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INVESTORMEETINGNovember 12, 2018
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INVESTOR MEETINGNovember 12, 2018
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TRADE BOOK MARKETS PERFORMANCE AND TRENDS (PRINT)
▪ Flat to moderate growth thanks to favorable demographics (Silver economy)
▪ Gradual long-term decline likely, due to proliferation of digital entertainmentformats
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2017 vs. 2016 2018 Trend
France -0.8%
USA +1.9%
UK +0.2%
Spain +3.3% (incl. Educ)
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EDUCATION MARKETS PERFORMANCE AND TRENDS
▪ Simultaneous absence of curriculum reform in three key countries in 2018
(no common cause)
▪ Reforms to resume in France in 2019, but level of public funding yet to bedetermined
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2017 vs. 2016 2018 trend
France -10.9%
UK -6.0%
Spain -15% (est.)
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DIGITAL PREFORMANCE AND TRENDS
▪ eBooks : slow decline after peak in 2013 (US) and 2014 (UK)
▪ Downloadable audiobooks : 25% to 30% annual growth rate
▪ Education : a successfull market for digital in the UK, a promising but as yet embryonic one in France and Spain
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2009
2.1%
2011
15.1%
6.2%
2010
20.6%
2012
21.4%
2013
20.7%
14.2%
2014 2015
17.4%
2016
13.4%
2017
0.3%
2009 2010
1.3%
5.8%
12.2%
2011
12.5%
2012
13.0%
16.0%
20152013 2014
17.6%15.9%
2016 2017
0.7%
2013
0.9%
2014
1.1%
2015
1.4%
2016
1.7%
2017
1.9%
2012
2.2%
2013
2.6%
2014
3.4%
20172015
4.0%
2016
5.1%
Sources : AAP, The Publishers Association – all figures are expressed in value
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WHICH STRATEGY HAVE WE ADOPTED IN THE FACE OF SUCH PERFORMANCES AND
TRENDS?
Distribution for third parties
Acquisitions
Diversification
Innovation and CRM
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DISTRIBUTION
▪ A key contributor to profits and cash flow
• High barrier to entry (few players)
• Negative working capital
• Distribution for third parties is risk-free and contributes to economies of scale
Opportunity :
More publishers to exit the business in the future and join market leaders
as rising cost can only be offset by scale
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ACQUISITIONS
▪ M&A activity has inflated PER of all large publishing companies
▪ High price must be offset by skillfull integration and quickly implementedsynergies in order to deliver high return on investment
▪ Lagardère Publishing’s track record in doing so is outstanding :
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Return on investment
HBG (2006) : 9%
Asterix (2008) : 14%
Quercus (2014) : 14%
Constable & Robinson (2014) 16%
… just to name a few
(excluding non US-business)
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ACQUISITIONS (CONT’D) :GLOBAL INDUSTRY-WIDE CONCENTRATION IS ON-GOING
Driven by :
▪ Weak organic growth
▪ Gains in profitability through synergies in :- Back offices
- Distribution
- Office footprints
▪ Need for leverage when dealing with online retailers
But :
M&A activity is slowing due to limited number of large independent players left
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DIVERSIFICATION
With M&A, a top priority in order to generate growth
▪ Board Games- Good culture fit
- Similar business model
- Potential synergies in sales and distribution
▪ Video games for mobile devices- Fast growing segment
- Need for IP
▪ Licencing- A policy for expanding marketing opportunities for all high value IP to other formats
Example :
o Asterix : Movies + TV series + Figurines + Theme Park / Etc.
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INNOVATION & CRM
▪ Hachette Innovation Program :
• A multi-national team with offices in Silicon Valley, New York, London and Paris- Focus is on :
o New technology
o New creative processes
o New business models
- CRM focus is on :
o Consumer insight
o Community Building
o Monetization
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TO SUMMARIZE
▪ Publishing is a mature, profitable and resilient industry
▪ As a top player, Lagardère Publishing needs to grow, diversify and innovate in order to continue to deliver solid, predictable profits and abundant cash flow in the long term
We have already taken decisive steps towards that goal,
and are actively exploring further oppotunities
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