A study initiated to enable a change in
Universal Music Group’s shareholding structure
- Vivendi first quarter 2018 revenues:
€3,109 million, up 16.0%1 (+3.3%1 at
constant currency and perimeter)
- Universal Music Group: strong
increase in operations with a 31.5%1 growth in
subscription and streaming revenues at constant currency and
perimeter. 7.2% organic growth at the end of April (4.5% at the end
of March)
- Canal+ Group: continuation of
recovery with a total of 15.3 million subscribers (+620,000
year-on-year)
- Good start for the other businesses:
Dailymotion, Gameloft, Havas and Vivendi Village
Regulatory News:
Vivendi (Paris:VIV):
This press release contains unaudited consolidated revenues2
established under IFRS, which were approved by Vivendi’s Management
Board on May 14, 2018, reviewed by the Audit Committee on May 15,
2018, and by the Supervisory Board on May 17, 2018.
Vivendi’s Supervisory Board met today under the chairmanship of
Mr. Yannick Bolloré and reviewed the Group’s consolidated revenue
figures for the quarter ended March 31, 2018, which were approved
by the Management Board on May 14, 2018.
REVENUES FOR THE FIRST QUARTER OF 2018
For the first quarter of 2018, Vivendi’s revenues amounted to
€3,109 million, compared to €2,680 million for the same period
in 2017, an increase of 16.0% notably resulting from the
consolidation of Havas (+€482 million).
At constant currency and perimeter3, revenues increased by 3.3%
compared to the first quarter of 2017, driven by the growth of
Universal Music Group (+4.5%) and Canal+ Group (+2.5%), which
confirms its recovery, as well as the improvement in the operating
performance of Dailymotion within New Initiatives.
Vivendi is confident about the prospects of its main businesses
for the rest of the 2018 year.
Change in revenues by business
segment
Three months ended March 31, (in millions of euros)
2018 2017 % Change
% Change atconstantcurrency
% Change atconstantcurrency
andperimeter3
Revenues Universal Music Group 1,222 1,284 -4.8% +4.5% +4.5%
Canal+ Group 1,298 1,272 +2.1% +2.5% +2.5% Havas 482 -
na4
na na Gameloft 79 91 -13.4% -7.4% -7.4% Vivendi Village 23 26
-11.1% -10.3% -3.3% New Initiatives 16 10 +55.8% +55.8% +55.8%
Elimination of intersegment transactions (11) (3)
Total Vivendi 3,109 2,680 +16.0%
+22.2% +3.3%
Universal Music Group
Vivendi's Supervisory Board approved the Management Board's
proposal notably to examine and carry out the necessary preliminary
legal operations required for a potential change in the Universal
Music Group’s shareholding structure.
Thereafter, the Management Board will present the various
options for such an evolution.
The user growth recently reported by the major streaming
platforms continues to support the strong increase in Universal
Music Group’s (UMG) subscription and streaming revenues. At the end
of April 2018, UMG’s revenues amounted to €1,657 million, up 7.2%
at constant currency and perimeter compared to the same four-month
period in 2017.
For the first quarter of 2018, revenues amounted to €1,222
million, up 4.5% at constant currency and perimeter compared to the
same period in 2017 (down 4.8% on an actual basis).
Recorded music revenues were up 5.9% at constant currency and
perimeter as growth in subscription and streaming revenues (+31.5%)
more than offset the decline in physical (-26.2%) and download
(-25.6%) sales.
Physical sales were particularly strong in the first quarter of
2017, notably driven by the soundtrack releases from La La Land,
Fifty Shades Darker and Moana. For the first quarter of 2018,
physical sales were also impacted by the timing of
releases, with slippage into the second quarter in some
markets, notably Japan, and the continued transformation of the
music business.
Recorded music best sellers for the first quarter of 2018
included the Black Panther soundtrack, a new release from Migos and
carryover sales from Post Malone, Imagine Dragons and Kendrick
Lamar.
According to Nielsen, UMG had the No. 1 album in the United
States with Migos’s Culture II and the No. 1 track with Drake’s
God’s Plan in the first quarter of 2018. In addition, UMG songs
occupied the No. 1 spot on the Spotify Global Chart for 12 weeks of
the first quarter of 2018.
Kendrick Lamar won the Pulitzer Prize for music for his album
“DAMN.”, the first win for a non-classical or jazz musician since
music was first included in the awards 75 years ago.
In today’s ever increasing global music market, UMG signed an
exclusive international recording agreement with Kris Wu, one of
Asia’s biggest stars and an artist whose creative success spans
music, film and television.
Music publishing revenues grew by 3.9% at constant currency and
perimeter, also driven by increased subscription and streaming
revenues, as well as better performance revenues.
Merchandising and other revenues declined by 18.7% at constant
currency and perimeter, due to lower touring activity and the
timing of retail promotions.
Canal+ Group
Canal+ Group’s revenues amounted to €1,298 million, up 2.1%
compared to the first quarter of 2017 (+2.5% at constant currency
and perimeter).
This trend was driven by the significant increase in the
subscriber base which reached a total of 15.3 million,
representing a year-on-year increase of 620,000 subscribers. (See
Appendix II)
In mainland France, the good momentum observed in the second
half of 2017 continued, with a stabilization of revenues for the
pay-TV business, notably resulting in a substantial decrease in the
individual subscriber churn rate5 of 2.2 percentage points to
15.0%.
The strong year-on-year growth trend in revenues outside of
France continued, mainly thanks to the African operations which
recorded a 12.3% growth at constant currency and perimeter.
Studiocanal’s revenues grew by 19.2% at constant currency and
perimeter, thanks to more theatrical releases (The Commuter, Early
Man, The Mercy, Brillantissime, Return of the Hero (Le Retour du
héros) and The Little Witch in Germany) and very strong video
sales, notably of Paddington 2.
In February 2018, Canal+ Group launched a pay-TV service in
Myanmar in partnership with the Burmese media group Forever. Canal+
Myanmar offers nearly 80 channels covering all themes, including
eight Canal+ channels in the Burmese language and showcasing local
content. The establishment of Canal+ Group in Myanmar, one of the
largest countries in Asia with annual economic growth of 7%, is
part of its long-term strategy to develop in territories with
strong growth potential.
In March 2018, Canal+ Group entered into an agreement with the
American company DirecTV for the broadcast of several Canal+ Group
channels. DirecTV customers who subscribe to the new FrenchDirect™
offer gain access to Canal+ International, a new general-interest
entertainment channel, to the CNews channel and, since the
beginning of May, to Studiocanal TV, which is built on
Studiocanal’s expansive catalog.
In April 2018, Canal+ Group and UMG launched the Deutsche
Grammophon+ channel, a service that allows subscribers to enjoy the
richness of this label’s catalog, which celebrates its 120th
anniversary this year. This catalog is editorialized in playlists,
with high-fidelity sound and, for the first time, videos are
available with Dolby Atmos sound.
On May 10, 2018, Canal+ Group announced that it will now offer
the Apple TV 4K as a set-top box to its subscribers in France.
Subscribers and new Canal customers will enjoy the best myCanal
experience, which will benefit from all the power of the Apple TV
4K and its ultra-fluid ergonomics. myCanal is the leading media app
in France across all platforms with more than 13 million mobile
downloads and 1 million daily users. The Apple TV 4K will be
offered to Canal subscribers at the same prices as those charged
for its own set-top box.
Havas
The revenues (gross margin) generated by Havas, fully
consolidated since July 3, 2017, amounted to €482 million in the
first quarter of 2018.
North America delivered a satisfactory performance (+2.2%
excluding Arnold’s impact) due to the good performances of Edge,
Havas Media and Havas Life. Arnold experienced a difficult start to
the year due to the loss of some clients.
The various European countries reported mixed performances,
notably due to the loss of the PSA media account last year, which
affected several countries. Business in France was slowing down
(organic growth of -2.3%) although BETC and Fullsix/Ekino performed
very well. Italy and Poland both reported strong growth.
Havas had a very good start to the year in the Latin America and
Asia Pacific regions (+4.6% and +7.8%, respectively, at constant
currency and perimeter), both of which remain very dynamic and
promising with strong development potential for Havas.
In the first quarter of 2018, Havas’ organic growth stood at
-0.1% excluding Arnold’s impact.
Havas continues to strengthen in certain areas of strategic
expertise and certain geographical regions. Since the beginning of
the year, Havas has made two acquisitions: DAA (Deekeling Arndt
Advisors), a German-based agency specializing in public relations
and finance, and M&C Consultancy, a London-based healthcare
communication agency.
In Paris, Havas created a new French agency, Plead, a subsidiary
specializing in strategic and sensitive executive communication
consulting. In addition, Havas Paris launched Blockchain, the first
fully-integrated communications offering designed to support
businesses involved in blockchain technology (a sequential
distributed database without any control). This offering was
launched in partnership with Blockchain Partner, the French leader
in blockchain consulting. In addition, the group created the Havas
China Desk, an offer aimed at supporting both clients seeking to
expand their presence in China and Chinese brands looking to expand
internationally.
Among the awards won in the first quarter of 2018, at the 5th
edition of the Media Agency of the Year awards (Prix Agence Média
de l'Année) in France, Havas Group's media business was named Group
of the Year, while Socialyse was awarded the content prize in the
Pure Player category and Agence79 won the data prize in the Pure
Player category. In the United States, Havas Media was named Agency
of the Year by MediaPost. The Host/Havas Australia agency was
ranked the No. 2 agency on the Campaign Brief Hot List 2018. BETC
was ranked among the best agencies in the world by the Gunn
Report.
On April 16, 2018, Vivendi received €76.2 million in dividends
from Havas.
Gameloft
With almost 2 million downloads per day across all platforms in
the first quarter of 2018, Gameloft is one of the leading mobile
game publishers in the world. Gameloft's revenues amounted to €79
million, down 7.4% at constant currency and perimeter compared to
the first quarter of 2017, notably due to the lack of new mobile
games releases in the first quarter of 2018.
The breakdown of revenues by geographical market was as follows:
36% in the EMEA region (Europe, the Middle East and Africa), 32% in
North America, 24% in Asia Pacific, and 8% in Latin America.
For the first quarter of 2018, Gameloft’s average number of
monthly active users (MAU) reached 114 million and its average
daily active users (DAU) reached 13 million. 62% of Gameloft’s
revenues were generated by internally developed franchises.
Gameloft has benefited from the strong performance of its
catalogue, notably its bestselling games such as Dragon Mania
Legends, Disney Magic Kingdoms, March of Empires, Asphalt 8:
Airborne and Minion Rush.
On May 3, 2018, Gameloft released Dungeon Hunter Champions, the
latest game in a series with over
100 million downloads. The new game took this hack'n'slash
franchise (an action role-playing video game) in a whole new
direction by introducing brand new worlds and characters that go
beyond the scope of the original saga. This new take on the
franchise has been hailed by its players, as sales of the game were
off to an excellent start even before its release in China.
Vivendi Village
Vivendi Village’s revenues amounted to €23 million, compared to
€26 million for the first quarter of 2017, a decrease of -3.3% at
constant currency and perimeter.
Vivendi Ticketing’s revenues amounted to €11 million for the
first quarter of 2018. In mid-April 2018, Vivendi, through See
Tickets, acquired Paylogic, a ticketing and technology company
based in Amsterdam, to form a global ticketing network spanning
Europe and the United States. With this acquisition, the ticketing
unit expects to sell more than 20 million tickets a year to
over 5,000 clients in over 30 countries.
Live performance revenues were up 11.9% compared to the first
quarter of 2017, primarily due to the development of Olympia
Production and of eight CanalOlympia venues currently operating in
Africa. At the end of April, Vivendi and Orange announced the
signing of a partnership with this network of venues to make the
cinema more accessible to all through the "Cinédays" program which
allows Orange customers to benefit from a 2 for 1 cinema ticket,
once or twice a week.
New Initiatives
New Initiatives, which groups together projects being launched
or under development including Dailymotion, Vivendi Content
(Studio+ and Vivendi Entertainment) and GVA (Group Vivendi Africa),
recorded revenues amounting to €16 million, an increase of 55.8%
compared to the first quarter of 2017, primarily thanks to
Dailymotion’s performance.
Dailymotion’s new user experience, deployed worldwide at the end
of 2017 on mobile, desktop and mobile app, has borne fruit. The
share of premium content consumption increased by 17% between
December 31, 2017 and March 31, 2018, and the number of views of
desktop premium content per session increased by 52% when it was
launched.
Designed primarily for 25-49-year-olds, Dailymotion's new user
experience leverages premium content from hundreds of leading
partners around the world, including Universal Music Group, CNN,
and Vice.
In March 2018, GVA, a new player in the African telecoms market,
in distribution partnership with Canal+ Togo, launched Canalbox its
first high-speed fiber internet offer in Lomé. Already available in
Libreville and Lomé, the FTTH Canalbox network will soon be
deployed in several other African cities. GVA benefits from the
strong expertise of the Canal+ Group in Africa and relies on the
power of the brand, on the very important commercial network
distributing Canal+ Group's products and on high-quality
service.
FIRST QUARTER HIGHLIGHTS AND RECENT EVENTS
- On January 16, 2018, Vivendi entered
into a hedging transaction to protect the value of its equity
interest in Fnac Darty. The hedge involves a forward sale based on
a reference price of € 91 per share (i.e., approximately € 268
million). Vivendi retains the option to unwind this transaction
either in cash or in shares at maturity, i.e., during the second
half of 2019 at the latest.
- On March 20, 2018, Vivendi announced
the sale of its entire 27.27% interest in Ubisoft at a price of
€66 per share, representing an aggregate amount of €2 billion.
This interest had been acquired by Vivendi over the past three
years for €794 million. On March 23, 2018, Vivendi received €1.51
billion in connection with this sale (the outstanding €0.5 billion
is to be received at the beginning of October 2018 under the
forward sale commitments on the balance of the Ubisoft
investment).
- On April 19, 2018, Vivendi's Annual
Shareholders' Meeting approved all the resolutions submitted to
their vote, notably including:
- the appointment of Michèle Reiser as a
member of the Supervisory Board for a four-year period, as well as
the renewal of the term of office of Philippe Bénacin, Aliza Jabès,
Cathia Lawson-Hall and Katie Stanton for the same four-year period;
and
- the distribution of an ordinary
dividend of €0.45 per share, up 12.5%, representing a total
distribution of €568 million. The dividend was paid on April 24,
2018 (following the coupon detachment on April 20, 2018).
- Following the Shareholders' Meeting of
April 19, 2018, Vivendi's Supervisory Board unanimously appointed
Yannick Bolloré as Chairman, replacing Vincent Bolloré. The
Supervisory Board also confirmed Philippe Bénacin as
Vice-Chairman.
- During its meeting on May 17, 2018, the
Supervisory Board unanimously approved the renewal of the terms of
office of the entire Management Board for a four-year term.
- On May 4, 2018, Telecom Italia’s
Shareholders’ Meeting renewed its Board of Directors, appointing
five of the ten Board candidates presented by Vivendi; Vivendi’s
slate obtained 47% of the vote compared to 49% for Elliott’s
slate.But the “new governance” is a concern to Vivendi, which is
the largest shareholder holding 24% of the company’s ordinary
shares. The risk of a dismantling and a governance that would not
take into account the shareholders’ interests, may cause Vivendi to
consider, as permitted by the law, to request the convening of a
Shareholders’ meeting to propose to reorganize the Board of
Directors.
About Vivendi
Since 2014, Vivendi has been focused on building a world-class
content, media and communications group with European roots. The
clear and ambitious strategy that was set in motion three years ago
has been successfully executed by the Management Board. First, in
content creation, the Group owns powerful, complementary assets in
music (UMG), mobile games (Gameloft) and movies/series (Canal+
Group), which are the three most popular forms of entertainment
content in the world today. Second, in the distribution market,
Vivendi has acquired the Dailymotion platform and repositioned it
to create a new digital showcase for our content. The Group has
also joined forces with several telecom operators and platforms to
maximize the reach of its distribution networks. In 2017, a third
building block – communications – was added to this structure, via
Havas. Havas possesses unique creative expertise in promoting free
content and producing short formats, which are increasingly viewed
on mobile devices.www.vivendi.com, www.cultureswithvivendi.com
Important Disclaimers
Cautionary Note Regarding Forward-Looking Statements. This press
release contains forward-looking statements with respect to the
financial condition, results of operations, business, strategy,
plans and outlook of Vivendi, including the impact of certain
transactions, the payment of dividends and distributions, as well
as share repurchases. Although Vivendi believes that such
forward-looking statements are based on reasonable assumptions,
such statements are not guarantees of future performance. Actual
results may differ materially from the forward-looking statements
as a result of a number of risks and uncertainties, many of which
are outside our control, including, but not limited to, the risks
related to antitrust and other regulatory approvals as well as any
other approvals which may be required in connection with certain
transactions and the risks described in the documents of the Group
filed by Vivendi with the Autorité des marchés financiers (the
French securities regulator), which are also available in English
on Vivendi's website (www.vivendi.com). Investors and security
holders may obtain a free copy of documents filed by Vivendi with
the Autorité des marchés financiers at www.amf-france.org, or
directly from Vivendi. Accordingly, we caution readers against
relying on such forward-looking statements. These forward-looking
statements are made as of the date of this press release. Vivendi
disclaims any intention or obligation to provide, update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise.
Unsponsored ADRs. Vivendi does not sponsor any American
Depositary Receipt (ADR) facility in respect of its shares. Any ADR
facility currently in existence is “unsponsored” and has no ties
whatsoever to Vivendi. Vivendi disclaims any liability in respect
of any such facility.
ANALYST CONFERENCE CALL
Speakers:Arnaud de PuyfontaineChief Executive
OfficerHervé PhilippeMember of the Management Board and
Chief Financial Officer
Date: May 17, 20186:00 pm Paris time – 5:00 pm London
time – 12:00 pm New York time
Media invited on a listen-only basis.
The conference call will be held in English.
Internet: The conference call can be followed on the
Internet at: www.vivendi.com (audiocast)
Numbers to dial:France: +33 (0)1 76 77 22 57United
Kingdom: +44(0) 330 336 94 11USA: +1 323 794 25
51Confirmation code: 895 7076
On our website www.vivendi.com will be available an audio
webcast and the slides of the presentation.
Appendix IAdoption of IFRS 15
As from January 1, 2018, Vivendi has applied the new accounting
standard on revenues: IFRS 15 - Revenues from Contracts with
Customers, with no material impact on Vivendi’s consolidated
revenues and operating results. In accordance with IFRS 15, Vivendi
has applied this change of accounting standard to fiscal year 2017;
therefore, the data contained in this press release relative to the
first quarters of 2018 and 2017 is comparable.
Impacts related to the application of IFRS 15 on Vivendi’s
revenues for the first quarter of 2017 and for fiscal year
2017:
(in millions of euros)
Three months endedMarch 31, 2017
Year endedDecember 31, 2017
Revenues (as previously published) (A) Universal
Music Group 1,284 5,673 Canal+ Group 1,278 5,246 Havas (a) - 1,151
Gameloft 68 258 Vivendi Village 26 109 New Initiatives 10 51
Elimination of intersegment transactions (3) (44)
Total
Vivendi 2,663 12,444 IFRS 15
restatements (B) Universal Music Group - - Canal+ Group (6)
(48) Havas (a) - - Gameloft 23 70 Vivendi Village - - New
Initiatives - - Elimination of intersegment transactions - -
Total Vivendi 17 22 Restated
revenues (A+B) Universal Music Group 1,284 5,673 Canal+ Group
1,272 5,198 Havas (a) - 1,151 Gameloft 91 328 Vivendi Village 26
109 New Initiatives 10 51 Elimination of intersegment transactions
(3) (44)
Total Vivendi 2,680 12,466
a. As a reminder, Vivendi has fully consolidated Havas since
July 3, 2017.
No material impact is expected for Universal Music Group and
Havas as their revenue recognition was already compliant with IFRS
15.
Appendix II
Canal+ GroupKey performance
indicators
in thousands
March 31, 2017 March 31, 2018
Δ
Individual subscribers 14,135
14,747 +612 Mainland France 8,084 8,011 -73
International 6,051 6,736 +685
Collective contracts
572 580 +8 Total 14,707
15,327 +620
FTA-TV audience share * 3M
2017 3M 2018
Δ
C8 5.0% 3.9% -1.1pt CStar 1.4% 1.4% - CNews 0.5% 0.5% -
Total 6.9% 5.8%
-1.1pt
* Source: Médiamétrie - Population aged 25-49.
1 Compared to the first quarter of 2017.2 As from January 1,
2018, Vivendi has applied the new accounting standard on revenues:
IFRS 15 - Revenues from Contracts with Customers, with no material
impact on Vivendi’s consolidated revenues and operating results. In
accordance with IFRS 15, Vivendi has applied this change of
accounting standard to fiscal year 2017; therefore, the data
contained in this press release relative to the first quarters of
2018 and 2017 is comparable. For a detailed presentation of the
impacts related to the application of this standard on revenues for
the first quarter of 2017, please refer to page 10 of this press
release.3 Constant perimeter reflects the impacts of the
acquisition of Havas (July 3, 2017) and the sale by Vivendi Village
of Radionomy (August 17, 2017).4 na: not applicable.5 Churn per
individual retail subscriber with commitment, over a 12-month
period, excluding wholesale customers.
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