Page 178 - 2012 Annual Report

178 VIVENDI l 2012 l Annual Report
FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS – STATUTORY AUDITORS’ REPORT ON THE
CONSOLIDATED FINANCIAL STATEMENTS – STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS –
STATUTORY FINANCIAL STATEMENTS 4
4
I - 2012 FINANCIAL REPORT
SECTION 2 EARNINGS ANALYSIS
EBITA was €5,283 million, compared to €5,860 million in 2011, a
€577 million decrease (-9.8%, or -10.7% at constant currency). For a
breakdown of EBITA by business segment, please refer to Section 4 of
this Financial Report.
Amortization of intangible assets acquired through business
combinations was €487 million, compared to €510 million in 2011, a
€23 million decrease (-4.5%).
Impairment losses on intangible assets acquired through business
combinations amounted to €760 million, compared to €397 million in 2011.
In 2012, they related to Canal+ France’s goodwill (€665 million) and certain
goodwill and music catalogs of Universal Music Group (€94 million). In
2011, they mainly related to Canal+ France’s goodwill (€380 million).
As of December 31, 2012, based on the verdict rendered on June 25, 2012
regarding the Liberty Media Corporation litigation in the United
States, which was confirmed by the court in New York on January 9,
2013 and entered into record by the judge on January 17, 2013, Vivendi
accrued a reserve for the full amount of the judgment (€945 million),
representing, €765 million in damages and €180 million in pre-judgment
interest covering the period from December 16, 2001 to January 17,
2013, at the rate of one-year U.S. Treasury notes. In addition, the reserve
regarding the Securities Class Action in the United States was unchanged
as of December 31, 2012, at €100 million. Please refer to Note 27 to the
Consolidated Financial Statements for the year ended December 31, 2012.
Other income amounted to €22 million, compared to €1,385 million in
2011. In 2011, it primarily included the impact related to the settlement
on January 14, 2011 of the litigation over the share ownership of PTC in
Poland (€1,255 million) and the sale in October 2011 of UMG’s interest in
Beats Electronics (€89 million).
Other charges amounted to €235 million, compared to €656 million in
2011. In 2012, they mainly included the €119 million impairment loss on
Canal+ Group’s interest in N-Vision in Poland and acquisition costs (EMI
Recorded Music, and the strategic partnership in Poland) of €63 million.
In 2011, they mainly included the capital loss incurred in January 2011
on the sale of Vivendi’s remaining 12.34% interest in NBC Universal
(€421 million, of which €477 million related to a foreign exchange loss
attributable to the decline in value of the US dollar since January 1, 2004)
and the settlement of the past disputes between GVT and various Brazilian
States regarding the application of ICMS tax on Internet and Broadband
services (€165 million).
EBIT was €2,878 million, compared to €5,682 million in 2011, a
€2,804 million decrease (-49.3%). In addition to the decline in EBITA
(-€577 million, of which -€678 million from SFR), this change mainly
reflected the recognition in 2012 of the reserve accrual regarding the
Liberty Media Corporation litigation (-€945 million) and the impairment
of Canal+ France’s goodwill (-€665 million). In 2011, the impact related to
the settlement of the litigation over the share ownership of PTC in Poland
(€1,255 million), partially offset by the capital loss incurred from the sale
of the remaining 12.34% interest in NBC Universal (-€421 million), and the
settlement of the past disputes between GVT and various Brazilian States
regarding the application of the ICMS tax (-€165 million).
Income from equity affiliates was a €38 million charge, compared to a
€18 million charge in 2011.
Interest was an expense of €568 million, compared to €481 million in
2011, a €87 million increase (+18.1%).
In 2012, interest expense on borrowings amounted to €599 million,
compared to €529 million in 2011, a €70 million increase (+13.2%).
This change was mainly attributable to the increase in the average
outstanding borrowings to €17.1 billion in 2012 (compared to €13.7 billion
in 2011), primarily reflecting the impact of the acquisitions of the 44%
interest in SFR in June 2011 (€7.75 billion) and of EMI Recorded Music
in September 2012 (€1.4 billion), partially offset by the decrease in the
average interest rate on borrowings to 3.50% in 2012 (compared to 3.87%
in 2011).
Interest income earned on cash and cash equivalents amounted to
€31 million in 2012, compared to €48 million in 2011, a €17 million
decrease. This change was attributable to the decrease in the average
cash and cash equivalents to €3.4 billion in 2012 (compared to €4.1 billion
in 2011) and to the decrease in the average income rate to 0.91% in 2012
(compared to 1.16% in 2011).
Income from investments amounted to €9 million, compared to
€75 million in 2011. In 2011, it included €70 million attributable to the
balance of the contractual dividend paid by GE to Vivendi on January 25,
2011 as part of the completion of the sale by Vivendi of its interest in NBC
Universal.
Other financial income and charges amounted to a net charge of
€173 million, compared to a net charge of €153 million in 2011, and
notably included foreign exchange losses on intercompany borrowings
(-€105 million in 2012, compared to -€27 million in 2011) and fees related
to borrowings and derivative instruments (-€15 million in 2012, compared
to -€52 million in 2011). For more information, please refer to Note 5 to the
Consolidated Financial Statements for the year ended December 31, 2012.
Income taxes reported to adjusted net income was a net charge
of €1,339 million, compared to a net charge of €1,408 million in 2011,
a €69 million decrease. This change notably reflected the impact of the
decline in the group’s business segments’ taxable income (+€264 million),
primarily related to SFR, partially offset by the decrease (-€181 million)
in current tax savings related to Vivendi SA’s tax group and Consolidated
Global Profit Tax Systems following the changes in French Tax Law in
2011 and 2012, mainly the capping of the deduction for tax losses carried
forward at 50% of taxable income (compared to 60% in 2011). The
effective tax rate reported to adjusted net income was 28.3% in 2012
(compared to 25.8% in 2011).
In addition, provision for income taxes was a net charge of
€1,159 million, compared to a net charge of €1,378 million in 2011, a
€219 million decrease. In addition to the items that explained the increase
in income taxes reported to adjusted net income, this increase reflected
the change in deferred tax assets related to Vivendi SA’s tax group
System, which was a €48 million charge (compared to a €129 million
charge in 2011).