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Vivendi — Vivendi Universal — H1 2005 Earnings Presentation
43 slides from Vivendi's earnings presentation, Sep 13, 2005
Slide 1: First Half 2005 Earnings
First Half 2005 Earnings IMPORTANT NOTICE: INVESTORS ARE STRONGLY ADVISED TO READ THE IMPORTANT LEGAL DISCLAIMER AT THE END OF THIS PRESENTATION Jean-Bernard LEVY Chief Executive Officer Jacques ESPINASSE Member of the Management Board & Chief Financial Officer
Slide 2: Vivendi Universal is Growing: First Half 2005 Earnings Show Significant Progress
Vivendi Universal is Growing: First Half 2005 Earnings Show Significant Progress Revenues grew +8% in H1 2005 Earnings From Operations: €1,994 million as published Up 31% on a comparable basis Adjusted Net Income: €1,162 million, vs. €344 million in H1 2004 A €818 million improvement Net lncome of €
Slide 3: Vivendi Universal is in Great Shape
Vivendi Universal is in Great Shape Focus on business operations: growth, profitability, development; Investment is growing in content creation, telecom infrastructure and distribution platforms; The financial restructuring is now complete; A handful of reasonable acquisition targets; Excellent earn
Slide 4: Main Events Have Eliminated Cash Drains & Risks
Main Events in First Half 2005 Have Eliminated Cash Drains & Risks VU Games back to profit in 2005: Tremendous success of World of Warcraft; Company reshaped and focused on growth; Improved console development capabilities through acquisition of 3 studios in 2005. Creation of neufCegetel: Leading al
Slide 5: VU Operates Leading Media & Telecom Assets
VU Operates Leading Media & Telecom Assets Mobile / Fixed line Pay-TV Music Video Games 92% 99% 20%* 100% 100% 56% 51% * 20% controlling interest and a 18.5% ownership interest Film TV / Film TV / Film Global Content Local Distribution Platforms neufCegetel 28% Mobile / Fixed line
Slide 6: All Our Operations are Growing: Universal Music Group
All Our Operations are Growing Universal Music Group: Significant market share gains in recorded music in 2005; Digital sales are growing fast at ~5% of total revenues in first half 2005; Several new initiatives to foster long-term growth: IMF, amp'd mobile, ... Positive impact on margins from 2003-
Slide 7: All Our Operations are Growing: Vivendi Universal Games
All Our Operations are Growing Vivendi Universal Games: Revenues and earnings growth driven by the tremendous success of World of Warcraft in each market where the game has been launched (4 million players as of end-August 2005); Recent acquisitions of 3 development studios in console games strength
Slide 8: All Our Operations are Growing: CANAL+ Group
All Our Operations are Growing CANAL+ Group: Growth in recruitments to CANAL+ and CANALSAT to ~ 450,000 in H1 2005; Successful acquisition of exclusive rights: French L1, Fox, Dreamworks, ... New distribution platforms: DSL and DTT. The growth strategy is in place
Slide 9: All Our Operations are Growing: SFR
All Our Operations are Growing SFR: SFR captured 49% of mobile net additions in France in first half 2005; Take-off of the 3G offer to 156,000 customers at end June 2005 (300,000 at end-August); Confirmed best quality of services and leadership in innovation*. * Source: ARCEP
Slide 10: All Our Operations are Growing: Maroc Telecom
All Our Operations are Growing Maroc Telecom: +35% year-on-year growth in mobile customers to 7.4 million at end-June 2005; +3% in the number of fixed lines to 1.35 million in June 2005; Fast development of DSL services in Morocco with Maroc Telecom leading the market at 135,000 customers at end-Jun
Slide 11: Growth Drivers for 2005-2007 are Already In Place
Growth Drivers for 2005 - 2007 are Already In Place Digital distribution and new sources of music revenues; Exclusivity of French L1 soccer rights and launch of Pay-DTT; Development of World of Warcraft in new and existing markets; Mobile data services, fixed-mobile substitution; Mobile and DSL pene
Slide 12: Vivendi Universal: A Coherent Group
Vivendi Universal: A Coherent Group Creation and development of brands and talent Marketing and distribution networks, customer loyalty, interactive services Management of investment and technological innovation Content Content Platform and subscriber management Networks
Slide 13: Being part of Vivendi Universal Enhances the Value of Each Business
Being part of Vivendi Universal Enhances the Value of Each Business Our businesses are distinct but bear strong complementary characteristics: New technologies drive growth; Digital distribution creates new opportunities within all of our businesses and at their frontier; Common key skill sets: Cont
Slide 14: Investing for Our Long-Term Growth
Investing for Our Long-Term Growth First concrete projects that will allow the group to benefit from incremental growth SFR / Universal Music Group: Major strategic agreement for the distribution of music content over mobile SFR / CANAL+ Group: Launch of the world's first Pay-TV package over mobile
Slide 15: Vivendi Universal's Key Advantages
Vivendi Universal's Key Advantages Ability to out perform competition in each of VU's markets: N°1 or N°2 in our key markets Collegial structure of Management Board and track record of management team Cross-fertilization between business units Leverage strong and efficient partnerships through key a
Slide 16: Overview of Revenues & Earnings from Operations by Business
Overview of Revenues & Earnings from Operations by Business Mobile Mobile / Fixed line Pay-TV / Film Music Video Games 92% 99% 20% * 100% 56% 51% H1 2005 Revenues H1 2005 EFO In € million, IFRS H1 2005 Revenues 9,086 +8% H1 2005 EFO 1,966 +31% Figures for Revenues and Earnings from Operations (EFO)
Slide 17: Results Confirm Strong Progress
First Half 2005 Results Confirm Strong Progress In € million - IFRS H1 2005 H1 2004 % Growth Revenues (Comparable basis - cc*) 9,086 8,479 +8% Earnings From Operations (Comparable basis - cc*) 1,966 1,503 +31% Adjusted Net Income 1,162 344 +238% Net Income 1,260 844 +49% Consolidated cash flow from
Slide 18: Earnings from Operations Details by Business
Details by business: In € million, IFRS Note: The % of economic interest is provided for information purposes only. The reported numbers are 100% consolidated. Earnings from operations up €463 million, +31% on a comparable basis at actual exchange rates Up 31% on constant currency basis First Half 2
Slide 19: Adjusted Net Income Growth
First Half 2005 Adjusted Net Income Growth €1,162m in H1 2005 from €344m in H1 2004 The €818 million improvement is due to: + €503m: improvement in earnings from operations; + €172m: decrease in interest due to lower average gross debt (from €11.4bn to €6.8bn) and lower average borrowing cost (from
Slide 20: Cash flow from operations up 1% on a comparable basis
Cash flow from operations up 1% on a comparable basis at actual exchange rates 2004 2005 % 1377.7 1315.7 Conso 687.4 760.1 2,065 2,076 1st half 2004 1st half 2005 First Half 2005 Cash Flow from Operations on a Comparable Basis Note: The % of economic interest is provided for information purposes onl
Slide 21: Net Available Cash Flow
Net Available Cash Flow In € million - IFRS H1 2005 Actual H1 2004 Actual Cash Flow from Operations excluding NBCU dividend 1,932 1,878 Dividend received from NBC Universal 129 224 Consolidated Cash Flow from Operations 2,061 2,102 - Cash taxes (1,284) (219) * - Cash interest expenses (101) (241) -
Slide 22: Net Debt Evolution
Net Debt Evolution Dec. 31, 2004 Acquisitions MT Put reversal CFFO Financing expenses & Taxes Dividends paid to minorities VU Dividens Debt Adjustment March 31, 2005 Aug. 31, 2005 Est -4.7 -5.2 -3.1 -3.1 -4.8 -5.3 -6 -4.7 -1.6 -1.1 -2.1 -1.7 -0.5 -0.7 -0.1 -6.1 -4.9 -2 Dec. 31, 2004 Cash flow from o
Slide 23: Income from Equity Affiliates Analysis
Income from Equity Affiliates Analysis H1 2005 H1 2004 Income from equity affiliates 172 163 including: NBC Universal Cegetel SAS VUE Elektrim Telekomunikacja Other 188 (20) - - - - 4 40 (1) 30 79 15 In € million - IFRS
Slide 24: Financial Income Analysis
First Half 2005 Financial Income Analysis H1 2005 H1 2004 Interest (101) (273) Interest expense on gross debt (excluding swap) Average borrowing cost (%) Average financial gross debt (in € billions) Interest rate swap Interest income on cash & cash equivalent (117) 3.61% 6.8 (7) 23 (256) 5.26% 11.4
Slide 25: Detail on Income Tax Expense
Detail on First Half 2005 Income Tax Expense + €246 m In Adjusted Net Income (savings expected in first half 2005) + €4 m Variation of deferred tax assets 2005-2006 + €250 m Impact on Net Income Impact of Worldwide tax agreement in H1 2005: In € million - IFRS H1 2005 H1 2004 Provision for income ta
Slide 26: Vivendi Universal will exceed its 2005 Adjusted Net Income growth target
Vivendi Universal will exceed its 2005 Adjusted Net Income growth target announced at the 2005 AGM In IFRS In millions of euros 2004 2005 Est 1330 1900 2005 2004 €1,330 m * > €1,800 m EPS from €1.16 ... .... to above €1.57 DPS of €0.60 ... .... at least 50% payout Vivendi Universal's 2005 Guidance *
Slide 27: Appendices
Appendices
Slide 28: Adjusted Net Income (non GAAP)
First Half 2005 Adjusted Net Income (non GAAP)
Slide 29: Universal Music Group: Performance
Universal Music Group: First Half 2005 Performance First Half 2005 Events Favorable ruling from the U.S. Supreme Court in the MGM vs. Grokster case; Monetization of online use of music videos; Launch of IMF - "International Music Feed", a 24h music video channel; Outsourcing of production and distri
Slide 30: Vivendi Universal Games: Performance
Vivendi Universal Games: First Half 2005 Performance Revenues up 67% at constant currency: Driven by the massive commercial success of MMORPG World of Warcraft, partially offset by a smaller slate of releases in 2005 vs. 2004; At end-June, World of Warcraft achieved over 2m customers via directly ma
Slide 31: CANAL+ Group: Geared up for Growth
CANAL+ Group : Geared up for Growth An ambitious investment policy First results are proving right A winning strategy Acquisition of exclusive premium content Investment in recruitments Launch of CANAL+ Le Bouquet +23% recruitments to CANAL+* +10% recruitments to CANALSAT* Acceleration in digitizati
Slide 32: CANAL+ Group: Performance
CANAL+ Group: First Half 2005 Performance Revenues: Pay-TV France up 2%*: +16% in recruitments to ~450,000 in H1 2005; Total portfolio at 7.96m: +240,000 vs. June 2004; StudioCanal down: due to phasing of releases to H2. Earnings from operations: Pay-TV France down €10m: Ups Higher ARPU and portfoli
Slide 33: SFR: Great Momentum in H1 2005
SFR : Great Momentum in H1 2005 Leader in net additions in H1: great commercial performances in H1 with 49% market share for net new customers Leader in 3G with 300,000 customers at end August Innovative offers and services Voice usage: launch of new tariff plans with unlimited communications to 3 S
Slide 34: SFR: Performance
SFR: First Half 2005 Performance First Half 2005 Events neufCegetel merger decided in May and closed in August; SFR leader in net adds in H1 with 49% market share** 156,000 3G customers at end-June 2005 (300,000 at end-August); Major strategic agreements signed with UMG and CANALSAT for the distribu
Slide 35: Maroc Telecom: Performance
Maroc Telecom: First Half 2005 Performance Maroc Telecom: First Half 2005 Performance First Half 2005 Events Fixed-line business liberalized: one license granted to Meditel, one license pending to Maroc Connect or Orascom; 920 people redundancy plan; New mobile offers: €4.5 sim card and €26 packs; A
Slide 36: NBC Universal: Performance
NBC Universal: First Half 2005 Performance First Half 2005 Events Announced a 6-year deal with the NFL to begin airing a primetime TV package in 2006; Signed an agreement for Telemundo to produce short programming segments for Wal-Mart TV Network expanding hispanic market place coverage; Unwound Int
Slide 37: From EBITDA to Cash Flow from Operations
From EBITDA to Cash Flow from Operations H1 2005 H1 2004 % change Revenues 9,131 8,406 +9% Operating expenses, excl. D&A (6,405) (6,060) +6% Sub-total EBITDA 2,726 2,346 +16% Cash restructuring charges (61) (86) -29% Dividends received from equity affiliates 160 284 -44% Capital expenditures (564) (
Slide 38: Vivendi Universal's Credit Ratings
Vivendi Universal's Credit Ratings
Slide 39: neuf Telecom-Cegetel Merger: Impact on Cegetel SAS Accounting
neuf Telecom-Cegetel Merger: Impact on Cegetel SAS Accounting The neufCegetel merger is accounted for in Vivendi Universal's accounts as a divestiture of Cegetel, of which (before minority interests): 28% are accounted for as "Income from equity affiliates", in anticipation of the 28% stake in neufC
Slide 40: Glossary
Glossary Comparable basis: essentially illustrates the effect of the divestitures that occurred in 2004 (mainly Canal+ Benelux, UMG's Music clubs, Kencell and Monaco Telecom), of the divestitures that occurred in 2005 (mainly NC Numericable) and includes the full consolidation of minority stakes in
Slide 41: IR Team
IR Team Eileen McLaughlin IR Director eileen.mclaughlin@groupvu.com Laurence Daniel IR Director laurence.daniel@groupvu.com Edouard Lassalle IR Analyst edouard.lassalle@groupvu.com Daniel SCOLAN Executive Vice President Investor Relations +33.1.71.71.12.33 daniel.scolan@groupvu.com For any financial
Slide 42: Important Legal Disclaimer
Important Legal Disclaimer This presentation contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from the forward-looking
Slide 43: Vivendi Universal Earnings
a VIVENDI UNIVERSAL First Half 2005 Earnings