2015 Full-Year Results Growth of recurring EBIT(1): 10.5%, at 378 million Operating margin at 5.3% (vs 4.8% in 2014)Rise of adjusted(2)profit: 30% at 240 million
Free cash flow: 274 million versus - 23 million in 2014
2016 recurring EBIT target(1): growth slightly above 10% versus 2015(3)
Proposed ordinary dividend unchanged at 1.30 per share
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In 2015, the Lagard re group achieved solid operating and financial performance, notably posting a 3% rise in like-for-like(4) sales, an improvement in profitability (operating margin of 5.3% in 2015 vs 4.8% in 2014) and a significant increase in free cash flow generated ( 274 million).
Group recurring EBIT growth was above announced target(5).
Sales totalled 7,193 million, 0.3% on a reported basis and 3.0% like-for-like.
Group recurring EBIT totalled 378 million, 36 million ( 10.5%) on 2014:
- Lagard re Publishing: recurring EBIT was steady at 198 million ( 1 million);
- Lagard re Travel Retail: recurring EBIT was 102 million. This division improved its profitability, thanks to the Travel Retail segment, stripping out the impact of the disposal of Distribution operations.
- Lagard re Active: recurring EBIT increased by 6 million to 79 million, boosted by a good performance from Lagard re Studios and cost-efficiency plans.
- Lagard re Sports and Entertainment: 16 million increase in recurring EBIT, to 20 million.
Profit - Group share rose to 74 million from 41 million in 2014, chiefly reflecting the rise in Group recurring EBIT and a reduction in income tax expense. Adjusted profit(2) - Group share was 240 million, up 30% on 2014.
The Group's financial position remains sound. The higher net debt figure of 1,551 million at the end of the period, compared with 954 million in 2014, was mainly attributable to the acquisition of Paradies in the United States. The Group has a healthy liquidity position, with a leverage ratio (net debt/recurring EBITDA(6)) of 2.4 times(7), thanks to a solid free cash flow generation.
I. SALES AND RECURRING EBIT(8)
Group consolidated sales
Sales totalled 7,193 million, up 3.0% on a like-for-like basis ( 0.3% on a reported basis).
The difference between data on a reported basis and like-for-like is explained in part by a positive currency effect of 222 million, due primarily to appreciation by the US dollar and the pound sterling, and in part by a negative scope effect (- 393 million), broken down as follows:
Miscellaneous effects of sales deconsolidation, amounting to - 671 million, essentially comprising:
- the deconsolidation of sales from Relay in train stations in France (following the creation of a joint venture with SNCF in September 2014, now consolidated using the equity method), for - 222 million, and of high-street retail sales in Poland (consolidated using the equity method after the disposal of 51% of Inmedio in December 2014) for 103 million;
- the disposal of Distribution assets in Switzerland in February 2015, with an impact of - 266 million, and of the Payot bookshops in July 2014, with an impact of - 28 million;
277 million in acquisitions at Lagard re Travel Retail (consolidation of Paradies in November 2015 and of Airest in April 2014), Lagard re Active (acquisition of Grupo Boomerang TV in May 2015 and consolidation of the sales of Gulli in November 2014) and Lagard re Publishing (Quercus and Rising Stars in the United Kingdom).
Group recurring EBIT
Group recurring EBIT rose by 10.5% to 378 million.
The main scope effect were: a - 15 million impact from the sale of Distribution operations (in Switzerland and the United States), 11 million from the acquisitions of Paradies and Boomerang. Currency effect had a positive impact of 11 million. Stripping out these effects, Group recurring EBIT growth was 8.8%, ahead of announced target ( growth of around 7% at constant exchange rates and excluding the sale of Distribution operations ).
Lagard re Publishing: operating margin remains high at 9.0%.
Sales
Sales totalled 2,206 million, up 10.1% on a reported basis and up 1.7% like-for-like.
2015 was driven by the good performance in France in Illustrated Books and General Literature, and to the positive momentum in Education in Spain and the United Kingdom, in Illustrated Books in the United Kingdom, and to the growth in Partworks. The reversal of market trends and impact of new contractual conditions with digital retailers weighed on sales. In the United Kingdom, the rise in VAT affected the performance of this division.
Operating profit
At 9.0%, the operating margin remains at a high level, despite a dip of -0.8 points. Recurring EBIT, at 198 million, increased by 1 million on 2014. This performance was attributable to three factors: lower sales of e-books in the United States, the VAT hike in the United Kingdom, and a decline in the Education segment in France (in a year preceding curriculum changes).
These factors were partly offset by positive momentum in France in General Literature and Illustrated Books, while sales of Partworks held up well.
Lagard re Travel Retail: operating margin stood at 2.9%
Sales
In 2015, sales totalled 3,510m, down 8.0% on a reported basis and up 4.3% like-for-like.
The strategic transformation of the division is still ongoing. Travel Retail now represents 73% of total sales for this division, up from 63% in 2014.
The development strategy of Lagard re Travel Retail was a success, with accelerated organic growth in Travel Retail and the completion of acquisitions in a growing North American market (primarily Paradies).The market environment in 2015 was characterised by the brisk pace of growth in air traffic, the continued downturn in the press market, and an unsettled geopolitical and macroeconomic situation. In France, the end of the ye
