Page 197 - 2012 Annual Report

197
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 5 TREASURY AND CAPITAL RESOURCES
SECTION 5 TREASURY AND CAPITAL RESOURCES
Preliminary comments:
✱ Vivendi considers Financial Net Debt, a non-GAAP measure, to be a relevant indicator in measuring Vivendi’s indebtedness. Financial Net Debt
is calculated as the sum of long-term and short-term borrowings and other long-term and short-term financial liabilities as reported on the
Consolidated Statement of Financial Position, less cash and cash equivalents as reported on the Consolidated Statement of Financial Position as
well as derivative financial instruments in assets, cash deposits backing borrowings, and certain cash management financial assets (included in
the Consolidated Statement of Financial Position under “financial assets”). Financial Net Debt should be considered in addition to, and not as a
substitute for, other GAAP measures reported on the Consolidated Statement of Financial Position, as well as other measures of indebtedness
reported in accordance with GAAP. Vivendi Management uses Financial Net Debt for reporting and planning purposes, as well as to comply with
certain debt covenants of Vivendi.
✱ In addition, cash and cash equivalents are not fully available for debt repayments since they are used for several purposes, including but not limited
to, acquisitions of businesses, capital expenditures, dividends, contractual obligations and working capital.
5.1. SUMMARY OF VIVENDI’S EXPOSURE TO CREDIT AND LIQUIDITY RISKS
Vivendi’s financing policy consists of incurring long-term debt, mainly in
bond and banking markets, at a variable or fixed rate, in euros or in US
dollars, depending on general corporate needs and market conditions.
✱ Non-current financial debts are primarily raised by Vivendi SA, which
centralizes the group’s financing management, except for Activision
Blizzard and Maroc Telecom Group. In this context, in 2012, Vivendi
pursued its policy of disintermediation, having recourse in priority to
the bond market. Vivendi also sought to diversify its investor base
by issuing on the American bond market and pursued its policy of
maintaining the “economic” average term of the group’s debt above
4 years. In addition, Vivendi has a Euro Medium Term Notes program
on the Luxembourg Stock Exchange, which is renewed each year,
in order to take advantage of every euro bond market opportunity.
Vivendi’s bank counterparties must meet certain criteria of financial
soundness, reflected in their credit rating with Standard & Poor’s and
Moody’s. Moreover, to comply with the rating agencies’ prudential
regulations regarding liquidity management, Vivendi arranges to the
extent possible, the refinancing of all expiring bank credit facilities
or bonds one year in advance. As a result, in 2012, Vivendi made
three bond issuances in euro for a total amount of €2,250 million
(January, April and December 2012), and one issuance in US dollars
for $2,000 million (April 2012).
✱ Contractual agreements for credit facilities granted to Vivendi SA do
not include provisions that tie the conditions of the loan to its financial
ratings from rating agencies. They contain customary provisions
related to events of default and at the end of each half-year,
Vivendi SA is notably required to comply with a financial covenant
(please refer to Note 22.2 to the Consolidated Financial Statements
for the year ended December 31, 2012). The credit facilities granted to
group companies other than Vivendi SA are intended to finance either
the general needs of the borrowing subsidiary or specific projects.
✱ In 2012, investments, working capital, debt service (including the
redemption of borrowings), and the payment of income taxes and the
dividend distribution, were financed by cash flow from operations, net,
asset disposals, and borrowing or share issuances (Direct 8 and Direct
Star). For the foreseeable future and based on the current financial
conditions on the financial market, subject to potential transactions
which may be implemented in connection with the group’s change
in scope, Vivendi intends to maintain this financing policy for its
investments and operations.
As of December 31, 2012:
✱ The group’s bond debt amounted to €10,888 million (compared to
€9,276 million as of December 31, 2011). In 2012, Vivendi issued
bonds in euros and in US dollars for a total amount of €3,758 million
and redeemed bonds for a total amount of €2,048 million (of
which $700 million (or €448 million) were early redeemed in April/
May 2012). For additional information on this bond debt, please refer
to Section 5.4 below. The group’s bond debt represented 61% of the
borrowings in the Statement of Financial Position (compared to 59%
as of December 31, 2011).
✱ The total amount of the group’s confirmed credit facilities amounted to
€9,039 million (compared to €12,083 million as of December 31, 2011).
The group’s aggregate amount of credit facilities neither drawn nor
backed by commercial paper amounted to €3,361 million (compared
to €6,635 million as of December 31, 2011). The decrease in the
amount of credit facilities neither drawn nor backed by commercial
paper was notably due to the disintermediation policy, the increase
in the outstanding amount of commercial paper, and the financing of
the acquisition of EMI Recorded Music by drawing on credit facilities.
✱ Vivendi SA’s and SFR’s total confirmed credit facilities amounted
to €8,340 million as of December 31, 2012 (including €2 billion in
available swinglines), compared to €11,242 million as of December 31,
2011. All these credit facilities have a maturity greater than one
year. These credit facilities were drawn for €1,894 million as of
December 31, 2012. Considering the €3,255 million commercial paper
issued at that date and backed to bank credit facilities, these facilities
were available up to a maximum amount of €3,191 million.