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Lagardere Sa — Lagardère SCA — Investor Presentation (November 2018)
61 slides from Lagardere Sa's investor presentation, Nov 19, 2018
Slide 1: Investor Presentation November 2018
INVESTOR PRESENTATION NOVEMBER 2018
Slide 2: Disclaimer
DISCLAIMER Certain statements contained in this document are forward-looking statements (including objectives and trends), which address our vision of the financial condition, results of operations, strategy, expected future business and financial performance of Lagardère SCA. These data do not repr
Slide 3: Table of Content
TABLE OF CONTENT MARKET TRENDS slide 4 GROUP PROFILE slide 9 GROUP STRATEGY slide 15 slide 19 slide 23 slide 27 slide 30 PERFORMANCE slide 33 GUIDANCE slide 41 Appendix slide 43 3
Slide 4: Market Trends
MICHAEL SONNE a, Lagardere MARKET TRENDS
Slide 5: A fast-changing global environment shaped by key growth drivers
A FAST-CHANGING GLOBAL ENVIRONMENT SHAPED BY 4 KEY GROWTH DRIVERS International offering adjusted to local specificities: shops, sport events, Glocalisation medias and entertainment Nomadism, globalisation of travel: increase in PAX Mobility Creation of a worldwide Consommation Consumption middle cl
Slide 6: A strong, resilient and attractive global book market
A STRONG, RESILIENT AND ATTRACTIVE GLOBAL BOOK MARKET Global book market Trends Global revenue ($m) 120 000 CAGR*: ▪ Revenue stable over the past few years. 1.3% ▪ Young people are still reading. 100 000 ▪ “Big readers” are primarily older people, 80 000 a demographic that is growing. ▪ The “best se
Slide 7: Travel retail is booming, driven by growth in air traffic
TRAVEL RETAIL IS BOOMING, DRIVEN BY GROWTH IN AIR TRAFFIC International tourism Outlook for the Travel Retail market Number of departures per year (in millions) Global Duty Free and Travel Retail sales (in $m) 1 600 140 000 1 400 120 000 CAGR*: CAGR*: 1 200 4.1% 100 000 6.3% 1 000 80 000 800 60 000
Slide 8: Group long-term growth based on worldwide inclination towards experience
GROUP LONG-TERM GROWTH BASED ON WORLDWIDE INCLINATION TOWARDS EXPERIENCE: TRAVEL AND CULTURE EXPERIENCES Growth in air passengers travel (in %, 2015-2040) CAGR: 4.9% Discretionary categories are showing the fastest growth North Europe America +3.7% Middle +2.8% East and Asia +7.7% Asia- Pacific +6.2
Slide 9: Group Profile
MICHAEL SONNE a, Lagardere GROUP PROFILE
Slide 10: A diversified group with leading brands and market positions
A DIVERSIFIED GROUP WITH LEADING BRANDS AND MARKET POSITIONS 2017 revenue breakdown by division 2017 revenue breakdown by region Latin America, Africa, Middle East Asia- 3% Pacific 9% France US and 32% • No. 3 worldwide (Trade) Canada • No. 4 worldwide in 7% 33% 20% €7,069m Travel Retail 12% • A mul
Slide 11: Increasing the profitability of the business is our priority
INCREASING THE PROFITABILITY OF THE BUSINESS IS OUR PRIORITY Consolidated recurring Change in recurring EBIT (€m) and EBIT (€m) and Group operating margin (%) Main factors and measures operating margin (%) 9.0% 9.2% 9.2% ▪ Strict cost control. 5.7% ▪ Organisational optimisation 5.3% of warehouses an
Slide 12: Cash flow generation stable in 2017 after 25% rise in 2016
AFTER A RISE OF 25% IN 2016, CASH FLOW GENERATION WAS STABLE IN 2017 Cash flow from operations before changes in working capital (€m)* 557 563 447 84 88 32 63 47 68 194 207 161 202 234 227 (16) (18) (6) 2015 2016 2017 Lagardère Publishing Lagardère Travel Retail Lagardère Active Lagardère Sports and
Slide 13: Allocation of cash flow from operations in 2017
AROUND 60% OF CASH FLOW FROM OPERATIONS BEFORE CHANGES IN WORKING CAPITAL WAS USED TO FUND BUSINESS INVESTMENTS IN 2017 Allocation of cash flow from operations before changes in working capital in 2017 (€m) 47%: Capex 12%: purchases of investments 30%: ordinary dividend 11%: other* 2017 Allocation o
Slide 14: A measured, well-balanced financial strategy
A MEASURED, WELL-BALANCED FINANCIAL STRATEGY … providing long-term viability for an A tight rein on net debt… attractive dividend payout policy €1,551m Historical dividend (€/share) Ordinary dividend Extra dividend 2.4x** €1,389m €1,368m 2.2x 2.2x 9.0 6.0 5.7%*** 2015 2016 2017 1.3 1.3 1.3 1.3 1.3 1
Slide 15: Group Strategy
MICHAEL SONNE a, Lagardere GROUP STRATEGY
Slide 16: Strategic vision and ambition
STRATEGIC VISION AND AMBITION 1 A simpler, more ambitious and more focused business profile 2 A new and more efficient financial profile 16
Slide 17: A simpler, more ambitious and more focused business profile
A SIMPLER, MORE AMBITIOUS AND MORE FOCUSED BUSINESS PROFILE ▪ A Group structured around two priority pillars, to ensure each one is given all the necessary resources to dominate their sectors: Power engine Growth engine Aim: to change the size and scale of the two pillars. Selling assets which no lo
Slide 18: A new and more efficient financial profile
A NEW AND MORE EFFICIENT FINANCIAL PROFILE Thanks to the new business profile: - stronger potential for synergies (both costs and business); - maximized cash conversion; - lower restructuring linked to declining activities. Structurally improved profitability and cash generation to finance the growt
Slide 19: Lagardère Publishing
Lagardere - PUBLISHING con SU! cal PRESIDENT IS MISSING
Slide 20: Successful portfolio of publishing businesses with leading positions
SUCCESSFUL PORTFOLIO OF PUBLISHING BUSINESSES WITH SOLID LEADING POSITIONS IN CORE MARKETS 2017 revenue by geographic area 2017 revenue by activity Other Education Other France 16% 16% 19% 29% Illustrated Spain Partworks Books 6% 12% €2,289m €2,289m 13% US & General UK & Canada Literature Australia
Slide 21: Growth fuelled by acquisition and international development
GROWTH FUELLED BY ACQUISITION AND INTERNATIONAL DEVELOPMENT Revenue evolution (€m) and cash flow from operations Growth fuelled by acquisitions (2003-2017) before changes in working capital (2003-2017) 2017 2016 2,289 2015 Revenue Cash flow from operations 2014 before changes in working capital 2013
Slide 22: Riding the digital wave
RIDING THE DIGITAL WAVE E-books E-books contribution to Lagardère Publishing's overall revenue: 7.9% in 2017. E-publishing Reinforcing leadership: Bookouture / acquisition of Britain’s leading independent e-publisher. Mobile apps Exploring new opportunities: UK mobile gaming startups acquisitions fo
Slide 23: Travel Retail
Lagardere TRAVEL RETAIL
Slide 24: High growth business with leading positions in its segments
HIGH GROWTH BUSINESS WITH LEADING POSITIONS IN ITS 3 SEGMENTS 2017 revenue* by geographic area 2017 revenue by activity North Foodservice Asia- 17% America Pacific 22% 12% Travel Essentials 44% €3,412m Duty Free €3,412m France & Fashion 25% 39% EMEA (excl. France) 41% *IFRS revenue, excluding Distri
Slide 25: Diversified growth paths
DIVERSIFIED GROWTH PATHS A strong development mainly Organic Growth driven by organic growth Gain of new concessions August 2018 The Netherlands: Foodservice on national railway Late 2017 Shanghai, Beijing, Wuhan: Duty Free & Fashion, Foodservice Bridge sales growth (€m at constant exchange rates, r
Slide 26: Improvement of cash generation backed by resilient business model
IMPROVEMENT OF CASH GENERATION BACKED BY A RESILIENT BUSINESS MODEL Travel Retail Cash Flow from Operations* Breakdown of Capex** 175 4.4% 4.3% +71% 155 3.8% 4.0% 4,0% 135 56 54 115 3,0% 207 66 188 95 44 75 135 83 2,0% 121 55 82 35 52 44 1,0% 15 -5 0,0% 2014 2015 2016 2017 2014 2015 2016 2017 Growth
Slide 27: Lagardère Active
Lagardere ACTIVE
Slide 28: A diversified business mix with solid leading positions
A DIVERSIFIED BUSINESS MIX WITH SOLID LEADING POSITIONS 2017 revenue by geographic area 2017 revenue by activity Rest of World Radio 17% 22% Press 39% Spain France 6% 77% €872m TV €872m 32% Pure digital & BtoB 7% Peers Sound market positions Radio + TV + Internet #1 #1 #3 #1 Magazine publisher Scrip
Slide 29: Sustain profitability and develop promising growth drivers
SUSTAIN PROFITABILITY AND DEVELOP PROMISING GROWTH DRIVERS Secure a profitable development Reinforce audiovisual activity Acquisition of Grupo Boomerang TV in Spain Recurring EBIT Acquisition of Aito Media Group in Finland CAGR 2012-17 ▪ Employment protection +2% 6.4% 8.0% Acquisition of Skyhigh TV
Slide 30: Sports and Entertainment
Lagardere SPORTS AND ENTERTAINMENT
Slide 31: A global network combining international expertise with local market knowledge
A GLOBAL NETWORK COMBINING INTERNATIONAL EXPERTISE WITH LOCAL MARKET KNOWLEDGE 2017 revenue by geographic area 2017 revenue by activity Rest of France World 20% Other Media rights 24% 34% 20% Asia & €496m €496m Australia Germany 15% 22% Marketing Rest of Europe rights UK 11% 46% 8% Competitive Lands
Slide 32: A successful recovery plan to prepare for growth
A SUCCESSFUL RECOVERY PLAN TO PREPARE FOR GROWTH DEVELOPING BRAND PRESERVING LONG STRENGHTENING CORE CONSULTING AND TERM PARTNERSHIPS SALES ACTIVITIES DIGITAL SERVICES Long-term partnerships ▪ Consolidate and expand ▪ Launch of Lagardère Plus, a comprehensive business on global agency with a mission
Slide 33: Group Performance in H1 2018
MICHAEL GONNELEY J Lagardere GROUP PERFORMANCE IN H1 2018
Slide 34: Highlights
HIGHLIGHTS (€m) H1 2017* H1 2018 +1.8% consolidated ▪ Solid performance Revenue 3,308 3,366 +4.4% like-for-like* from Travel Retail Group recurring EBIT** 132 132 ▪ Sustained business Group operating margin** 4.0% 3.9% levels across the other divisions Profit – Group share 27 119 ▪ Solid financial A
Slide 35: Lagardère Publishing: Activity
LAGARDÈRE PUBLISHING: ACTIVITY H1 2018 revenue by geographic area H1 2018 revenue by activity Education Other France Other 12% 21% 27% 17% 13%* 19%* 26%* 17%* Illustrated Books Spain Partworks 12% 5% €1,000m 14% €1,000m 11%* 5%* 14%* US & UK & General Canada Australia Literature 28% 19% 45% 29%* 21%
Slide 36: Lagardère Travel Retail: Activity
LAGARDÈRE TRAVEL RETAIL: ACTIVITY H1 2018 revenue by geographic area H1 2018 revenue by activity North America Asia-Pacific 21% 13% 24%* 11%* Travel Duty Free & Essentials Fashion €1,724m 43% €1,724m 41% EMEA France 45%* 38%* (excluding 24% France) 24%* 42% Wholesale 41%* distribution 1%* Foodservic
Slide 37: Lagardère Active: Activity
LAGARDÈRE ACTIVE: ACTIVITY H1 2018 revenue by geographic area H1 2018 revenue by activity Other Radio 18% 21% 16%* 23%* Spain France Press 7% 75% 41% 7%* €429m 77%* €429m 41%* TV 31% 29%* Pure Digital & BtoB 7% 7%* Change in recurring EBIT (€m) and operating margin (%) 7.6% 7.5% 7.6% 32 38 33 H1 201
Slide 38: Lagardère Sports and Entertainment: Activity
LAGARDÈRE SPORTS AND ENTERTAINMENT: ACTIVITY H1 2018 revenue by geographic area H1 2018 revenue by activity France Other Other 31% Media rights 19% 19% 20%* 31%* 19% 25%* 24%* Asia & €213m €213m Germany Australia 20% 18% 21%* 16%* Marketing Rest of Europe rights 9% UK 50% 13%* 15% 45%* 5%* Change in
Slide 39: Consolidated statement of cash flows
CONSOLIDATED STATEMENT OF CASH FLOWS (€m) H1 2017* H1 2018 Up 4.4% Cash flow from operations before changes in working capital 181 189 Changes in working capital (222) (112) Substantial improvement attributable to optimisation drive at Lagardère Income taxes paid (50) (11) Travel Retail and decrease
Slide 40: Financing policy
FINANCING POLICY ▪ Delivering a leverage ratio close to 2.3x ▪ Strong liquidity maintained. thanks to a tight rein on debt due to ▪ Next €500m bond maturity not until September 2019. favourable H1 cash flow generation. Bonds Leverage ratio Bank loans and other Net debt/Recurring EBITDA* Authorised C
Slide 41: Guidance
MICHAEL SONNE a, Lagardere GUIDANCE
Slide 42: 2018 Guidance
2018 GUIDANCE The Lagardère group is raising the 2018 recurring EBIT target announced last March. Group recurring EBIT growth in 2018 is now expected to be between 1% and 3% versus 2017, restated for IFRS 15, at constant exchange rates and excluding the impact of disposals at Lagardère Active. 42
Slide 43: Appendix: Business Updates
MICHAEL GONNELEY J Lagardere APPENDIX: BUSINESS UPDATES
Slide 44: Transformation method
TRANSFORMATION METHOD 1 A strategy to drive growth and improve profitability and cash generation, while maintaining a long-term vision. 2 Choice and objective of the timing of disposals and reinvestments. 3 Reinvestments broadly accretive in terms of recurring EBIT, cash generation and acquisition m
Slide 45: Perseus acquisition
PERSEUS ACQUISITION EXPANSION OF NON-FICTION AND BACKLIST PUBLISHING PROGRAMS ▪ Date of creation: 1996 ▪ Date of acquisition: 1st April 2016 ▪ 2015 revenue: ≈ €90m ▪ Activities: Non-fiction / Backlist publishing programs ▪ 9 imprints: Avalon Books, Basic Books, DACapo Press, Public Affairs, Running
Slide 46: Travel retail organic growth drivers
TRAVEL RETAIL ORGANIC GROWTH DRIVERS A favourable product mix evolution (in €m, revenue@100% 2015-2017) €3.6bn +16% €4.2bn +8.3% €4.5bn Liquor 6% 5% 6% Tobacco 19% 17% 17% Gourmet food 9% 9% 10% & confectionary 14% 14% Perfume & Cosmetics 16% 10% 11% Fashion 10% 20% 21% Food & Beverage 15% Print 10%
Slide 47: Growth driven by award of major tender offers
GROWTH HAS BEEN DRIVEN BY THE AWARD OF MAJOR TENDER OFFERS IN ALL THREE BUSINESSES… Focus on major airport tender offers won since 2014 2014 2015 2016 2017 Award date Reykjavik Krakow Hong Kong Phoenix Geneva Dakar Melbourne T4 Auckland Luxembourg Gdansk Prague Gold Coast Riyadh & Dammam Warsaw T1 A
Slide 48: And by selective M&A operations
… AND BY SELECTIVE M&A OPERATIONS Focus on M&A operations performed from 2014 to 2018 Gerzon Airest Saveria ▪ Closed in January 2014 ▪ Closed in April 2014 ▪ Closed in April 2015 ▪ 12 PoS in Schiphol airport ▪ 200 PoS in 11 countries ▪ 17 PoS located at JFK T4 ▪ Operations in Fashion ▪ Operations ma
Slide 49: Paradies Lagardère: creating a regional leader
PARADIES LAGARDÈRE: CREATING A REGIONAL LEADER Overview of Paradies Lagardère Paradies Lagardère 2017 key figures A new entity managed A unique and #3 by an experienced complementary North in North leadership team American footprint America 98 airports 6,000 employees A brand portfolio tailor A stro
Slide 50: Acquisition of Hojeij Branded Foods (1/3)
ACQUISITION OF HOJEIJ BRANDED FOODS: REINFORCING LAGARDÈRE TRAVEL RETAIL IN NORTH AMERICA AND IN FOODSERVICE GLOBALLY (1/3) HBF 2017 Profile of HBF key figures Successful acquisition Leading airport Recognised operational in 2017 of Vino Volo, Foodservice travel excellence with leading 124 #1 airpor
Slide 51: Acquisition of Hojeij Branded Foods (2/3)
ACQUISITION OF HOJEIJ BRANDED FOODS: REINFORCING LAGARDÈRE TRAVEL RETAIL IN NORTH AMERICA AND IN FOODSERVICE GLOBALLY (2/3) Strategic rationale ▪ A large travel foodservice market (50% of total North American travel retail market) supported An attractive travel by sound drivers and significant poten
Slide 52: Acquisition of Hojeij Branded Foods (3/3)
ACQUISITION OF HOJEIJ BRANDED FOODS: REINFORCING LAGARDÈRE TRAVEL RETAIL IN NORTH AMERICA AND IN FOODSERVICE GLOBALLY (3/3) Expected synergies ▪ Roll-out of HBF concepts/brands, well positioned for specific consumer needs Sales uplift synergies ▪ Improved menu tailoring and customer targeting ▪ Oper
Slide 53: Abu Dhabi International Airport: a major step in Middle-East
ABU DHABI INTERNATIONAL AIRPORT: A MAJOR STEP IN MIDDLE-EAST Overview of Abu Dhabi contract awarded ▪ 10-year contract on core duty free categories, confectionery and fine foods Key ▪ 13 PoS over 3,000 sq.m. figures ▪ 10-year estimated cumulated revenue: €2.1bn ▪ 7 Food and Beverage contracts awarde
Slide 54: Key features and ratios of tender offers in airport travel retail
KEY FEATURES AND RATIOS OF TENDER OFFERS IN THE AIRPORT TRAVEL RETAIL ENVIRONMENT ✓ Contracts are awarded through tender offer processes where travel retail operators answer RFPs on “packages” depending on the retail space location and / or the product line targeted Business line Main ratios1 Duty F
Slide 55: ELLE brand
BRAND 1* UPSCALE WOMEN’S BRAND 11,313,000consumersof which 8,451,000are women 1* PREMIUM WOMEN’S BRAND 2,976,000consumers of which 1,920,000are women PRESS THE NEWS, FASHION & BEAUTY MULTIGENERATIONAL WOMEN'S WEEKLY 329,932 copies 1 UPSCALE WOMEN’S WEEKLY 2,074,000 readers of which 1,735,000 are wom
Slide 56: 2018 Sports events calendar
2018 SPORTS EVENTS CALENDAR 2018 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter CHAN 2018 AFCON 2019 QUALIFIERS FOOTBALL AFRICA WOMEN AFCON SUPER CUP CHAMPIONS LEAGUE & CONFEDERATION CUP FOOTBALL EUROPE FIFA WORLD CUP 2018 AFC CHAMPIONS LEAGUE + AFC CUP AFC U23 AFC WOMEN AFC U16 / U19 FOOTBALL ASIA
Slide 57: Appendix: Financial Updates
APPENDIX: FINANCIAL UPDATES
Slide 58: An excellent shareholder return
AN EXCELLENT SHAREHOLDER RETURN 270 Lagardère share: +131% 250 Shareholder return* Indexes based 230 (100 at 1 January 2013) 210 190 170 150 130 CAC 40: +70% 110 STOXX Europe 600 Media: +74% 90 01/01/2013 01/01/2014 01/01/2015 01/01/2016 01/01/2017 01/01/2018 Lagardère CAC 40 Stoxx Europe 600 Media
Slide 59: Definitions (1/2)
DEFINITIONS (1/2) Lagardère uses alternative performance measures which serve as key measures of the Group's operating and financial performance. These indicators are tracked by the Executive Committee in order to assess performance and manage the business, as well as by investors in order to monito
Slide 60: Definitions (2/2)
DEFINITIONS (2/2) ▪ Operating Margin is calculated by dividing Recurring EBIT of fully consolidated companies (Group recurring EBIT) by revenue. ▪ Recurring EBITDA over a rolling 12-month period is calculated as recurring EBIT of fully consolidated companies (Group recurring EBIT) plus dividends rec
Slide 61: Lagardère IR team and calendar
LAGARDÈRE IR TEAM AND CALENDAR IR team details Calendar (all time is CET) Florence Lonis • Publication of Q4 2018 revenue 7 February 2019 at 8:00 a.m. Chief of Investor Relations Tel: +33 1 40 69 18 02 flonis@lagardere.fr Dounia Amouch Investor Relations Officer Tel: +33 1 40 69 67 88 damouch@lagard
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