Vivendi SE (VIV) Earnings Call Transcript & Summary

Ladies and gentlemen, dear shareholders, I'd like to welcome you to Vivendi's Extraordinary General Meeting. Of course, I would have preferred that we could all be gathered here together today. Unfortunately, the current health conditions and restrictions taken by the authorities left us with no choice than to hold this meeting behind closed doors with live streaming on our website and also on Dailymotion. We've convened this meeting in order to secure approval for a statutory amendment, allowing your company to distribute dividends, reserves or premiums by delivery of assets in kind, including the financial securities. As you know, many of our major institutional shareholders have, for several years now, requested the spin-off and distribution of UMG. Vivendi Management Board, led by Arnaud de Puyfontaine, decided to wait in order to reveal the full potential of this asset. Arnaud will tell you about that in a moment. I'd like to acknowledge the outstanding work done by the Vivendi teams in concept, so to speak, with those of UMG under the leadership of Sir Lucian Grainge that demonstrates that the long-term strategy of our group is the right one. Prior to the distribution plan that we are going to submit to you, it was necessary to obtain a valuation of UMG at its fair value to allow Vivendi to have sufficient financial resources to implement its development plan as a world leader in content, media and communications. The entry of the international consortium led by Tencent, 20% stake in UNG finalized between March 2020 and January '21, for an enterprise value of EUR 30 billion as well as the application of new investors at potentially higher prices allow us to bolster the valuation of UMG's and to study the planned distribution of 60% of its capital to Vivendi shareholders by the end of the year. At the same time, the listing of UMG shares will be sought on the regulated Euronext market on the Amsterdam Stock Exchange in a country where one of the historic head offices of UMG is based. In this framework, you're asked to amend the bylaws of your company in order to approve the principle of this exceptional distribution. In kind, this will allow your management board to continue the study of this plan. If successful, you'll be once again consulted at the general meeting. We'll now move to formalities. Let me remind you that our general meeting is convened on this day by notice published in the ballot of the 10th of March 2021 and the legal gazette [indiscernible] on the same date as well as by letter sent out to all registered shareholders. Our meeting is streamed live from Vivendi Head office in accordance with provisions of orders of December 2, 2020 and 25th of March 2020, governing the rules of meetings for bodies of legal entities and those deprived of private law legal entity, owing to the COVID-19 pandemic, to be found on the desk of the documents made available to shareholders in the prescribed timeframe. Let me remind you that your meeting will be addressing the following agenda. First of all, the amendment of Article 20 of bylaws, appropriation and distribution of profit and then powers for accomplishment of formalities. Having taken into account of votes and proxies forwarded up until the eve of the meeting at 3:00 p.m., I'm pleased to announce that the quorum stands at 73.33% dear shareholders. This is a very significant turnout and even historic. Thank you for your participation, the general meeting is, therefore, regularly constituted, almost 5,000 shareholders used the vote access platform made available to them. Together, the management board in its session on the 12th of February 2021, appointed to act as scrutineer, the [ Societe ] Compagnie de Cornouaille represented by Madam Lynda Hadjadj, as well as the investment fund of Vivendi employees, led by Madam [indiscernible]. I propose as every year to act as Secretary, Mr. Frédéric Crépin, Group General Council and member of the management Board; [indiscernible] [Donny Callip ] for the [ court ], verified the status of votes and proxies received up until yesterday, 3 PM. I'd like to thank members of the Supervisory Board who was following as you are the live streaming of our meeting on my side. Arnaud de Puyfontaine, Chair of the Management Board; and Frédéric Crépin, General Counsel and also a member of the management board. I'd also like to warmly thank the other members management board as well as all group employees who are also following live this meeting. I will now leave the floor to Arnaud, who will describe the purpose of this transaction as part of our strategic plan.

Thank you, Yannick. Good afternoon to you, one and all. It's a great pleasure for me to meet with you even via webcast. This shareholders' meeting is extraordinary in several respect. It has to do with the project that, if it were come to fruition, would be a major milestone in the history of your group. In just a few moments time, I'd like to explain to you the rationale of this project and why now? A few years ago, when we took the helm of the Vivendi group, the music industry was at its lowest point. Some people even said that music industry may well be on the brink of disappearing. At that time, many of us had -- many people advised us to sell Universal Music Group. Precisely the opposite, we decided to maintain that business to keep it because we were convinced we could reestablish its value. The transformation work conducted by Vivendi and the Universal teams led by Sir Lucian Grainge, made it possible for the company to resume growth and play a central role in the shift towards streaming and especially paid streaming. Universal Music Group, partner of over 400 digital platforms worldwide, transformed streaming from a niche market into a mass market. Since 2014, Universal Music Group saw its top line grow strongly every year, going from EUR 4.5 billion to EUR 7.4 billion in 2020. Its EBITDA grew by approximately 60%. The COVID crisis has also demonstrated the resilience of its business model with organic growth and EBITDA of 20% between 2019 and 2020. Today, the group more than ever before is the uncontested leader in its industry with 4 out of the 5 top artists, according to Spotify's ranking of the most streamed music in 2020, we've mentioned Drake or the Weeknd, amongst many others. This position as leader in an industry that's growing strongly is something we confirmed in selling 10% of UMG's capital to an international consortium led by our partner, Tencent, based on a valuation of EUR 30 billion. A transaction, which we repeated in January of 2021, selling an additional 10%, confirming the attractiveness of Universal Music Group to strategic investors. The project to distribute 60% of UMG capital to you, Vivendi shareholders, followed by its listing on the stock exchange by the end of 2021, is the logical outcome of the work conducted in recent months and years. It might make it possible to further demonstrate growth in the value of UMG. Vivendi shareholders will be able to decide for themselves if they'd rather wait for further increased value or to realize the gains of the growth in recent years. For your group, this new stage represents a major opportunity. First of all, to see our share price do away with part of its conglomerate discount. Furthermore, this will step up our development and our global reach in content, media and communication. To this end, we can see we have a clear strategic course based on some major pillars: creation of quality content, ability to distribute our own resources worldwide, development of new entertainment formats, using our activities in strong, high potential markets, increased integration of our business lines and of course, our ability to transform our businesses, as we demonstrate -- as we've demonstrated with music and we're also demonstrating in all of our business areas. Of course, changes in the health situation are uncertain, but we are confident in the future. Our support is a resilient business model. I'd also mention our financial situation is especially strong. We just announced we'd make an early repayment of the entire bond of EUR 1 billion issued in May 2016, also taking account of the transactions under consideration for UMG. Pro forma net debt of Vivendi would just be EUR 300 million based on our balance sheet December 31, 2020. Also we've proven our ability to create value over the long term. Change in our share price since 2014 is self-explanatory, it speaks for itself. Including dividends reinvested, our share price grew almost twice as fast as the CAC 40 index. Of course, I have an opportunity 22 June next for the Annual Shareholder Meeting, I will be able to give you a more comprehensive update on the situation and the outlook for this group. I'm looking forward to that already. Thank you for your support. Thank you for your confidence.

Thank you, Arnaud. Well, dear shareholders, since we've received no written question, we will now move to the resolutions that were put to the vote of shareholders. Let me remind you that since this is an Extraordinary General Meeting, resolutions require 2/3's majority in order to be adopted. Over to Frédéric Crépin.

Thank you, Yannick. Ladies and gentlemen, we have 2 resolutions today that are put to your approval, presented by your Management Board and Supervisory Board. The first resolution concerns the amendment of Article 20 of bylaws, the appropriation and distribution of profit. The purpose is to amend the bylaws and allow to -- company to distribute dividends or interim dividends, reserves, premium, delivery of assets in kind. Adopted, 99.98%. Second resolution, powers for the accomplishment of formalities linked to this meeting. Resolution is passed by 99.99% of the vote. The detailed result of the vote of the resolutions will be placed online on the website of the company after this meeting. Thank you.

Thank you, Frédéric. Dear shareholders, before closing this meeting, I'd like to thank you. Thank you, first of all, for your historic turnout, over 73%. And thank you, above all, for this result, 99.98%. It's a very strong signal, endorsing the strategy supported by the Supervisory Board and its outstanding execution by the management board. We're living a very important stage in the life of the group. Your vote is tremendous support to the continued study of this plan. As Arnaud said, we'll meet again on the 22nd of June is part of our AGM. Thank you. Meeting adjourned.