2013 Full-Year Results - Lagardere.com · This document presents the full-year 2013 results from...

2013 Full-Year Results

March 12, 2014March 12, 2014

DisclaimerThis document presents the full-year 2013 results from the consolidated financial statements of Lagardère SCA as of December 31, 2013. This document does not constitute the Annual Financial Report (Rapport Financier Annuel) within the meaning of article L. 451-1-2 of the French monetary and financial Code (Code monétaire et financier).

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.

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.

2013 Full-Year Results / March 12, 2014

2

Contents

3

Key performance figures pages 4 to 8

Performance by division pages 9 to 18

Group financial results pages 19 to 26

Appendices to consolidated accounts pages 27 to 38

Significant events pages 39 to 64


Key performance figures

4

Changes of scope: main items

5

Lagardère Services• In Travel Retail activity, full-year consolidation in 2013 of AdR Retail (operator

of duty free/duty paid shops in Rome airports) and Duty Free Stores Wellington (duty free – airports in Australia and New Zealand). In 2012, they wereconsolidated respectively as of October 1 and July 1.

Lagardère Active• Disposal of 25% interest held in Éditions P. Amaury in May 2013.• Full-year consolidation of LeGuide group in 2013. In 2012, it was integrated as

of July 1.• Full-year consolidation of BilletRéduc.com in 2013. In 2012, only the balance-

sheet of this entity acquired at year-end was consolitated.

EADS • Disposal of 7.4% interest holding in EADS group on April 12, 2013.

Canal+• Disposal of 20% interest holding in Canal+ France on November 05, 2013.


The good performance in Book Publishing and Travel Retail operations enabled to partly offset the still-difficult economy in

Europe and declining print press markets.

Group net sales – 2013

6*-0.7% excluding end of tobacco sales in Hungary.**At constant perimeter and exchange rates, see definition slide 38.

2012 2013

€7,370m €7,216m

€7,268m €7,171m

Net sales

Like-for-like2013 net sales**

-1.3%*

like-for-likeLike-for-like

2012 net sales*

-2.1%

reported


Key figures – Group

7

*See definition slide 38.**Excluding the contribution of EADS and non-recurring/non-operating items.***For 2013, ordinary dividend that will be recommended at the General Shareholders’ Meeting on May 6, 2014, excluding the interim dividend of €9 paid

on May 31, 2013.


(€m) 2012 2013 Change

Net sales 7,370 7,216 -2.1%

Media Recurring EBIT before associates* 358 372 +4.0%

Net income – Group share 89 1,307 +€1,218m

Adjusted net income – Group share** 207 172 -€35m

Cash flow from operations 531 570 +€39m

Net cash (debt) end of year (1,700) 361 +€2,061m

Earnings per share (in €) 0.70 10.22

Ordinary dividend per share (in €) 1.30 1.30***

8


2013 Media Recurring EBIT, slightly above the FY guidance

*Calculated using 2012 exchange rates.

+€358m +€21m +€379m -€7m +€372m

2012 ReportedEbit

BusinessPerformance

2013Comparable*

ForeignExchange

2013 ReportedEbit

+5.9%

Performance by division

9

Lagardère Publishing: activity

10*% of net sales in 2012.

France32%

UK & Australia

19%

US & Canada

25%

Spain6%

Other18%

32%*

20%*

17%*

8%*

23%*

2013 net sales by geographical area 2013 net sales by activity


Education16%

Illustrated books15%

General Literature

42%

Partworks11%

Other16%

40%*

18%*

15%*

10%*

17%*

2013 net sales: €2,066m are up (+1.9% like-for-like) thanks to:

• outstanding performances in General Literature in France (+13.3%), in the US and in the UK…

• …and strong increase in Partworks activity on all markets excluding Spain…• …that offset the expected decline in Education in France and Spain.• ongoing e-books momentum: digital represents 10.4% of Lagardère Publishing

total sales, 30% of Trade sales in the US and 27% of Adult trade sales in the UK.

Lagardère Publishing: focus on e-book

Continued growth in digital books, which now make up 10.4% of net sales vs. 7.8% in 2012.

• The digitalisation remains for the time being essentially limited to the US and UK markets:

– in the US, in a stabilising market, Lagardère Publishing digital sales posted a strong increase in 2013 (+33%) on the back of numerous best sellers;

– in the UK, where the market is still rising, e-book sales increased by 42% in 2013.

• French and Spanish markets still at an early stage.


2008 2009 2010 2011 2012 2013

1%

10%

20%27%

0%

10%

20%

30%

40%

50%

2010 2011 2012 2013

3%8%

21% 24%30%

0%

10%

20%

30%

40%

50%

2009 2010 2011 2012 2013

11

Lagardère Publishing e-book sales

% of total sales

0.1%0.7%

2%

6%8%

*Trade. / **Adult trade.

E-book share – as percentage of trade market sales

United Kingdom**United States*

30%27%

10.4%

Lagardère Publishing: profitability

12

(€m) 2012 2013 ChangeNet sales (a) 2,077 2,066 -0.5%Recurring EBIT before associates (b) 223 223Operating margin (b)/(a) 10.7% 10.8% +0.1 ptIncome from associates 0 (2)Non-recurring/non-operating items (7) (29)EBIT 216 192 -€24m


2013 profitability• Slight improvement in profitability (+0.1 pt) due to strong General Literature

sales based on best-sellers and Partworks dynamic that offset the expected decline in Education.

Non-recurring and non-operating items comprise mainly impairment losses on tangible and intangible assets (€24m).

France29%

Belgium12%

Eastern Europe

18%

US & Canada

6%

Spain10%

Switzerland10%

Asia & Australia

8%

Other7%

Lagardère Services: activity

13

28%*

10%*

6%*

20%*

12%*

5%*

8%*

11%* 40%

WholesaleDistribution

24%

56%*

26%*

18%*

IntegratedRetail16%

60%44%*



2013 net sales: €3,745m (-0.9% like-for-like, +0.3% excluding the impact of end of tobacco sales in Hungary).• Good performance in Travel Retail fuelled by growth in Duty Free and Food Services,

offset by continued decline of printed press products. Improving trends at year’s end on both activities.

• Overall, Travel Retail activities are up (+5% reported, +2.9% like-for-like), especially in Asia (+29.5%), Romania (+7.5%), Czech Republic (+5.6%) and Poland (+4.9%).

• While Distribution is down (-6% like-for-like, -3.2% excluding the end of tobacco sales in Hungary) despite an improvement at year’s end and the success of diversification activities.

*% of net sales in 2012.

Lagardère Services: profitability

14

(€m) 2012 2013 ChangeNet sales (a) 3,809 3,745 -1.7%Recurring EBIT before associates (b) 104 96 -€8mOperating margin (b)/(a) 2.7% 2.6% -0.1 ptIncome from associates 7 8Non-recurring/non-operating items (31) (62)EBIT 80 42 -€38m


2013 profitability • Good performance in Duty Free and Food Services, in addition to successful

diversification as well as savings initiatives in Distribution, are offset by the decline in print products that weighs on profitability.

• Overall, the recurring EBIT before associates of LS travel retail increases by €3m but decreases by €11m in LS distribution, including a significant one-off item: loss and bad debt provision related to the bankruptcy of a customer (regional wholesale distributor) at Curtis (US).

Non-recurring and non-operating items mainly due to impairment of goodwill in Press Wholesale Distribution in Switzerland (€29m), amortisation of intangible assets (€14m) and restructuring costs (€10m).

Press & other56%

Television23%

Radio21%

Lagardère Active: activity

15

France87%

International13%

12%*

88%*

20%*

23%*

57%*

*% of net sales in 2012.



2013 net sales: €996m (-3.8% like-for-like).• Decline in magazine circulation (-5.4%) dragged related advertising revenues

downwards.• Radio demonstrated its defensiveness with a slight upturn in its activity (+0.3%).• Overall advertising was down 6.6%.

Lagardère Active: profitability

16

(€m) 2012 2013 Change Net sales (a) 1,014 996 -1.9%Recurring EBIT before associates (b) 64 64Operating margin (b)/(a) 6.4% 6.4% =Income from associates 8 2Non-recurring/non-operating items (69) (375)EBIT 3 (309) -€312m


2013 profitability• Profits are stable, with good performances in Radio and TV (Production and

Channels) as well as ongoing cost control offsetting the declining trends in magazines.

Non-recurring and non-operating items are up, in relation with impairment losses on intangible assets (€225m) and associates (€47m), and restructuring costs (€91m).

Germany28%

UK11%

France12%

Rest of Europe

16%

Asia & Australia

14%

Rest of World19%

Media rights38%

Marketing rights42%

Other20%

Lagardère Unlimited: activity

17

17%*

43%*

40%*


16%*

21%*

20%*

25%*

7%*

11%*


2013 net sales: €409m (-13.6% like-for-like).• The decrease is explained by two main negative factors:

– unfavorable calendar effect mostly at World Sport Group especially with the AFC** contract (no qualifying matches for the Olympic Games), in addition to a negative comparison effect on hospitality activity in Europe (high billing in 2012 due to the Summer Olympics and the Euro 2012);

– the AFC contract turning into a commission contract (vs. a buy-out previously).• This is partially offset by the good performances on German soccer clubs

(marketing rights) and on ACN*** media and marketing rights.*% of net sales in 2012. / **Asian Football Confederation. / ***Africa Cup of Nations.

Lagardère Unlimited: profitability

18

(€m) 2012 2013 ChangeNet sales (a) 470 409 -13.0%Recurring EBIT before associates (b) (33) (11) +€22mOperating margin (b)/(a) - -Income from associates 1 (1)Non-recurring/non-operating items (66) (23)EBIT (98) (35) +€63m


2013 operating profitability• Profits are up due mainly to the -€22m provision booked in H1 2012 for the

IOC contract*.• Excluding this item, results are stable with a good performance in German

soccer clubs and ACN** rights, and a reduced loss in the Media rights trading activity in Europe, which offset the negative calendar effect at World Sport Group.

Non-recurring and non-operating items comprise mainly in 2013 restructuring costs (€14m) and amortisation of intangible assets (€9m).

*International Olympic Committee. / **Africa Cup of Nations.

Group financial results

19

Consolidated income statement (1/2)

20

(€m) 2012 2013

Net sales 7,370 7,216

Media recurring EBIT before associates* 358 372

Recurring EBIT before associates from other activities* (19) (45)Income from associates** 105*** 7Non-recurring/non-operating items (216) 1,193

Restructuring costs (40) (122)

Gains/(losses) on disposals (3) 1,671

Impairment losses (138) (328)

Amortisation of acquisition-related intangible assets and other acquisition-related expenses (35) (28)

EBIT 228 1,527

*See definition slide 38. / **Before impairment losses. / ***EADS contribution +€89m.


Consolidated income statement (2/2)

21

(€m) 2012 2013

EBIT 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


Adjusted net income – Group share

22*Net of taxes.

(€m) 2012 2013

Net income attributable to the Group 89 1,307

Equity accounted contribution from EADS (89) -

Amortisation of acquisition-related intangible assets and other acquisition-related expenses* 27 20Impairment losses on goodwill, tangible and intangible fixed assets* 138 298

Restructuring costs* 37 117

Gains (losses) on disposals* 5 (1,624)

Tax contribution on dividends paid to shareholders - 40

Exceptional bonus for employees* - 14

Adjusted net income excluding EADS 207 172


Consolidated statement of cash flows

23

(€m) 2012 2013

Cash flow from operations before interest, taxes 552 454

Changes in working capital (21) 116Cash flow from operations 531 570Interest paid & received, income taxes paid* (140) (235)Cash generated by/(used in) operating activities 391 335

Acquisition of property, plant & equipment and intangible assets (264) (296)Disposal of property, plant & equipment and intangible assets 20 8

Free cash flow 147 47Acquisition 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

*Including in 2013 a €40m payment of tax contribution on dividends.


Change in net debt in 2013

24

-€1,700m

€3,445m -€1,339m

-€45m +€361m

Net debt as of 31/12/2012

Net cash from operating &

investing activities

Dividendspaid

Foreign exchange, scope and

other items

Net cash as of

31/12/2013


Consolidated balance sheet

(€m) Dec. 31, 2012 Dec. 31, 2013

Non-current assets (excl. investments in associates) 3,922 3,579Investments in associates 1,451 152Current assets (other than short-term investments and cash) 2,847 2,817Short-term investments and cash 703 1,784Held-for-sale assets 437 -TOTAL ASSETS 9,360 8,332Stockholders’ equity 2,991 2,927Non-current liabilities (excl. debt) 670 628Non-current debt 2,165 617Current liabilities (excl. debt) 3,296 3,354Current debt 238 806Held-for-sale liabilities - -TOTAL LIABILITIES AND EQUITY 9,360 8,332

25


+€1,784m+€806m

+€2m+€101m

+€494m

+€6m +€14m

+€1,645m

Cashavailable

2014 2015 2016 2017 2018 2019&

beyond

+€361m

Net debt/ EBITDA**

-€1,700m

3,1x

Sound financial position

26*Net debt-to equity ratio.**See definition slide 38.

***Short-term investments and cash.****Group credit facility excluding authorised credit lines at divisions level.

Preservation of liquidity and balanced debt repayment scheduleAuthorised

credit lines****:

Treasury***:

+€3,429m


86%

14%

Gross debt – breakdown offunding sources

Bonds

Bank loanet other

65% in 2012

35% in 2012

2013• Strong liquidity.• High financial flexibility resulting from the net

cash position.• Gross debt centered on bond market.

31/12/2012 31/12/2013

27

Appendices to consolidated accounts

Lagardère Publishing

58%

Lagardère Active17%

Lagardère Services

25%

France37%

Western Europe

33%

Other2%

Asia-Pacific

7%

Eastern Europe

11%

USA & Canada

10%

Group profile – 2013

28

Net sales by division Recurring EBIT by division

Net sales by geographic area 2012 Net sales by geographic area 2013

Emerging countries: 20%Emerging countries: 22%

France36%

Western Europe

32%

Other3%

Asia-Pacific

7%

Eastern Europe

12%

USA & Canada

10%


LagardèrePublishing

28%Lagardère

Active14%

Lagardère Services

52%

Lagardère Unlimited

6%

Note: Recurring EBIT/Lagardère Unlimited: -€11m.

Recap of Media performance by division

29

Net sales (€m) 2013 net

salesReported

€m changeReported

changeLike-for-like

change*

Lagardère Publishing 2,066 -€11m -0.5% +1.9%Lagardère Services 3,745 -€64m -1.7% -0.9%**Lagardère Active 996 -€18m -1.9% -3.8%Lagardère Unlimited 409 -€61m -13.0% -13.6%Total Media 7,216 -€154m -2.1% -1.3%***

Recurring Media EBIT before associates(€m) 2013 EBIT Reported

€m changeReported

changeChange at

constant exchange rates

Lagardère Publishing 223 - +0.3% +2.8%Lagardère Services 96 -€8m -7.3% -6.1%Lagardère Active 64 - -0.7% -0.3%Lagardère Unlimited (11) +€22m - -Total Media 372 +€14m +4.0% +5.9%


*At constant perimeter and exchange rates. / **+0.3% excluding end of tobacco sales in Hungary. / ***-0.7% excluding end of tobacco sales in Hungary.

30

Analysis of non-recurring/non-operating items in 2013

(€m)Lagardère Publishing

LagardèreServices

LagardèreActive

Lagardère Unlimited

Total Lagardère

MediaOther

activitiesTotal

Lagardère

Restructuring costs (3) (10) (91) (14) (118) (4) (122)

Gains/(losses) on disposals - (4) (11) - (15) 1,686 1,671

Impairment losses (24) (32) (272) - (328) - (328)

Amortisation of acquisition-related intangible assets and acquisition-relatedexpenses

(2) (16) (1) (9) (28) - (28)

TOTAL (29) (62) (375) (23) (489) 1,682 1,193


Main associates

31


Balance Sheet Income Statement

(€m) 2012 2013 2012 2013

EADS (7.39%) - - 89 -

Canal+ France (20%) 1,154 - - -

Marie Claire (42%) 125 90 5 -

Amaury (25%) 98 - 1 -

Other associates 74 62 10 7

Total before impairment losses 1,451 152 105 7

Impairment losses* (44) (47)

TOTAL 61 (40)

*In 2013: Marie Claire €35m, O.E.E - Because €12m. In 2012: Canal+ France €43m, other €1m.

Cash flow statement data – Lagardère Publishing

32

(€m) 2012 2013

Cash flow from operations before interest, taxes 217 239

Changes in working capital (21) 38

Cash flow from operations 196 277Interest paid & received, income taxes paid (50) (62)

Cash generated by/(used in) operating activities 146 215Acquisition of property, plant & equipment and intangible assets (43) (41)

Disposal of property, plant & equipment and intangible assets 11 -

Free cash flow 114 174Acquisition of financial assets (6) (5)

Disposal of financial assets 1 1

(Increase)/decrease in short-term investments - -

Net cash from operating & investing activities 109 170


Cash flow statement data – Lagardère Services

33

(€m) 2012 2013Cash flow from operations before interest, taxes 156 159

Changes in working capital (29) (35)



Disposal of property, plant & equipment and intangible assets 8 2

Free cash flow 5 (38)Acquisition of financial assets (248) (7)


(Increase)/decrease in short-term investments 28 29Net cash from operating & investing activities (212) (14)


Cash flow statement data – Lagardère Active

34


Changes in working capital 6 27



Disposal of property, plant & equipment and intangible assets - 5

Free cash flow 6 16Acquisition of financial assets (91) (5)


(Increase)/decrease in short-term investments - -Net cash from operating & investing activities (25) 121


Cash flow statement data – Lagardère Unlimited

35


Changes in working capital 20 54



Disposal of property, plant & equipment and intangible assets 1 -

Free cash flow (5) (18)Acquisition of financial assets (38) (20)

Disposal of financial assets - 10

(Increase)/decrease in short-term investments - -Net cash from operating & investing activities (43) (28)


Off balance sheet commitments

36

(€m) 2012 2013

Commitments to purchase shares from third parties (other than minority interests) - -

Commitments given in connection with ordinary activities:

- contract guarantees and performance bonds 106 143- guarantees in favour of third parties or

non-consolidated companies 34 23

- other commitments given 56 49Commitments received:

- counter-guarantees of commitments given 34 23

- other commitments received 79 60

Mortgages and pledges - -


Lagardère Unlimited – Guaranteed minimum payments

37

At December 2013 entities forming part of Lagardère Unlimited had guaranteed minimum future payments amounting to €680m under long-term contracts for the sale of TV and marketing rights. These payments break down as follows by maturity:

At December 2013 the amounts due under marketing contracts signed by these same entities with broadcasters and partners amounted to €1,055m, breaking down as follows by maturity:


Maturity(€m)

2014 2015 2016 2017 2018 2019 & beyond

Total 2013 2012

Guaranteed minimum payments under sports rights marketing contracts

148 121 110 66 70 165 680 880

Maturity(€m)

2014 2015 2016 2017 2018 2019 & beyond

Total 2013 2012

Sports rights marketing contracts signed with broadcasters and partners

373 303 174 68 57 80 1,055 1,281

38

Recurring Media EBIT before associates is defined as the difference between earnings before interest 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.

EBITDA is defined as: Earnings before interest and tax - Gains/(+losses) on disposals + Depreciation and amortisation + Impairment losses on goodwill, property, plant and equipment and intangible fixed assets - Positive contribution (+ Negative contribution) of associates + Dividends received from associates.

Like-for-like net sales were calculated by adjusting: • 2013 net sales to exclude companies consolidated for the first time during the year, and 2012

net sales to exclude companies divested in 2013; • 2013 and 2012 nets sales based on 2012 exchange rates.

Free cash flow is defined as: Net cash generated by operating and investing activities, excluding acquisitions/disposals of financial assets and short-term investments.

For the records: definitions of Recurring Media EBIT, EBITDA, Like-for-like net sales and Free cash flow


Significant events

39

Overall performance

Substantial increase in net sales (+1.9% like-for-like) and operating profit (+0.3%).

Strong performances in core markets…

• Fiction best sellers and new Asterix album in France.

• Year-end print and digital best sellers in the United Kingdom, including record #1 non fiction.

• Across the board print and digital performance in the United States.

• Partworks success worldwide.

…outweigh the anticipated decline in Education.

• No change of curriculum in France resulting in a drop in sales.

• Same situation in Spain.


40

France

Net sales up by 0.8%.

Spectacular performance of the Fifty Shades trilogy (2 million copies sold), and of Inferno.

Successful launch of the new Asterix album (Asterix and the Picts), created by a new team (2.3 million copies in French, 24 translations in 15 countries).

Slowdown at Education due to the non-renewal of school curricula.

Reference and Illustrated imprints holding out in soft markets.

Children publishing performance boosted by the Violetta phenomenon.

Solid year in Distribution and two new third party clients joining in 2014.

Profits, flat, still account for about 50% of Hachette Livre’s global performance.


41

International markets

Significant growth in Partworks.• Solid resistance in all European markets but Spain.• Continued growth in Japan, Russia and English language markets.

Sales up 1.5% in the United Kingdom, Australia and New Zealand zone.• Massive presence in the christmas best seller lists (6 out of 10 in fiction. Alex Ferguson

autobiography, with a record 1.4 millions copies, # 1 in non fiction).• Strong performance in Education (curriculum change in Scotland).• Solid year in Children and Illustrated.• Weak market conditions in Australia and New Zealand.

6% growth in the United States.• Superb performance in fiction best seller lists.• Significant e-book growth in a flat market

-12.8% in Spain and Latin America due to economic environment (Spain), politicaltroubles (Argentina) and lack of curriculum change in Spain.


42

Digital activities

Share of net sales generated by e-books at 10.4% worldwide.

The US market is stabilising: e-book share of overall US market reached 23.3% vs. 23% in 2012.

• In this context, Hachette Book Group’s e-books share reached 30% of net sales on the back of high share of best sellers vs. competition.

Hachette UK at 19% and still growing.

France still low (3% of adult fiction and non-fiction net sales).

E-book prices are stable in key countries.


43

Significant events

44

Background The rise (+3.4%)1 in passenger traffic worldwide has slowed down last year. However,

after a challenging first half, the growth dynamic has gradually improved in the second half, mainly in Europe and in Asia-Pacific.

Despite a sustained decline in the print media markets and the effects of the economic crisis, 2013 consolidated net sales grew by +0.3% at constant rates and perimeter, and when stripping out the impact of the end of tobacco sales in Hungary:• +5.0% for LS travel retail (+2.9% at constant rate and like-for-like basis), double digit net sales

growth in Duty Free & Luxury (+20%) and Food Services (+13%).• -10.2% for LS distribution (-3.2% when stripping out the tobacco ban, at constant rate and like-

for-like basis).

In this difficult environment, growth project momentum remained strong and the year was marked by: • successful integration of the new acquisitions: Rome airports activities and DFS Wellington in the

Pacific region;• gain or renewal of major contracts: SNCF, Warsaw T1, fashion in Spain, Lille, Prague, Adelaide,

Queenstown, Sofia bus terminal;• several acquisitions in Travel Retail including Coffee Fellows in Germany (15 stores), Gerzon

(fashion retail) at Amsterdam airport and Airest (€200m net sales, 82% of which in Food Services, presence in 11 countries, Duty Free & Food Services at Venice airport);

• few acquisitions in Distribution to accelerate the diversification: Crossings Fine Food in the United States (import of European gourmet products), Sprinter (service to e-retailers) and LDS Distributor (distribution of convenience products) in Hungary.

451Source: ACI data at October 31, 2013.


46

Travel Retail in France Aelia

• 100% managed net sales up by +4,4% attributable to:– an increase of +6,5% at Paris airports thanks to the strong improvement of the Fashion activities

(+13.1%), the full-year effect of the modernisation of stores in 2012 (terminals S4, A/C), and despite the works that impacted strongly the terminal 2F sales in 2013.

– sales in the regions outside Paris are flat vs. last year: good performances on the French regions compensate the negative perimeter effect following the closing of specialised concepts such as L’Occitane or Virgin at Paris airports.

Relay• 100% managed net sales are flat (-0.4%):

– unfavorable environment…:– decrease of consumption on national market;– limited increase of traffic (railways and airports).

– …and strong decrease of the print products (-7.2%)…:– Presstalis strikes in Q1, economic crisis and switch to digital.

– …compensated by successful commercial initiatives and the modernisation of the network:– strong growth of the food & beverage (+12.1%) and gifts and souvenirs (+5.6%) categories;– opening of Gare Saint-Lazare stores and roll out of the new convenience and food services concepts

(Hubiz or Trib’s);– development of Air de Paris concept.

• Sustained development activities:– signing of an exclusive franchise contract with Marks & Spencer Simply Food in Travel Retail;– renewal of the SNCF contract (307 sales outlets) for 10 years following a very competitive tender;– gain of several significant tenders in food & beverage (Lille Flandres, Trib’s in Arras, Café Leffe and

Trib’s in Tours, Eric Kayser in Avignon..) and hospital cafeterias (Tenon, Saint-Omer, Amiens, Troyes, Morlaix, Clermont…).


Travel Retail in Europe

Italy (Rome airports)• First full-year of operations for LS travel retail Roma after a take-over in October 2012.• Results are in line with our expectations even if the traffic is significantly below the projections

(-7.3%).• All stores have been modernised according to plan, and entirely new commercial and customer

services programmes are in place.

United Kingdom• Growth of +3.8% attributable to a good performance of the major airport platforms (+2.6%) and

the full-year effect of the opening of four additional sales outlets in 2012 (+1.2 point).• 15 sales outlets at the end of 2013, as in 2012.

Germany• Sales increase of +3.4 %:

– Travel Retail is stable at -0,4% with decreasing performance of the constant network (-7.8 %) strongly impacted by the change of passengers flows at Frankfurt airport (since October 2012) compensated by the non comparable network (+7.4% due to full-year effect opening in 2012).

– Growth of Food Services (+3.8 %) thanks to the opening of Frankfurt train station concession in May 2013 (10 stores) and the acquisitions of 19 Coffee Fellows stores and a Burger King store in 2013.

• The network consists in 122 sales outlets, +31 vs. 2012 (30 sales outlets in Food Services).

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Travel Retail in Europe

Poland• Net sales growth of +4.9% driven by:

– continuous strong performance of the Duty Free business: +16.6% (positive effect on Warsaw traffic from the closing of Modlin regional airport until October 2013);

– growth of Food Services activities (+12.3% mainly from So! Coffee concepts);– Travel Essentials growth (+0.9%), mainly constrained by Inmedio (-6.2% impacted by the decrease of

press and tobacco sales and the disappointing economic conditions).

Czech Republic• Net sales increase of +5.6% in 2013, mainly fuelled by the development of the network

(comparable growth at +1.7% and 15 additional stores).• The growth is driven by both the Duty Free (+3.2 points, positively impacted by the modernisation

of the stores and new commercial initiatives) and the Food Services segments (+3.1 points, with 14 additional stores), while the Travels Essentials remains nearly flat (-0.2 point) despite a very strong decrease in press (-9.6%).

Romania and Bulgaria• Romania: net sales up +7.4%, with a network of 205 sales outlets (+7 sales outlets vs. 2012).• Bulgaria: business grew by +22.7%, with a network of 90 sales outlets (+10 sales outlets vs.

2012).

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Travel Retail in North America

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Retail activities in Canada and the United States are almost flat at -0.4%:• decreasing performance of the comparable network (-1.0%), highly impacted by the decrease in

print products (-9.6%), only partially compensated by the development of other products such as souvenirs & accessories or food & confectionary;

• positive contribution of the non comparable network (+0.6 point), the 2012 closings (La Guardia and JFK) being compensated by the full-year impact of 2012 openings (Edmonton, Austin and Pearson) and 2013 openings (Los Angeles, Detroit, Houston, Trudeau and JFK T8).


Travel Retail in Asia-Pacific

Pacific• 2013 has been affected by tight economic conditions, and a difficult and competitive

environment: the significant drop in book sales continued, and the September 2012 restrictive tobacco policy has had a full-year impact in 2013.

• Despite this difficult environment, net sales continued to expand by +3.1%, mainly thanks to the full-year impact of DFS Wellington (16 stores acquired in July 2012).

• The network comprises 137 sales outlets (stable compared with 2012).

Asia• Consolidated sales picked up by a strong +29.3%, thanks notably to continuous traffic growth,

improvement of existing Singapore operations (confectionery, specialty & fashion) and development of the fashion activity in China.

• LS travel retail is now present in Singapore, China, Hong Kong, Taiwan and Malaysia with a total network of 113 stores (+25 vs. 2012, driven by new fashion and travel essentials projects in Shenzhen Terminal 3).

• Recent entry into Malaysia, where LS travel retail opened two stores mid-2012 (Longchamp & Billabong-Lonely Planet), also contributed to grow the business. Activities will be extended in 2014 following the gain of the “general merchandise” concessions at KLIA2.

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Distribution activities

Belgium• Distribution activity declined by -5.3%, including -5.1% in press and -7.0% in phone cards.

• Integrated Retail activities slightly increased by 0.3%.

Spain• Business in Spain eroded by -5.7% in a difficult economic environment: Retail activities

fell by -3.6% and Distribution activities declined by -6.2%.

• Noticeable improvement in Q4.

Switzerland• Retail activity is stable at -0.5%, mainly thanks to Airport Fashion and the good performance

of Payot.

• Distribution activity declined by -5.4% (OLF excluded), with a -8.9% drop in press sales.

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Distribution activities

Hungary• Integrated Retail activity declined by -42.3%, since it suffered significantly from:

– the Tobacco ban law enforced mid-July (number of sales outlets selling tobacco went from 42,000 to 6,000; no international and/or large retailer can obtain those licenses);

– the change in mobile prepaid sales recognition method (commission-based contract).

Excluding these two impacts, the Retail activity declined by -8.1%, mainly due to sales outlets closings following the tobacco ban.

• Distribution activity eroded by -6.3% (managed net sales) also due to non recurring effects: – change in mobile prepaid sales accounting method;– modification of the Hungarian Post distribution contract;– acquisitions of LDS Distributor (January 2013), a convenience distribution company, and Sprinter

(May 2013), a home delivery and 3PL company.

Excluding the above impacts, the Distribution activity is stable.

North America• 2013 was impacted by the continued rapid decline in press sales, which impacted both Curtis

(-8.4%) and LS distribution North America (-8.0%).

• In Canada, the success of diversification activities, particularly through Euro-Excellence (company importing and distributing fine European food products acquired in July 2011), helped to partially offset the decline in press sales.

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Significant events

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French Magazine Publishing

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In a particularly depressed magazine market, Lagardère Active maintains its leadership on both circulation and advertising.

AdvertisingThe print advertising revenue declined by -10.1%, which is consistent with the magazine market. However, most of the Lagardère Active magazines such as Elle, Elle Décoration, Télé 7 Jours or Parents stay strong leaders on their competitive sets.

CirculationOverall, the circulation revenue is down by -5.4%, with a good resistance of the subscription revenue. The newsstand decline has been partially offset by price increases on key magazines (Paris Match, France Dimanche, Ici Paris, Elle, Public).

Significant events• In October 2013, Lagardère Active announced a strategic decision to focus its portfolio on its leading

brands, which have a strong digital development potential. The magazines to be sold are the following: Auto Moto, Be, Campagne Décoration, Le Journal de la Maison, Maison & Travaux, Mon Jardin & Ma Maison, Psychologies magazine and Union, as well as their digital developments. It is also planned to sell the print editions of Première and Pariscope.

• Elle received the Best Brand Magazine Award rewarding its global brand strategy development on new media (web, tablets and mobile phones) and also new fields (special events, services…).

• Licensing revenues have increased by +4% vs. 2012, thanks to the business development including the launch of Elle in Australia (September 2013), Elle Decoration in Mexico (April 2013) and two editions of Elle Men in Hong Kong (September 2013) and Thailand (November 2013). Furthermore, the development of the network continues with, for example, the planned launch of Elle in Malaysia (March 2014).

• Public celebrated in June its 10th anniversary. The brand remains the leader of the celebrity market on all digital devices: websites, mobile phones and apps.

• In May, Paris Match enhanced its editorial offer revamping the magazine itself with a new layout and new sections and bringing to market a new website using the responsive design technology.


Radio

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Europe 1• Radio station: number 3 in France.

2013 has been a very good year for Europe 1 since its audience share has improved on its main commercial target (25-59 years old listeners) from 6.3% to 7.5% on yearly basis1. High quality programmesfocusing on news have been implemented throughout 2013. They have led to good audience figures and an increase in advertising sales.

• Europe1.fr: very good performance throughout 2013.The website has reached more than 2.4 million unique visitors each month2, throughout 2013. Europe 1 was also the most podcasted of all French radios, with a monthly average of more than 5.3 million podcasts, and was the only French radio to exceed 6 million podcasts.

RFM• No.2 adult-music radio station on the 35-49 years old target with 3.0% audience share1, RFM has reached

its highest level since 2008 (2,473,000 listeners and 4.7% daily reach) on the last audience wave1.

Virgin Radio• Virgin Radio focused on pop rock electro music and achieved on the 25-49 years old target on a yearly

basis an additional +0.6 audience share and +7 minutes of listenership time1.

International radios• 2013 saw mixed performances from one country to another: robust advertising growth in Romania and

Germany mitigated by decrease in Poland, Czech Republic and Slovakia.• The slowdown noted in 2012 in our SMS activity in Poland continued throughout the year.• In March 2013, Lagardère Active Radio International (LARI) started broadcasting in Czech Republic the

frequencies acquired from BBC Radiocom.• With Radio Zet Gold launched in 15 cities across Poland on July 1st, LARI created a new brand which

intends to strengthen the main radio brand Radio Zet. • Radio Zet Gold is a music station for 40-59 years, replacing radio station Planeta FM which was targeting

young people. 1Source: Médiamétrie; November-December 2013. / 2Source: Médiamétrie; Nielsen NetRatings. / 3Source: Médiamétrie eStat; Catch-Up Radio; December 2013; France.


Television

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TV channels were still very dynamic in 2013, especially in Russia where TiJi and Gullicontinued to grow at double digit pace.

Free TV channels/Gulli: in 2013, the revenues have decreased versus 2012:• partly because of increased competition in Digital Terrestrial Television (DTT) French market: D8 is

now run by Groupe Canal+ and six new DTT channels have been launched in December 2012;• and partly because of a decreasing advertising TV market in France.In this environment, Lagardère Active manages to keep its TV leadership over the kids market and represents the first TV offer for children in France With Gulli, TiJi and Canal J.

Pay TV channels:• no renewal of major contracts in 2013;• after an increasing turnover in 2012, 2013 has been a consolidation year;• operations for launching Mezzo in Asia have been initiated in 2013.

Digital and merchandising revenues: in 2013, licensing and merchandising business have continued to grow especially around the Gulli brand. Replay TV consumption continued to rise highly in 2013 and Gulli.fr is the leader website for children in France.

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TV Production and Distribution

2.4 % revenue decrease in 2013 vs. 2012 mainly due to the shutdown of animation production activity in H2 2013. Productions deliveries of the six remaining episodes of Borgia season 2 for Canal+ and the last four episodes of Jo for TF1.

Television market in France • Decreasing audience share for all historical French channels except for TF1 and Arte in 2013

vs. 20121.• TV ad spending market decreased -5% in the first nine months of 2013 vs 20122.• Ad spending negative trends are impacting the program budgets and production investments of

historical channels.

Lagardère Entertainment performances• After being the No. 1 scripted producer in France, Lagardère Entertainment is becoming also the

No. 1 non scripted producer in 20133.• Lagardère Entertainment enjoyed the resounding success of short format serie Nos chers voisins

(TF1), which was on “TOP 100” audience in 2013, as well as its new short format Pep’s (TF1) launched in 2013.

• The other series of Lagardère Entertainment continue to attract good viewing figures, particularly Joséphine, ange gardien, Clem, and Famille d’accueil.

• C dans l’air, broadcast daily on France 5, continues to attract good viewing figures and has been renewed for a three years contract starting September 2013.

• Launching of Borgia season 3 for Canal+ and Transporter season 2 for M6, which will be delivered in 2014 (Atlantique Productions).

• Acquisition of non scripted production company Groupe Réservoir as of February 5, 2014.1Source: Médiamétrie. / 2Source: IREP. / 3Source: Écran Total.


Digital

Lagardère Active remains the leading media group in France on web and mobile devices with 19 million unique visitors1.

Doctissimo.fr remains the health and wellness information leader with over 8 million unique visitors1. Doctissimo.fr is developing its offer thanks to the acquisition of MonDocteur.fr, which is the first medical appointment online website, with already 30.000 users in Paris. Furthermore, Doctissimoprepares the launching of Doctipharma, a solution which enables pharmacies to sell some of their products online.

BilletReduc.com was elected “the best online ticket selling service” by the FEVAD². It is the French leader of low cost booking with more than 2,7 million tickets sold in 2013.

Boursier.com, the leading French editorial agency on financial data, has launched a patrimonial section with L’Argent & Vous. The aim is to target individual customers.

The LeGuide group is facing the large-scale development of Google Shopping leading to a decrease in traffic for all market players. Therefore, the group is aiming at developing new sources of alternative traffic and implementing innovative solutions. The LeGuide group has adopted in 2013 powerful tools such as a new datacenter, a business intelligence platform and a new SEM optimisation traffic acquisition platform.

581Source: Médiamétrie, NetRatings; connection from all places; January-December 2013. / ²E-commerce and distance selling federation.


Brand licensing activities

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Development of the international licensing business with new contracts in 2013: • opening of a new Elle Café in Japan (Tokyo) – July 2013;

• launch of Smartphone and touchpad accessories in Europe – November 2013;

• launch of amenities Elle Spa in Thailand;

• launch of handbags, luggage and lunchbox lines in Canada;

• launch of beauty appliances in South Korea;

• two key partners (ready-to-wear in Japan and South Korea) have renewed their trust in our brand Elle for another five years;

• launch of the first touchpad with “Label Parents”.

At the end of December 2013, revenues (mainly from Elle licensing) have increased by +3% vs. end of December 2012.

Significant events

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Significant events 1/4

Football• Media rights:

– sold the media rights of the 2013 Orange Africa Cup of Nations;– continued to sell media rights of the Asian Football Cup (AFC) competitions;– sold African, European and Asian qualifiers for the 2014 FIFA World Cup.

• Marketing rights:– continued to sell marketing rights of the AFC competitions;– managed the marketing rights of the 2013 Orange Africa Cup of Nations; – extended its comprehensive marketing contracts with Hannover 96 and Hamburg SV;– extended its current comprehensive marketing contract with FC Utrecht;– signed two German clubs, Hertha BSC Berlin and Hamburger SV, for its digital loyalty programme;– signed the first ever AFC deal with a Chinese sponsor (Tsingtao Beer);– sold hospitality rights for the 2013 UEFA Champions League final and the 2013 Europa League final.

• Organisation and management of events:– assisted the local organisation committee for the organisation and commercialisation of the FIFA club

World Cup held in Morocco in December 2013.


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Other team sports: basketball, volleyball, handball, rugby, football (NFL1)• Media rights:

– signed a new agreement with the FIBA2 to distribute the media rights of its competitions across Asia;

– distributed the FIVB3 Grand Champions Cup hosted in Japan.

• Marketing rights:– signed a marketing partnership with the French National Handball League for which it brokered a

sponsorship with Konica Minolta;– brokered the 4-year shirt sponsor deal between Joker, the fruit juice brand, and the French Basketball

Federation (shirt sponsor of the French national teams plus other rights);– signed an agreement with Stade français Paris for hospitality sales.

• Organisation and management of events:– signed a 5-year contract with the French National Handball League to be the promoter of the new

Hand Star Game, whose first edition was held in December 2013.

• Talent representation:– signed nine top NCAA4 football players in the 2013 NFL Draft, highlighted by three first round picks,

which included the first pick overall (Eric Fisher).


621National Football League. / ²International Basketball Federation. / 3International Volleyball Federation. / 4National Collegiate Athletic Association.

Significant events 3/4 Tennis

• Media rights:– distributed worldwide media rights of all WTA Premier events;– extended its agreement with the French Tennis Federation to distribute Roland-Garros media rights

across Asia.• Marketing rights:

– signed a new title sponsor for ATP tournament in Stockholm (Audi to replace BMW);– renewed its agreement with Roland-Garros for hospitality sales.

• Organisation and management of events:– signed a 5-year agreement with WTA and Singapore to be the promoter of the WTA Championships

(final event of the season) that will be hosted in Singapore from 2014 to 2018.• Talent representation:

– signed talent representation agreements with Andy Murray, winner of the 2013 Wimbledon Championships.

Golf• Organisation and management of events:

– acquired two golf events in Sweden: the Nordea Masters (European Tour) and the Helsingborg Open (Ladies European Tour);

– acquired Jeff Sanders Promotions, an events company, specialising in the production, management and marketing of golf tournaments in the US, including the Web.com Tour’s premier events.

• Talent representation:– acquired Crown Sports Management, a US-based golf talent representation agency, transforming

Lagardère Unlimited US into the largest golf management company on the PGA Tour;– Major stars that joined Lagardère Unlimited Golf in the Crown Sports acquisition include Brandt Snedeker,

Davis Love III, Stewart Cink, Lucas Glover, David Duval, Chris Kirk, and Harris English;– signed talent representation agreements with Jordan Spieth, the PGA Tour’s 2013 Rookie of the Year.


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Olympic sports• Media rights:

– continued to sell Sochi 2014 and Rio 2016 media rights;– extended its agreement with FINA1 to distribute worldwide media rights of the World Cup of Swimming

series;– became FIG2 official media rights agency.

• Marketing rights:– continued to sell marketing rights to the Glasgow Commonwealth Games 2014;– signed an exclusive sales agreement with the French Cycling Federation to launch a professional

cycling team;– renewed its agreement with British Swimming.

Consulting and operations of stadiums and arenas• Signed a first project in Qatar for the Qatar Olympic Committee: a consulting project on the Lusail

Multi-purpose Hall.• Continued to sell marketing rights of the Singapore Sports Hub.• Signed agreements with the French National Rugby League, the French National Basketball

League and the Belarus Football Association on stadium consulting.• Signed three projects in Russia with the 2018 FIFA World Cup stadiums.• Started working on the preparation of the UEFA Euro 2016™ (consulting agreement).

Live entertainment• Launched DISCO, a new musical that won the award of “Best musical of the year” by

Le Parisien-Aujourd’hui en France.


641International Swimming Federation. / ²International Gymnastics Federation.

2013 Full-Year Results

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