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Lagardere Sa — Lagardère SCA — Debt Investor Presentation (April 2014)
67 slides from Lagardere Sa's debt investor presentation, April 2014
Slide 1: Fixed income Investor presentation
Fixed income Investor presentation April 2014
Slide 2: Disclaimer
Disclaimer This document presents the full-year 2013 results from the consolidated financial statements of Lagardère SCA as of December 31, 2013. 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
Slide 3: Table of contents
Table of contents 1) Group profile slide 4 2) Group strategy slide 7 3) Performance in 2013 slide 15 4) Outlook and guidance slide 29 5) Appendix slide 32 2013 financials slide 33 Focus on Publishing slide 49 Focus on Active slide 55 Focus on Travel Retail slide 56 Capital structure slide
Slide 4: Reminder of Group profile
Reminder of Group profile 4
Slide 5: A diversified media Group with leading global brands
A diversified media Group with leading global brands World #3 trade French #1 internet & A world leader in Leader in Sports book publisher mobile media Group Travel Retail #1 in France rights in Asia #2 in the UK and Spain French #1 TV More than 4,000 shops #4 in the US Production Group in 20 countr
Slide 6: A balanced business mix with a worldwide presence
A balanced business mix with a worldwide presence Breakdown of 2013 Breakdown of 2013 recurring net sales by division EBIT by division Unlimited 6% Services 21% Publishing 28% Services 52% Publishing 51% Active 24% Active 14% Note: Recurring EBIT/Lagardère Unlimited: -€11m. Breakdown of 2013 net sal
Slide 7: 2013: full speed implementation of our strategy
2013: full speed implementation of our strategy 7
Slide 8: Strategic roadmap
Strategic roadmap Lagardère business matrix 3 pillars strategy Growth high Digital Adaptation of 1 existing activities Travel retail TV Production Investment in high Unlimited 2 growth activities Book publishing Radio Divestiture of Press 3 declining activities Magazines Distribution low & non core
Slide 9: Divestment of declining activities & non core assets
3 Divestment of declining activities & non core assets Successful disposal of the 3 main non core stakes at very good conditions France 7,4% of the share capital 20% of the share capital 25% of the share capital €2,3bn €1bn €91m April, 9, 2013 November, 5, 2013 April, 2, 2013 Magazines: announce
Slide 10: Investment in high growth activities (1/2): travel retail
2 Investment in high growth activities (1/2) : travel retail Organic growth drivers of travel retail 1. Strong and regular increase of global air traffic 12 10 4,5 8 Passengers 6 3,1 (billion) 2,5 2,3 2,4 4 2 2,1 2,2 International 6,2 2 4,3 2,8 2,9 3,1 3,2 3,4 3,5 Domestic Aéroport Roissy Charles
Slide 11: Investment in high growth activities (2/2): recent achievements
Investment in high growth activities (2/2) : 2 recent achievements Travel retail January, 16, 2013 Acquisition of Coffee Fellows 15 points of sale in train stations throughout Germany September, 19, 2013 Announcement of the partnership with Airest Food & Beverage and Travel Retail activities, includ
Slide 12: Adaptation of existing activities (1/2)
1 Adaptation of existing activities (1/2) Strengthened media brands position • Active: Licensing revenues +4% in 2013. Publishing: sucessful transition in book Publishing • Position of the Publisher maintained on the value chain • Prices have stabilized at a satisfactory level Positive impact
Slide 13: Adapt historic activities (2/2)
1 Adapt historic activities (2/2) Improvement of the Travel Retail product mix • Development of Duty Free : Cosmetics, Alcohol, Tobacco, Fashion & leather goods • Development of Food Service: Partnerships (Brioche Dorée, Paul, Costa Coffee) and development of LS brands (Trib’s, Bread&Butter, The Fla
Slide 14: Reduced exposure to print-related activities
Reduced exposure to print-related activities Print-related activities represented less than 50% of total sales for the first time in 2013 100% 80% 72% 70% 67% 65% 63% 61% 60% 54% 51% 51% Non print- related 40% 49% 49% Print-related 46% 37% 39% 30% 33% 35% 20% 28% 0% 2003 2006 2007 2008 2009 2010 201
Slide 15: Group performance in 2013
Group performance in 2013 15
Slide 16: Group net sales
Group net sales -2.1% €7,370m €7,216m reported -1,3% Like-for-like €7,268m €7,171m Like-for-like 2012 net sales* like-for-like 2013 net sales* 2012 2013 The good performance in Book Publishing and Travel Retail operations enabled to partly offset the still-difficult economy in Europe and declining p
Slide 17: Key figures – Group
Key figures – Group (€m) 2012 2013 Change Net sales 7,370 7,216 -2.1% Media Recurring EBIT before associates 358 372 +4.0% Net income – Group share 89 1,307 +€1,218m Adjusted net income – Group share* 207 172 -€35m Cash flow from operations 531 570 +€39m Net cash (debt) end of year (1,700) 361 +€2,0
Slide 18: Sound financial position
Sound financial position 2013 Gross debt – breakdown of funding sources • Strong liquidity. 35% in 2012 • High financial flexibility resulting from the net 14% Bonds cash position. Bank loan • Gross debt centered on bond market. 86% et other 65% in 2012 +€361m +€3,429m Preservation of liquidity an
Slide 19: Performance by division
Performance by division 19
Slide 20: Lagardère Publishing: activity
Lagardère Publishing: activity 2013 net sales by geographical area 2013 net sales by activity Other Education Other 16% 16% 18% 17%* 17%* 18%* France 32% Partworks Spain Illustrated 6% 32%* 11% books 8%* 10%* 15% 15%* US & Canada 25% UK & General Australia Literature 23%* 19% 42% 20%* 40%* 2013 ne
Slide 21: Lagardère Publishing: profitability
Lagardère Publishing: profitability (€m) 2012 2013 Change Net sales (a) 2,077 2,066 -0.5% Recurring EBIT before associates (b) 223 223 Operating margin (b)/(a) 10.7% 10.8% +0.1 pt Slight improvement in profitability (+0.1 pt) • due to strong General Literature sales based on best-sellers and Partw
Slide 22: Lagardère Publishing: track record
Lagardère Publishing: track record Resilient revenues and double-digit margins Net sales Operating margin €2,273m €2,130m €2,159m €2,165m €2,077m €2,038m €2,066m 13.2% 11.2% 11.4% 11.6% 10.8% 10.7% 10.8% 2007 2008 2009 2010 2011 2012 2013 « Twilight » saga effect (116m copies sold) 22
Slide 23: Lagardère Services: activity
Lagardère Services: activity 2013 net sales by geographical area 2013 net sales by activity US & Asia & Canada Australia 6% 8% Eastern 6%* 8%* Wholesale Europe Other Distribution 18% 7% 24% 20%* 5%* 26%* Switzerland 10% 11%* France 40% 60% 29% 44%* 56%* 28%* Spain Integrated 10% Retail 10%* Belgium
Slide 24: Lagardère Services: profitability
Lagardère Services: profitability (€m) 2012 2013 Change Net sales (a) 3,809 3,745 -1.7% Recurring EBIT before associates (b) 104 96 -€8m Operating margin (b)/(a) 2.7% 2.6% -0.1 pt 2013 profitability • Good performance in Duty free and Food Services, in addition to successful diversification as wel
Slide 25: Lagardère Active: activity
Lagardère Active: activity 2013 net sales by geographical area 2013 net sales by activity International 13% Radio 12%* 21% 20%* Press & other 56% France Television 57%* 87% 23% 88%* 23%* 2013 net sales: €996m (-3.8% like-for-like). • Decline in magazine circulation (-5,4%) dragged related advertis
Slide 26: Lagardère Active: profitability
Lagardère Active: profitability (€m) 2012 2013 Change Net sales (a) 1,014 996 -1.9% Recurring EBIT before associates (b) 64 64 Operating margin (b)/(a) 6.4% 6.4% 0 pt Operating profit is stable • with good performances in Radio and TV (Production and Channels) • as well as ongoing cost control • o
Slide 27: Lagardère Unlimited: activity
Lagardère Unlimited: activity 2013 net sales by geographical area 2013 net sales by activity France Rest of World 12% Other 19% 11%* 20% 20%* 17%* Media rights Germany 38% Asia & 28% Australia 40%* 25%* 14% 21%* Marketing rights Rest of 42% Europe 16% UK 43%* 16%* 11% 7%* 2013 net sales: €409m (-1
Slide 28: Lagardère Unlimited: profitability
Lagardère Unlimited: profitability (€m) 2012 2013 Change Net sales (a) 470 409 -13.0% Recurring EBIT before associates (b) (33) (11) +€22m Operating margin (b)/(a) - - 2013 operating profitability • Profits are up due mainly to the -€22m provision booked in H1 2012 for the IOC contract** • Excludi
Slide 29: Outlook and credit profile summary
Outlook and credit profile summary 29
Slide 30: Guidance and dividend
Guidance and dividend 2014 guidance on recurring media EBIT before associates: • In 2014, the Media recurring EBIT before associates is expected to increase again by 0% to 5% compared to 2013, at constant exchange rates and excluding the impact of the potential disposal of Distribution activities.
Slide 31: Credit highlights summary
Credit highlights summary Leading market positions in Publishing (#3 worldwide publisher) & Services (world leader in Travel Retail) A diversified, balanced complementary business mix within the media and travel retail industry • A geographically diversified group with c.2/3 of revenues generate
Slide 32: Appendix
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Slide 33: Consolidated income statement (1/2)
Consolidated income statement (1/2) (€m) 2012 2013 Net sales 7,370 7,216 Media recurring EBIT before associates 358 372 Recurring EBIT before associates from other (19) (45) activities Income from associates* 105** 7 Non-recurring items (216) 1,193 Restructuring costs (40) (122) Gains/(losses) on di
Slide 34: Consolidated income statement (2/2)
Consolidated income statement (2/2) (€m) 2012 2013 EBIT 228 1,527 Net interest expense (82) (91) Income before tax 146 1,436 Income tax expense (40) (117) Total net income 106 1,319 Attributable to minority interests (17) (12) Net income – Group share 89 1,307 34
Slide 35: Adjusted net income – Group share
Adjusted net income – Group share (€m) 2012 2013 Net income attributable to the Group 89 1,307 Equity accounted contribution from EADS (89) - Amortisation of acquisition-related intangible assets and other acquisition-related expenses* 27 20 Impairment losses on goodwill, tangible and intangible fix
Slide 36: Consolidated statement of cash flows
Consolidated statement of cash flows (€m) 2012 2013 Cash flow from operations before interest, taxes 552 454 Changes in working capital (21) 116 Cash flow from operations 531 570 Interest paid & received, income taxes paid* (140) (235) Cash generated by/(used in) operating activities 391 335 Acquisi
Slide 37: Change in net debt in 2013
Change in net debt in 2013 €3,445m -€1,339m -€45m +€361m -€1,700m Net debt as of Net cash from Dividends Foreign exchange, Net cash 31/12/2012 operating & paid scope and as of investing activities other items 31/12/2013 37
Slide 38: Consolidated balance sheet
Consolidated balance sheet (€m) Dec. 31, 2012 Dec. 31, 2013 Non-current assets (excl. investments in associates) 3,922 3,579 Investments in associates 1,451 152 Current assets (other than short-term investments and cash) 2,847 2,817 Short-term investments and cash 703 1,784 Held-for-sale assets 437
Slide 39: Analysis of non-recurring/non-operating items in 2013
Analysis of non-recurring/non-operating items in 2013 Total Lagardère Lagardère Lagardère Lagardère Lagardère Other Total (€m) Publishing Services Active Unlimited Media activities Lagardère Restructuring costs (3) (10) (91) (14) (118) (4) (122) Gains/(losses) on disposals - (4) (11) - (15) 1,686 1,
Slide 40: Main associates
Main associates Balance Sheet Income Statement (€m) 2012 2013 2012 2013 EADS (7.39%) - - 89 - Canal+ France (20%) 1,154 - - - Marie Claire (42%) 125 90 5 - Amaury (25%) 98 - 1 - Other associates 74 62 10 7 Total before impairment losses 1,451 152 105 7 Impairment losses* (44) (47) TOTAL 61 (40) *In
Slide 41: Recap of Media performance by division
Recap of Media performance by division Net sales (€m) 2013 net Reported Reported Like-for-like sales €m change change change * Lagardère Publishing 2,066 -€11m -0.5% +1.9% Lagardère Services 3,745 -€64m -1.7% -0.9% Lagardère Active 996 -€18m -1.9% -3.8% Lagardère Unlimited 409 -€61m -13.0% -13.6%
Slide 42: Capital Employed
Capital Employed (€m) 2013 Lagardère Publishing 981 Lagardère Services 518 Lagardère Active 503 Lagardère Unlimited 300 Total Media 2 302 Other and elimination 264 Group total 2 566 42
Slide 43: Cash flow statement data – Lagardère Publishing
Cash flow statement data – Lagardère Publishing (€m) 2012 2013 Cash flow from operations before interest, taxes 217 239 Changes in working capital (21) 38 Cash flow from operations 196 277 Interest paid & received, income taxes paid (50) (62) Cash generated by/(used in) operating activities 146 215
Slide 44: Cash flow statement data – Lagardère Active
Cash flow statement data – Lagardère Active (€m) 2012 2013 Cash flow from operations before interest, taxes 67 45 Changes in working capital 6 27 Cash flow from operations 73 72 Interest paid & received, income taxes paid (57) (45) Cash generated by/(used in) operating activities 16 27 Acquisition o
Slide 45: Cash flow statement data – Lagardère Services
Cash flow statement data – Lagardère Services (€m) 2012 2013 Cash flow from operations before interest, taxes 156 159 Changes in working capital (29) (35) Cash flow from operations 127 124 Interest paid & received, income taxes paid (31) (39) Cash generated by/(used in) operating activities 96 85 Ac
Slide 46: Cash flow statement data – Lagardère Unlimited
Cash flow statement data – Lagardère Unlimited (€m) 2012 2013 Cash flow from operations before interest, taxes 101 50 Changes in working capital 20 54 Cash flow from operations 121 104 Interest paid & received, income taxes paid (19) (13) Cash generated by/(used in) operating activities 102 91 Acqui
Slide 47: Lagardère Unlimited – Guaranteed minimum
Lagardère Unlimited – Guaranteed minimum At December 2013 entities forming part of Lagardère Unlimited had guaranteed minimum future payments amounting to €680m under long-term contracts for the sale of TV and marketing rights. These payments break down as follows by maturity: Maturity 2014 2015 2
Slide 48: Definitions of Recurring Media EBIT, EBITDA, Like-for-like net sales and Free cash flow
For the records: definitions of Recurring Media EBIT, EBITDA, Like-for-like net sales and Free cash flow Recurring Media EBIT before associates is defined as the difference between earnings before interest and tax and the following items of the profit and loss statement: • contribution of associat
Slide 49: Lagardere Publishing is the Number 3 in the world
Lagardere Publishing is the co Number 2 in the world Sales* of the top 15 Consumer book publishers worldwide (Trade / Education including Higher Education) in € M ** Pearson 6 511 ** Random House(1) 2 142 Lagardère Publishing 2 077 Planeta 1 772 McGraw Hill Education 1 648 (2) Holtzbrinck 1 501 Scho
Slide 50: e-Books: Answer to potential threat (1/5)
e-Books: Answer to potential threat (1/5) Risk # 1 : Self-publishing “Big ticket authors will publish themselves online” • But who will pay them their big advances up front ? • Who will help them improve their copy ? • Who will manage their promo tours and their web sites ? • Who will do their mar
Slide 51: e-Books: Answer to potential threat (2/5)
e-Books: Answer to potential threat (2/5) Risk # 2 : Disintermediation “Large e-tailers will become publishers” • The largest e-tailer (Amazon) only commands a 15% market share (print & ebook). Who wants to limit his audience to such a small fraction of the market ? • Who can be sure his/her e-pub
Slide 52: e-Books: Answer to potential threat (3/5)
e-Books: Answer to potential threat (3/5) Risk # 3 : Piracy “Why buy e-books when it’s so easy to download them illegally ?” • DRMs and piracy tracking agencies are a good deterrent. • The demographics of books buyers are not similar to those of music consumers (older, more affluent, more law-abid
Slide 53: e-Books: Answer to potential threat (4/5)
e-Books: Answer to potential threat (4/5) Risk # 4 : e-tailer market dominance “A high retail price policy is unsustainable when access to market is controlled by a few huge players” • The “agency contract”, upheld by DoJ and European Commission, is effective protection against deep discounting wh
Slide 54: e-Books: Answer to potential threat (5/5)
e-Books: Answer to potential threat (5/5) Risk # 5 : Profitability “Migrating from print to digital will negatively impact the profitability of the publishing industry” • Many high margin books (illustrated, coffee-table, how-to, boxes…) still don’t lend themselves to digitization. • School book d
Slide 55: Lagardère Active: a more resilient profile
Lagardère Active: a more resilient profile Reduced exposure to advertising Exposure to advertising (as % of Active division sales) 5% of Group 57% 57% sales 53% 54% 43% * 42% 37% 2007 2008 2009 2010 2011 2012 2013 * Excluding PMI and Russian radio, sold in 2011 55
Slide 56: Travel Retail: a fast growing market
Travel Retail: a fast growing market Travel retail market size and growth perspectives Estimates (€ bn, %, 2012) S = €85bn Others1 €36bn, 42% Stations 40% €14bn, 16% + Airports 65% 60% €35bn, 42% = = Annual growth until 2020 (% p.a.) 60% 15% + = 0% - 2% + 2% - 4% + to + 35% + 4% - 8% + 25% + + > 8%
Slide 57: Lagardere Services TR: an international player across all territories and channels
Lagardere Services TR: an international player operating across all territories and all channels LS Travel Retail sales@100% breakdown by geography and channel (€ bn, %, 2012) 100% = €2.5bn 17% Others1 €0.5bn, 15% 21% 35% Stations €0.6bn, 30% 24% 15% 80% Airports €1.4bn, 55% 50% 55% Western Europe E
Slide 58: A leading player worldwide in the race for consolidation
A leading player worldwide in the race for consolidation Largest travel retail operators by sales Estimates (€bn, 2012) 3.9 3.3 1.9 0.7 2.6 1.0 1.4 0.1 2.5 2.0 0.2 2.2 2.2 2.1 0.2 1.9 2.1 2 Duty Free & Luxury Retail 1.9 Travel essentials 1 1.6 Foodservice (1) News, gifts, convenience, souvenirs, ele
Slide 59: LS TR operations in 26 countries and almost 140 airports
Beyond size, LS TR is truly global with operations in 26 countries and almost 140 airports worldwide Lagardère Services retail operations (As of December 2012) Airports classified among the world’s top 100 airports in terms of passenger volume Other airports Source: ACI Annual Worldwide Airport Traf
Slide 60: A rich portfolio of concepts to operate across the segments in travel retail
A rich portfolio of concepts to operate across the segments in travel retail Duty Free & Travel essentials Foodservice Luxury LS Travel Retail brands Franchised brands 60
Slide 61: A high ambition in travel retail
A high ambition in travel retail Consolidation Convergence Globalization Sophistication Become a leading Reach Reach player in Deliver, measure #2 worldwide in Top 5 worldwide 3 continents and communicate TR including large (with a special focus on in each segment on excellence acquisitions Europe,
Slide 62: Travel Retail: emerging countries heavily contribute to growth worldwide
Travel Retail: emerging countries heavily contribute to growth worldwide Increase1 in total air traffic Sales Per Pax for BRIC destinations between 2006 and 2011 (As a multiple of the SPP of the remaining pax, (€ bn, %, 2006-2011) 2011) Paris Duty Free 5,5x Prague 7,0x Duty Free Rest Of the World 63
Slide 63: LS Travel Retail strategic objectives
LS Travel Retail strategic objectives (exc. Roma airport) LS Travel Retail sales and Ebitda margin evolution – Proportional view* (2011-2016) Sales growth** Ebitda margin improvement** +10% +0.5 pt to +1.0 pt per annum over the period 2/3 by organic growth Favorable mix evolution 1/3 through s
Slide 64: A solid portfolio of contracts
A solid portfolio of contracts Sales@100% breakdown by contract maturity (€ bn, %, 2011) Below 1 year 8% Above 48% €2.3bn 6 years 2 to 5 44% years LS Travel Retail renewed 99% of its contracts in Duty Free, renewal rate exceeds 90% overall Source: Lagardère Services
Slide 65: Acquisition of Roma airport duty free concession
Acquisition of Roma airport duty free concession Acquisition in September 2012 of the Duty Free activity of Aeroporti di Roma, operator of the duty free/paid concessions in Roma airports (Fiumicino and Ciampino) Contract profile : • 14 years contract • Exclusivity for core categories (duty free) • 2
Slide 66: Shareholding structure
Shareholding structure Capital at end December 2013 Number of shares 131 133 286 Number of voting rights 172 016 507 Share capital at end December 2013 Voting rights at end December 2013 Lagardère Capital & Management; Lagardère 9,30% Capital & Treasury stock; Management; 2,43% 14,40% Employees; 2,1
Slide 67: Lagardère IR Team and calendar
Lagardère IR Team and calendar Calendar IR team details (all time is CET) Anthony MELLOR 2014 Annual General Meeting Head of Investor Relations May 6, 2014 at 10:00 a.m. at the Carrousel du Louvre in Paris. Tel: 33 1 40 69 18 02 amellor@lagardere.fr Ordinary dividend and exceptional distribution Bot
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