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Annual Report -
2013
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Vivendi
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Financial Report | Statutory Auditors’ Report on the Consolidated Financial Statements | Consolidated
Financial Statements | Statutory Auditors’ Report on the Financial Statements |
Statutory Financial Statements
Note 4. Net Exceptional Items
Note 4.
Net Exceptional Items
In 2013, a net exceptional loss of -€2,749.2 million was recorded,
compared to a net exceptional loss of -€1,540.3 million in 2012. It is
primarily comprised of the following items:
a capital loss of €2,577.1 million relating to the transfer of the
shares of Vivendi Holding I LLC (formerly, Vivendi Holding I Corp.,
VHI) to Amber Subsidiary Co., following the transfer of the Activision
Blizzard shares held by VHI to Vivendi for €2,562.5 million (please
see “Significant Events” above and Note 3, Net Financial Income/
(Loss));
a net charge in the amount of €181.6 million related to the premium
paid in connection with the early redemption in October 2013 and
November 2013 of $2,105.2 million and the €1,500 million bonds
issued (please see Note 16, Borrowings); and
a net charge in the amount of €35.9 million related to the allotment
of performance shares to beneficiaries other than to directors and
employees of Vivendi SA.
Note 5.
Income Taxes
Vivendi SA benefits from the French Tax Group System and considers
that it benefited, until December 31, 2011 inclusive, from the
Consolidated Global Profit Tax System, as authorized under Article 209
quinquies of the French Tax Code. Therefore, since January 1, 2012,
Vivendi only benefits from the French Tax Group System.
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% owned directly or
indirectly, and that are located in France: for 2013, this applied to
Universal Music in France, SFR, and Canal+ Group.
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%
owned directly or indirectly, and that are located in France or abroad,
i.e., besides the French companies that are at least 95% owned
directly or indirectly 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.
In addition, as a reminder, on July 6, 2011, Vivendi lodged an
appeal with the Ministry of Finance in relation to the renewal of its
authorization to use the Consolidated Global Profit Tax System for a
3-year period, from January 1, 2012 to December 31, 2014.
The changes in French Tax Law in 2011 terminated the Consolidated
Global Profit Tax System as of September 6, 2011 and capped the
deduction for tax losses carried forward at 60% of taxable income.
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 (75% as from January 1, 2014).
Taking these elements into account, at year-end 2013, Vivendi recorded
a consolidated income tax credit of € 422.6 million, equal to the tax
savings of the year.
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 use the Consolidated
Global Profit Tax System was effective until the end of the
authorization granted by the French Ministry of Finance, including
fiscal year ending December 31, 2011, on November 30, 2012,
Vivendi filed for a 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, this fiscal position is
being challenged and in its Financial Statements for the year ended
December 31, 2012, Vivendi accrued a €366.2 million provision for
the associated risk, unchanged as of December 31, 2013 (please
refer to Note 15, provisions);
moreover, considering that the Consolidated Global Profit Tax
System permitted tax credits to be carried forward upon the maturity
of the authorization on December 31, 2011, Vivendi requested 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 and brought to
€220 million, when filing the tax return with respect to fiscal year
ended December 31, 2012. This fiscal position may be challenged
and in its Financial Statements for the year ended December 31,
2012, Vivendi accrued a €208.4 million provision for the associated
risk, brought to €220.3 million as of December 31, 2013 (please refer
to Note 15, provisions);
given the foregoing, as of December 31, 2012, Vivendi recorded
tax attributes representing potential tax savings in the aggregate
amount of €1,553 million (compared to €2,013 million as of
December 31, 2011). On February 19, 2014, the date of the
Management Board Meeting that approved the Financial
Statements for the year ended December 31, 2013, the 2013 tax
results of the subsidiaries within the scope of Vivendi SA’s French
Tax Group System were determined by estimating, and as a result,
the amount of tax attributes as of December 31, 2013 could not be
determined with certainty;
taking into account the impact of the estimated 2013 tax results and
before the impact of the consequences of the on-going tax audits
(please see below) on the amount of tax attributes, Vivendi SA
expects to achieve €1,527 million in tax savings from tax attributes
(undiscounted value based on the current income tax rate of
38.00%).
In respect of the Consolidated Global Profit Tax System, the consolidated
income reported for fiscal years 2006, 2007, and 2008 is under audit
by the French tax authorities. This tax audit started in January 2010.
In addition, in January 2011, the French tax authorities began a tax
