2014 ANNUAL RESULTS Growth of recurring Media EBIT(1): 2.9%(2) to 379m Group operating margin : 4.8% vs 4.5% in 2013
Recurring Group EBIT 4.7% to 342m
Adjusted net profit(3) 7.6% to 185m
Proposed ordinary dividend unchanged at 1.3 per share
A solid financial position
2015 guidance on recurring Group EBIT: about 5% compared to 2014(4)
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In 2014, the Lagard re group s operating performance featured improved profitability (with a margin of 4.8% in 2014 vs. 4.5% in 2013).
Growth in recurring Media EBIT ( 2.9% on a like-for-like basis(2)) is above the guidance(5), thanks to the recovery at Lagard re Unlimited, tight cost control in other units and a significant improvement in Travel Retail.
> Sales came to 7,170m, -0.6% in reported figures and -1.8% on a like-for-like basis( ), with an improvement at the end of the year.
> Recurring Media EBIT amounted to 379m, up 7m compared to 2013:
- Lagard re Publishing: the operating margin remained high (9.8%) but receded slightly by 1 point; Recurring EBIT amounted to 197m, down by - 26m with an unfavourable basis of comparison in General Literature in France and English-speaking countries, after a very strong year in 2013 for best-sellers. Cost-cutting measures helped to reduce this effect.
- Lagard re Services: Recurring EBIT rose by 9m to 105m, thanks to the sharp increase in Travel Retail activities.
- Lagard re Active: Recurring EBIT rose by 9m to 73m. The operating margin improved, driven by ongoing cost-cutting.
- Lagard re Unlimited: the recovery is on track, with positive recurring EBIT of 4m, up by 15m.
> Net profit - Group share amounted to 41m, vs. 1,307m in 2013, which included the 1,823m capital gain on the disposal of the EADS stake. Adjusted net profit - Group share came to 185m, a 7.6% increase compared to 2013, reflecting mainly the increase in recurring Group EBIT and the improvement in net financial income.
> The Group s financial situation was solid with net debt of 954m at end-2014, vs. net cash of 361m at end-2013. This change is mainly due to dividend payments (an exceptional distribution and the ordinary dividend). The cash situation remains healthy and gearing (net debt / equity) of 46% and leverage ratios (net debt / recurring EBITDA(7)), at 1.8x, are in line with Group objectives.
I- SALES AND RECURRING EBIT Sales came to 7,170m, or -1.8% on a like-for-like basis and -0.6% in reported figures.
The difference between the like-for-like and reported figures was caused mainly to a positive 108m perimeter, due, in turn, mainly to acquisitions in 2014 at Lagard re Services - Gerzon Holding (Amsterdam Schiphol airport) and Airest Group (including the Venice airport) - and, to a lesser extent, Lagard re Active (Groupe R servoir and France T l visions 34% stake in Gulli) and Lagard re Publishing (in the United Kingdom). Exchange-rate shifts had a negative impact of - 27m (mainly at Lagard re Services, due to the depreciation of the Australian dollar, the Hungarian forint, and the Canadian dollar vs. the euro).
Recurring Media EBIT amounted to 379m, 1.9%.
When excluding the impact of the July 2014 disposal of the Payot bookshops in Switzerland, whose contribution amounted to 3m between July and December 2013, recurring Media EBIT rose by 2.9%, slightly more than guidance range (i.e., growth about in the middle of a range of 0% to 5% at constant forex). The forex impact was not significant in 2014.
Recurring Group EBIT (i.e., recurring Media EBIT and other activities) amounted to 342m, 4.7% compared to 2013.
> Lagard re Publishing: the operating margin remains high
Sales
Sales 2014 came to 2,004m, -3% in reported figures and -4.5% on a like-for-like basis.
2014 was a transition year for Lagard re Publishing, whose top-line figure, as expected, was marked an unfavourable comparison driven by the large number of best-sellers in 2013. Note also the significant decline in Education, due to the lack of renewal of Textbook programmes, particularly in France.
Profitability
The operating margin remains high, at 9.8% but nonetheless receded by one point. Recurring EBIT at Lagard re Publishing amounted to 197m, - 26m compared to 2013. This shift was due mainly to the contraction of activity in General Literature in France and in English-speaking countries. The implementation of cost-cutting nonetheless helped limit its effects.
> Lagard re Services: acceleration of growth at Travel Retail and increase in recurring EBIT
Sales
Sales in 2014 came to 3,814m, 1.8% in reported figures and 1.3% in like-for-like figures. When excluding the impact of the end of tobacco sales in Hungary, like-for-like growth would have been 2.6%. The strategic transformation continues at Lagard re Services, and Travel Retail now accounts for 63% of total consolidated net sales, vs. 60% in 2013.
The market environment in 2014 featured growth in air traffic at a brisker pace than in 2013, and the continued decline in the press market. Lagard re Services development strategy paid off with an acceleration in organic growth in Travel Retail in the second half.
Profitability
The operating margin amounted to 2.7%, a very slight improvement, with a recurring EBIT up 9m to 105m.
This improvement was due to the solid performance at Travel Retail ( 15m) which, apart from the impact of growth in air traffic, was driven by a more favourable product mix, the successful development of new concepts and the contribution of acquisitions. The results of Distribution (down by - 6m) reflect weaker activity, which was nonetheless mitigated by the diversification strategy and tight cost control.
> Lagard re Active: improvement in profitability thanks to cost-cutting plans
Sales
Sales of 958m in 2014, or -3.8% in reported figures and -5.4%
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2014 ANNUAL RESULTS Growth of recurring Media EBIT(1): 2.9%(2) to 379m Group operating margin : 4.8% vs 4.5% in 2013
