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Friday, February 19, 2016
On January 1, 2004, in accordance with IFRS 1, Vivendi decided to apply IFRIC Interpretation 4 - Determining whether an arrangement
contains a lease, which mainly applies to commercial supply agreements for the Canal+ Group satellite capacity, which are commercial
service agreements that, in general, do not convey a right to use a specific asset. Contract costs under these agreements are consequently
expensed as operational costs for the period.
1.3.5.7 Asset impairment
Each time events or changes in the economic environment indicate a risk of impairment of goodwill, other intangible assets, property, plant
and equipment, and assets in progress, Vivendi re-examines the value of these assets. In addition, in accordance with the applicable
accounting standards, goodwill, other intangible assets with an indefinite useful life, and intangible assets in progress are all subject to an
annual impairment test undertaken in the fourth quarter of each fiscal year. This impairment test is performed to compare the recoverable
amount of each Cash Generating Unit (CGU) or, if necessary, groups of CGU to the carrying value of the corresponding assets (including
goodwill). A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows
from other assets or groups of assets. The Vivendi group operates through different communication businesses. Each business offers
different products and services that are marketed through various channels. CGUs are independently defined at each business level,
corresponding to the group operating segments. Vivendi CGUs and groups of CGUs are presented in Note 9.
The recoverable amount is determined as the higher of: (i) the value in use; or (ii) the fair value (less costs to sell) as described hereafter, for
each individual asset. If the asset does not generate cash inflows that are largely independent of other assets or groups of assets, the
recoverable amount is determined for the group of assets. In particular, an impairment test of goodwill is performed by Vivendi for each CGU
or group of CGUs, depending on the level at which Vivendi Management measures return on operations.
The value in use of each asset or group of assets is determined as the discounted value of future cash flows (Discounted Cash Flow method
(DCF)) by using cash flow projections consistent with the budget of the following year and the most recent forecasts prepared by the
operating segments.
Applied discount rates are determined by reference to available external sources of information, usually based on financial institutions’
benchmarks, and reflect the current assessment by Vivendi of the time value of money and risks specific to each asset or group of assets.
Perpetual growth rates used for the evaluation of CGUs are those used to prepare budgets for each CGU or group of CGUs, and beyond the
period covered, are consistent with growth rates estimated by the business by extrapolating growth rates used in the budgets, without
exceeding the long-term average growth rate for the markets in which the group operates.
The fair value (less costs to sell) is the price that would be received from the sale of an asset or group of assets in an orderly transaction
between market participants at the measurement date, less costs to sell. These values are determined on the basis of market data (stock
market prices or comparison with similar listed companies, with the value attributed to similar assets or companies in recent transactions)
or, in the absence of such data, on the basis of discontinued cash flows.
If the recoverable amount is lower than the carrying value of an asset or group of assets, an impairment loss equal to the difference is
recognized in EBIT. In the case of a group of assets, this impairment loss is first recorded against goodwill.
The impairment losses recognized in respect of property, plant and equipment, and intangible assets (other than goodwill) may be reversed in
a later period if the recoverable amount becomes greater than the carrying value, within the limit of impairment losses previously recognized.
Impairment losses recognized in respect of goodwill cannot be reversed at a later date.
1.3.5.8 Financial assets
Financial assets consist of financial assets measured at fair value and financial assets recognized at amortized cost. Financial assets are
initially recognized at fair value corresponding, in general, to the consideration paid, which is best evidenced by the acquisition cost
(including associated acquisition costs, if any).
Financial assets at fair value
Financial assets at fair value include available-for-sale securities, derivative financial instruments with a positive value (please refer to
Note 1.3.7) and other financial assets measured at fair value through profit or loss. Most of these financial assets are actively traded in
organized public markets, their fair value being calculated by reference to the published market price at period end. Fair value is estimated
for financial assets which do not have a published market price on an active market. As a last resort, when a reliable estimate of fair value
cannot be made using valuation techniques in the absence of an active market, the group values financial assets at historical cost, less any
impairment losses.
Available-for-sale securities consist of unconsolidated interests and other securities that cannot be classified in the other financial asset
categories described below. Unrealized gains and losses on available-for-sale securities are recognized in charges and income directly
Financial Report and Audited Consolidated Financial Statements for the year ended December 31, 2015 Vivendi /41