INVESTOR PRESENTATION APRIL 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 slide 9
slide 12
slide 16
slide 20
slide 22
PERFORMANCE slide 25
GUIDANCE slide 33
Appendix slide 35
3 GROUP STRATEGY A SIMPLER, MORE AMBITIOUS AND MORE FOCUSED BUSINESS PROFILE
. A Group structured around two priority pillars, to ensure each one is given all the necessary resources to dominate their sectors:
Power engine Growth engine
► Improve the Group’s industrial profile: simpler, more ambitious and more focused. ► Improve cash generation to finance the growth of our businesses.
5 2018, THE YEAR OF THE STRATEGIC REFOCUSING ROLL OUT…
. … with significant disposals transactions completed or engaged at Lagardère Active
• International Radios • Most of the Press Magazine titles Closed • Digital Assets (including e-Health activities)
• Television business (excluding Mezzo) Under exclusive negotiations
. … and significant reinvestments
• Lagardère Travel Retail: - Hojeij Branded Foods Acquisition • Lagardère Publishing: - Worthy Publishing Group Acquisition - Gigamic Acquisition
► Acquisitions wholly financed out of proceeds of non-core assets: Lagardère Active businesses and property assets.
6 2019, A TRANSITIONING YEAR TO FOLLOW UP ON STRATEGIC REFOCUSING
. With a target scope composed of:
• Lagardère Publishing and Lagardère Travel Retail « Core Businesses » • Other Activities: - Lagardère News - Entertainment businesses - Lagardère Corporate (including Lagardère Active Corporate to be extinguished progressively by 2020)
. And a non-retained scope splitted into:
• Lagardère Sports • Lagardère Studios Not yet disposed • Mezzo
7 SUCCESSFULL REINVESTMENTS IN CORE BUSINESSES TO CREATE VALUE
. At Lagardère Publishing
• Very positive return on investment track record with acquisitions since 1996. • Recent acquisitions to continue to increment catalogue and to buy properties.
. At Lagardère Travel Retail
• Strong and diversified concessions network. • Selective past acquisitions (advantageous multiples) with smooth integration and on-going synergies.
► Very strong track record of building global leaders both organically and via M&A.
8 GROUP PROFILE A DIVERSIFIED GROUP WITH LEADING BRANDS AND MARKET POSITIONS
2018 revenue breakdown by division 2018 revenue breakdown by region Latin America, Africa, Middle East Asia- 3% Pacific 9%
France 31% • No. 3 worldwide (Trade) US and Canada €7,258m • No. 3 worldwide in 31% 21% Travel Retail • A multi-segment publisher 51% • A major player in the digital • Robust expertise in Europe sector three business lines 36%
€7,258m 2018 recurring EBIT breakdown by division
7% 12% 6% • Leader in football in Africa, • No. 3 in scripted TV Production Asia and Europe in France • Leader in sponsorship and 18% media rights globally • Major player in Press and Radio €401m in France • Leader in golf talent 46% management
29% 10 A MEASURED, WELL-BALANCED FINANCIAL STRATEGY
… providing long-term viability for an attractive A tight rein on net debt… dividend payout policy
Historical dividend (€/share)
Leverage ratio Ordinary dividend per share (€) Net debt/Recurring EBITDA** Extra dividend per share (€)
9.0
6.0 5.7%* €1,368m €1,375m
1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 2.2x 2.1x* 2011 2012 2013 2014 2015 2016 2017 2018 *Dividend yield based on €22.80 closing price on 12 March 2019. 31/12/2017 31/12/2018
. Investment capacity of €500m assuming . Ordinary dividend stable over the long term (€ per share). a leverage ratio of 3x. . Large payouts to shareholders following the one-off sales of non-strategic shareholdings. . Attractive ordinary dividend yield given the current low interest rate environment.
* On a proforma basis (as per credit facility covenant), including 12 months of HBF recurring EBITDA. On a reported basis, ratio is 2.2x. ** Alternative Performance Measure (APM) - See Glossary on slides 51 to 54. 11
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%
Top 3 Consumer book publishers worldwide Ranking in core markets** Based on 2018 pro-forma turnover (€m) (Consumer: Trade & Education including Higher Education)
3,679 3,359* 2,252 #1 #2 #3 #4 #2
*2017 data (PRH will release its financial results on March 26th 2019). **Consumer (trading and education). 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. 13 GROWTH FUELLED BY ACQUISITION AND INTERNATIONAL DEVELOPMENT
Revenue evolution (€m) and cash flow from operations Growth fuelled by acquisitions (2003-2018) before changes in working capital
(2003-2018) 2018
2017
2,252 2016 Revenue Cash flow from operations 2015 before changes in working capital 2014
2013
2011
959 2009 A.
2008
2007
197 2006 83 2004 2003 2018 2003 14 RIDING THE DIGITAL WAVE
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.
Exploring new opportunities: Mobile gaming startups acquisitions Mobile apps for cross-fertilization with all imprints (Neon Play / Brainbow–Peak/ Is Cool).
E-education Spearheading new educational practices: from the digital multi-support version of a textbook to enhanced classroom content including game-changing self-assessment, solutions: acquisition of Rising Stars.
15
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 21% 13% Travel Essentials 43% €3,673m Duty Free €3,673m France & Fashion 24% 40% EMEA (excl. France) 42%
*IFRS revenue, excluding Distribution.
Top 10 Travel Retail operators worldwide Ranking in core markets
€bn, sales @100%, 2017 Top #1 #4 #1 10 Foodservice 7.2 Duty Free & Fashion
Travel Essentials Core Duty Fashion in 4.8 1.6 * Foodservice Travel 4.7 4.6 Essentials Free Europe 3.7 3.4 3.2 2.7 2.1 2.0
* Pro forma including 230m$ HBF sales. 17 Sources: Companies reports, The Moodie Report, Lagardère Travel Retail estimates. DIVERSIFIED GROWTH PATHS A strong development mainly Organic Growth driven by organic growth Gain of new concessions August 2018 The Netherlands: Foodservice on national railway Bridge sales growth Late 2017 Shanghai, Beijing, Wuhan: Duty Free & Fashion, Foodservice (€m at constant exchange rates, IFRS consolidated sales, 2017-2018) September 2017 Dakar: Duty Free and Travel Essentials 294 41 May 2017 Hong Kong: Liquor & Tobacco (with China Duty Free Group) *** (88%) (12%) 3,736 March 2017 Geneva: Duty Free 41 End 2016 Riyadh, Dammam, Jeddah: Duty Free Existing 131 concessions November 2016 Poland: master concession won at Gdansk airport Abu Dhabi: Duty Free & Foodservice +4.5%* December 2015 Expansion of existing concessions +9.9% Late 2017 Auckland: opening of a new Duty Free store 163 February 2017 Prague: Take-over of 9 additional Duty Free stores New concessions** December 2016 Rome: Foodservice & Duty Free in Avancorpo Terminal 3,401 September 2015 Nice: opening of new T1 with an innovative food concept External Growth 2017A Organic External 2018A sales growth growth sales November 2018 North America: acquisition of Hojeij Branded Foods June 2017 Poland: acquisition of Inflight Service activities
* On a like-for-like basis. North America: acquisition of Paradies (present in ** Net of contracts terminated over the period. October 2015 *** At 2017 exchange rate. more than 76 airports) 18 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% 4,0% 135 3.5% 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. 19
A DIVERSIFIED BUSINESS MIX WITH SOLID LEADING POSITIONS
2018 revenue by geographic area 2018 revenue by activity
Rest of World Others 5% 16%
Lagardère Non-Core France Studios Press Spain 24% 27% 7% 77% €895m €895m
TV Press Channels 15% 12%
International French Radio Radio 3% 14%
Peers Sound market positions
Radio + TV + Internet #1 #3 #1
Magazine publisher Scripted TV production Youth and family in France in France TV channels in France
21
A GLOBAL NETWORK COMBINING INTERNATIONAL EXPERTISE WITH LOCAL MARKET KNOWLEDGE
2018 revenue by geographic area 2018 revenue by activity
Media rights Rest of France Live Entertainment 16% World 18% 10% 21%
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 sponsorship In golf talent in Africa, Asia and media rights management and Europe globally
23 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 n.m. 6.9% YEARS 18 . Leverage our Media and strategies; 30 of continuous partnership Sponsorship sales network to - production & management with CGF of digital content; create value for rights holders > Contract until 2030 - mobile and tablet apps for (33) rights-holders; . Entered into exclusive media 2012 2018 Tailored partnerships - social apps & activations for distribution partnership with rights-holders and brands; International Handball EUROPEAN - data analysis. FOOTBALL Federation. 100 & RUGBY CLUBS
24 GROUP PERFORMANCE IN 2018 HIGHLIGHTS
(€m) 2017* 2018 +2.5% consolidated Revenue 7,084 7,258 . Solid performance +3.3% like-for-like** from Travel Retail Group recurring EBIT** 399 401 and Sports & Entertainment Group operating margin** 5.6% 5.5% divisions Profit – Group share 176 194 . Due to the absence of curriculum Adjusted profit – Group share** 214 222 reform, lower performance from Free cash flow** 283 471 Publishing Net debt at end of year** (1,368) (1,375) . Free cash flow substantially Earnings per share (in €) 1.36 1.49 improved. Ordinary dividend per share (in €) 1.30 1.30***
* Restated for IFRS 15 using the retrospective method. ** Alternative Performance Measure (APM) – See Glossary on slides 51 to 54. *** Ordinary dividend that will be recommended at the General Meeting on 10 may 2019. 26 LAGARDÈRE PUBLISHING: ACTIVITY
2018 revenue by geographic area 2018 revenue by activity
Other Education Other France 17% 14% 18% 28% 16%* 16%* 19%* 29%* Illustrated Spain Partworks Books 6% €2,252m 12% €2,252m 13% 6%* 12%* 13%*
US & UK & General Canada Australia Literature 29% 19% 44% 27%* 19%* 43%* *% of revenue in 2017 Change in recurring EBIT (€m) and operating margin (%)
9.2% 8.4%
210 190
2017 2018 27 LAGARDÈRE TRAVEL RETAIL: ACTIVITY
2018 revenue by geographic area 2018 revenue by activity
North America Asia-Pacific 21% 13% 22%* 12%* Travel Duty Free & Essentials Fashion 43% 40% €3,673m €3,673m EMEA France 44%* 39%* (excluding 24% France) 25%* 42% 41%* Foodservice 17% 17%* *% of revenue in 2017 Change in recurring EBIT (€m) and operating margin (%)
3.3% 3.3%
112 119
2017 2018 28 LAGARDÈRE ACTIVE: ACTIVITY
2018 revenue by geographic area 2018 revenue by activity Others 5% Other 5%* 16% Lagardère 16%* Studios 24% Non-Core Spain France 21%* Press 7% 27% 77% 27%* 6%* €895m 78%* €895m
TV Press Channels 15% 12% 11%* 15%* International French Non-core business Radio Radio 3% 14% Retained business *% of revenue in 2017 restated for IFRS 15 using the retrospective method. 6%* 14%* Change in recurring EBIT (€m) and operating margin (%)
7.5%* 8,4%
70 75
2017 2018 *% margin in 2017 restated for IFRS 15 using the retrospective method. 29 LAGARDÈRE SPORTS AND ENTERTAINMENT: ACTIVITY
2018 revenue by geographic area 2018 revenue by activity
Live Entertainment Media rights France Other 10% 16% * 21% 18% 10% 22%* 25%* 18%*
€438m Other €438m Asia & Germany 27% Australia 20% 24%* 17% 20%* 17%* Marketing rights Rest of Europe UK 47% 44%* 11% 13% 12%* 8%* *% of revenue in 2017 restated for IFRS 15 using the retrospective method. Change in recurring EBIT (€m) and operating margin (%)
6.9% 4.7%* 30 22
2017 2018
*% margin in 2017 restated for IFRS 15 using the retrospective method. 30 CONSOLIDATED STATEMENT OF CASH FLOWS
(€m) 2017* 2018
Cash flow from operations before changes in working capital 536 505 Substantial improvement Changes in working capital (71) 55 attributable to Lagardère Publishing and Lagardère Taxes paid excluding taxes on property disposals (61) (35) Travel Retail Net cash from operating activities** 404 525 Purchases/disposals of tangible and intangible assets*** (246) (237) Including €130m at Lagardère Travel Retail with Free cash flow excluding property disposals 158 288 a significant portion relating to new stores/concessions Proceeds from property disposals net of tax paid and related refitting costs 125 183 Free cash flow**** 283 471 In 2018, HBF acquisition Purchases of investments (68) (340) covered by proceeds from Disposals of investments 19 148 non-core assets disposals Net cash from operating and investing activities 234 279 Dividend paid and other (143) (229) Interest paid (70) (57) Change in net debt 21 (7) Net debt** (1,368) (1,375)
* Restated for IFRS 15 using the retrospective method. ** Before tax paid on property disposals. *** Excluding property disposals and refitting costs. **** Alternative Performance Measure (APM) – See Glossary on slides 51 to 54. 31 FINANCING POLICY
. A stable debt level. . HBF acquisition funded by non-core . 2019 Bond refinancing will reshuffle asset disposals (Lagardère Active assets and office buildings) repayment schedule positively
Leverage ratio Net debt/Recurring EBITDA** Authorised credit lines**: €1,250m
€1,368m €1,375m €499m Cash*: €492m 2.2x 2.1x* €71m €297m €710m €152m €496m €26m €48m 31/12/2017 31/12/2018 €4m Available 2019 2020 2021 2022 2023 2024 & cash beyond
* On a proforma basis (as per credit facility covenant), including 12 months of HBF *Short-term investments and cash, excluding €8m of derivative assets. recurring EBITDA. On a reported basis, ratio is 2.2x. **Undrawn Group credit facility excluding authorised credit lines at divisional level. ** Alternative Performance Measure (APM) - See Glossary on slides 51 to 54. 32 GUIDANCE GUIDANCE 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 disposed to date (which represented €78 million in 2018) is expected to be between €80 million and €90 million on a full-year basis.
* Including IFRS 16 impact on buildings and other only. Impact on concession contracts of Travel Retail is neutralised in REVISED Recurring EBIT. See Glossary on slide 51 to 54. ** 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 licence), the Entertainment businesses, the Group Corporate function, and the Lagardère Active Corporate function whose costs will be wound down by 2020. *** Recurring EBIT for assets disposed to date 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.
34 APPENDIX: BUSINESS UPDATES TRANSFORMATION METHOD
1 A strategy to drive growth and improve profitability and cash generation, while maintaining a long-term vision.
2 Choice and objective of the timing of disposals and reinvestments.
3 Reinvestments broadly accretive in terms of recurring EBIT, cash generation and acquisition multiples.
4 Launched in June 2017, our transformation has resulted in disposals in progress and a strategic acquisition for Lagardère Travel Retail in North America, with the Group exploring other avenues for reinvestment.
36 PERSEUS ACQUISITION
EXPANSION OF NON-FICTION AND BACKLIST PUBLISHING PROGRAMS
. 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, etc. . Market Positionning: Major general trade publisher in the United States. . Markets: United States + United Kingdom. . 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.
37 TRAVEL RETAIL ORGANIC GROWTH DRIVERS
A favourable product mix evolution (in €m, 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.). 38 GROWTH HAS BEEN DRIVEN BY THE AWARD OF MAJOR TENDER OFFERS IN ALL THREE BUSINESSES… Focus on major airport tender offers won since 2014 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) & Jeddah
39 … AND BY SELECTIVE M&A OPERATIONS
Focus on M&A operations performed from 2014 to 2018
Gerzon Airest Saveria
. Closed in January 2014 . Closed in April 2014 . Closed in April 2015 . 12 PoS in Schiphol airport . 200 PoS in 11 countries . 17 PoS located at JFK T4 . Operations in Fashion . Operations mainly in Foodservice . Operations in Fashion & Conf. . Annual sales: €55m . Annual sales: €200m . Annual sales: €20m
Paradies
. Closed in October 2015 . 520 PoS located in 75 airports Coffee Fellows . Operations in the 3 businesses Inflight Service activities in Poland and Northern Ferries . Closed in January 2014 . Annual sales: €480m . 18 PoS in German train stations . Closed in June 2017 . Operations in Foodservice . 9 PoS in airports and seaport Hojeij Branded Foods . Annual sales: €10m . Operations in Duty Free . Closed in November 2018 . Annual sales: €20m . 124 PoS in 38 airports . Operations in Foodservice . Annual sales: $225m
40 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. 41 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
1Including 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. 42 3Pro 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
43 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
1Cost Of Goods Sold. Full potential of recurring synergies to be reached in 2021 2General and administrative. 44 3Pre tax. 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. 45 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)
1Ratios 90% within standard deviation from the mean. 2MG could be fixed, indexed on traffic and/or inflation, monthly or annual. Source: Lagardère Travel Retail estimates. 46 ELLE: THE WOMEN BRAND
47 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
48 APPENDIX: FINANCIAL UPDATES AN EXCELLENT SHAREHOLDER RETURN
270 Lagardère share: +121%
250 Shareholder return* Indexes based 230 (100 at 1 January 2013)
210
190
170
150 CAC 40: +77% STOXX Europe 600 Media: +82% 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 31 December 2018. 50 GLOSSARY (1/4)
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. 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.
. The like-for-like change in revenue is calculated by comparing: • 2018 revenue to exclude companies consolidated for the first time during the period, and 2017 revenue to exclude companies divested in 2018; • 2018 and 2017 revenue based on 2017 exchange rates. . 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.
51 GLOSSARY (2/4)
. 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. . 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; • 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 on the above items. . Free cash flow is calculated as cash flow from operations plus 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.
52 GLOSSARY (3/4)
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 concessions businesses. From 1 January 2019, these indicators will be monitored by the Executive Committee to assess operating performance and manage the business, along with the financial metrics defined by the IASB. These indicators will be calculated based on accounting items taken from the consolidated financial statements prepared under IFRS anda reconciliation with those items will be provided. To prevent any confusion during the transition period between the alternative performance measures before and after the application of IFRS 16, each corresponding definition is preceded with “REVISED”. . REVISED Recurring EBIT (REVISED 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: (NEW) - Cancellation of fixed rental expense* on concessions; - Depreciation of right-of-use assets on concessions; - Gains and losses on lease modifications.
* 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. 53 GLOSSARY (4/4) . REVISED Recurring EBITDA over a rolling 12-month period is calculated as REVISED recurring EBIT of fully consolidated companies (REVISED 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 (NEW), less cancellation of fixed rental expense* for buildings and other items (NEW). . REVISED Adjusted profit – Group share is calculated on the basis of profit for the period, excluding non-recurring/non-operating items, net of tax 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: (NEW) - 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 on the above items. . REVISED Free cash flow is calculated as cash flow from operations including repayment of lease liabilities and associated interest paid (NEW) plus net cash flow relating to acquisitions and disposals of intangible assets and property, plant and equipment. * 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. 54 LAGARDÈRE IR TEAM
IR team details Calendar* (all time is CET)
Florence Lonis • Publication of Q1 2019 revenue 7 May 2019 at 8:00 a.m. Chief of Investor Relations Tel: +33 1 40 69 18 02 [email protected] • Publication of H1 2019 results 25 July 2019 at 5:35 p.m. Dounia Amouch Investor Relations Officer • Publication of Q3 2019 revenue Tel: +33 1 40 69 67 88 14 November 2019 at 8:00 a.m. [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. 55