash flowsto net present values using appropriate marketinterestrates and foreign currency rates prevailing at 31 March. 167 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 16.Provisions A provision is a liability recorded in the statement of financial position, where there is uncertainty over the timing or amount that will be paid, and istherefore often estimated. The main provisionswe hold are in relation to asset retirement obligations,which include the cost of returning network infrastructure sitesto their original condition atthe end of the lease and claimsfor legal and regulatorymatters. Accounting policies ProvisionsarerecognisedwhentheGrouphasapresentobligation(legalorconstructive)asaresultofapastevent,itisprobablethattheGroupwillbe requiredtosettlethatobligationandareliableestimatecanbemadeoftheamountoftheobligation.ProvisionsaremeasuredattheDirectors’best estimateoftheexpenditurerequiredtosettletheobligationatthereportingdateandarediscountedtopresentvaluewheretheeffectismaterial.Where thetimingofsettlementisuncertainamountsareclassifiedasnon-currentwheresettlementisexpectedmorethan12monthsfromthereportingdate. Assetretirement obligations InthecourseoftheGroup’sactivities,anumberofsitesandotherassetsareutilisedwhichareexpectedtohavecostsassociatedwithdecommissioning. Theassociatedcashoutflowsaresubstantiallyexpectedtooccuratthedatesofdecommissioningoftheassetstowhichtheyrelate,andarelongtermin nature. Legal andregulatory The Group isinvolved in a number of legal and other disputes, including where the Group hasreceived notifications of possible claims. The Directors ofthe Company, after taking legal advice, have established provisions considering the facts of each case. For a discussion of certain legal issues potentially affecting the Group see note 29 ‘Contingent liabilities and legal proceedings’to the consolidated financial statements. Restructuring The Group undertakes periodic reviews of its operations and recognises provisions asrequired based on the outcomes of these reviews. The associated cash outflowsfor restructuring costs are primarily lessthan one year. Other provisions Other provisions comprise variousitemsthat do not fallwithin the Group’s other categories of provisions. Asset retirement Legal and obligations regulatory Restructuring Other Total €m €m €m €m €m 1 April 2021 1,222 528 426 463 2,639 Exchange movements 3 (25) (4) 5 (21) Amounts capitalised in the year 297 – – – 297 Amounts charged to the income statement – 216 216 139 571 Utilised in the year - payments (51) (128) (295) (197) (671) Amounts released to the income statement (1) (142) (41) (83) (267) 31 March 2022 1,470 449 302 327 2,548 Exchange movements (22) (28) – (2) (52) Disposal of subsidiaries (578) (8) (2) (2) (590) Amounts capitalised in the year 185 – – – 185 Amounts charged to the income statement – 138 425 126 689 Utilised in the year - payments (59) (44) (181) (123) (407) Amounts released to the income statement (1) (77) (36) (48) (162) Other 35 – – – 35 31 March 2023 1,030 430 508 278 2,246 168 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 16.Provisions A provision is a liability recorded in the statement of financial position, where there is uncertainty over the timing or amount that will be paid, and istherefore often estimated. The main provisionswe hold are in relation to asset retirement obligations,which include the cost of returning network infrastructure sitesto their original condition atthe end of the lease and claimsfor legal and regulatorymatters. Accounting policies ProvisionsarerecognisedwhentheGrouphasapresentobligation(legalorconstructive)asaresultofapastevent,itisprobablethattheGroupwillbe requiredtosettlethatobligationandareliableestimatecanbemadeoftheamountoftheobligation.ProvisionsaremeasuredattheDirectors’best estimateoftheexpenditurerequiredtosettletheobligationatthereportingdateandarediscountedtopresentvaluewheretheeffectismaterial.Where thetimingofsettlementisuncertainamountsareclassifiedasnon-currentwheresettlementisexpectedmorethan12monthsfromthereportingdate. Assetretirement obligations InthecourseoftheGroup’sactivities,anumberofsitesandotherassetsareutilisedwhichareexpectedtohavecostsassociatedwithdecommissioning. Theassociatedcashoutflowsaresubstantiallyexpectedtooccuratthedatesofdecommissioningoftheassetstowhichtheyrelate,andarelongtermin nature. Legal andregulatory The Group isinvolved in a number of legal and other disputes, including where the Group hasreceived notifications of possible claims. The Directors ofthe Company, after taking legal advice, have established provisions considering the facts of each case. For a discussion of certain legal issues potentially affecting the Group see note 29 ‘Contingent liabilities and legal proceedings’to the consolidated financial statements. Restructuring The Group undertakes periodic reviews of its operations and recognises provisions asrequired based on the outcomes of these reviews. The associated cash outflowsfor restructuring costs are primarily lessthan one year. Otherprovisions Other provisions comprise variousitemsthat do not fallwithin the Group’s other categories of provisions. Asset retirement Legal and obligations regulatory Restructuring Other Total €m €m €m €m €m 1 April 2021 1,222 528 426 463 2,639 Exchange movements 3 (25) (4) 5 (21) Amounts capitalised in the year 297 – – – 297 Amounts charged to the income statement – 216 216 139 571 Utilised in the year - payments (51) (128) (295) (197) (671) Amounts released to the income statement (1) (142) (41) (83) (267) 31 March 2022 1,470 449 302 327 2,548 Exchange movements (22) (28) – (2) (52) Disposal of subsidiaries (578) (8) (2) (2) (590) Amounts capitalised in the year 185 – – – 185 Amounts charged to the income statement – 138 425 126 689 Utilised in the year - payments (59) (44) (181) (123) (407) Amounts released to the income statement (1) (77) (36) (48) (162) Other 35 – – – 35 31 March 2023 1,030 430 508 278 2,246 Provisions have been analysed between current and non-current asfollows: Asset retirement Legal and obligations regulatory Restructuring Other Total €m €m €m €m €m Current liabilities 61 193 298 122 674 Non-current liabilities 969 237 210 156 1,572 31 March 2023 1,030 430 508 278 2,246 Asset retirement Legal and obligations regulatory Restructuring Other Total €m €m €m €m €m Current liabilities 43 235 241 148 667 Non-current liabilities 1,427 214 61 179 1,881 31 March 2022 1,470 449 302 327 2,548 17.Calledupshare capital Called up share capital isthe number ofsharesin issue attheir par value. A number ofshareswere allotted during the year in relation to employee share schemes. Accountingpolicies Equity instrumentsissued by the Group are recorded atthe amount of the proceedsreceived, net of directissuance costs. 2023 2022 Number €m Number €m Ordinary shares of 20 20⁄21 US cents each allotted, issued and fully paid:1, 2, 3 1 April 28,817,627,868 4,797 28,816,835,778 4,797 Allotted during the year 628,190 – 792,090 – 31 March 28,818,256,058 4,797 28,817,627,868 4,797 Notes: 1 At 31March 2023, there were 50,000 (2022: 50,000) 7% cumulative fixed rate shares of £1 each in issue. 2 At 31March 2023, theGroup held 1,825,691,429 (2022: 447,576,522)treasury shareswith a nominal value of €304million (2022: €75 million). Themarket value ofshares heldwas €1,855 million (2022: €661 million). During the year, 85,844,124 (2022: 68,306,442)treasury shares were reissued under Group share schemes and 1,463,959,031 (2022: 1,441,870,348)shares were repurchased undershare buy-back arrangements. 3 During the year ended 31 March 2022, 1,518,629,693 treasury shares were issued in settlement of amaturing £1.72 billion subordinatedmandatory convertible bond. 169 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 18.Reconciliationofnet cashflowfromoperatingactivities The table below shows how our profitfor the year from continuing operationstranslatesinto cash flows generated from our operating activities. Re-presented1 Re-presented1 2023 2022 2021 Notes €m €m €m Profit for the financial year 12,335 2,773 483 Investment income 5 (248) (254) (245) Financing costs 5 1,728 1,964 1,027 Income tax expense 6 481 1,330 3,864 Operating profit 14,296 5,813 5,129 Adjustments for: Share-based payments and other non-cash charges 73 173 146 Depreciation and amortisation 10, 11 13,618 13,845 14,101 Loss on disposal of property, plant and equipment and intangible assets 27 30 17 Share of result of equity accounted associates and joint ventures 12 (433) (389) (374) Impairment loss 4 64 – – Other income 3 (9,098) (50) (568) Increase in inventory (180) (162) (68) (Increase)/decrease in trade and other receivables 14 (458) (638) 582 Increase/(decrease) in trade and other payables 15 1,379 384 (730) Cash generated by operations 19,288 19,006 18,235 Net tax paid (1,234) (925) (1,020) Net cash flow from operating activities 18,054 18,081 17,215 Note: 1 The resultsforthe years ended 31March 2022 and 31 March 2021 have been re-presented to reflectthatIndus Towers Limited is no longerreported as held forsale. In the year ended 31 March 2022, profitforthe financial year and operating profit have both increased by €149 million, otherincome has decreased by €29million and the share of result of equity accounted associates and joint ventures hasincreased by €178 million compared to the amounts previously reported. In the year ended 31 March 2021, profitforthe financial year has decreased by €53 million, investmentincome has decreased by €85million, operating profit hasincreased by €32million and the share of result of equity accounted associates and joint ventures has increased by €32 million compared to the amounts previously reported. There is no impact oncash generated by operations and net cash flowfrom operating activities. See note 7 ‘Discontinued operations and assets held forsale’ formore information. 19.Cashandcash equivalents The majority ofthe Group’s cash is held in bank deposits ormoneymarket fundswhich have a maturity of threemonths or lessfrom acquisition to enable ustomeet ourshort-term liquidity requirements. Accounting policies Cash and cash equivalents comprise cash and bank deposits, and othershort-termhighly liquid investmentsthat are readily convertible to a known amount of cash and are subjectto an insignificant risk of changesin value. Assetsinmoney marketfunds, whose contractual cash flows do not representsolely payments of interest and principal, are measured atfair value with gains and losses arising from changesin fair value included in net profit or lossfor the period. All other cash and cash equivalents are measured at amortised cost. 2023 2022 €m €m Cash and bank deposits1 3,924 2,220 Money market funds2 7,781 5,276 Cash and cash equivalents as presented in the consolidated statement of financial position 11,705 7,496 Bank overdrafts (77) (125) Cash and cash equivalents as presented in the consolidated statement of cash flows 11,628 7,371 Note: 1 Includes bank deposits underrepurchase agreements of €1,750million (2022: €nil). 2 Items are measured atfair value and the valuation basisislevel 1 classification,which comprisesfinancial instruments where fair value is determined by unadjusted quoted pricesin active markets. The carrying amount of balances at amortised cost approximatestheir fair value. Cash and cash equivalents of €1,572million (2022: €1,554 million) are held in countrieswith restrictions on remittances butwhere the balances could be used to repay subsidiaries’ third party liabilities. In addition, those balances could also be used to repay €722 million (2022: €932 million) of intercompany liabilities as at 31 March 2023. 170 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 18.Reconciliationofnet cashflowfromoperatingactivities The table below shows how our profitfor the year from continuing operationstranslatesinto cash flows generated from our operating activities. Re-presented1 Re-presented1 2023 2022 2021 Notes €m €m €m Profit for the financial year 12,335 2,773 483 Investment income 5 (248) (254) (245) Financing costs 5 1,728 1,964 1,027 Income tax expense 6 481 1,330 3,864 Operating profit 14,296 5,813 5,129 Adjustments for: Share-based payments and other non-cash charges 73 173 146 Depreciation and amortisation 10, 11 13,618 13,845 14,101 Loss on disposal of property, plant and equipment and intangible assets 27 30 17 Share of result of equity accounted associates and joint ventures 12 (433) (389) (374) Impairment loss 4 64 – – Other income 3 (9,098) (50) (568) Increase in inventory (180) (162) (68) (Increase)/decrease in trade and other receivables 14 (458) (638) 582 Increase/(decrease) in trade and other payables 15 1,379 384 (730) Cash generated by operations 19,288 19,006 18,235 Net tax paid (1,234) (925) (1,020) Net cash flow from operating activities 18,054 18,081 17,215 Note: 1 The resultsforthe years ended 31March 2022 and 31 March 2021 have been re-presented to reflectthatIndus Towers Limited is no longerreported as held forsale. In the year ended 31 March 2022, profitforthe financial year and operating profit have both increased by €149 million, otherincome has decreased by €29million and the share of result of equity accounted associates and joint ventures hasincreased by €178 million compared to the amounts previously reported. In the year ended 31 March 2021, profitforthe financial year has decreased by €53 million, investmentincome has decreased by €85million, operating profit hasincreased by €32million and the share of result of equity accounted associates and joint ventures has increased by €32 million compared to the amounts previously reported. There is no impact oncash generated by operations and net cash flowfrom operating activities. See note 7 ‘Discontinued operations and assets held forsale’ formore information. 19.Cashandcash equivalents The majority ofthe Group’s cash is held in bank deposits ormoneymarket fundswhich have a maturity of threemonths or lessfrom acquisition to enable ustomeet ourshort-term liquidity requirements. Accounting policies Cash and cash equivalents comprise cash and bank deposits, and othershort-termhighly liquid investmentsthat are readily convertible to a known amount of cash and are subjectto an insignificant risk of changesin value. Assetsinmoney marketfunds, whose contractual cash flows do not representsolely payments of interest and principal, are measured atfair value with gains and losses arising from changesin fair value included in net profit or lossfor the period. All other cash and cash equivalents are measured at amortised cost. 2023 2022 €m €m Cash and bank deposits1 3,924 2,220 Money market funds2 7,781 5,276 Cash and cash equivalents as presented in the consolidated statement of financial position 11,705 7,496 Bank overdrafts (77) (125) Cash and cash equivalents as presented in the consolidated statement of cash flows 11,628 7,371 Note: 1 Includes bank deposits underrepurchase agreements of €1,750million (2022: €nil). 2 Items are measured atfair value and the valuation basisislevel 1 classification,which comprisesfinancial instruments where fair value is determined by unadjusted quoted pricesin active markets. The carrying amount of balances at amortised cost approximatestheir fair value. Cash and cash equivalents of €1,572million (2022: €1,554 million) are held in countrieswith restrictions on remittances butwhere the balances could be used to repay subsidiaries’ third party liabilities. In addition, those balances could also be used to repay €722 million (2022: €932 million) of intercompany liabilities as at 31 March 2023. 20.Leases The Group leases assetsfromother parties(the Group is a lessee) and also leases assetsto other parties(the Group is a lessor). This note describes how the Group accountsfor leases and provides details about itslease arrangements. Accountingpolicies As a lessee When the Group leases an asset, a ‘right-of-use asset’ isrecognised for the leased item and a lease liability isrecognised for any lease paymentsto be paid over the lease termatthe lease commencement date. The right-of-use assetisinitially measured at cost, being the present value of the lease payments paid or payable, plus any initial direct costsincurred in entering the lease and less any lease incentivesreceived. Right-of-use assets are depreciated on a straight-line basisfrom the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. The lease term isthe non-cancellable period of the lease plus any periodsfor which the Group is‘reasonably certain’ to exercise any extension options(see below). The useful life of the assetis determined in amanner consistentto thatfor owned property, plant and equipment(as described in note 11 ‘Property, plant and equipment’). If right-of-use assets are considered to be impaired, the carrying value is reduced accordingly. Lease liabilities are initially measured at the value of the lease payments over the lease term that are not paid atthe commencement date and are usually discounted using the incremental borrowing rates of the applicable Group entity (the rate implicitin the lease is used if itisreadily determinable). Lease paymentsincluded in the lease liability include both fixed payments and in-substance fixed payments during the term of the lease. After initialrecognition, the lease liability isrecorded at amortised cost using the effective interestmethod. Itisremeasured when there is a change in future lease payments arising from a change in an index or rate (e.g. an inflation related increase) or if the Group’s assessment of the lease term changes; any changesin the lease liability as a result of these changes also resultsin a corresponding change in the recorded right-of-use asset. As a lessor Where the Group is a lessor, it determines atinception whether the lease is a finance or an operating lease. When a lease transferssubstantially all the risks and rewards of ownership of the underlying assetthen the lease is a finance lease; otherwise the lease is an operating lease. Where the Group is an intermediate lessor, the interestsin the head lease and the sub-lease are accounted forseparately and the lease classification of a sub-lease is determined by reference to the right-of-use asset arising from the head lease. Income from operating leasesisrecognised on a straight-line basis overthe lease term. Income from finance leasesisrecognised atlease commencementwith interestincome recognised over the lease term. Lease income isrecognised asrevenue for transactionsthat are part of the Group’s ordinary activities(i.e. primarily leases of handsets or other equipmentto customers, leases ofwholesale accessto the Group’sfibre and cable networks and leases of tower infrastructure assets). The Group usesIFRS 15 principlesto allocate the consideration in contracts between any lease and non-lease components. TheGroup’s leasingactivities as a lessee The Group leases buildingsfor itsretailstores, offices and data centres, land on which to constructmobile base stations,space on mobile base stationsto place active RANequipment and network space (primarily rack space or ductspace). In addition, the Group leasesfibre and other fixed connectivity to provide internal connectivity for the Group’s operations and on a wholesale basisfrom other operatorsto provide fixed connectivity servicesto the Group’s customers. The Group’s general approach to determining lease term by class of assetis described in note 1 ‘Basis of preparation’ under critical accounting judgements and key sources of estimation uncertainty. Most of the Group’sleasesinclude future price increasesthrough fixed percentage increases, indexation to inflation measures on a periodic basis or rentreviewclauses. Other than fixed percentage increasesthe lease liability does notreflectthe impact of these future increases unlessthe measurement date has passed. The Group’sleases contain nomaterial variable payments clauses other than those related to the number of operatorssharing space on third party mobile base stations. 171 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 20.Leases(continued) Optionalleaseperiods Where practicable the Group seeksto include extension or break optionsin leasesto provide operational flexibility, therefore many of the Group’s lease contracts contain optional periods. The Group’s policy on assessing and reassessing whether itisreasonably certain thatthe optional period will be included in the lease term is described in note 1 ‘Basis of preparation’ under ‘critical accounting judgements and key sources of estimation uncertainty’. After initialrecognition of a lease, the Group only reassessesthe lease term when there is a significant event or a significant change in circumstances,which was not anticipated atthe time of the previous assessment. Significant events orsignificant changesin circumstances could include merger and acquisition orsimilar activity,significant expenditure on the leased asset not anticipated in the previous assessment, or detailed management plansindicating a different conclusion on optional periodsto the previous assessment. Where a significant event orsignificant change in circumstances does not occur, the lease termand therefore lease liability and right-of-use asset value, will decline over time. The Group’s cash outflow for leasesin the year ended 31 March 2023 was €4,479 million (2022: €4,338 million). Following changesto the Group’s structure during the year, itis expected thatfuture annual cash outflowswill increase by circa €300 million absentsignificantfuture changesin the volume of the Group’s activities orstrategic changesto use more or fewer owned assets,subject to contractual price increases. The future cash outflowsincluded within lease liabilities are shown in the maturity analysis below. The maturity analysis only includesthe reasonably certain paymentsto be made; cash outflowsin these future periodswill likely exceed these amounts as paymentswill be made on optional periods not considered reasonably certain at present and on new leases entered into in future periods. The Group’sleasesfor customer connectivity are normally either under regulated access or network sharing orsimilar preferential access arrangements and as a resultthe Group normally hassignificantflexibility over the term it can lease such connectionsfor; generally the notice period required to cancel the lease islessthan the notice period included in the service contractwith the end customer. As a result, the Group does not have any significant cash exposure to optional periods on customer connectivity asthe Group can cancelthe lease when the service agreement ends. In some circumstancesthe Group is committed tominimum spend amountsfor connectivity leases, which are included within reported lease liabilities. Saleandleaseback In March 2023, the Group disposed of itsinterest in Vantage Towers A.G. (‘Vantage Towers’) into a new joint venture, Oak Holdings 1 GmbH(‘Oak’); Vodafone retains an interest of 64.2% in Oak, which owns 89.3% of Vantage Towers(see note 27 ‘Acquisitions and disposals’ for additional details). The Group has agreementswith Vantage Towersto lease back spaces on itstowers(see note 30 ‘Related party transactions’). The Group de-recognised assetsrelated to the mobile base stations with a net book value of €4,793 million. A total net gain on disposal of €9,287 million was realised as a result of the disposal of Vantage Towers; €680 million of this gain,reflecting the gain on the proportion ofsold towersthat has been retained through the leaseback, has been recorded as a reduction in the value of the right-of-use assetrecognised for the leaseback of towerspace and will be realised as a reduction in depreciation over the term of the leaseback until November 2028.Othersale and leaseback transactions entered into by the Groupwere notmaterial, individually or in aggregate. Amounts recognised inthe primary financial statements inrelation to lessee transactions Right-of-useassets The carrying value of the Group’sright-of-use assets, depreciation charge for the year and additions during the year are disclosed in note 11 ‘Property, plant and equipment’. Leaseliabilities The Group’slease liabilities are disclosed in note 21 ‘Borrowings’. The maturity profile of the Group’slease liabilitiesis asfollows: 2023 2022 €m €m Within one year 3,452 3,130 In more than one year but less than two years 2,574 2,189 In more than two years but less than three years 2,200 1,759 In more than three years but less than four years 1,981 1,579 In more than four years but less than five years 1,810 1,387 In more than five years 3,240 4,242 15,257 14,286 Effect of discounting (1,893) (1,747) Lease liability - as disclosed in note 21 ‘Borrowings’ 13,364 12,539 At 31 March 2023 the Group has entered into lease contractswith payment obligationswith an undiscounted value of €320 million (2022: €51 million) that had not commenced at 31 March 2023. Interest expense on lease liabilitiesfor the year is disclosed in note 5 ‘Investmentincome and financing costs’. The Group has nomaterial liabilities under residual value guarantees andmakes nomaterial variable payments notincluded in the lease liability. The Group does not apply either the shortterm or lowvalue expedient optionsin IFRS 16. 172 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 20.Leases(continued) Optionalleaseperiods Where practicable the Group seeksto include extension or break optionsin leasesto provide operational flexibility, therefore many of the Group’s lease contracts contain optional periods. The Group’s policy on assessing and reassessing whether itisreasonably certain thatthe optional period will be included in the lease term is described in note 1 ‘Basis of preparation’ under ‘critical accounting judgements and key sources of estimation uncertainty’. After initialrecognition of a lease, the Group only reassessesthe lease term when there is a significant event or a significant change in circumstances,which was not anticipated atthe time of the previous assessment. Significant events orsignificant changesin circumstances could include merger and acquisition orsimilar activity,significant expenditure on the leased asset not anticipated in the previous assessment, or detailed management plansindicating a different conclusion on optional periodsto the previous assessment. Where a significant event orsignificant change in circumstances does not occur, the lease termand therefore lease liability and right-of-use asset value, will decline over time. The Group’s cash outflow for leasesin the year ended 31 March 2023 was €4,479 million (2022: €4,338 million). Following changesto the Group’s structure during the year, itis expected thatfuture annual cash outflowswill increase by circa €300 million absentsignificantfuture changesin the volume of the Group’s activities orstrategic changesto use more or fewer owned assets,subject to contractual price increases. The future cash outflowsincluded within lease liabilities are shown in the maturity analysis below. The maturity analysis only includesthe reasonably certain paymentsto be made; cash outflowsin these future periodswill likely exceed these amounts as paymentswill be made on optional periods not considered reasonably certain at present and on new leases entered into in future periods. The Group’sleasesfor customer connectivity are normally either under regulated access or network sharing orsimilar preferential access arrangements and as a resultthe Group normally hassignificantflexibility over the term it can lease such connectionsfor; generally the notice period required to cancel the lease islessthan the notice period included in the service contractwith the end customer. As a result, the Group does not have any significant cash exposure to optional periods on customer connectivity asthe Group can cancelthe lease when the service agreement ends. In some circumstancesthe Group is committed tominimum spend amountsfor connectivity leases, which are included within reported lease liabilities. Saleandleaseback In March 2023, the Group disposed of itsinterest in Vantage Towers A.G. (‘Vantage Towers’) into a new joint venture, Oak Holdings 1 GmbH(‘Oak’); Vodafone retains an interest of 64.2% in Oak, which owns 89.3% of Vantage Towers(see note 27 ‘Acquisitions and disposals’ for additional details). The Group has agreementswith Vantage Towersto lease back spaces on itstowers(see note 30 ‘Related party transactions’). The Group de-recognised assetsrelated to the mobile base stations with a net book value of €4,793 million. A total net gain on disposal of €9,287 million was realised as a result of the disposal of Vantage Towers; €680 million of this gain,reflecting the gain on the proportion ofsold towersthat has been retained through the leaseback, has been recorded as a reduction in the value of the right-of-use assetrecognised for the leaseback of towerspace and will be realised as a reduction in depreciation over the term of the leaseback until November 2028.Othersale and leaseback transactions entered into by the Groupwere notmaterial, individually or in aggregate. Amounts recognised inthe primary financial statements inrelation to lessee transactions Right-of-useassets The carrying value of the Group’sright-of-use assets, depreciation charge for the year and additions during the year are disclosed in note 11 ‘Property, plant and equipment’. Leaseliabilities The Group’slease liabilities are disclosed in note 21 ‘Borrowings’. The maturity profile of the Group’slease liabilitiesis asfollows: 2023 2022 €m €m Within one year 3,452 3,130 In more than one year but less than two years 2,574 2,189 In more than two years but less than three years 2,200 1,759 In more than three years but less than four years 1,981 1,579 In more than four years but less than five years 1,810 1,387 In more than five years 3,240 4,242 15,257 14,286 Effect of discounting (1,893) (1,747) Lease liability - as disclosed in note 21 ‘Borrowings’ 13,364 12,539 At 31 March 2023 the Group has entered into lease contractswith payment obligationswith an undiscounted value of €320 million (2022: €51 million) that had not commenced at 31 March 2023. Interest expense on lease liabilitiesfor the year is disclosed in note 5 ‘Investmentincome and financing costs’. The Group has nomaterial liabilities under residual value guarantees andmakes nomaterial variable payments notincluded in the lease liability. The Group does not apply either the shortterm or lowvalue expedient optionsin IFRS 16. TheGroup’s leasingactivities as a lessor The Group has a wide range of lessor activities with consumer and enterprise customers, other telecommunication companies and other companies. With consumer and enterprise customers, the Group generateslease income from the provision of handsets, routers and other communications equipment. The Group provideswholesale accessto the Group’sfibre and cable networks, leases outspace on the Group’s owned mobile base stationsto other telecommunication companies and sub-leases certain retainedmobile base station sitesto telecommunication tower companies. In addition, the Group sub-leasesretailstoresto franchise partnersin certain markets and leases outsurplus assets(e.g. vacant offices and retailstores) to other companies. Lessor transactions are classified as operating or finance leases based onwhether the lease transferssubstantially all of the risks and rewards incidental to ownership of the asset. Leases are individually assessed, but generally, the Group’slessor transactionsin the year are classified as: - Operating leaseswhere the Group provideswholesale accessto itsfibre and cable networks, providesrouters orsimilar equipmentto fixed customers or islessor ofspace on owned mobile base stations; and - Finance leaseswhere the Group issub-lessor of handsets orsimilar itemsin back-to-back arrangements or where surplus assets or certain retained mobile base stationssites are sublet outfor all orsubstantially all of the remaining head lease term. The Group’sincome as a lessor in the year is asfollows: 2023 2022 €m €m Operating leases Lease revenue (note 2 ‘Revenue disaggregation and segmental analysis’) 751 758 Income from leases not recognised as revenue 47 45 Substantially all of the Group’sincome as a lessor is operating lease income. The committed amountsto be received from the Group’s operating leases are asfollows: Maturity Within one year In one to two years In two to three years In three to four years In four to five years In more than five years Total €m €m €m €m €m €m €m Committed operating lease payments due to the Group as a lessor 31 March 2023 304 128 36 16 7 4 495 31 March 2022 513 250 161 128 114 343 1,509 The Group’s netinvestmentin leases are disclosed in note 14 ‘Trade and other receivables’. The maturity profile of the Group’s netinvestmentin leasesis asfollows: 2023 2022 €m €m Within one year 111 72 In more than one year but less than two years 88 55 In more than two years but less than three years 67 36 In more than three years but less than four years 54 25 In more than four years but less than five years 47 11 In more than five years 39 9 406 208 Unearned finance income (33) (8) Net investment in leases - as disclosed in note 14 ‘Trade and other receivables’ 373 200 The Group has nomaterial lease income arising from variable lease payments. 173 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 21.Borrowings The Group’ssources of borrowing for funding and liquidity purposes come from a range of committed bank facilities and through short-term and long-term issuancesin the capital marketsincluding bond and commercial paper issues and bank loans. Liabilities arising from the Group’slease arrangements are also reported in borrowings;see note 20 ‘Leases’. Wemanage the basis onwhich we incur interest on debt between fixed interestrates and floating interest rates depending onmarket conditions using interest rate derivatives. The Group entersinto foreign exchange contractsto mitigate the impact of exchange ratemovements on certain monetary items. Accounting policies Interest-bearing loans and overdrafts are initially measured atfair value (which is equal to cost atinception), and are subsequently measured at amortised cost, using the effective interestrate method. Where they are identified as a hedged item in a designated fair value hedge relationship, fair value adjustments are recognised in accordancewith our policy (see note 22 ‘Capital and financialrisk management’). Any difference between the proceeds net of transaction costs and the amount due on settlement or redemption of borrowingsisrecognised over the term of the borrowing. Where bondsissued with certain conversion rights are identified as compound instrumentsthey are initiallymeasured atfair value with the nominal amountsrecognised as a componentin equity and the fair value of future couponsincluded in borrowings. These are subsequently measured at amortised cost using the effective interestrate method. Borrowings 2023 2022 €m €m Non-current borrowings Bonds 39,512 46,156 Bank loans 487 629 Lease liabilities (note 20) 10,318 9,810 Other borrowings1 1,352 1,536 51,669 58,131 Current borrowings Bonds 4,604 1,875 Bank loans 308 688 Lease liabilities (note 20) 3,046 2,729 Collateral liabilities 4,886 2,914 Bank borrowings secured against Indian assets 1,485 1,382 Other borrowings1 392 2,373 14,721 11,961 Borrowings 66,390 70,092 Note: 1 Includes €1,140 million (2022: €1,273million) and €196million (2022: €2,165 million) oflicence and spectrum fees payable in non-current and current borrowingsrespectively. The fair value of the Group’sfinancial liabilities held at amortised cost approximate to fair value with the exception of long-term bonds with a carrying value of €39,512million (2022: €46,156 million) which have a fair value of €35,044 million (2022: €46,348 million). Fair value is based on level 1 of the fair value hierarchy using quoted market prices. The Group’s current borrowings also include €1,485 million (2022: €1,382 million) of bank borrowingsthat are secured againstthe Group’s shareholdingsin Indus Towers and Vodafone Idea (see note 12 ‘Investmentsin Associates and Joint Ventures’ for further details of these assets) and will be repaid through the realisation of proceedsfrom those assets. This arrangement contains an embedded derivative option which has been separately fair valued and is presented within derivative assetsin current assets(see note 14 ‘Trade and other receivables’). The Group’s borrowings, which include certain bondsthat have been designated in hedge relationships, are carried at €1,282 million higher (2022: €1,316 million higher) than their euro equivalent redemption value. In addition, where bonds are issued in currencies other than euros, the Group has entered into foreign currency swapsto fixthe euro cash outflows on redemption. The impact of these swapsis notreflected in borrowings and would decrease the euro equivalentredemption value of the bonds by €1,440million (2022: €1,456 million). 174 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 21.Borrowings The Group’ssources of borrowing for funding and liquidity purposes come from a range of committed bank facilities and through short-term and long-term issuancesin the capital marketsincluding bond and commercial paper issues and bank loans. Liabilities arising from the Group’slease arrangements are also reported in borrowings;see note 20 ‘Leases’. Wemanage the basis onwhich we incur interest on debt between fixed interest rates and floating interest rates depending onmarket conditions using interest rate derivatives. The Group entersinto foreign exchange contractsto mitigate the impact of exchange ratemovements on certain monetary items. Accounting policies Interest-bearing loans and overdrafts are initially measured atfair value (which is equal to cost atinception), and are subsequently measured at amortised cost, using the effective interestrate method. Where they are identified as a hedged item in a designated fair value hedge relationship, fair value adjustments are recognised in accordancewith our policy (see note 22 ‘Capital and financialrisk management’). Any difference between the proceeds net of transaction costs and the amount due on settlement or redemption of borrowingsisrecognised over the term of the borrowing. Where bondsissued with certain conversion rights are identified as compound instrumentsthey are initiallymeasured atfair value with the nominal amountsrecognised as a componentin equity and the fair value of future couponsincluded in borrowings. These are subsequently measured at amortised cost using the effective interestrate method. Borrowings 2023 2022 €m €m Non-current borrowings Bonds 39,512 46,156 Bank loans 487 629 Lease liabilities (note 20) 10,318 9,810 Other borrowings1 1,352 1,536 51,669 58,131 Current borrowings Bonds 4,604 1,875 Bank loans 308 688 Lease liabilities (note 20) 3,046 2,729 Collateral liabilities 4,886 2,914 Bank borrowings secured against Indian assets 1,485 1,382 Other borrowings1 392 2,373 14,721 11,961 Borrowings 66,390 70,092 Note: 1 Includes €1,140 million (2022: €1,273million) and €196million (2022: €2,165 million) oflicence and spectrum fees payable in non-current and current borrowingsrespectively. The fair value of the Group’sfinancial liabilities held at amortised cost approximate to fair value with the exception of long-term bonds with a carrying value of €39,512million (2022: €46,156 million) which have a fair value of €35,044 million (2022: €46,348 million). Fair value is based on level 1 of the fair value hierarchy using quoted market prices. The Group’s current borrowings also include €1,485 million (2022: €1,382 million) of bank borrowingsthat are secured againstthe Group’s shareholdingsin Indus Towers and Vodafone Idea (see note 12 ‘Investmentsin Associates and Joint Ventures’ for further details of these assets) and will be repaid through the realisation of proceedsfrom those assets. This arrangement contains an embedded derivative option which has been separately fair valued and is presented within derivative assetsin current assets(see note 14 ‘Trade and other receivables’). The Group’s borrowings, which include certain bondsthat have been designated in hedge relationships, are carried at €1,282 million higher (2022: €1,316 million higher) than their euro equivalent redemption value. In addition, where bonds are issued in currencies other than euros, the Group has entered into foreign currency swapsto fixthe euro cash outflows on redemption. The impact of these swapsis notreflected in borrowings and would decrease the euro equivalentredemption value of the bonds by €1,440million (2022: €1,456 million). Commercialpaperprogrammes We currently have US and euro commercial paper programmes ofUS$15 billion (€13.8 billion) and €10 billion respectively which are available to be used tomeetshort-term liquidity requirements. At 31 March 2023 both programmesremained undrawn. The commercial paper facilitieswere supported by US$4.0 billion (€3.7 billion) and €4.0 billion ofsyndicated committed bank facilities.No amounts had been drawn under these facilities. Bonds We have two €30 billion euromedium-term note programmes and aUS shelf programme which are used tomeetmedium to long-term funding requirements. At 31 March 2023 the total amountsin issue under these programmessplit by currency wereUS$21.3 billion, €17.6 billion, £3.6 billion, AUD$0.5 billion, HKD$2.1 billion, NOK2.2 billion, CHF0.7 billion and JPY10 billion. At 31 March 2023 the Group had bonds outstanding with a nominal value equivalent to €42.8 billion. During the year ended 31 March 2023, bonds with a nominal value of €1.8 billion and £0.6 billion were issued utilising the euro medium-term note programme and US$1.2 billion were issued utilising the US Shelf programme. During the year bondswith euro equivalent nominal values of €1.9 billion and €3.8 billion matured and were re-purchased respectively. Bondsmature between 2023 and 2063 (2022: 2022 and 2059) and have interestrates between 0.375% and 7.875% (2022: 0% and 7.875%). Mandatoryconvertiblebonds In March 2023 the Group concluded the lastremaining share buybacksrelated to the mandatory convertible bonds(‘MCBs’) and no further instrumentsremain outstanding. On 12 March 2019 the Group issued £3.4 billion ofsubordinatedmandatory convertible bonds(‘MCBs’)splitinto two equal tranches of £1.7 billion with coupons of 1.2% and 1.5% respectively. The firsttranche matured on 12 March 2021 at a conversion price of £1.2055 pershare and the second tranchematured on 12 March 2022 at a conversion price of £1.1326 pershare. These were recognised as compound instrumentswith nominal values of £3.4 billion (€3.8 billion)recognised as a component ofshareholders’ fundsin equity and the fair value of future coupons £0.1 billion (€0.1 billion) recognised as a financial liability in borrowings. The Group’sstrategy wasto hedge the equity risk associated with the MCB issuance to any futuremovement in itsshare price by an option strategy designed to hedge the economic impact ofshare price movements. The Group decided to buy back ordinary sharestomitigate dilution resulting from the conversion and the hedging strategy provided a hedge for the repurchase price. Treasury shares The Group held a maximum of 1,825,691,429 (2022: 1,911,661,729) of its own shares during the year which represented 6.3% (2022: 6.6%) of issued share capital atthattime. 175 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 22.Capital andfinancialriskmanagement This note detailsthe treasury management and financialrisk management objectives and policies, aswell as the exposure and sensitivity of the Group to credit, liquidity, interest and foreign exchange risk, and the policiesin place tomonitor andmanage these risks. Accounting policies Financialinstruments Financial assets and financial liabilities, in respect of financial instruments, are recognised on the Group’s consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Financialliabilities andequity instruments Financial liabilities and equity instrumentsissued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contractthat provides a residual interestin the assets of the Group after deducting all of itsliabilities and includes no obligation to deliver cash or other financial assets. The accounting policies adopted forspecific financial liabilities and equity instruments are set out below. Financialliabilitiesunderputoptionarrangements The Group has an obligation to pay a fixed rate of return tominority equity shareholdersin the Group’ssubsidiary KabelDeutschland AG, under the terms of a court-imposed domination and profit and losstransfer agreement. This agreement also providesthe minority shareholdersthe option to puttheirshareholding to Vodafone at a fixed price pershare. The obligation to purchase the shares has been recognised as a financial liability and no non-controlling interests are recognised in respect of minority shareholders. Interest costs are accrued atthe agreed rate ofreturn and recognised in financing costs. Derivative financialinstruments andhedgeaccounting The Group’s activities expose itto the financialrisks of changesin foreign exchange rates and interestrateswhich itmanages using derivative financial instruments. The use of financial derivativesis governed by the Group’s policies approved by the Board of Directors, which provide written principles on the use of financial derivatives consistent with the Group’srisk managementstrategy. The Group does not use derivative financial instrumentsforspeculative purposes. The Group designates certain derivatives as: − hedges of the change in fair value ofrecognised assets and liabilities(‘fair value hedges’); − hedges of highly probable forecasttransactions or hedges of foreign currency or interestrate risks of firmcommitments(‘cash flowhedges’); or − hedges of netinvestmentsin foreign operations. Derivative financial instruments are initially measured atfair value on the contract date and are subsequently re-measured to fair value at each reporting date. Changesin values of all derivatives of a financing nature are included within investmentincome and financing costsin the income statement unless designated in an effective cash flow hedge relationship or a hedge of a net investmentin foreign operationswhen the effective portion of changesin value are deferred to other comprehensive income.Hedge effectivenessis determined atthe inception of the hedge relationship, and through periodic prospective effectiveness assessmentsto ensure that an economic relationship exists between the hedged item and hedging instrument. For fair value hedges, the carrying value of the hedged item is also adjusted for changesin fair value for the hedged risk, with gains and lossesrecognised in the income statement. Hedge accounting is discontinued when the hedging instrument expires or issold, terminated, exercised or no longer qualifiesfor hedge accounting. When hedge accounting is discontinued, any gain or lossrecognised in other comprehensive income atthattime remainsin equity and isrecognised in the income statementwhen the hedged transaction is ultimately recognised in the income statement. For cash flowhedges, when the hedged item isrecognised in the income statement, amounts previously recognised in other comprehensive income and accumulated in equity for the hedging instrument are reclassified to the income statement. However, when the hedged transaction resultsin the recognition of a non-financial asset or a non-financial liability, the gains and losses previously recognised in other comprehensive income and accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability. If a forecasttransaction is no longer expected to occur, the gain or loss accumulated in equity isrecognised immediately in the income statement. For netinvestment hedges, gains and losses accumulated in other comprehensive income are included in the income statementwhen the foreign operation is disposed of. 176 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 22.Capital andfinancialriskmanagement This note detailsthe treasury management and financialrisk management objectives and policies, aswell as the exposure and sensitivity of the Group to credit, liquidity, interest and foreign exchange risk, and the policiesin place tomonitor andmanage these risks. Accounting policies Financialinstruments Financial assets and financial liabilities, in respect of financial instruments, are recognised on the Group’s consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument. Financialliabilities andequity instruments Financial liabilities and equity instrumentsissued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contractthat provides a residual interestin the assets of the Group after deducting all of itsliabilities and includes no obligation to deliver cash or other financial assets. The accounting policies adopted forspecific financial liabilities and equity instruments are set out below. Financialliabilitiesunderputoptionarrangements The Group has an obligation to pay a fixed rate of return to minority equity shareholdersin the Group’ssubsidiary KabelDeutschland AG, under the terms of a court-imposed domination and profit and losstransfer agreement. This agreement also providesthe minority shareholdersthe option to puttheirshareholding to Vodafone at a fixed price pershare. The obligation to purchase the shares has been recognised as a financial liability and no non-controlling interests are recognised in respect of minority shareholders. Interest costs are accrued atthe agreed rate ofreturn and recognised in financing costs. Derivative financialinstruments andhedgeaccounting The Group’s activities expose itto the financialrisks of changesin foreign exchange rates and interestrateswhich itmanages using derivative financial instruments. The use of financial derivativesis governed by the Group’s policies approved by the Board of Directors, which provide written principles on the use of financial derivatives consistent with the Group’srisk managementstrategy. The Group does not use derivative financial instrumentsforspeculative purposes. The Group designates certain derivatives as: − hedges of the change in fair value ofrecognised assets and liabilities(‘fair value hedges’); − hedges of highly probable forecasttransactions or hedges of foreign currency or interestrate risks of firmcommitments(‘cash flowhedges’); or − hedges of netinvestmentsin foreign operations. Derivative financial instruments are initially measured atfair value on the contract date and are subsequently re-measured to fair value at each reporting date. Changesin values of all derivatives of a financing nature are included within investmentincome and financing costsin the income statement unless designated in an effective cash flow hedge relationship or a hedge of a netinvestmentin foreign operationswhen the effective portion of changesin value are deferred to other comprehensive income.Hedge effectivenessis determined atthe inception of the hedge relationship, and through periodic prospective effectiveness assessmentsto ensure that an economic relationship exists between the hedged item and hedging instrument. For fair value hedges, the carrying value of the hedged item is also adjusted for changesin fair value for the hedged risk, with gains and lossesrecognised in the income statement. Hedge accounting is discontinued when the hedging instrument expires or issold, terminated, exercised or no longer qualifiesfor hedge accounting. When hedge accounting is discontinued, any gain or lossrecognised in other comprehensive income atthattime remainsin equity and isrecognised in the income statementwhen the hedged transaction is ultimately recognised in the income statement. For cash flowhedges, when the hedged item isrecognised in the income statement, amounts previously recognised in other comprehensive income and accumulated in equity for the hedging instrument are reclassified to the income statement. However, when the hedged transaction resultsin the recognition of a non-financial asset or a non-financial liability, the gains and losses previously recognised in other comprehensive income and accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability. If a forecasttransaction is no longer expected to occur, the gain or loss accumulated in equity isrecognised immediately in the income statement. For netinvestment hedges, gains and losses accumulated in other comprehensive income are included in the income statement when the foreign operation is disposed of. Capitalmanagement The following table summarisesthe capital of the Group at 31 March: Re-presented1 2023 2022 €m €m Borrowings (note 21) 66,390 70,092 Cash and cash equivalents (note 19) (11,705) (7,496) Derivative financial instruments included in trade and other receivables (note 14) (6,124) (4,626) Derivative financial instruments included in trade and other payables (note 15) 1,422 1,672 Short-term investments (note 13) (4,305) (4,795) Collateral assets (note 13) (239) (698) Financial liabilities under put option arrangements 485 494 Equity 64,483 57,073 Capital 110,407 111,716 Note: 1 The resultsforthe year ended 31 March 2022 have been re-presented to reflectthatIndus Towers Limited is no longerreported as held forsale. Capital hasincreased by €96 million compared to the amount previously reported. See note 7 ‘Discontinued operations and assets held forsale’ formore information. The Group’s policy isto borrowcentrally using a mixture of long-term and short-termcapital marketissues and borrowing facilitiestomeet anticipated funding requirements. These borrowings, together with cash generated from operations, are loaned internally or contributed as equity to certain subsidiaries. Dividends from joint ventures and associates and tonon-controlling shareholders Dividend policieswithin shareholder agreementsfor certain of the Group’s associates and joint ventures give the Group certain rightsto receive dividends but are generally paid atthe discretion of the Board of Directors orshareholders. We do not have existing obligationsto pay dividendsto non-controlling interest partners of oursubsidiaries other than ongoing dividend obligationsto the Kabel Deutschland A.G. minority shareholders. The amount of dividendsreceived and paid in the year are disclosed in the consolidated statement of cash flows. Potential cash outflows from optionagreements and similar arrangements All remaining put optionsissued as part of the hedging strategy for the mandatory convertible bonds(‘MCBs’)matured during the financial year (1,452 million share options outstanding as at 31 March 2022). These permitted the holdersto exercise againstthe Group atmaturity of the option if there was a decrease in ourshare price. Under the terms of the options,settlementwasmade in cash which equated to the reduced value of sharesfrom the initial conversion price, adjusted for dividends declared. Saleoftrade receivables During the year, the Group sold certain trade receivablesto a number of financial institutions. Whilstthere are no repurchase obligationsin respect of these receivables, the Group provided credit guaranteeswhichwould only become payable if defaultrateswere significantly higher than historicalrates. The credit guarantee is not considered substantive and substantially allrisks and rewards associatedwith the receivables passed to the purchaser atthe date ofsale, therefore the receivableswere derecognised. The maximum payable underthe guarantees at 31 March 2023 was €1,927 million (2022: €1,341 million). No provision has beenmade in respect of these guarantees asthe likelihood of a cash outflow has been assessed asremote. Supplierfinancingarrangements The Group offerssuppliersthe opportunity to use supply chain financing (‘SCF’). SCF allowssuppliersthat decide to use itto receive funding earlier than the invoice due date. At 31 March 2023, the financial institutionsthatrun the SCF programmes had purchased €2.4 billion (2022: €2.4 billion) of outstanding supplier invoices, principally fromlargersuppliers. The Group does not provide any financial guaranteesto the financial institutions under this programme and continuesto cash settle supplier payablesin accordancewith their contractual terms. Assuch, the programme does not change the Group’s net debt, trade payable balances or cash flows. The Group evaluatessupplier arrangements against a number of indicatorsto assessif the payable continuesto hold the characteristics of a trade payable orshould be classified as borrowings; these indicatorsinclude whether the paymentterms exceed the shorter of customary paymentterms in the industry or 180 days. At 31 March 2023, none of the payablessubjectto supplier financing arrangementsmetthe criteria to be reclassified as borrowings. Financialriskmanagement The Group’streasury function centrally managesthe Group’sfunding requirement, netforeign exchange exposure, interest rate management exposures and counterparty risk arising from investments and derivatives. Treasury operations are conductedwithin a framework of policies and guidelines authorised and reviewed by the Board, mostrecently in March 2023. A treasury risk committee comprising of the Group’s Chief Financial Officer, Group General Counsel and Company Secretary, Group Financial Controller, Group Corporate Finance Director, Group Treasury Director and GroupDirector of Financial Controlling and Operationsmeetsthree times a year to review treasury activities and itsmembersreceive management information relating to treasury activities on a quarterly basis. The Group’sInternal Auditor reviewsthe internal control environmentregularly. 177 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 22.Capitalandfinancialriskmanagement(continued) No bondsissued by the Group or the Revolving Credit Facilities are subject to financial covenant ratios. Approximately €35 billion (2022: €38 billion) ofissued bonds have a change of control clause. TheGroup usesderivative instrumentsfor currency and interestrate riskmanagement purposesthat are transacted by specialisttreasury personnel. The Groupmitigates banking sector creditrisk by the use of collateralsupport agreements. The Group’sfinancial risk management policiesseek to reduce the Group’s exposure to any future disruption to financialmarkets, including any future impactsfromglobal economic and political uncertainty and othermacro economic events. The Group has combined cash and cash equivalent and short-term investments of €16.0 billion, providing significant headroom overshort-term liquidity requirements. Additionally the Groupmaintains undrawn revolving creditfacilities of €7.7 billion euro equivalent. As at 31 March 2023 and after hedging,substantially all the Group’s borrowings are held on a fixed interest basis, mitigating exposure to interestrate risk. The Group has no significant currency exposures otherthan positionsin economic hedging relationships. The Group’s creditrisk under financing activitiesisspread across a portfolio of highly rated institutionsto reduce counterparty exposures and derivative balances are substantially all collateralised. The Group’s operating activitiesresultin customer credit risk, for which provisionsfor expected creditlosses are recognised. Creditrisk Creditrisk isthe risk that a counterparty will notmeet its obligations under a financial asset leading to a financial lossfor the Group. The Group is exposed to creditrisk from its operating activities and from itsfinancing activities, the Group considersitsmaximum exposure to credit risk at 31 March to be: 2023 2022 €m €m Cash and bank deposits (note 19) 3,924 2,220 Money market funds (note 19) 7,781 5,276 Managed investment funds (note 13) 2,967 3,349 Bonds and debt securities (note 13) 2,337 2,376 Collateral assets (note 13) 239 698 Other investments (note 13) 2,473 2,438 Derivative financial instruments (note 14) 6,124 4,626 Trade receivables (note 14)1 6,158 6,083 Contract assets and other receivables (note 14) 4,353 4,457 Performance bonds and other guarantees (note 29) 3,381 2,866 39,737 34,389 Note: 1 Includes amounts guaranteed undersales oftrade receivables €1,927 million (2022: €1,341million) Expected creditloss The Group hasfinancial assets classified and measured at amortised cost and fair value through other comprehensive income that are subjectto the expected creditlossmodel requirements of IFRS 9. Cash and bank deposits and certain other investments are both classified and measured at amortised cost and subjectto impairmentrequirements. However, the identified expected creditlossis considered to be immaterial. Information about expected creditlossesfor trade receivables and contract assets can be found under ‘operating activities’ on page 179. Financing activities The Group investsin governmentsecurities on the basisthey generate a fixed rate ofreturn and are amongstthe most creditworthy of investments available. Investments aremade in accordance with established internal treasury policieswhich dictate the scaled maximum exposure permissible in relation to an investment’slong-term creditrating. The Group investsin AAA unsecured money marketmutual funds,where the investment islimited to 10% of each fund; A to AAA governmentsecurities, both directly and through money marketmutual funds; and hastwomanaged investmentfunds that hold securities with an average credit quality of AA. In respect of financial instruments used by the Group’streasury function,the aggregate credit risk the Groupmay have with one counterparty is limited by reference to the long-term creditratings assigned for that counterparty by Moody’s, Fitch Ratings and Standard &Poor’s. Furthermore, collateralsupport agreementsreduce the Group’s exposure to counterpartieswhomust post collateralwhen there is value due to the Group under outstanding derivative contractsthat 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. 178 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 22.Capitalandfinancialriskmanagement(continued) No bondsissued by the Group or the Revolving Credit Facilities are subject to financial covenant ratios. Approximately €35 billion (2022: €38 billion) ofissued bonds have a change of control clause. TheGroup usesderivative instrumentsfor currency and interestrate riskmanagement purposesthat are transacted by specialisttreasury personnel. The Groupmitigates banking sector creditrisk by the use of collateralsupport agreements. The Group’sfinancial risk management policiesseek to reduce the Group’s exposure to any future disruption to financialmarkets, including any future impactsfromglobal economic and political uncertainty and othermacro economic events. The Group has combined cash and cash equivalent and short-term investments of €16.0 billion, providing significant headroom overshort-term liquidity requirements. Additionally the Groupmaintains undrawn revolving creditfacilities of €7.7 billion euro equivalent. As at 31 March 2023 and after hedging,substantially all the Group’s borrowings are held on a fixed interest basis, mitigating exposure to interestrate risk. The Group has no significant currency exposures otherthan positionsin economic hedging relationships. The Group’s creditrisk under financing activitiesisspread across a portfolio of highly rated institutionsto reduce counterparty exposures and derivative balances are substantially all collateralised. The Group’s operating activitiesresultin customer credit risk, for which provisionsfor expected creditlosses are recognised. Creditrisk Creditrisk isthe risk that a counterparty will notmeet its obligations under a financial asset leading to a financial lossfor the Group. The Group is exposed to creditrisk from its operating activities and from itsfinancing activities, the Group considersitsmaximum exposure to credit risk at 31 March to be: 2023 2022 €m €m Cash and bank deposits (note 19) 3,924 2,220 Money market funds (note 19) 7,781 5,276 Managed investment funds (note 13) 2,967 3,349 Bonds and debt securities (note 13) 2,337 2,376 Collateral assets (note 13) 239 698 Other investments (note 13) 2,473 2,438 Derivative financial instruments (note 14) 6,124 4,626 Trade receivables (note 14)1 6,158 6,083 Contract assets and other receivables (note 14) 4,353 4,457 Performance bonds and other guarantees (note 29) 3,381 2,866 39,737 34,389 Note: 1 Includes amounts guaranteed undersales oftrade receivables €1,927 million (2022: €1,341million) Expected creditloss The Group hasfinancial assets classified and measured at amortised cost and fair value through other comprehensive income that are subjectto the expected creditlossmodel requirements of IFRS 9. Cash and bank deposits and certain other investments are both classified and measured at amortised cost and subjectto impairmentrequirements. However, the identified expected creditlossis considered to be immaterial. Information about expected creditlossesfor trade receivables and contract assets can be found under ‘operating activities’ on page 179. Financing activities The Group investsin governmentsecurities on the basisthey generate a fixed rate ofreturn and are amongstthe most creditworthy of investments available. Investments aremade in accordance with established internal treasury policieswhich dictate the scaled maximum exposure permissible in relation to an investment’slong-term creditrating. The Group investsin AAA unsecured money marketmutual funds,where the investment islimited to 10% of each fund; A to AAA governmentsecurities, both directly and through money marketmutual funds; and hastwomanaged investmentfunds that hold securities with an average credit quality of AA. In respect of financial instruments used by the Group’streasury function,the aggregate credit risk the Groupmay have with one counterparty is limited by reference to the long-term creditratings assigned for that counterparty by Moody’s, Fitch Ratings and Standard &Poor’s. Furthermore, collateralsupport agreementsreduce the Group’s exposure to counterpartieswhomust post collateralwhen there is value due to the Group under outstanding derivative contractsthat 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. In the event of any default, ownership of the collateral would revert to the respective holder atthat point. Detailed below isthe value of the cash collateral, which isreported within current borrowings, held by the Group at 31 March: 2023 2022 €m €m Collateral liabilities 4,886 2,914 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 deficitin the scheme and pledged security in relation to the Indus Towersmerger. The Group has also pledged cash as collateral against derivative financial instruments as disclosed in note 13 ‘Other investments’. Operating activities Customer creditrisk ismanaged by the Group’s business unitswhich each have policies, procedures and controlsrelating to customer creditrisk management. Outstanding trade receivables and contract assets are regularly reviewed tomonitor any changesin credit riskwith concentrations of creditrisk considered to be limited given thatthe Group’s customer base islarge and unrelated. The Group appliesthe simplified approach and recordslifetime expected creditlossesfor trade receivables and contract assets. Expected creditlosses are measured using historical cash collection data for periods of atleast 24 monthswherever possible and grouped into various customersegments based on product or customer type. The historical lossrates are adjusted where macroeconomic factors, for example changesin interestrates or unemploymentrates, or other commercial factors are expected to have a significantimpactwhen determining future expected creditlossrates. For trade receivablesthe expected creditloss provision is calculated using a provision matrix, in which the provision increases as balances age, and for receivables paid in instalments and contract assets aweighted lossrate is calculated to reflectthe period over which the amounts become due for payment by the customer. Trade receivables and contract assets arewritten off when each business unit determinesthere to be no reasonable expectation of recovery and enforcement activity has ceased. Movementsin the allowance for expected creditlosses during the year were asfollows: Trade receivables held Trade receivables held at fair value through Contract assets at amortised cost other comprehensive income 2023 2022 2023 2022 2023 2022 €m €m €m €m €m €m 1 April 83 101 1,342 1,480 108 57 Exchange movements (3) 1 (72) (70) 1 – Amounts charged to credit losses on financial assets 138 114 449 394 19 53 Other1 (140) (133) (570) (462) (57) (2) 31 March 78 83 1,149 1,342 71 108 Note: 1 Primarily utilisation ofthe provision byway ofwrite-off. Expected creditlosses are presented as net creditlosses on financial assetswithin operating profit and subsequentrecoveries of amounts previously written off are credited against the same line item. ThemajorityoftheGroup’stradereceivablesaredueformaturitywithin90daysandlargelycompriseamountsreceivablefromconsumersandbusiness customers. The table below presentsinformation on trade receivables past due¹ and their associated expected creditlosses: 31 March 2023 Trade receivables at amortised cost past due 30 days 31–60 61–180 180 Due or less days days days+ Total €m €m €m €m €m €m Gross carrying amount 2,465 599 163 329 957 4,513 Expected credit loss allowance (67) (64) (50) (173) (831) (1,185) Net carrying amount 2,398 535 113 156 126 3,328 31 March 2022 Trade receivables at amortised cost past due 30 days 31–60 61–180 180 Due or less days days days+ Total €m €m €m €m €m €m Gross carrying amount 2,411 650 182 390 1,043 4,676 Expected credit loss allowance (123) (83) (53) (190) (893) (1,342) Net carrying amount 2,288 567 129 200 150 3,334 Note: 1 Contract assetsrelate to amounts not yet due from customers. These amounts will be reclassified astrade receivables before they become due. Trade receivables atfair value through other comprehensive income are notmaterially pastdue. 179 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 22.Capitalandfinancialriskmanagement(continued) Liquidity risk Liquidity isreviewed daily on atleast a 12 month rolling basis and stresstested on the assumption that any commercial paper outstanding matures and is notreissued. The Groupmaintainssubstantial cash and cash equivalentswhich at 31 March 2023 amounted to cash €11.7 billion (2022: €7.5 billion) and undrawn committed facilities of €8.0 billion (2022: €8.2 billion), principally euro and US dollar revolving creditfacilities of €4.0 billion and US$4.0 billion (€3.7 billion) which mature in 2025 and 2028 respectively. The Groupmanagesliquidity risk on non-current borrowings by maintaining a variedmaturity profilewith a cap on the level of debtmaturity in any one calendar year, therefore minimising refinancing risk. Non-current borrowingsmature between 1 and 40 years. Thematurity profileof the anticipated future cash flowsincluding interestin relation to the Group’s non-derivative financial liabilities on an undiscounted basiswhich, therefore, differsfrom both the carrying value and fair value, is asfollows: Maturity profile1 Trade payables and other financial Bank loans Bonds Lease liabilities Other2 Total borrowings liabilities3 Total €m €m €m €m €m €m €m Within one year 308 6,234 3,452 6,764 16,758 15,370 32,128 In one to two years 235 3,070 2,574 423 6,302 51 6,353 In two to three years 110 5,725 2,200 259 8,294 – 8,294 In three to four years 18 5,500 1,981 258 7,757 – 7,757 In four to five years 70 2,212 1,810 233 4,325 – 4,325 In more than five years 128 42,325 3,240 599 46,292 – 46,292 869 65,066 15,257 8,536 89,728 15,421 105,149 Effect of discount/financing rates (74) (20,950) (1,893) (421) (23,338) (3) (23,341) 31 March 2023 795 44,116 13,364 8,115 66,390 15,418 81,808 Within one year 700 3,569 3,130 6,823 14,222 16,884 31,106 In one to two years 33 6,190 2,189 417 8,829 29 8,858 In two to three years 411 3,786 1,759 207 6,163 – 6,163 In three to four years 2 5,746 1,579 199 7,526 – 7,526 In four to five years 205 6,253 1,387 678 8,523 – 8,523 In more than five years 21 43,514 4,242 136 47,913 – 47,913 1,372 69,058 14,286 8,460 93,176 16,913 110,089 Effect of discount/financing rates (55) (21,027) (1,747) (255) (23,084) (1) (23,085) 31 March 2022 1,317 48,031 12,539 8,205 70,092 16,912 87,004 Notes: 1 Maturitiesreflect contractual cash flows applicable exceptin the event of a change of control or event of default, upon which lenders have the right, but notthe obligation,to request payment within 30 days. This also appliesto undrawn committed facilities. There is no debtthatissubjectto amaterial adverse change clause. 2 Includesspectrumlicence payables withmaturity profile €196million (2022: €2,319 million)within one year, €170 million (2022: €165 million) in one to two years, €199million (2022: €199million) in two to three years, €199 million (2022: €199 million)in three to four years, €199 million (2022: €662 million)in fourto five years and €587million (2022: €136 million) in more than five years. Also includes €4,886 million (2022: €2,914 million)in relation to cash received under collateralsupport agreementsshown within 1 year. 3 Includesfinancial liabilities under put option arrangements and non-derivative financial liabilities presentedwithin trade and other payables. Thematurity profile of the Group’sfinancial derivatives(which include interestrate swaps, cross-currency interestrate swaps and foreign exchange swaps) using undiscounted cash flows, is asfollows: 2023 2022 Payable1 Receivable1 Total Payable1 Receivable1 Total €m €m €m €m €m €m Within one year (17,845) 18,527 682 (12,671) 13,470 799 In one to two years (3,534) 4,055 521 (5,897) 6,399 502 In two to three years (4,028) 4,441 413 (2,584) 3,158 574 In three to four years (2,186) 2,567 381 (3,373) 3,864 491 In four to five years (2,265) 2,681 416 (1,699) 2,139 440 In more than five years (38,494) 44,586 6,092 (34,097) 40,129 6,032 (68,352) 76,857 8,505 (60,321) 69,159 8,838 Effect of discount/financing rates (3,803) (5,884) Financial derivative net receivable/(payable) 4,702 2,954 Note: 1 Payables and receivables are stated separately in the table above as cash settlementis on a gross basis. 180 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 22.Capitalandfinancialriskmanagement(continued) Liquidity risk Liquidity isreviewed daily on atleast a 12 month rolling basis and stresstested on the assumption that any commercial paper outstanding matures and is notreissued. The Groupmaintainssubstantial cash and cash equivalentswhich at 31 March 2023 amounted to cash €11.7 billion (2022: €7.5 billion) and undrawn committed facilities of €8.0 billion (2022: €8.2 billion), principally euro and US dollar revolving creditfacilities of €4.0 billion and US$4.0 billion (€3.7 billion) which mature in 2025 and 2028 respectively. The Groupmanagesliquidity risk on non-current borrowings by maintaining a variedmaturity profilewith a cap on the level of debtmaturity in any one calendar year, therefore minimising refinancing risk. Non-current borrowingsmature between 1 and 40 years. Thematurity profileof the anticipated future cash flowsincluding interestin relation to the Group’s non-derivative financial liabilities on an undiscounted basiswhich, therefore, differsfrom both the carrying value and fair value, is asfollows: Maturity profile1 Trade payables and other financial Bank loans Bonds Lease liabilities Other2 Total borrowings liabilities3 Total €m €m €m €m €m €m €m Within one year 308 6,234 3,452 6,764 16,758 15,370 32,128 In one to two years 235 3,070 2,574 423 6,302 51 6,353 In two to three years 110 5,725 2,200 259 8,294 – 8,294 In three to four years 18 5,500 1,981 258 7,757 – 7,757 In four to five years 70 2,212 1,810 233 4,325 – 4,325 In more than five years 128 42,325 3,240 599 46,292 – 46,292 869 65,066 15,257 8,536 89,728 15,421 105,149 Effect of discount/financing rates (74) (20,950) (1,893) (421) (23,338) (3) (23,341) 31 March 2023 795 44,116 13,364 8,115 66,390 15,418 81,808 Within one year 700 3,569 3,130 6,823 14,222 16,884 31,106 In one to two years 33 6,190 2,189 417 8,829 29 8,858 In two to three years 411 3,786 1,759 207 6,163 – 6,163 In three to four years 2 5,746 1,579 199 7,526 – 7,526 In four to five years 205 6,253 1,387 678 8,523 – 8,523 In more than five years 21 43,514 4,242 136 47,913 – 47,913 1,372 69,058 14,286 8,460 93,176 16,913 110,089 Effect of discount/financing rates (55) (21,027) (1,747) (255) (23,084) (1) (23,085) 31 March 2022 1,317 48,031 12,539 8,205 70,092 16,912 87,004 Notes: 1 Maturitiesreflect contractual cash flows applicable exceptin the event of a change of control or event of default, upon which lenders have the right, but notthe obligation,to request payment within 30 days. This also appliesto undrawn committed facilities. There is no debtthatissubjectto amaterial adverse change clause. 2 Includesspectrumlicence payables withmaturity profile €196million (2022: €2,319 million)within one year, €170 million (2022: €165 million) in one to two years, €199million (2022: €199million) in two to three years, €199 million (2022: €199 million)in three to four years, €199 million (2022: €662 million)in fourto five years and €587million (2022: €136 million) in more than five years. Also includes €4,886 million (2022: €2,914 million)in relation to cash received under collateralsupport agreementsshown within 1 year. 3 Includesfinancial liabilities under put option arrangements and non-derivative financial liabilities presentedwithin trade and other payables. Thematurity profile of the Group’sfinancial derivatives(which include interestrate swaps, cross-currency interestrate swaps and foreign exchange swaps) using undiscounted cash flows, is asfollows: 2023 2022 Payable1 Receivable1 Total Payable1 Receivable1 Total €m €m €m €m €m €m Within one year (17,845) 18,527 682 (12,671) 13,470 799 In one to two years (3,534) 4,055 521 (5,897) 6,399 502 In two to three years (4,028) 4,441 413 (2,584) 3,158 574 In three to four years (2,186) 2,567 381 (3,373) 3,864 491 In four to five years (2,265) 2,681 416 (1,699) 2,139 440 In more than five years (38,494) 44,586 6,092 (34,097) 40,129 6,032 (68,352) 76,857 8,505 (60,321) 69,159 8,838 Effect of discount/financing rates (3,803) (5,884) Financial derivative net receivable/(payable) 4,702 2,954 Note: 1 Payables and receivables are stated separately in the table above as cash settlementis on a gross basis. Marketrisk Interestratemanagement Under the Group’sinterestrate management policy, interestrates on long-term monetary assets and liabilities are principally maintained on a fixed rate basis. At 31 March 2023 and after hedging,substantially all of our outstanding liabilities are held on a fixed interestrate basisin accordance with treasury policy. At 31 March 2022 the Group held economic interestrate hedges atfair value through profit and loss. For each one hundred basis pointrise in marketinterestratesfor all currenciesin which the Group had borrowings at 31 March 2023 there would be an increase in profit before tax by €27 million (2022: €420million) including mark tomarketrevaluations of interestrate and other derivatives and the potential interest on cash and short-term investments. There would be nomaterial impact on equity. At 31 March 2023, the Group had limited exposure through interestrate derivatives and floating rate bondsreferencing LIBOR and other interbank offered rates(IBORs). Foreign exchangemanagement As Vodafone’s primary listing is on the London Stock Exchange itsshare price is quoted in sterling. Since the sterling share price representsthe value of itsfuture multi-currency cash flows, principally in euro, South African rand and sterling, the Groupmaintainsthe currency of debt and interest chargesin proportion to its expected future principal cash flows and has a policy to hedge external foreign exchange risks on transactions denominated in other currencies above a certain de minimislevel. At 31 March 2023 11% of net debtwas denominated in currencies otherthan euro (3% sterling, 6% South African rand and 2% other). This allows sterling, South African rand and other debt to be serviced in proportion to expected future cash flows and therefore provides a partial economic hedge againstincome statementtranslation exposure, asinterest costswill be denominated in foreign currencies. Under the Group’sforeign exchangemanagement policy, foreign exchange transaction exposure in Group companiesis generally maintained atthe lower of €5 million per currency permonth or €15million per currency over a six month period. The Group recognisesforeign exchange movementsin equity for the translation of netinvestment hedging instruments and balancestreated as investmentsin foreign operations.However, there is no netimpact on equity for exchange rate movements on netinvestment hedging instruments asthere would be an offsetin the currency translation of the foreign operation. At 31 March 2023 the Group held financial liabilitiesin a net investment hedge againstthe Group’s South African rand operations. Sensitivity to foreign exchange movements on the hedging liabilities, analysed against a strengthening ofthe South African rand by 12% (2022: 13%) would resultin a decrease in equity of €267 million (2022: €221million) which would be fully offset by foreign exchangemovements on the hedged net assets. In addition, cash flowhedges of principally US dollar borrowingswould resultin an increase in equity of €204 million (2022: €371 million) against a strengthening of US dollar by 5% (2022: 5%). The Group profit and loss accountis exposed to foreign exchange risk within both operating profit and financing income and expense. The principal operations not generating income in euro are Vodacom South Africa (South African rand), and Egypt(Egyptian pound). Financing income and expense includesforeign currency gains/lossesincurred on the translation of balance sheetitems not held in functional currency. These are principally on certain borrowings, derivatives, and other investments denominated in sterling and Turkish lira. The following table detailsthe Group’ssensitivity to foreign exchange risk. The percentage movement applied to the currency is based on the average movementsin the previousthree annualreporting periods. 2023 2022 €m €m Increase/ (decrease) in Profit before taxation ZAR 12% change (2022: 13%) 87 134 EGP 27% change (2022: 9%) 116 41 TRY 43% change (2022: 39%) 33 83 GBP 3% change (2022: 2%) (46) (67) Equity risk There is nomaterial equity risk relating to the Group’s equity investmentswhich are detailed in note 13 ‘Other investments’. In the prior financial year, the Group had hedged its exposure under the subordinated mandatory convertible bondsto any futuremovementsin its share price by an option strategy designed to hedge the economic impact ofshare pricemovements. This option strategy ended during the current financial year. As at 31 March 2023,the Group is no longersensitive (2022: 7% sensitivity) to a movementin itsshare price thatwould resultin an increase or decrease in profit before tax(2022: €36 million). 181 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) Riskmanagement strategyofhedgerelationships The risk strategies of the designated cash flow, fair value, and netinvestment hedgesreflectthe abovemarketrisk strategies. The objective of the cash flow hedgesis principally to convertforeign currency denominated fixed rate borrowingsin US dollar, pound sterling, Australian dollar, Swissfranc,Hong Kong dollar,Japanese yen,Norwegian krona andUS dollar floating rate borrowingsinto euro fixed rate borrowings and hedge the foreign exchange spotrate and interestrate risk. There are also cash flowhedges of certain subsidiary expenditure not denominated in functional currency of the entity, to hedge foreign exchange spotrisk. Derivative financial instruments designated in cash flow hedges are cross-currency interestrate swaps and foreign exchange swaps and forwards. The swapmaturity dates and liquidity profiles of the nominal cash flowsmatch those of the underlying borrowings and exposures. The objective of the netinvestment hedgesisto hedge foreign exchange risk in foreign operations. Derivative financial instruments designated in netinvestment hedges are cross-currency interest rate swaps and foreign exchange swaps. The hedging instruments are rolled on an ongoing basis as determined by the nature of the business. The objective of the fair value hedgesisto hedge a proportion of the Group’sfixed rate euro denominated borrowing to a euro floating rate borrowing. The swapmaturity datesmatch those of the underlying borrowing and the nominal cash flows are converted to quarterly payments. Hedge effectivenessis determined atthe inception of the hedge relationship and through periodic prospective effectiveness assessmentsto ensure that an economic relationship exists between the hedged item and hedging instrument. For hedges of foreign currency denominated borrowings and investments, the Group uses a combination of cross-currency and foreign exchange swapsto hedge its exposure to foreign exchange risk and interestrate risk and entersinto hedge relationshipswhere the critical terms of the hedging instrumentmatch with the terms of the hedged item. Therefore the Group expects a highly effective hedging relationshipwith the swap contracts and the value of the corresponding hedged itemsto change systematically in the opposite direction in response tomovementsin the underlying exchange rates and interestrates. The Group therefore performs a qualitative assessment of effectiveness. If changesin circumstances affectthe terms of the hedged item such thatthe critical terms no longer match with the critical terms of the hedging instrument, the Group uses the hypothetical derivativemethod to assess effectiveness. Hedge ineffectivenessmay occur due to: a) The fair value of the hedging instrument on the hedge relationship designation date if the fair value is not nil; b) Changesin the contractual terms ortiming of the payments on the hedged item; and c) A change in the creditrisk of the Group or the counterparty with the hedging instrument. The hedge ratio for each designationwill be established by comparing the quantity of the hedging instrument and the quantity of the hedged item to determine their relative weighting; for all of the Group’s existing hedge relationshipsthe hedge ratio has been determined as 1:1. The fair values of the derivative financial instruments are calculated by discounting the future cash flowsto net present values using appropriate marketrates and foreign currency rates prevailing at 31 March. The valuation basisislevel 2 of the fair value hierarchy. This classification comprises itemswhere fair value is determined from inputs other than quoted pricesthat are observable for the asset and liability, either directly or indirectly. Derivative financial assets and liabilities are included within trade and other receivables and trade and other payablesin the statement of financial position. 182 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) Riskmanagement strategyofhedgerelationships The risk strategies of the designated cash flow, fair value, and netinvestment hedgesreflect the abovemarketrisk strategies. The objective of the cash flow hedgesis principally to convertforeign currency denominated fixed rate borrowingsin US dollar, pound sterling, Australian dollar, Swissfranc,Hong Kong dollar,Japanese yen,Norwegian krona andUS dollar floating rate borrowingsinto euro fixed rate borrowings and hedge the foreign exchange spotrate and interestrate risk. There are also cash flowhedges of certain subsidiary expenditure not denominated in functional currency of the entity, to hedge foreign exchange spotrisk. Derivative financial instruments designated in cash flow hedges are cross-currency interestrate swaps and foreign exchange swaps and forwards. The swapmaturity dates and liquidity profiles of the nominal cash flowsmatch those of the underlying borrowings and exposures. The objective of the netinvestment hedgesisto hedge foreign exchange risk in foreign operations. Derivative financial instruments designated in netinvestment hedges are cross-currency interest rate swaps and foreign exchange swaps. The hedging instruments are rolled on an ongoing basis as determined by the nature of the business. The objective of the fair value hedgesisto hedge a proportion of the Group’sfixed rate euro denominated borrowing to a euro floating rate borrowing. The swapmaturity datesmatch those of the underlying borrowing and the nominal cash flows are converted to quarterly payments. Hedge effectivenessis determined atthe inception of the hedge relationship and through periodic prospective effectiveness assessmentsto ensure that an economic relationship exists between the hedged item and hedging instrument. For hedges of foreign currency denominated borrowings and investments, the Group uses a combination of cross-currency and foreign exchange swapsto hedge its exposure to foreign exchange risk and interestrate risk and entersinto hedge relationshipswhere the critical terms of the hedging instrumentmatch with the terms of the hedged item. Therefore the Group expects a highly effective hedging relationshipwith the swap contracts and the value of the corresponding hedged itemsto change systematically in the opposite direction in response tomovementsin the underlying exchange rates and interestrates. The Group therefore performs a qualitative assessment of effectiveness. If changesin circumstances affectthe terms of the hedged itemsuch thatthe critical terms no longer match with the critical terms of the hedging instrument, the Group uses the hypothetical derivativemethod to assess effectiveness. Hedge ineffectivenessmay occur due to: a) The fair value of the hedging instrument on the hedge relationship designation date if the fair value is not nil; b) Changesin the contractual terms ortiming of the payments on the hedged item; and c) A change in the creditrisk of the Group or the counterparty with the hedging instrument. The hedge ratio for each designationwill be established by comparing the quantity of the hedging instrument and the quantity of the hedged item to determine their relative weighting; for all of the Group’s existing hedge relationshipsthe hedge ratio has been determined as 1:1. The fair values of the derivative financial instruments are calculated by discounting the future cash flowsto net present values using appropriate marketrates and foreign currency rates prevailing at 31 March. The valuation basisislevel 2 of the fair value hierarchy. This classification comprises itemswhere fair value is determined from inputs other than quoted pricesthat are observable for the asset and liability, either directly or indirectly. Derivative financial assets and liabilities are included within trade and other receivables and trade and other payablesin the statement of financial position. The following table representsthe carrying values and nominal amounts of derivativesin a continued hedge relationship as at 31 March. At 31 March 2023 Other comprehensive income Weighted average Opening (Gain)/ Gain/(Loss) Closing Carrying Carrying balance Loss recycled to balance Euro Nominal value value 1 April deferred to financing 31 March Maturity interest amounts assets liabilities 2022 OCI costs 20231 year FX rate rate €m €m €m €m €m €m €m % Cash flow hedges - foreign currency risk3 Cross-currency and foreign exchange swaps US dollar bonds 17,690 4,456 – (1,484) (2,321) 1,096 (2,709) 2038 1.18 3.14 Australian dollar bonds 288 13 – (5) 31 (47) (21) 2027 1.56 1.57 Swiss franc bonds 624 58 – 20 (43) 20 (3) 2026 1.08 1.26 Pound sterling bonds 4,195 61 152 109 6 (152) (37) 2044 0.86 3.15 Hong Kong dollar bonds 233 22 – 7 (17) 5 (5) 2028 9.08 1.48 Japanese yen bonds 78 3 – 2 (9) (5) (12) 2037 128.53 2.47 Norwegian krona bonds 241 – 34 3 17 (32) (12) 2026 9.15 1.12 Foreign exchange forwards2 383 – 34 (69) 34 1 (34) 2023 18.92 – Cash flow hedges - foreign currency and interest rate risk3 Cross currency swaps - US dollar bonds 417 49 – (1) (20) 10 (11) 2023 1.17 1.07 Net investment hedge - foreign exchange risk5 Cross-currency and foreign exchange swaps - South African rand investment 2,004 96 – 1,133 (181) – 952 2025 18.23 1.83 26,153 4,758 220 (285) (2,503) 896 (1,892) At 31 March 2022 Other comprehensive income Weighted average Opening (Gain)/ Gain/(Loss) Closing Carrying Carrying balance Loss recycled to balance Euro Nominal value value 1 April deferred to financing 31 March Maturity interest amounts assets liabilities 2021 OCI costs 20221 year FX rate rate €m €m €m €m €m €m €m % Cash flow hedges - foreign currency risk3 Cross-currency and foreign exchange swaps US dollar bonds 20,995 2,745 10 501 (3,257) 1,272 (1,484) 2036 1.18 2.76 Australian dollar bonds 736 50 – (24) (12) 31 (5) 2024 1.56 0.92 Swiss franc bonds 624 16 1 30 (59) 49 20 2026 1.08 1.26 Pound sterling bonds 3,498 61 145 323 (239) 25 109 2043 0.86 2.97 Hong Kong dollar bonds 233 8 3 13 (18) 12 7 2028 9.08 1.48 Japanese yen bonds 78 – 6 11 (7) (2) 2 2037 128.53 2.47 Norwegian krona bonds 241 – 16 3 (7) 7 3 2026 9.15 1.12 Foreign exchange forwards2 244 – 69 – (72) 3 (69) 2022 12.34 – Cash flow hedges - foreign currency and interest rate risk3 Cross currency swaps - US dollar bonds 417 24 – 8 (33) 24 (1) 2023 1.17 1.07 Cash flow hedges - interest rate risk3 Interest rate swaps - Euro loans – – – (1) – 1 – – – – Net investment hedge - foreign exchange risk5 Cross-currency and foreign exchange swaps - South African rand investment 1,555 – 113 959 174 – 1,133 2022 17.29 0.31 28,621 2,904 363 1,823 (3,530) 1,422 (285) Notes: 1 Fair valuemovement deferred into other comprehensive income includes €383million loss(2022: €1,318million loss) and€17million gain (2022: €1million gain) of foreign currency basis outside the cash flowand netinvestment hedge relationshipsrespectively. 2 Includes euro andUS dollarforward contracts against Turkish lira to hedge foreign currency forecast expendituresin localmarkets.Notional amounts of €259million (2022: €146million) and $134million or €124million equivalent(2022: $109million or €98 million equivalent)withweighted average exchange rates of 18.36 (2022: 12.45) and 20.07 (2022: 10.95)respectively to Turkish lira. 3 For cash flowhedges,themovementin the hypothetical derivative (hedged item)mirrorsthat ofthe hedging instrument.Hedge ineffectiveness ofthe swaps designated in a cash flowhedge during the periodwas€nil (2022: €nil). 4 The carrying value of bondsincludes an additional €776million loss(2022: €760million loss) in relation to fair value ofother bonds previously designated in fair value hedge relationships. 5 Hedge ineffectivenessofswaps designated in a netinvestment hedge during the periodwas €nil (2022: €nil). 183 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 22.Capitalandfinancialriskmanagement(continued) Changes inassets andliabilities arising from financing activities Borrowings Derivative assets and liabilities Financial liabilities under put options Other liabilities Assets and liabilities arising from financing activities €m €m €m €m €m 1 April 2022 70,092 (2,954) 494 1,498 69,130 Cash movements Proceeds from issuance of long-term borrowings 4,071 – – – 4,071 Repayment of borrowings (13,538) – – – (13,538) Net movement in short-term borrowings 3,172 – – – 3,172 Net movement in derivatives – 261 – – 261 Interest paid (2,444) 590 (18) (79) (1,951) Purchase of treasury shares – – – (1,867) (1,867) Other – – (12) – (12) Non-cash movements Fair value movements – (1,688) – – (1,688) Foreign exchange (44) (350) – (20) (414) Interest costs 2,657 (561) 21 (113) 2,004 Lease additions 7,652 – – – 7,652 Acquisition and disposal of subsidiaries (5,243) – – – (5,243) Other1 15 – – 684 699 31 March 2023 66,390 (4,702) 485 103 62,276 Borrowings Derivative assets and liabilities Financial liabilities under put options Other liabilities Assets and liabilities arising from financing activities €m €m €m €m €m 1 April 2021 67,760 859 492 491 69,602 Cash movements Proceeds from issuance of long-term borrowings 2,548 – – – 2,548 Repayment of borrowings (8,248) – – – (8,248) Net movement in short-term borrowings 3,002 – – – 3,002 Net movement in derivatives – (293) – – (293) Interest paid (2,246) 469 (17) (10) (1,804) Purchase of treasury shares – – – (2,087) (2,087) Non-cash movements Fair value movements – (2,631) – – (2,631) Foreign exchange 1,386 (930) – (15) 441 Interest costs 2,356 (428) 19 13 1,960 Lease additions 3,410 – – – 3,410 Other1 124 – – 3,106 3,230 31 March 2022 70,092 (2,954) 494 1,498 69,130 Note: 1 Movementin Otherliabilities primarily relate to share buyback programmes. 184 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 22.Capitalandfinancialriskmanagement(continued) Changes inassets andliabilities arising from financing activities Borrowings Derivative assets and liabilities Financial liabilities under put options Other liabilities Assets and liabilities arising from financing activities €m €m €m €m €m 1 April 2022 70,092 (2,954) 494 1,498 69,130 Cash movements Proceeds from issuance of long-term borrowings 4,071 – – – 4,071 Repayment of borrowings (13,538) – – – (13,538) Net movement in short-term borrowings 3,172 – – – 3,172 Net movement in derivatives – 261 – – 261 Interest paid (2,444) 590 (18) (79) (1,951) Purchase of treasury shares – – – (1,867) (1,867) Other – – (12) – (12) Non-cash movements Fair value movements – (1,688) – – (1,688) Foreign exchange (44) (350) – (20) (414) Interest costs 2,657 (561) 21 (113) 2,004 Lease additions 7,652 – – – 7,652 Acquisition and disposal of subsidiaries (5,243) – – – (5,243) Other1 15 – – 684 699 31 March 2023 66,390 (4,702) 485 103 62,276 Borrowings Derivative assets and liabilities Financial liabilities under put options Other liabilities Assets and liabilities arising from financing activities €m €m €m €m €m 1 April 2021 67,760 859 492 491 69,602 Cash movements Proceeds from issuance of long-term borrowings 2,548 – – – 2,548 Repayment of borrowings (8,248) – – – (8,248) Net movement in short-term borrowings 3,002 – – – 3,002 Net movement in derivatives – (293) – – (293) Interest paid (2,246) 469 (17) (10) (1,804) Purchase of treasury shares – – – (2,087) (2,087) Non-cash movements Fair value movements – (2,631) – – (2,631) Foreign exchange 1,386 (930) – (15) 441 Interest costs 2,356 (428) 19 13 1,960 Lease additions 3,410 – – – 3,410 Other1 124 – – 3,106 3,230 31 March 2022 70,092 (2,954) 494 1,498 69,130 Note: 1 Movementin Otherliabilities primarily relate to share buyback programmes. Fairvalueandcarryingvalueinformation The carrying value and valuation basis of the Group’sfinancial assets are set out in notes 13 ‘Other investments’, 14 ‘Trade and other receivables’ and 19 ‘Cash and cash equivalents’. For all financial assets held at amortised cost the carrying values approximate fair value except as disclosed in note 13 ‘Other investments’. The carrying value and valuation basis of the Group’sfinancial liabilities are set out in notes 15 ‘Trade and other payables’ and 21 ‘Borrowings’. The carrying values approximate fair value for the Group’strade payables and other payables categories. For other financial liabilities a comparison of fair value and carrying value is disclosed in note 21 ‘Borrowings’. Level3 financialinstruments The Group’s borrowingsinclude €1,485 million (2022: €1,382 million) of bank borrowingsthat are secured againstthe Group’sshareholdingsin Indus Towers and Vodafone Idea (see note 12 ‘Investmentsin Associates and Joint Ventures’ for further details of these assets) and will be repaid through the realisation of proceedsfrom those assets. This arrangement contains an embedded derivative option which has been separately fair valued. The 31 March 2023 valuation of the embedded derivative asset of €198 million (2022: €3million) is presented within derivative assetsin current assets(see note 14 ‘Trade and other receivables’). A Black Scholesmodel for European put options has been used as a valuation model and primarily usesmarketinputs(quoted share prices and volatilitiesfor Indus Towers and Vodafone Idea) along with a strike price equal to the amount payable under the loan. The valuation includes an unobservable adjustmentto reflectthe potential timeframe to settle the loan and has been modelled using a range of potential durations up to 30 September 2024. As a result of this unobservable adjustment, the option is classified as a level 3 instrument under the fair value hierarchy. An increase/(decrease) in durations applied of 6 monthswould increase/(decrease) the derivative asset by €141million/(€115 million). Netfinancialinstruments The table below showsthe Group’sfinancial assets and liabilitiesthat are subject to offsetin the balance sheet and the impact of enforceable master netting orsimilar agreements. At 31 March 2023 Related amounts not set off in the balance sheet Gross amount Amount set off Amounts presented in balance sheet Right of set off with derivative counterparties Collateral (liabilities)/assets1 Net amount €m €m €m €m €m €m Derivative financial assets 6,124 – 6,124 (910) (4,886) 328 Derivative financial liabilities (1,422) – (1,422) 910 239 (273) Total 4,702 – 4,702 – (4,647) 55 At 31 March 2022 Related amounts not set off in the balance sheet Gross amount Amount set off Amounts presented in balance sheet Right of set off with derivative counterparties Collateral (liabilities)/assets1 Net amount €m €m €m €m €m €m Derivative financial assets 4,626 – 4,626 (1,365) (2,914) 347 Derivative financial liabilities (1,672) – (1,672) 1,365 368 61 Total 2,954 – 2,954 – (2,546) 408 Note: 1 Excludes collateral of €nil (2022: €330million) pledged asinitial margin, assecurity againstfuture mark to marketmovements on certain derivative options, thattherefore does not offset against existingmark tomarket balances as at 31 March. Financial assets and liabilities are offset and the net amountreported in the consolidated balance sheetwhen there is a legally enforceable rightto offsetthe recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Derivative financial instrumentsthat do notmeet the criteria for offset could be settled net in certain circumstances under ISDA (‘International Swaps and Derivatives Association’) agreementswhere each party hasthe option to settle amounts on a net basisin the event of defaultfrom the other. Collateral may be offset and netsettled against derivative financial instrumentsin the event of default by either party. The aforementioned collateral balances are recorded inNotes 13 ‘Other investments’ or 21 ‘Borrowings’ respectively. 185 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 23.Directors andkeymanagement compensation This note detailsthe total amounts earned by the Company’s Directors andmembers ofthe Executive Committee. Directors Aggregate emoluments of the Directors of the Company were asfollows: Re-presented1 Re-presented1 2023 2022 2021 €m €m €m Short-term remuneration 6 7 7 Long-term incentive schemes2 3 2 1 9 9 8 Notes: 1 The prior year comparatives have been re-presented to aggregate previously disclosed salaries and fees and incentive schemesinto Short-term remuneration. Additional disclosure is now provided forlong-term incentive schemes, increasing total emoluments by €2million and €1million forthe years ended 31 March 2022 and 31 March 2021, respectively. 2 Relatesto share-based payments. No Directorsserving during the year exercised share optionsin the year ended 31 March 2023 (2022: None; 2021: None). Keymanagementcompensation Aggregate compensation for keymanagement, being the Directors andmembers of the Executive Committee, was asfollows: 2023 2022 2021 €m €m €m Short-term employee benefits 25 28 28 Share-based payments 12 8 11 37 36 39 186 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 23.Directors andkeymanagement compensation This note detailsthe total amounts earned by the Company’s Directors andmembers ofthe Executive Committee. Directors Aggregate emoluments of the Directors of the Company were asfollows: Re-presented1 Re-presented1 2023 2022 2021 €m €m €m Short-term remuneration 6 7 7 Long-term incentive schemes2 3 2 1 9 9 8 Notes: 1 The prior year comparatives have been re-presented to aggregate previously disclosed salaries and fees and incentive schemesinto Short-term remuneration. Additional disclosure is now provided forlong-term incentive schemes, increasing total emoluments by €2million and €1million forthe years ended 31 March 2022 and 31 March 2021, respectively. 2 Relatesto share-based payments. No Directorsserving during the year exercised share optionsin the year ended 31 March 2023 (2022: None; 2021: None). Keymanagementcompensation Aggregate compensation for keymanagement, being the Directors andmembers of the Executive Committee, was asfollows: 2023 2022 2021 €m €m €m Short-term employee benefits 25 28 28 Share-based payments 12 8 11 37 36 39 24.Employees This note showsthe average number of people employed by the Group during the year, in which areas of our business our employeeswork andwhere they are based. It also showstotal employment costs. 2023 2022 2021 Employees Employees Employees By activity Operations 15,808 15,404 14,893 Selling and distribution 24,676 25,499 26,874 Customer care and administration 57,619 56,038 54,739 98,103 96,941 96,506 By segment Germany 15,242 15,256 15,798 Italy 5,733 5,765 5,818 Spain 3,992 4,194 4,257 UK 9,312 9,198 9,584 Other Europe 14,189 15,106 15,460 Vodacom 7,990 7,973 7,810 Other Markets 9,331 9,336 9,498 Vantage Towers1 753 502 – Common Functions 31,561 29,611 28,281 Total 98,103 96,941 96,506 Note: 1 Vantage Towers was a newreporting segmentin the comparative year ended 31 March 2022. The costincurred in respect of these employees(including Directors) was: 2023 2022 2021 €m €m €m Wages and salaries 4,853 4,469 4,238 Social security costs 604 578 549 Other pension costs (note 25 'Post employment benefits') 244 168 235 Share-based payments (note 26 'Shared-based payments') 141 119 135 Total 5,842 5,334 5,157 187 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 25.Postemploymentbenefits The Group operates a number of Defined Benefit and Defined Contribution retirement plansfor our employees. The Group’slargest defined benefit plan isin the UK. For further detailssee ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 ‘Basis of preparation’. Accounting policies For defined benefitretirement plans,the difference between the fair value of the plan assets and the present value of the plan liabilitiesis recognised as an asset or a liability on the consolidated statement of financial position. Defined benefit plan liabilities are assessed using the projected unitfunding method and applying the principal actuarial assumptions atthe reporting period date. Assets are valued at market value. Actuarial gains and losses are taken to the consolidated statement of comprehensive income for defined benefit plans or consolidated income statement for cash leaver plans asincurred. For this purpose, actuarial gains and losses comprise both the effects of changesin actuarial assumptions and experience adjustments arising fromdifferences between the previous actuarial assumptions and what has actually occurred. The return on plan assets, in excess of interestincome, and costsincurred forthe management of plan assets are also taken to other comprehensive income. Other movementsin the netsurplus or deficit are recognised in the consolidated income statement, including the currentservice cost, any past service cost and the effect of any settlements. The interest costlessthe expected interest income on assetsis also charged to the consolidated income statement. The amount charged to the consolidated income statementin respect of these plansisincluded within operating costs or in the Group’sshare of the results of equity accounted operations, as appropriate. The Group’s contributionsto defined contribution pension plans are charged to the consolidated income statement asthey fall due. Background At 31 March 2023 the Group operated a number ofretirement plansforthe benefit of its employeesthroughout the world, with varying rights and obligations depending on the conditions and practicesin the countries concerned. The Group’s philosophy isto provide accessto defined contribution retirement planswhere feasible and tomanage legacy defined benefitretirement arrangements. Defined benefit plans provide benefits based on the employees’ length of pensionable service and their final pensionable salary or other criteria. Defined contribution plans offer employeesindividual fundsthat are converted into benefits atthe time of retirement. The Group operates defined benefit plansin Germany, India, Ireland, Italy, the UK, theUnited States; defined benefitindemnity plansin Greece and Turkey; and a cash leaver plan in India. Defined contribution plans are currently provided in Egypt, Germany, Greece, India, Ireland, Italy, Portugal, South Africa, Spain and the UK. Income statement expense/(income) 2023 2022 2021 €m €m €m Defined contribution plans 207 197 204 Defined benefit plans 37 (29) 31 Total amount charged to income statement (note 24) 244 168 235 Definedbenefitplans The Group’sretirement policy isto provide competitive pension provision, in each operating country, in linewith themarketmedian for that location. The Group’s preferred retirement provision isfocused on Defined Contribution arrangements and/or State provision for future service. The Group’s main defined benefitfunding liability isthe Vodafone UK Group Pension Scheme (‘VodafoneUK plan’). Since June 2014 the Vodafone UK plan has consisted of two segregated sections: the Vodafone Section and the Cable & Wireless Section (‘CWW Section’). Both sections are closed to new entrants and to future accrual. The Group also operatessmaller funded and unfunded plansin theUK, funded and unfunded plansin Germany and a funded plan in Ireland. Defined benefit pension provision exposesthe Group to actuarial riskssuch aslonger than expected longevity of participants, lower than expected return on investments and higher than expected inflation, which may increase the liabilities or reduce the value of assets of the plans. Themain defined benefit plans are administered by trustee boardswhich are legally separate from the Group and consist of representatives who are employees, former employees or are independentfrom the Group. The trustee boards of the pension plans are required by legislation to actin the bestinterest of the participants,setthe investmentstrategy and contribution rates and are subjectto statutory funding regimes. The Vodafone UK plan isregistered as an occupational pension plan withHM Revenue and Customs(‘HMRC’) and issubjectto UK legislation and operates within the framework outlined by the Pensions Regulator.UK legislation requiresthat pension plans are funded prudently and that valuations are undertaken atleast every three years. Separate valuations are required for the Vodafone Section and CWW Section. The trustees obtain regular actuarial valuationsto check whether the statutory funding objective ismet and whether a recovery plan isrequired to restore funding to the level of the agreed technical provisions. The 31 March 2022 triennial actuarial valuation for the Vodafone Section and CWW Section of the Vodafone UK plan showed a netsurplus of £248 million (€282 million) on the funding basis, comprising of a £97 million (€110 million)surplusfor the Vodafone Section and a £151 million (€172 million)surplusfor the CWW Section. No further contributions are due in respect of the VodafoneUK plan atthistime. The next actuarial valuation has an effective date of 31 March 2025. 188 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 25.Postemploymentbenefits The Group operates a number of Defined Benefit and Defined Contribution retirement plansfor our employees. The Group’slargest defined benefit plan isin the UK. For further detailssee ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 ‘Basis of preparation’. Accounting policies For defined benefitretirement plans,the difference between the fair value of the plan assets and the present value of the plan liabilitiesis recognised as an asset or a liability on the consolidated statement of financial position. Defined benefit plan liabilities are assessed using the projected unitfunding method and applying the principal actuarial assumptions atthe reporting period date. Assets are valued at market value. Actuarial gains and losses are taken to the consolidated statement of comprehensive income for defined benefit plans or consolidated income statement for cash leaver plans asincurred. For this purpose, actuarial gains and losses comprise both the effects of changesin actuarial assumptions and experience adjustments arising fromdifferences between the previous actuarial assumptions and what has actually occurred. The return on plan assets, in excess of interestincome, and costsincurred forthe management of plan assets are also taken to other comprehensive income. Other movementsin the netsurplus or deficit are recognised in the consolidated income statement, including the currentservice cost, any past service cost and the effect of any settlements. The interest costlessthe expected interest income on assetsis also charged to the consolidated income statement. The amount charged to the consolidated income statementin respect of these plansisincluded within operating costs or in the Group’sshare of the results of equity accounted operations, as appropriate. The Group’s contributionsto defined contribution pension plans are charged to the consolidated income statement asthey fall due. Background At 31 March 2023 the Group operated a number ofretirement plansforthe benefit of its employeesthroughout the world, with varying rights and obligations depending on the conditions and practicesin the countries concerned. The Group’s philosophy isto provide accessto defined contribution retirement planswhere feasible and tomanage legacy defined benefitretirement arrangements. Defined benefit plans provide benefits based on the employees’ length of pensionable service and their final pensionable salary or other criteria. Defined contribution plans offer employeesindividual fundsthat are converted into benefits atthe time of retirement. The Group operates defined benefit plansin Germany, India, Ireland, Italy, the UK, theUnited States; defined benefitindemnity plansin Greece and Turkey; and a cash leaver plan in India. Defined contribution plans are currently provided in Egypt, Germany, Greece, India, Ireland, Italy, Portugal, South Africa, Spain and the UK. Income statement expense/(income) 2023 2022 2021 €m €m €m Defined contribution plans 207 197 204 Defined benefit plans 37 (29) 31 Total amount charged to income statement (note 24) 244 168 235 Definedbenefitplans The Group’sretirement policy isto provide competitive pension provision, in each operating country, in linewith themarketmedian for that location. The Group’s preferred retirement provision isfocused on Defined Contribution arrangements and/or State provision for future service. The Group’s main defined benefitfunding liability isthe Vodafone UK Group Pension Scheme (‘VodafoneUK plan’). Since June 2014 the Vodafone UK plan has consisted of two segregated sections: the Vodafone Section and the Cable & Wireless Section (‘CWW Section’). Both sections are closed to new entrants and to future accrual. The Group also operatessmaller funded and unfunded plansin theUK, funded and unfunded plansin Germany and a funded plan in Ireland. Defined benefit pension provision exposesthe Group to actuarial riskssuch aslonger than expected longevity of participants, lower than expected return on investments and higher than expected inflation, which may increase the liabilities or reduce the value of assets of the plans. Themain defined benefit plans are administered by trustee boardswhich are legally separate from the Group and consist of representatives who are employees, former employees or are independentfrom the Group. The trustee boards of the pension plans are required by legislation to actin the bestinterest of the participants,setthe investmentstrategy and contribution rates and are subjectto statutory funding regimes. The Vodafone UK plan isregistered as an occupational pension plan withHM Revenue and Customs(‘HMRC’) and issubjectto UK legislation and operates within the framework outlined by the Pensions Regulator.UK legislation requiresthat pension plans are funded prudently and that valuations are undertaken atleast every three years. Separate valuations are required for the Vodafone Section and CWW Section. The trustees obtain regular actuarial valuationsto check whether the statutory funding objective ismet and whether a recovery plan isrequired to restore funding to the level of the agreed technical provisions. The 31 March 2022 triennial actuarial valuation for the Vodafone Section and CWW Section of the Vodafone UK plan showed a netsurplus of £248 million (€282 million) on the funding basis, comprising of a £97 million (€110 million)surplusfor the Vodafone Section and a £151 million (€172 million)surplusfor the CWW Section. No further contributions are due in respect of the VodafoneUK plan atthistime. The next actuarial valuation has an effective date of 31 March 2025. These plan-specific actuarial valuations differ to the IAS 19 accounting basis, which is used tomeasure pension assets and liabilities presented in the Group’s consolidated statement of financial position. Funding plans are individually agreed for each of the Group’s other defined benefit planswith the respective trustees or governing board, taking into accountlocalregulatory requirements. Itis expected that ordinary contributions of €71 millionwill be paid into the Group’s defined benefit plans during the year ending 31 March 2024. The Group has also provided certain guaranteesin respect of the Vodafone UK plan; further details are provided in note 29 ‘Contingentliabilities and legal proceedings’ to the consolidated financialstatements. The investmentstrategy for the UK plansis controlled by the trusteesin consultation with the Group and the plans have no directinvestmentsin the Group’s equity securities or in property or other assets currently used by the Group. The allocation of assets between different classes of investmentisreviewed regularly and is a key factor in the trustee investment policy. The trustees aim to achieve the plan’sinvestment objectives through investing partly in a diversified mix of growth assetswhich, over the long term, are expected to grow in value by more than the lowrisk assets. The lowrisk assetsinclude cash and gilts, inflation and interestrate hedging and in substance insured pensioner annuity policiesin both the Vodafone Section and CWWSections of the Vodafone UK plan and an insured pensioner annuity policy in the Vodafone Ireland Pension Plan. A number of investmentmanagers are appointed to promote diversification by assets, organisation and investmentstyle and currentmarket conditions and trends are regularly assessed, which may lead to adjustmentsin the asset allocation. During the reporting period, there were significant movementsin UK gilt markets – in particular the ‘mini budget’ announced by the UK government on 23 September 2022 caused rapid sales of government bonds which further depressed gilt markets. Although a temporary intervention by the Bank of England and subsequent policy changesstabilised the market, gilt yields increased significantly in a short period of time. This triggered an increase in collateral callsfor pension schemesthat, like the Vodafone UK plan, used liability driven investment (LDI)strategies to hedge their interest rate risks. In response to the risk of potential future collateral calls, on 18 October 2022, the Group entered into short term liquidity facilities with both sections of the Vodafone UK plan for an aggregate amount of £450 million (€512 million). These facilities were put in place for short-term liquidity purposes, with the intention of reducing the risk should the UK plan be required to dispose of assets atshort notice in the event of significant increasesin gilt yields. Drawings could be made from the facility until 27 January 2023, with all amounts borrowed required to be repaid by 28 February 2023. No amounts were drawn under these facilities. There has been reduced volatility in gilt yieldssince the end of 2022, although, the level of yields are significantly higher than they were at 31 March 2022. This hasresulted in a decrease in the value of the assets, and also liabilities in respect of the Vodafone UK plan as at 31 March 2023. Actuarialassumptions The Group’s plan liabilities are measured using the projected unit creditmethod using the principal actuarial assumptionsset out below: 2023 2022 2021 % % % Weighted average actuarial assumptions used at 31 March1 Rate of inflation2 3.0 3.3 2.9 Rate of increase in salaries3 3.0 3.1 2.7 Discount rate 4.5 2.5 1.8 Notes: 1 Figuresshown represent a weighted average assumption ofthe individual plans. 2 The rate of increase in pensionsin payment and deferred revaluation are dependent on the rate of inflation. 3 Relates only to schemes open to future accrual primarily inGermany, Ireland and India. Mortality assumptions used are based on recommendationsfrom the individual local actuarieswhich include adjustmentsfor the experience of the Groupwhere appropriate. The Group’slargest plan isthe VodafoneUK plan. Further life expectancies assumed for the UK plans are 22.8/24.7 years (2022: 23.4/25.4 years) for a male/female pensioner currently aged 65 years and 23.7/25.5 years(2022: 25.4/27.5 years) from age 65 for a male/female non-pensioner member currently aged 40. Chargesmade to the consolidated income statement and consolidated statement of comprehensive income (‘SOCI’) on the basis of the assumptionsstated above are: 2023 2022 2021 €m €m €m Current service cost 44 38 37 Net past service (credit)/costs1 – (71) 2 Net interest (income)/charge (7) 4 (8) Total net cost/(credit) included within staff costs 37 (29) 31 Actuarial losses/(gains) recognised in the SOCI 213 (627) 686 Note: 1 No pastservice credits were recorded in the current financial year. In the prior year, a change inGermany relating to the provision of death and disability benefits effective from1 April 2021 resulted in a pastservice credit of €49 million; further net pastservice credits were recognised in the year ended 31 March 2022 forthe Vodafone UK plan relating to the offer of a pension increase exchange to allmembers atretirement and benefit clarifications. 189 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 25.Postemploymentbenefits(continued) Durationofthebenefitobligations Theweighted average duration of the defined benefit obligation at 31 March 2023 is 16 years(2022: 21 years). Fairvalueoftheassetsandpresentvalueoftheliabilitiesoftheplans The amount included in the consolidated statement of financial position arising from the Group’s obligationsin respect of its defined benefit plansis asfollows: Assets Liabilities Net surplus/ (deficit) €m €m €m 1 April 2021 7,632 (8,085) (453) Service cost – (38) (38) Past service credit – 71 71 Interest income/(cost) 140 (144) (4) Return on plan assets excluding interest income 58 – 58 Actuarial gains arising from changes in demographic assumptions – 7 7 Actuarial gains arising from changes in financial assumptions – 483 483 Actuarial gains arising from experience adjustments – 79 79 Employer cash contributions 60 – 60 Member cash contributions 17 (17) – Benefits paid (241) 241 – Exchange rate movements 52 (45) 7 Other movements (3) 7 4 31 March 2022 7,715 (7,441) 274 Service cost – (44) (44) Interest income/(cost) 185 (178) 7 Return on plan assets excluding interest income (2,475) – (2,475) Actuarial gains arising from changes in demographic assumptions – 186 186 Actuarial gains arising from changes in financial assumptions – 2,293 2,293 Actuarial losses arising from experience adjustments – (217) (217) Employer cash contributions 42 – 42 Member cash contributions 15 (15) – Benefits paid (216) 216 – Exchange rate movements (211) 224 13 Other movements (8) – (8) 31 March 2023 5,047 (4,976) 71 The table below provides an analysis of the netsurplusfor the Group as awhole. 2023 2022 €m €m Analysis of net surplus: Total fair value of plan assets 5,047 7,715 Present value of funded plan liabilities (4,875) (7,337) Net surplus for funded plans 172 378 Present value of unfunded plan liabilities (101) (104) Net surplus 71 274 Net surplus is analysed as: Assets1 329 555 Liabilities (258) (281) Note: 1 Pension assets are deemed to be recoverable and there are no adjustmentsin respect ofminimumfunding requirements as economic benefits are available to theGroup eitherin the form of future refunds or, for plansstill open to benefit accrual, in the formof possible reductionsin future contributions. 190 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 25.Postemploymentbenefits(continued) Durationofthebenefitobligations Theweighted average duration of the defined benefit obligation at 31 March 2023 is 16 years(2022: 21 years). Fairvalueoftheassetsandpresentvalueoftheliabilitiesoftheplans The amount included in the consolidated statement of financial position arising from the Group’s obligationsin respect of its defined benefit plansis asfollows: Assets Liabilities Net surplus/ (deficit) €m €m €m 1 April 2021 7,632 (8,085) (453) Service cost – (38) (38) Past service credit – 71 71 Interest income/(cost) 140 (144) (4) Return on plan assets excluding interest income 58 – 58 Actuarial gains arising from changes in demographic assumptions – 7 7 Actuarial gains arising from changes in financial assumptions – 483 483 Actuarial gains arising from experience adjustments – 79 79 Employer cash contributions 60 – 60 Member cash contributions 17 (17) – Benefits paid (241) 241 – Exchange rate movements 52 (45) 7 Other movements (3) 7 4 31 March 2022 7,715 (7,441) 274 Service cost – (44) (44) Interest income/(cost) 185 (178) 7 Return on plan assets excluding interest income (2,475) – (2,475) Actuarial gains arising from changes in demographic assumptions – 186 186 Actuarial gains arising from changes in financial assumptions – 2,293 2,293 Actuarial losses arising from experience adjustments – (217) (217) Employer cash contributions 42 – 42 Member cash contributions 15 (15) – Benefits paid (216) 216 – Exchange rate movements (211) 224 13 Other movements (8) – (8) 31 March 2023 5,047 (4,976) 71 The table below provides an analysis of the netsurplusfor the Group as awhole. 2023 2022 €m €m Analysis of net surplus: Total fair value of plan assets 5,047 7,715 Present value of funded plan liabilities (4,875) (7,337) Net surplus for funded plans 172 378 Present value of unfunded plan liabilities (101) (104) Net surplus 71 274 Net surplus is analysed as: Assets1 329 555 Liabilities (258) (281) Note: 1 Pension assets are deemed to be recoverable and there are no adjustmentsin respect ofminimumfunding requirements as economic benefits are available to theGroup eitherin the form of future refunds or, for plansstill open to benefit accrual, in the formof possible reductionsin future contributions. An analysis of netsurplusis provided below for the Vodafone UK plan, which is a funded plan. As part of the merger of the Vodafone UK plan and the Cable and Wireless Worldwide Retirement Plan (‘CWWRP’) plan on 6 June 2014 the assets and liabilities of the CWW Section are segregated from the Vodafone Section and hence are reported separately below. CWW Section Vodafone Section 2023 2022 2023 2022 €m €m €m €m Analysis of net surplus: Total fair value of plan assets 1,845 2,850 1,958 3,399 Present value of plan liabilities (1,657) (2,565) (1,900) (3,166) Net surplus 188 285 58 233 Net surpluses are analysed as: Assets 188 285 58 233 Liabilities – – – – Fair valueof planassets 2023 2022 €m €m Cash and cash equivalents 27 55 Equity investments: With quoted prices in an active market 140 849 Without quoted prices in an active market 322 359 Debt instruments: With quoted prices in an active market 588 1,334 Without quoted prices in an active market 288 317 Property: With quoted prices in an active market 17 29 Without quoted prices in an active market 438 460 Derivatives:1 Without quoted prices in an active market 1,791 2,195 Investment fund 782 1,161 Annuity policies With quoted prices in an active market 25 34 Without quoted prices 629 922 Total 5,047 7,715 Note: 1 Derivativesinclude collateral held in the form of cash. Assets are valued using ‘level 2’ inputs underIFRS 13 ‘Fair Value Measurement’ principles and classified as unquoted accordingly. The fair value of plan assets, which have been measured in accordancewith IFRS 13 ‘Fair Value Measurement’, are analysed by asset category above and are subdivided by assetsthat have a quotedmarket price in an activemarket and those that do not,such asinvestmentfunds. Where available, the fair values are quoted prices(e.g. listed equity,sovereign debt and corporate bonds). Unlisted investmentswithout quoted pricesin an active market(e.g. private equity) are included at values provided by the fundmanager in accordance with relevant guidance. Othersignificant assets are valued based on observable inputssuch as yield curves. The Vodafone UK plan annuity policiesfully match the pension obligations of those pensionersinsured and therefore are set equal to the present value of the related obligations. Investmentfunds of €782 million at 31 March 2023 (2022: €1,161 million) include investmentsin diversified alternative beta funds held in the Vodafone Section of the VodafoneUK plan. The actualreturn on plan assets over the year to 31 March 2023 was a loss of €2,290 million (2022: €198 million gain). Sensitivityanalysis Measurement of the Group’s defined benefitretirement obligation issensitive to changesin certain key assumptions. The sensitivity analysis below shows how a reasonably possible increase or decrease in a particular assumption would, in isolation,resultin an increase or decrease in the present value of the defined benefit obligation as at 31 March 2023. Rate of inflation Rate of increase in salaries Discount rate Life expectancy Decrease by 0.5% Increase by 0.5% Decrease by 0.5% Increase by 0.5% Decrease by 0.5% Increase by 0.5% Decrease by 1 year Increase by 1 year €m €m €m €m €m €m €m €m (Decrease)/increase in present value of defined benefit obligation (222) 260 (1) 1 385 (341) (129) 128 1 Note: 1 The sensitivity analysis may not be representative of an actual change in the defined benefit obligation asitis unlikely that changesin assumptionswould occurin isolation of one another. In presenting thissensitivity analysis, the change in the present value ofthe defined benefit obligation has been calculated on the same basis as prior years using the projected unit credit method atthe end ofthe year,which isthe same asthat applied in calculating the defined benefit obligation liability recognised in the statement of financial position. The rate of inflation assumption sensitivity factorsin the impact of changesto all assumptionsrelating to inflation including the rate of increase in salaries, pension increases and deferred revaluations. 191 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 26.Share-basedpayments The Group has a number ofshare plans used to award sharesto Executive Directors and employees as part oftheir remuneration package. A charge isrecognised over the vesting period in the consolidated income statement to record the cost ofthese, based on the fair value of the award on the grant date. Accounting policies The Group issues equity-settled share-based awardsto certain employees. Equity-settled share-based awards are measured atfair value (excluding the effect of non-market-based vesting conditions) atthe date of grant. The fair value determined atthe grant date of the equity-settled share-based award is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of the sharesthatwill eventually vest and adjusted for the effect of non-market-based vesting conditions. A corresponding increase in additional paid-in capital is also recognised. Some share awards have an attached market condition, based on totalshareholder return (‘TSR’), which istaken into accountwhen calculating the fair value of the share awards. The valuation for the TSR is based on Vodafone’sranking within the same group of companies, where possible, over the pastfive years. The fair value of awards of non-vested sharesis a calculation of the closing price of the Company’sshares on the day prior to the grant date, adjusted for the present value of the delay in receiving dividends where appropriate. Themaximumaggregate number of ordinary shares whichmay be issued in respect ofshare options orshare planswill not(withoutshareholder approval) exceed: − 10% of the ordinary share capital of the Company in issue immediately prior to the date of grant, when aggregated with the total number of ordinary shareswhich have been allocated in the preceding ten year period under all plans; and − 5% of the ordinary share capital of the Company in issue immediately prior to the date of grant, when aggregated with the total number of ordinary shareswhich have been allocated in the preceding ten year period under all plans, other than any planswhich are operated on an all-employee basis. Shareoptions Vodafone SharesavePlan Under the Vodafone Sharesave PlanUK staffmay acquire sharesin the Company through monthly savings of up to £375 over a three and/or five year period. The savings may then be used to purchase shares atthe option price, which isset atthe beginning of the invitation period and usually at a discount of 20% to the then prevailing market price of the Company’sshares. Shareplans VodafoneGroupexecutive plans Under the Vodafone Global Incentive Plan awards ofshares are granted to Directors and certain employees. The release of these sharesis conditional upon continued employment and forsome awards achievement of certain performance targetsmeasured over a three year period. Vodafone Share IncentivePlan Following a review of theUK all-employee plansit was decided thatwith effectfrom 1 April 2017 employeeswould no longer be able to contribute to the Share Incentive Plan andwould therefore no longer receive matching shares. Individuals who continue to hold sharesin the plan willreceive dividends paid outin cash. 192 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 26.Share-basedpayments The Group has a number ofshare plans used to award sharesto Executive Directors and employees as part oftheir remuneration package. A charge isrecognised over the vesting period in the consolidated income statement to record the cost ofthese, based on the fair value of the award on the grant date. Accounting policies The Group issues equity-settled share-based awardsto certain employees. Equity-settled share-based awards are measured atfair value (excluding the effect of non-market-based vesting conditions) atthe date of grant. The fair value determined atthe grant date of the equity-settled share-based award is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of the sharesthatwill eventually vest and adjusted for the effect of non-market-based vesting conditions. A corresponding increase in additional paid-in capital is also recognised. Some share awards have an attached market condition, based on totalshareholder return (‘TSR’), which istaken into accountwhen calculating the fair value of the share awards. The valuation for the TSR is based on Vodafone’sranking within the same group of companies, where possible, over the pastfive years. The fair value of awards of non-vested sharesis a calculation of the closing price of the Company’sshares on the day prior to the grant date, adjusted for the present value of the delay in receiving dividends where appropriate. Themaximumaggregate number of ordinary shares whichmay be issued in respect ofshare options orshare planswill not(withoutshareholder approval) exceed: − 10% of the ordinary share capital of the Company in issue immediately prior to the date of grant, when aggregated with the total number of ordinary shareswhich have been allocated in the preceding ten year period under all plans; and − 5% of the ordinary share capital of the Company in issue immediately prior to the date of grant, when aggregated with the total number of ordinary shareswhich have been allocated in the preceding ten year period under all plans, other than any planswhich are operated on an all-employee basis. Shareoptions Vodafone SharesavePlan Under the Vodafone Sharesave PlanUK staffmay acquire sharesin the Company through monthly savings of up to £375 over a three and/or five year period. The savingsmay then be used to purchase shares atthe option price, which isset atthe beginning of the invitation period and usually at a discount of 20% to the then prevailing market price of the Company’sshares. Shareplans VodafoneGroupexecutive plans Under the Vodafone Global Incentive Plan awards ofshares are granted to Directors and certain employees. The release of these sharesis conditional upon continued employment and forsome awards achievement of certain performance targetsmeasured over a three year period. Vodafone Share IncentivePlan Following a review of theUK all-employee plansit was decided thatwith effectfrom 1 April 2017 employeeswould no longer be able to contribute to the Share Incentive Plan andwould therefore no longer receive matching shares. Individuals who continue to hold sharesin the plan willreceive dividends paid outin cash. Movements inoutstandingordinaryshareoptions Ordinary share options 2023 2022 2021 Millions Millions Millions 1 April 61 62 53 Granted during the year 50 20 35 Forfeited during the year (2) (2) (1) Exercised during the year (8) (1) – Expired during the year (39) (18) (25) 31 March 62 61 62 Weighted average exercise price: 1 April £1.02 £1.07 £1.19 Granted during the year £0.83 £0.95 £1.03 Forfeited during the year £1.02 £1.06 £1.16 Exercised during the year £1.05 £1.17 £1.23 Expired during the year £1.01 £1.10 £1.27 31 March £0.87 £1.02 £1.07 Summaryofoptionsoutstanding 31 March 2023 31 March 2022 Outstanding shares Weighted average exercise Weighted remaining average contractual life Outstanding shares Weighted average exercise Weighted remaining average contractual life Millions price Months Millions price Months Vodafone Group Sharesave Plan: £0.78 - £1.78 62 £0.87 33 61 £1.02 24 Shareawards Movementsin non-vested shares are asfollows: 2023 2022 2021 Weighted Weighted Weighted average fair average fair average fair value at value at value at Millions grant date Millions grant date Millions grant date 1 April 270 £1.07 267 £1.20 245 £1.41 Granted 120 £1.17 113 £1.17 108 £0.99 Vested (70) £1.15 (68) £1.44 (56) £1.56 Forfeited (59) £0.89 (42) £1.52 (30) £1.10 31 March 261 £1.14 270 £1.07 267 £1.20 Otherinformation The total fair value ofshares vested during the year ended 31 March 2023 was £81million (2022: £98 million; 2021: £108 million). The compensation costincluded in the consolidated income statementin respect ofshare options and share planswas €141million (2022: €119 million; 2021: €135 million) which is comprised principally of equity-settled transactions. The average share price for the year ended 31 March 2023 was 108.2 pence (2022: 122.1 pence; 2021: 120.8 pence). 193 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 27.Acquisitions anddisposals Thenotebelowprovidesdetailsof acquisitionanddisposaltransactionsforthe current year aswellasthosecompletedinthe prior year.Forfurtherdetailssee‘Criticalaccountingjudgementsandkey sourcesof estimationuncertainty’ innote1‘Basisof preparation’totheconsolidatedfinancialstatements. Accounting policies Businesscombinations Acquisitions ofsubsidiaries are accounted for using the acquisitionmethod. The cost ofthe acquisition ismeasured atthe aggregate ofthe fair values at the date of exchange of assets given, liabilitiesincurred or assumed and equity instrumentsissued by theGroup.Acquisition-related costs are recognised in the consolidated income statement asincurred. The acquiree’sidentifiable assets and liabilities are recognised attheirfair values atthe acquisition date,which isthe date onwhichcontrol istransferred to theGroup.Goodwill ismeasured asthe excess ofthe sumofthe consideration transferred,the amount of any non-controlling interestsin the acquiree and the fair value oftheGroup’s previously held equity interestin the acquiree, if any, overthe net amounts ofidentifiable assets acquired and liabilities assumed atthe acquisition date. The interest ofthe non-controlling shareholdersin the acquireemay initially bemeasured either atfair value or atthenon-controlling shareholders’ proportion ofthe netfair value ofthe identifiable assets acquired, liabilities and contingentliabilities assumed. The choice ofmeasurement basisismade on an acquisition-by-acquisition basis. Acquisitionofinterests fromnon-controllingshareholders In transactionswith non-controlling partiesthat do notresultin a change incontrol,the difference between the fair value ofthe consideration paid or received and the amount bywhich the non-controlling interestis adjusted isrecognised in equity. Disposals The difference between the carryingvalue ofthe net assets disposed of and the fair value of consideration received isrecorded as a gain orloss on disposal. Foreign exchange translation gains orlossesrelating to subsidiaries, joint arrangements and associatesthattheGrouphas disposed of, and that have previously recorded in other comprehensive income or expense, are also recognised as part ofthe gain orloss on disposal. Othertransactionswithnon-controllingshareholders insubsidiaries The aggregate cash consideration in respect of othertransactionswith non-controlling shareholdersin subsidiaries, net of cash acquired, is asfollows: 2023 2022 €m €m Cash consideration (paid)/received Vantage Towers (667) 217 Other (25) (28) (692) 189 Vantage Towers On 13November 2022,theGroup completed the purchase of 4.2%ofVantage TowersA.G.for cash consideration of €667million,taking its shareholding to 85.8%. In the comparative period,theGroup received €217million following completion ofthemarketstabilisation period resulting fromthe IPOofVantage TowersinMarch2020 and as described in the Vantage Towers prospectus. Disposals The aggregate cash consideration in respect ofthe disposal ofsubsidiaries, net of cash disposed, is asfollows: 2023 2022 €m €m Cash consideration received Vodafone Hungary 1,606 – Vantage Towers 5,592 – Other disposals during the period 2 – Net cash disposed (224) – 6,976 – 194 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes tothe consolidated financial statements (continued) 27.Acquisitions anddisposals Thenotebelowprovidesdetailsof acquisitionanddisposaltransactionsforthe current year aswellasthosecompletedinthe prior year.Forfurtherdetailssee‘Criticalaccountingjudgementsandkey sourcesof estimationuncertainty’ innote1‘Basisof preparation’totheconsolidatedfinancialstatements. Accounting policies Businesscombinations Acquisitions ofsubsidiaries are accounted for using the acquisitionmethod. The cost ofthe acquisition ismeasured atthe aggregate ofthe fair values at the date of exchange of assets given, liabilitiesincurred or assumed and equity instrumentsissued by theGroup.Acquisition-related costs are recognised in the consolidated income statement asincurred. The acquiree’sidentifiable assets and liabilities are recognised attheirfair values atthe acquisition date,which isthe date onwhichcontrol istransferred to theGroup.Goodwill ismeasured asthe excess ofthe sumofthe consideration transferred,the amount of any non-controlling interestsin the acquiree and the fair value oftheGroup’s previously held equity interestin the acquiree, if any, overthe net amounts ofidentifiable assets acquired and liabilities assumed atthe acquisition date. The interest ofthe non-controlling shareholdersin the acquireemay initially bemeasured either atfair value or atthenon-controlling shareholders’ proportion ofthe netfair value ofthe identifiable assets acquired, liabilities and contingentliabilities assumed. The choice ofmeasurement basisismade on an acquisition-by-acquisition basis. Acquisitionofinterests fromnon-controllingshareholders In transactionswith non-controlling partiesthat do notresultin a change incontrol,the difference between the fair value ofthe consideration paid or received and the amount bywhich the non-controlling interestis adjusted isrecognised in equity. Disposals The difference between the carryingvalue ofthe net assets disposed of and the fair value of consideration received isrecorded as a gain orloss on disposal. Foreign exchange translation gains orlossesrelating to subsidiaries, joint arrangements and associatesthattheGrouphas disposed of, and that have previously recorded in other comprehensive income or expense, are also recognised as part ofthe gain orloss on disposal. Othertransactionswithnon-controllingshareholders insubsidiaries The aggregate cash consideration in respect of othertransactionswith non-controlling shareholdersin subsidiaries, net of cash acquired, is asfollows: 2023 2022 €m €m Cash consideration (paid)/received Vantage Towers (667) 217 Other (25) (28) (692) 189 Vantage Towers On 13November 2022,theGroup completed the purchase of 4.2%ofVantage TowersA.G.for cash consideration of €667million,taking its shareholding to 85.8%. In the comparative period,theGroup received €217million following completion ofthemarketstabilisation period resulting fromthe IPOofVantage TowersinMarch2020 and as described in the Vantage Towers prospectus. Disposals The aggregate cash consideration in respect ofthe disposal ofsubsidiaries, net of cash disposed, is asfollows: 2023 2022 €m €m Cash consideration received Vodafone Hungary 1,606 – Vantage Towers 5,592 – Other disposals during the period 2 – Net cash disposed (224) – 6,976 – VodafoneHungary On 31 January 2023,theGroup completed the sale ofVodafoneMagyarország Zrt(‘VodafoneHungary’)to 4iGPublic Limited Company andCorvinus Zrt. The table belowsummarisesthe net assets disposed and the resulting loss on disposal of €69million. €m Goodwill (441) Other intangible assets (521) Property, plant and equipment (516) Inventory (17) Trade and other receivables (206) Cash and cash equivalents (3) Current and deferred taxation 13 Borrowings 106 Trade and other payables 163 Provisions 31 Net assets disposed (1,391) Cash proceeds 1,606 Foreign exchange recycled from Currency reserve on disposal (284) Net loss on disposal1 (69) Notes: 1 Includedinotherincome inthe consolidatedincome statement. Vantage Towers On 22March2023,theGroup completed the disposal ofitsinterestin Vantage TowersA.G.toOakHoldings1GmbH,the co-control partnership of Vodafone,GIP and KKR.Vodafone retains an interest of 64.2%inOakHoldings 1GmbH,which owns 89.3%ofVantage TowersA.G. The table below summarisesthe net assets disposed and thenet gain ondisposal as €8,607million. €m Goodwill (3,448) Other intangible assets (294) Property, plant and equipment (4,882) Investments in associates and joint ventures (2,778) Trade and other receivables (292) Cash and cash equivalants (207) Current and deferred taxation 61 Borrowings 4,916 Trade and other payables 658 Provisions 556 Net assets disposed (5,710) Non-controlling interests derecognised 807 Cash proceeds 5,592 Fair value of Investment in Oak Holdings 1 GmbH 8,634 Restriction of gain (note 20)1 (680) Foreign exchange recycled from Currency reserve on disposal (36) Net gain on disposal2 8,607 Notes: 1 Relatedtaxof€154millionisincludedinIncometaxexpense inthe consolidatedincome statement. 2 Includedinotherincome inthe consolidatedincome statement. VodafoneGhana On 21 February 2023,theGroup completed the sale ofits 70% shareholding in Vodafone TelecommunicationsCompany Limited (‘VodafoneGhana’)to TelecelGroup for consideration of €Nil.Anet gain on disposal of €689million has been recordedwithin otherincome and expense in the consolidated income statement. Othermatters Vodafone Egypt In the comparative period on10November 2021,theGroup announced thatithad agreed to transferits 55% shareholding in Vodafone Egyptto its subsidiary,VodacomGroup Limited (‘Vodacom’). On 13December 2022,theGroup announced the completion ofthe transaction. Vodafonewasissuedwith 242million sharesin Vodacomand received cash proceeds of €577million in exchange forits 55% shareholding in Vodafone Egypt. Following completion,Vodafone’sshareholding in Vodacomhas increased from60.5% to 65.1%. 195 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
196 VodafoneGroup Plc Annual Report 2023 28.Commitments Acommitmentisa contractualobligationtomakeapaymentinthefuture,mainlyinrelationtoagreementstobuyassetssuch asmobiledevices,networkinfrastructureandITsystemsandleasesthathavenot commenced.Theseamountsarenot recordedintheconsolidatedstatementoffinancialpositionsincewehavenot yetreceivedthegoodsorservicesfromthe supplier. Capitalcommitments The amounts beloware theminimumamountsthatwe are committed to pay. Company and subsidiaries Share of joint operations Group 2023 2022 2023 2022 2023 2022 €m €m €m €m €m €m Contracts placed for future capital expendi-ture not provided in the financial state-ments1 3,507 4,388 – 140 3,507 4,527 Note: 1 Commitmentincludes contractsplacedforproperty, plant andequipment andintangibleassets. Leases entered into by theGroup but not commenced at31March2023 are disclosed in note 20 ‘Leases’. Included in capital commitmentsis an amount of €114million (2022: €331million)relating to spectrumacquisition commitmentsin Vodacom. In March 2023, the Group entered into an agreementwith Altice Luxembourg S.A. to create a joint venture, OXG Glasfaser GmbH‘OXG’, with 50.0% shareholding held by each shareholder. Each shareholder is committed to contribute funding of up to €950million to OXG for the deployment of fibre-to-the-home in Germany. The funding is expected to be contributed between 2023 and 2029. The amount and timing of the funding depends on the speed and size of the fibre deploymentso the funding may be for a lower value or contributed over a longer period of time. The contribution can be in the form of free capitalreserves,shareholder loan, loan notes orsimilar instruments as agreed by the shareholders. 29.Contingentliabilities andlegalproceedings Contingentliabilitiesarepotentialfuturecashoutflows,wherethe likelihoodofpaymentis consideredmorethanremote,but isnot consideredprobableor cannot bemeasuredreliably. 2023 2022 €m €m Performance bonds1 504 430 Other guarantees2 2,877 2,436 Notes: 1 Performancebondsrequire theGrouptomake paymentsto thirdpartiesinthe eventthattheGroupdoesnotperformwhatis expectedofitunderthe termsof any relatedcontractsor commercial arrangements. 2 Otherguaranteesprincipally compriseVodafoneGroupPlc’s guaranteeoftheGroup’s50%shareof aUS$3.5billionloanfacility (2022:US$3.5billionloanfacility),whichforms partoftheGroup’s overalljoint venture investmentinTPGTelecomLtd. TheGroup’sshareofthese loanbalancesisincludedinthenetinvestmentinjoint venture (seenote12‘Investmentsinassociatesandjoint arrangements’).Otherguaranteesalso include a secondarypledgeofINR42.5billion(2022: INR42.5billion)oversharesownedbyVodafoneGroupinIndus Towersto the valueof€476million (2022:€504million). See page197.Certainongoingtaxlitigationsincludeguarantee arrangements, principally€267millioninrelationto theNetherlandstax case (referto legal proceedings sectionbelow). 196 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
29.Contingentliabilitiesandlegalproceedings(continued) UKpensionschemes TheGroup’smain defined benefit plan isthe VodafoneUKGroupPensionScheme (‘VodafoneUK plan’)which hastwo segregated sections,the Vodafone Section and theCWWSection, as detailed in note 25 ‘Post employment benefits’. TheGroup has covenanted to provide security in favour of both the Vodafone Section and CWWSectionwhen they are in adeficit position. The deficitis measured on a prescribed basis agreed between theGroup and trustee,which differsfromthe accounting basisreported in note 25 ‘Post employment benefits’. TheGroup providessurety bonds asthe security. The level ofthe security has varied since inception in linewith themovementin the VodafoneUK plan deficit.Due to the improved funding position of the Plan the level ofsecurity hasreduced overthe year.As at31March2023 the VodafoneUK planretainssecurity over €114million (notional value)for the Vodafone Section andno security is currently required fortheCWWSection. The securitymay be substituted either on a voluntary ormandatory basis. TheCompany has also provided two guaranteesto the Vodafone Section ofthe VodafoneUK plan for a combined value up to €1.42 billion to provide security overthe deficit under certain defined circumstances, including insolvency ofthe employers. TheCompany has also agreed a similar guarantee of up to €1.42 billion fortheCWWSection. An additionalsmallerUK defined benefit plan,the THUS PlcGroup Scheme, has a guarantee fromtheCompany for up to €114million. VodafoneIdea As part ofthe agreementtomerge Vodafone India and IdeaCellularin 2017,the parties agreed amechanismfor payments between theGroup and Vodafone Idea Limited (‘VIL’) pursuantto the difference between the crystallisation of certain identified contingentliabilitiesin relation to legal, regulatory,tax and othermatters, and refundsrelating toVodafone India and Idea Cellular.Cash payments or cash receiptsrelating to thesematters musthave beenmade orreceived byVIL before any amount becomes due fromor owed to theGroup.Any future payments by theGroup toVIL as a result ofthis agreementwould only bemade aftersatisfaction ofthis and other contractual conditions. TheGroup’s potential exposure underthismechanismis capped atINR64 billion (€719million)following paymentsmade underthismechanismfrom Vodafone toVIL, in the year ended 31March 2021,totalling INR19 billion (€235million). On 7 February2023, VIL issued equity to theGovernment ofIndia equivalentto INR161 billion (€1.8 billion),representing thenet present value of interest accrued on both deferred spectrumauction instalments andAGRdues pursuantto a relief package announced in September 2021which is designed to improve the liquidity and financial health ofthe telecomsector. Widerreforms announced as part ofthe relief package include a four-year moratoriumon spectrumandAGRpayments and the option to convert payments due on spectrumandAGRpaymentsto equity atthe end ofthe moratoriumperiodwhich VIL elected to acceptinOctober 2021. VIL remainsin need of additional liquidity supportfromitslenders and intendsto raise additionalfunding. There are significant uncertaintiesin relation to VIL’s ability tomake paymentsin relation to any remaining liabilities covered by themechanismand no further cash payments are considered probable fromtheGroup as at31March2023. The carrying value oftheGroup’sinvestmentin VIL is €nil and theGroup isrecordingno furthershare oflossesin respect ofVIL. TheGroup’s potential exposure to liabilitieswithin VIL is capped by themechanismdescribed above; consequently, contingentliabilities arising fromlitigation in India concerning operations ofVodafone India arenotreported. IndusTowers VIL’s ability to satisfy certain paymentobligations underitsMaster ServicesAgreementswith Indus Towers(the ‘MSAs’)is uncertain and depends on a number offactorsincluding its ability to raise additionalfunding. Underthe terms ofthe Indus and Bharti InfratelmergerinNovember 2020, a security packagewas agreed forthe benefit ofthe newly createdmerged entity, Indus Towers,which could be invoked inthe eventthatVILwas unable tomake MSApayments. The security package included the following elements: - Acash prepayment ofINR24 billion (€279million) by VIL to Indus Towersin respect ofits undisputed payment obligations, due undertheMSAs afterthemerger closing. The prepaymentwasfully utilised during the yearto 31March 2022; - Aprimary pledge over 190.7million shares owned by VodafoneGroup in Indus Towers having a value ofINR47 billion (€544million) as at31March 2021. These pledged shareswere sold by theGroup in the year ended31March 2022;theGroup invested INR33.7 billion (€393million) ofthe proceeds by subscribing to newly issued VIL equity,which VIL immediately used to partially settle outstandingMSAobligationsto Indus Towers resulting in an equivalent partialrelease ofthe primary pledge. On14 February 2023, a similartransactionwas undertakenwith INR4.4 billion (€49 million)remaining fromthe sale ofthe primary pledge shares,fully releasing the pledge. - Asecondary pledge overshares owned by VodafoneGroup in Indus Towers,ranking behind Vodafone’s existing lendersforthe outstanding bank borrowings of €1.5 billion as at31March 2023 secured againstIndian assets(‘the bank borrowings’),with amaximumliability cap ofINR42.5 billion (€476million). In the event of non-payment ofrelevantMSAobligations by VIL, Indus Towerswould have recourse to any secondary pledged shares, afterrepayment ofthe bank borrowingsin full, up to the value ofthe liability cap. 197 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes to theconsolidatedfinancial statements (continued) 29.Contingentliabilitiesandlegalproceedings(continued) LegalProceedings The Group is currently involved in a number of legal proceedings, including inquiriesfrom, or discussionswith, government authoritiesthat are incidental to its operations. Legal proceedings where the Group considersthat the likelihood of material future outflows of cash or other resourcesismore than remote are disclosed below. Where the Group assessesthatit is probable thatthe outcome of legal proceedings willresultin a financial outflow, and a reliable estimate can be made of the amount of that obligation, a provision isrecognised for these amounts. In all cases, determining the probability ofsuccessfully defending a claim againstthe Group involvesthe application of judgement asthe outcome isinherently uncertain. The determination of the value of any future outflows of cash or other resources, and the timing ofsuch outflows, involves the use of estimates. The costsincurred in complexlegal proceedings,regardless of outcome, can be significant. The Group is notinvolved in any material proceedingsin which any of the Group’s Directors, members ofsenior management or affiliates are either a party adverse to the Group or have amaterial interest adverse to the Group. Indian tax cases The Group has been challenging retrospective tax demandsraised by the Indian tax authority under the Finance Act 2012 against Vodafone InternationalHoldings BV (‘VIHBV’) relating to a transaction in 2007 whereby VIHBV acquired assetsin India from Hutchison Telecommunications International Limited. Pursuantto a new scheme for resolving tax disputesintroduced by legislation in August 2021, Vodafone and the Indian Government have reached a final agreement and the demandsfor outstanding tax(including interest and penalties) have been withdrawn in full. Further background relating to thismatter is provided in the Group’s Annual Reportfor the financial year ended 31 March 2022. VISPL tax claims Vodafone India Services Private Ltd (‘VISPL’) isinvolved in a number of tax cases. The total value of the claimsis approximately €471 million plus interest, and penalties of up to 300% of the principal. Of the individual tax claims, the mostsignificantisin the amount of approximately €239 million (plusinterest of €628 million), which VISPL has been assessed as owing in respect of (i) a transfer pricing margin charged for the international call centre ofHTIL prior to the 2007 transaction with Vodafone forHTIL assets in India; (ii)the sale of the international call centre by VISPL to HTIL; and (iii) the acquisition of and/or the alleged transfer of options held by VISPL in Vodafone India. The first two of the three heads of tax are subject to an indemnity by HTIL. The larger part of the potential claim is notsubjectto an indemnity. A stay of the tax demand on a deposit of £20million and a corporate guarantee by VIHBV for the balance of tax assessed are in place. On 8 October 2015, the Bombay High Courtruled in favour of Vodafone in relation to the options and the call centre sale. The Indian Tax Authority has appealed to the Supreme Court of India. The appeal hearing has been adjourned indefinitely. While there issome uncertainty asto the outcome of the tax casesinvolving VISPL, the Group believesit has valid defences and does not consider it probable that a financial outflow will be required to settle these cases. Netherlands taxcase Vodafone Europe BV (‘VEBV’) hasreceived assessmentstotalling €267 million of tax and interest from the Dutch tax authorities, who are challenging the application of the arm’s length principle in relation to variousintra-group financing transactions. VEBV has appealed againstthese assessments to the District Court of theHague where a hearing was held in March 2023 andwe are awaiting the decision which is currently expected in summer 2023. The Group has entered into a guarantee for the full value of the assessmentsissued. The Group believesit hasrobust defences and does not consider it probable thatthere will be a financial outflow required to resolve the case. 198 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes to theconsolidatedfinancial statements (continued) 29.Contingentliabilitiesandlegalproceedings(continued) LegalProceedings The Group is currently involved in a number of legal proceedings, including inquiriesfrom, or discussionswith, government authoritiesthat are incidental to its operations. Legal proceedings where the Group considersthat the likelihood of material future outflows of cash or other resourcesismore than remote are disclosed below. Where the Group assessesthatit is probable thatthe outcome of legal proceedings willresultin a financial outflow, and a reliable estimate can be made of the amount of that obligation, a provision isrecognised for these amounts. In all cases, determining the probability ofsuccessfully defending a claim againstthe Group involvesthe application of judgement asthe outcome isinherently uncertain. The determination of the value of any future outflows of cash or other resources, and the timing ofsuch outflows, involves the use of estimates. The costsincurred in complexlegal proceedings,regardless of outcome, can be significant. The Group is notinvolved in any material proceedingsin which any of the Group’s Directors, members ofsenior management or affiliates are either a party adverse to the Group or have amaterial interest adverse to the Group. Indian tax cases The Group has been challenging retrospective tax demandsraised by the Indian tax authority under the Finance Act 2012 against Vodafone InternationalHoldings BV (‘VIHBV’) relating to a transaction in 2007 whereby VIHBV acquired assetsin India from Hutchison Telecommunications International Limited. Pursuantto a new scheme for resolving tax disputesintroduced by legislation in August 2021, Vodafone and the Indian Government have reached a final agreement and the demandsfor outstanding tax(including interest and penalties) have been withdrawn in full. Further background relating to thismatter is provided in the Group’s Annual Reportfor the financial year ended 31 March 2022. VISPL tax claims Vodafone India Services Private Ltd (‘VISPL’) isinvolved in a number of tax cases. The total value of the claimsis approximately €471 million plus interest, and penalties of up to 300% of the principal. Of the individual tax claims, the mostsignificantisin the amount of approximately €239 million (plusinterest of €628 million), which VISPL has been assessed as owing in respect of (i) a transfer pricing margin charged for the international call centre ofHTIL prior to the 2007 transaction with Vodafone forHTIL assetsin India; (ii)the sale of the international call centre by VISPL to HTIL; and (iii) the acquisition of and/or the alleged transfer of options held by VISPL in Vodafone India. The first two of the three heads of tax are subject to an indemnity by HTIL. The larger part of the potential claim is notsubjectto an indemnity. A stay of the tax demand on a deposit of £20million and a corporate guarantee by VIHBV for the balance of tax assessed are in place. On 8 October 2015, the Bombay High Courtruled in favour of Vodafone in relation to the options and the call centre sale. The Indian Tax Authority has appealed to the Supreme Court of India. The appeal hearing has been adjourned indefinitely. While there issome uncertainty asto the outcome of the tax casesinvolving VISPL, the Group believesit has valid defences and does not consider it probable that a financial outflow will be required to settle these cases. Netherlands taxcase Vodafone Europe BV (‘VEBV’) hasreceived assessmentstotalling €267 million of tax and interest from the Dutch tax authorities, who are challenging the application of the arm’slength principle in relation to variousintra-group financing transactions. VEBV has appealed againstthese assessments to the District Court of theHague where a hearing was held in March 2023 andwe are awaiting the decision which is currently expected in summer 2023. The Group has entered into a guarantee for the full value of the assessmentsissued. The Group believesit hasrobust defences and does not consider it probable thatthere will be a financial outflow required to resolve the case. 199 VodafoneGroup Plc Annual Report 2023 C2 General Other cases intheGroup Germany:Kabel Deutschland takeover- class actions The German courts have been determining the adequacy of the mandatory cash offer made tominority shareholdersin Vodafone’stakeover of Kabel Deutschland in 2013. Hearingstook place in May 2019 and a decision was delivered in November 2019 in Vodafone’sfavour,rejecting all claims byminority shareholders. A number ofshareholders appealed which wasrejected by the courtin December 2021. Several minority shareholders have filed a further appeal before the Federal Court ofJustice. The appeal processis ongoing. While the outcome is uncertain, the Group believesit has valid defences and thatthe outcome of the appealwill be favourable to Vodafone. Italy: Iliad v Vodafone Italy In July 2019, Iliad filed a claimfor €500 million against Vodafone Italy in the Civil Court of Milan. The claimalleges anti-competitive behaviour in relation to portability and certain advertising campaigns by Vodafone Italy. The main hearing on the merits ofthe claimtook place on 8 June 2021. On 17 April 2023, the Civil Courtissued a judgementin Vodafone Italy’sfavour and rejected Iliad’s claim for damagesin full. Iliad has filed an appeal before the Court of Appeal of Milan. The Group is currently unable to estimate any possible lossin this claim in the event of an adverse judgement on appeal butwhile the outcome is uncertain, the Group believesit has valid defences and thatitis probable that no present obligation exists. Greece: PapistasHoldings SA, Mobile Trade Stores(formerly Papistas SA) and Athanasios and Loukia Papistas v VodafoneGreece In October 2019, Mr. and Mrs. Papistas, and companies owned or controlled by them, filed several claims against Vodafone Greece with a total value of approximately €330 million for purported damage caused by the alleged abuse of dominance and wrongful termination of a franchise arrangementwith a Papistas company. Lawsuitswhich the Papistas claimants had previously brought against Vodafone Group Plc and certain directors and officers of Vodafone werewithdrawn. Vodafone Greece filed a counter claimand all claimswere heard in February 2020. All of the Papistas claimswere rejected by the Athens Court of FirstInstance because the stamp duty paymentsrequired to have the merits of the case considered had not been made. Vodafone Greece’s counter claimwas also rejected. The Papistas claimants and Vodafone Greece have each filed appeals. The appeal hearingstook place on 23 February and 11 May 2023 andwe are waiting to receive the judgements. The amount claimed in these lawsuitsissubstantial and, if the claimants are successful, the total potential liability could be material. However, we are continuing vigorously to defend the claims and based on the progress of the litigation so far the Group believesthatitis highly unlikely that there will be an adverse ruling for the Group. On this basis, the Group does not expectthe outcome of these claimsto have a material financial impact. UK: Phones 4Uin Administration v Vodafone Limited and VodafoneGroup Plc andOthers In December 2018, the administrators of former UK indirectseller, Phones 4U,sued the three main UK mobile network operators(‘MNOs’), including Vodafone, and their parent companiesin the EnglishHigh Court. The administrators allege collusion between the MNOsto pull their businessfrom Phones 4U, thereby causing its collapse. Vodafone and the other defendantsfiled their defencesin April 2019 and the Administrators filed their repliesin October 2019. Disclosure hastaken place and witnessstatementswere filed in December 2021. The judge has also ordered that there should be a splittrial between liability and damages. The firsttrial on liability took place fromMay to July 2022. We are waiting to receive the judgement. Taking into account all available evidence, the Group assessesitto be more likely than notthat a present obligation does not exist and thatthe allegations of collusion are completely withoutmerit; the Group is vigorously defending the claim. The value of the claim is not pleaded butwe understand itto be the total value ofthe business, allegedly equivalent to approximately £1 billion with the addition of alleged exemplary damages. Vodafone’s alleged share of the liability is also not pleaded. The Group is not able to estimate any possible lossin the event of an adverse judgment. 199 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes totheconsolidatedfinancial statements (continued) 200 VodafoneGroup Plc Annual Report 2023 2020 30.Relatedpartytransactions TheGrouphasanumberofrelatedpartiesincludingjoint arrangementsandassociates,pensionschemes andDirectorsand ExecutiveCommitteemembers(seenote12‘Investmentsinassociatesandjoint arrangements’,note25‘Post employment benefits’ andnote23‘Directorsandkeymanagement compensation’). Transactionswithjointarrangementsandassociates Related party transactionswith theGroup’sjoint arrangements and associates primarily comprise feesforthe use of products and servicesincluding network airtime and access charges,feesforthe provision of network infrastructure and cash pooling arrangements.No related party transactions have been entered into during the yearwhichmightreasonably affect any decisionsmade by the users ofthese consolidated financialstatements except as disclosed below. 2023 2022 2021 €m €m €m Sales of goods and services to associates 20 20 14 Purchase of goods and services from associates 8 10 5 Sales of goods and services to joint arrangements 220 221 203 Purchase of goods and services from joint arrangements 263 298 109 Interest income receivable from joint arrangements1 52 48 65 Interest expense payable to joint arrangements1 33 52 56 Trade balances owed: by associates 7 8 to associates 1 6 by joint arrangements 170 139 to joint arrangements 329 34 Other balances owed by associates – 80 Other balances owed by joint arrangements1 980 1,080 Other balances owed to joint arrangements2 5,628 1,561 Notes: 1 Amounts ariseprimarily throughVodafoneZiggoandOakHoldings 1GmbH. Interestis paid/receivedinlinewithmarketrates. 2 Amounts areprimarily inrelationto leasesoftowerspace fromOakHoldings1GmbH(2022: INWIT S.p.A.). On 22March 2023,theGroup completed the disposal ofitsinterestin Vantage TowersA.G.toOakHoldings1GmbH,the co-control partnership of Vodafone,GIP and KKR.Vodafone retained a non-controlling interest of 64.2%inOakHoldings 1GmbH,which owns 89.3% of Vantage TowersA.G.Oak Holdings 1GmbHis a joint venture oftheGroup. Dividendsreceived fromassociates and joint ventures are disclosed in the consolidated statement of cash flows. TransactionswithDirectors otherthancompensation During the three years ended31March 2023 and as of 21 June2023, noDirector nor any other executive officer,nor any associate of anyDirector or any other executive officer,wasindebted to theGroup.During the three years ended 31March 2023 and as of 21 June 2023,theGroup has not been a party to any othermaterialtransaction, or proposed transactions, inwhich anymember ofthe keymanagement personnel(includingDirectors, any other executive officer,seniormanager, any spouse orrelative of any ofthe foregoing or any relative ofsuch spouse) had orwasto have a direct orindirect material interest. 200 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes totheconsolidatedfinancial statements (continued) 200 VodafoneGroup Plc Annual Report 2023 2020 30.Relatedpartytransactions TheGrouphasanumberofrelatedpartiesincludingjoint arrangementsandassociates,pensionschemes andDirectorsand ExecutiveCommitteemembers(seenote12‘Investmentsinassociatesandjoint arrangements’,note25‘Post employment benefits’ andnote23‘Directorsandkeymanagement compensation’). Transactionswithjointarrangements andassociates Related party transactionswith theGroup’sjoint arrangements and associates primarily comprise feesforthe use of products and servicesincluding network airtime and access charges,feesforthe provision of network infrastructure and cash pooling arrangements.No related party transactions have been entered into during the yearwhichmightreasonably affect any decisionsmade by the users ofthese consolidated financialstatements except as disclosed below. 2023 2022 2021 €m €m €m Sales of goods and services to associates 20 20 14 Purchase of goods and services from associates 8 10 5 Sales of goods and services to joint arrangements 220 221 203 Purchase of goods and services from joint arrangements 263 298 109 Interest income receivable from joint arrangements1 52 48 65 Interest expense payable to joint arrangements1 33 52 56 Trade balances owed: by associates 7 8 to associates 1 6 by joint arrangements 170 139 to joint arrangements 329 34 Other balances owed by associates – 80 Other balances owed by joint arrangements1 980 1,080 Other balances owed to joint arrangements2 5,628 1,561 Notes: 1 Amounts ariseprimarily throughVodafoneZiggoandOakHoldings 1GmbH. Interestis paid/receivedinlinewithmarketrates. 2 Amounts areprimarily inrelationto leasesoftowerspace fromOakHoldings1GmbH(2022: INWIT S.p.A.). On 22March 2023,theGroup completed the disposal ofitsinterestin Vantage TowersA.G.toOakHoldings1GmbH,the co-control partnership of Vodafone,GIP and KKR.Vodafone retained a non-controlling interest of 64.2% inOakHoldings 1GmbH,which owns 89.3% of Vantage TowersA.G.Oak Holdings 1GmbHis a joint venture oftheGroup. Dividendsreceived fromassociates and joint ventures are disclosed in the consolidated statement of cash flows. TransactionswithDirectors otherthancompensation During the three years ended31March 2023 and as of 21 June2023, noDirector nor any other executive officer,nor any associate of anyDirector or any other executive officer,wasindebted to theGroup.During the three years ended 31March 2023 and as of 21 June 2023,theGroup has not been a party to any othermaterialtransaction, or proposed transactions, inwhich anymember ofthe keymanagement personnel(includingDirectors, any other executive officer,seniormanager, any spouse orrelative of any ofthe foregoing or any relative ofsuch spouse) had orwasto have a direct orindirect material interest. A full list of all of our subsidiaries, joint arrangements and associated undertakings is detailed below. A full list of subsidiaries, joint arrangements and associated undertakings (as defined in the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008) as at 31 March 2023 is detailed below. No subsidiaries are excluded from the Group consolidation. Unless otherwise stated the Company’s subsidiaries all have share capital consisting solely of ordinary shares and are indirectly held. The percentage held by Group companies reflect both the proportion of nominal capital and voting rights unless otherwise stated. Summarised financial information is provided in respect of the Group’s most significant joint arrangements and associates in note 12 ‘Investments in associates and joint arrangements’. Subsidiaries A subsidiary is an entity directly or indirectly controlled by the Company. Control is achieved where the Company has existing rights that give it the current ability to direct the activities that affect the Company’s returns and exposure or rights to variable returns from the entity. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling shareholder’s share of changes in equity since the date of the combination. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance. Company name % of share class held by Group Companies Share Class Albania Autostrada Tirane-Durres, Rruga: “Pavaresia”, Nr 61, Kashar, Tirana,Albania Vodafone Albania Sh.A 99.94 Ordinary shares Rruga “Ibrahim Rugova”, Sky Tower, Kati i 5, Hyrja 2, Tiranë, 1000, Albania _VOIS Albania Shpk. 100.00 Ordinary shares Australia Mills Oakley, Level 7, 151 Clarence Street, Sydney NSW 2000, Australia Vodafone Enterprise Australia Pty Limited 100.00 Ordinary shares Austria c/o Stolitzka & Partner Rechtsanwälte OG, Kärntner Ring 12, 3. Stock, 1010, Wien, Austria Vodafone Enterprise Austria GmbH 100.00 Ordinary shares Bahrain RSM Bahrain, 3rd floor Falcon Tower, Diplomatic Area, Manama, PO BOX 11816, Bahrain Vodafone Enterprise Bahrain W.L.L. 100.00 Ordinary shares Belgium Malta House, rue Archimède 25, 1000 Bruxelles, Belgium Vodafone Belgium SA/NV 100.00 Ordinary shares Brazil Av José Rocha Bonfim, 214, Cond Praça Capital – Edifício Toronto, sls 228/229 13080-900 Jardim Santa Genebra – Campinas, São Paulo, Brazil Cobra do Brasil Serviços de Telemàtica ltda. (in process of dissolution) 70.00 Ordinary shares Av. Paulista, 37 – 4º andar, Sala 427, Bela Vista, CEP, 01311-902, São Paulo, Brazil Vodafone Empresa Brasil Telecomunicações Ltda 100.00 Ordinary shares Rua Boa Vista, No. 254, room 1304 (parte), Centro, São Paulo, 01014907, Brazil Vodafone Serviços Empresariais Brasil Ltda. 100.00 Ordinary shares Company name % of share class held by Group Companies Share Class Bulgaria 10 Tsar Osvoboditel Blvd., 3rd Floor, Spredets Region, Sofia, 1000, Bulgaria Vodafone Enterprise Bulgaria EOOD 100.00 Ordinary shares Canada c/o ARC Information Services Inc., 3-84 Castlebury Crescent, Toronto ON M2H 1W8, Canada Vodafone Canada Inc. 100.00 Common shares Cayman Islands One Nexus Way, Camana Bay, Grand Cayman, KY1-9005, Cayman Islands CGP Investments (Holdings) Limited 100.00 Ordinary shares China Building 21, 11, Kangdin5g St., BDA, Beijing, 100176 – China Vodafone Automotive Technologies (Beijing) Co, Ltd 100.00 Ordinary shares Level 9, Tower 2, China Central Place, Room 941, No.79 Jianguo Road, Chaoyang District, Beijing, 100025, China Vodafone Enterprise Communications Technical Service (Shanghai) Co., Ltd. Beijing Branch2 100.00 Branch Room 1603, 16th Floor, 1200 Pudong Avenue, Free Trade Zone, Shanghai, China Vodafone Enterprise Communications Technical Service (Shanghai) Co., Ltd. 100.00 Ordinary shares Congo, The Democratic Republic of the 292 Avenue de La Justice, Commune de la Gombe, Kinshasa, The Democratic Republic of the Congo Vodacom Congo (RDC) SA5 33.20 Ordinary shares Building Commimo II Ground Floor Right, 3157 Boulevard du 30 Juin, Commune de la Gombe, Kinshasa, DRC Congo, The Democratic Republic of the Congo Vodacash S.A5 33.20 Ordinary shares Company name % of share class held by Group Companies Share Class Cyprus Ali Rıza Efendi Caddesi No:33/A Ortaköy, Lefkoşa, Cyprus Vodafone Evde Operations Ltd 100.00 Ordinary shares Vodafone Mobile Operations Limited 100.00 Ordinary shares Czech Republic náměstí Junkových 2, Prague 5, 15500, Czech Republic Nadace Vodafone Česká Republika 100.00 Trustee Oskar Mobil s.r.o. 100.00 Ordinary shares Vodafone Czech Republic A.S. 100.00 Ordinary shares Vodafone Enterprise Europe (UK) Limited – Czech Branch2 100.00 Branch Praha 4, Závišova 502/5, 14000, Nusle, Czech Republic Vantage Towers 2 s.r.o 100.00 Ordinary shares Závišova Real Estate, s.r.o. 100.00 Ordinary shares Denmark Tuborg Boulevard 12, 2900, Hellerup, Denmark Vodafone Enterprise Denmark A/S 100.00 Ordinary shares Egypt 37 Kasr El Nil St, 4th. Floor, Cairo, Egypt Starnet5 35.81 Ordinary shares 54 El Batal Ahmed Abed El Aziz, Mohandseen, Giza, Egypt Sarmady Communications5 35.82 Ordinary shares Building no. 2109 “VHUB1”, Smart Village, Cairo Alexandria, Egypt Vodafone International Services LLC5 100.00 Ordinary shares Site No 15/3C, Central Axis, 6th October City, Egypt Vodafone Egypt Telecommunications S.A.E.5 35.82 Ordinary shares Smart Village C3 Vodafo5ne Building, Egypt Vodafone Data5 35.81 Ordinary shares Vodafone Building Zahraa EL Maadi, Building A, Service Area D, Maadi, Cairo, Egypt Vodafone For Trading5 35.78 Ordinary shares 31.Relatedundertakings 201 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Finland c/o Eversheds Asianajotoimisto Oy, Fabianinkatu 29 B, Helsinki, 00100, Finland Vodafone Enterprise Finland Oy 100.00 Ordinary shares France 1300 route de Cretes, Le WTC, Bat I1, 06560, Valbonne Soph, France Vodafone Automotive Telematics Development S.A.S 100.00 Ordinary shares EuroPlaza Tour, 20, Avenue Andre Prothin, La Défense Cedex – France (149153), 92400, Courbevoie, France Vodafone Automotive France S.A.S 100.00 Ordinary shares Vodafone Enterprise France SAS 100.00 New euro shares Rue Champollion, 22300, Lannion, France Apollo Submarine Cable System Ltd – French Branch2 100.00 Branch Germany Altes Forsthaus 2, 67661, Kaiserslautern, Germany TKS Telepost Kabel-Service Kaiserslautern GmbH3 94.01 Ordinary shares Betastraße 6-8, 85774 Unterföhring, Germany Kabel Deutschland Holding AG 94.01 Ordinary shares Vodafone Customer Care GmbH3 94.01 Ordinary shares Vodafone Deutschland GmbH 94.01 Ordinary shares Buschurweg 4, 76870 Kandel, Germany Vodafone Automotive Deutschland GmbH 100.00 Ordinary shares Ferdinand-Braun-Platz 1, 40549, Düsseldorf, Germany Vodafone Enterprise Germany GmbH 100.00 Ordinary shares Vodafone GmbH 100.00 Ordinary A shares, Ordinary B shares Vodafone Group Services GmbH 100.00 Ordinary shares Vodafone Institut für Gesellschaft und Kommunikation GmbH 100.00 Ordinary shares Vodafone Stiftung Deutschland Gemeinnützige GmbH 100.00 Ordinary shares Vodafone Vierte Verwaltungs AG 100.00 Ordinary shares Vodafone West GmbH 100.00 Ordinary shares Friedrich-Wilhelm-Strasse 2, 38100, Braunschweig, Germany KABELCOM Braunschweig Gesellschaft Für Breitbandkabel-Kommunikation Mit Beschränkter Haftung3 94.01 Ordinary shares Holzmarkt 1, 50676, Köln, North Rhine-Westphalia, Germany Grandcentrix GmbH 100.00 Ordinary shares Nobelstrasse 55, 18059, Rostock, Germany “Urbana Teleunion” Rostock GmbH & Co.KG3 65.80 Ordinary shares Seilerstrasse 18, 38440, Wolfsburg, Germany KABELCOM Wolfsburg Gesellschaft für Breitbandkabel-Kommunikation mit beschränkter Haftung3 94.01 Ordinary shares Greece 12,5 km National Road Athens – Lamia, Metamorfosi / Athens, 14452, Greece Vodafone Innovus S.A 99.87 Ordinary shares 1-3 Tzavella str, 152 31 Halandri, Athens, Greece Vodafone-Panafon Hellenic Teleco5mmunications Company S.A. 99.87 Ordinary shares Pireos 163 & Ehelidon, Athens, 11854, Greece 360 Connect S.A. 99.87 Ordinary shares Guernsey Martello Court, Admiral Park, St. Peter Port, GY1 3HB, Guernsey FB Holdings Limited 100.00 Ordinary shares Le Bunt Holdings Limited 100.00 Ordinary shares Silver Stream Investments Limited 100.00 Ordinary shares Roseneath, The Grange, St Peter Port, GY1 2QJ, Guernsey VBA Holdings Limited5 65.10 Ordinary shares, Non-voting irredeemable non-cumulative preference shares VBA International Limited5 65.10 Ordinary shares, Non-voting irredeemable non-cumulative preference shares Hong Kong Level 24, Dorset House, Taikoo Place, 979 King’s Road, Quarry Bay, Hong Kong Vodafone Enterprise Hong Kong Ltd 100.00 Ordinary shares Hungary 40-44 Hungaria Krt., Budapest, H-1087, Hungary VSSB Vodafone Szolgáltató Központ Budapest Zártkörűen Működő Részvénytársaság 100.00 Registered ordinary shares India 10th Floor, Tower A&B, Global Technology Park, (Maple Tree Building), Marathahalli Outer Ring Road, Devarabeesanahalli Village, Varthur Hobli, Bengaluru, Karnataka, 560103, India Cable & Wireless Networks India Private Limited 100.00 Equity shares Cable and Wireless (India) Limited – Branch2 100.00 Branch Cable and Wireless Global (India) Private Limited 100.00 Equity shares 201-206, Shiv Smriti Chambers, 49/A, Dr. Annie Besant Road, Mumbai, Maharashtra, Worli, 400018, India Omega Telecom Holdings Private Limited 100.00 Equity shares Vodafone India Services Private Limited 100.00 Equity shares Business@Mantri, Tower B, Wing no – B1 & B2, 3rd Floor, S. No. – 197, Near Hotel Four Points, Lohegaon, Pune, Maharashtra, 411014, India Vodafone Global Services Private Limited 100.00 Equity shares E-47, Bankra Super Market, Bankra, Howrah, West Bengal, 711403, India Usha Martin Telematics Limited 100.00 Equity shares Ireland 2nd Floor, Palmerston House, Fenian Street, DUBLIN 2, Ireland Vodafone International Financing Designated Activity Company 100.00 Ordinary shares 38/39 Fitzwilliam Square West, Dublin 2, D02 NX53, Ireland Vodafone Enterprise Global Limited 100.00 Ordinary shares Vodafone Global Network Limited 100.00 Ordinary shares Mountainview, Leopardstown, Dublin 18, Ireland VF Ireland Property Holdings Limited 100.00 Ordinary euro shares Vodafone Group Services Ireland Limited 100.00 Ordinary shares Vodafone Ireland Limited 100.00 Ordinary shares Vodafone Ireland Marketing Limited 100.00 Ordinary shares Vodafone Ireland Retail Limited 100.00 Ordinary shares Italy Piazzale Luigi Cadorna, 4, 20123, Milano, Italy Vodafone Global Enterprise (Italy) S.R.L. 100.00 Ordinary shares SS 33 del Sempione KM 35, 212, 21052 Busto Arsizio (VA), Italy Vodafone Automotive Italia S.p.A 100.00 Ordinary shares Via Astico 41, 21100 Varese, Italy Vodafone Automotive Electronic Systems S.r.L 100.00 Ordinary shares Vodafone Automotive SpA 100.00 Ordinary shares Vodafone Automotive Telematics Srl 100.00 Ordinary shares Via Jervis 13, 10015, Ivrea (TO), Italy VEI S.r.l. 100.00 Partnership interest shares Vodafone Italia S.p.A. 100.00 Ordinary shares Via Lorenteggio 240, 20147, Milan, Italy Vodafone Enterprise Italy S.r.L 100.00 Euro shares Vodafone Gestioni S.p.A. 100.00 Ordinary shares Vodafone Servizi E Tecnologie S.R.L. 100.00 Equity shares IVia per Carpi 26/B, 42015, Correggio (RE), Italy VND S.p.A. 100.00 Ordinary shares Japan KAKiYa building, 9F, 2-7-17 Shin-Yokohama, Kohoku-ku, Yokoha-City, Kanagawa, 222-0033, Japan Vodafone Automotive Japan KK 100.00 Ordinary shares Marunouchi Trust Tower North 15F, 8-1, Marunouchi 1-chome, level 15, Chiyoda-ku, Tokyo, Japan Vodafone Enterprise U.K. – Japanese Branch2 100.00 Branch Vodafone Global Enterprise (Japan) K.K. 100.00 Ordinary shares Notes totheconsolidatedfinancial statements (continued) 31.Relatedundertakings(continued) 202 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Jersey 44 Esplanade, St Helier, JE4 9WG, Jersey Vodafone International 2 Limited 100.00 Ordinary shares Kenya 6th Floor, ABC Towers, ABC Place, Waiyaki Way, Nairobi, 00100, Kenya M-PESA Holding Co. Limited 100.00 Equity shares Vodafone Kenya Limited5 69.46 Ordinary voting shares The Riverfront, 4th floor, Prof. David Wasawo Drive, Off Riverside Drive, Nairobi, Kenya Vodacom Business (Kenya) Limited5 52.08 Ordinary shares Korea, Republic of ASEM Tower level 37, 517 Yeongdong-daero, Gangnam-gu, Seoul, 135-798, Korea, Republic of Vodafone Enterprise Korea Limited 100.00 Ordinary shares Lesotho 585 Mabile Road, Vodacom Park, Maseru, Lesotho, Lesotho Vodacom Lesotho (Pty) Limited5 52.08 Ordinary shares VCL Financial Services (Pty) Ltd5 52.08 Ordinary shares Luxembourg 15 rue Edward Steichen, Luxembourg, 2540, Luxembourg Tomorrow Street GP S.à r.l. 100.00 Ordinary shares Vodafone Enterprise Global Businesses S.à r.l. 100.00 Ordinary shares Vodafone Enterprise Luxembourg S.A. 100.00 Ordinary euro shares Vodafone International 1 S.à r.l. 100.00 Ordinary shares Vodafone International M S.à r.l. 100.00 Ordinary shares Vodafone Investments Luxembourg S.à r.l. 100.00 Ordinary shares Vodafone Luxembourg S.à r.l. 100.00 Ordinary shares Vodafone Procurement Company S.à r.l. 100.00 Ordinary shares Vodafone Roaming Services S.à r.l. 100.00 Ordinary shares Vodafone Services Company S.à r.l. 100.00 Ordinary shares Malaysia Suite 13.03, 13th Floor, Menara Tan & Tan, 207 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia Vodafone Global Enterprise (Malaysia) Sdn Bhd 100.00 Ordinary shares Malta Portomaso Business Tower, Level 15B, St Julians, STJ 4011, Malta Vodafone Holdings Limited 100.00 ‘A’ Ordinary shares, ‘B’ Ordinary shares Vodafone Insurance Limited 100.00 ‘A’ Ordinary shares, ‘B’ Ordinary shares Mauritius 10th Floor, Standard Chartered Towers, 19 Cybercity, Ebene, Mauritius, Mauritius Mobile Wallet VM15 65.10 Ordinary shares Mobile Wallet VM25 65.10 Ordinary shares VBA (Mauritius) Limited5 65.10 Ordinary shares, Redeemable preference shares Vodacom International Limited5 65.10 Ordinary shares, Non-Cumulative preference shares Fifth Floor, Ebene Esplanade, 24 Bank Street, Cybercity, Ebene, Mauritius Al-Amin Investments Limited 100.00 Ordinary shares Array Holdings Limited 100.00 Ordinary shares Asian Telecommunication Investments (Mauritius) Limited 100.00 Ordinary shares CCII (Mauritius), Inc. 100.00 Ordinary shares CGP India Investments Ltd. 100.00 Ordinary shares Euro Pacific Securities Ltd. 100.00 Ordinary shares Mobilvest 100.00 Ordinary shares Prime Metals Ltd. 100.00 Ordinary shares Trans Crystal Ltd. 100.00 Ordinary shares Vodafone Mauritius Ltd. 100.00 Ordinary shares Vodafone Telecommunications (India) Limited 100.00 Ordinary shares Vodafone Tele-Services (India) Holdings Limited 100.00 Ordinary shares Mexico Avenida Insurgentes Sur No. 1647, Piso 12, despacho 1202, Colonia San José Insurgentes, Alcaldía Benito Juárez, C.P. 03900, Ciudad de México, Mexico Vodafone Empresa México S.de R.L. de C.V. 100.00 Corporate certificate series A shares, Corporate certificate series B shares Mozambique Rua dos Desportistas, Numero 649, Cidade de Maputo, Mozambique Vodacom Moçambique, SA5 55.33 Ordinary shares Vodafone M-Pesa, S.A5 55.33 Ordinary shares Netherlands Rivium Quadrant 173, 15th Floor, 2909 LC, Capelle aan den IJssel, Netherlands Vodafone Enterprise Netherlands B.V. 100.00 Ordinary shares Vodafone Europe B.V. 100.00 Ordinary shares Vodafone International Holdings B.V. 100.00 Ordinary shares Vodafone Panafon International Holdings B.V. 99.87 Ordinary shares Zuid-hollanden 7, Rode Olifant, Spaces, 2596AL, den Haag, Netherlands IoT. nxt USA BV5 42.31 Ordinary shares IOT.NXT B.V.5 42.31 Ordinary shares IoT.nxt Europe BV5 42.31 Ordinary shares New Zealand 74 Taharoto Road, Takapuna, Auckland, 0622, New Zealand Vodafone Enterprise Hong Kong Limited – New Zealand Branch2 100.00 Branch Norway c/o EconPartner AS, Dronning Mauds gate 15, Oslo, 0250, Norway Vodafone Enterprise Norway AS 100.00 Ordinary shares Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN, United Kingdom Vodafone Limited – Norway Branch2 100.00 Branch Oman Knowledge Oasis Muscat, Al-seeb, Muscat, Governorate P.O Box 104 135, Oman Vodafone Services LLC 100.00 Shares Poland ul. Towarowa 28, 00-839, Warsaw, Poland Vodafone Business Poland sp. z o.o. 100.00 Ordinary shares Portugal Av. D. João II, nº 36 – 8º Piso, 1998 – 017, Parque das Nações, Lisboa, Portugal Oni Way – Infocomunicacoes, S.A 100.00 Ordinary shares Vodafone Enterprise Spain, S.L.U. – Portugal Branch2 100.00 Branch Vodafone Portugal – Comunicacoes Pessoais, S.A. 100.00 Ordinary shares Vodafone Solutions, Unipessoal LDA 100.00 Ordinary shares Notes totheconsolidatedfinancial statements (continued) 31.Relatedundertakings(continued) 203 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Romania 1 A Constantin Ghercu Street, 10th Floor, 6th District, Bucharest, Romania UPC Services S.R.L. (in liquidation) 100.00 Ordinary shares 18 Diligenței Steet, 1st floor, Building C1, Ploiesti, Prahova County, Romania Evotracking SRL 100.00 Ordinary shares 201 Barbu Vacarescu Street, 5th floor, 2nd District, Bucharest, Romania Vodafone External Services SRL 100.00 Ordinary shares Vodafone Foundation 100.00 Sole member 201 Barbu Vacarescu, 4th floor, 2nd District, Bucharest, Romania Vodafone Romania S.A 100.00 Ordinary shares 62 D Nordului Street, District 1, Bucharest, Romania UPC Foundation 100.00 Sole member Oltenitei Street no. 2, City Offices Building, 3rd Floor, Bucharest 4th District, Romania Vodafone România Technologies SRL 100.00 Ordinary shares Sectorul 2, Strada Barbu Văcărescu, Nr. 201, Etaj 1, Bucharest, Romania Vodafone România M – Payments SRL 100.00 Ordinary shares Russian Federation Build. 2, 14/10, Chayanova str., 125047, Moscow, Russian Federation Cable & Wireless CIS Svyaz LLC 100.00 Charter capital shares Serbia Vladimira Popovića 38-40, New Belgrade, 11070, Serbia Vodafone Enterprise Equipment Limited Ogranak u Beogradu – Serbia Branch2 100.00 Branch Singapore Asia Square Tower 2, 12 Marina View, #17-01, 018961, Singapore Vodafone Enterprise Singapore Pte.Ltd 100.00 Ordinary shares Slovakia Karadžičova 2, mestská časť Staré mesto, Bratislava, 811 09, Slovakia Vodafone Global Network Limited – Slovakia Branch2 100.00 Branch Prievozská 6, Bratislava, 821 09, Slovakia Vodafone Czech Republic A.S. – Slovakia Branch2 100.00 Branch South Africa 9 Kinross Street, Germiston South, 1401, South Africa Vodafone Holdings (SA) Proprietary Limited 100.00 Ordinary shares Vodafone Investments (SA) Proprietary Limited 100.00 Ordinary A shares, “B” Ordinary no par value shares Bylsbridge Office Park, Building 14m Block C, 1st Floor, Alexandra Road, Centurion, Highveld Ext 73, 0046, South Africa IoT.nxt (Pty) Limited5 42.31 Ordinary shares IoT.nxt Development (Pty) Limited5 42.31 Ordinary shares 10T Holdings Proprietary Limited5 42.31 Ordinary shares Vodacom Corporate Park, 082 Vodacom Boulevard, Midrand, 1685, South Africa Jupicol (Proprietary) Limited5 45.57 Ordinary shares Storage Technology Services (Pty) Limited5 33.20 Ordinary shares Infinity Services Partner Company5 65.10 Ordinary shares Mezzanine Ware (RF) Proprietary Limited5 58.59 Ordinary shares Motifprops 1 (Proprietary) Limited5 65.10 Ordinary shares Vodacom (Pty) Limited5 65.10 Ordinary shares, Ordinary A shares Vodacom Business Africa Group (Pty) Limited5 65.10 Ordinary shares Vodacom Business Africa SA (Pty) Limited5 65.10 Ordinary shares Vodacom Financial Services (Proprietary) Limited5 65.10 Ordinary shares Vodacom Group Limited 65.10 Ordinary shares Vodacom Insurance Administration Company (Proprietary) Limited5 65.10 Ordinary shares Vodacom Insurance Company (RF) Limited5 65.10 Ordinary shares Vodacom International Holdings (Pty) Limited5 65.10 Ordinary shares Vodacom Life Assurance Company (RF) Limited5 65.10 Ordinary shares Vodacom Payment Services (Proprietary) Limited5 65.10 Ordinary shares Vodacom Properties No 1 (Proprietary) Limited5 65.10 Ordinary shares Vodacom Properties No.2 (Pty) Limited5 65.10 Ordinary shares Vodacom Tower Company Proprietary Limited5 65.10 Ordinary shares Wheatfields Investments 276 (Proprietary) Limited5 65.10 Ordinary shares XLink Communications (Proprietary) Limited5 65.10 Ordinary A shares Spain Antracita, 7 – 28045, Madrid, Spain Vodafone Automotive Iberia S.L. 100.00 Ordinary shares Avenida de América 115, 28042, Madrid, Spain Vodafone Energía, S.L. 100.00 Ordinary shares Vodafone Enterprise Spain SLU 100.00 Ordinary euro shares Vodafone España, S.A.U. 100.00 Ordinary shares Vodafone Holdings Europe, S.L.U. 100.00 Ordinary shares Vodafone ONO, S.A.U. 100.00 Ordinary shares Vodafone Servicios, S.L.U. 100.00 Ordinary shares Torre Norte Adif, Explanada de la Estación no 7, 29002, Málaga, Spain Vodafone Intelligent Solutions España, S.L.U. 100.00 Ordinary shares Sweden c/o Hellström advokatbyrå, Box 7305, 103 90, Stockholm, Sweden Vodafone Enterprise Sweden AB 100.00 Ordinary shares, Shareholder’s contribution shares Switzerland Schiffbaustrasse 2, 8005, Zurich, Switzerland Vodafone Enterprise Switzerland AG 100.00 Ordinary shares Taiwan 22F., No.100, Songren Road., Xinyi District, Taipei City, 11070, Taiwan Vodafone Global Enterprise Taiwan Limited 100.00 Ordinary shares Tanzania, United Republic of 15 Floor, Vodacom Tower, Ursino Estate, Plot No. 23, Bagamoyo Road, Dar es Salaam, Tanzania, United Republic of M-Pesa Limited5 48.82 Ordinary A shares, Ordinary B shares Shared Networks Tanzania Limited5 48.82 Ordinary shares Vodacom Tanzania Public Limited Company5 48.82 Ordinary shares 3rd Floor, Maktaba (Library), ComplexBibi, Titi Mohaned Road, Dar es Salaam, Tanzania, United Republic of Gateway Communications Tanzania Limited5 64.45 Ordinary shares Notes totheconsolidatedfinancial statements (continued) 31.Relatedundertakings(continued) 204 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Thailand 725 Metropolis Building, 20th floor, Unit 100, Sukhumvit Road, Klongton Nua Sub-district, Watthana District, Bangkok, 10110, Thailand Vodafone Business Siam Co., Ltd. 100.00 Ordinary shares Turkey Büyükdere Caddesi, No:251, Maslak, Şişli / İstanbul, 34398, Turkey Vodafone Bilgi Ve Iletisim Hizmetleri AS 100.00 Registered shares Vodafone Dagitim, Servis ve Icerik Hizmetleri A.S. 100.00 Ordinary shares Vodafone Dijital Yayincilik Hizmetleri A.S. 100.00 Ordinary shares Vodafone Holding A.S. 100.00 Registered shares Vodafone Kule ve Altyapi Hizmetleri A.S. 100.00 Ordinary shares Vodafone Mall Ve Elektronik Hizmetler Ticaret AS 100.00 Ordinary shares Vodafone Medya Icerik Hizmetleri A.S. 100.00 Ordinary shares Vodafone Net İletişim Hizmetleri A.S. 100.00 Ordinary shares Vodafone Telekomunikasyon A.S 100.00 Registered shares İTÜ Ayazağa Kampüsü, Koru Yolu, Arı Teknokent Arı 3 Binası, Maslak, İstanbul, 586553, Turkey Vodafone Teknoloji Hizmetleri A.S. 100.00 Registered shares Maslak Mah. AOS 55 Sk. 42 Maslak Sit. B Blok Apt. No: 4/663, Sarıyer Istanbul, Turkey Vodafone Sigorta Aracilik Hizmetleri A.S. 100.00 Ordinary shares Vodafone Elektronik Para Ve Ödeme Hizmetleri A.S. 100.00 Registered shares Vodafone Finansman A.S. 100.00 Ordinary shares Maslak Mah. Büyükdere Cad. Büyükdere No: 251, Sarıyer, Istanbul, 34453, Turkey VOIS Turkey Akilli Çözümler Limited Şirket 100.00 Ordinary shares Ukraine Bohdana Khmelnytskogo Str. 19-21, Kyiv, Ukraine LLC Vodafone Enterprise Ukraine 100.00 Ordinary shares United Arab Emirates 16-SD 129, Ground Floor, Building 16-Co Work, Dubai Internet City, United Arab Emirates Vodacom Fintech Services FZ-LLC5 65.10 Ordinary shares Office 101, 1st Floor, DIC Building 1, Dubai Internet City, Dubai, United Arab Emirates Vodafone Enterprise Europe (UK) Limited – Dubai Branch2 100.00 Branch United Kingdom 11 Staple Inn Building, London, WC1V 7QH, United Kingdom Vodacom Business Africa Group Services Limited5 65.10 Ordinary shares, Preference shares Vodacom Investments Company Proprietary Limited5 65.10 Ordinary shares Vodacom UK Limited5 65.10 Ordinary shares, Ordinary B shares, Non-redeemable ordinary A shares, Non-redeemable preference shares 1-2 Berkeley Square, 99 Berkeley Street, Glasgow, G3 7HR, Scotland Thus Group Holdings Limited 100.00 Ordinary shares Thus Group Limited 100.00 Ordinary shares Thus Profit Sharing Trustees Limited 100.00 Ordinary shares 3 More London, Riverside, London, SE1 2AQ, United Kingdom IoT Nxt UK Limited 42.31 Ordinary shares 784 Upper Newtownards Road, Belfast, BT16 1UD, United Kingdom Vodafone (NI) Limited 100.00 Ordinary shares Edinburgh House, 4 North St. Andrew Street, Edinburgh, EH2 1HJ, United Kingdom Pinnacle Cellular Group Limited 100.00 Ordinary shares Pinnacle Cellular Limited 100.00 Ordinary shares Vodafone (Scotland) Limited 100.00 Ordinary shares One Kingdom Street, London, W2 6BY, United Kingdom DABCo Limited 100.00 Ordinary shares Quarry Corner, Dundonald, Belfast, BT16 1UD, Northern Ireland Energis (Ireland) Limited 100.00 A Ordinary shares, B Ordinary shares, C Ordinary shares, D Ordinary shares Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN, United Kingdom Apollo Submarine Cable System Limited 100.00 Ordinary shares Bluefish Communications Limited 100.00 Ordinary A shares, Ordinary B shares, Ordinary C shares, Ordinary D shares Cable & Wireless Aspac Holdings Limited 100.00 Ordinary shares Cable & Wireless CIS Services Limited 100.00 Ordinary shares Cable & Wireless Communications Data Network Services Limited 100.00 ‘A’ Ordinary shares, ‘B’ Ordinary shares Cable & Wireless Europe Holdings Limited 100.00 Ordinary shares Cable & Wireless Global Telecommunication Services Limited 100.00 Ordinary shares Cable & Wireless UK Holdings Limited 100.00 Ordinary shares Cable & Wireless Worldwide Limited 100.00 Ordinary shares Cable & Wireless Worldwide Voice Messaging Limited 100.00 Ordinary shares Cable and Wireless (India) Limited 100.00 Ordinary shares Cable and Wireless Nominee Limited 100.00 Ordinary shares Central Communications Group Limited 100.00 Ordinary Shares, Ordinary A shares Energis Communications Limited 100.00 Ordinary shares Energis Squared Limited 100.00 Ordinary shares London Hydraulic Power Company (The) 100.00 Ordinary shares, 5% Non-Cumulative preference shares MetroHoldings Limited 100.00 Ordinary shares Navtrak Ltd 100.00 Ordinary shares Project Telecom Holdings Limited 100.00 Ordinary shares Rian Mobile Limited 100.00 Ordinary shares Talkmobile Limited 100.00 Ordinary shares The Eastern Leasing Company Limited 100.00 Ordinary shares Thus Limited 100.00 Ordinary shares Vizzavi Limited 100.00 Ordinary shares Voda Limited 100.00 Ordinary shares Vodafone (New Zealand) Hedging Limited 100.00 Ordinary shares Vodafone 2. 100.00 Ordinary shares Vodafone 4 UK 100.00 Ordinary shares Vodafone 5 Limited 100.00 Ordinary shares Vodafone 5 UK 100.00 Ordinary shares Vodafone 6 UK 100.00 Ordinary shares Vodafone Americas 4 100.00 Ordinary shares Vodafone Automotive UK Limited 100.00 Ordinary shares Vodafone Benelux Limited 100.00 Ordinary shares Vodafone Cellular Limited1 100.00 Ordinary shares Vodafone Consolidated Holdings Limited 100.00 Ordinary shares Vodafone Corporate Limited 100.00 Ordinary shares Vodafone Corporate Secretaries Limited 100.00 Ordinary shares Vodafone DC Pension Trustee Company Limited 100.00 Ordinary shares Notes totheconsolidatedfinancial statements (continued) 31.Relatedundertakings(continued) 205 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Vodafone Distribution Holdings Limited 100.00 Ordinary shares Vodafone Enterprise Corporate Secretaries Limited 100.00 Ordinary shares Vodafone Enterprise Equipment Limited 100.00 Ordinary shares Vodafone Enterprise Europe (UK) Limited 100.00 Ordinary shares Vodafone Enterprise U.K. 100.00 Ordinary shares Vodafone Euro Hedging Limited 100.00 Ordinary shares Vodafone Euro Hedging Two Limited 100.00 Ordinary shares Vodafone Europe UK 100.00 Ordinary shares Vodafone European Investments1 100.00 Ordinary shares Vodafone European Portal Limited1 100.00 Ordinary shares Vodafone Finance Limited1 100.00 Ordinary shares Vodafone Finance Luxembourg Limited 100.00 Ordinary shares Vodafone Finance Management 100.00 Ordinary shares Vodafone Finance UK Limited 100.00 Ordinary shares Vodafone Financial Operations 100.00 Ordinary shares Vodafone Global Content Services Limited 100.00 Ordinary shares, 5% Fixed rate non-voting preference shares Vodafone Global Enterprise Limited 100.00 Ordinary shares, Deferred shares, B deferred shares Vodafone Group (Directors) Trustee Limited1 100.00 Ordinary shares Vodafone Group Pension Trustee Limited1 100.00 Ordinary shares Vodafone Group Services Limited 100.00 Ordinary shares, deferred shares Vodafone Group Services No.2 Limited1 100.00 Ordinary shares Vodafone Group Share Trustee Limited1 100.00 Ordinary shares Vodafone Holdings Luxembourg Limited 100.00 Ordinary shares Vodafone Intermediate Enterprises Limited 100.00 Ordinary shares Vodafone International 2 Limited – UK Branch2 100.00 Branch Vodafone International Holdings Limited 100.00 Ordinary shares Vodafone International Operations Limited 100.00 Ordinary shares Vodafone Investment UK 100.00 Ordinary shares Vodafone Investments Australia Limited 100.00 Ordinary shares Vodafone Investments Limited1 100.00 Ordinary shares, Zero coupon redeemable preference shares Vodafone IP Licensing Limited1 100.00 Ordinary shares Vodafone Limited 100.00 Ordinary shares Vodafone Marketing UK 100.00 Ordinary shares Vodafone Mobile Communications Limited 100.00 Ordinary shares Vodafone Mobile Enterprises Limited 100.00 Ordinary shares Vodafone Mobile Network Limited 100.00 Ordinary shares Vodafone Nominees Limited1 100.00 Ordinary shares Vodafone Oceania Limited 100.00 Ordinary shares Vodafone Overseas Finance Limited 100.00 Ordinary shares Vodafone Overseas Holdings Limited 100.00 Ordinary shares Vodafone Panafon UK 99.87 Ordinary shares Vodafone Partner Services Limited 100.00 Ordinary shares, Redeemable preference shares Vodafone Retail (Holdings) Limited 100.00 Ordinary shares Vodafone Sales & Services Limited 100.00 Ordinary shares Vodafone UK Foundation 100.00 Sole member Vodafone UK Limited1 100.00 Ordinary shares Vodafone Ventures Limited1 100.00 Ordinary shares Vodafone Worldwide Holdings Limited 100.00 Ordinary shares, Cumulative preference shares Vodafone Yen Finance Limited 100.00 Ordinary shares Vodafone-Central Limited 100.00 Ordinary shares Vodaphone Limited 100.00 Ordinary shares Vodata Limited 100.00 Ordinary shares Your Communications Group Limited 100.00 B Ordinary shares, Redeemable preference shares United States 1209 Orange Street, Wilmington DE 19801, United States IoT nxt USA Inc5 42.31 Common stock 1450 Broadway, Fl 11, Suite 104, New York NY 10018, United States Cable & Wireless Americas Systems, Inc. 100.00 Common stock shares Vodafone Americas Virginia Inc. 100.00 Common stock shares Vodafone US Inc. 100.00 Common stock shares, Ordinary shares 1615 Platte Street, Suite 02-115, Denver CO 80202, United States Vodafone Americas Foundation 100.00 Trustee Notes totheconsolidatedfinancial statements (continued) 31.Relatedundertakings(continued) 206 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Associated undertakings and joint arrangements Australia Level 1, 177 Pacific Highway, North Sydney NSW 2060, Australia 3.6 GHz Spectrum Pty Ltd 25.05 Ordinary shares AAPT Limited 25.05 Ordinary shares ACN 088 889 230 Pty Ltd 25.05 Ordinary shares ACN 139 798 404 Pty Ltd 25.05 Ordinary shares Adam Internet Holdings Pty Ltd 25.05 Ordinary shares Adam Internet Pty Ltd 25.05 A shares, B shares, Ordinary shares Agile Pty Ltd 25.05 Ordinary shares AlchemyIT Pty Ltd 25.05 Ordinary shares Chariot Pty Ltd 25.05 Ordinary shares Chime Communications Pty Ltd 25.05 Ordinary shares Connect West Pty Ltd 25.05 Ordinary shares Destra Communications Pty Ltd 25.05 Ordinary shares Digiplus Contracts Pty Ltd 25.05 Ordinary shares Digiplus Holdings Pty Ltd 25.05 Ordinary shares Digiplus Investments Pty Ltd 25.05 Ordinary shares Digiplus Pty Ltd 25.05 Ordinary shares H3GA Properties (No.3) Pty Limited 25.05 Ordinary shares iiNet Labs Pty Ltd 25.05 Ordinary shares iiNet Limited 25.05 Ordinary shares Internode Pty Ltd 25.05 Ordinary shares, Class B shares IntraPower Pty Limited 25.05 Ordinary shares Intrapower Terrestrial Pty Ltd 25.05 Ordinary shares IP Group Pty Ltd 25.05 Ordinary shares IP Services Xchange Pty Ltd 25.05 A shares, B shares Kooee Communications Pty Ltd 25.05 Ordinary shares Kooee Mobile Pty Ltd 25.05 Ordinary shares Mercury Connect Pty Ltd 25.05 Ordinary shares, E class shares Mobile JV Pty Limited 25.05 Ordinary shares Mobileworld Communications Pty Limited 25.05 Ordinary shares Mobileworld Operating Pty Ltd 25.05 Ordinary shares Netspace Online Systems Pty Ltd 25.05 Ordinary shares Numillar IPS Pty Ltd 25.05 Ordinary shares PIPE International (Australia) Pty Ltd 25.05 Ordinary shares PIPE Networks Pty Limited 25.05 Ordinary shares PIPE Transmission Pty Limited 25.05 Ordinary shares PowerTel Limited 25.05 Ordinary shares Request Broadband Pty Ltd 25.05 Ordinary shares Soul Communications Pty Ltd 25.05 Ordinary shares Soul Contracts Pty Ltd 25.05 Ordinary shares Soul Pattinson Telecommunications Pty Ltd 25.05 Ordinary shares SPT Telecommunications Pty Ltd 25.05 Ordinary shares SPTCom Pty Ltd 25.05 Ordinary shares Telecom Enterprises Australia Pty Limited 25.05 Ordinary shares Telecom New Zealand Australia Pty Ltd 25.05 Ordinary shares, Redeemable preference shares TPG Corporation Limited 25.05 Ordinary shares TPG Energy Pty Ltd 25.05 Ordinary shares TPG Finance Pty Limited 25.05 Ordinary shares TPG Holdings Pty Ltd 25.05 Ordinary shares TPG Internet Pty Ltd 25.05 Ordinary shares TPG JV Company Pty Ltd 25.05 Ordinary shares TPG Network Pty Ltd 25.05 Ordinary shares TPG Telecom Limited 25.05 Ordinary shares TransACT Capital Communications Pty Ltd 25.05 Ordinary shares TransACT Communications Pty Ltd 25.05 Ordinary shares TransACT Victoria Communications Pty Ltd 25.05 Ordinary shares TransACT Victoria Holdings Pty Ltd 25.05 Ordinary shares Trusted Cloud Pty Ltd 25.05 Ordinary shares Trusted Cloud Solutions Pty Ltd 25.05 Ordinary shares Value Added Network Pty Ltd 25.05 Ordinary shares Vision Network Pty Limited 25.05 Ordinary shares Vodafone Australia Pty Limited 25.05 Ordinary shares, Class B shares, Redeemable preference shares Vodafone Foundation Australia Pty Limited 25.05 Ordinary shares Vodafone Hutchison Receivables Pty Limited 25.05 Ordinary shares Vodafone Hutchison Spectrum Pty Limited 25.05 Ordinary shares Vodafone Network Pty Limited 25.05 Ordinary shares Vodafone Pty Limited 25.05 Ordinary shares VtalkVoip Pty Ltd 25.05 Ordinary shares Westnet Pty Ltd 25.05 Ordinary shares Belgium Space Court of Justice, Rue aux Laines 70, 1000 Brussels, Belgium Utiq S.A 25.00 Ordinary shares Bermuda Clarendon House, 2 Church St, Hamilton, HM11, Bermuda PPC 1 Limited 25.05 Ordinary shares Czech Republic Praha 4, Závišova 502/5, 14000, Nusle, Czech Republic Vantage Towers s.r.o.4 57.30 Ordinary shares U Rajské zahrady 1912/3, Praha 3, 130 00, Czech Republic COOP Mobil s.r.o. 33.33 Ordinary shares Egypt 23 Kasr El Nil St, Cairo, 11211, Egypt Wataneya Telecommunications S.A.E 50.00 Ordinary shares Ethiopia Addis Ababa, Kirkos Sub City, Woreda 01, Addis Ababa, Ethiopia Safaricom Telecommunications Ethiopia Private Limited Company5 19.48 Ordinary shares Germany 38 Berliner Allee, 40212, Düsseldorf, Germany MNP Deutschland Gesellschaft bürgerlichen Rechts 33.33 Partnership share Ferdinand-Braun-Platz 1, 40549, Düsseldorf, Germany Oak Holdings 1 GmbH 64.20 Ordinary shares Oak Holdings 2 GmbH 64.20 Ordinary shares Oak Holdings GmbH 64.20 Ordinary shares OXG Glasfaser Beteiligungs-GmbH 50.00 Ordinary shares OXG Glasfaser GmbH 50.00 Ordinary shares Nobelstrasse 55, 18059, Rostock, Germany Verwaltung “Urbana Teleunion” Rostock GmbH3 47.00 Ordinary shares Prinzenallee 11-13, 40549, Düsseldorf, Germany Vantage Towers AG 57.30 Ordinary shares Vantage Towers Erste Verwaltungsgesellschaft mbH4 57.30 Ordinary shares Vantage Towers Zweite Verwaltungsgesellschaft mbH4 57.30 Ordinary shares Greece 2 Adrianeiou str, Athens, 11525, Greece Vantage Towers Single Member Societe Anonyme4 57.30 Ordinary shares 43-45 Valtetsiou Str., Athens, Greece Safenet N.P,A. 24.97 Ordinary shares 56 Kifisias Avenue & Delfwn, Marousi, 151 25, Greece Tilegnous IKE 33.29 Ordinary shares Marathonos Ave 18 km & Pylou, Pallini, Attica, Pallini, Attica, 15351, Greece Victus Networks S.A. 49.94 Ordinary shares Hungary Boldizsár utca 2, Budapest, 1112, Hungary Vantage Towers Zártkörűen Működő Részvénytársaság4 57.30 Ordinary shares India 10th Floor, Birla Centurion, Century Mills Compound, Pandurang Budhkar Marg, Worli, Mumbai, Maharashtra, 400030, India Vodafone Foundation6 31.81 Ordinary shares Vodafone Idea Shared Services Limited6 32.29 Ordinary shares Vodafone Idea Technology Solutions Limited6 32.29 Ordinary shares Vodafone m-pesa Limited6 32.29 Ordinary shares You Broadband India Limited6 32.29 Equity shares A-19, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi, Delhi, 110044, India FireFly Networks Limited6 24.16 Ordinary shares Building No.10, Tower-A, 4th Floor, DLF Cyber City, Gurugram, Haryana, 122002, India Indus Towers Limited 21.05 Ordinary shares Suman Tower, Plot No. 18, Sector No. 11, Gandhinagar, 382011, Gujarat, India Vodafone Idea Limited 32.29 Equity shares Vodafone Idea Manpower Services Limited6 31.91 Ordinary shares Vodafone House, Corporate Road, Prahladnagar, Off S. G. Highway, Ahmedabad, Gujarat, 380051, India Vodafone Idea Business Services Limited6 32.29 Ordinary shares Vodafone Idea Communication Systems Limited6 32.29 Ordinary shares Vodafone Idea Telecom Infrastructure Limited6 32.29 Ordinary shares Notes totheconsolidatedfinancial statements (continued) 31.Relatedundertakings(continued) 207 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes totheconsolidatedfinancial statements (continued) 31.Relatedundertakings(continued) Ireland Mountainview, Leopardstown, Dublin 18, Ireland Vantage Towers Limited4 57.30 Ordinary shares The Herbert Building, The Park, Carrickmines, Dublin, Ireland Siro DAC 50.00 Ordinary shares Siro JV Holdco Limited 50.00 Ordinary B shares Italy Via Gaetana Negri 1, 20123, Milano, Italy Infrastrutture Wireless Italiana S.p.A. 19.01 Ordinary shares Kenya LR No. 13263 Safaricom House, PO Box 66827, 00800, Nairobi, Kenya Safaricom PLC 27.74 Ordinary shares Safaricom House, Waiyaki Way Westlands, Nairobi, Kenya M-PESA Africa Limited5 46.42 Ordinary shares Luxembourg 15 rue Edward Steichen, Luxembourg, 2540, Luxembourg Tomorrow Street SCA 50.00 Ordinary B shares, Ordinary C shares Netherlands Avenue Ceramique 300, 6221 Kx, Maastricht, Netherlands Vodafone Libertel B.V. 50.00 Ordinary shares Boven Vredenburgpassage 128, 3511 WR, Utrecht, Netherlands Amsterdamse Beheer- en Consultingmaatschappij B.V. 50.00 Ordinary shares Esprit Telecom B.V. 50.00 Ordinary shares FinCo Partner 1 B.V. 50.00 Ordinary shares LGE HoldCo V B.V. 50.00 Ordinary shares LGE HoldCo VI B.V. 50.00 Ordinary shares LGE Holdco VII B.V. 50.00 Ordinary shares LGE HoldCo VIII B.V. 50.00 Ordinary shares Vodafone Financial Services B.V. 50.00 Ordinary shares Vodafone Nederland Holding I B.V. 50.00 Ordinary shares Vodafone Nederland Holding II B.V. 50.00 Ordinary shares VodafoneZiggo Employment B.V. 50.00 Ordinary shares VodafoneZiggo Group B.V. 50.00 Ordinary shares VodafoneZiggo Group Holding B.V. 50.00 Ordinary shares VZ Financing I B.V. 50.00 Ordinary shares VZ Financing II B.V. 50.00 Ordinary shares VZ FinCo B.V. 50.00 Ordinary shares VZ PropCo B.V. 50.00 Ordinary shares VZ Secured Financing B.V. 50.00 Ordinary shares XB Facilities B.V. 50.00 Ordinary shares Ziggo B.V. 50.00 Ordinary shares Ziggo Deelnemingen B.V. 50.00 Ordinary shares Ziggo Finance 2 B.V. 50.00 Ordinary shares Ziggo Netwerk II B.V. 50.00 Ordinary shares Ziggo Real Estate B.V. 50.00 Ordinary shares Ziggo Services B.V. 50.00 Ordinary shares Ziggo Services Employment B.V. 50.00 Ordinary shares Ziggo Services Netwerk 2 B.V. 50.00 Ordinary shares Ziggo Zakelijk Services B.V. 50.00 Ordinary shares Zoranet Connectivity Services B.V. 50.00 Ordinary shares ZUM B.V. 50.00 Ordinary shares Media Parkboulevard 2, 1217 WE Hilversum, Netherlands Liberty Global Content Netherlands B.V. 50.00 Ordinary shares Rivium Quadrant 175, 2909 LC, Capelle aan den IJssel, Netherlands Central Tower Holding Company B.V.4 57.30 Ordinary shares Winschoterdiep 60, 9723 AB Groningen, Netherlands Zesko B.V. 50.00 Ordinary shares Ziggo Bond Company B.V. 50.00 Ordinary shares Ziggo Netwerk B.V. 50.00 Ordinary shares New Zealand Tompkins Wake, Level 11, 41 Shortland Street, Auckland, 1010, New Zealand iiNet (New Zealand) AKL Limited 25.05 Ordinary shares Philippines 22F Robinson Equitable Tower, ADB Ave, Corner Povega St, Ortigas Center, Pasig City, Philippines Orchid Cybertech Services Inc 25.05 Ordinary shares Portugal Edif. Arquiparque VII, R Dr António Loureiro Borges, 7, 3.º, 1495-131 ALGÉS, Algés, Oeiras, Portugal Vantage Towers, S.A.4 57.30 Ordinary shares Espaço Sete Rios, LEAP Rua de Campolide, 351, 0.05, 1070-034, Lisboa, Portugal Dual Grid – Gestão de Redes Partilhadas, S.A. 50.00 Ordinary shares Rua Pedro e Inês, Lote 2.08.01, 1990-075, Parque das Nações, Lisboa, Portugal Sport TV Portgugal, S.A. 25.00 Nominative shares Romania Calea Floreasca no. 169A, 3rd floor, District 1, Bucharest, România, Romania Vantage Towers S.R.L.4 57.30 Ordinary shares Floor 3, Module 2, Connected buildings III, Nr. 10A, Dimitrie Pompei Boulevard, Bucharest, Sector 2, Romania Netgrid Telecom SRL 50.00 Ordinary shares Russian Federation Building 3, 11, Promyshlennaya Street, Moscow, 115 516, Russian Federation Autoconnex Limited 35.00 Ordinary shares South Africa 76 Maude Street, Sandton, Johannesberg, 2196, South Africa Waterberg Lodge (Proprietary) Limited5 32.55 Ordinary shares Building 13, Ground Floor, East Thornhill Office Park, 94 Bekker Road, Vorna Valley X67 1685, South Africa Number Portability Company (Pty) Ltd5 12.10 Ordinary shares Celtis Plaza North, 1085 Schoeman Street, Hatfield, Pretoria, 0028, South Africa Afri G I S (Pty) Ltd5 21.16 Ordinary shares Rigel Office Park Block A, No 446 Rigel Avenue South, Erasmu, South Africa Canard Spatial Technologies Proprietary Limited5 21.16 Ordinary shares Vodacom Corporate Park, 082 Vodacom Boulevard, Midrand, 1685, South Africa M-Pesa S.A (Proprietary) Limited5 46.42 Ordinary shares Spain Calle San Severo 22, 28042, Madrid, Spain, Spain Vantage Towers, S.L.U.4 57.30 Ordinary shares Tanzania, United Republic of Plot No. 23, Ursino Estate, Bagamoyo Road, Dar es Salaam, Tanzania, United Republic of Vodacom Trust Limited5 48.82 Ordinary A shares, Ordinary B shares Turkey Çifte Havuzlar Mah Eski Londra Asfaltı Cad No: 151/1E/301, Esenler, Istanbul, Turkey FGS Bilgi Islem Urunler Sanayi ve Ticaret AS 50.00 Ordinary shares United Kingdom 24/25 The Shard, 32 London Bridge Street, London, SE1 9SG, United Kingdom Digital Mobile Spectrum Limited 25.00 Ordinary shares 3 More London Riverside, London, SE1 2AQ, United Kingdom VodaFamily Ethiopia Holding Company Limited5 31.47 Ordinary shares Griffin House, 161 Hammersmith Road, London, W6 8BS, United Kingdom Cable & Wireless Trade Mark Management Limited 50.00 Ordinary B shares Hive 2, 1530 Arlington Business Park, Theale, Reading, Berkshire, RG7 4SA, United Kingdom Cornerstone Telecommunications Infrastructure Limited5 28.65 Ordinary shares Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN, United Kingdom Vodafone Hutchison (Australia) Holdings Limited 50.00 Ordinary shares United States 251 Little Falls Drive, Wilmington DE 19808, United States LG Financing Partnership 50.00 Partnership interest PPC 1 (US) Inc. 25.05 Ordinary shares Ziggo Financing Partnership 50.00 Partnership interest Notes: 1. Directly held by Vodafone Group Plc. 2. Branches. 3. Shareholding is indirect through Vodafone Deutschland GmbH. 4. Shareholding is indirect through Vantage Towers A.G. 5. Shareholding is indirect through Vodacom Group Limited. The indirect shareholding is calculated using the 65.10% ownership interest in Vodacom Group Limited. 6. Includes the indirect interest held through Vodafone Idea Limited. 208 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Selectedfinancialinformation The table belowshowsselected financial information in respect ofsubsidiariesthat have non-controlling intereststhat arematerialto theGroup. Vodacom Group Limited Vodafone Egypt Telecommunications S.A.E1 2023 2022 2023 2022 €m €m €m €m Summary comprehensive income information Revenue 6,314 5,993 1,762 1,814 Profit for the financial year 943 1,002 302 314 Other comprehensive expense 193 (2) – – Total comprehensive income 1,136 1,000 302 314 Other financial information Profit for the financial year allocated to non-controlling interests 348 353 126 141 Dividends paid to non-controlling interests 274 294 68 194 Summary financial position information Non-current assets 6,761 7,253 1,005 1,630 Current assets 3,033 3,123 396 440 Total assets 9,794 10,376 1,401 2,070 Non-current liabilities (2,830) (2,191) (50) (83) Current liabilities (3,153) (3,539) (752) (1,197) Total assets less total liabilities 3,811 4,646 599 790 Equity shareholders’ funds 2,907 3,624 420 474 Non-controlling interests 904 1,022 179 316 Total equity 3,811 4,646 599 790 Statement of cash flows Net cash inflow from operating activities 1,908 1,946 657 755 Net cash outflow from investing activities (840) (666) (173) (284) Net cash outflow from financing activities (1,124) (1,177) (434) (749) Net cash inflow/(outflow) (56) 103 50 (278) Cash and cash equivalents brought forward 1,025 876 72 348 Exchange gain/(loss) on cash and cash equivalents (13) 46 (3) 2 Cash and cash equivalents 956 1,025 119 72 Note: 1 From1April2023,theGroupwillrevise itssegments bymovingVodafoneEgyptfromtheOtherMarketssegmentto theVodacomsegmentto reflectthe effective dateof changesmade to the Group’sinternalreportingstructure,followingthetransferofVodafoneEgyptto theVodacomGroupinDecember2022. Notes totheconsolidatedfinancial statements (continued) 31.Relatedundertakings(continued) 209 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes to theconsolidatedfinancial statements (continued) 32.Subsidiaries exemptfromaudit ThefollowingUKsubsidiarieswilltakeadvantageoftheaudit exemptionsetoutwithinsection479AoftheCompaniesAct 2006fortheyear ended31March2023. Name Registration number Name Registration number Bluefish Communications Limited 5142610 Vodafone Enterprise Europe (UK) Limited 3137479 Cable & Wireless Aspac Holdings Limited 4705342 Vodafone Europe UK 5798451 Cable & Wireless CIS Services Limited 2964774 Vodafone European Investments 3961908 Cable & Wireless Europe Holdings Limited 4659719 Vodafone European Portal Limited 3973442 Cable & Wireless UK Holdings Limited 3840888 Vodafone Finance Management 2139168 Cable & Wireless Worldwide Limited 7029206 Vodafone Finance UK Limited 3922620 Cable & Wireless Worldwide Voice Messaging Limited 1981417 Vodafone Global Content Services Limited 4064873 Cable & Wireless Nominee Limited 3249884 Vodafone Holdings Luxembourg Limited 4200970 Energis (Ireland) Limited NI035793 Vodafone Intermediate Enterprises Limited 3869137 Energis Communications Limited 2630471 Vodafone International Holdings Limited 2797426 Energis Squared Limited 3037442 Vodafone International Operations Limited 2797438 London Hydraulic Power Company (The) ZC000055 Vodafone Investment UK 5798385 MetroHoldings Limited 3511122 Vodafone Investments Limited 1530514 The Eastern Leasing Company Limited 1672832 Vodafone IP Licensing Limited 6846238 Thus Group Holdings Limited SC192666 Vodafone Marketing UK 6858585 Thus Group Limited SC226738 Vodafone Mobile Communications Limited 3942221 Voda Limited 1847509 Vodafone Mobile Enterprises Limited 2373469 Vodafone 2. 4083193 Vodafone Mobile Network Limited 3961482 Vodafone 5 Limited 6688527 Vodafone Nominees Limited 1172051 Vodafone 5 UK 2960479 Vodafone Oceania Limited 3973427 Vodafone 6 UK 8809444 Vodafone Overseas Finance Limited 4171115 Vodafone Americas 4 6389457 Vodafone Panafon UK 6326918 Vodafone Benelux Limited 4200960 Vodafone UK Limited 2227940 Vodafone Consolidated Holdings Limited 5754561 Vodafone Worldwide Holdings Limited 3294074 Vodafone Corporate Secretaries Limited 2357692 Vodafone Yen Finance Limited 4373166 Vodafone Enterprise Corporate Secretaries Limited 2303594 Vodaphone Limited 3961390 Vodafone Enterprise Equipment Limited 1648524 Your Communications Group Limited 4171876 33.Subsequentevents M-PesaHoldingCompany Limited On17April2023,theGroupenteredintoanagreementtosellM-PesaHoldingCompanyLimited(‘MPHCL’)toSafaricomPlc,anassociateentityoftheGroup, forUSD1.MPHCLholdsM-PesacustomerfundsontrustforthebenefitofM-PesacustomersinKenya. BalancesincludedintheGroup’sconsolidated financialstatementsforMPHCLat31March2023includeshortterminvestmentsof€1,247millionand€1,226millionduetoM-Pesacustomers,recorded withinOtherinvestmentsandOther creditors,respectively.Thesesums areshownintheGroup’sconsolidatedfinancialstatementsinaccordancewithIFRS, butMPHCLacts astheindependenttrustee forM-Pesacustomers, independentlyadministeringthetrust andholdingallfundsfromtheM-Pesacustomers ontrustforthebenefitofM-Pesacustomers.AnyprofitgeneratedbyMPHCL, afterdefrayingdirectcosts, isdonatedforuse forpubliccharitablepurposes only.Seenote13‘Otherinvestments’ andnote15‘Tradeandotherpayables’.Nomaterialgainorlossisexpected toariseondisposal.Completionofthis transactionissubjecttovarious approvalswhichareexpectedtobeobtainedbeforeorduringJuly2023. 210 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
211 VodafoneGroup Plc Annual Report 2023 VodafoneUKandThreeUK merger On14June2023,theGroupandCKHutchisonGroupTelecomHoldingsLimited(‘CKHGT’),asubsidiaryofCKHutchisonHoldings Limited(‘CKHutchison’) enteredintobindingagreementstocombine theirUKtelecommunicationbusinesses,respectivelyVodafoneUKandThreeUK. VodafoneUKandThreeUK willbecontributedto‘MergeCo’withdifferentialdebt amounts at completionofthe transactiontoachieveMergeCoownershipof51:49.VodafoneUKwill be contributedwithdebtof£4.3billionandThreeUKwith£1.7billion,subjecttocustomary completionadjustments.Nocashconsiderationwillbepaid. TheGroupandCKHGThaveenteredintoa comprehensivegovernanceframeworkwhichwillresultintheGroupfullyconsolidatingMergeCo. Aput/call frameworkwillenable theGrouptoacquire100%ofMergeCo. Undertheput/callframework,afterthreefinancialyearsfollowingcompletionofthe transactiontheGroupmay acquireCKHGT’s49.0%stakeinMergeCo(the‘CallOption’),andCKHGTmay sellits49.0%stake inMergeCototheGroup(the‘Put Option’).TheconsiderationforCKHGT’s49.0%stakeinMergeCowillbebased onfairmarket value,determinedby anindependentthird-party valuation process. ExerciseoftheCallOptionandPutOptionwillbe subjecttofairmarketvalue reachingaminimumenterprisevalueof£16.5billionforMergeCo(the ‘ExerciseThreshold’).Aftertheseventh financialyearfollowingcompletionofthetransaction,theExerciseThresholdshallnotapply totheexerciseofthePut Option.CompletionundertheCallOptionandthePutOptionwillbe subjecttocustomary third-partyapprovalsand consents. InrespectofboththeCallOptionandthePutOption,theGroupcanelecttopayCKHGTincashand/ornon-cashconsideration(beingnewsharesand convertibleloannotesissuedby theGroup),subjecttocertainconditionsand protectionsforCKHGTasaresultofholdinganysuchnon-cashconsideration. For anynon-cashconsideration,one thirdshallbe settledby theissuanceofnewVodafone sharessubjecttoa capof5%(inthecaseoftheCallOptiononly) oftheenlargedissuedsharecapitaloftheGroup.Theremainderofthenon-cashconsiderationshallbe settledby loannotes.50%willmatureonthe second anniversaryofcompletionoftheCallOptionorthePutOptionandtheresidual50%ofwhichwillmatureonthefourthanniversaryofthe completionofthe CallOptionorPutOption.Onthematuritydates,theGroupshallredeemtheloannotes,basedonamixof cashand/ornewVodafone sharesatitselection. Thetransactionissubjecttocertainregulatory conditions, includingclearancefromtheUK’sCompetitionandMarketsAuthorityandapprovalundertheUK NationalSecurity andInvestmentAct.ApprovalswillalsoberequiredfromboththeGroup’s andCKHutchison’sshareholders. Bondissuances andrepurchases On25May2023,theGroupissuedsubordinateddebtsecurities,underitseuromedium-termnoteprogramme,withnominalamountsof€750millionand £500million(maturingon30August2084and30August2086respectively)andrepurchased€1,561millionand$324millionofoutstandingsubordinated debtsecuritieson6June2023 (maturingon3January2079and3October2078respectively)aspartofaliabilitymanagementexercise. Notes to theconsolidatedfinancial statements (continued) 32.Subsidiaries exemptfromaudit ThefollowingUKsubsidiarieswilltakeadvantageoftheaudit exemptionsetoutwithinsection479AoftheCompaniesAct 2006fortheyear ended31March2023. Name Registration number Name Registration number Bluefish Communications Limited 5142610 Vodafone Enterprise Europe (UK) Limited 3137479 Cable & Wireless Aspac Holdings Limited 4705342 Vodafone Europe UK 5798451 Cable & Wireless CIS Services Limited 2964774 Vodafone European Investments 3961908 Cable & Wireless Europe Holdings Limited 4659719 Vodafone European Portal Limited 3973442 Cable & Wireless UK Holdings Limited 3840888 Vodafone Finance Management 2139168 Cable & Wireless Worldwide Limited 7029206 Vodafone Finance UK Limited 3922620 Cable & Wireless Worldwide Voice Messaging Limited 1981417 Vodafone Global Content Services Limited 4064873 Cable & Wireless Nominee Limited 3249884 Vodafone Holdings Luxembourg Limited 4200970 Energis (Ireland) Limited NI035793 Vodafone Intermediate Enterprises Limited 3869137 Energis Communications Limited 2630471 Vodafone International Holdings Limited 2797426 Energis Squared Limited 3037442 Vodafone International Operations Limited 2797438 London Hydraulic Power Company (The) ZC000055 Vodafone Investment UK 5798385 MetroHoldings Limited 3511122 Vodafone Investments Limited 1530514 The Eastern Leasing Company Limited 1672832 Vodafone IP Licensing Limited 6846238 Thus Group Holdings Limited SC192666 Vodafone Marketing UK 6858585 Thus Group Limited SC226738 Vodafone Mobile Communications Limited 3942221 Voda Limited 1847509 Vodafone Mobile Enterprises Limited 2373469 Vodafone 2. 4083193 Vodafone Mobile Network Limited 3961482 Vodafone 5 Limited 6688527 Vodafone Nominees Limited 1172051 Vodafone 5 UK 2960479 Vodafone Oceania Limited 3973427 Vodafone 6 UK 8809444 Vodafone Overseas Finance Limited 4171115 Vodafone Americas 4 6389457 Vodafone Panafon UK 6326918 Vodafone Benelux Limited 4200960 Vodafone UK Limited 2227940 Vodafone Consolidated Holdings Limited 5754561 Vodafone Worldwide Holdings Limited 3294074 Vodafone Corporate Secretaries Limited 2357692 Vodafone Yen Finance Limited 4373166 Vodafone Enterprise Corporate Secretaries Limited 2303594 Vodaphone Limited 3961390 Vodafone Enterprise Equipment Limited 1648524 Your Communications Group Limited 4171876 33.Subsequentevents M-PesaHoldingCompany Limited On17April2023,theGroupenteredintoanagreementtosellM-PesaHoldingCompanyLimited(‘MPHCL’)toSafaricomPlc,anassociateentityoftheGroup, forUSD1.MPHCLholdsM-PesacustomerfundsontrustforthebenefitofM-PesacustomersinKenya. BalancesincludedintheGroup’sconsolidated financialstatementsforMPHCLat31March2023includeshortterminvestmentsof€1,247millionand€1,226millionduetoM-Pesacustomers,recorded withinOtherinvestmentsandOther creditors,respectively.Thesesums areshownintheGroup’sconsolidatedfinancialstatementsinaccordancewithIFRS, butMPHCLacts astheindependenttrustee forM-Pesacustomers, independentlyadministeringthetrust andholdingallfundsfromtheM-Pesacustomers ontrustforthebenefitofM-Pesacustomers.AnyprofitgeneratedbyMPHCL, afterdefrayingdirectcosts, isdonatedforuse forpubliccharitablepurposes only.Seenote13‘Otherinvestments’ andnote15‘Tradeandotherpayables’.Nomaterialgainorlossisexpected toariseondisposal.Completionofthis transactionissubjecttovarious approvalswhichareexpectedtobeobtainedbeforeorduringJuly2023. 211 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
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Non-GAAPmeasures Unaudited information 219 VodafoneGroup Plc Annual Report 2023 In the discussion of the Group’sreported operating results, non-GAAP measures are presented to provide readers with additional financial information thatisregularly reviewed by management. This additional information presented is not uniformly defined by all companiesincluding those in the Group’sindustry. Accordingly, itmay not be comparable with similarly titled measures and disclosures by other companies. Additionally, certain information presented is derived from amounts calculated in accordance with IFRS butis not itself a measure defined under GAAP. Such measuresshould not be viewed in isolation or as an alternative to the equivalent GAAP measure. The non-GAAP measures discussed in this document are listed below. Non-GAAP measure Defined on page Closest equivalent GAAP measure Reconciled on page Performance metrics Organic Adjusted EBITDAaL growth Page 220 Not applicable − Organic revenue growth Page 220 Revenue Pages 221 and 222 Organic Group service revenue growth excluding Turkey Page 220 Service revenue Pages 221 and 222 Organic service revenue growth Page 220 Service revenue Pages 221 and 222 Organic mobile service revenue growth Page 220 Service revenue Pages 221 and 222 Organic fixed service revenue growth Page 220 Service revenue Pages 221 and 222 Organic Vodafone Business service revenue growth Page 220 Service revenue Pages 221 and 222 Organic financial services revenue growth in South Africa Page 220 Service revenue Pages 221 and 222 Financing metrics Adjusted net financing costs Page 22 Net financing costs Page 22 218 VodafoneGroup Plc Annual Report 2023 2020 This page isintentionally left blank. 219 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Unaudited information 220 VodafoneGroup Plc Annual Report 2023 Performancemetrics Organic growth All amounts marked with an ‘*’ in this documentrepresent organic growth which presents performance on a comparable basis, excluding the impact of foreign exchange rates, mergers and acquisitions, the hyperinflation adjustmentsin Turkey and other adjustmentsto improve the comparability ofresults between periods. Organic growth is calculated for revenue and profitability metrics, asfollows1 : − Adjusted EBITDAaL; − Revenue; − Group service revenue excluding Turkey2 ; − Service revenue; − Mobile service revenue; − Fixed service revenue; − Vodafone Businessservice revenue; and − Financialservicesrevenue in South Africa. Whilst organic growth is notintended to be a substitute for reported growth, nor isitsuperior to reported growth, we believe thatthe measure provides useful and necessary information to investors and other interested partiesfor the following reasons: − It provides additional information on underlying growth of the businesswithoutthe effect of certain factors unrelated to its operating performance; − Itis used for internal performance analysis; and − Itfacilitates comparability of underlying growth with other companies(although the term ‘organic’ is not a defined term under GAAP and may not, therefore, be comparable with similarly-titled measuresreported by other companies). We have not provided a comparative in respect of organic growth rates asthe current rates describe the change between the beginning and end of the current period,with such changes being explained by the commentary in this document. If comparativeswere provided,significantsections of the commentary for prior periodswould also need to be included,reducing the usefulness and transparency of this document. Notes: 1 Organic growth in retailservice revenue in Germany, a non-GAAP metric, is no longerreported.Other performance metrics are consideredmore relevantfor performance commentary. 2 Thisis a newnon-GAAP measure for FY23 and has been included because ofthe hyperinflationary environmentin Turkey. 220 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
221 VodafoneGroup Plc Annual Report 2023 Reported M&A and Foreign Organic FY23 FY22 growth Other exchange growth* €m €m % pps pps % Year ended 31 March 2023 Service revenue1 Germany 11,433 11,616 (1.6) – – (1.6) Mobile service revenue 5,060 5,124 (1.2) – – (1.2) Fixed service revenue 6,373 6,492 (1.8) – – (1.8) Italy 4,251 4,379 (2.9) – – (2.9) Mobile service revenue 2,972 3,141 (5.4) – – (5.4) Fixed service revenue 1,279 1,238 3.3 – – 3.3 UK 5,358 5,154 4.0 – 1.6 5.6 Mobile service revenue 3,928 3,697 6.2 – 1.8 8.0 Fixed service revenue 1,430 1,457 (1.9) – 1.6 (0.3) Spain 3,514 3,714 (5.4) – – (5.4) Other Europe 5,005 5,001 0.1 2.1 0.6 2.8 Vodacom 4,849 4,635 4.6 – (1.1) 3.5 Other Markets 3,300 3,420 (3.5) (2.2) 36.4 30.7 Common Functions 530 522 Eliminations (271) (238) Total service revenue 37,969 38,203 (0.6) 0.2 2.6 2.2 Other revenue 7,737 7,377 Revenue 45,706 45,580 0.3 - 2.7 3.0 Other growth metrics Group service revenue excluding Turkey 36,563 36,773 (0.6) 0.3 1.3 1.0 Vodafone Turkey - Service revenue 1,440 1,460 (1.4) (7.2) 56.2 47.6 Vodafone Business - Service revenue 10,332 10,316 0.2 0.7 1.7 2.6 South Africa - Financial services revenue 167 155 7.7 – 2.9 10.6 Adjusted EBITDAaL Germany 5,323 5,669 (6.1) – – (6.1) Italy 1,453 1,699 (14.5) – – (14.5) UK 1,350 1,395 (3.2) – 1.8 (1.4) Spain 947 957 (1.0) (0.1) – (1.1) Other Europe 1,632 1,606 1.6 2.5 0.6 4.7 Vodacom 2,159 2,125 1.6 – (0.2) 1.4 Other Markets 1,145 1,335 (14.2) 6.7 29.7 22.2 Vantage Towers 795 619 28.4 (21.0) 0.5 7.9 Percentage point change in Adjusted EBITDAaL margin Germany 40.6% 43.2% (2.6) – – (2.6) Italy 30.2% 33.8% (3.6) – – (3.6) UK 19.8% 21.2% (1.4) – 0.1 (1.3) Spain 24.2% 22.9% 1.3 – – 1.3 Other Europe 28.4% 28.4% - – – - Vodacom 34.2% 35.5% (1.3) – 0.1 (1.2) Other Markets 29.9% 34.9% (5.0) 2.3 (1.1) (3.8) Vantage Towers 59.4% 49.4% 10.0 (9.7) (0.1) 0.2 Note: 1 Priorto disposal, Vantage Towersrevenue wasreported by theGroup as otherrevenue, notservice revenue. Unaudited information 220 VodafoneGroup Plc Annual Report 2023 Performancemetrics Organic growth All amounts marked with an ‘*’ in this documentrepresent organic growth which presents performance on a comparable basis, excluding the impact of foreign exchange rates, mergers and acquisitions, the hyperinflation adjustmentsin Turkey and other adjustmentsto improve the comparability ofresults between periods. Organic growth is calculated for revenue and profitability metrics, asfollows1 : − Adjusted EBITDAaL; − Revenue; − Group service revenue excluding Turkey2 ; − Service revenue; − Mobile service revenue; − Fixed service revenue; − Vodafone Businessservice revenue; and − Financialservicesrevenue in South Africa. Whilst organic growth is notintended to be a substitute for reported growth, nor isitsuperior to reported growth, we believe thatthe measure provides useful and necessary information to investors and other interested partiesfor the following reasons: − It provides additional information on underlying growth of the businesswithoutthe effect of certain factors unrelated to its operating performance; − Itis used for internal performance analysis; and − Itfacilitates comparability of underlying growth with other companies(although the term ‘organic’ is not a defined term under GAAP and may not, therefore, be comparable with similarly-titled measuresreported by other companies). We have not provided a comparative in respect of organic growth rates asthe current rates describe the change between the beginning and end of the current period,with such changes being explained by the commentary in this document. If comparativeswere provided,significantsections of the commentary for prior periodswould also need to be included,reducing the usefulness and transparency of this document. Notes: 1 Organic growth in retailservice revenue in Germany, a non-GAAP metric, is no longerreported.Other performance metrics are consideredmore relevantfor performance commentary. 2 Thisis a newnon-GAAP measure for FY23 and has been included because ofthe hyperinflationary environmentin Turkey. 221 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
222 VodafoneGroup Plc Annual Report 2023 Reported M&A and Foreign Organic Q4 FY23 Q4 FY22 growth Other exchange growth* €m €m % pps pps % Quarter ended 31 March 2023 Service revenue1 Germany 2,821 2,903 (2.8) (0.0) – (2.8) Mobile service revenue 1,235 1,282 (3.7) 0.0 – (3.7) Fixed service revenue 1,586 1,621 (2.2) 0.1 – (2.1) Italy 1,055 1,085 (2.8) 0.1 – (2.7) Mobile service revenue 715 758 (5.7) 0.3 – (5.4) Fixed service revenue 340 327 4.0 (0.4) – 3.6 UK 1,319 1,341 (1.6) – 5.4 3.8 Mobile service revenue 948 972 (2.5) – 5.3 2.8 Fixed service revenue 371 369 0.5 – 5.8 6.3 Spain 874 908 (3.7) 0.0 - (3.7) Other Europe 1,178 1,242 (5.2) 8.6 0.2 3.6 Vodacom 1,143 1,192 (4.1) - 6.7 2.6 Other Markets 777 801 (3.0) (12.0) 55.0 40.0 Common Functions 128 134 Eliminations (53) (60) Total service revenue 9,242 9,546 (3.2) 0.4 4.7 1.9 Other revenue 1,896 1,861 Revenue 11,138 11,407 (2.4) 0.3 4.7 2.6 Other growth metrics Group service revenue excluding Turkey 8,821 9,262 (4.8) 1.2 4.1 0.5 Vodafone Turkey - Service revenue 430 290 48.3 (33.5) 43.5 58.3 Vodafone Business - Service revenue 2,582 2,626 (1.7) 1.0 3.6 2.9 South Africa - Financial services revenue 40 40 – – 14.2 14.2 Reported M&A and Foreign Organic Q3 FY23 Q3 FY22 growth Other exchange growth* €m €m % pps pps % Quarter ended 31 December 2022 Service revenue1 Germany 2,882 2,936 (1.8) – – (1.8) Mobile service revenue 1,279 1,301 (1.7) – – (1.7) Fixed service revenue 1,603 1,635 (2.0) – – (2.0) Italy 1,071 1,107 (3.3) – – (3.3) Mobile service revenue 750 794 (5.5) (0.2) – (5.7) Fixed service revenue 321 313 2.6 0.1 – 2.7 UK 1,327 1,292 2.7 – 2.6 5.3 Mobile service revenue 977 928 5.3 – 2.8 8.1 Fixed service revenue 350 364 (3.8) – 2.2 (1.6) Spain 858 940 (8.7) – – (8.7) Other Europe 1,275 1,257 1.4 – 0.7 2.1 Vodacom 1,234 1,172 5.3 – (1.8) 3.5 Other Markets 802 867 (7.5) 4.0 37.6 34.1 Common Functions 134 136 Eliminations (63) (60) Total service revenue 9,520 9,647 (1.3) 0.3 2.8 1.8 Other revenue 2,118 2,037 Revenue 11,638 11,684 (0.4) 0.3 2.8 2.7 Other growth metrics Group service revenue excluding Turkey 9,193 9,299 (1.1) – 1.6 0.5 Vodafone Turkey - Service revenue 334 355 (5.9) 10.6 48.2 52.9 Vodafone Business - Service revenue 2,602 2,604 (0.1) 0.5 2.0 2.4 South Africa - Financial services revenue 45 39 15.4 (3.3) 0.4 12.5 Note: 1 Priorto disposal, Vantage Towersrevenue wasreported by theGroup as otherrevenue, notservice revenue. 222 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
223 VodafoneGroup Plc Annual Report 2023 This page isintentionally left blank. 222 VodafoneGroup Plc Annual Report 2023 Reported M&A and Foreign Organic Q4 FY23 Q4 FY22 growth Other exchange growth* €m €m % pps pps % Quarter ended 31 March 2023 Service revenue1 Germany 2,821 2,903 (2.8) (0.0) – (2.8) Mobile service revenue 1,235 1,282 (3.7) 0.0 – (3.7) Fixed service revenue 1,586 1,621 (2.2) 0.1 – (2.1) Italy 1,055 1,085 (2.8) 0.1 – (2.7) Mobile service revenue 715 758 (5.7) 0.3 – (5.4) Fixed service revenue 340 327 4.0 (0.4) – 3.6 UK 1,319 1,341 (1.6) – 5.4 3.8 Mobile service revenue 948 972 (2.5) – 5.3 2.8 Fixed service revenue 371 369 0.5 – 5.8 6.3 Spain 874 908 (3.7) 0.0 - (3.7) Other Europe 1,178 1,242 (5.2) 8.6 0.2 3.6 Vodacom 1,143 1,192 (4.1) - 6.7 2.6 Other Markets 777 801 (3.0) (12.0) 55.0 40.0 Common Functions 128 134 Eliminations (53) (60) Total service revenue 9,242 9,546 (3.2) 0.4 4.7 1.9 Other revenue 1,896 1,861 Revenue 11,138 11,407 (2.4) 0.3 4.7 2.6 Other growth metrics Group service revenue excluding Turkey 8,821 9,262 (4.8) 1.2 4.1 0.5 Vodafone Turkey - Service revenue 430 290 48.3 (33.5) 43.5 58.3 Vodafone Business - Service revenue 2,582 2,626 (1.7) 1.0 3.6 2.9 South Africa - Financial services revenue 40 40 – – 14.2 14.2 Reported M&A and Foreign Organic Q3 FY23 Q3 FY22 growth Other exchange growth* €m €m % pps pps % Quarter ended 31 December 2022 Service revenue1 Germany 2,882 2,936 (1.8) – – (1.8) Mobile service revenue 1,279 1,301 (1.7) – – (1.7) Fixed service revenue 1,603 1,635 (2.0) – – (2.0) Italy 1,071 1,107 (3.3) – – (3.3) Mobile service revenue 750 794 (5.5) (0.2) – (5.7) Fixed service revenue 321 313 2.6 0.1 – 2.7 UK 1,327 1,292 2.7 – 2.6 5.3 Mobile service revenue 977 928 5.3 – 2.8 8.1 Fixed service revenue 350 364 (3.8) – 2.2 (1.6) Spain 858 940 (8.7) – – (8.7) Other Europe 1,275 1,257 1.4 – 0.7 2.1 Vodacom 1,234 1,172 5.3 – (1.8) 3.5 Other Markets 802 867 (7.5) 4.0 37.6 34.1 Common Functions 134 136 Eliminations (63) (60) Total service revenue 9,520 9,647 (1.3) 0.3 2.8 1.8 Other revenue 2,118 2,037 Revenue 11,638 11,684 (0.4) 0.3 2.8 2.7 Other growth metrics Group service revenue excluding Turkey 9,193 9,299 (1.1) – 1.6 0.5 Vodafone Turkey - Service revenue 334 355 (5.9) 10.6 48.2 52.9 Vodafone Business - Service revenue 2,602 2,604 (0.1) 0.5 2.0 2.4 South Africa - Financial services revenue 45 39 15.4 (3.3) 0.4 12.5 Note: 1 Priorto disposal, Vantage Towersrevenue wasreported by the Group as otherrevenue, notservice revenue. 223 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
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Shareholder information 2022/23 financial calendar key dates Ex-dividend date for final dividend 8 June 2023 Record date for final dividend 9 June 2023 AGM 25 July 2023 Final dividend payment 4 August 2023 Useful contacts The Registrar Equiniti Aspect House Spencer Road Lancing West Sussex BN99 6DA Telephone: +44 (0) 371 384 2532 See help.shareview.co.uk for more information about this service ADS holders EQ Shareowner Services P.O. Box 64504 St. Paul, MN 55164-0504 United States of America Telephone: +1 800 990 1135 (toll free) or, for calls from outside the United States: +1 651 453 2128 See shareowneronline.com for more information about this service Shareholder information Managing your shares via Shareview Our share Registrar, Equiniti, operates a portfolio service, Shareview, for investors in ordinary shares. This provides our shareholders with online access to information about their investments as well as a facility to help manage their holdings online, such as being able to: – update your details online including your address and dividend payment instructions; – buy and sell shares easily; – receive certain shareholder communications electronically; – send your general meeting voting instructions in advance of shareholder meetings; – view information about and join the Vodafone Group Plc Dividend Reinvestment Plan (‘DRIP’); and – access your online statements. Equiniti also offers an internet and telephone share dealing service to existing shareholders. See shareview.co.uk for more information about this service Shareholders with any queries regarding their holding should contact Equiniti on the contact details above. Shareholders may also find the investors section of our corporate website useful for general queries and information about the Company. See vodafone.com/investor for further details AGM Our thirty-ninth AGM will be held at The Pavilion, Vodafone House, Newbury RG14 2FN on Tuesday, 25 July 2023 at 10.00 am. Shareholder communications We are taking significant steps to reduce our impact on our planet. The use of electronic communications, rather than printed paper documents, means information about the Company can be accessed through emails or the Company’s website, thus reducing our impact on the environment. A growing number of our shareholders have opted to receive communications from us electronically. Shareholders who have done so will be sent an email alert containing a link to the relevant documents. We encourage all our shareholders to sign up for this service. You can register for this service at www.shareview.co.uk or by contacting Equiniti on the telephone number provided on the left of this page. See vodafone.com/investor for further information about this service ShareGift We support ShareGift, the charity share donation scheme (registered charity number 1052686). Through ShareGift, shareholders who have only a very small number of shares, which might be considered uneconomic to sell, are able to donate them to charity. Donated shares are aggregated and sold by ShareGift with the proceeds being passed on to a wide range of UK charities. See sharegift.org or call +44 (0)20 7930 3737 for further details. Warning to shareholders (‘boiler room’ scams) Over recent years we have become aware of investors who have received unsolicited calls or correspondence, in some cases purporting to have been issued by us, concerning investment matters. These callers typically make claims of highly profitable investment opportunities which turn out to be worthless or simply do not exist. These approaches are usually made by unauthorised companies and individuals and are commonly known as ’boiler room’ scams. Investors are advised to be wary of any unsolicited advice or offers to buy shares. If it sounds too good to be true, it often is. See the FCA website at fca.org.uk/scamsmart for more detailed information about this or similar activities Dividends Read more on the dividend amount per share on pages 25 and 218. Euro dividends Dividends are declared in euros to align with the functional currency of the Company, and paid in euros and pounds sterling according to where the shareholder is resident. Cash dividends to ADS holders are paid by the ADS depositary bank in US dollars. The foreign exchange rates at which dividends declared in euros are converted into pounds sterling and US dollars are calculated based on the average exchange rate of the five business days during the week prior to the payment of the dividend. Payment of dividends by direct credit We pay cash dividends directly to shareholders’ bank or building society accounts. This ensures secure delivery and means dividend payments are credited to shareholders’ designated accounts on the same day as payment. A dividend confirmation covering both the interim and final dividends paid during the financial year is sent to shareholders at the time of the interim dividend in February. ADS holders may choose to have their cash dividends paid by cheque from our ADS depositary bank, J.P. Morgan. 230 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Dividend reinvestment plan We offer a dividend reinvestment plan which allows holders of ordinary shares who choose to participate to use their cash dividends to acquire additional shares in the Company. These are purchased on their behalf by the plan administrator, Equiniti, through a low-cost dealing arrangement. For ADS holders, J.P. Morgan, through its transfer agent, EQ Shareowner Services, maintains the Global Invest Direct Program which is a direct purchase and sale plan for depositary receipts with a dividend reinvestment facility. See vodafone.com/dividends for further information about dividend payments Contact information for Equiniti and EQ Shareowner Services can be found on page 230 Taxation of dividends See page 234 for details on dividend taxation. Shareholders as at 31 March 2023 Number of ordinary shares Number of accounts % of total of issued shares 1-1,000 19,852 0.02 1,001-5,000 9,555 0.08 5,001-50,000 4,262 0.19 50,001-100,000 291 0.07 100,001-500,000 478 0.39 More than 500,000 984 99.25 Major shareholders As at 15 June 2023, J.P. Morgan, as custodian of our ADR programme, held approximately 14% of our ordinary shares of 2020/21 US cents each as nominee. At this date, the total number of ADRs outstanding was 376,603,653. As at 15 June 2023, 1,139 holders of ordinary shares had registered addresses in the United States and held a total of approximately 0.01% of the ordinary shares of the Company. As at 31 March 2023, the following voting rights and percentage interests in the ordinary share capital of the Company, disclosable under the Disclosure Guidance and Transparency Rule (‘DTR’) 5, had been notified to the Directors. Shareholder Voting rights Shareholding1 Emirates Telecommunications Group Company PJSC (‘e&’) 3,790,743,685 14.006097% BlackRock, Inc. 1,991,684,369 7.06% Liberty Global plc 1,335,000,000 4.92% Norges Bank 803,179,853 3.0004% 1. The percentage of voting rights detailed above was calculated at the time of the relevant disclosures made in accordance with DTR 5. On 24 April 2023, e& and two of its affiliates reported a total shareholding in Vodafone of 14.61% as of 12 April 2023 in a Schedule 13D filing with the SEC. Except as disclosed in e&’s Schedule 13D filing, the Company is not aware of any other changes in the interests disclosed under DTR 5 between 31 March 2023 and 15 June 2023. As far as the Company is aware, between 1 April 2020 and 15 June 2023, no shareholder, other than described above, held 3% or more of the voting rights attributable to the ordinary shares of the Company other than (i) J.P. Morgan, as custodian of our ADR program, (ii) e&, BlackRock, Inc., Liberty Global plc and Norges Bank (as described above) and (iii) Morgan Stanley, which owned 3.6% of the Company’s ordinary shares at 13 February 2018. The rights attaching to the ordinary shares of the Company held by these shareholders are identical in all respects to the rights attaching to all the ordinary shares of the Company. As at 15 June 2023, the Directors are not aware of any other interest of 3% or more in the ordinary share capital of the Company. The Company is not directly or indirectly owned or controlled by any foreign government or any other legal entity. There are no arrangements known to the Company that could result in a change of control of the Company. Other information Articles of Association and applicable English law The following description summarises certain provisions of the Company’s Articles of Association and applicable English law. This summary is qualified in its entirety by reference to the Companies Act 2006 and the Company’s Articles of Association. The Company is a public limited company under the laws of England and Wales. The Company is registered in England and Wales under the name Vodafone Group Public Limited Company with the registration number 1833679. Full details of where copies of the Articles of Association can be obtained are detailed on page 233 under ‘Documents on display’ All of the Company’s ordinary shares are fully paid. Accordingly, no further contribution of capital may be required by the Company from the holders of such shares. English law specifies that any alteration to the Articles of Association must be approved by a special resolution of the Company’s shareholders. Articles of Association The Company’s Articles of Association do not specifically restrict the objects of the Company. Directors The Directors are empowered under the Articles of Association to exercise all the powers of the Company subject to any restrictions in the Articles of Association, the Companies Act 2006 (as defined in the Articles of Association) and any special resolution. Under the Company’s Articles of Association a Director cannot vote in respect of any proposal in which the Director, or any person connected with the Director, has a material interest other than by virtue of the Director’s interest in the Company’s shares or other securities. However, this restriction on voting does not apply in certain circumstances as set out in the Articles of Association. The Directors are empowered to exercise all the powers of the Company to borrow money, subject to the limitation that the aggregate amount of all liabilities and obligations of the Group outstanding at any time shall not exceed an amount equal to 1.5 times the aggregate of the Group’s share capital and reserves calculated in the manner prescribed in the Articles of Association unless sanctioned by an ordinary resolution of the Company’s shareholders. Purchase of own shares The Company can make market purchases of its own shares or agree to do so in the future provided it is duly authorised by its members in a general meeting and subject to and in accordance with section 701 of the Companies Act 2006. Such authority was given at the 2022 AGM. On 9 March 2022, the Company announced the first tranche of the irrevocable and non-discretionary share buy-back programme as a result of the maturing of the first tranche of the mandatory convertible bond (‘MCB’), as announced on 19 March 2021, had concluded. Following the maturing of the second tranche of the MCB, the Company announced that a new irrevocable and non-discretionary share buy-back programme would commence on 17 March 2022. In order to satisfy the conversion of the second tranche of the MCB, 1,518,629,693 shares were issued from existing shares held in treasury. Between 17 March 2022 and 15 November 2022, Vodafone undertook an irrevocable and non-discretionary share buy-back programme to reduce the issued share capital of Vodafone to partially offset the increase in the issued share capital as a result of the maturing of the second tranche of the MCB. On 16 November 2022, the Company announced that a new irrevocable and non-discretionary share buy-back programme (the ‘New Programme’) 231 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
would commence. The sole purpose of the New Programme was to further reduce the issued share capital of the Company to offset the increase in the issued share capital as a result of the maturing of the second tranche of the MCB. Following the completion of the New Programme on 15 March 2023, the increase in the issued share capital as a result of the maturing of the second tranche of the MCB has been fully offset. The total number of shares purchased to offset the maturing of the second tranche of the MCB was below the number permitted to be purchased by the Company pursuant to the authority granted by the shareholders at the 2022 AGM. Read more about the programme on page 25 At each AGM all Directors, who are to remain on the Board, shall offer themselves for election or re-election, as applicable, in accordance with the Company’s Articles of Association and in the interests of good corporate governance. Directors are not required under the Company’s Articles of Association to hold any shares of the Company as a qualification to act as a Director, although the Executive Directors are required to under the Company’s Remuneration Policy. Read more on the Remuneration Policy on pages 87-91 Rights attaching to the Company’s shares At 31 March 2023, the issued share capital and percentage of total share capital represented by each share class of the Company was as follows. Number Percentage Preference shares 50,000 0.0002% Ordinary shares (excluding treasury shares) 26,992,564,629 93.6646% Treasury shares 1,825,691,429 6.3352% Ordinary shares (total) 28,818,256,058 99.9998% Total shares (preference and ordinary) 28,818,306,058 100.0000% Dividend rights Holders of 7% cumulative fixed rate shares are entitled to be paid in respect of each financial year, or other accounting period of the Company, a fixed cumulative preferential dividend of 7% p.a. on the nominal value of the fixed rate shares. A fixed cumulative preferential dividend may only be paid out of available distributable profits which the Directors have resolved should be distributed. The fixed rate shares do not have any other right to share in the Company’s profits. Holders of the Company’s ordinary shares may, by ordinary resolution, declare dividends but may not declare dividends in excess of the amount recommended by the Directors. The Board of Directors may also pay interim dividends. No dividend may be paid other than out of profits available for distribution. Dividends on ordinary shares can be paid to shareholders in whatever currency the Directors decide, using an appropriate exchange rate for any currency conversions which are required. If a dividend has not been claimed for one year after the date of the resolution passed at a general meeting declaring that dividend or the resolution of the Directors providing for payment of that dividend, the Directors may invest the dividend or use it in some other way for the benefit of the Company until the dividend is claimed. If the dividend remains unclaimed for 12 years after the relevant resolution either declaring that dividend or providing for payment of that dividend, it will be forfeited and belong to the Company. Voting rights At a general meeting of the Company, when voting on substantive resolutions (i.e. any resolution which is not a procedural resolution) each shareholder who is entitled to vote and is present in person or by proxy has one vote for every share held (a poll vote). Procedural resolutions (such as a resolution to adjourn a general meeting or a resolution on the choice of Chair of a general meeting) shall be decided on a show of hands, where each shareholder who is present at the meeting has one vote regardless of the number of shares held, unless a poll is demanded. Shareholders entitled to vote at general meetings may appoint proxies who are entitled to vote, attend and speak at general meetings. Two shareholders present in person or by proxy constitute a quorum for purposes of a general meeting of the Company. Under English law, shareholders of a public company such as the Company are not permitted to pass resolutions by written consent. Record holders of the Company’s ADSs are entitled to attend, speak and vote on a poll or a show of hands at any general meeting of the Company’s shareholders by the depositary’s appointment of them as corporate representatives or proxies with respect to the underlying ordinary shares represented by their ADSs. Alternatively, holders of ADSs are entitled to vote by supplying their voting instructions to the depositary or its nominee who will vote the ordinary shares underlying their ADSs in accordance with their instructions. Holders of the Company’s ADSs are entitled to receive notices of shareholders’ meetings under the terms of the deposit agreement relating to the ADSs. Employees who hold vested shares on EquatePlus account are able to vote by submitting instructions online through the EquatePlus platform. Note there are two vested share accounts with Computershare (SPA, in respect of shares arising from a SAYE exercise, and MyShareBank, in respect of vested shares from the Global Incentive Plan). Holders of the Company’s 7% cumulative fixed rate shares are only entitled to vote on any resolution to vary or abrogate the rights attached to the fixed rate shares. Holders have one vote for every fully paid 7% cumulative fixed rate share. Liquidation rights In the event of the liquidation of the Company, after payment of all liabilities and deductions in accordance with English law, the holders of the Company’s 7% cumulative fixed rate shares would be entitled to a sum equal to the capital paid up on such shares, together with certain dividend payments, in priority to holders of the Company’s ordinary shares. The holders of the fixed rate shares do not have any other right to share in the Company’s surplus assets. Pre-emptive rights and new issues of shares Under section 549 of the Companies Act 2006 Directors are, with certain exceptions, unable to allot the Company’s ordinary shares or securities convertible into the Company’s ordinary shares without the authority of the shareholders in a general meeting. In addition, section 561 of the Companies Act 2006 imposes further restrictions on the issue of equity securities (as defined in the Companies Act 2006 and which include the Company’s ordinary shares and securities convertible into ordinary shares) which are, or are to be, paid up wholly in cash and not first offered to existing shareholders. The Company’s Articles of Association allow shareholders to authorise Directors for a period specified in the relevant resolution to allot (i) relevant securities generally up to an amount fixed by the shareholders; and (ii) equity securities for cash other than in connection with a pre-emptive offer up to an amount specified by the shareholders and free of the pre-emption restriction in section 561. At the 2022 AGM the amount of relevant securities fixed by shareholders under (i) above and the amount of equity securities specified by shareholders under (ii) above were in line with the Pre-Emption Group’s Statement of Principles. Further details of such proposals are provided in the 2023 Notice of AGM. Shareholder information (continued) 232 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Disclosure of interests in the Company’s shares There are no provisions in the Articles of Association whereby persons acquiring, holding or disposing of a certain percentage of the Company’s shares are required to make disclosure of their ownership percentage although such requirements exist under the DTRs. General meetings and notices Subject to the Articles of Association, AGMs are held at such times and place as determined by the Directors of the Company. The Directors may also, when they think fit, convene other general meetings of the Company. General meetings may also be convened on requisition as provided by the Companies Act 2006. An AGM is required to be called on not less than 21 days’ notice in writing. Subject to obtaining shareholder approval on an annual basis, the Company may call other general meetings on 14 days’ notice. The Directors may determine that persons entitled to receive notices of meetings are those persons entered on the register at the close of business on a day determined by the Directors but not later than 21 days before the date the relevant notice is sent. The notice may also specify the record date, the time of which shall be determined in accordance with the Articles of Association and the Companies Act 2006. Under section 336 of the Companies Act 2006, the AGM must be held each calendar year and within six months of the Company’s year end. Variation of rights If at any time the Company’s share capital is divided into different classes of shares, the rights attached to any class may be varied, subject to the provisions of the Companies Act 2006, either with the consent in writing of the holders of three quarters in nominal value of the shares of that class or at a separate meeting of the holders of the shares of that class. At every such separate meeting all of the provisions of the Articles of Association relating to proceedings at a general meeting apply, except that (i) the quorum is to be the number of persons (which must be at least two) who hold or represent by proxy not less than one third in nominal value of the issued shares of the class or, if such quorum is not present at an adjourned meeting, one person who holds shares of the class regardless of the number of shares he holds; (ii) any person present in person or by proxy may demand a poll; and (iii) each shareholder will have one vote per share held in that particular class in the event a poll is taken. Class rights are deemed not to have been varied by the creation or issue of new shares ranking equally with or subsequent to that class of shares in sharing in profits or assets of the Company or by a redemption or repurchase of the shares by the Company. Limitations on transfer, voting and shareholding As far as the Company is aware there are no limitations imposed on the transfer, holding or voting of the Company’s ordinary shares other than those limitations that would generally apply to all of the shareholders, those that apply by law (e.g. due to insider dealing rules) or those that apply as a result of failure to comply with a notice under section 793 of the Companies Act 2006. No shareholder has any securities carrying special rights with regard to control of the Company. The Company is not aware of any agreements between holders of securities that may result in restrictions on the transfer of securities. Documents on display The Company is subject to the information requirements of the Exchange Act applicable to foreign private issuers. In accordance with these requirements the Company files its Annual Report on Form 20-F and other related documents with the SEC. These documents may be inspected at the SEC’s public reference rooms located at 100 F Street, NE Washington, DC 20549. Information on the operation of the public reference room can be obtained in the United States by calling the SEC on +1-800-SEC-0330. In addition, some of the Company’s SEC filings, including all those filed on or after 4 November 2002, are available on the SEC’s website at sec.gov. Click to download a copy of the Company’s Articles of Association. Copies can also be obtained from the Company’s registered office Material contracts At the date of this Annual Report the Group is not party to any contracts that are considered material to its results or operations except for: – its EUR 3,840,000,000 (as increased to EUR 3,990,000,000) and USD 3,935,000,000 (as increased to USD 4,004,000,000) revolving credit facilities which are discussed in note 21 ‘Borrowings’ to the consolidated statements; – the Contribution and Transfer Agreement dated 31 December 2016, as amended, relating to the contribution and/or transfer of shares in Ziggo Group Holding B.V. and Vodafone Libertel B.V. to Lynx Global Europe II B.V. and the formation of the Netherlands joint venture; – the Implementation Agreement dated 20 March 2017, as amended, relating to the combination of the Indian mobile telecommunications businesses of Vodafone Group and Idea Group as detailed in note 27 ‘Acquisitions and disposals’ to the consolidated financial statements; – the Deed of Merger dated 31 March 2020 relating to the combination of Vodafone Italy’s towers with INWIT’s passive network infrastructure; – the Investment Agreement dated 9 November 2022, as amended, and Shareholders’ Agreement dated 22 March 2023, by which Vodafone established a co-control partnership for Vantage Towers AG with a consortium of long-term infrastructure investors led by Global Infrastructure Partners and KKR; – the Relationship Agreement entered into with Emirates Telecommunications Group Company PJSC (“e&”) on 11 May 2023, relating to (i) the proposed appointment of up to two individuals nominated by e& as non-executive directors to the Board of Vodafone Group Plc and (ii) the ongoing relationship between e& and the Company; and – the Contribution Agreement dated 14 June 2023, between, inter alia, Vodafone and CK Hutchison Holdings Limited in relation to a combination of their UK telecommunication businesses, respectively Vodafone UK and Three UK. Exchange controls There are no UK Government laws, decrees or regulations that restrict or affect the export or import of capital including, but not limited to, foreign exchange controls on remittance of dividends on the ordinary shares or on the conduct of the Group’s operations. Taxation As this is a complex area, investors should consult their own tax adviser regarding the US federal, state and local, the UK and other tax consequences of owning and disposing of shares and ADSs in their particular circumstances. This section describes, primarily for a US holder (as defined below), in general terms, the principal US federal income tax and UK tax consequences of owning or disposing of shares or ADSs in the Company held as capital assets (for US and UK tax purposes). This section does not, however, cover the tax consequences for members of certain classes of holders subject to special rules including, for example, US expatriates and former long-term residents of the United States; officers and employees of the Company; holders that, directly, indirectly or by attribution, hold 5% or more of the Company’s stock (by vote or value); financial institutions; insurance companies; individual retirement accounts and other tax-deferred accounts; tax-exempt organisations; dealers in securities or currencies; investors that will hold shares or ADSs as part of straddles, hedging transactions or conversion transactions for US federal 233 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
income tax purposes; investors holding shares or ADSs in connection with a trade or business conducted outside of the US; or US holders whose functional currency is not the US dollar. A US holder is a beneficial owner of shares or ADSs that is for US federal income tax purposes: – an individual citizen or resident of the United States; – a US domestic corporation; – an estate, the income of which is subject to US federal income tax regardless of its source; or – a trust, if a US court can exercise primary supervision over the trust’s administration and one or more US persons are authorised to control all substantial decisions of the trust, or the trust has validly elected to be treated as a domestic trust for US federal income tax purposes. If an entity or arrangement treated as a partnership for US federal income tax purposes holds the shares or ADSs, the US federal income tax treatment of a partner in such partnership will generally depend on the status of the partner and the tax treatment of the partnership. Holders that are entities or arrangements treated as partnerships for US federal income tax purposes should consult their tax advisers concerning the US federal income tax consequences to them and their partners of the ownership and disposition of shares or ADSs by the partnership. This section is based on the US Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations thereunder, published rulings and court decisions, and on the tax laws of the UK, the Double Taxation Convention between the United States and the UK (the ‘treaty’) and current HM Revenue and Customs (‘HMRC’) practice, all as of the date hereof. These laws and such practice are subject to change, possibly on a retroactive basis. This section is further based in part upon the representations of the depositary and assumes that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms. For the purposes of the treaty and the US-UK double taxation convention relating to estate and gift taxes (the ‘Estate Tax Convention’), and for US federal income tax and UK tax purposes, this section is based on the assumption that a holder of ADRs evidencing ADSs will generally be treated as the owner of the shares in the Company represented by those ADRs. Investors should note that a ruling by the first-tier tax tribunal in the UK has cast doubt on this view, but HMRC have stated that they will continue to apply their long-standing practice of regarding the holder of such ADRs as holding the beneficial interest in the underlying shares. Similarly, the US Treasury has expressed concern that US holders of depositary receipts (such as holders of ADRs representing our ADSs) may be claiming foreign tax credits in situations where an intermediary in the chain of ownership between such holders and the issuer of the security underlying the depositary receipts, or a party to whom depositary receipts or deposited shares are delivered by the depositary prior to the receipt by the depositary of the corresponding securities, has taken actions inconsistent with the ownership of the underlying security by the person claiming the credit, such as a disposition of such security. Such actions may also be inconsistent with the claiming of the reduced tax rates that may be applicable to certain dividends received by certain non-corporate holders, as described below. Accordingly, (i) the creditability of any UK taxes and (ii) the availability of the reduced tax rates for any dividends received by certain non-corporate US holders, each as described below, could be affected by actions taken by such parties or intermediaries. Generally exchanges of shares for ADRs and ADRs for shares will not be subject to US federal income tax or to UK tax other than stamp duty or stamp duty reserve tax. Taxation of dividends UK taxation Under current UK law, there is no requirement to withhold tax from the dividends that we pay. Shareholders who are within the charge to UK corporation tax will be subject to corporation tax on the dividends we pay unless the dividends fall within an exempt class and certain other conditions are met. It is expected that the dividends we pay would generally be exempt. Individual shareholders in the Company who are resident in the UK will be subject to the income tax on the dividends we pay. Dividends will be taxable in the UK at the dividend rates applicable where the income received is above the dividend allowance (£1,000 in this tax year, falling to £500 from 6 April 2024) which is taxed at a nil rate. Dividend income is treated as the highest part of an individual shareholder’s income and the dividend allowance will count towards the basic or higher rate limits (as applicable) which may affect the rate of tax due on any dividend income in excess of the allowance. US federal income taxation Subject to the passive foreign investment company (‘PFIC’) rules described below, a US holder is subject to US federal income taxation on the gross amount of any dividend we pay out of our current or accumulated earnings and profits (as determined for US federal income tax purposes). Distributions in excess of current and accumulated earnings and profits will be treated as a non-taxable return of capital to the extent of the US holder’s basis in the shares or ADSs and thereafter as capital gain. However, the Company does not maintain calculations of its earnings and profits in accordance with US federal income tax accounting principles. US holders should therefore assume that any distribution by the Company with respect to shares will be reported as ordinary dividend income. Dividends paid to a non-corporate US holder will be taxable to the holder at the reduced rate normally applicable to long-term capital gains provided that certain requirements are met. Dividends must be included in income when the US holder, in the case of shares, or the depositary, in the case of ADSs, actually or constructively receives the dividend and will not be eligible for the dividends-received deduction generally allowed to US corporations in respect of dividends received from other US corporations. The amount of the dividend distribution to be included in income will be the US dollar value of the pound sterling or euro payments made determined at the spot pound sterling/US dollar rate or the spot euro/ US dollar rate, as applicable, on the date the dividends are received by the US holder, in the case of shares, or the depositary, in the case of ADSs, regardless of whether the payment is in fact converted into US dollars at that time. If dividends received in pounds sterling or euros are converted into US dollars on the day they are received, the US holder generally will not be required to recognise any foreign currency gain or loss in respect of the dividend income. Where UK tax is payable on any dividends received, a US holder may be entitled, subject to certain limitations, to a foreign tax credit in respect of such taxes. Taxation of capital gains UK taxation A US holder that is not resident in the UK will generally not be liable for UK tax in respect of any capital gain realised on a disposal of our shares or ADSs. Shareholder information (continued) 234 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
However, a US holder may be liable for both UK and US tax in respect of a gain on the disposal of our shares or ADSs if the US holder: – is a citizen of the United States and is resident in the UK; – is an individual who realises such a gain during a period of ‘temporary non-residence’ (broadly, where the individual becomes resident in the UK, having ceased to be so resident for a period of five years or less, and was resident in the UK for at least four out of the seven tax years immediately preceding the year of departure from the UK); – is a US domestic corporation resident in the UK by reason of being centrally managed and controlled in the UK; or – is a citizen or a resident of the United States, or a US domestic corporation, that has used, held or acquired the shares or ADSs in connection with a branch, agency or permanent establishment in the UK through which it carries on a trade, profession or vocation in the UK. In such circumstances, relief from double taxation may be available under the treaty. Holders who may fall within one of the above categories should consult their professional advisers. US federal income taxation Subject to the PFIC rules described below, a US holder that sells or otherwise disposes of our shares or ADSs generally will recognise a capital gain or loss for US federal income tax purposes equal to the difference, if any, between the US dollar value of the amount realised and the holder’s adjusted tax basis, determined in US dollars, in the shares or ADSs. This capital gain or loss will be a long-term capital gain or loss if the US holder’s holding period in the shares or ADSs exceeds one year. The gain or loss will generally be income or loss from sources within the US for foreign tax credit limitation purposes. The deductibility of losses is subject to limitations. Additional tax considerations UK inheritance tax An individual who is domiciled in the United States (for the purposes of the Estate Tax Convention) and is not a UK national will not be subject to UK inheritance tax in respect of our shares or ADSs on the individual’s death or on a transfer of the shares or ADSs during the individual’s lifetime, provided that any applicable US federal gift or estate tax is paid, unless the shares or ADSs are part of the business property of a UK permanent establishment or pertain to a UK fixed base used for the performance of independent personal services. Where the shares or ADSs have been placed in trust by a settlor they may be subject to UK inheritance tax unless, when the trust was created, the settlor was domiciled in the United States and was not a UK national. Where the shares or ADSs are subject to both UK inheritance tax and to US federal gift or estate tax, the estate tax convention generally provides a credit against US federal tax liabilities for UK inheritance tax paid. UK stamp duty and stamp duty reserve tax Stamp duty will, subject to certain exceptions, be payable on any instrument transferring our shares to the custodian of the depositary at the rate of 1.5% on the amount or value of the consideration if on sale or on the value of such shares if not on sale. Stamp duty reserve tax (‘SDRT’), at the rate of 1.5% of the amount or value of the consideration or the value of the shares, could also be payable in these circumstances but no SDRT will be payable if stamp duty equal to such SDRT liability is paid. Following rulings of the European Court of Justice and the first-tier tax tribunal in the UK, HMRC have confirmed that the 1.5% SDRT charge will not be levied on an issue of shares to a depositary receipt system on the basis that such a charge is contrary to EU law. The effect of this EU case law will continue to be recognised and followed in the United Kingdom pursuant to the provisions of the European Union (Withdrawal) Act 2018, even though the United Kingdom is no longer part of the EU, and HMRC’s published practice remains that the 1.5% charge will remain disapplied in such cases. However, this treatment may be modified as a result of the Retained EU Law (Revocation and Reform) Bill 2022 (if enacted without amendment). No stamp duty should in practice be required to be paid on any transfer of our ADSs provided that the ADSs and any separate instrument of transfer are executed and retained at all times outside the UK. A transfer of our shares in registered form will attract ad valorem stamp duty generally at the rate of 0.5% of the purchase price of the shares. There is no charge to ad valorem stamp duty on gifts. SDRT is generally payable on an unconditional agreement to transfer our shares in registered form at 0.5% of the amount or value of the consideration for the transfer, but if, within six years of the date of the agreement, an instrument transferring the shares is executed and stamped, any SDRT which has been paid would be repayable or, if the SDRT has not been paid, the liability to pay the tax (but not necessarily interest and penalties) would be cancelled. However, an agreement to transfer our ADSs will not give rise to SDRT. PFIC rules We do not believe that our shares or ADSs will be stock of a PFIC for US federal income tax purposes for our current taxable year or the foreseeable future. This conclusion is a factual determination that is made annually and thus is subject to change. If we are a PFIC, US holders of shares would be required (i) to pay a special US addition to tax on certain distributions and (ii) any gain realised on the sale or other disposition of the shares or ADSs would in general not be treated as a capital gain unless a US holder elects to be taxed annually on a mark-to-market basis with respect to the shares or ADSs. Otherwise a US holder would be treated as if he or she has realised such gain and certain ‘excess distributions’ rateably over the holding period for the shares or ADSs and would be taxed at the highest tax rate in effect for each such year to which the gain was allocated. An interest charge in respect of the tax attributable to each such preceding year beginning with the first such year in which our shares or ADSs were treated as stock in a PFIC would also apply. In addition, dividends received from us would not be eligible for the reduced rate of tax described above under ‘Taxation of dividends – US federal income taxation’. Back-up withholding and information reporting Payments of dividends and other proceeds to a US holder with respect to shares or ADSs, by a US paying agent or other US intermediary will be reported to the Internal Revenue Service and to the US holder as may be required under applicable regulations. Back-up withholding may apply to these payments if the US holder fails to provide an accurate taxpayer identification number or certification of exempt status or fails to comply with applicable certification requirements. Certain US holders are not subject to back-up withholding. US holders should consult their tax advisers about these rules and any other reporting obligations that may apply to the ownership or disposition of shares or ADSs, including requirements related to the holding of certain foreign financial assets. 235 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
The Company was incorporated under English law in 1984 as Racal Strategic Radio Limited (registered number 1833679). After various name changes, 20% of Racal Telecom Plc share capital was offered to the public in October 1988. The Company was fully demerged from Racal Electronics Plc and became an independent company in September 1991 at which time it changed its name to Vodafone Group Plc. Since then we have entered into various transactions which impacted the development of the Group. The most significant in the year ended 31 March 2023 are summarised below. – On 9 November 2022, the Vodafone Group announced a strategic co-control partnership with GIP and KKR for its 81.7% stake in Vantage Towers AG (‘Vantage Towers’). On 13 December 2022, the new joint venture, Oak Holdings GmbH (‘Oak Holdings’), launched a voluntary takeover offer to minority shareholders of Vantage Towers and this completed in January 2023. Following completion of the voluntary takeover offer, Oak Holdings holds a 89.3% stake in Vantage Towers. On 23 March 2023, Vodafone announced the completion of the co-control partnership and received initial net cash proceeds of €4.9 billion. Following completion Vodafone now holds a 64.2% shareholding in Oak Holdings. Oak Holdings and Vantage Towers have separately reached an agreement on a domination and profit and loss transfer agreement which was approved by Vantage Towers shareholders at an extraordinary general meeting on 5 May 2023. Oak Holdings also announced on 20 March 2023 an agreement to de-list the shares of Vantage Towers. – On 13 December 2022, the Vodafone Group completed the transfer of its 55% shareholding in Vodafone Egypt to its subsidiary, Vodacom Group Limited (‘Vodacom’). The Vodafone Group was issued 242 million shares in Vodacom and received cash proceeds of €577 million in exchange for its shareholding in Vodafone Egypt. As a result, Vodafone’s shareholding in Vodacom increased from 60.5% to 65.1%. – On 31 January 2023, the Vodafone Group completed the sale of 100% of Vodafone Hungary (Vodafone Magyarország Zrt) to 4iG Public Limited Company and Corvinus Zrt for a cash consideration of HUF 660 billion (€1.6 billion). – On 7 February 2023, Vodafone Idea Limited (‘Vi’) converted liabilities owed to the Government of India into equity shares. Following the transaction, the Government of India’s shareholding in Vi was 33.4%, and Vodafone Group’s shareholding was 31.7%. – On 14 February 2023, the Vodafone Group exercised warrants issued by Vi in July 2022. The total consideration of INR 4.4 billion (€49 million) was settled on issuance of the warrants in July 2022 and Vodafone Group received an additional 428 million shares in February 2023. Following the issuance of shares, Vodafone’s holding in Vi was equivalent to a 32.3% shareholding, with the Government of India’s shareholding being diluted to 33.1%. – On 21 February 2023, the Vodafone Group completed the sale of its 70% shareholding in Vodafone Ghana (Ghana Telecommunications Company Limited) to Telecel Group. – On 7 March 2023, the Vodafone Group completed the sale of 50% of its German fibre-to-the-home (‘FTTH’) company to Altice. The joint venture will deploy FTTH to up to seven million homes in Germany over six years and will offer wholesale access to all telecommunications service providers, with Vodafone Germany as the anchor tenant. – On 29 March 2023, the Vodafone Group announced the initiation of procedures for a statutory merger and squeeze-out of minority shareholders in Kabel Deutschland Holding AG (’KDG’). As of 31 March 2023, Vodafone owned 94.0% of KDG’s share capital. Vodafone KDG will acquire the shares of all KDG minority shareholders, and KDG will be merged into Vodafone KDG. Read more in our financial statements, note 12 ‘Investments in associate and joint arrangements’ Click here to view a simplified holding structure for the Vodafone Group: investors.vodafone.com/ VodafoneGroupHoldingStructure Introduction Our operating companies are generally subject to regulation governing their business activities. Such regulation typically takes the form of industry-specific law and regulation covering telecommunications services and general competition (anti-trust) law applicable to all activities. The following section describes the regulatory frameworks and the key regulatory developments at national and regional level and in the European Union (‘EU’), in which we had significant interests during the period ended 31 March 2023. Many of the regulatory developments reported in the following section involve ongoing proceedings or consideration of potential proceedings that have not reached a conclusion. Accordingly, we are unable to attach a specific level of financial risk to our performance from such matters. European Union (‘EU’) The European Electronic Communications Code (‘Code’) has updated the telecoms regulatory framework in Europe. The transposition process was due in December 2020 across all the Member States, but it has experienced delays in several countries. As a consequence, the European Commission (‘EC’) started infringement procedures against the remaining Member States at the same time, and afterwards referred the breach to the Court of Justice of the European Union (‘CJEU’). As of 31 March 2023, all markets (within our footprint) have transposed the Code into national legislation. Additionally, outside the EU, Albania is consulting on the transposition of the Code into Albanian legislation, with aim of fully aligning Albanian telecommunications legislation with the EU, as part of the integration package for the accession of Albania to the EU. Addressing the challenges posed by the COVID-19 pandemic, the Next Generation EU package is the Union’s means to support the recovery processes in EU Member States. The bulk of the proposed recovery measures are funded by a new temporary recovery instrument, the EU Recovery and Resilience Facility (‘RRF’), worth nearly €750 billion, which was adopted in December 2020. A significant amount is allocated towards digital and green initiatives, with a minimum threshold of 20% of the RRF to be allocated to digital and 37% to green initiatives. As of 31 March 2023, the EC had approved the national plans under the RRF for all 27 EU Member States, of which Czech Republic, Germany, Greece, Ireland, Italy, Portugal, Romania and Spain are within Vodafone’s footprint. In February 2022, the EC published its proposal for a regulation laying down harmonised rules on fair access to and fair use of data (the ‘Data Act’). The Regulation applies to manufacturers of connected devices, data holders, recipients, and providers of data processing services (cloud service providers) who will be subject to new requirements to support switching and interoperability. Negotiations are ongoing. The Digital Markets Act (‘DMA’) was agreed in March 2022 and published in the official EU Journal in November 2022. The Commission is preparing for implementation. Providers of online platforms who pass the quantitative thresholds to be designated as ’gatekeepers’ (annual turnover of €7.5 billion within the EU or a worldwide market valuation of €75 billion, plus 45 million monthly active end-users and 10,000 business users) will be subject new ex-ante regulatory obligations under the DMA. This designation will take place between May and September 2023, with a grace period of six months thereafter before enforcement proceedings will begin in early 2024. The Digital Services Act (‘DSA’) was also agreed in 2022 and published in the official EU Journal in November 2022. Online platforms, who have new obligations under the DSA, will be required to report their numbers of active users to the Commission, to inform the designation of Very Large Online Platforms (‘VLOPs’) who will be subject to additional risk assessment and platform design obligations. For the VLOPs, enforcement will begin in mid-2023, however, obligations for online platforms below this threshold will not take effect until early 2024. History and development Regulation Unaudited information 236 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
On 1 July 2022, the EU-Roaming Recast Regulation entered into force, prolonging the existing Regulation to ensure the continuation of Roam-Like-at-Home (‘RLAH’) for 10 years. The new regulation reduces the wholesale price caps for all services (data, voice and SMS) and brings new measures on transparency (including on the use of non-terrestrial networks), quality of service (‘QoS’) and access to emergency communications. In October and December 2022, respectively, the European Body of Regulators (‘BEREC’) published its final wholesale and retail guidelines providing interpretation guidance to the Regulation. On 15 September 2022, the European Commission adopted its draft Cyber Resilience Act (‘CRA’), introducing horizontal cybersecurity requirements for products with digital elements and associated services that are placed on the European single market. Products in scope will be subject to conformity assessment. Highly critical products will be subject to European cybersecurity certification schemes. The EC’s draft CRA has entered the co-legislative process which will be completed at the end of 2023 at the earliest, with new legislation coming into force during the course of 2024 and applicable two years thereafter. Negotiations on the Artificial Intelligence Act (‘AI Act’) are progressing, with the Council agreeing a General Approach on the file in December 2022. Annex III of the draft AI Act describes a number of AI systems that pose a ‘high risk’ and will therefore be subject to additional ex-ante regulatory obligations and conformity assessment process before being placed on the market. Amendments in the Parliament and Council include ‘management of the Internet’ and ‘safety components of critical digital infrastructure’ within Annex III. On 15 December 2022, the European institutions jointly signed the European Declaration on Digital Rights and Principles for the Digital Decade (‘Declaration’), covering issues including inclusion, freedom of choice online, online safety and security, and sustainable digitalisation. The Declaration puts forward, inter alia, the commitment to “developing adequate frameworks so that all market actors benefiting from the digital transformation assume their social responsibilities and make a fair and proportionate contribution to the costs of public goods, services and infrastructures, for the benefit of all people living in the EU”. In January 2023, the EU Digital Decade Policy Programme 2030 came into force. The initiative, a decision of the European Parliament (‘Parliament’) and the Council of the European Union (‘Council’), sets targets to be met by Member States by 2030 on the following four key pillars: a digitally skilled population and highly skilled digital professionals; secure and sustainable digital infrastructures (target is to have all European households connected to gigabit speeds and all populated areas covered by 5G); digital transformation of businesses; and digitalisation of public services. Member States should submit to the Commission national digital decade strategic roadmaps showing how they intend to meet these targets up to 2030. The EC is accountable for continually monitoring progress towards these targets by means of key performance indicators, which it is currently consulting on. The first report towards progress is expected by September 2023. In February 2023, the EC published the draft Gigabit Infrastructure Act (‘GIA’) (revising the 2014 Broadband Cost Reduction Directive). The GIA aims to reduce the cost of deploying gigabit electronic communication networks by improving the permit granting process and specifying that fees cannot exceed administrative costs. All permit-granting submissions will need to go through a single information point in each Member State, and timely approval of permits has been strengthened by cutting wait times to four months and including the right to compensation for damage caused by non-compliance with deadlines. The EC will publish an implementing act specifying permit exemption categories, which are currently not included in the proposal. This is set to be completed 18 months following GIA adoption. The GIA is expected to be passed by the end of March 2024. In addition to the GIA proposals, the Commission has published a far-reaching consultation on the future of the electronic communications sector and its infrastructure. The consultation contains over 60 questions over four chapters, covering: (i) technological and market developments; (ii) fairness for consumers; (iii) barriers to the single market; and (iv) achieving a fair contribution from all digital players to connectivity infrastructure. The deadline for response was 19 May 2023. Country specific Germany In July 2022, the national regulatory authority (‘NRA’) (‘BNetzA’) published its final regulation regarding the wholesale access markets (so-called Market 3a). There have been no significant changes to the regulation of copper network access; however the decision does implement a light touch regulation of fibre access (‘FTTH’). For the first time in Germany, an access regime for FTTH based on full equivalence of input will enforce the equal treatment of wholesale demand and Deutsche Telekom’s (‘DT’) retail arm. In addition, BNetzA will improve access to DT’s passive infrastructure (ducts, masts) due to its significant market power on broadband wholesale markets, including introducing regulated prices for the first time. In addition, the new regulation prolongs current unbundled local loop and bitstream access to DT’s copper network. Additionally, BNetzA have published a new draft regulation for wholesale central access (so-called Market 3b) for consultation. The final regulation is pending. Licences for frequency allocations at 800MHz, parts of 1800MHz, and 2600MHz will expire at the end of 2025. Vodafone Germany currently holds allocations at 800MHz and 2600MHz. BNetzA is therefore assessing its options on how to proceed on the reallocation of this spectrum. It may either re-auction the spectrum, or prolong the existing licences, or a combination of these. BNetzA furthermore considers swapping the licence terms for the 800MHz and 900MHz allocations. Thus, 900MHz instead of 800MHz spectrum would now be auctioned, and the 800MHz allocations would be prolonged till 2033. BNetzA is expected to make a final decision on next steps by the end of 2023. In 2019, Vodafone acquired spectrum at 2.1GHz and 3.6GHz. The spectrum allocation includes coverage obligations which, depending on the specifics of the obligation, to be fulfilled by end of either 2022 or 2024. All mobile network operators have reported on time on the status of obligation fulfilment for the 2022 obligations, including given judicial or factual circumstances hindering fulfilment. BNetzA is assessing the reports, including Vodafone’s. Results are expected by the end of June 2023, and it is possible that BNetzA will decide to impose fines in event of non-fulfilment. Italy In March 2017, the NRA (‘AGCOM’) imposed a minimum billing period of one month for fixed and converged offers, effective by the end of June 2017. The operators appealed AGCOM’s resolution before the Administrative Court and the appeal was rejected in February 2018. Vodafone Italy filed an appeal before the Council of State and, after the public hearing held in July 2020, the Council of State issued a Preliminary referral to the CJEU in order to assess if AGCOM has the power to impose minimum and binding billing periods under EU law. The proceeding before the CJEU is still pending, with a decision expected by the end of June 2023. In January 2020, the national competition authority (‘AGCM’) ruled that Vodafone Italy, Telecom Italia (‘TIM’), Fastweb and WindTre had coordinated their commercial strategies relating to the transition from four-week billing (28 days) to monthly billing, with the maintenance of an 8.6% price increase, in violation of Art.101 of Treaty on the Functioning of the EU (‘TFEU’). In July 2021, the Administrative Tribunal published its judgment annulling the AGCM’s decision and fine against Vodafone Italy for lack of evidence, accepting all of Vodafone Italy’s defensive arguments. According to the Tribunal, the alleged infringement was in fact the outcome of the companies’ independent choices to comply with legislation imposing an obligation to issue customer bills on a monthly 237 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Regulation (continued) Unaudited information basis. Prior to the Tribunal decision, Vodafone Italy had agreed to pay the €60 million fine in 15 monthly instalments of €4 million each. Following the Tribunal decision, Vodafone Italy started the process to be reimbursed for the two instalments, totalling €8 million, paid so far. The AGCM has submitted an appeal against the Tribunal decision to the Council of State. The public hearing was held on 26 January 2023 and Vodafone Italy is now waiting for the final decision of the Council of State, which is expected by the end of June 2023. In January 2021, TIM proposed a final fibre network co-investment to AGCOM, which was approved in December 2021. However, TIM has subsequently sought to amend the co-investment offer, to include the ability for it to increase wholesale prices to account for inflation. Therefore, in November 2022, AGCOM started a new market consultation on the amended co-investment offer, including the new price indexing mechanism. The proceedings are not yet concluded, and the final decision is expected by the end of June 2023. United Kingdom In November 2021, the Telecommunications Security Act (‘TSA’) was passed into legislation. This modified the Communications Act to allow the Secretary of State to issue High Risk Vendor (‘HRV’) designations that restrict the usage of named equipment suppliers. In October 2022, a HRV designation was issued mandating the removal of Huawei from 5G networks by the end of 2027 and restricting the use of Huawei equipment in UK telecoms networks in the meantime. The TSA also allows the Secretary of State to issue security regulations requiring providers of electronic communications networks and services to comply with a specified Code of Practice. After consultation, in September 2022, the Department for Digital, Culture, Media and Sport issued such security regulations, and the associated Code of Practice clarified the requirements and permitted longer implementation timescales for Vodafone UK than had originally been proposed in the TSA. Similarly, after consultation Ofcom has established the compliance regime associated with the Code of Practice. The NRA (‘Ofcom’) concluded a review of UK mobile market in December 2022. In its conclusions, Ofcom outlined its intention to make decisions that will encourage investment in mobile networks. Ofcom also confirmed it remained open-minded on the matter of mobile consolidation. In parallel, the government’s Wireless Infrastructure Strategy review, which is focused on future technologies and infrastructure evolution in the sector, is expected to conclude by September 2023. Ofcom’s review of Net Neutrality rules is underway. While the UK is still committed to high-level open internet alignment under the terms of the UK/EU trade deal, Ofcom has proposed a set of measures designed to aid clarity around the interpretation of the existing rules and outlined a more permissive approach to matters such as tariff differentiation, network slicing and zero rating. Ofcom is expected to conclude its review by end of 2023. In April 2023, the Government launched its Wireless Infrastructure Strategy, which sets out its ambition for 5G between now and 2030. The strategy recognises many of the commercial challenges facing the sector, setting out a number of initiatives aimed at remedying them. These include a plan to set out a clear evidence-based and forward-looking rationale for setting spectrum fees by the end of 2023; an open-minded approach to market consolidation and changes to planning rules to make it easier to alter masts. The strategy also signals the Government’s desire to incentivise take-up of new technology, including releasing funding for local governments and ensuring digital connectivity requirements are at the heart of all future major infrastructure projects. Vodacom: South Africa (‘SA’) The NRA (‘ICASA’) has concluded a Review of the Pro-competitive Conditions imposed on relevant licensees in terms of the Call Termination Regulations and published its draft findings document in March 2022. However, Telkom (a licensed network operator) has initiated a High Court review of the report. ICASA has been unable to conduct the cost modelling or publish the final report. There is no information on expected timelines for this challenge. On 3 April 2022, ICASA published a set of amendments to the End-User and Subscriber Service Charter Regulations 2016 for public comment. The proposed amendments facilitate the easier transfer of unused voice, SMS and data credit that is unused at the expiry of a billing period, which under the rules shall not expire before a period of six months. Vodacom SA submitted a written response to the proposed changes in June 2022 and participated in a public hearing held by ICASA in October 2022. Other Europe: Spain; Ireland; Portugal; Romania; Greece; Czech Republic; Albania Spectrum In Spain, spectrum auctions were held on 21 September 2022. Vodafone Spain acquired two national concessions of 200MHz each, i.e. a total of 400MHz, for €8 million. Additionally, in December 2022 the National State Budget was approved. The law sets a reduction of spectrum fees (for 5G bands 700MHz and 3.5 GHz) for a temporary period of two years (2022 – 2023). This has resulted in €11.2 million savings per year for Vodafone Spain. In Portugal, in July 2021 the NRA (‘ANACOM’) approved the renewal of Vodafone Portugal’s rights of use for 900MHz and 1800MHz until 2033. The spectrum renewal came with coverage obligations, which MNOs reached an agreement for in June 2022, which was then approved by ANACOM in July 2022. Vodafone Portugal has until 13 July 2023 to comply with these additional obligations. Additionally, Vodafone Portugal continues to appeal against certain aspects of the auction conditions for the 5G auction, which concluded in November 2021, claiming the conditions between new entrants and mobile network operators were discriminatory. Legal proceedings are still ongoing, with no expected date of conclusion, and the rights of use remain in place. In Ireland, the NRA (‘ComReg’) progressed with and concluded the main stage of the multi-band spectrum auction in December 2022. Vodafone Ireland acquired spectrum in the following bands: 2x10MHz in the 700MHz band, 2x20MHz in the 2.1GHz band, 2x35MHz and 30MHz in the 2.6GHz band. In Romania, in November 2022, the 5G auction ended with Vodafone Romania acquiring 2x5MHz in the 700MHz band and 100MHz in the 3.5GHz band, rights of use starting in January 2023 and January 2026, respectively. In Czech Republic, in November 2022, the NRA (‘CTU’) renewed Vodafone Czech Republic’s 2100MHz licence until the end of 2041. Renewal includes an obligation to keep Global System for Mobile communication (‘GSM’) until June 2028 and to improve the quality of mobile data service on motorways. In Albania, there were delays to the planned auction of 5G spectrum in all bands. This was due to the new entrant, 4iG, acquiring ONE Telecommunications, which resulted in the NRA (‘AKEP’) supporting the re-balancing of spectrum between the remaining Albanian MNOs, including Vodafone Albania. However, the spectrum re-balancing process was successfully closed on 1 January 2023, and the technical transfer of the spectrum is expected to be finalised by 30 April 2023. As a result, AKEP has announced that the 5G auction for all bands (3.5MHz, 26GHz and 700MHz) will start after the technical transfer of the spectrum. AKEP has started preliminary discussions with the operators on their interest in the bands up for auction, which is expected to happen by July 2023. There is no official document yet on the auction model, prices and other terms. Concerns over electromagnetic field (‘EMF’) triggered a residents’ petition in Greece for the annulment of the 5G Auction Tender document. Despite 238 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
the auction process completing in December 2020 and the assigned spectrum already being in use by Vodafone Greece, the petition against the Tender document was heard in January 2022, and a decision by the Council of State is pending, estimated to conclude by mid-2023. In the case that the petition is accepted, the assignment of 5G spectrum rights will be declared invalid. Universal Service Obligations (‘USO’) and Consumer Support Measures Vodafone Greece has three active appeals against the NRA (‘EETT’). These are in relation to charges amounting to around €16.75 million. €9 million of this is imposed in relation to the provision of universal services by operator OTE for the period of 2010 through to 2011. Vodafone Greece has appealed these costs, with the hearing due in November 2023. The remaining €7.75 million has been imposed on Vodafone Greece due to a decision of EETT on the USO net costs for the period of 2012-2016. Vodafone Greece also appealed these costs, and a final decision is expected by the end of 2023. Similarly, Vodafone Portugal continues to challenge payment notices totalling €34.8 million issued by ANACOM regarding 2012 to 2014 extraordinary compensation of USO costs. In Czech Republic, based on the results of a public tender announced by CTU in December 2022, Vodafone Czech Republic became one of the universal service providers of subsidy (up to CZK 200 per month) to people with certain social needs. The subsidy will be provided by the state through designated service providers. The obligation to provide the subsidy is valid from 1 January 2023 until 31 December 2025. In relation to consumer customer relations, in Spain, there is a Bill pending that will introduce new requirements around the provision of customer care and managing customer complaints, and compensation. The text of the Bill was approved by the Government on 31 May 2022, and it is expected to be fully approved by end of 2023. Networks In Czech Republic, in March 2022, Vodafone Czech Republic and T-Mobile Czech Republic announced a project for joint deployment of fibre infrastructure, with the details of the process now being finalised. Additionally, in Greece, approval for the 5G extension of the existing 4G network sharing agreement between Vodafone Greece and Nova/Wind Hellas is pending with EETT since August 2021. EETT requested both MNOs for additional data, which was submitted by Vodafone in February 2023. A final decision is expected by July 2023. In relation to network security, in Spain, the Government adopted their Cybersecurity Law in March 2022. The law introduces the concept of high-risk suppliers (‘HRS’) and creates a new framework: (i) for identifying HRS; (ii) limiting the use of HRS in both the Core and the Access networks; and (iii) for 5G operators to develop a risk assessment on their networks, and a vendor diversification strategy. No supplier has been identified as ‘high risk’ so far. Roaming Following the successful implementation of the RLAH regime between the ‘West Balkans 6’ (‘WB6’) countries (Albania, Kosovo, Montenegro, Macedonia, Serbia, Bosnia) which from July 2021 has removed roaming surcharge rates between these countries, the Regional Cooperation Council has started the discussions to extend roaming reduction tariffs between the EU and WB6. Access In Portugal, in June 2022, ANACOM published its final decision regarding the review of pricing of the Reference Duct Access Offer (‘RDAO’) and Reference Poles Access Offer (‘RPAO’) provided by the incumbent, MEO. ANACOM’s decision is based on evidence that action was needed in order to ensure cost orientation of prices applicable to said infrastructure. The decision was retrospectively applicable as of 15 February 2022 and reduced RDAO’s monthly fees by 35% and RPAO’s monthly fees by 20%. Additionally, in Greece, the EETT issued its final decision on wholesale access markets in February 2023. In general, the EETT has maintained the majority of the remedies, given the incumbent (‘OTE’) still has significant market power (‘SMP’) in these markets. However, it has enhanced access to passive infrastructure. In addition, for FTTH services, whilst it will retain cost orientation obligations, it will lift the margin squeeze obligations on OTE and allow OTE to provide volume discounts. In Czech Republic, in September 2021, the CTU published a draft market analysis of the mobile wholesale access market, proposing to impose regulation on the wholesale price for mobile voice, SMS and data. The CTU notified these draft measures to the EC, but the EC issued its decision in February 2022, stating that the three criteria test was not met, and ex-ante regulation based on a joint SMP finding was unjustified, and therefore requested the CTU to withdraw the proposals. On 17 August 2022, the CTU published an amended draft market analysis for public consultation. After the consultation process, the CTU notified draft measures to the EC in December 2022. In January 2023, the EC opened an in-depth investigation into the notified measures, which concluded on 24 March 2023, with the EC adopting a decision requiring the CTU to withdraw its proposed draft measure. The Commission’s decision means that CTU cannot adopt its draft measure as notified. Other Africa and Middle East: Democratic Republic of the Congo (DRC); Tanzania; Mozambique; Lesotho; Turkey; Egypt. Devices and registration In Tanzania, the NRA (‘TCRA’) issued regulations that introduce a biometric registration requirement for SIMs, and restrict the number of SIMs a customer may own. The TCRA has directed disconnection of unverified SIMs in this category by 13 February 2023. Vodacom Tanzania consequently disconnected unverified customers as directed, and is now engaging with TCRA and customers to facilitate verification and re-activation, including through a self-verification process that has been approved by TCRA. Similarly, in Lesotho, the Minister of Communication introduced new SIM Registration regulations, which must be complied with by 24 June 2023. The regulations require the operator to enact biometric registration, establish a central database with the Communications Authority, re-register SIMs with a six-month timeline and enforce penalties of Maloti 5k per non-compliant SIM card. Spectrum In Lesotho, Vodacom Lesotho had extended its right to use 3500MHz trial 5G spectrum up to 31 March 2022 when it vacated the spectrum bands upon expiry of these rights of use. Vodacom Lesotho is still engaging with the authorities to convert the trial licence to a permanent licence, which is under consideration by the NRA (‘LCA’). In Mozambique, Vodacom Mozambique is seeking to extend the rights to use spectrum that was temporarily assigned to it during COVID-19. Vodacom Mozambique entered discussions with the NRA (‘ARECOM’) to acquire this spectrum as a permanent licence. The negotiations concluded in January 2023, whereby ARECOM has accepted Vodacom Mozambique’s offer of US$12.5 million for three bands, namely: acquire the 1800MHz and 2100MHz, coupled with 900MHz based on a staggered payment plan over five years, and subject to a down payment of US$40 million. In Turkey, in April 2023, the NRA (BTK) issued a decision providing a six-year extension to the GSM Concession Agreement (2G/900MHz licence) which was due to expire in April 2023. The extension fee for Vodafone Turkey is €120m (+18% VAT). In Tanzania, the TCRA convened a spectrum auction on 11 October 2022. Vodacom Tanzania participated in the auction and successfully acquired licences for spectrum in the 700MHz, 2300MHz and 2600MHz bands. Additionally in Tanzania, on 1 September 2022, Vodacom Tanzania successfully launched its 5G network using the new 3.5GHz frequencies. 239 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Regulation (continued) Unaudited information Regulatory and legal disputes and fines In the Democratic Republic of the Congo (‘DRC’), Vodacom DRC are in ongoing negotiations with the NRA (‘ARPTC’) in relation to new regulatory fees that were first introduced in in March 2022. On 22 October 2022, the MNOs (including Vodacom DRC), Minister of Communications and ARPTC reached an agreement and signed a Memorandum of Understanding (‘MoU’) on the new regulatory fees, setting out revised fees and modality of payment. The MoU also provides for resolution of any pending fines and legal actions in this regard. Execution of each party’s obligations under the MoU is ongoing. In Tanzania, the TCRA found that Vodacom Tanzania had failed to comply with regulatory QoS targets, mostly in the Zanzibar region, and has ordered Vodacom Tanzania to execute network improvement, with threat of fines if it fails to comply. In Tanzania, the Finance Act 2021 introduced a mobile money levy which charged a rate of TZ10 to TZ10,000 for the use of mobile money services. However, the Minister of Finance has since reduced the original levy by 60% and carved out transfers from a bank account to a mobile money account, and transfers between users’ own bank or mobile accounts. There is further ongoing dialogue between the mobile operators’ industry association and the Ministry of Finance on the possibility of eliminating the levy completely. In Lesotho, the LCA issued a penalty of M134 million to Vodacom Lesotho on grounds that its statutory auditor was not independent. Vodacom Lesotho has appealed the fine to the Court and has ultimately agreed to settle with the LCA. The Court issued an order of settlement of the matter, in terms of which the Court inter alia ordered Vodacom Lesotho to pay a total of M4 million to LCA (with M2 million payable by the end of November 2022, and the remaining M2 million payable within two years). This matter is now closed. Networks and access In Turkey, in October 2021, the ICTA introduced a margin squeeze test on wholesale reference offers. Subsequently on 1 June 2022, ICTA permitted a price increase of 67% for Bitstream Wholesale Access Costs, to account for the high inflationary environment. Vodafone Turkey then requested a margin squeeze test from ICTA against the incumbent (Türk Telekom), which then increased its fixed broadband retail tariffs. Additionally, the ICTA has not finalised Türk Telekom’s Reference Offer revision process for two years; therefore, regulated fibre access model and revisions for wholesale service level agreements (‘SLAs’) are still expected. In Tanzania, the TCRA launched a study to update the Interconnection Rates Determination No.5/2017 to determine rates for termination of domestic traffic on mobile networks. The final rate derived from the study, once completed, shall apply retrospectively from 1 January 2023, up to 31 December 2028. In Egypt, Vodafone Egypt is in the process of shutting down 3G technology by end of 2026. The NRA (‘NTRA’) will define an industry 3G shutdown roadmap in line with Vodafone Egypt’s own roadmap. Spectrum Spectrum is a key requirement for the Group’s mobile business and the Group relies on acquiring spectrum licences in order to deliver services to customers and operate its business. An overview of the Group’s spectrum licences is provided on page 241. Mobile termination rates (‘MTRs’) Country by region 20201 20211 20221 20231 Europe Germany (€ cents) 0.90 0.78 0.55 0.40 Italy (€ cents) 0.76 0.67 0.55 0.40 UK (GB£ pence) 0.479 0.468 0.379 0.391 Spain (€ cents) 0.64 0.64 0.55 0.40 Ireland (€ cents) 0.55 0.43 0.43 0.40 Portugal (€ cents) 0.39 0.36 0.36 0.36 Romania (€ cents) 0.76 0.76 0.55 0.40 Greece (€ cents) 0.622 0.622 0.55 0.40 Czech Republic (CZK) 0.248 0.248 0.1406 0.0981 Albania (ALL)2 1.11 1.11 1.11 1.11 Africa and Middle East South Africa (ZAR) 0.10 0.09 0.09 0.09 Democratic Republic of Congo (USD cents) 2.00 2.00 2.00 1.50 Lesotho (LSL/ZAR) 0.12 0.09 0.09 0.09 Mozambique (meticash) (Dollar cents)3 0.37 0.31 0.25 0.18 Tanzania (Tanzanian shillings) 5.20 2.60 2.00 2.00 Turkey (lira) 0.03 0.03 0.03 0.02 Egypt (PTS/Piastres) 11.00 11.00 11.00 11.00 Notes: 1. All MTRs are based on end of financial year values. 2. Albania: There is no official decision so far regarding the reduction of the national MTRs below 1.11 ALL/min. In May 2021 the NRA approved the draft “Results of the cost model of wholesale mobile network services” based on a study by an external consultant. A glidepath was proposed aiming at a maximum MTR of 1.02 ALL/min in 2022 but the NRA never issued a decision imposing the mentioned reduction. 3. Mozambique: New cost model completed and glidepath introduced from January 2021. 240 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Overview of spectrum licences at 31 March 2023 700 MHz 800 MHz 900 MHz 1400 / 1500 MHz 1800 MHz 2.1 GHz 2.3 GHz 2.6 GHz 3.5 GHz Quantity1 (Expiry Date) Quantity1 (Expiry Date) Quantity1 (Expiry Date) Quantity1 (Expiry Date) Quantity1 (Expiry Date) Quantity1 (Expiry Date) Quantity1 (Expiry Date) Quantity1 (Expiry Date) Quantity1 (Expiry Date) Germany 2x10 (2033) 2x10 (2025) 2x10 (2033) 20 (2033) 2x25 (2033) 2x152 (2040) n/a 2x20+25 (2025) 90 (2040) 2x52, 3 (2025) Italy18 2x10 (2037) 2x10 (2029) 2x10 (2029) 20 (2029) 2x15 (2029) 2x15 (2029) n/a 2x15 (2029) 80 (2037) 2x53 (2029) UK4 n/a 2x10 (2033) 2x17.4 20 (2023) 2x5.8 2x14.8 n/a 2x20+25 (2033) 50 (2038) 40 (2041)3, 5 Spain18 2x10 (2041)6 2x10 (2031) 2x10 (2028) n/a 2x20 (2030) 2x15+5 (2030) n/a 2x20+20 (2030) 90 (2038) Ireland 2x10 (2042) 2x10 (2030) 2x10 (2030) n/a 2x25 (2030) 2x20 (2042) n/a 2x35 + 30 (2042) 1057 (2032) Portugal 2x10 (2041) 2x10 (2027) 2x5 (2033) n/a 2x6 (2033) 2x20 (2033) n/a 2x20+25 (2027) 90 (2041) 2x53 (2027) 2x143 (2027) Romania 40 (2025) 2x5 (2047) 2x10 (2029) 2x10 (2029) n/a 2x30 (2029) 2x14.8 (2031) n/a n/a 100 (2047)8 Greece18 2x10 (2036) 2x10 (2030) 2x15 (2027) n/a 2x10 (2027) 2x20 (2036) n/a 2x20+20 (2030) 140 (2035) 2x153 (2035) Czech Republic 2x10 (2036) 2x10 (2029) 2x10 (2029) n/a 2x27 (2029) 2x20 (2041)9 n/a 2x20 (2029) 100 (2032)10 Albania11 n/a 2x10 (2034) 2x8 (2031) n/a 2x9 (2031) 2x15+5 (2025) n/a 2x20+20 (2030) n/a 2x1.83 (2030) 2x143 (2030) 2x53 (2029) 2x43 (2024) 2x53 (2024) 2x53 (2031) South Africa12 2x10 n/a 2x1113 n/a 2x12 2x1513 n/a 80 10 Democratic Republic of Congo n/a 2x10 (2038) 2x6 (2038) n/a 2x18 (2038) 2x10+15 (2032) n/a n/a 2x15 (2026) Lesotho n/a 2x2014 2x2214 n/a 2x3014 2x2014 n/a n/a 2x2114 (2036) 79 (Trial) Mozambique n/a 2x10 (2039) 2x10 (2039) n/a 2x20 (2039) 2x15+5 (2039) n/a n/a 10015 (2024) 2x53, 15 (2028) 2x53, 15 (2028) Tanzania 2x10 (2033) 2x10 (2037) n/a 2x12.5 (2031) n/a 2x10 (2031) 2x15 (2031) 70 (2037) 20 (2037) 2x7+2x14 (2031) Turkey n/a 2x10 (2029) 2x11 (2023)16 n/a 2x10 (2029) 2x15+5 (2029) n/a 2x15+10 (2029) n/a 2x1.43 (2029) Egypt n/a n/a 2x12.5 (2031) n/a 2x10 (2031) 2x20 (2031) n/a 40 (2031)17 n/a Notes: 1. All: Single (or unpaired) blocks of spectrum are used for asymmetric data (non-voice) use; block quantity has been rounded to the nearest whole number. 2. Germany: The allocation of 2.1GHz will change to the following: At present we have 2x15 MHz (2040) and 2x5 (2025); in January 2026 will have 2x20 MHz (2040). 3. Multiple: Blocks within the same spectrum band but with different licence expiry dates are separately identified. 4. UK: All UK spectrum licences are perpetual so any dates given are the ones from which licence fees become payable, and where no date is given this means that licence fees already apply. 5. UK: Currently in the transition period of the 3.4-3.8 GHz defragmentation deal with Virgin Media O2. Once the transition is completed in 2025, Vodafone will have 90 MHz with an expiry date of 2038. 6. Spain: The initial term of the licence is 20 years, with the option to renew the licence for an additional 20 years as long as the licence conditions have been met. 7. Ireland: 105 MHz in cities, 85 MHz in regions. 8. Romania: 100 MHz 3.5 GHz licence to start upon expiry of the original 40 MHz licence. 9. Czech Republic: Early extension to the 2.1 GHz licence achieved in 2022, extending the term of the original licence from 2025 to 2041. 10. Czech Republic: Includes 40 MHz acquired from PODA, with same licence duration as the other 60 MHz. 11. Albania: As part of the merger remedies from the ONE-ALBtelecom merger, Vodafone has agreed to acquire the following spectrum from the merged entity effective 1 May 2023: 2x4.5 MHz of 1800 MHz expiring June 2024; 2x7.2 MHz of 1800 MHz expiring March 2034; 2x5 MHz of 2.1 GHz expiring June 2026; and 2x20 MHz of 2.6 GHz expiring May 2031. 12. South Africa: Under South Africa’s licensing regime, Vodacom has been assigned a network and service operating licence. This operating licence permits Vodacom South Africa to be assigned spectrum licences which are valid for the duration of the operating licence, subject to annual renewal through the payment of annual spectrum usage regulatory fees. Vodacom’s operating licence will expire in 2029. 13. South Africa: The South African Regulator has indicated that it has approved Vodacom’s 2100 MHz licence amendment which effectively returns the 2100TDD spectrum. Surrender of 2x1 MHz in 900 MHz due to band harmonisation imminent. 14. Lesotho: Vodacom’s Lesotho spectrum licences are attached to a unified services licence and renewed annually. 1x79 MHz of 3.5GHz has been licensed on a temporary basis and is pending renewal. 15. Mozambique: 3.5GHz spectrum for 5G trial which was extended to 2024. 2x5 of 2.1GHz and 2x5 of 1800 MHz have been acquired for 5 years expirying in 2028. A further 2x2 MHz of 900 MHz was also acquired expiring in line with the overall unified licence. 16. Turkey: Extension of 2x11 MHz licence up to 30 April 2029 was completed on 18 April 2023. Licence extension Protocol is subject to Council of State’s opinion which is pending. 17. Egypt: The first tranche of 20 MHz of 2.6 GHz was made available In November 2021 and the second tranche of 20 MHz was received in January 2022. 18. Multiple: We currently hold mmWave 26 GHz licences in Italy, Spain and Greece. 241 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Form 20-F cross reference guide No other information in this document is included in the 2023 Form 20-F or incorporated by reference into any filings by us under the Securities Act. Please see ‘Documents on display’ on page 233 for information on how to access the 2023 Form 20-F as filed with the SEC. The 2023 Form 20-F has not been approved or disapproved by the SEC nor has the SEC passed judgement upon the adequacy or accuracy of the 2023 Form 20-F. Item Form 20-F caption Location in this document Page 1 Identity of Directors, senior management and advisers Not applicable – 2 Offer statistics and expected timetable Not applicable – 3 Key information 3B Capitalisation and indebtedness Not applicable – 3C Reasons for the offer and use of proceeds Not applicable – 3D Risk factors Principal risk factors and uncertainties 51 to 56 4 Information on the Company 4A History and development of the Company Chair’s Message 6 Our Financial Performance 16 to 24 Directors’ report 108 to 109 Note 12 ‘Investments in associates and joint arrangements’ 157 to 164 History and development 236 Contact details Back cover Shareholder information: Contact details for Equiniti and EQ Shareholder Services 230 Shareholder information: Articles of Association and applicable English law 231 Note 1 ‘Basis of preparation’ 127 to 133 Note 2 ‘Revenue disaggregation and segmental analysis’ 134 to 137 Note 7 ‘Discontinued operations and assets held for sale’ 151 Note 11 ‘Property, plant and equipment’ 155 to 156 Note 27 ‘Acquisitions and disposals’ 194 to 195 Note 28 ‘Commitments’ 196 Documents on display 233 4B Business overview About Vodafone 2 Operating in a rapidly changing industry 3 Key performance indicators 4 to 5 Chair’s message 6 Chief Executive’s statement and strategic roadmap 7 Mega trends 8 to 9 Stakeholder engagement 10 to 12 Our financial performance 16 to 25 Purpose, sustainability and responsible business 26 to 50 Note 2 ‘Revenue disaggregation and segmental analysis’ 134 to 137 Regulation 236 to 240 4C Organisation structure Note 31 ‘Related undertakings’ 201 to 209 Note 12 ‘Investments in associates and joint arrangements’ 157 to 164 Note 13 ‘Other investments’ 165 4D Property, plant and equipment Our people strategy 14 TCFD disclosure 58 to 59 Note 20 ‘Leases’ 171 to 173 Note 11 ‘Property, plant and equipment’ 155 to 156 4A Unresolved staff comments None – 5 Operating and financial review and prospects 5A Operating results Our financial performance 16 to 25 Cyber security 42 to 43 Note 1 ‘Basis of preparation’ 127 to 133 Note 21 ‘Borrowings’ 174 to 175 Note 22 ‘Capital and financial risk management’ 176 to 185 Regulation 236 to 240 5B Liquidity and capital resources Our financial performance: Cash flow, capital allocation and funding 23 to 25 Long-term viability statement 57 Directors’ statement of responsibility: Going concern 112 Note 19 ‘Cash and cash equivalents’ 170 Note 21 ‘Borrowings’ 174 to 175 Note 20 ‘Leases’ 171 to 173 Note 22 ‘Capital and financial risk management’ 176 to 185 Note 28 ‘Commitments’ 196 242 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Item Form 20-F caption Location in this document Page 5C Research and development, patents and licences etc. Note 10 ‘Intangible assets’ 153 to 154 Regulation: Overview of spectrum licences 241 5D Trend information Key performance indicators 4 to 5 Mega trends 8 to 9 Long-term viability statement 57 5E Critical accounting estimates Note 1 ‘Basis of preparation’ 127 to 133 6 Directors, senior management and employees 6A Directors and senior management Our Board 65 to 67 Our governance structure 68 Our Executive Committee 69 Division of responsibilities 70 6B Compensation Annual Report on Remuneration: 2023 Remuneration 93 to 106 Remuneration Policy 87 to 92 Note 23 ‘Directors and key management compensation’ 186 6C Board practices Committee activities 61 Our Board 65 to 67 Our governance structure 68 Division of responsibilities 70 Board activities and principal decisions 71 to 72 Nominations and Governance Committee 74 to 76 Audit and Risk Committee 77 to 82 ESG Committee 83 to 84 Remuneration Committee 85 to 86 Remuneration policy 87 to 92 Shareholder information: Articles of Association and applicable English law 231 6D Employees Our people strategy 13 to 15 Workplace equality 33 to 34 Note 24 ‘Employees’ 187 6E Share ownership Annual Report on Remuneration: 2023 Remuneration 93 to 106 Remuneration Policy 87 to 92 All-employee share plans 97 Note 26 ‘Share-based payments’ 192 to 193 7 Major shareholders and related party transactions 7A Major shareholders Shareholder information: Major shareholders 231 7B Related party transactions Annual Report on Remuneration: 2023 Remuneration 93 to 106 Note 13 ‘Other investments’ 165 Note 23 ‘Directors and key management compensation’ 186 Note 29 ‘Contingent liabilities and legal proceedings’ 196 to 199 Note 30 ‘Related party transactions’ 200 7C Interests of experts and counsel Not applicable – 8 Financial information 8A Consolidated statements and other financial information Consolidated financial statements 123 to 211 Report of independent registered public accounting firm 119 to 122 Note 29 ‘Contingent liabilities and legal proceedings’ 196 to 199 Dividend rights 232 8B Significant changes Note 33 ’Subsequent Events’ 210 to 211 9 The offer and listing 9A Offer and listing details Capital structure and rights attaching to shares 108 9B Plan of distribution Not applicable – 9C Markets Capital structure and rights attaching to shares 108 9D Selling shareholders Not applicable – 9E Dilution Not applicable – 9F Expenses of the issue Not applicable – 243 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Item Form 20-F caption Location in this document Page 10 Additional information 10A Share capital Not applicable – 10B Memorandum and Articles of Association Shareholder information 230 to 235 Description of securities registered Exhibit 2.6 10C Material contracts Shareholder information: Material contracts 233 10D Exchange controls Shareholder information: Exchange controls 233 10E Taxation Shareholder information: Taxation 233 to 235 10F Dividends and paying agents Not applicable – 10G Statements by experts Not applicable – 10H Documents on display Shareholder information: Documents on display 233 10I Subsidiary information Note 31 ’Related undertakings’ 201 to 209 11 Quantitative and qualitative disclosures about market risk Note 22 ‘Capital and financial risk management’ 176 to 185 12 Description of securities other than equity securities 12A Debt securities Not applicable – 12B Warrants and rights Not applicable – 12C Other securities Not applicable – 12D American depositary shares Fees payable by ADR holders Exhibit 99.1 13 Defaults, dividend arrearages and delinquencies Not applicable – 14 Material modifications to the rights of security holders and use of proceeds Not applicable – 15 Controls and procedures Directors’ statement of responsibility 111 to 112 Governance 65 to 82 Cyber security 42 to 43 Report of independent registered public accounting firm 119 to 122 16 Reserved 16A Audit Committee financial expert Board Committees: Audit and Risk Committee 77 to 82 16B Code of ethics Our US listing requirements 107 16C Principal accountant fees and services Board Committees: Audit and Risk Committee 77 to 82 Note 3 ‘Operating profit’ 138 Board Committees: Audit and Risk Committee: External audit 82 16D Exemptions from the listing standards for audit committees Not applicable – 16E Purchase of equity securities by the issuer and affiliated purchasers Share buybacks 25 16F Change in registrant’s certifying accountant Not applicable – 16G Corporate governance Our US listing requirements 107 16H Mine safety disclosure Not applicable – 17 Financial statements Consolidated financial statements 123 to 211 18 Financial statements Report of independent registered public accounting firm 119 to 122 Consolidated financial statements 123 to 211 19 Exhibits Index to Exhibits – Form 20-F cross reference guide (continued) 244 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Forward-looking statements Unaudited information This document contains ‘forward-looking statements’ within the meaning of the US Private Securities Litigation Reform Act of 1995 with respect to the Group’s financial condition, results of operations and businesses, and certain of the Group’s plans and objectives. In particular, such forward looking statements include statements with respect to: – the Group’s expectations and guidance regarding its financial and operating performance, the performance of associates and joint ventures, other investments and newly acquired businesses, preparation for 5G and expectations regarding customers; – intentions and expectations regarding the development of products, services and initiatives, including the Group’s strategy, introduced by, or together with. Vodafone or by third parties; – expectations regarding the global economy and the Group’s operating environment and market position, including future market conditions growth in the number of worldwide mobile phone users and other trends; – revenue and growth expected from Vodafone Business’ and total communications strategy; – mobile penetration and coverage rates. MTR cuts, the Group’s ability to acquire spectrum and licences, including 5G licences, expected growth prospects in the Europe and Rest of the World regions and growth in customers and usage generally; – anticipated benefits to the Group from cost-efficiency programmes, including their impact on the absolute indirect cost base; – possible future acquisitions, including increases in ownership in existing investments, the timely completion of pending acquisition transactions and pending offers for investments; – expectations and assumptions regarding the Group’s future revenue, operating profit, cash flow depreciation and amortisation charges, foreign exchange rates, tax rates and capital expenditure – expectations regarding the Group’s access to adequate funding for its working capital requirements and share buyback programmes, and the Group’s future dividends or its existing investments; – the impact of regulatory and legal proceedings involving the Group and of scheduled or potential regulatory changes; and – climate change, including emissions targets and other ESG goals, commitments, targets and ambitions, climate-related scenarios or pathways and methodologies we use to assess our progress in relation to these. Forward-looking statements are sometimes but not always identified by their use of a date in the future or such words as ‘anticipates’, ‘aims’, ‘could’, ‘may’, ‘should’, ‘expects’, ‘believes’, ‘intends’, ‘plans’, ‘goals’, ‘estimates’, or ‘targets’. By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements These factors include, but are not limited to the following: – general economic and political conditions in the jurisdictions in which the Group operates and changes to the associated legal, regulatory and tax environments; – increased competition; – levels of investment in network capacity and the Group’s ability to deploy view technologies, products and services; – evolving cyber threats to the Group’s services and confidential data; – the Group’s ability to embed responses to climate-related risks into business strategy and operations; – rapid changes to existing products and services and the inability of new products and services to perform in accordance with expectations; – the ability of the Group to integrate new technologies, products and services with existing networks. technologies, products and services; – the Group’s ability to generate and grow revenue; – slower than expected impact of new or existing products, services or technologies on the Group’s future revenue, cost structure and capital expenditure outlays; – slower than expected customer growth, reduced customer retention, reductions or changes in customer spending and increased pricing pressure; – the Group’s ability to extend and expand its spectrum resources, to support ongoing growth in customer demand for mobile data services; – the Group’s ability to secure the timely delivery of high-quality products from suppliers; – loss of suppliers, disruption of supply chains and greater than anticipated prices of new mobile handsets; – changes in the costs to the Group of, or the rates the Group may charge for terminations and roaming minutes; – the impact of a failure or significant interruption to the Group’s telecommunications, networks, IT systems or data protection systems; – the Group’s ability to realise expected benefits from acquisitions, partnerships, pint ventures franchises, brand licences, platform sharing or other arrangements with third parties; – acquisitions and divestments of Group businesses and assets and the pursuit of new, unexpected strategic opportunities; – the Group’s ability to integrate acquired business or assets; – the extent of any future write-downs or impairment charges on the Group’s assets, or restructuring charges incurred as a result of an acquisition or disposition; – developments in the Group’s financial condition, earnings and distributable funds and other factors that the Board takes into account in determining the level of dividends; – the Group’s ability to satisfy working capital requirements; – changes in foreign exchange rates; – changes in the regulatory framework in which the Group operates; – the impact of legal or other proceedings against the Group or other companies in the communications industry; – changes in statutory tax rates and profit mix; – climate change projection risk including, for example, the evolution of climate change and its impacts, changes in the scientific assessment of climate change impacts, transition pathways and future risk exposure and limitations of climate scenario forecasts; – amendments to or new ESG reporting standards, models or methodologies; – changes in ESG data availability and quality which could result in revisions to reported data going forward; and – climate scenarios and the models that analyse them have limitations that are sensitive to key assumptions and parameters, which are themselves subject to some uncertainty. A review of the reasons why actual results and developments may differ materially from the expectations disclosed or implied within forward-looking statements can be found under ‘Principal risk factors and uncertainties on pages 51 to 56 of this document. All subsequent written or oral forward-looking statements attributable to the Company or any member of the Group or any persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. No assurances can be given that the forward-looking statements in this document will be realised. Subject to compliance with applicable law and regulations, Vodafone does not intend to update these forward-looking statements and does not undertake any obligation to do so. References in this document to information on websites, including other supporting disclosures located thereon such as videos, our ESG Addendum and our TCFD report, and/or social media sites are included as an aid to their location and such information is not incorporated in, and does not form part of the 2023 Annual Report on Form 20-F. Ernst & Young LLP has neither examined, compiled, nor performed any procedures with respect to the forward-looking statements. Accordingly, Ernst & Young LLP does not express an opinion or provide any other form of assurance on such information. 245 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
The definitions of non-GAAP measures are included in the ‘Non-GAAP measures’ section on pages 219 to 229. 3G A cellular technology based on wide band code division multiple access delivering voice and faster data services. 4G 4G or long-term evolution (‘LTE’) technology offers even faster data transfer speeds than 3G/HSPA. 5G 5G is the fifth-generation wireless broadband technology which provides better speeds and coverage than the current 4G. Adjusted EBITAaL Adjusted EBITDAaL is operating profit after depreciation on lease-related right of use assets and interest on leases but excluding depreciation, amortisation and gains/losses on disposal of owned assets and excluding share of results of equity accounted associates and joint ventures, impairment losses, restructuring costs arising from discrete restructuring plans, other income and expense and significant items that are not considered by management to be reflective of the underlying performance of the reporting segment. ADR American depositary receipts is a mechanism designed to facilitate trading in shares of non-US companies in the US stock markets. The main purpose is to create an instrument which can easily be settled through US stock market clearing systems. ADS American depositary shares are shares evidenced by American depositary receipts. ADSs are issued by a depositary bank and represent one or more shares of a non-US issuer held by the depositary bank. The main purpose of ADSs is to facilitate trading in shares of non-US companies in the US markets and, accordingly, ADRs which evidence ADSs are in a form suitable for holding in US clearing systems. Africa Comprises the Vodacom Group and business in Egypt. AGM Annual General Meeting. Applications (‘apps’) Apps are software applications usually designed to run on a smartphone or tablet device and provide a convenient means for the user to perform certain tasks. They cover a wide range of activities including banking, ticket purchasing, travel arrangements, social networking and games. For example, the MyVodafone app lets customers check their bill totals on their smartphone and see the minutes, texts and data allowance remaining. ARPU Average revenue per user, defined as customer revenue and incoming revenue divided by average customers. B2C Business-to-Consumer refers to the process of selling products and services directly between a business and consumers who are the end-users. Capital additions Comprises the purchase of owned property, plant and equipment and other intangible assets, other than licence and spectrum payments and integration capital additions. Churn Total gross customer disconnections in the period divided by the average total customers in the period. Cloud services This means the customer has little or no equipment, data and software at their premises. The capability associated with the service is run from the Vodafone network and data centres instead. This removes the need for customers to make capital investments and instead they have an operating cost model with a recurring monthly fee. CO2e CO2e, or Carbon dioxide equivalent, is a term for describing different greenhouse gases in a common unit. For any quantity and type of greenhouse gas, CO2e signifies the amount of CO2 which would have the equivalent global warming impact. Common Functions Comprises central teams and business functions. Converged customer A customer who receives fixed and mobile services (also known as unified communications) on a single bill or who receives a discount across both bills. Depreciation and amortisation The accounting charge that allocates the cost of tangible or intangible assets, whether owned or leased, to the income statement over its useful life. The measure includes the profit or loss on disposal of property, plant and equipment, software and leased assets. Eliminations Refers to the removal of intercompany transactions to derive the consolidated financial statements. Europe Comprises the Group’s European businesses and the UK. FCA Financial Conduct Authority. Financial services revenue Financial services revenue includes fees generated from the provision of advanced airtime, overdraft, financing and lending facilities, as well as merchant payments and the sale of insurance products (e.g. device insurance, life insurance and funeral cover). Fixed service revenue Service revenue (see overleaf) relating to the provision of fixed line and carrier services. Fibre to the cabinet (‘FTTC’) Involves running fibre optic cables from the telephone exchange or distribution point to the street cabinets which then connect to a standard phone line to provide broadband. Fibre to the home (‘FTTH’) Provides an end-to-end fibre optic connection the full distance from the exchange to the customer’s premises. GAAP Generally Accepted Accounting Principles. GSMA Global System for Mobile Communications Association. ICT Information and communications technology. IFRS International Financial Reporting Standards. Incoming revenue Comprises revenue from termination rates for voice and messaging to Vodafone customers. Integration capital additions Capital additions incurred in relation to significant changes in the operating model, such as the integration of recently acquired subsidiaries. Internet of Things (‘IoT’) The network of physical objects embedded with electronics, software, sensors, and network connectivity, including built-in mobile SIM cards, that enables these objects to collect data and exchange communications with one another or a database. LTM Last twelve months. Definition of terms Unaudited information 246 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Mark-to-market Mark-to-market or fair value accounting refers to accounting for the value of an asset or liability based on the current market price of the asset or liability. Mbps Megabits (millions) of bits per second. Mobile broadband Mobile broadband allows internet access through a browser or a native application using any portable or mobile device such as smartphone, tablet or laptop connected to a cellular network. Mobile service revenue Service revenue (see below) relating to the provision of mobile services. Mobile termination rate (‘MTR’) A per minute charge paid by a telecommunications network operator when a customer makes a call to another mobile or fixed network operator. Mobile virtual network operator (‘MVNO’) Companies that provide mobile phone services under wholesale contracts with a mobile network operator, but do not have their own licence or spectrum or the infrastructure required to operate a network. Next-generation networks (‘NGN’) Fibre or cable networks typically providing high-speed broadband. Net Promoter Score (‘NPS’) Net Promoter Score is a customer loyalty metric used to monitor customer satisfaction. Operating expenses Comprise primarily sales and distribution costs, network and IT-related expenditure and business support costs. Other Europe Other Europe markets include Portugal, Ireland, Greece, Romania, Czech Republic and Albania. Other Markets Other Markets comprise Turkey and Egypt. From 1 April 2023, the Group will revise its segments by moving Vodafone Egypt from the Other Markets segment to reflect the effective date of changes made to the Group’s internal reporting structure following the transfer of Vodafone Egypt to the Vodacom Group in December 2022. Other revenue Other revenue principally includes equipment revenue, interest income, income from partner market arrangements and lease revenue, including in respect of the lease out of passive tower infrastructure. Partner markets Markets in which the Group has entered into a partner agreement with a local mobile operator enabling a range of Vodafone’s global products and services to be marketed in that operator’s territory and extending Vodafone’s reach into such markets. Penetration Number of SIMs in a country as a percentage of the country’s population. Penetration can be in excess of 100% due to customers owning more than one SIM. Petabyte A petabyte is a measure of data usage. One petabyte is a million gigabytes. Pps Percentage points. RAN Radio access network is the part of a mobile telecommunications system which provides cellular coverage to mobile phones via a radio interface, managed by thousands of base stations installed on towers and rooftops across the coverage area, and linked to the core nodes through a backhaul infrastructure which can be owned, leased or a mix of both. Reported growth Reported growth is based on amounts reported in euros and determined under IFRS. Restructuring costs Costs incurred by the Group following the implementation of discrete restructuring plans to improve overall efficiency. Retail service revenue Retail service revenue comprises Service revenue excluding Mobile Virtual Network Operator (‘MVNO’) and Fixed Virtual Network Operator (‘FVNO’) wholesale revenue. Revenue The total of Service revenue (see below) and Other revenue (see above). Roaming and Visitor Roaming: allows customers to make calls, send and receive texts and data on other operators’ mobile networks, usually while travelling abroad. Visitor: revenue received from other operators or markets when their customers roam on one of our markets’ networks. Smartphone penetration The number of smartphone devices divided by the number of registered SIMs (excluding data only SIMs) and telemetric applications. Service revenue Service revenue is all revenue related to the provision of ongoing services to the Group’s consumer and enterprise customers, together with roaming revenue, revenue from incoming and outgoing network usage by non-Vodafone customers and interconnect charges for incoming calls. SME Small and medium-sized enterprises. SOHO Small-Office-Home-Office customers. Spectrum The radio frequency bands and channels assigned for telecommunication services. Task Force on Climate-related Financial Disclosures (‘TCFD’) TCFD is a global framework for companies and other organisations to develop more effective climate-related financial disclosures through their existing reporting processes. Vodafone Business Vodafone Business is part of the Group and partners with businesses of every size to provide a range of business-related services. Vodafone Procurement Company (‘VPC’) VPC is Vodafone’s procurement company, leading purchasing and supplier management for Vodafone as a whole. Based in Luxembourg, VPC manages most of Vodafone’s spending with suppliers worldwide. VPC supports the needs of Vodafone’s operating companies and group functions, and sells procurement services to third parties. _VOIS _VOIS (Vodafone Intelligent Solutions) has grown from a single entity service provider to a global purpose-driven company that provides a comprehensive portfolio of services to Vodafone and other telecommunications operators throughout the world. WACC Weighted average cost of capital. 247 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
Notes 248 Vodafone Group Plc Annual Report on Form 20-F 2023 Strategic report Governance Financials Other information |
References to Vodafone are to Vodafone Group Plc and references to Vodafone Group are to Vodafone Group Plc and its subsidiaries unless otherwise stated. Vodafone, the Vodafone Speech Mark Devices, Vodacom and Together We Can are trade marks owned by Vodafone. The Vantage Towers Logo and the VT Monogram Logo are trade marks owned by Vantage Towers AG. Other product and company names mentioned herein may be the trade marks of their respective owners. This report contains references to Vodafone’s website, and other supporting disclosures located thereon such as videos, our ESG Addendum, our TCFD report, and our cyber security factsheet, amongst others. These references are for readers’ convenience only and information included on Vodafone’s website is not incorporated in, and does not form part of, this Annual Report or our Annual Report on Form 20-F. © Vodafone Group 2023 Consultancy and design by Black Sun Global www.blacksun-global.com Our purpose: Planet The paper content of this publication has been certifiably reforested via PrintReleaf – the world’s first platform to measure paper consumption and automate reforestation across a global network of reforestation projects. The cover and text are printed on Revive 100 uncoated, made entirely from de-inked post-consumer waste. This product is Forest Stewardship Council® (‘FSC’®) certified and produced using elemental chlorine free (‘ECF’) bleaching. The manufacturing mill also holds ISO 14001 accreditation for environmental management. Certificate of Reforestation Printreleaf hereby certifies that Vodafone has offset 3,000 kg of paper consumption by reforesting 79.58 standard trees at the Reforestation Project located in Ireland. ACCOUNT ID ACT_B44719E7E15D OFFSET ID BX_AA2E3B72B883 OFFSET DATE 2023-05-23 REFORESTATION PROJECT Ireland KG OF PAPER 3,000 STANDARD TREES 79.58 |
Vodafone Group Plc Vodafone House The Connection Newbury Berkshire RG14 2FN England Registered in England No. 1833679 Telephone +44 (0)1635 33251 vodafone.com Contact details Shareholder helpline Telephone +44 (0)371 384 2532 Investor Relations ir@vodafone.co.uk vodafone.com/investor Media Relations vodafone.com/media/contact Annual Report on Form 20-F 2023 Vodafone Group Plc |
Index of Exhibits to the Company’s Annual Report on Form 20-F for the financial year ended March 31, 2023
1.1 |
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2.1 |
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2.2 |
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2.3 |
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2.4 |
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2.5 |
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2.6 |
Description of Securities Registered under Section 12 of the Exchange Act. |
2.7 |
Form of American Depository Receipt (included in Exhibit 2.5). |
4.1 |
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4.2 |
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4.3 |
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4.4 |
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4.5 |
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4.14 |
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4.15 |
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4.16 |
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4.17 |
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4.18 |
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4.19 |
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4.20 |
Letter of Appointment of Christine Ramon dated 14 November 2022. |
4.21 |
Service Agreement of Margherita Della Valle dated 13 June 2023. |
4.22 |
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4.23 |
4.24 |
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15.1 |
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99.1 |
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99.2 |
* The schedules to the Investment Agreement dated 9 November 2022 (as amended on 22 March 2023) have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. Copies of such schedules will be furnished to the SEC upon its request; provided, however, that confidential treatment may be requested pursuant to Rule 24b-2 of the Exchange Act for any schedule so furnished. Certain identified confidential portions of this exhibit have been omitted because such identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed.
** The schedules to the Shareholders’ Agreement dated 22 March 2023 have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. Copies of such schedules will be furnished to the SEC upon its request; provided, however, that confidential treatment may be requested pursuant to Rule 24b-2 of the Exchange Act for any schedule so furnished. Certain identified confidential portions of this exhibit have been omitted because such identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed.
*** The schedules to the Contribution Agreement dated 14 June 2023, between, inter alia, Vodafone and CK Hutchison Holdings Limited have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. Copies of such schedules will be furnished to the SEC upon its request; provided, however, that confidential treatment may be requested pursuant to Rule 24b-2 of the Exchange Act for any schedule so furnished. Certain identified confidential portions of this exhibit have been omitted because such identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed.
Signature
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorised the undersigned to sign this Annual Report on its behalf.
Vodafone Group Plc |
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/s/ Maaike de Bie |
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Maaike de Bie |
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Group General Counsel and Company Secretary |
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Date: 21 June 2023 |
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Exhibit 2.3
EXECUTION VERSION
SEVENTEENTH SUPPLEMENTAL TRUST DEED
22 SEPTEMBER 2022
VODAFONE GROUP PLC
and
THE LAW DEBENTURE TRUST CORPORATION p.l.c.
further modifying and restating the provisions of
the Trust Deed dated 16 July 1999
relating to a
€30,000,000,000
Euro Medium Term Note Programme
ALLEN & OVERY
Allen & Overy LLP
THIS SEVENTEENTH SUPPLEMENTAL TRUST DEED is made on 22 September 2022
BETWEEN:
(1) |
VODAFONE GROUP PLC, a company incorporated with limited liability in England and Wales with registered number 1833679, whose registered office is at Vodafone House, The Connection, Newbury, Berkshire RG14 2FN, England (the Issuer); and |
(2) |
THE LAW DEBENTURE TRUST CORPORATION p.l.c., a company incorporated with limited liability in England and Wales with registered number 1675231, whose registered office is at Eighth Floor, 100 Bishopsgate, London EC2N 4AG, England (the Trustee, which expression shall, wherever the context so admits, include such company and all other persons or companies for the time being the trustee or trustees of these presents) as trustee for the Noteholders and the Couponholders. |
WHEREAS:
(A)This Seventeenth Supplemental Trust Deed is supplemental to:
(i) |
the Trust Deed dated 16 July 1999 (hereinafter called the Principal Trust Deed) made between the Issuer and the Trustee and relating to the Euro Medium Term Note Programme (the Programme) established by the Issuer; |
(ii) |
the First Supplemental Trust Deed dated 4 May 2000 (the First Supplemental Trust Deed) made between the Issuer and the Trustee and modifying and restating the provisions of the Principal Trust Deed; |
(iii) |
the Second Supplemental Trust Deed dated 31 May 2001 (the Second Supplemental Trust Deed) made between the Issuer and the Trustee and further modifying and restating the provisions of the Principal Trust Deed; |
(iv) |
the Third Supplemental Trust Deed dated 6 June 2002 (the Third Supplemental Trust Deed) made between the Issuer and the Trustee and further modifying the provisions of the Principal Trust Deed; |
(v) |
the Fourth Supplemental Trust Deed dated 19 July 2005 (the Fourth Supplemental Trust Deed) made between the Issuer and the Trustee and further modifying and restating the provisions of the Principal Trust Deed; |
(vi) |
the Fifth Supplemental Trust Deed dated 19 July 2006 (the Fifth Supplemental Trust Deed) made between the Issuer and the Trustee and further modifying and restating the provisions of the Principal Trust Deed; |
(vii) |
the Sixth Supplemental Trust Deed dated 1 August 2007 (the Sixth Supplemental Trust Deed) made between the Issuer and the Trustee and further modifying the provisions of the Principal Trust Deed; |
(viii) |
the Seventh Supplemental Trust Deed dated 14 July 2008 (the Seventh Supplemental Trust Deed) made between the Issuer and the Trustee and further modifying the provisions of the Principal Trust Deed; |
1
(ix) |
the Eighth Supplemental Trust Deed dated 10 July 2009 (the Eighth Supplemental Trust Deed) made between the Issuer and the Trustee and further modifying the provisions of the Principal Trust Deed; |
(x) |
the Ninth Supplemental Trust Deed dated 13 July 2010 (the Ninth Supplemental Trust Deed) made between the Issuer and the Trustee and further modifying the provisions of the Principal Trust Deed; |
(xi) |
the Tenth Supplemental Trust Deed dated 8 July 2011 (the Tenth Supplemental Trust Deed) made between the Issuer and the Trustee and further modifying the provisions of the Principal Trust Deed; |
(xii) |
the Eleventh Supplemental Trust Deed dated 11 July 2013 (the Eleventh Supplemental Trust Deed) made between the Issuer and the Trustee and further modifying and restating the provisions of the Principal Trust Deed; |
(xiii) |
the Twelfth Supplemental Trust Deed dated 4 August 2014 (the Twelfth Supplemental Trust Deed) made between the Issuer and the Trustee and further modifying and restating the provisions of the Principal Trust Deed; |
(xiv) |
the Thirteenth Supplemental Trust Deed dated 12 January 2016 (the Thirteenth Supplemental Trust Deed) made between the Issuer and the Trustee and further modifying and restating the provisions of the Principal Trust Deed; |
(xv) |
the Fourteenth Supplemental Trust Deed dated 5 July 2019 (the Fourteenth Supplemental Trust Deed) made between the Issuer and the Trustee and further modifying and restating the provisions of the Principal Trust Deed; |
(xvi) |
the Fifteenth Supplemental Trust Deed dated 26 August 2020 (the Fifteenth Supplemental Trust Deed) made between the Issuer and the Trustee and further modifying and restating the provisions of the Principal Trust Deed; and |
(xvii) |
the Sixteenth Supplemental Trust Deed dated 16 September 2021 (the Sixteenth Supplemental Trust Deed and, together with the Principal Trust Deed, the First Supplemental Trust Deed, the Second Supplemental Trust Deed, the Third Supplemental Trust Deed, the Fourth Supplemental Trust Deed, the Fifth Supplemental Trust Deed, the Sixth Supplemental Trust Deed, the Seventh Supplemental Trust Deed, the Eighth Supplemental Trust Deed, the Ninth Supplemental Trust Deed, the Tenth Supplemental Trust Deed, the Eleventh Supplemental Trust Deed, the Twelfth Supplemental Trust Deed, the Thirteenth Supplemental Trust Deed, the Fourteenth Supplemental Trust Deed and the Fifteenth Supplemental Trust Deed, the Subsisting Trust Deeds) made between the Issuer and the Trustee and further modifying and restating the provisions of the Principal Trust Deed. |
(B) |
On 22 September 2022 the Issuer published a modified and updated Prospectus (the Prospectus) relating to the Programme. |
(C) |
The Issuer has requested the Trustee to agree to modify the Principal Trust Deed (as modified and/or restated as described above) to reflect the relevant modifications to the Prospectus referred to in Recital (B) above. |
2
NOW THIS SEVENTEENTH SUPPLEMENTAL TRUST DEED WITNESSES AND IT IS HEREBY AGREED AND DECLARED as follows:
1. |
SUBJECT as hereinafter provided and unless there is something in the subject matter or context inconsistent therewith all words and expressions defined in the Principal Trust Deed (as modified and/or restated as aforesaid) shall have the same meanings in this Seventeenth Supplemental Trust Deed. |
2.SAVE:
(a) |
in relation to all Series of Notes the first Tranche of which was issued on or prior to the day last preceding the date of this Seventeenth Supplemental Trust Deed; and |
(b) |
for the purpose (where necessary) of construing the provisions of this Seventeenth Supplemental Trust Deed, |
with effect on and from the date of this Seventeenth Supplemental Trust Deed:
(a) |
the Principal Trust Deed (as modified and/or restated as aforesaid) is further modified in such manner as would result in the Principal Trust Deed as so modified being in the form set out in the Schedule hereto; and |
(b) |
the provisions of the Principal Trust Deed (as modified and/or restated as aforesaid) insofar as the same still have effect shall cease to have effect and in lieu thereof the provisions of the Principal Trust Deed as so modified and restated (and being in the form set out in the Schedule hereto) shall have effect. |
3. |
FOR the avoidance of doubt, the Principal Trust Deed (without the modifications made hereby but, where applicable, as modified and/or restated as aforesaid) shall continue to have effect in relation to all Series of Notes the first Tranche of which was issued on or prior to the day last preceding the date of this Seventeenth Supplemental Trust Deed. |
4. |
THE Subsisting Trust Deeds shall henceforth be read and construed as one document with this Seventeenth Supplemental Trust Deed. |
5. |
A Memorandum of this Seventeenth Supplemental Trust Deed shall be endorsed by the Trustee on the Principal Trust Deed and by the Issuer on its duplicate thereof. |
6. |
This Seventeenth Supplemental Trust Deed may be executed and delivered in any number of counterparts, all of which, taken together, shall constitute one and the same deed and any party to this Seventeenth Supplemental Trust Deed may enter into the same by executing and delivering a counterpart. |
IN WITNESS whereof this Seventeenth Supplemental Trust Deed has been executed by the Issuer and the Trustee as a deed and delivered on the day and year first above written.
3
THE SCHEDULE
FORM OF MODIFIED PRINCIPAL TRUST DEED
TRUST DEED
16 JULY 1999
(AS AMENDED AND RESTATED MOST RECENTLY ON 22 SEPTEMBER 2022)
VODAFONE GROUP PLC
and
THE LAW DEBENTURE TRUST CORPORATION p.l.c.
relating to a
€30,000,000,000
Euro Medium Term Note Programme
1
CONTENTS
Clause |
|
Page |
|
|
|
1. |
Definitions |
1 |
2. |
Amount and issue of the Notes and Subordination |
13 |
3. |
Forms of the Notes |
17 |
4. |
Fees, Duties and Taxes |
19 |
5. |
Covenant of Compliance |
20 |
6. |
Cancellation of Notes and Records |
20 |
7. |
Non-payment |
21 |
8. |
Proceedings, Action and Indemnification |
21 |
9. |
Application of Moneys |
23 |
10. |
Notice of Payments |
23 |
11. |
Investment by Trustee |
23 |
12. |
Partial Payments |
24 |
13. |
Covenants |
24 |
14. |
Remuneration and Indemnification of Trustee |
27 |
15. |
Supplement to Trustee Acts |
29 |
16. |
Trustee’s Liability |
33 |
17. |
Trustee contracting with the Issuer |
33 |
18. |
Waiver, Authorisation and Determination |
34 |
19. |
Holder of Definitive Bearer Note assumed to be Couponholder |
35 |
20. |
Substitution and consolidation merger, Conveyance, Transfer Or Lease |
36 |
21. |
Currency Indemnity |
39 |
22. |
New Trustee |
40 |
23. |
Trustee’s Retirement and Removal |
40 |
24. |
Trustee’s powers to be additional |
41 |
25. |
Notices |
41 |
26. |
Governing Law |
41 |
27. |
Counterparts |
42 |
28. |
Contracts (Rights of Third Parties) Act 1999 |
42 |
Schedule |
|
|
|
|
|
|
|
1. |
Terms and Conditions of the Notes |
43 |
|
|
Part 1 |
Terms and Conditions of the Senior Notes |
43 |
|
Part 2 |
Terms and Conditions of the Subordinated Notes |
100 |
2. |
Forms of Global and Definitive Notes, Certificates, Coupons and Talons |
136 |
|
|
Part 1 |
Form of Temporary Global Note |
136 |
|
Part 2 |
Form of Permanent Global Note |
145 |
|
Part 3 |
Form of Regulation S Global Certificate |
155 |
|
Part 4 |
Form of DTC Restricted Global Certificate |
160 |
|
Part 5 |
Form of Definitive Note |
167 |
|
Part 6 |
Form of Coupon |
171 |
|
Part 7 |
Form of Talon |
172 |
|
Part 8 |
Form of Regulation S Certificate |
174 |
|
Part 9 |
Form of DTC Restricted Certificate |
179 |
3. |
Provisions for Meetings of Noteholders |
184 |
|
|
|
|
|
Signatories |
194 |
2
THIS TRUST DEED is made on 16 July 1999 as amended and restated most recently on 22 September 2022
BETWEEN:
(1) |
VODAFONE GROUP PLC, a company incorporated with limited liability in England and Wales with registered number 1833679, whose registered office is at Vodafone House, The Connection, Newbury, Berkshire RG14 2FN, England (the Issuer); and |
(2) |
THE LAW DEBENTURE TRUST CORPORATION p.l.c., a company incorporated with limited liability in England and Wales with registered number 1675231, whose registered office is at Eighth Floor, 100 Bishopsgate, London EC2N 4AG, England (the Trustee, which expression shall, wherever the context so admits, include such company and all other persons or companies for the time being the trustee or trustees of these presents) as trustee for the Noteholders and the Couponholders (each as defined below). |
WHEREAS:
(1) |
By a resolution of the Board of Directors of the Issuer passed on 24 May 1999 the Issuer resolved to establish, and most recently pursuant to a resolution of the Board of Directors of the Issuer passed on 29 March 2022, has resolved to maintain a Euro Medium Term Note Programme pursuant to which the Issuer may from time to time issue Notes as set out therein and herein. Notes up to a maximum nominal amount (including, for the avoidance of doubt, any Retained Notes) (calculated in accordance with Clause 3.5 of the Programme Agreement (as defined below)) from time to time outstanding of €30,000,000,000 (subject to increase as provided in the Programme Agreement) (the Programme Limit) may be issued pursuant to the said Programme. |
(2) |
The Trustee has agreed to act as trustee of these presents for the benefit of the Noteholders and the Couponholders upon and subject to the terms and conditions of these presents. |
NOW THIS TRUST DEED WITNESSES AND IT IS AGREED AND DECLARED as follows:
1.DEFINITIONS
1.1 |
Terms defined in the Conditions and not otherwise defined herein shall have the same meaning in these presents. In these presents unless there is anything in the subject or context inconsistent therewith the following expressions shall have the following meanings: |
Agency Agreement means the amended and restated agency agreement dated 22 September 2022, as amended and/or supplemented and/or restated from time to time, pursuant to which the Issuer has appointed the Issuing and Principal Paying Agent and the other Agents in relation to all or any Series of the Notes and any other agreement for the time being in force appointing further or other Agents in relation to all or any Series of the Notes, or in connection with their duties, the terms of which have previously been approved in writing by the Trustee, together with any agreement for the time being in force amending or modifying with the prior written approval of the Trustee any of the aforesaid agreements; Arrears of Interest has the meaning set out in Condition 5(a) of the Subordinated Notes;
Agents means, in relation to all or any Series of the Notes, the Issuing and Principal Paying Agent, the other Paying Agents, the Calculation Agent, the Registrar, the other Transfer Agents or any of them;
Appointee means any attorney, manager, agent, delegate, nominee, receiver, custodian or other person appointed by the Trustee under these presents;
1
Auditors means the auditors for the time being of the Issuer or, in the event of their being unable or unwilling promptly to carry out any action requested of them pursuant to the provisions of these presents, such other firm of accountants as may be nominated or approved by the Trustee for the purposes of these presents;
Authorised Signatory means any person who (a) is a Director or the Secretary of the Issuer or (b) has been notified by the Issuer in writing to the Trustee as being duly authorised to sign documents and to do other acts and things on behalf of the Issuer for the purposes of this Trust Deed;
Bearer Note means a Note that is in bearer form;
Calculation Agency Agreement means in relation to all or any Series of the Notes an agreement in or substantially in the form of Schedule I to the Agency Agreement;
Calculation Agent means, in relation to all or any Series of the Notes, the person appointed as such from time to time pursuant to the provisions of the Calculation Agency Agreement or any Successor calculation agent in relation thereto;
Certificate means a Definitive or Global Certificate representing one or more Registered Notes of the same Series and, save as provided in the Conditions, comprising the entire holding by a Noteholder of their Registered Notes of that Series;
CGN means a Temporary Global Note or a Permanent Global Note and in either case in respect of which the applicable Final Terms do not specify that it is a New Global Note;
Clearstream, Luxembourg means Clearstream Banking S.A.;
CMS Linked Notes means Senior Notes specified as such in the applicable Final Terms;
Conditions means, in relation to the Notes of any Series, the terms and conditions endorsed on or incorporated by reference into the Note or Notes constituting such Series, such terms and conditions being in or substantially in the form set out (in the case of Senior Notes) in Part 1 of the First Schedule or (in the case of Subordinated Notes) Part 2 of the First Schedule or, in each case, in such other form, having regard to the terms of issue of the Notes of the relevant Series, as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee and the relevant Dealer(s) as completed and/or (in the case of Exempt Notes) modified and/or replaced by the Final Terms applicable to the Notes of the relevant Series, in each case as from time to time modified in accordance with the provisions of these presents;
Coupon means an interest coupon appertaining to a Definitive Bearer Note (other than a Zero Coupon Note), such coupon being:
(a) |
if appertaining to a Fixed Rate Note, in the form or substantially in the form set out in Part 6 A of the Second Schedule or in such other form, having regard to the terms of issue of the Notes of the relevant Series, as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee and the relevant Dealer(s); or |
(b) |
if appertaining to a Floating Rate Note, a CMS Linked Note, an Inflation Linked Interest Note, a Sustainability-Linked Note or a Reset Rate Note, in the form or substantially in the form set out in Part 6 B of the Second Schedule or in such other form, having regard to the terms of issue of the Notes of the relevant Series, as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee and the relevant Dealer(s); or |
2
(c) |
if appertaining to a Definitive Note which is neither a Fixed Rate Note nor a Floating Rate Note nor a CMS Linked Note nor an Inflation Linked Interest Note nor a Sustainability-Linked Note nor a Reset Rate Note, in such form as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee and the relevant Dealer(s), |
and includes, where applicable, the Talon(s) appertaining thereto and any replacements for Coupons and Talons issued pursuant to Condition 11 of the Senior Notes or Condition 11 of the Subordinated Notes, as the case may be;
Couponholders means the several persons who are for the time being holders of the Coupons and includes, where applicable, the holders of the Talons;
Dealers means the entities named as Dealers in the Programme Agreement and any other entity which the Issuer may appoint as a Dealer and notice of whose appointment has been given to the Issuing and Principal Paying Agent and the Trustee by the Issuer in accordance with the provisions of the Programme Agreement but excluding any entity whose appointment has been terminated in accordance with the provisions of the Programme Agreement and notice of which termination has been given to the Issuing and Principal Paying Agent and the Trustee by the Issuer in accordance with the provisions of the Programme Agreement and references to a relevant Dealer or relevant Dealer(s) mean, in relation to any Tranche or Series of Notes, the Dealer or Dealers with whom the Issuer has agreed the issue of the Notes of such Tranche or Series and Dealer means any one of them;
Definitive Bearer Note means a bearer Note in definitive form issued or, as the case may require, to be issued by the Issuer in accordance with the provisions of the Programme Agreement or any other agreement between the Issuer and the relevant Dealer(s), the Agency Agreement and these presents in exchange for either a Temporary Global Note or part thereof or a Permanent Global Note (all as indicated in the applicable Final Terms), such bearer Note in definitive form being in the form or substantially in the form set out in Part 5 of the Second Schedule with such modifications (if any) as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee and the relevant Dealer(s) and having the Conditions endorsed thereon or, if permitted by the relevant Stock Exchange, incorporating the Conditions by reference (where applicable to this Trust Deed) as indicated in the applicable Final Terms and having the relevant information completing the Conditions appearing in the applicable Final Terms endorsed thereon or attached thereto and (except in the case of a Zero Coupon Note in bearer form) having Coupons and, where appropriate, Talons attached thereto on issue;
Definitive Certificate means a definitive Regulation S Certificate or DTC Restricted Certificate in or substantially in the form set out in Parts 8 and 9 of the Second Schedule, respectively with such modifications (if any) as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee, the Registrar and the relevant Dealer(s), representing one or more Regulation S Registered Notes or DTC Restricted Registered Notes, respectively of the same Series;
Directors means the Board of Directors for the time being of the Issuer and Director means any one of them;
DTC means The Depository Trust Company;
DTC Restricted Certificate means a Definitive Certificate representing DTC Restricted Registered Notes in or substantially in the form set out in Part 9 of the Second Schedule, with such modifications (if any) as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee, the Registrar and the relevant Dealer(s), bearing the Rule 144A Legend and includes any replacement thereof issued pursuant to the Conditions and any DTC Restricted Global Certificate; DTC Restricted Global Certificate means a Global Certificate in or substantially in the form set out in Part 4 of the Second Schedule with such modifications (if any) as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee, the Registrar and the relevant Dealer(s), and bearing the Rule 144A Legend and the legends required by DTC;
3
DTC Restricted Registered Note means a Registered Note represented by a DTC Restricted Global Certificate or DTC Restricted Certificate, as the case may be;
Early Termination Event has the meaning set out in Condition 5(i)(ii)(E) of the Senior Notes; Euroclear means Euroclear Bank SA/NV;
Eurosystem-eligible NGN means a NGN which is intended to be held in a manner which would allow Eurosystem eligibility, as stated in the applicable Final Terms;
Event of Default means, in respect of the Senior Notes, any of the conditions, events or acts provided in Condition 10(A) of the Senior Notes, to be Events of Default (being events upon the happening of which the Senior Notes of any Series would, subject only to declaration by the Trustee as therein provided, become immediately due and repayable) or, in the case of the Subordinated Notes, any of the conditions, events or acts provided in Condition 10(a) of the Subordinated Notes entitling the Trustee to institute proceedings for the winding-up of the Issuer and/or prove and/or claim in the winding-up or administration of the Issuer;
Exchangeable Bearer Note means a Bearer Note that is exchangeable in accordance with its terms for a Registered Note;
Exempt Notes has the meaning set out in the Programme Agreement;
Extraordinary Resolution has the meaning set out in paragraph 20 of the Third Schedule in relation to any Series of Notes;
FCA means the Financial Conduct Authority in its capacity as competent authority under the Financial Services and Markets Act 2000;
Final Terms has the meaning set out in the Programme Agreement;
Fixed Rate Note means a Senior Note on which interest is calculated at a fixed rate payable in arrear on a fixed date or fixed dates in each year and on redemption or on such other dates as may be agreed between the Issuer and the relevant Dealer(s) (as indicated in the applicable Final Terms);
Floating Rate Note means a Senior Note on which interest is calculated at a floating rate payable one-, two-, three-, six- or twelve-monthly or in respect of such other period or on such date(s) as may be agreed between the Issuer and the relevant Dealer(s) (as indicated in the applicable Final Terms);
Global Certificate means a Regulation S Global Certificate or a DTC Restricted Global Certificate in or substantially in the forms set out in Part 3 and Part 4 of the Second Schedule, respectively, with such modifications (if any) as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee, the Registrar and the relevant Dealer(s), representing Regulation S Registered Notes or DTC Restricted Registered Notes, respectively, or one or more Tranches of the same Series that are registered in the name of a nominee for Euroclear, Clearstream, Luxembourg and/or DTC and/or any other clearing system; Holding Company has the meaning set out in Condition 16 of the Senior Notes or Condition 15 of the Subordinated Notes, as the case may be;
Global Note means a Temporary Global Note and/or a Permanent Global Note, as the context may require;
4
Indexation Adviser has the meaning set out in Condition 5(a) of the Senior Notes;
Inflation Linked Interest Note means a Senior Note in respect of which the amount payable in respect of interest is calculated by reference to such index and/or formula or to changes in the prices of securities or commodities or to such other factors as the Issuer and the relevant Dealer(s) may agree (as indicated in the applicable Final Terms);
Inflation Linked Note means an Inflation Linked Interest Note and/or an Inflation Linked Redemption Amount Note, as applicable;
Inflation Linked Redemption Amount Note means a Senior Note in respect of which the amount payable in respect of principal is calculated by reference to such index and/or formula or to changes in the prices of securities or commodities or to such other factors as the Issuer and the relevant Dealer(s) may agree (as indicated in the applicable Final Terms);
Interest Commencement Date means, in the case of interest-bearing Notes, the date specified in the applicable Final Terms from (and including) which such Notes bear interest, which may or may not be the Issue Date;
Interest Payment Date means, in relation to any Floating Rate Note, CMS Linked Note or Inflation Linked Interest Note, either:
(a) |
the date which falls the number of months or other period specified as the Specified Period in the applicable Final Terms after the preceding Interest Payment Date or the Interest Commencement Date (in the case of the first Interest Payment Date); or |
(b) |
such date or dates as are indicated in the applicable Final Terms; ISM means the London Stock Exchange’s International Securities Market; |
Issue Date means, in respect of any Note, the date of issue and purchase of such Note pursuant to and in accordance with the Programme Agreement or any other agreement between the Issuer and the relevant Dealer(s);
Issue Price means the price, generally expressed as a percentage of the nominal amount of the Notes, at which the Notes will be issued;
Issuing and Principal Paying Agent means, in relation to all or any Series of the Notes, HSBC Bank plc at its office at 8 Canada Square, London E14 5HQ, England, or, if applicable, any Successor agent in relation thereto;
Liability means any loss, damage, cost, charge, claim, demand, expense, judgment, action, proceeding or other liability whatsoever (including, without limitation, in respect of taxes, duties, levies, imposts and other charges) and including any amount in respect of value added tax or similar tax charged or chargeable in respect thereof and legal fees and expenses on a full indemnity basis;
London Business Day has the meaning set out in Condition 4(b)(vii) of the Senior Notes or Condition 4(d) of the Subordinated Notes, as the case may be;
London Stock Exchange means the London Stock Exchange plc or such other body to which its functions have been transferred; Market means the London Stock Exchange’s main market which is a UK regulated market for the purposes of UK MiFIR;
5
Maturity Date means the date on which a Note is expressed to be redeemable;
NGN means a Temporary Global Note or a Permanent Global Note and in either case in respect of which the applicable Final Terms specify that the Global Note is a New Global Note;
Note means a note issued pursuant to the Programme and denominated in such currency or currencies as may be agreed between the Issuer and the relevant Dealer(s) which:
(a) |
has such maturity as may be agreed between the Issuer and the relevant Dealer(s), subject to such minimum or maximum maturity as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the Issuer or the relevant currency; and |
(b) |
has such denomination as may be agreed between the Issuer and the relevant Dealer(s), subject to such minimum denomination as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the relevant currency, |
issued or to be issued by the Issuer pursuant to the Programme Agreement or any other agreement between the Issuer and the relevant Dealer(s), the Agency Agreement and these presents and which may be issued in bearer or registered form. Notes which are issued in bearer form shall initially be represented by, and comprised in, either (i) a Temporary Global Note which may (in accordance with the terms of such Temporary Global Note) be exchanged for Definitive Bearer Notes or Registered Notes or a Permanent Global Note, which Permanent Global Note may (in accordance with the terms of such Permanent Global Note) in turn be exchanged for Definitive Bearer Notes or Registered Notes or (ii) a Permanent Global Note which may (in accordance with the terms of such Permanent Global Note) be exchanged for Definitive Bearer Notes or Registered Notes and which shall, in the case of Registered Notes, initially be represented by, and comprised in, a Regulation S Global Certificate and/or a DTC Restricted Global Certificate each of which may, in accordance with their terms, in turn be exchanged for Definitive Certificates (all as indicated in the applicable Final Terms) and includes any replacements for a Note issued pursuant to Condition 11 of the Senior Notes or Condition 11 of the Subordinated Notes, as the case may be;
Noteholder and holder have the meanings set out in the Conditions;
notice means, in respect of a notice to be given to Noteholders, a notice validly given pursuant to Condition 14 of the Senior Notes or Condition 14 of the Subordinated Notes, as the case may be;
NSS means the New Safekeeping Structure for registered global securities which are intended to constitute eligible collateral for Eurosystem monetary policy operations;
Official List has the meaning set out in Section 103 of the Financial Services and Markets Act 2000; outstanding in relation to the Notes, means all Notes issued other than:
(a) |
those Notes which have been redeemed pursuant to these presents or the Conditions; |
(b) |
those Notes in respect of which the date for redemption in accordance with the Conditions has occurred and the redemption moneys (including all interest payable thereon) have been duly paid to the Trustee or have been duly paid to the Issuing and Principal Paying Agent in the manner provided in the Agency Agreement (and where appropriate notice to that effect |
6
has been given to the relative Noteholders in accordance with Condition 14 of the Senior Notes or Condition 14 of the Subordinated Notes, as the case may be) and remain available for payment against presentation of the relevant Notes, Certificates and/or Coupons;
(c) |
those Notes which have been purchased and cancelled in accordance with Conditions 7(h) and 7(i) of the Senior Notes or Conditions 7(k) and 7(l) of the Subordinated Notes, as the case may be; |
(d) |
those Notes which have been substituted and cancelled in accordance with Condition 7(i) of the Subordinated Notes; |
(e) |
those Notes which have become void under Condition 9 of the Senior Notes or Condition 9 of the Subordinated Notes, as the case may be; |
(f) |
those mutilated or defaced Bearer Notes which have been surrendered and cancelled and in respect of which replacements have been issued pursuant to Condition 11 of the Senior Notes or Condition 11 of the Subordinated Notes, as the case may be; |
(g) |
(for the purpose only of ascertaining the nominal amount of the Notes outstanding and without prejudice to the status for any other purpose of the relevant Notes) those Bearer Notes which are alleged to have been lost, stolen or destroyed and in respect of which replacements have been issued pursuant to Condition 11 of the Senior Notes or Condition 11 of the Subordinated Notes, as the case may be; |
(h) |
those Exchangeable Bearer Notes that have been exchanged for Registered Notes; and |
(i) |
any Temporary Global Note to the extent that it shall have been exchanged for Definitive Bearer Notes or a Permanent Global Note and any Permanent Global Note to the extent that it shall have been exchanged for Definitive Bearer Notes in each case pursuant to its provisions, the provisions of these presents and the Agency Agreement, |
PROVIDED THAT for each of the following purposes, namely:
(j) |
the right to attend and vote at any meeting of the holders of the Notes of any Series, an Extraordinary Resolution in writing or an Extraordinary Resolution by way of electronic consents through the relevant Clearing System(s) as envisaged by paragraph 20 of the Third Schedule and any direction or request by the holders of the Notes of any Series; |
(k) |
the determination of how many and which Notes of any Series are for the time being outstanding for the purposes of Clauses 8.1 and 8.2, Conditions 10 and 16 of the Senior Notes and Conditions 10 and 15 of the Subordinated Notes and paragraphs 2, 5, 6 and 9 of the Third Schedule; |
(l) |
any discretion, power or authority (whether contained in these presents or vested by operation of law) which the Trustee is required, expressly or impliedly, to exercise in or by reference to the interests of the holders of the Notes of any Series; and |
(m) |
the determination by the Trustee whether any event, circumstance, matter or thing is, in its opinion, materially prejudicial to the interests of the holders of the Notes of any Series, |
those Notes of the relevant Series (if any) which are for the time being held by or on behalf of the Issuer, any Subsidiary of the Issuer (including any Retained Notes), any Holding Company of the Issuer or other Subsidiary of such Holding Company, in each case as beneficial owner, shall (unless and until ceasing to be so held) be deemed not to remain outstanding. Save for the purposes of the proviso herein, in the case of each NGN, the Trustee shall rely on the records of Euroclear and Clearstream, Luxembourg in relation to any determination of the nominal amount outstanding of each NGN;
7
Paying Agents means, in relation to all or any Series of the Notes, the several institutions (including, where the context permits, the Issuing and Principal Paying Agent) at their respective specified offices initially appointed as paying agents in relation to such Notes by the Issuer pursuant to the Agency Agreement and/or, if applicable, any Successor paying agents in relation thereto;
Permanent Global Note means a global note in the form or substantially in the form set out in Part 2 of the Second Schedule with such modifications (if any) as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee and the relevant Dealer(s), together with the copy of the applicable Final Terms annexed thereto, comprising some or all of the Notes of the same Series, issued by the Issuer pursuant to the Programme Agreement or any other agreement between the Issuer and the relevant Dealer(s), the Agency Agreement and these presents;
Person means any individual, corporation, partnership, joint venture, trust, unincorporated organisation or government, or any agency or political sub-division thereof;
Potential Event of Default means any condition, event or act which, with the lapse of time and/or the giving of notice and/or the issue of any certificate, would constitute an Event of Default;
Programme means the Euro Medium Term Note Programme established by, or otherwise contemplated in, the Programme Agreement;
Programme Agreement means the agreement of even date herewith between the Issuer and the Dealers named therein concerning the purchase of Notes to be issued pursuant to the Programme together with any agreement for the time being in force amending, replacing, novating or modifying such agreement;
Reference Banks means, in relation to the Senior Notes of any relevant Series, the several banks initially appointed as reference banks and/or, if applicable, any Successor reference banks in relation thereto;
Reset Rate Note means a Subordinated Note (as indicated in the applicable Final Terms);
Reset Reference Banks means, in relation to the Subordinated Notes of any relevant Series, the several banks initially appointed as reset reference banks and/or, if applicable, any Successor reset reference banks in relation thereto;
Register means the register maintained by the Registrar;
Registered Notes means those of the Notes which are for the time being in registered form and represented by a Certificate;
Registrar means, in relation to all or any Series of the Notes, HSBC Bank USA National Association at its office at 452 Fifth Avenue, New York, NY 10018-2708, or, if applicable, any Successor Registrar in relation thereto;
Regulation S means Regulation S under the Securities Act;
Regulation S Certificate means a Definitive Certificate representing Regulation S Registered Notes in or substantially in the form set out in Part 8 of the Second Schedule, with such modifications (if any) as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee, the Registrar and the relevant Dealer(s), and includes any replacement thereof issued pursuant to the Conditions and any Regulation S Global Certificate;
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Regulation S Global Certificate means a Global Certificate in or substantially in the form set out in Part 3 of the Second Schedule, with such modifications (if any) as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee, the Registrar and the relevant Dealer(s);
Regulation S Registered Note means a Registered Note represented by a Regulation S Certificate or a Regulation S Global Certificate, as the case may be;
Relevant Date has the meaning set out in Condition 8 of the Senior Notes or Condition 8 of the Subordinated Notes, as the case may be;
Relevant Jurisdiction has the meaning set out in Condition 8 of the Senior Notes or Condition 8 of the Subordinated Notes, as the case may be;
Renminbi Currency Event has the meaning set out in Condition 6(g) of the Senior Notes;
Reorganisation means the conveyance, transfer or lease of the properties and assets of the Issuer substantially as an entirety to any Person that guarantees the Issuer’s obligations under these presents in accordance with Clause 20;
repay, redeem and pay shall each include both the others and cognate expressions shall be construed accordingly;
Retained Notes means Notes specified as such in the applicable Final Terms unless and until such Notes have been sold by or on behalf of the Issuer or any Subsidiary to a third party and are no longer held by or on behalf of the Issuer or any such Subsidiary;
Rule 144A Legend means the transfer restriction legend under the Securities Act set out in the form of DTC Restricted Certificate in Part 9 of the Second Schedule and the DTC Restricted Global Certificate in Part 4 of the Second Schedule;
Securities Act means the United States Securities Act of 1933, as amended; Senior Note means a Note specified as such in the applicable Final Terms;
Series means a Tranche of Notes together with any further Tranche or Tranches of Notes which are (a) expressed to be consolidated and form a single series and (b) identical in all respects (including as to listing) except for their respective Issue Dates, Interest Commencement Dates and/or Issue Prices and the expressions Notes of the relevant Series, holders of Notes of the relevant Series and related expressions shall be construed accordingly;
Stock Exchange means the London Stock Exchange, the ISM or any other or further stock exchange(s) on which any Notes may from time to time be listed, and references in these presents to the relevant Stock Exchange shall, in relation to any Notes, be references to the Stock Exchange on which such Notes are, from time to time, or are intended to be, listed;
Subsidiary means, in relation to any entity, any company which is for the time being a subsidiary (within the meaning of Section 1159 of the Companies Act 2006) of such entity;
9
Subordinated Note means a Note specified as such in the applicable Final Terms; Successor means, in relation to the Issuing and Principal Paying Agent, the other Paying Agents, the Reference Banks, the Reset Reference Banks, the Calculation Agent, the Registrar and the Transfer Agents, any successor to any one or more of them in relation to the Notes which shall become such pursuant to the provisions of these presents and/or the Agency Agreement (as the case may be) and/or such other or further issuing and principal paying agent, paying agents, reference banks, reset reference banks, calculation agent, registrar and transfer agents (as the case may be) in relation to the Notes as may (with the prior approval of, and on terms previously approved by, the Trustee in writing) from time to time be appointed as such, and/or, if applicable, such other or further specified offices (in the former case being within the same city as those for which they are substituted) as may from time to time be nominated, in each case by the Issuer and (except in the case of the initial appointments and specified offices made under and specified in the Conditions and/or the Agency Agreement, as the case may be) notice of whose appointment or, as the case may be, nomination has been given to the Noteholders;
Successor in Business means any company which, as the result of any amalgamation, merger or reconstruction the terms of which have previously been approved in writing by the Trustee:
(a) |
owns beneficially the whole or substantially the whole of the undertaking, property and assets owned by the Issuer immediately prior thereto; and |
(b) |
carries on, as successor to the Issuer, the whole or substantially the whole of the business carried on by the Issuer immediately prior thereto; |
Sustainability-Linked Note has the meaning set out in Condition 4(c) of the Senior Notes;
Talons means the talons (if any) appertaining to, and exchangeable in accordance with the provisions therein contained for further Coupons appertaining to, the Definitive Bearer Notes (other than the Zero Coupon Notes), such talons being in the form or substantially in the form set out in Part 7 of the Second Schedule or in such other form as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee and the relevant Dealer(s) and includes any replacements for Talons issued pursuant to Condition 11 of the Senior Notes or Condition 11 of the Subordinated Notes, as the case may be;
TARGET2 System has the meaning set out in Condition 4(e) of the Senior Notes or Condition 4(h) of the Subordinated Notes, as the case may be;
Temporary Global Note means a temporary global note in the form or substantially in the form set out in Part 1 of the Second Schedule with such modifications (if any) as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee and the relevant Dealer(s), together with the copy of the applicable Final Terms annexed thereto, comprising some or all of the Notes of the same Series, issued by the Issuer pursuant to the Programme Agreement or any other agreement between the Issuer and the relevant Dealer(s), the Agency Agreement and these presents;
these presents means this Trust Deed and the Schedules and any trust deed supplemental hereto and the Schedules (if any) thereto and the Notes, the Certificates, the Coupons, the Talons, the Conditions and, unless the context otherwise requires, the applicable Final Terms, all as from time to time modified in accordance with the provisions herein or therein contained;
Tranche means all Notes which are identical in all respects (including as to listing);
Transfer Agents means, in relation to all or any Series of the Notes, the several institutions at their respective specified offices initially appointed as transfer agents in relation to such Notes by the Issuer pursuant to the Agency Agreement and/or, if applicable, any Successor transfer agents in relation thereto; UK MiFIR means Regulation (EU) No 600/2014 on markets in financial instruments as it forms part of domestic law in the United Kingdom by virtue of the EUWA;
10
Trust Corporation means a corporation entitled by rules made under the Public Trustee Act 1906 of Great Britain or entitled pursuant to any other comparable legislation applicable to a trustee in any other jurisdiction to carry out the functions of a custodian trustee;
Trustee Acts means the Trustee Act 1925 and the Trustee Act 2000;
United States has the meaning set out in Condition 8 of the Senior Notes or Condition 8 of the Subordinated Notes, as the case may be;
Zero Coupon Note means a Senior Note on which no interest is payable;
words denoting the singular shall include the plural and vice versa;
words denoting one gender only shall include the other genders; and
words denoting persons only shall include firms and corporations and vice versa.
1.2(a)All references in these presents to principal and/or principal amount and/or interest in respect of the Notes or to any moneys payable by the Issuer under these presents shall, unless the context otherwise requires, be construed in accordance with Condition 6(f) of the Senior Notes or Condition 6(f) of the Subordinated Notes, as the case may be.
(b) |
All references in these presents to any statute or any provision of any statute shall be deemed also to refer to any statutory modification or re-enactment thereof or any statutory instrument, order or regulation made thereunder or under any such modification or re-enactment. |
(c) |
All references in these presents to guarantees or to an obligation being guaranteed shall be deemed to include respectively references to indemnities or to an indemnity being given in respect thereof. |
(d) |
All references in these presents to any action, remedy or method of proceeding for the enforcement of the rights of creditors shall be deemed to include, in respect of any jurisdiction other than England, references to such action, remedy or method of proceeding for the enforcement of the rights of creditors available or appropriate in such jurisdiction as shall most nearly approximate to such action, remedy or method of proceeding described or referred to in these presents. |
(e) |
All references in these presents to Euroclear and/or Clearstream, Luxembourg and/or DTC shall, whenever the context so permits (but not in the case of any NGN or any Registered Global Note held under the NSS), be deemed to include references to any additional or alternative clearing system as is approved by the Issuer, the Issuing and Principal Paying Agent and the Trustee. |
(f) |
Unless the context otherwise requires, all references in these presents to interest shall, in the case of Subordinated Notes only, include any Arrears of Interest. |
(g) |
Unless the context otherwise requires words or expressions used in these presents shall bear the same meanings as in the Companies Act 2006 of Great Britain. |
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(h) |
In this Trust Deed references to Schedules, Clauses, subclauses, paragraphs and subparagraphs shall be construed as references to the Schedules to this Trust Deed and to the Clauses, subclauses, paragraphs and subparagraphs of this Trust Deed respectively. |
(i) |
In these presents tables of contents and Clause headings are included for ease of reference and shall not affect the construction of these presents. |
(j) |
All references in these presents to taking proceedings against the Issuer shall be deemed to include references to proving in the winding-up of the Issuer. |
(k) |
All references in these presents involving compliance by the Trustee with a test of reasonableness shall be deemed to include a reference to a requirement that such reasonableness shall be determined by reference solely to the interests of the holders of the Notes of the relevant one or more series as a class. |
(l) |
All references in these presents to the records of Euroclear and Clearstream, Luxembourg shall be to the records that each of Euroclear and Clearstream, Luxembourg holds for its customers which reflect the amount of such customer’s interest in the Notes. |
1.3 |
Words and expressions defined in these presents or the Agency Agreement or used in the applicable Final Terms shall have the same meanings where used herein unless the context otherwise requires or unless otherwise stated and provided that, in the event of inconsistency between the Agency Agreement and these presents, these presents shall prevail and, in the event of inconsistency between the Agency Agreement or these presents and the applicable Final Terms, the applicable Final Terms shall prevail. |
1.4 |
All references in these presents to the relevant currency shall be construed as references to the currency in which payments in respect of the Notes and/or Coupons of the relevant Series are to be made as indicated in the applicable Final Terms. |
1.5 |
All references in these presents (i) to Notes (other than Exempt Notes) being “listed” or “having a listing” shall in relation to the London Stock Exchange, be construed to mean that such Notes have been admitted to the Official List by the FCA and to trading on the Market and (ii) in relation to any Exempt Notes being “listed” or “having a listing” (a) on the London Stock Exchange, “listing” and “listed” shall be construed to mean that such Notes have been admitted to trading on the ISM and (b) all other references shall be construed to mean that such Exempt Notes have been admitted to trading on such other or further stock exchange(s) or markets (other than the Market) as may be agreed between the Issuer and the relevant Dealer and all references in these presents to “listing” or “listed” shall include references to “quotation” and “quoted” respectively. |
1.6 |
Wherever in these presents there is a requirement for the consent of, or a request from, the Noteholders, then, for so long as any of the Registered Notes is registered in the name of DTC or its nominee and represented by a DTC Restricted Global Certificate, DTC may send an omnibus proxy to the Issuer in accordance with and in the form used by DTC as part of its usual procedures from time to time. Such omnibus proxy shall assign the right to give such consent or, as the case may be, make such request to DTC’s direct participants as of the record date specified therein any such assignee participant may give the relevant consent or, as the case may be, make the relevant request in accordance with these presents. |
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2.AMOUNT AND ISSUE OF THE NOTES AND SUBORDINATION
2.1Amount of the Notes, Final Terms and Legal Opinions
The Notes will be issued in Series in an aggregate nominal amount from time to time outstanding not exceeding the Programme Limit from time to time and for the purpose of determining such aggregate nominal amount Clause 3.5 of the Programme Agreement shall apply.
By not later than 10.00 a.m. (London time) on the London Business Day preceding each proposed Issue Date, the Issuer shall deliver or cause to be delivered to the Trustee a draft of the applicable Final Terms and drafts of all legal opinions (if any) to be given in relation to the proposed issue and shall notify the Trustee in writing without delay of the relevant Issue Date and the nominal amount of the Notes to be issued and upon the issue of the relevant Notes shall deliver or cause to be delivered to the Trustee a copy of the final form of the applicable Final Terms. Upon the issue of the relevant Notes, such Notes shall become constituted by these presents without further formality.
Before the first issue of Notes occurring after each anniversary of this Trust Deed, and on such other occasions as the Trustee so requests (if (a) the Trustee considers it necessary in view of a change (or proposed change) in applicable law or regulations (or the interpretation or application thereof) affecting the Issuer, these presents, the Programme Agreement or the Agency Agreement, or (b) the Trustee has other reasonable grounds for such request), the Issuer will procure that a further legal opinion or further legal opinions in such form and with such content as the Trustee may require from the legal advisers specified in the Programme Agreement or such other legal advisers as the Trustee may require is/are delivered to the Trustee. Whenever such a request is made with respect to any Notes to be issued, the receipt of such opinion(s) in a form satisfactory to the Trustee shall be a further condition precedent to the issue of those Notes.
2.2Covenant to repay principal and to pay interest
The Issuer covenants with the Trustee that it will, as and when the Notes of any Series or any of them becomes due to be redeemed, or on such date as the same or any part thereof may become due and repayable thereunder, in accordance with the Conditions (subject in the case of Subordinated Notes, to the provisions of Condition 3(b) of the Subordinated Notes and Clause 2.3 below), unconditionally pay or procure to be paid to or to the order of the Trustee, in the case of any relevant currency other than euro, in the principal financial centre for the relevant currency and, in the case of euro, in a city in which banks have access to the TARGET2 System in each case in immediately available funds the principal amount in respect of the Notes of such Series becoming due for redemption on that date and (except in the case of Zero Coupon Notes) shall (subject to the provisions of the Conditions and Clause 2.3 below) in the meantime and until redemption in full of the Notes of such Series (both before and after any judgment or other order of a court of competent jurisdiction) unconditionally pay or procure to be paid to or to the order of the Trustee as a foresaid interest (which shall accrue from day to day) on the nominal amount of the Notes outstanding of such Series at rates and/or in amounts calculated from time to time in accordance with, or specified in, and on the dates provided for in, the Conditions (subject to Clause 2.9) PROVIDED THAT:
(a) |
every payment of principal or interest or other sum due in respect of the Notes made to or to the order of the Issuing and Principal Paying Agent in the manner provided in the Agency Agreement shall be in satisfaction pro tanto of the relative covenant by the Issuer in this Clause contained in relation to the Notes of such Series (including, in the case of Notes represented by a NGN, whether or not the corresponding entries have been made in the records of Euroclear and Clearstream, Luxembourg) except to the extent that there is a default in the subsequent payment thereof in accordance with the Conditions to the relevant Noteholders or Couponholders (as the case may be) or (in the case of Subordinated Notes) |
13
such subsequent payment is not made by reason of Conditions 3 or 5 of the Subordinated Notes;
(b) |
in the case of any payment of principal made to the Trustee or the Issuing and Principal Paying Agent after the due date or on or after accelerated maturity following an Event of Default interest shall continue to accrue on the nominal amount of the relevant Notes (except in the case of Zero Coupon Notes to which the provisions of Condition 7(j) of the Senior Notes shall apply) (both before and after any judgment or other order of a court of competent jurisdiction) at the rates aforesaid (or, if higher, the rate of interest on judgment debts for the time being provided by English law) up to and including the date which the Trustee determines to be the date on and after which payment is to be made in respect thereof as stated in a notice given to the holders of such Notes (such date to be not later than 30 days after the day on which the whole of such principal amount, together with an amount equal to the interest which has accrued and is to accrue pursuant to this proviso up to and including that date, has been received by the Trustee or the Issuing and Principal Paying Agent); and |
(c) |
in any case where payment of the whole or any part of the principal amount of any Note is improperly withheld or refused upon due presentation thereof or of the Certificate in respect thereof (other than in circumstances contemplated by 2.2(b) above), interest shall accrue on the nominal amount of such Note (except in the case of Zero Coupon Notes to which the provisions of Condition 7(j) of the Senior Notes shall apply) payment of which has been so withheld or refused (both before and after any judgment or other order of a court of competent jurisdiction) at the rates aforesaid (or, if higher, the rate of interest on judgment debts for the time being provided by English law) from the date of such withholding or refusal until the date on which, upon further presentation of the relevant Note or Certificate, as the case may be, payment of the full amount (including interest as aforesaid) in the relevant currency payable in respect of such Note is made or (if earlier) the seventh day after notice is given to the relevant Noteholder(s) (whether individually or in accordance with Condition 14 of the Senior Notes or Condition 14 of the Subordinated Notes, as the case may be) that the full amount (including interest as aforesaid) in the relevant currency in respect of such Note is available for payment, provided that, upon further presentation thereof being duly made, such payment is made. |
The Trustee will hold the benefit of this covenant and the other covenants in this Trust Deed on trust for the Noteholders and the Couponholders and itself in accordance with these presents.
2.3Subordination
Notwithstanding the covenant of the Issuer given in Clause 2.2, the rights and claims of the Trustee, the Noteholders and the Couponholders against the Issuer under the Subordinated Notes in respect of the sums due and payable on redemption and any payment of interest and any other sum payable in respect of or arising under the Subordinated Notes and these presents in respect thereof are subordinated to the claims of holders of all Senior Obligations in the event an order is made, or an effective resolution is passed, for the winding-up of the Issuer (except, in any such case, a solvent winding-up solely for the purposes of a reorganisation, reconstruction, amalgamation or the substitution in place of the Issuer of a Successor in Business of the Issuer, (x) the terms of which reorganisation, reconstruction, amalgamation or substitution have previously been approved in writing by the Trustee or by an Extraordinary Resolution of the Noteholders of the Subordinated Notes and do not provide for a claim to be made in the winding-up or administration of the Issuer in respect of the Subordinated Notes pursuant to Condition 10 of the Subordinated Notes; or (y) which substitution will be effected in accordance with Condition 15(b) of the Subordinated Notes), or an administrator of the Issuer has been appointed and such administrator gives notice that it intends to declare and distribute a dividend, pursuant to and in accordance with Condition 3 of the Subordinated Notes.
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This subordination of the claims of the Trustee, the Noteholders and the Couponholders in respect of the Subordinated Notes shall not affect any liability of the Issuer to the Trustee in its personal capacity (in relation to sums due to it or claimed by it under Clause 14 and/or Clause 15(j)) and in such capacity the Trustee shall rank as a holder of Senior Obligations of the Issuer.
2.4Payments on a Winding-up
If at any time an order is made or an effective resolution is passed, for the winding-up of the Issuer (except, in any such case, a solvent winding-up solely for the purposes of a reorganisation, reconstruction, amalgamation or the substitution in place of the Issuer of a Successor in Business of the Issuer, (x) the terms of which reorganisation, reconstruction, amalgamation or substitution have previously been approved in writing by the Trustee or by an Extraordinary Resolution of holders of Subordinated Notes and do not provide for a claim to be made in the winding-up or administration of the Issuer in respect of the Subordinated Notes pursuant to Condition 10 of the Subordinated Notes; or (y) which substitution will be effected in accordance with Condition 15(b) of the Subordinated Notes), or an administrator of the Issuer has been appointed and such administrator gives notice that it intends to declare and distribute a dividend, there shall be payable by the Issuer on each Subordinated Note (in lieu of any other payment by the Issuer) such amount as is provided in Condition 3(b) of the Subordinated Notes.
2.5Other obligations of the Issuer
Nothing contained in this Trust Deed shall in any way restrict the right of the Issuer to issue obligations or give guarantees in each case ranking in priority to or pari passu with or junior to the obligations of the Issuer in respect of the Subordinated Notes and if, in the opinion of the Trustee, any modification to the provisions of these presents or the Conditions of the Subordinated Notes to permit such ranking is necessary or expedient, the Trustee is hereby authorised to concur with the Issuer in executing a supplemental deed effecting such modification provided that the Trustee shall be entitled to assume that no such modification is required unless and until notified to the contrary by the Issuer in writing.
2.6Discharge
Subject to Clause 2.7, any payment to be made in respect of the Subordinated Notes or the Coupons by the Issuer or the Trustee may be made as provided in the Conditions of the Subordinated Notes and any payment so made will (subject to Clause 2.7) to such extent be a good discharge to the Issuer or the Trustee, as the case may be.
2.7Trustee’s requirements regarding Agents etc.
At any time after an Event of Default or a Potential Event of Default or any of the events specified in Condition 3(b)(i)(A) or Condition 3(b)(i)(B) of the Subordinated Notes shall have occurred or the Trustee shall have received any money which it proposes to pay under Clause 9 to the relevant Noteholders and/or Couponholders, the Trustee may:
(a)by notice in writing to the Issuer and the Agents require the Agents pursuant to the Agency Agreement:
15
(i)to act thereafter as Agents of the Trustee in relation to payments to be made by or on behalf of the Trustee under the terms of these presents mutatis mutandis on the terms provided in the Agency Agreement (save that the Trustee’s liability under any provisions thereof for the indemnification, remuneration and payment of out-of-pocket expenses of the Agents shall be limited to the amounts for the time being held by the Trustee on the trusts of these presents relating to the Notes of the relevant Series and the relative Certificates and Coupons and available for such purpose) and thereafter to hold all Notes and Coupons and all sums, documents and records held by them in respect of Notes, Certificates and Coupons on behalf of the Trustee; or
(ii) |
to deliver up all Notes, Certificates and Coupons and all sums, documents and records held by them in respect of Notes, Certificates and Coupons, in each case held by them in their capacity as Agent, to the Trustee or as the Trustee shall direct in such notice provided that such notice shall be deemed not to apply to any documents or records which the relevant Agent is obliged not to release by any law or regulation; and |
(b) |
by notice in writing to the Issuer require it to make all subsequent payments in respect of the Notes and Coupons to or to the order of the Trustee and not to the Issuing and Principal Paying Agent and, with effect from the issue of any such notice to the Issuer and until such notice is withdrawn, proviso (i) to subclause 2.2 of this Clause relating to the Notes shall cease to have effect. |
2.8Set-off
Subject to applicable law, no Noteholder or Couponholder in respect of Subordinated Notes may exercise, claim or plead any right of set-off, compensation or retention in respect of any amount owed to it by the Issuer in respect of, or arising under or in connection with, the Subordinated Notes or the Coupons and each such Noteholder or Couponholder shall, by virtue of their holding of any Subordinated Note or Coupon, be deemed to have waived all such rights of set-off, compensation or retention. Notwithstanding the preceding sentence, if any of the rights and claims of any Noteholder or Couponholder in respect of or arising under or in connection with the Subordinated Notes are discharged by set-off, such Noteholder or Couponholder in respect of Subordinated Notes, as the case may be, will, subject to applicable law, immediately pay an amount equal to the amount of such discharge to the Issuer or, if applicable, the liquidator, trustee, receiver or administrator of the Issuer and, until such time as payment is made, will hold a sum equal to such amount on trust for the Issuer or, if applicable, the liquidator, trustee, receiver or administrator in the Issuer’s winding-up or administration. Accordingly, any such discharge will be deemed not to have taken place.
2.9 |
Rate of interest after Notes due and repayable under Condition 10(A) of the Senior Notes or Condition 10(a) of the Subordinated Notes |
If the Floating Rate Notes, CMS Linked Notes, Inflation Linked Interest Notes or Reset Rate Notes of any Series become immediately due and repayable under Condition 10(A) of the Senior Notes or become repayable under Condition 10(a) of the Subordinated Notes, as the case may be, the rate and/or amount of interest payable in respect of them will be calculated at the same intervals as if such Notes had not become due and repayable, the first of which will commence on the expiry of the Interest Period during which the Notes of the relevant Series become so due and repayable mutatis mutandis in accordance with the provisions of Condition 4(b) of the Senior Notes or Condition 4 of the Subordinated Notes, as the case may be, except that the rates of interest need not be published.
2.10Currency of payments
All payments in respect of, under and in connection with these presents and the Notes of any Series to the relevant Noteholders and Couponholders shall be made in the relevant currency.
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2.11Further Notes
The Issuer shall be at liberty from time to time (but subject always to the provisions of these presents) without the consent of the Noteholders or Couponholders to create and issue further Notes having terms and conditions the same as the Notes of any Series (or the same in all respects save for the date from which interest thereon accrues and the amount of the first payment of interest on such further Notes) and so that the same shall be consolidated and form a single series with the outstanding Notes of a particular Series.
2.12Separate Series
The Notes of each Series shall form a separate Series of Notes and accordingly, unless for any purpose the Trustee in its absolute discretion shall otherwise determine, the provisions of this Clause and of Clauses 3 to 21 (both inclusive) and 22.2 and the Third Schedule shall apply mutatis mutandis separately and independently to the Notes of each Series and in such Clauses and Schedule the expressions Notes, Noteholders, Coupons, Couponholders and Talons shall be construed accordingly.
3.FORMS OF THE NOTES
3.1Global Notes
(a)The Notes of each Tranche will initially be represented by either:
(i) |
in the case of Bearer Notes, a single Temporary Global Note which shall be exchangeable for either Definitive Bearer Notes together with, where applicable, (except in the case of Zero Coupon Notes) Coupons and, where applicable, Talons attached or a Permanent Global Note or (in the case of Exchangeable Bearer Notes) Registered Notes, in each case in accordance with the provisions of such Temporary Global Note. Each Permanent Global Note shall be exchangeable for Definitive Bearer Notes together with, where applicable, (except in the case of Zero Coupon Notes) Coupons and, where applicable, Talons attached or (in the case of Exchangeable Bearer Notes) Registered Notes, in accordance with the provisions of such Permanent Global Note; or |
(ii) |
in the case of Bearer Notes, a single Permanent Global Note which shall be exchangeable for Definitive Bearer Notes together with, where applicable, (except in the case of Zero Coupon Notes) Coupons and, where applicable, Talons attached or (in the case of Exchangeable Bearer Notes) Registered Notes, in accordance with provisions of such Permanent Global Note; or |
(iii) |
in the case of Registered Notes which are sold outside the United States in “offshore transactions” within the meaning of Regulation S, a Regulation S Global Certificate which will be exchangeable for Regulation S Certificates and/or Notes represented by a DTC Restricted Global Certificate in accordance with the provisions of such Regulation S Global Certificates; or |
(iv) |
in the case of Registered Notes which are sold in the United States, to qualified institutional buyers within the meaning of Rule 144A, a DTC Restricted Global Certificate which will be exchangeable for DTC Restricted Certificates and/or Notes represented by a Regulation S Global Certificate in accordance with the provisions of such DTC Restricted Global Certificate. |
All Global Notes shall be prepared, completed and delivered to a common depositary (in the case of a CGN) or common safekeeper (in the case of a NGN or Registered Notes held under the NSS) for Euroclear and Clearstream, Luxembourg, each Regulation S Global Certificate shall be prepared, completed and delivered to, and registered in the name of a nominee of, a common depositary or common safekeeper for Euroclear and Clearstream, Luxembourg and each DTC Restricted Global Certificate shall be prepared, completed and delivered to a custodian for and registered in the name of a nominee of DTC, in each case in accordance with the provisions of the Programme Agreement or to or with or in the name of another appropriate custodian, nominee or depositary in accordance with any other agreement between the Issuer and the relevant Dealer(s) and, in each case, the Agency Agreement.
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(b) |
Each Temporary Global Note shall be printed or typed in the form or substantially in the form set out in Part 1 of the Second Schedule and may be a facsimile. Each Temporary Global Note shall have annexed thereto a copy of the applicable Final Terms and shall be signed manually or in facsimile by a person duly authorised by the Issuer on behalf of the Issuer and shall be authenticated by or on behalf of the Issuing and Principal Paying Agent and shall, in the case of a Eurosystem-eligible NGN, be effectuated by the common safekeeper acting on the instructions of the Issuing and Principal Paying Agent. Each Temporary Global Note so executed and authenticated (and effectuated, if applicable) shall be a binding and valid obligation of the Issuer and title thereto shall pass by delivery. |
(c) |
Each Permanent Global Note shall be printed or typed in the form or substantially in the form set out in Part 2 of the Second Schedule and may be a facsimile. Each Permanent Global Note shall have annexed thereto a copy of the applicable Final Terms and shall be signed manually or in facsimile by a person duly authorised by the Issuer on behalf of the Issuer and shall be authenticated by or on behalf of the Issuing and Principal Paying Agent and shall, in the case of a Eurosystem-eligible NGN, be effectuated by the common safekeeper acting on the instructions of the Issuing and Principal Paying Agent. Each Permanent Global Note so executed and authenticated (and effectuated, if applicable) shall be a binding and valid obligation of the Issuer and title thereto shall pass by delivery. |
(d) |
Each Regulation S Global Certificate shall be printed or typed in the form or substantially in the form set out in Part 3 of the Second Schedule and may be a facsimile. Each Regulation S Global Certificate shall have annexed thereto a copy of the applicable Final Terms and shall be signed manually or in facsimile by a person duly authorised by the Issuer on behalf of the Issuer and shall be authenticated by or on behalf of the Registrar and shall, in the case of Notes intended to be held under the NSS, be effectuated by the common safekeeper acting on the instructions of the Issuer. Each Regulation S Global Certificate shall be valid evidence of binding and valid obligations of the Issuer and title thereto shall pass upon registration in the Register. |
(e) |
Each DTC Restricted Global Certificate shall be printed or typed in the form or substantially in the form set out in Part 4 of the Second Schedule and may be a facsimile. Each DTC Restricted Global Certificate shall have annexed thereto a copy of the applicable Final Terms and shall be signed manually or in facsimile by a person duly authorised by the Issuer on behalf of the Issuer and shall be authenticated by or on behalf of the Registrar. Each DTC Restricted Global Certificate shall be valid evidence of binding and valid obligations of the Issuer and title thereto shall pass upon registration in the Register. |
3.2Definitive Bearer Notes
(a) |
The Definitive Bearer Notes, the Coupons and the Talons shall be to bearer in the respective forms or substantially in the respective forms set out in Parts 5, 6 and 7 respectively, of the Second Schedule. The Definitive Bearer Notes, the Coupons and the Talons shall be serially numbered and, if listed or quoted, shall be security printed in accordance with the requirements (if any) from time to time of the relevant Stock Exchange and the relevant Conditions shall be incorporated by reference (where applicable to these presents) into such Definitive Bearer Notes if permitted by the relevant Stock Exchange (if any), or, if not so permitted, the Definitive Bearer Notes shall be endorsed with or have attached thereto the relevant Conditions, and, in either such case, the Definitive Bearer Notes shall have endorsed thereon or attached thereto a copy of the applicable Final Terms (or the relevant |
18
provisions thereof). Title to the Definitive Bearer Notes, the Coupons and the Talons shall pass by delivery.
(b) |
The Definitive Bearer Notes shall be signed manually or in facsimile by a person duly authorised by the Issuer on behalf of the Issuer and shall be authenticated by or on behalf of the Issuing and Principal Paying Agent. The Definitive Bearer Notes so executed and authenticated, and the Coupons and Talons, upon execution and authentication of the relevant Definitive Bearer Notes, shall be binding and valid obligations of the Issuer. The Coupons and the Talons shall not be signed. No Definitive Bearer Note and none of the Coupons or Talons appertaining to such Definitive Bearer Note shall be binding or valid until such Definitive Bearer Note shall have been executed and authenticated as aforesaid. |
3.3Definitive Certificates
(a) |
The DTC Restricted Certificates and Regulation S Certificates shall be in the respective forms or substantially in the respective forms set out in Parts 8 and 9, respectively of the Second Schedule and shall be printed in accordance with applicable legal and stock exchange requirements. Title to such certificates shall pass upon registration in the Register. |
(b) |
The DTC Restricted Certificates and Regulation S Certificates shall be signed manually or in facsimile by a person duly authorised by the Issuer on behalf of the Issuer and shall be authenticated by or on behalf of the Registrar. The DTC Restricted Certificates and Regulation S Certificates so executed and authenticated shall be valid evidence of binding and valid obligations of the Issuer. Title to such Certificates shall pass upon registration in the Register. |
3.4Facsimile signatures
The Issuer may use the facsimile signature of any person who at the date such signature is affixed to a Global Note or a Definitive Bearer Note or a Certificate is duly authorised by the Issuer notwithstanding that at the time of issue of such Note or Certificate they may have ceased for any reason to be so authorised or to hold such office.
3.5Reliance on Certification of a Clearing System
Without prejudice to the provisions of Clause 15(x), the Trustee may call for any certificate or other document to be issued by Euroclear or Clearstream, Luxembourg as to the nominal amount of Notes represented by a Global Note standing to the account of any person. Any such certificate or other document shall, in the absence of manifest error, be conclusive and binding for all purposes. Any such certificate or other document may comprise any form of statement or print out of electronic records provided by the relevant Clearing System (including Euroclear’s EUCLID or Clearstream, Luxembourg’s Creation Online system) in accordance with its usual procedures and in which the holder of a particular nominal amount of Notes is clearly identified together with the amount of such holding. The Trustee shall not be liable to any person by reason of having accepted as valid or not having rejected any certificate or other document to such effect purporting to be issued by, or to reflect the records of, Euroclear or Clearstream, Luxembourg and subsequently found to be forged or not authentic.
4.FEES, DUTIES AND TAXES
The Issuer will pay any stamp, issue, registration, documentary and other fees, duties or taxes (if any), including interest and penalties, payable (a) in the United Kingdom, Belgium, Luxembourg and the United States of America on or in connection with (i) the execution and delivery of these presents and (ii) the constitution and original issue of the Notes, the Certificates and the Coupons and (b) in any jurisdiction on or in connection with any action taken by or on behalf of the Trustee or (where permitted under these presents so to do) any Noteholder or Couponholder to enforce, or to resolve any doubt concerning, or for any other purpose in relation to, these presents.
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5.COVENANT OF COMPLIANCE
The Issuer covenants with the Trustee that it will comply with and perform and observe all the provisions of these presents which are expressed to be binding on it. The Notes and the Coupons shall be held subject to the provisions contained in these presents and the Conditions shall be binding on the Issuer, the Trustee, the Noteholders and the Couponholders and all persons claiming through or under them. The Trustee shall be entitled to enforce the obligations of the Issuer under the Notes, the Coupons and the Conditions in the manner therein provided as if the same were set out and contained in this Trust Deed, which shall be read and construed as one document with the Notes and the Coupons. The Trustee shall hold the benefit of this covenant upon trust for itself and the Noteholders and the Couponholders according to its and their respective interests.
6.CANCELLATION OF NOTES AND RECORDS
6.1 |
The Issuer shall procure that all Notes (other than Retained Notes) issued by it (a) redeemed or (b) purchased for cancellation by or on behalf of the Issuer or any Subsidiary of the Issuer and surrendered for cancellation or (c) which, being Bearer Notes which have been mutilated or defaced, have been surrendered and replaced pursuant to Condition 11 of the Senior Notes or Condition 11 of the Subordinated Notes, as the case may be or (d) in respect of Subordinated Notes only, substituted pursuant to Condition 7(i) of the Subordinated Notes or (e) exchanged as provided in these presents (together in each case, in the case of Definitive Bearer Notes, with all unmatured Coupons attached thereto or delivered therewith) and, in the case of Definitive Bearer Notes, all relative Coupons paid in accordance with the relevant Conditions or which, being mutilated or defaced, have been surrendered and replaced pursuant to Condition 11 of the Senior Notes or Condition 11 of the Subordinated Notes, as the case may be, shall forthwith be cancelled by or on behalf of the Issuer and a certificate stating: |
(a) |
the aggregate nominal amount of Notes which have been redeemed and the amounts paid in respect thereof and the aggregate amounts in respect of Coupons which have been paid and the aggregate nominal amount of Notes which have been substituted; |
(b) |
the serial numbers of such Notes in definitive form or the Certificates representing Registered Notes; |
(c) |
the total numbers (where applicable, of each denomination) by maturity date of such Coupons; |
(d) |
the aggregate amount of interest paid (and the due dates of such payments) on Global Notes and Registered Notes; |
(e) |
the aggregate nominal amount of Notes (if any) which have been purchased by or on behalf of the Issuer or any Subsidiary of the Issuer and cancelled and the serial numbers of such Notes in definitive form or of the Certificates representing Registered Notes and, in the case of Definitive Bearer Notes, the total number (where applicable, of each denomination) by maturity date of the Coupons and Talons attached thereto or surrendered therewith; |
(f) |
the aggregate nominal amounts of Notes and the aggregate amounts in respect of Coupons which have been so exchanged or surrendered and replaced and the serial numbers of such Notes in definitive form or of the Certificates representing Registered Notes and the total number (where applicable, of each denomination) by maturity date of such Coupons and Talons; and |
20
(g)the total number (where applicable, of each denomination) by maturity date of Talons which have been exchanged for further Coupons,
shall be given to the Trustee by or on behalf of the Issuer as soon as possible and in any event within four months after the date of such redemption, substitution, purchase, payment, exchange or replacement (as the case may be). The Trustee may accept such certificate as conclusive evidence of redemption, substitution, purchase, exchange or replacement pro tanto of the Notes or payment of interest thereon or exchange of the relative Talons respectively and of cancellation of the relative Notes and Coupons.
6.2 |
The Issuer shall procure (a) that the Issuing and Principal Paying Agent and/or the Registrar shall keep a full and complete record of all Notes, Coupons and Talons issued by it (other than serial numbers of Coupons) and of their redemption, substitution or purchase and cancellation and of all replacement notes, coupons or talons issued in substitution for lost, stolen, mutilated, defaced or destroyed Bearer Notes, Coupons or Talons and of all transfers and exchanges of Registered Notes (b) that the Issuing and Principal Paying Agent and the Registrar shall, in respect of the Coupons of each maturity where the relevant Bearer Note is redeemed prior to its maturity date, retain until the expiry of 10 years from the Relevant Date in respect of such Coupons a list of the Coupons of that maturity still remaining unpaid or unexchanged and (c) that such records shall be made available to the Trustee during normal business hours. |
7.NON-PAYMENT
Proof that as regards any specified Note or Coupon the Issuer has made default in paying any amount due in respect of such Note or Coupon shall (unless the contrary be proved) be sufficient evidence that the same default has been made as regards all other Notes or Coupons (as the case may be) in respect of which the relevant amount is due and payable.
8.PROCEEDINGS, ACTION AND INDEMNIFICATION
8.1Proceedings, action and indemnification in relation to Senior Notes
(a) |
The Trustee may at any time, in its sole and absolute discretion and without notice, take such proceedings and/or other action as it may think fit against or in relation to the Issuer to enforce its obligations under these presents in respect of the Senior Notes. |
(b) |
The Trustee shall not be bound to take any proceedings mentioned in subclause (a) above or Condition 10(B) of the Senior Notes or any other action in relation to these presents in respect of the Senior Notes unless respectively directed or requested to do so (a) by an Extraordinary Resolution of the holders of Senior Notes or (b) in writing by the holders of at least one-quarter in nominal amount of the Senior Notes then outstanding (excluding Retained Notes) and in either case then only if it shall be indemnified and/or secured and/or prefunded by the holders of Senior Notes to its satisfaction against all proceedings, claims and demands to which it may be liable and against all costs, charges, liabilities and expenses which may be incurred by it in connection with such enforcement, including the costs of its managements’ time and/or other internal resources, calculated using its normal hourly rates in force from time to time. |
(c) |
In respect of the Senior Notes, the Trustee may refrain from taking any action in any jurisdiction if the taking of such action in that jurisdiction would, in its opinion which may be based upon legal advice in the relevant jurisdiction, be contrary to any law of that jurisdiction. Furthermore, the Trustee may also refrain from taking such action if it would otherwise render it liable to any person in that jurisdiction or if, in its opinion which may be based upon such legal advice (if applicable), it would not have the power to do the relevant |
21
thing in that jurisdiction by virtue of any applicable law in that jurisdiction or if it is determined by any court or other competent authority in that jurisdiction that it does not have such power.
(d)In respect of the Senior Notes, only the Trustee may enforce the provisions of these presents. No Noteholder or Couponholder in respect of the Senior Notes shall be entitled to proceed directly against the Issuer to enforce the performance of any of the provisions of these presents unless the Trustee having become bound as aforesaid to take proceedings fails or is unable to do so within 60 days and such failure or inability is continuing.
8.2Proceedings, action and indemnification in relation to Subordinated Notes
(a) |
If an Event of Default occurs, then the Issuer shall without notice from the Trustee be deemed to be in default under these presents, the Notes and the Coupons and the Trustee at its sole discretion may, notwithstanding the provisions of Condition 10(b) of the Subordinated Notes but subject to subclause (b) below, institute proceedings for the winding-up of the Issuer and/or prove and/or claim in the winding-up or administration of the Issuer, such claim being subordinated, and for the amount, as provided in Condition 3(b)(i) of the Subordinated Notes. The Trustee may at any time, at its discretion and without notice, take such proceedings against the Issuer as it may think fit to enforce its obligations under these presents in respect of the Subordinated Notes but in no event shall the Issuer, by virtue of the institution of any such proceedings, steps or actions, be obliged to pay any sum or sums sooner than the same would otherwise have been payable by it. |
(b) |
The Trustee shall not be bound to take any such proceedings as are mentioned in subclause (a) above or any other action or step under these presents in respect of the Subordinated Notes or the Coupons unless (i) it shall have been requested to do so by an Extraordinary Resolution of the holders of the Subordinated Notes or in writing by the holders of at least one-quarter in nominal amount of the Subordinated Notes then outstanding (excluding any Retained Notes), and (ii) in either case, it shall have been indemnified and/or secured and/or prefunded to its satisfaction against all liabilities, actions, proceedings, claims and demands to which it may thereby render itself liable and all costs, charges, damages and expenses which it may incur by so doing, including the costs of its managements’ time and/or other internal resources, calculated using its normal hourly rates in force from time to time. |
(c) |
In respect of the Subordinated Notes, the Trustee may refrain from taking any action in any jurisdiction if the taking of such action in that jurisdiction would, in its opinion which may be based upon legal advice in the relevant jurisdiction, be contrary to any law of that jurisdiction. Furthermore, the Trustee may also refrain from taking such action if it would otherwise render it liable to any person in that jurisdiction or if, in its opinion which may be based upon such legal advice (if applicable), it would not have the power to do the relevant thing in that jurisdiction by virtue of any applicable law in that jurisdiction or if it is determined by any court or other competent authority in that jurisdiction that it does not have such power. |
(d) |
In respect of the Subordinated Notes, only the Trustee may enforce the provisions of these presents. No Noteholder or Couponholder in respect of Subordinated Notes shall be entitled to proceed directly against the Issuer or to institute proceedings for the winding-up or to prove or claim in the winding-up or administration of the Issuer unless the Trustee, having become so bound to proceed, institute, prove or claim, fails or is unable to do so within 60 days and such failure or inability shall be continuing, in which case the holder or Couponholder in respect of the Subordinated Notes shall have only such rights against the Issuer as those which the Trustee is entitled to exercise as set out in Clause 8.2(a) above. |
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(e) |
No remedy against the Issuer, other than as referred to in Condition 10 of the Subordinated Notes, shall be available to the Trustee or the Noteholders or Couponholders of Subordinated Notes, whether for the recovery of amounts owing in respect of the Subordinated Notes or under these presents in respect thereof or in respect of any breach by the Issuer of any of its other obligations under or in respect of the Subordinated Notes or under these presents in respect thereof. |
9.APPLICATION OF MONEYS
All moneys received by the Trustee under these presents from the Issuer (including any moneys which represent principal or interest in respect of Notes or Coupons which have become void, or in respect of claims which have become prescribed, under Condition 9 of the Senior Notes or Condition 9 of the Subordinated Notes, as the case may be) shall, unless and to the extent attributable, in the opinion of the Trustee, to a particular Series of the Notes, be apportioned pari passu and rateably between each Series of the Notes, and all moneys received by the Trustee under these presents from the Issuer to the extent attributable in the opinion of the Trustee to a particular Series of the Notes or which are apportioned to such Series as aforesaid, be held by the Trustee upon trust to apply them (subject to Clause 11):
FIRST in payment or satisfaction of all amounts then due and unpaid under Clauses 14 and/or 15(j) to the Trustee and/or any Appointee;
SECONDLY in or towards payment pari passu and rateably of all principal and interest then due and unpaid in respect of the Notes of that Series;
THIRDLY in or towards payment pari passu and rateably of all principal and interest then due and unpaid in respect of the Notes of each other Series; and
FOURTHLY in payment of the balance (if any) to the Issuer (without prejudice to, or liability in respect of, any question as to how such payment to the Issuer shall be dealt with as between the Issuer and any other person),
PROVIDED ALWAYS that any payment required to be made by the Trustee pursuant to these presents shall only be made subject to any applicable laws and regulations.
10.NOTICE OF PAYMENTS
The Trustee shall give notice to the relevant Noteholders in accordance with Condition 14 of the Senior Notes or Condition 14 of the Subordinated Notes, as the case may be, of the day fixed for any payment to them under Clause 9. Such payment may be made in accordance with Condition 6 of the Senior Notes or Condition 6 of the Subordinated Notes, as the case may be and any payment so made shall be a good discharge to the Trustee.
11.INVESTMENT BY TRUSTEE
11.1 |
No provision of these presents shall (a) confer on the Trustee any right to exercise any investment discretion in relation to the assets subject to the trust constituted by these presents and, to the extent permitted by law, Section 3 of the Trustee Act 2000 shall not apply to the duties of the Trustee in relation to the trusts constituted by these presents and (b) require the Trustee to do anything which may cause the Trustee to be considered a sponsor of a covered fund under Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any regulations promulgated thereunder. |
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11.2 |
The Trustee may deposit moneys in respect of the Notes or Coupons in its name in an account at such bank or other financial institution as the Trustee may, in its absolute discretion, think fit. If that bank or financial institution is the Trustee or a subsidiary, holding or associated company of the Trustee, the Trustee need only account for an amount of interest equal to the amount of interest which would, at then current rates, be payable by it on such a deposit to an independent customer. |
11.3 |
The parties acknowledge and agree that in the event that any deposits in respect of the Notes or Coupons are held by a bank or a financial institution in the name of the Trustee and the interest rate in respect of certain currencies is a negative value such that the application thereof would result in amounts being debited from funds held by such bank or financial institution (“negative interest”), the Trustee shall not be liable to make up any shortfall or be liable for any loss. |
11.4 |
The Trustee may in its sole and absolute discretion accumulate such deposits and the resulting interest and other income derived thereon. The accumulated deposits shall be applied under Clause 9. All interest and other income deriving from such deposits shall be applied first in payment or satisfaction of all amounts then due and unpaid under Clause 14 and/or Clause 15(j) to the Trustee and/or any Appointee and otherwise held for the benefit of and paid to the Noteholders of such Series or the holders of the related Coupons, as the case may be. |
12.PARTIAL PAYMENTS
Upon any payment under Clause 9 (other than payment in full against surrender of a Note, Certificate or Coupon) the Note, Certificate or Coupon in respect of which such payment is made shall (except in the case of a NGN or a Registered Global Note held under the NSS) be produced to the Trustee or the Paying Agent by or through whom such payment is made and the Trustee shall or shall cause such Paying Agent to enface thereon a memorandum of the amount and the date of payment but the Trustee may in any particular case dispense with such production and enfacement upon such indemnity being given as it shall think sufficient.
13.COVENANTS
The Issuer covenants with the Trustee that, so long as any of the Notes remains outstanding (or, in the case of paragraphs (f), (g), (k), (l), (n) and (q), so long as any of the Notes or the relative Coupons remains liable to prescription or, in the case of subparagraph (m), until the expiry of a period of 30 days after the Relevant Date) it shall:
(a) |
give or procure to be given to the Trustee such opinions, certificates and information as it shall reasonably require and in such form as it shall reasonably require (including without limitation the procurement of all such certificates called for by the Trustee pursuant to Clause 15(c) and advice of the Indexation Adviser pursuant to Condition 5 of the Senior Notes) for the purpose of the discharge or exercise of the duties, trusts, powers, authorities and discretions vested in it under these presents or by operation of law; |
(b) |
at all times keep and procure its Subsidiaries to keep proper books of account and, following the occurrence of an Event of Default, a Potential Event of Default or any of the events specified in Condition 3(b)(i)(A) or Condition 3(b)(i)(B) of the Subordinated Notes or if the Trustee reasonably considers that any such event has occurred or is likely to occur, allow and procure its Subsidiaries to allow the Trustee and any person appointed by the Trustee to whom the Issuer or the relevant Subsidiary (as the case may be) shall have no reasonable objection free access to such books of account during normal business hours; |
(c) |
send to the Trustee (in addition to any copies to which it may be entitled as a holder of any securities of the Issuer) two copies in English of every balance sheet, profit and loss account, report, circular and notice of general meeting and every other document (other than |
24
documents of a promotional, advertising or marketing nature only) issued or sent to its shareholders together with any of the foregoing, and every document issued or sent to holders of securities other than its shareholders (including the Noteholders) as soon as practicable after the issue or publication thereof;
(d) |
forthwith give notice in writing to the Trustee of the happening of any Event of Default or any Potential Event of Default or (in the case of the Senior Notes only) any Renminbi Currency Event, Early Termination Event or Change of Control Put Event or (in the case of the Subordinated Notes only) any Special Event, Compulsory Arrears of Interest Settlement Event, Change of Control, Change of Control Event, any breach by the Issuer of any provisions of these presents or any of the events specified in Condition 3(b)(i)(A) or Condition 3(b)(i)(B) of the Subordinated Notes; |
(e) |
give to the Trustee (i) within 14 days after demand by the Trustee therefor and (ii) (without the necessity for any such demand) promptly after the publication of its audited accounts in respect of each financial year commencing with the financial year ended 31 March 1999 and in any event not later than 180 days after the end of each such financial year a certificate signed by two Authorised Signatories of the Issuer to the effect that, to the best of the knowledge, information and belief of the persons so certifying, they having made all reasonable enquiries, as at a date not more than seven days before delivering such certificate (the relevant certification date) there did not exist and had not existed since the relevant certification date of the previous certificate (or in the case of the first such certificate the date hereof) any Event of Default or any Potential Event of Default or (in the case of Senior Notes only) any Renminbi Currency Event, Early Termination Event or Change of Control Put Event or (in the case of Subordinated Notes only) any Special Event, Compulsory Arrears of Interest Settlement Event, Change of Control, Change of Control Event or any of the events specified in Condition 3(b)(i)(A) or Condition 3(b)(i)(B) of the Subordinated Notes (or if such exists or existed specifying the same) and that during the period from and including the relevant certification date of the last such certificate (or in the case of the first such certificate the date hereof) to and including the relevant certification date of such certificate the Issuer has complied with all its obligations contained in these presents or (if such is not the case) specifying the respects in which it has not complied; |
(f) |
so far as permitted by law, at all times execute all such further documents and do all such acts and things as may in the opinion of the Trustee be necessary at any time or times to give effect to the terms and conditions of these presents; |
(g) |
at all times maintain an Issuing and Principal Paying Agent, other Paying Agents, a Calculation Agent, Reference Banks, Reset Reference Banks, a Registrar and Transfer Agents in accordance with the Conditions; |
(h) |
use all reasonable endeavours to procure the Issuing and Principal Paying Agent to notify the Trustee forthwith in the event that it does not, on or before the due date for any payment in respect of the Notes or any of them or any of the relative Coupons, receive unconditionally pursuant to the Agency Agreement payment of the full amount in the relevant currency of the moneys payable on such due date on all such Notes or Coupons as the case may be; |
(i) |
in the event of the unconditional payment to the Issuing and Principal Paying Agent or the Trustee of any sum due in respect of the Notes or any of them or any of the relative Coupons being made after the due date for payment thereof forthwith give or procure to be given notice to the relevant Noteholders in accordance with Condition 14 of the Senior Notes or Condition 14 of the Subordinated Notes, as the case may be, that such payment has been made; |
25
(j) |
if the applicable Final Terms indicates that the Notes are listed, use all reasonable endeavours to maintain the quotation or listing on the relevant Stock Exchange of those of the Notes which are quoted or listed on the relevant Stock Exchange or, if it is unable to do so having used all reasonable endeavours, use all reasonable endeavours to obtain and maintain a quotation or listing of such Notes on such other stock exchange or exchanges or securities market or markets as the Issuer may (with the prior written approval of the Trustee) decide and shall also upon obtaining a quotation or listing of such Notes on such other stock exchange or exchanges or securities market or markets enter into a trust deed supplemental to this Trust Deed to effect such consequential amendments to these presents as the Trustee may require or as shall be requisite to comply with the requirements of any such stock exchange or securities market; |
(k) |
give notice to the Noteholders in accordance with Condition 14 of the Senior Notes or Condition 14 of the Subordinated Notes, as the case may be, of any appointment, resignation or removal of any Issuing and Principal Paying Agent, Calculation Agent, Reference Bank, Reset Reference Bank, other Paying Agent, Registrar or Transfer Agent (other than the appointment of the initial Issuing and Principal Paying Agent, Calculation Agent, Reference Banks, Reset Reference Banks, other Paying Agents, Registrar and Transfer Agents) after having obtained the prior written approval of the Trustee thereto or any change of any Paying Agent’s or Reference Bank’s or Reset Reference Bank’s or Registrar’s or Transfer Agents’ specified office and (except as provided by the Agency Agreement or the Conditions); PROVIDED ALWAYS THAT so long as any of the Notes or Coupons remains liable to prescription in the case of the termination of the appointment of the Issuing and Principal Paying Agent or the Calculation Agent or the Registrar no such termination shall take effect until a new Issuing and Principal Paying Agent or Calculation Agent or Registrar (as the case may be) has been appointed on terms previously approved in writing by the Trustee; |
(l) |
obtain the prior written approval of the Trustee to, and promptly give to the Trustee two copies of, the form of every notice given to the holders of any Notes issued by it in accordance with Condition 14 of the Senior Notes or Condition 14 of the Subordinated Notes, as the case may be (such approval, unless so expressed, not to constitute approval for the purposes of Section 21 of the Financial Services and Markets Act 2000 of Great Britain (the FSMA) of a communication within the meaning of Section 21 of the FSMA); |
(m) |
if payments of principal or interest in respect of the Notes or the relative Coupons by the Issuer shall become subject generally to the taxing jurisdiction of any territory or any political sub-division or any authority therein or thereof having power to tax other than or in addition to the Relevant Jurisdiction or any political sub-division or any authority therein or thereof having power to tax, immediately upon becoming aware thereof notify the Trustee of such event and (unless the Trustee otherwise agrees) enter forthwith into a trust deed supplemental to this Trust Deed in form and manner satisfactory to the Trustee, such trust deed to modify Condition 8 of the Senior Notes or Condition 8 of the Subordinated Notes, as the case may be (but not the proviso thereto) so that, in substitution for (or, as the case may be, addition to) the references therein to the Relevant Jurisdiction or any political sub-division thereof or any authority therein or thereof having power to tax, such Condition makes reference to that other or additional territory or any political sub-division thereof or any authority therein or thereof having power to tax to whose taxing jurisdiction such payments shall have become subject as aforesaid and Condition 7(b) of the Senior Notes and Condition 7(b) of the Subordinated Notes, as the case may be, shall be modified accordingly; |
(n) |
comply with and perform all its obligations under the Agency Agreement and use all reasonable endeavours to procure that the Agents comply with and perform all their |
26
respective obligations thereunder and any notice given by the Trustee pursuant to Clause 2.7(a) and that the Calculation Agent complies with and performs all its obligations under the Calculation Agency Agreement and not make any amendment to the Agency Agreement or the Calculation Agency Agreement without the prior written approval of the Trustee;
(o)in order to enable the Trustee to ascertain the nominal amount of the Notes of each Series for the time being outstanding for any of the purposes referred to in the proviso to the definition of outstanding in Clause 1 deliver to the Trustee as soon as practicable upon being so requested in writing by the Trustee a certificate in writing signed by two Authorised Signatories of the Issuer setting out the total number and aggregate nominal amount of the Notes of each Series issued by it which:
(i) |
up to and including the date of such certificate have been purchased by the Issuer, any Holding Company of the Issuer or any Subsidiary of the Issuer or such Holding Company and cancelled; and |
(ii) |
are at the date of such certificate held by, for the benefit of, or on behalf of, the Issuer, any Holding Company of the Issuer or any Subsidiary of the Issuer or such Holding Company; |
(p)if, in accordance with the provisions of the Conditions, interest in respect of the Notes becomes payable at the specified office of any Paying Agent in the United States of America promptly give notice thereof to the relative Noteholders in accordance with Condition 14 of the Senior Notes or Condition 14 of the Subordinated Notes, as the case may be;
(q) |
procure that each of its Subsidiaries observes the restrictions contained in Condition 7(h) of the Senior Notes and Condition 7(k) of the Subordinated Notes, as the case may be; |
(r) |
give prior written notice to the Trustee of any proposed redemption pursuant to Conditions 7(b) or 7(c) of the Senior Notes and Conditions 7(b) or 7(c) of the Subordinated Notes, as the case may be, and, if it shall have given notice to the Noteholders of its intention to redeem any Notes pursuant to Condition 7(c) of the Senior Notes or Condition 7(c) of the Subordinated Notes, as applicable, duly proceed to make drawings (if appropriate) and to redeem Notes accordingly; |
(s) |
promptly provide the Trustee with copies of all supplements and/or amendments and/or restatements of the Programme Agreement; |
(t) |
use all reasonable endeavours to procure that Euroclear and/or Clearstream, Luxembourg (as the case may be) issue(s) any record, certificate or other document requested by the Trustee under Clause 15(x) or otherwise as soon as practicable after such request; and |
(u) |
upon any sale or disposal of Retained Notes by the Issuer or any Subsidiary to an entity which is neither the Issuer nor a Subsidiary, promptly notify the Trustee of the same in writing. |
14.REMUNERATION AND INDEMNIFICATION OF TRUSTEE
14.1 |
The Issuer shall pay to the Trustee remuneration for its services as trustee of these presents at such rate and on such dates as shall be agreed in writing from time to time between the Issuer and the Trustee. Such remuneration shall accrue from day to day and be payable (in priority to payments to Noteholders and Couponholders) up to and including the date when, all the Notes having become due for redemption, the redemption moneys and interest thereon to the date of redemption have been |
27
paid to the Issuing and Principal Paying Agent or the Trustee PROVIDED THAT if upon due presentation of any Note or Coupon or any Certificate in respect thereof or any cheque payment of the moneys due in respect thereof is improperly withheld or refused, remuneration will commence again to accrue until payment to such Noteholder or Couponholder is duly made.
14.2 |
In the event of the occurrence of an Event of Default or a Potential Event of Default or, in the case of the Subordinated Notes only, a breach by the Issuer of this Trust Deed or the occurrence of any of the events specified in Condition 3(b)(i)(A) or Condition 3(b)(i)(B) of the Subordinated Notes, the Issuer hereby agrees that the Trustee shall be entitled to be paid additional remuneration, which may be calculated at its normal hourly rates in force from time to time. In any other case, if the Trustee considers it expedient or necessary or is requested by the Issuer to undertake duties which the Trustee and the Issuer agree to be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under these presents the Issuer shall pay to the Trustee such additional remuneration as shall be agreed between them (and which may be calculated at the Trustee’s normal hourly rates in force from time to time). |
14.3 |
The Issuer shall in addition pay to the Trustee an amount equal to the amount (if any) of any value added tax or similar tax chargeable in respect of its remuneration under these presents. |
14.4 |
In the event of the Trustee and the Issuer failing to agree: |
(a) |
(in a case to which subclause 14.1 above applies) upon the amount of the remuneration; or |
(b) |
(in a case to which subclause 14.2 above applies) upon whether such duties shall be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under these presents, or upon such additional remuneration, |
such matters shall be determined by an investment bank or other person (acting as an expert and not as an arbitrator) selected by the Trustee and approved by the Issuer or, failing such approval, nominated (on the application of the Trustee) by the President for the time being of The Law Society of England and Wales (the expenses involved in such nomination and the fees of such investment bank or other person being payable by the Issuer) and the determination of any such investment bank or other person shall be final and binding upon the Trustee and the Issuer.
14.5 |
The Issuer shall also pay or discharge all Liabilities incurred by the Trustee and any Appointee in relation to the preparation and execution of, the exercise of its powers and the performance of its duties under, and in any other manner in relation to, these presents, including but not limited to legal and travelling expenses and any stamp, issue, registration, documentary and other taxes or duties paid or payable by the Trustee in connection with any action taken or contemplated by or on behalf of the Trustee for enforcing, or resolving any doubt concerning, or for any other purpose in relation to, these presents. |
14.6 |
All amounts due and payable pursuant to subclause 14.5 above and/or Clause 15(j) shall be payable by the Issuer on the date specified in a written demand by the Trustee, such demand to specify the reason for such demand, and in the case of payments actually made by the Trustee prior to such demand shall (if not paid within 10 days after such demand and the Trustee so requires) carry interest from the date such payment was made or such later date as specified in such demand at the rate of one per cent. per annum above the base rate (on the date on which payment was made by the Trustee) of NatWest Bank plc from the date such demand is made, and in all other cases shall (if not paid on the date specified in such demand or, if later, within 10 days after such demand and, in either case, the Trustee so requires) carry interest at such rate from the date specified in such demand. All remuneration payable to the Trustee shall carry interest at such rate from the due date therefor. |
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14.7 |
Unless otherwise specifically stated in any discharge of these presents the provisions of this Clause and Clause 15(j) shall continue in full force and effect notwithstanding such discharge. |
14.8 |
The Trustee shall be entitled in its absolute discretion to determine in respect of which Series of Notes any Liabilities incurred under these presents have been incurred or to allocate any such Liabilities between the Notes of any Series. |
15.SUPPLEMENT TO TRUSTEE ACTS
Section 1 of the Trustee Act 2000 shall not apply to the duties of the Trustee in relation to the trusts constituted by these presents. Where there are any inconsistencies between the Trustee Acts and the provisions of these presents, the provisions of these presents shall, to the extent allowed by law, prevail and, in the case of any such inconsistency with the Trustee Act 2000, the provisions of these presents shall constitute a restriction or exclusion for the purposes of that Act. The Trustee shall have all the powers conferred upon trustees by the Trustee Acts and by way of supplement thereto it is expressly declared as follows:
(a) |
The Trustee may in relation to these presents act on the advice or opinion of or any information obtained from any lawyer, valuer, accountant, surveyor, banker, broker, auctioneer or other expert (including without limitation and in the case of the Senior Notes, an Indexation Adviser) whether obtained by the Issuer, the Trustee or otherwise and shall not be responsible for any Liability occasioned by so acting. |
(b) |
Any such advice, opinion or information may be sent or obtained by letter, e-mail or facsimile transmission and the Trustee shall not be liable for acting on any advice, opinion or information purporting to be conveyed by any such letter, e-mail or facsimile transmission although the same shall contain some error or shall not be authentic. |
(c) |
The Trustee may call for and shall be at liberty to accept as sufficient evidence of any fact or matter or the expediency of any transaction or thing a certificate signed by any two Authorised Signatories of the Issuer, and the Trustee shall not be bound in any such case to call for further evidence or be responsible for any Liability that may be occasioned by it or any other person acting on such certificate. |
(d) |
The Trustee shall be at liberty to hold or to place these presents and any other documents relating thereto or to deposit them in any part of the world with any banker or banking company or company whose business includes undertaking the safe custody of documents or lawyer or firm of lawyers considered by the Trustee to be of good repute and the Trustee shall not be responsible for or required to insure against any Liability incurred in connection with any such holding or deposit and may pay all sums required to be paid on account of or in respect of any such deposit. |
(e) |
The Trustee shall not be responsible for the receipt or application of the proceeds of the issue of any of the Notes by the Issuer, the exchange of any Global Note or Certificate for another Global Note or Certificate or Definitive Bearer Notes or the delivery of any Global Note, Certificate or Definitive Notes to the person(s) entitled to it or them. |
(f) |
The Trustee shall not be bound to give notice to any person of the execution of any documents comprised or referred to in these presents or to take any steps to ascertain whether any Event of Default or Potential Event of Default or (in the case of the Senior Notes only) any Early Termination Event, Renminbi Currency Event or Change of Control Put Event or (in the case of the Subordinated Notes only) any Special Event, Compulsory Arrears of Interest Settlement Event, Change of Control, Change of Control Event, any breach by the Issuer of any provisions of these presents or any of the events specified in |
29
Condition 3(b)(i)(A) or Condition 3(b)(i)(B) of the Subordinated Notes has occurred and, until it shall have actual knowledge or express notice pursuant to these presents to the contrary, the Trustee shall be entitled to assume that no Event of Default or Potential Event of Default or (in the case of the Senior Notes only) any Early Termination Event, Renminbi Currency Event or Change of Control Put Event or (in the case of the Subordinated Notes only) any Special Event, Compulsory Arrears of Interest Settlement Event, Change of Control, Change of Control Event or any of the events specified in Condition 3(b)(i)(A) or Condition 3(b)(i)(B) of the Subordinated Notes has occurred and that the Issuer is observing and performing all its obligations under these presents.
(g) |
Save as expressly otherwise provided in these presents, the Trustee shall have absolute and uncontrolled discretion as to the exercise or non-exercise of its trusts, powers, authorities and discretions under these presents (the exercise or non-exercise of which as between the Trustee and the Noteholders and the Couponholders shall be conclusive and binding on the Noteholders and the Couponholders) and shall not be responsible for any Liability which may result from their exercise or non-exercise and in particular the Trustee shall not be bound to act at the request or direction of the holders or the Couponholders or otherwise under any provision of this Trust Deed or to take at such request or direction or otherwise any other action under any provision of this Trust Deed, without prejudice to the generality of subclauses 8.1(b) and 8.2(b), unless it shall first be indemnified and/or secured and/or pre-funded to its satisfaction against all Liabilities to which it may render itself liable or which it may incur by so doing and the Trustee shall incur no liability for refraining to act in such circumstances. |
(h) |
The Trustee shall not be liable to any person by reason of having acted upon any Extraordinary Resolution in writing or any Extraordinary Resolution or other resolution purporting to have been passed at any meeting of the holders of Notes of all or any Series in respect whereof minutes have been made and signed or any Extraordinary Resolution passed by way of electronic consents received through the relevant Clearing System(s) in accordance with these presents or any direction or request of the holders of the Notes of all or any Series even though subsequent to its acting it may be found that there was some defect in the constitution of the meeting or the passing of the resolution or (in the case of an Extraordinary Resolution in writing or a direction or a request) it was not signed by the requisite number of Noteholders or (in the case of an Extraordinary Resolution passed by electronic consents received through the relevant Clearing System(s)) it was not approved by the requisite number of Noteholders or that for any reason the resolution, direction or request was not valid or binding upon such holders and the relative Couponholders. |
(i) |
The Trustee shall not be liable to any person by reason of having accepted as valid or not having rejected any Note, Certificate or Coupon reasonably believed by it to be such and subsequently found to be forged or not authentic. |
(j) |
Subject to Section 750 of the Companies Act 2006 and without prejudice to the right of indemnity by law given to trustees, the Issuer shall indemnify the Trustee and every Appointee and keep it or them indemnified against all Liabilities to which it or they may be or become subject or which may be properly incurred by it or them in the execution of any of its or their trusts, powers, authorities and discretions under these presents or its or their functions under any such appointment or in respect of any other matter or thing done or omitted in any way relating to these presents or any such appointment. |
(k) |
Any consent or approval given by the Trustee for the purposes of these presents may be given on such terms and subject to such conditions (if any) as the Trustee thinks fit and notwithstanding anything to the contrary in these presents may be given retrospectively. |
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(l) |
The Trustee shall not (unless and to the extent ordered so to do by a court of competent jurisdiction) be required to disclose to any Noteholder or Couponholder any information (including, without limitation, information of a confidential, financial or price sensitive nature) made available to the Trustee by the Issuer or any other person in connection with the trusts of these presents and no Noteholder or Couponholder shall be entitled to take any action to obtain from the Trustee any such information. |
(m) |
Where it is necessary or desirable for any purpose in connection with these presents to convert any sum from one currency to another it shall (unless otherwise provided by these presents or required by law) be converted at such rate or rates, in accordance with such method and as at such date for the determination of such rate of exchange, as may be agreed by the Trustee in consultation with the Issuer and any rate, method and date so agreed shall be binding on the Issuer, the Noteholders and the Couponholders. |
(n) |
The Trustee may certify whether or not any of the conditions, events and acts set out in paragraphs (b), (c), (e) and (f) of Condition 10(A) of the Senior Notes (each of which conditions, events and acts shall, unless in any case the Trustee in its absolute discretion shall otherwise determine, for all the purposes of these presents be deemed to include the circumstances resulting therein and the consequences resulting therefrom) is in its opinion materially prejudicial to the interests of the holders of Senior Notes and any such certificate shall be conclusive and binding upon the Issuer, the holders of Senior Notes and the Couponholders. |
(o) |
The Trustee as between itself and the Noteholders and the Couponholders may determine all questions and doubts arising in relation to any of the provisions of these presents. Every such determination, whether or not relating in whole or in part to the acts or proceedings of the Trustee, shall be conclusive and shall bind the Trustee and the Noteholders and the Couponholders. |
(p) |
In connection with the exercise by it of any of its trusts, powers, authorities or discretions under these presents (including, without limitation, any modification, waiver, authorisation, determination or substitution), the Trustee shall have regard to the general interests of the Noteholders as a class but shall not have regard to any interests arising from circumstances particular to individual Noteholders or Couponholders (whatever their number) and, in particular but without limitation, shall not have regard to the consequences of such exercise for individual Noteholders or Couponholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Noteholder or Couponholder be entitled to claim, from the Issuer, the Trustee or any other person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders or Couponholders except to the extent already provided for in Condition 8 of the Senior Notes or Condition 8 of the Subordinated Notes, as the case may be, and/or any undertaking given in addition thereto or in substitution therefor under these presents. |
(q) |
The Trustee may whenever it thinks fit delegate by power of attorney or otherwise to any person or persons or fluctuating body of persons (whether being a joint trustee of these presents or not) all or any of its trusts, powers, authorities and discretions vested in the Trustee by these presents. Such delegation may be made upon such terms (including power to sub-delegate) and subject to such conditions and regulations as the Trustee may in the interests of the Noteholders think fit. Provided that the Trustee has taken reasonable care in selecting such delegate, it shall not be under any obligation to supervise the proceedings or acts of any such delegate or sub-delegate or be in any way responsible for any Liability incurred by reason of any misconduct or default on the part of any such delegate or |
31
sub-delegate. The Trustee shall within a reasonable time after any such delegation or any renewal, extension or termination thereof give notice thereof to the Issuer.
(r) |
The Trustee may in the conduct of the trusts of these presents instead of acting personally employ and pay an agent (whether being a lawyer or other professional person) to transact or conduct, or concur in transacting or conducting, any business and to do, or concur in doing, all acts required to be done in connection with these presents (including the receipt and payment of money). Provided that the Trustee has taken reasonable care in selecting such agent, it shall not be in any way responsible for any Liability incurred by reason of any misconduct or default on the part of any such agent or be bound to supervise the proceedings or acts of any such agent. |
(s) |
The Trustee may appoint and pay any person to act as a nominee on any terms in relation to such assets of the trusts constituted by these presents as the Trustee may determine. |
(t) |
The Trustee shall not be responsible for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity, enforceability or admissibility in evidence of these presents or any other document relating or expressed to be supplemental thereto and shall not be liable for any failure to obtain any licence, consent or other authority for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity, performance, enforceability or admissibility in evidence of these presents or any other document relating or expressed to be supplemental thereto. |
(u) |
The Trustee shall not be responsible to any person for failing to request, require or receive any legal opinion relating to any Notes or for checking or commenting upon the content of any such legal opinion. |
(v) |
Any certificate or report of the Auditors or any other person called for by or provided to the Trustee in accordance with or for the purposes of the Notes may be relied upon by the Trustee as sufficient evidence of the facts stated therein whether or not such certificate or report is addressed to the Trustee and whether or not such certificate or report and/or any engagement letter or other document entered into by the Trustee in connection therewith contains a monetary or other limit on the liability of the Auditors (or such other expert or other person) in respect thereof. |
(w) |
So long as any Global Note is, or any Registered Notes represented by a Global Certificate are, held on behalf of a clearing system, in considering the interests of Noteholders, the Trustee may have regard to any information provided to it by such clearing system or its operator as to the identity (either individually or by category) of its accountholders or participants with entitlements to any such Global Note or the Registered Notes and may consider such interests on the basis that such accountholders or participants were the holder(s) thereof. |
(x) |
The Trustee may call for and shall rely on any records, certificate or other document of or to be issued by Euroclear or Clearstream, Luxembourg in relation to any determination of the principal amount of Notes represented by a NGN. Any such records, certificate or other document shall be conclusive and binding for all purposes. The Trustee shall not be liable to any person by reason of having accepted as valid or not having rejected any such records, certificate or other document to such effect purporting to be issued by Euroclear or Clearstream, Luxembourg and subsequently found to be forged or not authentic. |
(y) |
No provision of these presents shall require the Trustee to do anything which may in its opinion be illegal or contrary to applicable law or regulation. |
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(z) |
Any trustee being a banker, lawyer, broker or other person engaged in any profession or business shall be entitled to charge and be paid all usual professional and other charges for business transacted and acts done by them or their partner or firm on matters arising in connection with the trusts of these presents and also their properly incurred charges in addition to disbursements for all other work and business done and all time spent by them or their partner or firm on matters arising in connection with these presents, including matters which might or should have been attended to in person by a trustee not being a banker, lawyer, broker or other professional person. |
(aa) |
Nothing contained in these presents shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties or the exercise of any right, power, authority or discretion hereunder if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not assured to it. |
(bb) |
The Trustee shall not be bound to take any steps to enforce the performance of any provisions of these presents, the Notes or the Coupons or to appoint an independent financial advisor pursuant to the Conditions unless it shall be indemnified and/or secured and/or prefunded by the relevant Noteholders and/or Couponholders to its satisfaction against all proceedings, claims and demands to which it may be liable and against all costs, charges, liabilities and expenses which may be incurred by it in connection with such enforcement or appointment, including the cost of its managements’ time and/or other internal resources, calculated using its normal hourly rates in force from time to time. |
(cc) |
When determining whether an indemnity or any security or prefunding is satisfactory to it, the Trustee shall be entitled to evaluate its risk in given circumstances by considering the worst-case scenario and, for this purpose, it may take into account, without limitation, the potential costs of defending or commencing proceedings in England or elsewhere and the risk however remote, of any award of damages against it in England or elsewhere. |
(dd) |
The Trustee shall be entitled to require that any indemnity or security given to it by the Noteholders or any of them be given on a joint and several basis and be supported by evidence satisfactory to it as to the financial standing and creditworthiness of each counterparty and/or as to the value of the security and an opinion as to the capacity, power and authority of each counterparty and/or the validity and effectiveness of the security. |
16.TRUSTEE’S LIABILITY
16.1 |
Subject to Section 750 of the Companies Act 2006, nothing in these presents shall in any case in which the Trustee has failed to show the degree of care and diligence required of it as trustee having regard to the provisions of these presents conferring on it any trusts, powers, authorities or discretions exempt the Trustee from or indemnify it against any liability for gross negligence, wilful default or fraud of which it may be guilty in relation to its duties under these presents. |
16.2 |
Notwithstanding any provision of these presents to the contrary, the Trustee shall not in any event be liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including but not limited to lost profits, business, goodwill or opportunity), whether or not foreseeable, even if the Trustee has been advised of the likelihood of such loss or damage, unless the claim for loss or damage is made in respect of fraud on the part of the Trustee. |
17.TRUSTEE CONTRACTING WITH THE ISSUER
Neither the Trustee (which for the purpose of this Clause shall include the Holding Company of any corporation acting as trustee hereof or any Subsidiary of such Holding Company) nor any director or officer or Holding Company, Subsidiary or associated company of a corporation acting as a trustee under these presents shall by reason of its or their fiduciary position be in any way precluded from:
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(a) |
entering into or being interested in any contract or financial or other transaction or arrangement with the Issuer or any person or body corporate associated with the Issuer (including without limitation any contract, transaction or arrangement of a banking or insurance nature or any contract, transaction or arrangement in relation to the making of loans or the provision of financial facilities or financial advice to, or the purchase, placing or underwriting of or the subscribing or procuring subscriptions for or otherwise acquiring, holding or dealing with, or acting as paying agent in respect of, the Notes or any other notes, bonds, stocks, shares, debenture stock, debentures or other securities of, the Issuer or any person or body corporate associated as aforesaid); or |
(b) |
accepting or holding the trusteeship of any other trust deed constituting or securing any other securities issued by or relating to the Issuer or any such person or body corporate so associated or any other office of profit under the Issuer or any such person or body corporate so associated, |
and each shall be entitled to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such contract, transaction or arrangement as is referred to in Clause 17(a) above or, as the case may be, any such trusteeship or office of profit as is referred to in Clause 17(b) above without regard to the interests of the Noteholders and notwithstanding that the same may be contrary or prejudicial to the interests of the Noteholders and shall not be responsible for any Liability occasioned to the Noteholders thereby and shall be entitled to retain and shall not be in any way liable to account for any profit made or share of brokerage or commission or remuneration or other amount or benefit received thereby or in connection therewith.
Where any Holding Company, Subsidiary or associated company of the Trustee or any director or officer of the Trustee acting other than in their capacity as such a director or officer has any information, the Trustee shall not thereby be deemed also to have knowledge of such information and, unless it shall have actual knowledge of such information, shall not be responsible for any loss suffered by Noteholders resulting from the Trustee’s failing to take such information into account in acting or refraining from acting under or in relation to these presents.
18.WAIVER, AUTHORISATION AND DETERMINATION
18.1 |
The Trustee may without the consent or sanction of the Noteholders or the Couponholders and without prejudice to its rights in respect of any subsequent breach, Event of Default or Potential Event of Default from time to time and at any time but only if and in so far as in its opinion the interests of the Noteholders shall not be materially prejudiced thereby waive or authorise any breach or proposed breach by the Issuer of any of the covenants or provisions contained in these presents or any Condition or determine that any Event of Default or Potential Event of Default shall not be treated as such for the purposes of these presents or any Condition PROVIDED ALWAYS THAT the Trustee shall not exercise any powers conferred on it by this Clause in contravention of any express direction given by Extraordinary Resolution or by a request under Condition 10 of the Senior Notes or Condition 10 of the Subordinated Notes, as the case may be, but so that no such direction or request shall affect any waiver, authorisation or determination previously given or made. Any such waiver, authorisation or determination may be given or made on such terms and subject to such conditions (if any) as the Trustee may determine, shall be binding on the Noteholders and the Couponholders and, if, but only if, the Trustee shall so require, shall be notified by the Issuer to the Noteholders in accordance with Condition 14 of the Senior Notes or Condition 14 of the Subordinated Notes, as the case may be, as soon as practicable thereafter. |
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MODIFICATION
18.2 |
The Trustee may without the consent or sanction of the Noteholders or the Couponholders at any time and from time to time concur with the Issuer in making any modification (a) to these presents or any Condition which in the opinion of the Trustee it may be proper to make PROVIDED THAT the Trustee is of the opinion that such modification is not materially prejudicial to the interests of the Noteholders (but such power does not extend to any provision entitling the holders of the Subordinated Notes to institute proceedings for the winding-up of the Issuer which is more extensive than those set out in Condition 10(b) of the Subordinated Notes) or (b) to these presents or any Condition if in the opinion of the Trustee such modification is of a formal, minor or technical nature or to correct a manifest error or to comply with mandatory provisions of applicable law. Any such modification may be made on such terms and subject to such conditions (if any) as the Trustee may determine, shall be binding upon the Noteholders and the Couponholders and, unless the Trustee agrees otherwise, shall be notified by the Issuer to the Noteholders in accordance with Condition 14 of the Senior Notes or Condition 14 of the Subordinated Notes, as the case may be, as soon as practicable thereafter. |
In addition, the Trustee shall be obliged to concur with the Issuer in using its reasonable endeavours to effect any Benchmark Amendments in the circumstances and as otherwise set out in Condition 4(b)(ii)(H) of the Senior Notes and Condition 4(b) of the Subordinated Notes, as the case may be, and/or any Benchmark Replacement Conforming Changes in the circumstances and as otherwise set out in Condition 4(b)(ii)(H) of the Senior Notes, without the consent of the relevant Noteholders or Couponholders.
18.3 |
In the case of Subordinated Notes, the agreement or approval of the holders of Subordinated Notes shall not be required in the case of any variation of the Conditions and/or this Trust Deed and/or the Agency Agreement required to be made in connection with the substitution or variation of the Subordinated Notes pursuant to Condition 7(i) of the Subordinated Notes. |
BREACH
18.4 |
Any breach of or failure to comply with any such terms and conditions as are referred to in subclauses 18.1 and 18.2 of this Clause shall constitute a default by the Issuer in the performance or observance of a covenant or provision binding on it under or pursuant to these presents. |
19.HOLDER OF DEFINITIVE BEARER NOTE ASSUMED TO BE COUPONHOLDER
19.1 |
Wherever in these presents the Trustee is required or entitled to exercise a power, trust, authority or discretion under these presents, except as ordered by a court of competent jurisdiction or as required by applicable law, the Trustee shall, notwithstanding that it may have express notice to the contrary, assume that each holder of a Definitive Bearer Note is the holder of all Coupons appertaining to each Definitive Bearer Note of which they are the holder. |
NO NOTICE TO COUPONHOLDERS
19.2 |
Neither the Trustee nor the Issuer shall be required to give any notice to the Couponholders for any purpose under these presents and the Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the holders of Definitive Bearer Notes in accordance with Condition 14 of the Senior Notes or Condition 14 of the Subordinated Notes, as the case may be. |
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20. SUBSTITUTION AND CONSOLIDATION MERGER, CONVEYANCE, TRANSFER OR LEASE
20.1(a)The Trustee may without the consent of the Noteholders or Couponholders at any time agree with the Issuer to the substitution in place of the Issuer (or of the previous substitute under this Clause) as the principal debtor under these presents of either (i) a Successor in Business to the Issuer or (ii) a Holding Company of the Issuer or (iii) any Subsidiary of the Issuer (such substituted company being hereinafter called the New Company) (in the case of the Subordinated Notes, on a subordinated basis equivalent to that referred to in Condition 3 of the Subordinated Notes) provided that in each case a trust deed is executed or some other form of undertaking is given by the New Company in form and manner reasonably satisfactory to the Trustee, agreeing to be bound by the provisions of these presents with any consequential amendments which the Trustee may deem appropriate as fully as if the New Company had been named in these presents as the principal debtor in place of the Issuer (or of the previous substitute under this Clause) and provided further that (save in the case of a substitution of a Successor in Business to the Issuer) the Issuer unconditionally and irrevocably guarantees all amounts payable under these presents to the satisfaction of the Trustee.
(b) |
The following further conditions shall apply to 20.1(a) above: |
(i) |
the Issuer and the New Company shall comply with such other requirements as the Trustee may direct in order to ensure that the interests of the Noteholders are not materially prejudiced (and taking into account the proviso in paragraph 20.1(c) below); |
(ii) |
undertakings or covenants shall be given by the New Company in terms corresponding to the provisions of Condition 8 of the Senior Notes or Condition 8 of the Subordinated Notes, as the case may be, and Condition 7(b) of the Senior Notes and Condition 7(b) of the Subordinated Notes, as the case may be, shall be modified accordingly; |
(iii) |
without prejudice to the rights of reliance of the Trustee under the immediately following paragraph (iv), the Trustee is satisfied that the relevant transaction is not materially prejudicial to the interests of the Noteholders, provided that in determining such material prejudice the Trustee shall not take into account any prejudice to the interests of the Noteholders as a result of the New Company not being required pursuant to the undertakings or covenants given pursuant to the preceding paragraph (ii) to pay any Additional Amounts for or on account of any Taxes imposed by the United States (or any political subdivision or taxing authority thereof or therein); and |
(iv) |
if two authorised signatories of the New Company (or other officers acceptable to the Trustee) shall certify that the New Company is solvent at the time at which the relevant transaction is proposed to be effected (which certificate the Trustee may rely upon absolutely) the Trustee shall not be under any duty to have regard to the financial condition, profits or prospects of the New Company or to compare the same with those of the Issuer or any previous substitute under this Clause as applicable. |
(c) |
Any such trust deed or undertaking shall, if so expressed, operate to release the Issuer or the previous substitute as aforesaid from all of its obligations as principal debtor under these presents. Not later than 14 days after the execution of such documents and compliance with such requirements, the New Company shall give notice thereof in a form previously |
36
approved by the Trustee to the Noteholders in the manner provided in Condition 14 of the Senior Notes or Condition 14 of the Subordinated Notes, as the case may be. Upon the execution of such documents and compliance with such requirements, the New Company shall be deemed to be named in these presents as the principal debtor in place of the Issuer (or in place of the previous substitute under this Clause) under these presents and these presents shall be deemed to be modified in such manner as shall be necessary to give effect to the above provisions and, without limitation, references in these presents to the Issuer shall, unless the context otherwise requires, be deemed to be or include references to the New Company.
20.2(a)The Issuer may consolidate with or merge (which term shall include for the avoidance of doubt a scheme of arrangement) into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and the Issuer may permit any Person to consolidate with or merge into the Issuer or convey, transfer or lease its properties and assets substantially as an entirety to the Issuer, provided that:
(i) |
if the Issuer shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Issuer is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Issuer substantially as an entirety shall be a corporation, partnership or trust, shall be organised and validly existing under the laws of any applicable jurisdiction and shall expressly assume (including, in the case of a Reorganisation, by way of a full and unconditional guarantee subject to the proviso to this subclause) by a trust deed supplemental hereto executed and delivered to the Trustee on behalf of the Noteholders in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and interest on all the Notes and the performance or observance of every covenant of these presents on the part of the Issuer to be performed or observed; provided, however, that in the case of a Reorganisation; |
(A) |
such assumption shall be effected by means of a supplemental trust deed executed by the guarantor in which: |
I. |
the guarantor covenants to the Trustee to guarantee irrevocably and unconditionally the due and punctual payment of the principal of and interest on all the Notes, and all other amounts payable by the Issuer under these presents, which guarantee shall (inter alia) not be subject to any requirement for presentment or demand and shall not be affected, modified or impaired upon the happening from time to time of any event, including without limitation (x) the waiver, surrender, compromise, settlement, release, termination or modification of any or all of the obligations, covenants or agreements of the Issuer under these presents; (y) the bankruptcy or insolvency of the Issuer; and (z) to the extent permitted by law, the release or discharge by operation of law of the Issuer from the performance or observance of any obligation, covenant or agreement contained in these presents; and |
II. |
the guarantor covenants to be bound by each and every obligation of the Issuer contained in these presents, including without limitation the obligation to pay Additional Amounts with respect to any payment made under the guarantee to the extent and subject to the exceptions, mutatis mutandis, set out in Condition 8 of the Senior |
37
Notes or Condition 8 of the Subordinated Notes, as the case may be, and to be subject to each Event of Default specified in Condition 10(A) of the Senior Notes or Condition 10(a) of the Subordinated Notes, as the case may be, or in any Notes or Certificates in respect thereof and to each Potential Event of Default, as though in each case, each reference to the Issuer in connection with such obligations or Events of Default were to the guarantor; provided, however, that the reference to specific statutes in Condition 10(A)(e) of the Senior Notes shall be modified, if applicable, to reflect the laws of the jurisdiction of incorporation of the guarantor; and
(B) |
the Trustee shall have received an opinion of legal counsel (which may be an employee of the guarantor), in form and substance reasonably satisfactory to the Trustee to the effect that such guarantee is the valid, binding and enforceable obligation of the guarantor; |
(ii)immediately prior to and after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Issuer as a result of such transaction as having been incurred by the Issuer at the time of such transaction, no Event of Default or Potential Event of Default shall have happened and be continuing;
(iii)the Person formed by such consolidation or into which the Issuer is merged or to whom the Issuer has conveyed, transferred or leased its properties or assets (if such Person is incorporated or organised and validly existing under the laws of a jurisdiction other than the United States, any State thereof, or the District of Columbia, or England and Wales) agrees to indemnify the Trustee and the holder of each Note and Coupon against (A) any tax, assessment or governmental charge imposed on the Trustee or any such holder or required to be withheld or deducted from any payment to the Trustee or such holder as a consequence of such consolidation, merger, conveyance, transfer or lease; and (B) any costs or expenses of the act of such consolidation, merger, conveyance, transfer or lease;
(iv) |
the Issuer (and, in the case of a guarantee as provided above, the guarantor) has delivered to the Trustee a Certificate signed by two of its Authorised Signatories (or other officers acceptable to the Trustee) and an opinion of legal counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental trust deed is required in connection with such transaction, such supplemental trust deed complies with this Clause, that such supplemental trust deed is valid, binding and enforceable and that all conditions precedent herein provided for relating to such transaction have been complied with; |
(v) |
undertakings or covenants shall be given by such Person in terms corresponding to the provisions of Condition 8 of the Senior Notes or Condition 8 of the Subordinated Notes, as the case may be, and Condition 7(b) of the Senior Notes and Condition 7(b) of the Subordinated Notes, as the case may be, shall be modified accordingly; |
(vi) |
without prejudice to the rights of reliance of the Trustee under the immediately following paragraph (vii), the Trustee is satisfied that the relevant transaction is not materially prejudicial to the interests of the Noteholders, provided that in determining such material prejudice the Trustee shall not take into account any prejudice to the interests of the Noteholders as a result of the Person pursuant to the undertakings or covenants given pursuant to the preceding paragraph (v) not being |
38
required to pay any Additional Amounts for or on account of any Taxes imposed by the United States (or any political subdivision or taxing authority thereof or therein); and
(vii) |
if two authorised signatories of the Person formed by such consolidation or into which the Issuer is merged or to whom the Issuer has conveyed, transferred or leased its properties or assets (or other officers acceptable to the Trustee) shall certify that such Person is solvent at the time at which the relevant transaction is proposed to be effected (which certificate the Trustee may rely upon absolutely) the Trustee shall not be under any duty to have regard to the financial condition, profits or prospects of such Person or to compare the same with those of the Issuer. |
(b) |
Upon any consolidation of the Issuer with, or merger of the Issuer into, any other Person or any conveyance, transfer or lease of the properties and assets of the Issuer substantially as an entirety in accordance with paragraph (a) of this subclause 20.2, the successor Person formed by such consolidation or into which the Issuer is merged or to which such conveyance, transfer or lease is made shall succeed to and be substituted for, except in the case of an assumption by way of a full and unconditional guarantee made in accordance with paragraph (a) of this subclause 20.2 (in which event, the Issuer shall remain an obligor under these presents), and may exercise every right and power of, the Issuer under these presents with the same effect as if such successor Person had been named as the Issuer in these presents, as the case may be, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under these presents. |
(c) |
Not later than 21 days after completion of the relevant transaction as referred to in paragraph (a) of this subclause 20.2 the Issuer or, as the case may be, the Person resulting from any such consolidation or merger shall give notice thereof in a form previously approved by the Trustee to the Noteholders in the manner provided in Condition 14 of the Senior Notes or Condition 14 of the Subordinated Notes, as the case may be. |
21.CURRENCY INDEMNITY
The Issuer shall indemnify the Trustee, every Appointee, the Noteholders and the Couponholders and keep them indemnified against:
(a) |
any loss or damage incurred by any of them arising from the non-payment by the Issuer of any amount due to the Trustee or the holders of the Notes issued by the Issuer and the relative Couponholders under these presents by reason of any variation in the rates of exchange between those used for the purposes of calculating the amount due under a judgment or order in respect thereof and those prevailing at the date of actual payment by the Issuer; and |
(b) |
any deficiency arising or resulting from any variation in rates of exchange between (i) the date as of which the local currency equivalent of the amounts due or contingently due under these presents (other than this Clause) is calculated for the purposes of any bankruptcy, insolvency or liquidation of the Issuer and (ii) the final date for ascertaining the amount of claims in such bankruptcy, insolvency or liquidation. The amount of such deficiency shall be deemed not to be reduced by any variation in rates of exchange occurring between the said final date and the date of any distribution of assets in connection with any such bankruptcy, insolvency or liquidation. |
The above indemnities shall constitute obligations of the Issuer and separate and independent from its other obligations under the other provisions of these presents and shall apply irrespective of any indulgence granted by the Trustee or the Noteholders or the Couponholders from time to time and shall continue in full force and effect notwithstanding the judgment or filing of any proof or proofs in any bankruptcy, insolvency or liquidation of the Issuer for a liquidated sum or sums in respect of amounts due under these presents (other than this Clause).
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Any such deficiency as aforesaid shall be deemed to constitute a loss suffered by the Noteholders and the Couponholders and no proof or evidence of any actual loss shall be required by the Issuer or its liquidator or liquidators.
22. |
NEW TRUSTEE |
New Trustee
22.1 |
The power to appoint a new trustee of these presents shall be vested in the Issuer but no person shall be appointed who shall not previously have been approved by an Extraordinary Resolution. One or more persons may hold office as trustee or trustees of these presents but such trustee or trustees shall be or include a Trust Corporation. Whenever there shall be more than two trustees of these presents the majority of such trustees shall be competent to execute and exercise all the duties, powers, trusts, authorities and discretions vested in the Trustee by these presents provided that a Trust Corporation shall be included in such majority. Any appointment of a new trustee of these presents shall as soon as practicable thereafter be notified by the Issuer to the Issuing and Principal Paying Agent and in accordance with Condition 14 of the Senior Notes or Condition 14 of the Subordinated Notes, as the case may be, to the Noteholders. |
Separate and Co-Trustees
22.2 |
Notwithstanding the provisions of subclause 22.1 above, the Trustee may, upon giving prior notice to the Issuer (but without the consent of the Issuer, the Noteholders or the Couponholders), appoint any person established or resident in any jurisdiction (whether a Trust Corporation or not) to act either as a separate trustee or as a co-trustee jointly with the Trustee: |
(a) |
if the Trustee considers such appointment to be in the interests of the Noteholders; |
(b) |
for the purposes of conforming to any legal requirements, restrictions or conditions in any jurisdiction in which any particular act or acts is or are to be performed; or |
(c) |
for the purposes of obtaining a judgment in any jurisdiction or the enforcement in any jurisdiction of either a judgment already obtained or any of the provisions of these presents against the Issuer. |
The Issuer irrevocably appoints the Trustee to be its attorney in its name and on its behalf to execute any such instrument of appointment. Such a person shall (subject always to the provisions of these presents) have such trusts, powers, authorities and discretions (not exceeding those conferred on the Trustee by these presents) and such duties and obligations as shall be conferred or imposed by the instrument of appointment. The Trustee shall have power in like manner to remove any such person. Such reasonable remuneration as the Trustee may pay to any such person, together with any attributable costs, charges and expenses incurred by it in performing its function as such separate trustee or co-trustee, shall for the purposes of these presents be treated as costs, charges and expenses incurred by the Trustee.
23.TRUSTEE’S RETIREMENT AND REMOVAL
A trustee of these presents may retire at any time on giving not less than three months’ prior written notice to the Issuer without giving any reason and without being responsible for any Liabilities incurred by reason of such retirement. The Noteholders shall have the power exercisable by Extraordinary Resolution to remove any trustee or trustees for the time being of these presents. The Issuer undertakes that in the event of the only trustee of these presents which is a Trust Corporation giving notice under this Clause or being removed by Extraordinary Resolution it will use all reasonable endeavours to procure that a new trustee of these presents being a Trust Corporation is appointed as soon as reasonably practicable thereafter.
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The retirement or removal of any such trustee shall not become effective until a successor trustee being a Trust Corporation is appointed.
24.TRUSTEE’S POWERS TO BE ADDITIONAL
The powers conferred upon the Trustee by these presents shall be in addition to any powers which may from time to time be vested in the Trustee by the general law or as a holder of any of the Notes or Coupons.
25.NOTICES
Any notice or demand to the Issuer or the Trustee required to be given, made or served for any purposes under these presents shall be given, made or served by sending the same by pre-paid post (first class if inland, first class airmail if overseas), email or facsimile transmission or by delivering it by hand as follows:
to the Issuer: |
Vodafone House |
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The Connection |
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Newbury |
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Berkshire RG14 2FN |
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England |
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(Attention: Group Treasury Director) |
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Email: Treasury.Dealers@vodafone.com |
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to the Trustee: |
Eighth Floor |
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100 Bishopsgate |
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London EC2N 4AG |
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England |
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(Attention: the Manager, Commercial Trusts) |
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Email: trustsupport@lawdeb.com |
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Facsimile No.: 020 7606 5451 |
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or to such other postal address, email address or facsimile number as shall have been notified (in accordance with this Clause) to the other party hereto and any notice or demand sent by post as aforesaid shall be deemed to have been given, made or served upon receipt. Any notice or demand sent by email as aforesaid shall be deemed to have been given, made or served when sent (provided always that any communication to the Trustee shall only be treated as having been received upon written confirmation of receipt by the Trustee and an automatically generated “read” or “received” receipt shall not constitute such confirmation). Any notice or demand sent by facsimile transmission as aforesaid shall be deemed to have been given, made or served upon receipt provided that in the case of a notice or demand given by facsimile transmission such notice or demand shall forthwith be confirmed by post.
26.GOVERNING LAW
The Trust Deed, the Notes, the Coupons, and any non-contractual obligations arising out of or in connection with them, are governed by, and shall be construed in accordance with, English law.
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27.COUNTERPARTS
This Trust Deed and any trust deed supplemental hereto may be executed and delivered in counterparts, both of which, taken together, shall constitute one and the same deed and either party to this Trust Deed or any party to any trust deed supplemental hereto may enter into the same by executing and delivering a counterpart.
28.CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
A person who is not a party to this Trust Deed or any trust deed supplemental hereto has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Trust Deed or any trust deed supplemental hereto, but this does not affect any right or remedy of a third party which exists or is available apart from that Act.
IN WITNESS whereof this Trust Deed has been executed as a deed by the Issuer and the Trustee and delivered on the date stated on page 1.
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SCHEDULE 1
TERMS AND CONDITIONS OF THE NOTES
PART 1
TERMS AND CONDITIONS OF THE SENIOR NOTES
Notes issued by Vodafone Group Plc (formerly called Vodafone AirTouch Plc) (the “Issuer”) are constituted by a Trust Deed dated 16 July 1999 (such Trust Deed as modified and/or supplemented and/or restated from time to time, the “Trust Deed”) made between the Issuer and The Law Debenture Trust Corporation p.l.c. (the “Trustee”, which expression shall include any successor as trustee).
The Notes and the Coupons (as defined below) have the benefit of an amended and restated Agency Agreement dated 22 September 2022 (such Agency Agreement as amended and/or supplemented and/or restated from time to time, the “Agency Agreement”) made between the Issuer, HSBC Bank plc as issuing and principal paying agent and agent bank (the “Issuing and Principal Paying Agent”, which expression shall include any successor issuing and principal paying agent), the other paying agents named therein (together with the Issuing and Principal Paying Agent, the “Paying Agents”, which expression shall include any additional or successor paying agents), HSBC Bank USA, National Association as exchange agent (the “Exchange Agent”, which expression shall include any successor exchange agent) and HSBC Bank USA, National Association as registrar (the “Registrar”, which expression shall include any successor registrar) and a transfer agent and the other transfer agents named therein (together with the Registrar, the “Transfer Agents”, which expression shall include any additional or successor transfer agent) and the Trustee.
The Noteholders (as defined below) and the holders (the “Couponholders”) of the interest coupons (the “Coupons”) relating to interest bearing Notes in bearer form and, w here applicable in the case of such Notes, talons for further Coupons (the “Talons”) are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and are deemed to have notice of, and are entitled to the benefit of, those provisions applicable to them of the Agency Agreement and the applicable Final Terms. Any reference herein to “Coupons” or “coupons” shall, unless the context otherwise requires, be deemed to include a reference to “Talons” or “talons”. References in these Terms and Conditions to “Exempt Notes” are to Notes for which no prospectus is required to be published under the Financial Services and Markets Act 2000.
If this Note is not an Exempt Note, the final terms for this Note (or the relevant provisions thereof) are attached to or endorsed on this Note (the “Final Terms”). Part A of the Final Terms completes these Terms and Conditions for the purposes of this Note. References to the “applicable Final Terms” are to Part A of the Final Terms (or the relevant provisions thereof). If this Note is an Exempt Note, the pricing supplement for this Note (or the relevant provisions thereof) are attached to or endorsed on this Note (the “Pricing Supplement”). Part A of the Pricing Supplement completes these Terms and Conditions for the purposes of this Note and may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with these Terms and Conditions, replace or modify these Terms and Conditions for the purposes of this Note. In the case of Exempt Notes, any subsequent reference in these Terms and Conditions to “Final Terms” shall be deemed to include reference to “Pricing Supplement” so far as the context admits.
The Trustee acts for the benefit of the Noteholders and the Couponholders (which expression shall, unless the context otherwise requires, include the holders of the Talons), in accordance with the provisions of the Trust Deed.
As used herein, “Tranche” means Notes which are identical in all respects (including as to listing) and “Series” means a Tranche of Notes together with any further Tranche or Tranches of Notes which are (i) expressed to be consolidated and form a single series and (ii) identical in all respects (including as to listing) except for their respective Issue Dates, Interest Commencement Dates and/or Issue Prices.
Copies of the Trust Deed and the Agency Agreement are available for inspection during normal business hours at the registered office for the time being of the Issuer (being Vodafone House, The Connection, New bury, Berkshire RG14 2FN) and of the Trustee (being at Eighth Floor, 100 Bishopsgate, London EC2N 4AG, England) and at the specified office of each of the Paying Agents. In addition, the applicable Final Terms will be available for viewing on the website of the Regulatory News Service operated by the London Stock Exchange plc at www.londonstockexchange.com/exchange/news/market-news/market- news-home.html or otherwise published in accordance with Regulation (EU) 2017/1129 as it forms part of domestic law in the United Kingdom by virtue of the European Union Withdrawal Act 2018. If this Note is an Exempt Note, the applicable Pricing Supplement will only be obtainable by a Noteholder holding one or more Notes and such Noteholder must produce evidence satisfactory to the Paying Agent for the time being in London as to the identity of such holder.
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The statements in these Terms and Conditions include summaries of, and are subject to, the detailed provisions of the Trust Deed. Words and expressions defined in the Trust Deed and/or the Agency Agreement or used in the applicable Final Terms shall have the same meanings w here used in these Terms and Conditions unless the context otherwise requires or unless otherwise stated and provided that, in the event of inconsistency between the Agency Agreement and the Trust Deed, the Trust Deed shall prevail and, in the event of inconsistency between the Agency Agreement or the Trust Deed and the applicable Final Terms, the applicable Final Terms will prevail.
References herein to “RMB Notes” are to Notes denominated in Renminbi. References herein to “Renminbi”, “RMB” and “CNY” are to the lawful currency of the People’s Republic of China (the “PRC”) which, for the purposes of these Terms and Conditions, excludes the Hong Kong Special Administrative Region of the People’s Republic of China, the Macau Special Administrative Region of the People’s Republic of China and Taiwan.
1.Form, Denomination and Title
The Notes are issued in bearer form (“Bearer Notes”, which expression includes Notes that are specified to be Exchangeable Bearer Notes), in registered form (“Registered Notes”) or in bearer form exchangeable for Registered Notes (“Exchangeable Bearer Notes”) in each case in the Specified Denomination(s) shown hereon.
All Registered Notes shall have the same Specified Denomination. Where Exchangeable Bearer Notes are issued, the Registered Notes for which they are exchangeable shall have the same Specified Denomination as the lowest denomination of Exchangeable Bearer Notes.
The Notes may be Fixed Rate Notes, Floating Rate Notes, Zero Coupon Notes, CMS Linked Notes, Inflation Linked Interest Notes or a combination of any of the foregoing, depending upon the Interest Basis shown in the applicable Final Terms.
The Notes may be redeemable at par or may be Inflation Linked Redemption Notes, depending on the Redemption Basis shown in the applicable Final Terms.
The Notes may also be Sustainability-Linked Notes as defined in Condition 4(c).
If this Note is an Exempt Note, this Note may include terms and conditions not contemplated by these Terms and Conditions, in which event the relevant provisions will be included in the applicable Pricing Supplement.
Bearer Notes are serially numbered and are issued with Coupons attached, unless they are Zero Coupon Notes, in which case references to Coupons and Couponholders in these Terms and Conditions are not applicable.
Registered Notes are represented by registered certificates (“Certificates”) and, save as provided in Condition 2(c), each Certificate shall represent the entire holding of Registered Notes by the same holder.
Title to the Bearer Notes and Coupons will pass by delivery. Title to the Registered Notes will pass by registration in the register that the Issuer will procure to be kept by the Registrar in accordance with the provisions of the Agency Agreement (the “Register”). The Issuer, any Paying Agent, the Registrar, the Transfer Agents, the Exchange Agent and the Trustee may (to the fullest extent permitted by applicable laws) deem and treat the holder (as defined below) of any Note or Coupon as the absolute owner for all purposes (whether or not the Note or Coupon shall be overdue and notwithstanding any notice of ownership or writing on the Note or Coupon (or on the Certificate representing it) or any notice of previous loss or theft of the Note or Coupon (or that of the related Certificate) or of trust or any interest therein) and shall not be required to obtain any proof thereof or as to the identity of such holder and no person shall be liable for so treating the holder.
In these Terms and Conditions, “Noteholder” means the bearer of any Bearer Note or the person in whose name a Registered Note is registered (as the case may be), “holder” (in relation to a Note or Coupon) means the bearer of any Bearer Note or Coupon or the person in w hose name a Registered Note is registered (as the case may be) and capitalised terms have the meanings given to them in the applicable Final Terms, the absence of any such meaning indicating that such term is not applicable to the Notes.
If so specified in the applicable Final Terms, some or all of the relevant Tranche of Notes may immediately be purchased by or on behalf of the Issuer on the Issue Date thereof. Such Notes are referred to as “Retained Notes”.
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Any Retained Notes may (in each case, together with the related Coupons and Talons, if applicable) be purchased by and held by or for the account of the Issuer or any Subsidiary (as defined in the Trust Deed) of it and may be sold or otherwise disposed of in whole or in part by private treaty at any time, and shall cease to be Retained Notes to the extent of and upon such sale or disposal.
Retained Notes shall, pending sale or disposal by or on behalf of the Issuer, carry the same rights and be subject in all respects to the same terms and conditions as the other Notes of the relevant Series, except that Retained Notes will not be treated as outstanding for the purposes of determining quorum or voting at meetings of Noteholders, passing a resolution in writing, the giving of consent by way of electronic consents or of considering the interests of the Noteholders save as otherwise provided in the Trust Deed. Notes which have ceased to be Retained Notes shall carry the same rights and be subject in all respects to the same terms and conditions as the other Notes of the relevant Series.
Retained Notes will be held by a custodian appointed by the Issuer or any Subsidiary of it and specified in the applicable Final Terms (the “Custodian”). At the time of such appointment, the Issuer (or a relevant Subsidiary of it, as the case may be), the Trustee and the Custodian will enter into a custody agreement to specify how the Custodian will hold such Retained Notes on behalf of the Issuer.
2.Exchanges of Exchangeable Bearer Notes and Transfers of Registered Notes
(a)Exchange of Exchangeable Bearer Notes
Subject as provided in Condition 2(f), Exchangeable Bearer Notes may be exchanged for the same nominal amount of Registered Notes at the request in writing of the relevant Noteholder (in substantially the same form set out in Schedule 4 of the Agency Agreement) and upon surrender of each Exchangeable Bearer Note to be exchanged, together with all unmatured Coupons relating to it, at the specified office of any Transfer Agent; provided, however, that w here an Exchangeable Bearer Note is surrendered for exchange after the Record Date (as defined in Condition 6(c)) for any payment of interest, the Coupon in respect of that payment of interest need not be surrendered with it. Registered Notes may not be exchanged for Bearer Notes. Bearer Notes of one Specified Denomination may not be exchanged for Bearer Notes of another Specified Denomination. Bearer Notes that are not Exchangeable Bearer Notes may not be exchanged for Registered Notes.
(b)Transfer of Registered Notes
One or more Registered Notes may be transferred upon the surrender (at the specified office of the Registrar or any Transfer Agent) of the Certificate representing such Registered Notes to be transferred, together with the form of transfer endorsed on such Certificate, (or another form of transfer substantially in the same form and containing the same representations and certifications (if any), unless otherwise agreed by the Issuer), duly completed and executed and any other evidence as the Registrar or Transfer Agent may reasonably require. In the case of a transfer of part only of a holding of Registered Notes represented by one Certificate, a new Certificate shall be issued to the transferee in respect of the part transferred and a further new Certificate in respect of the balance of the holding not transferred shall be issued to the transferor.
(c)Partial Redemption in Respect of Registered Notes
In the case of a partial redemption of a holding of Registered Notes represented by a single Certificate, a new Certificate shall be issued to the holder in respect of the balance of the holding not redeemed. New Certificates shall only be issued against surrender of the existing Certificates to the Registrar or any Transfer Agent. In the case of a transfer of Registered Notes to a person who is already a holder of Registered Notes, a new Certificate representing the enlarged holding shall only be issued against surrender of the Certificate representing the existing holding.
(d)Delivery of New Certificates
Each new Certificate to be issued pursuant to Conditions 2(a), (b) or (c) above shall only be available for delivery within three business days of receipt of the request for exchange, form of transfer or Change of Control Put Notice (as defined in Condition 7(d)) or Put Notice (as defined in Condition 7(e)) and surrender of the Certificate for exchange. Delivery of the new Certificate(s) shall be made at the specified office of the Transfer Agent or of the Registrar (as the case may be) to whom delivery or surrender of such request for exchange, form of transfer, Change of Control Put Notice, Put Notice or Certificate shall have been made or, at the option of the holder making such delivery or surrender as aforesaid and as specified in the relevant request for exchange, form of transfer, Change of Control Put Notice, Put Notice or other in writing, be mailed by uninsured post at the risk of the holder entitled to the new Certificate to such address as may be so specified, unless such holder requests otherwise and pays in advance to the relevant Transfer Agent the costs of such other method of delivery and/or such insurance as it may specify.
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In this Condition 2(d), “business day” means a day, other than a Saturday or Sunday, on which banks are open for business in the place of the specified office of the relevant Transfer Agent or the Registrar (as the case may be).
(e)Exchange or Transfer Free of Charge
Exchange and transfer of Notes and Certificates on registration, transfer and exercise of an option or partial redemption shall be effected without charge by or on behalf of the Issuer, the Registrar or the Transfer Agents, but upon payment of any tax or other governmental charges that may be imposed in relation to it (or the giving of such indemnity as the Registrar or the relevant Transfer Agent may require).
(f)Closed Periods
No Noteholder may require the transfer of a Registered Note to be registered or an Exchangeable Bearer Note to be exchanged for one or more Registered Note(s) (i) during the period of 15 days prior to any date on which Notes may be called for redemption by the Issuer at its option pursuant to Condition 7(c), (ii) after any such Note has been called for redemption or (iii) during the period of seven days ending on (and including) any Record Date. An Exchangeable Bearer Note called for redemption may, however, be exchanged for one or more Registered Note(s) in respect of which the Certificate is simultaneously surrendered not later than the relevant Record Date.
3.Status of the Notes
The Notes and any relative Coupons are direct, unconditional and unsecured obligations of the Issuer and rank and will rank pari passu, without any preference among themselves, with all other, present and future, outstanding unsecured and unsubordinated obligations of the Issuer (other than obligations preferred by law).
4.Interest and Sustainability-Linked Notes
(a)Interest on Fixed Rate Notes
Each Fixed Rate Note bears interest from (and including) the Interest Commencement Date at the rate(s) per annum equal to the Rate(s) of Interest. Interest will be payable in arrear on the Interest Payment Date(s) in each year and on the Maturity Date.
In the case of RMB Notes, if:
(i) |
Interest Payment Date Adjustment is specified as applying in the applicable Final Terms; and |
(ii) |
(x) there is no numerically corresponding day in the calendar month in which an Interest Payment Date should occur or (y) any Interest Payment Date would otherwise fall on a day which is not a Business Day, |
then such Interest Payment Date shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event such Interest Payment Date shall be brought forward to the immediately preceding Business Day.
If the Notes are in definitive form, except (A) in the case of Sustainability-Linked Notes (as defined in Condition 4(c)) w here (i) Sustainability-Linked Trigger Event (Interest) is specified as applicable in the applicable Final Terms and (ii) following the occurrence of one or more relevant Sustainability-Linked Trigger Event(s), the Initial Rate of Interest has been increased in accordance with Condition 4(c) or (B) as provided in the applicable Final Terms, the amount of interest payable on each Interest Payment Date in respect of the Interest Period ending on (but excluding) such date will amount to the Fixed Coupon Amount. Payments of interest on any Interest Payment Date will, if so specified in the applicable Final Terms, amount to the Broken Amount so specified.
Except in the case of relevant Notes in definitive form where a Fixed Coupon Amount or Broken Amount is specified in the applicable Final Terms, interest shall be calculated in respect of any period by applying the Rate of Interest to:
(i) |
in the case of Fixed Rate Notes which are represented by a Global Note, the aggregate outstanding nominal amount of the Fixed Rate Notes represented by such Global Note; or |
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(ii)in the case of Fixed Rate Notes in definitive form, the Calculation Amount;
and, in each case, multiplying such sum by the applicable Fixed Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Fixed Rate Note in definitive form comprises more than one Calculation Amount, the amount of interest payable in respect of such Fixed Rate Note shall be the aggregate of the amounts (determined in the manner provided above) for each Calculation Amount comprising the Specified Denomination without any further rounding.
(b) |
Interest on Floating Rate Notes, CMS Linked Notes and Inflation Linked Interest Notes |
(i) |
Interest Payment Dates |
Each Floating Rate Note, CMS Linked Note and Inflation Linked Interest Note bears interest from (and including) the Interest Commencement Date and such interest will be payable in arrear on either:
(A) |
the Specified Interest Payment Date(s) (each an “Interest Payment Date”) in each year specified in the applicable Final Terms; or |
(B) |
if no Specified Interest Payment Date(s) is/are specified in the applicable Final Terms, each date (each an “Interest Payment Date”) which falls the number of months or other period specified as the Specified Period in the applicable Final Terms after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date. |
Such interest will be payable in respect of each Interest Period. If a Business Day Convention is specified in the applicable Final Terms and (x) if there is no numerically corresponding day in the calendar month in which an Interest Payment Date should occur or (y) if any Interest Payment Date would otherwise fall on a day which is not a Business Day, then, if the Business Day Convention specified is:
(1) |
in any case w here Specified Periods are specified in accordance with Condition 4(b)(i)(B), the Floating Rate Convention, such Interest Payment Date (i) in the case of (x) above, shall be the last day that is a Business Day in the relevant month and the provisions of (B) below shall apply mutatis mutandis or (ii) in the case of (y) above, shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event (A) such Interest Payment Date shall be brought forward to the immediately preceding Business Day and (B) each subsequent Interest Payment Date shall be the last Business Day in the month which falls the Specified Period after the preceding applicable Interest Payment Date occurred; or |
(2) |
the Following Business Day Convention, such Interest Payment Date shall be postponed to the next day which is a Business Day; or |
(3) |
the Modified Following Business Day Convention, such Interest Payment Date shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event such Interest Payment Date shall be brought forward to the immediately preceding Business Day; or |
(4) |
the Preceding Business Day Convention, such Interest Payment Date shall be brought forward to the immediately preceding Business Day. |
(ii) |
Rate of Interest for Floating Rate Notes and CMS Linked Notes |
The Rate of Interest payable from time to time in respect of Floating Rate Notes will be determined in the manner specified in the applicable Final Terms. The Rate of Interest payable from time to time in respect of CMS Linked Notes will be determined in accordance with Condition 4(b)(ii)(G).
(A)ISDA Determination for Floating Rate Notes
Where ISDA Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will be the relevant ISDA Rate plus or minus (as indicated in the applicable Final Terms) the Margin (if any).
47
For the purposes of this sub-paragraph (A), “ISDA Rate” for an Interest Period means a rate equal to the Floating Rate that would be determined by the Issuing and Principal Paying Agent under an interest rate swap transaction if the Issuing and Principal Paying Agent w ere acting as Calculation Agent for that swap transaction under the terms of an agreement incorporating the ISDA Definitions and under which:
(1) |
the Floating Rate Option is as specified in the applicable Final Terms; |
(2) |
the Designated Maturity is a period specified in the applicable Final Terms; and |
(3) |
the relevant Reset Date is either (i) if the applicable Floating Rate Option is based on EURIBOR for a currency, the first day of that Interest Period or (ii) in any other case, as specified in the applicable Final Terms. |
For the purposes of this sub-paragraph (A), (i) “Floating Rate”, “Calculation Agent”, “Floating Rate Option”, “Designated Maturity” and “Reset Date” have the meanings given to those terms in the ISDA Definitions, (ii) the definition of “Banking Day” in the ISDA Definitions shall be amended to insert after the words “are open for” in the second line the word “general” and (iii) “Euro-zone” means the region comprised of Member States of the European Union that adopt the single currency in accordance with the Treaty establishing the European Community, as amended by the Treaty on European Union.
(B)Screen Rate Determination for Floating Rate Notes — Term Rate
This Condition 4(b)(ii)(B) applies w here the applicable Final Terms specifies both Screen Rate Determination and Term Rate to be “Applicable”. The Rate of Interest for each Interest Period will, subject to Condition 4(b)(ii)(H) and as provided below, be either:
(1) |
the offered quotation; or |
(2) |
the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of the offered quotations, |
(expressed as a percentage rate per annum) for the Reference Rate which appears or appear, as the case may be, on the Relevant Screen Page (or such replacement page on that service which displays the information) as at the Relevant Time on the Interest Determination Date in question plus or minus (as indicated in the applicable Final Terms) the Margin (if any), all as determined by the Issuing and Principal Paying Agent. If five or more of such offered quotations are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the Issuing and Principal Paying Agent for the purpose of determining the arithmetic mean (rounded as provided above) of such offered quotations.
If the Relevant Screen Page is not available or if, in the case of Condition 4(b)(ii)(B)(1) above, no such offered quotation appears or, in the case of Condition 4(b)(ii)(B)(2) above, fewer than three such offered quotations appear, in each case as at the time specified in the preceding paragraph above, the Issuing and Principal Paying Agent shall request each of the Reference Banks to provide the Issuing and Principal Paying Agent with its offered quotation (expressed as a percentage rate per annum) for the Reference Rate, at approximately the Relevant Time, on the Interest Determination Date in question. If two or more of the Reference Banks provide the Issuing and Principal Paying Agent with such offered quotations, the Rate of Interest for such Interest Period shall be the arithmetic mean (rounded if necessary to the fifth decimal place with 0.000005 being rounded upwards) of such offered quotations plus or minus (as appropriate) the Margin (if any), all as determined by the Issuing and Principal Paying Agent.
48
If on any Interest Determination Date one only or none of the Reference Banks provides the Issuing and Principal Paying Agent with such offered quotations as provided in the preceding paragraph, the Rate of Interest for the relevant Interest Period shall be the rate per annum which the Issuing and Principal Paying Agent determines as being the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of the rates, as communicated to (and at the request of) the Issuing and Principal Paying Agent by the Reference Banks or any two or more of them, at which such banks were offered, at approximately the Relevant Time, on the relevant Interest Determination Date, deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate by leading banks in, if the Reference Rate is EURIBOR, the Euro-zone inter-bank market or, if the Reference Rate is TIBOR, the Tokyo inter-bank market or, if the Reference Rate is CDOR, the Toronto inter-bank market or, if the Reference Rate is JIBAR, the Johannesburg inter-bank market, as the case may be, plus or minus (as appropriate) the Margin (if any) or, if fewer than two of the Reference Banks provide the Issuing and Principal Paying Agent with such offered rates, the offered rate for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate, or the arithmetic mean (rounded as provided above) of the offered rates for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate, at approximately the Relevant Time, on the relevant Interest Determination Date, any one or more banks (w hic h bank or banks is or are in the opinion of the Issuer suitable for such purpose) informs the Issuing and Principal Paying Agent it is quoting to leading banks in, if the Reference Rate is EURIBOR, the Euro-zone inter-bank market or, if the Reference Rate is TIBOR, the Tokyo inter-bank market or, if the Reference Rate is CDOR, the Toronto inter-bank market or, if the Reference Rate is JIBAR, the Johannesburg inter-bank market, as the case may be, plus or minus (as appropriate) the Margin (if any), provided that, if the Rate of Interest cannot be determined in accordance with the foregoing provisions of this paragraph, the Rate of Interest shall be determined as at the last preceding Interest Determination Date (though substituting, w here a different Margin is to be applied to the relevant Interest Period from that which applied to the last preceding Interest Period, the Margin relating to the relevant Interest Period, in place of the Margin relating to that last preceding Interest Period).
(C) |
Screen Rate Determination for Floating Rate Notes — Overnight Rate — Compounded Daily SONIA — Non-Index Determination |
This Condition 4(b)(ii)(C) applies where the applicable Final Terms specifies: (1) Screen Rate Determination and Overnight Rate to be “Applicable”; (2) Compounded Daily SONIA as the Reference Rate; and (3) Index Determination to be “Not Applicable”.
(a) |
The Rate of Interest for an Interest Accrual Period will, subject to Condition 4(b)(ii)(H) and as provided below, be Compounded Daily SONIA with respect to such Interest Accrual Period plus or minus (as indicated in the applicable Final Terms) the applicable Margin (if any), all as determined by the Issuing and Principal Paying Agent. |
“Compounded Daily SONIA” means, with respect to an Interest Accrual Period, the rate of return of a daily compound interest investment (with the daily Sterling overnight reference rate as reference rate for the calculation of interest) as calculated by the Issuing and Principal Paying Agent as at the relevant Interest Determination Date in accordance with the following formula (and the resulting percentage will be rounded if necessary to the nearest fifth decimal place, with 0.000005 being rounded upwards):
where:
“d”is the number of calendar days in:
(i) |
where “Lag” is specified as the Observation Method in the applicable Final Terms, the relevant Interest Accrual Period; or |
(ii) |
where “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the relevant Observation Period; |
“D” |
is the number specified as such in the applicable Final Terms (or, if no such number is specified, 365); |
“do”means:
(i) |
where “Lag” is specified as the Observation Method in the applicable Final Terms, the number of London Banking Days in the relevant Interest Accrual Period; or |
(ii) |
w here “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the number of London Banking Days in the relevant Observation Period; |
49
“i” |
is a series of w hole numbers from one to “d0”, each representing the relevant London Banking Day in chronological order from, and including, the first London Banking Day in: |
(i) |
where “Lag” is specified as the Observation Method in the applicable Final Terms, the relevant Interest Accrual Period; or |
(ii) |
w here “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the relevant Observation Period; |
“London Banking Day” means any day on which commercial banks are open for general business (including dealing in foreign exchange and foreign currency deposits) in London;
“ni” for any London Banking Day “i”, means the number of calendar days from (and including) such London Banking Day “i” up to (but excluding) the following London Banking Day;
“Observation Period” means the period from (and including) the date falling “p” London Banking Days prior to the first day of the relevant Interest Accrual Period to (but excluding) the date falling “p” London Banking Days prior to (A) (in the case of an Interest Period) the Interest Payment Date for such Interest Period or (B) (in the case of any other Interest Accrual Period) the date on which the relevant payment of interest falls due;
“p” means:
(i) |
where “Lag” is specified as the Observation Method in the applicable Final Terms, the number of London Banking Days specified as the “Lag Period” in the applicable Final Terms (or, if no such number is so specified, five London Banking Days); or |
(ii) |
w here “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the number of London Banking Days specified as the “Observation Shift Period” in the applicable Final Terms (or, if no such number is specified, five London Banking Days); |
the “SONIA reference rate”, in respect of any London Banking Day (LBDx”), is a reference rate equal to the daily Sterling Overnight Index Average (“SONIA”) rate for such LBDX as provided by the administrator of SONIA to authorised distributors and as then published on the Relevant Screen Page (or, if the Relevant Screen Page is unavailable, as otherwise published by such authorised distributors) on the London Banking Day immediately following such LBDx; and
“SONIA,” means the SONIA reference rate for:
(i) |
where “Lag” is specified as the Observation Method in the applicable Final Terms, the London Banking Day falling “p” London Banking Days prior to the relevant London Banking Day “i”; or |
(ii) |
w here “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the relevant London Banking Day “i”. |
(b) |
Subject to Condition 4(b)(ii)(H), if, w here any Rate of Interest is to be calculated pursuant to Condition 4(b)(ii)(C)(a) above, in respect of any London Banking Day on which an applicable SONIA reference rate is required to be determined, such SONIA reference rate is not made available on the Relevant Screen Page or has not otherwise been published by the relevant authorised distributors, then the SONIA reference rate in respect of such London Banking Day shall be the rate determined by the Issuing and Principal Paying Agent as: |
I. |
the sum of (i) the Bank of England’s Bank Rate (the “Bank Rate”) prevailing at 5.00 p.m. (London time) (or, if earlier, close of business) on such London Banking Day; and (ii) the mean of the spread of the SONIA reference rate to the Bank Rate over the previous five London Banking Days in respect of which a SONIA reference rate has been published, excluding the highest spread (or, if there is more than one highest spread, one only of those highest spreads) and lowest spread (or, if there is more than one lowest spread, one only of those lowest spreads); or |
50
II |
if the Bank Rate under (l)(i) above is not available at the relevant time, either (A) the SONIA reference rate published on the Relevant Screen Page (or otherwise published by the relevant authorised distributors) for the first preceding London Banking Day in respect of which the SONIA reference rate was published on the Relevant Screen Page (or otherwise published by the relevant authorised distributors) or (B) if this is more recent, the latest rate determined under (I) above, |
and, in each case, references to “SONIA reference rate” in Condition 4(b)(ii)(C)(a) above shall be construed accordingly.
(c) |
In the event that the Rate of Interest cannot be determined in accordance with the foregoing provisions of this Condition 4(b)(ii)(C), and without prejudice to Condition 4(b)(ii)(H), the Rate of Interest shall be: |
I. |
that determined as at the last preceding Interest Determination Date on which the Rate of Interest was so determined (though substituting, where a different Margin, Maximum Rate of Interest and/or Minimum Rate of Interest is to be applied to the relevant Interest Accrual Period from that which applied to the last preceding Interest Accrual Period, the Margin, Maximum Rate of Interest and/or Minimum Rate of Interest (as the case may be) relating to the relevant Interest Accrual Period, in place of the Margin, Maximum Rate of Interest and/or Minimum Rate of Interest (as applicable) relating to that last preceding Interest Accrual Period); or |
II. |
if there is no such preceding Interest Determination Date, the initial Rate of Interest which would have been applicable to such Series of Notes for the first scheduled Interest Period had the Notes been in issue for a period equal in duration to the first scheduled Interest Period but ending on (and excluding) the Interest Commencement Date (applying the Margin and, if applicable, any Maximum Rate of Interest and/or Minimum Rate of Interest, applicable to the first scheduled Interest Period), |
in each case as determined by the Issuing and Principal Paying Agent.
(D)Screen Rate Determination for Floating Rate Notes — Overnight Rate — Compounded Daily SONIA — Index Determination
This Condition 4(b)(ii)(D) applies where the applicable Final Terms specifies: (1) Screen Rate Determination and Overnight Rate to be “Applicable”; (2) Compounded Daily SONIA as the Reference Rate; and (3) Index Determination to be “Applicable”.
(a) |
The Rate of Interest for an Interest Accrual Period will, subject to Condition 4(b)(ii)(H) and as provided below, be the Compounded Daily SONIA Rate with respect to such Interest Accrual Period plus or minus (as indicated in the applicable Final Terms) the applicable Margin (if any), all as determined by the Issuing and Principal Paying Agent. |
“Compounded Daily SONIA Rate” means, with respect to an Interest Accrual Period, the rate of return of a daily compound interest investment (with the daily Sterling overnight reference rate as reference rate for the calculation of interest) (expressed as a percentage and rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) determined by the Issuing and Principal Paying Agent by reference to the screen rate or index for compounded daily SONIA rates administered by the administrator of the SONIA reference rate that is published or displayed by such administrator or other information service from time to time on the relevant Interest Determination Date, as further specified in the applicable Final Terms (the “SONIA Compounded Index”) and in accordance with the following formula:
w here:
“d” |
is the number of calendar days from (and including) the day in relation to which SONIA Compounded Indexstart is determined to (but excluding) the day in relation to which SONIA Compounded IndexEnd is determined; |
51
“London Banking Day” means any day on which commercial banks are open for general business (including dealing in foreign exchange and foreign currency deposits) in London;
“Relevant Number” is the number specified as such in the applicable Final Terms (or, if no such number is specified, five);
“SONIA Compounded Indexstart” means, with respect to an Interest Accrual Period, the SONIA Compounded Index determined in relation to the day falling the Relevant Number of London Banking Days prior to the first day of such Interest Accrual Period; and
“SONIA Compounded IndexEnd” means, with respect to an Interest Accrual Period, the SONIA Compounded Index determined in relation to the day falling the Relevant Number of London Banking Days prior to (A) the Interest Payment Date for such Interest Accrual Period, or (B) such other date on which the relevant payment of interest falls due (but which by its definition or the operation of the relevant provisions is excluded from such Interest Accrual Period).
(b) |
If the relevant SONIA Compounded Index is not published or displayed by the administrator of the SONIA reference rate or other information service by 5.00 p.m. (London time) (or, if later, by the time falling one hour after the customary or scheduled time for publication thereof in accordance with the then-prevailing operational procedures of the administrator of the SONIA reference rate or of such other information service, as the case may be) on the relevant Interest Determination Date, the Compounded Daily SONIA Rate for the applicable Interest Accrual Period for which the SONIA Compounded Index is not available shall be “Compounded Daily SONIA” determined in accordance with Condition 4(b)(ii)(C) above as if “Index Determination” were specified in the applicable Final Terms as being ‘Not Applicable’, and for these purposes: (i) the “Observation Method” shall be deemed to be “Observation Shift” and (ii) the “Observation Shift Period” shall be deemed to be equal to the Relevant Number of London Banking Days, as if those alternative elections had been made in the applicable Final Terms. |
(E)Screen Rate Determination for Floating Rate Notes — Overnight Rate —SOFR — Non-Index Determination
This Condition 4(b)(ii)(E) applies where the applicable Final Terms specifies: (1) Screen Rate Determination and Overnight Rate to be “Applicable”; (2) either Compounded Daily SOFR or Weighted Average SOFR as the Reference Rate; and (3) Index Determination to be “Not Applicable”.
Where the applicable Final Terms specifies the Reference Rate to be Compounded Daily SOFR, the provisions of paragraph (a) below of this Condition 4(b)(ii)(E) apply.
Where the applicable Final Terms specifies the Reference Rate to be Weighted Average SOFR, the provisions of paragraph (b) below of this Condition 4(b)(ii)(E) apply.
(a)Compounded Daily SOFR
Where this paragraph (a) the Rate of Interest for an Interest Accrual Period will, subject to Condition 4(b)(ii)(H) and as provided below, be Compounded Daily SOFR with respect to such Interest Accrual Period plus or minus (as indicated in the applicable Final Terms) the applicable Margin (if any), all as determined by the Issuing and Principal Paying Agent.
“Compounded Daily SOFR’ means, with respect to an Interest Accrual Period, the rate of return of a daily compound interest investment (with the daily U.S. dollars secured overnight financing rate as reference rate for the calculation of interest) as calculated by the Issuing and Principal Paying Agent as at the relevant Interest Determination Date in accordance with the following formula (and the resulting percentage will be rounded if necessary to the nearest fifth decimal place, with 0.000005 being rounded upwards):
52
where:
“d” |
is the number of calendar days in: |
(i) |
w here “Lag” or “Lock-cut” is specified as the Observation Method in the applicable Final Terms, the relevant Interest Accrual Period; or |
(ii) |
w here “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the relevant Observation Period; |
“D” |
is the number specified as such in the applicable Final Terms (or, if no such number is specified, 360); |
“do” |
means: |
(i) |
w here “Lag” or “Lock-cut” is specified as the Observation Method in the applicable Final Terms, the number of U.S. Government Securities Business Days in the relevant Interest Accrual Period; or |
(ii) |
w here “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the number of U.S. Government Securities Business Days in the relevant Observation Period; |
“i” |
is a series of w hole numbers from one to “do”, each representing the relevant U.S. Government Securities Business Day in chronological order from, and including, the first U.S. Government Securities Business Day in: |
(i) |
w here “Lag” or “Lock-cut” is specified as the Observation Method in the applicable Final Terms, the relevant Interest Accrual Period; or |
(ii) |
w here “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the relevant Observation Period; |
“Lock-out Period” means the period from (and including) the day following the Interest Determination Date to (but excluding) the corresponding Interest Payment Date;
“New York Fed’s Website” means the website of the Federal Reserve Bank of New York (or a success or administrator of SOFR) or any successor source;
“ni” for any U.S. Government Securities Business Day “i”, means the number of calendar days from (and including) such U.S. Government Securities Business Day “i” up to (but excluding) the following U.S. Government Securities Business Day;
“Observation Period” means the period from (and including) the date falling “p” U.S. Government Securities Business Days prior to the first day of the relevant Interest Accrual Period to (but excluding) the date falling “p” U.S. Government Securities Business Days prior to (A) (in the case of an Interest Period) the Interest Payment Date for such Interest Period or (B) (in the case of any other Interest Accrual Period) the date on which the relevant payment of interest falls due;
“p” means:
(i) |
where “Lag” is specified as the Observation Method in the applicable Final Terms, the number of U.S. Government Securities Business Days specified as the “Lag Period” in the applicable Final Terms (or, if no such number is so specified, five U.S. Government Securities Business Days); |
(ii) |
where “Lock-out” is specified as the Observation Method in the applicable Final Terms, zero U.S. Government Securities Business Days; or |
53
(iii) |
w here “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the number of U.S. Government Securities Business Days specified as the “Observation Shift Period” in the applicable Final Terms (or, if no such number is specified, five U.S. Government Securities Business Days); |
“Reference Day” means each U.S. Government Securities Business Day in the relevant Interest Accrual Period, other than any U.S. Government Securities Business Day in the Lock-out Period;
“SOFR” in respect of any U.S. Government Securities Business Day (“USBDx”), is a reference rate equal to the daily secured overnight financing rate as provided by the Federal Reserve Bank of New York, as the administrator of such rate (or any successor administrator of such rate) on the New York Fed’s Website, in each case at or around 3.00 p.m. (New York City time) on the U.S. Government Securities Business Day immediately following such USBDx;
“SOFRi” means the SOFR for:
(i) |
where “Lag” is specified as the Observation Method in the applicable Final Terms, the U.S. Government Securities Business Day falling “p” U.S. Government Securities Business Days prior to the relevant U.S. Government Securities Business Day “i”; |
(ii)w here “Lock-out” is specified as the Observation Method in the applicable Final Terms:
(I) |
in respect of each U.S. Government Securities Business Day “i” that is a Reference Day, the SOFR in respect of the U.S. Government Securities Business Day immediately preceding such Reference Day; or |
(II) |
in respect of each U.S. Government Securities Business Day “i” that is not a Reference Day (being a U.S. Government Securities Business Day in the Lock-out Period), the SOFR in respect of the U.S. Government Securities Business Day immediately preceding the last Reference Day of the relevant Interest Accrual Period (such last Reference Day coinciding with the Interest Determination Date); or |
(iii) |
w here “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the relevant U.S. Government Securities Business Day “i”; and |
“U.S. Government Securities Business Day” means any day except for a Saturday, Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities.
(b)Weighted Average SOFR
Where this paragraph (b) applies, the Rate of Interest for an Interest Accrual Period will, subject to Condition 4(b)(ii)(H) and as provided below, be the Weighted Average SOFR with respect to such Interest Accrual Period plus or minus (as indicated in the applicable Final Terms) the applicable Margin (if any), all as calculated by the Issuing and Principal Paying Agent as of the Interest Determination Date (and rounded, if necessary, to the fifth decimal place, with 0.000005 being rounded upwards), where:
“Weighted Average SOFR” means:
(i) |
where “Lag” is specified as the Observation Method in the applicable Final Terms, the arithmetic mean of the SOFR in effect for each calendar day during the relevant Observation Period, calculated by multiplying each relevant SOFR by the number of calendar days such rate is in effect, determining the sum of such products and dividing such sum by the number of calendar days in the relevant Observation Period. For these purposes, the SOFR in effect for any calendar day which is not a U.S. Government Securities Business Day shall be deemed to be the SOFR in effect for the U.S. Government Securities Business Day immediately preceding such calendar day; and |
54
(ii) |
where “Lock-out” is specified as the Observation Method in the applicable Final Terms, the arithmetic mean of the SOFR in effect for each calendar day during the relevant Interest Accrual Period, calculated by multiplying each relevant SOFR by the number of days such rate is in effect, determining the sum of such products and dividing such sum by the number of calendar days in the relevant Interest Accrual Period, provided however that for any calendar day of such Interest Accrual Period falling in the Lock-out Period, the relevant SOFR for each day during that Lock-out Period will be deemed to be the SOFR in effect for the Reference Day immediately preceding the first day of such Lock-out Period. For these purposes, the SOFR in effect for any calendar day which is not a U.S. Government Securities Business Day shall, subject to the proviso above, be deemed to be the SOFR in effect for the U.S. Government Securities Business Day immediately preceding such calendar day. |
Defined terms used in this paragraph (b) and not otherwise defined herein have the meanings given to them in paragraph (a) above of this Condition 4(b)(ii)(D).
(c)SOFR Unavailable
Subject to Condition 4(b)(ii)(H), if, w here any Rate of Interest is to be calculated pursuant to this Condition 4(b)(ii)(E), in respect of any U.S. Government Securities Business Day in respect of which an applicable SOFR is required to be determined, such SOFR is not available, such SOFR shall be the SOFR for the first preceding U.S. Government Securities Business Day in respect of which the SOFR was published on the New York Fed’s Website.
In the event that the Rate of Interest cannot be determined in accordance with the foregoing provisions of this Condition 4(b)(ii)(E) but without prejudice to Condition 4(b)(ii)(H), the Rate of Interest shall be calculated in accordance, mutatis mutandis, with the provisions of Condition 4(b)(ii)(C)(c).
(F)Screen Rate Determination for Floating Rate Notes — Overnight Rate —SOFR — Index Determination
This Condition 4(b)(ii)(F) applies where the applicable Final Terms specifies: (1) Screen Rate Determination and Overnight Rate to be “Applicable”; (2) Compounded Daily SOFR as the Reference Rate; and (3) Index Determination to be “Applicable”.
(a) |
The Rate of Interest for an Interest Accrual Period will, subject to Condition 4(b)(ii)(H) and as provided below, be the Compounded SOFR with respect to such Interest Accrual Period plus or minus (as indicated in the applicable Final Terms) the applicable Margin (if any), all as determined by the Issuing and Principal Paying Agent. |
“Compounded SOFR” means, with respect to an Interest Accrual Period, the rate (expressed as a percentage and rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) determined by the Issuing and Principal Paying Agent in accordance with the following formula:
w here:
“dc” |
is the number of calendar days from (and including) the day in relation to which SOFR Indexstart is determined to (but excluding) the day in relation to which SOFR IndexEnd is determined; |
“Relevant Number” is the number specified as such in the applicable Final Terms (or, if no such number is specified, five);
“SOFR” means the daily secured overnight financing rate as provided by the SOFR Administrator on the SOFR Administrator’s Website;
55
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of SOFR);
“SOFR Administrator’s Website” means the website of the SOFR Administrator, or any successor source;
“SOFR Index”, with respect to any U.S. Government Securities Business Day, means the SOFR index value as published by the SOFR Administrator as such index appears on the SOFR Administrator’s Website at or around 3.00 p.m. (New York time) on such U.S. Government Securities Business Day (the “SOFR Determination Time”);
“SOFR Indexstart”, with respect to an Interest Accrual Period, is the SOFR Index value for the day which is the Relevant Number of U.S. Government Securities Business Days preceding the first day of such Interest Accrual Period;
“SOFR IndexEnd”, with respect to an Interest Accrual Period, is the SOFR Index value for the day which is the Relevant Number of U.S. Government Securities Business Days preceding (A) the Interest Payment Date for such Interest Accrual Period, or (B) such other date on which the relevant payment of interest falls due (but which by its definition or the operation of the relevant provisions is excluded from such Interest Accrual Period); and
“U.S. Government Securities Business Day” means any day except for a Saturday, Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities.
(b) |
If, as at any relevant SOFR Determination Time, the relevant SOFR Index is not published or displayed on the SOFR Administrator’s Website by the SOFR Administrator, the Compounded SOFR for the applicable Interest Accrual Period for which the relevant SOFR Index is not available shall be “Compounded Daily SOFR” determined in accordance with Condition 4(b)(ii)(E) above as if “Index Determination” w ere specified in the applicable Final Terms as being ‘Not Applicable’, and for these purposes: (i) the “Observation Method” shall be deemed to be “Observation Shift” and (ii) the “Observation Shift Period” shall be deemed to be equal to the Relevant Number of U.S. Government Securities Business Days, as if such alternative elections had been made in the applicable Final Terms. |
(G)Rate of Interest for CMS Linked Notes
The Rate of Interest for each Interest Period will, subject as provided below, be determined by reference to the following formula:
[CMS Rate + Margin] x Gearing Factor
Where:
“CMS Rate” means, subject as provided below, the Relevant Swap Rate (expressed as a percentage rate per annum) for swap transactions in the Reference Currency with a maturity of the CMS Designated Maturity which appears on the Relevant Screen Page as at the Relevant Time on the Interest Determination Date in question, all as determined by the Calculation Agent and as specified in the applicable Final Terms.
“Gearing Factor’ has the meaning specified in the applicable Final Terms.
“Margin” has the meaning specified in the applicable Final Terms.
If (for the purposes of determining the applicable CMS Rate) the Relevant Screen Page is not available, the Calculation Agent shall request each of the CMS Reference Banks to provide the Calculation Agent with its quotation for the Relevant Swap Rate (expressed as a percentage rate per annum) at approximately the Relevant Time on the Interest Determination Date in question. If three or more of the CMS Reference Banks provide the Calculation Agent such quotations, the CMS Rate for such Interest Period shall be the arithmetic mean rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of the quotations, eliminating the highest (or, if there is more than one highest quotation, one only of such quotations) and the lowest (or, if there is more than one lowest quotation, one only of such quotations).
56
If on any Interest Determination Date less than three or none of the CMS Reference Banks provides the Calculation Agent with such quotations as provided in the preceding paragraph, the Rate of Interest shall be determined as at the last preceding Interest Determination Date (though substituting, where a different Margin is to be applied to the relevant Interest Period from that which applied to the last preceding Interest Period, the Margin relating to the relevant Interest Period, in place of the Margin relating to that last preceding Interest Period).
(H)Benchmark Discontinuation
This Condition 4(b)(ii)(H) applies only to (i) Floating Rate Notes where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined and (ii) CMS Linked Notes unless Benchmark Discontinuation is specified in the applicable Final Terms to be “Not Applicable”.
If the applicable Final Terms specifies Benchmark Replacement to be “Applicable”, the provisions of Condition 4(b)(ii)(H)(a) apply, together with the other provisions of this Condition 4(b)(ii)(H) (other than Condition 4(b)(ii)(H)(b)).
If the applicable Final Terms specifies Benchmark Transition to be “Applicable”, the provisions of Condition 4(b)(ii)(H)(b) apply, together with the other provisions of this Condition 4(b)(ii)(H) (other than Condition 4(b)(ii)(H)(a)).
(a)Benchmark Replacement
(i)Issuer Determination and Independent Adviser
If a Benchmark Discontinuation Event occurs in relation to an Original Reference Rate at any time when any Rate of Interest (or any component part thereof) remains to be determined by reference to such Original Reference Rate, then:
(a) |
the Issuer shall use its reasonable endeavours to appoint and consult with an Independent Adviser, as soon as reasonably practicable, with a view to the Issuer (acting in good faith and in a commercially reasonable manner) determining a Successor Rate, failing which an Alternative Rate (in accordance with Condition 4(b)(ii)(H)(a)(ii)) and, in either case, an Adjustment Spread (in accordance with Condition 4(b)(ii)(H)(a)(iii)) and any Benchmark Amendments (in accordance with Condition 4(b)(ii)(H)(a)(iv)), by no later than five Business Days prior to the first Interest Determination Date that (A) falls after the Benchmark Replacement Date relating to such Benchmark Discontinuation Event, and (B) relates to an Interest Period for which the Rate of Interest (or any component part thereof) is to be determined by reference to such Original Reference Rate (the “IA Determination Cut-off Date”); and |
(b) |
if the Issuer is unable to appoint an Independent Adviser prior to the relevant IA Determination Cut-off Date in accordance with Condition 4(b)(ii)(H)(a)(i)(a), the Issuer (acting in good faith and in a commercially reasonable manner) may determine a Successor Rate, failing which an Alternative Rate (in accordance with Condition 4(b)(ii)(H)(a)(ii)) and, in either case, an Adjustment Spread (in accordance with Condition 4(b)(ii)(H)(a)(iii))) and any Benchmark Amendments (in accordance with Condition 4(b)(ii)(H)(a)(iv)), by no later than the first Interest Determination Date that (A) falls after the Benchmark Replacement Date relating to such Benchmark Discontinuation Event, and (B) relates to an Interest Period for which the Rate of Interest (or any component part thereof) is to be determined by reference to such Original Reference Rate. |
An Independent Adviser appointed pursuant to this Condition 4(b)(ii)(H)(a)(i) shall act in good faith and in a commercially reasonable manner and (in the absence of bad faith or fraud) shall have no liability whatsoever to the Trustee, the Issuing and Principal Paying Agent, any Calculation Agent, any other agents under the Agency Agreement (together with the Issuing and Principal Paying Agent and any Calculation Agent, the “Agents” and each an “Agent’), the Noteholders or the Couponholders for any advice given to the Issuer in connection with any determination made by the Issuer pursuant to this Condition 4(b)(ii)(H)(a).
(ii)Successor Rate or Alternative Rate
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If the Issuer (in accordance with Condition 4(b)(ii)(H)(a)(i)) determines that:
(a) |
there is a Successor Rate, then such Successor Rate and the applicable Adjustment Spread shall subsequently be used in place of the Original Reference Rate to determine the relevant Rate of Interest (or the relevant component part thereof) for all relevant future payments of interest on the Notes (subject to Condition 4(b)(ii)(H)(a)(v) and to the further operation of this Condition 4(b)(ii)(H)(a)); or |
(b) |
there is no Successor Rate but that there is an Alternative Rate, then such Alternative Rate shall (subject to adjustment as provided in Condition 4(b)(ii)(H)(a)(iii)) subsequently be used in place of the Original Reference Rate to determine the relevant Rate of Interest (or the relevant component part thereof) for all relevant future payments of interest on the Notes (subject to Condition 4(b)(ii)(H)(a)(v) and to the further operation of this Condition 4(b)(ii)(H)(a)). |
(iii) |
Adjustment Spread |
The Adjustment Spread (or the formula or methodology for determining the Adjustment Spread) shall be applied to the Successor Rate or the Alternative Rate (as the case may be).
If the Issuer (in accordance with Condition 4(b)(ii)(H)(a)(i)) is unable to determine the quantum of, or a formula or methodology for determining, an Adjustment Spread, then the Successor Rate or the Alternative Rate (as the case may be) will be used as described in Condition 4(b)(ii)(H)(a)(ii) without application of any Adjustment Spread (subject to Condition 4(b)(ii)(H)(a)(v) and to the further operation of this Condition 4(b)(ii)(H)(a)).
(iv) |
Benchmark Amendments |
If any Successor Rate or Alternative Rate and, in either case, the applicable Adjustment Spread is determined in accordance with this Condition 4(b)(ii)(H)(a) and the Issuer (in accordance with Condition 4(b)(ii)(H)(a)(i)) determines (a) that amendments to these Terms and Conditions, the Agency Agreement, (if applicable) any calculation agency agreement (a “Calculation Agency Agreement”) and/or the Trust Deed (including, without limitation, amendments to the definitions of Day Count Fraction, Business Day or Relevant Screen Page) are necessary to follow market practice or to ensure the proper operation of such Success or Rate or Alternative Rate and, in either case, the applicable Adjustment Spread (or any combination thereof) (such amendments, the “Benchmark Amendments”) and (b) the terms of the Bench mark Amendments, then the Issuer shall, subject to (A) Condition 4(b)(ii)(H)(a)(v) and (B) giving notice thereof in accordance with Condition 4(b)(ii)(H)(a)(vi), without any requirement for the consent or approval of the Noteholders or the Couponholders, vary these Terms and Conditions, the Agency Agreement, the relevant Calculation Agency Agreement and/or the Trust Deed (as applicable) to give effect to such Benchmark Amendments with effect from the date specified in such notice.
At the request of the Issuer, but subject to receipt by the Trustee and each of the Agents of a certificate signed by two Authorised Signatories of the Issuer pursuant to Condition 4(b)(ii)(H)(c), the Trustee and/or each relevant Agent (as applicable) shall (at the expense of the Issuer), without any requirement for the consent or approval of the Noteholders or the Couponholders, be obliged to concur with the Issuer in using its reasonable endeavours to effect any Benchmark Amendments (including, inter alia, by the execution of a deed or agreement supplemental to or amending the Trust Deed and/or the Agency Agreement and/or the relevant Calculation Agency Agreement, as applicable) and neither the Trustee nor any Agent shall be liable to any party for any consequences thereof, provided that neither the Trustee nor any Agent shall be obliged so to concur if, in the sole opinion of the Trustee or the relevant Agent (as applicable), doing so would impose more onerous obligations upon it or expose it to any additional duties, responsibilities or liabilities or reduce the protective provisions afforded to the Trustee or the relevant Agent, as applicable, in these Terms and Conditions, the Trust Deed, the Agency Agreement or any Calculation Agency Agreement (including, for the avoidance of doubt, any supplemental trust deed or supplemental agency agreement) in anyway.
(v) |
Benchmark Replacement Date |
Notwithstanding any other provision of this Condition 4(b)(ii)(H)(a), following the occurrence of any Benchmark Discontinuation Event:
58
(1) |
no Successor Rate or Alternative Rate shall be used in place of the relevant Original Reference Rate; and |
(2) |
no Adjustment Spread or Benchmark Amendments shall take effect, |
until the first Interest Determination Date that (A) falls after the Benchmark Replacement Date relating to such Benchmark Discontinuation Event and (B) relates to an Interest Period for which the Rate of Interest (or any component part thereof) is to be determined by reference to the Original Reference Rate.
(b)Benchmark Transition
If a Benchmark Transition Event and its related Benchmark Replacement Date occurs in relation to an Original Reference Rate at any time when any Rate of Interest (or any component part thereof) remains to be determined by reference to such Original Reference Rate, then the following provisions shall apply.
(i) | Independent Adviser |
The Issuer shall use its reasonable endeavours to appoint and consult with an Independent Adviser, as soon as reasonably practicable, with a view to the Issuer (acting in good faith and in a commercially reasonable manner) determining the Benchmark Replacement which will replace such Original Reference Rate for all purposes relating to the Notes in respect of all determinations on such date and for all determinations on all subsequent dates (subject to any subsequent application of this Condition 4(b)(ii)(H)(b) with respect to such Benchmark Replacement) and any Benchmark Replacement Conforming Changes.
Any Benchmark Replacement so determined by the Issuer shall have effect for any subsequent determination of any relevant Rate of Interest (subject to any further application of this Condition 4(b)(ii)(H)(b) with respect to such Benchmark Replacement), subject, if any associated Benchmark Replacement Conforming Changes are required in connection therewith, to such Benchmark Replacement Conforming Changes becoming effective in accordance with the following provisions.
If, notwithstanding the Issuer’s reasonable endeavours, the Issuer is unable to appoint and consuIt with an Independent Adviser in accordance with the foregoing paragraph, the Issuer shall nevertheless be entitled, acting in good faith and in a commercially reasonable manner, to make any and all determinations expressed to be made by the Issuer pursuant to this Condition 4(b)(ii)(H)(b), notwithstanding that such determinations are not made following consultation with an Independent Adviser. If, however, the Issuer is unable to determine a Benchmark Replacement in accordance with this Condition 4(b)(ii)(H)(b), the provisions of Condition 4(b)(ii)(H)(d) below s hall apply.
An Independent Adviser appointed pursuant to the Condition 4(b)(ii)(H)(b)(i) shall act in good faith and in a commercially reasonable manner and (in the absence of bad faith or fraud) shall have no liability whatsoever to the Trustee, the Agents (as defined in Condition 4(b)(ii)(H)(a)(i)), the Noteholders or the Couponholders for any advice given to the Issuer in connection with any determination made by the Issuer pursuant to this Condition 4(b)(ii)(H)(b).
(ii)Benchmark Replacement Conforming Changes
If the Issuer, following consultation with the Independent Adviser (if appointed), considers it is necessary to make Benchmark Replacement Conforming Changes, the Issuer shall, in consultation with the Independent Adviser (if appointed), determine the terms of such Benchmark Replacement Conforming Changes and shall, subject to giving notice in accordance with Condition 4(b)(ii) (H)(c) below (but without any requirement for the consent or approval of Noteholders), vary these Terms and Conditions, the Agency Agreement, (if applicable) any calculation agency agreement (a “Calculation Agency Agreement”) and/or the Trust Deed to give effect to such Benchmark Replacement Conforming Changes with effect from the date specified in such notice.
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At the request of the Issuer, but subject to receipt by the Trustee and each of the Agents of a certificate signed by two Authorised Signatories of the Issuer pursuant to Condition 4(b)(ii)(H)(c), the Trustee and/or each relevant Agent (as applicable) shall (at the expense of the Issuer), without any requirement for the consent or approval of the Noteholders or the Couponholders, be obliged to concur with the Issuer in using its reasonable endeavours to effect any Benchmark Replacement Conforming Changes (including, inter alia, by the execution of a deed or agreement supplemental to or amending the Trust Deed and/or the Agency Agreement and/or the relevant Calculation Agency Agreement, as applicable) and neither the Trustee nor any Agent shall be liable to any party for any consequences thereof, provided that neither the Trustee nor any Agent shall be obliged so to concur if, in the sole opinion of the Trustee or the relevant Agent (as applicable), doing so would impose more onerous obligations upon it or expose it to any additional duties, responsibilities or liabilities or reduce the protective provisions afforded to the Trustee or the relevant Agent, as applicable, in these Terms and Conditions, the Trust Deed, the Agency Agreement or any Calculation Agency Agreement (including, for the avoidance of doubt, any supplemental trust deed or supplemental agency agreement) in any way.
(c) |
Notification of Successor Rate, Alternative Rate, Adjustment Spread or Benchmark Replacement (as applicable) and any Benchmark Amendments or Benchmark Replacement Conforming Changes (as applicable) |
Following a Benchmark Discontinuation Event or a Benchmark Transition Event (as applicable) and the determination of any Successor Rate, Alternative Rate, Adjustment Spread, Benchmark Replacement, Benchmark Amendments and/or Benchmark Replacement Conforming Changes (as applicable) pursuant to the provisions of this Condition 4(b)(ii)(H) (and in any event prior to any Successor Rate, Alternative Rate, Adjustment Spread, Benchmark Replacement, Benchmark Amendments and/or Benchmark Replacement Conforming Changes (as applicable) taking effect), the Issuer will promptly notify the Trustee, the Agents and, in accordance with Condition 14, the Noteholders, of any such Successor Rate, Alternative Rate, Adjustment Spread, Benchmark Replacement and/or the specific terms of any Benchmark Amendments or Benchmark Replacement Conforming Changes (as applicable) so determined under this Condition 4(b)(ii)(H). Such notice shall be irrevocable and shall specify the effective date of the Benchmark Amendments or Benchmark Replacement Conforming Changes (as applicable) (if any).
Prior to any Successor Rate, Alternative Rate, Adjustment Spread, Benchmark Replacement, Benchmark Amendments and/or Benchmark Replacement Conforming Changes (as applicable) taking effect, the Issuer shall deliver to the Trustee and the Agents a certificate signed by two Authorised Signatories of the Issuer:
(i) |
confirming (a) that a Benchmark Discontinuation Event or a Benchmark Transition Event (as applicable) and, in either case, the related Benchmark Replacement Date have occurred, (b) the Successor Rate or, as the case may be, the Alternative Rate, (c) the applicable Adjustment Spread, (d) the Benchmark Replacement and (e) the specific terms of any Benchmark Amendments or Benchmark Replacement Conforming Changes (as applicable), in each case as determined in accordance with the provisions of this Condition 4(b)(ii)(H); and |
(ii) |
certifying that the Benchmark Amendments or Benchmark Replacement Conforming Changes (as applicable) are necessary to follow market practice or, as applicable, to ensure the proper operation of such Successor Rate or Alternative Rate and (in either case) the applicable Adjustment Spread or such Benchmark Replacement or any combination thereof (as applicable). |
The Trustee and the Agents shall be entitled to rely on such certificate (without enquiry or liability to any person) as sufficient evidence thereof.
The Successor Rate or Alternative Rate and the Adjustment Spread, the Benchmark Replacement and the Benchmark Amendments and/or Benchmark Replacement Conforming Changes (as applicable) (if any) specified in such certificate will (in the absence of manifest error in the determination of the Successor Rate or Alternative Rate and the Adjustment Spread, the Benchmark Replacement and the Benchmark Amendments and/or Benchmark Replacement Conforming Changes (if any) and without prejudice to the Trustee’s and each Agent’s ability to rely on such certificate as aforesaid and subject to Condition 4(b)(ii)(H)(a)(v)) be binding on the Issuer, the Trustee, the Agents, the Noteholders and the Couponholders as of their effective date.
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(d)Fallbacks
Without prejudice to the obligations of the Issuer under this Condition 4(b)(ii)(H), the Original Reference Rate and the fallback provisions provided for in (in the case of Floating Rate Notes) Conditions 4(b)(ii)(B) to 4(b)(ii)(F) or (in the case of CMS Linked Notes) Condition 4(b)(ii)(G) will continue to apply unless and until (a) a Benchmark Discontinuation Event and/or a Benchmark Transition Event in relation to the Original Reference Rate and (b) a related Benchmark Replacement Date have occurred.
If, following the occurrence of a Benchmark Replacement Date in respect of the Original Reference Rate and in relation to the determination of the Rate of Interest on the relevant Interest Determination Date:
(i) |
(in the case of a Benchmark Discontinuation Event) no Successor Rate or Alternative Rate (as applicable) is determined in accordance with this Condition 4(b)(ii)(H)(a) by such Interest Determination Date; or |
(ii) |
(in the case of a Benchmark Transition Event) no Benchmark Replacement is determined in accordance with Condition 4(b)(ii)(H)(b), |
the Original Reference Rate will continue to apply for the purposes of determining such Rate of Interest on such Interest Determination Date, with the effect that the fallback provisions provided for in (in the case of Floating Rate Notes) Condition 4(b)(ii)(B) to 4(b)(ii)(F) or (in the case of CMS Linked Notes) Condition 4(b)(ii)(G) will (if applicable) continue to apply to such determination.
For the avoidance of doubt, this Condition 4(b)(ii)(H) shall apply to the determination of the Rate of Interest on the relevant Interest Determination Date only, and the Rate of Interest applicable to any subsequent Interest Period(s) is subject to the subsequent operation of, and to adjustment as provided in, this Condition 4(b)(ii)(H).
(iii)Rate of Interest for Inflation Linked Interest Notes
The Rate of Interest in respect of Inflation Linked Interest Notes for each Interest Period will be as specified in the applicable Final Terms. Amounts of interest payable in respect of Inflation Linked Interest Notes determined by reference to the applicable Rate of Interest shall be subject to adjustment in accordance with Condition 5.
(iv)Minimum Rate of Interest and/or Maximum Rate of Interest
If the applicable Final Terms specifies a Minimum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the provisions of sub-paragraph (ii) above is less than such Minimum Rate of Interest, the Rate of Interest for such Interest Period shall be such Minimum Rate of Interest.
If the applicable Final Terms specifies a Maximum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the provisions of sub-paragraph (ii) above is greater than such Maximum Rate of Interest, the Rate of Interest for such Interest Period shall be such Maximum Rate of Interest.
(v)Determination of Rate of Interest and calculation of Interest Amounts
The Issuing and Principal Paying Agent, in the case of Floating Rate Notes, and the Calculation Agent, in the case of CMS Linked Notes and Inflation Linked Interest Notes, will at or as soon as practicable after each time at which the Rate of Interest is to be determined, determine the Rate of Interest for the relevant Interest Period (or other Interest Accrual Period). In the case of CMS Linked Notes and Inflation Linked Interest Notes, the Calculation Agent will cause the Rate of Interest for the relevant Interest Period to be notified to the Issuer and the Issuing and Principal Paying Agent as soon as practicable after calculating the same.
The Issuing and Principal Paying Agent will calculate the amount of interest (the “Interest Amount”) pay able on the Floating Rate Notes, CMS Linked Notes or Inflation Linked Interest Notes for the relevant Interest Period (or other Interest Accrual Period) by applying the Rate of Interest to:
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(A) |
in the case of Floating Rate Notes, CMS Linked Notes or Inflation Linked Interest Notes which are represented by a Global Note, the aggregate outstanding nominal amount of the Notes represented by such Global Note; or |
(B) |
in the case of Floating Rate Notes, CMS Linked Notes or Inflation Linked Interest Notes in definitive form, the Calculation Amount; |
and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Floating Rate Note, a CMS Linked Note or an Inflation Linked Interest Note in definitive form comprises more than one Calculation Amount, the Interest Amount payable in respect of such Note shall be the aggregate of the amounts (determined in the manner provided above) for each Calculation Amount comprising the Specified Denomination without any further rounding.
(vi)Linear Interpolation
Where Linear Interpolation is specified as applicable in respect of an Interest Period in the applicable Final Terms, the Rate of Interest for such Interest Period shall be calculated by the Issuing and Principal Paying Agent by straight line linear interpolation by reference to two rates based on the relevant Reference Rate (where Screen Rate Determination is specified as applicable in the applicable Final Terms) or the relevant Floating Rate Option (where ISDA Determination is specified as applicable in the applicable Final Terms), one of which shall be determined as if the Designated Maturity were the period of time for which rates are available next shorter than the length of the relevant Interest Period and the other of which shall be determined as if the Designated Maturity were the period of time for which rates are available next longer than the length of the relevant Interest Period provided however that if there is no rate available for a period of time next shorter or, as the case may be, next longer, then the Issuing and Principal Paying Agent shall determine such rate at such time and by reference to such sources as it determines appropriate.
“Designated Maturity” means, in relation to Screen Rate Determination, the period of time designated in the Reference Rate.
(vii)Notification of Rate of Interest and Interest Amounts
(A) |
Except w here the applicable Final Terms specifies both Screen Rate Determination and Overnight Rate to be “Applicable”, the Issuing and Principal Paying Agent will cause the Rate of Interest and each Interest Amount for each Interest Period and the relevant Interest Payment Date to be notified to the Issuer and any stock exchange on which the relevant Floating Rate Notes, CMS Linked Notes or Inflation Linked Interest Notes are for the time being listed and notice thereof to be published in accordance with Condition 14 as soon as possible after their determination but in no event later than the fourth London Business Day thereafter. Each Interest Amount and Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without prior notice in the event of an extension or shortening of the Interest Period. Any such amendment will, if the relevant Notes are to be listed on a stock exchange and the rules of such stock exchange so require, be promptly notified to each such stock exchange on which the relevant Floating Rate Notes, CMS Linked Notes or Inflation Linked Interest Notes are for the time being listed and to the Noteholders in accordance with Condition 14. |
(B) |
Where the applicable Final Terms specifies both Screen Rate Determination and Overnight Rate to be “Applicable”, the Issuing and Principal Paying Agent will cause the Rate of Interest and each Interest Amount for each Interest Accrual Period and the relevant Interest Payment Date to be notified to the Issuer and any stock exchange on which the relevant Floating Rate Notes are for the time being listed and notice thereof to be published in accordance with Condition 14 as soon as possible after their determination but in no event later than the second London Business Day thereafter. Each Interest Amount and Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without prior notice in the event of an extension or shortening of the relevant Interest Accrual Period. Any such amendment will, if the relevant Notes are to be listed on a stock exchange and the rules of such stock exchange so require, be promptly notified to each such stock exchange on which the relevant Floating Rate Notes are for the time being listed and to the Noteholders in accordance with Condition 14. |
For the purposes of this Condition 4(b)(vii), the expression “London Business Day” means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for business in London.
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(viii)Certificates to be final
All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 4, whether by the Issuing and Principal Paying Agent or, if applicable, the Calculation Agent shall (in the absence of manifest error) be binding on the Issuer, the Trustee, the Issuing and Principal Paying Agent, the Calculation Agent (if applicable), the other Paying Agents and all Noteholders and Couponholders and (in the absence of wilful default and fraud) no liability to the Issuer, the Trustee, the Noteholders or the Couponholders shall attach to the Issuing and Principal Paying Agent or, if applicable, the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to such provisions.
(c)Sustainability-Linked Trigger Event(s)
This Condition 4(c) applies to (i) Fixed Rate Notes in respect of which the applicable Final Terms indicates that Sustainability-Linked Trigger Event (Interest) is applicable or (ii) any Notes in respect of which the applicable Final Terms indicates that Sustainability-Linked Trigger Event (Premium) is applicable (“Sustainability-Linked Notes”).
If Sustainability-Linked Trigger Event (Interest) is specified as applicable in the applicable Final Terms, for any Interest Period commencing on or after the first Interest Payment Date immediately following the occurrence of one or more relevant Sustainability-Linked Trigger Event(s), the Initial Rate of Interest shall be increased by the relevant Sustainability-Linked Step Up Margin(s).
If Sustainability-Linked Trigger Event (Premium) is specified as applicable in the applicable Final Terms, following the occurrence of one or more relevant Sustainability-Linked Trigger Event(s), the Issuer shall pay to the holder of each Note an amount equal to the relevant Sustainability-Linked Premium Amount(s) on the relevant Sustainability-Linked Premium Payment Date.
The Issuer will cause: (i) the occurrence of any relevant Sustainability-Linked Trigger Event; and (ii) (unless the relevant Sustainability-Linked Trigger Event has previously occurred and been notified to the Issuing and Principal Paying Agent, the Trustee and the Noteholders as required by this Condition 4(c)) the satisfaction of the Customer GHG Savings Condition, the Female Management and Senior Leadership Condition, the M-Pesa Customers Condition, the Vodafone GHG Scope 1 and Scope 2 Emissions Condition and/or the Vodafone GHG Scope 3 Emissions Condition, as the case may be, to be notified to the Issuing and Principal Paying Agent, the Trustee and, in accordance with Condition 16, the Noteholders as soon as reasonably practicable after such occurrence or satisfaction (as applicable) and, in respect of a Sustainability-Linked Trigger Event, in any event no later than the relevant Sustainability-Linked Trigger Event Notification Deadline. Such notice shall be irrevocable and shall specify (i) in the case of Sustainability-Linked Notes in respect of which the applicable Final Terms indicates that Sustainability - Linked Trigger Event (Interest) is applicable, the Rate of Interest and, in the case of a notification of the occurrence of a Sustainability-Linked Trigger Event, the relevant Sustainability-Linked Step Up Margin and the relevant Sustainability-Linked Step Up Date or (ii) in the case of (A) Sustainability-Linked Notes in respect of which the applicable Final Terms indicates that Sustainability-Linked Trigger Event (Premium) is applicable and, (B) a notification of the occurrence of a Sustainability-Linked Trigger Event, the relevant Sustainability-Linked Premium Amount and the relevant Sustainability-Linked Premium Payment Date.
In the case of Sustainability-Linked Notes in respect of which the applicable Final Terms indicates that Sustainability-Linked Trigger Event (Interest) is applicable, (i) if one Sustainability-Linked Trigger Event is specified as applicable in the applicable Final Terms, an increase in the Rate of Interest will occur no more than once following the occurrence of the relevant Sustainability-Linked Trigger Event, (ii) if two or more Sustainability-Linked Trigger Events are specified as applicable in the applicable Final Terms with only one Sustainability-Linked Step Up Margin, an increase in the Rate of Interest will occur no more than once following the occurrence of one or more of the relevant Sustainability Linked Trigger Events and (iii) during the term of the Notes, if two or more Sustainability-Linked Trigger Events are specified as applicable in the applicable Final Terms together with two or more Sustainability-Linked Step Up Margins, the related combination of Sustainability-Linked Step Up Margins relating to such Sustainability-Linked Trigger Events may be applicable for the remaining term of the Sustainability-Linked Notes. For the avoidance of doubt, in the case of any such Notes, following any such increase to the Rate of Interest, the Rate of Interest will not subsequently decrease to the Initial Rate of Interest and no Sustainability-Linked Premium Amount(s) will be payable as a result of the occurrence of a relevant Sustainability-Linked Trigger Event.
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In the case of Sustainability-Linked Notes in respect of which the applicable Final Terms indicates that Sustainability - Linked Trigger Event (Premium) is applicable, (i) if two or more Sustainability-Linked Trigger Events are specified as applicable in the applicable Final Terms with only one Sustainability-Linked Premium Amount, only one Sustainability-Linked Premium Amount will be payable following the occurrence of one or more of the relevant Sustainability- Linked Trigger Events and (ii) during the term of the Notes, if two or more Sustainability-Linked Trigger Events are specified as applicable in the applicable Final Terms together with two or more Sustainability-Linked Step Up Margins, the related combination of Sustainability-Linked Premium Amounts may be payable. For the avoidance of doubt, in the case of any such Notes, no increase in the Rate of Interest will occur as a result of the occurrence of a relevant Sustainability-Linked Trigger Event.
Neither the Trustee nor the Issuing and Principal Paying Agent shall be obliged to monitor or inquire as to whether a Sustainability-Linked Trigger Event has occurred or have any liability in respect thereof and the Trustee shall be entitled to rely absolutely on any notice given to it by the Issuer pursuant to this Condition 4(c) without further enquiry or liability.
(d)Accrual of interest
Each Note (or in the case of the redemption of part only of a Note, that part only of such Note) will cease to bear interest (if any) from the date of its redemption unless payment of principal is improperly withheld or refused. In such event, interest will continue to accrue as provided in the Trust Deed.
(e)Definitions
In these Terms and Conditions:
“Adjustment Spread” means either (a) a spread (which may be positive, negative or zero), or (b) a formula or methodology for calculating a spread, in either case, which the Issuer (in accordance with Condition 4(b)(ii)(H)(a)(i)) determines is to be applied to the Successor Rate or the Alternative Rate (as the case may be) and is the spread, formula or methodology which:
(i) |
in the case of a Successor Rate, is formally recommended in relation to the replacement of the Original Reference Rate with such Successor Rate by any Relevant Nominating Body; |
(ii) |
in the case of an Alternative Rate or (w here (i) above does not apply) in the case of a Successor Rate, the Issuer determines is recognised or acknowledged as being in customary market usage in international debt capital markets transactions which reference the Original Reference Rate, where such rate has been replaced by such Successor Rate or such Alternative Rate (as the case may be); |
(iii) |
(if the Issuer determines that neither (i) nor (ii) above applies) the Issuer determines is recognised or acknowledged as being the industry standard for over-the-counter derivative transactions which reference the Original Reference Rate, w here such rate has been replaced by the Successor Rate or the Alternative Rate (as the case may be); or |
(iv) |
(if the Issuer determines that none of (i), (ii) or (iii) above applies) the Issuer determines to be appropriate in order to reduce or eliminate, to the extent reasonably practicable in the circumstances, any economic prejudice or benefit (as the case may be) to the Noteholders and the Couponholders as a result of the replacement of the Original Reference Rate with the Successor Rate or the Alternative Rate (as the case may be); |
“Alternative Rate” means an alternative to the Original Reference Rate which the Issuer determines (in accordance with Condition 4(b)(ii)(H)(a)(ii)) has replaced the Original Reference Rate in customary market usage in international debt capital markets transactions for the purposes of determining rates of interest (or the relevant component part thereof):
(i) |
in the case of Floating Rate Notes, for a commensurate interest period and in the same Specified Currency as the Notes; and |
(ii) |
in the case of CMS Linked Notes, with a commensurate swap rate designated maturity and in the same Reference Currency as the Notes, |
or, in any case, if the Issuer determines that there is no such rate, such other rate as the Issuer determines in its sole discretion is most comparable to the Original Reference Rate;
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“Authorised Signatory” means any person who (a) is a Director or the Secretary of the Issuer or (b) has been notified by the Issuer in writing to the Trustee as being duly authorised to sign documents and to do other acts and things on behalf of the Issuer for the purposes of the Trust Deed;
“Benchmark Amendments” has the meaning given to it in Condition 4(b)(ii)(H)(a)(iv);
“Benchmark Discontinuation Event” means, with respect to an Original Reference Rate:
(i) |
such Original Reference Rate ceasing to (a) be published for a period of at least five Business Days or (b) exist or be administered; |
(ii) |
the later of (a) the making of a public statement by the administrator of such Original Reference Rate that it will, on or before a specified date, cease publishing such Original Reference Rate permanently or indefinitely (in circumstances where no successor administrator has been appointed that will continue publication of such Original Reference Rate) and (b) the date falling six months prior to the specified date referred to in (ii)(a) |
(iii) |
the making of a public statement by the supervisor of the administrator of such Original Reference Rate that such Original Reference Rate has been permanently or indefinitely discontinued; |
(iv) |
the later of (a) the making of a public statement by the supervisor of the administrator of such Original Reference Rate that such Original Reference Rate will, on or before a specified date, be permanently or indefinitely discontinued and (b) the date falling six months prior to the specified date referred to in (iv)(a); |
(v) |
the making of a public statement by the supervisor of the administrator of such Original Reference Rate that means such Original Reference Rate has become prohibited from being used or that its use has become subject to restrictions or adverse consequences; |
(vi) |
the later of (a) the making of a public statement by the supervisor of the administrator of the Original Reference Rate that means such Original Reference Rate will be prohibited from being used or that its use will be subject to restrictions or adverse consequences, in each case on or before a specified date and (b) the date falling six months prior to the specified date referred to in (vi)(a); |
(vii) |
it has or will, prior to the next Interest Determination Date, become unlawful for the Issuer, any Agent or any other party specified in the applicable Final Terms as being responsible for calculating the Rate of Interest and/or the Interest Amount to calculate any payments due to be made to any Noteholder or Couponholder using such Original Reference Rate; or |
(viii) |
the making of a public statement by the supervisor of the administrator of such Original Reference Rate announcing that such Original Reference Rate is no longer representative or may no longer be used; |
“Benchmark Replacement” means, the first alternative set forth in the order below that can be determined by the Issuer as of the Benchmark Replacement Date:
(i) |
the sum of: (a) the alternate rate of interest that has been selected or recommended by the Relevant Governmental Body as the replacement for the Original Reference Rate and (b) the Benchmark Replacement Adjustment; |
(ii) |
the sum of: (a) the ISDA Fallback Rate and (b) the Benchmark Replacement Adjustment; or |
(iii) |
the sum of: (a) the alternate rate of interest that has been selected by the Issuer as the replacement for the Original Reference Rate giving due consideration to any industry-accepted rate of interest as a replacement for the then-current benchmark for U.S. dollar-denominated floating rate notes at such time and (b) the Benchmark Replacement Adjustment; |
“Benchmark Replacement Adjustment” means the first alternative set forth in the order below that can be determined by the Issuer as of the Benchmark Replacement Date:
65
(i) |
the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement; |
(ii) |
if the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA Fallback Rate, the ISDA Fallback Adjustment; or |
(iii) |
the spread adjustment (which may be a positive or negative value or zero) that has been selected by the Issuer giving due consideration to any industry-accepted spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated floating rate notes at such time; |
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to any Interest Period, Interest Accrual Period, the timing and frequency of determining rates and making payments of interest, rounding of amounts or tenors, and other administrative matters) that the Issuer (in consultation with the Independent Adviser, if appointed) decides may be appropriate to reflect the adoption of such Benchmark Replacement in a manner substantially consistent with market practice (or, if the Issuer decides that adoption of any portion of such market practice is not administratively feasible or if the Issuer determines that no market practice for use of the Benchmark Replacement exists, in such other manner as the Issuer (in consultation with the Independent Adviser, if appointed) determines is reasonably necessary);
“Benchmark Replacement Date” means:
(i)with respect to any Benchmark Discontinuation Event:
(a) |
in the case of an event falling within sub-paragraph (i)(a) of the definition of “Benchmark Discontinuation Event”, the first Business Day immediately following such five-Business Day period; |
(b) |
in the case of an event falling within sub-paragraphs (i)(b) or (ii) of the definition of “Benchmark Discontinuation Event”, the date of the relevant cessation of existence, administration or publication, as applicable; |
(c) |
in the case of an event falling within sub-paragraphs (iii), (v) or (viii) of the definition of “Benchmark Discontinuation Event”, the date of the relevant public statement; |
(d) |
in the case of an event falling within sub-paragraph (iv) of the definition of “Benchmark Discontinuation Event”, the date of the relevant discontinuation; or |
(e) |
in the case of event falling within sub-paragraphs (vi) or (vii) of the definition of “Benchmark Discontinuation Event”, the date on which the relevant prohibition, restrictions, adverse consequences or unlawfulness become(s) effective; and |
(ii)with respect to any Benchmark Transition Event:
(a) |
in the case of an event falling within sub-paragraph (i) or (ii) of the definition of “Benchmark Transition Event”, the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the Original Reference Rate permanently or indefinitely ceases to provide the Original Reference Rate (or such component); |
(b) |
in the case of an event falling within sub-paragraph (iii) of the definition of “Benchmark Transition Event”, the date of the public statement or publication of information referenced therein; |
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the Original Reference Rate (including the daily published component used in the calculation thereof):
(i)a public statement or publication of information by or on behalf of the administrator of the Original Reference Rate (or such component) announcing that such administrator has ceased or will cease to provide the Original Reference Rate (or such component), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Original Reference Rate (or such component); or
66
(ii) |
a public statement or publication of information by the regulatory supervisor for the administrator of the Original Reference Rate (or such component), the central bank for the currency of the Original Reference Rate (or such component), an insolvency official with jurisdiction over the administrator for the Original Reference Rate (or such component), a resolution authority with jurisdiction over the administrator for the Original Reference Rate (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for the Original Reference Rate, which states that the administrator of the Original Reference Rate (or such component) has ceased or will cease to provide the Original Reference Rate (or such component) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Original Reference Rate (or such component); or |
(iii) |
a public statement or publication of information by the regulatory supervisor for the administrator of the Original Reference Rate announcing that the Original Reference Rate is no longer representative; |
“Business Day” means a day which is both:
(i) |
a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in London and any Additional Business Centre specified in the applicable Final Terms; and |
(ii) |
either (1) in relation to any sum payable in a Specified Currency other than euro or Renminbi, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in the principal financial centre of the country of the relevant Specified Currency (which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney or Wellington, respectively), (2) in relation to any sum payable in euro, a day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET2) System (the “TARGET2 System”) is open or (3) in relation to any sum payable in Renminbi, a day (other than a Saturday, Sunday or public holiday) on which commercial banks and foreign exchange markets in Hong Kong are generally open for business and settlement for Renminbi payments in Hong Kong; |
“Calculation Agent” means the person appointed by the Issuer as calculation agent in relation to a Series of CMS Linked Notes and specified in the applicable Final Terms and shall include any successor calculation agent appointed in respect of such Notes;
“CDOR” means the Canadian dollar offered rate;
“CMS Reference Banks” means:
(i) |
w here the Reference Currency is euro, the principal office of five leading swap dealers in the Euro-zone inter-bank market; |
(ii) |
where the Reference Currency is Sterling, the principal London office of five leading swap dealers in the London inter-bank market; |
(iii) |
w here the Reference Currency is U.S. dollars, the principal New York City office of five leading swap dealers in the New York City inter-bank market; and |
(iv) |
in the case of any other Reference Currency, the principal Relevant Financial Centre office of five leading swap dealers in the Relevant Financial Centre inter-bank market, |
in each case as selected by the Calculation Agent;
“Customer GHG Savings” means, in respect of the period from (and including) the Customer GHG Savings Start Date to (but excluding) the Customer GHG Savings End Date, the total greenhouse gas emissions within the Scope of Reporting that the Group has helped its customers to avoid;
67
“Customer GHG Savings Amount” means, in millions of metric tonnes of carbon dioxide equivalent (Mt CO2e), the Customer GHG Savings calculated in good faith by the Issuer in consultation with the External Savings Agent, reported by the Issuer in accordance with Condition 15 and confirmed by the External Verifier;
“Customer GHG Savings Condition” means, in relation to each Customer GHG Savings Reference Year, the condition that: (i) the Reporting Condition (as defined in Condition 15) has been satisfied; and (ii) the Customer GHG Savings Amount in respect of such Customer GHG Savings Reference Year, as shown in the relevant ESG Addendum, is equal to or greater than the Customer GHG Savings Threshold in respect of such Customer GHG Savings Reference Year, and if the requirements of (i) and/or (ii) (above) are not met, the Customer GHG Savings Condition in respect of the relevant Customer GHG Savings Reference Year shall be deemed not to have been satisfied;
“Customer GHG Savings End Date” means the date specified in the applicable Final Terms as being the GHG Savings End Date;
“Customer GHG Savings Event” (if specified as applicable in the applicable Final Terms) occurs if the Customer GHG Savings Condition in respect of any Customer GHG Savings Reference Year is not satisfied, provided no Customer GHG Savings Event has previously occurred in respect of the Notes;
“Customer GHG Savings Reference Year” means the financial year(s) of the Issuer specified in the applicable Final Terms as being the Customer GHG Savings Reference Year(s);
“Customer GHG Savings Start Date” means the date specified in the applicable Final Terms as being the Customer GHG Savings Start Date;
“Customer GHG Savings Threshold” means the threshold(s) specified in the applicable Final Terms as being the Customer GHG Savings Threshold(s) in respect of the relevant Customer GHG Savings Reference Year(s);
“Day Count Fraction” means, in respect of the calculation of an amount of interest in accordance with Condition 4(b):
(i) |
if “Actual/Actual-ISDA” or “Actual/Actual” is specified in the applicable Final Terms, the actual number of days in the Interest Accrual Period divided by 365 (or, if any portion of that Interest Accrual Period falls in a leap year, the sum of (A) the actual number of days in that portion of the Interest Accrual Period falling in a leap year divided by 366 and (B) the actual number of days in that portion of the Interest Accrual Period falling in a non-leap year divided by 365); |
(ii) |
if “Actual/365 (Sterling)” is specified in the applicable Final Terms, the actual number of days in the Interest Accrual Period divided by 365 or, in the case of an Interest Payment Date falling in a leap year, 366; |
(iii) |
if “Actual/365 (Fixed)” is specified in the applicable Final Terms, the actual number of days in the Interest Accrual Period divided by 365; |
(iv) |
if “Actual/360” is specified in the applicable Final Terms, the actual number of days in the Interest Accrual Period divided by 360; |
(v) |
if “30/360”, “360/360” or “Bond Basis” is specified in the applicable Final Terms, the number of days in the Interest Accrual Period divided by 360, calculated on a formula basis as follows: |
where:
“Y1” is the year, expressed as a number, in which the first day of the Interest Accrual Period falls;
“Y2” is the year, expressed as a number, in which the day immediately following the last day of the Interest Accrual Period falls;
68
“M1” is the calendar month, expressed as a number, in which the first day of the Interest Accrual Period falls;
“M2” is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Accrual Period falls;
“D1” is the first calendar day, expressed as a number, of the Interest Accrual Period, unless such number is 31, in which case D1 will be 30; and
“D2” is the calendar day, expressed as a number, immediately following the last day included in the Interest Accrual Period, unless such number would be 31 and D1 is greater than 29, in which case D2 will be 30;
(vi) |
if “30E/360” or “Eurobond Basis” is specified in the applicable Final Terms, the number of days in the Interest Accrual Period divided by 360, calculated on a formula basis as follows: |
where:
“Y1” is the year, expressed as a number, in which the first day of the Interest Accrual Period falls;
“Y2” is the year, expressed as a number, in which the day immediately following the last day of the Interest Accrual Period falls;
“M1” is the calendar month, expressed as a number, in which the first day of the Interest Accrual Period falls;
“M2” is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Accrual Period falls;
“D1” is the first calendar day, expressed as a number, of the Interest Accrual Period, unless such number would be 31, in which case D1 will be 30; and
“D2” is the calendar day, expressed as a number, immediately following the last day included in the Interest Accrual Period, unless such number would be 31, in which case D2 will be 30; and
(vii) |
if “30E/360 (ISDA)” is specified in the applicable Final Terms, the number of days in the Interest Accrual Period divided by 360, calculated on a formula basis as follows: |
where:
“Y1” is the year, expressed as a number, in which the first day of the Interest Accrual Period falls;
“Y2” is the year, expressed as a number, in which the day immediately following the last day of the Interest Accrual Period falls;
“M1” is the calendar month, expressed as a number, in which the first day of the Interest Accrual Period falls;
“M2” is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Accrual Period falls;
“D1” is the first calendar day, expressed as a number, of the Interest Accrual Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and
69
“D2” is the calendar day, expressed as a number, immediately following the last day included in the Interest Accrual Period, unless (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31, in which case D2 will be 30;
“Determination Period” means each period from (and including) a Determination Date to (but excluding) the next Determination Date (including, w here either the Interest Commencement Date or the final Interest Payment Date is not a Determination Date, the period commencing on the first Determination Date prior to, and ending on the first Determination Date falling after, such date);
“ESG Addendum” has the meaning give to it in Condition 15;
“EURIBOR” means the Euro-zone inter-bank offered rate;
“External Savings Agent” means The Carbon Trust or, in the event that The Carbon Trust resigns or is otherwise replaced, such other third party as may be appointed by the Issuer to consult with the Issuer in calculating the Customer GHG Savings Amount;
“External Verifier” means:
(i) |
in relation to the Customer GHG Savings Amount, Grant Thornton UK LLP or, in the event that Grant Thornton UK LLP resigns or is otherwise replaced by the Issuer, such other qualified provider of third-party assurance or attestation services appointed by the Issuer to review the Issuer’s statement of the Customer GHG Savings Amount; |
(ii) |
in relation to the Female Management and Senior Leadership Amount, any qualified provider of third-party assurance or attestation services appointed by the Issuer to review the Issuer’s statement of Female Management and Senior Leadership Amount; |
(iii) |
in relation to the M-Pesa Customers Amount, any qualified provider of third-party assurance or attestation services appointed by the Issuer to review the Issuer’s statement of M-Pesa Customers Amount; and |
(iv) |
in relation to the Vodafone GHG Scope 1 and Scope 2 Emissions Amount and Vodafone GHG Scope 3 Emissions Amount, Grant Thornton UK LLP or, in the event that Grant Thornton UK LLP resigns or is otherwise replaced by the Issuer, such other qualified provider of third-party assurance or attestation services appointed by the Issuer to review the Issuer’s statement of the Vodafone GHG Scope 1 and Scope 2 Emissions Amount and Vodafone GHG Scope 3 Emissions Amount; |
“Female Management and Senior Leadership Amount” means, in respect of a relevant financial year, the total number of women in management and senior leadership roles in the Group within the Scope of Reporting as a percentage of total number of employees in management and senior leadership roles in the Group within the Scope of Reporting, in respect of such financial year and calculated in good faith by the Issuer, reported by the Issuer in accordance with Condition 15 and confirmed by the External Verifier; “Female Management and Senior Leadership Threshold” means the threshold(s) (express ed as a percentage) specified in the applicable Final Terms as being the Female Management and Senior Leadership Threshold(s) in respect of the relevant Female Management and Senior Leadership Reference Year(s);
“Female Management and Senior Leadership Condition” means, in relation to each Female Management and Senior Leadership Reference Year, the condition that: (i) the Reporting Condition (as defined in Condition 15) has been satisfied; and (ii) the Female Management and Senior Leadership Amount in respect of such Female Management and Senior Leadership Reference Year, as shown in the relevant ESG Addendum, is equal to or greater than the Female Management and Senior Leadership Threshold in respect of such Female Management and Senior Leadership Reference Year, and if the requirements of (i) and/or (ii) (above) are not met, the Female Management and Senior Leadership Condition in respect of the relevant Female Management and Senior Leadership Reference Year shall be deemed not to have been satisfied;
a “Female Management and Senior Leadership Event” (if specified as applicable in the applicable Final Terms) occurs if the Female Management and Senior Leadership Condition in respect of any Female Management and Senior Leadership Reference Year is not satisfied, provided no Female Management and Senior Leadership Event has previously occurred in respect of the Notes;
70
“Female Management and Senior Leadership Reference Year” means the financial year(s) of the Issuer specified in the applicable Final Terms as being the Female Management and Senior Leadership Reference Year(s);
“Fixed Day Count Fraction” means, in respect of the calculation of an amount of interest in accordance with Condition 4(a):
(i)if “Actual/Actual (ICMA)” is specified in the applicable Final Terms:
(a) |
in the case of Notes w here the number of days in the relevant period from (and including) the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to (but excluding) the relevant payment date (the “Accrual Period”) is equal to or shorter than the Determination Period during which the Accrual Period ends, the number of days in such Accrual Period divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Dates (as specified in the applicable Final Terms) that would occur in one calendar year; or |
(b) |
in the case of Notes w here the Accrual Period is longer than the Determination Period during which the Accrual Period ends, the sum of: |
(1) |
the number of days in such Accrual Period falling in the Determination Period in which the Accrual Period begins divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Dates (as specified in the applicable Final Terms) that would occur in one calendar year; and |
(2) |
the number of days in such Accrual Period falling in the next Determination Period divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Dates that would occur in one calendar year assuming interest was to be payable in respect of the w hole of that year; |
(ii) |
if “30/360” is specified in the applicable Final Terms, the number of days in the period from (and including) the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to (but excluding) the relevant payment date (such number of days being calculated on the basis of a year of 360 days with 12 30-day months) divided by 360; and |
(iii) |
if “Actual/365 (Fixed)” is specified in the applicable Final Terms, the actual number of days in the relevant period divided by 365; |
“GHG Protocol Standard” means the document titled “The Greenhouse Gas Protocol, A Corporate Accounting and Reporting Standard (Revised Edition)” published by the World Business Council for Sustainable Development and the World Resources Institute, as such document may be amended, supplemented or replaced at the relevant time;
“Independent Adviser” means an independent financial institution of international repute or an independent financial adviser with appropriate expertise in the international debt capital markets appointed by the Issuer at its own expense under Condition 4(b)(ii)(H) and notified in writing to the Trustee;
“Initial Rate of Interest” means the Initial Rate of Interest specified in the applicable Final Terms;
“Interest Accrual Period” means (i) each Interest Period and (ii) any other period (if any) in respect of which interest is to be calculated, being the period from (and including) the first day of such period to (but excluding) the day on which the relevant payment of interest falls due (which, if the Notes become due and payable in accordance with Condition 10, shall be the date on which the Notes become due and payable);
“Interest Determination Date” means:
(i)if the Notes are Floating Rate Notes and:
71
(a) |
the Reference Rate is SONIA, the date which is “p” London Banking Days prior to each Interest Payment Date; |
(b) |
the Reference Rate is SOFR, the date which is “p” U.S. Government Securities Business Days prior to each Interest Payment Date; |
(c) |
the Reference Rate is EURIBOR, the second day on which the TARGET2 System is open prior to the start of each Interest Period; |
(d) |
the Reference Rate is TIBOR, the second Tokyo Business Day prior to the start of each Interest Period; |
(e) |
the Reference Rate is CDOR, the first day of each Interest Period; or |
(f) |
the Reference Rate is JIBAR, the first day of each Interest Period; or |
(ii)if the Notes are CMS Linked Notes, each date specified in the applicable Final Terms;
“Interest Period” means the period from (and including) an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first) Interest Payment Date;
“ISDA Definitions” means the 2006 ISDA Definitions (as published by the International Swaps and Derivatives Association, Inc. and amended and updated as at the Issue Date of the first Tranche of the Notes);
“ISDA Fallback Adjustment” means the spread adjustment (which may be a positive or negative value or zero) that would apply for derivatives transactions referencing the ISDA Definitions to be determined upon the occurrence of an index cessation event with respect to the Original Reference Rate;
“ISDA Fallback Rate” means the rate that would apply for derivatives transactions referencing the ISDA Definitions to be effective upon the occurrence of an index cessation date with respect to the Original Reference Rate for the applicable tenor excluding the applicable ISDA Fallback Adjustment;
“JIBAR” means the Johannesburg inter-bank agreed rate;
“M-Pesa Customers Amount” means the number in millions of customers of the Group within the Scope of Reporting on the M-Pesa platform (or equivalent mobile money service), in respect of a financial year and calculated in good faith by the Issuer, reported by the Issuer in accordance with Condition 15 and confirmed by the External Verifier;
“M-Pesa Customers Condition” means, in relation to each M-Pesa Customers Reference Year, the condition that: (i) the Reporting Condition (as defined in Condition 15) has been satisfied; and (ii) the M-Pesa Customers Amount in respect of such M-Pesa Customers Reference Year, as shown in the relevant ESG Addendum, is equal to or greater than the M-Pesa Customers Threshold in respect of such M-Pesa Customers Reference Year, and if the requirements of (i) and/or (ii) (above) are not met, the M-Pesa Customers Condition in respect of the relevant M-Pesa Customers Reference Year shall be deemed not to have been satisfied;
a “M-Pesa Customers Event” (if specified as applicable in the applicable Final Terms) occurs if the M-Pesa Customers Condition in respect of any M-Pesa Customers Reference Year is not satisfied, provided no M-Pesa Customers Event has previously occurred in respect of the Notes;
“M-Pesa Customers Reference Year” means the financial year(s) of the Issuer specified in the applicable Final Terms as being the M-Pesa Customers Reference Year(s);
“M-Pesa Customers Threshold” means the threshold(s) specified in the applicable Final Terms as being the M-Pes a Customers Threshold(s) in respect of the relevant M-Pesa Customers Reference Year(s);
“Original Reference Rate” means the originally-specified benchmark or screen rate (as applicable) used to determine the relevant Rate of Interest (or any component part thereof) in respect of any Interest Period(s) (provided that if, following one or more Benchmark Replacement Dates, such originally-specified benchmark or screen rate (as applicable) (or any Successor Rate, Alternative Rate or Benchmark Replacement (as applicable) which has replaced it) has been replaced by a (for a further) Successor Rate, Alternative Rate or Benchmark Replacement (as applicable) and a Benchmark Discontinuation Event or Benchmark Transition Event (as applicable) and, in either case, a related Benchmark Replacement Date subsequently occur in respect of such Successor Rate, Alternative Rate or Benchmark Replacement (as applicable), the term “Original Reference Rate” shall include any such Successor Rate or Alternative Rate or Benchmark Replacement (as applicable));
72
“Reference Banks” means, in the case of a determination of EURIBOR, the principal office of four major banks in the Euro-zone inter-bank market, in the case of a determination of TIBOR, the principal Tokyo office of ten major banks in the Tokyo inter-bank market, in the case of a determination of CDOR, four major Canadian Schedule I chartered banks, in the case of a determination of JIBAR, the principal Johannesburg office of four major banks in the Johannesburg inter-bank market, in each case selected by the Issuing and Principal Paying Agent;
“Reference Rate” means (i) EURIBOR, (ii) TIBOR, (iii) CDOR, (iv) JIBAR or (v) CMS Rate, in each case for the relevant period, or (vi) Compounded Daily SONIA, (vii) Compounded Daily SOFR or (viii) Weighted Average SOFR, as specified in the applicable Final Terms;
“Reference Year” means:
(i) |
a Customer GHG Savings Reference Year; |
(ii) |
a Female Management and Senior Leadership Reference Year; |
(iii) |
a M-Pesa Customers Reference Year; |
(iv) |
a Vodafone GHG Scope 1 and Scope 2 Emissions Reference Year; and/or |
(v) |
a Vodafone GHG Scope 3 Emissions Reference Year, |
as specified in the applicable Final Terms and as the context may so require;
“Relevant Financial Centre” means:
(i)if the Notes are Floating Rate Notes:
(a)Brussels, in the case of a determination of EURIBOR;
(b)Tokyo, in the case of a determination of TIBOR;
(c)Toronto, in the case of a determination of CDOR; and
(d)Johannesburg, in the case of a determination of JIBAR; or
(ii)if the Notes are CMS Linked Notes, the city specified in the applicable Final Terms;
“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto;
“Relevant Nominating Body” means, in respect of an Original Reference Rate:
(i) |
the central bank for the currency to which such Original Reference Rate relates, or any central bank or other supervisory authority which is responsible for supervising the administrator of such Original Reference Rate; or |
(ii) |
any working group or committee sponsored by, chaired or co-chaired by or constituted at the request of (a) the central bank for the currency to which such Original Reference Rate relates, (b) any central bank or other supervisory authority which is responsible for supervising the administrator of such Original Reference Rate, (c) a group of the aforementioned central banks or other supervisory authorities or (d) the Financial Stability Board or any part thereof; |
73
“Relevant Swap Rate” means:
(i) |
where the Reference Currency is euro, the mid-market annual swap rate determined on the basis of the arithmetic mean of the bid and offered rates for the annual fixed leg, calculated on a 30/360 day count basis, of a fixed-for-floating euro interest rate swap transaction with a term equal to the Designated Maturity commencing on the first day of the relevant Interest Period and in a Representative Amount with an acknowledged dealer of good credit in the swap market, w here the floating leg, in each case calculated on an Actual/360 day count basis, is equivalent to EUR-EURIBOR-Reuters (as defined in the ISDA Definitions) with a designated maturity determined by the Calculation Agent by reference to standard market practice and/or the ISDA Definitions; |
(ii) |
w here the Reference Currency is Sterling, the mid-market semi-annual swap rate determined on the basis of the arithmetic mean of the bid and offered rates for the semi-annual fixed leg, calculated on an Actual/365 (Fixed) day count basis, of a fixed-for-floating Sterling interest rate swap transaction with a term equal to the Designated Maturity commencing on the first day of the relevant Interest Period and in a Representative Amount with an acknowledged dealer of good credit in the swap market, w here the floating leg, in each case calculated on an Actual/365 (Fixed) day count basis, is equivalent (A) if the Designated Maturity is greater than one year, to GBP-LIBOR-BBA (as defined in the ISDA Definitions) with a designated maturity of six months or (B) if the Designated Maturity is one year or less, to GBP-LIBOR-BBA with a designated maturity of three months; |
(iii) |
where the Reference Currency is U.S. dollars, the mid-market semi-annual swap rate determined on the basis of the mean of the bid and offered rates for the semi-annual fixed leg, calculated on a 30/360 day count basis, of a fixed-for-floating U.S. dollar interest rate swap transaction with a term equal to the Designated Maturity commencing on the first day of the relevant Interest Period and in a Representative Amount with an acknow ledged dealer of good credit in the swap market, w here the floating leg, calculated on an Actual/360 day count basis, is equivalent to USD-LIBOR-BBA (as defined in the ISDA Definitions) with a designated maturity of three months; and |
(iv) |
w here the Reference Currency is any other currency, the mid-market swap rate as determined by the Calculation Agent in its sole and absolute discretion on a commercial basis as it shall consider appropriate and in accordance with standard market practice; |
“Relevant Time” means:
(i)if the Notes are Floating Rate Notes:
(a)in the case of EURIBOR, 11.00 a.m.;
(b)in the case of TIBOR, 11.00 a.m.;
(c)in the case of CDOR, 10.00 a.m.; and
(d)in the case of JIBAR, 11.00 a.m.; or
(ii)if the Notes are CMS Linked Notes, the time specified in the applicable Final Terms, in each case in the Relevant Financial Centre;
“Representative Amount” means an amount that is representative for a single transaction in the relevant market at the relevant time;
“Scope of Reporting” means, in relation to the ESG Addendum, performance data which is included in the scope of the ESG Addendum as more fully described in the section of the section of the ESG Addendum headed “Reporting Criteria Scope” and subject to the good faith judgement of the Issuer; “Sustainability-Linked Step Up Margin” means, in relation to one or more Sustainability-Linked Trigger Event(s), the amount specified in the applicable Final Terms as being the Sustainability-Linked Step Up Margin in respect of such Sustainability-Linked Trigger Event(s);
“sub-unit” means, with respect to any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, with respect to euro, means one cent;
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“Successor Rate” means a successor to or replacement of the Original Reference Rate which is formally recommended by any Relevant Nominating Body;
“Sustainability-Linked Premium Amount” means, in relation to one or more Sustainability-Linked Trigger Event(s), the amount specified in the applicable Final Terms as being the Sustainability-Linked Premium Amount in respect of such Sustainability-Linked Trigger Event(s);
“Sustainability-Linked Premium Payment Date” means the date specified in the applicable Final Terms as being the Sustainability-Linked Premium Payment Date;
“Sustainability-Linked Step Up Date” means, in relation to a Sustainability-Linked Trigger Event, the first Interest Payment Date immediately following the occurrence of such Sustainability-Linked Trigger Event;
“Sustainability-Linked Trigger Event” means, in each case if specified in the applicable Final Terms as being applicable, a Customer GHG Savings Event, a Female Management and Senior Leadership Event, a M-Pesa Customers Event, a Vodafone GHG Scope 1 and Scope 2 Emissions Event and/or a Vodafone GHG Scope 3 Emissions Event, in each case in respect of the respective relevant Reference Year,
“Sustainability-Linked Trigger Event Notification Deadline” means the day falling 135 days after the last day of the applicable Reference Year;
“Threshold” means:
(a)Customer GHG Savings Threshold;
(b)Female Management and Senior Leadership Threshold;
(c)M-Pesa Customers Threshold;
(d)Vodafone GHG Scope 1 and Scope 2 Emissions Threshold; and/or
(e)Vodafone GHG Scope 3 Emissions Threshold,
as specified in the applicable Final Terms and as the context may so require;
“TIBOR” means the Tokyo inter-bank offered rate;
“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement Adjustment;
“Vodafone GHG Scope 1 Emissions” means, in respect of a financial year, direct greenhouse gas emissions from controlled sources of the Group within the Scope of Reporting, in respect of such financial year calculated in good faith by the Issuer using the market-based method;
“Vodafone GHG Scope 2 Emissions” means, in respect of a financial year, indirect greenhouse gas emissions from electricity, steam and heat purchased or acquired by the Group within the Scope of Reporting, in respect of such financial year calculated in good faith by the Issuer using the market-based method;
“Vodafone GHG Scope 3 Emissions” means, in respect of a financial year, indirect greenhouse gas emissions from non-controlled sources of the Group within the Scope of Reporting, but which the Group may be able to influence, in respect of such financial year calculated in good faith by the Issuer using the market-based method; (i)Vodafone GHG Scope 1 Emissions; and
“Vodafone GHG Scope 1 and Scope 2 Emissions Amount” means, in millions of metric tonnes of carbon dioxide equivalent (Mt CO2e), the sum of the:
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(ii)Vodafone GHG Scope 2 Emissions,
in each case in respect of the relevant financial year and calculated in good faith by the Issuer, reported by the Issuer in accordance with Condition 15 and confirmed by the External Verifier;
“Vodafone GHG Scope 3 Emissions Amount” means, in millions of metric tonnes of carbon dioxide equivalent (Mt CO2e), the Vodafone GHG Scope 3 Emissions calculated in good faith by the Issuer, reported by the Issuer in accordance with Condition 15 and confirmed by the External Verifier;
“Vodafone GHG Scope 1 and Scope 2 Emissions Baseline” means the Vodafone GHG Scope 1 and Scope 2 Emissions Amount for the financial year specified in the applicable Final Terms, as initially reported in the ESG Addendum in respect of such financial year and, if applicable, recalculated in good faith by the Issuer and published by the Issuer in the latest ESG Addendum published in accordance with Condition 15;
“Vodafone GHG Scope 3 Emissions Baseline” means the Vodafone GHG Scope 3 Emissions Amount for the financial year specified in the applicable Final Terms, as initially reported in the ESG Addendum in respect of such financial year and, if applicable, recalculated in good faith by the Issuer and published by the Issuer in the latest ESG Addendum published in accordance with Condition 15;
“Vodafone GHG Scope 1 and Scope 2 Emissions Condition” means, in relation to each Vodafone GHG Scope 1 and Scope 2 Emissions Reference Year, the condition that: (i) the Reporting Condition (as defined in Condition 15) has been satisfied; and (ii) the Vodafone GHG Scope 1 and Scope 2 Emissions Percentage in respect of such Vodafone GHG Scope 1 and Scope 2 Emissions Reference Year, as shown in the relevant ESG Addendum, is equal to or greater than the Vodafone GHG Scope 1 and Scope 2 Emissions Threshold in respect of such Vodafone GHG Scope 1 and Scope 2 Emissions Reference Year, and if the requirements of (i) and/or (ii) (above) are not met, the Vodafone GHG Scope 1 and Scope 2 Emissions Condition in respect of the relevant Vodafone GHG Scope 1 and Scope 2 Emissions Reference Year shall be deemed not to have been satisfied;
“Vodafone GHG Scope 3 Emissions Condition” means, in relation to each Vodafone GHG Scope 3 Emissions Reference Year, the condition that: (i) the Reporting Condition (as defined in Condition 15) has been satisfied; and (ii) the Vodafone GHG Scope 3 Emissions Percentage in respect of such Vodafone GHG Scope 3 Emissions Reference Year, as shown in the relevant ESG Addendum, is equal to or greater than the Vodafone GHG Scope 3 Emissions Threshold in respect of such Vodafone GHG Scope 3 Emissions Reference Year, and if the requirements of (i) and/or (ii) (above) are not met, the Vodafone GHG Scope 3 Emissions Condition in respect of the relevant Vodafone GHG Scope 3 Emissions Reference Year shall be deemed not to have been satisfied;
a “Vodafone GHG Scope 1 and Scope 2 Emissions Event” (if specified as applicable in the applicable Final Terms) occurs if the Vodafone GHG Scope 1 and Scope 2 Emissions Condition in respect of any Vodafone GHG Scope 1 and Scope 2 Emissions Reference Year is not satisfied, provided no Vodafone GHG Scope 1 and Scope 2 Emissions Event has previously occurred in respect of the Notes;
a “Vodafone GHG Scope 3 Emissions Event” (if specified as applicable in the applicable Final Terms) occurs if the Vodafone GHG Scope 3 Emissions Condition in respect of any Vodafone GHG Scope 3 Emissions Reference Year is not satisfied, provided no Vodafone GHG Scope 3 Emissions Event has previously occurred in respect of the Notes;
“Vodafone GHG Scope 1 and Scope 2 Emissions Percentage” means, in respect of any financial year, the percentage by which the Vodafone GHG Scope 1 and Scope 2 Emissions Amount for such financial year is a reduction in comparison to the Vodafone GHG Scope 1 and Scope 2 Emissions Baseline, as calculated in good faith by the Issuer and published by it in accordance with Condition 15;
“Vodafone GHG Scope 3 Emissions Percentage” means, in respect of any financial year, the percentage by which the Vodafone GHG Scope 3 Emissions Amount for such financial year is a reduction in comparison to the Vodafone GHG Scope 3 Emissions Baseline, as calculated in good faith by the Issuer and published by it in accordance with Condition 15; “Vodafone GHG Scope 3 Emissions Threshold” means the threshold(s)specified in the applicable Final Terms as being the Vodafone GHG Scope 3 Emissions Threshold(s) in respect of the relevant Vodafone GHG Scope 3 Emissions Reference Year(s);
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“Vodafone GHG Scope 1 and Scope 2 Emissions Threshold” means the threshold(s) specified in the applicable Final Terms as being the Vodafone GHG Scope 1 and Scope 2 Emissions Threshold(s) in respect of the relevant Vodafone GHG Scope 1 and Scope 2 Emissions Reference Year(s);
“Vodafone GHG Scope 1 and Scope 2 Emissions Reference Year” means the financial year(s) of the Issuer specified in the applicable Final Terms as being the Vodafone GHG Scope 1 and Scope 2 Emissions Reference Year(s); and
“Vodafone GHG Scope 3 Emissions Reference Year means the financial year(s)of the Issuer specified in the applicable Final Terms as being the Vodafone GHG Scope 3 Emissions Reference Year(s).
5.Inflation Linked Notes
This Condition 5 is applicable only if the applicable Final Terms specifies the Notes as Inflation Linked Interest Notes and/or Inflation Linked Redemption Notes (together, the “Inflation Linked Notes”).
(a)U.K. Retail Price Index
Where RPI (as defined below) is specified as the Index in the applicable Final Terms, Conditions 5(a) to 5(f) will apply. For purposes of Conditions 5(a) to 5(f), unless the context otherwise requires, the following defined terms shall have the meanings set out below:
“Base Index Figure” means (subject to Condition 5(c)(i)) the base index figure as specified in the applicable Final Terms;
“Calculation Agent” means the person appointed by the Issuer as calculation agent in relation to a Series of Inflation Linked Notes and specified in the applicable Final Terms, and shall include any successor calculation agent appointed in respect of such Notes;
“His Majesty’s Treasury” means His Majesty’s Treasury or any officially recognised party performing the function of a calculation agent (whatever such party’s title), on its or its successor’s behalf, in respect of the Reference Gilt;
“Index” or “Index Figure” means, subject as provided in Condition 5(c)(i), the U.K. Retail Price Index (RPI) (for all items) published by the Office for National Statistics (January 1987 = 100) or any comparable index which may replace the U.K. Retail Price Index for the purpose of calculating the amount payable on repayment of the Reference Gilt (the “RPI”). Any reference to the Index Figure:
(i) |
applicable to a particular month, shall, subject as provided in Conditions 5(c) and 5(e), be construed as a reference to the Index Figure published in the seventh month prior to that particular month and relating to the month before that of publication; or |
(ii) |
applicable to the first calendar day of any month shall, subject as provided in Conditions 5(c) and 5(e), be construed as a reference to the Index Figure published in the second month prior to that particular month and relating to the month before that of publication; or |
(iii) |
applicable to any other day in any month shall, subject as provided in Conditions 5(c) and 5(e), be calculated by linear interpolation between (x)the Index Figure applicable to the first calendar day of the month in w hic h the day falls, calculated as specified in sub-paragraph (ii) above and (y) the Index Figure applicable to the first calendar day of the month following, calculated as specified in sub-paragraph (ii) above and rounded to the nearest fifth decimal place; |
“Index Ratio” applicable to any month or date, as the case may be, means the Index Figure applicable to such month
or date, as the case may be, divided by the Base Index Figure and rounded to the nearest fifth decimal place;
“Limited Index Linked Notes” means Inflation Linked Notes to which a Maximum Indexation Factor and/or a Minimum Indexation Factor (as specified in the applicable Final Terms) applies;
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“Limited Index Ratio” means (a) in respect of any month or date, as the case may be, prior to the relevant Issue Date, the Index Ratio for that month or date, as the case may be, (b) in respect of any Limited Indexation Date after the relevant Issue Date, the product of the Limited Indexation Factor for that month or date, as the case may be, and the Limited Index Ratio as previously calculated in respect of the month or date, as the case may be, twelve months prior thereto; and (c) in respect of any other month, the Limited Index Ratio as previously calculated in respect of the most recent Limited Indexation Month;
“Limited Indexation Date” means any date falling during the period specified in the applicable Final Terms for which a Limited Indexation Factor is to be calculated;
“Limited Indexation Factor” means, in respect of a Limited Indexation Month or Limited Indexation Date, as the case may be, the ratio of the Index Figure applicable to that month or date, as the case may be, divided by the Index Figure applicable to the month or date, as the case may be, twelve months prior thereto, provided that (a) if such ratio is greater than the Maximum Indexation Factor specified in the applicable Final Terms, it shall be deemed to be equal to such Maximum Indexation Factor and (b) if such ratio is less than the Minimum Indexation Factor specified in the applicable Final Terms, it shall be deemed to be equal to such Minimum Indexation Factor;
“Limited Indexation Month” means any month specified in the applicable Final Terms for which a Limited Indexation Factor is to be calculated; and
“Reference Gilt” means the index-linked Treasury Stock or Treasury Gilt specified as such in the applicable Final Terms for so long as such gilt is in issue, and thereafter such issue of index-linked Treasury Stock or Treasury Gilt determined to be appropriate by a gilt-edged market maker or other adviser selected by the Issuer (an “Indexation Adviser”).
(b)Application of the Index Ratio
Each payment of interest (in the case of Inflation Linked Interest Notes) and principal (in the case of Inflation Linked Redemption Notes) in respect of the Notes shall be the amount provided in, or determined in accordance with, these Terms and Conditions, multiplied by the Index Ratio or Limited Index Ratio in the case of Limited Index Linked Notes applicable to the month or date, as the case may be, on which such payment falls to be made and rounded in accordance with Condition 4(b)(v).
(c)Changes in Circumstances Affecting the Index
(i) |
Change in base: If at any time and from time to time the Index is changed by the substitution of a new base therefor, then with effect from the month from and including that in which such substitution takes effect or the first date from and including that on which such substitution takes effect, as the case may be, (1) the definition of “Index” and “Index Figure” in Condition 5(a) shall be deemed to refer to the new date or month in substitution for January 1987 (or, as the case may be, to such other date or month as may have been substituted therefor), and (2) the new Base Index Figure shall be the product of the existing Base Index Figure and the Index Figure for the date on which such substitution takes effect, divided by the Index Figure for the date immediately preceding the date on which such substitution takes effect. |
(ii) |
Delay in publication of Index if sub-paragraph (i) of the definition of Index Figure is applicable: If the Index Figure which is normally published in the seventh month and which relates to the eighth month (the “relevant month”) before the month in which a payment is due to be made is not published on or before the fourteenth business day before the date on which such payment is due (the “date for payment”), the Index Figure applicable to the month in which the date for payment falls shall be (1) such substitute index figure (if any) as the Trustee considers (acting solely on the advice of the Indexation Adviser) to have been published by the United Kingdom Debt Management Office or the Bank of England, as the case may be, for the purposes of indexation of payments on the Reference Gilt or, failing such publication, on any one or more issues of index-linked Treasury Stock selected by an Indexation Adviser (and approved by the Trustee (acting solely on the advice of the Indexation Adviser))or (2) if no such determination is made by such Indexation Adv is er within seven days, the Index Figure last published (or, if later, the substitute index figure last determined pursuant to Condition 5(c)(i)) before the date for payment. |
(iii) |
Delay in publication of Index if sub-paragraph (ii) and/or (iii) of the definition of Index Figure is applicable: If |
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the Index Figure relating to any month (the “calculation month”) which is required to be taken into account for the purposes of the determination of the Index Figure for any date is not published on or before the fourteenth business day before the date on which such payment is due (the “date for payment”), the Index Figure applicable for the relevant calculation month shall be (1) such substitute index figure (if any) as the Trustee considers (acting solely on the advice of the Indexation Adviser) to have been published by the United Kingdom Debt Management Office or the Bank of England, as the case may be, for the purposes of indexation of payments on the Reference Gilt or, failing such publication, on any one or more issues of index-linked Treasury Stock selected by an Indexation Adviser (and approved by the Trustee (acting solely on the advice of the Indexation Adviser))or (2) if no such determination is made by such Indexation Adv is er within seven days, the Index Figure last published (or, if later, the substitute index figure last determined pursuant to Condition 5(c)(i)) before the date for payment.
(d)Application of Changes
Where the provisions of Condition 5(c)(ii) or Condition 5(c)(iii) apply, the determination of the Indexation Adviser as to the Index Figure applicable to the month in which the date for payment falls or the date for payment, as the case may be, shall be conclusive and binding. If, an Index Figure having been applied pursuant to Condition 5(c)(ii)(2) or Condition 5(c)(iii)(2), the Index Figure relating to the relevant month or relevant calculation month, as the case may be, is subsequently published while a Note is still outstanding, then:
(i) |
in relation to a payment of interest (in the case of Inflation Linked Interest Notes) and/or principal (in the case of Inflation Linked Redemption Notes) in respect of such Note other than upon final redemption of such Note, the interest and/or principal (as the case may be) next payable after the date of such subsequent publication shall be increased or reduced, as the case may be, by an amount equal to the shortfall or excess, as the case may be, of the amount of the relevant payment made on the basis of the Index Figure applicable by virtue of Condition 5(c)(ii)(2) or Condition 5(c)(iii)(2) below or above the amount of the relevant payment that would have been due if the Index Figure subsequently published had been published on or before the fourteenth business day before the date for payment; and |
(ii) |
in relation to a payment of interest (in the case of Inflation Linked Interest Notes) and/or principal (in the case of Inflation Linked Redemption Notes) upon final redemption, no subsequent adjustment to amounts paid will be made. |
(e)Material Changes or Cessation of the Index
(i) |
Material changes to the Index: If notice is published by His Majesty’s Treasury, or on its behalf, following a change to the coverage or the basic calculation of the Index, then the Calculation Agent shall make any such adjustments to the Index consistent with any adjustments made to the Index as applied to the Reference Gilt. |
(ii) |
Cessation of the Index: If the Trustee and the Issuer have been notified by the Calculation Agent that the Index has ceased to be published, or if His Majesty’s Treasury, or a person acting on its behalf, announces that it will no longer continue to publish the Index, then the Calculation Agent shall determine a successor index in lieu of any previously applicable index (the “Successor Index”) by using the following methodology: |
(a) |
if at any time a successor index has been designated by His Majesty’s Treasury in respect of the Reference Gilt, such successor index shall be designated the “Successor Index” for the purposes of all subsequent Interest Payment Dates, notwithstanding that any other Successor Index may previously have been determined under paragraphs (b) or (c) below; or |
(b) |
if a Successor Index has not been determined under paragraph (a) above, the Issuer and the Trustee (acting solely on the advice of the Indexation Adviser) together shall seek to agree for the purpose of the Notes one or more adjustments to the Index or a substitute index (with or without adjustments) with the intention that the same should leave the Issuer and the Noteholders in no better and no worse position than they would have been had the Index not ceased to be published; or |
(c) |
if the Issuer and the Trustee (acting solely on the advice of the Indexation Adviser) fail to reach agreement as mentioned above within 20 business days following the giving of notice as mentioned in paragraph (ii), a bank or other person in London shall be appointed by the Issuer and the Trustee |
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or, failing agreement on and the making of such appointment within 20 business days following the expiry of the 20 business day period referred to above, by the Trustee (acting solely on the advice of the Indexation Adviser) (in each case, such bank or other person so appointed being referred to as the “Expert”), to determine for the purpose of the Notes one or more adjustments to the Index or a substitute index (with or without adjustments) with the intention that the same should leave the Issuer and the Noteholders in no better and no worse position than they would have been had the Index not ceased to be published. Any Expert so appointed shall act as an expert and not as an arbitrator and all fees, costs and expenses of the Expert and of any Indexation Adviser and of any of the Issuer and the Trustee in connection with such appointment shall be borne by the Issuer.
(iii) |
Adjustment or replacement: The Index shall be adjusted or replaced by a substitute index pursuant to the foregoing paragraphs, as the case may be, and references in these Terms and Conditions to the Index and to any Index Figure shall be deemed amended in such manner as the Trustee (acting solely on the advice of the Indexation Adviser) and the Issuer agree are appropriate to give effect to such adjustment or replacement. Such amendments shall be effective from the date of such notification and binding upon the Issuer, the Trustee and the Noteholders, and the Issuer shall give notice to the Noteholders in accordance with Condition 14 of such amendments as promptly as practicable following such notification or adjustment. |
(f)Redemption for Index Reasons
If either (i) the Index Figure for three consecutive months is required to be determined on the basis of an Index Figure previously published as provided in Condition 5(c)(ii)(2) and the Trustee has been notified by the Calculation Agent that publication of the Index has ceased or (ii) notice is published by His Majesty’s Treasury, or on its behalf, following a change in relation to the Index, offering a right of redemption to the holders of the Reference Gilt, and (in either case) no amendment or substitution of the Index shall have been designated by His Majesty’s Treasury in respect of the Reference Gilt and such circumstances are continuing, the Issuer may, upon giving not more than 60 nor less than 30 days’ notice to the Noteholders (or such other notice period as may be specified in the applicable Final Terms) in accordance with Condition 14, redeem all, but not some only, of the Notes at their Early Redemption Amount referred to in Condition 7(g) below together (if appropriate) with interest accrued to (but excluding) the date of redemption (in each case adjusted in accordance with Condition 5(b)).
(g)HICP
Where HICP (as defined below) is specified as the Index in the applicable Final Terms, the Conditions 5(g) to 5(j) will apply. For purposes of Conditions 5(g) to 5(j), unless the context otherwise requires, the following defined terms shall have the meanings set out below:
“Base Index Level” means the base index level as specified in the applicable Final Terms;
“Calculation Agent” means the person appointed by the Issuer as calculation agent in relation to a Series of Inflation Linked Notes and specified in the applicable Final Terms, and shall include any successor calculation agent appointed in respect of such Notes;
“Index” or “Index Level” means (subject as provided in Condition 5(i)) the non-revised Harmonised Index of Consumer Prices excluding tobacco or relevant Successor Index (as defined in Condition 5(i)(ii)), measuring the rate of inflation in the European Monetary Union excluding tobacco, expressed as an index and published by Eurostat (the “HICP”). The first publication or announcement of a level of such index for a calculation month (as defined in Condition 5(i)(i)(A)) shall be final and conclusive and later revisions to the level for such calculation month will not be used in any calculations. Any reference to the Index Level which is specified in these Terms and Conditions as applicable to any day (“d”) in any month (“m”) shall, subject as provided in Condition 5(i), be calculated as follows:
where:
“ld is the Index Level for the day d “qm”is the actual number of days in month m,
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“HICP” m-2 is the level of HICP for month m-2
“HICP” m-3 is the level of HICP for month m-3
“nbd” is the actual number of days from and excluding the first day of month m to but including day d;
and
provided that if Condition 5(i) applies, the Index Level shall be the Substitute Index Level determined in accordance with such Condition.
“Index Business Day” means a day on which the TARGET System is operating;
“Index Determination Date” means in respect of any date for which the Index Level is required to be determined, the fifth Index Business Day prior to such date;
“Index Ratio” applicable to any date means the Index Level applicable to the relevant Index Determination Date divided by the Base Index Level and rounded to the nearest fifth decimal place, 0.000005 being rounded upwards; and
“Related Instrument” means an inflation-linked bond selected by the Calculation Agent that is a debt obligation of one of the governments (but not any government agency) of France, Italy, Germany or Spain and which pays a coupon or redemption amount which is calculated by reference to the level of inflation in the European Monetary Union with a maturity date which falls on (a) the same day as the Maturity Date or (b) the next longest maturity date after the Maturity Date or the next shortest maturity for the Maturity Date at its sole discretion, if there is no such bond maturing on the Maturity Date. The Calculation Agent will select the Related Instrument from such of those inflation-linked bonds issued on or before the relevant Issue Date and, if there is more than one such inflation-linked bond maturing on the same date, the Related Instrument shall be selected by the Calculation Agent from such bonds at its sole discretion. If the Related Instrument is redeemed the Calculation Agent will select a new Related Instrument on the same basis, but selected from all eligible bonds in issue at the time the originally selected Related Instrument is redeemed (including any bond for which the redeemed originally selected Related Instrument is exchanged).
(h)Application of the Index Ratio
Each payment of interest (in the case of Inflation Linked Interest Notes) and principal (in the case of Inflation Linked Redemption Notes) in respect of the Notes shall be the amount provided in, or determined in accordance with, these Terms and Conditions, multiplied by the Index Ratio applicable to the date on which such payment falls to be made and rounded in accordance with Condition 4(b)(v).
(i)Changes in Circumstances Affecting the Index
(i)Delay in publication of Index
(A) |
If the Index Level relating to any month (the “calculation month”) which is required to be taken into account for the purposes of the determination of the Index Level for any date (the “Relevant Leve I”) has not been published or announced by the day that is five Business Days before the date on which such payment is due (the “Affected Payment Date”), the Calculation Agent shall determine a Substitute Index Level (as defined below) (in place of such Relevant Level) by using the following methodology: |
(1) |
if applicable, the Calculation Agent will take the same action to determine the “Substitute Index Level” for the Affected Payment Date as that taken by the calculation agent (or any other party performing the function of a calculation agent (whatever such party’s title)) pursuant to the terms and conditions of the Related Instrument; |
(2) |
if (1) above does not result in a Substitute Index Level for the Affected Payment Date for any reason, then the Calculation Agent shall determine the Substitute Index Level as follow s: |
Substitute Index Level = Base Level x (Latest Level / Reference Level)
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Where:
“Base Level” means the level of the Index (excluding any flash estimates) published or announced by Eurostat (or any successor entity which publishes such index) in respect of the month which is 12 calendar months prior to the month for which the Substitute Index Level is being determined;
“Latest Level” means the latest level of the Index (excluding any flash estimates) published or announced by Eurostat (or any successor entity which publishes such index) prior to the month in respect of which the Substitute Index Level is being calculated; and
“Reference Level” means the level of the Index (excluding any flash estimates) published or announced by Eurostat (or any successor entity which publishes such index) in respect of the month that is 12 calendar months prior to the month referred to in “Latest Level” above.
(B) |
If a Relevant Level is published or announced at any time after the day that is five Business Days prior to the next Interest Payment Date, such Relevant Level will not be used in any calculations. The Substitute Index Level so determined pursuant to this Condition 5(i) will be the definitive level for that calculation month. |
(ii) |
Cessation of publication: If the Index Level has not been published or announced for two consecutive months or Eurostat announces that it will no longer continue to publish or announce the Index then the Calculation Agent shall determine a successor index in lieu of any previously applicable Index (the “Successor Index”) by using the following methodology: |
(A) |
if at any time (other than after an Early Termination Event (as defined below) has been designated by the Calculation Agent pursuant to paragraph (E) below) a successor index has been designated by the calculation agent (or any other party performing the function of a calculation agent (whatever such party’s title)) pursuant to the terms and conditions of the Related Instrument, such successor index shall be designated the “Successor Index” for the purposes of all subsequent Interest Payment Dates, notwithstanding that any other Successor Index may previously have been determined under paragraphs (B), (C) or (D) below; or |
(B) |
if a Successor Index has not been determined under paragraph (A) above (and there has been no designation of an Early Termination Event pursuant to paragraph (E) below), and a notice has been given or an announcement has been made by Eurostat (or any successor entity which publishes such index) specifying that the Index will be superseded by a replacement index specified by Eurostat (or any such successor), and the Calculation Agent determines that such replacement index is calculated using the same or substantially similar formula or method of calculation as used in the calculation of the previously applicable Index, such replacement index shall be the Index from the date that such replacement index comes into effect; or |
(C) |
if a Successor Index has not been determined under paragraphs (A) or (B) above (and there has been no designation of an Early Termination Event pursuant to paragraph (E) below), the Calculation Agent shall ask five leading independent dealers to state what the replacement index for the Index should be. If four or five responses are received, and of those four or five responses, three or more leading independent dealers state the same index, this index will be deemed the “Successor Index”. If three responses are received, and two or more leading independent dealers state the same index, this index will be deemed the “Successor Index”. If fewer than three responses are received, the Calculation Agent will proceed to paragraph (D) below; or |
(D) |
if no Successor Index has been determined under paragraphs (A), (B) or (C) above on or before the fifth Index Business Day prior to the next Affected Payment Date the Calculation Agent will determine an appropriate alternative index for such Affected Payment Date, and such index will be deemed the “Successor Index”; or |
(E) |
if the Calculation Agent determines that there is no appropriate alternative index, the Issuer shall, in conjunction with the Calculation Agent, determine in good faith an appropriate alternative index. If the Issuer, in conjunction with the Calculation Agent, does not decide on an appropriate alternative index within a period of ten Business Days, then an “Early Termination Event” will be deemed to |
82
have occurred and the Issuer will redeem the Notes pursuant to Condition 5(j).
(iii) |
Rebasing of the Index: If the Calculation Agent determines that the Index has been or will be rebased at any time, the Index as so rebased (the ‘Rebased Index’) will be used for the purposes of determining each relevant Index Level from the date of such rebasing; provided, however, that the Calculation Agent shall make such adjustments as are made by the calculation agent (or any other party performing the function of a calculation agent (whatever such party’s title)) pursuant to the terms and conditions of the Related Instrument to the levels of the Rebased Index so that the Rebased Index levels reflect the same rate of inflation as the Index before it was rebased. Any such rebasing shall not affect any prior payments made. |
(iv) |
Material Modification Prior to Interest Payment Date: If, on or prior to the day that is five Business Days before an Interest Payment Date, Eurostat announces that it will make a material change to the Index then the Calculation Agent shall make any such adjustments to the Index consistent with adjustments made to the Related Instrument. |
(v) |
Manifest Error in Publication: If, within thirty days of publication, the Calculation Agent determines that Eurostat (or any successor entity which publishes such index) has corrected the level of the Index to remedy a manifest error in its original publication, the Calculation Agent will notify the parties of (A) that correction, (B) the amount that is payable, in respect of interest payments falling after such correction, as a result of that correction and (C) take such other action as it may deem necessary to give effect to such correction. |
(j)Redemption for Index Reasons
If an Early Termination Event as described under Condition 5(i)(ii)(E) is deemed to have occurred, the Issuer will, upon giving not more than 60 nor less than 30 days’ notice to the Noteholders (or such other notice period as may be specified in the applicable Final Terms) in accordance with Condition 14, redeem all, but not some only, of the Notes at their Early Redemption Amount referred to in Condition 6(f) below together (if appropriate) with interest accrued to (but excluding) the date of redemption (in each case adjusted in accordance with Condition 5(h)).
6.Payments
(a) |
Method of payment |
Subject as provided below:
(i)payments in a Specified Currency other than euro or Renminbi will be made by credit or transfer to an account in the relevant Specified Currency (which, in the case of a payment in Japanese yen to a nonresident of Japan, shall be a non-resident account) maintained by the payee with, or, at the option of the payee, by a cheque in such Specified Currency drawn on, a bank in the principal financial centre of the country of such Specified Currency (which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney or Wellington, respectively);
(ii) |
payments in euro will be made by credit or transfer to a euro account (or to any other account to which euro may be credited or transferred) specified by the payee or, at the option of the payee, by a euro cheque; and |
(iii) |
payments in Renminbi will be made by transfer to a Renminbi account maintained by or on behalf of the payee with a bank in Hong Kong. |
Payments will be subject in all cases to (i) any fiscal or other laws and regulations applicable thereto in the place of payment, but without prejudice to the provisions of Condition 8, and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the “Code”) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, any official interpretations thereof, or any law implementing an intergovernmental approach thereto.
(b)Presentation of Bearer Notes and Coupons
Payments of principal in respect of Bearer Notes will be made in the manner provided in paragraph (a) above only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of Bearer Notes, and payments of interest in respect of Bearer Notes will (subject as provided below) be made as aforesaid only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of Coupons, in each case at the specified office of any Paying Agent outside the United States (which expression, as used herein, means the United States of America (including the States and the District of Columbia and its possessions)).
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Fixed Rate Notes in bearer form (other than Fixed Rate Notes which specify Interest Payment Date Adjustment as being applicable in the applicable Final Terms, Sustainability-Linked Notes which specify Sustainability-Linked Trigger Event (Interest) as being applicable in the applicable Final Terms or Inflation Linked Notes) should be presented for payment together with all unmatured Coupons appertaining thereto (which expression shall for this purpose include Coupons falling to be issued on exchange of matured Talons), failing which the amount of any missing unmatured Coupon (or, in the case of payment not being made in full, the same proportion of the amount of such missing unmatured Coupon as the sum so paid bears to the sum due) will be deducted from the sum due for payment. Each amount of principal so deducted will be paid in the manner mentioned above against surrender of the relative missing Coupon at any time before the expiry of 10 years after the Relevant Date (as defined in Condition 8) in respect of such principal (whether or not such Coupon would otherwise have become void under Condition 9) or, if later, five years from the date on which such Coupon would otherwise have become due, but in no event thereafter.
Upon any Fixed Rate Note in bearer form becoming due and repayable prior to its Maturity Date, all unmatured Talons (if any) appertaining thereto will become void and no further Coupons will be issued in respect thereof.
Upon the date on which any Floating Rate Note, Fixed Rate Note which specifies Interest Payment Date Adjustment as being applicable in the applicable Final Terms, Sustainability-Linked Note which specifies Sustainability-Linked Trigger Event (Interest) as being applicable in the applicable Final Terms, CMS Linked Note or Inflation Linked Interest Note in bearer form becomes due and repayable, unmatured Coupons and Talons (if any) relating thereto (whether or not attached) shall become void and no payment or, as the case may be, exchange for further Coupons shall be made in respect thereof.
If the due date for redemption of any definitive Bearer Note is not an Interest Payment Date, interest (if any) accrued in respect of such Note from (and including) the preceding Interest Payment Date or, as the case may be, the Interest Commencement Date shall be payable only against surrender of the relevant definitive Bearer Note.
(c)Payments in respect of Registered Notes
(i) |
Payments of principal in respect of Registered Notes shall be made against presentation and surrender of the relevant Certificates at the specified office of any of the Transfer Agents or of the Registrar and in the manner provided in the sub-paragraph (ii) below. |
(ii) |
Interest on Registered Notes shall be paid to the person show non the Register at the close of business on the fifteenth day before the due date for payment thereof (the “Record Date”). Payments of interest on each Registered Note shall be made in the relevant currency by cheque drawn on a Bank and mailed to the holder (or to the first named of joint holders) of such Note at its address appearing in the Register on the Record Date. Upon application by the holder to the specified office of the Registrar or any Transfer Agent before the Record Date, such payment of interest may be made by transfer to an account in the relevant currency maintained by the payee with a Bank. |
(iii) |
Payments of principal and interest in respect of Registered Notes registered in the name of, or in the name of a nominee for, The Depository Trust Company (“DTC”) and denominated in a Specified Currency other than U.S. dollars will be made or procured to be made by transfer by the Registrar to an account in the relevant Specified Currency of the Exchange Agent on behalf of DTC or its nominee in accordance with the following provisions. The amounts in such Specified Currency payable by the Registrar or its agent to DTC with respect to Registered Notes held by DTC or its nominee will be received from the Issuer by the Registrar who will make payments in such Specified Currency by wire transfer of same day funds to the designated bank account in such Specified Currency of those DTC participants entitled to receive the relevant payment who have made an irrevocable election to DTC, in the case of interest payments, on or prior to the third DTC Business Day after the Record Date for the relevant payment of interest and, in the case of payments of principal, at least 12 DTC Business Days prior to the relevant payment date, to receive that payment in such Specified Currency. The Registrar, after the Exchange Agent has converted amounts in such Specified Currency into U.S. dollars, will deliver such U.S. dollar amount in same day funds to DTC for payment through its settlement system to those DTC participants entitled to receive the relevant payment who did not elect to receive such payment in such Specified Currency. The Agency Agreement sets out the manner in which such conversions are to be made. For the purposes of this Condition 6(c), “DTC Business Day” means any day on which DTC is open for business. |
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(d)General provisions applicable to payments
The holder of a Global Note or a Global Certificate shall be the only person entitled to receive payments in respect of Notes represented by such Global Note or Global Certificate and the Issuer will be discharged by payment to, or to the order of, the holder of such Global Note or Global Certificate in respect of each amount so paid. Each of the persons shown in the records of Euroclear, Clearstream, Luxembourg or DTC as the beneficial holder of a particular nominal amount of Notes represented by such Global Note or Global Certificate must look solely to Euroclear, Clearstream, Luxembourg or DTC, as the case may be, for their share of each payment so made by the Issuer to, or to the order of, the holder of such Global Note or Global Certificate.
Notwithstanding the foregoing provisions of this Condition, if any amount of principal and/or interest in respect of Bearer Notes is payable in U.S. dollars, such U.S. dollar payments of principal and/or interest in respect of such Notes will be made at the specified office of a Paying Agent in the United States if:
(i) |
the Issuer has appointed Paying Agents with specified offices outside the United States with the reasonable expectation that such Paying Agents would be able to make payment in U.S. dollars at such specified offices outside the United States of the full amount of principal and interest on the Notes in the manner provided above when due; |
(ii) |
payment of the full amount of such principal and interest at all such specified offices outside the United States is illegal or effectively precluded by exchange controls or other similar restrictions on the full payment or receipt of principal and interest in U.S. dollars; and |
(iii) |
such payment is then permitted under United States law without involving, in the opinion of the Issuer, adverse tax consequences to the Issuer. |
(e)Payment Day
If the date for payment of any amount in respect of any Note or Coupon is not a Payment Day, the holder thereof shall not be entitled to payment until the next following Payment Day in the relevant place and shall not be entitled to further interest or other payment in respect of such delay. For these purposes, “Payment Day” means any day which (subject to Condition 9) is:
(i) |
a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in: |
(A)in the case of Notes in definitive form only, the relevant place of presentation;
(B)any Additional Financial Centre specified in the applicable Final Terms; and
(ii) |
either (1) in relation to any sum payable in a Specified Currency other than euro or Renminbi, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in the principal financial centre of the country of the relevant Specified Currency (which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney or Wellington, respectively), (2) in relation to any sum payable in euro, a day on which the TA RGET2 System is open or (3) in relation to any sum payable in Renminbi, a day (other than a Saturday, Sunday or public holiday) on which commercial banks and foreign exchange markets in Hong Kong are generally open for business and settlement for Renminbi payments in Hong Kong. |
(f)Interpretation of principal and interest
Any reference in these Terms and Conditions to principal in respect of the Notes shall be deemed to include, as applicable:
(i) |
any Additional Amounts which may be payable with respect to principal under Condition 8 or under any undertakings given in addition thereto or in substitution therefor pursuant to the Trust Deed; |
(ii) |
the Final Redemption Amount of the Notes; |
(iii) |
the Early Redemption Amount of the Notes; |
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(iv) |
the Optional Redemption Amount(s) (if any) of the Notes; |
(v) |
in relation to Zero Coupon Notes, the Amortised Face Amount (as defined in Condition 7(g)); and |
(vi) |
any premium and any other amounts (other than interest) which may be payable by the Issuer under or in respect of the Notes (including, for the avoidance of doubt, if applicable, any Sustainability-Linked Premium Amount(s)). |
Any reference in these Terms and Conditions to interest in respect of the Notes shall be deemed to include, as applicable, any Additional Amounts which may be payable with respect to interest under Condition 8 or any undertakings given in addition thereto or in substitution therefor pursuant to the Trust Deed.
(g)Renminbi Currency Event
If Renminbi Currency Event is specified as applying in the applicable Final Terms and a Renminbi Currency Event (as defined below) occurs, the Issuer, on giving not less than five nor more than thirty days’ irrevocable notice in accordance with Condition 14 to the Noteholders and the Trustee prior to any due date for payment, shall be entitled to satisfy its obligations in respect of such payment (in whole or in part) by making such payment in U.S. dollars on the basis of the Spot Rate for the relevant Determination Date as promptly notified to the Issuer, the Trustee and the Paying Agents by the Calculation Agent.
In such event, any payment of U.S. dollars will be made by transfer to a U.S. dollar denominated account maintained by the payee with, or by a U.S. dollar denominated cheque drawn on, a bank in New York City and the definition of “Payment Day” in Condition 6(e) shall mean any day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in: (A) in the case of Notes in definitive form only, the relevant place of presentation; and (B) London and New York City.
In these Terms and Conditions:
“Determination Business Day” means a day (other than a Saturday or Sunday) on which commercial banks are open for general business (including dealings in foreign exchange) in Hong Kong, London and New York City;
“Determination Date” means the day which is three Determination Business Days before the due date of the relevant payment under the Notes;
“Governmental Authority” means any de facto or de jure government (or any agency or instrumentality thereof), court, tribunal, administrative or other governmental authority or any other entity (private or public) charged with the regulation of the financial markets (including the central bank) of Hong Kong;
“Local Time” means the time of day in the jurisdiction in which the Calculation Agent, appointed in connection with the Notes, is located;
“Renminbi Currency Event” means any one of Renminbi Illiquidity, Renminbi Non-Transferability and Renminbi Inconvertibility;
“Renminbi Dealer” means an independent foreign exchange dealer of international repute active in the Renminbi exchange market in Hong Kong reasonably selected by the Issuer;
“Renminbi Illiquidity” means the general Renminbi exchange market in Hong Kong becomes illiquid as a result of which the Issuer cannot obtain sufficient Renminbi in order to satisfy its obligation to pay interest or principal (in whole or in part) in respect of the Notes, as determined by the Issuer acting in good faith and in a commercially reasonable manner following consultation with two Renminbi Dealers;
“Renminbi Inconvertibility” means the occurrence of any event that makes it impossible for the Issuer to convert any amount due in respect of the Notes into Renminbi in the general Renminbi exchange market in Hong Kong, other than where such impossibility is due solely to the failure of the Issuer to comply with any law, rule or regulation enacted by any Governmental Authority (unless such law, rule or regulation is enacted after the Issue Date of the first Tranche of the Notes and it is impossible for the Issuer, due to an event beyond its control, to comply with such law, rule or regulation); “Renminbi Non-Transferability” means the occurrence of any event that makes it impossible for the Issuer to transfer Renminbi between accounts inside Hong Kong or from an account inside Hong Kong to an account outside Hong Kong (including w here the Renminbi clearing and settlement system for participating banks in Hong Kong is disrupted or suspended), other than w here such impossibility is due solely to the failure of the Issuer to comply with any law, rub or regulation enacted by any Governmental Authority (unless such law, rule or regulation is enacted after the Issue Date of the first Tranche of the Notes and it is impossible for the Issuer, due to an event beyond its control, to comply with such law, rule or regulation); and
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“Spot Rate” means the spot CNY/U.S. dollar exchange rate for the purchase of U.S. dollars with Renminbi in the over-the-counter Renminbi exchange market in Hong Kong for settlement in three Determination Business Days, as determined by the Calculation Agent at or around 11.00 a.m. (Local Time) on the Determination Date, on a deliverable basis by reference to Reuters Screen Page TRADCNY3, or if no such rate is available, on a non-deliverable basis by reference to Reuters Screen Page TRADNDF. If neither rate is available, the Calculation Agent shall in good faith and in a commercially reasonable manner determine the Spot Rate at or around 11.00 a.m. (Local Time) on the Determination Date as the most recently available CNY/U.S. dollar official fixing rate for settlement in two Determination Business Days reported by the State Administration of Foreign Exchange of the PRC, which is reported on the Reuters Screen Page CNY=SAEC. Reference to a page on the Reuters Screen means the display page so designated on the Reuters Monitor Money Rates Service (or any successor service) or such other page as may replace that page for the purpose of displaying a comparable currency exchange rate.
If for any reason at any relevant time the Calculation Agent defaults in its obligation to determine the Spot Rate, the Trustee shall at the expense of the Issuer, appoint an expert to determine the Spot Rate in such manner as, in its absolute discretion (having such regard as it shall think fit to the foregoing provisions of this Condition), it shall deem fair and reasonable in all the circumstances and each such determination shall be deemed to have been made by the Calculation Agent.
All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 6(g), whether by the Calculation Agent or an expert appointed by the Trustee, shall (in the absence of manifest error) be binding on the Issuer, the Issuing and Principal Paying Agent, the other Paying Agents and all Noteholders and Couponholders and (in the absence of wilful default and bad faith) no liability to the Issuer, the Noteholders or the Couponholders shall attach to the Calculation Agent or such expert in connection with the exercise or non-exercise by it if its powers, duties and discretions pursuant to such provision.
7. |
Redemption and Purchase |
(a)Redemption at maturity
Unless previously redeemed or purchased and cancelled as specified below, each Note will be redeemed by the Issuer at its Final Redemption Amount specified in the applicable Final Terms in the relevant Specified Currency on the Maturity Date.
(b)Redemption for tax reasons
The Notes may be redeemed at the option of the Issuer in whole, but not in part, at any time (if this Note is not a Floating Rate Note, a CMS Linked Note or an Inflation Linked Interest Note) or on any Interest Payment Date (if this Note is a Floating Rate Note, a CMS Linked Note or an Inflation Linked Interest Note), on giving not less than 10 nor more than 60 days’ notice to the Issuing and Principal Paying Agent and, in accordance with Condition 14, the Noteholders (which notice shall be irrevocable), if:
(i) |
on the occasion of the next payment due in respect of the Notes, the Issuer would be required to pay Additional Amounts as provided or referred to in Condition 8 as a result of any change in, or amendment to, the laws or regulations of the Relevant Jurisdiction (as defined in Condition 8) (or any political subdivision or taxing authority thereof or therein), or any change in the application or official interpretation of such laws or regulations, which change or amendment becomes effective on or after the date on which agreement is reached to issue the first Tranche of the Notes; and |
(ii) |
such requirement cannot be avoided by the Issuer taking reasonable measures available to it, provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be required to pay such Additional Amounts were a payment in respect of the Notes then due. |
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Prior to the publication of any notice of redemption pursuant to this Condition, the Issuer shall deliver to the Trustee a certificate signed by two Authorised Signatories of the Issuer stating that the requirement referred to in sub-paragraph (i) above will apply on the occasion of the next payment due in respect of the Notes and cannot be avoided by the Issuer taking reasonable measures available to it and the Trustee shall be entitled to accept the certificate as sufficient evidence of the satisfaction of the conditions precedent set out above, in which event it shall be conclusive and binding on the Noteholders and the Couponholders. Upon the expiry of any such notice as is referred to in this paragraph, the Issuer shall be bound to redeem the Notes in accordance with the provisions of this paragraph.
Notes redeemed pursuant to this Condition 7(b) will be redeemed at their Early Redemption Amount referred to in paragraph (e) below together (if appropriate) with interest accrued to (but excluding) the date of redemption.
(c)Redemption at the option of the Issuer (Issuer Call)
If Issuer Call is specified in the applicable Final Terms, the Issuer may, at its option (without any requirement for the consent or approval of the Noteholders) and, having given not less than 10 nor more than 60 days’ notice prior to the relevant date fixed for redemption falling within the Issuer Call Period (as specified in the applicable Final Terms) to the Issuing and Principal Paying Agent and the Trustee and, in accordance with Condition 14, the Noteholders (w hic h notice shall be irrevocable and shall specify the date fixed for redemption), redeem all or some only of the Notes then outstanding on any Optional Redemption Date and at the relevant Optional Redemption Amount(s) specified in the applicable Final Terms. Any such redemption must be of a nominal amount equal to the Minimum Redemption Amount or a Higher Redemption Amount. The relevant Optional Redemption Amount will be either, as specified in the applicable Final Terms, (A) if Make Whole Redemption Price is specified in the applicable Final Terms as applying to one or more Optional Redemption Dates, the relevant Make Whole Redemption Price or (B) if Par Call is specified in the applicable Final Terms as applying to one or more Optional Redemption Dates, the specified amount per Calculation Amount stated in the applicable Final Terms together, in each case, with any accrued and unpaid interest up to (but excluding) the redemption date.
The Make Whole Redemption Price will be an amount equal to the higher of:
(A) |
if Spens Amount is specified as applicable in the applicable Final Terms, (x) 100 per cent. of the nominal amount outstanding of the Notes to be redeemed or (y) the nominal amount outstanding of the Notes to be redeemed multiplied by the price, as reported to the Issuer and the Trustee by the Determination Agent, at which the Gross Redemption Yield on such Notes on the Reference Date (assuming for this purpose that the Notes are redeemed on the Maturity Date (or, if a Par Redemption Date is specified in the applicable Final Terms, on the Par Redemption Date)) is equal to the Gross Redemption Yield (determined by reference to the middle market price) at the Quotation Time on the Reference Date of the Reference Bond, plus the Redemption Margin; or |
(B) |
if Make Whole Redemption Amount is specified as applicable in the applicable Final Terms, (x) 100 per cent. of the nominal amount outstanding of the Notes to be redeemed and (y) the sum of the present values of (i) the nominal amount outstanding of the Notes to be redeemed, (ii) the Remaining Term Interest on such Notes (exclusive of interest accrued to the date of redemption) and (iii) if Sustainability-Linked Trigger Event (Premium) is specified as applicable in the applicable Final Terms and one or more relevant Sustainability-Linked Trigger Events has or have occurred, the relevant Sustainability-Linked Premium Amount(s). Such present values shall be calculated by discounting such amounts to the date of redemption on an annual basis (assuming a 360-day year consisting of twelve 30-day months or, in the case of an incomplete month, the number of days elapsed) at the Reference Bond Rate, plus the Redemption Margin, |
all as determined by the Determination Agent.
In the case of a partial redemption of Notes, the Notes to be redeemed (“Redeemed Notes”) will be selected individually by lot, in the case of Redeemed Notes represented by definitive Notes, not more than 30 days prior to the date fixed for redemption (such date of selection being hereinafter called the “Selection Date”). In the case of Redeemed Notes represented by definitive Notes, a list of the serial numbers of such Redeemed Notes will be published in accordance with Condition 14 not less than 10 days prior to the date fixed for redemption.
In these Terms and Conditions:
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“DA Selected Bond” means a government security or securities selected by the Determination Agent as having an actual or interpolated maturity comparable with the remaining term of the Notes (assuming, if a Par Redemption Date is specified in the applicable Final Terms, redemption on such Par Redemption Date), that would be utilised, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities denominated in the Specified Currency and of a comparable maturity to the remaining term of the Notes;
“Determination Agent” means an investment bank or financial institution of international standing selected by the Issuer after consultation with the Trustee;
“Gross Redemption Yield” means, with respect to a security, the gross redemption yield on such security, expressed as a percentage and calculated by the Determination Agent on the basis set out by the United Kingdom Debt Management Office in the paper “Formulae for Calculating Gilt Prices from Yields”, page 4, Section One: Price/Yield Formulae “Conventional Gilts”; “Double dated and Undated Gilts with Assumed (or Actual) Redemption on a Quasi-Coupon Date” (published 8 June 1998, as amended or updated from time to time) on a semi-annual compounding basis (converted to an annualised yield and rounded up (if necessary) to four decimal places);
“Par Redemption Date” shall be as set out in the applicable Final Terms;
“Quotation Time” shall be as set out in the applicable Final Terms;
“Redemption Margin” shall be as set out in the applicable Final Terms;
“Reference Bond” shall be as set out in the applicable Final Terms or the DA Selected Bond;
“Reference Bond Price” means, with respect to any date of redemption, (a) the arithmetic average of the Reference Government Bond Dealer Quotations for such date of redemption, after excluding the highest and lowest such Reference Government Bond Dealer Quotations, or (b) if the Determination Agent obtains fewer than four such Reference Government Bond Dealer Quotations, the arithmetic average of all such quotations;
“Reference Bond Rate” means, with respect to any date of redemption, the rate per annum equal to the annual or semi-annual yield (as the case may be) to maturity or interpolated yield to maturity (on the relevant day count basis) of the Reference Bond, assuming a price for the Reference Bond (expressed as a percentage of its nominal amount) equal to the Reference Bond Price for such date of redemption;
“Reference Date” will be set out in the relevant notice of redemption;
“Reference Government Bond Dealer” means each of five banks selected by the Issuer, or their affiliates, which are (A) primary government securities dealers, and their respective successors, or (B) market makers in pricing corporate bond issues;
“Reference Government Bond Dealer Quotations” means, with respect to each Reference Government Bond Dealer and any date of redemption, the arithmetic average, as determined by the Determination Agent, of the bid and offered prices for the Reference Bond (expressed in each case as a percentage of its nominal amount) at the Quotation Time on the Reference Date quoted in writing to the Determination Agent by such Reference Government Bond Dealer; and
“Remaining Term Interest” means, with respect to any Note, the aggregate amount of scheduled payment(s) of interest on such Note for the remaining term of such Note (or, if a Par Redemption Date is specified in the applicable Final Terms, to the Par Redemption Date) determined on the basis of the rate of interest applicable to such Note from and including the date on which such Note is to be redeemed by the Issuer pursuant to this Condition 7(c).
(d)Redemption following a Change of Control
If Change of Control Put Option is specified in the applicable Final Terms and, at any time while any of the Notes remain outstanding, a Change of Control Put Event (as defined below) occurs, then the holder of each such Note will have the option (a “Change of Control Put Option”) (unless prior to the giving of the relevant Change of Control Put Event Notice (as defined below) the Issuer has given notice of redemption under Conditions 7(b) or 7(c) above) to require the Issuer to redeem or, at the Issuer’s option, purchase (or procure the purchase of) that Note on the date which is seven days after the expiration of the Put Period (as defined below) (such date or such other date as may be specified in the applicable Final Terms, the “Put Date”) at the Optional Redemption Amount specified in the applicable Final Terms together with (or, w here purchased, together with an amount equal to) interest (if any) accrued to (but excluding) the Put Date.
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A “Change of Control Put Event” will be deemed to occur if:
(i) |
any person or any persons acting in concert (as defined in the United Kingdom’s City Code on Takeovers and Mergers), other than a holding company (as defined in Section 1159 of the Companies Act 2006 as amended) w hose shareholders are or are to be substantially similar to the pre-existing shareholders of the Issuer, shall become interested (within the meaning of Part 22 of the Companies Act 2006 as amended) in (A) more than 50 per cent. of the issued or allotted ordinary share capital of the Issuer or (B) shares in the capital of the Issuer carrying more than 50 per cent. of the voting rights normally exercisable at a general meeting of the Issuer (each such event, a “Change of Control”); provided that, no Change of Control shall be deemed to occur if the event which would otherwise have constituted a Change of Control occurs or is carried out for the purposes of a reorganisation on terms previously approved by the Trustee in writing or by an Extraordinary Resolution; and |
(ii)the long-term debt of the Issuer has been assigned:
(A) |
an investment grade credit rating (Baa3/BBB-, or their respective equivalents, or better) (an “Investment Grade Rating”), by any Rating Agency at the invitation of the Issuer; or |
(B) |
w here there is no rating from any Rating Agency assigned at the invitation of the Issuer, an lnvestment Grade Rating by any Rating Agency of its own volition, |
and;
(x) |
such rating is, within the Change of Control Period, either downgraded to a non-investment grade credit rating (Ba1/BB+, or their respective equivalents, or worse) (a “Non-Investment Grade Rating”) or withdrawn and is not, within the Change of Control Period, subsequently (in the case of a downgrade) upgraded or (in the case of a withdrawal) reinstated to an Investment Grade Rating by such Rating Agency; and |
(y) |
there remains no other Investment Grade Rating of the long-term debt of the Issuer from any other Rating Agency; and |
(iii) |
in making any decision to downgrade or withdraw an Investment Grade Rating pursuant to paragraph (ii) above, the relevant Rating Agency announces publicly or confirms in writing to the Issuer or the Trustee that such decision(s) resulted, in whole or in part, from the occurrence of the relevant Change of Control. |
Further, if at the time of the occurrence of the relevant Change of Control the long-term debt of the Issuer is not assigned an Investment Grade Rating by any Rating Agency, a Change of Control Put Event will be deemed to occur upon the occurrence of a Change of Control alone.
Promptly upon the Issuer becoming aware that a Change of Control Put Event has occurred the Issuer shall, and at any time upon the Trustee becoming similarly so aw are the Trustee may, and if so requested by the holders of at least one-quarter in nominal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution of the Noteholders, shall (subject in each case to the Trustee being indemnified and/or secured and/or prefunded to its satisfaction) give notice (a “Change of Control Put Event Notice”) to the Noteholders in accordance with Condition 14 specifying the nature of the Change of Control Put Event and the procedure for exercising the Change of Control Put Option.
To exercise the Change of Control Put Option, the holder of the Note must (in the case of Bearer Notes) deposit such Note with any Paying Agent or (in the case of Registered Notes) deposit the Certificate representing such Note(s) with the Registrar or any Transfer Agent at its specified office, in each case at any time during normal business hours of such Paying Agent, Registrar or Transfer Agent, as the case may be, falling within the period (the “Put Period”) of 30 days after a Change of Control Put Event Notice is given or such other date as may be specified in the applicable Final Terms, accompanied by a duly signed and completed notice of exercise in the form (for the time being current) obtainable from the specified office of any Paying Agent, Registrar or Transfer Agent, as the case may be (a “Change of Control Put Notice”). No Note or Certificate so deposited and option so exercised may be withdrawn (except as provided in the Agency Agreement) without the prior consent of the Issuer. The Issuer shall redeem or purchase (or procure the purchase of) the relevant Notes on the Put Date unless previously redeemed (or purchased) and cancelled.
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If 80 per cent. or more in nominal amount of the Notes then outstanding have been redeemed or purchased pursuant to this Condition 7(d), the Issuer may, on giving not less than 10 nor more than 60 days’ notice to the Noteholders (such notice being given within 30 days after the Put Date), redeem or purchase (or procure the purchase of), at its option, all but not some only of the remaining outstanding Notes at their Optional Redemption Amount, together with interest (if any) accrued to (but excluding) the date fixed for such redemption or purchase.
If the rating designations employed by either Moody’s or S&P are changed from those which are described in paragraph (ii) of the definition of “Change of Control Put Event” above, or if a rating is procured from a Substitute Rating Agency, the Issuer shall determine, with the agreement of the Trustee, the rating designations of Moody’s or S&P or such Substitute Rating Agency (as appropriate) as are most equivalent to the prior rating designations of Moody’s or S&P and the definition of “Change of Control Put Event” shall be construed accordingly.
The Trustee is under no obligation to ascertain whether a Change of Control Put Event or Change of Control or any event which could lead to the occurrence of or could constitute a Change of Control Put Event or Change of Control has occurred, and, until it shall have actual know ledge or notice pursuant to the Trust Deed to the contrary, the Trustee may assume that no Change of Control Put Event or Change of Control or other such event has occurred.
In these Terms and Conditions:
“Change of Control Period” means the period commencing upon a Change of Control and ending 90 days after the Change of Control (or such longer period for which the Notes are under consideration (such consideration having been announced publicly within the period ending 90 days after the Change of Control) for rating review, such period not to exceed 60 days after the public announcement of such consideration); and
“Rating Agency” means Moody’s Investors Service Limited (“Moody’s”) or S&P Global Ratings Europe Limited (“S&P”) or any of their respective affiliates or successors or any rating agency (a “Substitute Rating Agency”) substituted for any of them by the Issuer from time to time with the prior written approval of the Trustee.
(e)Redemption at the option of the Noteholders (Investor Put)
If Investor Put is specified in the applicable Final Terms, upon the holder of any Note giving to the Issuer in accordance with Condition 14 notice within the Investor Put Period the Issuer will, upon the expiry of such notice, redeem, subject to, and in accordance with, the terms specified in the applicable Final Terms, in whole (but not in part), such Note on the Optional Redemption Date and at the Optional Redemption Amount together, if appropriate, with interest accrued to (but excluding) the Optional Redemption Date.
To exercise this option the holder must deposit (in the case of Bearer Notes) such Note (together with all unmatured Coupons) with any Paying Agent or (in the case of Registered Notes) the Certificate representing such Note(s) with the Registrar or any Transfer Agent at its specified office, accompanied by a duly completed and signed notice of exercise (a “Put Notice” in the form (for the time being current) obtainable from any specified office of any Paying Agent, the Registrar or any Transfer Agent (as applicable) within the notice period and in which the holder must specify a bank account (or, if payment is required to be made by cheque, an address) to which payment is to be made under this Condition.
(f)Clean-Up redemption at the option of the Issuer
If Clean-Up Call is specified in the applicable Final Terms and if the Clean-Up Call Threshold Percentage (as specified in the applicable Final Terms) or more of the aggregate nominal amount of the Notes originally issued (and, for these purposes, any further securities issued pursuant to Condition 17 will be deemed to have been originally issued) have been redeemed and/or purchased (except, if applicable, for the Notes redeemed at the Make Whole Redemption Price), then the Issuer may, at its option (without any requirement for the consent or approval of the Noteholders), and having given not less than 10 and no more than 60 days’ notice to the Trustee and the Issuing and Principal Paying Agent and, in accordance with Condition 14, the Noteholders (which notice shall be irrevocable and shall specify the date fixed for redemption), redeem all but not some only of the Notes on, or at any time after, the Clean-Up Call Optional Redemption Date specified in the applicable Final Terms. Any such redemption of Notes shall be at their Optional Redemption Amount, together with interest (if any) accrued to (but excluding) the date fixed for such redemption.
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(g)Early Redemption Amounts
For the purpose of paragraph (b) above and Condition 10, each Note will be redeemed at the Early Redemption Amount calculated as follows:
(i) |
in the case of a Note (other than a Zero Coupon Note), at the amount specified in the applicable Final Terms or, if no such amount or manner is so specified in the applicable Final Terms, at its nominal amount; or |
(ii) |
in the case of a Zero Coupon Note, at an amount (the “Amortised Face Amount”) calculated in accordance with the following formula: |
Early Redemption Amount = RP x (1+AY)Y
w here:
“RP”means the Reference Price;
“AY”means the Accrual Yield expressed as a decimal; and
“y” |
is the Day Count Fraction specified in the applicable Final Terms which will be either (i) 30/360 (in which case the numerator will be equal to the number of days (calculated on the basis of a 360-day year consisting of 12 months of 30 days each) from (and including) the Issue Date of the first Tranche of the Notes to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and repayable and the denominator will be 360) or (ii) Actual/360 (in which case the numerator will be equal to the actual number of days from (and including) the Issue Date of the first Tranche of the Notes to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and repayable and the denominator will be 360) or (iii) Actual/365 (in which case the numerator will be equal to the actual number of days from (and including) the Issue Date of the first Tranche of the Notes to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and repayable and the denominator will be 365). |
(h)Purchases
The Issuer or any Subsidiary of the Issuer may at any time purchase Notes (provided that, in the case of Bearer Notes, all unmatured Coupons and Talons appertaining thereto are purchased therewith) at any price in the open market or otherwise.
The Issuer will purchase (or procure the purchase of) any Retained Notes on the Issue Date.
(i)Cancellation
All Notes (other than Retained Notes) which are (a) redeemed or (b) purchased by or on behalf of the Issuer will forthwith be cancelled (together with all Certificates or unmatured Coupons and Talons attached thereto or surrendered therewith at the time of redemption) and accordingly may not be reissued or resold. Any Notes which are purchased by or on behalf of any of the Issuer’s Subsidiaries may, at the option of the purchaser, be held or res old or surrendered to a Paying Agent for cancellation.
The Issuer may cancel (or procure the cancellation of) any Retained Notes held by it or on its behalf at any time.
(j)Late payment on Zero Coupon Notes
If the amount payable in respect of any Zero Coupon Note upon redemption of such Zero Coupon Note pursuant to paragraph (a), (b), (c), (d) or (e) above or upon its becoming due and repayable as provided in Condition 10 is improperly withheld or refused, the amount due and repayable in respect of such Zero Coupon Note shall be the amount calculated as provided in paragraph (f)(ii) above as though the references therein to the date fixed for the redemption or the date upon which such Zero Coupon Note becomes due and payable were replaced by references to the date which is the earlier of:
(i)the date on which all amounts due in respect of such Zero Coupon Note have been paid; and
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(ii) |
five days after the date on which the full amount of the moneys payable in respect of such Zero Coupon Notes has been received by the Issuing and Principal Paying Agent or the Trustee and notice to that effect has been given to the Noteholders in accordance with Condition 14. |
8.Taxation
All payments in respect of the Notes and Coupons by the Issuer will be made without withholding or deduction for any present or future taxes, assessments or other governmental charges (“Taxes”) of the Issuer’s jurisdiction of incorporation (the “Relevant Jurisdiction”) (or any political subdivision or taxing authority thereof or therein), unless the withholding or deduction of the Taxes is required by law. In that event, the Issuer will pay such additional amounts (“Additional Amounts”) as may be necessary in order that the net amount paid to each holder of any Note or Coupon who, with respect to any such Tax is not resident in the Relevant Jurisdiction, after such withholding or deduction shall be not less than the respective amount to which such holder would have been entitled in respect of such Note or Coupon, as the case may be, in the absence of the withholding or deduction; provided however that the Issuer shall not be required to pay any Additional Amounts (i) for or on account of any such Tax imposed by the United States (or any political subdivision or taxing authority thereof or therein) or (ii) for or on account of:
(a) |
any Tax which would not have been imposed but for (i) the existence of any present or former connection between a holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, such holder, if such holder is an estate, trust, partnership or corporation) and the Relevant Jurisdiction or any political subdivision or territory or possession thereof or area subject to its jurisdiction, including, without limitation, such holder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a citizen or resident thereof or being or having been present or engaged in trade or business therein or having or having had a permanent establishment therein or (ii) the presentation of such Note or Coupon (x) for payment on a date more than 30 days after the Relevant Date (as defined below) or (y) in the Relevant Jurisdiction; |
(b) |
any estate, inheritance, gift, sale, transfer, personal property or similar tax, assessment or other governmental charge; |
(c) |
any Tax which is payable otherwise than by withholding or deduction from payments of (or in respect of) principal of, or any interest on, such Note or Coupon; |
(d) |
any Tax that is imposed or withheld by reason of the failure by the holder or any beneficial owner of such Note or Coupon to comply with a request of the Issuer given to the holder in accordance with Condition 14 (i) to provide information concerning the nationality, residence or identity of the holder or any beneficial owner or (ii) to make any declaration or other similar claim or satisfy any information or reporting requirements, which, in the case of (i) or (ii), is required or imposed by a statute, treaty, regulation or administrative practice of the Relevant Jurisdiction as a precondition to exemption from all or part of such Tax; or |
(e) |
any combination of items (a), (b), (c) and (d) above, |
nor shall the Issuer be required to pay any Additional Amounts with respect to any payment of the principal of, or any interest on, any Note or Coupon to any holder who is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent such payment would be required by the laws of the Relevant Jurisdiction (or any political subdivision or taxing authority thereof or therein) to be included in the income for tax purposes of a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner which would not have been entitled to such Additional Amounts had it been the holder of such Note or Coupon.
Notwithstanding any other provision of the Terms and Conditions, any amounts to be paid on the Notes by or on behalf of the Issuer, will be paid net of any deduction or withholding imposed or required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), or otherwise imposed pursuant to Sections 1471 through 1474 of the Code (or any regulations thereunder or official interpretations thereof) or an intergovernmental agreement between the United States and another jurisdiction facilitating the implementation thereof (or any fiscal or regulatory legislation, rules or practices implementing such an intergovernmental agreement) (and any such withholding or deduction, a “FATCA Withholding”). Neither the Issuer nor any other person will be required to pay any Additional Amounts in respect of FATCA Withholding.
As used herein:
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“Relevant Date” means the date on which such payment first becomes due, except that, if the full amount of the moneys payable has not been duly received by the Issuing and Principal Paying Agent or the Trustee on or prior to such due date, it means the date on which, the full amount of such moneys having been so received, notice to that effect is duly given to the Noteholders in accordance with Condition 14; and
“United States” means the United States of America (including the States and the District of Columbia) and its possessions (including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands).
9.Prescription
The Notes and Coupons will become void unless a claim for payment is made within a period of 10 years (in the c as e of principal) and five years (in the case of interest) after the Relevant Date (as defined in Condition 8) therefor (subject to the provisions of Condition 6(b)).
There shall not be included in any Coupon sheet issued on exchange of a Talon any Coupon the claim for payment in respect of which would be void pursuant to this Condition or Condition 6(b) or any Talon which would be void pursuant to Condition 6(b).
10.Events of Default and Enforcement
(A)Events of Default
The Trustee in its sole and absolute discretion may, and if so requested in writing by the holders of at least one-quarter in nominal amount of the Notes (excluding Retained Notes) then outstanding or if so directed by an Extraordinary Resolution of the Noteholders shall (subject in each case to being indemnified and/or secured and/or prefunded to its satisfaction), give notice to the Issuer that the Notes are, and they shall accordingly forthwith become, immediately due and repayable at their Early Redemption Amount as referred to in Condition 7(g) together (if applicable) with accrued interest as provided in the Trust Deed, in any of the following events (each such event, together w here applicable with the certification by the Trustee as described below, an “Event of Default”):
(a) |
if default is made in the payment of any principal or any interest due in respect of the Notes or any of them and the default continues for a period of 14 days in the case of a payment of principal or 21 days in the case of a payment of interest; or |
(b) |
if the Issuer fails to perform or observe any of its other obligations under these Terms and Conditions or the Trust Deed and (except in any case w here the Trustee considers the failure to be incapable of remedy when no such continuation or notice as is hereinafter mentioned will be required) the failure continues for the period of 30 days (or such longer period as the Trustee may permit) next following the service by the Trustee on the Issuer of notice requiring the same to be remedied; or |
(c) |
if any Indebtedness for Borrowed Money of the Issuer becomes due and repayable prematurely by reason of an event of default (however described) or the Issuer fails to make any payment in respect of any Indebtedness for Borrowed Money on the due date for payment (as extended by any originally applicable grace period) or any security given by the Issuer for any Indebtedness for Borrowed Money becomes enforceable by reason of default in relation thereto and steps are taken to enforce such security or if defauIt is made by the Issuer in making any payment due under any guarantee and/or indemnity (at the expiry of any originally applicable grace period) given by it in relation to any Indebtedness for Borrowed Money of any other person, provided that no event shall constitute an Event of Default unless the Indebtedness for Borrowed Money or other relative liability either alone or when aggregated with other Indebtedness for Borrowed Money and/or other liabilities relative to all (if any) other events which shall have occurred equals or exceeds £150,000,000 (or its equivalent in any other currency); or |
(d) |
if any order is made by any competent court or resolution passed for the winding up or dissolution of the Issuer, save for the purposes of a reorganisation on terms approved in writing by the Trustee; or |
(e) |
if the Issuer stops payment of, or is unable to, or admits inability to, pay, its debts (or any class of its debts) as they fall due, or is deemed unable to pay its debts (within the meaning of section 123(1)(e) or (2) of the Insolvency Act 1986), or is adjudicated or found bankrupt or insolvent or shall enter into any composition or |
94
other similar arrangements with its creditors under section 1 of the Insolvency Act 1986; or
(f) |
if (i) an administrative or other receiver, manager, administrator or other similar official is appointed in relation to the Issuer or, as the case may be, in relation to the w hole or a substantial part of the undertaking or assets of it, or an encumbrancer takes possession of the w hole or a substantial part of the undertaking or assets of it, or a distress, execution, attachment, sequestration or other process is levied, enforced upon, sued out or put in force against the w hole or a substantial part of the undertaking or assets of it and (ii) in any case (other than the appointment of an administrator) is not discharged, removed or paid within 45 days; |
PROVIDED, in the case of any event described above other than those described in paragraphs (a) and (d) above, the Trustee shall have certified in writing to the Issuer that the event is, in its opinion, materially prejudicial to the interests of the Noteholders.
For the purposes of this Condition, “Indebtedness for Borrowed Money” means any present or future indebtedness (whether being principal, premium, interest or other amounts) for or in respect of (i) money borrowed, (ii) liabilities under or in respect of any acceptance or acceptance credit or (iii) any bonds, notes, debentures, debenture stock or loan stock.
(B)Enforcement
The Trustee may at any time, at its discretion and without notice, take such proceedings against the Issuer as it may think fit to enforce the provisions of the Trust Deed, the Notes and the Coupons, but it shall not be bound to take any such proceedings or any other action in relation to the Trust Deed, the Notes or the Coupons unless (i) it shall have been so directed by an Extraordinary Resolution of the relevant Noteholders or so requested in writing by the holders of at least one-quarter in nominal amount of the relevant Notes then outstanding (excluding any Retained Notes), and (ii) it shall have been indemnified and/or secured and/or pre-funded to its satisfaction.
Save as otherwise provided herein, no Noteholder or Couponholder shall be entitled to proceed directly against the Issuer unless the Trustee, having become bound so to proceed, fails or is unable so to do within 60 days and the failure or inability shall be continuing.
11.Replacement of Notes, Certificates, Coupons and Talons
Should any Note, Certificate, Coupon or Talon be lost, stolen, mutilated, defaced or destroyed, it may be replaced at the specified office of the Issuing and Principal Paying Agent (in the case of Bearer Notes, Coupons or Talons) and of the Registrar (in the case of Certificates) upon payment by the claimant of such costs and expenses as may be incurred in connection therewith and on such terms as to evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Notes, Certificates, Coupons or Talons must be surrendered before replacements will be issued.
12.Agents
The names of the initial Issuing and Principal Paying Agent, the other Paying Agents, the Registrar and the Transfer Agents and their initial specified offices are set out below.
The Issuer is entitled, with the prior written approval of the Trustee, to vary or terminate the appointment of the Issuing and Principal Paying Agent, any other Paying Agent, the Registrar or any Transfer Agent and/or appoint additional or other Paying Agents or Transfer Agents or another Registrar and/or approve any change in the specified office through which any such agent acts, provided that:
(i) |
there will at all times be an Issuing and Principal Paying Agent; |
(ii) |
there will at all times be a Registrar and a Transfer Agent in relation to Registered Notes; |
(iii) |
so long as the Notes are listed on any stock exchange, there will at all times be a Paying Agent with a specified office in such place as may be required by the rules and regulations of the relevant stock exchange or other relevant authority; and |
(iv) |
there will at all times be a Paying Agent with a specified office in a city approved by the Trustee outside the |
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Relevant Jurisdiction.
In addition, the Issuer shall forthwith appoint a Paying Agent having a specified office in New York City in the circumstances described in Condition 6(d).
Any variation, termination, appointment or change shall only take effect (other than in the case of insolvency, when it shall be of immediate effect) after not less than 30 nor more than 60 days’ prior notice thereof shall have been given to the Noteholders in accordance with Condition 14.
In acting under the Agency Agreement, the Issuing and Principal Paying Agent, the Paying Agents, the Registrar and the Transfer Agents act solely as agents of the Issuer and, in certain limited circumstances, of the Trustee and do not assume any obligation to, or relationship of agency or trust with, any Noteholders or Couponholders. The Agency Agreement contains provisions permitting any entity into which any Paying Agent or Registrar or Transfer Agent is merged or converted or with which it is consolidated or to which it transfers all or substantially all of its assets to become the successor paying agent, registrar or transfer agent, as the case may be.
13.Exchange of Talons
On and after the Interest Payment Date on which the final Coupon comprised in any Coupon sheet matures, the Talon (if any) forming part of such Coupon sheet may be surrendered at the specified office of the Issuing and Principal Paying Agent or any other Paying Agent in exchange for a further Coupon sheet including (if such further Coupon sheet does not include Coupons to (and including) the final date for the payment of interest due in respect of the Note to which it appertains) a further Talon, subject to the provisions of Condition 9.
14.Notices
Notices to the holders of Registered Notes shall be mailed to them at their respective addresses in the Register and deemed to have been given on the fourth weekday (being a day other than a Saturday, Sunday or bank holiday) after the date of mailing.
Notices to the holders of Bearer Notes will be deemed to be validly given if published in a leading English language daily newspaper of general circulation in the United Kingdom. It is expected that such publication will be made in the Financial Times. The Issuer shall also ensure that notices are duly published in a manner which complies with the rules and regulations of any stock exchange or any other relevant authority on which the Notes are for the time being listed. Any such notice will be deemed to have been given on the date of the first publication.
Notices to be given by any Noteholder shall be in writing and given by lodging the same, together (in the case of any Note in definitive form) with the relative Note or Notes, with the Issuing and Principal Paying Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered Notes). Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the holders of Bearer Notes in accordance with this Condition.
15.Available Information
This Condition 15 only applies to Sustainability-Linked Notes.
In respect of each financial year of the Issuer, beginning with the financial year in which the Issue Date of the first Tranche of the Notes falls, the Issuer will publish on its website, as applicable: (i) the Customer GHG Savings Amount, the Female Management and Senior Leadership Amount, the M-Pesa Customers Amount, the Vodafone GHG Scope 1 and Scope 2 Emissions Amount, the Vodafone GHG Scope 3 Emissions Amount, the Vodafone GHG Scope 1 and Scope 2 Emissions Baseline and/or the Vodafone GHG Scope 3 Emissions Baseline for the relevant financial year, as indicated in the ESG addendum officially publish by the Issuer in relation to its annual report (the “ESG Addendum”); and (ii) an independent limited assurance report or reports issued by the relevant External Verifier(s) (the “Assurance Report”) in respect of, among others, where applicable, the Customer GHG Savings Amount, the Female Management and Senior Leadership Amount, the M-Pesa Customers Amount, the Vodafone GHG Scope 1 and Scope 2 Emissions Amount and the Vodafone GHG Scope 3 Emissions Amount which may form part of the ESG Addendum (the publication of such ESG Addendum and Assurance Report on or before the Sustainability-Linked Trigger Event Notification Deadline, together the “Reporting Condition”). The ESG Addendum and the Assurance Report will be published concurrently with the publication of the independent auditor’s report on the Issuer’s annual report and may form part of such annual report, and will have the same reference date as the relevant independent auditor’s report provided that to the extent the Issuer reasonably determines that additional time is required to complete the ESG Addendum and the Assurance Report, then the ESG Addendum and the Assurance Report may be published as soon as reasonably practicable, but in no event later than the Sustainability-Linked Trigger Event Notification Deadline.
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16.Meeting of Noteholders, Modification, Authorisation, Waiver, Determination and Substitution
(a)Meetings
The Trust Deed contains provisions for convening meetings of the Noteholders (which may be held at a physical location, or via an electronic platform (such as a conference call or videoconference) or by a combination of such methods) to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of any of the provisions of these Terms and Conditions, the Notes, the Coupons or the Trust Deed. Such a meeting may be convened by the Issuer or by Noteholders holding not less than 10 per cent. in nominal amount of the Notes for the time being outstanding. The quorum at any such meeting for passing an Extraordinary Resolution will be one or more persons holding or representing a clear majority in nominal amount of the Notes for the time being outstanding, or at any adjourned meeting one or more persons being or representing Noteholders whatever the nominal amount of the Notes so held or represented. The Trust Deed provides that (i) a resolution passed at a meeting duly convened and held in accordance with the Trust Deed by a majority consisting of not less than three-fourths of the votes cast on such resolution, (ii) a resolution in writing signed by or on behalf of the holders of not less than three-fourths in nominal amount of the Notes for the time being outstanding or (iii) consent given by way of electronic consents through the relevant clearing system(s) (in a form satisfactory to the Trustee) by or on behalf of the holders of not less than three-fourths in nominal amount of the Notes for the time being outstanding, shall, in each case, be effective as an Extraordinary Resolution of the Noteholders. An Extraordinary Resolution passed at any meeting of the Noteholders shall be binding on all the Noteholders, whether or not they are present at the meeting and whether or not they voted on (or voted in favour of) the relevant Extraordinary Resolution, and on all and Couponholders.
(b)Modification, Authorisation, Waiver, Determination, Substitution etc.
The Trustee may agree, without the consent of the Noteholders or the Couponholders, to any modification of, or to the waiver or authorisation of any breach or proposed breach of, any of these Terms and Conditions or any of the provisions of the Trust Deed or determine, without any such consent as aforesaid, that any Event of Default or Potential Event of Default (as defined in the Trust Deed) shall not be treated as such, which in any such case is not, in the opinion of the Trustee, materially prejudicial to the interests of the Noteholders or may agree, without any such consent as aforesaid, to any modification which is of a formal, minor or technical nature or to correct a manifest error. In addition, the Trustee shall be obliged to concur with the Issuer in using its reasonable endeavours to effect any Benchmark Amendments or Benchmark Replacement Conforming Changes in the circumstances and as otherwise set out in Condition 4(b)(ii)(H) without the consent of the Noteholders or the Couponholders.
In connection with the exercise by it of any of its trusts, powers, authorities and discretions (including, without limitation, any modification, waiver, authorisation, determination or substitution), the Trustee shall have regard to the general interests of the Noteholders as a class but shall not have regard to any interests arising from circumstances particular to individual Noteholders or Couponholders (whatever their number) and, in particular but without limitation, shall not have regard to the consequences of any such exercise for individual Noteholders or Couponholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Noteholder or Couponholder be entitled to claim, from the Issuer, the Trustee or any other person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders or Couponholders except to the extent already provided for in Condition 8 and/or any undertaking given in addition to, or in substitution for, Condition 8 pursuant to the Trust Deed.
The Trustee may, without the consent of the Noteholders or Couponholders, agree with the Issuer to the substitution in place of the Issuer (or of any previous substitute under this Condition) as principal debtor in respect of the Notes and the Coupons and under the Trust Deed of either (i) a Successor in Business (as defined in the Trust Deed) to the Issuer or (ii) a Holding Company of the Issuer or (iii) a Subsidiary of the Issuer, in each case subject to the Trustee being satisfied that the interests of the Noteholders are not materially prejudiced thereby provided that in determining such material prejudice the Trustee shall not take into account any prejudice to the interests of the Noteholders as a result of such substituted company not being required pursuant to proviso (i) to Condition 8 to pay any Additional Amounts for or on account of any Taxes imposed by the United States of America or any political subdivision or taxing authority thereof or therein and certain other conditions set out in the Trust Deed being complied with.
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The Trust Deed contains provisions permitting the Issuer to consolidate with or merge into any other person or convey, transfer or lease its properties and assets substantially as an entirety to any person provided that (i) in the case of a consolidation or merger (except w here the Issuer is the continuing entity) such person agrees to be bound by the terms of the Notes, the Coupons and the Trust Deed as principal debtor in place of the Issuer; (ii) in the case of a conveyance, transfer or lease, such person guarantees the obligations of the Issuer under the Notes, the Coupons and the Trust Deed and (iii) certain other conditions set out in the Trust Deed are complied with.
Any such modification, waiver, authorisation, determination or substitution shall be binding on the Noteholders and the Couponholders and, unless the Trustee otherwise agrees, any such modification or substitution shall be notified to the Noteholders in accordance with Condition 14 as soon as practicable thereafter.
For the purposes of this Condition “Holding Company” means, in relation to a person, an entity of which that person is a Subsidiary.
17.Further Issues
The Issuer shall be at liberty from time to time without the consent of the Noteholders or the Couponholders to create and issue further notes having terms and conditions the same as the Notes or the same in all respects save for the amount and date of the first payment of interest thereon and so that the same shall be consolidated and forma single Series with the outstanding Notes. The Trust Deed contains provisions for convening a single meeting of the Noteholders and the holders of notes of other Series in certain circumstances where the Trustee so decides.
18.Indemnification of the Trustee and its Contracting with the Issuer
The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including provisions relieving it from taking action unless indemnified to its satisfaction.
The Trust Deed also contains provisions pursuant to which the Trustee is entitled, inter alia, (i) to enter into business transactions with the Issuer and/or any of its Subsidiaries and to act as trustee for the holders of any other securities issued or guaranteed by, or relating to, the Issuer and/or any of its Subsidiaries, (ii) to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such transactions or, as the case may be, any such trusteeship without regard to the interests of, or consequences for, the Noteholders or Couponholders, and (iii) to retain and not be liable to account for any profit made or any other amount or benefit received thereby or in connection therewith.
19.Third Party Rights
No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of the Notes, but this does not affect any right or remedy of any person which exists or is available apart from that Act.
20.Governing Law
The Trust Deed, the Notes and the Coupons, and any non-contractual obligations arising out of or in connection w it h any of them, are governed by and shall be construed in accordance with, English law. The Agency Agreement is governed by and shall be construed in accordance with English law.
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ISSUING AND PRINCIPAL PAYING AGENT
HSBC Bank plc
8 Canada Square
London E14 5HQ
OTHER PAYING AGENTS
Credit Suisse AG |
|
Banque Internationale à Luxembourg, |
Uetlibergstrasse 231 |
|
société anonyme |
8070 Zurich |
|
69 route d’Esch |
|
|
L-2953 Luxembourg |
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PART 2
TERMS AND CONDITIONS OF THE SUBORDINATED NOTES
Notes issued by Vodafone Group Plc (formerly called Vodafone Air Touch Plc) (the “Issuer) are constituted by a Trust Deed dated 16 July 1999 (such Trust Deed as modified and/or supplemented and/or restated from time to time, the “Trust Deed”) made between the Issuer and The Law Debenture Trust Corporation p.l.c. (the “Trustee”, which expression shall include any successor as trustee).
The Notes and the Coupons (as defined below) have the benefit of an amended and restated Agency Agreement dated 22 September 2O22 (such Agency Agreement as amended and/or supplemented and/or restated from time to time, the “Agency Agreement”) made between the Issuer, HSBC Bank plc as issuing and principal paying agent and agent bank (the “Issuing and Principal Paying Agent”, which expression shall include any successor issuing and principal paying agent), the other paying agents named therein (together with the Issuing and Principal Paying Agent, the “Paying Agents”, which expression shall include any additional or successor paying agents), HSBC Bank USA, National Association as exchange agent (the “Exchange Agent”, which expression shall include any successor exchange agent) and HSBC Bank USA, National Association as registrar (the “Registrar”, which expression shall include any successor registrar) and a transfer agent and the other transfer agents named therein (together with the Registrar, the “Transfer Agents”, which expression shall include any additional or successor transfer agent) and the Trustee.
The Noteholders (as defined below) and the holders (the “Couponholders”) of the interest coupons (the “Coupons”) relating to interest bearing Notes in bearer form and, w here applicable in the case of such Notes, talons for further Coupons (the “Talons”) are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and are deemed to have notice of, and are entitled to the benefit of, those provisions applicable to them of the Agency Agreement and the applicable Final Terms. Any reference herein to “Coupons” or “coupons” shall, unless the context otherwise requires, be deemed to include a reference to “Talons” or “talons”. References in these Terms and Conditions to “Exempt Notes” are to Notes for which no prospectus is required to be published under the Financial Services and Markets Act 2OOO.
If this Note is not an Exempt Note, the final terms for this Note (or the relevant provisions thereof) are attached to or endorsed on this Note (the “Final Terms”). Part A of the Final Terms completes these Terms and Conditions for the purposes of this Note. References to the “applicable Final Terms” are to Part A of the Final Terms (or the relevant provisions thereof). If this Note is an Exempt Note, the pricing supplement for this Note (or the relevant provisions thereof) are attached to or endorsed on this Note (the “Pricing Supplement”). Part A of the Pricing Supplement completes these Terms and Conditions for the purposes of this Note and may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with these Terms and Conditions, replace or modify these Terms and Conditions for the purposes of this Note. In the case of Exempt Notes, any subsequent reference in these Terms and Conditions to “Final Terms” shall be deemed to include reference to “Pricing Supplement” so far as the context admits.
The Trustee acts for the benefit of the Noteholders and the Couponholders (which expression shall, unless the context otherwise requires, include the holders of the Talons), in accordance with the provisions of the Trust Deed.
As used herein, “Tranche” means Notes which are identical in all respects (including as to listing) and “Series” means a Tranche of Notes together with any further Tranche or Tranches of Notes which are (i) expressed to be consolidated and form a single series and (ii) identical in all respects (including as to listing) except for their respective Issue Dates, Interest Commencement Dates and/or Issue Prices.
Copies of the Trust Deed and the Agency Agreement are available for inspection during normal business hours at the registered office for the time being of the Issuer (being Vodafone House, The Connection, New bury, Berkshire RG14 2FN) and of the Trustee (being at Eighth Floor, 100 Bishopsgate, London EC2N 4AG, England) and at the specified office of each of the Paying Agents. In addition, the applicable Final Terms will be available for viewing on the website of the Regulatory News Service operated by the London Stock Exchange plc at w ww.londonstockexchange.com/exchange/news/market-news /market- news-home.html or otherwise published in accordance with Regulation (EU) 2O17/1129 as it forms part of domestic law in the United Kingdom by virtue of the European Union Withdrawal Act 2O18. If this Note is an Exempt Note, the applicable Pricing Supplement will only be obtainable by a Noteholder holding one or more Notes and such Noteholder must produce evidence satisfactory to the Paying Agent for the time being in London as to the identity of such holder. The statements in these Terms and Conditions include summaries of, and are subject to, the detailed provisions of the Trust Deed. Words and expressions defined in the Trust Deed and/or the Agency Agreement or used in the applicable Final Terms shall have the same meanings w here used in these Terms and Conditions unless the context otherwise requires or unless otherwise stated and provided that, in the event of inconsistency between the Agency Agreement and the Trust Deed, the Trust Deed shall prevail and, in the event of inconsistency between the Agency Agreement or the Trust Deed and the applicable Final Terms, the applicable Final Terms will prevail.
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1.Form, Denomination and Title
The Notes are issued in bearer form (“Bearer Notes”, which expression includes Notes that are specified to be Exchangeable Bearer Notes), in registered form (“Registered Notes”) or in bearer form exchangeable for Registered Notes (“Exchangeable Bearer Notes”) in each case in the Specified Denomination(s) shown hereon.
All Registered Notes shall have the same Specified Denomination. Where Exchangeable Bearer Notes are issued, the Registered Notes for which they are exchangeable shall have the same Specified Denomination as the lowest denomination of Exchangeable Bearer Notes.
The Notes will be Reset Rate Notes.
If this Note is an Exempt Note, this Note may include terms and conditions not contemplated by these Terms and Conditions, in which event the relevant provisions will be included in the applicable Pricing Supplement.
Bearer Notes are serially numbered and are issued with Coupons attached.
Registered Notes are represented by registered certificates (“Certificates”) and, save as provided in Condition 2(c), each Certificate shall represent the entire holding of Registered Notes by the same holder.
Title to the Bearer Notes and Coupons will pass by delivery. Title to the Registered Notes will pass by registration in the register that the Issuer will procure to be kept by the Registrar in accordance with the provisions of the Agency Agreement (the “Register”). The Issuer, any Paying Agent, the Registrar, the Transfer Agents, the Exchange Agent and the Trustee may (to the fullest extent permitted by applicable laws) deem and treat the holder (as defined below) of any Note or Coupon as the absolute owner for all purposes (whether or not the Note or Coupon shall be overdue and not withstanding any notice of ownership or writing on the Note or Coupon (or on the Certificate representing it) or any notice of previous loss or theft of the Note or Coupon (or that of the related Certificate) or of trust or any interest therein) and shall not be required to obtain any proof thereof or as to the identity of such holder and no person shall be liable for so treating the holder.
In these Terms and Conditions, “Note holder” means the bearer of any Bearer Note or the person in whose name a Registered Note is registered (as the case may be), “holder” (in relation to a Note or Coupon) means the bearer of any Bearer Note or Coupon or the person in w hose name a Registered Note is registered (as the case may be) and capitalised terms have the meanings given to them in the applicable Final Terms, the absence of any such meaning indicating that such term is not applicable to the Notes.
If so specified in the applicable Final Terms, some or all of the relevant Tranche of Notes may immediately be purchased by or on behalf of the Issuer on the Issue Date thereof. Such Notes are referred to as “Retained Notes”. Any Retained Notes may (in each case, together with the related Coupons and Talons, if applicable) be purchased by and held by or for the account of the Issuer or any Subsidiary (as defined in the Trust Deed) of it and may be sold or otherwise disposed of in whole or in part by private treaty at any time, and shall cease to be Retained Notes to the extent of and upon such sale or disposal.
Retained Notes shall, pending sale or disposal by or on behalf of the Issuer, carry the same rights and be subject in all respects to the same terms and conditions as the other Notes of the relevant Series, except that Retained Notes will not be treated as outstanding for the purposes of determining quorum or voting at meetings of Noteholders, passing a resolution in writing, the giving of consent by way of electronic consents or of considering the interests of the Noteholders save as otherwise provided in the Trust Deed. Notes which have ceased to be Retained Notes shall carry the same rights and be subject in all respects to the same terms and conditions as the other Notes of the relevant Series.
Retained Notes will be held by a custodian appointed by the Issuer or any Subsidiary of it and specified in the applicable Final Terms (the “Custodian”). At the time of such appointment, the Issuer (or a relevant Subsidiary of it, as the case may be), the Trustee and the Custodian will enter into a custody agreement to specify how the Custodian will hold such Retained Notes on behalf of the Issuer.
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2.Exchanges of Exchangeable Bearer Notes and Transfers of Registered Notes
(a)Exchange of Exchangeable Bearer Notes
Subject as provided in Condition 2(f), Exchangeable Bearer Notes may be exchanged for the same nominal amount of Registered Notes at the request in writing of the relevant Noteholder (in substantially the same form set out in Schedule 4 of the Agency Agreement) and upon surrender of each Exchangeable Bearer Note to be exchanged, together with all unmatured Coupons relating to it, at the specified office of any Transfer Agent; provided, however, that where an Exchangeable Bearer Note is surrendered for exchange after the Record Date (as defined in Condition 6(c)) for any payment of interest, the Coupon in respect of that payment of interest need not be surrendered with it. Registered Notes may not be exchanged for Bearer Notes. Bearer Notes of one Specified Denomination may not be exchanged for Bearer Notes of another Specified Denomination. Bearer Notes that are not Exchangeable Bearer Notes may not be exchanged for Registered Notes.
(b)Transfer of Registered Notes
One or more Registered Notes may be transferred upon the surrender (at the specified office of the Registrar or any Transfer Agent) of the Certificate representing such Registered Notes to be transferred, together with the form of transfer endorsed on such Certificate, (or another form of transfer substantially in the same form and containing the same representations and certifications (if any), unless otherwise agreed by the Issuer), duly completed and executed and any other evidence as the Registrar or Transfer Agent may reasonably require. In the case of a transfer of part only of a holding of Registered Notes represented by one Certificate, a new Certificate shall be issued to the transferee in respect of the part transferred and a further new Certificate in respect of the balance of the holding not transferred shall be issued to the transferor.
(c)Partial Redemption in Respect of Registered Notes
In the case of a partial redemption of a holding of Registered Notes represented by a single Certificate, a new Certificate shall be issued to the holder in respect of the balance of the holding not redeemed. New Certificates s hall only be issued against surrender of the existing Certificates to the Registrar or any Transfer Agent. In the case of a transfer of Registered Notes to a person who is already a holder of Registered Notes, a new Certificate representing the enlarged holding shall only be issued against surrender of the Certificate representing the existing holding.
(d)Delivery of New Certificates
Each new Certificate to be issued pursuant to Conditions 2(a), (b) or (c) above shall only be available for delivery within three business days of receipt of the request for exchange or form of transfer and surrender of the Certificate for exchange. Delivery of the new Certificate(s) shall be made at the specified office of the Transfer Agent or of the Registrar (as the case may be) to whom delivery or surrender of such request for exchange, form of transfer or Certificate shall have been made or, at the option of the holder making such delivery or surrender as aforesaid and as specified in the relevant request for exchange, form of transfer or other in writing, be mailed by uninsured post at the risk of the holder entitled to the new Certificate to such address as may be so specified, unless such holder requests otherwise and pays in advance to the relevant Transfer Agent the costs of such other method of delivery and/or such insurance as it may specify. In this Condition 2(d), “business day” means a day, other than a Saturday or Sunday, on which banks are open for business in the place of the specified office of the relevant Transfer Agent or the Registrar (as the case may be).
(e)Exchange or Transfer Free of Charge
Exchange and transfer of Notes and Certificates on registration, transfer and exercise of an option or partial redemption shall be effected without charge by or on behalf of the Issuer, the Registrar or the Transfer Agents, but upon payment of any tax or other governmental charges that may be imposed in relation to it (or the giving of such indemnity as the Registrar or the relevant Transfer Agent may require).
(f)Closed Periods
No Noteholder may require the transfer of a Registered Note to be registered or an Exchangeable Bearer Note to be exchanged for one or more Registered Note(s) (i) during the period of 15 days prior to any date on which Notes may be called for redemption by the Issuer at its option pursuant to Condition 7(c), (ii) after any such Note has been called for redemption or (iii) during the period of seven days ending on (and including) any Record Date. An Exchangeable Bearer Note called for redemption may, however, be exchanged for one or more Registered Note(s) in respect of which the Certificate is simultaneously surrendered not later than the relevant Record Date.
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3.Status and Subordination of the Notes
(a)Status
The Notes and any relative Coupons are direct, unsecured and subordinated obligations of the Issuer and rank and will rank pari passu, without any preference among themselves. The rights and claims of the Noteholders and the Couponholders are subordinated as described in Condition 3(b).
(b)Subordination
(i)General
In the event of:
(A) |
an order being made, or an effective resolution being passed, for the winding-up of the Issuer (except, in any such case, a solvent winding-up solely for the purposes of a reorganisation, reconstruction, amalgamation or the substitution in place of the Issuer of a Successor in Business of the Issuer, (x) the terms of which reorganisation, reconstruction, amalgamation or substitution have previously been approved in writing by the Trustee or by an Extraordinary Resolution (as defined in the Trust Deed) and do not provide for a claim to be made in the winding-up or administration of the Issuer in respect of the Notes pursuant to Condition 10; or (y) which substitution will be effected in accordance with Condition 15(b)); or |
(B) |
an administrator of the Issuer being appointed and such administrator giving notice that it intends to declare and distribute a dividend, |
there shall be payable by the Issuer in respect of each Note and (if applicable) Coupon (in lieu of any other payment by the Issuer), such amount, if any, as would have been payable to the relevant holder thereof if, on the day prior to the commencement of the winding-up or such administration, as the case may be, and thereafter, such holder were the holder of one of a class of preference shares in the capital of the Issuer (“Notional Preference Shares”) having an equal right to a return of assets in the winding-up or such administration, as the case may be, and so ranking pari passu with, the holders of Parity Obligations (as defined below), but ranking junior to the claims of holders of all Senior Obligations (as defined below) (except as otherwise provided by mandatory provisions of law), on the assumption that the amount that such holder was entitled to receive in respect of each Notional Preference Share on a return of assets in such winding-up or such administration, as the case may be, were an amount equal to the nominal amount of the relevant Note and any accrued and unpaid interest and any outstanding Arrears of Interest (as defined below) (and, in the case of an administration, on the assumption that holders of preference shares were entitled to claim and recover in respect of their preference shares to the same degree as in a winding-up).
Nothing in this Condition 3(b) or Condition 10 shall affect or prejudice the payment of, or indemnification for, the costs, charges, expenses, liabilities or remuneration of the Trustee or the Agents (as defined below) or the rights and remedies of the Trustee or the Agents in respect thereof.
Accordingly, and without prejudice to the rights of the Trustee or the Agents, the claims of holders of all Senior Obligations will first have to be satisfied in any winding-up or administration before the Noteholders and (if applicable) the Couponholders may expect to obtain any recovery in respect of their Notes and (if applicable) Coupons, respectively, and prior thereto Noteholders and (if applicable) the Couponholders will have only limited ability to influence the conduct of such winding-up or administration. See “Risk Factors - Limited Remedies”.
Subject to applicable law, no Noteholder or Couponholder may exercise, claim or plead any right of set-off, compensation or retention in respect of any amount owed to it by the Issuer in respect of, or arising under or in connection with, the Notes or the Coupons and each Noteholder or Couponholder shall, by virtue of its holding of any Note or Coupon, be deemed to have waived all such rights of set-off, compensation or retention. Not withstanding the preceding sentence, if any of the rights and claims of any Noteholder or Couponholder in respect of or arising under or in connection with the Notes are discharged by set-off, such Noteholder or Couponholder, as the case may be, will, subject to applicable law, immediately pay an amount equal to the amount of such discharge to the Issuer or, if applicable, the liquidator, trustee, receiver or administrator of the Issuer and, until such time as payment is made, will hold a sum equal to such amount on trust for the Issuer or, if applicable, the liquidator, trustee, receiver or administrator in the Issuer’s winding-up or administration.
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Accordingly, any such discharge will be deemed not to have taken place.
(iii)Definitions
In these Terms and Conditions:
“Junior Obligations” means any shares in the capital of the Issuer (except for preference shares in the capital of the Issuer (if any)) or any other securities or obligations issued or owed by the Issuer (including guarantees or indemnities or support arrangements given by the Issuer in respect of securities or obligations owed by other persons) which rank, or are expressed to rank, junior to the Notes or to the most junior class of preference shares in the capital of the Issuer;
“Parity Obligations” means (if any) (i) the most junior class of preference share capital in the Issuer ranking ahead of the ordinary shares in the capital of the Issuer and any other obligations of the Issuer, issued directly or indirectly by it, which rank, or are expressed to rank, pari passu with the Notes or such preference shares and (ii) any obligations of any Subsidiaries of the Issuer benefiting from a guarantee or support agreement entered into by the Issuer which ranks, or is expressed to rank, pari passu with the Notes or such preference shares; and
“Senior Obligations” means all obligations of the Issuer, issued directly or indirectly by it, other than Parity Obligations and Junior Obligations.
The Parity Obligations as at the time of issuance will be specified in Part B of the applicable Final Terms as “Parity Obligations”.
4.Interest
(a)Interest
Each Note bears interest on its outstanding nominal amount (unless a Benchmark Discontinuation Event has occurred, in which case the First Reset Rate of Interest and/or any Subsequent Reset Rate of Interest, as applicable, shall be determined pursuant to and in accordance with Condition 4(b)):
(A) |
from (and including) the Interest Commencement Date until (but excluding) the First Reset Date at the Initial Rate of Interest; |
(B) |
for the First Reset Period, at the First Reset Rate of Interest; and |
(C) |
for each Subsequent Reset Period thereafter (if any), at the relevant Subsequent Reset Rate of Interest, |
and such interest shall (subject to Condition 5) be payable, in each case, in arrear on the Interest Payment Dates specified in the applicable Final Terms.
The amount of interest payable shall be determined in accordance with Condition 4(c).
(b)Benchmark Discontinuation
This Condition 4(b) applies unless Benchmark Discontinuation is specified in the applicable Final Terms to be “Not Applicable”.
(i)Issuer Determination and Independent Adviser
If a Benchmark Discontinuation Event occurs in relation to an Original Reference Rate at any time when any Rate of Interest (or any component part thereof) remains to be determined by reference to such Original Reference Rate, then:
(a) |
the Issuer shall use its reasonable endeavors to appoint and consult with an Independent Adviser, as soon as reasonably practicable, with a view to the Issuer (acting in good faith and in a commercially reasonable manner) determining a Successor Rate, failing which an Alternative Rate (in accordance with Condition 4(b)(ii)) and, in either case, an Adjustment Spread (in accordance |
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with Condition 4(b)(iii)) and any Benchmark Amendments (in accordance with Condition 4(b)(iv)), by no later than five Business Days prior to the first Reset Determination Date that (A) falls after the Benchmark Replacement Date relating to such Benchmark Discontinuation Event, and (B) relates to a Reset Period for which the Rate of Interest (or any component part thereof) is to be determined by reference to such Original Reference Rate (the “IA Determination Cut-off Date”); and
(b) |
if the Issuer is unable to appoint an Independent Adviser prior to the relevant IA Determination Cut-off Date in accordance with Condition 4(b)(i)(a), the Issuer (acting in good faith and in a commercially reasonable manner) may determine a Successor Rate, failing which an Alternative Rate (in accordance with Condition 4(b)(ii)) and, in either case, an Adjustment Spread (in accordance with Condition 4(b)(iii)) and any Benchmark Amendments (in accordance with Condition 4(b)(iv)), by no later than the first Reset Determination Date that (A) falls after the Benchmark Replacement Date relating to such Benchmark Discontinuation Event, and (B) relates to an Reset Period for which the Rate of Interest (or any component part thereof) is to be determined by reference to such Original Reference Rate. |
An Independent Adviser appointed pursuant to this Condition 4(b)(i) shall act in good faith and in a commercially reasonable manner and (in the absence of bad faith or fraud) shall have no liability whatsoever to the Trustee, the Issuing and Principal Paying Agent, any Calculation Agent, any other agents under the Agency Agreement (together with the Issuing and Principal Paying Agent and any Calculation Agent, the “Agents” and each an “Agent”), the Noteholders or the Couponholders for any advice given to the Issuer in connection with any determination made by the Issuer pursuant to this Condition 4(b).
(ii)Successor Rate or Alternative Rate
If the Issuer (in accordance with Condition 4(b)(i)) determines that:
(a) |
there is a Successor Rate, then such Successor Rate and the applicable Adjustment Spread shall subsequently be used in place of the Original Reference Rate to determine the relevant Rate of Interest (or the relevant component part thereof) for all relevant future payments of interest on the Notes (subject to Condition 4(b)(v) and to the further operation of this Condition 4(b)); or |
(b) |
there is no Successor Rate but that there is an Alternative Rate, then such Alternative Rate shall (subject to adjustment as provided in Condition 4(b)(iii)) subsequently be used in place of the Original Reference Rate to determine the relevant Rate of Interest (or the relevant component part thereof) for all relevant future payments of interest on the Notes (subject to Condition 4(b)(v) and to the further operation of this Condition 4(b)). |
(iii)Adjustment Spread
The Adjustment Spread (or the formula or methodology for determining the Adjustment Spread) shall be applied to the Successor Rate or the Alternative Rate (as the case may be).
If the Issuer (in accordance with Condition 4(b)(i)) is unable to determine the quantum of, or a formula or methodology for determining, an Adjustment Spread, then the Successor Rate or the Alternative Rate (as the case may be) will be used as described in Condition 4(b)(ii) without application of any Adjustment Spread (subject to Condition 4(b)(v) and to the further operation of this Condition 4(b)).
(iv)Benchmark Amendments
If any Successor Rate or Alternative Rate and, in either case, the applicable Adjustment Spread is determined in accordance with this Condition 4(b) and the Issuer (in accordance with Condition 4(b)(i)) determines (a) that amendments to these Terms and Conditions, the Agency Agreement, (if applicable) any calculation agency agreement (a “Calculation Agency Agreement”) and/or the Trust Deed (including, without limitation, amendments to the definitions of Day Count Fraction, Business Day or Relevant Screen Page) are necessary to follow market practice or to ensure the proper operation of such Successor Rate or Alternative Rate and, in either case, the applicable Adjustment Spread (or any combination thereof) (such amendments, the “Benchmark Amendments”) and (b) the terms of the Benchmark Amendments, then the Issuer shall, subject to (A) Condition 4(b)(v) and (B) giving notice thereof in accordance with Condition 4(b)(vi), without any requirement for the consent or approval of the Noteholders or the Couponholders, vary these Terms and Conditions, the Agency Agreement, the relevant Calculation Agency Agreement and/or the Trust Deed (as applicable) to give effect to such Benchmark Amendments with effect from the date specified in such notice.
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At the request of the Issuer, but subject to receipt by the Trustee and each of the Agents of a certificate signed by two Authorised Signatories of the Issuer pursuant to Condition 4(b)(vi), the Trustee and/or each relevant Agent (as applicable) shall (at the expense of the Issuer), without any requirement for the consent or approval of the Noteholders or the Couponholders, be obliged to concur with the Issuer in using its reasonable endeavours to effect any Benchmark Amendments (including, inter alia, by the execution of a deed or agreement supplemental to or amending the Trust Deed and/or the Agency Agreement and/or the relevant Calculation Agency Agreement, as applicable) and neither the Trustee nor any Agent shall be liable to any party for any consequences thereof, provided that neither the Trustee nor any Agent shall be obliged so to concur if, in the sole opinion of the Trustee or the relevant Agent (as applicable), doing so would impose more onerous obligations upon it or expose it to any additional duties, responsibilities or liabilities or reduce the protective provisions afforded to the Trustee or the relevant Agent, as applicable, in these Terms and Conditions, the Trust Deed, the Agency Agreement or any Calculation Agency Agreement (including, for the avoidance of doubt, any supplemental trust deed or supplemental agency agreement) in any way.
(v)Benchmark Replacement Date
Notwithstanding any other provision of this Condition 4(b), following the occurrence of any Benchmark Discontinuation Event:
(1) |
no Successor Rate or Alternative Rate shall be used in place of the relevant Original Reference Rate; and |
(2) |
no Adjustment Spread or Benchmark Amendments shall take effect, |
until the first Reset Determination Date that (A) falls after the Benchmark Replacement Date relating to such Benchmark Discontinuation Event and (B) relates to an Reset Period for which the Rate of Interest (or any component part thereof) is to be determined by reference to the Original Reference Rate.
(vi) |
Notification of Successor Rate, Alternative Rate or Adjustment Spread (as applicable) and any Benchmark Amendments |
Following a Benchmark Discontinuation Event and the determination of any Successor Rate, Alternative Rate, Adjustment Spread and/or Benchmark Amendments (as applicable) pursuant to the provisions of this Condition 4(b) (and in any event prior to any Successor Rate, Alternative Rate, Adjustment Spread and/or Benchmark Amendments (as applicable) taking effect), the Issuer will promptly notify the Trustee, the Agents and, in accordance with Condition 14, the Noteholders, of any such Successor Rate, Alternative Rate, Adjustment Spread and/or the specific terms of any Benchmark Amendments so determined under this Condition 4(b). Such notice shall be irrevocable and shall specify the effective date of the Benchmark Amendments (if any).
Prior to any Successor Rate, Alternative Rate, Adjustment Spread and/or Benchmark Amendments taking effect, the Issuer shall deliver to the Trustee and the Agents a certificate signed by two Authorised Signatories of the Issuer:
(A) |
confirming (a) that a Benchmark Discontinuation Event and the related Benchmark Replacement Date have occurred, (b) the Successor Rate or, as the case may be, the Alternative Rate, (c) the applicable Adjustment Spread and (d) the specific terms of any Benchmark Amendments, in each case as determined in accordance with the provisions of this Condition 4(b); and |
(B) |
certifying that the Benchmark Amendments are necessary to follow market practice or, as applicable, to ensure the proper operation of such Successor Rate or Alternative Rate and (in either case) the applicable Adjustment Spread or any combination thereof (as applicable). |
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The Trustee and the Agents shall be entitled to rely on such certificate (without enquiry or liability to any person) as sufficient evidence thereof.
The Successor Rate or Alternative Rate and the Adjustment Spread and the Benchmark Amendments (if any) specified in such certificate will (in the absence of manifest error in the determination of the Successor Rate or Alternative Rate and the Adjustment Spread and the Benchmark Amendments (if any) and without prejudice to the Trustee’s and each Agent’s ability to rely on such certificate as aforesaid and subject to Condition 4(b)(v)) be binding on the Issuer, the Trustee, the Agents, the Noteholders and the Couponholders as of their effective date.
(vii)Fallbacks
Without prejudice to the obligations of the Issuer under this Condition 4(b), the Original Reference Rate and the fallback provisions provided for in Condition 4(h) will continue to apply unless and until (a) a Benchmark Discontinuation Event in relation to the Original Reference Rate and (b) a related Benchmark Replacement Date have occurred.
If, following the occurrence of a Benchmark Replacement Date in respect of the Original Reference Rate and in relation to the determination of the Rate of Interest on the relevant Reset Determination Date no Successor Rate or Alternative Rate (as applicable) is determined in accordance with this Condition 4(b)(ii) by such Reset Determination Date the Original Reference Rate will continue to apply for the purposes of determining such Rate of Interest on such Reset Determination Date, with the effect that the fallback provisions provided for in Condition 4(h) continue to apply to such determination.
For the avoidance of doubt, this Condition 4(b) shall apply to the determination of the Rate of Interest on the relevant Reset Determination Date only, and the Rate of Interest applicable to any subsequent Reset Period(s) is subject to the subsequent operation of, and to adjustment as provided in, this Condition 4(b).
Notwithstanding any other provision of this Condition 4(b), no Successor Rate or Alternative Rate will be adopted, nor will any Adjustment Spread be applied, nor will any Benchmark Amendments be made, if and to the extent that, in the determination of the Issuer, the same could reasonably be expected to cause the Notes to no longer be eligible for the same, or a higher amount of, “equity credit” (or such other nomenclature that the Rating Agency may then use to describe the degree to which an instrument exhibits the characteristics of an ordinary share) as was attributed to the Notes at the Issue Date of the last Tranche of the Notes (or if “equity credit” is not assigned to the Notes by the relevant Rating Agency on the Issue Date of the last Tranche of the Notes, at the date on which “equity credit” is assigned by such Rating Agency for the first time).
(c)Determination of Rate of Interest and calculation of Interest Payments
The Calculation Agent will at or as soon as practicable after each time at which the Rate of Interest is to be determined, determine the Rate of Interest for the relevant Interest Period. The Calculation Agent will cause the Rate of Interest for the relevant Interest Period to be notified to the Issuer and the Issuing and Principal Paying Agent as soon as practicable after calculating the same.
While paragraph 4(a)(A) applies, if the Notes are in definitive form, except (A) w here the Initial Rate of Interest has been increased in accordance with Condition 4(g) or (B) as provided in the applicable Final Terms, the amount of interest payable on each Interest Payment Date in respect of the Interest Period ending on (but excluding) such date will amount to the Fixed Coupon Amount. Payments of interest on any Interest Payment Date will, if so specified in the applicable Final Terms, amount to the Broken Amount so specified.
In all other cases, the Calculation Agent will calculate the Interest Payment payable for the relevant Interest Period (or other Interest Accrual Period) by applying the Rate of Interest to:
(A) |
in the case of Notes which are represented by a Global Note, the aggregate outstanding nominal amount of the Notes represented by such Global Note; or |
(B) |
in the case of Notes in definitive form, the Calculation Amount; |
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and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Note in definitive form comprises more than one Calculation Amount, the Interest Payment payable in respect of such Note shall be the aggregate of the amounts (determined in the manner provided above) for each Calculation Amount comprising the Specified Denomination without any further rounding.
(d)Notification of Rate of Interest and Interest Payments
The Calculation Agent will cause the Rate of Interest and each Interest Payment for each Interest Period and the relevant Interest Payment Date to be notified to the Issuer and the Issuing and Paying Agent. The Issuer will procure the Rate of Interest and each Interest Payment for each Interest Period and the relevant Interest Payment Date to be notified (if the relevant Notes are to be listed on a stock exchange and the rules of such stock exchange so require) to any stock exchange on which the relevant Notes are for the time being listed and the Issuing and Paying Agent will cause notice thereof to be published in accordance with Condition 14 as soon as possible after their determination but in no event later than the fourth London Business Day thereafter.
For the purposes of this Condition 4(d), the expression “London Business Day” means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for business in London.
(e)Certificates to be final
All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 4, whether by the Issuing and Principal Paying Agent or, if applicable, the Calculation Agent shall (in the absence of manifest error) be binding on the Issuer, the Trustee, the Issuing and Principal Paying Agent, the Calculation Agent (if applicable), the other Paying Agents and all Noteholders and Couponholders and (in the absence of wilful default and fraud) no liability to the Issuer, the Trustee, the Noteholders or the Couponholders shall attach to the Issuing and Principal Paying Agent or, if applicable, the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to such provisions.
(f)Accrual of interest
Each Note (or in the case of the redemption of part only of a Note, that part only of such Note) will cease to bear interest (if any) from the date of its redemption or substitution pursuant to Condition 7 unless payment of principal is improperly withheld or refused. In such event, interest (including on any Deferred Interest Payment, as defined below) will continue to accrue as provided in the Trust Deed.
(g)Step-up after Change of Control Event
Notwithstanding any other provision of this Condition 4, if the Issuer does not elect to redeem the Notes in accordance with Condition 7(f) following the occurrence of a Change of Control Event, the then prevailing Rate of Interest, and each subsequent Rate of Interest otherwise determined in accordance with the provisions of this Condition 4 (including, for the avoidance of doubt, in accordance with the provisions of Condition 4(b)), on the Notes shall be increased by the Change of Control Step-Up Margin (as specified in the applicable Final Terms) with effect from the Interest Period commencing on or after the first Interest Payment Date immediately following the date on which the Change of Control Event occurred.
Without prejudice to the Issuer’s right to redeem the Notes in accordance with Condition 7(f) following the occurrence of any Change of Control Event, this Condition 4(g) shall only apply in relation to the first Change of Control Event to occur while any of the Notes remains outstanding.
(h)Definitions
In these Terms and Conditions:
“Adjustment Spread” means either (a) a spread (which may be positive, negative or zero), or (b) a formula or methodology for calculating a spread, in either case, which the Issuer (in accordance with Condition 4(b)(i)) determines is to be applied to the Successor Rate or the Alternative Rate (as the case may be) and is the spread, formula or methodology which:
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(i) |
in the case of a Successor Rate, is formally recommended in relation to the replacement of the Original Reference Rate with such Successor Rate by any Relevant Nominating Body; |
(ii) |
in the case of an Alternative Rate or (w here (i) above does not apply) in the case of a Successor Rate, the Issuer determines is recognised or acknowledged as being in customary market usage in international debt capital markets transactions which reference the Original Reference Rate, where such rate has been replaced by such Successor Rate or such Alternative Rate (as the case may be); |
(iii) |
(if the Issuer determines that neither (i) nor (ii) above applies) the Issuer determines is recognised or acknowledged as being the industry standard for over-the-counter derivative transactions which reference the Original Reference Rate, w here such rate has been replaced by the Successor Rate or the Alternative Rate (as the case may be); or |
(iv) |
(if the Issuer determines that none of (i), (ii) or (iii) above applies) the Issuer determines to be appropriate in order to reduce or eliminate, to the extent reasonably practicable in the circumstances, any economic prejudice or benefit (as the case may be) to the Noteholders and the Couponholders as a result of the replacement of the Original Reference Rate with the Successor Rate or the Alternative Rate (as the case may be); |
“Alternative Rate” means an alternative to the Original Reference Rate which the Issuer determines (in accordance with Condition 4(b)(ii)) has replaced the Original Reference Rate in customary market usage in international debt capital markets transactions for the purposes of determining rates of interest (or the relevant component part thereof) in the Specified Currency or, if the Issuer determines that there is no such rate, such other rate as the Issuer determines in its sole discretion is most comparable to the Original Reference Rate;
“Authorised Signatory” means any person who (a) is a Director or the Secretary of the Issuer or (b) has been notified by the Issuer in writing to the Trustee as being duly authorised to sign documents and to do other acts and things on behalf of the Issuer for the purposes of the Trust Deed;
“Benchmark Amendments” has the meaning given to it in Condition 4(b)(iv); “Benchmark Discontinuation Event” means, with respect to an Original Reference Rate:
(i) | such Original Reference Rate ceasing to (a) be published for a period of at least five Business Days or (b) exist or be administered; |
(ii) |
the later of (a) the making of a public statement by the administrator of such Original Reference Rate that it will, on or before a specified date, cease publishing such Original Reference Rate permanently or indefinitely (in circumstances where no successor administrator has been appointed that will continue publication of such Original Reference Rate) and (b) the date falling six months prior to the specified date referred to in (ii)(a); |
(iii) |
the making of a public statement by the supervisor of the administrator of such Original Reference Rate that such Original Reference Rate has been permanently or indefinitely discontinued; |
(iv) |
the later of (a) the making of a public statement by the supervisor of the administrator of such Original Reference Rate that such Original Reference Rate will, on or before a specified date, be permanently or indefinitely discontinued and (b) the date falling six months prior to the specified date referred to in (iv)(a); |
(v) |
the making of a public statement by the supervisor of the administrator of such Original Reference Rate that means such Original Reference Rate has become prohibited from being used or that its use has become subject to restrictions or adverse consequences; |
(vi) |
the later of (a) the making of a public statement by the supervisor of the administrator of the Original Reference Rate that means such Original Reference Rate will be prohibited from being used or that its use will be subject to restrictions or adverse consequences, in each case on or before a specified date and (b) the date falling six months prior to the specified date referred to in (vi)(a); |
(vii) |
it has or will, prior to the next Interest Determination Date, become unlawful for the Issuer, any Agent or any other party specified in the applicable Final Terms as being responsible for calculating the Rate of Interest |
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and/or the Interest Payment to calculate any payments due to be made to any Noteholder or Couponholder using such Original Reference Rate; or
(viii) |
the making of a public statement by the supervisor of the administrator of such Original Reference Rate announcing that such Original Reference Rate is no longer representative or may no longer be used; |
“Benchmark Frequency” has the meaning given to it in the applicable Final Terms;
“Benchmark Gilt” means, in respect of a Reset Period, such United Kingdom government security having an actual or interpolated maturity date on or about the last day of such Reset Period as the Issuer, on the advice of an investment bank or financial adviser of international repute, may determine would be utilised, at the time of selection and in accordance with customary financial practice, in pricing new issuances of corporate debt securities denominated in sterling;
“Benchmark Gilt Quotation” means, with respect to a Reset Reference Bank and a Reset Period, the arithmetic mean of the bid and offered yields (on a semi-annual compounding basis) for the Benchmark Gilt in respect of that Reset Period, expressed as a percentage, as quoted by such Reset Reference Bank on a dealing basis for settlement on the next following dealing day in London;
“Benchmark Gilt Rate” means, in respect of a Reset Period, the percentage rate (rounded, if necessary, to the third decimal place (0.0005 per cent. being rounded upwards)) determined by the Calculation Agent on the basis of the Benchmark Gilt Quotations provided (upon request by or on behalf of the Issuer) by the Reset Reference Banks to the Issuer and by the Issuer to the Calculation Agent at approximately 11.00 a.m. (London time) on the Reset Determination Date in respect of such Reset Period. If at least four quotations are provided, the Benchmark Gilt Rate will be the arithmetic mean of the quotations provided, eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest). If only two or three quotations are provided, the Benchmark Gilt Rate will be the arithmetic mean of the quotations provided. If only one quotation is provided, the Benchmark Gilt Rate will be the quotation provided. If no quotations are provided, the Benchmark Gilt Rate will be (i) in the case of each Reset Period other than the Reset Period commencing on the First Reset Date, the Reset Rate in respect of the immediately preceding Reset Period or (ii) in the case of the Reset Period commencing on the First Reset Date, the percentage rate specified in the applicable Final Terms as the “First Reset Period Fallback”;
“BrokenAmount” has the meaning given to it in the applicable Final Terms;
“Benchmark Replacement Date” means, with respect to any Benchmark Discontinuation Event:
(i) |
in the case of an event falling within sub-paragraph (i)(a) of the definition of “Benchmark Discontinuation Event”, the first Business Day immediately following such five-Business Day period; |
(ii) |
in the case of an event falling within sub-paragraphs (i)(b) or (ii) of the definition of “Benchmark Discontinuation Event”, the date of the relevant cessation of existence, administration or publication, as applicable; |
(iii) |
in the case of an event falling within sub-paragraphs (iii), (v) or (viii) of the definition of “Benchmark Discontinuation Event”, the date of the relevant public statement; |
(iv) |
in the case of an event falling within sub-paragraph (iv) of the definition of “Benchmark Discontinuation Event”, the date of the relevant discontinuation; or |
(v) |
in the case of event falling within sub-paragraphs (vi) or (vii) of the definition of “Benchmark Discontinuation Event”, the date on which the relevant prohibition, restrictions, adverse consequences or unlawfulness become(s) effective; |
“Business Day” means a day which is both:
(i) |
a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in London and any Additional Business Centre specified in the applicable Final Terms; and |
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(ii) |
either (1) in relation to any sum payable in a Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in the principal financial centre of the country of the relevant Specified Currency or (2) in relation to any sum payable in euro, a day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET2) System (the “TARGET2 System”) is open; |
“Calculation Agent” means the person appointed by the Issuer as calculation agent in relation to a Series of Notes and specified in the applicable Final Terms and shall include any successor calculation agent appointed in respect of such Notes;
“Calculation Amount” has the meaning given to it in the applicable Final Terms;
“CMT Designated Maturity” has the meaning given to it in the applicable Final Terms;
“CMT Rate” means, in relation to a Reset Period and the Reset Determination Date in relation to such Reset Period, the rate determined by the Calculation Agent, and expressed as a percentage, equal to:
(i) |
the yield for United States Treasury Securities at “constant maturity” for the CMT Designated Maturity, as published in the H.15 under the caption “treasury constant maturities (nominal)”, as that yield is displayed on the CMT Rate Screen Page on such Reset Determination Date; |
(ii) |
if the yield referred to in paragraph (i) above is not published by 4.30 p.m. (New York City time) on the CMT Screen Page on such Reset Determination Date, the yield for the United States Treasury Securities at “constant maturity” for the CMT Designated Maturity as published in the H.15 under the caption “treasury constant maturities (nominal)” on such Reset Determination Date; or |
(iii) |
if the yield referred to in paragraph (ii) above is not published by 4.30 p.m. (New York City time) on such Reset Determination Date, the Reset Reference Bank Rate on the U.S. Government Securities Business Day following such Reset Determination Date; |
“CMT Rate Screen Page” has the meaning given to it in the applicable Final Terms or any successor service or such other page as may replace that page on that service for the purpose of displaying “treasury constant maturities” as reported in H.15;
“Change of Control Step-Up Margin” has the meaning given to it in the applicable Final Terms;
“Day Count Fraction” means, in respect of the calculation of an amount of interest:
(i) |
if “Actual/Actual-ISDA” or “Actual/Actual” is specified in the applicable Final Terms, the actual number of days in the Interest Accrual Period divided by 365 (or, if any portion of that Interest Accrual Period falls in a leap year, the sum of (A) the actual number of days in that portion of the Interest Accrual Period falling in a leap year divided by 366 and (B) the actual number of days in that portion of the Interest Accrual Period falling in a non-leap year divided by 365); |
(ii) |
if “Actual/365 (Sterling)” is specified in the applicable Final Terms, the actual number of days in the Interest Accrual Period divided by 365 or, in the case of an Interest Payment Date falling in a leap year, 366; |
(iii) |
if “Actual/365 (Fixed)” is specified in the applicable Final Terms, the actual number of days in the Interest Accrual Period divided by 365; |
(iv) |
if “Actual/360” is specified in the applicable Final Terms, the actual number of days in the Interest Accrual Period divided by 360; |
(v) |
if “30/360”, “360/360” or “Bond Basis” is specified in the applicable Final Terms, the number of days in the Interest Accrual Period divided by 360, calculated on a formula basis as follows: |
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where:
“Y1”is the year, expressed as a number, in which the first day of the Interest Accrual Period falls;
“Y2”is the year, expressed as a number, in which the day immediately following the last day of the Interest Accrual Period falls;
“M1” is the calendar month, expressed as a number, in which the first day of the Interest Accrual Period falls;
“M2” is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Accrual Period falls;
“D1” is the first calendar day, expressed as a number, of the Interest Accrual Period, unless such number is 31, in which case D1 will be 30; and
“D2” is the calendar day, expressed as a number, immediately following the last day included in the Interest Accrual Period, unless such number would be 31 and D1 is greater than 29, in which case D2 will be 30;
(vi) |
if “30E/360” or “Eurobond Basis” is specified in the applicable Final Terms, the number of days in the Interest Accrual Period divided by 360, calculated on a formula basis as follows: |
where:
“Y1” is the year, expressed as a number, in which the first day of the Interest Accrual Period falls;
“Y2” is the year, expressed as a number, in which the day immediately following the last day of the Interest Accrual Period falls;
“M1” is the calendar month, expressed as a number, in which the first day of the Interest Accrual Period falls;
“M2” is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Accrual Period falls;
“D1” is the first calendar day, expressed as a number, of the Interest Accrual Period, unless such number would be 31, in which case D1 will be 30; and
“D2” is the calendar day, expressed as a number, immediately following the last day included in the Interest Accrual Period, unless such number would be 31, in which case D2 will be 30;
(vii) |
if “30E/360 (ISDA)” is specified in the applicable Final Terms, the number of days in the Interest Accrual Period divided by 360, calculated on a formula basis as follows: |
where:
“Y1”is the year, expressed as a number, in which the first day of the Interest Accrual Period falls;
“Y2”is the year, expressed as a number, in which the day immediately following the last day of the Interest Accrual Period falls;
“M1” is the calendar month, expressed as a number, in which the first day of the Interest Accrual Period falls;
“M2” is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Accrual Period falls;
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“D1” is the first calendar day, expressed as a number, of the Interest Accrual Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and
“D2” is the calendar day, expressed as a number, immediately following the last day included in the Interest Accrual Period, unless (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31, in which case D2 will be 30; and
(viii)if “Actual/Actual (ICMA)” is specified in the applicable Final Terms:
(a) |
in the case of Notes w here the number of days in the relevant period from (and including) the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to (but excluding) the relevant payment date (the “Accrual Period”) is equal to or shorter than the Determination Period during which the Accrual Period ends, the number of days in such Accrual Period divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Dates (as specified in the applicable Final Terms) that would occur in one calendar year; or |
(b) |
in the case of Notes w here the Accrual Period is longer than the Determination Period during which the Accrual Period ends, the sum of: |
(1) |
the number of days in such Accrual Period falling in the Determination Period in which the Accrual Period begins divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Dates (as specified in the applicable Final Terms) that would occur in one calendar year; and |
(2) |
the number of days in such Accrual Period falling in the next Determination Period divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Dates that would occur in one calendar year assuming interest was to be payable in respect of the w hole of that year; |
“dealing day” means a day, other than a Saturday or Sunday, on which the London Stock Exchange (or such other stock exchange on which the Benchmark Gilt is at the relevant time listed) is ordinarily open for the trading of securities;
“Determination Date” means the date specified in the applicable Final Terms or, if none is so specified, the Interest Payment Date;
“Determination Period” means each period from (and including) a Determination Date to (but excluding) the next Determination Date (including, w here either the Interest Commencement Date or the final Interest Payment Date is not a Determination Date, the period commencing on the first Determination Date prior to, and ending on the first Determination Date falling after, such date);
“Eurozone” means the region comprising member states of the European Union that adopt the single currency in accordance with the Treaty establishing the European Community, as amended;
“First Margin” means the margin (expressed as a percentage) specified in the applicable Final Terms;
“First Reset Date” means the date specified in the applicable Final Terms;
“First Reset Period” means the period from (and including) the First Reset Date until (but excluding) the first (or only) Subsequent Reset Date or, if no such Subsequent Reset Date is specified hereon, the Maturity Date;
“First Reset Period Fallback” has the meaning given to it in the applicable Final Terms;
“First Reset Rate of Interest” means the rate of interest being determined by the Calculation Agent on the relevant Reset Determination Date as the sum of the relevant Reset Rate plus the First Margin (with such sum converted (if necessary) from a basis equivalent to the Benchmark Frequency to a basis equivalent to the frequency with which scheduled interest payments are payable on the relevant Notes during the First Reset Period (such calculation to be made by the Calculation Agent)); “Fixed Coupon Amount” has the meaning given to it in the applicable Final Terms;
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“Fixed Leg” has the meaning given to it in the applicable Final Terms;
“Floating Leg” has the meaning given to it in the applicable Final Terms;
“H.15” means the daily statistical release designated as H.15, or any successor publication, published by the board of governors of the Federal Reserve System at http://www.federalreserve.gov/releases/H15 or any successor site or publication;
“Independent Adviser” means an independent financial institution of international repute or an independent financial adviser with appropriate expertise in the international debt capital markets appointed by the Issuer at its own expense under Condition 4(b)(i) and notified in writing to the Trustee;
“Initial Rate of Interest” means the initial Rate of Interest specified in the applicable Final Terms;
“Interest Accrual Period” means (i) each Interest Period and (ii) any other period (if any) in respect of which interest is to be calculated, being the period from (and including) the first day of such period to (but excluding) the day on which the relevant payment of interest falls due (which, if the Notes become due and payable in accordance with Condition 10, shall be the date on which the Notes become due and payable);
“Interest Commencement Date” means the Issue Date or such other date as may be specified in the applicable Final Terms;
“Interest Payment” means, in respect of an Interest Accrual Period, the amount of interest payable per Calculation Amount for that Interest Accrual Period;
“Interest Payment Date” means the date(s) specified in the applicable Final Terms;
“Interest Period” means the period from (and including) an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first) Interest Payment Date;
“Original Reference Rate” means the originally-specified benchmark or screen rate (as applicable) used to determine the relevant Rate of Interest (or any component part thereof) in respect of any Reset Period(s) (provided that if, following one or more Benchmark Replacement Dates, such originally-specified benchmark or screen rate (as applicable) (or any Successor Rate or Alternative Rate (as applicable) which has replaced it) has been replaced by a (for a further) Successor Rate or Alternative Rate (as applicable) and a Benchmark Discontinuation Event and a related Benchmark Replacement Date subsequently occur in respect of such Successor Rate or Alternative Rate (as applicable), the term “Original Reference Rate” shall include any such Successor Rate or Alternative Rate (as applicable));
“Mid-Swap Quotations” means the arithmetic mean of the bid and offered rates:
(i) |
if the Specified Currency is euro, for the annual fixed leg (calculated on a 30/360 day count basis) of a fixed for floating interest rate swap transaction in euro which (i) has a term commencing on the relevant Reset Date which is equal to that of the relevant Swap Rate Period; (ii) is in an amount that is representative of a single transaction in the relevant market at the relevant time with an acknowledged dealer of good credit in the relevant swap market; and (iii) has a floating leg based on the Floating Leg as set out in the applicable Final Terms; or |
(ii) |
if the Specified Currency is not euro, for the Fixed Leg (as set out in the applicable Final Terms) of a fixed for floating interest rate swap transaction in that Specified Currency which (i) has a term commencing on the relevant Reset Date which is equal to that of the relevant Swap Rate Period; (ii) is in an amount that is representative of a single transaction in the relevant market at the relevant time with an acknowledged dealer of good credit in the relevant swap market; and (iii) has a floating leg based on the Floating Leg (as set out in the applicable Final Terms); |
“Mid-Swap Rate” means in respect of a Reset Period, (i) the applicable semi-annual or annual (as specified in the applicable Final Terms) mid-swap rate for swap transactions in the Specified Currency (with a maturity equal to that of the relevant Swap Rate Period specified in the applicable Final Terms) as displayed on the Screen Page at 11.00 a.m. (in the principal financial centre of the Specified Currency) on the relevant Reset Determination Date or (ii) if such rate is not displayed on the Screen Page at such time and date, the relevant Reset Reference Bank Rate;
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“Rate of Interest” means the Initial Rate of Interest, the First Reset Rate of Interest and/or each Subsequent Reset Rate of Interest, as the case may be;
“Relevant Nominating Body” means, in respect of an Original Reference Rate:
(i) |
the central bank for the currency to which such Original Reference Rate relates, or any central bank or other supervisory authority which is responsible for supervising the administrator of such Original Reference Rate; or |
(ii) |
any working group or committee sponsored by, chaired or co-chaired by or constituted at the request of (a) the central bank for the currency to which such Original Reference Rate relates, (b) any central bank or other supervisory authority which is responsible for supervising the administrator of such Original Reference Rate, (c) a group of the aforementioned central banks or other supervisory authorities or (d) the Financial Stability Board or any part thereof; |
“Relevant (Reset) Time” shall mean 11.00 a.m. (in the principal financial centre of the Specified Currency) or such other time as specified in the applicable Final Terms;
“Relevant Screen Page” has the meaning specified in the applicable Final Terms or such other page, section or other part as may replace it on the relevant information service or such other information service, in each case, as may be nominated by the person providing or sponsoring the information appearing there for the purpose of displaying rates a yields (as the case may be) comparable to the Reset Rate;
“Reset Date” means the First Reset Date and/or each Subsequent Reset Date, as the case may be;
“Reset Determination Date” means, in respect of a Reset Period, (a) each date specified in the applicable Final Terms or, if none is so specified, (b) (i) if the Specified Currency is sterling, the first Business Day of such Reset Period, (ii) if the Specified Currency is euro, the day falling two TARGET Business Days prior to the first day of such Reset Period, (iii) if the Specified Currency is U.S. dollars, the day falling two U.S. Government Securities Business Days prior to the first day of such Reset Period (without prejudice to the operation of the fallbacks set out in paragraph (iii) of the definition of “CMT Rate”) or (iv) for any other Specified Currency, the day falling two Business Days in the principal financial centre for such Specified Currency prior to the first day of such Reset Period;
“Reset Period” means the First Reset Period and/or each Subsequent Reset Period, as the case may be;
“Reset Rate” means (a) if “Mid-Swap Rate” is specified in the applicable Final Terms, the relevant Mid-Swap Rate, (b) if “Benchmark Gilt Rate” is specified in the applicable Final Terms, the relevant Benchmark Gilt Rate, (c) if “CMT Rate” is specified in the applicable Final Terms, the relevant CMT Rate or (d) if “Reset Reference Bond Rate” is specified in the applicable Final Terms, the relevant Reset Reference Bond Rate;
“Reset Reference Bank Rate” means the percentage rate determined on the basis of (a) if “Mid-Swap Rate” is specified in the applicable Final Terms, the Mid-Swap Quotations provided by the Reset Reference Banks to the Issuer (and any such quotations received shall be provided by the Issuer to the Calculation Agent) at or around 11.00 a.m. in the principal financial centre of the Specified Currency on the relevant Reset Determination Date; (b) if “CMT Rate” is specified in the applicable Final Terms, the percentage rate determined by the Calculation Agent on the bas is of the Reset United States Treasury Securities Quotations provided by the Reset Reference Banks to the Issuer (and any such quotations received shall be provided by the Issuer to the Calculation Agent) at or around 11.00 a.m. (New York City time) on the U.S. Government Securities Business Day following the relevant Reset Determination Date or (c) if “Reset Reference Bond Rate” is specified in the applicable Final Terms, the Reset Reference Bond Quotations provided by the Reset Reference Banks to the Calculation Agent at or around the Relevant (Reset) Time on such Reset Determination Date, and, in each case, rounded, if necessary, to the third decimal place (0.0005 per cent. being rounded upwards). If at least four quotations are provided, the Reset Reference Bank Rate will be the arithmetic mean of the quotations provided, eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest). If only two or three quotations are provided, the Res et Reference Bank Rate will be the arithmetic mean of the quotations provided. If only one quotation is provided, the Reset Reference Bank Rate will be the quotation provided.
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If no quotations are provided, the Reset Reference Bank Rate will be (i) in the case of each Reset Period other than the Reset Period commencing on the First Reset Date, the relevant Mid-Swap Rate, CMT Rate or Reset Reference Bond Rate (as applicable) in respect of the immediately preceding Reset Period or (ii) in the case of the Reset Period commencing on the First Reset Date, the percentage rate specified in the applicable Final Terms as the “First Reset Period Fallback”;
“Reset Reference Banks” means (i) in the case of the calculation of a Reset Reference Bank Rate w here “Mid-Swap Rate” is specified in the applicable Final Terms, five leading swap dealers in the principal interbank market relating to the Specified Currency, (ii) in the case of the calculation of a Reset Reference Bank Rate where “CMT Rate” is specified in the applicable Final Terms, five banks which are primary U.S. Treasury securities dealers or market makers in pricing corporate bond issues denominated in U.S. dollars in New York, (iii) in the case of a Benchmark Gilt Rate, five brokers of gilts and/or gilt-edged market makers, in each case, as selected by the Issuer or (iv) in the case of Reset Reference Bond Rate, the principal office in the principal financial centre of the Specified Currency of five major banks which are primary government securities dealers or market makers in pricing corporate bond issues in the Specified Currency;
“Reset Reference Bond” means, in relation to any Reset Period, a government security or securities issued by the state responsible for issuing the Specified Currency (which, if the Specified Currency is Euro, shall be Germany), as selected by the Issuer on the advice of an investment bank of international repute, that would be utilised, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities denominated in the Specified Currency and of a comparable maturity to such Reset Period;
“Reset Reference Bond Rate” means, in respect of a Reset Period:
(i) |
the arithmetic mean (expressed as a percentage rate per annum and rounded, if necessary, to the third decimal place (0.0005 per cent. being rounded upwards)) of the bid and offered yields of the relevant Res et Reference Bond, as determined by the Calculation Agent by reference to the Relevant Screen Page at the Relevant (Reset) Time on such Reset Determination Date; or |
(ii) |
if such rate does not appear on the Relevant Screen Page at such Relevant (Reset) Time on such Reset Determination Date, the Reset Reference Bank Rate on such Reset Determination Date; |
“Reset Reference Bond Quotation” means, in relation to a Reset Reference Bank and a Reset Determination Date, if Reset Reference Bond Rate is specified as the Reset Rate in the applicable Final Terms, the arithmetic mean of the bid and offered yields for the relevant Reset Reference Bond provided to the Calculation Agent by such Reset Reference Bank at approximately the Relevant (Reset) Time on such Reset Determination Date;
“Reset United States Treasury Securities Quotation” means, in relation to a Reset Period and the Reset Determination Date in relation to such Reset Period, the rate quoted by a Reset Reference Bank as being the yield-to-maturity based on the arithmetic mean of the secondary market bid price of such Reset Reference Bank for Reset United States Treasury Securities at approximately 4.30 p.m. (New York City time) on such Reset Determination Date;
“Reset United States Treasury Securities” means, on the relevant Reset Determination Date, United States Treasury Securities with an original maturity equal to the CMT Designated Maturity, a remaining term to maturity of no more than one year shorter than the CMT Designated Maturity and in a nominal amount equal to an amount that is representative for a single transaction in such United States Treasury Securities in the New York City market. If two United States Treasury Securities have remaining terms to maturity equally close to the duration of the CMT Designated Maturity, the United States Treasury Security with the largest nominal amount outstanding will be used;
“Specified Currency” means the currency specified in the applicable Final Terms or, if none is specified, the currency in which the Notes are denominated;
“sub-unit’ means, with respect to any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, with respect to euro, means one cent;
“Subsequent Margin” means, in respect of a Subsequent Reset Period, the relevant margin (expressed as a percentage) specified in the applicable Final Terms as applying to such Subsequent Reset Period;
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“Subsequent Reset Date” means the date or dates specified in the applicable Final Terms; “Subsequent Reset Period” means the period from (and including) the first (or only) Subsequent Reset Date to (but excluding) the next succeeding Subsequent Reset Date (if any) or, if there is no such succeeding Subsequent Res et Date, the Maturity Date, and if applicable, each successive period from (and including) a Subsequent Reset Date to (but excluding) the next succeeding Subsequent Reset Date or, if there is no such Subsequent Reset Date, the Maturity Date;
“Subsequent Reset Rate of Interest” means, in respect of any Subsequent Reset Period, the rate of interest being determined by the Calculation Agent on the relevant Reset Determination Date as the sum of the relevant Reset Rate plus the relevant Subsequent Margin (with such sum converted (if necessary) from a basis equivalent to the Benchmark Frequency to a basis equivalent to the frequency with which scheduled interest payments are payable on the relevant Notes during the relevant Subsequent Reset Period (such calculation to be made by the Calculation Agent));
“Successor Rate” means a successor to or replacement of the Original Reference Rate which is formally recommended by any Relevant Nominating Body;
“Swap Rate Period” means the period or periods specified in the applicable Final Terms;
“TARGET System” means the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET2) System or any successor thereto;
“United States Treasury Securities” means securities that are direct obligations of the United States Treasury, issued other than on a discount rate basis; and
“U.S. Government Securities Business Day” means any day except for a Saturday, Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities.
5.Deferral of Interest
(a)Deferral of Payments
The Issuer may, at its discretion, elect to defer all or part of any Interest Payment (a “Deferred Interest Payment”) which is otherwise scheduled to be paid on an Interest Payment Date by giving notice (a “Deferral Notice”) of such election to the Noteholders in accordance with Condition 14 and to the Trustee and the Issuing and Principal Paying Agent not more than 14 nor less than 7 Business Days prior to the relevant Interest Payment Date. Subject to Condition 5(b), if the Issuer elects not to make all or part of any Interest Payment on an Interest Payment Date, then it will not have any obligation to pay such interest on the relevant Interest Payment Date and any such non-payment of interest will not constitute a default or breach of its obligations for any purpose (whether under the Notes or otherwise) on the part of the Issuer.
Arrears of Interest (as defined below) may be satisfied at the option of the Issuer in whole or in part at any time (the “Optional Deferred Interest Settlement Date”) following delivery of a notice to such effect given by the Issuer to the Noteholders in accordance with Condition 14 and the Trustee and the Issuing and Principal Paying Agent not more than 14 nor less than 7 Business Days prior to the relevant Optional Deferred Interest Settlement Date informing them of its election to so satisfy such Arrears of Interest (or part thereof) and specifying the relevant Optional Deferred Interest Settlement Date.
Any Deferred Interest Payment shall itself bear interest (such further interest, together with the Deferred Interest Payment, being “Arrears of Interest”), at the Rate of Interest prevailing from time to time, from (and including) the date on which (but for such deferral) the Deferred Interest Payment would otherwise have been due to be made to (but excluding) the relevant Optional Deferred Interest Settlement Date or, as appropriate, such other date on which such Deferred Interest Payment is paid in accordance with Condition 5(b), in each case such further interest being compounded on each Interest Payment Date.
Non-payment of Arrears of Interest shall not constitute a default or breach of its obligations for any purpose (whether under the Notes or otherwise) on the part of the Issuer, unless such payment is required in accordance with Condition 5(b).
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(b)Mandatory Settlement
Notwithstanding the provisions of Condition 5(a) relating to the ability of the Issuer to defer Interest Payments, the Issuer shall pay any outstanding Arrears of Interest, in whole but not in part, on the first occurring Mandatory Settlement Date following the Interest Payment Date on which a Deferred Interest Payment first arose. The Issuer will deliver notice of the occurrence of a Compulsory Arrears of Interest Settlement Event and the associated Mandatory Settlement Date to the Noteholders in accordance with Condition 14 and the Trustee and the Issuing and Principal Paying Agent not more than 14 nor less than 7 Business Days prior to the relevant Mandatory Settlement Date.
In the Terms and Conditions:
a “Compulsory Arrears of Interest Settlement Event” shall have occurred if:
(i) |
a dividend (either interim or final), other distribution or payment was validly resolved on, declared, paid or made in respect of (a) ordinary shares of the Issuer, (b) any obligations of the Issuer which rank or are expressed to rank pari passu with the ordinary shares of the Issuer or (c) any obligations of any Subsidiaries of the Issuer benefiting from a guarantee or support agreement entered into by the Issuer which ranks, or is expressed to rank, part passu with the ordinary shares of the Issuer, except where (x) such dividend, other distribution or payment was required to be resolved on, declared, paid or made exclusively in ordinary shares of the Issuer or in respect of any share option, or any free share allocation plan in each case reserved for directors, officers and/or employees of the Issuer or any of its affiliates or any associated liquidity agreements or any associated hedging transactions or (y) the Issuer is obliged under the terms of such securities or by mandatory operation of law to make such dividend, distribution or other payment; |
(ii) |
a dividend (either interim or final), other distribution or payment was validly resolved on, declared, paid or made in respect of any Parity Obligations of the Issuer, except (x) w here such dividend, distribution or payment was required to be declared, paid or made under the terms of such Parity Obligations of the Issuer or by mandatory operation of law or (y) for any optional partial payment of deferred interest or arrears of interest (how soever described) on Parity Obligations (“Parity Obligations Arrears of Interest”), provided that any Arrears of Interest on the Notes and all Parity Obligations Arrears of Interest on Parity Obligations outstanding at such same time are simultaneously paid on a pro rata basis; |
(iii) |
the Issuer has redeemed, repurchased or otherwise acquired (a) any ordinary shares of the Issuer, (b) any obligations of the Issuer which rank or are expressed to rank pari passu with the ordinary shares of the Issuer or (c) any obligations of any Subsidiaries of the Issuer benefiting from a guarantee or support agreement entered into by the Issuer which ranks, or is expressed to rank, pari passu with the ordinary shares of the Issuer, except where (v) such repurchase or acquisition was undertaken in respect of any share option, or any free share allocation plan in each case reserved for directors, officers and/or employees of the Issuer or any of its affiliates or any associated liquidity agreements or any associated hedging trans actions, (w) the Issuer is obliged under the terms of such securities or by mandatory operation of law to make such repurchase or acquisition or (x) such repurchase or acquisition was made by or on behalf of the Issuer as part of an intra-day transaction that does not result in an increase in the aggregate number of ordinary shares held by or on behalf of the Issuer as treasury shares at 8.30 a.m. (London time) on the Interest Payment Date on which any outstanding Arrears of Interest w ere first deferred, (y) such repurchase or acquisition results from hedging of any convertible securities issued by the Issuer or by any Subsidiary of the Issuer and guaranteed by the Issuer; or (z) such repurchase or acquisition results from the settlement of existing equity derivatives after the Interest Payment Date on which any outstanding Arrears of Interest were first deferred; or |
(iv) |
the Issuer, or any Subsidiary of the Issuer, has redeemed, repurchased or otherwise acquired any Parity Obligations of the Issuer, except where (x) such redemption, repurchase or acquisition is effected as a public cash tender offer or public exchange offer at a purchase price per security which is below its par value or (y) the Issuer, or any Subsidiary of the Issuer, is obliged under the terms of such securities or by mandatory operation of law to make such redemption, repurchase or acquisition or (z) such acquisition results from the conversion of any convertible securities issued by the Issuer or issued by a Subsidiary of the Issuer with a guarantee from the Issuer; and |
“Mandatory Settlement Date” means the earlier of:
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(i) |
the 10th Business Day following the date on which a Compulsory Arrears of Interest Settlement Event occurs; |
(ii) |
the next scheduled Interest Payment Date on which the Issuer pays interest on the Notes; or |
(iii) |
the date on which the Notes are redeemed or repaid in accordance with Condition 3, Condition 7 or Condition 10. |
6.Payments
(a)Method of payment
Subject as provided below:
(i) |
payments in a Specified Currency other than euro will be made by credit or transfer to an account in the relevant Specified Currency maintained by the payee with, or, at the option of the payee, by a cheque in such Specified Currency drawn on, a bank in the principal financial centre of the country of such Specified Currency; and |
(ii) |
payments in euro will be made by credit or transfer to a euro account (or to any other account to which euro may be credited or transferred) specified by the payee or, at the option of the payee, by a euro cheque. |
Payments will be subject in all cases to (i) any fiscal or other laws and regulations applicable thereto in the place of payment, but without prejudice to the provisions of Condition 8, and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the “Code”) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, any official interpretations thereof, or any law implementing an intergovernmental approach thereto.
(b)Presentation of Bearer Notes and Coupons
Payments of principal in respect of Bearer Notes will be made in the manner provided in paragraph (a) above only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of Bearer Notes, and payments of interest in respect of Bearer Notes will (subject as provided below) be made as aforesaid only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of Coupons, in each case at the specified office of any Paying Agent outside the United States (which expression, as used herein, means the United States of America (including the States and the District of Columbia and its possessions)).
Upon the date on which any Note in bearer form becomes due and repayable, unmatured Coupons and Talons (if any) relating thereto (whether or not attached) shall become void and no payment or, as the case may be, exchange for further Coupons shall be made in respect thereof.
If the due date for redemption of any definitive Bearer Note is not an Interest Payment Date, interest (if any) accrued in respect of such Note from (and including) the preceding Interest Payment Date or, as the case may be, the Interest Commencement Date shall be payable only against surrender of the relevant definitive Bearer Note.
(c)Payments in respect of Registered Notes
(i) |
Payments of principal in respect of Registered Notes shall be made against presentation and surrender of the relevant Certificates at the specified office of any of the Transfer Agents or of the Registrar and in the manner provided in the sub-paragraph (ii) below. |
(ii) |
Interest on Registered Notes shall be paid to the person show non the Register at the close of business on the fifteenth day before the due date for payment thereof (the “Record Date”). Payments of interest on each Registered Note shall be made in the relevant currency by cheque drawn on a Bank and mailed to the holder (or to the first named of joint holders) of such Note at its address appearing in the Register on the Record Date. Upon application by the holder to the specified office of the Registrar or any Transfer Agent before the Record Date, such payment of interest may be made by transfer to an account in the relevant currency maintained by the payee with a Bank. |
(iii) |
Payments of principal and interest in respect of Registered Notes registered in the name of, or in the name of a |
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nominee for, The Depository Trust Company (“DTC”) and denominated in a Specified Currency other than U.S. dollars will be made or procured to be made by transfer by the Registrar to an account in the relevant Specified Currency of the Exchange Agent on behalf of DTC or its nominee in accordance with the following provisions. The amounts in such Specified Currency payable by the Registrar or its agent to DTC with respect to Registered Notes held by DTC or its nominee will be received from the Issuer by the Registrar who will make payments in such Specified Currency by wire transfer of same day funds to the designated bank account in such Specified Currency of those DTC participants entitled to receive the relevant payment who have made an irrevocable election to DTC, in the case of interest payments, on or prior to the third DTC Business Day after the Record Date for the relevant payment of interest and, in the case of payments of principal, at least 12 DTC Business Days prior to the relevant payment date, to receive that payment in such Specified Currency. The Registrar, after the Exchange Agent has converted amounts in such Specified Currency into U.S. dollars, will deliver such U.S. dollar amount in same day funds to DTC for payment through its settlement system to those DTC participants entitled to receive the relevant payment who did not elect to receive such payment in such Specified Currency. The Agency Agreement sets out the manner in which such conversions are to be made. For the purposes of this Condition 6(c), “DTC Business Day” means any day on which DTC is open for business.
(d)General provisions applicable to payments
The holder of a Global Note or a Global Certificate shall be the only person entitled to receive payments in respect of Notes represented by such Global Note or Global Certificate and the Issuer will be discharged by payment to, or to the order of, the holder of such Global Note or Global Certificate in respect of each amount so paid. Each of the persons shown in the records of Euroclear, Clearstream, Luxembourg or DTC as the beneficial holder of a particular nominal amount of Notes represented by such Global Note or Global Certificate must look solely to Euroclear, Clearstream, Luxembourg or DTC, as the case may be, for their share of each payment so made by the Issuer to, or to the order of, the holder of such Global Note or Global Certificate.
Notwithstanding the foregoing provisions of this Condition, if any amount of principal and/or interest in respect of Bearer Notes is payable in U.S. dollars, such U.S. dollar payments of principal and/or interest in respect of such Notes will be made at the specified office of a Paying Agent in the United States if:
(i) |
the Issuer has appointed Paying Agents with specified offices outside the United States with the reasonable expectation that such Paying Agents would be able to make payment in U.S. dollars at such specified offices outside the United States of the full amount of principal and interest on the Notes in the manner provided above when due; |
(ii) |
payment of the full amount of such principal and interest at all such specified offices outside the United States is illegal or effectively precluded by exchange controls or other similar restrictions on the full payment or receipt of principal and interest in U.S. dollars; and |
(iii) |
such payment is then permitted under United States law without involving, in the opinion of the Issuer, adverse tax consequences to the Issuer. |
(e)Payment Day
If the date for payment of any amount in respect of any Note or Coupon is not a Payment Day, the holder thereof shall not be entitled to payment until the next following Payment Day in the relevant place and shall not be entitled to further interest or other payment in respect of such delay. For these purposes, “Payment Day” means any day which (subject to Condition 9) is:
(i) |
a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in: |
(A)in the case of Notes in definitive form only, the relevant place of presentation;
(B)any Additional Financial Centre specified in the applicable Final Terms; and
(ii) |
either (1) in relation to any sum payable in a Specified Currency other than euro, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in the principal financial centre of the country of the relevant Specified Currency or (2) in relation to any sum payable in euro, a day on which the TARGET2 System is open. |
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(f)Interpretation of principal and interest
Any reference in these Terms and Conditions to principal in respect of the Notes shall be deemed to include, as applicable:
(i) |
any Additional Amounts which may be payable with respect to principal under Condition 8 or under any undertakings given in addition thereto or in substitution therefor pursuant to the Trust Deed; |
(ii) |
the Final Redemption Amount of the Notes; |
(iii) |
the Early Redemption Amount of the Notes (being the Early Redemption Amount (Tax), Early Redemption Amount (Rating), Early Redemption Amount (Accounting), Early Redemption Amount (CoC) and Early Redemption Amount (Event of Default), as applicable); |
(iv) |
the Optional Redemption Amount(s) (if any) of the Notes; and |
(v) |
any premium and any other amounts (other than interest) which may be payable by the Issuer under or in respect of the Notes. |
Any reference in these Terms and Conditions to interest will, unless the context otherwise requires, include Arrears of Interest. Any reference in these Terms and Conditions to interest (including in relation to any Arrears of Interest) in respect of the Notes shall be deemed to include, as applicable, any Additional Amounts which may be payable with respect to interest (including in respect of any Arrears of Interest) under Condition 8 or any undertakings given in addition thereto or in substitution therefor pursuant to the Trust Deed.
In relation to any reference in the Terms and Conditions to any redemption amount above the nominal value of any Note (other than the Make Whole Redemption Price), such amount above the nominal value shall represent a fixed interest amount for the period during which the Notes are outstanding).
7.Redemption, Substitution, Variation and Purchase
(a)Redemption at maturity
Unless previously redeemed or purchased and cancelled as specified below, each Note will be redeemed by the Issuer at its Final Redemption Amount specified in the applicable Final Terms together with any outstanding Arrears of Interest in the relevant Specified Currency on the Maturity Date.
(b)Redemption for tax reasons
If, immediately prior to the giving of the notice referred to below, a Tax Event or a Withholding Tax Event has occurred and is continuing, then the Issuer may, at its option (without any requirement for the consent or approval of the Noteholders), and having given not less than 10 nor more than 60 days’ notice to the Trustee, the Issuing and Principal Paying Agent and, in accordance with Condition 14, the Noteholders (which notice shall be irrevocable and shall specify the date fixed for redemption) and subject to Condition 7(j), redeem in accordance with these Conditions at any time all, but not some only, of the Notes, at the Early Redemption Amount (Tax) together with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest. Upon the expiry of such notice, the Issuer shall redeem the Notes.
In these Terms and Conditions:
“Early Redemption Amount (Tax)” is as specified in the applicable Final Terms;
a “Tax Event” shall be deemed to have occurred if as a result of a Tax Law Change:
(i) |
in respect of, or as a result of, the Issuer’s obligation to make any Interest Payment on the next following Interest Payment Date, the Issuer would not be entitled to claim a deduction in computing its taxation liabilities in the Relevant Jurisdiction or such entitlement is materially reduced or materially delayed (a “disallowance”); |
(ii) |
the Notes are prevented from being treated as loan relationships for tax purposes in the Relevant Jurisdiction; or |
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(iii) |
in respect of the Issuer’s obligation to make any Interest Payment on the next following Interest Payment Date, w here a deduction arises in respect of such Interest Payment the Issuer would not to any material extent be entitled to have such deduction set against the profits of companies with which it is grouped for applicable tax purposes in the Relevant Jurisdiction (Whether under the group relief system current as at the Issue Date of the last Tranche of the Notes or any similar system or systems having like effect as may from time to time exist) otherwise than as a result of a disallowance within (i), |
and, in each case, the Issuer cannot avoid the foregoing in connection with the Notes by taking measures reason ably available to it, provided measures reasonably available to the Issuer shall not include allocating a disallowance provided for in (i) above to any other company or security;
“Tax Law Change” means a change in or proposed change in, or amendment or proposed amendment to, the laws or regulations of the Relevant Jurisdiction or any political subdivision or any authority thereof or therein having the power to tax, including any treaty to which the Relevant Jurisdiction is a party, or any change in the application of official or generally published interpretation of such laws or regulations, including a decision of any court or tribunal, or any interpretation or pronouncement by any relevant tax authority that provides for a position with respect to such laws or regulations or interpretation thereof that differs from the previously generally accepted position in relation to similar transactions, which change or amendment becomes, or would become, effective on or after the Issue Date of the last Tranche of the Notes; and
a “Withholding Tax Event” shall be deemed to occur if as a result of a Tax Law Change, in making any payments on the Notes or the Coupons, the Issuer has paid or will or would on the next Interest Payment Date be required to pay Additional Amounts on the Notes or the Coupons and the Issuer cannot avoid the foregoing in connection with the Notes by taking measures reasonably available to it.
(c)Redemption at the option of the Issuer (Issuer Call)
If Issuer Call is specified in the applicable Final Terms, the Issuer may, at its option (without any requirement for the consent or approval of the Noteholders) and, having given not less than 10 nor more than 60 days’ notice prior to the relevant date fixed for redemption falling within the Issuer Call Period (as specified in the applicable Final Terms) to the Issuing and Principal Paying Agent and the Trustee and, in accordance with Condition 14, the Noteholders (w hic h notice shall be irrevocable and shall specify the date fixed for redemption), redeem all or some only of the Notes then outstanding on any Optional Redemption Date and at the relevant Optional Redemption Amount(s) specified in the applicable Final Terms. Any such redemption must be of a nominal amount equal to the Minimum Redemption Amount or a Higher Redemption Amount. The relevant Optional Redemption Amount will be either, as specified in the applicable Final Terms, (A) if Make Whole Redemption Price is specified in the applicable Final Terms as applying to one or more Optional Redemption Dates, the relevant Make Whole Redemption Price or (B) if Par Call is specified in the applicable Final Terms as applying to one or more Optional Redemption Dates, the specified amount per Calculation Amount stated in the applicable Final Terms together, in each case, with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest.
The Make Whole Redemption Price will be an amount equal to the higher of:
(A) |
if Spens Amount is specified as applicable in the applicable Final Terms, (x) 100 per cent. of the nominal amount outstanding of the Notes to be redeemed or (y) the nominal amount outstanding of the Notes to be redeemed multiplied by the price, as reported to the Issuer and the Trustee by the Determination Agent, at which the Gross Redemption Yield on such Notes on the Reference Date (assuming for this purpose that the Notes are redeemed on the Next Par Call Date) is equal to the Gross Redemption Yield (determined by reference to the middle market price) at the Quotation Time on the Reference Date of the Reference Bond, plus the Redemption Margin; or |
(B) |
if Make Whole Redemption Amount is specified as applicable in the applicable Final Terms, (x) 100 per cent. of the nominal amount outstanding of the Notes to be redeemed and (y) the sum of the present values of (i) the nominal amount outstanding of the Notes to be redeemed and (ii) the Remaining Term Interest on such Notes (exclusive of interest accrued (including any Arrears of Interest) to the date of redemption). Such present values shall be calculated by discounting such amounts to the date of redemption on an annual basis (assuming a 360-day year consisting of twelve 30-day months or, in the case of an incomplete month, the number of days elapsed) at the Reference Bond Rate, plus the Redemption Margin, |
all as determined by the Determination Agent.
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In the case of a partial redemption of Notes, the Notes to be redeemed (“Redeemed Notes”) will be selected individually by lot, in the case of Redeemed Notes represented by definitive Notes, not more than 30 days prior to the date fixed for redemption (such date of selection being hereinafter called the “Selection Date”). In the case of Redeemed Notes represented by definitive Notes, a list of the serial numbers of such Redeemed Notes will be published in accordance with Condition 14 not less than 10 days prior to the date fixed for redemption.
In these Terms and Conditions:
“DA Selected Bond” means a government security or securities selected by the Determination Agent as having an actual or interpolated maturity comparable with the remaining term of the Notes to the Next Par Call Date, that would be utilised, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities denominated in the Specified Currency and of a comparable maturity to the remaining term of the Notes to the Next Par Call Date;
“Determination Agent” means an investment bank or financial institution of international standing selected by the Issuer after consultation with the Trustee;
“Gross Redemption Yield” means, with respect to a security, the gross redemption yield on such security, expressed as a percentage and calculated by the Determination Agent on the basis set out by the United Kingdom Debt Management Office in the paper “Formulae for Calculating Gilt Prices from Yields”, page 4, Section One: Price/Yield Formulae “Conventional Gilts”; “Double dated and Undated Gilts with Assumed (or Actual) Redemption on a Quasi-Coupon Date” (published 8 June 1998, as amended or updated from time to time) on a semi-annual compounding basis (converted to an annualised yield and rounded up (if necessary) to four decimal places);
“Next Par Call Date” shall means the Maturity Date or (if earlier) the next occurring Optional Redemption Date to which “Par Call” is specified as in the applicable Final Terms as being applicable;
“Quotation Time” shall be as set out in the applicable Final Terms;
“Redemption Margin” shall be as set out in the applicable Final Terms;
“Reference Bond” shall be as set out in the applicable Final Terms or the DA Selected Bond;
“Reference Bond Price” means, with respect to any date of redemption, (a) the arithmetic average of the Reference Government Bond Dealer Quotations for such date of redemption, after excluding the highest and lowest such Reference Government Bond Dealer Quotations, or (b) if the Determination Agent obtains fewer than four such Reference Government Bond Dealer Quotations, the arithmetic average of all such quotations;
“Reference Bond Rate” means, with respect to any date of redemption, the rate per annum equal to the annual or semi-annual yield (as the case may be) to maturity or interpolated yield to maturity (on the relevant day count basis) of the Reference Bond, assuming a price for the Reference Bond (expressed as a percentage of its nominal amount) equal to the Reference Bond Price for such date of redemption;
“Reference Date” will be set out in the relevant notice of redemption;
“Reference Government Bond Dealer” means each of five banks selected by the Issuer, or their affiliates, which are (A) primary government securities dealers, and their respective successors, or (B) market makers in pricing corporate bond issues;
“Reference Government Bond Dealer Quotations” means, with respect to each Reference Government Bond Dealer and any date of redemption, the arithmetic average, as determined by the Determination Agent, of the bid and offered prices for the Reference Bond (expressed in each case as a percentage of its nominal amount) at the Quotation Time on the Reference Date quoted in writing to the Determination Agent by such Reference Government Bond Dealer; and
“Remaining Term Interest” means, with respect to any Note, the aggregate amount of scheduled payment(s) of interest on such Note for the remaining term of such Note to the Next Par Call Date determined on the basis of the rate of interest applicable to such Note from and including the date on which such Note is to be redeemed by the Issuer pursuant to this Condition 7(c).
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(d)Redemption for Rating Reasons
If, immediately prior to the giving of the notice referred to below, a Capital Event has occurred and is continuing, then the Issuer may, at its option (without any requirement for the consent or approval of the Noteholders), and having given not less than 10 nor more than 60 days’ notice to the Trustee, the Issuing and Principal Paying Agent and, in accordance with Condition 14, the Noteholders (which notice shall be irrevocable and shall specify the date fixed for redemption) and subject to Condition 7(j), redeem in accordance with these Conditions all, but not some only, of the Notes at any time at the Early Redemption Amount (Rating) together with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest. Upon the expiry of such notice, the Issuer shall redeem the Notes.
In these Terms and Conditions:
a “Capital Event” shall be deemed to occur if the Issuer has received, and confirmed in writing to the Trustee that it has so received, confirmation from any Rating Agency then providing a solicited rating of the Issuer or the Notes at the invitation of, or with the consent of, the Issuer and in connection with which the Notes are assigned an equity credit, either directly or via a publication by such Rating Agency, that an amendment, clarification or change has occurred in its equity credit criteria which becomes effective on or after the Issue Date of the last Tranche of the Notes (or, if later, effective after the date on which the Notes are assigned “equity credit” by such Rating Agency for the first time) and as a result of which, but not otherwise, (a) the Notes will no longer be eligible (or if the Notes have been partially or fully re-financed since the Issue Date of the first Tranche of the Notes and are no longer eligible for equity credit in part or in full as a result thereof, the Notes would no longer have been eligible as a result of such change had they not been re-financed) for the same, or a higher amount of, “equity credit” (or such other nomenclature that the Rating Agency may then use to describe the degree to which an instrument exhibits the characteristics of an ordinary share) as was attributed to the Notes at the Issue Date of the last Tranche of the Notes (or if “equity credit” is not assigned to the Notes by the relevant Rating Agency on the Issue Date of the last Tranche of the Notes, at the date on which “equity credit” is assigned by such Rating Agency for the first time) or (b) the length of time the Notes are assigned a particular level of “equity credit” by the relevant Rating Agency is shortened as compared to the length of time they were assigned that level of “equity credit” by such Rating Agency under its prevailing methodology on the Issue Date of the last Tranche of the Notes (or if “equity credit” was not assigned to the Notes by the relevant Rating Agency on the Issue Date of the last Tranche of the Notes, at the date on which “equity credit” is assigned by such Rating Agency for the first time);
“Early Redemption Amount (Rating)” is as specified in the applicable Final Terms; and
“Rating Agency” means, for the purposes of this Condition 7(d), Fitch Ratings Limited, Moody’s Investors Service Limited (“Moody’s”) or S&P Global Ratings Europe (“S&P”) or any rating agency (a “Substitute Rating Agency”) substituted for any of them by the Issuer and for the purposes of Condition 7(f), Moody’s or S&P or a Substitute Rating Agency and (in either case) any of their respective affiliates or successors.
(e)Redemption for Accounting Reasons
If, immediately prior to the giving of the notice referred to below, an Accounting Event has occurred and is continuing, then the Issuer may, at its option (without any requirement for the consent or approval of the Noteholders), and having given not less than 10 nor more than 60 days’ notice to the Trustee, the Issuing and Principal Paying Agent and, in accordance with Condition 14, the Noteholders (which notice shall be irrevocable and shall specify the date fixed for redemption) and subject to Condition 7(j), redeem in accordance with these Conditions all, but not some only, of the Notes at any time at the Early Redemption Amount (Accounting) together with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest. Upon the expiry of such notice, the Issuer shall redeem the Notes.
In these Terms and Conditions:
an “Accounting Event” shall be deemed to occur if, as a result of a change in accounting principles which becomes effective on or after the Issue Date of the last Tranche of the Notes, but not otherwise, the obligations of the Issuer under the Notes must not or may no longer be recorded as a “financial liability” in the next following audited annual consolidated financial statements of the Issuer prepared in accordance with IFRS or any other accounting standards that the Issuer may adopt in the future for the preparation of its audited annual consolidated financial statements in accordance with United Kingdom company law; “Early Redemption Amount (Accounting)” is as specified in the applicable Final Terms; and
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“IFRS” means International Financial Reporting Standards as issued by the International Accounting Standards Board.
(f)Redemption for Change of Control
If, immediately prior to the giving of the notice referred to below, a Change of Control Event has occurred and is continuing, then the Issuer may, at its option (without any requirement for the consent or approval of the Noteholders), and having given not less than 10 nor more than 60 days’ notice to the Trustee, the Issuing and Principal Paying Agent and, in accordance with Condition 14, the Noteholders (which notice shall be irrevocable and shall specify the date fixed for redemption) and subject to Condition 7(j), redeem in accordance with these Conditions all, but not some only, of the Notes at any time at the Early Redemption Amount (CoC) together with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest. Upon the expiry of such notice, the Issuer shall redeem the Notes.
The Trustee is under no obligation to ascertain whether a Change of Control Event or Change of Control or any event which could lead to the occurrence of or could constitute a Change of Control Event or Change of Control has occurred, and, until it shall have actual know ledge or notice pursuant to the Trust Deed to the contrary, the Trustee may assume that no Change of Control Event or Change of Control or other such event has occurred.
The Issuer intends (without thereby assuming a legal or contractual obligation) that for so long as any Notes remain outstanding, if (i) a Change of Control Event occurs and (ii) the Issuer elects to redeem the Notes pursuant to this Condition 7(f), it will launch a tender offer for all outstanding unsubordinated debt securities (which do not already contain a contractual right of the holders of such debt securities for such securities to be redeemed or repurchased as a result of the events giving rise to the Change of Control Event) at a price equal to not less than their aggregate nominal amount plus accrued and unpaid interest as soon as reasonably practicable following such event. The lssuer also intends (without thereby assuming a legal or contractual obligation) to launch such tender offer in such a way as to ensure that the repurchase of any unsubordinated debt securities tendered to it will be effected prior to any redemption of the Notes pursuant to this Condition 7(f).
In these Terms and Conditions:
A “Change of Control Event” will be deemed to occur if:
(i) |
any person or any persons acting in concert (as defined in the United Kingdom’s City Code on Takeovers and Mergers), other than a holding company (as defined in Section 1159 of the Companies Act 2006 as amended) w hose shareholders are or are to be substantially similar to the pre-existing shareholders of the Issuer, shall become interested (within the meaning of Part 22 of the Companies Act 2006 as amended) in (A) more than 50 per cent. of the issued or allotted ordinary share capital of the Issuer or (B) shares in the capital of the Issuer carrying more than 50 per cent. of the voting rights normally exercisable at a general meeting of the Issuer (each such event, a “Change of Control”); provided that, no Change of Control shall be deemed to occur if the event which would otherwise have constituted a Change of Control occurs or is carried out for the purposes of a reorganisation on terms previously approved by the Trustee in writing or by an Extraordinary Resolution; and |
(ii) |
any of the Issuer’s Senior Unsecured Obligations carry: |
(A) |
an investment grade credit rating (Baa3/BBB-, or their respective equivalents, or better) (an “Investment Grade Rating”), by any Rating Agency at the invitation of the Issuer; or |
(B) |
w here there is no rating from any Rating Agency assigned at the invitation of the Issuer, an Investment Grade Rating by any Rating Agency of its own volition, |
and;
(x) |
such rating is, within the Change of Control Period, either downgraded to a non-investment grade credit rating (Ba1/BB+, or their respective equivalents, or worse) (a “Non-Investment Grade Rating”) or withdrawn and is not, within the Change of Control Period, subsequently (in the case of a downgrade) upgraded or (in the case of a withdrawal) reinstated to an Investment Grade Rating by such Rating Agency; and |
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(y) |
there remains no other Investment Grade Rating of any of the Issuer’s Senior Unsecured Obligations from any other Rating Agency; and |
(iii) |
in making any decision to downgrade or withdraw an Investment Grade Rating pursuant to paragraph (ii) above, the relevant Rating Agency announces publicly or confirms in writing to the Issuer or the Trustee that such decision(s) resulted, in whole or in part, from the occurrence of the relevant Change of Control. |
Further, if at the time of the occurrence of the relevant Change of Control any of the Issuer’s Senior Unsecured Obligations are not assigned an Investment Grade Rating by any Rating Agency, a Change of Control Event will be deemed to occur upon the occurrence of a Change of Control alone.
If the rating designations employed by either Moody’s or S&P are changed from those which are described in paragraph (ii) of the definition of “Change of Control Event” above, or if a rating is procured from a Substitute Rating Agency, the Issuer shall determine, with the agreement of the Trustee, the rating designations of Moody’s or S&P or such Substitute Rating Agency (as appropriate) as are most equivalent to the prior rating designations of Moody’s or S&P and the definition of “Change of Control Event” shall be construed accordingly.
“Change of Control Period” means the period commencing upon a Change of Control and ending 90 days after the Change of Control (or such longer period for which the Senior Unsecured Obligations are under consideration (such consideration having been announced publicly within the period ending 90 days after the Change of Control) for rating review, such period not to exceed 60 days after the public announcement of such consideration);
“Early Redemption Amount (CoC)” is as specified in the applicable Final Terms; and
“Senior Unsecured Obligations” means any of the Issuer’s senior unsecured obligations.
(g)Clean-Up redemption at the option of the Issuer
If Clean-Up Call is specified in the applicable Final Terms and if a Clean-Up Call Event has occurred, then the Issuer may, at its option (without any requirement for the consent or approval of the Noteholders), and having given not les s than 10 and no more than 60 days’ notice to the Trustee and the Issuing and Principal Paying Agent and, in accordance with Condition 14, the Noteholders (which notice shall be irrevocable and shall specify the date fixed for redemption) and subject to Condition 7(j), redeem all but not some only of the Notes on, or at any time after, the Clean-Up Call Optional Redemption Date specified in the applicable Final Terms. Any such redemption of Notes shall be at their Optional Redemption Amount, together with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest. Upon the expiry of such notice, the Issuer will redeem the Notes.
In the Terms and Conditions:
“Clean-Up Call Event” means the Clean-Up Call Threshold Percentage or more of the aggregate nominal amount of the Notes originally issued (and, for these purposes, any further securities issued pursuant to Condition 16 will be deemed to have been originally issued) have been redeemed and/or purchased by the Issuer (except, if applicable, for the Notes redeemed at the Make Whole Redemption Price); and
“Clean-Up Call Threshold Percentage” is as specified in the applicable Final Terms.
(h)Early Redemption Amounts
For the purpose of Conditions 7(b), 7(d), 7(e), 7(f) above and Condition 10, each Note will be redeemed at the specified Early Redemption Amount (which shall be the Early Redemption Amount (Tax), Early Redemption Amount (Rating), Early Redemption Amount (Accounting), Early Redemption Amount (CoC) and Early Redemption Amount (Event of Default), as applicable), together with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest.
(i)Substitution and Variation
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If an Accounting Event, a Capital Event, a Tax Event or a Withholding Tax Event (each a “Substitution or Variation Event”) has occurred and is continuing, then the Issuer may, subject to Condition 7(j) (without any requirement for the consent or approval of the Noteholders) and subject to its having satisfied the Trustee immediately prior to the giving of any notice referred to herein that the provisions of this Condition 7(i) have been complied with, and having given not less than 10 and no more than 60 days’ notice to the Trustee and the Issuing and Principal Paying Agent and, in accordance with Condition 14, the Noteholders (which notice shall be irrevocable and specify the date for such substitution or variation, as the case may be), at any time either (i) substitute all, but not some only, of the Notes for, or (ii) vary the terms of the Notes with the effect that they remain or become (as the case may be), Qualifying Notes, and the Trustee shall (subject to the following provisions of this Condition 7(i) and subject to the receipt by it of the certificate of two Authorised Signatories of the Issuer referred to in Condition 7(j) below) agree to such substitution or variation.
Upon expiry of such notice, the Issuer shall either vary the terms of or, as the case may be, substitute the Notes in accordance with this Condition 7(i).
The Trustee agrees, at the request and expense of the Issuer and subject as aforesaid, to use reasonable endeavours to assist the Issuer in the substitution of the Notes for, or the variation of the terms of the Notes so that they remain, or as appropriate, become, Qualifying Notes, provided that the Trustee shall not be obliged to participate in, or assist with, any such substitution or variation if the terms of the proposed Qualifying Notes or the participation in or assistance with such substitution or variation would impose, in the Trustee’s sole opinion, more onerous obligations upon it or expose it to any additional duties, responsibilities or liabilities or reduce the rights and/or the protective provisions afforded to it in these Conditions and/or any documents to which it is a party in anyway and, separately, against which it is not indemnified and/or secured and/or prefunded to its satisfaction, if it shall so require. If the Trustee does not participate or assist as provided above, the Issuer may redeem the Notes as provided in Condition 7.
In connection with any substitution or variation in accordance with this Condition 7(i), the Issuer shall comply with the rules of any stock exchange on which the Notes are for the time being listed or admitted to trading.
Any such substitution or variation in accordance with the foregoing provisions following a Substitution or Variation Event shall only be permitted if it does not give rise to any other Substitution or Variation Event with respect to the Qualifying Notes.
Any such substitution or variation in accordance with the foregoing provisions following a Substitution or Variation Event shall only be permitted if it does not result in the Qualifying Notes no longer being eligible for the same, or a higher amount of, “equity credit” (or such other nomenclature that the Rating Agency may then use to describe the degree to which an instrument exhibits the characteristics of an ordinary share) as is attributed to the Notes on the date notice is given to Noteholders of the substitution or variation.
In these Terms and Conditions:
“Qualifying Notes” means securities that:
(a) |
are issued by the Issuer or any wholly-owned direct or indirect finance subsidiary of the Issuer with a guarantee of such obligations by the Issuer; |
(b) |
rank and (save in the case of a direct issue by the Issuer) benefit from a guarantee that ranks in relation to the obligations of the Issuer under such securities and/or such guarantee (as the case may be), equally with the ranking of the Notes and pari passu in a winding-up or liquidation of the Issuer with any Parity Obligations of the Issuer; |
(c) |
contain terms not materially less favourable to the Noteholders than the terms of the Notes (as reasonably determined by the Issuer (in consultation with an independent investment bank, independent financial adviser or counsel of international standing appointed at the Issuer’s expense)) and which: |
(i) |
provide for the same or a more favourable Rate of Interest from time to time as applied to the Notes immediately prior to such substitution or variation and preserve the same Interest Payment Dates; |
(ii) |
preserve the obligations (including the obligations arising from the exercise of any right) of the Issuer as to principal and as to redemption of the Notes, including (without limitation) as to timing of, and amounts payable upon, such redemption; |
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(iii) |
preserve any existing rights under these Conditions to any accrued interest, any Deferred Interest Payments, any Arrears of Interest and any other amounts payable under the Notes which, in each case, has accrued to Noteholders or Couponholders and not been paid; |
(iv) |
do not contain terms providing for the mandatory deferral of payments of interest and/or principal; |
(v) |
do not contain terms providing for loss absorption through principal write-down or conversion to ordinary shares; and |
(d) |
are (i) listed on the Official List and admitted to trading on the London Stock Exchange plc’s Main Market or (ii) listed on such other stock exchange as is a Recognised Stock Exchange at that time as selected by the Issuer. |
For the purposes of the definition of Qualifying Notes:
“Official List” means the Official List of the Financial Conduct Authority acting under Part VI of the Financial Services and Markets Act 2000; and
“Recognised Stock Exchange” means a recognised stock exchange as defined in section 1005 of the Income Tax Act 2007 as the same may be amended from time to time and any provision, statute or statutory instrument replacing the same from time to time.
(j) |
Preconditions to Special Event Redemption, Change of Control Event Redemption and Substitution and Variation |
Prior to the giving of any notice of redemption pursuant to Condition 7(b), 7(d), 7(e), 7(f), 7(g) or any notice of substitution or variation pursuant to Condition 7(i), the Issuer shall deliver to the Trustee a certificate in form and substance satisfactory to the Trustee signed by two Authorised Signatories of the Issuer stating that the relevant requirement or circumstance giving rise to the right to redeem, substitute or vary is satisfied, and w here the relevant Special Event requires measures reasonably available to the Issuer to be taken, the relevant Special Event cannot be avoided by the Issuer taking such measures. In relation to a substitution or variation pursuant to Condition 7(i), such certificate shall also include further certifications that the criteria specified in paragraphs (a) to (d) of the definition of Qualifying Notes will be satisfied by the Qualifying Notes upon issue and that such determinations were reached by the Issuer in consultation with an independent investment bank or counsel of international standing. The Trustee may rely absolutely upon and shall be entitled to accept such Authorised Signatories’ certificate without any liability to any person for so doing and without any further inquiry as sufficient evidence of the satisfaction of the conditions precedent set out in such paragraphs in which event it shall be conclusive and binding on the Noteholders and the Couponholders.
Any redemption of the Notes in accordance with Condition 7(b), 7(c), 7(d), 7(e), 7(f) or 7(g) shall be conditional on all outstanding Arrears of Interest being paid in full in accordance with the provisions of Condition 5 on or prior to the date thereof, together with any accrued and unpaid interest up to (but excluding) such redemption date.
The Trustee is under no obligation to ascertain whether any Special Event or Change of Control Event or Change of Control or any event which could lead to the occurrence of, or could constitute, any such Special Event, Change of Control Event or Change of Control, has occurred and, until it shall have actual know ledge or express notice pursuant to the Trust Deed to the contrary, the Trustee may assume that no such Special Event, Change of Control Event or Change of Control or such other event has occurred.
In these Terms and Conditions:
“Special Event” means any of an Accounting Event, a Capital Event, a Clean-Up Call Event, a Tax Event or a Withholding Tax Event or any combination of the foregoing.
(k)Purchases
The Issuer or any Subsidiary of the Issuer may at any time purchase Notes (provided that, in the case of Bearer Notes, all unmatured Coupons and Talons appertaining thereto are purchased therewith) at any price in the open market or otherwise.
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The Issuer will purchase (or procure the purchase of) any Retained Notes on the Issue Date.
(I)Cancellation
All Notes (other than Retained Notes) which are (a) redeemed or (b) purchased by or on behalf of the Issuer will forthwith be cancelled (together with all Certificates or unmatured Coupons and Talons attached thereto or surrendered therewith at the time of redemption) and accordingly may not be reissued or resold. Any Notes which are purchased by or on behalf of any of the Issuer’s Subsidiaries may, at the option of the purchaser, be held or res old or surrendered to a Paying Agent for cancellation.
The Issuer may cancel (or procure the cancellation of) any Retained Notes held by it or on its behalf at any time.
8.Taxation
All payments in respect of the Notes and Coupons by the Issuer will be made without withholding or deduction for any present or future taxes, assessments or other governmental charges (“Taxes”) of the Issuer’s jurisdiction of incorporation (the “Relevant Jurisdiction”) (or any political subdivision or taxing authority thereof or therein), unless the withholding or deduction of the Taxes is required by law. In that event, the Issuer will pay such additional amounts (“Additional Amounts”) as may be necessary in order that the net amount paid to each holder of any Note or Coupon who, with respect to any such Tax is not resident in the Relevant Jurisdiction, after such withholding or deduction shall be not less than the respective amount to which such holder would have been entitled in respect of such Note or Coupon, as the case may be, in the absence of the withholding or deduction; provided however that the Issuer shall not be required to pay any Additional Amounts (i) for or on account of any such Tax imposed by the United States (or any political subdivision or taxing authority thereof or therein) or (ii) for or on account of:
(a) |
any Tax which would not have been imposed but for (i) the existence of any present or former connection between a holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possess or of a power over, such holder, if such holder is an estate, trust, partnership or corporation) and the Relevant Jurisdiction or any political subdivision or territory or possession thereof or area subject to its jurisdiction, including, without limitation, such holder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a citizen or resident thereof or being or having been present or engaged in trade or business therein or having or having had a permanent establishment therein or (ii) the presentation of such Note or Coupon (x) for payment on a date more than 30 days after the Relevant Date (as defined below) or (y) in the Relevant Jurisdiction; |
(b) |
any estate, inheritance, gift, sale, transfer, personal property or similar tax, assessment or other governmental charge; |
(c) |
any Tax which is payable otherwise than by withholding or deduction from payments of (or in respect of) principal of, or any interest on, such Note or Coupon; |
(d) |
any Tax that is imposed or withheld by reason of the failure by the holder or any beneficial owner of such Note or Coupon to comply with a request of the Issuer given to the holder in accordance with Condition 14 (i) to provide information concerning the nationality, residence or identity of the holder or any beneficial owner or (ii) to make any declaration or other similar claim or satisfy any information or reporting requirements, which, in the case of (i) or (ii), is required or imposed by a statute, treaty, regulation or administrative practice of the Relevant Jurisdiction as a precondition to exemption from all or part of such Tax; or |
(e) |
any combination of items (a), (b), (c) and (d) above, |
nor shall the Issuer be required to pay any Additional Amounts with respect to any payment of the principal of, or any interest on, any Note or Coupon to any holder who is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent such payment would be required by the laws of the Relevant Jurisdiction (or any political subdivision or taxing authority thereof or therein) to be included in the income for tax purposes of a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner which would not have been entitled to such Additional Amounts had it been the holder of such Note or Coupon.
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Notwithstanding any other provision of the Terms and Conditions, any amounts to be paid on the Notes by or on behalf of the Issuer, will be paid net of any deduction or withholding imposed or required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), or otherwise imposed pursuant to Sections 1471 through 1474 of the Code (or any regulations thereunder or official interpretations thereof) or an intergovernmental agreement between the United States and another jurisdiction facilitating the implementation thereof (or any fiscal or regulatory legislation, rules or practices implementing such an intergovernmental agreement) (and any such withholding or deduction, a “FATCA Withholding”). Neither the Issuer nor any other person will be required to pay any Additional Amounts in respect of FATCA Withholding.
As used herein:
“Relevant Date” means the date on which such payment first becomes due, except that, if the full amount of the moneys payable has not been duly received by the Issuing and Principal Paying Agent or the Trustee on or prior to such due date, it means the date on which, the full amount of such moneys having been so received, notice to that effect is duly given to the Noteholders in accordance with Condition 14; and
“United States” means the United States of America (including the States and the District of Columbia) and its possessions (including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands).
9.Prescription
The Notes and Coupons will become void unless a claim for payment is made within a period of 10 years (in the case of principal) and five years (in the case of interest) after the Relevant Date (as defined in Condition 8) therefor (subject to the provisions of Condition 6(b)).
There shall not be included in any Coupon sheet issued on exchange of a Talon any Coupon the claim for payment in respect of which would be void pursuant to this Condition or Condition 6(b) or any Talon which would be void pursuant to Condition 6(b).
10.Event of Default and Enforcement
(a)Event of Default
If default is made in the payment of any principal or any interest due in respect of the Notes and the default continues for a period of 14 days in the case of a payment of principal or 21 days in the case of a payment of interest (an “Event of Default”), then the Issuer shall without notice from the Trustee be deemed to be in default under the Trust Deed, the Notes and, if applicable, the Coupons and the Trustee at its sole discretion may, notwithstanding the first paragraph of Condition 10(b) but subject to the second paragraph of Condition 10(b), institute proceedings for the winding-up of the Issuer and/or prove and/or claim in the winding-up or administration of the Issuer, such claim being subordinated, and for the amount, as provided in Condition 3(b)(i) (such amount, the “Early Redemption Amount (Event of Default)”).
(b)Enforcement
The Trustee may at any time, at its discretion and without notice, take such proceedings against the Issuer as it may think fit to enforce the provisions of the Trust Deed, the Notes and the Coupons but in no event shall the Issuer, by virtue of the institution of any such proceedings, steps or actions, be obliged to pay any sum or sums sooner than the same would otherwise have been payable by it.
The Trustee shall not be bound to take any such proceedings or any other action in relation to the Trust Deed, the Notes or the Coupons unless (i) it shall have been so directed by an Extraordinary Resolution of the relevant Noteholders or so requested in writing by the holders of at least one-quarter in nominal amount of the relevant Notes then outstanding (excluding any Retained Notes), and (ii) it shall have been indemnified and/or secured and/or pre-funded to its satisfaction.
No Noteholder or Couponholder shall be entitled to proceed directly against the Issuer or to institute proceedings for the winding-up or to prove or claim in the winding-up or administration of the Issuer unless the Trustee, having become bound so to proceed, fails or is unable so to do within 60 days and the failure or inability shall be continuing, in which case the Noteholder or Couponholder shall have only such rights against the Issuer as those which the Trustee is entitled to exercise as set out in this Condition 10.
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No remedy against the Issuer, other than as referred to in this Condition 10, shall be available to the Trustee or the Noteholders or Couponholders, whether for the recovery of amounts owing in respect of the Notes or under the Trust Deed or in respect of any breach by the Issuer of any of its other obligations under or in respect of the Notes or under the Trust Deed.
11.Replacement of Notes, Certificates, Coupons and Talons
Should any Note, Certificate, Coupon or Talon be lost, stolen, mutilated, defaced or destroyed, it may be replaced at the specified office of the Issuing and Principal Paying Agent (in the case of Bearer Notes, Coupons or Talons) and of the Registrar (in the case of Certificates) upon payment by the claimant of such costs and expenses as may be incurred in connection therewith and on such terms as to evidence and indemnity as the Issuer may reasonably require. Mutilated or defaced Notes, Certificates, Coupons or Talons must be surrendered before replacements will be issued.
12.Agents
The names of the initial Issuing and Principal Paying Agent, the other Paying Agents, the Registrar and the Transfer Agents and their initial specified offices are set out below.
The Issuer is entitled, with the prior written approval of the Trustee, to vary or terminate the appointment of the Issuing and Principal Paying Agent, any other Paying Agent, the Registrar or any Transfer Agent and/or appoint additional or other Paying Agents or Transfer Agents or another Registrar and/or approve any change in the specified office through which any such agent acts, provided that:
(i) |
there will at all times be an Issuing and Principal Paying Agent and a Calculation Agent; |
(ii) |
there will at all times be a Registrar and a Transfer Agent in relation to Registered Notes; |
(iii) |
so long as the Notes are listed on any stock exchange, there will at all times be a Paying Agent with a specified office in such place as may be required by the rules and regulations of the relevant stock exchange or other relevant authority; and |
(iv) |
there will at all times be a Paying Agent with a specified office in a city approved by the Trustee outside the Relevant Jurisdiction. |
In addition, the Issuer shall forthwith appoint a Paying Agent having a specified office in New York City in the circumstances described in Condition 6(d).
Any variation, termination, appointment or change shall only take effect (other than in the case of insolvency, when it shall be of immediate effect) after not less than 30 nor more than 60 days’ prior notice thereof shall have been given to the Noteholders in accordance with Condition 14.
In acting under the Agency Agreement, the Issuing and Principal Paying Agent, the Paying Agents, the Registrar, the Calculation Agent and the Transfer Agents act solely as agents of the Issuer and, in certain limited circumstances, of the Trustee and do not assume any obligation to, or relationship of agency or trust with, any Noteholders or Couponholders. The Agency Agreement contains provisions permitting any entity into which any Paying Agent or Registrar or Transfer Agent or Calculation Agent is merged or converted or with which it is consolidated or to which it transfers all or substantially all of its assets to become the successor paying agent, registrar, calculation agent or transfer agent, as the case may be.
13.Exchange of Talons
On and after the Interest Payment Date on which the final Coupon comprised in any Coupon sheet matures, the Talon (if any) forming part of such Coupon sheet may be surrendered at the specified office of the Issuing and Principal Paying Agent or any other Paying Agent in exchange for a further Coupon sheet including (if such further Coupon sheet does not include Coupons to (and including) the final date for the payment of interest due in respect of the Note to which it appertains) a further Talon, subject to the provisions of Condition 9.
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14.Notices
Notices to the holders of Registered Notes shall be mailed to them at their respective addresses in the Register and deemed to have been given on the fourth weekday (being a day other than a Saturday, Sunday or bank holiday) after the date of mailing.
Notices to the holders of Bearer Notes will be deemed to be validly given if published in a leading English language daily newspaper of general circulation in the United Kingdom. It is expected that such publication will be made in the Financial Times. The Issuer shall also ensure that notices are duly published in a manner which complies with the rules and regulations of any stock exchange or any other relevant authority on which the Notes are for the time being listed. Any such notice will be deemed to have been given on the date of the first publication.
Notices to be given by any Noteholder shall be in writing and given by lodging the same, together (in the case of any Note in definitive form) with the relative Note or Notes, with the Issuing and Principal Paying Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered Notes). Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the holders of Bearer Notes in accordance with this Condition.
15.Meeting of Noteholders, Modification, Authorisation, Waiver, Determination and Substitution
(a)Meetings
The Trust Deed contains provisions for convening meetings of the Noteholders (which may be held at a physical location, or via an electronic platform (such as a conference call or videoconference) or by a combination of such methods) to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of any of the provisions of these Terms and Conditions, the Notes, the Coupons or the Trust Deed. Such a meeting may be convened by the Issuer or by Noteholders holding not less than 10 percent. in nominal amount of the Notes for the time being outstanding. The quorum at any such meeting for passing an Extraordinary Resolution will be one or more persons holding or representing a clear majority in nominal amount of the Notes for the time being outstanding, or at any adjourned meeting one or more persons being or representing Noteholders whatever the nominal amount of the Notes so held or represented unless the business of such meeting includes consideration of proposals, inter alia, (i) to change the Maturity Date, (ii) to modify the circumstances in which the Issuer is entitled to defer interest or redeem or purchase the Notes, (iii) to reduce or cancel the nominal amount of the Notes or to reduce the amount payable on redemption or purchase of the Notes, (iv) to modify the provisions relating to subordination, (v) to change the currency of the denomination of the Notes or of any payment in respect of the Notes including the due dates for payment of principal and interest, (vi) to change the governing law of the Notes, the Trust Deed or the Agency Agreement (other than in the case of a substitution of the Issuer (or any previous substitute or substitutes) under Condition 15(b)) or (vii) to modify the provisions concerning the quorum required at any meeting of Noteholders or the majority required to pass an Extraordinary Resolution, in which case the necessary quorum will be one or more persons holding or representing not less than three-fourths, or at any adjourned meeting not less than one-fourth, in nominal amount of the Notes for the time being outstanding. The Trust Deed provides that (i) a resolution passed at a meeting duly convened and held in accordance with the Trust Deed by a majority consisting of not less than three-fourths of the votes cast on such resolution, (ii) a resolution in writing signed by or on behalf of the holders of not less than three-fourths in nominal amount of the Notes for the time being outstanding or (iii) consent given by way of electronic consents through the relevant clearing system(s) (in a form satisfactory to the Trustee) by or on behalf of the holders of not less than three-fourths in nominal amount of the Notes for the time being outstanding, shall, in each case, be effective as an Extraordinary Resolution of the Noteholders. An Extraordinary Resolution passed at any meeting of the Noteholders shall be binding on all the Noteholders, whether or not they are present at the meeting and whether or not they voted on (or voted in favour of) the relevant Extraordinary Resolution, and on all and Couponholders.
(b)Modification, Authorisation, Waiver, Determination, Substitution etc.
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The Trustee may agree, without the consent of the Noteholders or the Couponholders, to any modification of, or to the waiver or authorisation of any breach or proposed breach of, any of these Terms and Conditions or any of the provisions of the Trust Deed or determine, without any such consent as aforesaid, that any Event of Default or Potential Event of Default (as defined in the Trust Deed) shall not be treated as such, which in any such case is not, in the opinion of the Trustee, materially prejudicial to the interests of the Noteholders or may agree, without any such consent as aforesaid, to any modification which is of a formal, minor or technical nature or to correct a manifest error. In addition, the Trustee shall be obliged to concur with the Issuer in using its reasonable endeavours to effect any Benchmark Amendments in the circumstances and as otherwise set out in Condition 4(b) without the consent of the Noteholders or the Couponholders. The agreement or approval of the Noteholders shall not be required in the case of any variation of these Conditions and/or the Trust Deed and/or the Agency Agreement required to be made in connection with the substitution or variation of the Notes pursuant to Condition 7(i).
In connection with the exercise by it of any of its trusts, powers, authorities and discretions (including, without limitation, any modification, waiver, authorisation, determination or substitution), the Trustee shall have regard to the general interests of the Noteholders as a class but shall not have regard to any interests arising from circumstances particular to individual Noteholders or Couponholders (whatever their number) and, in particular but without limitation, shall not have regard to the consequences of any such exercise for individual Noteholders or Couponholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Noteholder or Couponholder be entitled to claim, from the Issuer, the Trustee or any other person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders or Couponholders except to the extent already provided for in Condition 8 and/or any undertaking given in addition to, or in substitution for, Condition 8 pursuant to the Trust Deed.
The Trustee may, without the consent of the Noteholders or Couponholders, agree with the Issuer to the substitution in place of the Issuer (or of any previous substitute under this Condition) as principal debtor in respect of the Notes and the Coupons and under the Trust Deed of either (i) a Successor in Business to the Issuer or (ii) a Holding Company of the Issuer or (iii) a Subsidiary of the Issuer, in each case subject to the Trustee being satisfied that the interests of the Noteholders are not materially prejudiced thereby provided that in determining such material prejudice the Trustee shall not take into account any prejudice to the interests of the Noteholders as a result of such substituted company not being required pursuant to proviso (i) to Condition 8 to pay any Additional Amounts for or on account of any Taxes imposed by the United States of America or any political subdivision or taxing authority thereof or therein and certain other conditions set out in the Trust Deed being complied with.
The Trust Deed contains provisions permitting the Issuer to consolidate with or merge into any other person or convey, transfer or lease its properties and assets substantially as an entirety to any person provided that (i) in the case of a consolidation or merger (except w here the Issuer is the continuing entity) such person agrees to be bound by the terms of the Notes, the Coupons and the Trust Deed as principal debtor in place of the Issuer; (ii) in the case of a conveyance, transfer or lease, such person guarantees the obligations of the Issuer under the Notes, the Coupons and the Trust Deed and (iii) certain other conditions set out in the Trust Deed are complied with.
Any such modification, waiver, authorisation, determination or substitution shall be binding on the Noteholders and the Couponholders and, unless the Trustee otherwise agrees, any such modification or substitution shall be notified to the Noteholders in accordance with Condition 14 as soon as practicable thereafter.
For the purposes of this Condition “Holding Company” means, in relation to a person, an entity of which that person is a Subsidiary.
16.Further Issues
The Issuer shall be at liberty from time to time without the consent of the Noteholders or the Couponholders to create and issue further notes having terms and conditions the same as the Notes or the same in all respects save for the amount and date of the first payment of interest thereon and so that the same shall be consolidated and forma single Series with the outstanding Notes. The Trust Deed contains provisions for convening a single meeting of the Noteholders and the holders of notes of other Series in certain circumstances where the Trustee so decides.
133
17.Indemnification of the Trustee and its Contracting with the Issuer
The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including provisions relieving it from taking action unless indemnified to its satisfaction.
The Trust Deed also contains provisions pursuant to which the Trustee is entitled, inter alia, (i) to enter into business transactions with the Issuer and/or any of its Subsidiaries and to act as trustee for the holders of any other securities issued or guaranteed by, or relating to, the Issuer and/or any of its Subsidiaries, (ii) to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such transactions or, as the case may be, any such trusteeship without regard to the interests of, or consequences for, the Noteholders or Couponholders, and (iii) to retain and not be liable to account for any profit made or any other amount or benefit received thereby or in connection therewith.
18.Third Party Rights
No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of the Notes, but this does not affect any right or remedy of any person which exists or is available apart from that Act.
19.Governing Law
The Trust Deed, the Notes and the Coupons, and any non-contractual obligations arising out of or in connection with any of them, are governed by and shall be construed in accordance with, English law. The Agency Agreement is governed by and shall be construed in accordance with English law.
134
ISSUING AND PRINCIPAL PAYING AGENT
HSBC Bank plc
8 Canada Square
London E14 5HQ
OTHER PAYING AGENTS
Credit Suisse AG |
|
Banque Internationale à Luxembourg, |
Uetlibergstrasse 231 |
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société anonyme |
8070 Zurich |
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69 route d’Esch |
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L-2953 Luxembourg |
135
SCHEDULE 2
FORMS OF GLOBAL AND DEFINITIVE NOTES, CERTIFICATES, COUPONS AND TALONS
PART 1
FORM OF TEMPORARY GLOBAL NOTE
VODAFONE GROUP PLC
(the Issuer)
(incorporated with limited liability in England and Wales)
TEMPORARY GLOBAL NOTE
This Note is a Temporary Global Note in respect of a duly authorised issue of Notes of the Issuer (the Notes) of the Nominal Amount, Specified Currency(ies) and Specified Denomination(s) as are specified in the Final Terms or Pricing Supplement, as the case may be, applicable to the Notes (the Final Terms), a copy of which is annexed hereto. References herein to the Conditions shall be to the Terms and Conditions of the Notes as set out in Part 1 (if the Notes are Senior Notes) or Part 2 (if the Notes are Subordinated Notes) of Schedule 1 to the Trust Deed (as defined below) as completed and/or (in the case of Exempt Notes) modified and/or replaced by the Final Terms but, in the event of any conflict between the provisions of the Conditions and the information in the Final Terms, the Final Terms will prevail. Words and expressions defined in the Conditions shall bear the same meanings when used in this Global Note. This Global Note is issued subject to, and with the benefit of, the Conditions and a Trust Deed (such Trust Deed as modified and/or supplemented and/or restated from time to time, the Trust Deed) dated 16 July 1999 and made between the Issuer (under its then name of Vodafone AirTouch Plc) and The Law Debenture Trust Corporation p.l.c. as trustee for the holders of the Notes.
The Issuer, subject as hereinafter provided and subject to and in accordance with the Conditions and the Trust Deed, promises to pay to the bearer hereof on the Maturity Date and/or on such earlier date(s) as all or any of the Notes represented by this Global Note may become due and repayable in accordance with the Conditions and the Trust Deed, the amount payable under the Conditions in respect of such Notes on each such date and to pay interest (if any) on the nominal amount of the Notes from time to time represented by this Global Note calculated and payable as provided in the Conditions and the Trust Deed together with any other sums payable under the Conditions and the Trust Deed, upon presentation and, at maturity, surrender of this Global Note to or to the order of the Issuing and Principal Paying Agent or any of the other Paying Agents located outside the United States, its territories and possessions (except as provided in the Conditions) from time to time appointed by the Issuer in respect of the Notes.
If the Final Terms indicates that this Global Note is intended to be a New Global Note, the nominal amount of Notes represented by this Global Note shall be the aggregate amount from time to time entered in the records of both Euroclear Bank SA/NV (Euroclear) and Clearstream Banking S.A. (Clearstream, Luxembourg and together with Euroclear, the relevant Clearing Systems). The records of the relevant Clearing Systems (which expression in this Global Note means the records that each relevant Clearing System holds for its customers which reflect the amount of such customer’s interest in the Notes) shall be conclusive evidence of the nominal amount of Notes represented by this Global Note and, for these purposes, a statement issued by a relevant Clearing System (which statement shall be made available to the bearer upon request) stating the nominal amount of Notes represented by this Global Note at any time shall be conclusive evidence of the records of the relevant Clearing System at that time.
If the Final Terms indicates that this Global Note is not intended to be a New Global Note, the nominal amount of the Notes represented by this Global Note shall be the amount stated in the applicable Final Terms or, if lower, the nominal amount most recently entered by or on behalf of the Issuer in the relevant column in Part II, or III of Schedule One hereto or in Schedule Two hereto.
136
On any redemption of, or payment of interest being made in respect of, or purchase and cancellation of, any of the Notes represented by this Global Note the Issuer shall procure that:
(a) |
if the Final Terms indicates that this Global Note is intended to be a New Global Note, details of such redemption, payment or purchase and cancellation (as the case may be) shall be entered pro rata in the records of the relevant Clearing Systems, and, upon any such entry being made, the nominal amount of the Notes recorded in the records of the relevant Clearing Systems and represented by this Global Note shall be reduced by the aggregate nominal amount of the Notes so redeemed or purchased and cancelled; or |
(b) |
if the Final Terms indicates that this Global Note is not intended to be a New Global Note, details of such redemption, payment or purchase and cancellation (as the case may be) shall be entered by or on behalf of the Issuer in Schedule One hereto and the relevant space in Schedule One hereto recording any such redemption, payment or purchase and cancellation (as the case may be) shall be signed by or on behalf of the Issuer. Upon any such redemption or purchase and cancellation, the nominal amount of this Global Note and the Notes represented by this Global Note shall be reduced by the nominal amount of such Notes so redeemed or purchased and cancelled. |
Payments due in respect of Notes for the time being represented by this Global Note shall be made to the bearer of this Global Note and each payment so made will discharge the Issuer’s obligations in respect thereof. Any failure to make entries referred to above shall not affect such discharge.
Payments of principal and interest (if any) due prior to the Exchange Date (as defined below) will only be made to the bearer hereof to the extent that there is presented to the Issuing and Principal Paying Agent by Clearstream, Luxembourg or Euroclear a certificate to the effect that it has received from or in respect of a person entitled to a beneficial interest in a particular nominal amount of the Notes represented by this Global Note (as shown by its records) a certificate of non-US beneficial ownership in the form required by it. The bearer of this Global Note will not (unless upon due presentation of this Global Note for exchange, delivery of the appropriate number of Definitive Bearer Notes (together, if applicable, with the Coupons and Talons appertaining thereto in or substantially in the forms set out in Parts 5, 6 and 7 of Schedule 2 to the Trust Deed) or, as the case may be, issue and delivery (or, as the case may be, endorsement) of the Permanent Global Note is improperly withheld or refused and such withholding or refusal is continuing at the relevant payment date) be entitled to receive any payment hereon due on or after the Exchange Date.
If this Temporary Global Note is an Exchangeable Bearer Note then, subject to Condition 2(f) of the Senior Notes or Condition 2(f) of the Subordinated Notes, as the case may be, this Temporary Global Note may be exchanged in whole or from time to time in part for one or more Registered Notes in accordance with the Conditions on or after the Issue Date but before its Exchange Date referred to below by its presentation to any Transfer Agent at its specified office. On or after the Exchange Date, the outstanding nominal amount of this Temporary Global Note may be exchanged for Definitive Bearer Notes and Registered Notes in accordance with the next paragraph.
On or after the date (the Exchange Date) which is the 40th day after the Issue Date, this Global Note may be exchanged (free of charge) in whole or in part for, as specified in the Final Terms, either (a) Definitive Bearer Notes and (if applicable) Coupons and/or Talons (on the basis that all the appropriate details have been included on the face of such Definitive Bearer Notes and (if applicable) Coupons and/or Talons and the relevant information completing the Conditions appearing in the Final Terms has been endorsed on or attached to such Definitive Bearer Notes) or (b) either (if the Final Terms indicates that this Global Note is intended to be a New Global Note) interests recorded in the records of the relevant Clearing Systems in a Permanent Global Note or (if the Final Terms indicates that this Global Note is not intended to be a New Global Note) a Permanent Global Note which, in either case, is in or substantially in the form set out in Part 2 of Schedule 2 to the Trust Deed (together with the Final Terms attached thereto) or (if this Global Note is an Exchangeable Bearer Note) for Registered Notes upon notice being given by Euroclear and/or Clearstream, Luxembourg acting on the instructions of any holder of an interest in this Global Note and subject, in the case of Definitive Bearer Notes, to such notice period as is specified in the Final Terms.
137
If Definitive Bearer Notes and (if applicable) Coupons and/or Talons have already been issued in exchange for all the Notes represented for the time being by the Permanent Global Note, then this Global Note may only thereafter be exchanged for Definitive Bearer Notes and (if applicable) Coupons and/or Talons pursuant to the terms hereof. This Global Note may be exchanged by the bearer hereof on any day (other than a Saturday, Sunday or bank holiday) on which banks are open for general business in London.
The Issuer shall procure that Definitive Bearer Notes or (as the case may be) the Permanent Global Note shall be issued and delivered and (in the case of the Permanent Global Note where the Final Terms indicates that this Global Note is intended to be a New Global Note) interests in the Permanent Global Note shall be recorded in the records of the relevant Clearing Systems in exchange for only that portion of this Global Note in respect of which there shall have been presented to the Issuing and Principal Paying Agent by Euroclear or Clearstream, Luxembourg a certificate to the effect that it has received from or in respect of a person entitled to a beneficial interest in a particular nominal amount of the Notes represented by this Global Note (as shown by its records) a certificate of non-US beneficial ownership in the form required by it.
On an exchange of the whole of this Global Note, this Global Note shall be surrendered to or to the order of the Issuing and Principal Paying Agent. The Issuer shall procure that:
(a) |
if the Final Terms indicates that this Global Note is intended to be a New Global Note, on an exchange of the whole or part only of this Global Note, details of such exchange shall be entered pro rata in the records of the relevant Clearing Systems such that the nominal amount of Notes represented by this Global Note shall be reduced by the nominal amount of this Global Note so exchanged; or |
(b) |
if the Final Terms indicates that this Global Note is not intended to be a New Global Note, on an exchange of part only of this Global Note details of such exchange shall be entered by or on behalf of the Issuer in Schedule Two hereto and the relevant space in Schedule Two hereto recording such exchange shall be signed by or on behalf of the Issuer, whereupon the nominal amount of this Global Note and the Notes represented by this Global Note shall be reduced by the nominal amount of this Global Note so exchanged. On any exchange of this Global Note for a Permanent Global Note, details of such exchange shall be entered by or on behalf of the Issuer in Schedule Two to the Permanent Global Note and the relevant space in Schedule Two thereto recording such exchange shall be signed by or on behalf of the Issuer. |
Until the exchange of the whole of this Global Note as aforesaid, the bearer hereof shall in all respects be entitled to the same benefits as if they were the bearer of Definitive Bearer Notes and the relative Coupons and/or Talons (if any) in the form(s) set out in Part 5, Part 6 and Part 7 (as applicable) of Schedule 2 to the Trust Deed.
The holder of this Global Note shall be treated at any meeting of the Noteholders as having one vote in respect of each Definitive Bearer Note for which this Global Note would be exchangeable.
In considering the interests of Noteholders while this Global Note is held on behalf of a clearing system, the Trustee may have regard to any information provided to it by such clearing system or its operator as to the identity (either individually or by category) of its accountholders with entitlements to this Global Note and may consider such interests as if such accountholders were the holder of this Global Note.
138
This Global Note does not confer on a third party any right under the Contracts (Rights of Third Parties) Ac t 1999 to enforce any term of this Global Note, but this does not affect any right or remedy of a third party
which exists or is available apart from that Act.
This Global Note, and any non-contractual obligations arising out of or in connection with it, are governed by, and shall be construed in accordance with, English law.
This Global Note shall not be valid unless authenticated by HSBC Bank plc as Issuing and Principal Paying Agent and, if the Final Terms indicates that this Global Note is intended to be held in a manner which would allow Eurosystem eligibility, effectuated by the entity appointed as common safekeeper by the relevant Clearing Systems.
IN WITNESS whereof the Issuer has caused this Global Note to be signed manually or in facsimile by a
person duly authorised on its behalf.
Issued as of ……………………..
VODAFONE GROUP PLC
By: ………………………………
Duly Authorised
Authenticated by
HSBC Bank plc
as Issuing and Principal Paying Agent.
By:………………………………………
Authorised Officer
1Effectuated without recourse,
warranty or liability by
………………………………
as common safekeeper
By:………………………..
1This should only be completed where the Final Terms indicates that this Global Note is intended to be held in a manner which would allow Eurosytem eligibility.
139
Schedule One*
PART I
INTEREST PAYMENTS
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Confirmation of |
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Interest Payment |
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Total amount of |
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Amount of interest |
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payment by or on |
Date made |
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Date |
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interest payable |
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paid |
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behalf of the Issuer |
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* Schedule One should only be completed where the Final Terms indicates that this Global Note is not intended to be a New Global Note.
140
PART II
REDEMPTIONS
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Remaining nominal |
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amount of this |
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Confirmation of |
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Global Note |
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redemption by or |
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Total amount of |
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Amount of |
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following such |
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on behalf of the |
Date made |
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principal payable |
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principal paid |
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redemption* |
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Issuer |
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* See most recent entry in Part II or III of Schedule Two in order to determine this amount.
141
PART III
PURCHASES AND CANCELLATIONS
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amount of this Global |
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Confirmation of |
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Part of nominal amount |
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Note following such |
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purchase and |
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of this Global Note |
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purchase and |
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cancellation by or on |
Date made |
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purchased and cancelled |
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cancellation* |
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behalf of the Issuer |
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* See most recent entry in Part II or III of Schedule Two in order to determine this amount.
142
Schedule Two*
EXCHANGES
FOR DEFINITIVE BEARER NOTES, REGISTERED NOTES OR PERMANENT GLOBAL NOTE
The following exchanges of a part of this Global Note for Definitive Bearer Notes or Registered Notes or a part of a Permanent Global Note have been made:
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Nominal amount of this |
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Global Note exchanged |
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for Definitive Bearer |
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Notes, Registered Notes |
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Remaining nominal |
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or a part of a Permanent |
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amount of this Global |
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Global Note (stating |
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Note following such |
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Notation made by or on |
Date made |
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which) |
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exchange* |
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behalf of the Issuer |
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* Schedule Two should only be completed where the Final Terms indicates that this Global Note is not intended to be a New Global Note.
* See most recent entry in Part II or III of Schedule One or in this Schedule Two in order to determine this amount.
143
ANNEX
[attach Final Terms that relate to this Global Note]
144
PART 2
FORM OF PERMANENT GLOBAL NOTE
[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]1
VODAFONE GROUP PLC
(the Issuer)
(incorporated with limited liability in England and Wales)
PERMANENT GLOBAL NOTE
This Note is a Permanent Global Note in respect of a duly authorised issue of Notes of the Issuer (the Notes) of the Nominal Amount, Specified Currency(ies) and Specified Denomination(s) as are specified in the Final Terms or Pricing Supplement, as the case may be, applicable to the Notes (the Final Terms), a copy of which is annexed hereto. References herein to the Conditions shall be to the Terms and Conditions of the Notes as set out in Part 1 (if the Notes are Senior Notes) or Part 2 (if the Notes are Subordinated Notes) of Schedule 1 to the Trust Deed (as defined below) as completed and/or (in the case of Exempt Notes) modified and/or replaced by the Final Terms but, in the event of any conflict between the provisions of the Conditions and the information in the Final Terms, the Final Terms will prevail. Words and expressions defined in the Conditions shall bear the same meanings when used in this Global Note. This Global Note is issued subject to, and with the benefit of, the Conditions and a Trust Deed (such Trust Deed as modified and/or supplemented and/or restated from time to time, the Trust Deed) dated 16 July 1999 and made between the Issuer (under its then name of Vodafone AirTouch Plc) and The Law Debenture Trust Corporation p.l.c. as trustee for the holders of the Notes.
The Issuer, subject to and in accordance with the Conditions and the Trust Deed, promises to pay to the bearer hereof on the Maturity Date and/or on such earlier date(s) as all or any of the Notes represented by this Global Note may become due and repayable in accordance with the Conditions and the Trust Deed, the amount payable under the Conditions in respect of such Notes on each such date and to pay interest (if any) on the nominal amount of the Notes from time to time represented by this Global Note calculated and payable as provided in the Conditions and the Trust Deed together with any other sums payable under the Conditions and the Trust Deed, upon presentation and, at maturity, surrender of this Global Note at the specified office of the Issuing and Principal Paying Agent at 8 Canada Square, London EC2V 7EX, England or such other specified office as may be specified for this purpose in accordance with the Conditions or at the specified office of any of the other Paying Agents located outside the United States, its territories and possessions (except as provided in the Conditions) from time to time appointed by the Issuer in respect of the Notes.
If the Final Terms indicates that this Global Note is intended to be a New Global Note, the nominal amount of Notes represented by this Global Note shall be the aggregate amount from time to time entered in the records of both Euroclear Bank SA/NV (Euroclear) and Clearstream Banking S.A. (Clearstream, Luxembourg and together with Euroclear, the relevant Clearing Systems). The records of the relevant Clearing Systems (which expression in this Global Note means the records that each relevant Clearing System holds for its customers which reflect the amount of such customer’s interest in the Notes) shall be conclusive evidence of the nominal amount of Notes represented by this Global Note and, for these purposes,
1 |
Include where the original maturity of the Notes is more than 365 days where TEFRAD is specified in the applicable Final Terms or Pricing Supplement, as the case may be. |
145
a statement issued by a relevant Clearing System (which statement shall be made available to the bearer upon request) stating the nominal amount of Notes represented by this Global Note at any time shall be conclusive evidence of the records of the relevant Clearing System at that time.
If the Final Terms indicates that this Global Note is not intended to be a New Global Note, the nominal amount of the Notes represented by this Global Note shall be the amount stated in the applicable Final Terms or, if lower, the nominal amount most recently entered by or on behalf of the Issuer in the relevant column in Part II or Part III of Schedule One hereto or in Schedule Two hereto.
On any redemption of, or payment of interest being made in respect of, or purchase and cancellation of, any of the Notes represented by this Global Note the Issuer shall procure that:
(a) |
if the Final Terms indicates that this Global Note is intended to be a New Global Note, details of such redemption, payment or purchase and cancellation (as the case may be) shall be entered pro rata in the records of the relevant Clearing Systems and, upon any such entry being made, the nominal amount of the Notes recorded in the records of the relevant Clearing Systems and represented by this Global Note shall be reduced by the aggregate nominal amount of the Notes so redeemed or purchased and cancelled; or |
(b) |
if the Final Terms indicates that this Global Note is not intended to be a New Global Note, details of such redemption, payment or purchase and cancellation (as the case may be) shall be entered by or on behalf of the Issuer in Schedule One hereto and the relevant space in Schedule One hereto recording any such redemption, payment or purchase and cancellation (as the case may be) shall be signed by or on behalf of the Issuer. Upon any such redemption or purchase and cancellation, the nominal amount of this Global Note and the Notes represented by this Global Note shall be reduced by the nominal amount of such Notes so redeemed or purchased and cancelled. |
Payments due in respect of Notes for the time being represented by this Global Note shall be made to the bearer of this Global Note and each payment so made will discharge the Issuer’s obligations in respect thereof and any failure to make entries referred to above shall not affect such discharge.
If the Notes represented by this Global Note were, on issue, represented by a Temporary Global Note then on any exchange of such Temporary Global Note for this Global Note or any part hereof, the Issuer shall procure that:
(a) |
if the Final Terms indicates that this Global Note is intended to be a New Global Note, details of such exchange shall be entered in the records of the relevant Clearing Systems such that the nominal amount of Notes represented by this Global Note shall be increased by the nominal amount of the Temporary Global Note so exchanged; or |
(b) |
if the Final Terms indicates that this Global Note is not intended to be a New Global Note, details of such exchange shall be entered by or on behalf of the Issuer in Schedule Two hereto and the relevant space in Schedule Two hereto recording such exchange shall be signed by or on behalf of the Issuer, whereupon the nominal amount of this Global Note and the Notes represented by this Global Note shall be increased by the nominal amount of the Temporary Global Note so exchanged. |
This Global Note may be exchanged (free of charge) in whole, but, except as provided below, not in part, for Definitive Bearer Notes and (if applicable) Coupons and/or Talons in or substantially in the forms set out in Part 5, Part 6 and Part 7 of Schedule 2 to the Trust Deed (on the basis that all the appropriate details have been included on the face of such Definitive Bearer Notes and (if applicable) Coupons and/or Talons and the relevant information completing the Conditions appearing in the Final Terms has been endorsed on or attached to such Definitive Bearer Notes) or (if this Global Note is an Exchangeable Bearer Note) Registered Notes represented by the Certificates described in the Trust Deed:
146
(a) |
if specified in the applicable Final Terms, upon not less than 60 days’ written notice being given to the Issuing and Principal Paying Agent by Euroclear and/or Clearstream, Luxembourg (acting on the instructions of any holder of an interest in this Global Note); or |
(b) |
if specified in the applicable Final Terms, only upon the occurrence of an Exchange Event; or |
(c) |
if this Global Note is an Exchangeable Bearer Note then, subject to Condition 2(f) of the Senior Notes or Condition 2(f) of the Subordinated Notes, as the case may be, by the holder hereof giving notice to the Issuing and Principal Paying Agent of its election to exchange the whole or a part of this Global Note for Registered Notes. |
An Exchange Event means (unless otherwise specified in the applicable Final Terms):
(i) | an Event of Default has occurred and is continuing; |
(ii) | the Issuer has been notified that both Euroclear and Clearstream, Luxembourg have been closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or have announced an intention permanently to cease business or have in fact done so and no alternative clearing system satisfactory to the Trustee is available; or |
(iii)the Issuer has or will become obliged to pay Additional Amounts as provided for or referred to in Condition 8 of the Senior Notes or Condition 8 of the Subordinated Notes, as the case may be, which would not be required were the Bearer Notes in definitive form and a certificate to such effect from two Authorised Signatories of the Issuer has been given to the Trustee.
Upon the occurrence of an Exchange Event:
(A) |
the Issuer will promptly give notice to Noteholders in accordance with Condition 14 of the Senior Notes or Condition 14 of the Subordinated Notes, as the case may be, of the occurrence of such Exchange Event; and |
(B) |
Euroclear and/or Clearstream, Luxembourg (acting on the instructions of any holder of an interest in this Global Note) or the Trustee may give notice to the Issuing and Principal Paying Agent requesting exchange and, in the event of the occurrence of an Exchange Event as described in (iii) above, the Issuer may also give notice to the Issuing and Principal Paying Agent requesting exchange. |
This Global Note is exchangeable in part only if this Global Note is an Exchangeable Bearer Note and the part thereof submitted for exchange is to be exchanged for Registered Notes.
Any such exchange shall occur on a date specified in the notice not later than 60 days (or, in the case of an exchange for Registered Notes, 5 days) after the date of receipt of the first relevant notice by the Issuing and Principal Paying Agent.
The first notice requesting exchange in accordance with the above provisions shall give rise to the issue of Definitive Bearer Notes for the total nominal amount of Notes represented by this Global Note.
Any such exchange as aforesaid will be made upon presentation of this Global Note by the bearer hereof on any day (other than a Saturday, Sunday or bank holiday) on which banks are open for business in London at the office of the Issuing and Principal Paying Agent specified above.
147
The aggregate nominal amount of Definitive Bearer Notes or Registered Notes issued upon an exchange of this Global Note will be equal to the aggregate nominal amount of this Global Note submitted for exchange. Upon exchange in full of this Global Note, the Issuing and Principal Paying Agent shall cancel it or procure that it is cancelled.
Certificates issued upon exchange for Registered Notes shall not be Global Certificates unless the holder so requests and certifies to the Issuing and Principal Paying Agent that it is, or is acting as, a nominee for Clearstream, Luxembourg or Euroclear.
Until the exchange of the whole of this Global Note as aforesaid, the bearer hereof shall in all respects be entitled to the same benefits as if they were the bearer of Definitive Bearer Notes and the relative Coupons and/or Talons (if any) in the form(s) set out in Part 5, Part 6 and Part 7 (as applicable) of Schedule 2 to the Trust Deed.
The holder of this Global Note shall be treated at any meeting of the Noteholders as having one vote in respect of each Definitive Bearer Note for which this Global Note would be exchangeable.
In considering the interests of Noteholders while this Global Note is held on behalf of a clearing system, the Trustee may have regard to any information provided to it by such clearing system or its operator as to the identity (either individually or by category) of its accountholders with entitlements to this Global Note and may consider such interests as if such accountholders were the holder of this Global Note.
This Global Note does not confer on a third party any right under the Contracts (Rights of Third Parties) Ac t 1999 to enforce any term of this Global Note, but this does not affect any right or remedy of a third party which exists or is available apart from that Act.
This Global Note, and any non-contractual obligations arising out of or in connection with it, are governed by, and shall be construed in accordance with, English law.
This Global Note shall not be valid unless authenticated by HSBC Bank plc as Issuing and Principal Paying Agent and, if the Final Terms indicates that this Global Note is intended to be held in a manner which would allow Eurosystem eligibility, effectuated by the entity appointed as common safekeeper by the relevant Clearing Systems.
148
IN WITNESS whereof the Issuer has caused this Global Note to be signed manually or in facsimile by a person duly authorised on its behalf.
Issued as of …………………………
VODAFONE GROUP PLC
By: …………………………………
Duly Authorised
Authenticated by
HSBC Bank plc
as Issuing and Principal Paying Agent.
By:…………………………………
Authorised Officer
1Effectuated without recourse,
warranty or liability by
…………………………………………
as common safekeeper
By:…………………………………
1 |
This should only be completed where the Final Terms indicates that this Global Note is intended to be held in a manner which would allow Eurosytem eligibility. |
149
Schedule One*
PART I
INTEREST PAYMENTS
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Confirmation of |
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Interest Payment |
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Total amount of |
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Amount of interest |
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payment by or on |
Date made |
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Date |
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interest payable |
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paid |
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behalf of the Issuer |
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* Schedule One should only be completed where the Final Terms indicates that this Global Note is not intended to be a New Global Note.
150
PART II
REDEMPTION
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Remaining nominal |
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amount of this |
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Confirmation of |
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Global Note |
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redemption by or |
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Total amount of |
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Amount of |
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following such |
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on behalf of the |
Date made |
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principal payable |
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principal paid |
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redemption* |
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Issuer |
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* See most recent entry in Part II or III of Schedule Two in order to determine this amount.
151
PART III
PURCHASES AND CANCELLATIONS
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amount of this Global |
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Confirmation of |
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Part of nominal amount |
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Note following such |
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purchase and |
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of this Global Note |
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purchase and |
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cancellation by or on |
Date made |
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purchased and cancelled |
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cancellation* |
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behalf of the Issuer |
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* See most recent entry in Part II or III of Schedule Two in order to determine this amount.
152
Schedule Two*
EXCHANGES
The following exchanges of a part of the Temporary Global Note for a part of this Global Note or a part of this Global Note for Registered Notes have been made:
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Nominal amount of |
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Temporary Global Note |
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exchanged for this |
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Increased/decreased |
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Global Note or of this |
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nominal amount of this |
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Global Note exchanged |
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Global Note following |
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Notation made by or on |
Date made |
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for Registered Notes |
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such exchange* |
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behalf of the Issuer |
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* See most recent entry in Part II or III of Schedule One or in this Schedule Two in order to determine this amount.
* Schedule Two should only be completed where the Final Terms indicates that this Global Note is not intended to be a New Global Note.
153
ANNEX
[attach the Final Terms that relate to this Global Note]
154
PART 3
FORM OF REGULATION S GLOBAL CERTIFICATE
THE NOTES REPRESENTED BY THIS REGULATION S GLOBAL CERTIFICATE HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
VODAFONE GROUP PLC
(the Issuer)
(incorporated with limited liability in England and Wales)
REGULATION S GLOBAL CERTIFICATE
This Regulation S Global Certificate is issued in respect of a duly authorised issue of Notes of the Issuer (the Notes) of the Nominal Amount, Specified Currency(ies) and Specified Denomination(s) as are specified in the Final Terms or Pricing Supplement, as the case may be, applicable to the Notes (the Final Terms), a copy of which is annexed hereto. This Regulation S Global Certificate certifies that the person whose name is entered in the Register is the registered holder (the Registered Holder) of such nominal amount of the Notes specified in the Final Terms at the date hereof.
Interpretation and Definitions
References in this Regulation S Global Certificate to the Conditions are to the Terms and Conditions of the Notes as set out in Part 1 (if the Notes are Senior Notes) or Part 2 (if the Notes are Subordinated Notes) of Schedule 1 to the Trust Deed (as defined below) as completed and/or (in the case of Exempt Notes) modified and/or replaced by the Final Terms but, in the event of any conflict between the provisions of the Conditions and the information in the Final Terms; the Final Terms will prevail. Words and expressions defined in the Conditions shall bear the same meanings when used in this Regulation S Global Certificate. This Regulation S Global Certificate is issued subject to, and with the benefit of, the Conditions and a Trust Deed (such Trust Deed as modified and/or supplemented and/or restated from time to time, the Trust Deed) dated 16 July 1999 and made between the Issuer (under its then name of Vodafone AirTouch Plc) and The Law Debenture Trust Corporation p.l.c as Trustee for the holders of the Notes.
Promise to Pay
The Issuer, subject as hereinafter provided and subject to and in accordance with the Conditions and the Trust Deed, promises to pay to the holder of the Notes represented by this Regulation S Global Certificate on the Maturity Date and/or on such earlier date(s) as all or any of the Notes represented by this Regulation S Global Certificate may become due and repayable in accordance with the Conditions and the Trust Deed, the amount payable under the Conditions in respect of such Notes on each such date and to pay interest (if any) on the nominal amount of the Notes from time to time represented by this Regulation S Global Certificate calculated and payable as provided in the Conditions and the Trust Deed together with any other sums payable under the Conditions and the Trust Deed.
For the purposes of this Regulation S Global Certificate, (a) the Issuer certifies that the Registered Holder is, at the date hereof, entered in the Register as the holder of the Notes represented by this Regulation S Global Certificate, (b) this Regulation S Global Certificate is evidence of entitlement only, (c) title to the Notes represented by this Regulation S Global Certificate passes only on due registration on the Register, (d) only the holder of the Notes, as on the immediately preceding Clearing System Business Day, represented by this Regulation S Global Certificate is entitled to payments in respect of the Notes represented by this Regulation S Global Certificate, and (e) the nominal amount of Notes represented by this Regulation S Global Certificate from time to time shall be that amount shown in the Register as being registered in the name of the Registered Holder hereof at such time.
155
For the purposes hereof “Clearing System Business Day” means any day other than (i) Saturdays or Sundays and (ii) 1 January and 25 December.
Transfer of Notes represented by Regulation S Global Certificates
If the Final Terms state that the Notes are to be represented by a Regulation S Global Certificate on issue, transfers of the holding of Notes represented by this Regulation S Global Certificate pursuant to Condition 2(b) of the Senior Notes or Condition 2(b) of the Subordinated Notes, as the case may be, may only be made in part:
(a) |
if the Notes represented by this Regulation S Global Certificate are held on behalf of Euroclear or Clearstream, Luxembourg or any other clearing system (an Alternative Clearing System) and any such clearing system is closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so and no alternative clearing system satisfactory to the Trustee is available; or |
(b) |
an Event of Default has occurred and is continuing; or |
(c) |
with the consent of the Issuer, |
provided that, in the case of the first transfer of part of a holding pursuant to (a) or (b) above, the holder of the Notes represented by this Regulation S Global Certificate has given the Registrar not less than 30 days’ notice at its specified office of such holder’s intention to effect such transfer. Where the holding of Notes represented by this Regulation S Global Certificate is only transferable in its entirety, the Certificate issued to the transferee upon transfer of such holding shall be a Regulation S Global Certificate. Where transfers are permitted in part, Certificates issued to transferees shall not be Regulation S Global Certificates unless the transferee so requests and certifies to the Registrar that it is, or is acting as a nominee for, Clearstream, Luxembourg, Euroclear and/or an Alternative Clearing System.
Interests in a Regulation S Global Certificate will be exchangeable, free of charge to the holder, for definitive Regulation S Certificates only upon the occurrence of an Exchange Event. An Exchange Event means (unless otherwise specified in the applicable Final Terms) that:
(i) |
an Event of Default has occurred and is continuing; or |
(ii) |
the Issuer has been notified that both Euroclear and Clearstream, Luxembourg have been closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or have announced an intention permanently to cease business or have in fact done so and, in any such case, no successor clearing system is available; or |
(iii) | the Issuer has or will become subject to adverse tax consequences which would not be suffered were the Notes represented by definitive Regulation S Certificates and a certificate to such effect from two Authorised Signatories of the Issuer has been given to the Trustee. |
Upon the occurrence of an Exchange Event:
(A) |
the Issuer will promptly give notice to Noteholders in accordance with Condition 14 of the Senior Notes or Condition 14 of the Subordinated Notes, as the case may be; and |
156
(B) |
Euroclear and Clearstream, Luxembourg (acting on the instructions of any holder of an interest in such Regulation S Global Certificate) may give notice to the Registrar requesting exchange and, in the event of an Exchange Event as described in (iii) above, the Issuer may also give notice to the Registrar requesting exchange. |
Any such exchange shall occur not later than 10 days after the date of receipt of the first relevant notice by the Registrar.
Meetings
At any meeting of Noteholders, the holder of the Notes represented by this Regulation S Global Certificate shall be treated as having one vote in respect of each nominal amount of Notes equal to the minimum Specified Denomination of the Notes.
This Regulation S Global Certificate shall not become valid for any purpose until authenticated by or on behalf of the Registrar and, if the applicable Final Terms indicates that this Regulation S Global Certificate is intended to be held under the New Safekeeping Structure, effectuated by the entity appointed as common safekeeper by Euroclear or Clearstream, Luxembourg.
This Regulation S Global Certificate, and any non-contractual obligations arising out of or in connection with it, shall be governed by and construed in accordance with English law.
IN WITNESS whereof the Issuer has caused this Regulation S Global Certificate to be signed manually or in facsimile by a person duly authorised on its behalf.
Dated as of the Issue Date.
VODAFONE GROUP PLC
By:
……………………………………
Duly Authorised
Authenticated
by HSBC Bank USA National Association as Registrar
By:
………………………………….
Authorised Officer
1Effectuated without recourse,
warranty or liability by
…………………………………
as common safekeeper
By:……………………………
1This should only be completed where the Final Terms indicates that this Regulation S Global Certificate is intended to be held under the NSS.
157
Form of Transfer
For value received the undersigned transfers to
…………………………………………………
…………………………………………………
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF TRANSFEREE)
[●] nominal amount of the Notes represented by this Regulation S Global Certificate, and all rights under them.
Dated |
|
…………………………………………….. |
|
|
|
Signed …………………………….. |
|
Certifying Signature |
|
|
|
Notes: |
|
|
(a) |
The signature of the person effecting a transfer shall conform to a list of duly authorised specimen signatures supplied by the holder of the Notes represented by this Regulation S Global Certificate or (if such signature corresponds with the name as it appears on the face of this Regulation S Global Certificate) be certified by a notary public or a recognised bank or be supported by such other evidence as a Transfer Agent or the Registrar may reasonably require. |
(b) |
A representative of the Noteholder should state the capacity in which they sign e.g. executor. |
158
ANNEX
[attach Final Terms that relate to this Global Certificate]
159
PART 4
FORM OF DTC RESTRICTED GLOBAL CERTIFICATE
THE NOTES REPRESENTED BY THIS DTC RESTRICTED GLOBAL CERTIFICATE HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT) OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT (RULE 144A) TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A QIB) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB, (2) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT (REGULATIONS) TO A NON-US PERSON (AS DEFINED IN THE REGULATIONS) OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALES OF THE NOTES REPRESENTED BY THIS DTC RESTRICTED CERTIFICATE.
Unless this DTC Restricted Global Certificate is presented by an authorised representative of The Depository Trust Company, a corporation incorporated under the laws of the State of New York (DTC), to the Issuer or its agent for registration of transfer, exchange or payment, and any definitive Note issued is registered in the name of Cede & Co. or such other name as is requested by an authorised representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorised representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the registered owner hereof, Cede & Co., has an interest herein.
VODAFONE GROUP PLC
(the Issuer)
(incorporated with limited liability in England and Wales)
DTC RESTRICTED GLOBAL CERTIFICATE
Registered Holder:
Address of Registered Holder:
Nominal amount of Notes
represented by this DTC Restricted Global
Certificate:
This DTC Restricted Global Certificate is issued in respect of a duly authorised issue of Notes of the Issuer (the Notes) of the Nominal Amount, Specified Currency(ies) and Specified Denomination(s) as are specified in the Final Terms or Pricing Supplement, as the case may be, applicable to the Notes (the Final Terms), a copy of which is annexed hereto. This DTC Restricted Global Certificate certifies that the Registered Holder (as defined above) is registered as the holder of such nominal amount of the Notes at the date hereof.
160
Interpretation and Definitions
References in this DTC Restricted Global Certificate to the Conditions are to the Terms and Conditions of the Notes as set out in Part 1 (if the Notes are Senior Notes) or Part 2 (if the Notes are Subordinated Notes) of Schedule 1 to the Trust Deed (as defined below) as completed and/or (in the case of Exempt Notes) modified and/or replaced by the Final Terms but, in the event of any conflict between the provisions of the Conditions and the information in the Final Terms, the Final Terms will prevail. Words and expressions defined in the Conditions shall bear the same meanings when used in this DTC Restricted Global Certificate. This DTC Restricted Global Certificate is issued subject to, and with the benefit of, the Conditions and a Trust Deed (such Trust Deed as modified and/or supplemented and/or restated from time to time, the Trust Deed) dated 16 July 1999 and made between the Issuer (under its then name of Vodafone AirTouch Plc) and The Law Debenture Trust Corporation p.l.c as Trustee for the holders of the Notes.
Promise to Pay
The Issuer, subject as hereinafter provided and subject to and in accordance with the Conditions and the Trust Deed, promises to pay to the holder of the Notes represented by this DTC Restricted Global Certificate on the Maturity Date and/or on such earlier date(s) as all or any of the Notes represented by this DTC Restricted Global Certificate may become due and repayable in accordance with the Conditions and the Trust Deed, the amount payable under the Conditions in respect of such Notes on each such date and to pay interest (if any) on the nominal amount of the Notes from time to time represented by this DTC Restricted Global Certificate calculated and payable as provided in the Conditions and the Trust Deed together with any other sums payable under the Conditions and the Trust Deed.
For the purposes of this DTC Restricted Global Certificate, (a) the Issuer certifies that the Registered Holder is, at the date hereof, entered in the Register as the holder of the Notes represented by this DTC Restricted Global Certificate, (b) this DTC Restricted Global Certificate is evidence of entitlement only, (c) title to the Notes represented by this DTC Restricted Global Certificate passes only on due registration on the Register, (d) only the holder of the Notes as on the immediately preceding Clearing System Business Day, represented by this DTC Restricted Global Certificate is entitled to payments in respect of the Notes represented by this DTC Restricted Global Certificate, and (e) the nominal amount of Notes represented by this DTC Restricted Global Certificate from time to time shall be that amount shown in the Register as being registered in the name of the Registered Holder hereof at such time.
For the purposes hereof “Clearing System Business Day” means any day other than (i) Saturdays or Sundays and (ii) 1 January and 25 December.
Transfer of Notes represented by DTC Restricted Global Certificates
If the Final Terms state that the Notes are to be represented by a DTC Restricted Global Certificate on issue, transfers of the holding of Notes represented by this DTC Restricted Global Certificate pursuant to Condition 2(b) of the Senior Notes or Condition 2(b) of the Subordinated Notes, as the case may be, may only be made in part:
(a) |
if the Notes represented by this DTC Restricted Global Certificate are held on behalf of DTC or any other clearing system (an Alternative Clearing System) and any such clearing system is closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so and no alternative clearing system satisfactory to the Trustee is available; or |
(b) |
an Event of Default has occurred and is continuing; or |
(c) |
with the consent of the Issuer, |
161
provided that, in the case of the first transfer of part of a holding pursuant to (a) or (b) above, the holder of the Notes represented by this DTC Restricted Global Certificate has given the Registrar not less than 30 days’ notice at its specified office of such holder’s intention to effect such transfer. Where the holding of Notes represented by this DTC Restricted Global Certificate is only transferable in its entirety, the Certificate issued to the transferee upon transfer of such holding shall be a DTC Restricted Global Certificate. Where transfers are permitted in part, Certificates issued to transferees shall not be DTC Restricted Global Certificates unless the transferee so requests and certifies to the Registrar that it is, or is acting as a nominee for, DTC and/or an Alternative Clearing System.
Interests in a DTC Restricted Global Certificate will be exchangeable, free of charge to the holder, for definitive DTC Restricted Certificates only upon the occurrence of an Exchange Event. An Exchange Event means (unless otherwise specified in the applicable Final Terms) that:
(i)an Event of Default has occurred and is continuing; or
(ii) |
either DTC has notified the Issuer that it is unwilling or unable to continue to act as depositary for the Notes and no alternative clearing system is available or DTC has ceased to constitute a clearing agency registered under the Exchange Act; or |
(iii) |
the Issuer has or will become subject to adverse tax consequences which would not be suffered were the Notes represented by definitive DTC Restricted Certificates and a certificate to such effect from two Authorised Signatories of the Issuer has been given to the Trustee. |
Upon the occurrence of an Exchange Event:
(A) |
the Issuer will promptly give notice to Noteholders in accordance with Condition 14 of the Senior Notes or Condition 14 of the Subordinated Notes, as the case may be; and |
(B) |
DTC (acting on the instructions of any holder of an interest in such DTC Restricted Global Certificate) may give notice to the Registrar requesting exchange and, in the event of an Exchange Event as described in (iii) above, the Issuer may also give notice to the Registrar requesting exchange. |
Any such exchange shall occur not later than 10 days after the date of receipt of the first relevant notice by the Registrar.
Covenants
The statements set forth in the legend above are an integral part of the Notes in respect of which this DT C Restricted Global Certificate representing DTC Restricted Registered Notes is issued and by acceptance hereof each holder of such Notes agrees to be subject to and bound by the terms and provisions set forth in such legend.
Meetings
At any meeting of Noteholders, the holder of the Notes represented by this DTC Restricted Global Certificate shall be treated as having one vote in respect of each nominal amount of Notes equal to the minimum Specified Denomination of the Notes.
This DTC Restricted Global Certificate shall not become valid for any purpose until authenticated by or on behalf of the Registrar.
162
This DTC Restricted Global Certificate, and any non-contractual obligations arising out of or in connection with it, shall be governed by and construed in accordance with English law.
163
IN WITNESS whereof the Issuer has caused this DTC Restricted Global Certificate to be signed manually or in facsimile by a person duly authorised on its behalf.
Dated as of the Issue Date.
VODAFONE GROUP PLC
By:
…………………………………………
Duly Authorised
Authenticated
by HSBC Bank USA National Association as Registrar
By:
………………………………………..
Authorised Officer
164
Form of Transfer
For value received the undersigned transfers to
………………………………………………………..
……………………………………………………….
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF TRANSFEREE)
[●] nominal amount of the Notes represented by this DTC Restricted Global Certificate, and all rights under them.
Dated |
|
………………………………………… |
|
|
|
Signed …………………………………… |
|
Certifying Signature |
|
|
|
Notes: |
|
|
(a) |
The signature of the person effecting a transfer shall conform to a list of duly authorised specimen signatures supplied by the holder of the Notes represented by this DTC Restricted Global Certificate or (if such signature corresponds with the name as it appears on the face of this DTC Restricted Global Certificate) be certified by a notary public or a recognised bank or be supported by such other evidence as a Transfer Agent or the Registrar may reasonably require. |
(b) |
A representative of the Noteholder should state the capacity in which they sign e.g. executor. |
165
ANNEX
[attach Final Terms that relate to this Global Certificate]
166
PART 5
FORM OF DEFINITIVE NOTE
[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED.]1
VODAFONE GROUP PLC
(the Issuer)
(incorporated with limited liability in England and Wales)
[Specified Currency and Nominal Amount of Tranche]
NOTES DUE
[Year of Maturity]
This Note is one of a Series of Notes of [Specified Currency(ies) and Specified Denomination(s)] each of the Issuer (Notes). References herein to the Conditions shall be to the Terms and Conditions [endorsed hereon/set out in Part 1 (if the Notes are Senior Notes) or Part 2 (if the Notes are Subordinated Notes) of Schedule 1 to the Trust Deed (as defined below) which shall be incorporated by reference herein and have effect as if set out herein] as completed by and/or (in the case of the Exempt Notes) modified and/or replaced the relevant information (appearing in the Final Terms or Pricing Supplement, as the case may be, (the Final Terms)) endorsed hereon but, in the event of any conflict between the provisions of the said Conditions and such information in the Final Terms, such information will prevail. Words and expressions defined in the Conditions shall bear the same meanings when used in this Note. This Note is issued subject to, and with the benefit of, the Conditions and a Trust Deed (such Trust Deed as modified and/or supplemented and/or restated from time to time, the Trust Deed) dated 16 July 1999 and made between the Issuer (under its then name of Vodafone AirTouch Plc) and The Law Debenture Trust Corporation p.l.c. as trustee for the holders of the Notes.
The Issuer, subject to and in accordance with the Conditions and the Trust Deed, promises to pay to the bearer hereof on the Maturity Date or on such earlier date as this Note may become due and repayable in accordance with the Conditions and the Trust Deed, the amount payable on redemption of this Note and to pay interest (if any) on the nominal amount of this Note calculated and payable as provided in the Conditions and the Trust Deed together with any other sums payable under the Conditions and the Trust Deed.
This Note shall not be valid unless authenticated by HSBC Bank plc as Issuing and Principal Paying Agent.
1 |
Include where the original maturity of the Notes is more than 365 days where TEFRAD is specified in the applicable Final Terms or Pricing Supplement, as the case may be. |
167
IN WITNESS whereof this Note has been executed on behalf of the Issuer.
Issued as of ………………….………..
VODAFONE GROUP PLC
By:……………………………………
Duly Authorised
Authenticated by
HSBC Bank plc
as Issuing and Principal Paying Agent.
By:……………………………………
Authorised Officer
168
[Conditions]
[Conditions to be as set out in Part 1 (if the Notes are Senior Notes) or Part 2 (if the Notes are Subordinated Notes) of Schedule 1 to this Trust Deed or such other form as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee and the relevant Dealer(s), but shall not be endorsed if not required by the relevant Stock Exchange]
169
Final Terms
[Here to be set out the text of the relevant information completing the Conditions which appears in the Final Terms relating to the Notes]
170
PART 6
FORM OF COUPON
On the front:
VODAFONE GROUP PLC
[Specified Currency and Nominal Amount of Tranche]
NOTES DUE
[Year of Maturity]
Series No. [ ]
[Coupon appertaining to a Note in the denomination of [Specified Currency and Specified Denomination]].1
Part A
[For Fixed Rate Notes: |
|
This Coupon is payable to bearer, separately |
Coupon for |
negotiable and subject to the Terms and |
[ ] |
Conditions of the said Notes. |
due on [ ], [ ]] |
Part B
[For Floating Rate Notes, CMS Linked Notes, Inflation Linked Interest Notes, Sustainability-Linked Notes or Reset Rate Notes:
Coupon for the amount due in accordance with the Terms and Conditions endorsed on, attached to or incorporated by reference into the said Notes on [the Interest Payment Date falling in [ ] [ ]/[ ]].
This Coupon is payable to bearer, separately negotiable and subject to such Terms and Conditions, under which it may become void before its due date.]
[ANY UNITED STATES PERSON (WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED.] 2
1Delete where the Notes are all of the same denomination.
2 |
Include where the original maturity of the Notes is more than 365 days where TEFRAD is specified in the applicable Final Terms or Pricing Supplement, as the case may be. |
171
PART 7
FORM OF TALON
On the front:
VODAFONE GROUP PLC
[Specified Currency and Nominal Amount of Tranche]
NOTES DUE
[Year of Maturity]
Series No. [ ]
[Talon appertaining to a Note in the denomination of [Specified Currency and Specified Denomination]].1
On and after [ ] further Coupons [and a further Talon] 2 appertaining to the Note to which this Talon appertains will be issued at the specified office of any of the Paying Agents set out on the reverse hereof (and/or any other or further Paying Agents and/or specified offices as may from time to time be duly appointed and notified to the Noteholders) upon production and surrender of this Talon.
This Talon may, in certain circumstances, become void under the Terms and Conditions endorsed on the Note to which this Talon appertains.
[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED.] 3
1 |
Delete where the Notes are all of the same denomination. |
2 |
Not required on last Coupon sheet. |
3 |
Include where the original maturity of the Notes is more than 365 days where TEFRAD is specified in the applicable Final Terms or Pricing Supplement, as the case may be. |
172
On the back of Coupons and Talons:
ISSUING AND PRINCIPAL PAYING AGENT
HSBC Bank plc
8 Canada Square
London E14 5HQ
OTHER PAYING AGENTS
Credit Suisse AG |
|
Banque Internationale à Luxembourg société |
Uetlibergstrasse 231 |
|
anonyme |
8070 Zurich |
|
69 route d’Esch |
|
|
L-2953 Luxembourg |
173
PART 8
FORM OF REGULATION S CERTIFICATE
On the front:
THE NOTES REPRESENTED BY THIS REGULATION S GLOBAL CERTIFICATE HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
VODAFONE GROUP PLC
(the Issuer)
(incorporated with limited liability in England and Wales)
[Specified Currency and Nominal Amount of Tranche]
NOTES DUE
[Year of Maturity]
This Regulation S Certificate certifies that(the Registered Holder) is, as at the date hereof,
registered as the holder of [nominal amount] of the Notes referred to above (the Notes) of the Issuer. References herein to the Conditions shall be to the Terms and Conditions [endorsed hereon/set out in Part 1 (if the Notes are Senior Notes) or Part 2 (if the Notes are Subordinated Notes) of Schedule 1 to the Trust Deed (as defined below) which shall be incorporated by reference herein and have effect as if set out herein] as completed and/or (in the case of Exempt Notes) modified and/or replaced by the relevant information (appearing in the Final Terms or Pricing Supplement, as the case may be, (the Final Terms)) endorsed hereon but, in the event of any conflict between the provisions of the said Conditions and such information in the Final Terms, such information will prevail. Words and expressions defined in the Conditions shall bear the same meanings when used in this Certificate. This Certificate is issued subject to, and with the benefit of, the Conditions and a Trust Deed (such Trust Deed as modified and/or supplemented and/or restated from time to time, the Trust Deed) dated 16 July 1999 and made between the Issuer (under its then name of Vodafone AirTouch Plc) and The Law Debenture Trust Corporation p.l.c. as trustee for the holders of the Notes.
The Issuer, subject to and in accordance with the Conditions and the Trust Deed, promises to pay to the Registered Holder hereof on the Maturity Date or on such earlier date as the Notes represented by this Certificate may become due and repayable in accordance with the Conditions and the Trust Deed, the amount payable on redemption of such Notes and to pay interest (if any) on the nominal amount of such Notes calculated and payable as provided in the Conditions and the Trust Deed together with any other sums payable under the Conditions and the Trust Deed.
For the purposes of this Regulation S Certificate, (a) the Issuer certifies that the Registered Holder is, at the date hereof, entered in the Register as the holder of the Note(s) represented by this Regulation S Certificate, (b) this Regulation S Certificate is evidence of entitlement only, (c) title to the Note(s) represented by this Regulation S Certificate passes only on due registration on the Register, and (d) only the holder of the Note(s) represented by this Regulation S Certificate is entitled to payments in respect of the Note(s) represented by this Regulation S Certificate.
This Regulation S Certificate shall not become valid for any purpose until authenticated by or on behalf of the Registrar.
174
This Regulation S Certificate, and any non-contractual obligations arising out of or in connection with it, shall be governed by and construed in accordance with English law.
IN WITNESS whereof this Regulation S Certificate has been executed on behalf of the Issuer.
Dated as of the Issue Date.
VODAFONE GROUP PLC
By: ………………………………
Duly Authorised
Authenticated by HSBC Bank USA National Association as Registrar.
By: …………………………….
Authorised Officer
175
On the back:
Terms and Conditions of the Notes
[Conditions to be as set out in Part 1 (if the Notes are Senior Notes) or Part 2 (if the Notes are Subordinated Notes) of Schedule 1 to this Trust Deed or such other form as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Registrar, the Trustee and the relevant Dealer(s), but shall not be endorsed if not required by the relevant Stock Exchange.]
176
Final Terms
[Here to be set out the text of the relevant information completing the Conditions which appears in the Final Terms relating to the Notes.]
177
Form of Transfer
For value received the undersigned transfers to
………………………………………………
………………………………………………
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF TRANSFEREE)
[●] nominal amount of the Notes represented by this Regulation S Certificate, and all rights under them.
Dated |
|
|
|
|
…………………………….. |
|
|
Certifying Signature |
Signed …………………………………… |
|
|
|
|
|
Notes: |
|
|
(a) |
The signature of the person effecting a transfer shall conform to a list of duly authorised specimen signatures supplied by the holder of the Notes represented by this Regulation S Certificate or (if such signature corresponds with the name as it appears on the face of this Regulation S Certificate) be certified by a notary public or a recognised bank or be supported by such other evidence as a Transfer Agent or the Registrar may reasonably require. |
(b) |
A representative of the Noteholder should state the capacity in which they sign. |
Unless the context otherwise requires capitalised terms used in this Form of Transfer have the same meaning as in the Trust Deed.
[TO BE COMPLETED BY TRANSFEREE:
[INSERT ANY REQUIRED TRANSFEREE REPRESENTATIONS, CERTIFICATIONS, ETC.]]
ISSUING AND PRINCIPAL PAYING AGENT, TRANSFER AGENT AND REGISTRAR
HSBC Bank plc
8 Canada Square
London E14 5HQ
PAYING AGENT, REGISTRAR AND TRANSFER AGENT
HSBC Bank USA National Association
452 Fifth Avenue
New York
NY 10018-2708
178
PART 9
FORM OF DTC RESTRICTED CERTIFICATE
On the front:
THE NOTES REPRESENTED BY THIS DEFINITIVE REGISTERED NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT (RULE 144A) TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A QIB) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB, (2) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT (REGULATIONS) TO A NON-U.S. PERSON (AS SUCH TERM IS DEFINED UNDER REGULATION S) OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THE NOTES REPRESENTED BY THIS DEFINITIVE REGISTERED NOTE.
[FOR PURPOSES OF SECTIONS 1271 ET. SEQ. OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED, THIS NOTE HAS ORIGINAL ISSUE DISCOUNT OF [currency][amount] PER EACH [currency][amount] OF PRINCIPAL AMOUNT OF THIS NOTE; THE ISSUE PRICE OF THIS NOTE IS [currency] [amount]; THE ISSUE DATE IS [date]; AND THE YIELD TO MATURITY (COMPOUNDED [semi-annually]) IS [yield].]*
VODAFONE GROUP PLC
(the Issuer)
(incorporated with limited liability in England and Wales)
[Specified Currency and Nominal Amount of Tranche]
NOTES DUE
[Year of Maturity]
This DTC Restricted Certificate certifies that …………………….. (the Registered Holder) is, as at the date hereof, registered as the holder of [nominal amount] of the Notes referred to above (the Notes) of the Issuer. References herein to the Conditions shall be to the Terms and Conditions [endorsed hereon/set out in Part 1 (if the Notes are Senior Notes) or Part 2 (if the Notes are Subordinated Notes) of Schedule 1 to the Trust Deed (as defined below) which shall be incorporated by reference herein and have effect as if set out herein] as completed and/or (in the case of Exempt Notes) modified and/or replaced by the relevant information (appearing in the Final Terms or Pricing Supplement, as the case may be, (the Final Terms)) endorsed hereon but, in the event of any conflict between the provisions of the said Conditions and such information in the Final Terms, such information will prevail. Words and expressions defined in the Conditions shall bear the same meanings when used in this DTC Restricted Certificate. This DTC Restricted Certificate is issued subject to, and with the benefit of, the Conditions and a Trust Deed (such Trust Deed as modified and/or supplemented and/or restated from time to time, the Trust Deed) dated 16 July 1999 and made between the
* Legend to be borne by any Definitive Certificate issued with “original issue discount” for U. S federal income tax purposes.
179
Issuer (under its then name of Vodafone AirTouch Plc) and The Law Debenture Trust Corporation p.l.c. as trustee for the holders of the Notes.
The Issuer, subject to and in accordance with the Conditions and the Trust Deed, promises to pay to the Registered Holder hereof on the Maturity Date or on such earlier date as the Notes represented by this DTC Restricted Certificate may become due and repayable in accordance with the Conditions and the Trust Deed, the amount payable on redemption of such Notes and to pay interest (if any) on the nominal amount of such Notes calculated and payable as provided in the Conditions and the Trust Deed together with any other sums payable under the Conditions and the Trust Deed.
The statements set forth in the legend above are an integral part of the Notes in respect of which this DTC Restricted Certificate is issued and by acceptance hereof each holder of such Notes agrees to be subject to and bound by the terms and provisions set forth in such legend.
For so long as the Notes are outstanding, the Issuer will, during the period in which the Issuer is neither subject to Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended, nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder, provide to the holder hereof, or to any prospective purchaser hereof designated by such holder, upon request, the information required to be provided by Rule 144A(d)(4) under the U.S. Securities Act of 1933, as amended.
For the purposes of this DTC Restricted Certificate, (a) the Issuer certifies that the Registered Holder is, at the date hereof, entered in the Register as the holder of the Note(s) represented by this DTC Restricted Certificate, (b) this DTC Restricted Certificate is evidence of entitlement only, (c) title to the Note(s) represented by this DTC Restricted Certificate passes only on due registration on the Register, and (d) only the holder of the Note(s) represented by this DTC Restricted Certificate is entitled to payments in respect of the Note(s) represented by this DTC Restricted Certificate.
This DTC Restricted Certificate shall not become valid for any purpose until authenticated by or on behalf of the Registrar.
This DTC Restricted Certificate, and any non-contractual obligations arising out of or in connection with it, shall be governed by and construed in accordance with English law.
IN WITNESS whereof this DTC Restricted Certificate has been executed on behalf of the Issuer.
Dated as of the Issue Date.
VODAFONE GROUP PLC
By: ……………………………………..
Duly Authorised
Authenticated by HSBC Bank USA National Association as Registrar.
By: ……………………………………
Authorised Officer
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On the back:
Terms and Conditions of the Notes
[Conditions to be as set out in Part 1 (if the Notes are Senior Notes) or Part 2 (if the Notes are Subordinated Notes) of Schedule 1 to this Trust Deed or such other form as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Registrar, the Trustee and the relevant Dealer(s), but shall not be endorsed if not required by the relevant Stock Exchange.]
181
Final Terms
[Here to be set out the text of the relevant information completing the Conditions which appears in the Final Terms relating to the Notes.]
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Form of Transfer
For value received the undersigned transfers to
……………………………………..
……………………………………..
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF TRANSFEREE)
[●] nominal amount of the Notes represented by this Regulation S Certificate, and all rights under them.
Dated |
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Certifying Signature |
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Signed …………………………………. |
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Notes: |
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(a) |
The signature of the person effecting a transfer shall conform to a list of duly authorised specimen signatures supplied by the holder of the Notes represented by this DTC Restricted Certificate or (if such signature corresponds with the name as it appears on the face of this DTC Restricted Certificate) be certified by a notary public or a recognised bank or be supported by such other evidence as a Transfer Agent or the Registrar may reasonably require. |
(b) |
A representative of the Noteholder should state the capacity in which they sign. |
Unless the context otherwise requires capitalised terms used in this Form of Transfer have the same meaning as in the Trust Deed.
[TO BE COMPLETED BY TRANSFEREE:
[INSERT ANY REQUIRED TRANSFEREE REPRESENTATIONS, CERTIFICATIONS, ETC.]]
ISSUING AND PRINCIPAL PAYING AGENT, TRANSFER AGENT AND REGISTRAR
HSBC Bank plc
8 Canada Square
London E14 5HQ
PAYING AGENT, REGISTRAR AND TRANSFER AGENT
HSBC Bank USA National Association
452 Fifth Avenue
New York
NY 10018-2708
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SCHEDULE 3
PROVISIONS FOR MEETINGS OF NOTEHOLDERS
1.(a)As used in this Schedule the following expressions shall have the following meanings unless the context otherwise requires:
(i) |
voting certificate shall mean an English language certificate issued by a Paying Agent and dated in which it is stated: |
(A) |
that on the date thereof Bearer Notes (whether in definitive form or represented by a Global Note and not being Bearer Notes in respect of which a block voting instruction has been issued and is outstanding in respect of the meeting specified in such voting certificate or any adjourned such meeting) were deposited with such Paying Agent or (to the satisfaction of such Paying Agent) were held to its order or under its control or blocked in an account with a clearing system and that no such Bearer Notes will cease to be so deposited or held or blocked until the first to occur of: |
I. |
the conclusion of the meeting specified in such certificate or, if later, of any adjourned such meeting; and |
II. |
the surrender of the certificate to the Paying Agent who issued the same; and |
(B) |
that the bearer thereof is entitled to attend and vote at such meeting and any adjourned such meeting in respect of the Bearer Notes represented by such certificate; |
(ii) |
block voting instruction shall mean an English language document issued by a Paying Agent and dated in which: |
(A)it is certified that Bearer Notes (whether in definitive form or represented by
a Global Note and not being Bearer Notes in respect of which a voting certificate has been issued and is outstanding in respect of the meeting specified in such block voting instruction and any adjourned such meeting) have been deposited with such Paying Agent or (to the satisfaction of such Paying Agent) were held to its order or under its control or blocked in an account with a clearing system and that no such Bearer Notes will cease to be so deposited or held or blocked until the first to occur of:
I. |
the conclusion of the meeting specified in such document or, if later, of any adjourned such meeting; and |
II. |
the surrender to the Paying Agent not less than 48 hours before the time for which such meeting or any adjourned such meeting is convened of the receipt issued by such Paying Agent in respect of each such deposited Bearer Note which is to be released or (as the case may require) the Bearer Note or Bearer Notes ceasing with the agreement of the Paying Agent to be held to its order or under its control or so blocked and the giving of notice by the Paying Agent to the Issuer in accordance with paragraph 17 hereof of the necessary amendment to the block voting instruction; |
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(B) |
it is certified that each holder of such Bearer Notes has instructed such Paying Agent that the vote(s) attributable to the Bearer Note or Bearer Notes so deposited or held or blocked should be cast in a particular way in relation to the resolution or resolutions to be put to such meeting or any adjourned such meeting and that all such instructions are during the period commencing 48 hours prior to the time for which such meeting or any adjourned such meeting is convened and ending at the conclusion or adjournment thereof neither revocable nor capable of amendment; |
(C) |
the aggregate nominal amount of the Bearer Notes so deposited or held or blocked are listed distinguishing with regard to each such resolution between those in respect of which instructions have been given as aforesaid that the votes attributable thereto should be cast in favour of the resolution and those in respect of which instructions have been so given that the votes attributable thereto should be cast against the resolution; and |
(D) |
one or more persons named in such document (each hereinafter called a proxy) is or are authorised and instructed by such Paying Agent to cast the votes attributable to the Bearer Notes so listed in accordance with the instructions referred to in (C) above as set out in such document; |
(iii) |
electronic platform means any form of telephone or electronic platform or facility and includes, without limitation, telephone and video conference call and application technology systems; |
(iv) |
hybrid meeting means a combined physical meeting and virtual meeting convened pursuant to this Schedule by the Issuer or the Trustee and which persons may attend either at the physical location specified in the notice of such meeting or via an electronic platform; |
(v) |
meeting means a physical meeting, virtual meeting or a hybrid meeting of Noteholders (whether originally convened or resumed following an adjournment); |
(vi) |
physical meeting means any meeting attended by persons present in person at the physical location specified in the notice of such meeting; |
(vii) |
present means physically present in person at a physical meeting or a hybrid meeting, or able to participate in or join a virtual meeting or a hybrid meeting held via an electronic platform; |
(viii) |
virtual meeting means any meeting held via an electronic platform; |
(ix) |
24 hours shall mean a period of 24 hours including all or part of a day upon w hic h banks are open for business in both the place where the relevant meeting is to be held and in each of the places where the Paying Agents have their specified offices (disregarding for this purpose the day upon which such meeting is to be held) and such period shall be extended by one period or, to the extent necessary, more periods of 24 hours until there is included as aforesaid all or part of a day upon which banks are open for business in all of the places as aforesaid; and |
(x) |
48 hours shall mean a period of 48 hours including all or part of two days upon which banks are open for business both in the place where the relevant meeting is to be held and in each of the places where the Paying Agents have their specified offices (disregarding for this purpose the day upon which such meeting is to be held) |
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and such period shall be extended by one period or, to the extent necessary, more periods of 24 hours until there is included as aforesaid all or part of two days upon which banks are open for business in all of the places as aforesaid.
(b) |
A holder of a Bearer Note (whether in definitive form or represented by a Global Note) may obtain a voting certificate in respect of such Bearer Note from a Paying Agent or require a Paying Agent to issue a block voting instruction in respect of such Note by depositing such Bearer Note with such Paying Agent or (to the satisfaction of such Paying Agent) by such Bearer Note being held to its order or under its control or being blocked in an account with a clearing system, in each case not less than 48 hours before the time fixed for the relevant meeting and on the terms set out in sub-paragraph (a)(i)(A) or (a)(ii)(A) above (as the case may be), and (in the case of a block voting instruction) instructing such Paying Agent to the effect set out in sub-paragraph (a)(ii)(B) above. The holder of any voting certific ate or the proxies named in any block voting instruction shall for all purposes in connection with the relevant meeting or adjourned meeting of Noteholders be deemed to be the holder of the Bearer Notes to which such voting certificate or block voting instruction relates and the Paying Agent with which such Bearer Notes have been deposited or the person holding the same to the order or under the control of such Paying Agent or the clearing system in which such Bearer Notes have been blocked shall be deemed for such purposes not to be the holder of those Bearer Notes. |
(c)(i)A holder of Registered Notes (whether in definitive form or represented by a Global Certificate (other than a Registered Note referred to in (iv) below)) may, by an instrument in writing in the English language (a form of proxy) signed by the holder or, in the case of a corporation, executed under its common seal or signed on its behalf by an attorney or a duly authorised officer of the corporation and delivered to the specified office of the Registrar not less than 48 hours before the time fixed for the relevant meeting, appoint any person (a proxy) to act on their or its behalf in connection with any meeting of the Noteholders and any adjourned such meeting.
(ii) |
Any holder of Registered Notes (whether in definitive form or represented by a Global Certificate) which is a corporation may by resolution of its directors or other governing body authorise any person to act as its representative (a representative) in connection with any meeting of the Noteholders and any adjourned such meeting. |
(iii) |
Any proxy appointed pursuant to sub-paragraph (i) above or representative appointed pursuant to sub-paragraph (ii) above shall so long as such appointment remains in force be deemed, for all purposes in connection with the relevant meeting or adjourned meeting of the Noteholders, to be the holder of the Registered Notes to which such appointment relates and the holder of the Registered Notes shall be deemed for such purposes not to be the holder. |
(iv) |
For so long as any of the Registered Notes is represented by a Global Certificate registered in the name of DTC or its nominee, DTC may mail an Omnibus Proxy to the Issuer in accordance with and in the form used by DTC as part of its usual procedures from time to time in relation to meetings of Noteholders. Such Omnibus Proxy shall assign the voting rights in respect of the relevant meeting to DTC’s direct participants as of the record date specified therein. Any such assignee participant may, by an instrument in writing in the English language signed by such assignee participant, or, in the case of a corporation, executed under its common seal or signed on its behalf by an attorney or a duly authorised officer of the corporation and delivered to the specified office of the Registrar or any Transfer Agent before the time fixed for the relevant meeting, appoint any person (a sub-proxy) to act on their or its behalf in connection with any meeting of Noteholders and any adjourned |
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such meeting. All references to proxy or proxies in this Schedule other than in this paragraph shall be read so as to include references to “sub-proxy” or “sub-proxies”.
2. |
The Issuer or the Trustee may at any time and the Issuer shall upon a requisition in writing in the English language signed by the holders of not less than one-tenth in nominal amount of the Notes for the time being outstanding convene a meeting of the Noteholders and if the Issuer makes default for a period of seven days in convening such a meeting the same may be convened by the Trustee or the requisitionists. Every physical meeting shall be held at a time and place approved by the Trustee. Every virtual meeting shall be held via an electronic platform and at a time approved by the Trustee. Every hybrid meeting shall be held at a time and place and via an electronic platform approved by the Trustee. |
3. |
At least 21 days’ notice (exclusive of the day on which the notice is given and the day on which the meeting is to be held) specifying the day and time of the meeting and the manner in which it is to be held, and if a physical meeting or hybrid meeting is to be held, the place of the meeting, shall be given to the holders of the relevant Notes prior to any meeting of such holders in the manner provided by Condition 14 of the Senior Notes or Condition 14 of the Subordinated Notes, as the case may be. Such notice, which shall be in the English language, shall state generally the nature of the business to be transacted at the meeting thereby convened but (except for an Extraordinary Resolution) it shall not be necessary to specify in such notice the terms of any resolution to be proposed. With respect to a virtual meeting or a hybrid meeting, each such notice shall set out such other and further details as are required under paragraph 23. Such notice shall include statements, if applicable, to the effect that (i) Bearer Notes may, not less than 48 hours before the time fixed for the meeting, be deposited with Paying Agents or (to their satisfaction) held to their order or under their control or blocked in an account with a clearing system for the purpose of obtaining voting certificates or appointing proxies and (ii) the holders of Registered Notes may appoint proxies by executing and delivering a form of proxy in the English language to the specified office of the Registrar not less than 48 hours before the time fixed for the meeting or, in the case of corporations, may appoint representatives by resolution of their directors or other governing body and delivering a certified copy thereof to the specified office of the Registrar. A copy of the notice shall be sent by post to the Trustee (unless the meeting is convened by the Trustee) and to the Issuer (unless the meeting is convened by the Issuer) and to each Agent (other than the Calculation Agent). |
4. |
A person (who may but need not be a Noteholder) nominated in writing by the Trustee shall be entitled to take the chair at the relevant meeting or adjourned meeting but if no such nomination is made or if at any meeting or adjourned meeting the person nominated shall not be present within 15 minutes after the time appointed for holding the meeting or adjourned meeting the Noteholders present shall choose one of their number to be Chairperson, failing which the Issuer may appoint a Chairperson. The Chairperson of an adjourned meeting need not be the same person as was Chairperson of the meeting from which the adjournment took place. |
5. |
At any such meeting one or more persons present holding Definitive Notes or voting certificates or being proxies or representatives and holding or representing in the aggregate not less than one-twentieth of the nominal amount of the Notes for the time being outstanding shall (except for the purpose of passing an Extraordinary Resolution or for the purposes mentioned in the proviso to Condition 15(a) of the Subordinated Notes) form a quorum for the transaction of business and no business (other than the choosing of a Chairperson) shall be transacted at any meeting unless the requisite quorum be present at the commencement of the relevant business. The quorum at any such meeting for passing an Extraordinary Resolution shall (subject as provided below) be one or more persons present holding Definitive Notes or voting certificates or being proxies or representatives and holding or representing in the aggregate a clear majority in nominal amount of the Notes for the time being outstanding. The quorum at any such meeting for considering any of the proposals mentioned in the proviso to Condition 15(a) of the Subordinated Notes shall (subject as provided below) be one or more persons present holding Definitive Notes or voting certificates or being |
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proxies or representatives and holding or representing in the aggregate not less than three-fourths in nominal amount of the Notes for the time being outstanding.
6. |
If within 15 minutes (or such longer period not exceeding 30 minutes as the Chairperson may decide) after the time appointed for any such meeting a quorum is not present for the transaction of any particular business, then, subject and without prejudice to the transaction of the business (if any) for which a quorum is present, the meeting shall if convened upon the requisition of Noteholders be dissolved. In any other case it shall stand adjourned to the same day in the next week (or if such day is a public holiday the next succeeding business day) at the same time and place (except in the case of a meeting at which an Extraordinary Resolution is to be proposed in which case it shall stand adjourned for such period, being not less than 13 clear days nor more than 42 clear days, and to such place as may be appointed by the Chairperson either at or subsequent to such meeting and approved by the Trustee). If within 15 minutes (or such longer period not exceeding 30 minutes as the Chairperson may decide) after the time appointed for any adjourned meeting a quorum is not present for the transaction of any particular business, then, subject and without prejudice to the transaction of the business (if any) for which a quorum is present, the Chairperson may either (with the approval of the Trustee) dissolve such meeting or adjourn the same for such period, being not less than 13 clear days (but without any maximum number of clear days), and to such place as may be appointed by the Chairperson either at or subsequent to such adjourned meeting and approved by the Trustee, and the provisions of this sentence shall apply to all further adjourned such meetings. At any adjourned meeting (except for the purposes mentioned in the proviso to Condition 15(a) of the Subordinated Notes) one or more persons present holding Definitive Notes or voting certificates or being proxies or representatives (whatever the nominal amount of the Notes so held or represented by them) shall form a quorum and shall have power to pass any resolution and to decide upon all matters which could properly have been dealt with at the meeting from which the adjournment took place had the requisite quorum been present. The quorum at an adjourned meeting for considering any of the proposals mentioned in the proviso to Condition 15(a) of the Subordinated Notes shall be one or more persons present holding Definitive Notes or voting certificates or being proxies or representatives and holding or representing in the aggregate not less than one-fourth in nominal amount of the Notes for the time being outstanding. |
7. |
Notice of any adjourned meeting at which an Extraordinary Resolution is to be submitted shall be given in the same manner as notice of an original meeting but as if 10 were substituted for 21 in paragraph 3 above and such notice shall state the required quorum. Subject as aforesaid it shall not be necessary to give any notice of an adjourned meeting. |
8. |
Every question submitted to a meeting shall be decided in the first instance by a show of hands and in case of equality of votes the Chairperson shall both on a show of hands and on a poll have a casting vote in addition to the vote or votes (if any) to which they may be entitled as a Noteholder or as a holder of a voting certificate or as a proxy or as a representative. |
9. |
At any meeting unless a poll is (before or on the declaration of the result of the show of hands) demanded by the Chairperson, the Issuer, the Trustee or any person present holding a Definitive Note of the relevant Series or a voting certificate or being a proxy or representative (whatever the nominal amount of the Notes so held or represented by them) a declaration by the Chairperson that a resolution has been carried or carried by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution. |
10. |
Subject to paragraph 12 below, if at any such meeting a poll is so demanded it shall be taken in such manner and subject as hereinafter provided either at once or after an adjournment as the Chairperson directs and the result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded as at the date of the taking of the poll. The demand for a poll shall not prevent |
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the continuance of the meeting for the transaction of any business other than the motion on which the poll has been demanded.
11. |
The Chairperson may with the consent of (and shall if directed by) any such meeting adjourn the same from time to time and from place to place but no business shall be transacted at any adjourned meeting except business which might lawfully (but for lack of required quorum) have been transacted at the meeting from which the adjournment took place. |
12. |
Any poll demanded at any such meeting on the election of a Chairperson or on any question of adjournment shall be taken at the meeting without adjournment. |
13. |
The Trustee and its lawyers and any director, officer or employee of a corporation being a trustee of these presents and any director or officer of the Issuer and its or their lawyers and any other person authorised so to do by the Trustee may attend, participate and speak at any meeting. Save as aforesaid, but without prejudice to the proviso to the definition of “outstanding” in Clause 1, no person shall be entitled to attend and speak nor shall any person be entitled to vote at any meeting of Noteholders or join with others in requesting the convening of such a meeting or to exercise the rights conferred on Noteholders by Condition 10(B) of the Senior Notes or Condition 10(b) of the Subordinated Notes, as the case may be, unless they either produce the Definitive Bearer Note or Definitive Bearer Notes of which they are the holder or a voting certificate or are a proxy or a representative or are the holder of a Registered Note or Registered Notes in definitive form. No person shall be entitled to vote at any meeting in respect of Notes held by, for the benefit of, or on behalf of, the Issuer, any Subsidiary of the Issuer (including any Retained Notes), any Holding Company of the Issuer or other Subsidiary of such Holding Company. Nothing herein shall prevent any of the proxies named in any block voting instruction or form of Proxy from being a director, officer or representative of or otherwise connected with the Issuer. |
14.Subject as provided in paragraph 13 hereof at any meeting:
(a) |
on a show of hands every person who is present in person and produces a Definitive Bearer Note or voting certificate or is a holder of a Registered Note in definitive form or is a proxy or representative shall have one vote; and |
(b) |
on a poll every person who is so present shall have one vote in respect of each €1.00 or such other amount as the Trustee may in its absolute discretion stipulate (or, in the case of meetings of holders of Notes denominated in another currency, such amount in such other currency as the Trustee in its absolute discretion may stipulate) in nominal amount of the Definitive Bearer Notes so produced or represented by the voting certificate so produced or in respect of which they are a proxy or representative or in respect of which (being a Registered Note in definitive form) they are the registered holder. |
Without prejudice to the obligations of the proxies named in any block voting instruction or form of proxy any person entitled to more than one vote need not use all their votes or cast all the votes to which they are entitled in the same way.
15. |
The proxies named in any block voting instruction or form of proxy need not be Noteholders. |
16. |
Each block voting instruction together (if so requested by the Trustee) with proof satisfactory to the Trustee of its due execution on behalf of the relevant Paying Agent and each form of proxy or resolution appointing a representative shall be deposited by the relevant Paying Agent (or as the case may be) by the Registrar or the relevant Transfer Agent at such place as the Trustee shall approve not less than 24 hours before the time appointed for holding the meeting or adjourned meeting at which the proxies named in the block voting instruction or form of proxy propose to vote and in default the block voting instruction or form of proxy or resolution appointing a representative shall |
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not be treated as valid unless the Chairperson of the meeting decides otherwise before such meeting or adjourned meeting proceeds to business. A certified copy of each block voting instruction or form of proxy or resolution appointing a representative shall be deposited with the Trustee before the commencement of the meeting or adjourned meeting but the Trustee shall not thereby be obliged to investigate or be concerned with the validity of or the authority of the proxies named in any such block voting instruction or form of proxy or of the representative named in such resolution.
17. |
Any vote given in accordance with the terms of a block voting instruction or form of proxy or resolution appointing a representative shall be valid notwithstanding the previous revocation or amendment of the block voting instruction or form of proxy or of any of the relevant Noteholders’ instructions pursuant to which it was executed provided that no intimation in writing of such revocation or amendment shall have been received from the relevant Paying Agent or in the case of Registered Note from the holder thereof by the Issuer at its registered office (or such other place as may have been required or approved by the Trustee for the purpose) by the time being 24 hours before the time appointed for holding the meeting or adjourned meeting at which the block voting instruction or form of proxy is to be used. |
18. |
A meeting of the Noteholders shall in addition to the powers hereinbefore given have the following powers exercisable only by Extraordinary Resolution (subject to the provisions relating to quorum contained in paragraphs 5 and 6 above) namely: |
(a) |
Power to sanction any compromise or arrangement proposed to be made between the Issuer, the Trustee, any Appointee and the Noteholders and Couponholders or any of them. |
(b) |
Power to sanction any abrogation, modification, compromise or arrangement in respect of the rights of the Trustee, any Appointee, the Noteholders, the Couponholders, the Issuer against any other or others of them or against any of their property whether such rights shall arise under these presents or otherwise. |
(c) |
Power to assent to any modification of the provisions of these presents which shall be proposed by the Issuer, the Trustee or any Noteholder. |
(d) |
Power to give any authority or sanction which under the provisions of these presents is required to be given by Extraordinary Resolution. |
(e) |
Power to appoint any persons (whether Noteholders or not) as a committee or committees to represent the interests of the Noteholders and to confer upon such committee or committees any powers or discretions which the Noteholders could themselves exercise by Extraordinary Resolution. |
(f) |
Power to approve of a person to be appointed a trustee and power to remove any trustee or trustees for the time being of these presents. |
(g) |
Power to discharge or exonerate the Trustee and/or any Appointee from all liability in respect of any act or omission for which the Trustee and/or such Appointee may have become responsible under these presents. |
(h) |
Power to authorise the Trustee and/or any Appointee to concur in and execute and do all such deeds, instruments, acts and things as may be necessary to carry out and give effect to any Extraordinary Resolution. |
(i) |
Power to sanction any scheme or proposal for the exchange or sale of the Notes for or the conversion of the Notes into or the cancellation of the Notes in consideration of shares, stock, notes, bonds, debentures, debenture stock and/or other obligations and/or securities of |
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the Issuer or any other company formed or to be formed, or for or into or in consideration of cash, or partly for or into or in consideration of such shares, stock, notes, bonds, debentures, debenture stock and/or other obligations and/or securities as aforesaid and partly for or into or in consideration of cash and for the appointment of some person with the power on behalf of the Noteholders to execute an instrument of transfer of the Registered Notes held by them in favour of the persons with or to whom the Notes are to be exchanged or sold respectively.
19. |
Any resolution (i) passed at a meeting of the Noteholders duly convened and held in accordance with these presents, (ii) passed as a resolution in writing in accordance with these presents or (iii) passed by way of electronic consents given by holders through the relevant Clearing System(s) in accordance with these presents shall be binding upon all the Noteholders whether present or not present at such meeting and whether or not voting and upon all Couponholders and each of them shall be bound to give effect thereto accordingly and the passing of any such resolution shall be conclusive evidence that the circumstances justify the passing thereof. Notice of the result of the voting on any resolution duly considered by the Noteholders shall be published in accordance with Condition 14 of the Senior Notes or Condition 14 of the Subordinated Notes, as the case may be, by the Issuer within 14 days of such result being known PROVIDED THAT the non-publication of such notice shall not invalidate such result. |
20. |
The expression Extraordinary Resolution when used in these presents means (a) a resolution passed at a meeting of the Noteholders duly convened and held in accordance with these presents by a majority consisting of not less than three-fourths of the persons voting thereat upon a show of hands or if a poll is duly demanded by a majority consisting of not less than three-fourths of the votes cast on such poll; or (b) a resolution in writing signed by or on behalf of the holders of not less than three-fourths in nominal amount of the Notes for the time being outstanding, which resolution in writing may be contained in one document or in several documents in like form each signed by or on behalf of one or more of the Noteholders; or (c) consent given by way of electronic consents through the relevant Clearing System(s) (in a form satisfactory to the Trustee) by or on behalf of the holders of not less than three-fourths in nominal amount of the Notes for the time being outstanding. |
21. |
Minutes of all resolutions and proceedings at every meeting of the Noteholders shall be made and entered in books to be from time to time provided for that purpose by the Issuer and any such minutes as aforesaid if purporting to be signed by the Chairperson of the meeting at which such resolutions were passed or proceedings transacted shall be conclusive evidence of the matters therein contained and until the contrary is proved every such meeting in respect of the proceedings of which minutes have been made shall be deemed to have been duly held and convened and all resolutions passed or proceedings transacted thereat to have been duly passed or transacted. |
22.(a)If and whenever the Issuer shall have issued and have outstanding Notes of more than one Series the foregoing provisions of this Schedule shall have effect subject to the following modifications:
(i) |
a resolution which in the opinion of the Trustee affects the Notes of only one Series shall be deemed to have been duly passed if passed at a separate meeting (or by a separate resolution in writing or by a separate resolution passed by way of consents received through the relevant Clearing System(s)) of the holders of the Notes of that Series; |
(ii) |
a resolution which in the opinion of the Trustee affects the Notes of more than one Series but does not give rise to a conflict of interest between the holders of Notes of any of the Series so affected shall be deemed to have been duly passed if passed at a single meeting (or by a single resolution in writing or by a single resolution passed by way of consents received through the relevant Clearing System(s)) of the holders of the Notes of all the Series so affected; |
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(iii) |
a resolution which in the opinion of the Trustee affects the Notes of more than one Series and gives or may give rise to a conflict of interest between the holders of the Notes of one Series or group of Series so affected and the holders of the Notes of another Series or group of Series so affected shall be deemed to have been duly passed only if passed at separate meetings (or by separate resolutions in writing or by separate resolutions passed by way of consents received through the relevant Clearing System(s)) of the holders of the Notes of each Series or group of Series so affected; and |
(iv) |
to all such meetings all the preceding provisions of this Schedule shall mutatis mutandis apply as though references therein to Notes and Noteholders were references to the Notes of the Series or group of Series in question or to the holders of such Notes, as the case may be. |
(b) |
If the Issuer shall have issued and have outstanding Notes which are not denominated in euro, in the case of any meeting of holders of Notes of more than one currency, the nominal amount of such Notes shall (i) for the purposes of paragraph 2 above be the equivalent in euro at the spot rate of a bank nominated by the Trustee for the conversion of the relevant currency or currencies into euro on the seventh dealing day prior to the day on which the requisition in writing is received by the Issuer and (ii) for the purposes of paragraphs 5, 6 and 14 above (whether in respect of the meeting or any adjourned such meeting or any poll resulting therefrom) be the equivalent at such spot rate on the seventh dealing day prior to the day of such meeting. In such circumstances, on any poll each person present shall have one vote for each €1.00 (or such other euro amount as the Trustee may in its absolute discretion stipulate) in nominal amount of the Notes (converted as above) which they hold or represent. |
23. |
Subject to all other provisions of these presents the Trustee may, without the consent of the Issuer, the Noteholders or the Couponholders, (i) concur with the Issuer in prescribing further regulations regarding the holding of meetings and attendance and voting at them or (ii) prescribe further regulations regarding the requisitioning and/or the holding of meetings of Noteholders and attendance and voting thereat, if, in either case, the Trustee is of the opinion that such regulations are not materially prejudicial to the interests of Noteholders. Such regulations may include (without limitation) such requirements as the Trustee thinks reasonable to satisfy itself that the persons who purport to make any requisition in accordance with this Trust Deed are entitled to do so and as to the form of voting certificates or block voting instructions so as to satisfy itself that persons who purport to attend or vote at a meeting are entitled to do so and/or to facilitate the holding of a virtual meeting or a hybrid meeting. |
24. |
Additional provisions applicable to virtual and/or hybrid meetings |
(a) |
The Issuer (with the Trustee’s prior approval) or the Trustee in its sole discretion may decide to hold a virtual meeting or a hybrid meeting and, in such case, shall provide details of the means for Noteholders or their representatives to attend, participate in and/or speak at the meeting, including the electronic platform to be used. |
(b) |
Without prejudice to paragraph 13, the Issuer (with the Trustee’s prior approval) or the Chairperson or the Trustee in its sole discretion may make any arrangement and impose any requirement or restriction as is necessary to ensure the identification of those entitled to take part in the virtual meeting or hybrid meeting and the suitability of the electronic platform. All documentation that is required to be passed between persons at or for the purposes of the virtual meeting or persons attending the hybrid meeting via the electronic platform (in each case, in whatever capacity) shall be communicated by email (or such other medium of electronic communication as the Trustee may approve), provided that the Issuer or its |
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agent(s) shall be solely responsible for facilitating the distribution of all such documentation unless the meeting shall have been convened by the Trustee.
(c) |
All resolutions put to a virtual meeting or a hybrid meeting shall be voted on by a poll. |
(d) |
Persons seeking to attend, participate in, speak at or join a virtual meeting or a hybrid meeting via the electronic platform, shall be responsible for ensuring that they have access to the facilities (including, without limitation, information technology systems, equipment and connectivity) which are necessary to enable them to do so. |
(e) |
In determining whether persons are attending, participating in or joining a virtual meeting or a hybrid meeting via the electronic platform, it is immaterial whether any one or more persons attending it are in the same physical location as each other or how they are able to communicate with each other. |
(f) |
One or more persons who are not in the same physical location as each other attend a virtual meeting or a hybrid meeting if their circumstances are such that if they have (or were to have) rights to speak or vote at that meeting, they are (or would be) able to exercise them. |
(g) |
In the case of a virtual meeting or a hybrid meeting via the electronic platform only, the Chairperson of the meeting reserves the right to take such steps as the Chairperson shall determine in its absolute discretion to avoid or minimise disruption at the meeting, which steps may include (without limitation), muting the electronic connection to the meeting of the person causing such disruption for such period of time as the Chairperson may determine. |
(h) |
A person is able to exercise the right to speak at a virtual meeting or a hybrid meeting when that person is in a position to communicate to all those attending the meeting, during the meeting, as contemplated by the relevant provisions of this Schedule. A person is able to exercise the right to speak at a virtual meeting or a hybrid meeting when that person is in a position to communicate to all those attending the meeting, during the meeting, as contemplated by the relevant provisions of this Schedule. |
(i) |
A person is able to exercise the right to vote at a virtual meeting or a hybrid meeting when: |
(i) |
that person is able to vote, during the meeting, on resolutions put to the vote at the meeting; and |
(ii) |
that person’s vote can be taken into account in determining whether or not such resolutions are passed contemporaneously with the votes of all the other persons attending the meeting who are entitled to vote at such meeting. |
(j) |
The Trustee shall not be responsible or liable to the Issuer or any other person for the choice or security of the electronic platform used for any virtual meeting or hybrid meeting or for accessibility or connectivity or the lack of accessibility or connectivity to any virtual meeting or hybrid meeting, notwithstanding any approval that may have been provided by the Trustee to the Issuer. |
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SIGNATORIES
THE COMMON SEAL of |
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THE COMMON SEAL of |
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THE LAW DEBENTURE TRUST |
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CORPORATION p.l.c. was affixed to this |
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16 July 1999 VODAFONE GROUP PLC and THE LAW DEBENTURE TRUST relating to a TRUST DEED ALLEN & OVERY Allen& OveryLLP |
DocuSign Envelope ID: 2E3C4ADF-F1B8-491E-B857-5EE746766583
SIGNATORIES TO THE SEVENTEENTH SUPPLEMENTAL TRUST DEED
EXECUTED and delivered as a DEED for and on |
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JAMIE stead |
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in the presence of: |
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(Signature of Witness): |
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Lindsey Southard |
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16 Granta Court, Trinity way, London, w3 7Fu |
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Assistant Treasurer |
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EXECUTED and delivered as a DEED on |
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Services Limited |
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22 SEPTEMBER 2022 VODAFONE GROUP PLC and THE LAW DEBENTURE TRUST CORPORATION p.l.c. further modifying and restating the provisions of the Trust Deed dated 16 July 1999 relating to a €30,000,000,000 Euro Medium Term Note Programme SEVENTEENTH SUPPLEMENTAL TRUST DEED ALLEN & OVERY Allen& Overy LLP |
Exhibit 2.4
EXECUTION VERSION
SECOND SUPPLEMENTAL TRUST DEED
22 SEPTEMBER 2022
VODAFONE INTERNATIONAL FINANCING DAC
and
VODAFONE GROUP PLC
and
THE LAW DEBENTURE TRUST CORPORATION p.l.c.
further modifying and restating the provisions of the Trust Deed dated 27 July 2020
relating to a
€30,000,000,000
Euro Medium Term Note Programme
Allen & Overy LLP
0011398-0004801 ICM:23343279.5
THIS SECOND SUPPLEMENTAL TRUST DEED is made on 22 September 2022
BETWEEN:
(1) |
VODAFONE INTERNATIONAL FINANCING DAC, a designated activity company limited by shares and incorporated in Ireland with registered number 672776, whose registered office is at 2nd Floor, Palmerston House, Fenian Street, Dublin 2, Ireland (the Issuer); |
(2) |
VODAFONE GROUP PLC, a company incorporated with limited liability in England and Wales with registered number 1833679, whose registered office is at Vodafone House, The Connection, Newbury, Berkshire RG14 2FN, England (the Guarantor); and |
(3) |
THE LAW DEBENTURE TRUST CORPORATION p.l.c., a company incorporated with limited liability in England and Wales with registered number 1675231, whose registered office is at Eighth Floor, 100 Bishopsgate, London EC2N 4AG, England (the Trustee, which expression shall, wherever the context so admits, include such company and all other persons or companies for the time being the trustee or trustees of these presents) as trustee for the Noteholders and the Couponholders. |
WHEREAS:
(A) | This Second Supplemental Trust Deed is supplemental to: |
(i) | the Trust Deed dated 27 July 2020 (hereinafter called the Principal Trust Deed) made between the Issuer, the Guarantor and the Trustee and relating to the Euro Medium Term Note Programme (the Programme) established by the Issuer; and |
(ii) | the First Supplemental Trust Deed dated 16 September 2021 (the First Supplemental Trust Deed and, together with the Principal Trust Deed, the Subsisting Trust Deeds) made between the Issuer, the Guarantor and the Trustee and modifying and restating the provisions of the Principal Trust Deed. |
(B) | On 22 September 2022 the Issuer published a modified and updated Prospectus (the Prospectus) relating to the Programme. |
(C) | The Issuer and the Guarantor have requested the Trustee to agree to modify the Principal Trust Deed (as modified and/or restated as described above) to reflect the relevant modifications to the Prospectus referred to in Recital (B) above. |
NOW THIS SECOND SUPPLEMENTAL TRUST DEED WITNESSES AND IT IS HEREBY AGREED AND DECLARED as follows:
1. |
SUBJECT as hereinafter provided and unless there is something in the subject matter or context inconsistent therewith all words and expressions defined in the Principal Trust Deed (as modified and/or restated as aforesaid) shall have the same meanings in this Second Supplemental Trust Deed. |
2. |
SAVE: |
(i) |
in relation to all Series of Notes the first Tranche of which was issued on or prior to the day last preceding the date of this Second Supplemental Trust Deed; and |
(ii) |
for the purpose (where necessary) of construing the provisions of this Second Supplemental Trust Deed, |
with effect on and from the date of this Second Supplemental Trust Deed:
(a) |
the Principal Trust Deed (as modified and/or restated as aforesaid) is further modified in such manner as would result in the Principal Trust Deed as so modified being in the form set out in the Schedule hereto; and |
(b) |
the provisions of the Principal Trust Deed (as modified and/or restated as aforesaid) insofar as the same still have effect shall cease to have effect and in lieu thereof the provisions of the Principal Trust Deed as so modified and restated (and being in the form set out in the Schedule hereto) shall have effect. |
3. |
FOR the avoidance of doubt, the Principal Trust Deed (without the modifications made hereby but, where applicable, as modified and/or restated as aforesaid) shall continue to have effect in relation to all Series of Notes the first Tranche of which was issued on or prior to the day last preceding the date of this Second Supplemental Trust Deed. |
4. |
THE Subsisting Trust Deeds shall henceforth be read and construed as one document with this Second Supplemental Trust Deed. |
5. |
A Memorandum of this Second Supplemental Trust Deed shall be endorsed by the Trustee on the Principal Trust Deed and by the Issuer and the Guarantor on their respective duplicates thereof. |
6. |
THIS Second Supplemental Trust Deed may be executed and delivered in any number of counterparts, all of which, taken together, shall constitute one and the same deed and any party to this Second Supplemental Trust Deed may enter into the same by executing and delivering a counterpart. |
IN WITNESS whereof this Second Supplemental Trust Deed has been executed by the Issuer, the Guarantor and the Trustee as a deed and delivered on the day and year first above written.
THE SCHEDULE
FORM OF MODIFIED PRINCIPAL TRUST DEED
TRUST DEED
27 JULY 2020
(AS AMENDED AND RESTATED MOST RECENTLY ON 22 SEPTEMBER 2022)
VODAFONE INTERNATIONAL FINANCING DAC
and
VODAFONE GROUP PLC
and
THE LAW DEBENTURE TRUST CORPORATION p.l.c.
relating to a
€30,000,000,000
Euro Medium Term Note Programme
CONTENTS
Clause |
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1. |
Definitions |
1 |
2. |
Amount and issue of the Notes |
12 |
3. |
Forms of the Notes |
15 |
4. |
Fees, Duties and Taxes |
17 |
5. |
Covenant of Compliance |
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6. |
Cancellation of Notes and Records |
18 |
7. |
Enforcement |
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8. |
Guarantee |
19 |
9. |
Proceedings, Action and Indemnification |
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10. |
Application of Moneys |
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11. |
Notice of Payments |
22 |
12. |
Investment by Trustee |
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13. |
Partial Payments |
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14. |
Covenants by the Issuer and the Guarantor |
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15. |
Remuneration and Indemnification of Trustee |
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16. |
Supplement to Trustee Acts |
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17. |
Trustee's Liability |
32 |
18. |
Trustee contracting with the Issuer and the Guarantor |
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19. |
Waiver, Authorisation and Determination |
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20. |
Holder of Definitive Bearer Note assumed to be Couponholder |
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21. |
Substitution and Consolidation Merger, Conveyance, Transfer or Lease |
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22. |
Currency Indemnity |
38 |
23. |
New Trustee |
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24. |
Trustee's Retirement and Removal |
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25. |
Trustee's powers to be additional |
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26. |
Notices |
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27. |
Governing Law |
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28. |
Submission to Jurisdiction |
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29. |
Counterparts |
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30. |
Contracts (Rights of Third Parties) Act 1999 |
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Schedule
1. |
Terms and Conditions of the Notes |
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2. |
Forms of Global and Definitive Notes, Certificates, Coupons and Talons |
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Part 1 |
Form of Temporary Global Note |
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Part 2 |
Form of Permanent Global Note |
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Part 3 |
Form of Regulation S Global Certificate |
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Part 4 |
Form of DTC Restricted Global Certificate |
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Part 5 |
Form of Definitive Note |
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Part 6 |
Form of Coupon |
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Part 7 |
Form of Talon |
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Part 8 |
Form of Regulation S Certificate |
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Part 9 |
Form of DTC Restricted Certificate |
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3. |
Provisions for Meetings of Noteholders |
154 |
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Signatories to the Trust Deed |
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THIS TRUST DEED is made on 27 July 2020, as amended and restated most recently on 22 September 2022
BETWEEN:
(1) |
VODAFONE INTERNATIONAL FINANCING DAC, a designated activity company limited by shares and incorporated in Ireland with registered number 672776, whose registered office is at 2nd Floor, Palmerston House, Fenian Street, Dublin 2, Ireland (the Issuer); |
(2) |
VODAFONE GROUP PLC, a company incorporated with limited liability in England and Wales with registered number 1833679, whose registered office is at Vodafone House, The Connection, Newbury, Berkshire RG14 2FN, England (the Guarantor); and |
(3) |
THE LAW DEBENTURE TRUST CORPORATION p.l.c., a company incorporated with limited liability in England and Wales with registered number 1675231, whose registered office is at Eighth Floor, 100 Bishopsgate, London EC2N 4AG, England (the Trustee, which expression shall, wherever the context so admits, include such company and all other persons or companies for the time being the trustee or trustees of these presents) as trustee for the Noteholders and the Couponholders (each as defined below). |
WHEREAS:
(1) |
By a resolution of the Board of Directors of the Issuer passed on 21 July 2020 the Issuer resolved to establish, and most recently pursuant to resolutions of the Board of Directors of the Issuer passed on 7 June 2022, maintain a Euro Medium Term Note Programme pursuant to which the Issuer may from time to time issue Notes as set out therein and herein. Notes up to a maximum nominal amount (including, for the avoidance of doubt, any Retained Notes) (calculated in accordance with Clause 3.5 of the Programme Agreement (as defined below)) from time to time outstanding of €30,000,000,000 (subject to increase as provided in the Programme Agreement) (the Programme Limit) may be issued pursuant to the said Programme. |
(2) |
By a resolution of the Board of Directors of the Guarantor passed on 29 March 2022 the Guarantor has resolved to guarantee all Notes issued under the said Programme. |
(3) |
The Trustee has agreed to act as trustee of these presents for the benefit of the Noteholders and the Couponholders upon and subject to the terms and conditions of these presents. |
NOW THIS TRUST DEED WITNESSES AND IT IS AGREED AND DECLARED as follows:
1. |
DEFINITIONS |
1.1 |
Terms defined in the Conditions and not otherwise defined herein shall have the same meaning in these presents. In these presents unless there is anything in the subject or context inconsistent therewith the following expressions shall have the following meanings: |
Agency Agreement means the agency agreement dated 27 July 2020, as amended and/or supplemented and/or restated from time to time, pursuant to which the Issuer and the Guarantor have appointed the Issuing and Principal Paying Agent and the other Agents in relation to all or any Series of the Notes and any other agreement for the time being in force appointing further or other Agents in relation to all or any Series of the Notes, or in connection with their duties, the terms of which have previously been approved in writing by the Trustee, together with any agreement for the time being in force amending or modifying with the prior written approval of the Trustee any of the aforesaid agreements; Auditors means the auditors for the time being of the Issuer or, as the case may be, the Guarantor or, in the event of their being unable or unwilling promptly to carry out any action requested of them pursuant to the provisions of these presents, such other firm of accountants as may be nominated or approved by the Trustee for the purposes of these presents;
1
Agents means, in relation to all or any Series of the Notes, the Issuing and Principal Paying Agent, the other Paying Agents, the Calculation Agent, the Registrar, the other Transfer Agents or any of them;
Appointee means any attorney, manager, agent, delegate, nominee, receiver, custodian or other person appointed by the Trustee under these presents;
Authorised Signatory means any person who (a) is a Director or the Secretary of the Issuer or the Guarantor (as the case may be) or (b) has been notified by the Issuer or the Guarantor (as the case may be) in writing to the Trustee as being duly authorised to sign documents and to do other acts and things on behalf of the Issuer or the Guarantor (as the case may be) for the purposes of this Trust Deed;
Bearer Note means a Note that is in bearer form;
Calculation Agency Agreement means in relation to all or any Series of the Notes an agreement in or substantially in the form of Schedule I to the Agency Agreement;
Calculation Agent means, in relation to all or any Series of the Notes, the person appointed as such from time to time pursuant to the provisions of the Calculation Agency Agreement or any Successor calculation agent in relation thereto;
Certificate means a Definitive or Global Certificate representing one or more Registered Notes of the same Series and, save as provided in the Conditions, comprising the entire holding by a Noteholder of their Registered Notes of that Series;
CGN means a Temporary Global Note or a Permanent Global Note and in either case in respect of which the applicable Final Terms do not specify that it is a New Global Note;
Clearstream, Luxembourg means Clearstream Banking S.A.;
CMS Linked Notes means Notes specified as such in the applicable Final Terms;
Conditions means, in relation to the Notes of any Series, the terms and conditions endorsed on or incorporated by reference into the Note or Notes constituting such Series, such terms and conditions being in or substantially in the form set out in the First Schedule or in such other form, having regard to the terms of issue of the Notes of the relevant Series, as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee and the relevant Dealer(s) as completed and/or (in the case of Exempt Notes) modified and/or replaced by the Final Terms applicable to the Notes of the relevant Series, in each case as from time to time modified in accordance with the provisions of these presents;
Coupon means an interest coupon appertaining to a Definitive Bearer Note (other than a Zero Coupon Note), such coupon being:
(a) |
if appertaining to a Fixed Rate Note, in the form or substantially in the form set out in Part 6 A of the Second Schedule or in such other form, having regard to the terms of issue of the Notes of the relevant Series, as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee and the relevant Dealer(s); or |
2
(b) |
if appertaining to a Floating Rate Note, a CMS Linked Note, an Inflation Linked Interest Note or a Sustainability-Linked Note, in the form or substantially in the form set out in Part 6 B of the Second Schedule or in such other form, having regard to the terms of issue of the Notes of the relevant Series, as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee and the relevant Dealer(s); or |
(c) |
if appertaining to a Definitive Note which is neither a Fixed Rate Note nor a Floating Rate Note nor a CMS Linked Note nor an Inflation Linked Interest Note nor a Sustainability- Linked Note, in such form as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee and the relevant Dealer(s), |
and includes, where applicable, the Talon(s) appertaining thereto and any replacements for Coupons and Talons issued pursuant to Condition 11;
Couponholders means the several persons who are for the time being holders of the Coupons and includes, where applicable, the holders of the Talons;
Dealers means the entities named as Dealers in the Programme Agreement and any other entity which the Issuer and the Guarantor may appoint as a Dealer and notice of whose appointment has been given to the Issuing and Principal Paying Agent and the Trustee by the Issuer in accordance with the provisions of the Programme Agreement but excluding any entity whose appointment has been terminated in accordance with the provisions of the Programme Agreement and notice of which termination has been given to the Issuing and Principal Paying Agent and the Trustee by the Issuer in accordance with the provisions of the Programme Agreement and references to a relevant Dealer or relevant Dealer(s) mean, in relation to any Tranche or Series of Notes, the Dealer or Dealers with whom the Issuer has agreed the issue of the Notes of such Tranche or Series and Dealer means any one of them;
Definitive Bearer Note means a bearer Note in definitive form issued or, as the case may require, to be issued by the Issuer in accordance with the provisions of the Programme Agreement or any other agreement between the Issuer and the relevant Dealer(s), the Agency Agreement and these presents in exchange for either a Temporary Global Note or part thereof or a Permanent Global Note (all as indicated in the applicable Final Terms), such bearer Note in definitive form being in the form or substantially in the form set out in Part 5 of the Second Schedule with such modifications (if any) as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee and the relevant Dealer(s) and having the Conditions endorsed thereon or, if permitted by the relevant Stock Exchange, incorporating the Conditions by reference (where applicable to this Trust Deed) as indicated in the applicable Final Terms and having the relevant information completing the Conditions appearing in the applicable Final Terms endorsed thereon or attached thereto and (except in the case of a Zero Coupon Note in bearer form) having Coupons and, where appropriate, Talons attached thereto on issue;
Definitive Certificate means a definitive Regulation S Certificate or DTC Restricted Certificate in or substantially in the form set out in Parts 8 and 9 of the Second Schedule, respectively with such modifications (if any) as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee, the Registrar and the relevant Dealer(s), representing one or more Regulation S Registered Notes or DTC Restricted Registered Notes, respectively of the same Series;
DTC means The Depository Trust Company;
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Directors means the Board of Directors for the time being of the Issuer or, as the case may be, the Guarantor, and Director means any one of them; DTC Restricted Certificate means a Definitive Certificate representing DTC Restricted Registered Notes in or substantially in the form set out in Part 9 of the Second Schedule, with such modifications (if any) as may be agreed between the Issuer, the Issuing and Principal Paying Agent (or any other agent appointed in respect of the issuance of any DTC Restricted Registered Notes (as applicable)), the Trustee, the Registrar and the relevant Dealer(s), bearing the Rule 144A Legend and includes any replacement thereof issued pursuant to the Conditions and any DTC Restricted Global Certificate;
DTC Restricted Global Certificate means a Global Certificate in or substantially in the form set out in Part 4 of the Second Schedule with such modifications (if any) as may be agreed between the Issuer, the Issuing and Principal Paying Agent (or any other agent appointed in respect of the issuance of any DTC Restricted Registered Notes (as applicable)), the Trustee, the Registrar and the relevant Dealer(s), and bearing the Rule 144A Legend and the legends required by DTC;
DTC Restricted Registered Note means a Registered Note represented by a DTC Restricted Global Certificate or DTC Restricted Certificate, as the case may be;
Early Termination Event has the meaning set out in Condition 5(i)(ii)(E);
Euroclear means Euroclear Bank SA/NV;
Euronext Dublin means The Irish Stock Exchange plc trading as Euronext Dublin;
Eurosystem-eligible NGN means a NGN which is intended to be held in a manner which would allow Eurosystem eligibility, as stated in the applicable Final Terms;
Event of Default means any of the conditions, events or acts provided in Condition 10(A) to be Events of Default (being events upon the happening of which the Notes of any Series would, subject only to declaration by the Trustee as therein provided, become immediately due and repayable);
Exchangeable Bearer Note means a Bearer Note that is exchangeable in accordance with its terms for a Registered Note;
Exempt Notes has the meaning set out in the Programme Agreement;
Extraordinary Resolution has the meaning set out in paragraph 20 of the Third Schedule in relation to any Series of Notes;
FCA means the Financial Conduct Authority in its capacity as competent authority under the Financial Services and Markets Act 2000;
Final Terms has the meaning set out in the Programme Agreement;
Fixed Rate Note means a Note on which interest is calculated at a fixed rate payable in arrear on a fixed date or fixed dates in each year and on redemption or on such other dates as may be agreed between the Issuer and the relevant Dealer(s) (as indicated in the applicable Final Terms);
Floating Rate Note means a Note on which interest is calculated at a floating rate payable one-, two-, three-, six- or twelve-monthly or in respect of such other period or on such date(s) as may be agreed between the Issuer and the relevant Dealer(s) (as indicated in the applicable Final Terms);
Global Certificate means a Regulation S Global Certificate or a DTC Restricted Global Certificate in or substantially in the forms set out in Part 3 and Part 4 of the Second Schedule, respectively, with such modifications (if any) as may be agreed between the Issuer, the Issuing and Principal Paying Agent (or, in the case of any DTC Restricted Registered Notes, any other agent appointed in respect of the issuance of any DTC Restricted Registered Notes (as applicable)), the Trustee, the Registrar and the relevant Dealer(s), representing Regulation S Registered Notes or DTC Restricted Registered Notes, respectively, or one or more Tranches of the same Series that are registered in the name of a nominee for Euroclear, Clearstream, Luxembourg and/or DTC and/or any other clearing system;
4
Global Note means a Temporary Global Note and/or a Permanent Global Note, as the context may require;
Holding Company has the meaning set out in Condition 16;
Indexation Adviser has the meaning set out in Condition 5(a);
Inflation Linked Interest Note means a Note in respect of which the amount payable in respect of interest is calculated by reference to such index and/or formula or to changes in the prices of securities or commodities or to such other factors as the Issuer and the relevant Dealer(s) may agree (as indicated in the applicable Final Terms);
Inflation Linked Note means an Inflation Linked Interest Note and/or an Inflation Linked Redemption Amount Note, as applicable;
Inflation Linked Redemption Amount Note means a Note in respect of which the amount payable in respect of principal is calculated by reference to such index and/or formula or to changes in the prices of securities or commodities or to such other factors as the Issuer and the relevant Dealer(s) may agree (as indicated in the applicable Final Terms);
Interest Commencement Date means, in the case of interest-bearing Notes, the date specified in the applicable Final Terms from (and including) which such Notes bear interest, which may or may not be the Issue Date;
Interest Payment Date means, in relation to any Floating Rate Note, CMS Linked Note or Inflation Linked Interest Note, either:
(a) |
the date which falls the number of months or other period specified as the Specified Period in the applicable Final Terms after the preceding Interest Payment Date or the Interest Commencement Date (in the case of the first Interest Payment Date); or |
(b) |
such date or dates as are indicated in the applicable Final Terms; |
Issue Date means, in respect of any Note, the date of issue and purchase of such Note pursuant to and in accordance with the Programme Agreement or any other agreement between the Issuer and the relevant Dealer(s);
Issue Price means the price, generally expressed as a percentage of the nominal amount of the Notes, at which the Notes will be issued;
Issuing and Principal Paying Agent means, in relation to all or any Series of the Notes, HSBC Bank plc at its office at 8 Canada Square, London E14 5HQ, England, or, if applicable, any Successor agent in relation thereto;
Liability means any loss, damage, cost, charge, claim, demand, expense, judgment, action, proceeding or other liability whatsoever (including, without limitation, in respect of taxes, duties, levies, imposts and other charges) and including any amount in respect of value added tax or similar tax charged or chargeable in respect thereof and legal fees and expenses on a full indemnity basis;
5
London Business Day has the meaning set out in Condition 4(b)(vii);
Market means Euronext Dublin's regulated market which is a regulated market for the purposes of the Markets in Financial Instruments Directive;
Markets in Financial Instruments Directive means Directive 2014/65/EU (as amended);
Maturity Date means the date on which a Note is expressed to be redeemable;
NGN means a Temporary Global Note or a Permanent Global Note and in either case in respect of which the applicable Final Terms specify that the Global Note is a New Global Note;
Note means a note issued pursuant to the Programme and denominated in such currency or currencies as may be agreed between the Issuer and the relevant Dealer(s) which:
(a) |
has such maturity as may be agreed between the Issuer and the relevant Dealer(s), subject to such minimum or maximum maturity as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the Issuer or the relevant currency; and |
(b) |
has such denomination as may be agreed between the Issuer and the relevant Dealer(s), subject to such minimum denomination as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the relevant currency, |
issued or to be issued by the Issuer pursuant to the Programme Agreement or any other agreement between the Issuer and the relevant Dealer(s), the Agency Agreement and these presents and which may be issued in bearer or registered form. Notes which are issued in bearer form shall initially be represented by, and comprised in, either (i) a Temporary Global Note which may (in accordance with the terms of such Temporary Global Note) be exchanged for Definitive Bearer Notes or Registered Notes or a Permanent Global Note, which Permanent Global Note may (in accordance with the terms of such Permanent Global Note) in turn be exchanged for Definitive Bearer Notes or Registered Notes or (ii) a Permanent Global Note which may (in accordance with the terms of such Permanent Global Note) be exchanged for Definitive Bearer Notes or Registered Notes and which shall, in the case of Registered Notes, initially be represented by, and comprised in, a Regulation S Global Certificate and/or a DTC Restricted Global Certificate each of which may, in accordance with their terms, in turn be exchanged for Definitive Certificates (all as indicated in the applicable Final Terms) and includes any replacements for a Note issued pursuant to Condition 11;
Noteholder and holder have the meanings set out in the Conditions;
notice means, in respect of a notice to be given to Noteholders, a notice validly given pursuant to Condition 14;
NSS means the New Safekeeping Structure for registered global securities which are intended to constitute eligible collateral for Eurosystem monetary policy operations;
Official List has the meaning set out in Section 103 of the Financial Services and Markets Act 2000;
outstanding in relation to the Notes, means all Notes issued other than:
(a) |
those Notes which have been redeemed pursuant to these presents or the Conditions; |
6
(b) |
those Notes in respect of which the date for redemption in accordance with the Conditions has occurred and the redemption moneys (including all interest payable thereon) have been duly paid to the Trustee or have been duly paid to the Issuing and Principal Paying Agent in the manner provided in the Agency Agreement (and where appropriate notice to that effect has been given to the relative Noteholders in accordance with Condition 14) and remain available for payment against presentation of the relevant Notes, Certificates and/or Coupons; |
(c) |
those Notes which have been purchased and cancelled in accordance with Conditions 7(h) and 7(i); |
(d) |
those Notes which have become void under Condition 9; |
(e) |
those mutilated or defaced Bearer Notes which have been surrendered and cancelled and in respect of which replacements have been issued pursuant to Condition 11; |
(f) |
(for the purpose only of ascertaining the nominal amount of the Notes outstanding and without prejudice to the status for any other purpose of the relevant Notes) those Bearer Notes which are alleged to have been lost, stolen or destroyed and in respect of which replacements have been issued pursuant to Condition 11; |
(g) |
those Exchangeable Bearer Notes that have been exchanged for Registered Notes; and |
(h) |
any Temporary Global Note to the extent that it shall have been exchanged for Definitive Bearer Notes or a Permanent Global Note and any Permanent Global Note to the extent that it shall have been exchanged for Definitive Bearer Notes in each case pursuant to its provisions, the provisions of these presents and the Agency Agreement, |
PROVIDED THAT for each of the following purposes, namely:
(i) |
the right to attend and vote at any meeting of the holders of the Notes of any Series, an Extraordinary Resolution in writing or an Extraordinary Resolution by way of electronic consents through the relevant Clearing System(s) as envisaged by paragraph 20 of the Third Schedule and any direction or request by the holders of the Notes of any Series; |
(j) |
the determination of how many and which Notes of any Series are for the time being outstanding for the purposes of Clause 9.1, Conditions 10 and 16 and paragraphs 2, 5, 6 and 9 of the Third Schedule; |
(k) |
any discretion, power or authority (whether contained in these presents or vested by operation of law) which the Trustee is required, expressly or impliedly, to exercise in or by reference to the interests of the holders of the Notes of any Series; and |
(l) |
the determination by the Trustee whether any event, circumstance, matter or thing is, in its opinion, materially prejudicial to the interests of the holders of the Notes of any Series, |
those Notes of the relevant Series (if any) which are for the time being held by or on behalf of the Issuer (including any Retained Notes), the Guarantor, any other Subsidiary of the Guarantor, any Holding Company of the Guarantor or other Subsidiary of such Holding Company, in each case as beneficial owner, shall (unless and until ceasing to be so held) be deemed not to remain outstanding. Save for the purposes of the proviso herein, in the case of each NGN, the Trustee shall rely on the records of Euroclear and Clearstream, Luxembourg in relation to any determination of the nominal amount outstanding of each NGN; Paying Agents means, in relation to all or any Series of the Notes, the several institutions (including, where the context permits, the Issuing and Principal Paying Agent) at their respective specified offices initially appointed as paying agents in relation to such Notes by the Issuer and the Guarantor pursuant to the Agency Agreement and/or, if applicable, any Successor paying agents in relation thereto;
7
Permanent Global Note means a global note in the form or substantially in the form set out in Part 2 of the Second Schedule with such modifications (if any) as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee and the relevant Dealer(s), together with the copy of the applicable Final Terms annexed thereto, comprising some or all of the Notes of the same Series, issued by the Issuer pursuant to the Programme Agreement or any other agreement between the Issuer and the relevant Dealer(s), the Agency Agreement and these presents;
Person means any individual, corporation, partnership, joint venture, trust, unincorporated organisation or government, or any agency or political sub-division thereof;
Potential Event of Default means any condition, event or act which, with the lapse of time and/or the giving of notice and/or the issue of any certificate, would constitute an Event of Default;
Programme means the Euro Medium Term Note Programme established by, or otherwise contemplated in, the Programme Agreement;
Programme Agreement means the agreement of even date herewith between the Issuer, the Guarantor and the Dealers named therein concerning the purchase of Notes to be issued pursuant to the Programme together with any agreement for the time being in force amending, replacing, novating or modifying such agreement;
Reference Banks means, in relation to the Notes of any relevant Series, the several banks initially appointed as reference banks and/or, if applicable, any Successor reference banks in relation thereto;
Register means the register maintained by the Registrar;
Registered Notes means those of the Notes which are for the time being in registered form and represented by a Certificate;
Registrar means, in relation to all or any Series of the Notes, the registrar appointed by the Issuer and the Guarantor and specified in the applicable Final Terms;
Regulation S means Regulation S under the Securities Act;
Regulation S Certificate means a Definitive Certificate representing Regulation S Registered Notes in or substantially in the form set out in Part 8 of the Second Schedule, with such modifications (if any) as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee, the Registrar and the relevant Dealer(s), and includes any replacement thereof issued pursuant to the Conditions and any Regulation S Global Certificate;
Regulation S Global Certificate means a Global Certificate in or substantially in the form set out in Part 3 of the Second Schedule, with such modifications (if any) as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee, the Registrar and the relevant Dealer(s);
Regulation S Registered Note means a Registered Note represented by a Regulation S Certificate or a Regulation S Global Certificate, as the case may be;
Relevant Date has the meaning set out in Condition 8; Relevant Jurisdiction has the meaning set out in Condition 8;
8
Renminbi Currency Event has the meaning set out in Condition 6(g);
Reorganisation means the conveyance, transfer or lease of the respective properties and assets of the Issuer or the Guarantor (as relevant) substantially as an entirety to any Person that guarantees the Issuer's or the Guarantor’s obligations under these presents in accordance with Clause 21;
repay, redeem and pay shall each include both the others and cognate expressions shall be construed accordingly;
Retained Notes means Notes specified as such in the applicable Final Terms unless and until such Notes have been sold by or on behalf of the Issuer, the Guarantor or any other Subsidiary of the Guarantor to a third party and are no longer held by or on behalf of the Issuer, the Guarantor or any other Subsidiary of the Guarantor;
Rule 144A Legend means the transfer restriction legend under the Securities Act set out in the form of DTC Restricted Certificate in Part 9 of the Second Schedule and the DTC Restricted Global Certificate in Part 4 of the Second Schedule;
Securities Act means the United States Securities Act of 1933, as amended;
Series means a Tranche of Notes together with any further Tranche or Tranches of Notes which are (a) expressed to be consolidated and form a single series and (b) identical in all respects (including as to listing) except for their respective Issue Dates, Interest Commencement Dates and/or Issue Prices and the expressions Notes of the relevant Series, holders of Notes of the relevant Series and related expressions shall be construed accordingly;
Stock Exchange means Euronext Dublin or any other or further stock exchange(s) on which any Notes may from time to time be listed, and references in these presents to the relevant Stock Exchange shall, in relation to any Notes, be references to the Stock Exchange on which such Notes are, from time to time, or are intended to be, listed;
Subsidiary means, in relation to any entity, any company which is for the time being a subsidiary (within the meaning of Section 1159 of the Companies Act 2006) of such entity;
Successor means, in relation to the Issuing and Principal Paying Agent, the other Paying Agents, the Reference Banks, the Calculation Agent, the Registrar and the Transfer Agents, any successor to any one or more of them in relation to the Notes which shall become such pursuant to the provisions of these presents and/or the Agency Agreement (as the case may be) and/or such other or further issuing and principal paying agent, paying agents, reference banks, calculation agent, registrar and transfer agents (as the case may be) in relation to the Notes as may (with the prior approval of, and on terms previously approved by, the Trustee in writing) from time to time be appointed as such, and/or, if applicable, such other or further specified offices (in the former case being within the same city as those for which they are substituted) as may from time to time be nominated, in each case by the Issuer and the Guarantor, and (except in the case of the initial appointments and specified offices made under and specified in the Conditions and/or the Agency Agreement, as the case may be) notice of whose appointment or, as the case may be, nomination has been given to the Noteholders;
Successor in Business means any company which, as the result of any amalgamation, merger or reconstruction the terms of which have previously been approved in writing by the Trustee:
(a) |
owns beneficially the whole or substantially the whole of the undertaking, property and assets owned by the Issuer or, as the case may be, the Guarantor, immediately prior thereto; and |
9
(b) |
carries on, as successor to the Issuer or, as the case may be, the Guarantor, the whole or substantially the whole of the business carried on by the Issuer or, as the case may be, the Guarantor, immediately prior thereto; |
Sustainability-Linked Note has the meaning set out in Condition 4(c);
Talons means the talons (if any) appertaining to, and exchangeable in accordance with the provisions therein contained for further Coupons appertaining to, the Definitive Bearer Notes (other than the Zero Coupon Notes), such talons being in the form or substantially in the form set out in Part 7 of the Second Schedule or in such other form as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee and the relevant Dealer(s) and includes any replacements for Talons issued pursuant to Condition 11;
TARGET2 System has the meaning set out in Condition 4(e);
Temporary Global Note means a temporary global note in the form or substantially in the form set out in Part 1 of the Second Schedule with such modifications (if any) as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee and the relevant Dealer(s), together with the copy of the applicable Final Terms annexed thereto, comprising some or all of the Notes of the same Series, issued by the Issuer pursuant to the Programme Agreement or any other agreement between the Issuer and the relevant Dealer(s), the Agency Agreement and these presents;
these presents means this Trust Deed and the Schedules and any trust deed supplemental hereto and the Schedules (if any) thereto and the Notes, the Certificates, the Coupons, the Talons, the Conditions and, unless the context otherwise requires, the applicable Final Terms, all as from time to time modified in accordance with the provisions herein or therein contained;
Tranche means all Notes which are identical in all respects (including as to listing);
Transfer Agents means, in relation to all or any Series of the Notes, the several institutions at their respective specified offices initially appointed as transfer agents in relation to such Notes by the Issuer and the Guarantor pursuant to the Agency Agreement and/or, if applicable, any Successor transfer agents in relation thereto;
Trust Corporation means a corporation entitled by rules made under the Public Trustee Act 1906 of Great Britain or entitled pursuant to any other comparable legislation applicable to a trustee in any other jurisdiction to carry out the functions of a custodian trustee;
Trustee Acts means the Trustee Act 1925 and the Trustee Act 2000;
United States has the meaning set out in Condition 8;
Zero Coupon Note means a Note on which no interest is payable;
words denoting the singular shall include the plural and vice versa;
words denoting one gender only shall include the other genders; and
words denoting persons only shall include firms and corporations and vice versa.
1.2(a) All references in these presents to principal and/or principal amount and/or interest in respect of the Notes or to any moneys payable by the Issuer and/or the Guarantor under these presents shall, unless the context otherwise requires, be construed in accordance with Condition 6(f).
10
(b) |
All references in these presents to any statute or any provision of any statute shall be deemed also to refer to any statutory modification or re-enactment thereof or any statutory instrument, order or regulation made thereunder or under any such modification or re-enactment. |
(c) |
All references in these presents to guarantees or to an obligation being guaranteed shall be deemed to include respectively references to indemnities or to an indemnity being given in respect thereof. |
(d) |
All references in these presents to any action, remedy or method of proceeding for the enforcement of the rights of creditors shall be deemed to include, in respect of any jurisdiction other than England, references to such action, remedy or method of proceeding for the enforcement of the rights of creditors available or appropriate in such jurisdiction as shall most nearly approximate to such action, remedy or method of proceeding described or referred to in these presents. |
(e) |
All references in these presents to Euroclear and/or Clearstream, Luxembourg and/or DTC shall, whenever the context so permits (but not in the case of any NGN or any Registered Global Note held under the NSS), be deemed to include references to any additional or alternative clearing system as is approved by the Issuer, the Issuing and Principal Paying Agent and the Trustee. |
(f) |
Unless the context otherwise requires words or expressions used in these presents shall bear the same meanings as in the Companies Act 2006 of Great Britain. |
(g) |
In this Trust Deed references to Schedules, Clauses, subclauses, paragraphs and subparagraphs shall be construed as references to the Schedules to this Trust Deed and to the Clauses, subclauses, paragraphs and subparagraphs of this Trust Deed respectively. |
(h) |
In these presents tables of contents and Clause headings are included for ease of reference and shall not affect the construction of these presents. |
(i) |
All references in these presents to taking proceedings against the Issuer and/or the Guarantor shall be deemed to include references to proving in the winding-up of the Issuer and/or the Guarantor (as the case may be). |
(j) |
All references in these presents involving compliance by the Trustee with a test of reasonableness shall be deemed to include a reference to a requirement that such reasonableness shall be determined by reference solely to the interests of the holders of the Notes of the relevant one or more series as a class. |
(k) |
All references in these presents to the records of Euroclear and Clearstream, Luxembourg shall be to the records that each of Euroclear and Clearstream, Luxembourg holds for its customers which reflect the amount of such customer's interest in the Notes. |
1.3 |
Words and expressions defined in these presents or the Agency Agreement or used in the applicable Final Terms shall have the same meanings where used herein unless the context otherwise requires or unless otherwise stated and provided that, in the event of inconsistency between the Agency Agreement and these presents, these presents shall prevail and, in the event of inconsistency between the Agency Agreement or these presents and the applicable Final Terms, the applicable Final Terms shall prevail. |
1.4 |
All references in these presents to the relevant currency shall be construed as references to the currency in which payments in respect of the Notes and/or Coupons of the relevant Series are to be made as indicated in the applicable Final Terms. |
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1.5 |
All references in these presents (i) to Notes (other than Exempt Notes) being "listed" or "having a listing" shall (a) in relation to Euronext Dublin, be construed to mean that such Notes have been admitted to the Official List of Euronext Dublin and to trading on the Market and (b) in relation to any other European Economic Area Stock Exchange, be construed to mean that such Notes have been admitted to trading on a market within that jurisdiction which is a regulated market for the purposes of the Markets in Financial Instruments Directive and (ii) in relation to any Exempt Notes being “listed” or “having a listing” on any other Stock Exchange all other references shall be construed to mean that such Exempt Notes have been admitted to trading on such other or further stock exchange(s) or markets (other than a stock exchange or market which is a regulated market for the purposes of the Markets in Financial Instruments Directive) as may be agreed between the Issuer, the Guarantor and the relevant Dealer and all references in these presents to "listing" or "listed" shall include references to "quotation" and "quoted" respectively. |
1.6 |
Wherever in these presents there is a requirement for the consent of, or a request from, the Noteholders, then, for so long as any of the Registered Notes is registered in the name of DTC or its nominee and represented by a DTC Restricted Global Certificate, DTC may send an omnibus proxy to the Issuer in accordance with and in the form used by DTC as part of its usual procedures from time to time. Such omnibus proxy shall assign the right to give such consent or, as the case may be, make such request to DTC's direct participants as of the record date specified therein any such assignee participant may give the relevant consent or, as the case may be, make the relevant request in accordance with these presents. |
2. |
AMOUNT AND ISSUE OF THE NOTES |
2.1 |
Amount of the Notes, Final Terms and Legal Opinions |
The Notes will be issued in Series in an aggregate nominal amount from time to time outstanding not exceeding the Programme Limit from time to time and for the purpose of determining such aggregate nominal amount Clause 3.5 of the Programme Agreement shall apply.
By not later than 10.00 a.m. (London time) on the London Business Day preceding each proposed Issue Date, the Issuer shall deliver or cause to be delivered to the Trustee a draft of the applicable Final Terms and drafts of all legal opinions (if any) to be given in relation to the proposed issue and shall notify the Trustee in writing without delay of the relevant Issue Date and the nominal amount of the Notes to be issued and upon the issue of the relevant Notes shall deliver or cause to be delivered to the Trustee a copy of the final form of the applicable Final Terms. Upon the issue of the relevant Notes, such Notes shall become constituted by these presents without further formality.
Before the first issue of Notes occurring after each anniversary of this Trust Deed, and on such other occasions as the Trustee so requests (if (a) the Trustee considers it necessary in view of a change (or proposed change) in applicable law or regulations (or the interpretation or application thereof) affecting the Issuer or, as the case may be, the Guarantor, these presents, the Programme Agreement or the Agency Agreement, or (b) the Trustee has other reasonable grounds for such request), the Issuer or, as the case may be, the Guarantor will procure that a further legal opinion or further legal opinions in such form and with such content as the Trustee may require from the legal advisers specified in the Programme Agreement or such other legal advisers as the Trustee may require is/are delivered to the Trustee. Whenever such a request is made with respect to any Notes to be issued, the receipt of such opinion(s) in a form satisfactory to the Trustee shall be a further condition precedent to the issue of those Notes.
2.2 |
Covenant to repay principal and to pay interest |
12
The Issuer covenants with the Trustee that it will, as and when the Notes of any Series or any of them becomes due to be redeemed in accordance with the Conditions, unconditionally pay or procure to be paid to or to the order of the Trustee, in the case of any relevant currency other than euro, in the principal financial centre for the relevant currency and, in the case of euro, in a city in which banks have access to the TARGET2 System in each case in immediately available funds the principal amount in respect of the Notes of such Series becoming due for redemption on that date and (except in the case of Zero Coupon Notes) shall (subject to the provisions of the Conditions) in the meantime and until redemption in full of the Notes of such Series (both before and after any judgment or other order of a court of competent jurisdiction) unconditionally pay or procure to be paid to or to the order of the Trustee as aforesaid interest (which shall accrue from day to day) on the nominal amount of the Notes outstanding of such Series at rates and/or in amounts calculated from time to time in accordance with, or specified in, and on the dates provided for in, the Conditions (subject to Clause 2.4) PROVIDED THAT:
(a) |
every payment of principal or interest or other sum due in respect of the Notes made to or to the order of the Issuing and Principal Paying Agent in the manner provided in the Agency Agreement shall be in satisfaction pro tanto of the relative covenant by the Issuer in this Clause contained in relation to the Notes of such Series (including, in the case of Notes represented by a NGN, whether or not the corresponding entries have been made in the records of Euroclear and Clearstream, Luxembourg) except to the extent that there is a default in the subsequent payment thereof in accordance with the Conditions to the relevant Noteholders or Couponholders (as the case may be); |
(b) |
in the case of any payment of principal made to the Trustee or the Issuing and Principal Paying Agent after the due date or on or after accelerated maturity following an Event of Default interest shall continue to accrue on the nominal amount of the relevant Notes (except in the case of Zero Coupon Notes to which the provisions of Condition 7(j) shall apply) (both before and after any judgment or other order of a court of competent jurisdiction) at the rates aforesaid (or, if higher, the rate of interest on judgment debts for the time being provided by English law) up to and including the date which the Trustee determines to be the date on and after which payment is to be made in respect thereof as stated in a notice given to the holders of such Notes (such date to be not later than 30 days after the day on which the whole of such principal amount, together with an amount equal to the interest which has accrued and is to accrue pursuant to this proviso up to and including that date, has been received by the Trustee or the Issuing and Principal Paying Agent); and |
(c) |
in any case where payment of the whole or any part of the principal amount of any Note is improperly withheld or refused upon due presentation thereof or of the Certificate in respect thereof (other than in circumstances contemplated by 2.2(b) above), interest shall accrue on the nominal amount of such Note (except in the case of Zero Coupon Notes to which the provisions of Condition 7(j) shall apply) payment of which has been so withheld or refused (both before and after any judgment or other order of a court of competent jurisdiction) at the rates aforesaid (or, if higher, the rate of interest on judgment debts for the time being provided by English law) from the date of such withholding or refusal until the date on which, upon further presentation of the relevant Note or Certificate, as the case may be, payment of the full amount (including interest as aforesaid) in the relevant currency payable in respect of such Note is made or (if earlier) the seventh day after notice is given to the relevant Noteholder(s) (whether individually or in accordance with Condition 14) that the full amount (including interest as aforesaid) in the relevant currency in respect of such Note is available for payment, provided that, upon further presentation thereof being duly made, such payment is made. |
The Trustee will hold the benefit of this covenant and the other covenants in this Trust Deed on trust for the Noteholders and the Couponholders and itself in accordance with these presents.
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2.3 |
Trustee’s requirements regarding Agents etc. |
At any time after an Event of Default or a Potential Event of Default shall have occurred or the Trustee shall have received any money which it proposes to pay under Clause 10 to the relevant Noteholders and/or Couponholders, the Trustee may:
(a) |
by notice in writing to the Issuer, the Guarantor and the Agents require the Agents pursuant to the Agency Agreement: |
(i) |
to act thereafter as Agents of the Trustee in relation to payments to be made by or on behalf of the Trustee under the terms of these presents mutatis mutandis on the terms provided in the Agency Agreement (save that the Trustee's liability under any provisions thereof for the indemnification, remuneration and payment of out-of-pocket expenses of the Agents shall be limited to the amounts for the time being held by the Trustee on the trusts of these presents relating to the Notes of the relevant Series and the relative Certificates and Coupons and available for such purpose) and thereafter to hold all Notes and Coupons and all sums, documents and records held by them in respect of Notes, Certificates and Coupons on behalf of the Trustee; or |
(ii) |
to deliver up all Notes, Certificates and Coupons and all sums, documents and records held by them in respect of Notes, Certificates and Coupons, in each case held by them in their capacity as Agent, to the Trustee or as the Trustee shall direct in such notice provided that such notice shall be deemed not to apply to any documents or records which the relevant Agent is obliged not to release by any law or regulation; and |
(b) |
by notice in writing to the Issuer and the Guarantor require each of them to make all subsequent payments in respect of the Notes and Coupons to or to the order of the Trustee and not to the Issuing and Principal Paying Agent and, with effect from the issue of any such notice to the Issuer and the Guarantor and until such notice is withdrawn, proviso (i) to subclause 2.2 of this Clause relating to the Notes shall cease to have effect. |
2.4 |
Rate of interest after Notes due and repayable under Condition 10(A) |
If the Floating Rate Notes, CMS Linked Notes or Inflation Linked Interest Notes of any Series become immediately due and repayable under Condition 10(A) the rate and/or amount of interest payable in respect of them will be calculated at the same intervals as if such Notes had not become due and repayable, the first of which will commence on the expiry of the Interest Period during which the Notes of the relevant Series become so due and repayable mutatis mutandis in accordance with the provisions of Condition 4(b) except that the rates of interest need not be published.
2.5 |
Currency of payments |
All payments in respect of, under and in connection with these presents and the Notes of any Series to the relevant Noteholders and Couponholders shall be made in the relevant currency.
2.6 |
Further Notes |
The Issuer shall be at liberty from time to time (but subject always to the provisions of these presents) without the consent of the Noteholders or Couponholders to create and issue further Notes having terms and conditions the same as the Notes of any Series (or the same in all respects save for the date from which interest thereon accrues and the amount of the first payment of interest on such further Notes) and so that the same shall be consolidated and form a single series with the outstanding Notes of a particular Series.
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2.7 |
Separate Series |
The Notes of each Series shall form a separate Series of Notes and accordingly, unless for any purpose the Trustee in its absolute discretion shall otherwise determine, the provisions of this Clause and of Clauses 3 to 22 (both inclusive) and 23.2 and the Third Schedule shall apply mutatis mutandis separately and independently to the Notes of each Series and in such Clauses and Schedule the expressions Notes, Noteholders, Coupons, Couponholders and Talons shall be construed accordingly.
3. |
FORMS OF THE NOTES |
3.1 |
Global Notes |
(a) |
The Notes of each Tranche will initially be represented by either: |
(i) |
in the case of Bearer Notes, a single Temporary Global Note which shall be exchangeable for either Definitive Bearer Notes together with, where applicable, (except in the case of Zero Coupon Notes) Coupons and, where applicable, Talons attached or a Permanent Global Note or (in the case of Exchangeable Bearer Notes) Registered Notes, in each case in accordance with the provisions of such Temporary Global Note. Each Permanent Global Note shall be exchangeable for Definitive Bearer Notes together with, where applicable, (except in the case of Zero Coupon Notes) Coupons and, where applicable, Talons attached or (in the case of Exchangeable Bearer Notes) Registered Notes, in accordance with the provisions of such Permanent Global Note; or |
(ii) |
in the case of Bearer Notes, a single Permanent Global Note which shall be exchangeable for Definitive Bearer Notes together with, where applicable, (except in the case of Zero Coupon Notes) Coupons and, where applicable, Talons attached or (in the case of Exchangeable Bearer Notes) Registered Notes, in accordance with provisions of such Permanent Global Note; or |
(iii) |
in the case of Registered Notes which are sold outside the United States in "offshore transactions" within the meaning of Regulation S, a Regulation S Global Certificate which will be exchangeable for Regulation S Certificates and/or Notes represented by a DTC Restricted Global Certificate in accordance with the provisions of such Regulation S Global Certificates; or |
(iv) |
in the case of Registered Notes which are sold in the United States, to qualified institutional buyers within the meaning of Rule 144A, a DTC Restricted Global Certificate which will be exchangeable for DTC Restricted Certificates and/or Notes represented by a Regulation S Global Certificate in accordance with the provisions of such DTC Restricted Global Certificate. |
All Global Notes shall be prepared, completed and delivered to a common depositary (in the case of a CGN) or common safekeeper (in the case of a NGN or Registered Notes held under the NSS) for Euroclear and Clearstream, Luxembourg, each Regulation S Global Certificate shall be prepared, completed and delivered to, and registered in the name of a nominee of, a common depositary or common safekeeper for Euroclear and Clearstream, Luxembourg and each DTC Restricted Global Certificate shall be prepared, completed and delivered to a custodian for and registered in the name of a nominee of DTC, in each case in accordance with the provisions of the Programme Agreement or to or with or in the name of another appropriate custodian, nominee or depositary in accordance with any other agreement between the Issuer and the relevant Dealer(s) and, in each case, the Agency Agreement.
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(b) |
Each Temporary Global Note shall be printed or typed in the form or substantially in the form set out in Part 1 of the Second Schedule and may be a facsimile. Each Temporary Global Note shall have annexed thereto a copy of the applicable Final Terms and shall be signed manually or in facsimile by a person duly authorised by the Issuer on behalf of the Issuer and shall be authenticated by or on behalf of the Issuing and Principal Paying Agent and shall, in the case of a Eurosystem-eligible NGN, be effectuated by the common safekeeper acting on the instructions of the Issuing and Principal Paying Agent. Each Temporary Global Note so executed and authenticated (and effectuated, if applicable) shall be a binding and valid obligation of the Issuer and title thereto shall pass by delivery. |
(c) |
Each Permanent Global Note shall be printed or typed in the form or substantially in the form set out in Part 2 of the Second Schedule and may be a facsimile. Each Permanent Global Note shall have annexed thereto a copy of the applicable Final Terms and shall be signed manually or in facsimile by a person duly authorised by the Issuer on behalf of the Issuer and shall be authenticated by or on behalf of the Issuing and Principal Paying Agent and shall, in the case of a Eurosystem-eligible NGN, be effectuated by the common safekeeper acting on the instructions of the Issuing and Principal Paying Agent. Each Permanent Global Note so executed and authenticated (and effectuated, if applicable) shall be a binding and valid obligation of the Issuer and title thereto shall pass by delivery. |
(d) |
Each Regulation S Global Certificate shall be printed or typed in the form or substantially in the form set out in Part 3 of the Second Schedule and may be a facsimile. Each Regulation S Global Certificate shall have annexed thereto a copy of the applicable Final Terms and shall be signed manually or in facsimile by a person duly authorised by the Issuer on behalf of the Issuer and shall be authenticated by or on behalf of the Registrar and shall, in the case of Notes intended to be held under the NSS, be effectuated by the common safekeeper acting on the instructions of the Issuer. Each Regulation S Global Certificate shall be valid evidence of binding and valid obligations of the Issuer and title thereto shall pass upon registration in the Register. |
(e) |
Each DTC Restricted Global Certificate shall be printed or typed in the form or substantially in the form set out in Part 4 of the Second Schedule and may be a facsimile. Each DTC Restricted Global Certificate shall have annexed thereto a copy of the applicable Final Terms and shall be signed manually or in facsimile by a person duly authorised by the Issuer on behalf of the Issuer and shall be authenticated by or on behalf of the Registrar. Each DTC Restricted Global Certificate shall be valid evidence of binding and valid obligations of the Issuer and title thereto shall pass upon registration in the Register. |
3.2 |
Definitive Bearer Notes |
(a) |
The Definitive Bearer Notes, the Coupons and the Talons shall be to bearer in the respective forms or substantially in the respective forms set out in Parts 5, 6 and 7 respectively, of the Second Schedule. The Definitive Bearer Notes, the Coupons and the Talons shall be serially numbered and, if listed or quoted, shall be security printed in accordance with the requirements (if any) from time to time of the relevant Stock Exchange and the relevant Conditions shall be incorporated by reference (where applicable to these presents) into such Definitive Bearer Notes if permitted by the relevant Stock Exchange (if any), or, if not so permitted, the Definitive Bearer Notes shall be endorsed with or have attached thereto the relevant Conditions, and, in either such case, the Definitive Bearer Notes shall have endorsed thereon or attached thereto a copy of the applicable Final Terms (or the relevant provisions thereof). Title to the Definitive Bearer Notes, the Coupons and the Talons shall pass by delivery. |
(b) |
The Definitive Bearer Notes shall be signed manually or in facsimile by a person duly authorised by the Issuer on behalf of the Issuer and shall be authenticated by or on behalf of the Issuing and Principal Paying Agent. The Definitive Bearer Notes so executed and authenticated, and the Coupons and Talons, upon execution and authentication of the relevant Definitive Bearer Notes, shall be binding and valid obligations of the Issuer. The Coupons and the Talons shall not be signed. No Definitive |
16
Bearer Note and none of the Coupons or Talons appertaining to such Definitive Bearer Note shall be binding or valid until such Definitive Bearer Note shall have been executed and authenticated as aforesaid.
3.3 |
Definitive Certificates |
(a) |
The DTC Restricted Certificates and Regulation S Certificates shall be in the respective forms or substantially in the respective forms set out in Parts 8 and 9, respectively of the Second Schedule and shall be printed in accordance with applicable legal and stock exchange requirements. Title to such certificates shall pass upon registration in the Register. |
(b) |
The DTC Restricted Certificates and Regulation S Certificates shall be signed manually or in facsimile by a person duly authorised by the Issuer on behalf of the Issuer and shall be authenticated by or on behalf of the Registrar. The DTC Restricted Certificates and Regulation S Certificates so executed and authenticated shall be valid evidence of binding and valid obligations of the Issuer. Title to such Certificates shall pass upon registration in the Register. |
3.4 |
Facsimile signatures |
The Issuer may use the facsimile signature of any person who at the date such signature is affixed to a Global Note or a Definitive Bearer Note or a Certificate is duly authorised by the Issuer notwithstanding that at the time of issue of such Note or Certificate they may have ceased for any reason to be so authorised or to hold such office.
3.5 |
Reliance on Certification of a Clearing System |
Without prejudice to the provisions of Clause 16(x), the Trustee may call for any certificate or other document to be issued by Euroclear or Clearstream, Luxembourg as to the nominal amount of Notes represented by a Global Note standing to the account of any person. Any such certificate or other document shall, in the absence of manifest error, be conclusive and binding for all purposes. Any such certificate or other document may comprise any form of statement or print out of electronic records provided by the relevant Clearing System (including Euroclear's EUCLID or Clearstream, Luxembourg's Creation Online system) in accordance with its usual procedures and in which the holder of a particular nominal amount of Notes is clearly identified together with the amount of such holding. The Trustee shall not be liable to any person by reason of having accepted as valid or not having rejected any certificate or other document to such effect purporting to be issued by, or to reflect the records of, Euroclear or Clearstream, Luxembourg and subsequently found to be forged or not authentic.
4. |
FEES, DUTIES AND TAXES |
The Issuer (failing whom, the Guarantor) will pay any stamp, issue, registration, documentary and other fees, duties or taxes (if any), including interest and penalties, payable (a) in the United Kingdom, Ireland, Belgium, Luxembourg and the United States of America on or in connection with (i) the execution and delivery of these presents and (ii) the constitution and original issue of the Notes, the Certificates and the Coupons and (b) in any jurisdiction on or in connection with any action taken by or on behalf of the Trustee or (where permitted under these presents so to do) any Noteholder or Couponholder to enforce, or to resolve any doubt concerning, or for any other purpose in relation to, these presents.
5. |
COVENANT OF COMPLIANCE |
Each of the Issuer and the Guarantor severally covenants with the Trustee that it will comply with and perform and observe all the provisions of these presents which are expressed to be binding on it.
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The Notes and the Coupons shall be held subject to the provisions contained in these presents and the Conditions shall be binding on the Issuer, the Guarantor, the Trustee, the Noteholders and the Couponholders and all persons claiming through or under them. The Trustee shall be entitled to enforce the obligations of the Issuer and the Guarantor under the Notes, the Coupons and the Conditions in the manner therein provided as if the same were set out and contained in this Trust Deed, which shall be read and construed as one document with the Notes and the Coupons. The Trustee shall hold the benefit of this covenant upon trust for itself and the Noteholders and the Couponholders according to its and their respective interests.
6. |
CANCELLATION OF NOTES AND RECORDS |
6.1 |
The Issuer shall procure that all Notes (other than Retained Notes) issued by it (a) redeemed or (b) purchased for cancellation by or on behalf of the Issuer, the Guarantor or any other Subsidiary of the Guarantor and surrendered for cancellation or (c) which, being Bearer Notes which have been mutilated or defaced, have been surrendered and replaced pursuant to Condition 11 or (d) exchanged as provided in these presents (together in each case, in the case of Definitive Bearer Notes, with all unmatured Coupons attached thereto or delivered therewith) and, in the case of Definitive Bearer Notes, all relative Coupons paid in accordance with the relevant Conditions or which, being mutilated or defaced, have been surrendered and replaced pursuant to Condition 11 shall forthwith be cancelled by or on behalf of the Issuer and a certificate stating: |
(a) |
the aggregate nominal amount of Notes which have been redeemed and the amounts paid in respect thereof and the aggregate amounts in respect of Coupons which have been paid; |
(b) |
the serial numbers of such Notes in definitive form or the Certificates representing Registered Notes; |
(c) |
the total numbers (where applicable, of each denomination) by maturity date of such Coupons; |
(d) |
the aggregate amount of interest paid (and the due dates of such payments) on Global Notes and Registered Notes; |
(e) |
the aggregate nominal amount of Notes (if any) which have been purchased by or on behalf of the Issuer, the Guarantor or any other Subsidiary of the Guarantor and cancelled and the serial numbers of such Notes in definitive form or of the Certificates representing Registered Notes and, in the case of Definitive Bearer Notes, the total number (where applicable, of each denomination) by maturity date of the Coupons and Talons attached thereto or surrendered therewith; |
(f) |
the aggregate nominal amounts of Notes and the aggregate amounts in respect of Coupons which have been so exchanged or surrendered and replaced and the serial numbers of such Notes in definitive form or of the Certificates representing Registered Notes and the total number (where applicable, of each denomination) by maturity date of such Coupons and Talons; and |
(g) |
the total number (where applicable, of each denomination) by maturity date of Talons which have been exchanged for further Coupons, |
shall be given to the Trustee by or on behalf of the Issuer as soon as possible and in any event within four months after the date of such redemption, purchase, payment, exchange or replacement (as the case may be). The Trustee may accept such certificate as conclusive evidence of redemption, purchase, exchange or replacement pro tanto of the Notes or payment of interest thereon or exchange of the relative Talons respectively and of cancellation of the relative Notes and Coupons.
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6.2 |
The Issuer shall procure (a) that the Issuing and Principal Paying Agent and/or the Registrar shall keep a full and complete record of all Notes, Coupons and Talons issued by it (other than serial numbers of Coupons) and of their redemption or purchase and cancellation and of all replacement notes, coupons or talons issued in substitution for lost, stolen, mutilated, defaced or destroyed Bearer Notes, Coupons or Talons and of all transfers and exchanges of Registered Notes (b) that the Agent and the Registrar shall, in respect of the Coupons of each maturity where the relevant Bearer Note is redeemed prior to its maturity date, retain until the expiry of 10 years from the Relevant Date in respect of such Coupons a list of the Coupons of that maturity still remaining unpaid or unexchanged and (c) that such records shall be made available to the Trustee during normal business hours. |
7. |
ENFORCEMENT |
7.1 |
The Trustee may at any time, in its sole and absolute discretion and without notice, take such proceedings and/or other action as it may think fit against or in relation to each of the Issuer and the Guarantor to enforce their respective obligations under these presents. |
7.2 |
Proof that as regards any specified Note or Coupon the Issuer or, as the case may be, the Guarantor has made default in paying any amount due in respect of such Note or Coupon shall (unless the contrary be proved) be sufficient evidence that the same default has been made as regards all other Notes or Coupons (as the case may be) in respect of which the relevant amount is due and payable. |
8. |
GUARANTEE |
8.1 |
The Guarantor hereby irrevocably and unconditionally, and notwithstanding the release of any other guarantor or any other person under the terms of any composition or arrangement with any creditors of the Issuer or any other Subsidiary of the Guarantor, guarantees to the Trustee: |
(a) |
the due and punctual payment in accordance with the provisions of these presents of the principal of and interest on all Notes and of any other amounts payable by the Issuer under these presents; and |
(b) |
the due and punctual performance and observance by the Issuer of each of the other provisions of these presents to be performed or observed by the Issuer. |
8.2 |
If the Issuer fails for any reason whatsoever punctually to pay any such principal, interest or other amount, the Guarantor shall cause each and every such payment to be made as if the Guarantor instead of the Issuer were expressed to be the primary obligor under these presents and not merely as surety (but without affecting the nature of the Issuer's obligations) to the intent that the holder of the relevant Note or Coupon or the Trustee (as the case may be) shall receive the same amounts in respect of principal, interest or such other amount as would have been receivable had such payments been made by the Issuer. |
8.3 |
If any sum which, although expressed to be payable by the Issuer under these presents, the Notes or the Coupons, is for any reason (whether or not now existing and whether or not now known or becoming known to the Issuer, the Guarantor, the Trustee or any Noteholder or Couponholder) not recoverable from the Guarantor on the basis of a guarantee then (a) it will nevertheless be recoverable from it as if it were the sole principal debtor and will be paid by it to the Trustee on demand and (b) as a separate and additional liability under these presents the Guarantor agrees, as a primary obligation, to indemnify each of the Trustee, each Noteholder and each Couponholder in respect of such sum by way of a full indemnity in the manner and currency as is provided for in the Notes, the Coupons or these presents (as the case may be) and to indemnify each Noteholder and each Couponholder against all losses, claims, costs, charges and expenses to which it may be subject or which it may incur in recovering such sum. |
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8.4 |
If any payment received by the Trustee or any Noteholder or Couponholder pursuant to the provisions of these presents shall (whether on the subsequent bankruptcy, insolvency or corporate reorganisation of the Issuer or, without limitation, on any other event) be avoided or set aside for any reason, such payment shall not be considered as discharging or diminishing the liability of the Guarantor and this guarantee shall continue to apply as if such payment had at all times remained owing by the Issuer and the Guarantor shall indemnify the Trustee and the relative Noteholders and/or Couponholders (as the case may be) in respect thereof PROVIDED THAT the obligations of the Issuer and/or the Guarantor under this subclause shall, as regards each payment made to the Trustee or any Noteholder or Couponholder which is avoided or set aside, be contingent upon such payment being reimbursed to the Issuer or other persons entitled through the Issuer. |
8.5 |
The Guarantor hereby agrees that its obligations hereunder shall be unconditional and that the Guarantor shall be fully liable irrespective of the validity, regularity, legality or enforceability against the Issuer of, or of any defence or counter-claim whatsoever available to the Issuer in relation to, its obligations under these presents, whether or not any action has been taken to enforce the same or any judgment obtained against the Issuer, whether or not any of the other provisions of these presents have been modified, whether or not any time, indulgence, waiver, authorisation or consent has been granted to the Issuer by or on behalf of the relative Noteholders or the relative Couponholders or the Trustee, whether or not any determination has been made by the Trustee pursuant to Clause 19, whether or not there have been any dealings or transactions between the Issuer, any of the relative Noteholders or Couponholders or the Trustee, whether or not the Issuer has been dissolved, liquidated, merged, consolidated, bankrupted or has changed its status, functions, control or ownership, whether or not the Issuer has been prevented from making payment by foreign exchange provisions applicable at its place of registration or incorporation and whether or not any other circumstances have occurred which might otherwise constitute a legal or equitable discharge of or defence to a guarantor. Accordingly, the validity of this guarantee shall not be affected by reason of any invalidity, irregularity, illegality or unenforceability of all or any of the obligations of the Issuer under these presents and this guarantee shall not be discharged nor shall the liability of the Guarantor under these presents be affected by any act, thing or omission or means whatever whereby its liability would not have been discharged if it had been the principal debtor. |
8.6 |
Without prejudice to the provisions of Clause 9.1, the Trustee may determine from time to time whether or not it will enforce this guarantee which it may do without making any demand of or taking any proceedings against the Issuer and may from time to time make any arrangement or compromise with the Guarantor in relation to this guarantee which the Trustee may consider expedient in the interests of the relative Noteholders or Couponholders. |
8.7 |
The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of dissolution, liquidation, merger or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest or notice with respect to these presents or the indebtedness evidenced thereby and all demands whatsoever and hereby covenants that this guarantee shall be a continuing guarantee, shall extend to the ultimate balance of all sums payable and obligations owed by the Issuer under these presents, shall not be discharged except by complete performance of the obligations contained in these presents and is additional to, and not instead of, any security or other guarantee or indemnity at any time existing in favour of any person, whether from the Guarantor or otherwise. |
8.8 |
If any moneys shall become payable by the Guarantor under this guarantee, the Guarantor shall not, so long as the same remain unpaid, without the prior written consent of the Trustee: |
(a) |
in respect of any amounts paid or payable by it under this guarantee, exercise any rights of subrogation or contribution or, without limitation, any other right or remedy which may accrue to it in respect of or as a result of any such payment or any such obligation to make a payment; or |
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(b) |
in respect of any other moneys for the time being due to the Guarantor by the Issuer, claim payment thereof or exercise any other right or remedy; |
(including in either case claiming the benefit of any security or right of set-off or contribution or, on the liquidation of the Issuer, proving in competition with the Trustee). If, notwithstanding the foregoing, upon the bankruptcy, insolvency or liquidation of the Issuer, any payment or distribution of assets of the Issuer of any kind or character, whether in cash, property or securities, shall be received by the Guarantor before payment in full of all amounts payable under these presents shall have been made to the relative Noteholders, Couponholders and the Trustee, such payment or distribution shall be received by the Guarantor on trust to pay the same over immediately to the Trustee for application in or towards the payment of all sums due and unpaid under these presents in accordance with Clause 10 on the basis that Clause 10 does not apply separately and independently to each Series of the Notes, save that nothing in this subclause 8.8 shall operate so as to create any charge by the Guarantor over any such payment or distribution.
8.9 |
Until all amounts which may be or become payable by the Issuer under these presents have been irrevocably paid in full, the Trustee may: |
(a) |
refrain from applying or enforcing any other moneys, security or rights held or received by the Trustee in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise), and the Guarantor shall not be entitled to the benefit of the same; and |
(b) |
hold in a suspense account any moneys received from the Guarantor or on account of the Guarantor's liability under this guarantee, without liability to pay interest on those moneys. |
8.10 |
The obligations of the Guarantor under these presents constitute direct, unconditional and unsecured obligations of the Guarantor and (subject as aforesaid) rank and will rank pari passu with all other outstanding unsecured and unsubordinated obligations of the Guarantor, present and future, but, in the event of insolvency, only to the extent permitted by applicable laws relating to creditors' rights. |
9. |
PROCEEDINGS, ACTION AND INDEMNIFICATION |
9.1 |
The Trustee shall not be bound to take any proceedings mentioned in Condition 10(B) or any other action in relation to these presents unless respectively directed or requested to do so (a) by an Extraordinary Resolution or (b) in writing by the holders of at least one-quarter in nominal amount of the Notes then outstanding (excluding Retained Notes) and in either case then only if it shall be indemnified and/or secured and/or prefunded by the relevant Noteholders to its satisfaction against all proceedings, claims and demands to which it may be liable and against all costs, charges, liabilities and expenses which may be incurred by it in connection with such enforcement, including the costs of its managements' time and/or other internal resources, calculated using its normal hourly rates in force from time to time. |
9.2 |
The Trustee may refrain from taking any action in any jurisdiction if the taking of such action in that jurisdiction would, in its opinion which may be based upon legal advice in the relevant jurisdiction, be contrary to any law of that jurisdiction. Furthermore, the Trustee may also refrain from taking such action if it would otherwise render it liable to any person in that jurisdiction or if, in its opinion which may be based upon such legal advice (if applicable), it would not have the power to do the relevant thing in that jurisdiction by virtue of any applicable law in that jurisdiction or if it is determined by any court or other competent authority in that jurisdiction that it does not have such power. |
9.3 |
Only the Trustee may enforce the provisions of these presents. No Noteholder or Couponholder shall be entitled to proceed directly against the Issuer and/or the Guarantor to enforce the performance of any of the provisions of these presents in respect of or concerning the Issuer and/or the Guarantor, in |
21
each case unless the Trustee having become bound as aforesaid to take proceedings fails or is unable to do so within 60 days and such failure or inability is continuing.
10. |
APPLICATION OF MONEYS |
All moneys received by the Trustee under these presents (including any moneys which represent principal or interest in respect of Notes or Coupons which have become void, or in respect of claims which have become prescribed, under Condition 9) shall, unless and to the extent attributable, in the opinion of the Trustee, to a particular Series of the Notes, be apportioned pari passu and rateably between each Series of the Notes, and all moneys received by the Trustee under these presents to the extent attributable in the opinion of the Trustee to a particular Series of the Notes or which are apportioned to such Series as aforesaid, be held by the Trustee upon trust to apply them (subject to Clause 12):
FIRST in payment or satisfaction of all amounts then due and unpaid under Clauses 15 and/or 16(j) to the Trustee and/or any Appointee;
SECONDLY in or towards payment pari passu and rateably of all principal and interest then due and unpaid in respect of the Notes of that Series;
THIRDLY in or towards payment pari passu and rateably of all principal and interest then due and unpaid in respect of the Notes of each other Series; and
FOURTHLY in payment of the balance (if any) to the Issuer (without prejudice to, or liability in respect of, any question as to how such payment to the Issuer shall be dealt with as between the Issuer, the Guarantor and any other person),
PROVIDED ALWAYS that any payment required to be made by the Trustee pursuant to these presents shall only be made subject to any applicable laws and regulations.
11. |
NOTICE OF PAYMENTS |
The Trustee shall give notice to the relevant Noteholders in accordance with Condition 14 of the day fixed for any payment to them under Clause 10. Such payment may be made in accordance with Condition 6 and any payment so made shall be a good discharge to the Trustee.
12. |
INVESTMENT BY TRUSTEE |
12.1 |
No provision of these presents shall (a) confer on the Trustee any right to exercise any investment discretion in relation to the assets subject to the trust constituted by these presents and, to the extent permitted by law, Section 3 of the Trustee Act 2000 shall not apply to the duties of the Trustee in relation to the trusts constituted by these presents and (b) require the Trustee to do anything which may cause the Trustee to be considered a sponsor of a covered fund under Section 619 of the Dodd- Frank Wall Street Reform and Consumer Protection Act and any regulations promulgated thereunder. |
12.2 |
The Trustee may deposit moneys in respect of the Notes or Coupons in its name in an account at such bank or other financial institution as the Trustee may, in its absolute discretion, think fit. If that bank or financial institution is the Trustee or a subsidiary, holding or associated company of the Trustee, the Trustee need only account for an amount of interest equal to the amount of interest which would, at then current rates, be payable by it on such a deposit to an independent customer. |
12.3 |
The parties acknowledge and agree that in the event that any deposits in respect of the Notes or Coupons are held by a bank or a financial institution in the name of the Trustee and the interest rate in respect of certain currencies is a negative value such that the application thereof would result in |
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amounts being debited from funds held by such bank or financial institution (“negative interest”), the Trustee shall not be liable to make up any shortfall or be liable for any loss.
12.4 |
The Trustee may in its sole and absolute discretion accumulate such deposits and the resulting interest and other income derived thereon. The accumulated deposits shall be applied under Clause 10. All interest and other income deriving from such deposits shall be applied first in payment or satisfaction of all amounts then due and unpaid under Clause 15 and/or Clause 16(j) to the Trustee and/or any Appointee and otherwise held for the benefit of and paid to the Noteholders of such Series or the holders of the related Coupons, as the case may be. |
13. |
PARTIAL PAYMENTS |
Upon any payment under Clause 10 (other than payment in full against surrender of a Note, Certificate or Coupon) the Note, Certificate or Coupon in respect of which such payment is made shall (except in the case of a NGN or a Registered Global Note held under the NSS) be produced to the Trustee or the Paying Agent by or through whom such payment is made and the Trustee shall or shall cause such Paying Agent to enface thereon a memorandum of the amount and the date of payment but the Trustee may in any particular case dispense with such production and enfacement upon such indemnity being given as it shall think sufficient.
14. |
COVENANTS BY THE ISSUER AND THE GUARANTOR |
Except as otherwise specified below, each of the Issuer and the Guarantor severally covenants with the Trustee that, so long as any of the Notes remains outstanding (or, in the case of paragraphs (g), (h), (l), (m), (o) and (r) so long as any of the Notes or the relative Coupons remains liable to prescription or, in the case of subparagraph (n), until the expiry of a period of 30 days after the Relevant Date) it shall:
(a) |
give or procure to be given to the Trustee such opinions, certificates and information as it shall reasonably require and in such form as it shall reasonably require (including without limitation the procurement by the Issuer or the Guarantor (as the case may be) of all such certificates called for by the Trustee pursuant to Clause 16.3 and advice of the Indexation Adviser pursuant to Condition 5) for the purpose of the discharge or exercise of the duties, trusts, powers, authorities and discretions vested in it under these presents or by operation of law; |
(b) |
at all times keep and (in the case of the Guarantor only) procure its Subsidiaries to keep proper books of account and, following the occurrence of an Event of Default or Potential Event of Default or if the Trustee reasonably considers that any such event has occurred or is likely to occur, allow and (in the case of the Guarantor only) procure its Subsidiaries to allow the Trustee and any person appointed by the Trustee to whom the Issuer, the Guarantor or the relevant Subsidiary (as the case may be) shall have no reasonable objection free access to such books of account during normal business hours; |
(c) |
(in the case of the Guarantor only) send to the Trustee (in addition to any copies to which it may be entitled as a holder of any securities of the Guarantor) two copies in English of every balance sheet, profit and loss account, report, circular and notice of general meeting and every other document (other than documents of a promotional, advertising or marketing nature only) issued or sent to its shareholders together with any of the foregoing, and every document issued or sent to holders of securities other than its shareholders (including the Noteholders) as soon as practicable after the issue or publication thereof; |
(d) |
forthwith give notice in writing to the Trustee of the happening of any Event of Default or any Potential Event of Default, Renminbi Currency Event, Early Termination Event or Change of Control Put Event; |
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(e) |
give to the Trustee (i) within 14 days after demand by the Trustee therefor and (ii) (without the necessity for any such demand) promptly after the publication of its audited accounts in respect of each financial year and in any event not later than 180 days after the end of each such financial year a certificate signed by two Authorised Signatories of the Issuer to the effect that, to the best of the knowledge, information and belief of the persons so certifying, they having made all reasonable enquiries, as at a date not more than seven days before delivering such certificate (the relevant certification date) there did not exist and had not existed since the relevant certification date of the previous certificate (or in the case of the first such certificate the date hereof) any Event of Default or any Potential Event of Default (or if such exists or existed specifying the same) and that during the period from and including the relevant certification date of the last such certificate (or in the case of the first such certificate the date hereof) to and including the relevant certification date of such certificate the Issuer has complied with all its obligations contained in these presents or (if such is not the case) specifying the respects in which it has not complied; |
(f) |
give to the Trustee (i) within seven days after demand by the Trustee therefor and (ii) (without the necessity for any such demand) at the same time as the Issuer gives its certificate in accordance with (e) above, a certificate signed by two Authorised Signatories of the Guarantor to the effect that, to the best of the knowledge, information and belief of the persons so certifying, they having made all reasonable enquiries, as at a date not more than seven days before delivering such certificate (the relevant certification date), there did not exist and had not existed since the relevant certification date of the previous certificate (or, in the case of the first such certificate, the date hereof) any Event of Default or any Potential Event of Default (or if such exists or existed specifying the same) and that during the period from and including the relevant certification date of the last such certificate (or, in the case of the first such certificate, the date hereof) to and including the relevant certification date of such certificate that the Guarantor has complied with all its obligations contained in these presents or (if such is not the case) specifying in which respects it has not complied; |
(g) |
so far as permitted by law, at all times execute all such further documents and do all such acts and things as may in the opinion of the Trustee be necessary at any time or times to give effect to the terms and conditions of these presents; |
(h) |
at all times maintain an Issuing and Principal Paying Agent, other Paying Agents, a Calculation Agent, Reference Banks, a Registrar and Transfer Agents in accordance with the Conditions; |
(i) |
use all reasonable endeavours to procure the Issuing and Principal Paying Agent to notify the Trustee forthwith in the event that it does not, on or before the due date for any payment in respect of the Notes or any of them or any of the relative Coupons, receive unconditionally pursuant to the Agency Agreement payment of the full amount in the relevant currency of the moneys payable on such due date on all such Notes or Coupons as the case may be; |
(j) |
in the event of the unconditional payment to the Issuing and Principal Paying Agent or the Trustee of any sum due in respect of the Notes or any of them or any of the relative Coupons being made after the due date for payment thereof forthwith give or procure to be given notice to the relevant Noteholders in accordance with Condition 14 that such payment has been made; |
(k) |
if the applicable Final Terms indicates that the Notes are listed, use all reasonable endeavours to maintain the quotation or listing on the relevant Stock Exchange of those of the Notes which are quoted or listed on the relevant Stock Exchange or, if it is unable to do so having used all reasonable endeavours, use all reasonable endeavours to obtain and maintain a quotation or listing of such Notes on such other stock exchange or exchanges or securities market or markets as the Issuer may (with the prior written approval of the Trustee) decide and shall also |
24
upon obtaining a quotation or listing of such Notes on such other stock exchange or exchanges or securities market or markets enter into a trust deed supplemental to this Trust Deed to effect such consequential amendments to these presents as the Trustee may require or as shall be requisite to comply with the requirements of any such stock exchange or securities market;
(l) |
give notice to the Noteholders in accordance with Condition 14 of any appointment, resignation or removal of any Issuing and Principal Paying Agent, Calculation Agent, Reference Bank, other Paying Agent, Registrar or Transfer Agent (other than the appointment of the initial Issuing and Principal Paying Agent, Calculation Agent, Reference Banks, other Paying Agents, Registrar and Transfer Agents) after having obtained the prior written approval of the Trustee thereto or any change of any Paying Agent's or Reference Bank's or Registrar's or Transfer Agents' specified office and (except as provided by the Agency Agreement or the Conditions); PROVIDED ALWAYS THAT so long as any of the Notes or Coupons remains liable to prescription in the case of the termination of the appointment of the Issuing and Principal Paying Agent or the Calculation Agent or the Registrar no such termination shall take effect until a new Issuing and Principal Paying Agent or Calculation Agent or Registrar (as the case may be) has been appointed on terms previously approved in writing by the Trustee; |
(m) |
obtain the prior written approval of the Trustee to, and promptly give to the Trustee two copies of, the form of every notice given to the holders of any Notes issued by it in accordance with Condition 14 (such approval, unless so expressed, not to constitute approval for the purposes of Section 21 of the Financial Services and Markets Act 2000 of Great Britain (the FSMA) of a communication within the meaning of Section 21 of the FSMA); |
(n) |
if payments by the Issuer or the Guarantor of principal or interest in respect of the Notes or the relative Coupons shall become subject generally to the taxing jurisdiction of any territory or any political sub-division or any authority therein or thereof having power to tax other than or in addition to the Relevant Jurisdiction or any political sub-division or any authority therein or thereof having power to tax, immediately upon becoming aware thereof notify the Trustee of such event and (unless the Trustee otherwise agrees) enter forthwith into a trust deed supplemental to this Trust Deed in form and manner satisfactory to the Trustee, such trust deed to modify Condition 8 (but not the proviso thereto) so that, in substitution for (or, as the case may be, addition to) the references therein to the Relevant Jurisdiction or any political sub-division thereof or any authority therein or thereof having power to tax, such Condition makes reference to that other or additional territory or any political sub-division thereof or any authority therein or thereof having power to tax to whose taxing jurisdiction such payments shall have become subject as aforesaid and Condition 7(b) shall be modified accordingly; |
(o) |
comply with and perform all its obligations under the Agency Agreement and use all reasonable endeavours to procure that the Agents comply with and perform all their respective obligations thereunder and any notice given by the Trustee pursuant to Clause 2.3(a) and that the Calculation Agent complies with and performs all its obligations under the Calculation Agency Agreement and not make any amendment to the Agency Agreement or the Calculation Agency Agreement without the prior written approval of the Trustee; |
(p) |
(in the case of the Guarantor only) in order to enable the Trustee to ascertain the nominal amount of the Notes of each Series for the time being outstanding for any of the purposes referred to in the proviso to the definition of outstanding in Clause 1 deliver to the Trustee as soon as practicable upon being so requested in writing by the Trustee a certificate in writing signed by two Authorised Signatories of the Guarantor setting out the total number and aggregate nominal amount of the Notes of each Series issued which: |
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(i) |
up to and including the date of such certificate have been purchased by the Issuer, the Guarantor, any other Subsidiary of the Guarantor, any Holding Company of the Guarantor or other Subsidiary of such Holding Company and cancelled; and |
(ii) |
are at the date of such certificate held by, for the benefit of, or on behalf of, the Issuer, the Guarantor, any other Subsidiary of the Guarantor, any Holding Company of the Guarantor or other Subsidiary of such Holding Company; |
(q) |
if, in accordance with the provisions of the Conditions, interest in respect of the Notes becomes payable at the specified office of any Paying Agent in the United States of America promptly give notice thereof to the relative Noteholders in accordance with Condition 14; |
(r) |
(in the case of the Guarantor only) procure that each of its Subsidiaries observes the restrictions contained in Condition 7(h); |
(s) |
give prior written notice to the Trustee of any proposed redemption pursuant to Condition 7(b) or 7(c) and, if it shall have given notice to the Noteholders of its intention to redeem any Notes pursuant to Condition 7(c), duly proceed to make drawings (if appropriate) and to redeem Notes accordingly; |
(t) |
promptly provide the Trustee with copies of all supplements and/or amendments and/or restatements of the Programme Agreement; |
(u) |
use all reasonable endeavours to procure that Euroclear and/or Clearstream, Luxembourg (as the case may be) issue(s) any record, certificate or other document requested by the Trustee under Clause 16(x) or otherwise as soon as practicable after such request; and |
(v) |
upon any sale or disposal of Retained Notes by the Issuer to an entity which is neither the Issuer, the Guarantor nor any other Subsidiary of the Guarantor, promptly notify the Trustee of the same in writing. |
15. |
REMUNERATION AND INDEMNIFICATION OF TRUSTEE |
15.1 |
The Issuer (failing whom, the Guarantor) shall pay to the Trustee remuneration for its services as trustee of these presents at such rate and on such dates as shall be agreed in writing from time to time between the Issuer, the Guarantor and the Trustee. Such remuneration shall accrue from day to day and be payable (in priority to payments to Noteholders and Couponholders) up to and including the date when, all the Notes having become due for redemption, the redemption moneys and interest thereon to the date of redemption have been paid to the Issuing and Principal Paying Agent or the Trustee PROVIDED THAT if upon due presentation of any Note or Coupon or any Certificate in respect thereof or any cheque payment of the moneys due in respect thereof is improperly withheld or refused, remuneration will commence again to accrue until payment to such Noteholder or Couponholder is duly made. |
15.2 |
In the event of the occurrence of an Event of Default or a Potential Event of Default, each of the Issuer and the Guarantor hereby agrees that the Trustee shall be entitled to be paid additional remuneration, which may be calculated at its normal hourly rates in force from time to time. In any other case, if the Trustee considers it expedient or necessary or is requested by the Issuer or the Guarantor to undertake duties which the Trustee and the Issuer or, as the case may be, the Guarantor agree to be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under these presents the Issuer (failing whom, the Guarantor) shall pay to the Trustee such additional remuneration as shall be agreed between them (and which may be calculated at the Trustee’s normal hourly rates in force from time to time). |
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15.3 |
The Issuer (failing whom, the Guarantor) shall in addition pay to the Trustee an amount equal to the amount (if any) of any value added tax or similar tax chargeable in respect of its remuneration under these presents. |
15.4 |
In the event of the Trustee, the Issuer and/or the Guarantor failing to agree: |
(a) |
(in a case to which subclause 15.1 above applies) upon the amount of the remuneration; or |
(b) |
(in a case to which subclause 15.2 above applies) upon whether such duties shall be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under these presents, or upon such additional remuneration, |
such matters shall be determined by an investment bank or other person (acting as an expert and not as an arbitrator) selected by the Trustee and approved by the Issuer or, failing such approval, nominated (on the application of the Trustee) by the President for the time being of The Law Society of England and Wales (the expenses involved in such nomination and the fees of such investment bank or other person being payable by the Issuer (failing whom, the Guarantor)) and the determination of any such investment bank or other person shall be final and binding upon the Trustee, the Issuer and the Guarantor.
15.5 |
The Issuer (failing whom, the Guarantor) shall also pay or discharge all Liabilities incurred by the Trustee in relation to the preparation and execution of, the exercise of its powers and the performance of its duties under, and in any other manner in relation to, these presents, including but not limited to legal and travelling expenses and any stamp, issue, registration, documentary and other taxes or duties paid or payable by the Trustee in connection with any action taken or contemplated by or on behalf of the Trustee for enforcing, or resolving any doubt concerning, or for any other purpose in relation to, these presents. |
15.6 |
All amounts due and payable pursuant to subclause 15.5 above and/or Clause 16(j) shall be payable by the Issuer or, as the case may be, the Guarantor on the date specified in a written demand by the Trustee, such demand to specify the reason for such demand, and in the case of payments actually made by the Trustee prior to such demand shall (if not paid within 10 days after such demand and the Trustee so requires) carry interest from the date such payment was made or such later date as specified in such demand at the rate of one per cent. per annum above the base rate (on the date on which payment was made by the Trustee) of NatWest Bank plc from the date such demand is made, and in all other cases shall (if not paid on the date specified in such demand or, if later, within 10 days after such demand and, in either case, the Trustee so requires) carry interest at such rate from the date specified in such demand. All remuneration payable to the Trustee shall carry interest at such rate from the due date therefor. |
15.7 |
Unless otherwise specifically stated in any discharge of these presents the provisions of this Clause and Clause 16(j) shall continue in full force and effect notwithstanding such discharge. |
15.8 |
The Trustee shall be entitled in its absolute discretion to determine in respect of which Series of Notes any Liabilities incurred under these presents have been incurred or to allocate any such Liabilities between the Notes of any Series. |
16. |
SUPPLEMENT TO TRUSTEE ACTS |
Section 1 of the Trustee Act 2000 shall not apply to the duties of the Trustee in relation to the trusts constituted by these presents. Where there are any inconsistencies between the Trustee Acts and the provisions of these presents, the provisions of these presents shall, to the extent allowed by law, prevail and, in the case of any such inconsistency with the Trustee Act 2000, the provisions of these presents shall constitute a restriction or exclusion for the purposes of that Act. The Trustee shall have all the powers conferred upon trustees by the Trustee Acts and by way of supplement thereto it is expressly declared as follows:
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(a) |
The Trustee may in relation to these presents act on the advice or opinion of or any information obtained from any lawyer, valuer, accountant, surveyor, banker, broker, auctioneer or other expert (including without limitation, an Indexation Adviser) whether obtained by the Issuer, the Guarantor, the Trustee or otherwise and shall not be responsible for any Liability occasioned by so acting. |
(b) |
Any such advice, opinion or information may be sent or obtained by letter, e-mail or facsimile transmission and the Trustee shall not be liable for acting on any advice, opinion or information purporting to be conveyed by any such letter, e-mail or facsimile transmission although the same shall contain some error or shall not be authentic. |
(c) |
The Trustee may call for and shall be at liberty to accept as sufficient evidence of any fact or matter or the expediency of any transaction or thing a certificate signed by any two Authorised Signatories of the Issuer and/or by any two Authorised Signatories of the Guarantor, and the Trustee shall not be bound in any such case to call for further evidence or be responsible for any Liability that may be occasioned by it or any other person acting on such certificate. |
(d) |
The Trustee shall be at liberty to hold or to place these presents and any other documents relating thereto or to deposit them in any part of the world with any banker or banking company or company whose business includes undertaking the safe custody of documents or lawyer or firm of lawyers considered by the Trustee to be of good repute and the Trustee shall not be responsible for or required to insure against any Liability incurred in connection with any such holding or deposit and may pay all sums required to be paid on account of or in respect of any such deposit. |
(e) |
The Trustee shall not be responsible for the receipt or application of the proceeds of the issue of any of the Notes by the Issuer, the exchange of any Global Note or Certificate for another Global Note or Certificate or Definitive Bearer Notes or the delivery of any Global Note, Certificate or Definitive Notes to the person(s) entitled to it or them. |
(f) |
The Trustee shall not be bound to give notice to any person of the execution of any documents comprised or referred to in these presents or to take any steps to ascertain whether any Early Termination Event, Renminbi Currency Event, Change of Control Put Event, Event of Default or any Potential Event of Default has occurred and, until it shall have actual knowledge or express notice pursuant to these presents to the contrary, the Trustee shall be entitled to assume that no Early Termination Event, Renminbi Currency Event, Change of Control Put Event, Event of Default or Potential Event of Default has occurred and that each of the Issuer and the Guarantor is observing and performing all its obligations under these presents. |
(g) |
Save as expressly otherwise provided in these presents, the Trustee shall have absolute and uncontrolled discretion as to the exercise or non-exercise of its trusts, powers, authorities and discretions under these presents (the exercise or non-exercise of which as between the Trustee and the Noteholders and the Couponholders shall be conclusive and binding on the Noteholders and the Couponholders) and shall not be responsible for any Liability which may result from their exercise or non-exercise and in particular the Trustee shall not be bound to act at the request or direction of the holders or the Couponholders or otherwise under any provision of this Trust Deed or to take at such request or direction or otherwise any other action under any provision of this Trust Deed, without prejudice to the generality of subclause 9.1, unless it shall first be indemnified and/or secured and/or pre-funded to its satisfaction against all Liabilities to which it may render itself liable or which it may incur by so doing and the Trustee shall incur no liability for refraining to act in such circumstances. |
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(h) |
The Trustee shall not be liable to any person by reason of having acted upon any Extraordinary Resolution in writing or any Extraordinary Resolution or other resolution purporting to have been passed at any meeting of the holders of Notes of all or any Series in respect whereof minutes have been made and signed or any Extraordinary Resolution passed by way of electronic consents received through the relevant Clearing System(s) in accordance with these presents or any direction or request of the holders of the Notes of all or any Series even though subsequent to its acting it may be found that there was some defect in the constitution of the meeting or the passing of the resolution or (in the case of an Extraordinary Resolution in writing or a direction or a request) it was not signed by the requisite number of Noteholders or (in the case of an Extraordinary Resolution passed by electronic consents received through the relevant Clearing System(s)) it was not approved by the requisite number of Noteholders or that for any reason the resolution, direction or request was not valid or binding upon such holders and the relative Couponholders. |
(i) |
The Trustee shall not be liable to any person by reason of having accepted as valid or not having rejected any Note, Certificate or Coupon reasonably believed by it to be such and subsequently found to be forged or not authentic. |
(j) |
Subject to Section 750 of the Companies Act 2006 (if applicable) and without prejudice to the right of indemnity by law given to trustees, each of the Issuer and the Guarantor shall severally indemnify the Trustee and every Appointee and keep it or them indemnified against all Liabilities to which it or they may be or become subject or which may be properly incurred by it or them in the execution of any of its or their trusts, powers, authorities and discretions under these presents or its or their functions under any such appointment or in respect of any other matter or thing done or omitted in any way relating to these presents or any such appointment. |
(k) |
Any consent or approval given by the Trustee for the purposes of these presents may be given on such terms and subject to such conditions (if any) as the Trustee thinks fit and notwithstanding anything to the contrary in these presents may be given retrospectively. |
(l) |
The Trustee shall not (unless and to the extent ordered so to do by a court of competent jurisdiction) be required to disclose to any Noteholder or Couponholder any information (including, without limitation, information of a confidential, financial or price sensitive nature) made available to the Trustee by the Issuer, the Guarantor or any other person in connection with the trusts of these presents and no Noteholder or Couponholder shall be entitled to take any action to obtain from the Trustee any such information. |
(m) |
Where it is necessary or desirable for any purpose in connection with these presents to convert any sum from one currency to another it shall (unless otherwise provided by these presents or required by law) be converted at such rate or rates, in accordance with such method and as at such date for the determination of such rate of exchange, as may be agreed by the Trustee in consultation with the Issuer or the Guarantor as relevant and any rate, method and date so agreed shall be binding on the Issuer, the Guarantor, the Noteholders and the Couponholders. |
(n) |
The Trustee may certify whether or not any of the conditions, events and acts set out in paragraphs (b), (c), (e), (f) and (g) of Condition 10(A) (each of which conditions, events and acts shall, unless in any case the Trustee in its absolute discretion shall otherwise determine, for all the purposes of these presents be deemed to include the circumstances resulting therein and the consequences resulting therefrom) is in its opinion materially prejudicial to the interests of the holders and any such certificate shall be conclusive and binding upon the Issuer, the Guarantor, the Noteholders and the Couponholders. |
29
(o) |
The Trustee as between itself and the Noteholders and the Couponholders may determine all questions and doubts arising in relation to any of the provisions of these presents. Every such determination, whether or not relating in whole or in part to the acts or proceedings of the Trustee, shall be conclusive and shall bind the Trustee and the Noteholders and the Couponholders. |
(p) |
In connection with the exercise by it of any of its trusts, powers, authorities or discretions under these presents (including, without limitation, any modification, waiver, authorisation, determination or substitution), the Trustee shall have regard to the general interests of the Noteholders as a class but shall not have regard to any interests arising from circumstances particular to individual Noteholders or Couponholders (whatever their number) and, in particular but without limitation, shall not have regard to the consequences of such exercise for individual Noteholders or Couponholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Noteholder or Couponholder be entitled to claim, from the Issuer, the Guarantor, the Trustee or any other person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders or Couponholders except to the extent already provided for in Condition 8 and/or any undertaking given in addition thereto or in substitution therefor under these presents. |
(q) |
The Trustee may whenever it thinks fit delegate by power of attorney or otherwise to any person or persons or fluctuating body of persons (whether being a joint trustee of these presents or not) all or any of its trusts, powers, authorities and discretions vested in the Trustee by these presents. Such delegation may be made upon such terms (including power to sub-delegate) and subject to such conditions and regulations as the Trustee may in the interests of the Noteholders think fit. Provided that the Trustee has taken reasonable care in selecting such delegate, it shall not be under any obligation to supervise the proceedings or acts of any such delegate or sub-delegate or be in any way responsible for any Liability incurred by reason of any misconduct or default on the part of any such delegate or sub-delegate. The Trustee shall within a reasonable time after any such delegation or any renewal, extension or termination thereof give notice thereof to the Issuer. |
(r) |
The Trustee may in the conduct of the trusts of these presents instead of acting personally employ and pay an agent (whether being a lawyer or other professional person) to transact or conduct, or concur in transacting or conducting, any business and to do, or concur in doing, all acts required to be done in connection with these presents (including the receipt and payment of money). Provided that the Trustee has taken reasonable care in selecting such agent, it shall not be in any way responsible for any Liability incurred by reason of any misconduct or default on the part of any such agent or be bound to supervise the proceedings or acts of any such agent. |
(s) |
The Trustee may appoint and pay any person to act as a nominee on any terms in relation to such assets of the trusts constituted by these presents as the Trustee may determine. |
(t) |
The Trustee shall not be responsible for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity, enforceability or admissibility in evidence of these presents or any other document relating or expressed to be supplemental thereto and shall not be liable for any failure to obtain any licence, consent or other authority for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity, performance, enforceability or admissibility in evidence of these presents or any other document relating or expressed to be supplemental thereto. |
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(u) |
The Trustee shall not be responsible to any person for failing to request, require or receive any legal opinion relating to any Notes or for checking or commenting upon the content of any such legal opinion. |
(v) |
Any certificate or report of the Auditors or any other person called for by or provided to the Trustee in accordance with or for the purposes of the Notes may be relied upon by the Trustee as sufficient evidence of the facts stated therein whether or not such certificate or report is addressed to the Trustee and whether or not such certificate or report and/or any engagement letter or other document entered into by the Trustee in connection therewith contains a monetary or other limit on the liability of the Auditors (or such other expert or other person) in respect thereof. |
(w) |
So long as any Global Note is, or any Registered Notes represented by a Global Certificate are, held on behalf of a clearing system, in considering the interests of Noteholders, the Trustee may have regard to any information provided to it by such clearing system or its operator as to the identity (either individually or by category) of its accountholders or participants with entitlements to any such Global Note or the Registered Notes and may consider such interests on the basis that such accountholders or participants were the holder(s) thereof. |
(x) |
The Trustee may call for and shall rely on any records, certificate or other document of or to be issued by Euroclear or Clearstream, Luxembourg in relation to any determination of the principal amount of Notes represented by a NGN. Any such records, certificate or other document shall be conclusive and binding for all purposes. The Trustee shall not be liable to any person by reason of having accepted as valid or not having rejected any such records, certificate or other document to such effect purporting to be issued by Euroclear or Clearstream, Luxembourg and subsequently found to be forged or not authentic. |
(y) |
No provision of these presents shall require the Trustee to do anything which may in its opinion be illegal or contrary to applicable law or regulation. |
(z) |
Any trustee being a banker, lawyer, broker or other person engaged in any profession or business shall be entitled to charge and be paid all usual professional and other charges for business transacted and acts done by them or their partner or firm on matters arising in connection with the trusts of these presents and also their properly incurred charges in addition to disbursements for all other work and business done and all time spent by them or their partner or firm on matters arising in connection with these presents, including matters which might or should have been attended to in person by a trustee not being a banker, lawyer, broker or other professional person. |
(aa) |
Nothing contained in these presents shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties or the exercise of any right, power, authority or discretion hereunder if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not assured to it. |
(bb) |
The Trustee shall not be bound to take any steps to enforce the performance of any provisions of these presents, the Notes or the Coupons or to appoint an independent financial advisor pursuant to the Conditions unless it shall be indemnified and/or secured and/or prefunded by the relevant Noteholders and/or Couponholders to its satisfaction against all proceedings, claims and demands to which it may be liable and against all costs, charges, liabilities and expenses which may be incurred by it in connection with such enforcement or appointment, including the cost of its managements’ time and/or other internal resources, calculated using its normal hourly rates in force from time to time. |
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(cc) |
When determining whether an indemnity or any security or prefunding is satisfactory to it, the Trustee shall be entitled to evaluate its risk in given circumstances by considering the worst-case scenario and, for this purpose, it may take into account, without limitation, the potential costs of defending or commencing proceedings in England or elsewhere and the risk however remote, of any award of damages against it in England or elsewhere. |
(dd) |
The Trustee shall be entitled to require that any indemnity or security given to it by the Noteholders or any of them be given on a joint and several basis and be supported by evidence satisfactory to it as to the financial standing and creditworthiness of each counterparty and/or as to the value of the security and an opinion as to the capacity, power and authority of each counterparty and/or the validity and effectiveness of the security. |
17. |
TRUSTEE'S LIABILITY |
17.1 |
Subject to Section 750 of the Companies Act 2006 (if applicable), nothing in these presents shall in any case in which the Trustee has failed to show the degree of care and diligence required of it as trustee having regard to the provisions of these presents conferring on it any trusts, powers, authorities or discretions exempt the Trustee from or indemnify it against any liability for gross negligence, wilful default or fraud of which it may be guilty in relation to its duties under these presents. |
17.2 |
Notwithstanding any provision of these presents to the contrary, the Trustee shall not in any event be liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including but not limited to lost profits, business, goodwill or opportunity), whether or not foreseeable, even if the Trustee has been advised of the likelihood of such loss or damage, unless the claim for loss or damage is made in respect of fraud on the part of the Trustee. |
18. |
TRUSTEE CONTRACTING WITH THE ISSUER AND THE GUARANTOR |
Neither the Trustee (which for the purpose of this Clause shall include the Holding Company of any corporation acting as trustee hereof or any Subsidiary of such Holding Company) nor any director or officer or Holding Company, Subsidiary or associated company of a corporation acting as a trustee under these presents shall by reason of its or their fiduciary position be in any way precluded from:
(a) |
entering into or being interested in any contract or financial or other transaction or arrangement with the Issuer or the Guarantor or any person or body corporate associated with the Issuer or the Guarantor (including without limitation any contract, transaction or arrangement of a banking or insurance nature or any contract, transaction or arrangement in relation to the making of loans or the provision of financial facilities or financial advice to, or the purchase, placing or underwriting of or the subscribing or procuring subscriptions for or otherwise acquiring, holding or dealing with, or acting as paying agent in respect of, the Notes or any other notes, bonds, stocks, shares, debenture stock, debentures or other securities of, the Issuer, the Guarantor or any person or body corporate associated as aforesaid); or |
(b) |
accepting or holding the trusteeship of any other trust deed constituting or securing any other securities issued by or relating to the Issuer or the Guarantor or any such person or body corporate so associated or any other office of profit under the Issuer or the Guarantor or any such person or body corporate so associated, |
and each shall be entitled to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such contract, transaction or arrangement as is referred to in 18(a) above or, as the case may be, any such trusteeship or office of profit as is referred to in 18(b) above without regard to the interests of the Noteholders and notwithstanding that the same may be contrary or prejudicial to the interests of the Noteholders and shall not be responsible for any Liability occasioned to the Noteholders thereby and shall be entitled to retain and shall not be in any way liable to account for any profit made or share of brokerage or commission or remuneration or other amount or benefit received thereby or in connection therewith.
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Where any Holding Company, Subsidiary or associated company of the Trustee or any director or officer of the Trustee acting other than in their capacity as such a director or officer has any information, the Trustee shall not thereby be deemed also to have knowledge of such information and, unless it shall have actual knowledge of such information, shall not be responsible for any loss suffered by Noteholders resulting from the Trustee's failing to take such information into account in acting or refraining from acting under or in relation to these presents.
19. |
WAIVER, AUTHORISATION AND DETERMINATION |
19.1 |
The Trustee may without the consent or sanction of the Noteholders or the Couponholders and without prejudice to its rights in respect of any subsequent breach, Event of Default or Potential Event of Default from time to time and at any time but only if and in so far as in its opinion the interests of the Noteholders shall not be materially prejudiced thereby waive or authorise any breach or proposed breach by the Issuer or the Guarantor of any of the covenants or provisions contained in these presents or any Condition or determine that any Event of Default or Potential Event of Default shall not be treated as such for the purposes of these presents or any Condition PROVIDED ALWAYS THAT the Trustee shall not exercise any powers conferred on it by this Clause in contravention of any express direction given by Extraordinary Resolution or by a request under Condition 10(A) but so that no such direction or request shall affect any waiver, authorisation or determination previously given or made. Any such waiver, authorisation or determination may be given or made on such terms and subject to such conditions (if any) as the Trustee may determine, shall be binding on the Noteholders and the Couponholders and, if, but only if, the Trustee shall so require, shall be notified by the Issuer to the Noteholders in accordance with Condition 14 as soon as practicable thereafter. |
MODIFICATION
19.2 |
The Trustee may without the consent or sanction of the Noteholders or the Couponholders at any time and from time to time concur with the Issuer and the Guarantor in making any modification (a) to these presents or any Condition which in the opinion of the Trustee it may be proper to make PROVIDED THAT the Trustee is of the opinion that such modification is not materially prejudicial to the interests of the Noteholders or (b) to these presents or any Condition if in the opinion of the Trustee such modification is of a formal, minor or technical nature or to correct a manifest error or to comply with mandatory provisions of applicable law. In addition, the Trustee shall be obliged to concur with the Issuer and the Guarantor in using its reasonable endeavours to effect any Benchmark Amendments or Benchmark Replacement Conforming Changes in the circumstances as set out in Condition 4(b)(ii)(H) without the consent of the Noteholders or the Couponholders. Any such modification may be made on such terms and subject to such conditions (if any) as the Trustee may determine, shall be binding upon the Noteholders and the Couponholders and, unless the Trustee agrees otherwise, shall be notified by the Issuer to the Noteholders in accordance with Condition 14 as soon as practicable thereafter. |
BREACH
19.3 |
Any breach of or failure to comply by the Issuer or the Guarantor with any such terms and conditions as are referred to in subclauses 19.1 and 19.2 of this Clause shall constitute a default by the Issuer or the Guarantor (as the case may be) in the performance or observance of a covenant or provision binding on it under or pursuant to these presents. |
20. |
HOLDER OF DEFINITIVE BEARER NOTE ASSUMED TO BE COUPONHOLDER |
20.1 |
Wherever in these presents the Trustee is required or entitled to exercise a power, trust, authority or discretion under these presents, except as ordered by a court of competent jurisdiction or as required |
33
by applicable law, the Trustee shall, notwithstanding that it may have express notice to the contrary, assume that each holder of a Definitive Bearer Note is the holder of all Coupons appertaining to each Definitive Bearer Note of which they are the holder.
NO NOTICE TO COUPONHOLDERS
20.2 |
Neither the Trustee nor the Issuer nor the Guarantor shall be required to give any notice to the Couponholders for any purpose under these presents and the Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the holders of Definitive Bearer Notes in accordance with Condition 14. |
21. |
SUBSTITUTION AND CONSOLIDATION MERGER, CONVEYANCE, TRANSFER OR LEASE |
21.1 |
Substitution of the Issuer |
(a) |
The Trustee may without the consent of the Noteholders or Couponholders at any time agree with the Issuer to the substitution in place of the Issuer (or of the previous substitute under this Clause) as the principal debtor under these presents of (i) a Successor in Business to the Issuer or (ii) the Guarantor or a Successor in Business to the Guarantor or (iii) any other Subsidiary of the Guarantor (such substituted company being hereinafter called the New Company) provided that in each case a trust deed is executed or some other form of undertaking is given by the New Company in form and manner reasonably satisfactory to the Trustee, agreeing to be bound by the provisions of these presents with any consequential amendments which the Trustee may deem appropriate as fully as if the New Company had been named in these presents as the principal debtor in place of the Issuer (or of the previous substitute under this Clause) and provided further that (save in the case of a substitution of the Guarantor or a Successor in Business to the Guarantor) the Guarantor unconditionally and irrevocably guarantees all amounts payable under these presents to the satisfaction of the Trustee. The following further conditions shall apply to this Clause 21.1(a): |
(i) |
the Issuer and the New Company shall comply with such other requirements as the Trustee may direct in order to ensure that the interests of the Noteholders are not materially prejudiced (and taking into account the proviso in paragraph 21.1(b) below); |
(ii) |
undertakings or covenants shall be given by the New Company in terms corresponding to the provisions of Condition 8 and Condition 7(b) shall be modified accordingly; |
(iii) |
without prejudice to the rights of reliance of the Trustee under the immediately following paragraph (iv), the Trustee is satisfied that the relevant transaction is not materially prejudicial to the interests of the Noteholders, provided that in determining such material prejudice the Trustee shall not take into account any prejudice to the interests of the Noteholders as a result of the New Company not being required pursuant to the undertakings or covenants given pursuant to the preceding paragraph (ii) to pay any Additional Amounts for or on account of any Taxes imposed by the United States (or any political subdivision or taxing authority thereof or therein); and |
(iv) |
if two authorised signatories of the New Company (or other officers acceptable to the Trustee) shall certify that the New Company is solvent at the time at which the relevant transaction is proposed to be effected (which certificate the Trustee may rely upon absolutely) the Trustee shall not be under any duty to have regard to the financial |
34
condition, profits or prospects of the New Company or to compare the same with those of the Issuer or any previous substitute under this Clause as applicable.
(b) |
Any such trust deed or undertaking shall, if so expressed, operate to release the Issuer or the previous substitute as aforesaid from all of its obligations as principal debtor under these presents. Not later than 14 days after the execution of such documents and compliance with such requirements, the New Company shall give notice thereof in a form previously approved by the Trustee to the Noteholders in the manner provided in Condition 14. Upon the execution of such documents and compliance with such requirements, the New Company shall be deemed to be named in these presents as the principal debtor in place of the Issuer (or in place of the previous substitute under this Clause) under these presents and these presents shall be deemed to be modified in such manner as shall be necessary to give effect to the above provisions and, without limitation, references in these presents to the Issuer shall, unless the context otherwise requires, be deemed to be or include references to the New Company. |
21.2 |
Substitution of the Guarantor |
(a) |
The Trustee may without the consent of the Noteholders or Couponholders at any time agree with the Guarantor to the substitution in place of the Guarantor (or of the previous substitute under this Clause) as guarantor under these presents of (i) a Successor in Business to the Guarantor or (ii) a Holding Company of the Guarantor or (iii) a Subsidiary of the Guarantor (such substituted company being hereinafter called the New Company) provided that in each case a trust deed is executed or some other form of undertaking is given by the New Company in form and manner reasonably satisfactory to the Trustee, agreeing to be bound by the provisions of these presents with any consequential amendments which the Trustee may deem appropriate as fully as if the New Company had been named in these presents as the guarantor in place of the Guarantor (or of the previous substitute under this Clause) and provided further that (in the case of a substitution of a Subsidiary of the Guarantor) the Guarantor unconditionally and irrevocably guarantees all amounts payable by the Issuer under these presents to the satisfaction of the Trustee. |
(b) |
The following further conditions shall apply to 21.2(a) above: |
(i) |
the Guarantor and the New Company shall comply with such other requirements as the Trustee may direct in order to ensure that the interests of the Noteholders are not materially prejudiced (and taking into account the proviso in paragraph 21.2(c) below); |
(ii) |
undertakings or covenants shall be given by the New Company in terms corresponding to the provisions of Condition 8 and Condition 7(b) shall be modified accordingly; |
(iii) |
without prejudice to the rights of reliance of the Trustee under the immediately following paragraph (iv), the Trustee is satisfied that the relevant transaction is not materially prejudicial to the interests of the Noteholders, provided that in determining such material prejudice the Trustee shall not take into account any prejudice to the interests of the Noteholders as a result of the New Company not being required pursuant to the undertakings or covenants given pursuant to the preceding paragraph (ii) to pay any Additional Amounts for or on account of any Taxes imposed by the United States (or any political subdivision or taxing authority thereof or therein); and |
(iv) |
if two authorised signatories of the New Company (or other officers acceptable to the Trustee) shall certify that the New Company is solvent at the time at which the relevant transaction is proposed to be effected (which certificate the Trustee may rely |
35
upon absolutely) the Trustee shall not be under any duty to have regard to the financial condition, profits or prospects of the New Company or to compare the same with those of the Guarantor or any previous substitute under this Clause as applicable.
(c) |
Any such trust deed or undertaking shall, if so expressed, operate to release the Guarantor or the previous substitute as aforesaid from all of its obligations as guarantor under these presents. Not later than 14 days after the execution of such documents and compliance with such requirements, the New Company shall give notice thereof in a form previously approved by the Trustee to the Noteholders in the manner provided in Condition 14. Upon the execution of such documents and compliance with such requirements, the New Company shall be deemed to be named in these presents as the guarantor in place of the Guarantor (or in place of the previous substitute under this Clause) under these presents and these presents shall be deemed to be modified in such manner as shall be necessary to give effect to the above provisions and, without limitation, references in these presents to the Guarantor shall, unless the context otherwise requires, be deemed to be or include references to the New Company. |
21.3 (a) Each of the Issuer and the Guarantor may consolidate with or merge (which term shall include for the avoidance of doubt a scheme of arrangement) into any other Person or convey, transfer or lease its respective properties and assets substantially as an entirety to any Person, and each of the Issuer and the Guarantor may permit any Person to consolidate with or merge into the Issuer or the Guarantor (as relevant) or convey, transfer or lease its properties and assets substantially as an entirety to the Issuer or the Guarantor (as relevant), provided that:
(i) |
if the Issuer or the Guarantor shall consolidate with or merge into another Person or convey, transfer or lease its respective properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Issuer or the Guarantor is merged or the Person which acquires by conveyance or transfer, or which leases, the respective properties and assets of the Issuer or the Guarantor (as relevant) substantially as an entirety shall be a corporation, partnership or trust, shall be organised and validly existing under the laws of any applicable jurisdiction and shall expressly assume (including, in the case of a Reorganisation, by way of a full and unconditional guarantee subject to the proviso to this subclause) by a trust deed supplemental hereto executed and delivered to the Trustee on behalf of the Noteholders in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and interest on all the Notes and the performance or observance of every covenant of these presents on the part of the Issuer or the Guarantor (as relevant) to be performed or observed; provided, however, that in the case of a Reorganisation; |
(A) |
such assumption shall be effected by means of a supplemental trust deed executed by the guarantor in which: |
I. |
the guarantor covenants to the Trustee to guarantee irrevocably and unconditionally the due and punctual payment of the principal of and interest on all the Notes, and all other amounts payable by the Issuer or the Guarantor (as relevant) under these presents, which guarantee shall (inter alia) not be subject to any requirement for presentment or demand and shall not be affected, modified or impaired upon the happening from time to time of any event, including without limitation (x) the waiver, surrender, compromise, settlement, release, termination or modification of any or all of the obligations, covenants or agreements of the Issuer or the Guarantor (as relevant) under these presents; (y) the bankruptcy or insolvency of the Issuer or the Guarantor (as relevant); and (z) to the extent permitted by law, the |
36
release or discharge by operation of law of the Issuer or the Guarantor (as relevant) from the performance or observance of any obligation, covenant or agreement contained in these presents; and
II. |
the guarantor covenants to be bound by each and every obligation of the Issuer or the Guarantor (as relevant) contained in these presents, including without limitation the obligation to pay Additional Amounts with respect to any payment made under the guarantee to the extent and subject to the exceptions, mutatis mutandis, set out in Condition 8, and to be subject to each Event of Default specified in Condition 10(A) or in any Notes or Certificates in respect thereof and to each Potential Event of Default, as though in each case, each reference to the Issuer or the Guarantor (as relevant) in connection with such obligations or Events of Default were to the guarantor; provided, however, that the reference to specific statutes in Condition 10(A)(e) shall be modified, if applicable, to reflect the laws of the jurisdiction of incorporation of the guarantor; and |
(B) |
the Trustee shall have received an opinion of legal counsel (which may be an employee of the guarantor), in form and substance reasonably satisfactory to the Trustee to the effect that such guarantee is the valid, binding and enforceable obligation of the guarantor; |
(ii) |
immediately prior to and after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Issuer or the Guarantor (as relevant) as a result of such transaction as having been incurred by the Issuer or the Guarantor (as relevant) at the time of such transaction, no Event of Default or Potential Event of Default shall have happened and be continuing; |
(iii) |
the Person formed by such consolidation or into which the Issuer or the Guarantor (as relevant) is merged or to whom the Issuer or the Guarantor (as relevant) has conveyed, transferred or leased its properties or assets (if such Person is incorporated or organised and validly existing under the laws of a jurisdiction other than the United States, any State thereof, or the District of Columbia, or England and Wales) agrees to indemnify the Trustee and the holder of each Note and Coupon against (A) any tax, assessment or governmental charge imposed on the Trustee or any such holder or required to be withheld or deducted from any payment to the Trustee or such holder as a consequence of such consolidation, merger, conveyance, transfer or lease; and (B) any costs or expenses of the act of such consolidation, merger, conveyance, transfer or lease; |
(iv) |
the Issuer or the Guarantor (as relevant) (and, in the case of a guarantee as provided above, the guarantor) has delivered to the Trustee a Certificate signed by two of its Authorised Signatories (or other officers acceptable to the Trustee) and an opinion of legal counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental trust deed is required in connection with such transaction, such supplemental trust deed complies with this Clause, that such supplemental trust deed is valid, binding and enforceable and that all conditions precedent herein provided for relating to such transaction have been complied with; |
(v) |
undertakings or covenants shall be given by such Person in terms corresponding to the provisions of Condition 8 and Condition 7(b) shall be modified accordingly; |
37
(vi) |
without prejudice to the rights of reliance of the Trustee under the immediately following paragraph (vii), the Trustee is satisfied that the relevant transaction is not materially prejudicial to the interests of the Noteholders, provided that in determining such material prejudice the Trustee shall not take into account any prejudice to the interests of the Noteholders as a result of the Person pursuant to the undertakings or covenants given pursuant to the preceding paragraph (v) not being required to pay any Additional Amounts for or on account of any Taxes imposed by the United States (or any political subdivision or taxing authority thereof or therein); and |
(vii) |
if two authorised signatories of the Person formed by such consolidation or into which the Issuer or the Guarantor (as relevant) is merged or to whom the Issuer or the Guarantor (as relevant) has conveyed, transferred or leased its properties or assets (or other officers acceptable to the Trustee) shall certify that such Person is solvent at the time at which the relevant transaction is proposed to be effected (which certificate the Trustee may rely upon absolutely) the Trustee shall not be under any duty to have regard to the financial condition, profits or prospects of such Person or to compare the same with those of the Issuer or the Guarantor (as relevant). |
(b) |
Upon any consolidation of the Issuer or the Guarantor (as relevant) with, or merger of the Issuer or the Guarantor (as relevant) into, any other Person or any conveyance, transfer or lease of the respective properties and assets of the Issuer or the Guarantor (as relevant) substantially as an entirety in accordance with paragraph (a) of this subclause 21.3, the successor Person formed by such consolidation or into which the Issuer or the Guarantor (as relevant) is merged or to which such conveyance, transfer or lease is made shall succeed to and be substituted for, except in the case of an assumption by way of a full and unconditional guarantee made in accordance with paragraph (a) of this subclause 21.3 (in which event, the Issuer or the Guarantor (as relevant) shall remain an obligor under these presents), and may exercise every right and power of, the Issuer or the Guarantor (as relevant) under these presents with the same effect as if such successor Person had been named as the Issuer or the Guarantor (as relevant) in these presents, as the case may be, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under these presents. |
(c) |
Not later than 21 days after completion of the relevant transaction as referred to in paragraph (a) of this subclause 21.3 the Issuer or the Guarantor (as relevant) or, as the case may be, the Person resulting from any such consolidation or merger shall give notice thereof in a form previously approved by the Trustee to the Noteholders in the manner provided in Condition 14. |
22. |
CURRENCY INDEMNITY |
Each of the Issuer and the Guarantor shall severally indemnify the Trustee, every Appointee, the Noteholders and the Couponholders and keep them indemnified against:
(a) |
any loss or damage incurred by any of them arising from the non-payment by the Issuer or the Guarantor of any amount due to the Trustee or the holders of the Notes issued by the Issuer and the relative Couponholders under these presents by reason of any variation in the rates of exchange between those used for the purposes of calculating the amount due under a judgment or order in respect thereof and those prevailing at the date of actual payment by the Issuer or the Guarantor; and |
(b) |
any deficiency arising or resulting from any variation in rates of exchange between (i) the date as of which the local currency equivalent of the amounts due or contingently due under these presents (other than this Clause) is calculated for the purposes of any bankruptcy, insolvency |
38
or liquidation of the Issuer or, as the case may be, the Guarantor and (ii) the final date for ascertaining the amount of claims in such bankruptcy, insolvency or liquidation. The amount of such deficiency shall be deemed not to be reduced by any variation in rates of exchange occurring between the said final date and the date of any distribution of assets in connection with any such bankruptcy, insolvency or liquidation.
The above indemnities shall constitute obligations of the Issuer and the Guarantor separate and independent from their other obligations under the other provisions of these presents and shall apply irrespective of any indulgence granted by the Trustee or the Noteholders or the Couponholders from time to time and shall continue in full force and effect notwithstanding the judgment or filing of any proof or proofs in any bankruptcy, insolvency or liquidation of the Issuer or, as the case may be, the Guarantor for a liquidated sum or sums in respect of amounts due under these presents (other than this Clause). Any such deficiency as aforesaid shall be deemed to constitute a loss suffered by the Noteholders and the Couponholders and no proof or evidence of any actual loss shall be required by the Issuer or the Guarantor or their liquidator or liquidators.
23. |
NEW TRUSTEE |
New Trustee
23.1 |
The power to appoint a new trustee of these presents shall be vested in the Issuer but no person shall be appointed who shall not previously have been approved by an Extraordinary Resolution. One or more persons may hold office as trustee or trustees of these presents but such trustee or trustees shall be or include a Trust Corporation. Whenever there shall be more than two trustees of these presents the majority of such trustees shall be competent to execute and exercise all the duties, powers, trusts, authorities and discretions vested in the Trustee by these presents provided that a Trust Corporation shall be included in such majority. Any appointment of a new trustee of these presents shall as soon as practicable thereafter be notified by the Issuer to the Issuing and Principal Paying Agent and in accordance with Condition 14 to the Noteholders. |
Separate and Co-Trustees
23.2 |
Notwithstanding the provisions of subclause 23.1 above, the Trustee may, upon giving prior notice to the Issuer and the Guarantor (but without the consent of the Issuer, the Guarantor, the Noteholders or the Couponholders), appoint any person established or resident in any jurisdiction (whether a Trust Corporation or not) to act either as a separate trustee or as a co-trustee jointly with the Trustee: |
(a) |
if the Trustee considers such appointment to be in the interests of the Noteholders; |
(b) |
for the purposes of conforming to any legal requirements, restrictions or conditions in any jurisdiction in which any particular act or acts is or are to be performed; or |
(c) |
for the purposes of obtaining a judgment in any jurisdiction or the enforcement in any jurisdiction of either a judgment already obtained or any of the provisions of these presents against the Issuer and/or the Guarantor. |
Each of the Issuer and the Guarantor irrevocably appoints the Trustee to be its attorney in its name and on its behalf to execute any such instrument of appointment. Such a person shall (subject always to the provisions of these presents) have such trusts, powers, authorities and discretions (not exceeding those conferred on the Trustee by these presents) and such duties and obligations as shall be conferred or imposed by the instrument of appointment. The Trustee shall have power in like manner to remove any such person. Such reasonable remuneration as the Trustee may pay to any such person, together with any attributable costs, charges and expenses incurred by it in performing its function as such separate trustee or co-trustee, shall for the purposes of these presents be treated as costs, charges and expenses incurred by the Trustee.
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24. |
TRUSTEE'S RETIREMENT AND REMOVAL |
A trustee of these presents may retire at any time on giving not less than three months' prior written notice to the Issuer and the Guarantor without giving any reason and without being responsible for any Liabilities incurred by reason of such retirement. The Noteholders shall have the power exercisable by Extraordinary Resolution to remove any trustee or trustees for the time being of these presents. The Issuer and the Guarantor each undertakes that in the event of the only trustee of these presents which is a Trust Corporation giving notice under this Clause or being removed by Extraordinary Resolution it will use all reasonable endeavours to procure that a new trustee of these presents being a Trust Corporation is appointed as soon as reasonably practicable thereafter. The retirement or removal of any such trustee shall not become effective until a successor trustee being a Trust Corporation is appointed.
25. |
TRUSTEE'S POWERS TO BE ADDITIONAL |
The powers conferred upon the Trustee by these presents shall be in addition to any powers which may from time to time be vested in the Trustee by the general law or as a holder of any of the Notes or Coupons.
26. |
NOTICES |
Any notice or demand to the Issuer, the Guarantor or the Trustee required to be given, made or served for any purposes under these presents shall be given, made or served by sending the same by pre-paid post (first class if inland, first class airmail if overseas), email or facsimile transmission or by delivering it by hand as follows:
to the Issuer: |
Vodafone International Financing Designated Activity Company |
Palmerston House
Fenian Street
Dublin 2, Ireland
(Attention: Group Treasury Director)
Email: Treasury.Dealers@vodafone.com
(with a copy to the Guarantor)
to the Guarantor: Vodafone House
The Connection
Newbury
Berkshire RG14 2FN
England
(Attention: Group Treasury Director)
Email: Treasury.Dealers@vodafone.com
to the Trustee: |
Eighth Floor |
London EC2N 4AG
England
40
(Attention: the Manager, Commercial Trusts)
Email: trust.support@lawdeb.com
Facsimile No.: 020 7606 5451
or to such other postal address, email address or facsimile number as shall have been notified (in accordance with this Clause) to the other parties hereto and any notice or demand sent by post as aforesaid shall be deemed to have been given, made or served upon receipt. Any notice or demand sent by email as aforesaid shall be deemed to have been given, made or served when sent (provided always that any communication to the Trustee shall only be treated as having been received upon written confirmation of receipt by the Trustee and an automatically generated “read” or “received” receipt shall not constitute such confirmation). Any notice or demand sent by facsimile transmission as aforesaid shall be deemed to have been given, made or served upon receipt provided that in the case of a notice or demand given by facsimile transmission such notice or demand shall forthwith be confirmed by post.
27. |
GOVERNING LAW |
The Trust Deed, the Notes, the Coupons, and any non-contractual obligations arising out of or in connection with them, are governed by, and shall be construed in accordance with, English law.
28. |
SUBMISSION TO JURISDICTION |
28.1 |
Each of the Issuer and the Guarantor irrevocably agrees for the benefit of the Trustee, the Noteholders and the Couponholders that the courts of England are to have exclusive jurisdiction to settle any dispute which may arise out of or in connection with these presents (including a dispute relating to any non-contractual obligations arising out of or in connection with these presents) and accordingly submit to the exclusive jurisdiction of the English courts. Each of the Issuer and the Guarantor waives any objection to the courts of England on the grounds that they are an inconvenient or inappropriate forum. The Trustee, the Noteholders and the Couponholders may take any suit, action or proceeding arising out of or in connection with these presents (including any suit, action or proceedings relating to any non-contractual obligations arising out of or in connection with these presents) (together referred to as Proceedings) against each of the Issuer and the Guarantor in any other court of competent jurisdiction and concurrent Proceedings in any number of jurisdictions. |
28.2 |
The Issuer irrevocably and unconditionally appoints the Guarantor at its registered office for the time being (and in the event of its ceasing so to act will appoint such other person as the Trustee may approve and as the Guarantor may nominate in writing to the Trustee for the purpose) to accept service of process on its behalf in England in respect of any Proceedings and the Guarantor hereby accepts such appointment. The Issuer: |
(a) |
agrees to procure that, so long as any of the Notes remains liable to prescription, there shall be in force an appointment of such a person approved by the Trustee with an office in London with authority to accept service as aforesaid; |
(b) |
agrees that failure by any such person to give notice of such service of process to the Issuer shall not impair the validity of such service or of any judgment based thereon; |
(c) |
consents to the service of process in respect of any Proceedings by the airmailing of copies, postage prepaid, to the Issuer in accordance with Clause 26; and |
(d) |
agrees that nothing in these presents shall affect the right to serve process in any other manner permitted by law. |
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29. |
COUNTERPARTS |
This Trust Deed and any trust deed supplemental hereto may be executed and delivered in counterparts, all of which, taken together, shall constitute one and the same deed and any party to this Trust Deed or any party to any trust deed supplemental hereto may enter into the same by executing and delivering a counterpart.
30. |
CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999 |
A person who is not a party to this Trust Deed or any trust deed supplemental hereto has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Trust Deed or any trust deed supplemental hereto, but this does not affect any right or remedy of a third party which exists or is available apart from that Act.
IN WITNESS whereof this Trust Deed has been executed as a deed by the Issuer, the Guarantor and the Trustee and delivered on the date stated on page 1.
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SCHEDULE 1
TERMS AND CONDITIONS OF THE NOTES
Notes issued by Vodafone International Financing DAC (the “Issuer”) are constituted by a Trust Deed dated 27 July 2020 (such Trust Deed as modified and/or supplemented and/or restated from time to time, the “Trust Deed”) made between the Issuer, Vodafone Group Plc (the “Guarantor”) and The Law Debenture Trust Corporation p.l.c. (the “Trustee”, which expression shall include any successor as trustee).
The Notes and the Coupons (as defined below ) have the benefit of an Agency Agreement dated 27 July 2020 (such Agency Agreement as amended and/or supplemented and/or restated from time to time, the “Agency Agreement”) made between the Issuer, the Guarantor, HSBC Bank plc as issuing and principal paying agent and agent bank (the “Issuing and Principal Paying Agent”, which expression shall include any successor issuing and principal paying agent) and the Trustee. The Issuer and the Guarantor may appoint other paying agents (together with the Issuing and Principal Paying Agent, the “Paying Agents”, which expression shall include any additional or successor paying agents), an exchange agent (the “Exchange Agent”, which expression shall include any successor exchange agent), a registrar (the “Registrar”, which expression shall include any successor registrar) and transfer agents (together with the Registrar, the “Transfer Agents”, which expression shall include any additional or successor transfer agent). The Noteholders (as defined below) and the holders (the “Couponholders”) of the interest coupons (the “Coupons”) relating to interest bearing Notes in bearer form and, where applicable in the case of such Notes, talons for further Coupons (the “Talons”) are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and are deemed to have notice of, and are entitled to the benefit of, those provisions applicable to them of the Agency Agreement and the applicable Final Terms. Any reference herein to “Coupons” or “coupons” shall, unless the context otherwise requires, be deemed to include a reference to “Talons” or “talons”. References in these Terms and Conditions to “Exempt Notes” are to Notes for which no prospectus is required to be published under the EU Prospectus Regulation (as defined below ).
If this Note is not an Exempt Note, the final terms for this Note (or the relevant provisions thereof) are attached to or endorsed on this Note (the “Final Terms”). Part A of the Final Terms completes these Terms and Conditions for the purposes of this Note. References to the “applicable Final Terms” are to Part A of the Final Terms (or the relevant provisions thereof). If this Note is an Exempt Note, the pricing supplement for this Note (or the relevant provisions thereof) are attached to or endorsed on this Note (the “Pricing Supplement”). Part A of the Pricing Supplement completes these Terms and Conditions for the purposes of this Note and may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with these Terms and Conditions, replace or modify these Terms and Conditions for the purposes of this Note. In the case of Exempt Notes, any subsequent reference in these Terms and Conditions to “Final Terms” shall be deemed to include reference to “Pricing Supplement” so far as the context admits.
The Trustee acts for the benefit of the Noteholders and the Couponholders (which expression shall, unless the context otherwise requires, include the holders of the Talons), in accordance with the provisions of the Trust Deed.
As used herein, “Tranche” means Notes which are identical in all respects (including as to listing) and “Series” means a Tranche of Notes together with any further Tranche or Tranches of Notes which are (i) expressed to be consolidated and form a single series and (ii) identical in all respects (including as to listing) except for their respective Issue Dates, Interest Commencement Dates and/or Issue Prices.
Copies of the Trust Deed and the Agency Agreement are available for inspection during normal business hours at the registered office for the time being of the Guarantor (being Vodafone House, The Connection, Newbury, Berkshire RG14 2FN) and of the Trustee (being at Eighth Floor, 100 Bishopsgate, London EC2N 4AG, England) and at the specified office of each of the Paying Agents. In addition, the applicable Final Terms will be available for viewing on the website of The Irish Stock Exchange plc, trading as Euronext Dublin, at https://live.euronext.com or otherwise published in accordance with Regulation (EU) 2017/1129 (the “EU Prospectus Regulation”). If this Note is an Exempt Note, the applicable Pricing Supplement will only be obtainable by a Noteholder holding one or more Notes and such Noteholder must produce evidence satisfactory to the Paying Agent for the time being in London as to the identity of such holder. The statements in these Terms and Conditions include summaries of, and are subject to, the detailed provisions of the Trust Deed. Words and expressions defined in the Trust Deed and/or the Agency Agreement or used in the applicable Final Terms shall have the same meanings where used in these Terms and Conditions unless the context otherwise requires or unless otherwise stated and provided that, in the event of inconsistency between the Agency Agreement and the Trust Deed, the Trust Deed shall prevail and, in the event of inconsistency between the Agency Agreement or the Trust Deed and the applicable Final Terms, the applicable Final Terms will prevail.
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References herein to “RMB Notes” are to Notes denominated in Renminbi. References herein to “Renminbi”, “RMB” and “CNY” are to the lawful currency of the People’s Republic of China (the “PRC”) which, for the purposes of these Terms and Conditions, excludes the Hong Kong Special Administrative Region of the People’s Republic of China, the Macau Special Administrative Region of the People’s Republic of China and Taiwan.
1. |
Form, Denomination and Title |
The Notes are issued in bearer form (“Bearer Notes”, which expression includes Notes that are specified to be Exchangeable Bearer Notes), in registered form (“Registered Notes”) or in bearer form exchangeable for Registered Notes (“Exchangeable Bearer Notes”) in each case in the Specified Denomination(s) shown hereon.
All Registered Notes shall have the same Specified Denomination. Where Exchangeable Bearer Notes are issued, the Registered Notes for which they are exchangeable shall have the same Specified Denomination as the lowest denomination of Exchangeable Bearer Notes.
The Notes may be Fixed Rate Notes, Floating Rate Notes, Zero Coupon Notes, CMS Linked Notes, Inflation Linked Interest Notes or a combination of any of the foregoing, depending upon the Interest Basis shown in the applicable Final Terms.
The Notes may be redeemable at par or may be Inflation Linked Redemption Notes, depending on the Redemption Basis shown in the applicable Final Terms.
The Notes may also be Sustainability-Linked Notes as defined in Condition 4(c).
If this Note is an Exempt Note, this Note may include terms and conditions not contemplated by these Terms and Conditions, in which event the relevant provisions will be included in the applicable Pricing Supplement.
Bearer Notes are serially numbered and are issued with Coupons attached, unless they are Zero Coupon Notes, in which case references to Coupons and Couponholders in these Terms and Conditions are not applicable.
Registered Notes are represented by registered certificates (“Certificates”) and, save as provided in Condition 2(c), each Certificate shall represent the entire holding of Registered Notes by the same holder.
Title to the Bearer Notes and Coupons will pass by delivery. Title to the Registered Notes will pass by registration in the register that the Issuer and the Guarantor will procure to be kept by the Registrar in accordance with the provisions of the Agency Agreement (the “Register”). The Issuer, the Guarantor, any Paying Agent, the Registrar, the Transfer Agents, the Exchange Agent and the Trustee may (to the fullest extent permitted by applicable laws) deem and treat the holder (as defined below) of any Note or Coupon as the absolute owner for all purposes (whether or not the Note or Coupon shall be overdue and notwithstanding any notice of ownership or writing on the Note or Coupon (or on the Certificate representing it) or any notice of previous loss or theft of the Note or Coupon (or that of the related Certificate) or of trust or any interest therein) and shall not be required to obtain any proof thereof or as to the identity of such holder and no person shall be liable for so treating the holder.
In these Terms and Conditions, “Noteholder” means the bearer of any Bearer Note or the person in whose name a Registered Note is registered (as the case may be), “holder” (in relation to a Note or Coupon) means the bearer of any Bearer Note or Coupon or the person in whose name a Registered Note is registered (as the case may be) and capitalised terms have the meanings given to them in the applicable Final Terms, the absence of any such meaning indicating that such term is not applicable to the Notes.
If so specified in the applicable Final Terms, some or all of the relevant Tranche of Notes may immediately be purchased by or on behalf of the Issuer on the Issue Date thereof. Such Notes are referred to as “Retained Notes”. Any Retained Notes may (in each case, together with the related Coupons and Talons, if applicable) be purchased by and held by or for the account of the Issuer, the Guarantor or any other Subsidiary (as defined in the Trust Deed) of the Guarantor and may be sold or otherwise disposed of in whole or in part by private treaty at any time, and shall cease to be Retained Notes to the extent of and upon such sale or disposal.
Retained Notes shall, pending sale or disposal by or on behalf of the Issuer, carry the same rights and be subject in all respects to the same terms and conditions as the other Notes of the relevant Series, except that Retained Notes will not be treated as outstanding for the purposes of determining quorum or voting at meetings of Noteholders, passing a resolution in writing, the giving of consent by way of electronic consents or of considering the interests of the Noteholders save as otherwise provided in the Trust Deed.
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Notes which have ceased to be Retained Notes shall carry the same rights and be subject in all respects to the same terms and conditions as the other Notes of the relevant Series.
Retained Notes will be held by a custodian appointed by the Issuer, the Guarantor or any other Subsidiary of the Guarantor and specified in the applicable Final Terms (the “Custodian”). At the time of such appointment, the Issuer (or the Guarantor or a relevant Subsidiary of the Guarantor, as the case may be), the Trustee and the Custodian will enter into a custody agreement to specify how the Custodian will hold such Retained Notes on behalf of the Issuer.
2. |
Exchanges of Exchangeable Bearer Notes and Transfers of Registered Notes |
(a) |
Exchange of Exchangeable Bearer Notes |
Subject as provided in Condition 2(f), Exchangeable Bearer Notes may be exchanged for the same nominal amount of Registered Notes at the request in writing of the relevant Noteholder (in substantially the same form set out in Schedule 4 of the Agency Agreement) and upon surrender of each Exchangeable Bearer Note to be exchanged, together with all unmatured Coupons relating to it, at the specified office of any Transfer Agent; provided, however, that where an Exchangeable Bearer Note is surrendered for exchange after the Record Date (as defined in Condition 6(c)) for any payment of interest, the Coupon in respect of that payment of interest need not be surrendered with it. Registered Notes may not be exchanged for Bearer Notes. Bearer Notes of one Specified Denomination may not be exchanged for Bearer Notes of another Specified Denomination. Bearer Notes that are not Exchangeable Bearer Notes may not be exchanged for Registered Notes.
(b) |
Transfer of Registered Notes |
One or more Registered Notes may be transferred upon the surrender (at the specified office of the Registrar or any Transfer Agent) of the Certificate representing such Registered Notes to be transferred, together with the form of transfer endorsed on such Certificate, (or another form of transfer substantially in the same form and containing the same representations and certifications (if any), unless otherwise agreed by the Issuer), duly completed and executed and any other evidence as the Registrar or Transfer Agent may reasonably require. In the case of a transfer of part only of a holding of Registered Notes represented by one Certificate, a new Certificate shall be issued to the transferee in respect of the part transferred and a further new Certificate in respect of the balance of the holding not transferred shall be issued to the transferor.
(c) |
Partial Redemption in Respect of Registered Notes |
In the case of a partial redemption of a holding of Registered Notes represented by a single Certificate, a new Certificate shall be issued to the holder in respect of the balance of the holding not redeemed. New Certificates shall only be issued against surrender of the existing Certificates to the Registrar or any Transfer Agent. In the case of a transfer of Registered Notes to a person who is already a holder of Registered Notes, a new Certificate representing the enlarged holding shall only be issued against surrender of the Certificate representing the existing holding.
(d) |
Delivery of New Certificates |
Each new Certificate to be issued pursuant to Conditions 2(a), (b) or (c) above shall only be available for delivery within three business days of receipt of the request for exchange, form of transfer or Change of Control Put Notice (as defined in Condition 7(d)) or Put Notice (as defined in Condition 7(e)) and surrender of the Certificate for exchange. Delivery of the new Certificate(s) shall be made at the specified office of the Transfer Agent or of the Registrar (as the case may be) to whom delivery or surrender of such request for exchange, form of transfer, Change of Control Put Notice, Put Notice or Certificate shall have been made or, at the option of the holder making such delivery or surrender as aforesaid and as specified in the relevant request for exchange, form of transfer, Change of Control Put Notice, Put Notice or other in writing, be mailed by uninsured post at the risk of the holder entitled to the new Certificate to such address as may be so specified, unless such holder requests otherwise and pays in advance to the relevant Transfer Agent the costs of such other method of delivery and/or such insurance as it may specify. In this Condition 2(d), “business day” means a day, other than a Saturday or Sunday, on which banks are open for business in the place of the specified office of the relevant Transfer Agent or the Registrar (as the case may be).
(e) |
Exchange or Transfer Free of Charge |
Exchange and transfer of Notes and Certificates on registration, transfer and exercise of an option or partial redemption shall be effected without charge by or on behalf of the Issuer, the Guarantor, the Registrar or the Transfer Agents, but upon payment of any tax or other governmental charges that may be imposed in relation to it (or the giving of such indemnity as the Registrar or the relevant Transfer Agent may require).
45
(f) |
Closed Periods |
No Noteholder may require the transfer of a Registered Note to be registered or an Exchangeable Bearer Note to be exchanged for one or more Registered Note(s) (i) during the period of 15 days prior to any date on which Notes may be called for redemption by the Issuer at its option pursuant to Condition 7(c), (ii) after any such Note has been called for redemption or (iii) during the period of seven days ending on (and including) any Record Date. An Exchangeable Bearer Note called for redemption may, however, be exchanged for one or more Registered Note(s) in respect of which the Certificate is simultaneously surrendered not later than the relevant Record Date.
3. |
Status of the Notes and the Guarantee |
(a) |
Status of the Notes |
The Notes and any relative Coupons are direct, unconditional and unsecured obligations of the Issuer and rank and will rank pari passu, without any preference among themselves, with all other, present and future, outstanding unsecured and unsubordinated obligations of the Issuer (other than obligations preferred by law).
(b) |
Status of the Guarantee |
The payment of principal and interest in respect of the Notes and all other moneys payable by the Issuer under or pursuant to the Trust Deed has been unconditionally and irrevocably guaranteed by the Guarantor in the Trust Deed (the “Guarantee”). The obligations of the Guarantor under the Guarantee are direct, unconditional and unsecured obligations of the Guarantor and rank and will rank pari passu with all other, present and future, outstanding unsecured and unsubordinated obligations of the Guarantor (other than obligations preferred by law).
4. |
Interest and Sustainability-Linked Notes |
(a) |
Interest on Fixed Rate Notes |
Each Fixed Rate Note bears interest from (and including) the Interest Commencement Date at the rate(s) per annum equal to the Rate(s) of Interest. Interest will be payable in arrear on the Interest Payment Date(s) in each year and on the Maturity Date.
In the case of RMB Notes, if:
(i) |
Interest Payment Date Adjustment is specified as applying in the applicable Final Terms; and |
(ii) |
(x) there is no numerically corresponding day in the calendar month in which an Interest Payment Date should occur or (y) any Interest Payment Date would otherwise fall on a day which is not a Business Day, |
then such Interest Payment Date shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event such Interest Payment Date shall be brought forward to the immediately preceding Business Day.
If the Notes are in definitive form, except (A) in the case of Sustainability-Linked Notes (as defined in Condition 4(c)) where (i) Sustainability-Linked Trigger Event (Interest) is specified as applicable in the applicable Final Terms and (ii) following the occurrence of one or more relevant Sustainability-Linked Trigger Event(s), the Initial Rate of Interest has been increased in accordance with Condition 4(c) or (B) as provided in the applicable Final Terms, the amount of interest payable on each Interest Payment Date in respect of the Interest Period ending on (but excluding) such date will amount to the Fixed Coupon Amount. Payments of interest on any Interest Payment Date will, if so specified in the applicable Final Terms, amount to the Broken Amount so specified.
Except in the case of relevant Notes in definitive form where a Fixed Coupon Amount or Broken Amount is specified in the applicable Final Terms, interest shall be calculated in respect of any period by applying the Rate of Interest to:
(i) |
in the case of Fixed Rate Notes which are represented by a Global Note, the aggregate outstanding nominal amount of the Fixed Rate Notes represented by such Global Note; or |
46
(ii) |
in the case of Fixed Rate Notes in definitive form, the Calculation Amount; |
and, in each case, multiplying such sum by the applicable Fixed Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Fixed Rate Note in definitive form comprises more than one Calculation Amount, the amount of interest payable in respect of such Fixed Rate Note shall be the aggregate of the amounts (determined in the manner provided above) for each Calculation Amount comprising the Specified Denomination without any further rounding.
(b) |
Interest on Floating Rate Notes, CMS Linked Notes and Inflation Linked Interest Notes |
(i) |
Interest Payment Dates |
Each Floating Rate Note, CMS Linked Note and Inflation Linked Interest Note bears interest from (and including) the Interest Commencement Date and such interest will be payable in arrear on either:
(A) |
the Specified Interest Payment Date(s) (each an “Interest Payment Date”) in each year specified in the applicable Final Terms; or |
(B) |
if no Specified Interest Payment Date(s) is/are specified in the applicable Final Terms, each date (each an “Interest Payment Date”) which falls the number of months or other period specified as the Specified Period in the applicable Final Terms after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date. |
Such interest will be payable in respect of each Interest Period. If a Business Day Convention is specified in the applicable Final Terms and (x) if there is no numerically corresponding day in the calendar month in which an Interest Payment Date should occur or (y) if any Interest Payment Date would otherwise fall on a day which is not a Business Day, then, if the Business Day Convention specified is:
(1) |
in any case where Specified Periods are specified in accordance with Condition 4(b)(i)(B), the Floating Rate Convention, such Interest Payment Date (i) in the case of (x) above, shall be the last day that is a Business Day in the relevant month and the provisions of (B) below shall apply mutatis mutandis or (ii) in the case of (y) above, shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event (A) such Interest Payment Date shall be brought forward to the immediately preceding Business Day and (B) each subsequent Interest Payment Date shall be the last Business Day in the month which falls the Specified Period after the preceding applicable Interest Payment Date occurred; or |
(2) |
the Following Business Day Convention, such Interest Payment Date shall be postponed to the next day which is a Business Day; or |
(3) |
the Modified Following Business Day Convention, such Interest Payment Date shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event such Interest Payment Date shall be brought forward to the immediately preceding Business Day; or |
(4) |
the Preceding Business Day Convention, such Interest Payment Date shall be brought forward to the immediately preceding Business Day. |
(ii) |
Rate of Interest for Floating Rate Notes and CMS Linked Notes |
The Rate of Interest payable from time to time in respect of Floating Rate Notes will be determined in the manner specified in the applicable Final Terms. The Rate of Interest payable from time to time in respect of CMS Linked Notes will be determined in accordance with Condition 4(b)(ii)(G).
(A) |
ISDA Determination for Floating Rate Notes |
Where ISDA Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will be the relevant ISDA Rate plus or minus (as indicated in the applicable Final Terms) the Margin (if any). For the purposes of this sub-paragraph (A), “ISDA Rate” for an Interest Period means a rate equal to the Floating Rate that would be determined by the Issuing and Principal Paying Agent under an interest rate swap transaction if the Issuing and Principal Paying Agent were acting as Calculation Agent for that swap transaction under the terms of an agreement incorporating the ISDA Definitions and under which:
47
(1) |
the Floating Rate Option is as specified in the applicable Final Terms; |
(2) |
the Designated Maturity is a period specified in the applicable Final Terms; and |
(3) |
the relevant Reset Date is either (i) if the applicable Floating Rate Option is based on EURIBOR for a currency, the first day of that Interest Period or (ii) in any other case, as specified in the applicable Final Terms. |
For the purposes of this sub-paragraph (A), (i) “Floating Rate”, “Calculation Agent”, “Floating Rate Option”, “Designated Maturity” and “Reset Date” have the meanings given to those terms in the ISDA Definitions, (ii) the definition of “Banking Day” in the ISDA Definitions shall be amended to insert after the words “are open for” in the second line the word “general” and (iii) “Euro-zone” means the region comprised of Member States of the European Union that adopt the single currency in accordance with the Treaty establishing the European Community, as amended by the Treaty on European Union.
(B) |
Screen Rate Determination for Floating Rate Notes – Term Rate |
This Condition 4(b)(ii)(B) applies where the applicable Final Terms specifies both Screen Rate Determination and Term Rate to be “Applicable”. The Rate of Interest for each Interest Period will, subject to Condition 4(b)(ii)(H) and as provided below, be either:
(1) |
the offered quotation; or |
(2) |
the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of the offered quotations, |
(expressed as a percentage rate per annum) for the Reference Rate which appears or appear, as the case may be, on the Relevant Screen Page (or such replacement page on that service which displays the information) as at the Relevant Time on the Interest Determination Date in question plus or minus (as indicated in the applicable Final Terms) the Margin (if any), all as determined by the Issuing and Principal Paying Agent. If five or more of such offered quotations are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the Issuing and Principal Paying Agent for the purpose of determining the arithmetic mean (rounded as provided above) of such offered quotations.
If the Relevant Screen Page is not available or if, in the case of Condition 4(b)(ii)(B)(1) above, no such offered quotation appears or, in the case of Condition 4(b)(ii)(B)(2) above, fewer than three such offered quotations appear, in each case as at the time specified in the preceding paragraph above, the Issuing and Principal Paying Agent shall request each of the Reference Banks to provide the Issuing and Principal Paying Agent with its offered quotation (expressed as a percentage rate per annum) for the Reference Rate, at approximately the Relevant Time, on the Interest Determination Date in question. If two or more of the Reference Banks provide the Issuing and Principal Paying Agent with such offered quotations, the Rate of Interest for such Interest Period shall be the arithmetic mean (rounded if necessary to the fifth decimal place with 0.000005 being rounded upwards) of such offered quotations plus or minus (as appropriate) the Margin (if any), all as determined by the Issuing and Principal Paying Agent.
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If on any Interest Determination Date one only or none of the Reference Banks provides the Issuing and Principal Paying Agent with such offered quotations as provided in the preceding paragraph, the Rate of Interest for the relevant Interest Period shall be the rate per annum which the Issuing and Principal Paying Agent determines as being the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of the rates, as communicated to (and at the request of) the Issuing and Principal Paying Agent by the Reference Banks or any two or more of them, at which such banks were offered, at approximately the Relevant Time, on the relevant Interest Determination Date, deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate by leading banks in, if the Reference Rate is EURIBOR, the Euro-zone inter-bank market or, if the Reference Rate is TIBOR, the Tokyo inter-bank market or, if the Reference Rate is CDOR, the Toronto inter-bank market or, if the Reference Rate is JIBAR, the Johannesburg inter-bank market, as the case may be, plus or minus (as appropriate) the Margin (if any) or, if fewer than two of the Reference Banks provide the Issuing and Principal Paying Agent with such offered rates, the offered rate for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate, or the arithmetic mean (rounded as provided above) of the offered rates for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate, at approximately the Relevant Time, on the relevant Interest Determination Date, any one or more banks (which bank or banks is or are in the opinion of the Guarantor suitable for such purpose) informs the Issuing and Principal Paying Agent it is quoting to leading banks in, if the Reference Rate is EURIBOR, the Euro-zone inter- bank market or, if the Reference Rate is TIBOR, the Tokyo inter-bank market or, if the Reference Rate is CDOR, the Toronto inter-bank market or, if the Reference Rate is JIBAR, the Johannesburg inter-bank market, as the case may be, plus or minus (as appropriate) the Margin (if any), provided that, if the Rate of Interest cannot be determined in accordance with the foregoing provisions of this paragraph, the Rate of Interest shall be determined as at the last preceding Interest Determination Date (though substituting, where a different Margin is to be applied to the relevant Interest Period from that which applied to the last preceding Interest Period, the Margin relating to the relevant Interest Period, in place of the Margin relating to that last preceding Interest Period).
(C) |
Screen Rate Determination for Floating Rate Notes – Overnight Rate – Compounded Daily SONIA – Non-Index Determination |
This Condition 4(b)(ii)(C) applies where the applicable Final Terms specifies: (1) Screen Rate Determination and Overnight Rate to be “Applicable”; (2) Compounded Daily SONIA as the Reference Rate; and (3) Index Determination to be “Not Applicable”.
(a) |
The Rate of Interest for an Interest Accrual Period will, subject to Condition 4(b)(ii)(H) and as provided below, be Compounded Daily SONIA with respect to such Interest Accrual Period plus or minus (as indicated in the applicable Final Terms) the applicable Margin (if any), all as determined by the Issuing and Principal Paying Agent. |
“Compounded Daily SONIA” means, with respect to an Interest Accrual Period, the rate of return of a daily compound interest investment (with the daily Sterling overnight reference rate as reference rate for the calculation of interest) as calculated by the Issuing and Principal Paying Agent as at the relevant Interest Determination Date in accordance with the following formula (and the resulting percentage will be rounded if necessary to the nearest fifth decimal place, with 0.000005 being rounded upwards):
where:
“d”is the number of calendar days in:
(i) |
where “Lag” is specified as the Observation Method in the applicable Final Terms, the relevant Interest Accrual Period; or |
(ii) |
where “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the relevant Observation Period; |
“D”is the number specified as such in the applicable Final Terms (or, if no such number is specified, 365);
“do”means:
(i) |
where “Lag” is specified as the Observation Method in the applicable Final Terms, the number of London Banking Days in the relevant Interest Accrual Period; or |
49
(ii) |
where “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the number of London Banking Days in the relevant Observation Period; |
“i” |
is a series of whole numbers from one to “do”, each representing the relevant London Banking Day in chronological order from, and including, the first London Banking Day in: |
(i) |
where “Lag” is specified as the Observation Method in the applicable Final Terms, the relevant Interest Accrual Period; or |
(ii) |
where “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the relevant Observation Period; |
“London Banking Day” means any day on which commercial banks are open for general business (including dealing in foreign exchange and foreign currency deposits) in London;
“ni” |
for any London Banking Day “i”, means the number of calendar days from (and including) such London Banking Day “i” up to (but excluding) the following London Banking Day; |
“Observation Period” means the period from (and including) the date falling “p” London Banking Days prior to the first day of the relevant Interest Accrual Period to (but excluding) the date falling “p” London Banking Days prior to (A) (in the case of an Interest Period) the Interest Payment Date for such Interest Period or (B) (in the case of any other Interest Accrual Period) the date on which the relevant payment of interest falls due;
“p” |
means: |
(i) |
where “Lag” is specified as the Observation Method in the applicable Final Terms, the number of London Banking Days specified as the “Lag Period” in the applicable Final Terms (or, if no such number is so specified, five London Banking Days); or |
(ii) |
where “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the number of London Banking Days specified as the “Observation Shift Period” in the applicable Final Terms (or, if no such number is specified, five London Banking Days); |
the “SONIA reference rate”, in respect of any London Banking Day (LBDx”), is a reference rate equal to the daily Sterling Overnight Index Average (“SONIA”) rate for such LBDx as provided by the administrator of SONIA to authorised distributors and as then published on the Relevant Screen Page (or, if the Relevant Screen Page is unavailable, as otherwise published by such authorised distributors) on the London Banking Day immediately following such LBDx; and
“SONIAi ”means the SONIA reference rate for:
(i) |
where “Lag” is specified as the Observation Method in the applicable Final Terms, the London Banking Day falling “p” London Banking Days prior to the relevant London Banking Day “i”; or |
(ii) |
where “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the relevant London Banking Day “i”. |
(b) |
Subject to Condition 4(b)(ii)(H), if, where any Rate of Interest is to be calculated pursuant to Condition 4(b)(ii)(C)(a) above, in respect of any London Banking Day on which an applicable SONIA reference rate is required to be determined, such SONIA reference rate is not made available on the Relevant Screen Page or has not otherwise been published by the relevant authorised distributors, then the SONIA reference rate in respect of such London Banking Day shall be the rate determined by the Issuing and Principal Paying Agent as: |
I. |
the sum of (i) the Bank of England’s Bank Rate (the “Bank Rate”) prevailing at 5.00 p.m. (London time) (or, if earlier, close of business) on such London Banking Day; and (ii) the mean of the spread of the SONIA reference rate to the Bank Rate over the previous five London Banking Days in respect |
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of which a SONIA reference rate has been published, excluding the highest spread (or, if there is more than one highest spread, one only of those highest spreads) and lowest spread (or, if there is more than one lowest spread, one only of those lowest spreads); or
II. |
if the Bank Rate under (I)(i) above is not available at the relevant time, either (A) the SONIA reference rate published on the Relevant Screen Page (or otherwise published by the relevant authorised distributors) for the first preceding London Banking Day in respect of which the SONIA reference rate was published on the Relevant Screen Page (or otherwise published by the relevant authorised distributors) or (B) if this is more recent, the latest rate determined under (I) above, |
and, in each case, references to “SONIA reference rate” in Condition 4(b)(ii)(C)(a) above shall be construed accordingly.
(c) |
In the event that the Rate of Interest cannot be determined in accordance with the foregoing provisions of this Condition 4(b)(ii)(C), and without prejudice to Condition 4(b)(ii)(H), the Rate of Interest shall be: |
I. |
that determined as at the last preceding Interest Determination Date on which the Rate of Interest was so determined (though substituting, where a different Margin, Maximum Rate of Interest and/or Minimum Rate of Interest is to be applied to the relevant Interest Accrual Period from that which applied to the last preceding Interest Accrual Period, the Margin, Maximum Rate of Interest and/or Minimum Rate of Interest (as the case may be) relating to the relevant Interest Accrual Period, in place of the Margin, Maximum Rate of Interest and/or Minimum Rate of Interest (as applicable) relating to that last preceding Interest Accrual Period); or |
II. |
if there is no such preceding Interest Determination Date, the initial Rate of Interest which would have been applicable to such Series of Notes for the first scheduled Interest Period had the Notes been in issue for a period equal in duration to the first scheduled Interest Period but ending on (and excluding) the Interest Commencement Date (applying the Margin and, if applicable, any Maximum Rate of Interest and/or Minimum Rate of Interest, applicable to the first scheduled Interest Period), |
in each case as determined by the Issuing and Principal Paying Agent.
(D) |
Screen Rate Determination for Floating Rate Notes – Overnight Rate – Compounded Daily SONIA – Index Determination |
This Condition 4(b)(ii)(D) applies where the applicable Final Terms specifies: (1) Screen Rate Determination and Overnight Rate to be “Applicable”; (2) Compounded Daily SONIA as the Reference Rate; and (3) Index Determination to be “Applicable”.
(a) |
The Rate of Interest for an Interest Accrual Period will, subject to Condition 4(b)(ii)(H) and as provided below, be the Compounded Daily SONIA Rate with respect to such Interest Accrual Period plus or minus (as indicated in the applicable Final Terms) the applicable Margin (if any), all as determined by the Issuing and Principal Paying Agent. |
“Compounded Daily SONIA Rate” means, with respect to an Interest Accrual Period, the rate of return of a daily compound interest investment (with the daily Sterling overnight reference rate as reference rate for the calculation of interest) (expressed as a percentage and rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) determined by the Issuing and Principal Paying Agent by reference to the screen rate or index for compounded daily SONIA rates administered by the administrator of the SONIA reference rate that is published or displayed by such administrator or other information service from time to time on the relevant Interest Determination Date, as further specified in the applicable Final Terms (the “SONIA Compounded Index”) and in accordance with the following formula:
where:
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“d” |
is the number of calendar days from (and including) the day in relation to which SONIA Compounded IndexStart is determined to (but excluding) the day in relation to which SONIA Compounded IndexEnd is determined; |
“London Banking Day” means any day on which commercial banks are open for general business (including dealing in foreign exchange and foreign currency deposits) in London;
“Relevant Number” is the number specified as such in the applicable Final Terms (or, if no such number is specified, five);
“SONIA Compounded IndexStart” means, with respect to an Interest Accrual Period, the SONIA Compounded Index determined in relation to the day falling the Relevant Number of London Banking Days prior to the first day of such Interest Accrual Period; and
“SONIA Compounded IndexEnd” means, with respect to an Interest Accrual Period, the SONIA Compounded Index determined in relation to the day falling the Relevant Number of London Banking Days prior to (A) the Interest Payment Date for such Interest Accrual Period, or (B) such other date on which the relevant payment of interest falls due (but which by its definition or the operation of the relevant provisions is excluded from such Interest Accrual Period).
(b) |
If the relevant SONIA Compounded Index is not published or displayed by the administrator of the SONIA reference rate or other information service by 5.00 p.m. (London time) (or, if later, by the time falling one hour after the customary or scheduled time for publication thereof in accordance with the then-prevailing operational procedures of the administrator of the SONIA reference rate or of such other information service, as the case may be) on the relevant Interest Determination Date, the Compounded Daily SONIA Rate for the applicable Interest Accrual Period for which the SONIA Compounded Index is not available shall be “Compounded Daily SONIA” determined in accordance with Condition 4(b)(ii)(C) above as if “Index Determination” were specified in the applicable Final Terms as being ‘Not Applicable’, and for these purposes: (i) the “Observation Method” shall be deemed to be “Observation Shift” and (ii) the “Observation Shift Period” shall be deemed to be equal to the Relevant Number of London Banking Days, as if those alternative elections had been made in the applicable Final Terms. |
(E) |
Screen Rate Determination for Floating Rate Notes – Overnight Rate – SOFR – Non-Index Determination |
This Condition 4(b)(ii)(E) applies where the applicable Final Terms specifies: (1) Screen Rate Determination and Overnight Rate to be “Applicable”; (2) either Compounded Daily SOFR or Weighted Average SOFR as the Reference Rate; and (3) Index Determination to be “Not Applicable”.
Where the applicable Final Terms specifies the Reference Rate to be Compounded Daily SOFR, the provisions of paragraph (a) below of this Condition 4(b)(ii)(E) apply.
Where the applicable Final Terms specifies the Reference Rate to be Weighted Average SOFR, the provisions of paragraph (b) below of this Condition 4(b)(ii)(E) apply.
(a) |
Compounded Daily SOFR |
Where this paragraph (a) the Rate of Interest for an Interest Accrual Period will, subject to Condition 4(b)(ii)(H) and as provided below, be Compounded Daily SOFR with respect to such Interest Accrual Period plus or minus (as indicated in the applicable Final Terms) the applicable Margin (if any), all as determined by the Issuing and Principal Paying Agent.
“Compounded Daily SOFR” means, with respect to an Interest Accrual Period, the rate of return of a daily compound interest investment (with the daily U.S. dollars secured overnight financing rate as reference rate for the calculation of interest) as calculated by the Issuing and Principal Paying Agent as at the relevant Interest Determination Date in accordance with the following formula (and the resulting percentage will be rounded if necessary to the nearest fifth decimal place, with 0.000005 being rounded upwards):
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where:
“d”is the number of calendar days in:
(i) |
where “Lag” or “Lock-out” is specified as the Observation Method in the applicable Final Terms, the relevant Interest Accrual Period; or |
(ii) |
where “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the relevant Observation Period; |
“D” |
is the number specified as such in the applicable Final Terms (or, if no such number is specified, 360); |
“do” |
means: |
(i) |
where “Lag” or “Lock-out” is specified as the Observation Method in the applicable Final Terms, the number of U.S. Government Securities Business Days in the relevant Interest Accrual Period; or |
(ii) |
where “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the number of U.S. Government Securities Business Days in the relevant Observation Period; |
“i” |
is a series of whole numbers from one to “do”, each representing the relevant U.S. Government Securities Business Day in chronological order from, and including, the first U.S. Government Securities Business Day in: |
(i) |
where “Lag” or “Lock-out” is specified as the Observation Method in the applicable Final Terms, the relevant Interest Accrual Period; or |
(ii) |
where “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the relevant Observation Period; |
“Lock-out Period” means the period from (and including) the day following the Interest Determination Date to (but excluding) the corresponding Interest Payment Date;
“New York Fed’s Website” means the website of the Federal Reserve Bank of New York (or a successor administrator of SOFR) or any successor source;
“ni” |
for any U.S. Government Securities Business Day “i”, means the number of calendar days from (and including) such U.S. Government Securities Business Day “i” up to (but excluding) the following U.S. Government Securities Business Day; |
“Observation Period” means the period from (and including) the date falling “p” U.S. Government Securities Business Days prior to the first day of the relevant Interest Accrual Period to (but excluding) the date falling “p” U.S. Government Securities Business Days prior to (A) (in the case of an Interest Period) the Interest Payment Date for such Interest Period or (B) (in the case of any other Interest Accrual Period) the date on which the relevant payment of interest falls due;
“p” |
means: |
53
(i) |
where “Lag” is specified as the Observation Method in the applicable Final Terms, the number of U.S. Government Securities Business Days specified as the “Lag Period” in the applicable Final Terms (or, if no such number is so specified, five U.S. Government Securities Business Days); |
(ii) |
where “Lock-out” is specified as the Observation Method in the applicable Final Terms, zero U.S. Government Securities Business Days; or |
(iii) |
where “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the number of U.S. Government Securities Business Days specified as the “Observation Shift Period” in the applicable Final Terms (or, if no such number is specified, five U.S. Government Securities Business Days); |
“Reference Day” means each U.S. Government Securities Business Day in the relevant Interest Accrual Period, other than any U.S. Government Securities Business Day in the Lock-out Period;
“SOFR” in respect of any U.S. Government Securities Business Day (“USBDx”), is a reference rate equal to the daily secured overnight financing rate as provided by the Federal Reserve Bank of New York, as the administrator of such rate (or any successor administrator of such rate) on the New York Fed’s Website, in each case at or around 3.00 p.m. (New York City time) on the U.S. Government Securities Business Day immediately following such USBDx;
“SOFRi” means the SOFR for:
(i) |
where “Lag” is specified as the Observation Method in the applicable Final Terms, the U.S. Government Securities Business Day falling “p” U.S. Government Securities Business Days prior to the relevant U.S. Government Securities Business Day “i”; |
(ii) |
where “Lock-out” is specified as the Observation Method in the applicable Final Terms: |
(I) |
in respect of each U.S. Government Securities Business Day “i” that is a Reference Day, the SOFR in respect of the U.S. Government Securities Business Day immediately preceding such Reference Day; or |
(II) |
in respect of each U.S. Government Securities Business Day “i” that is not a Reference Day (being a U.S. Government Securities Business Day in the Lock-out Period), the SOFR in respect of the U.S. Government Securities Business Day immediately preceding the last Reference Day of the relevant Interest Accrual Period (such last Reference Day coinciding with the Interest Determination Date); or |
(iii) |
where “Observation Shift” is specified as the Observation Method in the applicable Final Terms, the relevant U.S. Government Securities Business Day “i”; and |
“U.S. Government Securities Business Day” means any day except for a Saturday, Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities.
(b) |
Weighted Average SOFR |
Where this paragraph (b) applies, the Rate of Interest for an Interest Accrual Period will, subject to Condition 4(b)(ii)(H) and as provided below, be the Weighted Average SOFR with respect to such Interest Accrual Period plus or minus (as indicated in the applicable Final Terms) the applicable Margin (if any), all as calculated by the Issuing and Principal Paying Agent as of the Interest Determination Date (and rounded, if necessary, to the fifth decimal place, with 0.000005 being rounded upwards), where:
“Weighted Average SOFR” means:
54
(i) |
where “Lag” is specified as the Observation Method in the applicable Final Terms, the arithmetic mean of the SOFR in effect for each calendar day during the relevant Observation Period, calculated by multiplying each relevant SOFR by the number of calendar days such rate is in effect, determining the sum of such products and dividing such sum by the number of calendar days in the relevant Observation Period. For these purposes, the SOFR in effect for any calendar day which is not a U.S. Government Securities Business Day shall be deemed to be the SOFR in effect for the U.S. Government Securities Business Day immediately preceding such calendar day; and |
(ii) |
where “Lock-out” is specified as the Observation Method in the applicable Final Terms, the arithmetic mean of the SOFR in effect for each calendar day during the relevant Interest Accrual Period, calculated by multiplying each relevant SOFR by the number of days such rate is in effect, determining the sum of such products and dividing such sum by the number of calendar days in the relevant Interest Accrual Period, provided however that for any calendar day of such Interest Accrual Period falling in the Lock-out Period, the relevant SOFR for each day during that Lock-out Period will be deemed to be the SOFR in effect for the Reference Day immediately preceding the first day of such Lock-out Period. For these purposes, the SOFR in effect for any calendar day which is not a U.S. Government Securities Business Day shall, subject to the proviso above, be deemed to be the SOFR in effect for the U.S. Government Securities Business Day immediately preceding such calendar day. |
Defined terms used in this paragraph (b) and not otherwise defined herein have the meanings given to them in paragraph (a) above of this Condition 4(b)(ii)(D).
(c) |
SOFR Unavailable |
Subject to Condition 4(b)(ii)(H), if, where any Rate of Interest is to be calculated pursuant to this Condition 4(b)(ii)(E), in respect of any U.S. Government Securities Business Day in respect of which an applicable SOFR is required to be determined, such SOFR is not available, such SOFR shall be the SOFR for the first preceding U.S. Government Securities Business Day in respect of which the SOFR was published on the New York Fed’s Website.
In the event that the Rate of Interest cannot be determined in accordance with the foregoing provisions of this Condition 4(b)(ii)(E) but without prejudice to Condition 4(b)(ii)(H), the Rate of Interest shall be calculated in accordance, mutatis mutandis, with the provisions of Condition 4(b)(ii)(C)(c).
(F) |
Screen Rate Determination for Floating Rate Notes – Overnight Rate – SOFR – Index Determination |
This Condition 4(b)(ii)(F) applies where the applicable Final Terms specifies: (1) Screen Rate Determination and Overnight Rate to be “Applicable”; (2) Compounded Daily SOFR as the Reference Rate; and (3) Index Determination to be “Applicable”.
(a) |
The Rate of Interest for an Interest Accrual Period will, subject to Condition 4(b)(ii)(H) and as provided below, be the Compounded SOFR with respect to such Interest Accrual Period plus or minus (as indicated in the applicable Final Terms) the applicable Margin (if any), all as determined by the Issuing and Principal Paying Agent. |
“Compounded SOFR” means, with respect to an Interest Accrual Period, the rate (expressed as a percentage and rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) determined by the Issuing and Principal Paying Agent in accordance with the following formula:
where:
55
“dc” |
is the number of calendar days from (and including) the day in relation to which SOFR IndexStart is determined to (but excluding) the day in relation to which SOFR IndexEnd is determined; |
“Relevant Number” is the number specified as such in the applicable Final Terms (or, if no such number is specified, five);
“SOFR” means the daily secured overnight financing rate as provided by the SOFR Administrator on the SOFR Administrator’s Website;
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of SOFR);
“SOFR Administrator’s Website” means the website of the SOFR Administrator, or any successor source;
“SOFR Index”, with respect to any U.S. Government Securities Business Day, means the SOFR index value as published by the SOFR Administrator as such index appears on the SOFR Administrator’s Website at or around 3.00 p.m. (New York time) on such U.S. Government Securities Business Day (the “SOFR Determination Time”);
“SOFR IndexStart”, with respect to an Interest Accrual Period, is the SOFR Index value for the day which is the Relevant Number of U.S. Government Securities Business Days preceding the first day of such Interest Accrual Period;
“SOFR IndexEnd”, with respect to an Interest Accrual Period, is the SOFR Index value for the day which is the Relevant Number of U.S. Government Securities Business Days preceding (A) the Interest Payment Date for such Interest Accrual Period, or (B) such other date on which the relevant payment of interest falls due (but which by its definition or the operation of the relevant provisions is excluded from such Interest Accrual Period); and
“U.S. Government Securities Business Day” means any day except for a Saturday, Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities.
(b) |
If, as at any relevant SOFR Determination Time, the relevant SOFR Index is not published or displayed on the SOFR Administrator’s Website by the SOFR Administrator, the Compounded SOFR for the applicable Interest Accrual Period for which the relevant SOFR Index is not available shall be “Compounded Daily SOFR” determined in accordance with Condition 4(b)(ii)(E) above as if “Index Determination” were specified in the applicable Final Terms as being ‘Not Applicable’, and for these purposes: (i) the “Observation Method” shall be deemed to be “Observation Shift” and (ii) the “Observation Shift Period” shall be deemed to be equal to the Relevant Number of U.S. Government Securities Business Days, as if such alternative elections had been made in the applicable Final Terms. |
(G) |
Rate of Interest for CMS Linked Notes |
The Rate of Interest for each Interest Period will, subject as provided below, be determined by reference to the following formula:
[CMS Rate + Margin] x Gearing Factor
Where:
“CMS Rate” means, subject as provided below, the Relevant Swap Rate (expressed as a percentage rate per annum) for swap transactions in the Reference Currency with a maturity of the CMS Designated Maturity which appears on the Relevant Screen Page as at the Relevant Time on the Interest Determination Date in question, all as determined by the Calculation Agent and as specified in the applicable Final Terms.
“Gearing Factor” has the meaning specified in the applicable Final Terms.
“Margin” has the meaning specified in the applicable Final Terms.
56
If (for the purposes of determining the applicable CMS Rate) the Relevant Screen Page is not available, the Calculation Agent shall request each of the CMS Reference Banks to provide the Calculation Agent with its quotation for the Relevant Swap Rate (expressed as a percentage rate per annum) at approximately the Relevant Time on the Interest Determination Date in question. If three or more of the CMS Reference Banks provide the Calculation Agent such quotations, the CMS Rate for such Interest Period shall be the arithmetic mean rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of the quotations, eliminating the highest (or, if there is more than one highest quotation, one only of such quotations) and the lowest (or, if there is more than one lowest quotation, one only of such quotations).
If on any Interest Determination Date less than three or none of the CMS Reference Banks provides the Calculation Agent with such quotations as provided in the preceding paragraph, the Rate of Interest shall be determined as at the last preceding Interest Determination Date (though substituting, where a different Margin is to be applied to the relevant Interest Period from that which applied to the last preceding Interest Period, the Margin relating to the relevant Interest Period, in place of the Margin relating to that last preceding Interest Period).
(H) |
Benchmark Discontinuation |
This Condition 4(b)(ii)(H) applies only to (i) Floating Rate Notes where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined and (ii) CMS Linked Notes, unless Benchmark Discontinuation is specified in the applicable Final Terms to be “Not Applicable”.
If the applicable Final Terms specifies Benchmark Replacement to be “Applicable”, the provisions of Condition 4(b)(ii)(H)(a) apply, together with the other provisions of this Condition 4(b)(ii)(H) (other than Condition 4(b)(ii)(H)(b)).
If the applicable Final Terms specifies Benchmark Transition to be “Applicable”, the provisions of Condition 4(b)(ii)(H)(b) apply, together with the other provisions of this Condition 4(b)(ii)(H) (other than Condition 4(b)(ii)(H)(a)).
(a) |
Benchmark Replacement |
(i) |
Guarantor Determination and Independent Adviser |
If a Benchmark Discontinuation Event occurs in relation to an Original Reference Rate at any time when any Rate of Interest (or any component part thereof) remains to be determined by reference to such Original Reference Rate, then:
(a) |
the Guarantor shall use its reasonable endeavours to appoint and consult with an Independent Adviser, as soon as reasonably practicable, with a view to the Guarantor (acting in good faith and in a commercially reasonable manner) determining a Successor Rate, failing which an Alternative Rate (in accordance with Condition 4(b)(ii)(H)(ii)) and, in either case, an Adjustment Spread (in accordance with Condition 4(b)(ii)(D)(iii)) and any Benchmark Amendments (in accordance with Condition 4(b)(ii)(H)(iv)), by no later than five Business Days prior to the first Interest Determination Date that (A) falls after the Benchmark Replacement Date relating to such Benchmark Discontinuation Event, and (B) relates to an Interest Period for which the Rate of Interest (or any component part thereof) is to be determined by reference to such Original Reference Rate (the “IA Determination Cut-off Date”); and |
(b) |
if the Guarantor is unable to appoint an Independent Adviser prior to the relevant IA Determination Cut-off Date in accordance with Condition 4(b)(ii)(H)(i)(a), the Guarantor (acting in good faith and in a commercially reasonable manner) may determine a Successor Rate, failing which an Alternative Rate (in accordance with Condition 4(b)(ii)(H)(ii)) and, in either case, an Adjustment Spread (in accordance with Condition 4(b)(ii)(H)(iii)) and any Benchmark Amendments (in accordance with Condition 4(b)(ii)(H)(iv)), by no later than the first Interest Determination Date that (A) falls after the Benchmark Replacement Date relating to such Benchmark Discontinuation Event, and (B) relates to an Interest Period for |
57
which the Rate of Interest (or any component part thereof) is to be determined by reference to such Original Reference Rate.
An Independent Adviser appointed pursuant to this Condition 4(b)(ii)(D)(i) shall act in good faith and in a commercially reasonable manner and (in the absence of bad faith or fraud) shall have no liability whatsoever to the Trustee, the Issuing and Principal Paying Agent, any Calculation Agent, any other agents under the Agency Agreement (together with the Issuing and Principal Paying Agent and any Calculation Agent, the “Agents” and each an ”Agent”), the Noteholders or the Couponholders for any advice given to the Issuer and the Guarantor in connection with any determination made by the Guarantor pursuant to this Condition 4(b)(ii)(D).
(ii) |
Successor Rate or Alternative Rate |
If the Guarantor (in accordance with Condition 4(b)(ii)(H)(i)) determines that:
(a) |
there is a Successor Rate, then such Successor Rate and the applicable Adjustment Spread shall subsequently be used in place of the Original Reference Rate to determine the relevant Rate of Interest (or the relevant component part thereof) for all relevant future payments of interest on the Notes (subject to Condition 4(b)(ii)(H)(v) and to the further operation of this Condition 4(b)(ii)(H)); or |
(b) |
there is no Successor Rate but that there is an Alternative Rate, then such Alternative Rate shall (subject to adjustment as provided in Condition 4(b)(ii)(H)(iii)) subsequently be used in place of the Original Reference Rate to determine the relevant Rate of Interest (or the relevant component part thereof) for all relevant future payments of interest on the Notes (subject to Condition 4(b)(ii)(H)(v) and to the further operation of this Condition 4(b)(ii)(H)). |
(iii) |
Adjustment Spread |
The Adjustment Spread (or the formula or methodology for determining the Adjustment Spread) shall be applied to the Successor Rate or the Alternative Rate (as the case may be).
If the Guarantor (in accordance with Condition 4(b)(ii)(H)(i)) is unable to determine the quantum of, or a formula or methodology for determining, an Adjustment Spread, then the Successor Rate or the Alternative Rate (as the case may be) will be used as described in Condition 4(b)(ii)(H)(ii) without application of any Adjustment Spread (subject to Condition 4(b)(ii)(H)(v) and to the further operation of this Condition 4(b)(ii)(H)).
(iv) |
Benchmark Amendments |
If any Successor Rate or Alternative Rate and, in either case, the applicable Adjustment Spread is determined in accordance with this Condition 4(b)(ii)(H) and the Guarantor (in accordance with Condition 4(b)(ii)(H)(i)) determines (a) that amendments to these Terms and Conditions, the Agency Agreement, (if applicable) any calculation agency agreement (a “Calculation Agency Agreement”) and/or the Trust Deed (including, without limitation, amendments to the definitions of Day Count Fraction, Business Day or Relevant Screen Page) are necessary to follow market practice or to ensure the proper operation of such Successor Rate or Alternative Rate and, in either case, the applicable Adjustment Spread (or any combination thereof) (such amendments, the “Benchmark Amendments”) and (b) the terms of the Benchmark Amendments, then the Issuer and the Guarantor shall, subject to (A) Condition 4(b)(ii)(H)(v) and (B) giving notice thereof in accordance with Condition 4(b)(ii)(H)(vi), without any requirement for the consent or approval of the Noteholders or the Couponholders, vary these Terms and Conditions, the Agency Agreement, the relevant Calculation Agency Agreement and/or the Trust Deed (as applicable) to give effect to such Benchmark Amendments with effect from the date specified in such notice.
58
At the request of the Guarantor, but subject to receipt by the Trustee and each of the Agents of a certificate signed by two Authorised Signatories of the Guarantor pursuant to Condition 4(b)(ii)(H)(vi), the Trustee and/or each relevant Agent (as applicable) shall (at the expense of the Guarantor), without any requirement for the consent or approval of the Noteholders or the Couponholders, be obliged to concur with the Issuer and the Guarantor in using its reasonable endeavours to effect any Benchmark Amendments (including, inter alia, by the execution of a deed or agreement supplemental to or amending the Trust Deed and/or the Agency Agreement and/or the relevant Calculation Agency Agreement, as applicable) and neither the Trustee nor any Agent shall be liable to any party for any consequences thereof, provided that neither the Trustee nor any Agent shall be obliged so to concur if, in the sole opinion of the Trustee or the relevant Agent (as applicable), doing so would impose more onerous obligations upon it or expose it to any additional duties, responsibilities or liabilities or reduce the protective provisions afforded to the Trustee or the relevant Agent, as applicable, in these Terms and Conditions, the Trust Deed, the Agency Agreement or any Calculation Agency Agreement (including, for the avoidance of doubt, any supplemental trust deed or supplemental agency agreement) in any way.
(v) |
Benchmark Replacement Date |
Notwithstanding any other provision of this Condition 4(b)(ii)(H), following the occurrence of any Benchmark Discontinuation Event:
(1) |
no Successor Rate or Alternative Rate shall be used in place of the relevant Original Reference Rate; and |
(2) |
no Adjustment Spread or Benchmark Amendments shall take effect, |
until the first Interest Determination Date that (A) falls after the Benchmark Replacement Date relating to such Benchmark Discontinuation Event and (B) relates to an Interest Period for which the Rate of Interest (or any component part thereof) is to be determined by reference to the Original Reference Rate.
(b) |
Benchmark Transition |
If a Benchmark Transition Event and its related Benchmark Replacement Date occurs in relation to an Original Reference Rate at any time when any Rate of Interest (or any component part thereof) remains to be determined by reference to such Original Reference Rate, then the following provisions shall apply.
(i) |
Independent Adviser |
The Guarantor shall use its reasonable endeavours to appoint and consult with an Independent Adviser, as soon as reasonably practicable, with a view to the Guarantor (acting in good faith and in a commercially reasonable manner) determining the Benchmark Replacement which will replace such Original Reference Rate for all purposes relating to the Notes in respect of all determinations on such date and for all determinations on all subsequent dates (subject to any subsequent application of this Condition 4(b)(ii)(H)(b) with respect to such Benchmark Replacement) and any Benchmark Replacement Conforming Changes.
Any Benchmark Replacement so determined by the Guarantor shall have effect for any subsequent determination of any relevant Rate of Interest (subject to any further application of this Condition 4(b)(ii)(H)(b) with respect to such Benchmark Replacement), subject, if any associated Benchmark Replacement Conforming Changes are required in connection therewith, to such Benchmark Replacement Conforming Changes becoming effective in accordance with the following provisions.
If, notwithstanding the Guarantor’s reasonable endeavours, the Guarantor is unable to appoint and consult with an Independent Adviser in accordance with the foregoing paragraph, the Guarantor shall nevertheless be entitled, acting in good faith and in a commercially reasonable manner, to make any and all determinations expressed to be made by the Guarantor pursuant to this Condition 4(b)(ii)(H)(b), notwithstanding that such determinations are not made following consultation with an Independent Adviser. If, however, the Guarantor is unable to determine a Benchmark Replacement in accordance with this Condition 4(b)(ii)(H)(b), the provisions of Condition 4(b)(ii)(H)(d) below shall apply.
59
An Independent Adviser appointed pursuant to the Condition 4(b)(ii)(H)(b)(i) shall act in good faith and in a commercially reasonable manner and (in the absence of bad faith or fraud) shall have no liability whatsoever to the Trustee, the Agents (as defined in Condition 4(b)(ii)(H)(a)(i)), the Noteholders or the Couponholders for any advice given to the Issuer and the Guarantor in connection with any determination made by the Guarantor pursuant to this Condition 4(b)(ii)(H)(b).
(ii) |
Benchmark Replacement Conforming Changes |
If the Guarantor, following consultation with the Independent Adviser (if appointed), considers it is necessary to make Benchmark Replacement Conforming Changes, the Guarantor shall, in consultation with the Independent Adviser (if appointed), determine the terms of such Benchmark Replacement Conforming Changes and shall, subject to giving notice in accordance with Condition 4(b)(ii)(H)(c) below (but without any requirement for the consent or approval of Noteholders), vary these Terms and Conditions, the Agency Agreement, (if applicable) any calculation agency agreement (a “Calculation Agency Agreement”) and/or the Trust Deed to give effect to such Benchmark Replacement Conforming Changes with effect from the date specified in such notice.
At the request of the Guarantor, but subject to receipt by the Trustee and each of the Agents of a certificate signed by two Authorised Signatories of the Guarantor pursuant to Condition 4(b)(ii)(H)(c), the Trustee and/or each relevant Agent (as applicable) shall (at the expense of the Guarantor), without any requirement for the consent or approval of the Noteholders or the Couponholders, be obliged to concur with the Issuer and the Guarantor in using its reasonable endeavours to effect any Benchmark Replacement Conforming Changes (including, inter alia, by the execution of a deed or agreement supplemental to or amending the Trust Deed and/or the Agency Agreement and/or the relevant Calculation Agency Agreement, as applicable) and neither the Trustee nor any Agent shall be liable to any party for any consequences thereof, provided that neither the Trustee nor any Agent shall be obliged so to concur if, in the sole opinion of the Trustee or the relevant Agent (as applicable), doing so would impose more onerous obligations upon it or expose it to any additional duties, responsibilities or liabilities or reduce the protective provisions afforded to the Trustee or the relevant Agent, as applicable, in these Terms and Conditions, the Trust Deed, the Agency Agreement or any Calculation Agency Agreement (including, for the avoidance of doubt, any supplemental trust deed or supplemental agency agreement) in any way.
(c) |
Notification of Successor Rate, Alternative Rate, Adjustment Spread or Benchmark Replacement (as applicable) and any Benchmark Amendments or Benchmark Replacement Conforming Changes (as applicable) |
Following a Benchmark Discontinuation Event or a Benchmark Transition Event (as applicable) and the determination of any Successor Rate, Alternative Rate, Adjustment Spread, Benchmark Replacement, Benchmark Amendments and/or Benchmark Replacement Conforming Changes (as applicable) pursuant to the provisions of this Condition 4(b)(ii)(D) (and in any event prior to any Successor Rate, Alternative Rate, Adjustment Spread, Benchmark Replacement, Benchmark Amendments and/or Benchmark Replacement Conforming Changes (as applicable) taking effect), the Guarantor will promptly notify the Trustee, the Agents and, in accordance with Condition 14, the Noteholders, of any such Successor Rate, Alternative Rate, Adjustment Spread, Benchmark Replacement and/or the specific terms of any Benchmark Amendments or Benchmark Replacement Conforming Changes (as applicable) so determined under this Condition 4(b)(ii)(D). Such notice shall be irrevocable and shall specify the effective date of the Benchmark Amendments or Benchmark Replacement Conforming Changes (as applicable) (if any).
Prior to any Successor Rate, Alternative Rate, Adjustment Spread, Benchmark Replacement, Benchmark Amendments and/or Benchmark Replacement Conforming Changes (as applicable) taking effect, the Guarantor shall deliver to the Trustee and the Agents a certificate signed by two Authorised Signatories of the Guarantor:
60
(1) |
confirming (a) that a Benchmark Discontinuation Event or a Benchmark Transition Event (as applicable) and, in either case, the related Benchmark Replacement Date have occurred, (b) the Successor Rate or, as the case may be, the Alternative Rate, (c) the applicable Adjustment Spread, (d) the Benchmark Replacement and (e) the specific terms of any Benchmark Amendments or Benchmark Replacement Conforming Changes (as applicable), in each case as determined in accordance with the provisions of this Condition 4(b)(ii)(H); and |
(2) |
certifying that the Benchmark Amendments or Benchmark Replacement Conforming Changes (as applicable) are necessary to follow market practice or, as applicable, to ensure the proper operation of such Successor Rate or Alternative Rate and (in either case) the applicable Adjustment Spread or such Benchmark Replacement or any combination thereof (as applicable). |
The Trustee and the Agents shall be entitled to rely on such certificate (without enquiry or liability to any person) as sufficient evidence thereof.
The Successor Rate or Alternative Rate and the Adjustment Spread, the Benchmark Replacement and the Benchmark Amendments and/or Benchmark Replacement Conforming Changes (as applicable) (if any) specified in such certificate will (in the absence of manifest error in the determination of the Successor Rate or Alternative Rate and the Adjustment Spread, the Benchmark Replacement and the Benchmark Amendments and/or Benchmark Replacement Conforming Changes (if any) and without prejudice to the Trustee’s and each Agent’s ability to rely on such certificate as aforesaid and subject to Condition 4(b)(ii)(H)(v)) be binding on the Issuer, the Guarantor, the Trustee, the Agents, the Noteholders and the Couponholders as of their effective date.
(d) |
Fallbacks |
Without prejudice to the obligations of the Issuer and the Guarantor under this Condition 4(b)(ii)(H), the Original Reference Rate and the fallback provisions provided for in (in the case of Floating Rate Notes) Conditions 4(b)(ii)(B) to 4(b)(ii)(F) or (in the case of CMS Linked Notes) Condition 4(b)(ii)(G) will continue to apply unless and until (a) a Benchmark Discontinuation Event and/or a Benchmark Transition Event in relation to the Original Reference Rate and (b) a related Benchmark Replacement Date have occurred.
If, following the occurrence of a Benchmark Replacement Date in respect of the Original Reference Rate and in relation to the determination of the Rate of Interest on the relevant Interest Determination Date:
(i) |
(in the case of a Benchmark Discontinuation Event) no Successor Rate or Alternative Rate (as applicable) is determined in accordance with this Condition 4(b)(ii)(H)(a) by such Interest Determination Date; or |
(ii) |
(in the case of a Benchmark Transition Event) no Benchmark Replacement is determined in accordance with Condition 4(b)(ii)(H)(b), |
the Original Reference Rate will continue to apply for the purposes of determining such Rate of Interest on such Interest Determination Date, with the effect that the fallback provisions provided for in (in the case of Floating Rate Notes) Condition 4(b)(ii)(B) to 4(b)(ii)(F) or (in the case of CMS Linked Notes) Condition 4(b)(ii)(G) will (if applicable) continue to apply to such determination.
For the avoidance of doubt, this Condition 4(b)(ii)(H) shall apply to the determination of the Rate of Interest on the relevant Interest Determination Date only, and the Rate of Interest applicable to any subsequent Interest Period(s) is subject to the subsequent operation of, and to adjustment as provided in, this Condition 4(b)(ii)(H).
(iii) |
Rate of Interest for Inflation Linked Interest Notes |
61
The Rate of Interest in respect of Inflation Linked Interest Notes for each Interest Period will be as specified in the applicable Final Terms. Amounts of interest payable in respect of Inflation Linked Interest Notes determined by reference to the applicable Rate of Interest shall be subject to adjustment in accordance with Condition 5.
(iv) |
Minimum Rate of Interest and/or Maximum Rate of Interest |
If the applicable Final Terms specifies a Minimum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the provisions of sub-paragraph (ii) above is less than such Minimum Rate of Interest, the Rate of Interest for such Interest Period shall be such Minimum Rate of Interest.
If the applicable Final Terms specifies a Maximum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the provisions of sub-paragraph (ii) above is greater than such Maximum Rate of Interest, the Rate of Interest for such Interest Period shall be such Maximum Rate of Interest.
(v) |
Determination of Rate of Interest and calculation of Interest Amounts |
The Issuing and Principal Paying Agent, in the case of Floating Rate Notes, and the Calculation Agent, in the case of CMS Linked Notes and Inflation Linked Interest Notes, will at or as soon as practicable after each time at which the Rate of Interest is to be determined, determine the Rate of Interest for the relevant Interest Period (or other Interest Accrual Period). In the case of CMS Linked Notes and Inflation Linked Interest Notes, the Calculation Agent will cause the Rate of Interest for the relevant Interest Period to be notified to the Issuer, the Guarantor and the Issuing and Principal Paying Agent as soon as practicable after calculating the same.
The Issuing and Principal Paying Agent will calculate the amount of interest (the “Interest Amount”) payable on the Floating Rate Notes, CMS Linked Notes or Inflation Linked Interest Notes for the relevant Interest Period (or other Interest Accrual Period) by applying the Rate of Interest to:
(A) |
in the case of Floating Rate Notes, CMS Linked Notes or Inflation Linked Interest Notes which are represented by a Global Note, the aggregate outstanding nominal amount of the Notes represented by such Global Note; or |
(B) |
in the case of Floating Rate Notes, CMS Linked Notes or Inflation Linked Interest Notes in definitive form, the Calculation Amount; |
and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Floating Rate Note, a CMS Linked Note or an Inflation Linked Interest Note in definitive form comprises more than one Calculation Amount, the Interest Amount payable in respect of such Note shall be the aggregate of the amounts (determined in the manner provided above) for each Calculation Amount comprising the Specified Denomination without any further rounding.
(vi) |
Linear Interpolation |
Where Linear Interpolation is specified as applicable in respect of an Interest Period in the applicable Final Terms, the Rate of Interest for such Interest Period shall be calculated by the Issuing and Principal Paying Agent by straight line linear interpolation by reference to two rates based on the relevant Reference Rate (where Screen Rate Determination is specified as applicable in the applicable Final Terms) or the relevant Floating Rate Option (where ISDA Determination is specified as applicable in the applicable Final Terms), one of which shall be determined as if the Designated Maturity were the period of time for which rates are available next shorter than the length of the relevant Interest Period and the other of which shall be determined as if the Designated Maturity were the period of time for which rates are available next longer than the length of the relevant Interest Period provided however that if there is no rate available for a period of time next shorter or, as the case may be, next longer, then the Issuing and Principal Paying Agent shall determine such rate at such time and by reference to such sources as it determines appropriate.
“Designated Maturity” means, in relation to Screen Rate Determination, the period of time designated in the Reference Rate.
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(vii) |
Notification of Rate of Interest and Interest Amounts |
(A) |
Except where the applicable Final Terms specifies both Screen Rate Determination and Overnight Rate to be “Applicable”, the Issuing and Principal Paying Agent will cause the Rate of Interest and each Interest Amount for each Interest Period and the relevant Interest Payment Date to be notified to the Issuer and the Guarantor and any stock exchange on which the relevant Floating Rate Notes, CMS Linked Notes or Inflation Linked Interest Notes are for the time being listed and notice thereof to be published in accordance with Condition 14 as soon as possible after their determination but in no event later than the fourth London Business Day thereafter. Each Interest Amount and Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without prior notice in the event of an extension or shortening of the Interest Period. Any such amendment will, if the relevant Notes are to be listed on a stock exchange and the rules of such stock exchange so require, be promptly notified to each such stock exchange on which the relevant Floating Rate Notes, CMS Linked Notes or Inflation Linked Interest Notes are for the time being listed and to the Noteholders in accordance with Condition 14. |
(B) |
Where the applicable Final Terms specifies both Screen Rate Determination and Overnight Rate to be “Applicable”, the Issuing and Principal Paying Agent will cause the Rate of Interest and each Interest Amount for each Interest Accrual Period and the relevant Interest Payment Date to be notified to the Issuer and any stock exchange on which the relevant Floating Rate Notes are for the time being listed and notice thereof to be published in accordance with Condition 14 as soon as possible after their determination but in no event later than the second London Business Day thereafter. Each Interest Amount and Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without prior notice in the event of an extension or shortening of the relevant Interest Accrual Period. Any such amendment will, if the relevant Notes are to be listed on a stock exchange and the rules of such stock exchange so require, be promptly notified to each such stock exchange on which the relevant Floating Rate Notes are for the time being listed and to the Noteholders in accordance with Condition 14. |
For the purposes of this Condition 4(b)(vii), the expression “London Business Day” means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for business in London.
(viii) |
Certificates to be final |
All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 4, whether by the Issuing and Principal Paying Agent or, if applicable, the Calculation Agent shall (in the absence of manifest error) be binding on the Issuer, the Guarantor, the Trustee, the Issuing and Principal Paying Agent, the Calculation Agent (if applicable), the other Paying Agents and all Noteholders and Couponholders and (in the absence of wilful default and fraud) no liability to the Issuer, the Guarantor, the Trustee, the Noteholders or the Couponholders shall attach to the Issuing and Principal Paying Agent or, if applicable, the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to such provisions.
(c) |
Sustainability-Linked Trigger Event(s) |
This Condition 4(c) applies to (i) Fixed Rate Notes in respect of which the applicable Final Terms indicates that Sustainability- Linked Trigger Event (Interest) is applicable or (ii) any Notes in respect of which the applicable Final Terms indicates that Sustainability-Linked Trigger Event (Premium) is applicable (“Sustainability-Linked Notes”).
If Sustainability-Linked Trigger Event (Interest) is specified as applicable in the applicable Final Terms, for any Interest Period commencing on or after the first Interest Payment Date immediately following the occurrence of one or more relevant Sustainability-Linked Trigger Event(s), the Initial Rate of Interest shall be increased by the relevant Sustainability-Linked Step Up Margin(s).
If Sustainability-Linked Trigger Event (Premium) is specified as applicable in the applicable Final Terms, following the occurrence of one or more relevant Sustainability-Linked Trigger Event(s), the Issuer shall pay to the holder of each Note an amount equal to the relevant Sustainability-Linked Premium Amount(s) on the relevant Sustainability-Linked Premium Payment Date.
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The Issuer will cause: (i) the occurrence of any relevant Sustainability-Linked Trigger Event; and (ii) (unless the relevant Sustainability-Linked Trigger Event has previously occurred and been notified to the Issuing and Principal Paying Agent, the Trustee and the Noteholders as required by this Condition 4(c)) the satisfaction of the Customer GHG Savings Condition, the Female Management and Senior Leadership Condition, the M-Pesa Customers Condition, the Vodafone GHG Scope 1 and Scope 2 Emissions Condition and/or the Vodafone GHG Scope 3 Emissions Condition, as the case may be, to be notified to the Issuing and Principal Paying Agent, the Trustee and, in accordance with Condition 16, the Noteholders as soon as reasonably practicable after such occurrence or satisfaction (as applicable) and, in respect of a Sustainability-Linked Trigger Event, in any event no later than the relevant Sustainability-Linked Trigger Event Notification Deadline. Such notice shall be irrevocable and shall specify (i) in the case of Sustainability-Linked Notes in respect of which the applicable Final Terms indicates that Sustainability-Linked Trigger Event (Interest) is applicable, the Rate of Interest and, in the case of a notification of the occurrence of a Sustainability-Linked Trigger Event, the relevant Sustainability-Linked Step Up Margin and the relevant Sustainability-Linked Step Up Date or (ii) in the case of (A) Sustainability-Linked Notes in respect of which the applicable Final Terms indicates that Sustainability-Linked Trigger Event (Premium) is applicable and, (B) a notification of the occurrence of a Sustainability-Linked Trigger Event, the relevant Sustainability-Linked Premium Amount and the relevant Sustainability-Linked Premium Payment Date.
In the case of Sustainability-Linked Notes in respect of which the applicable Final Terms indicates that Sustainability-Linked Trigger Event (Interest) is applicable, (i) if one Sustainability-Linked Trigger Event is specified as applicable in the applicable Final Terms, an increase in the Rate of Interest will occur no more than once following the occurrence of the relevant Sustainability-Linked Trigger Event, (ii) if two or more Sustainability-Linked Trigger Events are specified as applicable in the applicable Final Terms with only one Sustainability-Linked Step Up Margin, an increase in the Rate of Interest will occur no more than once following the occurrence of one or more of the relevant Sustainability-Linked Trigger Events and (iii) during the term of the Notes, if two or more Sustainability-Linked Trigger Events are specified as applicable in the applicable Final Terms together with two or more Sustainability-Linked Step Up Margins, the related combination of Sustainability-Linked Step Up Margins relating to such Sustainability-Linked Trigger Events may be applicable for the remaining term of the Sustainability- Linked Notes. For the avoidance of doubt, in the case of any such Notes, following any such increase to the Rate of Interest, the Rate of Interest will not subsequently decrease to the Initial Rate of Interest and no Sustainability-Linked Premium Amount(s) will be payable as a result of the occurrence of a relevant Sustainability-Linked Trigger Event.
In the case of Sustainability-Linked Notes in respect of which the applicable Final Terms indicates that Sustainability-Linked Trigger Event (Premium) is applicable, (i) if two or more Sustainability-Linked Trigger Events are specified as applicable in the applicable Final Terms with only one Sustainability-Linked Premium Amount, only one Sustainability-Linked Premium Amount will be payable following the occurrence of one or more of the relevant Sustainability-Linked Trigger Events and (ii) during the term of the Notes, if two or more Sustainability-Linked Trigger Events are specified as applicable in the applicable Final Terms together with two or more Sustainability-Linked Step Up Margins, the related combination of Sustainability-Linked Premium Amounts may be payable. For the avoidance of doubt, in the case of any such Notes, no increase in the Rate of Interest will occur as a result of the occurrence of a relevant Sustainability-Linked Trigger Event.
Neither the Trustee nor the Issuing and Principal Paying Agent shall be obliged to monitor or inquire as to whether a Sustainability-Linked Trigger Event has occurred or have any liability in respect thereof and the Trustee shall be entitled to rely absolutely on any notice given to it by the Issuer pursuant to this Condition 4(c) without further enquiry or liability.
(d) |
Accrual of interest |
Each Note (or in the case of the redemption of part only of a Note, that part only of such Note) will cease to bear interest (if any) from the date of its redemption unless payment of principal is improperly withheld or refused. In such event, interest will continue to accrue as provided in the Trust Deed.
(e) |
Definitions |
In these Terms and Conditions:
“Adjustment Spread” means either (a) a spread (which may be positive, negative or zero), or (b) a formula or methodology for calculating a spread, in either case, which the Guarantor (in accordance with Condition 4(b)(ii)(H)(a)(i)) determines is to be applied to the Successor Rate or the Alternative Rate (as the case may be) and is the spread, formula or methodology which:
(i) |
in the case of a Successor Rate, is formally recommended in relation to the replacement of the Original Reference Rate with such Successor Rate by any Relevant Nominating Body; |
64
(ii) |
in the case of an Alternative Rate or (where (i) above does not apply) in the case of a Successor Rate, the Guarantor determines is recognised or acknowledged as being in customary market usage in international debt capital markets transactions which reference the Original Reference Rate, where such rate has been replaced by such Successor Rate or such Alternative Rate (as the case may be); |
(iii) |
(if the Guarantor determines that neither (i) nor (ii) above applies) the Guarantor determines is recognised or acknowledged as being the industry standard for over-the-counter derivative transactions which reference the Original Reference Rate, where such rate has been replaced by the Successor Rate or the Alternative Rate (as the case may be); or |
(iv) |
(if the Guarantor determines that none of (i), (ii) or (iii) above applies) the Guarantor determines to be appropriate in order to reduce or eliminate, to the extent reasonably practicable in the circumstances, any economic prejudice or benefit (as the case may be) to the Noteholders and the Couponholders as a result of the replacement of the Original Reference Rate with the Successor Rate or the Alternative Rate (as the case may be); |
“Alternative Rate” means an alternative to the Original Reference Rate which the Guarantor determines (in accordance with Condition 4(b)(ii)(H)(a)(ii)) has replaced the Original Reference Rate in customary market usage in international debt capital markets transactions for the purposes of determining rates of interest (or the relevant component part thereof):
(i) |
in the case of Floating Rate Notes, for a commensurate interest period and in the same Specified Currency as the Notes; and |
(ii) |
in the case of CMS Linked Notes, with a commensurate swap rate designated maturity and in the same Reference Currency as the Notes, |
or, in any case, if the Guarantor determines that there is no such rate, such other rate as the Guarantor determines in its sole discretion is most comparable to the Original Reference Rate;
“Authorised Signatory” means any person who (a) is a Director or the Secretary of the Issuer or the Guarantor (as the case may be) or (b) has been notified by the Issuer or the Guarantor (as the case may be) in writing to the Trustee as being duly authorised to sign documents and to do other acts and things on behalf of the Issuer or the Guarantor (as the case may be) for the purposes of the Trust Deed;
“Benchmark Amendments” has the meaning given to it in Condition 4(b)(ii)(H)(a)(iv);
“Benchmark Discontinuation Event” means, with respect to an Original Reference Rate:
(i) |
such Original Reference Rate ceasing to (a) be published for a period of at least five Business Days or (b) exist or be administered; |
(ii) |
the later of (a) the making of a public statement by the administrator of such Original Reference Rate that it will, on or before a specified date, cease publishing such Original Reference Rate permanently or indefinitely (in circumstances where no successor administrator has been appointed that will continue publication of such Original Reference Rate) and (b) the date falling six months prior to the specified date referred to in (ii)(a); |
(iii) |
the making of a public statement by the supervisor of the administrator of such Original Reference Rate that such Original Reference Rate has been permanently or indefinitely discontinued; |
(iv) |
the later of (a) the making of a public statement by the supervisor of the administrator of such Original Reference Rate that such Original Reference Rate will, on or before a specified date, be permanently or indefinitely discontinued and (b) the date falling six months prior to the specified date referred to in (iv)(a); |
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(v) |
the making of a public statement by the supervisor of the administrator of such Original Reference Rate that means such Original Reference Rate has become prohibited from being used or that its use has become subject to restrictions or adverse consequences; |
(vi) |
the later of (a) the making of a public statement by the supervisor of the administrator of the Original Reference Rate that means such Original Reference Rate will be prohibited from being used or that its use will be subject to restrictions or adverse consequences, in each case on or before a specified date and (b) the date falling six months prior to the specified date referred to in (vi)(a); |
(vii) |
it has or will, prior to the next Interest Determination Date, become unlawful for the Issuer, the Guarantor, any Agent or any other party specified in the applicable Final Terms as being responsible for calculating the Rate of Interest and/or the Interest Amount to calculate any payments due to be made to any Noteholder or Couponholder using such Original Reference Rate; or |
(viii) |
the making of a public statement by the supervisor of the administrator of such Original Reference Rate announcing that such Original Reference Rate is no longer representative or may no longer be used; |
“Benchmark Replacement” means, the first alternative set forth in the order below that can be determined by the Issuer as of the Benchmark Replacement Date:
(i) |
the sum of: (a) the alternate rate of interest that has been selected or recommended by the Relevant Governmental Body as the replacement for the Original Reference Rate and (b) the Benchmark Replacement Adjustment; |
(ii) |
the sum of: (a) the ISDA Fallback Rate and (b) the Benchmark Replacement Adjustment; or |
(iii) |
the sum of: (a) the alternate rate of interest that has been selected by the Issuer as the replacement for the Original Reference Rate giving due consideration to any industry-accepted rate of interest as a replacement for the then- current benchmark for U.S. dollar-denominated floating rate notes at such time and (b) the Benchmark Replacement Adjustment; |
“Benchmark Replacement Adjustment” means the first alternative set forth in the order below that can be determined by the Issuer as of the Benchmark Replacement Date:
(i) |
the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement; |
(ii) |
if the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA Fallback Rate, the ISDA Fallback Adjustment; or |
(iii) |
the spread adjustment (which may be a positive or negative value or zero) that has been selected by the Issuer giving due consideration to any industry-accepted spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated floating rate notes at such time; |
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to any Interest Period, Interest Accrual Period, the timing and frequency of determining rates and making payments of interest, rounding of amounts or tenors, and other administrative matters) that the Issuer (in consultation with the Independent Adviser, if appointed) decides may be appropriate to reflect the adoption of such Benchmark Replacement in a manner substantially consistent with market practice (or, if the Issuer decides that adoption of any portion of such market practice is not administratively feasible or if the Issuer determines that no market practice for use of the Benchmark Replacement exists, in such other manner as the Issuer (in consultation with the Independent Adviser, if appointed) determines is reasonably necessary);
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“Benchmark Replacement Date” means:
(i) |
with respect to any Benchmark Discontinuation Event: |
(a) |
in the case of an event falling within sub-paragraph (i)(a) of the definition of "Benchmark Discontinuation Event", the first Business Day immediately following such five-Business Day period; |
(b) |
in the case of an event falling within sub-paragraphs (i)(b) or (ii) of the definition of "Benchmark Discontinuation Event", the date of the relevant cessation of existence, administration or publication, as applicable; |
(c) |
in the case of an event falling within sub-paragraphs (iii), (v) or (viii) of the definition of "Benchmark Discontinuation Event", the date of the relevant public statement; |
(d) |
in the case of an event falling within sub-paragraph (iv) of the definition of "Benchmark Discontinuation Event", the date of the relevant discontinuation; or |
(e) |
in the case of event falling within sub-paragraphs (vi) or (vii) of the definition of "Benchmark Discontinuation Event", the date on which the relevant prohibition, restrictions, adverse consequences or unlawfulness become(s) effective; and |
(ii) |
with respect to any Benchmark Transition Event: |
(a) |
in the case of an event falling within sub-paragraph (i) or (ii) of the definition of "Benchmark Transition Event", the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the Original Reference Rate permanently or indefinitely ceases to provide the Original Reference Rate (or such component); |
(b) |
in the case of an event falling within sub-paragraph (iii) of the definition of "Benchmark Transition Event", the date of the public statement or publication of information referenced therein; |
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the Original Reference Rate (including the daily published component used in the calculation thereof):
(i) |
a public statement or publication of information by or on behalf of the administrator of the Original Reference Rate (or such component) announcing that such administrator has ceased or will cease to provide the Original Reference Rate (or such component), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Original Reference Rate (or such component); or |
(ii) |
a public statement or publication of information by the regulatory supervisor for the administrator of the Original Reference Rate (or such component), the central bank for the currency of the Original Reference Rate (or such component), an insolvency official with jurisdiction over the administrator for the Original Reference Rate (or such component), a resolution authority with jurisdiction over the administrator for the Original Reference Rate (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for the Original Reference Rate, which states that the administrator of the Original Reference Rate (or such component) has ceased or will cease to provide the Original Reference Rate (or such component) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Original Reference Rate (or such component); or |
(iii) |
a public statement or publication of information by the regulatory supervisor for the administrator of the Original Reference Rate announcing that the Original Reference Rate is no longer representative; |
“Business Day” means a day which is both:
(i) |
a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in London and any Additional Business Centre specified in the applicable Final Terms; and |
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(ii) |
either (1) in relation to any sum payable in a Specified Currency other than euro or Renminbi, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in the principal financial centre of the country of the relevant Specified Currency (which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney or Wellington, respectively), (2) in relation to any sum payable in euro, a day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET2) System (the “TARGET2 System”) is open or (3) in relation to any sum payable in Renminbi, a day (other than a Saturday, Sunday or public holiday) on which commercial banks and foreign exchange markets in Hong Kong are generally open for business and settlement for Renminbi payments in Hong Kong; |
“Calculation Agent” means the person appointed by the Issuer and the Guarantor as calculation agent in relation to a Series of CMS Linked Notes and specified in the applicable Final Terms and shall include any successor calculation agent appointed in respect of such Notes;
“CDOR” means the Canadian dollar offered rate;
“CMS Reference Banks” means:
(i) |
where the Reference Currency is euro, the principal office of five leading swap dealers in the Euro-zone inter-bank market; |
(ii) |
where the Reference Currency is Sterling, the principal London office of five leading swap dealers in the London inter- bank market; |
(iii) |
where the Reference Currency is U.S. dollars, the principal New York City office of five leading swap dealers in the New York City inter-bank market; and |
(iv) |
in the case of any other Reference Currency, the principal Relevant Financial Centre office of five leading swap dealers in the Relevant Financial Centre inter-bank market, |
in each case as selected by the Calculation Agent;
“Customer GHG Savings” means, in respect of the period from (and including) the Customer GHG Savings Start Date to (but excluding) the Customer GHG Savings End Date, the total greenhouse gas emissions within the Scope of Reporting that the Group has helped its customers to avoid;
“Customer GHG Savings Amount” means, in millions of metric tonnes of carbon dioxide equivalent (Mt CO2e), the Customer GHG Savings calculated in good faith by the Guarantor in consultation with the External Savings Agent, reported by the Guarantor in accordance with Condition 15 and confirmed by the External Verifier;
“Customer GHG Savings Condition” means, in relation to each Customer GHG Savings Reference Year, the condition that: (i) the Reporting Condition (as defined in Condition 15) has been satisfied; and (ii) the Customer GHG Savings Amount in respect of such Customer GHG Savings Reference Year, as shown in the relevant ESG Addendum, is equal to or greater than the Customer GHG Savings Threshold in respect of such Customer GHG Savings Reference Year, and if the requirements of (i) and/or (ii) (above) are not met, the Customer GHG Savings Condition in respect of the relevant Customer GHG Savings Reference Year shall be deemed not to have been satisfied;
“Customer GHG Savings End Date” means the date specified in the applicable Final Terms as being the GHG Savings End Date;
“Customer GHG Savings Event” (if specified as applicable in the applicable Final Terms) occurs if the Customer GHG Savings Condition in respect of any Customer GHG Savings Reference Year is not satisfied, provided no Customer GHG Savings Event has previously occurred in respect of the Notes;
“Customer GHG Savings Reference Year” means the financial year(s) of the Guarantor specified in the applicable Final Terms as being the Customer GHG Savings Reference Year(s);
“Customer GHG Savings Start Date” means the date specified in the applicable Final Terms as being the Customer GHG Savings Start Date;
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“Customer GHG Savings Threshold” means the threshold(s) specified in the applicable Final Terms as being the Customer GHG Savings Threshold(s) in respect of the relevant Customer GHG Savings Reference Year(s);
“Day Count Fraction” means, in respect of the calculation of an amount of interest in accordance with Condition 4(b):
(i) |
if “Actual/Actual-ISDA” or “Actual/Actual” is specified in the applicable Final Terms, the actual number of days in the Interest Accrual Period divided by 365 (or, if any portion of that Interest Accrual Period falls in a leap year, the sum of (A) the actual number of days in that portion of the Interest Accrual Period falling in a leap year divided by 366 and (B) the actual number of days in that portion of the Interest Accrual Period falling in a non-leap year divided by 365); |
(ii) |
if “Actual/365 (Sterling)” is specified in the applicable Final Terms, the actual number of days in the Interest Accrual Period divided by 365 or, in the case of an Interest Payment Date falling in a leap year, 366; |
(iii) |
if “Actual/365 (Fixed)” is specified in the applicable Final Terms, the actual number of days in the Interest Accrual Period divided by 365; |
(iv) |
if “Actual/360” is specified in the applicable Final Terms, the actual number of days in the Interest Accrual Period divided by 360; |
(v) |
if “30/360”, “360/360” or “Bond Basis” is specified in the applicable Final Terms, the number of days in the Interest Accrual Period divided by 360, calculated on a formula basis as follows: |
where:
“Y1” is the year, expressed as a number, in which the first day of the Interest Accrual Period falls;
“Y2” is the year, expressed as a number, in which the day immediately following the last day of the Interest Accrual Period falls;
“M1” is the calendar month, expressed as a number, in which the first day of the Interest Accrual Period falls;
“M2” is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Accrual Period falls;
“D1” is the first calendar day, expressed as a number, of the Interest Accrual Period, unless such number is 31, in which case D1 will be 30; and
“D2” is the calendar day, expressed as a number, immediately following the last day included in the Interest Accrual Period, unless such number would be 31 and D1 is greater than 29, in which case D2 will be 30;
(vi) |
if “30E/360” or “Eurobond Basis” is specified in the applicable Final Terms, the number of days in the Interest Accrual Period divided by 360, calculated on a formula basis as follows: |
where:
“Y1” is the year, expressed as a number, in which the first day of the Interest Accrual Period falls;
“Y2” is the year, expressed as a number, in which the day immediately following the last day of the Interest Accrual Period falls;
“M1” is the calendar month, expressed as a number, in which the first day of the Interest Accrual Period falls;
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“M2” is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Accrual Period falls;
“D1” is the first calendar day, expressed as a number, of the Interest Accrual Period, unless such number would be 31, in which case D1 will be 30; and
“D2” is the calendar day, expressed as a number, immediately following the last day included in the Interest Accrual Period, unless such number would be 31, in which case D2 will be 30; and
(vii) |
if “30E/360 (ISDA)” is specified in the applicable Final Terms, the number of days in the Interest Accrual Period divided by 360, calculated on a formula basis as follows: |
where:
“Y1” is the year, expressed as a number, in which the first day of the Interest Accrual Period falls;
“Y2” is the year, expressed as a number, in which the day immediately following the last day of the Interest Accrual Period falls;
“M1” is the calendar month, expressed as a number, in which the first day of the Interest Accrual Period falls;
“M2” is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Accrual Period falls;
“D1” is the first calendar day, expressed as a number, of the Interest Accrual Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and
“D2” is the calendar day, expressed as a number, immediately following the last day included in the Interest Accrual Period, unless (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31, in which case D2 will be 30;
“Determination Period” means each period from (and including) a Determination Date to (but excluding) the next Determination Date (including, where either the Interest Commencement Date or the final Interest Payment Date is not a Determination Date, the period commencing on the first Determination Date prior to, and ending on the first Determination Date falling after, such date);
“ESG Addendum” has the meaning give to it in Condition 15; “EURIBOR” means the Euro-zone inter-bank offered rate;
“External Savings Agent” means The Carbon Trust or, in the event that The Carbon Trust resigns or is otherwise replaced, such other third party as may be appointed by the Guarantor to consult with the Guarantor in calculating the Customer GHG Savings Amount;
“External Verifier” means:
(a) |
in relation to the Customer GHG Savings Amount, Grant Thornton UK LLP or, in the event that Grant Thornton UK LLP resigns or is otherwise replaced by the Guarantor, such other qualified provider of third-party assurance or attestation services appointed by the Guarantor to review the Guarantor’s statement of the Customer GHG Savings Amount; |
(b) |
in relation to the Female Management and Senior Leadership Amount, any qualified provider of third-party assurance or attestation services appointed by the Guarantor to review the Guarantor’s statement of Female Management and Senior Leadership Amount; |
(c) |
in relation to the M-Pesa Customers Amount, any qualified provider of third-party assurance or attestation |
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services appointed by the Guarantor to review the Guarantor’s statement of M-Pesa Customers Amount; and
(d) |
in relation to the Vodafone GHG Scope 1 and Scope 2 Emissions Amount and Vodafone GHG Scope 3 Emissions Amount, Grant Thornton UK LLP or, in the event that Grant Thornton UK LLP resigns or is otherwise replaced by the Guarantor, such other qualified provider of third-party assurance or attestation services appointed by the Guarantor to review the Guarantor’s statement of the Vodafone GHG Scope 1 and Scope 2 Emissions Amount and Vodafone GHG Scope 3 Emissions Amount; |
“Female Management and Senior Leadership Amount” means, in respect of a relevant financial year, the total number of women in management and senior leadership roles in the Group within the Scope of Reporting as a percentage of total number of employees in management and senior leadership roles in the Group within the Scope of Reporting, in respect of such financial year and calculated in good faith by the Guarantor, reported by the Guarantor in accordance with Condition 15 and confirmed by the External Verifier;
“Female Management and Senior Leadership Condition” means, in relation to each Female Management and Senior Leadership Reference Year, the condition that: (i) the Reporting Condition (as defined in Condition 15) has been satisfied; and (ii) the Female Management and Senior Leadership Amount in respect of such Female Management and Senior Leadership Reference Year, as shown in the relevant ESG Addendum, is equal to or greater than the Female Management and Senior Leadership Threshold in respect of such Female Management and Senior Leadership Reference Year, and if the requirements of (i) and/or (ii) (above) are not met, the Female Management and Senior Leadership Condition in respect of the relevant Female Management and Senior Leadership Reference Year shall be deemed not to have been satisfied;
a “Female Management and Senior Leadership Event” (if specified as applicable in the applicable Final Terms) occurs if the Female Management and Senior Leadership Condition in respect of any Female Management and Senior Leadership Reference Year is not satisfied, provided no Female Management and Senior Leadership Event has previously occurred in respect of the Notes;
“Female Management and Senior Leadership Threshold” means the threshold(s) (expressed as a percentage) specified in the applicable Final Terms as being the Female Management and Senior Leadership Threshold(s) in respect of the relevant Female Management and Senior Leadership Reference Year(s);
“Female Management and Senior Leadership Reference Year” means the financial year(s) of the Guarantor specified in the applicable Final Terms as being the Female Management and Senior Leadership Reference Year(s);
“Fixed Day Count Fraction” means, in respect of the calculation of an amount of interest in accordance with Condition 4(a):
(i) |
if “Actual/Actual (ICMA)” is specified in the applicable Final Terms: |
(a) |
in the case of Notes where the number of days in the relevant period from (and including) the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to (but excluding) the relevant payment date (the “Accrual Period”) is equal to or shorter than the Determination Period during which the Accrual Period ends, the number of days in such Accrual Period divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Dates (as specified in the applicable Final Terms) that would occur in one calendar year; or |
(b) |
in the case of Notes where the Accrual Period is longer than the Determination Period during which the Accrual Period ends, the sum of: |
(1) |
the number of days in such Accrual Period falling in the Determination Period in which the Accrual Period begins divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Dates (as specified in the applicable Final Terms) that would occur in one calendar year; and |
(2) |
the number of days in such Accrual Period falling in the next Determination Period divided by the product of (x) the number of days in such Determination Period and (y) the number of Determination Dates that would occur in one calendar year assuming interest was to be payable in respect of the whole of that year; |
71
(ii) |
if “30/360” is specified in the applicable Final Terms, the number of days in the period from (and including) the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to (but excluding) the relevant payment date (such number of days being calculated on the basis of a year of 360 days with 12 30-day months) divided by 360; and |
(iii) |
if “Actual/365 (Fixed)” is specified in the applicable Final Terms, the actual number of days in the relevant period divided by 365; |
“GHG Protocol Standard” means the document titled “The Greenhouse Gas Protocol, A Corporate Accounting and Reporting Standard (Revised Edition)” published by the World Business Council for Sustainable Development and the World Resources Institute, as such document may be amended, supplemented or replaced at the relevant time;
“Independent Adviser” means an independent financial institution of international repute or an independent financial adviser with appropriate expertise in the international debt capital markets appointed by the Guarantor at its own expense under Condition 4(b)(ii)(H)(i) and notified in writing to the Trustee;
“Initial Rate of Interest” means the initial Rate of Interest specified in the applicable Final Terms;
“Interest Accrual Period” means (i) each Interest Period and (ii) any other period (if any) in respect of which interest is to be calculated, being the period from (and including) the first day of such period to (but excluding) the day on which the relevant payment of interest falls due (which, if the Notes become due and payable in accordance with Condition 10, shall be the date on which the Notes become due and payable);
“Interest Determination Date” means:
(i) |
if the Notes are Floating Rate Notes and: |
(a) |
the Reference Rate is SONIA, the date which is “p” London Banking Days prior to each Interest Payment Date; |
(b) |
the Reference Rate is SOFR, the date which is “p” U.S. Government Securities Business Days prior to each Interest Payment Date; |
(c) |
the Reference Rate is EURIBOR, the second day on which the TARGET2 System is open prior to the start of each Interest Period; |
(d) |
the Reference Rate is TIBOR, the second Tokyo Business Day prior to the start of each Interest Period; |
(e) |
the Reference Rate is CDOR, the first day of each Interest Period; or |
(f) |
the Reference Rate is JIBAR, the first day of each Interest Period; or |
(ii) |
if the Notes are CMS Linked Notes, each date specified in the applicable Final Terms; |
“Interest Period” means the period from (and including) an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first) Interest Payment Date;
“ISDA Definitions” means the 2006 ISDA Definitions (as published by the International Swaps and Derivatives Association, Inc. and amended and updated as at the Issue Date of the first Tranche of the Notes);
“ISDA Fallback Adjustment” means the spread adjustment (which may be a positive or negative value or zero) that would apply for derivatives transactions referencing the ISDA Definitions to be determined upon the occurrence of an index cessation event with respect to the Original Reference Rate;
“ISDA Fallback Rate” means the rate that would apply for derivatives transactions referencing the ISDA Definitions to be effective upon the occurrence of an index cessation date with respect to the Original Reference Rate for the applicable tenor excluding the applicable ISDA Fallback Adjustment;
72
“JIBAR” means the Johannesburg inter-bank agreed rate;
“M-Pesa Customers Amount” means the number in millions of customers of the Group within the Scope of Reporting on the M-Pesa platform (or equivalent mobile money service), in respect of a financial year and calculated in good faith by the Guarantor, reported by the Guarantor in accordance with Condition 15 and confirmed by the External Verifier;
“M-Pesa Customers Condition” means, in relation to each M-Pesa Customers Reference Year, the condition that: (i) the Reporting Condition (as defined in Condition 15) has been satisfied; and (ii) the M-Pesa Customers Amount in respect of such M-Pesa Customers Reference Year, as shown in the relevant ESG Addendum, is equal to or greater than the M-Pesa Customers Threshold in respect of such M-Pesa Customers Reference Year, and if the requirements of (i) and/or (ii) (above) are not met, the M-Pesa Customers Condition in respect of the relevant M-Pesa Customers Reference Year shall be deemed not to have been satisfied;
a “M-Pesa Customers Event” (if specified as applicable in the applicable Final Terms) occurs if the M-Pesa Customers Condition in respect of any M-Pesa Customers Reference Year is not satisfied, provided no M-Pesa Customers Event has previously occurred in respect of the Notes;
“M-Pesa Customers Reference Year” means the financial year(s) of the Guarantor specified in the applicable Final Terms as being the M-Pesa Customers Reference Year(s);
“M-Pesa Customers Threshold” means the threshold(s) specified in the applicable Final Terms as being the M-Pesa Customers Threshold(s) in respect of the relevant M-Pesa Customers Reference Year(s);
“Original Reference Rate” means the originally-specified benchmark or screen rate (as applicable) used to determine the relevant Rate of Interest (or any component part thereof) in respect of any Interest Period(s) (provided that if, following one or more Benchmark Replacement Dates, such originally-specified benchmark or screen rate (as applicable) (or any Successor Rate, Alternative Rate or Benchmark Replacement (as applicable) which has replaced it) has been replaced by a (for a further) Successor Rate, Alternative Rate or Benchmark Replacement (as applicable) and a Benchmark Discontinuation Event or Benchmark Transition Event (as applicable) and, in either case, a related Benchmark Replacement Date subsequently occur in respect of such Successor Rate, Alternative Rate or Benchmark Replacement (as applicable), the term “Original Reference Rate” shall include any such Successor Rate or Alternative Rate or Benchmark Replacement (as applicable));
“Reference Banks” means, in the case of a determination of EURIBOR, the principal office of four major banks in the Euro- zone inter-bank market, in the case of a determination of TIBOR, the principal Tokyo office of ten major banks in the Tokyo inter-bank market, in the case of a determination of CDOR, four major Canadian Schedule I chartered banks, in the case of a determination of JIBAR, the principal Johannesburg office of four major banks in the Johannesburg inter-bank market, in each case selected by the Issuing and Principal Paying Agent;
“Reference Rate” means (i) EURIBOR, (ii) TIBOR, (iii) CDOR, (iv) JIBAR or (v) CMS Rate, in each case for the relevant period or (vi) Compounded Daily SONIA, (vii) Compounded Daily SOFR or (viii) Weighted Average SOFR, as specified in the applicable Final Terms;
“Reference Year” means:
(i) |
a Customer GHG Savings Reference Year; |
(ii) |
a Female Management and Senior Leadership Reference Year; |
(iii) |
a M-Pesa Customers Reference Year; |
(iv) |
a Vodafone GHG Scope 1 and Scope 2 Emissions Reference Year; and/or |
(v) |
a Vodafone GHG Scope 3 Emissions Reference Year, |
as specified in the applicable Final Terms and as the context may so require;
“Relevant Financial Centre” means:
73
(i) |
if the Notes are Floating Rate Notes: |
(a) |
Brussels, in the case of a determination of EURIBOR; |
(b) |
Tokyo, in the case of a determination of TIBOR; |
(c) |
Toronto, in the case of a determination of CDOR; and |
(d) |
Johannesburg, in the case of a determination of JIBAR; or |
(ii) |
if the Notes are CMS Linked Notes, the city specified in the applicable Final Terms; |
“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto;
“Relevant Nominating Body” means, in respect of an Original Reference Rate:
(i) |
the central bank for the currency to which such Original Reference Rate relates, or any central bank or other supervisory authority which is responsible for supervising the administrator of such Original Reference Rate; or |
(ii) |
any working group or committee sponsored by, chaired or co-chaired by or constituted at the request of (a) the central bank for the currency to which such Original Reference Rate relates, (b) any central bank or other supervisory authority which is responsible for supervising the administrator of such Original Reference Rate, (c) a group of the aforementioned central banks or other supervisory authorities or (d) the Financial Stability Board or any part thereof; |
“Relevant Swap Rate” means:
(i) |
where the Reference Currency is euro, the mid-market annual swap rate determined on the basis of the arithmetic mean of the bid and offered rates for the annual fixed leg, calculated on a 30/360 day count basis, of a fixed-for- floating euro interest rate swap transaction with a term equal to the Designated Maturity commencing on the first day of the relevant Interest Period and in a Representative Amount with an acknowledged dealer of good credit in the swap market, where the floating leg, in each case calculated on an Actual/360 day count basis, is equivalent to EUR- EURIBOR-Reuters (as defined in the ISDA Definitions) with a designated maturity determined by the Calculation Agent by reference to standard market practice and/or the ISDA Definitions; |
(ii) |
where the Reference Currency is Sterling, the mid-market semi-annual swap rate determined on the basis of the arithmetic mean of the bid and offered rates for the semi-annual fixed leg, calculated on an Actual/365 (Fixed) day count basis, of a fixed-for-floating Sterling interest rate swap transaction with a term equal to the Designated Maturity commencing on the first day of the relevant Interest Period and in a Representative Amount with an acknowledged dealer of good credit in the swap market, where the floating leg, in each case calculated on an Actual/365 (Fixed) day count basis, is equivalent (A) if the Designated Maturity is greater than one year, to GBP-LIBOR-BBA (as defined in the ISDA Definitions) with a designated maturity of six months or (B) if the Designated Maturity is one year or less, to GBP-LIBOR-BBA with a designated maturity of three months; |
(iii) |
where the Reference Currency is U.S. dollars, the mid-market semi-annual swap rate determined on the basis of the mean of the bid and offered rates for the semi-annual fixed leg, calculated on a 30/360 day count basis, of a fixed-for- floating U.S. dollar interest rate swap transaction with a term equal to the Designated Maturity commencing on the first day of the relevant Interest Period and in a Representative Amount with an acknowledged dealer of good credit in the swap market, where the floating leg, calculated on an Actual/360 day count basis, is equivalent to USD-LIBOR-BBA (as defined in the ISDA Definitions) with a designated maturity of three months; and |
74
(iv) |
where the Reference Currency is any other currency, the mid-market swap rate as determined by the Calculation Agent in its sole and absolute discretion on a commercial basis as it shall consider appropriate and in accordance with standard market practice; |
“Relevant Time” means:
(i) |
if the Notes are Floating Rate Notes: |
(a) |
in the case of EURIBOR, 11.00 a.m.; |
(b) |
in the case of TIBOR, 11.00 a.m.; |
(c) |
in the case of CDOR, 10.00 a.m.; and |
(d) |
in the case of JIBAR, 11.00 a.m.; or |
(ii) |
if the Notes are CMS Linked Notes, the time specified in the applicable Final Terms, |
in each case in the Relevant Financial Centre;
“Representative Amount” means an amount that is representative for a single transaction in the relevant market at the relevant time;
“Scope of Reporting” means, in relation to the ESG Addendum, performance data which is included in the scope of the ESG Addendum as more fully described in the section of the section of the ESG Addendum headed “Reporting Criteria Scope” and subject to the good faith judgement of the Guarantor;
“sub-unit” means, with respect to any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, with respect to euro, means one cent;
“Successor Rate” means a successor to or replacement of the Original Reference Rate which is formally recommended by any Relevant Nominating Body;
“Sustainability-Linked Premium Amount” means, in relation to one or more Sustainability-Linked Trigger Event(s), the amount specified in the applicable Final Terms as being the Sustainability-Linked Premium Amount in respect of such Sustainability-Linked Trigger Event(s);
“Sustainability-Linked Premium Payment Date” means the date specified in the applicable Final Terms as being the Sustainability-Linked Premium Payment Date;
“Sustainability-Linked Step Up Date” means, in relation to a Sustainability-Linked Trigger Event, the first Interest Payment Date immediately following the occurrence of such Sustainability-Linked Trigger Event;
“Sustainability-Linked Step Up Margin” means, in relation to one or more Sustainability-Linked Trigger Event(s), the amount specified in the applicable Final Terms as being the Sustainability-Linked Step Up Margin in respect of such Sustainability- Linked Trigger Event(s);
“Sustainability-Linked Trigger Event” means, in each case if specified in the applicable Final Terms as being applicable, a Customer GHG Savings Event, a Female Management and Senior Leadership Event, a M-Pesa Customers Event, a Vodafone GHG Scope 1 and Scope 2 Emissions Event and/or a Vodafone GHG Scope 3 Emissions Event, in each case in respect of the respective relevant Reference Year;
“Sustainability-Linked Trigger Event Notification Deadline” means the day falling 135 days after the last day of the applicable Reference Year;
“Threshold” means:
(a) |
Customer GHG Savings Threshold; |
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(b) |
Female Management and Senior Leadership Threshold; |
(c) |
M-Pesa Customers Threshold; |
(d) |
Vodafone GHG Scope 1 and Scope 2 Emissions Threshold; and/or |
(e) |
Vodafone GHG Scope 3 Emissions Threshold, |
as specified in the applicable Final Terms and as the context may so require;
“TIBOR” means the Tokyo inter-bank offered rate;
“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement Adjustment;
“Vodafone GHG Scope 1 Emissions” means, in respect of a financial year, direct greenhouse gas emissions from controlled sources of the Group within the Scope of Reporting, in respect of such financial year calculated in good faith by the Guarantor using the market-based method;
“Vodafone GHG Scope 2 Emissions” means, in respect of a financial year, indirect greenhouse gas emissions from electricity, steam and heat purchased or acquired by the Group within the Scope of Reporting, in respect of such financial year calculated in good faith by the Guarantor using the market-based method;
“Vodafone GHG Scope 3 Emissions” means, in respect of a financial year, indirect greenhouse gas emissions from non- controlled sources of the Group within the Scope of Reporting, but which the Group may be able to influence, in respect of such financial year calculated in good faith by the Guarantor using the market-based method;
“Vodafone GHG Scope 1 and Scope 2 Emissions Amount” means, in millions of metric tonnes of carbon dioxide equivalent (Mt CO2e), the sum of the:
(i) |
Vodafone GHG Scope 1 Emissions; and |
(ii) |
Vodafone GHG Scope 2 Emissions, |
in each case in respect of the relevant financial year and calculated in good faith by the Guarantor, reported by the Guarantor in accordance with Condition 15 and confirmed by the External Verifier;
“Vodafone GHG Scope 3 Emissions Amount” means, in millions of metric tonnes of carbon dioxide equivalent (Mt CO2e), the Vodafone GHG Scope 3 Emissions calculated in good faith by the Guarantor, reported by the Guarantor in accordance with Condition 15 and confirmed by the External Verifier;
“Vodafone GHG Scope 1 and Scope 2 Emissions Baseline” means the Vodafone GHG Scope 1 and Scope 2 Emissions Amount for the financial year specified in the applicable Final Terms, as initially reported in the ESG Addendum in respect of such financial year and, if applicable, recalculated in good faith by the Guarantor and published by the Guarantor in the latest ESG Addendum published in accordance with Condition 15;
“Vodafone GHG Scope 1 and Scope 2 Emissions Condition” means, in relation to each Vodafone GHG Scope 1 and Scope 2 Emissions Reference Year, the condition that: (i) the Reporting Condition (as defined in Condition 15) has been satisfied; and (ii) the Vodafone GHG Scope 1 and Scope 2 Emissions Percentage in respect of such Vodafone GHG Scope 1 and Scope 2 Emissions Reference Year, as shown in the relevant ESG Addendum, is equal to or greater than the Vodafone GHG Scope 1 and Scope 2 Emissions Threshold in respect of such Vodafone GHG Scope 1 and Scope 2 Emissions Reference Year, and if the requirements of (i) and/or (ii) (above) are not met, the Vodafone GHG Scope 1 and Scope 2 Emissions Condition in respect of the relevant Vodafone GHG Scope 1 and Scope 2 Emissions Reference Year shall be deemed not to have been satisfied;
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“Vodafone GHG Scope 3 Emissions Baseline” means the Vodafone GHG Scope 3 Emissions Amount for the financial year specified in the applicable Final Terms, as initially reported in the ESG Addendum in respect of such financial year and, if applicable, recalculated in good faith by the Guarantor and published by the Guarantor in the latest ESG Addendum published in accordance with Condition 15; “Vodafone GHG Scope 3 Emissions Condition” means, in relation to each Vodafone GHG Scope 3 Emissions Reference Year, the condition that: (i) the Reporting Condition (as defined in Condition 15) has been satisfied; and (ii) the Vodafone GHG Scope 3 Emissions Percentage in respect of such Vodafone GHG Scope 3 Emissions Reference Year, as shown in the relevant ESG Addendum, is equal to or greater than the Vodafone GHG Scope 3 Emissions Threshold in respect of such Vodafone GHG Scope 3 Emissions Reference Year and if the requirements of (i) and/or (ii) (above) are not met, the Vodafone GHG Scope 3 Emissions Condition in respect of the relevant Vodafone GHG Scope 3 Emissions Reference Year shall be deemed not to have been satisfied;
a “Vodafone GHG Scope 1 and Scope 2 Emissions Event” (if specified as applicable in the applicable Final Terms) occurs if the Vodafone GHG Scope 1 and Scope 2 Emissions Condition in respect of any Vodafone GHG Scope 1 and Scope 2 Emissions Reference Year is not satisfied, provided no Vodafone GHG Scope 1 and Scope 2 Emissions Event has previously occurred in respect of the Notes;
a “Vodafone GHG Scope 3 Emissions Event” (if specified as applicable in the applicable Final Terms) occurs if the Vodafone GHG Scope 3 Emissions Condition in respect of any Vodafone GHG Scope 3 Emissions Reference Year is not satisfied, provided no Vodafone GHG Scope 3 Emissions Event has previously occurred in respect of the Notes;
“Vodafone GHG Scope 1 and Scope 2 Emissions Percentage” means, in respect of any financial year, the percentage by which the Vodafone GHG Scope 1 and Scope 2 Emissions Amount for such financial year is a reduction in comparison to the Vodafone GHG Scope 1 and Scope 2 Emissions Baseline, as calculated in good faith by the Guarantor and published by it in accordance with Condition 15;
“Vodafone GHG Scope 3 Emissions Percentage” means, in respect of any financial year, the percentage by which the Vodafone GHG Scope 3 Emissions Amount for such financial year is a reduction in comparison to the Vodafone GHG Scope 3 Emissions Baseline, as calculated in good faith by the Guarantor and published by it in accordance with Condition 15;
“Vodafone GHG Scope 1 and Scope 2 Emissions Threshold” means the threshold(s) specified in the applicable Final Terms as being the Vodafone GHG Scope 1 and Scope 2 Emissions Threshold(s) in respect of the relevant Vodafone GHG Scope 1 and Scope 2 Emissions Reference Year(s);
“Vodafone GHG Scope 3 Emissions Threshold” means the threshold(s) specified in the applicable Final Terms as being the Vodafone GHG Scope 3 Emissions Threshold(s) in respect of the relevant Vodafone GHG Scope 3 Emissions Reference Year(s);
“Vodafone GHG Scope 1 and Scope 2 Emissions Reference Year” means the financial year(s) of the Guarantor specified in the applicable Final Terms as being the Vodafone GHG Scope 1 and Scope 2 Emissions Reference Year(s); and
“Vodafone GHG Scope 3 Emissions Reference Year” means the financial year(s) of the Guarantor specified in the applicable Final Terms as being the Vodafone GHG Scope 3 Emissions Reference Year(s).
5.Inflation Linked Notes
This Condition 5 is applicable only if the applicable Final Terms specifies the Notes as Inflation Linked Interest Notes and/or Inflation Linked Redemption Notes (together, the “Inflation Linked Notes”).
(a)U.K. Retail Price Index
Where RPI (as defined below) is specified as the Index in the applicable Final Terms, Conditions 5(a) to 5(f) will apply. For purposes of Conditions 5(a) to 5(f), unless the context otherwise requires, the following defined terms shall have the meanings set out below:
“Base Index Figure” means (subject to Condition 5(c)(i)) the base index figure as specified in the applicable Final Terms;
“Calculation Agent” means the person appointed by the Issuer and the Guarantor as calculation agent in relation to a Series of Inflation Linked Notes and specified in the applicable Final Terms, and shall include any successor calculation agent appointed in respect of such Notes;
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“His Majesty’s Treasury” means His Majesty’s Treasury or any officially recognised party performing the function of a calculation agent (whatever such party’s title), on its or its successor’s behalf, in respect of the Reference Gilt;
“Index” or “Index Figure” means, subject as provided in Condition 5(c)(i), the U.K. Retail Price Index (RPl) (for all items) published by the Office for National Statistics (January 1987 = 100) or any comparable index which may replace the U.K. Retail Price Index for the purpose of calculating the amount payable on repayment of the Reference Gilt (the “RPI”). Any reference to the Index Figure:
(i) |
applicable to a particular month, shall, subject as provided in Conditions 5(c) and 5(e), be construed as a reference to the Index Figure published in the seventh month prior to that particular month and relating to the month before that of publication; or |
(ii) |
applicable to the first calendar day of any month shall, subject as provided in Conditions 5(c) and 5(e), be construed as a reference to the Index Figure published in the second month prior to that particular month and relating to the month before that of publication; or |
(iii) |
applicable to any other day in any month shall, subject as provided in Conditions 5(c) and 5(e), be calculated by linear interpolation between (x) the Index Figure applicable to the first calendar day of the month in which the day falls, calculated as specified in sub-paragraph (ii) above and (y) the Index Figure applicable to the first calendar day of the month following, calculated as specified in sub-paragraph (ii) above and rounded to the nearest fifth decimal place; |
“Index Ratio” applicable to any month or date, as the case may be, means the Index Figure applicable to such month or date, as the case may be, divided by the Base Index Figure and rounded to the nearest fifth decimal place;
“Limited Index Linked Notes” means Inflation Linked Notes to which a Maximum Indexation Factor and/or a Minimum Indexation Factor (as specified in the applicable Final Terms) applies;
“Limited Index Ratio” means (a) in respect of any month or date, as the case may be, prior to the relevant Issue Date, the Index Ratio for that month or date, as the case may be, (b) in respect of any Limited Indexation Date after the relevant Issue Date, the product of the Limited Indexation Factor for that month or date, as the case may be, and the Limited Index Ratio as previously calculated in respect of the month or date, as the case may be, twelve months prior thereto; and (c) in respect of any other month, the Limited Index Ratio as previously calculated in respect of the most recent Limited Indexation Month;
“Limited Indexation Date” means any date falling during the period specified in the applicable Final Terms for which a Limited Indexation Factor is to be calculated;
“Limited Indexation Factor” means, in respect of a Limited Indexation Month or Limited Indexation Date, as the case may be, the ratio of the Index Figure applicable to that month or date, as the case may be, divided by the Index Figure applicable to the month or date, as the case may be, twelve months prior thereto, provided that (a) if such ratio is greater than the Maximum Indexation Factor specified in the applicable Final Terms, it shall be deemed to be equal to such Maximum Indexation Factor and (b) if such ratio is less than the Minimum Indexation Factor specified in the applicable Final Terms, it shall be deemed to be equal to such Minimum Indexation Factor;
“Limited Indexation Month” means any month specified in the applicable Final Terms for which a Limited Indexation Factor is to be calculated; and
“Reference Gilt” means the index-linked Treasury Stock or Treasury Gilt specified as such in the applicable Final Terms for so long as such gilt is in issue, and thereafter such issue of index-linked Treasury Stock or Treasury Gilt determined to be appropriate by a gilt-edged market maker or other adviser selected by the Guarantor (an “Indexation Adviser”).
(b) |
Application of the Index Ratio |
Each payment of interest (in the case of Inflation Linked Interest Notes) and principal (in the case of Inflation Linked Redemption Notes) in respect of the Notes shall be the amount provided in, or determined in accordance with, these Terms and Conditions, multiplied by the Index Ratio or Limited Index Ratio in the case of Limited Index Linked Notes applicable to the month or date, as the case may be, on which such payment falls to be made and rounded in accordance with Condition 4(b)(v).
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(c) |
Changes in Circumstances Affecting the Index |
(i) |
Change in base: If at any time and from time to time the Index is changed by the substitution of a new base therefor, then with effect from the month from and including that in which such substitution takes effect or the first date from and including that on which such substitution takes effect, as the case may be, (1) the definition of “Index” and “Index Figure” in Condition 5(a) shall be deemed to refer to the new date or month in substitution for January 1987 (or, as the case may be, to such other date or month as may have been substituted therefor), and (2) the new Base Index Figure shall be the product of the existing Base Index Figure and the Index Figure for the date on which such substitution takes effect, divided by the Index Figure for the date immediately preceding the date on which such substitution takes effect. |
(ii) |
Delay in publication of Index if sub-paragraph (i) of the definition of Index Figure is applicable: If the Index Figure which is normally published in the seventh month and which relates to the eighth month (the “relevant month”) before the month in which a payment is due to be made is not published on or before the fourteenth business day before the date on which such payment is due (the “date for payment”), the Index Figure applicable to the month in which the date for payment falls shall be (1) such substitute index figure (if any) as the Trustee considers (acting solely on the advice of the Indexation Adviser) to have been published by the United Kingdom Debt Management Office or the Bank of England, as the case may be, for the purposes of indexation of payments on the Reference Gilt or, failing such publication, on any one or more issues of index-linked Treasury Stock selected by an Indexation Adviser (and approved by the Trustee (acting solely on the advice of the Indexation Adviser)) or (2) if no such determination is made by such Indexation Adviser within seven days, the Index Figure last published (or, if later, the substitute index figure last determined pursuant to Condition 5(c)(i)) before the date for payment. |
(iii) |
Delay in publication of Index if sub-paragraph (ii) and/or (iii) of the definition of Index Figure is applicable: If the Index Figure relating to any month (the “calculation month”) which is required to be taken into account for the purposes of the determination of the Index Figure for any date is not published on or before the fourteenth business day before the date on which such payment is due (the “date for payment”), the Index Figure applicable for the relevant calculation month shall be (1) such substitute index figure (if any) as the Trustee considers (acting solely on the advice of the Indexation Adviser) to have been published by the United Kingdom Debt Management Office or the Bank of England, as the case may be, for the purposes of indexation of payments on the Reference Gilt or, failing such publication, on any one or more issues of index-linked Treasury Stock selected by an Indexation Adviser (and approved by the Trustee (acting solely on the advice of the Indexation Adviser)) or (2) if no such determination is made by such Indexation Adviser within seven days, the Index Figure last published (or, if later, the substitute index figure last determined pursuant to Condition 5(c)(i)) before the date for payment. |
(d)Application of Changes
Where the provisions of Condition 5(c)(ii) or Condition 5(c)(iii) apply, the determination of the Indexation Adviser as to the Index Figure applicable to the month in which the date for payment falls or the date for payment, as the case may be, shall be conclusive and binding. If, an Index Figure having been applied pursuant to Condition 5(c)(ii)(2) or Condition 5(c)(iii)(2), the Index Figure relating to the relevant month or relevant calculation month, as the case may be, is subsequently published while a Note is still outstanding, then:
(i) |
in relation to a payment of interest (in the case of Inflation Linked Interest Notes) and/or principal (in the case of Inflation Linked Redemption Notes) in respect of such Note other than upon final redemption of such Note, the interest and/or principal (as the case may be) next payable after the date of such subsequent publication shall be increased or reduced, as the case may be, by an amount equal to the shortfall or excess, as the case may be, of the amount of the relevant payment made on the basis of the Index Figure applicable by virtue of Condition 5(c)(ii)(2) or Condition 5(c)(iii)(2) below or above the amount of the relevant payment that would have been due if the Index Figure subsequently published had been published on or before the fourteenth business day before the date for payment; and |
(ii) |
in relation to a payment of interest (in the case of Inflation Linked Interest Notes) and/or principal (in the case of Inflation Linked Redemption Notes) upon final redemption, no subsequent adjustment to amounts paid will be made. |
(e)Material Changes or Cessation of the Index
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(i) |
Material changes to the Index: If notice is published by His Majesty’s Treasury, or on its behalf, following a change to the coverage or the basic calculation of the Index, then the Calculation Agent shall make any such adjustments to the Index consistent with any adjustments made to the Index as applied to the Reference Gilt. |
(ii) |
Cessation of the Index: If the Trustee, the Issuer and the Guarantor have been notified by the Calculation Agent that the Index has ceased to be published, or if His Majesty’s Treasury, or a person acting on its behalf, announces that it will no longer continue to publish the Index, then the Calculation Agent shall determine a successor index in lieu of any previously applicable index (the “Successor Index”) by using the following methodology: |
(a) |
if at any time a successor index has been designated by His Majesty’s Treasury in respect of the Reference Gilt, such successor index shall be designated the “Successor Index” for the purposes of all subsequent Interest Payment Dates, notwithstanding that any other Successor Index may previously have been determined under paragraphs (b) or (c) below; or |
(b) |
if a Successor Index has not been determined under paragraph (a) above, the Issuer, the Guarantor and the Trustee (acting solely on the advice of the Indexation Adviser) together shall seek to agree for the purpose of the Notes one or more adjustments to the Index or a substitute index (with or without adjustments) with the intention that the same should leave the Issuer, the Guarantor and the Noteholders in no better and no worse position than they would have been had the Index not ceased to be published; or |
(c) |
if the Issuer, the Guarantor and the Trustee (acting solely on the advice of the Indexation Adviser) fail to reach agreement as mentioned above within 20 business days following the giving of notice as mentioned in paragraph (ii), a bank or other person in London shall be appointed by the Guarantor and the Trustee or, failing agreement on and the making of such appointment within 20 business days following the expiry of the 20 business day period referred to above, by the Trustee (acting solely on the advice of the Indexation Adviser) (in each case, such bank or other person so appointed being referred to as the “Expert”), to determine for the purpose of the Notes one or more adjustments to the Index or a substitute index (with or without adjustments) with the intention that the same should leave the Issuer, the Guarantor and the Noteholders in no better and no worse position than they would have been had the Index not ceased to be published. Any Expert so appointed shall act as an expert and not as an arbitrator and all fees, costs and expenses of the Expert and of any Indexation Adviser and of any of the Issuer, the Guarantor and the Trustee in connection with such appointment shall be borne by the Guarantor. |
(iii) |
Adjustment or replacement: The Index shall be adjusted or replaced by a substitute index pursuant to the foregoing paragraphs, as the case may be, and references in these Terms and Conditions to the Index and to any Index Figure shall be deemed amended in such manner as the Trustee (acting solely on the advice of the Indexation Adviser), the Issuer and the Guarantor agree are appropriate to give effect to such adjustment or replacement. Such amendments shall be effective from the date of such notification and binding upon the Issuer, the Guarantor, the Trustee and the Noteholders, and the Issuer shall give notice to the Noteholders in accordance with Condition 14 of such amendments as promptly as practicable following such notification or adjustment. |
(f) |
Redemption for Index Reasons |
If either (i) the Index Figure for three consecutive months is required to be determined on the basis of an Index Figure previously published as provided in Condition 5(c)(ii)(2) and the Trustee has been notified by the Calculation Agent that publication of the Index has ceased or (ii) notice is published by His Majesty’s Treasury, or on its behalf, following a change in relation to the Index, offering a right of redemption to the holders of the Reference Gilt, and (in either case) no amendment or substitution of the Index shall have been designated by His Majesty’s Treasury in respect of the Reference Gilt and such circumstances are continuing, the Issuer may, upon giving not more than 60 nor less than 30 days’ notice to the Noteholders (or such other notice period as may be specified in the applicable Final Terms) in accordance with Condition 14, redeem all, but not some only, of the Notes at their Early Redemption Amount referred to in Condition 7(g) below together (if appropriate) with interest accrued to (but excluding) the date of redemption (in each case adjusted in accordance with Condition 5(b)).
(g)HICP
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Where HICP (as defined below) is specified as the Index in the applicable Final Terms, the Conditions 5(g) to 5(j) will apply. For purposes of Conditions 5(g) to 5(j), unless the context otherwise requires, the following defined terms shall have the meanings set out below:
“Base Index Level” means the base index level as specified in the applicable Final Terms;
“Calculation Agent” means the person appointed by the Issuer and the Guarantor as calculation agent in relation to a Series of Inflation Linked Notes and specified in the applicable Final Terms, and shall include any successor calculation agent appointed in respect of such Notes;
“Index” or “Index Level” means (subject as provided in Condition 5(i)) the non-revised Harmonised Index of Consumer Prices excluding tobacco or relevant Successor Index (as defined in Condition 5(i)(ii)), measuring the rate of inflation in the European Monetary Union excluding tobacco, expressed as an index and published by Eurostat (the “HICP”). The first publication or announcement of a level of such index for a calculation month (as defined in Condition 5(i)(i)(A)) shall be final and conclusive and later revisions to the level for such calculation month will not be used in any calculations. Any reference to the Index Level which is specified in these Terms and Conditions as applicable to any day (“d”) in any month (“m”) shall, subject as provided in Condition 5(i), be calculated as follows:
where:
“Id” is the Index Level for the day d
“HICP” m-2 is the level of HICP for month m-2
“HICP” m-3 is the level of HICP for month m-3
“nbd” is the actual number of days from and excluding the first day of month m to but including day d;
and
“qm” is the actual number of days in month m,
provided that if Condition 5(i) applies, the Index Level shall be the Substitute Index Level determined in accordance with such Condition.
“Index Business Day” means a day on which the TARGET System is operating;
“Index Determination Date” means in respect of any date for which the Index Level is required to be determined, the fifth Index Business Day prior to such date;
“Index Ratio” applicable to any date means the Index Level applicable to the relevant Index Determination Date divided by the Base Index Level and rounded to the nearest fifth decimal place, 0.000005 being rounded upwards; and
“Related Instrument” means an inflation-linked bond selected by the Calculation Agent that is a debt obligation of one of the governments (but not any government agency) of France, Italy, Germany or Spain and which pays a coupon or redemption amount which is calculated by reference to the level of inflation in the European Monetary Union with a maturity date which falls on (a) the same day as the Maturity Date or (b) the next longest maturity date after the Maturity Date or the next shortest maturity for the Maturity Date at its sole discretion, if there is no such bond maturing on the Maturity Date. The Calculation Agent will select the Related Instrument from such of those inflation-linked bonds issued on or before the relevant Issue Date and, if there is more than one such inflation-linked bond maturing on the same date, the Related Instrument shall be selected by the Calculation Agent from such bonds at its sole discretion. If the Related Instrument is redeemed the Calculation Agent will select a new Related Instrument on the same basis, but selected from all eligible bonds in issue at the time the originally selected Related Instrument is redeemed (including any bond for which the redeemed originally selected Related Instrument is exchanged).
(h)Application of the Index Ratio
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Each payment of interest (in the case of Inflation Linked Interest Notes) and principal (in the case of Inflation Linked Redemption Notes) in respect of the Notes shall be the amount provided in, or determined in accordance with, these Terms and Conditions, multiplied by the Index Ratio applicable to the date on which such payment falls to be made and rounded in accordance with Condition 4(b)(v).
(i)Changes in Circumstances Affecting the Index
(i) |
Delay in publication of Index |
(A) |
If the Index Level relating to any month (the “calculation month”) which is required to be taken into account for the purposes of the determination of the Index Level for any date (the “Relevant Level”) has not been published or announced by the day that is five Business Days before the date on which such payment is due (the “Affected Payment Date”), the Calculation Agent shall determine a Substitute Index Level (as defined below) (in place of such Relevant Level) by using the following methodology: |
(1) |
if applicable, the Calculation Agent will take the same action to determine the “Substitute Index Level” for the Affected Payment Date as that taken by the calculation agent (or any other party performing the function of a calculation agent (whatever such party’s title)) pursuant to the terms and conditions of the Related Instrument; |
(2) |
if (1) above does not result in a Substitute Index Level for the Affected Payment Date for any reason, then the Calculation Agent shall determine the Substitute Index Level as follows: |
Substitute Index Level = Base Level x (Latest Level / Reference Level) Where:
“Base Level” means the level of the Index (excluding any flash estimates) published or announced by Eurostat (or any successor entity which publishes such index) in respect of the month which is 12 calendar months prior to the month for which the Substitute Index Level is being determined;
“Latest Level” means the latest level of the Index (excluding any flash estimates) published or announced by Eurostat (or any successor entity which publishes such index) prior to the month in respect of which the Substitute Index Level is being calculated; and
“Reference Level” means the level of the Index (excluding any flash estimates) published or announced by Eurostat (or any successor entity which publishes such index) in respect of the month that is 12 calendar months prior to the month referred to in “Latest Level” above.
(B) |
If a Relevant Level is published or announced at any time after the day that is five Business Days prior to the next Interest Payment Date, such Relevant Level will not be used in any calculations. The Substitute Index Level so determined pursuant to this Condition 5(i) will be the definitive level for that calculation month. |
(ii) |
Cessation of publication: If the Index Level has not been published or announced for two consecutive months or Eurostat announces that it will no longer continue to publish or announce the Index then the Calculation Agent shall determine a successor index in lieu of any previously applicable Index (the “Successor Index”) by using the following methodology: |
(A) |
if at any time (other than after an Early Termination Event (as defined below) has been designated by the Calculation Agent pursuant to paragraph (E) below) a successor index has been designated by the calculation agent (or any other party performing the function of a calculation agent (whatever such party’s title)) pursuant to the terms and conditions of the Related Instrument, such successor index shall be designated the “Successor Index” for the purposes of all subsequent Interest Payment Dates, notwithstanding that any other Successor Index may previously have been determined under paragraphs (B), (C) or (D) below; or |
(B) |
if a Successor Index has not been determined under paragraph (A) above (and there has been no designation of an Early Termination Event pursuant to paragraph (E) below), and a notice has been |
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given or an announcement has been made by Eurostat (or any successor entity which publishes such index) specifying that the Index will be superseded by a replacement index specified by Eurostat (or any such successor), and the Calculation Agent determines that such replacement index is calculated using the same or substantially similar formula or method of calculation as used in the calculation of the previously applicable Index, such replacement index shall be the Index from the date that such replacement index comes into effect; or
(C) |
if a Successor Index has not been determined under paragraphs (A) or (B) above (and there has been no designation of an Early Termination Event pursuant to paragraph (E) below), the Calculation Agent shall ask five leading independent dealers to state what the replacement index for the Index should be. If four or five responses are received, and of those four or five responses, three or more leading independent dealers state the same index, this index will be deemed the “Successor Index”. If three responses are received, and two or more leading independent dealers state the same index, this index will be deemed the “Successor Index”. If fewer than three responses are received, the Calculation Agent will proceed to paragraph (D) below; or |
(D) |
if no Successor Index has been determined under paragraphs (A), (B) or (C) above on or before the fifth Index Business Day prior to the next Affected Payment Date the Calculation Agent will determine an appropriate alternative index for such Affected Payment Date, and such index will be deemed the “Successor Index”; or |
(E) |
if the Calculation Agent determines that there is no appropriate alternative index, the Guarantor shall, in conjunction with the Calculation Agent, determine in good faith an appropriate alternative index. If the Guarantor, in conjunction with the Calculation Agent, does not decide on an appropriate alternative index within a period of ten Business Days, then an “Early Termination Event” will be deemed to have occurred and the Issuer will redeem the Notes pursuant to Condition 5(j). |
(iii) |
Rebasing of the Index: If the Calculation Agent determines that the Index has been or will be rebased at any time, the Index as so rebased (the “Rebased Index”) will be used for the purposes of determining each relevant Index Level from the date of such rebasing; provided, however, that the Calculation Agent shall make such adjustments as are made by the calculation agent (or any other party performing the function of a calculation agent (whatever such party’s title)) pursuant to the terms and conditions of the Related Instrument to the levels of the Rebased Index so that the Rebased Index levels reflect the same rate of inflation as the Index before it was rebased. Any such rebasing shall not affect any prior payments made. |
(iv) |
Material Modification Prior to Interest Payment Date: If, on or prior to the day that is five Business Days before an Interest Payment Date, Eurostat announces that it will make a material change to the Index then the Calculation Agent shall make any such adjustments to the Index consistent with adjustments made to the Related Instrument. |
(v) |
Manifest Error in Publication: If, within thirty days of publication, the Calculation Agent determines that Eurostat (or any successor entity which publishes such index) has corrected the level of the Index to remedy a manifest error in its original publication, the Calculation Agent will notify the parties of (A) that correction, (B) the amount that is payable, in respect of interest payments falling after such correction, as a result of that correction and (C) take such other action as it may deem necessary to give effect to such correction. |
(j)Redemption for Index Reasons
If an Early Termination Event as described under Condition 5(i)(ii)(E) is deemed to have occurred, the Issuer will, upon giving not more than 60 nor less than 30 days’ notice to the Noteholders (or such other notice period as may be specified in the applicable Final Terms) in accordance with Condition 14, redeem all, but not some only, of the Notes at their Early Redemption Amount referred to in Condition 6(f) below together (if appropriate) with interest accrued to (but excluding) the date of redemption (in each case adjusted in accordance with Condition 5(h)).
6.Payments
(a)Method of payment
Subject as provided below :
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(i) |
payments in a Specified Currency other than euro or Renminbi will be made by credit or transfer to an account in the relevant Specified Currency (which, in the case of a payment in Japanese yen to a non-resident of Japan, shall be a non-resident account) maintained by the payee with, or, at the option of the payee, by a cheque in such Specified Currency drawn on, a bank in the principal financial centre of the country of such Specified Currency (which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney or Wellington, respectively); |
(ii) |
payments in euro will be made by credit or transfer to a euro account (or to any other account to which euro may be credited or transferred) specified by the payee or, at the option of the payee, by a euro cheque; and |
(iii) |
payments in Renminbi will be made by transfer to a Renminbi account maintained by or on behalf of the payee with a bank in Hong Kong. |
Payments will be subject in all cases to (i) any fiscal or other laws and regulations applicable thereto in the place of payment, but without prejudice to the provisions of Condition 8, and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the “Code”) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, any official interpretations thereof, or any law implementing an intergovernmental approach thereto.
(b)Presentation of Bearer Notes and Coupons
Payments of principal in respect of Bearer Notes will be made in the manner provided in paragraph (a) above only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of Bearer Notes, and payments of interest in respect of Bearer Notes will (subject as provided below) be made as aforesaid only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of Coupons, in each case at the specified office of any Paying Agent outside the United States (which expression, as used herein, means the United States of America (including the States and the District of Columbia and its possessions)).
Fixed Rate Notes in bearer form (other than Fixed Rate Notes which specify Interest Payment Date Adjustment as being applicable in the applicable Final Terms, Sustainability-Linked Notes which specify Sustainability-Linked Trigger Event (Interest) as being applicable in the applicable Final Terms or Inflation Linked Notes) should be presented for payment together with all unmatured Coupons appertaining thereto (which expression shall for this purpose include Coupons falling to be issued on exchange of matured Talons), failing which the amount of any missing unmatured Coupon (or, in the case of payment not being made in full, the same proportion of the amount of such missing unmatured Coupon as the sum so paid bears to the sum due) will be deducted from the sum due for payment. Each amount of principal so deducted will be paid in the manner mentioned above against surrender of the relative missing Coupon at any time before the expiry of 10 years after the Relevant Date (as defined in Condition 8) in respect of such principal (whether or not such Coupon would otherwise have become void under Condition 9) or, if later, five years from the date on which such Coupon would otherwise have become due, but in no event thereafter.
Upon any Fixed Rate Note in bearer form becoming due and repayable prior to its Maturity Date, all unmatured Talons (if any) appertaining thereto will become void and no further Coupons will be issued in respect thereof.
Upon the date on which any Floating Rate Note, Fixed Rate Note which specifies Interest Payment Date Adjustment as being applicable in the applicable Final Terms, Sustainability-Linked Note which specifies Sustainability-Linked Trigger Event (Interest) as being applicable in the applicable Final Terms, CMS Linked Note or Inflation Linked Interest Note in bearer form becomes due and repayable, unmatured Coupons and Talons (if any) relating thereto (whether or not attached) shall become void and no payment or, as the case may be, exchange for further Coupons shall be made in respect thereof.
If the due date for redemption of any definitive Bearer Note is not an Interest Payment Date, interest (if any) accrued in respect of such Note from (and including) the preceding Interest Payment Date or, as the case may be, the Interest Commencement Date shall be payable only against surrender of the relevant definitive Bearer Note.
(c)Payments in respect of Registered Notes
(i) |
Payments of principal in respect of Registered Notes shall be made against presentation and surrender of the relevant Certificates at the specified office of any of the Transfer Agents or of the Registrar and in the manner provided in the sub- paragraph (ii) below. |
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(ii) |
Interest on Registered Notes shall be paid to the person shown on the Register at the close of business on the fifteenth day before the due date for payment thereof (the “Record Date”). Payments of interest on each Registered Note shall be made in the relevant currency by cheque drawn on a Bank and mailed to the holder (or to the first named of joint holders) of such Note at its address appearing in the Register on the Record Date. Upon application by the holder to the specified office of the Registrar or any Transfer Agent before the Record Date, such payment of interest may be made by transfer to an account in the relevant currency maintained by the payee with a Bank. |
(iii) |
Payments of principal and interest in respect of Registered Notes registered in the name of, or in the name of a nominee for, The Depository Trust Company (“DTC”) and denominated in a Specified Currency other than U.S. dollars will be made or procured to be made by transfer by the Registrar to an account in the relevant Specified Currency of the Exchange Agent on behalf of DTC or its nominee in accordance with the following provisions. The amounts in such Specified Currency payable by the Registrar or its agent to DTC with respect to Registered Notes held by DTC or its nominee will be received from the Issuer by the Registrar who will make payments in such Specified Currency by wire transfer of same day funds to the designated bank account in such Specified Currency of those DTC participants entitled to receive the relevant payment who have made an irrevocable election to DTC, in the case of interest payments, on or prior to the third DTC Business Day after the Record Date for the relevant payment of interest and, in the case of payments of principal, at least 12 DTC Business Days prior to the relevant payment date, to receive that payment in such Specified Currency. The Registrar, after the Exchange Agent has converted amounts in such Specified Currency into U.S. dollars, will deliver such |
U.S. dollar amount in same day funds to DTC for payment through its settlement system to those DTC participants entitled to receive the relevant payment who did not elect to receive such payment in such Specified Currency. The Agency Agreement sets out the manner in which such conversions are to be made. For the purposes of this Condition 6(c), “DTC Business Day” means any day on which DTC is open for business.
(d)General provisions applicable to payments
The holder of a Global Note or a Global Certificate shall be the only person entitled to receive payments in respect of Notes represented by such Global Note or Global Certificate and the Issuer or, as the case may be, the Guarantor will be discharged by payment to, or to the order of, the holder of such Global Note or Global Certificate in respect of each amount so paid. Each of the persons shown in the records of Euroclear, Clearstream, Luxembourg or DTC as the beneficial holder of a particular nominal amount of Notes represented by such Global Note or Global Certificate must look solely to Euroclear, Clearstream, Luxembourg or DTC, as the case may be, for their share of each payment so made by the Issuer or, as the case may be, the Guarantor to, or to the order of, the holder of such Global Note or Global Certificate.
Notwithstanding the foregoing provisions of this Condition, if any amount of principal and/or interest in respect of Bearer Notes is payable in U.S. dollars, such U.S. dollar payments of principal and/or interest in respect of such Notes will be made at the specified office of a Paying Agent in the United States if:
(i) |
the Issuer and the Guarantor have appointed Paying Agents with specified offices outside the United States with the reasonable expectation that such Paying Agents would be able to make payment in U.S. dollars at such specified offices outside the United States of the full amount of principal and interest on the Notes in the manner provided above when due; |
(ii) |
payment of the full amount of such principal and interest at all such specified offices outside the United States is illegal or effectively precluded by exchange controls or other similar restrictions on the full payment or receipt of principal and interest in U.S. dollars; and |
(iii) |
such payment is then permitted under United States law without involving, in the opinion of the Guarantor, adverse tax consequences to the Issuer or the Guarantor, as the case may be. |
(e)Payment Day
If the date for payment of any amount in respect of any Note or Coupon is not a Payment Day, the holder thereof shall not be entitled to payment until the next following Payment Day in the relevant place and shall not be entitled to further interest or other payment in respect of such delay. For these purposes, “Payment Day” means any day which (subject to Condition 9) is:
(i) |
a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in: |
85
(A) |
in the case of Notes in definitive form only, the relevant place of presentation; |
(B) |
any Additional Financial Centre specified in the applicable Final Terms; and |
(ii) |
either (1) in relation to any sum payable in a Specified Currency other than euro or Renminbi, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in the principal financial centre of the country of the relevant Specified Currency (which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney or Wellington, respectively), (2) in relation to any sum payable in euro, a day on which the TARGET2 System is open or (3) in relation to any sum payable in Renminbi, a day (other than a Saturday, Sunday or public holiday) on which commercial banks and foreign exchange markets in Hong Kong are generally open for business and settlement for Renminbi payments in Hong Kong. |
(f)Interpretation of principal and interest
Any reference in these Terms and Conditions to principal in respect of the Notes shall be deemed to include, as applicable:
(i) |
any Additional Amounts which may be payable with respect to principal under Condition 8 or under any undertakings given in addition thereto or in substitution therefor pursuant to the Trust Deed; |
(ii) |
the Final Redemption Amount of the Notes; |
(iii) |
the Early Redemption Amount of the Notes; |
(iv) |
the Optional Redemption Amount(s) (if any) of the Notes; |
(v) |
in relation to Zero Coupon Notes, the Amortised Face Amount (as defined in Condition 7(g)); and |
(vi) |
any premium and any other amounts (other than interest) which may be payable by the Issuer under or in respect of the Notes (including, for the avoidance of doubt, if applicable, any Sustainability-Linked Premium Amount(s)). |
Any reference in these Terms and Conditions to interest in respect of the Notes shall be deemed to include, as applicable, any Additional Amounts which may be payable with respect to interest under Condition 8 or any undertakings given in addition thereto or in substitution therefor pursuant to the Trust Deed.
(g)Renminbi Currency Event
If Renminbi Currency Event is specified as applying in the applicable Final Terms and a Renminbi Currency Event (as defined below) occurs, each of the Issuer and the Guarantor, on giving not less than five nor more than thirty days’ irrevocable notice in accordance with Condition 14 to the Noteholders and the Trustee prior to any due date for payment, shall be entitled to satisfy its respective obligations in respect of such payment (in whole or in part) by making such payment in U.S. dollars on the basis of the Spot Rate for the relevant Determination Date as promptly notified to the Issuer, the Guarantor, the Trustee and the Paying Agents by the Calculation Agent.
In such event, any payment of U.S. dollars will be made by transfer to a U.S. dollar denominated account maintained by the payee with, or by a U.S. dollar denominated cheque drawn on, a bank in New York City and the definition of “Payment Day” in Condition 6(e) shall mean any day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in: (A) in the case of Notes in definitive form only, the relevant place of presentation; and (B) London and New York City.
In these Terms and Conditions:
“Determination Business Day” means a day (other than a Saturday or Sunday) on which commercial banks are open for general business (including dealings in foreign exchange) in Hong Kong, London and New York City;
“Determination Date” means the day which is three Determination Business Days before the due date of the relevant payment under the Notes;
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“Governmental Authority” means any de facto or de jure government (or any agency or instrumentality thereof), court, tribunal, administrative or other governmental authority or any other entity (private or public) charged with the regulation of the financial markets (including the central bank) of Hong Kong;
“Local Time” means the time of day in the jurisdiction in which the Calculation Agent, appointed in connection with the Notes, is located;
“Renminbi Currency Event” means any one of Renminbi Illiquidity, Renminbi Non-Transferability and Renminbi Inconvertibility;
“Renminbi Dealer” means an independent foreign exchange dealer of international repute active in the Renminbi exchange market in Hong Kong reasonably selected by the Guarantor;
“Renminbi Illiquidity” means the general Renminbi exchange market in Hong Kong becomes illiquid as a result of which the Issuer cannot obtain sufficient Renminbi in order to satisfy its obligation to pay interest or principal (in whole or in part) in respect of the Notes, as determined by the Guarantor acting in good faith and in a commercially reasonable manner following consultation with two Renminbi Dealers;
“Renminbi Inconvertibility” means the occurrence of any event that makes it impossible for the Issuer to convert any amount due in respect of the Notes into Renminbi in the general Renminbi exchange market in Hong Kong, other than where such impossibility is due solely to the failure of the Issuer and/or the Guarantor to comply with any law, rule or regulation enacted by any Governmental Authority (unless such law, rule or regulation is enacted after the Issue Date of the first Tranche of the Notes and it is impossible for the Issuer and/or the Guarantor, as the case may be, due to an event beyond its or their (as the case may be) control, to comply with such law, rule or regulation);
“Renminbi Non-Transferability” means the occurrence of any event that makes it impossible for the Issuer to transfer Renminbi between accounts inside Hong Kong or from an account inside Hong Kong to an account outside Hong Kong (including where the Renminbi clearing and settlement system for participating banks in Hong Kong is disrupted or suspended), other than where such impossibility is due solely to the failure of the Issuer and/or the Guarantor to comply with any law, rule or regulation enacted by any Governmental Authority (unless such law, rule or regulation is enacted after the Issue Date of the first Tranche of the Notes and it is impossible for the Issuer and/or the Guarantor, as the case may be, due to an event beyond its or their (as the case may be) control, to comply with such law, rule or regulation); and
“Spot Rate” means the spot CNY/U.S. dollar exchange rate for the purchase of U.S. dollars with Renminbi in the over-the-counter Renminbi exchange market in Hong Kong for settlement in three Determination Business Days, as determined by the Calculation Agent at or around 11.00 a.m. (Local Time) on the Determination Date, on a deliverable basis by reference to Reuters Screen Page TRADCNY3, or if no such rate is available, on a non-deliverable basis by reference to Reuters Screen Page TRADNDF. If neither rate is available, the Calculation Agent shall in good faith and in a commercially reasonable manner determine the Spot Rate at or around 11.00 a.m. (Local Time) on the Determination Date as the most recently available CNY/U.S. dollar official fixing rate for settlement in two Determination Business Days reported by the State Administration of Foreign Exchange of the PRC, which is reported on the Reuters Screen Page CNY=SAEC. Reference to a page on the Reuters Screen means the display page so designated on the Reuters Monitor Money Rates Service (or any successor service) or such other page as may replace that page for the purpose of displaying a comparable currency exchange rate.
If for any reason at any relevant time the Calculation Agent defaults in its obligation to determine the Spot Rate, the Trustee shall, at the expense of the Guarantor, appoint an expert to determine the Spot Rate in such manner as, in its absolute discretion (having such regard as it shall think fit to the foregoing provisions of this Condition), it shall deem fair and reasonable in all the circumstances and each such determination shall be deemed to have been made by the Calculation Agent.
All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 6(g), whether by the Calculation Agent or an expert appointed by the Trustee, shall (in the absence of manifest error) be binding on the Issuer, the Guarantor, the Trustee, the Issuing and Principal Paying Agent, the other Paying Agents and all Noteholders and Couponholders and (in the absence of wilful default and bad faith) no liability to the Issuer, the Guarantor, the Trustee, the Noteholders or the Couponholders shall attach to the Calculation Agent or such expert in connection with the exercise or non-exercise by it if its powers, duties and discretions pursuant to such provision.
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7.Redemption and Purchase
(a)Redemption at maturity
Unless previously redeemed or purchased and cancelled as specified below, each Note will be redeemed by the Issuer at its Final Redemption Amount specified in the applicable Final Terms in the relevant Specified Currency on the Maturity Date.
(b)Redemption for tax reasons
The Notes may be redeemed at the option of the Issuer in whole, but not in part, at any time (if this Note is not a Floating Rate Note, a CMS Linked Note or an Inflation Linked Interest Note) or on any Interest Payment Date (if this Note is a Floating Rate Note, a CMS Linked Note or an Inflation Linked Interest Note), on giving not less than 10 nor more than 60 days’ notice to the Issuing and Principal Paying Agent and, in accordance with Condition 14, the Noteholders (which notice shall be irrevocable), if:
(i) |
on the occasion of the next payment due in respect of the Notes, the Issuer would be required to pay Additional Amounts as provided or referred to in Condition 8 or the Guarantor would be unable for reasons outside its control to procure payment by the Issuer and in making payment itself would be required to pay such Additional Amounts, in each case as a result of any change in, or amendment to, the laws or regulations of the Relevant Jurisdiction (as defined in Condition 8) (or any political subdivision or taxing authority thereof or therein), or any change in the application or official interpretation of such laws or regulations, which change or amendment becomes effective on or after the date on which agreement is reached to issue the first Tranche of the Notes; and |
(ii) |
such requirement cannot be avoided by the Issuer or, as the case may be, the Guarantor taking reasonable measures available to it, |
provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer or, as the case may be, the Guarantor would be required to pay such Additional Amounts were a payment in respect of the Notes then due.
Prior to the publication of any notice of redemption pursuant to this Condition, the Issuer or the Guarantor shall deliver to the Trustee a certificate signed by two Authorised Signatories of the Issuer or, as the case may be, two Authorised Signatories of the Guarantor stating that the requirement referred to in sub-paragraph (i) above will apply on the occasion of the next payment due in respect of the Notes and cannot be avoided by the Issuer or, as the case may be, the Guarantor taking reasonable measures available to it and the Trustee shall be entitled to accept the relevant certificate as sufficient evidence of the satisfaction of the conditions precedent set out above, in which event it shall be conclusive and binding on the Noteholders and the Couponholders. Upon the expiry of any such notice as is referred to in this paragraph, the Issuer shall be bound to redeem the Notes in accordance with the provisions of this paragraph.
Notes redeemed pursuant to this Condition 7(b) will be redeemed at their Early Redemption Amount referred to in paragraph (e) below together (if appropriate) with interest accrued to (but excluding) the date of redemption.
(c)Redemption at the option of the Issuer (Issuer Call)
If Issuer Call is specified in the applicable Final Terms, the Issuer may, at its option (without any requirement for the consent or approval of the Noteholders) and, having given not less than 10 nor more than 60 days’ notice prior to the relevant date fixed for redemption falling w ithin the Issuer Call Period (as specified in the applicable Final Terms) to the Issuing and Principal Paying Agent and the Trustee and, in accordance with Condition 14, the Noteholders (which notice shall be irrevocable and shall specify the date fixed for redemption), redeem all or some only of the Notes then outstanding on any Optional Redemption Date and at the relevant Optional Redemption Amount(s) specified in the applicable Final Terms. Any such redemption must be of a nominal amount equal to the Minimum Redemption Amount or a Higher Redemption Amount. The relevant Optional Redemption Amount will be either, as specified in the applicable Final Terms, (A) if Make Whole Redemption Price is specified in the applicable Final Terms as applying to one or more Optional Redemption Dates, the relevant Make Whole Redemption Price or (B) if Par Call is specified in the applicable Final Terms as applying to one or more Optional Redemption Dates, the specified amount per Calculation Amount stated in the applicable Final Terms together, in each case, with any accrued and unpaid interest up to (but excluding) the redemption date.
The Make Whole Redemption Price will be an amount equal to the higher of:
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(A) |
if Spens Amount is specified as applicable in the applicable Final Terms, (x) 100 per cent. of the nominal amount outstanding of the Notes to be redeemed or (y) the nominal amount outstanding of the Notes to be redeemed multiplied by the price, as reported to the Issuer and the Trustee by the Determination Agent, at which the Gross Redemption Yield on such Notes on the Reference Date (assuming for this purpose that the Notes are redeemed on the Maturity Date (or, if a Par Redemption Date is specified in the applicable Final Terms, on the Par Redemption Date)) is equal to the Gross Redemption Yield (determined by reference to the middle market price) at the Quotation Time on the Reference Date of the Reference Bond, plus the Redemption Margin; or |
(B) |
if Make Whole Redemption Amount is specified as applicable in the applicable Final Terms, (x) 100 per cent. of the nominal amount outstanding of the Notes to be redeemed and (y) the sum of the present values of (i) the nominal amount outstanding of the Notes to be redeemed, (ii) the Remaining Term Interest on such Notes (exclusive of interest accrued to the date of redemption) and (iii) if Sustainability-Linked Trigger Event (Premium) is specified as applicable in the applicable Final Terms and one or more relevant Sustainability-Linked Trigger Events has or have occurred, the relevant Sustainability-Linked Premium Amount(s). Such present values shall be calculated by discounting such amounts to the date of redemption on an annual basis (assuming a 360-day year consisting of twelve 30-day months or, in the case of an incomplete month, the number of days elapsed) at the Reference Bond Rate, plus the Redemption Margin, |
all as determined by the Determination Agent.
In the case of a partial redemption of Notes, the Notes to be redeemed (“Redeemed Notes”) will be selected individually by lot, in the case of Redeemed Notes represented by definitive Notes, not more than 30 days prior to the date fixed for redemption (such date of selection being hereinafter called the “Selection Date”). In the case of Redeemed Notes represented by definitive Notes, a list of the serial numbers of such Redeemed Notes will be published in accordance with Condition 14 not less than 10 days prior to the date fixed for redemption.
In these Terms and Conditions:
“DA Selected Bond” means a government security or securities selected by the Determination Agent as having an actual or interpolated maturity comparable with the remaining term of the Notes (assuming, if a Par Redemption Date is specified in the applicable Final Terms, redemption on such Par Redemption Date), that would be utilised, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities denominated in the Specified Currency and of a comparable maturity to the remaining term of the Notes;
“Determination Agent” means an investment bank or financial institution of international standing selected by the Guarantor after consultation with the Trustee;
“Gross Redemption Yield” means, with respect to a security, the gross redemption yield on such security, expressed as a percentage and calculated by the Determination Agent on the basis set out by the United Kingdom Debt Management Office in the paper "Formulae for Calculating Gilt Prices from Yields", page 4, Section One: Price/Yield Formulae "Conventional Gilts"; "Double dated and Undated Gilts with Assumed (or Actual) Redemption on a Quasi-Coupon Date" (published 8 June 1998, as amended or updated from time to time) on a semi-annual compounding basis (converted to an annualised yield and rounded up (if necessary) to four decimal places);
“Par Redemption Date” shall be as set out in the applicable Final Terms;
“Quotation Time” shall be as set out in the applicable Final Terms;
“Redemption Margin” shall be as set out in the applicable Final Terms;
“Reference Bond” shall be as set out in the applicable Final Terms or the DA Selected Bond;
“Reference Bond Price” means, with respect to any date of redemption, (a) the arithmetic average of the Reference Government Bond Dealer Quotations for such date of redemption, after excluding the highest and lowest such Reference Government Bond Dealer Quotations, or (b) if the Determination Agent obtains fewer than four such Reference Government Bond Dealer Quotations, the arithmetic average of all such quotations;
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“Reference Bond Rate” means, with respect to any date of redemption, the rate per annum equal to the annual or semi-annual yield (as the case may be) to maturity or interpolated yield to maturity (on the relevant day count basis) of the Reference Bond, assuming a price for the Reference Bond (expressed as a percentage of its nominal amount) equal to the Reference Bond Price for such date of redemption;
“Reference Date” will be set out in the relevant notice of redemption;
“Reference Government Bond Dealer” means each of five banks selected by the Guarantor, or their affiliates, which are (A) primary government securities dealers, and their respective successors, or (B) market makers in pricing corporate bond issues;
“Reference Government Bond Dealer Quotations” means, with respect to each Reference Government Bond Dealer and any date of redemption, the arithmetic average, as determined by the Determination Agent, of the bid and offered prices for the Reference Bond (expressed in each case as a percentage of its nominal amount) at the Quotation Time on the Reference Date quoted in writing to the Determination Agent by such Reference Government Bond Dealer; and
“Remaining Term Interest” means, with respect to any Note, the aggregate amount of scheduled payment(s) of interest on such Note for the remaining term of such Note (or, if a Par Redemption Date is specified in the applicable Final Terms, to the Par Redemption Date) determined on the basis of the rate of interest applicable to such Note from and including the date on which such Note is to be redeemed by the Issuer pursuant to this Condition 7(c).
(d)Redemption following a Change of Control
If Change of Control Put Option is specified in the applicable Final Terms and, at any time while any of the Notes remain outstanding, a Change of Control Put Event (as defined below) occurs, then the holder of each such Note will have the option (a “Change of Control Put Option”) (unless prior to the giving of the relevant Change of Control Put Event Notice (as defined below) the Issuer has given notice of redemption under Conditions 7(b) or 7(c) above) to require the Issuer to redeem or, at the Issuer’s option, purchase (or procure the purchase of) that Note on the date which is seven days after the expiration of the Put Period (as defined below) (such date or such other date as may be specified in the applicable Final Terms, the “Put Date”) at the Optional Redemption Amount specified in the applicable Final Terms together with (or, where purchased, together with an amount equal to) interest (if any) accrued to (but excluding) the Put Date.
A “Change of Control Put Event” will be deemed to occur if:
(i) |
any person or any persons acting in concert (as defined in the United Kingdom’s City Code on Takeovers and Mergers), other than a holding company (as defined in Section 1159 of the Companies Act 2006 as amended) whose shareholders are or are to be substantially similar to the pre-existing shareholders of the Guarantor, shall become interested (within the meaning of Part 22 of the Companies Act 2006 as amended) in (A) more than 50 per cent. of the issued or allotted ordinary share capital of the Guarantor or (B) shares in the capital of the Guarantor carrying more than 50 per cent. of the voting rights normally exercisable at a general meeting of the Guarantor (each such event, a “Change of Control”); provided that, no Change of Control shall be deemed to occur if the event which would otherwise have constituted a Change of Control occurs or is carried out for the purposes of a reorganisation on terms previously approved by the Trustee in writing or by an Extraordinary Resolution; and |
(ii) |
the long-term debt of the Guarantor has been assigned: |
(A) |
an investment grade credit rating (Baa3/BBB-, or their respective equivalents, or better) (an “Investment Grade Rating”), by any Rating Agency at the invitation of the Guarantor; or |
(B) |
where there is no rating from any Rating Agency assigned at the invitation of the Guarantor, an Investment Grade Rating by any Rating Agency of its own volition, |
and;
(x) |
such rating is, within the Change of Control Period, either downgraded to a non-investment grade credit rating (Ba1/BB+, or their respective equivalents, or worse) (a “Non-Investment Grade Rating”) or withdrawn and is not, within the Change of Control Period, subsequently (in the case of a downgrade) upgraded or (in the case of a withdrawal) reinstated to an Investment Grade Rating by such Rating Agency; and |
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(y) |
there remains no other Investment Grade Rating of the long-term debt of the Guarantor from any other Rating Agency; and |
(iii) |
in making any decision to downgrade or withdraw an Investment Grade Rating pursuant to paragraph (ii) above, the relevant Rating Agency announces publicly or confirms in writing to the Guarantor or the Trustee that such decision(s) resulted, in whole or in part, from the occurrence of the relevant Change of Control. |
Further, if at the time of the occurrence of the relevant Change of Control the long-term debt of the Guarantor is not assigned an Investment Grade Rating by any Rating Agency, a Change of Control Put Event will be deemed to occur upon the occurrence of a Change of Control alone.
Promptly upon the Issuer or the Guarantor becoming aware that a Change of Control Put Event has occurred, the Issuer or, as the case may be, the Guarantor shall, and at any time upon the Trustee becoming similarly so aware the Trustee may, and if so requested by the holders of at least one-quarter in nominal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution of the Noteholders, shall (subject in each case to the Trustee being indemnified and/or secured and/or prefunded to its satisfaction) give notice (a “Change of Control Put Event Notice”) to the Noteholders in accordance with Condition 14 specifying the nature of the Change of Control Put Event and the procedure for exercising the Change of Control Put Option.
To exercise the Change of Control Put Option, the holder of the Note must (in the case of Bearer Notes) deposit such Note with any Paying Agent or (in the case of Registered Notes) deposit the Certificate representing such Note(s) with the Registrar or any Transfer Agent at its specified office, in each case at any time during normal business hours of such Paying Agent, Registrar or Transfer Agent, as the case may be, falling within the period (the “Put Period”) of 30 days after a Change of Control Put Event Notice is given or such other date as may be specified in the applicable Final Terms, accompanied by a duly signed and completed notice of exercise in the form (for the time being current) obtainable from the specified office of any Paying Agent, Registrar or Transfer Agent, as the case may be (a “Change of Control Put Notice”). No Note or Certificate so deposited and option so exercised may be withdrawn (except as provided in the Agency Agreement) without the prior consent of the Issuer. The Issuer shall redeem or purchase (or procure the purchase of) the relevant Notes on the Put Date unless previously redeemed (or purchased) and cancelled.
If 80 per cent. or more in nominal amount of the Notes then outstanding have been redeemed or purchased pursuant to this Condition 7(d), the Issuer may, on giving not less than 10 nor more than 60 days’ notice to the Noteholders (such notice being given within 30 days after the Put Date), redeem or purchase (or procure the purchase of), at its option, all but not some only of the remaining outstanding Notes at their Optional Redemption Amount, together with interest (if any) accrued to (but excluding) the date fixed for such redemption or purchase.
If the rating designations employed by either Moody’s or S&P are changed from those which are described in paragraph (ii) of the definition of “Change of Control Put Event” above, or if a rating is procured from a Substitute Rating Agency, the Guarantor shall determine, with the agreement of the Trustee, the rating designations of Moody’s or S&P or such Substitute Rating Agency (as appropriate) as are most equivalent to the prior rating designations of Moody’s or S&P and the definition of “Change of Control Put Event” shall be construed accordingly.
The Trustee is under no obligation to ascertain whether a Change of Control Put Event or Change of Control or any event which could lead to the occurrence of or could constitute a Change of Control Put Event or Change of Control has occurred, and, until it shall have actual knowledge or notice pursuant to the Trust Deed to the contrary, the Trustee may assume that no Change of Control Put Event or Change of Control or other such event has occurred.
In these Terms and Conditions:
“Change of Control Period” means the period commencing upon a Change of Control and ending 90 days after the Change of Control (or such longer period for which the Notes are under consideration (such consideration having been announced publicly within the period ending 90 days after the Change of Control) for rating review, such period not to exceed 60 days after the public announcement of such consideration); and
“Rating Agency” means Moody’s Investors Service Limited (“Moody’s”) or S&P Global Ratings Europe Limited (“S&P”) or any of their respective affiliates or successors or any rating agency (a “Substitute Rating Agency”) substituted for any of them by the Guarantor from time to time with the prior written approval of the Trustee.
(e)Redemption at the option of the Noteholders (Investor Put)
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If Investor Put is specified in the applicable Final Terms, upon the holder of any Note giving to the Issuer in accordance with Condition 14 notice within the Investor Put Period the Issuer will, upon the expiry of such notice, redeem, subject to, and in accordance with, the terms specified in the applicable Final Terms, in whole (but not in part), such Note on the Optional Redemption Date and at the Optional Redemption Amount together, if appropriate, with interest accrued to (but excluding) the Optional Redemption Date.
To exercise this option the holder must deposit (in the case of Bearer Notes) such Note (together with all unmatured Coupons) with any Paying Agent or (in the case of Registered Notes) the Certificate representing such Note(s) with the Registrar or any Transfer Agent at its specified office, accompanied by a duly completed and signed notice of exercise (a “Put Notice” in the form (for the time being current) obtainable from any specified office of any Paying Agent, the Registrar or any Transfer Agent (as applicable) within the notice period and in which the holder must specify a bank account (or, if payment is required to be made by cheque, an address) to which payment is to be made under this Condition.
(f)Clean-Up redemption at the option of the Issuer
If Clean-Up Call is specified in the applicable Final Terms and if the Clean-Up Call Threshold Percentage (as specified in the applicable Final Terms) or more of the aggregate nominal amount of the Notes originally issued (and, for these purposes, any further securities issued pursuant to Condition 17 will be deemed to have been originally issued) have been redeemed and/or purchased (except, if applicable, for the Notes redeemed at the Make Whole Redemption Price), then the Issuer may, at its option (without any requirement for the consent or approval of the Noteholders), and having given not less than 10 and no more than 60 days’ notice to the Trustee and the Issuing and Principal Paying Agent and, in accordance with Condition 14, the Noteholders (which notice shall be irrevocable and shall specify the date fixed for redemption), redeem all but not some only of the Notes on, or at any time after, the Clean-Up Call Optional Redemption Date specified in the applicable Final Terms. Any such redemption of Notes shall be at their Optional Redemption Amount, together with interest (if any) accrued to (but excluding) the date fixed for such redemption.
(g)Early Redemption Amounts
For the purpose of paragraph (b) above and Condition 10, each Note will be redeemed at the Early Redemption Amount calculated as follows:
(i) |
in the case of a Note (other than a Zero Coupon Note), at the amount specified in the applicable Final Terms or, if no such amount or manner is so specified in the applicable Final Terms, at its nominal amount; or |
(ii) |
in the case of a Zero Coupon Note, at an amount (the “Amortised Face Amount”) calculated in accordance with the following formula: |
Early Redemption Amount = RPx (1+AY)y
where:
“RP”means the Reference Price;
“AY”means the Accrual Yield expressed as a decimal; and
“y” |
is the Day Count Fraction specified in the applicable Final Terms which will be either (i) 30/360 (in which case the numerator will be equal to the number of days (calculated on the basis of a 360-day year consisting of 12 months of 30 days each) from (and including) the Issue Date of the first Tranche of the Notes to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and repayable and the denominator will be 360) or (ii) Actual/360 (in which case the numerator will be equal to the actual number of days from (and including) the Issue Date of the first Tranche of the Notes to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and repayable and the denominator w ill be 360) or (iii) Actual/365 (in which case the numerator will be equal to the actual number of days from (and including) the Issue Date of the first Tranche of the Notes to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and repayable and the denominator will be 365). |
(h)Purchases
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The Issuer, the Guarantor or any other Subsidiary of the Guarantor may at any time purchase Notes (provided that, in the case of Bearer Notes, all unmatured Coupons and Talons appertaining thereto are purchased therewith) at any price in the open market or otherwise.
The Issuer will purchase (or procure the purchase of) any Retained Notes on the Issue Date.
(i)Cancellation
All Notes (other than Retained Notes) which are (a) redeemed or (b) purchased by or on behalf of the Issuer will forthwith be cancelled (together with all Certificates or unmatured Coupons and Talons attached thereto or surrendered therewith at the time of redemption) and accordingly may not be reissued or resold. Any Notes which are purchased by or on behalf of the Guarantor or any of the Guarantor’s Subsidiaries (other than the Issuer) may, at the option of the purchaser, be held or resold or surrendered to a Paying Agent for cancellation.
The Issuer may cancel (or procure the cancellation of) any Retained Notes held by it or on its behalf at any time.
(j)Late payment on Zero Coupon Notes
If the amount payable in respect of any Zero Coupon Note upon redemption of such Zero Coupon Note pursuant to paragraph (a), (b), (c), (d) or (e) above or upon its becoming due and repayable as provided in Condition 10 is improperly withheld or refused, the amount due and repayable in respect of such Zero Coupon Note shall be the amount calculated as provided in paragraph f(ii) above as though the references therein to the date fixed for the redemption or the date upon which such Zero Coupon Note becomes due and payable were replaced by references to the date which is the earlier of:
(i)the date on which all amounts due in respect of such Zero Coupon Note have been paid; and
(ii)five days after the date on which the full amount of the moneys payable in respect of such Zero Coupon Notes has been received by the Issuing and Principal Paying Agent or the Trustee and notice to that effect has been given to the Noteholders in accordance with Condition 14.
8.Taxation
All payments in respect of the Notes and Coupons by or on behalf of the Issuer or the Guarantor will be made without withholding or deduction for any present or future taxes, assessments or other governmental charges (“Taxes”) levied by or on behalf of the Issuer’s jurisdiction of incorporation, the Issuer’s jurisdiction of tax residence or the Guarantor’s jurisdiction of incorporation (each a “Relevant Jurisdiction”) (or, in each case, any political subdivision or taxing authority thereof or therein), unless the withholding or deduction of the Taxes is required by law. In that event, the Issuer or, as the case may be, the Guarantor will pay such additional amounts (“Additional Amounts”) as may be necessary in order that the net amount paid to each holder of any Note or Coupon who, with respect to any such Tax is not resident in the Relevant Jurisdiction, after such withholding or deduction shall be not less than the respective amount to which such holder would have been entitled in respect of such Note or Coupon, as the case may be, in the absence of the withholding or deduction; provided however that neither the Issuer nor the Guarantor shall be required to pay any Additional Amounts (i) for or on account of any such Tax imposed by the United States (or any political subdivision or taxing authority thereof or therein) or (ii) for or on account of:
(a) |
any Tax which would not have been imposed but for (i) the existence of any present or former connection between a holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, such holder, if such holder is an estate, trust, partnership or corporation) and the Relevant Jurisdiction or any political subdivision or territory or possession thereof or area subject to its jurisdiction, including, without limitation, such holder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a citizen or resident thereof or being or having been present or engaged in trade or business therein or having or having had a permanent establishment therein or (ii) the presentation of such Note or Coupon (x) for payment on a date more than 30 days after the Relevant Date (as defined below) or (y) in the Relevant Jurisdiction; |
(b) |
any estate, inheritance, gift, sale, transfer, personal property or similar tax, assessment or other governmental charge; |
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(c) |
any Tax which is payable otherwise than by withholding or deduction from payments of (or in respect of) principal of, or any interest on, such Note or Coupon; |
(d) |
any Tax that is imposed or withheld by reason of the failure by the holder or any beneficial owner of such Note or Coupon to comply with a request of the Issuer or, as the case may be, the Guarantor given to the holder in accordance with Condition 14 (i) to provide information concerning the nationality, residence or identity of the holder or any beneficial owner or (ii) to make any declaration or other similar claim or complete any form or satisfy any information or reporting requirements, which, in the case of (i) or (ii), is required or imposed by a statute, treaty, regulation or administrative practice of the Relevant Jurisdiction as a precondition to exemption from all or part of such Tax; or |
(e) |
any combination of items (a), (b), (c) and (d) above, |
nor shall the Issuer or, as the case may be, the Guarantor be required to pay any Additional Amounts with respect to any payment of the principal of, or any interest on, any Note or Coupon to any holder who is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent such payment would be required by the laws of the Relevant Jurisdiction (or any political subdivision or taxing authority thereof or therein) to be included in the income for tax purposes of a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner which would not have been entitled to such Additional Amounts had it been the holder of such Note or Coupon.
Notwithstanding any other provision of the Terms and Conditions, any amounts to be paid on the Notes by or on behalf of the Issuer or the Guarantor, will be paid net of any deduction or withholding imposed or required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), or otherwise imposed pursuant to Sections 1471 through 1474 of the Code (or any regulations thereunder or official interpretations thereof) or an intergovernmental agreement between the United States and another jurisdiction facilitating the implementation thereof (or any fiscal or regulatory legislation, rules or practices implementing such an intergovernmental agreement) (and any such withholding or deduction, a “FATCA Withholding”). None of the Issuer, the Guarantor and any other person will be required to pay any Additional Amounts in respect of FATCA Withholding.
As used herein:
“Relevant Date” means the date on which such payment first becomes due, except that, if the full amount of the moneys payable has not been duly received by the Issuing and Principal Paying Agent or the Trustee on or prior to such due date, it means the date on which, the full amount of such moneys having been so received, notice to that effect is duly given to the Noteholders in accordance with Condition 14; and
“United States” means the United States of America (including the States and the District of Columbia) and its possessions (including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands).
9.Prescription
The Notes and Coupons will become void unless a claim for payment is made within a period of 10 years (in the case of principal) and five years (in the case of interest) after the Relevant Date (as defined in Condition 8) therefor (subject to the provisions of Condition 6(b)).
There shall not be included in any Coupon sheet issued on exchange of a Talon any Coupon the claim for payment in respect of which would be void pursuant to this Condition or Condition 6(b) or any Talon which would be void pursuant to Condition 6(b).
10.Events of Default and Enforcement
(A)Events of Default
The Trustee in its sole and absolute discretion may, and if so requested in writing by the holders of at least one-quarter in nominal amount of the Notes (excluding Retained Notes) then outstanding or if so directed by an Extraordinary Resolution of the Noteholders shall (subject in each case to being indemnified and/or secured and/or prefunded to its satisfaction), give notice to the Issuer and the Guarantor that the Notes are, and they shall accordingly forthwith become, immediately due and repayable at their Early Redemption Amount as referred to in Condition 7(g) together (if applicable)
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with accrued interest as provided in the Trust Deed, in any of the following events (each such event, together where applicable with the certification by the Trustee as described below, an “Event of Default”):
(a) |
if default is made in the payment of any principal or any interest due in respect of the Notes or any of them and the default continues for a period of 14 days in the case of a payment of principal or 21 days in the case of a payment of interest; or |
(b) |
if the Issuer or the Guarantor fails to perform or observe any of its other obligations under these Terms and Conditions or the Trust Deed and (except in any case where the Trustee considers the failure to be incapable of remedy when no such continuation or notice as is hereinafter mentioned will be required) the failure continues for the period of 30 days (or such longer period as the Trustee may permit) next following the service by the Trustee on the Issuer or the Guarantor (as the case may be) of notice requiring the same to be remedied; or |
(c) |
if any Indebtedness for Borrowed Money of the Issuer or the Guarantor becomes due and repayable prematurely by reason of an event of default (however described) or the Issuer or the Guarantor fails to make any payment in respect of any Indebtedness for Borrowed Money on the due date for payment (as extended by any originally applicable grace period) or any security given by the Issuer or the Guarantor for any Indebtedness for Borrowed Money becomes enforceable by reason of default in relation thereto and steps are taken to enforce such security or if default is made by the Issuer or the Guarantor in making any payment due under any guarantee and/or indemnity (at the expiry of any originally applicable grace period) given by it in relation to any Indebtedness for Borrowed Money of any other person, provided that no event shall constitute an Event of Default unless the Indebtedness for Borrowed Money or other relative liability either alone or when aggregated with other Indebtedness for Borrowed Money and/or other liabilities relative to all (if any) other events which shall have occurred equals or exceeds £150,000,000 (or its equivalent in any other currency); or |
(d) |
if any order is made by any competent court or resolution passed for the winding up or dissolution of the Issuer or the Guarantor, save for the purposes of a reorganisation on terms approved in writing by the Trustee; or |
(e) |
if the Issuer or the Guarantor stops payment of, or is unable to, or admits inability to, pay, its debts (or any class of its debts) as they fall due, or is deemed unable to pay its debts (within the meaning of section 509(3) or 570 of the Irish Companies Act 2014 or section 123(1)(e) or (2) of the Insolvency Act 1986 (whichever is applicable)), or is adjudicated or found bankrupt or insolvent or shall enter into any composition or other similar arrangements with its creditors under Parts 10 or 11 of the Irish Companies Act 2014 or under section 1 of the Insolvency Act 1986 (as applicable); or |
(f) |
if (i) an administrative or other receiver, manager, examiner, administrator or other similar official is appointed in relation to the Issuer or the Guarantor, or, as the case may be, in relation to the whole or a substantial part of the undertaking or assets of it, or an encumbrancer takes possession of the whole or a substantial part of the undertaking or assets of it, or a distress, execution, attachment, sequestration or other process is levied, enforced upon, sued out or put in force against the whole or a substantial part of the undertaking or assets of it and (ii) in any case (other than the appointment of an administrator) is not discharged, removed or paid within 45 days; or |
(g) |
if the Guarantee ceases to be, or is claimed by the Issuer or the Guarantor not to be, in full force and effect; or |
(h) |
if the Issuer ceases to be a Subsidiary which is wholly-owned and controlled, directly or indirectly, by the Guarantor; |
PROVIDED, in the case of any event described above other than those described in paragraphs (a), (d) and (h) above, the Trustee shall have certified in writing to the Issuer and the Guarantor that the event is, in its opinion, materially prejudicial to the interests of the Noteholders.
For the purposes of this Condition, “Indebtedness for Borrowed Money” means any present or future indebtedness (whether being principal, premium, interest or other amounts) for or in respect of (i) money borrowed, (ii) liabilities under or in respect of any acceptance or acceptance credit or (iii) any bonds, notes, debentures, debenture stock or loan stock.
(B)Enforcement
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The Trustee may at any time, at its discretion and without notice, take such proceedings against the Issuer and/or the Guarantor as it may think fit to enforce the provisions of the Trust Deed, the Notes and the Coupons, but it shall not be bound to take any such proceedings or any other action in relation to the Trust Deed, the Notes or the Coupons unless (i) it shall have been so directed by an Extraordinary Resolution of the relevant Noteholders or so requested in writing by the holders of at least one-quarter in nominal amount of the relevant Notes then outstanding (excluding any Retained Notes), and (ii) it shall have been indemnified and/or secured and/or pre-funded to its satisfaction.
Save as otherwise provided herein, no Noteholder or Couponholder shall be entitled to proceed directly against the Issuer or the Guarantor unless the Trustee, having become bound so to proceed, fails or is unable so to do within 60 days and the failure or inability shall be continuing.
11.Replacement of Notes, Certificates, Coupons and Talons
Should any Note, Certificate, Coupon or Talon be lost, stolen, mutilated, defaced or destroyed, it may be replaced at the specified office of the Issuing and Principal Paying Agent (in the case of Bearer Notes, Coupons or Talons) and of the Registrar (in the case of Certificates) upon payment by the claimant of such costs and expenses as may be incurred in connection therewith and on such terms as to evidence and indemnity as the Issuer or the Guarantor may reasonably require. Mutilated or defaced Notes, Certificates, Coupons or Talons must be surrendered before replacements will be issued.
12.Agents
The name of the initial Issuing and Principal Paying Agent and its initial specified office are set out below.
The Issuer and the Guarantor are entitled, with the prior written approval of the Trustee, to vary or terminate the appointment of the Issuing and Principal Paying Agent, and to appoint any other Paying Agent, the Registrar or any Transfer Agent and/or appoint additional or other Paying Agents or Transfer Agents or another Registrar and/or approve any change in the specified office through which any such agent acts, provided that:
(i) |
there will at all times be an Issuing and Principal Paying Agent; |
(ii) |
there will at all times be a Registrar and a Transfer Agent in relation to Registered Notes; |
(iii) |
so long as the Notes are listed on any stock exchange, there will at all times be a Paying Agent with a specified office in such place as may be required by the rules and regulations of the relevant stock exchange or other relevant authority; and |
(iv) |
if and so long as payments in respect of the Notes and Coupons would be subject to a withholding or deduction for Taxes levied by or on behalf of a Relevant Jurisdiction (or any political subdivision or taxing authority thereof or therein) if the Notes and Coupons were presented in the Relevant Jurisdiction, there will at all times be a Paying Agent with a specified office in a city approved by the Trustee outside the Relevant Jurisdiction. |
In addition, the Issuer and the Guarantor shall forthwith appoint a Paying Agent having a specified office in New York City in the circumstances described in Condition 6(d).
Any variation, termination, appointment or change shall only take effect (other than in the case of insolvency, when it shall be of immediate effect) after not less than 30 nor more than 60 days’ prior notice thereof shall have been given to the Noteholders in accordance with Condition 14.
In acting under the Agency Agreement, the Issuing and Principal Paying Agent, the Paying Agents, the Registrar and the Transfer Agents act solely as agents of the Issuer and the Guarantor and, in certain limited circumstances, of the Trustee and do not assume any obligation to, or relationship of agency or trust with, any Noteholders or Couponholders. The Agency Agreement contains provisions permitting any entity into which any Paying Agent or Registrar or Transfer Agent is merged or converted or with which it is consolidated or to which it transfers all or substantially all of its assets to become the successor paying agent, registrar or transfer agent, as the case may be.
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13.Exchange of Talons
On and after the Interest Payment Date on which the final Coupon comprised in any Coupon sheet matures, the Talon (if any) forming part of such Coupon sheet may be surrendered at the specified office of the Issuing and Principal Paying Agent or any other Paying Agent in exchange for a further Coupon sheet including (if such further Coupon sheet does not include Coupons to (and including) the final date for the payment of interest due in respect of the Note to which it appertains) a further Talon, subject to the provisions of Condition 9.
14.Notices
Notices to the holders of Registered Notes shall be mailed to them at their respective addresses in the Register and deemed to have been given on the fourth weekday (being a day other than a Saturday, Sunday or bank holiday) after the date of mailing.
Notices to the holders of Bearer Notes will be deemed to be validly given if published in a leading English language daily newspaper of general circulation in the United Kingdom. It is expected that such publication will be made in the Financial Times. The Issuer and the Guarantor shall also ensure that notices are duly published in a manner which complies with the rules and regulations of any stock exchange or any other relevant authority on which the Notes are for the time being listed. Any such notice will be deemed to have been given on the date of the first publication.
Notices to be given by any Noteholder shall be in writing and given by lodging the same, together (in the case of any Note in definitive form) with the relative Note or Notes, with the Issuing and Principal Paying Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered Notes). Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the holders of Bearer Notes in accordance with this Condition.
15.Available Information
This Condition 15 only applies to Sustainability-Linked Notes.
In respect of each financial year of the Guarantor, beginning with the financial year in which the Issue Date of the first Tranche of the Notes falls, the Guarantor will publish on its website, as applicable: (i) the Customer GHG Savings Amount, the Female Management and Senior Leadership Amount, the M-Pesa Customers Amount, the Vodafone GHG Scope 1 and Scope 2 Emissions Amount, the Vodafone GHG Scope 3 Emissions Amount, the Vodafone GHG Scope 1 and Scope 2 Emissions Baseline and/or the Vodafone GHG Scope 3 Emissions Baseline for the relevant financial year, as indicated in the ESG addendum officially publish by the Guarantor in relation to its annual report (the “ESG Addendum”); and (ii) an independent limited assurance report or reports issued by the relevant External Verifier(s) (the “Assurance Report”) in respect of, among others, where applicable, the Customer GHG Savings Amount, the Female Management and Senior Leadership Amount, the M-Pesa Customers Amount, the Vodafone GHG Scope 1 and Scope 2 Emissions Amount and the Vodafone GHG Scope 3 Emissions Amount which may form part of the ESG Addendum (the publication of such ESG Addendum and Assurance Report on or before the Sustainability-Linked Trigger Event Notification Deadline, together the “Reporting Condition”). The ESG Addendum and the Assurance Report will be published concurrently with the publication of the independent auditor’s report on the Guarantor’s annual report and may form part of such annual report, and will have the same reference date as the relevant independent auditor’s report provided that to the extent the Guarantor reasonably determines that additional time is required to complete the ESG Addendum and the Assurance Report, then the ESG Addendum and the Assurance Report may be published as soon as reasonably practicable, but in no event later than the Sustainability-Linked Trigger Event Notification Deadline.
16.Meeting of Noteholders, Modification, Authorisation, Waiver, Determination and Substitution
(a)Meetings
The Trust Deed contains provisions for convening meetings of the Noteholders (which may be held at a physical location, or via an electronic platform (such as a conference call or videoconference) or by a combination of such methods) to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of any of the provisions of these Terms and Conditions, the Notes, the Coupons or the Trust Deed. Such a meeting may be convened by the Issuer, the Guarantor or by Noteholders holding not less than 10 per cent. in nominal amount of the Notes for the time being outstanding. The quorum at any such meeting for passing an Extraordinary Resolution will be one or more persons holding or representing a clear majority in nominal amount of the Notes for the time being outstanding, or at any adjourned meeting one or more persons being or representing Noteholders whatever the nominal amount of the Notes so held or represented.
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The Trust Deed provides that (i) a resolution passed at a meeting duly convened and held in accordance with the Trust Deed by a majority consisting of not less than three-fourths of the votes cast on such resolution, (ii) a resolution in writing signed by or on behalf of the holders of not less than three-fourths in nominal amount of the Notes for the time being outstanding or (iii) consent given by way of electronic consents through the relevant clearing system(s) (in a form satisfactory to the Trustee) by or on behalf of the holders of not less than three-fourths in nominal amount of the Notes for the time being outstanding, shall, in each case, be effective as an Extraordinary Resolution of the Noteholders. An Extraordinary Resolution passed at any meeting of the Noteholders shall be binding on all the Noteholders, whether or not they are present at the meeting and whether or not they voted on (or voted in favour of) the relevant Extraordinary Resolution, and on all and Couponholders.
(b)Modification, Authorisation, Waiver, Determination, Substitution etc.
The Trustee may agree, without the consent of the Noteholders or the Couponholders, to any modification of, or to the waiver or authorisation of any breach or proposed breach of, any of these Terms and Conditions or any of the provisions of the Trust Deed or determine, without any such consent as aforesaid, that any Event of Default or Potential Event of Default (as defined in the Trust Deed) shall not be treated as such, which in any such case is not, in the opinion of the Trustee, materially prejudicial to the interests of the Noteholders or may agree, without any such consent as aforesaid, to any modification which is of a formal, minor or technical nature or to correct a manifest error. In addition, the Trustee shall be obliged to concur with the Issuer and the Guarantor in using its reasonable endeavours to effect any Benchmark Amendments or Benchmark Replacement Conforming Changes in the circumstances and as otherwise set out in Condition 4(b)(ii)(H) without the consent of the Noteholders or the Couponholders.
In connection with the exercise by it of any of its trusts, powers, authorities and discretions (including, without limitation, any modification, waiver, authorisation, determination or substitution), the Trustee shall have regard to the general interests of the Noteholders as a class but shall not have regard to any interests arising from circumstances particular to individual Noteholders or Couponholders (whatever their number) and, in particular but without limitation, shall not have regard to the consequences of any such exercise for individual Noteholders or Couponholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Noteholder or Couponholder be entitled to claim, from the Issuer, the Guarantor, the Trustee or any other person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders or Couponholders except to the extent already provided for in Condition 8 and/or any undertaking given in addition to, or in substitution for, Condition 8 pursuant to the Trust Deed.
The Trustee may, without the consent of the Noteholders or Couponholders, agree with the Issuer to the substitution in place of the Issuer (or of any previous substitute under this Condition) as principal debtor in respect of the Notes and the Coupons and under the Trust Deed of (i) a Successor in Business (as defined in the Trust Deed) to the Issuer or (ii) the Guarantor or a Successor in Business to the Guarantor or (iii) any other Subsidiary of the Guarantor, in each case subject to the Trustee being satisfied that the interests of the Noteholders will not be materially prejudiced thereby (provided that in determining such material prejudice the Trustee shall not take into account any prejudice to the interests of the Noteholders as a result of such substituted company not being required pursuant to proviso (i) to Condition 8 to pay any Additional Amounts for or on account of any Taxes imposed by the United States of America or any political subdivision or taxing authority thereof or therein) and certain other conditions set out in the Trust Deed being complied with.
The Trustee may, without the consent of the Noteholders or Couponholders, agree with the Guarantor to the substitution in place of the Guarantor (or of any previous substitute under this Condition) as guarantor in respect of the Notes and the Coupons and under the Trust Deed of either (i) a Successor in Business (as defined in the Trust Deed) to the Guarantor or (ii) a Holding Company of the Guarantor or (iii) a Subsidiary of the Guarantor, in each case subject to the Trustee being satisfied that the interests of the Noteholders will not be materially prejudiced thereby (provided that in determining such material prejudice the Trustee shall not take into account any prejudice to the interests of the Noteholders as a result of such substituted company not being required pursuant to proviso (i) to Condition 8 to pay any Additional Amounts for or on account of any Taxes imposed by the United States of America or any political subdivision or taxing authority thereof or therein) and certain other conditions set out in the Trust Deed being complied with.
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The Trust Deed contains provisions permitting each of the Issuer and the Guarantor to consolidate with or merge into any other person (including, without limitation, the Issuer consolidating with or merging into the Guarantor) or convey, transfer or lease its respective properties and assets substantially as an entirety to any person provided that (i) in the case of a consolidation or merger (except where the Issuer or, as the case may be, the Guarantor is the continuing entity but other than where the Issuer merges into the Guarantor) such person agrees to be bound by the terms of the Notes, the Coupons and the Trust Deed as principal debtor in place of the Issuer or, as the case may be, as guarantor in place of the Guarantor; (ii) in the case of a conveyance, transfer or lease, such person guarantees the obligations of the Issuer or, as the case may be, the Guarantor under the Notes, the Coupons and the Trust Deed and (iii) certain other conditions set out in the Trust Deed are complied with.
Any such modification, waiver, authorisation, determination or substitution shall be binding on the Noteholders and the Couponholders and, unless the Trustee otherwise agrees, any such modification or substitution shall be notified to the Noteholders in accordance with Condition 14 as soon as practicable thereafter.
For the purposes of this Condition “Holding Company” means, in relation to a person, an entity of which that person is a Subsidiary.
17.Further Issues
The Issuer shall be at liberty from time to time without the consent of the Noteholders or the Couponholders to create and issue further notes having terms and conditions the same as the Notes or the same in all respects save for the amount and date of the first payment of interest thereon and so that the same shall be consolidated and form a single Series with the outstanding Notes. The Trust Deed contains provisions for convening a single meeting of the Noteholders and the holders of notes of other Series in certain circumstances where the Trustee so decides.
18.Indemnification of the Trustee and its Contracting with the Issuer and/or the Guarantor
The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including provisions relieving it from taking action unless indemnified to its satisfaction.
The Trust Deed also contains provisions pursuant to which the Trustee is entitled, inter alia, (i) to enter into business transactions with the Issuer, the Guarantor and/or any of the Guarantor’s Subsidiaries and to act as trustee for the holders of any other securities issued or guaranteed by, or relating to, the Issuer, the Guarantor and/or any of the Guarantor’s Subsidiaries, (ii) to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such transactions or, as the case may be, any such trusteeship without regard to the interests of, or consequences for, the Noteholders or Couponholders, and (iii) to retain and not be liable to account for any profit made or any other amount or benefit received thereby or in connection therewith.
19.Third Party Rights
No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of the Notes, but this does not affect any right or remedy of any person which exists or is available apart from that Act.
20.Governing Law and Submission to Jurisdiction
(a)Governing Law
The Trust Deed, the Notes and the Coupons, and any non-contractual obligations arising out of or in connection with any of them, are governed by and shall be construed in accordance with, English law. The Agency Agreement is governed by and shall be construed in accordance with English law.
(b)Submission to Jurisdiction
(i) |
Subject to Condition 20(b)(iii) below, the English courts have exclusive jurisdiction to settle any dispute arising out of or in connection with the Trust Deed, the Notes, and/or the Coupons, including any dispute as to their existence, validity, interpretation, performance, breach or termination or the consequences of their nullity and any dispute relating to any non-contractual obligations arising out of or in connection with the Trust Deed, the Notes, and/or the Coupons (a “Dispute”) and accordingly each of the Issuer and the Trustee and any Noteholders or Couponholders in relation to any Dispute submits to the exclusive jurisdiction of the English courts. |
99
(ii) |
For the purposes of this Condition 19(b), the Issuer waives any objection to the English courts on the grounds that they are an inconvenient or inappropriate forum to settle any Dispute. |
(iii) |
To the extent allowed by law, the Trustee, the Noteholders and the Couponholders may, in respect of any Dispute or Disputes, take (i) proceedings in any other court with jurisdiction; and (ii) concurrent proceedings in any number of jurisdictions. |
(c)Appointment of Process Agent
The Issuer irrevocably appoints the Guarantor at Vodafone House, The Connection, Newbury, Berkshire RG14 2FN as its agent for service of process in any proceedings before the English courts in relation to any Dispute and agrees that, in the event of the Guarantor being unable or unwilling for any reason so to act, it will immediately appoint another person as its agent for service of process in England in respect of any Dispute. The Issuer agrees that failure by a process agent to notify it of any process will not invalidate service. Nothing herein shall affect the right to serve process in any other manner permitted by law.
(d)Other documents
The Issuer has in the Trust Deed and Agency Agreement submitted to the jurisdiction of the English courts and appointed an agent for service of process in terms substantially similar to those set out above
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ISSUING AND PRINCIPAL PAYING AGENT
HSBC Bank plc
8 Canada Square
London E14 5HQ
101
SCHEDULE 2
FORMS OF GLOBAL AND DEFINITIVE NOTES, CERTIFICATES, COUPONS AND TALONS
PART 1
FORM OF TEMPORARY GLOBAL NOTE
[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]1
[THIS NOTE IS ISSUED IN ACCORDANCE WITH AN EXEMPTION GRANTED BY THE CENTRAL BANK OF IRELAND UNDER SECTION 8(2) OF THE CENTRAL BANK ACT, 1971, INSERTED BY SECTION 31 OF THE CENTRAL BANK ACT, 1989, AS AMENDED BY SECTION 70(D) OF THE CENTRAL BANK ACT, 1997 EACH AMENDED BY THE CENTRAL BANK AND FINANCIAL SERVICES AUTHORITY OF IRELAND ACT, 2004 AND CONSTITUTES COMMERCIAL PAPER.
ANY INVESTMENT IN THIS NOTE DOES NOT HAVE THE STATUS OF A BANK DEPOSIT AND IS NOT WITHIN THE SCOPE OF THE DEPOSIT PROTECTION SCHEME OPERATED BY THE CENTRAL BANK OF IRELAND. THE ISSUER IS NOT AND WILL NOT BE REGULATED BY THE CENTRAL BANK OF IRELAND AS A RESULT OF ISSUING THIS TEMPORARY GLOBAL NOTE.
THE ISSUER’S OBLIGATIONS UNDER THIS NOTE ARE GUARANTEED BY VODAFONE GROUP PLC]2
VODAFONE INTERNATIONAL FINANCING DAC
(the Issuer)
(A designated activity company limited by shares and incorporated in Ireland)
unconditionally and irrevocably guaranteed by
VODAFONE GROUP PLC
(the Guarantor)
(Incorporated with limited liability under the laws of England and Wales)
TEMPORARY GLOBAL NOTE
This Note is a Temporary Global Note in respect of a duly authorised issue of Notes of the Issuer (the Notes) of the Nominal Amount, Specified Currency(ies) and Specified Denomination(s) as are specified in the Final Terms or Pricing Supplement, as the case may be, applicable to the Notes (the Final Terms), a copy of which is annexed hereto. References herein to the Conditions shall be to the Terms and Conditions of the Notes as set out in Schedule 1 to the Trust Deed (as defined below) as completed and/or (in the case of Exempt Notes) modified and/or replaced by the Final Terms but, in the event of any conflict between the provisions of the Conditions and the information in the Final Terms, the Final Terms will prevail. Words and expressions defined in the Conditions shall bear the same meanings when used in this Global Note. This Global Note is issued subject to, and with the benefit of, the Conditions and a Trust Deed (such Trust Deed as modified and/or
1 |
Delete where the original maturity of the Notes is 1 year or less. |
2 |
Delete where the original maturity of the Notes is 1 year or more. Notes with an original maturity of less than one year must be issued with a minimum denomination of €125,000 (or foreign currency equivalent). |
102
supplemented and/or restated from time to time, the Trust Deed) dated 27 July 2020 and made between the Issuer, the Guarantor and The Law Debenture Trust Corporation p.l.c. as trustee for the holders of the Notes.
The Issuer, subject as hereinafter provided and subject to and in accordance with the Conditions and the Trust Deed, promises to pay to the bearer hereof on the Maturity Date and/or on such earlier date(s) as all or any of the Notes represented by this Global Note may become due and repayable in accordance with the Conditions and the Trust Deed, the amount payable under the Conditions in respect of such Notes on each such date and to pay interest (if any) on the nominal amount of the Notes from time to time represented by this Global Note calculated and payable as provided in the Conditions and the Trust Deed together with any other sums payable under the Conditions and the Trust Deed, upon presentation and, at maturity, surrender of this Global Note to or to the order of the Issuing and Principal Paying Agent or any of the other Paying Agents located outside the United States, its territories and possessions (except as provided in the Conditions) from time to time appointed by the Issuer in respect of the Notes.
If the Final Terms indicates that this Global Note is intended to be a New Global Note, the nominal amount of Notes represented by this Global Note shall be the aggregate amount from time to time entered in the records of both Euroclear Bank SA/NV (Euroclear) and Clearstream Banking S.A. (Clearstream, Luxembourg and together with Euroclear, the relevant Clearing Systems). The records of the relevant Clearing Systems (which expression in this Global Note means the records that each relevant Clearing System holds for its customers which reflect the amount of such customer's interest in the Notes) shall be conclusive evidence of the nominal amount of Notes represented by this Global Note and, for these purposes, a statement issued by a relevant Clearing System (which statement shall be made available to the bearer upon request) stating the nominal amount of Notes represented by this Global Note at any time shall be conclusive evidence of the records of the relevant Clearing System at that time.
If the Final Terms indicates that this Global Note is not intended to be a New Global Note, the nominal amount of the Notes represented by this Global Note shall be the amount stated in the applicable Final Terms or, if lower, the nominal amount most recently entered by or on behalf of the Issuer in the relevant column in Part II, or III of Schedule One hereto or in Schedule Two hereto.
On any redemption of, or payment of interest being made in respect of, or purchase and cancellation of, any of the Notes represented by this Global Note the Issuer shall procure that:
(a) |
if the Final Terms indicates that this Global Note is intended to be a New Global Note, details of such redemption, payment or purchase and cancellation (as the case may be) shall be entered pro rata in the records of the relevant Clearing Systems, and, upon any such entry being made, the nominal amount of the Notes recorded in the records of the relevant Clearing Systems and represented by this Global Note shall be reduced by the aggregate nominal amount of the Notes so redeemed or purchased and cancelled; or |
(b) |
if the Final Terms indicates that this Global Note is not intended to be a New Global Note, details of such redemption, payment or purchase and cancellation (as the case may be) shall be entered by or on behalf of the Issuer in Schedule One hereto and the relevant space in Schedule One hereto recording any such redemption, payment or purchase and cancellation (as the case may be) shall be signed by or on behalf of the Issuer. Upon any such redemption or purchase and cancellation, the nominal amount of this Global Note and the Notes represented by this Global Note shall be reduced by the nominal amount of such Notes so redeemed or purchased and cancelled. |
Payments due in respect of Notes for the time being represented by this Global Note shall be made to the bearer of this Global Note and each payment so made will discharge the Issuer's obligations in respect thereof. Any failure to make entries referred to above shall not affect such discharge.
Payments of principal and interest (if any) due prior to the Exchange Date (as defined below) will only be made to the bearer hereof to the extent that there is presented to the Issuing and Principal Paying Agent by Clearstream, Luxembourg or Euroclear a certificate to the effect that it has received from or in respect of a person entitled to a beneficial interest in a particular nominal amount of the Notes represented by this Global Note (as shown by its records) a certificate of non-US beneficial ownership in the form required by it.
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The bearer of this Global Note will not (unless upon due presentation of this Global Note for exchange, delivery of the appropriate number of Definitive Bearer Notes (together, if applicable, with the Coupons and Talons appertaining thereto in or substantially in the forms set out in Parts 5, 6 and 7 of Schedule 2 to the Trust Deed) or, as the case may be, issue and delivery (or, as the case may be, endorsement) of the Permanent Global Note is improperly withheld or refused and such withholding or refusal is continuing at the relevant payment date) be entitled to receive any payment hereon due on or after the Exchange Date.
If this Temporary Global Note is an Exchangeable Bearer Note then, subject to Condition 2(f), this Temporary Global Note may be exchanged in whole or from time to time in part for one or more Registered Notes in accordance with the Conditions on or after the Issue Date but before its Exchange Date referred to below by its presentation to any Transfer Agent at its specified office. On or after the Exchange Date, the outstanding nominal amount of this Temporary Global Note may be exchanged for Definitive Bearer Notes and Registered Notes in accordance with the next paragraph.
On or after the date (the Exchange Date) which is the 40th day after the Issue Date, this Global Note may be exchanged (free of charge) in whole or in part for, as specified in the Final Terms, either (a) Definitive Bearer Notes and (if applicable) Coupons and/or Talons (on the basis that all the appropriate details have been included on the face of such Definitive Bearer Notes and (if applicable) Coupons and/or Talons and the relevant information completing the Conditions appearing in the Final Terms has been endorsed on or attached to such Definitive Bearer Notes) or (b) either (if the Final Terms indicates that this Global Note is intended to be a New Global Note) interests recorded in the records of the relevant Clearing Systems in a Permanent Global Note or (if the Final Terms indicates that this Global Note is not intended to be a New Global Note) a Permanent Global Note which, in either case, is in or substantially in the form set out in Part 2 of Schedule 2 to the Trust Deed (together with the Final Terms attached thereto) or (if this Global Note is an Exchangeable Bearer Note) for Registered Notes upon notice being given by Euroclear and/or Clearstream, Luxembourg acting on the instructions of any holder of an interest in this Global Note and subject, in the case of Definitive Bearer Notes, to such notice period as is specified in the Final Terms.
If Definitive Bearer Notes and (if applicable) Coupons and/or Talons have already been issued in exchange for all the Notes represented for the time being by the Permanent Global Note, then this Global Note may only thereafter be exchanged for Definitive Bearer Notes and (if applicable) Coupons and/or Talons pursuant to the terms hereof. This Global Note may be exchanged by the bearer hereof on any day (other than a Saturday, Sunday or bank holiday) on which banks are open for general business in London.
The Issuer shall procure that Definitive Bearer Notes or (as the case may be) the Permanent Global Note shall be issued and delivered and (in the case of the Permanent Global Note where the Final Terms indicates that this Global Note is intended to be a New Global Note) interests in the Permanent Global Note shall be recorded in the records of the relevant Clearing Systems in exchange for only that portion of this Global Note in respect of which there shall have been presented to the Issuing and Principal Paying Agent by Euroclear or Clearstream, Luxembourg a certificate to the effect that it has received from or in respect of a person entitled to a beneficial interest in a particular nominal amount of the Notes represented by this Global Note (as shown by its records) a certificate of non-US beneficial ownership in the form required by it.
On an exchange of the whole of this Global Note, this Global Note shall be surrendered to or to the order of the Issuing and Principal Paying Agent. The Issuer shall procure that:
(a) |
if the Final Terms indicates that this Global Note is intended to be a New Global Note, on an exchange of the whole or part only of this Global Note, details of such exchange shall be entered pro rata in the records of the relevant Clearing Systems such that the nominal amount of Notes represented by this Global Note shall be reduced by the nominal amount of this Global Note so exchanged; or |
104
(b) |
if the Final Terms indicates that this Global Note is not intended to be a New Global Note, on an exchange of part only of this Global Note details of such exchange shall be entered by or on behalf of the Issuer in Schedule Two hereto and the relevant space in Schedule Two hereto recording such exchange shall be signed by or on behalf of the Issuer, whereupon the nominal amount of this Global Note and the Notes represented by this Global Note shall be reduced by the nominal amount of this Global Note so exchanged. On any exchange of this Global Note for a Permanent Global Note, details of such exchange shall be entered by or on behalf of the Issuer in Schedule Two to the Permanent Global Note and the relevant space in Schedule Two thereto recording such exchange shall be signed by or on behalf of the Issuer. |
Until the exchange of the whole of this Global Note as aforesaid, the bearer hereof shall in all respects be entitled to the same benefits as if they were the bearer of Definitive Bearer Notes and the relative Coupons and/or Talons (if any) in the form(s) set out in Part 5, Part 6 and Part 7 (as applicable) of Schedule 2 to the Trust Deed.
The holder of this Global Note shall be treated at any meeting of the Noteholders as having one vote in respect of each Definitive Bearer Note for which this Global Note would be exchangeable.
In considering the interests of Noteholders while this Global Note is held on behalf of a clearing system, the Trustee may have regard to any information provided to it by such clearing system or its operator as to the identity (either individually or by category) of its accountholders with entitlements to this Global Note and may consider such interests as if such accountholders were the holder of this Global Note.
This Global Note does not confer on a third party any right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Global Note, but this does not affect any right or remedy of a third party which exists or is available apart from that Act.
This Global Note, and any non-contractual obligations arising out of or in connection with it, are governed by, and shall be construed in accordance with, English law and each of the Issuer and the Guarantor has in the Trust Deed submitted to the jurisdiction of the English courts for all purposes in connection with this Global Note.
This Global Note shall not be valid unless authenticated by HSBC Bank plc as Issuing and Principal Paying Agent and, if the Final Terms indicates that this Global Note is intended to be held in a manner which would allow Eurosystem eligibility, effectuated by the entity appointed as common safekeeper by the relevant Clearing Systems.
IN WITNESS whereof the Issuer has caused this Global Note to be signed manually or in facsimile by a person duly authorised on its behalf.
Issued as of |
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VODAFONE INTERNATIONAL FINANCING DAC | |||
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By: |
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Duly Authorised Attorney |
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Authenticated without recourse, warranty or liability by
HSBC Bank plc
as Issuing and Principal Paying Agent.
By: |
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105
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Authorised Officer |
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1Effectuated without recourse, |
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warranty or liability by |
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as common safekeeper |
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By: |
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1 |
This should only be completed where the Final Terms indicates that this Global Note is intended to be held in a manner which would allow Eurosytem eligibility. |
106
Schedule One*
PART I
INTEREST PAYMENTS
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Interest Payment |
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Total amount of |
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Amount of interest |
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Confirmation of |
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* Schedule One should only be completed where the Final Terms indicates that this Global Note is not intended to be a New Global Note.
107
PART II
REDEMPTIONS
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Total amount of |
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Amount of |
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Remaining nominal |
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Confirmation of |
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* See most recent entry in Part II or III of Schedule Two in order to determine this amount.
108
PART III
PURCHASES AND CANCELLATIONS
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Part of nominal amount |
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Remaining nominal |
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Confirmation of |
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* See most recent entry in Part II or III of Schedule Two in order to determine this amount.
109
Schedule Two*
EXCHANGES
FOR DEFINITIVE BEARER NOTES, REGISTERED NOTES OR PERMANENT GLOBAL NOTE
The following exchanges of a part of this Global Note for Definitive Bearer Notes or Registered Notes or a part of a Permanent Global Note have been made:
Date made |
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Nominal amount of this |
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Remaining nominal |
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Notation made by or on |
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* Schedule Two should only be completed where the Final Terms indicates that this Global Note is not intended to be a New Global Note.
* See most recent entry in Part II or III of Schedule One or in this Schedule Two in order to determine this amount.
110
ANNEX
[attach Final Terms that relate to this Global Note]
111
PART 2
FORM OF PERMANENT GLOBAL NOTE
[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.]1
[THIS NOTE IS ISSUED IN ACCORDANCE WITH AN EXEMPTION GRANTED BY THE CENTRAL BANK OF IRELAND UNDER SECTION 8(2) OF THE CENTRAL BANK ACT, 1971, INSERTED BY SECTION 31 OF THE CENTRAL BANK ACT, 1989, AS AMENDED BY SECTION 70(D) OF THE CENTRAL BANK ACT, 1997 EACH AMENDED BY THE CENTRAL BANK AND FINANCIAL SERVICES AUTHORITY OF IRELAND ACT, 2004 AND CONSTITUTES COMMERCIAL PAPER.
ANY INVESTMENT IN THIS NOTE DOES NOT HAVE THE STATUS OF A BANK DEPOSIT AND IS NOT WITHIN THE SCOPE OF THE DEPOSIT PROTECTION SCHEME OPERATED BY THE CENTRAL BANK OF IRELAND. THE ISSUER IS NOT AND WILL NOT BE REGULATED BY THE CENTRAL BANK OF IRELAND AS A RESULT OF ISSUING THIS PERMANENT GLOBAL NOTE.
THE ISSUER’S OBLIGATIONS UNDER THIS NOTE ARE GUARANTEED BY VODAFONE GROUP PLC]2
VODAFONE INTERNATIONAL FINANCING DAC
(the Issuer)
(A designated activity company limited by shares and incorporated in Ireland)
unconditionally and irrevocably guaranteed by
VODAFONE GROUP PLC
(the Guarantor)
(Incorporated with limited liability under the laws of England and Wales)
PERMANENT GLOBAL NOTE
This Note is a Permanent Global Note in respect of a duly authorised issue of Notes of the Issuer (the Notes) of the Nominal Amount, Specified Currency(ies) and Specified Denomination(s) as are specified in the Final Terms or Pricing Supplement, as the case may be, applicable to the Notes (the Final Terms), a copy of which is annexed hereto. References herein to the Conditions shall be to the Terms and Conditions of the Notes as set out in Schedule 1 to the Trust Deed (as defined below) as completed and/or (in the case of Exempt Notes) modified and/or replaced by the Final Terms but, in the event of any conflict between the provisions of the Conditions and the information in the Final Terms, the Final Terms will prevail. Words and expressions defined in the Conditions shall bear the same meanings when used in this Global Note. This Global Note is issued subject to, and with the benefit of, the Conditions and a Trust Deed (such Trust Deed as modified and/or supplemented and/or restated from time to time, the Trust Deed) dated 27 July 2020 and made between the Issuer, the Guarantor and The Law Debenture Trust Corporation p.l.c. as trustee for the holders of the Notes.
1 |
Include where the original maturity of the Notes is more than 365 days where TEFRA D is specified in the applicable Final Terms or Pricing Supplement, as the case may be. |
2 |
Delete where the original maturity of the Notes is 1 year or more. Notes with an original maturity of less than one year must be issued with a minimum denomination of €125,000 (or foreign currency equivalent). |
112
The Issuer, subject to and in accordance with the Conditions and the Trust Deed, promises to pay to the bearer hereof on the Maturity Date and/or on such earlier date(s) as all or any of the Notes represented by this Global Note may become due and repayable in accordance with the Conditions and the Trust Deed, the amount payable under the Conditions in respect of such Notes on each such date and to pay interest (if any) on the nominal amount of the Notes from time to time represented by this Global Note calculated and payable as provided in the Conditions and the Trust Deed together with any other sums payable under the Conditions and the Trust Deed, upon presentation and, at maturity, surrender of this Global Note at the specified office of the Issuing and Principal Paying Agent at 8 Canada Square, London EC2V 7EX, England or such other specified office as may be specified for this purpose in accordance with the Conditions or at the specified office of any of the other Paying Agents located outside the United States, its territories and possessions (except as provided in the Conditions) from time to time appointed by the Issuer in respect of the Notes.
If the Final Terms indicates that this Global Note is intended to be a New Global Note, the nominal amount of Notes represented by this Global Note shall be the aggregate amount from time to time entered in the records of both Euroclear Bank SA/NV (Euroclear) and Clearstream Banking S.A. (Clearstream, Luxembourg and together with Euroclear, the relevant Clearing Systems). The records of the relevant Clearing Systems (which expression in this Global Note means the records that each relevant Clearing System holds for its customers which reflect the amount of such customer's interest in the Notes) shall be conclusive evidence of the nominal amount of Notes represented by this Global Note and, for these purposes, a statement issued by a relevant Clearing System (which statement shall be made available to the bearer upon request) stating the nominal amount of Notes represented by this Global Note at any time shall be conclusive evidence of the records of the relevant Clearing System at that time.
If the Final Terms indicates that this Global Note is not intended to be a New Global Note, the nominal amount of the Notes represented by this Global Note shall be the amount stated in the applicable Final Terms or, if lower, the nominal amount most recently entered by or on behalf of the Issuer in the relevant column in Part II or Part III of Schedule One hereto or in Schedule Two hereto.
On any redemption of, or payment of interest being made in respect of, or purchase and cancellation of, any of the Notes represented by this Global Note the Issuer shall procure that:
(a) |
if the Final Terms indicates that this Global Note is intended to be a New Global Note, details of such redemption, payment or purchase and cancellation (as the case may be) shall be entered pro rata in the records of the relevant Clearing Systems and, upon any such entry being made, the nominal amount of the Notes recorded in the records of the relevant Clearing Systems and represented by this Global Note shall be reduced by the aggregate nominal amount of the Notes so redeemed or purchased and cancelled; or |
(b) |
if the Final Terms indicates that this Global Note is not intended to be a New Global Note, details of such redemption, payment or purchase and cancellation (as the case may be) shall be entered by or on behalf of the Issuer in Schedule One hereto and the relevant space in Schedule One hereto recording any such redemption, payment or purchase and cancellation (as the case may be) shall be signed by or on behalf of the Issuer. Upon any such redemption or purchase and cancellation, the nominal amount of this Global Note and the Notes represented by this Global Note shall be reduced by the nominal amount of such Notes so redeemed or purchased and cancelled. |
Payments due in respect of Notes for the time being represented by this Global Note shall be made to the bearer of this Global Note and each payment so made will discharge the Issuer's obligations in respect thereof and any failure to make entries referred to above shall not affect such discharge.
If the Notes represented by this Global Note were, on issue, represented by a Temporary Global Note then on any exchange of such Temporary Global Note for this Global Note or any part hereof, the Issuer shall procure that:
113
(a) |
if the Final Terms indicates that this Global Note is intended to be a New Global Note, details of such exchange shall be entered in the records of the relevant Clearing Systems such that the nominal amount of Notes represented by this Global Note shall be increased by the nominal amount of the Temporary Global Note so exchanged; or |
(b) |
if the Final Terms indicates that this Global Note is not intended to be a New Global Note, details of such exchange shall be entered by or on behalf of the Issuer in Schedule Two hereto and the relevant space in Schedule Two hereto recording such exchange shall be signed by or on behalf of the Issuer, whereupon the nominal amount of this Global Note and the Notes represented by this Global Note shall be increased by the nominal amount of the Temporary Global Note so exchanged. |
This Global Note may be exchanged (free of charge) in whole, but, except as provided below, not in part, for Definitive Bearer Notes and (if applicable) Coupons and/or Talons in or substantially in the forms set out in Part 5, Part 6 and Part 7 of Schedule 2 to the Trust Deed (on the basis that all the appropriate details have been included on the face of such Definitive Bearer Notes and (if applicable) Coupons and/or Talons and the relevant information completing the Conditions appearing in the Final Terms has been endorsed on or attached to such Definitive Bearer Notes) or (if this Global Note is an Exchangeable Bearer Note) Registered Notes represented by the Certificates described in the Trust Deed:
(a) |
if specified in the applicable Final Terms, upon not less than 60 days' written notice being given to the Issuing and Principal Paying Agent by Euroclear and/or Clearstream, Luxembourg (acting on the instructions of any holder of an interest in this Global Note); or |
(b) |
if specified in the applicable Final Terms, only upon the occurrence of an Exchange Event; or |
(c) |
if this Global Note is an Exchangeable Bearer Note then, subject to Condition 2(f), by the holder hereof giving notice to the Issuing and Principal Paying Agent of its election to exchange the whole or a part of this Global Note for Registered Notes. |
An Exchange Event means (unless otherwise specified in the applicable Final Terms):
(i) |
an Event of Default has occurred and is continuing; |
(ii) |
the Issuer has been notified that both Euroclear and Clearstream, Luxembourg have been closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or have announced an intention permanently to cease business or have in fact done so and no alternative clearing system satisfactory to the Trustee is available; or |
(iii) |
the Issuer or the Guarantor has or will become obliged to pay Additional Amounts as provided for or referred to in Condition 8 which would not be required were the Bearer Notes in definitive form and a certificate to such effect from two Authorised Signatories of the Issuer or, as the case may be, the Guarantor has been given to the Trustee. |
Upon the occurrence of an Exchange Event:
(A) |
the Issuer will promptly give notice to Noteholders in accordance with Condition 14 of the occurrence of such Exchange Event; and |
(B) |
Euroclear and/or Clearstream, Luxembourg (acting on the instructions of any holder of an interest in this Global Note) or the Trustee may give notice to the Issuing and Principal Paying Agent requesting exchange and, in the event of the occurrence of an Exchange Event as described in (iii) above, the Issuer may also give notice to the Issuing and Principal Paying Agent requesting exchange. |
114
This Global Note is exchangeable in part only if this Global Note is an Exchangeable Bearer Note and the part thereof submitted for exchange is to be exchanged for Registered Notes.
Any such exchange shall occur on a date specified in the notice not later than 60 days (or, in the case of an exchange for Registered Notes, 5 days) after the date of receipt of the first relevant notice by the Issuing and Principal Paying Agent.
The first notice requesting exchange in accordance with the above provisions shall give rise to the issue of Definitive Bearer Notes for the total nominal amount of Notes represented by this Global Note.
Any such exchange as aforesaid will be made upon presentation of this Global Note by the bearer hereof on any day (other than a Saturday, Sunday or bank holiday) on which banks are open for business in London at the office of the Issuing and Principal Paying Agent specified above.
The aggregate nominal amount of Definitive Bearer Notes or Registered Notes issued upon an exchange of this Global Note will be equal to the aggregate nominal amount of this Global Note submitted for exchange. Upon exchange in full of this Global Note, the Issuing and Principal Paying Agent shall cancel it or procure that it is cancelled.
Certificates issued upon exchange for Registered Notes shall not be Global Certificates unless the holder so requests and certifies to the Issuing and Principal Paying Agent that it is, or is acting as, a nominee for Clearstream, Luxembourg or Euroclear.
Until the exchange of the whole of this Global Note as aforesaid, the bearer hereof shall in all respects be entitled to the same benefits as if they were the bearer of Definitive Bearer Notes and the relative Coupons and/or Talons (if any) in the form(s) set out in Part 5, Part 6 and Part 7 (as applicable) of Schedule 2 to the Trust Deed.
The holder of this Global Note shall be treated at any meeting of the Noteholders as having one vote in respect of each Definitive Bearer Note for which this Global Note would be exchangeable.
In considering the interests of Noteholders while this Global Note is held on behalf of a clearing system, the Trustee may have regard to any information provided to it by such clearing system or its operator as to the identity (either individually or by category) of its accountholders with entitlements to this Global Note and may consider such interests as if such accountholders were the holder of this Global Note.
This Global Note does not confer on a third party any right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Global Note, but this does not affect any right or remedy of a third party which exists or is available apart from that Act.
This Global Note, and any non-contractual obligations arising out of or in connection with it, are governed by, and shall be construed in accordance with, English law and each of the Issuer and the Guarantor has in the Trust Deed submitted to the jurisdiction of the English courts for all purposes in connection with this Global Note.
This Global Note shall not be valid unless authenticated by HSBC Bank plc as Issuing and Principal Paying Agent and, if the Final Terms indicates that this Global Note is intended to be held in a manner which would allow Eurosystem eligibility, effectuated by the entity appointed as common safekeeper by the relevant Clearing Systems.
115
IN WITNESS whereof the Issuer has caused this Global Note to be signed manually or in facsimile by a person duly authorised on its behalf.
Issued as of |
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VODAFONE INTERNATIONAL FINANCING DAC | |||
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By: |
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Duly Authorised Attorney |
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Authenticated without recourse, warranty or liability by HSBC Bank plc | |||
as Issuing and Principal Paying Agent. | |||
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By: |
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Authorised Officer |
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1Effectuated without recourse, warranty or liability by | |||
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as common safekeeper |
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By: |
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1 |
This should only be completed where the Final Terms indicates that this Global Note is intended to be held in a manner which would allow Eurosytem eligibility. |
116
Schedule One*
PART I
INTEREST PAYMENTS
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Interest Payment |
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Total amount of |
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Amount of interest |
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Confirmation of |
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* Schedule One should only be completed where the Final Terms indicates that this Global Note is not intended to be a New Global Note.
117
PART II
REDEMPTION
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Total amount of |
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Amount of |
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Remaining nominal |
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Confirmation of |
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* See most recent entry in Part II or III of Schedule Two in order to determine this amount.
118
PART III
PURCHASES AND CANCELLATIONS
Date made |
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Part of nominal amount |
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Remaining nominal |
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Confirmation of |
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* See most recent entry in Part II or III of Schedule Two in order to determine this amount.
119
Schedule Two*
EXCHANGES
The following exchanges of a part of the Temporary Global Note for a part of this Global Note or a part of this Global Note for Registered Notes have been made:
Date made |
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Nominal amount of |
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Increased/decreased |
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Notation made by or on |
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* See most recent entry in Part II or III of Schedule One or in this Schedule Two in order to determine this amount.
* Schedule Two should only be completed where the Final Terms indicates that this Global Note is not intended to be a New Global Note.
120
ANNEX
[attach the Final Terms that relate to this Global Note]
121
PART 3
FORM OF REGULATION S GLOBAL CERTIFICATE
THE NOTES REPRESENTED BY THIS REGULATION S GLOBAL CERTIFICATE HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
[THE NOTES REPRESENTED BY THIS REGULATION S GLOBAL CERTIFICATE ARE ISSUED IN ACCORDANCE WITH AN EXEMPTION GRANTED BY THE CENTRAL BANK OF IRELAND UNDER SECTION 8(2) OF THE CENTRAL BANK ACT, 1971, INSERTED BY SECTION 31 OF THE CENTRAL BANK ACT, 1989, AS AMENDED BY SECTION 70(D) OF THE CENTRAL BANK ACT, 1997 EACH AMENDED BY THE CENTRAL BANK AND FINANCIAL SERVICES AUTHORITY OF IRELAND ACT, 2004 AND CONSTITUTE COMMERCIAL PAPER.
ANY INVESTMENT IN THE NOTES DOES NOT HAVE THE STATUS OF A BANK DEPOSIT AND IS NOT WITHIN THE SCOPE OF THE DEPOSIT PROTECTION SCHEME OPERATED BY THE CENTRAL BANK OF IRELAND. THE ISSUER IS NOT AND WILL NOT BE REGULATED BY THE CENTRAL BANK OF IRELAND AS A RESULT OF ISSUING THE NOTES.
THE ISSUER’S OBLIGATIONS UNDER THE NOTES ARE GUARANTEED BY VODAFONE GROUP PLC]1
VODAFONE INTERNATIONAL FINANCING DAC
(the Issuer)
(A designated activity company limited by shares and incorporated in Ireland)
unconditionally and irrevocably guaranteed by
VODAFONE GROUP PLC
(the Guarantor)
(Incorporated with limited liability under the laws of England and Wales)
REGULATION S GLOBAL CERTIFICATE
This Regulation S Global Certificate is issued in respect of a duly authorised issue of Notes of the Issuer (the Notes) of the Nominal Amount, Specified Currency(ies) and Specified Denomination(s) as are specified in the Final Terms or Pricing Supplement, as the case may be, applicable to the Notes (the Final Terms), a copy of which is annexed hereto. This Regulation S Global Certificate certifies that the person whose name is entered in the Register is the registered holder (the Registered Holder) of such nominal amount of the Notes specified in the Final Terms at the date hereof.
1 |
Delete where the original maturity of the Notes is 1 year or more. Notes with an original maturity of less than one year must be issued with a minimum denomination of €125,000 (or foreign currency equivalent). |
122
Interpretation and Definitions
References in this Regulation S Global Certificate to the Conditions are to the Terms and Conditions of the Notes as set out in Schedule 1 to the Trust Deed (as defined below) as completed and/or (in the case of Exempt Notes) modified and/or replaced by the Final Terms but, in the event of any conflict between the provisions of the Conditions and the information in the Final Terms; the Final Terms will prevail. Words and expressions defined in the Conditions shall bear the same meanings when used in this Regulation S Global Certificate. This Regulation S Global Certificate is issued subject to, and with the benefit of, the Conditions and a Trust Deed (such Trust Deed as modified and/or supplemented and/or restated from time to time, the Trust Deed) dated 27 July 2020 and made between the Issuer, the Guarantor and The Law Debenture Trust Corporation p.l.c as Trustee for the holders of the Notes.
Promise to Pay
The Issuer, subject as hereinafter provided and subject to and in accordance with the Conditions and the Trust Deed, promises to pay to the holder of the Notes represented by this Regulation S Global Certificate on the Maturity Date and/or on such earlier date(s) as all or any of the Notes represented by this Regulation S Global Certificate may become due and repayable in accordance with the Conditions and the Trust Deed, the amount payable under the Conditions in respect of such Notes on each such date and to pay interest (if any) on the nominal amount of the Notes from time to time represented by this Regulation S Global Certificate calculated and payable as provided in the Conditions and the Trust Deed together with any other sums payable under the Conditions and the Trust Deed.
For the purposes of this Regulation S Global Certificate, (a) the Issuer certifies that the Registered Holder is, at the date hereof, entered in the Register as the holder of the Notes represented by this Regulation S Global Certificate, (b) this Regulation S Global Certificate is evidence of entitlement only, (c) title to the Notes represented by this Regulation S Global Certificate passes only on due registration on the Register, (d) only the holder of the Notes, as on the immediately preceding Clearing System Business Day, represented by this Regulation S Global Certificate is entitled to payments in respect of the Notes represented by this Regulation S Global Certificate, and (e) the nominal amount of Notes represented by this Regulation S Global Certificate from time to time shall be that amount shown in the Register as being registered in the name of the Registered Holder hereof at such time.
For the purposes hereof "Clearing System Business Day" means any day other than (i) Saturdays or Sundays and (ii) 1 January and 25 December.
Transfer of Notes represented by Regulation S Global Certificates
If the Final Terms state that the Notes are to be represented by a Regulation S Global Certificate on issue, transfers of the holding of Notes represented by this Regulation S Global Certificate pursuant to Condition 2(b) may only be made in part:
(a) |
if the Notes represented by this Regulation S Global Certificate are held on behalf of Euroclear or Clearstream, Luxembourg or any other clearing system (an Alternative Clearing System) and any such clearing system is closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so and no alternative clearing system satisfactory to the Trustee is available; or |
(b) |
an Event of Default has occurred and is continuing; or |
(c) |
with the consent of the Issuer, |
provided that, in the case of the first transfer of part of a holding pursuant to (a) or (b) above, the holder of the Notes represented by this Regulation S Global Certificate has given the Registrar not less than 30 days’ notice at its specified office of such holder's intention to effect such transfer.
123
Where the holding of Notes represented by this Regulation S Global Certificate is only transferable in its entirety, the Certificate issued to the transferee upon transfer of such holding shall be a Regulation S Global Certificate. Where transfers are permitted in part, Certificates issued to transferees shall not be Regulation S Global Certificates unless the transferee so requests and certifies to the Registrar that it is, or is acting as a nominee for, Clearstream, Luxembourg, Euroclear and/or an Alternative Clearing System.
Interests in a Regulation S Global Certificate will be exchangeable, free of charge to the holder, for definitive Regulation S Certificates only upon the occurrence of an Exchange Event. An Exchange Event means (unless otherwise specified in the applicable Final Terms) that:
(i) |
an Event of Default has occurred and is continuing; or |
(ii) |
the Issuer has been notified that both Euroclear and Clearstream, Luxembourg have been closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or have announced an intention permanently to cease business or have in fact done so and, in any such case, no successor clearing system is available; or |
(iii) |
the Issuer or the Guarantor has or will become subject to adverse tax consequences which would not be suffered were the Notes represented by definitive Regulation S Certificates and a certificate to such effect from two Authorised Signatories of the Issuer or, as the case may be, the Guarantor has been given to the Trustee. |
Upon the occurrence of an Exchange Event:
(A) |
the Issuer will promptly give notice to Noteholders in accordance with Condition 14; and |
(B) |
Euroclear and Clearstream, Luxembourg (acting on the instructions of any holder of an interest in such Regulation S Global Certificate) may give notice to the Registrar requesting exchange and, in the event of an Exchange Event as described in (iii) above, the Issuer may also give notice to the Registrar requesting exchange. |
Any such exchange shall occur not later than 10 days after the date of receipt of the first relevant notice by the Registrar.
Meetings
At any meeting of Noteholders, the holder of the Notes represented by this Regulation S Global Certificate shall be treated as having one vote in respect of each nominal amount of Notes equal to the minimum Specified Denomination of the Notes.
This Regulation S Global Certificate shall not become valid for any purpose until authenticated by or on behalf of the Registrar and, if the applicable Final Terms indicates that this Regulation S Global Certificate is intended to be held under the New Safekeeping Structure, effectuated by the entity appointed as common safekeeper by Euroclear or Clearstream, Luxembourg.
This Regulation S Global Certificate, and any non-contractual obligations arising out of or in connection with it, shall be governed by and construed in accordance with English law and each of the Issuer and the Guarantor has in the Trust Deed submitted to the jurisdiction of the English courts for all purposes in connection with this Regulation S Global Certificate.
IN WITNESS whereof the Issuer has caused this Regulation S Global Certificate to be signed manually or in facsimile by a person duly authorised on its behalf.
124
Dated as of the Issue Date. |
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VODAFONE INTERNATIONAL FINANCING DAC | ||
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By: |
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Duly Authorised Attorney |
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Authenticated without recourse, warranty or liability | ||
by as Registrar | ||
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By: |
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Authorised Officer |
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1Effectuated without recourse, |
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warranty or liability by |
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as common safekeeper |
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By: |
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1 |
This should only be completed where the Final Terms indicates that this Regulation S Global Certificate is intended to be held under the NSS. |
125
Form of Transfer
For value received the undersigned transfers to
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(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF TRANSFEREE)
[●] nominal amount of the Notes represented by this Regulation S Global Certificate, and all rights under them.
Dated |
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Signed |
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Certifying Signature |
Notes:
(a) |
The signature of the person effecting a transfer shall conform to a list of duly authorised specimen signatures supplied by the holder of the Notes represented by this Regulation S Global Certificate or (if such signature corresponds with the name as it appears on the face of this Regulation S Global Certificate) be certified by a notary public or a recognised bank or be supported by such other evidence as a Transfer Agent or the Registrar may reasonably require. |
(b) |
A representative of the Noteholder should state the capacity in which they sign e.g. executor. |
126
ANNEX
[attach Final Terms that relate to this Global Certificate]
127
PART 4
FORM OF DTC RESTRICTED GLOBAL CERTIFICATE
THE NOTES REPRESENTED BY THIS DTC RESTRICTED GLOBAL CERTIFICATE HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT) OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT (RULE 144A) TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A QIB) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB, (2) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT (REGULATION S) TO A NON-US PERSON (AS DEFINED IN THE REGULATIONS) OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) , IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALES OF THE NOTES REPRESENTED BY THIS DTC RESTRICTED CERTIFICATE.
[THE NOTES REPRESENTED BY THIS DTC RESTRICTED GLOBAL CERTIFICATE ARE ISSUED IN ACCORDANCE WITH AN EXEMPTION GRANTED BY THE CENTRAL BANK OF IRELAND UNDER SECTION 8(2) OF THE CENTRAL BANK ACT, 1971, INSERTED BY SECTION 31 OF THE CENTRAL BANK ACT, 1989, AS AMENDED BY SECTION 70(D) OF THE CENTRAL BANK ACT, 1997 EACH AMENDED BY THE CENTRAL BANK AND FINANCIAL SERVICES AUTHORITY OF IRELAND ACT, 2004 AND CONSTITUTE COMMERCIAL PAPER.
ANY INVESTMENT IN THE NOTES DOES NOT HAVE THE STATUS OF A BANK DEPOSIT AND IS NOT WITHIN THE SCOPE OF THE DEPOSIT PROTECTION SCHEME OPERATED BY THE CENTRAL BANK OF IRELAND. THE ISSUER IS NOT AND WILL NOT BE REGULATED BY THE CENTRAL BANK OF IRELAND AS A RESULT OF ISSUING THE NOTES.
THE ISSUER’S OBLIGATIONS UNDER THE NOTES ARE GUARANTEED BY VODAFONE GROUP PLC]1
Unless this DTC Restricted Global Certificate is presented by an authorised representative of The Depository Trust Company, a corporation incorporated under the laws of the State of New York (DTC), to the Issuer or its agent for registration of transfer, exchange or payment, and any definitive Note issued is registered in the name of Cede & Co. or such other name as is requested by an authorised representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorised representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the registered owner hereof, Cede & Co., has an interest herein.
VODAFONE INTERNATIONAL FINANCING DAC
(the Issuer)
(A designated activity company limited by shares and incorporated in Ireland)
unconditionally and irrevocably guaranteed by
VODAFONE GROUP PLC
1 |
Delete where the original maturity of the Notes is 1 year or more. Notes with an original maturity of less than one year must be issued with a minimum denomination of €125,000 (or foreign currency equivalent). |
128
(the Guarantor)
(Incorporated with limited liability under the laws of England and Wales)
DTC RESTRICTED GLOBAL CERTIFICATE
Registered Holder:
Address of Registered Holder:
Nominal amount of Notes
represented by this DTC Restricted Global
Certificate:
This DTC Restricted Global Certificate is issued in respect of a duly authorised issue of Notes of the Issuer (the Notes) of the Nominal Amount, Specified Currency(ies) and Specified Denomination(s) as are specified in the Final Terms or Pricing Supplement, as the case may be, applicable to the Notes (the Final Terms), a copy of which is annexed hereto. This DTC Restricted Global Certificate certifies that the Registered Holder (as defined above) is registered as the holder of such nominal amount of the Notes at the date hereof.
Interpretation and Definitions
References in this DTC Restricted Global Certificate to the Conditions are to the Terms and Conditions of the Notes as set out in Schedule 1 to the Trust Deed (as defined below) as completed and/or (in the case of Exempt Notes) modified and/or replaced by the Final Terms but, in the event of any conflict between the provisions of the Conditions and the information in the Final Terms, the Final Terms will prevail. Words and expressions defined in the Conditions shall bear the same meanings when used in this DTC Restricted Global Certificate. This DTC Restricted Global Certificate is issued subject to, and with the benefit of, the Conditions and a Trust Deed (such Trust Deed as modified and/or supplemented and/or restated from time to time, the Trust Deed) dated 27 July 2020 and made between the Issuer, the Guarantor and The Law Debenture Trust Corporation p.l.c as Trustee for the holders of the Notes.
Promise to Pay
The Issuer, subject as hereinafter provided and subject to and in accordance with the Conditions and the Trust Deed, promises to pay to the holder of the Notes represented by this DTC Restricted Global Certificate on the Maturity Date and/or on such earlier date(s) as all or any of the Notes represented by this DTC Restricted Global Certificate may become due and repayable in accordance with the Conditions and the Trust Deed, the amount payable under the Conditions in respect of such Notes on each such date and to pay interest (if any) on the nominal amount of the Notes from time to time represented by this DTC Restricted Global Certificate calculated and payable as provided in the Conditions and the Trust Deed together with any other sums payable under the Conditions and the Trust Deed.
For the purposes of this DTC Restricted Global Certificate, (a) the Issuer certifies that the Registered Holder is, at the date hereof, entered in the Register as the holder of the Notes represented by this DTC Restricted Global Certificate, (b) this DTC Restricted Global Certificate is evidence of entitlement only, (c) title to the Notes represented by this DTC Restricted Global Certificate passes only on due registration on the Register, (d) only the holder of the Notes as on the immediately preceding Clearing System Business Day, represented by this DTC Restricted Global Certificate is entitled to payments in respect of the Notes represented by this DTC Restricted Global Certificate, and (e) the nominal amount of Notes represented by this DTC Restricted Global Certificate from time to time shall be that amount shown in the Register as being registered in the name of the Registered Holder hereof at such time.
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For the purposes hereof "Clearing System Business Day" means any day other than (i) Saturdays or Sundays and (ii) 1 January and 25 December.
Transfer of Notes represented by DTC Restricted Global Certificates
If the Final Terms state that the Notes are to be represented by a DTC Restricted Global Certificate on issue, transfers of the holding of Notes represented by this DTC Restricted Global Certificate pursuant to Condition 2(b) may only be made in part:
(a) |
if the Notes represented by this DTC Restricted Global Certificate are held on behalf of DTC or any other clearing system (an Alternative Clearing System) and any such clearing system is closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so and no alternative clearing system satisfactory to the Trustee is available; or |
(b) |
an Event of Default has occurred and is continuing; or |
(c) |
with the consent of the Issuer, |
provided that, in the case of the first transfer of part of a holding pursuant to (a) or (b) above, the holder of the Notes represented by this DTC Restricted Global Certificate has given the Registrar not less than 30 days' notice at its specified office of such holder's intention to effect such transfer. Where the holding of Notes represented by this DTC Restricted Global Certificate is only transferable in its entirety, the Certificate issued to the transferee upon transfer of such holding shall be a DTC Restricted Global Certificate. Where transfers are permitted in part, Certificates issued to transferees shall not be DTC Restricted Global Certificates unless the transferee so requests and certifies to the Registrar that it is, or is acting as a nominee for, DTC and/or an Alternative Clearing System.
Interests in a DTC Restricted Global Certificate will be exchangeable, free of charge to the holder, for definitive DTC Restricted Certificates only upon the occurrence of an Exchange Event. An Exchange Event means (unless otherwise specified in the applicable Final Terms) that:
(i) |
an Event of Default has occurred and is continuing; or |
(ii) |
either DTC has notified the Issuer that it is unwilling or unable to continue to act as depositary for the Notes and no alternative clearing system is available or DTC has ceased to constitute a clearing agency registered under the Exchange Act; or |
(iii) |
the Issuer or the Guarantor has or will become subject to adverse tax consequences which would not be suffered were the Notes represented by definitive DTC Restricted Certificates and a certificate to such effect from two Authorised Signatories of the Issuer or, as the case may be, the Guarantor has been given to the Trustee. |
Upon the occurrence of an Exchange Event:
(A) |
the Issuer will promptly give notice to Noteholders in accordance with Condition 14; and |
(B) |
DTC (acting on the instructions of any holder of an interest in such DTC Restricted Global Certificate) may give notice to the Registrar requesting exchange and, in the event of an Exchange Event as described in (iii) above, the Issuer may also give notice to the Registrar requesting exchange. |
Any such exchange shall occur not later than 10 days after the date of receipt of the first relevant notice by the Registrar.
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Covenants
The statements set forth in the legend above are an integral part of the Notes in respect of which this DTC Restricted Global Certificate representing DTC Restricted Registered Notes is issued and by acceptance hereof each holder of such Notes agrees to be subject to and bound by the terms and provisions set forth in such legend.
Meetings
At any meeting of Noteholders, the holder of the Notes represented by this DTC Restricted Global Certificate shall be treated as having one vote in respect of each nominal amount of Notes equal to the minimum Specified Denomination of the Notes.
This DTC Restricted Global Certificate shall not become valid for any purpose until authenticated by or on behalf of the Registrar.
This DTC Restricted Global Certificate, and any non-contractual obligations arising out of or in connection with it, shall be governed by and construed in accordance with English law and each of the Issuer and the Guarantor has in the Trust Deed submitted to the jurisdiction of the English courts for all purposes in connection with this DTC Restricted Global Certificate.
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IN WITNESS whereof the Issuer has caused this DTC Restricted Global Certificate to be signed manually or in facsimile by a person duly authorised on its behalf.
Dated as of the Issue Date. |
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VODAFONE INTERNATIONAL FINANCING DAC | |
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By: |
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Duly Authorised Attorney |
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Authenticated without recourse, warranty or liability | |
by as Registrar | |
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By: |
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Authorised Officer |
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Form of Transfer
For value received the undersigned transfers to
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(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF TRANSFEREE)
[●] nominal amount of the Notes represented by this DTC Restricted Global Certificate, and all rights under them.
Dated |
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Signed |
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Certifying Signature |
Notes:
(a) |
The signature of the person effecting a transfer shall conform to a list of duly authorised specimen signatures supplied by the holder of the Notes represented by this DTC Restricted Global Certificate or (if such signature corresponds with the name as it appears on the face of this DTC Restricted Global Certificate) be certified by a notary public or a recognised bank or be supported by such other evidence as a Transfer Agent or the Registrar may reasonably require. |
(b) |
A representative of the Noteholder should state the capacity in which they sign e.g. executor. |
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ANNEX
[attach Final Terms that relate to this Global Certificate]
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PART 5
FORM OF DEFINITIVE NOTE
[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED.]1
[THIS NOTE IS ISSUED IN ACCORDANCE WITH AN EXEMPTION GRANTED BY THE CENTRAL BANK OF IRELAND UNDER SECTION 8(2) OF THE CENTRAL BANK ACT, 1971, INSERTED BY SECTION 31 OF THE CENTRAL BANK ACT, 1989, AS AMENDED BY SECTION 70(D) OF THE CENTRAL BANK ACT, 1997 EACH AMENDED BY THE CENTRAL BANK AND FINANCIAL SERVICES AUTHORITY OF IRELAND ACT, 2004 AND CONSTITUTES COMMERCIAL PAPER.
ANY INVESTMENT IN THE NOTE DOES NOT HAVE THE STATUS OF A BANK DEPOSIT AND IS NOT WITHIN THE SCOPE OF THE DEPOSIT PROTECTION SCHEME OPERATED BY THE CENTRAL BANK OF IRELAND. THE ISSUER IS NOT AND WILL NOT BE REGULATED BY THE CENTRAL BANK OF IRELAND AS A RESULT OF ISSUING THE NOTE.
THE ISSUER’S OBLIGATIONS UNDER THE NOTE ARE GUARANTEED BY VODAFONE GROUP PLC]2
VODAFONE INTERNATIONAL FINANCING DAC
(the Issuer)
(A designated activity company limited by shares and incorporated in Ireland)
unconditionally and irrevocably guaranteed by
VODAFONE GROUP PLC
(the Guarantor)
(Incorporated with limited liability under the laws of England and Wales)
[Specified Currency and Nominal Amount of Tranche]
NOTES DUE
[Year of Maturity]
This Note is one of a Series of Notes of [Specified Currency(ies) and Specified Denomination(s)] each of the Issuer (Notes). References herein to the Conditions shall be to the Terms and Conditions [endorsed hereon/set out in Schedule 1 to the Trust Deed (as defined below) which shall be incorporated by reference herein and have effect as if set out herein] as completed by and/or (in the case of the Exempt Notes) modified and/or replaced the relevant information (appearing in the Final Terms or Pricing Supplement, as the case may be, (the Final Terms)) endorsed hereon but, in the event of any conflict between the provisions of the said Conditions and such information in the Final Terms, such information will prevail. Words and expressions defined in the Conditions shall bear the same meanings when used in this Note. This Note is issued subject to, and with the benefit of, the Conditions and a Trust Deed (such Trust Deed as modified and/or supplemented
1 |
Include where the original maturity of the Notes is more than 365 days where TEFRA D is specified in the applicable Final Terms or Pricing Supplement, as the case may be. |
2 |
Delete where the original maturity of the Notes is 1 year or more. Notes with an original maturity of less than one year must be issued with a minimum denomination of €125,000 (or foreign currency equivalent). |
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and/or restated from time to time, the Trust Deed) dated 27 July 2020 and made between the Issuer, the Guarantor and The Law Debenture Trust Corporation p.l.c. as trustee for the holders of the Notes.
The Issuer, subject to and in accordance with the Conditions and the Trust Deed, promises to pay to the bearer hereof on the Maturity Date or on such earlier date as this Note may become due and repayable in accordance with the Conditions and the Trust Deed, the amount payable on redemption of this Note and to pay interest (if any) on the nominal amount of this Note calculated and payable as provided in the Conditions and the Trust Deed together with any other sums payable under the Conditions and the Trust Deed.
This Note shall not be valid unless authenticated by HSBC Bank plc as Issuing and Principal Paying Agent.
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IN WITNESS whereof this Note has been executed on behalf of the Issuer.
Issued as of |
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VODAFONE INTERNATIONAL FINANCING DAC | |||
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By: |
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Duly Authorised Attorney |
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Authenticated without recourse, warranty or liability by HSBC Bank plc | |||
as Issuing and Principal Paying Agent. | |||
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By: |
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Authorised Officer |
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[Conditions]
[Conditions to be as set out in Schedule 1 to this Trust Deed or such other form as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Trustee and the relevant Dealer(s), but shall not be endorsed if not required by the relevant Stock Exchange]
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Final Terms
[Here to be set out the text of the relevant information completing the Conditions which appears in the Final Terms relating to the Notes]
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PART 6
FORM OF COUPON
On the front:
VODAFONE INTERNATIONAL FINANCING DAC
[Specified Currency and Nominal Amount of Tranche]
NOTES DUE
[Year of Maturity]
Series No. [ ]
[Coupon appertaining to a Note in the denomination of [Specified Currency and Specified Denomination]].1
Part A
[For Fixed Rate Notes:
This Coupon is payable to bearer, separately |
Coupon for |
negotiable and subject to the Terms and |
[ ] |
Conditions of the said Notes. |
due on [ ], [ ]] |
Part B
[For Floating Rate Notes, CMS Linked Notes, Inflation Linked Interest Notes or Sustainability-Linked Notes:
Coupon for the amount due in accordance with the Terms and Conditions endorsed on, attached to or incorporated by reference into the said Notes on [the Interest Payment Date falling in [] []/[ ]].
This Coupon is payable to bearer, separately negotiable and subject to such Terms and Conditions, under which it may become void before its due date.]
[ANY UNITED STATES PERSON (WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED.]2
1 |
Delete where the Notes are all of the same denomination. |
2 |
Include where the original maturity of the Notes is more than 365 days where TEFRA D is specified in the applicable Final Terms or Pricing Supplement, as the case may be. |
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PART 7
FORM OF TALON
On the front:
VODAFONE INTERNATIONAL FINANCING DAC
[Specified Currency and Nominal Amount of Tranche]
NOTES DUE
[Year of Maturity]
Series No. [ ]
[Talon appertaining to a Note in the denomination of [Specified Currency and Specified Denomination]].14
On and after [ ] further Coupons [and a further Talon]15 appertaining to the Note to which this Talon appertains will be issued at the specified office of any of the Paying Agents set out on the reverse hereof (and/or any other or further Paying Agents and/or specified offices as may from time to time be duly appointed and notified to the Noteholders) upon production and surrender of this Talon.
This Talon may, in certain circumstances, become void under the Terms and Conditions endorsed on the Note to which this Talon appertains.
[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED.]16
14 |
Delete where the Notes are all of the same denomination. |
15 |
Not required on last Coupon sheet. |
16 |
Include where the original maturity of the Notes is more than 365 days where TEFRA D is specified in the applicable Final Terms or Pricing Supplement, as the case may be. |
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On the back of Coupons and Talons:
ISSUING AND PRINCIPAL PAYING AGENT
HSBC Bank plc
8 Canada Square
London E14 5HQ
142
PART 8
FORM OF REGULATION S CERTIFICATE
On the front:
THE NOTES REPRESENTED BY THIS REGULATION S GLOBAL CERTIFICATE HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
[THE NOTES REPRESENTED BY THIS REGULATION S GLOBAL CERTIFICATE ARE ISSUED IN ACCORDANCE WITH AN EXEMPTION GRANTED BY THE CENTRAL BANK OF IRELAND UNDER SECTION 8(2) OF THE CENTRAL BANK ACT, 1971, INSERTED BY SECTION 31 OF THE CENTRAL BANK ACT, 1989, AS AMENDED BY SECTION 70(D) OF THE CENTRAL BANK ACT, 1997 EACH AMENDED BY THE CENTRAL BANK AND FINANCIAL SERVICES AUTHORITY OF IRELAND ACT, 2004 AND CONSTITUTE COMMERCIAL PAPER.
ANY INVESTMENT IN THE NOTES DOES NOT HAVE THE STATUS OF A BANK DEPOSIT AND IS NOT WITHIN THE SCOPE OF THE DEPOSIT PROTECTION SCHEME OPERATED BY THE CENTRAL BANK OF IRELAND. THE ISSUER IS NOT AND WILL NOT BE REGULATED BY THE CENTRAL BANK OF IRELAND AS A RESULT OF ISSUING THE NOTES.
VODAFONE INTERNATIONAL FINANCING DAC OBLIGATIONS UNDER THE NOTES ARE GUARANTEED BY VODAFONE GROUP PLC]17
VODAFONE INTERNATIONAL FINANCING DAC
(the Issuer)
(A designated activity company limited by shares and incorporated in Ireland)
unconditionally and irrevocably guaranteed by
VODAFONE GROUP PLC
(the Guarantor)
(Incorporated with limited liability under the laws of England and Wales)
[Specified Currency and Nominal Amount of Tranche]
NOTES DUE
[Year of Maturity]
This Regulation S Certificate certifies that (the Registered Holder) is, as at the date hereof, registered as the holder of [nominal amount] of the Notes referred to above (the Notes) of the Issuer. References herein to the Conditions shall be to the Terms and Conditions [endorsed hereon/set out in Schedule 1 to the Trust Deed (as defined below) which shall be incorporated by reference herein and have effect as if set out herein] as completed and/or (in the case of Exempt Notes) modified and/or replaced by the relevant information (appearing in the Final Terms or Pricing Supplement, as the case may be, (the Final Terms))
17 |
Delete where the original maturity of the Notes is 1 year or more. Notes with an original maturity of less than one year must be issued with a minimum denomination of €125,000 (or foreign currency equivalent). |
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endorsed hereon but, in the event of any conflict between the provisions of the said Conditions and such information in the Final Terms, such information will prevail. Words and expressions defined in the Conditions shall bear the same meanings when used in this Certificate. This Certificate is issued subject to, and with the benefit of, the Conditions and a Trust Deed (such Trust Deed as modified and/or supplemented and/or restated from time to time, the Trust Deed) dated 27 July 2020 and made between the Issuer, the Guarantor and The Law Debenture Trust Corporation p.l.c. as trustee for the holders of the Notes.
The Issuer, subject to and in accordance with the Conditions and the Trust Deed, promises to pay to the Registered Holder hereof on the Maturity Date or on such earlier date as the Notes represented by this Certificate may become due and repayable in accordance with the Conditions and the Trust Deed, the amount payable on redemption of such Notes and to pay interest (if any) on the nominal amount of such Notes calculated and payable as provided in the Conditions and the Trust Deed together with any other sums payable under the Conditions and the Trust Deed.
For the purposes of this Regulation S Certificate, (a) the Issuer certifies that the Registered Holder is, at the date hereof, entered in the Register as the holder of the Note(s) represented by this Regulation S Certificate,
(b) this Regulation S Certificate is evidence of entitlement only, (c) title to the Note(s) represented by this Regulation S Certificate passes only on due registration on the Register, and (d) only the holder of the Note(s) represented by this Regulation S Certificate is entitled to payments in respect of the Note(s) represented by this Regulation S Certificate.
This Regulation S Certificate shall not become valid for any purpose until authenticated by or on behalf of the Registrar.
This Regulation S Certificate, and any non-contractual obligations arising out of or in connection with it, shall be governed by and construed in accordance with English law and each of the Issuer and the Guarantor has in the Trust Deed submitted to the jurisdiction of the English courts for all purposes in connection with this Regulation S Certificate.
IN WITNESS whereof this Regulation S Certificate has been executed on behalf of the Issuer.
Dated as of the Issue Date. |
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VODAFONE INTERNATIONAL FINANCING DAC | |||
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By: |
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Duly Authorised Attorney |
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Authenticated without recourse, warranty or liability by as Registrar. | |||
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By: |
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Authorised Officer |
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On the back:
Terms and Conditions of the Notes
[Conditions to be as set out in Schedule 1 to this Trust Deed or such other form as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Registrar, the Trustee and the relevant Dealer(s), but shall not be endorsed if not required by the relevant Stock Exchange.]
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Final Terms
[Here to be set out the text of the relevant information completing the Conditions which appears in the Final Terms relating to the Notes.]
146
Form of Transfer
For value received the undersigned transfers to
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(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF TRANSFEREE)
[●] nominal amount of the Notes represented by this Regulation S Certificate, and all rights under them.
Dated |
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Certifying Signature |
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Signed |
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Notes:
(a) |
The signature of the person effecting a transfer shall conform to a list of duly authorised specimen signatures supplied by the holder of the Notes represented by this Regulation S Certificate or (if such signature corresponds with the name as it appears on the face of this Regulation S Certificate) be certified by a notary public or a recognised bank or be supported by such other evidence as a Transfer Agent or the Registrar may reasonably require. |
(b) |
A representative of the Noteholder should state the capacity in which they sign. |
Unless the context otherwise requires capitalised terms used in this Form of Transfer have the same meaning as in the Trust Deed.
[TO BE COMPLETED BY TRANSFEREE:
[INSERT ANY REQUIRED TRANSFEREE REPRESENTATIONS, CERTIFICATIONS, ETC.]]
ISSUING AND PRINCIPAL PAYING AGENT
HSBC Bank plc
8 Canada Square
London E14 5HQ
147
PART 9
FORM OF DTC RESTRICTED CERTIFICATE
On the front:
THE NOTES REPRESENTED BY THIS DEFINITIVE REGISTERED NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT (RULE 144A) TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A QIB) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB, (2) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT (REGULATION S) TO A NON-U.S. PERSON (AS SUCH TERM IS DEFINED UNDER REGULATIONS) OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THE NOTES REPRESENTED BY THIS DEFINITIVE REGISTERED NOTE.
[THE NOTES REPRESENTED BY THIS DTC RESTRICTED CERTIFICATE ARE ISSUED IN ACCORDANCE WITH AN EXEMPTION GRANTED BY THE CENTRAL BANK OF IRELAND UNDER SECTION 8(2) OF THE CENTRAL BANK ACT, 1971, INSERTED BY SECTION 31 OF THE CENTRAL BANK ACT, 1989, AS AMENDED BY SECTION 70(D) OF THE CENTRAL BANK ACT, 1997 EACH AMENDED BY THE CENTRAL BANK AND FINANCIAL SERVICES AUTHORITY OF IRELAND ACT, 2004 AND CONSTITUTE COMMERCIAL PAPER.
ANY INVESTMENT IN THE NOTES DOES NOT HAVE THE STATUS OF A BANK DEPOSIT AND IS NOT WITHIN THE SCOPE OF THE DEPOSIT PROTECTION SCHEME OPERATED BY THE CENTRAL BANK OF IRELAND. THE ISSUER IS NOT AND WILL NOT BE REGULATED BY THE CENTRAL BANK OF IRELAND AS A RESULT OF ISSUING THE NOTES.
VODAFONE INTERNATIONAL FINANCING DAC OBLIGATIONS UNDER THE NOTES ARE GUARANTEED BY VODAFONE GROUP PLC]18
[FOR PURPOSES OF SECTIONS 1271 ET. SEQ. OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED, THIS NOTE HAS ORIGINAL ISSUE DISCOUNT OF [currency][amount] PER EACH [currency][amount] OF PRINCIPAL AMOUNT OF THIS NOTE; THE ISSUE PRICE OF THIS NOTE IS [currency][amount]; THE ISSUE DATE IS [date]; AND THE YIELD TO MATURITY (COMPOUNDED [semi-annually]) IS [yield].]*
VODAFONE INTERNATIONAL FINANCING DAC
(the Issuer)
(A designated activity company limited by shares and incorporated in Ireland)
unconditionally and irrevocably guaranteed by
VODAFONE GROUP PLC
18 |
Delete where the original maturity of the Notes is 1 year or more. Notes with an original maturity of less than one year must be issued with a minimum denomination of €125,000 (or foreign currency equivalent). |
* |
Legend to be borne by any Definitive Certificate issued with "original issue discount" for U.S federal income tax purposes. |
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(the Guarantor)
(Incorporated with limited liability under the laws of England and Wales)
[Specified Currency and Nominal Amount of Tranche] NOTES DUE
[Year of Maturity]
This DTC Restricted Certificate certifies that (the Registered Holder) is, as at the date hereof, registered as the holder of [nominal amount] of the Notes referred to above (the Notes) of the Issuer. References herein to the Conditions shall be to the Terms and Conditions [endorsed hereon/set out in Schedule 1 to the Trust Deed (as defined below) which shall be incorporated by reference herein and have effect as if set out herein] as completed and/or (in the case of Exempt Notes) modified and/or replaced by the relevant information (appearing in the Final Terms or Pricing Supplement, as the case may be, (the Final Terms)) endorsed hereon but, in the event of any conflict between the provisions of the said Conditions and such information in the Final Terms, such information will prevail. Words and expressions defined in the Conditions shall bear the same meanings when used in this DTC Restricted Certificate. This DTC Restricted Certificate is issued subject to, and with the benefit of, the Conditions and a Trust Deed (such Trust Deed as modified and/or supplemented and/or restated from time to time, the Trust Deed) dated 27 July 2020 and made between the Issuer, the Guarantor and The Law Debenture Trust Corporation p.l.c. as trustee for the holders of the Notes.
The Issuer, subject to and in accordance with the Conditions and the Trust Deed, promises to pay to the Registered Holder hereof on the Maturity Date or on such earlier date as the Notes represented by this DTC Restricted Certificate may become due and repayable in accordance with the Conditions and the Trust Deed, the amount payable on redemption of such Notes and to pay interest (if any) on the nominal amount of such Notes calculated and payable as provided in the Conditions and the Trust Deed together with any other sums payable under the Conditions and the Trust Deed.
The statements set forth in the legend above are an integral part of the Notes in respect of which this DTC Restricted Certificate is issued and by acceptance hereof each holder of such Notes agrees to be subject to and bound by the terms and provisions set forth in such legend.
For so long as the Notes are outstanding, the Issuer will, during the period in which the Issuer is neither subject to Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended, nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder, provide to the holder hereof, or to any prospective purchaser hereof designated by such holder, upon request, the information required to be provided by Rule 144A(d)(4) under the U.S. Securities Act of 1933, as amended.
For the purposes of this DTC Restricted Certificate, (a) the Issuer certifies that the Registered Holder is, at the date hereof, entered in the Register as the holder of the Note(s) represented by this DTC Restricted Certificate, (b) this DTC Restricted Certificate is evidence of entitlement only, (c) title to the Note(s) represented by this DTC Restricted Certificate passes only on due registration on the Register, and (d) only the holder of the Note(s) represented by this DTC Restricted Certificate is entitled to payments in respect of the Note(s) represented by this DTC Restricted Certificate.
This DTC Restricted Certificate shall not become valid for any purpose until authenticated by or on behalf of the Registrar.
This DTC Restricted Certificate, and any non-contractual obligations arising out of or in connection with it, shall be governed by and construed in accordance with English law and each of the Issuer and the Guarantor has in the Trust Deed submitted to the jurisdiction of the English courts for all purposes in connection with this DTC Restricted Certificate.
IN WITNESS whereof this DTC Restricted Certificate has been executed on behalf of the Issuer.
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Dated as of the Issue Date. |
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VODAFONE INTERNATIONAL FINANCING DAC | |||
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By: |
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Duly Authorised Attorney |
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Authenticated without recourse, warranty or liability by [] as Registrar. | |||
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On the back:
Terms and Conditions of the Notes
[Conditions to be as set out in Schedule 1 to this Trust Deed or such other form as may be agreed between the Issuer, the Issuing and Principal Paying Agent, the Registrar, the Trustee and the relevant Dealer(s), but shall not be endorsed if not required by the relevant Stock Exchange.]
151
Final Terms
[Here to be set out the text of the relevant information completing the Conditions which appears in the Final Terms relating to the Notes.]
152
Form of Transfer
For value received the undersigned transfers to
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF TRANSFEREE)
[] nominal amount of the Notes represented by this Regulation S Certificate, and all rights under them.
Notes:
(a) |
The signature of the person effecting a transfer shall conform to a list of duly authorised specimen signatures supplied by the holder of the Notes represented by this DTC Restricted Certificate or (if such signature corresponds with the name as it appears on the face of this DTC Restricted Certificate) be certified by a notary public or a recognised bank or be supported by such other evidence as a Transfer Agent or the Registrar may reasonably require. |
(b) |
A representative of the Noteholder should state the capacity in which they sign. |
Unless the context otherwise requires capitalised terms used in this Form of Transfer have the same meaning as in the Trust Deed.
[TO BE COMPLETED BY TRANSFEREE:
[INSERT ANY REQUIRED TRANSFEREE REPRESENTATIONS, CERTIFICATIONS, ETC.]]
ISSUING AND PRINCIPAL PAYING AGENT
HSBC Bank plc
8 Canada Square
London E14 5HQ
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SCHEDULE 3
PROVISIONS FOR MEETINGS OF NOTEHOLDERS
1.(a)As used in this Schedule the following expressions shall have the following meanings unless the context otherwise requires:
(i) |
voting certificate shall mean an English language certificate issued by a Paying Agent and dated in which it is stated: |
(A) |
that on the date thereof Bearer Notes (whether in definitive form or represented by a Global Note and not being Bearer Notes in respect of which a block voting instruction has been issued and is outstanding in respect of the meeting specified in such voting certificate or any adjourned such meeting) were deposited with such Paying Agent or (to the satisfaction of such Paying Agent) were held to its order or under its control or blocked in an account with a clearing system and that no such Bearer Notes will cease to be so deposited or held or blocked until the first to occur of: |
I. |
the conclusion of the meeting specified in such certificate or, if later, of any adjourned such meeting; and |
II. |
the surrender of the certificate to the Paying Agent who issued the same; and |
(B) |
that the bearer thereof is entitled to attend and vote at such meeting and any adjourned such meeting in respect of the Bearer Notes represented by such certificate; |
(ii) |
block voting instruction shall mean an English language document issued by a Paying Agent and dated in which: |
(A) |
it is certified that Bearer Notes (whether in definitive form or represented by a Global Note and not being Bearer Notes in respect of which a voting certificate has been issued and is outstanding in respect of the meeting specified in such block voting instruction and any adjourned such meeting) have been deposited with such Paying Agent or (to the satisfaction of such Paying Agent) were held to its order or under its control or blocked in an account with a clearing system and that no such Bearer Notes will cease to be so deposited or held or blocked until the first to occur of: |
I. |
the conclusion of the meeting specified in such document or, if later, of any adjourned such meeting; and |
II. |
the surrender to the Paying Agent not less than 48 hours before the time for which such meeting or any adjourned such meeting is convened of the receipt issued by such Paying Agent in respect of each such deposited Bearer Note which is to be released or (as the case may require) the Bearer Note or Bearer Notes ceasing with the agreement of the Paying Agent to be held to its order or under its control or so blocked and the giving of notice by the Paying Agent to the Issuer in accordance with paragraph 17 hereof of the necessary amendment to the block voting instruction; |
154
(B) |
it is certified that each holder of such Bearer Notes has instructed such Paying Agent that the vote(s) attributable to the Bearer Note or Bearer Notes so deposited or held or blocked should be cast in a particular way in relation to the resolution or resolutions to be put to such meeting or any adjourned such meeting and that all such instructions are during the period commencing 48 hours prior to the time for which such meeting or any adjourned such meeting is convened and ending at the conclusion or adjournment thereof neither revocable nor capable of amendment; |
(C) |
the aggregate nominal amount of the Bearer Notes so deposited or held or blocked are listed distinguishing with regard to each such resolution between those in respect of which instructions have been given as aforesaid that the votes attributable thereto should be cast in favour of the resolution and those in respect of which instructions have been so given that the votes attributable thereto should be cast against the resolution; and |
(D) |
one or more persons named in such document (each hereinafter called a proxy) is or are authorised and instructed by such Paying Agent to cast the votes attributable to the Bearer Notes so listed in accordance with the instructions referred to in (C) above as set out in such document; |
(iii) |
electronic platform means any form of telephone or electronic platform or facility and includes, without limitation, telephone and video conference call and application technology systems; |
(iv) |
hybrid meeting means a combined physical meeting and virtual meeting convened pursuant to this Schedule by the Issuer, the Guarantor or the Trustee and which persons may attend either at the physical location specified in the notice of such meeting or via an electronic platform; |
(v) |
meeting means a physical meeting, virtual meeting or a hybrid meeting of Noteholders (whether originally convened or resumed following an adjournment); |
(vi) |
physical meeting means any meeting attended by persons present in person at the physical location specified in the notice of such meeting; |
(vii) |
present means physically present in person at a physical meeting or a hybrid meeting, or able to participate in or join a virtual meeting or a hybrid meeting held via an electronic platform; |
(viii) |
virtual meeting means any meeting held via an electronic platform; |
(ix) |
24 hours shall mean a period of 24 hours including all or part of a day upon which banks are open for business in both the place where the relevant meeting is to be held and in each of the places where the Paying Agents have their specified offices (disregarding for this purpose the day upon which such meeting is to be held) and such period shall be extended by one period or, to the extent necessary, more periods of 24 hours until there is included as aforesaid all or part of a day upon which banks are open for business in all of the places as aforesaid; and |
(x) |
48 hours shall mean a period of 48 hours including all or part of two days upon which banks are open for business both in the place where the relevant meeting is to be held and in each of the places where the Paying Agents have their specified offices (disregarding for this purpose the day upon which such meeting is to be held) and such period shall be extended by one period or, to the extent necessary, more periods |
155
of 24 hours until there is included as aforesaid all or part of two days upon which banks are open for business in all of the places as aforesaid.
(b) |
A holder of a Bearer Note (whether in definitive form or represented by a Global Note) may obtain a voting certificate in respect of such Bearer Note from a Paying Agent or require a Paying Agent to issue a block voting instruction in respect of such Note by depositing such Bearer Note with such Paying Agent or (to the satisfaction of such Paying Agent) by such Bearer Note being held to its order or under its control or being blocked in an account with a clearing system, in each case not less than 48 hours before the time fixed for the relevant meeting and on the terms set out in sub-paragraph (a)(i)(A) or (a)(ii)(A) above (as the case may be), and (in the case of a block voting instruction) instructing such Paying Agent to the effect set out in sub-paragraph (a)(ii)(B) above. The holder of any voting certificate or the proxies named in any block voting instruction shall for all purposes in connection with the relevant meeting or adjourned meeting of Noteholders be deemed to be the holder of the Bearer Notes to which such voting certificate or block voting instruction relates and the Paying Agent with which such Bearer Notes have been deposited or the person holding the same to the order or under the control of such Paying Agent or the clearing system in which such Bearer Notes have been blocked shall be deemed for such purposes not to be the holder of those Bearer Notes. |
(c)(i)A holder of Registered Notes (whether in definitive form or represented by a Global Certificate (other than a Registered Note referred to in (iv) below)) may, by an instrument in writing in the English language (a form of proxy) signed by the holder or, in the case of a corporation, executed under its common seal or signed on its behalf by an attorney or a duly authorised officer of the corporation and delivered to the specified office of the Registrar not less than 48 hours before the time fixed for the relevant meeting, appoint any person (a proxy) to act on their or its behalf in connection with any meeting of the Noteholders and any adjourned such meeting.
(ii)Any holder of Registered Notes (whether in definitive form or represented by a Global Certificate) which is a corporation may by resolution of its directors or other governing body authorise any person to act as its representative (a representative) in connection with any meeting of the Noteholders and any adjourned such meeting.
(iii)Any proxy appointed pursuant to sub-paragraph (i) above or representative appointed pursuant to sub-paragraph (ii) above shall so long as such appointment remains in force be deemed, for all purposes in connection with the relevant meeting or adjourned meeting of the Noteholders, to be the holder of the Registered Notes to which such appointment relates and the holder of the Registered Notes shall be deemed for such purposes not to be the holder.
(iv)For so long as any of the Registered Notes is represented by a Global Certificate registered in the name of DTC or its nominee, DTC may mail an Omnibus Proxy to the Issuer in accordance with and in the form used by DTC as part of its usual procedures from time to time in relation to meetings of Noteholders. Such Omnibus Proxy shall assign the voting rights in respect of the relevant meeting to DTC's direct participants as of the record date specified therein. Any such assignee participant may, by an instrument in writing in the English language signed by such assignee participant, or, in the case of a corporation, executed under its common seal or signed on its behalf by an attorney or a duly authorised officer of the corporation and delivered to the specified office of the Registrar or any Transfer Agent before the time fixed for the relevant meeting, appoint any person (a sub-proxy) to act on their or its behalf in connection with any meeting of Noteholders and any adjourned such meeting. All references to proxy or proxies in this Schedule other than in this paragraph shall be read so as to include references to "sub-proxy" or "sub-proxies".
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2. |
The Issuer, the Guarantor or the Trustee may at any time and the Issuer shall upon a requisition in writing in the English language signed by the holders of not less than one-tenth in nominal amount of the Notes for the time being outstanding convene a meeting of the Noteholders and if the Issuer makes default for a period of seven days in convening such a meeting the same may be convened by the Trustee or the requisitionists. Every physical meeting shall be held at a time and place approved by the Trustee. Every virtual meeting shall be held via an electronic platform and at a time approved by the Trustee. Every hybrid meeting shall be held at a time and place and via an electronic platform approved by the Trustee. |
3. |
At least 21 days' notice (exclusive of the day on which the notice is given and the day on which the meeting is to be held) specifying the day and time of the meeting and the manner in which it is to be held, and if a physical meeting or hybrid meeting is to be held, the place of the meeting shall be given to the holders of the relevant Notes prior to any meeting of such holders in the manner provided by Condition 14. Such notice, which shall be in the English language, shall state generally the nature of the business to be transacted at the meeting thereby convened but (except for an Extraordinary Resolution) it shall not be necessary to specify in such notice the terms of any resolution to be proposed. With respect to a virtual meeting or a hybrid meeting, each such notice shall set out such other and further details as are required under paragraph 23. Such notice shall include statements, if applicable, to the effect that (i) Bearer Notes may, not less than 48 hours before the time fixed for the meeting, be deposited with Paying Agents or (to their satisfaction) held to their order or under their control or blocked in an account with a clearing system for the purpose of obtaining voting certificates or appointing proxies and (ii) the holders of Registered Notes may appoint proxies by executing and delivering a form of proxy in the English language to the specified office of the Registrar not less than 48 hours before the time fixed for the meeting or, in the case of corporations, may appoint representatives by resolution of their directors or other governing body and delivering a certified copy thereof to the specified office of the Registrar. A copy of the notice shall be sent by post to the Trustee (unless the meeting is convened by the Trustee), to the Issuer (unless the meeting is convened by the Issuer), to the Guarantor (unless the meeting is convened by the Guarantor) and to each Agent (other than the Calculation Agent). |
4. |
A person (who may but need not be a Noteholder) nominated in writing by the Trustee shall be entitled to take the chair at the relevant meeting or adjourned meeting but if no such nomination is made or if at any meeting or adjourned meeting the person nominated shall not be present within 15 minutes after the time appointed for holding the meeting or adjourned meeting the Noteholders present shall choose one of their number to be Chairperson, failing which the Issuer may appoint a Chairperson. The Chairperson of an adjourned meeting need not be the same person as was Chairperson of the meeting from which the adjournment took place. |
5. |
At any such meeting one or more persons present holding Definitive Notes or voting certificates or being proxies or representatives and holding or representing in the aggregate not less than one-twentieth of the nominal amount of the Notes for the time being outstanding shall (except for the purpose of passing an Extraordinary Resolution) form a quorum for the transaction of business and no business (other than the choosing of a Chairperson) shall be transacted at any meeting unless the requisite quorum be present at the commencement of the relevant business. The quorum at any such meeting for passing an Extraordinary Resolution shall (subject as provided below) be one or more persons present holding Definitive Notes or voting certificates or being proxies or representatives and holding or representing in the aggregate a clear majority in nominal amount of the Notes for the time being outstanding. |
6. |
If within 15 minutes (or such longer period not exceeding 30 minutes as the Chairperson may decide) after the time appointed for any such meeting a quorum is not present for the transaction of any particular business, then, subject and without prejudice to the transaction of the business (if any) for which a quorum is present, the meeting shall if convened upon the requisition of Noteholders be dissolved. In any other case it shall stand adjourned to the same day in the next week (or if such day is a public holiday the next succeeding business day) at the same time and place (except in the case of |
157
a meeting at which an Extraordinary Resolution is to be proposed in which case it shall stand adjourned for such period, being not less than 13 clear days nor more than 42 clear days, and to such place as may be appointed by the Chairperson either at or subsequent to such meeting and approved by the Trustee). If within 15 minutes (or such longer period not exceeding 30 minutes as the Chairperson may decide) after the time appointed for any adjourned meeting a quorum is not present for the transaction of any particular business, then, subject and without prejudice to the transaction of the business (if any) for which a quorum is present, the Chairperson may either (with the approval of the Trustee) dissolve such meeting or adjourn the same for such period, being not less than 13 clear days (but without any maximum number of clear days), and to such place as may be appointed by the Chairperson either at or subsequent to such adjourned meeting and approved by the Trustee, and the provisions of this sentence shall apply to all further adjourned such meetings. At any adjourned meeting one or more persons present holding Definitive Notes or voting certificates or being proxies or representatives (whatever the nominal amount of the Notes so held or represented by them) shall form a quorum and shall have power to pass any resolution and to decide upon all matters which could properly have been dealt with at the meeting from which the adjournment took place had the requisite quorum been present.
7. |
Notice of any adjourned meeting at which an Extraordinary Resolution is to be submitted shall be given in the same manner as notice of an original meeting but as if 10 were substituted for 21 in paragraph 3 above and such notice shall state the required quorum. Subject as aforesaid it shall not be necessary to give any notice of an adjourned meeting. |
8. |
Every question submitted to a meeting shall be decided in the first instance by a show of hands and in case of equality of votes the Chairperson shall both on a show of hands and on a poll have a casting vote in addition to the vote or votes (if any) to which they may be entitled as a Noteholder or as a holder of a voting certificate or as a proxy or as a representative. |
9. |
At any meeting unless a poll is (before or on the declaration of the result of the show of hands) demanded by the Chairperson, the Issuer, the Guarantor, the Trustee or any person present holding a Definitive Note of the relevant Series or a voting certificate or being a proxy or representative (whatever the nominal amount of the Notes so held or represented by them) a declaration by the Chairperson that a resolution has been carried or carried by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution. |
10. |
Subject to paragraph 12 below, if at any such meeting a poll is so demanded it shall be taken in such manner and subject as hereinafter provided either at once or after an adjournment as the Chairperson directs and the result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded as at the date of the taking of the poll. The demand for a poll shall not prevent the continuance of the meeting for the transaction of any business other than the motion on which the poll has been demanded. |
11. |
The Chairperson may with the consent of (and shall if directed by) any such meeting adjourn the same from time to time and from place to place but no business shall be transacted at any adjourned meeting except business which might lawfully (but for lack of required quorum) have been transacted at the meeting from which the adjournment took place. |
12. |
Any poll demanded at any such meeting on the election of a Chairperson or on any question of adjournment shall be taken at the meeting without adjournment. |
13. |
The Trustee and its lawyers and any director, officer or employee of a corporation being a trustee of these presents and any director or officer of the Issuer or, as the case may be, the Guarantor, their lawyers and any other person authorised so to do by the Trustee may attend, participate and speak at any meeting. Save as aforesaid, but without prejudice to the proviso to the definition of "outstanding" in Clause 1, no person shall be entitled to attend and speak nor shall any person be entitled to vote at |
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any meeting of Noteholders or join with others in requesting the convening of such a meeting or to exercise the rights conferred on Noteholders by Condition 11 unless they either produce the Definitive Bearer Note or Definitive Bearer Notes of which they are the holder or a voting certificate or are a proxy or a representative or the holder of a Registered Note or Registered Notes in definitive form. No person shall be entitled to vote at any meeting in respect of Notes held by, for the benefit of, or on behalf of, the Issuer, the Guarantor, any other Subsidiary of the Guarantor, any Holding Company of the Guarantor or other Subsidiary of such Holding Company. Nothing herein shall prevent any of the proxies named in any block voting instruction or form of Proxy from being a director, officer or representative of or otherwise connected with the Issuer or the Guarantor, as the case may be.
14. |
Subject as provided in paragraph 13 hereof at any meeting: |
(a) |
on a show of hands every person who is present in person and produces a Definitive Bearer Note or voting certificate or is a holder of a Registered Note in definitive form or is a proxy or representative shall have one vote; and |
(b) |
on a poll every person who is so present shall have one vote in respect of each €1.00 or such other amount as the Trustee may in its absolute discretion stipulate (or, in the case of meetings of holders of Notes denominated in another currency, such amount in such other currency as the Trustee in its absolute discretion may stipulate) in nominal amount of the Definitive Bearer Notes so produced or represented by the voting certificate so produced or in respect of which they are a proxy or representative or in respect of which (being a Registered Note in definitive form) they are the registered holder. |
Without prejudice to the obligations of the proxies named in any block voting instruction or form of proxy any person entitled to more than one vote need not use all their votes or cast all the votes to which they are entitled in the same way.
15. |
The proxies named in any block voting instruction or form of proxy need not be Noteholders. |
16. |
Each block voting instruction together (if so requested by the Trustee) with proof satisfactory to the Trustee of its due execution on behalf of the relevant Paying Agent and each form of proxy or resolution appointing a representative shall be deposited by the relevant Paying Agent (or as the case may be) by the Registrar or the relevant Transfer Agent at such place as the Trustee shall approve not less than 24 hours before the time appointed for holding the meeting or adjourned meeting at which the proxies named in the block voting instruction or form of proxy propose to vote and in default the block voting instruction or form of proxy or resolution appointing a representative shall not be treated as valid unless the Chairperson of the meeting decides otherwise before such meeting or adjourned meeting proceeds to business. A certified copy of each block voting instruction or form of proxy or resolution appointing a representative shall be deposited with the Trustee before the commencement of the meeting or adjourned meeting but the Trustee shall not thereby be obliged to investigate or be concerned with the validity of or the authority of the proxies named in any such block voting instruction or form of proxy or of the representative named in such resolution. |
17. |
Any vote given in accordance with the terms of a block voting instruction or form of proxy or resolution appointing a representative shall be valid notwithstanding the previous revocation or amendment of the block voting instruction or form of proxy or of any of the relevant Noteholders' instructions pursuant to which it was executed provided that no intimation in writing of such revocation or amendment shall have been received from the relevant Paying Agent or in the case of Registered Note from the holder thereof by the Issuer at its registered office (or such other place as may have been required or approved by the Trustee for the purpose) by the time being 24 hours before the time appointed for holding the meeting or adjourned meeting at which the block voting instruction or form of proxy is to be used. |
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18. |
A meeting of the Noteholders shall in addition to the powers hereinbefore given have the following powers exercisable only by Extraordinary Resolution (subject to the provisions relating to quorum contained in paragraphs 5 and 6 above) namely: |
(a) |
Power to sanction any compromise or arrangement proposed to be made between the Issuer, the Guarantor, the Trustee, any Appointee and the Noteholders and Couponholders or any of them. |
(b) |
Power to sanction any abrogation, modification, compromise or arrangement in respect of the rights of the Trustee, any Appointee, the Noteholders, the Couponholders, the Issuer or the Guarantor against any other or others of them or against any of their property whether such rights shall arise under these presents or otherwise. |
(c) |
Power to assent to any modification of the provisions of these presents which shall be proposed by the Issuer, the Guarantor, the Trustee or any Noteholder. |
(d) |
Power to give any authority or sanction which under the provisions of these presents is required to be given by Extraordinary Resolution. |
(e) |
Power to appoint any persons (whether Noteholders or not) as a committee or committees to represent the interests of the Noteholders and to confer upon such committee or committees any powers or discretions which the Noteholders could themselves exercise by Extraordinary Resolution. |
(f) |
Power to approve of a person to be appointed a trustee and power to remove any trustee or trustees for the time being of these presents. |
(g) |
Power to discharge or exonerate the Trustee and/or any Appointee from all liability in respect of any act or omission for which the Trustee and/or such Appointee may have become responsible under these presents. |
(h) |
Power to authorise the Trustee and/or any Appointee to concur in and execute and do all such deeds, instruments, acts and things as may be necessary to carry out and give effect to any Extraordinary Resolution. |
(i) |
Power to sanction any scheme or proposal for the exchange or sale of the Notes for or the conversion of the Notes into or the cancellation of the Notes in consideration of shares, stock, notes, bonds, debentures, debenture stock and/or other obligations and/or securities of the Issuer, the Guarantor or any other company formed or to be formed, or for or into or in consideration of cash, or partly for or into or in consideration of such shares, stock, notes, bonds, debentures, debenture stock and/or other obligations and/or securities as aforesaid and partly for or into or in consideration of cash and for the appointment of some person with the power on behalf of the Noteholders to execute an instrument of transfer of the Registered Notes held by them in favour of the persons with or to whom the Notes are to be exchanged or sold respectively. |
19. |
Any resolution (i) passed at a meeting of the Noteholders duly convened and held in accordance with these presents, (ii) passed as a resolution in writing in accordance with these presents or (iii) passed by way of electronic consents given by holders through the relevant Clearing System(s) in accordance with these presents shall be binding upon all the Noteholders whether present or not present at such meeting and whether or not voting and upon all Couponholders and each of them shall be bound to give effect thereto accordingly and the passing of any such resolution shall be conclusive evidence that the circumstances justify the passing thereof. Notice of the result of the voting on any resolution duly considered by the Noteholders shall be published in accordance with Condition 14 by the Issuer |
160
within 14 days of such result being known PROVIDED THAT the non- publication of such notice shall not invalidate such result.
20. |
The expression Extraordinary Resolution when used in these presents means (a) a resolution passed at a meeting of the Noteholders duly convened and held in accordance with these presents by a majority consisting of not less than three-fourths of the persons voting thereat upon a show of hands or if a poll is duly demanded by a majority consisting of not less than three-fourths of the votes cast on such poll; or (b) a resolution in writing signed by or on behalf of the holders of not less than three-fourths in nominal amount of the Notes for the time being outstanding, which resolution in writing may be contained in one document or in several documents in like form each signed by or on behalf of one or more of the Noteholders; or (c) consent given by way of electronic consents through the relevant Clearing System(s) (in a form satisfactory to the Trustee) by or on behalf of the holders of not less than three-fourths in nominal amount of the Notes for the time being outstanding. |
21. |
Minutes of all resolutions and proceedings at every meeting of the Noteholders shall be made and entered in books to be from time to time provided for that purpose by the Issuer and any such minutes as aforesaid if purporting to be signed by the Chairperson of the meeting at which such resolutions were passed or proceedings transacted shall be conclusive evidence of the matters therein contained and until the contrary is proved every such meeting in respect of the proceedings of which minutes have been made shall be deemed to have been duly held and convened and all resolutions passed or proceedings transacted thereat to have been duly passed or transacted. |
22.(a)If and whenever the Issuer shall have issued and have outstanding Notes of more than one Series the foregoing provisions of this Schedule shall have effect subject to the following modifications:
(i) |
a resolution which in the opinion of the Trustee affects the Notes of only one Series shall be deemed to have been duly passed if passed at a separate meeting (or by a separate resolution in writing or by a separate resolution passed by way of consents received through the relevant Clearing System(s)) of the holders of the Notes of that Series; |
(ii) |
a resolution which in the opinion of the Trustee affects the Notes of more than one Series but does not give rise to a conflict of interest between the holders of Notes of any of the Series so affected shall be deemed to have been duly passed if passed at a single meeting (or by a single resolution in writing or by a single resolution passed by way of consents received through the relevant Clearing System(s)) of the holders of the Notes of all the Series so affected; |
(iii) |
a resolution which in the opinion of the Trustee affects the Notes of more than one Series and gives or may give rise to a conflict of interest between the holders of the Notes of one Series or group of Series so affected and the holders of the Notes of another Series or group of Series so affected shall be deemed to have been duly passed only if passed at separate meetings (or by separate resolutions in writing or by separate resolutions passed by way of consents received through the relevant Clearing System(s)) of the holders of the Notes of each Series or group of Series so affected; and |
(iv) |
to all such meetings all the preceding provisions of this Schedule shall mutatis mutandis apply as though references therein to Notes and Noteholders were references to the Notes of the Series or group of Series in question or to the holders of such Notes, as the case may be. |
(b) | If the Issuer shall have issued and have outstanding Notes which are not denominated in euro, in the case of any meeting of holders of Notes of more than one currency, the nominal amount |
161
of such Notes shall (i) for the purposes of paragraph 2 above be the equivalent in euro at the spot rate of a bank nominated by the Trustee for the conversion of the relevant currency or currencies into euro on the seventh dealing day prior to the day on which the requisition in writing is received by the Issuer and (ii) for the purposes of paragraphs 5, 6 and 14 above (whether in respect of the meeting or any adjourned such meeting or any poll resulting therefrom) be the equivalent at such spot rate on the seventh dealing day prior to the day of such meeting. In such circumstances, on any poll each person present shall have one vote for each €1.00 (or such other euro amount as the Trustee may in its absolute discretion stipulate) in nominal amount of the Notes (converted as above) which they hold or represent.
23. |
Subject to all other provisions of these presents the Trustee may, without the consent of the Issuer, the Guarantor, the Noteholders or the Couponholders, (i) concur with the Issuer and the Guarantor in prescribing further regulations regarding the holding of meetings and attendance and voting at them or (ii) prescribe further regulations regarding the requisitioning and/or the holding of meetings of Noteholders and attendance and voting thereat, if, in either case, the Trustee is of the opinion that such regulations are not materially prejudicial to the interests of Noteholders. Such regulations may include (without limitation) such requirements as the Trustee thinks reasonable to satisfy itself that the persons who purport to make any requisition in accordance with this Trust Deed are entitled to do so and as to the form of voting certificates or block voting instructions so as to satisfy itself that persons who purport to attend or vote at a meeting are entitled to do so and/or to facilitate the holding of a virtual meeting or a hybrid meeting. |
24. |
Additional provisions applicable to virtual and/or hybrid meetings |
(a) | The Issuer or the Guarantor (with the Trustee’s prior approval) or the Trustee in its sole discretion may decide to hold a virtual meeting or a hybrid meeting and, in such case, shall provide details of the means for Noteholders or their representatives to attend, participate in and/or speak at the meeting, including the electronic platform to be used. |
(b) | Without prejudice to paragraph 13, the Issuer or the Guarantor (with the Trustee’s prior approval) or the Chairperson or the Trustee in its sole discretion may make any arrangement and impose any requirement or restriction as is necessary to ensure the identification of those entitled to take part in the virtual meeting or hybrid meeting and the suitability of the electronic platform. All documentation that is required to be passed between persons at or for the purposes of the virtual meeting or persons attending the hybrid meeting via the electronic platform (in each case, in whatever capacity) shall be communicated by email (or such other medium of electronic communication as the Trustee may approve), provided that the Issuer or the Guarantor or its respective agent(s) shall be solely responsible for facilitating the distribution of all such documentation unless the meeting shall have been convened by the Trustee. |
(c) | All resolutions put to a virtual meeting or a hybrid meeting shall be voted on by a poll. |
(d) | Persons seeking to attend, participate in, speak at or join a virtual meeting or a hybrid meeting via the electronic platform, shall be responsible for ensuring that they have access to the facilities (including, without limitation, information technology systems, equipment and connectivity) which are necessary to enable them to do so. |
(e) | In determining whether persons are attending, participating in or joining a virtual meeting or a hybrid meeting via the electronic platform, it is immaterial whether any one or more persons attending it are in the same physical location as each other or how they are able to communicate with each other. |
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(f) | One or more persons who are not in the same physical location as each other attend a virtual meeting or a hybrid meeting if their circumstances are such that if they have (or were to have) rights to speak or vote at that meeting, they are (or would be) able to exercise them. |
(g) | In the case of a virtual meeting or a hybrid meeting via the electronic platform only, the Chairperson of the meeting reserves the right to take such steps as the Chairperson shall determine in its absolute discretion to avoid or minimise disruption at the meeting, which steps may include (without limitation), muting the electronic connection to the meeting of the person causing such disruption for such period of time as the Chairperson may determine. |
(h) | A person is able to exercise the right to speak at a virtual meeting or a hybrid meeting when that person is in a position to communicate to all those attending the meeting, during the meeting, as contemplated by the relevant provisions of this Schedule. A person is able to exercise the right to speak at a virtual meeting or a hybrid meeting when that person is in a position to communicate to all those attending the meeting, during the meeting, as contemplated by the relevant provisions of this Schedule. |
(i) | A person is able to exercise the right to vote at a virtual meeting or a hybrid meeting when: |
(i) | that person is able to vote, during the meeting, on resolutions put to the vote at the meeting; and |
(ii) | that person’s vote can be taken into account in determining whether or not such resolutions are passed contemporaneously with the votes of all the other persons attending the meeting who are entitled to vote at such meeting. |
(j) | The Trustee shall not be responsible or liable to the Issuer, the Guarantor or any other person for the choice or security of the electronic platform used for any virtual meeting or hybrid meeting or for accessibility or connectivity or the lack of accessibility or connectivity to any virtual meeting or hybrid meeting, notwithstanding any approval that may have been provided by the Trustee to the Issuer or the Guarantor. |
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SIGNATORIES TO THE TRUST DEED
EXECUTED and delivered as a DEED for and on behalf of VODAFONE INTERNATIONAL FINANCING DAC by its lawfully appointed attorney in the presence of: |
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27 July 2020 (as amended and restated on 22 September 2022) |
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VODAFONE INTERNATIONAL FINANCING DAC and VODAFONE GROUP PLC and THE LAW DEBENTURE TRUST CORPORATION p.l.c. relating to a €30,000,000,000 Euro Medium Term Note Programme |
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TRUST DEED |
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SIGNATORIES TO THE SECOND SUPPLEMENTAL TRUST DEED
EXECUTED and delivered as a DEED for and on behalf of VODAFONE INTERNATIONAL FINANCING DAC by its lawfully appointed attorney |
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JAMIE stead |
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Lindsey Southard |
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16 Granta Court, Trinity Way, London W3 7FU |
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Assistant Treaurer |
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EXECUTED and delivered as a DEED for and on behalf of VODAFONE GROUP PLC acting by |
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Lindsey Southard |
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Assistant Treasurer |
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CORPORATION p.l.c. |
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22 SEPTEMBER 2022 |
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VODAFONE INTERNATIONAL |
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FINANCING DAC |
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and |
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VODAFONE GROUP PLC |
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and |
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THE LAW DEBENTURE TRUST |
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CORPORATION p.l.c. |
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further modifying and restating the |
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169
Exhibit 2.6
DESCRIPTION OF SECURITIES REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT
As of March 31, 2023, Vodafone Group Plc (“Vodafone”, the “Company”) had the following securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 (the “Exchange Act”):
Title of each class |
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Trading |
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Name of each exchange on |
Ordinary shares of 20 20/21 US cents each |
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VOD |
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NASDAQ Global Select |
American Depositary Shares (evidenced by American Depositary Receipts) each representing ten ordinary shares |
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VOD |
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NASDAQ Global Select |
3.750% Notes due 16 January 2024 |
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VOD24 |
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The NASDAQ Stock |
Floating Rate Notes due January 2024 |
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VOD24A |
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The NASDAQ Stock |
4.125% Notes due 30 May 2025 |
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VOD25 |
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The NASDAQ Stock |
4.375% Notes due 30 May 2028 |
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VOD28 |
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The NASDAQ Stock |
6.250% Notes due February 2032 |
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VOD32 |
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The NASDAQ Stock |
6.150% Notes due February 2037 |
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VOD37 |
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The NASDAQ Stock |
5.000% Notes due 30 May 2038 |
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VOD38 |
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The NASDAQ Stock |
4.375% Notes due February 2043 |
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VOD43 |
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The NASDAQ Stock |
5.250% Notes due 30 May 2048 |
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VOD48 |
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The NASDAQ Stock |
4.875% Notes due 19 June 2049 |
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VOD49 |
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The NASDAQ Stock |
4.250% Notes due 17 September 2050 |
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VOD50 |
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The NASDAQ Stock |
5.625% Notes due 10 February 2053 |
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VOD53 |
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The NASDAQ Stock |
5.125% Notes due 19 June 2059 |
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VOD59 |
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The NASDAQ Stock |
5.750% Notes due 10 February 2063 |
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VOD63 |
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The NASDAQ Stock |
Capital Securities due April 2079 |
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VOD79 |
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The NASDAQ Stock |
NC5.25 Capital Securities due 2081 |
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VOD81A |
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The NASDAQ Stock |
NC10 Capital Securities due 2081 |
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VOD81B |
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The NASDAQ Stock |
NC30 Capital Securities due 2081 |
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VOD81C |
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The NASDAQ Stock |
* Not for trading, but only in connection with the registration of American Depositary Shares pursuant to the requirements of the Securities and Exchange Commission.
The Company’s ordinary shares, nominal value of 20 20/21 US cents each (“Vodafone Ordinary Shares”), are listed on the premium segment of the main market of the London Stock Exchange plc (the “LSE”). The Company’s American Depositary Shares (“Vodafone ADSs”) are available through an American Depositary Receipt program established pursuant to a deposit agreement (the “Deposit Agreement”) that the Company entered into with JPMorgan Chase Bank, N.A., as depositary (the “Depositary”). Vodafone ADSs, each representing ten Vodafone Ordinary Shares, are listed on the NASDAQ Global Select Market, traded under the symbol VOD, and are registered under Section 12(b) of the Securities Exchange Act of 1934 (the “Exchange Act”). In connection with this listing (but not for trading), the Vodafone Ordinary Shares are registered under Section 12(b) of the Exchange Act. The following contains a description of the rights of (i) holders of the Vodafone Ordinary Shares and (ii) Vodafone ADS holders.
The following summary is subject to and qualified in its entirety by the Company’s Articles of Association and by English law. This is not a summary of all the significant provisions of the Articles of Association or of English law and does not purport to be complete. Capital terms used but not defined herein have the meanings given to them in the Company’s Annual Report on Form 20-F for the fiscal year ended March 31, 2023 and in the Deposit Agreement, which is an exhibit to the Company’s Annual Report on Form 20-F filed with the SEC on June 10, 2022.
Vodafone Ordinary Shares
Item 9.A.3 Pre-emptive rights
Under section 549 of the Companies Act 2006, Directors are, with certain exceptions, unable to allot Vodafone Ordinary Shares or securities convertible into Vodafone Ordinary Shares without the authority of Vodafone Shareholders (“Vodafone Shareholders”) in a general meeting. In addition, section 561 of the Companies Act 2006 imposes further restrictions on the issue of equity securities (as defined in the Companies Act 2006, which include Vodafone Ordinary Shares and securities convertible into Vodafone Ordinary Shares) which are, or are to be, paid up wholly in cash and not first offered to existing Vodafone Shareholders. The Company’s Articles of Association allow Vodafone Shareholders to authorize Directors for a period specified in the relevant resolution to allot (i) relevant securities generally up to an amount fixed by the Vodafone Shareholders; and (ii) equity securities for cash other than in connection with a pre-emptive offer up to an amount specified by the Vodafone Shareholders and free of the pre-emption restriction in section 561. At the 2019 AGM the amount of relevant securities fixed by Vodafone Shareholders under (i) above and the amount of equity securities specified by Vodafone Shareholders under (ii) above were in line with the Pre-Emption Group’s Statement of Principles.
Item 9.A.5 Type and class of securities
Vodafone Ordinary Shares are listed on the London Stock Exchange and have a nominal value of 20 20/21 US cents each. All Ordinary Shares are issued in registered form. As at March 31, 2023, the total number of outstanding Vodafone Ordinary Shares was 28,818,256,058.
As far as the Company is aware, there are no limitations imposed on the transfer, holding or voting of Vodafone Ordinary Shares other than those limitations that would generally apply to all of the Vodafone Shareholders, those that apply by law (e.g. due to insider dealing rules) or those that apply as a result of failure to comply with a notice under section 793 of the Companies Act 2006.
Item 9.A.6 Limitations or qualifications
No shareholder has any securities carrying special rights with regard to control of the Company. The Company is not aware of any agreements between holders of securities that may result in restrictions on the transfer of securities.
Item 9.A.7 Other rights
Not applicable.
Item 10.B.3 Shareholder rights
Dividend rights
Vodafone Shareholders may, by ordinary resolution, declare dividends but may not declare dividends in excess of the amount recommended by the Directors. The Board of Directors may also pay interim dividends. No dividend may be paid other than out of profits available for distribution. Dividends on Vodafone Ordinary Shares can be paid to Vodafone Shareholders in whatever country the Directors decide, using an appropriate exchange rate for any currency conversions which are required.
If a dividend has not been claimed for one year after the date of the resolution passed at a general meeting declaring that dividend or the resolution of the Directors providing for payment of that dividend, the Directors may invest the dividend or use it in some other way for the benefit of the Company until the dividend is claimed. If the dividend remains unclaimed for 12 years after the relevant resolution either declaring that dividend or providing for payment of that dividend it will be forfeited and belong to the Company.
Voting rights
At a general meeting of the Company, when voting on substantive resolutions (i.e. any resolution which is not a procedural resolution) each holder of a Vodafone Ordinary Share who is entitled to vote and is present in person or by proxy has one vote for every Vodafone Ordinary Share held (a poll vote). Procedural resolutions (such as a resolution to adjourn a general meeting or a resolution on the choice of Chairman of a general meeting) are decided on a show of hands, where each holder of Vodafone Ordinary Shares who is present at the meeting has one vote regardless of the number of Vodafone Ordinary Shares held, unless a poll is demanded. Shareholders entitled to vote at general meetings may appoint proxies who are entitled to vote, attend and speak at general meetings.
Two Vodafone Shareholders present in person or by proxy constitute a quorum for purposes of a general meeting of the Company.
Under English law, Vodafone Shareholders of a public company such as the Company are not permitted to pass resolutions by written consent.
Employees who hold Vodafone Ordinary Shares in a vested nominee share account are able to vote through the respective plan’s trustees. Note there is now a vested share account with Computershare (in respect of Vodafone Ordinary Shares arising from a SAYE exercise) and Equatex (MyShareBank).
Under the Company’s Articles of Association, a Director cannot vote in respect of any proposal in which the Director, or any person connected with the Director, has a material interest other than by virtue of the Director’s interest in the Company’s shares or other securities.
The voting rights of the Directors (Executive and Non-Executive) and employees of the Company who hold interests in the share capital of the Company are the same as for other holders of the class of share indicated. At each AGM, all Directors must offer themselves for re-election (unless they are retiring) in accordance with the Company’s Articles of Association and in the interests of good corporate governance.
Rights to share in the company’s profits
See “Item 10.B.3. Shareholder rights—Dividend rights” above.
Rights to share in any surplus in the event of liquidation
In the event of the liquidation of the Company, after payment of all liabilities and deductions in accordance with English law, the holders of the Company’s 7% cumulative fixed rate shares would be entitled to a sum equal to the capital paid up on such shares, together with certain dividend payments, in priority to holders of Vodafone Ordinary Shares.
Redemption provisions
Under its Articles of Association, the Company is authorized to reduce (or purchase shares in) its capital of any class or classes. Class rights are deemed not to have been varied by the creation or issue of new shares ranking equally with or subsequent to that class of shares in sharing in profits or assets of the Company or by a redemption or repurchase of the shares by the Company.
Sinking fund provisions
Not applicable.
Liability to further capital calls by the company
Under the Articles of Association, the directors can call on Vodafone Shareholders to pay any money which has not yet been paid to the Company for their Vodafone Ordinary Shares. This includes both the nominal value of the Vodafone Ordinary Shares and any premium which may be payable. The terms of issue of the Vodafone Ordinary Shares govern the procedure related to calls. A call is treated as having been made as soon as the directors pass a resolution authorizing it.
A Vodafone Shareholder who has received at least 14 days’ notice giving details of the amount of a capital call, the time (or times) and place or address for payment must pay the call as required by the notice. Joint shareholders are liable jointly and severally to pay any money called for in respect of their Vodafone Ordinary Shares. A Vodafone Shareholder due to pay the amount called shall still have to pay the call even if, after the call was made, they transfer the Vodafone Ordinary Shares to which the call related.
Any provision discriminating against any existing or prospective holder of the Ordinary Shares as a result of such shareholder owning a substantial number of shares
Not applicable.
Item 10.B.4. Changes to shareholder rights
If at any time the Company’s share capital is divided into different classes of shares, the rights attached to any class may be varied or abrogated by a special resolution, subject to the provisions of the Companies Act 2006, either with the consent in writing of the holders of three quarters in nominal value of the shares of that class or at a separate meeting of the holders of the shares of that class.
At every such separate meeting all of the provisions of the Articles of Association relating to proceedings at a general meeting apply, except that (i) the quorum is to be the number of persons (which must be at least two) who hold or represent by proxy not less than one third in nominal value of the issued shares of the class or, if such quorum is not present on an adjourned meeting, one person who holds shares of the class regardless of the number of shares he holds; (ii) any person present in person or by proxy may demand a poll; and (iii) each shareholder will have one vote per share held in that particular class in the event a poll is taken. Class rights are deemed not to have been varied by the creation or issue of new shares ranking equally with or subsequent to that class of shares in sharing in profits or assets of the Company or by a redemption or repurchase of the shares by the Company.
Item 10.B.6 Limitations
The Company’s constitutional documents place no limitations on the right to hold Vodafone Ordinary Shares. There are no limitations on the right to hold or exercise voting rights on the Vodafone Ordinary Shares under English law.
Item 10.B.7 Change in control
The Company’s Articles of Association do not contain any provisions that would have the effect of delaying, deferring or preventing a change in control of the Company and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company (or any of its subsidiaries).
Item 10.B.8 Disclosure of shareholdings
There are no provisions in the Articles of Association whereby persons acquiring, holding or disposing of a certain percentage of the Company’s shares are required to make disclosure of their ownership percentage although such requirements exist under the Disclosure Guidance and Transparency Rules. Under these rules, the Company must disclose the holders of more than 3% of, or 3% of voting rights attributable to, the Company’s ordinary share capital of which it is made aware.
Item 10.B.9 Differences in the law
With respect to Items 10.B.2-10.B.8, there are no significant differences between the laws applicable to the Company and English law.
Item 10.B.10 Changes in capital
The requirements imposed by the Company’s Articles of Association governing changes in capital are not more stringent than is required by law.
Item 12.A Debt securities
Not applicable.
Item 12.B Warrants and Rights
Not applicable.
Item 12.C Other securities
Not applicable.
Vodafone American Depositary Shares
Item 12.D.1 Name and address of depositary
JPMorgan Chase Bank, N.A., having its principal office at 383 Madison Avenue, Floor 11, New York, New York 10179, has been appointed as the Depositary under the Deposit Agreement, dated as of February 15, 2022, among the Company, the Depositary and all holders from time to time of the Vodafone ADSs (“Vodafone ADS Holders”) issued thereunder.
12.D.2 Description of Vodafone ADSs
The following is a summary of the material provisions of the Deposit Agreement. For more complete information, you should read the Deposit Agreement in its entirety.
The Deposit Agreement sets forth the rights and obligations of Holders and Beneficial Owners of Vodafone ADSs and the rights and duties of the Depositary in respect of the Vodafone Ordinary Shares deposited thereunder and any and all other securities, property and cash from time to time received in respect of such Vodafone Ordinary Shares and held thereunder (the “Deposited Securities”). Each Vodafone ADS represents an ownership interest in ten Vodafone Ordinary Shares and is evidenced by an American depositary receipt (“Vodafone ADR”).
Voting of Vodafone ADSs
As soon as practicable after receipt of notice from the Company of any meeting of, or solicitation of consents or proxies from, Vodafone Shareholders underlying the Vodafone ADSs, and upon written request by the Company received by the Depositary at least 30 days before the vote or meeting, the Depositary will fix a record date for Vodafone ADS Holders and arrange to deliver certain materials to Vodafone ADS Holders relating to the upcoming meeting or solicitation.
The materials will contain:
● | such information as is contained in the notice of meeting or solicitation of consents or proxies received by the Depositary from the Company; |
● | An ADR Proxy card in a form prepared by the Depositary |
● | a statement that the Vodafone ADS Holders as of the close of business on a specified record date will be entitled, subject to any applicable law and the Company’s constituent documents , and the provisions of or governing the Vodafone Ordinary Shares (or any other securities, property or cash underlying the Vodafone ADS Holders’ Vodafone ADSs), |
● | a statement as to the manner in which such instructions and notification may be given. |
In lieu of distributing the materials received from the Company in connection with the meeting of, or solicitation of consents or proxies from, Vodafone Shareholders underlying the Vodafone ADSs, the Depositary may, to the extent not prohibited by applicable law, regulations or stock exchange requirements, distribute to the Vodafone ADS Holders a notice with instructions on how to retrieve or request such materials.
A Vodafone ADS Holder must hold Vodafone ADSs on the record date established by the Depositary in order to be eligible to give instructions for the exercise of voting rights at a meeting of shareholders. It is possible that the record date the Company uses for the exercise of voting rights on the Vodafone Ordinary Shares, on the one hand, and the record date used by the Depositary for the exercise of voting rights relating to the Vodafone Ordinary Shares underlying the Vodafone ADSs, on the other hand, may not be the same.
For voting instructions to be valid, the Depositary must receive them on or before the date specified in the materials delivered to Vodafone ADS Holders. The Depositary will, to the extent practicable, endeavor to vote or cause to be voted the underlying Vodafone Ordinary Shares in accordance with each Vodafone ADS Holder’s instructions. The Depositary will not vote the underlying Vodafone Ordinary Shares other than in accordance with the Vodafone ADS Holder’s instructions.
Persons who hold Vodafone ADSs through a brokerage account or otherwise serving in proxy will need to follow the procedures of their broker in order to give voting instructions to the Depositary.
In connection with a Vodafone Shareholders’ meeting, the Company and the Depositary will not be able to assure that Vodafone ADS Holders will receive the voting materials in time to ensure that such holders can either instruct the Depositary to vote the Vodafone Ordinary Shares underlying the Vodafone ADSs or withdraw the underlying Vodafone Ordinary Shares to vote them in person or by proxy. In addition, except as provided under applicable English law, the Depositary and its agents will not be responsible for failing to carry out voting instructions or for the manner in which any such vote is cast or the effect of any such vote.
The Depositary will have no obligation to take any action with respect to any meeting of, or solicitation of consents or proxies from, Vodafone Shareholders if such action would violate U.S. laws.
Neither the Depositary nor the Custodian will under any circumstances exercise any discretion as to voting, and neither the Depositary nor the Custodian will vote, attempt to exercise the right to vote, or in any way make use of the Vodafone Ordinary Shares (or any other securities, property or cash underlying the Vodafone ADS Holders’ Vodafone ADSs) for purposes of establishing a quorum or otherwise, except pursuant to and in accordance with written instructions from Vodafone ADS Holders or the provisions of the Deposit Agreement.
Dividends and Distributions
The Depositary will pay to Vodafone ADS Holders, as of a record date established by the Depositary under the terms of the Deposit Agreement, the cash dividends or other distributions it receives in respect of the Vodafone Ordinary Shares underlying such Vodafone ADS Holders’ Vodafone ADSs, after deducting its fees and expenses.
Vodafone ADS Holders will receive these distributions in proportion to the number of Vodafone Ordinary Shares represented by the Vodafone ADSs held by each of them.
Distributions in Cash
The Depositary will, as promptly as practicable, convert any cash dividend or distribution the Company pays on the Vodafone Ordinary Shares, other than any dividend or distribution paid in U.S. dollars, into U.S. dollars if it can effect such conversion and transfer the U.S. dollars to the United States on a practicable basis. At any time, the Depositary may, in its discretion, hold the excess amount of foreign currency uninvested as an additional cost of conversion and without liability for interest thereon for the respective accounts of the Vodafone ADS Holders. In the event that the Company or the Depositary is required to withhold and does withhold taxes or other governmental charges from such cash dividend or other cash distribution, the amount to be distributed to the Vodafone ADS Holders will be reduced accordingly. The Depositary will distribute only whole U.S. dollars and cents and will round any fractional amounts to the nearest whole cent.
Distributions in Shares
If any distribution consists of a dividend paid in, or a free distribution of, Vodafone Ordinary Shares, the Depositary may or will, if the Company so requests, distribute additional Vodafone ADSs representing any Vodafone Ordinary Shares that the Company so distributes as a dividend or free distribution, subject to the terms and conditions set forth in the Deposit Agreement. The Depositary will only distribute whole Vodafone ADSs. In lieu of delivering fractional Vodafone ADSs, the Depositary will sell the number of Vodafone Ordinary Shares represented by the aggregate of such fractions and distribute the net proceeds to the Vodafone ADS Holders entitled thereto. The Depositary may withhold the distribution of Vodafone ADSs if it has not received satisfactory assurances from the Company (including a legal opinion) that such distribution does not require registration under the Securities Act or is exempt from registration under the provisions of the Securities Act. If a distribution of additional Vodafone ADSs is withheld, the Depositary may sell all or part of such distribution in such amounts and in such manner as the Depositary deems necessary and practicable and distribute the net proceeds of any such sale (after deducting applicable taxes and/or governmental charges and fees and charges of, and expenses incurred by, the Depositary) to the Vodafone ADS Holders entitled thereto.
Elective Distributions in Cash or Shares
If the Company intends to make a distribution payable at the election of Vodafone Shareholders in cash or in additional Vodafone Ordinary Shares, the Depositary will, if the Company has timely requested that such elective distribution be made available to Vodafone ADS Holders, and if the Depositary has determined that such distribution is reasonably practicable and has received satisfactory legal opinions relating to such distribution, establish procedures to enable Vodafone ADS Holders to elect to receive the proposed dividend in cash or in additional Vodafone ADSs as described in the Deposit Agreement. If the conditions for an elective distribution are not satisfied, the Depositary will, to the extent permitted by law, distribute to Vodafone ADS Holders, on the basis of the same determination as is made in the local market in respect of Vodafone Ordinary Shares for which no election is made, either cash or additional Vodafone ADSs representing such additional Vodafone Ordinary Shares in the manner described in the Deposit Agreement. The Depositary will have no obligation to make any process available to Vodafone ADS Holders to receive the elective dividend in Vodafone Ordinary Shares rather than Vodafone ADSs. There can be no assurances that Vodafone ADS Holders will have the opportunity to receive elective distributions on the same terms as the holders of Vodafone Ordinary Shares.
Distribution of Rights to Receive Additional Shares
The Company agrees with the Depositary that neither the Company nor any company controlling, controlled by or under common control with the Company shall (a) issue (i) additional Shares, (ii) rights to subscribe for Shares, (iii) securities convertible into or exchangeable for Shares or (iv) rights to subscribe for any such securities or (b) deposit any Shares under this Deposit Agreement, except, in each case, under circumstances complying in all respects with the Securities Act of 1933. In support of the foregoing, at the reasonable request of the Depositary where it deems necessary, the Company will furnish the Depositary with legal opinions, in forms and from counsels reasonably acceptable to the Depositary, dealing with matters reasonably requested by the Depositary.
The Depositary will not knowingly accept for deposit hereunder any Shares required to be registered under the Securities Act of 1933 unless a registration statement is in effect and will use reasonable efforts to comply with written instructions of the Company not to accept for deposit hereunder any Shares identified in such instructions at such times and under such circumstances as may reasonably be specified in such instructions in order to facilitate the Company’s compliance with the requirements of the securities laws, rules and regulations in the United States.
Distributions Other Than Cash, Shares or Rights
If the Company intends to distribute property other than cash, Vodafone Ordinary Shares or rights to purchase additional Vodafone Ordinary Shares, the Depositary will, if determined that such distribution is reasonably practicable, sell such securities. The distribution will be made net of applicable fees and charges of, and expenses incurred by a JP Morgan division, branch, or affiliate in connection with such sale . Depositary will endeavor to sell the property in a public or private sale, at such place or places and upon such terms as it may deem reasonably practicable. The proceeds of such sale (net of applicable fees and charges of, and expenses incurred by, the Depositary and taxes) will be distributed to Vodafone ADS Holders.
Reports and Other Communications
On or before the first date on which the Company makes any communication available to holders of Deposited Securities or any securities regulatory authority or stock exchange, by publication or otherwise, the Company will deliver a copy of such notice to the Depositary and the Custodian. The Company will arrange for translation into English, to the extent required pursuant to any regulations of the SECAt the Company’s request and expense, the Depositary will, as promptly as practicable, distribute copies of such notices to the Vodafone ADS Holders.
Books of Depositary
The Depositary will maintain at its principal office a register for the registration and transfer of Vodafone ADSs. Vodafone ADS Holders may inspect such records at such office at reasonable times, but solely for the purpose of communicating with other Vodafone ADS Holders in the interest of business matters relating to the Company, the Vodafone ADSs or the Deposit Agreement. Such register may be closed from time to time when deemed expedient by the Depositary in connection with the performance of its duties under the Deposit Agreement or at the request of the Company. The Depositary will also maintain facilities to record and process the issuance, delivery, registration, transfer and surrender of Vodafone ADSs in accordance with the provisions of the Deposit Agreement.
Reclassifications, Recapitalizations and Mergers
The Depositary may, in its discretion, and shall if reasonably requested by the Company, amend this ADR or distribute additional or amended ADRs (with or without calling this ADR for exchange) or cash, securities or property on the record date set by the Depositary therefor to reflect any change in par value, split-up, consolidation, cancellation or other reclassification of Deposited Securities, any Share Distribution or Other Distribution not distributed to Holders or any cash, securities or property available to the Depositary in respect of Deposited Securities from (and the Depositary is hereby authorized to surrender any Deposited Securities to any person and, irrespective of whether such Deposited Securities are surrendered or otherwise cancelled by operation of law, rule, regulation or otherwise, to sell by public or private sale any property received in connection with) any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all the assets of the Company. To the extent the Depositary does not so amend this ADR or make a distribution to Holders to reflect any of the foregoing, or the net proceeds thereof, whatever cash, securities or property results from any of the foregoing shall constitute Deposited Securities and each ADS evidenced by this ADR shall automatically represent its pro rata interest in the Deposited Securities as then constituted. Promptly upon the occurrence of any of the aforementioned changes affecting Deposited Securities, the Company shall notify the Depositary in writing of such occurrence and as soon as practicable after receipt of such notice from the Company, may instruct the Depositary to give notice thereof, at the Company’s The Company may agree with the Depositary to amend or restate the Deposit Agreement and the Vodafone ADRs without the consent of Vodafone ADS Holders in any respect which they may deem necessary or desirable.
Amendment and Termination of the Deposit Agreement
Amendments
If the amendment or restatement imposes or increases fees or charges (except for taxes and governmental charges, registration fees, cable, telex or fax transmission costs, delivery costs or other such expenses) or otherwise prejudices any substantial existing right of Vodafone ADS Holders, it will only become effective 30 days after notice of such amendment or restatement has been given to Vodafone ADS Holders. Under the Deposit Agreement, notice of any amendment or restatement to the Deposit Agreement or any Vodafone ADR need not describe in detail the specific amendments effectuated thereby, and failure to describe the specific amendments in any such notice will not render such notice invalid so long as, in each such case, the notice given to the Vodafone ADS Holders identifies a means for such holders to retrieve or receive the text of such amendment or restatement. At the time an amendment or restatement becomes effective, a Vodafone ADS Holder is considered, by continuing to hold Vodafone ADSs, to have agreed to the amendment or restatement and to be bound by the Deposit Agreement as amended. However, if any governmental body adopts new laws, rules or regulations requiring an amendment or restatement of the Deposit Agreement to comply therewith, the Company and the Depositary may amend the Deposit Agreement and any Vodafone ADRs, which amendment or restatement may become effective before a notice of such amendment or restatement is given to Vodafone ADS Holders. However, no amendment or restatement will impair a Vodafone ADS Holder’s right to receive the Vodafone Ordinary Shares (or any other securities, property or cash) underlying such holder’s Vodafone ADSs in exchange for such holder’s Vodafone ADSs, except in order to comply with applicable provisions of any mandatory laws.
Termination
The Deposit Agreement will be terminated by the Depositary if the Company asks it to do so, in which case the Depositary must notify Vodafone ADS Holders at least 30 days before termination. If at any time after 60 days have expired since (y) the Company has delivered a notice of removal to the Depositary, a successor depositary has not been appointed by the Company and accepted its appointment, the Depositary may terminate the Deposit Agreement by mailing notice of such termination to the Vodafone ADS Holders then outstanding at least 30 days before termination. the Depositary may terminate the Deposit Agreement without notice to the Company, but subject to giving 30 days’ notice to the Holders, under the following circumstances: (i) in the event of the Company’s bankruptcy or insolvency, (ii) if the Shares cease to be listed on an internationally recognized stock exchange, (iii) if the Company effects (or will effect) a redemption of all or substantially all of the Deposited Securities, or a cash or share distribution representing a return of all or substantially all of the value of the Deposited Securities, or (iv) there occurs a merger, consolidation, sale of assets or other transaction as a result of which securities or other property are delivered in exchange for or in lieu of Deposited Securities. The Depositary shall endeavor to provide the Company with a courtesy copy of any termination notice provided to Holders under the immediately preceding sentence.
If any Vodafone ADSs remain outstanding after termination, (i) the Vodafone ADS Holders will be entitled to receive the underlying securities upon surrender of the Vodafone ADSs and payment of all fees, expenses, taxes and governmental charges, and (ii) the Depositary will stop registering the transfer of Vodafone ADSs, will stop distributing dividends to Vodafone ADS Holders, and will not give any further notices or do anything else under the Deposit Agreement other than:
● | collect dividends and distributions on the Vodafone Ordinary Shares (or any other securities, property or cash) underlying the Vodafone ADSs; |
● | sell rights and other properties received in respect of Vodafone Ordinary Shares (or any other securities, property or cash) underlying the Vodafone ADSs as provided in the Deposit Agreement; and |
● | deliver the Vodafone Ordinary Shares (or any other securities, property or cash) underlying the Vodafone ADSs, together with any dividends or other distributions received with respect thereto and the net proceeds of the sale of any rights or other property, in exchange for the Vodafone ADSs surrendered to the |
Depositary (after deducting, in each case, the fee of the Depositary for the surrender of Vodafone ADSs, any expenses for the account of the Vodafone ADS Holder in accordance with the terms of the Deposit Agreement, and any applicable taxes or governmental charges).
At any time after six months from the date of termination of the Deposit Agreement, the Depositary may sell any remaining deposited Vodafone Ordinary Shares (or any other securities, property or cash) underlying Vodafone ADSs. After that, the Depositary will hold the money it received on the sale, as well as any cash it is holding under the Deposit Agreement, unsegregated for the pro rata benefit of the Vodafone ADS Holders that have not surrendered their Vodafone ADSs. The Depositary will not invest the money and has no liability for interest. After making such sale, the Depositary’s only obligations to Vodafone ADS Holders will be to account for the money and cash (net of all applicable fees, expenses, taxes and governmental charges payable by Vodafone ADS Holders under the terms of the Deposit Agreement). After termination, the Company’s only obligations will be with respect to indemnification of, and to pay specified amounts to, the Depositary. The obligations under the terms of the Deposit Agreement of Vodafone ADS Holders outstanding as of the termination date will survive the termination date and will be discharged only when the applicable Vodafone ADSs are presented by their Vodafone ADS Holders to the Depositary for cancellation and such Vodafone ADS Holder has satisfied all of its obligations under the terms of the Deposit Agreement.
Withdrawal and Cancellation
A Vodafone ADS Holder may withdraw the Vodafone Ordinary Shares (or any other securities, property or cash) underlying such holder’s Vodafone ADSs upon surrender of such holder’s Vodafone ADSs for such purpose to the Depositary. The Depositary may require proper endorsement in blank of such ADR (or duly executed instruments of transfer thereof in blank) and the Holder’s written order directing the Depositary to cause the Deposited Securities represented by the ADSs evidenced by such ADR to be withdrawn and delivered to, or upon the written order of, any person designated in such order (a “Withdrawal Order”). Directions from the Depositary to the Custodian to deliver Deposited Securities shall be given by letter, first class airmail postage prepaid, or, at the request, risk and expense of the Holder, by SWIFT, cable, telex or facsimile transmission. Upon payment of the Depositary’s fees and of any taxes and governmental charges payable in connection with such surrender and withdrawal, and subject to the terms and conditions of the Deposit Agreement, the Company’s constituent documents, any other provisions of or governing the Vodafone Ordinary Shares (or any other securities, property or cash underlying the holder’s Vodafone ADSs), and other applicable laws, any deposited Vodafone Ordinary Shares (or any other securities, property or cash) underlying such holder’s Vodafone ADSs that have been surrendered to the Depositary will be delivered, as promptly as practicable, to such Vodafone ADS Holder at the office of the Custodian or through book-entry delivery of the amount of Vodafone Ordinary Shares represented by the Vodafone ADSs surrendered to the Depositary, except that the Depositary may deliver any dividends or distributions, or the proceeds of any sales of dividends, distributions or rights, at the principal office of the Depositary.
Limitations on Obligations and Liability to ADS Holders
The Deposit Agreement expressly limits the obligations and liabilities of the Company, the Depositary and any custodian to the Vodafone ADS Holders. These limitations include, among other things, that the Company and the Depositary:
● | are obligated only to take the actions specifically set forth in the Deposit Agreement without gross negligence or willful misconduct; |
● | have no obligation to become involved in a lawsuit or proceeding related to the Vodafone Ordinary Shares (or any other securities, property or cash) underlying the Vodafone ADSs or the Vodafone ADRs unless they are indemnified to their satisfaction; |
● | are not liable for any consequential or punitive damages or any action or non-action by it in reliance upon any advice of or information from any legal counsel, accountants, any person depositing Vodafone |
Ordinary Shares, any Vodafone ADS Holder or any other person whom they believe in good faith is competent to give them that advice or information;
● | may rely and will be protected in action upon any written notice, request or other document believed by it to be genuine and to have been signed or presented by the proper party or parties; and |
● | are not liable to Holders or beneficial owners of Vodafone ADSs or third parties for any special, consequential, indirect or punitive damages for any breach of the terms of the Deposit Agreement or otherwise. |
In addition, the Company, the Depositary and their respective directors, officers, employees, agents or affiliates are not liable to any holder or beneficial owner of Vodafone ADSs:
● | if the Depositary or the Company is prevented, delayed or forbidden from, or is subject to any civil or criminal penalty on account of, doing or performing any act or thing which by the terms of the Deposit Agreement or the Vodafone Ordinary Shares (or any other securities, property or cash underlying the Vodafone ADSs) it is provided will be done or performed by reason of any provision of any present or future law or regulation of the U.S. or any other country, or of any governmental or regulatory authority or stock exchange or inter-dealer quotation system, or by reason of any provision, present or future, of the Articles of Association, or by reason of any provision of any securities issued or distributed by the Company, or any offering or distribution thereof, or by reason of any act of God or war or other circumstances beyond its control; |
● | by reason of any exercise of, or failure to exercise, any discretion provided for in the Deposit Agreement; or |
● | for the inability of any holder or beneficial owner of Vodafone ADSs to benefit from any distribution, offering, right or other benefit which is made available to Vodafone Shareholders (or of any other securities, property or cash underlying the Vodafone ADSs) but is not, under the terms of the Deposit Agreement, made available to ADS Holders or beneficial owners of Vodafone ADSs. |
Additionally, the Depositary will not be liable for, among other things:
● | any acts or omissions made by a predecessor or successor depositary, so long as the Depositary performed its obligations without gross negligence or willful misconduct while it acted as the Depositary; |
● | any acts or omissions of any securities depository, clearing agency or settlement system in connection with book-entry settlement of Vodafone Ordinary Shares or otherwise; |
● | any failure to carry out any instructions to vote any of the Vodafone Ordinary Shares represented by the Vodafone ADSs, or for the manner in which any such vote is cast, if such action or non-action is in good faith, or for the effect of any such vote; |
● | the Depositary’s failure to determine that any distribution or action is lawful or reasonably practicable if such determination of practicability is made without bad faith; |
● | the content of any information received from the Company for distribution to the Vodafone ADS Holders or any inaccuracy of any translation thereof; |
● | any investment risk associated with acquiring an interest in, or the validity of worth of, the Vodafone Ordinary Shares (or any other securities, property or cash underlying Vodafone ADSs); |
● | any tax consequences that may result from the ownership of Vodafone ADSs, Vodafone Ordinary Shares or any other securities, property or cash underlying Vodafone ADSs; |
● | the credit-worthiness of any third party; |
● | allowing any rights to lapse in accordance with the terms of the Deposit Agreement; |
● | the failure or timeliness of any notice from the Company; or |
● | any action of or failure to act by, or any information provided or not provided by, the Depository Trust Company (“DTC”) or any DTC participant. |
Debt Securities
Each series of notes listed on the NASDAQ Stock Market LLC and set forth on the cover page to Vodafone’s annual report on Form 20-F for the year ended March 31, 2023 has been issued by Vodafone Group Plc (collectively, the “Debt Securities”). Each of these series of Debt Securities were issued pursuant to an effective registration statement and a related prospectus and prospectus supplement (if applicable) setting forth the terms of the relevant series of notes.
The following table sets forth the aggregate principal amount outstanding, date of issuance and file number of the registration statements for each relevant series of Debt Securities. The 3.750% Notes due 16 January 2024, Floating Rate Notes due January 2024, 4.125% Notes due 30 May 2025, 4.375% Notes due 30 May 2028, 6.250% Notes due February 2032, 6.150% Notes due February 2037, 5.000% Notes due 30 May 2038, 4.375% Notes due February 2043, 5.250% Notes due 30 May 2048, 4.875% Notes due 19 June 2049, 4.250% Notes due 17 September 2050, 5.625% Notes due 10 February 2053, 5.125% Notes due 19 June 2059 and 5.750% Notes due 10 February 2063 are collectively defined as, the “Notes.” The NC5.25 Capital Securities due 2081, NC10 Capital Securities due 2081, and NC30 Capital Securities due 2081 are collectively defined as, the “2081 Capital Securities.” The Capital Securities due April 2079 and the 2081 Capital Securities are collectively defined as, the “Capital Securities.”
Series |
|
Aggregate Principal |
|
Date of Issuance |
|
Registration |
3.750% Notes due 16 January 2024 |
|
770,324,000 |
|
May 30, 2018 |
|
333-219583 |
Floating Rate Notes due January 2024 |
|
488,984,000 |
|
May 30, 2018 |
|
333-219583 |
4.125% Notes due 30 May 2025 |
|
1,500,000,000 |
|
May 30, 2018 |
|
333-219583 |
4.375% Notes due 30 May 2028 |
|
900,504,000 |
|
May 30, 2018 |
|
333-219583 |
6.250% Notes due February 2032 |
|
495,000,000 |
|
November 30, 2002 |
|
333-10762 |
6.150% Notes due February 2037 |
|
1,700,000,000 |
|
February 27, 2007 |
|
333-110941 |
5.000% Notes due 30 May 2038 |
|
582,456,000 |
|
May 30, 2018 |
|
333-219583 |
4.375% Notes due February 2043 |
|
1,400,000,000 |
|
February 19, 2013 |
|
333-168347 |
5.250% Notes due 30 May 2048 |
|
1,443,947,000 |
|
May 30, 2018 |
|
333-219583 |
4.875% Notes due 19 June 2049 |
|
1,750,000,000 |
|
June 19, 2019 |
|
333-219583 |
4.250% Notes due 17 September 2050 |
|
1,500,000,000 |
|
September 17, 2019 |
|
333-219583 |
5.625% Notes due 10 February 2053 |
|
700,000,000 |
|
February 10, 2023 |
|
333-240163 |
5.125% Notes due 19 June 2059 |
|
500,000,000 |
|
June 19, 2019 |
|
333-219583 |
5.750% Notes due 10 February 2063 |
|
500,000,000 |
|
February 10, 2023 |
|
333-240163 |
Capital Securities due April 2079 |
|
2,000,000,000 |
|
April 4, 2019 |
|
333-219583 |
NC5.25 Capital Securities due 2081 |
|
500,000,000 |
|
June 4, 2021 |
|
333-240163 |
NC10 Capital Securities due 2081 |
|
1,000,000,000 |
|
June 4, 2021 |
|
333-240163 |
NC30 Capital Securities due 2081 |
|
950,000,000 |
|
June 4, 2021 |
|
333-240163 |
Descriptions of the Debt Securities
The summary set out below of the general terms and provisions of the Debt Securities does not purport to be complete and is subject to, and qualified in its entirety by reference to, all of the definitions and provisions of the Indenture (as defined below) and the form of the instrument representing each series of Debt Securities. Certain terms, unless otherwise defined herein, have the meaning given to them in the Indenture. All references to the “Indenture” are to the indenture, dated as of February 10, 2000, between the Company and Citibank, N.A., as Trustee, including forms of debt securities. The Bank of New York Mellon became the successor trustee (the “Trustee”) to Citibank, N.A. pursuant to an Agreement of Resignation, Appointment and Acceptance, dated as of July 24, 2007, by and among the Company, The Bank of New York Mellon and Citibank, N.A.
As required by U.S. federal law for all bonds and notes of companies that are publicly offered, any debt securities, including the Debt Securities, are governed by an indenture. The Indenture is a contract entered into between the Company and The Bank of New York Mellon, which acts as trustee.
The Trustee has two main roles:
● | First, the Trustee can enforce your rights against the Company if it defaults, although there are some limitations on the extent to which the Trustee acts on your behalf that are described below; and |
● | Second, the Trustee performs administrative duties for the Company, such as sending interest payments and notices to you and transferring your Debt Securities to a new buyer if you sell. |
The Indenture and its associated documents contain the full legal text of the matters described in this section. New York law governs the Indenture and the Notes, except for certain events of default described in the Indenture, which are governed by English law. The Company has filed a copy of the Indenture with the SEC as an exhibit to its registration statement.
Section references below refer to sections of the Indenture.
Descriptions of the Notes
3.750% Notes due January 2024
The following terms are applicable to the 3.750% Notes due January 2024:
● | Title: 3.750% Notes due January 2024 |
● | Total principal amount outstanding: $770,324,000. |
● | Issue date: May 30, 2018. |
● | Maturity date: The Company will repay the 3.750% Notes due January 2024 on January 16, 2024 at 100% of their principal amount, plus accrued and unpaid interest. |
● | Interest rate: 3.750% per annum. |
● | Interest payment dates: Semi-annually on January 16 and July 16 of each year, commencing January 16, 2019 (long first coupon) up to and including the maturity date for the 3.750% Notes due January 2024, subject to the applicable business day convention. |
● | Optional make-whole redemption: The Company has the right to redeem the 3.750% Notes due January 2024, in whole or in part, at any time and from time to time at a redemption price equal to the greater of (1) 100% of the principal amount of such 3.750% Notes due January 2024plus accrued interest to the date of redemption and (2) as determined by the quotation agent, the sum of the present values of the remaining scheduled payments of principal and interest on such 3.750% Notes due January 2024 (excluding any portion of such payments of interest accrued as of the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the adjusted treasury rate, plus 20 basis points. |
● | Redemption or Repurchase Following a Change of Control: If a Change of Control Put Event (as defined below) occurs, then the holder of a 3.750% Note due January 2024 will have the option to require the Company to redeem or, at the Company’s option, purchase (or procure the purchase of) such 3.750% Note due January 2024 at an optional redemption amount equal to 101% of the aggregate principal amount of the 3.750% Note due January 2024, plus accrued and unpaid interest on such 3.750% Note due January 2024to the date of redemption, according to the terms and limitations described in the prospectus. |
A “Change of Control Put Event” will be deemed to occur if:
(i) |
any person or any persons acting in concert (as defined in the United Kingdom’s City Code on Takeovers and Mergers), other than a holding company (as defined in Section 1159 of the Companies Act 2006 as amended) whose shareholders are or are to be substantially similar to the pre-existing Vodafone Shareholders, shall become interested (within the meaning of Part 22 of the Companies Act 2006 as amended) in (A) more than 50% of the issued or allotted ordinary share capital of the Company or (B) shares in the capital of the Company carrying more than 50% of the voting rights normally exercisable at a general meeting of the Company (each such event, a “Change of Control”); provided that, no Change of Control shall be deemed to occur if the event which would otherwise have constituted a Change of Control occurs or is carried out by an extraordinary resolution; and |
(ii) |
the long-term debt of the Company has been assigned: |
(A) |
an investment grade credit rating (Baa3/BBB—, or their respective equivalents, or better) (an “Investment Grade Rating”), by any Rating Agency (as defined below) at the invitation of the Company; or |
(B) |
where there is no rating from any Rating Agency assigned at the invitation of the Company, an Investment Grade Rating by any Rating Agency of its own volition, and; |
(x) |
such rating is, within the Change of Control Period (as defined below), either downgraded to a non-investment grade credit rating (Ba1/BB+, or their respective equivalents, or worse) (a “Non-Investment Grade Rating”) or withdrawn and is not, within the Change of Control Period, subsequently (in the case of a downgrade) upgraded or (in the case of a withdrawal) reinstated to an Investment Grade Rating by such Rating Agency; |
(y) |
and there remains no other Investment Grade Rating of the long-term debt of the Company from any other Rating Agency; and |
(iii) |
in making any decision to downgrade or withdraw an Investment Grade Rating pursuant to paragraph (ii) above, the relevant Rating Agency announces publicly or confirms in writing to the Company that such decision(s) resulted, in whole or in part, from the occurrence of the relevant Change of Control. |
Further, if at the time of the occurrence of the relevant Change of Control the long-term debt of the Company is not assigned an Investment Grade Rating by any Rating Agency, a Change of Control Put Event will be deemed to occur upon the occurrence of a Change of Control alone.
Promptly upon the Company becoming aware that a Change of Control Put Event has occurred the Company shall, and the Trustee if so requested by the holders of at least one-quarter in nominal amount of the 3.750% Notes due January 2024 then outstanding or if so directed by an extraordinary resolution of the holders of 3.750% Notes due January 2024, shall (subject in each case to the Trustee being indemnified and/or secured to its satisfaction) give notice (a “Change of Control Put Event Notice”) to the holders of 3.750% Notes due January 2024 specifying the nature of the Change of Control Put Event and the procedure for exercising the Change of Control Put Option.
To exercise the Change of Control Put Option, the holder of a 3.750% Note due January 2024 must (in the case of bearer debt securities) deposit such 3.750% Note due January 2024 with any Paying Agent or (in the case of registered 3.750% Notes due January 2024) deposit the certificate representing such 3.750% Note due January 2024 with the security registrar at its specified office, in each case at any time during normal business hours of such Paying Agent or security registrar (all as defined in the 3.750% Note due January 2024), as the case may be, falling within the period (the “Put Period”) of 30 days after a Change of Control Put Event Notice is given, accompanied by a duly signed and completed notice of exercise in the form (for the time being current) obtainable from the specified office of any Paying Agent or security registrar, as the case may be (a “Change of Control Put Notice”). No 3.750% Note due January 2024 or certificate so deposited and option so exercised may be withdrawn (except as provided in the Agency Agreement) without the prior consent of the Company. The Company shall redeem or purchase (or procure the purchase of) the relevant 3.750% Notes due January 2024 on the Put Date unless previously redeemed (or purchased) and cancelled.
If 80% or more in nominal amount of the 3.750% Notes due January 2024 then outstanding have been redeemed or purchased, the Company may, on giving not less than 30 nor more than 60 days’ notice to the holders of 3.750% Notes due January 2024 (such notice being given within 30 days after the Put Date), redeem or purchase (or procure the purchase of), at its option, all of the remaining outstanding 3.750% Notes due January 2024 at the optional redemption amount, together with interest (if any) accrued to (but excluding) the date fixed for such redemption or purchase.
If the rating designations employed by either Moody’s or S&P are changed from those which are described in paragraph (ii) of the definition of “Change of Control Put Event” above, or if a rating is procured from a Substitute Rating Agency (as defined below), the Company shall determine the rating designations of Moody’s or S&P or such Substitute Rating Agency (as appropriate) as are most equivalent to the prior rating designations of Moody’s or S&P and this section shall be construed accordingly.
The Trustee is under no obligation to ascertain whether a Change of Control Put Event or Change of Control or any event which could lead to the occurrence of or could constitute a Change of Control Put Event or Change of Control has occurred, and, until it shall have actual knowledge or notice pursuant to the trust deed to the contrary, the Trustee may assume that no Change of Control Put Event or Change of Control or other such event has occurred.
“Change of Control Period” means the period commencing upon a Change of Control and ending 90 days after the Change of Control (or such longer period for which the 3.750% Notes due January 2024 are under consideration (such consideration having been announced publicly within the period ending 90 days after the Change of Control) for rating review, such period not to exceed 60 days after the public announcement of such consideration); and
“Rating Agency” means Moody’s Investors Service España S.A. (“Moody’s”) or Standard & Poor’s Credit Market Services Europe Limited (“S&P”) or any of their respective affiliates or successors or any rating agency (a “Substitute Rating Agency”) substituted for any of them by the Company from time to time.
Floating Rate Notes due January 2024
The following terms are applicable to the Floating Rate Notes due January 2024:
● | Title: Floating Rate Notes due January 2024. |
● | Total principal amount outstanding: $488,984,000. |
● | Issue date: May 30, 2018. |
● | Maturity date: The Company will repay the Floating Rate Notes due January 2024 on January 16, 2024 at 100% of their principal amount, plus accrued and unpaid interest. |
● | Interest rate: The interest rate for the period from May 30, 2018 to, but excluding, the first interest reset date will be the initial base rate, as adjusted by adding the spread. Thereafter, the interest rate will be the base rate, as adjusted by adding the spread. The interest rate will be reset quarterly on each interest reset date. |
● | Initial Base Rate: Three-month U.S. dollar LIBOR, as determined on May 30, 2018. |
● | Base Rate: Three-month U.S. dollar LIBOR. |
● | Three-Month U.S. Dollar LIBOR: “Three-month U.S. dollar LIBOR” means the London interbank offered rate for deposits in U.S. dollars for a three-month period, as that rate appears on Reuters screen page “LIBOR01” at approximately 11:00 a.m., London time, on any interest determination date. |
● | If no offered rate appears on Reuters screen page “LIBOR01” on the relevant interest determination date at approximately 11:00 a.m., London time, then the Company will select and identify to the calculation agent four major banks in the London interbank market, and the calculation agent will request the principal London offices of each of such banks to provide a quotation of the rate at which three-month deposits in U.S. dollars in amounts of at least $1,000,000 are offered by it to prime banks in the London interbank market, on that date and at that time for the applicable interest period. If at least two quotations are |
provided, three-month U.S. dollar LIBOR will be the arithmetic average (rounded upward if necessary to the nearest .00001 of1%) of the quotations provided. If less than two quotes are provided, the Company will select and identify to the calculation agent three major banks in New York City, and the calculation agent will request each of such banks to provide a quotation of the rate offered by it at approximately 11:00 a.m., New York City time, on the interest determination date for loans in U.S. dollars to leading European banks for a three month period for the applicable interest period in an amount of at least $1,000,000. If three quotations are provided, three-month U.S. dollar LIBOR will be the arithmetic average of the quotations provided. Otherwise, the rate of interest for the next succeeding interest period will be equal to the rate of interest last determined in relation to the notes in respect of the preceding interest period, or, in the case of the first interest determination date prior to the first interest reset date, the initial base rate.
● | Notwithstanding the foregoing, if the Company determines on or prior to the relevant interest determination date, after consultation with an investment bank of national standing selected by us in its sole discretion, that three-month U.S. dollar LIBOR has been discontinued or ceased to be administered, then the Company will appoint in its sole discretion an investment bank of national standing to determine whether there is a substitute or successor base rate to three-month U.S. dollar LIBOR that is consistent with accepted market practice. If such investment bank of national standing determines that there is such a substitute or successor base rate, the calculation agent shall use such substitute or successor base rate. In such case, the calculation agent will implement changes to the business day convention, the definition of business day, the interest determination date and any method for obtaining the substitute or successor base rate if such rate is unavailable on the relevant business day, in a manner that is consistent with industry accepted practices for such substitute or successor base rate, all as determined and directed by such investment bank of national standing; provided, however, that the calculation agent shall not be required to implement any such changes that affects its own rights, duties or immunities under the indenture, the calculation agent agreement or otherwise. If such investment bank of national standing determines that there is no such substitute or successor base rate as so provided above, the rate of interest for the next succeeding interest period will be equal to the rate of interest last determined in relation to the notes in respect of the preceding interest period. |
● | Spread: Plus 0.990% |
● | Interest payment dates: Quarterly on January 16, April 16, July 16 and October 16 of each year, commencing July 16, 2018, up to and including the maturity date for the Tranche 6 Notes, subject to the applicable business day convention. |
● | Interest Reset Dates: Starting with the interest period scheduled to commence on July 16, 2018, the interest reset date for each interest period will be the first day of such interest period, subject to the applicable business day convention. |
● | Interest Determination Date: The interest determination date relating to a particular interest reset date will be the second London business day preceding such interest reset date. |
● | Calculation Agent: The Bank of New York Mellon, London Branch, or its successor appointed by us. |
● | Redemption or Repurchase Following a Change of Control: If a Change of Control Put Event occurs, then the holder of a Floating Rate Note due January 2024 will have the option to require the Company to redeem or, at the Company’s option, purchase (or procure the purchase of) such Floating Rate Note due January 2024 at an optional redemption amount equal to 101% of the aggregate principal amount of such Floating Rate Note due January 2024, plus accrued and unpaid interest on such Floating Rate Note due January 2024 to the date of redemption, according to the terms and limitations described above under “—3.750% Notes due January 2024—Redemption or Repurchase Following a Change of Control” as applied to the Floating Rate Notes due January 2024. |
4.125% Notes due May 2025
The following terms are applicable to the 4.125% Notes due May 2025:
● | Title: 4.125% Notes due May 2025. |
● | Total principal amount outstanding: $1,500,000,000. |
● | Issue date: May 30, 2018. |
● | Maturity date: The Company will repay the 4.125% Notes due May 2025 on May 30, 2025 at 100% of their principal amount, plus accrued and unpaid interest. |
● | Interest rate: 4.125% per annum. |
● | Interest payment dates: Semi-annually on May 30 and November 30 of each year, commencing November 30, 2018 up to and including the maturity date for the 4.125% Notes due May 2025, subject to the applicable business day convention. |
● | Business day convention: Following, Unadjusted. |
● | Day count fraction: 30/360 |
● | Optional make-whole redemption: The Company has the right to redeem the 4.125% Notes due May 2025, in whole or in part, at any time and from time to time at a redemption price equal to the greater of (1) 100% of the principal amount of such 4.125% Notes due May 2025 plus accrued interest to the date of redemption and (2) as determined by the quotation agent, the sum of the present values of the remaining scheduled payments of principal and interest on such 4.125% Notes due May 2025 (excluding any portion of such payments of interest accrued as of the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the adjusted treasury rate, plus 20 basis points. |
● | Redemption or Repurchase Following a Change of Control: If a Change of Control Put Event occurs, then the holder of a 4.125% Note due May 2025 will have the option to require the Company to redeem or, at the Company’s option, purchase (or procure the purchase of) such 4.125% Note due May 2025 at an optional redemption amount equal to 101% of the aggregate principal amount of such 4.125% Note due 2025, plus accrued and unpaid interest on such 4.125% Note due May 2025 to the date of redemption, according to the terms and limitations described above under “—3.750% Notes due January 2024—Redemption or Repurchase Following a Change of Control” as applied to the 4.125% Notes due May 2025. |
4.375% Notes due May 2028
The following terms are applicable to the 4.375% Notes due May 2028:
● | Title: 4.375% Notes due May 2028. |
● | Total principal amount outstanding: $900,504,000. |
● | Issue date: May 30, 2018. |
● | Maturity date: The Company will repay the 4.375% Notes due May 2028 on May 30, 2028 at 100% of their principal amount, plus accrued and unpaid interest. |
● | Interest rate: 4.375% per annum. |
● | Interest payment dates: Semi-annually on May 30 and November 30 of each year, commencing November 30, 2018 up to and including the maturity date for the 4.375% Notes due May 2028, subject to the applicable business day convention. |
● | Business day convention: Following, Unadjusted. |
● | Day count fraction: 30/360 |
● | Optional make-whole redemption: The Company has the right to redeem the 4.375% Notes due May 2028, in whole or in part, at any time and from time to time at a redemption price equal to the greater of (1) 100% of the principal amount of such 4.375% Notes due May 2028 plus accrued interest to the date of redemption and (2) as determined by the quotation agent, the sum of the present values of the remaining scheduled payments of principal and interest on such 4.375% Notes due May 2028 (excluding any portion |
of such payments of interest accrued as of the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the adjusted treasury rate, plus 25 basis points.
● | Redemption or Repurchase Following a Change of Control: If a Change of Control Put Event occurs, then the holder of a 4.375% Note due May 2028 will have the option to require the Company to redeem or, at the Company’s option, purchase (or procure the purchase of) such Note at an optional redemption amount equal to 101% of the aggregate principal amount of such 4.375% Note due May 2028, plus accrued and unpaid interest on such Note to the date of redemption, according to the terms and limitations described above under “—3.750% Notes due January 2024—Redemption or Repurchase Following a Change of Control” as applied to the 4.375% Note due May 2028. |
6.250% Notes due February 2032
The following terms are applicable to the 6.250% Notes due February 2032:
● | Title: 6.250% Notes due February 2032. |
● | Total principal amount outstanding: $495,000,000. |
● | Notes: $495,000,000 principal amount of 6.25% Notes due 2032. |
● | Issue Date: November 30, 2002. |
● | Maturity: The Company will repay the 6.250% Notes due 2032at 100% of their principal amount plus accrued interest on November 30, 2032. |
● | Interest payment dates: Semi-annually on May 30 and November 30. |
● | First interest payment date: May 30, 2003. |
● | Optional make-whole redemption: The Company has the right to redeem the 6.250% Notes due 2032, in whole or in part, at any time and from time to time at a redemption price equal to the greater of (1) 100% of the principal amount of the 6.250% Notes due February 2032plus accrued interest to the date of redemption and (2) as determined by the quotation agent, the sum of the present values of the remaining scheduled payments of principal and interest on the 6.250% Notes due 2032 (excluding any portion of such payments of interest accrued as of the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the adjusted treasury rate, plus 20 basis points, plus accrued interest to the date of redemption. |
6.150% Notes due February 2037
The following terms are applicable to the 6.150% Notes due February 2037:
● | Title: 6.150% Notes due February 2037. |
● | Total principal amount outstanding: $1,700,000,000. |
● | Issue date: February 27, 2007. |
● | Maturity date: The Company will repay the 6.150% Notes due February 2037 on February 27, 2037 at 100% of their principal amount plus accrued interest. |
● | Interest rate: 6.150% per annum. |
● | Interest payment dates: Semi-annually on February 27 and August 27 of each year, commencing August 27, 2007, up to and including the maturity date for the 6.150% Notes due February 2037, subject to the applicable business day convention. |
● | Business day convention: Following. |
● | Day count fraction: 30/360 |
● | Optional make-whole redemption: The Company has the right to redeem the 6.150% Notes due February 2037, in whole or in part, at any time and from time to time at a redemption price equal to the greater of (1) 100% of the principal amount of such 6.150% Notes due February 2037 plus accrued interest to the date of redemption and (2) as determined by the quotation agent, the sum of the present values of the remaining scheduled payments of principal and interest on such 6.150% Notes due February 2037 (excluding any portion of such payments of interest accrued as of the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-daymonths) at the adjusted treasury rate, plus 25 basis points, together with accrued interest to the date of redemption. |
5.000% Notes due May 2038
The following terms are applicable to the 5.000% Notes due May 2038:
● | Title: 5.000% Notes due May 2038. |
● | Total principal amount outstanding: $582,456,000 |
● | Issue date: May 30, 2018. |
● | Maturity date: The Company will repay the 5.000% Notes due May 2038 on May 30, 2038 at 100% of their principal amount, plus accrued and unpaid interest. |
● | Interest rate: 5.000% per annum. |
● | Interest payment dates: Semi-annually on May 30 and November 30 of each year, commencing November 30, 2018 up to and including the maturity date for the 5.000% Notes due May 2038, subject to the applicable business day convention. |
● | Business day convention: Following, Unadjusted. |
● | Day count fraction: 30/360 |
● | Optional make-whole redemption: The Company has the right to redeem the 5.000% Notes due May 2038, in whole or in part, at any time and from time to time at a redemption price equal to the greater of (1) 100% of the principal amount of such 5.000% Notes due May 2038plus accrued interest to the date of redemption and (2) as determined by the quotation agent, the sum of the present values of the remaining scheduled payments of principal and interest on such 5.000% Notes due May 2038 (excluding any portion of such payments of interest accrued as of the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the adjusted treasury rate, plus 30 basis points. |
● | Redemption or Repurchase Following a Change of Control: If a Change of Control Put Event occurs, then the holder of a 5.000% Note due May 2038 will have the option to require the Company to redeem or, at the Company’s option, purchase (or procure the purchase of) such 5.000% Note due May 2038 at an optional redemption amount equal to 101% of the aggregate principal amount of such 5.000% Note due May 2038, plus accrued and unpaid interest on such 5.000% Note due May 2038 to the date of redemption, according to the terms and limitations described above under “—3.750% Notes due January 2024—Redemption or Repurchase Following a Change of Control” as applied to the 5.000% Note due May 2038 series of Notes. |
4.375% Notes due February 2043
The following terms are applicable to the 4.375% Notes due February 2043:
● | Title: 4.375% Notes due February 2043. |
● | Total principal amount outstanding: $1,400,000,000. |
● | Issue date: February 19, 2013. |
● | Maturity date: The Company will repay the 4.375% Notes due February 2043 on February 19, 2043 at 100% of their principal amount plus accrued and unpaid interest. |
● | Interest rate: 4.375% annum. |
● | Interest payment dates: Semi-annually on February 19 and August 19 of each year, commencing August 19, 2013 up to and including the maturity date for the 4.375% Notes due February 2043, subject to the applicable business day convention. |
● | Business day convention: Following, Unadjusted. |
● | Optional make-whole redemption: The Company has the right to redeem the 4.375% Notes due February 2043, in whole or in part, at any time and from time to time at a redemption price equal to the greater of (1) 100% of the principal amount of such 4.375% Notes due February 2043 plus accrued interest to the date of redemption and (2) as determined by the quotation agent, the sum of the present values of the remaining scheduled payments of principal and interest on such 4.375% Notes due February 2043 (excluding any portion of such payments of interest accrued as of the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the adjusted treasury rate, plus 20 basis points. |
5.250% Notes due May 2048
The following terms are applicable to the 5.250% Notes due May 2048:
● | Title: 5.250% Notes due May 2048. |
● | Total principal amount outstanding: $1,443,947,000. |
● | Issue date: May 30, 2018. |
● | Maturity date: The Company will repay the 5.250% Notes due May 2048 on May 30, 2048 at 100% of their principal amount, plus accrued and unpaid interest. |
● | Interest rate: 5.250% per annum. |
● | Interest payment dates: Semi-annually on May 30 and November 30 of each year, commencing November 30, 2018 up to and including the maturity date for the 5.250% Notes due May 2048, subject to the applicable business day convention. |
● | Business day convention: Following, Unadjusted. |
● | Day count fraction: 30/360 |
● | Optional make-whole redemption: The Company has the right to redeem the 5.250% Notes due May 2048, in whole or in part, at any time and from time to time at a redemption price equal to the greater of (1) 100% of the principal amount of such 5.250% Notes due May 2048 plus accrued interest to the date of redemption and (2) as determined by the quotation agent, the sum of the present values of the remaining scheduled payments of principal and interest on such 5.250% Notes due May 2048 (excluding any portion of such payments of interest accrued as of the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the adjusted treasury rate, plus 35 basis points. |
● | Redemption or Repurchase Following a Change of Control: If a Change of Control Put Event occurs, then the holder of a 5.250% Note due May 2048 will have the option to require the Company to redeem or, at the Company’s option, purchase (or procure the purchase of) such 5.250% Note due May 2048 at an |
optional redemption amount equal to 101% of the aggregate principal amount of such Note, plus accrued and unpaid interest on such Note to the date of redemption, according to the terms and limitations described above under “—3.750% Notes due January 2024—Redemption or Repurchase Following a Change of Control” as applied to the 5.250% Notes due May 2048.
4.875% Notes due June 2049
The following terms are applicable to the 4.875% Notes due June 2049:
● | Title: 4.875% Notes due June 2049. |
● | Total principal amount outstanding: $1,750,000,000. |
● | Issue date: June 19, 2019. |
● | Maturity date: The Company will repay the 4.875% Notes due June 2049 on June 19, 2049 at 100% of their principal amount, plus accrued and unpaid interest. |
● | Interest rate: 4.875% per annum. |
● | Interest payment dates: Semi-annually on June 19 and December 19 of each year, commencing December 19, 2019 up to and including the maturity date for the 4.875% Notes due June 2049, subject to the applicable business day convention. |
● | Business day convention: Following, Unadjusted. |
● | Day count fraction: 30/360 |
● | Optional make-whole redemption: The Company has the right to redeem the 4.875% Notes due June 2049, in whole or in part, at any time and from time to time at a redemption price equal to the greater of (1) 100% of the principal amount of such 4.875% Notes due June 2049 plus accrued interest to the date of redemption and (2) as determined by the quotation agent, the sum of the present values of the remaining scheduled payments of principal and interest on such 4.875% Notes due June 2049 (excluding any portion of such payments of interest accrued as of the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the adjusted treasury rate, plus 40 basis points. |
4.250% Notes due 17 September 2050
The following terms are applicable to the 4.250% Notes due 17 September 2050.
● | Title: 4.250% Notes due 17 September 2050. |
● | Total principal amount outstanding: $1,500,000,000. |
● | Issue Date: September 17, 2019. |
● | Maturity Date: The Company will repay the 4.250% Notes due 17 September 2050 on September 17, 2050 at 100% of their principal amount, plus accrued and unpaid interest. |
● | Interest Rate: 4.25% per annum. |
● | Interest Payment Dates: Semi-annually on March 17 and September 17 of each year, commencing March 17, 2020 up to and including the maturity date for the 4.250% Notes due 17 September 2050, subject to the applicable business day convention. |
● | Optional Make-Whole Redemption: The Company has the right to redeem the 4.250% Notes due 17 September 2050, in whole or in part, at any time and from time to time at a redemption price equal to the greater of (1) 100% of the principal amount of such 4.250% Notes due 17 September 2050, plus accrued interest to the date of redemption and (2) as determined by the quotation agent, the sum of the present |
values of the remaining scheduled payments of principal and interest on such 4.250% Notes due 17 September 2050 (excluding any portion of such payments of interest accrued as of the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the adjusted treasury rate, plus 35 basis points.
● | Redemption or Repurchase Following a Change of Control: If a Change of Control Put Event occurs, then the holder of a 4.250% Note due 17 September 2050 will have the option to require the Company to redeem or, at the Company’s option, purchase (or procure the purchase of) such 4.250% Note due 17 September 2050 at an optional redemption amount equal to 101% of the aggregate principal amount of such 4.250% Note due 17 September 2050, plus accrued and unpaid interest on such 4.250% Note due 17 September 2050to the date of redemption, according to the terms and limitations described above under “—3.750% Notes due January 2024—Redemption or Repurchase Following a Change of Control” as applied to the 4.250% Notes due 17 September 2050. |
5.625% Notes due February 2053
The following terms are applicable to the 5.625% Notes due February 2053.
● | Title: 5.125% Notes due February 2053. |
● | Total principal amount outstanding: $700,000,000. |
● | Issue date: February 10, 2023. |
● | Maturity date: The Company will repay the 5.625% Notes due February 2053 on February 10, 2023 at 100% of their principal amount, plus accrued and unpaid interest. |
● | Interest rate: 5.625% per annum. |
● | Interest payment dates: Semi-annually on February 10 and September 10 of each year, commencing September 10, 2023 up to and including the maturity date for the 5.625% Notes due February 2053, subject to the applicable business day convention. |
● | Optional make-whole redemption: The Company has the right to redeem the 5.625% Notes due February 2053, in whole or in part, at any time and from time to time at a redemption price equal to the greater of (1) 100% of the principal amount of such 5.625% Note due February 2053 plus accrued interest to the date of redemption and (2) as determined by the quotation agent, the sum of the present values of the remaining scheduled payments of principal and interest on such 5.625% Note due February 2053 (excluding any portion of such payments of interest accrued as of the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the adjusted treasury rate, plus 40 basis points. |
● | Redemption or Repurchase Following a Change of Control: If a Change of Control Put Event occurs, then the holder of a 5.625% Note due February 2053 will have the option to require the Company to redeem or, at the Company’s option, purchase (or procure the purchase of) such 5.625% Note due February 2053 at an optional redemption amount equal to 101% of the aggregate principal amount of such 5.625% Note due February 2053, plus accrued and unpaid interest on such 5.625% Note due February 2053 to the date of redemption, according to the terms and limitations described above under “—3.750% Notes due January 2024—Redemption or Repurchase Following a Change of Control” as applied to the 5.625% Note due February 2053. |
5.125% Notes due June 2059
The following terms are applicable to the 5.125% Notes due June 2059.
● | Title: 5.125% Notes due June 2059. |
● | Total principal amount outstanding: $500,000,000. |
● | Issue date: June 19, 2019. |
● | Maturity date: The Company will repay the 5.125% Notes due June 2059 on June 19, 2059 at 100% of their principal amount, plus accrued and unpaid interest. |
● | Interest rate: 5.125% per annum. |
● | Interest payment dates: Semi-annually on June 19 and December 19 of each year, commencing December 19, 2019 up to and including the maturity date for the 5.125% Notes due June 2059, subject to the applicable business day convention. |
● | Optional make-whole redemption: The Company has the right to redeem the 5.125% Notes due June 2059, in whole or in part, at any time and from time to time at a redemption price equal to the greater of (1) 100% of the principal amount of such 5.125% Notes due June 2059 plus accrued interest to the date of redemption and (2) as determined by the quotation agent, the sum of the present values of the remaining scheduled payments of principal and interest on such 5.125% Notes due June 2059 (excluding any portion of such payments of interest accrued as of the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the adjusted treasury rate, plus 40 basis points. |
● | Redemption or Repurchase Following a Change of Control: If a Change of Control Put Event occurs, then the holder of a 5.125% Note due June 2059 will have the option to require the Company to redeem or, at the Company’s option, purchase (or procure the purchase of) such 5.125% Note due June 2059at an optional redemption amount equal to 101% of the aggregate principal amount of such 5.125% Note due June 2059, plus accrued and unpaid interest on such 5.125% Note due June 2059to the date of redemption, according to the terms and limitations described above under “—3.750% Notes due January 2024—Redemption or Repurchase Following a Change of Control” as applied to the 5.125% Notes due June 2059. |
5.750% Notes due February 2063
The following terms are applicable to the 5.750% Notes due February 2063.
● | Title: 5.750% Notes due February 2063. |
● | Total principal amount outstanding: $500,000,000. |
● | Issue date: February 10, 2023. |
● | Maturity date: The Company will repay the 5.750% Notes due February 2063 on February 10,2063 at 100% of their principal amount, plus accrued and unpaid interest. |
● | Interest rate: 5.750% per annum. |
● | Interest payment dates: Semi-annually on February 10 and September 10 of each year, commencing September 10, 2023 up to and including the maturity date for the 5.750% Notes due February 2063, subject to the applicable business day convention. |
● | Optional make-whole redemption: The Company has the right to redeem the 5.750% Notes due February 2063, in whole or in part, at any time and from time to time at a redemption price equal to the greater of (1) 100% of the principal amount of such 5.750% Note due February 2063 plus accrued interest to the date of redemption and (2) as determined by the quotation agent, the sum of the present values of the remaining scheduled payments of principal and interest on such 5.750% Note due February 2063 (excluding any portion of such payments of interest accrued as of the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the adjusted treasury rate, plus 40 basis points. |
● | Redemption or Repurchase Following a Change of Control: If a Change of Control Put Event occurs, then the holder of a 5.750% Note due February 2063 will have the option to require the Company to redeem or, at the Company’s option, purchase (or procure the purchase of) such 5.750% Note due February 2063 at an optional redemption amount equal to 101% of the aggregate principal amount of such 5.750% Note due February 2063, plus accrued and unpaid interest on such 5.750% Note due February 2063 to the date of |
redemption, according to the terms and limitations described above under “—3.750% Notes due January 2024—Redemption or Repurchase Following a Change of Control” as applied to the 5.750% Note due February 2063.
Other Terms Applicable to All Notes
The following terms are applicable to all Notes.
● | Guarantee: None. |
● | Denomination: The Notes are issued, unless otherwise indicated in the applicable prospectus supplement, in denominations that are even multiples of $1,000. |
● | Regular record dates for interest: With respect to each interest payment date, the regular record date for interest on Notes in registered form is the close of business on the Clearing System Business Day prior to the date for payment, where “Clearing System Business Day” means Monday to Friday, inclusive, except December 25 and January 1. The regular record date for interest on Notes that are represented by physical certificates is the date that is 15 calendar days prior to such date, whether or not such date is a business day. |
● | Payment of additional amounts: The Company intends to make all payments on the Notes without deducting United Kingdom (“U.K.”) withholding taxes. If any deduction is required on payments to non-U.K. investors, the Company will pay additional amounts on those payments. |
● | Optional Tax Redemption: The Company may redeem the Notes before they mature if the Company is obligated to pay additional amounts due to changes on or after the date of the final term sheet in U.K. withholding tax requirements, a merger or consolidation with another entity or a sale or lease of substantially all its assets and other limited circumstances. In that event, the Company may redeem the Notes in whole but not in part on any interest payment date, at a price equal to 100% of their principal amount plus accrued interest to the date fixed for redemption. |
● | Ranking: The Notes rank equally with all present and future unsecured and unsubordinated indebtedness of the Company. Because the Company is a holding company, the Notes effectively rank junior to any indebtedness or other liabilities of its subsidiaries. |
● | Business Days: For Notes which are fixed rate notes, New York; for Notes which are floating rate notes, London and New York. |
● | Business Day Convention: |
o | For Notes which are fixed rate notes: Following, Unadjusted. |
o | For Notes which are floating rate notes: Modified, Following. |
● | Day Count Fraction: |
o | For Notes which are fixed rate notes: 30/360. |
o | For Notes which are floating rate notes: Actual/360 (ISDA). |
● | Trading through DTC (as defined below), Clearstream, Luxembourg and Euroclear: The Company understands that secondary market trading between DTC participants will occur in the ordinary way in accordance with DTC’s rules. Secondary market trading will be settled using procedures applicable to U.S. corporate debt obligations in DTC’s Same-Day Funds Settlement System. |
o | If payment is made in U.S. dollars, settlement will be in same-day funds. If payment is made in a currency other than U.S. dollars, settlement will be free of payment. If payment is made other than in U.S. dollars, separate payment arrangements outside of the DTC system must be made between the DTC participants involved. |
o | The Company understands that secondary market trading between Euroclear and/or Clearstream, Luxembourg participants will occur in the ordinary way following the applicable rules and |
operating procedures of Euroclear and Clearstream, Luxembourg. Secondary market trading will be settled using procedures applicable to conventional Eurobonds in registered form.
● | Name of depositary: The Depositary Trust Company, commonly referred to as “DTC”. |
● | Sinking fund: There is no sinking fund. |
● | Trustee, Calculation Agent and Principal Paying Agent: The Bank of New York Mellon. |
● | Governing law and jurisdiction: New York law governs the Indenture and the Notes, except for certain events of default described in the Indenture, which are governed by English law. |
● | Adjusted treasury rate: “Adjusted treasury rate” means, with respect to any redemption date, the rate per year equal to the semi-annual equivalent yield to maturity of the comparable treasury issue, assuming a price for the comparable treasury issue (expressed as a percentage of its principal amount) equal to the comparable treasury price for such redemption date. |
● | “Comparable treasury issue” means the U.S. Treasury security selected by the quotation agent as having a maturity comparable to the remaining term of such Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining terms of such Notes. |
● | “Comparable treasury price” means, with respect to any redemption date, the average of the reference treasury dealer quotations for such redemption date. |
● | “Quotation agent” means the reference treasury dealer appointed by the Trustee after consultation with the Company. |
● | “Reference treasury dealer” means any primary U.S. government securities dealer in New York City selected by the Trustee after consultation with the Company. |
● | “Reference treasury dealer quotations” means with respect to each reference treasury dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the comparable treasury issue (expressed as a percentage of its principal amount) quoted in writing to the Trustee by such reference treasury dealer at 5:00 p.m. Eastern Standard Time on the third business day preceding such redemption date. |
Additional Mechanics Exchange and Transfer
You may have your Notes broken into more debt securities of smaller denominations or combined into fewer debt securities of larger denominations, as long as the total principal amount is not changed. This is called an exchange. (Section 305)
In the case of registered Notes, you may exchange or transfer your registered Notes at the office of the Trustee. The Trustee acts as its agent for registering Notes in the names of holders and transferring registered Notes. The Company may change this appointment to another entity or perform the service itself. The entity performing the role of maintaining the list of registered holders is called the “security registrar”. It will also register transfers of the registered Notes. However, you may not exchange registered Notes for bearer Notes. (Section 305)
You will not be required to pay a service charge to exchange or transfer Notes, but you may be required to pay any tax or other governmental charge associated with the exchange or transfer. The exchange or transfer of a registered Note will only be made if the security registrar is satisfied with your proof of ownership.
If the Company designates additional transfer agents, they will be named in the applicable prospectus supplement. The Company may cancel the designation of any particular transfer agent. The Company may also approve a change in the office through which any transfer agent acts. (Section 1002)
If the Notes are redeemable and the Company redeems less than all of the Notes of a particular series, the Company may block the exchange or transfer of the Notes in order to freeze the list of holders to prepare the mailing during the period beginning 15 days before the day the Company mail the notice of redemption and ending on the day of that mailing.
The Company may also refuse to register exchanges or transfers of the Notes selected for redemption. However, the Company will continue to permit exchanges and transfers of the unredeemed portion of any Note being partially redeemed. (Section 305)
Payment and Paying Agents
If your Notes are in registered form, the Company will pay interest to you if you are a direct holder listed in the Trustee’s records at the close of business on a particular day in advance of each due date for interest, even if you no longer own the security on the interest due date. That particular day, usually the Clearing System Business Day immediately prior to the interest due date, is called the “regular record date” and will be stated in the prospectus supplement. (Section 307)
The Company will pay interest, principal and any other money due on the registered Notes at the corporate trust office of the Trustee in New York City. That office is currently located at 101 Barclay Street, 7E, New York, NY 10286.
Interest on global securities will be paid to the holder thereof by wire transfer of same-day funds.
Holders buying and selling the Notes must work out between them how to compensate for the fact that the Company will pay all the interest for an interest period to, in the case of registered Notes, the one who is the registered holder on the regular record date or, in the case of bearer Notes, to the bearer. The most common manner is to adjust the sales price of the Notes to pro rate interest fairly between buyer and seller. This prorated interest amount is called “accrued interest”. The paying agent for a particular series will be set forth in the prospectus supplement establishing that series.
Notices
The Company and the Trustee will send notices only to direct holders, using their addresses as listed in the Trustee’s records. (Sections 101 and 106)
Regardless of who acts as paying agent, all money that the Company pay to a paying agent that remains unclaimed at the end of two years after the amount is due to direct holders will be repaid to us upon its request. After that two-year period, direct holders may look only to us for payment and not to the Trustee, any other paying agent or anyone else. (Section 1003)
Special Situations
Mergers and Similar Events
The Company is generally permitted to consolidate or merge with another entity. The Company is also permitted to sell or lease substantially all of its assets to another entity or to buy or lease substantially all of the assets of another entity. No vote by holders of the Notes approving any of these actions is required, unless as part of the transaction the Company makes changes to the Indenture requiring your approval, as described later under “—Modification and Waiver”. The Company may take these actions as part of a transaction involving outside third parties or as part of an internal corporate reorganization. The Company may take these actions even if they result in:
● | a lower credit rating being assigned to the Notes; or |
● | additional amounts becoming payable in respect of withholding tax, and the Notes thus being subject to redemption at its option, as described below under “—Optional Tax Redemption”. |
● | The Company has no obligation under the Indenture to seek to avoid these results, or any other legal or financial effects that are disadvantageous to you, in connection with a merger, consolidation or sale or lease of assets that is permitted under the Indenture. However, the Company may not take any of these actions unless all the following conditions are met: |
● | If the Company merges out of existence or sell or lease its assets, the other entity must assume its obligations on the Notes and under the Indenture, including the obligation to pay the additional amounts described under “—Payment of Additional Amounts”. This assumption may be by way of a full and unconditional guarantee in the case of a sale or lease of substantially all of its assets. |
● | If such other entity is organized under the laws of a country other than the United States or England and Wales, it must indemnify you against any governmental charge or other cost resulting from the transaction. |
● | The Company must not be in default on the Notes immediately prior to such action and such action must not cause a default. A default for this purpose would also include any event that would be an event of default if the requirements for notice of default or existence of defaults for a specified period of time were disregarded. |
● | If the Company sells or leases substantially all of its assets and the entity to which the Company sells or leases such assets guarantees its obligations, that entity must execute a supplement to the Indenture, known as a supplemental indenture. In the supplemental indenture, the entity must promise to be bound by every obligation in the Indenture. Furthermore, in this case, the Trustee must receive an opinion of counsel stating that the entity’s guarantees are valid, that certain registration requirements applicable to the guarantees have been fulfilled and that the supplemental indenture complies with the Trust Indenture Act of 1939. The entity that guarantees its obligations must also deliver certain certificates and other documents to the Trustee. |
● | The Company must deliver certain certificates and other documents to the Trustee. |
● | The Company must satisfy any other requirements specified in the prospectus supplement. (Section 801) |
It is possible that the United States Internal Revenue Service may deem a merger or other similar transaction to cause for U.S. federal income tax purposes an exchange of debt securities for new securities by the holders of the Notes. This could result in the recognition of taxable gain or loss for U.S. federal income tax purposes and possible other adverse tax consequences.
Modification and Waiver
There are three types of changes the Company can make to the Indenture and the Notes.
Changes Requiring Approval of Each Holder. First, there are changes that cannot be made to the Notes without the approval of each holder. These are the following types of changes:
● | change the stated maturity of the principal or interest on a Note; |
● | reduce any amounts due on a Note; |
● | change any obligation to pay the additional amounts described under “—Payment of Additional Amounts”; |
● | reduce the amount of principal payable upon acceleration of the maturity of a Note following a default; |
● | change the place or currency of payment on a Note; |
● | impair any of the conversion rights of the Notes; |
● | impair your right to sue for payment or conversion; |
● | reduce the percentage of holders of the Notes whose consent is needed to modify or amend the Indenture; |
● | reduce the percentage of holders of the Notes whose consent is needed to waive compliance with various provisions of the Indenture or to waive specified defaults; and |
● | modify any other aspect of the provisions dealing with modification and waiver of the Indenture. (Section 902) |
● | Changes Requiring a Majority Vote. The second type of change to the Indenture and the Notes is the kind that requires a vote of approval by the holders of the Notes which together represent a majority of the outstanding principal amount of the particular series affected. Most changes fall into this category, except for clarifying changes, amendments, supplements and other changes that would not adversely affect holders of the Notes in any material respect. For example, this vote would be required for us to obtain a waiver of all or part of any covenants described in an applicable prospectus supplement or a waiver of a past default. However, the Company cannot obtain a waiver of a payment default or any other aspect of the Indenture or the Notes listed in the first category described above under “—Changes Requiring Approval of Each Holder” unless the Company obtains your individual consent to the waiver. (Section 513) |
Changes Not Requiring Approval. The third type of change does not require any vote by holders of the Notes. This type is limited to clarifications, amendments, supplements and other changes that would not adversely affect holders of the Notes in any material respect. (Section 901)
Further Details Concerning Voting. When taking a vote, the Company will use the following rules to decide how much principal amount to attribute to a security:
● | For original issue discount securities, the Company will use the principal amount that would be due and payable on the voting date if the maturity of the Notes were accelerated to that date because of a default. |
● | For Notes whose principal amount is not known (for example, because it is based on an index), the Company will use a special rule for that security described in the prospectus supplement for that Note. |
● | For Notes denominated in one or more foreign currencies, currency units or composite currencies, the Company will use the U.S. dollar equivalent as of the date on which such Notes were originally issued. |
The Notes will not be considered outstanding, and therefore will not be eligible to vote, if the Company has deposited or set aside in trust for your money for their payment or redemption. The Notes will also not be eligible to vote if they have been fully defeased as described under “—Defeasance and Discharge”. (Section 101)
The Company will generally be entitled to set any day as a record date for the purpose of determining the holders of outstanding Notes that are entitled to vote or take other action under the Indenture. In limited circumstances, the Trustee will be entitled to set a record date for action by holders. If the Company or the Trustee set a record date for a vote or other action to be taken by holders of a particular series, that vote or action may be taken only by persons who are holders of outstanding Notes of that series on the record date and must be taken within 180 days following the record date or another period that the Company or, if it sets the record date, the Trustee may specify. The Company may shorten or lengthen (but not beyond 180 days) this period from time to time. (Section 104)
Redemption and Repayment
Unless otherwise indicated in your prospectus supplement, your Note will not be entitled to the benefit of any sinking fund - that is, the Company will not deposit money on a regular basis into any separate custodial account to repay your Notes. In addition, the Company will not be entitled to redeem your Note before its stated maturity unless your prospectus supplement specifies a redemption commencement date. You will not be entitled to require the Company to buy your Note from you, before its stated maturity, unless your prospectus supplement specifies one or more repayment dates.
If your prospectus supplement specifies a redemption commencement date or a repayment date, it will also specify one or more redemption prices or repayment prices, which may be expressed as a percentage of the principal amount of your Note or by reference to one or more formulae used to determine the redemption price(s). It may also specify one or more redemption periods during which the redemption prices relating to a redemption of the Notes during those periods will apply.
If your prospectus supplement specifies a redemption commencement date, the Company may redeem your Note at its option at any time on or after that date. If the Company redeems your Note, the Company will do so at the specified redemption price, together with interest accrued to the redemption date. If different prices are specified for different redemption periods, the price the Company pays will be the price that applies to the redemption period during which your Note is redeemed.
If your prospectus supplement specifies a repayment date, your Note will be repayable by us at your option on the specified repayment date(s) at the specified repayment price(s), together with interest accrued to the repayment date.
In the event that the Company exercise an option to redeem any Note, the Company will give to the holder written notice of the principal amount of the Note to be redeemed, not less than 30 days nor more than 60 days before the applicable redemption date. The Company will give the notice in the manner described under “—Notices”.
If a Note represented by a global security is subject to repayment at the holder’s option, the depositary or its nominee, as the holder, will be the only person that can exercise the right to repayment. Any indirect holders who own beneficial interests in the global security and wish to exercise a repayment right must give proper and timely instructions to their banks or brokers through which they hold their interests, requesting that they notify the depositary to exercise the repayment right on their behalf. Different firms have different deadlines for accepting instructions from their customers, and you should take care to act promptly enough to ensure that your request is given effect by the depositary before the applicable deadline for exercise.
In the event that the option of the holder to elect repayment as described above is deemed to be a “tender offer” within the meaning of Rule 14e-l under the Securities Exchange Act of 1934, the Company will comply with Rule 14e-l as then in effect to the extent it is applicable to us and the transaction.
The Company or its affiliates may purchase the Notes from investors who are willing to sell from time to time, either in the open market at prevailing prices or in private transactions at negotiated prices. The Notes that the Company or they purchase may, in its discretion, be held, resold or cancelled.
Payment of Additional Amounts
The government of any jurisdiction in which the Company is incorporated may require it to withhold amounts from payments on the principal or any premium or interest on a Note for taxes or any other governmental charges. If the jurisdiction requires a withholding of this type, the Company may be required to pay you an additional amount so that the net amount you receive will be the amount specified in the debt security to which you are entitled. However, in order for you to be entitled to receive the additional amount, you must not be resident in the jurisdiction that requires the withholding.
The Company will not have to pay additional amounts under any of the following circumstances:
● | The U.S. government or any political subdivision of the U.S. government is the entity that is imposing the tax or governmental charge. |
● | The withholding is imposed only because the holder was or is connected to the taxing jurisdiction or, if the holder is not an individual, the tax or governmental charge was imposed because a fiduciary, settlor, beneficiary, member or shareholder of the holder or a party possessing a power over a holder that is an estate or trust was or is connected to the taxing jurisdiction. These connections include those where the holder or related party: |
● | is or has been a citizen or resident of the jurisdiction; |
● | is or has been engaged in trade or business in the jurisdiction; or |
● | has or had a permanent establishment in the jurisdiction. |
● | The withholding is imposed due to the presentation of a Note, if presentation is required, for payment on a date more than 30 days after the security became due or after the payment was provided for. |
● | The withholding is imposed due to the presentation of a Note for payment in the United Kingdom. |
● | The withholding is on account of an estate, inheritance, gift, sale, transfer, personal property or similar tax or other governmental charge. |
● | The withholding is for a tax or governmental charge that is payable in a manner that does not involve withholding. |
● | The withholding is imposed or withheld because the holder or beneficial owner failed to comply with any of its requests for the following that the statutes, treaties, regulations or administrative practices of the taxing jurisdiction require as a precondition to exemption from all or part of such withholding: |
● | to provide information about the nationality, residence or identity of the holder or beneficial owner; or |
● | to make a declaration or satisfy any information requirements. |
● | The holder is a fiduciary or partnership or other entity that is not the sole beneficial owner of the payment in respect of which the withholding is imposed, and the laws of the taxing jurisdiction require the payment to be included in the income of a beneficiary or settlor of such fiduciary or a member of such partnership or another beneficial owner who would not have been entitled to such additional amounts had it been the holder of such debt security. |
● | With respect to Notes originally issued in bearer form, the payment relates to a Note that is in physical form. However, this exception only applies if: |
● | the Note in physical form was issued at the holder’s request following an event of default; and |
● | the Company have not issued physical certificates for the entire principal amount of such series of Notes. |
● | The withholding or deduction is imposed pursuant to European Council Directive 2003/48/EC on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such Directive. |
● | The withholding or deduction is imposed on a holder or beneficial owner who could have avoided such withholding or deduction by presenting its Notes to another paying agent. |
These provisions will also apply to any taxes or governmental charges imposed by any jurisdiction in which a successor to us is organized. The prospectus supplement relating to the Notes may describe additional circumstances in which the Company would not be required to pay additional amounts. (Sections 205, 802 and 1004)
Optional Tax Redemption
The Company may have the option to redeem, in whole but not in part, the Notes in the three situations described below. In such cases, the redemption price for Notes (other than original issue discount Notes) will be equal to the principal amount of the Notes being redeemed plus accrued interest and any additional amounts due on the date fixed for redemption. The redemption price for original issue discount Notes will be specified in the prospectus supplement for such securities. Furthermore, the Company must give you between 30- and 60-days’ notice before redeeming the Notes.
Defeasance and Discharge
Except for various obligations described below, the Company can legally release itself from any payment or other obligations on the Notes (called “full defeasance”) if it, in addition to other actions, put in place the following arrangements for you to be repaid:
● | The Company must deposit in trust for your benefit and the benefit of all other direct holders of the Notes a combination of money and U.S. government or U.S. government agency notes or bonds that, in the opinion of a nationally recognized public accounting firm, will generate enough cash to make interest, principal and any other payments on the Notes on their various due dates. |
● | The Company must deliver to the Trustee a legal opinion of its counsel, based upon a ruling by the United States Internal Revenue Service or upon a change in applicable U.S. federal income tax law, confirming that under then current U.S. federal income tax law the Company may make the above deposit without |
causing you to be taxed on the Notes any differently than if the Company did not make the deposit and just repaid the Notes itself.
If the Notes are listed on any securities exchange, the Company must deliver to the Trustee a legal opinion of its counsel confirming that the deposit, defeasance and discharge will not cause the Notes to be delisted. (Sections 1402 and 1404)
If the Company ever did accomplish full defeasance as described above, you would have to rely solely on the trust deposit for repayment on the Notes. You could not look to us for repayment in the unlikely event of any shortfall. Conversely, the trust deposit would most likely be protected from claims of its lenders and other creditors if the Company ever become bankrupt or insolvent. However, even if the Company take these actions, a number of its obligations relating to the Notes and under the Indenture will remain. These include the following obligations:
● | to register the exchange and transfer of the Notes; |
● | to replace mutilated, destroyed, lost or stolen Notes; |
● | to maintain paying agencies; and |
● | to hold money for payment in trust. |
Default and Related Matters
Ranking
The Notes are not secured by any of the Company’s property or assets. Accordingly, your ownership of the Notes means you are one of its unsecured creditors. The Notes may or may not be subordinated to any of its other debt obligations as indicated in the applicable prospectus supplement. If they are not subordinated, they will rank equally with all its other unsecured and unsubordinated indebtedness.
Events of Default
You will have special rights if an event of default occurs and is not cured, as described later in this subsection.
What Is an Event of Default? The term event of default means any of the following:
● | The Company does not pay the principal or any premium on a Note within 14 days of its due date. |
● | The Company does not pay interest on a Note within 21 days of its due date. |
● | The Company does not deposit any sinking fund payment within 14 days of its due date, if the Company agreed to maintain a sinking fund for your Notes and the other Notes of the same series. |
● | The Company remains in breach of any covenant or any other term of the Indenture for 30 days after the Company receives a notice of default stating that the Company is in breach. The notice must be sent by either the Trustee or holders of 25% of the principal amount of Notes of the affected series. |
● | The Company remains in default in the conversion of any convertible security of a given series for 30 days after the Company receives a notice of default stating that the Company is in default. The notice must be sent by either the Trustee or the holders of 25% of the principal amount of Notes of the affected series. |
● | If the total aggregate principal amount of all of its indebtedness for borrowed money, which meets one of the following conditions, together with the amount of any guarantees and indemnities described in the next point, equals or exceeds £50 million or, after August 1, 2014, £150 million: |
● | the principal amount of such indebtedness becomes due and payable prematurely as a result of an event of default (however described) under the agreement(s) governing that indebtedness; |
● | the Company fails to make any payment in respect of such indebtedness on the date when it is due (as extended by any originally applicable grace period); or |
● | any security that the Company has granted securing the payment of any such indebtedness becomes enforceable by reason of any default relating thereto and steps are taken to enforce the security. |
● | The Company fails to make payment due under any guarantee and/or indemnity (after the expiry of any originally applicable grace period) of another person’s indebtedness for borrowed money in an amount that, when added to the indebtedness for borrowed money which meets one of the conditions described in the prior point, equals or exceeds £50 million or, after August 1, 2014, £150 million. |
● | The Company is ordered by a court or passes a resolution to wind up or dissolve, save for the purposes of a reorganization on terms approved in writing by the Trustee. |
● | The Company stops paying or is unable to pay its debts as they fall due, or the Company is adjudicated or found bankrupt or insolvent, or the Company enters into any composition or other similar arrangement with its creditors under the U.K. Insolvency Act. |
● | If a receiver or administrator is appointed in relation to, or a distress, execution, attachment, sequestration or other process is levied, enforced upon, sued out or put in force against, the whole or a substantial part of its undertakings or assets and (other than the appointment of an administrator) is not discharged or removed within 90 days. |
● | Any other event of default described in the applicable prospectus supplement occurs. (Section 501) |
An event of default for a particular series of Notes does not necessarily constitute an event of default for any other series of Notes issued under the Indenture.
For these purposes, “indebtedness for borrowed money” means any present or future indebtedness (whether it is principal, premium, interest or other amounts) for or in respect of:
● | money borrowed (including in the form of any bonds, notes, debentures, debenture stock or loan stock); or |
● | liabilities under or in respect of any acceptance or acceptance credit. |
Remedies If an Event of Default Occurs. If an event of default has occurred and has not been cured, the Trustee or the holders of 25% in principal amount of the Notes of the affected series may declare the entire principal amount of all the Notes of that series to be due and immediately payable. This is called a declaration of acceleration of maturity. If an event of default occurs because of certain events in bankruptcy, insolvency or reorganization, the principal amount of all the Notes of that series will be automatically accelerated without any action by the Trustee, any holder or any other person. A declaration of acceleration of maturity may be canceled by the holders of at least a majority in principal amount of the Notes of the affected series. (Section 502)
The holders of a majority in principal amount of the outstanding Notes of any series will have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Notes of such series, provided that (a) such direction must not be in conflict with any rule of law or with the Indenture, (b) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and (c) such holders shall have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses, and liabilities which might be incurred by it in compliance with such request or direction. (Sections 512 and 603) Before you bypass the Trustee and bring your own lawsuit or other formal legal action or take other steps to enforce your rights or protect your interests relating to the Notes, the following must occur:
● | You must give the Trustee written notice that an event of default has occurred and remains uncured. |
● | The holders of 25% in principal amount of all outstanding Notes of the relevant series must make a written request that the Trustee take action because of the default, and must offer satisfactory indemnity to the Trustee against the cost and other liabilities of taking that action. |
● | The Trustee must have not taken action for 60 days after receipt of the above notice and offer of indemnity. |
● | The holders of a majority in principal amount of all outstanding Notes of the relevant series must not have given the Trustee a direction that is inconsistent with the above notice. (Section 507) |
However, you are entitled at any time to bring a lawsuit for the payment of money due on your Note on or after its due date. (Section 508)
Descriptions of the Capital Securities
Capital Securities due April 2079
The following terms are applicable to the Capital Securities due April 2079 (“2079 Capital Securities”). Within this section, capitalized terms that are not otherwise defined have the meaning given to them in the prospectus supplement dated March 28, 2019 (the “2079 Capital Securities Prospectus Supplement”), to the base prospectus dated July 31, 2017 (File No. 333-219583), filed with the Securities and Exchange Commission pursuant to Rule 424(b)(2) on April 1, 2019, which prospectus supplement is incorporated by reference herein.
● | Title: Capital Securities due April 2079. |
● | Total principal amount outstanding: $2,000,000,000. |
● | Issue date: April 4, 2019. |
● | Maturity date: Unless previously redeemed, purchased, cancelled or substituted, the Capital Securities due April 2079 will mature on April 4, 2079, and holders will be entitled to receive 100% of the principal amount of the Capital Securities due April 2079, together with any accrued and unpaid interest and any outstanding arrears of interest. |
● | Interest: The Capital Securities due April 2079 bear interest on their principal amount from (and including) the issue date to (but excluding) April 4, 2029 (the “First Reset Date”) at a rate of 7.000% per annum, payable semi-annually in arrears on April 4 and October 4 in each year, commencing on October 4, 2019. Thereafter, unless previously redeemed, the Capital Securities due April 2079 will bear interest from (and including) the First Reset Date to (but excluding) April 4, 2049 at a rate per annum which shall be 4.873% above the 5 year Swap Rate (as defined below) for the relevant reset period, payable semi-annually in arrears on April 4 and October 4 in each year. From (and including) April 4, 2049 up to (but excluding) April 4, 2079 (the “Maturity Date”), unless previously redeemed, the Capital Securities due April 2079 will bear interest at a rate per annum which shall be 5.623% above the 5 year Swap Rate for the relevant Reset Period payable semi-annually in arrears on April 4 and October 4 in each year. See “Description of Securities—Interest Payments” in the 2079 Capital Securities Prospectus Supplement. |
● | Optional interest deferral: The Company may, at its discretion, elect to defer all or part of any Interest Payment (a “Deferred Interest Payment”) which is otherwise scheduled to be paid on an Interest Payment Date by giving a Deferral Notice of such election to the holders Capital Securities due April 2079, the Trustee and the Principal Paying Agent. Other than in connection with a Mandatory Settlement, if the Company elects not to make all or part of any Interest Payment on an Interest Payment Date, then the Company will not have any obligation to pay such interest on the relevant Interest Payment Date and any such non-payment of interest will not constitute an Event of Default of the Issuer or any other breach of its obligations under the Capital Securities due April 2079 or for any other purpose. |
● | Further Issuances: The Company may, at its option, at any time and without the consent of the then existing noteholders issue additional Notes in one or more transactions (other than the issuance date and, possibly, the first interest payment date) identical to the Capital Securities due April 2079. These additional Notes will be deemed to be part of the same series as the Capital Securities due April 2079 and will provide the holders of these additional Notes the right to vote together with holders of the Capital Securities due April 2079. |
● | Arrears of Interest in respect of the Capital Securities due April 2079 may be satisfied at the option of the Company in whole or in part at any time (the “Optional Deferred Interest Settlement Date”) following delivery of a notice to such effect given by the Company to the holders of the Capital Securities due April 2079, the Trustee and the Principal Paying Agent informing them of its election to so satisfy such Arrears of Interest (or part thereof) and specifying the Optional Deferred Interest Settlement Date. |
● | Any Deferred Interest Payment (or part thereof) shall itself bear interest (such further interest together with the Deferred Interest Payment, being “Arrears of Interest”), at the Interest Rate prevailing from time to time, from (and including) the date on which (but for such deferral) the Deferred Interest Payment would otherwise have been due to be made to (but excluding) the Optional Deferred Interest Settlement Date or, as appropriate, such other date on which such Deferred Interest Payment is paid in connection with a Mandatory Settlement, in each case such further interest being compounded on each Interest Payment Date. Non-payment of Arrears of Interest shall not constitute a default by the Company under the Capital Securities due April 2079 or for any other purpose, unless such payment is required in connection with a Mandatory Settlement. |
● | Mandatory Settlement: Notwithstanding the above and the provisions of “Optional Interest Deferral” in the 2079 Capital Securities Prospectus Supplement, the Company will pay any outstanding Arrears of Interest, in whole but not in part, on the first occurring Mandatory Settlement Date following the Interest Payment Date on which a Deferred Interest Payment first arose. A “Mandatory Settlement Date” as defined in the terms of the Capital Securities due April 2079 encompasses (i) dividends, other distributions or payments in respect of Parity Obligations and other events that constitute “Compulsory Arrears of Interest Settlement Events,” (ii) payments of interest on the Capital Securities due April 2079 on a scheduled Interest Payment Date following the Interest Payment Date on which a Deferred Interest Payment first arose and (iii) the date of which the Capital Securities due April 2079 are redeemed or repaid in accordance with the conditions set forth under “Description of Securities—Subordination”, “Description of Securities—Redemption” or “Description of Securities—Event of Default” in the 2079 Capital Securities Prospectus Supplement. |
● | Optional Redemption: The Company may redeem all, but not less than all, of the Capital Securities due April 2079 on any date in the period commencing on any date from (and including) the First Call Date to (and including) the First Reset Date or on any Interest Payment Date thereafter at their principal amount, together with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest in respect of the Capital Securities due April 2079. |
● | Special Event Redemption: If a Capital Event, Tax Event, Accounting Event or Withholding Tax Event (any such, a “Special Event”) has occurred and is continuing, then the Company may redeem at any time all, but not less than all, of the Capital Securities due April 2079 at: |
o | in the case of a Capital Event, Tax Event or Accounting Event where the relevant date fixed for redemption falls prior to the First Call Date, 101% of their principal amount; |
o | in the case of a Capital Event, Tax Event or Accounting Event where the relevant date fixed for redemption falls on or after the First Call Date, 100% of their principal amount; or |
o | in the case of a Withholding Tax Event where any such redemption occurs at any time, 100% of their principal amount, |
◾ | in each case together with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest in respect of the Capital Securities due April 2079. |
● | Change of Control: If a Change of Control Event has occurred and is continuing, the Company may elect to redeem all, but not less than all, of the Capital Securities due April 2079 at any time at 101% of the principal amount of the Capital Securities due April 2079, together with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest in respect of the Capital Securities due April 2079. |
If the Company does not elect to redeem the Capital Securities due April 2079 following the occurrence of a Change of Control Event, the then prevailing Interest Rate, and each subsequent Interest Rate, on the Capital Securities due April 2079 shall be increased by 5% per annum with effect from (and including) the date on which the Change of Control Event occurred.
● | Substitution or variation instead of special event redemption: If an Accounting Event, a Capital Event, a Tax Event or a Withholding Tax Event has occurred and is continuing, without the consent of the holders of Capital Securities due April 2079, the Company may either, as an alternative to redemption, at any time, (i) substitute all, but not less than all, of the Capital Securities due April 2079 for, or (ii) vary the terms of the Capital Securities due April 2079 with the effect that they remain or become, as the case may be, Qualifying Securities, in each case in accordance with certain conditions and subject, inter alia, to the receipt by the Trustee of the Officer’s Certificate and an Opinion of Counsel, each as defined in the Indenture. |
● | Event of Default: If a default is made by the Company for a period of 14 days or more in the payment of any principal or premium (if any) or 21 days or more in the payment of interest, in each case in respect of any tranche of the 2079 Capital Securities and which is due, then the Company shall, without notice from the Trustee, be deemed to be in default under the indenture and the relevant 2079 Capital Securities and the Trustee at its sole discretion may, or shall, if so requested in writing by the shareholders of at least 25% in principal amount of the relevant 2079 Capital Securities then outstanding, subject in each case to its being indemnified and/or secured and/or prefunded to its satisfaction, institute proceedings for the winding-up of the Company and/or prove and/or claim in the winding-up or liquidation of the Company, such claim being subordinated, and for the amount as provided in “Description of Securities—Subordination—General” in the 2079 Capital Securities Prospectus Supplement. |
● | Payment of additional amounts: The Company intends to make all payments on the Notes without deducting United Kingdom (“U.K.”) withholding taxes. If any deduction is required on payments to non-U.K. investors, the Company will pay additional amounts on those payments to the extent described under “Description of Debt Securities We May Offer—Payment of Additional Amounts” in the 2079 Capital Securities Prospectus Supplement.. |
Additional Terms and Mechanics Applicable to Capital Securities due April 2079
Interest Payments
Interest Rate
The 2079 Capital Securities bear interest on their principal amount at the applicable Interest Rate from (and including) April 4, 2019 (the “Issue Date”) in accordance with the provisions of this “Interest Payments”.
Subject to conditions set forth under “—Optional Interest Deferral”, interest shall be payable on the 2079 Capital Securities semi-annually in arrears on each Interest Payment Date, provided that if any Interest Payment Date, other than the Maturity Date, would fall on a day that is not a Business Day, the Interest Payment Date will be postponed to the next succeeding Business Day (without the accrual of any additional interest for such period), except that if that Business Day falls in the next succeeding calendar month, the Interest Payment Date will be the immediately preceding Business Day. If the Maturity Date falls on a day that is not a Business Day, the payment of principal and interest will be postponed to the next Business Say and no interest will accrue as a result of that postponement (see “—General” in the 2079 Capital Securities Prospectus Supplement).
Interest Accrual
The 2079 Capital Securities will cease to bear interest from (and including) the date of redemption thereof pursuant to the provisions set forth under “—Redemption” or the date of substitution thereof pursuant to “—Substitution or Variation”, as the case may be, unless, upon due presentation, payment of all amounts due in respect of the 2079 Capital Securities is not made, in which event interest shall continue to accrue in respect of unpaid amounts on the 2079 Capital Securities, both before and after judgment, and shall be payable, up to (but excluding) the Relevant Date.
Except as provided in “—Interest Payments—First Fixed Interest Rate” in the 2079 Capital Securities Prospectus Supplement, where it is necessary to calculate an amount of interest in respect of any Security for a period which is less than or equal to a complete Interest Period, such interest shall be calculated on the basis of a 360-day year consisting of 12 months of 30 days each and, in the case of an incomplete month, the number of days elapsed.
Where it is necessary to calculate an amount of interest in respect of any Security for a period of more than one Interest Period, such interest shall be the aggregate of the interest payable in respect of a full Interest Period plus the interest payable in respect of the remaining period calculated in the manner as aforesaid.
Interest in respect of any Security shall be calculated per U.S.$1,000 in principal amount thereof (the “Calculation Amount”). The amount of interest payable per Calculation Amount for any period shall, except as provided in “—Interest Payments—First Fixed Interest Rate” in the 2079 Capital Securities Prospectus Supplement, be equal to the product of the relevant Interest Rate, the Calculation Amount and the day count fraction as described in this sub-section for the relevant period, rounding the resulting figure to the nearest cent (half a cent being rounded upwards). The amount of interest payable in respect of each Security shall be the aggregate of the amounts (determined in the manner provided above) for each Calculation Amount comprising the denomination of such Security without any further rounding.
First Fixed Interest Rate
For each Interest Period ending prior to the First Reset Date, the 2079 Capital Securities bear interest, subject to “—Optional Interest Deferral”, at the rate of 7.000% per annum (the “First Fixed Interest Rate”), payable semi-annually in arrears on the related Interest Payment Dates. Subject to “—Optional Interest Deferral”, the Interest Payment in respect of each Interest Period commencing before the First Reset Date will amount to U.S.$70.00 per Calculation Amount.
Subsequent Fixed Interest Rates
For each Interest Period which commences on or after the First Reset Date, the 2079 Capital Securities bear interest, subject to “—Optional Interest Deferral”, at the Subsequent Fixed Interest Rate determined on the Reset Interest Determination Date in respect of the Reset Period in which that Interest Period falls. Such interest shall be payable semi-annually in arrears on the related Interest Payment Dates until (and including) the Maturity Date and, subject to “—Interest Payments—Step-up after Change of Control Event” and “—Interest Payments—Benchmark Event” in the 2079 Capital Securities Prospectus Supplement, the “Subsequent Fixed Interest Rate” shall be the sum of the relevant 5 year Swap Rate and the applicable Margin, all as determined by the Agent Bank and where:
“5 year Swap Rate” means the semi-annual mid-swap rate for swap transactions in U.S. dollars with a maturity of 5 years as displayed on Reuters screen “ICESWAP1” as at 11:00 a.m. (New York City time) (the “Reset Screen Page”) on the day falling two U.S. Government Securities Business Days prior to the first day of the relevant Reset Period (the “Reset Interest Determination Date”).
If the 5 year Swap Rate does not appear on the Reset Screen Page on the Reset Interest Determination Date, the 5 year Swap Rate will be the Reset Reference Bank Rate on such Reset Interest Determination Date unless a Benchmark Event (as defined below) has occurred, in which case the 5 year Swap Rate shall be determined pursuant to and in accordance with the conditions set forth under”—Interest Payments—Benchmark Event”.
As used in this section:
the “5 year Swap Rate Quotations” means, in respect of each Interest Period falling within a Reset Period, the arithmetic mean of the bid and offered rates for the semi-annual fixed leg (calculated on a 30/360 day count basis) of a fixed-for-floating U.S. dollar interest rate swap which (i) has a term of 5 years commencing on the relevant Reset Interest Determination Date, (ii) is in an amount that is representative of a single transaction in the relevant market at the relevant time with an acknowledged dealer of good credit in the swap market, and (iii) has a floating leg based on the 3-month U.S. dollar London Interbank Offered Rate (“LIBOR”) rate (calculated on an Actual/360 day count basis); “Margin” means in respect of (i) each Reset Period which falls in the period commencing on (and including) April 4, 2029 and ending on (but excluding) April 4, 2049, 4.873%; and (ii) each Reset Period which falls on or after April 4, 2049, 5.623%;
“Reset Reference Bank Rate” means the percentage rate determined by the Agent Bank on the basis of the 5 year Swap Rate Quotations provided by five leading swap dealers in the interbank market (the “Reset Reference Banks”) to the Agent Bank at approximately 11:00 a.m. (New York City time) on such Reset Interest Determination Date and, rounded, if necessary, to the nearest 0.001% (0.0005% being rounded upwards). If at least four quotations are provided, the 5 year Swap Rate will be the rounded arithmetic mean of the quotations, eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest). If only two or three quotations are provided, the 5 year Swap Rate will be the rounded arithmetic mean of the quotations provided. If only one quotation is provided, the 5 year Swap Rate will be the rounded quotation provided. If no quotations are provided, the 5 year Swap Rate for the relevant period will be (i) in the case of each Reset Period other than the Reset Period commencing on the First Reset Date, the 5 year Swap Rate in respect of the immediately preceding Reset Period or (ii) in the case of the Reset Period commencing on the First Reset Date, equal to the last available 5 year mid swap rate for U.S. dollar swap transactions, expressed as a rate, on the Reset Screen Page; and
“U.S. Government Securities Business Days” means any day except for a Saturday, Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities.
The Subsequent Fixed Interest Rate shall be determined as provided above in respect of each Reset Period and, as so determined, such rate shall apply to each Interest Period falling within that Reset Period.
For the purposes of this section, the Agent Bank shall not be responsible to the Issuer or to any third party as a result of the Agent Bank having relied upon or acted on any quotation or information given to it for the purposes of calculating the Subsequent Fixed Interest Rate or the Reset Reference Bank Rate which subsequently may be found to be incorrect or inaccurate in any way or for any losses whatsoever resulting from acting in accordance therewith.
Determination of Subsequent Fixed Interest Rates
The Agent Bank will, as soon as practicable after 11.00 a.m. (New York City time) on each Reset Interest Determination Date, determine the Subsequent Fixed Interest Rate in respect of each Interest Period falling within the relevant Reset Period, provided that it receives the Successor Rate, Alternative Rate and Adjustment Spread, if applicable, at least five (5) Business Days prior to the applicable Reset Interest Determination Date.
Publication of Subsequent Fixed Interest Rates
The Company will cause notice of each Subsequent Fixed Interest Rate determined in accordance the provisions set forth under “Interest Payments” in respect of each relevant Interest Period to be given to the Trustee, the Holders, the Paying Agents and any stock exchange on which the 2079 Capital Securities are for the time being listed or admitted to trading, in each case as soon as practicable after its determination but in any event not later than the fourth Business Day thereafter.
Agent Bank and Reset Reference Banks
With effect from the First Reset Date, the Issuer will maintain an Agent Bank and five Reset Reference Banks (to the extent required) where the Interest Rate is to be calculated by reference to them.
The Company may from time to time replace the Agent Bank with another leading financial institution in New York, NY. If the Agent Bank is unable or unwilling to continue to act as the Agent Bank or fails duly to determine a Subsequent Fixed Interest Rate in respect of any Interest Period as provided in “—Interest Payments—Subsequent Fixed Interest Rates”, the Company will forthwith appoint another leading financial institution in New York, NY. The Agent Bank may not resign its duties or be removed without a successor having been appointed as aforesaid.
Determinations of Agent Bank Binding
All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions set forth under “Interest Payments” by the Agent Bank shall (in the absence of willful default, manifest error or negligence) be binding on the Issuer, the Agent Bank, the Trustee, the Paying Agents and all Holders and (in the absence as aforesaid) no liability to the Holders or the Company will attach to the Agent Bank in connection with the exercise or non-exercise by it of any of its powers, duties and discretions.
Step-up after Change of Control Event
Notwithstanding any other provision set forth under “Interest Payments”, if the Issuer does not elect to redeem the 2079 Capital Securities in accordance with the provisions set forth under”—Redemption—Redemption for Change of Control Event” following the occurrence of a Change of Control Event, the then prevailing Interest Rate, and each subsequent Interest Rate otherwise determined in accordance with the provisions of set forth under “Interest Payments” (including, for the avoidance of doubt, in accordance with the provisions of “—Interest Payments—Benchmark Event” in the 2079 Capital Securities Prospectus Supplement), on the 2079 Capital Securities shall be increased by 5% per annum with effect from (and including) the date on which the Change of Control Event occurred.
Benchmark Event
(i) | Independent Adviser |
If a Benchmark Event occurs when any Subsequent Fixed Interest Rate (or any component part thereof) remains to be determined by reference to the Original Reference Rate, then the Company will use reasonable efforts to appoint an Independent Adviser, as soon as reasonably practicable, to determine a Successor Rate, failing which an Alternative Rate and, in either case, an Adjustment Spread (if any) and any Benchmark Amendments, all in accordance with the provisions set forth under “Benchmark Amendments” below.
An Independent Adviser appointed pursuant to this section shall act in good faith and in a commercially reasonable manner as an expert and in consultation with the Issuer. In the absence of willful default, negligence or fraud, the Independent Adviser shall have no liability whatsoever to the Issuer, the Trustee, the Paying Agents, or the Holders for any determination made by it, pursuant to this section.
If (i) the Company is unable to appoint an Independent Adviser; or (ii) the Independent Adviser appointed by the Company fails to determine a Successor Rate or, failing which, an Alternative Rate in accordance with this sub-section prior to the Reset Interest Determination Date in respect of a Reset Period, the relevant 5 year Swap Rate applicable to each Interest Period ending during that Reset Period shall be equal to the 5 year Swap Rate in respect of the immediately preceding Reset Period or, in the case of the Reset Period commencing on the First Reset Date, equal to the last available 5 year mid swap rate for U.S. dollar swap transactions, expressed as a rate, on the Reset Screen Page. If a higher interest rate pursuant to the interest step-up after a Change of Control Event applies, the Subsequent Fixed Interest Rate determined in accordance with this sub-section shall be increased pursuant to such interest step-up. For the avoidance of doubt, the provisions under this sub-section shall apply to all payments of interest on the 2079 Capital Securities from the end of the then current Reset Period onwards only, and the interest payable on the 2079 Capital Securities during subsequent Reset Periods are subject to the subsequent operation of, and to adjustment as provided in, this sub-section.
(ii) |
Successor Rate or Alternative Rate |
If the Independent Adviser determines that:
(A) | there is a Successor Rate, then such Successor Rate shall (subject to any Adjustment Spread as set forth below) subsequently be used in place of the Original Reference Rate to determine the Subsequent Fixed Interest Rate (or the relevant component part thereof) for all payments of interest on the 2079 Capital Securities from the end of the then current Reset Period onwards (subject to the operation of this section); or |
(B) |
there is no Successor Rate but that there is an Alternative Rate, then such Alternative Rate shall (subject to any Adjustment Spread as set forth below) subsequently be used in place of the Original Reference Rate to determine the Subsequent Fixed Interest Rate (or the relevant component part thereof) for all future payments of interest on the 2079 Capital Securities from the end of the then current Reset Period onwards (subject to the operation of this section). |
(iii) |
Adjustment Spread |
If the Independent Adviser determines (i) that an Adjustment Spread is required to be applied to the Successor Rate or the Alternative Rate (as the case may be) and (ii) the quantum of, or a formula or methodology for determining, such Adjustment Spread, then such Adjustment Spread shall be applied to the Successor Rate or the Alternative Rate (as the case may be).
(iv) |
Benchmark Amendments |
If any Successor Rate, Alternative Rate or Adjustment Spread is determined in accordance with this section and the Independent Adviser, determines (i) that amendments to the terms of the 2079 Capital Securities are necessary to ensure the proper operation of such Successor Rate, Alternative Rate and/or Adjustment Spread (such amendments, the “Benchmark Amendments”) and (ii) the terms of the Benchmark Amendments, then the Company will, subject to giving notice thereof in accordance with the provisions set forth below under “Notices, etc.”, without any requirement for the consent or approval of the Holders, vary the terms of the 2079 Capital Securities to give effect to such Benchmark Amendments with effect from the date specified in such notice.
At the request of the Issuer, but subject to receipt by the Trustee of an Officer’s Certificate pursuant to the provisions set forth below under “Notices, etc.”, the Trustee shall (at the expense of the Issuer), without any requirement for the consent or approval of the Holders, be obliged to concur with the Issuer in effecting any Benchmark Amendments or Adjustment Spread (including, inter alia, by the execution of a supplemental indenture if required or amendment to the Calculation Agreement), provided that neither the Trustee nor the Agent Bank shall be obliged so to concur if in the opinion of the Trustee or the Agent Bank doing so would impose more onerous obligations upon it or expose it to any additional duties, responsibilities or liabilities or reduce or amend the protective provisions afforded to the Trustee or the Agent Bank in the terms of 2079 Capital Securities or the indenture (including, for the avoidance of doubt, any supplemental indenture) or the Calculation Agreement in any way.
In connection with any such variation in accordance with this provision, the Company will comply with the rules of any stock exchange on which the 2079 Capital Securities are for the time being listed or admitted to trading.
Notwithstanding any other provision of this section, no Successor Rate or Alternative Rate will be adopted, nor any Adjustment Spread applied, nor will any Benchmark Amendments be made, if and to the extent that, in the determination of the Issuer, the same could reasonably be expected to cause a Capital Event to occur.
(v) |
Notices, etc. |
Any Successor Rate, Alternative Rate, Adjustment Spread and the specific terms of any Benchmark Amendments determined under this section will be notified promptly by the Issuer to the Trustee, the Agent Bank, the Paying Agents and the Holders (in accordance with the notice provisions under the indenture). Such notice shall be irrevocable and shall specify the effective date of the Benchmark Amendments, if any.
No later than notifying the Trustee of the same, the Company will deliver to the Trustee an Officer’s Certificate:
(A) |
confirming (1) that a Benchmark Event has occurred, (2) the Successor Rate or, as the case may be, the Alternative Rate and, (3) where applicable, any Adjustment Spread and/or the specific terms of any Benchmark Amendments, in each case as determined in accordance with the provisions of this section; and |
(B) |
certifying that the Benchmark Amendments are necessary to ensure the proper operation of such Successor Rate, Alternative Rate and/or Adjustment Spread. |
The Trustee shall be entitled to rely on such certificate (without liability to any person) as sufficient evidence thereof. The Successor Rate or Alternative Rate and the Adjustment Spread (if any) and the Benchmark Amendments (if any) specified in such certificate will (in the absence of manifest error or bad faith in the determination of the Successor Rate or Alternative Rate and the Adjustment Spread (if any) and the Benchmark Amendments (if any) and without prejudice to the Trustee’s ability to rely on such certificate as aforesaid) be binding on the Issuer, the Trustee, the Agent Bank, the Paying Agents and the Holders.
(vi) |
Survival of Original Reference Rate |
Without prejudice to the obligations of the Issuer under this section, the Original Reference Rate and the fallback provisions provided for under “—Interest Payments—Subsequent Fixed Interest Rates” will continue to apply unless and until a Benchmark Event has occurred.
(vii) |
Definitions: |
As used in this section:
“Adjustment Spread” means either a spread (which may be positive or negative), or the formula or methodology for calculating a spread, in either case, which the Independent Adviser, determines is required to be applied to the Successor Rate or the Alternative Rate (as the case may be) to reduce or eliminate, to the extent reasonably practicable in the circumstances, any economic prejudice or benefit (as the case may be) to Holders as a result of the replacement of the Original Reference Rate with the Successor Rate or the Alternative Rate (as the case may be) and is the spread, formula or methodology which:
(i) | in the case of a Successor Rate, is formally recommended in relation to the replacement of the Original Reference Rate with the Successor Rate by any Relevant Nominating Body; or |
(ii) | if no such recommendation has been made, or in the case of an Alternative Rate, is what the Independent Adviser determines is recognized or acknowledged as being the industry standard for over-the-counter derivative transactions which reference the Original Reference Rate, where such rate has been replaced by the Successor Rate or the Alternative Rate (as the case may be); or |
(iii) | if the Issuer determines that no such industry standard is recognized or acknowledged, is what the Independent Adviser determines to be appropriate; |
“Alternative Rate” means an alternative benchmark or screen rate which the Independent Adviser determines in accordance with the provisions set forth in “—Interest Payments—Benchmark Event—Successor Rate or Alternative Rate” is customary in market usage in the international debt capital markets for the purposes of determining rates of interest (or the relevant component part thereof) in U.S. dollars;
“Benchmark Amendments” has the meaning given to it under “—Interest Payments—Benchmark Event—Benchmark Amendments”;
“Benchmark Event” means:
(i) | the Original Reference Rate ceasing be published for a period of at least 10 Business Days or ceasing to exist; or |
(ii) | a public statement by the administrator of the Original Reference Rate that it will, by a specified date within the following six months, cease publishing the Original Reference Rate permanently or indefinitely (in circumstances where no successor administrator has been appointed that will continue publication of the Original Reference Rate); or |
(iii) | a public statement by the supervisor of the administrator of the Original Reference Rate, that the Original Reference Rate has been or will, by a specified date within the following six months, be permanently or indefinitely discontinued; or |
(iv) |
a public statement by the supervisor of the administrator of the Original Reference Rate as a consequence of which the Original Reference Rate will be prohibited from being used either generally, or in respect of the 2079 Capital Securities, in each case within the following six months; or |
(v) |
it has become unlawful for any Paying Agent, Agent Bank or the Issuer to calculate any payments due to be made to any Holder using the Original Reference Rate; |
“Independent Adviser” means an independent financial institution of international repute or an independent financial adviser with appropriate expertise appointed by the Issuer;
“Original Reference Rate” means the 5 year Swap Rate;
“Relevant Nominating Body” means, in respect of a benchmark or screen rate (as applicable):
(i) | the central bank for the currency to which the benchmark or screen rate (as applicable) relates, or any central bank or other supervisory authority which is responsible for supervising the administrator of the benchmark or screen rate (as applicable); or |
(ii) | any working group or committee sponsored by, chaired or co-chaired by or constituted at the request of (a) the central bank for the currency to which the benchmark or screen rate (as applicable) relates, (b) any central bank or other supervisory authority which is responsible for supervising the administrator of the benchmark or screen rate (as applicable), (c) a group of the aforementioned central banks or other supervisory authorities or (d) the Financial Stability Board or any part thereof; and |
“Successor Rate” means a successor to or replacement of the Original Reference Rate which is formally recommended by any Relevant Nominating Body.
Redemption
Redemption for Certain Taxation Reasons
The optional tax redemption provisions of the indenture (Section 1108), as described in the accompanying prospectus under the caption “Description of Debt Securities We May Offer—Optional Tax Redemption,” shall not apply to the 2079 Capital Securities.
If, immediately prior to the giving of the notice referred to below, a Tax Event or a Withholding Tax Event has occurred and is continuing, then the Company may, subject to having given not less than 30 nor more than 60 days’ notice to the Trustee, the Principal Paying Agent and the Holders in accordance with the notice provisions set forth in the indenture (which notice shall be irrevocable) and subject to the conditions set forth under “—Preconditions to Special Event Redemption, Change of Control Event Redemption, and Substitution and Variation”, redeem in accordance with such conditions at any time all, but not less than all, of the 2079 Capital Securities at (i) 101% of their principal amount (in the case of a Tax Event where such redemption occurs prior to the First Call Date) or (ii) at 100% of their principal amount (in the case of a Tax Event where such redemption occurs on or after the First Call Date or in the case of a Withholding Tax Event where such redemption occurs at any time), together, in each case, with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest. Upon the expiry of such notice, the Company will redeem the 2079 Capital Securities.
Redemption for Rating Reasons
If, immediately prior to the giving of the notice referred to below, a Capital Event has occurred and is continuing, then the Company may, subject to having given not less than 30 nor more than 60 days’ notice to the Trustee, the Principal Paying Agent and the Holders in accordance with the notice provisions set forth in the indenture (which notice shall be irrevocable) and subject to the conditions set forth under “—Preconditions to Special Event Redemption, Change of Control Event Redemption, and Substitution and Variation”, redeem in accordance with such conditions all, but not less than all, of the 2079 Capital Securities at any time at (i) 101% of their principal amount (where such redemption occurs prior to the First Call Date) or (ii) 100% of their principal amount (where such redemption occurs on or after the First Call Date), together, in each case, with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest.
Upon the expiry of such notice, the Company will redeem the 2079 Capital Securities.
Redemption for Accounting Reasons
If, immediately prior to the giving of the notice referred to below, an Accounting Event has occurred and is continuing, then the Company may, subject to having given not less than 30 nor more than 60 days’ notice to the Trustee, the Principal Paying Agent and the Holders in accordance with the notice provisions set forth in the indenture (which notice shall be irrevocable) and subject to the conditions set forth under “—Preconditions to Special Event Redemption, Change of Control Event Redemption, and Substitution and Variation”, redeem in accordance with such conditions all, but not less than all, of the 2079 Capital Securities at any time at (i) 101% of their principal amount (where such redemption occurs prior to the First Call Date) or (ii) 100% of their principal amount (where such redemption occurs on or after the First Call Date), together, in each case, with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest. Upon the expiry of such notice, the Company will redeem the 2079 Capital Securities.
Redemption for Change of Control Event
If, immediately prior to the giving of the notice referred to below, a Change of Control Event has occurred and is continuing, then the Company may, subject to having given not less than 30 nor more than 60 days’ notice to the Trustee, the Principal Paying Agent and the Holders in accordance with the notice provisions set forth in the indenture (which notice shall be irrevocable) and subject to the conditions set forth under “—Preconditions to Special Event Redemption, Change of Control Event Redemption, and Substitution and Variation”, redeem in accordance with such conditions all, but not less than all, of the 2079 Capital Securities at any time at 101% of their principal amount, together with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest. Upon the expiry of such notice, the Company will redeem the 2079 Capital Securities.
The Trustee is under no obligation to ascertain whether a Change of Control Event or Change of Control or any event which could lead to the occurrence of or could constitute a Change of Control Event or Change of Control has occurred, and until it shall receive an Officer’s Certificate pursuant to the indenture to the contrary, the Trustee may assume that no Change of Control Event or Change of Control or other such event has occurred.
The Issuer intends (without thereby assuming a legal or contractual obligation) that for so long as the 2079 Capital Securities remain outstanding, if a Change of Control Event occurs, it will launch a tender offer for all outstanding unsubordinated debt securities (which do not already contain a contractual right of the holders of such debt securities for such securities to be redeemed or repurchased as a result of the events giving rise to the Change of Control Event) at a price equal to not less than their aggregate principal amount plus accrued and unpaid interest as soon as reasonably practicable following such event.
Substitution or Variation
If an Accounting Event, a Capital Event, a Tax Event or a Withholding Tax Event (each a “Substitution or Variation Event”) has occurred and is continuing, then the Company may, as an alternative to redemption, subject to the conditions set forth under “—Preconditions to Special Event Redemption, Change of Control Event Redemption, and Substitution and Variation” (without any requirement for the consent or approval of the Holders) and subject to the Trustee, immediately prior to the giving of any notice referred to herein, having received an Officer’s Certificate and an Opinion of Counsel (each as defined in the indenture), each stating to the effect that the provisions of this section have been complied with, and having given not less than 30 nor more than 60 days’ notice to the Trustee, the Principal Paying Agent and the Holders (which notice shall be irrevocable), at any time either (i) substitute all, but not less than all, of the 2079 Capital Securities for, or (ii) vary the terms of the 2079 Capital Securities with the effect that they remain or become (as the case may be), Qualifying Securities, and the Trustee shall (subject to the following provisions of this section and subject to the receipt by it of the Officer’s Certificate referred to below) agree to such substitution or variation.
Upon expiry of such notice, the Company will either vary the terms of or, as the case may be, substitute the 2079 Capital Securities in accordance with this section.
The Trustee agrees, at the expense of the Issuer, to use reasonable, non-discretionary and ministerial efforts to assist the Issuer in the substitution of the Qualifying Securities for the 2079 Capital Securities, or the variation of the terms of the 2079 Capital Securities so that they remain, or as appropriate, become, Qualifying Securities, provided that the Trustee shall not be obliged to participate in, or assist with, any such substitution or variation if the terms of the proposed Qualifying Securities or the participation in or assistance with such substitution or variation would impose, in the Trustee’s opinion, more onerous obligations upon it or expose it to liabilities or reduce its protections. If the Trustee does not participate or assist as provided above, the Company may redeem the 2079 Capital Securities as provided in “—Redemption”.
In connection with any substitution or variation in accordance with this section, the Company will comply with the rules of any stock exchange on which the 2079 Capital Securities are for the time being listed or admitted to trading.
Any such substitution or variation in accordance with the foregoing provisions following a Substitution or Variation Event shall only be permitted if it does not give rise to any other Substitution or Variation Event with respect to the Qualifying Securities.
Any such substitution or variation in accordance with the foregoing provisions following a Substitution or Variation Event shall only be permitted if it does not result in the Qualifying Securities no longer being eligible for the same, or a higher amount of, “equity credit” (or such other nomenclature that the Rating Agency may then use to describe the degree to which an instrument exhibits the characteristics of an ordinary share) as is attributed to the 2079 Capital Securities on the date notice is given to Holders of the substitution or variation.
“Qualifying Securities” means securities that:
(a) are issued by the Issuer or any wholly-owned direct or indirect finance subsidiary of the Issuer with a guarantee of such obligations by the Issuer;
(b) rank and (save in the case of a direct issue by the Issuer) benefit from a guarantee that ranks in relation to the obligations of the Issuer under such securities and/or such guarantee (as the case may be), equally with the ranking of the 2079 Capital Securities and pari passu in a winding-up or liquidation of the Issuer with any Parity Obligations of the Issuer;
(c) contain terms not materially less favorable to Holders than the terms of the 2079 Capital Securities (as reasonably determined by the Issuer (in consultation with an independent investment bank or counsel of international standing)) and which:
(i) | provide for the same or a more favorable Interest Rate from time to time as applied to the 2079 Capital Securities immediately prior to such substitution or variation and preserve the same Interest Payment Dates; |
(ii) | preserve the obligations (including the obligations arising from the exercise of any right) of the Issuer as to principal and as to redemption of the 2079 Capital Securities, including (without limitation) as to timing of, and amounts payable upon, such redemption; |
(iii) | preserve any existing rights under the terms of the 2079 Capital Securities to any accrued interest, any Deferred Interest Payments, any Arrears of Interest and any other amounts payable under the 2079 Capital Securities which, in each case, has accrued to Holders and not been paid; |
(iv) | do not contain terms providing for the mandatory deferral of payments of interest and/or principal; |
(v) | do not contain terms providing for loss absorption through principal write-down or conversion to ordinary shares; and |
(vi) |
are (i) listed on the New York Stock Exchange, (ii) listed on the Official List and admitted to trading on the London Stock Exchange plc’s Regulated Market or (iii) admitted to trading on a Multilateral Trading Facility operated by an internationally recognized stock exchange that is regulated in the European Economic Area as selected by the Issuer. |
For the purposes of the definition of Qualifying Securities:
“Multilateral Trading Facility” has the same meaning as in Article 4.1.22 of Directive 2014/65/EU (as amended) of the European Parliament and of the Council of May 15, 2014 on markets in financial instruments; and
“Official List” means the Official List of the Financial Conduct Authority acting under Part VI of the Financial Services and Markets Act 2000.
Subordination
General
In the event of:
(i) |
an order being made, or an effective resolution being passed, for the winding-up of the Issuer (except, in any such case, a solvent winding-up solely for the purposes of a reorganization, reconstruction, amalgamation or the substitution in place of the Issuer of a “successor in business” of the Issuer, the terms of which reorganization, reconstruction, amalgamation or substitution do not provide that the 2079 Capital Securities shall thereby become redeemable or repayable in accordance with the terms of the 2079 Capital Securities); or |
(ii) |
an administrator of the Issuer being appointed and such administrator giving notice that it intends to declare and distribute a dividend, |
(each, an “Additional Enforcement Event”), there shall be payable by the Issuer in respect of each Security (in lieu of any other payment by the Issuer), such amount, if any, as would have been payable to the Holder of such Security if, on the day prior to the commencement of the winding-up or such administration, as the case may be, and thereafter, such Holder were the holder of one of a class of preference shares in the capital of the Issuer (“Notional Preference Shares”) having an equal right to a return of assets in the winding-up or such administration, as the case may be, and so ranking pari passu with, the holders of Parity Obligations, but ranking junior to the claims of holders of all Senior Obligations (except as otherwise provided by mandatory provisions of law), on the assumption that the amount that such Holder was entitled to receive in respect of each Notional Preference Share on a return of assets in such winding-up or such administration, as the case may be, were an amount equal to the principal amount of the relevant Security and any accrued and unpaid interest and any outstanding Arrears of Interest.
Nothing in this section “—Subordination—General” or “—Event of Default” shall affect or prejudice the payment of the costs, charges, expenses, indemnities, liabilities or remuneration of the Trustee or the Agents or the rights and remedies of the Trustee or the Agents in respect thereof.
Accordingly, and without prejudice to the rights of the Trustee or the Agents, the claims of Holders of all Senior Obligations will first have to be satisfied in any winding-up or administration before the Holders may expect to obtain any recovery in respect of their 2079 Capital Securities, and prior thereto, Holders will have only limited ability to influence the conduct of such winding-up or administration. See “Risk Factors—Risks related to the Securities—Limited Remedies”.
No Set-off, etc.
Subject to applicable law, no Holder may exercise, claim or plead any right of set-off, compensation or retention in respect of any amount owed to it by the Issuer in respect of, or arising under or in connection with, the 2079 Capital Securities and each Holder shall, by virtue of his holding of any Security, be deemed to have waived all such rights of set-off, compensation or retention.
Definitions
As used in the “Description of Securities”, the following terms have the meanings set forth below:
“Accounting Event” shall be deemed to occur if, as a result of a change in accounting principles which becomes effective on or after the Issue Date, but not otherwise, the obligations of the Issuer under the 2079 Capital Securities must not or may no longer be recorded as a “financial liability” in the next following audited annual consolidated financial statements of the Issuer prepared in accordance with IFRS or any other accounting standards that the Issuer may adopt in the future for the preparation of its audited annual consolidated financial statements in accordance with United Kingdom company law;
“Agent Bank” is the agent bank that entered into the Calculation Agreement with the Issuer, which will initially be The Bank of New York Mellon, London Branch;
“Agents” means the Agent Bank and the Paying Agent or any of them;
“Additional Enforcement Event” has the meaning given to it under “—Subordination”;
“Arrears of Interest” has the meaning given to it under “—Optional Interest Deferral—Deferral of Payments”;
“Business Day” means a day, other than a Saturday, Sunday or public holiday, on which commercial banks and foreign exchange markets are open for general business in London and New York City;
“Calculation Agreement” means the Calculation Agent Agreement dated April 4, 2019, entered into by the Issuer and the Bank of New York Mellon, London Branch;
“Calculation Amount” has the meaning given to it under “—Interest Payments—Interest Accrual”;
“Capital Event” shall be deemed to occur if the Issuer has received, and confirmed in writing to the Trustee that it has so received, confirmation from any Rating Agency then providing a solicited rating of the Issuer or the 2079 Capital Securities at the invitation of, or with the consent of, the Issuer and in connection with which the 2079 Capital Securities are assigned an equity credit, either directly or via a publication by such Rating Agency, that an amendment, clarification or change has occurred in its equity credit criteria which becomes effective on or after the Issue Date (or, if later, effective after the date on which the 2079 Capital Securities are assigned “equity credit” by such Rating Agency for the first time) and as a result of which, but not otherwise, the 2079 Capital Securities will no longer be eligible for the same, or a higher amount of, “equity credit” (or such other nomenclature that the Rating Agency may then use to describe the degree to which an instrument exhibits the characteristics of an ordinary share) as was attributed to the 2079 Capital Securities at the Issue Date (or if “equity credit” is not assigned to the 2079 Capital Securities by the relevant Rating Agency on the Issue Date, at the date on which “equity credit” is assigned by such Rating Agency for the first time);
“Change of Control” means the occurrence of an event whereby any person or any persons acting in concert (as defined in the City Code on Takeovers and Mergers), other than a holding company (as defined in Section 1159 of the Companies Act 2006 as amended) whose shareholders are or are to be substantially similar to the preexisting shareholders of the Issuer, shall become interested (within the meaning of Part 22 of the Companies Act 2006 as amended) in (A) more than 50% of the issued or allotted ordinary share capital of the Issuer or (B) shares in the capital of the Issuer carrying more than 50% of the voting rights normally exercisable at a general meeting of the Issuer; provided that, no Change of Control shall be deemed to occur if the event would otherwise have constituted a Change of Control occurs or is carried out for the purposes of a reorganizations on terms previously approved by the Holders of at least 75% in principal amount of the 2079 Capital Securities then outstanding;
“Change of Control Event” shall be deemed to occur if:
(a) |
a Change of Control occurs; and |
(b) |
any of the Issuer’s Senior Unsecured Obligations carry: |
(A) |
an investment grade credit rating (Baa3 BBB–, or their respective equivalents, or better) (an “Investment Grade Rating”), by any Relevant Rating Agency at the invitation of the Issuer; or |
(B) |
(where there is no credit rating from any Relevant Rating Agency assigned at the invitation of the Issuer), an Investment Grade Rating by any Relevant Rating Agency of its own volition, and |
(x) |
such rating is, within the Change of Control Period, either downgraded to a non-investment grade credit rating (Ba1 BB-, or their respective equivalents, or worse) (a “Non-Investment Grade Rating”) or withdrawn and is not, within the Change of Control Period, subsequently (in the case of a downgrade) upgraded or (in the case of a withdrawal) reinstated to an Investment Grade Rating by such Relevant Rating Agency; |
(y) |
and there remains no other Investment Grade Rating of any of the Issuer’s Senior Unsecured Obligations from any other Relevant Rating Agency; and |
(c) |
in making any decision to downgrade or withdraw an Investment Grade Rating pursuant to paragraph (b) above, such Relevant Rating Agency announces publicly or confirms in writing to the Issuer or the Trustee that such decision(s) resulted, in whole or in part, from the occurrence of the relevant Change of Control. |
Further, if at the time of the occurrence of the relevant Change of Control the Issuer’s Senior Unsecured Obligations are not assigned an Investment Grade Rating by any Relevant Rating Agency, a Change of Control Event will be deemed to occur upon the occurrence of a Change of Control alone.
If the rating designations employed by either Moody’s or S&P are changed from those which are described in paragraph (b) of the definition of “Change of Control Event” above, or if a rating is procured from a Substitute Relevant Rating Agency, the Issuer shall determine the rating designations of Moody’s or S&P or such Substitute Relevant Rating Agency (as appropriate) as are most equivalent to the prior rating designations of Moody’s or S&P and the definition of “Change of Control Event” shall be construed accordingly;
“Change of Control Period” means the period commencing upon a Change of Control and ending 90 days after the Change of Control (or such longer period for which the Senior Unsecured Obligations are under consideration (such consideration having been announced publicly within the period ending 90 days after the Change of Control) for rating review, such period not to exceed 60 days after the public announcement of such consideration);
“Compulsory Arrears of Interest Settlement Event” shall have occurred if:
(a) |
a dividend (either interim or final), other distribution or payment was validly resolved on, declared, paid or made in respect of (i) ordinary shares of the Issuer, (ii) any obligations of the Issuer which rank or are expressed to rank pari passu with the ordinary shares of the Issuer or (iii) any obligations of any Subsidiaries of the Issuer benefiting from a guarantee or support agreement entered into by the Issuer which ranks, or is expressed to rank, pari passu with the ordinary shares of the Issuer, except where (x) such dividend, other distribution or payment was required to be resolved on, declared, paid or made exclusively in ordinary shares of the Issuer or in respect of any share option, or any free share allocation plan in each case reserved for directors, officers and/or employees of the Issuer or any of its affiliates or any associated liquidity agreements or any associated hedging transactions or (y) the Issuer is obliged under the terms of such securities or by mandatory operation of law to make such dividend, distribution or other payment; or |
(b) |
a dividend (either interim or final), other distribution or payment was validly resolved on, declared, paid or made in respect of any Parity Obligations of the Issuer, except where such dividend, distribution or payment was required to be declared, paid or made under the terms of such Parity Obligations of the Issuer or by mandatory operation of law; or |
(c) |
the Issuer has redeemed, repurchased or otherwise acquired (i) any ordinary shares of the Issuer, (ii) any obligations of the Issuer which rank or are expressed to rank pari passu with the ordinary shares of the Issuer or (iii) any obligations of any Subsidiaries of the Issuer benefiting from a guarantee or support agreement entered into by the Issuer which ranks, or is expressed to rank, pari passu with the ordinary shares of the Issuer, except where (v) such repurchase or acquisition was undertaken in respect of any share option, or any free share allocation plan in each case reserved for directors, officers and/or employees of the Issuer or any of its affiliates or any associated liquidity agreements or any associated hedging transactions, (w) the Issuer is obliged under the terms of such securities or by mandatory operation of law to make such repurchase or acquisition or (x) such repurchase or acquisition was made by or on behalf of the Issuer as part of an intra-day transaction that does not result in an increase in the aggregate number of ordinary shares held by or on behalf of the Issuer as treasury shares at 8:30 a.m. London time on the Interest Payment Date on which any outstanding Arrears of Interest were first deferred, (y) such repurchase or acquisition results from hedging of any convertible securities issued by the Issuer or by any Subsidiary of the Issuer and guaranteed by the Issuer; or (z) such repurchase or acquisition results from the settlement of existing equity derivatives after the Interest Payment Date on which any outstanding Arrears of Interest were first deferred; |
(d) |
the Issuer, or any Subsidiary of the Issuer, has redeemed, repurchased or otherwise acquired any Parity Obligations of the Issuer, except where (x) such redemption, repurchase or acquisition is effected as a public cash tender offer or public exchange offer at a purchase price per security which is below its par value or (y) the Issuer, or any Subsidiary of the Issuer, is obliged under the terms of such securities or by mandatory operation of law to make such redemption, repurchase or acquisition or (z) such acquisition results from the conversion of any convertible securities issued by the Issuer or issued by a Subsidiary of the Issuer with a guarantee from the Issuer; |
“Deferred Interest Payment” has the meaning given to it under “—Optional Interest Deferral—Deferral of Payments”;
“First Fixed Interest Rate” has the meaning given to it under “—Interest Payments—First Fixed Interest Rate”;
“First Call Date” means January 4, 2029;
“First Reset Date” means April 4, 2029;
“Interest Payment” means, in respect of an Interest Payment Date, the amount of interest payable on the 2079 Capital Securities for the relevant Interest Period in accordance with “—Interest Payments”;
“Interest Payment Date” means April 4 and October 4 in each year, commencing on (and including) October 4, 2019, subject to adjustment as described under “—Interest Payments—Interest Rate”;
“Interest Period” means the period beginning on (and including) the Issue Date and ending on (but excluding) the first Interest Payment Date and each successive period beginning on (and including) an Interest Payment Date and ending on (but excluding) the next succeeding Interest Payment Date;
“Interest Rate” means the First Fixed Interest Rate and/or each Subsequent Fixed Interest Rate, as the case may be;
“Issue Date” has the meaning given to it under “—Interest Payments—Interest Rate”;
“Junior Obligations” means any shares in the capital of the Issuer (except for preference shares in the capital of the Issuer (if any)) or any other securities or obligations issued or owed by the Issuer (including guarantees or indemnities or support arrangements given by the Issuer in respect of securities or obligations owed by other persons) which rank, or are expressed to rank, junior to the 2079 Capital Securities or to the most junior class of preference shares in the capital of the Issuer; “Maturity Date” means April 4, 2079, subject to adjustment as described under “—Interest Payments—Interest Rate”;
“Mandatory Settlement Date” means the earlier of:
(a) |
the date on which a Compulsory Arrears of Interest Settlement Event occurs; |
(b) |
the next scheduled Interest Payment Date on which the Issuer pays interest on the 2079 Capital Securities; or |
(c) |
the date on which the 2079 Capital Securities are redeemed or repaid in accordance with “—Subordination”, “—Redemption” or “—Event of Default”; |
“Parity Obligations” means (if any) (i) the most junior class of preference share capital in the Issuer ranking ahead of the ordinary shares in the capital of the Issuer and any other obligations of the Issuer, issued directly or indirectly by it, which rank, or are expressed to rank, pari passu with the 2079 Capital Securities or such preference shares and (ii) any obligations of any Subsidiaries of the Issuer benefiting from a guarantee or support agreement entered into by the Issuer which ranks, or is expressed to rank, pari passu with the 2079 Capital Securities or such preference shares;
For the avoidance of doubt, Parity Obligations include the Issuer’s £1,440,000,000 2.00% Subordinated Mandatory Convertible Bonds due 2019 (ISIN: XS1371473601), the Issuer’s €2,000,000,000 Capital Securities due 2079 issued on or around October 3, 2018 (ISIN: XS1888179477), the Issuer’s €500,000,000 Capital Securities due 2078 issued on or around October 3, 2018 (ISIN: XS1888179550), the Issuer’s £500,000,000 Capital Securities due 2078 issued on or around October 3, 2018 (ISIN: XS1888180996) and the Issuer’s U.S.$ 1,300,000,000 Capital Securities due 2078 issued on October 3, 2018 (ISIN: XS1888180640).
“Qualifying Securities” has the meaning given to it under “—Substitution or Variation”;
“Rating Agency” means Fitch Ratings Ltd, Moody’s Investors Service Esparia S.A. (“Moody’s”) or Standard & Poor’s Credit Market Services Europe Limited (“S&P”) or any of their respective affiliates or successors or any rating agency substituted for any of them by the Issuer from time to time;
“Relevant Date” means (i) in respect of any payment other than a sum to be paid by the Issuer in a winding-up or administration of the Issuer, the date on which such payment first becomes due and payable but, if the full amount of the moneys payable on such date has not been received by the Principal Paying Agent or the Trustee on or prior to such date, the Relevant Date means the date on which such moneys shall have been so received and notice to that effect shall have been given to the Holders, and (ii) in respect of a sum to be paid by the Issuer in a winding-up or administration of the Issuer, the date which is one day prior to the date on which an order is made or a resolution is passed for the winding-up or, in the case of an administration, one day prior to the date on which any dividend is distributed;
“Relevant Rating Agency” means Moody’s or S&P or any of their respective affiliates or successors or any rating agency (a “Substitute Relevant Rating Agency”) substituted for any of them by the Issuer from time to time;
“Reset Date” means the First Reset Date and each date falling on the fifth anniversary of the First Reset Date;
“Reset Period” means the period from one Reset Date to (but excluding) the next following Reset Date;
“Reset Reference Banks” means five major banks in the interbank market in London as selected by the Agent Bank, after consultation with the Issuer; “Subsequent Fixed Interest Rate” has the meaning given to it under “—Interest Payments—Subsequent Fixed Interest Rates”;
“Senior Obligations” means all obligations of the Issuer, issued directly or indirectly by it, other than Parity Obligations and Junior Obligations;
“Senior Unsecured Obligations” means any of the Issuer’s senior unsecured obligations;
“Special Event” means any of an Accounting Event, a Capital Event, a Tax Event or a Withholding Tax Event or any combination of the foregoing;
“Subsidiary” means a subsidiary within the meaning of Section 1159 of the Companies Act 2006;
“Substitution or Variation Event” has the meaning given to it under “—Substitution or Variation”;
“successor in business” means, in relation to a company, any other company which:
(a) |
owns beneficially the whole or substantially whole of the undertaking, property and assets owned by such company immediately prior thereto; and |
(b) |
carries on, as successor to such company, the whole or substantially the whole of the business carried on by such company immediately prior thereto; |
“Tax Event” shall be deemed to have occurred if as a result of a Tax Law Change:
(a) |
in respect of, or as a result of, the Issuer’s obligation to make any Interest Payment on the next following Interest Payment Date, the Issuer would not be entitled to claim a deduction in computing its taxation liabilities in the United Kingdom or such entitlement is materially reduced or materially delayed (a “disallowance”); |
(b) |
the 2079 Capital Securities are prevented from being treated as loan relationships for United Kingdom tax purposes; or |
(c) |
in respect of the Issuer’s obligation to make any Interest Payment on the next following Interest Payment Date, where a deduction arises in respect of such Interest Payment the Issuer would not to any material extent be entitled to have such deduction set against the profits of companies with which it is grouped for applicable United Kingdom tax purposes (whether under the group relief system current as at the Issue Date or any similar system or systems having like effect as may from time to time exist) otherwise than as a result of a disallowance within (a), |
and, in each case, the Issuer cannot avoid the foregoing in connection with the 2079 Capital Securities by taking measures reasonably available to it, provided measures reasonably available to the Issuer shall not include allocating a disallowance provided for in (a) above to any other company or security;
“Tax Law Change” means a change in or proposed change in, or amendment or proposed amendment to, the laws or regulations of the United Kingdom or any political subdivision or any authority thereof or therein having the power to tax, including any treaty to which the United Kingdom is a party, or any change in the application of official or generally published interpretation of such laws or regulations, including a decision of any court or tribunal, or any interpretation or pronouncement by any relevant tax authority that provides for a position with respect to such laws or regulations or interpretation thereof that differs from the previously generally accepted position in relation to similar transactions, which change or amendment becomes, or would become, effective on or after the Issue Date;
“United Kingdom” means the United Kingdom of Great Britain and Northern Ireland;
“U.S. dollar”, “U.S.$” and “cent” mean the lawful currency of the United States of America; and
a “Withholding Tax Event” shall be deemed to occur if as a result of a Tax Law Change, in making any payments on the 2079 Capital Securities, the Issuer has paid or will or would on the next Interest Payment Date be required to pay Additional Amounts on the 2079 Capital Securities and the Issuer cannot avoid the foregoing in connection with the 2079 Capital Securities by taking measures reasonably available to it.
NC5.25 Capital Securities due 2081
The following terms are applicable to the NC5.25 Capital Securities due 2081. Within this section, capitalized terms that are not otherwise defined have the meaning given to them in the prospectus supplement dated June 1, 2021 (the “2081 Capital Securities Prospectus Supplement”), to the base prospectus dated July 29, 2020 (File No. 333-240163), filed with the Securities and Exchange Commission pursuant to Rule 424(b)(2) on June 2, 2021, which prospectus supplement is incorporated by reference herein.
● | Title: NC5.25 Capital Securities due 4 June 2081. |
● | Total principal amount outstanding: $500,000,000. |
● | Issue date: June 4, 2021. |
● | Interest: The NC5.25 Capital Securities due 4 June 2081 bear interest on their principal amount from (and including) the issue date to (but excluding) September 4, 2026 (the “First Reset Date”) at a rate of 3.250% per annum, payable semi-annually in arrears on March 4 and September 4 in each year, commencing on March 4, 2022. Thereafter, unless previously redeemed, the NC5.25 Capital Securities due 4 June 2081 will bear interest from (and including) the First Reset Date to (but excluding) September 4, 2031 at a rate per annum equal to the 5 year Treasury Rate (as defined in the 2081 Capital Securities Prospectus Supplement) for the relevant reset period plus the relevant Margin applicable to that reset period, payable semi-annually in arrears on March 4 and September 4 in each year. Thereafter, unless previously redeemed, the NC5.25 Capital Securities due 4 June 2081 will bear interest from (and including) September 4, 2031 to (but excluding) September 4, 2046 at a rate per annum equal to the 5 year Treasury Rate for the relevant reset period plus the relevant Margin applicable to that reset period, payable semi-annually in arrears on March 4 and September 4 in each year. From (and including) September 4, 2046 up to (but excluding) June 4, 2081 (the “Maturity Date”), unless previously redeemed, the NC5.25 Capital Securities due 4 June 2081 will bear interest at a rate per annum equal to the 5 year Treasury Rate for the relevant Reset Period plus the Margin appliable to that Reset Period payable semi-annually in arrears on March 4 and September 4 in each year, and on the Maturity Date. See “Description of Securities—Interest Payments” in the 2081 Capital Securities Prospectus Supplement. |
NC10 Capital Securities due 2081
The following terms are applicable to the NC10 Capital Securities due 2081. Within this section, capitalized terms that are not otherwise defined have the meaning given to them in the 2081 Capital Securities Prospectus Supplement, which prospectus supplement is incorporated by reference herein.
● | Title: NC10 Capital Securities due 4 June 2081. |
● | Total principal amount outstanding: $1,000,000,000. |
● | Issue date: June 4, 2021. |
● | Interest: The NC10 Capital Securities due 4 June 2081 bear interest on their principal amount from (and including) the issue date to (but excluding) September 4, 2026 (the “First Reset Date”) at a rate of 4.125% per annum, payable semi-annually in arrears on June 4 and December 4 in each year, commencing on December 4, 2021. Thereafter, unless previously redeemed, the NC10 Capital Securities due 4 June 2081 will bear interest from (and including) the First Reset Date to (but excluding) June 4, 2051 at a rate per annum equal to the 5 year Treasury Rate (as defined in the 2081 Capital Securities Prospectus Supplement) for the relevant reset period plus the relevant Margin applicable to that reset period, payable semi-annually in arrears on June 4 and December 4 in each year. From (and including) June 4, 2051 up to (but excluding) June 4, 2081 (the “Maturity Date”), unless previously redeemed, the NC10 Capital Securities due 4 June 2081 will bear interest at a rate per annum equal to the 5 year Treasury Rate for the relevant Reset Period plus the Margin appliable to that Reset Period payable semi-annually in arrears on June 4 and December 4 |
in each year, and on the Maturity Date. See “Description of Securities—Interest Payments” in the 2081 Capital Securities Prospectus Supplement.
NC30 Capital Securities due 2081
The following terms are applicable to the NC30 Capital Securities due 2081. Within this section, capitalized terms that are not otherwise defined have the meaning given to them in the 2081 Capital Securities Prospectus Supplement, which prospectus supplement is incorporated by reference herein.
● | Title: NC30 Capital Securities due 4 June 2081. |
● | Total principal amount outstanding: $950,000,000. |
● | Issue date: June 4, 2021. |
● | Interest: The NC30 Capital Securities due 4 June 2081 bear interest on their principal amount from (and including) the issue date to (but excluding) June 4, 2051 (the “First Reset Date”) at a rate of 5.125% per annum, payable semi-annually in arrears on June 4 and December 4 in each year, commencing on December 4, 2021. Thereafter, unless previously redeemed, the NC30 Capital Securities due 4 June 2081 will bear interest from (and including) the First Reset Date to (but excluding) June 4, 2071 at a rate per annum equal to the 5 year Treasury Rate (as defined in the 2081 Capital Securities Prospectus Supplement) for the relevant reset period plus the relevant Margin applicable to that reset period, payable semi-annually in arrears on June 4 and December 4 in each year. From (and including) June 4, 2071 up to (but excluding) June 4, 2081 (the “Maturity Date”), unless previously redeemed, the NC30 Capital Securities due 4 June 2081 will bear interest at a rate per annum equal to the 5 year Treasury Rate for the relevant Reset Period plus the Margin appliable to that Reset Period payable semi-annually in arrears on June 4 and December 4 in each year, and on the Maturity Date. See “Description of Securities—Interest Payments” in the 2081 Capital Securities Prospectus Supplement. |
Additional Terms Applicable to 2081 Capital Securities
The following terms are applicable to all 2081 Capital Securities.
● | Maturity date: Unless previously redeemed, purchased, cancelled or substituted, the 2081 Capital Securities will mature on June 4, 2081, and holders will be entitled to receive 100% of the principal amount of the 2081 Capital Securities, together with any accrued and unpaid interest and any outstanding arrears of interest. |
● | Optional interest deferral: The Company may, at its discretion, elect to defer all or part of any Interest Payment (a “Deferred Interest Payment”) which is otherwise scheduled to be paid on an Interest Payment Date by giving a Deferral Notice of such election to the holders of 2081 Capital Securities, the Trustee and the Principal Paying Agent. Other than in connection with a Mandatory Settlement, if the Company elects not to make all or part of any Interest Payment on an Interest Payment Date, then the Company will not have any obligation to pay such interest on the relevant Interest Payment Date and any such non-payment of interest will not constitute an Event of Default of the Company or any other breach of its obligations under the 2081 Capital Securities or for any other purpose. |
● | Ranking: The 2081 Capital Securities constitute direct, unsecured and subordinated obligations of the Company. The rights and claims of the holders will be subordinated to the claims of holders of all Senior Obligations in that if at any time an order is made, or an effective resolution is passed, for the winding-up of the Company (otherwise than for the purposes of a solvent winding-up solely for the purposes of a reorganization, reconstruction, amalgamation or the substitution in place of the Company of a “successor in business” of the Company, the terms of which reorganization, reconstruction, amalgamation or substitution do not provide for a claim to be made in the winding-up or administration of the Company in respect of the 2081 Capital Securities) or an administrator of the Company is appointed and such administrator gives notice that it intends to declare and distribute a dividend, the rights and claims of the holders will be |
subordinated in accordance with the provisions set forth under “Description of Securities-Subordination” in the 2081 Capital Securities Prospectus Supplement.
● | The 2081 Capital Securities will be structurally subordinated to all obligations of the Company’s subsidiaries including claims with respect to trade payables.. |
● | Mandatory Settlement: Notwithstanding the above and the provisions of “Optional Interest Deferral” in the 2081 Capital Securities Prospectus Supplement, the Company will pay any outstanding Arrears of Interest, in whole but not in part, on the first occurring Mandatory Settlement Date following the Interest Payment Date on which a Deferred Interest Payment first arose. A “Mandatory Settlement Date” as defined in the terms of the 2081 Capital Securities encompasses (i) dividends, other distributions or payments in respect of Parity Obligations and other events that constitute “Compulsory Arrears of Interest Settlement Events,” (ii) payments of interest on the 2081 Capital Securities on a scheduled Interest Payment Date following the Interest Payment Date on which a Deferred Interest Payment first arose and (iii) the date of which the 2081 Capital Securities are redeemed or repaid in accordance with the conditions set forth under “Description of Securities—Subordination”, “Description of Securities—Redemption” or “Description of Securities—Event of Default” in the 2081 Capital Securities Prospectus Supplement. |
● | Optional Redemption: The Company may redeem all, but not less than all, of the 2081 Capital Securities on any Business Day in the period commencing on any date from (and including) the First Call Date to (and including) the First Reset Date or on any Interest Payment Date thereafter at their principal amount, together with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest in respect of the 2081 Capital Securities. |
● | Make-whole redemption: The Company has the right to redeem all, but not some only, of any tranche of the 2081 Capital Securities then outstanding, on any Business Day falling prior to the relevant First Call Date at the a redemption price equal to the greater of (1) 100% of the principal amount outstanding of the relevant tranche plus accrued interest to the date of redemption and (2) as determined by the quotation agent, the sum of the present values of the remaining scheduled payments of principal and interest on the relevant tranche and portion of such payments of interest accrued as of the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the reference bond rate. |
● | Special Event Redemption: If a Capital Event, Tax Event, Accounting Event or Withholding Tax Event (any such, a “Special Event”) has occurred and is continuing, then the Company may redeem at any time all, but not less than all, of the 2081 Capital Securities at: |
o | in the case of a Capital Event, Tax Event or Accounting Event where the relevant date fixed for redemption falls prior to the First Call Date, 101% of their principal amount; |
o | in the case of a Capital Event, Tax Event or Accounting Event where the relevant date fixed for redemption falls on or after the First Call Date, 100% of their principal amount; or |
o | in the case of a Withholding Tax Event where any such redemption occurs at any time, 100% of their principal amount, |
◾ | in each case together with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest in respect of the 2081 Capital Securities. |
● | Change of Control: If a Change of Control Event has occurred and is continuing, the Company may elect to redeem all, but not less than all, of the 2081 Capital Securities at any time at 101% of the principal amount of the 2081 Capital Securities, together with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest in respect of the 2081 Capital Securities. If the Company does not elect to redeem the 2081 Capital Securities following the occurrence of a Change of Control Event, the then prevailing Interest Rate, and each subsequent Interest Rate, on the 2081 Capital Securities shall be increased by 5% per annum with effect from (and including) the date on which the Change of Control Event occurred. |
● | Substitution or variation instead of special event redemption: If an Accounting Event, a Capital Event, a Tax Event or a Withholding Tax Event has occurred and is continuing, without the consent of the holders |
of 2081 Capital Securities, the Company may either, as an alternative to redemption, at any time, (i) substitute all, but not less than all, of the 2081 Capital Securities for, or (ii) vary the terms of the 2081 Capital Securities with the effect that they remain or become, as the case may be, Qualifying Securities, in each case in accordance with certain conditions and subject, inter alia, to the receipt by the Trustee of the Officer’s Certificate and an Opinion of Counsel, each as defined in the Indenture.
● | Event of Default: If a default is made by the Company for a period of 14 days or more in the payment of any principal or premium (if any) or 21 days or more in the payment of interest, in each case in respect of any tranche of the 2081 Capital Securities and which is due, then the Company shall, without notice from the Trustee, be deemed to be in default under the indenture and the relevant 2081 Capital Securities and the Trustee at its sole discretion may, or shall, if so requested in writing by the shareholders of at least 25% in principal amount of the relevant 2081 Capital Securities then outstanding, subject in each case to its being indemnified and/or secured and/or prefunded to its satisfaction, institute proceedings for the winding-up of the Company and/or prove and/or claim in the winding-up or liquidation of the Company, such claim being subordinated, and for the amount as provided in “Description of Securities—Subordination—General” in the 2081 Capital Securities Prospectus Supplement. |
● | Payment of additional amounts: The Company intends to make all payments on the Notes without deducting United Kingdom (“U.K.”) withholding taxes. If any deduction is required on payments to non-U.K. investors, the Company will pay additional amounts on those payments to the extent described under “Description of Debt Securities We May Offer—Payment of Additional Amounts” in the 2081 Capital Securities Prospectus Supplement.. |
Further Terms, Mechanics Exchange and Transfer applicable to 2081 Capital Securities
Interest Payments
Interest Rate
Each tranche of the 2081 Capital Securities bears interest on its principal amount at the applicable Interest Rate from (and including) June 4, 2021 (the “Issue Date”) in accordance with the provisions of this “-Interest Payments”.
Subject to conditions set forth under “-Optional Interest Deferral”, interest shall be payable on the 2081 Capital Securities semi-annually in arrears on each Interest Payment Date, provided that if any Interest Payment Date, other than the Maturity Date, would fall on a day that is not a Business Day, the Interest Payment Date will be postponed to the next succeeding Business Day (without the accrual of any additional interest for such period), except that if that Business Day falls in the next succeeding calendar month, the Interest Payment Date will be the immediately preceding Business Day. If the Maturity Date falls on a day that is not a Business Day, the payment of principal and interest will be postponed to the next Business Day and no interest will accrue as a result of that postponement (see “-General” above).
Interest Accrual
The 2081 Capital Securities will cease to bear interest from (and including) the date of redemption thereof pursuant to the provisions set forth under “-Redemption” or the date of substitution thereof pursuant to “-Substitution or Variation”, as the case may be, unless, upon due presentation, payment of all amounts due in respect of the 2081 Capital Securities is not made, in which event interest shall continue to accrue in respect of unpaid amounts on the 2081 Capital Securities, both before and after judgment, and shall be payable, up to (but excluding) the Relevant Date (as defined in the 2081 Capital Securities Prospectus Supplement).
Except as provided in “-Interest Payments-First Fixed Interest Rate” in the 2081 Capital Securities Prospectus Supplement, where it is necessary to calculate an amount of interest in respect of any Security for a period which is less than or equal to a complete Interest Period, such interest shall be calculated on the basis of a 360-day year consisting of 12 months of 30 days each and, in the case of an incomplete month, the number of days elapsed.
Where it is necessary to calculate an amount of interest in respect of any Security for a period of more than one Interest Period, such interest shall be the aggregate of the interest payable in respect of a full Interest Period plus the interest payable in respect of the remaining period calculated in the manner as aforesaid.
Interest in respect of any Security shall be calculated per U.S.$1,000 in principal amount thereof (the “Calculation Amount”). The amount of interest payable per Calculation Amount for any period shall, except as provided in “-Interest Payments-First Fixed Interest Rate” in the 2081 Capital Securities Prospectus Supplement, be equal to the product of the relevant Interest Rate, the Calculation Amount and the day count fraction as described in this sub-section for the relevant period, rounding the resulting figure to the nearest cent (half a cent being rounded upwards). The amount of interest payable in respect of each Security shall be the aggregate of the amounts (determined in the manner provided above) for each Calculation Amount comprising the denomination of such Security without any further rounding.
First Fixed Interest Rate
For each Interest Period ending prior to the First Tranche 1 Reset Date, the Tranche 1 Securities bear interest, subject to “-Optional Interest Deferral”, at the rate of 3.250% per annum (the “First Tranche 1 Fixed Interest Rate”), payable semi-annually in arrears on the related Interest Payment Dates. Subject to “-Optional Interest Deferral”, the Interest Payment in respect of each Interest Period commencing before the First Tranche 1 Reset Date will amount to U.S.$16.25 per Calculation Amount.
For each Interest Period ending prior to the First Tranche 2 Reset Date, the Tranche 2 Securities bear interest, subject to “-Optional Interest Deferral”, at the rate of 4.125% per annum (the “First Tranche 2 Fixed Interest Rate”), payable semi-annually in arrears on the related Interest Payment Dates. Subject to “-Optional Interest Deferral”, the Interest Payment in respect of each Interest Period commencing before the First Tranche 2 Reset Date will amount to U.S.$20.63 per Calculation Amount.
For each Interest Period ending prior to the First Tranche 3 Reset Date, the Tranche 3 Securities bear interest, subject to “-Optional Interest Deferral”, at the rate of 5.125% per annum (the “First Tranche 3 Fixed Interest Rate”), payable semi-annually in arrears on the related Interest Payment Dates. Subject to “-Optional Interest Deferral”, the Interest Payment in respect of each Interest Period commencing before the First Tranche 3 Reset Date will amount to U.S.$25.63 per Calculation Amount.
The “First Fixed Interest Rate” means the First Tranche 1 Fixed Interest Rate, the First Tranche 2 Fixed Interest Rate or the First Tranche 3 Fixed Interest Rate, as applicable.
Subsequent Fixed Interest Rates
For each Interest Period which commences on or after the relevant First Reset Date, the 2081 Capital Securities bear interest, subject to “-Optional Interest Deferral”, at the Subsequent Fixed Interest Rate determined on the Reset Interest Determination Date in respect of the Reset Period in which that Interest Period falls. Such interest shall be payable semi-annually in arrears on the related Interest Payment Dates until (and including) the relevant Maturity Date and, subject to “-Interest Payments-Step-up after Change of Control Event” in the 2081 Capital Securities Prospectus Supplement, the “Subsequent Fixed Interest Rate” shall be the sum as determined by the Agent Bank, of the relevant Five-Year Treasury Rate plus the Margin applicable to that Reset Period, where:
“Five-Year Treasury Rate” means, as of any Reset Interest Determination Date, the average of the yields on actively traded U.S. treasury securities adjusted to constant maturity, for five-year maturities, for the most recent five business days appearing under the caption “Treasury Constant Maturities” in the most recent H.15.
If the Issuer, in its sole discretion, determines that the Five-Year Treasury Rate cannot be determined pursuant to the method described above, the Issuer may use reasonable efforts to designate an unaffiliated agent or advisor, which may include an unaffiliated underwriter for the offering of the 2081 Capital Securities or any affiliate of any such underwriter (the “Designee”), to determine whether there is an industry-accepted successor rate to the Five-Year Treasury Rate.
If the Designee determines that there is such an industry-accepted successor rate to the Five-Year Treasury Rate, then the Five-Year Treasury Rate shall be such successor rate and, in that case, the Designee may then determine and adjust the business day convention, the definition of business day and the Reset Interest Determination Date to be used and any other relevant methodology for calculating such substitute or successor base rate, including any adjustment factor needed to make such substitute or successor base rate comparable to the Five-Year Treasury Rate, in a manner that is consistent with industry accepted practices for such substitute or successor base rate. No such adjustment shall affect the Trustee’s or the Agent Bank’s own rights, duties or immunities under the indenture, the calculation agent agreement or otherwise.
If the Five-Year Treasury Rate cannot be determined pursuant to the methods described in the paragraphs above, the rate will be equal to the Five-Year Treasury Rate for the last preceding Reset Period (or, in the case of the first Reset Period, the rate equal to 0.803% per annum in the case of the Tranche 1 Securities, 1.608% per annum in the case of the Tranche 2 Securities and 2.302% per annum in the case of the Tranche 3 Securities).
“H.15” means the daily statistical release designated as such, or any successor publication as determined by the Issuer in its sole discretion, published by the Board of Governors of the United States Federal Reserve System, and “most recent H.15” means the H.15 published closest in time but prior to the close of business on the Reset Interest Determination Date.
As used in this section:
“Margin” means: (a) in respect of the Tranche 1 Securities: (i) for each Reset Period which falls in the period commencing on (and including) September 4, 2026 and ending on (but excluding) September 4, 2031, 244.7 bps; (ii) for each Reset Period which falls in the period commencing on (and including) September 4, 2031 and ending on (but excluding) September 4, 2046, 269.7 bps; and (iii) for each Reset Period which falls on or after September 4, 2046, 344.7 bps; (b) in respect of the Tranche 2 Securities: (i) for each Reset Period which falls in the period commencing on (and including) June 4, 2031 and ending on (but excluding) June 4, 2051, 276.7 bps; and (ii) for each Reset Period which falls on or after June 4, 2051, 351.7 bps; and (c) in respect of the Tranche 3 Securities: (i) for each Reset Period which falls in the period commencing on (and including) June 4, 2051 and ending on (but excluding) June 4, 2071, 307.3 bps; and (ii) for each Reset Period which falls on or after June 4, 2071, 382.3 bps; “Reset Interest Determination Date” means the day falling two U.S. Government Securities Business Days prior to the first day of the relevant Reset Period.
“U.S. Government Securities Business Days” means any day except for a Saturday, Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities.
The Subsequent Fixed Interest Rate shall be determined as provided above in respect of each relevant Reset Period, provided that the Subsequent Fixed Interest Rate shall never be lower than 0% (zero), and, as so determined, such rate shall apply to each Interest Period falling within that Reset Period.
For the purposes of this section, the Agent Bank shall not be responsible to the Issuer or to any third party as a result of the Agent Bank having relied upon or acted on any quotation or information given to it for the purposes of calculating the Subsequent Fixed Interest Rate which subsequently may be found to be incorrect or inaccurate in any way or for any losses whatsoever resulting from acting in accordance therewith.
Determination of Subsequent Fixed Interest Rates
The Agent Bank will, as soon as practicable after 11.00 a.m. (New York City time) on each Reset Interest Determination Date, determine the Subsequent Fixed Interest Rate in respect of each Interest Period falling within the relevant Reset Period and promptly notify the Issuer.
Publication of Subsequent Fixed Interest Rates
The Company will cause notice of each Subsequent Fixed Interest Rate determined in accordance the provisions set forth under “Interest Payments” in respect of each relevant Interest Period to be given to the Trustee, the Holders, the Paying Agents and any stock exchange on which the 2081 Capital Securities are for the time being listed or admitted to trading, in each case as soon as practicable after its determination but in any event not later than the fourth Business Day thereafter.
Agent Bank
With effect from the relevant First Reset Date, the Issuer will maintain an Agent Bank which will calculate the relevant Interest Rate.
The Company may from time to time replace the Agent Bank with another leading financial institution in New York, New York. If the Agent Bank is unable or unwilling to continue to act as the Agent Bank or fails duly to determine a Subsequent Fixed Interest Rate in respect of any Interest Period as provided in “-Interest Payments-Subsequent Fixed Interest Rates”, the Company will forthwith appoint another leading financial institution in New York, New York. The Agent Bank may not resign its duties or be removed without a successor having been appointed as aforesaid.
Determinations of Agent Bank Binding
All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions set forth under “-Interest Payments” by the Agent Bank shall (in the absence of manifest error) be binding on the Issuer, the Agent Bank, the Trustee, the Paying Agents and all Holders and no liability to the Holders, the Company or the Trustee will attach to the Agent Bank in connection with the exercise or non-exercise by it of any of its powers, duties and discretions; provided that none of the Trustee, the Agent Bank or any Paying Agent shall have any responsibility to determine whether any manifest error has occurred and, in the absence of notice from us, may conclusively assume that no manifest error has occurred and shall suffer no liability in so assuming.
Step-up after Change of Control Event
Notwithstanding any other provision set forth under “-Interest Payments”, if the Issuer does not elect to redeem any tranche of the 2081 Capital Securities in accordance with the provisions set forth under “-Redemption-Redemption for Change of Control Event” following the occurrence of a Change of Control Event, the then prevailing Interest Rate, and each subsequent Interest Rate otherwise determined in accordance with the provisions set forth under “Interest Payments”, on the relevant 2081 Capital Securities shall be increased by 5% per annum with effect from (and including) the date on which the Change of Control Event occurred.
Without prejudice to the Company’s right to redeem any tranche of the 2081 Capital Securities in accordance with the provision set forth under “-Redemption-Redemption for Change of Control Event” following the occurrence of any Change of Control Event, the provision set forth under this “-Interest Payments-Step-up after Change of Control Event” shall only apply in relation to the first Change of Control Event to occur while any relevant 2081 Capital Securities remain outstanding.
Redemption
Make Whole Redemption by Company
The Issuer may, by giving not less than 10 but not more than 60 calendar days’ notice to the Trustee, the Principal Paying Agent and, in accordance with the notice provisions of the indenture, the Holders of any tranche of the 2081 Capital Securities (which notice shall be irrevocable and shall specify the date fixed for redemption (the “Make Whole Redemption Date”)), redeem all, but not some only, of the relevant 2081 Capital Securities then outstanding on any Business Day falling prior to the First Call Date at the Make Whole Redemption Amount together with any accrued and unpaid interest up to (but excluding) the Make Whole Redemption Date and any outstanding Arrears of Interest. No later than the Business Day immediately following the Reference Date, the Determination Agent shall notify the Issuer, the Trustee and the Principal Paying Agent of the Make Whole Redemption Amount, the Reference Bond Rate and (if applicable) the details of any Similar Security. The Issuer will promptly thereafter notify, in accordance with the notice provisions of the indenture, the Holders of any tranche of the 2081 Capital Securities of the Make Whole Redemption Amount, the Reference Bond Rate and (if applicable) the details of any Similar Security. Upon the expiry of such notice, the Issuer shall redeem the relevant tranche of the 2081 Capital Securities.
For the purposes of this subsection, unless the context otherwise requires, the following defined terms shall have the meanings set out below:
“Determination Agent” means an investment bank or financial institution of international standing selected by (and at the expense of) the Issuer for the purposes of the calculating the Make Whole Redemption Amount and, if applicable, selecting a Similar Security;
“Make Whole Redemption Amount” means an amount in U.S. dollars equal to the higher of: (x) 100% of the principal amount outstanding of the tranche of the 2081 Capital Securities to be redeemed and (y) the sum of the present values of the principal amount outstanding of the relevant 2081 Capital Securities and the Remaining Term Interest on the relevant 2081 Capital Securities (exclusive of any outstanding Arrears of Interest and any interest accruing on the principal amount of the relevant 2081 Capital Securities from, and including, the last Interest Payment Date or, as the case may be, the Issue Date, immediately preceding the Make Whole Redemption Date to, but excluding, the Make Whole Redemption Date) and such present values shall be calculated by discounting such amounts to such Make Whole Redemption Date, on a semi-annual basis (assuming a day count fraction as described under “-Interest Payments-Interest Accrual”) at a per annum rate equal to the Reference Bond Rate, plus the Redemption Margin, all as determined by the Determination Agent;
“Quotation Time” means 11.00 a.m. (New York City time);
“Redemption Margin” means, in respect of the Tranche 1 Securities, 0.40% per annum, in respect of the Tranche 2 Securities, 0.40% per annum, and, in respect of the Tranche 3 Securities, 0.45% per annum;
“Reference Bond” means, in respect of the Tranche 1 Securities, U.S. Treasury 0.750% due May 2026 (ISIN: US91282CCF68), in respect of the Tranche 2 Securities, U.S. Treasury 1.625% due May 2031 (ISIN: US91282CCB54) and, in respect of the Tranche 3 Securities, U.S. Treasury 1.875% due February 2051 (ISIN: US912810SU34). In any such case if such security is no longer outstanding, a Similar Security chosen by the Determination Agent and notified to the Issuer;
“Reference Bond Price” means, with respect to the Make Whole Redemption Date, (a) the arithmetic average of the Reference Government Bond Dealer Quotations for the Make Whole Redemption Date, after excluding the highest and lowest such Reference Government Bond Dealer Quotations, or (b) if the Determination Agent obtains fewer than four such Reference Government Bond Dealer Quotations, the arithmetic average of all such quotations;
“Reference Bond Rate” means, with respect to the Make Whole Redemption Date, the rate per annum equal to the annual or semi-annual yield (as the case may be) to maturity or interpolated yield to maturity (on the relevant day count basis) of the Reference Bond, assuming a price for the Reference Bond (expressed as a percentage of its principal amount) equal to the Reference Bond Price for such Make Whole Redemption Date;
“Reference Date” means the third Business Day prior to the Make Whole Redemption Date;
“Reference Government Bond Dealer” means each of five banks selected by the Issuer, or their affiliates, which are (a) primary government securities dealers, and their respective successors, or (b) market makers in pricing corporate bond issues (and which may include, for the avoidance of doubt, Barclays Capital Inc., BofA Securities, Inc., J.P. Morgan Securities LLC, Mizuho Securities USA LLC and Standard Chartered Bank);
“Reference Government Bond Dealer Quotations” means, with respect to each Reference Government Bond Dealer and the Make Whole Redemption Date, the arithmetic average, as determined by the Determination Agent, of the bid and offered prices for the Reference Bond (expressed in each case as a percentage of its principal amount) at the Quotation Time on the Reference Date quoted in writing to the Determination Agent by such Reference Government Bond Dealer;
“Remaining Term Interest” means the aggregate amount of scheduled payment(s) of interest on the relevant tranche of the 2081 Capital Securities for the remaining term of the relevant 2081 Capital Securities up to (but excluding) the First Call Date determined on the basis of the rate of interest applicable to the relevant 2081 Capital Securities from (and including) the date on which the relevant 2081 Capital Securities are to be redeemed by the Issuer pursuant to the provision set out under this “-Redemption-Make Whole Redemption by Issuer”; and
“Similar Security” means a U.S. Treasury security having an actual or interpolated maturity comparable with the remaining term of the tranche of the 2081 Capital Securities to be redeemed, assuming for this purpose only that the relevant 2081 Capital Securities mature on the First Call Date, that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities denominated in U.S. dollars and of a comparable maturity to the First Call Date.
Redemption for Certain Taxation Reasons
The optional tax redemption provisions of the indenture (Section 1108), as described in the accompanying prospectus under the caption “Description of Debt Securities We May Offer-Optional Tax Redemption,” shall not apply to the 2081 Capital Securities.
If, immediately prior to the giving of the notice referred to below, a Tax Event or a Withholding Tax Event has occurred and is continuing, then the Company may, subject to having given not less than 10 but not more than 60 calendar days’ notice to the Trustee, the Principal Paying Agent and the Holders of the relevant tranche of the 2081 Capital Securities in accordance with the notice provisions set forth in the indenture (which notice shall be irrevocable) and subject to the conditions set forth under “-Preconditions to Special Event Redemption, Change of Control Event Redemption, and Substitution and Variation”, redeem in accordance with such conditions at any time all, but not less than all, of the relevant 2081 Capital Securities at (i) 101% of their principal amount (in the case of a Tax Event where such redemption occurs prior to the relevant First Call Date) or (ii) at 100% of their principal amount (in the case of a Tax Event where such redemption occurs on or after the relevant First Call Date or in the case of a Withholding Tax Event where such redemption occurs at any time), together, in each case, with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest. Upon the expiry of such notice, the Company will redeem the relevant tranche of the 2081 Capital Securities.
Redemption for Rating Reasons
If, immediately prior to the giving of the notice referred to below, a Capital Event has occurred and is continuing, then the Company may, subject to having given not less than 10 but not more than 60 calendar days’ notice to the Trustee, the Principal Paying Agent and the Holders of the relevant tranche of the 2081 Capital Securities in accordance with the notice provisions set forth in the indenture (which notice shall be irrevocable) and subject to the conditions set forth under “-Preconditions to Special Event Redemption, Change of Control Event Redemption, and Substitution and Variation”, redeem in accordance with such conditions all, but not less than all, of any tranche of the 2081 Capital Securities at any time at (i) 101% of their principal amount (where such redemption occurs prior to the relevant First Call Date) or (ii) 100% of their principal amount (where such redemption occurs on or after the relevant First Call Date), together, in each case, with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest. Upon the expiry of such notice, the Company will redeem the relevant tranche of the 2081 Capital Securities.
Redemption for Accounting Reasons
If, immediately prior to the giving of the notice referred to below, an Accounting Event has occurred and is continuing, then the Company may, subject to having given not less than 10 but not more than 60 calendar days’ notice to the Trustee, the Principal Paying Agent and the Holders of the relevant tranche of the 2081 Capital Securities in accordance with the notice provisions set forth in the indenture (which notice shall be irrevocable) and subject to the conditions set forth under “-Preconditions to Special Event Redemption, Change of Control Event Redemption, and Substitution and Variation”, redeem in accordance with such conditions all, but not less than all, of the relevant 2081 Capital Securities at any time at (i) 101% of their principal amount (where such redemption occurs prior to the relevant First Call Date) or (ii) 100% of their principal amount (where such redemption occurs on or after the relevant First Call Date), together, in each case, with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest. Upon the expiry of such notice, the Company will redeem the relevant tranche of the 2081 Capital Securities.
Redemption for Change of Control Event
If, immediately prior to the giving of the notice referred to below, a Change of Control Event has occurred and is continuing, then the Company may, subject to having given not less than 10 but not more than 60 calendar days’ notice to the Trustee, the Principal Paying Agent and the Holders of any tranche of the 2081 Capital Securities in accordance with the notice provisions set forth in the indenture (which notice shall be irrevocable) and subject to the conditions set forth under “-Preconditions to Special Event Redemption, Change of Control Event Redemption, and Substitution and Variation”, redeem in accordance with such conditions all, but not less than all, of the relevant 2081 Capital Securities at any time at 101% of their principal amount, together with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest. Upon the expiry of such notice, the Company will redeem the relevant tranche of the 2081 Capital Securities.
The Trustee is under no obligation to ascertain whether a Change of Control Event or Change of Control or any event which could lead to the occurrence of or could constitute a Change of Control Event or Change of Control has occurred, and until it shall receive an Officer’s Certificate pursuant to the indenture to the contrary, the Trustee may assume that no Change of Control Event or Change of Control or other such event has occurred.
The Issuer intends (without thereby assuming a legal or contractual obligation) that for so long as the 2081 Capital Securities remain outstanding, if a Change of Control Event occurs, it will launch a tender offer for all outstanding unsubordinated debt securities (which do not already contain a contractual right of the holders of such debt securities for such securities to be redeemed or repurchased as a result of the events giving rise to the Change of Control Event) at a price equal to not less than their aggregate principal amount plus accrued and unpaid interest as soon as reasonably practicable following such event.
The Company will notify the Trustee and the Principal Paying Agent of the redemption price of 2081 Capital Securities to be redeemed promptly after the calculation thereof, and none of the Trustee, any Paying Agent or the Agent Bank shall have any responsibility for any calculation or determination in respect of the redemption price of any 2081 Capital Securities, or any component thereof, including any Make Whole Redemption Amount, and shall be entitled to receive, and fully protected in relying upon, an officers’ certificate from the Company that states such redemption price.
Substitution or Variation
If an Accounting Event, a Capital Event, a Tax Event or a Withholding Tax Event (each a “Substitution or Variation Event”) has occurred and is continuing, then the Company may, as an alternative to redemption, subject to the conditions set forth under “-Preconditions to Special Event Redemption, Change of Control Event Redemption, and Substitution and Variation” (without any requirement for the consent or approval of the Holders of the relevant tranche of the 2081 Capital Securities) and subject to the Trustee, immediately prior to the giving of any notice referred to herein, having received an Officer’s Certificate and an Opinion of Counsel (each as defined in the indenture), each stating to the effect that the provisions of this section have been complied with, and having given not less than 10 but not more than 60 days’ notice to the Trustee, the Principal Paying Agent and the Holders of the relevant tranche of the 2081 Capital Securities (which notice shall be irrevocable), at any time either (i) substitute all, but not less than all, of the relevant 2081 Capital Securities for, or (ii) vary the terms of the relevant 2081 Capital Securities with the effect that they remain or become (as the case may be), Qualifying Securities, and the Trustee shall (subject to the following provisions of this section and subject to the receipt by it of the Officer’s Certificate referred to below) agree to such substitution or variation.
Upon expiry of such notice, the Company will either vary the terms of or, as the case may be, substitute the relevant tranche of the 2081 Capital Securities in accordance with this section.
The Trustee agrees, at the expense of the Issuer and subject as aforesaid, to use reasonable, non-discretionary and ministerial efforts to assist the Issuer in the substitution of the Qualifying Securities for the relevant 2081 Capital Securities, or the variation of the terms of the relevant 2081 Capital Securities so that they remain, or as appropriate, become, Qualifying Securities, provided that the Trustee shall not be obliged to participate in, or assist with, any such substitution or variation if the terms of the proposed Qualifying Securities or the participation in or assistance with such substitution or variation would impose, in the Trustee’s opinion, more onerous obligations upon it or expose it to any additional duties, responsibilities or liabilities or reduce or amend the rights and/or the protective provisions afforded to it in the terms of the relevant 2081 Capital Securities and/or any documents to which it is a party in any way and, separately, against which it is not indemnified and/or secured and/or prefunded to its satisfaction, if it shall so require.
If the Trustee does not participate or assist as provided above, the Company may redeem the relevant tranche of the 2081 Capital Securities as provided in “-Redemption”.
In connection with any substitution or variation in accordance with this section, the Company will comply with the rules of any stock exchange on which the relevant 2081 Capital Securities are for the time being listed or admitted to trading.
Any such substitution or variation in accordance with the foregoing provisions following a Substitution or Variation Event shall only be permitted if it does not give rise to any other Substitution or Variation Event with respect to the Qualifying Securities.
Any such substitution or variation in accordance with the foregoing provisions following a Substitution or Variation Event shall only be permitted if it does not result in the Qualifying Securities no longer being eligible for the same, or a higher amount of, “equity credit” (or such other nomenclature that the Rating Agency may then use to describe the degree to which an instrument exhibits the characteristics of an ordinary share) as is attributed to the relevant 2081 Capital Securities on the date notice is given to Holders of the substitution or variation.
“Qualifying Securities” means securities that:
(a) |
are issued by the Issuer or any wholly-owned direct or indirect finance subsidiary of the Issuer with a guarantee of such obligations by the Issuer; |
(b) |
rank and (save in the case of a direct issue by the Issuer) benefit from a guarantee that ranks in relation to the obligations of the Issuer under such securities and/or such guarantee (as the case may be), equally with the ranking of the relevant 2081 Capital Securities and pari passu in a winding-up or liquidation of the Issuer with any Parity Obligations of the Issuer; |
(c) |
contain terms not materially less favorable to Holders of the relevant tranche of the 2081 Capital Securities than the terms of the relevant 2081 Capital Securities (as reasonably determined by the Issuer (in consultation with an independent investment bank or counsel of international standing)) and which: |
(i) |
provide for the same or a more favorable Interest Rate from time to time as applied to the relevant 2081 Capital Securities immediately prior to such substitution or variation and preserve the same Interest Payment Dates; |
(ii) |
preserve the obligations (including the obligations arising from the exercise of any right) of the Issuer as to principal and as to redemption of the relevant 2081 Capital Securities, including (without limitation) as to timing of, and amounts payable upon, such redemption; |
(iii) |
preserve any existing rights under the terms of the relevant 2081 Capital Securities to any accrued interest, any Deferred Interest Payments, any Arrears of Interest and any other amounts payable under the relevant 2081 Capital Securities which, in each case, has accrued to Holders of the relevant tranche of the 2081 Capital Securities and not been paid; |
(iv) |
do not contain terms providing for the mandatory deferral of payments of interest and/or principal; |
(vi) |
do not contain terms providing for loss absorption through principal write-down or conversion to ordinary shares; and |
(vii) |
are (i) listed on the Nasdaq Global Market, (ii) listed on the Official List and admitted to trading on the London Stock Exchange plc’s Main Market or (iii) listed on such other stock exchange as is a Recognized Stock Exchange at that time as selected by the Issuer. |
For the purposes of the definition of Qualifying Securities:
“Official List” means the Official List of the Financial Conduct Authority acting under Part VI of the Financial Services and Markets Act 2000; and
“Recognized Stock Exchange” means a recognized stock exchange as defined in section 1005 of the Income Tax Act 2007 as the same may be amended from time to time and any provision statute or statutory instrument replacing the same from time to time.
Subordination
General
In the event of:
(i) |
an order being made, or an effective resolution being passed, for the winding-up of the Issuer (except, in any such case, a solvent winding-up solely for the purposes of a reorganization, reconstruction, amalgamation or the substitution in place of the Issuer of a “successor in business” of the Issuer, the terms of which reorganization, reconstruction, amalgamation or substitution do not provide for a claim to be made in the winding-up or administration of the Issuer in respect of the 2081 Capital Securities); or |
(ii) |
an administrator of the Issuer being appointed and such administrator giving notice that it intends to declare and distribute a dividend, |
(each, an “Additional Enforcement Event”), there shall be payable by the Issuer in respect of each Security (in lieu of any other payment by the Issuer), such amount, if any, as would have been payable to the Holder of such Security if, on the day prior to the commencement of the winding-up or such administration, as the case may be, and thereafter, such Holder were the holder of one of a class of preference shares in the capital of the Issuer (“Notional Preference Shares”) having an equal right to a return of assets in the winding-up or such administration, as the case may be, and so ranking pari passu with, the holders of Parity Obligations, but ranking junior to the claims of holders of all Senior Obligations (except as otherwise provided by mandatory provisions of law), on the assumption that the amount that such Holder was entitled to receive in respect of each Notional Preference Share on a return of assets in such winding-up or such administration, as the case may be, were an amount equal to the principal amount of the relevant Security and any accrued and unpaid interest and any outstanding Arrears of Interest (and, in the case of an administration, on the assumption that holders of preference shares were entitled to claim and recover in respect of their preference shares to the same degree as in a winding-up).
Nothing in this section “-Subordination-General” or “-Event of Default” shall affect or prejudice the payment of the costs, charges, expenses, indemnities, liabilities or remuneration of the Trustee or the Agents or the rights and remedies of the Trustee or the Agents in respect thereof.
Accordingly, and without prejudice to the rights of the Trustee or the Agents, the claims of Holders of all Senior Obligations will first have to be satisfied in any winding-up or administration before the Holders of any tranche of the 2081 Capital Securities may expect to obtain any recovery in respect of their 2081 Capital Securities, and prior thereto, Holders will have only limited ability to influence the conduct of such winding-up or administration. See “Risk Factors-Risks related to the Securities-Limited Remedies”.
No Set-off, etc.
Subject to applicable law, no Holder of any tranche of the 2081 Capital Securities may exercise, claim or plead any right of set-off, compensation or retention in respect of any amount owed to it by the Issuer in respect of, or arising under or in connection with, the relevant 2081 Capital Securities and each Holder of any tranche of the 2081 Capital Securities shall, by virtue of their holding of any Security, be deemed to have waived all such rights of set-off, compensation or retention. Notwithstanding the preceding sentence, if any of the rights and claims of any Holder of any tranche of the 2081 Capital Securities in respect of or arising under or in connection with the relevant 2081 Capital Securities are discharged by set-off, such Holder will, subject to applicable law, (and by acquiring the 2081 Capital Securities, will be deemed to have agreed that it shall) immediately pay an amount equal to the amount of such discharge to the Issuer or, if applicable, the liquidator, trustee, receiver or administrator of the Issuer and, until such time as payment is made, will hold a sum equal to such amount on trust for the Issuer or, if applicable, the liquidator, trustee, receiver or administrator in the Issuer’s winding-up or administration.
Accordingly, any such discharge will be deemed not to have taken place.
Definitions
As used in the “Description of Securities”, the following terms have the meanings set forth below:
“Accounting Event” shall be deemed to occur if, as a result of a change in accounting principles which becomes effective on or after the Issue Date, but not otherwise, the obligations of the Issuer under the relevant 2081 Capital Securities must not or may no longer be recorded as a “financial liability” in the next following audited annual consolidated financial statements of the Issuer prepared in accordance with IFRS or any other accounting standards that the Issuer may adopt in the future for the preparation of its audited annual consolidated financial statements in accordance with United Kingdom company law;
“Agent Bank” is the agent bank that entered into the calculation agent agreement with the Issuer dated as of June 4, 2021, which will initially be The Bank of New York Mellon, London Branch;
“Agents” means the Agent Bank and the Paying Agent or any of them;
“Additional Enforcement Event” has the meaning given to it under “-Subordination”;
“Arrears of Interest” has the meaning given to it under “-Optional Interest Deferral-Deferral of Payments”;
“Business Day” means a day, other than a Saturday, Sunday or public holiday, on which commercial banks and foreign exchange markets are open for general business in London and New York City;
“Calculation Amount” has the meaning given to it under “-Interest Payments-Interest Accrual”;
“Capital Event” shall be deemed to occur if the Issuer has received, and confirmed in writing to the Trustee that it has so received, confirmation from any Rating Agency then providing a solicited rating of the Issuer or any tranche of the 2081 Capital Securities at the invitation of, or with the consent of, the Issuer and in connection with which the relevant 2081 Capital Securities are assigned an equity credit, either directly or via a publication by such Rating Agency, that an amendment, clarification or change has occurred in its equity credit criteria which becomes effective on or after the Issue Date (or, if later, effective after the date on which the relevant 2081 Capital Securities are assigned “equity credit” by such Rating Agency for the first time) and as a result of which, but not otherwise, the relevant 2081 Capital Securities will no longer be eligible (or if the relevant 2081 Capital Securities have been partially or fully re-financed since the Issue Date and are no longer eligible for “equity credit” in part or in full as a result thereof, the relevant 2081 Capital Securities would no longer have been eligible as a result of such change had they not been re-financed) for the same, or a higher amount of, “equity credit” (or such other nomenclature that the Rating Agency may then use to describe the degree to which an instrument exhibits the characteristics of an ordinary share) as was attributed to the relevant 2081 Capital Securities at the Issue Date (or if “equity credit” is not assigned to the relevant 2081 Capital Securities by the relevant Rating Agency on the Issue Date, at the date on which “equity credit” is assigned by such Rating Agency for the first time);
“Change of Control” means the occurrence of an event whereby any person or any persons acting in concert (as defined in the City Code on Takeovers and Mergers), other than a holding company (as defined in Section 1159 of the Companies Act 2006 as amended) whose shareholders are or are to be substantially similar to the preexisting shareholders of the Issuer, shall become interested (within the meaning of Part 22 of the Companies Act 2006 as amended) in (A) more than 50% of the issued or allotted ordinary share capital of the Issuer or (B) shares in the capital of the Issuer carrying more than 50% of the voting rights normally exercisable at a general meeting of the Issuer; provided that, no Change of Control shall be deemed to occur if the event would otherwise have constituted a Change of Control occurs or is carried out for the purposes of a reorganizations on terms previously approved by the Holders of at least 75% in principal amount of the 2081 Capital Securities then outstanding;
“Change of Control Event” shall be deemed to occur if:
(a) |
a Change of Control occurs; and |
(b) |
any of the Issuer’s Senior Unsecured Obligations carry: |
(A) |
an investment grade credit rating (Baa3 BBB-, or their respective equivalents, or better) (an “Investment Grade Rating”), by any Relevant Rating Agency at the invitation of the Issuer; or |
(B) |
(where there is no credit rating from any Relevant Rating Agency assigned at the invitation of the Issuer), an Investment Grade Rating by any Relevant Rating Agency of its own volition, and |
(x) |
such rating is, within the Change of Control Period, either downgraded to a non-investment grade credit rating (Ba1 BB-, or their respective equivalents, or worse) (a “Non-Investment Grade Rating”) or withdrawn and is not, within the Change of Control Period, subsequently (in the case of a downgrade) upgraded or (in the case of a withdrawal) reinstated to an Investment Grade Rating by such Relevant Rating Agency; |
(y) |
and there remains no other Investment Grade Rating of any of the Issuer’s Senior Unsecured Obligations from any other Relevant Rating Agency; and |
(c) |
in making any decision to downgrade or withdraw an Investment Grade Rating pursuant to paragraph (b) above, such Relevant Rating Agency announces publicly or confirms in writing to the Issuer or the Trustee that such decision(s) resulted, in whole or in part, from the occurrence of the relevant Change of Control. |
Further, if at the time of the occurrence of the relevant Change of Control the Issuer’s Senior Unsecured Obligations are not assigned an Investment Grade Rating by any Relevant Rating Agency, a Change of Control Event will be deemed to occur upon the occurrence of a Change of Control alone.
If the rating designations employed by either Moody’s Investors Service Limited (“Moody’s”) or S&P Global Ratings Europe (“S&P”) are changed from those which are described in paragraph (b) of the definition of “Change of Control Event” above, or if a rating is procured from a Substitute Relevant Rating Agency, the Issuer shall determine the rating designations of Moody’s or S&P or such Substitute Relevant Rating Agency (as appropriate) as are most equivalent to the prior rating designations of Moody’s or S&P and the definition of “Change of Control Event” shall be construed accordingly;
“Change of Control Period” means the period commencing upon a Change of Control and ending 90 days after the Change of Control (or such longer period for which the Senior Unsecured Obligations are under consideration (such consideration having been announced publicly within the period ending 90 days after the Change of Control) for rating review, such period not to exceed 60 days after the public announcement of such consideration);
“Compulsory Arrears of Interest Settlement Event” shall have occurred if:
(a) |
a dividend (either interim or final), other distribution or payment was validly resolved on, declared, paid or made in respect of (i) ordinary shares of the Issuer, (ii) any obligations of the Issuer which rank or are expressed to rank pari passu with the ordinary shares of the Issuer or (iii) any obligations of any Subsidiaries of the Issuer benefiting from a guarantee or support agreement entered into by the Issuer which ranks, or is expressed to rank, pari passu with the ordinary shares of the Issuer, except where (x) such dividend, other distribution or payment was required to be resolved on, declared, paid or made exclusively in ordinary shares of the Issuer or in respect of any share option, or any free share allocation plan in each case reserved for directors, officers and/or employees of the Issuer or any of its affiliates or any associated liquidity agreements or any associated hedging transactions or (y) the Issuer is obliged under the terms of such securities or by mandatory operation of law to make such dividend, distribution or other payment; or |
(b) |
a dividend (either interim or final), other distribution or payment was validly resolved on, declared, paid or made in respect of any Parity Obligations of the Issuer, except where such dividend, distribution or |
payment was required to be declared, paid or made under the terms of such Parity Obligations of the Issuer or by mandatory operation of law; or
(c) |
the Issuer has redeemed, repurchased or otherwise acquired (i) any ordinary shares of the Issuer, (ii) any obligations of the Issuer which rank or are expressed to rank pari passu with the ordinary shares of the Issuer or (iii) any obligations of any Subsidiaries of the Issuer benefiting from a guarantee or support agreement entered into by the Issuer which ranks, or is expressed to rank, pari passu with the ordinary shares of the Issuer, except where (v) such repurchase or acquisition was undertaken in respect of any share option, or any free share allocation plan in each case reserved for directors, officers and/or employees of the Issuer or any of its affiliates or any associated liquidity agreements or any associated hedging transactions, (w) the Issuer is obliged under the terms of such securities or by mandatory operation of law to make such repurchase or acquisition or (x) such repurchase or acquisition was made by or on behalf of the Issuer as part of an intra-day transaction that does not result in an increase in the aggregate number of ordinary shares held by or on behalf of the Issuer as treasury shares at 8:30 a.m. London time on the Interest Payment Date on which any outstanding Arrears of Interest were first deferred, (y) such repurchase or acquisition results from hedging of any convertible securities issued by the Issuer or by any Subsidiary of the Issuer and guaranteed by the Issuer; or (z) such repurchase or acquisition results from the settlement of existing equity derivatives after the Interest Payment Date on which any outstanding Arrears of Interest were first deferred; |
(d) |
the Issuer, or any Subsidiary of the Issuer, has redeemed, repurchased or otherwise acquired any Parity Obligations of the Issuer, except where (x) such redemption, repurchase or acquisition is effected as a public cash tender offer or public exchange offer at a purchase price per security which is below its par value or (y) the Issuer, or any Subsidiary of the Issuer, is obliged under the terms of such securities or by mandatory operation of law to make such redemption, repurchase or acquisition or (z) such acquisition results from the conversion of any convertible securities issued by the Issuer or issued by a Subsidiary of the Issuer with a guarantee from the Issuer; |
“Deferred Interest Payment” has the meaning given to it under “-Optional Interest Deferral-Deferral of Payments”;
“Determination Agent” has the meaning given to it under “-Redemption-Make Whole Redemption by the Issuer”;
“First Fixed Interest Rate” has the meaning given to it under “-Interest Payments-First Fixed Interest Rate”;
“First Call Date” means the First Tranche 1 Call Date, the First Tranche 2 Call Date or the First Tranche 3 Call Date, as applicable;
“First Reset Date” means the First Tranche 1 Reset Date, the First Tranche 2 Reset Date or the First Tranche 3 Reset Date, as applicable;
“First Tranche 1 Call Date” means June 4, 2026;
“First Tranche 1 Reset Date” means September 4, 2026;
“First Tranche 2 Call Date” means March 4, 2031;
“First Tranche 2 Reset Date” means June 4, 2031;
“First Tranche 3 Call Date” December 4, 2050;
“First Tranche 3 Reset Date” means June 4, 2051;
“Interest Payment” means, in respect of an Interest Payment Date, the amount of interest payable on the relevant 2081 Capital Securities for the relevant Interest Period in accordance with “-Interest Payments”; “Interest Payment Date” means, in respect of the Tranche 1 Securities, March 4 and September 4 in each year, commencing on (and including) March 4, 2022, and the Maturity Date; in respect of the Tranche 2 Securities, June 4 and December 4 in each year, commencing on (and including) December 4, 2021; and, in respect of the Tranche 3 Securities, June 4 and December 4 in each year, commencing on (and including) December 4, 2021, subject in each case to adjustment as described under “-Interest Payments-Interest Rate”;
“Interest Period” means the period beginning on (and including) the Issue Date and ending on (but excluding) the relevant first Interest Payment Date and each successive period beginning on (and including) an Interest Payment Date and ending on (but excluding) the next succeeding Interest Payment Date;
“Interest Rate” means the relevant First Fixed Interest Rate and/or each Subsequent Fixed Interest Rate, as the case may be;
“Issue Date” has the meaning given to it under “-Interest Payments-Interest Rate”;
“Junior Obligations” means any shares in the capital of the Issuer (except for preference shares in the capital of the Issuer (if any)) or any other securities or obligations issued or owed by the Issuer (including guarantees or indemnities or support arrangements given by the Issuer in respect of securities or obligations owed by other persons) which rank, or are expressed to rank, junior to the 2081 Capital Securities or to the most junior class of preference shares in the capital of the Issuer;
“Make Whole Redemption Amount” has the meaning given to it under “-Redemption-Make Whole Redemption by the Issuer”;
“Mandatory Settlement Date” means the earlier of:
(a) |
the date on which a Compulsory Arrears of Interest Settlement Event occurs; |
(b) |
the next scheduled Interest Payment Date on which the Issuer pays interest on the relevant 2081 Capital Securities; or |
(c) |
the date on which the relevant 2081 Capital Securities are redeemed or repaid in accordance with “-Subordination”, “-Redemption” or “-Event of Default”; |
“Maturity Date” means, in respect of each Tranche of the 2081 Capital Securities, June 4, 2081, subject in each case to adjustment as described under “-Interest Payments-Interest Rate”;
“Parity Obligations” means (if any) (i) the most junior class of preference share capital in the Issuer ranking ahead of the ordinary shares in the capital of the Issuer and any other obligations of the Issuer, issued directly or indirectly by it, which rank, or are expressed to rank, pari passu with the relevant 2081 Capital Securities or such preference shares and (ii) any obligations of any Subsidiaries of the Issuer benefiting from a guarantee or support agreement entered into by the Issuer which ranks, or is expressed to rank, pari passu with the relevant 2081 Capital Securities or such preference shares;
As at the Issue Date (and for so long as the same remain outstanding), Parity Obligations include the Issuer’s:
1. |
£1,720,000,000 1.50% Subordinated Mandatory Convertible Bonds due 2022 (ISIN: XS1960589668); |
2. |
€500,000,000 Capital Securities due 2078 (ISIN: XS 1888179550); |
3. |
£500,000,000 Capital Securities due 2078 (ISIN: XS1888180996); |
4. |
U.S.$1,300,000,000 Capital Securities due 2078 (ISIN: XS1888180640); |
5. |
€2,000,000,000 Capital Securities due 2079 (ISIN: XS1888179477); |
6. |
U.S.$2,000,000,000 Capital Securities due 2079 (ISIN: US92857WBQ24); |
7. |
€1,000,000,000 Capital Securities due 2080 (ISIN: XS2225157424); and |
8. |
€1,000,000,000 Capital Securities due 2080 (ISIN: XS2225204010). |
“Qualifying Securities” has the meaning given to it under “-Substitution or Variation”;
“Rating Agency” means Fitch Ratings Limited, Moody’s or S&P or any of their respective affiliates or successors or any rating agency substituted for any of them by the Issuer from time to time;
“Redemption Margin” has the meaning given to it under “-Redemption-Make Whole Redemption by the Issuer”;
“Reference Bond” has the meaning given to it under “-Redemption-Make Whole Redemption by the Issuer”;
“Reference Bond Price” has the meaning given to it under “-Redemption-Make Whole Redemption by the Issuer”;
“Reference Bond Rate” has the meaning given to it under “-Redemption-Make Whole Redemption by the Issuer”;
“Reference Date” has the meaning given to it under “-Redemption-Make Whole Redemption by the Issuer”;
“Reference Government Bond Dealer” has the meaning given to it under “-Redemption-Make Whole Redemption by the Issuer”;
“Reference Government Bond Dealer Quotations” has the meaning given to it under “-Redemption-Make Whole Redemption by the Issuer”;
“Remaining Term Interest” has the meaning given to it under “-Redemption-Make Whole Redemption by the Issuer”;
“Relevant Date” means (i) in respect of any payment other than a sum to be paid by the Issuer in a winding-up or administration of the Issuer, the date on which such payment first becomes due and payable but, if the full amount of the moneys payable on such date has not been received by the Principal Paying Agent or the Trustee on or prior to such date, the Relevant Date means the date on which such moneys shall have been so received and notice to that effect shall have been given to the Holders, and (ii) in respect of a sum to be paid by the Issuer in a winding-up or administration of the Issuer, the date which is one day prior to the date on which an order is made or a resolution is passed for the winding-up or, in the case of an administration, one day prior to the date on which any dividend is distributed;
“Relevant Rating Agency” means Moody’s or S&P or any of their respective affiliates or successors or any rating agency (a “Substitute Relevant Rating Agency”) substituted for any of them by the Issuer from time to time;
“Reset Date” means the First Reset Date and each date falling on the fifth anniversary of the First Reset Date;
“Reset Interest Determination Date” means the second U.S. Government Business Day prior to the relevant Reset Date;
“Reset Period” means the period from one Reset Date to (but excluding) the next following Reset Date;
“Senior Obligations” means all obligations of the Issuer, issued directly or indirectly by it, other than Parity Obligations and Junior Obligations;
“Senior Unsecured Obligations” means any of the Issuer’s senior unsecured obligations;
“Similar Security” has the meaning given to it under “-Redemption-Make Whole Redemption by the Issuer”; “Subsequent Fixed Interest Rate” has the meaning given to it under “-Interest Payments-Subsequent Fixed Interest Rates”;
“Special Event” means any of an Accounting Event, a Capital Event, a Tax Event or a Withholding Tax Event or any combination of the foregoing;
“Subsidiary” means a subsidiary within the meaning of Section 1159 of the Companies Act 2006;
“Substitution or Variation Event” has the meaning given to it under “-Substitution or Variation”;
“successor in business” means, in relation to a company, any other company which:
(a) |
owns beneficially the whole or substantially whole of the undertaking, property and assets owned by such company immediately prior thereto; and |
(b) |
carries on, as successor to such company, the whole or substantially the whole of the business carried on by such company immediately prior thereto; |
“Tax Event” shall be deemed to have occurred if as a result of a Tax Law Change:
(a) |
in respect of, or as a result of, the Issuer’s obligation to make any Interest Payment on the next following Interest Payment Date, the Issuer would not be entitled to claim a deduction in computing its taxation liabilities in its jurisdiction of incorporation, and any other territory or authority or additional territory or authority to whose taxing jurisdiction the Issuer has become subject (the “Relevant Jurisdiction”) or such entitlement is materially reduced or materially delayed (a “disallowance”); |
(b) |
the relevant 2081 Capital Securities are prevented from being treated as loan relationships for tax purposes in the Relevant Jurisdiction; or |
(c) |
in respect of the Issuer’s obligation to make any Interest Payment on the next following Interest Payment Date, where a deduction arises in respect of such Interest Payment the Issuer would not to any material extent be entitled to have such deduction set against the profits of companies with which it is grouped for applicable tax purposes in the Relevant Jurisdiction (whether under the group relief system current as at the Issue Date or any similar system or systems having like effect as may from time to time exist) otherwise than as a result of a disallowance within (a), |
and, in each case, the Issuer cannot avoid the foregoing in connection with the relevant tranche of the 2081 Capital Securities by taking measures reasonably available to it, provided measures reasonably available to the Issuer shall not include allocating a disallowance provided for in (a) above to any other company or security;
“Tax Law Change” means a change in or proposed change in, or amendment or proposed amendment to, the laws or regulations of the Relevant Jurisdiction or any political subdivision or any authority thereof or therein having the power to tax, including any treaty to which the Relevant Jurisdiction is a party, or any change in the application of official or generally published interpretation of such laws or regulations, including a decision of any court or tribunal, or any interpretation or pronouncement by any relevant tax authority that provides for a position with respect to such laws or regulations or interpretation thereof that differs from the previously generally accepted position in relation to similar transactions, which change or amendment becomes, or would become, effective on or after the Issue Date;
“United Kingdom” means the United Kingdom of Great Britain and Northern Ireland;
“U.S. dollar”, “U.S.$” and “cent” mean the lawful currency of the United States of America; and
a “Withholding Tax Event” shall be deemed to occur if as a result of a Tax Law Change, in making any payments on the relevant 2081 Capital Securities, the Issuer has paid or will or would on the next Interest Payment Date be required to pay Additional Amounts on the relevant 2081 Capital Securities and the Issuer cannot avoid the foregoing in connection with the relevant 2081 Capital Securities by taking measures reasonably available to it.
Other Terms Applicable to All Capital Securities
Further Issuances
The Company may, without the consent of Holders, create and issue further Capital Securities of a given tranche ranking pari passu with each of the outstanding Capital Securities and with the same terms as the outstanding Capital Securities of the relevant tranche (save for the date from which interest thereon accrues and the amount of the first payment of interest on such further Capital Securities) and so that such further issue shall be consolidated and form a single series with the outstanding Capital Securities of the relevant tranche for all purposes of the indenture, including without limitation, with respect to amendments, waivers, redemptions and offers to purchase, provided that if any such additional Capital Securities are not fungible with the Capital Securities of the relevant tranche for United States federal income tax purposes, such additional Capital Securities will have a separate CUSIP or other identifying number.
Principal and Maturity
Unless previously redeemed, purchased, cancelled or substituted, each tranche of the Capital Securities will mature on the Maturity Date and holders will be entitled to receive 100% of the principal amount of the relevant Capital Securities, together with any accrued and unpaid interest and any outstanding Arrears of Interest.
Optional Interest Deferral
Deferral of Payments
The Company may, at the Company’s discretion, elect to defer all or part of any Interest Payment (a “Deferred Interest Payment”) which is otherwise scheduled to be paid on an Interest Payment Date by giving notice (a “Deferral Notice”) of such election to the Holders of any tranche of the Capital Securities in accordance with the notice provisions set forth in the indenture, the Trustee and the Principal Paying Agent not more than 14 nor less than 7 Business Days prior to the relevant Interest Payment Date. Subject to conditions set forth in “-Optional Interest Deferral-Mandatory Settlement”, if the Issuer elects not to make all or part of any Interest Payment on an Interest Payment Date, then it will not have any obligation to pay such interest on the relevant Interest Payment Date and any such non-payment of interest will not constitute an Event of Default or any other breach of its obligations under the relevant Capital Securities or for any other purpose.
Arrears of Interest (as defined in the Capital Securities Prospectus Supplements) may be satisfied at the option of the Issuer in whole or in part at any time (the “Optional Deferred Interest Settlement Date”) following delivery of a notice to such effect given by the Issuer to the Holders of any tranche of the Capital Securities in accordance with the notice provisions set forth in the indenture, the Trustee and the Principal Paying Agent not more than 14 nor less than 7 Business Days prior to the relevant Optional Deferred Interest Settlement Date informing them of its election to so satisfy such Arrears of Interest (or part thereof) and specifying the relevant Optional Deferred Interest Settlement Date.
Any Deferred Interest Payment shall itself bear interest (such further interest, together with the Deferred Interest Payment, being “Arrears of Interest”), at the Interest Rate prevailing from time to time, from (and including) the date on which (but for such deferral) the Deferred Interest Payment would otherwise have been due to be made to (but excluding) the relevant Optional Deferred Interest Settlement Date or, as appropriate, such other date on which such Deferred Interest Payment is paid in connection with a Mandatory Settlement as set forth in the Capital Securities Prospectus Supplements, in each case such further interest being compounded on each Interest Payment Date.
Non-payment of Arrears of Interest shall not constitute a default by the Issuer under the relevant Capital Securities or for any other purpose, unless such payment is required in connection with a Mandatory Settlement.
Mandatory Settlement
Notwithstanding the provisions above relating to the ability of the Issuer to defer Interest Payments, the Company will pay any outstanding Arrears of Interest, in whole but not in part, on the first occurring Mandatory Settlement Date following the Interest Payment Date on which a Deferred Interest Payment first arose (“Mandatory Settlement”).
Redemption
Final Redemption
Unless previously redeemed, purchased, cancelled or substituted, each tranche of the Capital Securities will be redeemed at 100% of their principal amount, together with any accrued and unpaid interest and any outstanding Arrears of Interest, on June 4, 2081. The Capital Securities may not be redeemed at the option of the Issuer other than in accordance with the provisions set forth under “-Redemption”.
Issuer’s Call Option
The Company may, by giving not less than 10 but not more than 60 calendar days’ notice to the Trustee, the Principal Paying Agent and the Holders of any tranche of the Capital Securities in accordance with the notice provisions set forth in the indenture (which notice shall be irrevocable), redeem all, but not less than all, of the relevant Capital Securities on (i) any date during the period commencing on (and including) the First Call Date to (and including) the First Reset Date or (ii) any Interest Payment Date thereafter at their principal amount, together with any accrued and unpaid interest up to (but excluding) the redemption date and any outstanding Arrears of Interest. Upon the expiry of such notice, the Company will redeem the relevant tranche of the Capital Securities.
Preconditions to Special Event Redemption, Change of Control Event Redemption, and Substitution and Variation
Prior to giving any notice of redemption pursuant to the provisions set for under “-Redemption” (other than redemption pursuant to “-Redemption-Issuer’s Call Option” or “-Redemption-Make Whole Redemption by the Issuer”) or any notice of substitution or variation pursuant to the provisions set forth in”-Substitution or Variation”, the Company will deliver to the Trustee an Officer’s Certificate in form satisfactory to the Trustee stating that the relevant requirement or circumstance giving rise to the right to redeem, substitute or vary is satisfied, and where the relevant Special Event requires measures reasonably available to the Issuer to be taken, the relevant Special Event cannot be avoided by the Issuer taking such measures. In relation to a substitution or variation pursuant to the provisions set forth in “-Substitution or Variation”, such certificate shall also include further certifications that the criteria specified in paragraphs (a) to (d) of the definition of Qualifying Securities will be satisfied by the Qualifying Capital Securities upon issue and that such determinations were reached by the Issuer in consultation with an independent investment bank or counsel of international standing. The Trustee may rely absolutely upon and shall be entitled to accept such Officer’s Certificate without any liability to any person for so doing and without any further inquiry as sufficient evidence of the satisfaction of the conditions precedent set out in such paragraphs in which event it shall be conclusive and binding on the Holders.
Any redemption of any tranche of the Capital Securities in accordance with conditions set forth under “-Redemption-Issuer’s Call Option,-Redemption for Certain Taxation Reasons,-Redemption for Rating Reasons,-Redemption for Accounting Reasons or-Redemption for Change of Control Event”, shall be conditional on all outstanding Arrears of Interest being paid in full in accordance with the provisions under “-Optional Interest Deferral” on or prior to the date thereof, together with any accrued and unpaid interest up to (but excluding) such redemption, substitution or, as the case may be, variation date.
The Trustee is under no obligation to ascertain whether any Special Event or Change of Control Event or Change of Control or any event which could lead to the occurrence of, or could constitute, any such Special Event, Change of Control Event or Change of Control, has occurred and, until it shall receive an Officer’s Certificate pursuant to the indenture to the contrary, the Trustee may assume that no such Special Event, Change of Control Event or Change of Control or such other event has occurred.
Governing Law
The Capital Securities and the indenture will be governed by and construed in accordance with the laws of the State of New York, except that, the subordination provisions of the Capital Securities will be governed by and construed in accordance with English law. For the avoidance of doubt, the payment of the costs, charges, expenses, indemnities, liabilities or remuneration of the Trustee or the Agents shall be governed by the laws of the State of New York.
Event of Default
For the avoidance of doubt, the events of default provisions of the base indenture describing certain events of default other than payment defaults (Sections 501(3)-(10)), providing for acceleration (Section 502), providing for collection suits (Section 503) and providing for limitations on suits (Section 507), as described in the accompanying prospectus under the caption “Description of Debt Securities We May Offer-Default and Related Matters-Events of Default,” shall not apply to the Capital Securities.
Proceedings
If a default is made by the Issuer for a period of 14 days or more in the payment of any principal or premium (if any) or 21 days or more in the payment of any interest, in each case in respect of any tranche of the Capital Securities and which is due (an “Event of Default”), then the Issuer shall, without notice from the Trustee, be deemed to be in default under the indenture and the relevant Capital Securities and the Trustee at its sole discretion may, notwithstanding the provisions set forth under “-Event of Default-Enforcement” in the Capital Securities Prospectus Supplements but subject to the provisions set forth under “-Event of Default-Entitlement of Trustee”, institute proceedings for the winding-up of the Issuer and/or prove and/or claim in the winding-up or administration of the Issuer, such claim being subordinated, and for the amount, as provided in “-Subordination-General”.
Enforcement
The Trustee may, at its discretion (subject to the provisions set forth under “-Event of Default-Entitlement of Trustee”) and without further notice, institute such proceedings or take such steps or actions against the Issuer as it may think fit to enforce any term or condition binding on the Issuer under the indenture or the relevant tranche of the Capital Securities, but in no event shall the Issuer, by virtue of the institution of any such proceedings, steps or actions, be obliged to pay any sum or sums sooner than the same would otherwise have been payable by it.
Entitlement of Trustee
The Trustee shall not be bound to take any of the actions referred to in the provisions set forth under “-Event of Default-Proceedings” or “-Event of Default-Enforcement” above against the Issuer to enforce the terms of the indenture or any tranche of the Capital Securities at the request of the Holders of the relevant Capital Securities or take any other action or step under or pursuant to the terms of the relevant Capital Securities or the indenture unless (i) it shall have been so directed or requested in writing by the Holders of any tranche of the Capital Securities of at least 25% in principal amount of the relevant Capital Securities then outstanding and (ii) it shall have been indemnified and/or secured and/or prefunded to its satisfaction. However, if an Event of Default or Additional Enforcement Event has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by the indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the request of the Holders of any tranche of the Capital Securities of at least 25% in principal amount of the relevant Capital Securities then outstanding.
Right of Holders
No Holder of any tranche of the Capital Securities shall be entitled to proceed directly against the Issuer or to institute proceedings for the winding-up or to prove or claim in the winding-up or administration of the Issuer (except actions for payment of overdue principal, premium or interest) unless the Trustee, having become so bound to proceed, institute, prove or claim, fails or is unable to do so within a 60 day period and such failure or inability shall be continuing, in which case such Holder shall have only such rights against the Issuer as those which the Trustee is entitled to exercise as set out in this section.
Extent of Holders’ remedy
No remedy against the Issuer, other than as referred to in this Event of Default section, shall be available to the Trustee or the Holders of any tranche of the Capital Securities, whether for the recovery of amounts owing in respect of the relevant Capital Securities or under the indenture or in respect of any breach by the Issuer of any of its other obligations under or in respect of the relevant Capital Securities or under the indenture. For the avoidance of doubt, nothing in the foregoing shall prevent the Trustee from proving in any winding-up or administration of the Issuer and/or claiming in any winding-up or administration of the Issuer (even if not instituted by the Trustee).
Payment of Additional Amounts
All payments on the Capital Securities will be made without deducting U.K. withholding taxes, except as required by law. If any such deduction is required on payments to non-U.K. investors, the Company will pay additional amounts on those payments to the extent described under “Description of Debt Securities We May Offer-Payment of Additional Amounts” in the accompanying prospectus. Notwithstanding the foregoing, any amounts to be paid on the Capital Securities by or on behalf of the Issuer, will be paid net of any deduction or withholding imposed or required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), or otherwise imposed pursuant to Sections 1471 through 1474 of the Code (or any regulations thereunder or official interpretations thereof) or an intergovernmental agreement between the United States and another jurisdiction facilitating the implementation thereof (or any fiscal or regulatory legislation, rules or practices implementing such an intergovernmental agreement) (any such withholding or deduction, a “FATCA Withholding”). Neither the Issuer nor any person will be required to pay any additional amounts in respect of FATCA Withholding.
Regarding the Trustee
The Company and some of its subsidiaries maintain banking relations with the Trustee in the ordinary course of its business.
If an event of default occurs, or an event occurs that would be an event of default if the requirements for giving us notice of the default or its default having to exist for a specified period of time were disregarded, the Trustee may be considered to have a conflicting interest with respect to the Debt Securities or the Indenture for purposes of the Trust Indenture Act of 1939. In that case, the Trustee may be required to resign as trustee under the Indenture and the Company would be required to appoint a successor trustee.
Exhibit 4.3
Date: |
1/26/2023 |
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Barclays
European Loans Agency
1 Churchill Place
London
E14 5HP
For the attention of Aliraza Moledina, European Loans Agency
Vodafone Group Plc - USD 3,935,000,000 (as increased to USD 4,004,000,000) Credit Agreement originally dated 27 February 2015 and as amended pursuant to an amendment agreement dated 10 March 2021 (“RCF”).
Included within the RCF referenced above is an Extension Option, Section 6. Whereby, Vodafone may give notice to the Facility Agent not more than 60 days and not less than 30 days before the second anniversary that it wishes to request that the Final Maturity Date be extended for a further period of one year i.e. extend the current Maturity Date of 10 March 2027 to 10 March 2028.
Please accept this letter as confirmation that Vodafone wishes to apply for such a one-year extension in accordance with Section 6 of the RCF. In your role as Facility Agent please can you communicate this request to all Lenders and collate the Lender responses by Friday 10 February 2023.
If you have any questions or require clarification, please do not hesitate to contact Jamie Stead, Vodafone Group Treasury Director.
Yours faithfully,
Jamie Stead
Group Treasury Director
Vodafone Group Plc |
T +44 (0) 1635 33251 |
1 Kingdom Street, Paddington Central |
F +44 (0) 1635 238 080 |
London, W2 6BY, United Kingdom |
vodafone.com |
Registered office: Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN, United Kingdom, Registered in England No. 01833679
Exhibit 4.20
Jean-Francois van Boxmeer |
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Chairman |
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November 2022 |
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STRICTLY PRIVATE & CONFIDENTIAL |
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To: Christine Ramon
c/o Vodafone Group Ple
Vodafone House
The Connection
Newbury
Berkshire RG14 2FN
DEAR CHRISTINE
NON-EXECUTIVE DIRECTORSHIP OF VODAFONE GROUP PUBLIC LIMITED COMPANY
Further to our discussions, I am writing this letter on behalf of the Board of Directors to confirm the terms of your appointment as a non-executive director of Vodafone Group Public Limited Company (the “Company”) with effect from the date of this letter (the “Effective Date”).
Your obligations and responsibilities as a non-executive director are to the Company and, like all directors, you should act at all times in the best interests of the Company, exercising your independent judgment on all matters. Non-executive directors have the same general legal responsibilities to the Company as any other director. The Board as a whole is collectively responsible for promoting the success of the Company by directing and supervising the Company’s affairs. Your appointment as a non-executive director of the Company is subject to the Company’s Articles of Association (the “Articles”) and the latter will prevail in the event of any conflict between them and the terms of this letter. A copy of the current version of the Articles is available on the Company’s website at www.vodafone.com.
In my view, the role of the non-executive director has a number of key elements and I look forward to your contribution in these areas:
● | Purpose & Strategy: you should constructively challenge and contribute to the development of the Company’s purpose and strategy; |
● | Performance: you should scrutinise the performance of management in meeting agreed goals and objectives and monitor the reporting of performance; |
● | Risk: you should satisfy yourself that financial information is accurate and that financial controls and systems of risk management are robust and defensible; |
● | People: non-executive directors are responsible for determining appropriate levels of remuneration of executive directors, have a prime role in succession planning and appointing, and where necessary removing, senior management; and |
● | Culture: non-executive directors are responsible for ensuring that the values of the Company are unambiguous and embody the behaviours required to deliver the Company’s strategic goals. You should satisfy yourself that management are taking the appropriate action to achieve and maintain the desired culture. |
1 Appointment and Terms
Subject to the terms of this letter, your appointment as a director will commence on the Effective Date.
The Articles require that all directors retire each year at the Annual General Meeting. The Nominations and Governance Committee each year reviews and considers the submission of the directors for re-election and considers the membership of the Board committees. In the event that you submit yourself (with the agreement of the Nominations and Governance Committee) for re-election at an Annual General Meeting but you are not elected, your appointment as director will automatically terminate at the end of that Annual General Meeting. Your appointment will also terminate if you cease to be a director in accordance with any other provision of the Articles, or if either we give you, or you give us, one months’ written notice of termination. You will not be entitled to receive any compensation from the Company in respect of the termination of your appointment. In accordance with the recommendations of the UK Corporate Governance Code, after nine years’ service on the Board, a director may not be considered independent.
Overall, we anticipate a time commitment from you involving attendance at all Board meetings (the Company currently has eight each year), the Annual General Meeting (usually held in July each year) and at least one company/site visit per year.
You will be expected to devote appropriate preparation time ahead of each meeting. In addition, you will be asked to join at least one of the principal Board Committees. Each Committee meets about four or five times a year (and in some cases more frequently) and you are expected to attend all the meetings of the Committee(s) of which you are member. There may be additional demands on your time during any period of increased corporate activity (such as an acquisition or a takeover) or when major issues arise.
By accepting this appointment, you have confirmed that you are able to allocate sufficient time to meet the expectations of your role. If you are unable to attend a Board meeting or Committee meeting in person, I hope, nevertheless, that you will be able to join those meetings either by videoconference or teleconference facilities.
To ensure you do not become over-boarded, you must obtain my agreement before accepting additional commitments that might affect the time you are able to devote to your role as a non-executive director of the Company.
As a director you are under a duty to avoid conflicts of interest. Vodafone has a protocol on Director’s conflicts of interest which will be sent to you prior to you joining the Board. This protocol may be revised from time to time with the Board’s approval and you will be subject to the current version of it.
2 Fees
As you will be a non-executive director of the Company, the Board as a whole will determine your remuneration in accordance with the requirements of good corporate governance, and the Financial Conduct Authority’s Listing Rules. The fee for your services is £115,000.00 per annum and it is paid in equal instalments monthly in arrears. No separate fee is payable for membership of a Board Committee (unless you are the Chair of the Committee). You will also be entitled to be repaid all travelling and other expenses properly incurred in performing your duties in accordance with the Articles and Company policy. Payment of all fees will cease immediately after your appointment as a non-executive director of the Company terminates for any reason.
3 Dealing in the Company’s shares
You shall (and you shall ensure that your “closely associated persons”, including your spouse, any dependent children and associated legal entities shall) comply with the provisions of the Market Abuse Regime (MAR), Criminal Justice Act 1993, the Financial Services and Markets Act 2000 and rules and regulations laid down by the Company from time to time in relation to dealing in the Company’s shares. Further guidance is available from the Company Secretary.
4 Competitive Businesses
In view of the sensitive and confidential nature of the Company’s business you agree that for so long as you are a non-executive director of the Company you will not, without the consent of the Board, which shall not be withheld unreasonably, be engaged or interested in any capacity in any business or with any company which is, in the reasonable opinion of the Board, competitive with the business of any company in the Group. In the event that you become aware of any potential conflicts of interest, these should be disclosed to me and to the Company Secretary as soon as possible.
5 Confidentiality
You agree that you will not make use of, divulge or communicate to any person (except in the proper performance of your duties) any of the trade secrets or other confidential information of or relating to any company in the Group which you have received or obtained from or through the Company. This restriction shall continue to apply after the termination of your appointment without limit in point of time but shall cease to apply to information or knowledge which comes into the public domain otherwise than through your default or which shall have been received by you from a third party entitled to disclose the same to you.
Your attention is also drawn to the requirements under both legislation and regulation as to the disclosure of inside information. Consequently, you should avoid making any statements that might risk a breach of these requirements without prior clearance from me or from the Company Secretary. Please note that all media enquiries concerning the Company must be referred immediately to the Group External Affairs Director.
6 Illness or Incapacity
If you are prevented by illness or incapacity from carrying out your duties for a period exceeding three consecutive calendar months or at different times for a period exceeding in aggregate three calendar months in any one period of twelve calendar months or if you become prohibited by law or under the Articles from being a non-executive director of the Company, then the Company may terminate your appointment immediately.
7 Effect of Termination
Upon termination of your appointment howsoever arising, you shall immediately or upon request of the Company, resign from office as a non-executive director of the Company and all other offices held by you in any other companies in the Group and your membership of any organisation acquired by virtue of your tenure of any such office, and should you fail to do so, the Company is hereby irrevocably authorised to appoint some person in your name and on your behalf to sign any documents and do anything necessary or requisite to give effect thereto.
8 Return of Company Property
You agree that upon termination of your appointment as a non-executive director, you will immediately deliver to the Company all property belonging to the Company or any member of its Group, including all documents or other records made or compiled or acquired by you during your appointment concerning the business, finances or affairs of the Group.
9 Independent Professional Advice
In accordance with the UK Corporate Governance Code, the Board has agreed procedures for Directors in the furtherance of their duties to take independent professional advice if necessary, at the Company’s expense. Naturally, if you have any queries or difficulties at any time please feel free to discuss them with me. I am also available at all times to provide you with information and advice you may need.
10 Indemnification and Insurance
You will have the benefit of the following indemnity in relation to liability incurred in your capacity as a Director of the Company. This indemnity is as wide as English law currently permits:
(i) | The Company will provide funds to cover costs as incurred by you in defending legal proceedings brought against you in your capacity as, or as a result of your being or having been, a Director of the Company including criminal proceedings and proceedings brought by the Company itself or an Associated Company; |
(ii) | The Company will indemnify you in respect of any proceedings brought by third parties, including both legal and financial costs of an adverse judgment brought against you in your capacity as, or as a result of your being or having been, a Director of the Company; and |
(iii) | The Company will indemnify you for liability incurred in connection with any application made to a court for relief from liability, where the court grants such relief. |
For the avoidance of doubt, the indemnity granted does not cover:
(iv) | Unsuccessful defence of criminal proceedings, in which instance the Company would seek reimbursement for any funds advanced; |
(v) | Unsuccessful defence of an action brought by the Company itself or an Associated Company, in which instance the Company would seek reimbursement for any funds advanced; |
(vi) | Fines imposed by regulatory bodies; |
(vii) | Fines imposed in criminal proceedings; and |
(viii) | Liability incurred in connection with any application under Section 661(3) or (4) of the Companies Act 2006 (acquisition of shares by innocent nominee) or section 1157 of the Companies Act 2006 (general power to grant relief in case of honest and reasonable conduct), where the court refuses to grant you relief, and such refusal is final. |
You will notify the Company as soon as reasonably practicable upon becoming aware of any claim or potential claim against you.
The Company maintains Directors and Officers insurance as additional cover for Directors which, if the insurance policy so permits, may provide funds in circumstances where the law prohibits the Company from indemnifying directors. Further information will be provided by the Company Secretary.
11 Review Process
The performance of individual directors and the whole Board and its committees is evaluated annually. If, in the interim, there are any matters which cause you concern about your role, please discuss them with me as soon as is appropriate.
12 Contract for Services
It is agreed that you will not be an employee of the Company or any of its subsidiaries and that this letter shall not constitute a contract of employment.
13 Personal data
You acknowledge that, during your appointment, you may have access to and may process, or authorise the processing of, personal data (as defined for the purposes of UK and EU laws) that is held and controlled by a member of the Group. You agree to comply with those laws and the data protection policies issued from time to time by the Group in relation to such data. The Company (and other members of the Group and its and their employees and agents) may from time to time hold, process and disclose your personal data in accordance with the terms of the Company’s privacy notice or data protection policy in force from time to time (the current version can be obtained from the Company Secretary).
In this letter:
“Board” |
means the board of directors of the Company from time to time or any person or committee nominated by the board of directors as its representative or to whom (and to that extent) it has delegated powers for the purposes of this letter. |
“Group” |
means the Company and any other company which is its subsidiary or in which the Company or any subsidiary of the Company controls not less than 25% of the voting shares (where “subsidiary” has the meaning given to it by section 736 of the Companies Act 1985). |
This letter shall be governed by and construed in accordance with English Law. Both parties submit to the exclusive jurisdiction of the English Courts as regards any claim or matter arising in connection with the terms of this letter.
Please acknowledge receipt and acceptance of the terms of this letter by signing the enclosed copy and returning it to the Company Secretary. I am greatly looking forward to working with you.
Kind regards.
Yours sincerely
I hereby accept that the terms of this letter constitute the terms of my appointment as a non-executive director of the Company
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Signed |
Dated 14 November 2022 |
Vodafone Group Plc |
Vodafone House, The Connection, Newbury, Berkshire RG14 2FN, England |
T +44 (0)1635 33251 P +44 (0)1635 580857 www.vodafone.com |
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Registered Office Vodafone House, The Connection, Newbury, Berkshire RG14 2FN, England Registered in England No. 1833679 |
C2 General Dated: 13 June 2023 VODAFONE GROUP PUBLIC LIMITED COMPANY and Margherita Della Valle SERVICE AGREEMENT Exhibit 4.21 |
EXECUTED as a DEED on behalf of VODAFONE GROUP PUBLIC LIMITED COMPANY /s/ Leanne Wood Leanne Wood /s/ James Ludlow Name: James Ludlow Occupation: Group Reward & Policy Director, VGSL EXECUTED as a DEED by /s/ Margherita Della Valle Margherita Della Valle /s/ Geraldine McTaggart Name: Geraldine McTaggart Occupation: Personal Assistant to Group CEO 17 |
Non-authoritative consolidated version Privileged and Confidential CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. Investment Agreement relating to the establishment of the co-controlled towers joint venture (Oak Holdings 1 GmbH) Dated 9 November 2022 Vodafone GmbH and SCUR-Alpha 1539 GmbH (in future: Oak Consortium GmbH) relating to the establishment of the co-controlled towers joint ven-ture Oak Holdings 1 GmbH (as amended by (i) the Amendment Agreement to the Investment Agreement dated 12 December 2022 (roll of deeds no. 2167/22 BR of notary public Dr. Florian Braunfels in Düsseldorf) and (ii) 2nd Amendment Agreement to the Investment Agreement dated 22 March 2023 (roll of deeds no. 567/23 Br of notary public Dr. Florian Braunfels in Düs-seldorf)) Ref: L-328433 Exhibit 4.25 |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. Table of Contents Preamble............................................................................................................................... 1 1 Interpretation ......................................................................................................................... 2 2 Transaction Steps ............................................................................................................... 14 3 Sale and Transfer................................................................................................................ 16 4 Capital Increases and Subscriptions................................................................................... 17 5 Takeover Offer..................................................................................................................... 19 6 Conditions to Closing .......................................................................................................... 21 7 Closing ................................................................................................................................ 26 8 VF Germany’s Representations and Warranties................................................................. 29 9 Investor’s Representations and Warranties ........................................................................ 29 10 Legal Consequences .......................................................................................................... 30 11 Period between Signing and Closing.................................................................................. 38 12 Leakage............................................................................................................................... 42 13 Integration and Post-Closing Actions .................................................................................. 44 14 Tax....................................................................................................................................... 45 15 Public Announcements and Confidentiality......................................................................... 45 16 Termination.......................................................................................................................... 46 17 Miscellaneous Provisions.................................................................................................... 47 |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. This Investment Agreement (the “Agreement”) is made on 9 November 2022 between: (1) Vodafone GmbH, a limited liability company incorporated under the laws of Germany, reg-istered with the commercial register of the local court of Düsseldorf under register number HRB 38062, whose registered office is at Ferdinand-Braun-Platz 1, 40549 Düsseldorf, Ger-many, – herein also referred to as “VF Germany” – and (2) SCUR-Alpha 1539 GmbH (in future: Oak Consortium GmbH), a limited liability company incorporated under the laws of Germany, registered with the commercial register of the local court of Munich under register number HRB 278102, whose registered office is at c/o Latham & Watkins LLP, Dreischeibenhaus 1, 40211 Düsseldorf, Germany, – herein also referred to as “Investor” – VF Germany and the Investor are herein also referred to as the “Parties” and each of them as a “Party”. Preamble (A) Vodafone Group Plc is the parent company of VF Group, an international group providing telecommunication and technology services. (B) VF Germany is a wholly-owned indirect subsidiary of Vodafone Group Plc providing tele-communication and technology services in the German market. (C) VTG is the parent company of a European group of companies operating and marketing vertical passive mobile communications network infrastructure. The registered share capital of VTG of EUR 505,782,265.00 is divided in 505,782,265 no-par value shares (nennwertlose Stückaktien). VTG’s shares are listed on the regulated market (regulierter Markt) of the Frankfurt Stock Exchange with simultaneous listing in the subsegment of the regulated mar-ket with additional post-admission obligations (Prime Standard) of the Frankfurt Stock Ex-change. (D) At the date of this Agreement, VF Germany holds 413,347,708 no-par value shares in VTG (the “VF VTG-Shares”), corresponding to a shareholding of approx. 81.72% in VTG. The VF VTG-Shares are held by VF Germany in two separate securities deposits: 275,000,000 of the VF VTG-Shares are held in one sub-account (the “VF Sub-Account 1 VTG-Shares”) and 138,347,708 VF VTG-Shares are held in another sub-account (the “VF Sub-Account 2 VTG-Shares”). (E) The Investor is a German limited liability company which is indirectly jointly controlled by Global Infrastructure Management, LLC, and investment funds, vehicles and/or accounts advised and managed by various subsidiaries of KKR & Co. Inc. (F) VF Germany and the Investor intend to establish a Co-Controlled joint venture which shall hold the towers business of VTG Group (the “Transaction”). For such purpose VF Germany has already established MidCo 1, MidCo 2 and BidCo. MidCo 1, MidCo 2 and BidCo have |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. not prior to the date hereof, and will not prior to Closing, pursue any business activities other than the activities provided for in this Agreement. • MidCo 1 has a share capital of 25,000 shares (Geschäftsanteile), divided into 25,000 shares of a nominal amount of EUR 1.00 each. All shares in MidCo 1 are currently held by VF Germany. • MidCo 2 has a share capital of 25,000 shares (Geschäftsanteile), divided into 25,000 shares of a nominal amount of EUR 1.00 each. All shares in MidCo 2 are currently held by MidCo 1. • BidCo has a share capital of 25,000 shares (Geschäftsanteile), divided into 25,000 shares of a nominal amount of EUR 1.00 each. All shares in BidCo are currently held by MidCo 2. (G) In order to implement the Transaction, the Parties intend that: • BidCo will make a Takeover Offer for all shares in VTG, • VF Germany will, prior to Closing, contribute certain VF VTG-Shares to MidCo 1 against issuance of new shares in MidCo 1 to VF Germany, • The contributed VF VTG-Shares will then be rolled down for equity to MidCo 2 by contributing the shares as in-kind contribution as a capital increase to MidCo 2 against issuance of new shares in MidCo 2 to MidCo 1,, • Following satisfaction of the Closing Conditions • VF Germany will sell and transfer up to 50% of the shares in MidCo 1 to Investor subject to the condition precedent that BidCo acquires control within the meaning of Section 29 para. 2 Takeover Act over VTG, • MidCo 2 contributes the contributed VF VTG-Shares as in-kind contribution as a capital increase to BidCo against issuance of new shares in BidCo to MidCo 2, • Investor shall make a cash contribution to MidCo 1 in an amount of the In-vestor Equity Contribution (if any), and • VF Germany will sell and transfer certain VF VTG-Shares (if any) to BidCo. (H) Ultimately, subject to the provisions of this Agreement, the share capital of MidCo 1 is de-sired to be held by VF Germany (50%) and Investor (50%) (the “Target Shareholding”), and MidCo 1 will be the ultimate holding company which will (indirectly) hold the towers business of VTG Group. (I) Against this background, the Parties desire to set forth in this Agreement their respective rights and obligations in connection with the Transaction. NOW THEREFORE, the Parties agree as follows: 1 Interpretation 1.1 In this Agreement and the annexes to it, defined terms shall have the following meanings: “Acceptance Period” has the meaning set out in Clause 5.2.4; |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. “Accounts Date” means 31 March 2022; “AcquiCo Group” or “AcquiCo Group Companies” means MidCo 1, MidCo 2 and BidCo. “AcquiCo Group Company” means each member of AcquiCo Group; “Affiliate” means − for an entity that is not a Fund and does not hold, directly or indirectly, shares in VTG for a Fund: any other entity that, directly or indirectly through one or more intermedi-aries, Controls, is Controlled by, or under common Control with such entity; and − for an entity that is a Fund or holds, directly or indirectly, shares in VTG for a Fund: any other entity that, directly or indirectly through one or more intermediaries, is Con-trolled by such Fund or the Fund Manager; excluding any portfolio companies, port-folio investments (and their respective holding companies) or investee of any Fund; “Agreed Offer Price” has the meaning set out in Clause 5.3.1; “Agreement” has the meaning set out in the Parties’ section; “Annual Accounts” means the Individual Annual Accounts and the Consolidated Annual Accounts; “BaFin” means the German Federal Financial Supervisory Authority (Bundesanstalt für Fi-nanzdienstleistungsaufsicht); “Best Efforts” means such any and all actions or omissions required, supportive or useful to fulfil the relevant obligation, including to (i) consider and explore more than one available avenue, if possible; (ii) subject to Law, take any and all steps to pursue those avenues; (iii) commit such management time as is required in pursuance of fulfilling the relevant obligation; and (iv) incur expenditures and assume Obligations; provided in each case that it shall not be required to act in any way which would be detri-mental to the relevant person’s group financial interests or to enter into any transactions which are not at commercially reasonable market standard terms. For the avoidance of doubt, Best Efforts shall not be construed as a responsibility for an achievement of the re-sults intended to be achieved by an obligation (Einstandspflicht für den Erfolg). “BidCo” means Blitz D22-277 GmbH (in the future Oak Holdings GmbH), a limited liability company (Gesellschaft mit beschränkter Haftung) incorporated under the laws of Germany, registered with the commercial register of the local court (Amtsgericht) in Düsseldorf under register number HRB 98923, whose office is at Ferdinand-Braun-Platz 1, 40549 Düsseldorf, Germany; “BidCo Capital Increase” has the meaning as set out in Clause 2.1.4(iv)a; “Breach” has the meaning set out in Clause 10.1.2; “Business” means the operation and marketing of vertical passive mobile communications network infrastructures; |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. “Business Day” means a day which is not a Saturday, a Sunday or a public holiday in Düs-seldorf, Germany, London, United Kingdom, Jersey, or New York, United States of America; “Capital Increases” means the BidCo Capital Increase together with the MidCo 1 Capital Increase and the MidCo 2 Capital Increase; “Claim” means any written demand, claim, complaint, notice of violation or any other written assertion of an Obligation, for any Loss, specific performance, injunctive relief, remediation or other equitable relief whether or not ultimately determined to be valid; “Closing” has the meaning set out in Clause 7.1; “Closing Actions” has the meaning set out in Clause 7.2; “Closing Conditions” has the meaning set out in Clause 6.1; “Closing Date” has the meaning set out in Clause 7.1; “Closing Minutes” has the meaning set out in Clause 7.3; “Co-Control” (including with correlative meaning, the term “Co-Controlled”) in relation to a person (the “Co-Controlled Person”) means the right of two or more persons (not being Affiliates) acting jointly to Control such Co-Controlled Person, whereby each of the Co-Con-trolling persons requires a person which is not an Affiliate to exercise Control over the Co-Controlled Person. Immediately following Closing, VF Germany and the Investor Co-Control, and do not Control, MidCo 1; “Co-Investors” mean (i) The Public Investment Fund, a government fund established in ac-cordance with Royal Decree No. M/24 dated 25/06/1391H (corresponding to 17/08/1971G) and regulated by the Law of The Public Investment Fund issued pursuant to Royal Decree No. M/92 dated 12/08/1440H (corresponding to 18/04/2019G) and an integral part of the Kingdom of Saudi Arabia, and (ii) Tower Bridge Infrastructure Partners, L.P., a limited part-nership formed under the laws of the State of Delaware, having its registered address at 251 Little Falls Drive, Wilmington, DE 19808, United States of America, registered with the Sec-retary of State of Delaware under registration number 7364147; “Communication” has the meaning set out in Clause 6.2.4; “Consolidated Annual Accounts” means the audited consolidated annual accounts of VTG Group including all notes to the accounts and the auditors’ reports thereon for the financial year ending on the Accounts Date. “Contract” means, with respect to any Person, all binding agreements, contracts, deeds, or other binding commitments, arrangements or plans (including any amendments and other modifications thereto), to which such Person is a party or is otherwise bound; “Control” (including with correlative meaning, the term “Controlled by”) means the right of one person alone, or together with its Affiliates, to appoint the majority of the directors or to control the management or policy decisions of a person, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements, it being understood, however, that Co-Control does not constitute Control for the purposes of this Agreement; “Confidential Information” has the meaning set out in Clause 15.2.2; ; |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. “CTHC Special Share Agreement” has the meaning set out in Clause 11.3.4; “Credit Agreements” means the OpCo Credit Agreement, the HoldCo Credit Agreement and the HoldCo Convertible Note; “Data Room” means the electronic data room operated by Datasite LLC during the period from 9 September to 7 November 2022, for the posting of documents for review by the In-vestor in connection with the Transaction, with the content as of 7 November 2022 as listed in the Data Room index attached hereto as Annex 1.1(a) and contained in the flash storage devices delivered to the German Notary at Signing; “DPLTA” has the meaning set out in Clause 2.1.2; “Due Diligence Investigation” has the meaning set out in Clause 10.5.4(i)(a); “Employee” has the meaning set out in Clause 15.1 of Annex 8; “Equity/Debt Commitment Letters” has the meaning set out in Clause 11.4.1; “Filings” has the meaning set out in Clause 6.2.3(i); “Fund” means any body corporate, partnership, superannuation scheme, pension fund, col-lective investment scheme or managed fund that (a) has been established to pool the re-sources of multiple underlying investors or utilise the resources of one underlying investor, (b) is managed and/or advised by a Fund Manager and (c) has been established to invest in a class of assets or investments, rather than in a single asset or investment; “Fundamental Warranties” means the VF Warranties of Clauses 1 through 4 of Annex 8; “Fund Manager” means an appropriately authorised person appointed (on an exclusive ba-sis) by a Fund to manage and/or advise that Fund on a day-to-day basis in relation to all or part of its assets and undertakings; “Further BidCo Shares” has the meaning as set out in Clause 4.4.1; “Further MidCo 2 Shares” has the meaning as set out in Clause 4.3.1; “GDPR” has the meaning set out in Clause 13(i) of Annex 8; “German Notary” means notary public Dr Florian Braunfels (business offices at Königsallee 31, 40212 Düsseldorf, Germany); “German Takeover Act” means the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz - WpÜG); “GIP Investor” means GIP Oak Aggregator, L.P., an exempted limited partnership registered in the Cayman Islands. “Governing Documents” means the articles of incorporation, certificate of incorporation, charter, bylaws, articles or certificate of formation, regulations, limited liability company agreement, operating agreement, certificate of limited partnership, partnership and share-holder agreement, and all other similar documents, instruments or certificates executed, adopted, or filed in connection with the formation, organisation or governance of a Person, including any amendments thereto; “Governmental Authority” means any national, federal, regional, state, city, local or other governmental agency, authority, administrative agency, regulatory body, commission, board, |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. bureau, instrumentality, court or arbitral tribunal having governmental or quasi-governmental power; “Group IP Rights” has the meaning as set out in Clause 8 of Annex 8; “HoldCo Convertible Note” has the meaning as set out in Clause 11.4.1; “HoldCo Credit Agreement” has the meaning as set out in Clause 11.4.2; “HoldCo Debt Commitment Letter” has the meaning as set out in Clause 11.4.2; “HoldCo Equity Commitment Letters” has the meaning as set out in Clause 11.4.2; “HoldCo Equity Financing” has the meaning as set out in Clause 11.4.1; “HoldCo Financing” means the HoldCo Equity Commitment Letters, HoldCo Credit Agree-ment and HoldCo Debt Commitment Letter; “IFRS” has the meaning set out in Clause 6.2 of Annex 8; “Indemnified Party” has the meaning set out in Clause 10.7.1; “Indemnifying Party” has the meaning set out in Clause 10.7.1; “Individual Annual Accounts” means the audited annual accounts of each VTG Group Company for the financial year ending on the Accounts Date including all notes to the ac-counts and auditors’ reports; “Information Technology” means computer and communication systems, hardware, soft-ware and associated documentation and services; “Initial Annual Budget” has the meaning set out in Clause 13.5; “Initial Business Plan” has the meaning set out in Clause 13.5; “Investor” has the meaning set out in the Parties’ section; "Investor Controlling Shareholders" means the GIP Investor and the KKR Investor as well as the Investor’s direct and indirect Controlling shareholders which are directly or indirectly Controlled by the GIP Investor or the KKR Investor, respectively. "Investor DPLTA/Squeeze-out Cost Share" means an amount equal to the overall costs to be borne by VF Germany under Clauses 13.4.1. and 13.4.2 multiplied with the percentage of Investor's shareholding in MidCo 1 from time to time; “Investor Equity Contribution” means an amount in Euro equal to [***]; “Investor Equity Contribution Capital Increase” has the meaning set out in Clause 7.2.1(i); “Investor Group” means the Investor and its Affiliates excluding VTG Group and AcquiCo Group; “Investor Warranty” or “Investor Warranties” has the meaning set out in Clause 9; “IP Rights” means patents, utility models, rights in inventions, know-how and trade secrets, trade marks, service marks, rights in trade names and business names, logos and rights in get-ups, rights in the goodwill, copyrights (including rights in software and rights in and to software codes), database rights and rights in data, design rights, domain names and URLs, and all other intellectual property rights and similar rights in any part of the world, in each |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. case, whether such rights are registered or unregistered and including registrations and ap-plications for registration of such rights; “Irish Bill” has the meaning set out in Clause 6.1.2(i); “Irrevocable Qualified Non-Tender Agreement” means the irrevocable qualified non-ten-der agreement in the form attached to this Agreement as Annex 5.2.3; “KKR Investor” means KKR Oak Aggregator LP, a limited partnership under the laws of the Province of Ontario, Canada, registered with 1000328418; “Knowledge Representatives” means Marco Pugliese, Marco Fontana, Julia Giese and Ankit Sharma ; “Law” means any applicable statute, law, treaty, ordinance, order, rule, directive, regulation, code, constitution, executive order, injunction, judgement, decree or other requirement of any Governmental Authority; “Leakage” has the meaning set out in Clause 12.2.1; “Lien” means any mortgage, encumbrance, pledge, security interest, lien, deed of charge, right of first refusal or first offer, floating charge or other charge of any kind (including any agreement to give any of the foregoing), any conditional sale or other title retention agree-ment, or the filing of or agreement to give any security interest, charge or financing statement under the Laws of any jurisdiction; “Litigation” has the meaning set out in Clause 17 of Annex 8; “Longstop Date” has the meaning set out in Clause 16.1.2; “Losses” means all direct losses, liabilities, costs (including legal costs and experts’ and consultants’ fees), charges and expenses, excluding (i) indirect damages, (ii) consequential losses, (iii) lost profits or revenues or lost opportunities, (iv) frustrated expenses (vergebliche Aufwendungen) within the meaning of sec. 284 German Civil Code (Bürgerliches Ge-setzbuch - BGB) or (v) internal costs; “Master Services Agreements” means the agreements entered into, or to be entered into, between VTG or any other member of VTG Group on the hand and VF Remaining Group on the other hand regarding, in particular, the lease of space on the passive infrastructure at, or any other provision of access to, sites of VTG Group Companies, and the provision of services by VTG Group Companies in this context, to VF Remaining Group or any of its Affiliates, in each case enabling it or any of them to install and operate its or any of their equipment for the purpose of operating a telecommunications network, in each case as amended from time to time; “Material Contract” has the meaning set out in Clause 10.1 of Annex 8; “Maximum Investor Investment” shall mean an amount of EUR [***]; "Merger Control Clearances" has the meaning set out in Clause 6.2.3(iv)(a); “MidCo 1” means Blitz D22-276 GmbH (in the future Oak Holdings 1 GmbH), a limited lia-bility company (Gesellschaft mit beschränkter Haftung) incorporated under the laws of Ger-many, registered with the commercial register of the local court (Amtsgericht) in Düsseldorf under register number HRB 98913, whose office is at Ferdinand-Braun-Platz 1, 40549 Düs-seldorf, Germany; |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. “MidCo 1 Capital Increase” has the meaning set out in Clause 2.1.3(i)(a); “MidCo 1 Catch Up Sale Shares” has the meaning set out in Clause 3.2.1; “MidCo 1 Catch Up Sale Shares Purchase Price” means an amount in EUR equal to [***]; “MidCo 1 Sale Shares” shall mean shares in MidCo 1 (following implementation of the MidCo 1 Share Capital Increase and the Investor Equity Contribution Capital Increase, if any) in such number that their percentage in the overall share capital of MidCo 1 corre-sponds to (i) the MidCo 1 Sale Shares Investment Amount divided by (ii) (a) the total number of VTG Contribution Shares multiplied by the Agreed Offer Price (b) plus the Investor Equity Contribution, expressed as a percentage; “MidCo 1 Sale Shares Investment Amount” means an amount in Euro equal to the Maxi-mum Investor Investment minus the Investor Equity Contribution; “MidCo 1 Sale Shares SPA” has the meaning as set out in Clause 3.1; “MidCo 2” means Blitz D22-280 GmbH (in the future Oak Holdings 2 GmbH), a limited lia-bility company (Gesellschaft mit beschränkter Haftung) incorporated under the laws of Ger-many, registered with the commercial register of the local court (Amtsgericht) in Düsseldorf under register number HRB 98927, whose office is at Ferdinand-Braun-Platz 1, 40549 Düs-seldorf, Germany; “MidCo 2 Capital Increase” has the meaning set out in Clause 2.1.3(i)(b); “Minimum Cash Amount” means cash available at VTG Group in the amount of EUR [***]; “Net Financial Debt” means the amount of EUR [***]; “Non Disclosure Agreements” means (i) the non disclosure agreement entered into be-tween Vodafone Group Services Limited, VTG and Kohlberg Kravis Roberts & Co. Partners LLP on 20 July 2022 (as amended from time to time) and (ii) the non disclosure agreement entered into between Vodafone Group Services Limited, VTG and Global Infrastructure Man-agement, LLC on 17/18 July 2022 (as amended from time to time); “Notice” has the meaning set out in Clause 17.5.1; “Notified Claims” has the meaning set out in Clause 10.7.1; “Obligations” means, with respect to any Person, any duties, liabilities, covenants and ob-ligations of such Person, whether vested or unvested, absolute or contingent, conditional or unconditional, primary or secondary, direct or indirect, known or unknown, asserted or un-asserted, disputed or undisputed, matured or unmatured, accrued or unaccrued, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, and whether contractual, statutory or otherwise; “Official” has the meaning set out in Clause 12.2 of Annex 8; “Offer Document” means the offer document for the Takeover Offer in accordance with the German Takeover Act; “Offer Price” has the meaning set out in Clause 5.3.1; “OpCo Credit Agreement” has the meaning set out in Clause 11.4.2; “OpCo Debt Financing” has the meaning as set out in Clause 11.4.1; |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. “Order” means any order, writ, ruling, decision, verdict, decree, assessment, award (includ-ing arbitration awards), judgment, stipulation, injunction, or other determination, decision or finding by, before, or under the supervision of any Governmental Authority; “Party” or “Parties” has the meaning set out in the parties’ section on page 1 of the Agree-ment; “Pension Schemes” has the meaning set out in Clause 15.4 of Annex 8; “Permitted Leakage” has the meaning set out in Clause 12.2.2; “Permitted Liens” means: (i) Liens and charges imposed by Law and incidental to the operation of the Business, if payment of the obligation secured thereby is not yet overdue or if the validity or amount of such obligation is being contested in good faith by a VTG Group Com-pany; (ii) Liens for Taxes, assessments, Obligations under employees’ compensation or other social welfare legislation or other requirements, charges or levies of any Govern-mental Authority, in each case not yet overdue or which are being contested in good faith by a VTG Group Company; (iii) easements, servitudes, rights-of-way and other rights, exceptions, reservations, con-ditions, limitations, covenants and other restrictions on the Real Property Interests that do not materially interfere with, materially impair or materially impede the oper-ation, value or use of the Real Property Interests affected thereby; (iv) pledges and deposits incurred in the ordinary course of business that do not materi-ally interfere with, impair or impede the Business; (v) any Liens consisting of rights reserved to or vested in any Governmental Authority that do not materially detract from the value or marketability of the property affected or interfere with, impede or impair the Business; (vi) mechanics’ and materialmen’s Liens and similar charges (i) not filed of record and not delinquent or (ii) filed of record but that do not exceed EUR 10,000,000 in the aggregate; (vii) Liens in respect of Orders with respect to which an appeal or other proceeding for review is being prosecuted and with respect to which a stay of execution pending such appeal or such proceeding for review has been obtained; (viii) non-exclusive licences in respect of IP Rights entered into in the ordinary course of business; or (ix) Liens that will be paid in full or released on or prior to Closing Date; “Pro-rata Principle” has the meaning set out in Clause 10.3.2; “Proceeding” means any action, case, lawsuit, arbitration, mediation, investigation, hearing, audit, examination, enquiry or other proceeding (including regulatory or administrative pro-ceedings) at law or in equity, commenced, brought, conducted or heard by or before, any Governmental Authority, or any mediator, arbitrator or board of arbitration; “Real Property Interest” means the real property owned or leased or otherwise used by a VTG Group Company, together with all fixtures, buildings and other structures, facilities or |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. improvements located thereon on Signing and all easements, licenses, rights and appurte-nances relating to the foregoing; “Regulatory Conditions” means the Closing Conditions set out in Clauses 6.1.1 and 6.1.2; “Reference Offer Price” has the meaning set out in Clause 5.3.2; “Related Agreements” means the Shareholders’ Agreement and the business combination agreement entered into in accordance with Clause 2.1.1; “Relationship Agreement” has the meaning set out in Clause 11.3.4; “Relevant Authorities” means all competition or foreign investment or other regulatory au-thorities to which filings need to be made or from which approval is required in the context of the Regulatory Conditions; “Relevant Persons” has the meaning set out in Clause 5.4.1; “Restricted Country” has the meaning set out in Clause 13.2 of Annex 8; “Sanctions” has the meaning set out in Clause 13.2 of Annex 8; “Shareholders’ Agreement” means the shareholders’ agreement which shall be entered into between VF Germany, the Investor and MidCo 1 on the Closing Date in accordance with Clause 7.2.6(i) and in the form as attached hereto in Annex 2.1.4(v); “Signing” means the date of this Agreement; “Structure Paper” has the meaning set out in Clause 2.1; “Stepped-up Offer Price” has the meaning set out in Clause 13.4; “Subsidiaries” means, in relation to a person, any person Controlled by such person; “Squeeze-out” has the meaning set out in Clause 2.1.2; “Takeover Offer” means the takeover offer for all shares in VTG in accordance with the German Takeover Act to be launched by BidCo; “Target Shareholding” has the meaning set out in Recital (H); “Tax” or “Taxation” means all forms of taxation, including governmental, national, regional, provincial, local and municipal charges, duties, customs, imposts, levies, subsidies, with-holdings, liabilities and social security contributions and other social security levies, includ-ing, for the avoidance of doubt but not limited to, tax and ancillary charge (Steuer und steuer-liche Nebenleistung) within the meaning of section 3 of the German Tax Code (Abgabenor-dung, AO) and under the laws of any other jurisdiction, Spanish taxes on constructions, in-stallations and works, taxes on installations with environmental impact, Greek stamp taxes, and Greek real estate taxes, as well as any interest, surcharge, fine or penalty in relation thereto wherever chargeable, in each case irrespective of whether owed or payable directly or by way of withholding, as a primary liability or as a secondary liability, or as a legal suc-cessor or transferee, or any liability under a tax sharing, tax allocation or similar arrangement or under any contractual arrangement entered into outside of the ordinary course of business to make payment of, or in respect of, or on account of, the aforementioned taxes, levies and charges. For the avoidance of doubt, Tax does not include deferred taxes; |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. “Tax Authority” means any taxing or other authority competent to impose any liability in respect of Tax or responsible for the administration and/or collection of Taxation or enforce-ment of any Law in relation to Tax and acting in its capacity as such; “Tax Benefit” means any allowance, credit, deduction, exemption or set off in respect of any Tax or relevant to the computation of any income, profits or gains for the purposes of any Tax, or any right to or actual repayment of or saving of Tax (including, for the avoidance of doubt, any interest in respect of Tax) other than a Tax Refund. Any reference to the use or set-off of a Tax Benefit shall be construed accordingly and shall include use or set-off in part; “Tax Effective Date” means the Accounts Date; “Tax Refund” means any repayment of any Tax (including by way of set-off or deduction) or any right to such repayment (as the context requires), but reduced by any Tax thereon; “Tax Return” means any and all returns, applications, reports, claims for refund, notices, forms or information, preliminary filings, for the avoidance of doubt including self-assess-ments, and other written or electronically transferred materials and documents, which must be filed with or provided to the Tax Authorities in connection with Taxes; “Third Party Claim” has the meaning set out in Clause 10.7.4; “Transaction” has the meaning set out in Recital (F) of this Agreement; “Transaction Step Overview” has the meaning set out in Clause 2.1; “VAT” means any value added tax in the meaning of the Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax as amended and as imple-mented in local Law or any kind of similar or comparable Tax in a jurisdiction outside of the European Union; “VF Germany” has the meaning set out in the Parties’ section; “VF Group” means VF Germany and its Affiliates; “VF Group Company” means each member of VF Group; “VF Remaining Group” means VF Group excluding VTG Group and MidCo 1, MidCo 2 and BidCo; “VF Sub-Account 1 VTG-Shares” has the meaning set out in Recital (D) of this Agreement; “VF Sub-Account 2 VTG-Shares” has the meaning set out in Recital (D) of this Agreement; “VF VTG-Shares” has the meaning set out in Recital (D) of this Agreement; “VF Warranty” or “VF Warranties” has the meaning set out in Clause 8; “VTG” means Vantage Towers AG, a listed stock corporation (Aktiengesellschaft) incorpo-rated under the laws of Germany, registered with the commercial register of the local court (Amtsgericht) in Düsseldorf under register number HRB 92244, whose registered office is at Prinzenallee 11-13, 40549 Düsseldorf, Germany; “VTG Acquisition Shares” means the 47,319,218 VTG-Shares; “VTG Contribution Shares” means the sum of (i) VF Sub-Account 1 VTG-Shares, and (ii) VF Sub-Account 2 VTG Shares less the VTG Sold Shares. “VTG Contribution Shares Purchase Price” means an [***] |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. “VTG Group” means VTG and its Subsidiaries as well as, for the purposes of Clauses 3.1 of Annex 8 as well as the definition of Master Services Agreements only, Cornerstone Tele-communications Infrastructure Limited and Infrastructure Wireless Italiane S.p.A.; “VTG Group Company” means each member of VTG Group, provided that Cornerstone Telecommunications Infrastructure Limited and Infrastructure Wireless Italiane S.p.A. shall only be considered as VTG Group Companies to the extent forming part of the VTG Group as per the preceding definition; “VTG Management Board” means the management board (Vorstand) of VTG; “VTG Refinancing” means the refinancing of certain outstanding indebtedness under bonds issued by VTG (including any applicable premia, make-whole or other amounts relating thereto). “VTG Supervisory Board” means the supervisory board (Aufsichtsrat) of VTG; “VTG Share” means each ordinary voting share of the issued share capital of VTG; “VTG Sold Shares” means such number of VTG-Shares equalling (i) the VTG Acquisition Shares, less (ii) the number of VTG Shares tendered into the Takeover Offer, provided that the number must not be lower than zero. “VTG Sold Shares Purchase Price” means an amount in EUR equal to the number of the VTG Sold Shares multiplied by the Agreed Offer Price; and “VTG Sold Shares SPA” has the meaning set out in Clause 7.2.5(i). 1.2 Unless otherwise specified, in this Agreement 1.2.1 References to clauses, sub-clauses, paragraphs, annexes and schedules are to clauses, sub-clauses and paragraphs of, and schedules and annexes to, this Agree-ment. The schedules and annexes form part of this Agreement and shall have the same force and effect as if expressly set out in the body of this Agreement, and any reference to this Agreement shall include the annexes and schedules. 1.2.2 References to any document or agreement include a reference to that document or agreement as varied, amended, supplemented, substituted or assigned from time to time in accordance with this Agreement (as applicable). 1.2.3 References to a statute or statutory provision shall be construed as a reference to the same as it may have been, or may from time to time be, modified, re-enacted or consolidated, and shall include any subordinate legislation made from time to time under that statute or statutory provision, provided that nothing in this Clause 1.2.3 shall operate to increase the liability of any Party beyond that which would have existed had this Clause 1.2.3 been omitted. 1.2.4 References to books, records or other information mean books, records or other in-formation in any form, including paper, electronically stored data, magnetic media, film and microfilm. 1.2.5 All headings and titles are inserted for convenience only and are to be ignored in the interpretation of this Agreement. 1.2.6 The words “including”, “include”, “in particular” and words of similar effect shall not be deemed to limit the general effect of the words which precede them and the word |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. “including” means including without limitation (and all derivative terms are to be con-strued accordingly). 1.2.7 The words “to the extent” and “to the extent that” are used to indicate an element of degree and are not synonymous with the word “if”. 1.2.8 Any provision of this Agreement which is expressed to bind more than one person shall, save where inconsistent with the context, bind each of them severally and not jointly and severally. 1.2.9 References to the winding up or liquidation of a person include any equivalent or analogous procedure under the Law of any jurisdiction under which that person is incorporated, domiciled or resident or carries on business or has assets. 1.2.10 No provision of this Agreement shall be interpreted adversely against a Party, solely because that Party was responsible for drafting that provision (contra proferentem). 1.2.11 The use of any gender includes the other genders. 1.2.12 References to a country include any successor thereto, or any other country subse-quently comprising all or part of such country, provided that a reference to a country shall at any time only comprise such territory referred to at Signing. 1.2.13 If a word or phrase is defined, other grammatical forms of that word shall have a corresponding meaning. 1.2.14 General words shall not be given a restrictive meaning by reason of the fact that they are followed by particular examples intended to be embraced by the general words. Likewise, general words introduced by the word “other” shall not be given a restric-tive meaning by reason of the fact that they are preceded by words indicating a par-ticular class of acts, matters or things. 1.2.15 Where a German term has been added in parenthesis after an English term, only such German term shall be decisive for the interpretation of the relevant English term in relation to a German matter or a matter of German Law whenever such English term is used in this Agreement. English words used in this Agreement are intended to describe German legal concepts only and the consequences of the use of those words in English Law or any other foreign Law shall be disregarded. In respect of any jurisdiction other than Germany, a reference to any German legal term shall be construed as a reference to the term or concept which most nearly corresponds to it in that jurisdiction. 1.2.16 Any reference to a “day” (including the phrase “Business Day”) shall mean a period of 24 hours running from midnight to midnight. 1.2.17 References to times are to Central European (Summer) Time (unless otherwise specified). 1.2.18 References to “€”, “EUR” or “euros” are to the lawful currency of the Eurozone and reference to any amount in such currency shall be deemed to include reference to an equivalent amount in any other currency by using the exchange rate of the rele-vant currency officially determined by the European Central Bank, Frankfurt am Main, Germany, as of the relevant time and as published on its website under http://www.ecb.europa.eu/stats/exchange/eurofxref/html/index.en.html. For curren-cies for which the European Central Bank does not officially determine an exchange |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. rate, the exchange rate as published by Bloomberg PROFESSIONAL® Service at 2:00 p.m. CET on the relevant date shall apply. For currencies for which Bloomberg PROFESSIONAL® Service does not officially determine an exchange rate, the ex-change rate in effect at the relevant time as used by the bank with which the MidCo 1 holds its principal account shall apply. 1.2.19 Words in the singular shall include the plural and the plural shall include the singular. 1.2.20 References to a “company” shall be construed so as to include any corporation or other body corporate, wherever and however incorporated or established. 1.2.21 References to a “person” shall be construed so as to include any individual, firm, company, corporation, body corporate, government, state or agency of a state, local or municipal authority or government body or any joint venture, association or part-nership (whether or not having separate legal personality). 1.2.22 Unless a contrary indication appears, references to a “member” shall be construed so as to refer to any firm, company, corporation, any other body corporate and any joint venture, association or partnership (whether or not having separate legal per-sonality) and not to the individuals representing or otherwise acting on behalf of it. 1.2.23 References to writing or in writing shall include email. 2 Transaction Steps 2.1 Implementation Steps The Parties agree to the following steps to implement the Transaction as substantially further set forth in the “Project Oak – Draft Strawman Structure Paper” dated 8 November 2022 prepared by PricewaterhouseCoopers LL, a copy of which is attached as Annex 2.1 (the “Structure Paper”) as explicitly or implicitly amended by the overview of the sequence of the transaction steps attached hereto as Annex 2.1-1 (the “Transaction Step Overview”): 2.1.1 First, VF Germany, BidCo and VTG shall enter into a business combination agree-ment substantially in the form attached hereto as Annex 2.1.1; 2.1.2 Second, the Parties agree that, without undue delay after Signing, BidCo shall (x) announce the intention to publish the Takeover Offer simultaneously with the an-nouncement of the Transaction, and (y) publish the Takeover Offer following clear-ance of the Offer Document by BaFin as further set out in Clause 5. Simultaneously with the announcement of the decision to launch the Takeover Offer, BidCo shall announce its firm intention to (A) conclude a domination and profit and loss transfer agreement pursuant to section 291 para. 1 sentence 1 of the German Stock Corporation Act between BidCo as dominating entity and VTG as dominated entity at the earliest with effect as from 1 April 2023 (the “DPLTA”), and/or (B) imple-ment a squeeze-out of the minority shareholders of VTG in accordance with the Ger-man Stock Corporation Act if the relevant threshold is reached or exceeded (the “Squeeze-out”). 2.1.3 Third, the Parties agree that, prior to Closing, and further set out in Clause 4 (i) VF Germany shall, or as the case may be, procure that |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. (a) the VTG Contribution Shares are contributed by VF Germany by way of a capital increase against contribution in kind (Sachkapital-erhöhung) into MidCo 1 against issuance of new shares in MidCo 1 to VF Germany (the “MidCo 1 Capital Increase”), (b) the VTG Contribution Shares are contributed by MidCo 1 by way of a capital increase against contribution in kind (Sachkapitalerhöhung) into MidCo 2 against issuance of new shares in MidCo 2 to MidCo 1 (the “MidCo 2 Capital Increase”), and (ii) VF Germany shall procure that the MidCo 1 Capital Increase and the MidCo 2 Capital Increase shall be (x) resolved and executed, and (y) follow-ing contribution and transfer of the VTG Contribution Shares to MidCo 1 and MidCo 2, respectively, immediately filed for registration with the commercial register of MidCo 1 and MidCo 2, respectively; and VF Germany shall take all measures and actions that are reasonably necessary to achieve such reg-istrations without undue delay and shall refrain from those measures and actions which could reasonably foreseeably prevent or delay such registra-tions; and 2.1.4 Fourth, following satisfaction of the Closing Conditions and prior to or on the Closing Date, as the case may be, (i) Investor shall make a cash contribution to MidCo 1 in an amount of the In-vestor Equity Contribution (if any), (ii) MidCo 2 shall draw debt financing under the OpCo Credit Agreement, in an amount that is (when taken together with the amount of the Investor Equity Contribution (if any)) sufficient to finance the payment by Bidco in respect of the VTG Shares tendered into the Takeover Offer (if any) and the purchase price for the VTG Sold Shares (iii) VF Germany shall, subject to the terms of this Agreement, sell and transfer to the Investor at least the MidCo 1 Sale Shares and the Investor shall accept such sale and transfer pursuant to and in accordance with Clause 3.1 and Clause 7.2.1, (iv) the VTG Sold Shares shall be sold and transferred from VF Germany to BidCo pursuant to Clause 7.2.5, (iv)a VF Germany shall procure that (a) the VTG Contribution Shares are contrib-uted by MidCo 2 by way of a capital increase against contribution in kind (Sachkapitalerhöhung) into BidCo against issuance of new shares in BidCo to MidCo 2 (the “BidCo Capital Increase”) and (b) the BidCo Capital In-crease shall be (A) resolved and executed with immediate effect, and (B) registered in due course thereafter with the commercial register of BidCo, (v) the Parties shall enter into the Shareholders’ Agreement in the form as at-tached hereto in Annex 2.1.4(v); and (vi) the further Closing Actions shall be taken pursuant to Clause 7.2. 2.1.5 Fifth, the Takeover Offer shall be settled pursuant to Clause 5.5. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 2.1.6 Sixth, the Parties agree that AcquiCo Group and VTG Group shall be funded as set forth in the Structure Paper, in particular, the Parties shall procure that MidCo 2 shall draw debt financing under the OpCo Credit Agreement, and shall procure that the required proceeds are advanced to the relevant members of VTG Group, in an amount sufficient to enable funding the VTG Refinancing in full as well as the pay-ment of all related fees, costs and expenses. In case of any discrepancies between the Structure Paper and this Agreement, the Trans-action Step Overview or the Related Agreements, this Agreement, the Transaction Step Overview or the Related Agreements shall prevail. 2.2 Procurement obligation The Investor and VF Germany shall each procure (so far as they lawfully can), and ensure that its respective representatives exercise their rights and act within their powers (so far as they lawfully can) to procure: 2.2.1 compliance with, giving effect to, and execution of, all provisions of this Agreement, in particular in case this Agreement appears to impose any obligations on a AcquiCo Group Company or a VTG Group Company which is not a party to this Agreement; and 2.2.2 that MidCo 1, MidCo 2 and BidCo and their respective managing directors comply with, give effect to and execute all provisions of this Agreement, subject always to Law as well as any duties imposed by Law on the managing directors. 2.3 Target Shareholding in MidCo 1 2.3.1 The Investor shall use Best Efforts to achieve the Target Shareholding in MidCo 1 as of Closing by attracting new equity co-investors for this purpose and to draw addi-tional HoldCo debt (taken out by the Investor under the HoldCo Financing in the context of the transactions contemplated by this Agreement) pro rata to the additional equity investment. 2.3.2 The Investor shall provide to VF Germany on a regular basis, but in any case bi-weekly or upon request of VF Germany, information on the status of selecting and approaching of, and negotiating with, potential co-investors in the context of Clause 2.3.1 and the process to obtain EUR [***] of syndication. Investor shall in particular notify VF Germany in case of any material negotiations (either scheduled, planned or envisaged) with potential co-investors without undue delay as well as their results. 2.3.3 If a potential co-investor has committed an investment, the Investor is obliged to use such investment solely for the purpose of acquiring shares in MidCo 1 from VF Ger-many. 2.3.4 Clauses 2.3.1 and 2.3.3 do not apply to the ongoing equity syndication process of Investor to obtain EUR [***] of syndication. 3 Sale and Transfer 3.1 Sale and Transfer of MidCo 1 Sale Shares Subject to the terms of this Agreement, VF Germany hereby undertakes to sell and transfer to the Investor the MidCo 1 Sale Shares and the Investor hereby undertakes to accept such sale and transfer by entering into the share sale and transfer agreement substantially in the |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. form as attached hereto in Annex 3.1 (the “MidCo 1 Sale Shares SPA”) on the Closing Date as set forth in Clause 7.2.4(i). The sale and transfer of the MidCo 1 Sale Shares to the In-vestor shall be subject to the condition precedent of BidCo acquiring control over VTG within the meaning of Section 29 para. 2 Takeover Act. Investor is entitled to request, with written Notice to VF Germany by no later than five (5) Business Days prior to the Closing Date, that the number of MidCo 1 Sale Shares is in-creased to a total number of shares representing up to 50% of the registered share capital of MidCo 1 following implementation of the MidCo 1 Share Capital Increase and the Investor Equity Contribution Capital Increase, if any. The VTG Contribution Shares Purchase Price shall increase accordingly. If and to the extent the MidCo 1 Capital Increase has not been registered with the competent commercial register as of Closing, the transfer of the MidCo 1 Sale Shares from VF Germany to the Investor shall be subject to the registration of the MidCo 1 Capital Increase with the commercial register of MidCo 1. For the avoidance of doubt, if by the time the MidCo 1 Sale Shares SPA is executed the MidCo 1 Capital Increase has not yet been registered with the commercial register of MidCo 1, VF Germany shall (i) sell and transfer with immediate effect already existing shares in MidCo 1 and (ii) sell and transfer, subject to the condition precedent of the MidCo 1 Capital Increase being registered with the commercial register of MidCo 1, new MidCo 1 Shares issued in the MidCo 1 Capital Increase, in each case in such amounts that the target participation of Investor set forth in the definition of MidCo 1 Sale Shares is reached. 3.2 Sale and Transfer of Additional MidCo 1 Sale Shares 3.2.1 If the Target Shareholding in MidCo 1 has not been achieved as of Closing by sale and transfer of the MidCo 1 Sale Shares (as potentially increased pursuant to Clause 3.1), VF Germany herewith undertakes to sell and transfer, upon Investor's request to be issued to VF Germany until [***] the latest, to Investor a number of shares in MidCo 1 up to such amount of shares required to be purchased and ac-quired by Investor to reach the Target Shareholding (the “MidCo 1 Catch Up Sale Shares”) by entering into the share sale and transfer agreement substantially in the form as attached hereto in Annex 3.2.1. The purchase price payable by Investor for any MidCo 1 Catch Up Sale Shares is the MidCo 1 Catch Up Sale Shares Purchase Price. For the avoidance of doubt, Investor may exercise its rights under this Clause 3.2.1 more than once until the Target Shareholding is achieved. 3.2.2 The Investor shall pay to VF Germany the MidCo 1 Catch Up Sale Shares Purchase Price against simultaneous transfer (Zug-um-Zug) of the MidCo 1 Catch Up Sale Shares. 4 Capital Increases and Subscriptions 4.1 General provisions 4.1.1 VF Germany shall implement the measures in connection with the Capital Increases set out in Clauses 4.2 and 4.3 as soon as legally permissible after the number of VTG Contribution Shares is finally determinable (which will at the latest be upon lapse of the additional acceptance period of the Takeover Offer). VF Germany shall implement the measures in connection with the BidCo Capital Increase set out in Clause 4.4 following satisfaction of the Closing Conditions whereby the contribution and in rem transfer of the VTG Contribution Shares from MidCo 2 to BidCo shall in any event be effected on the Closing Date (but in no case prior to entering into (i) |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. the MidCo 1 Sale Shares SPA and (ii) the Shareholders' Agreement on the Closing Date). 4.1.2 The new shares in BidCo, MidCo 2 and MidCo 1 issued in the context of the respec-tive Capital Increases shall be ordinary voting shares of the same class, having the same rights and obligations as the existing shares of BidCo, MidCo 2 and MidCo 1. 4.1.3 The issue price for each new share in BidCo, MidCo 2 and MidCo 1 issued under or in connection with this Agreement shall be EUR 1.00. 4.1.4 VF Germany shall procure that the managing directors of BidCo, MidCo 2 and MidCo 1 will execute and deliver all such documents and undertake all such actions as required to immediately file for registration of the Capital Increases in accordance with this Agreement. 4.2 MidCo 1 Capital Increase In respect of the MidCo 1 Capital Increase: 4.2.1 VF Germany shall contribute the VTG Contribution Shares by way of capital in-creases against contribution in kind (Sachkapitalerhöhung) into MidCo 1 against the issuance of a corresponding number of shares in MidCo 1 to VF Germany. 4.2.2 For the purpose of the MidCo 1 Capital Increase, VF Germany shall as shareholder of MidCo 1 adopt resolutions on the increase of the registered share capital of MidCo 1 in a certain EUR amount against the contribution of the VTG Contribution Shares by way a capital increase against contribution in kind (Sachkapitalerhöhung) by issuing a certain number of shares in MidCo 1 to VF Germany. 4.2.3 VF Germany shall transfer the VTG Contribution Shares to MidCo 1 in two tranches as a contribution in kind (Sacheinlage). 4.2.4 VF Germany shall subscribe to the newly issued shares in MidCo 1. 4.3 MidCo 2 Capital Increase Subject to the filing for registration of the MidCo 1 Capital Increase with the commercial register of MidCo 1, in respect of the MidCo 2 Capital Increase: 4.3.1 VF Germany shall procure that MidCo 1 contributes the VTG Contribution Shares by way of capital increases against contribution in kind (Sachkapitalerhöhung) into MidCo 2 against the issuance of a corresponding number of shares in MidCo 2 (the “Further MidCo 2 Shares”) to MidCo 1. 4.3.2 For the purpose of the MidCo 2 Capital Increase, VF Germany shall procure that MidCo 1 as shareholder of MidCo 2 adopts resolutions on the increase of the regis-tered share capital of MidCo 2 in a certain EUR amount against the contribution of the VTG Contribution Shares by way a capital increase against contribution in kind (Sachkapitalerhöhung) by issuing the Further MidCo 2 Shares to MidCo 1. 4.3.3 VF Germany shall procure that MidCo 1 transfers the VTG Contribution Shares in two tranches to MidCo 2 as a contribution in kind (Sacheinlage). 4.3.4 VF Germany shall procure that MidCo 1 subscribes to the Further MidCo 2 Shares. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 4.4 BidCo Capital Increase Subject to the filing for registration of the MidCo 2 Capital Increase with the commercial register of MidCo 2, in respect of the BidCo Capital Increase: 4.4.1 VF Germany shall procure that MidCo 2 contributes the VTG Contribution Shares by way of capital increases against contribution in kind (Sachkapitalerhöhung) into BidCo against the issuance of a corresponding number of shares in BidCo (the “Fur-ther BidCo Shares”) to MidCo 2, provided that the contribution and transfer of the VTG Contribution Shares shall be effected on the Closing Date (but in no case prior to entering into (i) the MidCo 1 Sale Shares SPA and (ii) the Shareholders' Agree-ment). 4.4.2 For the purpose of the BidCo Capital Increase, VF Germany shall procure that MidCo 2 adopts resolutions on the increase of the registered share capital of BidCo in a certain EUR amount against the contribution of the VTG Contribution Shares by way a capital increase against contribution in kind (Sachkapitalerhöhung) by issuing the Further BidCo Shares to MidCo 2. 4.4.3 VF Germany shall procure that MidCo 2 transfers the VTG Contribution Shares in two tranches to BidCo as a contribution in kind (Sacheinlage). Such contributions and the in rem transfer of the VTG Contribution Shares from MidCo 2 to BidCo shall be effected on the Closing Date, but in no case prior to entering into (i) the MidCo 1 Sale Shares SPA and (ii) the Shareholders' Agreement. 4.4.4 VF Germany shall procure that MidCo 2 subscribes to the Further BidCo Shares. 4.5 VAT The Parties consider that the transactions anticipated by this Agreement are exempt from or not subject to VAT, and shall treat the transactions accordingly. VF Germany shall not waive any exemption from VAT. 5 Takeover Offer 5.1 Voluntary Offer 5.1.1 The Parties agree that upon Closing, the Transaction would trigger the obligation of BidCo, MidCo 2, MidCo 1 and the Investor as well as entities Controlling the Investor to publish the acquisition of control over VTG and to launch a mandatory takeover offer (Pflichtangebot) in accordance with sec. 35 et seqq. German Takeover Act. 5.1.2 The mandatory takeover offer obligations shall be pre-empted by the Takeover Offer as a voluntary takeover offer (befreiendes Übernahmeangebot) in accordance with secs. 29 et. seqq., 35 para. 3 German Takeover Act that shall be carried out by BidCo with mandatory offer releasing effect for BidCo, MidCo 2, MidCo 1, Investor and the entities Controlling the Investor. 5.2 Takeover Offer Process and Documents 5.2.1 Without undue delay after the date of this Agreement, BidCo shall announce its in-tention to launch the Takeover Offer pursuant to section 10 para. 1 sentences 1 and 2, para. 3 German Takeover Act in the form as attached hereto as Annex 5.2.1. 5.2.2 BidCo shall, in each case of (i) through (iv), following due consultation of all Parties, (i) prepare the Offer Document as well as any additional documentation required |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. pursuant to the German Takeover Act, (ii) submit the Offer Document to BaFin pur-suant to sec. 14 para. 1 German Takeover Act by no later than 7 December 2022, (iii) publish the Offer Document without undue delay after the clearance of the pub-lication of the Offer Document by BaFin and (iv) carry out any other actions required under the German Takeover Act or Law with regard to the Takeover Offer. BidCo shall only make such changes to the Offer Document in the BaFin review period as are either required as a result of a request by BaFin or agreed to by both VF Ger-many and the Investor. 5.2.3 Without undue delay after the date of this Agreement, VF Germany shall enter into the irrevocable qualified non-tender agreement (including a securities account block-age agreement) with BidCo in the form as attached hereto in Annex 5.2.3 (the “Ir-revocable Qualified Non-Tender Agreement”). 5.2.4 The acceptance period of the Takeover Offer pursuant to sec. 16 para. 1 German Takeover Act (the “Acceptance Period”) shall be no more than 6 weeks, unless extended due to mandatory legal provisions. 5.2.5 The Takeover Offer shall be financed through debt at MidCo 2 level with MidCo 2 advancing the funds to BidCo on the basis of a shareholder loan agreement or equity contribution or combination thereof. For this purpose, the Parties shall procure that MidCo 2 shall take all necessary steps under and in connection with the OpCo Credit Agreement (having regard to required timing requirements for drawdowns) to draw down and make available to BidCo (in the manner contemplated in the Structure Paper) such EUR amount as is necessary and within the applicable timeframes to enable BidCo to satisfy BidCo’s payment obligations under the VTG Sold Shares SPA and in respect of the VTG Shares tendered into the Takeover Offer (if any). 5.2.6 The Takeover Offer shall only be subject to satisfaction of the Regulatory Conditions by not later than 31 December 2023. 5.3 Offer Price 5.3.1 The Offer Document shall provide for an offer consideration in cash (the “Offer Price”) of EUR 32.00 for each VTG Share (the “Agreed Offer Price”). 5.3.2 If due to any action, other than a Permitted Action, in particular an acquisition of shares in VTG, (i) by a relevant member of VF Group before Closing or a relevant member of the VF Remaining Group after Closing or (ii) by a member of Investor Group prior to or after Closing, the Offer Price is increased pursuant to sec. 31 para. 4, 5 or 6 German Takeover Act and exceeds the Agreed Offer Price, (the “Reference Offer Price”), irrespective of the point in time at which such increase of the Agreed Offer Price occurs (i.e. including any increase even after settlement of the Takeover Offer), VF Germany (in case of a respective action by a member of VF Group prior to Closing or the VF Remaining Group after Closing) or the Investor (in case of a respective action by a member of the Investor Group prior to or after Closing), as applicable, shall indemnify BidCo by way of a contribution (into MidCo 1 and from MidCo 1 into MidCo 2 and from MidCo 2 into BidCo) for the additional costs incurred by BidCo as a result of the Reference Offer Price exceeding the Agreed Offer Price. "Permitted Action" means any action which is explicitly permitted under this Agree-ment other than the Capital Increases. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 5.3.3 If any Party raises concerns after the date of this Agreement that a Permitted Action may result in an increase of the Offer Price pursuant to sec. 31 para. 4, 5 or 6 Ger-man Takeover Act, the Parties shall discuss in good faith to assess the risk and to undertake measures to mitigate the risk if required. 5.4 Standstill 5.4.1 Each of the Parties hereby confirms that neither it nor any of its respective Affiliates (together the “Relevant Persons”) have acquired or agreed to acquire VTG Shares or other instruments in VTG for a purchase price exceeding the Agreed Offer Price within the six (6) month period prior to Signing. 5.4.2 Without the prior written approval of the respective other Party, for a period com-mencing on the date hereof and ending [***] after the announcement of the results for the initial acceptance period for the Takeover Offer pursuant to section 23 para. 1 sentence 1 no. 2 German Takeover Act, neither Party shall, and each Party shall procure that its Relevant Persons will not, (i) acquire, offer to acquire, enter into, continue, solicit, facilitate or encourage any discussion, enquiry or proposal from, or discussions or negotiations with any person regarding a (possible) acquisition of any shares or other instru-ments in VTG, (ii) procure or induce another person to acquire or to effect any of the matters set forth in this Clause 5.4.2, or (iii) enter into an agreement or arrangement to effect any of the matters set forth in this Clause 5.4.2, provided, however that the restrictions set forth in this Clause 5.4.2 shall not apply to a) any acquisition of shares or interest in VTG by BidCo through the Takeover Offer or in connection with this Agreement; b) any discussions, arrangements or agreements with and acquisitions from ad-ditional anchor shareholders of VTG to tender their respective VTG-Shares into the Takeover Offer at the Agreed Offer Price; or c) any acquisition of shares or other instruments in VTG by BidCo following BidCo’s announcement pursuant to section 23 para. 1 sentence 1 no. 2 Ger-man Takeover Act which is exempted from the minimum pricing rules pursu-ant to section 31 para. 5 German Takeover Act. 5.5 Completion of the Takeover Offer BidCo shall complete the Takeover Offer without undue delay after satisfaction of all Regu-latory Conditions as set forth in the Offer Document, but in any case after Closing. If the Regulatory Conditions are not met, or not met in time, BidCo shall release the tendered shares from the Takeover Offer without undue delay after non-satisfaction of the Regulatory Conditions as set forth in the Offer Document. 6 Conditions to Closing 6.1 Closing Conditions |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. The obligations of VF Germany and the Investor to perform the Closing Actions shall be subject to the conditions precedent (aufschiebende Bedingungen) in this Clause 6.1 (the “Closing Conditions”): 6.1.1 Merger control clearances (i) The European Commission and/or, in case the European Commission makes a partial or full referral in accordance with Article 4(4) or Article 9 of the European Union Merger Control Regulation, the competent national competition authority of each EU Member State concerned, has approved the Transaction including the settlement of the Takeover Offer or the Trans-action including the settlement of the Takeover Offer is deemed to be ap-proved. (ii) The Governmental Authorities in charge of merger control in China, Costa Rica, and Turkey, in each case, having approved the Transaction including the settlement of the Takeover Offer or, where relevant, the Transaction in-cluding the settlement of the Takeover Offer is deemed to be approved in accordance with the relevant competition laws (together with those set forth in Clause 6.1.1(i), the “Merger Control Clearances”). (iii) Approval shall also be deemed to have been granted for the purposes of the Closing Conditions referred to in Clause 6.1.1(i) and Clause 6.1.1(ii) if, in each case, the Governmental Authority has declared itself to be not compe-tent or has decided that filing of the Transaction including the settlement of the Takeover Offer is not required for other reasons, or has declared that the Transaction including the settlement of the Takeover Offer can be completed without prior approval. (iv) Approval shall further be deemed to have been granted for the purposes of the Closing Conditions referred to in Clause 6.1.1(i) and Clause 6.1.1(ii) if any regulatory or legislative amendment makes the Transaction including the settlement of the Takeover Offer not subject to prior approval under the rele-vant merger control regimes. (v) If any of the Governmental Authorities approve the Transaction including the settlement of the Takeover Offer subject to conditions, obligations or other requirements the Closing Conditions referred to in Clause 6.1.1(i) and Clause 6.1.1(ii) shall only be fulfilled once Closing is permitted pursuant to such conditions, obligations or other requirements. 6.1.2 Foreign investment control clearances (i) The Governmental Authorities in charge of foreign direct investment control in the Czech Republic, Germany, Italy, Romania, Spain and the UK in each case, having approved the Transaction including the settlement of the Take-over Offer or, where relevant, the Transaction including the settlement of the Takeover Offer is deemed to be approved in accordance with the relevant foreign direct investment control laws and if (a) the Screening of Third Coun-try Transactions Bill 2022 (the “Irish Bill”) which is currently in the legislative process in Ireland is enacted and enters into force prior to completion of the Takeover Offer and following its entry into force the Transaction is, or prior to the completion of the Takeover Offer becomes, a “notifiable transaction” (as |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. currently defined in section 9 of the Irish Bill), (b)(i) the Irish Governmental Authority in charge of foreign direct investment control having approved the Transaction, (ii) the Transaction including the settlement of the Takeover Of-fer is deemed to be approved pursuant to the provisions of the Irish Bill as enacted or (iii) a filing and/or notification is required but does not have a sus-pensory effect (the “Foreign Investment Control Clearances”). (ii) If from Signing until the Closing, any Governmental Authority or the legislator in a country where Vantage Group has material assets enacts, enters or en-forces any applicable law, act, decree, ordonnance, governmental coopera-tion agreement or equivalent that makes the consummation of the Transac-tion illegal without the approval of the competent foreign investment authori-ties, Investor and Vodafone Group Plc. shall jointly determine whether the approval of these competent authorities shall constitute a Closing Condition. (iii) Approval shall also be deemed to have been granted for the purposes of the Closing Conditions referred to in Clause 6.1.2(i) if, in each case, the Govern-mental Authority has declared itself to be not competent or has decided that filing of the Transaction including the settlement of the Takeover Offer is not required for other reasons, or has declared that the Transaction including the settlement of the Takeover Offer can be completed without prior approval. (iv) Approval shall further be deemed to have been granted for the purposes of the Closing Conditions referred to in Clause 6.1.2(i) if any regulatory or leg-islative amendment makes the Transaction including the settlement of the Takeover Offer not subject to prior approval under the relevant foreign invest-ment control regimes. (v) If any of the Governmental Authorities approve the Transaction including the settlement of the Takeover Offer subject to conditions, obligations or other requirements the Closing Conditions shall only be fulfilled once Closing is permitted pursuant to such conditions, obligations or other requirements. 6.1.3 The supervisory board (Aufsichtsrat) of VF Germany has approved the consumma-tion of this Agreement. If and once the supervisory board (Aufsichtsrat) of VF Ger-many has approved the consummation of this Agreement, VF Germany shall promptly inform the Investor of such decision by way of a Notice. VF Germany shall at any point in time be entitled to waive the Closing Condition set out in this Clause 6.1.3 and undertakes to declare such waiver if after the supervisory board meeting convened for 11 November 2022 it has received a binding instruction from its share-holders instructing it to consummate this Agreement (in accordance with its terms) and/or exercise the waiver of the Closing Condition set out in this Clause 6.1.3. If the Closing Condition in this Clause 6.1.3 is not satisfied or waived by 15 December 2022, Investor shall be entitled to withdraw from this Agreement. 6.1.4 Between Signing and the expiration of the acceptance period under the Takeover Offer, no Law, regulation, administrative act, injunction, temporary restraining order or preliminary or permanent injunction or other order issued by any Govern-mental Authority in a member state of the European Union, the United Kingdom or the United States of America and which is in force at the end of the acceptance period |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. under the Takeover Offer prohibits or makes illegal the consummation of the Trans-action including the settlement of the Takeover Offer or the acquisition of ownership of VTG Shares by BidCo. 6.2 Satisfaction of Regulatory Conditions 6.2.1 VF Germany and the Investor shall be jointly responsible for obtaining the Merger Control Clearances and the Foreign Investment Control Clearances from the Gov-ernmental Authorities where joint filings need to be made and shall be individually responsible where individual filings need to be made by either Party. VF Group and Investor shall in each case jointly agree on the strategy of the Parties (in a manner to obtain the Merger Control Clearances and Foreign Investment Control Clearances from the Governmental Authorities as soon as reasonably possible and consistent with the terms of this Agreement) and align with respect to the communications, meetings or proceedings with any relevant Governmental Authority. VF Group shall be responsible for the alignment with VTG Group. 6.2.2 VF Germany and the Investor shall, and shall procure that (i) each member of the AcquiCo Group, (ii) each member of the VF Remaining Group, (iii) the KKR Investor, (iv) the GIP Investor, (v) the Investor Controlling Shareholders and (vi) the Co-Inves-tors, as well as their advisors where relevant shall, cooperate to satisfy the Regula-tory Conditions as soon as reasonably practical. Subject to Clause 6.2.3(iv) through Clause 6.2.3(vi) below, VF Germany and the Investor shall, and shall procure that (i) each member of the AcquiCo Group, (ii) each member of the VF Remaining Group, (iii) the KKR Investor, (iv) the GIP Investor, (v) the Investor Controlling Shareholders and (vi) the Co-Investors shall take any and all actions and do all things necessary, supportive, proper or advisable to procure the satisfaction of the Regulatory Condi-tions by the end of the initial period of review by the Governmental Authorities (i.e. without the need for a second phase of investigation). 6.2.3 Cooperation referred to in Clause 6.2.2 above shall include, without prejudice to the generality of this clause in particular: (i) The preparation and filing, as soon as reasonably possible after Signing, of the submissions, notifications and filings to be made in order to procure the satisfaction of the Regulatory Conditions (the “Filings”) or, as appropriate, initiating prenotification discussions with the relevant Governmental Authori-ties in order to obtain the required approvals and preparing and filing re-sponses to requests for information made by any relevant Governmental Au-thority; (ii) Assistance with the preparation of any Filings or prenotification discussions, responses to requests for information made by any relevant Governmental Authority and the preparation of potential remedies, including, in each case, the provision of all information, as promptly as reasonably practicable and in a complete and accurate form, which is available and that is reasonably nec-essary to that end; (iii) At reasonable request and with reasonable prior notice, attending any meet-ings or hearings with any relevant Governmental Authority, including tele-phone or video conference calls. (iv) With respect to the Merger Control Clearances: |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. (a) Investor shall procure that [***]. (b) Subject to Clause 6.2.3(vi), [***]. (c) Investor shall not, and shall procure that the GIP Investor or KKR Investor shall not, directly or indirectly, enter into or effect any acqui-sitions that would reasonably likely prejudice the satisfaction of the Merger Control Clearances. (v) Investor shall procure that the Foreign Investment Control Clearances are obtained from the competent foreign investment authorities and that each and every impediment that may be asserted by any competent foreign in-vestment authority is avoided or eliminated, so as to enable VF Germany and Investor to consummate the Transaction on the earliest possible date, but in any event prior to the Longstop Date, including, if any competent for-eign investment authority is prepared to grant a Foreign Investment Control Clearance or otherwise clear the Transaction only subject to restrictions or obligations, regardless of whether or not imposed in binding orders (Anord-nungen) or agreed upon with any competent foreign investment authority in public law contracts (öffentlich-rechtliche Verträge) or otherwise, Investor shall, and shall procure that any of its Investor Controlling Shareholders and the Co-Investors shall, (i) propose and accept the imposition of restrictions or obligations, (ii) enter into any public law contracts (öffentlich-rechtliche Verträge) or otherwise agree with the competent foreign investment authori-ties with regard to the imposition of restrictions or obligations, and (iii) fully comply with any restrictions or obligations imposed, provided in each case (i) to (iii) that (a) Investor shall only propose or agree on restrictions, obliga-tions or other arrangements relating to the VF Group Companies or VTG Group Companies or the Business with the prior approval of Vodafone Group Plc. (to be granted in the form of Notice) and (b) subject to Clause 6.2.3(vi), nothing in this Section 6.2 shall be construed so as to require the Investor and/or its Investor Controlling Shareholders to propose and/or accept re-strictions, obligations or other arrangements that lead to (x) an acquisition of less than 30% of the shares in MidCo 1 by Investor or (y) an adverse change to the Investor's rights in MidCo 1 in respect of the (i) Key Shareholder Rights and/or (ii) transfer of shares by VF Germany, in both cases (i) and (ii) com-pared to the rights provided for under the Shareholders’ Agreement, it being understood that a potential regulatory requirement to set-up information ringfencing measures would not give rise to an adverse change of Investor’s rights in MidCo 1 within the meaning of item (i) and (ii) and it being further understood that the Parties shall, in case the Investor and/or its Investor Controlling Shareholders is requested to accept such restrictions, obligations or other arrangements, first use reasonable efforts to find a mutual solution to avoid any such restrictions, obligations or other arrangements while, at the same time, obtain the required clearances. (vi) [***] 6.2.4 Before making any material notification, filing, submission, response or other com-munication (whether orally, in writing, in electronic format or otherwise) other than of a purely administrative nature (each a “Communication”) to a Governmental Au-thority with respect to its review of merger control and foreign investment control |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. filings made or to be made under this Agreement, the Party making such Communi-cation shall: (i) provide draft copies of the Communication (or in respect of an oral Commu-nication an indication of the proposed content of such oral Communication) together with copies of any supporting documentation or other relevant ma-terial, where necessary after redaction of any confidential information be-longing to the disclosing Party and/or any third party, to the other Party rea-sonably in advance; (ii) take due consideration of any reasonable comments made by the respective other Party who shall communicate any comments promptly so as not to de-lay the submission of the Communication to any Governmental Authority it being understood that Communications shall only be made in a form agreed between the Parties; and (iii) provide, in each case, the final version of the Communication submitted to the Governmental Authority, together with copies of any supporting docu-mentation or other relevant material, where necessary after redaction of any confidential information belonging to the disclosing Party and/or any third party, to the other Party as soon as reasonably possible after submission. (iv) Both Parties shall have the right to attend any material meetings including telephone and video conferences with Governmental Authorities in the con-text of merger control and foreign investment control notifications made or to be made with any relevant Governmental Authorities. Each Party shall where possible inform the respective other Party of any such upcoming meetings with sufficient notice in order to enable it to participate in any such meetings. In case one Party and its advisors do not attend a meeting with a Govern-mental Authority the Party that participated in the meeting (or the advisors of which participated in such meeting) shall provide the respective other Party with the minutes of the meeting. 6.2.5 The cooperation duties foreseen in Clauses 6.2.1, 6.2.3 and 6.2.4 shall apply mutatis mutandis should the Parties decide to submit Filings to additional Governmental Au-thorities or should the Parties receive questions from such other Governmental Au-thorities. 6.3 Evidence VF Germany shall give evidence to the Investor and the Investor shall give evidence to VF Germany of the satisfaction of a Closing Condition or of the impossibility to satisfy such Closing Condition, in each case without undue delay after becoming aware of the same. 7 Closing 7.1 Closing Place and Date The closing of the Transaction (the “Closing”) shall take place prior to completion of the Takeover Offer at Linklaters’ offices in Düsseldorf, Germany, at 9 a.m. Central European Time (or such earlier time on such day as required to execute Closing prior to completion of the Takeover Offer) on the 8th banking day in the meaning of the Offer Document immediately following the day on which the satisfaction of the Closing Conditions contained in Clause 6 |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. has been published or such other location, time or date as may be agreed in writing between VF Germany and the Investor (the “Closing Date”). 7.2 Closing Actions At Closing, VF Germany and the Investor shall simultaneously (Zug-um-Zug) execute and deliver the following documents, or procure that such documents are executed and deliv-ered, and take the following actions or procure that such actions are taken in the order set forth in the Transaction Step Overview and otherwise in the order set forth below (together the “Closing Actions”): 7.2.1 Investor shall make a cash contribution to MidCo 1 in an amount equal to the Inves-tor Equity Contribution (if any) as follows: (i) VF Germany shall as shareholder of MidCo 1 adopt a resolution on the in-crease of the registered share capital of MidCo 1 against the contribution in cash of the Investor Equity Contribution by way of a cash capital increase (Barkapitalerhöhung) by issuing new shares in MidCo 1 to Investor (the “In-vestor Equity Contribution Capital Increase”). The amount of new shares to be issued to Investor shall be determined in such way that, following the capital increase, Investor's proportionate shareholding in MidCo 1 corre-sponds to the proportion of the Investor Equity Contribution to the sum of the Investor Equity Contribution and the value of the VTG Contribution Shares valued at the Agreed Offer Price. A sample calculation is attached hereto as Annex 7.2.1(i). (ii) The Investor shall pay the amount of the Investor Equity Contribution to MidCo 1’s bank account as specified by MidCo 1. (iii) Investor shall subscribe to the newly issued shares in MidCo 1. 7.2.2 Midco 1 shall make a cash contribution to MidCo 2 in an amount equal to the Investor Equity Contribution (if any) by way of a cash capital increase (Barkapitalerhöhung) by issuing new shares in MidCo 2 to Midco 1 or by way of a payment into the free capital reserves of MidCo 2 or otherwise. 7.2.3 Midco 2 shall make a cash contribution to BidCo in an amount equal to the Investor Equity Contribution (if any) by way of a cash capital increase (Barkapitalerhöhung) by issuing new shares in BidCo to Midco 2 or by way of a payment into the free capital reserves of BidCo or otherwise. 7.2.4 Transfer of MidCo 1 Sale Shares (i) VF Germany and the Investor shall effect the sale and transfer of the MidCo 1 Sale Shares by executing the MidCo 1 Sale Shares SPA. The transfer of the MidCo 1 Sale Shares from VF Germany to the Investor shall be subject to the condition precedent of BidCo acquiring control over VTG within the meaning of Section 29 para. 2 Takeover Act. (ii) The Investor shall procure that all necessary steps are taken under and in connection with the HoldCo Financing and the Equity/Debt Commitment Let-ters (having regard to required timing requirements for drawdowns) to ensure that it receives sufficient funds as required to fulfil the Investor’s payment obligations under the MidCo 1 Sale Shares SPA at Closing. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. (iii) Upon (x) BidCo becoming the owner of the VTG Contribution Shares and (y) the Investor having been provided with the copies referred to in Clause 7.2.4a, the Investor shall pay to VF Germany the VTG Contribution Shares Purchase Price as purchase price for the sale and transfer of the MidCo 1 Sale Shares. 7.2.4a VF Germany shall procure that after the BidCo Capital Increase having been re-solved upon, MidCo 2 effects the contribution and in rem transfer of the VTG Contri-bution Shares to BidCo on the Closing Date. VF Germany shall deliver to the Investor a copy of (y) the executed resolution on the BidCo Capital Increase, and (z) the ex-ecuted transfer agreement relating to the in rem transfer of the VTG Contribution Shares to BidCo.” 7.2.5 Transfer of VTG Sold Shares (i) VF Germany shall sell and transfer, and BidCo shall accept the sale and transfer of the VTG Sold Shares, each by signing the share sale and transfer agreement substantially in the form as attached hereto in Annex 7.2.5(i) (the “VTG Sold Shares SPA”). (ii) MidCo 2 shall take all necessary steps under and in connection with the OpCo Credit Agreement (having regard to required timing requirements for drawdowns) to draw down and make available to BidCo (in the manner con-templated in the Structure Paper) such EUR amount as is necessary and within the applicable timeframes to enable BidCo to satisfy BidCo’s payment obligations under the VTG Sold Shares SPA and in respect of the VTG Shares tendered into the Takeover Offer (if any). (iii) BidCo shall pay to VF Germany the VTG Sold Shares Purchase Price as purchase price for the sale and transfer of the VTG Sold Shares (if any). 7.2.6 Related Agreements (i) The Parties shall enter into the Shareholders’ Agreement in the form as at-tached hereto in Annex 2.1.4(v). 7.2.7 Further actions (i) VF Germany shall deliver to the Investor evidence of the waiver of the rele-vant [***]. (ii) VF Germany shall deliver to the Investor evidence of the termination [***]. (iii) VF Germany and Investor shall enter into [***]. 7.3 Closing Minutes At Closing, VF Germany and the Investor shall confirm to each other in writing that the Clos-ing Conditions have been fulfilled and the Closing Actions have been taken in accordance with this Agreement (the “Closing Minutes”). The legal effect of the Closing Minutes shall be to serve as prima facie evidence that all Closing Conditions have been fulfilled and all Closing Actions have been taken. However, the execution of the Closing Minutes shall not limit or prejudice any rights of the Parties arising under or in connection with this Agreement or under applicable Law. 7.4 Registration of Investor Equity Contribution Capital Increase |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. Without undue delay following payment of the Investor Equity Contribution amount to the bank account as specified by MidCo 1 pursuant to Clause 7.2.1(ii) and subject to BidCo acquiring control over VTG within the meaning of Section 29 para. 2 Takeover Act, VF Ger-many and Investor shall procure that the resolution on the Investor Equity Contribution Cap-ital Increase will be immediately filed for registration with the competent commercial register. The Parties shall take all measures and actions that are reasonably necessary to achieve such registration without undue delay and shall refrain from those measures and actions which could reasonably foreseeably prevent or delay such registration. 7.4a Registration of BidCo Capital Increase Without undue delay following contribution and transfer of the VTG Contribution Shares to BidCo, VF Germany and Investor shall procure that the resolution on the BidCo Capital In-crease will be immediately filed for registration with the competent commercial register. The Parties shall take all measures and actions that are reasonably necessary to achieve such registration without undue delay and shall refrain from those measures and actions which could reasonably foreseeably prevent or delay such registration. 7.5 Right to Defer Closing If a Closing Action pursuant to Clause 7.2 has not been executed and delivered by an obliged Party, the respective other Party shall have the right to defer all or individual Closing Actions and thus Closing, for a period reasonably determined by such Party, provided that under no circumstances Closing may be deferred to after the Long Stop Date. If the respective Party exercises such right, the other Party’s right to terminate pursuant to Clause 16.1 shall be suspended for the period by which Closing is deferred. 8 VF Germany’s Representations and Warranties VF Germany guarantees by way of an independent promise of warranty (selbständiges Gar-antieversprechen) pursuant to sec. 311 German Civil Code, and exclusively with the reme-dies pursuant to Clause 10, that the statements set forth in [***] (the “VF Warranties” or each a “VF Warranty”) are true and correct as of the date of this Agreement and the state-ments set forth in [***] are also true and correct as of the Closing Date. The Investor acknowledges that the VF Warranties are being provided on the basis of infor-mation received from the management of the VTG Group in the form of due-inquiry declara-tions and that (i) none of the facts, matters, circumstances or statements made by the man-agement as part of these declarations have been independently researched or verified by VF Germany and (ii) VF Germany is under no obligation to independently research or verify any of the facts, matters, circumstances or statements made by the management as part of these declarations and that the omission to carry out any such research or verification shall not provide the basis for any claims against VF Germany based on fraud (Arglist) or the argument that statements have been made in the absence of sufficient information (ins Blaue hinein gemachte Angaben). 9 Investor’s Representations and Warranties The Investor guarantees by way of an independent promise of warranty (selbständiges Gar-antieversprechen) pursuant to sec. 311 German Civil Code, and exclusively with the reme-dies pursuant to Clause 10, that the statements set forth in [***] (the “Investor Warranties” or a “Investor Warranty”) are true and correct as of the date of this Agreement and, unless expressly stated otherwise in this Agreement, as of the Closing Date. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 10 Legal Consequences 10.1 Exhaustive Provisions Subject to mandatory Law, in particular sec. 123 (wilful deceit – arglistige Täuschung) or sec. 276 para. 3 (wilful misconduct – Vorsatz) German Civil Code, 10.1.1 the VF Warranties and the warranties provided for in Clause 12 are exhaustive and no further warranties shall be deemed to be given by VF Germany; the Investor acknowledges that the relevant warranties contained in this Agreement (including in Clause 8 and 12) are the only representations, warranties or other assurances of any kind given by VF Germany on which the Investor may rely (and has relied) in entering into this Agreement; 10.1.2 the provisions set forth in this Clause 10 shall be exhaustive and shall apply instead and to the exclusion of any and all remedies available to the Investor under the Law (i) in the event of any of VF Warranties being incorrect when made in accordance with this Agreement or (ii) in the event of any other covenant or obligation of VF Germany arising from or relating to this Agreement being breached (collectively a “Breach”) and except for the rights of indemnification provided for in Clauses 5.3.2, 12, 13.4 and 14, the Investor hereby waives and releases any Claim or cause of action by Law or otherwise against VF Germany or its Affiliates regarding Obligations or Losses of any nature whatsoever, and; 10.1.3 Any further liability of VF Germany and any differing or further rights or Claims of the Investor other than explicitly provided for in this Agreement, irrespective of their na-ture or legal basis, – including without limitation, the statutory right of rescission (Anfechtung) or withdrawal (Rücktritt), to claim remediation (Nacherfüllung) or to claim damages (Schadensersatz) or reimbursement of futile expenditure (Ersatz vergeblicher Aufwendungen) – are hereby expressly excluded and waived, in partic-ular, without limitation, (i) arising from or in connection with defects in quality or title (Sach- oder Rechtsmängel), (ii) from incorrectness of any of VF Warranties’, (iii) breach of any contractual or pre-contractual obligation, (iv) tort, (v) interference with the contractual basis (Störung der Geschäftsgrundlage), or (vi) any other basis. 10.2 VF Germany’s Reasonable Knowledge To the extent that the VF Warranties are restricted to VF Germany’s “reasonable knowledge”, this shall mean that none of the persons listed in Annex 10.2-A has, at the relevant point in time, after having made reasonable enquiries with the persons listed in Annex 10.2-B, posi-tive knowledge or reasons to believe that the statement concerned was incorrect, had it been made without the “reasonable knowledge” restriction. 10.3 VF Germany’s Liability In the event of a Breach, VF Germany shall put the Investor or, at the election of Investor, the respective AcquiCo Group Company or the respective VTG Group Company (as appli-cable) in the position in which the Investor, the relevant AcquiCo Group Company or the relevant VTG Group Company would be in, if the VF Warranty had been correct, or had the Breach not occurred, in each case subject to the following: 10.3.1 To the extent possible, the Investor shall first give VF Germany the opportunity to factually remedy (Naturalrestitution) the Breach within four weeks after being re-quested to do so by the Investor. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 10.3.2 If VF Germany fails or is unable to achieve this factual remediation within the four-week-period or if it is not possible to factually remedy the Breach, VF Germany shall compensate by way of contribution the respective AcquiCo Group Company or the respective VTG Group Company (wherever the Loss has occurred) or, if neither a AcquiCo Group Company nor a VTG Group Company has incurred a Loss, shall compensate the Investor, in each case by way of monetary damages (Schadenser-satz in Geld) for all Losses suffered by the respective AcquiCo Group Company, the respective VTG Group Company or, if neither a AcquiCo Group Company nor a VTG Group Company has incurred a Loss, the Investor as a result of such Breach, pro-vided that in case of a Breach of any VF Warranty which results in a Loss of a mem-ber of the AcquiCo Group or VTG Group, any Losses compensable as a conse-quence thereof shall only comprise the Losses incurred at the level of the respective member of the AcquiCo Group or VTG Group, (i) such Losses multiplied by one hundred percent (100%) in case an AcquiCo Group Company or VTG Group Company is the respective compensated company; and otherwise (ii) multiplied by the pro rata equity participation (durchgerechnete Be-teiligungsquote) of Investor in case of the Investor being the compensated company; (the “Pro-rata Principle”). The Pro-rata Principle shall also apply mutatis mutandis to any benefits received by a member of the AcquiCo Group or VTG Group, in par-ticular for offsetting benefits pursuant to Clause 10.5.6. 10.3.3 For the avoidance of doubt, in the event that VF Germany remedies the Breach, VF Germany shall also compensate an affected AcquiCo Group or VTG Group Com-pany or, if neither any AcquiCo Group or VTG Group Company has incurred a Loss, the Investor by way of monetary damages (Schadensersatz in Geld) for all Losses suffered by the respective AcquiCo Group Company or VTG Group Company or, if neither any AcquiCo Group Company nor any VTG Group Company has incurred a Loss, the Investor during the period prior to the remedy of the Breach, thereby ap-plying the Pro-Rata Principle. 10.4 Indemnification Provisions for the Benefit of VF Germany The Investor shall in case of a Loss of VF Germany or any of its Affiliates, subject to the limitations set forth in this Agreement and at the sole discretion of VF Germany, contribute cash to MidCo 1, in each case in such amount as necessary (which implies that, in case of a contribution of cash to MidCo 1, e.g. if Investor holds 50% of the shares in MidCo 1, 200% of the Loss need to be contributed to MidCo 1; a sample calculation is attached hereto as Annex 10.4) to put VF Germany or any of its Affiliates in the same position VF Germany or any of its Affiliates would be in if it or they had not incurred the respective Loss, in each case if and to the extent the respective Loss arises out of or is related to (i) the breach of any Investor Warranty contained in this Agreement when made or (ii) the breach of any cove-nants or Obligations of the Investor contained in this Agreement, provided, in each case of (a) and (b), that the limitations to VF Germany’s liability pursuant to Clauses 10.1, 10.3, 10.5.1, 10.5.2, 10.5.3, 10.5.5, 10.5.6, 10.5.8, 10.5.10 (provided that any covenants or Obli-gations of Investor included in Clause 6.2 shall only be limited by Clause10.5.10(iii)), 10.6 and 10.7 shall apply mutatis mutandis to such Investor’s liability. 10.5 Limitations to VF Germany’s Liability |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 10.5.1 Changes in Legislation VF Germany shall not be liable under or in connection with this Agreement to the extent that such liability would not have occurred but for the passing of, or change in, any Law (including any increase in the rates of Taxes) or any mandatory interpre-tation of Law which occurred after Signing. 10.5.2 Changes Attributable to the Investor VF Germany shall not be liable under or in connection with this Agreement in respect of any Obligation or Loss resulting from, or increased by (but, in the latter case, only to the extent of the actual increase in such Obligation or Loss), (i) any voluntary act or omission of the Investor or any of the Investor’s Affiliates (including, after Closing, the VTG Group Companies), or their respective di-rectors, officers, employees, agents or other representatives, including any changes in the accounting methods or principles of the Investor or any of the Investor’s Affiliates or (ii) any act or omission expressly agreed in, and in compliance with, this Agree-ment, the Related Agreements or otherwise expressly requested or ex-pressly approved by the Investor. 10.5.3 Non-Compliance by the Investor (i) VF Germany shall not be liable under or in connection with this Agreement in respect of a Claim to the extent the Investor does not comply with its obli-gations under Clause 10.7 to the extent the relevant Loss has been in-creased (or caused) as a result of such non-compliance. (ii) The Investor shall procure that all reasonable measures in the meaning of sec. 254 German Civil Code are taken and all reasonable assistance is given to avoid or mitigate any Losses and VF Germany shall not be liable if and to the extent the Investor breaches such obligation to mitigate. 10.5.4 VF Germany’s Disclosure / Investor’s Knowledge (i) The Investor acknowledges and agrees that: (a) during the period from 18 July 2022 to 8 November 2022, the Investor has performed, with the assistance of professional advisors, a due diligence investigation with respect to the VTG Group, AcquiCo Group and the MidCo 1 Sale Shares, the Business as operated by the VTG Group prior to or at Signing and has had, amongst others, (i) access to the strategic, commercial, technical, operational, finan-cial, tax, legal and other information provided in the Data Room, (ii) the opportunity to submit questions to and receive answers from VF Germany and/or VTG on any matter that it deemed proper and nec-essary for the purpose of entering into this Agreement, and (iii) ac-cess to the senior management of VTG (together the “Due Diligence Investigation”); the documents which were displayed in the Data Room and all additional written information provided in the context of the Due Diligence Investigation have been stored on a flash storage device and handed over to the German Notary to be taken into cus-tody pursuant to an escrow agreement substantially in the form of the |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. draft attached hereto as Annex 10.5.4(i)(a). The Parties are entitled at any time to request from the German Notary access to the stored documents, if and to the extent the requesting Party deems such ac-cess necessary to enforce any right it may have or to defend against any right of the respective other Party under this Agreement or the Related Agreements; (b) in the Due Diligence Investigation, the Investor, its representatives and advisers have had sufficient opportunity to review any and all information made available to them; and (c) the Due Diligence Investigation was in form, scope and substance to the Investor’s satisfaction and the Investor has raised with VF Ger-many any and all issues which it considered relevant in connection with the transactions contemplated by this Agreement. (ii) Investor’s Knowledge VF Germany shall not be liable under or in connection with this Agreement in respect of any Breach to the extent that the Investor or any of its repre-sentatives has on the date of this Agreement knowledge of the underlying facts constituting such Breach, or Investor or any of its Knowledge Repre-sentatives (i) would have had such knowledge on the date of the Agreement if it had made proper enquiries (except for a Breach of Fundamental Warran-ties), or (ii) acquires such knowledge after the date of this Agreement and the Closing is consummated without the Investor having expressly reserved its rights arising from the relevant Breach by way of Notice to VF Germany. In particular, without limitation, the following facts shall be deemed known by the Investor on the date of this Agreement (except with respect to the Fun-damental Warranties): (a) all matters expressly disclosed, expressly contained or expressly re-ferred to in this Agreement or the Related Agreements; (b) all matters that are reasonably apparent from the content of materials made available to the Investor or its representatives in the Data Room prior to the date of this Agreement in such a way that they could reasonably be expected to be identified by a prudent business person or by a relevant Knowledge Representative; (c) all matters disclosed in writing in the expert sessions in connection with the transactions contemplated by this Agreement by or on behalf of VF Germany, VTG or its representatives or advisors to the Investor or its representatives, in each case in connection with the Due Dili-gence Investigation; (d) all matters disclosed, provided for or noted (to the extent of such pro-vision or note) or referred to in the Annual Accounts or are reasonably apparent from the content of the prospectus dated 8 March 2021 in relation to the public offering of shares in VTG and for the admission of VTG’s shares to trading on the regulated market (regulierter Markt) of the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) with simultaneous admission to the subsegment of the regulated market |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. with additional post-admission obligations (Prime Standard) of the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) in such a way that they could reasonably be expected to be identified by a pru-dent business person or by a relevant Knowledge Representative; (e) all matters otherwise disclosed in writing by or on behalf of VF Ger-many or VTG to the Investor or its representatives in connection with the transactions contemplated in this Agreement; (f) all matters which are or were publicly available in commercial regis-ters or on the website of VTG in the period beginning from 1 June 2022 until five (5) Business Days prior to Signing. 10.5.5 Investor’s Rights to Recover VF Germany shall not be liable under or in connection with this Agreement to the extent that: (i) the damage giving rise to a Claim is covered by an insurance of any AcquiCo Group Company or VTG Group Company, the Investor or any of the Inves-tor’s Affiliates, or (ii) the Investor, a AcquiCo Group Company or a VTG Group Company has a valid claim for compensation of, or indemnification from, the respective dam-age against a third party. 10.5.6 Offsetting Benefits VF Germany shall not be liable under or in connection with this Agreement in respect of any Claim to the extent of any existing or future offsetting benefits, savings or other quantifiable financial advantages accruing or attributable to the Investor, a Ac-quiCo Group Company or a VTG Group Company on account of the matters or cir-cumstances giving rise to such Claim, including any Tax Benefits. Future offsetting benefits, savings or other quantifiable financial advantages shall be valued at their net present value calculated at a discount rate of [***] p.a. 10.5.7 Inclusion in the Annual Accounts or Business Plan VF Germany shall not be liable under or in connection with this Agreement in respect of any claim to the extent that the specific matter giving rise to such Claim has been taken into account in (i) the Annual Accounts as a write-off (Abschreibung), value adjustment (Wertberichtigung), provision (Rückstellung) or liability (Verbindlichkeit) or (ii) the business plan provided to Investor in the context of the Due Diligence In-vestigation. 10.5.8 Ne bis in idem The Investor or any other person shall not be entitled to recover from VF Germany more than once in respect of the same Loss (including arising from Leakage) suf-fered. The foregoing shall apply in particular where one and the same set of facts (Sachverhalt) qualifies under more than one provision and therefore entitling the In-vestor to a Claim under or in connection with this Agreement. In this case, only the more specific provision shall apply and VF Germany’s Obligations shall be deter-mined exclusively based on such more specific provision. 10.5.9 Overstatements/Understatements/Allowances/Provisions |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. If and to the extent that: (i) the amount of any allowance, provision or reserve (including any allowance, provision or reserve taken into account in calculating the net value of an as-set) made in the Annual Accounts or otherwise taken into account or reflected therein is found to be in excess of, or unnecessary in respect of, the matter for which such allowance, provision or reserve was made, (ii) any sum is received by a VTG Group Company in respect of any asset which has previously been written off as irrecoverable in the Annual Accounts, or (iii) the value of any asset in the Annual Accounts is understated or any liability in the Annual Accounts is overstated, the amount of such excess, unnecessary allowance, provision or reserve, receipt, understatement or overstatement shall, to the extent relating to the fact pattern con-stituting a relevant Breach, be credited against and applied in relieving VF Germany from any liability it would otherwise incur in respect of a respective Claim under or in connection with this Agreement. 10.5.10 De minimis, Basket, Cap (i) Except for the rights of specific performance, Breaches of Fundamental War-ranties, Payments under Clause 13.4 and indemnification provided for in Clause 5.3.2 and 12, Claims under this Agreement can only be made if: (a) the liability agreed or determined in respect of a single Claim exceeds an amount of EUR [***]; and (b) the aggregate amount of the Claims exceed an amount of EUR [***]. If the thresholds in lit (a) are and (b) are exceeded, in each case the entire amount shall be taken into account. Any single Claim where the liability agreed or determined for any Claim does not exceed the threshold in lit (a) shall for all purposes be disregarded. (ii) The aggregate liability of VF Germany under this Agreement, except for Claims under Clause 5.3.2, 12, 13.4 and Breaches of Fundamental Warran-ties but including Claims under Annex 14, shall be limited to a maximum amount of EUR [***]. (iii) The overall liability of VF Germany under this Agreement, including for Claims under Clause 5.3.2, 12 and 13.4 and Breaches of Fundamental Warranties, and all other Losses, Obligations and Taxes shall be limited to an aggregate maximum amount corresponding to the EUR-amount of[***]. (iv) [***]. 10.6 Time Limitation The claims of the Investor under this Agreement shall become time-barred as follows: 10.6.1 Claims arising from a Breach of Fundamental Warranties shall become time-barred [***] after the date of this Agreement; 10.6.2 All Claims arising from any other Breach, except for Breaches of Clause 12 shall become time-barred [***] after the Closing Date; |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 10.6.3 All Claims arising from a Breach of Clause 12, shall become time barred [***] after the Closing Date; 10.6.4 All Claims arising from Annex 14 shall be time-barred [***]. Secs. 203 et seqq. German Civil Code shall apply. 10.7 Conduct of Claims 10.7.1 Notification VF Germany or the Investor, as the case may be (for purposes of this Clause 10.7, an “Indemnified Party”) shall give Notice to the indemnifying Party (for purposes of this Clause 10.7, an “Indemnifying Party”) of any Breach within the time period de-fined in Clause 10.7.2. Such Notice shall specify in reasonable detail for each indi-vidual Breach all underlying facts constituting the Breach, the legal basis for a po-tential claim and the amount or estimated amount of the Losses suffered by the In-demnified Party, a AcquiCo Group Company or VTG Group Company, as the case may be, in result of the Breach and shall be submitted together with documents which enable the Indemnifying Party to assess the merits of any claims in respect of the relevant Breach and the amount or estimated amount of the Losses arising from the Breach. The Indemnified Party’s claims so notified are herein referred to as “No-tified Claims”. 10.7.2 Time Limit for Notification The Indemnified Party shall make the notification in accordance with Clause 10.7.1 with [***] after it has obtained actual knowledge of the underlying facts constituting the relevant Breach. This [***] period shall be reduced as appropriate if the urgency of the matter requires a swifter notification to the Indemnifying Party so as to enable the Indemnifying Party to effectively exercise its rights under this Clause 10.7. 10.7.3 Investigation by the Indemnifying Party In connection with any matter or circumstance that may give rise to a claim against Indemnifying Party under this Agreement the Indemnified Party shall allow, and shall exercise all rights available to it to ensure that the respective AcquiCo Group Com-panies or VTG Group Companies allow, the Indemnifying Party and its financial, ac-counting, tax or legal advisers to investigate the matter or circumstance alleged to give rise to a Claim and whether and to what extent any amount is payable in respect of such Claim. In particular, all material and documents relating to the relevant Claim of which the Indemnified Party and/or the relevant AcquiCo Group Company and/or VTG Group Company are aware shall be disclosed without undue delay, and all such information and assistance, including access to premises and personnel, and the right to examine and copy or photograph any assets, accounts, documents and rec-ords, as the Indemnifying Party, or its financial, accounting, tax or legal advisers may reasonably request shall be given without undue delay (unverzüglich). The Indemni-fying Party hereby undertakes to keep all such information confidential and to use it only for the purpose of investigating and defending the claim in question. All reason-able expenses of the Indemnified Party, the relevant AcquiCo Group Company and VTG Group Company caused by such disclosure and assistance, other than internal costs such as labour or overhead costs, shall be borne by [***]. 10.7.4 Third Party Claims |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. In the event that a Claim against the Indemnified Party, a AcquiCo Group Company or a VTG Group Company is asserted, made, threatened or filed by a third party (excluding any Tax Authority but including any other Governmental Authority) which results, or which the Indemnified Party believes to result, from a Breach of the In-demnifying Party (the “Third Party Claim”) the following shall apply: (i) The Indemnified Party shall inform the Indemnifying Party by way of a Notice about the Third Party Claim and, to the extent known to the Indemnified Party, its amount, and shall provide to the Indemnifying Party copies of the documents required to examine the substance of the Third Party Claim to the extent they are available to the Indemnified Party. In case such docu-ments are available to a AcquiCo Group Company or VTG Group Company, the Indemnified Party shall exercise all rights available to it to ensure that such AcquiCo Group Company or VTG Group Company provides copies of such documents. (ii) No admissions in relation to such Third Party Claim shall be made by or on behalf of the Indemnified Party or any of its Affiliates and the Indemnified Party shall exercise all rights available to it to ensure that neither any Ac-quiCo Group Company nor any VTG Group Company will make any such admission, and the Indemnified Party shall not, and shall exercise all rights available to it to ensure that neither any AcquiCo Group Company nor any VTG Group Company will, compromise, dispose of or settle any Third Party Claim without the prior written consent of the Indemnifying Party. (iii) If the Indemnifying Party wishes to defend the Indemnified Party or the re-spective AcquiCo Group Companies or VTG Group Companies against the Third Party Claim in its name and on its behalf, the Indemnifying Party shall give Notice to the Indemnified Party of such decision within a period of three weeks after having been duly notified of the Third Party Claim in accordance with Clauses 10.7.1 and 10.7.2. To the extent legally possible, the Indemni-fied Party shall, and shall exercise all rights available to it to ensure that each AcquiCo Group Company and VTG Group Company will, upon such notifi-cation put the Indemnifying Party in a position under which it is entitled to take any action it deems necessary to defend, appeal, compromise or settle the Third Party Claim (including the assertion and pursuit of counter-claims or other claims against any third parties) at its sole discretion in the name and on behalf of the Indemnified Party or the respective AcquiCo Group Companies or VTG Group Companies. Notwithstanding the Indemnified Party’s Obligations pursuant to Clause 10.7.3, the Indemnified Party shall, and shall exercise all rights available to it to ensure that the respective Ac-quiCo Group Companies or VTG Group Companies will, promptly give all assistance and information to the Indemnifying Party as may be reasonably required to defend the Third Party Claim and in particular promptly forward all notices, communications and filings (including court papers) to the Indem-nifying Party. (iv) If the Indemnifying Party does not notify the Indemnified Party in accordance with Clause 10.7.4(iii), the Indemnified Party shall, and shall exercise all rights available to it to ensure that the respective AcquiCo Group Companies or VTG Group Companies will, conduct the defence of the Third Party Claim |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. diligently and in good faith and (a) take into account the legitimate interests of the Indemnifying Party as well as the legitimate interest of the Indemnified Party, (b) keep the Indemnifying Party fully informed of the progress of the Third Party Claim and its defence, (c) promptly provide the Indemnifying Party with copies of all material notices, communications and filings (includ-ing court papers), (d) ensure that the Indemnifying Party and/or one or sev-eral representatives of the Indemnifying Party bound to secrecy by profes-sional code will, to the extent legally permissible, be entitled to participate in any meetings or discussions (including in connection with any tax audits) and (d) consult with the Indemnifying Party prior to taking any action in relation to the Third Party Claim and its defence so as to give the Indemnifying Party the opportunity to comment and object. If reasonable, at the request of the Indemnifying Party, the Indemnified Party shall, and shall exercise all rights available to it to ensure that the respective AcquiCo Group Companies or VTG Group Companies will, take such action as the Indemnifying Party may request in its reasonable discretion to avoid, defend against, appeal or settle any Third Party Claim. (v) The Indemnified Party shall, and shall exercise all rights available to it to ensure that the respective AcquiCo Group Companies or VTG Group Com-panies will, at all times and in particular until the Indemnifying Party has no-tified the Indemnified Party in accordance with Clause 10.7.4(iii), act in the best interest of the Indemnifying Party in relation to a Third Party Claim and shall consult with the Indemnifying Party in relation to the suitable manner of dealing with the Third Party Claim. In particular, the Indemnified Party shall, and shall exercise all rights available to it to ensure that the respective Ac-quiCo Group Companies or VTG Group Companies will, notify the Indemni-fying Party promptly upon a Third Party Claim being, or likely to be, asserted, made, threatened or filed, such Notice to be submitted together with all in-formation in relation to the Third Party Claim which is available to the Indem-nified Party and the respective VTG Group Companies. (vi) If and to the extent the Indemnified Party has an Obligation under this Clause 10.7 to procure actions or omissions of any AcquiCo Group Company or VTG Group Company, the Indemnifying Party shall have no right to claim a limitation of its liability under this Agreement if and to the extent the Indem-nified Party could not fulfil its Obligations caused by an action or omission of the Indemnifying Party. (vii) The costs and expenses incurred in relation to the defence against the Third Party Claim shall be borne as follows: (a) [***] (b) [***] (c) [***] 11 Period between Signing and Closing 11.1 Ordinary course of business |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. As from the Signing until the Closing Date, VF Germany shall exercise all rights legally avail-able to it (other than to request the convocation, or to call, a general meeting of VTG) to ensure that each member of AcquiCo Group and VTG Group will conduct their respective business (including the Business) in the ordinary course consistent with past practice. 11.2 Preservation of value of AcquiCo Group and VTG Group 11.2.1 Subject to Clause 11.2.2 and fiduciary duties, VF Germany shall exercise all rights legally available to it to ensure that each member of AcquiCo Group and VTG Group will (i) not create, issue or grant any option to subscribe for, any share capital of any member of the AcquiCo Group or VTG Group, other than options or other rights to receive shares it is committed to issue or grant under share plans or comparable remuneration mechanisms in place as at the date of this Agreement; (ii) not acquire or dispose of, by or through a member of AcquiCo Group or VTG Group, whether by merger or consolidation, by purchasing or selling an eq-uity interest or otherwise, any business or any corporation, partnership, as-sociation or other business organisation or division thereof involving a con-sideration, expenditure or liabilities in excess of EUR [***]; (iii) not acquire or dispose of any material asset or make any other investment or de-investment involving a consideration, expenditure or liabilities in ex-cess of EUR [***]; (iv) not adopt any material amendments to the Governing Documents of a mem-ber of AcquiCo Group or VTG Group; (v) not incur any Obligations in excess of EUR [***] of a member of AcquiCo Group or VTG Group for borrowed money or purchase money indebtedness, whether or not evidenced by a note, bond, debenture or similar instrument, nor enter into any guarantees in excess of EUR [***] by a member of AcquiCo Group or VTG Group, except (i) trade debt in the ordinary course of busi-ness, (ii) indebtedness owed to other members of AcquiCo Group or VTG Group, (iii) indebtedness that will be settled prior to Closing and (iv) debt which replaces existing debt on terms materially in line with market terms at the time of replacement; and (vi) promptly notify the Investor of any material emergency or other material change in the business or the assets (for purposes of this Clause 11.2.1(vi) only, “material” shall mean events or circumstances which result or would reasonably be likely to result in Losses equal to or greater than EUR [***] of any member of AcquiCo Group or VTG Group. None of the above requirements shall be interpreted to limit any other of the above requirements. To the extent that the exercise of VF Germany’s voting rights in VTG’s general meeting is concerned by any of VF Germany’s obligations with respect to the measures set forth in Clauses 11.2, 11.3, 12 and 13.3 of this Agreement, such obligation shall (i) only apply as from publication of BidCo’s announcement of its in-tention to launch the Takeover Offer and (ii) only relate to the exercise of voting rights in the first general meeting of VTG after Signing. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 11.2.2 Clause 11.2.1 shall not apply if the respective measure is (i) set forth in Annex 11.2.2; (ii) set forth in the business plan or budgets; (iii) otherwise explicitly contemplated by this Agreement or the Related Agree-ments; (iv) required by Law; (v) required under any Contract existing as of Signing; (vi) in line with the ordinary course of business of VTG Group; or (vii) otherwise consented to by the Investor in writing, such consent not to be unreasonably withheld, conditioned or delayed, during the period between Signing and Closing Date. 11.3 Conclusion, Termination and Amendment of Agreements 11.3.1 Unless explicitly provided for otherwise in this Agreement or the Related Agreement, the Parties shall cooperate in good faith and agree on actions required (if any) to enable VTG Group to operate its Business after Closing substantially in a manner as operated prior to Closing. Such actions shall deal, in particular, with (i) the general separation from VTG Group from the Remaining VF Group, including required tran-sitional services, (ii) replacement of existing intra-group financing and (iii) replace-ment of certain guarantees. 11.3.2 [***] 11.3.3 VF Germany shall not, and shall procure that the Remaining VF Group Companies will not, exercise any potential rights and claims that may arise under or in connection with the agreements set forth in Annex 11.3.3 as a consequence of the Transaction. 11.3.4 VF shall procure that the relevant VF Group Companies will [***]. 11.4 Financial Commitment 11.4.1 With a view to financing the Transaction, it is envisaged to implement the following financing structure: (i) At the level of Investor, equity in the amount of EUR [***] ("HoldCo Equity Financing"), bank debt in the amount of EUR [***] ("HoldCo Debt Financ-ing") and a convertible note in the amount of EUR [***] ("HoldCo Converti-ble Note") shall be provided; and (ii) At the level of MidCo 2, external debt in the amount of EUR [***] ("OpCo Debt Financing") shall be provided. 11.4.2 Investor has procured, (i) with regard to the HoldCo Equity Financing, certain equity commitment let-ters which form part of this notarial deed (the “HoldCo Equity Commitment Letters”); (ii) with regard to the HoldCo Debt Financing, Investor has received debt com-mitment letters dated 4 November 2022 in respect of credit facilities agree-ments, from and duly executed by each of: [***] (together, the “Lenders”) |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. (those commitment letters, the HoldCo Interim Facility Agreement (as de-fined therein) and any definitive facility agreement which will replace such commitment letters in accordance with the terms of the applicable commit-ment letters, the “HoldCo Credit Agreement”). (iii) with regard to the HoldCo Convertible Note, a binding debt commitment letter (“HoldCo Debt Commitment Letter”, together with the HoldCo Equity Com-mitent Letter, the “Equity/Debt Commitment Letters”) which forms part of this notarial deed; and (iv) with regard to the OpCo Debt Financing, Investor has received binding debt commitment letters dated 4 November 2022 in respect of credit facilities agreements, from and duly executed by the Lenders (the “OpCo Credit Agreement”) (those commitment letters, the Opco Interim Facility Agree-ment (as defined therein) and any definitive facility agreement which will re-place such commitment letters in accordance with the terms of the applicable commitment letters, (the “OpCo Credit Agreement”). 11.4.3 VF Germany shall (i) procure that Midco 2 takes the necessary steps to accede to the OpCo Credit Agreement (and Investor shall provide, and shall procure that any entity controlled by it provides, all assistance reasonably requested by VF Germany to facilitate and effect such accession as soon as practicable following the date of this Agreement, including, for the avoidance of doubt, executing any accession cer-tificate with respect to the OpCo Credit Agreement), and (ii) with the purpose of fa-cilitating the finalizing of the Credit Agreements (including measures in order to com-ply with applicable “know your customer” and anti-money laundering rules and reg-ulations), take all reasonable steps to ensure that the AcquiCo Group Companies and the VTG Group Companies, if and to the extent permitted under applicable Law (and subject to any applicable confidentiality restrictions) and reasonably requested by Investor, provide information relating to the AcquiCo Group Companies and the VTG Group Companies to arrangers, underwriters, book runners and/or prospective lenders under the Credit Agreements as well as to rating agencies (including the participation in meetings and/or giving of presentations), and otherwise use reason-able best efforts to support in relation to the syndication of the Credit Agreements (and Investor shall provide, and shall procure that any entity controlled by it provides, all assistance reasonably requested by VF Germany to facilitate and assist with the same). The Investor shall refrain from taking any steps that would cause a breach of the terms of the cash confirmation letter to BidCo and MidCo 2 from [***] dated on or about the date of this Agreement. 11.4.4 The Parties agree that (i) Investor, duly consulting and cooperating with VF Germany (and, in respect of any material amendments thereto, subject to the prior consent of VF Germany), shall be responsible for and entitled to further negotiate and finalize all documentation comprising the OpCo Credit Agreement and (ii) (without prejudice to the obligations of Investor to ensure that the funds are made available to the Ac-quiCo Group Companies and the VTG Group Companies in order to enable them to comply with their obligations under, and as contemplated by, this Agreement) no documentation shall be executed by MidCo 2 without the prior consent of the Inves-tor and VF Germany. 11.5 Corporate Documents |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. The Parties shall discuss in good faith, and agree upon within [***] following the date of this Agreement, the corporate documents required in relation to the AcquiCo Group Companies, including: 11.5.1 Amendments to the articles of each AcquiCo Group Company; and 11.5.2 Rules of procedure for the Company Directors, Shareholders’ Committee, [***] and [***] (each as defined in the Shareholders’ Agreement); in each case consistent with the terms agreed in the Shareholders’ Agreement. 12 Leakage 12.1 Warranty and Undertaking VF Germany hereby 12.1.1 represents and warrants by way of an independent promise of warranty (selbständi-ges Garantieversprechen) pursuant to sec. 311 German Civil Code that between the Accounts Date and Signing no Leakage other than a Permitted Leakage has oc-curred, and 12.1.2 undertakes to procure that between Signing and Closing Date, unless otherwise pro-vided in this Agreement or the Related Agreements, no Leakage other than a Per-mitted Leakage will occur. 12.2 Leakage, Permitted Leakage 12.2.1 “Leakage” shall mean: (i) any dividend or other distribution (whether in cash, deemed or in kind) de-clared or paid by any member of AcquiCo Group or VTG Group to any mem-ber of VF Remaining Group; (ii) any payment (either in cash or in kind) made or agreed to be made, in par-ticular, in respect of share capital, loan capital or other securities being re-deemed, purchased or repaid, or any other return of capital, or any liability, cost or expense incurred or agreed by any member of AcquiCo Group or VTG Group to any member of VF Remaining Group; (iii) any liabilities assumed, indemnified, incurred or discharged by any member of AcquiCo Group or VTG Group on behalf of, or to release any liabilities of, any member of VF Remaining Group (including any professional advisors’ costs of advisers engaged by a member of AcquiCo Group or VF Remaining Group in relation to this Agreement or the transactions reflected in this Agree-ment); (iv) any sale, surrender or transfer of any asset or right by any member of Ac-quiCo Group or VTG Group to any member of VF Remaining Group if and to the extent such assets or rights are sold, surrender or transferred at less than fair market value; (v) any conclusion of (including by an amendment to an existing agreement) agreements or any other assumption of contractual obligations by any mem-ber of AcquiCo Group or VTG Group with or vis-á-vis any member of VF |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. Remaining Group, in each case if and to the extent not at arm’s length terms and in the ordinary course of business; (vi) unless in the ordinary course of business, any waiver by any member of VTG Group of rights against any member of the VF Remaining Group, and any release of any member of the VF Remaining Group from obligations of such member of the VF Remaining Group; (vii) any guarantee or indemnity provided by or security or encumbrance created over any of the assets of any member of AcquiCo Group or VTG Group in favour or for the benefit of any member of VF Remaining Group; (viii) any agreement, resolution or commitment to take any action set forth in Clauses 12.2.1(i) through 12.2.1(vii); and (ix) any Taxes becoming payable by any member of AcquiCo Group or VTG Group as a consequence of any of the above actions; and in each case unless (i) it constitutes Permitted Leakage, or (ii) remedied by Closing. 12.2.2 “Permitted Leakage” shall mean: (i) any incurred liabilities or payments, in each case expressly provided for un-der the terms of this Agreement or the Related Agreements; (ii) the amendment, termination, replacement or performance of agreements (in-cluding purchase price payments) required to transfer the AcquiCo Group Companies in order to achieve the holding structure as intended by this Agreement; (iii) any payment or performance for which a member of VTG Group is fully and adequately (angemessen) compensated on an arm’s-length basis, including in any case [***]; (iv) any payments made or agreed, or any liability, cost or expense incurred or agreed, in respect of any matter undertaken at the written request of, or with the prior written consent of, the Investor; (v) the payment of dividends on 2 August 2022 for a period ending on the Ac-counts Date resolved by VTG’s general meeting dated 28 July 2022 amount-ing to EUR [***] per dividend-bearing VTG Share; (vi) the amendment, termination, replacement or performance of the agreements existing as of the date of this Agreement between any member of AcquiCo Group or VTG Group on the one hand and any member of VF Remaining Group on the other hand (which may be amended following the date of this Agreement if in the ordinary course of business), including the agreements listed in Annex 12.2.2(vi) as well as the amendments to such listed agree-ments, in each case if in the ordinary course of business and arm’s length terms; (vii) any agreement, resolution or commitment to take any action set forth in Clauses 12.2.2(i) through 12.2.2(vi); and (viii) any Taxes becoming payable by any member of AcquiCo Group or VTG Group as a consequence of any of the above actions in this Clause 12.2.2. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 12.3 Legal Consequences In the event of the incorrectness of the warranty pursuant to Clause 12.1.1 or a breach by VF Germany of the undertaking pursuant to Clause 12.1.2, VF Germany shall, upon written Notice by the Investor, subject to the following sentence, pay to the relevant AcquiCo Group Company or VTG Group Company at which level the Leakage has occurred an amount in cash equal to such Leakage plus any Taxes arising at the level of the relevant VTG Group Company in connection with any payment under this Clause 12.3 plus an amount equal to interest at a rate per annum of [***] on such Leakage from (and including) the date on which the Leakage occurred to (but excluding) the date the payment under this Clause is received (calculated on an [***] count basis). Clause 10.5 shall not apply to this Clause. In case the Leakage consists of a dividend payment by VTG to VF Germany in the meaning of Clause 12.2.1(i), VF Germany shall pay to the Investor an amount in cash equal to its shareholding in MidCo 1 at the time of such Leakage or, if at that time Investor had not shareholding, its shareholding at Closing, in each case without undue delay after receipt of the dividend pay-ment but not prior to Closing, provided that such payment shall not bear any interest. 13 Integration and Post-Closing Actions 13.1 The Parties agree to either conclude the DPLTA or implement the Squeeze-out. Which inte-gration measure will be implemented depends on whether the relevant 95% threshold in VTG has been reached at the end of the additional acceptance period. 13.2 The Parties will also consider to make a delisting offer for the VTG Shares and thereby revoke the admission to trading on the regulated market pursuant to sec. 39 para. 2 of the German Stock Exchange Act (Börsengesetz). 13.3 The Parties shall cooperate and support each other in the preparation and implementation of the contemplated integration measures. The Parties shall ensure that as soon as reason-ably possible (i) VTG, where applicable, convenes a general meeting to resolve upon such measure and executes all required actions to implement such measure, (ii) VF Germany or BidCo (as the case may be) resolves on the agreed measure, (iii) VF Germany or BidCo (as the case may be) votes in favour of a respective resolution in the general meeting of VTG and (iv) VF Germany or BidCo (as the case may be) executes all additional actions required to implement such measure, including the valuation, offer and payment of any fixed or re-curring compensation or the launching of a purchase offer to remaining external VTG share-holders required by Law in connection with any relevant measure. 13.4 The costs of any measures described in this Clause 13 (including any costs for acquisition of further VTG Shares as well as for payment of guaranteed dividends and interest or in connection with the implementation of the measures set out in this Clause 13) shall be borne by [***], provided that [***] shall bear, 13.4.1 [***], 13.4.2 [***] 13.5 Business Plan [***] 13.6 Master Services Agreement Side Letter [***] |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 14 Tax The provisions of Annex 14 shall apply in respect of Taxes. 15 Public Announcements and Confidentiality 15.1 Public Announcements No press or other public announcement in connection with the existence or the subject mat-ter of this Agreement or the Related Agreements shall be made or issued by or on behalf of any of the Parties or any of their Affiliates (including the AcquiCo Group Companies and the VTG Group Companies) without the prior written approval of VF Germany and the Investor or as otherwise expressly set out in this Agreement or the Related Agreements. This shall not affect any announcement required by Law or any regulatory body or the rules of any recognised stock exchange on which the shares of a Party or any of their Affiliates (including the AcquiCo Group Companies and the VTG Group Companies) are listed, provided that each Party, if it or any of its Affiliates is under an obligation to make an announcement, shall consult with the other Party as soon as reasonably practicable before complying with such an obligation unless an immediate publication is legally required. 15.2 Confidentiality 15.2.1 The Non Disclosure Agreement will terminate in accordance with its terms. Thereaf-ter, this Clause 15.2 shall apply. 15.2.2 Each of the Parties shall treat as strictly confidential and not disclose or use any information received or obtained as a result of or in connection with the entering into this Agreement which relates (i) to this Agreement, its existence or its provisions or to any agreement to be entered into pursuant to this Agreement, including the Related Agreements; (ii) to the negotiations relating to this Agreement, including the Related Agree-ments; (iii) to the respective other Parties and the other Parties’ Affiliates; (iv) to the AcquiCo Group Companies and the VTG Group Companies; (together “Confidential Information”). Each Party shall procure that its respective Affiliates, its or their managers, officers, directors, employees, agents, consultants or other representatives who receive or have received Confidential Information shall comply with the confidentiality obligations set out in this Clause 15.2 in respect of the Confidential Information as if they were a party to this Agreement. 15.2.3 This Agreement shall not prohibit disclosure or use of any information, including Con-fidential Information, if and to the extent that: (i) the disclosure or use is required by Law, any Governmental Authority or any recognised stock exchange on which the shares of a Party or any of its Affil-iates (including the AcquiCo Group Companies and the VTG Group Compa-nies) are listed, (ii) the disclosure or use is required for the purpose of any judicial proceedings arising out of this Agreement or any other agreement entered into under or |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. pursuant to this Agreement, including the Related Agreements, or the disclo-sure is made to a Tax Authority in connection with the Tax affairs of the dis-closing Party, (iii) the disclosure is made to professional advisers or actual or potential financi-ers (or their directors, partners, members, managers, officers, employees, agents or other representatives and advisors) of a Party and any of its direct or indirect shareholders on a need to know basis and on terms that such professional advisors or actual or potential financiers (or their directors, part-ners, members, managers, officers, employees, agents or other representa-tives and advisors), to the extent they are not bound to professional secrecy, shall undertake (also for the benefit of the other Parties) to comply with sub-stantially the same confidentiality obligations set out in this Clause 15.2 in respect of such information, (iv) the disclosure is made to an actual or potential financing source of the Inves-tor, provided that the Investor shall procure that the relevant recipients of Confidential Information comply with substantially the same confidentiality obligations set out in this Clause 15.2 in respect of such information, (v) the disclosure is made to GIP Investors, KKR Investors, actual or prospective limited partners, trustees or Fund Managers of the GIP Investors or KKR Investors (or their directors, partners, members, managers, officers, employ-ees, agents or other representatives and advisors), provided that the Inves-tor shall procure that the relevant recipients of Confidential Information com-ply with substantially the same confidentiality obligations set out in this Clause 15.2 in respect of such information, (vi) the disclosure is made by VF Germany prior to Closing or by VF Germany or the Investor after Closing to a VTG Group Company or any representative, employee or professional advisor of a VTG Group Company, provided that VF Germany or the Investor, as the case may be, procures compliance of VTG Group Company or its representative with the confidentiality obligations set out in this Clause 15.2 in respect of such information as if it were a party to this Agreement, (vii) the information is or becomes publicly available (other than by breach of this Agreement or any other confidentiality agreement between the Parties or any of them), (viii) VF Germany in case of a disclosure or use by the Investor, or the Investor in case of a disclosure or use by VF Germany, has given prior written approval to the disclosure or use, (ix) the disclosure is explicitly permitted under this Agreement, including the Re-lated Agreements, or (x) the information is independently developed after Closing by the disclosing Party. 16 Termination 16.1 Termination |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. This Agreement may be terminated at any time prior to Closing: 16.1.1 by mutual written consent of VF Germany and the Investor; 16.1.2 by VF Germany upon Notice to the Investor, or by the Investor upon Notice to VF Germany, if Closing contemplated hereby shall not have occurred (other than through the failure of VF Germany or the Investor, as applicable, to comply with its Obligations under this Agreement) by [***] (the “Longstop Date”). 16.2 Effect of Termination Except for this Clause 16.2, Clause 10 (Legal Consequences), Clause 15 (Public Announce-ments and Confidentiality), Clause 17.1 (Account Details), Clause 17.2 (Costs), Clause 17.3 (No Netting), Clause 17.5 (Notices), Clause 17.6 (Disputes), Clause 17.7 (Form of Amend-ments), Clause 17.8 (Assignments), Clause 17.11 (Governing Law), this Agreement shall, upon termination hereof pursuant to Clause 16.1, forthwith become of no further force or effect and (a) except as provided in this Clause 16.2, there shall be no liability on the part of VF Germany or the Investor or any of their respective Affiliates, or any of their respective officers, directors or managers, to any other party and (b) except as provided in this Clause 16.2, all rights and Obligations of any Party under this Agreement shall cease; pro-vided, however, that any such termination shall not relieve VF Germany or the Investor from liability for any breach of this Agreement. 17 Miscellaneous Provisions 17.1 Account Details All payments to be made under this Agreement shall be made 17.1.1 if to VF Germany, to the following bank account or to any account notified by VF Germany to the Investor not later than [***] prior to the respective payment: [***] 17.1.2 if to the Investor, to the bank account notified by the Investor to VF Germany not later than [***] prior to the respective payment: 17.2 Costs Each Party shall bear all costs incurred by it in connection with the preparation, negotiation and execution of this Agreement by itself. Unless explicitly set forth otherwise in this Agree-ment, the notarial fees and all registration, stamp duties and transfer Taxes as well as all fees of all Relevant Authorities that are payable as a result of the Transaction, or fees of advisers acting for an AcquiCo Group Company in relation to actions to be undertaken by such AcquiCo Group Company, shall be borne half each by VF Germany and the Investor, including real estate transfer Taxes as a result of the Takeover Offer or subsequent measures of any of the AcquiCo Group Companies. Furthermore, VF Germany and the Investor shall each bear half of any costs of VTG which may have to be reimbursed to VTG in the context of the Transaction pursuant to sec. 57, 311 et seqq. German Stock Corporation Act. 17.3 Impact of Payments If any payment is made by VF Germany to the Investor pursuant to Clause 13.4, any such payment shall be treated as an adjustment to the VTG Contribution Shares Purchase Price and the VTG Contribution Shares Purchase Price shall be deemed to have been reduced |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. by the amount of such payment and, to the extent permitted by applicable Law, shall be treated by the Parties as such also for Tax purposes. 17.4 No Netting No Party shall be entitled to: 17.4.1 set-off (aufrechnen) any rights and claims it may have against the other Party or an Affiliate of the other Party against any rights or claims it or its Affiliate may have under or in connection with this Agreement, or 17.4.2 refuse to perform any obligation it may have under or in connection with this Agree-ment on the grounds that it has a right of retention (Zurückbehaltungsrecht), unless the underlying rights or claims to be set-off (including, for payment claims, the amount) or the right of retention have been acknowledged (anerkannt) in writing by the other Party or have been confirmed by final decision (rechtskräftig festgestellt) of a competent court (Gericht) or arbitral tribunal (Schiedsgericht). 17.5 Notices 17.5.1 All notices and other communications that are required to be or may be given pursu-ant to this Agreement shall be in writing (email being sufficient) and in the English language (a “Notice”). Notices shall be sent to a Party at its address or email address and for the attention of all individuals holding the position set out below: [***] or to such other address or email address as any Party may, from time to time, des-ignate in a written Notice given in accordance with this Clause 17.5. Any Notice given to a contact named above as recipient of a copy shall be for information purposes only and shall be ignored for the purposes of determining whether a Notice was duly given to a Party or not. 17.5.2 Any notice given under this Agreement shall, in the absence of earlier receipt, be deemed to have been given and effective as follows: (i) if delivered in person or by courier, upon actual receipt by or on behalf of the intended recipients; (ii) if sent by email, at transmission of all emails, provided that the persons send-ing the email shall not have received a failed-delivery report; or (iii) if mailed, upon the earlier of the third (3rd) Business Day after deposit in the mail or the date of delivery as shown by the return receipt therefor. 17.6 Disputes The Parties hereby agree that any and all disputes arising, directly or indirectly, under or in connection with this Agreement and its consummation, including any claim or controversy relating to the existence, validity, enforceability, default or termination hereof, shall neces-sarily, finally and definitively, be settled in accordance with the arbitration rules of the [***] as amended from time to time without recourse to the ordinary courts of law. The seat of the arbitration shall be [***]. The arbitral tribunal shall be comprised of three arbitrators. The language of the arbitration shall be English, provided however, that the Parties shall be en-titled to submit written evidence also in the German language. Multi-party and/or multi-con-tract proceedings in relation to disputes under this Agreement shall be admissible. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. In the event that applicable mandatory Law requires any matter arising, directly or indirectly, under or in connection with this Agreement and its consummation, including any claim or controversy relating to the existence, validity, enforceability, default or termination hereof, to be decided upon by a court of law, the courts competent for Düsseldorf, Germany, shall have the exclusive jurisdiction thereupon. 17.7 Form of Amendments Any amendment or supplement to, or the termination or modification of, this Agreement, including this provision, shall be valid only if made in writing, except where a stricter form (e.g. notarisation) is required under applicable Law or this Agreement. 17.8 Assignments This Agreement and any Claims or Obligations arising therefrom shall not be assigned by any Party (including by operation of Law or otherwise) except with the prior written consent of the other Party. Any purported assignment in violation of this Clause 17.8 shall be null and void. 17.9 Invalid Provisions Should any provision of this Agreement be or held to be wholly or partly invalid, ineffective or unenforceable, this shall not affect the validity, effectiveness or enforceability of the re-maining provisions. Any such invalid, ineffective or unenforceable provision shall, to the ex-tent permitted by Law, be deemed replaced, or, to the extent not permitted by Law, be re-placed by the Parties, by such valid, effective and enforceable provision as comes closest to the economic intent and purpose of such invalid, ineffective or unenforceable provision. The aforesaid shall apply mutatis mutandis to any unintended omission in this Agreement. 17.10 Entire Agreement This Agreement and the Related Agreements (together with the Schedules and Annexes hereto and thereto) constitute the entire agreement of the Parties hereto and thereto, and supersede all prior agreements and undertakings, both written and oral, among the Parties, with respect to the subject matter hereof. 17.11 Governing Law 17.11.1 This Agreement and any contractual rights and obligations arising out of or in con-nection therewith and its consummation, including disputes about its validity, shall be governed by and construed in accordance with the Laws of Germany, excluding conflict of laws rules and the UN Convention on Contracts for the International Sale of Goods (CISG). 17.11.2 Any non-contractual rights and obligations in connection with this Agreement shall also be governed by and construed in accordance with the Laws of Germany. [Balance of page intentionally left blank] |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. List of Annexes and Schedules No. Annex / Schedule 1. Annex 1.1(a): Data Room Index 2. Annex 1.1-1: Sample calculation MidCo 1 Catch Up Sale Shares Purchase Price 3. Annex 2.1-1: Transaction Structure 4. Annex 2.1: Draft Strawman Structure Paper 5. Annex 2.1.2: Business Combination Agreement 6. Annex 3.1: MidCo 1 Sale Shares SPA 7. Annex 3.2.1: MidCo 1 Catch Up Sale Shares SPA 8. Annex 5.2.1: Sec. 10 Announcement 9. Annex 5.2.3: Irrevocable Qualified Non-Tender Agreement 10. Annex 7.2.1(i): Sample Calculation (amount of new shares to be issued to Investor) 11. Annex 7.2.5(i): VTG Sold Shares SPA 12. Annex 7.2.7(iv): Special Minority Veto Rights Rider 13. Annex 8 - VF Warranties 14. Schedule 3.1: Corporate Information 15. Schedule 3.2: Part I/II Enterprise agreements, silent partnerships 16. Schedule 5: Business 17. Schedule 7.2: List of restrictions or third-party rights to the leased Real Property Inter-est 18. Schedule 7.3: Buildings, constructions and facilities 19. Schedule 8: Group IP Rights 20. Schedule 9.1: Information Technology Systems 21. Schedule 9.2: Failures, breakdowns or security breaches of Information Technology systems 22. Schedule 10.2: List of Material Contracts 23. Schedule 10.3: List of all loan agreements or similar 24. Schedule 10.4: List of Intra-Group Agreements between member of VF Remaining Group and any VTG Group Company 25. Schedule 12.1: Compliance 26. Schedule 15.2: List of all material collectives bargaining agreements, company bar-gaining agreements and shop agreements 27. Schedule 15.3: Restrictions to operational or personnel changes 28. Schedule 15.4: List of the applicable benefit and incentive schemes in respect of each VTG Group Company 29. Schedule 15.5: List of all material plans, including commitments based on works cus-tom regarding company pensions 30. Schedule 17: List of Litigation Proceedings 31. Schedule 18.1: Absence of changes with material effects 32. Schedule 18.2: Conduct outside the ordinary course of business 33. Annex 9 - Investor Warranties 34. Schedule 5: Investor Warranties - No competition 35. Annex 10.2-A: List of VF Germany's Knowledge Persons 36. Annex 10.2-B: List of persons with whom the VF Germany Knowledge Persons must make reasonable enquiries 37. Annex 10.4: Sample calculation for cash contribution under Section 10.4 38. Annex 10.5.4(i)(a): Escrow Agreement Data Room 39. Annex 11.2.2(vi): Permitted Actions 40. Annex 11.3.3: Intragroup Agreements Change of Control 41. Annex 12.2.2(vi): Permitted Leakage 42. Annex 13.6: MSA Side Letter 43. Annex 13.1.4: Sample Calculations DPLTA 44. Annex 13.2.4: Sample Calculations Squeeze-Out 45. Annex 13.4: VTG Share sample calculation 46. Annex 14: Tax Matters |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. i SHAREHOLDERS’ AGREEMENT relating the towers joint venture Oak Holdings 1 GmbH Dated 22 March 2023 Vodafone GmbH and Oak Consortium GmbH and Oak Holdings 1 GmbH Exhibit 4.26 |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. ii Table of Contents Contents Page 1 Interpretation ......................................................................................................................... 1 2 General Obligations and covenants.................................................................................. 11 3 Corporate Structure of the Company................................................................................ 13 4 Corporate Governance ....................................................................................................... 14 5 Management Board............................................................................................................. 14 6 Shareholders’ Committee................................................................................................... 15 7 Shareholders’ Meeting........................................................................................................ 19 8 VTG Governance ................................................................................................................. 22 9 Reserved Matters ................................................................................................................ 24 10 Minority Rights .................................................................................................................... 25 11 [***]..............................................................................................Error! Bookmark not defined. 12 Deadlock .............................................................................................................................. 25 13 [***]..............................................................................................Error! Bookmark not defined. 14 [***]..............................................................................................Error! Bookmark not defined. 15 [***]..............................................................................................Error! Bookmark not defined. 16 Cooling off period ............................................................................................................... 27 17 [***]........................................................................................................................................ 27 18 [***]..............................................................................................Error! Bookmark not defined. 19 Accounting, Annual Report, Business Plan and Budget................................................ 27 20 [***]........................................................................................................................................ 28 21 Related Party Transactions and Conflicts of Interest ..................................................... 28 22 Intellectual Property Rights ............................................................................................... 29 23 Company Finance ............................................................................................................... 29 24 [***]..............................................................................................Error! Bookmark not defined. 25 Tax ........................................................................................................................................ 29 26 Default ........................................................................................Error! Bookmark not defined. 27 Termination of Master Services Agreements .........................Error! Bookmark not defined. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. iii 28 Announcements .................................................................................................................. 30 29 Confidentiality ..................................................................................................................... 31 30 Miscellaneous...................................................................................................................... 34 31 Duration, Termination and Survival................................................................................... 35 32 Survival of Rights, Duties and Obligations ...................................................................... 36 33 Notices ................................................................................................................................. 36 34 Compliance with Law.......................................................................................................... 38 35 Governing Law and jurisdiction ........................................................................................ 38 |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 1 This Shareholders Agreement (the “Agreement”) is made on 22 March 2023 between: (1) Vodafone GmbH, a limited liability company incorporated under the laws of Germany, registered with the commercial register of the local court of Düsseldorf under register number HRB 38062, whose registered office is at Ferdinand-Braun-Platz 1, 40549 Düsseldorf, Germany (“Vodafone”); (2) Oak Consortium GmbH, a limited liability company incorporated under the laws of Germany, registered with the commercial register of the local court of Munich under register number HRB 278102, whose registered office is at Eschersheimer Landstrasse 14, 60322 Frankfurt am Main, Germany (the “Investor”); and (3) Oak Holdings 1 GmbH, a limited liability company incorporated under the laws of Germany, registered with the commercial register of the local court of Düsseldorf under register number HRB 98913, whose registered office is at Ferdinand-Braun-Platz 1, 40549 Düsseldorf, Germany, (the “Company”); Vodafone, the Investor and the Company are also collectively referred to as “Parties” and each of them as a “Party”. Whereas: (A) On 9 November 2022, Vodafone and the Investor entered into an Investment Agreement, providing, amongst other things, for the establishment of a Co-Controlled joint venture which shall become the new holding entity for Vodafone’s shareholding in VTG, the parent company of a European group of companies operating and marketing vertical passive mobile communications network infrastructure. (B) As part of the Investment Agreement, the Shareholders have agreed to set up the Company as a Co-Controlled joint venture and to enter into this Agreement. The Company shall serve as the Shareholders’ Co-Controlled holding company of the Company Group. The purpose of this Agreement is to establish the general framework governing the relationship between the Shareholders with respect to their capacities as Shareholders, regulating the management and supervision of the Company and certain aspects of the affairs of, and their dealings with, the Company and the Company Subsidiaries. (C) Vodafone and the Investor have agreed to hold their Shares and to regulate their respective rights as Shareholders of the Company on the terms and conditions of this Agreement. (D) The Company is a party to this Agreement in order to agree to the contents of this Agreement and to acknowledge and accept the Company’s rights and obligations contained herein. It is agreed as follows: 1 Interpretation In this Agreement, including the Recitals, unless the context otherwise requires, the provisions in this Clause 1 shall apply: 1.1 Definitions “[***]; |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 2 “Accession Agreement” has the meaning set out in Clause 17.1; “Affiliate” means (i) for an entity that is not a Fund and does not hold shares in the Company for a Fund: any other entity that, directly or indirectly through one or more intermediaries, Controls, is Controlled by, or under common Control with such entity; or (ii) for an entity that is a Fund or holds shares in the Company for a Fund: any other entity that, directly or indirectly through one or more intermediaries, is Controlled, managed or advised by such Fund or the Fund Manager or their respective Affiliates; “[***] “Agreement” means this Shareholders’ Agreement; “Annual Budget” means (i) for the Financial Year of the Company in which the date of this Agreement occurs, the Initial Annual Budget; and, (ii) for each following Financial Year of the Company, the annual budget of the Company for the relevant Financial Year as approved and/or amended (and/or deemed approved) from time to time in accordance with Clause 19; “Articles” means the articles of association of the Company (Gesellschaftsvertrag) from time to time; “Board Rules of Procedure” means the rules of procedure of the Management Board as amended from time to time; “Business” means the business as operated by the Company, VTG and their Subsidiaries from time to time; “Business Day” means a day which is not a Saturday, a Sunday or a public holiday in Germany, the United Kingdom, Jersey or New York; “Business Plan” means the Initial Business Plan as updated from time to time in accordance with Clause 19; “Closing” has the meaning given to it in the Investment Agreement; “Co-Control” (including with correlative meaning, the term “Co-Controlled”) in relation to a person (the “Co-Controlled Person”) means two or more persons acting jointly to Control such Co-Controlled Person, whereby each of the controlling persons require a non-Affiliate to exercise Control. Following Closing, each of Vodafone and the Investor Co-Control, and do not Control, the Company; “Committee Rules of Procedure” has the meaning set out in Clause 6.10; “Company” has the meaning set out in the Parties’ section; “Company Directors” means the members of the Management Board from time to time; “Company Group” means the Company and its subsidiaries (including the Company Subsidiaries) and subsidiary undertakings; “Company Subsidiary” means any direct or indirect Subsidiary of the Company; [***] [***] “Confidential Information” has the meaning set out in Clause 29.1; |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 3 “Conflicted Party” has the meaning set out in Clause 21.1; “Control” (including with correlative meaning, the term “Controlled by”) means the right of one person alone, or together with its Affiliates, to appoint the majority of the directors or to control the management or policy decisions of a person, directly or indirectly, whether by virtue of their shareholding, management rights, shareholders agreements, voting agreements, contracts, or by a management or advisory agreement or otherwise, it being understood, however, that Co-Control does not constitute Control for the purposes of this Agreement; “Deadlock Appointees” and each “Deadlock Appointee” has the meaning set out in Clause 12.2.1; “Deadlock Matter” has the meaning set out in Clause 12.1.2; “Debt Finance” means facilities (senior and subordinated facilities, together with any related hedging arrangements) for the provision of a material amount of third party debt to the Company, VTG or any other VTG Group Company, from time to time, for the funding of any acquisitions, repayment of and/or refinancing of third party debt, capital expenditure and/or working capital; “Default Call Option” has the meaning set out in Clause 26.4.2(i); “Default Call Option Notice” has the meaning set out in Clause 26.4.2(ii); “Default Call Option Shares” has the meaning set out in Clause 26.4.2(i); “Default Call Option SPA” has the meaning set out in Clause 26.4.2(ii)(a); “Default Notice” has the meaning set out in Clause 26.2.1; “Defaulting Shareholder” has the meaning set out in Clause 26.1; “Draft Revised Annual Budget” has the meaning set out in Clause 19.2; “Draft Revised Business Plan” has the meaning set out in Clause 19.2; “Effective Date” has the meaning set out in Clause 31.1; [***] [***] [***] [***] “Emergency Loan” has the meaning set in out in Clause 24.3; “Emergency SHL Agreement” has the meaning set in out in Clause 24.3.4(i); “Encumbrance” means any claim, charge, mortgage, lien, option, equitable right, power of sale, pledge, hypothecation, retention of title, right of pre-emption, right of first refusal or other third party right(s) or security interest of any kind or an agreement, arrangement or obligation to create any of the foregoing; “Expenditures” has the meaning set out in lit (b) of Schedule 9.2.1; “Extended Material Breach Cure Period” has the meaning set out in Clause 26.4.2(i); |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 4 “Extended Pre-Emption Acceptance Period” has the meaning set out in Clause 14.4.6(ii)(c); “Final Deadlock” has the meaning set out in Clause 12.2.4; “Final Term” means any term of a Master Services Agreement after the expiry of which a prolongation or renewal is not provided for without any party having to take any action (e.g., exercise of unilateral extension rights) under the Master Services Agreement; “Financial Year” means the financial year of the Company; “Financing Documents” means the agreements (including facility, inter-creditor and security agreements and any ancillary documents) pursuant to which lenders make available Debt Finance (in each case, as amended, supplemented, novated or replaced from time to time); [***] “Fund” means any body corporate, partnership, superannuation scheme, pension fund, collective investment scheme or managed fund that: (i) has been established to pool the resources of multiple underlying investors or utilise the resources of one underlying investor; (ii) is managed and/or advised by a Fund Manager; and (iii) has been established to invest in a class of assets or investments, rather than in a single asset or investment; [***] [***] [***] [***] [***] “Governmental Authority” means any national, state or municipal governmental bodies, authorities or courts of judicial authority, national or supranational body or any person or body exercising executive, legislative, judicial or regulatory functions on behalf of any of them, and shall include all relevant securities commissions, stock exchange authorities, foreign exchange authorities, Tax Authorities, competition and antitrust authorities (including the European Union authorities and regulatory authorities) and similar entities or authorities; “IFRS” means international financial reporting standards; [***] [***] “Initial Annual Budget” means the annual budget of the Company for the Financial Year of the Company in which the date of the Agreement occurs, as set out in the Business Plan; “Initial Business Plan” has the meaning as set out in Clause 19.1.1; “Initiating Shareholder” has the meaning set out in Clause 15.1.1; [***] [***] [***] |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 5 [***] “Investment Agreement” means the investment agreement entered into between Vodafone and the Investor on 9 November 2022, as amended from time to time; “Investor” has the meaning set out in the Parties’ section; [***] [***] “IRC” shall mean the US Internal Revenue Code of 1986, as amended; “Joint Global Coordinators” has the meaning set out in Clause 15.1.2; “Key Shareholder” means: (i) Vodafone, provided it (a) holds at [***] Shares in the Company and (b) has not transferred Key Shareholder Rights in accordance with Clause 14.5; (ii) the Investor, provided it (a) holds [***] of Shares in the Company and (b) has not transferred Key Shareholder Rights in accordance with Clause 14.5; and (iii) in respect of any other Shareholder, such Shareholder to which Key Shareholder Rights have been transferred in accordance with Clause 14.5, provided it: (a) holds [***] of Shares in the Company; and (b) has not transferred such rights in accordance with Clause 14.5 to any other person; “Key Shareholder Rights” means the rights granted to a Key Shareholder under this Agreement; “Key Transaction Documents” means this Agreement, the Investment Agreement, the Master Services Agreements and all documents entered into pursuant to this Agreement (in each case including all annexes and schedules thereto); “KYC Information” means information and documents reasonably required to comply with anti-money laundering or know your client Law and related internal market standard compliance procedures; “Law” means any applicable statute, law, treaty, ordinance, order, rule, directive, regulation, code, constitution, executive order, injunction, judgement, decree or other requirement of any Governmental Authority; [***] “Loss of DR” has the meaning set out in Clause 26.4.1(i); “Loss of VR” has the meaning set out in Clause 26.4.1(i); “Management Board” means the management body of the Company (Geschäftsführung) responsible for the day-to-day business and comprising the Company Directors; “Market Participant” has the meaning set out in Clause 29.2.1(xi); [***] “Material Breach” has the meaning set out in Clause 26.1; “Material Breach Cure Period” has the meaning set out in Clause 26.3; [***] |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 6 “Minority Veto Rights” has the meaning set out in Clause 10.1; [***] [***] [***] [***] [***] [***] “Notice” has the meaning set out in Clause 33.1; “Obligations” means, with respect to any person, any duties, liabilities, covenants and obligations of such person, whether vested or unvested, absolute or contingent, conditional or unconditional, primary or secondary, direct or indirect, known or unknown, asserted or unasserted, disputed or undisputed, matured or unmatured, accrued or unaccrued, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, and whether contractual, statutory or otherwise; [***] [***] [***] “Party” or collectively “Parties” means a party to this Agreement, including any person who becomes a party by entering into an Accession Agreement, and any such party’s successors and permitted assigns; [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] “Reasonable Endeavours” means such endeavours as would be expected of a reasonable and prudent person applying their minds to the relevant obligation with a view to satisfying it, which: |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 7 (i) shall require the relevant person to: (a) consider and explore more than one available avenue, if possible; (b) take reasonable steps to pursue those avenues; (c) commit reasonable management time, in pursuance of fulfilling the relevant obligation; and (d) incur reasonable expenditure and assume reasonable Obligations; (ii) shall not require the relevant person to act in any way which would be materially detrimental to the relevant person’s financial interests; and (iii) shall not require the relevant person to act in any way or incur any expenditure or assume any Obligations and/or liabilities which would be disproportionate in relation to the purpose for which Reasonable Endeavours shall be used; [***] “Related Party Transaction” has the meaning set out in Clause 21.1; [***] [***] [***] “Representatives” means, in respect of any person, its officers, employees, professional advisers, auditors and other representatives of such person, provided that such persons are subject to duties of confidentiality; “Reserved Matters” has the meaning set out in Clause 5.1.1; [***] [***] [***] provided that limb (iii) shall not apply to any Affiliate Transfer; [***] [***] [***] [***] [***] [***] [***] [***] “Sanctioned Country” means any country or territory that is at the Effective Date or subsequently becomes the subject of country-wide or territory-wide Sanctions; “Sanctioned Person” means, a person who is targeted by or subject to Sanctions, including but not limited to due to the fact that such person is: (i) owned or controlled by a person who is targeted by or subject to Sanctions; or (ii) located in, resident in, incorporated or organized under the laws of a Sanctioned Country; for the avoidance of doubt, if shares in Vodafone Group Plc as a publicly listed entity (or any of its legal successors as publicly listed entities) |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 8 are or would be owned by a Sanctioned Person this shall not result in Vodafone Group Plc or any of its Affiliates being considered a Sanctioned Person; “Sanctions” means any applicable economic sanctions, embargoes or restrictive measures, as enacted, publicly notified, amended from time to time, administered, or enforced by the United Nations, the European Union, or any state in which a Party or any of its Affiliates is incorporated or has material business or in which securities of a Party or any of its Affiliates are listed on a stock exchange; [***] “Shareholder Group” means a Shareholder and its Affiliates; [***] “Shareholders” means any holder of Shares or its legal successors from time to time and at the time of execution of this Agreement shall be Vodafone and the Investor; “Shareholders Reserved Matters” has the meaning set out in Clause 9.2.1; “Shareholders’ Committee” means the shareholders’ committee of the Company to be established in accordance with this Agreement; “Shareholders’ Committee Member” means a member of the Shareholders’ Committee; “Shareholders’ Committee Reserved Matters” has the meaning set out in Clause 9.1.1; “Shareholders’ Meeting” means the shareholders’ meeting of the Company; “Shares” means the issued ordinary shares (Geschäftsanteile) in the capital of the Company from time to time; “Subsidiaries” means, in relation to a person, any person Controlled by such person; “Suspension Notice” has the meaning set out in Clause 26.4.1(ii); “Tax” or “Taxation” means all forms of taxation, including governmental, national, regional, provincial, local and municipal charges, duties, customs, imposts, levies, subsidies, withholdings, liabilities and social security contributions and other social security levies, as well as any interest, surcharge, fine or penalty in relation thereto wherever chargeable, in each case irrespective of whether owed or payable directly or by way of withholding, as a primary liability or as a secondary liability, or as a legal successor or transferee, or based on civil Law (pursuant to tax sharing agreements/arrangements or contractual tax clauses) or otherwise owed under Law. For the avoidance of doubt, Tax does not include deferred taxes; “Tax Authority” means any taxing or other authority competent to impose any liability in respect of Taxation or responsible for the assessment, administration and/or collection of Taxation or enforcement of any Law in relation to Taxation; [***] [***] [***] [***] [***] [***] |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 9 [***] [***] [***] “Vantage Policies” has the meaning set out in Clause 13.1.3; “Vodafone” has the meaning set out in the Parties’ section; “Vodafone Group Plc” means Vodafone Group Plc, a public company incorporated in England and Wales with company number 1833679, having its registered address at Vodafone House, The Connection, Newbury, Berkshire RG14 2FN, United Kingdom; “Vodafone IFRS” means the IFRS as applied by Vodafone Group Plc from time to time; “VTG” means Vantage Towers AG, a German stock corporation (Aktiengesellschaft), having its registered seat in Düsseldorf, Germany, registered with the commercial register of the local court (Amtsgericht) in Düsseldorf under number HRB 92244, or any legal successor; “VTG Directors” means the members of the VTG Management Board from time to time; “VTG General Meeting” means the shareholders’ meeting of VTG; “VTG Group” means VTG and its subsidiaries (including its Subsidiaries) and subsidiary undertakings; “VTG Group Company” means each member of VTG Group; “VTG Management Board” means the management board (Vorstand) of VTG or any equivalent governing body of VTG responsible for the day-to-day business and management; “VTG MB Rules of Procedure” has the meaning as set out in Clause 8.1.5; “VTG SB Members” means the members of the VTG Supervisory Board from time to time; “VTG SB Rules of Procedure” has the meaning as set out in Clause 8.2.4; “VTG Subsidiary” means any direct or indirect Subsidiary of VTG; and “VTG Supervisory Board” means the supervisory board (Aufsichtsrat) of VTG. 1.2 Construction 1.2.1 References to clauses, sub-clauses, paragraphs, annexes and schedules are to clauses, sub-clauses and paragraphs of, and schedules and annexes to, this Agreement. The schedules and annexes form part of this Agreement and shall have the same force and effect as if expressly set out in the body of this Agreement, and any reference to this Agreement shall include the annexes and schedules. 1.2.2 References to any document or agreement include a reference to that document or agreement as varied, amended, supplemented, substituted or assigned from time to time in accordance with this Agreement (as applicable). 1.2.3 References to a statute or statutory provision shall be construed as a reference to the same as it may have been, or may from time to time be, modified, re-enacted or consolidated, and shall include any subordinate legislation made from time to time |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 10 under that statute or statutory provision, provided that nothing in this Clause 1.2.3 shall operate to increase the liability of any Party beyond that which would have existed had this Clause 1.2.3 been omitted. 1.2.4 References to books, records or other information mean books, records or other information in any form, including paper, electronically stored data, magnetic media, film and microfilm. 1.2.5 All headings and titles are inserted for convenience only and are to be ignored in the interpretation of this Agreement. 1.2.6 The words “including”, “include”, “in particular” and words of similar effect shall not be deemed to limit the general effect of the words which precede them and the word “including” means including without limitation (and all derivative terms are to be construed accordingly). 1.2.7 The words “to the extent” and “to the extent that” are used to indicate an element of degree and are not synonymous with the word “if”. 1.2.8 Any provision of this Agreement which is expressed to bind more than one person shall, save where inconsistent with the context, bind each of them severally and not jointly and severally. 1.2.9 References to the winding up or liquidation of a person include any equivalent or analogous procedure under the Law of any jurisdiction under which that person is incorporated, domiciled or resident or carries on business or has assets. 1.2.10 No provision of this Agreement shall be interpreted adversely against a Party, solely because that Party was responsible for drafting that provision (contra proferentem). 1.2.11 The use of any gender includes the other genders. 1.2.12 References to a country include any successor thereto, or any other country subsequently comprising all or part of such country, provided that a reference to a country shall at any time only comprise such territory referred to at the date of this Agreement. 1.2.13 If a word or phrase is defined, other grammatical forms of that word shall have a corresponding meaning. 1.2.14 General words shall not be given a restrictive meaning by reason of the fact that they are followed by particular examples intended to be embraced by the general words. Likewise, general words introduced by the word “other” shall not be given a restrictive meaning by reason of the fact that they are preceded by words indicating a particular class of acts, matters or things. 1.2.15 Where a German term has been added in parenthesis after an English term, only such German term shall be decisive for the interpretation of the relevant English term in relation to a German matter or a matter of German Law whenever such English term is used in this Agreement. English words used in this Agreement are intended to describe German legal concepts only and the consequences of the use of those words in English Law or any other foreign Law shall be disregarded. In respect of any jurisdiction other than Germany, a reference to any German legal term shall be construed as a reference to the term or concept which most nearly corresponds to it in that jurisdiction. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 11 1.2.16 Any reference to a “day” (including the phrase “Business Day”) shall mean a period of 24 hours running from midnight to midnight. 1.2.17 References to times are to Central European (Summer) Time (unless otherwise specified). 1.2.18 References to “€”, “EUR” or “euros” are to the lawful currency of the Eurozone and reference to any amount in such currency shall be deemed to include reference to an equivalent amount in any other currency by using the exchange rate of the relevant currency officially determined by the European Central Bank, Frankfurt am Main, Germany, as of the relevant time and as published on its website under http://www.ecb.europa.eu/stats/exchange/eurofxref/html/index.en.html. For currencies for which the European Central Bank does not officially determine an exchange rate, the exchange rate as published by Bloomberg PROFESSIONAL® Service at 2:00 p.m. CET on the relevant date shall apply. For currencies for which Bloomberg PROFESSIONAL® Service does not officially determine an exchange rate, the exchange rate in effect at the relevant time as used by the bank with which the Company holds its principal account shall apply. 1.2.19 Words in the singular shall include the plural and the plural shall include the singular. 1.2.20 References to a “company” shall be construed so as to include any corporation or other body corporate, wherever and however incorporated or established. 1.2.21 References to a “person” shall be construed so as to include any individual, firm, company, corporation, body corporate, government, state or agency of a state, local or municipal authority or government body or any joint venture, association or partnership (whether or not having separate legal personality). 1.2.22 Unless a contrary indication appears, references to a “member” shall be construed so as to refer to any firm, company, corporation, any other body corporate and any joint venture, association or partnership (whether or not having separate legal personality) and not to the individuals representing or otherwise acting on behalf of it. 1.2.23 References to “writing” or “in writing” shall include email. 2 General Obligations and covenants 2.1 The Shareholders agree that their respective rights and obligations in relation to the Company shall be regulated by this Agreement and the Articles. 2.2 Each Shareholder agrees to vote its Shares and otherwise act within its powers (so far as it lawfully can), and ensure that its respective representatives shall exercise their voting rights and act within their powers (so far as they lawfully can) to ensure the following: 2.2.1 compliance with, giving effect to, and execution of, all provisions of this Agreement; and 2.2.2 that the Company Directors, the Shareholders’ Committee Members, the Company and any Company Subsidiary, including VTG, and the equivalent bodies of any Company Subsidiary, including the VTG Directors and the VTG SB Members: (i) shall act in accordance with Law; and (ii) shall comply with, give effect to and execute all provisions of this Agreement, the Articles, the Board Rules of Procedure, the |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 12 Committee Rules of Procedure and any corporate documents of a Company Subsidiary, including for VTG the VTG MB Rules of Procedure (subject always to any duties imposed by Law on the Company Directors, the Shareholders’ Committee Members and any other directors, supervisory board members or members of any equivalent body in any Company Subsidiary, including the VTG Directors and the VTG SB Members). 2.3 The Company agrees and undertakes to, and shall procure that each of its Company Subsidiaries will: 2.3.1 act in accordance with Law; 2.3.2 comply with all of its obligations under this Agreement and the Articles; 2.3.3 refrain from engaging in any activity or conduct that has or will result in a violation of any anti-bribery, anti-money laundering or anti-terrorist financing Law of any country or any economic or trade sanctions, in each case subject to applicable Law; 2.3.4 procure, if and to the extent legally possible, through the exercise of its rights under any employment agreement or other contract, that the Company Directors: (i) act in accordance with Law; and (ii) comply with, give effect to and execute all provisions of this Agreement, the Articles, the Board Rules of Procedure, the Committee Rules of Procedure as well as VTG MB Rules of Procedure (subject always to any duties imposed by Law on the Company Directors); and 2.3.5 procure, if and to the extent legally possible, through the exercise of its rights as a shareholder or under contract or otherwise, that each Company Subsidiary: (i) shall act in accordance with Law; and (ii) shall implement, comply with, give effect to, and execute and enact governance provisions in accordance with the provisions of this Agreement, the Articles, the Board Rules of Procedure, the Committee Rules of Procedure as well as the VTG MB Rules of Procedure and (subject always to any duties imposed by Law on the Company Directors, the Shareholders’ Committee Members or any other directors, supervisory board members or members of any equivalent body in any Company Subsidiary, including the VTG Directors and the VTG SB Members). Any obligations of the Company set forth in this Agreement shall also relate to the management of any Company Subsidiary. 2.4 The Shareholders agree with each other that: 2.4.1 No breach of Clause 2.3 shall give any Party a right to claim damages from the Company in respect of such breach, and the Shareholders agree with each other that their rights vis-à-vis the Company in respect of such breaches shall be limited to actions for specific performance; and 2.4.2 any other breach of this Agreement by the Company or a Company Subsidiary shall, where reasonably possible, first be remedied through actions for specific performance. If any such other breach of the Agreement cannot reasonably be remedied through actions for specific performance, each Shareholder shall be free to claim damages against the Company. 2.5 The Shareholders shall procure that: 2.5.1 a full consolidation of the Company for accounting purposes by either Vodafone or the Investor is not required (save that nothing in this Clause 2.5 shall prevent a Shareholder acquiring Shares in accordance with the terms of this Agreement); and |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 13 2.5.2 with effect from the Effective Date, the Articles, the Board Rules of Procedure and the Committee Rules of Procedure are adopted and are consistent with, and give effect to, the provisions of this Agreement. 2.6 The Shareholders shall, in relation to the performance of this Agreement or in connection with the activities of the Business, refrain from engaging in any activity or conduct that has or will result in a violation of any anti-bribery, anti-corruption, anti-money laundering or anti-terrorist financing Law, any trade control Law or economic or trade sanctions, in each case subject to applicable Law. 2.7 If at any time the Company or the Shareholders cannot procure that an action is taken by the Company or a Company Subsidiary when required by this Agreement due to a policy formally adopted or agreement entered into by the Company or a Company Subsidiary, the Shareholders and the Company shall use Reasonable Endeavours to procure that the relevant policy or agreement is revoked, terminated or otherwise amended to enable the relevant action to be taken by the Company or a Company Subsidiary and permit the Company or Shareholders to comply with its obligations under this Agreement. 3 Corporate Structure of the Company 3.1 Legal Form and Company Name 3.1.1 The Company shall have the legal form of a German limited liability company (Gesellschaft mit beschränkter Haftung – GmbH). 3.1.2 The Company shall have the name “Oak Holdings 1 GmbH”. 3.2 Share Capital 3.2.1 The share capital of the Company at the Effective Date amounts to EUR 404,167,688.00 (in words: four hundred four million one hundred sixty-seven thousand six hundred eighty eight euro), divided into 404,167,688 ordinary shares with a nominal value of 1 euro (EUR 1.00) each (all ordinary shares issued by the Company from time to time being the “Shares” and each a “Share”). 3.2.2 The share capital of the Company shall be increased at the Effective Date as further set out in the Investment Agreement. 3.3 Business seat, tax residency and headquarters 3.3.1 The business seat and headquarters of the Company as well as VTG shall be in Düsseldorf, Germany. 3.3.2 The Shareholders intend that the Company shall be and remain tax resident solely in Germany for purposes of any domestic Tax Law and any applicable treaty. 3.4 Financial Year The Financial Year of the Company shall commence on 1 April and end on 31 March, or on such other dates as laid down in the Articles. 3.5 Representation The Company shall be represented (i) by two Company Directors (Geschäftsführer/innen) acting jointly or (ii) by one Company Director acting together with an authorised signatory (Prokurist/innen). |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 14 4 Corporate Governance The Company shall have the following corporate bodies: (i) the “Management Board” (Geschäftsführung); (ii) the “Shareholders’ Committee” (Gesellschafterausschuss); and (iii) the “Shareholders’ Meeting” (Gesellschafterversammlung). 5 Management Board 5.1 Powers and duties of the Management Board 5.1.1 The Management Board shall be responsible for the management of the Company. It shall carry out its tasks in accordance with Law, this Agreement, the Articles, the Board Rules of Procedure, the Committee Rules of Procedure, the Business Plan and Annual Budget, any general or singular instructions by the Shareholders’ Committee or Shareholders’ Meeting as well as the interests of the Company and, in accordance with Law, the collective interests of the Shareholders, provided that the Management Board shall not take any decision in relation to (i) any Shareholder Reserved Matter without the prior approval of the Shareholders in accordance with Clause 9.2 or (ii) any Shareholders’ Committee Reserved Matter without the prior approval of the Shareholders’ Committee in accordance with Clause 9.1 (the Shareholders Reserved Matters together with the Shareholders’ Committee Reserved Matters, the “Reserved Matters”), and in each case taking into consideration the Minority Veto Rights and New Minority Veto Rights. 5.1.2 The Management Board shall be obliged to implement at the Company Subsidiaries a governance structure which is materially consistent with the governance structure set out in this Agreement. It shall in particular ensure that no Company Subsidiary takes any decision in relation to any of the Reserved Matters without the prior approval of the Shareholders or the Shareholders’ Committee, as the case may be, or without taking into consideration the Minority Veto Rights and New Minority Veto Rights. 5.1.3 The delegation of certain duties and responsibilities to a Company Director shall not negate the joint responsibility of all Company Directors. 5.2 Composition of the Management Board and appointment of Company Directors 5.2.1 The Management Board shall consist of [***] Company Directors. 5.2.2 The initial Company Directors on the Effective Date are as follows [***] 5.2.3 As soon as reasonably practicable after Closing, the initial Company Directors shall be replaced by [***] Company Directors that are at the same time VTG Directors and the Company Directors shall going forward always come from the group of VTG Directors, unless all Key Shareholders agree otherwise. 5.2.4 Each Key Shareholder shall have the right to nominate one Company Director in accordance with Clause 5.2.3. Each Shareholder shall vote in the Shareholders’ Meeting, as far as it lawfully can, in favour of the appointment of a nominee unless a nominee, if elected, would be an Unsuitable Member. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 15 5.2.5 If there are less than two Key Shareholders, or if a Key Shareholder does not appoint a Company Director within [***] following a vacancy, such Company Director(s) as are required to take the number of Company Directors to [***] shall be appointed by the Shareholders’ Meeting by a simple majority. 5.2.6 The Company shall obtain directors and officers liability insurance coverage, on reasonable and customary terms and conditions, for the benefit of the Company Directors. 5.3 Suspension and dismissal of Company Directors 5.3.1 A Company Director may be suspended or dismissed by the Shareholders’ Meeting at any time upon request of a Key Shareholder (and the Shareholders shall vote accordingly), provided that a Key Shareholder may only request to dismiss the Company Director appointed by the other Key Shareholder if such Company Director is or has become an Unsuitable Member. 5.3.2 If a Company Director is dismissed for whatever reason, or is otherwise removed from office, the Shareholders’ Meeting shall, without undue delay, appoint a new Company Director as a replacement in accordance with Clause 5.2 provided that such Shareholder who nominated the dismissed Company Director shall have the right to nominate the new Company Director. 5.4 [***] 5.5 Board Rules of Procedure Further details of the organisation and decision-making processes of the Management Board are set forth in the “Board Rules of Procedure”. The Management Board may amend the Board Rules of Procedure, subject to the provisions of this Agreement and subject to approval of the Shareholders’ Committee. 6 Shareholders’ Committee 6.1 Powers and duties of the Shareholders’ Committee 6.1.1 The Shareholders’ Committee shall be the joint body (gemeinsames Gremium) of Shareholders for discussion, consultation and decision making in relation to the Company and the Company Subsidiaries. It shall serve as the main forum to discuss and agree on key business decisions regarding the Company and the Company Subsidiaries, in particular the tower business of VTG and its Subsidiaries, including in relation to the financial situation, strategy and operational targets, dismissal and hiring of key personnel, dividend policy and capital structure, as well as the Annual Budget and Business Plan, material litigation matters, acquisitions, divestments, joint ventures and similar transactions of the Company or any Company Subsidiary. 6.1.2 The Shareholders’ Committee shall also resolve, as a Shareholders’ Committee Reserved Matter, upon any matters which are in general referred by Law to a shareholders’ meeting of a German limited liability company, except for: (i) the approval of the annual financial statements; (ii) the decision on the distribution of profits; (iii) the repurchase and redemption (Einziehung) of shares; (iv) the election of the auditor; (v) appointments to, and dismissals from, the Shareholders’ Committee; and (vi) (other) matters which must be resolved by a shareholders’ meeting in accordance with Law. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 16 6.1.3 Any Shareholders’ Committee Reserved Matters shall be discussed and decided in the Shareholders’ Committee. Once the Shareholders’ Committee has passed a resolution in relation to a Shareholders’ Committee Reserved Matter, the matter shall be referred to the Management Board or any other competent board for implementation. 6.1.4 Any actions or decisions by the Shareholders’ Committee shall be made in accordance with Law, this Agreement, the Articles, the Committee Rules of Procedure, the Business Plan and Annual Budget as well as the interests of the Company and the collective interests of the Shareholders. 6.1.5 Meetings of the Shareholders’ Committee shall be convened as often as the business of the Company and the Company Subsidiaries requires, but at least quarterly, unless all Shareholders’ Committee Members agree otherwise. 6.1.6 Subject to Clause 13.4.3, each member of the Shareholders’ Committee is irrevocably authorised by the Company and the other Shareholders to disclose any information or records belonging to or concerning the Company, any member of the Company Group or its or their business and assets to the Shareholder upon whose request such member is nominated and appointed, or to any Affiliate of such Shareholder, provided that the recipient is under a duty of confidentiality (including by way of its employment agreement or by Law) in relation to such information or records. 6.2 Composition of the Shareholders’ Committee and appointment of its members 6.2.1 Each Shareholder (including Key Shareholders) shall be entitled to nominate in its sole discretion [***] Shareholders’ Committee Member for each [***] shareholding it holds, provided that: (i) each Key Shareholder shall be entitled at all times to nominate [***] Shareholders’ Committee Members; and (ii) each Key Shareholder that holds a Relevant Percentage of [***] shall at all times be entitled to nominate [***] of the Shareholders’ Committee Members (and this Agreement shall be amended accordingly, if required). 6.2.2 The initial Shareholders’ Committee Members will be appointed by resolution of the Shareholders’ Meeting on the Effective Date. Each Shareholder shall vote in the Shareholders’ Meeting, as far as they lawfully can, in favour of the appointment of the nominees nominated in accordance with Clause 6.2.1 unless a nominee, if elected, would become an Unsuitable Member. Upon the cessation or reduction of a Shareholder’s right to nominate Shareholders’ Committee Members (other than pursuant to a Transfer where the nomination right has passed to an Affiliate of the transferring Shareholder), each Shareholder shall vote in the Shareholders’ Meeting, as far as they lawfully can: (i) in favour of the removal of any Shareholders’ Committee Member previously nominated by the relevant Shareholder; and (ii) if and to the extent the nomination right has passed to another Shareholder, in favour of the appointment of any Shareholders’ Committee Member nominated by such other Shareholder. If a Shareholder’s right to nominate a Shareholders’ Committee Member has ceased and no other Shareholder is entitled to nominate an individual for the vacant position, such position on the Shareholders’ Committee shall remain vacant. The provisions in this Clause shall apply mutatis mutandis if and to the extent |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 17 a Shareholder acquires a right to nominate Shareholders’ Committee Members or if the number of Shareholders’ Committee Members to which such Shareholder is entitled to nominate increases. 6.2.3 In the event that an individual ceases to be a Shareholders’ Committee Member (for whatever reason), the Shareholder that has nominated such individual (or the successor to its nomination right in accordance with this Agreement) shall be entitled to nominate a replacement Shareholders’ Committee Member, if and to the extent the nomination right of such Shareholder has not ceased at the time of the appointment of the replacement Shareholders’ Committee Member. Such nominee shall be appointed at a Shareholders’ Meeting which shall take place without undue delay following a Notice from the nominating Shareholder to the other Shareholders regarding the nominated individual. 6.2.4 The Shareholders undertake to each other and to the Company to maintain the consistency of membership of the Shareholders’ Committee to the extent reasonably possible. 6.2.5 Each Key Shareholder shall be entitled to appoint up to [***] to act as observers at meetings of the Shareholders’ Committee. Observers shall be entitled to receive notice of, and attend, all Shareholders’ Committee meetings and to receive copies of Shareholders’ Committee papers as if they were Shareholders’ Committee Members, but shall not be entitled to speak or vote on any resolutions proposed. The nominating Key Shareholder shall at any time have the right to remove, in its sole discretion, any observer nominated by it and to nominate a new observer in their place. 6.2.6 Any Shareholder may appoint any other suitable representative of the relevant Shareholder willing to act as an alternate for its nominated Shareholders’ Committee Member to attend, speak at and vote at a Shareholders’ Committee meeting in place of such Shareholders’ Committee Member and to exercise and discharge all the functions, powers and duties of such Shareholders’ Committee Member, in each case at such meeting, by giving notice in writing to the other Shareholders having representatives in the Shareholders’ Committee and the Company. 6.3 Suspension and dismissal of members of the Shareholders’ Committee 6.3.1 A Shareholders’ Committee Member may be suspended and dismissed as a Shareholders’ Committee Member at any time: (i) by Notice to the Company by the Shareholder that has nominated such member (or the successor to its nomination right in accordance with this Agreement); or (ii) where such a member is an Unsuitable Member (and reasonable evidence of such has been provided), by Notice to the Company by a Shareholder, and in either such event the Shareholders’ Meeting shall promptly suspend or dismiss such Shareholders’ Committee Member from its position and shall promptly appoint another Shareholders’ Committee Member in its place in accordance with this Agreement and the Articles. The Shareholder that has nominated the member to be suspended or dismissed (or the successor to its nomination right in accordance with this Agreement) shall be entitled to nominate a replacement Shareholders’ Committee Member, if and to the extent the nomination right of such Shareholder |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 18 has not ceased at the time of the appointment of the replacement Shareholders’ Committee Member. 6.4 Chairperson and deputy chairperson of the Shareholders’ Committee 6.4.1 The Shareholders’ Committee shall appoint one Shareholders’ Committee Member to act as chairperson and one to act as deputy chairperson of the Shareholders’ Committee. 6.4.2 [***] 6.4.3 If Vodafone is no longer a Key Shareholder and the right to nominate the chairperson has not been transferred in accordance with Clause 14.5, the chairperson shall be nominated by the Investor if the Investor is at the time of the nomination a Key Shareholder or by the successor pursuant to Clause 14.5 of the Key Shareholders rights; otherwise the chairperson shall be elected by the Shareholders’ Committee by a simple majority. If the Investor is no longer Key Shareholder and the right to nominate the deputy chairperson has not been transferred in accordance with Clause 14.5, the deputy chairperson shall be elected by the Shareholders’ Committee by a simple majority. 6.4.4 If a Shareholders’ Committee Member who was the chairperson or the deputy chairperson has either been suspended or dismissed or has resigned as a Shareholders’ Committee Member, the Key Shareholder that nominated such Shareholders’ Committee Member (or the successor to this right in accordance with this Agreement) shall be entitled to nominate a replacement chairperson or deputy chairperson, as the case may be, if and to the extent the nomination right of such Key Shareholder has not ceased at the time of replacement. 6.4.5 The chairperson of the Shareholders’ Committee is responsible for the preparation of the decisions of the Shareholders’ Committee and shall chair its meetings at which he or she is present. 6.4.6 If the chairperson is not present at a Shareholders’ Committee meeting, the deputy chairperson shall chair the meeting. If the deputy chairperson is not present, the Shareholders’ Committee may appoint with simple majority vote any of its members to chair the respective meeting. 6.5 Voting 6.5.1 At a Shareholders’ Committee meeting, each member of the Shareholders’ Committee shall have one vote. Matters arising at the Shareholders’ Committee shall be decided by resolution passed with a simple majority of the votes cast, subject to the higher threshold required in relation to Shareholders’ Committee Reserved Matters. 6.5.2 The chairperson and the deputy chairperson of the Shareholders’ Committee shall not have a casting vote. 6.6 Quorum 6.6.1 Subject to Clause 6.6.4, the Shareholders’ Committee meeting shall have a quorum if at least [***] of the Shareholders’ Committee Members are present or represented, provided that in each case (except as set forth in Clause 6.6.5) one Shareholders’ Committee Member of each Key Shareholder must be present or represented. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 19 6.6.2 For the determination of the quorum, Shareholders’ Committee Members that are not allowed to take part in the discussions and decision-making by the Shareholders’ Committee pursuant to Law, the Articles or the Committee Rules of Procedure shall be considered absent. 6.6.3 If the Shareholders’ Committee meeting does not have a quorum or if a quorum ceases to be present during the course of the meeting, the chairperson or the individual representing the chairperson in such meeting shall adjourn the meeting to a specified place and time not less than [***] after the original [***] (or such shorter period as the Key Shareholders agree). A notice of the adjourned Shareholders’ Committee meeting shall be given to all Shareholders’ Committee Members. 6.6.4 At a reconvened Shareholders’ Committee meeting following an adjournment pursuant to Clause 6.6.3, a quorum shall be present if one Shareholders’ Committee Member nominated by each Key Shareholder is present or represented. 6.6.5 If all Shareholders’ Committee Members nominated by a Shareholder are not allowed to take part in the discussions and decision-making by the Shareholders’ Committee pursuant to Law, the Articles or the Committee Rules of Procedure, the provisions of this Clause 6.6.5 shall apply: the presence of Shareholders’ Committee Members nominated by such Shareholder shall not be required for a quorum and for the determination of the [***] presence of the Shareholders’ Committee Members set out in Clause 6.6.1 the Shareholders’ Committee Members nominated by such Shareholder shall be disregarded. 6.7 Convening of the Shareholders’ Committee meeting 6.7.1 Shareholders’ Committee meetings may be convened by the Management Board or by a Key Shareholder. 6.7.2 The notice to convene the Shareholders’ Committee meeting shall be given no later than [***] (or such shorter period as the Key Shareholders agree) prior to [***] of the meeting and shall set out an agenda identifying in reasonable detail the matters to be discussed. 6.8 [***] 6.9 Conflict of Interest Subject to Clause 21 (Related Party Transactions and Conflicts of Interest), the right of a Shareholders’ Committee Member to vote in a Shareholders’ Committee meeting shall not be excluded for conflicts of interest if the subject of the vote relates to a commercial contract between a member of the Company Group and the Shareholder or an Affiliate of such Shareholder (other than a member of the Company Group). 6.10 Committee Rules of Procedure The Shareholders’ Meeting may adopt rules of procedure for the Shareholders’ Committee, setting out further details for the organisation and decision-making processes of the Shareholders’ Committee (the “Committee Rules of Procedure”). 7 Shareholders’ Meeting 7.1 Responsibilities of the Shareholders’ Meeting |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 20 7.1.1 The Shareholders’ Meeting shall generally have the tasks and obligations assigned to it under mandatory Law. 7.1.2 The Shareholders’ Meeting shall in particular decide on the following topics: (i) approval of the annual financial statements and decision on the distribution of profits; (ii) re-purchase of own Shares or redemption (Einziehung) of Shares; (iii) Shareholder Reserved Matters and any other matters assigned to the Shareholders’ Meeting in accordance with this Agreement; (iv) election of the auditor of the Company; and (v) appointments and dismissals of members of the Shareholders’ Committee or Company Directors. 7.2 Frequency 7.2.1 The annual Shareholders’ Meeting shall be held within [***], promptly following the preparation and audit of the annual financial statements of the Company. 7.2.2 Other Shareholders’ Meetings shall be held as often as the Management Board, the Shareholders’ Committee or a 12.5% Shareholder deem necessary. 7.3 Language The Shareholders’ Meeting shall be held, and all documents in respect of the Shareholders’ Meeting shall be prepared, in the English language, unless [***] Shareholders agree otherwise or unless explicitly required under German Law (in the latter case convenience translations into the English language shall be made available to the Shareholders as soon as reasonably practicable). 7.4 Place 7.4.1 Shareholders’ Meetings shall take place at locations reasonably convenient for all Shareholders, but in any case in [***], unless all Key Shareholders agree otherwise, provided always that conducting such meetings in the respective jurisdiction is consistent with the governance agreed between the Parties from time to time, to ensure that the Company maintains [***] in Germany. 7.4.2 The Shareholders’ Meeting may also be held by video and other electronic conferencing means, provided that such meetings are consistent with the governance agreed between the Key Shareholders from time to time, to ensure that the Company maintains its tax residency in [***] and further provided that all Shareholders (or their representatives) participating in such meeting are able to communicate simultaneously (e.g. by using conferencing, video conference or telephone conference applications or platforms such as Microsoft Teams or Zoom). 7.5 Agenda 7.5.1 The agenda for the annual Shareholders’ Meeting shall in any case include the following matters: (i) approval of the annual financial statements; (ii) decision on the distribution of profits; and |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 21 (iii) discharge/release from liability (Entlastung) of the Shareholders’ Committee Members. 7.5.2 On or shortly prior to the day of the annual Shareholders’ Meeting, the Shareholders’ Committee shall also hold a meeting and decide upon the discharge/release from liability (Entlastung) of the Company Directors. 7.6 Resolutions 7.6.1 Each Shareholder shall have the right to cast [***] for each Share held at the time of casting its vote. 7.6.2 Unless otherwise provided in the Articles or this Agreement, matters arising at any Shareholders’ Meeting of the Company shall be decided by shareholders’ resolution, passed with a [***] of the votes cast, subject to any higher threshold required by Law. Shareholder Reserved Matters require [***]. 7.7 Convening of the Shareholders’ Meeting 7.7.1 Subject to Law, Shareholders’ Meetings may be convened by the Management Board, the Shareholders’ Committee or by a Key Shareholder. 7.7.2 The notice to convene the Shareholders’ Meeting shall be given no later than [***] (or such shorter period as the Shareholders agree) prior to [***] of the meeting and shall set out an agenda identifying in reasonable detail the matters to be discussed. 7.8 Meetings/Quorum 7.8.1 The Shareholders’ Meeting shall be quorate as follows: (i) Subject to Clause 7.8.1(ii), all [***] must be present or represented. If not all [***] are present or represented, a second Shareholders’ Meeting shall be called by the chairperson of the Shareholders’ Committee, a [***] or a [***] of the first meeting in accordance with Clause 7.7.2. (ii) For the second meeting that is duly convened pursuant to Clause 7.8.1(i), at least [***] in the Company must be present or represented, provided that, subject to Clause 7.6.2, no decisions may be made and no resolutions may be passed that have not been on the agenda for the first meeting, except if unanimously agreed otherwise by all Shareholders (present and absent). 7.8.2 Resolutions of the Shareholders’ Meeting may be taken outside a meeting, provided no stricter form is required under German Law and provided that all Shareholders have approved such resolutions being passed in this manner; the votes shall be cast in writing, specifying the way in which each Shareholder has cast its vote. 7.9 Chair The Shareholders’ Meeting shall be chaired by the chairperson of the Shareholders’ Committee. In his or her absence, the deputy chairperson of the Shareholders’ Committee shall chair the Shareholders’ Meeting. If he or she is not present, the chairperson of the Shareholders’ Meeting shall be appointed by the Shareholders’ Meeting by simple majority. 7.10 Conflict of Interest Subject to Clause 21 (Related Party Transactions and Conflicts of Interest), the right to vote in a Shareholders’ Meeting shall not be excluded for reasons of a conflict of interest if the |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 22 subject of the vote relates to a commercial contract between the Company and a Shareholder or an Affiliate of a Shareholder (other than a member of the Company Group). 8 VTG Governance Irrespective of the legal form of VTG from time to time or its listing status from time to time and irrespective of whether VTG at a time is a majority-owned or wholly-owned Company Subsidiary, as from Effective Date the VTG Management Board and, where in place due to mandatory Law or agreement of the Key Shareholders, the VTG Supervisory Board, shall be composed and shall operate in accordance with the principles set forth under Clauses 8.1 and 8.2, unless otherwise agreed between the Key Shareholders. 8.1 VTG Management Board 8.1.1 Powers and duties of the VTG Management Board (i) The Parties agree that the VTG Management Board shall be responsible for the overall management of VTG and VTG Group in accordance with Law, this Agreement, the Articles, the VTG MB Rules of Procedure, the Business Plan and Annual Budget, any general or singular instructions by the Shareholders’ Committee, Shareholders’ Meeting or VTG’s shareholders’ meeting as well as the interests of VTG and, in accordance with Law, the collective interests of the Shareholders, provided that, subject to mandatory Law, the VTG Management Board shall not take any decision in relation to a Reserved Matter without the prior approval of the Shareholders’ Meeting or the Shareholders’ Committee, as the case may be, and in each case by taking into consideration the Minority Veto Rights and New Minority Veto Rights. (ii) The Company shall procure that the VTG Management Board shall implement for the VTG Subsidiaries a governance structure materially consistent with the governance structure set out in this Agreement. It shall in particular ensure that no VTG Subsidiary takes any decision in relation to any of the Reserved Matters without the prior approval of the Shareholders’ Meeting or Shareholders’ Committee, as the case may be, or without taking into consideration the Minority Veto Rights and New Minority Veto Rights. (iii) The delegation of certain duties and responsibilities to a VTG Director shall not negate the joint responsibility of all VTG Directors. 8.1.2 Composition of the VTG Management Board and appointment of VTG Directors (i) The VTG Management Board shall as of the Effective Date consist of such number of persons and such VTG Directors as the Key Shareholders deem appropriate (prior to or after the Effective Date). (ii) Each VTG Director shall be appointed by the VTG Supervisory Board in accordance with the relevant provisions of this Agreement, the Articles and the articles of association of VTG and applicable Law, provided that prior to any appointment of a VTG Director the Shareholders’ Committee shall have approved the appointment as a Shareholders’ Committee Reserved Matter. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 23 (iii) As soon as a VTG Director ceases to be in office, any subsequent VTG Directors will be appointed by the VTG Supervisory Board. Each VTG Director may be reappointed in accordance with Clause 8.1.2(ii). (iv) [***] 8.1.3 Suspension and dismissal of VTG Directors (i) A VTG Director shall be suspended or dismissed by the VTG Supervisory Board at any time upon request of one Key Shareholder (and following such request, the other Key Shareholder(s) shall be required to vote in favour of the dismissal as a Shareholders’ Committee Reserved Matter). (ii) If a VTG Director is suspended or dismissed for whatever reason, or is otherwise removed from office, the VTG Supervisory Board shall, without undue delay, appoint a new VTG Director as replacement in accordance with Clause 8.1.2(ii). 8.1.4 [***] 8.1.5 Rules of Procedure The working methods and decision-making process of the VTG Management Board are further set forth in the “VTG MB Rules of Procedure”. The VTG Supervisory Board may amend the VTG MB Rules of Procedure, subject to the provisions of this Agreement and subject to approval of the Shareholders’ Committee. 8.1.6 Monitoring Upon request of any representative of a Key Shareholder, the chairperson of the Shareholders’ Committee shall without undue delay convene a meeting with members of the VTG Management Board and appropriate representatives of the Key Shareholders for the purposes of discussing the affairs of the Company Group. Unless otherwise agreed between the Key Shareholders, such meetings shall take place no more than once per calendar month. 8.2 VTG Supervisory Board 8.2.1 Powers and duties of the VTG Supervisory Board The VTG Supervisory Board shall have the rights and obligations of a supervisory board of a German stock corporation under mandatory Law. Subject to mandatory Law, it shall act in accordance with Law, this Agreement, the Articles, the Business Plan and Annual Budget, as well as the interests of VTG and VTG Group and, in accordance with Law, the collective interests of the Shareholders, provided that the VTG Supervisory Board shall not take any decision in relation to a Reserved Matter without the prior approval of the Shareholders’ Meeting or the Shareholders’ Committee, as the case may be, and in each case by taking into consideration the Minority Veto Rights and New Minority Veto Rights. 8.2.2 Composition of the VTG Supervisory Board and appointment of its members (i) The VTG Supervisory Board shall be composed identically to the Shareholders’ Committee. (ii) Each VTG SB Member shall be appointed by the VTG General Meeting in accordance with the relevant provisions of this Agreement and the Articles. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 24 (iii) The Company Directors shall, and shall instruct any other Company representative to, ensure that the VTG Supervisory Board is composed identically to the Shareholders’ Committee at any time. In case of any inconsistencies between the composition of the Shareholders’ Committee and the VTG Supervisory Board, the Company Directors and any other Company representative shall request as soon as reasonably possible, the convocation of a VTG General Meeting with the agenda item to appoint or dismiss, as the case may be, one or more VTG SB Member(s), or to request that a respective agenda item is added to the agenda at a VTG General Meeting called by the VTG Directors, and to request that any other ancillary resolutions are taken by the VTG General Meeting or otherwise that are required to ensure the intended composition of the VTG Supervisory Board (e.g. the amendment of the articles of association of VTG). (iv) The initial VTG SB Members shall be appointed by the VTG General Meeting as soon as reasonably possible after the Effective Date for a term of [***]. Clause 8.2.2(iii) shall apply mutatis mutandis and each Shareholder shall ensure that the Company Directors act in accordance with Clause 8.2.2(iii). (v) VTG shall obtain directors and officers liability insurance coverage, on reasonable and customary terms and conditions, for the benefit of the VTG SB Members. 8.2.3 Suspension and dismissal of VTG SB Members A VTG SB Member shall be suspended or dismissed as a VTG SB Member if he or she is suspended or dismissed as a Shareholders’ Committee Member in accordance with this Agreement. Clause 8.2.2(iii) shall apply mutatis mutandis. 8.2.4 Rules of Procedure The working methods and decision-making process of the VTG Supervisory Board are further set forth in the “VTG SB Rules of Procedure”. The VTG Supervisory Board may amend the VTG SB Rules of Procedure, subject to the provisions of this Agreement and subject to approval of the Shareholders’ Committee. Each representative of a Shareholder in the VTG Supervisory Board shall, and each Shareholder will ensure that its representative will, vote in the VTG Supervisory Board, as far as they lawfully can, in favour of the initial implementation of the VTG SB Rules of Procedure. 8.3 [***] 9 Reserved Matters 9.1 Shareholders’ Committee Reserved Matters 9.1.1 The Shareholders’ Committee Reserved Matters at the time of the Effective Date are set forth in Schedule 9.1.1. 9.1.2 Approval by the Shareholders’ Committee of any Shareholders’ Committee Reserved Matter requires: (i) a Shareholders’ Committee resolution passed with simple majority of the votes cast; and (ii) affirmative votes of each present or represented Shareholders’ Committee Member nominated by a Key Shareholder as |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 25 long as the nominating Key Shareholder or any of its Affiliates is a Key Shareholder at the time of the resolution. 9.1.3 Any amendment to the list of Shareholders’ Committee Reserved Matters requires: (i) a Shareholders’ Committee resolution passed with [***] cast; and (ii) affirmative votes of each present or represented Shareholders’ Committee Member nominated by a Key Shareholder as long as the nominating Key Shareholder or any of its Affiliates remains a Key Shareholder at the time of the resolution. 9.1.4 Each Key Shareholder may request, with the approval of the other Key Shareholder, that individual matters and actions by the Management Board that are not generally a Shareholders’ Committee Reserved Matter shall require the approval of the Shareholders’ Committee and be treated as a Shareholders’ Committee Reserved Matter for these purposes. 9.2 Shareholder Reserved Matters 9.2.1 The Shareholder Reserved Matters at the time of the Effective Date are set forth in Schedule 9.2.1. 9.2.2 Approval of the Shareholders’ Meeting to Shareholders Reserved Matters requires a resolution passed with a simple majority of the votes cast and, as long as there are one or several Key Shareholders, the affirmative vote of each Key Shareholder. 9.2.3 The Shareholders’ Meeting may decide from time to time to amend the list of Shareholder Reserved Matters, such decision in each case to be taken with a simple majority, provided that such majority must include the affirmative vote of each Key Shareholder. 9.3 [***] 10 Minority Rights 10.1 If and as long as a Shareholder is not a Key Shareholder but is a [***] Shareholder, it shall be entitled to the veto rights set out in Schedule 10.1 (the “Minority Veto Rights”). Matters subject to the Minority Veto Rights shall be decided in the Shareholders’ Committee or Shareholders’ Meeting (as applicable) and shall require the affirmative vote of the Shareholder (or its present or represented representatives in the Shareholders’ Committee) entitled to such Minority Veto Rights. If such minority Shareholder has not nominated a Shareholders’ Committee Member, the Minority Veto Rights shall not apply in relation to such Shareholder for matters being decided in the Shareholders’ Committee. 10.2 The list of Minority Veto Rights may be amended, from time to time, by a resolution of the Shareholders’ Meeting, provided that the affirmative vote of each Key Shareholder and each Shareholder entitled to Minority Veto Rights is required. 11 [***] 12 Deadlock 12.1 Deadlock Matter 12.1.1 In case the Shareholders’ Committee is unable to pass a resolution (either approving or disapproving) on an agenda item in two consecutive meetings or no quorum is |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 26 present at [***] meetings, as duly convened, a Shareholders’ Meeting shall be called in accordance with Clause 7.7. The notice period for convening such Shareholders’ Meeting shall not exceed [***]. This Clause 12.1.1 shall not apply to agenda items in respect of which the Shareholders’ Committee is obliged to take certain resolutions in accordance with this Agreement. 12.1.2 Any agenda item (regardless of whether referred to it pursuant to Clause 12.1.1 or not) on which the Shareholders’ Meeting is unable to pass a resolution in [***] or for which no quorum is present at [***], as duly convened, shall be considered a “Deadlock Matter”. 12.2 Escalation Process 12.2.1 Any Shareholder may refer a Deadlock Matter for discussion between a senior representative designated by each Shareholder (the “Deadlock Appointees” and each a “Deadlock Appointee”). 12.2.2 The Deadlock Appointees shall use Reasonable Endeavours to decide upon the Deadlock Matter within [***] on which the Deadlock Matter has been referred to the Deadlock Appointees. 12.2.3 A Deadlock Matter shall be considered solved if the Deadlock Appointees of the Key Shareholders and, in case of a matter subject to a Minority Veto Right, also the Deadlock Appointee of each Shareholder entitled to such Minority Veto Right has agreed on the Deadlock Matter. In each such case, the Deadlock Matter shall be implemented in accordance with the applicable governance provisions. 12.2.4 If the Deadlock Matter cannot be solved with the process set out in Clauses 12.2.1 and 12.2.2, the Deadlock Matter shall be referred to the Group CEOs of the Shareholders (or an equivalent person) and Clauses 12.2.1, 12.2.2 and 12.2.3 shall apply mutatis mutandis. In case the Group CEOs or equivalent persons are finally unable to decide upon the Deadlock Matter [***], the matter shall be considered a “Final Deadlock”. 12.3 Continuation of the Status Quo If the Deadlock Matter is considered a Final Deadlock, the status quo in relation to such matter shall prevail, save in respect of (i) the Annual Budget for which Clause 19.6 shall apply; or (ii) an amendment to or revision of the Business Plan, for which Clause 19.5 shall apply. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 27 13 [***] 14 [***] 15 [***] 16 [***] 17 [***] 18 [***] 19 Accounting, Annual Report, Business Plan and Budget 19.1 The Shareholders shall use Reasonable Endeavours to agree (as soon as reasonably practicable following the Effective Date) on 19.1.1 a [***] Business Plan (the “Initial Business Plan”), and 19.1.2 [***]. The Initial Business Plan and Initial Annual Budget shall be adopted by the Shareholders’ Committee as soon as possible following such agreement. 19.2 The Company shall procure that the Company Directors shall prepare a draft Business Plan and Annual Budget to be submitted to the Shareholders’ Committee to replace and update the then existing Business Plan (the “Draft Revised Business Plan”) and Annual Budget (a “Draft Revised Annual Budget”) by no later [***] following the date of this Agreement, comprising: (i) in respect of the Business Plan, a financial, cash flow and capital expenditure forecast for the subsequent 4 year period; and (ii) [***]. 19.3 Each Draft Revised Business Plan and Draft Revised Annual Budget shall be reviewed by the Key Shareholders in close coordination with the Company Directors and shall be finalised by the Company Directors (reasonably taking into account the direction and comments of the Key Shareholders) prior to the start of the period to which it relates. Promptly following such finalisation, the Draft Revised Business Plan and Draft Revised Annual Budget shall be proposed for approval by the Shareholders’ Committee and adopted as the Business Plan and Annual Budget by the Shareholders’ Committee in accordance with Clause 9.1.1. The Shareholders’ Committee shall use Reasonable Endeavours to approve the Draft Revised Business Plan and Draft Revised Annual Budget (as applicable) under Clause 19.2 prior [***]. 19.4 If the Shareholders’ Committee does not approve the Draft Revised Business Plan and/or Draft Revised Annual Budget and/or any proposals for changes to the Business Plan, [***] the Company shall revise the draft and proposals (with regard to any comments raised by each of the Shareholders) and again present them to the Shareholders’ Committee for approval. 19.5 [***] 19.6 [***] |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 28 20 [***] 21 Related Party Transactions and Conflicts of Interest 21.1 Any transaction, arrangement or dealing by the Company or any Company Subsidiary with any Shareholder or its Affiliate (other than a member of Company Group) (such Shareholder the “Conflicted Party” and the interaction a “Related Party Transaction”) shall be entered into on an arm’s length basis. Any conclusion, amendment, termination or renewal of a material Related Party Transaction (except for any prolongation or renewal of any Master Services Agreement following the determination of Relevant Market Terms in accordance with Clause 27.1.3) shall be subject to the prior approval of the Shareholders’ Committee and shall be a Shareholders’ Committee Reserved Matter. A Related Party Transaction shall be deemed material for the purpose of this Clause only if the relevant measures exceed (or could exceed) an amount of [***]. 21.2 To the extent legally permissible, the Representatives of a Conflicted Party, any Shareholders’ Committee Members nominated by a Conflicted Party or the Conflicted Party shall not be excluded from voting or exercising any rights in relation to a Related Party Transaction, provided, however, that the Conflicted Party (and its Representatives, including any Shareholders’ Committee Members nominated by a Conflicted Party) shall be excluded from voting or exercising any rights in a Shareholders’ Meeting (if applicable) or at a Shareholders’ Committee meeting in cases where the Company resolves on, in relation to any such Related Party Transaction, subject to Clause 21.3: 21.2.1 imposing a contractual penalty on the Conflicted Party (or its Affiliates other than a member of Company Group); 21.2.2 performing unilateral legal declarations for cause (einseitige Rechtsgeschäfte aus wichtigen Grund), in particular, terminating or exercising any right to terminate a Related Party Transaction with the Conflicted Party (or its Affiliates other than a member of Company Group); 21.2.3 enforcing by legal proceedings or waiving any material right under or in relation to any Related Party Transaction; or 21.2.4 defending any claim brought against the Company by, or initiating, pursuing or not pursuing a claim or litigation against, the Conflicted Party (or its Affiliates other than a member of Company Group) in connection with any Related Party Transaction. 21.3 The Shareholders’ Committee Members nominated by a Conflicted Party shall only be excluded from voting at a Shareholders’ Committee meeting if in relation to a resolution concerning a matter set out under Clauses 21.2.1 through 21.2.4 the matter in hand is material. A matter shall be deemed material for the purpose of this Clause only if the matter is material in the context of the Conflicted Party or the Related Party Transaction exceeds (or could exceed) an amount of [***]. 21.4 If Clause 21.3 applies, the determination of a quorum in a Shareholders’ Meeting or Shareholder’s Committee in accordance with this Agreement shall not require the presence of the Conflicted Party and the affirmative vote of the Conflicted Party in a Shareholders’ Meeting or Shareholder’s Committee shall not be required for any resolution regarding such Related Party Transaction. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 29 21.5 If the Shareholders’ Committee or Shareholders’ Meeting is unable to approve a Related Party Transaction, the matter will be deemed a Deadlock Matter and resolved in accordance with Clause 12.2. 22 Intellectual Property Rights Any Intellectual Property Rights which arise in the Company in the course of the Company’s activities shall belong to the Company. The same shall apply mutatis mutandis to any Company Subsidiary. 23 Company Finance The Company shall maintain a long-term optimal leverage policy, targeting net financial debt/adjusted EBITDAaL levels of [***], or such other levels as decided upon in accordance with the terms of this Agreement. 24 [***] 25 Tax 25.1 Management of Tax Affairs 25.1.1 The Management Board shall (i) be responsible for the management of the Tax affairs of the Company and any Company Subsidiary in a Tax compliant manner, including the preparation of Tax returns, claims, elections, surrenders, disclaimers, notices and consents, and the conduct of negotiations, litigations and correspondence with any Tax Authority; and (ii) ensure that a customary tax compliance management system for the Company and any Company Subsidiary is implemented within reasonable time, monitored and regularly enhanced. 25.1.2 The Company shall inform its Shareholders on a regular basis on the status of implementation of Clause 25.1.1(ii) above and any significant results from monitoring and planned and implemented enhancement measures. 25.2 Exchange of Information 25.2.1 The Company shall provide and procure that the Company Subsidiaries provide to the Shareholders any information reasonably requested by any of them, in connection with the preparation, filing or publication of any Tax returns, reports (either for Tax or financial or non-financial reporting purposes), notices, claims, elections or any other action for taxation purposes. 25.2.2 The Company shall provide to any Shareholder such information as such Shareholder may reasonably request from time to time: (i) to enable such Shareholder to determine whether any member of the Company Group has been or may become a “passive foreign investment company” (a “PFIC”) for purposes of the IRC; (ii) to enable such Shareholder to determine the consequences to such Shareholder or any of its direct or indirect investors of such status; (iii) that is reasonably necessary for such Shareholder, or any direct or indirect investor in such Shareholder, to duly complete and file its income tax returns; and (iv) if any member |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 30 of the Company Group is determined to be a PFIC, such information as is reasonably necessary for that Shareholder, or any direct or indirect investor in such Shareholder, to make or maintain any election available under the IRC related to PFIC status, including a “qualified electing fund” (“QEF”) election with respect to any member of the Company Group. Such information shall be provided to the Shareholders as soon as reasonably practicable after [***] and in no event later than the [***] of the relevant member of the Company Group for which it is determined that such an election may be made. 25.3 Co-operation 25.3.1 The Parties and the Company shall co-operate and the Company shall procure that the Company Subsidiaries co-operate in good faith with each other with regard to the Tax affairs of any of them. 25.3.2 The Company shall keep and procure that the Company Subsidiaries shall keep the Shareholders informed on a regular or, as necessary, on an ad-hoc basis of all relevant Tax affairs relating to the Company and the Company Subsidiaries. The Company shall inform the respective Shareholder of all relevant Tax affairs which may affect the Tax position of any of the Shareholders without undue delay (unverzüglich) in a complete, precise and consistent manner. 25.3.3 On request of any Shareholder, the Company and the requesting Shareholder shall consult with each other on Tax matters; the other Shareholder may participate in such consultation, except and to the extent business secrets of the requesting Shareholder may be endangered. 26 [***] 27 [***] 28 Announcements 28.1 Public announcements by a Shareholder or its Affiliates 28.1.1 Each Shareholder shall not, and shall procure that its Affiliates (other than a member of the Company Group) will not, make any public announcement of any kind in respect of this Agreement or the Business except as otherwise agreed in writing between the Key Shareholders or unless required by Law or regulation (including any rules of a stock exchange), in which case the Shareholder concerned shall, to the extent reasonably practicable, consult with the other Shareholders regarding the contents of the announcement, and the Shareholder or the Affiliate of the Shareholder making the announcement (as the case may be) shall (unless it is not reasonably practicable to do so) give a copy of the text of the announcement to the other Shareholders prior to the announcement being released. 28.1.2 Nothing in this Clause 28.1 shall prevent a Shareholder from making a statement in the ordinary course of business referring to the Shareholder’s holding of Shares or the fact of its individual participation in the Business. 28.2 Public announcements by the Company or a Company Subsidiary |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 31 28.2.1 No public announcement of any kind shall be made by the Company or a Company Subsidiary in respect of this Agreement, the joint venture described herein or the Shareholders, except as approved by the Shareholders’ Committee or unless required by Law or regulation (including any rules of a stock exchange). 28.2.2 Nothing in this Clause 28.2 shall prevent the Company or a Company Subsidiary from making statements in the ordinary course of business about the Business or the fact of a Shareholder’s holding of Shares or interest in the Business. 28.3 Equity capital markets communication The members of the Company Group shall not communicate with or provide information to investors, potential investors, analysts or other participants of capital markets without the approval of the Shareholders’ Committee (unless required otherwise by Law), except for the purpose of obtaining ratings or independent debt financing. 29 Confidentiality 29.1 Confidential Information Subject to Clause 29.2, each Shareholder shall keep confidential, and procure that its respective officers, directors, employees, agents and advisers and its respective Affiliates and their respective officers, directors, employees, agents and advisers keep confidential, the following information (the “Confidential Information”): 29.1.1 all communications between a Shareholder and the Company; 29.1.2 all information and other materials supplied to or received by any of the Shareholders from the Company or any other member of the Company Group which are either marked “confidential” or are by their nature intended to be “confidential”; 29.1.3 any information relating to: (i) this Agreement, the Business and the customers, assets or affairs of the Company and any other member of the Company Group which a Shareholder or its Affiliates may have or acquire through ownership by the relevant Shareholder of its interest in the Company or this Agreement, and all information concerning the business transactions and/or financial arrangements of the Company or any other member of the Company Group; and (ii) the customers, business, assets or affairs of a Shareholder or its direct or indirect shareholders and their Affiliates and all information concerning the business transactions and/or financial arrangements of such persons, which a Shareholder or its Affiliates may have or acquire through the relevant Shareholder ownership of an interest in the Company, and shall not use any Confidential Information for any business purposes other than for its investment in the Company Group or disclose any Confidential Information to any Third Party without the approval of the other Shareholders or unless explicitly allowed under the terms of this Agreement. The Investor shall procure that no direct or indirect shareholder in the Investor holding indirectly 12.5% of the Shares or its employees shall use any Confidential Information for its own business purposes (including any business that competes with the Business) other than for its investment in the Company Group. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 32 29.2 Exclusions 29.2.1 Clause 29 shall not prohibit disclosure or use of any information if and to the extent: (i) the information is or becomes publicly available (other than by breach of this Agreement) or was already in the possession of the relevant party without being subject to any confidentiality obligations; (ii) the information relates to the Company and the Shareholders’ Committee has confirmed in writing to the Shareholders that the information is not confidential; (iii) permitted by Clause 28; (iv) the information is independently developed by a Shareholder after the Effective Date; (v) the disclosure or use is required by Law, any governmental or regulatory body or any stock exchange on which the securities of either Shareholder, an indirect shareholder of a Shareholder or any of their Affiliates are listed (including where this is required as part of any actual or potential offering, placing and/or sale of securities of the relevant Shareholder, indirect shareholder in a Shareholder or any of their Affiliates); (vi) the disclosure or use is required for the purpose of any judicial or arbitral proceedings arising out of this Agreement or any documents to be entered pursuant to it or to enable the FMV to be determined by the valuation experts under Clause 18; (vii) the disclosure of information is to any Tax Authority, to the extent such disclosure is reasonably required for the purposes of the Tax affairs of the Shareholder concerned or any of its direct or indirect shareholders and their Affiliates; (viii) the disclosure of information is by a Shareholder to an indirect shareholder or by a Shareholder or an indirect shareholder or their respective Affiliates to their respective Affiliates, or its or their directors, employees, consultants, agents, insurance providers or professional advisers on a need to know basis (which shall include any measure taken by the Shareholder or indirect shareholders to comply with and monitor the obligations under Clause 13.2), the requirements of Clause 13.6.2 are fulfilled (to the extent applicable) and the recipient is notified of the confidentiality obligations in this Clause 29 (and the relevant Shareholder shall be responsible under this Clause 29 for any disclosure by its Affiliates, and its or their directors, employees, consultants, agents, insurance providers or professional advisers as if such disclosure was made by the Shareholder itself); (ix) the disclosure of information is by a Shareholder (or a direct or indirect shareholder of a Shareholder) or its or their Affiliates, on a confidential basis, to its actual or potential equity and debt funding sources and actual and potential investors and limited partners, to any rating agency, and, in each case, to their professional advisors; (x) the disclosure of information is on a confidential basis to a bona fide Third Party or professional advisers or financiers of such Third Party wishing to |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 33 acquire Shares from a Shareholder in accordance with the terms of this Agreement to the extent that any such persons need to know the information for the purposes of considering, evaluating, advising on or furthering the potential purchase, provided that no such disclosure shall be made unless such person has agreed to be bound and to observe the restrictions under this Clause 29; (xi) the disclosure is to any investors, potential investors or analysts (each a “Market Participant”), but only if such disclosure is of a kind which a reasonable Market Participant would be likely to use as part of the basis of his investment decisions in relation to any listed securities of a Shareholder (or a direct or indirect shareholder of a Shareholder) or any of its or their Affiliates (or, in the case of analysts, their analysis of any such securities) and such disclosure would be expected by participants in the markets on which any securities of a Shareholder (or a direct or indirect shareholder of a Shareholder) or any of its or their Affiliates are listed or traded in accordance with any accepted market practice on those markets; (xii) the disclosure is to any Market Participant if required for a Shareholder or an indirect shareholder or their respective Affiliates in order to comply with the obligations under Clause 13.2; or (xiii) all parties to this Agreement consent in writing, provided that: (a) to the extent practicable and legally permissible, prior to disclosure or use of any information pursuant to Clauses 29.2.1(v) or 29.2.1(vii), the Party concerned shall, where legally permissible, promptly notify the other Parties of such requirement with a view to providing the other Parties with the opportunity to contest such disclosure or use or otherwise agree the timing and content of such disclosure or use; (b) to the extent practicable and legally permissible, prior to disclosure of written information pursuant to Clause 29.2.1(xi), the Party concerned provides such written information to the other Parties and gives them a reasonable opportunity to comment upon such information and the proposed disclosure; and (c) the disclosing Party shall be responsible for any breach of this Clause 29 by a person to whom they disclose information pursuant to Clauses 29.2.1(viii), 29.2.1(ix), 29.2.1(x) or 29.2.1(xi). 29.3 Damages Not an Adequate Remedy Without prejudice to any other rights or remedies which a Shareholder may have, the Shareholders acknowledge and agree that damages would not be an adequate remedy for any breach of this Clause 29 and the remedies of injunction, specific performance and other equitable relief are appropriate for any threatened or actual breach of any such provision and no proof of special damages shall be necessary for the enforcement of the rights under this Clause 29. 29.4 Duration of Confidentiality Obligations |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 34 The obligations contained in this Clause 29 shall survive the term or termination of this Agreement. 29.5 Non-Disclosure Agreement The Non-Disclosure Agreement shall cease to have any force or effect from the Effective Date. 30 Miscellaneous 30.1 Costs Each Party shall bear its own costs and expenses incurred in connection with the preparation, negotiation and execution of this Agreement, unless specifically otherwise provided for in this Agreement. 30.2 Conflict with the Articles and other governance documents 30.2.1 In the event of any ambiguity, conflict or discrepancy between the provisions of this Agreement on the one hand and the Articles, the Committee Rules of Procedure, the Board Rules of Procedure, the VTG MB Rules of Procedure, the VTG SB Rules of Procedure or any other relevant governance documents of the Company or its Company Subsidiaries on the other hand: (i) the provisions of this Agreement shall prevail; and (ii) the Shareholders shall exercise all voting and other rights and powers available to them so as to give effect to the provisions of this Agreement and shall further procure any required amendment to the Articles, the Committee Rules of Procedure, the Board Rules of Procedure, the VTG MB Rules of Procedure, the VTG SB Rules of Procedure or any other relevant governance documents of the Company or its Company Subsidiaries (as the case may be) to remove such ambiguity, conflict or discrepancy, provided that such amendments shall not contravene Law. 30.2.2 This Agreement shall not affect or limit the rights and obligations of the Parties pursuant to the Investment Agreement. 30.3 No partnership This Agreement shall not be construed as creating any partnership relationship or any agency relationship between any of the Parties. 30.4 No waiver 30.4.1 No failure or delay by any Party in exercising any right or remedy provided under this Agreement shall operate as a waiver of it, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise of it or the exercise of any other right or remedy. 30.4.2 Any waiver of a breach of this Agreement shall not constitute a waiver of any subsequent breach. 30.4.3 No waiver by any Party of any requirement of this Agreement, or of any remedy or right under this Agreement, shall have effect unless given in writing and signed by such Party. 30.4.4 Any waiver, release or compromise or any other arrangement of any kind whatsoever which a Shareholder gives or enters into with any other Party in connection with this Agreement shall not affect any right or remedy of any Shareholder as regards any |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 35 other Parties or the liabilities of any other such Parties under or in relation to this Agreement. 30.5 Entire Agreement The Key Transaction Documents (together with the Schedules and Annexes hereto and thereto) constitute the entire agreement of the Parties hereto and thereto, and supersedes all prior agreements and undertakings, both written and oral, among the Parties, with respect to the subject matter hereof. 30.6 Form of Amendments 30.6.1 Subject to Clause 30.6.2, any amendment or supplement to, or the termination of, this Agreement, including this provision, shall be valid only if made in writing and signed by each party (including, for the avoidance of doubt, PDF copies of such signed document), except where a stricter form (e.g., notarial recording) is required under Law or this Agreement and may also be signed in counterparts. 30.6.2 Any amendment to the Shareholders’ Committee Reserved Matters or Shareholders’ Reserved Matters may be made in accordance with paragraph (rr) of Schedule 9.1.1 or paragraph (j) of Schedule 9.1.2 respectively. 30.7 Assignment 30.7.1 Except as otherwise expressly provided in this Agreement, no Party may, without approval of the other Parties, assign, grant any security interest over, hold on trust or otherwise transfer the benefit of the whole or any part of this Agreement. 30.7.2 The Shareholders may, however, transfer any rights and obligation under this Agreement to any of its Affiliates. 30.7.3 Any assignee shall not be entitled to receive under this Agreement any greater amount than that to which the assigning Party would have been entitled. 30.8 Other remedies Any remedy or right conferred upon the Shareholders for breach of this Agreement shall be in addition to and without prejudice to all other rights and remedies available to them. 30.9 Management incentive plan 30.9.1 The Shareholders shall use Reasonable Endeavours, acting in good faith, to implement a management incentive plan for the Group as soon as reasonably practicable following the Effective Date and shall cooperate and take such actions, including making any required amendments to this Agreement, as are reasonably required in order to do so. 30.9.2 Following implementation of the management incentive plan for the Group, the Shareholders’ Committee shall regularly review such management incentive plan and, if both Key Shareholders mutually come to the conclusion that amendment is required, resolve upon such amendment. 31 Duration, Termination and Survival 31.1 Effective Date This Agreement takes effect as of Closing (the “Effective Date”). |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 36 31.2 Termination 31.2.1 Ordinary Termination (i) This Agreement will terminate with immediate effect (a) if only one Shareholder is a party to this Agreement; and/or (b) upon listing of the Shares on a regulated market and the subsequent commencement of the trading in the Shares on such regulated market; provided that Clause 27 shall survive any such termination. (ii) Each Shareholder may terminate this Agreement with a notice period of 4 months and with effect as of the Financial Year, however, with the earliest effect as of the end of 31 March 2052, provided that such termination shall only terminate its participation in this Agreement and shall have no effect on the existence of this Agreement in relation to other non-terminating Shareholders (if any). 31.2.2 Extraordinary Termination (i) The extraordinary termination right pursuant to Sec. 313, 314 German Civil Code (Bürgerliches Gesetzbuch, BGB) shall remain unaffected. (ii) In case of an Insolvency Event with regard to a Shareholder, the other Shareholder(s) shall have an extraordinary termination right, provided that such termination shall only terminate any rights granted under this Agreement to the Shareholder with regard to which the Insolvency Event has occurred and shall have no effect on the existence of this Agreement or the position as a party of such Shareholder of this Agreement. (iii) Regardless of the cause, a termination right shall be exercised by Notice by the terminating Shareholder to the other Shareholders and the Company. Each termination under this Clause 31.2.2 shall take immediate effect. 32 Survival of Rights, Duties and Obligations 32.1 Termination of this Agreement for any cause shall not release a Party from any liability which at the time of termination has already accrued to another Party or which thereafter may accrue in respect of any act or omission prior to such termination. 32.2 If a Party ceases to be a Party to this Agreement for any cause such Party shall not be released from any liability which at the time of the cessation has already accrued to another Party or which thereafter may accrue in respect of any act or omission prior to such cessation. 33 Notices 33.1 Any notice or other communication in connection with this Agreement (each a “Notice”) shall be: 33.1.1 in writing (including email); 33.1.2 in the English language; and |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 37 33.1.3 delivered by hand or courier or by an internationally renowned overnight delivery service or mailed by registered or certified mail or by email. 33.2 Notices to Vodafone shall be sent to the following address, or such other address as Vodafone may notify to the other Parties from time to time: Postal address: [***] Marked for the attention of: [***] Email address: [***] With a copy to [***] 33.3 Notices to the Investor shall be sent to the following address or such other address as the Investor may notify to the other Parties from time to time: Postal address: [***] Marked for the attention of[***] Email address: [***] With a copy to (delivery of such copy shall not in itself constitute a valid Notice): Postal address: [***] Marked for the attention of [***] Email-address: [***] 33.4 Notices to the Company shall be sent to the following address, or such other address as the Company may notify to the other Parties from time to time: Postal address: [***] Marked for the attention of: [***] Email address: [***] 33.5 [***] In the case of any other Party to this Agreement, from time to time, Notices shall be addressed to the relevant Party at the address set out in that Party’s Accession Agreement or such other address as the Party in question may notify to the other Parties from time to time. 33.6 A Notice shall be effective upon receipt and shall be deemed to have been received: 33.6.1 if delivered by hand or courier, at the time of actual receipt by or on behalf of the intended recipient; 33.6.2 in the case of delivery, at the time recorded by the delivery company; 33.6.3 if mailed in accordance with the foregoing provisions, upon the date of delivery as shown by the return receipt therefor; or 33.6.4 if sent by email, at transmission, provided that the person sending the email shall not have received an automated absence reply or failed-delivery report. |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 38 34 Compliance with Law Nothing in this Agreement shall oblige any Party or any other person to breach mandatory Law or any mandatory duties or obligations imposed by Law, including any mandatory fiduciary duties imposed by Law. 35 Governing Law and jurisdiction 35.1 This Agreement and any contractual rights and obligations arising out of or in connection therewith and its consummation, including disputes about its validity, shall be governed by and construed in accordance [***] Subject to Clause 35.3 and unless Law mandatorily require decision by a of court of Law, any contractual and non-contractual dispute arising from or in connection with this Agreement and its consummation, including disputes about its validity, shall be finally settled in accordance with the [***] without recourse to the ordinary courts of Law. The seat of the arbitration shall be [***]. The arbitral tribunal shall be comprised of [***]. The language of the arbitration shall be English, provided however, that the Parties shall be entitled to submit written evidence in the German language. German Law applies to this arbitration agreement. 35.2 In the event mandatory Law requires any matter arising from or in connection with this Agreement and its consummation, including disputes about its validity, to be decided upon by a court of Law, the competent courts in and [***], shall have the exclusive jurisdiction thereupon. [Balance of page intentionally left blank] |
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”. 39 List of Schedules 1 Schedule 1.1-1: Competitor List 2 Schedule 9.1.1: Shareholders' Committee Reserved Matters 3 Schedule 9.2.1: Shareholder Reserved Matters 4 Schedule 10.1: Minority Veto Rights 5 Schedule 13.1.3: Vantage Policies 6 Schedule 17: Accession Agreement 7 Schedule 18(iv): List of Investment Banks |
Exhibit 4.27
EXECUTION VERSION
DATED 11 MAY 2023
VODAFONE GROUP PLC
and
EMIRATES TELECOMMUNICATIONS GROUP COMPANY PJSC
Relationship Agreement
Slaughter and May
One Bunhill Row
London
EC1Y 8YY
(RJYT/VM/OMXG/JODW)
2
CONTENTS
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PAGE |
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1. |
DEFINITIONS AND INTERPRETATION |
4 |
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2. |
APPOINTMENT AND REMOVAL OF THE NOMINEES |
11 |
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3. |
OBLIGATIONS IN CONNECTION WITH REGULATORY CONDITIONS |
15 |
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4. |
RIGHTS AND OBLIGATIONS OF THE NOMINEES |
16 |
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5. |
COMMITTEE MEMBERSHIP |
17 |
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6. |
SHARE TRANSFERS |
18 |
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7. |
STANDSTILL |
19 |
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8. |
COMMUNICATIONS |
20 |
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9. |
CORPORATE ACTIONS |
22 |
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10. |
VOTING |
23 |
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11. |
PERMITTED ACTIONS |
23 |
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12. |
ANNOUNCEMENTS |
24 |
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13. |
REPORTING INFORMATION |
24 |
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14. |
PROVISION OF INFORMATION AND CONFIDENTIALITY |
26 |
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15. |
CONFLICTS |
29 |
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16. |
COMPLIANCE AND INDEPENDENCE |
30 |
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17. |
COSTS AND EXPENSES |
30 |
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18. |
TERMINATION |
30 |
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19. |
WARRANTIES |
32 |
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20. |
ENTIRE AGREEMENT |
33 |
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21. |
INJUNCTIVE RELIEF |
33 |
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22. |
FURTHER ASSURANCE |
33 |
3
23. |
NOTICES |
33 |
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24. |
REMEDIES AND WAIVERS |
34 |
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25. |
ASSIGNMENT |
35 |
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26. |
THIRD PARTY RIGHTS |
35 |
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27. |
ILLEGALITY AND INVALIDITY |
35 |
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28. |
COUNTERPARTS |
36 |
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29. |
GOVERNING LAW AND JURISDICTION |
36 |
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30. |
AGENT FOR SERVICE |
36 |
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Schedule 1 Interests |
38 |
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Appendix 1 Form of Resignation Letter |
40 |
4
THIS AGREEMENT IS MADE this 11th day of May 2023
BETWEEN:
1. |
VODAFONE GROUP PLC, whose registered office is at Vodafone House, The Connection, Newbury, RG14 2FN and which is incorporated under the laws of England and Wales and registered with Company No. 01833679 (the “Company”); and |
2. |
EMIRATES TELECOMMUNICATIONS GROUP COMPANY PJSC, a public joint-stock company incorporated under the laws of the United Arab Emirates whose principal business office is located at Head Office Building A, Intersection of Zayed the 1st Street and Sheikh Rashid Bin Saeed Al Maktoum Street, PO Box 3838, Abu Dhabi, United Arab Emirates (“e&”), |
the Company and e& each being a “Party”, and together the “Parties”, to this Agreement.
WHEREAS:
(A) |
As at the date of this Agreement, Atlas 2022 Holdings Limited, a wholly-owned subsidiary of e&, is the registered holder of 3,944,743,685 Ordinary Shares. |
(B) |
The Parties have entered into this Agreement in order to record certain matters relating to: (i) the proposed appointment of the Nominees to the Board; and (ii) the regulation of the ongoing relationship between the Parties. |
In consideration of the mutual rights and covenants herein, the receipt and sufficiency of which is hereby acknowledged, IT IS AGREED as follows:
1. |
DEFINITIONS AND INTERPRETATION |
1.1 |
In this Agreement (including its recitals): |
“Accounting |
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has the meaning given in clause 13.5; |
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“Accounting Policies” |
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has the meaning given in clause 13.1(C); |
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“acting in concert” |
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has the meaning given to that term in the UK Takeover |
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“Affiliate” |
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means, in respect of a person from time to time: (i) any person Controlled by that person; (ii) any person who has Control over that person; and (iii) any other person Controlled by a person having Control over that person, provided that (x) “Affiliate” in respect of e& shall include EIA but shall not include any other Affiliates of EIA that are not e& or its Controlled Affiliates and (y) for purposes of this |
5
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Agreement , e& and the Company shall be deemed not to be Affiliates of each other; |
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“Agreement” |
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means this agreement as it may be amended from time to time; |
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“Applicable Law” |
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means any applicable statute, law (including common law), regulation, ordinance, rule, judgment, order, injunction, notice, decree, clearance, approval, directive, requirement or any other form of determination by or decision of any Governmental Authority, in each case, that is binding or applicable to a person or its business or operations, and whether in effect as of the date of this Agreement or at any time thereafter; |
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“Appointment Letter” |
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has the meaning given in clause 2.3; |
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“Articles of Association” |
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means the Company’s articles of association from time to time; |
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“Audit and Risk Committee” |
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means the audit and risk committee of the Board from time to time; |
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“Board” |
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means the board of directors of the Company from time to time; |
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“Business Day” |
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means a day (other than a Saturday or a Sunday) on which banks are open for business in London; |
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“Candidate List” |
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has the meaning given in clause 2.8; |
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“Companies Act” |
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means the Companies Act 2006; |
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“Confidential Information” |
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means all Information concerning or relating to, whether directly or indirectly, any member of the Group, including Information concerning or relating to the directors, customers, business, property, assets, affairs, trading practices, research and development activities, plans, proposals and/or prospects of any member of the Group, disclosed by or acquired in any way (and whether directly or indirectly, before on or after the date of this Agreement) from any member of the Group or from any directors, officers, employees, agents, advisers or representatives of any member of the Group and including, for the avoidance of doubt, any Information so disclosed or acquired as a result of or in connection with the Nominees’ positions as Directors (including where such Information is passed from |
6
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a Nominee to any other e& Relevant Person); |
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“Conflict Matter” |
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has the meaning given in clause 15.1; |
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“Control” |
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means, with respect to any person, the power, directly or indirectly, to: (A) exercise voting rights in respect of more than 50 per cent. of the securities having ordinary voting power of that person; (B) appoint or remove more than one half of the directors, partners or other persons exercising similar authority with respect to such person; or (C) direct, or cause the direction of, the management and policies of such person, in each case whether through the ownership of voting securities, by contract or otherwise, and “Controls” and “Controlled” shall be interpreted accordingly; |
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“Controlled Affiliate” |
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means, in the case of a person from time to time, any person Controlled by that person; |
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“Corporate Governance Code” |
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means the UK Corporate Governance Code published from time to time by the Financial Reporting Council; |
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“Corporate Governance and Compliance Policies” |
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means all policies or codes relating to corporate governance and/or regulatory compliance adopted by the Board from time to time, or which the Company or the Directors in relation to the Company are subject, including the Corporate Governance Code, the Nasdaq Listing Rules, any securities dealing code, Listing Rules compliance manual or procedures and Disclosure Rules compliance manual or procedures adopted by the Board from time to time; |
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“Customary Resolutions” |
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means shareholder resolutions on (i) the election or re- election of Directors selected by the Nominations and Governance Committee and recommended by the Board, (ii) receipt of annual accounts, (iii) approval of remuneration report and policy, (iv) consent to short notice of meetings, (v) appointment and remuneration of auditors, (vi) share allotment authority, (vii) dis-application of pre-emption rights, (xiii) authorization for share buy-backs in the ordinary course and (ix) political donations and |
7
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expenditures in the ordinary course; |
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“Director” |
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means a director of the Company; |
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“Disclosure Rules” |
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means the disclosure guidance and transparency rules published by the Financial Conduct Authority from time to time under Part VI of FSMA; |
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“Disposal” |
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means, with respect to Ordinary Shares, directly or indirectly, any offer, sale, contract to sell, grant or sale of options over, purchase of any option or contract to sell, transfer, charge, pledge, grant of any right or warrant to purchase or otherwise transfer, lend, or dispose of or the entry into of any swap or other agreement that transfers from the e& Group, in whole or in part, any of the consequences of ownership of Ordinary Shares, whether any such transaction described above is to be settled by delivery of Ordinary Shares, in cash or otherwise or any other disposal or agreement to dispose of any Ordinary Shares or any announcement or other publication of the intention to do any of the foregoing; |
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“e& Group” |
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means e& and each of e&’s wholly-owned subsidiaries; |
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“e& Nominee” |
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has the meaning given in clause 2.1 and clause 2.8; |
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“e& Nominee Conditions” |
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has the meaning given in clause 2.1 and “e& Nominee Condition” means any one of them; |
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“e& Nominee Regulatory Conditions” |
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means the e& Nominee Condition set out in clauses 2.1(B); |
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“e& Quarterly Report” |
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has the meaning given to it in clause 13.5; |
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“e& Senior Management” |
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means any of the individuals identified as e& Senior Management in e&’s annual report or any individual replacing or succeeding such individual or any member of the e& board of directors; |
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“EIA” |
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means the Emirates Investment Authority, a public institution established under the laws of the United Arab Emirates whose principal business office is at PO Box 3235, International Tower, ADNEC Capital Centre, Abu Dhabi, United Arab Emirates; |
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“Eligible Issuance” |
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means an issuance of Ordinary Shares by the Company: (i) on a pre-emptive basis to all or substantially all of the |
8
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Company’s shareholders or (ii) to third parties (provided, in the case of (ii) that e& or another member of the e& Group is invited to participate in such issuance pro-rata on substantially the same terms); |
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“FSMA” |
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means the Financial Services and Markets Act 2000; |
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“General Offer’’ |
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an offer for the whole of the issued share capital of the Company, whether by way of a takeover offer or scheme of arrangement (under section 896 of the Companies Act) or otherwise; |
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“Governmental Authority” |
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means any governmental, statutory, regulatory, administrative or investigative body or authority, governmental department, agency, commission, stock exchange, competition authority, tribunal, court or arbitral body with competent jurisdiction or other entity authorised to make or enforce laws, rules or regulations, or pass directions having jurisdiction pursuant to Applicable Law; |
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“Group” |
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means the Company and its Affiliates; |
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“Higher Threshold” |
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means, subject to clause 2.14, members of the e& Group holding, as registered holder, Ordinary Shares, and/or depositary receipts representing Ordinary Shares, representing in aggregate at least 20.0 per cent. of the total number of Voting Rights outstanding; |
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“Independence Test” |
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means, in respect of an individual, that the Board reasonably considers such individual to be independent of e& and its Affiliates, applying in good faith the criteria and guidance on independence set out in the Corporate Governance Code (as if the Corporate Governance Code also applied to e& and its Controlled Affiliates, and an individual shall not be considered independent of e& and its Affiliates if such individual is a director, officer or employee of any Affiliate of e& and, for the avoidance of doubt, any of the factors which are likely to impair such individual’s independence, as set out in the Corporate Governance Code, apply to such individual in respect of e& and any of its Affiliates); |
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“Independent Nominee” |
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has the meaning given in clause 2.2 and clause 2.9; |
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“Independent Nominee Conditions” |
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has the meaning given in clause 2.2 and “Independent Nominee Condition” means any one of them; |
9
“Independent Nominee Regulatory Condition” |
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means the Independent Nominee Condition set out in clause 2.2(B); |
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“Information” |
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means all information of whatever nature and in whatever form including in writing, orally, electronically and in a visual or machine readable medium including CD ROM, magnetic and digital form; |
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“Inside Information” |
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has the meaning given to that term in the Market Abuse Regulation; |
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“Interest” |
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has the meaning given to “interests in securities” in the UK Takeover Code; |
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“Listing Rules” |
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means the listing rules published by the Financial Conduct Authority from time to time under Part VI of FSMA; |
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“Lock-up Period” |
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has the meaning given in clause 6.1; |
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“Longstop Date” |
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has the meaning given in clause 18.1(B)(i); |
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“Lower Threshold” |
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means, subject to clause 2.14, members of the e& Group holding, as registered holder, Ordinary Shares, and/or depositary receipts representing Ordinary Shares, representing in aggregate at least 14.6 per cent. of the total number of Voting Rights outstanding; |
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“Market Abuse Regulation” |
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means the Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse, as amended and transposed into the laws of the United Kingdom pursuant to the European Union (Withdrawal) Act 2018 and the European Union (Withdrawal Agreement) Act 2020 (including all regulations and technical standards issued thereunder); |
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“Minimum Share Amount” |
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means an aggregate number of Ordinary Shares representing at least the lesser of (a) an aggregate market value of $250,000,000 or (b) 1 per cent. of the Voting Rights outstanding; |
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“Nominations and Governance Committee” |
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means the nominations and governance committee of the Board from time to time; |
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“Nominee Return Date” |
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means, in relation to any Nominee, the date on which such Nominee has been required to resign as a Director pursuant to clause 2.6 or clauses 2.11 and 2.12; |
10
“Nominees” |
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means the e& Nominee and the Independent Nominee and “Nominee” means either of them (as the context requires); |
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“Ordinary Shares” |
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means the ordinary shares of 2020/21 US cents each in the capital of the Company; |
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“Permitted Action” |
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has the meaning given in clause 11; |
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“Proceedings” |
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has the meaning given in clause 29.2; |
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“Quarterly Accounts” |
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has the meaning given in clause 13.1(C); |
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“Registration Rights Agreement” |
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means the Registration Rights Agreement between the Parties dated as of the date of this Agreement; |
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“Regulatory Authorities” |
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means the governmental or regulatory bodies that enforce the foreign investment laws, competition and merger control laws or other regulatory regimes in respect of the Relevant Jurisdictions; |
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“Regulatory Conditions” |
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means the e& Nominee Regulatory Conditions and the Independent Nominee Regulatory Conditions and “Regulatory Condition” means any one of them; |
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“Relevant Jurisdictions” |
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means the jurisdictions agreed between the Parties as of the date of this Agreement; |
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“Relevant Person” |
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means: (i) in the case of e& (an “e& Relevant Person”), (x) each of e&’s Controlled Affiliates, each of e&’s and e&’s Controlled Affiliates’ directors, officers, employees and agents and (y) each Nominee; and (ii) in the case of the Company (a “Company Relevant Person”), each of the Company’s Affiliates, and each of the Company’s and the Company’s Affiliates’ directors (other than the Nominees), officers, employees and agents; |
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“Remuneration Committee” |
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means the remuneration committee of the Board from time to time; |
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“Remuneration Policy” |
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means the Directors’ remuneration policy adopted by the Company from time to time; |
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“Requirements” |
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has the meaning given in clause 4.4; |
11
“Return Date” |
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means the date on which both Nominees from time to time have been required to resign as Directors pursuant to clauses 2.11 and 2.12; |
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“Service Document” |
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means a claim form, application notice, order, judgment or other document relating to any Proceedings; |
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“Transaction” |
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has the meaning given in clause 7.1(D); |
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“UK” |
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means the United Kingdom; |
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“UK Takeover Code” |
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means the City Code on Takeovers and Mergers; |
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“Voting Rights” |
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means, in relation to the securities of the Company, voting rights attaching to securities of the Company which are generally exercisable at meetings of shareholders of the Company; |
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“wholly-owned subsidiary” |
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has the meaning given in section 1159(2) of the Companies Act; and |
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“Working Hours” |
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means 9.30 a.m. to 5.30 p.m. on a Business Day. |
1.2 |
In this Agreement, unless otherwise specified: |
(A) |
references to clauses, schedules or appendices are to clauses, schedules or appendices of this Agreement; |
(B) |
a reference to any statute or statutory provision shall be construed as a reference to the same as it may have been, or may from time to time be, amended, modified or re-enacted; |
(C) |
references to the singular shall include references to the plural and vice versa; |
(D) |
the words “including” and “include” shall not be construed as or take effect as limiting the generality of the foregoing words; |
(E) |
the rule known as the ejusdem generis rule shall not apply and, accordingly, general words introduced by the word “other” shall not be given a restrictive meaning by reason of the fact that they are preceded by words indicating a particular class of acts, matters or things; |
(F) |
references to a day mean a period of 24 hours from midnight to midnight in the United Kingdom; |
(G) |
the headings shall not be construed as part of this Agreement nor affect its |
12
interpretation;
(H) |
references to recommendations, consents or determinations given by the Board shall mean recommendations, consents or determinations given by a majority of the Board members voting on the matter in question; |
(I) |
a reference to a “person” includes any natural person, limited or unlimited liability company, corporation or other body corporate, firm, partnership (whether limited or unlimited), organisation, proprietorship, trust, union, association, government or any agency or political subdivision thereof; and |
(J) |
a reference to a “company” includes any company, corporation or any other body corporate (wherever incorporated or established) but does not include partnerships that, whether or not having separate legal personality, are not regarded as a body corporate under the law by which they are governed. |
2. |
APPOINTMENT AND REMOVAL OF THE NOMINEES |
2.1 |
Subject to: |
(A) |
the e& Group satisfying, and continuing to satisfy at the time at which all of the other e& Nominee Conditions are satisfied, the Lower Threshold; and |
(B) |
e& having obtained all necessary approvals required from the Regulatory Authorities to hold up to (but not including) 15 per cent. of the Company’s Voting Rights and nominate one non-executive director to the Board, or else having received confirmation from the relevant Regulatory Authorities of the same not being required in the Relevant Jurisdiction(s) (or it otherwise being agreed between external counsel on behalf of each of the Parties that the same are not required), |
(together, the “e& Nominee Conditions”), e& shall be entitled to nominate the e& Group CEO as at the date of this Agreement for appointment by the Board as a nonexecutive Director (the “e& Nominee”). The Company shall procure that, on or before the date that is seven Business Days after the date on which e& has notified the Company to its satisfaction that all of the e& Nominee Conditions have been satisfied, the Board shall appoint such e& Nominee to serve as a non-executive Director provided that such e& Nominee complies with the Requirements at the time of appointment.
2.2 |
Subject to: |
(A) |
the e& Group satisfying, and continuing to satisfy at the time at which all of the other Independent Nominee Conditions are satisfied, the Higher Threshold; and |
(B) |
e& having obtained all necessary approvals required from the Regulatory Authorities to hold up to (but not including) 20 per cent. of the Company’s Voting Rights and nominate two non-executive directors to the Board, or else having received confirmation from the relevant Regulatory Authorities of the same not |
13
being required in the Relevant Jurisdiction(s) (or it otherwise being agreed between external counsel on behalf of each of the Parties that the same are not required),
(together, the “Independent Nominee Conditions”), and clause 2.14(C), e& shall be entitled, after consulting with the Company in good faith regarding the identity of such individual, to nominate an individual who:
(i) |
e& reasonably considers to have an appropriate mix of skills and experience to act as a non-executive Director of the Company; |
(ii) |
may not be an officer, director of e& or any of its Affiliates; and |
(iii) |
satisfies the Independence Test, |
for appointment by the Board as a non-executive Director (the “Independent Nominee”). The Company shall procure that, on or before the date that is seven Business Days after the date on which e& notifies to the Company to the Company’s satisfaction that all of the Independent Nominee Conditions have been satisfied, the Board shall appoint such Independent Nominee to serve as a non-executive Director provided that: (i) such appointment has been approved and recommended to the Board by the Nominations and Governance Committee (such approval and recommendation not to be unreasonably withheld or delayed); and (ii) such Independent Nominee complies with the Requirements at the time of appointment. To the extent that any such person is not so approved and recommended to the Board by the Nominations and Governance Committee, e& shall (provided the Independent Nominee Conditions continue to be met) be entitled to continue to nominate an alternative individual for approval as Independent Nominee until an individual is approved and recommended as Independent Nominee, with the foregoing provisions of this clause applying equally for such purpose.
2.3 |
Any appointment of a Nominee in accordance with this Agreement shall be effected pursuant to an appointment letter (each an “Appointment Letter”) to be agreed by the Company and e& and which shall substantially be in the form in which the other nonexecutive Directors of the Company are appointed from time to time, save for such amendments as are reasonably necessary to reflect the terms of this Agreement. If and to the extent that any of the provisions of this Agreement conflict with the provisions set out in any Appointment Letter, the terms of this Agreement shall prevail. |
2.4 |
e& shall promptly provide to the Company all information and/or documentation reasonably requested by the Company: |
(A) |
in connection with assessing eligibility and other criteria applicable to each Nominee (including the Independence Test in respect of the Independent Nominee); |
(B) |
required by Applicable Law or which is otherwise necessary in order to comply with or satisfy any regulatory, compliance or legal obligations (including any |
14
relevant stock exchange rules and listing standards) in connection with the appointment of a Nominee; and/or
(C) |
required by the Company in connection with the appointment of a Nominee in order to comply with any Corporate Governance and Compliance Policy or any of the Company’s own internal policies and procedures. |
2.5 |
e& acknowledges that, after the appointment of a Nominee to the Board in accordance with this clause 2, such Nominee shall be subject to annual retirement and re-election as set out in the Articles of Association and in accordance with the Corporate Governance and Compliance Policies and, though it is understood that each appointed Nominee shall be nominated and recommended by the Board for election by the Company’s shareholders as a non-executive director at each subsequent annual general meeting of the Company shareholders in such circumstances, there shall be no cause of action under this Agreement if the Company’s shareholders vote against the appointment, election or re-election (as applicable) of either Nominee. |
2.6 |
e& shall be entitled at any time after the appointment of a Nominee to the Board in accordance with this clause 2, by notice in writing to the Company, to remove such Nominee as a Director. e& shall procure that the relevant Nominee resigns as a Director promptly upon the Company’s receipt of such a notice (with their resignation letter being substantially in the form set out in Appendix 1 to this Agreement). |
2.7 |
If, at any time after the appointment of a Nominee to the Board in accordance with this clause 2, a vacancy on the Board is created as a result of: |
(A) |
such Nominee’s death or incapacity; |
(B) |
the resignation of a Nominee voluntarily or pursuant to clause 2.6; or |
(C) |
the termination of a Nominee’s appointment pursuant to clause 2.11(A)(ii) or clause 2.11(C), |
then clauses 2.8 and 2.9 shall apply.
2.8 |
In the case of a Board vacancy created by the resignation, removal or dismissal of the e& Nominee in the circumstances set out in clause 2.7, e& shall be entitled, after consulting with the Company in good faith regarding the identity of the proposed replacement for such e& Nominee (who must be a member of the e& Senior Management Team), to propose to the Company (i) a list of no fewer than three such members of the e& Senior Management Team who e& reasonably considers to have an appropriate mix of skills and experience to act as a non-executive Director of the Company (the “Candidate List”) and (ii) e&’s order of preference for the individuals in the Candidate List, and the Board shall: |
(A) |
subject to the resignation, removal or dismissal of the e& Nominee being replaced, appoint the first individual from the Candidate List in e&’s order of preference to the Board as a non-executive director, subject to the approval of |
15
the Nominations and Governance Committee and its recommendation to the Board (such approval and recommendation not to be unreasonably withheld or delayed);
(B) |
to the extent that any such person is not so approved and recommended to the Board by the Nominations and Governance Committee, appoint the second individual from the Candidates List in e&’s order of preference to the Board as a non-executive director, subject to the approval of the Nominations and Governance Committee and its recommendation to the Board (such approval and recommendation not to be unreasonably withheld or delayed); and |
(C) |
to the extent that any such person is not so approved and recommended to the Board by the Nominations and Governance Committee, appoint the third individual from the Candidate List in e&’s order of preference to the Board as a non-executive director (such appointment not being conditioned on any approval or recommendation by the Nominations and Governance Committee), and |
thereafter, such individual appointed pursuant to this clause 2.8 shall, on becoming a Director, become an “e& Nominee” under this Agreement (in substitution for the e& Nominee replaced by such individual).
2.9 |
In the case of a Board vacancy created by the removal or dismissal of the Independent Nominee in the circumstances set out in clause 2.7, e& shall be entitled, after consulting with the Company in good faith regarding the identity of a proposed replacement for such Nominee, to nominate an alternative individual who e& reasonably considers to have an appropriate mix of skills and experience to act as a non-executive Director of the Company (and who may not be an officer, director of e& or any of its Affiliates) for appointment by the Board as a non-executive Director. The Company shall procure that the Board appoints such individual to serve as a non-executive Director provided that: |
(i) |
such individual satisfies the Independence Test; |
(ii) |
such appointment has been approved by Board on the recommendation of the Nominations and Governance Committee (such approval and recommendation not to be unreasonably withheld or delayed); and |
(iii) |
such individual complies with the Requirements, |
and thereafter such individual shall, on becoming a Director, become an “Independent Nominee” under this Agreement (in substitution for the Independent Nominee replaced by such individual). To the extent that any such person is not so approved and recommended to the Board by the Nominations and Governance Committee, e& shall (provided the Independent Nominee Conditions continue to be met) be entitled to continue to nominate an alternative individual for approval as Independent Nominee until an individual is approved and recommended as Independent Nominee, with the foregoing provisions of this clause applying equally for such purpose.
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2.10 |
The Company agrees that the Board and the Nominations and Governance Committee shall meet promptly and as many times as are necessary (whether or not such meetings have been previously scheduled) after receipt of any request from e& to nominate or replace any Nominee pursuant to this clause 2 to consider in a reasonably timely manner (and in any event within 7 Business Days) such request in accordance with this Agreement. |
2.11 |
The Company may, by notice in writing to e&, immediately terminate the appointment of: |
(A) |
the Independent Nominee if: |
(i) |
the e& Group ceases to, following satisfaction of the Independent Nominee Conditions, satisfy the Higher Threshold; or |
(ii) |
the Independent Nominee ceases at any time to satisfy the Independence Test; |
(B) |
each Nominee if this Agreement terminates in accordance with clause 18; and |
(C) |
either Nominee if: |
(i) |
such Nominee is removed from office by the Company’s shareholders in accordance with the Companies Act and the Articles of Association or otherwise ceases to be a Director in accordance with the Articles of Association; or |
(ii) |
such Nominee fails to comply with his or her Appointment Letter in any material respect or is disqualified from acting as a Director by any Applicable Law or otherwise fails to comply with any of the Requirements in any material respect in circumstances which are either incapable of remedy within a reasonable time or else are not remedied to the Company’s reasonable satisfaction within such period. |
2.12 |
e& agrees that, if the appointment of a Nominee as a Director is terminated by the Company in any of the circumstances set out in clause 2.11, then e& shall promptly procure the resignation of such Nominee (with their resignation letter being substantially in the form set out in Appendix 1 to this Agreement). |
2.13 |
If a Nominee refuses to resign when required to do so pursuant to this clause 2, then the Company and e& shall use all reasonable endeavours to procure that such Nominee is removed pursuant to section 168 of the Companies Act as soon as reasonably practicable. |
2.14 |
Notwithstanding any other term of this Agreement: |
(A) |
the dilutive effect of any issuance by the Company of Ordinary Shares (including upon conversion of other securities of the Company) on the Voting Rights held by the e& Group following the date of this Agreement, other than in |
17
connection with an Eligible Issuance, shall be disregarded when determining whether or not the Lower Threshold or the Higher Threshold is satisfied by the e& Group;
(B) |
the Higher Threshold shall be treated as having been satisfied where: (i) the Independent Nominee Regulatory Condition has been satisfied; (ii) the e& Group has demonstrated to the Company’s reasonable satisfaction that it is not permitted under Applicable Law to hold 20 per cent. or more of the Company’s Voting Rights; and (iii) members of the e& Group hold as registered holder, Ordinary Shares, and/or depositary receipts representing Ordinary Shares, representing in aggregate at least 20 per cent. of the total number of Voting Rights outstanding, less a buffer of no more than 0.4% of the total number of Voting Rights outstanding (provided that if the condition under (ii) above ceases to be satisfied, this buffer shall no longer apply from the end of the second month following the time at which the e& Group becomes permitted under Applicable Law to hold 20 per cent. or more of the Company’s Voting Rights outstanding); and |
(C) |
if the Independent Nominee’s appointment is terminated pursuant to Clause 2.11(A)(i), e& shall no longer have the right to appoint an Independent Nominee, even if the Independent Nominee Conditions are thereafter satisfied. |
2.15 |
The Parties acknowledge that, during the term of this Agreement , it is their mutual expectation that the total size of the Board (including the Nominees) shall not exceed 15. |
2.16 |
In the event of any inconsistency between the provisions of this Agreement relating to the appointment of a Nominee and the Articles of Association, to the extent permitted by Applicable Law, the provisions of this Agreement shall prevail as between e& and the Company. |
3. |
OBLIGATIONS IN CONNECTION WITH REGULATORY CONDITIONS |
3.1 |
The Company shall provide e& with such assistance, documentation and information as e& reasonably requires for the purpose of satisfying the Regulatory Conditions and to identify, and thereafter obtain, any further equivalent regulatory approvals required for the e& Group to acquire up to (but not including) 25 per cent. of the Company’s Voting Rights and nominate the Nominees under clause 2. |
3.2 |
e& shall use all reasonable endeavours to fulfil or procure the fulfilment of the Regulatory Conditions as soon as reasonably practicable and in any event before the Longstop Date, provided that nothing herein shall require e& or any of its Relevant Persons to offer, agree or commit to, any restrictions or remedies (including any divestiture of assets, behavioural remedy, or other restrictions to use, own or operate e&’s and its Affiliates’ assets) that are requested or required by any Regulatory Authority for the purposes of fulfilment of the Regulatory Conditions. |
3.3 |
Nothing in this clause 3 shall require the Company or any other member of the Group to |
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provide or disclose to e& or any of e&’s Affiliates, or to its or their respective advisers, any information:
(A) |
that the Company or any other member of the Group is prevented from providing under Applicable Law (including a request for non-disclosure made by a Governmental Authority) or the terms of an existing contract to which it is a party (provided that, in such latter case, the Company will use reasonable endeavours to obtain the consent from the relevant parties under such contract, if the information is reasonably necessary for the purposes of fulfilment of the Regulatory Conditions); or |
(B) |
where the Company reasonably considers that disclosure of such information would be materially and disproportionately prejudicial to the Company’s commercial, reputational or legal interests. |
3.4 |
The Company shall not, and shall procure that no other member of the Group shall, take any action the primary purpose of which would reasonably be regarded as being to prejudice, render materially more difficult or otherwise materially delay the satisfaction of any Regulatory Condition. This clause 3.4 shall not prohibit the Company or any other member of the Group from: |
(A) |
taking any action which the Company or relevant other member of the Group reasonably believes is required under Applicable Law or by a Governmental Authority; or |
(B) |
taking any action in relation to any actual or threatened litigation or other dispute resolution process in which any member of the Group is or may be involved. |
3.5 |
Each Party shall promptly notify the other Party: |
(A) |
upon becoming aware that any Regulatory Condition has been satisfied; and |
(B) |
upon becoming aware of any fact or circumstance which makes any of the Regulatory Conditions incapable of being satisfied. |
4. |
RIGHTS AND OBLIGATIONS OF THE NOMINEES |
4.1 |
Following appointment of a Nominee as a Director, and until such Nominee ceases to be a Director, the Company shall, save as otherwise provided in this Agreement and/or such Nominee’s Appointment Letter, treat such Nominee in a manner consistent with the treatment of the non-executive Directors as a whole, and in particular shall procure that such Nominee is covered by the Company’s directors’ and officers’ liability insurance to the same extent as other non-executive Directors, and at the Company’s expense. |
4.2 |
Subject to and in accordance with the Remuneration Policy, the approval of the Remuneration Committee (not to be unreasonably withheld or delayed), the relevant |
19
Director’s Appointment Letter, the Articles of Association, the Corporate Governance and Compliance Policies and any other policies of the Company from time to time relating to remuneration and/or reimbursement of expenses to the extent applicable to each non-executive director and made available to e& and the Nominees, the Independent Nominee shall:
(A) |
be entitled to fees from the Company in respect of his or her position as a Director on the same or substantially the same basis as the other non-executive Directors of equivalent roles and responsibilities from time to time; and |
(B) |
be entitled to reimbursement by the Company of all reasonable out-of-pocket expenses necessarily incurred by such Nominee in carrying out his or her duties as a Director. |
4.3 |
Save as provided pursuant to clause 4.2, e& shall bear all of the costs and expenses of the Nominees. |
4.4 |
e& acknowledges that each Nominee shall have all of the rights and obligations, including fiduciary duties to the Company, of a director under Applicable Law, the Articles of Association, the Corporate Governance and Compliance Policies and all of the Company’s other internal policies, procedures, codes, rules, standards and guidelines (together, the “Requirements”), and undertakes to use all reasonable endeavours to procure that such Nominee shall comply with the Requirements at all times. |
4.5 |
e& shall procure that neither Nominee appoints an alternate Director, unless the Board (excluding the Nominees) provides its prior written consent. |
5. |
COMMITTEE MEMBERSHIP |
5.1 |
The Parties acknowledge and agree that: |
(A) |
without prejudice to clause 5.1(C), for so long as the appointment of a Nominee to the Audit and Risk Committee or the Remuneration Committee (as applicable) would not be in compliance with the Corporate Governance Code and/or the Nasdaq Listing Rules as applicable to the Company, that Nominee shall not be entitled to be appointed as a member of the Audit and Risk Committee or the Remuneration Committee (as applicable), but may be invited to attend meetings of the Audit and Risk Committee and the Remuneration Committee on the same basis as other non-executive Directors who are not members of those committees are so invited, having due regard to the relevant Nominee’s skills and experience; |
(B) |
with effect from the date of appointment of any e& Nominee, the Board shall, at e&’s request, appoint the e& Nominee as a member of the Nominations and Governance Committee in addition to (and not in substitution for any of) the members of the Nominations and Governance Committee at such time, provided that the e& Nominee shall not receive, or be entitled to receive, any |
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Information, and shall not be entitled to participate in any proceedings of the Nominations and Governance Committee relating to the nomination, appointment, election and/or re-election of any actual or prospective Nominee; and
(C) |
subject to the Corporate Governance and Compliance Policies and with effect from the date of his or her respective appointment as a Director, each Nominee may be considered by the Board for appointment as a member of, or invited to attend meetings of, any other committee of the Board from time to time on the same basis as other non-executive Directors, having due regard to such Nominee’s skills and experience. |
5.2 |
The Parties acknowledge and agree that the continuing appointment of a Nominee to any committees of the Board shall, at all times, be subject to such appointment being permitted by the Corporate Governance Code and Applicable Laws. |
6. |
SHARE TRANSFERS |
6.1 |
Subject to clause 6.2, e& undertakes to the Company that it shall not (and shall procure that no member of the e& Group shall) effect any Disposal of any Ordinary Shares during the two years following the date of this Agreement (the “Lock-up Period”). |
6.2 |
Clause 6.1 shall not restrict any Disposal of Ordinary Shares: |
(A) |
arising from the acceptance of a General Offer made by a third party in accordance with the UK Takeover Code (whether or not recommended by the Board); |
(B) |
pursuant to any compromise, scheme of arrangement or scheme of reconstruction in respect of the Company which is approved by a court of competent jurisdiction, provided that participating in any such compromise, scheme of arrangement or scheme of reconstruction in respect of the Company is not prohibited by any other provision of this Agreement and is otherwise in accordance with the recommendation of the Board; |
(C) |
pursuant to a share buyback programme, tender offer or similar transaction to repurchase, redeem or reduce Ordinary Shares which is initiated by the Company or any Transaction recommended by the Board; |
(D) |
between members of the e& Group; or |
(E) |
up to an aggregate maximum in each twelve-month period from the date of this Agreement until the expiry of the Lock-up Period of Ordinary Shares representing 3 per cent. of the Voting Rights, provided that: (i) the Lower Threshold continues to be satisfied following completion of such Disposal; and (ii) any such Disposals, to the extent effected on a lit-market, do not constitute more than 25 per cent. of the average daily volume of the Ordinary Shares in any one day on the market on which the Disposal is carried out. |
21
6.3 |
The Parties further agree that clause 6.1 shall not restrict any member of the e& Group from granting any pledge or other security interest over Ordinary Shares and/or entering into any swap, option, collar or other arrangement that transfers, in whole or in part, any of the consequences of ownership of Ordinary Shares to the extent any such action is part of a single transaction to acquire legal and beneficial title for the e& Group to additional Ordinary Shares to the extent permitted by this Agreement. |
6.4 |
e& shall: |
(A) |
to the extent permitted under Applicable Law, notify the Company of any proposed Disposal following the expiry of the Lock-up Period or pursuant to clause 6.2(E) of any Ordinary Shares held by any member of the e& Group (other than any Disposal (i) pursuant to clauses 6.2(A) to 6.2(D) (inclusive) or clause 11(A) or (ii) that constitute less than 25 per cent. of the average daily volume of the Ordinary Shares in any one day on the market on which the Disposal is carried out) at least two Business Days prior to the date of such Disposal; |
(B) |
take into account any reasonable representations made by the Company in respect of any such Disposal (including with respect to the timing of such Disposal); and |
(C) |
use all reasonable endeavours to procure that such Disposal is undertaken in such a manner as would reasonably be expected to maintain an orderly market in the Ordinary Shares. |
6.5 |
Without limiting any additional rights that e& may have under the Registration Rights Agreement, if at any time following the Lock-up Period, e& intends to dispose of the Company’s shares representing at least the Minimum Share Amount either as a single transaction or series of connected transactions, the Company shall on written request (but no more frequently than twice per calendar year, save that the Company shall act reasonably and discuss in good faith any more frequent requests where e& reasonably considers that the same would be necessary or desirable in light of general market conditions) provide e& with reasonable assistance to facilitate such disposal whether through underwritten offerings, open market sales or privately negotiated transactions, including (i) affording to one law firm and one accounting firm in respect of each of e& and/ or any underwriters, reasonable access to pertinent books, contracts and other corporate and financial records of the Company, (ii) providing reasonable availability of senior management of the Company to provide customary due diligence assistance in connection with any such transfer or offering, taking into account the Company’s reasonable business needs and (iii) providing all reasonably required information in the Company’s possession for any prospectus, offering circular, information memorandum or similar document required in connection with any such transfer or offering. |
7. |
STANDSTILL |
7.1 |
e& undertakes and agrees that (unless specifically requested or approved in writing by the Company, acting through a resolution of the Board (excluding the Nominees)), it |
22
shall not, and it shall procure that each other e& Relevant Person (and any other person who is acting in concert with e& or any other e& Relevant Person (in relation to the Company)) shall not, whether directly or indirectly, in any manner, for the duration of this Agreement:
(A) |
acquire, offer or propose to acquire, or agree to acquire (by any means, including by way of purchase, tender or exchange offer, acquisition of control of another person, joining a partnership, limited partnership or other group or through swap or hedging transactions or otherwise) an Interest which would result in e& (taken together with all other e& Relevant Persons and any other person who is acting in concert with any e& Relevant Person (in relation to the Company)) owning, controlling or otherwise having any Interest which, in aggregate, is in excess of such number of Ordinary Shares of the Company as represent 24.99 per cent. of the total number of Voting Rights from time to time, provided that such percentage shall be deemed not to have been exceeded to the extent arising as a result of (i) any repurchase, redemption or reduction of Ordinary Shares undertaken by the Company that reduces the number of Voting Rights or (ii) any member of the e& Group taking up its rights, or subscribing for or acquiring Ordinary Shares or other securities of the Company pursuant to any offerings or issues of Ordinary Shares or other securities of the Company made by the Company to its shareholders, provided it takes no action to participate on more than a pro-rata basis; |
(B) |
other than as otherwise permitted by clause 6, take any action or propose or agree to take any action to enter into a securities borrowing or lending transaction in respect of securities of the Company or any other arrangement in which any securities of the Company are or may be used as collateral in respect of any borrowing or lending transaction; |
(C) |
other than as otherwise permitted by clause 6, take any action or propose or agree to take any action to enter into a transaction which is intended to hedge the economic exposure of the e& Group to its holding of Ordinary Shares in the Company, or which otherwise transfers, in whole or in part, any of the consequences of ownership of Ordinary Shares without constituting a sale or transfer of the Ordinary Shares; |
(D) |
effect or seek to effect, offer or propose to effect, cause or participate in, or in any way assist, support or facilitate any other person to effect, seek to effect, offer or propose to effect or participate in, any takeover, tender or exchange offer, merger, consolidation, acquisition, scheme, arrangement, business combination, recapitalisation, reorganisation, sale or acquisition of assets, liquidation, dissolution or other transaction involving the Company or any of its Affiliates or joint ventures or any of their respective securities (each, a “Transaction”), or frustrate or seek to frustrate any Transaction proposed by or endorsed by the Company, or make any public statement with respect to a Transaction, in each case that is inconsistent with the position of the Board; or |
(E) |
enter into any discussions, negotiations, agreements or understandings with |
23
any third party with respect to any of the foregoing or knowingly encourage or seek to persuade any third party to take any action or make any statement with respect to any of the foregoing.
7.2 |
e& hereby warrants and confirms that, as at the date of this Agreement and save as disclosed in Schedule 1 hereto: |
(A) |
none of e& and its Affiliates: |
(i) |
has any Interest or right to subscribe for securities of the Company; |
(ii) |
has any short position (whether conditional or absolute and whether in the money or otherwise) relating to any securities of the Company, including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery; or |
(iii) |
has borrowed or lent any securities of the Company; and |
(B) |
Atlas 2022 Holding Limited is a wholly-owned subsidiary of e&. |
7.3 |
e& warrants that, as at the date of this Agreement, no e& Relevant Person is acting in concert with any other shareholder of the Company or any person in relation to the securities of the Company and undertakes that, for the duration of this Agreement, no e& Relevant Person shall act in concert with any other shareholder of the Company or any other person (other than an e& Relevant Person) in relation to the securities of the Company. |
8. |
COMMUNICATIONS |
8.1 |
Each Party undertakes and agrees that it shall not, and it shall procure that each of its Relevant Persons shall not, whether directly or indirectly, in any manner, for the duration of this Agreement: |
(A) |
make any statement or announcement that constitutes an attack on or criticism of, or otherwise disparages or causes to be disparaged the other Party (or any other member of the Group (where the other Party is the Company) or the e& Group (where the other Party is e&)) (or their respective management, policies, performance, affairs, securities or assets) or any of its or their current or former directors, officers or employees; |
(B) |
send any communications to the other Party which attack or criticise, or otherwise disparage the other Party (or the Board and any other member of the Group (where the other Party is the Company) or the e& Group (where the other Party is e&)) or any of any such person’s respective current or former directors, officers or employees; |
(C) |
unless specifically requested or approved in writing by the other Party (in the |
24
case of the Company, acting through a resolution of the Board (excluding the Nominees)), communicate with any other shareholder of the other Party from time to time, including by sending any documents, circulars or other communications, regarding any intent, purpose, plan or proposal with respect to the other Party (or the Board and any other member of the Group (where the other Party is the Company) or the e& Group (where the other Party is e&)), its management, policies and affairs, any of its securities or assets or this Agreement; or
(D) |
enter into discussions, negotiations, agreements or understandings with any third parties with respect to any of the foregoing or knowingly encourage or seek to persuade any third party to take any action or make any statement with respect to any of the foregoing. |
8.2 |
Clause 8.1 shall not prohibit: |
(A) |
any Relevant Person of a Party from making any disclosure or statement which is required to be made pursuant to Applicable Law, provided any such disclosure or statement will (to the extent permitted by Applicable Law and where practicable) be made only after prompt consultation with the other Party and after taking into account the other Party’s reasonable requirements as to its timing, content and manner of making; |
(B) |
any Relevant Person of a Party from asserting or enforcing any rights, claims or defences, or pursuing any remedies (x) in any action, litigation or investigation against such Relevant Person or (y) under this Agreement, any Appointment Letter, the Registration Rights Agreement or any other agreement between e& or any of its Affiliates and any member of the Group; |
(C) |
any Relevant Persons of a Party from communicating privately with: (i) the other Relevant Persons of such Party and/or (ii) the Relevant Persons of the other Party, in each case, regarding the matters set out in clause 8.1, provided that any such communications are not intended to, and would not reasonably be expected to, result in public disclosure of such communications; |
(D) |
any Director (including a Nominee) from freely expressing their views during any Board meetings or committee meetings, including, without limitation, in making any recommendation, consistent with their fiduciary duties, which is required to be given to the Company’s shareholders in respect of any resolution of the Company’s shareholders; or |
(E) |
e&, or any other e& Relevant Person, from commenting, as part of ordinary course scheduled investor or analyst meetings, meetings with credit rating agencies, or similar ordinary course communications with investors, analysts and credit rating agencies on e&’s truly held beliefs regarding the performance of the e& Group’s investment in the Company, including with regard to the Company’s strategic performance and direction, provided that (and to the extent that) e& shall: |
25
(i) |
(to the extent permitted by Applicable Laws) in good time in advance of any such scheduled meeting or communication, first share with the Company the substance and content of any such proposed communications (including drafts of any reference to the Company (or any other Company Relevant Person) in any periodic releases in connection with such event, and any draft Q&A responses); |
(ii) |
act reasonably to consult with the Company in relation to such content, and act in good faith to take into account the Company’s reasonable comments thereon; |
(iii) |
not, and use its reasonable endeavours to procure that its agents and representatives do not, materially deviate from such messaging or content when commenting to investors or analysts in respect of the same; and |
(iv) |
for the avoidance of doubt, not thereby disclose (and shall procure that any other e& Relevant Persons shall not thereby disclose) any Confidential Information, unless otherwise permitted by this Agreement. |
9. |
CORPORATE ACTIONS |
9.1 |
Save in so far as the same is (or is strictly necessary to effect) a Permitted Action, e& undertakes and agrees that it shall not, and it shall procure that each other e& Relevant Person shall not, whether directly or indirectly, in any manner, for the duration of this Agreement: |
(A) |
do or seek to do any of the following: (i) requisition a general meeting of the Company or any other meeting of all or some of the Company’s shareholders; (ii) propose a resolution to be put forward at a general meeting of the Company or any other meeting of all or some of the Company’s shareholders; or (iii) circulate (or request the circulation of) a statement to the Company’s shareholders; |
(B) |
solicit proxies in any proxy solicitation (or consents or other authority, if applicable) of shareholders of the Company (including any solicitation asking shareholders to withhold votes on a matter or vote on a matter) other than consistent with the recommendation of the Board, or conduct any other type of referendum (binding or non-binding) of shareholders of the Company or (save where required to do so by Applicable Law) publicly disclose how it intends to vote or act on any such matter; |
(C) |
provide an irrevocable undertaking or letter of intent in respect of its Interest in the Company to any person (other than at the request of the Board in relation to any transaction or proposal that is recommended by the Board); |
(D) |
commence or threaten any litigation (including any derivative action) in its capacity as shareholder against the Company, any other member of the Group, |
26
or any of its or their current or former directors, officers or employees;
(E) |
without the prior written consent of the Company, knowingly employ, solicit or engage, in any capacity any director, officer or employee of any member of the Group, save that this clause 9.1(E) shall not apply to the employment of any person: (i) who responds to a general public advertisement which is not specifically directed at that person; (ii) who approaches any e& Relevant Person on an unsolicited basis; or (iii) following cessation of, or agreement to terminate, that person’s employment with the Group without any solicitation or encouragement by any e& Relevant Person; or |
(F) |
enter into any discussions (subject to Clause 9.3), negotiations, agreements or understandings with any third party with respect to any of the foregoing or knowingly encourage or seek to persuade any third party to take any action or make any statement with respect to any of the foregoing. |
9.2 |
e& shall notify the chair of the Board as soon as practicable, and within one Business Day, if, during the term of this Agreement, any member of the e& Group determines that it wishes to accept a General Offer made by a third party which has not been recommended by the Board. |
9.3 |
If e& (or any of its Controlled Affiliates) is approached by or on behalf of any shareholders, financing parties and/or third parties in respect of any potential acquisition or other transaction relating to the Company or its assets, then after having undertaken only such discussions as are reasonably necessary to allow the third party to explain its proposal (and without e& offering any views on the proposal or negotiating any terms), e& shall notify the chair of the Board of the same as soon as practicable and, in any event, no later than the tenth Business Day after an approach. Following such notification, e& may only continue such discussions in consultation with the Board and shall cease them if requested by the Board. For the purposes of this Agreement, the existence and substance of any such discussions shall be treated as Confidential Information about the Company held by e& and subject to clause 14 of this Agreement. |
9.4 |
It is acknowledged by the Parties that e& may, from time to time and on its own account, give consideration to potential acquisitions or other transactions relating to the Company or its assets. If it does so, e& may not discuss any such transaction with any third parties without the prior consent of the Board and will cease consideration of any such transaction if requested to do so by the Board. |
10. |
VOTING |
10.1 |
For the duration of this Agreement, e& shall cause all shares carrying Voting Rights which are beneficially owned by the e& Group to be present for quorum purposes and to be voted in accordance with any recommendations given by the Board in respect of all Customary Resolutions proposed by the Board at any general meeting of the Company or any other meeting of all or some of the Company’s shareholders. |
10.2 |
Nothing in this Agreement shall limit, restrict or prevent: (i) e& from voting any shares |
27
carrying Voting Rights which are beneficially owned, directly or indirectly by the e& Group, in such manner as they may determine in its absolute discretion in respect of any shareholder resolutions of the Company which are not Customary Resolutions or, subject to the procedures set out in clause 8.2(E)(i) to (iv), explaining that it has voted in a particular way (or not voted); or (ii) subject to Applicable Law and their fiduciary duties, the Nominees from voting in respect of any Board resolution or Board consent in such manner as they may determine in their absolute discretion.
11. |
PERMITTED ACTIONS |
Notwithstanding any other provision of this Agreement, nothing in this Agreement (including clauses 6, 7, 8 and 9) shall prohibit any of e&’s Relevant Persons or any other person who is acting in concert with any such e& Relevant Person (in relation to the Company) from:
(A) |
without prejudice to clause 9.2, accepting a General Offer made by a third party (whether recommended or not by the Board); |
(B) |
making, or announcing a firm intention to make, a General Offer which is recommended by the Board (excluding the Nominees), provided that e& shall procure that: (i) no e& Relevant Person shall take any such step unless it has first obtained the recommendation of the Board (excluding the Nominees); and (ii) any such e& Relevant Person shall promptly withdraw such General Offer if the Board (excluding the Nominees) withdraws its recommendation of such General Offer; |
(C) |
making, or announcing a firm intention to make, a General Offer in circumstances where a third party has made or has announced under Rule 2.7 of the UK Takeover Code a General Offer; or |
(D) |
asserting or enforcing any rights, claims or defences, or pursuing any remedies it may have against the Company or any of its Relevant Persons in any action, litigation or investigation under the Relationship Agreement, any Appointment Letter or the Registration Rights Agreement or any other agreement between e& or any of its Affiliates and any member of the Group, |
((A) – (D) above, the “Permitted Actions”).
12. |
ANNOUNCEMENTS |
12.1 |
The Company and e& shall promptly following the entry into of this Agreement each issue a press release in the form agreed between the Parties. The Parties shall not make any public statement in respect of the matters contemplated by this Agreement which would be inconsistent with such press releases, except as required by Applicable Law or any Governmental Authority (in each case provided that such announcement will (to the extent permitted by Applicable Law and reasonably practicable) be made only after prompt consultation with the other Party and after taking into account the other Party’s reasonable comments as to the timing, content and manner of making) or with |
28
the prior written consent of the other Party.
12.2 |
The Company acknowledges that e& may file a copy of this Agreement as an exhibit to a Schedule 13D filing or Schedule 13D/A filing in respect of its interest in the Company under the U.S. Securities Exchange Act of 1934 and the Company may file a copy of this Agreement as an exhibit to its annual report on Form 20-F. To the extent permitted by Applicable Laws and reasonably practicable, e& and the Company shall make any such filing only after consultation with the other Party and shall consider the other Party’s reasonable comments regarding such filing received, in the case of the Company’s annual report on Form 20-F, at least five Business Days prior to the respective document’s filing. |
12.3 |
Save as permitted pursuant to clauses 12.1 and 12.2, neither Party shall (and shall procure that none of its Relevant Persons shall) issue any press release or any other public statement or public announcement announcing the entry into this Agreement. |
13. |
REPORTING INFORMATION |
13.1 |
The Company shall provide e& with access to, and copies of, the following, in each case to the extent permitted by Applicable Law: |
(A) |
as soon as reasonably practicable after being circulated to the Board any initial or revised business plan and operating budget for the Group as adopted by the Board from time to time; |
(B) |
as soon as reasonably practicable after being circulated to the Board (and only for each month in which there is a Board meeting that receives this reporting), the monthly management accounts of the Group in such form as are distributed to the Board, showing, inter alia, the consolidated revenue, and operating results of the Group on a monthly and financial year-to-date basis; |
(C) |
no later than 10 Business Days after the date of external publication of the annual, half-yearly and quarterly results of the Group, a quarterly report of the Group prepared by the executive management of the Company on the basis of the accounting policies, practices and procedures of the Group (the “Accounting Policies”) showing, amongst other things, the consolidated balance sheet, consolidated income statement, consolidated statement of comprehensive income, borrowings and (only in the case of a quarter ending at a half year end and a financial year-end) consolidated cash flow statement, together with any segmental information reported by the Group (such quarterly reports being the “Quarterly Accounts”); and |
(D) |
the half-yearly and annual consolidated accounts of the Group, including the related segmental information, prepared in accordance with the Accounting Policies and audited and/or reviewed as required by Applicable Law applicable to the Group, as soon as reasonably practicable after the external publication of the results for the period (and, in any case, no later than 10 Business Days after |
29
the date of publication of those results).
13.2 |
The Company agrees to hold meetings on a quarterly basis between the financial controller of the Group (or another person with similar responsibilities reasonably acceptable to e&) and e&’s representatives regarding any significant accounting matters (including in respect of material transactions involving the Group) as reasonably necessary to assist e& in complying with the requirements of its equity method accounting for the e& Group’s investment in the Company. |
13.3 |
The Company shall, where reasonably practicable and permissible under Applicable Law, provide e& with reasonable assistance and cooperation (at e&’s cost to the extent it would involve significant additional cost, time or expenses by the Company) in connection with: (i) the preparation of e&’s accounts; (ii) the preparation of tax returns (or other tax filings or correspondence with a tax authority); or (iii) compliance with any other legal or regulatory requirement, in each case in connection with e& Group’s holding of Ordinary Shares, including, without limitation, with respect to the Abu-Dhabi Stock Exchange and any telecommunication regulatory authority to which e& or any of its Affiliates is subject, it being understood that such reasonable assistance and cooperation includes providing to e& reasonable access to the Group’s personnel and (at e&’s cost, and to the extent consented to by the Group’s external auditors) the Group’s external auditors (and their audit working papers and other deliverables pertinent to their audit of the Group accounts) to discuss on a non-recourse and non prejudicial basis and, in the case of the Group’s external auditors, in compliance with the terms of their engagement with the Group, any reasonable query from e& and its auditors on any significant accounting matters (including in respect of material transactions involving the Group) as reasonably necessary to assist e& in complying with the requirements of its equity method accounting for its investment in the Company. |
13.4 |
The Company shall finalise and publish its consolidated half-yearly accounts and consolidated annual accounts for each relevant accounting period as required under the Listing Rules or Applicable Law. |
13.5 |
e& shall not (and shall procure that none of e&’s Relevant Persons shall) publicly disclose any financial information provided by the Company pursuant to clauses 13.1 to 13.3 (the “Accounting Confidential Information”) until after such time as the Company has publicly disclosed the Accounting Confidential Information as part of its quarterly, semi-annual or annual reporting, provided that, to the extent not previously disclosed by the Company, e& shall be permitted to report in each of its quarterly reports (each an “e& Quarterly Report”) e&’s share of the aggregate net income of its associates and joint ventures and the aggregate carrying value of its investments in its associates and joint ventures in e&’s consolidated income statement and consolidated balance sheet included therein, as determined on the basis of the Accounting Confidential Information provided to e& in respect of the Company’s quarter period preceding the quarter period covered by the relevant e& Quarterly Report, regardless whether the Company has published in whole or in part such Accounting Confidential Information but subject to the Company having published its trading update for such preceding quarter. |
30
13.6 |
e& undertakes to notify the Company if for any reason, including as a result of any change in the e& Group’s holding of Ordinary Shares, e& expects that it will cease to account for its interest in the Company using the equity method. |
13.7 |
Nothing in this clause 13 shall require the Group to change its Accounting Policies, restate financial statements or present segmental or comparative information where such segmental or comparative information would not otherwise be reportable for any purpose (including the preparation of e&’s: (i) accounts (or the accounts of the e& group); or (ii) tax returns or other tax filings or correspondence with a tax authority. |
13.8 |
The provision of this clause 13 shall continue in full force and effect for so long as e& continues to account for the e& Group’s holding of Ordinary Shares in the Company using the equity method (and, for the avoidance of doubt, shall survive termination of this Agreement), unless this Agreement is terminated pursuant to (i) clauses 18.1(B)(ii), 18.1(C) or 18.1(F), in which case the provisions of this clause 13 shall survive only for 60 Business Days following such termination or (ii) clauses 18.1(B)(i), 18.1(D)(ii) or 18.1(E), in which case the provisions of this clause 13 shall terminate immediately upon termination of this Agreement, provided, that, in each case, if during the survival period of the provisions of this clause 13 following termination of this Agreement, any e& Relevant Person takes any action that would constitute a material breach of the provisions in clause 8 had this Agreement not been terminated, then the provisions of this clause 13 shall immediately terminate upon the e& Relevant Person taking such action. The termination of the provisions of this clause 13 is the sole consequence of such e& Relevant Person’s action which does not otherwise constitute a breach of this Agreement. |
14. |
PROVISION OF INFORMATION AND CONFIDENTIALITY |
14.1 |
Subject to clause 14.2 below, e& shall (and shall procure that each e& Relevant Person shall) keep all Confidential Information secret and confidential and shall not, without the prior written consent of the Company, directly or indirectly communicate or disclose (whether in writing or orally or in any other manner) Confidential Information to any other person. |
14.2 |
The restrictions in clause 14.1 shall not apply to the disclosure of Confidential Information: |
(A) |
subject to clauses 14.3 and 14.4, by a Nominee to e& or any member of the e& Group (on a strictly need to know basis) or to any professional advisers of any such person; |
(B) |
if and to the extent required by Applicable Law or a Governmental Authority, provided that the disclosure will (to the extent permitted by Applicable Law and reasonably practicable) be made only after prompt consultation with the Company and after taking into account the Company’s reasonable comments as to its timing, content and manner of making; |
(C) |
if and to the extent that such Confidential Information was properly and lawfully |
31
in the possession of an e& Relevant Person prior to the time it was disclosed by, or acquired from, any member of the Group, provided that no e& Relevant Person knows or ought reasonably to know that such Confidential Information is subject to a duty of confidentiality owed to any member of the Group;
(D) |
if and to the extent that such Confidential Information is received by an e& Relevant Person from a third party provided that no such e& Relevant Person knows or ought reasonably to know that such Confidential Information is subject to an obligation of confidentiality in favour of any member of the Group; |
(E) |
to the extent permitted by the proviso in clause 13.5; or |
(F) |
if and to the extent that such Confidential Information is in, or comes into, the public domain, otherwise than as a result of a breach of this Agreement or any other agreement between the Parties or as a result of any breach of any other duty of confidence owed by any e& Relevant Person to any member of the Group. |
14.3 |
e& shall procure that any person to whom Confidential Information is disclosed pursuant to clause 14.2(A) shall comply with the terms of clause 14.1 as if such person were named herein as “e&”. e& shall remain fully responsible and liable for any failure by any other e& Relevant Person or its or their professional advisers to keep all Confidential Information received or acquired (whether received or acquired on or after the date of this Agreement) secret and confidential in accordance with clause 14.1. |
14.4 |
Notwithstanding the provisions of clause 14.1, the Parties acknowledge and agree, and e& shall procure, that the Nominees shall not disclose to any other e& Relevant Person, or to any other person, any Information which the Board considers to be Inside Information unless the Board (excluding the Nominees) determines that such disclosure is permissible under Applicable Law (including the relevant provisions of the Disclosure Rules and the Market Abuse Regulation). |
14.5 |
e&: |
(A) |
acknowledges and agrees that Confidential Information disclosed to it (and to any other e& Relevant Person) may be Inside Information and that disclosure or misuse of such Confidential Information may amount to market abuse or insider dealing, and consents (and shall procure that any other e& Relevant Person so consents) to being made an insider by virtue of receiving any Confidential Information that is Inside Information; |
(B) |
undertakes to comply (and to procure that any other e& Relevant Person in receipt of any Inside Information will comply) with Applicable Law relating to Inside Information (including, without limitation, relevant restrictions relating to any dealing by it in the securities of the Company); |
(C) |
undertakes that it shall not (and shall procure that no other e& Relevant Person will) deal in any securities of the Company at any time when a Nominee is |
32
prohibited under Applicable Law or under the Corporate Governance and Compliance Policies (to the extent made available to e& and the Nominees) from dealing in securities of the Company, or if the Company has otherwise instructed directors generally not to deal; and
(D) |
acknowledges that, subject to Applicable Law, where any e& Relevant Person is in possession of any Inside Information relating to the Company, the Company shall have no obligation to disclose or announce such Inside Information save as otherwise required to do so pursuant to the Registration Rights Agreement, whether in order to enable any such e& Relevant Person to be able to exercise its rights in respect of any Interest held in the Company’s shares or otherwise |
14.6 |
e& shall not (and shall procure that no other e& Relevant Person will) use any Confidential Information for any purpose (including, but not limited to, any competitive or commercial purpose) other than: |
(A) |
monitoring and managing its shareholding in the Company; or |
(B) |
providing such support and assistance to a Nominee as is reasonably necessary in order for them to fulfil their role as a non-executive Director of the Company. |
14.7 |
To the extent that any Confidential Information is covered or protected by privilege, then disclosing such Confidential Information or permitting the disclosure of it does not constitute a waiver of privilege or any other rights which any Relevant Person of the Company may have in respect of such Confidential Information. |
14.8 |
e& shall procure that any Nominee shall, within 30 days of such Nominee’s Nominee Return Date: |
(A) |
return to the Company or destroy (at the Company’s option) all original and hard copies of documents held by such Nominee (including any analyses, memoranda or other documents) to the extent that they contain or reflect Confidential Information (and all copies thereof which have been made by or on behalf of such Nominee); and |
(B) |
delete all other materials held by such Nominee which are not in a form reasonably capable of return or destruction (including, without limitation, from computers, telephones, disks, hard drives, servers and other devices) to the extent that they contain, reflect, or are derived or generated from, Confidential Information (and all copies thereof which have been made by or on behalf of such Nominee). |
14.9 |
e& shall confirm to the Company in writing, within 30 days of each relevant Nominee’s Nominee Return Date, that it has complied with clause 14.8 in respect of such Nominee. |
14.10 |
e& shall (and shall procure that each other e& Relevant Person shall), within 30 days of the Return Date: |
33
(A) |
return to the Company or destroy (at the Company’s option) all original and hard copies of documents held by any e& Relevant Person (including any analyses, memoranda or other documents) to the extent that they contain or reflect Confidential Information (and all copies thereof which have been made by or on behalf of any Relevant Person); and |
(B) |
delete all other materials held by any e& Relevant Person which are not in a form reasonably capable of return or destruction (including, without limitation, from computers, telephones, disks, hard drives, servers and other devices) to the extent that they contain, reflect, or are derived or generated from, Confidential Information (and all copies thereof which have been made by or on behalf of any e& Relevant Person). |
14.11 |
e& shall confirm to the Company in writing, within 30 days of the Return Date, that it has complied with clause 14.10. |
14.12 |
Notwithstanding clause 14.10, any e& Relevant Person may retain any Confidential Information: |
(A) |
which is stored electronically pursuant to an existing, reasonable, routine data back-up exercise on servers or back-up systems, provided that all such Confidential Information is deleted from local hard drives and no attempt is made to recover Confidential Information from such servers or back-up systems; or |
(B) |
which is required to be retained for the purpose of complying with Applicable Law, provided that no step will be taken to access or recover such Confidential Information other than for such purpose, |
provided that such Confidential Information shall in each case otherwise continue to be held by the relevant e& Relevant Person on a confidential basis subject to the terms of this Agreement.
15. |
CONFLICTS |
15.1 |
The Parties acknowledge and agree that, unless the Board (excluding the Nominees) consents or agrees otherwise, the Nominees shall not be entitled to attend, be counted in the quorum, participate in discussions at, or vote on resolutions at any part of a Board meeting (or committee meeting) where: |
(A) |
the subject matter of the discussions or resolutions at the relevant Board meeting (or committee meeting) relates to: (i) the relationship between the Company (or any other member of the Group) and any e& Relevant Person, including, for example, in connection with the rights and obligations under this Agreement; (ii) any transaction or arrangement between any member of the Group and any e& Relevant Person; (iii) any business segment or geographical market in which any member of the Group actually or potentially competes with e& or any of its Affiliates; (iv) any transaction or arrangement which both Parties |
34
may reasonably be expected to be interested in pursuing; or (v) any General Offer from a third party in respect of which the Company is entitled to terminate this Agreement pursuant to clause 18.1(D)(i); or
(B) |
a Nominee’s participation in the Board meeting (or committee meeting) would reasonably be expected to give rise to an actual or potential conflict of interests for such Nominee (as determined by the independent non-executive Directors, acting reasonably and in good faith) which is not authorised by the Board (excluding the relevant Nominee(s)) in accordance with Applicable Law and the Company’s internal policy on Directors’ conflicts of interests from time to time, |
(each a “Conflict Matter”), and e& shall procure that the Nominees shall recuse themselves from any such meeting (or part of such meeting, as appropriate).
15.2 |
The Parties acknowledge and agree that: |
(A) |
all decisions as to whether any matter is a Conflict Matter in relation to any Nominee shall be taken by the Company in accordance with its internal policy on Directors’ conflicts of interests from time to time; and |
(B) |
the Nominees shall not receive, or be entitled to receive, any Information, and shall not be entitled to participate in any Board or committee proceedings, relating to any Conflict Matter. |
16. |
INDEPENDENCE |
16.1 |
e& shall (and shall procure that each of its Controlled Affiliates shall) at all times comply in all material respects with Applicable Law to which it is subject in relation to its investment in the Group. |
16.2 |
e& shall: |
(A) |
insofar as it is legally able to do so, procure that any transactions or arrangements between: (i) any e& Relevant Person; and (ii) any member of the Group are conducted on arm’s length commercial terms; and |
(B) |
not take any action that would reasonably be expected to have the effect of preventing or impeding the Company from complying with its obligations under the Listing Rules to carry on an independent business. |
17. |
COSTS AND EXPENSES |
Without prejudice to clauses 4.2 and 4.3, each Party shall bear its own costs and expenses in relation to the negotiation and agreement of this Agreement and in relation to complying with their respective obligations under this Agreement.
35
18. |
TERMINATION |
18.1 |
This Agreement: |
(A) |
shall terminate with immediate effect if, following the satisfaction of the e& Nominee Conditions, the e& Group ceases to satisfy the Lower Threshold; |
(B) |
may be terminated: |
(i) |
by either Party with immediate effect by written notice to the other Party if any e& Nominee Condition has not been satisfied by the date that is 18 months after the date of this Agreement (the “Longstop Date”); or |
(ii) |
by the non-breaching Party if the other Party breaches the terms of this Agreement in any material respect that is incapable of remedy within a reasonable period (or which is capable of being so remedied, but is not remedied to the non-breaching Party’s reasonable satisfaction within such period); |
(C) |
may be terminated by the Company with immediate effect by written notice to the other Party if EIA or its directors takes any action that would be a breach of this agreement pursuant to clause 7, 8 or 9 in any material respect if such person was an e& Relevant Person, provided that such breach is incapable of remedy within a reasonable period (or which is capable of being so remedied, but is not remedied to the Company’s reasonable satisfaction within such period); |
(D) |
may be terminated: |
(i) |
by the Company with immediate effect by written notice to e& if upon any member of the e& Group making a determination to accept, or accepting, a General Offer made by a third party which has not been recommended by the Board, or failing to, where reasonably able to do so, promptly withdraw an acceptance of any General Offer which was recommended by the Board at the time of the relevant member of the e& Group’s acceptance of such General Offer but in respect of which the Board has subsequently withdrawn its recommendation; or |
(ii) |
by either Party with immediate effect by written notice to the other Party, if e& causes any shares carrying Voting Rights which are beneficially owned by the e& Group to vote against any recommendations given by the Board in respect of any resolutions proposed by the Board at any general meeting of the Company or any other meeting of all or some of the Company’s shareholders (other than: (i) resolutions that would disproportionately and adversely affect the rights of e& under this Agreement or as compared to the other shareholders of the Company; or (ii) Customary Resolutions); |
36
(E) |
may be terminated by either Party with immediate effect by written notice to the other Party at any time before the date on which all of the e& Nominee Conditions have been satisfied if such Party determines in its reasonable judgment on the advice of external counsel that any fact or circumstance arises which makes any of the e& Nominee Regulatory Conditions incapable of being satisfied by the Longstop Date (provided that the Party intending to terminate pursuant to this clause shall first reasonably consult with the other Party and its counsel prior to terminating pursuant to this clause 18.1(E)); and |
(F) |
may be terminated by either Party with immediate effect by written notice to the other Party at any time following the expiry of the Lock-up Period. |
18.2 |
The provisions of (i) clauses 1, 2.12, 2.13, 17 and 19 to 30 (inclusive) and this clause 18 shall survive the termination of this Agreement without limit in time, (ii) clause 6.5 shall survive the termination of this Agreement until the termination of the Registration Rights Agreement, (iii) clause 13.1 shall survive the termination of this Agreement for eighteen months and (iv) clause 13 shall survive the termination of this Agreement in accordance with its terms. |
18.3 |
Without prejudice to clause 18.2, if this Agreement is terminated pursuant to clause 18.1(F), clauses 7 to 11 (inclusive) shall survive the termination of this Agreement until the date that is 30 days after (and excluding) the date of termination of this Agreement. |
18.4 |
Termination of this Agreement shall be without prejudice to any rights or obligations of the Parties which have accrued prior to the time on which this Agreement is terminated. |
18.5 |
Save as set out in clause 18.1, no Party shall have any right of termination or rescission in respect of this Agreement. |
19. |
WARRANTIES |
19.1 |
Each Party warrants as at the date of this Agreement to the other Party that: |
(A) |
it has the requisite power and authority to enter into and perform this Agreement; |
(B) |
the obligations of such Party under this Agreement constitute binding obligations of such Party in accordance with their respective terms; and |
(C) |
the execution and delivery of, and the performance by such Party of its obligations under, this Agreement will not: |
(i) |
result in a breach of any provision of the constitutional documents of such Party; |
(ii) |
result in a breach of, or constitute a default under, any instrument to which such Party (or any of its Affiliates) is a party or by which such Party (or any of its Affiliates) is bound; |
37
(iii) |
result in a breach of Applicable Law or any order, judgment or decree of any court or Governmental Authority to which such Party (or any of its Affiliates) is a party or by which such Party (or any of its Affiliates) is bound; |
(iv) |
require such Party (or any of its Affiliates) to obtain any consent or approval of, or give any notice to or make any registration with, any Governmental Authority which has not been obtained or made at the date of this Agreement and is in full force and effect; or |
(v) |
require the consent of any other person. |
19.2 |
Each Party acknowledges that the other Party has entered into this Agreement in reliance on the warranties given by it above. |
20. |
ENTIRE AGREEMENT |
This Agreement constitutes the whole and only agreement between the Parties relating to the subject matter of this Agreement. None of the Parties is relying upon or shall have any right of action against the other arising out of or in connection with any draft, agreement, undertaking, representation, warranty, promise, assurance or arrangement of any nature whatsoever, whether or not in writing, relating to the subject matter of this Agreement made or given by any person at any time before the date of this Agreement except to the extent that it is repeated in this Agreement. Nothing in this clause 20 shall exclude or limit any liability for fraud.
21. |
INJUNCTIVE RELIEF |
The Parties agree that damages alone may not be an adequate remedy for any breach of this Agreement and accordingly each Party may be entitled to the remedies of injunction, specific performance and other equitable relief for any threatened or actual breach of this Agreement.
22. |
FURTHER ASSURANCE |
22.1 |
Each Party shall from time to time at its own cost, on being required to do so by the other Party, now or at any time in the future, do or procure the doing of all such acts and/or execute or procure the execution of all documents in a form satisfactory to such other Party which such other Party may reasonably consider necessary for giving full effect to this Agreement and securing to such other Party the full benefit of the rights, powers and remedies conferred upon such other Party in this Agreement. |
22.2 |
The Company agrees and undertakes that it will not propose any resolution to its shareholders (including any amendment to the Articles of Association) or adopt and/or amend the Corporate Governance and Compliance Policies for the primary purpose of removing, restricting, reducing or impeding the implementation or exercise of the rights of e& set out in this Agreement (including, without limitation, any resolution to remove a Nominee, otherwise pursuant to the express terms of this Agreement). |
38
23. |
NOTICES |
23.1 |
A notice or other communication under this Agreement shall only be effective if it is in writing and sent to a Party at its address or to its email address set out below, or (where applicable) to the address of that Party’s agent for service for the time being under clause 30: |
if to the Company: |
Vodafone Group plc Vodafone House, The Connection, Newbury, RG14 2FN |
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Attention: Group General Counsel & Company Secretary e-mail: groupcosec@vodafone.com |
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With a copy (not constituting notice) to: |
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Slaughter and May One Bunhill Row London EC1Y 8YY |
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Attention: Roland Turnill and Victoria MacDuff e-mail: Roland.Turnill@slaughterandmay.com; Victoria.MacDuff@slaughterandmay.com |
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if to e&: |
Emirates Telecommunications Group Company PJSC |
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Head Office Building A Intersection of Zayed the 1st Street and SheikhRashid Bin Saeed Al Maktoum Street PO Box 3838 Abu Dhabi United Arab Emirates Attention: Brooke Marie Lindsay and Nazih El Hassanieh e-mail: blindsay@eand.com; nelhassanieh@eand.com |
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With a copy (not constituting notice) to: |
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Sullivan & Cromwell LLP 1 New Fetter Lane London EC4A 1AN Attention:John Horsfield-Bradbury E-Mail: horsfieldbradburyj@sullcrom.com |
provided that a Party may change its notice details on giving notice to the other Party of the change in accordance with this clause 23.
23.2 |
Any notice given under this Agreement shall, in the absence of earlier receipt, be deemed to have been duly given as follows: |
39
(A) |
if delivered personally, on delivery ; |
(B) |
if sent by first class inland post, two clear Business Days after the date of posting; |
(C) |
if sent by airmail, six clear Business Days after the date of posting; or |
(D) |
if sent by e-mail, when sent provided that no notification of failure of transmission to the intended recipient is received, |
provided that any notice given under this Agreement outside Working Hours in the place to which it is addressed shall be deemed not to have been given until the start of the next period of Working Hours in such place and provided further that in respect of any notice delivered to e& the term Business Day as used in this clause 23.2 shall mean any day (other than a Saturday or a Sunday) on which banks are open for business in Abu Dhabi.
24. |
REMEDIES AND WAIVERS |
24.1 |
No delay or omission by any Party to this Agreement in exercising any right, power or remedy provided by Applicable Law or under this Agreement shall: |
(A) |
affect that right, power or remedy; or |
(B) |
operate as a waiver of it. |
24.2 |
The single or partial exercise of any right, power or remedy provided by Applicable Law or under this Agreement shall not preclude any other or further exercise of it or the exercise of any other right, power or remedy. |
24.3 |
The rights, powers and remedies provided in this Agreement are cumulative and not exclusive of any rights, powers and remedies provided by law. |
25. |
ASSIGNMENT |
No Party shall, without the prior written consent of the other Party:
(A) |
assign, or purport to assign, (absolutely or by way of security) all or any part of the benefit of, or its rights or benefits under, this Agreement ; |
(B) |
make a declaration of trust in respect of (or enter into any arrangement whereby it agrees to hold in trust for, or otherwise pass (directly or indirectly) to, any person) all or any part of the benefit of, or its rights or benefits under, this Agreement; or |
(C) |
sub-contract, or enter into any arrangement whereby another person is to perform, any or all of its obligations under this Agreement. |
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26. |
THIRD PARTY RIGHTS |
The Parties to this Agreement do not intend that any term of this Agreement should be enforceable, by virtue of the Contracts (Rights of Third Parties) Act 1999, by any person who is not a party to this Agreement.
27. |
ILLEGALITY AND INVALIDITY |
If at any time any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, that shall not affect or impair:
(A) |
the legality, validity or enforceability in that jurisdiction of any other provision of this Agreement; or |
(B) |
the legality, validity or enforceability under the law of any other jurisdiction of that or any other provision of this Agreement. |
28. |
COUNTERPARTS |
28.1 |
This Agreement may be executed in any number of counterparts, and by the Parties on separate counterparts, but shall not be effective until each Party has executed at least one counterpart. |
28.2 |
Each counterpart shall constitute an original of this Agreement, but all the counterparts shall together constitute one and the same instrument. |
29. |
GOVERNING LAW AND JURISDICTION |
29.1 |
This Agreement is to be governed by and construed in accordance with English law. Any matter, claim or dispute arising out of or in connection with this Agreement, whether contractual or non-contractual, is to be governed by and determined in accordance with English law. |
29.2 |
The courts of England and Wales shall have exclusive jurisdiction to settle any dispute, whether contractual or non-contractual, arising out of or in connection with this Agreement. Any proceeding, suit or action arising out of or in connection with this agreement or the negotiation, existence, validity or enforceability of this Agreement (“Proceedings”) shall be brought only in the courts of England. |
29.3 |
Each Party waives (and agrees not to raise) any objection, on the ground of forum non conveniens or on any other ground, to the taking of Proceedings in the courts of England. Each Party also agrees that a judgment against it in Proceedings brought in England shall be conclusive and binding upon it and may be enforced in any other jurisdiction. |
29.4 |
Each Party irrevocably submits and agrees to submit to the jurisdiction of the courts of England and Wales. |
41
30. |
AGENT FOR SERVICE |
30.1 |
Within five Business Days from the date of this Agreement , e& shall irrevocably appoint Law Debenture Corporate Services Limited to be its agent for the receipt of Service Documents and e& hereby agrees that any Service Document may be effectively served on it in connection with Proceedings in England and Wales by service on its agent effected in any manner permitted by the Civil Procedure Rules. |
30.2 |
If the agent at any time ceases for any reason to act as such, e& shall appoint a replacement agent having an address for service in England or Wales and shall notify the Company of the name and address of the replacement agent. Failing such appointment and notification, the Company shall be entitled by notice to e& to appoint a replacement agent to act on behalf of e&. The provisions of this clause 30 applying to service on an agent and to payment for those services apply equally to a replacement agent. |
30.3 |
A copy of any Service Document served on an agent shall be sent by post to e&. Failure or delay in so doing shall not prejudice the effectiveness of service of the Service Document. |
42
Schedule 1
Interests
Atlas 2022 Holdings Limited is the legal and beneficial owner of 3,944,743,685 Ordinary Shares.
The information in Annex A of the Schedule 13D filed by e& with the U.S. Securities and Exchange Commission on 24 April 2023 is incorporated herein by reference.
43
Appendix 1
Form of Resignation Letter
To:
The Directors
Vodafone Group Plc (the “Company”)
Vodafone House,
The Connection,
Newbury,
RG14 2FN
[date]
Dear Sirs/Mesdames,
I hereby resign my office as a director of the Company with immediate effect.
I confirm that I have no claims against the Company or any of its subsidiaries for breach of contract, compensation for loss of office or on any other account whatsoever and that there is no agreement or arrangement outstanding under which the Company or any of its subsidiaries has or could have any obligation to me other than in respect of accrued remuneration or expenses. To the extent that any such claim exists or may exist, I hereby irrevocably waive such claim and release the Company from any liability it has or might have in respect thereof.
Yours faithfully,
Signed as a deed by [name of individual] in the ) |
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presence of: ) |
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(Signature of individual) |
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Witness’s signature: |
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………………………….. |
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Name (print): |
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………………………….. |
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Occupation: |
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………………………….. |
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Address: |
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………………………….. |
Signed by Margherita Della Valle for and on behalf of VODAFONE GROUP PLC |
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Signed by |
………………………….. |
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for and on behalf of |
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EMIRATES TELECOMMUNICATIONS |
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GROUP COMPANY PJSC |
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[Signature Page to the Relationship Agreement]
Signed by ………………………….. |
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for and on behalf of |
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………………………….. |
VODAFONE GROUP PLC |
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Signed by Hatem Dowidar for and on behalf of EMIRATES TELECOMMUNICATIONS GROUP COMPANY PJSC |
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[Signature Page to the Relationship Agreement]
Exhibit 4.28
EXECUTION VERSION
REGISTRATION RIGHTS AGREEMENT
by and between
Vodafone Group Plc
and
Emirates Telecommunications Group Company PJSC
Dated as of 11 May 2023
TABLE OF CONTENTS
Page
Section 1. |
Definitions |
1 |
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Section 2. |
Shelf Registration |
7 |
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Section 3. |
Demand Registrations |
9 |
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Section 4. |
Piggyback Registrations |
10 |
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Section 5. |
Holdback Agreements |
12 |
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Section 6. |
Suspensions |
12 |
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Section 7. |
Registration Procedures |
13 |
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Section 8. |
Underwritten Offerings |
20 |
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Section 9. |
Registration and Selling Expenses |
21 |
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Section 10. |
Confidentiality |
21 |
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Section 11. |
Indemnification; Contribution |
21 |
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Section 12. |
Rule 144 Compliance |
24 |
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Section 13. |
Transfer Assistance |
25 |
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Section 14. |
Miscellaneous |
25 |
THIS REGISTRATION RIGHTS AND SELL-DOWN COOPERATION AGREEMENT (the “Agreement”) is made and entered into as of 11 May 2023 by and among VODAFONE GROUP PLC, a public limited liability company incorporated under the laws of England and Wales (the “Company”) and EMIRATES TELECOMMUNICATIONS GROUP COMPANY PJSC, a public joint-stock company incorporated under the laws of the United Arab Emirates (“e&” and, together with its Affiliates or successors, and permitted assigns from time to time that hold or beneficially own Registrable Securities of the Company, the “Holders” and each an “Holder”).
RECITALS
WHEREAS, on the same date of this Agreement, the Company and e& entered into a Relationship Agreement (the “Relationship Agreement”), the principal purpose of which is to regulate the continuing relationship between the Company and e& and which sets forth certain lock-up restrictions applicable to the Holders (the “Lock-Up Restrictions”); and
WHEREAS, the parties hereto desire to enter into this Agreement to set forth certain rights and obligations of the Company and the Holders with respect to the Relevant Shares (as herein defined).
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valid consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:
Section 1.Definitions.
(a)As used in this Agreement, the following terms shall have the following meanings:
“Acceptable Terms” has the meaning set forth in Section 8(a).
“ADSs” means American Depositary Shares, each representing 10 Ordinary Shares.
“Affiliate” of a Person has the meaning set forth in Rule 12b-2 under the Exchange Act.
“Agreement” has the meaning set forth in the Preamble.
“Automatic Shelf Registration Statement” means a Shelf Registration Statement that is an “automatic shelf registration statement” as defined in rule 405 under the Securities Act.
“Business Day” means any day that is not a Saturday, a Sunday or a day on which banks are required or permitted to be closed in the City of New York, New York, or London, United Kingdom or for purposes of Section 14(j) only, Abu-Dhabi, United Arab Emirates.
“Company” has the meaning set forth in the Preamble.
“Controlling Person” has the meaning set forth in Section 11(a).
“Covered Person” has the meaning set forth in Section 11(a).
“Demand Registration” has the meaning set forth in Section 3(a).
“Demand Registration Request” has the meaning set forth in Section 3(a).
“Depositary” means the depositary from time to time with respect to the ADSs.
“e&” has the meaning set forth in the Preamble.
“e& Relevant Person” has the meaning set forth in the Relationship Agreement.
“EU Market Abuse Regulation” means Regulation (EU) No 596/2014.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Financial Intermediary” has the meaning set forth in Section 13.
“FINRA” means the Financial Industry Regulatory Authority, Inc.
“Filing Date” means 60 days before the Lock-Up End date.
“Governmental Entity” means any United States or foreign (i) federal, state, local, municipal or other government, (ii) governmental or quasi-governmental entity of any nature (including, without limitation, any governmental agency, branch, department, official or entity and any court or other tribunal) or (iii) body exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature, including, without limitation, any arbitral tribunal.
“Holder” has the meaning set forth in the Preamble.
“Lock-Up End Date” means the date on which the Lock-Up Restrictions cease to apply to the Holders pursuant to the Relationship Agreement.
“Lock-Up Restrictions” has the meaning set forth in the Recitals.
“Minimum Share Threshold” means an aggregate number of Ordinary Shares, as determined at the relevant time specified in this Agreement, representing at least the lesser of (a) an aggregate market value of $250,000,000 or (b) 1% of the Outstanding Shares.
“Ordinary Shares” means the ordinary shares of the Company.
“Outstanding Shares” means at any given time the Ordinary Shares of the Company in issue excluding the Ordinary Shares held by the Company in treasury.
“Person” means any natural person, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, foundation, unincorporated organization or government or other agency or political subdivision thereof.
-2-
“Piggyback Registration” has the meaning set forth in Section 4(a).
“Piggyback Shelf Registration Statement” has the meaning set forth in Section 4(a).
“Piggyback Shelf Takedown” has the meaning set forth in Section 4(a).
“Prospectus” means the prospectus or prospectuses (whether preliminary or final) included in any Registration Statement and relating to Registrable Securities, as amended or supplemented and including all material incorporated by reference in such prospectus or prospectuses.
“Qualified Independent Underwriter” means a “qualified independent underwriter” within the meaning of FINRA Rule 5121.
“Registrable Securities” means, at any time, (i) any Relevant Shares and (ii) any securities issued by the Company after the date hereof in respect of the Relevant Shares by way of a share dividend, subdivision, reorganization, reclassification, recapitalization, stock split, reverse stock split, combination or exchange of shares or other similar event (it being understood that, for purposes of this Agreement, a Person shall be deemed to be a Holder of Registrable Securities whenever such Person in its sole discretion has the right to then acquire or obtain from the Company any Registrable Securities, whether or not such acquisition has actually been effected); provided, however, that as to any particular Registrable Securities, such securities shall cease to constitute Registrable Securities for all purposes of this Agreement when all such securities (a) have been sold pursuant to an effective Registration Statement or in compliance with Rule 144 under the Securities Act, (b) have been sold in a transaction where a subsequent public distribution of such securities would not require registration under the Securities Act, (c) are eligible for sale pursuant to Rule 144 under the Securities Act without limitation thereunder on volume or manner of sale as determined by either the Company or e& on the basis of an opinion from a reputable US counsel, or (d) are not outstanding (or any combination of clauses (a), (b), (c), and (d)), and the Company’s obligations regarding Registrable Securities hereunder shall cease to apply with respect to such securities.
“Registration Expenses” means any and all fees and expenses incident to the Company’s performance of or relating to compliance with this Agreement, including: (ii) SEC, stock exchange, FINRA and all other registration and filing fees and all listing fees and fees with respect to the inclusion of securities on any U.S. or non-U.S. securities market on which the Registrable Securities are listed or quoted, (ii) fees and expenses of compliance with state securities or “blue sky” laws of any state or jurisdiction of the United States or compliance with the securities laws of jurisdictions outside the United States and in connection with the preparation of a “blue sky” survey, (iii) word processing, printing and copying expenses, (iv) expenses incurred in connection with any roadshow by the Company for an underwritten offering, (v) fees and disbursements of counsel for the Company , (vi) fees and disbursements of all independent public accountants of the Company (including the expenses with respect to any opinion and/or audit/review and updates thereof but excluding expenses with respect to “comfort” letters) and fees and expenses of other Persons, including special experts, retained by the Company, (vii) fees and expenses of any transfer agent, custodian or the Depositary, and (viii) rating agency fees and expenses. For the avoidance of doubt, Registration Expenses shall not include any Selling Expenses.
-3-
“Registration Rights Termination Date” means the first date on which e& and its Affiliates cease to hold or beneficially own any Registrable Securities.
“Registration Statement” means any registration statement of the Company under the Securities Act which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, all amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all documents incorporated by reference in such Registration Statement.
“Relationship Agreement” has the meaning set forth in the Recitals.
“Relevant Shares” means any Ordinary Shares held or beneficially owned by any Holder (including, for the avoidance of doubt, any ADSs representing Relevant Shares) at any given time during the term of this Agreement.
“Request” means a Shelf Registration Request or a Demand Registration Request, as applicable.
“Rule 144” means Rule 144 under the Securities Act, as in effect from time to time, or any successor rule thereto.
“SEC” means the Securities and Exchange Commission or any successor agency administering the Securities Act and the Exchange Act at the time.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Selling Expenses” means with respect to each registration or underwritten offering, (i) any stamp duty, stock transfer or similar transaction tax arising out of the sale of such Registrable Securities, (ii) any underwriting fees, discounts and selling commissions to be paid to any underwriter, agent, dealer or other financial intermediary, (iii) all fees and expenses incurred by the Holders (but not the Company) in connection with any “road show” for underwritten offerings of Registrable Securities, including such Holders’ own costs of travel, lodging and meals, (iv) fees and disbursements of all independent public accountants of the Company with respect to any “comfort” letter and updates thereof and (v) any fees and out of pocket expenses of any legal counsel, underwriter, agent, dealer or other financial intermediary for the Holders or its advisors.
“Shelf Registration” has the meaning set forth in Section 2(b).
“Shelf Registration Request” has the meaning set forth in Section 2(b).
“Shelf Registration Statement” means a Registration Statement on Form F-3 or any then appropriate form for an offering to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, as in effect from time to time, or any successor rule thereto.
“Shelf Takedown” has the meaning set forth in Section 2(f).
“Suspension” has the meaning set forth in Section 6(a).
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“Termination Date” means the earlier of (i) the Registration Rights Termination Date, (ii) the date on which the Relationship Agreement is terminated by the Company pursuant to clause 18.1(B)(ii), 18.1(C) or 18.1(D)(ii) of the Relationship Agreement or by e& pursuant to clause 18.1(F) of the Relationship Agreement and (iii) when the Relationship Agreement is terminated pursuant to any other clause of the Relationship Agreement, the time at which any e& Relevant Person takes any action that would constitute a material breach of the provisions in clauses 8 and 9 of the Relationship Agreement (such provisions to be construed in accordance with and within the context of the Relationship Agreement) had the Relationship Agreement not been terminated (it being understood that the termination of this Agreement is the sole consequence of such e& Relevant Person’s action which does not otherwise constitute a breach of this Agreement); provided that in the circumstances described in Section 7(i), the Termination Date shall be deemed not to have occurred until the earlier of (x) completion of the offering contemplated thereby and (y) 30 days after the commencement of such offering.
“transfer” means, when used as a noun, any direct or indirect, voluntary or involuntary, sale, contribution, offer, grant of option, disposal, pledge, charge, assignment, mortgage, grant of lien or any security interest or other transfer (including the creation of any derivative or synthetic interest, including a participation or other similar interest) and, when used as a verb, voluntarily to directly or indirectly sell, contribute, offer, grant any option, otherwise dispose of, pledge, charge, assign, mortgage, grant any lien or any security interest on or otherwise transfer, in any case, whether by operation of law or otherwise.
“Underwriting Agreement” means any agreement providing for a distribution of securities in which the distributor would be deemed to be an “underwriter” for purposes of Section 2(a)(11) of the Securities Act and the interpretations of the SEC thereunder.
“Underwritten Block Trade” has the meaning set forth in Section 2(f).
“underwritten offering” means an offering of securities pursuant to a Registration Statement conducted by one or more underwriters pursuant to the terms of an Underwriting Agreement.
“Underwritten Shelf Takedown” has the meaning set forth in Section 2(f).
“Underwritten Shelf Takedown Notice” has the meaning set forth in Section 2(f).
“Valid Suspension Reason” has the meaning set forth in Section 6(a).
“WKSI” means a “well known seasoned issuer” as defined in Rule 405 under the Securities Act.
(b)In addition to the above definitions, unless the context requires otherwise:
(i)any reference to any statute, regulation, rule or form as of any time shall mean such statute, regulation, rule or form as amended or modified and shall also include any successor statute, regulation, rule or form, as amended, from time to time; (ii)the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, in each case notwithstanding the absence of any express statement to such effect, or the presence of such express statement in some contexts and not in others;
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(iii)references to “Section” are references to Sections of this Agreement;
(iv)words such as “herein”, “hereof”, “hereinafter” and “hereby” when used in this Agreement refer to this Agreement as a whole; and
(v)references to “dollars” and “$” mean U.S. dollars.
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Section 2.Shelf Registration.
(a)Qualification to Register. The Company shall use its best efforts to remain qualified to register securities pursuant to a registration statement on Form F-3 (or any successor form) under the Securities Act and maintain its WKSI status.
(b)WKSI F-3 Filing. If the Company is eligible to use Form F-3 and is a WKSI, then at any time after the Filing Date following the receipt by the Company of a written notice of a request in respect of a Shelf Registration Statement (a “Shelf Registration Request”) from e&, the Company shall prepare and file with the SEC an Automatic Shelf Registration Statement for an offering to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, as in effect from time to time, or any successor rule thereto (a “Shelf Registration”) so that such Automatic Shelf Registration Statement becomes effective under the Securities Act on or before the later of (i) the date which is 30 days after the date the Company receives the Shelf Registration Request and (ii) the Lock-Up End Date.
(c)Non-WKSI F-3 Filing. If the Company is eligible to use Form F-3 but is a not a WKSI, then at any time after the Filing Date following the receipt by the Company of a Shelf Registration Request from e&, the Company shall (x) prepare and file with the SEC a Shelf Registration Statement for a Shelf Registration on or before the date which is 30 days after the date the Company receives the Shelf Registration Request and (y) use its commercially reasonable efforts to cause the Shelf Registration Statement to become effective under the Securities Act on or before the later of (i) the date which is 60 days after the date the Company receives the Shelf Registration Request and (ii) the Lock-Up End Date.
(d)Contents and Effectiveness. The Shelf Registration Statement shall provide for all legally permitted methods or combinations of methods of disposition thereunder of Registrable Securities, including firm commitment underwritten public offerings, bought deals, block trades, sales in connection with hedging transactions, direct sales, transactions on an agency basis, open market sales, and purchases or sales by brokers. The Company shall maintain the Shelf Registration Statement in accordance with the terms hereof and shall prepare and file with the SEC such amendments, including post-effective amendments, supplements, and documents to be incorporated by reference therein as may be necessary to keep the Shelf Registration Statement continuously effective and available for use in accordance with the terms hereof to permit all Holders named therein to sell their Registrable Securities included therein and in compliance with the provisions of the Securities Act until the earliest of (A) the date on which such Shelf Registration Statement expires (provided that the Company shall renew such Shelf Registration Statement upon such expiration) and (B) the Termination Date.
(e)Additional Registrable Securities: Additional Selling Stockholders. Subject to Section 6, at any time and from time to time that a Shelf Registration Statement is effective, if e& requests (i) the registration under the Securities Act of additional Registrable Securities pursuant to such Shelf Registration Statement or (ii) that an Holder be added or replaced as a selling shareholder in such Shelf Registration Statement, the Company shall as promptly as reasonably practicable amend or supplement the Shelf Registration Statement to cover such additional Registrable Securities and/or Holder.
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(f)Right to Effect Shelf Takedowns. Subject to Section 6 and after the Lock-Up End Date, at any time and from time to time when a Shelf Registration Statement is effective and until the Termination Date, each Holder shall be entitled to sell any or all of the Registrable Securities covered by such Shelf Registration Statement (a “Shelf Takedown”), but only upon not less than fifteen (15) Business Days’ prior written notice by e& (an “Underwritten Shelf Takedown Notice”) to the Company if such takedown is to be underwritten (an “Underwritten Shelf Takedown”). Upon receipt of an Underwritten Shelf Takedown Notice, the Company shall, as promptly as reasonably practicable (and in any event within such fifteen (15) Business Days’ notice period) use its reasonable best efforts to effect such Underwritten Shelf Takedown. The Company shall, at the request of e&, file any prospectus supplement or, if the applicable Shelf Registration Statement is an Automatic Shelf Registration Statement, any post-effective amendments and otherwise take any action necessary to include therein all disclosure and language reasonably deemed necessary or advisable by e& to effect such Underwritten Shelf Takedown. e& shall be entitled to issue an Underwritten Shelf Takedown Notice only if the number of Registrable Securities included in such Underwritten Shelf Takedown is not lower than the Minimum Share Threshold at the time of the Underwritten Shelf Takedown Notice (based on the then-current market prices and number of Outstanding Shares). Notwithstanding the foregoing, if e& wishes to engage in an underwritten “block trade”, “overnight block trade”, “bought deal” or similar transaction or other transaction with a 2-day or less marketing period (collectively, an “Underwritten Block Trade”) off of a Shelf Registration Statement, then e& only needs to notify the Company of the Underwritten Block Trade five (5) Business Days prior to the day such offering is to commence and the Underwritten Block Trades are not subject to any minimum requirement of Registrable Securities being sold pursuant to such Underwritten Block Trades. For the avoidance of doubt, Underwritten Shelf Takedowns (excluding Underwritten Block Trades) constitute a Demand Registration such that Section 3, including the limit on the number of Demand Registrations per year, shall apply to an Underwritten Shelf Takedown. For the avoidance of doubt, e& shall be entitled to request (and the Company shall be required to effect) Demand Registrations (including Underwritten Shelf Takedowns but excluding Underwritten Block Trades) no more frequently than twice per calendar year, save that the Company shall act reasonably and discuss in good faith any more frequent requests where e& reasonably considers that the same would be necessary or desirable in light of general market conditions. e& shall give the Company prompt written notice of the consummation of any Shelf Takedown that is not underwritten.
(g)Priority on Underwritten Shelf Takedowns. The Company may include Ordinary Shares other than Registrable Securities in an Underwritten Shelf Takedown for any accounts (including for the account of the Company) on the terms provided below, but only with the consent of the managing underwriters of such offering and e&. Subject to such consent having been received, if the managing underwriters of such Underwritten Shelf Takedown advise the Company and e& in writing that, in their opinion, the number of Ordinary Shares proposed to be included in such Underwritten Shelf Takedown, including all Registrable Securities and all other Ordinary Shares proposed to be included in such offering, exceeds the number of Ordinary Shares which can reasonably be expected to be sold in such offering without adversely affecting the success of the offering (including the price per share, timing or distribution of the Ordinary Shares proposed to be sold in such offering), the Company shall include in such Underwritten Shelf Takedown: (i) first, the Registrable Securities proposed to be sold by e& and the other Holders in such offering, and (ii) second, any Ordinary Shares proposed to be included therein by any other Persons (including Ordinary Shares to be sold for the account of the Company and/or any other holders of Ordinary Shares), allocated, in the case of this clause (ii), among such Persons in such manner as the Company may determine.
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The provisions of this paragraph (g) apply only to an offering that e& has requested be an Underwritten Shelf Takedown (excluding any Underwritten Block Trades).
(h)Selection of Underwriters. e& shall be entitled to select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such Underwritten Shelf Takedown, subject to, in respect of Underwritten Shelf Takedown which are not Underwritten Block Trades, the approval of the Company (not be unreasonably withheld, conditioned or delayed) and (ii) manage and direct all decisions required for effecting such Underwritten Shelf Takedown. The provisions of this paragraph (h) apply only to an offering that e& has requested be an Underwritten Shelf Takedown.
Section 3.Demand Registrations.
(a)Right to Demand Registrations. If, at any time after the Lock-Up End Date and prior to the Termination Date, the Company is not eligible to use Form F-3 (or fails to comply with its obligations pursuant to Section 2(a), (b), (c) or (d)), e&, by providing written notice to the Company, may request that it and the other Holders shall be permitted to sell all or part of their Registrable Securities pursuant to a Registration Statement on Form F-1 (a “Demand Registration”). Each request for a Demand Registration (a “Demand Registration Request”) shall specify the number of Registrable Securities intended to be offered and sold and the relevant selling Holders pursuant to the Demand Registration and the intended method of distribution thereof, including whether it is intended to be an underwritten offering. As promptly as practicable and no later than forty-five (45) days after receipt of a Demand Registration Request, the Company shall file a Registration Statement on Form F-1 covering all Registrable Securities that have been requested to be registered in the Demand Registration Request. The Company shall use its commercially reasonable efforts to cause the Registration Statement filed pursuant to this Section 3(a) to be declared effective by the SEC or otherwise become effective under the Securities Act within 60 days from the original filing date thereof. Notwithstanding the foregoing, the Company shall not be required to effect a Demand Registration on Form F-1 unless the number of Registrable Securities included in such Demand Registration is not lower than the Minimum Share Threshold at the time of the Demand Registration (based on the then-current market prices and number of Outstanding Shares). e& shall be entitled to request (and the Company shall be required to effect) Demand Registrations (including Underwritten Shelf Takedowns but excluding Underwritten Block Trades) no more frequently than twice per calendar year, save that the Company shall act reasonably and discuss in good faith any more frequent requests where e& reasonably considers that the same would be necessary or desirable in light of general market conditions.
(b)Effectiveness and Withdrawal. Upon the date of effectiveness of any Demand Registration for an underwritten offering, the Company shall keep the Registration Statement filed pursuant to Section 3(a) effective (including by preparing and filing with the SEC such amendments, including post-effective amendments, and supplements as may be necessary) until all of the Registrable Securities covered by such Demand Registration have been sold by the participating Holder(s). e& may, by written notice to the Company, withdraw all or part of the Registrable Securities from a Demand Registration at any time prior to the effectiveness of the applicable Registration Statement, it being agreed that in the event of a full withdrawal, or a partial withdrawal that would result in the number of Registrable Securities included in such Demand Registration being lower than the Minimum Share Threshold at the time of such withdrawal (based on the then-current market prices and number of Outstanding Shares), the Company may (in its sole discretion) cease all efforts to seek effectiveness of the applicable Registration Statement, unless, in the event of a partial withdrawal only, the Company intends to effect a primary offering of securities pursuant to such Registration Statement.
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(c)Underwritten Offerings. e& shall be entitled to request an underwritten offering pursuant to a Demand Registration, in which case it shall be entitled to (i) select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such offering, subject to the approval of the Company (not be unreasonably withheld, conditioned or delayed) and (ii) manage and direct all decisions required for effecting such Demand Registration. The provisions of this paragraph (c) shall not apply in the event e& conducts a full withdrawal, or a partial withdrawal that would result in the number of Registrable Securities included in the Demand Registration being lower than the Minimum Share Threshold at the time of such withdrawal (based on the then-current market prices and number of Outstanding Shares).
(d)Priority on Underwritten Demand Registrations. The Company may include Ordinary Shares other than Registrable Securities in a Demand Registration for any accounts (including for the account of the Company) on the terms provided below if such Demand Registration is an underwritten offering and only with the consent of the managing underwriters of such offering and e&. Subject to such consent having been received, if the managing underwriters of the requested Demand Registration advise the Company and e& that, in their opinion, the number of Ordinary Shares proposed to be included in such Demand Registration, including all Registrable Securities and all other Ordinary Shares proposed to be included in such offering, exceeds the number of Ordinary Shares which can reasonably be expected to be sold in such offering without adversely affecting the success of the offering (including the price per share, timing or distribution of the Ordinary Shares proposed to be sold in such offering), the Company shall include in such Demand Registration: (i) first, the Registrable Securities proposed to be sold by e& and the other Holders in such offering and (ii) second, any Ordinary Shares proposed to be included therein by any other Persons (including Ordinary Shares to be sold for the account of the Company and/or any other holders of Ordinary Shares), allocated, in the case of this clause (ii), among such Persons in such manner as the Company may determine. The provisions of this paragraph (d) apply only to an offering that a Holder has requested be an underwritten Demand Registration.
Section 4.Piggyback Registrations.
(a)Subject to Section 4(b), whenever after the Lock-Up End Date but prior to the Termination Date the Company proposes to register any Ordinary Shares under the Securities Act (other than a registration (i) pursuant to a Registration Statement on Form S-8 (or other registration solely relating to an offering or sale to employees or directors of the Company pursuant to any employee stock plan or other employee benefit arrangement), (ii) pursuant to a Registration Statement on Form F-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), (iii) in connection with any dividend or distribution reinvestment or similar plan, or (iv) in connection with any securities issuable or deliverable upon the conversion or exchange of any convertible or exchangeable debt instruments), whether for its own account or for the account of one or more shareholders of the Company (other than the Holders of Registrable Securities) and the form of Registration Statement to be used may be used for any registration of Registrable Securities (a “Piggyback Registration”), the Company shall give at least fifteen (15) Business Days’ prior written notice to e& of its intention to effect such a registration and, subject to Sections 4(b), shall use its commercially reasonable efforts to include in such Registration Statement and in any offering of Ordinary Shares to be made pursuant to such Registration Statement that number of Registrable Securities requested to be sold in such offering by e& for its account or the account of any other Holder; provided that the Company has received a written request for inclusion therein from e& no later than six (6) Business Days after the date on which the Company has given notice of the Piggyback Registration to e&.
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This Agreement alone shall not be interpreted to impose on the Company any obligation to proceed with any Piggyback Registration and the Company may, in its sole discretion, abandon, terminate and/or withdraw a Piggyback Registration for any reason at any time prior to the pricing thereof. If a Piggyback Registration is effected pursuant to a Registration Statement on Form F-3 or the then appropriate form for an offering to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act or any successor rule thereto (a “Piggyback Shelf, Registration Statement”), e& shall be notified by the Company of and shall have the right, but not the obligation, to participate together with the other Holders in any offering pursuant to such Piggyback Shelf Registration Statement (a “Piggyback Shelf Takedown”), subject to the same limitations that are applicable to any other Piggyback Registration as set forth above.
(b)Priority on Primary Piggyback Registrations. If a Piggyback Registration or Piggyback Shelf Takedown, in both cases in which e& and the other Holders are participating, is initiated as a primary underwritten offering on behalf of the Company and the managing underwriters of the offering advise the Company that, in their opinion, the number of Ordinary Shares proposed to be included in such offering, including all Registrable Securities and all other Ordinary Shares proposed to be included in such offering, exceeds the number of Ordinary Shares that can reasonably be expected to be sold in such offering without adversely affecting the success of the offering (including the price per share, timing or distribution of the Ordinary Shares to be sold in such offering), the Company shall include in such Piggyback Registration or Piggyback Shelf Takedown: (i) first, the number of Ordinary Shares that the Company proposes to sell in such offering and (ii) second, the Registrable Securities proposed to be sold by e& and the other Holders in such offering.
(c)Selection of Underwriters. If a Piggyback Registration or Piggyback Shelf Takedown is initiated as a primary or secondary underwritten offering, the Company shall be entitled to (i) select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such offering and take into reasonable consideration any request by e& to select a co-managing underwriter (ii) manage and direct all decisions required for effecting such Piggyback Registration or Piggyback Shelf Takedown.
(d)Withdrawal. e& shall have the right to withdraw its request for inclusion of its and/or the other Holders’ Registrable Securities in any registration statement pursuant to this Section 4 by giving written notice to the Company of its request to withdraw; provided, however, that such request must be made in writing at least one Business Day prior to the earlier of the execution by the selling Holders of the Underwriting Agreement or the execution by such selling Holders of the custody agreement with respect to such registration.
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Section 5.Holdback Agreements.
(a)To the extent requested by the managing underwriter(s) for an underwritten offering pursuant to Sections 2 or 3 of this Agreement, each Holder that, together with its Affiliates, beneficially owns more than one (1) percent of the then-outstanding Ordinary Shares (including Ordinary Shares represented by ADSs) shall not, and shall cause its subsidiaries not to, effect any registered sale of Ordinary Shares under the Securities Act or other public distribution of Ordinary Shares during such period as is reasonably requested by the managing underwriter(s) (which period shall in no event be longer than three (3) days prior to and ninety (90) days (thirty days in the case of an Underwritten Block Trade) after the pricing of such offering), and each Holder shall sign customary “lock up” agreements in form and substance, and with exceptions that are customary for an underwritten offering of such type and size.
(b)To the extent requested by the managing underwriter(s) for an underwritten offering pursuant to Sections 2 or 3 of this Agreement, the Company shall not, and shall cause its subsidiaries not to, effect any registered sale of Ordinary Shares under the Securities Act or other public distribution of equity during such period as is reasonably requested by the managing underwriter(s) (which period shall in no event be longer than three (3) days prior to and ninety (90) days (thirty days in the case of an Underwritten Block Trade) after the pricing of such offering), and the Company shall sign customary “lock up” agreements in form and substance, and with exceptions that are customary for an underwritten offering of such type and size. For the avoidance of doubt, the provisions of this Section 5(a) shall apply only in respect of an underwritten offering and only if the number of Registrable Securities to be sold in the offering is not lower than the Minimum Share Threshold at the time of the Underwritten Shelf Takedown Notice or Demand Registration, as applicable, (based on the then-current market prices and number of Outstanding Shares).
Section 6.Suspensions.
(a)Notwithstanding any other provision of this Agreement, the Company shall be entitled to delay or suspend the filing, effectiveness or use of a Registration Statement or Prospectus (including by withdrawing or declining to amend any Registration Statement or Prospectus that has been filed or by declining to take any other actions otherwise required hereunder with regard to any Registration Statement or Prospectus) (a “Suspension”) (a) at such times as are required by law (including the EU Market Abuse Regulation) as reasonably determined by the Company based on the advice of outside counsel, (b) if the Company determines in good faith that the participation of the Company would reasonably be expected to (i) require public disclosure of material non-public information that would not otherwise be required to be disclosed and (ii) such disclosure of material non-public information would have a material adverse effect on any pending negotiation to effect a material merger, acquisition, disposition, financing, reorganization, recapitalization or other similar extraordinary transaction or (c) within ninety (90) days after the effective date of any Piggyback Registration (each of (a), (b) and (c), a “Valid Suspension Reason”). The Company shall provide written notice to e& of the commencement and termination of any Suspension (and any withdrawal of a Registration Statement pursuant to this Section 6), which notice shall describe, to the extent permitted by applicable laws, the reasons therefor.
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After becoming aware of the existence of a Suspension pursuant to this Section 6, e& shall keep the existence of such Suspension confidential and shall immediately discontinue (and direct any other Holder making offers or sales of Registrable Securities to immediately discontinue) offers and sales of Registrable Securities pursuant to such Registration Statement or Prospectus until such time as it is advised in writing by the Company that the use of the Registration Statement or Prospectus may be resumed and, if applicable, is furnished by the Company with a supplemented or amended Prospectus as contemplated by Section 7(a)(vi).
(b)Without the prior written consent of e&, in no event shall a Suspension or Suspensions be in effect for (x) an aggregate of 60 days or more in any twelve-month period or (y) more than five (5) days after the relevant Valid Suspension Reason ceases to exist.
(c)Notwithstanding anything in this Agreement to the contrary, the Company shall not be permitted to file a registration statement to register for sale, or to conduct any registered securities offerings (including any “take-downs” off of an effective shelf registration statement) of, any of its securities either for its own account or for the account of any security holder or holders for so long as a Suspension is effective.
Section 7.Registration Procedures.
(a)If and whenever the Company is required to effect the registration of any Registrable Securities pursuant to this Agreement, the Company shall, as promptly as practicable, effect the registration and facilitate the offering and sale of such Registrable Securities in accordance with the intended methods of disposition thereof and, pursuant thereto, the Company shall, as applicable:
(i)prepare and file with the SEC a Registration Statement with respect to such Registrable Securities, make all required filings required in connection therewith and (if the Registration Statement is not automatically effective upon filing) use its commercially reasonable efforts to have the Registration Statement declared effective by the SEC as promptly as practicable after filing;
(ii)prepare and file with the SEC such amendments and supplements to, or any document incorporated by reference in, or otherwise amending or supplementing, any Registration Statement and the Prospectus used in connection therewith as may be necessary to comply with the applicable requirements of the Securities Act and to keep such Registration Statement effective for the relevant period hereunder; provided that as promptly as reasonably practicable before filing any of the documents referred to in sub-clauses (i) and (ii) of this Section 7, or before sending a response to an SEC comment letter, the Company will furnish to e& and the managing underwriters participating to the offering, if any, copies of all such documents proposed to be filed or otherwise delivered to the SEC (including all exhibits thereto and each document incorporated by reference therein to the extent then required by the rules and regulations of the SEC), which documents will be subject to their reasonable review and reasonable comment (including any reasonable objections to any information pertaining to the Holders and their plan of distribution and otherwise to the extent necessary, if at all, to complete the filing or maintain the effectiveness thereof) and the Company shall consider in good faith all reasonable comments received at least one (1) Business Day prior to the respective document’s filing by e&, the managing underwriters participating to the offering, if any, and their legal counsel and shall not include in any such filing information to which e& objects in good faith;
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(iii)furnish to e&, such number of copies of the Prospectus included in such Registration Statement (including each preliminary Prospectus) and any supplement thereto, each free writing prospectus utilized in connection therewith, and such other documents as e& may reasonably request, including in order to facilitate the disposition of the Registrable Securities covered by such Registration Statement in conformity with the requirements of the Securities Act;
(iv)use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such U.S. jurisdiction(s) as e& or any managing underwriter reasonably requests and do any and all other acts and things that may be necessary or reasonably advisable to enable the selling Holders and each underwriter, if any, to consummate the disposition of Registrable Securities in such jurisdiction(s); provided that the Company shall not be required to qualify generally to do business, subject itself to taxation or consent to general service of process in any jurisdiction where it would not otherwise be required to do so but for its obligations pursuant to this Section 7(a)(iv);
(v)as promptly as reasonably practicable notify e& and the managing underwriters of any underwritten offering, if any:
(1)each time the Registration Statement, any pre-effective amendment thereto, the Prospectus or any Prospectus supplement or any post-effective amendment to the Registration Statement has been filed and, with respect to the Registration Statement or any post-effective amendment thereto, when the same has become effective;
(2)of any request by the SEC for amendments or supplements to the Registration Statement or the Prospectus (including any documents to be incorporated therein) or for any additional information regarding the Holders (and provide to e& copies of all correspondence with the SEC);
(3)of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceedings for any such purpose; and
(4)of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction;
(vi)other than during a Suspension, notify e&, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the occurrence of any event that would cause the Prospectus included in such Registration Statement to contain an untrue statement of a material fact or to omit any fact necessary to make the statements made therein not misleading in light of the circumstances under which they were made, and, at the request of e&, prepare and file with the SEC, as soon as practicable, a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made;
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(vii)in the event of the issuance of any stop order suspending the effectiveness of a Registration Statement, any order suspending or preventing the use of any related Prospectus or any suspension of the qualification or exemption from qualification of any Registrable Securities for sale in any jurisdiction, use its commercially reasonable efforts to promptly obtain the withdrawal or lifting of any such order or suspension;
(viii)not file or make any amendment to any Registration Statement with respect to any Registrable Securities, any amendment of, or supplement to the Prospectus used in connection therewith or any document incorporated by reference therein, or use any free writing prospectus, that refers to any Holder covered thereby by name or otherwise identifies such Holder as the holder of any securities of the Company without the consent of e& (such consent not to be unreasonably withheld, conditioned or delayed) unless the Company reasonably determines (A) disclosure of such information is necessary to comply with federal or state securities laws, (B) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (C) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (D) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement known to the Company, and prior to the filing of any document referred to in this Section 7(a)(viii), provide copies of such document to counsel for e& and make the Company’s representatives reasonably available for discussion of such document and make such changes in such document concerning the information regarding the Holders contained therein prior to the filing thereof as counsel for e& may reasonably request;
(ix)take all steps reasonably necessary to permit the deposit of each Holder’s Registrable Securities that are not then held in the form of ADSs into such depositary receipt facility as the Company may then sponsor at the election of e&, and to prepare and file with the SEC any amendment to an existing Registration Statement on Form F-6, if necessary, to cover any ADSs held by such Holder or that will be held by any purchaser of Registrable Securities to be sold under any Registration Statement, it being understood that any customary fees, charges and taxes payable in connection with any deposit of Registrable Securities into a depositary receipt facility then sponsored by the Company shall be borne by e&;
(x)use its commercially reasonable efforts to cause all such ADSs constituting Registrable Securities which are registered to be listed on each securities exchange on which the ADSs representing the Ordinary Shares are then listed and to be eligible and remain eligible for registration of the ADSs pursuant to Form F-6; (xi)cooperate with the relevant Holders and the Depositary to facilitate the timely delivery of ADSs (in book entry or certificated form) to be delivered pursuant to Section 7(a)(ix) above, which ADSs shall be free of all restrictive legends;
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(xii)(A) comply (and continue to comply) with the requirements of any self-regulatory organization applicable to the Company, including all corporate governance requirements, (B) use commercially reasonable efforts to cooperate with e& and the managing underwriters participating in any offering contemplated hereby, if any, and their respective counsel in connection with the preparation and filing of any applications, notices, registrations and responses to requests for additional information with FINRA (including using commercially reasonable efforts to obtain FINRA’s pre-clearance or pre-approval of the Registration Statement and applicable Prospectus upon filing with the SEC), the London Stock Exchange, the Nasdaq Stock Market, or any other national securities exchange on which the Registrable Securities are listed, and (D) use its reasonable best efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other Governmental Entities as may be necessary to enable the Holders or the managing underwriters, if any, to consummate the disposition of such Registrable Securities;
(xiii)to the extent required by the rules and regulation of FINRA, retain a Qualified Independent Underwriter acceptable to e& and the managing underwriters participating to the offering;
(xiv)provide a transfer agent and registrar (which may be the same entity) for all such Registrable Securities not later than the effective date of such Registration Statement;
(xv)in the case of an underwritten offering in which a Holder participates pursuant to a Demand Registration, a Piggyback Registration or a Shelf Registration, upon reasonable notice and at reasonable times during normal business hours, and to the extent not prohibited by applicable law, make reasonably available for inspection by the managing underwriter(s) of such underwritten offering pursuant to such Registration Statement and one law firm and one accounting firm acting for all such managing underwriter(s), pertinent corporate documents and financial and other records of the Company, its subsidiaries and, to the extent practicable, material joint ventures, cause the Company’s officers, employees and independent accountants to supply information reasonably requested by such managing underwriter(s), law firm or accounting firm in connection with such registration or offering, cause the senior management of the Company and the Company’s independent accountants to make themselves available at mutually convenient times, in each of the aforementioned cases, for customary due diligence; provided, however, that any Person gaining access to such records and other information or personnel of the Company pursuant to this Section 7(a)(xv) shall (i) reasonably cooperate with the Company to limit any resulting disruption to the Company’s business and (ii) protect the confidentiality of any information regarding the Company which the Company determines in good faith to be confidential and of which determination such Person is notified, unless such information (A) is or becomes known to the public without a breach of this Agreement, (B) is or becomes available to such Person on a non-confidential basis from a source other than the Company without a breach of this Agreement or any other agreement of which such Person is aware, (C) is independently developed by such Person, (D) is requested or required by a deposition, interrogatory, request for information or documents by a Governmental Entity, subpoena or similar process or (E) is otherwise required to be disclosed by law;
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(xvi)in the case of an underwritten offering in which a Holder participates pursuant to a Demand Registration, a Piggyback Registration or a Shelf Registration, obtain opinions from the Company’s counsel, including local and/or regulatory counsel, and a “comfort” letter and updates thereof from the independent public accountants who have certified the financial statements of the Company (and/or any other financial statements) included or incorporated by reference in such Registration Statement, in each case, in customary form and covering such matters as are customarily covered by such opinions and “comfort” letters delivered to underwriters in underwritten public offerings; and furnish to e& a copy of such opinions and letters addressed to such underwriters;
(xvii)comply (and continue to comply) with all applicable rules and regulations of the SEC (including maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) in accordance with the Exchange Act), and make generally available to its security holders (including by way of filings with the SEC), as soon as reasonably practicable a consolidated earnings statement (in a form that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder or any successor rule thereto) covering the period of at least 12 months beginning with the first day of the Company’s first full fiscal year after the effective date of the applicable Registration Statement, which requirement shall be deemed satisfied if the Company timely files complete and accurate information on Forms 20-F and 6-K under the Exchange Act and otherwise complies with Rule 158 under the Securities Act or any successor rule thereto;
(xviii)take no direct or indirect action prohibited by Regulation M under the Exchange Act;
(xix)in the case of an underwritten offering in which a Holder participates pursuant to a Demand Registration, a Piggyback Registration or a Shelf Registration, (A) if at any time the information conveyed to a purchaser at the time of sale includes any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, as promptly as reasonably practicable file with the SEC such amendments or supplements to such information as may be necessary so that the statements as so amended or supplemented will not, in the light of the circumstances, be misleading, and (B) as promptly as reasonably practicable incorporate in a supplement to the Prospectus or a post-effective amendment to the Registration Statement such other information as is reasonably requested by e& or the managing underwriter(s) participating in such underwritten offering to be included therein, the purchase price for the securities to be paid by the underwriters and any other applicable terms of such underwritten offering, and promptly make all required filings of such supplement or post-effective amendment;
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(xx)without limiting the provisions in Section 5 and Section 8, in the case of an underwritten offering in which a Holder participates pursuant to a Demand Registration, a Piggyback Registration or a Shelf Registration, enter (and cause its directors and officers to enter) into a customary underwriting agreement for offerings of that kind, containing such provisions (including provisions for indemnification, opinions of counsel and comfort letters and lock-up agreements not to exceed ninety (90) days, if requested by the managing underwriters) and take all such other customary and reasonable actions as the managing underwriters of such offering may reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including causing members of senior management of the Company to make themselves available at reasonable times and places to participate in “road shows” or other marketing efforts that the managing underwriter(s) determines are necessary to effect the offering and otherwise assist the managing underwriters in the marketing of the Registrable Securities);
(xxi)without limiting the generality of Section 13, cooperate with the Holders and the managing underwriters, if any, to facilitate the timely preparation and delivery of book-entry shares or certificates not bearing any restrictive legends representing the Registrable Securities to be sold, and cause such Registrable Securities to be issued in such denominations and registered in such names in accordance with the Underwriting Agreement at least two (2) Business Days prior to any sale of Registrable Securities to the underwriters or, if not an underwritten offering, in accordance with the instructions of e& at least two (2) Business Days prior to any sale of Registrable Securities and instruct any transfer agent and registrar of Registrable Securities to release any stop transfer orders in respect thereof (and, in the case of Registrable Securities registered on a Shelf Registration Statement, at the request of e&, prepare and deliver book-entry shares or certificates representing such Registrable Securities not bearing any restrictive legends and deliver or cause to be delivered an opinion or instructions to the transfer agent in order to allow such Registrable Securities to be sold from time to time);
(xxii)to the extent the Company has filed an Automatic Shelf Registration Statement which covers Registrable Securities and has not paid the filing fee covering those Registrable Securities at the time the Automatic Shelf Registration Statement is filed, pay such fee at such time or times as the Registrable Securities are to be sold in compliance with the SEC rules; and
(xxiii)without limiting any of the Company’s obligations set forth in this Agreement, if the Company files any Shelf Registration Statement for the benefit of the holders of any of its Ordinary Shares other than the Holders, and the Holders do not request that their Registrable Securities be included in such Shelf Registration Statement, the Company agrees that it shall include in such registration statement such disclosures as may be required by Rule 430B under the Securities Act (referring to the unnamed selling security holders in a generic manner by identifying the initial offering of the securities to the Holders) in order to ensure that the Holders may be added at e&’s request to such Shelf Registration Statement at a later time through the filing of a prospectus supplement rather than a post-effective amendment; provided that the foregoing obligation shall only apply to the extent that the Company is eligible to rely on Rule 430B under the Securities Act with respect to selling security holder disclosures.
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(b)Subject to Section 11(c), e& shall furnish to the Company in writing such information regarding itself and any relevant selling Holders and the distribution proposed by it as is required for use in any such Registration Statement or Prospectus, including responses to questionnaires as are customary for similar transactions, and which the Company may reasonably request or as may be required by applicable securities laws and regulations, and as shall be required in connection with any registration, qualification or compliance referred to in this Agreement. e& agrees to notify the Company as promptly as reasonably practicable of any inaccuracy or change in information previously furnished to the Company or of the happening of any event, in either case as a result of which any Prospectus contains an untrue statement of a material fact regarding e& or any other selling Holder or the distribution of such Registrable Securities or omits to state any material fact regarding e& or any other selling Holder or the distribution of such Registrable Securities required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and to furnish to the Company promptly any additional information required to correct and update any previously furnished information or required such that such Prospectus shall not contain, with respect to e& or any other selling Holder or the distribution of such Registrable Securities, an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(c)e& agrees by having the Relevant Shares treated as Registrable Securities hereunder that, upon being advised in writing by the Company of the occurrence of an event pursuant to Section 7(a)(vi), it will (and will cause any other Holder to) immediately discontinue (and direct any other Persons making offers and sales of Registrable Securities to immediately discontinue) offers and sales of Registrable Securities pursuant to any Registration Statement (other than those pursuant to a plan that is in effect prior to such time and that complies with Rule 10b5-1 of the Exchange Act) until it is advised in writing by the Company that the use of the Prospectus may be resumed and is furnished with a supplemented or amended Prospectus as contemplated by Section 7(a)(vi), and, if so directed by the Company, e& will deliver to the Company all copies, other than permanent file copies then in e&’s possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice.
(d)e& shall provide written notice to the Company as soon as practicable, and in any case within five (5) Business Days, once e& or any Holder ceases to own any Registrable Securities because of one or more transfers or other dispositions. The Company shall not disclose any information regarding the Holders’ holdings of Registrable Securities communicated to the Company in accordance with this Section 7(d) to any other Persons, other than its counsel.
(e)e& agrees that neither it nor any Holder will prepare or have prepared on its or their behalf or used or refer to, any issuer free writing prospectus without the prior written consent of the Company and, in connection with any underwritten offering, the underwriters.
(f)e& shall, and shall ensure that each Holder does, comply with the Securities Act and the Exchange Act and all applicable state securities laws in connection with the registration and the disposition of Registrable Shares pursuant hereto.
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(g)The Company may prepare and deliver an issuer free writing prospectus (as such term is defined in Rule 405 under the Securities Act) in lieu of any supplement to a Prospectus, and references herein to any “supplement” to a Prospectus shall include any such issuer free writing prospectus, provided that the Company shall use its reasonable best efforts to ensure that any free writing prospectus utilized in connection with any registration or offering covered by this Agreement complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related Prospectus and related documents, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(h)It is understood and agreed that if, solely as a result of unresolved SEC comments, the Company has been unable to file and obtain, or maintain, effectiveness of a Registration Statement or any amendment or supplement thereto or to cause any such document to become or remain effective or usable within or for any particular period of time as provided in Section 2, Section 3 or this Section 7, the Company shall not be in breach of this Agreement; provided that the Company has used since the date of the first Request hereunder, and continues to use, its best efforts to resolve such unresolved SEC comments as promptly as is practicable.
(i)It is further understood and agreed that the Company shall not have any obligations under this Section 7 at any time on or after the Termination Date, unless an underwritten offering initiated pursuant to this Agreement has been priced but not completed prior to the Registration Rights Termination Date, in which event the Company’s obligations under this Section 7 shall continue with respect to such offering until it is so completed (but not more than 30 days after the commencement of the offering).
Section 8.Underwritten Offerings.
(a)In the event of an underwritten offering in which a Holder participates pursuant to a Demand Registration or a Shelf Registration, the Company shall enter into a customary Underwriting Agreement with the underwriters. Such Underwriting Agreement shall (i) be satisfactory in form and substance to e&, (ii) contain terms not inconsistent with the provisions of this Agreement and (iii) contain such representations and warranties by, and such other agreements on the part of, the Company and such other terms as are generally prevailing in agreements of that type, including indemnities and contribution agreements on substantially the same terms as those contained herein or as otherwise customary for the underwriters. Every selling Holder shall be a party to such underwriting agreement, provided that under such underwriting agreement: (i) each selling Holder shall not be required to make any representations or warranties to or agreements with the Company or the underwriters other than customary representations of a selling shareholder, including representations, warranties or agreements regarding its ownership of and title to the Registrable Securities, any written information specifically provided by such selling Holder for inclusion in the Registration Statement and its intended method of distribution, and (ii) any liability of such selling Holder to any underwriter or other Person under such underwriting agreement for indemnity, contribution or otherwise shall in no case be greater than the amount of the net proceeds received by such selling Holder upon the sale of Registrable Securities pursuant to such Registration Statement (after deducting underwriters’ discounts and commissions) and in no event shall relate to anything other than information about such selling Holder specifically provided by e& for use in the Registration Statement and prospectus and shall otherwise contain terms no less advantageous to such selling Holders than those provided in Section 11 (the above clauses (i) and (ii) collectively, the “Acceptable Terms”).
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(b)In the case of an underwritten offering in which a Holder participates pursuant to a Piggyback Registration, if the Company shall have determined to enter into an Underwriting Agreement in connection therewith, all of the selling Holders’ Registrable Securities to be included in such registration shall be subject to such Underwriting Agreement (provided such Underwriting Agreement reflects the Acceptable Terms (as defined above)).
Section 9.Registration and Selling Expenses.
(a)Subject to the remainder of this Section 9, the Company shall pay directly or, if incurred by e& or any Holder, promptly reimburse to e&, the Registration Expenses applicable to the registration or sale by or for the benefit of e& or any selling Holder. e& will be responsible for any Selling Expenses.
(b)The obligation of the Company to bear and pay for expenses of any registration proceeding under Section 9(a) shall apply irrespective of whether a registration, once properly demanded or requested, becomes effective or is withdrawn or suspended; provided that the Registration Expenses for any Registration Statement withdrawn solely at the request of e& (unless withdrawn following commencement of a Suspension) shall be borne by e&.
Section 10.Confidentiality. The provisions under clauses 14.1 and 14.2 of the Relationship Agreement shall apply to any confidential information made available under this Agreement and shall be deemed to be incorporated in this letter as if set out in full, mutatis mutandis.
Section 11.Indemnification; Contribution.
(a)The Company shall, to the fullest extent permitted by law, indemnify and hold harmless each Holder and any Person which is or might be deemed to be a “controlling person” of each Holder or any of its subsidiaries within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each such Person, a “Controlling Person”), and their respective directors, officers and employees (each of the foregoing, together with such Holders, a “Covered Person”) against any losses, claims, actions, damages, liabilities and expenses, joint or several, to which such Covered Person may become subject under the Securities Act, the Exchange Act, any state blue sky securities laws, any equivalent non-U.S.
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securities laws, common law or otherwise, insofar as such losses, claims, actions, damages, liabilities or expenses arise out of or are based upon (i) any untrue or alleged untrue statement of a material fact contained in or incorporated by reference in any such Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule 405 under the Securities Act or any successor rule thereto) or any amendment thereof or supplement thereto or any document incorporated by reference therein, (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, (iii) any untrue statement or alleged untrue statement of a material fact in the information conveyed by the Company to any purchaser at the time of the sale to such purchaser, or the omission or alleged omission to state therein a material fact required to be stated therein or (iv) any violation or alleged violation by the Company of the Securities Act or any other similar federal or state securities laws or any rule or regulation promulgated thereunder applicable to the Company and relating to any action or inaction required of the Company in connection with any registration of securities, and the Company shall reimburse such Covered Persons for any legal or other documented expenses (including counsel fees) reasonably incurred by such Covered Person in connection with investigating, defending or settling any such loss, claim, action, damage or liability; provided that, subject to Section 11(c), the Company shall not be so liable in any such case to the extent that any loss, claim, action, damage, liability or expense arises out of or is based upon any such untrue statement or alleged untrue statement, or omission or alleged omission, made or incorporated by reference in any such Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule 405 under the Securities Act or any successor rule thereto) or any amendment thereof or supplement thereto or any document incorporated by reference therein in reliance upon, and in conformity with, written information prepared and furnished to the Company by such Covered Person expressly for use therein. This indemnity shall be in addition to any liability the Company may otherwise have.
(b) Subject to Section 11(c), in connection with any registration in which a Holder of Registrable Securities is participating, e& shall furnish to the Company in writing such information regarding itself and any Holder as is required for use in any such Registration Statement or Prospectus and shall, to the fullest extent permitted by law, indemnify and hold harmless the Company, its directors and officers, employees, agents and any Person which is or might be deemed to be a Controlling Person against any losses, claims, actions, damages, liabilities and expenses, joint or several, to which they or any of them may become subject under the Securities Act, the Exchange Act, any state blue sky securities laws, any equivalent non-U.S. securities laws, common law or otherwise, insofar as such losses, claims, actions, damages, liabilities or expenses arise out of or are based upon (i) any untrue or alleged untrue statement of a material fact contained in the Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule 405 under the Securities Act or any successor rule thereto) or any amendment thereof or supplement thereto or any document incorporated by reference therein, or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but, in the case of each of clauses (i) and (ii), only to the extent that such untrue statement or alleged untrue statement, or omission or alleged omission, is made in such Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule 405 under the Securities Act or any successor rule thereto) or any amendment thereof or supplement thereto or any document incorporated by reference therein in reliance upon, and in conformity with, written information prepared and furnished to the Company by any Holder expressly for use therein, and e& shall reimburse the Company, its directors and officers, employees, agents and any Person which is or might be deemed to be a Controlling Person for any legal or other documented expenses (including counsel fees) reasonably incurred by them in connection with investigating, defending or settling any such loss, claim, action, damage or liability; provided that the obligation to indemnify pursuant to this Section 11(b) shall be of e& only and shall not exceed an amount equal to the net proceeds (after deducting underwriters’ discounts and commissions) actually received by all selling Holders in the sale of Registrable Securities to which such Registration Statement or Prospectus relates. This indemnity shall be in addition to any liability which e& may otherwise have.
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(c)The Company and e& hereby acknowledge and agree that, unless otherwise expressly agreed to in writing by e&, for all purposes of this Agreement (including Section 11(a) and (b)), the only information furnished or to be furnished by any Holder to the Company for use in any such Registration Statement, Prospectus, preliminary Prospectus, free writing prospectus or any amendment thereof or supplement thereto or any document incorporated by reference therein, are statements specifically relating to (i) the beneficial ownership of the Registrable Securities by such Holder and its Affiliates as disclosed in the section of such document entitled “Selling Stockholders” or “Principal and Selling Stockholders” and (ii) the name and address of the selling Holders.
(d)Any Person entitled to indemnification hereunder shall give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification; provided that any failure or delay to so notify the indemnifying party shall not relieve the indemnifying party of its obligations hereunder, except to the extent that the indemnifying party is actually and materially prejudiced by reason of such failure or delay. In case a claim or an action that is subject or potentially subject to indemnification hereunder is brought against an indemnified party, the indemnifying party shall be entitled to participate in and shall have the right, exercisable by giving written notice to the indemnified party as promptly as practicable after receipt of written notice from such indemnified party of such claim or action, to assume, at the indemnifying party’s expense, the defense of any such claim or action, with counsel reasonably acceptable to the indemnified party; provided that any indemnified party shall continue to be entitled to participate in the defense of such claim or action, with counsel of its own choice, but the indemnifying party shall not be obligated to reimburse the indemnified party for any fees, costs and expenses subsequently incurred by the indemnified party in connection with such defense unless (A) the indemnifying party has agreed in writing to pay such fees, costs and expenses, (B) the indemnifying party has failed to assume the defense of such claim or action within a reasonable time after receipt of notice of such claim or action, (C) having assumed the defense of such claim or action, the indemnifying party fails to pursue the defense of such claim or action in a reasonable manner, (D) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest or (E) the indemnified party has reasonably concluded that there may be one or more legal or equitable defenses available to it and/or other any other indemnified party which are different from or additional to those available to the indemnifying party. Subject to the proviso in the foregoing sentence, no indemnifying party shall, in connection with any one claim or action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general circumstances or allegations, be liable for the fees, costs and expenses of more than one firm of attorneys (in addition to any local counsel) for all indemnified parties. The indemnifying party shall not (x) have the right to settle a claim or action for which any indemnified party is entitled to indemnification hereunder without the consent of the indemnified party, and (y) consent to the entry of any judgment or enter into or agree to any settlement relating to such claim or action, in each case unless such judgment or settlement (A) does not impose any admission of wrongdoing or ongoing obligations on any indemnified party and (B) includes as an unconditional term thereof the giving by the claimant or plaintiff therein to such indemnified party, in form and substance reasonably satisfactory to such indemnified party, of a full and final release from all liability in respect of such claim or action. The indemnifying party shall not be liable hereunder for any amount paid or payable or incurred pursuant to or in connection with any judgment entered or settlement effected with the consent of an indemnified party unless the indemnifying party has also consented to such judgment or settlement (such consent not to be unreasonably withheld, conditioned or delayed).
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(e)If the indemnification provided for in this Section 11 is held by a court of competent jurisdiction to be unavailable to, or unenforceable by, an indemnified party in respect of any loss, claim, action, damage, liability or expense referred to in this Section 11, then the applicable indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, action, damage, liability or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and of the indemnified party, on the other hand, in connection with the statements, omissions or violations referred to in this Section 11 which resulted in such loss, claim, action, damage, liability or expense as well as any other relevant equitable considerations. The relative fault of the indemnifying party, on the one hand, and of the indemnified party, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party, whether the violation of the Securities Act or any other federal or state securities law or rule or regulation promulgated thereunder applicable to the Company and relating to any action or inaction required of the Company in connection with any registration of securities was perpetrated by the indemnifying party or the indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement, omission or violation. The parties agree that it would not be just and equitable if contribution pursuant hereto were determined by pro rata allocation or by any other method or allocation that does not take into account the equitable considerations referred to in this Section 11(e). In no event shall the amount which e& or any other Holder of Registrable Securities may be obligated to contribute pursuant to this Section 11(e) exceed an amount equal to the net proceeds (after deducting underwriters’ discounts and commissions) actually received by the selling Holders in the sale of Registrable Securities that gives rise to such obligation to contribute. No indemnified party guilty or liable of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any Person which was not guilty of such fraudulent misrepresentation.
(f)Indemnification similar to that specified in the preceding paragraphs of this Section 11 (with appropriate modifications) shall be given by the Company and e& with respect to any required registration or other qualification of securities under any applicable securities and state “blue sky” laws.
(g)The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified Person or any officer, director or Controlling Person of such indemnified Person and shall survive the transfer of securities and the Termination Date but only with respect to offers and sales of Registrable Securities made before the Termination Date or during the period following the Termination Date referred to in Section 7(i).
Section 12.Rule 144 Compliance. With a view to making available to the Holders of Registrable Securities the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration, the Company shall:
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(a)make and keep public information available, as those terms are understood and defined in Rule 144;
(b)use best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and
(c)furnish to any Holder of Registrable Securities, promptly upon request by e&, a written statement by the Company as to its compliance with the reporting requirements of Rule 144 and of the Securities Act and the Exchange Act.
Section 13.Transfer Assistance. In connection with any sale or transfer of Relevant Shares by e& or any of its Affiliates, including any sale or transfer pursuant to Rule 144 and other rules and regulations of the SEC that may at any time permit a Holder of Registrable Securities to sell securities of the Company to the public without registration, the Company shall, to the extent allowed by law, take any and all action necessary or reasonably requested by e& in order to permit or facilitate such sale or transfer, including, without limitation, at the sole expense of the Company, by (i) issuing such directions to any transfer agent, registrar or depositary, as applicable, (ii) delivering such opinions to the transfer agent, registrar or depositary as are customary for transactions of this type and are reasonably requested, and (iii) taking or causing to be taken such other actions as are necessary (in each case on a timely basis) in order to cause any legends, notations or similar designations restricting transferability of the Relevant Shares to be removed and to rescind any transfer restrictions with respect to such Relevant Shares; provided, however, that if reasonably requested by the Company, e& shall deliver to the Company, in form and substance reasonably satisfactory to the Company, representation letters regarding its or its applicable Affiliate’s compliance with such rules and regulations, as may be applicable. In addition, the Company, at its sole expense, shall use reasonable best efforts to remove any restrictive legend on any Relevant Shares, as applicable, upon request by e& if (A) such Relevant Shares are sold pursuant to an effective registration statement or (B) a registration statement covering the resale of such Relevant Shares is effective under the Securities Act and e&, on behalf of itself or the applicable Affiliate, delivers to the Company a representation letter agreeing that such Relevant Shares will be sold under such effective registration statement.
Section 14.Miscellaneous.
(a)Adjustments Affecting Ordinary Shares. The provisions of this Agreement shall apply, to the fullest extent set forth herein with respect to the Relevant Shares and Registrable Securities, and to any and all equity securities of (i) the Company, (ii) any entity separated from the Company by way of spin-off, split-off, demerger or otherwise, or any successor or assign of the Company (whether by merger, share exchange, consolidation, sale of assets or otherwise) or (iii) any direct or indirect subsidiary or parent company of the Company, in each case (i) to (iii) which may be issued in respect of, in exchange for or in substitution of, Relevant Shares and/or Registrable Securities and shall be appropriately adjusted for any share dividends, splits, reverse splits, combinations, recapitalizations and the like occurring after the date hereof so as to reflect the intent and meaning of the provisions hereof and so that the rights, privileges, duties and obligations hereunder shall continue with respect to the share capital of the Company as so changed as well as the share capital of any other entity received in connection with such transaction.
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(b)No Inconsistent Agreements. The Company represents and warrants that it has not entered into, and agrees that it will not enter into, any agreement with respect to its securities that violates or subordinates or is otherwise inconsistent with the rights granted to the Holders of Registrable Securities under this Agreement.
(c)Successors and Assigns. Neither this Agreement nor any right, benefit, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by any party hereto without the prior written consent of the other parties, and any attempted assignment without such consent shall be null and void and of no effect.
(d)No Third Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective successors and assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Agreement; provided, however, that the parties hereto hereby acknowledge that the Persons set forth in Section 11 shall be express third-party beneficiaries of the obligations of the parties hereto set forth in Section 11.
(e)Remedies; Specific Performance. In the event of a breach or a threatened breach by any party to this Agreement of its obligations under this Agreement, any party injured or to be injured by such breach shall be entitled to specific performance of its rights under this Agreement or to injunctive relief, in addition to being entitled to exercise all rights provided in this Agreement and granted by law, it being agreed by the parties that the remedy at law, including monetary damages, for breach of any such provision will be inadequate compensation for any loss and that any defense or objection in any action for specific performance or injunctive relief for which a remedy at law would be adequate is hereby waived.
(f)No Waivers. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
(g)Governing Law. This Agreement (including, for the avoidance of doubt, the provisions of the Relationship Agreement incorporated by reference herein pursuant to Section 10) shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of New York. THE COMPANY AND e& HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(h)Jurisdiction and Venue.
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Each of the Company and e& hereby (i) irrevocably submits to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York solely for purposes of any legal action or proceeding arising out of or relating to this Agreement or, if the United States District Court for the Southern District of New York declines to accept jurisdiction over a particular matter, any federal or state court sitting in the Borough of Manhattan in the City of New York and (ii) irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any legal action or proceeding in any New York State court or United States federal court sitting in the Borough of Manhattan in the City of New York, and any claim that any such action or proceedings brought in any such court has been brought in an inconvenient forum.
(i)Appointment of Agent for Service of Process. The Company agrees to appoint an agent upon which process may be served in any legal action or proceeding which may be instituted in any Federal or State court in the Borough of Manhattan, the City of New York, arising out of or relating to this Agreement, but for that purpose only, within five (5) Business Days of the date of this Agreement. Service of process upon such agent at its address, and written notice of said service to the Company servicing the same addressed as provided by Section 14(j), shall be deemed in every respect effective service of process upon the Company, respectively, in any such legal action or proceeding. Such appointment shall be irrevocable so long as e& shall have any rights pursuant to the terms of this Agreement until the appointment of a successor by the Company and such successor’s acceptance of such appointment. The Company further agrees to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of such agent or successor.
(j)Notices. Any notice, demand, request, waiver, or other communication under this Agreement shall be in writing and shall be deemed to have been duly given (x) on the date of service or sending, if personally served or sent by electronic mail or facsimile and (y) on the Business Day after such communication is delivered to an internationally recognized courier, if sent by such courier delivery service for next day delivery and addressed as follows:
If to the Company: | |
| |
Vodafone Group Plc | |
Vodafone House | |
The Connection | |
Newbury RG14 2FN | |
Attention: |
Group General Counsel & Company Secretary |
E-Mail: |
groupcosec@vodafone.com. |
with a copy (which shall not constitute notice) to: | |
Linklaters LLP | |
1 Silk Street | |
London EC2Y 8HQ | |
Attention: |
Michael Z. Bienenfeld |
E-Mail: |
mike.bienenfeldWinklaters.com |
If to e&:
Head Office Building A
-27-
Intersection of Zayed the 1st Street and SheikhRashid Bin Saeed Al | |
Maktoum Street | |
PO Box 3838 | |
Abu Dhabi | |
United Arab Emirates | |
Attention: |
Brooke Marie Lindsay and Nazih El Hassanieh |
E-Mail: |
blindsay@eand.com; nelhassanieh@eand.com |
with a copy (which shall not constitute notice) to: | |
| |
Sullivan & Cromwell LLP | |
1 New Fetter Lane | |
London EC4A IAN | |
Attention: |
John Horsfield-Bradbury |
E-Mail: |
horsfieldbradburyj@sullcrom.com |
or to such other person (with such other contact information) as may be notified by the relevant party to the other in writing from time to time.
(k)Headings. The headings and other captions in this Agreement are for convenience and reference only and shall not constitute a part of this Agreement, nor shall they affect its meaning, construction or effect.
(1)Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be deemed an original instrument (including signatures delivered via facsimile or electronic mail) and all of which together shall constitute one and the same instrument. The parties hereto may deliver this Agreement by facsimile or by electronic mail, including any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.doeusiun.com, www.echosign.alobe.com, etc., and each party shall be permitted to rely upon the signatures so transmitted to the same extent and effect as if they were original signatures.
(m)Entire Agreement. This Agreement and the Relationship Agreement contain the entire agreement among the parties hereto with respect to the subject matter thereof and supersede and replace all other prior agreements, written or oral, among the parties hereto with respect to the subject matter thereof.
(n)Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
-28-
(o)Amendments. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, without the prior written consent of the Company and each Holder affected thereby.
(p)Further Assurances. Each party to this Agreement shall cooperate and take such action as may be reasonably requested by another party to this Agreement in order to carry out the provisions and purposes of this Agreement and the transactions contemplated hereby.
(q)Termination. This Agreement shall terminate upon the Termination Date; provided that the provisions of Section 10 shall survive termination for 18 months and Section 9, Section 11 and this Section 14 shall survive such termination indefinitely. .
[Signature Page Follows]
-29-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written.
|
[Signature Page to Registration Rights Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written.
|
[Signature Page to Registration Rights Agreement]
Exhibit 4.29
PRIVATE AND CONFIDENTIAL
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
|
BRILLIANT DESIGN LIMITED and CK HUTCHISON GROUP TELECOM HOLDINGS LIMITED and CK HUTCHISON HOLDINGS LIMITED and VODAFONE INTERNATIONAL OPERATIONS LIMITED and VODAFONE GROUP PLC and VODAFONE UK TRADING HOLDINGS LIMITED |
|
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Table of Contents
Contents |
|
Page |
1 |
Interpretation |
2 |
2 |
Pre-Closing Reorganisations |
20 |
3 |
Closing Transactions |
20 |
4 |
Closing Accounts |
24 |
5 |
Conditions |
25 |
6 |
Pre-Closing |
28 |
7 |
Change of Name |
32 |
8 |
Closing |
33 |
9 |
[***] |
34 |
10 |
Tax |
34 |
11 |
Warranties |
35 |
12 |
Indemnities |
39 |
13 |
Limitation of Liability |
40 |
14 |
Warranty Claims |
45 |
15 |
[***] |
48 |
16 |
Post-Closing |
48 |
17 |
Confidentiality |
52 |
18 |
Insurance |
55 |
19 |
Support Commitments |
57 |
20 |
[***] |
58 |
21 |
Termination |
58 |
22 |
Topco Guarantees |
60 |
23 |
Other Provisions |
62 |
1
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 1 |
The Three UK Group |
67 |
Schedule 2 |
The Vodafone UK Group |
68 |
Schedule 3 |
Mergeco |
69 |
Schedule 4 |
Hutchison Reorganisation |
70 |
Schedule 5 |
Vodafone Reorganisation |
71 |
Schedule 6 |
Illustration of Closing Transactions |
72 |
Schedule 7 |
Closing Accounts |
73 |
Schedule 8 |
Conduct of Business (the Three UK Group) |
74 |
Schedule 9 |
Conduct of Business (the Vodafone UK Group and Mergeco) |
75 |
Schedule 10 |
Closing Deliverables (Clause 8) |
76 |
Schedule 11 |
Bonuses, Commission and Retention Payments |
77 |
Schedule 12 |
Vodafone Share Incentive Plans |
78 |
Schedule 13 |
Pension Schemes |
79 |
Schedule 14 |
Hutchison Warranties |
80 |
Schedule 15 |
List of Hutchison Individuals with Knowledge |
81 |
Schedule 16 |
Vodafone Warranties |
82 |
Schedule 17 |
List of Vodafone Individuals with Knowledge |
83 |
Schedule 18 |
Trading Updates |
84 |
Schedule 19 |
Pre-Closing Asset Transfers |
85 |
Schedule 20 |
Continuing Support Commitments |
86 |
Schedule 21 |
Agreed Form Documents |
87 |
2
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Contribution Agreement
This Agreement (this “Agreement”) is made on 14 June 2023
Between:
(1) |
Brilliant Design Limited, a company incorporated in the British Virgin Islands with company number 384092 whose registered office is at Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands (“Hutchison”); |
(2) |
CK Hutchison Group Telecom Holdings Limited, a company incorporated in the Cayman Islands with registered number MC-352731 whose registered office is at Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands, and whose principal place of business is at 48th Floor, Cheung Kong Center, 2 Queen’s Road, Hong Kong (“Hutchison Topco”); |
(3) |
CK Hutchison Holdings Limited, a company incorporated in the Cayman Islands with registered number MC-294571 whose registered office is at Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman KY1-1104, Cayman Islands, and whose principal place of business is at 48th Floor, Cheung Kong Center, 2 Queen’s Road, Hong Kong (“CKHH”); |
(4) |
Vodafone International Operations Limited, a company incorporated in England and Wales with registered number 02797438 whose registered office is at Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN (“Vodafone”); |
(5) |
Vodafone Group Plc, a company incorporated in England and Wales with registered number 01833679 whose registered office is at Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN (“Vodafone Topco”); and |
(6) |
Vodafone UK Trading Holdings Limited, particulars of which are set out in Schedule 3 (“Mergeco”). |
Whereas:
(A) |
Vodafone and Hutchison have agreed to combine their respective businesses in the UK to form a joint venture pursuant to which the Three UK Group and the Vodafone UK Group shall be contributed to Mergeco on the terms and conditions of this Agreement and the Transaction Documents. |
(B) |
Mergeco is at the date hereof wholly indirectly owned by Vodafone Topco. |
(C) |
Save in respect of the Three UK JV Companies, the Three UK Group is at the date hereof wholly indirectly owned by CKHH. |
(D) |
Save in respect of the Vodafone UK JV Companies, the Vodafone UK Group is at the date hereof wholly indirectly owned by Vodafone Topco. |
(E) |
Between the date hereof and Closing, Vodafone and Vodafone Topco have agreed to procure that the Vodafone Reorganisation is effected. |
(F) |
Between the date hereof and Closing, Hutchison and Hutchison Topco have agreed to procure that the Hutchison Reorganisation is effected. |
(G) |
The parties have agreed to implement the Closing Transactions on the terms and conditions of this Agreement and the Transaction Documents. |
1
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
(H) |
With effect from Closing, Hutchison shall hold 49 per cent. of Mergeco and Vodafone shall hold 51 per cent. of Mergeco. |
(I) |
CKHH is a party to this Agreement solely for the purposes of its obligations under Clause 5.2.5 and shall not be subject to any other obligations under this Agreement. |
(J) |
After [***], [***] shall cease to be a Three UK Group Company under this Agreement and shall not be further subject to any provisions under this Agreement in relation to the Three UK Group. |
It is agreed as follows:
1 |
Interpretation |
In this Agreement, unless the context otherwise requires, the provisions in this Clause 1 apply:
1.1 |
Definitions |
“Additional Hutchison Controller” has the meaning given to it in Clause 5.1.3;
“Additional Vodafone Controller” has the meaning given to it in Clause 5.1.4;
“Affiliate” has the meaning given to it in the Shareholders’ Agreement;
[***]
“Agreed Form” means, in relation to a document, such document in the form agreed between Hutchison and Vodafone and confirmed by Vodafone’s Lawyers and Hutchison’s Lawyers by e-mail on or around the date of this Agreement with such alterations as may be agreed in writing between Hutchison and Vodafone from time to time, and in each case all such agreed form documents are listed in Schedule 21;
[***]
“Anti-Bribery and Corruption Laws” means any applicable anti-bribery and anti-corruption laws, regulations or codes, including the Bribery Act 2010, the Criminal Finances Act 2017 and the US Foreign and Corrupt Practices Act 1977;
“Audit and Risk Committee” has the meaning given to it in the Shareholders’ Agreement;
[***]
“Board Committees Terms of Reference” has the meaning given to it in Clause 6.5.1(ii);
“Bonus Cost Mechanics” has the meaning given to it in paragraph 10 of Schedule 11;
“Business Day” means a day on which commercial banks are open for general business in London and Hong Kong, but excluding a Saturday, Sunday or public holiday in any of London or Hong Kong;
“Business Warranties” means the Hutchison Business Warranties and the Vodafone Business Warranties, and “Business Warranty” means any one of the Business Warranties;
“Business Warranty Claim” means a claim by Mergeco for breach of a Business Warranty;
[***]
“Claimed Party” has the meaning given to it in Clause 14.1; “Clean Team Agreement” means the clean team agreement agreed between Hutchison Topco and Vodafone Topco dated 24 September 2022;
2
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
“Closing” means the completion of each of the Closing Transactions;
“Closing Date” means the date on which Closing takes place;
“Closing Transactions” means the transactions set out in Clauses 3.3 to 3.6;
“CMA” means the United Kingdom Competition and Markets Authority;
“Code Power Companies” has the meaning given to it in paragraph 4.1 of Schedule 5;
[***]
“Competition Act” means the Competition Act 1998;
“Confidential Information” means any and all information:
(a) |
which is used in or otherwise relates to the business, customer, financial or other affairs of the Hutchison Group, the Vodafone Group or Mergeco; |
(b) |
in respect of which any Hutchison Group Company, any Vodafone Group Company or Mergeco is bound by an obligation of confidence to a third party; or |
(c) |
which is received or obtained as a result of a party entering into or performing, or which is supplied by or on behalf of a party in the negotiations leading to, this Agreement (including the subject matter and provisions of this Agreement and each document referred to in it); |
“Confidentiality Agreement” means the confidentiality agreement dated 3 August 2021 between Vodafone Topco and Hutchison Topco pursuant to which certain confidential information was made available to both the Hutchison Group and the Vodafone Group;
[***]
“CTA 2010” means the Corporation Tax Act 2010;
“Data Protection Authority” means any body responsible for enforcing Data Protection Legislation;
“Data Protection Legislation” means the following legislation to the extent applicable from time to time:
(a) |
national laws implementing the Directive on Privacy and Electronic Communications (2002/58/EC); |
(b) |
the General Data Protection Regulation (2016/679) and any national law issued under that regulation; |
(c) |
the UK General Data Protection Regulation, Data Protection Act 2018 and the Privacy and Electronic Communications (EC Directive) Regulations 2003; and |
(d) |
any other similar national privacy law; |
[***]
3
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
“Disclosed” means, in respect of any fact, matter or circumstance, fairly disclosed, in such manner and with sufficient detail to enable the relevant party to assess the nature, scope and extent of the matter disclosed;
“DMSL” means Digital Mobile Spectrum Limited, a company incorporated in England and Wales with registered number 08247385 whose registered office is at 24/25 The Shard 32 London Bridge Street, London SE1 9SG, England;
[***]
“Draft Budget” means the draft initial budget in the Agreed Form;
“Draft Business Plan” means the draft initial business plan in the Agreed Form;
“ECC” means the Employee Consultation Council established by Vodafone UK in 2014 with a constitution dated September 2020, which operates as an information and consultation forum for employees of Vodafone UK, Vodafone Sales & Services Limited, Vodafone Global Enterprise Limited and Vodafone Group Services Limited;
“EEA Agreement” means the Agreement on the European Economic Area signed in Porto on 2 May 1992 (OJ No L 1, 3.1.1994, p. 3);
[***]
“EFTA State” means Iceland, Liechtenstein, Norway and Switzerland as signatories to the European Free Trade Association convention signed in Stockholm on 4 January 1960;
[***]
“Encumbrance” means any claim, charge, mortgage, lien, option, equity, pledge, power of sale, hypothecation, retention of title, right of pre-emption, right of first refusal or other third party right or security interest of any kind or an agreement, arrangement or obligation to create any of the foregoing (excluding, in relation to Intellectual Property Rights, any licences of Intellectual Property Rights);
“Enterprise Act” means the Enterprise Act 2002;
“Environment” means all or any of the following media (alone or in combination): (i) air (including the air within buildings and the air within other natural or man-made structures, whether above or below ground); (ii) water (including water under or within land or in drains or sewers); and (iii) soil and land and any ecological systems and living organisms supported by any of those media, including a person and their property;
“Environmental Law” means all applicable laws (including, for the avoidance of doubt, common law), statutes, regulations, statutory guidance notes and final and binding court and other tribunal decisions applicable to each Three UK Group Company (in the case of Schedule 14) or to each Vodafone UK Group Company (in the case of Schedule 16) and in force in the relevant jurisdictions on the date of this Agreement whose purpose is to protect the Environment or worker health and safety, or prevent pollution of the Environment or to regulate electromagnetic radiation, emissions, discharges or releases of Hazardous Substances into the Environment, or to regulate the use, treatment, storage, burial, disposal, transportation or handling of Hazardous Substances, product packaging and product stewardship and all bye-laws, codes, regulations, decrees or orders issued or promulgated or approved thereunder or in connection therewith to the extent that the same have force of law as at the date of this Agreement; “Environmental Permit” means any licence, approval, authorisation, permission, notification, waiver, order or exemption which is issued, granted or required under Environmental Law;
4
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
“Estimated Hutchison Closing Cash” means the amount of Hutchison Closing Cash (as defined in Schedule 7) as estimated by Hutchison acting in good faith;
“Estimated Hutchison Closing Debt” means the amount of Hutchison Closing Debt (as defined in Schedule 7) as estimated by Hutchison acting in good faith;
“Estimated Hutchison Closing Working Capital” means the amount of Hutchison Closing Working Capital (as defined in Schedule 7) as estimated by Hutchison acting in good faith;
“Estimated Vodafone Closing Cash” means the amount of Vodafone Closing Cash (as defined in Schedule 7) as estimated by Vodafone acting in good faith;
“Estimated Vodafone Closing Debt” means the amount of Vodafone Closing Debt (as defined in Schedule 7) as estimated by Vodafone acting in good faith;
“Estimated Vodafone Closing Working Capital” means the amount of Vodafone Closing Working Capital (as defined in Schedule 7) as estimated by Vodafone acting in good faith;
“EU Antitrust Condition” has the meaning given to it in Clause 5.1.7;
“EU Merger Regulation” means Council Regulation (EC) 139/2004;
“Evasion Facilitation Rules” means, in the UK, the corporate criminal offence of failing to prevent the facilitation of tax evasion as set out in Part 3 of the Criminal Finances Act 2017 and, outside the UK, any equivalent regime in any other jurisdiction;
[***]
“Export Control Laws” means all applicable export control laws and regulations, including those relating to trade embargoes and prohibitions or licensing requirements on the sale, supply, transfer, export or import of specified items (goods, software, technology, related technical assistance, services and financing) governing the cross-border and in-country transfer of items falling within scope;
“FCA” means the Financial Conduct Authority of the UK and any successor or replacement body from time to time (as the context may require);
[***]
“Financial Debt” means any obligation (whether present or future, secured or unsecured, as principal or surety or otherwise) for the payment or repayment of money for or in respect of money borrowed or raised, by whatever means (including acceptances, bills of exchange, securities and deposits), including any outstanding costs and fees related thereto;
“Financial Regulation” means all applicable laws, regulations, statutes, rules, codes, orders, judgments, injunctions, notices or other requirements whose purpose is to regulate and impose rules and requirements in relation to the provision of financial services and/or those firms which operate within the financial services sector, including the FCA Handbook, the Consumer Credit sourcebook, the Consumer Credit Act 1974, FSMA and the Payment Services Regulations 2017, in each case to the extent applicable to and binding upon a person; “FSMA” means the Financial Services and Markets Act 2000;
5
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
“Fundamental Warranties” means the Hutchison Fundamental Warranties and the Vodafone Fundamental Warranties and “Fundamental Warranty” means any one of the Fundamental Warranties;
[***]
“Global Carrier Master Services Agreement” means the Global Carrier Master Services Agreement between Vodafone Enterprise Global Limited, Vodafone UK and Mergeco, in the Agreed Form and to be entered into at Closing;
“Hazardous Substances” means any natural or artificial substance of any nature whatsoever (whether in the form of a solid, liquid, gas or vapour alone or in combination with any other substance) which is capable of causing harm or damage to the Environment or to worker health or safety, or capable of causing a nuisance, including, but not limited to, controlled, special, hazardous, toxic or dangerous wastes or pollutants;
“HKLRs” means the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as such may be amended, modified or revised from time to time;
“HMRC” means His Majesty’s Revenue and Customs;
[***]
“Hutchison Business Warranties” means the Hutchison Warranties, excluding the Hutchison Fundamental Warranties, and “Hutchison Business Warranty” means any one of the Hutchison Business Warranties;
[***]
“Hutchison Capitalisation Issue” has the meaning given to it in Clause 3.5.2(i);
“Hutchison Capitalisation Shares” means such number of ordinary shares of £1.00 each in the entire issued share capital of Mergeco as shall result in Hutchison holding 49 per cent. of the entire issued ordinary share capital in Mergeco immediately following the simultaneous Vodafone Capitalisation Issue and Hutchison Capitalisation Issue, to be determined by Vodafone (so far as possible based on the valuations and amounts notified to Hutchison under Clause 3.1.2) and notified to Hutchison no later than [***] Business Days prior to Closing;
[***]
“Hutchison Directors” means the directors of CKHH from time to time;
“Hutchison Disclosure Letter” means the letter dated on the same date as this Agreement from Hutchison to Mergeco disclosing:
(a) |
certain information in relation to the Hutchison Warranties; and |
(b) |
details of other matters referred to in this Agreement; |
[***]
“Hutchison Excess Debt” means the aggregate outstanding amounts under the Hutchison Shareholder Loans less the Hutchison Existing Debt, immediately prior to the Mergeco Sale Closing; “Hutchison Existing Debt” means loan receivables under the Hutchison Shareholder Loans in the amount of [***] (comprising principal and accrued interest);
6
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
“Hutchison FCA Condition” has the meaning given to it in Clause 5.1.3;
“Hutchison Fundamental Warranties” means the warranties set out in paragraphs 1 and 2.1 of Schedule 14;
“Hutchison General Meeting” means the general meeting (including any adjournment thereof) of the CKHH Shareholders to be convened in connection with the Transaction;
“Hutchison Group” means Hutchison Topco and its Affiliates from time to time, including CKHH, and “Hutchison Group Company” means any entity in the Hutchison Group;
“Hutchison Group Insurance Policies” means all insurance policies maintained by the Hutchison Group from time to time under which any Three UK Group Company is entitled to any benefit, other than any Three UK Group Insurance Policies;
“Hutchison Guaranteed Obligations” has the meaning given to it in Clause 22.1.1;
[***]
“Hutchison Intra Group Agreement” means any binding contract, agreement, licence or commitment between or among any Three UK Group Company on the one hand and a Hutchison Retained Group Company on the other hand;
“Hutchison Mergeco Directors” means the directors of Mergeco appointed by Hutchison pursuant to clause 5.1 (The Board and the Board Committees) of the Shareholders’ Agreement;
[***]
“Hutchison Reorganisation” means [***];
[***]
“Hutchison Resolutions” has the meaning given to it in Clause 5.1.10;
“Hutchison Retained Group” means the entities in the Hutchison Group that are not part of the Three UK Group and “Hutchison Retained Group Company” means any entity in the Hutchison Retained Group;
[***]
“Hutchison Shareholder Loans” means loans between Hutchison as lender and Three UK as borrower with an amount of principal and interest equal to the required amount notified by Vodafone to Hutchison pursuant to Clause 3.1.2, and designated as such by Hutchison (with such designation being notified to Vodafone at least [***] Business Days before the Mergeco Sale Closing);
“Hutchison Shareholder Resolution Condition” means the condition set out at Clause 5.1.10;
“Hutchison’s Lawyers” means Linklaters LLP of One Silk Street, London EC2Y 8HQ, UK;
[***]
“Hutchison VAT Group” means the group of persons for VAT purposes to which the Hutchison Representative Member belongs; “Hutchison Warranties” means the warranties given by Hutchison pursuant to Clause 11.1 and Schedule 14, and “Hutchison Warranty” means any one of them;
7
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
“Hutchison Wrong Pocket Asset” means any asset or property (which, for the avoidance of doubt, shall exclude any contract, agreement, service or employee) which relates exclusively or predominantly to the business of the Hutchison Retained Group but which, following Closing, is owned by the Mergeco Group;
[***]
“Initial Budget” means the Draft Budget as adjusted by Vodafone and Hutchison pursuant to Clause 6.3.2 and delivered and adopted by Mergeco at Closing pursuant to Clause 6.3.4 as part of the Initial Business Plan;
“Initial Business Plan” means the Draft Business Plan as adjusted by Vodafone and Hutchison pursuant to Clause 6.3.2 and delivered and adopted by Mergeco at Closing pursuant to Clause 6.3.4 and the Shareholder’s Agreement;
“Initial Rationalisation” has the meaning given to it in in paragraph 5 of Schedule 5;
“Intellectual Property Rights” means trade marks, service marks, rights in trade names, business names, logos and trade dress, rights to sue for passing off and in unfair competition, patents, utility models, rights in inventions, design rights, copyrights and related rights (including rights in computer software), database rights, rights in domain names, URLs and social media accounts, rights in confidential information, trade secrets and all other similar rights in any part of the world, including any registration of such rights and applications and rights to apply for such registrations;
[***]
“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003;
[***]
“Loan Amount” has the meaning given to it in paragraph 8 of Schedule 5;
[***]
“Losses” means all losses (but not indirect losses (including indirect loss of profits)), liabilities, costs (including properly incurred legal costs and experts’ and consultants’ fees), charges, expenses, Tax (or Tax that would have arisen but for the availability of a Relief), actions, proceedings, claims and demands;
[***]
“Mergeco Articles of Association” has the meaning given to it in Clause 6.5.1(i);
[***]
“Mergeco Contribution Share Premium” means such amount of share premium as may be attributable to the issuance of the Mergeco Contribution Shares as, subject to Clause 3.1.4, may be determined by Vodafone (so far as possible, based on the valuations and amounts notified to Hutchison under Clause 3.1.2) and notified to Hutchison no later than [***] Business Days prior to Closing;
8
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
“Mergeco Contribution Shares” means such number of ordinary shares of £1.00 each in the entire issued share capital of Mergeco to be issued to Hutchison as, subject to Clause
3.1.4, determined by Vodafone (so far as possible, based on the valuations and amounts notified to Hutchison under Clause 3.1.2) and notified to Hutchison no later than [***] Business Days prior to Closing, it being agreed that the Mergeco Contribution Shares issued to Hutchison in accordance with Clause 3.4.1(iv)(a) shall not cause Vodafone to hold [***] per cent. or more of the issued share capital in Mergeco nor Hutchison to hold [***] per cent. or more of the issued share capital in Mergeco immediately following the Three UK Share Sale Closing;
“Mergeco FCA Condition” has the meaning given to it in Clause 5.1.5(iii);
“Mergeco Group” means, from Closing:
(a) |
Mergeco; |
(b) |
the Three UK Group; |
(c) |
the Vodafone UK Group; and |
(d) |
Mergeco’s other subsidiary undertakings from time to time, |
and “Mergeco Group Company” means any entity in the Mergeco Group;
“Mergeco Guaranteed Obligations” has the meaning given to it in Clause 22.3.1;
[***]
“Mergeco Loan Note 1” means the loan note, substantially in the same form as the Vodafone Trade Mark Loan Note (unless otherwise agreed between Hutchison and Vodafone), in an amount as, subject to Clause 3.1.4, may be determined by Vodafone (so far as possible, based on the valuations and amounts notified to Hutchison under Clause 3.1.2) and notified to Hutchison no later than [***] Business Days prior to Closing, which shall be equal to the amount of the Three UK Valuation less (i) the nominal value of the Mergeco Contribution Shares and (ii) the Mergeco Contribution Share Premium;
“Mergeco Loan Note 2” means the loan note in an amount equal to the Hutchison Excess Debt to be issued by Mergeco to Hutchison pursuant to Clause 3.4.2(ii), substantially in the same form as the Vodafone Trade Mark Loan Note (unless otherwise agreed between Hutchison and Vodafone);
[***]
“Mergeco Wrong Pocket Asset” means any asset or property (which, for the avoidance of doubt, shall exclude any contract, agreement, service or employee) which relates exclusively or predominantly to the Vodafone UK Business or the Three UK Business but which, following Closing, is owned by the Vodafone Retained Group or the Hutchison Retained Group (as the case may be);
[***]
“NS&I Act” means the National Security and Investment Act 2021;
“NS&I Condition” has the meaning given to it in Clause 5.1.9;
[***]
“Part 4A FSMA Permission” means a permission given by the FCA under Part 4A of the FSMA; “Payee” has the meaning given to it in Clause 8.6.1;
9
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
“Payer” has the meaning given to it in Clause 8.6.1;
“Payment” has the meaning given to it in Clause 1.16;
“Payment Obligation” has the meaning given to it in Clause 1.16;
[***]
“Permitted Encumbrance” means:
(a) |
any Encumbrance which arises in connection with any cash management, netting or set-off arrangement (or any arrangement for the operation of accounts entered into using a bank’s or financial institution’s standard terms and conditions for such arrangement) entered into by any Three UK Group Company or any Vodafone UK Group Company in the ordinary course of business; |
(b) |
any Encumbrance arising by way of retention of title of goods or over any documents of title, insurance policies and sales contracts in each case created or made in the ordinary course of business; |
(c) |
any Encumbrance over cash deposits not exceeding [***] in aggregate outstanding at any one time and required by any real property lessor from any Three UK Group Company or Vodafone UK Group Company as a deposit for the lease obligations of that Three UK Group Company or Vodafone UK Group Company; |
(d) |
any Encumbrance constituted by the right of a counterparty under a derivative instrument entered into by a Three UK Group Company or Vodafone UK Group Company to set off or net amounts owed under that derivative instrument; and |
(e) |
any Encumbrance arising under the terms of a finance lease which constitutes any loan, financing liability or obligation not arising in the ordinary course of trading; |
“Phase 2 CMA Reference” means a reference by the CMA to its chair for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013;
[***]
“Pre-Contractual Statement” means any draft, agreement, undertaking, representation, warranty, promise, assurance, term sheet or arrangement of any nature whatsoever, whether or not in writing, relating to the subject matter of this Agreement made or given by any person at any time prior to this Agreement becoming legally binding;
[***]
“Recognised Stock Exchange” has the meaning given to it in the Shareholders’ Agreement;
[***]
“Regulatory Authority” means the Secretary of State under the NS&I Act, the CMA, the European Commission, the Turkish Competition Board, as well as any other relevant authority for the purposes of the Regulatory Conditions;
“Regulatory Conditions” means the UK Antitrust Condition, the EU Antitrust Condition, the Turkey Antitrust Condition and the NS&I Condition; “Relevant Hutchison Group Companies” means any Hutchison Group Company that is, or will be, a party to any Transaction Document and a “Relevant Hutchison Group Company” means any of them;
10
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
[***]
“Relevant Vodafone Group Companies” means any Vodafone Group Company that is, or will be, a party to any Transaction Document and a “Relevant Vodafone Group Company” means any of them;
“Relief” means any loss, allowance, credit, relief, deduction or set-off in respect of, or taken into account (or capable of being taken into account) in the calculation of a liability to, Tax, or any right to a repayment of Tax;
[***]
“Remuneration Committee” has the meaning given to it in the Shareholders’ Agreement;
[***]
“Sanctioned Person” means any person that (at the relevant time) is, or is owned by or controlled by (as such terms are interpreted in accordance with relevant Sanctions Law and any associated guidance produced by any Sanctions Authority in connection with the same from time to time) one or more persons that is:
(a) |
listed on any Sanctions List; |
(b) |
domiciled, permanently resident, incorporated or organised under the laws of any country or territory that is the target of comprehensive country-wide or territory-wide sanctions pursuant to relevant Sanctions Law (including, but not limited to, Cuba, Iran, North Korea, Syria, Crimea, Donetsk and Luhansk); and/or |
(c) |
domiciled, permanently resident, incorporated or organised under the laws of Russia, or any non-Ukrainian government controlled areas of Russia, Kherson, Zaporizhzhia, in each case, for such time as they are subject to Sanctions Laws; |
“Sanctions Authority” means any legislative, regulatory, judicial, enforcement or executive body, agency or authority of:
(a) |
the UK; |
(b) |
the United States (including the Office of Foreign Assets Control of the U.S. Treasury Department, the U.S. State Department and the U.S. Department of Commerce); |
(c) |
the United Nations Security Council or any United Nations Security Council Sanctions Committee; or |
(d) |
the European Union (or any member state of the European Union); |
“Sanctions Law” means the economic, financial and trade sanctions laws, regulations, embargoes, restrictive measures and/or orders administered, enacted or enforced from time to time by any Sanctions Authority;
“Sanctions List” means any published list or other published public announcement, designation or identification of persons targeted under Sanctions Law prepared by any Sanctions Authority, including: (i) the “Consolidated List of Financial Sanctions Targets in the UK” issued by the Office of Financial Sanctions Implementation, His Majesty’s Treasury; (ii)
11
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
the “Specially Designated Nationals and Blocked Persons” list maintained by the Office of Foreign Assets Control of the United States Department of the Treasury; and (iii) the Consolidated List of Persons, Groups and Entities subject to EU Financial Sanctions maintained by the European Commission;
“Shareholders’ Agreement” means the shareholders’ agreement between (inter alia) Hutchison and Vodafone in respect of various shareholder arrangements in relation to Mergeco, in the Agreed Form and to be entered into at Closing;
“SoS” means the Secretary of State responsible for the application of the NS&I Act;
[***]
“Strategy and Merger Integration Committee” has the meaning given to it in the Shareholders’ Agreement;
[***]
“Support Commitment” means any security, guarantees, sureties, comfort letters or indemnities, but excluding any given under or for the purposes of the Transaction Documents;
“Surviving Clauses” means Clauses 1, 17 and 23, and “Surviving Clause” means any one of them;
“Tax” or “Taxation” means all forms of taxation and statutory, governmental, state, provincial, local governmental or municipal duties, imposts, contributions and levies and any charges, deductions or withholdings, in each case in the nature of tax, whether levied by reference to gross or net income, profits, gains, sales, transfer, ownership, net wealth, asset values, turnover, added value, personal property or otherwise, in each case whether of the UK or elsewhere in the world whenever imposed and whether chargeable directly or primarily against or attributable directly or primarily to, the relevant person or any other person and regardless of whether any amount in respect of any of them is recoverable from any other person, and all penalties, charges and interest relating thereto or to any failure to file any return required for the purposes of any of them or to any incorrect return for any of them;
“Tax Authority” means any authority competent to impose, administer, manage or collect any Tax;
“Tax Claim” means:
(a) |
a Tax Warranty Claim against Hutchison or a Tax Covenant Claim against Hutchison; or |
(b) |
a Tax Warranty Claim against Vodafone or a Tax Covenant Claim against Vodafone; |
“Tax Covenant” means the deed of tax covenant between Hutchison, Vodafone and Mergeco, in the Agreed Form and to be entered into at Closing;
“Tax Covenant Claim” means a claim against:
(a) |
Hutchison under the Tax Covenant; or |
(b) |
Vodafone under the Tax Covenant; |
12
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
“Tax Warranty Claim” means a claim against:
(a) |
Hutchison for breach of paragraph 6 of Schedule 14; or |
(b) |
Vodafone for breach of paragraph 6 of Schedule 16; |
[***]
“Third Party Claim” has the meaning given to it in Clause 14.5;
[***]
“Three UK Business” means the business carried on by the Three UK Group as a whole or the business carried on by any Three UK Group Company;
[***]
“Three UK Employees” means the employees of the Three UK Group (other than any specifically excluded by agreement with Vodafone), and “Three UK Employee” means any one of them;
[***]
“Three UK Group” means Three UK and the companies listed in Part 2 and Part 3 of Schedule 1, and “Three UK Group Company” means any entity in the Three UK Group;
“Three UK Group Insurance Policies” means all insurance policies maintained by the Three UK Group from time to time;
[***]
“Three UK JV Companies” means the companies listed in Part 3 of Schedule 1, and “Three UK JV Company” means any one of them;
“Three UK Loan” has the meaning given to it in Clause 3.6.1;
[***]
“Three UK Shares” means the entire issued share capital of Three UK;
“Three UK Share Sale” has the meaning given to it in Clause 3.4.1(i);
“Three UK Share Sale Closing” has the meaning given to it in Clause 3.4.1(ii);
[***]
“Three UK Valuation” means the valuation of the Three UK Shares notified to Hutchison under Clause 3.1.2;
[***]
“Transaction” means the transactions contemplated by this Agreement;
“Transaction Announcement” means the announcement(s), in the Agreed Form, relating to the Transaction;
“Transaction Documents” means this Agreement, the Hutchison Disclosure Letter, the Vodafone Disclosure Letter, the Shareholders’ Agreement, the Loan Agreements, the Hutchison Trade Mark Agreement, the Vodafone Trade Mark Agreement, the Vodafone Trade Mark Loan Note, the Vodafone Intercompany Services Agreement, each of the Vodafone Surviving Intra Group Agreements, the Transitional Services Agreement, the Tax Covenant and all documents entered into pursuant to this Agreement, and “Transaction Document” means any one of them;
13
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
“Transitional Services Agreement” means the agreement between [***] and Hutchison 3G UK Limited relating to the continuation of certain services, to be entered into on the date of this Agreement;
[***]
“TUPE” means the Transfer of Undertakings (Protection of Employment) Regulations 2006 (as amended or replaced from time to time) or any equivalent legislation in any other jurisdiction under which the employment of an employee or worker automatically transfers;
“Turkey Antitrust Condition” has the meaning given to it in Clause 5.1.8(iii);
“Turkish Competition Board” means the Turkish Competition Board (in Turkish, Türk Rekabet Kurulu) of the Republic of Turkey;
“UK” means the United Kingdom of Great Britain and Northern Ireland;
“UK Antitrust Condition” has the meaning given to it in Clause 5.1.6(iii)(b);
“UK GAAP” means the generally accepted accounting practice in the UK including Financial Reporting Standards (specifically Financial Reporting Standard 101 and, in respect of [***], Financial Reporting Standard 102) and Statements of Standard Accounting Practice, each as issued or adopted by the Financial Reporting Council, Abstracts issued by the Financial Reporting Council (and pronouncements previously issued by the Urgent Issues Task Force of the Accounting Standards Board) and pronouncements by the Conduct Committee of the Financial Reporting Council (or its predecessor, the Financial Reporting Review Panel);
“UKLRs” means the listing rules made by the FCA pursuant to Part VI of FSMA, as such may be amended, modified or revised from time to time;
“Underlying Claim” has the meaning given to it in Clause 14.3.2;
“VAT” means:
(a) |
within the UK, any value added tax imposed by the VAT Act 1994 and legislation and regulations supplemental thereto; |
(b) |
within the European Union, such Taxation as may be levied in accordance with (but subject to derogations from) the Directive 2006/112/EC; and |
(c) |
any similar Taxation levied by reference to added value or sales, whether imposed in the UK or the European Union or imposed elsewhere, but excluding any duties, levies and similar charges; |
[***]
“Vodafone Business Warranties” means the Vodafone Warranties, excluding the Vodafone Fundamental Warranties, and “Vodafone Business Warranty” means any one of the Vodafone Business Warranties;
“Vodafone Capitalisation Issue” has the meaning given to it in Clause 3.5.1(i); “Vodafone Capitalisation Shares” means such number of ordinary shares of £1.00 each in the entire issued share capital of Mergeco as shall result in Vodafone holding [***] per cent.
14
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
of the entire issued ordinary share capital in Mergeco immediately following the simultaneous Vodafone Capitalisation Issue and Hutchison Capitalisation Issue, to be determined by Vodafone (so far as possible, based on the valuations and amounts notified to Hutchison under Clause 3.1.2) and notified to Hutchison no later than [***] Business Days prior to Closing;
[***]
“Vodafone Closing Lender” means the applicable lender under the Initial Vodafone Shareholder Loans (as defined in the Shareholders’ Agreement) and which shall be a Vodafone Retained Group Company;
[***]
“Vodafone Directors” means the directors of Vodafone Topco from time to time;
[***]
“Vodafone Disclosure Letter” means the letter dated on the same date as this Agreement from Vodafone to Mergeco disclosing:
(a) |
certain information in relation to the Vodafone Warranties; and |
(b) |
details of other matters referred to in this Agreement; |
[***]
“Vodafone Existing Debt” means the loan receivable owed by Mergeco to Vodafone International Operations Limited on the Closing Date, immediately prior to, and without giving effect to, the transactions contemplated under Clause 3;
“Vodafone FCA Condition” has the meaning given to it in Clause 5.1.4(iii);
[***]
“Vodafone General Meeting” means the general meeting (including any adjournment thereof) of the Vodafone Topco Shareholders to be convened in connection with the Transaction;
[***]
“Vodafone Group” means Vodafone Topco and its subsidiary undertakings from time to time (excluding Mergeco) and “Vodafone Group Company” means any entity in the Vodafone Group;
“Vodafone Group Insurance Policies” means all insurance policies maintained by the Vodafone Group from time to time under which any Vodafone UK Group Company is entitled to any benefit, other than any Vodafone UK Group Insurance Policies;
“Vodafone Guaranteed Obligations” has the meaning given to it in Clause 22.2.1;
[***]
“Vodafone’s Lawyers” means Slaughter and May of One Bunhill Row, London EC1Y 8YY, UK; “Vodafone Mergeco Directors” means the directors of Mergeco appointed on Closing by Vodafone pursuant to clause 5.1 (The Board and the Board Committees) of the Shareholders’ Agreement;
15
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
[***]
“Vodafone Reorganisation” means [***];
[***]
“Vodafone Representative Member” means the representative member of the Vodafone VAT Group (which at the date of this Agreement is Vodafone Group Services Limited);
“Vodafone Resolutions” has the meaning given to it in Clause 5.1.11;
“Vodafone Retained Group” means the entities in the Vodafone Group that are not part of the Vodafone UK Group or (after Closing) the Three UK Group and “Vodafone Retained Group Company”, means any entity in the Vodafone Retained Group;
[***]
“Vodafone Shareholder Resolution Condition” means the condition set out at Clause 5.1.11;
[***]
“Vodafone Shares” has the meaning given to it in the Shareholders’ Agreement;
[***]
“Vodafone Topco Shareholders” means the holders of shares in Vodafone Topco from time to time;
[***]
“Vodafone VAT Group” means the group of persons for VAT purposes to which the Vodafone Representative Member belongs;
“Vodafone Warranties” means the warranties given by Vodafone pursuant to Clause 11.3 and Schedule 16, and “Vodafone Warranty” means any one of them;
“Vodafone Wrong Pocket Asset” means any asset or property (which, for the avoidance of doubt, shall exclude any contract, agreement, service or employee) which relates exclusively
or predominantly to the business of the Vodafone Retained Group but which, following Closing, is owned by the Mergeco Group;
[***]
“Warranty Claim” means a claim against:
(a) |
Hutchison for breach of any of the warranties it makes under Schedule 14; or |
(b) |
Vodafone for breach of any of the warranties it makes under Schedule 16; |
[***]
1.2 |
Singular, Plural, Gender |
References to one gender include all genders and (unless the context otherwise requires) references to the singular include the plural and vice versa.
16
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
1.3 |
References to Persons and Companies |
References to:
1.3.1 |
a person include any individual, firm, company, body corporate, government, state or agency of a state, local or municipal authority or government body or any joint venture, association or partnership (whether or not having separate legal personality and including a limited liability partnership); and |
1.3.2 |
a company include any company, corporation or other body corporate, wherever and however incorporated or established. |
1.4 |
References to Subsidiaries and Holding Companies |
The words “body corporate”, “holding company”, “subsidiary” and “subsidiary undertaking” shall have the same meanings in this Agreement as their respective definitions in the Companies Act 2006.
1.5 |
Connected Persons |
A person shall be deemed to be connected with another if that person is connected with such other within the meaning of Section 1122 of CTA 2010.
1.6 |
Schedules etc. |
References to this Agreement shall include any Recitals and Schedules to it and references to Clauses and Schedules are to Clauses of, and Schedules to, this Agreement. References to paragraphs and Parts are to paragraphs and Parts of the Schedules. The Recitals and Schedules form part of this Agreement and shall have the same force and effect as if expressly set out in the body of this Agreement.
1.7 |
Headings and Titles |
Headings and titles are for convenience only and do not affect the interpretation of this Agreement.
1.8 |
Reference to Documents |
References to, or to a provision of, this Agreement or any other document referred to in this Agreement (including any document in the Agreed Form) is a reference to, as applicable, this Agreement or that other document (or the relevant provision of, as applicable, this Agreement or that other document) as amended, restated, novated or supplemented (other than in breach of the provisions of, as applicable, this Agreement or that other document) at any time.
1.9 |
References to Statutes |
References to any statute or statutory provision shall be construed as a reference to the same as it may have been, or may from time to time be, amended, modified or re-enacted and shall include any subordinate legislation made from time to time under that statute or statutory provision.
17
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
1.10 |
Information |
References to books, records or other information mean books, records or other information in any form, including paper, electronically stored data, magnetic media, film and microfilm.
1.11 |
Non-Limiting Effect of Words |
References to “include”, “includes”, “including”, “in particular” and words of similar effect shall be deemed to be followed by the words “without limitation” and shall not be deemed to limit the general effect of the words that precede them.
1.12 |
General Words |
The rule known as the ejusdem generis rule shall not apply and accordingly general words introduced by the word “other” shall not be given a restrictive meaning by reason of the fact that they are preceded by words indicating a particular class of acts, matters or things. General words shall not be given a restrictive meaning by reason of the fact that they are followed by particular examples intended to be embraced by the general words.
1.13 |
Meaning of “to the extent that” and Similar Expressions |
The formulation “to the extent that” shall mean “if, but only to the extent that” and not solely “if”, and similar expressions shall be construed in the same way.
1.14 |
References to “liabilities”, “costs” and/or “expenses” |
References to “liabilities”, “costs” and/or “expenses” incurred by a person shall not include any amount in respect of VAT comprised in such liabilities, costs and/or expenses for which that person or, if relevant, any other member of the VAT group to which that person belongs is entitled to credit as input tax.
1.15 |
References to “indemnify” or “indemnifying” |
References to “indemnify” or “indemnifying” any person against any circumstance shall mean indemnifying and keeping them harmless, on an after-Tax basis, from all actions, claims and proceedings from time to time made against such person and all loss, damage, payments, costs or reasonable expenses suffered made or incurred by such person as a consequence of that circumstance.
1.16 |
Meaning of “after-Tax basis” |
Any indemnity, covenant or other obligation to pay (the “Payment Obligation”) being given or assumed to be given on an “after-Tax basis” means that the amount payable pursuant to such Payment Obligation (the “Payment”) shall be calculated in such a manner as will ensure that, after taking into account:
1.16.1 |
any Tax required to be deducted or withheld from the Payment; and |
1.16.2 |
the amount and timing of any additional Tax which becomes payable by the recipient of the Payment or any member of the recipient’s Group (as defined in the Shareholders’ Agreement) as a result of the Payment’s being subject to Tax in the hands of the recipient of the Payment (provided that, where the Payment Obligation is Hutchison’s and relates to a Payment to be made to Mergeco, this Clause 1.16.2 shall not apply if and to the extent that the Payment, together with the aggregate amount of all previous Payments made by Hutchison to Mergeco on an after-Tax |
18
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
basis under this Agreement and any payments made by Hutchison to Mergeco pursuant to the Tax Covenant, exceeds an amount equal to the aggregate value, in each case as at the Three UK Share Sale Closing, of the Mergeco Contribution Shares and the Mergeco Loan Note 1); and
1.16.3 |
the amount and timing of any Tax benefit which is obtained by the recipient of the Payment or any member of the recipient’s Group (as defined in the Shareholders’ Agreement) to the extent that such Tax benefit is attributable to the matter giving rise to the Payment Obligation or to the receipt of the Payment, |
the recipient of the Payment and any member of the recipient’s Group (as defined in the Shareholders’ Agreement) is in the same position as that in which they would have been if the matter giving rise to the Payment Obligation had not occurred (or, in the case of a Payment Obligation arising by reference to a matter affecting a person other than the recipient of the Payment, the recipient of the Payment and that other person are, taken together, in the same position as that in which they would have been had the matter giving rise to the Payment Obligation not occurred), provided that the amount of the Payment shall not exceed that which it would have been if it had been regarded for all Tax purposes as received solely by the recipient and not any other person, and except to the extent that the recipient is Mergeco and it is left in a worse position solely as a result of the operation of the proviso at the end of Clause 1.16.2.
1.17 |
Legal Terms |
References to any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall, in respect of any jurisdiction other than England, be treated as a reference to any analogous term in that jurisdiction.
1.18 |
Obligations to Procure |
Unless otherwise expressly provided, the expression “procure” where used in the context of the Three UK JV Companies or the Vodafone UK JV Companies means the relevant party undertaking to exercise (or caused to be exercised) its voting rights (if any) in the relevant Three UK JV Company or Vodafone UK JV Company and to use any and all other powers vested in it from time to time as legal and/or beneficial owner of the shares in the relevant Three UK JV Companies or the Vodafone UK JV Companies.
1.19 |
Currency |
In this Agreement, references to “£” are references to the lawful currency from time to time of the UK and references to “€” are references to the single currency from time to time of any member state of the European Union that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.
1.20 |
References to a “day” |
References to a “day” (including within the phrase “Business Day”) shall mean a period of 24 hours running from midnight to midnight (London time).
19
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
1.21 |
References to a Time Period |
References to a time period where such time period is to be counted in days, months or weeks shall, unless otherwise indicated, commence on the date of notice and such period shall include the first day, month or week (as appropriate) of that period.
1.22 |
References to “occurrence-based” |
References to “occurrence-based” insurance policies shall mean a type of insurance policy that provides coverage for claims that arise from incidents that occurred during the policy period, regardless of whether the claim with respect to the relevant incident is reported or made within or after the policy period.
2 |
Pre-Closing Reorganisations |
On and subject to the terms of this Agreement:
2.1 |
Hutchison and Hutchison Topco shall procure that the Hutchison Reorganisation is implemented in accordance with the provisions of Schedule 4; and |
2.2 |
Vodafone and Vodafone Topco shall procure that the Vodafone Reorganisation is implemented in accordance with the provisions of Schedule 5, |
and in each case in compliance with applicable laws and having obtained, to the extent required to be obtained, relevant regulatory or third party waivers, consents, derogations, amendments, licences or approvals in connection therewith.
3 |
Closing Transactions |
3.1 |
Closing Transactions |
3.1.1 |
On and subject to the terms of this Agreement, each of Hutchison, Hutchison Topco, Vodafone, Vodafone Topco and Mergeco shall, and Hutchison Topco shall procure that the relevant Hutchison Group Companies shall, comply with and implement the transactions under, and Vodafone Topco shall procure that the relevant Vodafone Group Companies shall, comply with and implement the transactions under, Clauses 3.3 to 3.6 sequentially on the date specified for Closing in accordance with Clause 8.1 or Clause 8.4.3 (as applicable). Illustrative diagrams of the transactions under Clauses 3.3 to 3.6 are set out in Schedule 6. Where there is any inconsistency between Clauses 3.3 to 3.6 and Schedule 6, Clauses 3.3 to 3.6 shall prevail. |
3.1.2 |
Not later than [***] Business Days prior to Closing, Vodafone shall (having acted reasonably to determine such values and amounts, and with Hutchison providing reasonable cooperation in producing such determination) notify Hutchison of: (i) the Three UK Valuation; (ii) the valuation of the Vodafone UK Shares; (iii) the required amount of intra-group debt for the Vodafone UK Group and; (iv) the required amount (comprising principal and interest) of the Hutchison Shareholder Loans, in each case for the purposes of the transactions under: (a) Clauses 3.3 to 3.6; (b) paragraphs 6 to 11 of Schedule 5; and (c) paragraph 2 of Schedule 4. |
3.1.3 |
The required amount (comprising principal and interest) of the Hutchison Shareholder Loans notified by Vodafone to Hutchison must not be less than [***]. |
20
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
3.1.4 |
The aggregate amount of: (i) the Mergeco Loan Note 1; (ii) the nominal value of the Mergeco Contribution Shares; and (iii) the Mergeco Contribution Share Premium, shall not be greater than [***]. |
3.1.5 |
Vodafone shall begin the process to determine the valuations and amounts to be notified to Hutchison pursuant to Clause 3.1.2 when it reasonably considers Closing to be no more than [***] months away. Vodafone shall consult with Hutchison regarding the determination of such valuations and amounts and shall take into account any reasonable comments made by Hutchison during such consultation. Hutchison shall provide its reasonable cooperation to Vodafone in producing such determination. |
3.1.6 |
Hutchison shall not be required to use any valuations or amounts notified to it under Clause 3.1.2, or otherwise determined by Vodafone in relation to any instrument issued or transferred under Clauses 3.3 to 3.5, for any purposes other than the transactions under Clauses 3.3 to 3.5 and paragraph 2 of Schedule 4. |
3.1.7 |
When determining the amounts and values to be used for each of the transactions under Clauses 3.3 to 3.5, Vodafone shall, so far as possible, determine such amounts and values so that each transaction is at an arm’s length value, based on an assumption that the valuations and amounts notified to Hutchison under Clause 3.1.2 are correct. |
3.1.8 |
Prior to the Closing Date, Vodafone shall implement (and shall procure that Mergeco and each Vodafone UK Group Company implement) paragraphs 6 to 11 of Schedule 5. |
3.1.9 |
Prior to the Closing Date, Hutchison shall implement (and shall procure that each Three UK Group Company implements) paragraph 2 of Schedule 4. |
3.2 |
Closing Estimates |
3.2.1 |
Not later than [***] Business Days prior to Closing, Hutchison shall notify Vodafone of the following: |
(i) |
the Estimated Hutchison Closing Cash; |
(ii) |
the Estimated Hutchison Closing Debt; and |
(iii) |
the Estimated Hutchison Closing Working Capital. |
3.2.2 |
Not later than [***] Business Days prior to Closing, Vodafone shall notify Hutchison of the following: |
(i) |
the Estimated Vodafone Closing Cash; |
(ii) |
the Estimated Vodafone Closing Debt; and |
(iii) |
the Estimated Vodafone Closing Working Capital. |
21
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
3.3 |
[***] |
3.4 |
Contribution of the Three UK Shares and Sale of Debt |
3.4.1 |
Contribution of the Three UK Shares |
(i) |
Immediately following the Mergeco Sale Closing, Hutchison shall sell, and Mergeco shall purchase, the Three UK Shares (the “Three UK Share Sale”). |
(ii) |
The Three UK Shares shall be sold free from Encumbrances and together with all rights and advantages attaching to them (including the right to receive all dividends or distributions declared, made or paid on or after completion of the Three UK Share Sale (the “Three UK Share Sale Closing”)). |
(iii) |
Hutchison shall procure that, on or prior to the Three UK Share Sale Closing, any and all rights of pre-emption over the Three UK Shares are waived irrevocably by the persons entitled thereto. |
(iv) |
In consideration for the sale and purchase of the Three UK Shares: |
(a) |
Mergeco shall issue the Mergeco Contribution Shares to Hutchison, with a portion of such consideration allocated to the Mergeco Contribution Share Premium; and |
(b) |
Mergeco shall issue the Mergeco Loan Note 1 to Hutchison. |
(v) |
The Mergeco Contribution Shares shall be issued fully paid, free from Encumbrances and shall rank in all respects pari passu with the existing issued fully paid shares in Mergeco, including the right to receive all dividends and other distributions declared, made or paid by Mergeco after the Three UK Share Sale Closing. |
3.4.2 |
Sale of Part of Debt Held by Hutchison in Three UK |
(i) |
Simultaneously with the Three UK Share Sale Closing, Hutchison shall sell, and Mergeco shall purchase, the Hutchison Excess Debt. |
(ii) |
In consideration for the sale and purchase of the Hutchison Excess Debt, Mergeco shall issue the Mergeco Loan Note 2 to Hutchison. |
3.4.3 |
Settlement of Mergeco Sale Shares Consideration |
Immediately following the completion of the transactions contemplated under Clauses 3.4.1 and 3.4.2, Hutchison shall assign an amount of the Mergeco Loan Note 1 equal to the Mergeco Sale Shares Consideration to Vodafone in full repayment and settlement of the Mergeco Sale Shares Consideration, which was left outstanding under Clause 3.3.4.
3.5 |
Capitalisation of Mergeco Debt |
3.5.1 |
Vodafone Capitalisation |
(i) |
Immediately following the completion of the transactions under Clause 3.4, Mergeco shall issue the Vodafone Capitalisation Shares to Vodafone (the "Vodafone Capitalisation Issue”). |
22
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
(ii) |
The Vodafone Capitalisation Shares shall be issued fully paid, free from Encumbrances and shall rank in all respects pari passu with the existing issued fully paid shares in Mergeco, including the right to receive all dividends and other distributions declared, made or paid by Mergeco after the Vodafone Capitalisation Issue. |
(iii) |
The consideration for the Vodafone Capitalisation Issue shall be satisfied by the release of: |
(a) |
the Vodafone Existing Debt; and |
(b) |
the portion of the Mergeco Loan Note 1 assigned to Vodafone under Clause 3.4.3. |
3.5.2 |
Hutchison Capitalisation |
(i) |
Simultaneously with the Vodafone Capitalisation Issue, Mergeco shall issue the Hutchison Capitalisation Shares to Hutchison (the “Hutchison Capitalisation Issue”). |
(ii) |
The Hutchison Capitalisation Shares shall be issued fully paid, free from Encumbrances and shall rank in all respects pari passu with the existing issued fully paid shares in Mergeco, including the right to receive all dividends and other distributions declared, made or paid by Mergeco after the Hutchison Capitalisation Issue. |
(iii) |
The consideration for the Hutchison Capitalisation Issue under this Agreement shall be satisfied by the release of: |
(a) |
the remaining amount owed to Hutchison under the Mergeco Loan Note 1, which will remain outstanding after completion of the transactions under Clause 3.4.3; and |
(b) |
the Mergeco Loan Note 2. |
3.5.3 |
The parties acknowledge and agree that, immediately following completion of the transactions set out in Clauses 3.5.1 and 3.5.2, Hutchison shall hold 49 per cent. of the entire issued ordinary share capital in Mergeco and Vodafone shall hold 51 per cent. of the entire issued ordinary share capital in Mergeco. When Mergeco’s share register is updated to reflect such transactions, Vodafone’s name shall be entered first in the register with Hutchison’s name to be entered in the register immediately thereafter. |
3.6 |
Mergeco Refinancing |
3.6.1 |
Immediately following completion of the transactions set out in Clauses 3.3 to 3.5, Vodafone shall procure that Vodafone Closing Lender shall lend [***] to Mergeco pursuant to the terms and conditions of the Three UK Loan Agreement (the “Three UK Loan”). |
3.6.2 |
Immediately following receipt of the proceeds of the Three UK Loan, Mergeco shall lend all such proceeds received pursuant to the Three UK Loan to Three UK and shall procure that Three UK shall apply all such proceeds in full repayment and settlement of the Hutchison Existing Debt. |
23
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
3.7 |
Closing Accounts Consideration |
3.7.1 |
If (i) the amount of the Estimated Hutchison Closing Cash (stated as a positive amount) plus the Estimated Hutchison Closing Debt (stated as a negative amount) is a greater negative amount than (ii) the amount of the Target Hutchison Cash (stated as a positive amount) plus the Target Hutchison Debt (stated as a negative amount), then Hutchison shall make a payment equal to the difference to Mergeco. |
3.7.2 |
If (i) the amount of the Estimated Hutchison Closing Cash (stated as a positive amount) plus the Estimated Hutchison Closing Debt (stated as a negative amount) is a lesser negative amount than (ii) the amount of the Target Hutchison Cash (stated as a positive amount) plus the Target Hutchison Debt (stated as a negative amount), then Mergeco shall make a payment equal to the difference to Hutchison. |
3.7.3 |
If the Estimated Hutchison Closing Working Capital is less than the Target Hutchison Working Capital, then Hutchison shall make a payment equal to the difference to Mergeco. |
3.7.4 |
If the Estimated Hutchison Closing Working Capital is greater than the Target Hutchison Working Capital, then Mergeco shall make a payment equal to the difference to Hutchison. |
3.7.5 |
If (i) the amount of the Estimated Vodafone Closing Cash (stated as a positive amount) plus the Estimated Vodafone Closing Debt (stated as a negative amount) is a greater negative amount than (ii) the amount of the Target Vodafone Cash (stated as a positive amount) plus the Target Vodafone Debt (stated as a negative amount), then Vodafone shall make a payment equal to the difference to Mergeco. |
3.7.6 |
If (i) the amount of the Estimated Vodafone Closing Cash (stated as a positive amount) plus the Estimated Vodafone Closing Debt (stated as a negative amount) is a lesser negative amount than (ii) the amount of the Target Vodafone Cash (stated as a positive amount) plus the Target Vodafone Debt (stated as a negative amount), then Mergeco shall make a payment equal to the difference to Vodafone. |
3.7.7 |
If the Estimated Vodafone Closing Working Capital is less than the Target Vodafone Working Capital, then Vodafone shall make a payment equal to the difference to Mergeco. |
3.7.8 |
If the Estimated Vodafone Closing Working Capital is greater than the Target Vodafone Working Capital, then Mergeco shall make a payment equal to the difference to Vodafone. |
3.7.9 |
Each of Vodafone and Hutchison shall make the payments which each of them is obliged to make pursuant to this Clause 3.7, on the basis of the calculations set out herein. Each such payment shall be settled through the pre-closing steps: (i) for payments between Vodafone and Mergeco, by adjusting the amount of the Vodafone UK Pre-Closing Dividend payable under paragraph 9 of Schedule 5 and making an equivalent adjustment to the amount of the dividend payable by Mergeco to Vodafone under paragraph 11 of Schedule 5; or (ii) for payments between Hutchison and Mergeco, by adjusting the actions to be taken in accordance with paragraph 2 of Schedule 4. |
3.7.10 |
To the extent that any payments pursuant to this Clause 3.7 are not settled under Clause 3.7.9, such payments shall be made on Closing by causing such payments |
24
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
to be credited to the bank account(s) as may be designated by such party, in full, in pounds sterling and in immediately available cash funds.
3.8 |
Adjustments to Consideration |
Any payment made by Vodafone or Hutchison to Mergeco, or by Mergeco to Vodafone or Hutchison, shall (so far as possible) be treated as an adjustment to the consideration for the sale of the Vodafone UK Shares pursuant to the Vodafone UK Share Sale or the Three UK Shares pursuant to the Three UK Share Sale (as appropriate) to Mergeco to the extent of the payment. Any payment made by Vodafone to Hutchison, or by Hutchison to Vodafone, shall (so far as possible) be treated as an adjustment to the consideration for the sale of the Mergeco Sale Shares to the extent of the payment.
4 |
Closing Accounts |
The provisions of Schedule 7 shall apply.
5 |
Conditions |
5.1 |
Conditions Precedent |
The Closing Transactions are conditional upon satisfaction of the following conditions, or their satisfaction subject only to Closing:
5.1.1 |
The Hutchison Reorganisation Condition |
The Hutchison Reorganisation being implemented in accordance with the provisions of paragraphs 1 and 3 of Schedule 4, subject to Clause 5.2.1(iii) (the “Hutchison Reorganisation Condition”).
5.1.2 |
The Vodafone Reorganisation Condition |
The Vodafone Reorganisation being implemented in accordance with the provisions of paragraphs 1 to 5 of Schedule 5, subject to Clause 5.2.2(iii) (the “Vodafone Reorganisation Condition”).
5.1.3 |
The Hutchison FCA Condition |
In respect of Hutchison and any other Hutchison Group Company which will acquire control (for the purposes of FSMA) over Vodafone UK as a result of the Transaction (each an “Additional Hutchison Controller”), the FCA:
(i) |
having given written notice for the purposes of Section 189(4)(a) of FSMA that it has determined to approve such acquisition of control by Hutchison and any Additional Hutchison Controller unconditionally (save as to the period within which the acquisition of control must occur), provided that each such approval remains effective; or |
(ii) |
having given written notice for the purposes of Section 189(7) of FSMA that it has determined to approve such acquisition of control by Hutchison and any Additional Hutchison Controller subject to conditions, provided that each such approval remains effective and that, where applicable, the FCA has confirmed in writing that it considers any condition imposed by it to have been satisfied; or |
25
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
(iii) |
being treated, by virtue of Section 189(6) of FSMA, as having approved such acquisition of control by Hutchison and any Additional Hutchison Controller (together with Clauses 5.1.3(i) and 5.1.3(ii), the “Hutchison FCA Condition”). |
5.1.4 |
The Vodafone FCA Condition |
In respect of Vodafone and any other Vodafone Group Company which will acquire control (for the purposes of FSMA) over Hutchison 3G UK Limited as a result of the Transaction (each an “Additional Vodafone Controller”), the FCA:
(i) |
having given written notice for the purposes of Section 189(4)(a) of FSMA that it has determined to approve such acquisition of control by Vodafone and any Additional Vodafone Controller unconditionally (save as to the period within which the acquisition of control must occur), provided that each such approval remains effective; or |
(ii) |
having given written notice for the purposes of Section 189(7) of FSMA that it has determined to approve such acquisition of control by Vodafone and any Additional Vodafone Controller subject to conditions, provided that each such approval remains effective and that, where applicable, the FCA has confirmed in writing that it considers any condition imposed by it to have been satisfied; or |
(iii) |
being treated, by virtue of Section 189(6) of FSMA, as having approved such acquisition of control by Vodafone and any Additional Vodafone Controller (together with Clauses 5.1.4(i) and 5.1.4(ii), the “Vodafone FCA Condition”). |
5.1.5 |
The Mergeco FCA Condition |
In respect of Mergeco, the FCA:
(i) |
having given written notice for the purposes of Section 189(4)(a) of FSMA that it has determined to approve the acquisition of control by Mergeco over Hutchison 3G UK Limited which would arise as a result of the Transaction unconditionally (save as to the period within which the acquisition of control must occur), provided that such approval remains effective; or |
(ii) |
having given written notice for the purposes of Section 189(7) of FSMA that it has determined to approve such acquisition of control by Mergeco subject to conditions, provided that each such approval remains effective and that, where applicable, the FCA has confirmed in writing that it considers any condition imposed by it to have been satisfied; or |
(iii) |
being treated, by virtue of Section 189(6) of FSMA, as having approved the acquisition of control by Mergeco over Hutchison 3G UK Limited (together with Clauses 5.1.5(i) and 5.1.5(ii), the “Mergeco FCA Condition”). |
26
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
5.1.6 |
The UK Antitrust Condition |
The occurrence of any of the following events:
(i) |
confirmation having been received from the CMA that the CMA does not intend to refer the Transaction under Section 33(1) of the Enterprise Act for a Phase 2 CMA Reference; or |
(ii) |
confirmation having been received from the CMA that the CMA proposes to accept undertakings (as offered by the parties in accordance with Clause 5.2.4(ii)) in lieu of a Phase 2 CMA Reference in respect of the Transaction under Section 73 of the Enterprise Act; or |
(iii) |
following a Phase 2 CMA Reference, either: |
(a) |
confirmation having been received from the CMA that the Transaction may proceed without any undertakings, conditions or orders; or |
(b) |
confirmation having been received from the CMA that the Transaction may proceed subject to the giving of Commitments in accordance with Clause 5.2.4(ii), and all conditions contained in such decision having been satisfied or complied with (together with Clauses 5.1.6(i) and 5.1.6(ii), the “UK Antitrust Condition”). |
5.1.7 |
The EU Antitrust Condition |
To the extent that the Transaction amounts to a concentration subject to review by the European Commission under the EU Merger Regulation:
(i) |
the European Commission declaring that the Transaction is compatible with the internal market, either unconditionally or conditional subject to the giving of Commitments in accordance with Clause 5.2.4(ii), pursuant to Article 6(1)(b), Article 6(2), Article 8(1) or Article 8(2) of the EU Merger Regulation and all conditions contained in such decision having been satisfied or complied with; or |
(ii) |
there has been a deemed approval in respect of the Transaction under the EU Merger Regulation pursuant to Article 10(6) of the EU Merger Regulation; or |
(iii) |
in the event that all or any part of the Transaction is referred, or is deemed under the EU Merger Regulation or Protocol 24 of the EEA Agreement to have been referred, by the European Commission to the competent authorities of one or more European Union member states or EFTA States, all such competent authorities whose approval is necessary for Closing of all or part of the Transaction to occur, adopting, or having been deemed under relevant laws to have adopted, all decisions and approvals necessary to allow Closing of the Transaction, either unconditionally or conditional subject to the giving of Commitments in accordance with Clause 5.2.4(ii) and all conditions contained in such decisions having been satisfied or complied with (together with Clauses 5.1.7(i) and 5.1.7(ii), the “EU Antitrust Condition”). |
27
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
5.1.8 |
The Turkey Antitrust Condition |
To the extent that the Transaction triggers a mandatory filing under Turkey Law No. 4054:
(i) |
the unconditional or conditional (subject to the giving of Commitments in accordance with Clause 5.2.4(ii)) approval of the Turkish Competition Board for the Transaction having been obtained in writing; or |
(ii) |
the Turkish Competition Board having decided that the Transaction is not subject to the approval of the Turkish Competition Board; or |
(iii) |
the approval of the Turkish Competition Board having been deemed to have been given by virtue of the failure or omission by the Turkish Competition Board to respond to the application within a period of [***] calendar days commencing from the date of submission of such application or the date on which the Turkish Competition Board deems the relevant submission complete (together with Clauses 5.1.8(i) and 5.1.8(ii), the “Turkey Antitrust Condition”). |
5.1.9 |
The NS&I Condition |
To the extent that the Transaction (including any interim steps in implementation of the Transaction, if applicable) triggers one or more mandatory filings by either or all parties under the NS&I Act, all such filing(s) having been accepted and in respect of each such filing either:
(i) |
confirmation having been received under Section 14(8)(b)(ii) of the NS&I Act that the SoS will not take any further action in relation to the Transaction; or |
(ii) |
following a call-in notice, the SoS giving a final notification under Section 26 of the NS&I Act that no further action will be taken under the NS&I Act in relation to the Transaction; or |
(iii) |
following a call-in notice, the SoS making a final order under Section 26 of the NS&I Act which does not prohibit the Transaction, or any interim step in the implementation of the Transaction as the case may be, or which allows the Transaction, or any interim step in implementation of the Transaction as the case may be, to proceed on terms satisfactory to the parties in accordance with Clause 5.2.4(ii) (together with Clauses 5.1.9(i) and 5.1.9(ii), the “NS&I Condition”). |
5.1.10 |
The Hutchison Shareholder Resolution Condition |
The CKHH Shareholders having passed requisite resolutions (the “Hutchison Resolutions”) at a general meeting approving the Transaction and [***], to the extent required by and in accordance with the HKLRs and applicable laws for the parties to this Agreement to consummate the Transaction and [***] (the “Hutchison Shareholder Resolution Condition”).
5.1.11 |
The Vodafone Shareholder Resolution Condition |
The Vodafone Topco Shareholders having passed requisite resolutions (the “Vodafone Resolutions”) at a general meeting approving [***], [***] and [***], to the extent required by and in accordance with the UKLRs and applicable laws for the parties to consummate [***], [***] and [***] (the “Vodafone Shareholder Resolution Condition”).
28
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
5.1.12 |
[***] |
5.2 |
[***] |
5.3 |
Non-Satisfaction/Waiver |
5.3.1 |
None of the conditions set out in Clause 5.1 may be waived in whole or in part at any time. |
5.3.2 |
If any of the conditions set out in Clause 5.1 are not satisfied by 5.00 p.m. (London time) on the Longstop Date, any party may, in its sole discretion, terminate this Agreement (other than the Surviving Clauses), provided that in each case the party proposing to terminate this Agreement is not in material breach of this Agreement. |
6 |
Pre-Closing |
6.1 |
Hutchison’s Obligations in Relation to the Conduct of Business |
6.1.1 |
Subject to Clause 6.1.3, Hutchison shall procure that between the date of this Agreement and Closing, each Three UK Group Company shall carry on its business: (a) as a going concern; (b) materially in compliance with applicable laws; and (c) in the ordinary course as carried on in the [***] months prior to the date of this Agreement, save insofar as agreed in writing by Vodafone (such consent not to be unreasonably withheld or delayed). |
6.1.2 |
Without prejudice to the generality of Clause 6.1.1 and subject to Clause 6.1.3, Hutchison shall procure that, in order to preserve the value of the Three UK Business, between the date of this Agreement and Closing, each Three UK Group Company shall not, except as may be expressly required to give effect to and to comply with this Agreement, without the prior written consent of Vodafone (such consent not to be unreasonably withheld or delayed) undertake any of the actions set out in Schedule 8. For the avoidance of doubt, any of the actions which are carved out or otherwise permitted under Schedule 8 shall in each case only be permitted to the extent not otherwise inconsistent with any of the other covenants, undertakings or obligations expressly provided for in the Transaction Documents. |
6.1.3 |
[***] |
6.1.4 |
Without prejudice to the generality of Clause 6.1.1, prior to Closing, Hutchison shall, subject to compliance with Data Protection Legislation and other applicable laws (including any required security clearances) and the parties’ confidentiality obligations set out in Clause 17.2, procure that the Three UK Group shall allow Vodafone and its agents, upon reasonable notice, reasonable access to, and to take copies of, the books, records and documents of or relating in whole or in part to the Three UK Group, provided that the obligations of Hutchison under this Clause 6.1.4 shall not extend to allowing access to information which: |
(i) |
is commercially sensitive information of the Three UK Group; or |
29
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
(ii) |
relates to the Hutchison Intra Group Agreements that terminate at or prior to Closing. |
6.2 |
Vodafone’s Obligations in Relation to the Conduct of Business |
6.2.1 |
Subject to Clause 6.2.4, Vodafone shall procure that, between the date of this Agreement and the satisfaction of the Vodafone Reorganisation Condition, Mergeco shall not engage in any activities, carry out any business or incur any obligations or liabilities (including Financial Debt) (whether accrued, absolute, contingent or otherwise), other than engaging in activities or incurring liabilities incidental to the maintenance of its corporate existence or for the purposes of the execution or implementation of this Agreement (including, but not limited to, the Vodafone Reorganisation) and any other Transaction Document to which it is a party. |
6.2.2 |
Subject to Clause 6.2.4, Vodafone shall procure that: (i) between the date of this Agreement and Closing, each Vodafone UK Group Company shall; and (ii) between the date of the satisfaction of the Vodafone Reorganisation Condition and Closing, Mergeco shall, each carry on their respective businesses: (a) as a going concern; (b) materially in compliance with applicable laws; and (c) in the ordinary course as carried on in the [***] months prior to the date of this Agreement (and in the case of Mergeco, as carried on by the Vodafone UK Group), save insofar as agreed in writing by Hutchison (such consent not to be unreasonably withheld or delayed). |
6.2.3 |
Without prejudice to the generality of Clauses 6.2.1 and 6.2.2 and subject to Clause 6.2.4, Vodafone shall procure that, in order to preserve the value of the Vodafone UK Business and the business of Mergeco, between the date of this Agreement and Closing, each Vodafone UK Group Company and Mergeco shall not, except as may be expressly required to give effect to and to comply with this Agreement, without the prior written consent of Hutchison (such consent not to be unreasonably withheld or delayed) undertake any of the actions set out in Schedule 9. For the avoidance of doubt, any of the actions which are carved out or otherwise permitted under Schedule 9 shall in each case only be permitted to the extent not otherwise inconsistent with any of the other covenants, undertakings or obligations expressly provided for in the Transaction Documents. |
6.2.4 |
[***] |
6.2.5 |
Without prejudice to the generality of Clauses 6.2.1 and 6.2.2, prior to Closing, Vodafone shall, subject to compliance with Data Protection Legislation and other applicable laws (including any required security clearances) and the parties’ confidentiality obligations set out in Clause 17.2, procure that the Vodafone UK Group and Mergeco shall allow Hutchison and its agents, upon reasonable notice, reasonable access to, and to take copies of, the books, records and documents of or relating in whole or in part to the Vodafone UK Group and Mergeco, provided that the obligations of Vodafone under this Clause 6.2.5 shall not extend to allowing access to information which: |
(i) |
is commercially sensitive information of the Vodafone UK Group and Mergeco (as the case may be); or |
(ii) |
relates to the Vodafone Intra Group Agreements that are terminating pursuant to Clause 20.1. |
30
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
6.3 |
Pre-Closing Undertakings |
6.3.1 |
[***] |
6.3.2 |
Between the date of this Agreement and Closing, Vodafone and Hutchison shall work together (acting in good faith) to adjust (and agree any resulting updates to) the Draft Business Plan and the Draft Budget to take into account and reflect circumstances and developments which have impacted (or are reasonably likely to impact) the Vodafone UK Business and/or the Three UK Business and the synergy targets for the Mergeco Group, including (without limitation) for the following matters: |
(i) |
changes to the underlying performance of the Vodafone UK Business and/or the Three UK Business; |
(ii) |
[***] |
(iii) |
adjustments for any other fact or circumstance arising between the date of this Agreement and Closing (if not already taken into account in an adjustment for the matters referred to in Clauses 6.3.2(i) and 6.3.2(ii)). |
6.3.3 |
Each of Vodafone and Hutchison severally undertakes to comply with Clause 6.3.2 without unreasonable delay in order to avoid any postponement to the date for Closing under Clause 8.1.2. |
6.3.4 |
The updated Initial Business Plan and the updated Initial Budget shall be delivered and adopted by Mergeco at Closing in accordance with clause 2.2(A) (Establishment of the Company) of the Shareholders’ Agreement. |
6.3.5 |
Between the date of this Agreement and Closing, Vodafone and Hutchison shall work together to agree an integration plan, acting reasonably and in good faith (and subject to applicable law). |
6.3.6 |
To the extent permitted by applicable law, each of Hutchison and Vodafone severally undertakes, subject to the implementation of appropriate clean team arrangements (in accordance with the terms of the Clean Team Agreement or as otherwise required), and without prejudice to Clause 17, to keep Vodafone (in the case of Hutchison) and Hutchison (in the case of Vodafone) reasonably informed of the Three UK Group’s (in the case of Hutchison) and the Vodafone UK Group’s (in the case of Vodafone) trading updates prior to Closing, including (unless otherwise agreed between Vodafone and Hutchison): |
(i) |
providing each other on a [***] basis with a report in the form contained in Part A of Schedule 18 (such report to be provided no later than [***], and containing financial information in respect of [***]); |
(ii) |
at the reasonable request of Vodafone (in the case of Hutchison) and Hutchison (in the case of Vodafone), meeting with Vodafone’s (in the case of Hutchison) and Hutchison’s (in the case of Vodafone) representatives no more frequently than [***] to discuss the reports referred to in paragraph (i); |
(iii) |
providing each other’s clean team on a [***] basis (ending for such purposes on [***]) with a report in the form contained in Part B of Schedule 18 (such report to be provided no later than [***], and containing financial information in respect of [***]); and |
31
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
(iv) |
at the reasonable request of Vodafone (in the case of Hutchison) and Hutchison (in the case of Vodafone), meeting with Vodafone’s (in the case of Hutchison) and Hutchison’s (in the case of Vodafone) clean-team representatives no more frequently than [***] to discuss the reports referred to in paragraph (ii) above. |
6.3.7 |
Hutchison shall procure that the Three UK Group reviews the matters set out in row 17.3 of the Hutchison Disclosure Letter as soon as reasonably practicable after the date of this Agreement, with a view to align those with [***]. |
6.3.8 |
[***] |
6.3.9 |
[***] |
6.3.10 |
[***] |
6.4 |
[***] |
6.5 |
Mergeco Corporate Governance |
6.5.1 |
Between the date of this Agreement and Closing, Hutchison, Vodafone and Mergeco shall co-operate and seek to agree the following, the agreed forms of which shall be adopted by Mergeco on Closing in accordance with the Shareholders’ Agreement: |
(i) |
the new articles of association of Mergeco (the “Mergeco Articles of Association”); |
(ii) |
the terms of reference of each of the following committees: |
(a) |
the Audit and Risk Committee; |
(b) |
the Remuneration Committee; and |
(c) |
the Strategy and Merger Integration Committee (together with Clauses 6.5.1(i) and 6.5.1(ii), the “Board Committees Terms of Reference”), |
in each case incorporating, and based on, the principles set out in the Shareholders’ Agreement.
6.5.2 |
Between the date of this Agreement and Closing, Vodafone undertakes to provide Hutchison, upon request, with any draft or copy of: (i) [***]; and (ii) the Vodafone Group accounting policies. |
6.5.3 |
[***] |
6.6 |
Pre-Closing Asset Transfers |
6.6.1 |
Between the date of this Agreement and the Closing Date: |
(i) |
Vodafone shall procure that the assets or properties listed in items 7, 8 and 9 of Part A of Schedule 19 and all of the items listed in Part B of Schedule 19 are transferred by the relevant Vodafone UK Group Company to such Vodafone Retained Group Company as it may nominate, on terms to be agreed by Vodafone and Hutchison between the date of this Agreement and Closing, provided that such transfers will: (a) be at no cost to Mergeco; (b) be undertaken in accordance with applicable law and free from |
32
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Encumbrances; (c) provide that Mergeco retains physical access rights to the assets or properties; and (d) complete fully prior to the Closing Date and with no obligations or liabilities in relation to, or arising of, such transfer and assets remaining outstanding on or after the Closing Date;
(ii) |
Vodafone shall have the right (but not the obligation) to procure that the assets or properties listed in items 1 to 6 (inclusive) of Part A of Schedule 19 may be transferred by a Vodafone UK Group Company to such Vodafone Retained Group Company as it may nominate for such value as it may determine in accordance with applicable law and free from Encumbrances, such transfer to complete prior to the Closing Date, provided that any such transfer does not have a deleterious effect on the Vodafone UK Business and the business of the Mergeco Group; and |
(iii) |
Prior to Closing, Vodafone and Hutchison shall negotiate in good faith to agree any action which they, acting reasonably, consider is necessary to take in relation to any of the assets or properties listed in Part C of Schedule 19. |
6.7 |
[***] |
6.8 |
[***] |
7 |
Change of Name |
Between the date of this Agreement and Closing, Hutchison and Vodafone shall agree the name of Mergeco.
8 |
Closing |
8.1 |
Date and Place |
8.1.1 |
Subject to Clause 5 and Clause 8.1.2 (and subject to Clause 8.4), Closing shall take place at the offices of Hutchison’s Lawyers on the last calendar day of the month in which the notification of the fulfilment, or their fulfilment subject only to Closing, of the condition(s) set out in Clause 5.1 takes place, except that where less than [***] Business Days remain between such fulfilment and the last calendar day of the month, Closing shall take place on the last calendar day of the following month, or at such other location or date as may be agreed between Vodafone and Hutchison. |
8.1.2 |
Subject to Clauses 6.3.3 and 8.4, in the event that: (i) a date for Closing has been scheduled pursuant to Clause 8.1.1; and (ii) Vodafone and Hutchison have not agreed updates to either the Draft Business Plan or the Draft Budget in accordance with Clause 6.3.2, then the date for Closing shall be postponed to the last calendar day of the month in which Vodafone and Hutchison agree such updates (except that where less than [***] Business Days remain between the date on which such updates are agreed and the last calendar day of the month, Closing shall take place on the last calendar day of the following month, or on such other date as may be agreed between Vodafone and Hutchison). |
33
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
8.2 |
Closing Events |
By 10.00 a.m. (London time) on the date fixed for Closing in accordance with Clause 8.1, Hutchison, Vodafone and Mergeco shall comply with their respective obligations specified in Clause 3 and Schedule 10, subject to Clause 8.3.
8.3 |
When Closing Shall Have Taken Place |
8.3.1 |
Subject to Clause 8.6.2, all documents and items delivered at Closing pursuant to Clauses 3 and 8.2 and Schedule 10 shall be held by the recipient (through its legal advisers) to the order of the person delivering the same until such time as Closing shall have taken place pursuant to Clause 8.3.2. |
8.3.2 |
Simultaneously with: |
(i) |
delivery of all documents and items required to be delivered at Closing in accordance with Clause 3 and Schedule 10 (or waiver of such delivery by the person entitled to receive the relevant document or item); and |
(ii) |
completion of the Closing Transactions, |
the documents and items delivered pursuant to Clauses 3 and 8.2 and Schedule 10 shall cease to be held to the order of the person delivering them and Closing shall have taken place.
8.4 |
Breach of Closing Obligations |
If a party fails to comply with any obligation contained in Clauses 3.3 to 3.6, or in paragraphs 1, 2 or 4.2 of Schedule 10, either Hutchison (in the case of non-compliance by Vodafone or Mergeco) or Vodafone (in the case of non-compliance by Hutchison) shall be entitled (without prejudice to the right to claim damages or other compensation) by written notice to the other parties:
8.4.1 |
to terminate this Agreement (other than the Surviving Clauses) without liability on its part; |
8.4.2 |
to effect Closing so far as practicable having regard to the defaults which have occurred; or |
8.4.3 |
to fix a new date for Closing (being no later than the next calendar month end after the agreed date for Closing), in which case the provisions of Clauses 3, 8.2, 8.3 and 8.4 and Schedule 10 shall apply to Closing as so deferred but provided such deferral may only occur once. |
8.5 |
Compliance with Anti-Bribery and Corruption Laws |
No Vodafone Group Company or Hutchison Group Company shall use, directly or indirectly, the proceeds from the transactions contemplated by the Transaction Documents to finance activities in violation of any Anti-Bribery and Corruption Laws.
8.6 |
Non-Business Day Closing Date |
Following the date of this Agreement, Vodafone and Hutchison shall in good faith and as soon as reasonably practicable agree an arrangement whereby, if the scheduled Closing Date is not also the last Business Day of the calendar month in which the Closing Date falls, on the last Business Day prior to the Closing Date:
34
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
8.6.1 |
each party (a “Payer”) which is required to make a payment to another party (a “Payee”) on the Closing Date shall make such payment into one or more escrow accounts or arrangements with one or more escrow agents, subject to: (i) being held to the order of, and released as soon as possible to, the Payee on the occurrence of Closing, provided, however, that under no circumstances shall any amounts be released to the Payee unless at the same time (or prior to such release of such amounts) any and all documents and items required to be delivered at Closing for the purposes of the obligations specified in Clause 8.3 are released concurrently (or prior to the release of such amounts); or (ii) being held to the order of, and released as soon as possible to, the Payer if Closing does not occur; and |
8.6.2 |
if the scheduled Closing Date is not also the last Business Day of the calendar month in which the Closing Date falls, Vodafone and Hutchison shall, following the date of this Agreement, agree in good faith and as soon as reasonably practicable, arrangements in relation to the holding, delivery and release of documents as required by Clause 8.3.1. |
9 |
[***] |
10 |
Tax |
10.1 |
VAT Group |
10.1.1 |
Hutchison shall procure that the Hutchison Representative Member makes an application to HMRC for the Hutchison VAT Group to be disbanded with effect from Closing. |
10.1.2 |
Vodafone shall procure that the Vodafone Representative Member makes an application to HMRC for: (i) Mergeco to be added to the Vodafone VAT Group (to the extent not already done so) as soon as reasonably practicable following the date of this Agreement; and (ii) so far as permitted by applicable law, the Three UK Group Companies to be added to the Vodafone VAT Group with effect from Closing. |
10.2 |
Tax Group Arrangements |
10.2.1 |
For the purposes of this Clause 10.2: |
(i) |
“UK Group Payment Arrangement” means an arrangement entered into pursuant to section 59F Taxes Management Act 1970; |
(ii) |
“Vodafone UK Group Payment Arrangement” means the UK Group Payment Arrangement under which Vodafone Topco has agreed to discharge the liabilities of (amongst others) those Pre-Closing Vodafone UK Group Companies who are part of such UK Group Payment Arrangements to pay corporation tax for the accounting periods to which such UK Group Payment Arrangement relates; |
(iii) |
“Departing Vodafone Member” means a Pre-Closing Vodafone UK Group Company which is party to the Vodafone UK Group Payment Arrangement; and |
(iv) |
“Pre-Closing Vodafone UK Group Company” has the meaning given to it in the Tax Covenant. |
35
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
10.2.2 |
Vodafone shall procure, so far as possible, that each Departing Vodafone Member ceases to be a party to the Vodafone UK Group Arrangement with effect from a date which is on or before Closing. |
10.2.3 |
Vodafone shall procure, so far as possible, that all Pre-Closing Vodafone UK Group Companies, who are party to a simplified arrangement for UK group relief purposes with members of the Vodafone Retained Group, shall be excluded from such simplified arrangement with effect from a date which is on or before Closing. |
10.3 |
[***] |
11 |
Warranties |
11.1 |
Hutchison Warranties |
11.1.1 |
Subject to Clauses 11.2 and 11.7, Hutchison warrants to Mergeco, in respect of the purchase and sale of the Three UK Shares pursuant to the Three UK Share Sale: (i) that each of the Hutchison Fundamental Warranties is true and accurate and not misleading; and (ii) that each of the Hutchison Business Warranties is true and accurate and not misleading. |
11.1.2 |
The Hutchison Fundamental Warranties and the warranties contained in: (i) [***]; and (ii) [***], are made to Mergeco as at the date of this Agreement and are also deemed to be repeated at Closing by reference to the circumstances subsisting at such time (save as expressly set out therein, and subject to: (a) any actions taken in connection with [***]; and (b) [***]. Subject to the foregoing, the Hutchison Business Warranties are made to Mergeco solely as at the date of this Agreement. |
11.1.3 |
Where any Hutchison Warranty or confirmation is given on terms that it is given so far as Hutchison is aware or to the knowledge of Hutchison (or any other words equivalent or similar to this or having equivalent or similar effect), Hutchison shall be deemed to have knowledge only of anything which is actually known to any of the persons listed in Schedule 15 (with no imputation of the knowledge of any other person). |
11.1.4 |
Each of Vodafone and Mergeco acknowledges and agrees that Hutchison does not give or make any warranty or representation as to the accuracy of any forward-looking forecasts, estimates or projections provided to Vodafone, any other Vodafone Group Company or Mergeco or any of their directors, officers, employees, agents or advisers on or prior to the date of this Agreement, including in the Hutchison Disclosure Letter and the documents provided in [***]. |
11.1.5 |
Mergeco acknowledges and agrees that for the purposes of the Hutchison Warranties, DMSL shall not be deemed to be a Three UK Group Company and no Hutchison Warranties shall be deemed to be given by Hutchison in respect of DMSL. |
11.1.6 |
Save for any Hutchison Warranties given under paragraphs 2.1.4 and 2.1.7 of Schedule 14, any Hutchison Warranty shall, insofar as it is given in respect of [***] (which, for the avoidance of doubt, shall not apply to any Hutchison Warranties insofar as they relate to the position of any other Three UK Group Company in respect of [***], including in respect of any contract entered into in connection therewith and any rights and obligations thereunder), be given on terms that it is |
36
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
deemed to be qualified by the expression “so far as Hutchison is aware” and for the avoidance of doubt, Clause 11.1.3 shall apply to such Hutchison Warranty.
11.1.7 |
The only Hutchison Warranties given: |
(i) |
in respect of employee and employee benefit matters (including pensions) are those contained in paragraphs 7 and 8 of Schedule 14 and each of the other Hutchison Warranties shall be deemed not to be given in respect of such matters; and |
(ii) |
[***] |
11.1.8 |
Any payment made by Hutchison to Mergeco in respect of a claim for a breach of the Hutchison Warranties shall be given on an after-Tax basis (and, for the avoidance of doubt, shall be treated as a “Payment” for the purposes of Clause 1.16). |
11.2 |
Hutchison’s Disclosures |
11.2.1 |
The Hutchison Warranties provided under Clause 11.1 are subject to the following matters: |
(i) |
any matter which is Disclosed in [***]; |
(ii) |
all matters which would be revealed by making an online search [***] Business Days prior to the date of this Agreement on the documents uploaded in the [***] years prior to the date of this Agreement to the public file of each Three UK Group Company at the Companies Registry in the UK; and |
(iii) |
all matters which would be revealed by making an online search [***] Business Days prior to the date of this Agreement of the publicly available registers of Intellectual Property Rights maintained by the UK Intellectual Property Office in respect of the patents, registered designs, and registered trade marks and applications therefor Disclosed in [***] as being owned by a Three UK Group Company. |
11.2.2 |
References in the Hutchison Disclosure Letter to paragraph numbers shall be to the paragraphs in Schedule 14 to which the disclosure is most likely to relate. Such references are given for convenience only and shall not limit the effect of any of the disclosures, all of which are made against the Hutchison Warranties as a whole. |
11.3 |
Vodafone Warranties |
11.3.1 |
Subject to Clauses 11.4 and 11.7, Vodafone warrants to Mergeco, in respect of the purchase and sale of the Vodafone UK Shares pursuant to the Vodafone UK Share Sale: (i) that each of the Vodafone Fundamental Warranties is true and accurate and not misleading; and (ii) that each of the Vodafone Business Warranties is true and accurate and not misleading. |
11.3.2 |
The Vodafone Fundamental Warranties and the warranties contained in: (i) [***]; and (ii) [***], are made to Mergeco as at the date of this Agreement and are also, except for [***], deemed to be repeated at Closing by reference to the circumstances subsisting at such time (save as expressly set out therein, and subject to: (a) any actions taken in connection with [***]; and (b) [***]. Subject to the foregoing, the |
37
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Vodafone Business Warranties are made to Mergeco solely as at the date of this Agreement.
11.3.3 |
Where any Vodafone Warranty or confirmation is given on terms that it is given so far as Vodafone is aware or to the knowledge of Vodafone (or any other words equivalent or similar to this or having equivalent or similar effect), Vodafone shall be deemed to have knowledge only of anything which is actually known to any of the persons listed in Schedule 17 (with no imputation of the knowledge of any other person). |
11.3.4 |
Each of Hutchison and Mergeco acknowledges and agrees that Vodafone does not give or make any warranty or representation as to the accuracy of any forward-looking forecasts, estimates or projections provided to Hutchison, any other Hutchison Group Company or Mergeco or any of their directors, officers, employees, agents or advisers on or prior to the date of this Agreement, including in the Vodafone Disclosure Letter and the documents provided in the Vodafone Data Room. |
11.3.5 |
Mergeco acknowledges and agrees that for the purposes of the Vodafone Warranties, DMSL shall not be deemed to be a Vodafone UK Group Company and no Vodafone Warranties shall be deemed to be given by Vodafone in respect of DMSL. |
11.3.6 |
The only Vodafone Warranties given in respect of employee and employee benefit matters (including pensions) are those contained in paragraphs 7 and 8 of Schedule 16 and each of the other Vodafone Warranties shall be deemed not to be given in respect of such matters. |
11.3.7 |
Any payment made by Vodafone to Mergeco in respect of a claim for a breach of the Vodafone Warranties shall be given on an after-Tax basis (and, for the avoidance of doubt, shall be treated as a “Payment” for the purposes of Clause 1.16). |
11.4 |
Vodafone’s Disclosures |
11.4.1 |
The Vodafone Warranties provided under Clause 11.3 are subject to the following matters: |
(i) |
any matter which is Disclosed in [***]; |
(ii) |
all matters which would be revealed by making an online search [***] Business Days prior to the date of this Agreement on the documents uploaded in the [***] years prior to the date of this Agreement to the public file of each Vodafone UK Group Company at the Companies Registry in the UK; and |
(iii) |
all matters which would be revealed by making an online search [***] Business Days prior to the date of this Agreement of the publicly available registers of Intellectual Property Rights maintained by the UK Intellectual Property Office in respect of the patents, registered designs, and registered trade marks and applications therefor Disclosed in the Vodafone Data Room as being owned by a Vodafone UK Group Company. |
11.4.2 |
References in the Vodafone Disclosure Letter to paragraph numbers shall be to the paragraphs in Schedule 16 to which the disclosure is most likely to relate. Such |
38
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
references are given for convenience only and shall not limit the effect of any of the disclosures, all of which are made against the Vodafone Warranties as a whole.
11.5 |
Waiver of Rights |
Save in the case of fraud, each of Hutchison and Vodafone severally undertakes to Mergeco, and, in addition, to the Three UK Group (in the case of Hutchison) and to the Vodafone UK Group (in the case of Vodafone), and all of the respective directors, officers, employees and agents of Mergeco, the Three UK Group (in the case of Hutchison) and the Vodafone UK Group (in the case of Vodafone) to waive any rights, remedies or claims which it may have in respect of any misrepresentation, inaccuracy or omission in or from any information or advice supplied or given by the Three UK Group (in the case of Hutchison) and the Vodafone UK Group (in the case of Vodafone) or their respective directors, officers, employees or agents in connection with assisting Hutchison (in the case of the Three UK Group) and Vodafone (in the case of the Vodafone UK Group) in the giving of any Hutchison Warranty or any Vodafone Warranty respectively or the preparation of the Hutchison Disclosure Letter or the Vodafone Disclosure Letter (as applicable) and the Tax Covenant.
11.6 |
Effect of Closing |
The warranties and all other provisions of this Agreement, if and to the extent that they have not been performed by Closing, shall not be extinguished or affected by Closing or by any other event or matter (including any satisfaction of any condition contained in Clause 5.1), except by a specific and duly authorised written waiver or release by the other relevant party or parties which enjoy the benefit of the warranties and the other provisions of this Agreement.
11.7 |
If Closing Does not Occur |
Notwithstanding anything to the contrary under this Agreement, Mergeco shall have no right to make any Warranty Claim against either Hutchison or Vodafone unless and until after Closing has occurred.
12 |
Indemnities |
12.1 |
[***] |
12.2 |
[***] |
12.3 |
[***] |
12.4 |
Reorganisation Indemnities |
12.4.1 |
Hutchison shall, with effect from Closing, indemnify and hold harmless Mergeco from and against any and all Losses suffered by the Three UK Group in relation to the Hutchison Reorganisation, including (but not limited to) Losses arising from or relating to: |
(i) |
any transfers, steps or actions taken or required to be taken to implement the Hutchison Reorganisation (or any part thereof); |
39
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
(ii) |
any failure to obtain waivers, consents, derogations, amendments, licences or approvals required to be obtained for the implementation of the Hutchison Reorganisation; |
(iii) |
any failure to comply with obligations under any applicable laws in connection with the Hutchison Reorganisation; |
(iv) |
any fees, costs and expenses incurred or payable by a Three UK Group Company in relation to the Hutchison Reorganisation (save to the extent reflected in the calculation of Hutchison Debt in the Hutchison Closing Schedules); and |
(v) |
any failure to carry out and complete in full the Hutchison Reorganisation in accordance with the provisions of Schedule 4, |
save that the indemnification obligations under this Clause 12.4.1:
(a) |
shall not include any Losses which are expressly contemplated by the provisions of Schedule 4; |
(b) |
shall not include any Losses which are Tax Liabilities (as defined in the Tax Covenant), which shall instead be dealt with exclusively under the Tax Covenant. |
12.4.2 |
Vodafone shall, with effect from Closing, indemnify and hold harmless Mergeco from and against any and all Losses suffered by the Vodafone UK Group in relation to the Vodafone Reorganisation, including (but not limited to) Losses arising from or relating to: |
(i) |
any transfers, steps or actions taken or required to be taken to implement the Vodafone Reorganisation (or any part thereof); |
(ii) |
any failure to obtain waivers, consents, derogations, amendments, licences or approvals required to be obtained for the implementation of the Vodafone Reorganisation; |
(iii) |
any failure to comply with obligations under any applicable laws in connection with the Vodafone Reorganisation; |
(iv) |
any fees, costs and expenses incurred or payable by a Vodafone UK Group Company in relation to the Vodafone Reorganisation (save to the extent reflected in the calculation of Vodafone Debt in the Vodafone Closing Schedules); and |
(v) |
any failure to carry out and complete in full the Vodafone Reorganisation in accordance with the provisions of Schedule 5, |
save that the indemnification obligations under this Clause 12.4.2:
(a) |
shall not include any Losses which are expressly contemplated by the provisions of Schedule 5; |
(b) |
shall not include any Losses which are Tax Liabilities (as defined in the Tax Covenant), which shall instead be dealt with exclusively under the Tax Covenant. |
40
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
12.5 |
[***] |
12.6 |
[***] |
12.7 |
[***] |
12.8 |
[***] |
13 |
Limitation of Liability |
13.1 |
Hutchison Time Limitation for Claims |
Hutchison shall not be liable for any Warranty Claim, [***] or Tax Claim unless a notice of such claim is given by Mergeco to Hutchison specifying the matters set out in Clause 14.2:
13.1.1 |
in the case of any Tax Claim (other than [***]), within [***] Closing; |
13.1.2 |
in the case of a [***], within [***] of Closing; |
13.1.3 |
in the case of any Warranty Claim (other than a Tax Warranty Claim), within [***] of Closing; or |
13.1.4 |
in the case of [***], before the earlier of: |
(i) |
[***]; or |
(ii) |
[***]. |
13.2 |
Hutchison Minimum Claims |
Hutchison shall not be liable for any individual Warranty Claim or Tax Claim (other than [***]) (or a series of Warranty Claims or Tax Claims arising from substantially identical facts or circumstances) where the liability agreed or determined for any such individual Warranty Claim or Tax Claim or series of Warranty Claims or Tax Claims does not exceed [***].
13.3 |
Hutchison Aggregate Minimum Claims |
13.3.1 |
Hutchison shall not be liable for any Warranty Claim or Tax Claim (other than [***]) unless the aggregate amount of all Warranty Claims and such Tax Claims for which Hutchison would otherwise be liable (disregarding any Warranty Claims and such Tax Claims excluded by Clause 13.2) exceeds [***]. |
13.3.2 |
Where the liability agreed or determined in respect of all Warranty Claims and Tax Claims referred to in Clause 13.3.1 exceeds [***], subject as provided elsewhere in this Clause 13, Hutchison shall be liable for the aggregate amount of all Warranty Claims and Tax Claims as agreed or determined (disregarding any Warranty Claims and such Tax Claims excluded by Clause 13.2) and not just the excess. |
13.4 |
Hutchison Maximum Liability |
13.4.1 |
The aggregate liability of Hutchison for all Business Warranty Claims and Tax Claims (subject to Clause 13.4.2 below) shall not exceed [***]. |
13.4.2 |
Hutchison will be liable for [***] up to the extent that the aggregate liability of Hutchison for Business Warranty and Tax Claims does not exceed [***]. |
41
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
13.4.3 |
The aggregate liability of Hutchison for all claims under this Agreement shall not exceed [***]. |
13.5 |
Hutchison Recovery |
13.5.1 |
Prior to Recovery from Hutchison |
If, before Hutchison pays an amount in discharge of any Warranty Claim (other than a Tax Warranty Claim) to Mergeco, any Mergeco Group Company (as applicable) recovers or is entitled to recover (whether by payment, discount, credit, relief, insurance or otherwise) from a third party a sum which indemnifies or compensates any Mergeco Group Company (in whole or in part) for the loss or liability which is the subject matter of such Warranty Claim, Mergeco shall procure that, before steps are taken to enforce such Warranty Claim against Hutchison following notification under Clause 14.2, all reasonable steps are taken to enforce the recovery against the third party and any actual recovery (less any reasonable costs incurred in obtaining such recovery and less any Taxation due (or which would have been due but for the availability of a Relief) on the amount recovered, save if and to the extent that Hutchison has already discharged such costs, expenses or Tax or otherwise compensated the relevant Mergeco Group Company in respect of them) shall reduce the amount of such Warranty Claim to the extent of such recovery.
13.5.2 |
Following Recovery from Hutchison |
If Hutchison has paid an amount in discharge of any Warranty Claim (other than a Tax Warranty Claim) to Mergeco and subsequently any Mergeco Group Company is entitled to recover (whether by payment, discount, credit, relief, insurance or otherwise) from a third party a sum which indemnifies or compensates any Mergeco Group Company (in whole or in part) for the loss or liability which is the subject matter of such Warranty Claim, Mergeco shall procure that all steps are taken as Hutchison may reasonably require to enforce such recovery and shall, or shall procure that the relevant Mergeco Group Company shall, pay to Hutchison as soon as practicable after receipt an amount equal to:
(i) |
any sum recovered from the third party less any costs and expenses incurred in obtaining such recovery and less any Taxation due (or which would have been due but for the availability of a Relief) on the amount recovered, save if and to the extent that Hutchison has already discharged such costs, expenses or Tax or otherwise compensated the relevant Mergeco Group Company in respect of them after taking account of any Relief available in respect of the payment to be made under this Clause 13.5.2; or |
(ii) |
if less, the amount previously paid by Hutchison to Mergeco in respect of the relevant Warranty Claim. |
13.6 |
Vodafone Time Limitation for Claims |
Vodafone shall not be liable for any Warranty Claim, [***] or Tax Claim unless a notice of such claim is given by Mergeco to Vodafone specifying the matters set out in Clause 14.2:
13.6.1 |
in the case of any Tax Claim, within [***] of Closing; |
13.6.2 |
in the case of a [***], within [***] of Closing; and |
42
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
13.6.3 |
in the case of any Warranty Claim (other than a Tax Warranty Claim), within [***] following Closing. |
13.7 |
Vodafone Minimum Claims |
Vodafone shall not be liable for any individual Warranty Claim or Tax Claim (other than [***]) (or a series of Warranty Claims or Tax Claims arising from substantially identical facts or circumstances) where the liability agreed or determined for any such individual Warranty Claim or Tax Claim or series of Warranty Claims or Tax Claims does not exceed [***].
13.8 |
Vodafone Aggregate Minimum Claims |
13.8.1 |
Vodafone shall not be liable for any Warranty Claim or Tax Claim (other than [***]) unless the aggregate amount of all Warranty Claims and such Tax Claims for which Vodafone would otherwise be liable (disregarding any Warranty Claims and such Tax Claims excluded by Clause 13.7) exceeds [***]. |
13.8.2 |
Where the liability agreed or determined in respect of all Warranty Claims and Tax Claims referred to in Clause 13.8.1 exceeds [***]subject as provided elsewhere in this Clause 13, Vodafone shall be liable for the aggregate amount of all Warranty Claims and Tax Claims as agreed or determined (disregarding any Warranty Claims and Tax Claims excluded by Clause 13.7) and not just the excess. |
13.9 |
Vodafone Maximum Liability |
13.9.1 |
The aggregate liability of Vodafone for all Business Warranty Claims and Tax Claims (subject to Clause 13.9.2 below) shall not exceed [***]. |
13.9.2 |
Vodafone will be liable for [***]up to the extent that the aggregate liability of Vodafone for Business Warranty and Tax Claims does not exceed [***]. |
13.9.3 |
The aggregate liability of Vodafone for all claims under this Agreement shall not exceed [***]. |
13.10 |
Vodafone Recovery |
13.10.1 |
Prior to Recovery from Vodafone |
If, before Vodafone pays an amount in discharge of any Warranty Claim (other than a Tax Warranty Claim) to Mergeco, any Mergeco Group Company (as applicable) recovers or is entitled to recover (whether by payment, discount, credit, relief, insurance or otherwise) from a third party a sum which indemnifies or compensates any Mergeco Group Company (in whole or in part) for the loss or liability which is the subject matter of such Warranty Claim, Mergeco shall procure that, before steps are taken to enforce such Warranty Claim against Vodafone following notification under Clause 14.2, all reasonable steps are taken to enforce the recovery against the third party and any actual recovery (less any reasonable costs incurred in obtaining such recovery and less any Taxation due (or which would have been due but for the availability of a Relief) on the amount recovered, save if and to the extent that Vodafone has already discharged such costs, expenses or Tax or otherwise compensated the relevant Mergeco Group Company in respect of them) shall reduce the amount of such Warranty Claim to the extent of such recovery.
43
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
13.10.2 |
Following Recovery from Vodafone |
If Vodafone has paid an amount in discharge of any Warranty Claim (other than a Tax Warranty Claim) to Mergeco and subsequently any Mergeco Group Company is entitled to recover (whether by payment, discount, credit, relief, insurance or otherwise) from a third party a sum which indemnifies or compensates any Mergeco Group Company (in whole or in part) for the loss or liability which is the subject matter of such Warranty Claim, Mergeco shall procure that all steps are taken as Vodafone may reasonably require to enforce such recovery and shall, or shall procure that the relevant Mergeco Group Company shall, pay to Vodafone as soon as practicable after receipt an amount equal to:
(i) |
any sum recovered from the third party less any costs and expenses incurred in obtaining such recovery and less any Taxation due (or which would have been due but for the availability of a Relief) on the amount recovered, save if and to the extent that Vodafone has already discharged such costs, expenses or Tax or otherwise compensated the relevant Mergeco Group Company in respect of them after taking account of any Relief available in respect of the payment to be made under this Clause 13.10.2; or |
(ii) |
if less, the amount previously paid by Vodafone to Mergeco in respect of the relevant Warranty Claim. |
13.11 |
General Limitations of Liability |
13.11.1 |
Contingent Liabilities |
No party shall be liable for any Warranty Claim (other than a Tax Warranty Claim) in respect of any liability which is contingent or not capable of being quantified unless and until such liability becomes an actual liability and is due and payable. This Clause 13.11.1 shall not permit Hutchison or Vodafone to avoid such Warranty Claim in respect of a contingent liability or a liability not capable of being quantified that is made within the time limit specified in Clauses 13.1 and 13.6 (and including the matters set out in Clause 14.2).
13.11.2 |
Losses |
No party shall be liable for any Warranty Claim (other than a Tax Warranty Claim) in respect of any indirect loss (including any indirect loss of profits).
13.11.3 |
Provisions |
Hutchison and Vodafone shall not be liable for any Warranty Claim if and to the extent that proper allowance, specific provision or specific reserve is made in the Hutchison Closing Schedules or the Vodafone Closing Schedules (as applicable) for the matter giving rise to the Warranty Claim.
13.11.4 |
Matters Arising Subsequent to this Agreement |
No party shall be liable for any Warranty Claim (other than a Tax Warranty Claim) if and to the extent that such Warranty Claim has arisen or is increased as a result of:
(i) |
any matter or thing done or omitted to be done pursuant to and in compliance with this Agreement or any other Transaction Document or otherwise at the |
44
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
request in writing or with the approval in writing of the other parties (as applicable);
(ii) |
any act, omission or transaction of any Mergeco Group Company or its directors, officers, employees or agents, after Closing, provided that this shall not apply if such act, omission or transaction was done, committed or effected in order to comply with applicable law; |
(iii) |
the passing of, or any change in, after the date of this Agreement of any law, rule, regulation or administrative practice of any government, governmental department, agency or regulatory body; or |
(iv) |
any change after the date of this Agreement of any generally accepted interpretation or application of any legislation, or accounting principles, procedure or practice. |
13.11.5 |
Actual Knowledge |
No party shall be liable for any Warranty Claim if and to the extent that the facts, matters or circumstances giving rise to the Warranty Claim were actually known by the other party making the Warranty Claim prior to signing this Agreement in sufficient detail so as to enable such party to identify the nature and scope of the breach. For these purposes:
(i) |
in respect of a Warranty Claim against Hutchison, Mergeco shall be deemed solely to have the actual knowledge of the individuals listed in Schedule 17; and |
(ii) |
in respect of a Warranty Claim against Vodafone, Mergeco shall be deemed solely to have the actual knowledge of the individuals listed in Schedule 15. |
13.11.6 |
No Double Recovery and No Double Counting |
No party may recover for breach of or under this Agreement, the Tax Covenant or otherwise more than once in respect of the same Losses suffered or amount for which the party is otherwise entitled to claim (or part of such Losses or amount), and no amount (including any Relief) (or part of any amount) shall be taken into account, set off or credited more than once for breach of or under this Agreement, the Tax Covenant or otherwise, with the intent that there will be no double counting for breach of or under this Agreement, the Tax Covenant or otherwise.
13.11.7 |
Mitigation of Losses |
Nothing in this Agreement restricts or limits the general obligation at law of any party to mitigate any loss or damage which it may suffer or incur as a consequence of any breach of any Hutchison Warranty or any Vodafone Warranty.
13.11.8 |
Tax Claims |
Neither Hutchison nor Vodafone shall be liable for any Tax Claim if and to the extent that the exclusions in clause 4 (Limitations and Exclusions) of the Tax Covenant apply.
45
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
13.11.9 |
Fraud |
None of the limitations contained in this Clause 13 shall apply to any claim for breach of or under this Agreement or the Tax Covenant if and to the extent it arises or is increased as a result of fraud by the party subject to such claim, any Three UK Group Company (in the case of Hutchison being subject to such claim), any Vodafone UK Group Company (in the case of Vodafone being subject to such claim) or any of their respective directors, officers, employees or agents.
13.12 |
[***] |
14 |
Warranty Claims |
14.1 |
Notification of Potential Warranty Claims |
If Mergeco becomes aware of any fact, matter or circumstance that may give rise to a Warranty Claim (other than a Tax Warranty Claim, which shall instead be dealt with under clause 12 (Notification of Potential Claims) of the Tax Covenant) (ignoring for these purposes the application of Clause 13.2, Clause 13.3, Clause 13.7 or Clause 13.8), Mergeco shall as soon as reasonably practicable and, in any event, within 30 days give notice in writing to the party against which such Warranty Claim would be made (the “Claimed Party”), setting out such information as is available to Mergeco as is reasonably necessary to enable the Claimed Party to assess the merits of the potential Warranty Claim, to act to preserve evidence and to make such provision as the Claimed Party may consider necessary. Failure to give notice within such period shall not affect the rights of Mergeco except if and to the extent that the Claimed Party is prejudiced by the failure.
14.2 |
Notification of Warranty Claims and Tax Claims |
Notice of any Warranty Claim or Tax Claim shall be given by Mergeco to the Claimed Party as soon as possible (and in any event within the time limits specified in Clauses 13.1 and 13.6 (as applicable)), and, to the extent available to Mergeco, shall specify reasonably detailed information in relation to the legal and factual basis of the Warranty Claim or Tax Claim (including, if applicable, evidence of any Third Party Claim) and Mergeco’s estimate of the amount of Losses which is, or is to be, the subject of the Warranty Claim or Tax Claim (including any Losses which are contingent on the occurrence of any future event).
14.3 |
Commencement of Proceedings |
Any Warranty Claim notified pursuant to Clause 14.2 shall (if it has not been previously satisfied, settled or withdrawn) be deemed to be irrevocably withdrawn [***] months after the notice is given pursuant to Clause 14.2 unless at the relevant time legal proceedings in respect of the Warranty Claim have been commenced by being both issued and served except:
14.3.1 |
for any Warranty Claim of which notice is given for the purposes of Clause 14.2 at a time when the amount set out in Clause 13.3, where Hutchison is the Claimed Party, or Clause 13.8, where Vodafone is the Claimed Party, has not been exceeded, in which case such Warranty Claim shall be deemed to have been withdrawn unless legal proceedings in respect of it have been commenced by being both issued and served within [***] months of the date of any subsequent notification to the Claimed |
46
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Party pursuant to Clause 14.2 of one or more Warranty Claims which result(s) in the total amount claimed in all Warranty Claims notified to the Claimed Party pursuant to Clause 14.2 exceeding the amount set out in Clause 13.3, where Hutchison is the Claimed Party, or Clause 13.8, where Vodafone is the Claimed Party (as applicable), for the first time;
14.3.2 |
in the case of a Warranty Claim which has arisen as a result of a claim made against a Mergeco Group Company, a Vodafone Group Company or a Hutchison Group Company (as the case may be) or in connection with a matter in respect of which the Seller (as therein defined) had or has a right to require any action to be taken under clause 13 (Tax Authority Claims Procedure) of the Tax Covenant (the “Underlying Claim”), where any person has taken steps to avoid, dispute, resist, compromise, defend or appeal against the Underlying Claim in accordance with this Clause 14 (or otherwise, in the case of a matter relating to clause 13 (Tax Authority Claims Procedure) of the Tax Covenant) in which case the [***] month period shall commence on the date that the Underlying Claim is finally settled or finally determined; and |
14.3.3 |
in the case of a contingent liability, the [***] month period shall commence on the date the relevant contingent liability becomes an actual liability and is due and payable. |
14.4 |
Investigation by the Claimed Party |
Subject to Mergeco being reimbursed (on an after-Tax basis) by the Claimed Party for all reasonable costs and expenses, Mergeco shall (and shall procure that any relevant Three UK Group Company or Vodafone UK Group Company (as applicable) shall) give such information and assistance (including access to premises and personnel and the right to examine and copy any assets, accounts, documents and records) as the Claimed Party may reasonably request, subject to the Claimed Party agreeing in such form as Mergeco may reasonably require to keep all such information confidential and to use it only for the purposes of investigating and defending the claim in question.
14.5 |
Conduct of Third Party Claims |
If the matter or circumstance that is reasonably likely to give rise to a Warranty Claim (other than a Tax Warranty Claim) is a result of or in connection with a claim by or liability to a third party, whether such claim or liability is actual, alleged, threatened, suspected or potential, and whether relied upon by Mergeco in bringing or supporting such Warranty Claim (a “Third Party Claim”), then:
14.5.1 |
Mergeco shall notify the Claimed Party in writing of such Third Party Claim as soon as reasonably practicable; |
14.5.2 |
Mergeco shall consult with the Claimed Party so far as reasonably practicable in relation to the conduct of the Third Party Claim and shall take reasonable account of the views of the Claimed Party before taking any action in relation to the Third Party Claim; |
14.5.3 |
no admissions in relation to the Third Party Claim shall be made by or on behalf of Mergeco (or any Three UK Group Company or any Vodafone UK Group Company (as applicable)) and the Third Party Claim shall not be compromised, disposed of or |
47
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
settled without the written consent of the Claimed Party (such consent not to be unreasonably withheld or delayed);
14.5.4 |
subject to the Claimed Party indemnifying Mergeco in a form reasonably satisfactory to Mergeco against any liability, cost, damage or expense which may be properly incurred or, as the case may be, properly increased, Mergeco shall (or shall procure that the relevant Three UK Group Company or the relevant Vodafone UK Group Company (as applicable) shall) take such action as the Claimed Party may reasonably request to avoid, dispute, deny, defend, resist, appeal, compromise or contest the Third Party Claim; |
14.5.5 |
the Claimed Party shall be entitled at its own expense and in its absolute discretion, by notice in writing to Mergeco, to take such action as it shall deem necessary to avoid, dispute, deny, defend, resist, appeal, compromise or contest the Third Party Claim (including making counterclaims or other claims against third parties) in the name of and on behalf of Mergeco (or the relevant Three UK Group Company or the relevant Vodafone UK Group Company concerned (as applicable)) and to have the conduct of any related proceedings, negotiations or appeals; and |
14.5.6 |
if the Claimed Party sends a notice to Mergeco pursuant to Clause 14.5.5: |
(i) |
Mergeco shall (and shall procure that any relevant Three UK Group Company or Vodafone UK Group Company (as applicable) shall): |
(a) |
give, subject to their being reimbursed by the Claimed Party (on an after-Tax basis) for all reasonable costs and expenses, such information and assistance (including access to premises and personnel, and the right to examine and copy any assets, accounts, documents and records) as the Claimed Party may reasonably request, including instructing such professional or legal advisers as the Claimed Party may nominate to act on behalf of Mergeco (or the relevant Three UK Group Company or Vodafone UK Group Company concerned (as applicable)) but in accordance with the Claimed Party’s instructions; and |
(b) |
be entitled to participate in the defence of the Third Party Claim, and to employ its own professional or legal advisers, provided that the Claimed Party shall control the conduct of the Third Party Claim; and |
(ii) |
the Claimed Party shall: |
(a) |
consult with Mergeco and take reasonable account of the views of Mergeco before taking any action in relation to the Third Party Claim; |
(b) |
keep Mergeco informed of all relevant matters relating to the Third Party Claim and shall promptly forward or procure to be forwarded to Mergeco copies of all correspondence and other written communications relating to the Third Party Claim; |
(c) |
not make any settlement or compromise of the Third Party Claim without the written consent of Mergeco, such consent not to be unreasonably withheld or delayed. Subject to Clause 14.5.7, if Mergeco unreasonably fails to consent to a settlement or |
48
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
compromise, the maximum liability of the Claimed Party shall (without prejudice to Clause 12) not exceed the full amount of the proposed settlement or compromise; and
(d) |
indemnify, save as set out in Clause 14.5.6(ii)(c), Mergeco (or the relevant Three UK Group Company or the relevant Vodafone UK Group Company concerned (as applicable)) against all properly incurred costs and expenses (including legal and professional costs and expenses) that may be incurred as a result of the Claimed Party assuming conduct of the Third Party Claim. |
14.5.7 |
Notwithstanding Clauses 14.5.3 to 14.5.6, neither Mergeco (nor the relevant Three UK Group Company nor the relevant Vodafone UK Group Company (as applicable)) shall be required to take any action or refrain from taking any action if Mergeco (or the relevant Three UK Group Company or the relevant Vodafone UK Group Company concerned (as applicable)) reasonably considers such action or omission may be unduly onerous or materially prejudicial to it or to its business. |
15 |
[***] |
16 |
Post-Closing |
16.1 |
[***] |
16.2 |
Wrong Pockets |
16.2.1 |
Subject to Clause 16.2.6, if: |
(i) |
at any time from Closing until the first anniversary of Closing, Hutchison or Vodafone gives written notice to Mergeco that, in the view of Hutchison (in respect of a notice from Hutchison) or in the view of Vodafone (in respect of a notice from Vodafone), a Mergeco Group Company owns any Hutchison Wrong Pocket Asset (in respect of a notice from Hutchison) or a Vodafone Wrong Pocket Asset (in respect of a notice from Vodafone); or |
(ii) |
at any time from Closing until the first anniversary of Closing, any party to this Agreement gives written notice to Vodafone or Hutchison that in the view of such party, a Vodafone Retained Group Company (in the case of a notice to Vodafone) or a Hutchison Retained Group Company (in the case of a notice to Hutchison) owns any Mergeco Wrong Pocket Asset, |
then:
(a) |
where a written notice is served under Clause 16.2.1(i) or this Clause 16.2.1(ii), Vodafone (in the case of a notice served by Hutchison or Mergeco) or Hutchison (in the case of a notice served by Vodafone or Mergeco) shall respond to Hutchison or Vodafone (as applicable) stating whether it agrees with the identification of such asset or property. In the event of any disagreement and if Vodafone and Hutchison are unable to resolve such disagreement, either Vodafone or Hutchison shall have the right to bring proceedings to resolve such disagreement in accordance with Clause 23.12; |
49
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
(b) |
following agreement of Vodafone and Hutchison pursuant to Clause 16.2.1(ii)(a) or final judicial determination by the relevant court that such asset or property is a Hutchison Wrong Pocket Asset or a Vodafone Wrong Pocket Asset (as applicable), Mergeco shall use its reasonable endeavours to procure that such Hutchison Wrong Pocket Asset or such Vodafone Wrong Pocket Asset (as applicable) is transferred (in respect of a notice from Hutchison) to such Hutchison Retained Group Company as Hutchison may nominate or (in respect of a notice from Vodafone) to such Vodafone Retained Group Company as Vodafone may nominate, in each case for prevailing accounting book value and free from Encumbrances as soon as practicable after receiving such written notice; and |
(c) |
following agreement of Vodafone and Hutchison pursuant to Clause 16.2.1(ii)(a) or final judicial determination by the relevant court that such asset or property is a Mergeco Wrong Pocket Asset, Vodafone or Hutchison (as applicable) shall use its reasonable endeavours to procure that such Mergeco Wrong Pocket Asset is transferred to such Mergeco Group Company as Mergeco may nominate, in each case for prevailing accounting book value and free from Encumbrances as soon as practicable after receiving such written notice. |
16.2.2 |
If a transfer is effected under Clause 16.2.1(b), then: |
(i) |
the relevant Mergeco Group Company shall (in the case of a notice from Hutchison) account to Hutchison or such Hutchison Retained Group Company as Hutchison may nominate or (in the case of a notice from Vodafone) account to Vodafone or such Vodafone Retained Group Company as Vodafone may nominate for any profits or gains (net of applicable Tax (or Tax that would have arisen but for the availability of a Relief)) arising from or relating to such Hutchison Wrong Pocket Asset or Vodafone Wrong Pocket Asset (as applicable) in the period between the Closing Date and the date on which such asset or property is transferred on the terms of Clause 16.2.1 to the relevant person if and to the extent that such profits or gains have not otherwise been received by or for the benefit of the Hutchison Retained Group or the Vodafone Retained Group (as applicable); and |
(ii) |
Hutchison (in the case of a notice from Hutchison) or Vodafone (in the case of a notice from Vodafone) shall with effect from Closing indemnify and hold harmless Mergeco against and in respect of any and all obligations and liabilities (other than Tax Liabilities (as defined in the Tax Covenant), which shall instead be dealt with exclusively under the Tax Covenant) incurred by such Mergeco Group Company if and to the extent relating to or arising under such Hutchison Wrong Pocket Asset or Vodafone Wrong Pocket Asset (as applicable) (including the costs of enforcing or defending any claims relating to such obligations and liabilities, but net of any benefit that accrues to the Mergeco Group from such asset or property). |
50
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
16.2.3 |
If a transfer is effected under Clause 16.2.1(c), then: |
(i) |
the relevant Hutchison Retained Group Company or the relevant Vodafone Retained Group Company (as applicable) shall account to Mergeco or such Mergeco Group Company as Mergeco may nominate for any profits or gains (net of applicable Tax (or Tax that would have arisen but for the availability of a Relief)) arising from or relating to such Mergeco Wrong Pocket Asset in the period between the Closing Date and the date on which such Mergeco Wrong Pocket Asset is transferred on the terms of Clause 16.2.1 to the relevant person if and to the extent that such profits or gains have not otherwise been received by or for the benefit of the Mergeco Group; and |
(ii) |
Mergeco shall with effect from Closing indemnify and hold harmless Hutchison (in the case of a notice to Hutchison) or Vodafone (in the case of a notice to Vodafone) against and in respect of any and all obligations and liabilities incurred by a Hutchison Retained Group Company or a Vodafone Retained Group Company (as appropriate) if and to the extent relating to or arising under such Mergeco Wrong Pocket Asset (including the costs of enforcing or defending any claims relating to such obligations and liabilities, but net of any benefit that accrues to the Hutchison Retained Group or the Vodafone Retained Group (as applicable) from such Mergeco Wrong Pocket Asset). |
16.2.4 |
If, pursuant to Clause 16.2.1: |
(i) |
a Mergeco Group Company transfers a Hutchison Wrong Pocket Asset to a Hutchison Retained Group Company that partly relates to the Three UK Business, then Hutchison shall procure that the relevant Hutchison Retained Group Company shall (to the extent legally practicable) grant to the relevant Mergeco Group Company a non-exclusive, perpetual, worldwide, assignable, irrevocable licence (with the right to sub-licence) of or right to use such Hutchison Wrong Pocket Asset (or part thereof) to the extent that it relates to the Three UK Business, in each case subject to such terms as Hutchison may determine (acting reasonably) taking into account the nature of the Hutchison Wrong Pocket Asset, the extent of the use, transfer pricing implications regarding such licence or right to use, and any other existing agreements pursuant to which such Hutchison Wrong Pocket Asset could be licensed; |
(ii) |
a Mergeco Group Company transfers a Vodafone Wrong Pocket Asset to a Vodafone Retained Group Company that partly relates to the Vodafone UK Business, then Vodafone shall procure that the relevant Vodafone Retained Group Company shall (to the extent legally practicable) grant to the relevant Mergeco Group Company a non-exclusive, perpetual, worldwide, assignable, irrevocable licence (with the right to sub-licence) of or right to use such Vodafone Wrong Pocket Asset (or part thereof) to the extent that it relates to the Vodafone UK Business, in each case subject to such terms as Vodafone may determine (acting reasonably) taking into account the nature of the Vodafone Wrong Pocket Asset, the extent of the use, transfer pricing implications regarding such licence or right to use, and any other existing |
51
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
agreements pursuant to which such Vodafone Wrong Pocket Asset could be licensed; and
(iii) |
a Hutchison Retained Group Company or Vodafone Retained Group Company transfers a Mergeco Wrong Pocket Asset to a Mergeco Group Company that partly relates to the business of the Hutchison Retained Group or of the Vodafone Retained Group (as applicable), then Mergeco shall procure that the relevant Mergeco Group Company shall (to the extent legally practicable) grant to the relevant Hutchison Retained Group Company or the relevant Vodafone Retained Group Company (as applicable) a non-exclusive, perpetual, worldwide, assignable, irrevocable licence (with the right to sub-licence) of or right to use such Mergeco Wrong Pocket Asset (or part thereof) to the extent that it relates to the business of the Hutchison Retained Group or of the Vodafone Retained Group (as applicable) in each case subject to such terms as Mergeco may determine (acting reasonably) taking into account the nature of the Mergeco Wrong Pocket Asset, the extent of the use, transfer pricing implications regarding such licence or right to use, and any other existing agreements pursuant to which such Mergeco Wrong Pocket Asset could be licensed. |
16.2.5 |
If a transfer of any asset or property contemplated under Clause 16.2.1 cannot be executed due to the absence of consent of a party (other than a Mergeco Group Company, a Hutchison Retained Group Company or a Vodafone Retained Group Company) required for transfer, then: |
(i) |
in the case of any Hutchison Wrong Pocket Asset or Vodafone Wrong Pocket Asset, Mergeco shall procure, to the extent legally practicable, that the party entitled to receive such asset or property, or such Hutchison Retained Group Company or such Vodafone Retained Group Company (as applicable) that such party may nominate, shall be put in such position as it would have been had such asset or property been transferred; and |
(ii) |
in the case of any Mergeco Wrong Pocket Asset, Hutchison or Vodafone (as applicable) shall procure, to the extent legally practicable, that Mergeco, or such Mergeco Group Company that Mergeco may nominate, shall be put in such position as they would have been had such Mergeco Wrong Pocket Asset been transferred. |
16.2.6 |
Clauses 16.2.1 to 16.2.5 shall not apply to: |
(i) |
any Intellectual Property Rights subject to Clause 16.2.7; |
(ii) |
any assets, properties, services or rights (including omitted services, whether such omitted services have already been requested or not), benefits or rights (including Intellectual Property Rights) which: |
(a) |
are used under or for the purposes of, or pursuant to or in connection with; |
(b) |
relate to the subject matter of; or |
(c) |
are provided, may be provided, or may be requested to be provided pursuant to, |
52
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
the Vodafone Intercompany Services Agreement, the Vodafone Surviving Intra Group Agreements, the Transitional Services Agreement and any Hutchison Intra Group Agreement as at Closing or at any time following Closing. In no event shall the application of this Clause 16.1 result in an outcome that is contrary to the outcome that would be achieved by applying the provisions of the Vodafone Intercompany Services Agreement, the Vodafone Surviving Intra Group Agreements, the Transitional Services Agreement and any Hutchison Intra Group Agreement as at Closing or any time following Closing (including the provisions in connection with omitted services, pricing and caps on service charges);
(iii) |
any assets or properties which are accounted for in the Hutchison Closing Schedules or the Vodafone Closing Schedules (as applicable); |
(iv) |
assets and any property listed and referred to in Schedule 19; and |
(v) |
any Reliefs. |
16.2.7 |
Where: |
(i) |
Vodafone identifies an Intellectual Property Right that exclusively relates to the business of the Vodafone Retained Group but which, following Closing, is owned by the Mergeco Group; |
(ii) |
Hutchison identifies an Intellectual Property Right that exclusively relates to the business of the Hutchison Retained Group but which, following Closing, is owned by the Mergeco Group; or |
(iii) |
Mergeco identifies an Intellectual Property Right that exclusively relates to the Vodafone UK Business or the Three UK Business but which, following Closing, is owned by the Vodafone Retained Group or the Hutchison Retained Group (as the case may be), |
the parties will discuss in good faith whether the Intellectual Property Right that has been identified should be transferred to such company as nominated by the party that has identified the Intellectual Property Right. This Clause 16.2.7 will not apply to: (a) trade mark rights or domain names; and (b) any Intellectual Property Right that is licensed, created and/or assigned under or pursuant to any Hutchison Intra Group Agreement in force as at, or after, Closing, Transitional Services Agreement, Vodafone Surviving Intra Group Agreement and Vodafone Company Intercompany Services Agreement.
17 |
Confidentiality |
17.1 |
Announcements |
On or prior to Closing, no announcement or circular in connection with the existence or the subject matter of this Agreement shall be made or issued by or on behalf of Mergeco, any Hutchison Group Company or any Vodafone Group Company without the prior written consent of Hutchison and Vodafone. This shall not affect:
17.1.1 |
the publication of [***] in accordance with Clause 5.2.5 or the publication of the [***] in accordance with Clause 5.2.6; |
53
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
17.1.2 |
any other announcement or circular required by law or any governmental or regulatory body or the rules of any stock exchange on which the shares of either party or its holding company are listed but the party with an obligation to make an announcement or communication or issue a circular (or whose holding company has such an obligation) shall consult with Hutchison and/or Vodafone (as relevant) (or shall procure that its holding company consults with Hutchison and/or Vodafone (as relevant)) insofar as is reasonably practicable before complying with such an obligation; |
17.1.3 |
any communications with the Three UK Employees or the Vodafone UK Employees, or their respective employee representative bodies, in the ordinary course which do not provide any information which materially exceeds the information provided in any public announcement; or |
17.1.4 |
the Transaction Announcement which shall be made on the date of this Agreement (or on such other date as may be agreed between Hutchison and Vodafone). |
17.2 |
Confidentiality |
17.2.1 |
The parties shall procure that the Confidentiality Agreement shall cease to have any force or effect from the date of this Agreement. |
17.2.2 |
Up to and including Closing (from which point the Shareholders’ Agreement shall apply), subject to Clauses 17.1 and 17.2.3, each of the parties shall treat as strictly confidential and not disclose or use any information received or obtained as a result of entering into this Agreement (or any agreement entered into pursuant to this Agreement) which relates to: |
(i) |
the existence and the provisions of this Agreement and of any agreement entered into pursuant to this Agreement; |
(ii) |
the negotiations relating to this Agreement (and any such other agreements); |
(iii) |
any Confidential Information of the Hutchison Retained Group (in the case of Vodafone and Mergeco) and the Vodafone Retained Group (in the case of Hutchison and Mergeco); and |
(iv) |
any Confidential Information obtained prior to Closing of: (i) the Three UK Group (in the case of Vodafone and Mergeco); and (ii) the Vodafone UK Group and Mergeco (in the case of Hutchison). |
17.2.3 |
Clause 17.2.2 shall not prohibit disclosure or use of any information if and to the extent: |
(i) |
the disclosure or use is required by law, any governmental or regulatory body, any ratings agency or any stock exchange on which the shares of a party or its holding company are listed (including where this is required as part of any actual or potential offering, placing and/or sale of securities of any Hutchison Group Company and any Vodafone Group Company); |
(ii) |
the disclosure or use is required to vest the full benefit of this Agreement in each of the parties; |
54
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
(iii) |
the disclosure or use is required for the purpose of any arbitral or judicial proceedings arising out of this Agreement or any other agreement entered into, under, or pursuant to, this Agreement; |
(iv) |
the disclosure is made to a Tax Authority in connection with the Tax affairs of the disclosing party or any member of the disclosing party’s group; |
(v) |
the disclosure is made to professional advisers or actual or potential financiers of the Hutchison Group or the Vodafone Group on a need to know basis on terms that such professional advisers or financiers undertake to comply with the provisions of Clause 17.2.2 in respect of such information as if they were a party to this Agreement and the disclosing party takes responsibility for any breach by them; |
(vi) |
the disclosure is made to [***] and/or their professional advisers on terms that such [***] or professional advisers undertake to comply with the provisions of Clause 17.2.2 in respect of such information as if they were a party to this Agreement or are otherwise required to keep the information disclosed confidential (and, subject to compliance with applicable laws, Vodafone shall use reasonable endeavours to consult with Hutchison before making any such disclosure and keep Hutchison appraised of any material discussions which relate to or concern any of Clauses 17.2.2(i) to 17.2.2(iv) with such trustees and/or their professional advisers); |
(vii) |
the information is or becomes publicly available (other than by breach of the Confidentiality Agreement or of this Agreement); |
(viii) |
the disclosure is made on a confidential basis to potential purchasers of all or part of Mergeco, the Hutchison Group or the Vodafone Group or to their professional advisers or financiers, provided that such persons need to know the information for the purposes of considering, evaluating, advising on or furthering the potential purchase or for the purposes of considering whether to provide finance in relation to the potential purchase on terms that such potential purchasers or their professional advisers or financiers undertake to comply with the provisions of Clause 17.2.2 in respect of such information as if they were a party to this Agreement and the disclosing party takes responsibility for any breach by them; |
(ix) |
Hutchison (in the event that the proposed disclosure is to be made by Vodafone or Mergeco) and/or Vodafone (in the event that the proposed disclosure is to be made by Hutchison or Mergeco) has given prior written approval to the disclosure or use; or |
(x) |
the information is independently developed after Closing, |
provided that, prior to disclosure or use of any information pursuant to paragraphs (i), (ii) or (iii) of this Clause 17.2.3, the party concerned shall, where not prohibited by law, consult with the other part(ies) insofar as is reasonably practicable.
17.2.4 |
If this Agreement terminates without Closing having occurred, Vodafone and/or Mergeco shall (at its expense, as soon as practicable following request by Hutchison) and Hutchison shall (at its expense, as soon as practicable following request by Vodafone and/or Mergeco): |
55
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
(i) |
so far as practicable to do so, return or destroy, or procure the return or destruction of, all originals and hard copies of documents containing Confidential Information; and |
(ii) |
so far as practicable to do so, permanently erase, or procure the permanent erasing of, all electronic copies of Confidential Information in its possession or under its custody or control, |
provided that, without prejudice to any duties of confidentiality contained in this Agreement or the Confidentiality Agreement, each party may retain any Confidential Information as may be required by law or regulation.
17.2.5 |
The parties shall procure that [***] shall cease to have any force or effect from the Closing Date. The parties shall agree an information sharing protocol to apply from Closing in relation to information flows between Mergeco and any Hutchison Group Company and/or any Vodafone Group Company |
18 |
Insurance |
18.1 |
Existing Claims under Group Insurance Policies |
18.1.1 |
With respect to any claim made before the Closing Date by or on behalf of any Vodafone UK Group Company under any Vodafone Group Insurance Policies, to the extent that: |
(i) |
the Vodafone UK Group has not been compensated prior to the Closing Date in respect of the Losses in respect of which the claim was made; or |
(ii) |
the Losses in respect of which the claim was made have not been taken into account in the Vodafone Closing Schedules and reduced the Vodafone Working Capital accordingly, |
Vodafone shall procure that the relevant Vodafone Retained Group Company uses reasonable endeavours after the Closing Date to recover all monies due from insurers and shall pay all monies received (less any deductible or excess under the Vodafone Group Insurance Policies, any Tax due (or Tax that would have been due but for the availability of a Relief) and any reasonable out of pocket expenses suffered or incurred by Vodafone or any Vodafone Retained Group Company following the Closing Date in seeking recovery from the insurers) to Mergeco as soon as reasonably practicable after receipt.
18.1.2 |
With respect to any claim made before the Closing Date by or on behalf of any Three UK Group Company under any Hutchison Group Insurance Policies, to the extent that: |
(i) |
the Three UK Group has not been compensated prior to the Closing Date in respect of the Losses in respect of which the claim was made; or |
(ii) |
the Losses in respect of which the claim was made have not been taken into account in the Hutchison Closing Schedules and reduced the Hutchison Working Capital accordingly, |
56
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Hutchison shall procure that the relevant Hutchison Retained Group Company uses reasonable endeavours after the Closing Date to recover all monies due from insurers and shall pay all monies received (less any deductible or excess under the Hutchison Group Insurance Policies, any Tax due (or Tax that would have been due but for the availability of a Relief) and any reasonable out of pocket expenses suffered or incurred by Hutchison or any Hutchison Retained Group Company following the Closing Date in seeking recovery from the insurers) to Mergeco as soon as reasonably practicable after receipt.
18.2 |
New Claims under Vodafone Occurrence-Based Policies |
18.2.1 |
With respect to any event, act or omission relating to any Vodafone UK Group Company that occurred or existed prior to the Closing Date that is covered by an “occurrence-based” Vodafone Group Insurance Policy, Vodafone shall, at the cost and instruction of Mergeco, procure that the relevant Vodafone Retained Group Company uses reasonable endeavours to make a claim under such insurance policy, provided that Vodafone shall not be obliged to make any such claim if and to the extent that such claim is also covered by an insurance policy held by a Mergeco Group Company. |
18.2.2 |
Following receipt of an instruction from Mergeco to pursue a claim, Vodafone shall, at Mergeco’s cost, use reasonable endeavours to make all necessary notifications and claims under the relevant Vodafone Group Insurance Policy, and the relevant Vodafone UK Group Company shall be entitled to be paid any proceeds actually received under the Vodafone Group Insurance Policy (less any deductible or excess under the Vodafone Group Insurance Policies, any Tax due (or Tax that would have been due but for the availability of a Relief) and any reasonable out of pocket expenses suffered or incurred by Vodafone or any Vodafone Retained Group Company following the Closing Date in seeking recovery from the insurers), provided that Mergeco shall provide (and shall procure that the relevant Mergeco Group Company also provides), at Mergeco’s cost, all assistance, information and co-operation reasonably requested by Vodafone. |
18.3 |
New Claims under Hutchison Occurrence-Based Policies |
18.3.1 |
With respect to any event, act or omission relating to any Three UK Group Company that occurred or existed prior to the Closing Date that is covered by an “occurrence-based” Hutchison Group Insurance Policy, Hutchison shall, at the cost and instruction of Mergeco, procure that the relevant Hutchison Retained Group Company uses reasonable endeavours to make a claim under such insurance policy, provided that Hutchison shall not be obliged to make any such claim if and to the extent that such claim is also covered by an insurance policy held by a Mergeco Group Company. |
18.3.2 |
Following receipt of an instruction from Mergeco to pursue a claim, Hutchison shall, at Mergeco’s cost, use reasonable endeavours to make all necessary notifications and claims under the relevant Hutchison Group Insurance Policy, and the relevant Three UK Group Company shall be entitled to be paid any proceeds actually received under the Hutchison Group Insurance Policy (less any deductible or excess under the Hutchison Group Insurance Policies, any Tax due (or Tax that would have been due but for the availability of a Relief) and any reasonable out of pocket expenses suffered or incurred by Hutchison or any Hutchison Retained Group Company following the Closing Date in seeking recovery from the insurers), provided that Mergeco shall provide (and shall procure that the relevant Mergeco Group Company also provides), at Mergeco’s cost, all assistance, information and co-operation reasonably requested by Hutchison. |
57
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
19 |
Support Commitments |
19.1 |
[***] |
19.2 |
Renewal of Support Commitments |
19.2.1 |
The parties acknowledge and agree that Hutchison will be under no obligation to renew any Support Commitments given by any Hutchison Retained Group Company in respect of liabilities or obligations of the Three UK Group. |
19.2.2 |
The parties acknowledge and agree that Vodafone will be under no obligation to renew any Support Commitments given by any Vodafone Retained Group Company in respect of liabilities or obligations of Mergeco or the Vodafone UK Group. |
19.2.3 |
The parties acknowledge and agree that Mergeco will be under no obligation to renew any Support Commitments given by any Mergeco Group Company in respect of liabilities or obligations of the Hutchison Retained Group or the Vodafone Retained Group. |
19.3 |
Indemnity |
19.3.1 |
Vodafone shall, following Closing, pay to Hutchison an amount equal to X; provided that, if and to the extent that Vodafone has complied with the foregoing payment obligation, Hutchison and any other Hutchison Retained Group Company shall not claim damages or other compensation from, or otherwise hold the Three UK Group liable for, the amounts paid by Hutchison and/or any other Hutchison Retained Group Company pursuant to such Support Commitment. In this Clause 19.3.1, “X” means 51 per cent. multiplied by A / (1 – (0.51 x B)) where: |
(i) |
“A” means all amounts paid by Hutchison and any other Hutchison Retained Group Company pursuant to any Support Commitments provided by the Hutchison Retained Group in respect of liabilities or obligations of the Three UK Group; and |
(ii) |
“B” means the tax rate at which Hutchison is taxed, or would be taxed but for the use of a Relief, on receipt of any payment by Vodafone pursuant to this Clause 19.3.1, expressed as a decimal. |
19.3.2 |
Hutchison shall, following Closing, pay to Vodafone an amount equal to Y; provided that, if and to the extent that Hutchison has complied with the foregoing payment obligation, Vodafone and any other Vodafone Retained Group Company shall not claim damages or other compensation from, or otherwise hold the Vodafone UK Group liable for, the amounts paid by Vodafone and/or any other Vodafone Retained Group Company pursuant to such Support Commitment. In this Clause 19.3.2, “Y” means 49 per cent. multiplied by C / (1 – (0.49 x D)) where: |
(i) |
“C” means all amounts paid by Vodafone and any other Vodafone Retained Group Company pursuant to any Support Commitments provided by the Vodafone Retained Group in respect of liabilities or obligations of the |
58
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Vodafone UK Group, other than in respect of any amounts paid by the Vodafone Retained Group in respect of [***]; and
(ii) |
“D” means the tax rate at which Vodafone is taxed, or would be taxed but for the use of a Relief, on receipt of any payment by Hutchison pursuant to this Clause 19.3.2, expressed as a decimal. |
19.3.3 |
Any payment made under Clause 19.3.1 or Clause 19.3.2 shall be made on an after-Tax basis in accordance with Clause 1.16, but with relevant adjustments to the calculation made such that there is no double counting of Taxes paid by the recipient with the parties acknowledging that their intention any such Taxes are to be shared on a 49/51 per cent. basis as set out in Clauses 19.3.1 and 19.3.2. For the avoidance of doubt, the payment obligations under Clause 19.3.1 or Clause 19.3.2 (as the case may be) shall not apply to Vodafone or Hutchison if, prior to such payment being made by Vodafone or Hutchison, the Mergeco Group has paid in full to Hutchison (and/or any other Hutchison Retained Group) or Vodafone (and/or any other Vodafone Retained Group Company) the amounts paid by Hutchison (and/or any other Hutchison Retained Group Company) or Vodafone (and/or any other Vodafone Retained Group Company) pursuant to such Support Commitment. Subject to and after the compliance with the payment obligations by Vodafone under Clause 19.3.1 or by Hutchison under Clause 19.3.2 (as the case may be), Mergeco shall reimburse Vodafone and Hutchison pro-rata on an after-Tax basis in accordance with their respective shareholding percentage in Mergeco of the amount paid by Hutchison (and/or any other Hutchison Retained Group Company) pursuant to the Support Commitment under Clause 19.3.1 or by Vodafone (and/or any other Vodafone Retained Group Company) pursuant to the Support Commitment under Clause 19.3.2 (as applicable). |
19.3.4 |
If and to the extent that after Closing there is any Support Commitment given by or binding upon any Three UK Group Company in respect of liabilities or obligations of the Hutchison Retained Group, Hutchison shall indemnify Mergeco against 100 per cent. of all amounts paid by any Mergeco Group Company pursuant to any such Support Commitments. |
19.3.5 |
If and to the extent that after Closing there is any Support Commitment given by or binding upon any Vodafone UK Group Company in respect of liabilities or obligations of the Vodafone Retained Group, Vodafone shall indemnify Mergeco against 100 per cent. of all amounts paid by any Mergeco Group Company pursuant to any such Support Commitments. |
20 |
[***] |
21 |
Termination |
21.1 |
In addition to any right to terminate this Agreement in accordance with Clauses 5.3.2 and 8.4.1, this Agreement may be terminated by either Hutchison or Vodafone in accordance with Clause 21.3. |
21.2 |
If this Agreement is terminated in accordance with Clause 5.3.2, 8.4.1 or 21.3, all obligations of the parties under this Agreement shall end (other than the Surviving |
59
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Clauses), but, for the avoidance of doubt, all rights and liabilities of the parties which have accrued before termination shall continue to exist.
21.3 |
Termination Rights |
21.3.1 |
If, as at the date of this Agreement or immediately prior to Closing, Hutchison is in material breach of any Hutchison Fundamental Warranties (or would be if such warranties were repeated at that time), Vodafone shall be entitled (without prejudice to Vodafone’s right to claim damages or other compensation), prior to Closing, by notice in writing to the other parties to terminate this Agreement (other than the Surviving Clauses). |
21.3.2 |
If, as at the date of this Agreement or immediately prior to Closing, Vodafone is in material breach of any Vodafone Fundamental Warranties (or would be if such warranties were repeated at that time), Hutchison shall be entitled (without prejudice to Hutchison’s right to claim damages or other compensation), prior to Closing, by notice in writing to the other parties to terminate this Agreement (other than the Surviving Clauses). |
21.3.3 |
If, in circumstances in which the Hutchison Shareholder Resolution Condition is not deemed to be satisfied in accordance with Clause 5.2.8: |
(i) |
the Hutchison Directors fail to make [***] as required in Clause 5.2.5(ii); |
(ii) |
the Hutchison Directors adjourn the Hutchison General Meeting otherwise than in accordance with Clause 5.2.5(iii) (or fail to reconvene the Hutchison General Meeting within [***] Business Days (or, if later, the soonest date permitted by applicable law) once so adjourned); |
(iii) |
the Hutchison Directors withdraw, suspend, qualify or adversely modify or amend [***] once made; or |
(iv) |
the CKHH Shareholders fail to approve the Hutchison Resolutions at the Hutchison General Meeting, |
Hutchison (only if Hutchison Topco and the Hutchison Directors have complied with Clause 5.2.5 in all respects) or Vodafone may each, in its sole discretion, terminate this Agreement (other than the Surviving Clauses), by notice in writing to the other received prior to Closing.
21.3.4 |
If, in circumstances in which the Vodafone Shareholder Resolution Condition is not deemed to be satisfied in accordance with Clause 5.2.8: |
(i) |
the Vodafone Directors fail to make the Vodafone Recommendation as required in Clause 5.2.6(ii); |
(ii) |
the Vodafone Directors adjourn the Vodafone General Meeting otherwise than in accordance with Clause 5.2.6(iii) (or fail to reconvene the Vodafone General Meeting within [***] Business Days (or, if later, the soonest date permitted by applicable law) once so adjourned); |
(iii) |
the Vodafone Directors withdraw, suspend, qualify or adversely modify or amend the Vodafone Recommendation once made; or |
60
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
(iv) |
the Vodafone Topco Shareholders fail to approve the Vodafone Resolutions at the Vodafone General Meeting, |
Vodafone (only if Vodafone Topco and the Vodafone Directors have complied with Clause 5.2.6 in all respects) or Hutchison may each, in its sole discretion, terminate this Agreement (other than the Surviving Clauses), by notice in writing to the other received prior to Closing.
21.3.5 |
[***] |
21.3.6 |
Any failure by either Vodafone or Hutchison to exercise the right to terminate this Agreement under this Clause 21.3 shall not constitute a waiver of any of their respective rights. |
21.4 |
Effect of Termination |
If this Agreement is terminated in accordance with Clause 5.3.2, Clause 8.4.1 or Clause 21.3, all obligations of the parties under this Agreement shall end (other than the Surviving Clauses), but, for the avoidance of doubt, all rights and liabilities of the parties which have accrued before termination shall continue to exist.
22 |
Topco Guarantees |
22.1 |
Hutchison Topco Guarantee of Hutchison |
22.1.1 |
In consideration for Mergeco and Vodafone entering into this Agreement, Hutchison Topco hereby unconditionally and irrevocably guarantees to Mergeco and Vodafone the due and punctual performance and observance by Hutchison of all obligations and liabilities under or otherwise arising out of or in connection with this Agreement and the Tax Covenant (the “Hutchison Guaranteed Obligations”) and agrees to indemnify and hold harmless Mergeco and Vodafone against all liabilities, losses, proceedings, claims, damages, costs and expenses that they may suffer or incur as a result of any failure or delay by Hutchison in the performance or observance of any Hutchison Guaranteed Obligations. The liability of Hutchison Topco under this Clause 22.1 shall not be released or diminished by any variation of the terms of this Agreement or the Tax Covenant (whether or not agreed by Hutchison Topco), any forbearance, neglect or delay in seeking performance of the Hutchison Guaranteed Obligations or any granting of time for such performance. |
22.1.2 |
If and whenever Hutchison defaults for any reason whatsoever in the performance or observance of any of the Hutchison Guaranteed Obligations, Hutchison Topco shall forthwith upon demand unconditionally perform (or procure performance of) and satisfy (or procure satisfaction of) the relevant Hutchison Guaranteed Obligation in the manner prescribed by this Agreement or the Tax Covenant and so that the same benefits shall be conferred on Mergeco and/or Vodafone as would have been received if such Hutchison Guaranteed Obligation had been duly and promptly performed and observed by Hutchison. |
22.1.3 |
With respect to Hutchison Topco, this guarantee is to be a continuing guarantee and accordingly is to remain in force until all the Hutchison Guaranteed Obligations shall have been performed or satisfied. This guarantee is in addition to, without limiting and not in substitution for, any rights or security which Mergeco or Vodafone may |
61
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
now or after the date of this Agreement have or hold for the performance and observance of the Hutchison Guaranteed Obligations.
22.1.4 |
As a separate and independent stipulation, Hutchison Topco agrees that any Hutchison Guaranteed Obligation which may not be enforceable against or recoverable from Hutchison by reason of any legal limitation, disability or incapacity on or of Hutchison or any fact or circumstance (other than any relevant limitation imposed by this Agreement or the Tax Covenant) shall nevertheless be enforceable against and recoverable from Hutchison Topco as though the same had been incurred by Hutchison Topco and Hutchison Topco were the sole or principal obligor in respect thereof and shall be performed or paid by Hutchison Topco on written demand from Mergeco or Vodafone. |
22.2 |
Vodafone Topco Guarantee of Vodafone |
22.2.1 |
In consideration for Mergeco and Hutchison entering into this Agreement, Vodafone Topco hereby unconditionally and irrevocably guarantees to Mergeco and Hutchison the due and punctual performance and observance by Vodafone of all obligations and liabilities under or otherwise arising out of or in connection with this Agreement and the Tax Covenant (the “Vodafone Guaranteed Obligations”) and agrees to indemnify and hold harmless Mergeco and Hutchison against all liabilities, losses, proceedings, claims, damages, costs and expenses that they may suffer or incur as a result of any failure or delay by Vodafone in the performance or observance of any Vodafone Guaranteed Obligations. The liability of Vodafone Topco under this Clause 22.2 shall not be released or diminished by any variation of the terms of this Agreement or the Tax Covenant (whether or not agreed by Vodafone Topco), any forbearance, neglect or delay in seeking performance of the Vodafone Guaranteed Obligations or any granting of time for such performance. |
22.2.2 |
If and whenever Vodafone defaults for any reason whatsoever in the performance or observance of any of the Vodafone Guaranteed Obligations, Vodafone Topco shall forthwith upon demand unconditionally perform (or procure performance of) and satisfy (or procure satisfaction of) the relevant Vodafone Guaranteed Obligation in the manner prescribed by this Agreement or the Tax Covenant and so that the same benefits shall be conferred on Mergeco and/or Hutchison as would have been received if such Vodafone Guaranteed Obligation had been duly and promptly performed and observed by Vodafone. |
22.2.3 |
With respect to Vodafone Topco, this guarantee is to be a continuing guarantee and accordingly is to remain in force until all the Vodafone Guaranteed Obligations shall have been performed or satisfied. This guarantee is in addition to, without limiting and not in substitution for, any rights or security which Mergeco or Hutchison may now or after the date of this Agreement have or hold for the performance and observance of the Vodafone Guaranteed Obligations. |
22.2.4 |
As a separate and independent stipulation, Vodafone Topco agrees that any Vodafone Guaranteed Obligation which may not be enforceable against or recoverable from Vodafone by reason of any legal limitation, disability or incapacity on or of Vodafone or any fact or circumstance (other than any relevant limitation imposed by this Agreement or the Tax Covenant) shall nevertheless be enforceable against and recoverable from Vodafone Topco as though the same had been |
62
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
incurred by Vodafone Topco and Vodafone Topco were the sole or principal obligor in respect thereof and shall be performed or paid by Vodafone Topco on written demand from Mergeco or Hutchison.
22.3 |
Vodafone Topco Guarantee of Mergeco |
22.3.1 |
In consideration for Hutchison entering into this Agreement, Vodafone Topco hereby unconditionally and irrevocably guarantees to Hutchison the due and punctual performance and observance by Mergeco of all obligations and liabilities under or otherwise arising out of or in connection with this Agreement from the date of this Agreement until immediately prior to Closing (the “Mergeco Guaranteed Obligations”) and agrees to indemnify and hold harmless Hutchison against all liabilities, losses, proceedings, claims, damages, costs and expenses that it may suffer or incur as a result of any failure or delay by Mergeco in the performance or observance of any Mergeco Guaranteed Obligations. The liability of Vodafone Topco under this Clause 22.3 shall not be released or diminished by any variation of the terms of this Agreement (whether or not agreed by Vodafone Topco), any forbearance, neglect or delay in seeking performance of the Mergeco Guaranteed Obligations or any granting of time for such performance. |
22.3.2 |
If and whenever Mergeco defaults for any reason whatsoever in the performance or observance of any of the Mergeco Guaranteed Obligations, Vodafone Topco shall forthwith upon demand unconditionally perform (or procure performance of) and satisfy (or procure satisfaction of) the relevant Mergeco Guaranteed Obligation in the manner prescribed by this Agreement and so that the same benefits shall be conferred on Hutchison as would have been received if such Mergeco Guaranteed Obligation had been duly and promptly performed and observed by Mergeco. |
22.3.3 |
With respect to Vodafone Topco, this guarantee is to be a continuing guarantee and shall remain in force until immediately prior to Closing. This guarantee is in addition to, without limiting and not in substitution for, any rights or security which Hutchison may now or after the date of this Agreement have or hold for the performance and observance of the Mergeco Guaranteed Obligations. |
22.3.4 |
As a separate and independent stipulation, Vodafone Topco agrees that any Mergeco Guaranteed Obligation which may not be enforceable against or recoverable from Mergeco by reason of any legal limitation, disability or incapacity on or of Mergeco or any fact or circumstance (other than any relevant limitation imposed by this Agreement) shall nevertheless be enforceable against and recoverable from Vodafone Topco as though the same had been incurred by Vodafone Topco and Vodafone Topco were the sole or principal obligor in respect thereof and shall be performed or paid by Vodafone Topco on written demand from Hutchison. |
22.3.5 |
This Clause 22.3 shall cease to have any force and effect immediately prior to Closing. |
63
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
23 |
Other Provisions |
23.1 |
Language |
Each other document in connection with this Agreement shall be in English or accompanied by an English translation. The receiving party shall be entitled to assume the accuracy of and rely upon any English translation of any document, notice or other communication given or delivered to it pursuant to this Clause 23.1. If there is a discrepancy between an English translation and the foreign language original, the English translation shall prevail.
23.2 |
Assignment |
This Agreement shall be binding on and enure for the benefit of each party’s successors in title. No party shall assign (or declare any trust in favour of a third party over) all or any part of the benefit of, or its rights or benefits under, this Agreement, without the prior written consent of each of the other parties (which may be withheld at each party’s sole discretion).
23.3 |
Entire Agreement (Including Variation) |
23.3.1 |
Whole and Only Agreement |
This Agreement constitutes the whole and only agreement between the parties relating to the subject matter of this Agreement, and supersedes and extinguishes all previous discussions, correspondence, negotiations, drafts, agreements, promises, assurances, term sheet, warranties, representations, arrangements and understandings between the parties, whether written or oral.
23.3.2 |
No Reliance on Pre-Contractual Statements |
Except in the case of fraud, each party acknowledges and agrees that in entering into this Agreement, it is not relying upon any Pre-Contractual Statement which is not expressly repeated in this Agreement.
23.3.3 |
Exclusion of Other Rights of Action |
Except in the case of fraud, no party shall have any right of action against any other party to this Agreement arising out of or in connection with any Pre-Contractual Statement except to the extent that it is expressly repeated in this Agreement.
23.3.4 |
Variation |
This Agreement may only be varied in writing signed by each of the parties.
23.4 |
Notices |
23.4.1 |
Notices to Be in Writing |
A notice under this Agreement shall only be effective if it is in writing (facsimile is not permitted) and in English and email is permitted.
23.4.2 |
Addresses |
Notices under this Agreement shall be sent to a party at its address and for the attention of the individual set out below:
[***]
64
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
provided that a party may change its notice details on giving notice to the other parties of the change in accordance with this Clause 23.4.
23.4.3 |
Receipt of Notices |
Subject to Clause 23.4.4, any notice given under this Agreement shall be effective upon receipt and shall be deemed to have been received:
(i) |
at the time recorded by the delivery company, in the case of recorded delivery; |
(ii) |
at the time of delivery, if delivered by hand or courier; or |
(iii) |
at the time of sending if sent by e-mail, provided that the sender does not receive any automated message that the email has not been delivered to the recipient. |
23.4.4 |
Working Hours |
A notice that is deemed by Clause 23.4.3 to be received after 5.00 p.m. on any day, or on a Saturday, Sunday or public holiday in the place of receipt, shall be deemed to be received at 9.00 a.m. on the next day that is not a Saturday, Sunday or public holiday in the place of receipt.
23.5 |
Remedies and Waivers |
23.5.1 |
Delay or Omission |
No delay or omission by any party to this Agreement in exercising any right, power or remedy provided by law or under this Agreement shall:
(i) |
affect that right, power or remedy; |
(ii) |
operate as a waiver of it; or |
(iii) |
operate as an affirmation of this Agreement. |
23.5.2 |
Single or Partial Exercise |
The single or partial exercise of any right, power or remedy provided by law or under this Agreement shall not, unless otherwise expressly stated, preclude any other or further exercise of it or the exercise of any other right, power or remedy.
23.5.3 |
Cumulative Rights |
The rights, powers and remedies provided in this Agreement are cumulative and not exclusive of any rights, powers and remedies provided by law.
23.5.4 |
Damages Not an Adequate Remedy |
Notwithstanding any express remedies provided under this Agreement and without prejudice to any other right or remedy which any party may have, each party acknowledges and agrees that damages alone may not be an adequate remedy for any breach by it of the provisions of this Agreement, so that in the event of a breach or anticipated breach of such provisions, the remedies of injunction and/or an order for specific performance may in appropriate circumstances be available.
65
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
23.6 |
Third Party Rights |
Save as expressly set out in this Agreement, the parties to this Agreement do not intend that any term of this Agreement be enforceable, by virtue of the Contracts (Rights of Third Parties) Act 1999, by any person who is not a party to this Agreement.
23.7 |
No Partnership or Fiduciary Relationship |
The parties acknowledge and agree that:
(i) |
nothing in this Agreement and no action taken by the parties under this Agreement shall constitute a partnership, association or other co-operative entity between any of the parties or constitute any party the agent of any other party for any purpose; and |
(ii) |
no fiduciary relationship or fiduciary duties shall exist between the parties arising out of or in connection with this Agreement. |
23.8 |
Costs and Expenses, VAT and Stamp Taxes |
23.8.1 |
If anything done under this Agreement is a supply on which VAT is chargeable, the recipient of that supply shall pay to the maker of it (in addition to any other amounts payable under this Agreement) an amount equal to any VAT for which the maker of the supply (or any member of the VAT group of which it is a member) is liable to account (against delivery by the maker of the supply (or any member of the VAT group of which it is a member) of an appropriate VAT invoice). |
23.8.2 |
Vodafone and Hutchison shall bear equally among them any stamp duty or stamp duty reserve tax arising in respect of: |
(i) |
the sale of the [***] in accordance with Clause 3.3; and |
(ii) |
the contribution of the Three UK Shares in accordance with Clause 3.4.1, |
(including on, or in relation to, any instruments effecting such transfers or an agreement to such transfers).
23.9 |
Counterparts |
23.9.1 |
This Agreement may be executed in any number of counterparts, and by the parties on separate counterparts, but shall not be effective until each party has executed at least one counterpart. Each counterpart shall constitute an original of this Agreement, but all the counterparts shall together constitute but one and the same instrument. |
23.9.2 |
Any party may execute this Agreement by electronic signature (in whatever form) and such signature is conclusive of the relevant party’s intention to be bound by this Agreement (in the same way as if signed by that party’s manuscript signature). |
23.9.3 |
Delivery of a counterpart of this Agreement by e-mail attachment shall be an effective mode of delivery. |
66
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
23.10 |
Further Assurances |
Each party shall, and shall procure that any relevant member of its group shall, at their own cost, promptly execute and deliver such documents and perform such acts as may reasonably be required for the purpose of giving full effect to this Agreement.
23.11 |
Governing Law |
This Agreement is to be governed by and construed in accordance with English law. Any matter, claim or dispute arising out of or in connection with this Agreement, whether contractual or non-contractual, is to be governed by and determined in accordance with English law.
23.12 |
Submission to Jurisdiction |
Each party irrevocably agrees that the courts of England are to have exclusive jurisdiction to settle any dispute which may arise out of or in connection with this Agreement and that accordingly any proceedings arising out of or in connection with this Agreement shall be brought in such courts. Each of the parties irrevocably submits to the exclusive jurisdiction of such courts and waives any objection to proceedings in any such court on the ground of venue or on the ground that the proceedings have been brought in an inconvenient forum.
23.13 |
Appointment of Process Agent |
23.13.1 |
Each of Hutchison and Hutchison Topco shall maintain an agent in England for service of process and any other documents in proceedings in connection with this Agreement. That agent shall be: [***] |
23.13.2 |
Any claim form, judgment or other notice of legal process shall be sufficiently served on each of Hutchison and Hutchison Topco if delivered to their appointed agent at its address for the time being (as specified in Clause 23.13.1). |
23.13.3 |
Each of Hutchison and Hutchison Topco agrees not to revoke the authority of their agent and if for any reason they do so or their agent ceases to act in such capacity, each of them shall promptly appoint another agent with an address in England and notify each other party to this Agreement of the agent’s details. If each of Hutchison or Hutchison Topco fails to appoint another agent within 14 days of them being required to do so under this Clause 23.13.3, any other party to this Agreement may, at the expense of Hutchison and Hutchison Topco, appoint one on behalf of each of them. |
67
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 1
The Three UK Group
[***]
68
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 2
The Vodafone UK Group
[***]
69
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 3
Mergeco
[***]
70
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 4
Hutchison Reorganisation
[***]
71
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 5
Vodafone Reorganisation
[***]
72
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 6
Illustration of Closing Transactions
[***]
73
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 7
Closing Accounts
[***]
74
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 8
Conduct of Business (the Three UK Group)
75
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 9
Conduct of Business (the Vodafone UK Group and Mergeco)
[***]
76
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 10
Closing Deliverables
(Clause 8)
[***]
77
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 11
Bonuses, Commission and Retention Payments
[***]
78
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 12
Vodafone Share Incentive Plans
[***]
79
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 13
Pension Schemes
[***]
80
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 14
Hutchison Warranties
[***]
81
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 15
List of Hutchison Individuals with Knowledge
[***]
82
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 16
Vodafone Warranties
[***]
83
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 17
List of Vodafone Individuals with Knowledge
[***]
84
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 18
Trading Updates
[***]
85
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 19
Pre-Closing Asset Transfers
[***]
86
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 20
Continuing Support Commitments
[***]
87
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
Schedule 21
Agreed Form Documents
[***]
88
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
This Agreement has been entered into on the date first stated above.
89
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
BRILLIANT DESIGN LIMITED
[***]
[SIGNATURE PAGE TO THE CHURCHILL CONTRIBUTION AGREEMENT]
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
CK HUTCHISON GROUP TELECOM HOLDINGS LIMITED
[***]
[SIGNATURE PAGE TO THE CHURCHILL CONTRIBUTION AGREEMENT]
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
CK HUTCHISON HOLDINGS LIMITED
[***]
[SIGNATURE PAGE TO THE CHURCHILL CONTRIBUTION AGREEMENT]
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
VODAFONE INTERNATIONAL OPERATIONS LIMITED
[***]
[SIGNATURE PAGE TO THE CHURCHILL CONTRIBUTION AGREEMENT]
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
VODAFONE GROUP PLC
[***]
[SIGNATURE PAGE TO THE CHURCHILL CONTRIBUTION AGREEMENT]
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. SUCH EXCLUDED INFORMATION HAS BEEN MARKED WITH “[***]”.
VODAFONE UK TRADING HOLDINGS LIMITED
[***]
[SIGNATURE PAGE TO THE CHURCHILL CONTRIBUTION AGREEMENT]
Exhibit 12
RULE 13a-14(a) CERTIFICATION
I, Margherita Della Valle, certify that:
1. |
I have reviewed this Annual Report on Form 20-F of Vodafone Group Plc (the “Company”); |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; |
4. |
I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the Company and have: |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; |
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) |
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) |
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the Annual Report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. |
5. |
I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions): |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and |
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. |
21 June 2023 |
|
/s/ Margherita Della Valle |
Date |
|
Margherita Della Valle |
|
|
Group Chief Executive and Chief Financial Officer |
Exhibit 13
RULE 13a-14(b) CERTIFICATION
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Vodafone Group Plc, a company incorporated under the laws of England and Wales (the “Company”), hereby certifies, to such officer’s knowledge, that:
The Annual Report on Form 20-F for the year ended 31 March 2023 (the “Report”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
21 June 2023 |
/s/ Margherita Della Valle |
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Date |
Margherita Della Valle |
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Group Chief Executive and Chief Financial Officer |
The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Report or as a separate disclosure document.
Exhibit 15.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
1) |
Registration Statement (Form F-3 No. 333-240163) of Vodafone Group Plc; |
2) |
Registration Statement (Form S-8 No. 333-81825) of Vodafone Group Plc; and |
3) |
Registration Statement (Form S-8 No. 333-149634) of Vodafone Group Plc, pertaining to the Vodafone Global Incentive Plan 2014; |
of our reports dated 21 June 2023, with respect to the consolidated financial statements of Vodafone Group Plc and the effectiveness of internal control over financial reporting of Vodafone Group Plc included in this Annual Report (Form 20-F) for the year ended 31 March 2023.
/s/ Ernst & Young LLP |
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London, United Kingdom |
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21 June 2023 |
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Exhibit 99.1
Table of contents
Reports of independent registered public accounting firm (PCAOB ID 01438) |
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The reports of the independent registered public accounting firm and the consolidated financial statements have been extracted, without adjustment, from pages 123 to 211 of the Annual Report on Form 20-F.
F-1
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Vodafone Group Plc
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Vodafone Group Plc (the Group) as of 31 March 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended 31 March2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group at 31 March 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended 31 March 2023, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Group’s internal control over financial reporting as of 31 March 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organisations of the Treadway Commission (2013 framework) and our report dated 21 June 2023 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on the financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Carrying value of cash generating units, including goodwill
Description of the matter |
As more fully described in Note 4 to the consolidated financial statements, in accordance with IAS 36 Impairment of Assets, the Group calculates the value in use (‘VIU’) for cash generating units (‘CGUs’) to determine whether an adjustment to the carrying value of the CGU, and therefore, goodwill, is required. As of 31 March 2023, the Group has recorded €27,615 million of goodwill. The Group’s assessment of the VIU of its CGUs involves estimation and judgement about the future performance of the local market businesses. In particular, the determination of the VIUs for the Germany, UK, Italy and Spain CGUs was sensitive to the significant assumptions of projected adjusted EBITDAaL growth, long-term growth rates and discount rates. |
F-2
Auditing the Group’s annual impairment test for the Germany, UK, Italy and Spain CGUs was complex and involved significant auditor judgement, given the estimation uncertainty related to the significant assumptions described above, as applied in the VIU models and the sensitivity of these VIU models to fluctuations in those assumptions. |
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How we addressed the matter in our audit |
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Group’s goodwill impairment review process, including management’s controls over the significant assumptions described above. For the annual impairment assessment as at 31 March 2023 we assessed, with the help of a valuation specialist, the methodology applied in the VIU models, as compared to the requirements of IAS 36 and tested the mathematical accuracy of the VIU models. For those CGUs mentioned above, we performed procedures to test and assess the significant assumptions used in the VIU models, which included evaluating projected adjusted EBITDAaL growth, for example by comparing underlying assumptions to external data such as economic and industry forecasts for the relevant markets and for consistency with evidence obtained from other areas of our audit. We also compared CGU EBITDAaL multiples to market listed peers and considered independent analyst valuations for individual CGUs, where available. For each CGU mentioned above, we compared the cash flow projections used in the VIU models to the information approved by the Group’s Board of Directors and evaluated the historical accuracy of management’s business plans, which underpin the VIU models, by comparing prior year forecasts to actual results in the current period. With the assistance of a valuation specialist, for the CGUs mentioned above, we compared long-term growth rates and discount rates against EY independently determined ranges and performed sensitivity analyses on the above-described assumptions in the VIU models, to evaluate the parameters that, should they arise, would cause an impairment of the CGU or would indicate additional disclosures were appropriate. We also assessed the adequacy of the related disclosures provided in Note 4 of the consolidated financial statements, in particular the sensitivity disclosures in relation to reasonably possible changes in assumptions that could result in impairment. |
Revenue Recognition
Description of the matter |
As more fully described in Note 2, Note 14 and Note 15 to the consolidated financial statements, the Group reported revenue of €45,706 million, contract assets of €3,557 million and contract liabilities of €2,543 million for the year ended and at, 31 March 2023. Management records revenue according to the principles of IFRS 15, Revenue from Contracts with Customers, including following the 5-step model, as described in the accounting policy in Note 2 to the consolidated financial statements. Auditing the revenue recorded by the Group is complex, due to the multiple IT systems and tools utilised in the initiation, processing and recording of transactions, which includes a high volume of individually low monetary value transactions, as well as the potential for significant postings outside of the aforementioned IT systems. Furthermore, judgement and the involvement of IT professionals was required to determine the audit approach to test and evaluate the relevant data that was captured and aggregated, and to assess the sufficiency of the audit evidence obtained. |
How we addressed the matter in our audit |
We, together with our IT professionals, obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Group’s revenue recognition process, including controls over the appropriate flow of transactional data through the IT systems and tools and the reconciliation of the transactional data to the accounting records. For significant revenue streams in certain components, our audit procedures included performing a correlation analysis between invoiced revenue, receivables and cash receipts and performing incremental audit procedures, such as agreeing items to source documents, where the results of the correlation analysis was not as expected; For other components where correlation analysis was not performed, our audit procedures included, reperforming billing data to general ledger end-to-end reconciliations, which included assessing the accuracy of the data inputs to underlying source documentation, including contractual agreements, where relevant; testing the mathematical accuracy and completeness of the reconciliations and any material reconciling items, including testing significant revenue postings outside of the billing systems by reference to underlying source documentation; and |
F-3
We recalculated the revenue recognised to evaluate whether the processing of the revenue recognition by the Group’s IT systems and automated processes was in accordance with IFRS 15. |
Recoverability of deferred tax assets in Luxembourg
Description of the matter |
As more fully described in Note 6 to the consolidated financial statements, the Group recognises deferred tax assets in accordance with IAS 12, Income Taxes, based on their estimated recoverability and whether management judges that it is probable that there will be sufficient and suitable taxable profits in the relevant legal entity or tax group against which to utilise the assets in the future. A deferred tax asset in Luxembourg of €16,269 million has been recognised in respect of losses, as management concluded it is probable that the Luxembourg entities will continue to generate taxable profits in the future, against which they can utilise these assets. Management estimates that the losses will be utilised over a period of 35-39 years. The Luxembourg companies’ income and therefore future taxable profits is derived from the Group’s internal financing and procurement and roaming activities. The forecast future finance income can vary based on forecast interest rates and intercompany debt levels, which in turn impacts the timeframe over which the deferred tax asset is forecast to be recovered. Furthermore, during the course of the year Luxembourg owned direct and indirect interests in the Group’s operating activities. The value of these investments is primarily based on the Group’s value in use calculations. Changes in the value of the interests in these operating activities, for the purposes of local Luxembourg statutory financial statements, can result in impairment reversals or charges, which are taxable or tax deductible, respectively, under local law. Auditing the Group’s recognition and recoverability of deferred tax assets in Luxembourg involves judgements and estimation uncertainty in relation to the availability of future taxable profits and the period of time over which it is expected to utilise these assets, results in increased estimation uncertainty. |
How we addressed the matter in our audit |
We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls around the recognition of deferred tax assets in Luxembourg, including the calculation of the gross amount of deferred tax assets recorded, the preparation of the prospective financial information used to determine the Luxembourg entities’ future taxable profits, and management’s identification and use of available commercial strategies. To test the realisability of the deferred tax assets in Luxembourg, with the support of tax professionals, our audit procedures included, among others, assessing the existence of available losses, including the impact of current year taxable profits resulting from procurement, roaming and finance income. Our procedures also included evaluating management’s position on the recoverability of the losses with respect to local tax law and tax planning strategies adopted, testing the calculation of the valuation of entities within the Luxembourg structure during the year by, among other procedures, to cashflow projections applied in the most recent value in use calculations, net asset valuations and share price data and assessing the Luxembourg ownership structure. We assessed the reasonableness of the forecasted procurement and roaming taxable profits utilised in management’s realisability assessment, by comparing to historical actual profits and with evidence obtained from other areas of our audit. To evaluate the forecast finance income, our procedures included, on a sample basis, recalculating finance income with reference to underlying agreements, comparing future interest rates utilised in the forecasts to relevant external benchmarks and the assumed reductions in intergroup debt, for consistency with our understanding of relevant guidance in respect of transfer pricing of financial transactions. We assessed whether evidence exists that is contrary to management’s stated intention that the financing structures will remain in place or that indicates it is not probable that sufficient future taxable profits will exist. We also assessed the adequacy of the disclosures in Note 6 of the consolidated financial statements, in respect of the Luxembourg deferred tax assets, against the requirements of IAS 12. |
F-4
/s/ Ernst & Young LLP
We have served as the Group’s auditor since 2019.
London, United Kingdom
21 June 2023
F-5
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Vodafone Group Plc
Opinion on Internal Control Over Financial Reporting
We have audited Vodafone Group Plc’s (the Group) internal control over financial reporting as of 31 March 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Vodafone Group Plc maintained, in all material respects, effective internal control over financial reporting as of 31 March 2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Group as of 31 March 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended 31 March 2023, and the related notes and our report dated 21 June 2023 expressed an unqualified opinion thereon.
Basis for Opinion
The Group’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s report on Internal control over financial reporting on page 112. Our responsibility is to express an opinion on the Group’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
London, United Kingdom
21 June 2023
F-6
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Consolidated income statement
for the years ended 31 March
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Re-presented1 |
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Re-presented1 |
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2023 |
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2022 |
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2021 |
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Note |
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€m |
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€m |
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€m |
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Revenue |
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2 |
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45,706 |
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45,580 |
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43,809 |
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Cost of sales |
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(30,850) |
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(30,574) |
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(30,086) |
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Gross profit |
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14,856 |
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15,006 |
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13,723 |
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Selling and distribution expenses |
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(3,329) |
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(3,358) |
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(3,522) |
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Administrative expenses |
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(6,092) |
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(5,713) |
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(5,350) |
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Net credit losses on financial assets |
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22 |
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(606) |
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(561) |
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(664) |
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Share of results of equity accounted associates and joint ventures |
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12 |
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433 |
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389 |
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374 |
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Impairment loss |
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4 |
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(64) |
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– |
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– |
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Other income |
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3 |
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9,098 |
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50 |
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568 |
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Operating profit |
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3 |
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14,296 |
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5,813 |
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5,129 |
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Investment income |
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5 |
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248 |
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254 |
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245 |
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Financing costs |
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5 |
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(1,728) |
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(1,964) |
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(1,027) |
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Profit before taxation |
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12,816 |
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4,103 |
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4,347 |
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Income tax expense |
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6 |
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(481) |
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(1,330) |
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(3,864) |
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Profit for the financial year |
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12,335 |
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2,773 |
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483 |
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Attributable to: |
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– Owners of the parent |
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11,838 |
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2,237 |
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59 |
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– Non-controlling interests |
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497 |
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536 |
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424 |
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Profit for the financial year |
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12,335 |
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2,773 |
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483 |
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Group earnings per share (all from continuing operations)1 |
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– Basic |
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8 |
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42.77 |
c |
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7.71 |
c |
0.20 |
c |
– Diluted |
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8 |
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42.62 |
c |
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7.68 |
c |
0.20 |
c |
Note:
1 | The results for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. See note 7 ‘Discontinued operations and assets held for sale’ and note 8 ‘Earnings per share’ for more information. |
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Consolidated statement of comprehensive income
for the years ended 31 March
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Re-presented1 |
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Re-presented1 |
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2023 |
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2022 |
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2021 |
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Note |
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€m |
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€m |
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€m |
Profit for the financial year |
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12,335 |
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2,773 |
|
483 |
Other comprehensive income/(expense): |
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Items that may be reclassified to the income statement in subsequent years: |
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Foreign exchange translation differences, net of tax |
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(1,236) |
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(30) |
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138 |
Foreign exchange translation differences transferred to the income statement |
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(334) |
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19 |
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(17) |
Other, net of tax2 |
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963 |
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1,863 |
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(3,743) |
Total items that may be reclassified to the income statement in subsequent years |
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(607) |
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1,852 |
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(3,622) |
Items that will not be reclassified to the income statement in subsequent years: |
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Net actuarial (losses)/gains on defined benefit pension schemes, net of tax |
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25 |
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(160) |
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483 |
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(555) |
Total items that will not be reclassified to the income statement in subsequent years |
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(160) |
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483 |
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(555) |
Other comprehensive (expense)/income |
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(767) |
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2,335 |
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(4,177) |
Total comprehensive income/(expense) for the financial year |
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11,568 |
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5,108 |
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(3,694) |
Attributable to: |
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– Owners of the parent |
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11,267 |
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4,546 |
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(4,117) |
– Non-controlling interests |
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301 |
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562 |
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423 |
Total comprehensive income/(expense) for the financial year |
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11,568 |
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5,108 |
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(3,694) |
Notes:
1 | The results for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. See note 7 ‘Discontinued operations and assets held for sale’ and note 8 ‘Earnings per share’ for more information. |
2 | Principally includes the impact of the Group’s cash flow hedges deferred to other comprehensive income during the year. |
Further details on items in the consolidated statement of comprehensive income can be found in the consolidated statement of changes in equity on page 125.
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Consolidated statement of financial position
at 31 March
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Re-presented1 |
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31 March 2023 |
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31 March 2022 |
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Note |
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€m |
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€m |
Non-current assets |
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Goodwill |
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10 |
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27,615 |
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31,884 |
Other intangible assets |
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10 |
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19,592 |
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21,360 |
Property, plant and equipment |
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11 |
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37,992 |
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40,804 |
Investments in associates and joint ventures |
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12 |
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11,079 |
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5,323 |
Other investments |
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13 |
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1,093 |
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1,073 |
Deferred tax assets |
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6 |
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19,316 |
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19,089 |
Post employment benefits |
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25 |
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329 |
|
555 |
Trade and other receivables |
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14 |
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7,843 |
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6,383 |
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124,859 |
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126,471 |
Current assets |
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Inventory |
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956 |
|
836 |
Taxation recoverable |
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279 |
|
296 |
Trade and other receivables |
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14 |
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10,705 |
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11,019 |
Other investments |
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13 |
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7,017 |
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7,931 |
Cash and cash equivalents |
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19 |
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11,705 |
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7,496 |
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30,662 |
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27,578 |
Total assets |
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155,521 |
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154,049 |
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Equity |
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Called up share capital |
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17 |
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4,797 |
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4,797 |
Additional paid-in capital |
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149,145 |
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149,018 |
Treasury shares |
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(7,719) |
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(7,278) |
Accumulated losses |
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(113,086) |
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(122,022) |
Accumulated other comprehensive income |
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30,262 |
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30,268 |
Total attributable to owners of the parent |
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63,399 |
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54,783 |
Non-controlling interests |
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1,084 |
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2,290 |
Total equity |
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64,483 |
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57,073 |
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Non-current liabilities |
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Borrowings |
|
21 |
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51,669 |
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58,131 |
Deferred tax liabilities |
|
6 |
|
771 |
|
520 |
Post employment benefits |
|
25 |
|
258 |
|
281 |
Provisions |
|
16 |
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1,572 |
|
1,881 |
Trade and other payables |
|
15 |
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2,184 |
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2,516 |
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56,454 |
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63,329 |
Current liabilities |
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|
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Borrowings |
|
21 |
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14,721 |
|
11,961 |
Financial liabilities under put option arrangements |
|
22 |
|
485 |
|
494 |
Taxation liabilities |
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|
|
457 |
|
864 |
Provisions |
|
16 |
|
674 |
|
667 |
Trade and other payables |
|
15 |
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18,247 |
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19,661 |
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34,584 |
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33,647 |
Total equity and liabilities |
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155,521 |
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154,049 |
Note:
1 | Balances as at 31 March 2022 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. See note 7 ‘Discontinued operations and assets held for sale’ for more information. |
The consolidated financial statements on pages 123 to 211 were approved by the Board of Directors and authorised for issue on 21 June 2023 and were signed on its behalf by:
/s/ Margherita Della Valle |
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Margherita Della Valle |
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Group Chief Executive and Chief Financial Officer |
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Consolidated statement of changes in equity
for the years ended 31 March
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Additional |
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Accumulated other comprehensive income |
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Equity |
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Non- |
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Share |
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paid-in |
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Treasury |
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Accumulated |
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Currency |
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Pensions |
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Revaluation |
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attributable |
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controlling |
|
Total |
|
|
capital1 |
|
capital2 |
|
shares |
|
losses |
|
reserve3 |
|
reserve |
|
surplus4 |
|
Other5 |
|
to owners |
|
interests |
|
equity |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
1 April 2020 |
|
4,797 |
|
152,629 |
|
(7,802) |
|
(120,349) |
|
28,308 |
|
(679) |
|
1,227 |
|
3,279 |
|
61,410 |
|
1,215 |
|
62,625 |
Issue or reissue of shares7 |
|
– |
|
(1,943) |
|
2,033 |
|
(87) |
|
– |
|
– |
|
– |
|
– |
|
3 |
|
– |
|
3 |
Share-based payments |
|
– |
|
126 |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
|
126 |
|
10 |
|
136 |
Transactions with NCI in subsidiaries8 |
|
– |
|
– |
|
– |
|
1,149 |
|
– |
|
– |
|
– |
|
– |
|
1,149 |
|
748 |
|
1,897 |
Dividends |
|
– |
|
– |
|
– |
|
(2,412) |
|
– |
|
– |
|
– |
|
– |
|
(2,412) |
|
(384) |
|
(2,796) |
Comprehensive (expense)/income |
|
– |
|
– |
|
– |
|
59 |
|
122 |
|
(555) |
|
– |
|
(3,743) |
|
(4,117) |
|
423 |
|
(3,694) |
Profit |
|
– |
|
– |
|
– |
|
59 |
|
– |
|
– |
|
– |
|
– |
|
59 |
|
424 |
|
483 |
OCI - before tax |
|
– |
|
– |
|
– |
|
– |
|
129 |
|
(686) |
|
– |
|
(4,630) |
|
(5,187) |
|
– |
|
(5,187) |
OCI – taxes |
|
– |
|
– |
|
– |
|
– |
|
6 |
|
131 |
|
– |
|
887 |
|
1,024 |
|
3 |
|
1,027 |
Transfer to the income statement ('IS') |
|
– |
|
– |
|
– |
|
– |
|
(13) |
|
– |
|
– |
|
– |
|
(13) |
|
(4) |
|
(17) |
Purchase of treasury shares('TS')9 |
|
– |
|
– |
|
(403) |
|
– |
|
– |
|
– |
|
– |
|
– |
|
(403) |
|
– |
|
(403) |
31 March 2021 Re-presented6 |
|
4,797 |
|
150,812 |
|
(6,172) |
|
(121,640) |
|
28,430 |
|
(1,234) |
|
1,227 |
|
(464) |
|
55,756 |
|
2,012 |
|
57,768 |
Issue or reissue of shares7 |
|
– |
|
(1,902) |
|
2,000 |
|
(98) |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
Share-based payments |
|
– |
|
108 |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
|
108 |
|
11 |
|
119 |
Transactions with NCI in subsidiaries8 |
|
– |
|
– |
|
– |
|
(38) |
|
– |
|
– |
|
– |
|
– |
|
(38) |
|
237 |
|
199 |
Dividends |
|
– |
|
– |
|
– |
|
(2,483) |
|
– |
|
– |
|
– |
|
– |
|
(2,483) |
|
(532) |
|
(3,015) |
Comprehensive income/(expense) |
|
– |
|
– |
|
– |
|
2,237 |
|
(37) |
|
483 |
|
– |
|
1,863 |
|
4,546 |
|
562 |
|
5,108 |
Profit |
|
– |
|
– |
|
– |
|
2,237 |
|
– |
|
– |
|
– |
|
– |
|
2,237 |
|
536 |
|
2,773 |
OCI – before tax |
|
– |
|
– |
|
– |
|
– |
|
(56) |
|
627 |
|
– |
|
2,368 |
|
2,939 |
|
26 |
|
2,965 |
OCI – taxes |
|
– |
|
– |
|
– |
|
– |
|
– |
|
(144) |
|
– |
|
(505) |
|
(649) |
|
– |
|
(649) |
Transfer to the IS |
|
– |
|
– |
|
– |
|
– |
|
19 |
|
– |
|
– |
|
– |
|
19 |
|
– |
|
19 |
Purchase of TS9 |
|
– |
|
– |
|
(3,106) |
|
– |
|
– |
|
– |
|
– |
|
– |
|
(3,106) |
|
– |
|
(3,106) |
31 March 2022 Re-presented6 |
|
4,797 |
|
149,018 |
|
(7,278) |
|
(122,022) |
|
28,393 |
|
(751) |
|
1,227 |
|
1,399 |
|
54,783 |
|
2,290 |
|
57,073 |
Adoption of IAS 29 |
|
– |
|
– |
|
– |
|
– |
|
565 |
|
– |
|
– |
|
– |
|
565 |
|
– |
|
565 |
1 April 2022 - b/forward |
|
4,797 |
|
149,018 |
|
(7,278) |
|
(122,022) |
|
28,958 |
|
(751) |
|
1,227 |
|
1,399 |
|
55,348 |
|
2,290 |
|
57,638 |
Issue or reissue of shares |
|
– |
|
1 |
|
122 |
|
(113) |
|
– |
|
– |
|
– |
|
– |
|
10 |
|
– |
|
10 |
Share-based payments |
|
– |
|
126 |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
|
126 |
|
9 |
|
135 |
Transactions with NCI in subsidiaries |
|
– |
|
– |
|
– |
|
(287) |
|
– |
|
– |
|
– |
|
– |
|
(287) |
|
(1,118) |
|
(1,405) |
Dividends |
|
– |
|
– |
|
– |
|
(2,502) |
|
– |
|
– |
|
– |
|
– |
|
(2,502) |
|
(398) |
|
(2,900) |
Comprehensive income/(expense) |
|
– |
|
– |
|
– |
|
11,838 |
|
(1,374) |
|
(160) |
|
– |
|
963 |
|
11,267 |
|
301 |
|
11,568 |
Profit10 |
|
– |
|
– |
|
– |
|
11,838 |
|
– |
|
– |
|
– |
|
– |
|
11,838 |
|
497 |
|
12,335 |
OCI - before tax |
|
– |
|
– |
|
– |
|
– |
|
(1,469) |
|
(213) |
|
– |
|
1,314 |
|
(368) |
|
(230) |
|
(598) |
OCI - taxes |
|
– |
|
– |
|
– |
|
– |
|
(3) |
|
53 |
|
– |
|
(351) |
|
(301) |
|
(3) |
|
(304) |
Transfer to the IS |
|
– |
|
– |
|
– |
|
– |
|
(334) |
|
– |
|
– |
|
– |
|
(334) |
|
– |
|
(334) |
Translation of hyperinflationary results |
|
– |
|
– |
|
– |
|
– |
|
432 |
|
– |
|
– |
|
– |
|
432 |
|
37 |
|
469 |
Purchase of TS9 |
|
– |
|
– |
|
(563) |
|
– |
|
– |
|
– |
|
– |
|
– |
|
(563) |
|
– |
|
(563) |
31 March 2023 |
|
4,797 |
|
149,145 |
|
(7,719) |
|
(113,086) |
|
27,584 |
|
(911) |
|
1,227 |
|
2,362 |
|
63,399 |
|
1,084 |
|
64,483 |
Notes:
1 | See note 17 ‘Called up share capital’. |
2 | Includes share premium, capital reserve, capital redemption reserve, merger reserve and share-based payment reserve. The merger reserve was derived from acquisitions made prior to 31 March 2004 and subsequently allocated to additional paid-in capital on adoption of IFRS. |
3 | The currency reserve is used to record cumulative translation differences on the assets and liabilities of foreign operations. The cumulative translation differences are recycled to the income statement on disposal of the foreign operation. |
4 | The revaluation surplus derives from acquisitions of subsidiaries made before the Group’s adoption of IFRS 3 (Revised) on 1 April 2010 and comprises the amounts arising from recognising the Group’s pre-existing equity interest in the acquired subsidiary at fair value. |
5 | Principally includes the impact of the Group’s cash flow hedges with €2,322 million net gain deferred to other comprehensive income during the year (2022: €3,704 million net gain; 2021: €5,892 million net loss) and €896 million net gain (2022: €1,422 million net gain; 2021: €1,226 million net loss) recycled to the income statement. These hedges primarily relate to foreign exchange exposure on fixed borrowings, with any foreign exchange on nominal balances directly impacting income statement in each period but interest cash flows unwinding to the income statement over the life of the hedges (up to 2063). See note 22 ‘Capital and financial risk management’ for further details. |
6 | The results for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer presented as held for sale. As at 31 March 2022, accumulated losses decreased by €96 million, resulting in an increase of €96 million in total equity compared to amounts previously reported. As at 31 March 2021, accumulated losses decreased by €53 million, offset by an increase of €5 million in accumulated other comprehensive income, resulting in a net decrease of €48 million in total equity compared to amounts previously reported. See note 7 ‘Discontinued operations and assets held for sale’. |
7 | Movements include the re-issue of 1,427 million shares (€1,944 million) in March 2021 to satisfy the first tranche and the re-issue of 1,519 million shares (€1,903 million) in March 2022 to satisfy the second tranche of the Mandatory Convertible Bond issued in March 2019. |
8 | Principally relates to transactions in relation to Vantage Towers A.G. See note 27 ‘Acquisitions and disposals’ for details. |
9 | Represents the irrevocable and non-discretionary share buyback programmes announced on 19 March 2021, 19 May 2021, 23 July 2021, 17 November 2021, 9 March 2022 and 16 November 2022. |
10 | Includes a gain on disposal of Vantage Towers A.G. of €8,607 million and a gain on disposal of Vodafone Ghana of €689 million, offset by a loss on disposal of Vodafone Hungary of €69 million. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statement of cash flows
for the years ended 31 March
|
|
|
|
2023 |
|
2022 |
|
2021 |
|
|
Note |
|
€m |
|
€m |
|
€m |
Inflow from operating activities |
|
18 |
|
18,054 |
|
18,081 |
|
17,215 |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Purchase of interests in subsidiaries, net of cash acquired |
|
27 |
|
– |
|
– |
|
(136) |
Purchase of interests in associates and joint ventures |
|
12 |
|
(78) |
|
(445) |
|
(13) |
Purchase of intangible assets |
|
|
|
(2,963) |
|
(3,262) |
|
(3,227) |
Purchase of property, plant and equipment |
|
|
|
(6,250) |
|
(5,798) |
|
(5,413) |
Purchase of investments |
|
|
|
(767) |
|
(2,009) |
|
(3,726) |
Disposal of interests in subsidiaries, net of cash disposed |
|
27 |
|
6,976 |
|
– |
|
157 |
Disposal of interests in associates and joint ventures |
|
|
|
– |
|
446 |
|
420 |
Disposal of property, plant and equipment and intangible assets |
|
|
|
98 |
|
33 |
|
43 |
Disposal of investments |
|
|
|
1,650 |
|
3,282 |
|
1,704 |
Dividends received from associates and joint ventures |
|
|
|
617 |
|
638 |
|
628 |
Interest received |
|
|
|
338 |
|
247 |
|
301 |
Outflow from investing activities |
|
|
|
(379) |
|
(6,868) |
|
(9,262) |
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Proceeds from issue of long-term borrowings |
|
|
|
4,071 |
|
2,548 |
|
4,359 |
Repayment of borrowings |
|
|
|
(13,538) |
|
(8,248) |
|
(12,237) |
Net movement in short-term borrowings |
|
|
|
3,172 |
|
3,002 |
|
(2,791) |
Net movement in derivatives |
|
|
|
261 |
|
(293) |
|
279 |
Interest paid1 |
|
|
|
(1,951) |
|
(1,804) |
|
(2,152) |
Payments for settlement of written put options2 |
|
|
|
(12) |
|
– |
|
(1,482) |
Purchase of treasury shares |
|
|
|
(1,867) |
|
(2,087) |
|
(62) |
Issue of ordinary share capital and reissue of treasury shares |
|
17 |
|
10 |
|
– |
|
5 |
Equity dividends paid |
|
9 |
|
(2,484) |
|
(2,474) |
|
(2,427) |
Dividends paid to non-controlling shareholders in subsidiaries |
|
|
|
(400) |
|
(539) |
|
(391) |
Other transactions with non-controlling shareholders in subsidiaries |
|
27 |
|
(692) |
|
189 |
|
1,663 |
Other movements with associates and joint ventures |
|
|
|
– |
|
– |
|
40 |
Outflow from financing activities |
|
|
|
(13,430) |
|
(9,706) |
|
(15,196) |
Net cash inflow/(outflow) |
|
|
|
4,245 |
|
1,507 |
|
(7,243) |
Cash and cash equivalents at beginning of the financial year |
|
19 |
|
7,371 |
|
5,790 |
|
13,288 |
Exchange gain/(loss) on cash and cash equivalents |
|
|
|
12 |
|
74 |
|
(255) |
Cash and cash equivalents at end of the financial year |
|
19 |
|
11,628 |
|
7,371 |
|
5,790 |
Notes:
1 | Amount for 2023 includes €26 million of cash outflow (2022: €58 million inflow; 2021: €9 million inflow) on derivative financial instruments for the share buyback related to maturing tranches of mandatory convertible bonds. |
2 | Amount for 2021 reflects the settlement of a tender offer made to other shareholders of Kabel Deutschland Holding A.G. |
|
|
|
|
|
|
Notes to the consolidated financial statements |
1. Basis of preparation
This section describes the critical accounting judgements and estimates that management has identified as having a potentially material impact on the Group’s consolidated financial statements and sets out our significant accounting policies that relate to the financial statements as a whole. Where an accounting policy is generally applicable to a specific note to the financial statements, the policy is described within that note. We have also detailed below the new accounting pronouncements that we will adopt in future years and our current view of the impact they will have on our financial reporting.
The consolidated financial statements are prepared in accordance with UK-adopted International Accounting Standards (‘IAS’), with International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board (‘IASB’) and with the requirements of the Companies Act 2006 (the ‘Act’). The consolidated financial statements are prepared on a going concern basis (see page 112).
Vodafone Group Plc is incorporated and domiciled in England and Wales (registration number 1833679). The registered address of the Company is Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN, England.
IFRS requires the Directors to adopt accounting policies that are the most appropriate to the Group’s circumstances. These have been applied consistently to all the years presented, unless otherwise stated. In determining and applying accounting policies, Directors and management are required to make judgements and estimates in respect of items where the choice of specific policy, accounting judgement, estimate or assumption to be followed could materially affect the Group’s reported financial position, results or cash flows and disclosure of contingent assets or liabilities during the reporting period; it may later be determined that a different choice may have been more appropriate.
The Group’s critical accounting judgements and key sources of estimation uncertainty are detailed below. Actual outcomes could differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period; they are recognised in the period of the revision and future periods if the revision affects both current and future periods.
Management regularly reviews, and revises as necessary, the accounting judgements that significantly impact the amounts recognised in the financial statements and the estimates that are considered to be ‘critical estimates’ due to their potential to give rise to material adjustments in the Group’s financial statements in the year to 31 March 2024. As at 31 March 2023, management has identified critical judgements in respect of revenue recognition, lease accounting, valuing assets and liabilities acquired in business combinations, the accounting for tax disputes, the classification of joint arrangements, whether to recognise provisions or to disclose contingent liabilities, held for sale accounting and the impacts of climate change. In addition, management has identified critical accounting estimates in relation to the recovery of deferred tax assets, post employment benefits and impairment reviews; estimates have also been identified that are not considered to be critical in respect of the allocation of revenue to goods and services, the useful economic lives of finite lived intangible assets and property, plant and equipment.
The majority of the Group’s provisions are either long-term in nature (such as asset retirement obligations) or relate to shorter-term liabilities (such as those relating to restructuring and property) where there is not considered to be a significant risk of material adjustment in the next financial year. Critical judgements exercised in respect of tax disputes include cases in India and a tax dispute related to financing costs in the Netherlands.
These critical accounting judgements, estimates and related disclosures have been discussed with the Group’s Audit and Risk Committee.
Critical accounting judgements and key sources of estimation uncertainty
Revenue recognition
Revenue recognition under IFRS 15 necessitates the collation and processing of very large amounts of data and the use of management judgements and estimates to produce financial information. The most significant accounting judgements and source of estimation uncertainty are disclosed below.
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
1. Basis of preparation (continued)
Gross versus net presentation
If the Group has control of goods or services when they are delivered to a customer, then the Group is the principal in the sale to the customer; otherwise the Group is acting as an agent. Whether the Group is considered to be the principal or an agent in the transaction depends on analysis by management of both the legal form and substance of the agreement between the Group and its business partners; such judgements impact the amount of reported revenue and operating expenses (see note 2 ‘Revenue disaggregation and segmental analysis’) but do not impact reported assets, liabilities or cash flows. Scenarios requiring judgement to determine whether the Group is a principal or an agent include, for example, those where the Group delivers third-party branded software or services (such as premium music, TV content or cloud-based services) to customers and goods or those where services delivered to customers in partnership with a third-party.
Allocation of revenue to goods and services provided to customers
Revenue is recognised when goods and services are delivered to customers (see note 2 ‘Revenue disaggregation and segmental analysis’). Goods and services may be delivered to a customer at different times under the same contract, hence it is necessary to allocate the amount payable by the customer between goods and services on a ‘relative standalone selling price basis’; this requires the identification of performance obligations (‘obligations’) and the determination of standalone selling prices for the identified obligations. The determination of obligations is, for the primary goods and services sold by the Group, not considered to be a critical accounting judgement; the Group’s policy on identifying obligations is disclosed in note 2 ‘Revenue disaggregation and segmental analysis’. The determination of standalone selling prices for identified obligations is discussed below.
It is necessary to estimate the standalone price when the Group does not sell equivalent goods or services in similar circumstances on a standalone basis. When estimating the standalone price the Group maximises the use of external inputs; methods for estimating standalone prices include determining the standalone price of similar goods and services sold by the Group, observing the standalone prices for similar goods and services when sold by third parties or using a cost-plus reasonable margin approach (which is sometimes the case for devices and other equipment). Where it is not possible to reliably estimate standalone prices due to a lack of observable standalone sales or highly variable pricing, which is sometimes the case for services, the standalone price of an obligation may be determined as the transaction price less the standalone prices of other obligations in the contract. The standalone price determined for obligations materially impacts the allocation of revenue between obligations and impacts the timing of revenue when obligations are provided to customers at different times – for example, the allocation of revenue between devices, which are usually delivered up-front, and services which are typically delivered over the contract period. However, there is not considered to be a significant risk of material adjustment to the carrying value of contract-related assets or liabilities in the 12 months after the balance sheet date if these estimates were revised.
Lease accounting
Lease accounting under IFRS 16 is complex and necessitates the collation and processing of very large amounts of data and the increased use of management judgements and estimates to produce financial information. The most significant accounting judgements are disclosed below.
Lease identification
Whether the arrangement is considered a lease or a service contract depends on the analysis by management of both the legal form and substance of the arrangement between the Group and the counter-party to determine if control of an identified asset has been passed between the parties; if not, the arrangement is a service arrangement. Control exists if the Group obtains substantially all of the economic benefit from the use of the asset, and has the ability to direct its use, for a period of time. An identified asset exists where an agreement explicitly or implicitly identifies an asset or a physically distinct portion of an asset which the lessor has no substantive right to substitute.
The scenarios requiring the greatest judgement include those where the arrangement is for the use of fibre or other fixed telecommunication lines. Generally, where the Group has exclusive use of a physical line it is determined that the Group can also direct the use of the line and therefore leases will be recognised. Where the Group provides access to fibre or other fixed telecommunication lines to another operator on a wholesale basis the arrangement will generally be identified as a lease, whereas when the Group provides fixed line services to an end-user, generally control over such lines is not passed to the end-user and a lease is not identified.
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
1. Basis of preparation (continued)
The impact of determining whether an agreement is a lease or a service depends on whether the Group is a potential lessee or lessor in the arrangement and, where the Group is a lessor, whether the arrangement is classified as an operating or finance lease. The impacts for each scenario are described below where the Group is potentially:
- |
A lessee. The judgement impacts the nature and timing of both costs and reported assets and liabilities. A lease results in an asset and a liability being reported and depreciation and interest being recognised; the interest charge will decrease over the life of the lease. A service contract results in operating expenses being recognised evenly over the life of the contract and no assets or liabilities being recorded (other than trade payables, prepayments and accruals). |
- |
An operating lessor. The judgement impacts the nature of income recognised. An operating lease results in lease income being recognised whilst a service contract results in service revenue. Both are recognised evenly over the life of the contract. |
- |
A finance lessor. The judgement impacts the nature and timing of both income and reported assets. A finance lease results in the lease income being recognised at commencement of the lease and an asset (the net investment in the lease) being recorded. |
Lease term
Where leases include additional optional periods after an initial lease term, significant judgement is required in determining whether these optional periods should be included when determining the lease term. The impact of this judgement is significantly greater where the Group is a lessee. As a lessee, optional periods are included in the lease term if the Group is reasonably certain it will exercise an extension option or will not exercise a termination option; this depends on an analysis by management of all relevant facts and circumstances including the leased asset’s nature and purpose, the economic and practical potential for replacing the asset and any plans that the Group has in place for the future use of the asset. Where a leased asset is highly customised (either when initially provided or as a result of leasehold improvements) or it is impractical or uneconomic to replace then the Group is more likely to judge that lease extension options are reasonably certain to be exercised. The value of the right-of-use asset and lease liability will be greater when extension options are included in the lease term. The normal approach adopted for lease term by asset class is described below.
The lease terms can vary significantly by type and use of asset and geography. In addition, the exact lease term is subject to the non-cancellable period and rights and options in each contract. Generally, lease terms are judged to be the longer of the minimum lease term and:
- |
Between 5 and 10 years for land and buildings (excluding retail), with terms at the top end of this range if the lease relates to assets that are considered to be difficult to exit sooner for economic, practical or reputational reasons; |
- |
To the next contractual lease break date for retail premises (excluding breaks within the next 12 months); |
- |
Where leases are used to provide internal connectivity the lease term for the connectivity is aligned to the lease term or useful economic life of the assets connected; |
- |
The customer service agreement length for leases of local loop connections or other assets required to provide fixed line services to individual customers; and |
- |
Where there are contractual agreements to provide services using leased assets, the lease term for these assets is generally set in accordance with the above principles or for the lease term required to provide the services for the agreed service period, if longer. |
In most instances the Group has options to renew or extend leases for additional periods after the end of the lease term which are assessed using the criteria above.
Lease terms are reassessed if a significant event or change in circumstances occurs relating to the leased assets that is within the control of the Group; such changes usually relate to commercial agreements entered into by the Group, or business decisions made by the Group. Where such changes change the Group’s assessment of whether it is reasonably certain to exercise options to extend, or not terminate leases, then the lease term is reassessed and the lease liability is remeasured, which in most cases will increase the lease liability.
Taxation
The Group’s tax charge on ordinary activities is the sum of the total current and deferred tax charges. The calculation of the Group’s total tax charge involves estimation and judgement in respect of certain matters, being principally:
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Notes to the consolidated financial statements (continued) |
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1. Basis of preparation (continued)
Recognition of deferred tax assets
Significant items on which the Group has exercised accounting estimation and judgement include the recognition of deferred tax assets in respect of losses in Luxembourg, Germany, Italy and Spain as well as capital allowances in the United Kingdom. The recognition of deferred tax assets, particularly in respect of tax losses, is based upon whether management judge that it is probable that there will be sufficient and suitable taxable profits in the relevant legal entity or tax group against which to utilise the assets in the future. The Group assesses the availability of future taxable profits using the same undiscounted five year forecasts for the Group’s operations as are used in the Group’s value in use calculations (see note 4 ‘Impairment losses’). In the case of Luxembourg, this includes forecasts of future income from the Group’s internal financing, centralised procurement and roaming activities.
Where tax losses are forecast to be recovered beyond the five year period, the availability of taxable profits is assessed using the cash flows and long-term growth rates used for the value in use calculations.
The estimated cash flows inherent in these forecasts include the unsystematic risks of operating in the telecommunications business including the potential impacts of changes in the market structure, trends in customer pricing, the costs associated with the acquisition and retention of customers, future technological evolutions and potential regulatory changes, such as our ability to acquire and/or renew spectrum licences.
Changes in the estimates which underpin the Group’s forecasts could have an impact on the amount of future taxable profits and could have a significant impact on the period over which the deferred tax asset would be recovered.
The Group only considers substantively enacted tax laws when assessing the amount and availability of tax losses to offset against the future taxable profits. See note 6 ‘Taxation’ to the consolidated financial statements.
See additional commentary relating to climate change below.
Uncertain tax positions
The tax impact of a transaction or item can be uncertain until a conclusion is reached with the relevant tax authority or through a legal process. The Group uses in-house tax experts when assessing uncertain tax positions and seeks the advice of external professional advisors where appropriate. The most significant judgements in this area relate to the Group’s tax disputes in India and a tax dispute related to financing costs in the Netherlands. Further details of tax disputes are included in note 29 ‘Contingent liabilities and legal proceedings’ to the consolidated financial statements.
Business combinations and goodwill
When the Group completes a business combination, the fair values of the identifiable assets and liabilities acquired, including intangible assets, are recognised. The determination of the fair values of acquired assets and liabilities is based, to a considerable extent, on management’s judgement. If the purchase consideration exceeds the fair value of the net assets acquired then the incremental amount paid is recognised as goodwill. If the purchase price consideration is lower than the fair value of the assets acquired then the difference is recorded as a gain in the income statement.
Allocation of the purchase price between finite lived assets (discussed below) and indefinite lived assets such as goodwill affects the subsequent results of the Group as finite lived intangible assets are amortised, whereas indefinite lived intangible assets, including goodwill, are not amortised.
See note 27 ‘Acquisitions and disposals’ to the consolidated financial statements for further details.
Joint arrangements
The Group participates in a number of joint arrangements where control of the arrangement is shared with one or more other parties. Judgement is required to classify joint arrangements in a separate legal entity as either a joint operation or as a joint venture, which depends on management’s assessment of the legal form and substance of the arrangement taking into account relevant facts and circumstances such as whether the owners have rights to substantially all the economic outputs and, in substance, settle the liabilities of the entity.
The classification can have a material impact on the consolidated financial statements. The Group’s share of assets, liabilities, revenue, expenses and cash flows of joint operations are included in the consolidated financial statements on a line-by-line basis, whereas the Group’s investment and share of results of joint ventures are shown within single line items in the consolidated statement of financial position and consolidated income statement respectively. See note 12 ‘Investments in associates and joint arrangements’ to the consolidated financial statements.
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Notes to the consolidated financial statements (continued) |
1. Basis of preparation (continued)
Finite lived intangible assets
Other intangible assets include amounts spent by the Group acquiring licences and spectrum, customer bases and the costs of purchasing and developing computer software.
Where intangible assets are acquired through business combinations and no active market for the assets exists, the fair value of these assets is determined by discounting estimated future net cash flows generated by the asset. Estimates relating to the future cash flows and discount rates used may have a material effect on the reported amounts of finite lived intangible assets.
Estimation of useful life
The useful life over which intangible assets are amortised depends on management’s estimate of the period over which economic benefit will be derived from the asset. Useful lives are periodically reviewed to ensure that they remain appropriate. Management’s estimates of useful life have a material impact on the amount of amortisation recorded in the year, but there is not considered to be a significant risk of material adjustment to the carrying values of intangible assets in the year to 31 March 2024 if these estimates were revised. The basis for determining the useful life for the most significant categories of intangible assets are discussed below.
Customer bases
The estimated useful life principally reflects management’s view of the average economic life of the customer base and is assessed by reference to customer churn rates. An increase in churn rates may lead to a reduction in the estimated useful life and an increase in the amortisation charge.
Capitalised software
For computer software, the estimated useful life is based on management’s view, considering historical experience with similar products as well as anticipation of future events which may impact their life such as changes in technology. The useful life will not exceed the duration of a licence.
Property, plant and equipment
Property, plant and equipment represents 24.4% of the Group’s total assets (2022: 26.5)%. Estimates and assumptions made may have a material impact on their carrying value and related depreciation charge. See note 11 ‘Property, plant and equipment’ to the consolidated financial statements for further details.
Estimation of useful life
The depreciation charge for an asset is derived using estimates of its expected useful life and expected residual value, which are reviewed annually. Management’s estimates of useful life have a material impact on the amount of depreciation recorded in the year, but there is not considered to be a significant risk of material adjustment to the carrying values of property, plant and equipment in the year to 31 March 2024 if these estimates were revised.
Management determines the useful lives and residual values for assets when they are acquired, based on experience with similar assets and taking into account other relevant factors such as any expected changes in technology.
See additional commentary relating to climate change, below.
Post employment benefits
Management uses estimates when determining the Group’s liabilities and expenses arising for defined benefit pension schemes. Management is required to estimate the future rates of inflation, salary increases, discount rates and longevity of members, each of which may have a material impact on the defined benefit obligations that are recorded. Further details, including a sensitivity analysis, are included in note 25 ‘Post employment benefits’ to the consolidated financial statements.
Contingent liabilities
The Group exercises judgement to determine whether to recognise provisions and the exposures to contingent liabilities related to pending litigations or other outstanding claims subject to negotiated settlement, mediation, arbitration or government regulation, as well as other contingent liabilities (see note 29 ‘Contingent liabilities and legal proceedings’ to the consolidated financial statements). Judgement is necessary to assess the likelihood that a pending claim will succeed, or a liability will arise.
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Notes to the consolidated financial statements (continued) |
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1. Basis of preparation (continued)
Impairment reviews
IFRS requires management to perform impairment tests annually for indefinite lived assets, and for finite lived assets and for equity accounted investments if events or changes in circumstances indicate that their carrying amounts may not be recoverable.
Management is required to make significant judgments concerning the identification of impairment indicators, the determination of fair values for assets and whether the carrying value of assets can be supported by the net present value of future cash flows that they are expected to generate.
The Group performs an annual impairment test which focuses on determining a recoverable amount for its assets based on value in use, rather than fair value less costs of disposal due to a lack of observable market data on fair values for equivalent assets.
Calculating the net present value of the future cash flows requires estimates to be made in respect of highly uncertain matters including management’s expectations of:
– | Growth in adjusted EBITDAaL, (see note 2 ‘Revenue disaggregation and segmental analysis’ for a reconciliation to the consolidated income statement); |
– | Timing and amount of future capital expenditure, licence and spectrum payments; |
– | Long-term growth rates; and |
– | Appropriate discount rates to reflect the risks involved. |
Changing the assumptions selected by management, in particular projected adjusted EBITDAaL, long-term growth rate and discount rate assumptions, could significantly affect the Group’s impairment evaluation and hence reported assets and profits or losses. Further details, including a sensitivity analysis, are included in note 4 ‘Impairment losses’ to the consolidated financial statements.
Where the Group has interests in listed entities, market data, such as share price, is used to assess the fair value of those interests. If the market capitalisation indicates that their carrying amounts may not be recoverable, possible adjustments to the share price are reviewed and, where information is available, a value in use calculation is performed to support a conclusion on impairment.
For operations that are classified as held for sale, management is required to determine whether the carrying value of the discontinued operation can be supported by the fair value less costs of disposal. Where not observable in a quoted market, management has determined fair value less costs to sell by reference to the outcomes from the application of a number of potential valuation techniques, determined from inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.
For a number of reasons, transaction values agreed as part of any business acquisition or disposal may be higher than the assessed value in use.
See additional commentary relating to climate change, below.
Held for sale accounting
When the value of a non-current asset or a group of assets in a disposal group will be primarily recovered through a sale transaction and there is an active plan for the disposal such that it is highly probable that the disposal will be completed within 12 months (subject to certain matters outside of the Group’s control) then the related assets will be classified as held for sale or as a discontinued operation.
Judgement is applied by management in determining if assets meet the requirements to be classified as held for sale or as discontinued operations. Further detail is provided in note 7 ‘Discontinued operations and assets held for sale’.
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Notes to the consolidated financial statements (continued) |
1. Basis of preparation (continued)
Climate change
The potential climate change-related risks and opportunities to which the Group is exposed, as identified by management, are disclosed in the Group’s TCFD disclosures on pages 58 and 59. Management has assessed the potential financial impacts relating to the identified risks, primarily considering the useful lives of, and retirement obligations for, property, plant and equipment, the possibility of impairment of goodwill and other long-lived assets and the recoverability of the Group’s deferred tax assets. Management has exercised judgement in concluding that there are no further material financial impacts of the Group’s climate-related risks and opportunities on the consolidated financial statements. These judgements will be kept under review by management as the future impacts of climate change depend on environmental, regulatory and other factors outside of the Group’s control which are not all currently known.
Significant accounting policies applied in the current reporting period that relate to the financial statements as a whole
Accounting convention
The consolidated financial statements are prepared on a historical cost basis except for certain financial and equity instruments that have been measured at fair value and for the application of IAS 29 ‘Financial Reporting in Hyperinflationary Economies’ for the Group’s entities reporting in Turkish lira (see below).
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company, subsidiaries controlled by the Company (see note 31 ‘Related undertakings’ to the consolidated financial statements), joint operations that are subject to joint control and the results of joint ventures and associates (see note 12 ‘Investments in associates and joint arrangements’ to the consolidated financial statements).
Basis of preparation changes adopted on 1 April 2022 - Hyperinflation
As anticipated in the Annual Report for the year ended 31 March 2022, Turkey met the requirements to be designated as a hyperinflationary economy under IAS 29 ‘Financial Reporting in Hyperinflationary Economies’ in the quarter ended 30 June 2022. In addition, Ethiopia where the Group’s associate, Safaricom, has operations has also become a hyperinflationary economy in the year. The Group has therefore applied hyperinflationary accounting, as specified in IAS 29, at its Turkish operations whose functional currency is the Turkish lira and to Safaricom’s operations in Ethiopia where the Ethiopian birr is the functional currency for the reporting period commencing 1 April 2022. This resulted in an opening balance adjustment of €565 million to consolidated equity.
In accordance with IAS 21 ‘The Effects of Changes in Foreign Exchange Rates’, comparative amounts have not been restated.
Turkish lira and Ethiopian birr results and non-monetary asset and liability balances for the current financial year ended 31 March 2023 have been revalued to their present value equivalent local currency amount as at 31 March 2023, based on an inflation index, before translation to euros at the reporting date exchange rate of €1: 20.85 TRL and €1:58.59 ETB, respectively.
For the Group’s operations in Turkey:
– | The gain or loss on net monetary assets resulting from IAS 29 application is recognised in the consolidated income statement within Other income. |
– | The Group also presents the gain or loss on cash and cash equivalents as monetary items together with the effect of inflation on operating, investing and financing cash flows as one number in the consolidated statement of cash flows. |
– | The Group has presented the IAS 29 opening balance adjustment to net assets within currency reserves in equity. Subsequent IAS 29 equity restatement effects and the impact of currency movements are presented within other comprehensive income because such amounts are judged to meet the definition of ‘exchange differences’. |
For Safaricom’s operations in Ethiopia, the impacts of IAS 29 accounting are reflected as an increase to Investments in associates and joint ventures and an increase to Equity.
The inflation index in Turkey selected to reflect the change in purchasing power was the consumer price index (CPI) issued by the Turkish Statistical Institute which has risen by 50.5% during the current financial year ended 31 March 2023.The inflation index selected in Ethiopia is the CPI issued by the Ethiopian Statistics Service which rose 31.3% in the year ended 31 March 2023.
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Notes to the consolidated financial statements (continued) |
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1. Basis of preparation (continued)
The main impacts of the aforementioned adjustments on the consolidated financial statements are shown below.
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Year ended 31 March 2023 |
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Increase/(decrease) |
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|
€m |
Revenue |
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85 |
Operating profit |
|
(87) |
Profit for the financial year |
|
(123) |
Non-current assets |
|
814 |
Equity attributable to owners of the parent |
|
777 |
Non-controlling interests |
|
37 |
Foreign currencies
The consolidated financial statements are presented in euro, which is also the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.
With the exception of the Group’s Turkish lira operations, which are subject to hyperinflation accounting (see above), transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity at the rates prevailing on the reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the initial transaction dates. Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.
Share capital, share premium and other capital reserves are initially recorded at the functional currency rate prevailing at the date of the transaction and are not retranslated.
For the purpose of presenting consolidated financial statements, the assets and liabilities of entities with a functional currency other than euro are expressed in euro using exchange rates prevailing at the reporting period date.
Income and expense items and cash flows are translated at the average exchange rates for each month and exchange differences arising are recognised directly in other comprehensive income. On disposal of a foreign entity, the cumulative amount previously recognised in the consolidated statement of comprehensive income relating to that particular foreign operation is recognised in profit or loss in the consolidated income statement.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated accordingly.
The net foreign exchange gain recognised in the consolidated income statement for the year ended 31 March 2023 is €111 million (31 March 2022: €309 million loss; 2021: €13 million loss). The net gains and net losses are recorded within operating profit (2023: €247 million credit; 2022: €24 million charge; 2021: €3 million credit), financing costs (2023: €135 million charge; 2022: €284 million charge; 2021 €23 million charge) and income tax expense (2023: €1 million charge; 2022: €1 million charge; 2021: €7 million credit). The foreign exchange gains and losses included within other income arise on the disposal of subsidiaries, interests in joint ventures, associates and investments from the recycling of foreign exchange gains and losses previously recognised in the consolidated statement of comprehensive income.
Current or non-current classification
Assets are classified as current in the consolidated statement of financial position where recovery is expected within 12 months of the reporting date. All assets where recovery is expected more than 12 months from the reporting date and all deferred tax assets, goodwill and intangible assets, property, plant and equipment and investments in associates and joint ventures are reported as non-current.
Liabilities are classified as current unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. For provisions, where the timing of settlement is uncertain, amounts are classified as non-current where settlement is expected more than 12 months from the reporting date. In addition, deferred tax liabilities and post-employment benefits are reported as non-current.
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Notes to the consolidated financial statements (continued) |
1. Basis of preparation (continued)
Inventory
Inventory is stated at the lower of cost and net realisable value. Cost is determined on the basis of weighted average costs and comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition.
New accounting pronouncements adopted on or after 1 April 2022
The Group adopted the following new accounting policies on 1 April 2022 to comply with amendments to IFRS. The accounting pronouncements, none of which had a material impact on the Group’s financial reporting on adoption, are:
– |
Annual Improvements to IFRS Standards 2018-2020; |
– |
Amendments to IAS 16 ‘Property, Plant and Equipment: Proceeds before Intended Use’; |
– |
Amendments to IAS 37 ‘Onerous Contracts - Cost of Fulfilling a Contract’; and |
– |
Amendments to IFRS 3 ‘Reference to the Conceptual Framework’. |
New accounting pronouncements to be adopted on or after 1 April 2023
The following new standards and narrow-scope amendments have been issued by the IASB and are effective for annual reporting periods beginning on or after 1 January 2023:
– | IFRS 17 ‘Insurance Contracts’; |
– | Amendments to IAS 1 ‘Disclosure of Accounting Policies’; |
– | Amendment to IAS 8 ‘Definition of Accounting Estimates’; and |
– | Amendment to IAS 12 ‘Deferred Tax related to Assets and Liabilities arising from a Single Transaction’. |
These amendments have been endorsed by the UK Endorsement Board. The Group’s financial reporting will be presented in accordance with the above new standards from 1 April 2023. The amendments to IAS 1, IAS 8 and IAS 12 are not expected to have a material impact on the consolidated income statement, consolidated statement of financial position or consolidated statement of cash flows. The impact of the adoption of IFRS 17 is addressed below.
IFRS 17 ‘Insurance Contracts’
IFRS 17 sets out revised principles for the recognition, measurement, presentation and disclosure of insurance contracts. The Group issues certain short and long-term insurance contracts including device insurance and the reinsurance of a third-party annuity policy issued to the Vodafone and CWW Sections of the Vodafone UK Group Pension Scheme.
The adoption of IFRS 17 will result in insurance and reinsurance liabilities being reclassified into a separate line item from Trade and other payables and Provisions. The total reclassifications as at 1 April 2023 and for comparative periods are estimated to range from €400 million to €650 million, the largest element relating to the reinsurance of the third-party annuity policy (see Note 15 ‘Trade and other payables’ and Note 25 ‘Post employment benefits’). Prior periods will be re-presented on adoption of IFRS 17; no material adjustments are expected to equity or to the Group’s Consolidated Income Statement on adoption.
The Group will issue further details on the impact of adopting IFRS 17 as part of the Interim Financial Statements for the six months ending 30 September 2023.
New accounting pronouncements to be adopted on or after 1 April 2024
The following amendments have been issued by the IASB and are effective for annual periods beginning on or after 1 January 2024; they have not yet been endorsed by the UK Endorsement Board.
– |
Amendments to IAS 1 ‘Classification of Liabilities as Current or Non-Current’; Amendments to IAS 1 ‘Non-current Liabilities and Covenants’; and |
– |
Amendments to IFRS 16 ‘Lease Liability in a Sale and Leaseback’. |
The Group is assessing the impact of these new standards and the Group’s financial reporting will be presented in accordance with these standards from 1 April 2024 as applicable.
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Notes to the consolidated financial statements (continued) |
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2. Revenue disaggregation and segmental analysis
The Group’s businesses are managed on a geographical basis. Selected financial data is presented on this basis below.
Accounting policies
Revenue
When the Group enters into an agreement with a customer, goods and services deliverable under the contract are identified as separate performance obligations (‘obligations’) to the extent that the customer can benefit from the goods or services on their own and that the separate goods and services are considered distinct from other goods and services in the agreement. Where individual goods and services do not meet the criteria to be identified as separate obligations they are aggregated with other goods and/or services in the agreement until a separate obligation is identified. The obligations identified will depend on the nature of individual customer contracts, but might typically be separately identified for mobile handsets, other equipment such as set-top boxes and routers provided to customers and services provided to customers such as mobile and fixed line communication services. Where goods and services have a functional dependency (for example, a fixed line router can only be used with the Group’s services) this does not, in isolation, prevent those goods or services from being assessed as separate obligations. Activities relating to connecting customers to the Group’s network for the future provision of services are not considered to meet the criteria to be recognised as obligations except to the extent that the control of related equipment passes to customers.
The Group determines the transaction price to which it expects to be entitled in return for providing the promised obligations to the customer based on the committed contractual amounts, net of sales taxes and discounts. Where indirect channel dealers, such as retailers, acquire customer contracts on behalf of the Group and receive commission, any commissions that the dealer is compelled to use to fund discounts or other incentives to the customer are treated as payments to the customer when determining the transaction price and consequently are not included in contract acquisition costs.
The transaction price is allocated between the identified obligations according to the relative standalone selling prices of the obligations. The standalone selling price of each obligation deliverable in the contract is determined according to the prices that the Group would achieve by selling the same goods and/or services included in the obligation to a similar customer on a standalone basis; where standalone selling prices are not directly observable, estimation techniques are used maximising the use of external inputs. See ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 for details. Revenue is recognised when the respective obligations in the contract are delivered to the customer and cash collection is considered probable. Revenue for the provision of services, such as mobile airtime and fixed line broadband, is recognised when the Group provides the related service during the agreed service period.
Revenue for device sales to end customers is generally recognised when the device is delivered to the end customer. For device sales made to intermediaries such as indirect channel dealers, revenue is recognised if control of the device has transferred to the intermediary and the intermediary has no right to return the device to receive a refund; otherwise revenue recognition is deferred until sale of the device to an end customer by the intermediary or the expiry of any right of return.
Where refunds are issued to customers they are deducted from revenue in the relevant service period.
When the Group has control of goods or services prior to delivery to a customer, then the Group is the principal in the sale to the customer. As a principal, receipts from, and payments to, suppliers are reported on a gross basis in revenue and operating costs. If another party has control of goods or services prior to transfer to a customer, then the Group is acting as an agent for the other party and revenue in respect of the relevant obligations is recognised net of any related payments to the supplier and recognised revenue represents the margin earned by the Group. See ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 for details.
Customers typically pay in advance for prepay mobile services and monthly for other communication services. Customers typically pay for handsets and other equipment either up-front at the time of sale or over the term of the related service agreement.
When revenue recognised in respect of a customer contract exceeds amounts received or receivable from a customer at that time a contract asset is recognised; contract assets will typically be recognised for handsets or other equipment provided to customers where payment is recovered by the Group via future service fees. If amounts received or receivable from a customer exceed revenue recognised for a contract, for example if the Group receives an advance payment from a customer, a contract liability is recognised.
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Notes to the consolidated financial statements (continued) |
2. Revenue disaggregation and segmental analysis (continued)
When contract assets or liabilities are recognised, a financing component may exist in the contract; this is typically the case when a handset or other equipment is provided to a customer up-front but payment is received over the term of the related service agreement, in which case the customer is deemed to have received financing. If a significant financing component is provided to the customer, the transaction price is reduced and interest revenue is recognised over the customer’s payment period using an interest rate reflecting the relevant central bank rates and customer credit risk.
Contract-related costs
When costs directly relating to a specific contract are incurred prior to recognising revenue for a related obligation, and those costs enhance the ability of the Group to deliver an obligation and are expected to be recovered, then those costs are recognised on the consolidated statement of financial position as fulfilment costs and are recognised as expenses in line with the recognition of revenue when the related obligation is delivered.
The direct and incremental costs of acquiring a contract including, for example, certain commissions payable to staff or agents for acquiring customers on behalf of the Group, are recognised as contract acquisition cost assets in the consolidated statement of financial position when the related payment obligation is recorded. Costs are recognised as an expense in line with the recognition of the related revenue that is expected to be earned by the Group; typically this is over the customer contract period as new commissions are payable on contract renewal. Certain amounts payable to agents are deducted from revenue recognised (see above).
Revenue disaggregation and segmental income statement analysis
Revenue reported for the year includes revenue from contracts with customers, comprising service and equipment revenue, as well as other revenue items including revenue from leases and interest revenue arising from transactions with a significant financing component.
The tables below present Revenue and Adjusted EBITDAaL for the year ended 31 March 2023 and for the comparative years ended 31 March 2022 and 31 March 2021. The comparative information for the year ended 31 March 2021 is presented under the previous segmental reporting structure.
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Revenue from |
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|
|
|
|
Total |
|
|
|
|
Service |
|
Equipment |
|
contracts with |
|
Other |
|
Interest |
|
segment |
|
Adjusted |
|
|
revenue |
|
revenue |
|
customers |
|
revenue1 |
|
revenue |
|
revenue |
|
EBITDAaL |
31 March 2023 |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Germany |
|
11,433 |
|
1,313 |
|
12,746 |
|
350 |
|
17 |
|
13,113 |
|
5,323 |
Italy |
|
4,251 |
|
426 |
|
4,677 |
|
122 |
|
10 |
|
4,809 |
|
1,453 |
UK |
|
5,358 |
|
1,375 |
|
6,733 |
|
58 |
|
33 |
|
6,824 |
|
1,350 |
Spain |
|
3,514 |
|
307 |
|
3,821 |
|
60 |
|
26 |
|
3,907 |
|
947 |
Other Europe |
|
5,005 |
|
602 |
|
5,607 |
|
117 |
|
20 |
|
5,744 |
|
1,632 |
Vodacom |
|
4,849 |
|
1,034 |
|
5,883 |
|
403 |
|
28 |
|
6,314 |
|
2,159 |
Other Markets |
|
3,300 |
|
530 |
|
3,830 |
|
4 |
|
– |
|
3,834 |
|
1,145 |
Vantage Towers |
|
– |
|
– |
|
– |
|
1,338 |
|
– |
|
1,338 |
|
795 |
Common Functions2 |
|
530 |
|
47 |
|
577 |
|
810 |
|
– |
|
1,387 |
|
(139) |
Eliminations |
|
(271) |
|
(1) |
|
(272) |
|
(1,292) |
|
– |
|
(1,564) |
|
– |
Group |
|
37,969 |
|
5,633 |
|
43,602 |
|
1,970 |
|
134 |
|
45,706 |
|
14,665 |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
2. Revenue disaggregation and segmental analysis (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from |
|
|
|
|
|
Total |
|
|
|
|
Service |
|
Equipment |
|
contracts with |
|
Other |
|
Interest |
|
segment |
|
Adjusted |
|
|
revenue |
|
revenue |
|
customers |
|
revenue1 |
|
revenue |
|
revenue |
|
EBITDAaL |
31 March 2022 |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Germany |
|
11,616 |
|
1,126 |
|
12,742 |
|
365 |
|
21 |
|
13,128 |
|
5,669 |
Italy |
|
4,379 |
|
525 |
|
4,904 |
|
108 |
|
10 |
|
5,022 |
|
1,699 |
UK |
|
5,154 |
|
1,333 |
|
6,487 |
|
69 |
|
33 |
|
6,589 |
|
1,395 |
Spain |
|
3,714 |
|
369 |
|
4,083 |
|
73 |
|
24 |
|
4,180 |
|
957 |
Other Europe |
|
5,001 |
|
528 |
|
5,529 |
|
105 |
|
19 |
|
5,653 |
|
1,606 |
Vodacom |
|
4,635 |
|
950 |
|
5,585 |
|
384 |
|
24 |
|
5,993 |
|
2,125 |
Other Markets |
|
3,420 |
|
404 |
|
3,824 |
|
6 |
|
– |
|
3,830 |
|
1,335 |
Vantage Towers |
|
– |
|
– |
|
– |
|
1,252 |
|
– |
|
1,252 |
|
619 |
Common Functions2 |
|
522 |
|
53 |
|
575 |
|
838 |
|
1 |
|
1,414 |
|
(197) |
Eliminations |
|
(238) |
|
(1) |
|
(239) |
|
(1,242) |
|
– |
|
(1,481) |
|
– |
Group |
|
38,203 |
|
5,287 |
|
43,490 |
|
1,958 |
|
132 |
|
45,580 |
|
15,208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from |
|
|
|
|
|
Total |
|
|
|
|
Service |
|
Equipment |
|
contracts with |
|
Other |
|
Interest |
|
segment |
|
Adjusted |
|
|
revenue |
|
revenue |
|
customers |
|
revenue1 |
|
revenue |
|
revenue |
|
EBITDAaL |
31 March 2021 |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Germany |
|
11,520 |
|
1,055 |
|
12,575 |
|
380 |
|
29 |
|
12,984 |
|
5,634 |
Italy |
|
4,458 |
|
446 |
|
4,904 |
|
97 |
|
13 |
|
5,014 |
|
1,597 |
UK |
|
4,848 |
|
1,206 |
|
6,054 |
|
44 |
|
53 |
|
6,151 |
|
1,367 |
Spain |
|
3,788 |
|
292 |
|
4,080 |
|
64 |
|
22 |
|
4,166 |
|
1,044 |
Other Europe |
|
4,859 |
|
549 |
|
5,408 |
|
124 |
|
17 |
|
5,549 |
|
1,760 |
Vodacom |
|
4,083 |
|
800 |
|
4,883 |
|
282 |
|
16 |
|
5,181 |
|
1,873 |
Other Markets |
|
3,312 |
|
441 |
|
3,753 |
|
12 |
|
– |
|
3,765 |
|
1,228 |
Common Functions2 |
|
470 |
|
36 |
|
506 |
|
862 |
|
– |
|
1,368 |
|
(117) |
Eliminations |
|
(197) |
|
(1) |
|
(198) |
|
(171) |
|
– |
|
(369) |
|
– |
Group |
|
37,141 |
|
4,824 |
|
41,965 |
|
1,694 |
|
150 |
|
43,809 |
|
14,386 |
Notes:
1 |
Other revenue includes lease revenue recognised under IFRS 16 ‘Leases’ (see note 20 ‘Leases’). |
2 |
Comprises central teams and business functions. |
The total future revenue from the remaining term of Group’s contracts with customers for performance obligations not yet delivered to those customers at 31 March 2023 is €18,521 million (2022: €20,013 million; 2021: €21,038 million); of which €11,941 million (2022: €12,913 million; 2021: €14,110 million) is expected to be recognised within the next year and the majority of the remaining amount in the following 12 months.
Segmental analysis
The Group’s operating segments are established on the basis of those components of the Group that are evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Group has determined the chief operating decision maker to be its Chief Executive. The Group has a single group of similar services and products, being the supply of communications services and related products.
Vantage Towers A.G. (‘Vantage Towers’) has been presented as a separate segment of the Group since 1 April 2021, following its IPO in March 2021; the segmental presentation for the year ended 31 March 2021 was not revised. Vantage Towers continued to be reported as a separate segment until the time of its disposal.
From 1 April 2023, the Group will revise its segments by moving Vodafone Egypt from the Other Markets segment to the Vodacom segment to reflect the effective date of changes made to the Group’s internal reporting structure, following the transfer of Vodafone Egypt to the Vodacom group in December 2022.
Revenue is attributed to a country based on the location of the Group company reporting the revenue. Transactions between operating segments are charged at arm’s-length prices.
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
2. Revenue disaggregation and segmental analysis (continued)
With the exception of Vodacom, which is a legal entity encompassing South Africa and certain other smaller African markets, and Vantage Towers, which comprises companies providing mobile tower infrastructure in a number of European markets, segment information is primarily provided on the basis of geographic areas, being the basis on which the Group manages its worldwide interests.
The operating segments for Germany, Italy, UK, Spain and Vodacom are individually material for the Group and are each reporting segments for which certain financial information is provided. In addition, the Vantage Towers operating segment was a separately listed part of the Group until its disposal into a joint venture on 22 March 2023 (see note 27 ‘Acquisitions and disposals’) and is presented as a reporting segment as it is considered to provide useful information to users of the financial statements. The aggregation of smaller operating segments into the Other Europe and Other Markets reporting segments reflects, in the opinion of management, the similar local market economic characteristics and regulatory environments for each of those operating segments as well as the similar products and services sold and comparable classes of customers. In the case of the Other Europe region (comprising Albania, Czech Republic, Greece, Hungary(to the date of its disposal), Ireland, Portugal and Romania), this largely reflects membership or a close association with the European Union, while the Other Markets segment (comprising Egypt, Ghana (to the date of its disposal) and Turkey) largely includes developing economies with less stable economic or regulatory environments. Common Functions is a separate reporting segment and comprises activities which are undertaken primarily in central Group entities that do not meet the criteria for aggregation with other reporting segments.
A reconciliation of adjusted EBITDAaL, the Group’s measure of segment profit, to the Group’s profit or loss before taxation for the financial year is shown below.
|
|
|
|
Re-presented1 |
|
Re-presented1 |
|
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
Adjusted EBITDAaL |
|
14,665 |
|
15,208 |
|
14,386 |
Restructuring costs |
|
(587) |
|
(346) |
|
(356) |
Interest on lease liabilities |
|
436 |
|
398 |
|
374 |
Loss on disposal of owned assets |
|
(36) |
|
(28) |
|
(30) |
Depreciation and amortisation on owned assets |
|
(9,649) |
|
(9,858) |
|
(10,187) |
Share of results of equity accounted associates and joint ventures |
|
433 |
|
389 |
|
374 |
Impairment loss2 |
|
(64) |
|
– |
|
– |
Other income |
|
9,098 |
|
50 |
|
568 |
Operating profit |
|
14,296 |
|
5,813 |
|
5,129 |
Investment income |
|
248 |
|
254 |
|
245 |
Finance costs |
|
(1,728) |
|
(1,964) |
|
(1,027) |
Profit before taxation |
|
12,816 |
|
4,103 |
|
4,347 |
Notes:
1 | The results for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. In the year ended 31 March 2022, the share of result of equity accounted associates and joint ventures has increased by €178 million, other income has decreased by €29 million and operating profit has increased by €149 million compared to amounts previously reported. In the year ended 31 March 2021, the share of result of equity accounted associates and joint ventures has increased by €32 million, operating profit has increased by €32 million and investment income has decreased by €85 million compared to amounts previously reported. See note 7 ‘Discontinued operations and assets held for sale’ for more information. |
2 | The FY23 impairment loss relates to Indus Towers and is included in the Other Markets segment. See overleaf and Note 4 ‘Impairment losses’. |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
2. Revenue disaggregation and segmental analysis (continued)
Segmental assets
The tables below present the segmental assets for the year ended 31 March 2023 and for the comparative years ended 31 March 2022 and 31 March 2021. The comparative information for the year ended 31 March 2021 is presented under the previous segmental reporting structure.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
Depreciation |
|
|
|
|
Non-current |
|
Capital |
|
Right-of-use |
|
additions to |
|
and |
|
|
|
|
assets1 |
|
additions2 |
|
asset additions |
|
intangible assets3 |
|
amortisation |
|
Impairment loss |
31 March 2023 |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Germany |
|
43,878 |
|
2,701 |
|
2,145 |
|
2 |
|
4,154 |
|
– |
Italy |
|
10,235 |
|
833 |
|
916 |
|
5 |
|
1,970 |
|
– |
UK |
|
6,629 |
|
892 |
|
1,639 |
|
– |
|
1,562 |
|
– |
Spain |
|
6,331 |
|
565 |
|
742 |
|
8 |
|
1,393 |
|
– |
Other Europe |
|
7,815 |
|
927 |
|
1,104 |
|
151 |
|
1,363 |
|
– |
Vodacom |
|
5,810 |
|
862 |
|
219 |
|
260 |
|
1,027 |
|
– |
Other Markets |
|
2,488 |
|
495 |
|
177 |
|
13 |
|
830 |
|
64 |
Vantage Towers |
|
– |
|
551 |
|
318 |
|
– |
|
326 |
|
– |
Common Functions |
|
2,013 |
|
839 |
|
127 |
|
– |
|
993 |
|
– |
Group |
|
85,199 |
|
8,665 |
|
7,387 |
|
439 |
|
13,618 |
|
64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
Depreciation |
|
|
|
|
Non-current |
|
Capital |
|
Right-of-use |
|
additions to |
|
and |
|
|
|
|
assets1 |
|
additions2 |
|
asset additions |
|
intangible assets3 |
|
amortisation |
|
Impairment loss |
31 March 2022 |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Germany |
|
43,190 |
|
2,670 |
|
795 |
|
– |
|
3,981 |
|
– |
Italy |
|
10,519 |
|
840 |
|
670 |
|
255 |
|
1,929 |
|
– |
UK |
|
6,226 |
|
832 |
|
580 |
|
229 |
|
1,905 |
|
– |
Spain |
|
6,433 |
|
676 |
|
422 |
|
291 |
|
1,499 |
|
– |
Other Europe |
|
8,548 |
|
1,009 |
|
502 |
|
126 |
|
1,511 |
|
– |
Vodacom |
|
6,383 |
|
853 |
|
187 |
|
– |
|
920 |
|
– |
Other Markets |
|
2,467 |
|
530 |
|
229 |
|
– |
|
598 |
|
– |
Vantage Towers |
|
8,179 |
|
366 |
|
320 |
|
– |
|
523 |
|
– |
Common Functions |
|
2,103 |
|
844 |
|
123 |
|
– |
|
979 |
|
– |
Group |
|
94,048 |
|
8,620 |
|
3,828 |
|
901 |
|
13,845 |
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
Non-current |
|
Capital |
|
Right-of-use |
|
Other additions to |
|
and |
|
|
|
|
assets1 |
|
additions2 |
|
asset additions |
|
intangible assets3 |
|
amortisation |
|
Impairment loss |
31 March 2021 |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Germany |
|
47,563 |
|
2,772 |
|
1,133 |
|
1 |
|
4,836 |
|
– |
Italy |
|
10,707 |
|
805 |
|
758 |
|
17 |
|
2,025 |
|
– |
UK |
|
7,968 |
|
822 |
|
1,138 |
|
– |
|
2,202 |
|
– |
Spain |
|
7,213 |
|
772 |
|
700 |
|
9 |
|
1,579 |
|
– |
Other Europe |
|
10,369 |
|
968 |
|
1,016 |
|
431 |
|
1,727 |
|
– |
Vodacom |
|
5,839 |
|
703 |
|
174 |
|
– |
|
872 |
|
– |
Other Markets |
|
2,988 |
|
512 |
|
247 |
|
439 |
|
666 |
|
– |
Common Functions |
|
2,145 |
|
829 |
|
140 |
|
– |
|
194 |
|
– |
Group |
|
94,792 |
|
8,183 |
|
5,306 |
|
897 |
|
14,101 |
|
– |
Notes:
1 |
Comprises goodwill, other intangible assets and property, plant and equipment. |
2 |
Includes additions to property, plant and equipment (excluding right-of-use assets), computer software and development costs, reported within Intangible assets. |
3 |
Includes additions to licences and spectrum and customer base acquisitions. |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
3. Operating profit
Detailed below are the key amounts recognised in arriving at our operating profit
|
|
|
|
Re-presented1 |
|
Re-presented1 |
|
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
Amortisation of intangible assets (Note 10) |
|
4,031 |
|
4,044 |
|
4,421 |
Depreciation of property, plant and equipment (Note 11): |
|
|
|
|
|
|
Owned assets |
|
5,627 |
|
5,857 |
|
5,766 |
Leased assets |
|
3,960 |
|
3,944 |
|
3,914 |
Impairment loss (Note 4) |
|
64 |
|
– |
|
– |
Staff costs (Note 24) |
|
5,842 |
|
5,334 |
|
5,157 |
Amounts related to inventory included in cost of sales |
|
5,950 |
|
5,671 |
|
5,160 |
Own costs capitalised attributable to the construction or acquisition of property, plant and equipment |
|
(1,267) |
|
(1,092) |
|
(995) |
Loss on disposal of Vodafone Hungary2 (Note 27) |
|
69 |
|
– |
|
– |
Gain on disposal of Vodafone Ghana2 (Note 27) |
|
(689) |
|
– |
|
– |
Gain on disposal of Vantage Towers2 (Note 27) |
|
(8,607) |
|
– |
|
– |
Gain on disposal of Indus Towers Limited1,2 |
|
– |
|
81 |
|
– |
Pledge arrangements in respect of Indus Towers Limited2 (Note 29) |
|
– |
|
(15) |
|
(429) |
Net gain on formation of TPG Telecom2 (Note 12) |
|
– |
|
– |
|
1,043 |
Net gain on formation of Indus Towers Limited2 (Note 12) |
|
– |
|
– |
|
292 |
Settlement of tender offer to KDG shareholders2 |
|
– |
|
– |
|
(204) |
Notes:
1 |
The results for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. In the year ended 31 March 2022, the gain on disposal of Indus Towers Limited has decreased by €29 million compared to the amount previously reported. There is no impact on the amount previously reported for the year ended 31 March 2021. See note 7 ‘Discontinued operations and assets held for sale’ for more information. |
2 |
Included in other income in the consolidated income statement. |
The total remuneration of the Group’s auditor, Ernst & Young LLP and other member firms of Ernst & Young Global Limited, for services provided to the Group during the year ended 31 March 2023 is analysed below.
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
Parent company |
|
5 |
|
4 |
|
3 |
Subsidiaries |
|
22 |
|
19 |
|
18 |
Audit fees1 |
|
27 |
|
23 |
|
21 |
|
|
|
|
|
|
|
Audit-related2 |
|
3 |
|
2 |
|
– |
Vantage Towers IPO3 |
|
– |
|
– |
|
11 |
Non-audit fees |
|
3 |
|
2 |
|
11 |
|
|
|
|
|
|
|
Total fees |
|
30 |
|
25 |
|
32 |
Notes:
1 | Includes fees in connection with the interim review, preliminary announcement and controls audit required under Section 404 of the Sarbanes Oxley Act. In total this amounted to €1 million in each of the years presented. |
2 | Fees for (i) special purpose audits and (ii) statutory and regulatory filings during the year. |
3 | Fees incurred for IPO services relating to the IPO of Vantage Towers A.G. on 18 March 2021. |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
4. Impairment losses
Impairment occurs when the carrying value of assets is greater than the present value of the net cash flows they are expected to generate. We review the carrying value of assets for each country in which we operate at least annually. For further details of our impairment review process see ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 ‘Basis of preparation’ to the consolidated financial statements.
Accounting policies
Goodwill
Goodwill is not subject to amortisation but is tested for impairment annually or whenever there is an indication that the asset may be impaired.
For the purpose of impairment testing, assets are grouped at the lowest levels for which there are separately identifiable cash flows, known as cash-generating units. The determination of the Group’s cash-generating units is primarily based on the geographic area where the Group supplies communications services and products. If cash flows from assets within one jurisdiction are largely independent of the cash flows from other assets in that same jurisdiction and management monitors performance separately, multiple cash-generating units are identified within that geographic area.
If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. Impairment losses recognised for goodwill are not reversible in subsequent periods.
The recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
Management prepares formal five year plans for the Group’s cash-generating units, which are the basis for the value in use calculations.
Property, plant and equipment, finite lived intangible assets and equity accounted investments
At each reporting period date, the Group reviews the carrying amounts of its property, plant and equipment, finite lived intangible assets and equity- accounted investments to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent, if any, of the impairment loss. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount and an impairment loss is recognised immediately in the income statement.
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
4. Impairment losses (continued)
Where there has been a change in the estimates used to determine recoverable amount and an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, not to exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset or cash-generating unit in prior years and an impairment loss reversal is recognised immediately in the consolidated income statement.
Impairment loss
Following our annual impairment review, the Group recognised an impairment loss in the consolidated income statement within operating profit relating to our investment in Indus Towers of €64 million in the current year. Further detail on events that led to the recognition of this loss is included on page 141. No impairments were recognised for any other cash-generating units in the three years ended 31 March 2023.
Goodwill
The remaining carrying value of goodwill at 31 March was as follows:
|
|
|
|
|
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
Germany |
|
20,335 |
|
20,335 |
Italy |
|
2,481 |
|
2,481 |
Vantage Towers Germany |
|
– |
|
2,565 |
Other |
|
4,799 |
|
6,503 |
|
|
27,615 |
|
31,884 |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
4. Impairment losses (continued)
Key assumptions used in the value in use calculations
The key assumptions used in determining the value in use are:
Assumption |
|
How determined |
Projected adjusted EBITDAaL |
|
Projected adjusted EBITDAaL has been based on past experience adjusted for the following: |
|
– In Europe, mobile revenue is expected to benefit from increased usage as customers transition to higher data bundles, and new products and services are introduced. Fixed revenue is expected to continue to grow as penetration is increased and more products and services are sold to customers; |
|
|
|
– Outside of Europe, revenue is expected to continue to grow as the penetration of faster data-enabled devices rises along with higher data bundle attachment rates, and new products and services are introduced; and |
|
|
– Margins are expected to be impacted by negative factors such as the cost of acquiring and retaining customers in increasingly competitive markets and by positive factors such as the efficiencies expected from the implementation of Group initiatives. |
Projected capital expenditure |
|
The cash flow forecasts for capital expenditure are based on past experience and include the ongoing capital expenditure required to maintain our networks, provide products and services in line with customer expectations, including of higher data volumes and speeds, and to meet the population coverage requirements of certain of the Group’s licences. In Europe, capital expenditure is required to roll out capacity-building next generation 5G and gigabit networks. Outside of Europe, capital expenditure will be required for the continued rollout of current and next generation mobile networks in emerging markets. Capital expenditure includes cash outflows for the purchase of owned property, plant and equipment and computer software. |
Projected licence and spectrum payments |
|
To enable the continued provision of products and services, the cash flow forecasts for licence and spectrum payments for each relevant cash-generating unit include amounts for expected renewals and newly available spectrum. Beyond the five year forecast period, a long-run cost of spectrum is assumed. |
Long-term growth rate |
|
For the purposes of the Group’s value in use calculations, a long‑term growth rate into perpetuity is applied immediately at the end of the five year forecast period and is based on the lower of: |
|
|
– the nominal GDP growth rate forecasts for the country of operation; and |
|
|
– the long-term compound annual growth rate in adjusted EBITDAaL as estimated by management. |
|
|
Long-term compound annual growth rates determined by management may be lower than forecast nominal GDP growth rates due to the following market-specific factors: competitive intensity levels, maturity of business, regulatory environment or sector-specific inflation expectations. |
Pre-tax discount rate |
|
The pre-tax discount rate for each cash-generating unit is derived such that when applied to pre-tax cash flows it gives the same result as when the observable post-tax weighted average cost of capital is applied to post-tax cash flows. |
|
|
The assumptions used to develop discount rates for each cash-generating unit are benchmarked to externally available data. |
|
|
– The risk free rate is derived from an average yield of a ten year bond issued by the government in each cash-generating unit’s respective country of operations. |
|
|
– The forward-looking equity market risk premium (an investor’s required rate return over and above a risk free rate) is based on studies by independent economists, the long-term average equity market risk premium and the market risk premiums typically used by valuation practitioners. |
|
|
– The asset beta reflecting the systematic risk of the telecommunications segment relative to the market as a whole is determined from betas observed for comparable listed telecommunications companies. |
|
|
– The region-specific leverage ratios are estimated from ratios observed for comparable listed telecommunications companies. |
|
|
Each cash-generating unit’s discount rate is determined in nominal terms in order to match their nominal estimates of future cash flows. |
|
|
Rising risk free interest rates and lower asset betas have, respectively, increased and decreased the cash-generating unit discount rates in the current year. |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
4. Impairment losses (continued)
Year ended 31 March 2023
The Group performs its annual impairment test for goodwill and indefinite lived intangible assets at 31 March and when there is an indicator of impairment of an asset. At each reporting period date judgement is exercised by management in determining whether any internal or external sources of information observed are indicative that the carrying amount of any of the Group’s cash generating units is not recoverable. For changes to the Group’s cash-generating units in the current year see note 27 ‘Acquisitions and disposals’.
Climate change
As a large owner of infrastructure and consumer of energy, the Group has exposure to climate change related risks such as energy cost increases, asset damage and service disruption. The long range plans used in the Group’s impairment testing include forecast energy costs and other costs that are embedded in the planning process to deliver the Group’s zero carbon targets. The long range plans also include capital expenditure in relation to the Group’s use of durable and energy efficient infrastructure and the costs of the Group’s extensive and ongoing network maintenance programme. Climate change has not had a material impact on the outcome of the Group’s impairment testing.
Indus Towers Limited
The Group’s investment in Indus Towers was tested for impairment at 31 March 2023 following a decline in Indus Towers’ quoted share price in the current year. Management concluded that fair value less costs of disposal is the appropriate basis to determine the recoverable amount of the Group’s investment. Indus Towers’ share price is observable in a quoted market and is considered a level 1 input under the IFRS 13 fair value hierarchy. The share price of INR143.00 per share implied a recoverable amount of INR 81 billion (€0.9 billion) which was lower than the carrying value of the investment at the same date. An impairment charge of €64 million was recognised to reduce the carrying value of the Group’s investment to the recoverable amount in the Group’s consolidated statement of financial position.
Value in use assumptions
The table below shows key assumptions used in the value in use calculations, and separately presented cash-generating units for which the carrying amount of goodwill is significant in comparison with the Group’s total carrying amount of goodwill:
|
|
|
|
|
|
|
Assumptions used in value in use calculations |
||
|
|
Germany |
|
Italy |
|
|
% |
|
% |
Pre-tax discount rate |
|
7.8 |
|
8.9 |
Long-term growth rate |
|
0.6 |
|
1.5 |
Projected adjusted EBITDAaL CAGR1 |
|
1.8 |
|
1.0 |
Projected capital expenditure2 |
|
19.4-19.8 |
|
16.5-17.9 |
Sensitivity analysis
The estimated recoverable amounts of the Group’s operations in Germany, Italy, the UK, and Spain exceed their carrying values by €3.2 billion, €0.2 billion, €1.3 billion, and €0.4 billion respectively. If the assumptions used in the impairment review were changed to a greater extent than as presented in the following table, the changes would, in isolation, lead to an impairment loss being recognised for the year ended 31 March 2023.
|
|
|
|
|
|
|
|
|
|
|
Change required for carrying value to equal recoverable amount |
||||||
|
|
Germany |
|
Italy |
|
UK |
|
Spain |
|
|
pps |
|
pps |
|
pps |
|
pps |
Pre-tax discount rate |
|
0.6 |
|
0.2 |
|
1.6 |
|
0.5 |
Long-term growth rate |
|
(0.6) |
|
(0.2) |
|
(1.9) |
|
(0.6) |
Projected adjusted EBITDAaL CAGR1 |
|
(1.8) |
|
(0.5) |
|
(4.1) |
|
(1.5) |
Projected capital expenditure2 |
|
5.5 |
|
0.9 |
|
4.2 |
|
2.2 |
Notes:
1 |
Projected adjusted EBITDAaL CAGR is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing. |
2 |
Projected capital expenditure, which excludes licences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five years for all cash-generating units of the plans used for impairment testing. |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
4. Impairment losses (continued)
For the Group’s operations in Italy and Spain management has prepared the following sensitivity analysis for changes in pre-tax discount rate and projected adjusted EBITDAaL CAGR1 assumptions. The associated impact of the change in each key assumption does not consider any consequential impact on other assumptions used in the impairment review.
|
|
Recoverable amount less carrying value |
||
|
|
Italy |
|
Spain |
|
|
€bn |
|
€bn |
Base case as at 31 March 2023 |
|
0.2 |
|
0.4 |
Change in pre-tax discount rate |
|
|
|
|
Decrease by 1pps |
|
1.4 |
|
1.3 |
Increase by 1pps |
|
(0.8) |
|
(0.3) |
Change in projected adjusted EBITDAaL CAGR1 |
|
|
|
|
Decrease by 5pps |
|
(1.6) |
|
(0.8) |
Increase by 5pps |
|
2.3 |
|
1.8 |
Note:
1 |
Projected adjusted EBITDAaL CAGR is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing. |
Year ended 31 March 2022
The disclosures below for the year ended 31 March 2022 are as previously disclosed in the 31 March 2022 Annual Report.
The Group performs its annual impairment test for goodwill and indefinite lived intangible assets at 31 March and when there is an indicator of impairment of an asset. At each reporting period date judgement is exercised by management in determining whether any internal or external sources of information observed are indicative that the carrying amount of any of the Group’s cash-generating units is not recoverable.
As a large owner of infrastructure and consumer of energy, the Group has exposure to climate change related risks such as energy cost increases, asset damage and service disruption. The long range plans used in the Group’s impairment testing include forecast energy costs and other costs that are embedded in the planning process to deliver the Group’s zero carbon targets. The long range plans also include capital expenditure in relation to the Group’s use of durable and energy efficient infrastructure and the costs of the Group’s extensive and ongoing network maintenance programme. Furthermore, the Group will continue to develop strong reactive initiatives to manage the unpredictable impacts of future climate-related risks. Climate change, therefore, has not had a material impact on the outcome of the Group’s impairment testing and the Group will continue to refine its approach to modelling climate-related risks and opportunities in the value in use calculations.
As the war in Ukraine continues, it is challenging to predict the full extent and duration of its impact on the economy and the Group’s businesses. However, to assess a potential impact of this on the Group’s impairment testing, management prepared scenario analysis based on adjustments to the long range plans for high level estimates of market risks impacted by the war. This analysis did not indicate a risk of impairment at 31 March 2022. Management will update the cash flows and assumptions used in the Group’s impairment testing at future reporting dates with latest best estimates.
No impairments were recognised for the Group’s cash-generating units during the year to 31 March 2022.
Value in use assumptions
The table below shows key assumptions used in the value in use calculations, and separately presented cash-generating units for which the carrying amount of goodwill is significant in comparison with the Group’s total carrying amount of goodwill:
|
|
|
|
|
|
|
|
|
|
|
Assumptions used in value in use calculations |
||||||
|
|
|
|
|
|
Vantage Towers |
|
|
|
|
Germany |
|
Italy |
|
Germany |
|
Other |
|
|
% |
|
% |
|
% |
|
% |
Pre-tax discount rate |
|
7.4 |
|
9.3 |
|
6.1 |
|
6.2-22.5 |
Long-term growth rate |
|
0.5 |
|
1.5 |
|
1.5 |
|
1.0-8.9 |
Projected adjusted EBITDAaL CAGR1 |
|
(0.1) |
|
(0.2) |
|
11.0 |
|
(5.4)-13.0 |
Projected capital expenditure2 |
|
19.6-21.8 |
|
15.0-16.3 |
|
32.0-62.1 |
|
10.0-51.4 |
Notes:
1 | Projected adjusted EBITDAaL CAGR is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing. For the purposes of this disclosure, Italy’s adjusted EBITDAaL for the year ended 31 March 2022 excludes the TIM settlement. |
2 | Projected capital expenditure, which excludes licences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five years for all cash-generating units of the plans used for impairment testing. |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
4. Impairment losses (continued)
Sensitivity analysis
The estimated recoverable amounts of the Group’s operations in Germany, Italy, the UK and Spain exceed their carrying values by €7.3 billion, €0.4 billion, €1.3 billion and €0.1 billion respectively. However, if the assumptions used in the impairment review were changed to a greater extent than as presented in the following table, the changes would, in isolation, lead to an impairment loss being recognised for the year ended 31 March 2022.
|
|
|
|
|
|
|
|
|
|
|
Change required for carrying value to equal recoverable amount |
||||||
|
|
Germany |
|
Italy |
|
UK |
|
Spain |
|
|
pps |
|
pps |
|
pps |
|
pps |
Pre-tax discount rate |
|
1.4 |
|
0.3 |
|
1.3 |
|
0.1 |
Long-term growth rate |
|
(1.4) |
|
(0.3) |
|
(1.5) |
|
(0.1) |
Projected adjusted EBITDAaL CAGR1 |
|
(4.1) |
|
(0.9) |
|
(3.1) |
|
(0.4) |
Projected capital expenditure2 |
|
12.6 |
|
1.8 |
|
4.3 |
|
0.5 |
For the Group’s operations in Germany, Italy, the UK and Spain management has considered the following reasonably possible changes in pre-tax discount rate, long-term growth rate and projected adjusted EBITDAaL CAGR1 assumptions, leaving all other assumptions unchanged. The sensitivity analysis presented is prepared on the basis that the reasonably possible change in each key assumption would not have a consequential impact on other assumptions used in the impairment review. The associated impact on the impairment assessment is presented in the table below.
Management has concluded that no reasonably possible or foreseeable change in projected capital expenditure2 would cause the difference between the carrying value and recoverable amount for any cash generating unit to be materially different to the base case disclosed below.
|
|
|
|
|
|
|
|
|
|
|
Recoverable amount less carrying value |
||||||
|
|
Germany |
|
Italy |
|
UK |
|
Spain |
|
|
€bn |
|
€bn |
|
€bn |
|
€bn |
Base case as at 31 March 2022 |
|
7.3 |
|
0.4 |
|
1.3 |
|
0.1 |
Change in pre-tax discount rate |
|
|
|
|
|
|
|
|
Decrease by 1pps |
|
14.9 |
|
1.7 |
|
2.8 |
|
1.0 |
Increase by 1pps |
|
1.7 |
|
(0.7) |
|
0.3 |
|
(0.6) |
Change in long-term growth rate |
|
|
|
|
|
|
|
|
Decrease by 1pps |
|
1.6 |
|
(0.6) |
|
0.4 |
|
(0.5) |
Increase by 1pps |
|
15.6 |
|
1.7 |
|
2.8 |
|
0.9 |
Change in projected adjusted EBITDAaL CAGR1 |
|
|
|
|
|
|
|
|
Decrease by 5pps |
|
(1.4) |
|
(1.6) |
|
(0.7) |
|
(1.1) |
Increase by 5pps |
|
17.9 |
|
2.8 |
|
3.8 |
|
1.5 |
Notes:
1 |
Projected adjusted EBITDAaL CAGR is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing. For the purposes of this disclosure, Italy’s adjusted EBITDAaL for the year ended 31 March 2022 excludes the TIM settlement. |
2 |
Projected capital expenditure, which excludes licences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five years for all cash-generating units of the plans used for impairment testing. |
Year ended 31 March 2021
The disclosures below for the year ended 31 March 2021 are as previously disclosed in the 31 March 2021 Annual Report.
Following the carve-out of Vodafone’s tower infrastructure to Vantage Towers A.G. (‘Vantage Towers’) during the year in Germany, Spain, Portugal, Ireland, Greece, Romania, Czech Republic and Hungary and the acquisitions by Vantage Towers of Vodafone UK’s 50% shareholding in Cornerstone Telecommunications Infrastructure Limited (‘CTIL’) and the remaining shareholding in the Vantage Towers Greece, management considers Vodafone’s operating companies and Vantage Tower’s operating companies in the affected geographical areas to represent two cash-generating units for the purpose of impairment testing as at 31 March 2021. Vodafone’s investment in Infrastrutture Wireless Italiane S.p.A. (‘INWIT’) was also transferred to Vantage Towers during the year.
Goodwill has been allocated on a relative values basis to the Vantage Towers cash-generating units, where applicable, as part of the tower business carve out from Vodafone’s operations. The cash-generating units described below relate to Vodafone’s mobile and fixed line trading businesses, unless otherwise indicated as being part of Vantage Towers.
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
4. Impairment losses (continued)
Value in use assumptions
The table below shows key assumptions used in the value in use calculations.
|
|
Assumptions used in value in use calculation |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Vantage Towers |
|
|
Germany |
|
Italy |
|
Spain |
|
Ireland |
|
Romania |
|
Germany |
|
|
% |
|
% |
|
% |
|
% |
|
% |
|
% |
Pre-tax discount rate |
|
7.4 |
|
10.5 |
|
9.2 |
|
7.7 |
|
9.9 |
|
6.0 |
Long-term growth rate |
|
0.5 |
|
0.5 |
|
0.5 |
|
0.5 |
|
1.0 |
|
1.5 |
Projected adjusted EBITDAaL CAGR1 |
|
1.2 |
|
2.1 |
|
4.9 |
|
0.5 |
|
0.9 |
|
8.4 |
Projected capital expenditure2 |
|
19.7-21.5 |
|
14.4-15.9 |
|
15.7-17.6 |
|
12.6-15.1 |
|
12.3-15.2 |
|
39.1-56.2 |
Notes:
1 |
Projected adjusted EBITDAaL CAGR is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing. A pro-rata adjustment has been made to true-up 31 March 2021 adjusted EBITDAaL to a full year where the towers business carve-out occurred during the year. |
2 |
Projected capital expenditure, which excludes licences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five years for all cash-generating units of the plans used for impairment testing. |
Sensitivity analysis
The estimated recoverable amounts of the Group’s operations in Germany, Italy, Spain, Ireland, Romania and Vantage Towers Germany exceed their carrying values by €7.4 billion, €0.6 billion, €0.3 billion, €0.1 billion, €0.1 billion and €3.5 billion, respectively. If the assumptions used in the impairment review were changed to a greater extent than as presented in the following table, the changes would, in isolation, lead to an impairment loss being recognised for the year ended 31 March 2021.
|
|
Change required for carrying value to equal recoverable amount |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Vantage Towers |
|
|
Germany |
|
Italy |
|
Spain |
|
Ireland |
|
Romania |
|
Germany |
|
|
pps |
|
pps |
|
pps |
|
pps |
|
pps |
|
pps |
Pre-tax discount rate |
|
1.3 |
|
0.7 |
|
0.4 |
|
0.7 |
|
0.7 |
|
5.2 |
Long-term growth rate |
|
(1.3) |
|
(0.8) |
|
(0.5) |
|
(0.7) |
|
(0.9) |
|
(4.9) |
Projected adjusted EBITDAaL CAGR1 |
|
(4.0) |
|
(1.5) |
|
(1.5) |
|
(1.6) |
|
(1.9) |
|
(19.3) |
Projected capital expenditure2 |
|
12.7 |
|
3.0 |
|
1.6 |
|
2.8 |
|
1.9 |
|
162.6 |
Management considered the following reasonably possible changes in key assumptions for projected adjusted EBITDAaL CAGR1 and long-term growth rate, leaving all other assumptions unchanged. Consistent with the prior year, and due to the uncertainty of future COVID-19 impacts, management’s range of reasonably possible changes in projected adjusted EBITDAaL CAGR1 is plus or minus 5 percentage points (2020: +/- 5 percentage points). The sensitivity analysis presented is prepared on the basis that the reasonably possible change in each key assumption would not have a consequential impact on other assumptions used in the impairment review. The associated impact on the impairment assessment is presented in the table below.
Management believes that no reasonably possible or foreseeable change in the pre-tax discount rate or projected capital expenditure2 would cause the difference between the carrying value and recoverable amount for any cash-generating unit to be materially different from the base case disclosed below.
|
|
Recoverable amount less carrying value |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Vantage Towers |
|
|
Germany |
|
Italy |
|
Spain |
|
Ireland |
|
Romania |
|
Germany |
|
|
€bn |
|
€bn |
|
€bn |
|
€bn |
|
€bn |
|
€bn |
Base case as at 31 March 2021 |
|
7.4 |
|
0.6 |
|
0.3 |
|
0.1 |
|
0.1 |
|
3.5 |
Change in projected adjusted EBITDAaL CAGR1 |
|
|
|
|
|
|
|
|
|
|
|
|
Decrease by 5pps |
|
(1.6) |
|
(1.3) |
|
(0.6) |
|
(0.2) |
|
(0.1) |
|
2.4 |
Increase by 5pps |
|
18.2 |
|
2.9 |
|
1.4 |
|
0.5 |
|
0.3 |
|
5.0 |
Change in long-term growth rate |
|
|
|
|
|
|
|
|
|
|
|
|
Decrease by 1pps |
|
1.5 |
|
(0.1) |
|
(0.3) |
|
– |
|
– |
|
2.2 |
Increase by 1pps |
|
16.0 |
|
1.6 |
|
1.0 |
|
0.3 |
|
0.2 |
|
6.1 |
The carrying values for Vodafone UK, Portugal, Czech Republic, and Hungary include goodwill arising from acquisitions and/or the purchase of operating licences or spectrum rights. The recoverable amounts for these operating companies are also not materially greater than their carrying values and accordingly are disclosed below.
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
4. Impairment losses (continued)
If the assumptions used in the impairment review were changed to a greater extent than as presented in the following table, the changes would, in isolation, lead to an impairment loss being recognised in the year ended 31 March 2021.
|
|
Change required for carrying value to equal recoverable amount |
||||||
|
|
UK |
|
Portugal |
|
Czech Republic |
|
Hungary |
|
|
pps |
|
pps |
|
pps |
|
pps |
Pre-tax discount rate |
|
0.8 |
|
0.9 |
|
1.2 |
|
0.3 |
Long-term growth rate |
|
(0.8) |
|
(1.0) |
|
(1.3) |
|
(0.4) |
Projected adjusted EBITDAaL CAGR1 |
|
(1.7) |
|
(2.2) |
|
(3.0) |
|
(0.7) |
Projected capital expenditure2 |
|
2.5 |
|
3.7 |
|
7.5 |
|
1.5 |
Notes:
1 | Projected adjusted EBITDAaL CAGR is expressed as the compound annual growth rates in the initial five years for all cash-generating units of the plans used for impairment testing. A pro-rata adjustment has been made to true up 31 March 2021 adjusted EBITDAaL to a full year where the towers business carve-out occurred during the year. |
2 | Projected capital expenditure, which excludes licences and spectrum, is expressed as capital expenditure as a percentage of revenue in the initial five years for all cash-generating units of the plans used for impairment testing. |
5. Investment income and financing costs
Investment income comprises interest received from short-term investments and other receivables. Financing costs mainly arise from interest due on bonds and commercial paper issued, bank loans and the results of hedging transactions used to manage foreign exchange and interest rate movements.
|
|
|
|
Re-presented1 |
|
Re-presented1 |
|
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
Investment income |
|
|
|
|
|
|
Financial assets measured at amortised cost |
|
212 |
|
249 |
|
221 |
Financial assets measured at fair value through profit and loss |
|
36 |
|
5 |
|
24 |
|
|
248 |
|
254 |
|
245 |
Financing costs |
|
|
|
|
|
|
Financial liabilities measured at amortised cost |
|
|
|
|
|
|
Bonds |
|
1,711 |
|
1,546 |
|
1,722 |
Lease liabilities |
|
436 |
|
398 |
|
374 |
Bank loans and other liabilities2 |
|
430 |
|
469 |
|
463 |
Interest on derivatives |
|
(561) |
|
(428) |
|
(485) |
Mark-to-market on derivatives |
|
(423) |
|
(341) |
|
(1,070) |
Financial assets measured at fair value through profit and loss |
|
– |
|
36 |
|
– |
Foreign exchange |
|
135 |
|
284 |
|
23 |
|
|
1,728 |
|
1,964 |
|
1,027 |
Net financing costs |
|
1,480 |
|
1,710 |
|
782 |
Notes:
1 |
The results for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. In the year ended 31 March 2021, investment income has decreased by €85 million compared to the amount previously reported. There is no impact on the amount previously reported for the year ended 31 March 2022. See note 7 ‘Discontinued operations and assets held for sale’ for more information. |
2 |
Interest capitalised for the year ended 31 March 2023 was €5 million (2022: €17 million, 2021: €17 million). |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
6. Taxation
This note explains how our Group tax charge arises. The deferred tax section of the note also provides information on our expected future tax charges and sets out the tax assets held across the Group together with our view on whether or not we expect to be able to make use of these in the future.
Accounting policies
Income tax expense represents the sum of the current and deferred taxes.
Current tax payable or recoverable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because some items of income or expense are taxable or deductible in different years or may never be taxable or deductible. The Group’s liability for current tax is calculated using tax rates and laws that have been enacted or substantively enacted by the reporting period date.
The Group recognises provisions for uncertain tax positions when the Group has a present obligation as a result of a past event and management judge that it is probable that there will be a future outflow of economic benefits from the Group to settle the obligation. Uncertain tax positions are assessed and measured on an issue by issue basis within the jurisdictions that we operate either using management’s estimate of the most likely outcome where the issues are binary, or the expected value approach where the issues have a range of possible outcomes. The Group recognises interest on late paid taxes as part of financing costs, and any penalties, if applicable, as part of the income tax expense.
Deferred tax is the tax expected to be payable or recoverable in the future arising from temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. It is accounted for using the statement of financial position liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that temporary differences or taxable profits will be available against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are not recognised to the extent they arise from the initial recognition of non-tax deductible goodwill.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint arrangements, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting period date and adjusted to reflect changes in the Group’s assessment that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised, based on tax rates that have been enacted or substantively enacted by the reporting period date.
Tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they either relate to income taxes levied by the same taxation authority on either the same taxable entity or on different taxable entities which intend to settle the current tax assets and liabilities on a net basis.
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
6. Taxation (continued)
Tax is charged or credited to the income statement, except when it relates to items charged or credited to other comprehensive income or directly to equity, in which case the tax is recognised in other comprehensive income or in equity.
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
2021 |
Income tax expense |
|
€m |
|
€m |
|
€m |
United Kingdom corporation tax expense: |
|
|
|
|
|
|
Current year |
|
4 |
|
22 |
|
24 |
Adjustments in respect of prior years |
|
4 |
|
17 |
|
3 |
|
|
8 |
|
39 |
|
27 |
Overseas current tax expense/(credit): |
|
|
|
|
|
|
Current year |
|
924 |
|
993 |
|
872 |
Adjustments in respect of prior years |
|
(26) |
|
81 |
|
(30) |
|
|
898 |
|
1,074 |
|
842 |
Total current tax expense |
|
906 |
|
1,113 |
|
869 |
Deferred tax on origination and reversal of temporary differences: |
|
|
|
|
|
|
United Kingdom deferred tax |
|
(71) |
|
(791) |
|
(94) |
Overseas deferred tax |
|
(354) |
|
1,008 |
|
3,089 |
Total deferred tax (credit)/expense |
|
(425) |
|
217 |
|
2,995 |
Total income tax expense |
|
481 |
|
1,330 |
|
3,864 |
Tax charged/(credited) directly to other comprehensive income
|
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
Current tax |
|
3 |
|
– |
|
(17) |
Deferred tax |
|
304 |
|
648 |
|
(1,009) |
Total tax charged/(credited) directly to other comprehensive income |
|
307 |
|
648 |
|
(1,026) |
Tax charged/(credited) directly to equity
|
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
Deferred tax |
|
6 |
|
– |
|
(2) |
Total tax charged/(credited) directly to equity |
|
6 |
|
– |
|
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
6. Taxation (continued)
Factors affecting the tax expense for the year
The table below explains the differences between the expected tax expense, being the aggregate of the Group’s geographical split of profits multiplied by the relevant local tax rates and the Group’s total tax expense for each year.
|
|
|
|
Re-presented1 |
|
Re-presented1 |
|
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
Continuing profit before tax as shown in the consolidated income statement |
|
12,816 |
|
4,103 |
|
4,347 |
|
|
|
|
|
|
|
Aggregated expected income tax expense |
|
3,848 |
|
1,231 |
|
1,111 |
Impairment loss with no tax effect |
|
18 |
|
– |
|
– |
Disposal of Group investments2 |
|
(2,918) |
|
(8) |
|
(332) |
Effect of taxation of associates and joint ventures, reported within profit before tax |
|
(125) |
|
(111) |
|
69 |
Deferred tax (credit)/charge following revaluation of investments in Luxembourg |
|
(393) |
|
1,455 |
|
2,120 |
Previously unrecognised temporary differences we expect to use in the future, including in Luxembourg |
|
(16) |
|
(708) |
|
(45) |
Previously recognised temporary differences and losses we no longer expect to use in the future |
|
– |
|
74 |
|
699 |
Current year temporary differences (including losses) that we currently do not expect to use |
|
207 |
|
116 |
|
170 |
Adjustments in respect of prior year tax liabilities |
|
(35) |
|
13 |
|
(10) |
Impact of tax credits and irrecoverable taxes |
|
80 |
|
74 |
|
90 |
Deferred tax on overseas earnings |
|
(6) |
|
2 |
|
– |
Effect of current year changes in statutory tax rates on deferred tax balances3 |
|
35 |
|
(667) |
|
(45) |
Financing costs not (taxable)/deductible for tax purposes |
|
(27) |
|
46 |
|
(62) |
Revaluation of assets for tax purposes in Turkey and Italy4 |
|
(338) |
|
(357) |
|
– |
Expenses not deductible for tax purposes |
|
151 |
|
170 |
|
99 |
Income tax expense |
|
481 |
|
1,330 |
|
3,864 |
Notes:
1 |
Amounts for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. See note 7 ‘Discontinued operations and assets held for sale’ for more information. |
2 |
2023 relates to the change in consolidation status of Vantage Towers and the tax exempt disposals of Vodafone Hungary and Vodafone Ghana. 2021 includes the tax exempt gains relating to the TPG Telecom Limited merger in Australia and Indus Towers Limited in India. |
3 |
2022 includes the increase in future UK tax rate to 25%. |
4 |
2023 relates to a step of assets for tax purposes in Turkey. 2022 relates to step up of assets for tax purposes in Italy and Turkey. |
Deferred tax
Analysis of movements in the net deferred tax asset balance during the year:
|
|
€m |
1 April 2022 |
|
18,569 |
Foreign exchange movements |
|
(59) |
Credited the income statement |
|
425 |
Charged directly to OCI |
|
(304) |
Charged directly to equity |
|
(6) |
Impact of hyperinflation accounting |
|
(191) |
Arising on acquisitions and disposals |
|
111 |
31 March 20231 |
|
18,545 |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
6. Taxation (continued)
Deferred tax assets and liabilities, before offset of balances within countries, are as follows:
|
|
Amount |
|
|
|
|
|
|
|
Net |
|
|
credited/ |
|
|
|
|
|
|
|
recognised |
|
|
(expensed) |
|
Gross |
|
Gross |
|
Less |
|
deferred tax |
|
|
in income |
|
deferred |
|
deferred tax |
|
amounts |
|
asset/ |
|
|
statement |
|
tax asset |
|
liability |
|
unrecognised |
|
(liability) |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Accelerated tax depreciation |
|
136 |
|
2,761 |
|
(1,426) |
|
(47) |
|
1,288 |
Intangible assets |
|
324 |
|
630 |
|
(1,495) |
|
15 |
|
(850) |
Tax losses |
|
(78) |
|
28,035 |
|
– |
|
(9,540) |
|
18,495 |
Treasury related items |
|
2 |
|
623 |
|
(717) |
|
(588) |
|
(682) |
Temporary differences relating to revenue recognition |
|
(40) |
|
19 |
|
(705) |
|
– |
|
(686) |
Temporary differences relating to leases |
|
216 |
|
1,482 |
|
(1,054) |
|
(30) |
|
398 |
Other temporary differences |
|
(135) |
|
938 |
|
(296) |
|
(60) |
|
582 |
31 March 20231 |
|
425 |
|
34,488 |
|
(5,693) |
|
(10,250) |
|
18,545 |
Analysed in the balance sheet, after offset of balances within countries, as:
|
|
€m |
Deferred tax asset |
|
19,316 |
Deferred tax liability |
|
(771) |
31 March 20231 |
|
18,545 |
At 31 March 2022, deferred tax assets and liabilities, before offset of balances within countries, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount |
|
|
|
|
|
|
|
Net |
|
|
credited/ |
|
|
|
|
|
|
|
recognised |
|
|
(expensed) |
|
Gross |
|
Gross |
|
Less |
|
deferred tax |
|
|
in income |
|
deferred |
|
deferred tax |
|
amounts |
|
asset/ |
|
|
statement |
|
tax asset |
|
liability |
|
unrecognised |
|
(liability) |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Accelerated tax depreciation |
|
672 |
|
2,589 |
|
(1,361) |
|
(58) |
|
1,170 |
Intangible assets |
|
643 |
|
666 |
|
(1,801) |
|
11 |
|
(1,124) |
Tax losses |
|
(1,450) |
|
28,977 |
|
– |
|
(10,341) |
|
18,636 |
Treasury related items |
|
(90) |
|
616 |
|
(372) |
|
(562) |
|
(318) |
Temporary differences relating to revenue recognition |
|
(9) |
|
3 |
|
(666) |
|
– |
|
(663) |
Temporary differences relating to leases |
|
(3) |
|
1,754 |
|
(1,577) |
|
– |
|
177 |
Other temporary differences |
|
20 |
|
1,148 |
|
(379) |
|
(78) |
|
691 |
31 March 20221 |
|
(217) |
|
35,753 |
|
(6,156) |
|
(11,028) |
|
18,569 |
At 31 March 2022, analysed in the balance sheet, after offset of balances within countries, as:
|
|
€m |
Deferred tax asset |
|
19,089 |
Deferred tax liability |
|
(520) |
31 March 20221 |
|
18,569 |
Note:
1 | The Group does not discount deferred tax assets. This is in accordance with IAS 12. |
Factors affecting the tax charge in future years
The Group’s future tax charge, and effective tax rate, could be affected by several factors including; tax reform in countries around the world, including any arising from the OECD’s or European Commission’s work on the taxation of the digital economy and European Commission initiatives such as the Minimum Tax directive or as a consequence of state aid investigations, future corporate acquisitions and disposals, any restructuring of our businesses and the resolution of open tax issues (see below).
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
6. Taxation (continued)
The Group is routinely subject to audit by tax authorities in the territories in which it operates. The Group considers each issue on its merits and, where appropriate, holds provisions in respect of the potential tax liability that may arise. As at 31 March 2023, the Group holds provisions for such potential liabilities of €412 million (2022: €463 million). These provisions relate to multiple issues, across the jurisdictions in which the Group operates. The reduction follows the resolution of a number of disputes during the year.
As the tax impact of a transaction can be uncertain until a conclusion is reached with the relevant tax authority or through a legal process, the amount ultimately paid may differ materially from the amount accrued and could therefore affect the Group’s overall profitability and cash flows in future periods. See Note 29 ‘Contingent liabilities and legal proceedings’ to the consolidated financial statements.
The tables below present the gross amount and expiry dates of losses available for carry forward for the year ended 31 March 2023 and the comparative year ended 31 March 2022.
|
|
Expiring |
|
Expiring |
|
|
|
|
|
|
within |
|
beyond |
|
|
|
|
|
|
5 years |
|
6 years |
|
Unlimited |
|
Total |
31 March 2023 |
|
€m |
|
€m |
|
€m |
|
€m |
Losses for which a deferred tax asset is recognised |
|
15 |
|
59 |
|
78,967 |
|
79,041 |
Losses for which no deferred tax is recognised |
|
306 |
|
15,649 |
|
18,321 |
|
34,276 |
|
|
321 |
|
15,708 |
|
97,288 |
|
113,317 |
|
|
Expiring |
|
Expiring |
|
|
|
|
|
|
within |
|
beyond |
|
|
|
|
|
|
5 years |
|
6 years |
|
Unlimited |
|
Total |
31 March 2022 |
|
€m |
|
€m |
|
€m |
|
€m |
Losses for which a deferred tax asset is recognised |
|
19 |
|
259 |
|
79,848 |
|
80,126 |
Losses for which no deferred tax is recognised |
|
334 |
|
13,162 |
|
23,928 |
|
37,424 |
|
|
353 |
|
13,421 |
|
103,776 |
|
117,550 |
Deferred tax assets on losses in Luxembourg
Included in the table above are losses of €65,232 million (2022: €65,348 million) that have arisen in Luxembourg companies. A deferred tax asset of €16,269 million (2022: €16,298 million) has been recognised in respect of these losses, as we conclude it is probable that the Luxembourg entities will continue to generate taxable profits in the future against which we can utilise these losses. These tax losses principally arose from historical impairments, primarily following the acquisition of the Mannesmann Group in 2000. These losses also arose prior to the 2017 tax reform in Luxembourg and are available to carry forward indefinitely.
In December 2022, the Group undertook an internal restructuring which saw the Luxembourg companies dispose of their investments in the Group’s operating companies. This resulted in the Luxembourg holding companies recording a tax deductible loss on the disposal in the local GAAP financial statements. The investments are valued for the local GAAP financial statements using the Group’s recoverable value calculations (see Note 4 – ‘Impairment losses’) and the carrying values and valuation methodology differs from the goodwill assessment for the Group’s consolidated financial statements.
Losses incurred after the 2017 tax reform in Luxembourg expire after 17 years and are only used after any pre-existing losses. In the year ended 31 March 2023 the Luxembourg companies incurred additional tax losses of €2,608 million following the disposals of their investments in the Group’s operating companies. No deferred tax asset is recognised for these losses on the basis that they are not forecast to be used prior to the expiry of their 17 year life. In a period where pre-existing tax losses are not utilised due to impairments, the forecast utilisation timeframe extends by one year.
Following the restructuring, the losses in Luxembourg are no longer impacted by changes in the value of the Group’s operating companies and the recovery of the deferred tax asset will be driven by the recurring profits of the Luxembourg companies.
These recurring profits are derived from the Group’s internal financing, centralised procurement and international roaming activities. These activities have consistently generated taxable profits of over €1 billion per annum throughout their existence. The Group has reviewed the latest 5 year forecasts for the Luxembourg companies, including their ability to continue to generate income beyond this period. The forecasts consider the impact of the current market conditions on the existing financing activities, including the current view of interest rates, levels of intragroup financing, as well as the future profits generated from the procurement and roaming activities.
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
6. Taxation (continued)
This assessment also included a review of the commercial structures supporting the profits generated from these activities and considered the factors, under the Group’s control, which could impact the ability of these activities to generate taxable profits. We have assessed that the current structure continues to be sustainable under the tax laws substantively enacted at the balance sheet date and the Group’s intentions to keep these activities in Luxembourg remains unchanged.
Based on the current forecasts, €4,518 million (2022: €3,546 million) of the deferred tax asset is forecast to be used within the next 10 years, and €8,742 million (2022: €6,953 million) used within 20 years. The losses are projected to be fully utilised over the next 35 to 39 years. The decrease in the recovery period over the prior year is principally a result of higher interest rates, driving margins up on existing financing activities. In the year ended 31 March 2022 these same factors also meant the Group recognised €699 million of previously unrecognised deferred tax asset as the forecasts produced at that time, which reflected the same factors discussed above, showed these losses will be used within 60 years. The Group did not previously recognise the asset as the losses were forecast to be used beyond 60 years.
An increase or decrease in the forecast income in Luxembourg in each year of 5%-10% would change the period over which the losses will be fully utilised by 2 to 4 years. The Group uses these different scenarios of forecast income to understand the impact that a change in interest rates or level of debt advanced by the Luxembourg companies could have on the recovery period of the losses.
Any future changes in tax law, including those driven by OECD, EU or domestic tax reforms or the structure of the Group could have a significant effect on the use of the Luxembourg losses, including the period over which these losses can be utilised. The Group has continued to monitor developments relating to OECD’s Pillar 2 rules, including reviewing the administrative guidance published in December 2022 and does not anticipate a significant impact on its ability to continue to use our losses in Luxembourg. On the basis that future changes in tax laws are unknown, the profit forecasts assume that existing tax laws continue.
Based on the above factors the Group concludes that it is probable that the Luxembourg companies will continue to generate taxable profits in the future against which it will use these losses. In addition to the above, €15,925 million (2022; €13,298 million) of the Group’s Luxembourg losses expire after 11-17 years and no deferred tax asset is recognised as they will expire before we can use these losses. The remaining losses do not expire. We also have €9,136 million (2022: €9,136 million) of Luxembourg losses in a former Cable & Wireless Worldwide Group company, for which no deferred tax asset has been recognised as it is uncertain whether these losses will be utilised.
Deferred tax assets on losses in Germany
The Group has tax losses of €12,932 million (2022: €13,955 million) in Germany arising on the write down of investments in Germany in 2000. The losses are available to use against both German federal and trade tax liabilities and they do not expire. A deferred tax asset of €2,021 million (2022: €2,170 million) has been recognised in respect of these losses as we conclude it is probable that the German business will continue to generate taxable profits in the future against which we can utilise these losses. The Group has reviewed the latest forecasts for the German business which incorporate the unsystematic risks of operating in the telecommunications business (see Note 4 ‘Impairment losses’). In the period beyond the 5 year forecast we have reviewed the profits inherent in the terminal period and based on these and our expectations for the German business we believe it is probable the German losses will be fully utilised. Based on the current forecasts the losses will be fully utilised over the next 4 to 9 years. A 5%-10% change in the forecast profits of the German business would alter the utilisation period by 1 year.
Deferred tax assets in Italy
The Group has a recognised deferred tax asset of €425 million (2022: €411 million), including €152 million (2022: €71 million) relating to tax losses in Italy. The Italian business has historically been profitable and is forecasted to return to profitability, absent the tax deductions arising from the revaluation of assets undertaken in the year ended 31 March 2022, in the short term. The Group has reviewed the latest forecasts for the Italian business which incorporate the unsystematic risks of operating in the telecommunications business (see Note 4 ‘Impairment losses’). In the period beyond the 5 year forecast we have reviewed the profits inherent in the terminal period and based on these and our expectations for the Italian business we believe it is probable the Italian losses will be fully utilised.
Deferred tax assets on losses in Spain
The Group has tax losses of €5,130 million (2022: €4,627 million) which are available to offset against the future profits of the Grupo Corporativo ONO business. The losses do not expire, and no deferred tax asset is recognised for these losses due to the trading environment in Spain.
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
6. Taxation (continued)
Other tax losses
The Group has losses amounting to €2,377 million (2022: €8,444 million) in respect of UK subsidiaries which are only available for offset against future capital gains and since it is uncertain whether these losses will be utilised, no deferred tax asset has been recognised, as in the prior year. The losses reduced following the dissolution of a UK holding company which held capital losses. The remaining losses relate to a number of other jurisdictions across the Group. There are also €2,443 million (2022: €2,365 million) of unrecognised temporary differences relating to treasury items and other items.
Impact of climate risks
The recovery of the Group’s deferred tax assets is dependent on its forecasts of future profitability and the climate related risks have been considered in the Group’s assessment of the recovery of those assets (see Note 4 ‘Impairment losses’). The Group does not expect the climate related risks to have an impact on the ability of Luxembourg to continue to provide the internal financing, procurement, and roaming activities to other members of the Group.
Unremitted earnings
No deferred tax liability has been recognised in respect of a further €26,371 million (2022: €8,599 million) of unremitted earnings of subsidiaries because the Group is able to control the timing of the reversal of the temporary difference, and it is probable that such differences will not reverse in the foreseeable future. It is not practicable to estimate the amount of unrecognised deferred tax liabilities in respect of these unremitted earnings.
7. Discontinued operations and assets held for sale
The Group classifies certain of its assets that it expects to dispose as either discontinued operations or as held for sale.
The Group classifies non-current assets and assets and liabilities within disposal groups (‘assets’) as held for sale if the assets are available immediately for sale in their present condition, management is committed to a plan to sell the assets under usual terms, it is highly probable that their carrying amounts will be recovered principally through a sale transaction rather than through continuing use and the sale is expected to be completed within one year from the date of the initial classification.
Assets and liabilities classified as held for sale are presented separately as current items in the consolidated statement of financial position and are measured at the lower of their carrying amount and fair value less costs to sell. Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale. Similarly, equity accounting ceases for associates and joint ventures held for sale.
Where operations constitute a separately reportable segment (see note 2 ‘Revenue disaggregation and segmental analysis’) and have been disposed of, or are classified as held for sale, the Group classifies such operations as discontinued.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the Group consolidated income statement. Discontinued operations are also excluded from segment reporting. All other notes to the financial statements include amounts for continuing operations, unless indicated otherwise.
Discontinued operations
The Group did not have any discontinued operations in the year ended 31 March 2023 or the comparative years ended 31 March 2022 and 31 March 2021.
Assets held for sale
Reclassification of Indus Towers Limited
In the consolidated financial statements for the prior year ended 31 March 2022, the Group’s 21.0% interest in Indus Towers Limited was reported within assets held for sale. Whilst the Group remains focused on achieving a sale, the investment is not assessed as meeting the requirements of held for sale at 31 March 2023. Consequently, comparative balances as at 31 March 2022 have been re-presented in these consolidated financial statements to reflect that Indus Towers Limited is no longer reported as held for sale.
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
7. Discontinued operations and assets held for sale (continued)
Impact on the consolidated income statement
The reclassification has no impact on previously reported revenue and gross profit, as reported in the consolidated income statement.
In the year ended 31 March 2022, the share of results of equity accounted associates and joint ventures increased by €178 million, offset by a decrease of €29 million in other income. Consequently, operating profit, profit before taxation and profit for the financial year all increased by €149 million compared to amounts previously reported. Total comprehensive income for the financial year increased by €144 million, reflecting the increase in profit for the financial year of €149 million, offset by a charge of €5 million included in other comprehensive income.
In the year ended 31 March 2021, the share of results of equity accounted associates and joint ventures increased by €32 million and therefore operating profit increased by €32 million compared to the amount previously reported. Investment income decreased by €85 million and therefore profit before taxation and profit for the financial year both decreased by €53 million compared to amounts previously reported. Total comprehensive expense for the financial year increased by €48 million, reflecting the decrease in profit for the financial year of €53 million, offset by a credit of €5 million included in other comprehensive income
Impact on the consolidated statement of financial position
The consolidated statement of financial position is on page 124 and has not been reproduced below in its entirety. The table below only discloses the impacted lines.
|
|
|
|
|
|
|
|
|
As previously |
|
Impact of |
|
|
|
|
presented |
|
reclassification |
|
Re-presented |
|
|
2022 |
|
2022 |
|
2022 |
|
|
€m |
|
€m |
|
€m |
Non-current assets |
|
|
|
|
|
|
Investments in associates and joint ventures |
|
4,268 |
|
1,055 |
|
5,323 |
Assets held for sale |
|
959 |
|
(959) |
|
– |
|
|
|
|
|
|
|
Total assets |
|
153,953 |
|
96 |
|
154,049 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Accumulated losses |
|
(122,118) |
|
96 |
|
(122,022) |
|
|
|
|
|
|
|
Total equity and liabilities |
|
153,953 |
|
96 |
|
154,049 |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
8. Earnings per share
Basic earnings per share is the amount of profit generated for the financial year attributable to equity shareholders divided by the weighted average number of shares in issue during the year.
Weighted average number of shares for basic earnings per share |
|
27,680 |
|
29,012 |
|
29,592 |
Effect of dilutive potential shares: restricted shares and share options |
|
95 |
|
97 |
|
91 |
Weighted average number of shares for diluted earnings per share |
|
27,775 |
|
29,109 |
|
29,683 |
|
|
|
|
|
Re-presented1 |
|
Re-presented1 |
|
|
|
2023 |
|
|
2022 |
|
2021 |
|
|
|
€m |
|
|
€m |
|
€m |
|
Profit for earnings per share from continuing operations attributable to owners |
|
11,838 |
|
|
2,237 |
|
59 |
|
Profit for basic and diluted earnings per share |
|
11,838 |
|
|
2,237 |
|
59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Re-presented1 |
|
Re-presented1 |
|
|
|
2023 |
|
|
2022 |
|
2021 |
|
|
|
eurocents |
|
|
eurocents |
|
eurocents |
|
Basic earnings per share from continuing operations |
|
42.77 |
c |
|
7.71 |
c |
0.20 |
c |
Basic earnings per share |
|
42.77 |
c |
|
7.71 |
c |
0.20 |
c |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Re-presented1 |
|
Re-presented1 |
|
|
|
2023 |
|
|
2022 |
|
2021 |
|
|
|
eurocents |
|
|
eurocents |
|
eurocents |
|
Diluted earnings per share from continuing operations |
|
42.62 |
c |
|
7.68 |
c |
0.20 |
c |
Diluted earnings per share |
|
42.62 |
c |
|
7.68 |
c |
0.20 |
c |
Note:
1 | The results for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. In the year ended 31 March 2022, profit for basic and diluted earnings per share has increased by €149 million (2021: €53 million decrease) compared to the amount previously reported. Consequently, basic earnings per share increased by 0.51 eurocents (2021: 0.18 eurocents decrease) and diluted earnings per share increased by 0.51 eurocents (2021: 0.18 eurocents decrease) compared to amounts previously reported. See note 7 ‘Discontinued operations and assets held for sale’ for more information. |
9. Equity dividends
Dividends are one type of shareholder return, historically paid to our shareholders in February and August.
|
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
Declared during the financial year |
|
|
|
|
|
|
Final dividend for the year ended 31 March 2022: 4.50 eurocents per share (2021: 4.50 eurocents per share, 2020: 4.50 eurocents per share) |
|
1,265 |
|
1,254 |
|
1,205 |
Interim dividend for the year ended 31 March 2023: 4.50 eurocents per share (2022: 4.50 eurocents per share, 2021: 4.50 eurocents per share) |
|
1,237 |
|
1,229 |
|
1,207 |
|
|
2,502 |
|
2,483 |
|
2,412 |
Proposed after the end of the year and not recognised as a liability |
|
|
|
|
|
|
Final dividend for the year ended 31 March 2023: 4.50 eurocents per share (2022: 4.50 eurocents per share, 2021: 4.50 eurocents per share) |
|
1,215 |
|
1,265 |
|
1,260 |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
10. Intangible assets
The statement of financial position contains significant intangible assets, mainly in relation to goodwill and licences and spectrum. Goodwill, which arises when we acquire a business and pay a higher amount than the fair value of its net assets primarily due to the synergies we expect to create, is not amortised but is subject to annual impairment reviews. Licences and spectrum are amortised over the life of the licence. For further details see ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 ‘Basis of preparation ‘ to the consolidated financial statements.
Accounting policies
Identifiable intangible assets are recognised when the Group controls the asset, it is probable that future economic benefits attributed to the asset will flow to the Group and the cost of the asset can be reliably measured. Identifiable intangible assets are recognised at fair value when the Group completes a business combination. The determination of the fair values of the separately identified intangibles, is based, to a considerable extent, on management’s judgement.
Goodwill
Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition.
Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is not subject to amortisation but is tested for impairment annually or whenever there is evidence that it may be impaired. Goodwill is denominated in the currency of the acquired entity and revalued to the closing exchange rate at each reporting period date.
Negative goodwill arising on an acquisition is recognised directly in the income statement.
On disposal of a subsidiary or a joint arrangement, the attributable amount of goodwill is included in the determination of the profit or loss recognised in the income statement on disposal.
Finite lived intangible assets
Intangible assets with finite lives are stated at acquisition or development cost, less accumulated amortisation. The amortisation period and method is reviewed at least annually. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates.
Licence and spectrum fees
Amortisation periods for licence and spectrum fees are determined primarily by reference to the unexpired licence period, the conditions for licence renewal and whether licences are dependent on specific technologies. Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives from the commencement of related network services.
Computer software
Computer software comprises software purchased from third parties as well as the cost of internally developed software. Computer software licences are capitalised on the basis of the costs incurred to acquire and bring into use the specific software. Costs that are directly associated with the production of identifiable and unique software products controlled by the Group, and are probable of producing future economic benefits, are recognised as intangible assets. Direct costs of software development include employee costs and directly attributable overheads.
Software integral to an item of hardware equipment is classified as property, plant and equipment.
Costs associated with maintaining software programs are recognised as an expense when they are incurred.
Amortisation is charged to the income statement on a straight-line basis over the estimated useful life from the date the software is available for use.
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
10. Intangible assets (continued)
Other intangible assets
Other intangible assets, including brands and customer bases, are recorded at fair value at the date of acquisition. Amortisation is charged to the income statement, over the estimated useful lives of intangible assets from the date they are available for use, on a straight-line basis. The amortisation basis adopted for each class of intangible asset reflects the Group’s consumption of the economic benefit from that asset.
Estimated useful lives
The estimated useful lives of finite lived intangible assets are as follows:
|
|
|
Licence and spectrum fees |
|
3 – 40 years |
Computer software |
|
3 – 5 years |
Brands |
|
1 – 30 years |
Customer bases |
|
2 – 37 years |
|
|
|
|
Licence and |
|
Computer |
|
Customer |
|
|
|
|
|
|
Goodwill |
|
spectrum fees |
|
software |
|
bases |
|
Other |
|
Total |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
1 April 2021 |
|
99,364 |
|
33,528 |
|
17,833 |
|
12,308 |
|
466 |
|
163,499 |
Exchange movements |
|
(21) |
|
(148) |
|
(60) |
|
80 |
|
1 |
|
(148) |
Arising on acquisition |
|
(10) |
|
– |
|
– |
|
54 |
|
– |
|
44 |
Additions |
|
– |
|
901 |
|
2,727 |
|
– |
|
7 |
|
3,635 |
Disposals |
|
– |
|
(356) |
|
(2,823) |
|
– |
|
(1) |
|
(3,180) |
Other |
|
– |
|
1 |
|
36 |
|
– |
|
(10) |
|
27 |
31 March 2022 |
|
99,333 |
|
33,926 |
|
17,713 |
|
12,442 |
|
463 |
|
163,877 |
Adoption of IAS 29 |
|
1,564 |
|
1,099 |
|
408 |
|
110 |
|
87 |
|
3,268 |
1 April 2022 brought forward |
|
100,897 |
|
35,025 |
|
18,121 |
|
12,552 |
|
550 |
|
167,145 |
Exchange movements |
|
(783) |
|
(1,270) |
|
(504) |
|
(240) |
|
(53) |
|
(2,850) |
Disposal of subsidiaries |
|
(3,939) |
|
(443) |
|
(348) |
|
(458) |
|
(4) |
|
(5,192) |
Additions |
|
– |
|
439 |
|
2,804 |
|
– |
|
7 |
|
3,250 |
Disposals |
|
– |
|
(2) |
|
(1,831) |
|
– |
|
(1) |
|
(1,834) |
Hyperinflation impacts |
|
729 |
|
557 |
|
232 |
|
51 |
|
40 |
|
1,609 |
31 March 2023 |
|
96,904 |
|
34,306 |
|
18,474 |
|
11,905 |
|
539 |
|
162,128 |
Accumulated impairment losses and amortisation |
|
|
|
|
|
|
|
|
|
|
|
|
1 April 2021 |
|
67,633 |
|
22,043 |
|
12,496 |
|
7,324 |
|
454 |
|
109,950 |
Exchange movements |
|
(184) |
|
(35) |
|
(72) |
|
70 |
|
1 |
|
(220) |
Amortisation charge for the year |
|
– |
|
1,306 |
|
2,225 |
|
509 |
|
4 |
|
4,044 |
Disposals |
|
– |
|
(351) |
|
(2,821) |
|
– |
|
(1) |
|
(3,173) |
Other |
|
– |
|
– |
|
39 |
|
– |
|
(7) |
|
32 |
31 March 2022 |
|
67,449 |
|
22,963 |
|
11,867 |
|
7,903 |
|
451 |
|
110,633 |
Adoption of IAS 29 |
|
1,564 |
|
829 |
|
390 |
|
110 |
|
87 |
|
2,980 |
1 April 2022 brought forward |
|
69,013 |
|
23,792 |
|
12,257 |
|
8,013 |
|
538 |
|
113,613 |
Exchange movements |
|
(414) |
|
(846) |
|
(351) |
|
(231) |
|
(50) |
|
(1,892) |
Disposal of subsidiaries |
|
(39) |
|
(147) |
|
(180) |
|
(80) |
|
(2) |
|
(448) |
Amortisation charge for the year |
|
– |
|
1,133 |
|
2,343 |
|
554 |
|
1 |
|
4,031 |
Disposals |
|
– |
|
(2) |
|
(1,814) |
|
– |
|
(1) |
|
(1,817) |
Hyperinflation impacts |
|
729 |
|
407 |
|
207 |
|
51 |
|
40 |
|
1,434 |
31 March 2023 |
|
69,289 |
|
24,337 |
|
12,462 |
|
8,307 |
|
526 |
|
114,921 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
|
|
|
|
|
|
31 March 2022 |
|
31,884 |
|
10,963 |
|
5,846 |
|
4,539 |
|
12 |
|
53,244 |
31 March 2023 |
|
27,615 |
|
9,969 |
|
6,012 |
|
3,598 |
|
13 |
|
47,207 |
For licences and spectrum fees and other intangible assets, amortisation is included within the cost of sales line within the consolidated income statement. Included in the net book value of computer software are assets in the course of construction, which are not depreciated, with a cost of €1,451 million (2022: €1,955 million).
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
10. Intangible assets (continued)
The net book value and expiry dates of the most significant licences are as follows:
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
|
Expiry dates |
|
€m |
|
€m |
Germany |
|
2025/2033/2040 |
|
2,979 |
|
3,270 |
Italy |
|
2029/2037 |
|
3,123 |
|
3,415 |
UK |
|
2023/2033/2038/2041 |
|
1,055 |
|
1,209 |
Spain |
|
2028/2030/2031/2038/2041 |
|
758 |
|
809 |
The remaining amortisation period for each of the licences in the table above corresponds to the expiry date of the respective licence. A summary of the Group’s most significant spectrum licences can be found on page 241.
11. Property, plant and equipment
The Group makes significant investments in network equipment and infrastructure – the base stations and technology required to operate our networks – that form the majority of our tangible assets. All assets are depreciated over their useful economic lives. For further details on the estimation of useful economic lives, see ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 ‘Basis of preparation ‘to the consolidated financial statements.
Accounting policies
Land and buildings held for use are stated in the statement of financial position at their cost, less any accumulated depreciation and any accumulated impairment losses.
Amounts for equipment, fixtures and fittings, which includes network infrastructure assets are stated at cost less accumulated depreciation and any accumulated impairment losses.
Assets in the course of construction are carried at cost, less any recognised impairment losses. Depreciation of these assets commences when the assets are ready for their intended use.
The cost of property, plant and equipment includes directly attributable incremental costs incurred in their acquisition and installation. Depreciation is charged so as to write off the cost of assets, other than land, using the straight-line method, over their estimated useful lives, as follows:
Land and buildings
|
|
|
Freehold buildings |
|
25 - 50 years |
Leasehold premises |
|
the term of the lease |
Equipment, fixtures and fittings
|
|
|
Network infrastructure and other |
|
1 - 35 years |
Depreciation is not provided on freehold land.
Right-of-use assets arising from the Group’s lease arrangements are depreciated over their reasonably certain lease term, as determined under the Group’s leases policy (see note 20 ‘Leases’ and ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 for details).
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
11. Property, plant and equipment (continued)
The gain or loss arising on the disposal, retirement or granting of a finance lease on an item of property, plant and equipment is determined as the difference between any proceeds from sale or receivables arising on a lease and the carrying amount of the asset and is recognised in the income statement.
|
|
|
|
|
|
|
|
|
|
|
Equipment, |
|
|
|
|
Land and |
|
fixtures |
|
|
|
|
buildings |
|
and fittings |
|
Total |
|
|
€m |
|
€m |
|
€m |
Cost |
|
|
|
|
|
|
1 April 2021 |
|
2,315 |
|
75,974 |
|
78,289 |
Exchange movements |
|
1 |
|
(265) |
|
(264) |
Arising on acquisition |
|
(74) |
|
44 |
|
(30) |
Additions |
|
41 |
|
5,845 |
|
5,886 |
Disposals |
|
(200) |
|
(2,280) |
|
(2,480) |
Other |
|
263 |
|
2 |
|
265 |
31 March 2022 as reported |
|
2,346 |
|
79,320 |
|
81,666 |
Adoption of IAS 29 |
|
15 |
|
1,776 |
|
1,791 |
1 April 2022 brought forward |
|
2,361 |
|
81,096 |
|
83,457 |
Exchange movements |
|
(81) |
|
(2,648) |
|
(2,729) |
Disposal of subsidiaries |
|
(69) |
|
(7,210) |
|
(7,279) |
Additions |
|
49 |
|
5,805 |
|
5,854 |
Disposals |
|
(253) |
|
(3,724) |
|
(3,977) |
Hyperinflation impacts |
|
7 |
|
1,040 |
|
1,047 |
Other |
|
(17) |
|
101 |
|
84 |
31 March 2023 |
|
1,997 |
|
74,460 |
|
76,457 |
|
|
|
|
|
|
|
Accumulated depreciation and impairment |
|
|
|
|
|
|
1 April 2021 |
|
1,216 |
|
48,403 |
|
49,619 |
Exchange movements |
|
3 |
|
(171) |
|
(168) |
Charge for the year |
|
117 |
|
5,740 |
|
5,857 |
Disposals |
|
(191) |
|
(2,240) |
|
(2,431) |
Other |
|
224 |
|
(223) |
|
1 |
31 March 2022 as reported |
|
1,369 |
|
51,509 |
|
52,878 |
Adoption of IAS 29 |
|
3 |
|
1,432 |
|
1,435 |
1 April 2022 brought forward |
|
1,372 |
|
52,941 |
|
54,313 |
Exchange movements |
|
(28) |
|
(1,694) |
|
(1,722) |
Disposal of subsidiaries |
|
(18) |
|
(4,543) |
|
(4,561) |
Charge for the year |
|
83 |
|
5,544 |
|
5,627 |
Disposals |
|
(170) |
|
(3,672) |
|
(3,842) |
Hyperinflation impacts |
|
1 |
|
747 |
|
748 |
31 March 2023 |
|
1,240 |
|
49,323 |
|
50,563 |
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
31 March 2022 |
|
977 |
|
27,811 |
|
28,788 |
31 March 2023 |
|
757 |
|
25,137 |
|
25,894 |
Included in the net book value of land and buildings and equipment, fixtures and fittings are assets in the course of construction, which are not depreciated, with a cost of €10 million (2022: €12 million) and €1,988 million (2022: €2,353 million) respectively. Also included in the book value of equipment, fixtures and fittings are assets leased out by the Group under operating leases, with a cost of €2,170 million (2022: €2,998 million), accumulated depreciation of €1,393 million (2022: €2,050 million) and net book value of €777 million (2022: €948 million).
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
11. Property, plant and equipment (continued)
Right-of-use assets arising from the Group’s lease arrangements are recorded within property, plant and equipment:
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
Property, plant and equipment (owned assets) |
|
25,894 |
|
28,788 |
Right-of-use assets1 |
|
12,098 |
|
12,016 |
31 March |
|
37,992 |
|
40,804 |
Note:
1 |
Additions of €7,387 million (2022: €3,828 million) and a depreciation charge of €3,960 million (2022: €3,944 million) were recorded in respect of right-of-use assets during the year to 31 March 2023. |
12. Investments in associates and joint arrangements
The Group holds interests in associates in Kenya and in India, where we have significant influence, as well as in a number of joint arrangements, notably in the Netherlands, India, Australia and now Oak Holdings 1 GmbH and its markets, where we share control with one or more third parties. For further details see ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 ‘Basis of preparation ‘to the consolidated financial statements.
Accounting policies
Interests in joint arrangements
A joint arrangement is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control; that is, when the relevant activities that significantly affect the investee’s returns require the unanimous consent of the parties sharing control. Joint arrangements are either joint operations or joint ventures.
Gains or losses resulting from the contribution or sale of a subsidiary as part of the formation of a joint arrangement are recognised in respect of the Group’s entire equity holding in the subsidiary.
Joint operations
A joint operation is a joint arrangement whereby the parties that have joint control have the rights to the assets, and obligations for the liabilities, relating to the arrangement or that other facts and circumstances indicate that this is the case. The Group’s share of assets, liabilities, revenue, expenses and cash flows are combined with the equivalent items in the financial statements on a line-by-line basis.
Any goodwill arising on the acquisition of the Group’s interest in a joint operation is accounted for in accordance with the Group’s accounting policy for goodwill arising on the acquisition of a subsidiary.
Joint ventures
A joint venture is a joint arrangement whereby the parties that have joint control have the rights to the net assets of the arrangement.
At the date of acquisition, any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the joint venture is recognised as goodwill. The goodwill is included within the carrying amount of the investment.
The results and assets and liabilities of joint ventures, other than those joint ventures or part thereof that are held for sale (see note 7 ‘Discontinued operations and assets held for sale’), are incorporated in the consolidated financial statements using the equity method of accounting. Under the equity method, investments in joint ventures are carried in the consolidated statement of financial position at cost adjusted for post-acquisition changes in the Group’s share of the net assets of the joint venture, less any impairment in the value of the investment. The Group’s share of post-tax profits or losses are recognised in the consolidated income statement. Losses of a joint venture in excess of the Group’s interest in that joint venture are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the joint venture.
Associates
An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint arrangement.
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
12. Investments in associates and joint arrangements (continued)
Significant influence is the power to participate in the financial and operating policy decisions of the investee but where the Group does not have control or joint control over those policies.
At the date of acquisition, any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate is recognised as goodwill. The goodwill is included within the carrying amount of the investment.
The results and assets and liabilities of associates are incorporated in the consolidated financial statements using the same equity method of accounting used for joint ventures, described above.
Joint operations
On 22 March 2023, the Group completed the disposal of its principal joint operation as part of the transaction with Oak Holdings 1 GmbH. The financial and operating activities of the operation were jointly controlled by the participating shareholders and were primarily designed for all but an insignificant amount of the output to be consumed by the shareholders.
|
|
|
|
Country of |
|
Percentage |
|
Percentage |
|
|
|
|
incorporation or |
|
shareholdings1 |
|
shareholdings1 |
Name of joint operation |
|
Principal activity |
|
registration |
|
2023 |
|
2022 |
Cornerstone Telecommunications Infrastructure Limited |
|
Network infrastructure |
|
UK |
|
– |
|
50.0 |
Note:
1 | Effective ownership percentages of Vodafone Group Plc are rounded to the nearest tenth of one percent. |
Joint ventures and associates
|
|
|
|
|
|
|
2023 |
|
2022 |
|
|
|
|
Re-presented1 |
|
|
€m |
|
€m |
Investments in joint ventures |
|
9,578 |
|
3,781 |
Investments in associates |
|
1,501 |
|
1,542 |
31 March |
|
11,079 |
|
5,323 |
Note:
1 |
The results for the year ended 31 March 2022 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. In the year ended 31 March 2022, investments in associates have increased by €1,055 million compared to the amount previously reported. See note 7 ‘Discontinued operations and assets held for sale’ for more information. |
Joint ventures
The financial and operating activities of the Group’s joint ventures are jointly controlled by the participating shareholders. The participating shareholders have rights to the net assets of the joint ventures through their equity shareholdings. Unless otherwise stated, the Company’s principal joint ventures all have share capital consisting solely of ordinary shares and are all indirectly held. The country of incorporation or registration of all joint ventures is also their principal place of operation.
|
|
|
|
Country of |
|
Percentage |
|
Percentage |
|
|
|
|
incorporation or |
|
shareholdings1 |
|
shareholdings1 |
Name of joint venture |
|
Principal activity |
|
registration |
|
2023 |
|
2022 |
Oak Holdings 1 GmbH |
|
Network infrastructure |
|
Germany |
|
64.2 |
|
– |
VodafoneZiggo Group Holding B.V. |
|
Network operator |
|
Netherlands |
|
50.0 |
|
50.0 |
OXG Glasfaser GmbH |
|
Fibre infrastructure |
|
Germany |
|
50.0 |
|
– |
Vodafone Idea Limited2 |
|
Network operator |
|
India |
|
32.3 |
|
47.6 |
TPG Telecom Limited3 |
|
Network operator |
|
Australia |
|
25.1 |
|
25.1 |
INWIT S.p.A. |
|
Network infrastructure |
|
Italy |
|
– |
|
33.2 |
Notes:
1 | Effective ownership percentages of Vodafone Group Plc rounded to the nearest tenth of one percent. |
2 | At 31 March 2023 the fair value of the Group’s interest in Vodafone Idea Limited was INR 91 billion (€1,021 million) (2022: INR 148 billion (€1,750 million)) based on the quoted share price on the National Stock Exchange of India. |
3 | At 31 March 2023 the fair value of the Group’s interest in TPG Telecom Limited was AUD 2,273 million (€1,401 million) (2022: AUD 2,818 million (€1,902 million)) based on the quoted share price on ASX. |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
12. Investments in associates and joint arrangements (continued)
Oak Holdings 1 GmbH
On 22 March 2023, the Group completed the disposal of its interest in Vantage Towers A.G. to Oak Holdings 1 GmbH, the co-control partnership of Vodafone, GIP and KKR. Vodafone retained an interest of 64.2% in Oak Holdings 1 GmbH, which owns 89.3% of Vantage Towers A.G. On 18 April 2023, the Management Board and the Supervisory Board of Vantage Towers A.G. published their joint reasoned statement on the public delisting tender offer of Oak Holdings 1 GmbH to the shareholders of Vantage Towers A.G. Both recommended that all remaining shareholders accept the delisting tender offer.
OXG Glasfaser GmbH
In March 2023, the Group entered into an agreement with Altice Luxembourg S.A. to create a joint venture, OXG Glasfaser GmbH (‘OXG’), with 50.0% shareholding held by each shareholder. Each shareholder is committed to contribute funding of up to €950 million to OXG for the deployment of fibre-to-the-home in Germany. The funding is expected to be contributed between 2023 and 2029. The amount and timing of the funding depends on the speed and size of the fibre deployment so the funding may be for a lower value or contributed over a longer period of time. The contribution can be in the form of free capital reserves, shareholder loan, loan notes or similar instruments as agreed by the shareholders.
Vodafone Idea Limited
The Group’s carrying value in Vodafone Idea Limited (‘VIL’) reduced to €nil at 30 September 2019. The Group’s share of VIL’s losses not recognised at 31 March 2023 is €3,717 million (31 March 2022: €5,120 million). Significant uncertainties exist in relation to VIL’s ability to generate the cash flow it requires to settle or its ability to refinance its liabilities and guarantees as they fall due (see note 29 ‘Contingent liabilities and legal proceedings’).
The value of the Group’s 21.0% shareholding in Indus Towers Limited is, in part, dependent on the income generated by Indus Towers Limited from tower rentals to major customers, including VIL. Any inability of these major customers to pay such amounts in the future may impact the carrying value (31 March 2023: €908 million) of the Group’s investment in Indus Towers Limited.
TPG Telecom Limited
TPG Telecom Limited is listed on the Australian Securities Exchange (‘ASX’). Vodafone and Hutchison Telecommunications (Australia) Limited each own an economic interest of 25.05%, with the remaining 49.9% listed as free float on the ASX. The financial information presented in the tables below includes debt held within the structure that holds the Group’s interest in TPG.
INWIT S.p.A.
On 22 March 2023, the Group completed the disposal of its 33.2% interest in INWIT S.p.A. as part of the transaction with Oak Holdings 1 GmbH.
Dividends received from joint ventures
During the year ended 31 March 2023, the Group received dividends included in the consolidated statement of cash flows from VodafoneZiggo Group Holding B.V. of €165 million (2022: €350 million, 2021: €209 million), TPG Telecom Limited of €24 million (2022: €22 million, 2021: €nil) and INWIT S.p.A. of €103 million (2022: €96 million, 2021: €42 million).
Aggregated financial information
The table below provides aggregated financial information for the Group’s joint ventures as it relates to the amounts recognised in the income statement and consolidated statement of financial position.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) from |
||||
|
|
Investment in joint ventures |
continuing operations1 |
|||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Oak Holdings 1 GmbH |
|
8,634 |
|
– |
|
– |
|
– |
|
– |
VodafoneZiggo Group Holding B.V. |
|
793 |
|
822 |
|
137 |
|
(19) |
|
(232) |
TPG Telecom Limited |
|
108 |
|
84 |
|
48 |
|
(5) |
|
98 |
INWIT S.p.A. |
|
– |
|
2,851 |
|
30 |
|
27 |
|
3 |
Other |
|
43 |
|
24 |
|
(15) |
|
(14) |
|
(15) |
Total |
|
9,578 |
|
3,781 |
|
200 |
|
(11) |
|
(146) |
Note:
1 |
Total Other comprehensive income/(expense) is not materially different to profit/(loss) from continuing operations. |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
12. Investments in associates and joint arrangements (continued)
Summarised financial information
Summarised financial information for each of the Group’s material joint ventures on a 100% ownership basis is set out below and overleaf.
As disclosed above, the Group’s investment in VIL was reduced to €nil in the year ended 31 March 2020 and the Group has not recorded any profit or loss in respect of its share of VIL’s results since that date.
Financial information is presented for TPG Telecom Limited (‘TPG’) for the nine month period to, and as at 31 December 2022 on the basis that full-year information in relation to TPG has not been released at the date of approval of these financial statements and as such is market sensitive for TPG.
Financial information presented for INWIT S.p.A. for the years to 31 March 2023, 31 March 2022 and 31 March 2021 is based on the financial results and financial position as at 31 December 2022, 31 December 2021 and 31 December 2020, respectively, being the latest financial information available to the Group when completing the financial statements for each year.
|
VodafoneZiggo Group Holding B.V. |
|
Vodafone Idea Limited |
|||||||||
|
|
2023 |
|
2022 |
|
2021 |
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Income statement |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
4,063 |
|
4,056 |
|
4,010 |
|
5,046 |
|
4,450 |
|
4,847 |
Operating expenses |
|
(2,124) |
|
(2,104) |
|
(2,058) |
|
(3,280) |
|
(2,802) |
|
(3,133) |
Depreciation and amortisation |
|
(1,527) |
|
(1,592) |
|
(1,658) |
|
(2,396) |
|
(2,390) |
|
(2,442) |
Other income |
|
– |
|
– |
|
25 |
|
– |
|
(34) |
|
(2,135) |
Operating profit/(loss) |
|
412 |
|
360 |
|
319 |
|
(630) |
|
(776) |
|
(2,863) |
Interest income |
|
– |
|
– |
|
– |
|
9 |
|
14 |
|
32 |
Interest expense |
|
11 |
|
(276) |
|
(658) |
|
(2,567) |
|
(2,297) |
|
(2,035) |
Profit/(loss) before tax |
|
423 |
|
84 |
|
(339) |
|
(3,188) |
|
(3,059) |
|
(4,866) |
Income tax (expense)/credit |
|
(150) |
|
(121) |
|
(125) |
|
– |
|
2 |
|
– |
Profit/(loss) from continuing operations1 |
|
273 |
|
(37) |
|
(464) |
|
(3,188) |
|
(3,057) |
|
(4,866) |
|
|
TPG Telecom Limited |
|
INWIT S.p.A. |
||||||||
|
|
2023 |
|
2022 |
|
2021 |
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Income statement |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
3,027 |
|
3,375 |
|
3,010 |
|
853 |
|
785 |
|
562 |
Operating expenses |
|
(1,870) |
|
(2,292) |
|
(2,096) |
|
(73) |
|
(70) |
|
(46) |
Depreciation and amortisation |
|
(700) |
|
(914) |
|
(769) |
|
(508) |
|
(513) |
|
(398) |
Operating profit |
|
457 |
|
169 |
|
145 |
|
272 |
|
202 |
|
118 |
Interest income |
|
– |
|
– |
|
1 |
|
– |
|
– |
|
– |
Interest expense |
|
(172) |
|
(122) |
|
(201) |
|
(81) |
|
(90) |
|
(101) |
Profit/(loss) before tax |
|
285 |
|
47 |
|
(55) |
|
191 |
|
112 |
|
17 |
Income tax (expense)/credit |
|
(25) |
|
(27) |
|
495 |
|
(1) |
|
(30) |
|
(7) |
Profit from continuing operations1 |
|
260 |
|
20 |
|
440 |
|
190 |
|
82 |
|
10 |
Note:
1 | Total Other comprehensive income/(expense) is not materially different to profit/(loss) from continuing operations. |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
12. Investments in associates and joint arrangements (continued)
|
|
Oak Holdings 1 |
|
|||
|
|
GmbH1 |
|
VodafoneZiggo Group Holding B.V. |
||
|
|
2023 |
|
2023 |
|
2022 |
|
|
€m |
|
€m |
|
€m |
Statement of financial position |
|
|
|
|
|
|
Non-current assets |
|
23,878 |
|
16,570 |
|
16,521 |
Current assets |
|
749 |
|
719 |
|
739 |
Total assets |
|
24,627 |
|
17,289 |
|
17,260 |
Equity shareholders’ funds |
|
13,450 |
|
1,586 |
|
1,643 |
Non-controlling interests |
|
1,262 |
|
– |
|
– |
Non-current liabilities |
|
6,709 |
|
13,299 |
|
13,187 |
Current liabilities |
|
3,206 |
|
2,404 |
|
2,430 |
Cash and cash equivalents within current assets |
|
224 |
|
20 |
|
190 |
Non-current liabilities excluding trade and other payables and provisions |
|
6,215 |
|
13,138 |
|
13,007 |
Current liabilities excluding trade and other payables and provisions |
|
2,409 |
|
1,247 |
|
1,282 |
|
|
Vodafone Idea Limited2 |
|
TPG Telecom Limited |
||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
€m |
|
€m |
|
€m |
|
€m |
Statement of financial position |
|
|
|
|
|
|
|
|
Non-current assets |
|
18,162 |
|
17,267 |
|
9,823 |
|
10,638 |
Current assets |
|
2,174 |
|
2,693 |
|
1,009 |
|
898 |
Total assets |
|
20,336 |
|
19,960 |
|
10,832 |
|
11,536 |
Equity shareholders’ (deficit)/funds |
|
(10,760) |
|
(10,214) |
|
3,019 |
|
3,129 |
Non-current liabilities |
|
24,730 |
|
23,266 |
|
6,702 |
|
7,227 |
Current liabilities |
|
6,366 |
|
6,908 |
|
1,111 |
|
1,180 |
Cash and cash equivalents within current assets |
|
96 |
|
365 |
|
290 |
|
435 |
Non-current liabilities excluding trade and other payables and provisions |
|
24,707 |
|
23,241 |
|
6,595 |
|
7,173 |
Current liabilities excluding trade and other payables and provisions |
|
2,699 |
|
3,334 |
|
86 |
|
121 |
|
|
INWIT S.p.A. |
|
|
2022 |
|
|
€m |
Statement of financial position |
|
|
Non-current assets |
|
14,532 |
Current assets |
|
270 |
Total assets |
|
14,802 |
Equity shareholders’ funds |
|
8,595 |
Non-current liabilities |
|
5,672 |
Current liabilities |
|
535 |
Cash and cash equivalents within current assets |
|
96 |
Non-current liabilities excluding trade and other payables and provisions |
|
5,420 |
Current liabilities excluding trade and other payables and provisions |
|
319 |
Notes:
1 | Includes balances which are provisional based on finalisation of the purchase price allocation. |
2 | Includes certain amounts subject to an adjustment mechanism agreed as part of the formation of Vodafone Idea Limited. See note 29 ‘Contingent liabilities and legal proceedings’. |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
12. Investments in associates and joint arrangements (continued)
The reconciliation of summarised financial information presented to the carrying amount of our interest in joint ventures is set out below.
|
|
Oak Holdings 1 |
|
|
||||
|
|
GmbH |
|
VodafoneZiggo Group Holding B.V. |
||||
|
|
2023 |
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
|
€m |
Equity shareholders’ funds |
|
13,450 |
|
1,586 |
|
1,643 |
|
|
Interest in joint ventures1 |
|
8,634 |
|
793 |
|
822 |
|
|
Carrying value |
|
8,634 |
|
793 |
|
822 |
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) from continuing operations |
|
– |
|
273 |
|
(37) |
|
(464) |
Share of profit/(loss)1 |
|
– |
|
137 |
|
(19) |
|
(232) |
|
|
Vodafone Idea Limited |
|
TPG Telecom Limited |
||||||||
|
|
2023 |
|
2022 |
|
2021 |
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Equity shareholders’ (deficit)/funds |
|
(10,760) |
|
(10,214) |
|
|
|
3,019 |
|
3,129 |
|
|
Interest in joint ventures1 |
|
(3,475) |
|
(4,863) |
|
|
|
56 |
|
27 |
|
|
Impairment |
|
(242) |
|
(257) |
|
|
|
– |
|
– |
|
|
Goodwill |
|
– |
|
– |
|
|
|
52 |
|
57 |
|
|
Investment proportion not recognised |
|
3,717 |
|
5,120 |
|
|
|
– |
|
– |
|
|
Carrying value |
|
– |
|
– |
|
|
|
108 |
|
84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/profit from continuing operations |
|
(3,188) |
|
(3,057) |
|
(4,866) |
|
260 |
|
20 |
|
440 |
Share of (loss)/profit1 |
|
(1,030) |
|
(1,357) |
|
(2,160) |
|
48 |
|
(5) |
|
98 |
Share of loss not recognised |
|
1,030 |
|
1,357 |
|
2,160 |
|
– |
|
– |
|
– |
Share of profit/(loss)1 |
|
– |
|
– |
|
– |
|
48 |
|
(5) |
|
98 |
|
|
INWIT S.p.A. |
||||
|
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
Equity shareholders’ funds |
|
— |
|
8,595 |
|
8,801 |
Interest in joint ventures |
|
— |
|
2,851 |
|
2,920 |
Carrying value |
|
— |
|
2,851 |
|
2,920 |
|
|
|
|
|
|
|
Profit from continuing operations |
|
190 |
|
82 |
|
10 |
Share of profit |
|
63 |
|
27 |
|
3 |
Share of profit not recognised as held for sale |
|
(33) |
|
— |
|
— |
Share of profit |
|
30 |
|
27 |
|
3 |
Note:
1 | The Group’s effective ownership percentages of Oak Holdings 1 GmbH, VodafoneZiggo Group Holding B.V., Vodafone Idea Limited and TPG Telecom Limited are 64.2%, 50.0%, 32.3% and 25.1%, respectively, rounded to the nearest tenth of one percent. |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
12. Investments in associates and joint arrangements (continued)
Associates
Unless otherwise stated, the Company’s principal associates all have share capital consisting solely of ordinary shares and are all indirectly held. The country of incorporation or registration of all associates is also their principal place of operation.
|
|
|
|
Country of |
|
Percentage |
|
Percentage |
|
|
|
|
incorporation or |
|
shareholding1 |
|
shareholding1 |
Name of associate |
|
Principal activity |
|
registration |
|
2023 |
|
2022 |
Safaricom PLC2 |
|
Network operator |
|
Kenya |
|
39.9 |
|
40.0 |
Indus Towers Limited3 |
|
Network infrastructure |
|
India |
|
21.0 |
|
21.0 |
Notes:
1 | Effective ownership percentages of Vodafone Group Plc rounded to the nearest tenth of one percent. |
2 | At 31 March 2023, the fair value of the Group’s interest in Safaricom PLC was KES 290 billion (€2,012 million) (2022: KES 546 billion (€4,270 million)) based on the closing quoted share price on the Nairobi Stock Exchange. The Group also holds two non-voting shares. |
3 | At 31 March 2023, the fair value of the Group’s interest in Indus Towers Limited was INR 81 billion (€908 million) (2022: INR 126 billion (€1,494 million)) based on the closing quoted share price on the National Stock Exchange of India. |
Aggregated financial information
The table below provides aggregated financial information for the Group’s associates as it relates to the amounts recognised in the income statement and consolidated statement of financial position.
|
|
Investment in associates |
|
Profit/(loss) from continuing operations |
||||||
|
|
|
|
Re-presented1 |
|
|
|
Re-presented1 |
|
Re-presented1 |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Safaricom PLC2 |
|
509 |
|
428 |
|
195 |
|
217 |
|
217 |
Indus Towers Limited |
|
908 |
|
1,055 |
|
50 |
|
178 |
|
306 |
Other2 |
|
84 |
|
59 |
|
(12) |
|
5 |
|
(3) |
Total |
|
1,501 |
|
1,542 |
|
233 |
|
400 |
|
520 |
Notes:
1 |
The results for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. In the year ended 31 March 2022, investments in associates has increased by €1,055 million and profit from continuing operations has increased by €178 million (2021: €32 million) compared to the amounts previously reported. See note 7 ‘Discontinued operations and assets held for sale’ for more information. |
2 |
Other comprehensive income includes profit from continuing operations, together with €127 million in respect of the application of IAS 29 to Safaricom’s operations in Ethiopia. |
Dividends from associates
During the year ended 31 March 2023, the Group received dividends included in the consolidated statement of cash flows from Indus Towers Limited of €75 million (2022: €nil, 2021: €201 million) and from Safaricom PLC of €250 million (2022: €170 million, 2021: €171 million).
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
12. Investments in associates and joint arrangements (continued)
Summarised financial information
Summarised financial information for each of the Group’s material associates on a 100% ownership basis is set out below.
|
|
Safaricom PLC |
|
Indus Towers Limited |
||||||||
|
|
2023 |
|
2022 |
|
2021 |
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Income statement |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
2,468 |
|
2,318 |
|
2,083 |
|
3,343 |
|
3,122 |
|
2,421 |
Operating expenses |
|
(1,353) |
|
(1,164) |
|
(1,030) |
|
(2,240) |
|
(1,480) |
|
(1,247) |
Depreciation and amortisation |
|
(432) |
|
(309) |
|
(299) |
|
(588) |
|
(598) |
|
(477) |
Other income |
|
68 |
|
– |
|
– |
|
– |
|
– |
|
412 |
Operating profit |
|
751 |
|
845 |
|
754 |
|
515 |
|
1,044 |
|
1,109 |
Interest income |
|
13 |
|
9 |
|
12 |
|
26 |
|
– |
|
61 |
Interest expense |
|
(69) |
|
(59) |
|
(27) |
|
(200) |
|
(140) |
|
(194) |
Profit before tax |
|
695 |
|
795 |
|
739 |
|
341 |
|
904 |
|
976 |
Income tax expense |
|
(285) |
|
(270) |
|
(197) |
|
(102) |
|
(272) |
|
(168) |
Profit from continuing operations and total comprehensive income |
|
410 |
|
525 |
|
542 |
|
239 |
|
632 |
|
808 |
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
- Owners of the parent |
|
489 |
|
542 |
|
542 |
|
239 |
|
632 |
|
808 |
- Non-controlling interests |
|
(79) |
|
(17) |
|
– |
|
– |
|
– |
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of financial position |
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets |
|
3,007 |
|
2,173 |
|
|
|
5,243 |
|
5,359 |
|
|
Current assets |
|
436 |
|
510 |
|
|
|
1,081 |
|
1,685 |
|
|
Total assets |
|
3,443 |
|
2,683 |
|
|
|
6,324 |
|
7,044 |
|
|
Equity shareholders' funds |
|
1,269 |
|
1,066 |
|
|
|
3,453 |
|
3,774 |
|
|
Non-controlling interests |
|
532 |
|
312 |
|
|
|
– |
|
– |
|
|
Non-current liabilities |
|
753 |
|
558 |
|
|
|
1,954 |
|
2,101 |
|
|
Current liabilities |
|
889 |
|
747 |
|
|
|
917 |
|
1,169 |
|
|
Cash and cash equivalents within current assets |
|
127 |
|
241 |
|
|
|
3 |
|
278 |
|
|
Non-current liabilities excluding trade and other payables and provisions |
|
500 |
|
465 |
|
|
|
1,665 |
|
1,795 |
|
|
Current liabilities excluding trade and other payables and provisions |
|
322 |
|
241 |
|
|
|
491 |
|
638 |
|
|
The reconciliation of summarised financial information presented to the carrying amount of our interest in the associate is set out below.
|
|
Safaricom PLC |
|
Indus Towers Limited |
||||||||
|
|
|
|
|
|
|
|
|
|
Re-presented1 |
|
Re-presented1 |
|
|
2023 |
|
2022 |
|
2021 |
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Equity shareholders' funds |
|
1,269 |
|
1,066 |
|
|
|
3,453 |
|
3,774 |
|
|
Interest in associates2 |
|
507 |
|
425 |
|
|
|
727 |
|
794 |
|
|
Goodwill |
|
2 |
|
3 |
|
|
|
181 |
|
261 |
|
|
Carrying value |
|
509 |
|
428 |
|
|
|
908 |
|
1,055 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit from continuing operations |
|
489 |
|
542 |
|
542 |
|
239 |
|
632 |
|
808 |
Share of profit |
|
195 |
|
217 |
|
217 |
|
50 |
|
178 |
|
306 |
Notes:
1 | The results for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. In the year ended 31 March 2022, the carrying value of the Group’s interest in the associate has increased by €1,055 million and the Group’s share of profit has increased by €178 million (2021: €32 million) compared to the amounts previously reported. See note 7 ‘Discontinued operations and assets held for sale’ for more information. |
2 | The Group’s effective ownership percentages of Safaricom PLC and Indus Towers Limited are 39.9% and 21.0%, respectively, rounded to the nearest tenth of one percent. |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
13. Other investments
The Group holds a number of other listed and unlisted investments, mainly comprising managed funds, deposits and government bonds.
Accounting policies
Other investments comprising debt and equity instruments are recognised and derecognised on a trade date where a purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, including transaction costs.
Debt securities that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost using the effective interest method, less any impairment. Debt securities that do not meet the criteria for amortised cost are measured at fair value through profit and loss.
Equity securities are classified and measured at fair value through other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss following derecognition of the investment.
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
Included within non-current assets |
|
|
|
|
Equity securities1 |
|
94 |
|
143 |
Debt securities2 |
|
999 |
|
930 |
|
|
1,093 |
|
1,073 |
Included within current assets |
|
|
|
|
Short-term investments: |
|
|
|
|
Bonds and debt securities3 |
|
1,338 |
|
1,446 |
Managed investment funds1 |
|
2,967 |
|
3,349 |
|
|
4,305 |
|
4,795 |
Collateral assets4 |
|
239 |
|
698 |
Other investments5 |
|
2,473 |
|
2,438 |
|
|
7,017 |
|
7,931 |
Notes:
1 |
Items measured at a fair value, €47 million (2022: €91 million) of equity securities have a valuation basis of level 1 classification, which comprises financial instruments where fair value is determined by unadjusted quoted prices in active markets for identical assets and liabilities. The remaining items are measured at fair value and the basis is level 2 classification, which comprises items where fair value is determined from inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. |
2 |
Items are measured at amortised cost and have a fair value of €803 million (2022: €830 million) with a valuation basis of level 1 classification. |
3 |
Items are measured at fair value and the valuation basis is level 1 classification. |
4 |
Items are measured at amortised cost and the carrying amount approximates fair value. |
5 |
Includes investments measured at a fair value of €1,409 million (2022: €1,460 million). The valuation basis is level 1. The remaining items are measured at amortised cost and the carrying amount approximates fair value. |
Non-current debt securities within non-current assets include €885 million (2022: €885 million) of loan notes issued by VodafoneZiggo Holding B.V.
The Group invests surplus cash positions across a portfolio of short-term investments to manage liquidity and credit risk whilst achieving suitable returns. Collateral arrangements on derivative financial instruments result in cash being paid/(held), repayable when the derivatives are settled. These assets do not meet the definition of cash and cash equivalents but are included in the Group’s net debt based on their liquidity.
Bonds and debt securities includes €899 million(2022: €681 million) of highly liquid Japanese; €290 million (2022: €nil) Dutch; €150 million (2022: €nil) German; €nil (2022: €501 million) Belgian; €nil (2022: €200 million) French government securities and €nil (2022: €64 million) of UK government bonds.
Managed investment funds of €2,967 million (2022: €3,349 million) are in funds with liquidity of up to 90 days.
Collateral assets of €239 million (2022: €698 million) represents collateral paid on derivative financial instruments.
Other investments are excluded from net debt based on their liquidity and primarily consist of restricted debt securities including amounts held in qualifying assets by Group insurance companies to meet regulatory requirements.
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
14. Trade and other receivables
Trade and other receivables mainly consist of amounts owed to us by customers and amounts that we pay to our suppliers in advance. Derivative financial instruments with a positive market value are reported within this note as are contract assets, which represent an asset for accrued revenue in respect of goods or services delivered to customers for which a trade receivable does not yet exist, and finance lease receivables recognised where the Group acts as a lessor. See note 20 ‘Leases’ for more information on the Group’s leasing activities.
Accounting policies
Trade receivables represent amounts owed by customers where the right to receive payment is conditional only on the passage of time. Trade receivables that are recovered in instalments from customers over an extended period are discounted at market rates and interest revenue is accreted over the expected repayment period. Other trade receivables do not carry any interest and are stated at their nominal value. When the Group establishes a practice of selling portfolios of receivables from time to time these portfolios are recorded at fair value through other comprehensive income; all other trade receivables are recorded at amortised cost.
The carrying value of all trade receivables, contract assets and finance lease receivables recorded at amortised cost is reduced by allowances for lifetime estimated credit losses. Estimated future credit losses are first recorded on the initial recognition of a receivable and are based on the ageing of the receivable balances, historical experience and forward looking considerations. Individual balances are written off when management deems them not to be collectible.
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
Included within non-current assets |
|
|
|
|
Trade receivables |
|
51 |
|
34 |
Trade receivables held at fair value through other comprehensive income |
|
337 |
|
606 |
Net investment in leases |
|
267 |
|
134 |
Contract assets |
|
494 |
|
495 |
Contract-related costs |
|
690 |
|
630 |
Other receivables |
|
66 |
|
37 |
Prepayments |
|
296 |
|
231 |
Derivative financial instruments1 |
|
5,642 |
|
4,216 |
|
|
7,843 |
|
6,383 |
Included within current assets |
|
|
|
|
Trade receivables |
|
3,277 |
|
3,300 |
Trade receivables held at fair value through other comprehensive income |
|
566 |
|
802 |
Net investment in leases |
|
106 |
|
66 |
Contract assets |
|
3,063 |
|
3,056 |
Contract-related costs |
|
1,471 |
|
1,403 |
Amounts owed by associates and joint ventures |
|
175 |
|
241 |
Other receivables |
|
730 |
|
869 |
Prepayments |
|
835 |
|
872 |
Derivative financial instruments1 |
|
482 |
|
410 |
|
|
10,705 |
|
11,019 |
Note:
1 |
Includes €198 million (2022: €3 million) of embedded derivative option for which fair value is based on level 3 of the fair value hierarchy (see section on fair value carrying value information within note 22 ‘Capital and Risk Management’). All other items are measured at fair value and the valuation basis is level 2 classification, which comprises items where fair value is determined from inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. |
The Group’s trade receivables and contract assets are classified at amortised cost unless stated otherwise and are measured after allowances for future expected credit losses, see note 22 ‘Capital and financial risk management’ for more information on credit risk.
The carrying amounts of trade and other receivables, which are measured at amortised cost, approximate their fair value and are predominantly non-interest bearing.
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
14. Trade and other receivables (continued)
The Group’s contract-related costs comprise €2,078 million (2022: €1,967 million) relating to costs incurred to obtain customer contracts and €83 million (2022: €66 million) relating to costs incurred to fulfil customer contracts; an amortisation and impairment expense of €1,541 million (2022: €1,517 million) was recognised in operating profit during the year.
Other than for the embedded derivative option described above, the fair values of the derivative financial instruments are calculated by discounting the future cash flows to net present values using appropriate market interest rates and foreign currency rates prevailing at 31 March.
15. Trade and other payables
Trade and other payables mainly consist of amounts owed to suppliers that have been invoiced or are accrued and contract liabilities relating to consideration received from customers in advance. They also include taxes and social security amounts due in relation to the Group’s role as an employer. Derivative financial instruments with a negative market value are reported within this note.
Accounting policies
Trade payables are not interest-bearing and are stated at their nominal value.
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
Included within non-current liabilities |
|
|
|
|
Other payables |
|
520 |
|
452 |
Accruals |
|
48 |
|
28 |
Contract liabilities |
|
500 |
|
530 |
Derivative financial instruments1 |
|
1,116 |
|
1,506 |
|
|
2,184 |
|
2,516 |
Included within current liabilities |
|
|
|
|
Trade payables |
|
7,662 |
|
7,327 |
Amounts owed to associates and joint ventures |
|
329 |
|
40 |
Other taxes and social security payable |
|
1,013 |
|
1,114 |
Other payables |
|
2,080 |
|
2,032 |
Accruals2 |
|
4,814 |
|
6,991 |
Contract liabilities |
|
2,043 |
|
1,991 |
Derivative financial instruments1 |
|
306 |
|
166 |
|
|
18,247 |
|
19,661 |
Notes:
1 |
Items are measured at fair value and the valuation basis is level 2 classification, which comprises items where fair value is determined from inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. |
2 |
Includes €nil (2022: €1,434 million) payable in relation to the irrevocable and non-discretionary share buyback programmes. |
The carrying amounts of trade and other payables approximate their fair value.
Materially all of the €1,991 million recorded as current contract liabilities at 1 April 2022 was recognised as revenue during the year.
Other payables included within non-current liabilities include €257 million (2022: €351 million) in respect of the re-insurance of a third party annuity policy related to the Vodafone and CWW Sections of the Vodafone UK Group Pension Scheme.
The fair values of the derivative financial instruments are calculated by discounting the future cash flows to net present values using appropriate market interest rates and foreign currency rates prevailing at 31 March.
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
16. Provisions
A provision is a liability recorded in the statement of financial position, where there is uncertainty over the timing or amount that will be paid, and is therefore often estimated. The main provisions we hold are in relation to asset retirement obligations, which include the cost of returning network infrastructure sites to their original condition at the end of the lease and claims for legal and regulatory matters.
Accounting policies
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the reporting date and are discounted to present value where the effect is material. Where the timing of settlement is uncertain amounts are classified as non-current where settlement is expected more than 12 months from the reporting date.
Asset retirement obligations
In the course of the Group’s activities, a number of sites and other assets are utilised which are expected to have costs associated with decommissioning. The associated cash outflows are substantially expected to occur at the dates of decommissioning of the assets to which they relate, and are long term in nature.
Legal and regulatory
The Group is involved in a number of legal and other disputes, including where the Group has received notifications of possible claims. The Directors of the Company, after taking legal advice, have established provisions considering the facts of each case. For a discussion of certain legal issues potentially affecting the Group see note 29 ‘Contingent liabilities and legal proceedings’ to the consolidated financial statements.
Restructuring
The Group undertakes periodic reviews of its operations and recognises provisions as required based on the outcomes of these reviews. The associated cash outflows for restructuring costs are primarily less than one year.
Other provisions
Other provisions comprise various items that do not fall within the Group’s other categories of provisions.
|
|
Asset |
|
|
|
|
|
|
|
|
|
|
retirement |
|
Legal and |
|
|
|
|
|
|
|
|
obligations |
|
regulatory |
|
Restructuring |
|
Other |
|
Total |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
1 April 2021 |
|
1,222 |
|
528 |
|
426 |
|
463 |
|
2,639 |
Exchange movements |
|
3 |
|
(25) |
|
(4) |
|
5 |
|
(21) |
Amounts capitalised in the year |
|
297 |
|
– |
|
– |
|
– |
|
297 |
Amounts charged to the income statement |
|
– |
|
216 |
|
216 |
|
139 |
|
571 |
Utilised in the year − payments |
|
(51) |
|
(128) |
|
(295) |
|
(197) |
|
(671) |
Amounts released to the income statement |
|
(1) |
|
(142) |
|
(41) |
|
(83) |
|
(267) |
31 March 2022 |
|
1,470 |
|
449 |
|
302 |
|
327 |
|
2,548 |
Exchange movements |
|
(22) |
|
(28) |
|
– |
|
(2) |
|
(52) |
Disposal of subsidiaries |
|
(578) |
|
(8) |
|
(2) |
|
(2) |
|
(590) |
Amounts capitalised in the year |
|
185 |
|
– |
|
– |
|
– |
|
185 |
Amounts charged to the income statement |
|
– |
|
138 |
|
425 |
|
126 |
|
689 |
Utilised in the year − payments |
|
(59) |
|
(44) |
|
(181) |
|
(123) |
|
(407) |
Amounts released to the income statement |
|
(1) |
|
(77) |
|
(36) |
|
(48) |
|
(162) |
Other |
|
35 |
|
– |
|
– |
|
– |
|
35 |
31 March 2023 |
|
1,030 |
|
430 |
|
508 |
|
278 |
|
2,246 |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
16. Provisions (continued)
Provisions have been analysed between current and non-current as follows:
|
|
Asset |
|
|
|
|
|
|
|
|
|
|
retirement |
|
Legal and |
|
|
|
|
|
|
|
|
obligations |
|
regulatory |
|
Restructuring |
|
Other |
|
Total |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Current liabilities |
|
61 |
|
193 |
|
298 |
|
122 |
|
674 |
Non-current liabilities |
|
969 |
|
237 |
|
210 |
|
156 |
|
1,572 |
31 March 2023 |
|
1,030 |
|
430 |
|
508 |
|
278 |
|
2,246 |
|
|
Asset |
|
|
|
|
|
|
|
|
|
|
retirement |
|
Legal and |
|
|
|
|
|
|
|
|
obligations |
|
regulatory |
|
Restructuring |
|
Other |
|
Total |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Current liabilities |
|
43 |
|
235 |
|
241 |
|
148 |
|
667 |
Non-current liabilities |
|
1,427 |
|
214 |
|
61 |
|
179 |
|
1,881 |
31 March 2022 |
|
1,470 |
|
449 |
|
302 |
|
327 |
|
2,548 |
17. Called up share capital
Called up share capital is the number of shares in issue at their par value. A number of shares were allotted during the year in relation to employee share schemes.
Accounting policies
Equity instruments issued by the Group are recorded at the amount of the proceeds received, net of direct issuance costs.
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
Number |
|
€m |
|
Number |
|
€m |
Ordinary shares of 20 20⁄ 21 US cents each allotted, issued and fully paid:1,2,3 |
|
|
|
|
|
|
|
|
1 April |
|
28,817,627,868 |
|
4,797 |
|
28,816,835,778 |
|
4,797 |
Allotted during the year |
|
628,190 |
|
– |
|
792,090 |
|
– |
31 March |
|
28,818,256,058 |
|
4,797 |
|
28,817,627,868 |
|
4,797 |
Notes:
1 | At 31 March 2023, there were 50,000 (2022: 50,000) 7% cumulative fixed rate shares of £1 each in issue. |
2 | At 31 March 2023, the Group held 1,825,691,429 (2022: 447,576,522) treasury shares with a nominal value of €304 million (2022: €75 million). The market value of shares held was €1,855 million (2022: €661 million). During the year, 85,844,124 (2022: 68,306,442) treasury shares were reissued under Group share schemes and 1,463,959,031 (2022: 1,441,870,348) shares were repurchased under share buy-back arrangements. |
3 | During the year ended 31 March 2022, 1,518,629,693 treasury shares were issued in settlement of a maturing £1.72 billion subordinated mandatory convertible bond. |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
18. Reconciliation of net cash flow from operating activities
The table below shows how our profit for the year from continuing operations translates into cash flows generated from our operating activities.
|
|
|
|
|
|
Re-presented1 |
|
Re-presented1 |
|
|
|
|
2023 |
|
2022 |
|
2021 |
|
|
Notes |
|
€m |
|
€m |
|
€m |
Profit for the financial year |
|
|
|
12,335 |
|
2,773 |
|
483 |
Investment income |
|
5 |
|
(248) |
|
(254) |
|
(245) |
Financing costs |
|
5 |
|
1,728 |
|
1,964 |
|
1,027 |
Income tax expense |
|
6 |
|
481 |
|
1,330 |
|
3,864 |
Operating profit |
|
|
|
14,296 |
|
5,813 |
|
5,129 |
Adjustments for: |
|
|
|
|
|
|
|
|
Share-based payments and other non-cash charges |
|
|
|
73 |
|
173 |
|
146 |
Depreciation and amortisation |
|
10, 11 |
|
13,618 |
|
13,845 |
|
14,101 |
Loss on disposal of property, plant and equipment and intangible assets |
|
|
|
27 |
|
30 |
|
17 |
Share of result of equity accounted associates and joint ventures |
|
12 |
|
(433) |
|
(389) |
|
(374) |
Impairment loss |
|
4 |
|
64 |
|
– |
|
– |
Other income |
|
3 |
|
(9,098) |
|
(50) |
|
(568) |
Increase in inventory |
|
|
|
(180) |
|
(162) |
|
(68) |
(Increase)/decrease in trade and other receivables |
|
14 |
|
(458) |
|
(638) |
|
582 |
Increase/(decrease) in trade and other payables |
|
15 |
|
1,379 |
|
384 |
|
(730) |
Cash generated by operations |
|
|
|
19,288 |
|
19,006 |
|
18,235 |
Net tax paid |
|
|
|
(1,234) |
|
(925) |
|
(1,020) |
Net cash flow from operating activities |
|
|
|
18,054 |
|
18,081 |
|
17,215 |
Note:
1 |
The results for the years ended 31 March 2022 and 31 March 2021 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. In the year ended 31 March 2022, profit for the financial year and operating profit have both increased by €149 million, other income has decreased by €29 million and the share of result of equity accounted associates and joint ventures has increased by €178 million compared to the amounts previously reported. In the year ended 31 March 2021, profit for the financial year has decreased by €53 million, investment income has decreased by €85 million, operating profit has increased by €32 million and the share of result of equity accounted associates and joint ventures has increased by €32 million compared to the amounts previously reported. There is no impact on cash generated by operations and net cash flow from operating activities. See note 7 ‘Discontinued operations and assets held for sale’ for more information. |
19. Cash and cash equivalents
The majority of the Group’s cash is held in bank deposits or money market funds which have a maturity of three months or less from acquisition to enable us to meet our short-term liquidity requirements.
Accounting policies
Cash and cash equivalents comprise cash and bank deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Assets in money market funds, whose contractual cash flows do not represent solely payments of interest and principal, are measured at fair value with gains and losses arising from changes in fair value included in net profit or loss for the period. All other cash and cash equivalents are measured at amortised cost.
|
|
|
|
|
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
Cash and bank deposits1 |
|
3,924 |
|
2,220 |
Money market funds2 |
|
7,781 |
|
5,276 |
Cash and cash equivalents as presented in the consolidated statement of financial position |
|
11,705 |
|
7,496 |
Bank overdrafts |
|
(77) |
|
(125) |
Cash and cash equivalents as presented in the consolidated statement of cash flows |
|
11,628 |
|
7,371 |
Note:
1 | Includes bank deposits under repurchase agreements of €1,750 million (2022: €nil). |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
2 | Items are measured at fair value and the valuation basis is level 1 classification, which comprises financial instruments where fair value is determined by unadjusted quoted prices in active markets. |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
19. Cash and cash equivalents (continued)
The carrying amount of balances at amortised cost approximates their fair value.
Cash and cash equivalents of €1,572 million (2022: €1,554 million) are held in countries with restrictions on remittances but where the balances could be used to repay subsidiaries’ third party liabilities. In addition, those balances could also be used to repay €722 million (2022: €932 million) of intercompany liabilities as at 31 March 2023.
20. Leases
The Group leases assets from other parties (the Group is a lessee) and also leases assets to other parties (the Group is a lessor). This note describes how the Group accounts for leases and provides details about its lease arrangements.
Accounting policies
As a lessee
When the Group leases an asset, a ‘right-of-use asset’ is recognised for the leased item and a lease liability is recognised for any lease payments to be paid over the lease term at the lease commencement date. The right-of-use asset is initially measured at cost, being the present value of the lease payments paid or payable, plus any initial direct costs incurred in entering the lease and less any lease incentives received.
Right-of-use assets are depreciated on a straight-line basis from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. The lease term is the non-cancellable period of the lease plus any periods for which the Group is ‘reasonably certain’ to exercise any extension options (see below). The useful life of the asset is determined in a manner consistent to that for owned property, plant and equipment (as described in note 11 ‘Property, plant and equipment’). If right-of-use assets are considered to be impaired, the carrying value is reduced accordingly.
Lease liabilities are initially measured at the value of the lease payments over the lease term that are not paid at the commencement date and are usually discounted using the incremental borrowing rates of the applicable Group entity (the rate implicit in the lease is used if it is readily determinable). Lease payments included in the lease liability include both fixed payments and in-substance fixed payments during the term of the lease.
After initial recognition, the lease liability is recorded at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate (e.g. an inflation related increase) or if the Group’s assessment of the lease term changes; any changes in the lease liability as a result of these changes also results in a corresponding change in the recorded right-of-use asset.
As a lessor
Where the Group is a lessor, it determines at inception whether the lease is a finance or an operating lease. When a lease transfers substantially all the risks and rewards of ownership of the underlying asset then the lease is a finance lease; otherwise the lease is an operating lease.
Where the Group is an intermediate lessor, the interests in the head lease and the sub-lease are accounted for separately and the lease classification of a sub-lease is determined by reference to the right-of-use asset arising from the head lease.
Income from operating leases is recognised on a straight-line basis over the lease term. Income from finance leases is recognised at lease commencement with interest income recognised over the lease term.
Lease income is recognised as revenue for transactions that are part of the Group’s ordinary activities (i.e. primarily leases of handsets or other equipment to customers, leases of wholesale access to the Group’s fibre and cable networks and leases of tower infrastructure assets). The Group uses IFRS 15 principles to allocate the consideration in contracts between any lease and non-lease components.
The Group’s leasing activities as a lessee
The Group leases buildings for its retail stores, offices and data centres, land on which to construct mobile base stations, space on mobile base stations to place active RAN equipment and network space (primarily rack space or duct space). In addition, the Group leases fibre and other fixed connectivity to provide internal connectivity for the Group’s operations and on a wholesale basis from other operators to provide fixed connectivity services to the Group’s customers.
The Group’s general approach to determining lease term by class of asset is described in note 1 ‘Basis of preparation’ under critical accounting judgements and key sources of estimation uncertainty.
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
20. Leases (continued)
Most of the Group’s leases include future price increases through fixed percentage increases, indexation to inflation measures on a periodic basis or rent review clauses. Other than fixed percentage increases the lease liability does not reflect the impact of these future increases unless the measurement date has passed. The Group’s leases contain no material variable payments clauses other than those related to the number of operators sharing space on third party mobile base stations.
Optional lease periods
Where practicable the Group seeks to include extension or break options in leases to provide operational flexibility, therefore many of the Group’s lease contracts contain optional periods. The Group’s policy on assessing and reassessing whether it is reasonably certain that the optional period will be included in the lease term is described in note 1 ‘Basis of preparation’ under ‘critical accounting judgements and key sources of estimation uncertainty’.
After initial recognition of a lease, the Group only reassesses the lease term when there is a significant event or a significant change in circumstances, which was not anticipated at the time of the previous assessment. Significant events or significant changes in circumstances could include merger and acquisition or similar activity, significant expenditure on the leased asset not anticipated in the previous assessment, or detailed management plans indicating a different conclusion on optional periods to the previous assessment. Where a significant event or significant change in circumstances does not occur, the lease term and therefore lease liability and right-of-use asset value, will decline over time.
The Group’s cash outflow for leases in the year ended 31 March 2023 was €4,479 million (2022: €4,338 million). Following changes to the Group’s structure during the year, it is expected that future annual cash outflows will increase by circa €300 million absent significant future changes in the volume of the Group’s activities or strategic changes to use more or fewer owned assets, subject to contractual price increases. The future cash outflows included within lease liabilities are shown in the maturity analysis below. The maturity analysis only includes the reasonably certain payments to be made; cash outflows in these future periods will likely exceed these amounts as payments will be made on optional periods not considered reasonably certain at present and on new leases entered into in future periods.
The Group’s leases for customer connectivity are normally either under regulated access or network sharing or similar preferential access arrangements and as a result the Group normally has significant flexibility over the term it can lease such connections for; generally the notice period required to cancel the lease is less than the notice period included in the service contract with the end customer. As a result, the Group does not have any significant cash exposure to optional periods on customer connectivity as the Group can cancel the lease when the service agreement ends. In some circumstances the Group is committed to minimum spend amounts for connectivity leases, which are included within reported lease liabilities.
Sale and leaseback
In March 2023, the Group disposed of its interest in Vantage Towers A.G. (‘Vantage Towers’) into a new joint venture, Oak Holdings 1 GmbH (‘Oak’); Vodafone retains an interest of 64.2% in Oak, which owns 89.3% of Vantage Towers (see note 27 ‘Acquisitions and disposals’ for additional details). The Group has agreements with Vantage Towers to lease back spaces on its towers (see note 30 ‘Related party transactions’). The Group de-recognised assets related to the mobile base stations with a net book value of €4,793 million. A total net gain on disposal of €9,287 million was realised as a result of the disposal of Vantage Towers; €680 million of this gain, reflecting the gain on the proportion of sold towers that has been retained through the leaseback, has been recorded as a reduction in the value of the right-of-use asset recognised for the leaseback of tower space and will be realised as a reduction in depreciation over the term of the leaseback until November 2028. Other sale and leaseback transactions entered into by the Group were not material, individually or in aggregate.
Amounts recognised in the primary financial statements in relation to lessee transactions
Right-of-use assets
The carrying value of the Group’s right-of-use assets, depreciation charge for the year and additions during the year are disclosed in note 11 ‘Property, plant and equipment’.
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
20. Leases (continued)
Lease liabilities
The Group’s lease liabilities are disclosed in note 21 ‘Borrowings’. The maturity profile of the Group’s lease liabilities is as follows:
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
Within one year |
|
3,452 |
|
3,130 |
In more than one year but less than two years |
|
2,574 |
|
2,189 |
In more than two years but less than three years |
|
2,200 |
|
1,759 |
In more than three years but less than four years |
|
1,981 |
|
1,579 |
In more than four years but less than five years |
|
1,810 |
|
1,387 |
In more than five years |
|
3,240 |
|
4,242 |
|
|
15,257 |
|
14,286 |
Effect of discounting |
|
(1,893) |
|
(1,747) |
Lease liability - as disclosed in note 21 'Borrowings' |
|
13,364 |
|
12,539 |
At 31 March 2023 the Group has entered into lease contracts with payment obligations with an undiscounted value of €320 million (2022: €51 million) that had not commenced at 31 March 2023.
Interest expense on lease liabilities for the year is disclosed in note 5 ‘Investment income and financing costs’.
The Group has no material liabilities under residual value guarantees and makes no material variable payments not included in the lease liability. The Group does not apply either the short term or low value expedient options in IFRS 16.
The Group’s leasing activities as a lessor
The Group has a wide range of lessor activities with consumer and enterprise customers, other telecommunication companies and other companies. With consumer and enterprise customers, the Group generates lease income from the provision of handsets, routers and other communications equipment. The Group provides wholesale access to the Group’s fibre and cable networks, leases out space on the Group’s owned mobile base stations to other telecommunication companies and sub-leases certain retained mobile base station sites to telecommunication tower companies. In addition, the Group sub-leases retail stores to franchise partners in certain markets and leases out surplus assets (e.g. vacant offices and retail stores) to other companies.
Lessor transactions are classified as operating or finance leases based on whether the lease transfers substantially all of the risks and rewards incidental to ownership of the asset. Leases are individually assessed, but generally, the Group’s lessor transactions in the year are classified as:
– | Operating leases where the Group provides wholesale access to its fibre and cable networks, provides routers or similar equipment to fixed customers or is lessor of space on owned mobile base stations; and |
– | Finance leases where the Group is sub-lessor of handsets or similar items in back-to-back arrangements or where surplus assets or certain retained mobile base stations sites are sublet out for all or substantially all of the remaining head lease term. |
The Group’s income as a lessor in the year is as follows:
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
Operating leases |
|
|
|
|
Lease revenue (note 2 'Revenue disaggregation and segmental analysis') |
|
751 |
|
758 |
Income from leases not recognised as revenue |
|
47 |
|
45 |
Substantially all of the Group’s income as a lessor is operating lease income.
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
20. Leases (continued)
The committed amounts to be received from the Group’s operating leases are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturity |
||||||||||||
|
|
Within one |
|
In one to two |
|
In two to |
|
In three to four |
|
In four to five |
|
In more than |
|
|
|
|
year |
|
years |
|
three years |
|
years |
|
years |
|
five years |
|
Total |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Committed operating lease payments due to the Group as a lessor |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 March 2023 |
|
304 |
|
128 |
|
36 |
|
16 |
|
7 |
|
4 |
|
495 |
31 March 2022 |
|
513 |
|
250 |
|
161 |
|
128 |
|
114 |
|
343 |
|
1,509 |
The Group’s net investment in leases are disclosed in note 14 ‘Trade and other receivables’. The maturity profile of the Group’s net investment in leases is as follows:
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
Within one year |
|
111 |
|
72 |
In more than one year but less than two years |
|
88 |
|
55 |
In more than two years but less than three years |
|
67 |
|
36 |
In more than three years but less than four years |
|
54 |
|
25 |
In more than four years but less than five years |
|
47 |
|
11 |
In more than five years |
|
39 |
|
9 |
|
|
406 |
|
208 |
Unearned finance income |
|
(33) |
|
(8) |
Net investment in leases - as disclosed in note 14 ‘Trade and other receivables’ |
|
373 |
|
200 |
The Group has no material lease income arising from variable lease payments.
21. Borrowings
The Group’s sources of borrowing for funding and liquidity purposes come from a range of committed bank facilities and through short-term and long-term issuances in the capital markets including bond and commercial paper issues and bank loans. Liabilities arising from the Group’s lease arrangements are also reported in borrowings; see note 20 ‘Leases’. We manage the basis on which we incur interest on debt between fixed interest rates and floating interest rates depending on market conditions using interest rate derivatives. The Group enters into foreign exchange contracts to mitigate the impact of exchange rate movements on certain monetary items.
Accounting policies
Interest-bearing loans and overdrafts are initially measured at fair value (which is equal to cost at inception), and are subsequently measured at amortised cost, using the effective interest rate method. Where they are identified as a hedged item in a designated fair value hedge relationship, fair value adjustments are recognised in accordance with our policy (see note 22 ‘Capital and financial risk management’). Any difference between the proceeds net of transaction costs and the amount due on settlement or redemption of borrowings is recognised over the term of the borrowing. Where bonds issued with certain conversion rights are identified as compound instruments they are initially measured at fair value with the nominal amounts recognised as a component in equity and the fair value of future coupons included in borrowings. These are subsequently measured at amortised cost using the effective interest rate method.
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
21. Borrowings (continued)
Borrowings
|
|
|
|
|
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
Non-current borrowings |
|
|
|
|
Bonds |
|
39,512 |
|
46,156 |
Bank loans |
|
487 |
|
629 |
Lease liabilities (note 20) |
|
10,318 |
|
9,810 |
Other borrowings1 |
|
1,352 |
|
1,536 |
|
|
51,669 |
|
58,131 |
Current borrowings |
|
|
|
|
Bonds |
|
4,604 |
|
1,875 |
Bank loans |
|
308 |
|
688 |
Lease liabilities (note 20) |
|
3,046 |
|
2,729 |
Collateral liabilities |
|
4,886 |
|
2,914 |
Bank borrowings secured against Indian assets |
|
1,485 |
|
1,382 |
Other borrowings1 |
|
392 |
|
2,373 |
|
|
14,721 |
|
11,961 |
Borrowings |
|
66,390 |
|
70,092 |
Note:
1 |
Includes €1,140 million (2022: €1,273 million) and €196 million (2022: €2,165 million) of licence and spectrum fees payable in non-current and current borrowings respectively. |
The fair value of the Group’s financial liabilities held at amortised cost approximate to fair value with the exception of long-term bonds with a carrying value of €39,512 million (2022: €46,156 million) which have a fair value of €35,044 million (2022: €46,348 million). Fair value is based on level 1 of the fair value hierarchy using quoted market prices.
The Group’s current borrowings also include €1,485 million (2022: €1,382 million) of bank borrowings that are secured against the Group’s shareholdings in Indus Towers and Vodafone Idea (see note 12 ‘Investments in Associates and Joint Ventures’ for further details of these assets) and will be repaid through the realisation of proceeds from those assets. This arrangement contains an embedded derivative option which has been separately fair valued and is presented within derivative assets in current assets (see note 14 ‘Trade and other receivables’).
The Group’s borrowings, which include certain bonds that have been designated in hedge relationships, are carried at €1,282 million higher (2022: €1,316 million higher) than their euro equivalent redemption value. In addition, where bonds are issued in currencies other than euros, the Group has entered into foreign currency swaps to fix the euro cash outflows on redemption. The impact of these swaps is not reflected in borrowings and would decrease the euro equivalent redemption value of the bonds by €1,440 million (2022: €1,456 million).
Commercial paper programmes
We currently have US and euro commercial paper programmes of US$15 billion (€13.8 billion) and €10 billion respectively which are available to be used to meet short-term liquidity requirements. At 31 March 2023 both programmes remained undrawn.
The commercial paper facilities were supported by US$4.0 billion (€3.7 billion) and €4.0 billion of syndicated committed bank facilities. No amounts had been drawn under these facilities.
Bonds
We have two €30 billion euro medium-term note programmes and a US shelf programme which are used to meet medium to long-term funding requirements. At 31 March 2023 the total amounts in issue under these programmes split by currency were US$21.3 billion, €17.6 billion, £3.6 billion, AUD$0.5 billion, HKD$2.1 billion, NOK2.2 billion, CHF0.7 billion and JPY10 billion.
At 31 March 2023 the Group had bonds outstanding with a nominal value equivalent to €42.8 billion. During the year ended 31 March 2023, bonds with a nominal value of €1.8 billion and £0.6 billion were issued utilising the euro medium-term note programme and US$1.2 billion were issued utilising the US Shelf programme. During the year bonds with euro equivalent nominal values of €1.9 billion and €3.8 billion matured and were re-purchased respectively.
Bonds mature between 2023 and 2063 (2022: 2022 and 2059) and have interest rates between 0.375% and 7.875% (2022: 0% and 7.875%).
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
21. Borrowings (continued)
Mandatory convertible bonds
In March 2023 the Group concluded the last remaining share buybacks related to the mandatory convertible bonds (‘MCBs’) and no further instruments remain outstanding. On 12 March 2019 the Group issued £3.4 billion of subordinated mandatory convertible bonds (‘MCBs’) split into two equal tranches of £1.7 billion with coupons of 1.2% and 1.5% respectively. The first tranche matured on 12 March 2021 at a conversion price of £1.2055 per share and the second tranche matured on 12 March 2022 at a conversion price of £1.1326 per share. These were recognised as compound instruments with nominal values of £3.4 billion (€3.8 billion) recognised as a component of shareholders’ funds in equity and the fair value of future coupons £0.1 billion (€0.1 billion) recognised as a financial liability in borrowings. The Group’s strategy was to hedge the equity risk associated with the MCB issuance to any future movement in its share price by an option strategy designed to hedge the economic impact of share price movements. The Group decided to buy back ordinary shares to mitigate dilution resulting from the conversion and the hedging strategy provided a hedge for the repurchase price.
Treasury shares
The Group held a maximum of 1,825,691,429 (2022: 1,911,661,729) of its own shares during the year which represented 6.3% (2022: 6.6%) of issued share capital at that time.
22. Capital and financial risk management
This note details the treasury management and financial risk management objectives and policies, as well as the exposure and sensitivity of the Group to credit, liquidity, interest and foreign exchange risk, and the policies in place to monitor and manage these risks.
Accounting policies
Financial instruments
Financial assets and financial liabilities, in respect of financial instruments, are recognised on the Group’s consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument.
Financial liabilities and equity instruments
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that provides a residual interest in the assets of the Group after deducting all of its liabilities and includes no obligation to deliver cash or other financial assets. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.
Financial liabilities under put option arrangements
The Group has an obligation to pay a fixed rate of return to minority equity shareholders in the Group’s subsidiary Kabel Deutschland AG, under the terms of a court-imposed domination and profit and loss transfer agreement. This agreement also provides the minority shareholders the option to put their shareholding to Vodafone at a fixed price per share. The obligation to purchase the shares has been recognised as a financial liability and no non-controlling interests are recognised in respect of minority shareholders. Interest costs are accrued at the agreed rate of return and recognised in financing costs.
Derivative financial instruments and hedge accounting
The Group’s activities expose it to the financial risks of changes in foreign exchange rates and interest rates which it manages using derivative financial instruments. The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors, which provide written principles on the use of financial derivatives consistent with the Group’s risk management strategy. The Group does not use derivative financial instruments for speculative purposes.
The Group designates certain derivatives as:
– | hedges of the change in fair value of recognised assets and liabilities (‘fair value hedges’); |
– | hedges of highly probable forecast transactions or hedges of foreign currency or interest rate risks of firm commitments (‘cash flow hedges’); or |
– | hedges of net investments in foreign operations. |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
22. Capital and financial risk management (continued)
Derivative financial instruments are initially measured at fair value on the contract date and are subsequently re-measured to fair value at each reporting date. Changes in values of all derivatives of a financing nature are included within investment income and financing costs in the income statement unless designated in an effective cash flow hedge relationship or a hedge of a net investment in foreign operations when the effective portion of changes in value are deferred to other comprehensive income. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. For fair value hedges, the carrying value of the hedged item is also adjusted for changes in fair value for the hedged risk, with gains and losses recognised in the income statement.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised or no longer qualifies for hedge accounting. When hedge accounting is discontinued, any gain or loss recognised in other comprehensive income at that time remains in equity and is recognised in the income statement when the hedged transaction is ultimately recognised in the income statement.
For cash flow hedges, when the hedged item is recognised in the income statement, amounts previously recognised in other comprehensive income and accumulated in equity for the hedging instrument are reclassified to the income statement. However, when the hedged transaction results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously recognised in other comprehensive income and accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability. If a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in the income statement.
For net investment hedges, gains and losses accumulated in other comprehensive income are included in the income statement when the foreign operation is disposed of.
Capital management
The following table summarises the capital of the Group at 31 March:
|
|
|
|
|
|
|
|
|
Re-presented1 |
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
Borrowings (note 21) |
|
66,390 |
|
70,092 |
Cash and cash equivalents (note 19) |
|
(11,705) |
|
(7,496) |
Derivative financial instruments included in trade and other receivables (note 14) |
|
(6,124) |
|
(4,626) |
Derivative financial instruments included in trade and other payables (note 15) |
|
1,422 |
|
1,672 |
Short-term investments (note 13) |
|
(4,305) |
|
(4,795) |
Collateral assets (note 13) |
|
(239) |
|
(698) |
Financial liabilities under put option arrangements |
|
485 |
|
494 |
Equity |
|
64,483 |
|
57,073 |
Capital |
|
110,407 |
|
111,716 |
Note:
1 |
The results for the year ended 31 March 2022 have been re-presented to reflect that Indus Towers Limited is no longer reported as held for sale. Capital has increased by €96 million compared to the amount previously reported. See note 7 ‘Discontinued operations and assets held for sale’ for more information. |
The Group’s policy is to borrow centrally using a mixture of long-term and short-term capital market issues and borrowing facilities to meet anticipated funding requirements. These borrowings, together with cash generated from operations, are loaned internally or contributed as equity to certain subsidiaries.
Dividends from joint ventures and associates and to non-controlling shareholders
Dividend policies within shareholder agreements for certain of the Group’s associates and joint ventures give the Group certain rights to receive dividends but are generally paid at the discretion of the Board of Directors or shareholders. We do not have existing obligations to pay dividends to non-controlling interest partners of our subsidiaries other than ongoing dividend obligations to the Kabel Deutschland A.G. minority shareholders. The amount of dividends received and paid in the year are disclosed in the consolidated statement of cash flows.
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
22. Capital and financial risk management (continued)
Potential cash outflows from option agreements and similar arrangements
All remaining put options issued as part of the hedging strategy for the mandatory convertible bonds (‘MCBs’) matured during the financial year (1,452 million share options outstanding as at 31 March 2022). These permitted the holders to exercise against the Group at maturity of the option if there was a decrease in our share price. Under the terms of the options, settlement was made in cash which equated to the reduced value of shares from the initial conversion price, adjusted for dividends declared.
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 2023 was €1,927 million (2022: €1,341 million). No provision has been made in respect of these guarantees as the likelihood of a cash outflow has been assessed as remote.
Supplier financing arrangements
The Group offers suppliers the opportunity to use supply chain financing (‘SCF’). SCF allows suppliers that decide to use it to receive funding earlier than the invoice due date. At 31 March 2023, the financial institutions that run the SCF programmes had purchased €2.4 billion (2022: €2.4 billion) of outstanding supplier invoices, principally from larger suppliers. The Group does not provide any financial guarantees to the financial institutions under this programme and continues to cash settle supplier payables in accordance with their contractual terms. As such, the programme does not change the Group’s net debt, trade payable balances or cash flows.
The Group evaluates supplier arrangements against a number of indicators to assess if the payable continues to hold the characteristics of a trade payable or should be classified as borrowings; these indicators include whether the payment terms exceed the shorter of customary payment terms in the industry or 180 days. At 31 March 2023, none of the payables subject to supplier financing arrangements met the criteria to be reclassified as borrowings.
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 March 2023. A treasury risk committee comprising of the Group’s Chief Financial Officer, Group General Counsel and Company Secretary, Group Financial Controller, Group Corporate Finance Director, Group Treasury Director and Group Director of Financial Controlling and Operations meets three times a year to review treasury activities and its members receive management information relating to treasury activities on a quarterly basis. The Group’s Internal Auditor reviews the internal control environment regularly.
No bonds issued by the Group or the Revolving Credit Facilities are subject to financial covenant ratios. Approximately €35 billion (2022: €38 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 short-term investments of €16.0 billion, providing significant headroom over short-term liquidity requirements. Additionally the Group maintains undrawn revolving credit facilities of €7.7 billion euro equivalent. As at 31 March 2023 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.
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
22. Capital and financial risk management (continued)
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 activities and from its financing activities, the Group considers its maximum exposure to credit risk at 31 March to be:
|
|
|
|
|
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
Cash and bank deposits (note 19) |
|
3,924 |
|
2,220 |
Money market funds (note 19) |
|
7,781 |
|
5,276 |
Managed investment funds (note 13) |
|
2,967 |
|
3,349 |
Bonds and debt securities (note 13) |
|
2,337 |
|
2,376 |
Collateral assets (note 13) |
|
239 |
|
698 |
Other investments (note 13) |
|
2,473 |
|
2,438 |
Derivative financial instruments (note 14) |
|
6,124 |
|
4,626 |
Trade receivables (note 14)1 |
|
6,158 |
|
6,083 |
Contract assets and other receivables (note 14) |
|
4,353 |
|
4,457 |
Performance bonds and other guarantees (note 29) |
|
3,381 |
|
2,866 |
|
|
39,737 |
|
34,389 |
Note:
1 |
Includes amounts guaranteed under sales of trade receivables €1,927 million (2022: €1,341 million). |
Expected credit loss
The Group has financial assets classified and measured at amortised cost and fair value through other comprehensive income that are subject to the expected credit loss model requirements of IFRS 9. Cash and bank deposits and certain other investments are both classified and measured at amortised cost and subject to impairment requirements. However, the identified expected credit loss is considered to be immaterial.
Information about expected credit losses for trade receivables and contract assets can be found under ‘operating activities’ on page 179.
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 by Moody’s, Fitch Ratings and Standard & Poor’s. Furthermore, collateral support agreements reduce the Group’s exposure to counterparties who must post 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.
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:
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
Collateral liabilities |
|
4,886 |
|
2,914 |
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 and pledged security in relation to the Indus Towers merger. The Group has also pledged cash as collateral against derivative financial instruments as disclosed in note 13 ‘Other investments’.
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
22. Capital and financial risk management (continued)
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. 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 |
||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
1 April |
|
83 |
|
101 |
|
1,342 |
|
1,480 |
|
108 |
|
57 |
Exchange movements |
|
(3) |
|
1 |
|
(72) |
|
(70) |
|
1 |
|
– |
Amounts charged to credit losses on financial assets |
|
138 |
|
114 |
|
449 |
|
394 |
|
19 |
|
53 |
Other1 |
|
(140) |
|
(133) |
|
(570) |
|
(462) |
|
(57) |
|
(2) |
31 March |
|
78 |
|
83 |
|
1,149 |
|
1,342 |
|
71 |
|
108 |
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:
|
|
|
|
Trade receivables at amortised cost past due |
||||||||
|
|
|
|
30 days |
|
31-60 |
|
61-180 |
|
180 |
|
|
|
|
Due |
|
or less |
|
days |
|
days |
|
days+ |
|
Total |
31 March 2023 |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Gross carrying amount |
|
2,465 |
|
599 |
|
163 |
|
329 |
|
957 |
|
4,513 |
Expected credit loss allowance |
|
(67) |
|
(64) |
|
(50) |
|
(173) |
|
(831) |
|
(1,185) |
Net carrying amount |
|
2,398 |
|
535 |
|
113 |
|
156 |
|
126 |
|
3,328 |
|
|
|
|
Trade receivables at amortised cost past due |
||||||||
|
|
|
|
30 days |
|
31–60 |
|
61–180 |
|
180 |
|
|
|
|
Due |
|
or less |
|
days |
|
days |
|
days+ |
|
Total |
31 March 2022 |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Gross carrying amount |
|
2,411 |
|
650 |
|
182 |
|
390 |
|
1,043 |
|
4,676 |
Expected credit loss allowance |
|
(123) |
|
(83) |
|
(53) |
|
(190) |
|
(893) |
|
(1,342) |
Net carrying amount |
|
2,288 |
|
567 |
|
129 |
|
200 |
|
150 |
|
3,334 |
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. |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
22. Capital and financial risk management (continued)
Liquidity risk
Liquidity is reviewed daily on at least a 12 month rolling basis and stress tested on the assumption that any commercial paper outstanding matures and is not reissued. The Group maintains substantial cash and cash equivalents which at 31 March 2023 amounted to cash €11.7 billion (2022: €7.5 billion) and undrawn committed facilities of €8.0 billion (2022: €8.2 billion), principally euro and US dollar revolving credit facilities of €4.0 billion and US $4.0 billion (€3.7 billion) which mature in 2025 and 2028 respectively. The Group manages liquidity risk on non-current borrowings by maintaining a varied maturity profile with a cap on the level of debt maturity in any one calendar year, therefore minimising refinancing risk. Non-current borrowings mature between 1 and 40 years.
The maturity profile of the anticipated future cash flows including interest in relation to the Group’s non-derivative financial liabilities on an undiscounted basis which, therefore, differs from both the carrying value and fair value, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables and |
|
|
|
|
Bank loans |
|
Bonds |
|
Lease liabilities |
|
Other2 |
|
Total borrowings |
|
other financial liabilities3 |
|
Total |
Maturity profile1 |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Within one year |
|
308 |
|
6,234 |
|
3,452 |
|
6,764 |
|
16,758 |
|
15,370 |
|
32,128 |
In one to two years |
|
235 |
|
3,070 |
|
2,574 |
|
423 |
|
6,302 |
|
51 |
|
6,353 |
In two to three years |
|
110 |
|
5,725 |
|
2,200 |
|
259 |
|
8,294 |
|
– |
|
8,294 |
In three to four years |
|
18 |
|
5,500 |
|
1,981 |
|
258 |
|
7,757 |
|
– |
|
7,757 |
In four to five years |
|
70 |
|
2,212 |
|
1,810 |
|
233 |
|
4,325 |
|
– |
|
4,325 |
In more than five years |
|
128 |
|
42,325 |
|
3,240 |
|
599 |
|
46,292 |
|
– |
|
46,292 |
|
|
869 |
|
65,066 |
|
15,257 |
|
8,536 |
|
89,728 |
|
15,421 |
|
105,149 |
Effect of discount/financing rates |
|
(74) |
|
(20,950) |
|
(1,893) |
|
(421) |
|
(23,338) |
|
(3) |
|
(23,341) |
31 March 2023 |
|
795 |
|
44,116 |
|
13,364 |
|
8,115 |
|
66,390 |
|
15,418 |
|
81,808 |
Within one year |
|
700 |
|
3,569 |
|
3,130 |
|
6,823 |
|
14,222 |
|
16,884 |
|
31,106 |
In one to two years |
|
33 |
|
6,190 |
|
2,189 |
|
417 |
|
8,829 |
|
29 |
|
8,858 |
In two to three years |
|
411 |
|
3,786 |
|
1,759 |
|
207 |
|
6,163 |
|
– |
|
6,163 |
In three to four years |
|
2 |
|
5,746 |
|
1,579 |
|
199 |
|
7,526 |
|
– |
|
7,526 |
In four to five years |
|
205 |
|
6,253 |
|
1,387 |
|
678 |
|
8,523 |
|
– |
|
8,523 |
In more than five years |
|
21 |
|
43,514 |
|
4,242 |
|
136 |
|
47,913 |
|
– |
|
47,913 |
|
|
1,372 |
|
69,058 |
|
14,286 |
|
8,460 |
|
93,176 |
|
16,913 |
|
110,089 |
Effect of discount/financing rates |
|
(55) |
|
(21,027) |
|
(1,747) |
|
(255) |
|
(23,084) |
|
(1) |
|
(23,085) |
31 March 2022 |
|
1,317 |
|
48,031 |
|
12,539 |
|
8,205 |
|
70,092 |
|
16,912 |
|
87,004 |
Notes:
1 |
Maturities reflect contractual cash flows applicable except in the event of a change of control or event of default, upon which lenders have the right, but not the obligation, to request payment within 30 days. This also applies to undrawn committed facilities. There is no debt that is subject to a material adverse change clause. |
2 |
Includes spectrum licence payables with maturity profile €196 million (2022: €2,319 million) within one year, €170 million (2022: €165 million) in one to two years, €199 million (2022: €199 million) in two to three years, €199 million (2022: €199 million) in three to four years, €199 million (2022: €662 million) in four to five years and €587million (2022: €136 million) in more than five years. Also includes €4,886 million (2022: €2,914 million) in relation to cash received under collateral support agreements shown within 1 year. |
3 |
Includes financial liabilities under put option arrangements and non-derivative financial liabilities presented within trade and other payables. |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
22. Capital and financial risk management (continued)
The maturity profile of the Group’s financial derivatives (which include interest rate swaps, cross-currency interest rate swaps and foreign exchange swaps) using undiscounted cash flows, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
||||||||
|
|
Payable1 |
|
Receivable1 |
|
Total |
|
Payable1 |
|
Receivable1 |
|
Total |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Within one year |
|
(17,845) |
|
18,527 |
|
682 |
|
(12,671) |
|
13,470 |
|
799 |
In one to two years |
|
(3,534) |
|
4,055 |
|
521 |
|
(5,897) |
|
6,399 |
|
502 |
In two to three years |
|
(4,028) |
|
4,441 |
|
413 |
|
(2,584) |
|
3,158 |
|
574 |
In three to four years |
|
(2,186) |
|
2,567 |
|
381 |
|
(3,373) |
|
3,864 |
|
491 |
In four to five years |
|
(2,265) |
|
2,681 |
|
416 |
|
(1,699) |
|
2,139 |
|
440 |
In more than five years |
|
(38,494) |
|
44,586 |
|
6,092 |
|
(34,097) |
|
40,129 |
|
6,032 |
|
|
(68,352) |
|
76,857 |
|
8,505 |
|
(60,321) |
|
69,159 |
|
8,838 |
Effect of discount/financing rates |
|
|
|
|
|
(3,803) |
|
|
|
|
|
(5,884) |
Financial derivative net receivable/(payable) |
|
|
|
|
|
4,702 |
|
|
|
|
|
2,954 |
Note:
1 |
Payables and receivables are stated separately in the table above as cash settlement is on a gross basis. |
Market risk
Interest rate management
Under the Group’s interest rate management policy, interest rates on long-term monetary assets and liabilities are principally maintained on a fixed rate basis.
At 31 March 2023 and after hedging, substantially all of our outstanding liabilities are held on a fixed interest rate basis in accordance with treasury policy. At 31 March 2022 the Group held economic interest rate hedges at fair value through profit and loss.
For each one hundred basis point rise in market interest rates for all currencies in which the Group had borrowings at 31 March 2023 there would be an increase in profit before tax by €27 million (2022: €420 million) including mark to market revaluations of interest rate and other derivatives and the potential interest on cash and short-term investments. There would be no material impact on equity.
At 31 March 2023, the Group had limited exposure through interest rate derivatives and floating rate bonds referencing LIBOR and other interbank offered rates (IBORs).
Foreign exchange management
As Vodafone’s primary listing is on the London Stock Exchange its share price is quoted in sterling. Since the sterling share price represents the value of its future multi-currency cash flows, principally in euro, South African rand and sterling, the Group maintains the currency of debt and interest charges in proportion to its expected future principal cash flows and has a policy to hedge external foreign exchange risks on transactions denominated in other currencies above a certain de minimis level.
At 31 March 2023 11% of net debt was denominated in currencies other than euro (3% sterling, 6% South African rand and 2% other). This allows sterling, South African rand and other debt to be serviced in proportion to expected future cash flows and therefore provides a partial economic hedge against income statement translation exposure, as interest costs will be denominated in foreign currencies.
Under the Group’s foreign exchange management policy, foreign exchange transaction exposure in Group companies is generally maintained at the lower of €5 million per currency per month or €15 million per currency over a six month period.
The Group recognises foreign exchange movements in equity for the translation of net investment hedging instruments and balances treated as investments in foreign operations. However, there is no net impact on equity for exchange rate movements on net investment hedging instruments as there would be an offset in the currency translation of the foreign operation. At 31 March 2023 the Group held financial liabilities in a net investment hedge against the Group’s South African rand operations. Sensitivity to foreign exchange movements on the hedging liabilities, analysed against a strengthening of the South African rand by 12% (2022: 13%) would result in a decrease in equity of €267 million (2022: €221million) which would be fully offset by foreign exchange movements on the hedged net assets. In addition, cash flow hedges of principally US dollar borrowings would result in an increase in equity of €204 million (2022: €371 million) against a strengthening of US dollar by 5% (2022: 5%).
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
22. Capital and financial risk management (continued)
The Group profit and loss account is exposed to foreign exchange risk within both operating profit and financing income and expense. The principal operations not generating income in euro are Vodacom South Africa (South African rand), and Egypt (Egyptian pound). Financing income and expense includes foreign currency gains/losses incurred on the translation of balance sheet items not held in functional currency. These are principally on certain borrowings, derivatives, and other investments denominated in sterling and Turkish lira.
The following table details the Group’s sensitivity to foreign exchange risk. The percentage movement applied to the currency is based on the average movements in the previous three annual reporting periods.
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
Increase/ (decrease) in Profit before taxation |
|
|
|
|
ZAR 12% change (2022: 13%) |
|
87 |
|
134 |
EGP 27% change (2022: 9%) |
|
116 |
|
41 |
TRY 43% change (2022: 39%) |
|
33 |
|
83 |
GBP 3% change (2022: 2%) |
|
(46) |
|
(67) |
Equity risk
There is no material equity risk relating to the Group’s equity investments which are detailed in note 13 ‘Other investments’.
In the prior financial year, the Group had hedged its exposure under the subordinated mandatory convertible bonds to any future movements in its share price by an option strategy designed to hedge the economic impact of share price movements. This option strategy ended during the current financial year. As at 31 March 2023, the Group is no longer sensitive (2022: 7% sensitivity) to a movement in its share price that would result in an increase or decrease in profit before tax (2022: €36 million).
Risk management strategy of hedge relationships
The risk strategies of the designated cash flow, fair value, and net investment hedges reflect the above market risk strategies.
The objective of the cash flow hedges is principally to convert foreign currency denominated fixed rate borrowings in US dollar, pound sterling, Australian dollar, Swiss franc, Hong Kong dollar, Japanese yen, Norwegian krona and US dollar floating rate borrowings into euro fixed rate borrowings and hedge the foreign exchange spot rate and interest rate risk. There are also cash flow hedges of certain subsidiary expenditure not denominated in functional currency of the entity, to hedge foreign exchange spot risk. Derivative financial instruments designated in cash flow hedges are cross-currency interest rate swaps and foreign exchange swaps and forwards. The swap maturity dates and liquidity profiles of the nominal cash flows match those of the underlying borrowings and exposures.
The objective of the net investment hedges is to hedge foreign exchange risk in foreign operations. Derivative financial instruments designated in net investment hedges are cross-currency interest rate swaps and foreign exchange swaps. The hedging instruments are rolled on an ongoing basis as determined by the nature of the business.
The objective of the fair value hedges is to hedge a proportion of the Group’s fixed rate euro denominated borrowing to a euro floating rate borrowing. The swap maturity dates match those of the underlying borrowing and the nominal cash flows are converted to quarterly payments.
Hedge effectiveness is determined at the inception of the hedge relationship and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument.
For hedges of foreign currency denominated borrowings and investments, the Group uses a combination of cross-currency and foreign exchange swaps to hedge its exposure to foreign exchange risk and interest rate risk and enters into hedge relationships where the critical terms of the hedging instrument match with the terms of the hedged item. Therefore the Group expects a highly effective hedging relationship with the swap contracts and the value of the corresponding hedged items to change systematically in the opposite direction in response to movements in the underlying exchange rates and interest rates. The Group therefore performs a qualitative assessment of effectiveness. If changes in circumstances affect the terms of the hedged item such that the critical terms no longer match with the critical terms of the hedging instrument, the Group uses the hypothetical derivative method to assess effectiveness.
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
22. Capital and financial risk management (continued)
Hedge ineffectiveness may occur due to:
a) The fair value of the hedging instrument on the hedge relationship designation date if the fair value is not nil;
b) Changes in the contractual terms or timing of the payments on the hedged item; and
c) A change in the credit risk of the Group or the counterparty with the hedging instrument.
The hedge ratio for each designation will be established by comparing the quantity of the hedging instrument and the quantity of the hedged item to determine their relative weighting; for all of the Group’s existing hedge relationships the hedge ratio has been determined as 1:1.
The fair values of the derivative financial instruments are calculated by discounting the future cash flows to net present values using appropriate market rates and foreign currency rates prevailing at 31 March. The valuation basis is level 2 of the fair value hierarchy. This classification comprises items where fair value is determined from inputs other than quoted prices that are observable for the asset and liability, either directly or indirectly. Derivative financial assets and liabilities are included within trade and other receivables and trade and other payables in the statement of financial position.
The following table represents the carrying values and nominal amounts of derivatives in a continued hedge relationship as at 31 March.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
Weighted average |
||||||||||
|
|
|
|
|
|
|
|
Opening |
|
(Gain)/ |
|
Gain/(Loss) |
|
Closing |
|
|
|
|
|
|
|
|
|
|
Carrying |
|
Carrying |
|
balance |
|
Loss |
|
recycled to |
|
balance |
|
|
|
|
|
Euro |
|
|
Nominal |
|
value |
|
value |
|
1 April |
|
deferred to |
|
financing |
|
31 March |
|
Maturity |
|
|
|
interest |
|
|
amounts |
|
assets |
|
liabilities |
|
2022 |
|
OCI |
|
costs |
|
20231 |
|
year |
|
FX rate |
|
rate |
At 31 March 2023 |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
|
|
|
|
% |
Cash flow hedges - foreign currency risk3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross-currency and foreign exchange swaps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US dollar bonds |
|
17,690 |
|
4,456 |
|
– |
|
(1,484) |
|
(2,321) |
|
1,096 |
|
(2,709) |
|
2038 |
|
1.18 |
|
3.14 |
Australian dollar bonds |
|
288 |
|
13 |
|
– |
|
(5) |
|
31 |
|
(47) |
|
(21) |
|
2027 |
|
1.56 |
|
1.57 |
Swiss franc bonds |
|
624 |
|
58 |
|
– |
|
20 |
|
(43) |
|
20 |
|
(3) |
|
2026 |
|
1.08 |
|
1.26 |
Pound sterling bonds |
|
4,195 |
|
61 |
|
152 |
|
109 |
|
6 |
|
(152) |
|
(37) |
|
2044 |
|
0.86 |
|
3.15 |
Hong Kong dollar bonds |
|
233 |
|
22 |
|
– |
|
7 |
|
(17) |
|
5 |
|
(5) |
|
2028 |
|
9.08 |
|
1.48 |
Japanese yen bonds |
|
78 |
|
3 |
|
– |
|
2 |
|
(9) |
|
(5) |
|
(12) |
|
2037 |
|
128.53 |
|
2.47 |
Norwegian krona bonds |
|
241 |
|
– |
|
34 |
|
3 |
|
17 |
|
(32) |
|
(12) |
|
2026 |
|
9.15 |
|
1.12 |
Foreign exchange forwards2 |
|
383 |
|
– |
|
34 |
|
(69) |
|
34 |
|
1 |
|
(34) |
|
2023 |
|
18.92 |
|
– |
Cash flow hedges - foreign currency and interest rate risk3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross currency swaps - US dollar bonds |
|
417 |
|
49 |
|
– |
|
(1) |
|
(20) |
|
10 |
|
(11) |
|
2023 |
|
1.17 |
|
1.07 |
Net investment hedge - foreign exchange risk5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross-currency and foreign exchange swaps - South African rand investment |
|
2,004 |
|
96 |
|
– |
|
1,133 |
|
(181) |
|
– |
|
952 |
|
2025 |
|
18.23 |
|
1.83 |
|
|
26,153 |
|
4,758 |
|
220 |
|
(285) |
|
(2,503) |
|
896 |
|
(1,892) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
22. Capital and financial risk management (continued)
|
|
|
|
|
|
|
|
Other comprehensive income |
|
Weighted average |
||||||||||
|
|
|
|
|
|
|
|
Opening |
|
|
|
Gain/(Loss) |
|
Closing |
|
|
|
|
|
|
|
|
|
|
Carrying |
|
Carrying |
|
balance |
|
(Gain)/Loss |
|
recycled to |
|
balance |
|
|
|
|
|
Euro |
|
|
Nominal |
|
value |
|
value |
|
1 April |
|
deferred to |
|
financing |
|
31 March |
|
Maturity |
|
|
|
interest |
|
|
amounts |
|
assets |
|
liabilities |
|
2021 |
|
OCI |
|
costs |
|
20221 |
|
year |
|
FX rate |
|
rate |
At 31 March 2022 |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
|
|
|
|
% |
Cash flow hedges – foreign currency risk3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross-currency and foreign exchange swaps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US dollar bonds |
|
20,995 |
|
2,745 |
|
10 |
|
501 |
|
(3,257) |
|
1,272 |
|
(1,484) |
|
2036 |
|
1.18 |
|
2.76 |
Australian dollar bonds |
|
736 |
|
50 |
|
– |
|
(24) |
|
(12) |
|
31 |
|
(5) |
|
2024 |
|
1.56 |
|
0.92 |
Swiss franc bonds |
|
624 |
|
16 |
|
1 |
|
30 |
|
(59) |
|
49 |
|
20 |
|
2026 |
|
1.08 |
|
1.26 |
Pound sterling bonds |
|
3,498 |
|
61 |
|
145 |
|
323 |
|
(239) |
|
25 |
|
109 |
|
2043 |
|
0.86 |
|
2.97 |
Hong Kong dollar bonds |
|
233 |
|
8 |
|
3 |
|
13 |
|
(18) |
|
12 |
|
7 |
|
2028 |
|
9.08 |
|
1.48 |
Japanese yen bonds |
|
78 |
|
– |
|
6 |
|
11 |
|
(7) |
|
(2) |
|
2 |
|
2037 |
|
128.53 |
|
2.47 |
Norwegian krona bonds |
|
241 |
|
– |
|
16 |
|
3 |
|
(7) |
|
7 |
|
3 |
|
2026 |
|
9.15 |
|
1.12 |
Foreign exchange forwards2 |
|
244 |
|
– |
|
69 |
|
– |
|
(72) |
|
3 |
|
(69) |
|
2022 |
|
12.34 |
|
– |
Cash flow hedges – foreign currency and interest rate risk3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross currency swaps - US dollar bonds |
|
417 |
|
24 |
|
– |
|
8 |
|
(33) |
|
24 |
|
(1) |
|
2023 |
|
1.17 |
|
1.07 |
Cash flow hedges – interest rate risk3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps – Euro loans |
|
– |
|
– |
|
– |
|
(1) |
|
– |
|
1 |
|
– |
|
– |
|
– |
|
– |
Net investment hedge – foreign exchange risk5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross-currency and foreign exchange swaps – South African rand investment |
|
1,555 |
|
– |
|
113 |
|
959 |
|
174 |
|
– |
|
1,133 |
|
2022 |
|
17.29 |
|
0.31 |
|
|
28,621 |
|
2,904 |
|
363 |
|
1,823 |
|
(3,530) |
|
1,422 |
|
(285) |
|
|
|
|
|
|
Notes:
1 | Fair value movement deferred into other comprehensive income includes €383 million loss (2022: €1,318 million loss) and €17 million gain (2022: €1 million gain) of foreign currency basis outside the cash flow and net investment hedge relationships respectively. |
2 | Includes euro and US dollar forward contracts against Turkish lira to hedge foreign currency forecast expenditures in local markets. Notional amounts of €259 million (2022: €146 million) and $134 million or €124 million equivalent (2022: $109 million or €98 million equivalent) with weighted average exchange rates of 18.36 (2022: 12.45) and 20.07 (2022: 10.95) respectively to Turkish lira. |
3 | For cash flow hedges, the movement in the hypothetical derivative (hedged item) mirrors that of the hedging instrument. Hedge ineffectiveness of the swaps designated in a cash flow hedge during the period was €nil (2022: €nil). |
4 | The carrying value of bonds includes an additional €776 million loss (2022: €760 million loss) in relation to fair value of other bonds previously designated in fair value hedge relationships. |
5 | Hedge ineffectiveness of swaps designated in a net investment hedge during the period was €nil (2022: €nil). |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
22. Capital and financial risk management (continued)
Changes in assets and liabilities arising from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets and liabilities |
|
|
|
|
Derivative assets |
|
Financial liabilities |
|
|
|
arising from |
|
|
Borrowings |
|
and liabilities |
|
under put options |
|
Other liabilities |
|
financing activities |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
1 April 2022 |
|
70,092 |
|
(2,954) |
|
494 |
|
1,498 |
|
69,130 |
Cash movements |
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of long-term borrowings |
|
4,071 |
|
– |
|
– |
|
– |
|
4,071 |
Repayment of borrowings |
|
(13,538) |
|
– |
|
– |
|
– |
|
(13,538) |
Net movement in short-term borrowings |
|
3,172 |
|
– |
|
– |
|
– |
|
3,172 |
Net movement in derivatives |
|
– |
|
261 |
|
– |
|
– |
|
261 |
Interest paid |
|
(2,444) |
|
590 |
|
(18) |
|
(79) |
|
(1,951) |
Purchase of treasury shares |
|
– |
|
– |
|
– |
|
(1,867) |
|
(1,867) |
Other |
|
– |
|
– |
|
(12) |
|
– |
|
(12) |
Non-cash movements |
|
|
|
|
|
|
|
|
|
|
Fair value movements |
|
– |
|
(1,688) |
|
– |
|
– |
|
(1,688) |
Foreign exchange |
|
(44) |
|
(350) |
|
– |
|
(20) |
|
(414) |
Interest costs |
|
2,657 |
|
(561) |
|
21 |
|
(113) |
|
2,004 |
Lease additions |
|
7,652 |
|
– |
|
– |
|
– |
|
7,652 |
Acquisition and disposal of subsidiaries |
|
(5,243) |
|
– |
|
– |
|
– |
|
(5,243) |
Other1 |
|
15 |
|
– |
|
– |
|
684 |
|
699 |
31 March 2023 |
|
66,390 |
|
(4,702) |
|
485 |
|
103 |
|
62,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets and liabilities |
|
|
|
|
Derivative assets |
|
Financial liabilities |
|
|
|
arising from |
|
|
Borrowings |
|
and liabilities |
|
under put options |
|
Other liabilities |
|
financing activities |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
1 April 2021 |
|
67,760 |
|
859 |
|
492 |
|
491 |
|
69,602 |
Cash movements |
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of long-term borrowings |
|
2,548 |
|
– |
|
– |
|
– |
|
2,548 |
Repayment of borrowings |
|
(8,248) |
|
– |
|
– |
|
– |
|
(8,248) |
Net movement in short-term borrowings |
|
3,002 |
|
– |
|
– |
|
– |
|
3,002 |
Net movement in derivatives |
|
– |
|
(293) |
|
– |
|
– |
|
(293) |
Interest paid |
|
(2,246) |
|
469 |
|
(17) |
|
(10) |
|
(1,804) |
Purchase of treasury shares |
|
– |
|
– |
|
– |
|
(2,087) |
|
(2,087) |
Non-cash movements |
|
|
|
|
|
|
|
|
|
|
Fair value movements |
|
– |
|
(2,631) |
|
– |
|
– |
|
(2,631) |
Foreign exchange |
|
1,386 |
|
(930) |
|
– |
|
(15) |
|
441 |
Interest costs |
|
2,356 |
|
(428) |
|
19 |
|
13 |
|
1,960 |
Lease additions |
|
3,410 |
|
– |
|
– |
|
– |
|
3,410 |
Other1 |
|
124 |
|
– |
|
– |
|
3,106 |
|
3,230 |
31 March 2022 |
|
70,092 |
|
(2,954) |
|
494 |
|
1,498 |
|
69,130 |
Note:
1 |
Movement in Other liabilities primarily relate to share buyback programmes. |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
22. Capital and financial risk management (continued)
Fair value and carrying value information
The carrying value and valuation basis of the Group’s financial assets are set out in notes 13 ‘Other investments’, 14 ‘Trade and other receivables’ and 19 ‘Cash and cash equivalents’. For all financial assets held at amortised cost the carrying values approximate fair value except as disclosed in note 13 ‘Other investments’.
The carrying value and valuation basis of the Group’s financial liabilities are set out in notes 15 ‘Trade and other payables’ and 21 ‘Borrowings’. The carrying values approximate fair value for the Group’s trade payables and other payables categories. For other financial liabilities a comparison of fair value and carrying value is disclosed in note 21 ‘Borrowings’.
Level 3 financial instruments
The Group’s borrowings include €1,485 million (2022: €1,382 million) of bank borrowings that are secured against the Group’s shareholdings in Indus Towers and Vodafone Idea (see note 12 ‘Investments in Associates and Joint Ventures’ for further details of these assets) and will be repaid through the realisation of proceeds from those assets. This arrangement contains an embedded derivative option which has been separately fair valued. The 31 March 2023 valuation of the embedded derivative asset of €198 million (2022: €3 million) is presented within derivative assets in current assets (see note 14 ‘Trade and other receivables’).
A Black Scholes model for European put options has been used as a valuation model and primarily uses market inputs (quoted share prices and volatilities for Indus Towers and Vodafone Idea) along with a strike price equal to the amount payable under the loan. The valuation includes an unobservable adjustment to reflect the potential timeframe to settle the loan and has been modelled using a range of potential durations up to 30 September 2024. As a result of this unobservable adjustment, the option is classified as a level 3 instrument under the fair value hierarchy. An increase/(decrease) in durations applied of 6 months would increase/(decrease) the derivative asset by €141 million/(€115 million).
Net financial instruments
The table below shows the Group’s financial assets and liabilities that are subject to offset in the balance sheet and the impact of enforceable master netting or similar agreements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related amounts not set off in the balance sheet |
||||
|
|
|
|
|
|
Amounts |
|
Right of set off |
|
|
|
|
|
|
|
|
|
|
presented in |
|
with derivative |
|
Collateral |
|
|
|
|
Gross amount |
|
Amount set off |
|
balance sheet |
|
counterparties |
|
(liabilities)/assets1 |
|
Net amount |
At 31 March 2023 |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Derivative financial assets |
|
6,124 |
|
– |
|
6,124 |
|
(910) |
|
(4,886) |
|
328 |
Derivative financial liabilities |
|
(1,422) |
|
– |
|
(1,422) |
|
910 |
|
239 |
|
(273) |
Total |
|
4,702 |
|
– |
|
4,702 |
|
– |
|
(4,647) |
|
55 |
|
|
|
|
|
|
|
|
Related amounts not set off in the balance sheet |
||||
|
|
|
|
|
|
Amounts |
|
Right of set off |
|
|
|
|
|
|
|
|
|
|
presented in |
|
with derivative |
|
Collateral |
|
|
|
|
Gross amount |
|
Amount set off |
|
balance sheet |
|
counterparties |
|
(liabilities)/assets1 |
|
Net amount |
At 31 March 2022 |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Derivative financial assets |
|
4,626 |
|
– |
|
4,626 |
|
(1,365) |
|
(2,914) |
|
347 |
Derivative financial liabilities |
|
(1,672) |
|
– |
|
(1,672) |
|
1,365 |
|
368 |
|
61 |
Total |
|
2,954 |
|
– |
|
2,954 |
|
– |
|
(2,546) |
|
408 |
Note:
1 |
Excludes collateral of €nil (2022: €330 million) pledged as initial margin, as security against future mark to market movements on certain derivative options, that therefore does not offset against existing mark to market balances as at 31 March. |
Financial assets and liabilities are offset and the net amount reported in the consolidated balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Derivative financial instruments that do not meet the criteria for offset could be settled net in certain circumstances under ISDA (‘International Swaps and Derivatives Association’) agreements where each party has the option to settle amounts on a net basis in the event of default from the other. Collateral may be offset and net settled against derivative financial instruments in the event of default by either party. The aforementioned collateral balances are recorded in Notes 13 ‘Other investments’ or 21 ‘Borrowings’ respectively.
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
23. Directors and key management compensation
This note details the total amounts earned by the Company’s Directors and members of the Executive Committee.
Directors
Aggregate emoluments of the Directors of the Company were as follows:
|
|
|
|
Re-presented1 |
|
Re-presented1 |
|
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
Short-term remuneration |
|
6 |
|
7 |
|
7 |
Long-term incentive schemes2 |
|
3 |
|
2 |
|
1 |
|
|
9 |
|
9 |
|
8 |
Notes:
1 | The prior year comparatives have been re-presented to aggregate previously disclosed salaries and fees and incentive schemes into Short-term remuneration. Additional disclosure is now provided for long-term incentive schemes, increasing total emoluments by €2 million and €1 million for the years ended 31 March 2022 and 31 March 2021, respectively. |
2 | Relates to share-based payments. |
No Directors serving during the year exercised share options in the year ended 31 March 2023 (2022: None; 2021: None).
Key management compensation
Aggregate compensation for key management, being the Directors and members of the Executive Committee, was as follows:
|
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
Short-term employee benefits |
|
25 |
|
28 |
|
28 |
Share-based payments |
|
12 |
|
8 |
|
11 |
|
|
37 |
|
36 |
|
39 |
24. Employees
This note shows the average number of people employed by the Group during the year, in which areas of our business our employees work and where they are based. It also shows total employment costs.
|
|
2023 |
|
2022 |
|
2021 |
|
|
Employees |
|
Employees |
|
Employees |
By activity |
|
|
|
|
|
|
Operations |
|
15,808 |
|
15,404 |
|
14,893 |
Selling and distribution |
|
24,676 |
|
25,499 |
|
26,874 |
Customer care and administration |
|
57,619 |
|
56,038 |
|
54,739 |
|
|
98,103 |
|
96,941 |
|
96,506 |
By segment |
|
|
|
|
|
|
Germany |
|
15,242 |
|
15,256 |
|
15,798 |
Italy |
|
5,733 |
|
5,765 |
|
5,818 |
Spain |
|
3,992 |
|
4,194 |
|
4,257 |
UK |
|
9,312 |
|
9,198 |
|
9,584 |
Other Europe |
|
14,189 |
|
15,106 |
|
15,460 |
Vodacom |
|
7,990 |
|
7,973 |
|
7,810 |
Other Markets |
|
9,331 |
|
9,336 |
|
9,498 |
Vantage Towers1 |
|
753 |
|
502 |
|
– |
Common Functions |
|
31,561 |
|
29,611 |
|
28,281 |
Total |
|
98,103 |
|
96,941 |
|
96,506 |
Note:
1 |
Vantage Towers was a new reporting segment in the comparative year ended 31 March 2022. |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
24. Employees (continued)
The cost incurred in respect of these employees (including Directors) was:
|
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
Wages and salaries |
|
4,853 |
|
4,469 |
|
4,238 |
Social security costs |
|
604 |
|
578 |
|
549 |
Other pension costs (note 25 'Post employment benefits') |
|
244 |
|
168 |
|
235 |
Share-based payments (note 26 'Shared-based payments') |
|
141 |
|
119 |
|
135 |
Total |
|
5,842 |
|
5,334 |
|
5,157 |
25. Post employment benefits
The Group operates a number of Defined Benefit and Defined Contribution retirement plans for our employees. The Group’s largest defined benefit plan is in the UK. For further details see ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 ‘Basis of preparation’.
Accounting policies
For defined benefit retirement plans, the difference between the fair value of the plan assets and the present value of the plan liabilities is recognised as an asset or a liability on the consolidated statement of financial position. Defined benefit plan liabilities are assessed using the projected unit funding method and applying the principal actuarial assumptions at the reporting period date. Assets are valued at market value.
Actuarial gains and losses are taken to the consolidated statement of comprehensive income for defined benefit plans or consolidated income statement for cash leaver plans as incurred. For this purpose, actuarial gains and losses comprise both the effects of changes in actuarial assumptions and experience adjustments arising from differences between the previous actuarial assumptions and what has actually occurred. The return on plan assets, in excess of interest income, and costs incurred for the management of plan assets are also taken to other comprehensive income.
Other movements in the net surplus or deficit are recognised in the consolidated income statement, including the current service cost, any past service cost and the effect of any settlements. The interest cost less the expected interest income on assets is also charged to the consolidated income statement. The amount charged to the consolidated income statement in respect of these plans is included within operating costs or in the Group’s share of the results of equity accounted operations, as appropriate.
The Group’s contributions to defined contribution pension plans are charged to the consolidated income statement as they fall due.
Background
At 31 March 2023 the Group operated a number of retirement plans for the benefit of its employees throughout the world, with varying rights and obligations depending on the conditions and practices in the countries concerned. The Group’s philosophy is to provide access to defined contribution retirement plans where feasible and to manage legacy defined benefit retirement arrangements. Defined benefit plans provide benefits based on the employees’ length of pensionable service and their final pensionable salary or other criteria. Defined contribution plans offer employees individual funds that are converted into benefits at the time of retirement.
The Group operates defined benefit plans in Germany, India, Ireland, Italy, the UK, the United States; defined benefit indemnity plans in Greece and Turkey; and a cash leaver plan in India. Defined contribution plans are currently provided in Egypt, Germany, Greece, India, Ireland, Italy, Portugal, South Africa, Spain and the UK.
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
25. Post employment benefits (continued)
Income statement expense/(income)
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
Defined contribution plans |
|
207 |
|
197 |
|
204 |
Defined benefit plans |
|
37 |
|
(29) |
|
31 |
Total amount charged to income statement (note 24) |
|
244 |
|
168 |
|
235 |
Defined benefit plans
The Group’s retirement policy is to provide competitive pension provision, in each operating country, in line with the market median for that location. The Group’s preferred retirement provision is focused on Defined Contribution arrangements and/or State provision for future service.
The Group’s main defined benefit funding liability is the Vodafone UK Group Pension Scheme (‘Vodafone UK plan’). Since June 2014 the Vodafone UK plan has consisted of two segregated sections: the Vodafone Section and the Cable & Wireless Section (‘CWW Section’). Both sections are closed to new entrants and to future accrual. The Group also operates smaller funded and unfunded plans in the UK, funded and unfunded plans in Germany and a funded plan in Ireland. Defined benefit pension provision exposes the Group to actuarial risks such as longer than expected longevity of participants, lower than expected return on investments and higher than expected inflation, which may increase the liabilities or reduce the value of assets of the plans.
The main defined benefit plans are administered by trustee boards which are legally separate from the Group and consist of representatives who are employees, former employees or are independent from the Group. The trustee boards of the pension plans are required by legislation to act in the best interest of the participants, set the investment strategy and contribution rates and are subject to statutory funding regimes.
The Vodafone UK plan is registered as an occupational pension plan with HM Revenue and Customs (‘HMRC’) and is subject to UK legislation and operates within the framework outlined by the Pensions Regulator. UK legislation requires that pension plans are funded prudently and that valuations are undertaken at least every three years. Separate valuations are required for the Vodafone Section and CWW Section.
The trustees obtain regular actuarial valuations to check whether the statutory funding objective is met and whether a recovery plan is required to restore funding to the level of the agreed technical provisions. The 31 March 2022 triennial actuarial valuation for the Vodafone Section and CWW Section of the Vodafone UK plan showed a net surplus of £248 million (€282 million) on the funding basis, comprising of a £97 million (€110 million) surplus for the Vodafone Section and a £151 million (€172 million) surplus for the CWW Section. No further contributions are due in respect of the Vodafone UK plan at this time. The next actuarial valuation has an effective date of 31 March 2025.
These plan- specific actuarial valuations differ to the IAS 19 accounting basis, which is used to measure pension assets and liabilities presented in the Group’s consolidated statement of financial position.
Funding plans are individually agreed for each of the Group’s other defined benefit plans with the respective trustees or governing board, taking into account local regulatory requirements. It is expected that ordinary contributions of €71 million will be paid into the Group’s defined benefit plans during the year ending 31 March 2024. The Group has also provided certain guarantees in respect of the Vodafone UK plan; further details are provided in note 29 ‘Contingent liabilities and legal proceedings’ to the consolidated financial statements.
The investment strategy for the UK plans is controlled by the trustees in consultation with the Group and the plans have no direct investments in the Group’s equity securities or in property or other assets currently used by the Group. The allocation of assets between different classes of investment is reviewed regularly and is a key factor in the trustee investment policy. The trustees aim to achieve the plan’s investment objectives through investing partly in a diversified mix of growth assets which, over the long term, are expected to grow in value by more than the low risk assets. The low risk assets include cash and gilts, inflation and interest rate hedging and in substance insured pensioner annuity policies in both the Vodafone Section and CWW Sections of the Vodafone UK plan and an insured pensioner annuity policy in the Vodafone Ireland Pension Plan. A number of investment managers are appointed to promote diversification by assets, organisation and investment style and current market conditions and trends are regularly assessed, which may lead to adjustments in the asset allocation.
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
25. Post employment benefits (continued)
During the reporting period, there were significant movements in UK gilt markets – in particular the ‘mini budget’ announced by the UK government on 23 September 2022 caused rapid sales of government bonds which further depressed gilt markets. Although a temporary intervention by the Bank of England and subsequent policy changes stabilised the market, gilt yields increased significantly in a short period of time. This triggered an increase in collateral calls for pension schemes that, like the Vodafone UK plan, used liability driven investment (LDI) strategies to hedge their interest rate risks.
In response to the risk of potential future collateral calls, on 18 October 2022, the Group entered into short term liquidity facilities with both sections of the Vodafone UK plan for an aggregate amount of £450 million (€512 million). These facilities were put in place for short-term liquidity purposes, with the intention of reducing the risk should the UK plan be required to dispose of assets at short notice in the event of significant increases in gilt yields. Drawings could be made from the facility until 27 January 2023, with all amounts borrowed required to be repaid by 28 February 2023. No amounts were drawn under these facilities.
There has been reduced volatility in gilt yields since the end of 2022, although, the level of yields are significantly higher than they were at 31 March 2022. This has resulted in a decrease in the value of the assets, and also liabilities in respect of the Vodafone UK plan as at 31 March 2023.
Actuarial assumptions
The Group’s plan liabilities are measured using the projected unit credit method using the principal actuarial assumptions set out below:
|
|
2023 |
|
2022 |
|
2021 |
|
|
% |
|
% |
|
% |
Weighted average actuarial assumptions used at 31 March1 |
|
|
|
|
|
|
Rate of inflation2 |
|
3.0 |
|
3.3 |
|
2.9 |
Rate of increase in salaries3 |
|
3.0 |
|
3.1 |
|
2.7 |
Discount rate |
|
4.5 |
|
2.5 |
|
1.8 |
Notes:
1 | Figures shown represent a weighted average assumption of the individual plans. |
2 | The rate of increase in pensions in payment and deferred revaluation are dependent on the rate of inflation. |
3 | Relates only to schemes open to future accrual primarily in Germany, Ireland and India. |
Mortality assumptions used are based on recommendations from the individual local actuaries which include adjustments for the experience of the Group where appropriate. The Group’s largest plan is the Vodafone UK plan. Further life expectancies assumed for the UK plans are 22.8/24.7 years (2022: 23.4/25.4 years) for a male/female pensioner currently aged 65 years and 23.7/25.5 years (2022: 25.4/27.5 years) from age 65 for a male/female non-pensioner member currently aged 40.
Charges made to the consolidated income statement and consolidated statement of comprehensive income (‘SOCI’) on the basis of the assumptions stated above are:
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
Current service cost |
|
44 |
|
38 |
|
37 |
Net past service (credit)/costs1 |
|
– |
|
(71) |
|
2 |
Net interest (income)/charge |
|
(7) |
|
4 |
|
(8) |
Total net cost/(credit) included within staff costs |
|
37 |
|
(29) |
|
31 |
Actuarial losses/(gains) recognised in the SOCI |
|
213 |
|
(627) |
|
686 |
Note:
1 |
No past service credits were recorded in the current financial year. In the prior year, a change in Germany relating to the provision of death and disability benefits effective from 1 April 2021 resulted in a past service credit of €49 million; further net past service credits were recognised in the year ended 31 March 2022 for the Vodafone UK plan relating to the offer of a pension increase exchange to all members at retirement and benefit clarifications. |
Duration of the benefit obligations
The weighted average duration of the defined benefit obligation at 31 March 2023 is 16 years (2022: 21 years).
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
25. Post employment benefits (continued)
Fair value of the assets and present value of the liabilities of the plans
The amount included in the consolidated statement of financial position arising from the Group’s obligations in respect of its defined benefit plans is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net surplus/ |
|
|
Assets |
|
Liabilities |
|
(deficit) |
|
|
€m |
|
€m |
|
€m |
1 April 2021 |
|
7,632 |
|
(8,085) |
|
(453) |
Service cost |
|
– |
|
(38) |
|
(38) |
Past service credit |
|
– |
|
71 |
|
71 |
Interest income/(cost) |
|
140 |
|
(144) |
|
(4) |
Return on plan assets excluding interest income |
|
58 |
|
– |
|
58 |
Actuarial gains arising from changes in demographic assumptions |
|
– |
|
7 |
|
7 |
Actuarial gains arising from changes in financial assumptions |
|
– |
|
483 |
|
483 |
Actuarial gains arising from experience adjustments |
|
– |
|
79 |
|
79 |
Employer cash contributions |
|
60 |
|
– |
|
60 |
Member cash contributions |
|
17 |
|
(17) |
|
– |
Benefits paid |
|
(241) |
|
241 |
|
– |
Exchange rate movements |
|
52 |
|
(45) |
|
7 |
Other movements |
|
(3) |
|
7 |
|
4 |
31 March 2022 |
|
7,715 |
|
(7,441) |
|
274 |
Service cost |
|
– |
|
(44) |
|
(44) |
Interest income/(cost) |
|
185 |
|
(178) |
|
7 |
Return on plan assets excluding interest income |
|
(2,475) |
|
– |
|
(2,475) |
Actuarial gains arising from changes in demographic assumptions |
|
– |
|
186 |
|
186 |
Actuarial gains arising from changes in financial assumptions |
|
– |
|
2,293 |
|
2,293 |
Actuarial losses arising from experience adjustments |
|
– |
|
(217) |
|
(217) |
Employer cash contributions |
|
42 |
|
– |
|
42 |
Member cash contributions |
|
15 |
|
(15) |
|
– |
Benefits paid |
|
(216) |
|
216 |
|
– |
Exchange rate movements |
|
(211) |
|
224 |
|
13 |
Other movements |
|
(8) |
|
– |
|
(8) |
31 March 2023 |
|
5,047 |
|
(4,976) |
|
71 |
The table below provides an analysis of the net surplus for the Group as a whole.
|
|
|
|
|
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
Analysis of net surplus: |
|
|
|
|
Total fair value of plan assets |
|
5,047 |
|
7,715 |
Present value of funded plan liabilities |
|
(4,875) |
|
(7,337) |
Net surplus for funded plans |
|
172 |
|
378 |
Present value of unfunded plan liabilities |
|
(101) |
|
(104) |
Net surplus |
|
71 |
|
274 |
Net surplus is analysed as: |
|
|
|
|
Assets1 |
|
329 |
|
555 |
Liabilities |
|
(258) |
|
(281) |
Note:
1 | Pension assets are deemed to be recoverable and there are no adjustments in respect of minimum funding requirements as economic benefits are available to the Group either in the form of future refunds or, for plans still open to benefit accrual, in the form of possible reductions in future contributions. |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
25. Post employment benefits (continued)
An analysis of net surplus is provided below for the Vodafone UK plan, which is a funded plan. As part of the merger of the Vodafone UK plan and the Cable and Wireless Worldwide Retirement Plan (‘CWWRP’) plan on 6 June 2014 the assets and liabilities of the CWW Section are segregated from the Vodafone Section and hence are reported separately below.
|
|
CWW Section |
|
|
Vodafone Section |
||||
|
|
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
|
|
€m |
|
€m |
Analysis of net surplus: |
|
|
|
|
|
|
|
|
|
Total fair value of plan assets |
|
1,845 |
|
2,850 |
|
|
1,958 |
|
3,399 |
Present value of plan liabilities |
|
(1,657) |
|
(2,565) |
|
|
(1,900) |
|
(3,166) |
Net surplus |
|
188 |
|
285 |
|
|
58 |
|
233 |
Net surpluses are analysed as: |
|
|
|
|
|
|
|
|
|
Assets |
|
188 |
|
285 |
|
|
58 |
|
233 |
Liabilities |
|
– |
|
– |
|
|
– |
|
– |
Fair value of plan assets
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
Cash and cash equivalents |
|
27 |
|
55 |
Equity investments: |
|
|
|
|
With quoted prices in an active market |
|
140 |
|
849 |
Without quoted prices in an active market |
|
322 |
|
359 |
Debt instruments: |
|
|
|
|
With quoted prices in an active market |
|
588 |
|
1,334 |
Without quoted prices in an active market |
|
288 |
|
317 |
Property: |
|
|
|
|
With quoted prices in an active market |
|
17 |
|
29 |
Without quoted prices in an active market |
|
438 |
|
460 |
Derivatives:1 |
|
|
|
|
Without quoted prices in an active market |
|
1,791 |
|
2,195 |
Investment fund |
|
782 |
|
1,161 |
Annuity policies |
|
|
|
|
With quoted prices in an active market |
|
25 |
|
34 |
Without quoted prices |
|
629 |
|
922 |
Total |
|
5,047 |
|
7,715 |
Note:
1 |
Derivatives include collateral held in the form of cash. Assets are valued using ‘level 2’ inputs under IFRS 13 ‘Fair Value Measurement’ principles and classified as unquoted accordingly. |
The fair value of plan assets, which have been measured in accordance with IFRS 13 ‘Fair Value Measurement’, are analysed by asset category above and are subdivided by assets that have a quoted market price in an active market and those that do not, such as investment funds. Where available, the fair values are quoted prices (e.g. listed equity, sovereign debt and corporate bonds). Unlisted investments without quoted prices in an active market (e.g. private equity) are included at values provided by the fund manager in accordance with relevant guidance. Other significant assets are valued based on observable inputs such as yield curves. The Vodafone UK plan annuity policies fully match the pension obligations of those pensioners insured and therefore are set equal to the present value of the related obligations. Investment funds of €782 million at 31 March 2023 (2022: €1,161 million) include investments in diversified alternative beta funds held in the Vodafone Section of the Vodafone UK plan.
The actual return on plan assets over the year to 31 March 2023 was a loss of €2,290 million (2022: €198 million gain).
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
25. Post employment benefits (continued)
Sensitivity analysis
Measurement of the Group’s defined benefit retirement obligation is sensitive to changes in certain key assumptions. The sensitivity analysis below shows how a reasonably possible increase or decrease in a particular assumption would, in isolation, result in an increase or decrease in the present value of the defined benefit obligation as at 31 March 2023.
|
|
Rate of inflation |
|
Rate of increase in salaries |
|
Discount rate |
|
Life expectancy |
||||||||
|
|
Decrease by 0.5% |
|
Increase by 0.5% |
|
Decrease by 0.5% |
|
Increase by 0.5% |
|
Decrease by 0.5% |
|
Increase by 0.5% |
|
Decrease by 1 year |
|
Increase by 1 year |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
(Decrease)/increase in present value of defined benefit obligation1 |
|
(222) |
|
260 |
|
(1) |
|
1 |
|
385 |
|
(341) |
|
(129) |
|
128 |
Note:
1 | The sensitivity analysis may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another. In presenting this sensitivity analysis, the change in the present value of the defined benefit obligation has been calculated on the same basis as prior years using the projected unit credit method at the end of the year, which is the same as that applied in calculating the defined benefit obligation liability recognised in the statement of financial position. The rate of inflation assumption sensitivity factors in the impact of changes to all assumptions relating to inflation including the rate of increase in salaries, pension increases and deferred revaluations. |
26. Share-based payments
The Group has a number of share plans used to award shares to Executive Directors and employees as part of their remuneration package. A charge is recognised over the vesting period in the consolidated income statement to record the cost of these, based on the fair value of the award on the grant date.
Accounting policies
The Group issues equity-settled share-based awards to certain employees. Equity-settled share-based awards are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based award is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of the shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions. A corresponding increase in additional paid-in capital is also recognised.
Some share awards have an attached market condition, based on total shareholder return (‘TSR’), which is taken into account when calculating the fair value of the share awards. The valuation for the TSR is based on Vodafone’s ranking within the same group of companies, where possible, over the past five years.
The fair value of awards of non-vested shares is a calculation of the closing price of the Company’s shares on the day prior to the grant date, adjusted for the present value of the delay in receiving dividends where appropriate.
The maximum aggregate number of ordinary shares which may be issued in respect of share options or share plans will not (without shareholder approval) exceed:
– 10% of the ordinary share capital of the Company in issue immediately prior to the date of grant, when aggregated with the total number of ordinary shares which have been allocated in the preceding ten year period under all plans; and |
– 5% of the ordinary share capital of the Company in issue immediately prior to the date of grant, when aggregated with the total number of ordinary shares which have been allocated in the preceding ten year period under all plans, other than any plans which are operated on an all-employee basis. |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
26. Share-based payments (continued)
Share options
Vodafone Sharesave Plan
Under the Vodafone Sharesave Plan UK staff may acquire shares in the Company through monthly savings of up to £375 over a three and/or five year period. The savings may then be used to purchase shares at the option price, which is set at the beginning of the invitation period and usually at a discount of 20% to the then prevailing market price of the Company’s shares.
Share plans
Vodafone Group executive plans
Under the Vodafone Global Incentive Plan awards of shares are granted to Directors and certain employees. The release of these shares is conditional upon continued employment and for some awards achievement of certain performance targets measured over a three year period.
Vodafone Share Incentive Plan
Following a review of the UK all-employee plans it was decided that with effect from 1 April 2017 employees would no longer be able to contribute to the Share Incentive Plan and would therefore no longer receive matching shares. Individuals who continue to hold shares in the plan will receive dividends paid out in cash.
Movements in outstanding ordinary share options
|
Ordinary share options |
||||||||
|
|
2023 |
|
2022 |
|
2021 |
|||
|
|
Millions |
|
Millions |
|
Millions |
|||
1 April |
|
|
61 |
|
|
62 |
|
|
53 |
Granted during the year |
|
|
50 |
|
|
20 |
|
|
35 |
Forfeited during the year |
|
|
(2) |
|
|
(2) |
|
|
(1) |
Exercised during the year |
|
|
(8) |
|
|
(1) |
|
|
– |
Expired during the year |
|
|
(39) |
|
|
(18) |
|
|
(25) |
31 March |
|
|
62 |
|
|
61 |
|
|
62 |
Weighted average exercise price: |
|
|
|
|
|
|
|
|
|
1 April |
|
|
£1.02 |
|
|
£1.07 |
|
|
£1.19 |
Granted during the year |
|
|
£0.83 |
|
|
£0.95 |
|
|
£1.03 |
Forfeited during the year |
|
|
£1.02 |
|
|
£1.06 |
|
|
£1.16 |
Exercised during the year |
|
|
£1.05 |
|
|
£1.17 |
|
|
£1.23 |
Expired during the year |
|
|
£1.01 |
|
|
£1.10 |
|
|
£1.27 |
31 March |
|
|
£0.87 |
|
|
£1.02 |
|
|
£1.07 |
Summary of options outstanding
|
|
31 March 2023 |
|
31 March 2022 |
|||||||||
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
remaining |
|
|
|
|
|
remaining |
|
|
|
|
Weighted |
|
average |
|
|
|
Weighted |
|
average |
|
|
|
Outstanding |
|
average |
|
contractual |
|
Outstanding |
|
average |
|
contractual |
|
|
|
shares |
|
exercise |
|
life |
|
shares |
|
exercise |
|
life |
|
|
|
Millions |
|
price |
|
Months |
|
Millions |
|
price |
|
Months |
|
Vodafone Group Sharesave Plan: |
|
|
|
|
|
|
|
|
|
|
|
|
|
£0.78 – £1.78 |
|
62 |
|
|
£0.87 |
|
33 |
|
61 |
|
£1.02 |
|
24 |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
26. Share-based payments (continued)
Share awards
Movements in non-vested shares are as follows:
|
2023 |
|
2022 |
|
2021 |
||||||||||
|
|
|
|
Weighted |
|
|
|
Weighted |
|
|
|
Weighted |
|||
|
|
|
|
average fair |
|
|
|
average fair |
|
|
|
average fair |
|||
|
|
|
|
value at |
|
|
|
value at |
|
|
|
value at |
|||
|
|
Millions |
|
grant date |
|
Millions |
|
grant date |
|
Millions |
|
grant date |
|||
1 April |
|
270 |
|
|
£1.07 |
|
267 |
|
|
£1.20 |
|
245 |
|
|
£1.41 |
Granted |
|
120 |
|
|
£1.17 |
|
113 |
|
|
£1.17 |
|
108 |
|
|
£0.99 |
Vested |
|
(70) |
|
|
£1.15 |
|
(68) |
|
|
£1.44 |
|
(56) |
|
|
£1.56 |
Forfeited |
|
(59) |
|
|
£0.89 |
|
(42) |
|
|
£1.52 |
|
(30) |
|
|
£1.10 |
31 March |
|
261 |
|
|
£1.14 |
|
270 |
|
|
£1.07 |
|
267 |
|
|
£1.20 |
Other information
The total fair value of shares vested during the year ended 31 March 2023 was £81 million (2022: £98 million; 2021: £ 108 million).
The compensation cost included in the consolidated income statement in respect of share options and share plans was €141 million (2022: €119 million; 2021: €135 million) which is comprised principally of equity-settled transactions.
The average share price for the year ended 31 March 2023 was 108.2 pence (2022: 122.1 pence; 2021: 120.8 pence).
27. Acquisitions and disposals
The note below provides details of acquisition and disposal transactions for the current year as well as those completed in the prior year. For further details see ‘Critical accounting judgements and key sources of estimation uncertainty’ in note 1 ‘Basis of preparation’ to the consolidated financial statements.
Accounting policies
Business combinations
Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values at the date of exchange of assets given, liabilities incurred or assumed and equity instruments issued by the Group. Acquisition-related costs are recognised in the consolidated income statement as incurred. The acquiree’s identifiable assets and liabilities are recognised at their fair values at the acquisition date, which is the date on which control is transferred to the Group. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the Group’s previously held equity interest in the acquiree, if any, over the net amounts of identifiable assets acquired and liabilities assumed at the acquisition date. The interest of the non-controlling shareholders in the acquiree may initially be measured either at fair value or at the non-controlling shareholders’ proportion of the net fair value of the identifiable assets acquired, liabilities and contingent liabilities assumed. The choice of measurement basis is made on an acquisition-by-acquisition basis.
Acquisition of interests from non-controlling shareholders
In transactions with non-controlling parties that do not result in a change in control, the difference between the fair value of the consideration paid or received and the amount by which the non-controlling interest is adjusted is recognised in equity.
Disposals
The difference between the carrying value of the net assets disposed of and the fair value of consideration received is recorded as a gain or loss on disposal. Foreign exchange translation gains or losses relating to subsidiaries, joint arrangements and associates that the Group has disposed of, and that have previously recorded in other comprehensive income or expense, are also recognised as part of the gain or loss on disposal.
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
27. Acquisitions and disposals (continued)
Other transactions with non-controlling shareholders in subsidiaries
The aggregate cash consideration in respect of other transactions with non-controlling shareholders in subsidiaries, net of cash acquired, is as follows:
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
Cash consideration (paid)/received |
|
|
|
|
Vantage Towers |
|
(667) |
|
217 |
Other |
|
(25) |
|
(28) |
|
|
(692) |
|
189 |
Vantage Towers
On 13 November 2022, the Group completed the purchase of 4.2% of Vantage Towers A.G. for cash consideration of €667 million, taking its shareholding to 85.8%. In the comparative period, the Group received €217 million following completion of the market stabilisation period resulting from the IPO of Vantage Towers in March 2020 and as described in the Vantage Towers prospectus.
Disposals
The aggregate cash consideration in respect of the disposal of subsidiaries, net of cash disposed, is as follows:
|
|
|
|
|
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
Cash consideration received |
|
|
|
|
Vodafone Hungary |
|
1,606 |
|
– |
Vantage Towers |
|
5,592 |
|
– |
Other disposals during the period |
|
2 |
|
– |
Net cash disposed |
|
(224) |
|
– |
|
|
6,976 |
|
– |
Vodafone Hungary
On 31 January 2023, the Group completed the sale of Vodafone Magyarország Zrt (‘Vodafone Hungary’) to 4iG Public Limited Company and Corvinus Zrt. The table below summarises the net assets disposed and the resulting loss on disposal of €69 million.
|
|
|
|
|
€m |
Goodwill |
|
(441) |
Other intangible assets |
|
(521) |
Property, plant and equipment |
|
(516) |
Inventory |
|
(17) |
Trade and other receivables |
|
(206) |
Cash and cash equivalents |
|
(3) |
Current and deferred taxation |
|
13 |
Borrowings |
|
106 |
Trade and other payables |
|
163 |
Provisions |
|
31 |
Net assets disposed |
|
(1,391) |
Cash proceeds |
|
1,606 |
Foreign exchange recycled from Currency reserve on disposal |
|
(284) |
Net loss on disposal1 |
|
(69) |
Note:
1 | Included in other income in the consolidated income statement. |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
27. Acquisitions and disposals (continued)
Vantage Towers
On 22 March 2023, the Group completed the disposal of its interest in Vantage Towers A.G. to Oak Holdings 1 GmbH, the co-control partnership of Vodafone, GIP and KKR. Vodafone retains an interest of 64.2% in Oak Holdings 1 GmbH, which owns 89.3% of Vantage Towers A.G. The table below summarises the net assets disposed and the net gain on disposal as €8,607 million.
|
|
€m |
Goodwill |
|
(3,448) |
Other intangible assets |
|
(294) |
Property, plant and equipment |
|
(4,882) |
Investments in associates and joint ventures |
|
(2,778) |
Trade and other receivables |
|
(292) |
Cash and cash equivalants |
|
(207) |
Current and deferred taxation |
|
61 |
Borrowings |
|
4,916 |
Trade and other payables |
|
658 |
Provisions |
|
556 |
Net assets disposed |
|
(5,710) |
Non-controlling interests derecognised |
|
807 |
Cash proceeds |
|
5,592 |
Fair value of Investment in Oak Holdings 1 GmbH |
|
8,634 |
Restriction of gain (note 20)1 |
|
(680) |
Foreign exchange recycled from Currency reserve on disposal |
|
(36) |
Net gain on disposal2 |
|
8,607 |
Notes:
1 | Related tax of €154 million is included in Income tax expense in the consolidated income statement. |
2 | Included in other income in the consolidated income statement. |
Vodafone Ghana
On 21 February 2023, the Group completed the sale of its 70% shareholding in Vodafone Telecommunications Company Limited (‘Vodafone Ghana’) to Telecel Group for consideration of €Nil. A net gain on disposal of €689 million has been recorded within other income and expense in the consolidated income statement.
Other matters
Vodafone Egypt
In the comparative period on 10 November 2021, the Group announced that it had agreed to transfer its 55% shareholding in Vodafone Egypt to its subsidiary, Vodacom Group Limited (‘Vodacom’).
On 13 December 2022, the Group announced the completion of the transaction. Vodafone was issued with 242 million shares in Vodacom and received cash proceeds of €577 million in exchange for its 55% shareholding in Vodafone Egypt. Following completion, Vodafone’s shareholding in Vodacom has increased from 60.5% to 65.1%. .
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
28. Commitments
A commitment is a contractual obligation to make a payment in the future, mainly in relation to agreements to buy assets such as mobile devices, network infrastructure and IT systems and leases that have not commenced. These amounts are not recorded in the consolidated statement of financial position since we have not yet received the goods or services from the supplier.
Capital commitments
The amounts below are the minimum amounts that we are committed to pay.
|
|
Company and subsidiaries |
|
Share of joint operations |
|
Group |
||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
|
€m |
Contracts placed for future capital expenditure not provided in the financial statements1 |
|
3,507 |
|
4,388 |
|
– |
|
140 |
|
3,507 |
|
4,527 |
Note:
1 | Commitment includes contracts placed for property, plant and equipment and intangible assets. |
Leases entered into by the Group but not commenced at 31 March 2023 are disclosed in note 20 ‘Leases’. Included in capital commitments is an amount of €114 million (2022: €331 million) relating to spectrum acquisition commitments in Vodacom.
In March 2023, the Group entered into an agreement with Altice Luxembourg S.A. to create a joint venture, OXG Glasfaser GmbH ‘OXG’, with 50.0% shareholding held by each shareholder. Each shareholder is committed to contribute funding of up to €950 million to OXG for the deployment of fibre-to-the-home in Germany. The funding is expected to be contributed between 2023 and 2029. The amount and timing of the funding depends on the speed and size of the fibre deployment so the funding may be for a lower value or contributed over a longer period of time. The contribution can be in the form of free capital reserves, shareholder loan, loan notes or similar instruments as agreed by the shareholders.
29. Contingent liabilities and legal proceedings
Contingent liabilities are potential future cash outflows, where the likelihood of payment is considered more than remote, but is not considered probable or cannot be measured reliably.
|
|
2023 |
|
2022 |
|
|
€m |
|
€m |
Performance bonds1 |
|
504 |
|
430 |
Other guarantees2 |
|
2,877 |
|
2,436 |
Notes:
1 | Performance bonds require the Group to make payments to third parties in the event that the Group does not perform what is expected of it under the terms of any related contracts or commercial arrangements. |
2 | Other guarantees principally comprise Vodafone Group Plc’s guarantee of the Group’s 50% share of a US$3.5 billion loan facility (2022: US$3.5 billion loan facility), which forms part of the Group’s 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 ‘Investments in associates and joint arrangements’). Other guarantees also include a secondary pledge of INR42.5 billion (2022: INR42.5 billion) over shares owned by Vodafone Group in Indus Towers to the value of €476 million (2022: €504 million). See page 197. Certain ongoing tax litigations include guarantee arrangements, principally €267 million in relation to the Netherlands tax case (refer to legal proceedings section below). |
UK pension schemes
The Group’s main defined benefit plan is the Vodafone UK Group Pension Scheme (‘Vodafone UK plan’) which has two segregated sections, the Vodafone Section and the CWW Section, as detailed in note 25 ‘Post employment benefits’.
The Group has covenanted to provide security in favour of both the Vodafone Section and CWW Section when they are in a deficit position. The deficit is measured on a prescribed basis agreed between the Group and trustee, which differs from the accounting basis reported in note 25 ‘Post employment benefits’. The Group provides surety bonds as the security.
The level of the security has varied since inception in line with the movement in the Vodafone UK plan deficit. Due to the improved funding position of the Plan the level of security has reduced over the year. As at 31 March 2023 the Vodafone UK plan retains security over €114 million (notional value) for the Vodafone Section and no security is currently required for the CWW Section. The security may be substituted either on a voluntary or mandatory basis. The Company has also provided two guarantees to the Vodafone Section of the Vodafone UK plan for a combined value up to €1.42 billion to provide security over the deficit under certain defined circumstances, including insolvency of the employers. The Company has also agreed a similar guarantee of up to €1.42 billion for the CWW Section.
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
29. Contingent liabilities and legal proceedings (continued)
An additional smaller UK defined benefit plan, the THUS Plc Group Scheme, has a guarantee from the Company for up to €114 million.
Vodafone Idea
As part of the agreement to merge Vodafone India and Idea Cellular in 2017, the parties agreed a mechanism for payments between the Group and Vodafone Idea Limited (‘VIL’) pursuant to the difference between the crystallisation of certain identified contingent liabilities in relation to legal, regulatory, tax and other matters, and refunds relating to Vodafone India and Idea Cellular. Cash payments or cash receipts relating to these matters must have been made or received by VIL before any amount becomes due from or owed to the Group. Any future payments by the Group to VIL as a result of this agreement would only be made after satisfaction of this and other contractual conditions.
The Group’s potential exposure under this mechanism is capped at INR 64 billion (€719 million) following payments made under this mechanism from Vodafone to VIL, in the year ended 31 March 2021, totalling INR 19 billion (€235 million).
On 7 February 2023, VIL issued equity to the Government of India equivalent to INR 161 billion (€1.8 billion), representing the net present value of interest accrued on both deferred spectrum auction instalments and AGR dues pursuant to a relief package announced in September 2021 which is designed to improve the liquidity and financial health of the telecom sector. Wider reforms announced as part of the relief package include a four-year moratorium on spectrum and AGR payments and the option to convert payments due on spectrum and AGR payments to equity at the end of the moratorium period which VIL elected to accept in October 2021.
VIL remains in need of additional liquidity support from its lenders and intends to raise additional funding. There are significant uncertainties in relation to VIL’s ability to make payments in relation to any remaining liabilities covered by the mechanism and no further cash payments are considered probable from the Group as at 31 March 2023. The carrying value of the Group’s investment in VIL is €nil and the Group is recording no further share of losses in respect of VIL. The Group’s potential exposure to liabilities within VIL is capped by the mechanism described above; consequently, contingent liabilities arising from litigation in India concerning operations of Vodafone India are not reported.
Indus Towers
VIL’s ability to satisfy certain payment obligations under its Master Services Agreements with Indus Towers (the ‘MSAs’) is uncertain and depends on a number of factors including its ability to raise additional funding. Under the terms of the Indus and Bharti Infratel merger in November 2020, a security package was agreed for the benefit of the newly created merged entity, Indus Towers, which could be invoked in the event that VIL was unable to make MSA payments. The security package included the following elements:
- | A cash prepayment of INR 24 billion (€279 million) by VIL to Indus Towers in respect of its undisputed payment obligations, due under the MSAs after the merger closing. The prepayment was fully utilised during the year to 31 March 2022; |
- | A primary pledge over 190.7 million shares owned by Vodafone Group in Indus Towers having a value of INR 47 billion (€544 million) as at 31 March 2021. These pledged shares were sold by the Group in the year ended 31 March 2022; the Group invested INR 33.7 billion (€393 million) of the proceeds by subscribing to newly issued VIL equity, which VIL immediately used to partially settle outstanding MSA obligations to Indus Towers resulting in an equivalent partial release of the primary pledge. On 14 February 2023, a similar transaction was undertaken with INR 4.4 billion (€49 million) remaining from the sale of the primary pledge shares, fully releasing the pledge. |
- | A secondary pledge over shares owned by Vodafone Group in Indus Towers, ranking behind Vodafone’s existing lenders for the outstanding bank borrowings of €1.5 billion as at 31 March 2023 secured against Indian assets (‘the bank borrowings’), with a maximum liability cap of INR 42.5 billion (€476 million). In the event of non-payment of relevant MSA obligations by VIL, Indus Towers would have recourse to any secondary pledged shares, after repayment of the bank borrowings in full, up to the value of the liability cap. |
Legal Proceedings
The Group is currently involved in a number of legal proceedings, including inquiries from, or discussions with, government authorities that are incidental to its operations.
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
29. Contingent liabilities and legal proceedings (continued)
Legal proceedings where the Group considers that the likelihood of material future outflows of cash or other resources is more than remote are disclosed below. Where the Group assesses that it is probable that the outcome of legal proceedings will result in a financial outflow, and a reliable estimate can be made of the amount of that obligation, a provision is recognised for these amounts.
In all cases, determining the probability of successfully defending a claim against the Group involves the application of judgement as the outcome is inherently uncertain. The determination of the value of any future outflows of cash or other resources, and the timing of such outflows, involves the use of estimates. The costs incurred in complex legal proceedings, regardless of outcome, can be significant.
The Group is not involved in any material proceedings in which any of the Group’s Directors, members of senior management or affiliates are either a party adverse to the Group or have a material interest adverse to the Group.
Indian tax cases
The Group has been challenging retrospective tax demands raised by the Indian tax authority under the Finance Act 2012 against Vodafone International Holdings BV (‘VIHBV’) relating to a transaction in 2007 whereby VIHBV acquired assets in India from Hutchison Telecommunications International Limited. Pursuant to a new scheme for resolving tax disputes introduced by legislation in August 2021, Vodafone and the Indian Government have reached a final agreement and the demands for outstanding tax (including interest and penalties) have been withdrawn in full.
Further background relating to this matter is provided in the Group’s Annual Report for the financial year ended 31 March 2022.
VISPL tax claims
Vodafone India Services Private Ltd (‘VISPL’) is involved in a number of tax cases. The total value of the claims is approximately €471 million plus interest, and penalties of up to 300% of the principal.
Of the individual tax claims, the most significant is in the amount of approximately €239 million (plus interest of €628 million), which VISPL has been assessed as owing in respect of (i) a transfer pricing margin charged for the international call centre of HTIL prior to the 2007 transaction with Vodafone for HTIL assets in India; (ii) the sale of the international call centre by VISPL to HTIL; and (iii) the acquisition of and/or the alleged transfer of options held by VISPL in Vodafone India. The first two of the three heads of tax are subject to an indemnity by HTIL. The larger part of the potential claim is not subject to an indemnity. A stay of the tax demand on a deposit of £20 million and a corporate guarantee by VIHBV for the balance of tax assessed are in place. On 8 October 2015, the Bombay High Court ruled in favour of Vodafone in relation to the options and the call centre sale. The Indian Tax Authority has appealed to the Supreme Court of India. The appeal hearing has been adjourned indefinitely.
While there is some uncertainty as to the outcome of the tax cases involving VISPL, the Group believes it has valid defences and does not consider it probable that a financial outflow will be required to settle these cases.
Netherlands tax case
Vodafone Europe BV (‘VEBV’) has received assessments totalling €267 million of tax and interest from the Dutch tax authorities, who are challenging the application of the arm’s length principle in relation to various intra-group financing transactions. VEBV has appealed against these assessments to the District Court of the Hague where a hearing was held in March 2023 and we are awaiting the decision which is currently expected in summer 2023. The Group has entered into a guarantee for the full value of the assessments issued.
The Group believes it has robust defences and does not consider it probable that there will be a financial outflow required to resolve the case.
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
29. Contingent liabilities and legal proceedings (continued)
Other cases in the Group
Germany: Kabel Deutschland takeover - class actions
The German courts have been determining the adequacy of the mandatory cash offer made to minority shareholders in Vodafone’s takeover of Kabel Deutschland in 2013. Hearings took place in May 2019 and a decision was delivered in November 2019 in Vodafone’s favour, rejecting all claims by minority shareholders. A number of shareholders appealed which was rejected by the court in December 2021. Several minority shareholders have filed a further appeal before the Federal Court of Justice. The appeal process is ongoing. While the outcome is uncertain, the Group believes it has valid defences and that the outcome of the appeal will be favourable to Vodafone.
Italy: Iliad v Vodafone Italy
In July 2019, Iliad filed a claim for €500 million against Vodafone Italy in the Civil Court of Milan. The claim alleges anti-competitive behaviour in relation to portability and certain advertising campaigns by Vodafone Italy. The main hearing on the merits of the claim took place on 8 June 2021. On 17 April 2023, the Civil Court issued a judgement in Vodafone Italy’s favour and rejected Iliad’s claim for damages in full. lliad has filed an appeal before the court of Appeal of Milan.
The Group is currently unable to estimate any possible loss in this claim in the event of an adverse judgement on appeal but while the outcome is uncertain, the Group believes it has valid defences and that it is probable that no present obligation exists.
Greece: Papistas Holdings SA, Mobile Trade Stores (formerly Papistas SA) and Athanasios and Loukia Papistas v Vodafone Greece
In October 2019, Mr. and Mrs. Papistas, and companies owned or controlled by them, filed several claims against Vodafone Greece with a total value of approximately €330 million for purported damage caused by the alleged abuse of dominance and wrongful termination of a franchise arrangement with a Papistas company. Lawsuits which the Papistas claimants had previously brought against Vodafone Group Plc and certain directors and officers of Vodafone were withdrawn. Vodafone Greece filed a counter claim and all claims were heard in February 2020. All of the Papistas claims were rejected by the Athens Court of First Instance because the stamp duty payments required to have the merits of the case considered had not been made. Vodafone Greece’s counter claim was also rejected. The Papistas claimants and Vodafone Greece have each filed appeals. The appeal hearings took place on 23 February and 11 May 2023 and we are waiting to receive the judgements.
The amount claimed in these lawsuits is substantial and, if the claimants are successful, the total potential liability could be material. However, we are continuing vigorously to defend the claims and based on the progress of the litigation so far the Group believes that it is highly unlikely that there will be an adverse ruling for the Group. On this basis, the Group does not expect the outcome of these claims to have a material financial impact.
UK: Phones 4U in Administration v Vodafone Limited and Vodafone Group Plc and Others
In December 2018, the administrators of former UK indirect seller, Phones 4U, sued the three main UK mobile network operators (‘MNOs’), including Vodafone, and their parent companies in the English High Court. The administrators allege collusion between the MNOs to pull their business from Phones 4U, thereby causing its collapse. Vodafone and the other defendants filed their defences in April 2019 and the Administrators filed their replies in October 2019. Disclosure has taken place and witness statements were filed in December 2021. The judge has also ordered that there should be a split trial between liability and damages. The first trial on liability took place from May to July 2022. We are waiting to receive the judgement.
Taking into account all available evidence, the Group assesses it to be more likely than not that a present obligation does not exist and that the allegations of collusion are completely without merit; the Group is vigorously defending the claim. The value of the claim is not pleaded but we understand it to be the total value of the business, allegedly equivalent to approximately £1 billion with the addition of alleged exemplary damages. Vodafone’s alleged share of the liability is also not pleaded. The Group is not able to estimate any possible loss in the event of an adverse judgment.
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|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
30. Related party transactions
The Group has a number of related parties including joint arrangements and associates, pension schemes and Directors and Executive Committee members (see note 12 ‘Investments in associates and joint arrangements’, note 25 ‘Post employment benefits’ and note 23 ‘Directors and key management compensation’).
Transactions with joint arrangements and associates
Related party transactions with the Group’s joint arrangements and associates primarily comprise fees for the use of products and services including network airtime and access charges, fees for the provision of network infrastructure and cash pooling arrangements. No related party transactions have been entered into during the year which might reasonably affect any decisions made by the users of these consolidated financial statements except as disclosed below.
|
|
2023 |
|
2022 |
|
2021 |
|
|
€m |
|
€m |
|
€m |
Sales of goods and services to associates |
|
20 |
|
20 |
|
14 |
Purchase of goods and services from associates |
|
8 |
|
10 |
|
5 |
Sales of goods and services to joint arrangements |
|
220 |
|
221 |
|
203 |
Purchase of goods and services from joint arrangements |
|
263 |
|
298 |
|
109 |
Interest income receivable from joint arrangements1 |
|
52 |
|
48 |
|
65 |
Interest expense payable to joint arrangements1 |
|
33 |
|
52 |
|
56 |
|
|
|
|
|
|
|
Trade balances owed: |
|
|
|
|
|
|
by associates |
|
7 |
|
8 |
|
– |
to associates |
|
1 |
|
6 |
|
– |
by joint arrangements |
|
170 |
|
139 |
|
– |
to joint arrangements |
|
329 |
|
34 |
|
– |
Other balances owed by associates |
|
– |
|
80 |
|
– |
Other balances owed by joint arrangements1 |
|
980 |
|
1,080 |
|
– |
Other balances owed to joint arrangements2 |
|
5,628 |
|
1,561 |
|
– |
Notes:
1 | Amounts arise primarily through VodafoneZiggo and Oak Holdings 1 GmbH. Interest is paid/received in line with market rates. |
2 | Amounts are primarily in relation to leases of tower space from Oak Holdings 1 GmbH (2022: INWIT S.p.A.). |
On 22 March 2023, the Group completed the disposal of its interest in Vantage Towers A.G. to Oak Holdings 1 GmbH, the co-control partnership of Vodafone, GIP and KKR. Vodafone retained a non-controlling interest of 64.2% in Oak Holdings 1 GmbH, which owns 89.3% of Vantage Towers A.G. Oak Holdings 1 GmbH is a joint venture of the Group.
Dividends received from associates and joint ventures are disclosed in the consolidated statement of cash flows.
Transactions with Directors other than compensation
During the three years ended 31 March 2023 and as of 21 June 2023, no Director nor any other executive officer, nor any associate of any Director or any other executive officer, was indebted to the Group. During the three years ended 31 March 2023 and as of 21 June 2023, the Group has not been a party to any other material transaction, or proposed transactions, in which any member of the key management personnel (including Directors, any other executive officer, senior manager, any spouse or relative of any of the foregoing or any relative of such spouse) had or was to have a direct or indirect material interest.
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
31. Related undertakings
A full list of all of our subsidiaries, joint arrangements and associated undertakings is detailed below.
A full list of subsidiaries, joint arrangements and associated undertakings (as defined in the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008) as at 31 March 2023 is detailed below. No subsidiaries are excluded from the Group consolidation. Unless otherwise stated the Company’s subsidiaries all have share capital consisting solely of ordinary shares and are indirectly held. The percentage held by Group companies reflect both the proportion of nominal capital and voting rights unless otherwise stated. Summarised financial information is provided in respect of the Group’s most significant joint arrangements and associates in note 12 ‘Investments in associates and joint arrangements’.
Subsidiaries
A subsidiary is an entity directly or indirectly controlled by the Company. Control is achieved where the Company has existing rights that give it the current ability to direct the activities that affect the Company’s returns and exposure or rights to variable returns from the entity. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling shareholder’s share of changes in equity since the date of the combination. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
31. Related undertakings (continued)
Company name |
% of share class held |
Share Class |
Albania |
|
|
Autostrada Tirane-Durres, Rruga: “Pavaresia”, Nr 61, Kashar, Tirana, Albania |
|
|
Vodafone Albania Sh.A |
99.94 |
Ordinary shares |
Rruga "Ibrahim Rugova", Sky Tower, Kati i 5, Hyrja 2, Tiranë, 1000, Albania |
|
|
_VOIS Albania Shpk. |
100.00 |
Ordinary shares |
Australia |
|
|
Mills Oakley , Level 7, 151 Clarence Street, Sydney NSW 2000, Australia |
|
|
Vodafone Enterprise Australia Pty Limited |
100.00 |
Ordinary shares |
Austria |
|
|
c/o Stolitzka & Partner Rechtsanwälte OG, Kärntner Ring 12, 3. Stock, 1010, Wien, Austria |
|
|
Vodafone Enterprise Austria GmbH |
100.00 |
Ordinary shares |
Bahrain |
|
|
RSM Bahrain, 3rd floor Falcon Tower, Diplomatic Area, Manama, PO BOX 11816, Bahrain |
|
|
Vodafone Enterprise Bahrain W.L.L. |
100.00 |
Ordinary shares |
Belgium |
|
|
Malta House, rue Archimède 25, 1000 Bruxelles, Belgium |
|
|
Vodafone Belgium SA/NV |
100.00 |
Ordinary shares |
Brazil |
|
|
Av José Rocha Bonfim, 214, Cond Praça Capital - Edifício Toronto, sls 228/229 13080-900 Jardim Santa Genebra - Campinas, São Paulo, Brazil |
|
|
Cobra do Brasil Serviços de Telemàtica ltda. (in process of dissolution) |
70.00 |
Ordinary shares |
Av. Paulista, 37 - 4º andar, Sala 427, Bela Vista, CEP, 01311-902, São Paulo, Brazil |
|
|
Vodafone Empresa Brasil Telecomunicações Ltda |
100.00 |
Ordinary shares |
Rua Boa Vista, No. 254, room 1304 (parte), Centro, São Paulo, 01014907, Brazil |
|
|
Vodafone Serviços Empresariais Brasil Ltda. |
100.00 |
Ordinary shares |
Bulgaria |
|
|
10 Tsar Osvoboditel Blvd., 3rd Floor, Spredets Region, Sofia, 1000, Bulgaria |
|
|
Vodafone Enterprise Bulgaria EOOD |
100.00 |
Ordinary shares |
Canada |
|
|
c/o ARC Information Services Inc., 3-84 Castlebury Crescent, Toronto ON M2H 1W8, Canada |
|
|
Vodafone Canada Inc. |
100.00 |
Common shares |
Cayman Islands |
|
|
One Nexus Way, Camana Bay, Grand Cayman, KY1-9005, Cayman Islands |
|
|
CGP Investments (Holdings) Limited |
100.00 |
Ordinary shares |
China |
|
|
Building 21, 11, Kangdin5g St., BDA, Beijing, 100176 - China |
|
|
Vodafone Automotive Technologies (Beijing) Co, Ltd |
100.00 |
Ordinary shares |
Level 9, Tower 2, China Central Place, Room 941, No.79 Jianguo Road, Chaoyang District, Beijing, 100025, China |
|
|
Vodafone Enterprise Communications Technical Service (Shanghai) Co., Ltd. Beijing Branch2 |
100.00 |
Branch |
Room 1603, 16th Floor, 1200 Pudong Avenue, Free Trade Zone, Shanghai, China |
|
|
Vodafone Enterprise Communications Technical Service (Shanghai) Co., Ltd. |
100.00 |
Ordinary shares |
Congo, The Democratic Republic of the |
|
|
292 Avenue de La Justice, Commune de la Gombe, Kinshasa, The Democratic Republic of the Congo |
|
|
Vodacom Congo (RDC) SA5 |
33.20 |
Ordinary shares |
Building Commimo II Ground Floor Right, 3157 Boulevard du 30 Juin, Commune de la Gombe, Kinshasa, DRC Congo, The Democratic Republic of the Congo |
|
|
Vodacash S.A5 |
33.20 |
Ordinary shares |
Cyprus |
|
|
Ali Rıza Efendi Caddesi No:33/A Ortaköy, Lefkoşa, Cyprus |
|
|
Vodafone Evde Operations Ltd |
100.00 |
Ordinary shares |
Vodafone Mobile Operations Limited |
100.00 |
Ordinary shares |
Czech Republic |
|
|
náměstí Junkových 2, Prague 5, 15500, Czech Republic |
|
|
Nadace Vodafone Česká Republika |
100.00 |
Trustee |
Oskar Mobil s.r.o. |
100.00 |
Ordinary shares |
Vodafone Czech Republic A.S. |
100.00 |
Ordinary shares |
Vodafone Enterprise Europe (UK) Limited - Czech Branch2 |
100.00 |
Branch |
Praha 4, Závišova 502/5, 14000, Nusle, Czech Republic |
|
|
Vantage Towers 2 s.r.o |
100.00 |
Ordinary shares |
Závišova Real Estate, s.r.o. |
100.00 |
Ordinary shares |
Denmark |
|
|
Tuborg Boulevard 12, 2900, Hellerup, Denmark |
|
|
Vodafone Enterprise Denmark A/S |
100.00 |
Ordinary shares |
Egypt |
|
|
37 Kasr El Nil St, 4th. Floor, Cairo, Egypt |
|
|
Starnet5 |
35.81 |
Ordinary shares |
54 El Batal Ahmed Abed El Aziz, Mohandseen, Giza, Egypt |
|
|
Sarmady Communications5 |
35.82 |
Ordinary shares |
Building no. 2109 “VHUB1”, Smart Village, Cairo Alexandria, Egypt |
|
|
Vodafone International Services LLC5 |
100.00 |
Ordinary shares |
Site No 15/3C, Central Axis, 6th October City, Egypt |
|
|
Vodafone Egypt Telecommunications S.A.E.5 |
35.82 |
Ordinary shares |
|
|
|
Smart Village C3 Vodafone Building, Egypt |
|
|
Vodafone Data5 |
35.81 |
Ordinary shares |
Vodafone Building Zahraa EL Maadi, Building A, Service Area D, Maadi, Cairo, Egypt |
|
|
Vodafone For Trading5 |
35.78 |
Ordinary shares |
Finland |
|
|
c/o Eversheds Asianajotoimisto Oy, Fabianinkatu 29 B, Helsinki, 00100, Finland |
|
|
Vodafone Enterprise Finland Oy |
100.00 |
Ordinary shares |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
France |
|
|
1300 route de Cretes, Le WTC, Bat I1, 06560, Valbonne Soph, France |
|
|
Vodafone Automotive Telematics Development S.A.S |
100.00 |
Ordinary shares |
EuroPlaza Tour, 20, Avenue Andre Prothin, La Défense Cedex - France (149153), 92400, Courbevoie, France |
|
|
Vodafone Automotive France S.A.S |
100.00 |
Ordinary shares |
Vodafone Enterprise France SAS |
100.00 |
New euro shares |
Rue Champollion, 22300, Lannion, France |
|
|
Apollo Submarine Cable System Ltd – French Branch2 |
100.00 |
Branch |
Germany |
|
|
Altes Forsthaus 2, 67661, Kaiserslautern, Germany |
|
|
TKS Telepost Kabel-Service Kaiserslautern GmbH3 |
94.01 |
Ordinary shares |
Betastraße 6-8, 85774 Unterföhring, Germany |
|
|
Kabel Deutschland Holding AG |
94.01 |
Ordinary shares |
Vodafone Customer Care GmbH3 |
94.01 |
Ordinary shares |
Vodafone Deutschland GmbH |
94.01 |
Ordinary shares |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
31. Related undertakings (continued)
Company name |
% of share class held |
Share class |
Buschurweg 4, 76870 Kandel, Germany |
|
|
Vodafone Automotive Deutschland GmbH |
100.00 |
Ordinary shares |
Ferdinand-Braun-Platz 1, 40549, Düsseldorf, Germany |
|
|
Vodafone Enterprise Germany GmbH |
100.00 |
Ordinary shares |
Vodafone GmbH |
100.00 |
Ordinary A shares, Ordinary B shares |
Vodafone Group Services GmbH |
100.00 |
Ordinary shares |
Vodafone Institut für Gesellschaft und Kommunikation GmbH |
100.00 |
Ordinary shares |
Vodafone Stiftung Deutschland Gemeinnützige GmbH |
100.00 |
Ordinary shares |
Vodafone Vierte Verwaltungs AG |
100.00 |
Ordinary shares |
Vodafone West GmbH |
100.00 |
Ordinary shares |
Friedrich-Wilhelm-Strasse 2, 38100, Braunschweig, Germany |
|
|
KABELCOM Braunschweig Gesellschaft Für Breitbandkabel-Kommunikation Mit Beschränkter Haftung3 |
94.01 |
Ordinary shares |
Holzmarkt 1, 50676, Köln, North Rhine-Westphalia, Germany |
|
|
Grandcentrix GmbH |
100.00 |
Ordinary shares |
Nobelstrasse 55, 18059, Rostock, Germany |
|
|
"Urbana Teleunion" Rostock GmbH & Co.KG3 |
65.80 |
Ordinary shares |
Seilerstrasse 18, 38440, Wolfsburg, Germany |
|
|
KABELCOM Wolfsburg Gesellschaft für Breitbandkabel-Kommunikation mit beschränkter Haftung3 |
94.01 |
Ordinary shares |
Greece |
|
|
12,5 km National Road Athens – Lamia, Metamorfosi / Athens, 14452, Greece Vodafone Innovus S.A |
99.87 |
Ordinary shares |
1-3 Tzavella str, 152 31 Halandri, Athens, Greece |
|
|
Vodafone-Panafon Hellenic Telecommunications Company S.A. |
99.87 |
Ordinary shares |
Pireos 163 & Ehelidon, Athens, 11854, Greece |
|
|
360 Connect S.A. |
99.87 |
Ordinary shares |
Guernsey |
|
|
Martello Court, Admiral Park, St. Peter Port, GY1 3HB, Guernsey |
|
|
FB Holdings Limited |
100.00 |
Ordinary shares |
Le Bunt Holdings Limited |
100.00 |
Ordinary shares |
Silver Stream Investments Limited |
100.00 |
Ordinary shares |
Roseneath, The Grange, St Peter Port, GY1 2QJ, Guernsey |
|
|
VBA Holdings Limited5 |
65.10 |
Ordinary shares, Non-voting irredeemable non-cumulative preference shares |
VBA International Limited5 |
65.10 |
Ordinary shares, Non-voting irredeemable non-cumulative preference shares |
Hong Kong |
|
|
Level 24, Dorset House, Taikoo Place, 979 King’s Road, Quarry Bay, Hong Kong |
|
|
Vodafone Enterprise Hong Kong Ltd |
100.00 |
Ordinary shares |
Hungary |
|
|
40-44 Hungaria Krt., Budapest, H-1087, Hungary |
|
|
VSSB Vodafone Szolgáltató Központ Budapest Zártkörűen Működő Részvénytársaság |
100.00 |
Registered ordinary shares |
India |
|
|
10th Floor, Tower A&B, Global Technology Park, (Maple Tree Building), Marathahalli Outer Ring Road, Devarabeesanahalli Village, Varthur Hobli, Bengaluru, Karnataka, 560103, India |
|
|
Cable & Wireless Networks India Private Limited |
100.00 |
Equity shares |
Cable and Wireless (India) Limited - Branch2 |
100.00 |
Branch |
Cable and Wireless Global (India) Private Limited |
100.00 |
Equity shares |
201 - 206, Shiv Smriti Chambers, 49/A, Dr. Annie Besant Road, Mumbai, Maharashtra, Worli, 400018, India |
|
|
Omega Telecom Holdings Private Limited |
100.00 |
Equity shares |
Vodafone India Services Private Limited |
100.00 |
Equity shares |
Business@Mantri, Tower B, Wing no - B1 & B2, 3rd Floor, S. No. - 197, Near Hotel Four Points, Lohegaon, Pune, Maharashtra, 411014, India |
|
|
Vodafone Global Services Private Limited |
100.00 |
Equity shares |
E-47, Bankra Super Market, Bankra, Howrah, West Bengal, 711403, India |
|
|
Usha Martin Telematics Limited |
100.00 |
Equity shares |
Ireland |
|
|
2nd Floor, Palmerston House, Fenian Street, DUBLIN 2, Ireland |
|
|
Vodafone International Financing Designated Activity Company |
100.00 |
Ordinary shares |
38/39 Fitzwilliam Square West, Dublin 2, D02 NX53, Ireland |
|
|
Vodafone Enterprise Global Limited |
100.00 |
Ordinary shares |
Vodafone Global Network Limited |
100.00 |
Ordinary shares |
Mountainview, Leopardstown, Dublin 18, Ireland |
|
|
VF Ireland Property Holdings Limited |
100.00 |
Ordinary euro shares |
Vodafone Group Services Ireland Limited |
100.00 |
Ordinary shares |
Vodafone Ireland Limited |
100.00 |
Ordinary shares |
Vodafone Ireland Marketing Limited |
100.00 |
Ordinary shares |
Vodafone Ireland Retail Limited |
100.00 |
Ordinary shares |
Italy |
|
|
Piazzale Luigi Cadorna, 4, 20123, Milano, Italy |
|
|
Vodafone Global Enterprise (Italy) S.R.L. |
100.00 |
Ordinary shares |
SS 33 del Sempione KM 35, 212, 21052 Busto Arsizio (VA), Italy |
|
|
Vodafone Automotive Italia S.p.A |
100.00 |
Ordinary shares |
Via Astico 41, 21100 Varese, Italy |
|
|
Vodafone Automotive Electronic Systems S.r.L |
100.00 |
Ordinary shares |
Vodafone Automotive SpA |
100.00 |
Ordinary shares |
Vodafone Automotive Telematics Srl |
100.00 |
Ordinary shares |
Via Jervis 13, 10015, Ivrea (TO), Italy |
|
|
VEI S.r.l. |
100.00 |
Partnership interest shares |
Vodafone Italia S.p.A. |
100.00 |
Ordinary shares |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
Via Lorenteggio 240, 20147, Milan, Italy |
|
|
Vodafone Enterprise Italy S.r.L |
100.00 |
Euro shares |
Vodafone Gestioni S.p.A. |
100.00 |
Ordinary shares |
Vodafone Servizi E Tecnologie S.R.L. |
100.00 |
Equity shares |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
31. Related undertakings (continued)
Company name |
% of share class held |
Share Class |
IVia per Carpi 26/B, 42015, Correggio (RE), Italy |
|
|
VND S.p.A. |
100.00 |
Ordinary shares |
Japan |
|
|
KAKiYa building, 9F, 2-7-17 Shin-Yokohama, Kohoku-ku, Yokoha- City, Kanagawa, 222-0033, Japan |
|
|
Vodafone Automotive Japan KK |
100.00 |
Ordinary shares |
Marunouchi Trust Tower North 15F, 8-1, Marunouchi 1-chome, level 15 , Chiyoda-ku, Tokyo, Japan |
|
|
Vodafone Enterprise U.K. – Japanese Branch2 |
100.00 |
Branch |
Vodafone Global Enterprise (Japan) K.K. |
100.00 |
Ordinary shares |
Jersey |
|
|
44 Esplanade, St Helier, JE4 9WG, Jersey |
|
|
Vodafone International 2 Limited |
100.00 |
Ordinary shares |
Kenya |
|
|
6th Floor, ABC Towers, ABC Place, Waiyaki Way, Nairobi, 00100, Kenya |
|
|
M-PESA Holding Co. Limited |
100.00 |
Equity shares |
Vodafone Kenya Limited5 |
69.46 |
Ordinary voting shares |
The Riverfront, 4th floor, Prof. David Wasawo Drive, Off Riverside Drive, Nairobi, Kenya |
|
|
Vodacom Business (Kenya) Limited5 |
52.08 |
Ordinary shares |
Korea, Republic of |
|
|
ASEM Tower level 37, 517 Yeongdong-daero, Gangnam-gu, Seoul, 135-798, Korea, Republic of |
|
|
Vodafone Enterprise Korea Limited |
100.00 |
Ordinary shares |
Lesotho |
|
|
585 Mabile Road, Vodacom Park, Maseru, Lesotho, Lesotho |
|
|
Vodacom Lesotho (Pty) Limited5 |
52.08 |
Ordinary shares |
VCL Financial Services (Pty) Ltd5 |
52.08 |
Ordinary shares |
Luxembourg |
|
|
15 rue Edward Steichen, Luxembourg, 2540, Luxembourg |
|
|
Tomorrow Street GP S.à r.l. |
100.00 |
Ordinary shares |
Vodafone Enterprise Global Businesses S.à r.l. |
100.00 |
Ordinary shares |
Vodafone Enterprise Luxembourg S.A. |
100.00 |
Ordinary euro shares |
Vodafone International 1 S.à r.l. |
100.00 |
Ordinary shares |
Vodafone International M S.à r.l. |
100.00 |
Ordinary shares |
Vodafone Investments Luxembourg S.à r.l. |
100.00 |
Ordinary shares |
Vodafone Luxembourg S.à r.l. |
100.00 |
Ordinary shares |
Vodafone Procurement Company S.à r.l. |
100.00 |
Ordinary shares |
Vodafone Roaming Services S.à r.l. |
100.00 |
Ordinary shares |
Vodafone Services Company S.à r.l. |
100.00 |
Ordinary shares |
Malaysia |
|
|
Suite 13.03, 13th Floor, Menara Tan & Tan, 207 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia |
|
|
Vodafone Global Enterprise (Malaysia) Sdn Bhd |
100.00 |
Ordinary shares |
Malta |
|
|
Portomaso Business Tower, Level 15B, St Julians, STJ 4011, Malta |
|
|
Vodafone Holdings Limited |
100.00 |
‘A’ Ordinary shares, ‘B’ Ordinary shares |
Vodafone Insurance Limited |
100.00 |
‘A’ Ordinary shares, ‘B’ Ordinary shares |
Mauritius |
|
|
10th Floor, Standard Chartered Towers, 19 Cybercity, Ebene, Mauritius, Mauritius |
|
|
Mobile Wallet VM15 |
65.10 |
Ordinary shares |
Mobile Wallet VM25 |
65.10 |
Ordinary shares |
VBA (Mauritius) Limited5 |
65.10 |
Ordinary shares, Redeemable preference shares |
Vodacom International Limited5 |
65.10 |
Ordinary shares, Non-Cumulative preference shares |
Fifth Floor, Ebene Esplanade, 24 Bank Street, Cybercity, Ebene, Mauritius |
|
|
Al-Amin Investments Limited |
100.00 |
Ordinary shares |
Array Holdings Limited |
100.00 |
Ordinary shares |
Asian Telecommunication Investments (Mauritius) Limited |
100.00 |
Ordinary shares |
CCII (Mauritius), Inc. |
100.00 |
Ordinary shares |
CGP India Investments Ltd. |
100.00 |
Ordinary shares |
Euro Pacific Securities Ltd. |
100.00 |
Ordinary shares |
Mobilvest |
100.00 |
Ordinary shares |
Prime Metals Ltd. |
100.00 |
Ordinary shares |
Trans Crystal Ltd. |
100.00 |
Ordinary shares |
Vodafone Mauritius Ltd. |
100.00 |
Ordinary shares |
Vodafone Telecommunications (India) Limited |
100.00 |
Ordinary shares |
Vodafone Tele-Services (India) Holdings Limited |
100.00 |
Ordinary shares |
Mexico |
|
|
Avenida Insurgentes Sur No. 1647, Piso 12, despacho 1202, Colonia San José Insurgentes, Alcaldía Benito Juárez, C.P. 03900, Ciudad de México, Mexico |
|
|
Vodafone Empresa México S.de R.L. de C.V. |
100.00 |
Corporate certificate series A shares, Corporate certificate series B shares |
Mozambique |
|
|
Rua dos Desportistas, Numero 649, Cidade de Maputo, Mozambique |
|
|
Vodacom Moçambique, SA5 |
55.33 |
Ordinary shares |
Vodafone M-Pesa, S.A5 |
55.33 |
Ordinary shares |
Netherlands |
|
|
Rivium Quadrant 173, 15th Floor, 2909 LC, Capelle aan den IJssel, Netherlands |
|
|
Vodafone Enterprise Netherlands B.V. |
100.00 |
Ordinary shares |
Vodafone Europe B.V. |
100.00 |
Ordinary shares |
Vodafone International Holdings B.V. |
100.00 |
Ordinary shares |
Vodafone Panafon International Holdings B.V. |
99.87 |
Ordinary shares |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
Zuid-hollanden 7, Rode Olifant, Spaces, 2596AL, den Haag, Netherlands |
|
|
IoT.nxt USA BV5 |
42.31 |
Ordinary shares |
IOT.NXT B.V.5 |
42.31 |
Ordinary shares |
IoT.nxt Europe BV5 |
42.31 |
Ordinary shares |
New Zealand |
|
|
74 Taharoto Road, Takapuna, Auckland, 0622, New Zealand |
|
|
Vodafone Enterprise Hong Kong Limited - New Zealand Branch2 |
100.00 |
Branch |
Norway |
|
|
c/o EconPartner AS, Dronning Mauds gate 15, Oslo, 0250, Norway |
|
|
Vodafone Enterprise Norway AS |
100.00 |
Ordinary shares |
Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN, United Kingdom |
|
|
Vodafone Limited – Norway Branch2 |
100.00 |
Branch |
Oman |
|
|
Knowledge Oasis Muscat, Al-seeb, Muscat, Governorate P.O Box 104 135, Oman |
|
|
Vodafone Services LLC |
100.00 |
Shares |
Poland |
|
|
ul. Towarowa 28, 00-839, Warsaw, Poland |
|
|
Vodafone Business Poland sp. z o.o. |
100.00 |
Ordinary shares |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
31. Related undertakings (continued)
|
% of share class |
|
|
held by Group |
|
Company name |
Companies |
Share class |
Portugal |
|
|
Av. D. João II, nº 36 – 8º Piso, 1998 – 017, Parque das Nações, Lisboa, Portugal |
|
|
Oni Way - Infocomunicacoes, S.A |
100.00 |
Ordinary shares |
Vodafone Enterprise Spain, S.L.U. – Portugal Branch2 |
100.00 |
Branch |
Vodafone Portugal – Comunicacoes Pessoais, S.A. |
100.00 |
Ordinary shares |
Vodafone Solutions, Unipessoal LDA |
100.00 |
Ordinary shares |
Romania |
|
|
1 A Constantin Ghercu Street, 10th Floor, 6th District, Bucharest, Romania |
|
|
UPC Services S.R.L. (in liquidation) |
100.00 |
Ordinary shares |
18 Diligenței Steet, 1st floor, Building C1, Ploiesti, Prahova County, Romania |
|
|
Evotracking SRL |
100.00 |
Ordinary shares |
201 Barbu Vacarescu Street, 5th floor, 2nd District, Bucharest, Romania |
|
|
Vodafone External Services SRL |
100.00 |
Ordinary shares |
Vodafone Foundation |
100.00 |
Sole member |
201 Barbu Vacarescu, 4th floor, 2nd District, Bucharest, Romania |
|
|
Vodafone Romania S.A |
100.00 |
Ordinary shares |
62 D Nordului Street, District 1, Bucharest, Romania |
|
|
UPC Foundation |
100.00 |
Sole member |
Oltenitei Street no. 2, City Offices Building, 3rd Floor, Bucharest 4th District, Romania |
|
|
Vodafone România Technologies SRL |
100.00 |
Ordinary shares |
Sectorul 2, Strada Barbu Văcărescu, Nr. 201, Etaj 1, Bucharest, Romania |
|
|
Vodafone România M – Payments SRL |
100.00 |
Ordinary shares |
Russian Federation |
|
|
Build. 2, 14/10, Chayanova str., 125047, Moscow, Russian Federation |
|
|
Cable & Wireless CIS Svyaz LLC |
100.00 |
Charter capital shares |
Serbia |
|
|
Vladimira Popovića 38-40, New Belgrade, 11070, Serbia |
|
|
Vodafone Enterprise Equipment Limited Ogranak u Beogradu - Serbia Branch2 |
100.00 |
Branch |
Singapore |
|
|
Asia Square Tower 2, 12 Marina View, #17-01, 018961, Singapore |
|
|
Vodafone Enterprise Singapore Pte.Ltd |
100.00 |
Ordinary shares |
Slovakia |
|
|
Karadžičova 2, mestská časť Staré mesto, Bratislava, 811 09, Slovakia |
|
|
Vodafone Global Network Limited – Slovakia Branch2 |
100.00 |
Branch |
Prievozská 6, Bratislava, 821 09, Slovakia |
|
|
Vodafone Czech Republic A.S. – Slovakia Branch2 |
100.00 |
Branch |
South Africa |
|
|
9 Kinross Street, Germiston South, 1401, South Africa |
|
|
Vodafone Holdings (SA) Proprietary Limited |
100.00 |
Ordinary shares |
Vodafone Investments (SA) Proprietary Limited |
100.00 |
Ordinary A shares, “B” Ordinary no par value shares |
Bylsbridge Office Park, Building 14m Block C, 1st Floor, Alexandra Road, Centurion, Highveld Ext 73, 0046, South Africa |
|
|
IoT.nxt (Pty) Limited5 |
42.31 |
Ordinary shares |
IoT.nxt Development (Pty) Limited5 |
42.31 |
Ordinary shares |
10T Holdings Proprietary Limited5 |
42.31 |
Ordinary shares |
Vodacom Corporate Park, 082 Vodacom Boulevard, Midrand, 1685, South Africa |
|
|
Jupicol (Proprietary) Limited5 |
45.57 |
Ordinary shares |
Storage Technology Services (Pty) Limited5 |
33.20 |
Ordinary shares |
Infinity Services Partner Company5 |
65.10 |
Ordinary shares |
Mezzanine Ware (RF) Proprietary Limited5 |
58.59 |
Ordinary shares |
Motifprops 1 (Proprietary) Limited5 |
65.10 |
Ordinary shares |
Vodacom (Pty) Limited5 |
65.10 |
Ordinary shares, Ordinary A shares |
Vodacom Business Africa Group (Pty) Limited5 |
65.10 |
Ordinary shares |
Vodacom Business Africa SA (Pty) Limited5 |
65.10 |
Ordinary shares |
Vodacom Financial Services (Proprietary) Limited5 |
65.10 |
Ordinary shares |
Vodacom Group Limited |
65.10 |
Ordinary shares |
Vodacom Insurance Administration Company (Proprietary) Limited5 |
65.10 |
Ordinary shares |
Vodacom Insurance Company (RF) Limited5 |
65.10 |
Ordinary shares |
Vodacom International Holdings (Pty) Limited5 |
65.10 |
Ordinary shares |
Vodacom Life Assurance Company (RF) Limited5 |
65.10 |
Ordinary shares |
Vodacom Payment Services (Proprietary) Limited5 |
65.10 |
Ordinary shares |
Vodacom Properties No 1 (Proprietary) Limited5 |
65.10 |
Ordinary shares |
Vodacom Properties No.2 (Pty) Limited5 |
65.10 |
Ordinary shares |
Vodacom Tower Company Proprietary Limited5 |
65.10 |
Ordinary shares |
Wheatfields Investments 276 (Proprietary) Limited5 |
65.10 |
Ordinary shares |
XLink Communications (Proprietary) Limited5 |
65.10 |
Ordinary A shares |
Spain |
|
|
Antracita, 7 – 28045, Madrid, Spain |
|
|
Vodafone Automotive Iberia S.L. |
100.00 |
Ordinary shares |
Avenida de América 115, 28042, Madrid, Spain |
|
|
Vodafone Energía, S.L. |
100.00 |
Ordinary shares |
Vodafone Enterprise Spain SLU |
100.00 |
Ordinary euro shares |
Vodafone España, S.A.U. |
100.00 |
Ordinary shares |
Vodafone Holdings Europe, S.L.U. |
100.00 |
Ordinary shares |
Vodafone ONO, S.A.U. |
100.00 |
Ordinary shares |
Vodafone Servicios, S.L.U. |
100.00 |
Ordinary shares |
Torre Norte Adif, Explanada de la Estación no 7, 29002, Málaga, Spain |
|
|
Vodafone Intelligent Solutions España, S.L.U. |
100.00 |
Ordinary shares |
Sweden |
|
|
c/o Hellström advokatbyrå, Box 7305, 103 90, Stockholm, Sweden |
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
Vodafone Enterprise Sweden AB |
100.00 |
Ordinary shares, Shareholder’s contribution shares |
Switzerland |
|
|
Schiffbaustrasse 2, 8005, Zurich, Switzerland |
|
|
Vodafone Enterprise Switzerland AG |
100.00 |
Ordinary shares |
Taiwan |
|
|
22F., No.100, Songren Road., Xinyi District, Taipei City, 11070, Taiwan |
|
|
Vodafone Global Enterprise Taiwan Limited |
100.00 |
Ordinary shares |
Tanzania, United Republic of |
|
|
15 Floor, Vodacom Tower, Ursino Estate, Plot No. 23, Bagamoyo Road, Dar es Salaam, Tanzania, United Republic of |
|
|
M-Pesa Limited5 |
48.82 |
Ordinary A shares, Ordinary B shares |
Shared Networks Tanzania Limited5 |
48.82 |
Ordinary shares |
Vodacom Tanzania Public Limited Company5 |
48.82 |
Ordinary shares |
3rd Floor, Maktaba (Library), ComplexBibi, Titi Mohaned Road, Dar es Salaam, Tanzania, United Republic of |
|
|
Gateway Communications Tanzania Limited5 |
64.45 |
Ordinary shares |
Thailand |
|
|
725 Metropolis Building, 20th floor, Unit 100, Sukhumvit Road, Klongton Nua Sub-district, Watthana District, Bangkok, 10110, Thailand |
|
|
Vodafone Business Siam Co., Ltd. |
100.00 |
Ordinary shares |
Turkey |
|
|
Büyükdere Caddesi, No:251, Maslak, Şişli / İstanbul, 34398, Turkey |
|
|
Vodafone Bilgi Ve Iletisim Hizmetleri AS |
100.00 |
Registered shares |
Vodafone Dagitim, Servis ve Icerik Hizmetleri A.S. |
100.00 |
Ordinary shares |
Vodafone Dijital Yayincilik Hizmetleri A.S. |
100.00 |
Ordinary shares |
Vodafone Holding A.S. |
100.00 |
Registered shares |
Vodafone Kule ve Altyapi Hizmetleri A.S. |
100.00 |
Ordinary shares |
Vodafone Mall Ve Elektronik Hizmetler Ticaret AS |
100.00 |
Ordinary shares |
Vodafone Medya Icerik Hizmetleri A.S. |
100.00 |
Ordinary shares |
Vodafone Net İletişim Hizmetleri A.S. |
100.00 |
Ordinary shares |
Vodafone Telekomunikasyon A.S |
100.00 |
Registered shares |
İTÜ Ayazağa Kampüsü, Koru Yolu, Arı Teknokent Arı 3 Binası, Maslak, İstanbul, 586553, Turkey |
|
|
Vodafone Teknoloji Hizmetleri A.S. |
100.00 |
Registered shares |
Maslak Mah. AOS 55 Sk. 42 Maslak Sit. B Blok Apt. No: 4/663, Sarıyer Istanbul, Turkey |
|
|
Vodafone Sigorta Aracilik Hizmetleri A.S. |
100.00 |
Ordinary shares |
Vodafone Elektronik Para Ve Ödeme Hizmetleri A.S. |
100.00 |
Registered shares |
Vodafone Finansman A.S. |
100.00 |
Ordinary shares |
Maslak Mah. Büyükdere Cad. Büyükdere No: 251, Sarıyer, Istanbul, 34453, Turkey |
|
|
VOIS Turkey Akilli Çözümler Limited Şirket |
100.00 |
Ordinary shares |
Ukraine |
|
|
Bohdana Khmelnytskogo Str. 19-21, Kyiv, Ukraine |
|
|
LLC Vodafone Enterprise Ukraine |
100.00 |
Ordinary shares |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
31. Related undertakings (continued)
|
% of share class |
|
|
held by Group |
|
Company name |
Companies |
Share Class |
United Arab Emirates |
|
|
16-SD 129, Ground Floor, Building 16-Co Work, Dubai Internet City, United Arab Emirates |
|
|
Vodacom Fintech Services FZ-LLC5 |
65.10 |
Ordinary shares |
Office 101, 1st Floor, DIC Building 1, Dubai Internet City, Dubai, United Arab Emirates |
|
|
Vodafone Enterprise Europe (UK) Limited – Dubai Branch2 |
100.00 |
Branch |
United Kingdom |
|
|
11 Staple Inn Building, London, WC1V 7QH, United Kingdom |
|
|
Vodacom Business Africa Group Services Limited5 |
65.10 |
Ordinary shares, Preference shares |
Vodacom Investments Company Proprietary Limited5 |
65.10 |
Ordinary shares |
Vodacom UK Limited5 |
65.10 |
Ordinary shares, Ordinary B shares, Non-redeemable ordinary A shares, Non-redeemable preference shares |
1-2 Berkeley Square, 99 Berkeley Street, Glasgow, G3 7HR, Scotland |
|
|
Thus Group Holdings Limited |
100.00 |
Ordinary shares |
Thus Group Limited |
100.00 |
Ordinary shares |
Thus Profit Sharing Trustees Limited |
100.00 |
Ordinary shares |
3 More London, Riverside, London, SE1 2AQ, United Kingdom |
|
|
IoT Nxt UK Limited |
42.31 |
Ordinary shares |
784 Upper Newtownards Road, Belfast, BT16 1UD, United Kingdom |
|
|
Vodafone (NI) Limited |
100.00 |
Ordinary shares |
Edinburgh House, 4 North St. Andrew Street, Edinburgh, EH2 1HJ, United Kingdom |
|
|
Pinnacle Cellular Group Limited |
100.00 |
Ordinary shares |
Pinnacle Cellular Limited |
100.00 |
Ordinary shares |
Vodafone (Scotland) Limited |
100.00 |
Ordinary shares |
One Kingdom Street, London, W2 6BY, United Kingdom |
|
|
DABCo Limited |
100.00 |
Ordinary shares |
Quarry Corner, Dundonald, Belfast, BT16 1UD, Northern Ireland |
|
|
Energis (Ireland) Limited |
100.00 |
A Ordinary shares, B Ordinary shares, C Ordinary shares, D Ordinary shares |
Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN, United Kingdom |
|
|
Apollo Submarine Cable System |
100.00 |
Ordinary shares |
Bluefish Communications Limited |
100.00 |
Ordinary A shares, Ordinary B shares, Ordinary C shares, Ordinary D shares |
Cable & Wireless Aspac Holdings Limited |
100.00 |
Ordinary shares |
Cable & Wireless CIS Services Limited |
100.00 |
Ordinary shares |
Cable & Wireless Communications Data Network Services Limited |
100.00 |
'A' Ordinary shares, 'B' Ordinary shares |
Cable & Wireless Europe Holdings Limited |
100.00 |
Ordinary shares |
Cable & Wireless Global Telecommunication Services Limited |
100.00 |
Ordinary shares |
Cable & Wireless UK Holdings Limited |
100.00 |
Ordinary shares |
Cable & Wireless Worldwide Limited |
100.00 |
Ordinary shares |
Cable & Wireless Worldwide Voice Messaging Limited |
100.00 |
Ordinary shares |
Cable and Wireless (India) Limited |
100.00 |
Ordinary shares |
Cable and Wireless Nominee Limited |
100.00 |
Ordinary shares |
Central Communications Group Limited |
100.00 |
Ordinary Shares, Ordinary A shares |
Energis Communications Limited |
100.00 |
Ordinary shares |
Energis Squared Limited |
100.00 |
Ordinary shares |
London Hydraulic Power Company (The) |
100.00 |
Ordinary shares, |
MetroHoldings Limited |
100.00 |
Ordinary shares |
Navtrak Ltd |
100.00 |
Ordinary shares |
Project Telecom Holdings Limited |
100.00 |
Ordinary shares |
Rian Mobile Limited |
100.00 |
Ordinary shares |
Talkmobile Limited |
100.00 |
Ordinary shares |
The Eastern Leasing Company Limited |
100.00 |
Ordinary shares |
Thus Limited |
100.00 |
Ordinary shares |
Vizzavi Limited |
100.00 |
Ordinary shares |
Voda Limited |
100.00 |
Ordinary shares |
Vodafone (New Zealand) Hedging Limited |
100.00 |
Ordinary shares |
Vodafone2 |
100.00 |
Ordinary shares |
Vodafone 4 UK |
100.00 |
Ordinary shares |
Vodafone 5 Limited |
100.00 |
Ordinary shares |
Vodafone 5 UK |
100.00 |
Ordinary shares |
Vodafone 6 UK |
100.00 |
Ordinary shares |
Vodafone Americas4 |
100.00 |
Ordinary shares |
Vodafone Automotive UK Limited |
100.00 |
Ordinary shares |
Vodafone Benelux Limited |
100.00 |
Ordinary shares |
Vodafone Cellular Limited1 |
100.00 |
Ordinary shares |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
31. Related undertakings (continued)
|
% of share class |
|
|
held by Group |
|
Company name |
Companies |
Share Class |
Vodafone Consolidated Holdings Limited |
100.00 |
Ordinary shares |
Vodafone Corporate Limited |
100.00 |
Ordinary shares |
Vodafone Corporate Secretaries Limited |
100.00 |
Ordinary shares |
Vodafone DC Pension Trustee Company Limited |
100.00 |
Ordinary shares |
Vodafone Distribution Holdings Limited |
100.00 |
Ordinary shares |
Vodafone Enterprise Corporate Secretaries Limited |
100.00 |
Ordinary shares |
Vodafone Enterprise Equipment Limited |
100.00 |
Ordinary shares |
Vodafone Enterprise Europe (UK) Limited |
100.00 |
Ordinary shares |
Vodafone Enterprise U.K. |
100.00 |
Ordinary shares |
Vodafone Euro Hedging Limited |
100.00 |
Ordinary shares |
Vodafone Euro Hedging Two Limited |
100.00 |
Ordinary shares |
Vodafone Europe UK |
100.00 |
Ordinary shares |
Vodafone European Investments1 |
100.00 |
Ordinary shares |
Vodafone European Portal Limited1 |
100.00 |
Ordinary shares |
Vodafone Finance Limited1 |
100.00 |
Ordinary shares |
Vodafone Finance Luxembourg Limited |
100.00 |
Ordinary shares |
Vodafone Finance Management |
100.00 |
Ordinary shares |
Vodafone Finance UK Limited |
100.00 |
Ordinary shares |
Vodafone Financial Operations |
100.00 |
Ordinary shares |
Vodafone Global Content Services Limited |
100.00 |
Ordinary shares, 5% Fixed rate non-voting preference shares |
Vodafone Global Enterprise Limited |
100.00 |
Ordinary shares, Deferred shares, B deferred shares |
Vodafone Group (Directors) Trustee Limited1 |
100.00 |
Ordinary shares |
Vodafone Group Pension Trustee Limited1 |
100.00 |
Ordinary shares |
Vodafone Group Services Limited |
100.00 |
Ordinary shares, deferred shares |
Vodafone Group Services No.2 Limited1 |
100.00 |
Ordinary shares |
Vodafone Group Share Trustee Limited1 |
100.00 |
Ordinary shares |
Vodafone Holdings Luxembourg Limited |
100.00 |
Ordinary shares |
Vodafone Intermediate Enterprises Limited |
100.00 |
Ordinary shares |
Vodafone International 2 Limited – UK Branch2 |
100.00 |
Branch |
Vodafone International Holdings Limited |
100.00 |
Ordinary shares |
Vodafone International Operations Limited |
100.00 |
Ordinary shares |
Vodafone Investment UK |
100.00 |
Ordinary shares |
Vodafone Investments Australia Limited |
100.00 |
Ordinary shares |
Vodafone Investments Limited1 |
100.00 |
Ordinary shares, Zero coupon redeemable preference shares |
Vodafone IP Licensing Limited1 |
100.00 |
Ordinary shares |
Vodafone Limited |
100.00 |
Ordinary shares |
Vodafone Marketing UK |
100.00 |
Ordinary shares |
Vodafone Mobile Communications Limited |
100.00 |
Ordinary shares |
Vodafone Mobile Enterprises Limited |
100.00 |
Ordinary shares |
Vodafone Mobile Network Limited |
100.00 |
Ordinary shares |
Vodafone Nominees Limited1 |
100.00 |
Ordinary shares |
Vodafone Oceania Limited |
100.00 |
Ordinary shares |
Vodafone Overseas Finance Limited |
100.00 |
Ordinary shares |
Vodafone Overseas Holdings Limited |
100.00 |
Ordinary shares |
Vodafone Panafon UK |
99.87 |
Ordinary shares |
Vodafone Partner Services Limited |
100.00 |
Ordinary shares, Redeemable preference shares |
Vodafone Retail (Holdings) Limited |
100.00 |
Ordinary shares |
Vodafone Sales & Services Limited |
100.00 |
Ordinary shares |
Vodafone UK Foundation |
100.00 |
Sole member |
Vodafone UK Limited1 |
100.00 |
Ordinary shares |
Vodafone Ventures Limited1 |
100.00 |
Ordinary shares |
Vodafone Worldwide Holdings Limited |
100.00 |
Ordinary shares, Cumulative preference shares |
Vodafone Yen Finance Limited |
100.00 |
Ordinary shares |
Vodafone-Central Limited |
100.00 |
Ordinary shares |
Vodaphone Limited |
100.00 |
Ordinary shares |
Vodata Limited |
100.00 |
Ordinary shares |
Your Communications Group Limited |
100.00 |
B Ordinary shares, Redeemable preference shares |
United States |
|
|
1209 Orange Street, Wilmington DE 19801, United States |
|
|
IoT nxt USA Inc5 |
42.31 |
Common stock |
1450 Broadway, Fl 11, Suite 104, New York NY 10018, United States |
|
|
Cable & Wireless Americas |
100.00 |
Common stock shares |
Vodafone Americas Virginia Inc. |
100.00 |
Common stock shares |
Vodafone US Inc. |
100.00 |
Common stock shares, Ordinary shares |
1615 Platte Street, Suite 02-115, Denver CO 80202, United States |
|
|
Vodafone Americas Foundation |
100.00 |
Trustee |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
31. Related undertakings (continued)
Associated undertakings and joint arrangements
Company Name |
% of share |
Share Class |
Australia |
|
|
Level 1, 177 Pacific Highway, North Sydney NSW 2060, Australia |
|
|
3.6 GHz Spectrum Pty Ltd |
25.05 |
Ordinary shares |
AAPT Limited |
25.05 |
Ordinary shares |
ACN 088 889 230 Pty Ltd |
25.05 |
Ordinary shares |
ACN 139 798 404 Pty Ltd |
25.05 |
Ordinary shares |
Adam Internet Holdings Pty Ltd |
25.05 |
Ordinary shares |
Adam Internet Pty Ltd |
25.05 |
A shares, B shares, Ordinary shares |
Agile Pty Ltd |
25.05 |
Ordinary shares |
AlchemyIT Pty Ltd |
25.05 |
Ordinary shares |
Chariot Pty Ltd |
25.05 |
Ordinary shares |
Chime Communications Pty Ltd |
25.05 |
Ordinary shares |
Connect West Pty Ltd |
25.05 |
Ordinary shares |
Destra Communications Pty Ltd |
25.05 |
Ordinary shares |
Digiplus Contracts Pty Ltd |
25.05 |
Ordinary shares |
Digiplus Holdings Pty Ltd |
25.05 |
Ordinary shares |
Digiplus Investments Pty Ltd |
25.05 |
Ordinary shares |
Digiplus Pty Ltd |
25.05 |
Ordinary shares |
H3GA Properties (No.3) Pty Limited |
25.05 |
Ordinary shares |
iiNet Labs Pty Ltd |
25.05 |
Ordinary shares |
iiNet Limited |
25.05 |
Ordinary shares |
Internode Pty Ltd |
25.05 |
Ordinary shares, Class B shares |
IntraPower Pty Limited |
25.05 |
Ordinary shares |
Intrapower Terrestrial Pty Ltd |
25.05 |
Ordinary shares |
IP Group Pty Ltd |
25.05 |
Ordinary shares |
IP Services Xchange Pty Ltd |
25.05 |
A shares, B shares |
Kooee Communications Pty Ltd |
25.05 |
Ordinary shares |
Kooee Mobile Pty Ltd |
25.05 |
Ordinary shares |
Mercury Connect Pty Ltd |
25.05 |
Ordinary shares, E class shares |
Mobile JV Pty Limited |
25.05 |
Ordinary shares |
Mobileworld Communications Pty Limited |
25.05 |
Ordinary shares |
Mobileworld Operating Pty Ltd |
25.05 |
Ordinary shares |
Netspace Online Systems Pty Ltd |
25.05 |
Ordinary shares |
Numillar IPS Pty Ltd |
25.05 |
Ordinary shares |
PIPE International (Australia) Pty Ltd |
25.05 |
Ordinary shares |
PIPE Networks Pty Limited |
25.05 |
Ordinary shares |
PIPE Transmission Pty Limited |
25.05 |
Ordinary shares |
PowerTel Limited |
25.05 |
Ordinary shares |
Request Broadband Pty Ltd |
25.05 |
Ordinary shares |
Soul Communications Pty Ltd |
25.05 |
Ordinary shares |
Soul Contracts Pty Ltd |
25.05 |
Ordinary shares |
Soul Pattinson Telecommunications Pty Ltd |
25.05 |
Ordinary shares |
SPT Telecommunications Pty Ltd |
25.05 |
Ordinary shares |
SPTCom Pty Ltd |
25.05 |
Ordinary shares |
Telecom Enterprises Australia Pty Limited |
25.05 |
Ordinary shares |
Telecom New Zealand Australia Pty Ltd |
25.05 |
Ordinary shares, Redeemable preference shares |
TPG Corporation Limited |
25.05 |
Ordinary shares |
TPG Energy Pty Ltd |
25.05 |
Ordinary shares |
TPG Finance Pty Limited |
25.05 |
Ordinary shares |
TPG Holdings Pty Ltd |
25.05 |
Ordinary shares |
TPG Internet Pty Ltd |
25.05 |
Ordinary shares |
TPG JV Company Pty Ltd |
25.05 |
Ordinary shares |
TPG Network Pty Ltd |
25.05 |
Ordinary shares |
TPG Telecom Limited |
25.05 |
Ordinary shares |
TransACT Capital Communications Pty Ltd |
25.05 |
Ordinary shares |
TransACT Communications Pty Ltd |
25.05 |
Ordinary shares |
TransACT Victoria Communications Pty Ltd |
25.05 |
Ordinary shares |
TransACT Victoria Holdings Pty Ltd |
25.05 |
Ordinary shares |
Trusted Cloud Pty Ltd |
25.05 |
Ordinary shares |
Trusted Cloud Solutions Pty Ltd |
25.05 |
Ordinary shares |
Value Added Network Pty Ltd |
25.05 |
Ordinary shares |
Vision Network Pty Limited |
25.05 |
Ordinary shares |
Vodafone Australia Pty Limited |
25.05 |
Ordinary shares, Class B shares, Redeemable preference shares |
Vodafone Foundation Australia Pty Limited |
25.05 |
Ordinary shares |
Vodafone Hutchison Receivables Pty Limited |
25.05 |
Ordinary shares |
Vodafone Hutchison Spectrum Pty Limited |
25.05 |
Ordinary shares |
Vodafone Network Pty Limited |
25.05 |
Ordinary shares |
Vodafone Pty Limited |
25.05 |
Ordinary shares |
VtalkVoip Pty Ltd |
25.05 |
Ordinary shares |
Westnet Pty Ltd |
25.05 |
Ordinary shares |
Belgium |
|
|
Space Court of Justice, Rue aux Laines 70, 1000 Brussels, Belgium |
|
|
Utiq S.A |
25.00 |
Ordinary shares |
Bermuda |
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
Clarendon House, 2 Church St, Hamilton, HM11, Bermuda |
|
|
PPC 1 Limited |
25.05 |
Ordinary shares |
Czech Republic |
|
|
Praha 4, Závišova 502/5, 14000, Nusle, Czech Republic |
|
|
Vantage Towers s.r.o.4 |
57.30 |
Ordinary shares |
U Rajské zahrady 1912/3, Praha 3, 130 00, Czech Republic |
|
|
COOP Mobil s.r.o. |
33.33 |
Ordinary shares |
Egypt |
|
|
23 Kasr El Nil St, Cairo, 11211, Egypt |
|
|
Wataneya Telecommunications S.A.E |
50.00 |
Ordinary shares |
Ethiopia |
|
|
Addis Ababa, Kirkos Sub City, Woreda 01, Addis Ababa, Ethiopia |
|
|
Safaricom Telecommunications Ethiopia Private Limited Company5 |
19.48 |
Ordinary shares |
Germany |
|
|
38 Berliner Allee, 40212, Düsseldorf, Germany |
|
|
MNP Deutschland Gesellschaft |
33.33 |
Partnership share |
Ferdinand-Braun-Platz 1, 40549, Düsseldorf, Germany |
|
|
Oak Holdings 1 GmbH |
64.20 |
Ordinary shares |
Oak Holdings 2 GmbH |
64.20 |
Ordinary shares |
Oak Holdings GmbH |
64.20 |
Ordinary shares |
OXG Glasfaser Beteiligungs-GmbH |
50.00 |
Ordinary shares |
OXG Glasfaser GmbH |
50.00 |
Ordinary shares |
Nobelstrasse 55, 18059, Rostock, Germany |
|
|
Verwaltung “Urbana Teleunion” Rostock GmbH3 |
47.00 |
Ordinary shares |
Prinzenallee 11-13, 40549, Düsseldorf, Germany |
|
|
Vantage Towers AG |
57.30 |
Ordinary shares |
Vantage Towers Erste Verwaltungsgesellschaft mbH4 |
57.30 |
Ordinary shares |
Vantage Towers Zweite Verwaltungsgesellschaft mbH4 |
57.30 |
Ordinary shares |
Greece |
|
|
2 Adrianeiou str, Athens, 11525, Greece |
|
|
Vantage Towers Single Member Societe Anonyme4 |
57.30 |
Ordinary shares |
43–45 Valtetsiou Str., Athens, Greece |
|
|
Safenet N.P,A. |
24.97 |
Ordinary shares |
56 Kifisias Avenue & Delfwn, Marousi, 151 25, Greece |
|
|
Tilegnous IKE |
33.29 |
Ordinary shares |
Marathonos Ave 18 km & Pylou, Pallini, Attica, Pallini, Attica, 15351, Greece |
|
|
Victus Networks S.A. |
49.94 |
Ordinary shares |
Hungary |
|
|
Boldizsár utca 2, Budapest, 1112, Hungary |
|
|
Vantage Towers Zártkörűen Működő Részvénytársaság4 |
57.30 |
Ordinary shares |
India |
|
|
10th Floor, Birla Centurion, Century Mills Compound, Pandurang Budhkar Marg, Worli, Mumbai, Maharashtra, 400030, India |
|
|
Vodafone Foundation6 |
31.81 |
Ordinary shares |
Vodafone Idea Shared Services Limited6 |
32.29 |
Ordinary shares |
Vodafone Idea Technology Solutions Limited6 |
32.29 |
Ordinary shares |
Vodafone m-pesa Limited6 |
32.29 |
Ordinary shares |
You Broadband India Limited6 |
32.29 |
Equity shares |
A-19, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi, Delhi, 110044, India |
|
|
FireFly Networks Limited6 |
24.16 |
Ordinary shares |
Building No.10, Tower-A, 4th Floor, DLF Cyber City, Gurugram, Haryana, 122002, India |
|
|
Indus Towers Limited |
21.05 |
Ordinary shares |
Suman Tower, Plot No. 18, Sector No. 11, Gandhinagar, 382011, Gujarat, India |
|
|
Vodafone Idea Limited |
32.29 |
Equity shares |
Vodafone Idea Manpower Services Limited6 |
31.91 |
Ordinary shares |
Vodafone House, Corporate Road, Prahladnagar, Off S. G. Highway, Ahmedabad, Gujarat, 380051, India |
|
|
Vodafone Idea Business Services Limited6 |
32.29 |
Ordinary shares |
Vodafone Idea Communication Systems Limited6 |
32.29 |
Ordinary shares |
Vodafone Idea Telecom Infrastructure Limited6 |
32.29 |
Ordinary shares |
Ireland |
|
|
Mountainview, Leopardstown, Dublin 18, Ireland |
|
|
Vantage Towers Limited4 |
57.30 |
Ordinary shares |
The Herbert Building, The Park, Carrickmines, Dublin, Ireland |
|
|
Siro DAC |
50.00 |
Ordinary shares |
Siro JV Holdco Limited |
50.00 |
Ordinary B shares |
Italy |
|
|
Via Gaetana Negri 1, 20123, Milano, Italy |
|
|
Infrastrutture Wireless Italiana S.p.A. |
19.01 |
Ordinary shares |
Kenya |
|
|
LR No. 13263 Safaricom House, PO Box 66827, 00800, Nairobi, Kenya |
|
|
Safaricom PLC |
27.74 |
Ordinary shares |
Safaricom House, Waiyaki Way Westlands, Nairobi, Kenya |
|
|
M-PESA Africa Limited5 |
46.42 |
Ordinary shares |
Luxembourg |
|
|
15 rue Edward Steichen, Luxembourg, 2540, Luxembourg |
|
|
Tomorrow Street SCA |
50.00 |
Ordinary B shares, Ordinary C shares |
Netherlands |
|
|
Avenue Ceramique 300, 6221 Kx, Maastricht, Netherlands |
|
|
Vodafone Libertel B.V. |
50.00 |
Ordinary shares |
Boven Vredenburgpassage 128, 3511 WR, Utrecht, Netherlands |
|
|
Amsterdamse Beheer- en Consultingmaatschappij B.V. |
50.00 |
Ordinary shares |
Esprit Telecom B.V. |
50.00 |
Ordinary shares |
FinCo Partner 1 B.V. |
50.00 |
Ordinary shares |
LGE HoldCo V B.V. |
50.00 |
Ordinary shares |
LGE HoldCo VI B.V. |
50.00 |
Ordinary shares |
LGE Holdco VII B.V. |
50.00 |
Ordinary shares |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
LGE HoldCo VIII B.V. |
50.00 |
Ordinary shares |
Vodafone Financial Services B.V. |
50.00 |
Ordinary shares |
Vodafone Nederland Holding I B.V. |
50.00 |
Ordinary shares |
Vodafone Nederland Holding II B.V. |
50.00 |
Ordinary shares |
VodafoneZiggo Employment B.V. |
50.00 |
Ordinary shares |
VodafoneZiggo Group B.V. |
50.00 |
Ordinary shares |
VodafoneZiggo Group Holding B.V. |
50.00 |
Ordinary shares |
VZ Financing I B.V. |
50.00 |
Ordinary shares |
VZ Financing II B.V. |
50.00 |
Ordinary shares |
VZ FinCo B.V. |
50.00 |
Ordinary shares |
VZ PropCo B.V. |
50.00 |
Ordinary shares |
VZ Secured Financing B.V. |
50.00 |
Ordinary shares |
XB Facilities B.V. |
50.00 |
Ordinary shares |
Ziggo B.V. |
50.00 |
Ordinary shares |
Ziggo Deelnemingen B.V. |
50.00 |
Ordinary shares |
Ziggo Finance 2 B.V. |
50.00 |
Ordinary shares |
Ziggo Netwerk II B.V. |
50.00 |
Ordinary shares |
Ziggo Real Estate B.V. |
50.00 |
Ordinary shares |
Ziggo Services B.V. |
50.00 |
Ordinary shares |
Ziggo Services Employment B.V. |
50.00 |
Ordinary shares |
Ziggo Services Netwerk 2 B.V. |
50.00 |
Ordinary shares |
Ziggo Zakelijk Services B.V. |
50.00 |
Ordinary shares |
Zoranet Connectivity Services B.V. |
50.00 |
Ordinary shares |
ZUM B.V. |
50.00 |
Ordinary shares |
Media Parkboulevard 2, 1217 WE Hilversum, Netherlands |
|
|
Liberty Global Content Netherlands B.V. |
50.00 |
Ordinary shares |
Rivium Quadrant 175, 2909 LC, Capelle aan den IJssel, Netherlands |
|
|
Central Tower Holding Company B.V.4 |
57.30 |
Ordinary shares |
Winschoterdiep 60, 9723 AB Groningen, Netherlands |
|
|
Zesko B.V. |
50.00 |
Ordinary shares |
Ziggo Bond Company B.V. |
50.00 |
Ordinary shares |
Ziggo Netwerk B.V. |
50.00 |
Ordinary shares |
New Zealand |
|
|
Tompkins Wake, Level 11, 41 Shortland Street, Auckland, 1010, New Zealand |
|
|
iiNet (New Zealand) AKL Limited |
25.05 |
Ordinary shares |
Philippines |
|
|
22F Robinson Equitable Tower, ADB Ave, Corner Povega St, Ortigas Center, Pasig City, Philippines |
|
|
Orchid Cybertech Services Inc |
25.05 |
Ordinary shares |
Portugal |
|
|
Edif. Arquiparque VII, R Dr António Loureiro Borges, 7, 3.º, 1495-131 ALGÉS, Algés, Oeiras, Portugal |
|
|
Vantage Towers, S.A.4 |
57.30 |
Ordinary shares |
Espaço Sete Rios, LEAP Rua de Campolide, 351, 0.05, 1070-034, Lisboa, Portugal |
|
|
Dual Grid – Gestão de Redes Partilhadas, S.A. |
50.00 |
Ordinary shares |
Rua Pedro e Inês, Lote 2.08.01, 1990-075, Parque das Nações, Lisboa, Portugal |
|
|
Sport TV Portgugal, S.A. |
25.00 |
Nominative shares |
Romania |
|
|
Calea Floreasca no. 169A, 3rd floor, District 1, Bucharest, România, Romania |
|
|
Vantage Towers S.R.L.4 |
57.30 |
Ordinary shares |
Floor 3, Module 2, Connected buildings III, Nr. 10A, Dimitrie Pompei Boulevard, Bucharest, Sector 2, Romania |
|
|
Netgrid Telecom SRL |
50.00 |
Ordinary shares |
Russian Federation |
|
|
Building 3, 11, Promyshlennaya Street, Moscow, 115 516, Russian Federation |
|
|
Autoconnex Limited |
35.00 |
Ordinary shares |
South Africa |
|
|
76 Maude Street, Sandton, Johannesberg, 2196, South Africa |
|
|
Waterberg Lodge (Proprietary) Limited5 |
32.55 |
Ordinary shares |
Building 13, Ground Floor, East Thornhill Office Park, 94 Bekker Road, Vorna Valley X67 1685, South Africa |
|
|
Number Portability Company (Pty) Ltd5 |
12.10 |
Ordinary shares |
Celtis Plaza North, 1085 Schoeman Street, Hatfield, Pretoria, 0028, South Africa |
|
|
Afri G I S (Pty) Ltd5 |
21.16 |
Ordinary shares |
Rigel Office Park Block A, No 446 Rigel Avenue South, Erasmu, South Africa |
|
|
Canard Spatial Technologies Proprietary Limited5 |
21.16 |
Ordinary shares |
Vodacom Corporate Park, 082 Vodacom Boulevard, Midrand, 1685, South Africa |
|
|
M-Pesa S.A (Proprietary) Limited5 |
46.42 |
Ordinary shares |
Spain |
|
|
Calle San Severo 22, 28042, Madrid, Spain, Spain |
|
|
Vantage Towers, S.L.U.4 |
57.30 |
Ordinary shares |
Tanzania, United Republic of |
|
|
Plot No. 23, Ursino Estate, Bagamoyo Road, Dar es Salaam, Tanzania, United Republic of |
|
|
Vodacom Trust Limited5 |
48.82 |
Ordinary A shares, Ordinary B shares |
Turkey |
|
|
Çifte Havuzlar Mah Eski Londra Asfaltı Cad No: 151/1E/301, Esenler, Istanbul, Turkey |
|
|
FGS Bilgi Islem Urunler Sanayi ve Ticaret AS |
50.00 |
Ordinary shares |
United Kingdom |
|
|
24/25 The Shard, 32 London Bridge Street, London, SE1 9SG, United Kingdom |
|
|
Digital Mobile Spectrum Limited |
25.00 |
Ordinary shares |
3 More London Riverside, London, SE1 2AQ, United Kingdom |
|
|
VodaFamily Ethiopia Holding Company Limited5 |
31.47 |
Ordinary shares |
Griffin House, 161 Hammersmith Road, London, W6 8BS, United Kingdom |
|
|
Cable & Wireless Trade Mark Management Limited |
50.00 |
Ordinary B shares |
Hive 2, 1530 Arlington Business Park, Theale, Reading, Berkshire, RG7 4SA, United Kingdom |
|
|
Cornerstone Telecommunications Infrastructure Limited5 |
28.65 |
Ordinary shares |
Vodafone House, The Connection, Newbury, Berkshire, RG14 2FN, United Kingdom |
|
|
Vodafone Hutchison (Australia) Holdings Limited |
50.00 |
Ordinary shares |
United States |
|
|
251 Little Falls Drive, Wilmington DE 19808, United States |
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
LG Financing Partnership |
50.00 |
Partnership interest |
PPC 1 (US) Inc. |
25.05 |
Ordinary shares |
Ziggo Financing Partnership |
50.00 |
Partnership interest |
Notes:
1. | Directly held by Vodafone Group Plc. |
2. | Branches. |
3. | Shareholding is indirect through Vodafone Deutschland GmbH. |
4. | Shareholding is indirect through Vantage Towers A.G. |
5. | Shareholding is indirect through Vodacom Group Limited. The indirect shareholding is calculated using the 65.10% ownership interest in Vodacom Group Limited. |
6. | Includes the indirect interest held through Vodafone Idea Limited. |
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
|
|
|
|
|
31. Related undertakings (continued)
Selected financial information
The table below shows selected financial information in respect of subsidiaries that have non-controlling interests that are material to the Group.
|
|
|
|
|
|
Vodafone Egypt |
||
|
|
Vodacom Group Limited |
|
Telecommunications S.A.E1 |
||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
€m |
|
€m |
|
€m |
|
€m |
Summary comprehensive income information |
|
|
|
|
|
|
|
|
Revenue |
|
6,314 |
|
5,993 |
|
1,762 |
|
1,814 |
Profit for the financial year |
|
943 |
|
1,002 |
|
302 |
|
314 |
Other comprehensive expense |
|
193 |
|
(2) |
|
– |
|
– |
Total comprehensive income |
|
1,136 |
|
1,000 |
|
302 |
|
314 |
Other financial information |
|
|
|
|
|
|
|
|
Profit for the financial year allocated to non-controlling interests |
|
348 |
|
353 |
|
126 |
|
141 |
Dividends paid to non-controlling interests |
|
274 |
|
294 |
|
68 |
|
194 |
Summary financial position information |
|
|
|
|
|
|
|
|
Non-current assets |
|
6,761 |
|
7,253 |
|
1,005 |
|
1,630 |
Current assets |
|
3,033 |
|
3,123 |
|
396 |
|
440 |
Total assets |
|
9,794 |
|
10,376 |
|
1,401 |
|
2,070 |
Non-current liabilities |
|
(2,830) |
|
(2,191) |
|
(50) |
|
(83) |
Current liabilities |
|
(3,153) |
|
(3,539) |
|
(752) |
|
(1,197) |
Total assets less total liabilities |
|
3,811 |
|
4,646 |
|
599 |
|
790 |
Equity shareholders' funds |
|
2,907 |
|
3,624 |
|
420 |
|
474 |
Non-controlling interests |
|
904 |
|
1,022 |
|
179 |
|
316 |
Total equity |
|
3,811 |
|
4,646 |
|
599 |
|
790 |
|
|
|
|
|
|
|
|
|
Statement of cash flows |
|
|
|
|
|
|
|
|
Net cash inflow from operating activities |
|
1,908 |
|
1,946 |
|
657 |
|
755 |
Net cash outflow from investing activities |
|
(840) |
|
(666) |
|
(173) |
|
(284) |
Net cash outflow from financing activities |
|
(1,124) |
|
(1,177) |
|
(434) |
|
(749) |
Net cash inflow/(outflow) |
|
(56) |
|
103 |
|
50 |
|
(278) |
Cash and cash equivalents brought forward |
|
1,025 |
|
876 |
|
72 |
|
348 |
Exchange gain/(loss) on cash and cash equivalents |
|
(13) |
|
46 |
|
(3) |
|
2 |
Cash and cash equivalents |
|
956 |
|
1,025 |
|
119 |
|
72 |
Note:
1 |
From 1 April 2023, the Group will revise its segments by moving Vodafone Egypt from the Other Markets segment to the Vodacom segment to reflect the effective date of changes made to the Group’s internal reporting structure, following the transfer of Vodafone Egypt to the Vodacom Group in December 2022. |
|
|
|
|
|
|
Notes to the consolidated financial statements (continued) |
32. Subsidiaries exempt from audit
The following UK subsidiaries will take advantage of the audit exemption set out within section 479A of the Companies Act 2006 for the year ended 31 March 2023.
Name |
|
Registration number |
|
Name |
|
Registration number |
|
|
|
|
|
|
|
|
|
Bluefish Communications Limited |
|
5142610 |
|
Vodafone Enterprise Europe (UK) Limited |
|
3137479 |
|
Cable & Wireless Aspac Holdings Limited |
|
4705342 |
|
Vodafone Europe UK |
|
5798451 |
|
Cable & Wireless CIS Services Limited |
|
2964774 |
|
Vodafone European Investments |
|
3961908 |
|
Cable & Wireless Europe Holdings Limited |
|
4659719 |
|
Vodafone European Portal Limited |
|
3973442 |
|
Cable & Wireless UK Holdings Limited |
|
3840888 |
|
Vodafone Finance Management |
|
2139168 |
|
Cable & Wireless Worldwide Limited |
|
7029206 |
|
Vodafone Finance UK Limited |
|
3922620 |
|
Cable & Wireless Worldwide Voice Messaging Limited |
|
1981417 |
|
Vodafone Global Content Services Limited |
|
4064873 |
|
Cable & Wireless Nominee Limited |
|
3249884 |
|
Vodafone Holdings Luxembourg Limited |
|
4200970 |
|
Energis (Ireland) Limited |
|
NI035793 |
|
Vodafone Intermediate Enterprises Limited |
|
3869137 |
|
Energis Communications Limited |
|
2630471 |
|
Vodafone International Holdings Limited |
|
2797426 |
|
Energis Squared Limited |
|
3037442 |
|
Vodafone International Operations Limited |
|
2797438 |
|
London Hydraulic Power Company (The) |
|
ZC000055 |
|
Vodafone Investment UK |
|
5798385 |
|
MetroHoldings Limited |
|
3511122 |
|
Vodafone Investments Limited |
|
1530514 |
|
The Eastern Leasing Company Limited |
|
1672832 |
|
Vodafone IP Licensing Limited |
|
6846238 |
|
Thus Group Holdings Limited |
|
SC192666 |
|
Vodafone Marketing UK |
|
6858585 |
|
Thus Group Limited |
|
SC226738 |
|
Vodafone Mobile Communications Limited |
|
3942221 |
|
Voda Limited |
|
1847509 |
|
Vodafone Mobile Enterprises Limited |
|
2373469 |
|
Vodafone 2. |
|
4083193 |
|
Vodafone Mobile Network Limited |
|
3961482 |
|
Vodafone 5 Limited |
|
6688527 |
|
Vodafone Nominees Limited |
|
1172051 |
|
Vodafone 5 UK |
|
2960479 |
|
Vodafone Oceania Limited |
|
3973427 |
|
Vodafone 6 UK |
|
8809444 |
|
Vodafone Overseas Finance Limited |
|
4171115 |
|
Vodafone Americas 4 |
|
6389457 |
|
Vodafone Panafon UK |
|
6326918 |
|
Vodafone Benelux Limited |
|
4200960 |
|
Vodafone UK Limited |
|
2227940 |
|
Vodafone Consolidated Holdings Limited |
|
5754561 |
|
Vodafone Worldwide Holdings Limited |
|
3294074 |
|
Vodafone Corporate Secretaries Limited |
|
2357692 |
|
Vodafone Yen Finance Limited |
|
4373166 |
|
Vodafone Enterprise Corporate Secretaries Limited |
|
2303594 |
|
Vodaphone Limited |
|
3961390 |
|
Vodafone Enterprise Equipment Limited |
|
1648524 |
|
Your Communications Group Limited |
|
4171876 |
|
|
|
|
|
|
|
Notes to the consolidated financial statements |
33.Subsequent events
M-Pesa Holding Company Limited
On 17 April 2023, the Group entered into an agreement to sell M-Pesa Holding Company Limited (‘MPHCL’) to Safaricom Plc, an associate entity of the Group, for USD 1. MPHCL holds M-Pesa customer funds on trust for the benefit of M-Pesa customers in Kenya. Balances included in the Group’s consolidated financial statements for MPHCL at 31 March 2023 include short term investments of €1,247 million and €1,226 million due to M-Pesa customers, recorded within Other investments and Other creditors, respectively. These sums are shown in the Group’s consolidated financial statements in accordance with IFRS, but MPHCL acts as the independent trustee for M-Pesa customers, independently administering the trust and holding all funds from the M-Pesa customers on trust for the benefit of M-Pesa customers. Any profit generated by MPHCL, after defraying direct costs, is donated for use for public charitable purposes only. See note 13 ‘Other investments’ and note 15 ‘Trade and other payables’. No material gain or loss is expected to arise on disposal. Completion of this transaction is subject to various approvals which are expected to be obtained before or during July 2023.
Vodafone UK and Three UK merger
On 14 June 2023, the Group and CK Hutchison Group Telecom Holdings Limited (‘CKHGT’), a subsidiary of CK Hutchison Holdings Limited (‘CK Hutchison’) entered into binding agreements to combine their UK telecommunication businesses, respectively Vodafone UK and Three UK. Vodafone UK and Three UK will be contributed to ‘MergeCo’ with differential debt amounts at completion of the transaction to achieve MergeCo ownership of 51:49. Vodafone UK will be contributed with debt of £4.3 billion and Three UK with £1.7 billion, subject to customary completion adjustments. No cash consideration will be paid.
The Group and CKHGT have entered into a comprehensive governance framework which will result in the Group fully consolidating MergeCo. A put/call framework will enable the Group to acquire 100% of MergeCo. Under the put/call framework, after three financial years following completion of the transaction the Group may acquire CKHGT’s 49.0% stake in MergeCo (the ‘Call Option’), and CKHGT may sell its 49.0% stake in MergeCo to the Group (the ‘Put Option’). The consideration for CKHGT’s 49.0% stake in MergeCo will be based on fair market value, determined by an independent third-party valuation process. Exercise of the Call Option and Put Option will be subject to fair market value reaching a minimum enterprise value of £16.5 billion for MergeCo (the ‘Exercise Threshold’). After the seventh financial year following completion of the transaction, the Exercise Threshold shall not apply to the exercise of the Put Option. Completion under the Call Option and the Put Option will be subject to customary third-party approvals and consents.
In respect of both the Call Option and the Put Option, the Group can elect to pay CKHGT in cash and/or non-cash consideration (being new shares and convertible loan notes issued by the Group), subject to certain conditions and protections for CKHGT as a result of holding any such non-cash consideration. For any non-cash consideration, one third shall be settled by the issuance of new Vodafone shares subject to a cap of 5% (in the case of the Call Option only) of the enlarged issued share capital of the Group. The remainder of the non-cash consideration shall be settled by loan notes. 50% will mature on the second anniversary of completion of the Call Option or the Put Option and the residual 50% of which will mature on the fourth anniversary of the completion of the Call Option or Put Option. On the maturity dates, the Group shall redeem the loan notes, based on a mix of cash and/or new Vodafone shares at its election.
The transaction is subject to certain regulatory conditions, including clearance from the UK’s Competition and Markets Authority and approval under the UK National Security and Investment Act. Approvals will also be required from both the Group’s and CK Hutchison’s shareholders.
Bond issuances and repurchases
On 25 May 2023, the Group issued subordinated debt securities, under its euro medium-term note programme, with nominal amounts of €750 million and £500 million (maturing on 30 August 2084 and 30 August 2086 respectively) and repurchased €1,561 million and $324 million of outstanding subordinated debt securities on 6 June 2023 (maturing on 3 January 2079 and 3 October 2078 respectively) as part of a liability management exercise.
Exhibit 99.2
JPMorgan Chase Bank, N.A. serves as the depositary bank for Vodafone’s ADR Program.
Fees payable by ADR Holders
Under the Deposit Agreement dated as of February 15, 2022, among Vodafone Group Plc, JPMorgan Chase Bank, N.A., and all holders and beneficial owners from time to time of American Depositary Receipts (‘ADRs’), an ADR holder had to pay the following service fees to the depositary bank. This fee schedule remained unchanged throughout the financial year ended 31 March 2023.
Persons depositing or withdrawing shares must pay: |
For: |
$5.00 (or less) per 100 ADRs (or portion of 100 ADRs) |
· Issuance of ADRs, including issuances resulting from a distribution of shares or rights or other property, and distributions of ADRs pursuant to stock dividends or other free distributions · Surrender of ADRs for withdrawal of deposited securities or ADR cancellation or reduction, including if the deposit agreement terminates |
$5.00 (or less) per 100 ADRs (or portion thereof). The current per ADR fee to be charged for an interim dividend is $0.0175 per ADR and for a final dividend is $0.0175 per ADR. |
· Any cash distribution to ADR registered holders |
$ 5.00 (or less) per 100 ADRs (or portion thereof) |
· An annual fee for the operation and maintenance of administering the ADRs. This fee is not currently charged. |
A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADRs |
· Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADR registered holders |
Registration or transfer fees |
· Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares |
Expenses of the depositary |
· Cable, telex, facsimile transmissions and delivery expenses (when expressly provided in the deposit agreement) · Converting foreign currency to US dollars |
Taxes and other governmental charges that the depositary or the custodian must pay on any ADR or share underlying an ADR, for example, stock transfer taxes, stamp duty or withholding taxes, exchange control regulations or other applicable regulatory requirements. |
· As necessary |
Any charges incurred by the depositary or its agents for servicing shares, deposited securities or ADRs, selling securities, or delivering deposited securities, or otherwise in connection with compliance with applicable law, rule or regulation |
· As necessary |
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Fees Payable by the Depositary to the Issuer
As set out above, pursuant to the deposit agreement, the depositary may charge up to $0.05 per ADR in respect of each dividend paid by us. We have agreed with the depositary that any dividend fee collected by it is paid to us, net of any dividend collection fee charged by it. For FY23, we agreed with the depositary that it will charge $0.0175 per ADR in respect of any interim dividend and $0.0175 per ADR in respect of any final dividend paid during that year.
During FY23, we received approximately $13.8 million from J.P. Morgan Chase Bank N.A. in respect of dividends and issuance and cancellation of ADRs during the year.
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