Page 224 - 2012 Annual Report

224 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
III - CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Accounting policies and valuation methods
1.2.4. Consolidated Statement of Financial Position
Assets and liabilities that are expected to be realized, or intended for
sale or consumption, within the entity’s normal operating cycle (generally
12 months), are recorded as current assets or liabilities. If their maturity
exceeds this period, they are recorded as non-current assets or liabilities.
Moreover, certain reclassifications have been made to the 2011 and 2010
Consolidated Financial Statements to conform to the presentation of the
2012 and 2011 Consolidated Financial Statements.
1.3. PRINCIPLES GOVERNING THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
Pursuant to IFRS principles, the Consolidated Financial Statements have
been prepared on a historical cost basis, with the exception of certain
assets and liabilities detailed below.
The Consolidated Financial Statements include the financial statements
of Vivendi and its subsidiaries after eliminating intragroup items and
transactions. Vivendi has a December 31 year-end. Subsidiaries that do
not have a December 31 year-end prepare interim financial statements at
that date, except when their year-end falls within the three months prior
to December 31.
Acquired subsidiaries are included in the Consolidated Financial
Statements of the group as of the date of acquisition.
1.3.1. Use of estimates
The preparation of Consolidated Financial Statements in compliance
with IFRS requires the group management to make certain estimates and
assumptions that they consider reasonable and realistic. Even though
these estimates and assumptions are regularly reviewed by Vivendi
Management based, in particular, on past or anticipated achievements,
facts and circumstances may lead to changes in these estimates and
assumptions which could impact the reported amount of group assets,
liabilities, equity or earnings.
The main estimates and assumptions relate to the measurement of:
✱ revenue: estimates of provisions for returns and price guarantees, and
rewards as part of loyalty programs deducted from certain revenue
items (please refer to Note 1.3.4);
✱ Activision Blizzard revenue: estimates of the service period over
which revenue from the sale of boxes for video-games with significant
online functionality is recognized (please refer to Note 1.3.4.1);
✱ provisions: risk estimates, performed on an individual basis, noting
that the occurrence of events during the course of procedures may
lead to a risk reassessment at any time (please refer to Notes 1.3.8
and 19);
✱ employee benefits: assumptions are updated annually, such as the
probability of employees remaining within the group until retirement,
expected changes in future compensation, the discount rate and
inflation rate (please refer to Notes 1.3.8 and 20);
✱ share-based compensation: assumptions are updated annually, such
as the estimated term, volatility and the estimated dividend yield
(please refer to Notes 1.3.10 and 21);
✱ certain financial instruments: fair value estimates (please refer to
Notes 1.3.5.8, 1.3.7 and 23);
✱ deferred taxes: estimates concerning the recognition of deferred tax
assets are updated annually with factors such as expected tax rates
and future tax results of the group (please refer to Notes 1.3.9 and 6);
✱ goodwill and other intangible assets: valuation methods adopted
for the identification of intangible assets acquired through business
combinations (please refer to Notes 1.3.5.2 and 2);
✱ goodwill, intangible assets with indefinite useful lives and assets in
progress: assumptions are updated annually relating to impairment
tests performed on each of the group’s cash-generating units (CGUs),
future cash flows and discount rates (please refer to Notes 1.3.5.7, 9,
11, and 12);
The difference between CFFO and net cash provided by operating
activities, before income tax consists of dividends received from equity
affiliates and unconsolidated companies and capital expenditures, net,
which are included in net cash used for investing activities and of income
tax paid, net, which are excluded from CFFO.