investor presentation - lagardère - … · investor presentation april 2016 1) group profile slide...

INVESTOR PRESENTATION

December 2016

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 forecasts within the meaning of European Regulation No. 809/2004. When used in this document, words such as “anticipate”, “believe”, “estimate”, “expect”, “may”, “intend”, “predict”, “hope”, “can”, “will”, “should”, “is designed to”, “with the intent”, “potential”, “plan” and other words of similar import are intended to identify forward-looking statements. Such statements include, without limitation, projections for improvements in process and operations, revenues and operating margin growth, cash flow, performance, new products and services, current and future markets for products and services and other trend projections as well as new business opportunities. Although Lagardère SCA believes that the expectation reflected in such forward-looking statements are reasonable, such statements are not guarantees of future performance. Actual results may differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are outside our control, including without limitations: • general economic conditions, including in particular growth in Europe and North America; • legal, regulatory, financial and governmental risks related to the businesses; • certain risks related to the media industry (including, without limitation, technological risks); • the cyclical nature of some of the businesses. 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 such forward-looking statements and Lagardère SCA, as well as its affiliates, directors, advisors, employees and representatives accept no responsibility in this respect. Please refer to the most recent Reference Document (Document de référence) filed by Lagardère SCA with the French Autorité des marchés financiers for additional information in relation to such factors, risks and uncertainties. Accordingly, we caution you against relying on forward-looking statements. The forward-looking statements abovementioned are made as of the date of this document and neither Lagardère SCA nor any of its subsidiaries undertake any obligation to update or review such forward-looking statements whether as a result of new information, future events or otherwise. Consequently neither Lagardère SCA nor any of its subsidiaries are liable for any consequences that could result from the use of any of the above statements.

2

TABLE OF CONTENT


APRIL 2016

1) Group profile Slide 5

2) Group strategy Slide 9

3) Group performance in H1 2016 Slide 17

4) Guidance and dividend Slide 28

Appendix: Business updates Slide 30

3

GROUP PROFILE

A DIVERSIFIED GROUP WITH LEADING GLOBAL BRANDS AND MARKET POSITIONS

15 French titles 81 international editions under

license

France leading Internet & mobile media group

French #1 TV audiovisual producer

Leading magazine publisher

Major player in Radio in France

Leader in sports marketing in Asia and Africa

Leader in football in Africa, Asia, England, France and Germany

Leader in the representation of golf players worldwide

More than 4,500 shops in over 30 countries and 220 airports

worldwide

A leading digital player

World #4 in Travel Retail

Strong expertise in three business lines

Travel Essentials, Duty Free & Fashion, Foodservice

World #3 Trade book publisher

A multi-segment publisher

#1 in France, #2 in the UK, #3 in Spain, #4 in the US

Trade & Illustrated books, Education, Partworks

To be divested : Press Wholesale Distribution

*Lagardère Services changed its name to Lagardère Travel Retail in July 2015. It still includes revenues from the Distribution division, to be sold.

*

5

Breakdown of revenue by geographic area in 2015

6

A WORLDWIDE FOOTPRINT WITH AN INCREASING PRESENCE IN NORTH AMERICA

35% 34%

12% 10%

7%

2%

32% 34%

10% 13%

8%

3%

2014 2015 2015 2015 2015 2015 2015 2014 2014 2014 2014 2014

France Western

Europe

Eastern

Europe

USA

& Canada Asia-Pacific

LATAM,

Middle East,

Africa 6

7

Lagardère

Travel Retail

49%

Lagardère

Publishing

31%

Lagardère

Active

13%

Breakdown of Recurring EBIT by division in 2015

Lagardère

Publishing

49%

Lagardère

Travel Retail

26%

Lagardère

Active

20%

A DIVERSIFIED BUSINESS MIX

Lagardère Sports and Entertainment 5%

Lagardère Sports and Entertainment 7%

Breakdown of revenue by division in 2015

7

GROUP STRATEGY

BUSINESSES GROWTH PROFILE


APRIL 2016

Book Publishing

Magazines

Broadcasting*

TV Production

Distribution

Travel Retail Digital Sports &

Entertainment Gro

wth

po

ten

tial

Market position

A 3 pillars strategy

*Radio + TV channels.

Divest

Adapt

1 2

3

Invest

Size proportional to revenue. N.B

: 9

REDUCE EXPOSURE TO DECLINING ACTIVITIES

Disposal of Swiss Distribution business (ex Payot Naville Distribution)

Press Distribution and Integrated Retail

Magazines

June 2015

February 2015

January 2016

1

The disposal of the remaining Wholesale Press Distribution and Integrated Retail activities

(in Hungary and Canada) is a major priority. The divestment process is almost achieved.

February 2016

February 2016

Parents magazine disposal

Disposal of Spanish Distribution business (SGEL)

Announcement of Belgium Distribution business disposal

Disposal of US Distribution business (Curtis)

10

ADAPT EXISTING ACTIVITIES AND ENHANCE LEADERSHIP POSITION

Successful management of the ebook impact with the preservation of the pure agency model (retail price controlled by publishers) in the US and UK digital markets.

Reinforcement of our leadership position by synergetic acquisitions (Rising Star, primary school text books in the UK and Perseus, 6th general editor "trade" in the US).

Focus on the optimization of the cost structure.

Developments in musical radios in French speaking Africa (Ivory Coast).

Growth of digital revenues from our French offline brands (through Paris Match, Elle, Public, Europe 1… websites and apps).

Lagardère Publishing

Lagardère Active

2


APRIL 2016

11

Exclusive relationships with 2 FIFA Confederations

An international positioning

1,600 people in more than 26 countries

YEARS

22 of continuous partnership

> Contract until 2028

> Contract until 2020

Long term partnerships illustration

EUROPEAN

FOOTBALL

& RUGBY

CLUBS

Long-term partnerships

Tailored partnerships

with CAF

70

YEARS 21

of continuous partnership

with AFC

DEVELOPING BRAND

CONSULTING AND DIGITAL

SERVICES

STRENGHTENING CORE

SALES ACTIVITIES STREAMLINING OUR

PORTFOLIO OF ACTIVITIES

ADAPT EXISTING ACTIVITIES AND ENHANCE LEADERSHIP POSITION 2

12

JFK airport (New York) : acquisition of 17 stores

Abu Dhabi: Duty Free (3,000 m²)

Abu Dhabi: 9 Food stores

US: acquisition of Paradies (present in more than 76 airports)

Development in Abu Dhabi with a premium concept

M&A

Tender Offers

Creation of the 3rd largest player in North America

TRAVEL RETAIL: A THRIVING POWER ENGINE…

Expansion of the existing network

Hong Kong: 7 Travel Essentials and Food stores

Nice: opening of new T1 with an innovative food concept

INVEST IN HIGHER GROWTH ACTIVITIES 3

May 2016

December 2015

October 2015

September 2015

October 2015

April 2015

2,853

3,589

217

190

329 407

2013 revenue Organic growth External growth 2015 revenue

[Bridge revenue growth (€m, revenue @100%, 2013–2015)]

Tender offers won1

Existing contracts

55%

45%

+26%

1. Net of contracts terminated over the period.

A strong development driven both

by organic growth and M&A

13

France 23%

Belgium 12%

Eastern Europe

17%

Spain 10%

Asia-Pacific 10%

Italy 8%

17%

41%

… WITH UNIQUE POSITIONNING ON THREE SEGMENTS AND DIVERSIFIED GEOGRAPHICAL EXPOSURE

Foodservice

42%

INVEST IN HIGHER GROWTH ACTIVITIES

Revenue breakdown of Lagardère Travel

Retail by Region

3

[in % of 2015 total revenue]

Other Western Europe

11%

US & Canada 9%

Revenue breakdown of Lagardère Travel

Retail by business line

[in % of 2015 total revenue]

14

INVEST IN HIGHER GROWTH ACTIVITIES 3

Transaction: acquisition of 82 %

2015 revenue: €77m

Activities: Fiction / Entertainment / Production / Distribution, Others

Fiction catalogue: 23 programs

Non-fiction catalogue: >100 programs

Markets: Spain + LATAM (Chile, Colombia, Peru)

MAY 2015: ACQUISITION OF GRUPO BOOMERANG TV, LEADING INDEPENDENT PRODUCER IN SPAIN

15

GROUP PERFORMANCE

IN H1 2016

GROUP KEY FIGURES

17

(€m) H1 2015 H1 2016

Revenue 3,304 3,431

Recurring EBIT of fully consolidated companies*

122 101

Group operating margin 3.7% 2.9%

Profit – Group share 9 44

Adjusted profit – Group share 75 65

Free cash flow* (84) 47

Net debt at end of the period (1,551)** (1,739)

*See definitions slide 22.

**Net debt as of 31/12/2015.

Results in line with

management

expectations.

Seasonality impact

especially for

Sports and

Entertainment.

Travel Retail

confirmed as

growth driver of

the Group.

Control of the

indebtness despite

seasonality.

+3.8% reported

+0.5% like-for-like*

+€131m

-€188m

-€10m

-17.2%

-0.8pt

+€35m

ACTIVITY AND PROFITABILITY

18

*% of revenue in H1 2015.

France 28%

UK & Australia 21%

US & Canada 27%

Spain 5%

Other 19%

28%*

23%*

18%*

5%*

26%*

H1 2016 revenue by geographical area

Education 14%

Illustrated Books 14%

General Literature

43%

Partworks 13%

Other 16%

17%*

12%*

43%*

13%*

15%*

H1 2016 revenue by activity

36

162

36

3.7%

13.1%

3.7%

H1 2015 H2 2015 H1 2016

(€m)

Recurring EBIT of fully consolidated companies Operating Margin (in %)

PROFITABILITY



19

82%

18%

France 22%

Belgium 12%

Eastern Europe

17%

Spain 3%

Other Western Europe

8%

Asia-Pacific

10%

Italy

7%

23%*

10%*

7%*

17%*

13%*

10%*

12%* 8%*


Travel Retail

30%*

70%*

Distribution (Wholesale Distribution

& Integrated Retail)


US & Canada 21%

30

72

36

1.8%

3.9%

2.0%

H1 2015 H2 2015 H1 2016

(€m)


PROFITABILITY


20

France 76%

Spain 7%

Other International

17% 14%*

83%*

3%*


Press 40%

TV 29%

Radio 22%


22%*

28%*

43%*

7%*

Pure Players

& BtoB

9%


33 46

33

7.6% 8.8%

7.6%

H1 2015 H2 2015 H1 2016

(€m)


PROFITABILITY

21


Marketing rights 48%

Other 34%

25%*

44%*

31%*

Germany 21%

France 27%

Rest of Europe

16%

Asia & Australia

13%

H1 2016 revenue by geographical area H1 2016 revenue by activity

10%*

7%*

21%*

13%*

25%*

24%*

UK

7%

Rest of World 16%

Media rights 18%

32

(12)

5

12.4%

(4.7%)

2.1%

H1 2015 H2 2015 H1 2016

(€m)


PROFITABILITY

H1 2016 UPDATE: REVENUE BY DIVISION

22

(€m) H1 2016

Reported

€m change

Reported

change

Like-for-like

change*

Lagardère Publishing 970 +€2m +0.3% -0.2%

Lagardère Travel

Retail 1,790 +€150m +9.1% +5.4%

Lagardère Active 436 -€1m -0.5% -7.4%

Lagardère Sports

and Entertainment 235 -€24m -9.0% -11.7%

Total 3,431 +€127m +3.8% +0.5%

*At constant perimeter and exchange rates.

Resilient performance, supported by good

momentum in Partworks, Education in Spain

and Literature & Distribution in France.

Strong growth despite terrorist attacks in

Europe thanks to strong network momentum.

Paradies in line with expectations.

Uneven performance (Press down and Radio

up) combined with an unfavourable

comparison basis in TV Production.

As expected, unfavourable sporting calendar

effect with the organisation of two major

soccer competitions in 2015.

H1 2016 UPDATE: RECURRING EBIT BY DIVISION

(€m) H1 2016

Reported

€m change

Lagardère Publishing 36 +€0m

Lagardère Travel Retail 36 +€6m

Lagardère Active 33 +€0m

Lagardère Sports and

Entertainment 5 -€27m

Total operating activities 110 -€21m

Other activities (9) -€0m

Total 101 -€21m

Strong increase in profitability in the US and success of Partworks offset by a decline in digital revenue in the UK and expenses related to French curricular reform.

Performance buoyed by the integration of new activities. Good performance in Europe, despite the impact of

terrorist attacks.

Negative trend in Magazine offset by a cost reduction plan.

Unfavourable delivery phase in TV Production.

As expected, unfavourable sporting calendar effect.

23

H1 2016 UPDATE: CONSOLIDATED STATEMENT OF CASH FLOWS

(€m) H1 2015 H1 2016

Cash flow from operations before interest, taxes 168 181

Changes in working capital (97) (153)

Cash flow from operations 71 28

Interest paid & received, income taxes paid (26) (36)

Cash generated by/(used in) operating activities 45 (8)

Acquisition of property, plant & equipment and intangible assets (133) (133)

Disposal of property, plant & equipment and intangible assets 4 188

Free cash flow (84) 47

Acquisition/(disposal) of financial assets (194) 9

Net cash from operating & investing activities (278) 56

Dividend paid and others (204) (244)

Change in net debt (482) (188)

Net debt (1,551)* (1,739)

24 *Net debt as of 31/12/2015.

Up 7.7%

Deterioration of €56m mainly due to

non-recurring items in Lagardère

Sports and Entertainment.

Lagardère Travel Retail is the main

contributor (+€64m) to cash from

operating activities.

FCF improvement (up €131m)

despite continued investment in

Travel Retail helped by the disposal

of non-operating asset.

FINANCING POLICY

Cautious management of the balance sheet despite a significant acquisition…

… preserving a bold dividend policy

30/06/2015 31/12/2015 30/06/2016

€1,551m

2.6x

Leverage ratio Net debt/Recurring EBITDA*

€1,436m

2.4x

**

2.8x

**

€1,739m

*See definition slide 22.

**On a proforma basis (as per credit facility covenant), including 12 months of Paradies recurring EBITDA.

Leverage increase compared to 30 June 2015 (0.2x higher) largely due to the Paradies acquisition.

Leverage increase compared to 31 December 2015 (0.4x higher) mainly due to the business seasonality.

Historical dividends (€/share)

Long-term stability of the ordinary dividend per share.

Friendly shareholder policy post exceptional disposals.

Attractive ordinary yield in the current low-interest rate environment.

1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3

9.0 6.0

6.1%*

2008 2009 2010 2011 2012 2013 2014 2015

Ordinary dividend per share (€)

Extra dividend per share (€)

25

*Dividend yield based on €21.42 closing price on 27/07/2016.

DEFINITIONS

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 goodwill, property, plant and equipment and intangible assets;

• restructuring costs;

• items related to business combinations:

- expenses on acquisitions;

- gains and losses resulting from acquisition price adjustments and fair value adjustment resulting from changes in control;

- amortisation of acquisition-related intangible assets.

Like-for-like revenue were calculated by adjusting:

• 2016 revenue to exclude companies consolidated for the first time during the year, and 2015 revenue to exclude companies divested in 2016;

• 2016 and 2015 revenue based on 2015 exchange rates.

Free cash flow is defined as: cash generated by/(used in) operating activities added with acquisitions/disposals of intangible assets and property, plant and equipment.

Recurring EBITDA is defined as recurring EBIT of fully consolidated companies added with:

• depreciation and amortisation of intangible assets and property, plant and equipment;

• dividends received from equity-accounted companies.

26

GUIDANCE AND DIVIDEND

2016 GUIDANCE AND DIVIDEND

2016 guidance

• In 2016, the recurring EBIT of fully consolidated companies* is expected to grow slightly

above 10% compared to 2015:

- at constant exchange rates;

- excluding the effect of the potential disposal of Distribution activities.

Dividend

• Ordinary dividend for fiscal year 2015 maintained: €1.30 per share.

• It was paid on 10 May 2016.

*Recurring EBIT of fully consolidated companies of the four operating divisions + other activities.


APRIL 2016

28

APPENDIX: BUSINESS UPDATES

PERSEUS ACQUISITION:

30

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 Press…

Market Positionning: Major general trade publisher in the US

Markets: US + UK

Synergies: The synergies for us will come to finding our own way out of the global Perseus infrastructure and running the business through our own infrastructure, which will take about 18 months.

EXPANSION OF NON-FICTION AND BACKLIST PUBLISHING PROGRAMS

1. Strong and regular growth of global air traffic (+4% per year)

2. Increase of emerging country passengers travelling in mature countries

3. Increasing externalization of travel retail shops by landlords

4. Increased surface dedicated to travel retail in airports and train stations

Roissy Charles De Gaulle airport, Paris

2.1

2.4

1.6

1.4

0,9 0,9

0,5

1.6 2.1

1.4

2.4 1.5

1.8 0.8

1.2

5.3

Rest of the world

North America

ASPAC

Europe

4%

7.5

5%

2013 2021

Source: Lagardère, ACI.

3%

7%

2%

X% CAGR.

Global traffic growth [Bn passengers / 2013-2021]

TRAVEL RETAIL ORGANIC GROWTH DRIVERS

31

Strong market fundamentals

(1) Other mainly includes: travel accessories, gifts & souvenirs and convenience products (phone cards, lottery, …)

TRAVEL RETAIL ORGANIC GROWTH DRIVERS

[in €m, managed revenue 2011-2015]

A favourable product mix evolution

32

PARADIES ACQUISITION: A GAME CHANGER IN NORTH AMERICA

33

1) On a debt and cash free basis

2) Pre-tax, full potential of recurring synergy expected to be reached in 2019

Source: Lagardère Travel Retail internal data

Significant

expected

synergies

Expected $15m synergies per year as of 2019:

Margin synergies

G&A synergies

Other potential synergies (not quantified): Sales and marketing/ best practices/ international development of owned and franchised brands

Purchase price : $530m for 100% of the equity net of minority partners1)

7.5x EV/EBITDA post run rate synergies2)

Double digit EBITDA margin

Key

financial

terms

Source: Paradies internal data

PARADIES LAGARDÈRE: CREATING A REGIONAL LEADER

34

Paradies

Lagardère

2015 key

figures

#3 in North

America

100 airports

6,000 employees

$770m revenue

A new entity managed

by an experienced

leadership team

A unique and

complementary North

American footprint

A brand portfolio tailor

made for the North

American market

A strong and long-

lasting relationship with

landlords

Overview of Paradies Lagardère

PARADIES: INTEGRATION PROJECT ON TRACK

35

Focus

Strong and integrated management to keep momentum

Immediate integration of senior leadership team

Decision to have main HQ in Atlanta

✓

Focusing on quick wins

Margins and trade negotiations

Business development integration

✓

Integration

A clearly defined path towards full integration

Target organization with progressive integration (Platforms and Corporate)

Margin and topline upsides

✓

Expected synergies will be reached after full integration is

completed (2019)

ABU DHABI INTERNATIONAL AIRPORT: A MAJOR STEP IN MIDDLE-EAST

36 Source: Lagardère Travel Retail internal data

10-year contract on core duty free categories, confectionery and fine foods

13 PoS over 3,000 sqm

10-year estimated cumulated revenue: €3bn

9 Food and Beverage contracts awarded in April 2016

Key

figures

Le Club iconic shop Multi-category shops

Overview of Abu Dhabi core Duty Free contract awarded

50/50 joint venture created

to bid and run operations

56% 60% 63% 73%

44% 40% 37% 27%

2012 2013 2014 2015

Distribution*

(to be sold)

Travel Retail

The repositioning and development strategy of Lagardère Travel Retail is almost achieved, with the advanced disposal process of the Distribution activities and the

accelerated organic growth in Travel Retail.

*Press Wholesale Distribution and Integrated Retail.


APRIL 2016

TRAVEL RETAIL BUSINESS MIX EVOLUTION

37

Lagardere Travel Retail: improvement of the business mix


APRIL 2016

Worldwide Sports market [€ billion, 2015]

Growth factors

34

34

27

15

2015

110

Merchandising

Media rights

Marketing rights

Ticketing

Worldwide growth of 5% a year, driven by

media and marketing rights

Globalization of rights accelerating

Source: Lagardère, PWC.

+ 5 %

+ 5 %

+ 6 %

+ 5 %

A WORLDWIDE GROWING SPORTS MARKET

Growth outlook for the Sports market

38

WE DELIVER OUR PARTNERS COMPREHENSIVE SOLUTIONS TO GENERATE VALUE

39

LAGARDÈRE IR TEAM AND CALENDAR

IR team details

Florence Lonis

Chief of Investor Relations

Tel: +33 1 40 69 18 02

[email protected]

Hacène Boumendjel

Investor Relations Officer

Tel: +33 1 40 69 67 88

[email protected]

Josefin Maisondieu

Assistant

Tel: +33 1 40 69 19 22

[email protected]

Address: 4 rue de Presbourg 75116 Paris - FRANCE

Tickers: Bloomberg (MMB FP), Reuters (LAGA.PA)

Calendar (all time is CET)

Announcement of FY 2016 revenue

Q4 revenue will be released on 9 February 2017 at 8:00 a.m.

A conference call will be held at 10:00 a.m. on the same day.

Announcement of FY 2016 results

Full Year will be released on 8 March 2017 at 17:35

40

investor presentation - lagardère - … · investor presentation april 2016 1) group profile slide...

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