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2016 first-half results

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2016 FIRST-HALF RESULTS
28 July 2016
2016 First-Half Results / 28 July 2016
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 within the meaning of European Regulation No. 809/2004.
When used in this document, words such as “anticipate”, “believe”, “estimate”, “expect”, “may”, “intend”, “predict”, “hope”, “can”, “will”,
“should”, “is designed to”, “with the intent”, “potential”, “plan” and other words of similar import are intended to identify forward-looking
statements. Such statements include, without limitation, projections for improvements in process and operations, revenues and
operating margin growth, cash flow, performance, new products and services, current and future markets for products and services
and other trend projections as well as new business opportunities.
Although Lagardère SCA believes that the expectation reflected in such forward-looking statements are reasonable, such statements
are not guarantees of future performance. Actual results may differ materially from the forward-looking statements as a result of a
number of risks and uncertainties, many of which are outside our control, including without limitations:
• general economic conditions, including in particular growth in Europe and North America;
• legal, regulatory, financial and governmental risks related to the businesses;
• certain risks related to the media industry (including, without limitation, technological risks);
• the cyclical nature of some of the businesses.
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.
Please refer to the most recent Reference Document (Document de référence) filed by Lagardère SCA with the French Autorité des
marchés financiers for additional information in relation to such factors, risks and uncertainties.
Accordingly, we caution you against relying on forward-looking statements. The forward-looking statements abovementioned are made
as of the date of this document and neither Lagardère SCA nor any of its subsidiaries undertake any obligation to update or review such
forward-looking statements whether as a result of new information, future events or otherwise. Consequently neither Lagardère SCA
nor any of its subsidiaries are liable for any consequences that could result from the use of any of the above statements.
2
H1 HIGHLIGHTS
2016 First-Half Results
28 July 2016
2016 First-Half Results / 28 July 2016
H1 HIGHLIGHTS
H1 2015
H1 2016
(€m)
 Results in line with
management
expectations.
 Seasonality impact
especially for
Sports and
Entertainment.
 Travel Retail
confirmed as
growth driver of
the Group.
 Control of the
indebtness despite
seasonality.
Revenue
Recurring EBIT of fully
consolidated companies*
Group operating margin
Profit – Group share
Adjusted profit – Group share
Free cash flow*
Net debt at end of the period
+3.8% reported
+0.5% like-for-like*
3,304
3,431
122
101
3.7%
2.9%
9
44
+€35m
75
65
-€10m
(84)
47
+€131m
(1,551)**
(1,739)
-€188m
-17.2%
-0.8pt
*See definitions slide 38.
**Net debt as of 31/12/2015.
4
H1
PERFORMANCE
BY DIVISION
2016 First-Half Results
28 July 2016
2016 First-Half Results / 28 July 2016
LAGARDÈRE PUBLISHING: ACTIVITY
H1 2016 revenue by geographical area
H1 2016 revenue by activity
Other
19%
18%*
Spain
5%
Other
16%
France
28%
17%*
28%*
Partworks
13%
5%*
12%*
US & Canada
27%
26%*
UK &
Australia
21%
23%*
Education
14%
13%*
Illustrated
Books
14%
15%*
General
Literature
43%
43%*
 €970m (up 0.3% as reported and down 0.2% like-for-like).
• Negative currency effect of €18m offset by a positive scope effect of €22m.
 Resilient performance, supported by good momentum in Partworks, Education in Spain and
Literature and Distribution in France.
*% of revenue in H1 2015.
6
2016 First-Half Results / 28 July 2016
LAGARDÈRE PUBLISHING: PROFITABILITY
13.1%
(€m)
3.7%
162
36
H1 2015
3.7%
36
H2 2015
Recurring EBIT of fully consolidated companies
H1 2016
Operating Margin (in %)
 Profitability stable, in line with traditionally low H1 contribution.
• Recurring EBIT held firm thanks to strong increase in profitability in the US, due to disciplined cost management,
and the success of Partworks. These elements are offset by a decline in digital revenue in the UK and expenses
related to French curricular reform.
7
2016 First-Half Results / 28 July 2016
LAGARDÈRE TRAVEL RETAIL: ACTIVITY
H1 2016 revenue by geographical area
US & Canada
21%
7%*
Distribution
(Wholesale Distribution
& Integrated Retail)
18%
AsiaPacific
10%
10%*
Eastern
Europe
17%
H1 2016 revenue by activity
30%*
France
22%
17%*
Travel Retail
82%
70%*
23%*
Other
Western
Europe
8%
12%*
Italy
7% Spain
3%
8%*
10%*
Belgium
12%
13%*
 €1,790m (up 9.1% as reported and up 5.4% like-for-like).
• Negative currency effect of €22m and positive scope effect of €93m. The performance of Paradies Lagardère is
in line with the Group’s expectations. Figures below are presented on a like-for-like basis.
 Travel Retail activity up 7.8%, driven by network expansion, rollout of new concepts and
improvement in the product mix, which offset the impacts of terrorist attacks in Europe.
 Distribution down 3.1%.
*% of revenue in H1 2015.
8
2016 First-Half Results / 28 July 2016
LAGARDÈRE TRAVEL RETAIL: PROFITABILITY
3.9%
(€m)
2.0%
1.8%
72
36
30
H1 2015
H2 2015
Recurring EBIT of fully consolidated companies
H1 2016
Operating Margin (in %)
 Profitability up by 20%.
• €12m increase in Travel Retail, which was buoyed by the integration of new activities, dented by ramp-up costs.
Good performance in Europe, mainly in Italy and Netherlands, despite the impact of terrorist attacks.
• €6m decrease in Distribution (disposal of Swiss, US and Spanish activities).
9
2016 First-Half Results / 28 July 2016
LAGARDÈRE ACTIVE: ACTIVITY
H1 2016 revenue by geographical area
Other
International
17%
Radio
22%
14%*
Spain
7%
3%*
H1 2016 revenue by activity
22%*
Press
40%
France
76%
43%*
83%*
TV
29%
28%*
Pure Players
& BtoB
9%
7%*
 €436m (down 0.5% as reported and down 7.4% like-for-like).
• Positive scope effect of €31m, reflecting the acquisition of Grupo Boomerang TV.
 A mixed performance (Press down and Radio up) combined with an unfavourable comparison
basis in TV Production.
*% of revenue in H1 2015.
10
2016 First-Half Results / 28 July 2016
LAGARDÈRE ACTIVE: PROFITABILITY
(€m)
8.8%
7.6%
7.6%
46
33
H1 2015
33
H2 2015
Recurring EBIT of fully consolidated companies
H1 2016
Operating Margin (in %)
 Profitability stable.
• Cost reduction plan offset the negative trend in Magazine Publishing and unfavourable delivery phasing in
TV Production.
11
2016 First-Half Results / 28 July 2016
LAGARDÈRE SPORTS AND ENTERTAINMENT: ACTIVITY
H1 2016 revenue by geographical area
Rest of World
16%
H1 2016 revenue by activity
Media rights
18%
France
27%
25%*
13%*
Asia &
Australia
13%
31%*
Other
34%
25%*
24%*
Rest of
Europe
16%
10%*
Germany
21%
UK
7%
21%*
Marketing
rights
48%
44%*
7%*
 €235m (down 9.0% as reported and down 11.7% like-for-like).
• Slight negative currency effect of €1m and positive scope effect of €7m.
 As expected, revenue impacted by a negative sports calendar effect with the organisation of
two major football championships in 2015.
*% of revenue in H1 2015.
12
2016 First-Half Results / 28 July 2016
LAGARDÈRE SPORTS AND ENTERTAINMENT: PROFITABILITY
(€m)
12.4%
2.1%
32
(4.7%)
5
(12)
H1 2015
H2 2015
Recurring EBIT of fully consolidated companies
H1 2016
Operating Margin (in %)
 Recurring EBIT down as anticipated.
• Highly unfavourable seasonality effect reflecting a very positive calendar in first-half 2015.
13
H1
GROUP
RESULTS
2016 First-Half Results
28 July 2016
2016 First-Half Results / 28 July 2016
CHANGES IN CONSOLIDATED REVENUE – H1 2016
(€m)
+150
-1
3,431
-24
3,304
+2
Revenue
H1 2015
Lagardère
Publishing
Lagardère Travel
Retail
Lagardère
Active
Lagardère Sports
and Entertainment
Revenue
H1 2016
 Revenue up 3.8% reported, up 0.5% like-for-like and up 2.4% like-for-like excluding the calendar impact
of sporting events.
 Top-line growth largely driven by Lagardère Travel Retail (up €150m) and negatively impacted by
the calendar in Sports and Entertainment.
 Positive scope effect of €153m and negative currency effect of €42m.
15
2016 First-Half Results / 28 July 2016
CONSOLIDATED INCOME STATEMENT – H1 2016
H1 2015
H1 2016
(€m)
101
44
(11)
4
122
(16)
1
(26)
(11)
(23)
(6)
(10)
9
(72)
Recurring EBIT of
fully consolidated
companies
Income from equityaccounted
companies
Non-recurring/
non-operating
items
Net interest
expense
Income tax
expense
Profit attributable
to minority
interests
Profit – Group
share
 Recurring EBIT down due to the negative seasonality impact in Sports and Entertainment, partly offset by
the growth of Travel Retail.
 Decrease in interest expense following disposal of Deutsche Telekom securities and reduction in the average
cost of debt.
 Income tax increase relating to the disposal of non-operating asset.
16
2016 First-Half Results / 28 July 2016
ANALYSIS OF NON-RECURRING/NON-OPERATING ITEMS IN H1 2016
(€m)
H1 2015
H1 2016
(35)
(74)
19
139
Impairment losses
(30)
(39)
Amortisation of acquisition-related intangible
assets and acquisition-related expenses
(26)
(37)
TOTAL
(72)
(11)
Restructuring costs
Gains (losses) on disposals
17
2016 First-Half Results / 28 July 2016
ADJUSTED PROFIT – GROUP SHARE
H1 2015
H1 2016
9
44
Restructuring costs*
+32
+49
Gains (losses) on disposals*
-20
-96
Impairment losses on goodwill, tangible and intangible fixed assets*
+29
+39
Amortisation of acquisition-related intangible assets and other
acquisition-related expenses*
+20
+24
Tax contribution on dividends paid to shareholders
+5
+5
Adjusted profit – Group share
75
65
(€m)
Profit – Group share
*Net of taxes.
18
2016 First-Half Results / 28 July 2016
CONSOLIDATED STATEMENT OF CASH FLOWS
H1 2015
H1 2016
Cash flow from operations before interest, taxes
168
181
Changes in working capital
(97)
(153)
71
28
(26)
(36)
45
(8)
(133)
(133)
4
188
(84)
47
(194)
9
(278)
56
(204)
(244)
(482)
(188)
(1,551)*
(1,739)
(€m)
Cash flow from operations
Interest paid & received, income taxes paid
Cash generated by/(used in) operating activities
Acquisition of property, plant & equipment and intangible assets
Disposal of property, plant & equipment and intangible assets
Free cash flow
Acquisition/(disposal) of financial assets
Net cash from operating & investing activities
Dividend paid and others
Change in net debt
Net debt
*Net debt as of 31/12/2015.
Up 7.7%
Deterioration of €56m mainly due to
non-recurring items in Lagardère
Sports and Entertainment.
Lagardère Travel Retail is the main
contributor (+€64m) to cash from
operating activities.
FCF improvement (up €131m)
despite continued investment in
Travel Retail helped by the disposal
of non-operating asset.
19
2016 First-Half Results / 28 July 2016
FINANCING POLICY
 Cautious management of the balance
sheet despite a significant acquisition…
 … preserving a bold dividend policy
Historical dividends (€/share)
Leverage ratio
Net debt/Recurring EBITDA*
€1,739m
€1,436m
€1,551m
Ordinary dividend per share (€)
Extra dividend per share (€)
9.0
2.8x
**
2.6x
2.4x
**
6.0
6.1%*
1.3
1.3
1.3
1.3
1.3
1.3
1.3
1.3
2008
2009
2010
2011
2012
2013
2014
2015
*Dividend yield based on €21.42 closing price on 27/07/2016.
30/06/2015
31/12/2015
30/06/2016
 Leverage increase compared to 30 June 2015
(0.2x higher) largely due to the Paradies acquisition.
 Leverage increase compared to 31 December 2015
(0.4x higher) mainly due to the business seasonality.
*See definition slide 38.
**On a proforma basis (as per credit facility covenant), including 12 months
of Paradies recurring EBITDA.
 Long-term stability of the ordinary dividend per share.
 Friendly shareholder policy post exceptional disposals.
 Attractive ordinary yield in the current low-interest rate
environment.
20
2016 First-Half Results / 28 July 2016
CONCLUSION
In light of business trends at end of June 2016, the Group confirms its target for the full year:
“Group recurring EBIT growth is expected slightly above 10% compared to 2015, at constant
exchange rates and excluding any impact from any disposal of Distribution activities”
21
APPENDICES TO
CONSOLIDATED
ACCOUNTS
2016 First-Half Results
28 July 2016
2016 First-Half Results / 28 July 2016
CHANGES OF SCOPE: MAIN ITEMS
 Lagardère Publishing
• Acquisition of the Perseus Books Group’s publishing business in April 2016.
• Disposal of 51% of YenPress in May 2016 (equity-accounted since 1 June 2016).
• Disposal of Harlequin (joint venture) in March 2016.
 Lagardère Travel Retail
• Disposal of the Spanish press distribution business SGEL in February 2016.
• Disposal of Canadian press distribution assets in May 2016.
 Lagardère Active
• Disposal of our 49% in S.E.T.C. (cable satellite TV magazine) in May 2016.
 Lagardère Sports and Entertainment
• Disposal of the Endurance division in March 2016.
23
2016 First-Half Results / 28 July 2016
CONSOLIDATED INCOME STATEMENT
(€m)
Revenue
Recurring EBIT of fully consolidated companies*
Income from equity-accounted companies**
Non-recurring/non-operating items
Total EBIT
Operating activities
Other activities
Net interest expense
Profit before tax
Income tax expense
Total profit
Attributable to minority interests
Profit – Group share
*Recurring EBIT of fully consolidated companies of the four operating divisions + other activities.
**Before impairment losses.
H1 2015
H1 2016
3,304
122
1
(72)
51
60
(9)
(26)
25
(6)
3,431
101
4
(11)
94
7
87
(16)
78
(23)
19
10
9
55
11
44
24
2016 First-Half Results / 28 July 2016
ANALYSIS OF NON-RECURRING/NON-OPERATING ITEMS IN H1 2016
Lagardère
Publishing
Lagardère
Travel Retail
Lagardère
Active
Lagardère
Sports and
Entertainment
Total operating
activities
Restructuring costs
(2)
(10)
(52)
(2)
(66)
(8)
(74)
(35)
Gains (losses) on disposals
20
(1)
6
0
25
104
129
19
Fair value adjustment resulting
from changes in control
8
/
/
2
10
/
10
/
Impairment losses
/
(3)
(32)
(4)
(39)
/
(39)
(30)
Amortisation of acquisition-related
intangible assets and acquisitionrelated expenses
(3)
(32)
/
(2)
(37)
/
(37)
(26)
TOTAL
23
(46)
(78)
(6)
(107)
96
(11)
(72)
(€m)
Total
H1 2016
Other
activities
Total
H1 2015
25
2016 First-Half Results / 28 July 2016
GROUP PROFILE – H1 2016
Revenue by division
Lagardère Sports and Entertainment
7%
Lagardère Sports and Entertainment
5%
Lagardère
Publishing
28%
Lagardère
Active
13%
Recurring EBIT of fully consolidated companies by division
Lagardère
Travel
Retail
52%
Revenue by geographic area H1 2015
Lagardère
Active
30%
Lagardère
Travel
Retail
32%
Revenue by geographic area H1 2016
USA &
Canada
12%
Eastern
Europe
10%
US &
Canada
19%
France
31%
France
32%
Eastern
Europe
10%
AsiaPacific
9%
AsiaPacific
9%
Other
3%
Western
Europe
34%
Emerging countries: 22%
Lagardère
Publishing
33%
Other
2%
Emerging countries: 21%
Western
Europe
29%
26
2016 First-Half Results / 28 July 2016
RECAP OF PERFORMANCE BY DIVISION
 Revenue
H1 2016
Reported
€m change
Reported
change
Like-for-like change*
970
+€2m
+0.3%
-0.2%
1,790
+€150m
+9.1%
+5.4%
Lagardère Active
436
-€1m
-0.5%
-7.4%
Lagardère Sports and Entertainment
235
-€24m
-9.0%
-11.7%
3,431
+€127m
+3.8%
+0.5%
H1 2016
Reported
€m change
Reported
change
Change at constant
exchange rates**
Lagardère Publishing
36
+€0m
+0.6%
+2.3%
Lagardère Travel Retail
36
+€6m
+20.3%
+78.3%
Lagardère Active
33
+€0m
+1.0%
+2.4%
5
-€27m
-84.5%
-84.1%
110
-€21m
-16.0%
-8.4%
(9)
-€0m
/
/
101
-€21m
-17.2%
-9.2%
(€m)
Lagardère Publishing
Lagardère Travel Retail
Total
 Recurring EBIT of fully consolidated companies
(€m)
Lagardère Sports and Entertainment
Total operating activities
Other activities
Total
*At constant perimeter and exchange rates. / **At constant exchange rates, excluding disposal of LTR Distribution.
27
2016 First-Half Results / 28 July 2016
MAIN EQUITY-ACCOUNTED COMPANIES
Balance sheet
Income statement*
2015
(as of
31/12/2015)
2016
(as of
30/06/2016)
2015
(as of
30/06/2015)
2016
(as of
30/06/2016)
Marie Claire (42%)
90
90
-
3
Édition J’ai Lu (35%)
17
16
-
-
Société de Distribution Aéroportuaire (50%)
16
8
3
1
Inmedio (49%)
11
11
-
-
YenPress (49%)**
-
10
-
-
Société des Commerces en Gares (50%)
3
3
(1)
-
Société d’Édition de Télévision par Câble (49%)***
8
-
-
-
Other associates
6
6
(2)
(4)
155
144
0
0
(€m)
TOTAL
*Including impairment losses.
**Equity accounted since June 2016 (previously fully consolidated in Hachette Book Group).
***Sale of SETC in May 2016.
28
2016 First-Half Results / 28 July 2016
CONSOLIDATED BALANCE SHEET
(€m)
31 Dec. 2015
30 June 2016
4,672
4,416
155
144
2,846
2,803
634
393
TOTAL ASSETS
8,307
7,756
Stockholders’ equity
2,135
1,869
800
780
Non-current debt
1,526
1,538
Current liabilities (excl. debt)
3,187
2,975
659
594
8,307
7,756
Non-current assets (excl. investments in associates and joint ventures)
Investments in associates and joint ventures
Current assets (other than short-term investments and cash)
Short-term investments and cash
Non-current liabilities (excl. debt)
Current debt
TOTAL LIABILITIES AND EQUITY
29
2016 First-Half Results / 28 July 2016
CASH FLOW STATEMENT DATA – LAGARDÈRE PUBLISHING
(€m)
H1 2015
H1 2016
32
43
Changes in working capital
(93)
(93)
Cash flow from operations
(61)
(50)
(8)
(30)
(69)
(80)
(32)
2
(13)
11
(99)
(82)
Acquisition of financial assets
1
(76)
Disposal of financial assets
1
24
(97)
(134)
Cash flow from operations before interest, taxes
Interest paid & received, income taxes paid
Cash generated by/(used in) operating activities
Acquisition of property, plant & equipment and intangible assets
Disposal of property, plant & equipment and intangible assets
Free cash flow
Net cash from operating & investing activities
30
2016 First-Half Results / 28 July 2016
CASH FLOW STATEMENT DATA – LAGARDÈRE TRAVEL RETAIL
(€m)
H1 2015
H1 2016
Cash flow from operations before interest, taxes
74
88
Changes in working capital
29
(15)
Cash flow from operations
103
73
Interest paid & received, income taxes paid
(19)
(9)
84
64
(55)
2
(78)
2
31
(12)
(16)
(1)
(109)
8
(94)
(5)
Cash generated by/(used in) operating activities
Acquisition of property, plant & equipment and intangible assets
Disposal of property, plant & equipment and intangible assets
Free cash flow
Acquisition of financial assets
Disposal of financial assets
Net cash from operating & investing activities
31
2016 First-Half Results / 28 July 2016
CASH FLOW STATEMENT DATA – LAGARDÈRE ACTIVE
(€m)
Cash flow from operations before interest, taxes
Changes in working capital
Cash flow from operations
Interest paid & received, income taxes paid
Cash generated by/(used in) operating activities
Acquisition of property, plant & equipment and intangible assets
Disposal of property, plant & equipment and intangible assets
Free cash flow
Acquisition of financial assets
Disposal of financial assets
Net cash from operating & investing activities
H1 2015
H1 2016
30
35
(12)
(13)
18
22
(24)
(25)
(6)
(3)
(5)
-
(9)
1
(11)
(11)
(47)
(2)
-
12
(58)
(1)
32
2016 First-Half Results / 28 July 2016
CASH FLOW STATEMENT DATA – LAGARDÈRE SPORTS AND ENTERTAINMENT
(€m)
Cash flow from operations before interest, taxes
Changes in working capital
Cash flow from operations
Interest paid & received, income taxes paid
Cash generated by/(used in) operating activities
Acquisition of property, plant & equipment and intangible assets
Disposal of property, plant & equipment and intangible assets
Free cash flow
Acquisition of financial assets
Disposal of financial assets
Net cash from operating & investing activities
H1 2015
H1 2016
46
26
2
(42)
48
(16)
(11)
(16)
37
(32)
(41)
-
(31)
0
(4)
(63)
(23)
(8)
-
9
(27)
(62)
33
2016 First-Half Results / 28 July 2016
OFF BALANCE SHEET COMMITMENTS
(€m)
2015
H1 2016
1
0
- contract guarantees and performance bonds
288
325
- guarantees in favour of third parties or
non-consolidated companies
115
101
21
22
7
6
20
20
1
1
Commitments to purchase shares from third parties
(other than minority interests)
Commitments given in connection with ordinary activities:
- other commitments given
Commitments received:
- counter-guarantees of commitments given
- other commitments received
Mortgages and pledges
34
2016 First-Half Results / 28 July 2016
LAGARDÈRE SPORTS AND ENTERTAINMENT
GUARANTEED MINIMUM PAYMENTS
 At 30 June 2016 entities forming part of Lagardère Sports and Entertainment had guaranteed minimum future
payments amounting to €1,359m under long-term contracts for the sale of TV and marketing rights.
These payments break down as follows by maturity:
Maturity
(€m)
Guaranteed minimum
payments under
sports rights
marketing contracts
30/06/2016
30/06/2017
170
30/06/2017
30/06/2018
149
30/06/2018
30/06/2019
146
30/06/2019
30/06/2020
147
30/06/2020
30/06/2021
30/06/2021
30/06/2022
30/06/2022
& beyond
Total
112
82
553
1,359
 At 30 June 2016 the amounts due under marketing contracts signed by these same entities with broadcasters
and partners amounted to €1,847m, breaking down as follows by maturity:
Maturity
(€m)
Sports rights
marketing contracts
signed with
broadcasters and
partners
30/06/2016
30/06/2017
519
30/06/2017
30/06/2018
365
30/06/2018
30/06/2019
295
30/06/2019
30/06/2020
196
30/06/2020
30/06/2021
30/06/2021
30/06/2022
30/06/2022
& beyond
Total
105
63
304
1,847
35
2016 First-Half Results / 28 July 2016
RECURRING EBITDA – OVER 12 ROLLING MONTHS
(€m)
H1 2015
2015**
H1 2016**
354
429
380
+185
+207
+219
Dividends received from equity-accounted companies
+23
+13
+21
Total recurring EBITDA*
562
649
620
Total recurring EBIT of fully consolidated
companies*
Depreciation & amortisation of intangible assets and
property, plant and equipment
*See definitions slide 38.
**On a proforma basis (as per credit facility covenant), including 12 months of Paradies recurring EBITDA.
36
2016 First-Half Results / 28 July 2016
OUTSTANDING DEBT & MATURITY PROFILE
 Gross debt breakdown: focused directly
on credit investors
 Preservation of liquidity and well balanced debt
repayment schedule
22%
Bonds
8%
70%
Bank loans & other
Authorised
credit lines**: €1,250m
Commercial paper
€125m
Cash*: €393m
€511m
€510m
€500m
€469m
€5m
€12m
*Short-term investments and cash.
**Group credit facility excluding authorised credit lines at divisions level.
37
2016 First-Half Results / 28 July 2016
DEFINITIONS
 Recurring EBIT of fully consolidated companies is defined as the difference between profit before finance costs and tax
and the following items of the profit and loss statement:
• income (loss) from equity-accounted companies;
• gains (losses) on disposals of assets;
• impairment losses on goodwill, property, plant and equipment and intangible assets;
• restructuring costs;
• items related to business combinations:
- expenses on acquisitions;
- gains and losses resulting from acquisition price adjustments and fair value adjustment resulting from changes in control;
- amortisation of acquisition-related intangible assets.
 Like-for-like revenue were calculated by adjusting:
• 2016 revenue to exclude companies consolidated for the first time during the year, and 2015 revenue to exclude companies divested
in 2016;
• 2016 and 2015 revenue based on 2015 exchange rates.
 Free cash flow is defined as: cash generated by/(used in) operating activities added with acquisitions/disposals of intangible assets
and property, plant and equipment.
 Recurring EBITDA is defined as recurring EBIT of fully consolidated companies added with:
• depreciation and amortisation of intangible assets and property, plant and equipment;
• dividends received from equity-accounted companies.
38
SIGNIFICANT
EVENTS
2016 First-Half Results
28 July 2016
2016 First-Half Results / 28 July 2016
BACKGROUND AND OVERALL PERFORMANCE
 Overall performance slightly behind H1 of 2015
• Revenue: slightly below H1 2015.
• EBIT: in line with H1 2015.
- Industry-wide decline of e-books in US and UK.
- Print regaining market share.
- Forex negatively impacted by drop of £ vs. € linked to Brexit fears.
- Acquisitions (Perseus) contributing according to plan.
 Reminder
• Seasonality: the bulk of revenue and EBIT is generated in H2.
40
2016 First-Half Results / 28 July 2016
FRANCE
 Revenue up vs. H1 of 2015
• Strong lineup in general fiction and non-fiction, but coloring books declining.
• Distribution performing well as a result, with strong contribution from third-party publishers.
• Education in investment mode (new free samples) as it gears up for strong second half driven by curriculum reform.
41
2016 First-Half Results / 28 July 2016
INTERNATIONAL MARKETS
 UK
• UK revenue behind H1 2015 as result of sharp drop in e-book revenue linked to end of massive discounting by retailers, partly offset
by strong performance of Illustrated, esp. coloring books.
 US
• H1 revenue in the US slightly below H1 2015 like-for-like, but improved EBIT linked to tight control over costs.
 Spain
• Spain way ahead of H1 2015 in revenue, thanks to early shipment of 2016-2017 text books.
42
2016 First-Half Results / 28 July 2016
DIGITAL
 After end of e-books bubble, getting ready for the next digital wave
• After peaking in 2014, e-book revenue slowdown in US and UK confirmed and on-going, with talk in the media of consumers
experiencing “digital fatigue”.
• Hachette Livre mobilising expertise and resources to ride the “second digital wave”: social media, big data, gaming (licensing – based
or not).
43
SIGNIFICANT
EVENTS
2016 First-Half Results
28 July 2016
2016 First-Half Results / 28 July 2016
BACKGROUND (1/2)
 The growth in passenger traffic (+5.9%)* is slightly below last year growth (+6.1%). The growth remains strong
in Europe (+5.6%), North America (+4.8%) and Asia-Pacific (+8.9%). However the rise in passenger traffic in Europe
has slowed down significantly after the Brussel attack and is driven by the low-cost carriers and intra-EU traffic.
 At constant rate and perimeter, the traffic evolution combined with new commercial initiatives and a dynamic
management of the network, generated a sustained growth of Travel Retail revenue (+7.8%) despite a difficult
geopolitical and macroeconomic situation.
 Total like-for-like revenue increased by +5.4%, the strong performance of Travel Retail being partly absorbed by
the decline of Distribution (-3.1%).
 Total revenue on a consolidated basis reached €1,790m (+9.1% vs. June 2015: +29.1% for Travel Retail and -36,9%
for Distribution) with a €22m negative exchange rate (Polish zloty, New Zealand, Australian and Canadian dollars)
and, as expected, a positive scope effect (+93m):
• acquisitions for +€263m, essentially Paradies in October 2015 and JFK T4 in April 2015;
• disposal of the Distribution activities for -€170m, essentially with Spain disposal in February 2016 (-€105m) and Switzerland disposal
in February 2015 (-€54m).
 Distribution divestment process is almost completed (only Hungary and a small Canadian activity are left).
Belgium closing should happen in Q4 once the Belgium Competition Authorities approval is obtained.
*Source:
ACI data: Europe: +5.6% vs. +5.2%, Asia-Pacific: +8.9% vs. +8.0%, and North America: +4.8 % vs. +5.3% (at 31 May 2016 vs. 31 Dec. 2015).
45
2016 First-Half Results / 28 July 2016
BACKGROUND (2/2)
 Within a disturbed environment, Travel Retail growth remained strong and marked by:
• the successful integration and good performances of the new acquisitions, mainly Paradies and JFK T4 in North America;
• new concessions start-up, mainly:
-
New Zealand: Auckland Duty Free (late June 2015),
China: Kunming master concession (August 2015),
Poland: Warsaw T1 (May 2015), Krakow Duty Free (September 2015),
Luxembourg Duty Free (November 2015),
Iceland: Foodservice operations (March 2015),
France: Marks & Spencer Chatelet (August 2015) and Gare de l’Est (November 2015).
• a sustained development momentum, mainly: Abu Dhabi: 9 stores gained in Foodservice; Poland: master concession won at
Gdansk airport; Singapore: fashion concession of Terminal 2; Italy: opening of 5 Relay stores and gain of 3 concessions in Foodservice
at Rome airport; North America: gain of 3 packages at Phoenix airport in H1; UK: London – Luton: renewal and expansion of the duty
free concession for 10 years (mid-April 2016);
• the success of the new concepts and of the marketing and commercial initiatives;
• the negative impact of the terrorist attacks in Europe (Paris in November 2015 and Brussels in March 2016);
• the lower spend of the BRICs passengers.
46
2016 First-Half Results / 28 July 2016
TRAVEL RETAIL IN FRANCE
 Travel Essentials and Foodservice
• 100% revenue up +2.1%:
- strong performance of the Foodservice activities: +7.7% (dynamic network expansion with openings in railway stations, airports and
hospitals);
- compensating the lower revenue in gifts and souvenirs at -4.4%, impacted by the traffic decrease of the Eiffel Tower and Paris airport
souvenirs stores, following the terrorist attacks and the implementation of the Fan Zone during the Euro football championship (Eiffel
Tower only).
 Duty Free & Fashion
• 100% revenue down -4.7%:
- a decrease of -4.6% at Paris airports related to:
• lesser quality Pax (Japanese, Chinese, Brazilian, Indonesian and Russian) following 2015 terrorist attacks;
• unfavorable Euro exchange rate (against RMB/USD/Ruble/Pound);
• the decline of Chinese spend per passenger (fall in the Chinese stock market, biometric visas implementation, new tax on imported
good, on-going impact of the anti-corruption measures).
- Regional airports, growth momentum (+0.5% vs. 2015), following the stores refurbishment (e.g. new walkthrough in Nice) and commercial
initiatives (Bordeaux, Lille, Nantes) compensates the loss of the Eurotunnel concession (end of March 2015).
47
2016 First-Half Results / 28 July 2016
TRAVEL RETAIL IN EUROPE (1/2)
 Italy
• Revenue up +8.4% with a strong performance in the 3 business lines:
- Foodservice (+6.1%);
- Duty Free and Fashion (+5.4%) with Rome at +6.2%;
- Travel Essentials (+46.0%) with the introduction of 5 new Relay stores.
 Netherlands
• Revenue up +4.0%: the Schiphol airport − Lounge 2 platform has reopened during Q2, driving a double digit growth since then.
 United Kingdom
• Opening of a new walkthrough (1,700 sqm) in Luton airport mid-April following the 10-year renewal of the concession.
• Overall revenue up +8.5% versus 2015 thanks to a sustained traffic growth and new/revamped stores of Luton and Glasgow (fashion
stores).
 Spain and Portugal
• Revenue decreased by -2.7% due to the impact of the unfavorable economic context for the Fashion activities and the rationalisation
of the network.
• The network comprises 145 stores (down 12 vs. December 2015).
 Germany
• Revenue increased by +3.0 %: Travel Essentials +2.3%; Foodservice +9.1% thanks to the development of the Frankfurt train station
food court (+4.7%) and of the Coffee Fellows network.
48
2016 First-Half Results / 28 July 2016
TRAVEL RETAIL IN EUROPE (2/2)
 Austria and Slovenia
• Austria: growth of +1.3%; Slovenia decreased by -12.2% mainly due to traffic decline (reduction of air routes).
• The network is composed of 29 stores for Austria and 7 for Slovenia at end of June 2016.
 Poland
• Poland’s total revenue at 100% grew by +19.5%, with +45% from Duty Free activities, +10% from Travel Essentials and +27% from
Foodservice. This positive trend is driven by the opening of Warsaw airport − Terminal 1 stores in May 2015 and the take-over of the
duty free concession at Krakow airport at the end of September 2015, as well as a strong traffic growth in all Polish airports (Warsaw:
+7.7% in H1 2016).
 Czech Republic
• Revenue up +5.0%, with the continuing development of the Foodservice network (+13.7%), along with dynamic Travel Essentials
performance (+5.6%). Duty Free decrease by -3.0%, the Russian passengers and spend decrease could not be fully compensated
by the successful commercial initiatives and the growth from other nationalities.
 Romania and Bulgaria
• Romania: revenue up by +24.4% with a network of 226 stores (+8 additional stores at the end of June 2016).
• Bulgaria: business grew by +13.5% thanks to the opening of 10 new stores in 2015 and 2016 and the good performance of
the Food & Beverage and Tobacco categories.
 Iceland
• Since March 2015, Lagardère Travel Retail is operating 7 stores (Foodservice only) at Keflavik airport.
49
2016 First-Half Results / 28 July 2016
TRAVEL RETAIL IN NORTH AMERICA
 North America
• The very strong growth of the Retail activities in Canada and the United States is driven by the acquisition of Paradies in November
2015 (550 stores) and, to a lower extent, by the JFK T4 acquisition in April 2015 (17 stores).
• The comparable network is growing by +5.1% with positive ramp-up effects on LAX, Austin and Dallas platforms and some early
impacts of the commercial synergies.
• The Paradies integration process is going and delivering results as per plan, and the expected level of synergies is confirmed.
50
2016 First-Half Results / 28 July 2016
TRAVEL RETAIL IN ASIA-PACIFIC
 Pacific
• Total revenue in the Pacific have been growing by +21.8% versus 2015:
- the growth is driven by Duty Free and Luxury (+175%) with the take-over of the Auckland duty free concession which opened in late June
2015, as well as the recently opened Duty Free & Luxury operations (Victoria’s Secret, MAC and Amuse concepts in different locations);
- Travel Essentials revenue down -8.6% versus 2015 following the closing of our Sydney T1 concessions and despite the strong
performance of our operations in New-Zealand (+15.1%).
 Asia
• Revenue growth by +4.2%, despite a rather challenging environment:
- China is growing strongly by +32.6% with the success of the new strategy in place since 2015. The growth comes from the sustained
development of the Fashion activities in all airports (Shenzhen, Xi’an, Kunming);
- Singapore is slightly down by -3.9% following the unfavorable transfer of passengers from Terminal 2 (T2) to Terminal 3 and the closure
of the T2 Fashion Gallery (which has re-opened in July) partly compensated by the new T1 fashion stores and the development of the
new products and commercial initiatives;
- Hong Kong is down -3.2% impacted by the construction period between February and April, and the reduction of the space allocated to
the Relay stores; this is partly compensated by the development of new fashion and specialty concepts;
- Malaysian revenue are limited but down -55% following the closure of the non profitable stores of KLIA2 in 2015.
51
SIGNIFICANT
EVENTS
2016 First-Half Results
28 July 2016
2016 First-Half Results / 28 July 2016
LAGARDÈRE ACTIVE
 Announcement of a voluntary redundancy plan
• With the structural decline in revenue from the printed press, Lagardère Active has to continue rebalancing its business portfolio in favor
of audiovisual activities, develop BtoB revenues and intensify the efforts for reducing its costs.
• In March 2016, Lagardère Active has announced a reorganisation project related to the press magazine division, the advertising division
and some functional corporate departments.
• It will be achieved by a voluntary redundancy plan that can lead to a potential reduction of 220 posts.
53
2016 First-Half Results / 28 July 2016
MAGAZINE PUBLISHING
 Disposal of the magazine Parents to Uni-Éditions in January 2016.
 Audiences One Global
The global audience (i.e on all devices: print, computer, smartphones and tablets) are still growing for our main weeklies: Elle (+1.9%*);
Paris Match (+4.9%*) and Télé 7 Jours (+0.8%*).
 Print Advertising
In a specially depressed print advertising market, Lagardère Active’s advertising revenue decreased by -10.4% (-8.4% excluding regional
revenue). Elle, Télé 7 Jours and Version Femina remain leaders on their competitive segments.
 Print Circulation
In a declining market, the circulation revenue is down by -2.1%. The newstand decline is partially offset by the subscription revenue trend
and the mid-2015 price increase of some of our magazines.
 Digital
Digital revenue on apps and websites is still growing, driven by the good performances of Elle, Paris Match and Télé 7 Jours. Public and
Télé 7 Jours applications are among the leaders of their segments, as well as Elle on high-end women's audiences.
 Licensing
The licensing activity benefits from the launch of its 45th Elle international website in Kazakhstan and the launch of 2 new spin-off
(Elle Wedding Germany & 100% Cheveux Elle Quebec).
In addition, the “Elle content sharing program”, consisting in creating 20 exclusive fashion stories per year for the Elle international
network, was launched in January 2016.
*Source:
ACPM; One Global 2016 V1 vs. One Global 2015 V4.
54
2016 First-Half Results / 28 July 2016
RADIO
 Europe 1
• Ranks No.2 among the news and entertainment private radio stations in France and reaches over 4 million people daily.
• The latest radio audience measurement published by Médiamétrie* resulted as follows:
- 7.8% of cumulative audience;
- 7% audience share on the 13 years old segment;
- 5.1% audience share on the 25-59 years old commercial target.
• The digital strategy of Europe 1 is to develop revenue on mobile, video and through social networks. Europe 1 ranks first on mobile
among radio stations and no.1 on podcasts.
 RFM
• RFM’s success is due to its diverse musical programming and the quality of its hosts.
• RFM attracts 2,239,000 listeners and achieves 3.1% audience share*.
 Virgin Radio
• Virgin Radio has consolidated its good results on the last wave, with 2,657,000 listeners and a cumulative audience of 5.0%*.
This represents the best results for the station among the last 7 years.
• More listeners who listen longer: success of the prime talk show and the music.
 International radios
• In H1 2016, advertising sales increased significantly in most of the countries where Lagardère Active Radio International (LARI)
operates, driven again by remarkable performances in Poland.
• LARI remains a major radio player in the Central and Eastern Europe and begins to strengthen its positions in West Africa with
Vibe Radio launched in Senegal (September 2014) and then in Ivory Coast (September 2015).
• Pursuing its strategy of developping radio networks into new growth markets and regions, LARI recently acquired stakes in two radio
stations broadcasting in Cambodia.
• LARI’s digital activity continued to progress, reaching close to 7.5 million unique visitors in June 2016 (+25% in a year).
*Médiamétrie;
April-June 2016.
55
2016 First-Half Results / 28 July 2016
TELEVISION ACTIVITIES
TV CHANNELS
 With Gulli, TiJi and Canal J, Lagardère Active remains the first TV offer for children in France:
• Gulli, broadcasting in HD since April 2016, remains the leader among the kids channels on the French television market, ahead of TF1
and France 4 (the state-owned kids channel);
• Lagardère Active is keeping its leadership over the kids advertising TV market with a 33% market share.
 Distribution agreements:
• Lagardère Active signed a new distribution agreement with CanalSat and most of the French internet providers, including the exclusive
launch of the new channel Elle Girl on CanalSat;
• Mezzo is now broadcasting in 57 countries.
 Digital:
• TV Replay consumption continued to increase over the period and Gulli.fr is the leading website for children in France.
TV PRODUCTION AND DISTRIBUTION: LAGARDÈRE STUDIOS
 Revenues increase by +7% in H1 2016 vs. H1 2015, thanks to the impact of the acquisition of Grupo Boomerang TV
in May 2015.
 Lagardère Studios remains the no.1 producer of scripted contents and the no.2 of non-scripted programs in France:
• good audience performances for prime time TV series: Clem (TF1) and Caïn (France 2);
• success of the new prime time series aired for the first time in H1 2016 (Agathe Koltès and Tandem – France 3);
• the last five episodes of coproduction Midnight Sun for Canal+ and SVT were delivered in June (Atlantique Productions).
 Grupo Boomerang TV continues to perform well in 2016:
• in Spain and in Italy: good audiences figures for the daily series El Secreto de Puente Viejo and Acacias 38.
 African developments:
• green light for the second season of C’est la vie, African TV series produced by Keewu.
56
2016 First-Half Results / 28 July 2016
DIGITAL PURE PLAYERS
 Lagardère Active is operating on the digital segment with websites and applications of its own offline brands
(including Elle, Europe 1, Gulli, Public and Télé 7 Jours) as well as its pure player brands (Doctissimo.fr,
BilletReduc.com, Boursier.com, LeGuide.com).
 Lagardère Active is one of the leading media groups in audience, with more than 15 million unique visitors (UVs) in
France on the fixed-line internet, and 10 million of UVs on mobile*.
 Doctissimo.fr, is the leading website on e-health and wellbeing with nearly 6 million of UVs. It has strengthened its position
by creating a unique ecosystem within the e-health sector:
• MonDocteur.fr, online booking website for medical consultations manages monthly more than 1 million appointments, operates in
250 French cities with thousands professionals (doctors, health centers, clinics);
• Doctipharma.fr, a service company allowing French pharmacies to create their own online dispensary.
 BilletReduc.com, leader in France for online booking at cut prices, continues its growth with the launching of its new
application for smartphones.
 Newsweb, Boursier.com’s editor and first French editorial agency on financial information, continues developing its portfolio
through a monetisation activity for third-party websites.
 LeGuide:
• on 26 July 2016, Lagardère Active received a firm offer from online shopping search engine Kelkoo to acquire the shares of
LeGuide.com, and accordingly has granted Kelkoo exclusivity to pursue discussions.
*Source:
Médiamétrie; May 2016 for the fixed-line internet and March 2016 for the mobile.
57
SIGNIFICANT
EVENTS
2016 First-Half Results
28 July 2016
2016 First-Half Results / 28 July 2016
BUSINESS UNITS
 Football Europe
• Successful delivery of key projects for the UEFA Euro 2016™ tournament:
- development, organisation and management of the Fan Zone in Paris;
- brand activation programs for various of the tournament’s major partners;
- official hospitality sales agent for six territories.
 Golf
• Successful launch of the SMBC Singapore Open and delivery of the Nordea Masters.
 Olympics and Major Events
• Commissioned by the Budapest 2024 Summer Olympic and Paralympic Games Bid Committee to lead an international consortium that
will advise the city on its bid to host the 2024 Games.
 Media
• Exclusive multi-year deal from 2016 to 2020 with the International Table Tennis Federation (ITTF) to sell the media rights in a selection
of territories.
 Endurance
• Divestment of the endurance and mass participation business.
 Rugby
• Long-term marketing and strategic consultancy agreement signed with European Professional Club Rugby.
59
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