Investor Presentation September 2009 Investor Presentation / 1 - - PowerPoint PPT Presentation

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Investor Presentation

Investor Presentation

September 2009

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Presentation by Dominique D’Hinnin CFO of Lagardère SCA

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Certain of the statements contained in this document are not historical facts but rather are statements of future expectations and other forward-looking statements that are based on management’s beliefs. These statements reflect such views and assumptions as of the date of the statements and involve known and unknown risks and uncertainties that could cause future results, performance or future events to differ materially from those expressed

• r implied in such statements.

When used in this document, words such as “anticipate”, “believe”, “estimate”, “expect”, “may”, “intend” and “plan” are intended to identify forward-looking statements which address our vision of expected future business and financial performance. Such forward-looking 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. These forward-looking statements are based upon a number of assumptions which are subject to uncertainty and trends that may differ materially from future results, depending on a variety of factors including without limitation: General economic and labour conditions, including in particular economic conditions in Europe and North America Legal, financial and governmental risks (including, without limitation, certain market 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. Lagardère SCA disclaims any intention or obligation to update or review the forward-looking statements referred to

• above. Consequently Lagardère SCA is not responsible for any consequences that could result from the use of any
• f the above statements.

Disclaimer

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Lagardère is a diversified media group focused on 4 main divisions: Publishing, Active (Press, Radio and TV), Services and Sports

• Our diversity (cyclical-acyclical/ mature-non mature businesses/ domestic-international)

improves our risk profile

• We target market leading positions and 100% ownership in each of our businesses

Our strategy is to allocate more capital to higher growth areas

• Sports: currently 11% of our EBIT, target of 20% in 4 to 5 years, with average growth of

5% to 7% in sports marketing and rights management

• Digital activities: 6.2% of Lagardère Active in 2008, vs. target of about 10.0% in 2010

Shareholder-friendly

• Dividend per share has risen by around +8% a year on average since 2003
• We have a track record in share buybacks, including €102m in September/October 2008

following €337m in 2007

A clear strategy for the future

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Revenues: €3,720m / - 3.5% like-for-like and - 2.2% on a reported basis Consolidated recurring EBIT before associates: €186m / - 27.0% Recurring EBIT before associates from €172m / +19.4% Media activities (excl. Lagardère Active): Net income: €318m / - 50.9% Net income adjusted (exc. EADS): €129m / -18.9% Net debt at 31.06.2009: €2,143m vs. €2,731m in 1H 2008

Lagardère SCA Key Figures

Operating results to end June 2009 confirm our ability to meet our full-year guidance:

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2008 revenues: €8,214m

43% 5% 26% 26% 19% 11% 37% 33%

2008 Media Recurring EBIT: €657m

Lagardère SCA 2008 full-year figures

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Lagardère Publishing

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31% 10% 18% 20% 7% 11% 4% 22% 18% 34% 2% 13% 2% 8%

Lagardère Publishing 2008 revenues: €2,159m

A Balanced Portfolio of Assets

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Lagardère Publishing: No.2

2007-2008 sales(*) in € million

812 852 885 901 1 014 1 259 1 381 1 612 1 616 1 760 1 803 1 837 1 900 2 159 4 744 1 000 2 000 3 000 4 000 5 000 Reader's Digest Shueisha* Kodansha* Shogakukan* HarperCollins Cengage Learning Holtzbrinck* Scholastic De Agostini* Planeta + Editis* McGraw -Hill Education Random House* Houghton Mifflin Harcourt* Hachette Livre Pearson

Note 1: The impact of the 2007 USD exchange rate is dominant for all American players. Note 2: Professional publishing sales have been excluded as far as they could be isolated. * 2007 turnover.

Competitive Position in the World Book Market

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Continued organic growth:

• Proactive exploration of business opportunities in large emerging countries
• Partworks start-up in Russia to offset decline in mature markets (France, Spain,

UK)

• Implementation of digital plan to capitalize on growth of e-book market (Extension
• f Numilog services to UK, Monetization of Larousse.fr, Distribution of digital Text

Books) Further consolidation:

• Be prepared to seize attractive acquisition opportunities to round out our portfolio:

UK, Spain (trade) & USA (trade)

What next for Lagardère Publishing?

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• * 1999-2004 French GAAP

** 2004-2005 IFRS: Recurring EBIT Before Associates after reallocating central costs

• *** 2006 onward:post IAS 31 implementation
• **** 2009 After management fees charged by Non-Media activities based on the rules applied in 2009

Evolution of Lagardère Publishing Recurring EBIT

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Lagardère Active

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• Strong position in TV Production in France
• Successful launch of DTT channels:
• 3.8% audience share leader

in 4-14 age group in 2008

• 1.3% audience share leader in

15-24 age group in 2008

• Leader in Children’s TV segments with

14.8% national audience share of 4-10 age group

• Shareholder of Canal+ France (20%)

50% of Lagardère Radio’s business is in France: our 3 stations (Europe 1, Virgin

Radio, RFM) together have nearly 20% audience share…

…50% is in the Rest of the World with

strong position in Eastern Europe

40% of the Broadcast business is in TV:

Broadcast (2008 revenues: €520m)

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• * 1999-2004 French GAAP

** 2004-2005 IFRS: Recurring EBIT Before Associates after reallocating central costs

• *** 2006 onward: post IAS 31 implementation

**** 2009 After management fees charged by Non-Media activities based on the rules applied in 2009

Evolution of Lagardère Active: Broadcast Recurring EBIT

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41 editions (39 editions last year) Brand extension dynamic

Controlled subsidiaries: 128 magazines Joint venture: 40 magazines License: 50 magazines

FRANCE 39% 39% ASIA & OTHERS 8% 8% UNITED STATES 19% 19% WESTERN EUROPE 22% 22%

• RUSSIA

12% 12%

Press (2008 revenues: €1,591m)

• An international network in 44 countries

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• * 1999-2004 French GAAP

** 2004-2005 IFRS: Recurring EBIT Before Associates after reallocating central costs

• *** 2006 onward: post IAS 31 implementation

**** 2009 After management fees charged by Non-Media activities based on the rules applied in 2009

Evolution of Lagardère Active: Press Recurring EBIT

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What factors will affect Lagardère Active recurring EBIT in 2009?

• A decline in our advertising revenues: other things being equal, each 1% loss of

advertising revenue has a negative impact of €8m to €10m on full-year recurring EBIT, before any cost savings

• Increases in some operating expenses (especially paper prices): negative impact

around €35m on full-year recurring EBIT

• The need to continue investing in the businesses and countries of the future (such

as the internet, digital terrestrial television and China), and to consolidate our leadership positions: negative impact of around €10m on full-year recurring EBIT

Lagardère Active: Objectives for 2009

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How have we responded?

• Rationalization of the business portfolio

In addition to cost-cutting, we will rationalize our portfolio of businesses:

• discontinuing, selling or out-licensing

selected magazines

• refocusing on:
• strong brands
• our leadership positions
• enhancing our presence in high-growth

activities:

• digital terrestrial television
• emerging markets
• digital activities
• Active 2009 Plan – “One Step Further”
• After the Active 2009 plan, which in 2009 will

have generated cumulative savings of €86m relative to 2006 (including €20m in full year 2009), we are announcing a new cost-cutting plan to achieve €70m of savings from 2009:

• tight control over salaries
• restructuring in some countries
• renegotiating contracts with printers
• cuts in promotional costs
• cuts in editorial costs

Lagardère Active: Objectives for 2009

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156

*

€m

**

* Before inflation, including around €20m one-shot savings that will be maintained as long as the environment does not improve ** for the Active 2009 Plan

Cumulative savings:

• Close to 8% of operating expenses
• Double the initial cost savings plan (Active 2009)

“One Step Further” 2009 cost savings plan

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Lagardère Services

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From distribution to retail: distribution 34% of revenues in 2008 vs 45% in 2000 From low to higher margin products From mature countries toward Central Europe (18% of sales in 2008) & Asia (4% of sales in 2008)

3 shifts to improve growth & profitability

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• * 1999-2004 French GAAP

** 2004-2005 IFRS: Recurring EBIT Before Associates after reallocating central costs

• *** 2006 onward: post IAS 31 implementation

**** 2009 After management fees charged by Non-Media activities based on the rules applied in 2009

Evolution of Lagardère Services Recurring EBIT

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Lagardère Sports

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Germany 24% UK 8% France 9% Other European countries 37% Asia 6% Other 16%

• H1 2008
• Operating Margin • 14.9%
• Revenues
• 197
• in € million
• These figures do not include World Sport

Group, which was accounted for as an associate (by the equity method)

European leader in sports rights management

• H1 2009
• 261
• 12.6%
• 2008
• 444
• 16.9%
• In 2008

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Building leading positions across key markets and expanding our service

• ffering

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Lagardère: Outlook for 2009

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For Lagardère Active, the lack of visibility makes it impossible to set guidance for 2009 at this stage. However:

• Each 1% loss of advertising revenue has a negative impact of €8m to €10m on full-year

recurring EBIT before any cost savings, on top of which comes the knock-on effect of rises in some operating costs (€35m in 2009).

• Past and planned measures (One Step Further) should deliver net cost savings of €90m

in 2009 For our other businesses, we can expect 2009 full-year recurring EBIT in a range from zero growth to a drop of no more than 10% This guidance is based on constant exchange rates, and builds in an investment budget that we expect to cost around €30m of recurring EBIT for Lagardère Media as a whole

Outlook for 2009: Objectives confirmed

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Lagardère IR Team:

Virginie Banet Investor Relations Director Tel: 33 1 40 69 18 02 vbanet@lagardere.fr Nathalie Frizzole Investor Relations Tel: 33 1 40 69 67 88 nfrizzole@lagardere.fr Hélène Martin Assistant Tel: 33 1 40 69 19 22 Fax: 33 1 40 69 22 72 hmartin@lagardere.fr Address: 4 rue de Presbourg 75116 PARIS FRANCE

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Appendix

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• Fully owned

26 23 18 51 24 26 18 37 50

• 2
• Acquisitions
• Fully
• wned

converted to license

• Licenses

Shift to license

• 243
• End 2006
• Launches
• (incl. 7

licenses) 132

• Sale
• JV

Current portfolio

• Closed
• 220

167

• 21%

Including additional restructuring performed since June 2008:

closed down 5 (incl. Home in June 2008 estimate) sale 12 shift to JV 4 (+1 title brought by partner) shift to or new license 10 (-1 license closed down)

• Reduction in # of magazines published: -35

Most of the magazine portfolio restructuring plan achieved in 2008

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“One Step Further” plan

Summary by line item

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September 2009