Lagardere Sa · EURONEXT:MMB
Lagardere Sa — Lagardère SCA — H1 2015 Earnings Presentation
63 slides from Lagardere Sa's earnings presentation, Jul 30, 2015
Slide 1: 2015 First-Half Results
2015 First-Half Results July 30, 2015
Slide 2: 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 represent forec
Slide 3: Contents
Key Group figures pages 4 to 6 Contents Performance by division pages 7 to 17 Group financial results pages 18 to 25 Appendices to consolidated accounts pages 26 to 38 Significant events pages 39 to 63 2015 First-Half Results July 30, 2015 3
Slide 4: Key Group figures
Key Group figures
Slide 5: Changes of scope: main items
Lagardère Publishing • Acquisition of UK book publisher Rising Stars. Full consolidation starting January 1, 2015. Lagardère Active Changes • Acquisition of the Spanish group of TV production Boomerang TV. of scope: Full consolidation starting May 28, 2015. main items Lagardère Travel Retail •
Slide 6: Key figures Group
H1 2014 Reported Like-for-like H1 2015 (€m) restated* change change** Sales 3,364 3,304 -1.8% +2.9% Recurring EBIT of fully 110 122 +11.0% / consolidated companies*** Key figures Group operating margin 3.3% 3.7% +0.4 pt / – Profit – Group share (35) 9 +€44m / Group Adjusted profit – Group share 31 7
Slide 7: Performance by division
Performance by division
Slide 8: Lagardère Publishing: activity
H1 2015 sales by geographical area H1 2015 sales by activity Other Other Education 18% 17% 13% 20%* France 17%* 13%* 28% Spain Illustrated 30%* Partworks Books 5% 5%* 12% 15% 14%* 14%* Lagardère US & UK & General Publishing: Canada 26% Australia 23% Literature 43% activity 25%* 20%* 42%* H1 2015 s
Slide 9: Lagardère Publishing: focus on e-book
As expected, the weight of e-books has decreased: e-books accounted for 10.7% of sales in H1 2015 vs. 11.3% in H1 2014. Digital for the time being remains essentially limited to the traditional fiction/non-fiction segment, in the US and UK markets, with similar market trends: • in the US, in a d
Slide 10: Lagardère Publishing: profitability
H1 2014 H1 2015 Change (€m) restated* Sales (a) 903 968 +7.1% Recurring EBIT of fully consolidated 50 36 -€14m companies (b) Lagardère Operating margin (b)/(a) 5.5% 3.7% -1.8 pt Publishing: Income (loss) from equity-accounted 1 0 -€1m companies profitability Non-recurring/non-operating items (5) (8)
Slide 11: Lagardère Travel Retail: activity
H1 2015 sales by geographical area H1 2015 sales by activity US & Canada Eastern 7% Distribution Europe 6%* (Wholesale Distribution 17% Asia & & Integrated Retail) 17%* Australia 10% 30% 8%* 37%* Western Lagardère Europe 12% Travel Retail: 16%* France 23% Travel Retail 70% Italy activity 8% 28%* 63%
Slide 12: Lagardère Travel Retail: focus on Travel Retail
The growth strategy of Lagardère Travel Retail is bearing fruits. • All comments below are based on like-for-like figures. • A strong growth of Travel Retail activity (+7.3% like-for-like) on almost all markets, with a slight acceleration in Q2 (+7.8%), fuelled by improving traffic trends, the goo
Slide 13: Lagardère Travel Retail: profitability
H1 2014 H1 2015 Change (€m) restated* Sales (a) 1,852 1,640 -11.4% Recurring EBIT of fully consolidated 35 30 -€5m companies (b) Operating margin (b)/(a) 1.9% 1.8% -0.1 pt Lagardère Income (loss) from equity-accounted Travel Retail: companies 3 2 -€1m profitability Non-recurring/non-operating items
Slide 14: Lagardère Active: activity
H1 2015 sales by geographical area H1 2015 sales by activity International Radio 17% 22% 14%* 23%* Press 44% France TV 52%* 83% 28% Lagardère 86%* 17%* Active: Pure Digital 6% activity 8%* H1 2015 sales: €437m (+0.7% reported and +0.2% like-for-like). • A positive perimeter of +€3m. All comments b
Slide 15: Lagardère Active: profitability
H1 2014 H1 2015 Change (€m) restated* Sales (a) 435 437 +0.7% Recurring EBIT of fully consolidated 34 33 -€1m companies (b) Operating margin (b)/(a) 7.8% 7.6% -0.2 pt Lagardère Income (loss) from equity-accounted Active: companies (4) 0 +€4m profitability Non-recurring/non-operating items (9) (39) -
Slide 16: Lagardère Unlimited: activity
H1 2015 sales by geographical area H1 2015 sales by activity Rest of France World 13% Other 25% 15%* Media 25% 20%* rights 22%* 31% Germany 24%* Lagardère 21% 29%* Unlimited: Asia & Marketing activity Australia 24% UK 7% rights 19%* Rest of 8%* 44% Europe 54%* 10% 9%* H1 2015 sales: €259m (+48.5%
Slide 17: Lagardère Unlimited: profitability
(€m) H1 2014 H1 2015 Change Sales (a) 174 259 +48.5% Recurring EBIT of fully consolidated 6 32 +€26m companies (b) Operating margin (b)/(a) 3.4% 12.4% +9 pts Lagardère Income (loss) from equity-accounted Unlimited: companies 1 (1) -€2m profitability Non-recurring/non-operating items (10) (15) -€5m E
Slide 18: Group financial results
Group financial results
Slide 19: Consolidated income statement (1/2)
H1 2014 H1 2015 (€m) restated* Sales 3,364 3,304 Total recurring EBIT of fully consolidated companies** 110 122 Operating activities 125 131 Consolidated Other activities (15) (9) income Income from equity-accounted companies*** 1 1 statement Non-recurring/non-operating items (47) (72) (1/2) Restruc
Slide 20: Consolidated income statement (2/2)
H1 2014 H1 2015 (€m) restated* EBIT 64 51 Net interest expense (38) (26) Consolidated Profit before tax 26 25 income Income tax expense (57) (6) statement (2/2) Total profit (31) 19 Attributable to minority interests (4) (10) Profit – Group share (35) 9 2015 First-Half Results July 30, 2015 *Include
Slide 21: Adjusted profit Group share
H1 2014 H1 2015 (€m) restated* Profit – Group share (35) 9 Amortisation of acquisition-related intangible assets Adjusted profit and other acquisition-related expenses** +17 +20 – Impairment losses on goodwill, tangible and intangible Group share +2 +29 fixed assets** Restructuring costs** +17 +32 G
Slide 22: Consolidated statement of cash flows
H1 2014 H1 2015 (€m) restated* Cash flow from operations before interest, taxes 133 168 Changes in working capital (198) (97) Cash flow from operations (65) 71 Consolidated Interest paid & received, income taxes paid (61) (26) statement of Cash generated by/(used in) operating activities (126) 45 ca
Slide 23: Change in net debt in H1 2015
(€954m) -€278m -€184m -€20m (€1,436m) Change in net debt in H1 2015 Net cash Net cash from Dividends Foreign exchange, Net debt as of operating & paid scope and as of 2015 First-Half Results 31/12/2014 investing activities other items 30/06/2015 July 30, 2015 23
Slide 24: Consolidated balance sheet
Dec. 31, 2014 June 30, (€m) restated* 2015 Non-current assets (excl. investments in associates and joint ventures) 3,948 4,057 Investments in associates and joint ventures 159 149 Consolidated Current assets (other than short-term investments balance sheet and cash) 2,834 2,894 Short-term investment
Slide 25: Sound financial position
H1 2015 Gross debt breakdown: • Strong liquidity. well-balanced funding sources • Gross debt centered on bond market 14% in 2014 & commercial paper. 20% • Reduced funding costs thanks to the new bond Bonds issued in September 2014 (2.4% effective interest 52% Commercial paper rate), maturing in Se
Slide 26: Appendices to consolidated accounts
Appendices to consolidated accounts
Slide 27: Group profile H1 2015
Sales by division Recurring EBIT of fully consolidated Lagardère companies by division Unlimited 8% Lagardère Lagardère Lagardère Lagardère Active Publishing Unlimited Publishing 13% 29% 25% 27% Group profile H1 2015 Lagardère Lagardère Lagardère Travel Active Travel Retail 25% Retail 50% 23% Sales
Slide 28: Recap of performance by division
Sales H1 2015 Reported Reported Like-for-like change* (€m) sales €m change change Lagardère Publishing 968 +€65m -7.1% -2.9% Lagardère Travel Retail 1,640 -€212m -11.4% +3.5% Lagardère Active 437 +€2m +0.7% +0.2% Recap of Lagardère Unlimited 259 +€85m +48.5% +34.9% performance Total 3,304 -€60m -1
Slide 29: Analysis of non-recurring/non-operating items in H1 2015
Lagardère Total Lagardère Travel Lagardère Lagardère operating Other Total (€m) Publishing Retail Active Unlimited activities activities Lagardère Restructuring costs (6) (4) (13) (12) (35) / (35) Gains/(losses) on (0) 17 2 / 19 / 19 disposals Analysis of non- recurring/non- Impairment losses / (3)
Slide 30: Main associates and joint ventures
Balance sheet Income statement 2014 2015 2014 2015 (as of (as of (as of (as of (€m) 31/12/2014) 30/06/2015) 30/06/2014) 30/06/2015 Marie Claire (42%) 90 90 - - Main associates Édition J’ai Lu (35%) 17 17 1 0 and Société de Distribution 15 12 3 3 Aéroportuaire (45%) joint ventures Société d’Édition d
Slide 31: Cash flow statement data Lagardère Publishing
H1 2014 H1 2015 (€m) restated* Cash flow from operations before interest, taxes 52 32 Changes in working capital (153) (93) Cash flow from operations (101) (61) Cash flow Interest paid & received, income taxes paid (22) (8) statement data Lagardère Cash generated by/(used in) operating activities (1
Slide 32: Cash flow statement data Lagardère Travel Retail
H1 2014 H1 2015 (€m) restated* Cash flow from operations before interest, taxes 59 74 Changes in working capital (51) 29 Cash flow from operations 8 103 Cash flow Interest paid & received, income taxes paid (11) (19) statement data Cash generated by/(used in) operating activities (3) 84 Lagardère Ac
Slide 33: Cash flow statement data Lagardère Active
H1 2014 H1 2015 (€m) restated* Cash flow from operations before interest, taxes 15 30 Changes in working capital (9) (12) Cash flow from operations 6 18 Cash flow Interest paid & received, income taxes paid (10) (24) statement data Cash generated by/(used in) operating activities (4) (6) Lagardère A
Slide 34: Cash flow statement data Lagardère Unlimited
(€m) H1 2014 H1 2015 Cash flow from operations before interest, taxes 17 46 Changes in working capital 31 2 Cash flow from operations 48 48 Cash flow Interest paid & received, income taxes paid (4) (11) statement data Cash generated by/(used in) operating activities 44 37 Lagardère Acquisition of pr
Slide 35: Off balance sheet commitments
(€m) 2014 H1 2015 Commitments to purchase shares from third parties - - (other than minority interests) Commitments given in connection with ordinary activities: Off balance - contract guarantees and performance bonds 207 196 sheet - guarantees in favour of third parties or 14 11 commitments non-con
Slide 36: Lagardère Unlimited Guaranteed minimum payments
At June 30, 2015 entities forming part of Lagardère Unlimited had guaranteed minimum future payments amounting to €1,465m under long-term contracts for the sale of TV and marketing rights. These payments break down as follows by maturity: 30/06/2015 30/06/2016 30/06/2017 30/06/2018 30/06/2019 30/0
Slide 37: Recurring EBITDA
H1 2014 Dec. 31, H1 2015** (€m) restated*/** 2014*** Total recurring EBIT of fully consolidated 332 342 354 companies**** Recurring Depreciation & amortisation of intangible EBITDA assets and property, plant and equipment +171 +174 +185 Dividends received from equity-accounted +6 +17 +23 companies T
Slide 38: 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 goodwil
Slide 39: Significant events
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Slide 40: Background and overall performance
Book markets flat worldwide. Total H1 2015 sales are down -2.9% like-for-like vs. H1 2014, and are up +7.1% overall, thanks to: Background • favorable foreign exchange rates; and overall • recent acquisitions in UK contributing positively to sales growth. performance New corporate headquarters
Slide 41: France
Stronger performance vs. H1 2014, across all segments but Education. General fiction & non-fiction, illustrated books and Larousse are leading growth. France Education is slightly down vs. H1 2014, but exceeding low expectations. 2015 First-Half Results July 30, 2015 41
Slide 42: International markets
UK sales are down compared with H1 2014. US share of best-sellers in line with H1 2014, and superior to market share, but e-book sales falling short. International Spain still struggling, and Latin America delivering strong performance. markets Partworks hit by Russian exchange rate, but gro
Slide 43: Digital activities
In the US • US e-book market peaked at 25% in Q2 2014, has been eroding since. • Hachette Livre e-book sales in the US declining both in volume and in value, due to market conditions and to new Amazon contract, as expected. Digital activities In the UK • E-book sales declining vs. H1 2014 (VAT c
Slide 44: 2nd half outlook
Downside • No improvement expected in Education in France. Upside • “Fifty Shades” sequel in French scheduled in Q3. 2nd half outlook • New Asterix album scheduled in Q4. • Partworks to benefit in 2nd half from larger number of new product launches than expected. 2015 First-Half Results July 30,
Slide 45: Significant events: Lagardère Travel Retail
Lagardere TRAVEL RETAIL Significant events | SOW NON UDONS
Slide 46: Background (1/3)
Lagardère Services changed its name to Lagardère Travel Retail on July 8, 2015. It still includes revenues from the Distribution division. The rise (+5.8%*) in passenger traffic worldwide has improved compared to last year (+4.9%). The growth remains strong in Europe at +4.8%. Asia-Pacific traff
Slide 47: Background (2/3)
Main perimeter evolution since the beginning of the year (Travel Retail) • Acquisition of 17 fashion and confectionery stores at JFK airport (New York – USA) on April 21, 2015 ($25m turnover projected for the first full year). Significant perimeter effects in 2014 impacting 2015 (Travel Retail)
Slide 48: Background (3/3)
In a still challenging environment, Travel Retail growth remained strong and half- year 2015 was marked by: • The good performances and full effects of the new activities: - new Fashion concessions in Spain (6 stores opened in Madrid, Malaga, Barcelona and Valencia along year 2014) and in the UK (
Slide 49: Travel Retail in France
Duty Free & Luxury • 100% managed sales up by +8% attributable to: - an increase of +9.8% at Paris airports fueled by the strong improvement of the Fashion activities (+21%) as well as the sustained growth of the electronics & travel accessories network and favorable trends on the core duty free s
Slide 50: Travel Retail in Europe (1/3)
Italy • Rome airports - A major fire occurred on May 7 at Fiumicino airport, destroying part of the commercial spaces of the Terminal 3 (closing of 2 stores). Insurances should compensate the losses and the company is working with airport authorities to optimise customer service. - Despite this ev
Slide 51: Travel Retail in Europe (2/3)
United Kingdom • Growth of +11.5% attributable to both the opening of 6 fashion stores in Birmingham in Q3 2014 and to the performance of the Luton platform (which has been successfully renewed in Q1 2015). 22 stores at the end of June 2015 vs. 15 stores in June 2014. Spain Travel Retail • Sales
Slide 52: Travel Retail in Europe (3/3)
Poland • Excluding the impact of Inmedio activities deconsolidation on December 1, 2014, Poland’s total turnover is growing by +11.8%, with +13% from both Duty Free activities and Travel Essentials and +4% from Foodservice. This positive trend is mainly explained by the strong traffic trend (Warsa
Slide 53: Travel Retail in North America
Retail activities in Canada and in the United States show a +5.7% growth on a comparable basis (rate and perimeter). • Increased revenues from the comparable network: +8% in Food & Beverage, +5% in Souvenirs and Travel Accessories and -5% for Press. • Revenues from non-comparable network has an im
Slide 54: Travel Retail in Asia-Pacific
Pacific • In 2015, on-going rationalisation of the news & book network has been compensated by the developments of the Duty Free & Luxury activities (Auckland Duty Free concession opened in late June, Victoria’s Secret, MAC and AMUSE concepts in different locations) and the Travel Essentials activ
Slide 55: Significant events: Lagardère Active
Significant events
Slide 56: Magazine Publishing
Print Advertising • In a particularly depressed print advertising market, Lagardère Active’s sales decrease has been curbed to -6.5%. • Elle, Elle Décoration, Elle à Table and Télé 7 Jours remain leaders on their competitive segments. Magazine Print Circulation • In a declining market, the circu
Slide 57: Radio
Advertising radio market has declined during the first semester 2015. In this context, Lagardère Active’s radios have performed variously. Europe 1: number 3 news and entertainment radio station in France, reaching daily over 4 million people. • Despite its stable overall audience share, Europe
Slide 58: Television
Lagardère Active Broadcast: Lagardère Active has filed a draft public buyout offer for all the 8,229 shares of its audiovisual division Lagardère Active Broadcast, not held by Lagardère Active. This operation will simplify Lagardère Active Broadcast's legal processes, and entail cost savings (incl
Slide 59: TV Production and Distribution
H1 2015 performance: 75% revenue increase in H1 2015 (+45% on a like-for-like basis) mainly due to the favorable phasing of program deliveries and positive effects in 2015 tied to sales of rights. First development step in Europe, with the acquisition as of May 26, 2015 of Grupo Boomerang TV, a
Slide 60: Digital Pure Players
During the first semester of 2015, Lagardère Active has continued to develop the division’s brands and new sources of revenues. Doctissimo is the leading website for providing information on e-health and wellbeing. Since the beginning of 2015, the website has been upgraded to a responsive format.
Slide 61: Significant events: Lagardère Unlimited
Lagardere UNLIMITED » PIS WWM DDD Significant events
Slide 62: Business units (1/2)
Football Africa • Successful delivery the 2015 Orange Africa Cup of Nations in Equatorial Guinea. • Renewal of partnership agreement with CAF* until 2028 to continue to commercialise the marketing and media rights of the main regional football competitions in Africa, including the Africa Cup of Na
Slide 63: Business units (2/2)
Stadium Management • Signing of a 10-year agreement to operate Sweden’s Friends Arena. Consulting and digital Business units • Acquisition of akzio! ajoint, the market leading sponsoring agency in Germany. With this acquisition, Lagardère Unlimited is complementing its service portfolio in Europ