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Lagardere Sa — Lagardère SCA — Debt Investor Presentation (October 2019)
50 slides from Lagardere Sa's debt investor presentation, October 2019
Slide 1: Credit Investor Presentation October 2019
CREDIT INVESTOR PRESENTATION October 2019
Slide 2: Disclaimer
DISCLAIMER This document presents the full-year 2018 results from the consolidated financial statements of Lagardère SCA and the first-half 2019 results from the latest interim financial report of Lagardère SCA published on July 25, 2019. This document does not constitute the Annual Financial Report
Slide 3: Disclaimer
DISCLAIMER No representation or warranty, express or implied, is made as to, and no reliance should be placed upon, the fairness, accuracy, completeness or correctness of the Information or opinions and none of Lagardère SCA or the Joint Lead Managers accepts any responsibility or any liability (in
Slide 4: Today's Speakers
TODAY’S SPEAKERS Gérard • Group CFO since 1 June 2016, member of the Executive Committee Adsuar • In 2011 appointed Group Deputy CFO at Lagardère Group Chief Financial • 10 years Corporate Executive Finances & Treasury at EADS based in Munich Officer Emmanuel • Joined Lagardère in 2012 as Head of Fu
Slide 5: Table of Content
TABLE OF CONTENT LAGARDÈRE AT A GLANCE LAGARDÈRE GROUP and FINANCIAL STRATEGIES & POSITIONING OPERATING PERFORMANCE, OUTLOOK & FINANCIAL PROFILE TRANSACTION OVERVIEW APPENDICES 5
Slide 6: Lagardère at a Glance
LAGARDÈRE AT A GLANCE LAGARDÈRE GROUP and FINANCIAL STRATEGIES & POSITIONING OPERATING PERFORMANCE, OUTLOOK & FINANCIAL PROFILE TRANSACTION OVERVIEW APPENDICES 6
Slide 7: Lagardère at a Glance
LAGARDÈRE AT A GLANCE HIGHLIGHTS SHAREHOLDING STRUCTURE* 3rd largest privately owned consumer books publisher in the world 0.83% Number 4 in the global Travel Retail market 7.33% 1.98% Lagardère Capital & Management 2018: €7.2bn revenues, €401m recurring EBIT, Treasury shares €471m free cash flow an
Slide 8: Management Team
MANAGEMENT TEAM * Enlarged Committee. (Comité Elargi) 8
Slide 9: Lagardère Group and Financial Strategies & Positioning
LAGARDÈRE AT A GLANCE LAGARDÈRE GROUP and FINANCIAL STRATEGIES & POSITIONING OPERATING PERFORMANCE, OUTLOOK & FINANCIAL PROFILE TRANSACTION OVERVIEW APPENDICES 9
Slide 10: Transforming the Portfolio Is Part of the Group's DNA
TRANSFORMING THE PORTFOLIO IS PART OF THE GROUP’S DNA AND HELPS CREATE VALUE OVER THE LONG TERM Revenue by division Disposal of non-strategic businesses 2003 TV unit (excl. Mezzo) 5% 7.4% of 42% of Books 8% 7.5% of 20% of Press Le Monde Interactif 16% 36% Radio assets Distribution Distribution in So
Slide 11: Most of Our Revenue and Recurring EBIT Achieved Through Two Main Pillars
MOST OF OUR REVENUE AND RECURRING EBIT IS ALREADY ACHIEVED THROUGH OUR TWO MAIN PILLARS 2018 revenue breakdown by region Latin America, Africa, Middle East 31% Asia- 3% of total revenue 51% of total revenue Pacific 9% 4 3 • Third-largest privately-owned • No. 4 in the global Travel Retail France US
Slide 12: Ongoing Strategic Refocusing with Swift Progress on Disposal Plan
ONGOING STRATEGIC REFOCUSING WITH SWIFT PROGRESS ON THE DISPOSAL PLAN ANNOUNCED 2018 2019 June January/ €14m 42% stake February €41m Operations July in the €73m February* process of Central Europe €18m Africa, Asia being sold July/ October €55m February Press (excl. Paris Match, Le Journal du Dimanc
Slide 13: A Unique Group Combining Both Resilience and Growth
A UNIQUE GROUP COMBINING BOTH RESILIENCE AND GROWTH A revisited, principal Corporate function Symbolic, prestigious assets A resilient power engine capable of further A growth engine capable of increased growth, with: profitability, with: Greater diversification (licences, mobile games Ongoi
Slide 14: Our Target: A Leaner, More Ambitious Business Profile
OUR TARGET: A LEANER, MORE AMBITIOUS BUSINESS PROFILE REFOCUSED AROUND TWO COMPLEMENTARY BUSINESSES A Group structured around two pillars to ensure each is given the necessary resources to lead its sector: Power engine Growth engine Growth decorrelated from the economic cycle Structural growth
Slide 15: A Measured, Well-Balanced Financial Strategy
A MEASURED, WELL-BALANCED FINANCIAL STRATEGY A tight rein on net debt… A stable ordinary dividend payout... Historical dividends (€/share) €1,389m Ordinary dividend €1,375m €1,368m Extra dividend 2.2x 9.0 2.2x 2.1x** 6.4%*** 6.0 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 2016 2017 2018 2011 2012 2013 2014 2015
Slide 16: Lagardère Publishing
LA PARENTHESE LIBERALE ee} Jane Birkin va = \ Munkey Diaries CONNELLY |
Slide 17: Successful Portfolio of Publishing Businesses with Solid Leading Positions
SUCCESSFUL PORTFOLIO OF PUBLISHING BUSINESSES WITH SOLID LEADING POSITIONS IN CORE MARKETS 2018 revenue by geographic area 2018 revenue by activity Other* Education Other France 17% 14% 18% 28% Illustrated Spain Books 6% Partworks 13% €2,252m 12% €2,252m US & UK & General Canada Australia Literature
Slide 18: Creating a Top Global Player Through Acquisitions (1/2)
CREATING A TOP GLOBAL PLAYER THROUGH ACQUISITIONS, ORGANIC DEVELOPMENT AND AN INTERNATIONAL STRATEGY (1/2) Revenue evolution and cash flow from operations Leadership fuelled by acquisitions (2003-2019) before changes in working capital (€m) 2019 (2003-2018) 2018 2,252 2017 Revenue 2016 Cash flow fro
Slide 19: Creating a Top Global Player Through Acquisitions (2/2)
CREATING A TOP GLOBAL PLAYER THROUGH ACQUISITIONS, ORGANIC DEVELOPMENT AND AN INTERNATIONAL STRATEGY (2/2) M&A activity has inflated PER of all large publishing companies High price must be offset by skillfull integration and quickly implemented synergies (back offices, distribution, office foot
Slide 20: Slide 20
Slide 21: Lagardère Travel Retail Has Become a Global Leader
LAGARDÈRE TRAVEL RETAIL HAS BECOME A GLOBAL LEADER THANKS TO ORGANIC GROWTH AND SELECTIVE ACQUISITIONS Revenue evolution and cash flow from operations before changes in working capital (€m)* Development driven mainly by organic growth in 2003-2019 (2003-2018) Organic growth New concessions won Augus
Slide 22: High Growth Business with Leading Positions in Its Segments
HIGH GROWTH BUSINESS WITH LEADING POSITIONS IN ITS 3 SEGMENTS 2018 revenue by geographic area 2018 revenue by activity North Foodservice Asia- 17% America Pacific 35 countries 21% 13% on 5 continents Travel Essentials 43% €3,673m 257 airports* Duty Free €3,673m France & Fashion EMEA (excl. 24% 750 r
Slide 23: Acquisition of International Duty Free Closed in September 2019
ACQUISITION OF INTERNATIONAL DUTY FREE CLOSED IN SEPTEMBER 2019: REINFORCING LAGARDÈRE TRAVEL RETAIL COMPETITIVE POSITION IN EUROPE IDF 2018 Profile of IDF key figures High-quality Duty Free Belgium’s leading Travel Unique Premium & Fashion outlets, all Retail operator with Chocolate retail recently
Slide 24: A Growth Engine Capable of Increased Profitability
A GROWTH ENGINE CAPABLE OF INCREASED PROFITABILITY Travel Retail Recurring EBIT and margin* 140 3,3% 3,3% 3,5% 3,0% 120 3,0% 2,7% 119 100 2,4% 112 2,5% 1,9% 95 80 1,8% 2,0% 1,6% 1,6% 60 68 1,5% 60 40 1,0% 42 43 20 30 33 0,5% 0 0,0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 Recurring EBIT Margin r
Slide 25: Improvement of Cash Generation Backed by a Resilient Business Model
IMPROVEMENT OF CASH GENERATION BACKED BY A RESILIENT BUSINESS MODEL Travel Retail Cash Flow from Operations* Breakdown of Capex** 175 4.3% 4.4% 155 4.0% +66% 135 3.5% 4,0% 56 54 224 115 50 207 3,0% 188 95 66 135 75 82 83 77 2,0% 55 35 44 1,0% 15 -5 0,0% 2015 2016 2017 2018 2015 2016 2017 2018 New st
Slide 26: Operating Performance, Outlook & Financial Profile
LAGARDÈRE AT A GLANCE LAGARDÈRE GROUP and FINANCIAL STRATEGIES & POSITIONING OPERATING PERFORMANCE, OUTLOOK & FINANCIAL PROFILE TRANSACTION OVERVIEW APPENDICES 26
Slide 27: Highlights / Full-Year 2018
HIGHLIGHTS / FULL-YEAR 2018 (€m) 2017* 2018 +2.5% consolidated Revenue 7,084 7,258 +3.3% like-for-like** Solid performance from Travel Retail Group recurring EBIT** 399 401 and Sports & Entertainment Group operating margin** 5.6% 5.5% divisions Profit – Group share 176 194 Due to the absence of
Slide 28: Highlights / First-Half 2019
HIGHLIGHTS / FIRST-HALF 2019 Solid performance from our target scope: Lagardère Publishing and Lagardère Travel (€m) H1 2018* H1 2019 Retail +7.3% consolidated Revenue 3,366 3,612 +6.7% like-for-like** Strong performance of Group recurring EBIT** 139 153 Lagardère Sports and Entertainment due to
Slide 29: Consolidated Income Statement / Full-Year 2018
CONSOLIDATED INCOME STATEMENT / FULL-YEAR 2018 (€m) 2017* 2018 Revenue 7,084 7,258 Group recurring EBIT** 399 401 Income from equity-accounted companies*** 3 4 Non-recurring/non-operating items (127) 4 Total EBIT 275 409 Finance costs, net (73) (59) Profit before tax 202 350 Income tax (expense) ben
Slide 30: Consolidated Balance Sheet / First-Half 2019
CONSOLIDATED BALANCE SHEET / FIRST-HALF 2019 (€m) Assets* Liabilities 31 Dec. 2018** 30 June 2019 31 Dec. 2018** 30 June 2019 1,868 1,738 Total equity Intangible assets 2,820 2,777 1,367 1,590 Net debt*** Right of use 2,552 2,521 2,741 2,737 Lease liability Other assets 1,275 1,248 1,031 Assets held
Slide 31: Consolidated Statement of Cash Flows / Full-Year 2018
CONSOLIDATED STATEMENT OF CASH FLOWS / FULL-YEAR 2018 (€m) 2017* 2018 Cash flow from operations before changes in working capital 536 505 Substantial improvement Changes in working capital (71) 55 attributable to Lagardère Publishing and Lagardère Taxes paid excluding taxes on property disposals (61
Slide 32: Outlook 2019
OUTLOOK 2019 2019 RECURRING EBIT(1) GROWTH TARGET BASED ON TARGET SCOPE(2): The Lagardère group expects 2019 recurring EBIT(1) growth based on the target scope(2) to be between 4% and 6% at constant exchange rates and excluding the acquisition of HBF. Core businesses Target scope Other Activities(3)
Slide 33: Financing Policy
FINANCING POLICY Keeping a leverage ratio at 2.3x with strong Strong liquidity maintained. recurring EBITDA for H1 2019. Cash available: M€ 1,042 Undrawn RCF: M€ 1,250 €500m bond repaid in September 2019. €2,292m Bonds Leverage ratio Bank loans and other Net debt/Recurring EBITDA* Schuldsc
Slide 34: Transaction Overview
LAGARDÈRE AT A GLANCE LAGARDÈRE GROUP and FINANCIAL STRATEGIES & POSITIONING OPERATING PERFORMANCE, OUTLOOK & FINANCIAL PROFILE TRANSACTION OVERVIEW APPENDICES 34
Slide 35: Key Investments Highlights
KEY INVESTMENTS HIGHLIGHTS A TRANSFORMING PORTFOLIO • Solid operating Performance from the 2 core business units: FOCUSSED ON CORE BUSINESSES TO • Lagardère Publishing CREATE VALUE OVER THE LONG TERM • Lagardère Travel Retail • Leading positions in core publishing markets LAGARDERE PUBLISHING • Crea
Slide 36: Transaction Overview
TRANSACTION OVERVIEW Summary Term Sheet ISSUER LAGARDERE SCA RATING NR NOTIONAL AMOUNT EUR 500,000,000 MATURITY [6 or 7 years] , 1 tranche ISSUE TYPE Fixed STATUS OF THE NOTES Senior Unsecured FORM OF THE NOTES Regulation S / Bearer / Dematerialized GLOBAL COORDINATOR CACIB (B&D) ACTIVE BOOKRUNNERS
Slide 37: Appendices
LAGARDÈRE AT A GLANCE LAGARDÈRE GROUP and FINANCIAL STRATEGIES & POSITIONING OPERATING PERFORMANCE, OUTLOOK & FINANCIAL PROFILE TRANSACTION OVERVIEW APPENDICES 37
Slide 38: Consolidated Balance Sheet / At 31 December 2018
CONSOLIDATED BALANCE SHEET / AT 31 DECEMBER 2018 (€m) 31 Dec. 2017* 31 Dec. 2018 Non-current assets 4,007 3,987 Investments in equity-accounted companies 123 73 Current assets 2,941 2,742 Short-term investments and cash 546 710 Assets held for sale 6 699 TOTAL ASSETS 7,623 8,211 Total equity 1,924 2
Slide 39: Consolidated Balance Sheet / At 30 June 2019
CONSOLIDATED BALANCE SHEET / AT 30 JUNE 2019 (€m) 31 Dec. 2018* 30 June 2019 Non-current assets 6,572 6,523 Investments in equity-accounted companies 70 68 Current assets 2,729 2,736 Short-term investments and cash 710 1,042 Assets held for sale 701 454 TOTAL ASSETS 10,782 10,823 Total equity 1,868
Slide 40: Consolidated Income Statement / First-Half 2019
CONSOLIDATED INCOME STATEMENT / FIRST-HALF 2019 (€m) H1 2018* H1 2019 Revenue 3,366 3,612 Group recurring EBIT** 139 153 Income from equity-accounted companies*** (5) 0 Non-recurring/non-operating items 135 5 O/w IFRS 16 impacts on concession agreements 19 29 Total EBIT 269 158 Finance costs, net (2
Slide 41: Consolidated Statement of Cash Flows / First-Half 2019
CONSOLIDATED STATEMENT OF CASH FLOWS / FIRST-HALF 2019 (€m) H1 2018* H1 2019 Cash flow from operations before changes in working capital 186 237 Changes in working capital (111) (173) Income taxes paid (11) (23) Cash flow from operations 64 41 Purchases of property, plant & equipment and intangible
Slide 42: Sports and Entertainment
ee SPORTS ‘AND. SA INMENT Pe oe - “A y
Slide 43: A Global Network Combining International Expertise with Local Market Knowledge
A GLOBAL NETWORK COMBINING INTERNATIONAL EXPERTISE WITH LOCAL MARKET KNOWLEDGE 2018 revenue by geographic area 2018 revenue by activity Live Entertainment Media rights Other France 10% 16% 21% 18% Asia & €438m Other €438m Australia Germany 27% 17% 20% Marketing rights 47% Rest of Europe UK 11% 13% C
Slide 44: A Successful Recovery Plan and Growth Secured with Major Contracts
A SUCCESSFUL RECOVERY PLAN AND A GROWTH SECURED WITH RENEWAL AND ADDITION OF MAJOR CONTRACTS 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 comprehens
Slide 45: Lagardère Active
7 ¥ Lagardere ACTIVE
Slide 46: A Diversified Business Mix with Solid Leading Positions
A DIVERSIFIED BUSINESS MIX WITH SOLID LEADING POSITIONS 2018 revenue by geographic area 2018 revenue by activity Other Other 5% 16% Lagardère Non-Core France Studios Press Spain 24% 27% 7% 77% €895m €895m TV Press Channels 15% 12% International French Radio Radio Non-core business 3% 14% Retained bu
Slide 47: Outlook 2019 Non-Retained Business Scope
OUTLOOK 2019 NON-RETAINED BUSINESS SCOPE(1): Based on constant exchange rates, the contribution to recurring EBIT in 2019 for businesses not yet disposed at 13 March 2019 (which represented €78 million in 2018) is expected to be between €80 million and €90 million on a full-year basis, despite the d
Slide 48: Glossary (1/3)
GLOSSARY (1/3) 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 monitor t
Slide 49: Glossary (2/3)
GLOSSARY (2/3) The like-for-like change in revenue is calculated by comparing: • H1 2019 revenue to exclude companies consolidated for the first time during the period, and H1 2018 revenue to exclude companies divested in H1 2019; • H1 2019 and H1 2018 revenue based on H1 2018 exchange rates. Op
Slide 50: Glossary (3/3)
GLOSSARY (3/3) Adjusted profit – Group share is calculated on the basis of profit for the period, excluding non-recurring/non-operating items, the related tax effect and minority interests, as follows: Profit for the period excluding: • Gains (losses) on disposals of assets; • Impairment losses on
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