Page 236 - 2012 Annual Report

236 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
Cash-settled instruments
✱ the expected term of the instruments granted is deemed to be equal
to one-half of the residual contractual term of the instrument for
vested rights, and to the average of the residual vesting period at
the remeasurement date and the residual contractual term of the
instrument for unvested rights;
✱ the value of instruments granted is initially estimated at grant date
and is then re-estimated at each reporting date until the payment date
and the expense is adjusted pro rata taking into account the vested
rights at each such reporting date;
✱ the expense is recognized as a provision; and
✱ moreover, as plans settled in cash are primarily denominated in US
dollars, the value fluctuates based on the EUR/USD exchange rate.
Share-based compensation cost is allocated to each operating segment,
pro rata the number of equity instruments or equivalent instruments
granted to their managers and employees.
The dilutive effect of stock options and performance shares settled in
equity through the issuance of Vivendi or Activision Blizzard shares which
are in the process of vesting is reflected in the calculation of diluted
earnings per share.
In accordance with IFRS 1, Vivendi elected to retrospectively apply IFRS 2
as of January 1, 2004. Consequently, all share-based compensation
plans for which rights remained to be vested as of January 1, 2004 were
accounted for in accordance with IFRS 2.
1.4. RELATED PARTIES
Group-related parties are those companies over which the group exercises
an exclusive control, joint control or significant influence, shareholders
exercising joint control over group joint ventures, non-controlling interests
exercising significant influence over group subsidiaries, corporate officers,
group management and directors and companies over which the latter
exercise an exclusive control, joint control, or significant influence.
The transactions realized with subsidiaries over which the group exercises
a control are eliminated in the intersegment operations (a list of the
principal consolidated subsidiaries is presented in Note 28). Moreover,
commercial relationships among subsidiaries of the group, aggregated in
operating segments, are conducted on an arm’s length basis under terms
and conditions similar to those which would be offered by third parties.
The operating costs of Vivendi SA’s headquarters in Paris and of its New
York City office, after the allocation of a portion of these costs to each
of the group’s businesses, are included in the Holding and Corporate
operating segment. (Please refer to Note 3 for a detailed description of
the transactions between the parent company and the subsidiaries of the
group, aggregated by operating segments).
1.5. CONTRACTUAL OBLIGATIONS AND CONTINGENT ASSETS AND LIABILITIES
Once a year, Vivendi and its subsidiaries prepare detailed reports on all
material contractual obligations, commercial and financial commitments
and contingent obligations, for which they are jointly and severally
liable. These detailed reports are updated by the relevant departments
and reviewed by senior management on a regular basis. To ensure
completeness, accuracy and consistency of these reports, some dedicated
internal control procedures are performed, including (but not limited to)
the review of:
✱ minutes of meetings of the shareholders, Management Board,
Supervisory Board and committees of the Supervisory Board in respect
of matters such as contracts, litigation, and authorization of asset
acquisitions or divestitures;
✱ pledges and guarantees with banks and financial institutions;
✱ pending litigation, claims (in dispute) and environmental matters
as well as related assessments for unrecorded contingencies with
internal and/or external legal counsels;
✱ tax examiner’s reports and, if applicable, notices of reassessments and
tax expense analyses for prior years;
✱ insurance coverage for unrecorded contingencies with the Risk
Management department and insurance agents and brokers with
whom the group contracted;
✱ related-party transactions for guarantees and other given or received
commitments; and more generally
✱ major contracts and agreements.