Published: November 20, 2012
“A saving of 40% on banking cash flow”
Lagardère Active, the result of a fusion of the press and audio-visual activity in 2006, is the media branch of Lagardère, and encompasses three other divisions. Hachette Livre, the brand used by Lagardère Publishing, is the second largest publisher in the world, the biggest in Europe and number one in France, with around 75 media titles, in Great Britain, Australia and New Zealand, second in Spain and fifth in the United States; the retail division, grouped at the heart of Lagardère Services, runs the premier international network of shops selling cultural activity products, and of duty-free stores such as Relay, Virgin, Aelia; Lagardère Services is also the world leader in press distribution; then there’s sport and entertainment with Lagardère Unlimited, which mostly deals with management of distribution rights, the marketing of rights and of sports marketing products.
Lagardère Active, whose turnover has risen to €1.1 bn, includes a division for magazine publishing called France, a leader in advertising and circulation, which publishes about 40 titles including Elle, Paris Match, Télé 7 Jours, Be, Le journal du dimanche, and which has just over 2.6 million subscribers; a radio centre in France – general stations like Europe 1, music stations like Virgin Radio, RFM ; fiction publishers , the frontrunner in France’s fiction market with Julie Lescaux, Joséphine ange gardien, Les Borgias and number two in the production of broadcast feeds, C dans l’air for example; a television division, with channels including Gulli, Canal J, MCM, June, Mezzo. Theer is also a digital division whose assets include Doctissimo, the most popular site among French women, Boursier.com [Stock Exchange] and Sport.fr, as well as advertising. Lagardère Active sold its portfolio of overseas-edited magazines to Hearst Corporation in 2011: this sale, along with the winding up of Russian radio stations in December, represented almost a billion euros, which allowed us to reduce debt to a very low level.
Each branch of Lagardère has extensive autonomy in its treasury management; for example, they don’t all use exactly the same financial tools. Nevertheless, the central treasury for the group has complete control when it comes to mid- and long-term financing. However, at the treasury of Lagardère Active, which consists of about a hundred companies, has a total of 350 bank accounts and is under Rémy Pierre, financial director and member of the executive committee, the principle of centralisation is followed throughout. The department consists of seven people, including myself, three of whom work in cash management, one in the back office and management of banking relationships, one who works specifically in IT, and one in charge of cash management software.
The aim is to concentrate liquidity at one point while still staying in control at all times: it involves a cash pooling where automatic balancing is achieved with the help of integrated software called Cash Value, by Datalog Finances, which we have been using since November 2011. The fact that we use the Cash Pooler payment software package allows automatic integration of accounting data into Cash Value. We work with six cash management banks, five of which are French, which are all present in the banking pool of the holding company.
We were inclined to choose SwiftNet, but the termination of a large part of our international activity simplified the deal: we eventually chose Ebics TS, which we have now installed.[[[PAGE]]]
Yes, the figures for our monthly subscriptions are as follows: 130,000 direct debits, 80,000 cheques and 15,000 payments by bank card, which makes banking commission add up pretty quickly. Because of this we decided last year to issue an invitation to tender for all our cash management in France, with the help of the consultancy company bfinance. We were looking for cost savings in the region of 10%; the outcome of our invitation to tender surpassed our expectations, with a gain of 40% which we took as an indication of the loyalty of our banking partners.
In order to vary our sources of financing, we have for a long time been good at securitisation, specifically of accounts receivable from our magazine, television and website advertisers. This programme, which extended to the United States, Italy and France, before the termination that I mentioned before, weathered the financial crisis very well. The operation is organised by BNP Paribas, whose strong balance sheet was of benefit to us, while our legal advice comes from the law firm Freshfields Bruckhaus Deringer. The programme, now limited to France, of around €80m, allows us to finance ourselves at an all-inclusive rate equivalent to 120 basis points. Securitisation is much more difficult to put into place than factoring, but once the initial phase is over, everything is in place for a period of five years.
Part of the exchange risk ended with the sale of our international assets to Hearst, but we have kept ownership of Elle and its various editions, which means we will be due royalties paid in foreign currency; there is also our licensing activity – Elle branded clothing, leather goods, accessories – mainly in Asia and the United States. We use classic instruments, futures and options, to protect ourselves from untimely variations between a number of currencies, dollar, yen, pounds sterling, etc., and the euro.
Yes, although it’s an area which I only recently acquired. It’s a fairly interesting area, because in reality, even if the notion of risk is central, as in the treasury, it’s a quite distinct job. One of its characteristics is the importance to Lagardère of the brokers, Marsh, Gras Savoye and Diot Active, who place our risk with insurance companies, whilst at the treasury we are used to meeting our bankers face to face. One of the lessons I learned after some time in office is that we had perhaps underestimated the risks that affect the insurance sector. Counterparty risk must be analysed the same way as in a bank because guarantees can be annulled if a company’s credit rating is downgraded.
Not exactly. After studying management at the Université Paris-Dauphine, I worked on risk management in a mutual guarantee company. Then I moved to Hachette, in 1985, to work on financing of manufacturing plants and real estate. Ten years later, I joined Hachette Filippacchi Media, which became Lagardère Active in 2006.
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