Annual report 2014

Note 1. Accounting Rules and Methods

Financial Report | Statutory Auditors’ Report on the Consolidated Financial Statements | Consolidated

Financial Statements | Statutory Auditors’ Report on the Financial Statements |

Statutory Financial Statements

1.7. Provisions

A provision is recorded if Vivendi has an obligation to a third party and

it is probable or certain that an outflow of resources will be necessary

to settle this obligation, without receipt of an equivalent consideration

from the third party.

The provision is equal to the best estimate, taken at period-end, of the

outflow of resources necessary to settle the obligation, where the risk

exists at the end of the period.

The assumptions underlying the provisions are regularly reviewed and

any necessary adjustments are recorded.

Where it is not possible to provide a reliable estimate for the amount of

the obligation, a provision is not recorded and disclosure is made in the

notes to the financial statements (see Note 25, Litigation).

1.8. Stock option plans and performance share plans

When the Company grants performance shares or establishes a stock

purchase option plan that is settled by the delivery of treasury shares, a

provision is recognized. This provision is calculated based on the market

price of Vivendi shares at grant date or the estimated share purchase

price at year-end. In the case of stock purchase option plans, the entry

cost or estimated share purchase price is reduced by the exercise price

that is likely to be paid by employees.

Pursuant to the PCG, expenses, charges and reversals in relation to the

grant of stock options and performance shares to company employees,

are recorded as personnel costs.

1.9. Employee benefit plans

Vivendi applied method 1 of Recommendation No. 2013-02 of the

National Accounting Council (

Conseil National de la Comptabilité

CNC) dated November 7, 2013, regarding the valuation and accounting

methods for pension commitments and similar benefits.

The provision recorded for obligations in relation to employee benefit

plans includes all Vivendi employee benefit plans, i.e., retirement/

termination payments, pensions and supplemental pensions. It is

calculated as the difference between the value of the actuarial

obligations and plan assets, net of actuarial gains and losses and

unrecognized past service costs.

The actuarial obligation is calculated using the projected unit credit

method (each activity period generates additional entitlement). Actuarial

gains and losses are recognized using the “corridor method”. This

consists of recording, in the profit or loss account for the relevant period,

the amortization calculated by dividing the portion of actuarial gains and

losses which exceeds the greater of 10% of (i) the obligation and (ii) the

fair value of the plans’ assets as of the beginning of the fiscal year, by the

average remaining working life expectancy of the beneficiaries.

1.10. Foreign currency-denominated transactions

Foreign currency-denominated income and expense items are translated

using average monthly rates or, as applicable, using the exchange rate

negotiated during specific transactions.

Foreign currency-denominated receivables, payables, marketable

securities and cash balances are translated at the exchange rates

applicable on the accounting closing date (PCG 2014 Art. 420-5).

Unrealized gains and losses recognized on translation of foreign currency

borrowings, loans, receivables and payables, using exchange rates

prevailing on the accounting closing date, are recorded in the Statement

of Financial Position in unrealized foreign exchange gains and losses,

except where currency hedging instruments that set the currency rate

at maturity have been implemented (see Note 1.11, Derivative financial

instruments).

Vivendi seeks to secure the exchange rate of assets and long-term

liabilities denominated in foreign currencies, particularly through the

implementation of derivative financial instruments. Foreign exchange

gains and losses realized on these hedging instruments are reclassified

as applicable in the Statement of Financial Position as deferred revenue

or expenses until the gain or loss on the hedged item is recognized (see

Note 1.11, Derivative financial instruments).

A provision for foreign exchange losses is recorded in respect of

unhedged and unrealized exchange losses (PCG 2014, Art. 420-5).

Transactions in foreign currency that are covered by currency hedging

instruments that do not set the currency rate at maturity, are provisioned

up to the amount of the uncovered risk.

Unrealized foreign exchange gains and/or losses on cash balances and

foreign currency current accounts (similar to cash balances under PCG

2014 Art. 420-7) on the accounting closing date are recorded immediately

as foreign exchange gains and/or losses.

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Annual Report 2014