Hello. Good evening, everyone, and welcome to the Vivendi Half Year 2020 Results Presentation. This conference call will be hosted by Mr. Arnaud de Puyfontaine, Chairman of the Management Board and CEO; and Mr. Hervé Philippe, a member of the Management Board and CFO. As a reminder, this call is being recorded. [Operator Instructions] I would now like to turn the call over to Mr. Arnaud de Puyfontaine. Please go ahead, sir.

Thank you very much, and hello, good evening, everyone. Welcome, and thank you for joining us today. First of all, I hope that you are all keeping healthy. I would like to invite you to read carefully after the call the disclaimer on Slide 2 and on Slide 3, the information notice related to the impact of COVID-19 on our activities. Thank you in advance. Like any company, we have been facing an unprecedented situation in the past few months. We have had to adapt to the unknown because nothing prepares you for this. However, one thing we do have is a resilient business model, which has enabled us to announce today good financial results for the sixth months of 2020 – 6 first months of 2020. Hervé will share more details in a few minutes. It is no surprise that the lockdown has significantly affected our businesses related to advertising, publishing all live events. Yet, we have delivered a solid performance, mainly driven by Universal Music Group, UMG, thanks to its subscription-based activities, and by Canal+ Group, which achieved strong growth in its international operations. As a group, we succeeded in increasing our revenue, plus 3% compared to the first half of 2019. In addition, our adjusted net income grew by 5.4%, reaching nearly €600 million, and this increase doesn’t include the capital gain of €2.4 billion resulting from our decision to begin opening the UMG share capital. The last 6 months have also enabled Vivendi to strengthen our financial position. Our net debt decreased from €4.1 billion at the end of 2019 to €3.1 billion at the end of June 2020. The first half of 2020 is a great illustration of how Vivendi has kept moving forward in challenging times. Let me give you 2 examples. The first one is the opening of UMG’s capital. At the end of March, Vivendi concluded an agreement with a Tencent’s lead consortium, for a strategic investment of 10% in UMG at a total equity valuation of €30 billion. We are very pleased to welcome Tencent as a great new partner and are looking forward to the tremendous growth opportunities offered by this cooperation. The transaction completed in March is only a first step. Following our previous announcements, we are pursuing the process of potentially selling additional minority interest in UMG. And as you know, an IPO is scheduled for early 2023 at the latest or even before, if possible. The second example is the closing of the Endemol Shine Group acquisition by Banijay. This acquisition has created the largest international player in audiovisual content, production and distribution. We are very happy to now own 32.9% of the new combined group. This investment perfectly fits our ambition to build a world-class leader in the content industry. While progressing along our strategic road map, we have continued to deliver value to our shareholders. From January to end of June, €1.4 billion were returned to the Vivendi shareholders. The breakdown is as follows: €690 million through the payments of the €0.06 dividend per share approved at the last shareholders’ meeting; and €719 million through our share buyback scheme. The current share buyback program runs until the end of October. It covers a maximum of 10% of the share capital at a maximum purchase price of €26 per share. Coming back to my introduction, let me share with you how we are preparing for the weeks and months to come. Of course, there are uncertainties about the evolution of the health crisis as well as about the global economic context. We need to be cautious. That being said, we are already seeing some tentative recovery signs on our most impacted markets. For example, as soon as bookshops reopened in France, consumers were back. Editis revenue grew by 38% in June compared to June 2019. More generally speaking, we remain confident. Vivendi adds unique assets to succeed. First, we can rely on a coherent and diversified model, which is a real strength in the current context. Being well-established in many entertainment segments and in many countries makes it possible to offset difficulties in 1 market with a strong performance of another. Second, most of our activities were already strongly digitized before the crisis, which has limited the impact of the lockdown. In addition, we are less exposed in the vagaries of the economic situation thanks to the strength of our subscription-based activities. They help guarantee regular income of a sustained period of time, it is particularly true in music and TV. Third, we are driven by a culture of agility. Our group is made of entrepreneurial teams who stay very close to their business and can make the right decision accordingly. The crisis has demonstrated our ability to quickly adapt to changing environments and specific situations. To conclude, I would like to take this opportunity to thank once again the 45,000 employees of our group for their commitment, courage and solidarity. Thank you for your attention and it’s my great pleasure to now hand over to my friend, Hervé. Over to you, Hervé. Hervé Philippe: Thank you very much, Arnaud and good evening to everyone. It’s my pleasure to present to you our financial results for the first half of 2020. Just before beginning with impacts of changes in the consolidation scope and currency fluctuation on our growth rates, let me say a few words on the impact of the COVID-19 crisis on our businesses. As Arnaud recommended, please read the disclaimer on Slide 3. In a nutshell, let me first say that the health crisis is having a limited impact on our main activities; second, that it is still difficult to assess how it will impact the rest of the year; third, that we did not identify any indications of a decrease in the recurrable amount of our assets with a non-definite life; and four, that our balance sheet is very healthy. Back to the first table of this slide, you can see that this half, the scope effect is much more important than the currency effect. The main changes in the scope of consolidation were the acquisition of Editis since February 2019 and the integration of M7 at the Canal+ Group level since mid-September 2019. Regarding the change in currencies, the U.S. dollar was up 4% against the euro, therefore this half FX had a positive impact of 80 basis points on our revenues, mostly at the UMG level. However, the trends have reversed in the recent weeks and should the U.S. dollar decline continue, the FX impact could be reversed in the next quarters. On Slide 12, we have a summary of the key financial metrics for H1 2020. As announced by Arnaud, Vivendi’s financial results are good. With a good resilience of our revenues driven by the subscription activities of UMG’s and Canal+ Group, a 2.4% increase in EBITA and adjusted net income growing by more than 5%. The IFRS results show the same positive trends with a 2.3% increase in EBIT on net profit that reached €757 million. Cash flow generation was also strong in H1, with a CFFO of €338 million, an increase of €302 million compared to the same period of 2019. I will comment on this valuation later. Finally, our balance sheet indicators are solid with equity amounting to more than €17 billion after the recognition of the capital gain of the sale of 10% of UMG for €2.4 billion. And for the same reason, net debt was reduced to €3.1 billion at the end of June 2020 compared to €4.1 billion at the end – the year end of 2019. Going to Slide 13, and the P&L. Revenues, EBITA and EBIT will be commented later in the section related to the performances by business units. Below EBIT, let me highlight the 2 main changes in the P&L compared to H1 2019. First, income from equity affiliate amounted to €76 million and notably included Vivendi’s share of the capital gain recognized by Telecom Italia on the INWIT transaction. Next, other financial income and charges this half primarily included the revaluation of our stakes in Spotify and Tencent Music. So earnings attributable to Vivendi shareowners amounted to €757 million, an increase of 45%. At this stage, it’s also worth noting that the P&L did not benefit from the recognition of the €2.4 billion capital gain on the sale of 10% of UMG, which was directly accounted for through shareholders’ equity in accordance with IFRS rules. Yet, you can see the impact of the sale on the non-controlling interest, which increased to minus €84 million, reflecting the entry of Tencent into UMG’s share capital. Finally, adjusted net income, which better reflects the group’s operating performance, amounted to €583 million, an increase of 5.4%. Moving to our balance sheet on Slide 14, in short, our balance sheet is in very good shape. The most notable changes compared to the 2019 year-end balance sheet, relate to the impact of the sale of 10% of UMG, as already mentioned. This positive item was partially offset by the dividends paid in April on the share buybacks. Consolidated equity increased to €17.4 billion, and net debt decreased to €3.1 billion. Consequently, the net debt-to-equity ratio decreased to less than 18%. As for assets, our financial investments increased mainly thanks to the revolution of the interest in Spotify from Tencent Music. On Slide 15, we can see the evolution of our debt position during this half, which mainly reflects the cash received from the sale of 10% of UMG in March, the return to shareholders for a total amount of €1.4 billion including dividends and share buybacks, which amounts were already recalled by Arnaud. And third, the acquisition of a stake in Lagardere. As of July 10, we owned 21% of Lagardere’s share capital. Finally, the business unit generated operating cash flows of €338 million, and at the end of the year, net debt was €3 million – €3.1 million. The analysis of this amount can be found on the next slide. Out of the €3.1 billion in net debt, Vivendi’s gross cash position amounted to €2.6 billion and gross debt was €5.5 billion. As shown by the chart at the middle of the page, the maturities of the bonds are spread over time until 2028, and the debt average maturity is quite long 5 years. Also, at the end of June 2020, Vivendi has available credit lines of €3.7 billion on the market value of our listed equity portfolio was €4 billion. In total, Vivendi’s liquidity position is solid as confirmed by the credit rating agencies with stable outlooks. Going to Slide 18 and the performances by business unit, which highlights the good performances delivered by UMG and Canal+ Group, in H1 2020, Vivendi’s revenues amounted to over €7.6 billion, an increase of more than €200 million, mainly thanks to UMG and the consolidation of M7. In organic terms, Vivendi’s revenues decreased by 2%, mainly due to the impact of the pandemic on Havas, Editis and Vivendi Village. The second table shows the increase in EBITDA of €29 million. UMG grew 16.6% organically, and Canal+ Group’s EBITA before restructuring charges also grew 16%, excluding the M7 contribution. The growth of Universal Music and Canal+ was partially offset by the slowdown of the other businesses. Going to Slide 19 and organic growth by quarter, the second row of figure shows the impact of the pandemic on our businesses. After a positive first quarter, you can see that UMG and Canal+ group, were quite resilient in the second quarter. As anticipated, there was a decline in the revenues of Havas on some of the other businesses, which were strongly impacted by COVID-19. However, it is worth noting that the Gameloft revenues increased sharply during the lockdown of the second quarter with a plus 6.5% increase. We also saw a significant rebound in additive revenues in June, with a plus 38% increase following the end of the lockdown in France. Going to Slide 20, with the operating cash flow generation, in H1 2020, Vivendi’s CFFO increase of more than €300 million, mainly thanks to the performance of Canal+ Group which benefited from the postponed amount of content investments, notably at Studiocanal, linked to the pandemic. Let me also remind you that the cash flow generation at Vivendi is highly seasonal for almost all our businesses. Cash flow generation in H1 at Universal Music Group, Havas and Editis is usually much lower than H2, due to the seasonality of the businesses themselves. Let’s move to the next slide to have a more in-depth look to the breakdown of this cash flow. And because this slide provides the details of our cash flow conversion from the EBITDA level. So EBITDA increase reflects good operating performances, we already saw in the previous slides. But as you can see, the bridge from EBITDA to CFFO, our CFFO calculation includes the content investments paid. At Vivendi, we continuously invest in artists, content and like to fuel our future growth, and especially at Universal Music, we pay advances to artists that are recouped overtime after the albums are released. We also buy catalogs when the right opportunities arise. So taking into account these investments and also a favorable change in working Capital, notably at Canal+ Group level, CFFO in H1 2020 amounted to €338 million. Now let’s take a closer look at the key performance metrics for each business unit. Starting with Universal Music on Slide 24, as already mentioned, UMG’s revenues continued to increase this half, up 3.5% organically, thanks to the growth in streaming and subscription, which generated an additional €250 million in revenues in H1 2020. New releases from the weekend, Justin Bieber, King & Prince, Eminem and Lil Baby, as well as continued sales from Billie Eilish and Post Malone, drove the digital music consumption platforms. This half year, streaming and subscription represented more than 65% of recorded music revenues compared to 60% in H1 2019. As you can see on the left-hand of the slide, physical sales and merchandising were more affected by COVID-19. We focus on the impact of the pandemic on Q2 figures on the next slide. On the right-hand slide, we focus on UMG’s profitability, which improved by 160 points, driven by revenue growth and cost control. On this slide, you have the detail in the Q2 revenues and the pandemic impact of the different revenue lines for UMG’s. Streaming and subscription revenues were up 8.5% in Q2. The decrease in the growth rate compared to Q1 is due to the impact of COVID-19 on the ad-funded streaming business. The subscription business is inherently more stable and resilient. Other digital sales included the receipt of a digital royalty claim in Q1 that accounted for a little more than 1% of recorded music growth in H1. As expected, physical sales declined 22% in H1 2020, of which 39% in Q2. Licensing revenues includes synchronization income as well as third-party complication license income and other revenue diversification opportunities. The result may vary from quarter-to-quarter. Publishing was up 24% in Q2, driven by subscription and streaming as well as the receipt of another digital royalty claim. Excluding this settlement amount, publishing revenue grew over 6% in Q2 2020. Finally, merchandising revenue declined by almost 62% in Q2 due to the COVID-19 pandemic impact on touring and retail. Going to Slide 25, you can see all UMG key financial figures for the period, which we have already gone through. Regarding EBITA, let me just add that the 2 onetime items I just mentioned accounted for less than half of the margin improvement, meaning that EBITA grew 9.1%, excluding these items. To complete the overview of Universal Music performance, let me comment on its cash flow generation. UMG’s CFFO reached €60 million in H1, an apparent decrease mainly due to content investment and the timing of artist payments. These strategic investments enhanced UMG’s portfolio of talent and content and will generate future revenues. Excluding these investments, the CFFO amounted to €449 million, representing an increase of almost 21% compared to last year, on par with the increase of EBITA. Moving to Canal+ Group, starting with the overall subscriber base on Slide 27, on the left-hand of the slide, you can see that total subscribers to Canal+ offers worldwide, exceeds €20 million. International subscriber base growth notably accelerated, thanks to the integration of M7 subscribers and the organic growth with more than 0.5 million additional clients in Africa. Now international subscribers represent more than half of the subscriber base. Meanwhile, the French subscriber base stabilized, as we will see in the next slide. In aggregate, Canal+ Group gained more than 3.2 million subscribers compared to June 2019. On the right, you have the evolution of the EBITA before restructuring charges which was €329 million. The €93 million increase reflects the positive impact of the M7 acquisition and of the efforts made over the last 4 years. As a reminder, since Canal+ has initiated its cost optimization plan, it has generated around €1 billion cumulative savings in 4 years from mid-2015 cost base. Moving to the Canal+ subscriber base in Mainland France on Slide 28, as the subscriber portfolio, including subscribers, resulting from partnership with telco and collective contracts, reached 8.5 million at the end of June 2020 representing a slight increase year-on-year, since the second half of 2019 and even during the lockdown, the commercial trends have been improving with the deceleration of cancellations and better recruitments, helped by the launch of [indiscernible] in April, the return of English Premier League and the distribution deal with beIN Sport. On to Slide 29, you can see the details of Canal+ Q2 revenues and the contrasted situation. In Mainland France, revenues decreased 3.5% in the context, marked by a downturn in the advertising market due to the COVID-19 pandemic. And Studiocanal revenues were down 41% in Q2 due to the closing of cinemas over the entire period. However, the total lack of income from fresh film was partially offset by sales of films and series from the catalog. Meanwhile, international operations continued to increase, excluding the M7 acquisition, revenue grew 1.7% in Q2 2020. Turning to Canal+ Group’s key figures on Slide 30, the Canal+ group EBITA was €300 million in H1 2020 after restructuring charges. The €92 million of restructuring charges booked last year in the context of the transformation plan were augmented by €29 million in the first half of this year. Finally, bear in mind that the sharp increase in CFFO already mentioned is mainly linked to temporary effects linked to the pandemic in Q2 that may reverse in the coming months. Moving to Slide 32, on Havas key figures, as anticipated, the second quarter of 2020 was significantly impacted by the COVID-19 pandemic. This unprecedented crisis has affected the entire communications industry as some advertisers were forced to postpone or cancel a number of campaigns. At Havas, all divisions felt the impact, except for Havas Health & You, which continues to deliver positive performance thanks to the market and the gains in market share achieved last year. Net revenues were €977 million, down 11% organically. In terms of regions, at the end of June, North America delivered a satisfactory performance, thanks to a resilient market and growth in health communications. Europe was severely affected by the pandemic, either the agencies in United Kingdom and Germany have proven more resistant than others. Both Asia Pacific and Latin America recorded sharp declines. For the first half of 2020, EBITA was €46 million compared to €108 million for the same period of 2019. This change was due to the sharp downturns in activity reported by both the Media and Creative divisions. The cost reduction plan was implemented, as we’ll see in a few moments. Slide 33 present Havas’ organic growth quarter-by-quarter and by geographical IRR, focusing on second quarter on Havas, two most significant geographic areas, we can say that North America was down 8% organically; and Europe was down almost 23%. Those 2 areas represent almost 90% of the net revenues at the end of June 2020 and performed in line with many European competitors. The next slide, which is 34, focused on the bridge to explain the EBITA variation between June 2019 and June 2020. EBITA was €108 million at the end of 2019. You can see the impact of the organic decrease in the net revenues for €123 million. It has been partially compensated by the positive impact of the cost reduction plan for €58 million in this semester. This cost reduction plan was implemented in both the Media and the Creative division in the early weeks of the crisis. By the end of June, Havas Group has already absorbed nearly half the decline in revenues before restructuring costs. Accordingly, EBITA came at €46 million at the end of June 2020. To finish on Havas, let’s look at Slide 35 with the different breakdowns of net revenues. You can see on the left that Havas has a well-balanced sectorial portfolio. Health and wellness reached 27% compared to 19% at the end of December 2019. The other categories are represented equally. On the right, you have the breakdown by geographical areas. We can note that the increasing weight of North America, which stands at 42%, bringing it closer to the level of Europe, which stands at 46%. To conclude on Havas, I can say that the group quickly reacted and adapted, thanks to its agility and flexibility as the economic context is still complicated, Havas remain cautious about the evolution of its businesses for the second part of the year 2020. On the profitability side, its EBITA should be supported by the full benefit of the cost reduction program. Going to Slide 37 on Editis, Vivendi has fully consolidated Editis since February 2019. Editis revenues were €262 million in H1 2020, down 15% pro forma. The COVID-19 pandemic impacted all of Editis’ activities with the shutdown of the book retailers. However, after the lockdown, Editis enjoyed a strong recovery with revenue increase of 38% in June. You can see the curve on the right of the slide. This positive trend continued in early July. Finally, let me remind you that Editis is structurally and heavily weighted to the second half of the year, with the final part of the high school curriculum reform, the impact of which should be observed in Q3. Summer sales that could be higher than usual since people will stay in France for their vacation and novel sales being strongly linked to the new releases in the autumn as well as Christmas sales. Let me now give you the main fact regarding the other businesses. Together, they generated revenues of €162 million. For the second quarter of 2020, Gameloft’s revenues were €69 million, up 6.5% year-on-year, with sales on OTT platforms, up 16.3%, thanks to the stay-at-home measures. On the contrary, the lockdown measures imposed in Europe and Africa during the first half of 2020 had a significant impact on Vivendi Village ticketing and live activities. For the conclusion, this concludes the presentation of our half year 2020 results. It was good results driven by UMG and Canal+. During this half, we also finalized the first step in the opening of Universal Music share capital. Please note that we will release our Q3 2020 revenues on October 20 after market close, and our shareholders’ meeting next year will be convened on June 22. Thank you very much for your attention and we are now ready to take your questions.

[Operator Instructions] Our first question comes from the line of William Packer of Exane BNP Paribas. William, when you are ready, please go ahead.

Hi, Hervé. Hi, Arnaud. Many thanks for taking my questions. Three for me, please. Firstly, could you talk us through how streaming is trading in June and July? You have helpfully provided detail on the second quarter, but clearly, we are all quite focused on how things are emerging out of the lockdown period? Secondly, we have a H1 margin, which has been impacted by the digital royalty claim, could you just think – help us think about underlying operating cost inflation and how we should think about that developing in the second half of the year? And then finally, you recently announced the deal with Spotify, congratulations, could you talk us through the implications for your business beyond the core streaming business, those flagged areas of cooperation, could perhaps you – reduce your marketing spend intensity as a result of the deal? Could you just help us think about the implications? Thank you.

Hi, William. Thank you for your questions. I will start – Arnaud speaking and I will start by the third question, while Hervé is preparing himself for the first and the second. Well, as you know, we are not commenting on terms of the agreement, but obviously, we are very happy about having come to an agreement with Spotify. Since the very beginning of our relationship, Universal Music Group and Spotify works very closely on developing innovative marketing campaigns and tools to help artists to reach the biggest possible audience in Spotify’s platform. And as Spotify mentioned on its Q2 call, big artists, such as Lady Gaga, have already adopted these tools. Obviously, that relationship will not only continue, but our teams will work more closely than ever before. UMG will additionally provide feedback on early-stage features, playing a leading role in shaping the development of the marketing platform. We like to position Universal Music Group not only as the most creative music company in its competitive environment but also as a very marketing and innovation-driven company. And we expect this agreement to provide us with possibility to, again, prove it. Hervé Philippe: And to answer your first question and second one, just maybe for the reason of consumption of music after the COVID crisis, we can refer to what Spotify said very recently, saying that the music consumption has recovered to pre-COVID levels in June, which is a trend. Obviously, we will see what will be the future in the years, especially on the ad-funded part of the business. But to answer your second question on the H1 margin, there was some impact, indeed, of some one-time item, and you have the precise impact of those H1 one-time items in our slides, in the Slide 25, which is very precise. But we can say that the growth of the EBITA was around 9%, excluding the one-time item and the profitability increased in this first part of the year and this increase is both linked to the growth of the business, but also to the strict cost control at UMG level, which is implemented. Thank you.

Our next question comes from the line of Lisa Yang of Goldman Sachs. Lisa, when you are ready, please go ahead.

Good evening. I have a follow-up question on this trading number. Would it be possible to give us the trends within Q2 between the subscription and the advertising business, as I understand advertising was severely impacted? And could you maybe give us a sense of the exit rate for both sub-segments that would be really helpful? The second question is on Canal+, I understand their DTT license is up for renewal. I am just wondering if you could talk about the pros and cons of having this DTT license and what could be the financial implications if you decide not to renew it? And the third one is on the UMG stake sale process, could you give us maybe an update on the sale process with other barriers when should we expect a decision? And is it fair to assume the valuation could be higher than €30 billion given where Warner and Spotify are trading currently? Thank you. Hervé Philippe: Yes, to answer your first question on the split between subscription and streaming, we do not disclose this difference between the two parts of the business, which can have some different rhythm, especially during the COVID crisis. But I can just refer to the industry mix, which is disclosed by the IFPI, which was generally for all the businesses, 25% in advertising and 75% in subscription in 2019.

Thank you, Lisa. Your question on Canal+ and the TNT renewal, I mean, the digital terrestrial TV renewal. Well, as a matter of fact, all options regarding the TNT license for Canal are still opened, including that the license not to be renewed. The license terms under the current agreement ends in December 2020. But whatever the final decision is, there will be no impact on the 2020 financials. But today, digital terrestrial TV represents for Canal+ around 400,000 subscribers, then – less than 2% of our subscriber base. And this frequency, as a matter of fact, involved high cost and very restrictive obligations. So I am not going to dwell any more on that subject. But yes, there are pros and cons. But as we have been saying, and you have seen the numbers, the growth from Canal+ Group for our international operation is very compelling. But France is still at a crossroad. And that’s the reason why we needed to manage the company on a very tight basis. And as regard to this renewal process, we need to keep every option opened and to see what would be the condition under which we could renew, taking into account those pros and cons, as you are mentioning in your question. So that’s the situation for that very specific issue.

Alright. Our next question comes from the line...

Okay. No, no, no, sorry. Sorry.

Pardon me.

There was a debate between Hervé and I in who is going to answer the third question. Well, as we said, we are pursuing discussion with potential new partner within Universal Music Group. We have been approached by many different interests. And the process is currently happening. As regard to the condition and the different aspects, we are not going to comment on them at this stage. What I can say as regard to the question of this UMG process and the current situation, no need to say that we are extremely happy about having Tencent as a partner. And we are expecting this partnership to be able to go from strength to strength. And I must say that all the early developments are very encouraging so, more to come in due time. Thank you, Lisa.

Our next question comes from Omar Sheikh of Morgan Stanley. Omar, when you are ready, please go ahead.

Thank you, good evening, everyone. I have three questions as well. First of all, maybe if I could return to the question on streaming revenues, you mentioned the comment that Spotify had made on their call about consumption returning to pre-COVID levels. But I wonder whether you could give us a sense of whether you think that the growth in your streaming revenues will also return to pre-COVID levels? And if so, whether you expect that to happen later this year or into next? That’s the first question. Secondly, a question for Arnaud, I suppose, just on the share buyback. In previous press releases, Arnaud, you have put in a phrase, which talks about the intention to return "substantial portion" of the proceeds from the UMG sale to shareholders via share buyback or tender offer. And I noticed, unless I missed it, it is not included in the press release today. I wonder whether you could confirm that, that’s still your intention? And if not, perhaps what you are thinking – or how you are thinking it’s developed on that point? And then thirdly, I just have a question about the Lagardère transaction. So you spent €400 million, which is a relatively small amount of money on a 21% stake in Lagardère. I just wondered whether, Arnaud, you could just set out your – the rationale for that transaction and what you are hoping which benefits essentially you are hoping will – you will be able to generate for Vivendi shareholders as a result of the investment? Thank you very much. Hervé Philippe: I can take the first one on the streaming revenue, which is another way to ask a question on split between streaming and subscription to say that in Q2, obviously, the part which has been affected is ad-funded streaming revenues and that we will see recovery in that part of the business, thanks to the development of the business itself on the level of advertising, indeed. And the trends in consumption remained very good. More generally the trend in streaming and subscription is continuing to grow, as Spotify, as always – said recently also. And we can say that if you compare from one quarter to the quarter, you will have always some bad effect, which is important and that it’s inevitable in the long-term that you will have some decline in the rate of growth of this business. It’s very simple mathematics. That’s why – what I can say on the streaming and subscription system, we are very confident for the development of the business in the rest of the year, indeed.

So, on the proceeds, your question on the proceeds, well, as I mentioned, in H1 2020, Vivendi paid €1.4 billion to shareholders 50% in dividends and 50% in buybacks. Well, regarding to the current situation, our position is to remain cautious and to keep a strong liquidity position to face the uncertainty as regard to the foreseeable future. But the current buyback program will continue until October 20, and a further 35 million shares could be bought back, representing 3.65% of the share capital, depending on market condition. So to your second question, our intention is still to give back to the shareholder part of the proceeds, while assessing opportunities to develop our interest in specific situations. And as we speak, we have a share buyback program on air, if I can say so. But obviously, we keep a very cautious attention as regard to the solidity of our liquidity position. Second question as regard to Lagardère and the rationale, as you rightly so mentioned, currently, the level of investment represents 1% of the value of Universal valuation. But we have built a position within Lagardère with a consideration that it’s a good investment. We consider that the level of the share price, this is a good investment for Vivendi shareholders. The Group, Lagardère, is going through a difficult period, and we wanted to be able to make this financial investment being seen as an amicable investment as regards to the relationship between the 2 groups. We said that when we started the investment, we would keep the option open to be able to continue our stake building to be able to diminish the average cost of our investment, and this is what we did. Some events end of May has created an evolution of the governance of the company with the arrival of Group Arnaud at the level of the commodities. We see that as a common view from Group Arnaud and Vivendi as regard to the potential of this group on the foreseeable future, and we are happy to see them also in investing. And let me remind that the principles are good relationship, and we also have had, in the past, common initiative between the two groups, like the Mezzo acquisition more recently. Last but not least, we have also said that this investment, which is a long-term financial investment doesn’t prevent us from building industrial agreements if some opportunity arise, then that we will consider in the future. So that’s the current position as regard to the stake that we now own on – in Lagardère, with a clear statement, which has been made on the 15th of July at the AMF, the market of – the French Market Authority.

[Foreign Language]

[Foreign Language]

Our next question comes from the line of Adrien de Saint Hilaire of Bank of America. Adrien, when you are ready, please go ahead.

Hi. [Technical Difficulty]

I am sorry. Could you start from the beginning because the line was...

[Technical Difficulty]

I am sorry, I am sorry. We can’t hear you. I don’t know if you are calling from a mobile or something. We can’t hear you.

[Technical Difficulty]

It’s not working. Maybe we can try to get the better line and move to the next question. We turn back we will come back to you, obviously.

Alright. Our next question comes from Julien Roch of Barclays. Julien, when you are ready, please go ahead.

[Foreign Language] My first question is on Canal+. In France, you have been extremely busy doing a lot of great deals on sports, the League One, the Champions League, the Europa League, then you signed a deal with Disney, you signed a deal with Netflix, you signed a deal with beIN, you have some cost cutting so, a lot of movement, which makes forecasting operating profit almost impossible. So I was hoping you could give us some color on the overall impact of those at least 5 big things on cost? When you put all of that together, how much will cost increase or decrease? That’s my first question. The second question is on Page 21, the net payment to artist and catalog acquisition by UMG more than doubled. Some of it will be net payment to artists, and if it goes up more than revenue, people will consider that’s kind of negative working capital, which is not good. But if you buy catalog, that’s M&A, and it’s probably a good thing. So I was hoping you could split the €352 million between – or give us the amount of catalog acquisition in €352 million. That’s my second question. And then on the buyback, I got your answer, but you have published 2 press releases on your website. On the 19th of June, you said that you increased the buyback to 23.25 million shares from a 25 million, and that was supposed to happen – those shares were supposed to be bought back by the 30th of July. And then on the 26th of June, you move those 23.25 million to 43.25 million, and now it’s supposed to happen from the 31st of July to 20th of October. So my first question is, why you did not do the first part of the buyback, which you communicated on? And I guess depending on your answer, what guarantee we can have that the second part will happen? Hervé Philippe: Maybe I can answer the two first questions on – the first one being on Canal+ on the fact that we have many, many new deals and contracts which have been announced, and you want to know what could be the impact on the cost. I cannot obviously disclose any figures regarding the different costs of those contracts, which are confidential. But indeed, as you can imagine, the Canal+ management is very keen to keep a very good financial condition to those contracts. So if Canal+ and with the Vivendi support decide to enter in such contracts, it’s because we believe that they are at the right price. Another way to explain this thing is to see what has happened last year when there was an auction for the League One. And when we considered – Canal+ considered that the price to be paid to get the League One in France was too high, we didn’t enter in this deal and negotiations. So that’s why you can be confident in the ability of Canal+ management to be able to negotiate and to have the best possible price for the content. Sometimes it’s good to have, I would say, some niche content to add to our portfolio to develop businesses, which has been the case also in some very good deals which have been done for some sports, even like Formula 1 or for Moto Grand Prix. The last one for Moto Grand Prix, which is not expensive, but with the success of the French motorbiker, it’s a very good impact on our business, and our subscribers are very happy. The last figures for that were very impressive for the last Moto Grand Prix. For your question regarding the advances in catalog and – advances on catalog, you want to have the split. First, let me say that we have given a global figure, which is for the first time, and this is very important on this – this was something which was, I believe, expected by the investors and shareholders. So we have made an important step. We have not disclosed the breakdown between acquisition of catalogs and advances, but I would say, from our view, this is the same basket in view. And when we are investing in catalogs and when we are investing in advances to artists, it’s investment in content. And that’s why we do believe that, at this stage of the market, this is a very good thing to invest in content to preserve the artists we have or to develop the new artists and to gain market share. So this is a very good opportunity. And we wanted to show that the decline in the CFFO at Universal Music was only apparent because, in fact, it’s hidden, there is a hidden part, which is the development of the investments under the CFFO.

On the third question, Julien, well, we say what we want to do and we do what we say we would do. But as a matter of fact, no need to say that the first half of 2020 has been impacted by substantial events called COVID. And as I mentioned, we paid huge attention in managing the financial management of our situation of our company, and it may have had an impact on the sequence of events on that specific matter that you are raising. So it’s a question of timing and capacity to cope with an unknown situation linked to an extraordinary event. But as regard to the details and the consequences and what we will do, we have announced and we have, as I said, we have a current share buyback plan, which is opened. And for the sequence and the consequence, I will ask you to make contact with our team at Vivendi, just to be able to provide you with any other details you may need. Thank you.

[Foreign Language]

[Foreign Language]

Our next question comes from the line of Richard Eary of UBS. Richard Eary, when you are ready, please go ahead.

Thank you. Good evening, everyone. Three hopefully quick questions for myself. I may have missed something early on the call, but I didn’t know whether you had made any comments with regard to the UMG IPO process on the back of the successful Warner float and whether that had changed your potential timing of that IPO? That’s the first question. The second question, you talked about – within the capital management process, you talked obviously about investments. But it’d be interesting just to try to update on the process in terms of what is the M&A criteria, particularly after the lag of their investment? And then just lastly, with regard to UMG’s stake in Spotify, whether there’s anything – any development or thought process of what you do with that stake post the share price increase?

Thank you. I will take the question on the IPO. As we said, our intention – a, we are welcoming the good results of the Warner Music Group IPO. And we said in previous statements that in the different stages as regard to the opening of the UMG Capital, our intention was to plan for an IPO no later than early 2023. But as mentioned during the call, we could consider an earlier IPO, if it is possible. So options are open and will depend on different factors that we are currently reviewing. So that’s on the IPO subject. Hervé? Hervé Philippe: I can maybe answer the question on Spotify and the stake we have in Spotify. As you have seen, we have a very good relationship with Spotify. We have renewed the contract with them, and we are very happy with the share price of Spotify, which has increased a lot in the recent weeks. And we are very satisfied with that. And we have no intention to sell our stake in Spotify, which is a very good partner for us. So we are a shareholder. We are a happy shareholder of Spotify.

On the M&A criteria and the situation, well, we have a very well-defined process within the group. We are having M&A committee. The M&A committee are reviewing every potential opportunity of M&A transaction. The financial criteria in terms of economics, IRR and so on, are well-defined within the group. And depending on the different stage of investment, it goes to the management board or it goes to the supervisory boards, point number one. Point number two, we are reviewing bolt-on acquisition. It’s important to reinforce the momentum of our growth of our different businesses to be able to accelerate the development of our industrial strategic visions. And if I can take an example, as you have seen in our numbers, M7 has been a very good acquisition, it has been accretive for the group, and is delivering on our expectations. Then we have got, on another aspect, different – other opportunities, and one of them, and you mentioned it, is the Group Lagardère. I answered previously the question as regard to Lagardère. And the reason why we have built a stake in the situation, shall I remind you that in the development of the equity story of Vivendi and what we are delivering step by step. We have also the possibility to rely on – and to build this strategy and the development of the group with also in specific situation on a kind of a long-term vision. And that’s important for us to be able to, from time to time, take some position when we do think that it’s going to add value and create value in our equity story. So there are certain situations where we take some options, and I guess that in the capacity for us to cope with the unexpected events while being in a position to deliver improvement in our results on a regular basis. We play with this kind of a two different level and situation in terms of investment with very, very strictly monitored process within the group. And I hope that I have covered the question you raised. Thank you.

Thank you.

Our next question...

Sorry. Maybe we can try to see whether we can find somewhere in the telco world? Adrien de Saint Hilaire?

Okay.

Okay. So we are going to show how Vivendi is an agile company ready to bring innovation to this analyst call because for the first time since I took my job, I’m going to have the question from Adrien on mobile. So Adrien, your question: do you include the €1.4 billion in dividend and buyback to be already included in the return of proceed of UMG to shareholders? I will hand that over to Hervé. And second question, do you expect the new partnerships with Spotify will drive market share gains versus other levels? That’s question number two. And question number three, it seems to be that this evening, we are having a kind of a rolling 3 questions, so let’s stick to that rule. What are you trying to gain through Board representation at Lagardère? So let me take the third question, and I will hand over to the 2 previous ones to Hervé. Do you agree? And the second is about, do we think that the deal with Spotify is going to drive market share for Universal against competitors? So Adrien, [Foreign Language], so we made a communication on the 15th of July when we reach certain thresholds, and we made a [Foreign Language] at the AMF, while we say that we could envisage to get representation at the Board of Lagardère, and why did we mention that is because there’s been some changes in the governance of the company with what has been announced on the 25th of May. And as regard to the situation, we thought that if the circumstances were to be sold, we will ask for Board representation, just to be able to get the share of voice, based on our stake within the company. So it’s very pragmatic. So we’re not going to try to gain, but we keep the option open if the circumstances create the need for us to be represented very pragmatically. Maybe Hervé, on the first question? Hervé Philippe: Maybe the first question is linked to the fact that on our slide, we see very clearly that we have returned to shareholders roughly the half of the proceeds of the first 10% of the sale of Universal Music. So this is a timing issue, I would say, because we have paid the dividend the month after we get the €2.8 billion, and we have made the €700 million of buybacks beginning in January, February, and so this is roughly at the same time. So – but there is no direct link between the 2 figures. And we can say on buyback is that after the – beginning of the COVID crisis, we have been much more cautious in terms of buyback, considering that we have to keep our very strong liquidity and to be prudent. As you have seen, we have decided in June, in fact, to re-launch our buyback program, and with the possibility that we have to do it considering this important liquidity. So there is no direct link, but you can see that we have decided to re-launch the buyback in June. For the agreement with Spotify, we are very satisfied with this new agreement. We are – as I have said previously, we have a very good partner with Spotify. Since the beginning of our relationship, we work very closely on developing an initiative, technologies and so and so. We are very happy with that. And I don’t know if it will lead to an increase of our market share towards our competitors, but I hope so indeed.

Our next caller is Matthew Walker of Credit Suisse. Matthew when you are ready please go ahead.

Thanks a lot. Good afternoon. I have got three questions, please. The first is just on the one-off in the music business. It seems to be a bit in publishing and some in another area. Sorry if I missed it, maybe it was already explained, but if you could just go through that and say, was there any impact on – of the one-off on the streaming number? And if so, how much it was? Second question is on the two-sided marketplace, Spotify said on that call that you were very enthusiastic about the two-sided marketplace much more so than the other labels. Can you tell us how much are you investing actually in the two-sided marketplace? And what do you expect to get in return? And then finally, if you could say anything on market share gain or loss so far this year versus the other labels? And is it the case that we should expect a market share gain, for example, from the Taylor Swift album in the second half of the year? Hervé Philippe: I will take the first one on the one-off because it’s a pure financial question. So this – we have the impact, which are given on the Slide 24. So this is very, very clear and very precise for that in the – both in Q1 and in Q2. And there was no impact on the streaming and subscription lines. The impact were in other digital sales for the Q1 and in music publishing for the Q2. This being said, what I want to highlight is that we have some items this half year. It’s been decided that we did not have in the first half of last year. But generally speaking, it’s very frequent that we have such sort of onetime item. Why? Because it comes from discussion with platforms, with labels, with partners, and we have always discussion regarding the past and the current contract, and we have some possibilities to look to the file, to the data, which have been used to pay royalties and so. So in the future, I am sure that we will have other positive impact on the accounts of Universal Music, thanks to such discussion and claims sometimes. Because we always – Universal Music always look to be paid properly by the partners, which is completely logical, I would say.

On the question where – on Spotify, where we don’t get into specific details, as you are aware, but I’m repeating my position, which is the relationship between UMG and Spotify has been based on working very closely on developing innovative marketing campaigns and tools towards artists to reach the biggest possible audience on Spotify’s platform. And we are expecting that this agreement will provide us with the possibility to bring innovation and creating innovation in a way to make the great quality of our Universal Music Group artists available to the highest possible proportion of listeners. So that’s kind of the main driver between all what we have done and under the flag of innovative capacity to make that work and to develop from trend to trend.

Shall we move on to the next question?

Yes

Our next caller is Conor O’Shea of Kepler Cheuvreux. Conor when you are ready please go ahead. Conor O’Shea: Yes thank you for taking my questions, three questions, please. First two questions on UMG, if I think I follow what you said, Hervé, you said I think for the first half, it was about €50 million, 5-0, of onetime items on revenue, split between other digital and music publishing. Can you give us the impact on operating profit in the first half of the year from those two items? Does that drop-through almost 100%? Secondly, on the other digital sales, I appreciate the detail on Slide 24. So it seems that there were no onetime items in Q2, but I think also recently, we have been used to 25%, 30% declines in digital downloads as the switch into streaming continues. Has that changed materially? Because I think in Q2, you’re on a single-digit decline, which looks like a lot better than we expect? And then the third question just on Havas, the 500 basis point margin decline in the first half of the year, which is bigger than the peer group in the agency sector. It looks like there’s been some tactical cost savings, but maybe not a lot of restructuring costs. So can you give us some help about what we could expect in the second half of the year? Are the adjustments enough in a slightly better environment to get to, let’s say, flat operating profit in H2 versus H2 ‘19? Hervé Philippe: Well, thank you for your question. For the first one on the impact of the onetime item, I think that you have all the details in the Slide 25 or 24, in terms both on revenues and EBITA. So I’ll let you make the mathematics on such figures, that we are both impacted on the revenue and the EBITA level. For the decline in downloads, this is something which is roughly in the same trend on all the quarter-after-quarter, and I have no specific reason to explain from one quarter can be the difference. The trend is always the same, and there is no specific difference. For Havas, I couldn’t say that the decline in the EBITDA ratio at Havas has to be considered with the mix of the geographies at Havas. Probably the decline in Europe has been bigger than in the U.S., and this is true for all the competitors of Havas. And if you consider that Havas is more exposed to Europe, this is logical to have a global figure, which can be under some competitors, if the competitors are more exposed to the U.S. activities. If you look to region by region, I would say, the performance of Havas is more or less in line with the competitor. It’s important to highlight. Secondly, I believe that when you make a cost reduction program in advertising businesses, you have never the full effect of the cost reduction immediately. You have some timing effect when you are having a decrease in the staff, for example, it takes some weeks or some months to get the full effect of the savings. So that’s why I do believe that the cost reduction plan will have a more important effect in the second half of 2020 than in the first half indeed. Thank you. Conor O’Shea: Okay, thanks.

And our final question today comes from Tom Singlehurst of Citi. Tom when you are ready, please go ahead.

It’s Tom here from Citigroup. I had a couple of questions. The first one on, I suppose, cash usage in the second quarter. I suppose one thing that doesn’t really add up is that you’re saying you didn’t want to buy back shares for liquidity reasons, but you were perfectly happy to buy Lagardère shares. So I suppose a couple of questions on the back of this, one of which is, can you just go over again what is so attractive about the Lagardère opportunity? Is it travel retail that you are interested in? Is it the publishing assets? Just some more insights on why that was such a burning sort of opportunity that it needed to be sort of activated in advance of buying back your own shares? And I suppose – the second linked question is when you talk about the October 20 deadline and you could buy back shares, I mean, is it just a corridor? Is it a will – how should we think about that in that context? So that was the first question. And the second question, very briefly on Spotify, I have got the message loud and clear that you’re not going to sell stake anytime soon, but it has performed very well. It’s now obviously a very meaningful chunk of money. Yes, obviously, we have all read some comments in the press around the Taylor Swift deal that you have made a commitment to share the proceeds with artists. Can you just give a bit more detail if you ever do get to a point where you are selling that stake, just how that sort of sharing of the proceeds would work now that it’s clearly performed so well for you? Hervé Philippe: Well, to answer the second question on the share buyback and the timing of it, we have no specific – it’s not a deadline. We can decide in the coming months after this program, if it is not completed by the end of October, we can obviously decide to launch a new buyback program, depending, obviously, of the level of the stock price in the market at that time. So we – as you have seen, we have decided to launch several buyback programs, and we will adapt to the market conditions to decide whether to launch it, to relaunch it or to change some details in this buyback program.

As regard to the decision, we’re trying to compare things which have only, as a comment, the way we’re using our liquidity. But on the one hand, we do compare a tool, which is a tool that we’re using to give back proceeds to shareholders. And we’ve got length to be able to make – a duration to make it happen. And on the other side, we’ve got a situation, which was the situation of the Lagardère Group, which has occurred. And again, I repeat myself, number one, in terms of allocation, it’s less than 1% of Universal valuation; number two, at the price we did it, we do consider that as a long-term financial investment. But as we said, this investment from Vivendi demonstrates our confidence in the outlook of this group, which has a strong international leadership positions in its main businesses, and in which, like many others, is currently going through a difficult period. And in the future, a joint project between the two groups could be developed. And we shall see. We keep options opened. So again, this stake is the possibility in a specific situation to have a stake and to build optionality and to do consider that as a long-term financial investment. And on the other terms, it’s an ongoing vehicle that we are using in specific circumstances to make a buyback and to use part of our liquidity availability, to give back money to the shareholders. And we manage the situation depending on the events, depending on the opportunities and depending on what we are aiming at achieving. Hervé Philippe: Just finally, to answer the question on Taylor Swift, and the possibility to share a part of the capital gain on Spotify. I just can say that we do not disclose the details of the contracts with the artist. Remember what has been written at that time. But to come back to Spotify, we are very satisfied as we are today with the stake in Spotify, and we have no intention to sell our stake in Spotify. We do consider that the long-term relationship with Spotify is in the best interest of both our shareholders from our artists to develop the market through such relationship with Spotify is very good for the future of Universal Music and its main stakeholders.

Thank you very much.

We have one final question that’s come through if you would like to take it? The caller is Matti Littunen of Bernstein. When you are ready please go ahead.

Good evening thank you for your patience only two questions. One, how should we expect the level of ANR investment at UMG to develop in the future? And two, on that African growth for Canal+, was that – is there a material contribution from English-speaking markets in Africa? Or was it mainly the French-speaking countries driving that growth? Thank you.

Thank you for your questions. On the African, it’s mainly driven by French-speaking territories in terms of growth. Hervé Philippe: The first question, yes, on the ANR for Universal Music, indeed, it’s very difficult to predict anything because it depends on opportunities and each times [Technical Difficulty] are good opportunities to develop or to increase investment in content. I think Universal Music will consider it under the supervision of Vivendi, and we will decide in the best interest of the artist, indeed, on the business and the revenues – the future revenues of the profitability of Universal Music.

And no need to say that Universal Music group, under the fantastic leadership of Sir Lucian Grainge, has made a very strong reputation on being the very best company in terms of spotting talents and providing our music company with the very best of the best. And when you see, as a results, let me take the example of 2019, we had the 8 of the 10 first results worldwide. So being able to maintain a level of investment, which is like an R&D investment for talent scouting and building what has enabled the company to be worldwide leader in the industry, managing what is very unique to creative industries, which is a business but based on talent, I must say that I’m always extraordinarily exciting – excited, sorry, but also very, very impressed by the quality of all our people at UMG, which is the results of the fantastic know-how and talent of the Sir Lucian. So obviously, this is a momentum and an investment that we are discussing with Universal Music Group, but we do put at the center of the UMG DNA this capacity to spot those who are going to be the big talent for the future. So that’s very important to maintain what is very unique to UMG.

Okay thanks.

Alright and this concludes our question session.

You are taking the words out of my mouth. So thank you all for this session. I am very much looking forward to getting back with you in... Hervé Philippe: In October.

In October. Bye-bye. Hervé Philippe: Bye-bye. Have a nice vacation.

Thank you, yes. Great summer. Bye-bye.

Thank you all for joining today’s conference. You may now disconnect your lines. Hosts, please stay connected.