Lagardere Sa · EURONEXT:MMB
Lagardere Sa — Investor Day (February 2005)
31 slides from Lagardere Sa's investor day presentation, Feb 1, 2005
Slide 1: Transition to IFRS
Transition to IFRS (International Financial Reporting Standards) Investor Day February 1, 2005 1
Slide 2: Important
Important The purpose of this presentation is solely to provide a provisional and non-exhaustive estimate of the main accounting impacts of the application of the IFRS standards on the historical consolidated financial statements of the Lagardère Group as prepared under French generally accepted acc
Slide 3: Table of contents
Table of contents 9 Key objectives and regulatory framework ---------------- p. 4 to 5 9 2005 financial reporting calendar -------------------------- p. 6 9 Note relating to EADS ----------------------------------------- p. 7 9 IFRS – the basics ----------------------------------------------- p. 8 t
Slide 4: Key objectives
Key objectives 9 Describe the main impacts identified to date relating to the implementation of IFRS 9 Address questions raised by the introduction of IFRS 9 Set out the Group’s financial reporting calendar 4
Slide 5: Regulatory framework
Regulatory framework A European Union regulation requires all companies listed on a European stock exchange to prepare their consolidated financial statements under IFRS with effect from January 1, 2005 Consequences: 9 Publication of Q1 2005 sales under IFRS 9 Publication of Lagardère Group consolid
Slide 6: Lagardère Group – 2005 Financial Reporting Calendar
Lagardère Group – 2005 Financial Reporting Calendar 9 February 1, 2005 : Investor Day 9 March 10, 2005 (evening) : French GAAP financial statements for year ending December 31, 2004 9 Mid-May 2005: Q1 sales (IFRS) 9 May 16, 2005 : IFRS financial statements for year ending December 31, 2004 9 End of
Slide 7: Note relating to the consolidation of EADS
Note relating to the consolidation of EADS IFRS, in their current form, require no change to the existing method (proportional consolidation under French GAAP ) used by the Lagardère Group to account for its investment in EADS. This presentation relates to the entire Lagardère Group except for issue
Slide 8: IFRS – the basics
IFRS – the basics The IFRS framework includes the following standards: 9 International Accounting Standards (IAS) 1 to 41 9 International Financial Reporting Standards (IFRS) 1 to 5 Transition from French GAAP to IFRS will impact Lagardère at three levels: 9 First Time Application: opening balance s
Slide 9: Options available under IFRS
Options available under IFRS The main options available under IFRS and adopted by Lagardère are: 9 Non-application of the fair value option 9 Business combinations prior to January 1, 2004 not restated 9 No revaluation of property, plant and equipment at market value (maintained at historical cost)
Slide 10: Significant IFRS for Lagardère: P&L statement
Significant IFRS for Lagardère: P&L statement Standards with a valuation impact 9 IFRS 2 : Share-Based Payment 9 IFRS 3 : Business Combinations Standard with a presentation impact 9 IAS 18 : Revenue Recognition Standard still under evaluation 9 IAS 39 : Financial Instruments effective date January 1
Slide 11: Significant IFRS for Lagardère: balance sheet
Significant IFRS for Lagardère: balance sheet Standards with valuation impact 9 IAS 12 : Deferred Taxes 9 IAS 19 : Employee Benefits Standards with presentation impact 9 TSDI (perpetual subordinated notes) 9 Classification of balance sheet items between current and non current Standard still under e
Slide 12: Segment reporting (IAS 14) – No impact on Lagardère
Segment reporting (IAS 14) – No impact on Lagardère Reportable business segments will remain unchanged 9 Book Publishing 9 Press Publishing 9 Distribution Services 9 Lagardere Active 9 Other activities 12
Slide 13: Significant IFRS for Lagardère – Part I: P&L Statement
Significant IFRS for Lagardère Part I: P&L Statement 13
Slide 14: IAS 18 – Revenue Recognition
IAS 18 – Revenue Recognition 1/3 Reclassification The Group carried out a review of all criteria used in the presentation of Lagardère sales. The conclusions are based on the Group’s interpretation of IFRS, augmented as necessary by a review of the practices reported by European and American groups
Slide 15: Sales to June 30, 2004 restated under IFRS
Sales to June 30, 2004 restated under IFRS 2/3 €m Reported Commissions Commission Exchanges Other Restatement IFRS sales % change French on Based of similar sub-total 06/30/2004 GAAP sales Distribution Sales goods & 06/30/2004 services Book Publishing 580 (5) (5) 575 -1 % Press Publishing 1,043 (122
Slide 16: IAS 18 cont'd. – Financial income directly attributable to operations
IAS 18 cont’d. – Financial income directly attributable to operations (Reclassification) 3/3 Under French GAAP, interest and similar income arising on surplus cash is recorded as financial income, below the operating income line. Under IFRS, interest and similar income generated by operations must b
Slide 17: IFRS 2 – Share-Based Payment (valuation)
IFRS 2 – Share-Based Payment (valuation) 1/2 Stock option plans giving grantees the right to purchase or subscribe for shares at a price agreed at the grant date are not recognized in the French GAAP financial statements. Under IFRS, an expense is recognized representing the benefit to the grantees,
Slide 18: IFRS 2 – Share-Based Payment
IFRS 2 – Share-Based Payment 2/2 For the Lagardère Group, IFRS 2 takes effect with the December 2003 plan. Earlier plans are outside the scope of first-time application of IFRS 2. The expense to be recognized for the December 2003 plan is around €26m, split between 2004 and 2005. This accounting cha
Slide 19: IFRS 3 – Business combinations (valuation)
IFRS 3 – Business combinations (valuation) Under French GAAP, Lagardere amortizes its goodwill over a maximum period of 20 years. Impairment tests are carried out on activities when there is an indication of a loss in value, and write- downs are taken as a non-operating expense if the economic value
Slide 20: Other reclassifications in P&L statement
Other reclassifications in P&L statement The following reclassifications will change the presentation of the Lagardère Group’s financial statements. These items, which were below the French GAAP Operating Income (“Résultat d’exploitation”) line, will now be included in IFRS EBIT (“Résultat avant cha
Slide 21: Definitions of new indicators
Definitions of new indicators €m to French English 06/30/04 Résultat d’exploitation (normes Operating Income (French GAAP) 190 françaises) Stock options Stock options (6) Produits financiers directement imputables à Interest income directly related to 5 l’exploitation operations Part du résultat fin
Slide 22: Definition of a new profitability indicator
Definition of a new profitability indicator In order to provide an indicator that reflects, according to the Group, the recurring profitability of operations, Lagardère has developed a new indicator based on IFRS EBIT (Résultat avant charges financières et impôts) the last line in the table on the p
Slide 23: Summary: main impacts on 2004 P&L statement
Summary: main impacts on 2004 P&L statement Estimate Reclassifications: 06/30/04 Impact on sales -€575m (no impact on net income) -14% Adjustments: Elimination of goodwill amortization +€39m Expense related to stock option plan (*) -€6m (*2003 stock option plan only) 23
Slide 24: Significant IFRS for Lagardère – Part II: Balance sheet
Significant IFRS for Lagardère Part II: Balance sheet 24
Slide 25: IAS 12 – Deferred Taxes (valuation)
IAS 12 – Deferred Taxes (valuation) IAS 12 requires recognition of deferred taxes on all differences between the accounting and tax value of assets and liabilities. Under French GAAP, deferred tax liabilities were not recorded : - on intangibles that were recognized in a business combination and whi
Slide 26: IAS 19 – Employee Benefits (valuation)
IAS 19 – Employee Benefits (valuation) IAS 19 requires the recognition, via provisions, of all obligations arising from benefits granted to employees under a defined- benefit plan when and after they leave the enterprise. The standard also defines the actuarial valuation method to be used, which may
Slide 27: Perpetual subordinated notes (TSDI)
Perpetual subordinated notes (TSDI) The 1988 TSDIs, included in “Total permanent funds” in the French GAAP financial statements, have passed the 15-year trigger date (February 2004) after which interest payments are reimbursed in full by a bank, such that the effective interest expense is zero. Thes
Slide 28: Other Items Identified
Other Items Identified IAS 17 - Leases Under IFRS, rents payable under operating leases have to be charged to the profit and loss account on a straight line basis. Therefore, rents which are not linear over the duration of the lease, will have to be restated accordingly. 28
Slide 29: IFRS Cash Flow statement
IFRS Cash Flow statement EBIT (IFRS) Depreciation Impairment losses, provisions & other non-monetary items (Gain)/loss on disposals of assets Dividends received from associates Results from associates Cash flow from operations before interest, taxes and changes in working capital requirements Change
Slide 30: IFRS Cash Flow statement
IFRS Cash Flow statement New features introduced in the IFRS format 9 Net cash flow from operations (content changed) is now presented before interest paid / received and taxes 9 Interest paid and received, and taxes paid, are shown separately 9 Net cash flow from operations after interest and taxes
Slide 31: Conclusion
Conclusion Next steps 9 IAS 39 9 Results from associates 9 Completion of Audit Committee review and audit process 9 May 16, 2005 presentation Compared to French GAAP 9Reduction in stockholders’ equity 9Increase in net bank debt of €64m 9Net income impacted by stock options & elimination of GW amorti