2014 FIRST-HALF RESULTS JULY 31, 2014

Transcription

1 2014 FIRST-HALF RESULTS JULY 31, 2014

2 DISCLAIMER 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. 2

3 CONTENTS Key performance figures pages 4 to 6 Performance by division pages 7 to 16 Group financial results pages 17 to 25 Appendices to consolidated accounts pages 26 to 37 Significant events pages 38 to 61 3

4 KEY PERFORMANCE FIGURES

5 CHANGES OF SCOPE: MAIN ITEMS Lagardère Publishing Acquisition of UK book publisher Constable & Robinson. Full consolidation starting January 31, Acquisition of UK book publisher Quercus, to be fully consolidated in the second half of the year. Signature of a contract for the acquisition of US book publisher Perseus. The deal should be finalized in the 2 nd half. Lagardère Services Six months full consolidation of Gerzon Holding BV. Gerzon operates 12 fashion stores in Schiphol airport (Amsterdam). Three months full consolidation of Group Airest, operating in Food & Beverage and Travel Retail and managing more than 200 points of sales in 11 countries, mostly in Italy (Venice). Lagardère Active Acquisition of 70% ownership in Groupe Réservoir. Full consolidation starting February 1, Lagardère Unlimited Acquisition of Casino de Paris. Full consolidation starting April 1,

6 KEY FIGURES GROUP ( m) H H Reported change Like-for-like change* Net sales 3,406 3, % -2.6% Recurring EBIT before associates** % Profit (loss) Group share 1,483 (33) - 1,516m Adjusted net profit Group share = Net cash (debt) 361*** (1,091) - 1,452m *At constant perimeter and exchange rates. / **See definition slide 37. / ***Net cash 31/12/

7 PERFORMANCE BY DIVISION

8 LAGARDÈRE PUBLISHING: ACTIVITY H net sales by geographical area H net sales by activity Spain 5% 6%* Other 20% 18%* France 30% 32%* Partworks 14% 13%* Other 17% 16%* Education 13% 14%* Illustrated books 14% 14%* US & Canada 25% 25%* UK & Australia 20% 19%* General Literature 42% 43%* H net sales: 903m (-1% like-for-like) Slight decrease, as expected, mostly due to a strong H in France. Q2 sales show an improvement (+2.5% like-for-like). In France, sales are down vs. H (-9.0%) which benefited from major successes (mainly Fifty Shades saga, Dan Brown s Inferno...). Upturn in the US (+5.6%), with notably a strong best-seller offering (including The Silkworm by Robert Galbraith). In the UK, activity is also up (+1.1%) with good performances in Education and the strong dynamic of e-books. Activity is down in Spain and Latin America (-6.7%), with some delays in curricula reforms. Strong performance of Partworks (+7.0%) on all markets. *% of net sales in H

9 2013 Full-Year Results / March 12, FIRST-HALF RESULTS / JULY 31, 2014 LAGARDÈRE PUBLISHING: FOCUS ON E-BOOK As expected, the pace of digital transition has slowed down: e-books accounted for 11.3% of sales in H (unchanged vs. H1 2013). Digital for the time being essentially limited to the traditional fiction/non-fiction segment, in the US and UK markets, with diverging market trends: in the US, in a zero growth market (which confirms the slowdown noticed since 2013), Lagardère Publishing digital sales dropped from 34% of Trade sales in H to 29% in H1 2014, reflecting market trend, fewer movie tie-ins vs. 2013, and Amazon punitive action; in the UK, where the market is still growing, e-book sales increased sharply and account for 36% of Adult trade sales; French and Spanish markets still at an early stage. E-book share as percentage of trade market sales United States* United Kingdom** Lagardère Publishing e-book sales % of total sales 50% 40% 30% 20% 10% 0% 3% 8% 21% 24% 30% 34% H % H % 40% 30% 20% 10% 0% 1% 10% 20% 27% 31% H % H % 0.7% 2.0% 6.0% 8.0% 10.4% 11.3% H % H *Trade. / **Adult trade. 9

10 LAGARDÈRE PUBLISHING: PROFITABILITY ( m) H H Change Net sales (a) % Recurring EBIT before associates (b) m Operating margin (b)/(a) 7.7% 5.6% -2.1 pts Income from associates 1 1 Non-recurring/non-operating items (12) (5) EBIT m H profitability Profitability trend is mainly attributable to the decrease of activity in France (negative comparison effect with an exceptional H1 2013). 10

11 LAGARDÈRE SERVICES: ACTIVITY H net sales by geographical area Eastern Europe 17% 20%* Switzerland 10% 10%* Spain 9% 9%* *% of net sales in H US & Canada 6% 6%* Belgium 12% 13%* Asia & Australia 8% 8%* Other 10% 6%* France 28% 28%* 37% 41%* H net sales by activity Wholesale Distribution 22% 23%* Integrated Retail 15% 18%* 63% 59%* H net sales: 1,852 (-0.1% like-for-like and +2.4% excluding the end of tobacco sales in Hungary). Travel Retail activity is up (+8.1% reported, +4.3% like-for-like) on all markets, with an acceleration in Q2, fuelled by improving traffic trends and the good performance of acquisitions. In France, activity is stable: good performances in Duty Free and Food Services offset the decline in print products and the impact of the SNCF strikes in June. In the rest of Europe, activity is up, especially in Italy (+26%) with the ramping up of the Rome airport, in Germany (+5.7%) with the network development, and in Central Europe thanks to traffic growth and network expansion: Czech Republic (+5%), Bulgaria (+18.5%) and Romania (+4.2%). In North America, activity is buoyant (+9.7%), driven by network increase, as well as in ASPAC (+10.7%) with strong Duty Free performance (fashion & specialty). Distribution is down -6.6%, but is almost stable (-0.5%) excluding the end of tobacco sales in Hungary, with improving trends thanks to diversification initiatives. 11

12 LAGARDÈRE SERVICES: PROFITABILITY ( m) H H Change Net sales (a) 1,814 1, % Recurring EBIT before associates (b) m Operating margin (b)/(a) 1.6% 1.9% +0.3 pt Income from associates 2 3 Non-recurring/non-operating items (41) (24) EBIT (10) m H profitability Increase in LS travel retail (+ 8m) in line with activity trends, improving product mix, the successful development of new concepts and the contribution of acquisitions. Very slight decrease of profitability in LS distribution (- 1m), due to the end of tobacco sales in Hungary (- 2m impact). Excluding this item, profit is up, thanks to the diversification strategy, non recurring elements and cost control. Non-recurring and non-operating items comprise mainly amortisation of intangible assets and restructuring costs (in Distribution). 12

13 LAGARDÈRE ACTIVE: ACTIVITY H net sales by geographical area H net sales by activity International 14% 13%* France 86% 87%* 21%* Radio 23% Television 17% 19%* Press & other 60% 60%* H net sales: 435m (-10% like-for-like). The decrease in activity is partly attributable to the expected negative comparison effect in TV Production (-42.4%), due to an unusual delivery calendar in H Excluding this item, sales are down -5.6%. Overall, advertising trend is still negative (-5.9%). Magazine activities are down (-6.6%), with a drop in advertising (-10.7%), and a more resilient circulation (-2.3%). Mixed trends in radio stations (-0.8%): up at Europe 1 and in Eastern Europe, and down for musical stations in France. *% of net sales in H

14 LAGARDÈRE ACTIVE: PROFITABILITY ( m) H H Change Net sales (a) % Recurring EBIT before associates (b) m Operating margin (b)/(a) 7% 8% +1 pt Income from associates (5) (4) Non-recurring/non-operating items (274) (9) EBIT (246) m H profitability Profitability is up: an efficient cost control combined with the closure of loss-making activities enabled to offset negative trends in advertising and circulation. 14

15 LAGARDÈRE UNLIMITED: ACTIVITY H net sales by geographical area H net sales by activity Rest of World 20% 22%* France 15% 12%* 14%* Other 22% Media rights 24% 40%* Asia & Australia 19% 17%* Rest of Europe 9% 13%* UK 8% 10%* Germany 29% 26%* Marketing rights 54% 46%* H net sales: 174m (-14.8% like-for-like). As expected, business is impacted by a negative calendar effect, due mainly to the nonoccurrence of the ACN** and of qualifying matches for the World Cup (AFC*** contract). Activity is also down due to the termination of large media rights contracts in Europe operated by Sportfive International (mainly contracts with European soccer federations). These items are partially offset by good activity trends in marketing rights (Hospitality activities driven by the World Soccer Cup), and the development of Golf activities (acquisition of the Nordea Masters competition). *% of net sales in H / **Africa Cup of Nations. / ***Asian Football Confederation. 15

16 LAGARDÈRE UNLIMITED: PROFITABILITY ( m) H H Change Net sales (a) % Recurring EBIT before associates (b) m Operating margin (b)/(a) 2.4% 3.6% +1.2 pt Income from associates - 1 Non-recurring/non-operating items (7) (10) EBIT (2) (3) - 1m H operating profitability The recovery plan of the division is on track. The closure of loss-making activities, as well as the cost saving plan, enabled to more than offset the negative calendar effect. Non-recurring/non-operating items mostly due to restructuring costs and amortisation of intangible assets. 16

17 GROUP FINANCIAL RESULTS

18 CONSOLIDATED INCOME STATEMENT (1/2) ( m) H H Net sales 3,406 3,364 Total recurring EBIT before associates* Media activities Other activities (33) (15) Income from associates** (2) 1 Non-recurring/non-operating items 1,489 (47) Restructuring costs (14) (22) Gains/(losses) on disposals 1,810 (2) Impairment losses (294) (2) Amortisation of acquisition-related intangible assets and other acquisition-related expenses (13) (21) EBIT 1, *See definition slide 37. / **Before impairment losses. 18

19 CONSOLIDATED INCOME STATEMENT (2/2) ( m) H H EBIT 1, Net interest expense (55) (38) Profit before tax 1, Income tax expense (46) (58) Total net profit (loss) 1,491 (29) Attributable to minority interests (8) (4) Profit (loss) Group share 1,483 (33) 19

20 ADJUSTED NET INCOME GROUP SHARE ( m) H H Net profit (loss) attributable to the Group 1,483 (33) Amortisation of acquisition-related intangible assets and other acquisition-related expenses* Impairment losses on goodwill, tangible and intangible fixed assets* Restructuring costs* Gains/losses on disposals* -1, Tax contribution on dividends paid to shareholders Exceptional bonus for employees* Adjusted net profit *Net of taxes. 20

21 CONSOLIDATED STATEMENT OF CASH FLOWS ( m) H H Cash flow from operations before interest, taxes Changes in working capital (91) (201) Cash flow from operations 87 (65) Interest paid & received, income taxes paid (98) (61) Cash generated by/(used in) operating activities (11) (126) Acquisition of property, plant & equipment and intangible assets (163) (98) Disposal of property, plant & equipment and intangible assets 1 7 Free cash flow (173) (217) Acquisition of financial assets (47) (201) Disposal of financial assets 2, (Increase)/decrease in short-term investments 14 - Net cash from operating & investing activities 2,175 (391) 21

22 CHANGE IN NET DEBT IN H m - 391m - 959m - 102m ( 1091m) Net cash as of 31/12/2013 Net cash from operating & investing activities Dividends paid Foreign exchange, scope and other items Net debt as of 30/06/

23 CONSOLIDATED BALANCE SHEET ( m) Dec. 31, 2013 June 30, 2014 Non-current assets (excl. investments in associates) 3,579 3,856 Investments in associates Current assets (other than short-term investments and cash) 2,817 2,797 Short-term investments and cash 1, TOTAL ASSETS 8,332 7,346 Stockholders equity 2,927 1,929 Non-current liabilities (excl. debt) Non-current debt Current liabilities (excl. debt) 3,354 3,087 Current debt 806 1,094 TOTAL LIABILITIES AND EQUITY 8,332 7,346 23

24 SOUND FINANCIAL POSITION Gross debt breakdown: well-balanced funding sources 2,184m Authorised credit lines**: Preservation of liquidity and balanced debt repayment schedule 1,645m 1094m*** 14% in % Bonds 75% Bank loan et other Treasury*: 495m 86% in m 4m 8m 4m 12m 13m *Short-term investments and cash. / **Group credit facility excluding authorised credit lines at divisions level. / ***Including bond 640m maturing october

25 RECURRING MEDIA EBIT: H1 PERFORMANCE & 2014 GUIDANCE The H Recurring media EBIT trend was expected, due to a strong H1 2013: -7.0% at current exchange rates; -5.9% at constant exchange rates. Confirmation of the 2014 FY guidance on recurring Media EBIT, which was announced in March 2014: 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. 25

26 APPENDICES TO CONSOLIDATED ACCOUNTS

27 GROUP PROFILE H Lagardère Active 13% Net sales by division Lagardère Unlimited 5% Lagardère Publishing 27% Lagardère Active 27% Recurring EBIT by division Lagardère Unlimited 5% Lagardère Publishing 40% Lagardère Services 55% Lagardère Services 28% Net sales by geographic area H Net sales by geographic area H Eastern Europe 12% USA & Canada 10% France 36% Eastern Europe 12% USA & Canada 10% France 35% Asia- Pacific 7% Other 3% Western Europe 32% Asia- Pacific 7% Emerging countries: 22% Emerging countries: 20% Other 2% Western Europe 34% 27

28 RECAP OF MEDIA PERFORMANCE BY DIVISION Net sales ( m) H net sales Reported m change Reported change Like-for-like change* Lagardère Publishing m -1.5% -1.0% Lagardère Services 1, m +2.1% -0.1% Lagardère Active m -7.7% -10.0% Lagardère Unlimited m -14.6% -14.8% Total Media 3,364-42m -1.2% -2.6% Recurring Media EBIT before associates ( m) H EBIT Reported m change Reported change Change at constant exchange rates Lagardère Publishing 51-20m -27.5% -25.6% Lagardère Services m +24.0% +25.0% Lagardère Active m +4.4% +4.9% Lagardère Unlimited 6 + 1m +26.8% +20.8% Total Media m -7.0% -5.9% *At constant perimeter and exchange rates. 28

29 ANALYSIS OF NON-RECURRING/NON-OPERATING ITEMS IN H ( m) Lagardère Publishing Lagardère Services Lagardère Active Lagardère Unlimited Total Lagardère Media Other activities Total Lagardère Restructuring costs (3) (10) (5) (4) (22) - (22) Gains/(losses) on disposals - 1 (4) - (3) 1 (2) Impairment losses - (1) - (1) (2) - (2) Amortisation of acquisitionrelated intangible assets and acquisition-related expenses (2) (14) - (5) (21) - (21) TOTAL (5) (24) (9) (10) (48) 1 (47) 29

30 MAIN ASSOCIATES ( m) Balance Sheet 2013 (as of 31/12/2013) 2014 (as of 30/06/2014) Income Statement 2013 (as of 30/06/2013) 2014 (as of 30/06/2014) Marie Claire (42%) Other associates (2) 1 Total before impairment losses (2) 1 Impairment losses* (45) - TOTAL (47) 1 *In 2013: Marie Claire 35m, O.E.E - Because 10m. 30

31 CASH FLOW STATEMENT DATA LAGARDÈRE PUBLISHING ( m) H H Cash flow from operations before interest, taxes Changes in working capital (95) (154) Cash flow from operations (18) (101) Interest paid & received, income taxes paid (28) (22) Cash generated by/(used in) operating activities (46) (123) Acquisition of property, plant & equipment and intangible assets (13) (19) Disposal of property, plant & equipment and intangible assets - - Free cash flow (59) (142) Acquisition of financial assets (5) (34) Disposal of financial assets - 1 (Increase)/decrease in short-term investments - - Net cash from operating & investing activities (64) (175) 31

32 CASH FLOW STATEMENT DATA LAGARDÈRE SERVICES ( m) H H Cash flow from operations before interest, taxes Changes in working capital (42) (52) Cash flow from operations 12 8 Interest paid & received, income taxes paid (13) (11) Cash generated by/(used in) operating activities (1) (3) Acquisition of property, plant & equipment and intangible assets (65) (59) Disposal of property, plant & equipment and intangible assets 1 5 Free cash flow (65) (57) Acquisition of financial assets (6) (121) Disposal of financial assets - 3 (Increase)/decrease in short-term investments 14 - Net cash from operating & investing activities (57) (175) 32

33 CASH FLOW STATEMENT DATA LAGARDÈRE ACTIVE ( m) H H Cash flow from operations before interest, taxes Changes in working capital (20) (10) Cash flow from operations 7 6 Interest paid & received, income taxes paid (27) (10) Cash generated by/(used in) operating activities (20) (4) Acquisition of property, plant & equipment and intangible assets (7) (5) Disposal of property, plant & equipment and intangible assets - 2 Free cash flow (27) (7) Acquisition of financial assets (4) (7) Disposal of financial assets 98 4 (Increase)/decrease in short-term investments - - Net cash from operating & investing activities 67 (10) 33

34 CASH FLOW STATEMENT DATA LAGARDÈRE UNLIMITED ( m) H H Cash flow from operations before interest, taxes Changes in working capital Cash flow from operations Interest paid & received, income taxes paid (3) (4) Cash generated by/(used in) operating activities Acquisition of property, plant & equipment and intangible assets (76) (14) Disposal of property, plant & equipment and intangible assets - - Free cash flow Acquisition of financial assets (28) (37) Disposal of financial assets 10 - (Increase)/decrease in short-term investments - - Net cash from operating & investing activities 3 (7) 34

35 OFF BALANCE SHEET COMMITMENTS ( m) 2013 H Commitments to purchase shares from third parties (other than minority interests) Commitments given in connection with ordinary activities: contract guarantees and performance bonds guarantees in favour of third parties or non-consolidated companies other commitments given Commitments received: - counter-guarantees of commitments given other commitments received Mortgages and pledges

36 LAGARDÈRE UNLIMITED GUARANTEED MINIMUM PAYMENTS At June 30, 2014 entities forming part of Lagardère Unlimited had guaranteed minimum future payments amounting to 628m under long-term contracts for the sale of TV and marketing rights. These payments break down as follows by maturity: Maturity ( m) 30/06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/2020 & beyond Total Guaranteed minimum payments under sports rights marketing contracts At June 30, 2014 the amounts due under marketing contracts signed by these same entities with broadcasters and partners amounted to 1,168m, breaking down as follows by maturity: Maturity ( m) 30/06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/2020 & beyond Total Sports rights marketing contracts signed with broadcasters and partners ,168 36

37 FOR THE RECORDS: DEFINITIONS OF RECURRING MEDIA EBIT, EBITDA, LIKE-FOR-LIKE NET SALES AND FREE CASH FLOW Recurring 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. Like-for-like net sales were calculated by adjusting: 2014 net sales to exclude companies consolidated for the first time during the year, and 2013 net sales to exclude companies divested in 2014; 2014 and 2013 nets sales based on 2013 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. 37

38 SIGNIFICANT EVENTS

39 OVERALL PERFORMANCE (1/3) US net sales up by 5.6% due to strong best seller offering, despite Amazon punitive practices. UK net sales slightly up (+1.1%) against strong 2013 performance. French net sales down 9% due to declining market, higher returns and tough comparative with Spanish language net sales declining due to delays in the implementation of curricula reforms. Partworks still on stellar trend (+7%), especially in Germany, Japan and Russia. 39

40 OVERALL PERFORMANCE (2/3) Ongoing dispute with Amazon in the US over terms. No discounting of Hachette Book Group titles by Amazon + shipping delays on print + no preordering. Negative impact on print and e-book sales, partially offset by higher volumes with independant retailers and chains. Signature of a contract for the acquisition of Perseus Group in the US 1. The deal should be finalized in the 2 nd half $90m in Publishing sales/year. 10% Ebit margin expected by Great editorial fit (quality back list in non-fiction). Distribution business should be sold to Ingram. 1 Announced on 25 June

41 OVERALL PERFORMANCE (3/3) Acquisition of Constable & Robinson and Quercus in the UK in March. 30m sales/year. Quality front and back lists. Quercus publisher of Millenium in the UK. Negative forex impact due to strong euro vs. dollar and pound. 41

42 DIGITAL ACTIVITIES Total e-book revenue: 11.3% of net sales, stable vs. first half % in the US (vs. 34% in H1 2013) due to e-books slowdown and Amazon punitive tactics. 36% in the UK (vs. 31% in H1 2013). 3.8% in France (in fiction/non-fiction). 42

43 SIGNIFICANT EVENTS

44 BACKGROUND The rise (+5.1%) 1 in passenger traffic worldwide has improved compared to last year. The growth is particularly dynamic in Europe and ASPAC. Despite the continuous sustained decline in the print media markets, 2014 half-year consolidated net sales grew by +2.4 % at constant rates and perimeter and after stripping-out the impact of the end of tobacco sales in Hungary: +8.1% for LS travel retail (+4.3% at constant rate and like-for-like basis); double digit turnover growth in Duty Free & Luxury (+15%) and Food Services (+49%); -6.6% for LS distribution (-0.5% after stripping-out the tobacco ban, at constant rate and like-for-like basis). In a still challenging environment, growth remained strong and the semester was marked by: two medium size acquisitions: Gerzon, Fashion Duty Free ( 55m sales in 2013) at Amsterdam Schipol airport in January and the Airest Group operating in Food Services and Travel Retail, managing more than 200 sales outlets in 11 countries, mid-april ( 216m sales in 2013); the launch of the LS distribution divestment process, the disposal of Payot (bookstores) activity in Switzerland (closing completed on July 15 th ) and the sale of LS travel retail North America non travel retail newsstand network (34 stores); the good performances of the new activities and renovated stores: Fashion concessions in China (Shenzhen) and Spain (Madrid, Malaga, Barcelona); Food Services developments in France, Central Europe and the USA; Duty Free in Rome, Adelaide (Australia) and Kuala Lumpur (Malaysia); gain or renewal of major contracts: Warsaw T1 (Retail and Food Services), Birmingham (Fashion), Food Services concessions in France (Grenoble, Rennes, Perpignan and Carcassonne airports), hospitals (Marseille, Bordeaux)... 1 Source: ACI data at April 2014 (Europe : +5.2%, ASPAC : +5.9% and North America : +2.2%). 44

45 TRAVEL RETAIL IN FRANCE Aelia 100% managed net sales up by +3.1% attributable to: an increase of +3.6% at Paris airports thanks to the on-going improvement of the Fashion activities (+6.4%) and a favourable traffic impact that compensate the negative FX rate impact on the high spenders passengers (Russia), especially on the Core Business activities (+2.9%); sales in regions outside Paris are increasing vs by +3.2%. Relay 100% managed net sales are slightly decreasing (-1.7%) due to: an unfavorable environment: decrease of consumption and SNCF strikes in June; strong decrease of print products (-6.6%) and tobacco (-3.3%); partly compensated by successful commercial initiatives, the new Relay concept roll-out and the development of food concepts (start-up of the exclusive franchise agreement with Simply Food (Marks & Spencer)). Sustained development activities: opening of Simply Food La Défense in June 2014; gain of several significant tenders in Food & Beverage and/or Travel Essentials (Rennes, Cannes, Grenoble, Perpignan, Carcassonne) and hospital cafeterias (Haguenau, Marseille, Bordeaux); disposal of La Cure Gourmande in May 2014 (5 sales outlets). Rivoli and Orly stores have been transferred to Relay before the disposal. 45

46 TRAVEL RETAIL IN EUROPE (1/2) Italy (Rome airports) H at +26% vs following the very positive impact of Fiumicino stores refurbishment and despite the construction impact of Ciampino and the still challenging economic environment. Operational and commercial improvement plans are on track. Three new stores will open during the second half of the year: Luxottica, Victoria s Secret and Montblanc. United Kingdom Growth of +4.2% vs attributable to a good performance at the major airport platforms: Luton: +9.4% thanks to the commercial initiatives, the openings of a MAC pop-up store and an arrival store; Glasgow: +12.4% thanks to the improvement of the gastronomy and liquor offer and to the extension of the shop in April. Germany Net sales increase of +5.7% vs driven mainly by the strong performance of the Food Services business line (+5.2%) benefiting from the growth of the Frankfurt train station food court and of the Coffee fellows and Burger King stores acquired in

47 TRAVEL RETAIL IN EUROPE (2/2) Poland Net sales growth of +1.5%. The expected decline of the Duty Free activities (-3.6%) impacted by the transfer of Ryanair flights from Warsaw airport to Modlin airport since its reopening in October 2013 is more than compensated by the development of the Food Services activities (+12.3%) and the continuous growth of Travel Essentials (+2.0%), driven by the resilience of newsstand concepts in non-travel retail and the growing convenience stores network. HDS Polska signed on June 10 th a preliminary agreement with Eurocash by which 51% of shares are purchased by Eurocash to operate the High street Inmedio network in Poland. On the same day, both parties signed a master-franchise agreement by which Eurocash will be entitled to develop convenience stores under the 1 minute brand in non travel sector in Poland. Czech Republic Net sales increase of +5.0% vs. 2013, mainly fuelled by the development of the network. The growth is driven by both the Food Services segments (+3.1 pts with 16 additional stores) and Duty Free (+1.9 pt, positively impacted by the modernisation of the stores and new commercial initiatives along with positive traffic trend at +2.1%), while Travel Essentials remains flat despite a very strong decrease in press (-8.9%). Duty Free was impacted by the negative FX on Russian passengers spend. Romania and Bulgaria Romania: net sales grew by +4.2% vs with a network of 206 sales outlets (+9 sales outlets vs. 2013). Tobacco increased by +4.8% while print products decreased by -9.5%. Bulgaria: business grew by +18.5% with a network of 91 sales outlets (+7 sales outlets vs. 2013). Opening of Sofia Bus Station concessions in May and of the beer and vodka bars in Varna and Burgas airports at the beginning of

48 TRAVEL RETAIL IN NORTH AMERICA Retail activity in Canada and the United States is increasing by +9.7%: dynamic growth within the comparable network of +5.9% driven by both positive traffic trend and development of non print products; positive contribution of the non comparable network (+5.7 pts), the 2013/2014 closings (urban retail network in Canada and JFK mainly) being compensated by 2013/2014 openings (Los Angeles, Houston, Detroit and JFK T8); in line with its strategic repositioning, LS travel retail North America completed the disposal of its non travel retail newsstand network (34 stores) at the end of June. 48

49 TRAVEL RETAIL IN ASIA-PACIFIC Pacific Despite a still challenging environment, net sales grew by +2% thanks to: the Duty Free activity driven by the renovation of the Adelaide stores and the addition of a Victoria s Secret store; concepts and product mix diversification in the Travel Essential network in Australia (+8.0% in confectionery & beverages; +10.6% in gifts/souvenirs and accessories) and in New Zealand: +6.9% (mostly due to confectionary & beverages); print sales continue to drop (press: -9.3%, books: -3.7%) however the book decline path has been significantly reduced. The network comprises 136 sales outlets (+4 compared to 2013). Asia Consolidated net sales increased by +35.2% versus 2013, thanks notably to the outstanding network development in China (including +22 Fashion and Travel Essential stores at Shenzhen) and in Malaysia (opening of two Fashion & Specialty stores at Kuala Lumpur International Airport T2). The network of 6 stores operated in Taiwan high speed rail stations has been closed in June 2014, due to limited potential to expand in the country. Lagardère Services is also expanding its presence in India through the development of Relay stores under a franchise agreement (7 sales outlets in Dehli and Bangalore). Sales have also benefited from continuous traffic growth across the region, as well as further operational improvements on existing operations, notably in Singapore and China. However, recent trends in traffic are more challenging and the Chinese anti-ostentatious campaign and new tour operator policy are affecting the sales in the region. 49

50 DISTRIBUTION ACTIVITIES (1/2) Belgium Integrated Retail activities experienced a slight increase in sales (+1.1%): press decline (-5.5%) was fully compensated by the good performance of tobacco (+8.0%) and the development of food & beverage and accessories. Distribution activity declined by -4.7%, including -4.4% for press. Spain Retail activity is in line with last year at -0.7% due to stores closings in the Retail activity balanced by the stores openings in Fashion. Distribution activity declined by -6.3% with a -6.8% decrease in press sales, the trend continues to improve. Switzerland Retail activity is above last year at +1.8% mainly thanks to Naville Détail, Airport Fashion and the good performance of Payot. Distribution activity declined by -4.7% with a -7.6% drop in press sales. Hungary As expected, the Integrated Retail activity suffered significantly from the tobacco ban law enforced mid-july 2013 which led to the closing of more than 140 stores. Distribution activity increased by +24.4% (managed net sales) thanks to the successful diversification strategy driven by the development of LDS (convenience distribution company acquired in January 2013), and Sprinter (home delivery and 3PL company acquired in May 2013). 50

51 DISTRIBUTION ACTIVITIES (2/2) North America H was impacted by the continued rapid decline in press sales, which impacted both Curtis (-15.8%) and LS distribution North America (-11.1%). In Canada, the decline was however mitigated by the development of the diversification activities (Euro-Excellence: +2.4%) and through external growth (takeover of French-language titles from Les Messageries de Presse Benjamin in Quebec starting April 2014, generating pts of additional sales). However, performance was affected by operational issues that are currently being addressed. 51

52 SIGNIFICANT EVENTS

53 MAGAZINE PUBLISHING Advertising The print advertising revenue went down by 10.7%. However, most of the Lagardère Active magazines such as Elle, Elle Décoration, Télé 7 Jours or Parents stay strong leaders on their competitive sets. Circulation The circulation revenue went down by 2.3% with a good resistance of the news and celebrity segments (including Le Journal du Dimanche, Paris Match, Ici Paris, France Dimanche). Price increases on key magazines enable to partially offset newsstands volume decline. Significant events On the 10 th of July 2014, Lagardère Active completed the sale of 10 of its magazines to 4B Media-Group Rossel and Reworld Media. The Magazine Publishing business was reorganised into four segments (high-end women s, news, mass market and family) in order to strengthen its leading brands and help accelerate digitalisation. The development of licences continues in 2014 with the launch of Elle in Malaysia (March 2014), Elle Decor in Korea and Denmark, Elle a tavola in Italy and Elle Gourmet in Spain. In February, Elle magazine in France reinforced its identity and image with a new layout. 53

54 RADIO Europe 1 (news and entertainment radio station in France) Remains the number 3 radio station in France. Europe 1 has reduced the audience gap with the first two leaders and, this season (September 2013 June 2014), has achieved its best audience results since the past four years. Is very powerful on its main commercial target (25-59 years old). In a weak French advertising radio market, Europe 1 s sales have been up on the first semester 2014 vs. first semester The website, very dynamic in terms of viewers increase year on year, will soon be repositioned towards video. Virgin Radio/RFM (music radio stations in France) Audience shares have been flat. Sales are slightly down in a weak French advertising radio market (especially for musical stations). International Radio H proved to be a semester of steady advertising growth, driven by remarkable performances in Poland, Germany and Slovakia. Lagardère Active Radio International gained a radio frequency in Senegal and now intends to broadcast a new radio station in the Dakar region in the second half of the year. 54

55 TELEVISION Free TV Gulli Increase by 30% of audience share (4-10 years old) in June 2014 vs. June 2013, in spite of the repositioning of TV channel France 4 into a kids channel since April 1 st Gulli has renewed with the leadership position on kids segment on French TV market. Consequently advertising sales are up by 20% over the first semester versus S Agreement has been found with France Télévisions in order to acquire their 34% capital share in Gulli. Launch of Virgin Radio TV on Free platform (ADSL platform) in March 2014 in order to expand our offer in music. Launch of Mezzo Live HD in Asia in January. Development of our footprint on the web especially around the Gulli brand. Every month more than 14 millions of videos are downloaded from Gulli s website and Internet platform. Our channel in Russia continues to grow, especially our pre-school offer branded TiJi. 55

56 TV PRODUCTION AND DISTRIBUTION 42.4% revenue decrease in H vs. H mainly due to the high level of activity in H Acquisition of non scripted production company Groupe Réservoir as of February 5 th Acquisition of scripted company Sam & Compagnie as of February 17 th Acquisition of comedy scripted company De Père en Fils Productions as of April 7 th Disposal of 25% participation in Because Music. Lagardère Entertainment performance Lagardère Entertainment #1 scripted producer in France and #1 non scripted producer since Lagardère Entertainment enjoys the resounding success of short format serie Nos chers voisins (TF1). The other series of Lagardère Entertainment continue to attract good ratings, particularly Joséphine, ange gardien, Clem and Famille d'accueil. In unscripted programs, C dans l air continues to enjoy outstanding ratings, as well as TV reality show L'Île des vérités. 1 Source: Écran Total. 56

57 DIGITAL Lagardère Active is the second media group in France on the web and the first on mobile phones with 19 million unique visitors 1, and consolidated its digital position in Doctissimo, the health and wellness information leader with over 8 million unique visitors 1, continues the diversification of its activities: after the acquisition in 2013 of MonDocteur.fr, a medical appointment online website, Doctissimo launched in April 2014 Doctipharma.fr, a service which allows pharmacies to create their online place. BilletReduc.com, elected the best online ticketing agency in 2013 by the FEVAD², is the French leader of the low cost booking and pursued its strong increase with more than 1.4 million of tickets sold during the first semester. Facing in 2013 the large-scale deployment of Google Shopping which led to the traffic decrease for all the market players, LeGuide group has implemented several projects to restore growth and develop new sources of alternative traffic. LeGuide group has also launched a beta version of a new social shopping website, Blacklist.me, focusing on giving more value to the user via a better understanding of its tastes. 1 Source: Médiamétrie, Netratings; connection from all places; January-May ²E-commerce and distance selling federation. 57

58 SIGNIFICANT EVENTS

59 CORPORATE / ORGANISATION Creation of an Executive Committee: setting the strategic direction; managing the business on a day to day basis; responsible for the transition to a globally integrated business. Ongoing turnaround of the business in Europe: individual companies coordination and development; restructuring media business in Europe. Implementation of a new organisation aiming at building an integrated agency to further accelerate our level of profitability: build-up worldwide sponsorship and media organisations; drive development through global division strategies (Football, Golf, etc.); implement locally strategies and territory specific businesses. Lagardère Unlimited recovery plan is on track. 59

60 BUSINESS UNITS (1/2) Football Initiated the implementation of an integrated European football platform. Expanded its footprint in Germany, the UK and the Netherlands (clubs, single rights and panel advertising). Signed commercial deals in China for the Asian Football Confederation. Successfully delivered the 2014 African Nations Championship (CHAN) in South Africa. Golf and tennis Successfully organised the Nordea Masters and three charity golf events in the US. Signed several sponsors for the BNP Paribas WTA finals in Singapore. Media and digital Expanded tennis footprint with several ATP 250 renewals. Developped digital activation programmes in France, Germany and the US. 60

61 BUSINESS UNITS (2/2) Olympics Distributed the Sochi 2014 Winter Olympic Games media rights. Commercialised the 2014 Glasgow Commonwealth Games. Stadiums, arenas and theatres Set up of a Brazilian activity, including the operation of two stadiums in partnership with BWA (Castelão 2014 FIFA World Cup stadium and Independencia). Signed a 10-year stadium operations and club marketing contract in Budapest. Expanded its consultancy business in Russia, Germany and Greece. Acquired the operating company of the Casino de Paris. Endurance Successfully delivered four ITU World Series events. 61

62 2014 FIRST-HALF RESULTS JULY 31, 2014