Lagardere Sa · EURONEXT:MMB
Lagardere Sa — FY2002 Earnings Presentation
74 slides from Lagardere Sa's earnings presentation, Mar 17, 2003
Slide 1: Full Year 2002 Results
Full Year 2002 Results Analyst Meeting March 17, 2003 1
Slide 2: Table of contents
Table of contents 9 2002 Consolidated statements p. 3 to 30 9 Profitability improvement plan p. 31 to 35 9 Data by business segment p. 36 to 51 9 Significant events p. 52 to 70 9 Lagardère stock performance p. 71 to 73 2
Slide 3: 2002 Consolidated statements
2002 Consolidated statements 3
Slide 4: Principal changes in consolidated companies
Principal changes in consolidated Companies Businesses Book publishing OCTOPUS Balance Sheet : full consolidation (100%) as of December 31, 2001 Income Statement : full consolidation (100%) as of January 1, 2002 BRUÑO Full consolidation (100%) as of January 01, 2002 4
Slide 5: Principal changes in consolidated companies
Principal changes in consolidated Companies Businesses Press Acquisitions Marie-Claire : Equity method (42%) as of April 1,2001 Zurban : Full consolidation as of January 1, 2002 EDIF* : Full consolidation as of January 1, 2002 (Proportional consolidation (50%) in 2001) * Elle and Elle Decor publishi
Slide 6: Principal changes in consolidated companies
Principal changes in consolidated Companies Businesses Distribution Services VIRGIN Full consolidation (100%) as of August 1, 2001 NEWSLINK Proportional consolidation (40%) as of January 1, 2002 6
Slide 7: Principal changes in consolidated companies
Principal changes in consolidated Companies Businesses Audiovisual Lagardere Active Lagardere Active Broadcast Broadcast 2002 includes January to December (12 months) 2001 included October 2000 to December 2001 (15 months) 7
Slide 8: Sales by business segment
Sales by business segment 13 295 M€ 13 216 M€ 11 875 M€ 4 486 4 339 3 489 1 183 1 141 782 7 203 7 668 8 095 2000 2001 2002 Lagardère Media Automobile High Technology / EADS - Stable total revenues (-0.6 %) 8 - Solid revenue growth for Lagardère Media (+5.6 %)
Slide 9: Lagardère Media sales by division
Lagardère Media Sale breakdown by division 8 095 M€ 7 668 M€ 7 203 M€ 568 633 950 640 846 830 2 113 2 336 2 439 3 853 4 464 3 294 2000 2001 2002 Distribution Services Press Books Lagardere Active Growth on a like for like basis : +7.8 % 9
Slide 10: Lagardère Media sales by geographical area
Lagardère Media Sale breakdown by geographical area 4% 4% 3% 23% 20% 21% 33% 32% 34% 40% 44% 42% 2000 2001 2002 France Rest of Europe USA & Canada Rest of the world 10
Slide 11: Operating income by business segment
Operating income by business segment 474 M€ 514 M€ 440 M€ 12 104 68 63 66 7 71 353 385 323 (9) (15) 2000 2001 2002 Lagardère Media Automobile High Technology / EADS Other Lagardère Media operating income up by 15.6% (when comparing similar periods) 11 despite a severe advertising market downturn, es
Slide 12: Lagardère Media operating income by division
Lagardère Media Operating income by division 385 M€ 353 M€ 14 323 M€ 4 65 91 58 203 192 213 61 81 88 (9) 2000 2001 2002 Distribution Services Press Books Lagardere Active - Impressive growth of the “Books” division + 40% - “Lagardere Active” continues to restore its profitability 12 - “Press” improv
Slide 13: Financial (expense)/income by business segment
Financial (expense)/income* by business segment (15) M€ (331) M€ (95) M€ 24 8 228 6 8 37 (43) 66) (240) (11) (363) * Excluding preferred remuneration (29) 2000 2001 2002 Lagardère Media Automobile High Technology / EADS Other - Additional T-Online shares depreciation -278 M€ (-157 M€ en 2001) 13 - C
Slide 14: Current income by business segment
Current income* by business segment 499 M€ 379 M€ 20 219 2 77 93 109 M€ 280 74 9 34 113 44 22 2000 2001 2002 * Excluding preferred remuneration Lagardère Media Automobile High Technology / EADS Other - Additional T-Online shares depreciation -278 M€ (-157 M€ en 2001) 14 - Capital gain on EADS « Exce
Slide 15: Exceptional items (by division)
Exceptional items ( by division) 653 M€ 3 353 M€ 4 690 463 (371) M€ (30) (93) (69) (10) (21) (273) (21) (8) 2000 2001 2002 Lagardère Media Automobile High Technology / EADS Other Exit related costs for Automobile activities -266 M€ 15
Slide 16: Exceptional items (by type)
Exceptionnal items (by type) HT* Excl HT** EADS Excl. EADS EADS Excl. EADS 683 M€ 880 463 (350) M€ (110) M€ 15 7 (30) (42) (21) (16) (107) (66) (5) (85) 32 (17) (304) * HT : High Technology (37) ** Excl. HT : Excluding High Technology 2000 2001 2002 High Technology / EADS (including Airbus 441 M€ in
Slide 17: Goodwill Amortization
Goodwill Amortization (61) M€ (121) M€ (125) M€ (52) (75) (79) (9) (46) (46) 2000 2001 2002 Lagardère excl. High Technology / EADS High Technology / EADS Acquisitions of Virgin and Octopus 17
Slide 18: Income tax
Income tax 143 M€ (424) M€ (168) M€ 163 (20) (102) (66) (388) (36) 2000 2001 2002 Lagardère excl. High Technology / EADS High Technology / EADS T-Online capital gain related tax adjustement +195 M€ 18
Slide 19: Net income from companies accounted for by the equity method
Net income from Companies accounted for by the equity method 77 M€ 18 30 M€ (33) M€ 59 28 20 2 (53) 2000 2001 2002 Lagardère excl. High Technology / EADS High Technology / EADS - multiThématiques equity stake depreciation -68 M€ in 2002 19 - Lagardère’s share of exceptional items recorded by CanalSa
Slide 20: Minority interest
Minority interest (11) M€ (4) M€ (32) M€ 7 4 (8) (18) (29) (3) 2000 2001 2002 Lagardère excl. High Technology / EADS High Technology / EADS 20
Slide 21: Consolidated Income Statement
Consolidated Income Statement (In M€) 2000 * 2001 2002 Excl. HT** Total Excl. EADS Total Excl. EADS Total HT ** EADS EADS Sales 8 386 3 489 11 875 8 809 4 486 13 295 8 877 4 339 13 216 Operating Income 406 68 474 410 104 514 377 63 440 Interest Income (29) (66) (95) (4) (11) (15) (302) (29) (331) Cu
Slide 22: Net income – excl. non recurring items
Net income – excl. non recurring items Excl. EADS (In M€) 2001 2002 Net income 146 (262) T-Online 130 83 - financial 157 278 - tax (27) (195) ’’Excess Shares’’ (172) - financial (210) - tax 38 Matra Automobile (34) 246 - net income Net income excl. non-recurring items (before Restatt Intangible Asse
Slide 23: Operating Cash Flows & Investing Activities
Operating Cash Flows & Investing Activities Cash flow from operations Change in working capital 696 M€ 595 M€ 571 M€ 224 M€ 500 224 171 M€ 335 78 135 M€ 25 70 347 146 146 260 196 65 2000 2001 2002 2000 2001 2002 Lagardère excl. High Technology / EADS High Technology / EADS 23
Slide 24: Statement of Cash Flows
Statement of Cash Flows (In M€) 2001 2002 Excl. EADS EADS Total Excl. EADS EADS Total Cash flow from oper. 224 347 571 335 260 595 Change in work. capital 70 65 135 78 146 224 Total operating cash flow 294 412 706 413 406 819 Investments (760) (501) (1 261) (1 692) (632) (2 324) Tangible & intangibl
Slide 25: Balance Sheet
Balance Sheet (In M€) 2001 2002 Excl. EADS EADS Total Excl. EADS EADS Total Fixed assets 6 105 2 756 8 861 7 101 2 830 9 931 Current assets 4 339 4 813 9 152 3 794 4 445 8 239 of which cash & equiv. 1 790 1 213 3 003 1 500 943 2 443 TOTAL ASSETS 10 444 7 569 18 013 10 895 7 275 18 170 Stockholders’
Slide 26: Stockholders' Equity & Net Cash (Indebtedness)
Stockholder’s Equity* & Net Cash (Indebtness) * 4 328 M€ 3 889 M€ 3 914 M€ 717 M€ 219 M€ (1 394) M€ 2000 2001 2002 Stockholders' Equity Net Cash (Indebtness) 26 * Excl. «perpetual subordinated notes»
Slide 27: Net Debt Position
Net Debt Position* (In M€) 12.31.2001 2002 12.31.2002 Changes EADS 232 (39) 193 T-Online 679 (278) 401 Excl. EADS and T-Online (692) (1 296) (1 988) Net Debt Position 219 (1 613) (1 394) 27 * Excl. «perpetual subordinated notes»
Slide 28: Lagardère – Borrowing maturities (excl. EADS)
Lagardère – Borrowing maturities (excl. EADS) (In M€) 12.31.2002 Less than Total 1 to 5 years over 5 years one year Perpetual subordinated - - 287 287 notes, 1992 Bonds (1) 768 240 423 1 431 Bank borrowings (2) 71 1 119 2 1 192 Leasing contracts 17 34 67 118 Other 55 2 10 67 Short-term borrowings 27
Slide 29: Commitments and contingent liabilities
Commitments and contingent liabilities (excl. EADS) (In M€) 12.31.02 Operational related Guarantees 335 (incl. 159 M€ related to currently processed VUP assets acquisition Share repurchase commiments - Commitments to repurchase shares at a fixed price 13 Financial instruments used to hedge positions
Slide 30: Other informations (excl. EADS)
Other informations (excl. EADS) (In M€) 12.31.02 Rental commitments 696 - 2003 127 - 2004 115 - 2005 99 - 2006 84 - 2007 and beyond 271 (59) Mark to market value of financial instruments (*) (*) financial instruments exclusively dedicated to financial assets and liabilities hedging Securitization -
Slide 31: Profitability improvement plan
Profitability improvement plan 31
Slide 32: Status as of March 17, 2003: action plan reinforced
STATUS AS OF MARCH 17, 2003 ACTION PLAN REINFORCED IN ORDER TO ACCELERATE THE OPERATING INCOME IMPROVEMENT IN 2001 AND 2002 DESPITE A TOUGH ENVIRONMENT 2002 OBJECTIVE IS EXCEEDED (121 MILLION EUROS CUMULATIVE IMPACT VS. 106 INITIALLY PLANNED) 2003 ET 2004 OBJECTIVES ARE CONFIRMED (CUMULATIVE I
Slide 33: Impact phasing
Impact phasing M€ 2001 2002 TOTAL HACHETTE LIVRE 3 7 10 HACHETTE FILIPACCHI 21 30 51 HACHETTE DISTRIBUTION 8 12 20 LAGARDERE ACTIVE 19 21 40 LAGARDERE MEDIA 51 70 121 33
Slide 34: Operating income and margin trend by media business segment
Operating income and margin trend… …by media business segment M€ 2000 2001 2002 HACHETTE LIVRE 58 65 91 as a % of revenue 7.0% 7.7% 9.6% HACHETTE FILIPACCHI 213 203 192 as a % of revenue 8.7% 8.7% 9.1% HACHETTE DISTRIBUTION 61 81 88 as a % of revenue 1.8% 2.1% 2.0% LAGARDERE ACTIVE (9) 4 14 LAGARDER
Slide 35: 2003-2004 Outlook
2003-2004 Outlook M€ TOTAL CUMULATIVE IMPACTS IN… * 2001 –2002 2003 2004 HACHETTE LIVRE 10 13 14 HACHETTE FILIPACCHI 51 79 98 HACHETTE DISTRIBUTION 20 26 33 LAGARDERE ACTIVE 40 53 61 TOTAL 121 171 206 * VS. 2000. ALL THESE FIGURES ARE CUMULATIVE INCLUDING FURTHER ACTIONS IN 2003 AND 2004 35
Slide 36: Operating Income variance analysis
Operating Income variance analysis M€ OP.INC.2002 ACTION PLAN OTHER * OP. INC. 2002 IMPACTS 323 121 (59) 385 * OTHER : - ADVERTISING ENVIRONMENT, ESPECIALLY US MAGAZINES - DEVELOPMENT COSTS - INFLATION-LINKED COST BASIS INCREASE 36
Slide 37: Data by business segment
Data by business segment 37 “ LAGARDERE Pee oe
Slide 38: Sales by business segment
Sales by business segment (In M€) 2000 2001 2002 Books 830 846 950 Press 2 439 2 336 2 113 Distribution Services 3 294 3 853 4 464 Lagardere Active 640 633 568 Lagardère Media 7 203 7 668 8 095 High Technology / EADS 3 806* 4 486 4 339 Automobile 1 183 1 141 782 TOTAL 12 192 13 295 13 216 * publishe
Slide 39: Press sales by geographical area
Press Sale breakdown by geographical area 8% 8% 8% 27% 26% 25% 20% 20% 20% 45% 46% 47% 2000 2001 2002 France Rest of Europe USA & Canada Rest of the world 39
Slide 40: Distribution Services sales by geographical area
Distribution Services Sale breakdown by geographical area 25% 24% 26% 48% 44% 42% 27% 32% 32% 2000 2001 2002 France Rest of Europe USA & Canada 40
Slide 41: Operating income by business segment
Operating income by business segment (In M€) 2000 2001 2002 Books 58 65 91 Press 213 203 192 Distribution Services 61 81 88 Lagardere Active (9) 4 14 Lagardère Media 323 353 385 High Technology / EADS 166* 104 63 Automobile 71 66 7 Books 12 (9) (15) Operating income 572 514 440 * published 41
Slide 42: Lagardère Media – Income Statement
Lagardère Media – Income Statement (In M€) 2000 2001 2002 Sales 7 203 7 668 8 095 Operating income 323 353 385 Interest income (exp.)(*) (43) (240) (363) Current income 280 113 22 Non-operating income 798(**) (46) (53) Income from Associates 2 59 15 Net income before income tax 1 080 126 (16) Operat
Slide 43: Lagardère Media – Statement of Cash Flows
Lagardère Media – Statement of Cash Flows (In M€) 2000 2001 2002 Cash flow from operations 359 269 357 Change in working capital 94 27 37 Total operating cash flow 453 296 394 Investments (1 424) (721) (1 643) Tangible & int. Inv. (197) (268) (228) Financial Inv. (1 227) (453) (1 415)* Divestitures
Slide 44: Automobile – Income Statement
Automobile – Income Statement (In M€) 2000 2001 2002 Sales 1 183 1 141 782 Operating income 71 66 7 Interest income (exp.) 6 8 37 Current income 77 74 44 Non-operating income 3 (21) (273) Net income before tax 80 53 (229) Operating margin 6,0% 5,8% 0,9% 44
Slide 45: Automobile – Statement of Cash Flows
Automobile – Statement of Cash Flows (In M€) 2000 2001 2002 Cash flow from operations 111 61 (26) Change in working capital (29) (14) 9 Total operating cash flow 82 47 (17) Investments (65) (26) (33) Tangible & int. Inv. (60) (24) (33) Financial Inv. (5) (2) - Divestitures 5 1 2 Investing activities
Slide 46: EADS - Income Statement from EADS as reported to Lagardère format
EADS - Income Statement … … from EADS as reported to Lagardère format (In M€) EADS Reclassifications EADS 100% 100% as Capital Restructuring Goodwills Income Lagardère reported Gains Charges Amortiz. from format and Associates Losses Sales 29 901 29 901 Operating income 160 (92) 161 936 1 165 Financ
Slide 47: EADS – Income Statement restated
EADS – Income Statement restated (In M€) EADS Forex Goodwill Cash EADS EADS 100% restatts restatts equivalent restated share Lagardère depreciation 100% 15.10% Format (*) Sales 29 901 (1 174) 28 727 4 339 Operating income 1 165 (905) 155 415 63 Financial results (82) (74) (41) (197) (29) Non-operati
Slide 48: EADS – Contribution to Lagardère Income statement
EADS – Contribution to Lagardère Income statement (In M€) 2000 2001 2002 published (1) pro forma (2) Sales 3 806 3 489 4 486 4 339 Operating income 166 68 104 63 Financial results (81) (66) (11) (29) Current income 85 2 93 34 Non-operating income (32) (30) 463 (8) Income from Associates 34 29 18 20
Slide 49: EADS – Contribution to Lagardère Statement of Cash Flows
EADS – Contribution to Lagardère Statement of Cash Flows (In M€) 2000 2001 2002 Cash flow from oper. 196 347 260 Change in working capital 146 65 146 Investments (269) (501) (632) Tangible & int. Inv. (157) (332) (349) Financial Inv. (112) (169) (283) Divestitures 59 214 185 Cash equivalents (86) (5
Slide 50: EADS – Balance sheet restated
EADS – Balance sheet restated and Contribution to Lagardère Balance sheet (In M€) EADS Lagardère EADS restated EADS restated 100% Restatements 100% 15.10% Fixed assets 25 173 (6 394) 18 779 2 830 Current assets 22 227 (2 839) 19 388 2 921 of which cash & equiv.. 6 200 60 6 260 943 TOTAL ASSETS 47 40
Slide 51: Lagardère – Headquarters & non-operating branch results
Lagardère – «Headquarters & non-operating branch» results (M€) 2000 2001 2002 Operating income 12 (9) (15) Net interest income (exp.) incl. (9) 214(*) 14 Preferred remunerations Non-operating income (10) (1) (8) Income from Associates - - - TOTAL (7) 204 (9) (*) including net capital gain on the sal
Slide 52: Lagardère – Results summary
Lagardère – Results summary (M€) 2000 2001 2002 Lagardère Media 1 080 126 (16) High Technology / EADS 87 574 46 Automobile 80 53 (229) Other (8) 204 (9) Tax (457) (168) 143 Income before Deprec., Amortization of 1 239 957 (208) intangibles and goodwill Depreciation, Amortization of intangibles and (
Slide 53: Significant events
Significant events 53 > . LAGARDERE eae > > °°} “ae
Slide 54: Significant events: Books performance 2002
Significant events IMPRESSIVE PERFORMANCES IN 2002 Stellar results and growth rates : Revenues : 950 M€ Growth rates : +12,3% (as published) + 3,1% (on a like-for-like basis) 2001 2002 Variance Operating income 65 M€ 91 M€ +40% Net income 40 M€ 60 M€ +49% 54
Slide 55: Significant events: Books across the board
Significant events IMPRESSIVE PERFORMANCES ALL ACROSS THE BOARD France : market up 2,3%. Literature : Success evenly shared between all the publishing houses : +4% Illustrated books : Children books, Tourism and ’’How to’’ guides progressing strongly: +18% Education : Hatier and Hachette Edu
Slide 56: Significant events: Books export
Significant events Export : UK : Hachette Livre is the 4th largest publisher, with a 7% market share ORION : Revenue organic growth 10% Record-breaking 30 titles on the benchmark Sunday Times bestsellers list WATTS : Successful export and right sales OCTOPUS : Activity in line with business
Slide 57: Outlook: Books
OUTLOOK 2002, strong profitability improvement Operating margin : 2001 2002 7,7% 9,6% Ambition and optimism for the future based on : - the good profitabilty level - well-balanced successes all across the different publishing segments 57
Slide 58: Significant events: Press
Significant events GENERAL CONTEXT > Impacted by a major slump in advertising sales, especially in the USA > Slight decrease in paper prices SIGNIFICANT EVENTS > Acquisition of Attic Futura, the 7th-ranked magazine publishing group in the UK and regain of control over ELLE, ELLE Decoration, ELLE Gir
Slide 59: Significant events: Magazine publishing France
Significant events MAGAZINE PUBLISHING — FRANCE > Advertising Sales down but market share up > Circulation holding steady > Acquisition of Zurban > Isa: break-even expected in 2003 > Bon Voyage: harmed by uncertainties in the travel market > Télé 7 Jours: new format release 59
Slide 60: Significant events: International magazine publishing
Significant events INTERNATIONAL MAGAZINE PUBLISHING > Constitution of Hachette Filipacchi UK, the 6th-largest magazine publisher in the UK > New editions of Marie Claire (Poland, China) and regain of control over the Italian edition USA > Advertising slump intensified Fashion and Decoration particu
Slide 61: Significant events: Daily press and supplements
Significant events DAILY PRESS and SUPPLEMENTS > Financial results similar to 2001 > Launch of the free title MarseillePlus > Launch of Version Femina, the leading European women's title PHOTO AND OTHER BUSINESS LINES Photo: > Major cost-savings and reinforced editorial synergies > Goal remains to a
Slide 62: Outlook: Press
OUTLOOK > Continue to pursue the business restructuring process started three years ago > Increase the emphasis on our core activities > Rationalize the portfolio of titles > Systematic search for alliances > Strengthen international activities > Establish plans to increase productivity 62
Slide 63: Significant events: Press distribution
Significant events > Sales: + 14% based on current coverage and exchange rates > Operating income: +8.8% PRESS DISTRIBUTION The press distribution business grew strongly during 2002 > Spain: Sales up by 30% > Significant business growth experienced in Switzerland (+15.1%) and Hungary (+9%) > Strong
Slide 64: Significant events: Retail sales
Significant events RETAIL SALES HDS implements its two fold strategy : 1. Outlets in transport locations: RELAY: - Retail outlet network consolidation: 1,100 Relay stores in 13 countries across Europe and North America - Spin-off concepts: * Relay Services * Relay Café * Relay Livres AELIA: - Sales
Slide 65: Significant events: Virgin stores
Significant events 2. Specialized books, music, video and multimedia stores under the VIRGIN brand: Sales growth in 2002: 15.4% (1.8% on a like-for-like surface area) Expansion of the network in France: six new stores opened up between November 2001 and September 2002, bringing the number of Virgin
Slide 66: Outlook for 2003
OUTLOOK FOR 2003 > Airport traffic levels contingent to the situation in the Middle East > Further developing the business in traditional markets — Western Europe and North America — as well as in Asia/Oceania and Central Europe > Further leveraging of the Virgin brand in France and internationally,
Slide 67: Significant events: Audiovisual
Significant events AUDIOVISUAL > 2002 Sales up by 34.7% (as reported and when comparing similar periods) > Operating income declined (distribution: Kirch Group’s bankruptcy impact and current difficulties in all European markets, development of Match TV) • Theme channels: - Digital terrestrial telev
Slide 68: Significant events: Radios
Significant events RADIOS > Sales: +13.9% (as reported and when comparing similar periods) > Stable operating income • Europe 1: Sales holding up well, but promotional campaigns hurt profits Latest Médiamétrie ratings show an increase in the audience (10.6% cumulative share) • Europe 2 and RFM: Stro
Slide 69: Significant events: Advertising sales and new media
Significant events ADVERTISING SPACE AND AIRTIME SALES > Sales up by 7% (excluding contract with Skyrock terminated in 2001 and when comparing similar periods) > Lagardère Active Publicité: the leading radio advertising sales network, with a 23.9% audience share NEW MEDIA > Sales grew by almost 10%
Slide 70: Significant events: Automobile activity 2002
Significant events ACTIVITY 2002 ESPACE Production phased out 2002: 32,296 Espace manufactured (down from 59,116 the year before) M72 Development of this new light 2-seater vehicle continued during 2002. At the end of 2002, in the light of technical and commercial difficulties, decision was made to
Slide 71: Outlook for 2003: Automobile
> Pursue strategy implementaion towards third party car companies in the fields of engineering, development and testing OUTLOOK FOR 2003 > Implementing a so-called “Plan de sauvegarde de l’emploi” (lay-off plan) for the Romorantin (production) and the Trappes (technical and administration) sites > E
Slide 72: Lagardère stock performance
Lagardère stock performance 72
Slide 73: Lagardère share price, January 1999 – March 2003
Lagardère share price January 1999 – March 12, 2003 300 300 250 250 200 200 150 150 100 100 50 50 0 0 1999 2000 2001 2002 2003 LAGARDERE 73 DJ STOXX MEDIA CAC40 Source: DATASTREAM
Slide 74: Lagardère share price, January 1993 – March 2003
Lagardère share price January 1993 – March 12, 2003 (monthly average) 800 700 600 500 400 300 Lagardère 200 100 CAC 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 74 January, 1993 - Share price base : 100 = € 13 (FF 85)