Press

INVESTOR DAY June 1, 2006 Agenda

HFM presentation

Main initiatives 2003 - 2007

Market outlook 2006 - 2010

HFM strategy 2006 - 2010: four pillars of growth Organic growth Market consolidation Development in emerging markets Opportunities in digital Conclusion

Page 2 HFM in the world HFM is world leader in consumer magazines in terms of number of titles and international presence (countries and languages)

• More than 260 titles published in 41 countries • Well diversified portfolio with strong brands (Elle, Marie-Claire, Psychologies, Car & Driver, etc) • 9,500 employees • 2005 revenues: €1.9bn, with 55% generated outside France (65% for magazines) • World leader in consumer magazines in terms of number of titles and international presence (countries and languages) - No.1 in France and Spain - No.1 foreign player in USA, Spain, Italy, Japan, China - No.3 in Italy and Russia • Controls its operations in 9 of 10 main markets (exception: Germany) • Strong Internet development (e-mag, media websites, etc)

Page 3 Main initiatives 2003 - 2007 In a tough market (2001-2005)… Despite a tough magazine advertising market over the past 5 years …

1995-2000 2001-2005

In Euro 11.4% CAGR -4.2% 30.0%

25.0%

20.0%

15.0%

Magazine 10.0% advertising market growth 5.0% USA in € France, UK, (%) 0.0% Italy, Spain, Japan -5.0%

-10.0%

-15.0%

-20.0% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Source: Adbarometer Page 5 … HFM maintained profitability …HFM magazine publishing margins increased slightly in 2001-2005

2001- 2005: 12.0% 11.5% 11.0% Excluding launch costs 10.4% 10.6%

9.5% Including launch costs 9.1% 8.8% 8.9% 8.9%

2001 2002 2003 2004 2005

End of 2005 • HFM operating margin (Recurring EBIT / revenues): 8.7% • Target margin by end of 2007: 11.7% • Gap: 3%

Three steps to bridge the gap in a cost-cutting environment: • Restructuring title, asset and country mix • Scaling back new launch costs to recurring level • Generating incremental EBIT growth from top-line growth

Page 6 Roadmap to 2007 margin target (1/4) Restructuring title, asset and country mix

Focus on our core business and core countries, selling or shutting down low-margin entities:

1. Focus on magazines (e.g. divestment of regional press)

2. Focus on major countries

Targeted acquisitions:

• Acquisitions in countries where HFM is subscale (USA, UK, Italy, Japan), achieving scale effects through increased market share

Overall target: + 1% of operating margin

Page 7 Roadmap to 2007 margin target (2/4) Scaling back new launch costs to recurring level Successful 2004 - 2005 - 2006 launches: • France: Public, Choc (new concepts: generational magazines) • Marie-Claire: Russia, Japan, China, Italy (following the acquisition of 42% of MC) • Psychologies: Italy, Spain, UK, Russia, China (following the acquisition of 49% of Psycho)

Recurring level from magazines by 2007: • €15m-€20m, vs. €35m-€40m in 2004-2005 2.9% 2.6% Δ Profitability Excluding / Including (1) 1.7% 1.6% 1.5% launch costs

2001 2002 2003 2004 2005

Overall target: + 1% of operating margin (1) Operating margin as % of revenues Page 8 Roadmap to 2007 margin target (3/4) Cost-cutting, plus incremental EBIT growth from top-line growth

Ongoing cost-cutting, after the €102m achieved in 2001-2005 • Focus on most successful HFM brands • Headcount reduction (USA, UK, France, etc): up to 200 staff • Overhead reductions • Manufacturing and distribution cost savings

Top-line growth: • Organic growth: Market growth assumption 2006 - 2007: Advertising growth: + 2% to + 4% Circulation growth (volume): -2% to 0% Overall: 0% to + 2% HFM growth: + 0.5% to + 1.5%

Overall target: + 1% of operating margin

Page 9 Roadmap to 2007 margin target (4/4) To sum up: HFM’s successive steps to improve profitability 2006-20072006-2007

HeavyHeavy 2003-20052003-2005 restructuringrestructuring

• Ongoing cost-cutting plan EditorialEditorial 2001-2002 • Reduction of launch costs 2001-2002 developmentdevelopment • Portfolio restructuring - Transformation from diversified player to a • Action necessary to resist Cost-cuttingCost-cutting pure-play magazine publisher (including price war withdrawal from regional press) - Reinforcement of our - Focus on most profitable segments brands (e.g. Marie-Claire, • Rapid improvement in ¾ Portfolio rationalization Psychologies) profitability ¾ Acquisitions to strengthen our market - More new launches - Withdrawal from share, in order to reach critical mass in (e.g. Public, Choc) printing countries where we are subscale - Cost-cutting plan • Internet developments

Page 10 Market outlook 2006 - 2010 2006 - 2010: Magazine circulation Pointers for the future

Cautious approach called for

Key factors in magazine circulation trends: • Internet: three issues (Time, Price, Content) • Competitiveness (new products, price war) • New concepts driven by demographics - Young people still want magazines, but expectations have changed - New editorial concepts must be generationally-oriented - Launch impact on P&L • Print distribution channels need to adapt

Page 12 2006 - 2010: Consumer magazine advertising market Consumer magazine advertising market average growth: 3.7% p.a. USA by far the largest market, double-digit growth in emerging markets

Millions of current euros 4.7% 9-country average: 12,000 9-country average: 2005 CAGR 2005/2010 3.7% p.a. 2010 3.7% p.a. 10,000 €20,245m€20,245m inin 20052005 €24,257m€24,257m inin 20102010 8,000

6,000

4,000 3.2% 1.7% -0.2% 1.0% 17.7% 12.7% 2,000 1.6% 3.1%

0 France Italy Spain Germany UK United States Japan China Russia

• Developed countries: The market is growing (3.1% on average), except in Japan Strong growth rate in the USA • Emerging markets: Double-digit growth By 2010, both China and Russia will have overtaken Spain

Source: Bipe Page 13 2006 - 2010: Internet advertising market Strong growth potential for the Internet advertising market

Millions of current euros 9-country average: 12,000 13.1% 9-country average: 2005 CAGR 2005/2010 14.3% p.a. 2010 14.3% p.a. 10,000 €9,754m€9,754m inin 20052005 €19,015m€19,015m inin 20102010 8,000

6,000

4,000 9.3% 11.9% 20.1% 28.5% 40.2% 2,000 31.3% 19.0% 30.0%

0 France Italy Spain Germany UK United States Japan China Russia

• Search engines will account for more than 75% of the Internet advertising market • Magazines expected to have market share in the 10%-15% range; HFM will be looking for market share of 0.5% in 2010 and 1% in 2015 • By 2010, China is expected to overtake Spain and Italy in Internet ad volume

Source: Bipe Page 14 2006 - 2010 growth assumptions (magazines and media websites) To sum up: Print expected to be a tough market, but HFM well placed to capture higher growth

Basis Market growth Comments (2005) range

Circulation : - 2 %/ 0 % Organic growth 1 560 M€ 0 % to 2 % Advertising : 2 %/ 4 % ( including e-mag ) China Emerging 137 M€ 10 % to 15 % Russia countries India

Websites : broadband 12 M€ 14 % Digital development

* EBIT/revenues (1) Digital magazines and media websites

Page 15 HFM strategy 2006 - 2010 Competitive environment: main categories of competitor HFM has developed an original strategy, both global and local National International multi-language Mono-language

Global Local brand Global strategy: brand portfolio Global and local brands

Strength • Concentration • No risk of ad • Profitability • Expansion and network • Language-based marginalization depends on local • Good ad efficiency synergies • Low exposure to portfolios • Continuous growth of • Profitability country risk the portfolio • Strong presence in emerging markets Weakness • Lack of international • Need to create and • Exposure to • Insufficient presence develop brands country risk profitability due to • Risk of ad • Low average • Problem of ad lack of focus marginalization profitability visibility • Exposure to country • Little potential for risk growth

Page 17 HFM International Business Model Local and international platforms for long-term profitable growth

(1) (2) (3)

ConsolidateConsolidate EstablishEstablish AchieveAchieve organic organic withinwithin national national aa platform platform growthgrowth marketmarket

• Build a “spider-web” • Increased size offers • Consolidate by acquisitions, strategy, including greater potential for bolted onto existing platform ELLE launch in target launching new titles country • Reach critical mass so as to • International presence increase efficiency vis-à-vis • Acquisitions of allows rollout of advertisers platforms in various powerful titles across countries many countries • Strengthen HFM’s bargaining power to counter • Still subscale in some • Revenue synergies via concentration of the entire countries (due to cross-pollination of value chain: media agencies, midsize acquisitions successful brands and paper manufacturers, etc policy) formats • Increase profitability (cost synergies, scale effects, market share value)

Source: HFM

Page 18 HFM historical phases (1981- 2006) A series of growth and consolidation cycles

HFM Magazine Revenues - Basis 100 (Constant $ rate – excluding inflation)

PMF 300 Growth / Consolidation Growth Consolidation Reorganization International expansion 280

260

240

220

200 01 - 05 In € CAGR -4.2% 30% 180 25% 20% Magazine 15% 160 advertising 10% USA market 5% France, 0% growth UK, Italy, 140 -5% in € Spain, -10% (in %) Japan 120 -15% -20% 99 00 01 02 03 04 05 100

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Page 19 2006 - 2010: HFM strategy Four pillars of growth To sum up/ HFM strategy will be built on four pillars, designed to provide higher growth and profitability (1) (2) (3) (4)

OrganicOrganic EmergingEmerging DigitalDigital ConsolidationConsolidation growthgrowth marketsmarkets developmentsdevelopments

• Launch new • Reach critical mass • Take advantage • Take advantage of concepts / in major countries of fast-growing broadband brands with where HFM is still markets • Develop digital strong editorial subscale: - China magazines content (high - United States - Russia cover price) - UK - India • Reach leadership positions in Media sites • Focus on high - Italy • Take advantage (main segments and profitability titles - Japan of high growth countries) • Use HFM and and profitability • Increase • Gain significant IGA networks to profitability Internet ad market roll out strongest (market share share concepts value) internationally • High growth and profitability

Page 20 HFM strategy (1) : Organic growth Organic growth (new concepts international and local) will balance natural attrition of one part of portfolio International development New title (presence in new countries) launches 25

4

20

3 15 5 12

2 4 10

6 6 3 5 5 1 12 5 1 1 9 1 3 22 2 8 5 2 4 4 4 444 3 3 33 3 2 22 2 2 1 0 0 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 • Development of an international network • Growing importance of local brands from 1985 to 1995 • Find new concepts to be tested locally and then to be internationalized • Organic growth (new concepts international and local) International brands balancing natural attrition of one part of portfolio • Conservative assumptions on organic growth for HFM Local brands Note : excluding licences Sources: HFM (0.5% to 1.5%) Page 21 HFM strategy (2) : Market consolidation Magazine market still very fragmented

100%

Other 67 Other 80% 39% % 68% Other Other Other 48% 54% 67% Other 3% 65% Other Market share by 70% competitor in the 60% 9% 4% main countries Other (in %) 86%

40% 3%

Top 3 Top 3 61% 52% 3% 9 Top 3 Top 3 Top 3 % 46% 35% 20% Top 3 39% 33% Top 3 33 HFM % 30% 26% 19 3% Top3 13% % 14% 0% United States France United Germany Ita Spain Japan China Russia Kingdom ly Market size (retail) 24 75523 531 ($bn) Market size: advertising + diffusion (subscription and single copy) revenues Source: PriceWaterhouse Coopers, China Statistics Yearbook, ZenithOptimedia, HFM, DDM, PPA Marketing, Annual reports, analyses and estimates HFM

Page 22 Relationship between national market share and profitability (1/3) There is a strong value to national market share

Scale effect Typical cost (unit cost gain for each Value to structure (%) doubling of size) size

Central costs National 7%- 20% - 25% (corporate, HR, Finance, IT, 12% publishers, etc)

Selling costs National 25%-35% 10% - 15% (advertising, promotion, etc) International (for international concepts)

Editorial costs International 25%-40% 5% - 7% (journalists, photos, etc) (for international concepts)

Manufacturing costs 2% - 5% International (paper) (paper, printing) 25%-35% National (printing)

7% - 10% Source: HFM analysis 7% - 10%

Page 23 Relationship between national market share and profitability (2/3) HFM will expand in its major markets to improve growth and profitability

Synergies: examples by country

USAUSA UKUK ItalyItaly

2006 revenue x 2 2006 revenue x 3 2006 revenue x 2

HFM US profitability rate: HFM UK profitability rate: HFM Italy profitability rate: 5 to 7 points 8 to 10 points 6 to 8 points

Source: HFM analysis

Page 24 Relationship between national market share and profitability (3/3) There is a strong value to national market share; HFM’s profitability is linked to its weighted average market share - 2004 - 20% Meredith Mondadori 18% Primedia Time Inc • HFM’s profitability 16% Emap HFM is linked to its 14% (Spain) weighted average HFM 12% HFM (3) (France) (4) market share 10% (Global) HFM • HFM’s profitability Operating 8% (USA) Bertelsmann Springer in France and Spain Playboy HFM (G+J) RCS income/ 6% Condé Nast (Italy) Magazines is high, thanks to revenues Europe 4% strong positions (%) 2% HFM Edipresse (UK) • HFM is still sub- 0% scale in UK, Italy -2% Dennis and the USA -4% Publishing

0% 5% 10% 15% 20% 35%

Specialists (1) Weighted average market share (%)

(1) Special interest magazines (2) 2005 figures for HFM (3) Excluding Regional (4) Excluding PQR supplements Source: published data

Page 25 HFM strategy (3): Emerging markets (1/2)0 Russia and Eastern Europe, China, India: strong growth and profitability potential

Russia China India

GDP 2005 - 2010 (in volume) + 12.2% + 7.4% + 8.6% per year Advertising market growth 2005 - 2010 + 13.1% + 13.6% + 13.5%* per year Consumer mag ad market growth + 12.7% + 17.7% nd* 2005 - 2010 per year

* NB: Indian advertising market growth = 2005-2008 India will experience strong demographic growth (2005-2010): +1.2% per year Sources: BIPE, MINEFI-DGTPE, ZenithOptimedia

Page 26 HFM strategy: Emerging markets (2/2) HFM can build on past investment to grow in Eastern Europe and coastal China*

HFM Revenues Main initiatives (China + Russia) (2002 - 2005)

• Strong growth in China and Russia based on launches of international magazines: x1.7 -China: Marie-Claire (2002), Elle Deco (2004), 25 ans (2004), Psychologies (2006), Photo (2006), Quo (2006) - Russia: Maxim Russia (2002), Elle Girl (2003), x4.2 Maxim Ukraine (2003), Psychologies (2005)

Russia • Acquisition and extension of IMG Network in Russia (46 towns) China 2001 2005 2010

2006 - 2010 • Mix of organic growth and acquisitions in Russia and China, plus market Developments concentration • Reinforcement of IMG network in Russia

* And India, depending on market deregulation Page 27 HFM strategy (4): a global digital strategy HFM will also use its brands to achieve strong growth over the next few years in digital magazine and media websites. Example: Elle

Global print brand Licensing

Multimedia brand Mobile and Magazine Media Websites other content ¾ Specific content (different from magazine) Print Digital Magazine ¾ Consistent with brand positioning (digital kiosk) ¾ Traffic oriented (importance of advertising revenue) ¾ Development of new sources of revenues

¾ Substitution ¾ Development

Page 28 HFM strategy: a multiplatform strategy HFM is developing a multiplatform strategy (example: Elle )

MAGAZINES PRINT E-MAG

Set: Set / Flexible FREQUENCY weekly, (Special issues, monthly, etc teasers, etc) Text Text VISUAL & Photos AUDIO Photos Layout UNIVERSE Layout + Rich media - Circulation/Ad - Circulation/Ad - Fixed & Variable BUSINESS - Low-cost costs MODEL - Fully-protected - Fully-protected ad space ad space

Page 29 HFM strategy: digital magazines HFM will expand in digital magazines (already 15,000 subscribers in US) Digitalization • Long term increase in sales volumes (print and digital): PaperPaper DigitalDigital - Winning new readers (attractive product MagazineMagazine MagazineMagazine for young people, strength abroad, etc) Publishing - Winning new markets (emerging markets (content and marketing) with under-developed distribution: China, India, etc.) Advertising page sales - New flexibility in pricing policy

Manufacturing • New sources of advertising revenues: - Rich media (“e-mag” audience value) - Sponsored links and better efficiency Distribution tracking

Retail (news- • Strong increase in profitability: stand cost) - Eliminating costs that severely limit magazine profitability at present (print, Total 100% 40% distribution, etc) Percentage of value chain 50% 90%-100% Potential 60% cost reduction and controlled by publisher 15%-30% margin growth, depending on the title’s revenue structure

Page 30 HFM strategy: a multiplatform strategy HFM is developing a multiplatform strategy (example: Elle) MAGAZINES MEDIA WEBSITES OTHERS PRINT E-MAG

Set: Set / Flexible FREQUENCY weekly, (Special issues, Constantly updated Constantly updated monthly, etc teasers, etc) Text Text Text Photos, Videos VISUAL & Text Photos Photos Logos AUDIO Photos Videos Layout Ringtones UNIVERSE Layout Sound + Rich media Sound Interactive content Interactive content - Circulation / Ad - Circulation / Ad - Fixed & Variable - Pay-per-act and BUSINESS - Low costs - Advertising driven costs subscriptions MODEL - Fully-protected - Fixed costs - Fully-protected ad - Fixed costs ad space space

Page 31 HFM strategy: media websites HFM has a strong and growing Internet presence in 2006

• 125 HFM magazine websites in 2006, in 27 countries

• Strong brands, well positioned in growing Internet segments: auto (Car and Driver), women (Elle, Woman’s Day, Psychologies), celebrities (Public)

• Substantial, rapidly-growing traffic: - 11.6m unique visitors per month (March 2006) - 175m page views per month (March 2006) - November 2005 – March 2006: page views on HFM websites up 24%

• Fast-growing revenues - 2005 website revenues: €12m - 2006 estimated website revenues: €20m (up 67%)

Page 32 HFM strategy: media websites Our strategy: focus on five key markets and segments …

Celebrities/Celebrities/ WomenWomen WomenWomen WomenWomen AutomotiveAutomotive EntertainmentEntertainment USUS FranceFrance AsiaAsia USUS FranceFrance

• Pragmatic strategy: Focus on 5 main segments with strong Internet growth potential Each segment may include several brands (magazine or other) • Our strengths: Brands, content and community Know-how, and the resources to fund investment • Worldwide strategy for the women’s segment based on the Elle network and our other key brands (Elle, Marie-Claire, Psychologies, already sold as a package to advertisers in a “Women’s Media Pack’)

Page 33 HFM strategy: media websites Example: www.public.fr … Celebrities/EntertainmentCelebrities/Entertainment FranceFrance Launch date: Nov 2004 • 2005: 3.7m page views per month 150,000 unique visitors per month • 2006 target: 7.5m page views 300,000 unique visitors

Website’s strengths: • “Youth” and “celebrities” segments • Public TV: 3 hrs per week, in partnership with Yahoo! • Content reactivity (gossips, forum, blogs, games, etc) • “Public waps” available on NRJ mobile and I-mode

Page 34 HFM strategy: media websites Example: the ELLE network

26 ELLE websites already set up around the world:

• 14 in Europe, 7 in Asia, 4 in North America, 1 in Africa

• US and Japan monthly page views: + 15m per website

• Brand extension: Elle Girl (6 websites), Elle Déco (6 websites)

Page 35 HFM strategy: media websites Media websites in HFM’s main segments will deliver profitable growth

Total HFM 2006 2010

Page views/month 165 M x 3 to x 5

Unique visitors/month 11 M x 2 to x 4

Revenue 20 M€ x 4 to x 6

% EBIT/Revenue ns 15 to 30 %

Page 36 Conclusion Conclusion HFM strategy

GLOBALIZATION DIGITALIZATION CONSOLIDATION

Increase our presence in Digitalize Make significant target markets the value chain acquisitions

Two priorities: ¾ Production ¾ To combine growth ¾ Advertising and profitability ¾ Leading and emerging markets ¾ Distribution ¾ To be proactive in a changing market ¾ Critical mass

Over the next 5 years, HFM’s unique network will enable us to: • Continue launching strong concepts and brands, and roll them out internationally • Continue building a strong presence in emerging markets (especially Russia and China) • Build a strong position in digital • Be one of the top players in local industry consolidation

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