Television Franchise

Good afternoon, ladies and gentlemen, and welcome to the TF1 group conference call. At this time, I would like to turn the call over to Philippe Delery, CFO. Sir, please go ahead.

Thank you. Good evening, ladies and gentlemen. Thank you for joining us. I will start with the main key points and then give an overview of our results for the first nine months of 21. Then I will be happy to take questions as usual. Let's move to the financial results for the first nine months of 21. The TF1 Group posted strong results for the first nine months of 21, thanks to the combination of a positive trend in the TV ad market, a strong demand for content, as far as our production business is concerned, and cost control in line with our expectations. Group revenues stand at 1,651,000,000 euros, They are up by 21 percent compared to the first nine months or 20, and they are 37 million higher compared to end of September or 19 level. I would like to point out that revenues from our activities are up by 88 million euros year on year, which is plus 22 percent compared to last year, and 33 million euros versus September or 19 plus 7 percent. This performance illustrates the success of our group capacity to extend its core business to complementary activities like production distribution services. The current operating profit stands at 223 million euros plus 98 million euros versus last year and around 40 million higher than nine months or 19. Thanks to this, the group delivered a high current operating margin at 13.5% at the end of September 2021, 11.8% excluding government support of €27.7 million. TF1 remains focused on its ESG involvement. The AdSafe House launched in July an environmental advertising fund called Ecofunding. in order to support responsible advertising initiatives. This commitment has been recognized by the main extra-financial agencies. The group was recently awarded the third place in the GAIA ranking for companies over 500 million euros in sales by Etifinance, a French extra-financial agency. As a summary, I would point out the result of our two main activities for the first nine months at Solo. At the end of September, media revenue rose by 18% thanks to 202 million increase of ad spending on our linear and nonlinear screens. Investments in programming helped us secure higher ratings than last year. These higher ratings, as well as positive momentum in advertising, helped us regain value and score a significant increase. Profitability of this segment is 13.5%. The new end studio segment performed very well with revenues up by 69 million at end of September. That is to say 45% increase in a market where demand for content is high. Studio benefited from a catch-up effect as well as organic and external growth. Profitability stands at 13.3%. Let's now get into the details of our activities. I will start commenting on the performance of the media segment. Revenues rose by 221 million euros year-on-year with an increase of the operating profit of 72 million euros. First, advertising revenues significantly increased year-on-year by 21% growth. Our ad sales has worked to improve the value of our screens in specific day parts, such as access prime time, as a means to better monetize increasing audiences. The positive trend on the TV ad market, with only a few sectors still underperforming compared to 2019, cars, cosmetics, travel, also explains the growth of the ad revenue in Q3. Even if the basis of comparison stood at a high level last year, I'll remind you that we outperformed the market last year Q3 by 8.2%. Digital ad revenues, which rose by 12%, benefited from synergies and combined offers that we've developed between our linear and nonlinear activities. Other revenues within the media segment are up by 19.2 million euros, led by higher business services and music revenues. Regarding the cost of programs, the group has shown again its agility and its ability to save opportunities. It stands at 685 million euros, higher than in 2020, of course, when we had made significant one-off savings in a lockdown context. In a dynamic ad market, the group has continued to reinvest in fresh, innovative programs to offer stronger ratings to our clients. This led to a very good performance for the group's channel, whose ratings are up by 1.2 points for women below 50 and 0.8 points for people aged between 25 and 49. Moving on to the new end studio segment, revenue stand at 220 million euros. They increased by 69 million euros versus last year due to an excellent performance since the beginning of the year. Excluding the effect linked to the deconsolidation of the game sector, revenues of new end studio were up by 58%. Revenues at NUEN for the first nine months of 2021 were positively impacted by a strong demand for content as well as a catch-up effect since, in a COVID context, some productions initially planned to be delivered in 2020 were postponed in 2021. NUEN is pursuing its international development and acquired a majority stake in German production company Flair Films in September. after the acquisition of the Spanish studio Aizen in April. Newell also keeps on pursuing high-value added partnership with platforms like for Apple TV+, which has entered the post-production phase. And the book of orders stands at more than 1,800 hours and offers strong visibility for 2022. This segment posted a current operating profit 29 million euros, up by 25 million euros year-on-year. Just a quick word on the net profit. The net results attributable to the group stand at 147 million euros for the first nine months of 2021, including the investments in Salto. This level is higher than 2019 and already close to what was achieved at the end of December 2019. Let's now comment on the cash position. Excluding these obligations, the TF1 group had net cash of €36.3 million positive at end of September 2021 compared to no debt, €0.7 million at end of December 2020. The TF1 group generated at end of September the free cash flow of €165 million versus €51 million at end of 2020. It has a sound financial position and access to available bilateral credit facility for more than $1 billion. Now let's conclude with the outlook. For the end of 2021, our audiences and clients will benefit from a very strong and diversified lineup available both on linear and nonlinear. It will include new premium French scripted programs as well as entertainment programs that create a unique link. Convergence between TV and digital will reinforce the value creation for the benefit of our clients. UN Studio will pursue its objective of increasing international revenues and grow its book of orders with pure player platforms. Given these very good results, the TF1 Group increased its guidance and now anticipate a double-digit current operating margin rate above 12% for 2021. Well, that's concluded my review on the TF1 Group's results for the first nine months of 2021. Well, thank you again for having joined us, and should you have any questions, please do not hesitate to ask. Finally, I remind you that a recording of this conference call will be available. You will find the connection details on our website.

Thank you. Ladies and gentlemen, if you wish to ask a question, please press 01 on your telephone keypad. We have a first question from Annick Mass from Exxon BNP Paribas. Madame, please go ahead.