Note 5 - Segment information
Under the impetus of Arnaud Lagardère, General and Managing Partner, the Group launched its strategic refocusing around two priority divisions, Lagardère Publishing and Lagardère Travel Retail. The Group restructured in 2019 in the wake of the successive disposals of Lagardère Active and Lagardère Sports assets.
Its internal reporting is now based on a target business scope, comprising:
- Lagardère Publishing: Books, E-books, Mobile Games and Board Games.
- Lagardère Travel Retail: Travel Essentials, Duty Free & Fashion, and Foodservice.
The target scope also includes “Other Activities”, which groups together Lagardère News (Paris Match and Le Journal du Dimanche magazine titles, Europe 1, RFM and Virgin Radio stations, and the Elle brand licence), Lagardère Live Entertainment, Lagardère Paris Racing, and the Group Corporate function. The Corporate function is used primarily to report the effect of financing obtained by the Group and the net operating costs of Group holding companies.
Assets sold or disposals pending completion relating to the former Lagardère Active division and Lagardère Sports are being monitored separately until the date of their effective sale. The data presented by division were calculated using the same accounting rules and methods as those used in the consolidated financial statements and described in the accompanying notes. The data include key alternative performance measures. Transactions between business divisions are generally carried out on arm’s length terms.
Comparative information presented for 2018 has been restated to reflect changes in the Group’s internal reporting. As Lagardère Active was only reorganised into standalone business units in late 2018, the earnings and cash of Lagardère News, along with assets sold and disposals pending completion, were allocated based on management data.
Comparative information takes into account the reallocation of goodwill in 2019.
5.1 SEGMENT INFORMATION
2019 income statement
| Lagardère Publishing |
Lagardère Travel Retail |
Other Activities |
Total target scope |
Assets sold and disposals pending completion at Lagardère Active |
Total | Lagardère Sports |
|
|---|---|---|---|---|---|---|---|
| Revenue | 2 395 | 4 264 | 288 | 6 947 | 275 | 7 222 | 470 |
| Inter-segment revenue | (11) | - | - | (11) | - | (11) | - |
| Consolidated revenue | 2 384 | 4 264 | 288 | 6 936 | 275 | 7 211 | 470 |
| Other income from ordinary activities | 6 | 31 | 38 | 75 | 9 | 84 | - |
| Total income from ordinary activities |
2 390 | 4 295 | 326 | 7 011 | 284 | 7 295 | 470 |
| Recurring operating profit (loss) of fully consolidated companies | 220 | 152 | (11) | 361 | 17 | 378 | 64 |
| Income (loss) from equity accounted companies before impairment losses | 1 | 4 | 1 | 6 | - | 6 | - |
| Recurring operating profit (loss) | 221 | 156 | (10) | 367 | 17 | 384 | 64 |
| Restructuring costs | (12) | (14) | (15) | (41) | (1) | (42) | (20) |
| Gains (losses) on disposals | - | 2 | 142 | 144 | (7) | 137 | - |
| Disposals of assets | - | (1) | 142 | 141 | (8) | 133 | - |
| Gains and losses on lease modifications under concession agreements |
- | 3 | - | 3 | - | 3 | - |
| Fair value adjustments due to change in control |
- | - | - | - | 1 | 1 | - |
| Impairment losses(*) | - | (6) | (2) | (8) | (26) | (34) | (234) |
| Fully consolidated companies | - | (6) | (2) | (8) | (26) | (34) | (234) |
| Amortisation of acquisition-related intangible assets | (6) | (79) | - | (85) | - | (85) | (1) |
| Expenses related to acquisitions and disposals |
(1) | (2) | - | (3) | (1) | (4) | (6) |
| Purchase price adjustment | (1) | (1) | - | (2) | - | (2) | (2) |
| Impact of IFRS 16 on concession agreements | - | 57 | - | 57 | - | 57 | - |
| Depreciation of right-of-use assets | - | (475) | - | (475) | - | (475) | - |
| Decrease in lease liabilities | - | 460 | - | 460 | - | 460 | - |
| Interest paid on lease liabilities | - | 64 | - | 64 | - | 64 | - |
| Changes in working capital relating to lease liabilities | - | 8 | - | 8 | - | 8 | - |
| Profit (loss) before finance costs and tax | 201 | 113 | 115 | 429 | (18) | 411 | (199) |
| Items included in recurring operating profit (loss) |
|||||||
| Depreciation and amortisation of property, plant and equipment and intangible assets | (34) | (130) | (11) | (175) | (5) | (180) | (60) |
| Depreciation of right-of-use assets – Buildings and other | (32) | (15) | (24) | (71) | - | (71) | (12) |
| Cost of free share plans | (3) | (2) | (1) | (6) | - | (6) | (1) |
(*) Impairment losses on goodwill, property, plant and equipment and intangible assets.
2018 income statement
| Lagardère Publishing |
Lagardère Travel Retail |
Other Activities |
Total target scope |
Assets sold and disposals pending completion at Lagardère Active |
Total (*) | Lagardère Sports (*) |
|
|---|---|---|---|---|---|---|---|
| Revenue | 2 263 | 3 673 | 301 | 6 237 | 642 | 6 879 | 390 |
| Inter-segment revenue | (11) | - | - | (11) | - | (11) | - |
| Consolidated revenue | 2 252 | 3 673 | 301 | 6 226 | 642 | 6 868 | 390 |
| Other income from ordinary activities | 7 | 25 | 17 | 49 | 34 | 83 | - |
| Total income from ordinary activities |
2 259 | 3 698 | 318 | 6 275 | 676 | 6 951 | 390 |
| Recurring operating profit (loss) of fully consolidated companies | 200 | 121 | (11) | 310 | 75 | 385 | 32 |
| Income (loss) from equity accounted companies before impairment losses |
1 | 1 | 1 | 3 | - | 3 | - |
| Recurring operating profit (loss) | 201 | 122 | (10) | 313 | 75 | 388 | 32 |
| Restructuring costs | (20) | (6) | (45) | (71) | - | (71) | (8) |
| Gains (losses) on disposals | 1 | (8) | 205 | 198 | 3 | 201 | - |
| Disposals of assets | 1 | (4) | 205 | 202 | 3 | 205 | - |
| Gains and losses on lease modifications under concession agreements(*) |
- | (4) | - | (4) | - | (4) | - |
| Impairment losses(**) | - | (4) | (3) | (7) | (37) | (44) | (3) |
| Fully consolidated companies | - | (4) | (3) | (7) | (37) | (44) | (3) |
| Amortisation of acquisition-related intangible assets | (5) | (59) | - | (64) | - | (64) | (2) |
| Expenses related to acquisitions and disposals |
- | (2) | (4) | (6) | (2) | (8) | 1 |
| Purchase price adjustment | - | 2 | 1 | 3 | 1 | 4 | (6) |
| Impact of IFRS 16 on concession agreements |
- | 45 | - | 45 | - | 45 | - |
| Depreciation of right-of-use assets | - | (399) | - | (399) | - | (399) | - |
| Decrease in lease liabilities | - | 384 | - | 384 | - | 384 | - |
| Interest paid on lease liabilities | - | 59 | - | 59 | - | 59 | - |
| Changes in working capital relating to lease liabilities | - | 1 | - | 1 | - | 1 | - |
| Profit before finance costs and tax |
177 | 90 | 144 | 411 | 40 | 451 | 14 |
| Items included in recurring operating profit (loss) |
|||||||
| Depreciation and amortisation of property, plant and equipment and intangible assets | (31) | (109) | (10) | (150) | (5) | (155) | (45) |
| Depreciation of right-of-use assets – Buildings and other | (32) | (13) | (18) | (63) | (2) | (65) | (12) |
| Cost of free share plans | (3) | (2) | (6) | (11) | (1) | (12) | (1) |
(*) Data restated for the full retrospective application of IFRS 16 (see note 1.1).
(**) Impairment losses on goodwill, property, plant and equipment and intangible assets.
2019 statement of cash flows
| Lagardère Publishing |
Lagardère Travel Retail |
Other Activities and eliminations |
Total target scope |
Assets sold and disposals pending completion at Lagardère Active |
Total | Lagardère Sports and eliminations(*) |
|
|---|---|---|---|---|---|---|---|
| Cash flow from (used in) operating activities |
306 | 797 | (8) | 1 095 | 29 | 1 124 | 69 |
| Decrease in lease liabilities(*) | (32) | (475) | (12) | (519) | 1 | (518) | (12) |
| Interest paid on lease liabilities(*) | (10) | (66) | (1) | (77) | - | (77) | (1) |
| Cash flow from (used in) operations before income taxes paid |
264 | 256 | (21) | 499 | 30 | 529 | 56 |
| Income taxes paid | (43) | (26) | 24 | (45) | (7) | (52) | (20) |
| Cash flow from operations | 221 | 230 | 3 | 454 | 23 | 477 | 36 |
| Net cash from (used in) investing activities relating to intangible assets and property, plant and equipment |
(35) | (156) | 15 | (176) | (7) | (183) | (48) |
| - Purchases | (35) | (162) | (11) | (208) | (7) | (215) | (48) |
| - Proceeds from disposals | - | 6 | 26 | 32 | - | 32 | - |
| Free cash flow | 186 | 74 | 18 | 278 | 16 | 294 | (12) |
| Net cash from (used in) investing activities relating to investments | (30) | (244) | 306 | 32 | (3) | 29 | 8 |
| - Purchases | (32) | (249) | (3) | (284) | (3) | (287) | (1) |
| - Proceeds from disposals | 2 | 5 | 309 | 316 | - | 316 | 9 |
| Interest received | 2 | 3 | 2 | 7 | - | 7 | - |
| (Increase) decrease in short-term investments |
- | - | - | - | - | - | - |
| Cash flow from (used in) operations and investing activities |
158 | (167) | 326 | 411 | 13 | 330 | (4) |
(*) Cash flows relating to lease liabilities are shown within net cash from financing activities in the consolidated statement of cash flows.
2018 statement of cash flows
| Lagardère Publishing |
Lagardère Travel Retail |
Other Activities and eliminations |
Total target scope |
Assets sold and disposals pending completion at Lagardère Active |
Total (*) | Lagardère Sports and eliminations(*) |
|
|---|---|---|---|---|---|---|---|
| Cash flow from (used in) operating activities | 225 | 737 | (7) | 955 | 21 | 976 | 114 |
| Decrease in lease liabilities(**) | (30) | (396) | (15) | (441) | (2) | (443) | (11) |
| Interest paid on lease liabilities(**) | (12) | (61) | (3) | (76) | - | (76) | (2) |
| Cash flow from (used in) operations before income taxes paid |
183 | 280 | (25) | 438 | 19 | 457 | 101 |
| Income taxes paid | (40) | (21) | 47 | (14) | (58) | (72) | (5) |
| Cash flow from (used in) operations | 143 | 259 | 22 | 424 | (39) | 385 | 96 |
| Net cash from (used in) investing activities relating to intangible assets and property, plant and equipment |
(42) | (127) | (9) | (178) | 217 | 39 | (51) |
| - Purchases | (43) | (130) | (8) | (181) | (34) | (215) | (55) |
| - Proceeds from disposals | 1 | 3 | (1) | 3 | 251 | 254 | 4 |
| Free cash flow | 101 | 132 | 13 | 246 | 178 | 424 | 45 |
| Net cash from (used in) investing activities relating to investments |
(13) | (305) | 89 | (229) | 33 | (196) | (1) |
| - Purchases | (13) | (308) | (8) | (329) | (10) | (339) | (1) |
| - Proceeds from disposals | - | 3 | 97 | 100 | 43 | 143 | - |
| Interest received | 1 | 1 | 2 | 4 | 1 | 5 | - |
| (Increase) decrease in short-term investments |
- | - | - | - | - | - | - |
| Cash flow from (used in) operations and investing activities |
89 | (172) | 326 | 21 | 212 | 233 | 44 |
(*) Data restated for the full retrospective application of IFRS 16 (see note 1.1).
(**) Cash flows relating to lease liabilities are shown within net cash from financing activities in the consolidated statement of cash flows.
Balance sheet at 31 December 2019
| Lagardère Publishing |
Lagardère Travel Retail |
Other Activities and eliminations |
Total | ||||
|---|---|---|---|---|---|---|---|
| Segment assets | 3 187 | 5 310 | 652 | 9 149 | |||
| Investments in equity-accounted companies | 29 | 37 | 7 | 73 | |||
| Segment liabilities | (1 910) | (3 756) | (624) | (6 290) | |||
| Capital employed | 1 306 | 1 591 | 35 | 2 932 | |||
| Assets held for sale and associated liabilities(*) |
201 | ||||||
| Net cash and cash equivalents (net debt) | (1 461) | ||||||
| Equity | 1 672 | ||||||
(*) Assets held for sale and associated liabilities include Lagardère Sports and the Audiovisual Production business at Lagardère Active (see note 4.3).
Balance sheet at 31 December 2018
| Lagardère Publishing |
Lagardère Travel Retail |
Other Activities and eliminations |
Total target scope | Assets sold and disposals pending completion at Lagardère Active |
Lagardère Sports |
Total (*) | |
|---|---|---|---|---|---|---|---|
| Segment assets | 3 137 | 4 530 | 649 | 8 316 | 32 | 953 | 9 301 |
| Investments in equity accounted companies | 28 | 34 | 7 | 69 | 1 | - | 70 |
| Segment liabilities | (1 878) | (3 203) | (600) | (5 681) | (14) | (727) | (6 422) |
| Capital employed | 1 287 | 1 361 | 56 | 2 704 | 19 | 226 | 2 949 |
| Assets held for sale and associated liabilities | 286 | ||||||
| Net cash and cash equivalents (net debt) | (1 367) | ||||||
| Equity | 1 868 |
(*) Data restated for the full retrospective application of IFRS 16 (see note 1.1).
5.2 INFORMATION BY GEOGRAPHICAL SEGMENT
Revenue
| 2019 | 2018 | |
|---|---|---|
| France | 2 034 | 2 254 |
| European Union (excl. France) | 2 415 | 2 274 |
| Other European countries | 147 | 149 |
| United States and Canada | 1 752 | 1 437 |
| Middle East | 34 | 21 |
| Asia-Pacific | 690 | 597 |
| Other (Africa, Latin America) | 139 | 136 |
| Total | 7 211 | 6 868 |
Segment assets
| 2019 | 2018 (*) | |
|---|---|---|
| France | 2 170 | 2 324 |
| European Union (excl. France) | 3 429 | 3 192 |
| Other European countries | 202 | 242 |
| United States and Canada | 2 582 | 2 693 |
| Middle East | 23 | 22 |
| Asia-Pacific | 682 | 781 |
| Other (Africa, Latin America) | 61 | 47 |
| Total | 9 149 | 9 301 |
(*) Data restated for the full retrospective application of IFRS 16 (see note 1.1).
Purchases of intangible assets and property, plant and equipment
| 2019 | 2018 | |
|---|---|---|
| France | 55 | 79 |
| European Union (excl. France) | 58 | 61 |
| Other European countries | 2 | 3 |
| United States and Canada | 71 | 42 |
| Middle East | 1 | 2 |
| Asia-Pacific | 25 | 24 |
| Other (Africa, Latin America) | 3 | 4 |
| Total | 215 | 215 |