INVESTOR PRESENTATION
September 2019 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 regarding Lagardère SCA’s results or any other performance indicator, but rather trends or targets, as the case may be. 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; • 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. 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. 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
GROUP STRATEGY slide 4
GROUP PROFILE IN 2018 slide 15
slide 18
slide 21
slide 26
slide 29
GROUP PERFORMANCE IN H1 2019 slide 31
GUIDANCE slide 39
Appendix: business updates slide 41
3 GROUP STRATEGY 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 5% (excl. Mezzo) Books 7.4% of 8% 42% of Press 7.5% of 20% of 16% 36% Le Monde Interactif Radio assets Distribution Distribution in South Distribution Distribution Regional 25% of activities in activities in Distribution Africa, activities dailies in International 10 French Switzerland Belgium activities in Press Services titles in in Germany France magazines magazines and the US and Spain Hungary France 35% Lagardère Media
2004 2005 2006 2007 2011 2013 2014 2015 2016 2017 2018 2019 2018
6% ►87% of the revenue generated in 2003 is about to be outside the Group 12% 31% post-transformation scope ►In 2018, 82% of the revenue was already generated by Lagardère
51% Publishing and Lagardère Travel Retail
5 ONGOING STRATEGIC REFOCUSING WITH SWIFT PROGRESS ON THE DISPOSAL PLAN ANNOUNCED
2018 2019
January/ June €14m 42% stake February €41m Operations in the July €73m February* Central Europe €18m process of Africa, Asia being sold
July/ €55m Press October February (excl. Paris Match, Le Journal du Dimanche €52m and the Elle brand licence)
June (49% of share Signing capital)
July €12m (60% of share capital)
September TV channels (excl. Mezzo) €215m * Jacaranda and Vibe Radio: disposals completed in February 2019. Mediamark: closing subject to regulatory clearance. 6 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
✓ Structural growth outpacing GDP growth ✓ Growth decorrelated from the economic cycle ✓ Industry consolidation, providing a source of attractive ✓ Strategic positioning at the heart of industry-leading opportunities content creation
► Improved Group industrial profile: a leaner, more ambitious profile refocused around growth businesses ► Improved cash generation to finance the growth of our businesses
7 LAGARDÈRE PUBLISHING: 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 from operations before changes in working 2015 capital 2014
2013
959 2011
2009 A.
2008
197 2007 83 2006 2003 2018 2004 #11 #3
2003 8 LAGARDÈRE PUBLISHING: 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 footprints…) in order to deliver high return on investment
▪ Lagardère Publishing’s track record in doing so is outstanding:
Lagardère Publishing’s after tax return on investment in acquisitions since 1996
• Acquisition in 1996 • Acquisition in 2008 • Return on investment 15% • Return on investment 14% • Acquisition in 2004 • Acquisition in 2014
• Return on investment 9% (excluding non US-business) • Return on investment 16%
• Acquisition in 2006 • Acquisition in 2014 • Return on investment 9% • Return on investment 14% • Acquisition in 2007 • Acquisition in 2016 • Return on investment 13% • Return on investment 12%
9 LAGARDÈRE TRAVEL RETAIL HAS BECOME A GLOBAL LEADER THANKS TO ORGANIC GROWTH AND SELECTIVE ACQUISITIONS (1/2)
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 August 2018 Netherlands: Foodservice in rail stations 3,673 End-2017 Shanghai, Beijing, Wuhan: Fashion, Foodservice September 2017 Dakar: Duty Free, Travel Essentials Revenue May 2017 Hong Kong: Alcohol and Tobacco (with China Duty Free Group) Cash flows from operations Geneva: Duty Free before changes in working March 2017 capital End-2016 Riyadh, Dammam, Jeddah: Duty Free November 2016 Poland: New concession awarded at Gdansk airport December 2015 Abu Dhabi: Duty Free and Foodservice Development of existing concessions End-2017 Auckland: Opening of a new Duty Free store February 2017 Prague: Takeover of an additional 9 Duty Free stores 899 December 2016 Rome: Foodservice and Duty Free at the Avancorpo terminal September 2015 Nice: Opening of terminal 1 with a new Foodservice concept 224 Acquisitions 19 July 2019 Europe: International Duty Free 2003 2018 November 2018 North America: Hojeij Branded Foods June 2017 Poland: Inflight Service operations * Adjusted for Distribution businesses. October 2015 North America: Paradies (76 airports) 10 LAGARDÈRE TRAVEL RETAIL HAS BECOME A GLOBAL LEADER THANKS TO ORGANIC GROWTH AND SELECTIVE ACQUISITIONS (2/2)
• Strong and diversified concessions network • Selective past acquisitions at advantageous multiples with smooth integration and on-going synergies
Lagardère has a track record of advantageous multiples… $15 million $10 million €7 million synergies synergies synergies per annum per annum per annum as of 2019 as of 2021 as of 2022
7.6x 6.9x 7.6x 7x 8x
Acquisition of Gerzon Acquisition of 50% Acquisition of 100% Acquisition of 100% Acquisition of 100% by Lagardère Travel of Airest by Lagardère of Paradies by of HBF by Lagardère of IDF by Lagardère Retail Travel Retail Lagardère Travel Travel Retail Travel Retail EV/EBITDA Retail
Sept. Oct. Dec. April June March March August Nov. July 2008 2012 2013 2014 2014 2015 2015 2015 2018 2018
9.8x 8.9x 9.9x >20x 12.4x …within a market with strong consolidation trend Acquisition of Hudson Acquisition of 51% of Acquisition of 100% Acquisition of 60% of Acquisition of 100% Group by Dufry Folli Follie Travel of The Nuance Group Schiphol Airport Retail of World Duty Free by Retail activity by Dufry by Dufry by Heinemann Dufry
11 INNOVATION IS A DRIVING FORCE FOR OUR TWO BUSINESSES
Content creation Concept creation
▪ New activities (mobile games) ▪ Follow trends and create new concepts for ▪ New business models (Asterix licences, demanding travellers board games) ▪ Invent the commerce of tomorrow by ▪ New media (audiobooks, e-books) digitising stores ▪ A cutting-edge Innovation Program ▪ New modes of consumption (Foodservice) ▪ A century of creating masterpieces ▪ A century of setting up businesses in transport hubs
► The Group is built on, and driven forward by, business innovation, employee creativity and operational excellence.
12 A PRUDENT AND EFFICIENT FINANCIAL STRATEGY
Thanks to the new business profile, structurally improved profitability and cash generation to finance the growth of our two leaders
Cautious leverage ratio maintained within our comfort zone
Stable ordinary dividend payout
13 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 ▪ Ongoing expansion of the concession network and board games) ▪ The scale effect of the concession network ▪ Increased innovation (scale in purchasing, decrease in capex and construction costs) ▪ Expanded distribution (including on behalf of third party publishers) ▪ Agile and efficient organisation
▪ Acquisition synergies ▪ Excellence in traveler understanding and operational execution
14 GROUP PROFILE IN 2018 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 France 3 • Third-largest privately-owned • No. 4 in the global Travel Retail consumer book publisher in the market US and 31% Canada €7,258m world • Solid experience in three 21% segments: • Front-ranking player − Duty Free & Fashion Europe on the digital market − Travel Essentials 36% − Foodservice 2018 recurring EBIT breakdown by division
18%
46% 12% 7% 6% of total revenue of total revenue €401m No. 3 in the French fiction production market 1 Football: leader in Africa, Asia and Europe 3 • Front-ranking player in the French Press and • World leader in sponsoring and major player in TV rights distribution Radio market 29% 16 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 2.1x** 2.2x 6.0 5.4%***
1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018
Leverage ratio *** Yield based on the closing share price of €24.28 at 2 May 2019. Net debt/recurring EBITDA*
… combined with proceeds from future ...and proceeds from asset disposals reinvested in disposals, giving significant investment Lagardère Publishing and Lagardère Travel Retail headroom
* Defined as the sum of (i) recurring EBIT of fully consolidated companies, (ii) depreciation, amortisation and impairment, and (iii) dividends received from equity-accounted companies. ** On a pro forma basis (as per the syndicated loan agreement), taking into account 12 months' recurring EBITDA for HBF. Based on reported figures, the leverage ratio comes out at 2.2x. 17
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 29% 19% 44% * Of which 12% for Distribution (self and third party).
Top 3 Consumer book publishers worldwide Ranking in core markets* Based on 2018 pro-forma revenue (€m) (Consumer: Trade & Education including Higher Education, excluding Professional)
3,679 3,424 2,252 #1 #2 #3 #4 #2
* Consumer (Trade & Education including Higher Education, excluding Professional). Based on 2018 average exchange rates. Revenues from STM, professional markets and other activities than book publishing have been excluded when it could be isolated. Sources: Annual reports, Internal estimates, GfK, Nielsen Bookscan. 19 CREATING NEW OPPORTUNITIES OUT OF EMERGING CONSUMER BEHAVIORS AND NEW FORMS OF READING
E-books E-books contribution to Lagardère Publishing's overall revenue: 7.9% in 2018.
Audiobooks Audiobooks contribution to Lagardère Publishing's overall revenue: 2.7% in 2018.
E-publishing Reinforcing leadership: Bookouture / acquisition of Britain’s leading independent e-publisher.
Spearheading new educational practices: from the digital multi-support E-education version of a textbook to enhanced classroom content including game-changing self-assessment, solutions: acquisition of Rising Stars.
Exploring leisure activities adjacent to the world of publishing for Consumer cross-fertilization with all imprints, including consumer games in games all their components: - Mobile gaming (Neon Play / Brainbow-Peak / Is Cool) - Board Games (Gigamic)
20
Annual Ordinary and Extraordinary General Meeting / 10 May 2019 STRATEGY DEPARTMENT Duty Free & Fashion Travel Essentials Foodservice
22 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% airports* €3,673m 257 Duty Free €3,673m France & Fashion EMEA (excl. 24% 750 railway 40% France) and metro 42% stations
* Including franchises.
Top 10 Travel Retail operators worldwide Ranking in core markets
€bn, sales @100%, 2018 #4 #1 #3 #1 Foodservice 7.7 Duty Free & Fashion 6.1 5.5 4.9 5.3 including Travel Essentials Airport Fashion in 1.6 HBF & IDF(1) 4.7 Foodservice Travel 4.4 Essentials Duty Free Europe 3.6(2) 2.9 2.8 2.5 1.8 0.7
(1) FY Pro forma. / (2) Travel Retail activities only. 23 Sources: Companies reports, The Moodie Report, Lagardère Travel Retail estimates. 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 2,4% 100 112 2,5% 95 80 1,9% 1,8% 2,0% 1,6% 1,6% 60 68 1,5% 60 40 1,0% 42 43 33 20 30 0,5%
0 0,0% 2010 2011 2012 2013 2014 2015 2016 2017 2018
Recurring EBIT Margin rate
✓Operational excellence and retail expertise ✓Market penetration and business development (network expansion and scale effect) ✓Organisation and system optimization (system harmonization)
* Travel Retail perimeter only (excluding Distribution). 24 IMPROVEMENT OF CASH GENERATION BACKED BY A RESILIENT BUSINESS MODEL
Travel Retail Cash Flow from Operations* Breakdown of Capex**
175 4.3% 4.4% +66% 155 4.0% 3.5% 4,0% 135 56 54 224 115 50 207 3,0% 188 95 66
135 75 82 77 2,0% 55 83
35 44 1,0%
15
-5 0,0% 2015 2016 2017 2018 2015 2016 2017 2018 New stores Renewal & maintenance % of revenue
* Travel Retail perimeter only (excluding Distribution) – Cash Flow from Operations before changes in working capital. ** Capex Travel Retail, excluding Distribution. 25
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 16% 21% 18% 10%
Asia & €438m Other €438m Australia Germany 27% 17% 20% Marketing rights 47% Rest of Europe UK 11% 13% Competitive Landscape Leading Positions
In football In sponsoring in Africa, Asia and TV rights and Europe distribution
27 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 comprehensive business on global agency with a mission to existing territories in Football transform traditional brand YEARS Europe sponsorships into highly inventive 23 of continuous partnership ▪ Focus on CAF next cycles and impactful marketing platforms: Division returned to with CAF > Contract until 2028 profitability in 2014 - partnership exploratory and strategy - comprehensive digital strategies n.m. 6.9% YEARS 18 ▪ Leverage our Media and - production & management 30 of continuous partnership Sponsorship sales network to of digital content with CGF create value for rights holders - mobile and tablet apps for > Contract until 2030 rights-holders (33) ▪ Entered into exclusive media - social apps & activations for 2012 2018 Tailored partnerships rights-holders and brands distribution partnership with - data analysis EUROPEAN International Handball FOOTBALL Federation 100 & RUGBY CLUBS
28
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 Non-core business 3% Radio Retained business 14% Peers Sound market positions
Radio + TV + Internet #3
Magazine publisher Fiction production in France in France
30 GROUP PERFORMANCE IN H1 2019 HIGHLIGHTS
▪ Solid performance from our target scope: Lagardère Publishing and Lagardère Travel (€m) H1 2018* H1 2019 Retail Revenue 3,366 3,612 +7.3% consolidated +6.7% like-for-like** ▪ Strong performance of Group recurring EBIT** 139 153 Lagardère Sports and Entertainment due to Group operating margin** 4.1% 4.2% AFC event Profit – Group share 106 52 ▪ H1 typically low free Adjusted profit – Group share** 59 63 cash flow due to business and working Free cash flow** 147 (59) capital seasonality Net debt** at end of period*** (1,367) (1,590) ▪ Solid financial position with leverage ratio at 2.3x stable year on * Restated for IFRS 16 using the full retrospective method. ** Alternative Performance Measure (APM) – See Glossary on slides 73 to 75. year *** Net debt as of 31 December 2018.
32 LAGARDÈRE PUBLISHING: ACTIVITY H1 2019 revenue by geographic area H1 2019 revenue by activity Education 11% Other France Other 12%* 21% 28% 18% 21%* 27%* 17%* Illustrated Books 12% Spain Partworks 12%* 5% 14% 5%* 14%*
US & UK & General Canada Australia Literature 30% 16% 45% 28%* 19%* 45%*
* % of revenue in H1 2018 Change in recurring EBIT (€m) and operating margin (%)
12.4%
155 4.5% 3.5% 45 36 H1 2018* H2 2018* H1 2019
* Restated for IFRS 16 using the full retrospective method. 33 LAGARDÈRE TRAVEL RETAIL: ACTIVITY H1 2019 revenue by geographic area H1 2019 revenue by activity
US & Canada Asia-Pacific 26% 12% 21%* 13%* Travel Duty Free & Essentials Fashion 40% 38% 43%* 41%* EMEA France (excluding 23% 24%* France) 39% 42%* Foodservice 22% 16%* * % of revenue in H1 2018 Change in recurring EBIT (€m) and operating margin (%) 4.4%
2.3% 2.0% 86 34 46
H1 2018* H2 2018* H1 2019 * Restated for IFRS 16 using the full retrospective method. 34 LAGARDÈRE SPORTS AND ENTERTAINMENT: ACTIVITY H1 2019 revenue by geographic area H1 2019 revenue by activity Live Entertainment Other France 10% 27% 17% 10%* 19%* 19%*
Media rights 39% Germany Marketing 18% 21%* rights 20%* 39% Asia & 50%* Australia 18% UK 18%* 9% Rest of Europe Other 15%* 11% 12% 9%* 19%* * % of revenue in H1 2018 Change in recurring EBIT (€m) and operating margin (%)
21.0%
14.0% 1.3% 67 30 3
H1 2018* H2 2018* H1 2019 * Restated for IFRS 16 using the full retrospective method. 35 LAGARDÈRE ACTIVE: ACTIVITY H1 2019 revenue by geographic area H1 2019 revenue by activity Other Other 2% 40%** 19% 18%* Press 24% 15%* Lagardère Studios 36% Spain France 13% 68% 21%* 75%* 7%* French Radio 21% 14%*
TV Other (Core) Channels 1% 16% Retained business * % of revenue in H1 2018. 10%* Non-core business ** % of revenue in H1 2018 including 29% on Non-core Press and 7% International Radio. Change in recurring EBIT (€m) and operating margin (%) 9.2% 7.7%
43 33 2.7% 7 H1 2018* H2 2018* H1 2019 * Restated for IFRS 16 using the full retrospective method. 36 CONSOLIDATED STATEMENT OF CASH FLOWS
(€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 assets (119) (127) Disposals of property, plant & equipment and intangible assets 202 27 Free cash flow** 147 (59) Purchases of investments (18) (51) Disposals of investments 23 101 Cash flow from (used in) operations and investing activities 152 (9) Dividend paid and other (207) (180) Interest paid (32) (34) Change in net debt (87) (223)
* Restated for IFRS 16 using the full retrospective method. ** Alternative Performance Measure (APM) – See Glossary on slides 73 to 75. 37 FINANCING POLICY
▪ Keeping a leverage ratio at 2.3x with strong ▪ Strong liquidity maintained. Recurring EBITDA and prior to TV Channels ▪ Next €500m bond maturity in September 2019 partially disposals closing in Q3. refinanced due to private placement (Schuldschein) issued in June 2019.
Bonds Leverage ratio Bank loans and other Net debt/Recurring EBITDA* Schuldschein Authorised Commercial paper credit lines**: €1,250m €1,590m €497m €113m Cash*: €1,042m €1,445m 2.3x €727m €160m €294m €52m €495m €66m €1,368m €30m €186m 2.3x €2m €10m 2.1x
30/06/2018 31/12/2018 30/06/2019
* Alternative Performance Measure (APM) – See Glossary on slides 73 to 75. * Short-term investments and cash. ** Undrawn Group credit facility excluding authorised credit lines at divisional level. 38 GUIDANCE OUTLOOK 2019
2019 RECURRING EBIT* GROWTH TARGET BASED ON TARGET SCOPE**: The Lagardère group expects 2019 recurring EBIT* growth based on the target scope** to be between 4% and 6% at constant exchange rates and excluding the acquisition of HBF.
NON-RETAINED BUSINESS SCOPE***: 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 disposal of Mezzo since that date.
* Including IFRS 16 impact on buildings and other only. Impact on concession contracts of Travel Retail is neutralised in Recurring EBIT. – See Glossary on slides 73 to 75. ** Lagardère Publishing and Lagardère Travel Retail (core businesses), as well as Other Activities including Lagardère News (Paris Match, Le Journal du Dimanche, Europe 1, Virgin Radio, RFM and the Elle brand licence), the Entertainment businesses, the Group Corporate function, and the Lagardère Active Corporate function whose costs will be wound down by 2020. *** Recurring EBIT of operations disposed between 1 January 2019 and 24 July 2019 is minimal, since the Press business was deconsolidated with effect from 1 January 2019 and the amounts corresponding to the other assets are not significant. 40 APPENDIX: BUSINESS UPDATES CORPORATE SOCIAL RESPONSIBILITY (1/2) A TRIPLE AMBITION TO COMBINE BUSINESS AND MEANING
Placing people at the Anticipating and Acting as an ethical and heart of our strategy supporting social and responsible organisation environmental change
➢ Diversity and gender balance in ➢ Management of energy and carbon ➢ Respect for privacy human capital impacts ➢ Respect for fundamental rights ➢ Management of skills and key talent ➢ Management of resources and respect for the environment ➢ Fighting corruption ➢ Access to and dissemination of education, culture and ➢ Quality of products and services, entertainment promotion of health and well-being
42 CORPORATE SOCIAL RESPONSIBILITY (2/2) LAGARDÈRE’S MATERIALITY MATRIX
3,00
Access to education 2,75 and culture
Personal data protection 2,50 Diversity and gender balance in the workplace 2,25
Ethical sourcing Cultural pluralism and 2,00 Anti-corruption diversity measures Attract and retain talent 1,75 Promoting health
and well-being Stakeholders’ expectations Stakeholders’ 1,50 Protecting intellectual property
1,25 Limiting the energy and carbon footprint Responsible supply chain 1,00 Responsible paper Creating and management broadcasting 0,75 Quality and security entertainment of manufactured and distributed products 0,50 Contribution to society Value of human capital 0,25 Environmental costs and risks Non-compliance costs Ethics and quality 0,00 0,00 0,25 0,50 0,75 1,00 1,25 1,50 1,75 2,00 2,25 2,50 2,75 3,00 Degree of challenge for the Group’s economic performance 43 PUBLISHERS ARE THE IRREPLACEABLE LINK BETWEEN AUTHORS & READERS
Foresee trends Optimize profits Sales Management from production to
Copyright sales Sub- Protection Financials (Advance) Detect talent rights Acquisition/assignments Editing
(Agent) Promotion & Author Sales Fact Negotiate contracts authors Tours checking & Be creative Marketing Proof reading Advertising Design Order & Publicity Reorder Bookstores Intake Social Media Nurture connections with Printing & Successfully collaborate Distribution Shipping distributors & retailers with authors eBook production & delivery
44 Source: Hachette Livre. 44 DIGITAL PREFORMANCE AND TRENDS
▪ E-books: slow decline after peak in 2013 (US) and 2014 (UK)
20.8% 17.4% 12.6% 12.5% 11.1% 10.1% 10.8% 14.2% 12.8% 12.4%
20146 20157 20168 20179 201810 2014 2015 2016 2017 2018
▪ Downloadable audiobooks: 25% to 30% annual growth rate 7.0% 3.6% 5.1% 4.0% 2.5% 3.4% 2.1% 1.7% 2.6% 1.3%
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 ▪ Education: a successfull market for digital in the UK, a promising but as yet embryonic one in France and Spain
Sources: AAP, The Publishers Association – all figures are expressed in value. 45 PERSEUS ACQUISITION
EXPANSION OF NON-FICTION AND BACKLIST PUBLISHING PROGRAMS
▪ Date of creation: 1996. ▪ Date of acquisition: 1 April 2016. ▪ 2015 revenue: ≈ €90m ▪ Activities: Non-fiction / Backlist publishing programs. ▪ 9 imprints: Avalon Books, Basic Books, DACapo Press, Public Affairs, Running Press, etc. ▪ Market positionning: major general trade publisher in the United States. ▪ Markets: United States + United Kingdom. ▪ Synergies: distribution, back-office, editorial synergies with Hachette Books.
46 PARTWORKS COLLECTION EDITED BY LAGARDÈRE PUBLISHING
47 THE TRAVEL RETAIL MARKET ENJOYS STRONG GROWTH DYNAMICS
Estimated annual growth in global air traffic (in %, 2015-2040) – In number of passengers
Europe North 3.7% America 2.8%
Asia- Pacific 6.2% Middle East Latin 7.7% America Africa 4.6% 4.2%
► Lagardère Travel Retail is ideally placed on a market where the number of passengers is expected to grow by around 5% per annum through to 2040
Source: Lagardère estimates. 48 KEY FEATURES AND RATIOS OF TENDER OFFERS IN THE AIRPORT TRAVEL RETAIL ENVIRONMENT
✓ Contracts are awarded through tender offer processes where travel retail operators answer RFPs on “packages” depending on the retail space location and / or the product line targeted
Business line Main ratios1 Duty Free & Fashion Travel Essentials Foodservice
Surface (sq.m.) 500 – 10,000 30 – 200 50 – 300
Capex 3,000 – 5,000 2,000 – 5,000 1,000 – 3,000 (€/sq.m.) (incl. brand contrib.) (incl. kitchen)
Length 5 – 10 5 – 7 7 – 10 (years)
Rent 15 – 40 8 – 30 10 – 35 (% of sales) Most of the time supported by a Minimum Guaranteed2
Rare Exclusivity (de facto in some cases)
1 Ratios 90% within standard deviation from the mean. 2 MG could be fixed, indexed on traffic and/or inflation, monthly or annual. Source: Lagardère Travel Retail estimates. 49 PARTNER OF CHOICE
▪ We have the widest and most diverse portfolio in Travel Retail
TRAVEL ESSENTIALS DUTY FREE & FASHION FOODSERVICE
Own brands
Partner brands
Bespoke brands
50 Relay, Paris Orly 3 (France) LATEST NEWS IN TRAVEL ESSENTIALS
▪ Since January 2019
OPEN OPEN OPEN
Opening of Turkey and of the 1st Relay in Turkey 1st Relay in Gabon 12 relay stores Istanbul Sabiha Gökçen airport Libreville Airport In the Canary Islands
OPEN OPEN OPENING SOON
7 POS (Relay, Paris Saint-Germain, Daily Monop’) on Dutch Discoveries Eiffel Tower contract renewed (6 new POS) +700 s.qm. Paris Orly 3 (France) Amsterdam Schiphol Eiffel Tower, downtown Paris
52 Aelia Duty Free, Venice Marco Polo Airport (Italy) LATEST NEWS IN DUTY FREE
CAMPAIGN ACQUISITION
Prague Airport Duty Free tender won Lagardère Travel Retail signs an agreement to acquire IDF 19 shops to open in 2020 historical Belgian Duty Free operator (subject to closing)
OPEN OPEN
Opening of a 800 s.qm. The Fashion Gallery Aelia Duty Free Smart Traveler concept at Beauvais Airport Vienna Airport, Austria 3rd Smart Traveler store after Ciampino and Marseille airports in 2018
54 Beauty New Age by Buy Paris Duty Free, CDG Paris Airport (France)
Application available on smartphones and tablets
Customized recommendations 10 to 15 references
26,000 flavors More than 1,200 brands In 26 languages
Perfumist X Aelia Duty Free Geolocalisation EXCELLENCE IN RETAIL AND FOOD
▪ Be recognized as travelers’ preferred retailer
by offering memorable by adapting by constantly innovating shopping and food to each environment for a seamless experiences & to each traveler profile customer journey
56 LATEST NEWS IN FOODSERVICE
▪ Since January 2019
OPEN PARTNERSHIP OPENING SOON OPEN
Bourbon Pub with Chef Michael Mina 1st Itsu restaurant to open Hong Kong International Takeover of 28 Smullers POS at San Francisco Airport at Paris Orly Airport Dutch Rail network, Netherlands
ACQUISITION AWARDS AWARDS
Operations Team of the Year 2019 Lagardère Travel Retail Czech Republic
Franchise Team of the Year 2019 Lagardère Travel Retail Spain & Portugal
Acquisition of the FS activity at Prague Spain and the Czech Republic: Lagardère Travel Retail: the big winner of the 2019 FAB Awards central station (10 POS) winners of the Costa Coffee awards
57 DIVERSIFIED GROWTH PATHS: ORGANIC GROWTH (1/3) A strong development mainly driven by organic growth
Bridge sales growth (€m at constant exchange rates, IFRS consolidated sales, 2017-2018)
41 294 (12%) 3,736*** (88%) 41
Existing 131 concessions
+4.5%* +9.9%
163 New 3,401 concessions**
2017A Organic External 2018A sales growth growth sales
* On a like-for-like basis. ** Net of contracts terminated over the period. *** At 2017 exchange rate. 58 DIVERSIFIED GROWTH PATHS: ORGANIC GROWTH (2/3)
Growth has been driven by the award of major tender offers in all three businesses 2014 2015 2016 2017 2018
Reykjavik Krakow Hong Kong Phoenix Geneva Dakar Gabon San Francisco Vienna
Melbourne T4 Auckland Luxembourg Gdansk Prague Gold Coast Malaga Orlando
Riyadh, Dammam Warsaw T1 Abu Dhabi Hong Kong Christchurch NS Station (NL) and Jeddah
59 DIVERSIFIED GROWTH PATHS: ORGANIC GROWTH (3/3)
A favourable product mix evolution (in €bn, revenue@100% 2016-2018)
€4.2bn +8.1% €4.5bn +8.2% €4.9bn Liquor 6% 6% 6%
Tobacco 17% 17% 17%
Gourmet food 9% 9% 8% & confectionary Perfume & Cosmetics 14% 14% 14%
Fashion 10% 11% 12%
Food & Beverage 19% 21% 22%
Print 10% 8% 7%
Other* 15% 14% 16%
2016 2017 2018
* Other mainly includes: travel accessories, gifts & souvenirs and convenience products (phone cards, lottery, etc.). 60 DIVERSIFIED GROWTH PATHS: SELECTIVE M&A OPERATIONS
Focus on M&A operations performed from 2014 to 2019
Airest Saveria Gerzon ▪ Closed in April 2014 ▪ Closed in April 2015 ▪ Closed in January 2014 ▪ 200 PoS in 11 countries ▪ 17 PoS located at JFK T4 ▪ 12 PoS in Schiphol airport ▪ Operations mainly in Foodservice ▪ Operations in Fashion & Conf. ▪ Operations in Fashion ▪ Annual sales: €200m ▪ Annual sales: €20m ▪ Annual sales: €55m Paradies ▪ Closed in October 2015 ▪ 520 PoS located in 75 airports ▪ Operations in the 3 businesses ▪ Annual sales: €480m
Hojeij Branded Foods Inflight Service activities in Coffee Fellows Poland and Northern Ferries ▪ Closed in November 2018 ▪ Closed in January 2014 ▪ Closed in June 2017 ▪ 124 PoS in 38 airports ▪ 18 PoS in German train ▪ 9 PoS in airports and seaport stations ▪ Operations in Foodservice ▪ Operations in Duty Free ▪ Operations in Foodservice ▪ Annual sales: $225m ▪ Annual sales: €20m ▪ Annual sales: €10m International Duty Free (IDF) ▪ Signed in July 2019 ▪ 30 PoS in airports and train station ▪ Operations in Duty Free and Foodservice
▪ Annual sales: €183m 61 PARADIES LAGARDÈRE: CREATING A REGIONAL LEADER
Overview of Paradies Lagardère
Paradies Lagardère 2017 key figures A new entity managed A unique and #3 by an experienced complementary North in North leadership team American footprint America
98 airports
6,000 employees A brand portfolio tailor A strong and made for the North long-lasting relationship $852m American market with landlords revenue
Source: Paradies internal data. 62 ACQUISITION OF HOJEIJ BRANDED FOODS: REINFORCING LAGARDÈRE TRAVEL RETAIL IN NORTH AMERICA AND IN FOODSERVICE GLOBALLY (1/3) Profile of HBF HBF 2017 key figures Successful acquisition Leading airport Recognised operational in 2017 of Vino Volo, Foodservice travel excellence with leading #1 airport wine bar 124 retail operator in proprietary and partner chain in the US and restaurants North America brands across Canada 38 airports Transaction overview 40+ ▪ Acquisition of 100% of Hojeij Branded Foods (HBF) Transaction summary ▪ Purchase price: $330 million2 brand relationships and ▪ Attractive synergy potential with run rate of circa $10 million per annum the proprietary EBITDA, synergies and fourth year following the acquisition concepts ▪ Transaction EBITDA multiple (on a valuation gross of partners share) of implied multiple seven times estimated 2018 Pro Forma EBITDA3 including run rate synergies $225m revenue1
1 Including 12 months revenue of Vino Volo, acquired in July 2017. 2 Based on debt and cash free valuation, net of partners share in operating JVs (ACDBE programmes) estimated to be 16% over the period of the business plan. 63 3 Pro Forma EBITDA is defined as Reported EBITDA adjusted for the run-rate performance of shops opening and closing in 2018 as well as the USD 10 million run-rate impact of recurring synergies. ACQUISITION OF HOJEIJ BRANDED FOODS: REINFORCING LAGARDÈRE TRAVEL RETAIL IN NORTH AMERICA AND IN FOODSERVICE GLOBALLY (2/3)
Strategic rationale
▪ A large travel foodservice market (50% of total North American travel retail market) supported An attractive travel by sound drivers and significant potential for growth thanks to: foodservice market in North America ✓ Solid traffic forecasts ✓ Very dynamic segment with growing demand from travelers and landlords’ awareness
▪ Combining the activities of Paradies Lagardère and HBF creates the third-largest operator in the North American airport travel retail and restaurant industry. ▪ With operations in more than 110 airports, the combination of HBF and Paradies Lagardère Reinforcing would generate an overall annual sales in excess of $1.1 billion, with circa $350 million in Lagardère Travel Retail in North America food and beverage sales. ▪ Both Lagardère Travel Retail and HBF are Atlanta-based and have a strong cultural fit and high quality oriented business models ▪ A very strong and experienced management team
64 ACQUISITION OF HOJEIJ BRANDED FOODS: REINFORCING LAGARDÈRE TRAVEL RETAIL IN NORTH AMERICA AND IN FOODSERVICE GLOBALLY (3/3) Expected synergies
▪ Roll-out of HBF concepts/brands, well positioned for specific consumer needs Sales uplift synergies ▪ Improved menu tailoring and customer targeting ▪ Operational know-how and excellence in execution
▪ Alignment of purchasing conditions to the extent possible on food products as well as on beverages COGS1 synergies ▪ Consolidation of volumes between Paradies Lagardère and HBF, which will improve bargaining power with vendors ▪ Better costs of goods management
▪ Creation of a dedicated Foodservice business unit, which will improve efficiencies G&A2 & other synergies ▪ Consolidation and rationalisation of central functions and costs ▪ Convergence towards a dedicated and business-oriented IT system
Total quantified synergies $10 millions3 run rate
1 Cost Of Goods Sold. 2 General and administrative. Full potential of recurring synergies to be reached in 2021 3 Pre tax. 65 ACQUISITION OF INTERNATIONAL DUTY FREE: REINFORCING LAGARDÈRE TRAVEL RETAIL COMPETITIVE POSITION IN EUROPE (1/3) Profile of IDF IDF 2018 key figures Belgium’s leading High-quality Duty Free Unique Premium Travel Retail operator & Fashion outlets, all Chocolate retail with long-term recently refitted or experience through contracts and currently under refit, The Belgian Chocolate operations in and first-class House 30 Luxembourg and Kenya execution standards points of sales Transaction overview
3 ▪ Acquisition of 100% of International Duty Free (IDF) countries Transaction summary ▪ Purchase price: €250 million2
▪ IDF key figures in 2018: sales of €183 million, with a secured portfolio of €183m long-term contracts revenue1 ▪ Attractive synergy potential with run rate of circa €7 million per annum after EBITDA, synergies and the third year following the acquisition implied multiple ▪ Relutive on all financial indicators including RESOP (above 9%) and high cash conversion rate ▪ Transaction EBITDA multiple (on a valuation gross of partners share) of around 8 times 2020 Pro forma EBITDA3
1 Full year 2018. 2 Based on debt and cash free valuation. 66 3 Year 1 pro-forma EBITDA is defined as Reported EBITDA adjusted for the EUR 7 million run-rate impact of recurring synergies. ACQUISITION OF INTERNATIONAL DUTY FREE: REINFORCING LAGARDÈRE TRAVEL RETAIL COMPETITIVE POSITION IN EUROPE (2/3)
Strategic rationale
A mature and secured ▪ Secured existing operations and mid-term development opportunities in Belgium: business environment, ✓ Long-term contracts on mature platforms (Brussels and Charleroi airports, Brussels Midi train station) ✓ Mid-term expansion opportunities in Belgium offering further opportunities
▪ Globally: ✓ Consolidate Lagardère Travel Retail’s position as #2 in Travel Retail (excluding downtown) Reinforcement of ✓ Position as the third largest global Duty Free & Fashion operator in airports Lagardère Travel Retail ▪ In Europe: competitive position ✓ Enter a new country with a strong position locally ✓ Consolidate our leading position globally ✓ Create another European flagship airport
▪ A perfect fit of IDF with Lagardère Travel Retail’s strategy and culture, supporting its four positioning pillars and facilitating a smooth integration: ✓ Retail excellence: high-quality stores, recently refitted, and first-class in-store execution in line with Lagardère’s Perfect fit with Lagardère standards Travel Retail positioning ✓ Partner of choice: close collaboration with the key landlords and privileged relations with suppliers ✓ Profitable expansion: profitable operations with relutive effect on all Lagardère Travel Retail’s ratios, supported by long- term contracts which will increase Lagardères’ average remaining life of contracts ✓ Agile and efficient organization: entrepreneurial and innovative culture, with an experienced and highly involved management who will stay onboard 67 ACQUISITION OF INTERNATIONAL DUTY FREE: REINFORCING LAGARDÈRE TRAVEL RETAIL COMPETITIVE POSITION IN EUROPE (3/3)
Expected synergies
▪ Alignment of purchasing conditions to the extent possible on Retail products and Chocolates 1 COGS synergies ▪ Consolidation of volumes between Lagardère Travel Retail and IDF, leading to an improved bargaining power with the suppliers
▪ Convergence towards a dedicated and business-oriented IT system
Other synergies ▪ SG&A optimization leveraging the integration with Lagardère Travel Retail
TotalTotal quantified quantified synergies synergies €7 million2 run rate
Full potential of recurring synergies$10 millions to be reached3 run rate in 2022
1 Cost Of Goods Sold. 2 Pre tax. 68 ABU DHABI INTERNATIONAL AIRPORT: A MAJOR STEP IN MIDDLE-EAST
Overview of Abu Dhabi contract awarded
▪ 10-year contract on core duty free categories, confectionery and fine foods Key ▪ 13 PoS over 3,000 sq.m. figures ▪ 10-year estimated cumulated revenue: €2.1bn ▪ 7 Food and Beverage contracts awarded in April 2016
50/50 joint venture created to bid and run operations
Multi-category shops Le Club iconic shop Source: Lagardère Travel Retail internal data. 69 2019 SPORTS EVENTS CALENDAR
2019
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
AFCON
AFCON U20 AFCON U17 AFCON U23 AFCON Qualifiers (matchday 6) Football Africa
Champions League & Confederation Cup 2018-19
Super Cup Super Cup (for CL&CC 2018) (for CL&CC 19)
AFC Champions League + AFC Cup
Football Asia Asian Cup
AFC Futsal
Singapore Open Australia Open Golf
Media Handball Men WC 70 APPENDIX: FINANCIAL UPDATES AN EXCELLENT SHAREHOLDER RETURN
270 Lagardère share: +132%
250 Shareholder return* Indexes based 230 (100 at 1 January 2013)
210
190
170
150 CAC 40: +91% STOXX Europe 600 Media: +91% 130
110
90 01/01/2013 01/01/2014 01/01/2015 01/01/2016 01/01/2017 01/01/2018 01/01/2019 Lagardère CAC 40 Stoxx Europe 600 Media
* Source: Capital IQ and Datastream as of 28 June 2019. 72 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 the Group's operating performance, along with the financial metrics defined by the IASB. In the context of the first-time application of IFRS 16 – Leases, effective 1 January 2019, the Group has elected to retain its existing alternative performance measures with certain modifications, in particular the neutralisation of pure accounting effects and distortions created by the new standard on the concession's businesses. From 1 January 2019, these indicators are monitored by the Executive Committee to assess operating performance and manage the business, along with the financial metrics defined by the IASB. These indicators are calculated based on accounting items taken from the consolidated financial statements prepared under IFRS and a reconciliation with those items is provided either in this presentation or in the press release or in the notes to the consolidated financial statements. A dedicated presentation relating to the impacts of IFRS 16 on the alternative performance indicators was held on 12 February 2019 and is available on the Lagardère website (http://www.lagardere.com/fichiers/fckeditor/File/Relations_investisseurs/Publications/2019/IFRS16/2019_Session_IFRS_16.pdf). ▪ Recurring EBIT (Group recurring EBIT). The Group's main performance indicator is recurring operating profit of fully consolidated companies, which is calculated as follows: Profit before finance costs and tax excluding: • Income (loss) from equity-accounted companies before impairment losses; • Gains (losses) on disposals of assets; • Impairment losses on goodwill, property, plant and equipment, intangible assets and investment in equity-accounted companies; • Net restructuring costs; • Items related to business combinations: - Acquisition-related expenses; - Gains and losses resulting from purchase price adjustments and fair value adjustment due to changes in control; - Amortisation of acquisition-related intangible assets. • Specific major disputes unrelated to the Group's operating performance; • Items related to leases: - Cancellation of fixed rental expense* on concessions; - Depreciation of right-of-use assets on concessions; - Gains and losses on lease modifications. 73 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.
▪ Operating margin is calculated by dividing recurring EBIT of fully consolidated companies (Group recurring EBIT) by revenue.
▪ Recurring EBITDA over a rolling 12-month period is calculated as recurring EBIT of fully consolidated companies (Group recurring EBIT) plus dividends received from equity-accounted companies, less amortisation and depreciation charged against intangible assets and property, plant and equipment, less amortisation of signing fees, less depreciation of right-of-use assets for buildings and other items, less cancellation of fixed rental expense for buildings and other items.
▪ Free cash flow is calculated as cash flow from operations before changes in working capital plus net cash flow relating to repayment of lease liabilities and associated interest paid, changes in working capital, taxes paid, and net cash flow relating to acquisitions and disposals of intangible assets and property, plant and equipment.
▪ Net debt is calculated as the sum of the following items: short-term investments and cash and cash equivalents, financial instruments designated as hedges of debt, non-current debt and current debt.
74 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 goodwill, property, plant and equipment, intangible assets and investments in equity-accounted companies; • Net restructuring costs; • Items related to business combinations: - Acquisition-related expenses; - Gains and losses resulting from purchase price adjustments and fair value adjustments due to changes in control; - Amortisation of acquisition-related intangible assets. • Specific major disputes unrelated to the Group's operating performance; • Items related to leases: - Cancellation of fixed rental expense* on concessions; - Depreciation of right-of-use assets on concessions; - Interest expense on lease liabilities on concessions; - Gains and losses on lease modifications. • Tax effects of the above items, including the tax on dividends paid in France; • Non-recurring changes in deferred taxes; • Adjusted profit attributable to minority interests (Profit for the period attributable to minority interests plus minority interests on the above items).
* Cancellation of fixed rental expense is equal to the repayment of the lease liability, the associated change in working capital and interest paid in the statement of cash flows. 75 LAGARDÈRE IR TEAM
IR team details Calendar* (all time is CET)
Florence Lonis • Publication of Q3 2019 results 7 November 2019 at 8:00 a.m. Chief of Investor Relations Tel: +33 1 40 69 18 02 [email protected]
Nicolas Bogler Investor Relations Officer Tel: +33 1 40 69 67 88 [email protected]
Sophie Reille Assistant Tel: +33 1 40 69 21 14 [email protected]
Address: 42 rue Washington - 75408 Paris - France
Tickers: Bloomberg (MMB FP), Reuters (LAGA.PA)
* These dates can be subjected to change. 76