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Note 27. Foreign Currency Risk Management
Financial Report | Statutory Auditors’ Report on the Consolidated Financial Statements | Consolidated
Financial Statements | Statutory Auditors’ Report on the Financial Statements |
Statutory Financial Statements
Note 26.
Instruments Used toManage Borrowings
Vivendi manages its financial liquidity, interest rate and foreign
currency exchange rate risks centrally. Vivendi’s Financing and Treasury
Department conducts these operations, reporting directly to the Chief
Financial Officer of Vivendi, who is also a member of the Management
Board. The Financing and Treasury Department has the necessary
expertise, resources (in particular, technical resources) and information
systems for this purpose.
Vivendi uses various derivative financial instruments to manage and
reduce its exposure to fluctuations in interest rates and foreign currency
exchange rates. All instruments are traded over-the-counter with highly-
rated counterparties.
The majority of Group financing is secured directly by Vivendi SA, which
provides financing to its subsidiaries as and when necessary.
As of December 31, 2014, Vivendi SA’s open swaps, which qualify for
hedge accounting, totaled €3.1 billion and can be summarized as follows:
p
p
€450 million of fixed-rate payer swaps, issued in 2012 with a maturity
date of 2017;
p
p
€450 million of fixed-rate receiver swaps, issued in 2010 with a
maturity date of 2017; and
p
p
€1,000 million of fixed-rate receiver swaps, issued in 2011 with a
maturity date of 2016.
Instruments held by Vivendi SA to hedge borrowings are broken-down as follows:
Vivendi SA External Hedging Arrangements
(in millions of euros)
12/31/14
Maturing
within < 1 year
Maturing
within
1 to 5 years
Maturing
within
> 5 years Counterparty
Fixed-rate receiver swaps
1,450
1,450
Banks
Fixed-rate payer swaps
450
450
Banks
Total
1,000
0
1,000
0
As of December 31, 2014, there was no interest rate internal hedging between Vivendi SA and its subsidiaries.
Note 27.
Foreign Currency RiskManagement
Vivendi’s foreign currency risk management seeks to hedge highly
probable budget exposures, resulting primarily from monetary flows
generated by operations performed in currencies other than the euro, and
from firm commitment contracts, essentially in relation to the acquisition
by subsidiaries of editorial content including sports, audiovisual and film
rights, realized in foreign currencies. It should be noted that:
p
p
Vivendi SA is the sole counterparty for foreign currency transactions
within the Group, unless specific regulatory or operational restrictions
require otherwise; and
p
p
all identified exposures are hedged at a minimum of 80% for
exposures related to forecasted transactions, and 100% for firm
commitment contracts.
In addition, Vivendi may also hedge foreign currency exposure resulting
from foreign currency-denominated financial assets and liabilities
by entering into currency swaps and forward contracts, enabling the
refinancing or investment of cash balances in euros or other local
currencies, and use monetary or derivative instruments, if applicable, to
manage its foreign currency exposure to inter-company current accounts
denominated in foreign currencies (which qualify for hedge accounting
pursuant to the French PCG).
The table below shows the notional amount of currency to be delivered
or received under currency instruments (currency swaps and forward
contracts). Positive amounts indicate currency receivable and negative
amounts currency deliverable.
(in millions of euros)
December 31, 2014
EUR
GBP
PLN
USD
Other
currencies
Sales against the euro
1,176
(1,061)
(52)
(63)
Sales against other currencies
3
56
(59)
Purchases against the euro
(1,908)
1,020
51
717
120
Purchases against other currencies
57
(3)
(56)
3
(1)
(675)
(41)
(5)
724
(3)
329
Annual Report 2014