Lagardère SCA : 2013 Full-Year Results

  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
tfb@lagardere.fr
or
Ramzi Khiroun, tel: +33 1 40 69 16 33
rk@lagardere.fr
or
Investor Relations Contact
Anthony Mellor, tel: +33 1 40 69 18 02
amellor@lagardere.fr
 
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