Page 299 - 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 23 Financial instruments and management of financial risks
As of February 18, 2013, the date of the Management Board meeting
that approved Vivendi’s Financial Statements for the year ended
December 31, 2012, Vivendi SA and SFR had available confirmed credit
facilities amounting to €8,340 million, of which €500 million were drawn.
Considering the amount of commercial paper issued at that date, and
backed on bank credit facilities for €3,991 million, these facilities were
available for an aggregate amount of €3,849 million. Moreover, the sale of
Parlophone, announced on February 7, 2013, for £487 million (please refer
to Note 2.1), should be finalized during the second half of 2013.
GROUP FINANCING ORGANIZATION
Excluding primarily Activision Blizzard and Maroc Telecom, Vivendi SA
centralizes daily cash surpluses (cash pooling) of all controlled entities (a)
that are not subject to local regulations restricting the transfer of financial
assets or (b) that are not subject to other contractual agreements. In
particular, the increase to a 100% ownership interest in SFR on June 16,
2011, has enabled Vivendi SA to centralize all of SFR’s cash surpluses on
a daily basis from July 1, 2011 through a cash pooling account.
Alternatively, in particular at Activision Blizzard and Maroc Telecom, cash
surpluses are not pooled by Vivendi SA but rather, as the case may be,
distributed as dividends when they are not used to finance investments
of the relevant subsidiaries, as common stock repurchases or to redeem
borrowings used to finance their investments. Regarding Activision
Blizzard, up until July 9, 2013, the distribution of any dividend by Activision
Blizzard requires the affirmative vote of a majority of the independent
directors if Activision Blizzard’s Financial Net Debt, after giving effect to
such dividend, exceeds $400 million.
Taking into account the foregoing, Vivendi considers that the cash flows
generated by its operating activities, its cash and cash equivalents, as
well as the amounts available through its current bank credit facilities will
be sufficient to cover its operating expenses and capital expenditures,
service its debt (including the redemption of borrowings), pay its income
taxes and dividends, as well as to fund its financial investment projects,
if any, for the next twelve months, subject to potential transactions which
may be implemented in connection with the group’s change in scope.
In addition, Vivendi considers that the bank commitments received on
September 28, 2012 to cover the letter of credit to be soon put in place in
connection with its appeal of the Liberty Media Corporation litigation will
be sufficient to suspend enforcement of the judgment by Liberty Media
Corporation until the appeal is resolved.
23.3. CREDIT AND INVESTMENT CONCENTRATION RISK AND COUNTERPARTY RISK MANAGEMENT
Vivendi’s risk management policy aims at minimizing the concentration
of its credit (bank credit facilities, bonds, derivatives) and investment
risks as well as counterparty risk, as regards the setting-up of bank credit
facilities, derivatives or investments, by entering into transactions with
highly rated commercial banks only. Moreover, regarding bond issues,
Vivendi distributes its transactions among selected financial investors.
In addition, Vivendi’s trade receivables do not represent a significant
concentration of credit risk due to its broad customer base, the broad
variety of customers and markets, and the geographic diversity of its
business operations.
23.4. EQUITY MARKET RISK MANAGEMENT
As of December 31, 2012 and as of December 31, 2011, Vivendi’s exposure
to equity market risk was non-significant.
In addition, as of December 31, 2012, Vivendi holds call options and has
granted put options on listed or unlisted shares. Vivendi is thus exposed to
the risk of fluctuation in their values. As of December 31, 2012, Vivendi’s
net exposure was not significant, given that the unrealized losses on the
put granted to ITI group on a 9% interest in N-Vision (-€19 million; please
refer to Note 2.3) were offset by the unrealized gain on Deezer warrants
(€20 million).