232
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
interests and the remaining balance through equity attributable to
Vivendi SA shareowners;
subsequent changes in the value of the commitment are recognized
as a financial liability by an adjustment to equity attributable to
Vivendi SA shareowners; and
upon maturity of the commitment, if the non-controlling interests
are not purchased, the entries previously recognized are reversed; if
the non-controlling interests are purchased, the amount recognized
in financial liabilities is reversed, offset by the cash outflow relating
to the purchase of the non-controlling interests.
Derivative financial instruments
Vivendi uses derivative financial instruments to manage and reduce its
exposure to fluctuations in interest rates, and foreign currency exchange
rates. All instruments are either listed on organized markets or traded
over-the-counter with highly-rated counterparties. These instruments
include interest rate and currency swaps, and forward exchange
contracts. All these derivative financial instruments are used for hedging
purposes.
When these contracts qualify as hedges for accounting purposes,
gains and losses arising on these contracts are offset in earnings
against the gains and losses relating to the hedged item. When the
derivative financial instrument hedges exposures to fluctuations in
the fair value of an asset or a liability recognized in the Statement of
Financial Position or of a firm commitment which is not recognized in the
Statement of Financial Position, it is a fair value hedge. The instrument
is remeasured at fair value in earnings, with the gains or losses arising
on remeasurement of the hedged portion of the hedged item offset on
the same line of the Statement of Earnings, or, as part of a forecasted
transaction relating to a non-financial asset or liability, at the initial
cost of the asset or liability. When the derivative financial instrument
hedges cash flows, it is a cash flow hedge. The hedging instrument
is remeasured at fair value and the portion of the gain or loss that is
determined to be an effective hedge is recognized through charges and
income directly recognized in equity, whereas its ineffective portion
is recognized in earnings, or, as part of a forecasted transaction on a
non-financial asset or liability, they are recognized at the initial cost of
the asset or liability. When the hedged item is realized, accumulated
gains and losses recognized in equity are released to the Statement
of Earnings and recorded on the same line as the hedged item. When
the derivative financial instrument hedges a net investment in a foreign
operation, it is recognized in the same way as a cash flow hedge.
Derivative financial instruments which do not qualify as a hedge for
accounting purposes are remeasured at fair value and resulting gains
and losses are recognized directly in earnings, without remeasurement
of the underlying instrument.
Furthermore, income and expenses relating to foreign currency
instruments used to hedge highly probable budget exposures and firm
commitments contracted pursuant to the acquisition of editorial content
rights (including sports, audiovisual and film rights) are recognized
in EBIT. In all other cases, gains and losses arising on the fair value
remeasurement of instruments are recognized in other financial charges
and income.
1.3.8.
Other liabilities
Provisions
Provisions are recognized when, at the end of the reporting period,
Vivendi has a legal obligation (legal, regulatory or contractual) or a
constructive obligation, as a result of past events, and it is probable that
an outflow of resources embodying economic benefits will be required
to settle the obligation and the obligation can be reliably estimated.
Where the effect of the time value of money is material, provisions
are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money.
If no reliable estimate can be made of the amount of the obligation,
no provision is recorded and a disclosure is made in the Notes to the
Consolidated Financial Statements.
Employee benefit plans
In accordance with the laws and practices of each country in which
it operates, Vivendi participates in, or maintains, employee benefit
plans providing retirement pensions, post-retirement health care, life
insurance and post-employment benefits to eligible employees, former
employees, retirees and such of their beneficiaries who meet the
required conditions. Retirement pensions are provided for substantially
all employees through defined contribution plans, which are integrated
with local social security and multi-employer plans, or defined benefit
plans, which are generally managed via group pension plans. The plan
funding policy implemented by the group is consistent with applicable
government funding requirements and regulations.
Defined contribution plans
Contributions to defined contribution and multi-employer plans are
expensed during the year.
Defined benefit plans
Defined benefit plans may be funded by investments in various
instruments such as insurance contracts or equity and debt investment
securities, excluding Vivendi shares or debt instruments.
Pension expenses and defined benefit obligations are calculated by
independent actuaries using the projected unit credit method. This
method is based on annually updated assumptions, which include
the probability of employees remaining with Vivendi until retirement,
expected changes in future compensation and an appropriate discount
rate for each country in which Vivendi maintains a pension plan. The
assumptions adopted in 2012 and 2013, and the means of determining
these assumptions, are presented in Note 21. A provision is recorded in
the Statement of Financial Position equal to the difference between the
actuarial value of the related benefits (actuarial liability) and the fair
value of any associated plan assets, and includes past service cost and
actuarial gains and losses.
The cost of defined benefit plans consists of 3 components recognized
as follows:
the service cost is included in selling, general and administrative
expenses. It comprises current service cost, past service cost
resulting from a plan amendment or a curtailment, immediately
recognized in profit and loss, and gains and losses on settlement;
