INVESTORMEETINGNovember 12, 2018

INVESTOR MEETINGNovember 12, 2018

TRADE BOOK MARKETS PERFORMANCE AND TRENDS (PRINT)

▪ Flat to moderate growth thanks to favorable demographics (Silver economy)

▪ Gradual long-term decline likely, due to proliferation of digital entertainmentformats

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2017 vs. 2016 2018 Trend

France -0.8%

USA +1.9%

UK +0.2%

Spain +3.3% (incl. Educ)

EDUCATION MARKETS PERFORMANCE AND TRENDS

▪ Simultaneous absence of curriculum reform in three key countries in 2018

(no common cause)

▪ Reforms to resume in France in 2019, but level of public funding yet to bedetermined

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2017 vs. 2016 2018 trend

France -10.9%

UK -6.0%

Spain -15% (est.)

DIGITAL PREFORMANCE AND TRENDS

▪ eBooks : slow decline after peak in 2013 (US) and 2014 (UK)

▪ Downloadable audiobooks : 25% to 30% annual growth rate

▪ Education : a successfull market for digital in the UK, a promising but as yet embryonic one in France and Spain

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2009

2.1%

2011

15.1%

6.2%

2010

20.6%

2012

21.4%

2013

20.7%

14.2%

2014 2015

17.4%

2016

13.4%

2017

0.3%

2009 2010

1.3%

5.8%

12.2%

2011

12.5%

2012

13.0%

16.0%

20152013 2014

17.6%15.9%

2016 2017

0.7%

2013

0.9%

2014

1.1%

2015

1.4%

2016

1.7%

2017

1.9%

2012

2.2%

2013

2.6%

2014

3.4%

20172015

4.0%

2016

5.1%

Sources : AAP, The Publishers Association – all figures are expressed in value

WHICH STRATEGY HAVE WE ADOPTED IN THE FACE OF SUCH PERFORMANCES AND

TRENDS?

Distribution for third parties

Acquisitions

Diversification

Innovation and CRM

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DISTRIBUTION

▪ A key contributor to profits and cash flow

• High barrier to entry (few players)

• Negative working capital

• Distribution for third parties is risk-free and contributes to economies of scale

Opportunity :

More publishers to exit the business in the future and join market leaders

as rising cost can only be offset by scale

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ACQUISITIONS

▪ M&A activity has inflated PER of all large publishing companies

▪ High price must be offset by skillfull integration and quickly implementedsynergies in order to deliver high return on investment

▪ Lagardère Publishing’s track record in doing so is outstanding :

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Return on investment

HBG (2006) : 9%

Asterix (2008) : 14%

Quercus (2014) : 14%

Constable & Robinson (2014) 16%

… just to name a few

(excluding non US-business)

ACQUISITIONS (CONT’D) :GLOBAL INDUSTRY-WIDE CONCENTRATION IS ON-GOING

Driven by :

▪ Weak organic growth

▪ Gains in profitability through synergies in :- Back offices

- Distribution

- Office footprints

▪ Need for leverage when dealing with online retailers

But :

M&A activity is slowing due to limited number of large independent players left

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DIVERSIFICATION

With M&A, a top priority in order to generate growth

▪ Board Games- Good culture fit

- Similar business model

- Potential synergies in sales and distribution

▪ Video games for mobile devices- Fast growing segment

- Need for IP

▪ Licencing- A policy for expanding marketing opportunities for all high value IP to other formats

Example :

o Asterix : Movies + TV series + Figurines + Theme Park / Etc.

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INNOVATION & CRM

▪ Hachette Innovation Program :

• A multi-national team with offices in Silicon Valley, New York, London and Paris- Focus is on :

o New technology

o New creative processes

o New business models

- CRM focus is on :

o Consumer insight

o Community Building

o Monetization

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TO SUMMARIZE

▪ Publishing is a mature, profitable and resilient industry

▪ As a top player, Lagardère Publishing needs to grow, diversify and innovate in order to continue to deliver solid, predictable profits and abundant cash flow in the long term

We have already taken decisive steps towards that goal,

and are actively exploring further oppotunities

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