Operator: Good day and welcome to the Vivendi (Q4 2012 Conference Call). I would now like to turn the call over to Mr. Bonamy. Please go ahead.
Jean-Michel Bonamy - EVP, IR: Good morning, ladies and gentlemen. Thank you for joining us today for Vivendi's Full Year 2012 Earnings.
Jean-Francois Dubos, Chairman of the Management Board and Chief Executive Officer and Philippe Capron, Member of Vivendi Management Board and Chief Financial Officer. This presentation will be in English with a simultaneous translation. This call is webcast on Vivendi.com where the slides are available for downloads.
We invite you to read the important legal disclaimer at the end of the presentation on Page 54. The full year 2012 financial report and consolidated financial statements will be available on our website (as of today) after market close. You will be able to access a replay of this call for 15 days also on our websites and as usual, this presentation will be followed by a Q&A session.
Now I have the pleasure to introduce our CEO, Jean-Francois Dubos.
Jean-Francois Dubos - Chairman: Good morning, ladies and gentlemen. Pleasure to be presenting to you the Vivendi annual results along with Philippe Capron, Chief Financial Officer and the member of the Management Board. Good morning Philippe.
Despite the challenging economic environment, (multiple speaker) reached their outlook in (2012). This with new market conditions and the intense (multiple speaker) subsidiaries also reorganized their operations and put in place cost reduction program. Activision Blizzard, the (multiple speaker) of successful launches.
So far, (multiple speaker) business model excluding the implementation of a voluntary departure plan in order to maximize its value and stabilized its customer base. SFR was the first operator to offer 4G mobile network generation for both private (indiscernible) and company.
Maroc Telecom recorded strong growth in its international activity. GVTs development was once again confirmed with its network expansion and pay-TV offer. This major strategic transactions (multiple speaker) 2012.
Exhibition of EMI recovered music reinforce Universal Group’s position as worldwide leader in music plus strengthened its position in free-to-air TV in France and in Poland. It consolidated its presence in pay-TV while (operating) in the free-to-air market. These transactions are in line with Vivendi’s desire to strengthen its position in midyear and content.
Vivendi has all the assets needed to assert itself as a European bond global leader. Our ongoing strategic review was defined precisely and as I (know) and appropriate, the right path to increase the overall Group’s value and to best serve shareholder interest.
Looking at the first slide, we are pleased to demonstrate that Vivendi delivered on its commitments in 2012. In terms of operating performance, our businesses achieved results in line or above initial guidance.
Adjusted net income was slightly above upgraded guidance. Net debt was well below guidance.
Concerning acquisitions, the successful disposal of our EMI assets required by Brussels and the strategic acquisitions by Canal+ in Poland has been causes for satisfaction. Last but not least, the process regarding the strategic review is ongoing.
This slide is self-explanatory and gives you the key numbers for 2012. I will let you read them for yourself. (Renews) 28, 29, EBITDA, adjusted net income, CFFO, net debt.
As a result of these figures, the management Board will propose EUR1 dividend per share to our shareholders payable in cash on May 17.
We were very active in 2012 including acquisitions announced in 2011.
As a result of the EMI deal, we have reinforced our worldwide leadership, specifically in the three main markets, U.S.A., Japan, Germany. We are present in 77 countries now. We are developing our presence in digital platforms, which are by nature transnational and the disposal of the EMI assets is a success with one-third of EMI revenues sold for almost of the initial price of the acquisition. With Canal+ we have successfully re-launched the two free-to-air channel, D8 and D17.
Meanwhile in Poland we have created a number two pay-TV operator and gained the foothold in the free-to-air markets too.
Litigations, we are very committed to protecting shareholders interest at Vivendi. We already know our opposition on Liberty Media lawsuits and the securities class action, all debates since 2002.
You can read the slide for yourself and Philippe will come back to this later if necessary.
In short, Vivendi strongly believes that there are many grounds for appeal and continues to pursue all available path of action to return to a verdict and reduce the damages overall.
If you come back to the element of our strategic review, I confirm that we want to strengthen our presence of media and contents while unlocking value for SFR.
We are convinced that having a strong presence in content in a strategic asset in the digital world, we at Vivendi have the opportunity to build a worldwide European-born media champion, thanks to our leading positions in games, music and audio/visual.
We have great brands and a unique expertise. The objectives of this strategy are enhanced growth with a focus on shareholder return and a higher valuation of the total group. Our aim here is that with the refocusing organization and lower costs, there will be no justification for the conglomerate discount.
We have a strong commitment to unlock value for SFR. We will continue to invest in SFR to boost growth. We intent to remain in and develop our premium customer base while increasing segmentation between low cost and premium offers and leading the market on 4G. We are realigning operations to manage costs down, creating savings of EUR500 million. In parallel, we are fitting certain strategic alliances in networks and industrial partnership.
To conclude, ladies and gentlemen, Vivendi is focused on the following key priorities for 2013. Cash flow generation in a challenging environment, adaptation of our telecom businesses to this environment, integration acquisitions and delivering synergies, strengthening in media and content is our focus for 2013 while continuing to unlock value for SFR and finally, creating value for Vivendi shareholders.
Thank you and now I will turn over to Philippe.
Philippe Capron - CFO: Thank you, Jean-Francois. Good morning everyone. It's a pleasure to be among you here to present our annual results. As we all expected 2012 proved a very challenging year because of the economy especially in this country, but also because of the specific challenges facing SFR given the market developments which occurred last year.
In light of this, I'm proud to report that our businesses all delivered very satisfactory performances and it's fair to say ahead of expectations. Adjusted net income at EUR2.55 billion is EUR400 million below the previous year, but if you take out the changes in perimeter (indiscernible) SFR, which relates to many years ago and the restructuring plans which were implemented at Maroc Telecom and some of its African subsidiaries as well as booked for SFR even though the plan itself will unfold only this year, then you have an adjusted net income of EUR2.86 billion which is not so far from last year's performance. So, overall, in the face of everything which happened, I would dare say, this has been a good year.
Why? Well, it's been – it's fair to say it's been driven in large part of the excellent performance of Activision Blizzard driven by the strength of their franchises. I will get back to this. But also SFR delivered better than expected results with an EBITDA down 10.6%, whether we had guided the market initially somewhere in between minus 12% and minus 15%. Strong commercial cost control and cost control in general has been the main driver to this performance by SFR.
Maroc Telecom has also been an excellent performer. I’ve guided the market to expect after, it’s fair to say, a dismal 2011, another couple of difficult years before we destabilized Maroc Telecom but actually it has destabilized already in 2012, and we have every indication that this will continue in 2013. So we are extremely happy with the way the Company has reacted to yet another challenging competitive environment.
EBITDA margin at GVT has reached a new record and growth continues their unabated in spite of the change in VAT we took late last year. Additionally, all Vivendi businesses generated strong cash flow, so that our net debt at year end after spectrum and after EMI acquisition is well below the initial guidance of minus – of less than EUR14 billion.
I won't dwell on those figures. They have been already shown to you by Jean-Francois. Not much to say really. I’ll get back to each of them.
Recent highlights for all media businesses. As I’ve said, we had a record EBITDA, more than EUR1.1 billion at Activision Blizzard. This is in spite of further increase of the deferred EBITDA figures, so actually we've not used up those resources, we've further built them, so in the face of the year, of course it's going to be more difficult because of the sold cycle unless launches, it's reassuring to know that we have an enlarged mattress so to speak of accumulated earnings which we push forward.
Another satisfaction last year has been the fact that Skylanders is really proving to be a third leg to the business. I mean we're often criticized for the fact that we have at Activision Blizzard only two legs, Call of Duty and World of Warcraft which is good in a world where almost everybody else has no legs at all, but it's only two and we are happy to see that Skylanders is really growing in to a third leg of the business with about $1 billion of sales last year and yet another gain which is going to be launched this year. Diablo III also for Blizzard has been a great success.
Net cash at Activision Blizzard has reached $4.4 billion at year-end, that’s net cash, no debt and of course the Board as has been announced by Activision, the Board is currently looking into the possible users of that cash,
UMG has successfully closed the EMI acquisition and sold the Brussels (indiscernible) remedies at excellent conditions. We'll get back to that and meanwhile the core business at UMG prior to the acquisition was slightly up as digital sales and new monetization models continue to develop and to offset the decline of physical which is less and less relevant especially in North America as time passes.
Canal+ has been building its future last year by completing its major strategic movement into free-to-air in France on one hand and pay-TV in Poland. While already enjoying a good growth in overseas, Canal overseas is another growth engine for Canal and this offsets a more difficult environment in France because of competition, because of taxes and because of the economy, but so far Canal is proving up to this challenge.
So proceeds from EMI asset sales averaged about GBP530 million, that is close to half, or the initial price tags we paid for the whole of EMI. So basically we’ll sold about one-third of the revenue foreclosed to have of the value. So with hindsight, it’s going to look like a very sweet deal, because when we factor in the restructuring costs, which are being incurred or which are ahead of us, and the synergies which are going to be extracted over the next couple of years, we will have paid for this acquisition less than five times EBITDA. So by any standards this acquisition will prove extremely beneficial, leaving aside the strategic benefits of being the undisputed leader in this industry.
Recent highlights for our telecom businesses; relative to the environment, as I mentioned, they all posted a very strong performance last year. Maroc Telecom as I mentioned restabilized one year ahead of plan. Thanks to very strong growth in the African subsidiaries. The EBITDA margin is up more than one point, reaching 56% and if you take time to think about it knowing that the market is declining a little bit in Morocco, this is offset by growth in the African subsidiaries, but this growth should be dilutive, given the fact that the EBITDA margins are below the Moroccan level in the other African countries, but EBITDA margin increase has been such in the African subsidiary is that this has offset some mix effect and actually we are growing the EBITDA margin.
The EBIT margin at 39.6% is also well above guidance and CFFO is up even after playing for the redundancy plan, which we booked in Q2. Overall, if you took out the restructuring plan, you would see that EBIT actually has been flat or slightly growing in Morocco last year which is an amazing performance in the face of a very steep price decline in the country itself, in Morocco itself.
GVT has continued on a strong growth path in spite of the VAT change impact as I said and in spite of weaker currency, so that results are more impressive in Reais than they are in euros, but still we're extremely pleased with the way the Company is developing. I'll get back to that.
SFR as I mentioned, is ahead of guidance with only a 10.6% EBITDA decline versus 12% to 15%. Commercial momentum has been reestablished including in fixed and we are clearly leaders in 4G deployment.
Few more words on SFR. We now think we are fully adapted, fully adjusted to the new competitive environment. We feel we offer the best value proposition for each segment. Of course, we emphasize our presence on the high-end of the market. We feel that premium offers will continue to account for 60% to 70% of our customers and the huge majority of our sales. We'll definitely try to preserve and enlarge our premium on pricing, leveraging 4G access and other innovations.
I want to reassure our competitors because sometimes they will refer us. We are not going to cut prices down across the board. We are doing this in a very selective tactically efficient way. We are not going to give away 4G with our low-end subscriptions and we've never been leaders in price reduction, we are not going to start now.
The best indication of this will be the guidance I’ll show you in a while. I mean we are still guiding the market on EUR2.9 billion of EBITDA next year, which I guess is best reassurance we can give you guys. At the same time of course our new stream line tariffs will have drive further round of cost reduction through complexity reduction.
If you look at the breakdown of our EBITDA contributions last year, I mentioned the record performance of Activision Blizzard at EUR1.15 billion. Music has been up – slightly up at EUR525 million, this is before any net contribution of EMI, the two months of contribution of EMI has been offset by restructuring charges and therefore this is really the core business which has been slightly growing, which we are very happy with of course, SFR is down to EUR1.6 billion, but this includes some non-restructuring items including the fine I mentioned and of course EUR187 million of restructuring charges, mostly the redundancy plan which has been announced and which has been negotiated.
Maroc Telecom is down, but as I mentioned, this is due to the restructuring charges, we had 1,400 people go out of Maroc Telecom itself and this of course will help to drive cost down I the next years. Leaving this phenomenon aside, we would have been almost flat last year.
GVT is growing by 23% on the face of it, but this is in euro, in reais, the real growth is 33.7% and this calculation is becoming a bit more awkward as time goes by of course that if we had not had to suffer an increase in ICMS, the local VAT, our actual EBITDA increase would have been 58%.
Canal is lightly down, that is due to the cost of relaunch of D8 and D17. If we took those charges aside, we would actually be slightly up at about plus 2%. So overall, strong performances across the board as I mentioned.
Adjusted net income is down 13.6%, this is of course driven by a lower EBITDA. We also have less income from investments, because last year we still had a last dividend from NBCU at the very beginning of the year, which did not occur in 2012.
Interest charge has increased somewhat due to the larger average debt over the year. This impact has been actually lessened by the very favorable financing conditions which have lowered the average interest on our gross debt.
The tax is going down, but not as much as you would expect looking at the pre-tax earnings. This is due to a heavier taxes in both France and to a lesser extent Morocco, which have taken the effective tax rate from 26% in 2011 to 28% in 2012 and then of course the non-controlling interest come down in spite of the very good performance of Activision Blizzard due to the fact that we now control SFR fully.
The IFRS net income group share itself is much lower at only EUR164 million, but that is because of two significant non-cash items. One is the provisioning of Liberty Media litigation and the other one is an impairment of the goodwill on our 80% stake in Canal+ France, which is mostly driven by the increase in VAT. As you know in 2014 VAT will go from 7% to 10%, which means roughly EUR80 million for – of additional tax burden for Canal, and in the present environment there is not much which can be done to pass this on to the customer. Therefore, this means an EUR80 million impact per year starting next year, and if you do the math, it's a very large part of the EUR665 million impairment charge which we are taking this year on Canal+ France.
Cash generation, however, has remained extremely strong. In 2011, we had generated EUR8 billion of cash, this year we come close to this performance, in 2012 we generated EUR7.9 billion. So as you see, the decline in earnings has not been parallel to the decline in cash generation. We have taken care of that. Of course, the cash flow from operations after CapEx is significantly down, but this is due to the fact that we had an exceptional CapEx charge last year because of the spectrum acquisition we paid at the very beginning of the year EUR1.065 billion for 4G spectrum and of course this is reflected by the CFFO.
If you excluded the spectrum acquisition, CapEx would be EUR3.4 billion, and the increase is mostly driven by GVT, due both to the network rollout on telecom but also increasingly to the pay-TV launch which generate CapEx that’s related to the set-top boxes we installed in people's homes
Our net debt is below guidance at EUR13.4 billion at the end of 2012. It would actually be less than EUR13 billon if we were already taking into account the EMI remedies mostly Parlophone and Sanctuary which have been sold at good conditions as I mentioned.
The other interesting thing to notice is that without spectrum or without EMI acquisitions, we would have actually had a decrease in our debt, so on this front, the situation is fully under control, and it doesn't mean we have any margin from maneuver from where we are, but it also explains why we are not in any hurry to sell assets at any prices, especially our present level of debt is proving very easy to finance or refinance in today's market environment.
In particular, we are enjoying a large and cheap commercial paper program. We are actually enjoying now more than $4 billion of support from the commercial paper market at conditions which are on hurdle, I mean historically low, less than 20 basis points and we are also refinancing on (demand) or bank markets at conditions which are relatively attractive from an historical perspective.
For 2013, we are releasing guidances by business. We are not releasing an overall guidance for Vivendi. We feel that because of the strategic review, both or group level earnings and/or dividend policies need to be reassessed and need to be recalculated according to what the perimeter is going to look like, and therefore, we are not giving an overall guidance. But we’re giving a guidance for each of our businesses. Activision should generate an EBITDA above $1 billion. That is significantly less than this year. This year has been exceptionally strong like the year before. We have less releases in 2013, and also the console cycle is traditionally creating an environment which is less conducive to software sales.
Universal should post a significant increase in EBITDA with a positive contribution from the EMI Recorded Music, this of course after restructuring charges.
EBITDA at SFR as I mentioned should be closed to EUR2.9 billion with CapEx around EUR1.6 billion. Maroc Telecom should maintain its EBITDA margin around the present, very high figure of 56% and show slight growth in EBITDA minus CapEx. I forgot to mention it that I mean both SFR and Maroc Telecom have had amazing cash generation this year, I mean EUR1.8 billion before spectrum acquisition for SFR and a growing CFFO for Maroc Telecom as well.
GVT should continue to post a significant growth in the low 20s at constant currency. EBITDA margin should still be above 40% in spite of the pay-TV business which is growing, which is therefore creating some dilution on the margin level and EBITDA minus CapEx, which was breakeven for telecoms alone this year, should be breakeven for the business as a whole in 2013.
Last but not least, Canal should have an EBITDA around EUR670 million before the restructuring related to pay-TV. In Poland that is up EUR50 million if you look at the pro forma of last year if Canal had had Poland and the free-to-air channels for the whole year, it would have generated about EUR620 million this year.
In conclusion, our key priorities for 2013 is, of course, to continue to focus on cash flow generation and that is all the more important because of the challenges due to the economy, to the macro. We will continue to adapt our telecoms businesses to this environment.
We’ll integrate, of course, the acquisitions, which were closed late in 2012 in order to deliver the expected synergies, and we will implement the Board’s new vision, which is to strengthen media and content while making sure we maximize the value of our telecom assets, especially SFR.
We’ll focus on shareholder value creation. I mean, we clearly look forward to cash returns to our investors, which may include dividends but also buyback, as mentioned by Jean-Francois, and will remain strictly committed to our present BBB or Ba2 credit rating.
As mentioned by Jean-Francois also $1 dividend per share will be paid on May 17 to our shareholders provided the General Assembly (Fortune) approves it of course.
Thank you. I guess now we are ready, Jean-Francois and myself can take questions.
Conor O'Shea - Kepler Capital Market: Conor O'Shea, Kepler Capital Market. Three questions if I may, two questions on SFR. You mentioned the drop in prices is quite selective in January, but we’ve seen it at least from the outside quite across the board. Can you give us an indication of what assumptions are in terms of how long it will take for the subscriber base to be on the 2013 prices, the first question? Secondly, how do you maintain your EBITDA target, because I guess EUR2.9 billion was what was assumed before the price decreases that doesn’t seem to have being an acceleration of cost savings how do you explain that? And then just the last question on Canal+, you mentioned, the impact of the increase of VAT in 2014. Recently we have the impression that you’ve been investing more in programming cost with the Formula One rights and FAPL rights renewed presumably at a higher cost. Can you give us an indication, what kind of evolution on programming cost we might expect maybe next year?
Philippe Capron - CFO: You are sitting exactly behind the two experts who are able to answer your questions.
Unidentified Company Speaker: No, no (indiscernible).
Jean-Francois Dubos - Chairman: Hello, two three, I guess. I got about the tariff drop. When you are concerned with our tariff drops you should look at our competitors tariff decreases as well and in very detail and you will see that as Philippe mentioned, we are not leaders in getting prices, we are fast followers, but followers on lean. When you – it may appear that we are less expensive, but it's for much less than the others, especially orange and what we did in our general tariff decrease was just to align to competitors tariff, including promotions which tends to be everlasting promotions those days. So be careful. This was the first thing. The second thing was, what is the impact on the EBITDA for 2013? Last year we announced that over 2012, '13, '14 Mobile Service revenues should decrease by 25% that was an estimate. We decline – we decreased 11% this year. We shall decrease 12%, 12.5% in 2013. When I say this year, it was 2013, excuse me. This is more or less in line with what we had said last year, so we are not Visionaire, but for the time being it's – we are in line. The better than expected EBITDA decrease that we experienced in 2012 is due to the fact that we are controlling cost not that bad, but also the fact that we were slightly late in repricing the base versus our competitors. Actually we started actively with pricing in September and we are accelerating this year. But we are on track with what we announced so far (across the) Europe. Just to mention that you didn't ask the question but I will answer. The EUR2.9 billion EBITDA guidance for 2013 is quite challenging. It assumes no further price war or very limited – very, very limited one. No change in French tax environment, we have a lot of taxes (indiscernible) we expect a good news (indiscernible). We assume it will not change, but it's not yet decided and also it's subject to global French economic environment being stable which is not sure. So this guidance has more potential downsize than upsize. You may understand.
Unidentified Company Speaker: (Gregor)?
Conor O'Shea - Kepler Capital Market: For Canal+, as you noticed, we had adopted an aggressive strategy for the premium-content and we not only secured our content but also enriched our premium-content through first the English Premier League that we secured for France, but not only for France, for all our territories, also in Africa, Vietnam and Poland. We also enriched our affair with the Formula 1 and also with the (output in) Warner in September ’12. Of course, I can’t give you the exact impact for confidential reasons of this renegotiation, but what I can say is that, of course, our target for '13 includes the increase for mainly the premium sports rights. Regarding the VAT impact, while VAT hike will represent EUR80 million in '14 and we think that it will be difficult to increase our price and we think that we could partly offset this hike but not totally because of the economic environment and also the completion of being in sports who introduced a new price reference at EUR11 and Canal+ refer is around EUR39.
Unidentified Analyst: (Indiscernible), a couple of questions from my side please. The first one to follow-up on (commerce one). I remember you used to give the detail on the share of customers that have been overpriced. Is it possible to have these figures again? I understand you are accelerating the pricing for deals contracts, what should be the impact of this change in 2013? Is it going to accelerate the pricing? Second question is related to the low (indiscernible) from selling the (indiscernible), could you please update on this one? Also, technically, is there is any fiscal friction in case of kind of (indiscernible) to pay the cash (as extra) dividend to its shareholder Canal+ Group and (indiscernible)?
Jean-Francois Dubos - Chairman: On the re-price as explained by Pierre, we have already re-priced about half of our base and this will continue new tariffs announced last year for many, many or at the beginning of this year for many customers will not change a lot and what we expect is less very significant further upward decline and a very significant decline in churn for those old customers, who were on very old contract, who were -- some of them were sleep on them, but many when they woke up were immediately churning away from us, so we expect for this proactive method to reduce churn and the first tactical indications we have is that this is working. On the low shoot of leg out there, we are not going to make large comments, this situation is well-known. Let's just say that, we feel very confident that the treasury conventions or cash pulling we apply to all the Group subsidiaries is valid from a legal point of view. Our auditors are certain that this was a normal conditions type convention between related parties and therefore we feel legally very strong, but even if we lost I mean it would just mean that Group Canal has to send back its treasury to Canal+ France, who would then have to invest it in other risk-free instruments yielding presumably a less than the yields they are presently enjoying. There would be no change for, we would have to borrow more on our bank line switch would not be good for some of the bankruptcy here in the room, but is largely a relevant for us. At the end of the day, I’m not exactly sure to see what like other would have want from it. I mean the real – so real thing thereafter is dividends, but that's not what they're asking and that's not what they’re getting.
Jerome Bodin - Natixis: Jerome Bodin, Natixis. Two very small one from me, the first on Activision Blizzard, I see that your stake is at 61.5% end of '012. So I just want to check that point. So it was 63% in Q3. So did you dispose some shares in Q4? My second question is on Canal+ you were mentioning cost for the Formula One rights, if we could have your view on revenues and net adds related to this new contract?
Jean-Francois Dubos - Chairman: I'll answer Activision first. We've not disposed of any shares, I mean as far as I know our share of the Company has been completely stable over Q4. It was 61, it's still 61. It's previous year that's almost 15 months ago, which we had disposals on some shares in November, but since then we've had no sales and therefore no change. On the other hand, the Company has stopped buying back its own shares after Q2 and therefore we've not been (indiscernible) as the way we used to the previous years. On Canal, (indiscernible)?
Unidentified Company Speaker: On Canal+, of course, we think that in some way that one will help us in recruitments and also in churn and mainly in the tough competition with BeIN Sport, but I can’t give you exact figures of the impact we target with this one.
Operator: Filippo Lo Franco, JP Morgan Cazenove.
Filippo Lo Franco - JP Morgan Cazenove: I have three question please. The first one is concerning Activision Blizzard, just to come back on the previous question, you said that you have 61%, I wanted to know if you consider this as a share that you can keep even if there is for instance a Activision Blizzard potential share buyback. Actually how do you think about this? The second is, you usually provided in the past an Activision Blizzard EBITDA guidance for you in Europe and IFRS. What will this be or should I just compare to the EUR1 billion in Europe? The thing that I am missing is that potential IFRS impact? Then, should you sell any assets as we all hope you are going to do, would you consider buying back some of your shares by dilution?
Philippe Capron - CFO: First on Activision Blizzard, I mean we are again we are at 61%. There is no project right now to change that situation. We'll see if opportunities arise and as I mentioned the Board is presently considering, how best to use the cash balance on the balance sheet in the interest of old shareholders. Therefore there is not much more I can say at this stage. We’ll see how we react to the proposals. Concerning the guidance, it is IFRS. It is in dollars just because – I don’t know Jean-Michel is feeling (cute) and wants to give guidance in dollars, so that the good news is, our guidance increases every day nowadays, given there is a strength of the American currency, but that's a comparable figure to the EUR11.50 million which we have posted. Regarding sales, yes, as indicated by Jean-Francois, if there are disposals, we do consider buybacks as a possible way to pass some of the proceeds on to the shareholders if I need to limit or cancel out the dilution which inevitably would follow any major asset disposal.
Filippo Lo Franco - JP Morgan Cazenove: Okay, fantastic. I just want to ensure that I understood it right. Okay fantastic, thank you very much.
Philippe Capron - CFO: Julien Roch, Barclays Capital.
Julien Roch - Barclays Capital: First question is on EMI, would it possible to have the 2012 pro forma revenue and EBITA taking into account the acquisition and disposals, as well as the restructuring charge for '13? That's my first question. The second one is on net debt, I understand that the perimeter might change, but would it be possible to have a guidance for '13 if the perimeter was not changing on net debt. Then, the last question is the amount of the (capital) restructuring in '13 in your guidance of (EUR670 million) is ex restructuring, those are my three questions.
Jean-Francois Dubos - Chairman: So for EMI, I forgot the exact figure but we must have had something like a EUR30 million contribution in 2012, which was completely offset by the restructuring charge to it's – where we started in those countries where you can do it quickly and where the situation was clear, because there was no remedies. For 2013 EMI should contribute something like EUR100 million for UMG, but a large proportion of this something like 80 million will be invested in further restructuring in the other countries, so the net gain for UMG will be limited. It is only in 2014 that we'll have the full impact plus synergies and with no more restructuring charges. In terms of net debt, we are not giving any guidance. We feel that there are too many unknowns regarding the perimeter, so we've deliberately chosen not to give guidance and the restructuring in Poland should be about EUR50 million of restructuring costs. Keeping in mind the fact that we are expecting north of EUR60 million, possibly more we hope more million euros of synergies on the pay-TV operations which are being consolidated in Poland. So the payback on that investment will be very quick.
Nicolas Cote-Colisson - HSBC: Nicolas Cote-Colisson, HSBC. Just a question on the SFR. If you can give some precision about your industrial partnership that you mentioned on one of your slides. I was wondering if it could be a critical operation (indiscernible)? Also if you can have an update on your fiber strategy and how much you plan to invest this year and how much would go with the (indiscernible) investment scheme?
Philippe Capron - CFO: We do envisage industrial partnerships. We do not envisage and that can take a variety of forms and we do not envisage a strategic partnership at this stage, i.e., revolving around capital. On fiber, I think, Pierre is better suited to answer.
Pierre Rodocanachi - CEO of Management Patrimonial Conseil: In 2012 we invested EUR130 million and we shall invest EUR170 million in 2013. Out of these co-investments that we are doing with France Telecom (indiscernible) will be limited to (EUR20 million, EUR25 million) because it is only the start. Matthew Walker from Nomura. Matthew?
Matthew Walker - Nomura: I was just wondering if you could give us a few updated thoughts on GVT, and what your attitude towards the process going on down there is. The second question goes back to Canal+. So you have got EUR670 million minus EUR50 million for 2013 of the restructuring charges in Poland. Then I guess what you said was you’ve got some synergies of EUR60 million or so kicking in, in 2014. Is it correct to assume that that is going to be basically offset by the EUR80 million of VAT impact in 2014, where effectively in 2014 you'll end up back with a sort of EUR600 million to EUR620 million kind of figure for (eBay) and Canal+?
Philippe Capron - CFO: Well you are forgetting the free-to-air channels, but I will let (indiscernible) answer you more fully.
Unidentified Company Speaker: As Philippe mentioned it, we target EUR60 million impact of synergies in Poland, but by year end ’15. So we will benefit from the synergy in '14 but on the (indiscernible). The second thing is that of course and Mainland France will suffer from the VAT impact, the VAT will represent about EUR80 million and we will on the offset this impact in Mainland France and with the (indiscernible) driver and mainly the free-to-air channel and our developments outside France.
Philippe Capron - CFO: On GVT, we have not officially confirmed that there is a process but since some of the bidders have publicly announced that they were making bids, it would be a bit hard for me to deny it, so clearly in light of what we said about strengthening in media and focusing on media, yes, we have an exploratory process on GVT and this is still going on by the way, it's not gone cold as some papers have indicated. Whether it will go through will really depend on whether we feel that the value being proposed to us is representative of the quality of the asset. It's fair to say the main growth engine of Vivendi, it is a superb asset. There is still a lot of growth ahead for quite a few years because we've not covered the full country. We are just rolling out – starting to rollout in (Sao Paulo) City proper and therefore we are not in any hurry to rush any asset – to sell any asset, but least of all GVT given the growth potential, so yes, if we have a very good price within this process, we will definitely recommend selling to a Board who will make the ultimate decision, but if the price is not right we won't and we'll wait and we'll sell something else or we'll wait. We don't feel that it is in your interest, in the shareholders' interest to buy/sell our assets when actually financially we are definitely not forced to.
Ian Whittaker - Liberum Capital: Just three questions. The first one is just leading on from your answer on GVT. You said you've just start to build out in the City of Sao Paulo. I think on the last conference call, you had said that you had to laid out, so I just wonder, if that was right and if it is -- was there any reason why you changed your strategy there. The other two questions, first of all, just relates to -- of your view on the priorities of cash, any cash today raised from any disposals that you do, do you have a packing order in preference for what you would use that cash for, whether share buybacks further acquisitions, organic revenue growth and so forth? Then the third question just has to do with Activision. You mentioned this $4.4 billion of net cash at year end. Certainly from an S&P standpoint, you don't get any, or it doesn’t seem though you get any benefit of that from -- for your net debt to EBITDA leverage. Sort of given you're a 61% shareholder, I just wondered whether sort of you have any preference for how Activision management uses that cash? Whether you would prefer them to use it to increase the dividend or to do more acquisitions that would be earnings accretive?
Jean-Francois Dubos - Chairman: On Sao Paulo, we got the authorization to rollout only last year. So before that we had rolled out our network in other cities in the metropolitan area, but not in the city of Sao Paulo proper. Now that we have the authorization, it's just a question of trade-offs and whether it's more interesting to rollout in some parts of the cities, which we finally concluded it would or in other smaller cities in Sao Paulo state or in other state so it's just a question of determining the right order to do things. It's true that CapEx per line is typically higher in dense cities like Sao Paulo or Rio where we have now the network -- I mean not fully rolled out, but significantly developed, but at the same time, there are some significant benefits given the higher income brackets of a large part of the population, so it's just a tactical trade-offs. Regarding the use of cash, I mean we will cross that bridge when we get there, we are focusing on trying to get a great value for those assets, which we might consider disposing off. What we do is the cash will be in the interest of shareholders keeping in mind the interest of bond holders, which means there will be some deleveraging whatever else we do. Concerning Activision Blizzard, yes, indeed we have different attitudes from the different rating agencies regarding how much of that cash they take into account in their assessment of Vivendi's value, of Vivendi's creditworthiness and we do have a preference from the user of the cash, but I'm just not telling you.
Philippe Capron - CFO: We continue with Omar Sheikh from Credit Suisse.
Omar Sheikh - Credit Suisse: I’ve got three questions left I guess. Just going back to Activision again, Philippe. I wondered if you could just in the context of everything you’ve said on your ambition to strength media and content, whether you could sort of give us a definitive statement of intention in relation to your stake. Could you just kind of say whether or not you will be willing to reduce that stake in the future? That’s the first question. Secondly, on SFR, could you just give us the timing of the cost savings of the EUR500 million in total of fixed cost savings by 2014 and how much did you book in ’12 and how much should we expect to be booked in ’13 and ’14? Then, finally, could you just give us – just clarify on disposals, how they might be treated for tax purposes? Could you just tell us whether or not if you were in a hypothetical situation that you were to sell either the stake in Maroc or GVT, whether that will be subject to capital gains tax?
Philippe Capron - CFO: On Activision Blizzard, I can only reaffirm that we have no statement of intention. I mean it’s a pretty (indiscernible) and interesting optional situation. We can go up, we can go down, we can stay where we are. So, it’s an interesting case study. But I’m not telling you which way we lean. On disposals, I mean we will try to structure all of them in a tax efficient way. It doesn’t mean we will necessarily fully escape capital gains taxes. It is our assumption that in most cases capital gains taxes would be only frictional in any of the transactions you might contemplate. On cost reduction, (indiscernible) I'll let Pierre answer.
Pierre Rodocanachi - CEO of Management Patrimonial Conseil: So you remember that the base line was, in 2011 EUR8 billion of cost, out of which EUR6 billion were related either to revenues that is mostly the connection cost or the other EUR3 billion were related to customer base, acquisition cost, retention cost et cetera. The total of the EUR8 billion have been reduced by EUR575 million in 2012 that is little bit more than 7%. What we call – what is the remaining part the EUR2 billion of what we call 'our fixed cost', that is network cost, the IT cost, structured cost, et cetera. These EUR2 billion we achieve a 5% reduction that is EUR110 million to be specific. We intend to have the same amount of reduction of this fixed cost that is a gain on EUR110 million in 2013, which the total which represents – which would represent EUR220 million will be realized at the end of 2013. We shall be on track with full year effect in 2015 of the EUR500 million that we announced. It is to be noted that this year in 2013. The employee redundancy plan will only count for one quarter, that is, the last quarter of 2013 because we are still negotiating with the trade unions – with the new trade unions and the new workers' council which has been elected in last November. So this has explained for – this accounts for the delay in the employee redundancy plan. But otherwise we are on track.
Unidentified Company Speaker: Charles Bedouelle, Exane.
Charles Bedouelle - Exane PNB Paribas: So I wanted to focus on GVT numbers. You had a very, very strong EBITDA margin in Q4 at GVT and you also had somewhat slower growth in terms of new lines and new home passed. So I just wanted to understand how the two were linked and also to understand do you expect the very strong margin gains you've achieved in Q4 to be maintained partially entirely in the coming years or if there is a little bit a one-off effect with maybe a slightly lower commercial activity relative to previous quarters.
Philippe Capron - CFO: You're absolutely right. There is that but there is an even more important point which you need to have in mind. Q4 is the first VAT free or ICMS free comparison base because the increase in ICMS occurred on October 1, 2011 and therefore, it was a drag for Q4 2011 and the next three quarters and therefore the last quarter of last year was the first quarter in which the underlying performance of the Company was realized. In terms of lines and service, however, it is fair to say we had a slow Q4. We normally had a better activity but essentially between – for the last two weeks of December and not much happened. It was smaller, slower than the new (indiscernible) which we are in, but looking at the performance in January we feel that we are back on track and sales of new lines are there. This being said, it's more an uphill struggle to grow GVT nowadays because our competitors very often they have reacted and as they cannot react by improving the service, especially the technical service, they react by cutting, slashing prices. Very often in some cities now we are actually more expensive than the traditional players, which is a paradox for an alternative service provider. But that’s effect of life. We are trying not to cut our prices, which is fully justified because we give much better value, especially better service quality and more bandwidth than our competitors do. But it's true that the price comparison makes it more difficult for us to grow share, which we still do rest assured.
Charles Bedouelle - Exane PNB Paribas: Just a very follow-up question on that very point and that would be my only question. I noted that the home passed were usually obviously much higher than the lining services, but that this gap has been reducing to almost zero in Q4. So should we understand that you need a big boost in CapEx in very short term to be able to grow again like you did during the past? How should I interpret this number basically?
Philippe Capron - CFO: Well, we are making a conscience effort to better monetize the previous home passed and the previous street cabinets and convert them into more lines so we have a specifically targeted effort to achieve this, but we are not constraining CapEx in terms of the deployment, we invested north of EUR1 billion of CapEx at GVT last year and it was growing slightly – it was growing on the telecom side as well as on the pay-TV side, but in spite of this, we will continue to – we'll maintain CapEx where it is. We will stop to be CapEx minus – we will start to be cash positive on the telecom side this year and overall as I said we'll be cash neutral.
Polo Tang - UBS: It's Polo Tang from UBS. I just have two questions, the first question is really just about leverage. Where do you see your optimum level of leverage on that pension and lease adjusted basis, so I estimate that roughly you were running about three times on a proportionate basis but ideally where do you want to take this down to for example, would we -- it sounds like 2.5 times and my second question is really just about Maroc Telecom. Can you maybe give us an update in terms of where you are on that process?
Jean-Francois Dubos - Chairman: In terms of leverage, we do not have any preset target. Our target is to be well within our BBB rating, so we have a constant dialogue with the rating agencies to make sure we achieve this. We don't want to be underleveraged, it would make any sense, we don't aim to be BBB+ or AA- or A-. We don't feel this would be in the interest of our shareholders. So that's what we'll do and if there is excess cash as we said beyond the necessary deleveraging if we sell on asset, we'll think of our shareholders first and foremost. In terms of Maroc Telecom, I cannot give you a precise update. There is also an exploratory process going on in Maroc, it's not big secret given the fact that many of the potential bidders have made their intentions known. Same thing…
Polo Tang - UBS: There is no official offer?
Jean-Francois Dubos - Chairman: Yes, we do not have – we did not receive any binding offer at this stage and we will see whether the process leads to a good price for an asset, which again has had amazingly strong performances last year, I mean I think the – it is the management team of Maroc Telecom is really to be credited for an exceptional performance in the face of a very significant price decline over two years prices have been cut by half.
Philippe Capron - CFO: Thomas Singlehurst, Citi. Thomas?
Thomas Singlehurst - Citi: Tom Singlehurst, Citigroup. I have one question to be (indiscernible), on GVT and two with the medium-term guidance, because where it stands today, I think you're guiding to R$7 billion in 2014, R$10 billion in 2016, but just to hit the first target, the R$7 billion. If I thought my number is right and (big if), but assuming you need to consistently hit high 20s growth and I'm just wondering whether there is any slippage in that medium-term guidance based on the 2013 number – forecast you've put out?
Philippe Capron - CFO: I would have to look and we have not launched our annual three-year planning exercise, but I don't think there is a slippage compared to what we announced, which was rather cautious actually to start with. So I don't think there is significant slippage, but Jean-Michel will get back to you with more precise figures, if we’ve made them public. Richard Jones, Goldman Sachs.
Richard Jones - Goldman Sachs: Two questions. The first is, and apologies if you answered this already, and when you say one of the strategic aims is to strengthen media and content, just wondering what you really mean by that, does that just mean that you expect the businesses, the media businesses that you’re in already to grow strongly or you expect to increase your space and – or you expect to move into other media businesses as well. Then secondly if you could give us thoughts on what synergies there are between those three media businesses.
Philippe Capron - CFO: I think everything is possible. The three avenues of growth which were indicated could be pursued simultaneously. We are not emphasizing the synergies, which exist across or existing media businesses, but it's fair to say that for many large media groups you can also speak of conglomerates was not necessarily large amount of synergies except in terms of the financial management, in terms of the human management with more sharing of executives across all business practices across them. So we are not dogmatic about any of this, we have to in a way invent a new group so this will necessarily take time, because we are not doing it under any pressure except self-inflicted, the will to actually develop a new group out of the present perimeter of Vivendi.
Richard Jones - Goldman Sachs: Can I just ask a follow-up on that, on why the strategic aim is to–
Philippe Capron - CFO: (Patrick Kirby) from Deutsche Bank.
Patrick Kirby - Deutsche Bank: I had two questions left please. Firstly just on the cash dividend policy. I appreciate you said you don’t want to give any firm guidance on this because of what might happen on perimeter changes and so on. But if the perimeter didn’t change in 2013, could you confirm that you would stick to the 45% to 55% payout ratio and that the EUR1 cash dividend is a minimum payment? Then secondly just on the tax rate this year, your guidance is an increase of up to 200 basis points in that. Can you remind us what the components of that increase are going to be?
Philippe Capron - CFO: I love science fiction, I read lot of it. I mean your is a very – your first question is a very hypothetical. I mean if nothing changes then and the parameter is the same, then we’ll assess the situation. But I cannot, I mean and we’ll see what Jean-Francois and myself choose to present the board and whether the board accepted or not. But it’s too farfetched. Again, we are not committing to any policy. It doesn’t mean we are going to start holding cash, it’s actually exactly the other way around. I think we made it clear that we want to have some cash returns to the shareholders to – as soon as we can and in a more advantageous way as we can, but beyond that, again, we are not committing to any policy even if the perimeter had not changed a year from now. Concerning the tax rate, I mean it's (test) by 1000 cuts. There is no large explanation for this year's or next year's increase, but it's just a series of measures taken by the government on the deductibility of interest, the 3% taxes on dividends. I mean, we are distributing EUR1.3 billion this year. That means EUR40 million of taxes. In Morocco in the same way, the withholding taxes has increased. So it's the series of small unsavory measures, while at the same time (indiscernible) competitivity is relatively irrelevant for us because neither Canal nor SFR are large employers in France. So, no large reason, but a series of small ones and I'm sure you can go through them with Jean-Michel and his team. So, on this note, I think we can conclude this presentation. Thank you for you attendance and your questions.