Good evening, everyone, and welcome to the Vivendi H1 twenty twenty one Earnings Presentation. This conference will be hosted by Mr. Arnaud Debufontein, Chairman of the Management Board and CEO and Mr. Herve Philip, a member of the Management Board and CFO. As a reminder, this call is being recorded.
During the call, you'll be on listen only. However, later on in the call, during the Q and A session, analysts will have the opportunity to ask questions without any follow-up questions. I would now like to turn the call over to Mr. Arnaud de Profontaine. Please go ahead, sir.
Your line is open.
Hello, everyone. Welcome, and thank you for joining, Rey Philippe and myself today. As usual, I would like you to invite to read carefully after the call the disclaimer on Slide two and in the appendices, the information notice related to the impact of COVID-nineteen on our activities. That being said, to start with, we are happy to share that Vivendi has delivered very good results for the first half of twenty twenty one. At constant currency rate and perimeter, our revenue improved by 12% organically and our EBITA by almost 50% compared to 2020.
And even if we compare to 2019, revenue and EBITA respectively progressed by 1248%. All our businesses have been growing. Once again, we have demonstrated our ability to adapt our activities in record time with a lot of agility in this particularly tough context we've all experienced. We have also demonstrated our ability to transform our businesses and the whole group in fast changing environments, in line with the plan we have been delivering since 2014. Let me quickly review some key highlights of H1 illustrating my point.
The first one is the distribution and listing project of Universal Music Group. Everything is proceeding according to plan. In March, Vivendi's extraordinary General Shareholders' Meeting gave the green light to the proposed distribution of 60% of UMG. In June, the proposed distribution of 60% of UMG was massively approved by at Vivendi's Annual General Shareholders' Meeting. The listing of the company on Euronext Amsterdam is scheduled to take place on September 21 this year.
Please bear in mind that the Tencent led consortium already owns 20% of UMG and that the equity interest eventually acquired by Bill Achman should be between 510% Vivendi will retain 10%. The strong performance of UMG in H1 shows that the joint transformation drive carried out by Sir Lucian Grange and his teams and those at Vivendi over the last few years has really paid off. We've been able to create significant value in a sector that many predicted was fated to disappear. The second example is the accelerated transformation of Canal plus Group. Canal delivered strong performance in all segments and enjoyed even faster growth in the second quarter.
The strategy was defined a few years ago is paying off. Our global subscriber base has increased by 1,800,000 within one year and has almost doubled in five years. Canal has succeeded in transforming itself from a traditional pay TV player to a leading content and digital aggregator with over 22,000,000 subscribers in 40 countries. The third example illustrates how we are able to transform our acquisitions. Editis H1 revenue jumped by 42% compared to H1 twenty twenty and by 25% compared to H1 twenty nineteen.
Since 2019, when joining Vivendi, Editis has managed to combine economic performance, organizational changes for greater agility and collaboration with other Vivendi entities while contributing to the spread of reading and the emergence of new readers. Editis is also playing and will play a leading role in the transformation of the book industry. The fourth example is the continued transformation of Havas Group, which has been able to adjust its organization and cost structure to limit the impact of the crisis. Beyond this very specific context, the group is constantly reinventing its offers to meet with expectations of its customers. Havas continues to improve its overall performance quarter after quarter.
The fifth and last example, Prisma Media, shows our ability to transform ourselves through acquisitions. Two months ago, we officially welcomed Prisma Media, the French leader in print and digital magazines, with key titles such as Capital, Fanactual, National Geographic and Harvard Business Review. This acquisition perfectly complements our activities and will help increase our digital reach. With Prisma and Dele Motion combined, we are reaching 39,000,000 unique video viewers a month, very close to YouTube and therefore 44,000,000. Prisma's integration perfectly fits our ambition to be a leader in media, content and communication, reviling the industry players.
And Gameloft or Vivendi Village are other two examples of this transformation journey. Last word on our situation in Italy. Last week, we closed an agreement with Fininvest and Mediaset putting an end to our disputes. We welcome this positive development, and we reiterate our commitment to playing a long term industrial role in Italy. As for Telecom Italia, we will keep contributing to the acceleration of the company's transformation.
Our transformation capacity would be nothing without value creation. The plan that has been driving us since 2014 is to create value for all stakeholders over the long term. As you can see on the chart, our share price, which is an important indicator of our group's performance, has risen by 112% with dividends reinvested between June 2014 and July 2021 compared to 78% for the CAC. Furthermore, from January to June 2021, the sum of €653,000,000 was returned to shareholders through the payments of a €0.60 dividend per share approved at the last shareholders' meeting. From June 2014 to June 2021, euros 17,000,000,000 were returned to the Vivendi shareholders through dividends and share buyback.
The first six months of 2021 have demonstrated that Vivendi is moving forward and building a unique content media and communication company. Despite market uncertainties, we are excited by the road ahead. We have strong assets to succeed: the solidity of our strategic plan, the uniqueness of our integrated model, the robustness of our activities as demonstrated by our first half results and more and above all, the support of our main shareholder, the Boulore Group, providing stability over the long term. There can't be no great industrial plan without continuity and sustainability. This plan is and will remain one of constant transformation of our assets to create value for all stakeholders.
Thanks for listening. I will now hand over to Herve.
Thank you, Arnaud. Good evening to everyone. It's my pleasure to present to you our financial results for the first half of twenty twenty one. On the first table of this slide, you can see that for this half, the currency effect is more important than the scope effect. Regarding the change in currencies, the trend reversed during this first six months with the strengthening of the euro against the U.
S. Dollar. Therefore, for this half, FX had a negative impact of 400 basis points on our revenues, mostly at the UNG and Havas levels. The main change in the scope of consolidation was the acquisition of Prisma Media completed at the May. Therefore, the impact is quite small.
Also, even though the sale of the second 10% stake in UMG in January 2021 has not impacted the group's revenues, the transaction impacted our results and equity. On Slide 11, you have a summary of the key financial metrics for the first half of twenty twenty one. As announced by Arnaud, Vivendi's financial results are very strong with: first, revenues increasing above the EUR8 billion threshold with an organic growth of almost twelve percent second, 49.3% organic increase in EBITA and third, an adjusted net income increasing by 24%. Net debt amounted to nearly EUR 2,900,000,000.0 at the June 2021. Going to Slide 12 on the P and L.
First, it is worth noting that for the second time, the P and L did not benefit from the recognition of the €2,400,000,000 capital gain on the sale of the second tranche of 10% of UMG, which was directly accounted for through equity in accordance with IFRS rules. I will comment on revenues and EBITA later when I discuss the performances by business unit. On this slide, let me highlight the main changes in the P and L compared to 2020. First, the line income from equity affiliates represented a loss of €38,000,000 and notably included Vivendi's share cap of Telecom Italia's net earnings. Second, income from investments included the dividends we saved from Mediaset for €102,000,000 Then other financial income and charges were impacted by the revaluation of our stakes in Spotify and Tencent Music.
The impact is this year negative, while it was positive last year. And lastly, non controlling interest increased by €25,000,000 reflecting 10% stake in UMG's share capital. At the bottom of the table, you can see that the adjusted net income increased by 24% compared to H1 twenty twenty and by 30% if compared to H1 twenty nineteen. This result that is restated of some noncash IFRS accounting treatments is more representative of the economic performances of the group. Moving to the balance sheet on Slide 13.
In short, our balance sheet is in very good shape. The most notable changes compared to the twenty twenty year end balance sheet relate to the impact of the sale of the second tranche of 10% of UMG, leading to an increase in equity of EUR 2,900,000,000.0. Therefore, consolidated equity increased by €19,300,000,000 and financial net debt was just below €2,900,000,000 The gearing is at 15% against 30% at the end of twenty twenty. As for assets, we haven't had to take any impairment test on goodwill, and the value of our financial investments amounted to EUR8 billion. I will comment further on our portfolio of assets on the upcoming slides.
On Slide 14, beyond our consolidated assets, is managing a portfolio of investments that we can divide in two categories. First, investments accounted for under the equity method. Vivendi owns stakes of 23.75% in Telecom Italia's ordinary shares and voting rights and 32.9 in Benigere Group. After acquiring NDM Oilseine last year, Beniget became the world leader in the production and distribution of audiovisual content. Vivendi has also taken several stakes in leading media companies.
First, in 2020, Canal plus bought a 12% stake in MultiChoice, which is a leading South African pay TV company in English speaking Africa and a perfect complement to our activities on that continent. Second, we own a 27% stake in Lagardere after its transformation from Societe Uncle Mondi to Societe Unum. Then in Spain, we have a 1% stake in Telefonica and a 9.9% in PRIZA, the leading media and education company in the Spanish speaking world, which owns, among other things, the Spanish daily newspaper, El Pais. Regarding our stake in Mediaset, as Arnaud reminded you, we closed the agreement with Finnavest and Mediaset. As part of this agreement, we received a dividend of EUR 102,000,000 and sold 5% of Mediaset for around EUR 160,000,000.
This agreement puts an end to the dispute at a very low cost for Vivendi and led to an increase in the value of our stake in Mediaset. And in July, we received more good news on the litigation front. The Paris court definitively dismissed all the claims around our financial communication between 2000 and 02/2002. This latest decision and the agreement seen on Mediaset terminate two significant risks we have had been carrying for several years. Now let's move to the evolution of our financial net debt, which mainly reflects the following: first, the cash received from the sale of the second tranche of 10% of UMG in January 2021 for €2,800,000,000 after the return to shareholders for a total amount of €800,000,000 which includes the dividend paid and also the share buyback program until mid February third, the financial investments, including Prisma Media and our stake in PRIZA and the operating cash flow generated by the businesses, which amounting to EUR 700,000,000 that I will talk about later on.
At the end of half year, financial net debt landed at around €2,900,000,000 However, we should receive €3,300,000,000 from the sale of another 10% of UMG before the distribution. And also, taking into account the completion of the deconsolidation of EUR 2,000,000,000 of UMG debt, Vivendi's restated cash position would be close to EUR 2,400,000,000.0 positive. Back to the half year debt position on the next slide. Out of the 2,900,000,000 of net debt, Vivendi's gross cash position amounted to €1,800,000,000 and gross debt was €4,600,000,000 As shown in the chart in the middle of the page, the bond maturities are spread over time until 2028, and the average debt maturity stands at four point five years. In total, Vivendi's liquidity position is solid with a net debt to equity ratio amounting to 15% and total financial availabilities of around €10,000,000,000 after the distribution of UMG.
Going to Slide 19 on the performances by quarter, which highlights the variation in organic growth attributable to the pandemic. In Q2, we posted a global organic growth of 18.9%, recovering from a minus 7.9% decrease in Q2 last year. All our businesses contributed to these strong performances and delivered strong growth. Going to Slide 20 and the performances by business unit. In the first half of twenty twenty one, Vivendi's revenues reached over €8,000,000,000 an increase of more than €800,000,000 compared to the first half of twenty nineteen.
The group's margin had remained stable at 9.7 in H1 twenty twenty, which was a good performance in the context of the pandemic. In 2021, the margin has resumed its solid growth and stood at 13% this half, representing a gain in EBITA margin of more than 300 basis points. More specifically, some of the group businesses were hit hard by the pandemic, notably Havas and Editis, and H1 twenty twenty one saw a strong rebound in these businesses as well as continued growth in the profitability of Universal Music and Canal plus Now let's take a closer look at the key performances metrics for each business unit, starting with Universal Music on Slide '22. Recorded Music revenues were up 30% in Q2, driven by the growth in streaming and subscriptions, physical and licensing. The biggest factor in the acceleration of these businesses this quarter was the COVID impact in the prior year.
The second quarter of twenty twenty one also included a catch up payment from platform. Excluding this catch up, streaming and subscription revenues grew 25%. Music Publishing revenues were up 1% year on year, driven by growth in streaming and subscription, too. Excluding the nonrecurring item included in the second quarter of twenty twenty, Publishing revenue grew by 20%, and merchandising revenues grew 67%, thanks to the improved retail and direct to consumer sales. On the next slide, we focus on margins.
I say that UMG's Alcer accounts will be also published tonight simultaneously with Vivendi's funds. The margin expansion was largely driven by the revenue growth on cost control. The EBITA margin increased from 14.8% in H1 twenty nineteen to 19.7% in H1 twenty twenty one, representing a steady growth of four ninety basis points. Going to Slide '24, you can see all the UMG's key financial figures I already mentioned. In addition, the bottom of this page shows UMG's CFFO of EUR $370,000,000 in H1 twenty twenty one.
After cash flow generation being impacted by increased content investment in H1 twenty twenty, UMG's cash generation increased by €310,000,000 in H1 twenty twenty one, reflecting improved operational performance. And we still believe it is worth continuing to invest in music content as the right opportunities present themselves at a justifiable price. Moving to the very good performances delivered by Canal plus starting with the subscriber base metrics on Slide 26. After gaining 3,000,000 subscribers and crossing the 20,000,000 mark, thanks in particular to the integration of M7 in September 2019, Canal plus has been continuing the same dynamic trend of increasing its subscriber base in 2021. There are almost 1,800,000 additional subscribers compared to 06/30/2020, and Canal plus reached a total of 22,000,000.
Subscribers outside Metropolitan France now represent 60% of the total base, reflecting the increasing strategic importance of Canal plus international activities. In more detail, the graph the left breaks down the growth of the international subscriber base After the successful integration of M7 in 2019, all zones continued to grow in 2020 and 2021. As of 06/30/2021, Africa almost reached the 6,000,000 mark, driven this half by the broadcasting of Football Championships Euro and Copa America. In April, we also started operation in Ethiopia, the second most populous country on the continent. Nine local language channels have been created and off to a promising start.
On the right, the subscriber portfolio in Mainland France also showed net growth of 349,000 subscribers over twelve months, driven by OTT offers and the exclusive distribution of channels such as BIM Sports and Disney plus The offer was further enhanced by STARZPLAY, illustrating Canal plus ability to aggregate the best content and application on the market and driving high customer satisfaction. Turning to Canal plus Group's key financial figures on Slide 28. Canal plus revenues were €2,800,000,000 up 4.7%. Internationally, revenues grew by 4%, thanks to the contribution of Africa and the significant increase in the subscriber base. Second, in Mainland France, revenues grew slightly, thanks to Free TV, which benefited from the catch up in the advertising market and a good performance from sinews.
Studio Canal had a strong half year with revenues up 41%, driven by very good performances from its catalog and TV series. Profitability was up 10% compared to H1 twenty twenty despite a tough comparison base as in H1 twenty twenty included savings related to the disruption of sports events and films and television content shooting. Finally, cash flow generated by Canal plus Group was €457,000,000 in H1 twenty twenty one compared to €653,000,000 last year. This unfavorable evolution is largely due to the deferral of certain disbursements regarding sports rights and film last year. That being said, the EBITA conversion rate remains solid.
Moving to Slide 30 with Havas, our Communications business, and a focus on the two key financial indicators of Havas. The slide on the left shows a sequential improvement of net revenues. Since the strong impact of the pandemic in Q2 twenty twenty, quarter after quarter, the hard work of Ava's team has led to a strong recovery with a growth rate of 15.8% in the second quarter of twenty twenty one. Then on the right, you can see the dynamic rebound in the first half EBITA. This graph confirms that Havas is gradually returning to a normative profitability.
This improvement is attributable to the cost adjustment plan introduced in the early stage of last year's pandemic outbreak onto a strong recovery in business momentum. These financial performances demonstrate the crucial role of Havas and communication agencies as a whole in providing strategic support to brands. On the next slide, let's have a look on the breakdown of net revenues of Havas. First, on the left, you can see that the health care and wellness sector has remained the most dynamic and important sector at Havas. Havas has a very strong market position in this business, particularly in The United States.
Second, on the right, Europe represented almost 50% of Havas activity, while The United States stood at 40%. Turning to Havas Group's key figure on Slide 32. The net revenues of Havas Group reached €1,000,000,000 on organic growth of 7.3 year on year. Acquisition contributed positively by 1.2% and currencies had a negative impact of 5.4%. Havas progressed in all the regions.
The biggest contributors were Europe and North America, both reporting a double digit growth. And to complete the overview, the operating cash flow CFFO, which, of course, is usually negative at this period of the year, also improved strongly. Havas Group is embarking on the second half of twenty twenty one with confidence, thanks to the sustained business levels and innovative commercial offers such as user experience, e commerce and meaningful media experience. Going to Slide 34 on Editis. With a very good performance over the last twelve months with a marked rebound in sales since Q3 twenty twenty and even an acceleration in H1 twenty twenty one, This performance is not only the result of a favorable basis of comparison with the first half of twenty twenty and the first lockdown in France, since Editis revenues jumped by 20.5% compared to the first half of twenty nineteen, as we can see on the next slide, where you can see all of the Editis' key financial figures, Reflecting the solid commercial performance, both EBITA and CFFO improved dramatically in H1 twenty twenty one.
EBITA was €10,000,000 compared to an operating loss of €21,000,000 and operating cash flow improved from minus €76,000,000 to minus €23,000,000 Let me now give you the relevant information for our smaller consolidated assets. You have more figures in the appendix. We finalized the acquisition of Prisma Media on May 31. As such, its contribution to Vivendi's H1 revenues and result is not significant. Revenues of €29,000,000 were consolidated by Vivendi in H1 twenty twenty one.
GEMNOFT sales amounted to €120,000,000 in H1 twenty twenty one. Its product mix significantly improved during the first six months of 2021, thanks to the successful launch of two new games in April on Apple Arcade. Vivendi Village ticketing activities experienced a significant recovery following the announcement of the lifting of health restriction in Q2. In total, 8,200,000 tickets were sold by SeaTickets in the first half of the year. New initiative brings together the Dailymotion platform and Groupe Vivendi Africa.
Dailymotion is now the leading French video platform, and GVER has been building a broadcast Internet network in Africa under the CANALBOX brand. It is currently present in five countries and expects to continue its strong growth, supported by an ever increasing demand for very high speed home access in Africa. Finally, this slide gives you the six months pro form a figures of Prisma Media. These data are presented for illustration purposes only. This concludes the presentation of our first half of twenty twenty one results, which reflects a very strong performance of our businesses.
Please note that we will release our Q3 twenty twenty one revenues on October 21 after market close. Thank you very much for your attention, and we are now ready, Arnaud and myself, to take your questions.
The first question is coming from the line of Omar Syk from Morgan Stanley. Omar, you're unmuted. You may now go ahead.
Good evening, everyone, and thanks for taking the question. I've got three, if I could. If I could start, Elve, with the one off in Universal Streaming revenues in the quarter, could you confirm the drop through to profit? I think it's EUR 33,000,000 of one off revenue. I just wondered how much of that revenue converted to EBITA in H1?
That's the first question. Secondly, I wondered if you could maybe, Alun, give us an update on where we are in the Pershing Square. Do you know at this point whether they'll buy 5% or 10%? And do you anticipate holding the 10% of Universal that you'll be left with post delisting for the long term? That's the second question.
And then thirdly, either Arne or Herve, a question on your financial capacity. You mentioned in one of your slides that you've got up to 10,000,000,000 of financial flexibility. You're obviously currently net cash. Could you maybe just talk about your priorities for the business going forward in terms of buybacks, M and A or investment in the business? Thank you very much.
Let me take the second question. It's Arnaud de Poufoten speaking. Hi, Omar. On the question for Pershing Square, we announced that we were expecting to complete an agreement with Bill Akman before the mid September, September 14. So I can't be any more specific more specific at this stage, but we are working.
As regard the two constructively, should I say. As regard to 10 remaining percent, we don't have a specific reason as regard to the remaining 10% that is going that are going to be held by Vivendi.
Maybe to answer the first question on the onetime item, it's a catch up payment. So the impact on the EBITA is more or less in line with the percentage of profitability of Premium Subscription.
As regards to the third question, which is our financial capacity. Well, since 2014, we always say that in the context of our strategic agenda, the resources available to us are going to be used in the interest of value creation. And we don't have any specific objective at this stage, but that's going to be a combination of obviously organic growth. Point number two, bolt on acquisition in terms of M and A. And last but not least, we have had this share buyback agreed in the context of the AGM, which is going to be third lever.
So that's the position as it is. And we want, obviously. And obviously, we have the financial management of the company and the decrease of the debt.
Thank you very much.
Thank you so much for your question, Omar. And the next question is coming from the line of Adrian de Saint Helaire from Bank of America. Adrian, you're unmuted. I may now go ahead.
Thank you very much. And I have a few questions as well, please. Good evening, Alno. Good evening, Herve and the whole IR team. So you've just answered Omar's question about how you might split the capital allocation.
I'm just curious in terms of sectors within Vivendi, what are the sort of priorities between books, between games, between pay TV or advertising? If you could try and maybe put this in order, that would be quite useful. Secondly, on Canal plus can you give us a sense of what you think about any improvements in profitability in the second half of twenty twenty one? Will you expect that it will follow the same trend that you saw in the first half? Or are there any other moving parts?
And then last question. So you've disclosed that you own a 1% stake in Telefonica, which I presume you invested in last year. Can you tell us the rationale for that investment? What is it that you're trying to do with them given that you were a shareholder before? I think you sold your stake and you bought one again.
So help us understand, please, the rationale for that investment. Thank you very much.
First question. I have read that your one of your last research and the title was Prisma, A Little Bit of a Destruction, if I do recall. So, you know how I'm very keen in learning from your research. As regard to sector prioritization, I will not give you any specific. What we want is to build an industrial media content and entertainment group.
You know our different line of business. We step by step are building an industrial winning formula in all the different initiatives between all our line of businesses. To give you an example, we're currently having within Groupe Canal more than 10 projects, which are coming from initiatives triggered by Editis. And you remember that not only as regard to Editis, we truly believe in the capacity to have a successful story in value creation in the book industry, but also the books, more than two third of creative ideas in terms of TV series or film production are coming from creative ideas on books. And so we are playing with this kind of a winning formula.
So no very specific priorities, but very in-depth attention about the opportunities which may be available to us and with smart resource allocation, capacity to feed our ambition in terms of writing and delivering on our ambition by organic investment and M and A. But let's do consider that all the businesses we are in today are businesses which are part of our strategic agenda and within which we'd invest in any shape or form if and when the opportunity arise. And let me restate that we'll do that in applying strict financial discipline. I will answer also your third question, which is about Telefonica. We are good in terms of building our strategic agenda in French speaking territories.
We are good in terms of building our strategic agenda in English speaking countries. We want to increase the exposure to Spanish speaking territories. We have taken a stake in PRIZA early this year. We have a strong position in the production industry with bamboo productiones. We have a strong presence with Havas led by Alfonso Rores in Madrid and covering also South America.
And as regard to Telefonica, it's a story which did start, you're absolutely right, in summer twenty fourteen because we took the stake of Telefonica in Telecom Italia when we complete the transaction on GVT, for those who have knowledge about the story of Vivendi. And we built a relationship. We had to dispose of the stake based on CADE regulation. CADE is the Brazilian antitrust. But Telefonica is a key player in Spain and other territories, but mainly in Spain.
We do believe on these opportunities that we see arising in terms of building bridges between telco and media operators. That has been one of the basic reason of the position we're in, in Italy. So for us, it's to be a shareholder and to have a strong relationship with a very talented team at Telefonica and providing with option in the future. And that's the reason why we wanted to build again after have been received the clearance from CADE. We wanted to rebuild this stake in the company.
For instance, Telefonica is one of the shareholder of PRIZA and in the different initiatives we're currently working on because, again, every investment on our side is based on, first and foremost, an industrial rationale, which has to be reinforced by financial perspective. But in financial perspective on their own right is not enough. We do things and we've got stake in operation where we can see opportunities on the long term with a kind of industrial approach. And this is the reason why we have this stake in Telefonica. I hope that I did answer your question, Adrian.
I'm going to hand over to Herve.
To answer the question on the second half of Canal plus As you imagine, Vivendi doesn't give any guidance on the full year. We are still in a current and temporary context, which is complicated. There is little visibility. And more specifically for CANAL plus some important element are still pending, such as the media chronology, the financing of cinema, the Ligue one, right, and so forth. We are very satisfied with the results of CANAL plus and the good work which has been done, especially in terms of costs, but I will not give you any more precise guidance.
Thank you.
Thank you, Atriene, for your question. The next question is coming from the line of William Packer from Exane BNP Paribas. William, you're unmuted. I may now go ahead.
Hi there. Many thanks for taking my questions. Firstly, thank you for confirming the date of the UMG CMD. Could you give us a little detail on what to expect? For example, will there be new financial targets?
Any confirmation or color there would be helpful. Secondly, another half of very healthy profit progress at UMG. If we exclude the one offs which we've already discussed, could you talk about how sustainable that profit improvement is? My understanding is the business has been benefited from some pandemic related savings. So to what extent are they an inverted commas one off?
And then finally, The UK in The UK, the committee from the Department of Culture had published a report on the future of the music streaming industry and made various recommendations that even force could bring some changes to the current distribution of streaming revenues to industry stakeholders. I wonder if you could just share your initial perspectives on that report and whether it's likely other countries could follow suit such as The United States or European Union. Thanks.
Okay. Well, it it was that we will have a a Capital Market Day on on Universal Music on the fifteenth of of August. Invitation will be launched by by by Universal Universal Music. And it will be the occasion for the management of Universal Music to update on the business and to give ideas on the future and what could be their targets or their financial targets. For the profits and the growth of the profit, if you relate it to the specific OTIs we add this semester,
I would say.
First, in my view, we have very often such good news for Universal Music. I don't remember any year in which we didn't have such onetime positive impact, which are generally related to the resolution of old problem or situation in which some players don't pay the royalties they will have they would normally have to pay. So this being said, the growth in the profitability at Universal Music relies largely on the operating leverage. And very logically, when you have such an important growth at the top line and you have some sort of fixed cost and you have a very good operating leverage, which is the case at Universal Music as you have seen this year. Thank you.
Do you want to take it on
The UK? I will take The UK with a great pleasure. So as regard the point you're raising, William, the report from the Select Committee is on the advisory and the government isn't required to accept the recommendation and in many cases doesn't. But at this point, it's not certain that any legislation will be brought forward. But so in that context, at this point, it is far too early to speculate about whether or what the CMA might investigate and let alone what conclusions would be.
But to put your question in the context, since I had the great pleasure to join Vivendi in 2014, as regard to the logic and the supply chain within the music industry, there's been always discussion as regards to the relationship between the different stakeholder. The only thing that I'd like to say is in that context, what one of the thing and one of the key USP of Universal Music Group and which is lived on every day by Sir Lucian Grange. And his team as Universal Music Group is the respect of creative artists. And when you see the turnaround of the industry, when you see where we are at today compared to where we were in 2015, I think part of the winning formula has been to be the number one and the most creative music company. And to get this attraction capacity to build a strong and long term sustainable relationship with the artist.
There is trust, but there is also common interest. And I don't see in any industry sustainable growth without the capacity to define an agenda and a way of doing things with an alignment between the different participants. So, I do see on the short, mid and long term in every aspect of value creation and relationship between the different players in the industry, an approach that would destroy this kind of alignment between those stakeholders. And I take the opportunity of your question of UK to reiterate what has been my point in different circumstances. And we discussed in the past the relationship between Universal Music Group, for instance, and digital streaming platform and many other situation.
But I remain convinced that there is kind of a common agenda and there should be a kind of alignment between the different players within the industry and that is going to be the case. Thank you.
Many thanks.
Thank you, William, for your question. And the next question is coming from the line of Julien Roch from Barclays. Julien, you're unmuted. I may now go ahead.
Usual three questions. The first one is 20 in 2019, 106,000,000 of UMG content investment were purchased of Catalog Eri told us during the results call. In 2020, UMG spent 1,500,000,000.0 in content. If we assume broadly the same ratio that in 2019, there's another 900,000,000 of catalog. So I wanted to know how much did this 1,200,000,000.0 of investment contribute to UMG organic in h one?
That's my first question. The second question is, how would you get 10,000,000,000 of financial flexibility? You're gonna get 2,400,000,000.0 of cash post distribution in sales of UMG. That's a 7.6% gap, and EBITDA post UMG distribution should be 800,000,000.0. So 10 times gearing seems high to me.
And the last question is, how much was the one off in q two in music in million euros? Because Omar said 33. I calculated 50 VR, the indication you get on recorded and 43 VR indication you
get on streaming. I know it's
a small number, but we might as well get the right number.
Your first question is on the contribution to revenue and EBITDA for the investments which we have made last year. First, it's important to say that when we expand our extended deal, which is with an artist with whom we are already working. There is no specific revenue impact. On the other hand, there is an EBITA impact when we fully acquire Publishing Catalog and there is no longer royalty expense to that artist. And for some of the deals closed in 2020, the rights come to UMG over a period of time.
And thus, they are not completely on entirely reflecting in the 2021 results. But we continue to believe that it is a very good thing to invest in content and to take opportunities when they come at to deal them at reasonable and justifiable prices. The second the third question on onetime item in the second quarter of twenty twenty one, the catch up payment in streaming and subscription was EUR 41,000,000. Your second question was referring to our financial liabilities of EUR 10,000,000,000. We've given this figure considering the net cash we would have at the after the UMG distribution plus the value of the financial asset and liquid assets we have.
And we arrive very easily at EUR 10,000,000,000 availabilities and possibilities. I suppose, obviously, that we could, I would say, sell some of our stakes to take such an amount of opportunities. But if we have the stakes, we could have also the means to make operation with that. So that's why the EUR 10,000,000,000 is quite easy to calculate.
Thank you so much, Julien, for your question. The next question is coming from the line of Matthew Walker from Credit Suisse. Matthew, you're unmuted. I may now go ahead.
Thanks a lot. Hope you can hear me. Three questions, please. The first one is you mentioned UMG had repaid the debt to Vivendi. What net debt will UMG list with, please, if you could just explain that?
The second thing is, obviously, you know, one of the reasons the the shares have retraced since the announcement on the 60% distribution is people are worried about what's gonna happen to the stub price of Vivendi, excluding UMG. Why not protect the value of the stub by saying that you're gonna do a buyback? Otherwise, you may end up with a situation where there's a there's a big dislocation and the stock price will fall, you know, really dramatically. Third question is, what's happening on football vis a vis Amazon? You mentioned that you weren't gonna broadcast the rights when Amazon when Amazon got their rights pretty cheaply.
Can you update us on the football situation and what your intention is with Ligue one rights up until 2024? Thanks.
The first question on the UMG debt. Obviously, we have in the figures roughly EUR 2,000,000,000 of net debt, which is deconsolidation of the debt from UMG at Vivendi level. So it would mean that at the same time, UMG will have a net debt of roughly EUR 2,000,000,000.
Well, as regard your question for the football rights, Well, as you have read, it's a complex subject and I can't express myself as some legal situation are underway. But we at Vivendi obviously fully support Maxime Sada, the Canal plus CEO, in his position, which is very factual, to be paying EUR $332,000,000 for two games of French Ligue one in a context where Amazon will pay €259,000,000 for eight games. Well, as a matter of fact, we've got a problem, and that's the reason why we are very determined to defend our interest. What I know, nonetheless, is over and above this French Ligue one, what I know is that Canal plus will have on screen, on air for subscribers two of the best games every day of the Champions League, which is coming back on Canal plus and we're going to have the best game of Europa League. We have great results in English Premier League.
We love the English Premier League on Canal. We've got the Rugby Top forty, which is a fantastic championship. We've got Formula One, which is going from strength to strength in terms of viewership rate. We've got Moto Grand Prix, fantastic. We've got Golf.
We've got Box ing. And in the context of this wonderful sport offering, we've got the generalist format of Canal plus with movie, TV series, documentaries, program for young people. And we're confident that whatever happens on the Ligue one in France, we have a solid offering, which is second to none in the context of the French market.
On the question of the possibility of a buyback after the distribution, yes, this is absolutely a possibility for the Management Board to launch a buyback program on the market after the distribution. Nothing has been decided yet. Indeed, it will be made in due time. But the General Meeting of Shareholders approved as a possibility to make buyback and gave the authorization to the management board to do it. So this is clearly a possibility to do and to launch it after the distribution.
And I add to that, that the authorization which has been given to the management board is with a maximum price of EUR 29. But it doesn't mean obviously that the buyback price would be set at this price. And conditions to launch any buyback program would be examined by the Management Board and will notably depend on market conditions. Thank you.
Thank you.
Thank you, Matthew, for your question. The next question in the queue is coming from the line of Christophe Cherblanc from Societe Generale. Christophe, you are unmuted. I may now go ahead.
Good evening, Arnaud. Good evening, Herve. Three on my side, please. First on the Pershing Square situation regarding the potential leftover. What is your plan?
What I mean by that, are you going to look for a core investor? Would you be willing to place the leftover potentially ahead of the listing or just at the time of the listing? That's the first question. The second question was on Canal plus How do you account for the dispute? What I mean by that, are you still charging in your P and L a provision for the sublicensing contract we've been and not paying the money?
Is that the way you're accounting for the situation? And also on football, what is your best estimate of the football fanatic hardcore base, which is at risk? I'm sure you've run a scenario analysis. And the last one was on Havas. Herriot was mentioning a return to normative profitability.
What do you mean by that? Is it low teen margin, mid teen margin? Any clarity would be super helpful. Thank you.
I
will take the first one on Pershing. So we are discussing and working with Pershing. And we it's going to be as disclosed between 5% to 10%. If there were a percentage remaining available, we've got high demand for this remaining potential remaining stake. So we're still on plan.
We in the under the circumstances of not having the 10% with Pershing, which is not the favorite scenario, we have high demand to be able to match the 10. If we were in any shape or form not completing that, we've got also the possibility to keep and to get and to have this potential few percentage available for us on the market post
listing. Herve? Well, on Canal plus obviously, the situation is evolving. And as you have seen, Canal plus has won an important trial in court last week. So there is no specific provision in the account for that.
I would say the contrary, the fact that Canal plus will not be obliged to pay for the sublicense to be in spot can be a sort of savings made by Canal plus in the future. This being said, we have to calculate and to see what could be the impact on the subscriber base of such new situation for football. But frankly speaking, we do not expect to lose a lot of subscribers. As Arnaud just mentioned, all the sports that are available on Canal plus and especially the Champions League for football, which is an important driver subscribers in our view. For Havas, we what can be the margin or the normative margin at Havas.
So let me say that we are very satisfied with Havas and the possibility to adapt the cost base to new situation and to see a return to profitability. And we believe that it can be back at the end of twenty twenty two to a normative profitability, which is plus 10% EBITA in which was the case in 2019, I believe.
Thank you.
You for your question. The next question in the queue is coming from the line of Richard Uri from UBS. Richard, you're unmuted. I may now go ahead.
Good evening, everyone, and thanks thanks for the call. Three questions from myself. Just on the streaming revenues, obviously, they have benefited or should have benefited from some streaming plus deals that came through in the first half. I just don't and they should also benefited from a, obviously, cycling of the advertising environment from last year. So I'm just trying to get maybe a little bit more color in terms of streaming plus paid subscription and ad funded subscription and what was driving the growth in the second quarter, that that would be helpful.
The second question goes back to, I think, a number of questions about Canal profitability in the second half of the year. I think I was right in thinking that the second half of last year benefited from savings from football rights. So should we assume that those savings accrue in the second half, or have they been offset by additional rights that you've purchased, which could obviously impact the profitability half on half, you know, as we look at the second half? And then just lastly, I don't know if you can update us in terms of when we're gonna get a clearer picture of the actual physical offer structure and the mechanisms for the demerger and the pricing of which the scripts will be set to demerger. That would be helpful.
Thanks.
For the first question on the streaming subscription trends in the Q2, we had first in the Q2, frankly, very good base effect due to the level of sales in Q2 twenty twenty. We had a good impact in the ad funded part of streaming business indeed because the value of ad is much better this year than it was last year. And we have also the fact that in we have the effect of the new contract, which have been paid which have been completed in the past with TikTok, with Facebook and so on different new contracts. I think this is interesting to say that probably during the Capital Market Day at the August, you can have some additional color on the growth to come in streaming and subscription for Universal Music. For Canal plus frankly speaking, you have plus and minus in different aspect on the cost of Sports last year on this year.
So this is why this is quite difficult to predict what could be the evolution of profitability in the second part of this year. And you see, we have already done an important job at Canal plus in terms of cost control, in the central cost, I would say, of Canal plus also in the content cost. So we are satisfied with that. It's difficult to predict for the second part as many factors can have an influence of the final level of the cost. I I'm not sure to have well understood the third question on the demerger costs.
No. Just trying to so just on the third question, just trying to get an understanding of when we're gonna get more details of how the split will physically work when we get through to the September 21 and how the pricing mechanisms will work?
Well, it will be more clearly explained in the prospectus and so at the September. But normally, on the first day of trading on September 21, each shareholder of Vivendi will receive a share in Universal Music, which will be tradable at on the market on the September 21, even as mechanism of Reglement de Raison will give the shares only two days later. But the shares will be tradable on the market on the first day on September 21. Then there will be an indicative price which will be given by us and the bank the day before. And then we'll have a sort of auction in the market in the morning to determine the first listing price of Universal Music.
Details will be given later on that, but this is broadly what I think the things will happen on this first day of trading of Neurofemuzik in Amsterdam. Thank you.
Thanks. Can I just ask a follow-up to the second question on Canal? Can you just go through the pluses and minuses and so we can understand how how the numbers may pan out in the second half for Canal?
No. I'm sorry. I cannot answer this question.
Okay. Thank you for your question, Richard. The next question from the queue is coming from the line of Connor O'Shea from Kepler. Connor, you're unmuted. I may now go ahead.
Yes, thank you. Good evening, everybody. Thanks for taking my questions. Just a couple of questions. Firstly, just to follow-up on the legal uncertainty.
Could you just clarify at least what you understand to be the expected timing of any decisions on outstanding litigation between yourselves and and BN and or or the league when we could expect a decision. I imagine it's before the start of the next season. But if you could just confirm that, that would be great. And then on the publishing side, could we have an idea of just the seasonality? You gave some pro pro form a numbers for Prisma for the six months in terms of revenues and EBITA, but could we have an idea of the full year earnings are sort of second half weighted in a normal year?
And also on Editors, you had very strong growth in the distribution side. Just wondering what's driving that, and is it higher margin? And then a final question on Universal Music. Just in terms of the streaming growth, obviously, we've seen some of the platforms, Spotify and in particular, Tencent Music. Obviously, they've got some regulatory problems in the domestic market, but share prices have come down a lot over the last four, five months.
I'm just wondering, there any read across to Universal's business in terms of what kind of growth we could expect going forward? Or are you comfortable with the level of growth you're delivering at the moment?
Thank you, Konar, for your Just something I'd like to say to Richard, just that the question that has been asked would be answered by our IR team, but we've got a specific rule of the game during this analyst call, which is really to stick to the three questions maximum. So IR team is going to be there to answer your question, Richard. So Conor, as regards to your question with as regards to the sequence of events and the timing of the litigation, I can't answer the question. We've got different process involving different players, and I can't be specific about what is going to be happening. Probably get further news in terms of what's going to be the next step by close of this week.
Okay.
Maybe question number two, Jose? It was a
question on publishing and the seasonality. We have given in the slides the impact on publishing and the profitability, which was linked to the first half of twenty twenty. So I have not made the exact calculation on that. You asking question on publishing on in music or publishing in
Sorry, sorry, sorry, publishing for Editis, please.
On Prisma.
On Prisma.
What we can say is that in this publishing, be it magazine publishing or book publishing. And in terms of magazine publishing, you've got the physical distribution, you've got the advertising market and you've got the fantastic transformation of Prisma Media in terms of digital audience, those are businesses which are second half geared. So we got a good result on Editis on the first half, but really you've got the kind of businesses which are delivering the big chunk of profit during the second half of the year. And as regards to your comments based on distribution, with Interforum, which is the distribution company of Editis, we've got the business of Editis, but we've got also the business of third parties. We've got strong relationship with clients, which are our partners.
And this distribution operation has been fed by strong appetite for readers to go in the different retailing space and to buy books. So all the distribution activity has been fed by this appetite, which is music, obviously, to our ears.
Herve, on the Universal? The question on Universal was referring, if I understood well, on the decline in the price of Spotify and Tencent Music. And some, I would say, some years, it's a very positive impact. Some years, it can be more negative. It has been the case this year.
But this has only impact, I would say, EBITA, in fact, because this is in other financial and profits. So it impacts only the level the net result or not the profitability at the operational level. So we'll see.
Okay. Understood. Thank you.
Thank you, Connor, for your question. And the final question for today is going to be from the line of Tom Singlehurst from Citi. Tom, you're unmuted. I may now go ahead.
Thank you very much. Yes. Tom here from Citi. Thank you for taking my questions. I just wanted to go back to, I suppose, the Pershing Square deal and the and the decision to sell to financial buyer.
I mean, obviously, it's about getting the biggest price. I do understand that you want to maximize the price, but it struck me that it would also be useful having, you know, some form of strategic plan. I'm just sort of wondering whether, you know, given there's been this hiatus with this deal, whether it would be better to hold back a a share of that, stake sale and and find a strategic buyer of the stake just to sort of give you a sort of an incremental, strategic, straight structural, straight operational boost, which presumably Pershing Square doesn't bring bring you within UMG? So that was the first question. The second question was very specifically on China and the change in regulation with respect to to the music deals that were struck there and the the the removal of exclusivity for Tencent.
Does that make any difference to to you guys at all? And then the very final question on Editas. Stunning performance across the first half. Just interested in why the drop through was relatively limited.
I think
there was €90,000,000 of additional revenue year on year, but only €30,000,000 of additional EBITA. Is that just because of seasonal buildup of investment in ahead of the second half? Or is there something else going on? Thank you very much.
Well, thank you for your question, Tom. Number one, we always say that in terms of the process, we had some interest expressed by either industrial potential partner or financial partner. And there are two things, which has regarded to the discussion and the agreement we had with Bill Ackman, which is number one, the price. And price is obviously a criteria that is second to known. And the second thing is in terms of the structure of capital, in terms of the nature of Universal Music Group.
And when you see the key financial sponsor of Pershing, it gives an exposure to The U. S. Markets. There are great families which have invested in the vehicle and it gives this kind of visibility in the context of The U. S.
Market. So those have been the criteria through which we came to the conclusion that we would like to have Bill Ackman and Pershing as part of our story. As regard to China and the evolution, we are currently reviewing the order to determine any effect on our business. But of course, as previously announced, we separately license with the digital service providers in China. We remain committed to helping support and growing sustainable music market in China and confident in the Chinese market's potential.
And as regard to the UNG's joint venture label with Tencent, we are reviewing the order and both parties are committed to continue the growth across the music market in China and we believe that JV label will deliver new opportunities for artists and increase choice and experiences for music fans. Eric?
The last question was referring to Editis and the drop through of between the increase in revenues and the EBITA. We are you have to consider that you have a very important seasonality in this business. And profitability is much more on the second half of the year than in the first one. This being said, you have seen very interesting growth at Editis, and we are very confident for the rest of the year in terms of profitability.
Very clear. Thank you.
Thank you, Tom, for your question. And there are no further questions in queue. So I'll hand over back to your host to conclude today's call.
Well, I would like to thank you for your attention. Thank you for your questions and very much looking forward for the next six months. I wish you all the very best and a great summer. And look forward to sharing with you in early twenty twenty two.
Thank you very much. Have a nice evening and good summer. Bye.
Thank you everyone for joining us on today's call. You may now disconnect your handsets. House, please stay connected.