Vivendi Universal posted a Euros 13.6bn net loss in 2001, due to a massive Euros 15.2bn goodwill write down, the result of a raft of expensive acquisitions. However, the group has met its operational targets for its media and communications division.

Presenting VU's full-year report to the press March 4 in Paris, Jean-Marie Messier appeared eager to address the concerns of the financial markets regarding VU's accounting practice and the existence of hidden risks. VU's chairman also played down the debt load of his group which has reached Euros 14.6bn last year (Euros 19.1bn according to US accounting practice). The company reports utilised both US and French accounting methods for the benefit of Wall St and European investors.

Messier also stressed that his group did not warn on profits, unlike most other major media groups. VU's media and entertainment division has registered a 10% growth in revenues, to Euros 28bn, and a Euros 5bn EBITDA (up 34%), mostly due to solid earnings from its film and telecom activities. Universal Studio Group, for its part, posted a 171% EBITDA growth in 2001, brought about by buoyant theatrical receipts and DVD sales, telecom providing a 49% boost. VU registered a Euros operating free cash flow last year, compared to an expected Euros 1.2bn to 1.5bn, cash savings from synergies reaching Euros 500m.

The group, which announced a 10% hike in revenues as well as an ambitious Euros 6bn EBITDA target for 2002, also announced that cash management as well as integration of its new Vivendi Universal Entertainment division would be top priorities this year.

VUE will report separately from Canal Plus. The European pay-TV giant (which is qualified as a 'cashflow drain' in VU's report) will be given two years to address its cashflow and results problems. The recovery involves cutting down programming costs, which will represent savings of Euro 300m each on sport and film rights, and Euro 150m on in-house production.

Canal Plus, which is the largest contributor to the goodwill write down (it accounted for a hefty Euros 6bn) also represented Euros 500m in negative free cash flow, 70% of the shortfall stemming from its Italian pay operations, Telepiu, which are to be merged with its competitor Stream pending a decision by the Italian antitrust authorities.