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Good afternoon, this is the conference operator. Welcome and thank you for joining the Louis Hachette Group and Lagardere First Half 2026 Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. At this time, I would like to turn the conference over to Mr. Rapin, Head of Investor Relations. Please go ahead, sir.

Yes, thank you. Good evening, everyone. This conference call will be hosted today by Jean-Christophe Thierry, chairman and CEO of Louis Hachette Group, and Gregoire Castaing, deputy CEO of Louis Hachette Group and deputy CEO in charge of finance for Lagardere. Joining us for this presentation also, Frédéric Chevalier, the CEO of Lagardere Travel Retail, who will each share their insights and key highlights for this first semester. This presentation will be followed by a Q&A session. I now leave the floor to Jean-Christophe Thiry.

Thank you, Emmanuel, and good evening, everyone, and thank you for joining us today. I am delighted to introduce you to Louis Hachette Group's first half 2026 results. Despite a challenging economic and geopolitical environment, particularly in the Middle East, our group once again demonstrated its resilience and the strength of its diversified model. In the first half of 2026, we generated revenue of 4.5 billion euros and EBITDA of more than 200 million euros, reflecting disciplined execution across the group. We also maintained a strong financial profile supported by good cash generation and continued debt reduction. Gregoire will take you through the figures in a moment. Let me first turn to the main developments across our businesses. At Lagardere Publishing, Performance remained solid, supported by the diversity and quality of the portfolio. In trade, we benefited from successful releases by Guillaume Musso and Pierre Lemaitre, to name a few, in France, while the house-made series continued to perform strongly in both the UK and the US. We also had strong momentum in Spain and Latin America, while our board games and part-work activities remained important contributors to growth. Turning to Lagardere Travel Retail, the business maintained its positive dynamics, driven by strong performances in Europe and the Americas. Our teams continued to demonstrate great agility in managing both the direct and indirect impacts of the situation in the Middle East. We also strengthened our portfolio through several new openings and the renewal of our concession at Geneva Airport. Our other activities also delivered encouraging progress. Both Lagardere Live and Prisma Media reported positive EBITDA in the first half, reflecting disciplined cost management and a more focused strategic approach. At Prisma Media, the restructuring program designed to adapt the business to changing market conditions and accelerate digital transformation is progressing. Overall, 18 months after our listing, we continue to deliver solid momentum across the group. This, once again, demonstrates the relevance of our strategy and the resilience of our group built around leading positions in publishing, travel retail, and media. Looking ahead. We remain confident in our ability to create sustainable long-term value and seize the opportunities that lie before us. Thank you for your attention and I will now hand over to Gregoire who will take you through our financial performance in more detail.

Thank you very much Jean-Christophe and good evening everyone. I'm also very pleased to share with you the good news and solid results delivered by the group for this first ALP. We will start by taking a look at the different performances of our different businesses, starting on the slide 5 with the Lagardere Publishing, which once again delivered a solid performance this semester, despite relatively soft market conditions overall. The business showed strong resilience, benefiting again from its diversified activities and international footprint. Revenue increased by 1.3% on a like-for-like basis to more than 1.3 billion euros. In France, as you can see, the revenue was down 1.6% in a difficult market that declined by around 5%. Literature remained well-oriented in France for Lagardere Hachette. Supported by several successful new releases, as Jean-Christophe mentioned it, including Le Crème du Paradis by Guillaume Musso, with already 2,050 copies sold, and by Les Belles Promesses by Pierre Lemaitre, published in January of this year. We also benefited from a strong momentum in Le Livre de Poche with Quelqu'un d'Autre by Musso again, and Le Barman du Ritz by Philippe Collin. Digital audio revenue continues to grow with a more than 20% increase in France year on year. On digital business, by the way, France is still lagging behind compared with what we are able to achieve in the UK, for example. However, the growth we are seeing is encouraging. Our efforts to accelerate digital development in France are bearing fruits. This is one of our priorities for Hachette France in the years ahead. Coming back to H1 results for France, our performance was also affected by weaker market conditions in a number of segments, notably illustrated books, comics, tourism and education. More broadly, we continue to see the impact of cautious customer spending and a softer environment for discussionary purchases. This makes the performance delivered by the French team all the more noteworthy. Regarding the US, revenue increased by 1.3% in a market that contracted by 1.5%. This growth reflects a strong slate of new releases. such as the deluxe edition of Sorenson, Dyer Bloom, and Furry Bloom, or James Patterson and Viola Davis, Judge Stone. The continued growth in audiobooks also contributes to this result in the US. In the UK, revenue was down 1% in the market, up 1% following a very strong growth in the first half of 25, driven by Rebecca Yarros, Onyx Term, which was a huge success, as you know. Backlist sales remain strong, supported by continued sales of Frida McFadden, The Housemaid series, and Maggie O'Farrell's Amnets, both boosted by their film adaptations in early 26. New releases by Alice Osman and Flora Snapp also contribute to the top-line growth this semester. In our Spanish-speaking countries, revenue rose sharply by, as you see, 13%, benefiting from the early start of the back-to-schooler season in Spain, combined with the continued growth of the paperback division. Mexico also reported growth for both education and trade. Revenue from Partworks was up 6%. We continue to outperform in this market with particularly strong position and growth across the world, including Japan, Italy, Poland, for example. Finally, board games continue to support our revenue segment with a strong 9% growth, supported by the continued success of the Flip 7 game. Now let's have a look to the EBITDA and operating margin on the slide 6. In H126, EBITDA reached 105 million euros compared to 103 million euros last year. On the like-for-like basis, mainly excluding adverse exchange rate, EBITDA grew by 5 million compared to H125. As a result, the operating margin remains strong at close to 8%, confirming the publishing division's sustained profitability despite the unfavorable seasonality that typically affects, as you know, the first semester. To sum up, a solid first half for publishing, supported notably by its international footprint and its diversification efforts, which clearly represent two key strengths in the current Let's now move on to travel retail on the slide 8. Lagardère Travel Retail maintained its growth momentum and delivered a revenue of almost 3 billion euros during the first half, revenue increased by 3.3% on a like-for-like basis, supported by the continued expansion of our network. This includes the opening of Auckland in July 2025, which generated and several new openings across the United States which contribute an additional 30 million euros. In France, revenue declined by 4%. As a reminder, this line includes the wholesale activity carrier with the joint venture operating our travel, essential and duty-free businesses at Paris airport. Performance was below last year level, reflecting both the impact of the situation in the Middle East on traffic flows through European hubs, and also the temporary disruption caused by renovation works at several terminals at Paris Charles de Gaulle airport. A more positive note, Duty Free, as you can see, excluding Paris Airport in France, continued to deliver good growth with revenue up 14% supported by the modernization of stores at Nice Airport. In the EMEA, revenue was up 4% despite a 28% decline in the Middle East in the H1 and a minus 39% in Q2. By the way, if we just take a look at the direct impact of the current geopolitical context of the Middle East crisis on our top line, please note that the Middle East accounted for 1.2% of the Louis Hachette revenue compared to 1.8% in H1-25. Again, as Jean-Christophe mentioned it, besides this weight in our revenue, we remain very vigilant as to the direct and indirect impact on our activities throughout 26, especially as regards to the impact on air passenger traffic and or the risk of inflation. Coming back to the performance in EMEA, sales were strong in the rest of Europe. For instance, in Romania, in the UK on ferries, in Italian regional airports, as well as in Dusseldorf and Frankfurt in Germany or in Albania, Czech Republic and Spain. In America, revenue rose sharply by 6%. In North America, sales were up 5%, supported by numerous openings and strong commercial performance. Q1 was stronger, clearly, at 6%, supported by increased world time and consumption in airports. And Q2 was softer at 3%, impacted by lower traffic trends in May and June, surge in airfares and speed bankruptcy impacts at Fort Lauderdale and Detroit airports. In APAC, revenue grew by 9%. reflecting a strong performance across the region. As already mentioned, the main driver was our duty-free operation in Auckland, which contributed to more than €15 million during the first half. This more than offset the impact of store closures in China, which reduced revenue by around 40% compared with last year. By the way, regarding the restructuring of our activities in China, we remain on track to finalize our exit by the end of 26. Next slide on EBITDA for LTR, for travel retail. EBITDA came at 111 million euros, as you can see. On the like-for-like basis, EBITDA increased by 2 million. and the EBITDA margin remains stable despite the consequences of the situation in the Middle East and the recurred level delivered in the H1-25. This solid performance reflects strong execution in North America, continued operational discipline and lower restructuring costs in North Asia as the rationalization plan nears completion. Now let's turn to other activities, Lagardere Live, For the first semester of 26, Lagardere's live revenue increased by 3% on a like-for-like basis to €115 million. Radio and news are facing a weaker advertising market, and on the other end, live entertainment had a strong semester, posting close to 20% growth, like for like, driven by the timing of artist tours organized by Elle Productions and a recurve program of events at Les Folies Bergères, the Casino de Paris, and the Arkea Arena in Bordeaux. After a sharp improvement in H1 regarding EBITDA, the EBITDA continued to improve and reached 3 million, representing a solid 22 million increase since H1-24. These results were achieved thanks to our continuous efforts to reduce the cost in every entity of this branch. Moving on now to PRISMA for the H1-26. Prisma delivered a revenue of 109 million euros, down 25%, while print circulation continued to be very impacted by the structural downturn in the magazine market. Digital revenues have been affected by the evolving digital consumption patterns and weaker online advertising demand. But please note that EBITDA remains stable and positive during this first semester at 3 million as the revenue decline has been offset by cost savings. H126 was marked by continued restructuring, the closure of certain titles and magazines, the divestitures of the luxury division, and the sales as of 13.6% minority stake to Vivendi. Last but not least, as you may know, the group also obtained a favorable ruling in its complaint against Google recently with a related cash inflow of 66 million euros expected by the end of this year. I would also take this opportunity to underline the work of the teams who have been working on this matter for months and even for years to defend Prisma interests. Now that we covered the performance of each division, let me walk you through the financial at group level, starting with revenue on the slide 16. Total group revenue reached 4.5 billion in H126 with a like-for-like growth of 2%. Once again, organic growth was the main driver, contributing 82 million euros across the Lagardere Group's entities. On the negative side, foreign exchange had an adverse impact of 100 million, with the US dollar being the main currency affecting our revenue, reflecting our strong presence in the US in both travel retail and publishing. This provides a good transition to the next slide where we will look to the revenue by geographic area. As you can see, revenue mix remains broadly stable year on year with North America continuing to be our largest market at 26%. France represents 22% of revenue while Western and Eastern Europe slightly increase their contribution thanks to Lagardère Travel Retail. On the next slide, for this first half of the year, Group EBITDA, as you can see, increased by 8 million on a like-for-like basis after, again, a good level for H125. All activities from Lagardère Group contributed positively to this performance. and ethics and scope impacts amounted to 10 million euros mainly reflecting again the unfavorable US dollar and British also pounds evolutions versus euros. On the next slide, as regards the rest of our P&L, profits before interest and tax was stable at 162 million. Financial costs improved by 11 million, driven by lower gross debt and reduced average cost of debt. Interest expense on liabilities increased by 11% due to new, renewed and amended lease contracts, particularly in Poland and in New Zealand. And so in total, IFRS net result increased significantly by 23% to 16 million euros. Now let's move on to cash flow from operations on the slide 20. We continue to focus, as Jean-Christophe mentioned it, on improving the conversion of our operating performance into cash flow generation. As a result, our CFFO increased by 50% year-on-year to 84 million euros. As usual, publishing generated negative cash flow in this first half, reflecting the seasonality of the business and the build-up of working cap ahead of the important second half publishing season. However, H1 cash flow improved significantly year-on-year from an outflow of 40 million in 2018. 5 to an outflow of 24 million this semester, mainly by a favorable evolution of the working cap. Travel retail CFO reached 104 million, up 22 million versus last year, also reflecting both strong operational performance and improved working capital generation. Overall, working cap remains under control, and we continue to expect a significant reversal in the second half, as is typically the case in both of our businesses. As a result, we remain confident in our ability to deliver solid cash flow generation for the full year. This improvement in cash flow naturally brings us to our balance sheet, and more specifically to the evolution of our net debt, which is presented on the next slide. Given the seasonality of our activities, it makes more sense to consider the rolling 12-month evolution of our total cash generation and net debt as shown on this graph. On this basis, we reduced our net debt by more than 200 million, thanks to mainly our operating cash flow. Please note that our net free cash flow, cash flow after tax, Financial interest and dividends paid to minorities and subsidiaries level was reached 320 million euros. It's worth mentioning that CAPEX and CFFO as you know in H225 include the proceeds from disposal of our real estate in Rue d'Assas and also the sale of moon.com domain name for an amount close to 45 million euros. So a normative cash generation, let's say on the 12 rolling months, would be around 280 million euros. This very high level reflects the resilience of our operation throughout the challenging period and the substantial progress achieved over the past 24 months to improve our cash generation. The remaining outflows relating to the dividend paid in May to Lagardere Group Minorities and to our shareholders. Finally, we received also 40 million at Prisma level from the sale of its luxury division and from Vivendi's contribution to its capital increase. As a result, net debt decreased from 1.3% 9 billion to 1.7 billion at the end of June 26. At this point, I would like to make a brief remark for those monitoring the net debt at Lagardere level. Like Louis Hachette Group, Lagardere's net debt level also sharply improved, ending the first half of this year just below 1.8 billion. representing a reduction of almost 200 million year on year. As a result, Lagardere net debt ratio fell to 2.2 as of June 26 compared to 2.5 a year earlier. So we are clearly on track with our deleveraging trajectory. We are pursuing things Thank you very much. of 26. Louis Hachette Group delivered solid operational results, demonstrating the resilience of its businesses despite the difficult geopolitical and macroeconomic context. Louis Hachette Revenue reached 4.5 billion euros and reported a strong EBITDA at 218 million euros, growing after an already very strong first half of 25. Cash flow generation was also good with a cash flow up 50% and reaching again 84 million euros. Over 12 months, we significantly reduced our net debt by more than 200 million. This brings to 1.7 billion euros, a historically low level for H1. Thank you for your attention and we are now available to answer your question.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their telephone. The first question comes from Jérôme Baudin with OdoBHF. Please go ahead.

Yes, thank you and good evening everyone. Just first question on the trend. So if we could have a quick word as usual on publishing and travel retail for summer. So I have understood that the US has been a bit weaker in May and June. So what's the situation for travel retail in the US in July and in Middle East? That would be useful. Second question on the free cash flow. I'm not very clear on what is recurring or not. So should we expect H2, I mean the gain on the working cap to continue in H2 and I'm not very totally clear on the impact of the on Prisma so you win a contingency around Prisma so is it in the cash or not yet so if you can come back on that point so the 66 million if I'm correct that's my second question so on working cap and on Prisma and And lastly, a market question regarding publishing. So there is a US judge that approved last week or a few weeks ago a $1.5 billion settlement between Andropique and a group of publishers over books downloading. So first, do you expect Hachette to receive some compensation? That's my first question. Besides that, are you now talking with Andropique and other AI companies about a paid license deal for the future? Thank you very much.

Maybe, Frédéric, you can start for the trends regarding private retail.

Sure. Good afternoon, everybody. Frédéric Chevalier speaking. For the summer, of course, in the context of the The current geopolitical context throughout the world, the situation is extremely uncertain, as you can guess. Overall, we had a pretty good first quarter. The second one was a bit softer overall. Especially in the US with a slowdown of the traffic and consequence of the crisis in the Middle East, the bankruptcy of Spirit Airlines, a low-cost carrier in the US that affected the traffic in general and affected us indirectly. What we see today in July is overall worldwide a month of July that is in the continuity or a little bit better than second quarter. With Europe, and in particular Southern Europe, doing better, and the U.S. doing a little bit less, lower than Q2. Middle East continues to be, obviously... Quite depressed for obvious reasons. Those reasons remain extremely uncertain. The uncertainty of the conflict in the Middle East is super high, so for that reason it's a bit difficult for us to give any forecast for August and September, which are two big months together with July. July is somehow worldwide A little bit reassuring, a bit better than Q2, as I said earlier.

The next question.

Sorry, we need to answer about the publishing.

For the publishing, the second half of the year is always a key period for Hachette-Livre. and for the publishing industry more broadly. As a reminder, unlike in 2025, we will not benefit from a new Asterix release this year which represented around 15 million euros of revenues last year. More generally, publishing remains a heat-driven business, and it is always difficult to predict the success of upcoming titles. That said, we have a number of highly anticipated releases scheduled for H2, including Rebecca Yarrow's new book, Freshing Day, in September in the U.K., and Joe Biden's memoir in November, for which we hold the world rights. We will also publish Malcolm Gladwell's new title, The American Way of Killing, as well as a new title from Rachel Gillig, The Nave and the Moon in the US, and Sylvester Stallone's memoir, The Steps in the UK. In France, major autumn releases include Le Siècle de Notre Métamorphose by Amine Malouf at Grasset, La Vie est une Grande Aventure by Laurent Gounel at Fayard, and Dan Brown's Le Secret des Secrets at Le Livre de Poche. I add that we could also have very good surprise with new authors. I am, for example, thinking of the first novel of a Canadian author, Télisson Aurélien, C'était ça ou mourir, published by Grasset next month, which could have success like, for instance, Guelphi a few years ago. However, books are ultimately a discretionary purchase and given the current consumer environment, We remain cautious regarding demand trends in the second half.

Thank you, Jean-Christophe. Jérôme, regarding your second question for the free cash flow and the recurring free cash flow, let me just precise some topics. If you have a look to our figures on the 12 months evolution, As I mentioned, we have two big exceptional items for a total of 45 million euros, the sale of ASAS and the sale of moon.com. So if you want just to forecast, let's say, normative cash flow, you may take this into account. If you have a look to our figures just for the first semester, there is no Significant exceptional impact and that may also answer to the second part of your question regarding Google since again the related cash inflow of 66 million euros is expected by the end of this year but not yet received by the group so it's not in the cash and it's not in the result at this stage. For your last and third question, regarding the entropic settlement, you write, as several publishers disclosed this recently, we had, let's say, a good and significant settlement in the U.S., Some of the publishers disclosed their expectations regarding this settlement. Lagardere Publishing is also part of the beneficiaries of the Entropic Settlement with a total number of books listed by the court similar, for instance, to Bloomsbury in the magnitude of less or more than 15,000 titles. But On our side, we think it's too early to disclose any specific amounts for the company since the settlement amount is after attorney fees and other expenses and will also be of course shared with the author. So we hope to see some progress during the second semester but too soon to mention any impact for us. I think that you also had a question about the monetization regarding this type of, let's say, process and AI impact. Let's say that we don't rule out monetizing our content if we believe that both we and our author would benefit from it. But to be completely transparent, at this stage, our main focus It's more on the ongoing litigation in the U.S. involving, again, several publishers and platforms, and in which Hachette Book Group is a party. Next question. I think I answered the question.

Thank you. So the next question comes from Eric Ravary with CIC CIB. Please go ahead.

Yes, good evening. Thank you for taking my questions. I have two questions. First one is on travel retail. Could we have some details about the impact of the Middle East crisis on EBIT in H1 and also what's the positive impact of the China restructuring on EBIT in H1 and what are you expecting for China? from China Restructuring in H2 compared with H1, so that's for travel retail. And second question is on Prisma. So you have been implementing a major cost restructuring there. Are you also working on the adaptation of the offering of Prisma, the magazine offering, to the new consumption patterns?

Sorry, I didn't catch the end of your question regarding Prisma, can you...

Yes, it was, so you worked on Cust, are you also working on the adaptation of Prisma?

Frédéric, maybe I just answer for China and then you can give maybe some details about the Middle East, but Regarding China, again, you know that in H125, it still represented a loss of a few million euros in EBITDA. It included operational losses and restructuring costs, which was already, last year, partially offset by reversal of provision accounting particularly in the equity affiliates line ITAC. You can see that in the figures. Now in H1-26 EBITDA for China is breakeven thanks to the provision we took in 24 and again in the beginning of 25. So we can consider that China is neutral in terms of EBITDA for the figures of H1-2026. And as I mentioned, the restructuring is expected to be finalized in the end of 2026, so we are well on track on the timeline. Regarding the impact on EBITDA for the Middle East, we don't want to discuss the figures at this stage too soon and too detailed. Sorry for that. We gave you... The trend regarding the revenues and the potential indirect impact that we have, but too soon also to discuss very accurate figures on this situation. But of course, it negatively impacted us during the first semester, of course. Eric, you also had a question regarding PRISMA and the adaptation of the branch. As you know, first, maybe a quick update regarding the restructuring plan. The restructuring plan is progressing in line with the expectations. and his aim at further improving the group's cost base and the operational efficiency and profitability. At this stage, we are not providing a specific target for the future savings at Prisma. Again, too soon to say. However, we of course expect the restructuring to secure positive EBITDA. As I mentioned, Prisma is still positive in this first part of the year and we want to maintain PRISMA at least at this level and of course if it's possible to increase the profitability in the In the coming years. We are currently, besides this restructuring process, of course, we are also working on the strategy for repositioning the offer. Over the past several months, our primary focus has been Portfolio Rationalization and Cost Optimization The luxury division. But at this stage, for the rest of the strategy, we are not yet ready to communicate any specific strategy for Prisma offer too soon. The agenda was really already tough during this first part of this year for the management. So we will provide, of course, an update and share our plans when the timing will be appropriated.

Okay, thank you, Gregoire.

Thank you for your questions.

The last question comes from Geoffrey Dalloin with BNP Paribas. Please go ahead.

Yes, good evening. Thanks for taking my questions. I would have two questions, please. The first one is on Lagardere Live, which was a drag on 2025 earnings. I guess EBITDA was negative 20 million euros. You reach a positive EBITDA at H1 2026. So I would say happy to get your thoughts in the second half of the year. And if you are aiming to reach at least break even over the full year. for Lagardere Live. That's question number one. And the question number two is just to clarify, you know, your comments regarding, you know, the Paris rulings. So the 66 million euros impact you mentioned, this is not including the 84 million euros of cash flow from operations, you know, you disclosed in the first half. Is that correct? And so that's going to fuel into the second half of the year, just to clarify that point, please. Thank you very much.

Yes, let me again clarify, this is not in the H1 figures regarding cash and results. So this should be used for the second part of the year. You're right, this is very significant, so let's be very clear on that. Regarding Lagardere Live, you know I mentioned that the advertising market is quite difficult in France, but... We benefit from a good momentum regarding the production of artist tours and again the events at our venues in Paris and Bordeaux. The target is still to be positive in terms of EBIT at the end of this year. At this stage, we are still confident, but of course, we hope that the advertising market for the news part of Lagardère Live will be, let's say, quite correct for the rest of the year. But this is still the target, and we think it's feasible.

And maybe if I may, you know, thank you very much. Maybe if I may, you know, one follow-up, you know, regarding travel retail. So we've seen margins down, you know, in the first half, you know, I guess about 40 bits down compared to the first half last year. I mean, you know, I get, you know, it's very, you've got a lot of uncertainty regarding the next coming weeks and months, but could you take, you know, I would say in actions, Thank you very much

Well, of course, we have absolutely no control on the traffic, so we need to be super agile. The teams throughout the world engage into a lot of actions, not of the same nature. The actions we engage into in Abu Dhabi or Dubai obviously are a little bit more radical than those we started and we implemented in the rest of the world. But a bit everywhere in all our units, when we saw the war in the Middle East was longer than the few days that were announced at the very beginning, we started implementing action plans. Thank you very much. We'll continue those efforts with the objective to protect as much as we can the bottom line. But extremely hard to tell if we have to go that way or if we're back to more favorable traffic and therefore P&L evolution.

Understood. Thank you very much.

Mr. Rapin, there are no more questions registered at this time.

Thank you for this presentation and to listen to these explanations. And we wish you a safe summer and the Q3 revenue will take place on October 15th. Thank you very much. Have a good evening.

Thank you. Thank you. Thank you.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your phones. Thank you.