Vivendi: The Good Results for 2020 Confirm the Resilience of the Group’s Main Businesses

• Revenues increased to €16.09 billion, up 1.2% compared to 2019
• EBITA increased to €1.63 billion, up 6.6% compared to 2019
• Earnings before provision for income taxes¹ increased to €2.18 billion, up 47.7% compared to 2019
• Universal Music Group: successful opening of UMG’s share capital with 20% owned by a consortium led by Tencent; planned distribution of 60% of UMG’s share capital to Vivendi’s shareholders

PARIS–(BUSINESS WIRE)–Regulatory News:

Vivendi (Paris:VIV):

2020 KEY FIGURES (in millions of euros)		% change year- on-year	% change year-on -year at constant currency and perimeter2
Revenues	€16,090 M	+1.2%	-0.6%
EBITA3,4	€1,627 M	+6.6%	+3.7%
EBIT4	€1,468 M	+6.3%
Earnings before provision for income taxes1	€2,182 M	+47.7%

This press release contains audited consolidated financial figures established under IFRS, which were approved by Vivendi’s Management Board on March 1, 2021, reviewed by the Vivendi Audit Committee on March 1, 2021, and by Vivendi’s Supervisory Board on March 3, 2021 under the chairmanship of Yannick Bolloré.

In 2020, revenues were €16,090 million, up 1.2%. This increase mainly resulted from the growth of Universal Music Group (UMG), Canal+ Group² and Editis², partially offset by the slowdown in other activities, mainly Havas Group and Vivendi Village, all of which were affected by the consequences of the COVID-19 pandemic.

At constant currency and perimeter², revenues were almost stable (-0.6%) compared to 2019.

Following good growth in the first quarter of 2020 (+4.4% at constant currency and perimeter²) and a decline in the second quarter (-7.9%), Vivendi’s revenues recovered in the third (+0.7%) and fourth (+0.7%) quarters.

For the second half of 2020, at constant currency and perimeter², revenues slightly increased (+0.7%) compared to the second half of 2019 and compared to a decrease of 2.0% for the first half of 2020.

EBITA was €1,627 million, an increase of 6.6% compared to 2019. At constant currency and perimeter², EBITA increased by 3.7%, primarily driven by the growth of UMG and Canal+ Group.

EBIT was €1,468 million, an increase of 6.3% compared to 2019.

Other financial charges and income were a net income of €589 million, compared to a net income of €65 million in 2019. In 2020, the revaluation of the investments in Spotify and Tencent Music Entertainment was a net gain of €591 million, compared to €139 million in 2019. In addition, in 2020, Vivendi received an additional payment of €56 million for the sale of GVT in 2015, following the favorable settlement of a tax litigation in Brazil.

On March 31, 2020, the sale of 10% of UMG’s share capital to a Tencent-led consortium was recorded, in accordance with IFRS standards, as a sale of non-controlling interests and therefore has not impacted the Consolidated Financial Statement of Earnings. As a result, in accordance with IFRS 10, the capital gain on the sale of 10% of UMG’s share capital was directly recorded as an increase in equity attributable to Vivendi SE shareowners for €2,385 million.

Provision for income taxes reported to net income was a net charge of €575 million, compared to a net income of €140 million in 2019. Excluding the current tax income of €473 million resulting from the aforementioned favorable decision of the French Council of State (Conseil d’État) in 2019 regarding the use of foreign tax receivables upon the group’s exit from the Global Profit Tax System), provision for income taxes reported to net income increased by €242 million in 2020.

Earnings attributable to non-controlling interests were €167 million, compared to €34 million in 2019. This increase of €133 million primarily reflected the Tencent-led consortium’s share of Universal Music Group’s net earnings as from March 31, 2020.

Earnings before provision for income taxes which allows the best comparison versus the 2019 earnings¹, amounted to a profit of €2,182 million, an increase of 47.7%.

Earnings attributable to Vivendi SE shareowners amounted to a profit of €1,440 million (or €1.26 per share – basic), compared to €1,583 million in 2019 (or €1.28 per share – basic). In 2019, excluding the current tax income of €473 million regarding the use of foreign tax receivables upon the exit from the Global Profit Tax System, earnings attributable to Vivendi SE shareowners increased by 29.7%.

Adjusted net income was a profit of €1,228 million (or €1,08 per share – basic), compared to €1,741 million in 2019 (or €1.41 per share – basic), a decrease of 29.5%. In 2019, it included the current tax income of €473 million regarding the use of foreign tax receivables upon the exit from the Global Profit Tax System.

As of December 30, 2020, Vivendi’s Financial Net Debt increased by €889 million to €4,953 million.

If the contemplated distribution of 60% of UMG’s share capital, which is expected to involve the repayment by UMG of the loan granted by Vivendi, were to occur, and taking into account the €2.8 billion in cash received from the sale of an additional 10% of UMG’s share capital to the Tencent- led consortium, the Vivendi Group’s pro-forma net debt would amount to €0.3 billion, based on the balance sheet as of December 31, 2020.

Vivendi has significant financing capacity. As of December 31, 2020, €3.3 billion of the group’s committed credit facilities were available.

As of December 31, 2020, the average “economic” term of the group’s financial debt, calculated based on the assumption that the available medium-term credit lines may be used to redeem the group’s shortest term borrowings, was 4.8 years (compared to 5.3 years as of December 31, 2019).

As Vivendi’s consolidated equity amounted to €16.431 billion, the Group’s net debt-to-equity (gearing) ratio was 30% as of December 31, 2020.

Although the COVID-19 pandemic is having a more significant impact on certain countries or businesses than others, in 2020, Vivendi has demonstrated resilience in adapting its activities to continue to best serve and entertain its customers, while reducing costs to preserve its margins. The business activities showed good resilience, in particular music and pay television. However, as previously mentioned, the other businesses such as Havas Group and Vivendi Village (in particular live entertainment) were affected by the pandemic’s effects. Editis has enjoyed a strong rebound in its businesses in France since June 2020.

Vivendi continually monitors the current and potential consequences of the crisis. It is difficult at this time to determine how it will impact Vivendi’s results in 2021. Businesses related to advertising and live performance have a risk of being more impacted than others. Nevertheless, the Group remains confident in the resilience of its main businesses. It continues to make every effort to ensure the continuity of its activities, as well as to best serve and entertain its customers and audiences while complying with the guidelines of authorities in each country where it operates.

Planned distribution of 60% of UMG’s share capital to Vivendi’s shareowners

For a number of years, Vivendi’s leading institutional shareholders have been pressing for a split or the distribution of Universal Music Group (UMG) to reduce Vivendi’s conglomerate discount.

Prior to considering a favorable response to this request, the Management Board wished to obtain a fair value for UMG to better serve the interests of its shareholders and therefore support the fulfillment of its development plan to become a global leader in content, media and communications.

The Chairman of the Management Board set a minimum target of €30 billion for UMG’s enterprise value. The acquisition by the Tencent-led consortium of a 20% stake in UMG’s share capital, completed between March 2020 and January 2021 on the basis of this valuation, as well as interests expressed by other investors at potentially higher prices, have now enabled the Management Board to consider a distribution in kind of 60% of UMG’s share capital to Vivendi shareholders.

This distribution, exclusively in kind, would take the form of an exceptional distribution (“special dividend”). The listing of UMG’s shares, issued by its holding company, would be applied for on the regulated market of Euronext NV in Amsterdam, in a country that has been one of UMG’s historical homes.

A Vivendi Extraordinary Shareholders’ Meeting will be called for March 29, 2021, to modify the company’s by-laws and make the principle of this distribution in kind possible and pursue this project. Subject to a favorable shareholder vote, a Shareholders’ Meeting could be called before the end of 2021 to vote on this distribution of UMG shares.

Prisma Media

On December 23, 2020, Vivendi entered into a put option agreement for 100% of Prisma Media. Prisma Media is the leading French press group in the sector, in print and digital, with twenty essential flagship brands of the magazine press, from Femme Actuelle to GEO, via Capital, Gala, Télé Loisirs, and more.

In accordance with applicable regulations, the contemplated acquisition remains subject to the information and consultation process with Prisma Media’s employee representative bodies, the authorization from the relevant competition authorities as well as the finalization of legal documentation.

Prisa

On January 25, 2021, Vivendi announced that it owned 9.9% of Prisa’s share capital. Prisa, which owns El Pais, Santillana, Cadena SER, Radio Caracol, AS and Los 40 Principales, is the leader in media and education in the Spanish-speaking world.

The acquisition of a stake in Prisa is part of Vivendi’s strategy to strengthen its position as a global content, media and communications group and to expand its access to Spanish-speaking markets in Europe, Latin America and the United States.

Returns to shareholders

Since January 1, 2020, Vivendi has repurchased 96,52 million of its own shares (i.e., 8.14% of its share capital), representing €2.35 billion, including 23.02 million shares under the previous buyback program and

73.50 million shares under the current program.

As of March 3, 2021, Vivendi holds 100.44 million treasury shares, representing 8.47% of the share capital.

In addition, the Annual General Shareholders’ Meeting to be held on June 22, 2021 will vote on the proposal of an ordinary dividend of 0.60 euro per share with respect to fiscal year 2020. This dividend would represent a yield of approximately 2%. The ex-dividend date would be June 23, 2021, with payment on June 25, 2021.

Creation Unlimited, Vivendi’s raison d’être

Vivendi offers a perfect environment for all types of talent in the creative industries. This is why the Group has defined its raison d’être through its tagline Creation Unlimited, meaning to unleash creation by revealing all talent, valuing all ideas and cultures and sharing them with as many people as possible.

This raison d’être enables Vivendi to create value not only for the company but for the entire creative community and represents a genuine commitment on the part of Vivendi, its management and all its employees.

There are three dimensions to it:

• Implementing all means necessary to promote diverse, inclusive and original creation;
• Guiding new talent and supporting established talent in their artistic and professional approach; and
• Making the most beautiful content and talent shine as widely as possible.

Evolution of the CSR program

Vivendi redefined its CSR program in 2020, putting its social, societal and environmental impacts into perspective and setting a first milestone for 2025. The new program, entitled Creation for the Future, directly ties in with Vivendi’s raison d’être: Creation Unlimited.

The new program consists of three pillars:

• Creation for the Planet, “Innovating to protect the planet”, frames the Group’s commitment to respond to the climate emergency and protect the environment. Vivendi has defined its 2020-2035 climate strategy, notably in line with the 2015 Paris Agreement and the Science-Based Targets initiative which the Group joined this year. Additionally, Vivendi is going further by planning to achieve carbon neutrality (reach “Net Zero”) by 2025, bearing in mind that some entities have already achieved this goal.

• Creation for Society, “Imagining tomorrow’s society,” reflects the societal responsibility incumbent on the Group through the content it produces or distributes. Vivendi is especially committed to fostering open societies by making culture and education more accessible.

• Creation with All, “Building a responsible world together,” expresses Vivendi’s ambition to involve its internal and external stakeholders in building a more inclusive and responsible world.

The CSR program is a powerful performance lever that enables Vivendi to share the value that it creates with all its stakeholders.

Strengthening of ESG disclosure in financial communications

The year 2020 was also marked by the accelerated integration of Environmental, Social and Governance (ESG) criteria into Vivendi’s financial communications. This process, initiated by the Chairman of the Supervisory Board, Yannick Bolloré, at the Shareholders’ Meeting of April 20, 2020, is characterized by the intensification of collaboration between various transversal internal working groups and the deepening of dialogue with investors and ESG analysts.

Vivendi consulted the leading French and international ESG institutional investors owning an interest in Vivendi’s capital. As a result, the Group has gained a better understanding of their methodologies, expectations, and perception of the Group’s ESG performance.

Comments on the Businesses Key Financials

Universal Music Group

In 2020, Universal Music Group’s (UMG) revenues amounted to €7,432 million, up 4.7% at constant currency and perimeter compared to 2019 (+3.8% on an actual basis).

Recorded music revenues grew by 6.7% at constant currency and perimeter thanks mainly to the growth in subscription and streaming revenues (+16.2%), which more than offset the 6.0% decline in physical sales compared to 2019, and the 19.0% decline in download sales.

Recorded music best sellers for 2020 included new releases from The Weeknd, Lil Baby, Pop Smoke, BTS, Justin Bieber, King & Prince, Taylor Swift and Juice WRLD, as well as continued sales from Billie Eilish and Post Malone.

In 2020, UMG had four of the Top 5 artists of the year on Spotify globally (Drake, J Balvin, Juice WRLD and The Weeknd), the No. 1 song of the year (The Weeknd’s Blinding Lights) and two of the Top 3 albums (The Weeknd’s After Hours and Post Malone’s Hollywood’s Bleeding). In addition, based on US data from Nielsen Music/MRC, UMG had all of the Top 6 albums of the year with Lil Baby, Taylor Swift, Pop Smoke, The Weeknd, Juice WRLD and Post Malone.

Music publishing revenues increased 14.4% at constant currency and perimeter compared to 2019, driven by increased subscription and streaming revenues, as well as the receipt of a digital royalty claim in the second quarter of 2020.

On December 7, 2020, Universal Music Publishing Group (UMPG) announced a landmark agreement in which UMPG acquired Bob Dylan’s entire catalog of songs, encompassing more than 600 copyrights, spanning 60 years, and recorded more than 6,000 times by an array of artists from many countries, cultures and music genres.

Merchandising and other revenues were down 39.6% at constant currency and perimeter compared to 2019, due to the impact of the health pandemic on both touring and retail activity.

Driven by the growth in revenues, revenues mix and cost control, UMG’s EBITA amounted to €1,329 million, up 20.1% at constant currency and perimeter compared to 2019 (+18.3% on an actual basis).

On February 8, 2021, UMG and TikTok announced a global agreement that delivers equitable compensation for recording artists and songwriters, and significantly expands and enhances the companies’ existing relationship, promoting the development of new innovative experiences and the ability to forge deeper bonds between fans and artists.

Canal+ Group

At the end of December 2020, Canal+ Group’s total subscriber portfolio (individual and collective) reached 21.8 million, including 8.7 million in mainland France, compared to 20.3 million at the end of December 2019.

In 2020, Canal+ Group’s revenues were €5,498 million, up 4.4% compared to 2019 (down 0.9% at constant currency and perimeter).

Pay-TV in mainland France recorded a net increase of its total subscriber base of 262,000 over the past 12 months.

Revenues from international operations increased sharply by 19.8% (up 4.0% at constant currency and perimeter), thanks to the significant growth in the number of subscribers (+1.2 million year-on-year) across all geographical areas except Asia-Pacific, and the success of the M7 integration.

Studiocanal’s revenues declined by 17.0% year-on-year, as the filming and distribution of movies and series were particularly affected by the pandemic. However, this decrease was partially offset by the good performance of the catalog.

In 2020, Canal+ Group’s profitability improved compared to 2019. EBITA recorded a strong increase of 26.7%, reaching €435 million, compared to €343 million in 2019.

In October 2020, Canal+ Group announced that it held 12% of the share capital of the South African company MultiChoice Group Ltd, the leader in pay-TV in anglophone and lusophone sub-Saharan Africa, becoming the second-largest shareholder.

Canal+ Group, the exclusive distributor of Disney+ in France since it became available in Canal+ offers on April 7, 2020, entered into distribution agreements with other operators in the fourth quarter of 2020 to expand this streaming service.

In December 2020, French Broadcasting Authority (Conseil Supérieur de l’Audiovisuel) (“CSA”) authorized Canal+ Group to renew its DTT license in France for three years, i.e., until December 6, 2023. This reception mode concerned nearly 2% of Canal+ Group subscribers at the end of December 2020.

On February 4, 2021, the Professional Football League and Canal+ Group announced a global agreement regarding the audiovisual rights for Ligue 1 Uber Eats and Ligue 2 BKT for the 2020-2021 season. Since the 25th day of Ligue 1 Uber Eats and Ligue 2 BKT, and until the end of the 2020-2021 season, Canal+ Group has had the exclusive audiovisual rights, live and in full, to all Ligue 1 Uber Eats matches and eight of the ten Ligue 2 BKT matches. In addition to the audiovisual rights to these matches, Canal+ Group will hold all the magazine rights during the week and on weekends.

In addition, on March 2, 2021, Canal+, which has been a partner of the TOP 14 for more than 35 years, won the latest call for tenders launched by the National Rugby League for broadcasting rights in France until the end of the 2026-2027 season. These exclusive broadcasting rights cover all TOP 14 matches, live as well as near-live clips, and all programs devoted to them, in all media formats.

Havas Group

During the fourth quarter of 2020, global economic activity continued its gradual recovery, in line with the third quarter performance. The advertising market is more stable and continues to improve, albeit to varying degrees depending on the geographical region and sector.

Against this challenging backdrop, Havas Group reported a clear improvement in the fourth quarter with organic net revenue⁵ growth of -7.5%, compared to -10.4% in the third quarter of 2020.

With the exception of Asia-Pacific, all geographical regions continued to improve or consolidate their performances⁶. The North American agencies continued to hold up well, thanks to a dynamic advertising market and the resilience of health and wellness communications. Under the impetus of both the Creative and Media businesses, Europe reported an overall stronger performance, although with contrasting results between countries. Latin America consolidated its recovery, and a new organization was implemented in the Asia-Pacific agencies.

Havas Group’s revenues for 2020 were €2,137 million, down 10.1% (-10.8% at constant currency and perimeter) compared to 2019. Net revenues were €2,049 million, down 9.2% compared to 2019 and organic growth was -9.9% compared to 2019. Exchange rates had a negative impact of -1.4% (+2.5% in 2019) and acquisitions contributed +2.1%.

In 2020, EBITA was €121 million, compared to €225 million in 2019. Thanks to its agility, the benefits of the cost adjustment plan introduced at the beginning of the crisis enabled Havas Group to absorb more than 50% of the decline in its revenues over the full-year 2020 (before restructuring charges).

Havas Group has begun 2021 with confidence: business activity, especially in the second half of 2020, proved highly dynamic, with the winning of prestigious new clients including Jacobs Douwe Egberts, Epic Games, Tetra Pack and PMU. The reinforcement of existing offerings and the launch of two new and groundbreaking initiatives, Havas CX and Havas Market, make Havas Group’s expertise more attractive than ever. Thanks to its cost adjustment plan and the introduction of new organizational structures, Havas Group is in good shape and well equipped to make the most of any new growth opportunities its markets may present. At the same time, it is keeping a close eye on economic and social developments.

Editis

In an extremely turbulent environment in 2020 with the closure, during some periods, of a large number of the points of sale in France (the publishing market fell by -67% in April, -25% in May and -35% in November), the market ended the year just 2.7% lower than 2019 (source GfK 2020), demonstrating its resilience. However, certain segments, such as tourism, were heavily affected.

In 2020, Editis’ revenues reached €725 million, a slight decrease of 1.3% at constant currency and perimeter compared to 2019. In 2020, the school reform had a lower impact than in 2019.

With its Nathan and Bordas brands, Editis is strengthening its leadership position in education and remains the leader in the very competitive market of senior-year high school curriculum reform.

Editis’ general literature and that of its third-party publishing partners performed well, with several of Editis titles included among the year’s best-sellers across all categories. Editis was the best-represented publishing group in the Top 20 best-selling new releases in 2020 in France, with nine titles sold by the group⁷.

Likewise, several of Editis’ new releases were selected for prestigious literary awards, such as La Grâce by Thibault de Montaigu (Plon publishing house), which was awarded the Prix de Flore⁷.

Nimba Éditions, a 100% Ivorian publishing house launched with the support of Vivendi’s local presence, published its first titles in December 2020. Nimba Éditions aims to reveal local talent and offer relevant and intelligent content to readers in Côte d’Ivoire and neighboring French-speaking countries.

In 2020, Editis’ EBITA was €38 million, compared to €43 million for the same period in 2019 (12-month pro forma). Thanks to cost control, Income from operations was up by 2.4% at constant currency and perimeter compared to 2019.

Other businesses

In 2020, Gameloft‘s revenues were €253 million, down 2.1% compared to 2019 (-1.5% at constant currency and perimeter). Sales on OTT platforms, representing 74% of Gameloft’s total revenues, were up by 0.9%, driven by the success of Asphalt 9: Legends on mobile phones, PCs and Nintendo Switch (+30% annual growth) and the resilience of the catalog. In 2020, Disney Magic Kingdoms, March of Empires, Asphalt 9: Legends, Dragon Mania Legends and Asphalt 8: Airborne recorded the highest sales, representing 53% of Gameloft’s total revenues. In 2020, Gameloft continued to implement its internal transformation plan, which resulted in a sharp drop in operating expenses and a significant increase in its margins.

Contacts

Media
Paris

Jean-Louis Erneux

+33 (0)1 71 71 15 84

Solange Maulini

+33 (0) 1 71 71 11 73

Investor Relations

Paris

Xavier Le Roy

+33 (0)1 71 71 18 77

Nathalie Pellet

+33 (0) 1 71 71 11 24

Delphine Maillet

+33 (0)1 71 71 17 20

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