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Friday, February 19, 2016
Foreign currency risk
The group’s foreign currency risk management is centralized by Vivendi SA’s Financing and Treasury Department and primarily seeks to
hedge budget exposures (at an 80% level) resulting from monetary flows generated by activities performed in currencies other than the euro
as well as from external firm commitments (at a 100% level), primarily relating to the acquisition of editorial content (e.g., sports, audiovisual
and film rights) and certain capital expenditures (e.g., set-top boxes), realized in currencies other than the euro. Most of the hedging
instruments are foreign currency swaps or forward contracts that have a maturity period of less than one year. Considering the foreign
currency hedging instruments established, an unfavorable and uniform euro change of 1% against all foreign currencies in position as of
December 31, 2015, would have a non-significant cumulative impact on net earnings (below €1 million). In addition, the group may hedge
foreign currency exposure resulting from foreign-currency denominated financial assets and liabilities. Moreover, due to their non-significant
nature, net exposures related to subsidiaries’ net working capital (internal flows of royalties as well as external purchases) are generally not
hedged. The associated risks are settled at the end of each month by translating the amounts into the functional currency of the relevant
operating entities.
The principal currencies hedged by the group are US dollars (USD) and British pounds (GBP). In 2015 and 2014, to hedge against a possible
depreciation of its net investment in certain subsidiaries in the United Kingdom due to an unfavorable change in GBP, Vivendi set up a hedge
using forward contracts for a notional amount of £832 million, or €1,141 million at forward rate. From an accounting perspective, these
hedge instruments were considered as net investment hedges.
The following tables present the foreign currency risk management instruments used by the group; the positive amounts relate to currencies
to be received, the negative amounts relate to currencies to be delivered at contractual exchange rates:
December 31, 2015
Notional amounts
Fair value
(in millions of euros) Total USD PLN GBP Other Assets Liabilities
Sales against the euro (1,535) (55) (290) (1,159) (31) 18 (2)
Purchases against the euro 2,212 651 70 1,377 114 16 (37)
Other - 198 (118) (13) (67) 5 (1)
677 794 (338) 205 16 39 (40)
Breakdown by accounting category of foreign currency hedging instruments
Cash Flow Hedge
Sales against the euro (53) (4) (35) - (14) - -
Purchases against the euro 48 47 - - 1 2 -
Other - 24 (24) - - 1 (1)
(5) 67 (59) - (13) 3 (1)
Fair Value Hedge
Sales against the euro (325) (51) (255) (18) (1) 6 (2)
Purchases against the euro 333 312 - 21 - 11 (2)
Other - 106 (94) (8) (4) 4 -
8 367 (349) (5) (5) 21 (4)
Net Investment Hedge
Sales against the euro (1,141) - - (1,141) - 12 -
(1,141) - - (1,141) - 12 -
Economic Hedging (a)
Sales against the euro (17) - - - (17) - -
Purchases against the euro 1,832 292 70 1,356 114 3 (35)
Other - 68 - (5) (63) - -
1,815 360 70 1,351 34 3 (35)
Financial Report and Audited Consolidated Financial Statements for the year ended December 31, 2015 Vivendi /85