VIVENDI SE Regulatory News:
Vivendi (Paris:VIV):
Change at constant
currency and
Change perimeter(1)
First Half 2020 Key Figures year-on-year year-on-year
Revenues EUR7,576 M +3.0% -2.0%
EBITA(2,3) EUR735 M +2.4% -3.8%
EBIT(3) EUR660 M +2.3%
Earnings attributable to
Vivendi SE
shareowners(3) EUR757 M +45.7%
Adjusted net income(2,3) EUR583 M +5.4%
This press release contains unaudited condensed financial results established under IFRS, which were approved by Vivendi's Management Board on July 27, 2020, and reviewed by the Vivendi Audit Committee on July 28, 2020, and by Vivendi's Supervisory Board on July 30, 2020.
Vivendi's Supervisory Board met today under the chairmanship of Yannick Bolloré and reviewed the Group's financial results for the half-year ended June 30, 2020, which were approved by the Management Board on July 27, 2020.
-- For the first half of 2020, revenueswere EUR7,576 million, up to 3.0%
(-2.0% at constant currency and perimeter) compared to the first half of
2019. This increase was mainly due to the growth in revenues of Vivendi's
two main businesses, UMG and Canal+ Group, demonstrating the resilience
of their subscription-related activities. The increase was partially
offset by the slowdown in the revenues of Havas Group and Vivendi Village,
which were affected by the COVID-19 pandemic. For the second quarter of
2020, affected by the lockdown measures taken in most countries, revenues
were EUR3,706 million, down 4.8% (-7.9% at constant currency and
perimeter) compared to the second quarter of 2019.
-- EBITA was EUR735 million, an increase of 2.4% compared to the first half
of 2019 (-3.8% at constant currency and perimeter). The EBITA growth at
Universal Music Group (+EUR81 million) and Canal+ Group (+EUR20 million)
was notably offset by the EBITA slowdown at Havas Group (-EUR67 million).
-- Other financial charges and income were a net income of EUR417 million,
compared to a net income of EUR91 million for the first half of 2019,
representing a favorable change of EUR326 million. This amount included
the revaluation of the interests in Spotify and Tencent Music for a net
amount of EUR449 million, compared to EUR155 million for the same period
in 20194.
-- Provision for income taxes reported to net income was a net charge of
EUR299 million, compared to a net charge of EUR182 million for the same
period in 2019. This change notably reflected the increase in the
deferred tax charge related to the revaluation of the interests in
Spotify and Tencent Music (-EUR110 million, compared to -EUR37 million
for the first half of 2019).
-- Earnings attributable to non-controlling interests were EUR84 million,
compared to EUR10 million for the first half of 2019. This increase
mainly reflected the Tencent-led consortium's share (EUR64 million) of
Universal Music Group's net earnings as from March 31, 2020.
-- Earnings attributable to Vivendi SE shareowners amounted to a profit of
EUR757 million (or EUR0.66 per share - basic), compared to EUR520 million
for the first half of 2019 (or EUR0.41 per share - basic), an increase of
EUR237 million. This change mainly reflected the improvement in other
financial charges and income (+EUR326 million) generated by the
revaluation of the interests in Spotify and Tencent Music (+EUR294
million).
-- Adjusted net income was a profit of EUR583 million (or EUR0.51 per share
- basic), compared to EUR554 million for the first half of 2019 (or
EUR0.44 per share - basic), an increase of 5.4%.
-- The first half of 2020 was marked by strong cash generation (CFFO) of
EUR338 million, compared to EUR36 million in the first half of 2019,
thanks to Canal+ Group and after significant content investments by UMG.
-- Vivendi's balance sheet is particularly healthy. During the first half of
2020, Vivendi's net financial debt fell by EUR1,007 million, from
EUR4,064 million as of December 31, 2019 to EUR3,057 million as of June
30, 2020. This change notably includes a return to shareholders
(dividends and share buybacks) of EUR1.4 billion, compared to EUR3.3
billion in 2019 (dividends and share buybacks), and the sale of 10% of
UMG's share capital for EUR2.8 billion. The Group has significant
financing capacity. As of June 30, 2020, the Group's credit lines
(Vivendi SE and Havas SA) were available in the amount of EUR3.7 billion.
As of June 30, 2020, the average "economic" term of the financial debt,
calculated based on the assumption that available medium-term credit
lines may be used to redeem the group's shortest-term borrowings, is 5.0
years. With consolidated equity of EUR17.4 billion, the gearing rate
(ratio of net debt to equity) was 17.5%.
Although the COVID-19 pandemic is having a more significant impact on certain countries or businesses than others, Vivendi has been able to demonstrate resilience and adapt in order to continue to best serve and entertain its customers, while reducing costs to preserve its margins. The business activities showed good resistance, in particular music and pay television. However, as anticipated when the first-quarter revenues were released, Havas Group, Vivendi Village and Editis were affected by the effects of the public health crisis. However, Editis has been enjoying a strong rebound in its business since the end of the lockdown in France.
Vivendi carefully analyzes the current and potential consequences of the crisis. It is difficult at this time to determine how it will impact its annual results. Businesses related to advertising and live performance are likely to be affected longer than others. Nevertheless, the Group remains confident in the resilience of its main businesses. It continues to make every effort to ensure the continuity of its activities and best serve and entertain its customers and audiences while complying with the authorities' guidelines in each country where it operates.
A review of the value of assets with an indefinite life, in particular the goodwill, was performed. Taking into account the performance achieved during the first half of the year by the business units, Vivendi did not identify any indications of a decrease in the recoverable amount compared to December 31, 2019, based on the sensitivity analyses performed.
SUCCESSFUL OPENING OF UMG'S SHARE CAPITAL
On March 31, 2020, Vivendi completed the sale of 10% of UMG's share capital to a consortium led by Tencent, based on an enterprise value of EUR30 billion for 100% of UMG.
The consortium, led by Tencent and including Tencent Music Entertainment and other financial co-investors, has the option to acquire, on the same valuation basis, up to an additional 10% of the share capital of UMG until January 15, 2021. This transaction is complemented by a separate agreement allowing Tencent Music Entertainment to acquire a minority stake in the capital of the UMG subsidiary owning its Chinese activities.
Following the success of this important strategic agreement, Vivendi is pursuing the possible sale of additional minority interests in UMG with the assistance of several mandated banks. An IPO is scheduled for early 2023 at the latest.
ACQUISITION BY BANIJAY OF ENDEMOL SHINE GROUP
Banijay's acquisition of Endemol Shine Group was finalized on July 3, 2020. This transaction creates the world leader in the production and distribution of audiovisual content, with annual revenues of around EUR2.7 billion (pro-forma 2019). Vivendi's support for this transaction (the Group owns 32.9% of the new entity) is part of its desire to build a world leader in culture, at the crossroads of the entertainment, media and communication industries.
Present in 22 countries, the new group has a portfolio of world-famous audiovisual programs, both streamed programs (Big Brother, Master Chef, The Wall, etc.) and scripted programs (Black Mirror, Humans, Tin Star, ...). It also has an unrivaled distribution network, the two entities having complementary geographic locations.
SHARE BUYBACK PROGRAM
Between January 1 and March 6, 2020, Vivendi repurchased 23 million of its own shares, representing EUR559 million. Since April 20, 2020, the Group has repurchased 8.25 million of its own shares (i.e., 0.70% of its share capital), representing EUR160 million.
As of July 29 2020, Vivendi holds 35.2 million treasury shares (i.e., 2.97% of its share capital), of which 19.1 million shares designated for cancellation, 7.5 million shares allocated to covering performance share plans and 8.6 million allocated to covering employee shareholding plans.
COMMENTS ON THE BUSINESSES
Universal Music Group
For the first half of 2020, Universal Music Group's (UMG) revenues were EUR3,459 million, up 3.5% at constant currency and perimeter compared to the first half of 2019 (+6.2% on an actual basis).
Recorded music revenues grew by 3.7% at constant currency and perimeter thanks to the growth in subscription and streaming revenues (+12.4%) and the receipt of a digital royalty claim. This increase was achieved despite the impact of the COVID-19 pandemic, which mainly affected the second quarter of 2020. Physical sales were down 22.4% compared to the first half of 2019, while download sales declined by 23.1%.
Recorded music best sellers for the first half of 2020 included new releases from The Weeknd, Justin Bieber, King & Prince, Eminem and Lil Baby, as well as continued sales from Billie Eilish and Post Malone.
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