224
Annual Report -
2013
-
Vivendi
4
Financial Report | Statutory Auditors’ Report on the Consolidated Financial Statements |
Consolidated
Financial Statements
| Statutory Auditors’ Report on the Financial Statements | Statutory 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 29.
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.
The new model of control, introduced by IFRS 10 superseding IAS 27
revised –
Consolidated and Separate Financial Statements
, and
interpretation SIC 12 –
Consolidation – Special Purpose Entities
, is
based on the following three criteria to be fulfilled simultaneously to
conclude that the parent company exercises control:
a parent company has power over a subsidiary when the parent
company has existing rights that give it the current ability to direct
the relevant activities of the subsidiary, i.e., the activities that
significantly affect the subsidiary’s returns. Power may arise from
existing or potential voting rights, or contractual agreements. Voting
rights must be substantial, i.e., they shall be exercisable at any
time, without limitation particularly during decision making related
to significant activities. The assessment of the exercise of power
depends on the nature of the subsidiary’s relevant activities, the
internal decision-making process, and the allocation of rights among
the subsidiary’s other shareowners;
the parent company is exposed, or has rights, to variable returns
from its involvement with the subsidiary which may vary as a
result of the subsidiary’s performance. The concept of returns is
broadly defined and includes, among others, dividends and other
distributions of economic benefits, changes in the value of the
investment in the subsidiary, economies of scale, and business
synergies; and
the parent company has the ability to use its power to affect the
returns. Power without any impact on returns does not qualify as
control.
Consolidated Financial Statements of a group are presented as if the
group was a single economic entity with two categories of owners:
the owners of the parent company on the one hand (Vivendi SA
shareowners) and the owners of non-controlling interests on the other.
A non-controlling interest is defined as the interest in a subsidiary that
is not attributable, directly or indirectly, to a parent. As a result, changes
to a parent company’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 gives rise to profit or loss
in the statement of earnings.
Accounting for joint arrangements
IFRS 11, which supersedes IAS 31 –
Financial Reporting of Interests in
joint ventures,
and interpretation SIC 13 –
Jointly Controlled Entities
– Non-monetary Contributions by Venturers,
establishes principles for
Financial Reporting by parties to a joint arrangement.
In a joint arrangement, parties are bound by a contractual arrangement,
giving these parties joint control of the arrangement. An entity that
is a party to an arrangement shall assess whether the contractual
arrangement gives all the parties or a group of the parties, control of
the arrangement collectively. Once it has been established that all the
parties or a group of the parties collectively control the arrangement,
joint control exists only when decisions about the relevant activities
require the unanimous consent of the parties that collectively control
the arrangement.
Joint arrangements are classified into two categories:
joint operations: these are joint arrangements whereby the parties
that have joint control of the arrangement have rights to the assets,
and obligations for the liabilities, relating to the arrangement. Those
parties are called joint operators. A joint operator shall recognize
100% of wholly-owned assets/liabilities, expenses/revenues of the
joint operation, and its share of any of those items held jointly; and
joint ventures: these are joint arrangements whereby the parties
that have joint control of the arrangement have rights to the net
assets of the arrangement. Those parties are called joint venturers.
Each joint venturer shall recognize its interest in a joint venture
as an investment, and shall account for that investment using the
equity method in accordance with IAS 28 (please refer below).
The elimination of proportionate consolidation for joint ventures has
no impact on Vivendi, which already accounted for under the equity
method companies that were jointly controlled by Vivendi, directly or
indirectly, and a limited number of other shareholders under the terms
of a contractual arrangement.
Equity accounting
Entities over which Vivendi exercises significant influence as well as
joint ventures 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.
