Lagardère 2003-2012 Ten years of transformation Refocus on Media
2 Lagardère 2003-2012 / Ten years of transformation
2003 Organisation
Lagardère SCA Bank Arjil & Cie
High Tech Media & communication
100% 15.04% EADS Hachette Livre
100% Hachette Filipacchi Médias
Lagardère Active Broadcast 99.3% 27.4% MultiThématiques
Lagardère Active 100% Broadband
34% CanalSatellite
100% Hachette Distribution Services
3 Lagardère 2003-2012 / Ten years of transformation
2012: a Group organised around four major divisions, fully owned
Lagardère SCA
100% 100% 100% 100%
+ two main minority stakes:
: final exit (7.4%) expected in 2013.
France: 20% stake.
4 Lagardère 2003-2012 / Ten years of transformation
2003-2012 evolution: breakdown of net sales
2003 2012
8% 6% Hachette 28% Livre 36% 16% Hachette * Filipacchi Médias 5% 52% Lagardère Active** 14% 35% Hachette Distribution Services
*Proportional consolidation (15.04%). / **Lagardère Active Broadcast and Lagardère Active Broadband. 5 Lagardère 2003-2012 / Ten years of transformation
2003-2012 evolution: breakdown of recurring EBIT before associates
2003 2012
16% *** Hachette 35% Livre 27% *
31% Hachette Filipacchi Médias 16% 14% 57% Hachette 4% Distribution Lagardère Services Active**
*Proportional consolidation (15.04%). / **Lagardère Active Broadcast and Lagardère Active Broadband. / ***Negative recurring EBIT for Lagardère Unlimited in 2012. 6 Consolidation of leadership positions and expansion in new business areas
7 Lagardère 2003-2012 / Ten years of transformation
2003-2012: a changing media value chain
RIGHTS AND AGREGATION DISTRIBUTION CONTENT
Digital Value Print challenged & audience fragmentation
Our strategy:
Invest Consolidate & Develop non Digital print
8 Lagardère 2003-2012 / Ten years of transformation
The 2003-2012 strategy conducted by M&A activity… Acquisitions Disposals
Invest in rights and content Exit from challenged activities & weak positions
Sportfive Lagardère Unlimited US French newspapers World Sport Group International Magazine Publishing (PMI) Develop non print: Travel Retail Exit from print-related
SDA (JV with ADP) Duty Free in Eastern Europe Virgin stores AdR Retail (Rome) Travel Retail in Czech Republic DFS Wellington Digital Divest non core activities Newsweb LeGuide.com Doctissimo BilletReduc EADS T-Online NMPP* Consolidation of leadership
Vivendi Universal Publishing Hodder Headline Time Warner Book Group
*Nouvelles Messageries de la Presse Parisienne. 9 Lagardère 2003-2012 / Ten years of transformation
… delivered significant profile evolution… High growth* 100% +18 pts 80%
Emerging 60% Non
markets 40% advertising +6 pts 20% +8 pts
0% As % of net sales
2003 2012 Rights and Non paper content ** +11 pts +20 pts
DigitalDigital (Excl. (Excl. Services)Lagardère Services) +8 pts *Duty Free, Digital, TV Production, Lagardère Unlimited, DTT channels, Emerging markets. **Partworks, Reference, Practical guides, Digital (Lagardère Active), TV Production, licensing, Lagardère Unlimited. 10 Lagardère 2003-2012 / Ten years of transformation
… with proven results Despite economic crisis, the Lagardère group operating margin remained stable, while media peers endured a two points margin drop over the period.
220% Strong resilience in 170% 2009
100120% basis 70%
20%
-30% 2003-2011 change:
-80% Lagardère margin: flat Peers margin: -2 pts -130% GDP (global): +0.4 pt Adv. Market (global): -0.9 pt -180%
-230% 2003 2004 2005 2006 2007 2008 2009 2010 2011 Annual GDP growth rate (global) Annual ad market growth (global) Peers margin evolution Lagardère margin evolution
Source: brokers and peers financial information. 11 2003-2012: Success Stories sample
12 Lagardère 2003-2012 / Ten years of transformation
Lagardère Publishing : from world #13 in 2003 to world #2 in trade publishing
+2m 116m 5m +6m 111.6m m + +2m 2m+ 2m+ France Worldwide Worldwide France France UK
6m 153m 64m 19m +7m France USA USA Worldwide Spain Number of copies sold 13 Lagardère 2003-2012 / Ten years of transformation
Lagardère Publishing: successful transition to digital
1st publisher in the world to sign an agreement with Google protecting authors’ and publishers’ rights.
#1 supplier of e-books to the United Kingdom market.
#1 US publisher to sell more than 10m e-books by the same author (James Patterson).
A strategy aimed at maintaining the publisher’s position on the book value chain
14 Lagardère 2003-2012 / Ten years of transformation
Elle, a leading and prestigious global brand (1/2) 2003 2012
Paid circulation Elle France: 321K 384K Nb of weekly copies Ad sales in France: €59m €63m
International editions : 58 76
International editions €351m €465m sales :
Worlwide in 2012: 54 200 ad pages: #1 worlwide, 30% market share(1) 21m readers 6.6m copies sold/month
Worlwide in 2012: 10 900 ad pages: #1 worlwide 10m readers
(1)High-end women’s magazine segment. 15 Lagardère 2003-2012 / Ten years of transformation
Elle, a leading and prestigious global brand (2/2)
Successful diversification:
Nb of product categories x3 in 10 years
Elle products in 80 countries in 2012 (vs. 40 in 2003)
20 000 sales outlets (30% exclusive stores and dedicated corner stores)
Elle shops, clothes, shoes, kitchen utensils, Elle coffee-shop (Vietnam), Elle cosmetics, Elle cars…
16 Lagardère 2003-2012 / Ten years of transformation
Aelia: success story of a major player in Travel Retail (1/2) 2003 2012
Nb stores: 126 294
Countries: 1 15
Retail 13K sqm 54K sqm Space:
Addressed 55m pax 200m pax Traffic:
Net sales (€m) 1,021 10.2% CAGR*
427
*Compound Annual Growth rate. 17 Lagardère 2003-2012 / Ten years of transformation
Aelia: success story of a major player in Travel Retail (2/2) “Best confectionery Best new Fashion & store worldwide Best Beauty new Leathergoods store 2011 (Dreamstore)” 2012 store 2007 The Fashion Gallery, So Chocolate, Roissy CDG Singapore Changi Airport Singapore Changi Airport
18 Lagardère 2003-2012 / Ten years of transformation
Lagardère Unlimited: creation of a leading market position worldwide since 5 years (1/2) High exposure to emerging markets: Key positions: 2012 net sales breakdown
#1 in football in Africa Emerging markets 38% Leader in sports rights in Asia
#1 in comprehensive marketing for Western Europe Eastern Europe football clubs in Europe USA 56% 3% 6% Middle East Key partnerships: 5% Africa (1) (2) (3) (4) ASPAC AFC , CAF , IAAF , WTA 8% 20+ football clubs in Europe Latin America 21% 1%
(1) Asian Football Confederation. (2) Confederation of African Football. (3) International Association of Athletics Federation. (4) Women’s Tennis Association. 19 Lagardère 2003-2012 / Ten years of transformation
Lagardère Unlimited: creation of a leading market position worldwide since 5 years (2/2)
Asia’s largest sports marketing, media and event management company.
Over 150 employees in 8 offices across Asia.
Global Network with 300+ partners.
20 2003-2012: a sound financial policy
21 Lagardère 2003-2012 / Ten years of transformation
Balanced and long-term driven cash policy
Cash flow : cumulative 2003-2012
€2.6bn returned to shareholders Cumulative cash generated by Cumulative operations and use of cash Exceptional dividend disposals Share buyback Dividend
7% Other 501 500
Disposals €4,447m 419 37% Acquisitions
276 Organic 26% growth CF from 179 173 167 169 166 €6,635m 130 operations 5% Deleveraging
24% Return to sharholders 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
22 Lagardère 2003-2012 / Ten years of transformation
Sound financial situation A level of debt adjusted to the activity and to the economic environment Net debt excluding EADS (2002 to 2006) and ORAPA (2006 to 2008)
3 000 2,570 2,619 2 500 1,901 2,045 2 000 1,699 1,824 1,772 1,700 Average: €1,852m m m 1 500 1,269 € 1,120 1 000 500 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Well diversified funding sources over the period
Gross debt breakdown in 2003 Gross debt breakdown in 2012
9% 7% Bonds 27% Bank loan 28% 65% 64% Other
23 Sustainable Development and Corporate Governance 2003-2012 Achievements
24 Lagardère 2003-2012 / Ten years of transformation
2003-2012: Lagardère adapts to an increasingly demanding environment Keener awareness of environmental, ethical and social challenges More stringent Growing regulatory expectations of requirements (New employees, Economic shareholders, Regulations Act, Lagardère has moved etc.: transparency Grenelle into position to answer (governance), Environment risk management Forum) these challenges: (environmental risks, reputational risks, etc.), 1 Corporate governance: ethics, CSR* 1improve and observe good Environment practices. is changing deeply Sustainable development: 2setting up a CSR organisation and introducing pragmatic policies tailored to the Group's businesses. Observers
Continual focus (media, social networks, etc.)
*Corporate Social Responsibility. 25 Lagardère 2003-2012 / Ten years of transformation
Corporate Governance: improve and observe 1good practices
A renewed Supervisory Board with more women and increased independence
New Chairman (independent) since 2010.
Composition: diverse backgrounds and complementary expertise.
2003 2012
Independent members: 50% 87%
Women: 0% 33%
Smoother functioning: • creation of an Appointments and Remuneration Committee in 2010:
– organisation of a procedure for selecting new members.
• shorter terms of office;
• introduction of a self-assessment policy confirmed by an external evaluation. Compliance with the AFEP-MEDEF corporate governance code
26 Lagardère 2003-2012 / Ten years of transformation
Sustainable Development: setting up a CSR organisation and 2 introducing pragmatic policies tailored to the Group's businesses Regulatory Expectations of employees requirements & stakeholders
Increasing use of certified paper from The first publisher to display carbon and sustainably managed forests: origin of paper labels on its books. – 75% for Lagardère Publishing; – 100% for Lagardère Active magazines. Heightened social commitment (Jean-Luc Lagardère Foundation, Elle Foundation). Energy efficiency campaigns.
Carbon assessment in several divisions: Rallying employees to support corporate Lagardère Publishing, Lagardère Active, social responsibility efforts. Lagardère Services (Relay).
Drawing up a charter and codes for the Talent management project and diversity at Group's partners. Lagardère Active.
Four priorities 1 - Affirm our reputation as a responsible employer 2 - Develop our businesses with respect for the environment 3 - Promote information access and awareness 4 - To be a media group that creates social ties 27 2012 Full-Year Results March 7, 2013
28 2012: a significant step forward
29 2012 Full-Year Results / March 7, 2013
Expected sale of EADS (7.4% stake)
Multi-party agreement signed on December 5, 2012, clearing the way for EADS’ governance and shareholding structure to be streamlined.
The EADS Extraordinary General Meeting will be held on March 27, 2013.
Lagardère expects to sell all its EADS stake before July 31, 2013, probably through a share buyback program for the most part, and directly on the market for the remaining part.
Proceeds will be used for an exceptional cash return to shareholders and for deleveraging.
Strengthened long term financial solidity
€500m bond successfully issued in October 2012:
• lengthened debt profile maturity; • maintained liquidity on the long run.
30 2012 Full-Year Results / March 7, 2013
Canal+ France
Legal action on February 13, 2013, against Vivendi and Groupe Canal+ for the purpose of obtaining a restitution of €1.6 billion in cash to Canal+ France: • Lagardère believes that Canal+ France cash management agreement is legally contestable and that the use made by the Vivendi group of the latter has caused significant harm to Canal+ France; • appearance in the Paris commercial court on March 21, 2013.
Canal+ France IPO: • this situation has caused a deadlock preventing Canal+ France, as things stand, from going ahead with an IPO in normal conditions.
31 2012 Full-Year Results / March 7, 2013
M&A activity in 2012 is in line with our growth strategy
Acquisitions Disposals
LeGuide.com (shopping Declining OLF (book distribution Digital comparator) business in Switzerland) BilletReduc.com (online ticketing)
Travel AdR Retail (Rome) Retail DFS Wellington (Duty Free in Autralia and New Zealand) UG-Air (Duty Free in Prague)
Zaechel (sport events promotion & hospitality) Rights & SMAM (sports marketing rights consultancy in Australia) Content Gaylord Sports Management (athletes representation in the US)
32 2012 Full-Year Results / March 7, 2013
Successful integration of acquired companies
Net sales: +16% in 2012 (like-for-like) +24% in Q4 2012 (like-for-like)
Good performance, in line with expectations
Increase in sales and significant AdR Retail improvement of SPP* despite less favourable traffic figures. Initial targets exceeded.
*Sales per passenger. 33
2012 Business highlights
34 2012 Full-Year Results / March 7, 2013
General Literature: another great vintage
UK: 20 #1 titles in Sunday Times’ best-seller list.
US: 30 #1 titles in New York Times’ best-seller list for printed books and 6 titles for e-books.
UK, USA, France 800k 400k France France
E-books keep growing
US: 23% of net sales (+15% vs. 2011). UK: 23% of adult trade net sales (x2 vs. 2011).
Settlement with the DoJ and European Commission: agency model preserved.
35 2012 Full-Year Results / March 7, 2013
Leadership maintained in a challenging environment 2012 competitive positions in France:
1st magazine publisher
1st audiovisual production group
1st TV offer for Children & Family
1st media group on the web and mobile phones
Continued expansion in new businesses
Development in digital through new business models. Development of licensing activities: +11% in 2012. TV Production: confirmed position after a strong increase in 2011.
36 2012 Full-Year Results / March 7, 2013
Strong momentum in Travel Retail
France: +15% for Aelia up 8.2% UK: +10.7%, Germany: +8.8%
Asia: +32.5% Central Europe : +13.4%
Passenger traffic*: +4.2% worldwide Travel Retail +7.3% in ASPAC net sales
Dynamic organic growth and modernization of sales outlets:
• opening of new terminals in Roissy CDG, new Fashion concession in Xi’an (China), gain of Specialty outlets in Malaysia, of Food Services concession in Frankfurt train station, Dallas, Los Angeles and Chicago airports…
• gain of convenience outlets for the SNCF in France, renewal of the Eiffel Tower souvenirs concession in Paris…
• continued development of new concepts: iStore, Tech2go, Hubiz , Trib’s…
*Source: ACI data at October 31, 2012. 37 2012 Full-Year Results / March 7, 2013
Continued business development for Lagardère Unlimited Strong project momentum: • successfully relaunched the UAFA Arab cup (football); • managed the media and marketing rights of the Orange Africa Cup of Nations; • enlarged its portfolio of exclusive commercial relationships with German and French football clubs;
• expanded its talent representation practice in the US;
• reinforced its Stadium and Arena and Entertainment businesses international footprints.
Decreased exposure to premium media rights in Europe: • investment in other business models; • total exposure decreased by -6 pts in 2012 vs. 2011.
38 2012 Performance
39 2012 Full-Year Results / March 7, 2013
2012 results illustrate the resiliency of our Group
Activity remained stable despite a challenging environment: €7,370m (-0.2% like-for-like)
Recurring media EBIT slighlty above guidance: €358m (+€3m, i.e. +0.8%)
Cash from operating activities sharply up: €391m vs. €257m in 2011
Dividend maintained: 1.30€ per share*
*To be approved by the General Shareholders’ Meeting on May 3, 2013. 40 2012 Full-Year Results / March 7, 2013
Lagardère stock outperformed the market and the media index
Lagardère 125 CAC40
DJ Stoxx Media
115
105 100 basis
95 2012 performance: Lagardère: +23.9% 85 CAC 40: +15.2% DJ Stoxx Media: +17.4%
75
41 2013 Outlook
42 2012 Full-Year Results / March 7, 2013
Guidance 2013
In 2013, the Media recurring EBIT before associates is expected to increase by between 0% to 5% at constant exchange rates, compared to 2012.
This guidance is based notably on the assumption of a circa 5% decrease of advertising sales for Lagardere Active.
43