Vivendi SE (VIV) Earnings Call Transcript & Summary

Good evening, everyone, and welcome to the Vivendi Full Year 2024 Earnings Presentation. This conference will be hosted by Mr. Arnaud de Puyfontaine, Chairman of the Management Board and CEO; and Francois Laroze, Member of the Management Board and CFO. As a remainder this call is being recorded. [Operator Instructions] I'd now like to hand the call over to your host this evening, Mr. Arnaud de Puyfontaine. Please go ahead, sir. Your line is open.

Thank you very much, and good evening to everybody. As you're aware, 2024 was an exceptionally busy year for Vivendi marked by the spin-off project and the respective listings of Group Canal+, Havas and Louis Hachette Group. This operation was completed on a tight schedule running from December 2023 until the approval of the spin-off by 97.5% at the Extraordinary General Meeting on December 9, 2024. Following this intense period, the Vivendi Group is now composed of a portfolio of listed investment managed dynamically, including, among others, Universal Music Group, Telecom Italia, Banijay and MediaForEurope, and an operational assets with Gameloft, which we continue to support in its transformation into a multi-platform game publisher. The value of these assets as of December 31, 2024, amounts to over EUR 7.1 billion, including EUR 6.9 billion in listed securities. For 2024, the revaluated net assets, which reflects the debt adjusted estimate of the value of all listed and unlisted assets of the group stands at EUR 4.8 billion. After accounting for EUR 2.1 billion in debt and EUR 0.3 billion in liabilities. The 2024 accounts are thus impacted by EUR 5.7 billion due to the fair value adjustment of the spin-off assets, a purely accounting effect. As mentioned earlier, Vivendi is committed to a major transformation project aimed at creating value for all stakeholders. We are now a few weeks past the first day of trading, which was December 16. As you can see on the screen, Vivendi has risen by 15% since the beginning of the year and is outperforming the SBF 120 Index, to which it is now linked. Francois will shortly discuss the details of our performance over the past year. If you will allow me a few informative words about the newly listed entities to highlight. The exceptional performance of Havas, which closed a historic year. The very strong results of Louis Hachette Group, which combines Lagardere and Prisma Media, and Group Canal+ achievements of key milestones in becoming one of the leading players in the industry. And it's fair to say that if the activities resulting from the spin-off have not yet reached to date the expected level of value creation. We remain very confident that the anticipated valuations will be achieved. Thank you very much, and I will now hand over to Francois.

Thank you very much, Arnaud. I will walk you through the figures of the group for 2024. First of all, our key figures with this portfolio of EUR 7.1 billion, as Arnaud mentioned, the net asset value of EUR 4.8 billion, which is EUR 4.69 per share. In terms of P&L, it's a revenue of EUR 297 million, EBITDA minus 1%, adjusted net income, EUR 111 million, and the net earnings group shares taking into account the impact of the split of 6 -- in negative by EUR 6 billion. If we look at our investment portfolio. You know all the stakes of the Vivendi Group, starting by Universal Music with 9.94%. We remind you about TIM, MFE, Banijay, Telefonica and Prisa with no major evolution on these stakes. Just a few words on Lagardere where after the spinoff, we have invested in Lagardere for representing now 473% at the end of the year. We went up to 5% very recently. We disclosed this threshold last week. And this is mainly due to the exercise of the right of session in the end of some shareholders of Lagardere. If we look at the valuation of this portfolio, it's for the listed company, it represents EUR 6.9 billion at the end of the year 2024, 4.4 -- coming EUR 4.5 billion, let's say, coming from UMG, the rest with Telecom Italia, EUR 0.9 billion, Banijay EUR 0.7 billion, the remaining coming from MFE, Telefonica, Lagardere and Prisa. If we spend a few seconds on Gameloft, which is our operating business unit. The revenue went down from 2023 to 2024 from EUR 311 million to EUR 293 million, it's a 5.7% decrease. Nevertheless, due to a very positive and talented cost management, the Gameloft team management has been able to increase the EBITDA from EUR 5 million to EUR 8 million between 2023 and 2024. And if we were to compare the -- before restructuring charge, it's an increase from EUR 10 million to EUR 14 million, confirming the very good performance of Gameloft. We have reminded the geographical split of our revenues with North America being the first region at 45% of the revenues and then Europe 37%, Asia and Latin America. If we have a look at the net asset value for which we gave you the figures, EUR 4.8 billion, we start with the portfolio valuation we have already described of EUR 7.1 billion. And then we deduct the net debt, which is to EUR 2.072 billion. And we also deduct some liabilities for EUR 311 million. So at the end, we have this net asset value of EUR 4.8 billion, which is EUR 4.69 per share, knowing that we have 1.029 billion shares in our capital. The financial debt evolution, we started the year with a EUR 2.8 billion net debt, which was the one disclosed as the previous year. Let me rapidly highlight some major events on this financial net debt evolution with the impact of the divestments of our ticketing business early in the second half of 2024 for an amount of EUR 300 million. We also have acquired EUR 389 million of Lagardere share, some of which have been part of the split and some others have been kept after the split. We have made share buyback for EUR 343 million, mainly -- exclusively on the first half of the year, and we have paid dividend to our shareholders for a little bit more than EUR 250 million. If we look at the loan-to-value, we refer to this net debt of EUR 2.072 billion. This net debt comes from the -- mainly from the margin loan, we have set up during the fourth quarter 2024, with 5 banks -- 5 international banks. To this margin loan, we add the commercial paper from which we have EUR 450 million at the end of the previous year. And our bank loans and other debt for EUR 197 million. So at the end, we have this adjusted net debt of EUR 2.072 billion. And if we compare it with the market value of our investments, it's a 30% loan-to-value ratio. If we look at our income statement, let's focus on the revenues and EBITDA, tell you that our revenue is mainly coming from Gameloft and reminding you that the figures of 2023 are the one, which has been restated in accordance with IFRS 5 rule, to the 2023 figures as the one we stated on the current perimeter, excluding all the impact of the SpinCos, which have led the group. So the revenue went down, as I explained, due to Gameloft by 4.9% and the EBITDA, which was EUR 333 million negative last year is slightly negative at EUR 1 million, including the Gameloft performance, EUR 8 million, the corporate cost for EUR 126 million and the Vivendi share of UMG earnings that we account for in the EBITDA for EUR 120 million compared with EUR 94 million last year. If we go to the full P&L, starting from this EBITDA of minus 1, we have the impact of the amortization and depreciation of intangibles, mainly the goodwill impairment that we did for Gameloft for an amount of EUR 140 million. We also have accounted the settlement of the agreement with institutional investors during the first half 2024 for EUR 96 million, negative EUR 96 million. So our earnings from continuing operations is a loss of EUR 183 million after the positive interest and the income for investment coming from the dividend of MFE, Banijay or Telefonica. And then if we had the impact of the earnings from continuing operation with, as Arnaud mentioned, as the impact of the fair value adjustments of the distributed assets based on the opening share price on December the 16th for EUR 5.7 billion. That's the reason why the net group -- net income group share is a loss of EUR 6.004 billion. Nevertheless, our adjusted net income, which represent a recurring result of the group is positive by EUR 111 million. As a conclusion, I will remind that these figures have been strongly impacted by the spin-off of the group into 4 entities. Let you know that we will release our 2025 Q1 revenues on April 28 and that we will propose ordinary dividend to the shareholder meeting of April 2028 of EUR 0.04 per share, represent a yield of 1.5%, roughly EUR 40 million and that the dividend should be paid on the 2nd of May if confirmed by the shareholders during the shareholder meeting. So that's where we are for 2024. And with Arnaud, we are at your disposal to answer any of your questions.

[Operator Instructions] We do not appear to have any questions coming in at this time. Mr. Arnaud de Puyfontaine, I'd like to turn the call back over to you. One more please, sir. We just have a question popped in now. And a couple of them. The first question is coming from Sami Kassab of BNP Pariba.

One question. Can you please remind me of the long-term strategy with the video games asset, please?

Well, thank you for your question. We are happy about the current performance of Gameloft, which has delivered numbers in a year without new launches, which has enabled the company to show that its foundation are ready for a bright future. So our strategy is to be able to generate organic growth, while increasing margins in terms of operation and to be in a position to seize the potential acquisition, bolt-on acquisition to grow the size of the company. We have read in the press some speculation about willingness to Vivendi to exit the game operation, which is an invalid information.

Our next question is coming from Eric Ravary of CIC.

First one is on the corporate cost level. So it started to reduce in last year. Are you planning to reduce it further in the coming years? And what could be the sort of normative corporate cost level for the new Vivendi? And second question on Telecom Italia. Could we have an update on the situation there? And what could be the solutions for you to potentially sales your stake?

Thank you for your question. We don't give you precise figures on the evolution of the corporate costs. Nevertheless, we can give you a trend. I reminded you that some people who have left the Vivendi Group following the split and which are -- who have joined the different SpinCos. It's more than 25 people who have left. So this will have a positive impact on the 2025 figures. And we also focus on reducing all type of OpEx. So we have a plan -- ambitious plan to keep on reducing but we won't disclose precisely the ambition for 2025.

As regard to the...

Thank you. As regard to the question on Telecom Italia, we have made it very clear that our intention is to sell our stake in Telecom Italia. And this is the plan. So we have seen many speculation and rumors about the situation. But when we are in a position to be able to exit the company in good terms, we'll do it. So it's a very pragmatic and active shareholder position as regard to the sequence of events over the past 12 months, and we want to be very dedicated in getting a solution as regard to the current situation.

[Operator Instructions] Thank you [indiscernible] Mr. de Puyfontaine. We have no further questions.

Well, thank you very much. Have a good evening, and see you on the next occasion. Thank you.

Thank you. Bye-bye.

Ladies and gentlemen, that concludes today's conference. Thank you so much for your participation. You may now disconnect. We wish you a very good day and goodbye.