226
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
Costs of revenues
Costs of revenues include manufacturing and distribution costs, royalty
and copyright expenses, artists’ costs, recording costs, and direct
overheads. Selling, general and administrative expenses primarily
include marketing and advertising expenses, selling costs, provisions
for doubtful receivables and indirect overheads.
■
■
1.3.4.3. GVT, SFR, and Maroc Telecom Group
Separable components of bundled offers
Revenues from telephone packages are recognized as multiple-
component sales in accordance with IAS 18. Revenues from the sale
of telecommunication equipment (mobile phones and other equipment),
net of discounts granted to customers through the distribution
channel, are recognized upon activation of the line. Revenues from
telephone subscriptions are recognized on a straight-line basis over
the subscription contract period. Revenues from incoming and outgoing
traffic are recognized when the service is rendered.
Customer acquisition and loyalty costs for mobile phones, principally
consisting of rebates on the sale of equipment to customers through
distributors, are recognized as a deduction from revenues. Customer
acquisition and loyalty costs consisting of premiums not related to the
sale of equipment as part of telephone packages and commissions paid
to distributors are recognized as selling and general expenses.
Equipment rentals
IFRIC 4 –
Determining whether an arrangement contains a lease
,
applies to equipment for which a right of use is granted. Equipment
lease revenues are generally recognized on a straight-line basis over
the life of the lease agreement.
Content sales
Sales of services provided to customers managed on behalf of content
providers (mainly premium rate numbers) are either accounted for gross,
or net of the content providers’ fees when the provider is responsible for
the content and for setting the price payable by subscribers.
Custom contracts
Service access and installation costs invoiced primarily to the operator’s
clients on the installation of services such as a broadband connection,
bandwidth service or IP connection are recognized over the expected
duration of the contractual relationship and the supply of the primary
service.
Access to telecommunication infrastructure is provided to clients
pursuant to various types of contracts: lease arrangements, hosting
contracts or Indefeasible Right of Use (IRU) agreements. IRU
agreements, which are specific to the telecommunication sector, confer
an exclusive and irrevocable right to use an asset (cables, fiber optic or
bandwidth) during a (generally lengthy) defined period without a transfer
of ownership of the asset. Revenue generated by leases, hosting
contracts in the Netcenters and IRU agreements is recognized over the
duration of the corresponding contract, except in the case of a finance
lease whereby the equipment is considered as a sale on credit.
In the case of IRU agreements and certain lease or service contracts,
services are paid in advance the first year. Where the contract is not
qualified as a finance lease, these non-refundable advance payments
are recorded as deferred income and recognized ratably over the
contract term. The deferral period is thus between 10 and 25 years
for IRU agreements and between 1 and 25 years for leases or service
contracts.
Costs of revenues
Costs of revenues comprise purchasing costs (including purchases
of mobile phones), interconnection and access costs, network, and
equipment costs. Selling, general and administrative expenses notably
include commercial costs relating to marketing and customer care
expenses.
■
■
1.3.4.4. Other
Provisions for estimated returns and price guarantees
are
deducted from sales of products to customers through distributors. They
are estimated based on past sales statistics and they take into account
the economic environment and product sales forecast to final customers.
The recognition of awards associated with loyalty programs
in
the form of free or discounted goods or services are recorded according
to IFRIC 13. Loyalty programs of SFR (valid until the third quarter of 2012),
Maroc Telecom, and Canal+ Group grant to existing customers awards in
the form of free services, according to the length of the relationship with
the customer and/or loyalty points for subsequent conversion into either
handset renewal subsidies, or free services. IFRIC 13 –
Interpretation
is
based upon the principle of measuring loyalty awards by reference to
their fair value. Fair value is defined as the excess price over the sales
incentive that would be granted to any new customer and, should any
such excess price exist, would result in deferring the recognition of the
revenue associated with the subscription in the amount of such excess
price.
Selling, general and administrative expenses
primarily include
salaries and employee benefits, rent, consulting and service fees,
insurance costs, travel and entertainment expenses, administrative
department costs, provisions for receivables and other operating
expenses.
Advertising costs
are expensed as incurred.
Slotting fees and cooperative advertising expenses
are recorded
as a reduction in revenues. However, cooperative advertising at UMG is
treated as a marketing expense and expensed when its expected benefit
is individualized and can be estimated.
