Lagardère 2003-2012
Ten years of transformation
Refocus on Media
2
2003 Organisation
3
Lagardère 2003-2012 / Ten years of transformation
15.04% 100%
100%
34%
99.3%
100%
Lagardère SCA Bank Arjil & Cie
100%
High Tech
EADS
Media & communication
Hachette Livre
Hachette Filipacchi Médias
Lagardère Active Broadcast
MultiThématiques
Lagardère Active Broadband
Hachette Distribution Services
CanalSatellite
27.4%
2012: a Group organised around four major divisions, fully owned
+ two main minority stakes:
: final exit (7.4%) expected in 2013.
France: 20% stake.
4
Lagardère SCA
100% 100% 100% 100%
Lagardère 2003-2012 / Ten years of transformation
5
2003-2012 evolution: breakdown of net sales
*Proportional consolidation (15.04%). / **Lagardère Active Broadcast and Lagardère Active Broadband.
2003 2012
16% Hachette
Filipacchi
Médias
36%
8% Hachette
Livre
5% Lagardère
Active**
35% Hachette
Distribution Services
*
52%
28%
14%
6%
Lagardère 2003-2012 / Ten years of transformation
6
2003-2012 evolution: breakdown of recurring EBIT before associates
*Proportional consolidation (15.04%). / **Lagardère Active Broadcast and Lagardère Active Broadband. / ***Negative recurring EBIT for Lagardère Unlimited in 2012.
35%
16% Hachette
Livre
31% Hachette
Filipacchi
Médias
4% Lagardère
Active**
14% Hachette
Distribution
Services
*
2003 2012
27%
16%
***
57%
Lagardère 2003-2012 / Ten years of transformation
Consolidation of leadership
positions and expansion in
new business areas
7
8
2003-2012: a changing media value chain
RIGHTS AND CONTENT
AGREGATION DISTRIBUTION
Value Digital
Print challenged &
audience
fragmentation
Invest Consolidate &
Digital
Develop non
Our strategy:
Lagardère 2003-2012 / Ten years of transformation
9
The 2003-2012 strategy conducted by M&A activity…
SDA (JV with ADP)
Vivendi Universal Publishing
Hodder Headline Time Warner Book Group
Newsweb
Sportfive
Doctissimo
World Sport Group
Duty Free in Eastern Europe
Travel Retail in Czech Republic DFS Wellington
AdR Retail (Rome)
LeGuide.com
BilletReduc
French newspapers
International Magazine Publishing (PMI)
Virgin stores
Acquisitions Disposals
Invest in rights and content
Develop non print: Travel Retail
Digital
Consolidation of leadership
Exit from challenged activities & weak positions
Exit from print-related
Divest non core activities
Lagardère 2003-2012 / Ten years of transformation
Lagardère Unlimited US
EADS
T-Online
NMPP*
*Nouvelles Messageries de la Presse Parisienne.
… delivered significant profile evolution…
*Duty Free, Digital, TV Production, Lagardère Unlimited, DTT channels, Emerging markets.
**Partworks, Reference, Practical guides, Digital (Lagardère Active), TV Production, licensing, Lagardère Unlimited.
10
0%
20%
40%
60%
80%
100%
High growth
Nonadvertising
Non paper
Digital (Excl.Services)
Rights andcontent
Emergingmarkets
+11 pts
+6 pts
+18 pts
+8 pts
+20 pts
+8 pts
2003
2012
*
**
As % of net sales
Digital
(Excl. Lagardère Services)
Lagardère 2003-2012 / Ten years of transformation
-230%
-180%
-130%
-80%
-30%
20%
70%
120%
170%
220%
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
… 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.
Strong
resilience in
2009
Lagardère margin: flat
Peers margin: -2 pts
GDP (global): +0.4 pt
Adv. Market (global): -0.9 pt
2003-2011 change:
100
basis
Source: brokers and peers financial information. 11
Lagardère 2003-2012 / Ten years of transformation
2003-2012: Success Stories
sample
12
13
Lagardère Publishing : from world #13 in 2003 to world #2 in trade publishing
2m+ +2m 116m 5m +6m 11 m +
6m 153m 64m 19m
+2m
Number of copies sold
+7m
France Worldwide France Worldwide
2m+ 1.6m
France UK
France USA USA Worldwide Spain
Lagardère 2003-2012 / Ten years of transformation
14
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
Lagardère 2003-2012 / Ten years of transformation
15
Elle, a leading and prestigious global brand (1/2)
2012
Worlwide in 2012:
54 200 ad pages: #1 worlwide, 30% market share(1)
21m readers 6.6m copies sold/month
(1)High-end women’s magazine segment.
Worlwide in 2012:
10 900 ad pages: #1 worlwide 10m readers
2003
Paid circulation Elle France: Nb of weekly copies
321K 384K
Ad sales in France: €63m
International editions : 58 76
€59m
International editions
sales : €351m €465m
Lagardère 2003-2012 / Ten years of transformation
16
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…
Lagardère 2003-2012 / Ten years of transformation
17
Aelia: success story of a major player in Travel Retail (1/2)
2003 2012
Net sales (€m)
Nb stores: 126 294
Countries: 1 15
Retail
Space: 13K sqm 54K sqm
Addressed
Traffic: 55m pax 200m pax
427
1,021
10.2% CAGR*
*Compound Annual Growth rate.
Lagardère 2003-2012 / Ten years of transformation
18
Aelia: success story of a major player in Travel Retail (2/2)
Best Beauty new
store 2007
Roissy CDG
Best new Fashion &
Leathergoods store 2011
The Fashion Gallery,
Singapore Changi Airport
“Best confectionery
store worldwide
(Dreamstore)” 2012
So Chocolate,
Singapore Changi
Airport
Lagardère 2003-2012 / Ten years of transformation
19
Lagardère Unlimited: creation of a leading market position worldwide
since 5 years (1/2)
Emerging markets
38%
High exposure to emerging markets:
2012 net sales breakdown Key positions:
#1 in football in Africa
Leader in sports rights in Asia
#1 in comprehensive marketing for
football clubs in Europe
Key partnerships:
AFC (1) , CAF (2) , IAAF (3) , WTA (4)
20+ football clubs in Europe
(1) Asian Football Confederation. (2) Confederation of African Football. (3) International Association of Athletics Federation. (4) Women’s Tennis Association.
56% 6%
21% 8%
5%
3%
1%
Eastern Europe Western Europe
USA
Latin America
Middle East
Africa ASPAC
Lagardère 2003-2012 / Ten years of transformation
20
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.
Lagardère 2003-2012 / Ten years of transformation
2003-2012: a sound financial
policy
21
22
Balanced and long-term driven cash policy
Cash flow : cumulative 2003-2012
€2.6bn returned to shareholders Cumulative cash
generated by
operations and
disposals
Cumulative
use of cash
Disposals
CF from
operations
Organic growth
Acquisitions
Other
Return to sharholders
Deleveraging €6,635m
24%
€4,447m
5%
26%
37%
7%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Share buyback Dividend
419
500
276
173 167 169
501
179 130
Exceptional dividend
166
Lagardère 2003-2012 / Ten years of transformation
23
A level of debt adjusted to the activity and to the economic environment
Well diversified funding sources over the period
Sound financial situation
1,901 1,699
1,120
2,045
2,570 2,619
1,824 1,772
1,269
1,700
0
500
1 000
1 500
2 000
2 500
3 000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
€m
Net debt excluding EADS (2002 to 2006) and ORAPA (2006 to 2008)
64%
27%
9%
Gross debt breakdown in 2003
Bonds
Bank loan
Other65%
28%
7%
Gross debt breakdown in 2012
Average:
€1,852m
Lagardère 2003-2012 / Ten years of transformation
Sustainable Development
and Corporate Governance
24
2003-2012 Achievements
Continual focus (media,
social networks, etc.)
Environment
is changing
deeply
25
2003-2012: Lagardère adapts to an increasingly demanding
environment
*Corporate Social Responsibility.
Observers
Keener awareness of environmental, ethical and social challenges
Growing
expectations of
employees,
shareholders,
etc.: transparency
(governance),
risk management
(environmental
risks, reputational
risks, etc.),
ethics, CSR* 1 Corporate governance:
improve and observe good
practices.
Sustainable development:
setting up a CSR organisation and
introducing pragmatic policies
tailored to the Group's businesses.
More stringent
regulatory
requirements (New
Economic
Regulations Act,
Grenelle
Environment
Forum)
Lagardère has moved
into position to answer
these challenges:
1
2
Lagardère 2003-2012 / Ten years of transformation
A renewed Supervisory Board with more women and increased independence
Compliance with the AFEP-MEDEF corporate governance code
26
Corporate Governance: improve and observe
good practices 1
New Chairman (independent) since 2010.
Composition: diverse backgrounds and complementary expertise.
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.
2003 2012
50% 87% Independent members:
0% 33% Women:
Lagardère 2003-2012 / Ten years of transformation
27
Sustainable Development: setting up a CSR organisation and
introducing pragmatic policies tailored to the Group's businesses 2 Regulatory
requirements Expectations of employees
& stakeholders
Increasing use of certified paper from sustainably managed forests:
– 75% for Lagardère Publishing;
– 100% for Lagardère Active magazines.
Energy efficiency campaigns.
Carbon assessment in several divisions: Lagardère Publishing, Lagardère Active, Lagardère Services (Relay).
Drawing up a charter and codes for the Group's partners.
The first publisher to display carbon and origin of paper labels on its books.
Heightened social commitment (Jean-Luc Lagardère Foundation, Elle Foundation).
Rallying employees to support corporate social responsibility efforts.
Talent management project and diversity at Lagardère Active.
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
Four priorities
Lagardère 2003-2012 / Ten years of transformation
2012 Full-Year Results
March 7, 2013
28
2012: a significant step
forward
29
30
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.
Expected sale of EADS (7.4% stake)
Strengthened long term financial solidity
€500m bond successfully issued in October 2012:
• lengthened debt profile maturity; • maintained liquidity on the long run.
2012 Full-Year Results / March 7, 2013
31
Canal+ France
2012 Full-Year Results / March 7, 2013
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.
32
M&A activity in 2012 is in line with our growth strategy
Digital LeGuide.com (shopping
comparator)
BilletReduc.com (online
ticketing)
Travel
Retail
AdR Retail (Rome)
DFS Wellington (Duty Free in Autralia and New Zealand)
UG-Air (Duty Free in Prague)
Rights &
Content
Zaechel (sport events promotion & hospitality)
SMAM (sports marketing rights consultancy in Australia)
Gaylord Sports Management (athletes representation in the US)
Acquisitions Disposals
Declining
business OLF (book distribution
in Switzerland)
2012 Full-Year Results / March 7, 2013
33
Successful integration of acquired companies
Net sales:
+16% in 2012 (like-for-like)
+24% in Q4 2012 (like-for-like)
AdR Retail Increase in sales and significant
improvement of SPP* despite less
favourable traffic figures.
Initial targets exceeded.
*Sales per passenger.
Good performance, in line with
expectations
2012 Full-Year Results / March 7, 2013
2012 Business highlights
34
35
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.
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.
800k 400k
E-books keep growing
UK, USA, France
France France
2012 Full-Year Results / March 7, 2013
36
2012 competitive positions in France:
Development in digital through new business models.
Development of licensing activities: +11% in 2012.
TV Production: confirmed position after a strong increase in 2011.
Leadership maintained in a challenging environment
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
2012 Full-Year Results / March 7, 2013
37
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…
Strong momentum in Travel Retail
up 8.2%
Travel Retail
net sales
France: +15% for Aelia
UK: +10.7%, Germany: +8.8%
Asia: +32.5%
Central Europe : +13.4%
Passenger traffic*: +4.2% worldwide
+7.3% in ASPAC
*Source: ACI data at October 31, 2012.
2012 Full-Year Results / March 7, 2013
38
Strong project momentum:
Decreased exposure to premium media rights in Europe: • investment in other business models;
• total exposure decreased by -6 pts in 2012 vs. 2011.
Continued business development for Lagardère Unlimited
• 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.
2012 Full-Year Results / March 7, 2013
2012 Performance
39
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*
40
2012 results illustrate the resiliency
of our Group
*To be approved by the General Shareholders’ Meeting on May 3, 2013.
2012 Full-Year Results / March 7, 2013
75
85
95
105
115
125
Lagardère
CAC40
DJ Stoxx Media
Lagardère stock outperformed the market
and the media index
100
basis
Lagardère: +23.9%
CAC 40: +15.2%
DJ Stoxx Media: +17.4%
2012 performance:
2012 Full-Year Results / March 7, 2013
41
2013 Outlook
42
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
Guidance 2013
2012 Full-Year Results / March 7, 2013