Annual report 2014

Information about the Company | Corporate Governance |

Reports

4.5. Key Procedures for Financial and Accounting Information

The procedures listed below help reinforce internal controls over the

treatment of financial and accounting information disclosed by Vivendi.

Provisions of the guide on applying internal control procedures in relation

to financial disclosures, contained in the internal control standards

published by the AMF, were taken into account when updating these

procedures.

Consolidation and Financial Reports:

the group’s Consolidated Financial

Statements and its Financial Reporting were prepared in accordance with

international accounting standards (IFRS) and are based on accounting

data prepared by the management for each business unit. The IFRS

standards and IFRS Interpretations Committee (IFRIC) interpretations used

are those adopted by the European Union. The main topics addressed

in the Financial Report must comply with specific requirements, which

include, in particular, an impairment test on assets held by the Company

during the 4

quarter of each fiscal year, an assessment of liquidity risk,

valuation of employee benefits, duties and taxes (see below) and off

balance sheet commitments. The Consolidated Financial Statements

are closed and approved by the Management Board quarterly and are

reviewed by the Audit Committee. The annual and half yearly financial

statements are reviewed by the Supervisory Board, in reliance on

observations made by the Audit Committee. The group’s financial

statements are published quarterly. They are subject to an annual audit

and limited semi-annual reviews by the group’s Statutory Auditors.

Budget and management control:

every year, each business unit presents

its strategy and annual budget for the following year to the group’s Senior

Management. After approval by Vivendi’s Management Board, a summary

is then presented to the Supervisory Board. Quantitative and qualitative

targets used as a basis to assess annual performance are then set for

each business unit’s management. Budgets are reviewed each month and

updated three times per year.

Investments/divestments:

any investments or divestments exceeding

€15 million must receive prior approval from the Investment Committee

chaired by the Chairman of the Management Board. This procedure

applies to all transactions, including the acquisition of equity interests

and the launch of new businesses, whatever the amount, and to any other

financial commitment, including, among others, the purchase of rights

and property contracts, that were not provided for in the annual budget.

The Investment Committee meets as often as necessary. The analysis

of documents and preparation of reports is done by the Disposals and

Acquisitions department at the Company headquarters. Any transaction

involving amounts greater than €100 million and €300 million must

receive the prior approval of the Management Board and the Supervisory

Board, respectively, pursuant to their Internal Regulations.

Monitoring of investment transactions:

in connection with the regular

follow-up of value creation, Vivendi’s Management Board has

strengthened the process of post-completion analysis of investment

transactions, supplementing the existing budgetary reviews and

quarterly Financial Reporting. The purpose of this analysis is to validate

the implementation of controls as well as actual financial performance

pursuant to the business plan approved for the acquisition. It takes into

account both the progressive integration of companies acquired by the

business units and the impact of changing market conditions following

the acquisition date. Vivendi’s Internal Audit department reviews the

conclusions, which are then presented to Vivendi’s Senior Management

and, if there are any major issues, to the Management Board. An annual

summary is presented to Vivendi’s Audit Committee.

Monitoring of financial commitments:

as part of the Financial Reporting

process, the business units prepare a list of commitments given and

received on a quarterly basis. These commitments are presented by

the legal and finance officers of the business units at meetings held

with the Vivendi’s group’s Management, which take place as part of

the closing process for the annual financial statements. They are also

presented to the Audit Committee once a year.

Sureties, endorsements and guarantees:

pursuant to the provisions of the

Company’s by-laws and the Internal Regulations of the Supervisory Board,

the granting of sureties, endorsements and guarantees by Vivendi to its

subsidiaries is subject to prior approval in accordance with the following

dual limitations:

any commitment under €100 million where the aggregate amount

of commitments is under €1 billion is subject to the approval of the

Management Board, which may delegate such power. The approval

requires the signatures of both the Chief Financial Officer and the

General Counsel and Company Secretary; and

any commitment over €100 million and any commitment, regardless

of the amount, where the cumulative amount of commitments is

over €1 billion is subject to the approval of the Supervisory Board.

The approval requires the Chairman of the Management Board’s

signature.

Treasury, financing and liquidity:

the management of cash flows and

hedging transactions (foreign exchange and interest rates) is centralized

at the headquarters of Vivendi SA. GVT’s treasury functions are managed

independently and are tailored to the group’s policies and procedures.

The liquidity position at the business unit level, as well as exposure to

foreign exchange and interest rate risks, are monitored on a bi-monthly

basis by a Treasury Committee. The majority of medium and long-term

financing operations occur at the head office and such operations are

subject to the prior approval of the Management Board and Supervisory

Board, in accordance with their Internal Regulations. However, financing

transactions that are part of the management of the Company’s debt,

when used to optimize it within thresholds previously authorized by the

Supervisory Board, only require a notification to the Board. A financial

management presentation is made to the Audit Committee once a year.

Duties and taxes:

Vivendi SA’s Tax department also provides advice to

the group’s subsidiaries and is responsible for tax audit defense before

local tax authorities, with the exception of the companies within the GVT

business unit in which case it participates in the review and auditing

of duties and taxes as part of the preparation of the Vivendi group’s

Consolidated Financial Statements.

Litigation:

major disputes are monitored directly or coordinated by the

group’s General Counsel and Company Secretary. A report relating to

litigation involving Vivendi and its business units is prepared by the

group’s legal department in collaboration with the general counsels and

heads of the legal departments of the main business units. A summary

litigation report is provided to the Management Board on a monthly

basis. A table of current litigation and disputes is updated for each

quarterly closing date based on information provided by each business

unit; a summary of this table is included in the Management Board’s

quarterly business report to the Supervisory Board. The Audit Committee,

Supervisory Board and Management Board are kept informed of material

ongoing litigation matters by the General Counsel and Company Secretary

at all times.

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Annual Report 2014