ANNUAL REPORT 2014 Management Message 02 At the center of our businesses 04 12 Group Profi le | Businesses | Societal, Social and Litigation | Risk Factors 07 Environmental Information 41 1. Group Profi le 09 1. Corporate Social Responsibility (CSR) Policy 42 2. Businesses 20 2. Societal Information 47 3. Litigation 32 3. Social Information 62 4. Risk Factors 38 4. Environmental Information 77 5. Verifi cation of Non-Financial Data 85 3 Information about the Company | Corporate Governance | Reports 91 1. General Information about the Company 92 2. Additional Information about the Company 93 3. Corporate Governance 106 4. Report by the Chairman of Vivendi’s Supervisory Board on Corporate Governance, Internal Audits and Risk Management – Fiscal Year 2014 147 5. Statutory Auditors’ report, prepared in accordance with Article L.225-235 of the French Commercial Code, on the Report prepared by the Chairman of the Supervisory Board of Vivendi SA 156 4 Financial Report | Statutory Auditors’ Report on the Consolidated Financial Statements | Consolidated Financial Statements | Statutory Auditors’ Report on the Financial Statements | Statutory Financial Statements 159 Selected key consolidated fi nancial data 160 I - 2014 Financial Report 161 II - Appendices to the Financial Report: Unaudited supplementary fi nancial data 191 III - Consolidated Financial Statements for the year ended December 31, 2014 195 IV - Vivendi SA - 2014 Statutory Financial Statements 294 56 Recent events | Outlook 337 Responsibility for Auditing 1. Recent events 338 the Financial Statements 341 2. Outlook 339 1. Responsibility for Auditing the Financial Statements 342 ANNUAL REPORT 2014 The Annual Report in English is a translation of the French “Document de référence” provided for information purposes. This translation is qualifi ed in its entirety by reference to the “Document de référence ”. Annual Report 2014 01 Management Message MANAGEMENT MESSAGE 2014 was a year that was full of changes for Vivendi, which successfully managed the shift toward refocusing its goals. Reconfi gured and free of debt, a new integrated industrial group is emerging with a clear ambition to become the European champion in media and content. “We are ivendi is now writing a new page in its history. The holding company of yesterday that managed fi nancial interests in various businesses has today confi dent in V been replaced by an integrated industrial group in media and content that V ivendi’s ability values the potential of all creative talent. Initiated more than two years ago, the repositioning of Vivendi was completed in to win over the new 2014 with the disposal of our three telecommunications assets: Maroc Telecom, SFR and GVT. To facilitate the distribution of our content, however, we are retaining media consumers minority stakes in certain markets and remain open to industrial partnerships with of the 21 century.” other distribution platforms. These three strategic disposals, made under satisfactory fi nancial conditions, allowed Vivendi to erase its debt and restore its fi nancial fl exibility. Our net debt position of over €11 billion as of December 31, 2013, shifted to a net cash position of €4.6 billion as of December 31, 2014, before fi nalization of the GVT sale (planned for the second quarter of 2015) and the anticipated return to our shareholders. The proceeds from these three disposals are specifi cally intended to give Vivendi new resources to expand in media and content. By 2014, the group already consolidated its positions in TV, fi lm and music. In pay-TV, Canal+ continues to grow in France, where the SVoD (Subscription Video-on-Demand) service Canalplay has 600,000 pay subscribers, as well as in Africa, where A+, a new 100% African channel was launched in approximately 20 countries. Free-to-air TV also recorded a solid performance, supported by the audiences of D8, which is confi rming its status as a leader in DVB. The year 2014 was particularly prosperous for Studiocanal, with the large box-offi ce success of movies such as Non-Stop and Paddington. Finally, Universal Music Group (UMG), now more than ever the world leader in recorded music, posted excellent album sales in 2014, from Taylor Swift to Stromae, and the original soundtrack of the Disney movie Frozen. Present in €10,089* €999* 15,571* 67 million million Employees countries Revenues EBITA * Excludes GVT 02 Annual Report 2014 Management Message From left to right: Frédéric Crépin, Group General Counsel and Company Secretary - Hervé Philippe, Member of the Management Board, Chief Financial Offi cer Vincent Bolloré, Chairman of the Supervisory Board - Arnaud de Puyfontaine, Chairman of the Management Board Stéphane Roussel, Member of the Management Board, Senior Executive Vice President, Development and Organization Simon Gillham, Chairman of Vivendi Village, Senior Executive Vice President, Communications In a diffi cult regulatory and competitive environment, all our businesses excuse for immobility and inaction. 2015 must be the year that allows demonstrated an ability to adapt, develop and grow. The group us to move further, and more rapidly, in the transformation of Vivendi. generated total revenues of more than €10 billion in 2014. Building Above all, Vivendi must accelerate its transition from being a holding on these results, the new Vivendi is presently ready to achieve new company to becoming an integrated industrial group. This task, which growth targets. has become necessary as a result of the digital revolution that is We are convinced that this new growth is in media and content. Why? blurring the traditional boundaries between media, will reveal the Firstly, because there will be many more consumers who can be shared development potential of our different operations. It is based entertained in tomorrow’s world. Over the next ten years, the world’s on a few clear principles: a simplifi ed organization, giving priority to middle class is estimated to increase by as much as it did during organic growth, maintaining a strict fi nancial discipline and increasing the entire 20th century. This means that two billion people in Africa, the cooperation among our businesses. Asia and Latin America will enter the leisure economy by 2025. Vivendi intends to make an even greater commitment to talent, wherever Secondly, because tomorrow’s consumers will be better connected and it is found and whatever it is. As a major media group known for its better equipped for entertainment: at home or traveling, on one screen exceptional expertise in music, TV, and fi lm, Vivendi wants to go a step or more than one simultaneously, and on demand or by subscription. further in fi nding and developing emerging talent. Because we also have The dissemination of the Internet, particularly on mobile devices, a duty to bring out creative potential in those who do not necessarily means that the number of users around the world will double over have the resources to express themselves, we have decided to make the next ten years. equal opportunity the central focus of this process, in a spirit of living together with others. We are confi dent in Vivendi’s ability to capitalize on these tremendous changes and win over the new media consumers of the 21st century. Our Finally, Vivendi wants to pursue such initiative as a continuation of group is present on every continent, with French roots, an international its corporate social responsibility (CSR) policy and commitments. Our reputation, and operations in certain high-potential regions (such as priority is to strengthen Vivendi’s pioneering position in CSR, which is Africa and Vietnam). With Canal+ and UMG, we have two lead brands in regularly praised by non-fi nancial ratings agencies, investors and by all their respective markets that are able to produce and distribute exclusive the group’s partners. content. Finally, Vivendi has already begun its digital metamorphosis This roadmap is being supported by the energy and enthusiasm provided by investing in the latest generation of platforms. This is the purpose by the cohesive team that best refl ects Vivendi as a whole. A new era is behind the recent creation of “Vivendi Village”, which brings together beginning for Vivendi, with one great ambition: to become tomorrow’s innovative digital services. European champion in media and content. For more than 160 years, All these assets are invaluable in strengthening our presence in the new Vivendi has never ceased transforming and reinventing itself. We are geographic and digital markets. They must not, however, serve as an optimistic about the group’s ability to meet this new challenge. Annual Report 2014 03 At the center of our businesses AT THE CENTER OF OUR BUSINESSES Television Film Music Digital As an integrated media and content industrial group, Vivendi holds a world leadership position in music, is the European leader in fi lms, and the French leader in television. It is present across the entire value chain - from the discovery of talent to the creation, production and distribution of content. Today’s developments in these businesses occur in the digital arena. The group’s leadership positions mean that it can fully seize all opportunities. Digital is also driving the convergence in consumption modes for musical and audiovisual content, multiplying the possibilities for synergies and projects among the three Vivendi subsidiaries: Canal+ Group, Universal Music Group and Vivendi Village. Canal+ Group is the French leader in pay-TV. It is also present in Canal+ Group produces the Canal+ pay-TV channels, free-to-air TV and fi lm, and has which are recognized for the originality, creativity, and operations in Europe, Africa exclusivity of their content. It also distributes Canalsat, and Vietnam. a pay-TV package featuring over 150 channels. In 2012, Canal+ Group developed its free channel division by purchasing D8 and D17. At year-end 2014, D8 was ranked fi fth-largest national channel (market share of Revenues 3.3%), confi rming the effectiveness of the investments €5,456 7,033 made in free-to-air TV.