MARCH LETTER 2015 TO OUR SHAREHOLDERS R 2014 EARNINGS IN LINE WITH EXPECTATIONS D S O T O H P NOW FULLY REFOCUSED ON MEDIA AND VINCENT ARNAUD BOLLORÉ DE PUYFONTAINE CONTENT ACTIVITIES CHAIRMAN OF CHAIRMAN OF THE SUPERVISORY THE MANAGEMENT SUBSTANTIAL RETURN TO SHAREHOLDERS BOARD BOARD he new Vivendi reached many mile - tion is expected to be maintained for 2015 and stones in 2014. The Group completed 2016. A share buyback program of about €2.7 Tthe process of refocusing on its media billion is also planned. In total, about €5.7 bil - and content activities. Vivendi thus accepted lion will be returned to shareholders by mid- an offer from Numericable-SFR and Altice for 2017, in addition to the €1.3 billion paid in the 20% interest it still held in Numericable- 2014. SFR. The amount offered corresponded to Now an integrated industrial media and con - what Vivendi had hoped for, tent group, Vivendi strengthened its position enabling it to generate a pre - in these sectors in 2014 by acquiring interests €5.7 million to be mium of over 20% in three in StudioBagel, a network of channels on distributed between now months in an illiquid market. YouTube, and Eagle Rock, which specializes in and mid-2017 following Furthermore, the Bolloré music programs. It also published good results Group increased its shares in €1.3 billion in 2014 due to the growth of the Canalplay, its unlim - Vivendi to 8.15%, demonstrat - ited video-on-demand service, the launch of ing its confidence in the Group’s A+, a new 100% African channel, or the capacity for growth. record-breaking success of Sam Smith, a Due to the disposals achieved over the past young British singer, Stromae and Indila. two years, the Group has returned to comfort - Discovering new talent is at the core of able financial flexibility and is going to pro - Vivendi’s strategy, as is establishing itself ceed with a substantial return to shareholders. more firmly in high-growth markets and ac - The Annual General Meeting on April 17, 2015 celerating its digital transition. The pre-emi - will propose the payment of an ordinary divi - nence of digital technology is eroding the dend of €1 for 2014, reflecting the Group’s boundaries between the Group’s different business performance (20 cents) and the re - business lines: cooperation and common proj - turn to shareholders (80 cents). This distribu - ects are now increasing. I R E S U L T S 2 2014 EARNINGS IN LINE R E L D I S WITH EXPECTATIONS D R A N s in previous quarters, (UMG), the year was charac - at €626 million (+37.9%) while R E B the 2014 annual re - terised by the faster than ex - earnings attributable to Vivendi © sults published on pected transformation of music shareholders rose by a factor Hervé Philippe AFebruary 27 were in distribution modes with robust of 2.4 to €4.744 billion. It par - Financial Director line with expectations. They re - growth in streaming compared ticularly benefited from the flect a strong resilience of the to digital downloads and phys - capital gains from the SFR and Group’s main activities con - ical sales. Maroc Telecom sales. In a very competitive fronted with an unpredictable Vivendi’s results and net situa - environment, Vivendi economic and competitive cli - INCOME FROM OPERA - tion were strongly impacted by achieved almost-stable mate. TIONS OVER €1.1 BILLION these significant disposals. income from operations, The Canal+ Group saw an in - IN 2014 In addition to sizeable capital last year. In 2015, the Board crease in sales due to the In this context, the Group’s in - gains, the latter enabled expects an income from growth of its international ac - come from operations, an ag - Vivendi to buyback some of its operations margin close to tivities, which offset the down - gregation of the subsidiaries’ bonds and substantially de - that achieved in 2014 and an turn in business and the impact “pure” business, resisted, ris - crease its interest expense increase in its adjusted net of the rise in VAT in France. ing to €1,108 million (+0.5%)*. (mainly due to the 2013 bond income of 10%. For Universal Music Group The adjusted net income stood redemptions that followed the 2014 ANNUAL EARNINGS* AN ANTICIPATED RETURN TO SHAREHOLDERS Change at constant OF €5.7 BILLION Change year-on-year perimeter and currency year-on-year The disposals completed over the past two years have enabled Vivendi to refocus on media and content and reduce its net Revenues debt, which had risen to a high of €17.4 billion on June 30, €10,089M -1.6% - 1.4% 2013. Income from operations They have led, and will lead to, substantial returns to share - €1,108M -2.0% + 0.5% holders. Vivendi has already paid an ordinary distribution of €1.00 per share for the 2013 financial year, €0.50 of which eco - EBITA nomically corresponded to the Group’s perfomance in 2013 €999M +4.6% + 8.1% and €0.50 to a return to shareholders as a result of ongoing disposals of assets. EBIT €736M +15.6% Further to this, the Management Board will propose for ap - proval at the Annual General Meeting on April 17, 2015, a pay - Adjusted net income ment of an ordinary dividend of €1.00 with respect to 2014, €626M +37.9% €0.20 of which corresponds to the Group’s business perform - ance and €0.80 to a return to shareholders with respect to dis - Earnings attributable to Vivendi shareholders posals. The objective is to maintain this distribution level for 4 744 M€ x 2.4 the fiscal years 2015 and 2016. In addition to these distributions, the plan is to proceed with Net cash a share buyback program of about €2.7 billion, up to the legal +€4.6bn vs -€11.1bn net debt at year-end 2013 limit of 10% of capital in line with the market regulations. The program will run over 18 months. *The figures above take account of changes in the perimeter occurring or announced in 2013 and 2014 the accounting impact of which, particularly in In total, the return to shareholders from mid-2015 to mid-2017 compliance with IFRS 5, has been described in the 2014 Financial Report could reach approximately €5.7 billion in addition to the €1.3 available on the www.vivendi.com website or on request to the Vivendi billion paid in 2014. Shareholders’ Department. 3 SALE OF 20% VIVENDI’S INTEREST IN NUMERICABLE-SFR Last February 17 th , Numericable-SFR and Altice offered to pur - chase 20% Vivendi’s interest in the French telecoms operator. The Management Board followed by the Group’s Supervisory Board considered the proposal, after which the Supervisory Board endorsed it on February 27 th . The proposed price was €40.00 per share versus a closing sale of 88% A 10% expected billion the previ - price of €33.315 on the day of the finalization of SFR’s transfer of Activision ous year. to Numericable and Altice, November 27, 2014. The premium Blizzard). increase In 2015, th e realize d by Vivendi therefore totalled 20% in just three The impact Group is antici - months! And the low level of liquidity in the Numericable-SFR in 2015 adjusted of the bond pating a slight shares would have made a future exit under optimal condi - redemption net income growth in rev - tions uncertain. made in Decem - enues fueled by The purchase was funded half by Numericable-SFR (as part ber 2014 following the Canal+ Group’s international of a share buyback program submitted to a General Meeting sale of SFR will only be felt in activities and by the develop - of its shareholders) via a payment in cash, and half by Altice 2015. ment of UMG streaming. The France via a payment by the latest on April 7, 2016 at an an - income from operations margin nual interest rate of 3.8%. A POSITIVE NET CASH should be close to that of 2014. This disposal, which will cancel out any previous agreements POSITION OF €4.6 BILLIO N V ivendi also expects an in - and discussions, brought in an additional €3.9 billion for On December 31, 2014, Vivendi crease in its adjusted net in - Vivendi and enabled it to collect a total of about €17 billion thus had a positive Net Cash come of 10% mainly thanks to (after financing the acquisition of Virgin for €200 million) for Position of €4.6 billion, com - lower restructuring charges the sale of SFR. pared to a Net Debt of €11.1 and interest expense. I L’OLYMPIA HALL TO HOST VIVENDI’S GENERAL SHAREHOL DERS’ MEETING n integrated industrial and charity galas! holders page then General Amedia and content group, If you are not in Paris, you can Shareholders’ Meeting). The Vivendi wished to use the follow the General General Share - iconic Olympia (28 Boulevard Shareholders’ holders’ R des Capucines, Paris 9th Ar - Meeting live via an Meet - E L A meeting D I rondissement), which it owns, online broadcast ing S D R to hold its Annual Sharehold - (www.vivendi.com; broadcast sub- A N R ers’ Meeting on April 17. Individual Share - sec - E B live on the © Individual share - Internet tion Frédéric Crépin holders who are will also allow Senior Executive members of the Vice President Club have already you to access a & Group General had an opportu - range of publications such as Counsel nity to visit the Annual Report, the Share - L’Olympia but this holders’ Mee ting Notice, the is, this year, the Management Board’s Report first time the with the draft resolutions etc.