Full-Year 2016 Results Strong rise in Group recurring EBIT(1): up 13.5%(2) to 395 million Free cash flow generation up sharply, at 416 million
2017 Group recurring EBIT growth target(1): between 5% and 8%(2)
Proposed ordinary dividend unchanged at 1.30 per share
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In 2016, the Lagard re group confirmed its growth momentum, boosted by organic growth in Travel Retail of more than 7% and by a strong yearly performance from Lagard re Publishing.
Robust growth in Lagard re s businesses
The Lagard re group recorded revenue of 7,391 million, up 2.5% on a like-for-like basis. This sustained performance was primarily driven by growth at Travel Retail (up 7.1%) and Lagard re Publishing (up 2.5%), confirming the relevance of the Group s strategy and allowing Lagard re to strengthen its leadership while developing its growth drivers.
Sharp rise in Group recurring EBIT
With growth in Group recurring EBIT coming in at 13.5%(2) versus 2015, Lagard re outperformed its initial target of slightly above 10%(2) announced in March 2016.
Group recurring EBIT came in at 395 million versus 378 million in 2015. This improvement reflects a sharp increase in the contribution of Travel Retail coupled with a strong performance from Lagard re Publishing.
Profit before finance costs and tax was 314 million, up from 174 million in 2015, owing mainly to the disposal of a non-operating asset.
Profit - Group share jumped to 175 million from 74 million one year earlier. Adjusted profit(3) - Group share was stable at 238 million versus 240 million in 2015.
Increase in free cash flow generation
Net debt was down 162 million to 1,389 million owing to 25% growth in cash flow from operations before changes in working capital and the disposal of a non-operating asset.
The leverage ratio (net debt/recurring EBITDA(4)) came out at 2.2x at end-2016, sharply lower than the anticipated level announced at the time of the acquisition of Paradies(5), of slightly below 3.0x.
I- REVENUE AND RECURRING EBIT(6)
REVENUE
Revenue totalled 7,391 million, up 2.5% like-for-like and up 2.7% on a consolidated basis. The difference between like-for-like and consolidated figures reflects a 95 million negative foreign exchange effect due mainly to the depreciation of the pound sterling, and a 124 million positive scope impact linked to external growth transactions, partly offset by the impact of disposals in the Press Distribution activities.
GROUP RECURRING EBIT
Group recurring EBIT advanced 4.6% on a consolidated basis to 395 million.
The disposal of Distribution activities (in Spain, Switzerland, the US, Canada and Belgium) represented a 25 million negative scope impact. Changes in exchange rates had a 5 million negative impact.
Stripping out these effects, Group recurring EBIT growth was 13.5%, ahead of the target initially announced in March 2016 ("growth slightly above 10% compared to 2015, at constant exchange rates and excluding any impact from any disposal of Distribution activities").
Lagard re Publishing Revenue
Revenue totalled 2,264 million in 2016, up 2.5% like-for-like and up 2.6% on a consolidated basis.
Business growth in 2016 was driven by the United Kingdom (up 11.0%), lifted by the success of Harry Potter and the Cursed Child in English worldwide (excluding the US and Canada) and Fantastic Beasts, and by the good performance of Partworks (up 5.7%), especially in Japan and Spain.
In France (up 1.5%), the good performance of Education driven by curricular reform was partly offset by an unfavourable comparison effect linked to the success of Ast rix in 2015, and by a less intensive release schedule in General Literature.
In the United States, business was down 4.2% due to a less eventful publishing programme than in 2015.
The Spain/Latin America region was stable (down 0.4%) despite the unfavourable comparison effect (publication of Ast rix in 2015), thanks to ongoing curricular reform in Spain and a one-off export transaction in Latin America.
In 2016, the contribution of e-books to Lagard re Publishing s overall revenue was 8.0% (9.0% in 2015).
Recurring EBIT
At 9.2%, the operating margin improved by 0.2 points, while recurring EBIT increased by 10 million year-on-year to 208 million. The increase results from three factors: profitability gains in the US underpinned by strict cost discipline; a good performance from Partworks in Japan and Spain; and the one-off impact of new titles such as Harry Potter and the Cursed Child and Fantastic Beasts in the UK, which offset the full-year impact of a return to the agency agreement for e-books.
In France, the positive impact of curricular reform helped offset a more subdued performance from Illustrated Books and General Literature over the year.
Lagard re Travel Retail Revenue
2016 revenue for the division totalled 3,695 million, up 5.0% like-for-like and up 5.3% on a consolidated basis.
Despite an unstable geopolitical environment, Lagard re Travel Retail s growth strategy continued to bear fruit, with organic growth in Travel Retail (up 7.1% like-for-like) led by strong performances in North America and Asia-Pacific.
Business in France held firm (up 0.5%), thanks to a good performance in the Travel Essentials and Foodservice segments following the extension and modernisation of the network and to the upturn in the Duty Free segment towards the end of the year. Duty Free benefited from a favourable comparison effect after a weak fourth-quarter 2015 shaped by the Paris terrorist attacks.
EMEA (excluding France) enjoyed strong 10.9% growth, spurred by network development, modernisation of concepts and a dynamic sales policy which helped limit the impact of the terrorist attacks.
Business was up 9.7% in North America thanks to network expansion and sales synergi
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Full-Year 2016 Results Strong rise in Group recurring EBIT(1): up 13.5%(2) to 395 million Free cash flow generation up sharply, at 416 million
