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Lagardere Sa — Lagardère SCA — Debt Investor Presentation (April 2016)

47 slides from Lagardere Sa's debt investor presentation, April 2016

  1. Slide 1: Credit investor presentation

    Credit investor presentation APRIL 2016

  2. Slide 2: Disclaimer

    This document presents the full-year 2015 results from the consolidated financial statements of Lagardère SCA. This document does not constitute the Annual Financial Report (Rapport Financier Annuel) within the meaning of article L. 451-1-2 of the French monetary and financial Code (Code monétaire e

  3. Slide 3: Table of content

    1) Group profile 2) Group strategy Table of content 3) Group performance and outlook 4) Key credit highlights and transaction rationale 5) Appendix CREDIT INVESTOR PRESENTATION APRIL 2016 3

  4. Slide 4: Group profile

    Lagardeére _ Group profile ||

  5. Slide 5: A diversified group with leading global brands and market positions

    * World #3 trade book World #3 in Leading magazine publisher Travel Retail publisher Leading global sport rights management #1 in France More than 4,000 shops 27 French titles agency #2 in the UK, #3 in Spain in 29 countries and 84 international editions #4 in the US 150 airports worldwide under lic

  6. Slide 6: A balanced business mix and a worldwide presence

    Breakdown of sales Breakdown of recurring EBIT by division in 2015 by division in 2015 Lagardère Sports and Lagardère Sports and Entertainment Entertainment 5% 7% Lagardère Active Lagardère Lagardère 13% Publishing Active 31% A balanced 20% Lagardère business mix Publishing 49% and a worldwide Lagar

  7. Slide 7: Group strategy

    Lagardeére Group strategy

  8. Slide 8: A 3 pillars strategy

    A 3 pillars strategy Growth potential Invest Digital Travel Retail Sports & Businesses Entertainment 3 growth profile TV Production Adapt Broadcasting* Book Publishing Distribution 2 1 Magazines Divest Market position CREDIT INVESTOR PRESENTATION N.B: Size proportional to sales. APRIL 2016 *Radio +

  9. Slide 9: Reduce exposure to declining activities (1/2)

     Successful deals in 2015 and 2016 Press distribution and integrated retail February 2015 Disposal of Swiss Distribution business (ex Payot Naville Distribution) Reduce June 2015 Disposal of US Distribution business (Curtis) 1 exposure to declining activities (1/2) February 2016 Disposal of Spanish

  10. Slide 10: Group paper exposure

    Group paper exposure Paper activities represented less than 50% of total sales for the first time in 2013 As % of consolidated sales 100% Reduce 80% 1 exposure to 60% 72% 70% 67% 65% 63% 61% 49% 51% 54% 55% Paper 54% declining 40% 46% 51% 49% 46% Non paper 39% 45% activities (2/2) 20% 28% 30% 33% 35

  11. Slide 11: Adapt existing activities: Publishing and Active

    LagardèrePublishing Lagardère Publishing  Successful management of transition to e-book  e-book market trends: Adapt existing • No further transition to digital in 2015 activities and • Implementation of the pure agency model (retail price controlled 2 enhance by publishers) in the US and UK marke

  12. Slide 12: Adapt existing activities: Travel Retail (1/2)

    Travel Retail (1/2) Lagardere Travel Retail: improvement of the business mix Adapt existing activities and 27% Distribution* 37% 2 enhance 44% 40% (to be sold) leadership position (2/4) 73% Travel Retail 60% 63% 56% 2012 2013 2014 2015 The repositioning and development strategy of Lagardère Travel R

  13. Slide 13: Adapt existing activities: Travel Retail (2/2)

    Travel Retail (2/2)  A significant improvement of the product-mix thanks to the strategy aimed at strengthening the footprint in airports Adapt existing % of total consolidated sales Sales change 2015 vs. 2014 activities and 2 enhance - Deconsolidation of Relay in French leadership -21% railways st

  14. Slide 14: Adapt existing activities: Lagardère Sports and Entertainment

    Lagardère Sports and Entertainment  The recovery plan is well on track  A significant change of the business mix, aimed at delivering a more regular performance Adapt existing  Diversification of the revenue streams activities and 2 enhance leadership Lagardere Sports and Entertainment: business

  15. Slide 15: Invest in higher growth activities (1/2)

    Recent deals in 2015 Travel Retail April 2015 Acquisition of 17 stores at JFK Airport (New York) 17 fashion and candy sales outlets spread over 1,700 m² in Terminal T4 3 Invest in October 2015 Acquisition of Paradies, an airport travel retail leader in North America operating in more than 75 airport

  16. Slide 16: Invest in higher growth activities (2/2): Paradies acquisition

    Transaction overview  Acquisition of Paradies, an airport travel retail leader in North America  100% of the equity of Paradies holding company, Transaction  Representing c. 80% of Paradies activities in aggregate 1 3 Invest in summary  Purchase price: $530m2 i.e. €485m  Creation of 3rd largest

  17. Slide 17: Group performance and outlook

    Group performance and outlook

  18. Slide 18: FY 2015 key figures

    2015 Reported Like-for-like 2014* (€m) change change** Sales 7,170 7,193 +0.3% +3.0% Recurring EBIT of fully consolidated 342 378 +10.5% / companies*** Group operating margin 4.8% 5.3% +0.5 pt / Group Profit – Group share 41 74 +€33m / FY 2015 key Adjusted profit – Group share 185 240 +€55m / figure

  19. Slide 19: Consolidated statement of cash flows

    (€m) 2014 2015 Cash flow from operations before interest, taxes 403 447 Changes in working capital (49) 180 Cash flow from operations 354 627 Consolidated statement of Interest paid & received, income taxes paid (144) (103) cash flows Cash generated by/(used in) operating activities 210 524 Acquisit

  20. Slide 20: FY 2016 Guidance and Dividend

     2016 guidance • In 2016, the recurring EBIT of fully consolidated companies is expected to grow slightly above 10%: FY 2016 - At constant exchange rates Guidance - Excluding the effect of the potential disposal of Distribution activities & Dividend  Dividend • Ordinary dividend maintained: €1.30

  21. Slide 21: Key credit highlights and transaction rationale

    Key credit highlights and transaction rationale

  22. Slide 22: Conservative financial policy

    Net debt / EBITDA* ratio Inaugural bond Disposal of International Disposal of 3 non-core stakes in 2013: $530m Paradies in 2009 Magazine Publishing (PMI) - EADS (7.4%): €2.28bn acquisition in for €651m in 2011 - Canal+ France (20%): €1.02bn 2015 Conservative - Amaury (25%): €91.4m financial policy 2

  23. Slide 23: Diversified funding structure supported by strong liquidity position

    Gross debt breakdown:  2015 well-balanced funding sources • Revolving Credit Facility refinanced in May 2015 for €1.25bn, 5 years + up to 2 years extension options 21% in 2014 18% • Strong liquidity, with €1,884m covering up to end of 2018 Bonds Bridge Loan • Gross debt centered on bond market & co

  24. Slide 24: Transaction rationale

     Positive developments since the credit roadshow of October 2015 : – Completion of the Paradies acquisition on 22 October 2015 allowing a start of the integration process with the objective of generating commercial and financial synergies in the North American travel retail market – Asset portfolio

  25. Slide 25: Contemplated bond structure

    Issuer  Lagardère SCA Issuer Rating  Not Rated Size  Benchmark Contemplated Ranking  Senior bond structure Maturity  TBD Governing Law  French Law Listing / Denomination  Luxembourg Stock Exchange / EUR 100k Note: The terms are outlined in their entirety in the full terms and conditions of th

  26. Slide 26: Appendix

    Lagardeére | i Appendix

  27. Slide 27: FY 2015 activity highlights

     Group sales totalled €7,193 million • +3.0% on a like-for-like basis (+0,3 on a reported basis). • a negative perimeter of -€393m, and a positive currency effect of €222m.  Activity by division: • Lagardère Publishing: sales up sharply, driven by the good performance of Illustrated Books in Franc

  28. Slide 28: Lagardère Publishing: activity and profitability

    2015 sales by geographical area 2015 sales by activity Other 17% Other Education 18%* 16% 16% France 17%* 16%* Spain 29% 6% 31%* Partworks 6%* 11% Illustrated Books 12%* Activity and 17% 15%* profitability US & Canada UK & Australia General 25% 23% Literature 24%* 21%* 40% 40%* *% of sales in 2014.

  29. Slide 29: Lagardère Publishing: successful transition to digital

     As expected, the weight of e-books has decreased: e-books accounted for 9% of total sales of the division in 2015 vs. 10.3% in 2014.  Digital for the time being remains essentially limited to the traditional fiction/non-fiction segment, and only in the US and in the UK, where in 2015 market trend

  30. Slide 30: Lagardère Travel Retail: activity and profitability

    2015 sales by geographical area 2015 sales by activity US & Eastern Canada Europe 9% 6%* Asia Pacific Distribution 17% 10% (Wholesale Distribution 17%* & Integrated Retail) Other 8%* 27% Western Europe 37%* 11% Travel Retail 16%* France 73% Activity and Italy 23% 26%* 63%* profitability 8% 6%* Spain

  31. Slide 31: Lagardère Active: activity and profitability

    2015 sales by geographical area 2015 sales by activity Other Radio international 21% 13% 22%* Press 14%* Spain 41% 6% 45%* 0%* TV France 32% Activity and 81% 26%* 86%* profitability Pure Digital 6% 7%* *% of sales in FY 2014. (€m) 2014 2015 Change Sales (a) 958 962 +0.5% Recurring EBIT of fully cons

  32. Slide 32: Lagardère Sports and Entertainment: activity and profitability

    2015 sales by geographical area 2015 sales by activity US & Latin America France Africa & Media rights 9% 13% 14%* Other Middle East 26% 14%* 32% 16% 19%* 9%* 33%* Germany Activity and 22% 27%* Asia & profitability Australia 17% UK Marketing 20%* 9% 7%* rights Rest of 42% 48%* Europe 14% 9%* *% of s

  33. Slide 33: Consolidated income statement (1/2)

    (€m) 2014* 2015 Sales 7,170 7,193 Recurring EBIT of fully consolidated companies** 342 378 Operating activities 379 399 Other activities (37) (21) Consolidated Income (loss) from equity-accounted companies*** 9 11 income Non-recurring/non-operating items (142) (215) statement Restructuring costs (66

  34. Slide 34: Consolidated income statement (2/2)

    Net interest expense (73) (66) Profit before tax 136 108 Income tax expense (87) (37) Consolidated Total profit 49 71 income statement Attributable to minority interests (8) 3 (2/2) Profit – Group share 41 74 CREDIT INVESTOR PRESENTATION APRIL 2016 34

  35. Slide 35: Adjusted profit Group share

    (€m) 2014 2015 Profit – Group share 41 74 Restructuring costs* +53 +56 Adjusted profit Gains (losses) on disposals* +5 -24 – Fair value adjustment resulting from changes in control* -25 - Group share Impairment losses on goodwill, tangible and intangible fixed +41 +62 assets* Amortisation of acquisi

  36. Slide 36: Consolidated balance sheet

    31 Dec. 2014 31 Dec. (€m) restated* 2015 Non-current assets (excl. investments in associates and joint ventures) 3,948 4,672 Consolidated Investments in associates and joint ventures 159 155 balance sheet Current assets (other than short-term investments and cash) 2,834 2,846 Short-term investments

  37. Slide 37: Change in net debt in FY 2015

    (€954m) +€274m -€627m -€186m -€58m (€1,551m) Change in net debt in FY 2015 Net debt Acquisition / Foreign Net debt as of Free cash disposal of Dividends exchange, scope as of flow financial paid and 31/12/2014 31/12/2015 assets other items CREDIT INVESTOR PRESENTATION APRIL 2016 37

  38. Slide 38: Non-recurring/non-operating items in FY 2015

    Lagardère Lagardère Lagardère Lagardère Total Other Total Publishing Travel Active Sports and operating activities Lagardère Retail Entertainment activities (€m) Restructuring (8) (19) (20) (30) (77) / (77) costs Non-recurring/ Gains (losses) on (1) 17 3 1 20 / 20 disposals non-operating Impairment

  39. Slide 39: Main associates and joint ventures

    Balance sheet Income statement* 2014 2015 2014 2015 (€m) Marie Claire (42%) 90 90 4 - Édition J’ai Lu (35%) 17 17 1 0 Main associates Société de Distribution Aéroportuaire and (45%) 15 16 6 7 joint ventures Société d’Édition de Télévision par 10 8 - - Câble (49%) Inmedio Poland (49%) 9 11 - 2 Sociét

  40. Slide 40: For the records: definitions of Recurring EBIT, like-for-like sales and free cash flow

     Recurring EBIT of fully consolidated companies is defined as the difference between profit before finance costs and tax and the following items of the profit and loss statement: • income (loss) from equity-accounted companies • gains (losses) on disposals of assets • impairment losses on goodwill,

  41. Slide 41: Organic growth drivers of Travel Retail

     Strong and regular growth of global air traffic  Increase of emerging country passengers travelling in mature countries  Increasing externalization of travel retail shops by landlords  Increased surface dedicated to travel retail in airports and train stations 4.6% global PAX growth in the next

  42. Slide 42: A pure travel retail player experiencing sales growth with a more balanced sales mix

    Sales evolution by business line and region between 2013 and 2015 (€m, sales @100%) CAGR +12% A pure travel 2015  = €3.6bn retail player 2013 experiencing  = €2.9bn sales growth with a more Duty Free & Duty Free Fashion & Fashion balanced sales 41% 42% mix Foodservice Foodservice 8% 12% Travel Tra

  43. Slide 43: Attractive industry triggering high return, yet with very different P&L profiles

    Illustrative Overview of main rent payment schemes Iso-IRR THE IM FAVORS HIGH RENTS SPREAD OVER THE IM FAVORS CASH NOW AGAINST LOWER CONTRACT DURATION RENTS IN THE FUTURE A B Travel retailer key financials Travel retailer key financials Attractive industry Cumulated rent Cumulated rent (in €) (in €)

  44. Slide 44: Growth was spectacular on high-margin categories

    Breakdown sales by product (€m, sales @100%, 2011-2015) CAGR CAGR €2.3bn +12% €2.9bn +12% €3.6bn Growth was in Liquor 6% 6% 6% particular spectacular on 24% 19% Tobacco 25% high-margin 10% Gourmet food categories & confectionary 9% 9% 16% Perfume & Cosmetics 15% 16% Fashion 5% 10% 6% Food & Beverage

  45. Slide 45: Lagardère Travel Retail, a global player

    28 countries, 150 airports at end 2014* Amsterdam London Lagardère Paris Travel Retail, a global player Rome Venise Vancouver Madrid Los Angeles Toronto Dallas Abu Dhabi Hong Kong Kuala Lumpur Singapore Sydney Auckland CREDIT INVESTOR PRESENTATION Flagship airports Top 150 airports in terms of PAX v

  46. Slide 46: Reminder of Paradies profile

    Historical Revenue Growth show resilience 2015E Breakdown of sales by category [in $ million; end June FY] [in $ million ] Food Services Recession 4% $500 Premium Apparel Convenience & & Specialty Travel Accessories 9/11 and 16% 47% Recession General Reminder of $250 Merchandise & Souvenirs Recessio

  47. Slide 47: Lagardère IR Team and calendar

    IR team details Calendar (all time is CET) Florence LONIS  2016 General shareholders’ Meeting Chief of Investor Relations The General Meeting of Shareholders will be held on 3 May 2016 Tel: 33 1 40 69 18 02 at 10:00 a.m. at the Carrousel du Louvre in Paris. flonis@lagardere.fr Lagardère IR  Ordina

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