292
Annual Report -
2013
-
Vivendi
4
Financial Report | Statutory Auditors’ Report on the Consolidated Financial Statements |
Consolidated
Financial Statements
| Statutory Auditors’ Report on the Financial Statements | Statutory Financial Statements
Note 24. Financial instruments and management of financial risks
24.2.
Management of financial risks and derivative financial instruments
As part of its business, Vivendi is exposed to several types of financial
risks: market risk, credit (or counterparty) risk, as well as liquidity
risk. Market risks are defined as the risks of fluctuation in future cash
flows of financial instruments (receivables and payables, as described
in Note 24.1 above) that depend on the changes in financial markets.
For Vivendi, market risks may therefore primarily impact interest rates
and foreign currency exchange positions, in the absence of significant
investments in the markets for stocks and bonds. Vivendi’s Financing
and Treasury department centrally manages significant market risks, as
well as its liquidity risk within the group, reporting directly to Vivendi’s
Chief Financial Officer. The department has the necessary expertise,
resources (notably technical resources), and information systems for
this purpose. However, the Maroc Telecom Group’s cash and exposure
to financial risks was managed independently. The Treasury Committee
monitors the liquidity positions in all business units and the exposure to
interest rate risk and foreign currency exchange rate risk on a bi-monthly
basis. Short- and long-term financing activities are mainly performed at
the group’s headquarters and are subject to the prior approval of the
Management Board and Supervisory Board, in accordance with the
Vivendi Internal Regulations. However, in terms of optimizing financing
operations within the group’s debt management framework within the
limits already approved by the Supervisory Board, a simple notification
is required.
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 either listed on organized markets or
traded over-the-counter with highly-rated counterparties. All derivative
financial instruments are used for hedging purposes and speculative
hedging is forbidden.
Derivative financial instrument values on the Statement of Financial Position
(in millions of euros)
Note
December 31, 2013
December 31, 2012
Assets
Liabilities
Assets
Liabilities
Interest rate risk management
24.2.1
88
(7)
104
(10)
Pay-fixed interest rate swaps
-
(7)
-
(10)
Pay-floating interest rate swaps
88
-
104
-
Foreign currency risk management
24.2.2
17
(19)
13
(26)
Other
24.4
21
-
20
-
Derivative financial instruments
126
(26)
137
(36)
Deduction of current derivative financial instruments
(17)
19
(12)
15
Non-current derivative financial instruments
109
(7)
125
(21)
24.2.1.
Interest rate risk management
Note
As from the second quarter of 2013, in compliance with IFRS 5, Activision Blizzard and Maroc Telecom Group have been reported in Vivendi’s
Consolidated Statements as discontinued operations. Their Financial Net Debt or net cash have been excluded form Vivendi’s Financial Net
Debt. This adjustment has been applied (i) to all periods (2013 and 2012) and (ii) to all data presented in this section to ensure consistency of
information.
Interest rate risk management instruments are used by Vivendi to reduce
net exposure to interest rate fluctuations, to adjust the respective
proportion of fixed or floating interest rates in the total debt and to
optimize average net financing costs. In addition, Vivendi’s internal
procedures prohibit all speculative transactions.
■
■
Average gross borrowings and average cost
of borrowings
In 2013, average gross borrowings amounted to €16.3 billion (compared
to €16.5 billion in 2012), of which €9.2 billion was at fixed-rates
and €7.1 billion at floating rates (compared to €9.7 and €6.8 billion,
respectively, in 2012). After management, the average cost of
borrowings was 3.38%, with a fixed rate ratio of 57% (compared to
3.46%, with a fixed-rate ratio of 59% in 2012).
