Vodafone Group Plc Annual Report 2012 12 Chairman’s statement

A world of opportunity Gerard Kleisterlee succeeded Sir as What have been your main impressions of after Chairman of Vodafone at the AGM in 2011. Previously your first year? he was CEO of for ten years. Here he gives his The Group is well positioned. It has strong view on his first impressions of Vodafone, the key franchises in most of its markets, attractive global exposure, a core product that has governance issues facing the Board, his interactions become a vital part of people’s lives and a with management, and the approach to management number of exciting opportunities for growth. Combined with its substantial cash flow, low and shareholder remuneration. leverage and management strength in depth, there are plenty of reasons for optimism. Summary of key points However, throughout Vodafone I see what I would describe as a restless dissatisfaction: aa Our strategy is working well to deliver superior operational performance, a sense that we are doing well and have a high level of free cash flow and significant returns to shareholders significantly improved our commercial aaWe have strength in depth in the management team and a Board comprised performance over recent years, but that of business leaders with a wide range of business expertise we could do much better still. aaStrong returns to shareholders with total dividends for the year of 13.52 pence People at Vodafone are their own toughest (including the 4.0 pence special dividend) and the majority of the £6.8 billion critics but this creates a highly energetic and share buyback programme now complete strongly collaborative environment aiming at constant improvement. How is the strategic focus of the company evolving? The last two years have seen significant proceeds realised from the sale of non- controlled stakes and the income dividend from Verizon Wireless, which means that the external focus will now inevitably turn more to our operational execution. From our perspective, this is no more than business as usual and the Group’s strategy continues to be clear: to pursue our growth opportunities in data, enterprise and emerging markets in a disciplined and efficient way, and give shareholders a healthy return on their investment in the process. All of these elements are discussed in much more detail elsewhere in this report. Business review Performance Governance Financials Additional information

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Apr 12 Apr Governance management Risk Feb 11 Feb More on on More 73 to 63 Pages on More 39 Page Explore in more detail more in Explore schemes have a bias towards long-term, long-term, towards bias a have schemes our incentivise which plans, share-based investment multi-year prioritise to leaders closely interests their align and decisions shareholders. institutional of those with year this alignment this deepened have We requirements shareholding introducing by team. leadership senior the throughout together, total cash returns to shareholders shareholders to returns cash total together, approximately to equivalent been have the over capitalisation market 30% of our period the in Furthermore, years. share our last four 2012, May 21 to 2011 from 1 April European MSCI the outperformed has price 100 FTSE the and 19.6% by index Telecoms by 3.7%. management about what And remuneration? should team management executive The create they that extent the to well paid be incentive Our shareholders. for value earn a return in excess of our cost of capital, capital, of cost our of excess in return a earn dividend Our policy. dividend consistent a and years two place in put target, growth share per growing a shareholders give to out sets ago, by covered comfortably stream dividend are We flow. free cash annual expected share billion £6.8 of a end the also nearing paid year this and buyback programme pence 4.0 of dividend special an additional income our of proceeds of the out per share Verizon Wireless. from dividend special year’s this dividends, ordinary Taking programme buyback the and dividend How do you approach approach you do How shareholder remuneration? is strategy remuneration shareholder Our through return, shareholder total on focused the of value the growing of a combination that opportunities in investing by Company Dec 11 Dec

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Jun 11 Jun Vodafone (share price in pence) in price (share Vodafone by 19.6% by 3.7%” by Our share price has has price share Our MSCI the outperformed index Telecoms European “ 120 160 200 For legal reasons it should be noted that past performance cannot be relied on as a guide to future performance. future to guide a as on relied be cannot performance past that noted be should it reasons legal For Vodafone share price vs FTSE 100 FTSE vs price share Vodafone 2012 May 21 to 2011 April 1 women by 2015. by women markets. We also aim to bring further gender gender further bring to aim also We markets. reach we as years coming the over balance being members Board of 25% of goal our industries, as well as far-reaching geographical geographical far-reaching as well as industries, our build to keen be would I knowledge. models, business internet-based of experience Asian of knowledge detailed a as well as leaders from sectors as wide-ranging as as wide-ranging as sectors from leaders capital, venture retail, services, financial regulated and technology accountancy, With respect to expertise, my predecessor predecessor my expertise, to respect With a assembling in progress excellent made outlooks. and talents of diversity broad business comprises currently Board The Our annual survey on Board effectiveness has has effectiveness Board on survey Our annual no but modifications minor some prompted overhaul. major delivery of the Group’s strategy within a clear clear a within strategy Group’s the of delivery and framework, governance transparent role. and that fulfilling currently are we I believe currently functioning? and support to is focus primary Board’s The the on management executive the advise How is the Board Board the is How