Numericable SFR Unaudited selected financial information for the

Numericable SFR
Unaudited selected financial information
for the three months ended March 31, 2015
Numericable SFR
1, Square Bela Bartok
75015 Paris
Numericable SFR
Unaudited selected financial information
March 31, 2015
Numericable SFR
UNAUDITED CONSOLITATED STATEMENT OF INCOME
(in millions of euros)
Revenue
Purchases and subcontracting services
Staff costs and employee benefits expense
Taxes and duties
Provisions
Other operating income
Other operating expense
Operating income before depreciation and
amortization (EBITDA)
Depreciation and amortization
Operating income
Financial income
Interest relative to gross financial debt
Other financial expense
Finance costs, net
Income tax expense (income)
Share in net income (loss) of associates
Net income (loss) from continuing operations
Net income (loss) from discontinued operations
Net income (loss)
- Attributable to owners of the entity
- Attributable to non-controlling interests
Three months ended
March 31,
March 31,
2015
2014
2,740
328
(1,489)
(151)
(281)
(38)
(136)
(7)
(9)
(2)
61
19
(14)
872
149
(499)
374
665
(150)
(20)
495
(54)
1
816
816
814
2
(75)
75
(37)
(3)
(40)
35
35
35
-
Numericable SFR
Unaudited selected financial information
March 31, 2015
Numericable SFR
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(in millions of euros)
ASSETS
Goodwill
Other intangible assets
Property, plant and equipment
Investments in associates
Other non-current financial assets
Deferred tax assets
Non-current assets
Inventories
Trade receivables and other receivables
Other current financial assets
Income tax receivable
Cash and cash equivalents
Assets classified as held for sale
Current assets
TOTAL ASSETS
(in millions of euros)
EQUITY AND LIABILITIES
Share capital
Additional paid-in capital
Reserves
Net invested equity attributable to owners of the
parent
Non-controlling interests
Total invested equity
Non-current financial liabilities
Non-current provisions
Deferred tax liabilities
Other non-current liabilities
Non-current liabilities
Current financial liabilities
Current provisions
Trade payables and other current liabilities
Current income tax liabilities
Liabilities classified as held for sale
Current liabilities
TOTAL EQUITY AND LIABILITIES
1
March 31,
2015
12,815
4,181
5,767
131
2,267
481
25,641
227
2,597
125
298
1,050
4,297
29,939
March 31,
2015
December 31,
2014
restated1
12,815
4,196
5,897
130
1,049
634
24,720
256
2,812
128
252
546
3,994
28,714
December 31,
2014
Restated1
487
9,748
(3,304)
487
9,748
(2,270)
6,930
7,965
14
6,944
13,800
314
2
540
14,656
2,142
323
5,656
217
8,338
29,939
10
7,975
13 349
327
43
583
14,302
283
317
5,621
217
6,438
28,714
The statement of financial position as at December 31, 2014 has been restated to reflect the price adjustement on the
acquisition of SFR as described in Note 1.1 (decrease of the caption « Goodwill » and increase of the caption « Other
current financial assets » of 120 million euros).
Numericable SFR
Unaudited selected financial information
March 31, 2015
Numericable Group
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions of euros)
Net income (loss) from continuing operations
Non-cash items
Share in net income (loss) of associates
Depreciation and amortization
Gains and losses on disposals
Income tax expense (income)
Cost of gross financial debt
Foreign currency differences, net
Other non-cash items*
Change in working capital and other payments
Change in working capital
Income tax paid
Net cash provided (used) by operating activities
Purchases of property, plant and equipment and intangible assets
Proceeds from disposals of property, plant and equipment and
intangible assets
Decrease (increase) in loans and other non-current financial assets
Investments in companies included in the scope of consolidation,
net of cash acquired
Investment subsidies and grants received
Net cash provided (used) by investing activities
Capital increases of the parent company
Issuance of debt
Repayment of debt
Interest paid
Net cash provided (used) by financing activities
Net cash flow from continuing operations
Cash and cash equivalents – opening balance
Cash and cash equivalents – closing balance
Three months ended
March 31, March 31,
2015
2014
816
35
(1)
495
4
54
150
(20)
(622)
66
37
2
212
(51)
1,037
(400)
(37)
103
(75)
3
-
1
3
(1)
-
(397)
70
(9)
(253)
(192)
448
5832
1,031
(72)
2
(6)
(36)
(41)
(10)
101
92
*Mainly includes the non-cash financial income of 643.5 million coming from the cancellation of the earn-out as described
in Note 1.1.
2
The opening balance has been restated by 37 million euros in order to take into account (i) a change in the presentation
of cash and cash equivalents so that the position of cash and cash equivalentsdisclosed in the above statement of cash
flows is net of overdrafts and (ii) a reclassification in the opening balance of notes receivable.
Numericable SFR
Unaudited selected financial information
March 31, 2015
1
Significant events for the three-month period ended March 31,
2015
1.1
Acquisition of the 20% stake Vivendi owns in NumericableSFR
On February 18, 2015, Numericable-SFR and its majority shareholder Altice submitted a binding offer to
regarding the acquisition of the 20% stake Vivendi owns in Numericable-SFR, for a price of 40 euros per
share, representing a total amount of approximately €3,9 billions d'euros.
On February 27, 2015, Vivendi’s Supervisory Board approved the offer of Numericable-SFR.
On May 6, 2015 Numericable-SFR acquired half of Vivendi's stake through a share buyback program, the
remainder of the Vivendi's stake will be acquired by Altice.
This operation had the following impacts on the financial statements for the 3-month period ended March 31,
2015:
- a decrease by 1,948 millions of euros of equity reserves;
- an increase by 1,948 millions of euros of current financial liabilities.
This agreement include the following terms:
(i)
Vivendi paid to Numericable-SFR a purchase price adjustment in the amount of €116 million
according to the purchase price adjustment provisions contained in the agreements related to
the SFR acquisition. This price adjustment was accounted for as follows:
In the « restated » financial statements for the year ended 2014: recognition of a receivable
towards Vivendi in the caption « Other current financial assets» for €120 millions (correspondind
to the price adjustment as estimated on the acquisition date) vs a decrease of the provisional
Goodwill recognized on the Acquisition of SFR ;
In the consolidated financial statements for the 3-month period ended March 31, 2015 :
recognition of a financial expense of €4 millions.
(ii)
Vivendi permanently waives the €750 million earn-out that Numericable-SFR would have owed
Vivendi if it had achieved an EBITDA – Capex of at least €2 billion in one single fiscal year by 31
December. The Group likewise recognized a net financial income of €643,5 millions during Q1
2015, corresponding to the discounted value of the earn-out as accounted for in the financial
liabilitis of the Group as at December 31, 2014, and a tax income of €40,5 millions during Q1
2015.
(iii)
In the event of final invalidation of the merger between SFR and Vivendi Telecom International
(VTI), completed in December 2011, Vivendi agrees to return to SFR up to €711 million
corresponding to the principal tax amount paid by SFR to Vivendi in connection with its inclusion
in the Vivendi tax group.
1.2
Search of France’s competiton authority (“Autorité de la
concurrence”) in several offices of the Group on April 2, 2015
France’s competition authority searched the offices of the Group after several competitor raised concerns over
whether Numericable and SFR began working together before they received the official approval of the merger
from the antitrust body. The Group contests the facts put forward by its competitors.
Numericable SFR
Unaudited selected financial information
March 31, 2015
2
Segment Information
The following tables disclose the breakdown of revenues and Ebitda according to the three operating
segments defined by the Group : B2C/B2B/Wholesale.
2.1
Revenues
(in millions of euros)
B2C
B2B
Wholesale
Total
2.2
March 31,
2014
published
1,854
558
328
1,974
577
321
197
79
52
2,740
2,872
328
Ebitda
(in millions of euros)
B2C
B2B
Wholesale
Total
3
March 31,
2014
proforma
March 31,
2015
March 31,
2014
proforma
March 31,
2015
March 31,
2014
published
521
176
175
456
140
155
87
18
45
872
752
149
Bridge between Ebitda and Adjusted Ebitda
The following table shows the bridge between EBITDA as disclosed in the unaudited consolidated Statement of
Income and Adjusted EBITDA :
(en millions d'euros)
EBITDA
Restructuring costs (a)
Costs relating to stock-options
plans (b)
Disposal of assets
CVAE (Cotisation sur la Valeur
Ajoutée des Entreprises) (c)
Other income /expenses (d)
Adjusted EBITDA
March 31,
2015
872
6
March 31,
2014
proforma
752
7
March 31,
2014
published
149
-
2
3
1
4
(7)
-
22
17
3
23
930
(1)
770
154
(a) These restructuring costs include transactional indemnities and other costs relating to workforce planning
(Gestion Prévisionnelle de l’Emploi et des Compétences/GPEC)
(b) Expenses relating to IFRS 2.
(c) The business value added contribution (Cotisation sur la Valeur Ajoutée des Entreprises/CVAE) is restated
to the extent that some of the Group's competitors classify this tax, assessed on value added, as an income
tax in the sense of IAS 12.
(d) Mainly reflects the impact, on the period, of the cost savings that have already be negociated as if those
savings had been implemented as at January 1, 2015.
Numericable SFR
Unaudited selected financial information
March 31, 2015
The adjusted EBITDA is a financial indicator that is not defined in IFRS standards and excludes certain items
that Numericable SFR considers not relevant to its recurring operating activities or which are not cash.
Numericable SFR
Unaudited selected financial information
March 31, 2015
4
Net financial debt
(In millions of euros)
March
31, 2015
9,477
4,311
70
103
13,961
1,050
2,129
3,179
10,782
Bonds
Term loans
Finance leases
Other financial liabilities
Liabiliy items contributing to net financial debt (a)
Restricted cash
Cash and cash equivalents
Derivative instruments (c)
Asset items contributing to net financial debt (b)
Net financial debt (a) – (b)
December
31, 2014
8,670
4,047
69
75
12,861
546
912
1,458
11,403
(a) Liability items correspond to the nominal value of financial liabilities (excluding accrued interest, impact
of the amortized cost method, perpetual subordinated notes, operating debts and the financial liabilities
towards Vivendi in connection with the share buy back as disclosed in Note 1.1) – all these assets
having been translated at the closing rate.
(b) Asset items include cash and cash equivalents, and restricted cash if any.
(c) The value of derivative instruments, as at March 31, 2015, can be broken down as an exchange rate
impact of 2,140 million euros and an interest rate impact of (11) million euros.
5
Provisions and contingent liabilities
The Group is involved in legal and administrative proceedings that have arisen in the ordinary course of its
business. The most significant disputes and proceedings in which the Group is involved are described in Note
26 to the Consolidated financial statements for the year ended December 31, 2014.
The breakdown and change in provisions for the three months ended ended March 31, 2015 are as follows:
Three month period ended March 31, 2015
(In millions of euros)
Provisions for retirement benefits
Restructuring
Cost of site restoration
Litigation and other
Total
Current provisions
Non-current provisions
Opening
120
11
76
437
643
316
327
Change in
Scope
Increase
-
-
3
1
8
12
8
4
Utilization
(9)
(9)
(6)
(2)
Reversal
(8)
(8)
(8)
(1)
Other
(0)
(2)
(3)
12
(14)
Closing
123
12
76
425
636
323
314
Numericable SFR
Unaudited selected financial information
March 31, 2015
6
Condensed consolidated proforma financial information
6.1
Condensed consolidated proforma Income Statement for the 3
months ended March 31, 2014
Q1 2014
Numericable
SFR historical
consolidated
financial
statements
Revenues
Operating expenses
Operating income
Finance costs, net
Income tax income (expense)
Share of net income (loss) of associates
Income
- Attributable to owners of the entity
- Attributable to non-controlling interests
6.2
328
(253)
75
(40)
35
35
-
Q1 2014
SFR
2,443
(2,206)
237
(68)
(68)
(4)
96
94
2
Q1 2014
Virgin
106
(104)
2
(1)
(1)
-
-
Proforma
Adjustments
Amount Note
(4)
(32)
(37)
(61)
37
(61)
(61)
-
Q1 2014
Numericable SFR
proforma
financial
information
6.2.a
6.2.b
6.2.c
6.2.d
6.2.e
6.2.e
2,872
(2,596)
277
(169)
(41)
(4)
71
69
2
Notes to the condensed consolidated proforma financial statements
as at March 31, 2014
Basis of preparation
The condensed consolidated proforma financial information presented below was prepared in accordance with
Article 222-2 of the AMF General Regulations and AMF Instruction No.2007-05 relating to proforma financial
information.
It includes a condensed proforma income statement for the three-month period ended March 31, 2014,
aiming to present the impact of the Acquisitions of the SFR Group (SFR SA, SIG 50 and their subsidiaries,
including Telindus, acquired by the SFR Group on 30 April 2014) and of the Virgin Mobile Group (Omer
Telecom Limited and its subsidiaries) and the associated financing, as if the "Transactions" (Acquisitions,
financing of Acquisitions and refinancing transactions connected with the acquisitions) had occurred on
January 1st, 2014.
The proforma financial information is presented by way of example only and does not reflect the transactions
or financial position that Numericable SFR would have conducted or attained had the Transactions occurred
on 1st January 2014. The proforma financial information does not reflect Numbericable SFR's future
operating results or its future financial situation either. It does not include the restructuring and/or
consolidation costs that could be incurred following the Acquisitions, and which should not have a sustained
impact on the Group.
The proforma financial information does not include tax income/expense that would result from a tax
restructuring of the Group.
The condensed consolidated proforma financial information is based on preliminary estimates and
assumptions that Numericable SFR considers to be reasonable. In particular, as explained in Note 5.3. to the
2014 annual accounts, the value of goodwill calculated on the acquisitions of SFR and Virgin Mobile was
provisional at 31 December 2014 and will be reviewed on the basis of the final measurement of the fair value
of the assets acquired and liabilities assumed, which will be reflected by the recognition of certain identifiable
Numericable SFR
Unaudited selected financial information
March 31, 2015
acquired assets such as licences, trademarks and customer bases that have a limited lifetime and will be
depreciated. Consequently, the Group's future operating results could be impacted significantly by
depreciation charges connected with such identifiable acquired assets.
Only adjustments that can be documented and reliably estimated on the date that the condensed
consolidated proforma financial information is prepared are taken into account. For example, the condensed
consolidated proforma financial information does not reflect potential cost savings or synergies.
The change in the fair value of derivatives in the proforma information was calculated on the basis of the
market conditions and hedges existing in May 2014 when financing the Acquisitions, which is why there are
no proforma adjustments in that respect.
The condensed consolidated proforma financial information does not reflect any specific item such as
provisions relating to contractual provisions for change of control or any consolidation costs that could be
incurred as a result of the Acquisitions. Non-recurring items that are directly attributable to the Transactions
and that can be documented and reliably estimated are included in the proforma adjustments.
Historical financial information
The condensed consolidated proforma financial information should be read in conjunction with the Notes to
the annual accounts of the Group. They have been prepared on the basis of:
The Numericable-SFR consolidated financial statements as at March 31, 2014;
The financial statements of SFR S.A., SIG 50 S.A. and their subsidiaries for the 3-month period ended
March 31, 2014 (which have not been audited or subjected to limited review).
The Virgin Mobile consolidated financial information for the 3-month period ended March 31, 2014. As
Virgin Mobile's previous fiscal year ended on 31 March 2014, the financial information for the 3-month
period ended March 31, 2014 has been derived from:
o the consolidated financial statements as at 31 March 2014;
o the consolidated financial information for the 9-month period ended 31 December 2013
(which has not been audited or subjected to limited review).
Intragroup transactions
Following the Acquisitions, all transactions between Numericable-SFR, the SFR Group and the Virgin Mobile
Group are considered to be intragroup transactions. Thus, all transactions between Numericable-SFR, the SFR
Group and the Virgin Mobile Group have been eliminated when preparing the proforma financial information.
Numericable SFR
Unaudited selected financial information
March 31, 2015
Proforma adjustments
Unless otherwise indicated, the proforma adjustments are determined before any tax impact.
(a) The proforma adjustments to revenues reflect (i) the elimination of intragroup revenues between
Numericable SFR, SFR, Virgin Mobile and Telindus totalling 61 million euros and (ii) the inclusion of
Telindus Group revenues for the 3-month period between 1st January 2014 and 31 March 2014 in the
amount of 57 million euros.
(b) The proforma adjustments to operating expenses reflect mainly (i) the elimination of intragroup
transactions between Numericable SFR, SFR, Virgin Mobile and Telindus totalling 61 million euros and (ii)
the inclusion of Telindus Group operating expenses for the 3-month period between 1st January 2014
and 31 March 2014 in the amount of 58 million euros (iii) a negative impact of 59 million euros in
connection with the application of IFRIC 21 and (iv) a positive impact of 24 million euros due to the
activation of Subscriber Acquisition Costs as performed in the historical accounts of the Group starting
2015.
(c) The proforma adjustments to financing expenses (additional expense of 61 million euros) include mainly:
 The additional interest, for the period January to March 2014, on the New Financing raised by
Numericable-SFR in May 2014 as part of the Acquisitions, totalling 160 million euros (including
the amortisation of the cost of arranging new borrowings over their lifetime). The proforma
adjustments have been calculated on the basis of the borrowing terms obtained in May 2014
when financing the acquisitions;
 The cancellation of interest relating to Numericable SFR's former Senior Debt which has been
refinanced and was repaid early in May 2014. That interest represented 36 million euros for the
three month period ended March 31, 2014.
 The cancellation of interest on SFR's and Virgin's financial debts to their former shareholders
which were paid off by Numericable SFR when finalizing the Transactions. These financing
expenses represented 63 million euros for the three month period ended March 31, 2014.
(d) Tax income of 37 million euros has been reflected in the condensed consolidated proforma income
statement in line with the proforma adjustments impacting pre-tax income.
(e) None of these adjustments are considered to have an impact on non-controlling interests.
Numericable SFR
Unaudited selected financial information
March 31, 2015
6.3
Bridge from the pro forma operating result to proforma
Adjusted EBITDA
The following table shows the bridge between the proforma operating income as disclosed in the condensed
consolidated proforma income statement, and the proforma adjusted EBITDA.
Q1 2014
Numericable
SFR
Operating income
Amortisation and depreciation
EBITDA
Restructuring costs
Costs relating to stock option
plans
Disposal of assets
CVAE (Cotisation sur la Valeur
Ajoutée des Entreprises)
Other income/expenses
Adjusted EBITDA
75
Q1 2014
SFR
237
Q1 2014
Virgin
2
Proforma
Adjustements
(37)
Q1 2014
Numericable
SFR
Proforma
277
75
392
4
4
475
149
629
6
(33)
752
-
4
3
-
7
1
1
-
-
3
-
(7)
-
-
(7)
3
15
(0)
-
17
-
(1)
-
-
(1)
154
641
8
(33)
770
The adjusted EBITDA is a financial indicator that is not defined in IFRS standards and excludes certain items
that Numericable SFR considers not relevant to its recurring operating activities or which are not cash.
Numericable SFR identified similar adjustments at SFR and Virgin based on the information provided by SFR
and Virgin Mobile.