Slide 1: 2006 First Half Earnings Press Conference
2006 First Half Earnings September 7, 2006 Press conference
Slide 2: Presenters
Jean-Bernard Levy Chairman of the Management Board & Chief Executive Officer Jacques Espinasse Member of the Management Board & Chief Financial Officer
Slide 3: Jean-Bernard Levy, Chairman of the Management Board & CEO
Jean-Bernard Levy Chairman of the Management Board & Chief Executive Officer
Slide 4: Main Figures for the First Half
Main Figures for the First Half 2006 * Please refer to the glossary at the end of this document 7 Revenues of 9,610 million euros, up +5.8% on a comparable basis EBITA* of 2,348 million euros, up +11.1% on a comparable basis Adjusted net income, group share, of 1,378 million euros, up +10.9% Net inc
Slide 5: Main Events of the First Half
Main Events of First Half 2006 9 Canal+ and TPS combination agreement and Lagardere agreement Strengthened our interests in our media assets in the U.S. SFR increased its stake in Neuf Cegetel from 28.2% to 34.9% Canal+ Group sold the Paris Saint-Germain soccer club Vivendi resolved tax litigation r
Slide 6: All Business Units are Growing and Profitable
All Vivendi's Business Units are Growing and Profitable On a comparable basis - - IFRS Revenues EBITA Universal Music Group €2,202m + 5.3% €295m + 22.4% Vivendi Games €296m +24.4% €62m +226.3% Canal+ Group €1,795m +10.7% €190m - - 0.5% SFR €4,301m + 1.7% €1,389m + 3.7% Maroc Telecom €993m +13.2% €41
Slide 7: Our 2006 Objectives
Our 2006 Objectives 13 Financial goals Adjusted net income: ^ +16%, i.e. approx. €2.6bn Earnings per share: ^ +16%, i.e. approx. €2.26 per share Dividend: Pay-out ratio of a minimum 50%, i.e. a minimum of €1.13€ per share
Slide 8: Our 2006 Priorities
Our 2006 Priorities 15 Priorities Implement the combination of CANAL+ and TPS Take advantage of our leading positions Capitalize on our subscriber focused business model to maximize the benefit from the expansion of digital by launching innovative services Maximize the competitive advantages of our
Slide 9: Growth Drivers Are In Place
Growth Drivers Are In Place 17 Digital generates a growing portion of the Group's activities: 10% of Universal Music Group's revenues 73% of CANAL+ Group's subscriptions in France 70% of Vivendi Games revenues are derived from online games The pending combination between Canal+ and TPS re- energizes
Slide 10: Universal Music Group: Acquisition of BMG Music Publishing
Consideration: €1,630 million in Enterprise value Why Music Publishing? Attractive low risk, high margin business Creates the world's largest music publishing company Synergies enhance value creation Scarcity value of sizeable pure-play music publishing assets Why BMG Music Publishing? Unique / irre
Slide 11: UMG to Purchase BMG Music Publishing: A Unique Opportunity
BMG Music Publishing enhances the strategic position and value of Universal Music Group as the world's leading recorded music company AND music publishing company UMG to Purchase BMG Music Publishing: A Unique Opportunity ... Publishing Recorded ebitda 14 86 UMG Today UMG + BMG MP Publishing Recorde
Slide 12: To Grow Music Publishing and Enhance Value of UMG and Vivendi
....to Grow Music Publishing and Enhance Value of UMG and Vivendi 23 Unique, irreplaceable catalog Over 1m copyrights (Coldplay, Robbie Williams, Justin Timberlake, Puccini, Ravel,...) Over 90% of Net Publisher Share generated by owned titles World leader in attractive Production Music Library busin
Slide 13: Focus on the CANAL+ / TPS Combination
Focus on the CANAL+ / TPS Combination 25 The French government awarded its authorization on August 31, 2006 within the initial time frame Consumers will soon be able to access a unique enriched offer through a single commercial operator Vivendi's undertakings do not put into question the industrial
Slide 14: 2011 Outlook Confirmed
2011 Outlook Confirmed 2006-2011 EBITA average growth: Between 8% and 10% per annum 2011 Adjusted Net Income: Between €3.5 billion and €4.0 billion * 27 * Including the assumption that all deferred tax assets will have been utilized by end of 2010.
Slide 15: Our Strategy: Innovation & Leadership
Our Strategy: Innovation & Leadership 29 Further strengthen our leadership positions in superior content and distribution businesses Pursue new digital services revenue streams that take advantage of the rise of mobility and broadband
Slide 16: Financial Performance
First Half 2006 Financial Performance Jacques Espinasse Member of the Management Board & Chief Financial Officer
Slide 17: First Half Results Confirm Strong Progress
First Half Results Confirm Strong Progress In euro million - IFRS First Half 2006 % growth on a comparable basis Revenues (on a comparable basis) 9,572 + 5.8% EBITA (on a comparable basis) 2,348 + 11.1% Adjusted net income, group share 1,378 + 10.9% Net income, group share 1,862 + 48.1% Note: please
Slide 18: Operating Highlights
Operating Highlights Strong operating performance in H1 2006: Revenues up +5.8% to €9,572m in H1 2006: Strong acceleration of CANAL+ Group (+10.7%) and Vivendi Games (+24.4%); Good performance from UMG, driven by strong growth in digital sales (+5.3%); SFR continues to grow (+1.7%), despite heavy cu
Slide 19: Adjusted Net Income Growth
First Half 2006 Adjusted Net Income Growth The 135 million euros growth (+10,9%) in Adjusted net income, attributable to equity holders of the parent, compared to H1 2005 derives from: + €227m: improvement in EBITA at 100% - - €10m: higher interest and increase in income from investments - - €17m: d
Slide 20: Consolidated Statement of Earnings
Consolidated First Half 2006 Statement of Earnings 41 September7, 2006 For more details, please refer to appendices on p.38 In euro million - IFRS - Figures as published H1 2006 H1 2005 % Growth Reminder FY 2005 Revenues 9,610 9,131 +5.2% 19,484 EBITA 2,348 2,121 +10.7% 3,985 EBIT 2,235 1,855 +20.5%
Slide 21: Revenues by Business Unit
Universal Music Group V Games Canal+ Group SFR Maroc Telecom Other S1 2005 2092 238 1622 4229 877 -12 S1 2006 2202 296 1795 4301 993 -15 In euro million - IFRS Revenues: +€526m, +5.8% on a comparable basis First Half 2006 Revenues on a comparable basis 9,046 9,572 UMG Vivendi Games SFR Maroc Telecom
Slide 22: EBITA: +€234m, +11.1% on a Comparable Basis
EBITA: +€234m, +11.1% on a comparable basis First Half 2006 EBITA on a comparable basis 2,114 2,348 UMG SFR Maroc Telecom 241 - -0.5% +3.7% +16.5% +22.4% +226.3% 295 19 62 191 190 1,340 1,389 352 410 27 22 Vivendi Games CANAL+ Group Holding & Corporate (56) (20) Non core activities 45 +64.3% - -18.5
Slide 23: Income from Equity Affiliates
Income from Equity Affiliates 47 H1 2006 H1 2005 Income from equity affiliates 155 172 including: NBC Universal Neuf Cegetel / Cegetel SAS Other 157 (2) 0 188 (21) 5 In euro million - IFRS
Slide 24: Net Available Cash Flow
Net Available Cash Flow for the First Half 2006 49 In euro million - IFRS H1 2006 Actual H1 2005 Actual Consolidated cash flow from operations before net capital expenditures 2,787 2,587 Consolidated cash flow from operations (CFFO) 1,893 2,061 Net consolidated cash flow (CFAIT) 586 317 Net availabl
Slide 25: Financial Net Debt Evolution at end-June 2006
Dec. 31, 2004 Acquisitions Puts and FMV of pus CFFO Financing expenses & Taxes Dividends paid to minorities VIV div Sept. 30, 2005 Est. Sept. 7, 2006 Est -3.8 -4.5 -3.6 -3.6 -4.8 -5.6 0 -3.8 -0.7 -1 -1.9 -1.2 -0.8 -1.2 -6.8 -4.6 -1 -2 Financial Net Debt Evolution at end-June 2006 Dec. 31, 2005 Cash
Slide 26: Business Performance & 2006 Outlook
Business Performance & 2006 Outlook Unless otherwise mentioned, financial information presented in the forthcoming pages is in euro million on a comparable basis.
Slide 27: Vivendi Operates First Class Assets in Media & Telecom
Vivendi Operates First Class Assets in Media & Telecom Mobile / Fixed line Pay-TV Music Video Games 100% 100% 20% 100% 100% 56% 51% Film TV / Film Mobile / Fixed line Global Content Local Distribution Platforms 35%* 55 * Before the acquisition of 50% to 100% of Belgacom's 5.8% interest in Neuf Ceget
Slide 28: Universal Music Group: Achievements
UMG in the U.S. ended the 1st half with back-to-back number 1 albums from A.F.I., Busta Rhymes, Nelly Furtado and India Arie Universal Motown's artist Chamillionaire sold more than 3 million mastertones with his chart-topping hit single "Ridin'" UMG International acquired Vale Music, Spain's leading
Slide 29: Universal Music Group: 2006 Outlook
Universal Music Group: 2006 Outlook Revenues: "Slight growth" (unchanged) EBITA margin: "Same margin rate or slightly above 2005" (unchanged) 59
Slide 30: Vivendi Games: Achievements
Vivendi Games: First Half 2006 Achievements Revenues EBITA x3.3 Paying clients to World of Warcraft 4,893 +24.4% H1 2005 H1 2006 2005 2006 Rev 238 296 238 296 2005 2006 WoW cust. 2.1 7 H1 2005 H1 2006 2.1 m ~7.0m * 2005 2006 Est 19 62 H1 2005 H1 2006 19 62 Announcement by Blizzard of an expansion pa
Slide 31: Vivendi Games: 2006 Outlook
Vivendi Games: 2006 Outlook Revenues: "Growth above +15%" (Upgraded from "+12% to +15% growth") EBITA margin: "Margin rate above 11% from 8.7% in 2005 " (Upgraded from "Between 8% and 10% from 6.4% in 2005" in EFO margin terms) 63
Slide 32: CANAL+ Group: Achievements
Revenues: +11% increase in French pay-TV driven by a higher ARPU and growth in the subscription portfolio CANAL+ ARPU: +4.8% in the period to €29.8 per month End-June 2006, subscriptions to CANAL+ LE BOUQUET were at 56% of total CANAL+ portfolio: +7 points vs. June 2005 EBITA: down only €1m, mainly
Slide 33: CANAL+ Group: 2006 Outlook
CANAL+ Group: 2006 Outlook Revenues: "+4% to +6% growth" (Unchanged) EBITA: "Stable at constant perimeter" (Unchanged) 67
Slide 34: SFR: Achievements
SFR: First Half 2006 Achievements * Excluding MVNOs Revenues +1.21m (+7.4%) Customers * +1.7% H1 2005 H1 2006 2005 2006 Rev. 4229 4301 4,229 4,301 2005 2006 Cust. 16208 17415 H1 2005 H1 2006 16.2 m 17.4 m 2005 2006 EBITA 1340 1389 H1 2005 H1 2006 1,340 1,389 SFR increased its stake in Neuf Cegetel f
Slide 35: SFR: 2006 Outlook
SFR: 2006 Outlook Revenues: "Stable to slight growth" (Unchanged) EBITA: "+8% to +10% growth" (Unchanged) EBITA margin: "Grow to approximately 29.5% / 30.5%" (Unchanged) 71
Slide 36: Maroc Telecom: Achievements
Maroc Telecom: First Half 2006 Achievements Revenues Mobile clients 4,893 +13.2% H1 2005 H1 2006 2005 2006 Rev. 877 993 87 7 993 2005 2006 Cust. 7188 8924 H1 2005 H1 2006 7,188 k 8,924 k 2005 2006 EBITA 352.3 409.6 H1 2005 H1 2006 352 41 0 Launch of DSL television with CANAL+ Group, a pioneer move i
Slide 37: Maroc Telecom: 2006 Outlook
Maroc Telecom: 2006 Outlook Revenues: "Growth above +8%" (revised upwards on July 25, 2006 from "+6% to +8% growth") EBITA: "Growth above +14%" (Upgraded from "+12% to +14% growth ") 75
Slide 38: 2006 Outlook
2006 Outlook 77 2006 Adjusted net income: ^+16%, i.e. approx. €2.6bn 2006 EPS: ^+16%, i.e. approx. €2.26/share 2006 dividend: ^50% of Adjusted net income, i.e. a minimum €1.13 per share
Slide 39: 2011 Outlook Confirmed
2011 Outlook Confirmed 2006-2011 EBITA average growth: Between 8% and 10% per annum 2011 Adjusted Net Income: Between €3.5 billion and €4.0 billion * 79 * Including the assumption that all deferred tax assets will have been utilized by end of 2010.
Slide 40: Appendices
vivendi Appendices
Slide 41: Consolidated Statement of Earnings
Consolidated First Half 2006 Statement of Earnings * na: non applicable 83 Including: Loss on DuPont shares: € (98)m Write down to zero of PTC shares: € (496)m Including: Impact of the settlement of the tax litigation on DuPont shares: €1,019m In euro million - IFRS - Figures as published H1 2006 H1
Slide 42: Net Available Cash Flow
Net Available Cash Flow for the First Half 2006 In euro million - IFRS H1 2006 Actual H1 2005 Actual 1. Consolidated cash flow from operations before net capex 2,787 2,587 2. - Capital expenditures (954) (564) 3. + Proceeds from sales of tangible and intangible assets 5 74 4. + Change in working cap
Slide 43: Improved Financial Reporting
Improved Financial Reporting Reasons for changing An improved application of IFRS and a simplification of financial statements A refined tracking of the business units' and the Group's operating performance, through new key indicators that are adjusted for certain accounting impacts deriving from ac
Slide 44: 2002-2006 Key Figures
2002-2006 Key Figures Keyfgaes Tae niente Fs Reveves 9131 BIA Jue, 206) 282121 Easing tom operations rat 2008 fangs 2531789 sates Eales oto pant 1921257 AMjtedctincomeatibsbetoquyhoircthepsatics —13TB 1283, saonstom oe, 28, arseg STA pee Aust otncme. tibet uty holes pant em 207 1338 tty mes 199 ed A
Slide 45: 2002-2006 Key Figures (continued)
2002-2006 Key Figures con) Seid a earch Inewoepernbercishres) 78 i 78 7k Ties 1 EZ oS Ta st rr an Ajsedneticome tials ey hers pen ge at eat er unter sinesoutsandroendatpeodinmiliens| 11518 510 Egy pasar 1796 ean Eqiy, atritabletoeuityhodersoltheparentper share Co a) Dh on prevousenrporshare 0 a am n
Slide 46: 2005 Consolidated Statement of Earnings & Adjusted Net Income
2005 Consolidated Statement of Earnings & Adjusted Net Income 91 September7, 2006 Consolidated Statement of Earnings Consolidated Statement of Earnings Adjusted Statement of Earnings Adjusted Statement of Earnings In euro million - IFRS 2005 2005 Revenues 19,484 19,484 Revenues Gross margin 9,586 9,
Slide 47: EBITA: 2005 Figures by Business
Fiscal year ended December 31, 2005 In euro million - IFRS Universal Music Group Vivendi Games Canal+ Group SFR Maroc Telecom Holding & Corporate Other Total Vivendi EBITDA 760 86 369 3 209 1 056 (149) - 5 331 Amortization (excluding intangible assets acquired through business combinations) (61) (29
Slide 48: Impact of Improved Financial Reporting on Vivendi's Outlook
Impact of Improved Financial Reporting on Vivendi's Outlook Business unit 2005 EFO Previous 2006 EFO outlook 2005 EBITA New 2006 EBITA outlook Universal Music Group 480 681 Margin on revenues 9.8% "Same margin rate or slightly above 2005" 13.9% "Same margin rate or slightly above 2005" Vivendi Games
Slide 49: Universal Music Group: Key Metrics
Universal Music Group: First Half 2006 Key Metrics Top-selling artists in the first half Top-selling artists in the first half Top-selling artists in the first half Top-selling artists in the first half H1 2006 Million units H1 2005 Million units Andrea Bocelli 2.8 50 Cent 6.5 Jack Johnson & Friends
Slide 50: Vivendi Games: Key Metrics
Vivendi Games: First Half 2006 Key Metrics Paying clients to World of Warcraft at end-June 2006 Paying clients to World of Warcraft at end-June 2006 Region % North America & Europe 43% Asia 57% Worldwide 100% ~7.0M Titles Platform 1. World of Warcraft Online 2. Ice Age 2 PC / Consoles 3. 50 Cent: Bu
Slide 51: CANAL+ Group: Key Metrics
Juin 05 Juin 06 CANAL+ 4915 4995 CanalSat 3044 3247 CANAL+ Group: First Half 2006 Key Metrics CANAL+ CANALSAT CANAL+ Group net portfolio * (in thousands) 7,959 +283 * Individual and collective subscriptions to CANAL+ and CANALSAT in mainland France and overseas territories. June 2005 June 2006 3,044
Slide 52: SFR: Key Metrics
SFR: First Half 2006 Key Metrics (at end-June, including SRR) 2006 2005 Growth Customers (in '000) * 17,415 16,208 +7.4% Vodafone live! customers (in '000) * 5,520 3,193 +72.9% 3G customers (in '000) * 1,574 156 na Market share on customer base (%) * 35.5% 35.7% -0.2 point 12-month rolling blended A
Slide 53: Maroc Telecom: Key Metrics
Maroc Telecom: First Half 2006 Key Metrics (at end-June, excluding Mauritel) 2006 2005 Growth Number of fixed lines (in '000) 1,310 1,349 -2.9% Total Internet accesses (in '000) 332 158 x2.1 Including DSL access (in '000) 325 135 x2.4 Number of mobile clients (in '000) 8,924 7,188 +24.2% Prepaid cli
Slide 54: Interest
First Half 2006 Interest H1 2006 H1 2005 Interest (115) (101) Interest expense on gross debt (including swaps) Average borrowing cost (%) Average amount of borrowings (in euro billion) Interest income on cash & cash equivalent (147) 4.42% 6.6 32 (123) 3.61% 6.8 22 In euro million - IFRS 107
Slide 55: Analysis of Provision for Income Taxes
H1 2006 H1 2005 Provision for income taxes 651 (385) Included in Adjusted net income (463) (433) Worldwide Tax System (year n) 291 246 Tax charge (754) (679) Not included in Adjusted net income 1 114 48 Worldwide Tax System (deferred tax n+1/n) 7 4 Other taxes 1 107 44 Cash income taxes paid (1,258)
Slide 56: Evolution of Shareholders' Equity
Shareholders' equity, group share Minority interests Total Shareholders' equity December 31, 2005 18,769 2,839 21,608 Net income 1,862 591 2,453 Dividend paid by Vivendi S.A. (1,152) (1 152) Acquisition of 7.7% of USH1 to MEI (832) (832) Dividends and other transactions with minority interests (843)
Slide 57: Glossary
Glossary 115 Adjusted earnings before interest and income taxes (EBITA): EBIT (defined as the difference between charges and income that do not result from financial activities, equity affiliates, discontinued operations and tax) before the amortization of intangible assets acquired through business
Slide 58: Important Legal Disclaimer
Important Legal Disclaimer 117 Vivendi is quoted on Euronext Paris SA. This presentation contains "forward-looking statements" as that term is defined in the US Private Securities Litigation Reform Act of 1995. Such forward-looking statements are not guarantees of the company's future performance. A