-- Positive first quarter earnings support 2005 guidance (adjusted net income of at least EUR 1.8 billion, i.e. at least 37% growth per share when compared to 2004).
-- Universal Music Group and Vivendi Universal Games confirm their turnarounds. Sustained growth in earnings from operations (on a comparable basis(1)) at Canal+ Group (+42%), Maroc Telecom (+14%) and SFR (mobile: +7%).
-- Earnings from operations amounted to EUR 877 million. On a comparable basis, earnings from operations amounted to EUR 849 million, versus EUR 697 million for the same period in 2004, a 22% growth.
-- Adjusted net income(2) amounted to EUR 512 million versus EUR 160 million for the first quarter of 2004.
-- Net income amounted to EUR 502 million versus EUR 166 million for the first quarter of 2004.
-- Financial net debt(3) amounted to EUR 4,421 million on March 31, 2005, versus EUR 4,724 million (which includes EUR 1.1 billion for the forward agreement to purchase the 16% additional stake in Maroc Telecom) on December 31, 2004. Cash flow from operations(4) amounted to EUR 1,078 million for the first quarter of 2005.
Comments on the Group's earnings for first quarter 2005
Revenues amounted to EUR 4,761 million. On a comparable basis, revenues increased 7% (+8% at constant currency). Each of the business units contributed to the growth in revenues.
Earnings from operations amounted to EUR 877 million. On a comparable basis, earnings from operations increased by 22% (22% at constant currency).
Income from equity affiliates amounted to EUR 72 million compared to EUR 78 million in the first quarter of 2004. The equity in NBC Universal's earnings for the first quarter of 2005 amounted to EUR 72 million.
Interest amounted to EUR -46 million compared to EUR -144 million in the first quarter of 2004.
Other financial charges primarily included the changes in the fair value of derivative instruments.
In the first quarter of 2005, other financial charges amounted to EUR -29 million compared to EUR -122 million in the first quarter of 2004. This variation is largely explained by the evolution of the value of the embedded option of the Sogecable convertible bond (EUR +44 million for the first quarter of 2005 versus EUR -91 million for the same period in 2004).
Income tax expense totaled EUR 163 million compared to an expense of EUR 218 million in the first quarter of 2004. This variation is linked to the positive impact of the Consolidated Global Profit Tax System (EUR +125 million) in the first quarter of 2005. In 2004, the Consolidated Global Profit Tax System's impact was accounted from the third quarter, following Vivendi Universal's admission to this system on August 22, 2004.
Excluding the positive impact of the Consolidated Global Profit Tax System in the first quarter of 2005, the income tax expense increased during the first quarter of 2005 due to the increase in pre-tax earnings of the business units.
Earnings attributable to equity holders of the parent improved significantly. It amounted to EUR 502 million (basic earnings of EUR 0.44 per share and diluted earnings of EUR 0.44 per share) versus EUR 166 million in the first quarter of 2004 (basic earnings of EUR 0.15 per share and diluted earnings of EUR 0.14 per share).
Adjusted net income amounted to EUR 512 million versus an adjusted net income of EUR 160 million in the first quarter of 2004. This improvement of EUR 352 million was mainly achieved through: improvement in earnings from operations (EUR +183 million), reduction in interest (EUR +98 million) and reduction in provision for income taxes (EUR +76 million).
Comments on earnings from operations for Vivendi Universal's Media and Telecom business units for the first quarter 2005
Universal Music Group (UMG) :
UMG's earnings from operations amounted to EUR 36 million compared to a loss of EUR 11 million in the first quarter of 2004 reflecting an improvement in activity, margins on higher sales volumes, as well as lower restructuring costs.
Vivendi Universal Games (VUG) :
VUG's earnings from operations were EUR 11 million, compared to a reported loss in 2004 of EUR 48 million. This improvement reflects combined actions taken in order to restore profitability: a significant increase in net sales (+47% when compared to 2004) due to World of Warcraft, a favourable shift in ongoing business composition more heavily weighted on the high margin World of Warcraft subscription business model and significantly lower fixed operating expenses resulting from the global turnaround plan.
Canal+ Group :
Canal+ Group reported earnings from operations of EUR 132 million representing an increase of 42% on a comparable basis. Excluding exceptional items, the period-on-period earnings from operations grew 37% due to revenues growth and positive impact on costs.
Within French pay-TV, the group's core business, earnings from operations amounted to EUR 104 million and achieved a +20% increase compared to the same period in 2004 on a comparable basis. Meanwhile, the group's subsidiary in Poland confirmed its recovery with strongly improved quarterly earnings from operations.
StudioCanal's earnings from operations amounted to EUR 23 million representing an increase of +51% compared to the previous year.
SFR Cegetel :
SFR Cegetel earnings from operations increased by 2% to EUR 567 million.
Mobile activity earnings from operations grew 7% to EUR 602 million, due to an 8% growth in network revenues (excluding rebilling of mobile termination between operators) and a continued strong control of customer acquisition and retention costs: as a percentage of network revenues (excluding mobile termination), customer acquisition and retention costs were down nearly 1 point to 10.1%.
As a consequence of the heavy commercial and technical costs of the broadband Internet retail offer launched in March 2004, the fixed telephony and Internet activity recorded operating losses of EUR 35 million for the first quarter of 2005, compared to a loss of EUR 5 million for the same period in 2004.
Maroc Telecom :
Maroc Telecom earnings from operations grew 15%, to EUR 180 million, compared with the same period last year (+14% at constant currency on a comparable basis). Maroc Telecom succeeded in maintaining its margin level and, at the same time, in continuing its acquisition policy of new customers, mainly mobile customers (net adds of 387,000 for the first quarter of 2005).
Important disclaimer:
This press release 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 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 that : Vivendi Universal will be unable to further identify, develop and achieve success for new products, services and technologies; Vivendi Universal will face increased competition and that the effect on pricing, spending, third-party relationships and revenues of such competition will limit or reduce Vivendi Universal's revenue and/or income; Vivendi Universal will be unable to establish and maintain relationships with commerce, advertising, marketing, technology, and content providers; and that Vivendi Universal will not be able to obtain or retain, upon acceptable terms, the licenses and permits necessary to operate and expand its businesses; as well as the risks described in the documents Vivendi Universal has filed with the U.S. Securities and Exchange Commission and the French Autorite des Marches Financiers. Investors and security holders are urged to read those documents at the Commission's website at www.sec.gov. Those documents may also be obtained free of charge from Vivendi Universal. Vivendi Universal does not undertake, nor has any obligation, to provide, update or revise any forward-looking statements.
Analyst Conference (Media invited on a listen only basis)
Speakers: Mr. Jacques ESPINASSE Member of the Management Board & Chief Financial Officer Ms. Sandrine DUFOUR Deputy Chief Financial Officer Date Thursday, May 19, 2005 2:30PM Paris time; 1:30PM London time; 8:30AM EST Dial-in (France): +33(0)1.71.23.04.23 Dial-in (UK): +44(0)20.7365.1849 Dial (US toll free): 1.866.850.2201 or (US toll): +1.718.354.1172 Replay details (replay available for 7 days): France: +33(0)1.71.23.02.48 - Access code: 2519415 UK: +44(0)20.7784.1024 - Access code: 5194289 US: 1.866.883.4489 (Toll free) or +1.718.354.1112 - Access code: 5194289 An Audio web cast will also be available at: http://finance.vivendiuniversal.com The slides of the presentation will also be available online.
(1)For the comparable basis definition, please refer to appendix II.
(2)For the adjusted net income, please refer to appendix I.
(3)Financial net debt is calculated as the sum of long-term debt, bank overdrafts and short-term borrowings, less cash and cash equivalents, non current derivative instruments in assets, current derivative instruments in assets and cash deposits backing financing; in each case, as reported on Vivendi Universal's Consolidated Statement of Financial Position. Financial gross debt comprises bonds, loans, other financial debt (including treasury bills and finance leases), obligations related to commitments to repurchase minority interests and derivatives whose value is negative.
(4)Net cash provided by operating activities net of capital expenditures and before financing costs and taxes.
Note: This press release contains unaudited consolidated earnings established under IFRS.
APPENDIX I
VIVENDI UNIVERSAL
CONSOLIDATED STATEMENT OF EARNINGS
(IFRS, unaudited)
(In millions of euros, except per
share amounts) -------------------------
1st Quarter Ended
March 31
-------------------------
2005 2004
------------ ---------
Revenues EUR 4,761 4,385
Cost of revenues (2,511) (2,335)
------------ ---------
Margin of operations 2,250 2,050
------------ ---------
Earnings from operations 877 694
Other income from ordinary
activities 19 23
Income from equity affiliates 72 78
------------ ---------
Earnings before interest and
income taxes 968 795
Interest (46) (144)
Other financial charges (29) (122)
Other financial income 22 9
------------ ---------
Interest and other financial
charges and income (53) (257)
------------ ---------
Earnings before income taxes
and discontinued operations 915 538
Provision for income taxes (163) (218)
------------ ---------
Earnings from continuing operations 752 320
Earnings from discontinued operations - (a) 118
------------ ---------
Earnings EUR 752 EUR 438
============ =========
Attributable to:
Minority interests 250 272
Equity holders of the parent EUR 502 166
Earnings from continuing operations
per share-basic (in euros) EUR 0.66 EUR 0.28
Earnings from continuing operations
per share-diluted (in euros) EUR 0.65 EUR 0.28
Earnings attributable to discontinued
operations per share - basic EUR - EUR 0.10
Earnings attributable to dicontinued
operations per share - diluted EUR - EUR 0.10
Earnings attributable to the
equity holders of the parent
per share - basic EUR 0.44 EUR 0.15
Earnings attributable to the
equity holders of the parent
per share - diluted EUR 0.44 EUR 0.14
(a) For the first quarter of 2004, included 80% of Vivendi Universal Entertainment's earnings generated over the period.
Please note that:
In application of European regulation 1606/2002 dated July 19, 2002 concerning international standards, the consolidated financial statements of Vivendi Universal for the financial year ending December 31, 2005, will be prepared in accordance with the IAS (International Accounting Standards) / IFRS (International Financial Reporting Standards) applicable as of December 31, 2005, as approved by the European Union. The first consolidated financial statements published in accordance with IAS/IFRS will be those for the 2005 financial year, with comparative figures for 2004 prepared using the same primary basis of accounting. For each 2005 interim financial publication, comparative information for corresponding 2004 interim financial statements will be published. Given the remaining uncertainties concerning the standards and interpretations which will be applicable as of December 31 2005, Vivendi Universal reserves the right to modify certain accounting methods and options adopted during the preparation of this 2004 financial information, on final and definitive reporting of the first IFRS financial statements. Please refer to Note "IFRS 2004 transition" published on April 14, 2005 and filed with the SEC as a 6-K on April 19, 2005.
Adjusted Net Income definition:
Adjusted net income includes earnings from operations, other income from ordinary affiliates, income from equity affiliates, interest, and tax and minority interest relating to these items. As a consequence, it excludes other charges from ordinary activities (corresponding to impairment losses, if any), other financial charges and income and earnings from discontinued operations as presented in the consolidated statement of earnings, as well as provision for income taxes and minority interests in adjustments. Adjusted net income (loss) never includes adjustments in earnings from operations.
APPENDIX II
VIVENDI UNIVERSAL
REVENUES AND OPERATING INCOME ON A COMPARABLE BASIS BY BUSINESS
SEGMENT
(IFRS, unaudited)
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 Mauritel at Maroc Telecom as if these transactions had occurred at the beginning of 2004. In 2004, comparable basis also includes estimated mobile-to-mobile sales at SFR Cegetel applying the 2005 rate. Comparable basis results are not necessarily indicative of the combined results that would have occurred had the events actually occurred at the beginning of 2004.
------------------------------------------
1st Quarter Ended March 31,
------------------------------------------
%Change
(in millions of euros) at constant
2005 2004 %Change currency
---------- --------- ------- -----------
Revenues
---------
Universal Music Group EUR 1,038 EUR 933 11% 14%
Vivendi Universal Games 113 77 47% 52%
Canal+ Group 836 824 1% 1%
SFR Cegetel (a) 2,326 2,182 7% 7%
Maroc Telecom 423 383 10% 12%
Non Core operations
and elimination
of intercompany
transactions (b) (20) (8) na(1) na(1)
---------- --------- ------- -----------
Total Vivendi Universal EUR 4,716 EUR 4,391 7% 8%
========== ========= ======= ===========
Earnings from Operations
------------------------
Universal Music Group EUR 36 EUR (4) na(1) na(1)
Vivendi Universal Games 11 (48) na(1) na(1)
Canal+ Group 104 73 42% 40%
SFR Cegetel (a) 567 555 2% 2%
Maroc Telecom 180 160 13% 14%
Holding & Corporate (47) (44) -7% -7%
Non core operations (b) (2) 5 na(1) na(1)
---------- --------- -------- -----------
Total Vivendi Universal EUR 849 EUR 697 22% 22%
========== ========= ======== ===========
na(1): not applicable
(a) As of January 1, 2005, SFR revenues include mobile-to-mobile sales of EUR 217 million for the first quarter of 2005. 2004 comparable basis includes estimated theoretical mobile-to-mobile sales applying the 2005 rate, i.e. EUR 204 million. Mobile-to-mobile sales have no impact on earnings from operations.
(b) Corresponds to Vivendi Telecom International, Vivendi Valorisation and other non core businesses.
APPENDIX III
VIVENDI UNIVERSAL
REVENUES AND OPERATING INCOME BY BUSINESS SEGMENT AS PUBLISHED
(IFRS, unaudited)
---------------------------------
1st Quarter Ended March 31,
---------------------------------
(In millions of euros) 2005 2004 % Change
--------- --------- -----------
Revenues
--------
Universal Music Group EUR 1,038 EUR 977 6%
Vivendi Universal Games 113 77 47%
Canal+ Group 881 918 -4%
SFR Cegetel (a) 2,326 1,978 18%
Maroc Telecom 423 368 15%
Non core operations and
elimination of intercompany
transactions (b) (20) 67 na(1)
--------- --------- -----------
Total Vivendi Universal
(excluding VUE) EUR 4,761 EUR 4,385 9%
========= ========= ===========
Vivendi Universal Entertainment - - na(1)
--------- --------- -----------
Total Vivendi Universal EUR 4,761 EUR 4,385 9%
========= ========= ===========
Earnings from Operations
------------------------
Universal Music Group EUR 36 EUR (11) na(1)
Vivendi Universal Games 11 (48) na(1)
Canal+ Group 132 72 83%
SFR Cegetel (a) 567 555 2%
Maroc Telecom 180 156 15%
Holding & Corporate (47) (44) -7%
Non core operations (b) (2) 14 na(1)
--------- --------- -----------
Total Vivendi Universal
(excluding VUE) EUR 877 EUR 694 26%
========= ========= ===========
Vivendi Universal Entertainment - - na(1)
--------- --------- -----------
Total Vivendi Universal EUR 877 EUR 694 26%
========= ========= ===========
na(1): not applicable.
(a) As of January 1, 2005, SFR revenues include mobile-to-mobile sales of EUR 217 million for the first quarter of 2005. These sales have no impact on earnings from operations.
(b) Corresponds to Vivendi Telecom International, Vivendi Valorisation and other non core businesses.
Facebook
Twitter
LinkedIn
Delicious
Reddit
StumbleUpon
Digg
MySpace
Newsvine
Google Bookmark
Yahoo! Bookmark
Email
Email 
