PRESS RELEASE

from VANTIVA (isin : FR0013505062)

Half-year financial report June 30 2024

image                                                                      HALF-YEAR CONSOLITED FINANCIAL REPORT – June 30, 2024

CONTENTS

I - Declaration by the person responsible for the interim financial report

 

II.     Half-yearly activity report to June 30, 2024

III.   Vantiva's condensed interim consolidated financial statements at June 30, 2024

IV.  Statutory auditors' report

image                                                                      HALF-YEAR CONSOLITED FINANCIAL REPORT – June 30, 2024

I - Declaration by the person responsible for the interim financial report


Paris, August 1st, 2024,

Declaration by the person responsible for the half-year financial report at June 30, 2024

I hereby certify that, to the best of my knowledge, the condensed half-year financial statements have been prepared in accordance with the applicable set of accounting standards and give a true and fair view of the assets, liabilities, financial position and results of operations of the Company and all the companies included in the consolidation, and that the attached half-year management report gives a true and fair view of the significant events during the first six months of the year, their impact on the financial statements, related-party transactions, and describes the main risks and uncertainties for the remaining six months of


image
the year.

 Gueuf

Vantiva Chief Executive Officer,

__________________________

Luis Martinez-Amago

VANTIVA 

10 Boulevard de Grenelle - 75015 Paris, France  Tel: +33 (0)1 45 78 11 45

www.vantiva.com

S.A. with capital of 4,901,364.11 euros

Head office: 10 Boulevard de Grenelle

75015 Paris, France

333 773 174 R.C.S. Paris


image                                                                      HALF-YEAR CONSOLITED FINANCIAL REPORT – June 30, 2024

 

 II. Half-year report at June 30, 2024

 

II HALF-YEAR REPORT AT JUNE 30, 2024 

 

A. Presentation of first-half 2024 results 

H1 2024 Key Highlights 

The demand for Connected Home has been hampered by strict capex policy from telco and cable operators still holding too high inventories. This has been particularly true in the North America and LATAM regions. But the consolidation of Home Networks activities has mitigated the negative impact of this change. Diversification businesses (retail and services) have started to contribute to the P&L. One positive note is the start of recovery in Q2, which showed 21% growth over last year. 

On SCS side, the decrease in optical discs demand has been in line with our anticipations and less severe than a year ago. The “Growth activities” have continued to develop well and offset part of the structural decline in optical disc. 

But the key achievement of the first half has been the success and the speed of the integration of the business acquired from CommScope. In less than 6 months, we have almost completed the operational merger of Home Networks and Vantiva’s Connected Home operations and have exited from most of the Transitional Service Agreements put in place in January.

Vantiva revenues totaled €1,004 million, down -3.4% (-2.9% at constant exchange rate).

Connected Home revenues amounted to €797 million for the half, a 1.2% decrease (-0.7% at constant exchange rate). SCS revenues were €206 million, down 10.9% (-10.6% at constant exchange rate).

Adjusted EBITDA has been negatively impacted by this volume decline and dual cost structure, but benefited from the first positive impacts of the combined business with Home Networks. It was down to €23 million in the semester vs €49 million in H1 2023. 

Connected Home, including Home Networks and Diversifications, contributed €33 million (versus €56 million in the previous year) to adjusted EBITDA while SCS contributed €2 million (versus €7 million in H1 last year).

FCF, before financial and tax for the half was positive by €30 million, showing a €104 million improvement over last year, despite a lower EBITDA, thanks to a favorable change in working capital.

Capex is €18 million below last year reflecting our strict policy, the first fruits of the combined business with Home Networks and the disposal of a real estate asset in Poland.

The working capital development which was more strictly managed by Vantiva than Home Networks, has benefited from Vantiva’s management.

 

Outlook 2024

We expect the recovery, which started in the second quarter, to accelerate in the second part of the year.

Therefore, the second half should benefit from better volumes of demand and positive impact from the synergies. In this context, Vantiva confirms its guidance for the year.

•       EBITDA > €140m

•       FCF [1] > €0m

 

I-

Segment Review – H1 2024 Results Highlights

 

Connected Home

Revenues breakdown by product

In € million

H1 2024

H1 2023

Change at current rate

Change at constant rate

Revenues

797

 

476

807 

 

647

(1.2)%

(26.5)%

(0.7)%

(26.2)%

o/w by product

Broadband

Video

287

160 

79.6%

81.0%

Diversification

34

33

4.2%

 

56 

7.0%

nm

(41.2)%

nm

(40.2)%

EBITDA adj

As a % of revenues

 

Connected Home revenues contributed 79% of Group revenues (78% in H1 23) and totaled €797 million in the semester, down 1.2%. At constant exchange rate, the decrease would have been -0.7% compared with H1 2023. The integration of Home Networks and Diversification activities have almost compensated for the negative impact of the lower demand in a context of inventory adjustments by our customers. North America has been the most penalized market, as well as LATAM. Eurasia and APAC regions have resisted better, notably thanks to Video products. 

Adjusted EBITDA of the division amounted to €33 million (vs €56 million in H1 23), or 4.2% of revenues (vs 7.0% in H1 23). The drop in revenues and the dual operational cost structure due to the acquisition (HN) are the main reasons for the margin decline.

image 

Supply Chain Solutions

In € million

H1 2024

H1 2023

Change at current rate

Change at constant rate

Revenues

206

 

153

231 

 

193

(10.9)%

(21.1)%

(10.6)%

(20.9)%

o/w by activity

  Disc

  Growth activities

53

0.7%

38

3.0%

42.0%

42.3%

EBITDA

(77.9)%

(77.3)%

As a % of revenues

 

SCS revenues totaled €206 million in the period, down 10.9% from H1 2023. At constant exchange rate the decline would have been 10.6%. The volume decline of the optical disc activity has normalized and has been partly offset by continuing price actions. Logistics activities have continued to develop well, but the Freight business is still suffering from overcapacity. Vinyl records production has grown strongly as expected. Thus, it is in line with our plan in the US, meanwhile we have higher expectations in Europe where competition is more fragmented.

Adjusted EBITDA of the division amounted to €2 million (vs €7m in H1 23), or 0.7% of revenues (3.0% in H1 23). The margin decline came from the lower volumes of optical discs. 

Corporate & Other

In € million

H1 2024

H1 2023

Change at current rate

Change at constant rate

Revenues

0

(11)  ns

(14)  ns

 

 

EBITDA

nm 

nm

As a % of revenues

“Corporate & Other” have no revenue anymore and the corporate costs explain the EBITDA negative contribution of -€11 million vs -€14 million in H1 2023. This is nonetheless delivering a €3 million saving year-on-year.

                 

II-

Results analysis

 

P&L analysis

In € million

H1 2024

H1 2023

Change at current rate

Change at constant rate

Revenues from continuing operations

1,004 23

1,038  49 

(3.4)%

(2.9)%

Adjusted EBITDA from continuing operations

(52.3)%

(51.1)%

As a % of revenues

2.3%

(46)

4.7%

(40)

(240)bps

(235)bps

D&A & Reserves1, w/o PPA amortization

15.5%

16.1%

Adjusted EBITA from continuing operations

(23)

nm

nm

As a % of revenues

(2.3%)

(15)

0.9%

(13)

(315)bps

(310)bps

PPA amortization

(10.2)%

(10.6)%

Non-recurring items

(61)

(146)

nm

nm

EBIT from continuing operations

(98)

(150) 

nm

nm

As a % of revenues

(9.8)%

(58)

(14.5)%

(55)

na

na

Net financial income (loss)

(6.9)%

(7.6)%

Income tax

(9)

3

nm

nm

Gain (loss) from associates 

(1)

(25) 

nm

nm

Profit (loss) from continuing operations

(166)

(1)

(227)

(2)

nm

nm

Net gain (loss) from discontinued operations

nm

nm

Net income (loss)

(167)

(229)

nm

nm

1Risk, litigation and warranty reserves

H1 Revenues stood at €1,004 million, representing a 3.4% decrease (-2.9% at constant exchange rate). The decrease for Connected Home (-1.2%) resulted from the consolidation of Home Networks business and the lower demand from our main customers due to market conditions. SCS revenues were down 10.9% reflecting the structural decline of the optical disc demand, partly offset by the growth of the other activities. 

H1 Adjusted EBITDA amounted to €23 million, down €26 million year-on-year. This stems from the decline in volume but also largely from the dual cost structure coming with the integration of Home Networks.

H1 Adjusted EBITA of -€23 million represented a €32 million year-on-year decrease, explained by lower EBITDA and higher depreciation and amortization.

PPA amortization was slightly up at -€15 million versus -€13 in H1 2023.

Non-recurring items amounted to -€61 million versus -€146 million a year ago which was largely impacted by the impairment of SCS goodwill.

EBIT from continuing operations was a -€98 million loss compared to -€150 million. 

The financial result totaled -€58 million in the first half, compared to -€55 million in H1 2023. 

Income tax is a negative of €9 million, versus a positive of €3 million.

Result from associates is negative of -€1 million versus -€25 million last year (depreciation of our stake in TCS from the first of January to the deconsolidation date).

Net loss from continued operations amounted to -€166 million compared to -€227 million in H1 2023.

Result of discontinued operations showed a small loss of €1 million.

Group net result therefore is a loss of -€167 million in the half, compared to a loss of -€229 million in H1 2023. 

 

FCF and debt analysis

In € million

H1 2024

H1 2023

Change at current rate

Change at constant rate

Adjusted EBITDA from continuing operations

23 

(26)

49 

(44)

(52.3)%

(51.1)%

Capex

(40.7)%

(40.4)%

Non-recurring items (cash impact)

(58)

(26)

nm

nm

Change in working capital and other assets and liabilities

91 

(54) 

nm

nm

Free Cash Flow from continuing operations before Tax & Financial

30 

(74) 

104

105

 

 

 

 

 

 

30/06/2024

31/12/2023

Nominal Gross Debt (including IFRS 16 Lease debt)*

           516 

              544 

Cash and Cash Equivalent

             (39)

             (133)

Net financial debt at nominal value (non IFRS)

           477 

              411 

IFRS adjustments**

               4

               (4)

Net financial debt (IFRS)

           481 

               407 

*      Nominal Gross Debt considers PIK interest at nominal value and excludes exit fees accruals

**  IFRS adjustments consider PIK at IFRS value and exit fees and deduct original discount fees (OID)

Capex decreased by 40.7% thanks to strict control of spending, first fruits of the merger and the disposal of a real estate asset in Poland. 

Free Cash Flow[2] went from -€74 million to €30 million. This significant improvement despite the lower EBITDA 

(-€26 million) came from lower capex (€18 million) and positive change in working capital (€144 million) explained by better payment terms with some suppliers, following the acquisition.

The cash position at the end of June 2024 was €39 million not including the Wells Fargo Credit Line of €66 million.

Appendix 

image 

Debt details 

In € million

Line

Characteristics

Nominal

IFRS amount

Nominal Rate

IFRS Rate

Barclays 

Cash: Euribor 3M + 2.50% & PIK

258

258

10.2%

13.5%

Angelo Gordon

Cash: Euribor 3M + 4.00% & PIK

131

131

13.2%

17.8%

Barclays AG short term loans

PIK: E+ 10%

11

11

13.7%

21.3%

Wells Fargo

WF Prime +2.0%

31

31

10.3%

10.3%

Operating Lease

67

67

15.8%

15.8%

Capital Lease

2

2

11.2%

11.2%

Other

16

20

NA

NA

Total Debt

 

516

520

11.4%

14.3%

Cash & Cash Equivalents

 

39

39

 

 

Net Debt

 

477

481

 

 

 

IFRS 16 impact

                  

                        In € million                         

    image       

                            SALES                            

                         EBITDA ADJ                         

                        In % of sales                       

                             EBITA                            

                 Operating Cash Flow                 

             FCF before Financial & Tax             

              FCF after Financial & Tax               

    image       

                                                                              imageActual H1 24                                                    

                                                                                                  

 

 

         Actual H1 24          

(excl. IFRS16)

image

              Actual              

          Current rate          

  image         

               1,004              

                                  

                 7                  

               0.7%               

               (27)                

               (52)                

                                  

                11                  

               (33)                

                                  

                                  

 

        IFRS16 impact         

image

              Actual              

          Current rate          

  image         

                 +0                 

                                  

                +16                

                1.6%              

                 +4                 

                +16                

                                  

                +19                

                +14                

                                  

                                  

 

Reconciliation of adjusted operating indicators 

In addition to published results, and with the aim of providing a more comparable view of the evolution of its operating performance in H1 2024 compared to last year, Vantiva is presenting a set of adjusted indicators which exclude the following items as per the statement of operations of the group’s consolidated financial statements:

•       net restructuring costs;

•       net impairment charges;

•       other income and expenses (other non-current items).

In € million                                                                                                                                                        H1                  H1 Change1

                                                                                                                                                                       2024      2023

EBIT from continuing operations

(98) (69) 

(150)

52

Restructuring charges, net

(8) 

(61)

Net impairment gain (losses) on non-current operating assets

(4) 

(135) 

131

Other income (expense)

12

(4)

16

PPA amortization

(15) 

(13)

(1)

Adjusted EBITA from continuing operations

(23) 

(46)

9

(32) 

Depreciation and amortization (“D&A”)

(40)

(6)

Adjusted EBITDA from continuing operations

23 

49

(26)

1 Variation at current rates

The caption “Adjusted EBITDA” corresponds to the profit (loss) from continuing operations before tax and net financial income (expense), net of other income (expense), depreciation and amortization (including impact of provision for risks, litigation and warranties).

The caption “Adjusted EBITA” corresponds to the profit (loss) from continuing operations before tax and net financial income (expense), net of other income (expense) and amortization of purchase accounting items. 

B.   Risk factors

The risk factors are of the same nature as those set out in Chapter 3.1 of the 2023 Universal Registration Document, which do not show any significant change in the first half of 2024.

C.   Transactions between related parties

The transactions between related parties mentioned in Chapter 7.4 of the 2023 Universal Registration Document continued during the first 6 months of the current financial year.

The main change that occurred during the period is described in Note 1.1.2 “Repayment of the short-term loan” in the appendix to the condensed half-year consolidated financial statements of this Report.


HALF-YEAR CONSOLITED FINANCIAL REPORT – June 30, 2024

image 

III. Vantiva's condensed interim consolidated financial statements at June 30, 2024


 

 

 

 

 

 

 

 

 

2024 HALF YEAR FINANCIAL REPORT

VANTIVA INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2024

This is a free translation into English of the French “rapport financier semestriel” and is provided solely for the convenience of English-speaking users.

This is the report on the Group for the first half 2024 condensed consolidated accounts which are prepared in compliance with articles L 451-1-2 III of the Code monétaire et financier and 222-4 et suivants of the Règlement Général de l’Autorité des Marchés Financiers.

 

 

 

 

 

 

 

 

 

 

 

 

             

TABLE OF CONTENTS

TABLE OF CONTENTS................................................................................................................................................................. 2

INTERIM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS............................................................................... 3

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME........................................................ 4

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION.................................................................. 5

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION.................................................................. 6

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS............................................................................... 7

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY.................................................................. 8

1. GENERAL INFORMATION........................................................................................................................................................ 9

1.1. MAIN EVENTS OF THE PERIOD...................................................................................................................................................... 9

1.1.1 VANTIVA’S ACQUISITION OF THE COMMSCOPE GROUP'S "HOME NETWORKS" BUSINESS............................................................................. 9

1.1.2 SHORT TERM LOAN REPAYMENT.................................................................................................................................................. 9

1.1.3 CHANGE IN GOVERNANCE......................................................................................................................................................... 9

1.1.4 TCS ADMINISTRATION PROCEDURE.............................................................................................................................................. 9

1.2. ACCOUNTING POLICIES APPLIED BY THE GROUP.............................................................................................................................. 10

1.1.1 BASIS FOR PREPARATION........................................................................................................................................................ 10

2. ACQUISITION OF THE COMMSCOPE GROUP'S "HOME NETWORKS" BUSINESS.......................................................... 12

2.1. OPERATING CONTEXT AND REGULATORY FRAMEWORK...................................................................................................................... 12

2.2. ACCOUNTING TREATMENT OF THE TRANSACTION............................................................................................................................. 14

2.3. PRELIMINARY ALLOCATION OF THE ACQUISITION PRICE..................................................................................................................... 15

2.4. CONTRIBUTION TO THE MAIN AGGREGATES.................................................................................................................................... 16

2.5. MAIN PRELIMINARY ASSUMPTIONS AND COMMENTS ON OPENING BALANCE SHEET...................................................................................... 17

3. SCOPE OF CONSOLIDATION................................................................................................................................................ 18

4. INFORMATION ON OPERATIONS.......................................................................................................................................... 18

4.1. INFORMATION BY BUSINESS SEGMENTS......................................................................................................................................... 18

4.2. DISAGGREGATED REVENUE INFORMATION...................................................................................................................................... 22

4.3. INFORMATION BY GEOGRAPHICAL AREA......................................................................................................................................... 22

4.4. INFORMATION BY PRODUCT........................................................................................................................................................ 22

4.5. OTHER INCOME & EXPENSES..................................................................................................................................................... 23

4.6. NET FINANCIAL INCOME (EXPENSE).............................................................................................................................................. 23

4.7. INCOME TAX.......................................................................................................................................................................... 23

5. GOODWILL, INTANGIBLE & TANGIBLE ASSETS................................................................................................................. 24

5.1. GOODWILL............................................................................................................................................................................ 24

5.2. INTANGIBLE ASSETS................................................................................................................................................................. 25

5.3. PROPERTY, PLANT & EQUIPMENT................................................................................................................................................ 26

5.4. RIGHT-OF-USE ASSETS............................................................................................................................................................. 26

6. EQUITY & EARNINGS PER SHARE....................................................................................................................................... 27

6.1. CHANGE IN SHARE CAPITAL........................................................................................................................................................ 27

6.2. EARNINGS (LOSS) PER SHARE.................................................................................................................................................... 27

7. FINANCIAL ASSETS, FINANCING & DERIVATIVE FINANCIAL INSTRUMENTS................................................................. 28

7.1. FINANCIAL ASSETS.................................................................................................................................................................. 28

7.2. FINANCIAL LIABILITIES.............................................................................................................................................................. 28

7.3. DERIVATIVE FINANCIAL INSTRUMENTS........................................................................................................................................... 30

7.4. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES............................................................................................................................ 31

7.5. LIQUIDITY RISK AND MANAGEMENT OF FINANCING AND CAPITAL STRUCTURE............................................................................................. 34

8. EMPLOYEE BENEFITS........................................................................................................................................................... 35

8.1. POST-EMPLOYMENT & LONG-TERM BENEFITS................................................................................................................................. 35

8.2. SHARE-BASED COMPENSATION PLANS.......................................................................................................................................... 35

9. PROVISIONS & CONTINGENCIES......................................................................................................................................... 36

9.1. DETAIL OF PROVISIONS............................................................................................................................................................. 36

9.2. CONTINGENCIES..................................................................................................................................................................... 36

10. SPECIFIC OPERATIONS IMPACTING THE CONSOLIDATED STATEMENT OF CASH-FLOWS....................................... 36

10.1. ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES & INVESTMENTS....................................................................................................... 36

10.2. CASH IMPACTS ON FINANCING OPERATIONS.................................................................................................................................. 37

11. SUBSEQUENT EVENTS....................................................................................................................................................... 37

INTERIM CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Sixth months ended June 30,

(€ in million)

CONTINUING OPERATIONS

Revenue

Cost of sales

Note

image

1 004

(862)

2023

1 038

(918)

imageimageGross margin             141                                   121

(127)

(101)

(53)

(36)

1

11

(69)

(8)

(4)

(135)

12

(4)

(98)

(150)

Selling and administrative expenses

Research and development expenses Other operating income

Restructuring costs

Net impairment losses on non-current operating assets                                   (5)

Other income (expense)                                                                                  (4.5)

Earnings before Interest & Tax (EBIT) from continuing operations

Interest income

2

0

Interest expense

(43)

(30)

Other financial expenses

(17)

(25)

imageimage    (4.6)                          (58)                                     (55)

(1)

(25)

(9)

3

(166)

(227)

(1)

(2)

(167)

(229)

(167)

(229)

                   -                                              -

Sixth months ended June 30,

Gain (loss) from associates

Income tax expense                                                                                        (4.7)

Income (loss) from continuing operations

DISCONTINUED OPERATIONS

Income (loss) from discontinued operations                                                   (11.1)

Net income (loss) for the year

Attributable to :

- Equity holders

- Non-controlling interest

EARNINGS PER SHARE

                               (in euro, except number of shares)                                                                 2024                                    2023

imageWeighted average number of shares outstanding (basic net of

image6.2 treasury shares held)

Earnings (losses) per share from continuing operations

- basic

- diluted

Earnings (losses) per share from discontinued operations

- basic

- diluted

Total earnings (losses) per share

- basic

- diluted

(0,34)

(0,34)

(0,00)

(0,00)

(0,34) (0,34)

(0,64) (0,64)

(0,01) (0,01)

(0,64)

(0,64)

 

 

The accompanying notes on pages 10 to 37 are an integral part of these interim condensed consolidated financial statements.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

image

The accompanying notes on pages 10 to 37 are an integral part of these interim condensed consolidated financial statements.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

December 31,

                                                                                                                             Note       June 30, 2024

image                                                          (€ in million)                                                                                                        2023

ASSETS

Goodwill

(5.1)

482

468

Intangible assets

(5.2)

171

133

Property, plant and equipment

(5.3)

88

90

Right-of-use assets

(5.4)

55

51

Other operating non-current assets

10

6

image

TOTAL OPERATING NON-CURRENT ASSETS

806

749

Non-consolidated investments

                 15

                 19

Other financial non-current assets

                 26

                 17

image

TOTAL FINANCIAL NON-CURRENT ASSETS

(7.4)

41

36

Investments in associates and joint-ventures

(1.1.4)

                   1

                   2

Deferred tax assets

21

20

869

806

TOTAL NON-CURRENT ASSETS

Inventories

281

204

Trade accounts and notes receivable

379

274

Contract assets

31

20

Other operating current assets

208

187

image

TOTAL OPERATING CURRENT ASSETS

899

685

Income tax receivable

11

10

Other financial current assets

(6.4)

19

29

Cash and cash equivalents

(6.1)

39

133

Assets classified as held for sale

0

1

968

859

TOTAL CURRENT ASSETS

1 837

1 665

TOTAL ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes on pages 10 to 37 are an integral part of these interim condensed consolidated financial statements.

 

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION  

 

 

December 31,

                                                                                                                                Note       June 30, 2024

image                                                        (€ in million)                                                                                                            2023

EQUITY AND LIABILITIES

Common stock (490,150,266 shares at June 30, 2024 with nominal value of 0.01

euro per share)

(6.1)

5

4

Subordinated Perpetual Notes

500

500

Additional paid-in capital & reserves

(569)

(435)

Cumulative translation adjustment

(54)

(63)

image

Shareholders equity attributable to owners of the parent                                                       (117)                             6

        Non-controlling interests                                                                                                                0                                 -

TOTAL EQUITY

(118)

6

Retirement benefits obligations

162

181

Provisions

(9.1)

39

27

Contract liabilities

1

0

Other operating non-current liabilities

11

3

image

TOTAL OPERATING NON-CURRENT LIABILITIES                                                                      212                          211

Borrowings       (7.2) 406 391 Lease liabilities (7.2) 43 37

        Other non-current liabilities                                                                                                          33                            -

        Deferred tax liabilities                                                                                                                     5                               3

TOTAL NON-CURRENT LIABILITIES

698

642

Retirement benefits obligations

(8.1)

30

34

Provisions

(9.1)

68

32

Trade accounts and notes payable

695

540

Accrued employee expenses

71

67

Contract liabilities

20

10

Other operating current liabilities

291

202

image

TOTAL OPERATING CURRENT LIABILITIES

1 175

885

Borrowings

(7.2)

45

92

Lease liabilities

(7.2)

26

22

Income tax payable

10

16

Other financial current liabilities

0

2

TOTAL CURRENT LIABILITIES

1 257

1 017

TOTAL LIABILITIES

1 955

1 659

TOTAL EQUITY & LIABILITIES

1 837

1 665

 

 

 

 

 

 

 

The accompanying notes on pages 10 to 37 are an integral part of these interim condensed consolidated financial statements.

 

 

 

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

June 30,

image2024               2023

Net income (loss)                                                                                                                                           (167)              (229)

Income (loss) from discontinued operations                                                                                                        (1)                  (2)

Profit (loss) from continuing operations                                                                                                       (166)              (227)

image

Summary adjustments to reconcile profit from continuing activities to cash generated from continuing operations

Depreciation and amortization

72

59

Net (income) loss of associates

1

25

Impairment of assets

(5.1)

4

135

Net changes in provisions

15

(15)

Gain (loss) on asset disposals

(33)

(0)

Interest (income) and expense

(4.5)

42

30

Other items (including tax)

17

13

Changes in working capital and other assets and liabilities

87

(54)

Cash generated from continuing operations

37

(35)

Interest paid on lease debt

(5)

(5)

Interest paid

(26)

(11)

Interest received

1

0

Income tax paid

(15)

(10)

Net operating cash generated from continuing operations

(8)

(61)

Net operating cash used in discontinued operations

(8)

1

NET OPERATING CASH GENERATED FROM CONTINUING OPERATIONS (I)

(8)

(61)

Acquisition of subsidiaries, associates and investments, net of cash acquired

0

(10)

Purchases of property, plant and equipment (PPE)

(10)

(20)

Proceeds from sale of PPE and intangible assets

12

0

Purchases of intangible assets including capitalization of development costs

(28)

(24)

Cash collateral and security deposits granted to third parties

(19)

(9)

Cash collateral and security deposits reimbursed by third parties

14

(8)

Net investing cash used in continuing operations

(32)

(70)

Net investing cash used in discontinued operations

3

(15)

NET INVESTING CASH USED IN CONTINUING OPERATIONS (II)

(32)

(70)

Proceeds from borrowings

(10.2)

31

30

Repayments of lease debt

(10.2)

(8)

(11)

Repayments of borrowings

(10.2)

(75)

             -

Other

1

4

Net financing cash generated in continuing operations

(51)

22

Net financing cash used in discontinued operations

(0)

(1)

NET FINANCING CASH USED IN CONTINUING OPERATIONS (III)

(51)

22

image

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

39

39

The accompanying notes on pages 10 to 37 are an integral part of these interim condensed consolidated financial statements.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(€ in million)

 Share Capital

 Additional paid-in capital

 Perpetual

Notes

 Other reserves

 Retained earnings

 Cumulative translation

 Equity attributable to equity

holders of the Group

 Non-controlling

 Total equity

interest 

 Balance as of January 1, 2023 

4

232

500

173

(549)

(41)

320

         -                       320

Net loss for the year

 -

 -

 -

 -

(285)

 -

(285)

         -                       (285)

Other comprehensive income

(7)

(21)

(29)

(29)

Total comprehensive income for the period

(7)

(285)

(21)

(314)

 -

(314)

Capital increases

(1)

0

(1)

         0                       (1)

Equity instruments

1

1

         -                         1

Shared-based payment to employees

1

1

         -                         1

Transfer of lapsed awards from other reserves to retained earnings

 -

 -

 -

(1)

1

 -

 -

 -

 Balance as of December 31, 2023

4

231

500

167

(833)

(62)

6

         -                         6

Net income (loss)

 -

 -

 -

 -

(167)

 -

(167)

         0                     (167)

Net income (loss) for the half year

(167)

(167)

(167)

Other comprehensive income

 -

 -

 -

17

 -

9

26

         0                      26

Total comprehensive income for the period

 -

 -

 -

17

(167)

9

(141)

0

(141)

Capital increases

1

15

 -

 -

 -

 -

16

         0                      16

Equity instruments

 -

 -

1

 -

 -

1

         -                         1

Share-based payment

 -

 -

1

 -

 -

1

         -                         1

 Balance as of June 30, 2024                                                             5                   246                 500                 185               (1 000)             (53)                (117)                     0                      (118)      

The accompanying notes on pages 10 to 37 are an integral part of these interim condensed consolidated financial statements.

             

1. General information

Vantiva is a global technology leader in designing, developing, and supplying innovative products and solutions that connect consumers around the world to the content and services they love – whether at home, at work or in other smart spaces. Vantiva has also earned a solid reputation for optimizing supply chain performance by leveraging its decades-long expertise in high-precision manufacturing, logistics, fulfillment and distribution. Please refer to note 3.1 for details on the Group’s operating segments.

In these consolidated financial statements, the terms “Vantiva group”, “the Group” and “Vantiva” mean Vantiva SA together with its consolidated subsidiaries. Vantiva SA or the “Company” refers to the Vantiva group parent company. 

       1.1.      Main events of the period

1.1.1 Vantiva’s acquisition of the CommScope Group's "Home Networks" business 

On January 9, 2024, the Group finalized the acquisition of the Home Networks activity of CommScope Group, a U.S.-based appliance company providing home connectivity solutions and video set-top boxes. Vantiva has acquired all the assets and liabilities required to run the Home Networks activity.  

 A purchase agreement, subject to conditions precedent, specifying the terms and price of the Acquisition was signed on December 7, 2023 by Vantiva and CommScope. Note 2 details the acquisition operation.

1.1.2 Short term loan repayment

In March 2024 Vantiva agreed with the lenders to extend the maturity date applicable to the loans from March 30, 2024 to June 30, 2024. In February and June 2024, the short-term loan of 85 million euros was partially repaid for 48 and 27 million euros respectively (including 74.4 million euros in principal, interest and existing fees accrued to date). A new extension request was granted by the lenders in June 2024, postponing the payment date of the balance of 10,6 million euros at the latest to September 30, 2024.

1.1.3 Change in governance

On February 8, 2024 Brian Shearer, Head of European Credit Solutions at Angelo, Gordon & Co., L.P. (“TPG Angelo Gordon”), has been appointed as a Director and Chairman of Vantiva’s Board of Directors, replacing Richard Moat.

1.1.4 TCS administration procedure

On April 10, 2024 the news of Technicolor Creative Studios (TCS) entering into receivership was published in the BODACC (official trade journal) under N°2792, following a judgment of the Paris trade court. Throughout both the preparation of the 2023 financial information (financial statements and management report) and their closing by the Board of directors, and until this BODACC publication date, Vantiva had no access to this information regarding TCS, which was kept confidential. As of December 31, 2023, Vantiva’s assets in TCS were evaluated at fair value, on a going concern assumption and Vantiva had on its books 3.1 million euros for the shares held in TCS and a fair value of 7.6 million euros for the convertible bond subscribed in June 2023. The transition and separation services were terminated at the end of March 2024. At June 30, 2024, the majority of TCS shares and receivables held during the period had been written down. The bonds were exchanged on June 5, 2024 for shares in Technicolor Group SAS, the new group taking over the former TCS assets, in which Vantiva now holds a 1.76% interest valued at 3.4 million euros.

       1.2.      Accounting policies applied by the Group

 

 

1.1.1 Basis for preparation 

The interim condensed consolidated financial statements of the Group for the Hard Close ended 31 May 2024 were prepared in accordance with IAS 34, “Interim Financial Reporting”, a standard issued by the International Accounting Standards Board (IASB) and endorsed by the European Union. Because they are condensed, these financial statements do not include all the information required under the standards issued by the IASB and should be read in conjunction with the full-year financial statements of the Group for the year ended December 31, 2023.

The standards approved by the European Union are available on the following web site:

https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-andauditing/company-reporting/financial-reporting_en#ifrs

Vantiva financial statements are presented in euros and have been rounded to the nearest million. This may in certain circumstances lead to non‑material differences so that the sum of the figures equals the sub‑totals that appear in the tables. 

The interim condensed consolidated financial statements and notes were approved by the Board of Directors of Vantiva SA and authorized for issuance on July 24, 2024.

The accounting policies applied by the Group are consistent with those followed in the preparation of the Group’s Consolidated Financial Statements for the year ended December 31, 2023. The standards, amendments and interpretations which have been applied January 1,2024 have no impact for the Group (see Note 1.2.1.1).

1.2.1.1 Going Concern

The financial statements have been prepared on a going concern basis in the following context: 

Due to the variability of operations and the recent acquisition of Home Networks, the Company has an increased need for liquidity to complete the integration of the Home Networks business, among other things. This need has been reflected in the cash flow forecast and is expected to normalize once this process of integrating Home Networks activities is finalized. The key integration milestones were delivered in the first half of 2024, in particular (i) the roll-out of Vantiva's IT systems and processes across the entire business perimeter (ii) the merger of legal entities to simplify the group's legal footprint, (iii) organizational simplifications (iv) the inclusion of a portion of Home Networks' assets in Vantiva's financing programs and (v) the improvement of purchasing conditions and payment terms agreed with the main vendors.

Management has updated the 2024 budget initially approved by the Board of Directors on March 26, 2024. The cash flow forecast, established for the next twelve months, has been updated accordingly. This includes the following assumptions:

•         The achievement of the EBITDA budgeted for the full year 2024, the shift in revenue being offset by the expected benefits of the continued implementation of cost synergies and the Vantiva integration program, focused on the rationalization of IT systems, team structures and workforce reductions, the vast majority of which were initiated during the first half of 2024;

•         The continuation of (i) the $125 million credit facility obtained from Wells Fargo and factoring lines, (ii) purchase conditions and payment terms negotiated with key suppliers and (iii) continued optimization of inventory levels;

•         The continued incorporation of Home Networks assets into Vantiva's existing factoring and/or assetbased lending programs in H2 2024 existing or in addition to existing schemes (see note 7.5);

•         The continuation of existing favorable commercial conditions and payment terms negotiated by

Vantiva with key vendors and customers, complemented with some improvements to be concluded;

•         The continued compliance with financial commitments related to the Barclays and Angelo Gordon loans maturing in 2026 and 2027.

These structuring assumptions are essential to justify the going concern principle.

These action plans and the reasonableness of these assumptions were reviewed by the Board of Directors on July 24, 2024, which approved the revised budget and cash flow forecast.

1.2.1.2 New standards, amendments, and interpretations

Main standards, amendments, and interpretations effective and applied as of January 1st, 2024

New standard and interpretation

Main provisions

Lease Liability in a

Sale and Leaseback

(Amendments to IFRS

16 Leases)

These amendments provide clarification on the subsequent measurement of sale and leaseback transactions where the initial disposal of the asset meets the IFRS 15 criteria for recognition as a sale.

-           Classification of liabilities as current or non-current - Deferral of effective date

Amendements IAS 1,                        (published 06/20)

-           Non-current liabilities subject to covenants (published 10/22)

imageSupplier Financing This amendment requires disclosure in the notes to the financial statements of supplier Arrangements financing arrangements, otherwise known as reverse factoring, with the aim of improving (Amendment to IAS 7 the transparency of these arrangements and their effects on liabilities, cash flows and and IFRS 7) liquidity risk.

No significant impact has been identified as the result of the implementation of the above amendments.

 

New standards, amendments, and interpretations not effective as of January 1st, 2025 No new standard has been applied by anticipation.

1.2.1.3 Basis of measurement, estimates & judgments. 

The financial information has been prepared using the historical cost convention with some exceptions regarding various assets and liabilities, for which specific provisions recommended by the IFRS have been applied.

-          Non-financial assets are initially recognized at acquisition costs or manufacturing costs including any costs directly attributable to bringing the assets to the location and condition necessary for them to be capable of operating in the manner intended by the Group’s management. Long term assets are subsequently measured using the cost model, cost less accumulated depreciation and impairment losses.

-          Financial assets & liabilities are initially recognized at fair value or at amortized cost (see note 8.4).

The preparation of consolidated financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period of the consolidated financial statements. These assumptions and estimates inherently contain some degree of uncertainty.  

Management regularly reviews its valuations and estimates based on its past experience and various other factors considered reasonable and relevant for the determination of the fair estimates of the assets and liabilities’ carrying value and the revenues and expenses.

Management bases its estimates on historical experience and various other assumptions that are believed to be reasonable and relevant. Actual results may differ from these estimates, while different assumptions or conditions may yield different results. 

Vantiva’s management believes the following to be the critical accounting policies and related judgments and estimates used in the preparation of its consolidated financial statements:

-          Going concern principle, despite the variability in the timing of sales, in particular with regard to the cash flow forecasts adopted by the board of directors on 26 March 2024 for the next 12 months;

-          Acquisition of the CommScope Group's "Home Networks" business and measurement of the fair value of assets and liabilities as of acquisition date (see note 2);

-          Assessing the fair value of the shares in the new Technicolor Group;

-          Impairment of goodwill and intangible assets with indefinite useful lives (see notes 5.1);

-          Determination of expected useful lives of tangible and intangible assets (see notes 5.2 & 5.3);

-          Determination of the term of the rents for the estimation of the right of use and of recoverable amounts for individually impaired right-of-use asset (see note 5.4);  

-          Presentation in other income (expense) (see note 4.5);

-          Determination of inventories net realizable value;

-          Deferred tax assets recognition ;

-          Assessment of actuarial assumptions used to determine provisions for employee postemployment benefits (see note 8.2);

-          Measurement of provisions and contingencies (see note 9); -      Determination of royalties payables.

1.2.1.4 Foreign exchange translation rates

The main exchange rates used for translation (one unit of euro converted to each foreign currency) are summarized in the following table:

image

                                                                             Closing rate                                                       Average rate

June 30th        December       June 30th

     2024             31st 2023             2023

June 30th        December       June 30th

     2024             31st 2023             2023

1.0705

1.1050                 1.0866

1.0828

1.0816                 1.0789

1.6079

1.6263                 1.6398

1.6406

1.6297                 1.6108

89.2495

91.9045              89.2065

90.1398

89.3371               88.7613

19.5654

18.7231              18.5614

18.5590

19.2035               19.6636

US Dollar (USD)

Australian Dollar (AUD)   

Indian Rupee (INR)     Mexican Pesos (MXN)   

2. Acquisition of the CommScope Group's "Home Networks" business 

         2.1.      Operating context and regulatory framework

Main stages of the “Home Networks” purchase:

-          On December 7, 2023, a Purchase Agreement has been signed by Vantiva and CommScope

-          On December 19, 2023, The Combined General Meeting called upon to vote on the issuance of New Shares to CommScope

-          On January 9, 2024, Vantiva acquired 100% of Home Networks’ share capital from CommScope and carried out a reserved capital increase of 16 million euros paid up by debt clearing.

On January 9, 2024, the Group finalized the acquisition of the Home Networks activity of CommScope Group, a U.S.-based appliance company providing home connectivity solutions and video set-top boxes. Vantiva has acquired all the assets and liabilities required to run the Home Networks activity. 

A purchase agreement, subject to conditions precedent, specifying the terms and price of the Acquisition was signed on December 7, 2023 by Vantiva and CommScope (hereinafter, the "Purchase Agreement").

The Purchase Agreement provides for: 

-          remuneration in Vantiva’s shares representing a detention of 27.48% on a non-diluted basis and of 25% on a fully diluted basis. Subject to the lifting of the Conditions Precedent of the Purchase Agreement, the entire proceeds of the Acquisition will be reinvested in capital by CommScope within Vantiva via a share capital increase reserved to it. CommScope will subscribe, by way of debt set-off, to New Shares in Vantiva under the conditions set out in the Investment Agreement. Vantiva has completed on January 9, 2024, a reserved capital increase of 16 million euros paid up by debt set-off;

-          the payment of an earn-out in cash to CommScope, if certain conditions are met. The maximum total amount of an earn-out has been set at one hundred million US dollars. This financial liability was initially valued at around 33 million euros and remains unchanged at 30 June 2024. 

The Purchase Agreement specifies that the scope of the acquisition is defined as follows:

-          all liabilities relating to the Home Networks activity, excluding tax liabilities incurred prior to the Completion Date;

-          all the assets related to the Home Networks activity with the exception of certain excluded assets, including in particular:  o the ARRIS© brand;

o    certain patents (which are however subject to a user license); 

o    surplus stocks of components (defined as the value of stocks exceeding the level of stocks required to carry out the activity); 

-          services related to the Home Networks activity; 

-          employees attached to the Home Networks activity; 

-          it being understood that the legal and tax structure targeted in the context of the sale has been defined in such way to enable CommScope to retain the tax attributes historically generated by CommScope; 

-          it being understood that the Transaction is being carried out without any transfer of financial debt or cash, other than to pay for existing cash, debt or indemnification of transfer costs and excluded liabilities.

image

Vantiva completed on January 9, 2024, a reserved capital increase of €16 million released by way of debt clearing subscribed by CommScope; In doing so, CommScope’s detention in the share capital of Vantiva SA is 134,705,669 shares held out of a total of 490,136,411 shares composing Vantiva’s share capital, representing a detention of 27.48% on a non-diluted basis and of 25% on a fully diluted basis. The expected value creation will therefore be shared between the current shareholders of Vantiva and CommScope on a 75% / 25% basis. An investment agreement between Commscope and Vantiva provides for an undertaking to retain Vantiva shares for a period of eighteen months from the Issue Date (the “Conservation Commitment” or “Lock-up”), subject to:

(i)            transfers to CommScope Affiliates who will be bound by the terms of the Investment Agreement, or

(ii)           Change of Control of Vantiva.

As long as CommScope serves on the Board of Directors, except with Vantiva prior consent CommScope and its Affiliates, if any, have undertaken, directly or indirectly, alone or in concert with a Third Party, not to acquire or propose to acquire (other than as a result of a stock split, stock dividend or participation in any share capital increase or issue of shares with shareholders' preferential subscription rights), or subscribe for, or offer to subscribe for, any additional shares or securities in the Company which would result in CommScope holding a proportion of the Company's share capital greater than the proportion of the Company's share capital it holds following the Reserved Share Capital Increase.

         2.2.      Accounting treatment of the transaction

Taking into account IFRS 3 "Business Combinations" ("IFRS 3") and the Purchase Agreement Home Networks, Vantiva's management has determined that, for accounting purposes, Vantiva is the acquirer and Home Networks is the acquiree, given that Vantiva is acquiring, directly or indirectly, the entire Home Networks activity of the CommScope Group. It was considered that the number of Vantiva shares issued in consideration for CommScope’ contribution and the provisions of the Investment Agreement, signed as part of the Acquisition as described in section 1.2.2 of the amendment to the URD 2022, would not enable CommScope to exercise exclusive control over Vantiva.  

In accordance with IFRS 3, CommScope's Home Networks activity is the acquiree, its identifiable assets acquired and liabilities assumed will be accounted at their fair value at the acquisition date, as defined under IFRS 3. 

The Group is still within the relevant one-year valuation period, and is continuing to collect the information needed to evaluate the assets acquired and liabilities assumed. Paragraph 36 of IFRS 3 requires in particular that, before recognizing a gain on a bargain purchase ("Badwill"), the acquirer should review the procedures used to measure the amounts of consideration transferred. In this context, the present Financial Information uses preliminary data.

The Group has started and will continue to review the opening balance sheet of the Home Networks business and making a preliminary allocation of the acquisition price with the help of valuation experts and external accountants. In view of the work in progress, which will continue over the coming months, the values presented in the adjustments correspond to estimates at the date of preparation of the Halfyear Financial Information, which could be different at the time of preparation of the annual financial statements.

         2.3.      Preliminary allocation of the acquisition price

In this case, the provisional balance sheet of the acquisition is as follows:

image

January 9,

                                                                              (€ in million)                                                                    2024

Intangible assets

36

Property, plant and equipment

12

Right-of-use assets

7

Other operating non-current assets

2

TOTAL OPERATING NON-CURRENT ASSETS

58

Other financial non-current assets

1

TOTAL FINANCIAL NON-CURRENT ASSETS

1

Deferred tax assets

2

TOTAL NON-CURRENT ASSETS (a)

61

Inventories

82

Trade accounts and notes receivable

216

Contract assets

6

Other operating current assets

43

TOTAL OPERATING CURRENT ASSETS

348

Income tax receivable

6

Other financial current assets

2

Cash and cash equivalents

12

TOTAL CURRENT ASSETS (b)

368

Retirement benefits obligations

1

Provisions

9

Contract liabilities

1

Other operating non-current liabilities

8

TOTAL OPERATING NON-CURRENT LIABILITIES

19

Lease liabilities

7

Deferred tax liabilities

3

TOTAL NON-CURRENT LIABILITIES (c)

29

Provisions

17

Trade accounts and notes payable

191

Accrued employee expenses

16

Contract liabilities

9

Other operating current liabilities

85

TOTAL CURRENT LIABILITIES (d)

318

TOTAL OF NET ASSETS ACQUIRED AT FAIR VALUE (e) = (a)+(b)-(c)-(d)

83

Transferred Conisderation (f)

59

TOTAL PRELIMINARY BADWILL (g) = (f)-(e)

(24)

The provisional allocation of the purchase price is presented below:

January 9, 2024

(€ in million)

image

- Payment in newly Issued Shares

16

   Fair value of the consideration subscribed in Vantiva shares by way of debt set-off (M€)

- Final Cash Consideration 11

- Earn-Out, Fair value of the consideration subscribed in Vantiva shares by way of debt set-off (M€) 33

TOTAL ACQUISITION COSTS, Fair value of the transferred counterpart (M€)

59

Fair value of acquired net assets

83

TOTAL PRELIMINARY BADWILL

(24)

According to IFRS 3 Standards, when the acquisition price of the participation and the fair value of the minority interests are less than the identifiable assets and liabilities assumed at the fair value, then the goodwill is negative: a badwill must be recorded as profit at the date of acquisition.

As a result, the preliminary badwill was recognized in other income in the interim condensed consolidated statement of operations.

Detail on consideration components:

•       Equity (a share-based payment based on 134,704,669 shares in Vantiva SA representing 25% of Vantiva's share capital on a fully diluted basis, each share being valued at 11.6 euro cents, based on Vantiva's share price on January 9, 2024, i.e. €16 million) ;

•       The Earn-out (based on the fair value of the earn-out as at January 9, 2024, in accordance with IFRS 3 Revised. This amount is, at the discretion of the seller, either due in full after the combined group's EBITDA reaches the cap in one year, and payable in two equal annual instalments - subject to Vantiva's available liquidity (option A), or in one-third instalments after each financial year in which the cap is reached (option B). The fair value of this earn-out was estimated at 33 million euros. by an independent valuer, using a Monte Carlo simulation and the following assumptions:  

o    Medium-term plan approved by Vantiva's Board of Directors on March 26, 2024 ; o Assumption that the new combined group will reach the 400 million euros EBITDA threshold in 2027; 

o    Discount rate of 15.3%, including a risk-free rate of 4% and a mark-up of 11% to reflect Vantiva's cost of capital for its various activities; 

o    Asset volatility of 54%. 

o    Payment of the earn-out in two instalments in 2027 and 2028 (assuming exercise of Option A by the seller) ;

•       Final cash paid equal to the accounting position of the present cash at the acquisition date determined in accordance with the Purchase Agreement for €11 million was therefore returned to CommScope.

The determination of the Badwill is provisional as at 30 June 2024, the estimation of the fair value of the transferred counterparty and its allocation will be reviewed by closing date.  

         2.4.      Contribution to the main aggregates

Paragraphs 59 and 60 of IFRS 3 requires that the acquirer shall disclose information that enables users of the financial statements to evaluate the nature and financial effect of a business combination that occurs either during the current reporting period; or after the end of the reporting period but before the financial statements are authorized for issue. The acquirer shall also disclose information that enables users of its financial statements to evaluate the financial effects of adjustments recognized in the current reporting period that relate to business combinations that occurred in the period or previous reporting periods.

Revenue attributable to the Home Networks business cannot be reliably determined due to a first day combined business organization and large common customers, except for the retail revenue amounting to 34 million euros.

The profit and loss of the acquiree cannot be determined since Home Networks was actively integrated from the first day of the acquisition, through a common management and organization, unification of the supply chain and IT, and other various synergy-targeting actions. For the same reason, independent cash-flows cannot be attributed to Home Networks and the broadband and video business of Home Networks is integrated to the Connected Home CGU. 

         2.5.      Main preliminary assumptions and comments on opening balance sheet

•       Right of use:

Rights of use have been valued in accordance with the accounting and valuation methods applied by Vantiva and with IFRS (IFRS 3 §28A and §28B). Rents have therefore been discounted at the marginal borrowing rate of the entities purchased, and the useful life according to Vantiva's outlook.  Leases from Commscope embedded in the transition services agreement are included in this amount.

•       Intangible assets:

The intangible assets include:

-          A customer relationship valued preliminarily at 16.3 million euros by an external valuator using the multi-period excess earnings model, based on historical churn rates and sales. Based on the product life cycle, a 5-year amortization rate seem appropriate

-          Technologies, valued preliminarily at 15.1 million euros by an external valuator using the relief from royalty method. These technologies include unpatented know-how in integrating embedded softwares, mobility connectivity stacks, cloud and mobile apps into user-friendly products, among other expertise. It also includes the ECO software and associated technologies.

These intangible assets are depreciated over a 5-year term.

•       Taxes:

The preliminary amount of deferred tax presented on the opening balance sheet, is still under review, notably as the main entities of the acquired group were carved out before the sale.

•       Inventories:

As a general rule, inventories have been valued at standard cost (replacement cost as of acquisition date).

Inventories matching an existing purchase order have been valued at fair value of expected proceeds minus costs to sell. This led to a 7.2 million euros increase in inventory value.

Inventory fair value was reduced for references with no probable sales forecast in the twelve months following the acquisition date for an amount of 33.6 million euros including a depreciation of inventories of 21.5 million euros.

•       Trade accounts and notes receivable: 

Gross amount of trade receivables at opening balance sheet before review amounted to 268 million euros.  The preliminary fair value has been estimated taking into ageing and other information available on recoverability.

Operating provisions linked to customer claims have been recognized.for a preliminary amount of 11 million euros.

•       Other operating current assets:

The other operating current assets include the preliminary amount of the indemnification receivable from Commscope (+3 million euros) regarding excluded liabilities, an offset in Prepaids of unused Software contracts for -4 million euros.and the recognition of an onerous commitment .for -10 million euros.

•       Provisions:

The warranty provision has been recognized for a preliminary amount of 7 million euros, in line with the Group accounting methods.

•       Trade payables and other operating current liabilities

The trade payables include a preliminary amount of payables to Home Network suppliers, for claims which may relate, for example, to inventory taken in excess at the request of Home Networks, extracontractual services, price differences, etc. 

Other current and non-current operating for 23.8 million euros liabilities include a preliminary amount of liabilities relating to contractual obligations and likely contractual penalties due to firm commitments included in supply agreements.

An accrual relating to royalty claims made by patent holders against Home Networks or against customers has been recognized for19 million euros. These mainly non-litigious claims were valued taking into account potential settlement and maintenance costs.

3. Scope of consolidation

Acquisition of the CommScope Group's "Home Networks" business 

On January 9th, 2024, the Group completed the acquisition of CommScope’s Home Networks division, a US provider of devices that supply residential connectivity and video set top box solutions. The acquisition of CommScope Home Networks represents a transformational transaction for Vantiva, as it will significantly increase Vantiva’s Connected Home capabilities.

4. Information on operations

         4.1.      Information by business segments

Vantiva has two continuing business and reportable operating segments under IFRS 8: Connected Home, SCS (formerly known as DVD Services).

The Group’s Executive Committee makes its operating decisions and assesses performance based on this operating business. All remaining activities, including unallocated corporate functions, are grouped in the segment “Corporate & Other”.

Trademarks Licensing operations, Technicolor Creative Studios are presented in the discontinued operations line for the half year ending as of June 30, 2024, and 2023 and are not included in the note business segments.

Connected Home

The Connected Home segment offers a complete portfolio of Broadband and Video Customer Premise Equipment (“CPE”) to Pay‑TV operators and Network Service Providers (“NSPs”), including broadband modems and gateways, digital set‑top boxes, and Internet of Things (“IoT”) connected devices. The Connected Home revenues come from the sale of these devices and the associated services.

Supply Chain Solutions (SCS) (formerly DVD Services)

SCS segment is the worldwide leader in the replication, packaging and distribution of video, game and music CD, DVD and Blu-ray™ discs. The segment is increasingly focused on diversifying its business outside of packaged media, offering end-to-end supply chain solutions, comprising distribution, fulfillment, freight-brokerage, and transportation management services. Furthermore, SCS is the accelerating development of new non-disc related manufacturing businesses, including the production of polymer-based microfluidic devices for use in medical diagnostics and recent investments in vinyl record production capability. 

Corporate & Other

The segment « Corporate & Others » includes:

•       corporate functions, which comprise the costs of Group management, together with headquarters support functions, such as Human Resources, IT, Finance, Marketing and Communication, Corporate Legal Operations and Real Estate Management, and which do not service a particular business within the two operating segments of the Group;

•       Patent Licenses which monetize valuable patents not sold to InterDigital;

•       post‑disposal service operations and commitments related to activities sold, as well commitments from the former consumer electronics operations, mainly pension and legal costs.

Year ended June 30, 2024

Connected

Home

SCS

Corporate &

Other

TOTAL

Vantiva

                                        (€ in million)                                                                Sixth months ended 30 June, 2024

Statement of operations

Revenue

797

206

0

1 004

Intersegment sales

-

-

-

-

Earnings before Interest & Tax (EBIT) from continuing operations

(60)

(15)

(24)

(98)

Of which:

Amortization of purchase accounting items

(12)

(3)

(15)

Net impairment losses on non-current operating assets

(4)

0

(4)

Restructuring costs

(62)

(7)

0

(69)

Other income (expenses)

17

6

(10)

12

Adjusted EBITA

2

(11)

(13)

(22)

Of which:

Depreciation & amortization (excl PPA items)

(34)

(13)

(2)

(48)

Other non-cash items (1)

3

(0)

(1)

1

Adjusted EBITDA

Statements of financial position

33

2

(11)

23

Segment assets

1 426

251

20,98390

1 698

Unallocated assets

139

Total consolidated assets

1 837

Segment liabilities

1 055

111

254

1 420

Unallocated liabilities

535

Total consolidated liabilities excluding shareholders' equity

1 955

Other information

Net capital expenditures

(34)

8

(0)

(26)

Capital employed excluding goodwill

32

135

(13)

154

(1) Mainly variation of provisions for risks, litigations and warranties

 

 

Year ended June 30, 2023

Connected

Home

SCS

Corporate &

Other

TOTAL

Vantiva

                                        (€ in million)                                                              Sixth months ended June 30, 2023

Statement of operations

Revenue

807

231

0

1 038

Intersegment sales

-

-

-

-

Earnings before Interest & Tax (EBIT) from continuing operations

17

(147)

(20)

(150)

Of which:

Amortization of purchase accounting items

(11)

(3)

-

(13)

Net impairment losses on non-current operating assets

(1)

(133)

-

(134)

Restructuring costs

(2)

(5)

(1)

(8)

Other income (expenses)

0

(1)

(3)

(4)

Adjusted EBITA

31

(5)

(16)

9

Of which:

Depreciation & amortization (excl PPA items)

(29)

(14)

(2)

(45)

Other non-cash items (1)

4

2

-

5

Adjusted EBITDA

Statements of financial position

56

7

(14)

49

Segment assets

1 225

281

25

1 532

Unallocated assets

174

Technicolor Creative Studios and Trademark Licensing assets (2)

3

Total consolidated assets

1 709

Segment liabilities

732

135

258

1 125

Unallocated liabilities

498

Technicolor Creative Studios and Trademark Licensing liabilities (2)

3

Net Asset excluding shareholders' equity

1 627

Other information

Net capital expenditures

(34)

(10)

(0)

(44)

Capital employed

80

14

(15)

79

(1)      Mainly variation of provisions for risks, litigations, and warranties

(2)      re-presented to reflect the impacts of new IFRIC

 

The following comments apply to the two tables above:

1      The caption “Adjusted EBITDA” corresponds to the profit (loss) from continuing operations before tax and net financial income (expense), net of other income (expense), depreciation and amortization (including the impact of provision for risks, litigation and warranties);

2      The caption “Adjusted EBITA” corresponds to the profit (loss) from continuing operations before tax and net financial income (expense), excluding in particular other income, expenses and impairment of PPA;

3      The captions “Total segment assets” and “Total segment liabilities” include all operating assets and liabilities used by a segment;

4      The caption “Unallocated assets” includes mainly financial assets, deferred and income tax assets, cash and cash equivalents and assets classified as held for sale;

5      The caption “Unallocated liabilities” includes mainly the financial debt, deferred and income tax liabilities and liabilities classified as held for sale;

6      The caption “Net capital expenditures” includes cash used related to tangible and intangible capital expenditures, net of cash received for tangible and intangible asset disposals;

7      The caption “Capital employed” is defined as being the aggregate of both net tangible and intangible assets (excluding goodwill), operating working capital and other current assets and liabilities (except for provisions including those related to employee benefits, income tax, payables on acquisition of companies and payables to suppliers of PPE and intangible assets).

 

         4.2.      Disaggregated revenue information

In respect of IFRS15 Revenue from contracts with customers, continuing revenue per method of recognition, contract assets and liabilities are disaggregated in the following way:

Connected

Home

SCS

Corporate &

Other

797

206

                -

                 -

                -

0

797

206

0

June 30, 2024

                  1 003                           0

1 004

Revenue of continuing operations

imageimage                                  (€ in million)                                                                                                                                 image

Revenue recognized at delivery of goods or services1 038

Revenue from licenses0

1 038

         4.3.      Information by geographical area

(€ in million)

Revenue

France

U.K.

Rest of

Europe

U.S.

Rest of

Americas

Asia-Pacific

South-Africa

TOTAL

2024

                 122

                  106

32

536

135

59

13

1 004

2023

214

9

35

               571

147

62

0

1 038

 

Following the acquisition of the CommScope Group's "Home Networks" business, the group Vantiva gained a new market share in South Africa.

         4.4.      Information by product

 

image

         4.5.      Other income & expenses

image

 

In June 30, 2024, the other income (expense) increased by approximately 16 million euros, which are mainly related to preliminary badwill that was recognized in other income, to sale and lease back of Poland’s building and to various restructuring projects.

In June 30, 2023, the other income (expense) linked to the Group’s restructuring projects amounted to - 4 million euros.

         4.6.      Net financial income (expense)

(€ in million)

Interest income

Sixth months ended June 30,

2024

2023

 2

 0

Interest expense

 (43)

 (30)

Net interest expense

 (41)

 (30)

Net interest expense on defined benefit liability

 (3)

 (4)

Foreign exchange gain / (loss)

 1

 (0)

Other

 (15)

 (21)

Other financial income (expense)

 (17)

 (25)

Net financial income (expense)

 (58)

 (55)

In the first sixth months of 2024, the financial result showed a net financial expense of 58 million euros a higher level than in the first half of 2023, due to: 

o              Net interest expense of 41 million euros, increase significantly in the first half of 2024, including 33 million euros in interest linked to the cost of refinancing in 2022 and the short loan interest contracted in 2023. And includes 2 million euros of interest income on deposits.

o              Other financial expenses show a loss of 17 million euros in the first half of 2024. This change is mainly due to the depreciation of TCS shares for 7,4 million euros and interest costs on factoring and sale receivables for 3 million euros. As well as 3 million euros in financial charges related to pension plans.

         4.7.      Income Tax

The income tax expense for June 30, 2024 is determined using the year-end 2024 forecasted effective tax rate. This rate is computed at entity level or at the tax consolidation level if appropriate.

The income tax charge for the six months ended June 30, 2024 is summarized below: 

 

Sixth months ended June 30,

2024

2023

 (0)

 (1)

 (9)

 4

 (9)

 3

(€ in million)

France

Foreign Total Income Tax

 

 

 

 

Income tax expense at June 30, 2024 totaled 9 million euros, mainly due to various adjustments relating to prior years and to current taxes booked in Mexico, Italy, India, the United States, Poland and Brazil.  

 

Pillar 2 - International tax reform

 

The OECD's international tax reform, known as “Pillar 2”, which aims in particular to establish a minimum tax rate of 15%, came into force in France on January 1, 2024. The Group has embarked on a project to identify the impact and organize the processes needed to comply with its obligations. Given the current state of regulations in the countries in which the Group operates, no significant financial consequences have been identified based on the results and information obtained for the first half of 2024.

5. Goodwill, intangible & tangible assets

         5.1.      Goodwill

The following table provides the allocation of the goodwill to each Goodwill Reporting Unit (GRU) based on the organization effective as of December 31, 2023 and June 30, 2024.

image

 

Connected

Home

SCS

Total

(€ in million)

At January 1, 2023, net

458

162

619

                             Exchange difference                                 (16)                         (2)                         (18)

                             Impairment loss                                            -                         (133)                      (133)

At December 31, 2023, net

442

26

468

                             Exchange difference                                  12                           1                            13

At June 30, 2024, net

454

27

482

As a reminder, in the first half of 2023, an impairment loss of 133 million euros was booked to materialize the fall in structural optical disc demand in SCS division.

         5.2.      Intangible assets

Relations clients

Brevets & autres immobilisations

incorporelles

Total des immobilisations

incorporelles

(en millions d’euros)

Au 1 janvier 2023, net

24

138

163

      Brut                                                                                     270                              735                               1 005

       Amortissements cumulés                                              (246)                            (597)                              (843)

image

Ecarts de conversion

-

(4)

(5)

Acquisitions des activités poursuivies

-

40

40

Amortissements

(17)

(43)

(60)

Pertes de valeurs d'actifs

-

(5)

(5)

Au 31 décembre 2023, net

7

126

133

      Brut                                                                                     140                              723                                 863

       Amortissements cumulés                                              (133)                            (598)                              (731)

image

Ecarts de conversion

(0)

4

4

Mouvements perimetre (1)

16

20

36

Acquisitions des activités poursuivies

-

28

28

Amortissements

(9)

(25)

(34)

Pertes de valeurs d'actifs

-

(2)

(2)

Autres

5

1

6

Au 30 juin 2024, net

20

150

171

      Brut                                                                                     161                              787                                 948

Amortissements cumulés              (140)       (637)       (777) image 

         (1)        Related to Home Networks business acquisition

         5.3.      Property, plant & equipment

image

         (2)     Related to Home Networks business acquisition

         5.4.      Right-of-use assets 

image

Change in contract

9

-

9

Reclassification

-

2

2

Depreciation charge

(21)

(4)

(25)

image

(1)     related to Rennes new lease - A lease of 5 years and to the renewal of Aqua lease in Mexico for 2 years and half. 

(2)     related to Home Networks business acquisition, leases based in the US, Japan, GBR and India.

(3)     remeasurement of the right of use following a lease modification.

(4)     The impairment expense is mainly due to the rationalization of the sites following Home Networks’ acquisition. The expense is presented in the restructuring costs.

6. Equity & Earnings per share

         6.1.      Change in share capital

Number of shares

Par value

Share capital in Euros

(in euros, except number of shares in units)

Share Capital as of December 31, 2023

355 431 742

0,01

3 554 317

Capital increase

134 709 669

0,01

1 347 097

Exercice of  New Shareholders Warrants

8 855

0,01

89

Share Capital as of June 30, 2024

490 150 266

0,01

4 901 503

As presented in Note 2, the group issued 134 704 699 shares to CommScope as part of the compensation paid for Home Networks business acquisition.

         6.2.      Earnings (Loss) per share

          Diluted earnings (loss) per share

 

Sixth months ended June 30,

2024

2023

 (167)

 -

 (229)

 -

 1

 2

 (166)

 (227)

 490 150

 355 419

 -

 490 150

 355 419

(€ in million, except number of shares in thousands)

Net income (loss)

Net (income) loss attributable to non-controlling interest

Net (income) loss from discontinued operations

Numerator:

Adjusted profit “Group share” from continuing operations attributable to ordinary shareholders

Basic weighted number of outstanding shares (‘000)

Dilutive impact of stock-option, free share and performance share plans and convertible debt Denominator: Diluted weighted number of outstanding shares (‘000)*

 

 

Potential ordinary shares relate to the shares and options plans presented in note 8.2.

Due to the negative adjusted profit group share from continuing operations, none of these potential shares would have a dilutive effect.

 

 

 

 

 

 

 

 

 

 

7. Financial assets, financing & derivative financial instruments

         7.1.      Financial assets

Cash and cash equivalents

(€ in million)

Jun 2024

Cash (1)

36

Cash equivalents (2)

3

Cash and cash equivalents

39

imageDec 2023

33

100

133

(1) Cash corresponds to cash in bank accounts as well as demand deposits.

(2) Cash equivalents correspond to very liquid short-term investments, with an original maturity not exceeding three months, which are easily convertible at any time into a known amount of cash and for which the risk on the principal amount is negligible

 

Cash equivalents 

Cash equivalents amount to 3 million euros and have been invested in money-market funds.

In December 31, 2023, Cash equivalents were also invested in money-market funds.

 

         7.2.      Financial liabilities

Borrowings

Main features of the Group’s borrowings

In October 2023, Vantiva has contracted a new short-term debt, maturing March 2023 for 85 million euros. Since its inception, the loan has been partially repaid leaving only €10,625,000 of principal outstanding as of 30 June 2024 that has been extended at the latest in September 2024. The new loan was obtained with an independent pledges with Group’s assets.

Details of the Group’s debt without and with operating leases as of June 30, 2024, are given in the tables below:

Vantiva June 2024 Net Debt - without Operating Leases

Vantiva June 2024 Net Debt - without Operating Leases

EUR Millions

Borrower

Line

Characteristics

Nominal

IFRS Amts

Nominal Rate

IFRS Rate

Maturity

Vantiva

Barclays 1L

Cash: E + 2.5% Margin & PIK (1)

EUR

258

258

10,2%

13,5%

Sep-26

Vantiva

AG 2L

Cash: E + 4.00% & PIK: 5.00% (2)

EUR

131

131

13,2%

17,8%

Mar-27

Vantiva Technologies

Barclays Angelo G  Short Term Loan

PIK: E + 10%

EUR

11

11

13,7%

21,3%

Sep-24

Technicolor USA Inc.

WF

WF Prime Rate + 2% Margin

USD

31

31

10,3%

10,3%

Sep-26

Several Aff

Capital Lease

Various

2

2

11,2%

11,2%

Vantiva

Acc Interest Debt

EUR

2

2

N/A

N/A

Vantiva

Acc PIK

EUR

14

30

N/A

N/A

Several Aff

Others

Various

0

0

N/A

N/A

IFRS Adjustment

N/A

N/A

-12

N/A

N/A

                      Total Debt                                                                                                                              449                         453                   10,8%               14,1%

image

(1)Cash Interest = Euribor + margin 2.5% and PIK interests: 3.00% for the first year, increasing to 4.00% 12 months after closing, then 5.5% 24 months after closing, then + 0.5% every 12 months thereafter

(2)Cash Interest: EURIBOR + 4.00% then 6.00% after year 2 // PIK interests: 5.00% for the first year, increasing to 5.5% after 12 months, then 6.0%                              

 

 

 

 

 

Vantiva June 2024 Net Debt - with Operating Leases

EUR Millions

Borrower

Line

       Characteristics                Currency           Nominal

IFRS Amts

Nominal Rate

IFRS Rate

Maturity

Vantiva                     Barclays 1L

Cash: E + 2.5% Margin & PIK (1)

EUR

258

258

10,2%

13,5%

Sep-26

Vantiva                     AG 2L

Cash: E + 4.00% & PIK: 5.00% (2)

EUR

131

131

13,2%

17,8%

Mar-27

Vantiva Technologies Barclays Angelo G  Short Term Loan

PIK: E + 10%

EUR

11

11

13,7%

21,3%

Sep-24

Technicolor USA Inc.  WF

WF Prime Rate + 1.75 % Margin

USD

31

31

10,3%

10,3%

Sep-26

Vantiva June 2024 Net Debt - with Operating Leases

image                      IFRS Adjustment                                                                                           EUR                                                                            N/A                  N/A

                      Total Debt                                                                                                                                                                                    11,4%

(1)Cash Interest = Euribor + margin 2.5% and PIK interests: 3.00% for the first year, increasing to 4.00% 12 months after closing, then 5.5% 24 months after closing, then + 0.5% every 12 months thereafter

(2)Cash Interest: EURIBOR + 4.00% then 6.00% after year 2 // PIK interests: 5.00% for the first year, increasing to 5.5% after 12 months, then 6.0%                               

Pledges over other credit lines

The pledges under the other credit lines were untouched with WF mainly having first priority on US assets and First Lien and Second Lien and short-term loan secured by Connected Home assets (excluding US).

Mandatory and voluntary prepayments

In case of default or change of control of Vantiva, creditors will have the ability to immediately demand payment of all or a portion of the outstanding amounts.

100% of the net proceeds from non-ordinary disposal needs to be used to repay the debt, subject to reinvestment right, in the case of casualty events and the ability to retain up to 10 million euros of the cash proceeds.

The credit agreement defines an Excess Cash Flow, as a cash-flow generation that exceeds the needs of business operations.

Any Excess Cash Flow would trigger a mandatory partial repayment commencing for the fiscal year ending December 31, 2023 as per the test below:

•       For 50% if Total Net Leverage Ratio > 2.20x

•       For 25% if Total Net Leverage Ratio ≤ 2.20 and > 1.70x

•       And 0% if Total Net Leverage Ratio < 1.70x

No excess cash flow occurred in December 2023 and next test to occur in December 2024.

The events of defaults in the Debt Instruments include among other things and are subject to certain exceptions, thresholds and grace periods:

•       Failure by borrowers to make required payments when due under the Debt Instruments or of any other financial indebtedness or to comply with material obligations related to the Debt Instruments;

•       A cross default under which there is a default if any member of the Group defaults under any indebtedness involving an aggregate amount of more than 25 million U.S. dollars.

Financial Covenants

The documentation for the 1st lien, 2nd lien, short term loan and Wells Fargo contains a leverage covenant, tested on June 30 and December 31 starting in June 2023 and requiring the ratio of total net debt to EBITDA to be less than or equal to the levels given below :

                 June 30, 2024                                                   5.00 to 1.00

                 December 31, 2024 and thereafter                     5.10 to 1.00

The breach of this financial covenant is an event of default upon the occurrence of which the lenders can instruct the debt’s agent to declare it immediately due and payable.

The net debt as defined for the covenant is equal to the nominal value of the Group’s debt (excluding operating leases under IFRS16) minus (i) cash and (ii) cash collaterals that guarantee debt.

The EBITDA as defined for the covenant is equal to the Group adjusted EBITDA minus all IFRS 16 expenses. As required by the debt documentation, this adjusted EBITDA over 12 months includes also the second half year of Home Networks as acquired by Vantiva.

The calculated leverage ratios are shown below:

Date

Convenant Cap

Convenant

June 30, 2024

5,0

3,2

December 31, 2024 and thereafter

5,1

NA

Affirmative Covenants

The Debt Instruments (WF, 1L, 2L, Short Term Loan) contain various standard and customary affirmative covenants and in addition contain requirements to the Group to provide:

•       Semestrial financials: unaudited balance sheet, income statement, and cashflow statement (without notes);

•       Annual financials: audited balance sheet, income statement, and cashflow statement;

•       Annual Budget including Revenues, EBITDA, cash-flows and indebtedness ratio.

 

Negative Covenants

The Debt Instruments contain various standard and customary negative covenants as well as other specific covenants which restrict the Group’s ability to undertake certain actions.  

These include restrictions on: 

•       Indebtedness: Generally new indebtedness is not permitted with various exceptions and baskets notably for capital leases and unsecured debt.

•       Liens: New liens are generally not allowed except for some carve-outs and a general lien basket

•       Disposals: Subject to certain carve-outs and baskets, the Group is limited in its ability to make disposals.

•       Acquisitions: Except for a lifetime basket amount the Group cannot make acquisitions.

•       Distributions: The Group is limited in its ability to make external distributions, in particular to shareholders.

In June 30, 2024 Vantiva fully respects all applicable covenants and no case of default occurred between this date and the approval of the financial statements.

         7.3.      Derivative financial instruments 

In June 30, 2024 and December 31, 2023, the fair value of the Group’s financial derivatives was as follows:

image(€ in million) Foreign currency hedges interest rate hedges

Total

Foreign currency hedge characteristics

The foreign currency hedges outstanding at June 30, 2024 are shown in the table below:

€ in millions

Currencies

Notional(1)

Maturity

Fair value(2)

Forward purchases/sales and currency swaps

EUR/CAD

   1

2024

0

Forward purchases/sales and currency swaps

EUR/GBP

   14

2024

0

Forward purchases/sales and currency swaps

EUR/USD

-   29

2024

0

Forward purchases/sales and currency swaps

GBP/USD

-   84

2024

0

Forward purchases/sales and currency swaps

USD/AUD

   1

2024

0

Forward purchases/sales and currency swaps

USD/CAD

   35

2024

0

Forward purchases/sales and currency swaps

USD/JPY

   16

2024

0

Forward purchases/sales and currency swaps

USD/MXN

   3

2024

0

Forward purchases/sales and currency swaps

Other pairs

   1

2024

0

Fair value

1

(1) Net forward purchases/(sales), in millions of the first currency of the pair

(2) Market value in millions of euros at June 30, 2024

 

Interest rate hedges

The Group has no interest rate hedging instruments outstanding at June 30, 2024 . 

As a new debt was contracted on a EUR floating rate (EURIBOR), the Group has considered and is currently considering several options to hedge its interest rate exposures.  

Instruments not documented as hedges 

As of June 30, 2024 Group does not have any outstanding derivative instruments that are not documented as hedges.

         7.4.      Fair value of financial assets and liabilities

In accordance with IFRS 13 – Fair Value measurement, 3 levels of fair value measurement have been identified for financial assets & liabilities:

•       Level 1: quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date;

•       Level 2: internal models with observable parameters including the use of recent arm’s length transactions (when available), reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models, making maximum use of market inputs and relying as little as possible on entity-specific inputs;

•       Level 3: internal models with non-observable parameters.

The table below shows the breakdown of the financial assets and liabilities by accounting category:


At June 30,

2024, net

15

23

1

1

0

25

41

18

-

1

19

36

3

39

58

(406)

(406)

(33)

(33)

(43)

(481)

(45)

(26)

(0)

(0)

(72)

(553)

(€ in million)

Non-consolidated Investments

Cash collateral & security deposits

Loans & others

Subleases receivables

Convertibles bond (1)

imageOther non-current financial assets Total non-current financial assets

Cash collateral and security deposits

Other current financial assets

Derivative financial instruments

Other financial current assets

Cash

Cash equivalents

Cash and cash equivalents

imageTotal current financial assets

Non current borrowings (2) Borrowings

Earn Out   (3)

Other non-current liabilities

Lease liabilities

imageTotal non-current financial liabilities

Financial debt

Lease liabilities

Derivative financial instruments

Other current financial liabilities

image

image

Total current financial liabilities TOTAL FINANCIAL LIABILITIES Measurement by accounting categories as of June 30, 2024

Amortized costs

Fair value through profit & loss

Fair value through equity

Derivative

Instruments

(see note 8.5)

Fair Value measurement

-

15

-

-

 Level 1/Level 3

5

18

-

-

 Level 1/Level 2

1

-

-

-

 Level 2

1

-

-

-

 Level 2

-

0

-

-

 Level 3

image

0

18

-

-

 Level 1

-

-

-

-

image

-

-

-

1

 Level 2

image

-

36

-

-

 Level 1

-

3

-

-

 Level 1

image

(406)

-

-

-

 Level 2

-

(33)

-

 Level 3

(43)

-

-

-

 Level 2

(45)

-

-

-

 Level 2

(26)

-

-

-

 Level 2

-

-

-

(0)

 Level 2

-

-

-

(0)

 Level 2

(1)    Following TCS's placement in administration procedure, the convertible bonds held by Vantiva with a gross value of

10 million euros were converted into shares in the new “Technicolor Groupe” group

(2)    Borrowings are recognized at amortized costs (at cost, net of amortization). The total financial liabilities represent 609 million euros as of June 30, 2024 (546 million euros as of December 31, 2023).  

(3)    The group model valued the earn out of Home Networks acquisition (Level 3) using the Monte Carlo method to determine the present value of the resulting payments:

o    by estimating the EBITDA of the combined company in a risk-free environment based on the management’s forecast, 

o    using the conditions stipulated in the acquisition agreement (option A) to determine the present value of the resulting payments

 

image 

At December

31, 2023

19

15

1

0

8

24

43

20

-

1

21

34

100

133

155

(391)

(391)

-

-

(37)

(428)

(92)

(22)

(2)

(2)

(118)

(546)

(€ in million)

Non-consolidated Investments

Cash collateral & security deposits

Loans & others

Subleases receivables

Convertibles bond (1)

imageOther non-current financial assets Total non-current financial assets

Cash collateral and security deposits

Other current financial assets

Derivative financial instruments

Other financial current assets

Cash

Cash equivalents

Cash and cash equivalents

imageTotal current financial assets

Non current borrowings (2) Borrowings

Derivative financial instruments Other non-current liabilities

Lease liabilities

imageTotal non-current financial liabilities

Financial debt

Lease liabilities

Derivative financial instruments

Other current financial liabilities

image

image

Total current financial liabilities TOTAL FINANCIAL LIABILITIES Measurement by accounting categories as of December 31, 2023

Amortized costs

Fair value through profit & loss

Fair value through equity

Derivative

Instruments

(see note 8.5)

Fair Value measurement

-

19

-

-

 Level 1/Level 3

6

9

-

-

 Level 1/Level 2

1

-

-

-

 Level 2

0

-

-

-

 Level 2

-

8

-

-

 Level 3

image

0

20

-

-

 Level 1

-

-

-

-

image

-

-

-

1

 Level 2

image

-

34

-

-

 Level 1

-

100

-

-

 Level 1

image

(391)

-

-

-

 Level 2

-

-

-

-

 Level 2

(37)

-

-

-

 Level 2

(92)

-

-

-

 Level 2

(22)

-

-

-

 Level 2

-

-

-

(2)

 Level 2

-

-

-

(2)

 Level 2

image 


(1)    The group model valued the convertible bond (Level 3) as the addition of : o         a vanilla bond with a yield of 16% in line with the yield of debt similar to TCS debt at December 31 o                a long call representing the potential upside of conversion  o a short call representing the ability of TCS to force the conversion

The model yields a 7.6 million euros valuation for a volatility of 130% (Reuters suggested volatility) and 9 million euros for a 77% Volatility (Long-Term Volatility). The group retained the former valuation.

The model selected by the group returns a conservative valuation, which is in line with the low liquidity of the asset.

(2)    Borrowings are recognized at amortized costs (at cost, net of amortization). The total financial liabilities represent 545 million euros as of December 31, 2023 (431 million euros as of December 31, 2022).  

Some cash collaterals in U.S. entities are classified as current because of their short maturity but are renewed automatically for periods of 12 months.

        7.5.      Liquidity risk and management of financing and capital structure

 

Maturity schedule of the Group’s financings

EUR Millions

30 June 2024

Barclays 1L

AG 2L

Short Term Loan

WF Line

Accrued Interests

PIK Interests

Lease liabilities

Other debt

Total debt principal payments

Ajustement IFRS

Debt in IFRS

EUR Millions

Cash Interest 1L 2L Short Term Loan

PIK Interests 1L & 2L + Exit Fees

Lease liabilities - interest

Other debt - interest

Total Interest payments

Minus PIK and accrued interests included on debt table

Total Interest payments

2024-S2

2025

2026

2027

2028

2029

After

Total

11

31

2 1

14

11

258

19 13

131

10 13

9

7

2

258

131

11

31 2

30

69

0

59

11

290

155

9

7

2

532

image

-12

image

520

2024-S2

2025

2026

2027

2028

2029

After

Total

2

1 5

0 9

19

8

10

7

0 6

0 5

0 5

2

30

45

0

8

9

27

17

6

5

5

77

image

-32

image

45

The contractual cash flow obligations of the Group due to its current debt are considered to be equal to the amounts shown in the consolidated statement of financial position.

The group has mechanisms in place to be able to manage liquidity in countries where there are foreign exchange controls. The cash position in these countries (India and China) amounts to 8 million in 30 June 2024 (vs 10 million euros in 2023), mainly covering short-term needs.

Credit Lines

image(€ in million)

Committed lines expiring in more than one year

              *Undrawn confirmed line remains the same amount at $125m but at different exchanges rates                                    

The Group’s committed credit lines consist of a receivable-backed committed credit facility in an amount of 125 million U.S. dollar, equivalent to 117 million euros in 30 June 2024 exchange rate, (the “WF Line”). The availability of this credit line varies depending on the amount of trade receivables and inventories. In 30 June 2024 , 97 million euro worth of financing was available and 31 million drawn , hence 66 million available.  With 39 million of cash and cash equivalents, the total Group liquidity adds up to 105 million.

 

Factoring

In 30 June 2024 the group had 71 million euros of outstanding factoring amounts which were divided in  24 million euros of clients reverse factoring programs and 47 million euros of non-recourse factoring.

For the non-recourse factoring program, the Group counts with 2 counterparties, Wells Fargo in the USA and Eurofactor in France.  The Group has concluded that under these contracts, the receivables should be derecognized. In particular, the amounts received are definitive and cannot be changed based on future performance. The group only retains a dilution risk, that has been historically very low.

In France, transferred receivables are covered by an insurance program, with benefits transferred to the financial institution.

8. Employee benefits

        8.1.           Post-employment & long-term benefits

image

Medical post-retirement

                                                                                 Pension plan benefits                                                              Total

                              (€ in million)                                                                                         benefits

2024

2023

2024

2023

2024

2023

213

223

2

2

215

225

4

12

-

-

4

12

(13)

(28)

-

-

(13)

(28)

(16)

(1)

-

-

(16)

(1)

2

-

-

-

2

-

190

206

2

2

192

208

At January 1

Net periodic pension cost

Benefits paid and contributions

Actuarial (gains) losses recognized in OCI

Currency translation adjustments and other

At June 30th

Of which current

30

35

0

-

30

35

Of which non-current

160

179

2

2

162

182

As of June 30, 2024, the present value of the obligation amounted to 332 million euros, and the fair value of plan assets amounted to 148 million euros.

The Group has reassessed its actuarial assumptions on June 30, 2024. Actuarial gains mainly reflect variance of plan of assets and actuarial rates. The discount rates used in our reassessment are the following: 

-     Germany: 3.61 % vs. 3,17% at 2023 closing; -    UK: 5.10% vs 4,50% at 2023 closing; - USA: 5.13% vs. 4,60% at 2023 closing. 

        8.2.           Share-based compensation plans 

The number of options and free shares outstanding and their weighted average exercise price changed as follows at June 30, 2024 and December 31, 2023:

Number of options and free shares

Weighted Average

Exercise Price / Share value (in €)

Outstanding as of December 31, 2022

 2 696 437

1,00

(ranging from 0 to 74)

Granted (1)

Vested

Forfeited & other

Of which exercisable

31 363

19 529 099

434 070

(31 363)

70,15

0,24

0,00 70,15

Outstanding as of December 31, 2023

 22 628 243

0,23

(ranging from 0,19 to 0,23)

Granted (1)

Vested

Forfeited & other

Of which exercisable

-

0,00

0,00 0,00

0,00

Outstanding as of June 30, 2024

 22 628 243

0,23

(ranging from 0,19 to 0,23)

                                                                                               Of which exercisable                     -                                                                -

(*) linked to the 2022 and 2023 Long-Term Incentive Plans (LTIP)

9. Provisions & contingencies

        9.1.      Detail of provisions

                                                                                       Provisions for risks &            Provisions for restructuring

                                                          Provisions              litigations related to                           related to

imageTotal for warranty       continuing               discontinued           continuing               discontinued

(€ in million)

                                                                                    operations        operations         operations        operations

Au December 31, 2023                             13                      21                      16                       6                        2                    58

Current period additional provision

4

4

-

64

1

72

Release

(6)

(0)

(1)

0

(0)

(7)

Usage during the period

(4)

(5)

(1)

(33)

(1)

(44)

Scope change

16

10

-

0

-

26

Other movements and currency translation adjustments

1

-

-

(0)

1

2

24

30

2

107

Au June 30, 202414                                                                                                              37

Of which current                                        24                      5                        1                       37                       2                     69

Of which non-current                                   -                       25                     13                       -                        -                     38         

The provisions for restructuring are mainly termination costs related to the actions taken to mitigate the decrease in demand and simplify the structure of the group. 

The increase of provisions for risk in continuing operations is mainly due to the recognition of litigation in the opening balance sheet of the Home Networks entities (see note 2). 

        9.2.      Contingencies

In the ordinary course of the business, the Group is involved in various legal proceedings and is subject to tax, customs and administrative regulation. The Group’s general policy is to accrue a reserve when a risk represents a contingent liability towards a third-party and when a loss is probable, and it can be reasonably estimated. 

There have been no significant events in the first half of 2024 concerning the disputes mentioned in note 8.1 of our 2023 annual consolidated financial statements, and no other significant new disputes have arisen since December 31, 2023, except for those concerning Home Networks which have been recognized in the opening balance sheet (see note 2).

10.  Specific operations impacting the consolidated statement of cash-flows

10.1. Acquisitions and disposals of subsidiaries & investments

10.1.1. Acquisitions

For the sixth months ended June 30,2024, the acquisition of activities and investments, net of cash position of companies acquired is 0 million euros (see note 2).

For the sixth months ended June 30,2023 there were no acquisitions of businesses or investments beyond the 10 million euros investment in convertible bonds of TCS. 

10.1.2. Disposals

For the sixth months ended June 30,2024, there is no cash impact related to the disposal of activities or investments same as the first half year of 2023.

10.2. Cash impacts on financing operations

The table below summarizes the Group’s borrowing changes in the Statement of Balance Sheet position:  

image

Non cash variation

(€ in million)

Non current borrowing

31-Dec-23

Cash impact of Non cash borrowing variation movements on

           (1)                                             lease contracts

IFRS adjustment

Interest expenses

Currency

Translation

Adjustments and Forex

Scope change

Transfer

Current - Non current

30-June-24

 391

           (0)                            -

 3

 13

 (0)

 -

 -

 406

Current borrowing

 92

          (44)                            -

 -

 (4)

 1

 -

 -

 45

TOTAL BORROWING

 483

          (44)                            -

 3

 9

 1

 -

 -

 452

Non current lease liabilities

 37

          (14)                          16

 -

 -

 2

 7

 (5)

 43

Current lease liabilities

 22

           (0)                            0

 -

 -

 0

 -

 5

 26

TOTAL LEASE LIABILITIES

 59

          (14)                          16

 -

 -

 2

 7

 (0)

 70

11. Subsequent events

Lars Ihlen Appointed interim CEO following Luis Martinez Amago’s decision to retire.

On July 24, 2024, Vantiva announced the appointment of Lars Ihlen as interim CEO.

This change effective on August 15, 2024 follows the announcement of Luis Martinez-Amago's decision to retire, made during the Board of Directors of July 24, 2024.

Lars Ihlen will assume the position interim CEO in addition to his responsibilities of group CFO, whilst the Board finalize the appointment of Vantiva’s next Chief Executive Officer. The Board’s dedicated committees will naturally be involved in this process (Governance & Social Responsibility Committee and Remuneration & Talent Committee).

Luis Martinez-Amago leaves Vantiva after 9 years of service and leadership where he led the development of major key accounts as head of the Connected Home division, drove the group’s spin off as CEO and the recent acquisition of ComScope’s Home Networks’, whose successful integration has been mostly completed in the first semester of 2024.


HALF-YEAR CONSOLITED FINANCIAL REPORT – June 30, 2024

image 

IV. Statutory auditors' report


VANTIVA

Société Anonyme 

10 Boulevard de Grenelle

75015 PARIS  

___________________________________________________________________

Statutory Auditors’ Review Report on the Half-yearly 

Financial Information

For the period from January 1 to June 30, 2024


Deloitte & Associés                                                             

6, place de la Pyramide

92908 Paris-La Défense Cedex

S.A.S. au capital de 2 188 160 €

572 028 041 RCS Nanterre

Société de Commissariat aux Comptes inscrite à la

Compagnie Régionale de Versailles et du Centre

VANTIVA

Société Anonyme 

10 Boulevard de Grenelle

75015 PARIS

Forvis Mazars

61, rue Henri Régnault

92400 Courbevoie

S.A. à Directoire au capital de 8 320 000 € 784 824 153 RCS Nanterre

Société de Commissariat aux Comptes inscrite à la

Compagnie Régionale de Versailles et du Centre


___________________________________________________________________

Statutory Auditors’ Review Report on the Half-yearly 

Financial Information

For the period from January 1 to June 30, 2024

___________________________________________________________________

This is a free translation into English of the statutory auditors’ review report on the half-yearly financial information issued in French and is provided solely for the convenience of English-speaking users. This report includes information relating to the specific verification of information given in the Group’s half-yearly management report. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.

To the Shareholders,

In compliance with the assignment entrusted to us by your General Assembly and in accordance with the requirements of article L. 451-1-2-III of the French Monetary and Financial Code ("Code monétaire et financier"), we hereby report to you on:

•     the review of the accompanying condensed half-yearly consolidated financial statements of Vantiva, for the period from January 1 to June 30, 2024;

•     the verification of the information presented in the half-yearly management report.

These condensed half-yearly consolidated financial statements are the responsibility of the Board of Directors. Our role is to express a conclusion on these financial statements based on our review.

Conclusion on the financial statements

We conducted our review in accordance with professional standards applicable in France. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with professional standards applicable in France and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.

Accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed half-yearly consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 - standard of the IFRSs as adopted by the European Union applicable to interim financial information.

Without qualifying our conclusion, we draw your attention to the matter set out in note « 1.2.1.1. Going concern » which details the Management’s structuring assumptions of the cash forecast, on the basis of which the financial statements have been prepared following the going concern principle, and approved by the Board of Directors.

Specific verification

We have also verified the information presented in the half-yearly management report on the condensed halfyearly consolidated financial statements subject to our review. 

We have no matters to report as to its fair presentation and consistency with the condensed half-yearly  consolidated financial statements.

Paris-La Défense and Courbevoie, August 1st 2024

The Statutory Auditors

French original signed by

                           Deloitte & Associés

 

Forvis Mazars

                              Nadège PINEAU

Daniel ESCUDEIRO                    Christophe PATOUILLERE

2 l  VANTIVA l Statutory Auditors’ Review Report on the Half-yearly Financial Information l For the period from January 1 to June 30, 2024 



[1] After interest and tax and excluding restructuring and integration costs for HN.

[2] Before interest and tax and excluding Home Networks integration costs.

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