Page 257 - 2012 Annual Report

257

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

III - CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2012

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 9 Goodwill

method, using the most recent cash flow forecasts approved by the

Management of the group, as well as financial assumptions consistent

with previous years: a discount rate of 9% and a perpetual growth rate

of 1.50% (unchanged compared to December 31, 2011) - please refer

to the table below. As a result, considering primarily the expected

impact on revenues in Metropolitan France of the increase in the VAT

rate from 7% to 10% as of January 1, 2014 and, to a lesser extent, the

adverse changes in the macro-economic and competitive environment

since the second half of 2012, Vivendi Management concluded that

Canal+ France’s recoverable amount was below its carrying value as

of December 31, 2012, and consequently recorded an impairment loss

of €665 million.

✱

SFR: as of December 31, 2011, and June 30, 2012, Vivendi had

re-examined the value of SFR’s goodwill and concluded that the

recoverable amount of SFR exceeded its carrying value at those

dates. As of December 31, 2012, Vivendi again examined the value

of SFR’s goodwill. At that date, and as of December 31, 2011 and

June 30, 2012, SFR’s recoverable amount was determined upon the

basis of the usual valuation methods, in particular the value in use,

based upon the DCF method. The most recent cash flow forecasts, and

financial assumptions approved by the Management of the group were

used and were updated in order to take into account (i) the expected

impact of the new tariff policies decided by SFR during the second

half of 2012 and early 2013, following the evolution of the competitive

environment, (ii) the downward adjustment in the perpetual growth

rate assumption (0.50%, compared to 1% at the end of June 2012 and

end of 2011) and (iii) the acceleration in very-high speed broadband

investments. As a result, Vivendi’s Management concluded that SFR’s

recoverable amount, despite its decline, exceeded its carrying value as

of December 31, 2012 - please refer to tables below.

PRESENTATION OF KEY ASSUMPTIONS USED

FOR THE DETERMINATION OF RECOVERABLE AMOUNTS

The value in use of each CGU or groups of CGU is determined as the

discounted value of future cash flows by using cash flow projections

consistent with the 2013 budget and the most recent forecasts prepared

by the operating segments. These forecasts are prepared for each

operating segment on the basis of the financial targets as well as the

following main key assumptions: discount rate, perpetual growth rate,

and EBITA as defined in Note 1.2.3, capital expenditures, competitive

environment, regulatory environment, technological development and

level of commercial expenses. Except for Maroc Telecom, for which the

recoverable amount is determined based on its stock market price, the

recoverable amount for each CGU or groups of CGU was determined based

on its value in use in accordance with the main key assumptions presented

below.

The Annual Report contains a detailed description of the 2013 operating

performance projections for each operating segment of the Group.

Operating segments

CGU or groups

of CGU tested

Valuation Method

Discount Rate

(a)

Perpetual Growth Rate

2012

2011

2012

2011

2012

2011

Activision Blizzard

Activision

DCF, stock market price

& comparables model

DCF, stock market price &

comparables model

10.50% 10.00% 4.00% 4.00%

Blizzard

DCF, stock market price

& comparables model

DCF, stock market price &

comparables model

10.50% 10.00% 4.00% 4.00%

Distribution DCF & comparables model DCF & comparables model

13.50% 13.00% -4.00% -4.00%

Universal Music Group Universal Music Group DCF & comparables model DCF & comparables model

9.25% 9.25% 1.00% 1.00%

SFR

SFR DCF & comparables model

DCF

7.30% 7.00% 0.50% 1.00%

Maroc Telecom Group

Maroc Telecom

Stock market price

na*

Onatel

DCF

DCF 14.40% 13.70% 3.00% 3.00%

Gabon Telecom

DCF

DCF 12.70% 11.70% 3.00% 3.00%

Mauritel

DCF

DCF 17.40% 19.00% 3.00% 3.00%

Sotelma

DCF

DCF 14.60% 13.50% 3.00% 3.00%

GVT

(b)

GVT

DCF DCF & comparables model

10.91% 11.54% 4.00% 4.00%

Canal+ Group

Canal+ France

DCF

9.00% 9.00% 1.50% 1.50%

StudioCanal

DCF

9.00% 9.00% 0.00% 0.00%

na*: not applicable.

DCF: Discounted Cash Flows.

(a)

The determination of recoverable amounts using a post-tax discount rate applied to post-tax cash flows provides recoverable amounts consistent with

the ones that would have been obtained using a pre-tax discount rate applied to pre-tax cash flows.

(b)

Regarding GVT, an annual impairment test on the value of goodwill was performed in the second quarter of each fiscal year.