Lagardère SCA : 2013 Full-Year Results Significant improvement of recurring EBIT from Media activities^(1) (+5.9%^(2)) in a difficult global economy Net income – Group share: €1,307 million *Net sales: €7,216million, down 1.3% on a like-for-like basis^(3) *Recurring EBIT from Media activities: €372million, up 5.9% at constant exchange rates *Net income – Group share: €1,307million thanks to the gain on EADS disposal. Proposals to maintain the ordinary dividend at €1.3 per share and of an exceptional distribution of 6€/share 2014 Recurring EBIT from Media activities target: growth between 0% and +5%^(4) Business Wire PARIS -- March 12, 2014 Regulatory News : Lagardère SCA (Paris:MMB) : 2013 saw significant progress in the continuing implementation of the Lagardère Group re-focus strategy: *Disposal of minority stakes (EADS, Canal+ France and Amaury); *Development of growing businesses (Travel Retail and TV Production); *Reducing exposure to declining activities (restructuring the Magazines Publishing business and initiating a divestiture process for LS distribution). For the first time, activities related to print products accounted only for 49% of the Group's net sales (down two percentage points relative to 2012). In a difficult global economy, the Lagardère Group reported good performances with, of particular note, an exceptional net income and a 5.9% increase in recurring EBIT from Media activities at constant exchange rates, performing just above announced guidance (growth between 0% and 5% at constant exchange rates). *Net sales totalled €7,216million, down -1.3% on a like-for-like basis, with an upward momentum at the end of the year. *Recurring Media EBIT came out to €372million, up 4.0% on 2012 at current exchange rates, on the back notably of: *strong recurring EBIT (€223 million) and good performance turned in by Lagardère Publishing, with a slight increase in profitability (10.8%, up 0.1pt), thanks to good results in General Literature and Partworks; *a €96million Recurring EBIT at Lagardère Services (compared to €104 million in 2012). Brisk Travel Retail sales still do not offset the decline in press products; *resilient recurring EBIT at Lagardère Active (€64million). Effective cost control and good performance by Radio and TV Production offset the negative trends in Magazines. *improving recurring EBIT at Lagardère Unlimited (-€11million compared to -€33million in 2012). Stable excluding the impact of the provision for the IOC^(5) contract recognised in 2012. *Net income – Group share at €1,307million, compared to €89million in 2012, thanks to the gain on EADS stake disposal. Adjusted net income – Group share (excluding the EADS contribution and non-operating items) came in at €172million, down €35million relative to 2012, attributable mainly to higher tax charges. *Cash flow from operations rose (€570million, up €39million), notably due to a very significant improvement in change in Working Capital Requirement (WCR). Total net cash provided by operating and investing activities accounted for a net cash inflow of €3,445million. *The Group shows at the end of the year a net cash surplus of €361million, compared to a net debt at year-end 2012 of €1,700million. This improvement is mainly attributable to the disposals of non-strategic assets. I- NET SALES AND RECURRING EBIT BEFORE ASSOCIATES Net sales totalled €7,216million, down slightly on a like-for-like basis (-1.3%), and on a reported basis (-2.1%). The difference between reported and like-for-like data is due essentially to a negative foreign exchange effect (-€112million, in particular on the pound sterling, the US dollar and the Australian dollar), partially offset by a positive scope effect (+€55million), primarily attributable to acquisitions in Travel Retail (Rome airports and DFS Wellington in Australia/New Zealand) and the LeGuide group. Net sales (€m) Reported change Like-for-like 2012 2013 2013/2012 change 2013/2012 LAGARDÈRE 7,370 7,216 -2.1% -1.3%^(1) Lagardère Publishing 2,077 2,066 -0.5% +1.9% Lagardère Services 3,809 3,745 -1.7% -0.9%^(2) Lagardère Active 1,014 996 -1.9% -3.8% Lagardère Unlimited 470 409 -13.0% -13.6% ^(1) -0.7%, excluding the end of tobacco sales in Hungary. ^(2) +0.3%, excluding the end of tobacco sales in Hungary. Recurring EBIT from Media activities stood at €372million, up 4.0%. Stripping out the negative foreign exchange effect (-€7m), recurring EBIT stands at €379million, up €21million (+5.9%) relative to 2012 and slightly above initially announced guidance (growth between 0% and 5% at constant exchange rates). Recurring EBIT before Difference between 2013/2012 on a associates (€m) reported basis (€m) 2012 2013 LAGARDÈRE Media 358 372 +14 Lagardère 223 223 0 Publishing Lagardère Services 104 96 -8 Lagardère Active 64 64 0 Lagardère -33 -11 +22 Unlimited *Lagardère Publishing: stable recurring EBIT before associates and an improvement in the operating margin thanks to good performances in General Literature and Partworks. Activity 2013 was a good year with net sales at €2,066 million, up 1.9% on a like-for-like basis. Profitability Lagardère Publishing successfully raised its operating margin to 10.8% in 2013, up from 10.7% in 2012, thanks to the excellent performance turned in by General Literature and Partworks. The division's recurring EBIT before associates was €223million, up €6m vs. 2012 at constant exchange rate. This result is achieved despite the anticipated decline in Education attributable to the absence of curriculum reform and the negative comparison effects (number of best-sellers in 2012). The negative foreign exchange impact brings the recurring EBIT evolution back to stability relative to 2012. In France, recurring EBIT before associates edged up slightly: the good performance turned in by General Literature (notably, the publication of novels by E L James and Dan Brown) and Illustrated Books (Asterix and the Picts) offset the sharp decline in Education linked to the absence of curriculum reform. In the United States, recurring EBIT before associates was significantly higher thanks to several best-sellers and the positive effects of growth momentum in Digital Books. In the United Kingdom, recurring EBIT before associates was down slightly: the commercial successes recognised at the end of the year were offset by continuing difficulties internationally and the unfavourable comparison effect with 2012, that was marked by the release of numerous best sellers. Partworks posted solid recurring EBIT before associates, with successful launches in Japan and in Russia. Finally, recurring EBIT in Spain/Latin America was down, with, in particular, the absence of curriculum reform in Spain and the lingering effects of the economic crisis, partially offset by cost-cutting programmes. *Lagardère Services: fast-paced growth in Travel Retail, partly offset by declining press product sales. Activity 2013 net sales totalled €3,745million, down 0.9% on a like-for-like basis (up 0.3%, stripping out the impact of the end of tobacco sales in Hungary). For 2013 as a whole, Travel Retail continued its solid trend, accounting now for 60% of Lagardère Services' sales compared to 56% in 2012. Profitability The operating margin came out at 2.6%, with recurring EBIT before associates down slightly to €96million. Travel Retail's recurring EBIT before associates rose €3million due to the positive effects of acquisitions and extension and modernisation of networks and concepts and to the solid performance turned in by Duty Free and Food Services. Nonetheless, these factors were partially overshadowed by the decline in press products in travel essentials (Relay). Distribution activities benefit from diversification efforts and continuing operational cost control that do not entirely offset the structural difficulties in print press products. Recurring EBIT before associates was down €11million, including a loss and provision related to the bankruptcy of a customer (regional wholesaler) at Curtis (United States). *Lagardère Active: effective cost control and good performance by Radio and TV Production, offsetting the negative trend in Magazines. Activity 2013 net sales totalled €996million, down 1.9% on a reported basis and down 3.8% on a like-for-like basis. Profitability The division successfully maintained its operating margin at 6.4%, with a recurring EBIT before associates of €64million, virtually stable relative to 2012. Thanks to continued structural and operational cost savings plan and the good performance of Radio and Television, the division successfully offset the decline in magazine circulation and, therefore, the associated advertising revenue. *Lagardère Unlimited: recurring EBIT before associates was up sharply but stable excluding the impact of the provision for the IOC contract recognised in 2012. Activity Net sales came out to €409million, down on a reported basis (-13%) and on a like-for-like basis (-13.6%). Profitability Recurring EBIT before associates came out at -€11million, up €22million relative to 2012, when the provision on the contract signed with the IOC was recognised (-€22million). Stripping out this item, recurring EBIT before associates was stable, with good performance by Sportfive (marketing of German football club rights and, to a lesser extent, those of the ACN^(6)) and a reduction this year in the loss in European media rights activities, that offset the negative seasonality of the AFC^(7) contract at World Sport Group. Recurring EBIT before associates of Non-Media activities stood at -€45million (compared to -€19million in 2012) primarily due to the profit-sharing bonus paid to employees subsequent to the exceptional dividend linked to the disposal of EADS stake. II- OTHER INCOME STATEMENT DATA CONSOLIDATED INCOME STATEMENT (€m) FY 2012 FY 2013 Net sales 7,370 7,216 Media Recurring EBIT before associates 358 372 Total recurring EBIT before associates 339 327 Income (loss) from associates* 105** 7 Non-recurring/non-operating items (216) 1,193 Income before interest and tax 228 1,527 Net interest expense (82) (91) Income before tax 146 1,436 Income tax expense (40) (117) Total net income 106 1,319 attributable to minority interests (17) (12) Net income – Group share 89 1,307 *Before impairment losses. **Of which €89m contribution from EADS. CONTRIBUTION FROM ASSOCIATES^(8) Net income from associates stood at €7million, down sharply from 2012 (€105million), when the Group received an €89million contribution from EADS, €5million from Marie Claire and €1million from Amaury. NON-RECURRING/NON-OPERATING ITEMS Non-recurring/non-operating items totalled €1,193million, compared to -€216million in 2012. They mainly comprise: *the €1,671million gain on the sale of the ownership interest in EADS (+€1,823million) and the losses on Canal+ France (-€137million) and Amaury (-€9million); *-€328million in impairment losses on property, plant & equipment and intangible assets at Lagardère Publishing (€24million), especially on Partworks in Spain, at Lagardère Services on Payot Naville Distribution in Switzerland (€29million), and at Lagardère Active (€272million, including €219m on Magazine Publishing and €35m on the ownership interest in Marie Claire); *-€122million in restructuring costs, with €91million at Lagardère Active, including estimated costs for the restructuring of the Magazine division; *-€28million on the amortisation of acquisition-related intangible assets and costs, including €14million on concessions at Lagardère Services and €9million at Lagardère Unlimited. INCOME BEFORE INTEREST AND TAX This item rose sharply to €1,527million compared to €228million in 2012, mainly reflecting the capital gain on the disposal of EADS. NET INTEREST EXPENSE Net interest expense stood at €91million, up €9million relative to 2012, stemming primarily from the cost of the partial redemption in the first half of 2013 of the bonds maturing in 2014 aimed at reducing the amount to be redeemed in October 2014. This transaction will translate into lower interest expenses in 2014. INCOME TAX EXPENSE Income tax expense stood at €117million versus €40million in 2012 and includes notably: *the additional 3% tax in France on dividends paid (€40million); *the capital gain tax on the disposal of EADS; *the cancellation of a deferred tax asset, used in 2013 (€24million). Factoring in all these items, net income came out at €1,319million, of which €1,307million is attributable to the Group and €12million to minority interests. ADJUSTED NET INCOME – GROUP SHARE Adjusted net income (excluding the contribution from EADS and non-operating items) came in at €172million, down €35million relative to 2012, mainly attributable to a higher tax charge and by the cost of the partial redemption of the bonds maturing in 2014. (€m) 2012 2013 Net income – Group share 89 1,307 Equity-accounted contribution from EADS (89) - Amortisation of acquisition-related intangible assets & other 27 20 acquisition-related expenses* Impairment losses on goodwill, property, plant & equipment 138 298 and intangible fixed assets* Restructuring costs* 37 117 Gains/(losses) on disposals* 5 (1,624) Tax contribution on dividends - 40 Exceptional bonus for employees* - 14 Adjusted net income excluding EADS 207 172 *Net of tax. NET INCOME PER SHARE Net income per share – attributable to the Group came out at €10.22 versus €0.70 in 2012. Adjusted earnings per share attributable to the Group came out at €1.34 compared to €1.62 in 2012. III- OTHER FINANCIAL INFORMATION TOTAL CASH FLOWS FROM OPERATING AND INVESTING ACTIVITIES (€m) 2012 2013 Cash flow from operations before interest and tax 552 454 Changes in working capital (21) 116 Cash flow from operations 531 570 Interest paid and received, income taxes paid (140) (235) Cash generated by/(used in) operating activities 391 335 Acquisition of property, plant & equipment and intangible (264) (296) assets Disposal of property, plant & equipment and intangible assets 20 8 Free cash flow 147 47 Acquisition of financial assets (384) (41) Disposal of financial assets 65 3,410 (Increase)/decrease in short-term investments 28 29 Net cash from operating & investing activities (144) 3,445 2013 cash flows from operations stand at €570million, up €39million relative to 2012. *Drop in cash flow to €454million, reflecting the decline in recurring EBIT before associates, lower depreciation and amortisation expenses and provisions (for the record, a -€22million provision for impairment on the IOC contract was recognised on the 2012 financial statements), the effect of restructuring costs and the profit-sharing bonus to employees during the period, and the decline in dividends received (specifically from EADS). *At +€116million, change in Working Capital Requirements (WCR) rose sharply (+€137m) compared to 2012, notably attributable to the substantial improvement posted by Lagardère Publishing relative to 2012, when advances to authors were high. In 2013, Lagardère Unlimited also posted higher cash inflows linked to the AFC contract while Lagardère Active enjoyed a favourable inventory trend associated with TV Production. Interest paid (net of interest received) rose €10million to €86million, due to expenses linked to the partial redemption of the debt issue maturing in 2014. Income taxes paid were also up (€149million in 2013 versus €64million in 2012), and include notably €40million in taxes linked to the dividends. Cash flow used in investing activities stands at -€337million. *Investments in property, plant & equipment and intangible assets, net of disposals, came in at €288million, up (+€44million) relative to 2012, and mainly concern Lagardère Services (continuing development by setting up Travel Retail sales outlets) and to Lagardère Unlimited (regular purchases of sports rights). *Financial investments stood at €41million, and mainly relate to small acquisitions in the Lagardère Publishing, Lagardère Services and Lagardère Unlimited divisions. Total disposals of financial assets stand at €3,410million, and mainly concern the disposal of non-core stakes (EADS, Canal+ France and Amaury) in the amounts net of costs of €2,272million, €1,017million and €91million, respectively. Total cash flow from operating and investing activities amounted to a net inflow of €3,445million, compared to a net outflow of €144million in 2012 in connection notably with the significant disposals of financial assets and smaller investments in 2013. FINANCIAL POSITION The Group shows at the end of the year a €361million cash surplus compared to a net debt at year-end 2012 of €1,700million. The difference is mainly attributable to the disposal of non-core stakes in EADS, Canal+ France and Amaury, partially offset by the payment of dividends (€1156m in exceptional dividend, €167million in ordinary dividend and a €16million to minority interests). The Group's liquidity position is still very solid, with €3,429million in available liquidity (available cash and short-term investments reported on the balance sheet totalling €1,784million, and €1,645million undrawn from the authorised syndicated credit). The debt repayment schedule presents a cautious profile, as the current financial debt in 2014 is limited to €806million, corresponding principally to the redemption for an amount of €640m in October 2014 of the bond issued in late 2009, which was partially redeemed in the first half of 2013. IV- OUTLOOK/DIVIDENDS 2014 GUIDANCE ON RECURRING MEDIA EBIT BEFORE ASSOCIATES In 2014, the Media recurring EBIT before associates is expected to increase again by 0% to 5% compared to 2013, at constant exchange rates and excluding the effect of the potential disposal of Distribution activities. . DIVIDENDS Annual dividend: The ordinary dividend proposed to the General Meeting of Shareholders to allocate income from the 2013 fiscal year is €1.3 per share, maintained at last year’s level. In light of the extraordinary interim dividend of €9 per share paid on May 30, 2013, the total annual dividend paid to allocate income from the 2013 fiscal year will be €10.3 per share. Exceptional distribution: Following the disposal of Lagardère’s minority stake in Canal+ France, a proposal to distribute a portion of the proceeds from this sale, i.e. €6 per share, will be submitted to the General Meeting of Shareholders on May 6. These amounts are consistent with the Group's dynamic shareholder remuneration policy combining stability on ordinary share dividends since 2007, and occasional operations such as share buybacks (in 2006, 2007 and 2008) and extraordinary distributions (in 2005, 2013 and 2014). Note: the total amount of exceptional dividends distributed following 2013 assets disposals (EADS, Canal Plus and Amaury) represents 57% of the amount of the corresponding disposals. *** Calendar *2014 Annual General Meeting The General Meeting of Shareholders will be held on May 6, 2014 at 10:00a.m. at the Carrousel du Louvre in Paris. *Ordinary Dividend and exceptional distribution Both the ordinary dividend (proposed at €1.3 per share) and the exceptional distribution (proposed at €6 per share) will be paid as of May 13, 2014. The ex-dividend date is May 8, 2014. *Announcement of Q1 2014 sales First quarter net sales will be released on May 13, 2014 at 8:00a.m. A conference call will be held at 10:00a.m. on the same day. *Lagardère Investor Day An Investor Day event dedicated to the Group's growth strategy will take place on May 28, 2014. *Announcement of H1 2014 results First-half 2014 results will be released on July 31, 2014 at 5:35 p.m. A conference call will be held at 5:45p.m. on the same day. *** Definitions Definition of Recurring Media EBIT Recurring Media EBIT of consolidated companies is defined as the difference between income before interest and tax and the following items of the income 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 diversified media group (Book and e-Publishing; Travel Retail and Distribution; Press, Audiovisual, Digital and Advertising Sales Brokerage; Sports and Entertainment). Lagardère shares are listed on Euronext Paris. www.lagardere.com 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 prevailing 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 has no intention and is under no obligation to update or review the forward-looking statements referred to above. Consequently Lagardère SCA accepts no liability for any consequences arising from the use of any of the above statements. ^(1)Lagardère Media division’s recurring EBIT before associates. See definition at the end of the press release. ^(2)At constant exchange rates ^(3)At constant exchange rates and perimeter. ^(4)At constant exchange rates and excluding the effect of the potential disposal of Distribution activities. ^(5)International Olympic Committee. ^(6)Africa Cup of Nations. ^(7)Asian Football Confederation. ^(8)Before impairment losses. Contact: Lagardère SCA Press Contacts Thierry Funck-Brentano, tel: +33 1 40 69 16 34 firstname.lastname@example.org or Ramzi Khiroun, tel: +33 1 40 69 16 33 email@example.com or Investor Relations Contact Anthony Mellor, tel: +33 1 40 69 18 02 firstname.lastname@example.org
Lagardère SCA : 2013 Full-Year Results
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