Page 334 - 2012 Annual Report

334 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
IV - VIVENDI SA 2012 STATUTORY FINANCIAL STATEMENTS
3. NOTES TO THE 2012 STATUTORY FINANCIAL STATEMENTS
Note 4 Net Exceptional Items
Note 4. Net Exceptional Items
In 2012, a net exceptional loss of -€1,540.3 million was recorded,
compared to a €153.8 million income in 2011. It comprises the following
main items:
✱ a net charge to provisions in the amount of €944.8 million related
to the Liberty Media Corporation litigation in the United States (see
Major Events, Note 15, Provisions and Note 24, Litigation);
✱ a net charge to provisions in the amount of €574.6 million related to
tax refund requests that may be challenged (please see Note 5, Income
Taxes, Note 9, Current Assets and Note 15, Provisions) comprising:
– €366.2 million related to the tax savings under the
Consolidated Global Profit Tax System for the fiscal year
ended December 31, 2011,
– €208.4 million related to the effects of the use of tax credits
under the French Tax Group System for the fiscal year ended
December 31, 2012;
✱ a net charge in the amount of €25.1 million related to the premium
paid in connection with the early redemption in April 2012 and
May 2012 of the $700 million bond issued with an original maturity of
April 2013 (see Note 16, Borrowings); and
✱ a net charge in the amount of €11.8 million related to the allotment
of performance shares other than to Directors and employees of
Vivendi SA.
Note 5. Income Taxes
Vivendi benefits from the French Tax Group System and considers that it
benefited, until December 31, 2011 included, from the Consolidated Global
Profit Tax System, as authorized under Article 209 quinquies of the French
Tax Code:
✱ Under the French Tax Group System, Vivendi is entitled to consolidate
its own tax profits and losses with the tax profits and losses of
subsidiaries that are at least 95% directly or indirectly owned by it,
and that are located in France: Universal Music in France, SFR (as of
January 1, 2011), and Canal+ Group (excluding Canal+ France and its
subsidiaries, in which Vivendi directly or indirectly owns at most 80%
of the outstanding shares).
✱ Until December 31, 2011, the Consolidated Global Profit Tax System
entitled Vivendi to consolidate its own tax profits and losses with the
tax profits and losses of subsidiaries that are at least 50% directly
or indirectly owned by it, and that are located in France or abroad,
i.e., besides the French companies that are at least 95% directly or
indirectly owned by Vivendi: Activision Blizzard, Universal Music
Group, Maroc Telecom, GVT, Canal+ France and its subsidiaries, as
well as Société d’Edition de Canal Plus (SECP). As a reminder, as
of May 19, 2008, Vivendi applied to the French Ministry of Finance
for the renewal of its authorization to use the Consolidated Global
Profit Tax System and an authorization was granted by an order dated
March 13, 2009, for a three-year period beginning with the taxable
year 2009 and ending with the taxable year 2011.
✱ The changes in French Tax Law in 2011 capped the deduction for tax
losses carried forward at 60% of taxable income and terminated the
Consolidated Global Profit Tax System as of September 6, 2011. Since
2012, the deduction for tax losses carried forward is capped at 50%
of taxable income and the deductibility of interest is limited to 85% of
financial charges, net.
Taking these elements into account, at year-end 2012, Vivendi recorded a
consolidated income tax credit of €599.3 million, which was reduced by
€226.7 million (primarily, as a result of the 50% cap change, please see
above), resulting in a tax saving of €372.6 million.
The impact of the French Tax Group and Consolidated Global Profit Tax
Systems on the valuation of Vivendi’s tax attributes (tax losses and tax
credits carried forward) are as follows:
✱ As Vivendi considers that its entitlement to the Consolidated Global
Profit Tax System was effective until the end of the authorization
granted by the French Ministry of Finance, and thereby included
fiscal year ending December 31, 2011, it filed on November 30, 2012,
and asked for the refund of €366.2 million with respect to the tax
saving for the fiscal year ended December 31, 2011, booked in the
Statement of Earnings in 2012. However, as this fiscal position may
be challenged, Vivendi has accrued a €366.2 million provision for the
associated risk (please refer to Note 4, Net Exceptional Items and
Note 15, Provisions);
✱ Moreover, considering that the Consolidated Global Profit Tax
System tax credits can be carried forward upon the maturity of the
authorization on December 31, 2011, Vivendi will request a refund of
the taxes due, under the French Tax Group System for the year ended
December 31, 2012, excluding social contributions and exceptional
contributions, or €208.4 million, booked in the Statement of Earnings
in 2012 in income Tax credit. Similarly, this fiscal position may be
challenged, Vivendi has accrued a €208.4 million provision for the
associated risk (please refer to Note 4, Net Exceptional Items and
Note 15, Provisions);
✱ Considering the above, as of December 31, 2011, Vivendi reported
tax attributes amounting to a potential tax saving for a total of
€2,013 million. On February 18, 2013, the date of the Management
Board meeting that approved the Financial Statements for the year