Credit investor presentation - Lagardere.com

Credit investor presentation

SEPTEMBER 2015

CREDIT INVESTOR PRESENTATION

SEPTEMBER 2015

Disclaimer

This document presents the full-year 2014 results from the consolidated financial statements of Lagardère SCA. 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 and financial Code (Code monétaire et financier). 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, as amended. 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. 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. This document does not constitute an offer or invitation to sell or purchase, or any solicitation of any offer to purchase or subscribe for, any securities of Lagardère SCA. Neither this document, nor any part of it, shall form the basis of, or be relied upon in connection with, any contract or commitment whatsoever. This document is solely for your information on a confidential basis and may not be reproduced, redistributed or sent, in whole or in part, to any other person, including by email or by any other means of electronic communication. In particular, neither this document nor any copy of it may be taken, transmitted or distributed, directly or indirectly, in the United States. The distribution of this document in other jurisdictions may be restricted by law and persons into whose possession this document comes should make themselves aware of the existence of, and observe, any such restrictions. Lagardère SCA securities have not been and will not be registered under the U.S. Securities Act of 1933 (as amended), and may not be offered or sold in the United States (or to, or for the account or benefit of, U.S. Persons) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state or local securities laws.

2


SEPTEMBER 2015

1) Group profile

2) Group strategy

3) Acquisition of Paradies

4) Group outlook

5) Key credit highlights and transaction rationale

6) Appendix

Table of content

3

Group profile


SEPTEMBER 2015

A diversified

group with

leading global

brands and

market positions

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

#4 in the US

27 French titles 84 international editions

under license More than 4,000 shops

in 29 countries and 150 airports worldwide

World #3 trade book publisher

A leading digital player

France #1 Internet & mobile media Group

French #1 TV Production Group

Leading magazine publisher

Major player in Radio

World #3 in Travel Retail

Strong expertise in three business lines

Leading global sport rights management

agency

Leading positions in soccer in Africa, Asia Germany and France

Marketing and media rights management, stadium businesses,

event production

A multi-segment publisher

Trade & Illustrated books, Education, Partworks

Duty Free & Luxury Food Services,

Travel Essentials

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

*


SEPTEMBER 2015

Western Europe

France

Latin America, Africa, Middle East

Asia/Pacific

USA/Canada 35%

34% 12%

Eastern Europe

7%

10%

2% Emerging markets*:

21%

Breakdown of sales

by division in 2014

Breakdown of recurring EBIT

by division in 2014

Breakdown of sales by geographic area

in 2014 Presence in more than

30 countries

* As % of total Lagardère net sales

A balanced

business mix

and a worldwide

presence

Lagardère Publishing

28%

Lagardère Active 13%

Lagardère Travel Retail

53%

Lagardère Sports and

Entertainment 5%


52%



28%

Lagardère Sports and

Entertainment 1%

6

Developed markets*:

79%

Group strategy


SEPTEMBER 2015

Businesses

growth profile

Invest

*Radio + TV channels.

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

0 2 4 6 8 10 12

Size proportional to sales. N.B:

Book Publishing

Magazines

Travel Retail

TV Production

Broadcasting*

Sports

Digital

Press wholesale

Distribution

Market position

Gro

wth

po

ten

tia

l

8

Divest

Adapt


SEPTEMBER 2015

From

megatrends

to strategic

roadmap

Reduce exposure to declining activities

Invest in higher growth activities

Adapt existing activities and enhance leadership positions

2

1

3

Megatrends: 3 pillars strategy: Impact:

Digitalisation

Mobility

Globalisation

Audience fragmentation

Value shift to customer knowledge (data management)

Increase in air traffic

Increase in emerging countries’ wealthy &

middle class

9


SEPTEMBER 2015

Sale of 51% of Inmedio (high-street retail in Poland)

Disposal of Swiss Distribution business (ex Payot Naville Distribution)

Disposal of Curtis Circulation Company, a US magazines distribution

business

Disposal of 10 titles in France

Reduce exposure to

declining activities (1/2)

Press distribution and integrated retail

Magazines

February 2015

December 2014

July 2014

1

Successful deals in 2014 and 2015

The disposal of the remaining wholesale press distribution and Integrated Retail

activities (in Spain, Hungary, Belgium) is a major priority. The divestment process

is well on track.

July 2015

10


SEPTEMBER 2015

As % of consolidated sales

72%

70% 67%

65% 63% 61%

54%

51%

49%

46%

28% 30%

33% 35%

37% 39% 46%

49%

51%

54%

0%

20%

40%

60%

80%

100%

2003 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Paper

Non paper

≈1/3

(e) (e) (e)

≈2/3

Paper activities represented less than 50% of total

sales for the first time in 2013

Paper Non paper

Lagardère Publishing Paper books, partworks, etc. E-books, audiobooks

Lagardère Travel Retail Books, press distribution Other (tobacco, fashion & cosmetics, etc.)

Lagardère Active Magazines Broadcasting, TV production, licensing, digital

Lagardère Sports and Entertainment

- 100% non paper

1 Reduce

exposure to declining

activities (2/2)

Medium term target


SEPTEMBER 2015

Successful transition to e-book (detail slide 34)

Rounding out of porfolio through select acquisitions in the UK:

• Constable & Robinson and Quercus (fiction and non fiction)

• Rising Star (primary school textbooks)

On-going success of Partworks, developed in house

Musical radios: developments in Africa (Senegal).

Digital: initiatives in e-medical businesses:

• MonDocteur.fr: first online booking website of medical consultations;

• Doctripharma.fr: service company allowing French pharmacies to create their own

online dispensary.

TV / Gulli:

• now owned at 100% after the acquisition of the 34% minority stake;

• still the No.1 kids French channel.

Adapt existing activities and

enhance leadership

position (1/4)


Lagardère Active

2

12


SEPTEMBER 2015

The strategic transformation of the division is well on track:

13

Travel Retail (1/2)

56%

60%

63%

18% 16% 15%

26% 24% 22%

2012 2013 2014

Wholesale Distribution

Integrated Retail

LS Travel Retail

LTR distribution (to

Travel retail

Lagardere Travel Retail*: business mix


enhance leadership

position (2/4)

Distribution (to be sold)

2

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


SEPTEMBER 2015

A significant improvement of the product-mix thanks to the strategy aimed at

strengthening the footprint in airports.

14

9% 9% 15%

29% 33% 35%

62% 58% 50%

Food Services

Duty Free & Luxury **

Travel Essentials *

2012 2013 2014

Travel Retail: mix segment

Travel Retail (2/2)

* News & convenience, gifts & souvenirs, electronics & media. ** Fashion, alcohol & liquors, perfumes & cosmetics, tobacco.

Duty Free

development

Decreased print

exposure

% of IFRS reported sales


enhance leadership

position (3/4)

2


SEPTEMBER 2015

40% 38%

19%

17% 20%

33%

43% 42% 48%

2012 2013 2014

Marketing rights

Other activities *

Media rights

The recovery plan is well on track, with a positive recurring EBIT in 2014, despite the negative calendar of events that year.

Ongoing strategic transition: a new Executive Committee, a more integrated organisation and the

turnaround of the business in Europe.

A significant change of the business mix, aimed at delivering a more regular performance.

15

2

Lagardere Sports and Entertainment:

business mix


*Stadium management, brand consulting, entertainment.

Arena Castelao in Brazil


enhance leadership

position (4/4)


SEPTEMBER 2015

Invest in

higher growth

activities (1/2)

Travel Retail

TV Production

3

Sports

Recent deals in 2015

Acquisition of UFA (soccer marketing in Europe, especially in Germany) April 2015

April 2015 Acquisition of 17 stores at JFK Airport (New York)

17 fashion and candy sales outlets spread over 1,700 m² in Terminal T4

May 2015 Acquisition of 82% of Grupo Boomerang TV

Leading independent TV Producer in Spain.

Signature of an agreement for the acquisition of Paradies, an airport travel retail leader

in North America operating in more than 76 airports (Canada and US airports).

Creation of the 2nd largest player in the North American airport travel retail industry.

See slide 18.

August 2015

16


SEPTEMBER 2015

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]

17

Invest in

higher growth

activities (2/2)

3

Organic growth drivers of travel retail

Acquisition of Paradies


SEPTEMBER 2015

19

Transaction

overview

Transaction summary

Acquisition of Paradies, an airport travel retail leader in North America 100% of the equity of Paradies holding company, Representing c. 80% of Paradies activities in aggregate (in accordance with US

regulation Paradies activities are operated in each airport with dedicated legal entities including minority partners, which represent c. 20% of the Enterprise Value of the Paradies Group)

Purchase price: $530m1 i.e. €485m

Creation of the second largest player in the North American airport travel retail industry

EBITDA, synergies and implied multiple

Key figures in 20152: operations in more than 76 airports, sales of $515m (€471m), EBITDA of $62m (12% margin) i.e. €57m

Attractive synergy potential: run rate of c. $15m3 p. a. the 4th year following the acquisition

Transaction proportional EBITDA multiple around 7.5x, based on Fiscal Year 20162 estimated EBITDA, pro forma for the run rate synergies

Closing Expected in Q4 2015 (antitrust clearance obtained on September 4, 2015)

Conditions to closing: third parties consents

$530m underwritten acquisition bridge financing with a 2-year maturity Financing

1 On a cash and debt free basis ,subject to final adjustment. All figures in USD are converted in € at August the 6th 2015 exchange rate : 1.0929 USD for 1 euro 2 Fiscal year ending on 28 June, US GAAP consolidated figures

3 Pre-tax synergies

Message on antitrust to be discussed with legal

counsel


SEPTEMBER 2015

An attractive market undergoing major redevelopments, thus creating opportunities for retailers

A large and resilient market ($7.7bn) still relatively fragmented

A significant potential for growth:

Increasing commercial development of airports (expansion in concessions space and improvement of passengers flow)

Rising spending per passengers

Good traffic forecasts (+3% from 2015 to 2021 and +2% for the following decade 1)

An appealing opportunity

A complementary geographical footprint (together Lagardère Travel Retail and Paradies activities will cover most top North American airports)

Paradies local brands combined with Lagardère access to global brands will significantly enhance the brand portfolio and airports needs

The opportunity to acquire a strong and respected pure travel retail player:

Strong renewal track record (due to reputation + landlord relationship + recognized quality of operation)

Historical player with sustainable and profitable growth

Large and high-quality brand portfolio

A deal with strong potential synergies: (i) central costs and buying power, estimated at $15m per year (run rate basis), and (ii) business development opportunities

Paradies has a very strong and experienced management team with diverse capabilities to drive growth and provide best-in-class solutions for its customers, being the travelers, landlords and brands

A resilient business profile

Diversified and long term concession portfolio with operations in more than 76 airports

Family business since 1960

Diverse product offering: convenience/travel accessories, general merchandise/souvenirs, premium apparel/specialty, readables and food services

¹ airline companies data and ACI reports

Immediate market impact

The combination of Paradies and Lagardère Travel Retail would create the #2 player at par with Hudson/Dufry (each company would generate c. $700-800m sales in Travel Essentials/Specialty Retail)

20

Strategic

rationale


SEPTEMBER 2015

Full potential of recurring synergy expected to be reached in 2019

COGS1 synergies

Alignment of purchasing conditions to the extent possible

Gross margin improvement from scale effect

Consolidation of volumes across stores

G&A & other synergies

Rationalization of central costs

Combination of IT projects

Total quantifies synergies $15m2 run rate

Additional synergy potential

Business development opportunities

Sales and marketing firepower alignment

Process and systems improvements by integration of best practices and combined experiences

International development of owned and franchise brands

21

¹ Cost Of Goods Sold 2 Pre tax

Expected

synergies

Group outlook


SEPTEMBER 2015

23

(€m) H1 2014 restated*

H1 2015 Reported

change Like-for-like

change**

Sales 3,364 3,304 -1.8% +2.9%

Recurring EBIT of fully consolidated companies

110 122 +11.0% /

Group operating margin 3.3% 3.7% +0.4 pt /

Profit – Group share (35) 9 +€44m /

Adjusted profit – Group share 31 75 +€44m /

*Including the negative impact related to the retrospective application of IFRIC 21 “Levies” on H1 2014 figures (see Appendix for further details) **At constant perimeter and exchange rates ***Recurring EBIT of fully consolidated companies of the four operating divisions (previously called the “Media” Recurring EBIT) + other activities

H1 2015 key figures and FY 2015 guidance

The first half results, as well as the outlook for the second half, have enable to raise the

target on 2015 recurring EBIT announced in March 2015

From now on, Group Recurring EBIT of fully consolidated companies*** should

increase in 2015 by about +7%, compared to 2014 (versus +5% previously):

- at constant exchange rates

- excluding the effect of the potential disposal of Distribution activities


SEPTEMBER 2015

Long term

objectives

(2013-2018)

Top-line growth objective

To achieve an organic growth >3% per year by 2018

Recurring EBIT* objective

Group recurring EBIT growth of circa 5% per year in average between

2013 and 2018**

*Recurring Media EBIT of fully consolidated companies of the four divisions + other activities (i.e. €327m in 2013).

**This target, based on 2013 figures, is to be adjusted once the Distribution and Integrated Retail businesses are sold.

These long term objectives, announced in May 2014, are unchanged.

24

Key credit highlights and

transaction rationale


SEPTEMBER 2015

Conservative

financial policy

* Defined as recurring operating profit before associates + D&A other than on acquisition-related intangible assets + Dividends received from Associates

26

2,6x 2,6x

1,9x

2,8x

(0,7)x

1,8x

2,6x

Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Jun-15

Net debt / EBITDA*

Net debt: €1,824m €1,772m €1,269m €1,700m -€361m €954m €1,436m

Inaugural bond in 2009

Disposal of 3 non-core stakes in 2013: - EADS (7.4%): €2.28bn - Canal+ France (20%): €1.02bn - Amaury (25%): €91.4m

Disposal of International Magazine Publishing (PMI) for €651m in 2011


SEPTEMBER 2015

27

(€954m) -€278m -€184m -€20m (€1,436m)

Net debt as of

31/12/2014

Net cash from operating &

investing activities

Dividends paid

Foreign exchange, scope and

other items

Net debt as of

30/06/2015

Change in net

debt in H1 2015


SEPTEMBER 2015

€451m

€1,250m

492 497 527

276

9 5

803

48

501

10

502

23

Cash available

30/06/2015- 30/06/2016

30/06/2016- 30/06/2017

30/06/2017- 30/06/2018

30/06/2018- 30/06/2019

30/06/2019- 30/06/2020

30/06/2020 & beyond

Bonds Commercial paper Bank loans & other

52% 28%

20%

Gross debt breakdown: well-balanced funding sources

Bonds

Commercial paper

Bank loans & other

Diversified

funding structure

supported by a

strong liquidity

position

14% in 2014

65% in 2014

End of June 2015 • Strong liquidity position (€1.7bn)

• New 5+1+1-year €1.25bn RCF signed in May 2015. Covenant of 3.5x (net debt / recurring EBITDA)

• Gross debt centered on capital markets

* Short-term investments and cash. ** Group credit facility excluding authorised credit lines at divisions level.

21% in 2014

Authorised

credit lines**:

Cash*:

Preservation of liquidity and balanced debt repayment schedule

28


SEPTEMBER 2015

Conservative

financial policy

with strong

liquidity profile

and diversified

funding sources

29

#3 worldwide in Publishing & Travel Retail

A diversified, balanced complementary business mix within the media and travel retail industry

– A geographically diversified group with 79% of revenues generated in developed countries

– Resilient base of Lagardère Publishing & lower exposure of Lagardère Active to cyclical advertising spend

– Growth opportunities in Travel Retail, digital & TV production

Sound financial profile with a strong liquidity position and diversified funding sources

Stable management and shareholder base thanks to the legal structure of the company (Société en commandite par actions = French partnership limited by shares)


SEPTEMBER 2015

Transaction

rationale

30

The contemplated hybrid and/or senior bond offering(s) would:

– Support Lagardère in its portfolio strategic improvement

– Strengthen Lagardère’s capital structure (hybrid to be accounted 100% as equity

under IFRS)

– Take advantage of the current low rate environment to further extend the group’s

average debt maturity; and

– Diversify Lagardère’s sources of funding by tapping into the current strong demand for

the hybrid asset class

The proceeds of the contemplated hybrid and/or senior offering(s) will be used:

– (i) to refinance or replace in part the bridge loan entered into for the purpose of

financing the payment of the purchase price of the Paradies acquisition by Lagardère

Travel Retail; and

– (ii) for general corporate purposes


SEPTEMBER 2015

Contemplated

hybrid structure

31

Key feature of the Hybrid Security

Issuer Lagardère SCA

Issuer Rating Not Rated

Bonds Euro [●] Undated Deeply Subordinated Fixed to Reset Rate Bonds (the “Bonds”)

Ranking Deeply subordinated, senior only to ordinary shares and any other class of share capital of the Issuer

Maturity Perpetual

Optional Redemption On [●, 2020] (the “First Call Date”) and on any Interest Payment Date thereafter

Interest Interest payable annually in arrear Fixed rate until the First Call Date, then, and every 5 years thereafter, the interest rate resets to a rate equal to the

5 year swap rate plus [●] (the initial credit spread) plus a step up of 500bps

Step up 500bps at the First Call Date Additional 500bps if the Bonds are not called upon the occurrence of a Change of Control Call Event

Optional interest deferral Optional deferral of interest payments (in whole but not in part) at the Issuer’s discretion Any deferred interest constitutes Arrears of Interest No optional deferral if in the prior 12 months a Mandatory Payment Event has occurred (discretionary payment,

redemption or repurchase of parity or junior obligations – subject to certain exceptions)

Arrears of Interest May be settled in cash at any time at the Issuer’s discretion but shall become due and payable upon the earliest of: i. 10 business days following a Mandatory Payment Event ii. The next Interest Payment Date on which the Issuer does not elect to defer the relevant interest payment iii. Redemption of the Bonds iv. Liquidation of the Issuer Arrears of interest bear interest at the corresponding rate of interest of the Bonds, in accordance with Article 1154

of the French Code civil

Early Redemption Rights Gross-up Event, Withholding Tax Event, Change of Control Call Event, Repurchase event: at par Tax Deductibility Event and Accounting Event: at 101% of the par amount before the First Call Date and par

thereafter

Governing Law French Law

Listing / Denominations Luxembourg Stock Exchange / EUR 100k

Appendix


SEPTEMBER 2015

Lagardère

Publishing:

Activity

33 *% of sales in 2013

2014 sales by geographical area 2014 sales by activity

France 31%

UK & Australia

21%

US & Canada

24%

Spain 6%

Other 18%

32%*

19%*

18%*

6%*

25%*

Education 16%

Illustrated books 15%

General Literature

40%

12%

Other 17%

42%*

16%*

15%* 11%*

16%*

Partworks

(€m) 2013 2014 Change

Sales (a) 2,066 2,004 -3.0%

Recurring EBIT of fully consolidated companies (b)

223 197 -€26m

Operating margin (b)/(a) 10.8% 9.8% -1.0 pt

Income (loss) from equity-accounted companies (2) 2 /

Non-recurring/non-operating items (29) (30) /

EBIT 192 169 -€23m


SEPTEMBER 2015

As expected, the weight of e-books has decreased in H1 2015.

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 decreasing market (confirming the slowdown noticed since H1 2014), Lagardère Publishing digital sales decreased. It reflects market trend, fewer movie tie-ins vs. H1 2014, and the impact of the new contract with Amazon;

• in the UK, where the market is stabilizing, e-book sales decreased due to fewer best sellers vs. H1 2014, and to a change in VAT rate;

• French and Spanish markets still at an early stage.

2.0%

6.0%

8.0%

10.4% 10.3%

11.3%

2010 2011 2012 2013 2014 H12014

H12015

% of total sales

E-book share – as percentage of trade market sales

United Kingdom**

Lagardère Publishing e-book sales

10.7%

8%

21% 24%

30% 26%

29%

2010 2011 2012 2013 2014 H12014

H12015

United States*

24%

33%

1%

10%

20%

27%

31%

36%

2010 2011 2012 2013 2014 H12014

H12015

34

Lagardère Publishing: successful

transition to digital

*Trade. / **Adult trade.


SEPTEMBER 2015

(€m) 2013 2014 Change

Sales (a) 3,745 3,814 +1.8%

Recurring EBIT of fully consolidated companies (b) 96 105 +€9m

Operating margin (b)/(a) 2.6% 2.7% +0.1 pt

Income from equity-accounted companies 8 6 /


EBIT 42 47 +€5m

Lagardère

Travel Retail:

Activity

35


Wholesale

Distribution

22%

24%*

16%*

Integrated

Retail

15%

63%

60%*

29%*

10%*

6%*

18%*

12%*

4%*

8%*

10%*

France 26%

Belgium 12%

Eastern Europe

17%

US & Canada

6%

Spain 9%

Switzerland 9%

Asia-Pacific

8%

Other 7%

Italy 6% 3%*

*% of sales in 2013


SEPTEMBER 2015

Lagardère

Active:

Activity

36 *% of sales in 2013

Press 45%

TV 26%

Radio 22%

France 86%

International 14%

13%*

87%*


7%* Pure digital 7%

21%*

23%*

49%*

(€m) 2013 2014 Change

Sales (a) 996 958 -3.8%

Recurring EBIT of fully consolidated companies (b) 64 73 +€9m

Operating margin (b)/(a) 6.4% 7.6% +1.2 pt

Income from equity-accounted companies 2 4 /


EBIT (309) 56 +€365m


SEPTEMBER 2015

Lagardère

Sports and

Entertainment:

Activity

37 *% of sales in 2013 **.Stadium management, brand consulting, entertainment, athlete representation…

Germany 27%

UK 7%

France 14%

Rest of Europe

9%

Asia & Australia

20%

USA & Canada 8%

Rest of World 15%

6%*

Media rights 19%

Marketing rights 48%

Other** 33%


20%*

42%*

38%*

16%*

14%*

13%*

11%*

12%*

28%*

(€m) 2013 2014 Change

Sales (a) 409 394 -3,8%

Recurring EBIT of fully consolidated companies (b) (11) 4 +€15m

Operating margin (b)/(a) - 1.0% -

Loss from equity-accounted companies (1) (3)

Non-recurring/non-operating items (23) (19)

EBIT (35) (18) +€17m


SEPTEMBER 2015

FY 2014

consolidated

income

statement (1/2)

38

(€m) 2013 2014

Sales 7,216 7,170

Total recurring EBIT of fully consolidated companies 327 342

Media activities 372 379

Other activities (45) (37)

Income from equity-accounted companies* 7 9

Non-recurring/non-operating items 1,193 (142)

Restructuring costs (122) (66)

Gains/(losses) on disposals 1,671 (5)

Fair value adjustment resulting from changes in control - 25

Impairment losses (328) (41)

Amortisation of acquisition-related intangible assets and other

acquisition-related expenses (28) (55)

EBIT 1,527 209

*Before impairment losses


SEPTEMBER 2015

FY 2014

consolidated

income

statement (2/2)

39

(€m) 2013 2014

EBIT 1,527 209

Net interest expense (91) (73)

Profit before tax 1,436 136

Income tax expense (117) (87)

Total profit 1,319 49

Attributable to minority interests (12) (8)

Profit – Group share 1,307 41


SEPTEMBER 2015

FY 2014

adjusted profit –

group share

40

(€m) 2013 2014

Profit – Group share 1,307 41

Amortisation of acquisition-related intangible assets and

other acquisition-related expenses* +20 +42

Impairment losses on goodwill, tangible and intangible

fixed assets* +298 +41

Restructuring costs* +117 +53

Gains/losses on disposals* -1,624 +5

Fair value adjustment resulting from changes in control* - -25

Tax contribution on dividends paid +40 +28

Exceptional bonus for employees* +14 -

Adjusted profit - Group share 172 185

*Net of taxes


SEPTEMBER 2015

FY 2014

consolidated

statement of

cash flows

41

(€m) 2013 2014

Cash flow from operations before interest, taxes 454 403

Changes in working capital 116 (49)

Cash flow from operations 570 354

Interest paid & received, income taxes paid (235) (144)

Cash generated by operating activities 335 210

Acquisition of property, plant & equipment and intangible

assets (296) (249)

Disposal of property, plant & equipment and intangible assets 8 16

Free cash flow 47 (23)

Acquisition of financial assets (41) (282)

Disposal of financial assets 3,410 34

(Increase)/decrease in short-term investments 29 -

Net cash from operating & investing activities 3,445 (271)


SEPTEMBER 2015

(€m) Dec. 31, 2013 Dec. 31, 2014

Non-current assets (excl. investments in

associates and joint ventures) 3,579 3,949

Investments in associates and joint ventures 152 159

Current assets (other than short-term investments

and cash) 2,817 2,834

Short-term investments and cash 1,784 566

Total assets 8,332 7,508

Stockholders’ equity 2,927 2,081

Non-current liabilities (excl. debt) 628 714

Non-current debt 617 1,030

Current liabilities (excl. debt) 3,354 3,193

Current debt 806 490

Total liabilities and equity 8,332 7,508

FY 2014

consolidated

balance sheet

42


SEPTEMBER 2015

Stable dividend

policy

Lagardère has maintained a stable dividend policy

43

Dividends paid over time

1,10 1,20 1,30 1,30 1,30 1,30 1,30 1,30 1,30 1,30

9,00

6,00

1,10 1,20 1,30 1,30 1,30 1,30 1,30

10,30

7,30

1,30

mai-06 mai-07 mai-08 mai-09 mai-10 mai-11 mai-12 mai-13 mai-14 mai-15

For the eighth year in a row, the ordinary dividend amounted to €1.30 per share in 2015

Exceptional dividends:

– 2013: €9.0 per share derived from the Lagardère’s group’s sale of its 7.4% interest in EADS

– 2014: €6.0 per share related to the sale of the Lagardère’s group’s stake in Canal+ France


SEPTEMBER 2015

Impact related to the retrospective application of IFRIC 21 “Levies” on H1 2014 figures:

- -€3m on Recurring EBIT of fully consolidated companies

- -€2m on Profit – Group share and Adjusted profit – Group share

- The new interpretation IFRIC 21 modifies the obligating event that gives rise to the

recognition of a liability to pay a levy or contribution. The obligating event for the

recognition of the liability is now the activity that triggers the payment of the levy, as

defined by the tax authorities

IFRIC 21 impact

on H1 2014

figures

44


SEPTEMBER 2015

Paradies is a leading operator in airport travel retail in the North American industry with operations in more than 76 airports and €515M in sales1 with a portfolio of long-term concessions. Moreover, broad location portfolio provides a diversification from geography, weather and airline route patterns

Created as a family business in 1960, Paradies is controlled by the private equity investment firm Freeman Spogli & Co (since 2010), with the Paradies family still owing a minority share

Paradies is renowned in the US for the quality of its operations and management, having won the industry’s “Best Airport Retailer” award in 20 successive years

Paradies is a leading operator in convenience and travel essentials, having initiated a strong diversification strategy in gift & souvenirs, fashion, accessories and specialty (primarily with strong brands such as Brooks Brothers, PGA, CNBC etc.), and recently started developing its Food & Beverage business

Convenience & Travel Accessories

47%

Readables 13%

General Merchandise & Souvenirs

20%

Premium Apparel & Specialty

16%

Food Services 4%

Historical Revenue Growth show resilience

2015E Breakdown of sales by category

[in $ million – breakdown based on YTD May figures]

[in $ million; end June FY]

45

$0

$250

$500

FY '60 FY '79 FY '83 FY '87 FY '91 FY '95 FY '99 FY '03 FY '07 FY '11 FY '15

Recession

Recession

9/11 and Recession

Recession

1 End June fiscal year, US GAAP consolidated figures

Profile of

Paradies


SEPTEMBER 2015

North American Travel Retail industry size Competitive landscape

Foodservice Core Duty Free

Essentials & Specialty

v

v v

v

v

v

v v

v

v

Source: Lagardère Travel Retail estimates, company reports, Moodies ¹ Ranking based on estimated sales

32%

16%

52%

Airports

Essentials & Specialty 2.5

32%

Core Duty Free 1.2

16%

Foodservice 4.0

52%

∑ = 7.7

[in $ billion 2014]

v v

v

v

v

v

Key market takeaways

A $7.7bn market with varying dynamics across segments:

Foodservice: growing and highly fragmented market mainly driven by domestic traffic with limited on-board free food offer

Core Duty Free: more limited offer compared to other regions (EMEA, ASPAC) due to the predominance of domestic traffic

Travel Essentials: number 1 competitor is Hudson (Dufry) – Critical size is a key challenge

+

46

The North

American airport

travel retail

industry


SEPTEMBER 2015

Sales breakdown by division

Sales 2014 = €7,170m Sales 2014 = €7,629m


28%


53%



6% Lagardère Publishing

26%


56%



5%

EBITDA breakdown by division

EBITDA 2014 = €533m1 EBITDA 2014 = €582m1


45%


29%



12%


41%


35%



11%

o/w Distribution

19%

o/w Distribution

18%

Source: Lagardère and Lagardère Travel Retail ¹ Breakdown excluding EBITDA from other activities of -€37m)

47

Combined

profiles


SEPTEMBER 2015

Lagardère IR

Team and

calendar

IR team details Anthony MELLOR Head of Investor Relations Tel: 33 1 40 69 18 02 [email protected] Hacène BOUMENDJEL Investor Relations Deputy Head 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 9 months 2015 sales November 10 2015 at 8:00 am A conference call will be held at 10:00 a.m. on the same day

48 V12

mailto:[email protected]

Documents

Credit investor presentation - Lagardere.com