Vivendi: Satisfactory results for the first half of 2015
Strong financial structure enabling the Group’s development.
First quarter 2015 Key figures1
Change year-on-year
Change at constant currency and perimeter2 year-on-year
Revenues €2,492M +7.5% +2.5%
EBIT3 €117M €33M
Earnings attributable to Vivendi shareowners3 +17.1% NA4
Income from operations3 €218M +7.0% +3.1%
EBITA3 €218M +17.9% +14.1%
Adjusted net income3 €136M +24.1%
Net cash +€4.6bn5 vs. +€4.6bn as of December 31, 2014
1 In compliance with IFRS 5, SFR and Maroc Telecom (businesses sold in 2014), as well as GVT (in the process of being sold) have been reported as discontinued operations. In practice, income and charges from these businesses have been reported as follow:
- their contribution until the effective divestiture, if any, to each line of Vivendi’s Consolidated Statement of Earnings (before non-controlling interests) has been reported on the line “Earnings from discontinued operations”;
- their share of net income has been excluded from Vivendi’s adjusted net income.
2 Constant perimeter reflects the following changes made in the consolidation scope: acquisitions of Mediaserv (on February 13, 2014) and Thema (on October 28, 2014) at Canal+ Group.
3 For the reconciliation of EBIT to EBITA and to income from operations, as well as of earnings attributable to Vivendi SA shareowners to adjusted net income, see Appendix V.
4 Not comparable due to the sale of Maroc Telecom and SFR in 2014 (qualified as discontinued operations in 2014 as per IFRS 5).
5 Excluding the partial redemption by GVT of its loan for €0.3bn, as per IFRS5.
Vivendi's Supervisory Board met today under the chairmanship of Vincent Bolloré and reviewed the Group’s condensed financial statements for the first quarter of 2015, which were approved by the Management Board on May 5, 2015.
Vivendi posted increased operating results for the first quarter of 2015.
Canal + Group’s operations were supported by the good performances of its entities outside of France, its free-to-air channels in France and of Studiocanal. Universal Music Group (UMG) benefited from the growth in recorded music and music publishing. At Vivendi Village, Vivendi Ticketing in the United Kingdom and Wengo registered a very satisfactory first quarter.
In this context, Vivendi‘s income from operations increased by 7.0% (3.1% at constant currency and perimeter) compared to the first quarter of 2014 thanks to the performance of UMG’s music repertoire and the transformation plan implemented by Watchever.
Earnings attributable to Vivendi SA shareowners amounted to €33 million, compared to €431 million for the first quarter of 2014. This amount included earnings for discontinued operations for €584 million during the first quarter of 2014, compared to €17 million for the first quarter of 2015. This situation will continue throughout 2015.
Adjusted net income, representing the economic performance of business segments, grew 24.1% to €136 million compared to the first quarter of 2014, thanks to the increase in income from operations, the increase in income received from investments and the decrease in interest expense, partially offset by the increase in income tax expense.
Moreover, Vivendi’s balance sheet is solid. The net cash stood at €4.6 billion5 as of March 31, 2015.
On April 7, 2015, Vivendi entered into exclusive negotiations with Orange for the acquisition of an 80% interest in Dailymotion for €217 million.
On May 6, 2015, the Group completed the sale of its 20% interest in Numericable-SFR for €3.8 billion. €1.8 billion has already been received; the remaining balance will be received no later than April 7, 2016.
Proposed public tender offer on SECP
Given that since 2009, French law permits Vivendi to increase its interest in Société d’Edition de Canal Plus (SECP), and because a large number of its shareholders have requested it, today Vivendi’s Supervisory Board authorized a proposed public tender offer on SECP, in which Vivendi indirectly controls 48.5% of the share capital, at a price of €7.60 per share after the payment of a €0.25 dividend per SECP share on April 29, 2015 (see separate press release).
Comments on Key Financial Consolidated Indicators
A/ Analysis of the consolidated income statement changes
In compliance with IFRS 5, SFR and Maroc Telecom (businesses sold in 2014) as well as GVT (in the process of being sold), have been reported as discontinued operations. In practice, income and charges from these businesses have been reported as follows:
- their contribution until the effective divestiture, if any, to each line of Vivendi’s Consolidated Statement of Earnings (before non-controlling interests) has been reported on the line “Earnings from discontinued operations”;
- their share of net income has been excluded from Vivendi’s adjusted net income.
Revenues were €2,492 million, compared to €2,317 million for the first quarter of 2014 (a 7.5% growth, or +2.5% at constant currency and perimeter2).
EBIT was €117 million, compared to €100 million for the first quarter of 2014, a 17.1% increase.
Earnings attributable to Vivendi SA shareowners amounted to €33 million (or €0.02 per share), compared to €431 million (or €0.32 per share) for the first quarter of 2014.
Earnings attributable to Vivendi SA shareowners for continuing operations, after non-controlling interests (Canal+ Group, Universal Music Group and Vivendi Village, as well as Corporate) was a €16 million profit for the first quarter of 2015, compared to a €10 million loss for the first quarter of 2014, a €26 million favorable change. This change primarily reflected the €17 million increase in EBIT, the €6 million decrease in interest expense and the €9 million in dividends received from Activision Blizzard, partially offset by the €9 million increase in income tax expense.
Earnings attributable to Vivendi SA shareowners for discontinued operations, after non-controlling interests amounted to €17 million for the first quarter of 2015, compared to €441 million for the same period in 2014, a €424 million decrease. For the first quarter of 2014, earnings notably included SFR, Maroc Telecom and GVT’s contributions, as well as the gain on the change in value of the remaining interest in Activision Blizzard.
B/ Analysis of adjusted net income changes
As a result of the application of IFRS 5 to SFR, Maroc Telecom and GVT, the Adjusted Statement of Earnings presents the results of Canal+ Group, Universal Music Group (UMG) and Vivendi Village’s activities, as well as Corporate costs.
Income from operations was €218 million, compared to €204 million for the first quarter of 2014, a 7.0% increase. At constant currency, income from operations increased by €8 million (+4.0%) and primarily reflected the improved operating performance of Vivendi Village (+€24 million), thanks to the cost management at Watchever since the second half of 2014, and of Universal Music Group (+€17 million), mainly attributable to strong recorded music sales.
EBITA was €218 million, compared to €185 million for the first quarter of 2014, a 17.9% increase. At constant currency, EBITA increased by 15.1% (+14.1% at constant currency and perimeter). Restructuring charges, incurred by Universal Music Group, amounted to €7 million, compared to €6 million for the first quarter of 2014. The change in EBITA primarily reflected the increase in income from operations.
Interest was an expense of €5 million, compared to €11 million for the first quarter of 2014, a 56.4% improvement thanks in particular to lower interest expenses on bonds partially offset by lower income received from financings granted to SFR.
Income taxes in adjusted net income were a net charge of €61 million, compared to €40 million for the first quarter of 2014. The effective tax rate reported to adjusted net income was at 27.6%.
Adjusted net income attributable to non-controlling interests remained stable at €19 million and included non-controlling interests of Société d’Edition de Canal Plus, Canal+ Overseas and nc+.
Adjusted net income was €136 million (or €0.10 per share), compared to €109 million for the first quarter of 2014 (€0.08 per share), a 24.1% increase. This increase resulted from the increase in EBITA (+€33 million), the decrease in interest expense (+€6 million) and dividends received from Activision Blizzard (+€9 million), partially offset by the increase in income tax expense (-€21 million).
Comments on Business Highlights
Canal+ Group
Canal+ Group’s revenues amounted to €1,370 million, a 4.0% increase (+2.5% at constant currency and perimeter) compared to the first quarter of 2014.
Canal+ Group had a total of 15.2 million subscriptions, an increase of 605,000 year-on-year, thanks to the strong performance of Canal+ in Africa and Vietnam, and Canalplay in mainland France.
Revenues from pay-TV operations in mainland France were nearly stable year-on-year, in a difficult economic environment. International pay-TV revenues were up 13.9% compared to the first quarter of 2014, thanks to the continuous growth of the subscriber base.
Advertising revenues from free-to-air channels benefited from growing audience ratings at D8 and i>Télé.
Studiocanal’s revenues grew significantly thanks to successful theatrical releases, including Paddington, Imitation Game and Shaun the sheep.
Canal+ Group’s EBITA was €165 million, compared to €175 million for the first quarter of 2014. This change resulted from an increased investment in sport content (exclusive Eurosport channel on Canalsat and secured rights to the National French Rugby Championship’s “TOP 14” on Canal+), partially offset by a favorable effect related to the release schedule of the French soccer league 1 and by the favorable outcome of a tax litigation during the first quarter of 2014.
Income from operations was €154 million, compared to €179 million for the first quarter of 2014.
On March 16, 2015, Canal+ Group jointly announced with ITI Group the sale of their controlling interest in TVN, Poland’s leading private media company, to Scripps Networks Interactive Inc.
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