Lagardère SCA: Quarterly Information – Third Quarter 2013

  Lagardère SCA: Quarterly Information – Third Quarter 2013

       2013 Recurring EBIT^(1) from Media Activities Guidance Confirmed

              Accelerated Implementation of Strategic Priorities

  Net Sales as of September 30, 2013: €5,282M, Down 1.1% on a Like-for-Like
                                  Basis^(2)

Business Wire

PARIS -- November 12, 2013

Regulatory News:

The Lagardère group (Paris:MMB) accelerated the implementation of its three
strategic axes: disposal of minority stakes (Canal+ France), investment in
growing activities (acquisition of Travel Retail activities in Venice) and
reduced exposure to print products (reorganisation of French Magazine
Publishing).

During the third quarter 2013, mixed evolution of Group’s activities: Travel
Retail, General Literature in the United States, Partworks and Radio posted
strong performance. By contrast, the pre-announced slowdown in Education (tied
to a lack of renewal of school curricula) and the on-going decline in print
media circulation dragged the activity down.

Third-quarter net sales came in at €1,877m, down by 2.9% on a like-for-like
basis (by 4.4% on a reported basis). The differential between reported and
like-for-like performance is attributable to a negative foreign exchange
effect (of -€43m, associated primarily with Lagardère Publishing and Lagardère
Services), partially offset by a positive scope effect (of +€13m, mainly at
Lagardère Services).

Of particular significance this quarter was the negative impact of the end of
tobacco sales at Lagardère Services in Hungary due to a regulatory change.
Excluding this item, activity would be up +0.2% like-for-like in the third
quarter at Lagardère Services, and Group’s activity decrease reduced to -1.9%.

  *Lagardère Publishing: good performance in General Literature in the United
    States (+11%) as well as by Illustrated Books (+11.9%) and Partworks
    (+11.7%). As expected, total revenue was down with, in particular, a
    slowdown in Education in both France (-16%) and Spain, and in General
    Literature in France (-10.3%) due to an unfavourable comparison effect
    with the third quarter of 2012.
  *Lagardère Active:  during this quarter a good performance in Radio (+8.4%)
    and Audiovisual Production, which continues to grow, at +4.4%. A highlight
    was a smaller decline in advertising (-5.3%) and in circulation (-5.2%),
    in line with the market.
  *Lagardère Services: the Travel Retail business is continuing to grow (+5.2
    % reported and +2.6% like-for-like), particularly in Duty-Free and Food
    Services. Other than the decline in print products, the Distribution
    business was primarily impacted this quarter (-8.1% like-for-like) by the
    end of tobacco sales in Hungary due to a regulatory change. Excluding this
    item, Distribution business would be down -3.1%, slightly better than the
    previous quarters.
  *Lagardère Unlimited:  Net sales totalled €98m, down 8.1%. Activity was
    negatively impacted by a less favourable event schedule.

At September 30, 2013

Net sales stood at €5,282m, down slightly on a like-for-like basis (-1.1%),
and on a reported basis (-1.3%). The differential between reported and
like-for-like performance is mainly due to a negative foreign exchange effect
(of -€67m, primarily tied to the pound sterling, the US dollar and the
Australian dollar). This was partially offset by a positive scope effect (of
+€53m), mainly related to acquisitions of Travel Retail businesses (Aeroporti
di Roma, DFS Wellington in Australia/New Zealand) and LeGuide group.

I. GROUP NET SALES AND ACTIVITY

                                          
                 Cumulated net sales at       Change
                 Sept. 30 (in €m)
                 At           At              Reported     Like-for-like
                September       September
              30,          30,          2013/2012    2013/2012
                 2012            2013
LAGARDÈRE     5,352        5,282        -1.3%        -1.1%^(1)
Lagardère        1,531           1,497           -2.2%           0.2%
Publishing
Lagardère        672             687             2.3%            -0.4%
Active
Lagardère        2,829           2,796           -1.2%           -1.2%^(2)
Services
Lagardère     320          302          -5.9%        -7.5%
Unlimited
^(1)-0,7% excluding end of tobacco sales in Hungary.
^(2)-0,4% excluding end of tobacco sales in Hungary.


                  Q3 net sales (in €m)     Change
                    Q3 2012    Q3 2013    Reported     Like-for-like
                                        2013/2012    2013/2012
LAGARDÈRE         1,963      1,877      -4.4%        -2.9%^(3)
Lagardère            626           580           -7.4%           -4.1%
Publishing
Lagardère            222           216           -2.7%           -1.7%
Active
Lagardère            1,008         983           -2.5%           -1.9%^(4)
Services
Lagardère         107        98         -8.4%        -8.1%
Unlimited
^(3) -1.9% excluding end of tobacco sales in Hungary.
^(4) +0.2% excluding end of tobacco sales in Hungary.


Lagardère Publishing

Net sales came to €1,497m on September 30, 2013, up 0.2% on a like-for-like
basis: General Literature’s excellent performance (+23% in France and +9% in
the United States) offset the expected slowdown in the Education business in
France and Spain and a weaker schedule of new releases in General Literature
in France in the third quarter. The unfavourable foreign exchange effect
stands at -€36m and is essentially related to the pound sterling, the US
dollar and the Japanese yen.

Third quarter 2013:

Sales decreased 7.3% on a reported basis and 4.1% on a like-for-like basis.
The differential is mainly due to a negative foreign exchange effect of €20m.

The quarter was marked by the end of the cycle of school curricula renewal,
which impacted Education sales in France and in Spain.

General Literature performance was uneven: activity in France and in the
United-Kingdom suffered from a negative comparison effect while activity in
the United States enjoyed a particularly dynamic quarter.

In France: the excellent performance in Illustrated Books (+11.9%) did not
enable to offset the less buoyant Education market (-16.0%), as school
curricula were not renewed this year. General Literature activity (-10.3%) was
hurt by the effects of negative comparison with the success of J.K. Rowling's
novel, The Casual Vacancy, in the third quarter 2012, partially offset by the
significant contribution of the second and third instalments of the Fifty
Shades trilogy and the launch of Dan Brown's Inferno.

In English-speaking countries: General Literature sales in the United States
continued to soar (+11.0%), particularly with the success of Nicholas Sparks'
The Longest Ride. The United Kingdom (-3.9%) was impacted by the sharp
downturn in International activities (New Zealand and Australia), as well as a
negative comparison effect tied to the release of J.K. Rowling's novel in
2012.

In Spain: activity declined (-21.2%) with the lack of curricular reform in
Education and the lingering effects of the economic crisis.

A highlight was the very strong performance in Partworks (+11.7%), which
continue to enjoy strong growth in France and Russia notably, boosted by a
series of successful launches.

E-book sales still enjoy strong growth and in the third quarter represented
27% of the trade^(3) market in the United States (compared to 20% in the third
quarter of 2012), 30% of the Adult trade market in the United Kingdom
(compared to 20% in the third quarter of 2012), that is, 9.4% of Lagardère
Publishing's total net sales (compared to 6.4% in the third quarter of 2012).

Lagardère Active

Net sales at the end of September 2013 stood at €687m, up 2.3% on a reported
basis and down slightly by 0.4% on a like-for-like basis. The differential is
mainly attributable to a positive scope effect (+€18m, stemming mainly from
the acquisition of the LeGuide group).

The activity over the first nine months of the year remained almost stable,
largely due to an increase in Audiovisual Production (up 28%), which occurred
mainly in the first quarter and cannot be extrapolated over the entire year.
These items are offset by the decline in Press Magazine circulation (-6.8%
over the period), and, consequently, in related advertising sales.

Third quarter 2013:

Net sales came out to €216m, down 1.7% on a like-for-like basis. This quarter
there was a less pronounced decline in advertising (-5.3%) and circulation
(-5.2%), in line with the market. By contrast, Radio performed very well, and
Audiovisual Production continued to climb.

Magazine Publishing: the decrease in net sales (-5.7%) is mainly due to the
decline in revenue from advertising (-11.2%) and circulation (-5.2%).

Radio: Radio revenue is up sharply (+8.4%), particularly at Europe 1 (+19.7%,
thanks to good advertising sales and diversification); music radio also turned
in solid performance (+4.5%), as did Central Europe (+3.3%) thanks to a better
audience. Radio confirms thus its resilient business model, suited to the
current advertising environment.

TV Production: activity is up (+4.4%). A return to normal standards is
expected at the end of the year after the trends observed in the first half of
the year, which had been exceptionally robust.

Digital business was down (-4.4% on a like-for-like basis) due to unfavourable
changes in the advertising market and a slowdown at LeGuide: the highly
competitive environment in Germany (Ciao) was not offset by the increase in
the site's traditional businesses.

Lagardère Services

Net sales stood at €2,796m at September 30, 2013, down 1.2% both on a reported
basis and on a like-for-like basis. The negative foreign exchange effect (of
-€29m) was offset by a positive scope effect, due to the consolidation of
activities at Aeroporti di Roma, DFS Wellington and distribution in Hungary,
partially counterbalanced by the deconsolidation of OLF (Distribution in
Switzerland) and the impact (-€40m) previously mentioned of the transformation
of a telephony sales contract in Hungary into a commission contract.

Over the first nine months of the year, activity was boosted by the momentum
in Travel Retail (+6.1% reported), driven by the growth in Duty Free and Food
Services like-for-like, activity is enjoying strong growth in Asia (+ 29.6%),
in Romania (+11.5%), in the Czech Republic (+5.2%) and in Poland (+4.8%).
These positive items were mitigated by a sharp decrease in print products and
by the slowdown in air traffic growth. At end July (latest figures), air
traffic was slightly up worldwide by 2.9%: +1.8% in Europe, +0.6% in North
America and +5.5% in Asia-Pacific.

Distribution is still feeling the effects of the decline in press. Revenues
were also hard hit by the end of tobacco sales in Hungary following a
regulatory change in July 2013. Without this effect, revenue would have been
down by -4% like-for-like for the first 9 months (versus -5.8% without
adjustment for this item).

Third quarter 2013:

Net sales came out to €983m, down 2.5% on a reported basis and down 1.9% on a
like-for-like basis. The division's business mix continues to evolve: Travel
Retail now represents 61% of the mix (up 5% relative to the third quarter of
2012) compared to 39% for LS distribution (Integrated Retail and Press
Distribution). Without the impact of the end of tobacco sales in Hungary,
performance would be up by 0.2% this quarter (like-for-like).

LS travel retail

Travel Retail posted +5.2% growth on a reported basis and +2.6% growth
like-for-like, driven by the development of Duty Free and Food Services
activities in Europe and network expansion in Asia. In France, the decline in
print product sales at Relay, down -0.9% overall, was offset by brisk Duty
Free sales and diversification initiatives. Duty Free continued to grow in
Central Europe: +6.2% in Poland and +8.4% in the Czech Republic, where growth
was also fuelled by Food Services activities. Business is up sharply in Asia
(+37.7%), driven by new concepts, strong business momentum in Singapore and
Hong Kong as well as network development in China (fashion) and Malaysia.

Activities at Aeroporti di Roma were marked this quarter by the completion of
renovation and expansion works. They should achieve their full potential
starting from the fourth quarter of 2013 and in 2014 as expected.

LS distribution

Distribution activities are down 12.4% on a reported basis, -8.1%
like-for-like and -3.1% excluding the effect of the end of tobacco sales in
Hungary. Revenues remained negatively impacted by the structural erosion of
print products and the lingering crisis in Spain.

In contrast, a highlight was the positive contribution of diversification
activities with the strong performance turned in by Euro-Excellence (importer
and distributor of upscale grocery products, +29.1%) in North America, and the
integration of convenience products distribution activities as well as of
services to e-merchants in Hungary and in Spain.

Lagardère Unlimited

Net sales at September 30, 2013 stood at €302m, down on a reported basis
(-5.9%) and on a like-for-like basis (-7.5%). The differential is attributable
to a positive scope effect, somewhat offset by a negative foreign exchange
effect.

The decline in revenue is due primarily to the transformation of the AFC^(4)
contract into a commission contract (vs. the previous buy-out) at World Sport
Group, which reduced net reported sales. Of particular note was the
unfavourable seasonality effect on the UAFA^(5) contract, which was only
partially offset by the Gulf Cup of Nations.

In contrast, revenue is up at Sportfive due to the good performance of German
football club marketing rights and the ACN^(6) media and marketing rights in
2013, as well as the qualifying rounds for football’s World Cup. These
positive items were partially offset by the expiration of contracts for media
rights to certain football leagues in Europe.

Third quarter 2013:

Net sales came out to €98m, down on a reported basis (-8.4%) and down on a
like-for-like basis (-8.1%).

Business in Europe was negatively impacted by a weak contribution of
qualifying matches for football’s World Cup in 2014 due notably to an
unfavourable draw (lower market value of matches) and by the non-renewal of
contracts with European football federations and certain European clubs.

World Sport Group activity is impacted, as expected, by an unfavourable
calendar effect due to a weaker event schedule for the AFC contract.

II. Key events since 30 June 2013

On October 28, 2013 Lagardère and Vivendi announced an agreement on Vivendi’s
purchase of the 20% stake in Canal+ France owned by Lagardère for €1,020m in
cash. The transaction was completed on November 5, 2013.Page of 6

On October 17, 2013, Lagardère Active announced its plan to reorganise its
Magazine Publishing business around its strongest brands, with the disposal of
10 print media titles in France. The purpose of the plan is to return to
growth by concentrating on leading brands that have key potential for digital
development.Page of 6

On September 19, 2013, Lagardère Services announced the establishment of an
industrial partnership and business combination with Airest (affiliate of the
Italian group Save) including Food and Beverage (82% of activity) and Travel
Retail (18%) activities. This is aimed at creating important synergies and
developing activities, mainly at the Venice airport.

III. Outlook

  *Profitability

TARGET FOR RECURRING EBIT FROM MEDIA ACTIVITIES IS MAINTAINED

The good results over the first half and the outlook for the end of the year
allow to maintain our guidance on Recurring EBIT from Media activities for
2013 as announced in March.

In 2013, recurring EBIT from Media activities is expected to grow between 0%
and 5% compared to 2012 at constant exchange rates. This target is primarily
based on the expected decline in advertising sales of approximately 7% at
Lagardère Active.

  *Financial Position

The Group's financial position remains sound with good liquidity and a variety
of sources of financing.

Net debt-to-equity is set to decline substantially at year-end, due to the
disposal of our stake in Canal+ France.

                                     ***

Investor calendar

  *Announcement of 2013 net sales

2013 net sales will be released on February 11, 2014, at 8 a.m.

  *Announcement of 2013 results

2013 full-year results will be released on March 12, 2014 at 5:35 p.m.

                                     ***

FOR THE RECORD – DEFINITION OF RECURRING MEDIA EBIT

Recurring Media EBIT of consolidated companies is defined as the difference
between the result before financial charges and tax and the following items of
the profit and loss statement:

  *contribution of associates;
  *gains or 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;
  *amortisation of acquisition-related intangible assets.

Lagardère is a world-class pure-play media group (Book and e-Publishing;
Press, Audiovisual, Digital and Advertising Sales Brokerage; Travel Retail and
Distribution; Sport Industry and Entertainment).

Lagardère shares are listed on Euronext Paris.

Important Notice:

Some of the statements contained in this document are not historical facts but
rather are statements of future expectations and other forward-looking
statements that are based on management's beliefs. These statements reflect
such views and assumptions as of the date of the statements and involve known
and unknown risks and uncertainties that could cause future results,
performance or future events to differ materially from those expressed or
implied in such statements.

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.

Lagardère SCA disclaims any intention or obligation to update or review the
forward-looking statements referred to above. Consequently Lagardère SCA is
not responsible for any consequences that could result from the use of any of
the above statements.

^(1)Recurring EBIT before associates. See definition at the end of the press
release.
^(2)Constant scope and exchange rates.
^(3)Adult trade works.
^(4)Asian Football Cup.
^(5)Union of Arab Football Associations.
^(6)Africa Cup of Nations.

Contact:

Lagardère SCA
Press
Thierry Funck-Brentano, +33 1 40 69 16 34
tfb@lagardere.fr
or
Ramzi Khiroun, +33 1 40 69 16 33
rk@lagardere.fr
or
Investor Relations
Anthony Mellor, +33 1 40 69 18 02
amellor@lagardere.fr
 
Press spacebar to pause and continue. Press esc to stop.