Page 225 - 2012 Annual Report

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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
1.3.2. Principles of consolidation
A list of Vivendi’s major subsidiaries, joint ventures and associated entities
is presented in Note 28.
Consolidation
All companies in which Vivendi has a controlling interest, namely those
in which it has the power to govern financial and operational policies to
obtain benefits from their operations, are fully consolidated.
A controlling position is deemed to exist when Vivendi holds, directly or
indirectly, a voting interest exceeding 50% of total voting rights in an
entity and no other shareholder or group of shareholders may exercise
substantive participation rights that would enable it to veto or block
ordinary decisions taken by Vivendi.
A controlling position also exists when Vivendi, holding an interest of
50% or less in an entity, has (i) control over more than 50% of the voting
rights of such entity by virtue of an agreement entered into with other
investors; (ii) the power to govern the financial and operational policies
of the entity by virtue of statute or contract, (iii) the right to appoint or
remove from office a majority of the members of the Board of Directors or
other equivalent governing body or (iv) the power to assemble the majority
of voting rights at meetings of the Board of Directors or other governing
body. Revised IAS 27 presents the Consolidated Financial Statements of a
group as those of a single economic entity with two categories of owners:
Vivendi SA shareowners and the owners of non-controlling interests. A
non-controlling interest is defined as the equity in a subsidiary that is
not attributable, directly or indirectly, to a parent. As a result of this new
approach, changes in a parent’s ownership interest in a subsidiary that
do not result in a loss of control only impact equity, as control does not
change within the economic entity. Hence, in the event of the acquisition
of an additional interest in a consolidated entity after January 1, 2009,
Vivendi recognizes the difference between the acquisition price and the
carrying value of non-controlling interests acquired as a change in equity
attributable to Vivendi SA shareowners. Conversely, any acquisition of
control achieved in stages or a loss of control give rise to profit or loss in
the statement of earnings.
Vivendi consolidates special purpose entities that it controls in substance
where it either (i) has the right to obtain a majority of benefits; or (ii)
retains the majority of residual risks inherent in the special purpose entity
or its assets.
Equity accounting
Entities over which Vivendi exercises significant influence as well as
entities over which Vivendi exercises joint control are accounted for under
the equity method.
Significant influence is presumed to exist when Vivendi holds, directly
or indirectly, at least 20% of voting rights in an entity unless it can be
clearly demonstrated that Vivendi does not exercise significant influence.
Significant influence can be evidenced through other criteria, such
as representation on the Board of Directors or the entity’s equivalent
governing body, participation in policy-making processes, material
transactions with the entity or the interchange of managerial personnel.
Companies that are jointly controlled by Vivendi, directly or indirectly, and
a limited number of other shareholders under the terms of a contractual
arrangement are also accounted for under the equity method.
1.3.3. Foreign currency translation
The Consolidated Financial Statements are presented in millions of euros.
The functional currency of Vivendi SA and the presentation currency of
the group is the euro.
Foreign currency transactions
Foreign currency transactions are initially recorded in the functional
currency of the entity at the exchange rate prevailing at the date of
the transaction. At the closing date, foreign currency monetary assets
and liabilities are translated into the entity’s functional currency at the
exchange rate prevailing on that date. All foreign currency differences
are expensed, with the exception of differences resulting from borrowings
in foreign currencies which constitute a hedge of the net investment in
a foreign entity. These differences are allocated directly to charges
and income directly recognized in equity until the divestiture of the net
investment.
Financial statements denominated in a foreign currency
Except in cases of significant exchange rate fluctuation, financial
statements of subsidiaries, joint ventures or other associated entities for
which the functional currency is not the euro are translated into euros as
follows: the Consolidated Statement of Financial Position is translated
at the exchange rate at the end of the period, and the Consolidated
✱ Activision Blizzard content assets: estimates of the future performance
of franchises and other content assets related to games are recognized
in the Statement of Financial Position (please refer to Notes 1.3.5.3
and 10); and
✱ UMG content assets: estimates of the future performance of
beneficiaries who were granted advances are recognized in the
Statement of Financial Position (please refer to Notes 1.3.5.3 and 10).
Given the current economic crisis, notably in respect of sovereign
exposures in countries considered to be at risk, Vivendi has reviewed the
valuation of all its financial assets and liabilities. This review did not have
any significant impact on the 2012 Consolidated Financial Statements.