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Vivendi — Vivendi Universal — H1 2005 Earnings Presentation

44 slides from Vivendi's earnings presentation, Sep 13, 2005

1. Slide 1: First Half 2005 Earnings

   First Half 2005 Earnings Jean-Bernard LEVY Chief Executive Officer Jacques ESPINASSE Member of the Management Board & Chief Financial Officer IMPORTANT NOTICE: INVESTORS ARE STRONGLY ADVISED TO READ THE IMPORTANT LEGAL DISCLAIMER AT THE END OF THIS PRESENTATION First Half 2005 Earnings - September 1

2. 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 ƒ Up 31% on a comparable basis ► Adjusted Net Income: €1,162 million, vs. €344 million in H1 2004 ƒ A €818 million improvement ► Net

3. 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; ► Exce

4. Slide 4: Main Events in First Half 2005 Have Eliminated Cash Drains & Risks

   Main Events in First Half 2005 Have Eliminated Cash Drains & Risks 3 VU Games back to profit in 2005: ƒ Tremendous success of World of Warcraft; ƒ Company reshaped and focused on growth; ƒ Improved console development capabilities through acquisition of 3 studios in 2005. 3 Creation of neufCegetel:

5. Slide 5: VU Operates Leading Media & Telecom Assets

   VU Operates Leading Media & Telecom Assets Music Video TV / Film Film Pay-TV Mobile / Mobile / Games Fixed line Fixed line 92% 99% 20%* 100% 100% 56% 51% 28% neufCegetel Global Content Local Distribution Platforms * 20% controlling interest and a 18.5% ownership interest First Half 2005 Earnings - S

6. Slide 6: All Our Operations are Growing: Universal Music Group

   All Our Operations are Growing ► Universal Music Group: ƒ Significant market share gains in recorded music in 2005; ƒ Digital sales are growing fast at ~5% of total revenues in first half 2005; ƒ Several new initiatives to foster long-term growth: IMF, amp’d mobile, … ƒ Positive impact on margins fr

7. Slide 7: All Our Operations are Growing: Vivendi Universal Games

   All Our Operations are Growing ► Vivendi Universal Games: ƒ 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); ƒ Recent acquisitions of 3 development studios in console games st

8. Slide 8: All Our Operations are Growing: CANAL+ Group

   All Our Operations are Growing ► CANAL+ Group: ƒ Growth in recruitments to CANAL+ and CANALSAT to ~ 450,000 in H1 2005; ƒ Successful acquisition of exclusive rights: French L1, Fox, Dreamworks, … ƒ New distribution platforms: DSL and DTT. The growth strategy is in place First Half 2005 Earnings - Se

9. Slide 9: All Our Operations are Growing: SFR

   All Our Operations are Growing ► SFR: ƒ SFR captured 49% of mobile net additions in France in first half 2005; ƒ Take-off of the 3G offer to 156,000 customers at end June 2005 (300,000 at end-August); ƒ Confirmed best quality of services and leadership in innovation*. * Source: ARCEP First Half 2005

10. Slide 10: All Our Operations are Growing: Maroc Telecom

    All Our Operations are Growing ► Maroc Telecom: ƒ +35% year-on-year growth in mobile customers to 7.4 million at end-June 2005; ƒ +3% in the number of fixed lines to 1.35 million in June 2005; ƒ Fast development of DSL services in Morocco with Maroc Telecom leading the market at 135,000 customers at

11. 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 an

12. Slide 12: Vivendi Universal: A Coherent Group

    Vivendi Universal: A Coherent Group Content Content Creation and development of brands and talent Platform and Marketing and distribution subscriber networks, customer loyalty, management interactive services Management of investment Networks and technological innovation First Half 2005 Earnings - S

13. 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: ƒ New technologies drive growth; ƒ Digital distribution creates new opportunities within all of our businesses and at their frontier; ƒ Common key skill se

14. 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: ƒ Major strategic agreement for the distribution of music content over mobile TV. ► SFR / CANAL+ Group: ƒ Launch of the world’s first Pay-TV package

15. Slide 15: Vivendi Universal’s Key Advantages

    Vivendi Universal’s Key Advantages ► Ability to out perform competition in each of VU’s markets: ƒ 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 thr

16. Slide 16: Overview of Revenues & Earnings from Operations by Business

    Overview of Revenues & Earnings from Operations by Business In € million, IFRS H1 2005 Revenues 9,086 +8% H1 2005 EFO 1,966 +31% Music Video TV / Film Pay-TV / Mobile Mobile / Games Film Fixed line Percent of interest 92% 99% 20% * 100% 56% 51% H1 2005 Revenues 2,092 +9% 238 +67% 20% equity 1,652 -1

17. Slide 17: Main Scope & Accounting Changes in the First Half 2005

    Main Scope & Accounting Changes in the First Half 2005 ► Acquisition of a further 16% stake in Maroc Telecom to 51% for €1.1 billion; ► Acquisition by CANAL+ Group of the minority stake in MultiThématiques and divestiture of its stake in Lagardère Thématiques; ► Divestiture of NC Numericable by CANA

18. Slide 18: First Half 2005 Results Confirm Strong Progress

    First Half 2005 Results Confirm Strong Progress In € million - IFRS H1 H1 % 2005 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 (Comp

19. Slide 19: First Half 2005 Earnings from operations on a Comparable Basis

    First Half 2005 Earnings from operations on a Comparable Basis In € million, IFRS 1,966 Earnings from operations up €463 million, 1,503 +31% on a comparable basis at actual exchange rates Up 31% on constant currency basis 1st half 2004 1st half 2005 Details by business: Comparable basis Growth at Va

20. Slide 20: First Half 2005 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: ƒ + €503m: improvement in earnings from operations; ƒ + €172m: decrease in interest due to lower average gross debt (from €11.4bn to €6.8bn) and lower average borrowing cos

21. Slide 21: First Half 2005 Cash Flow from Operations on a Comparable Basis

    First Half 2005 Cash Flow from Operations on a Comparable Basis In € million, IFRS 2,065 2,076 Cash flow from operations up 1% on a comparable basis at actual exchange rates 1,378 1,316 Consolidated basis Proportionate basis + €11m variation - €62m variation 1st half 2004 1st half 2005 Details by bu

22. Slide 22: Net Available Cash Flow

    Net Available Cash Flow H1 2005 H1 2004 Actual Actual In € million - IFRS Cash Flow from Operations excluding NBCU dividend 1,932 1,878 On May 12, 2004 at the Dividend received from NBC Universal 129 224 time of the closing Consolidated Cash Flow from Operations 2,061 2,102 No cash impact yet from t

23. Slide 23: Net Debt Evolution

    Net Debt Evolution In € billion, IFRS Reversal of Maroc Telecom Acquisitions forward Cash flow Cash interest Dividends Dividends Estimated at Dec. 31, & investments, purchase from and tax paid to paid to VU Other June 30, August 31, 2004 net agreement operations & other minorities shareholders adjus

24. Slide 24: Income from Equity Affiliates Analysis

    Income from Equity Affiliates Analysis H1 H1 In € million - IFRS 2005 2004 Income from equity affiliates 172 163 including: • NBC Universal 188 40 • Cegetel SAS (20) (1) • VUE - 30 • Elektrim Telekomunikacja - 79 • Other 4 15 First Half 2005 Earnings - September 13, 2005 24

25. Slide 25: First Half 2005 Financial Income Analysis

    First Half 2005 Financial Income Analysis In € million, IFRS H1 2005 H1 2004 Interest (101) (273) • Interest expense on gross debt (excluding swap) (117) (256) • Average borrowing cost (%) 3.61% 5.26% • Average financial gross debt (in € billions) 6.8 11.4 • Interest rate swap (7) (41) • Interest in

26. Slide 26: Detail on First Half 2005 Income Tax Expense

    Detail on First Half 2005 Income Tax Expense f Impact of Worldwide tax agreement in H1 2005: + €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 f H1 2005 Tax details In € million – IFRS H1 2005 H1 2004

27. Slide 27: Vivendi Universal’s 2005 Guidance

    Vivendi Universal’s 2005 Guidance Vivendi Universal will exceed its 2005 Adjusted Net Income growth target announced at the 2005 AGM In IFRS 2005 In millions of euros 2004 EPS from … to above €1.16 … €1.57 DPS of … at least €0.60 … 50% payout €1,330 m * > €1,800 m * 2004 Adjusted Net Income as per I

28. Slide 28: Appendices

    Appendices First Half 2005 Earnings - September 13, 2005 28

29. Slide 29: First Half 2005 Adjusted Net Income (non GAAP)

    First Half 2005 Adjusted Net Income (non GAAP) C O N S O LID A T E D S T A T E M E N T O F E A R N IN G S ( a ) A J US T E D S T A T E M E N T O F E A R N IN G S ( a ) (In millions of euros, except per share amounts) 1st Half Ended June 30, 1st Half Ended June 30, 2005 2004 2005 2004 Revenues € 9,13

30. Slide 30: Universal Music Group: First Half 2005 Performance

    Universal Music Group: First Half 2005 Performance Revenues up 9% at constant currency*: First Half on a Growth Growth ▶ Strong sales in North America and growth comparable basis 2005/2004 2005/2004 at on a in € million - IFRS 2005 2004 comparable constant currency in Germany, the U.K. and Australia

31. Slide 31: Vivendi Universal Games: First Half 2005 Performance

    Vivendi Universal Games: First Half 2005 Performance Revenues up 67% at constant currency: ▶ Driven by the massive commercial success First Half Growth Growth 2005/2004 at of MMORPG World of Warcraft, partially in € million - IFRS 2005 2004 2005/2004 constant offset by a smaller slate of releases in

32. Slide 32: CANAL+ Group: Geared up for Growth

    CANAL+ Group : Geared up for Growth 2005 targets An ambitious First results are A winning confirmed and investment policy proving right strategy exceeded on subscriptions ƒ Acquisition of ƒ +23% recruitments ƒ Consolidation of exclusive premium to CANAL+* leadership on all content distribution platf

33. Slide 33: CANAL+ Group: First Half 2005 Performance

    CANAL+ Group: First Half 2005 Performance Revenues: Growth ▶ Pay-TV France up 2%*: First Half 2005/2004 2005 2004 on a comparable comparable comparable ƒ +16% in recruitments to ~450,000 in H1 2005; in € million - IFRS basis basis basis Revenues 1 652 1 651 0% Pay-TV France 1 364 1 333 2% ƒ Total po

34. Slide 34: 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 ƒ Voice usage: launch of new tariff plans with unlimited communication

35. Slide 35: SFR: First Half 2005 Performance

    SFR: First Half 2005 Performance First Half on a Growth comparable basis 2005/2004 on Revenues up 8%*: a comparable in € million - IFRS 2005 2004 basis ▶ 9% year-on-year increase in the customer Revenues 4 239 3 922 8% base to 16.23m **; Modified EBITDA 1 711 1 544 11% Earnings from operations 1 340

36. Slide 36: Maroc Telecom: First Half 2005 Performance

    Maroc Telecom: First Half 2005 Performance Revenues up 14% at constant currency*: First Half on a Growth comparable basis Growth 2005/2004 2005/2004 on a ▶ Mobile, up 27% at constant currency*: comparable on a ƒ +35% growth in the customer base to 7.4m; basis at in € million - IFRS 2005 2004 compara

37. Slide 37: NBC Universal: First Half 2005 Performance

    NBC Universal: First Half 2005 Performance First Half Revenues up 68% on a reported basis: Growth in $ million - US GAAP 2005 2004 2005/2004 ▶ Network prime in tough cycle … 17% lower GE basis * GE basis * ratings in the season: Revenues 7,459 4,449 68% ƒ No repeat of “Friends” & “Frasier” finales i

38. Slide 38: From EBITDA to Cash Flow from Operations

    From EBITDA to Cash Flow from Operations H1 H1 % In € million, IFRS – Actual figures 2005 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 2

39. Slide 39: Vivendi Universal’s Credit Ratings

    Vivendi Universal’s Credit Ratings Rating Agency Rating date Type of debt Rating Outlook Reminder at June 30, 2004 Standard & Poor's July 27, 2005 Long-term Corporate Credit BBB Stable BBB- Short-term Corporate Credit A-2 Stable A-3 Senior Unsecured Debt BBB Stable BBB- Moody's October 22, 2004 Long

40. Slide 40: 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): ƒ 28% are accounted for as “Income from equity affiliates”, in anticipation of the 28% stake in n

41. Slide 41: Glossary

    Glossary ƒ 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 Numéricâble) and includes the full consolidation of minority stakes i

42. Slide 42: IR Team

    IR Team Daniel SCOLAN Executive Vice President Investor Relations +33.1.71.71.12.33 daniel.scolan@groupvu.com Paris New York 42, Avenue de Friedland 800 Third avenue 75380 Paris cedex 08 / France New York, NY 10022 / USA Phone: +33.1.71.71.12.33 Phone: +1.212.572.1334 Fax: +33.1.71.71.14.16 Fax: +1.

43. Slide 43: 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

44. Slide 44: First Half 2005 Earnings

    First Half 2005 Earnings First Half 2005 Earnings - September 13, 2005 44

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