Vivendi Se · EURONEXT:VIV
Vivendi — H1 2016 Earnings Presentation
40 slides from Vivendi's earnings presentation, Aug 25, 2016
Slide 1: First Half 2016 Results
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 Aug. 25, 2016 FIRST HALF 2016 RESULTS IMPORTANT NOTICE: Financial statements unaudited and prepared under IFRS Investors are strongly urged to read the important disclaimer at the end of this presentation
Slide 2: H1 2016 Business Update
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 ARNAUD DE PUYFONTAINE Chairman of the Management Board Chief Executive Officer H1 2016 BUSINESS UPDATE
Slide 3: Key Highlights
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 KEY HIGHLIGHTS ■ Music: Fast transition to streaming. New opportunities ahead ■ Investments in mobile-dedicated content: a worldwide opportunity ■ IP and content: Investments in production and IP ■ TV distribution: Continuous international expans
Slide 4: Music: Transition to Streaming Is Opening Up Opportunities
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 MUSIC: TRANSITION TO STREAMING IS OPENING UP OPPORTUNITIES ■ In 2015, the recorded music industry returned to growth, up 3.2%* reaching $15bn*. Driven by a sharp increase in subscriptions and streaming, +45.2%* yoy. Paid subscribers increased
Slide 5: Music: Transition to Streaming Is Opening Up Opportunities
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 MUSIC: TRANSITION TO STREAMING IS OPENING UP OPPORTUNITIES H1 2016 ■ In H1 2016, subscription and streaming revenues 17% Streaming and accounted for 36% of UMG’s recorded music (only 17% in 17% 17% 36% subscriptions Download H1 2014 H1 2014). Oth
Slide 6: Mobile-Dedicated Content: Gameloft
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 MOBILE-DEDICATED CONTENT: GAMELOFT ■ Games: a US$ 100bn industry. Gaming is one of the biggest segments of the media industry; Mobile games already represent 37%* of the gaming industry. and is the fastest growing one. ■ Thanks to mobile pene
Slide 7: Mobile-Dedicated Content: Gameloft
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 MOBILE-DEDICATED CONTENT: GAMELOFT ■ In a rapidly-evolving market, Gameloft, with Vivendi's backing, can be more ambitious in its growth plans. ■ Strong portfolio of games. Strong audience* Internally developed franchises Partnerships 148m MAU*
Slide 8: Mobile-Dedicated Content: Studio+
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 MOBILE-DEDICATED CONTENT: STUDIO+ ■ The first service offering premium series designed for mobiles with a global ambition thanks to partnerships with telcos. ■ 1st class content provider: 1 series per week Premium series of 10 episodes of 10
Slide 9: IP and Content
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 IP AND CONTENT ■ Investing in production and in IP with the objective of retaining ownership of IP. IP and original programming Production companies ■ “Créations Originales” partnering with ■ Equity interest in production companies: peers. Bani
Slide 10: TV Distribution: Continuous International Expansion
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 TV DISTRIBUTION: CONTINUOUS INTERNATIONAL EXPANSION ■ Canal+ now has more subscribers internationally than in mainland France: individual subscribers reached 5.7m at end-June 2016, +749k compared to end-June 2015. POLAND 2.1m subs Rev: €246m +2.7
Slide 11: TV Distribution: Redefinition of French TV
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 TV DISTRIBUTION: REDEFINITION OF FRENCH TV ■ Clear value proposition between Pay-TV and FTA channels. ■ Canal+: focus on subscribers. Reduction to ~2hs/day of free-to-air content; 150 additional hours of exclusive content for subscribers. ■ C
Slide 12: Roadmap to Offsetting Canal+ Losses – Cost Efficiency
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 ROADMAP TO OFFSETTING CANAL+ LOSSES – COST EFFICIENCY ■ € 300m cost efficiency plan set-up for Pay-TV Mainland France (Canal+ channels and Canalsat). ■ Streamlining of all costs, without negatively impacting consumer experience: € 100m reductio
Slide 13: Update on Telecom Italia
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 UPDATE ON TELECOM ITALIA ■ Three Vivendi representatives appointed to Telecom Italia’s Board of Directors on December 15, 2015. ■ Evolution of the management team, with the appointment of Flavio Cattaneo as CEO. ■ New goals set up in terms of cos
Slide 14: Executing Our Strategy to Become a Leading European Content and Media Group
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 WE ARE EXECUTING OUR STRATEGY TO BECOME A LEADING EUROPEAN CONTENT AND MEDIA GROUP WITH STRONG POSITIONS IN FRANCE AND SOUTHERN EUROPE AND WITH WORLDWIDE AMBITIONS Embracing all forms of entertainment content and consumer behaviors 14
Slide 15: Two-Fold Approach
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 TWO-FOLD APPROACH All forms of entertainment content All forms of distribution ■ In-house distribution ■ Music channels ■ Video Films and Series ■ Partnerships Telcos Digital platforms ■ Games Fnac 15
Slide 16: Outlook Maintained
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 OUTLOOK MAINTAINED UNIVERSAL MUSIC GROUP ■ We continue to see positive momentum in the business, driven by ongoing growth in streaming and subscription and tempered by continued declines in download and physical, leading to a reasonable increase
Slide 17: Financials
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 HERVE PHILIPPE Member of the Management Board Chief Financial Officer FINANCIALS
Slide 18: Scope of Consolidation and Main Currencies
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 SCOPE OF CONSOLIDATION AND MAIN CURRENCIES In compliance with IFRS 5, GVT qualifies as a discontinued operation from Q3 2014, hence its earnings are reported as “Earnings from discontinued operations”. This classification retrospectively applies
Slide 19: Key Financial Metrics at End-June 2016
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 KEY FINANCIAL METRICS AT END-JUNE 2016 % Change % Underlying change* Year-on-year Year-on-year Revenues: € 5,044 m - 1.0 % - 0.9 % IFRS EBIT: € 1,062 m + 3.4 % Net Income**, group share: € 913 m + 28.3 % Non-GAAP**** Income from operation
Slide 20: Highlights (Universal Music Group)
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 Constant perimeter In euro millions - IFRS H1 2015 H1 2016 Change and constant HIGHLIGHTS currency * Revenues 2,311 2,315 + 0.2% + 1.6% ■ Subscription and streaming up c. 62%* in H1 2016 Recorded music 1,848 1,832 - 0.8% + 0.5% compared to H1 201
Slide 21: Highlights (Canal+ Group)
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 Constant perimeter In euro millions - IFRS H1 2015 H1 2016 Change and constant HIGHLIGHTS currency * Revenues 2,734 2,639 - 3.5% - 3.0% ■ Revenues down 3.0%*: Pay-TV Mainland France 1,716 1,627 - 5.2% - 5.2% ■ International operations benefited f
Slide 22: Highlights (Vivendi Village, New Initiatives, Corporate)
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 VIVENDI VILLAGE Constant perimeter In euro millions - IFRS H1 2015 H1 2016 Change and constant HIGHLIGHTS currency * Revenues 51 54 + 6.9% - 2.2% . Income from operations 8 (8) na na Vivendi Village EBITA 8 (4) na na ■ Decrease in Income from ope
Slide 23: Adjusted P&L
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 ADJUSTED P&L Constant perimeter In euro millions - IFRS H1 2015 H1 2016 Change % and constant currency* Revenues 5,095 5,044 - 51 - 1.0% - 0.9% Income from operations 500 440 - 60 - 12.0% - 7.6% Income from operations margin 9.8% 8.7% - 1.1pt Equ
Slide 24: Consolidated P&L
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 CONSOLIDATED P&L In euro millions - IFRS H1 2015 H1 2016 % Revenues 5,095 5,044 - 1.0% Cost of revenues (3,069) (3,088) Selling, general and administrative expenses excluding amortization (1,481) (1,521) of intangible assets acquired through busi
Slide 25: Consolidated Balance Sheet
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 CONSOLIDATED BALANCE SHEET In euro millions December December Assets June 30, 2016 Equity and Liabilities June 30, 2016 31, 2015 31, 2015 Goodwill 10,177 10,705 Consolidated equity * 21,086 18,399 Intangible and tangible assets 4,335 3,949 Provis
Slide 26: Cash Flow from Operations (CFFO)
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 CASH FLOW FROM OPERATIONS (CFFO) CFFO before capex, net CFFO H1 2015 H1 2016 Change In euro millions H1 2015 H1 2016 Change (1) 116 na Universal Music Group (24) 93 na 428 381 - 11.2% Canal+ Group 327 303 - 7.6% 12 2 - 82.8% Vivendi Village 9 (2)
Slide 27: Net Cash at End-June 2016
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 NET CASH AT END-JUNE 2016 In euro billions Disposals and Net Cash Distribution to Interest, taxes paid decrease of financial Acquisitions and Net Cash Dec. 31, 2015 shareholders Share buyback CFFO and other assets investments Other June 30, 2016
Slide 28: Appendices
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 APPENDICES Details of Business Operations: slides 29-31 Detailed Vivendi Financial Results: slides 33-37 Glossary and Disclaimers: slides 39-40
Slide 29: UMG
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 UMG Constant Recorded Music Revenues H1 2015 H1 2016 perimeter and In euro millions - IFRS H1 2016 Europe 36% 36% constant North America 44% 44% currency * Asia 12% 12% Recorded music 1,832 + 0.5% Rest of the world 8% 8% Physical sales 488 - 16.2
Slide 30: Canal+ Group
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 CANAL+ GROUP In '000 June 30, 2015 June 30, 2016 Change Constant individual subscribers 10,942 11,182 + 240 perimeter Revenues H1 2015 H1 2016 and Mainland France 5,964 5,455 - 509 In euro millions - IFRS constant International 4,978 5,727 + 749
Slide 31: Highlights (Gameloft)
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 Constant perimeter In euro millions - IFRS H1 2015 H1 2016 Change and constant HIGHLIGHTS currency * Revenues 127 125 - 2.0% + 4.0% ■ In H1 2016, Gameloft released 2 new games: Disney Magic Kingdoms et Blacklist Conspiracy. Revenue H1 2015 H1 201
Slide 32: Appendices: Detailed Vivendi Financial Results
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 APPENDICES Detailed Vivendi Financial Results
Slide 33: Revenues / EBITDA / EBITA
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 REVENUES / EBITDA / EBITA Constant Constant Constant perimeter Revenues Constant perimeter Q2 2015 Q2 2016 Change H1 2015 H1 2016 Change currency and constant In euro millions - IFRS currency and constant currency * currency * 1,214 1,196 - 1.4%
Slide 34: Revenues / Income from Operations / EBITA
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 REVENUES / INCOME FROM OPERATIONS / EBITA Constant Constant Constant perimeter Revenues Constant perimeter Q2 2015 Q2 2016 Change H1 2015 H1 2016 Change currency and constant In euro millions - IFRS currency and constant currency * currency * 1,2
Slide 35: Interest & Income Tax
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 INTEREST & INCOME TAX In euro millions (except where noted) – IFRS H1 2015 H1 2016 Interest (14) (17) Interest expense on borrowings (34) (28) Average interest rate on borrowings (%) 2.91% 2.32% Average outstanding borrowings (in euro billions) 2
Slide 36: Reconciliation of Earnings to Adjusted Net Income
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 RECONCILIATION OF EARNINGS ATTRIBUTABLE TO VIVENDI SA SHAREOWNERS TO ADJUSTED NET INCOME In euro millions - IFRS H1 2015 H1 2016 Earnings attributable to Vivendi SA shareowners (*) 1,991 911 Amortization and depreciation of intangible assets acqu
Slide 37: Reconciliation of EBIT to Income from Operations
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 RECONCILIATION OF EBIT TO INCOME FROM OPERATIONS In euro millions - IFRS H1 2015 H1 2016 EBIT 1,027 1,062 Amortization and depreciation of intangible assets acquired through business 203 110 combinations Other income & charges (714) (785) EBITA 5
Slide 38: Appendices: Glossary & Disclaimer
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 APPENDICES Glossary & Disclaimer
Slide 39: Glossary
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 GLOSSARY The non-GAAP measures defined below should be considered in addition to, and not as a substitute for, other GAAP measures of operating and financial performance and Vivendi considers this to be relevant indicators of the group’s operatin
Slide 40: Important Legal Disclaimer / Contacts
H 1 2 0 1 6 R e s u l t s – A u g u s t 2 5 , 2 0 1 6 IMPORTANT LEGAL DISCLAIMER / CONTACTS Cautionary Note Regarding Forward-Looking Statements This presentation contains forward-looking statements with respect to Vivendi's financial condition, results of operations, business, strategy, plans, and