Lettre-GB-avril-2002 6/06/02 10:22 Page 1 letter to our shareholders APRIL 2002 "REAPING THE BENEFITS OF RIGOROUS MANAGEMENT" S U M M A R Y La ga rd è r e Media's operating prof its for 2001 wer e up more tha n 10% over 2000. With adver tising in the doldrums – especially in the Uni t ed Sta t es –, many media groups announced a fall in Highlights p.02 pro f its compa r ed to the previous yea r . On the other hand, only a 2001 Annual Results ver y small number wer e able to produce a double-digit rat e of growth . HACHETTE FILIPACCHI MEDIAS p.03 Version Femina The perfor mance of Lagard è r e Media has its basis in solid Afghan Women ad va n t a ge s : Exemplary Women LAGARDERE MEDIA • st r ong compe t i t i v e positions, the better to wea t her the storm ; p.04 / 05 Lagardère Media Abroad • a well-balanced portf olio of business activities, achi e ved in HACHETTE LIVRE pa r ticular tha n k s to those activities not affec t ed or only slightly p.04 / 05 af fec t ed by cha n g es in the adver tising market ; Acquisition of Octopus Families on Top Loads of Advice • pr oper execution of the cost cutting prog ram launched in March 20 0 1, that will be continued at least until the end of 2003. LAGARDERE ACTIVE p.06 Fur the rm o r e, the strict investment discipline that has been Match TV settles in E.D.I. becomes Lagardere Active imp l e m e n t ed over the past few years has provided prote c t i o n Radio International (LARI) ag ainst the risk of having to write- d o wn assets that wer e ac qu i r ed above their real value. It also enabled the pres e r va t i o n HACHETTE DISTRIBUTION SERVICES p.07 of an extrem e l y solid financial position. The Group in fact has a Virgin po s i t i v e net cash surplus. EADS p.08 In conclusion, LAGARDERE is in a highly favor able position. The EADS Exceeds Its Targets continued implementation of the cost-cutting plan will prod u c e amp l i f ied effects in 2002 and 2003, which, of course, will prote c t MATRA AUTOMOBILE fu t u r e growt h or perhaps even accelerat e it. Then, the absence of p.08 A campaign featuring the Avantime! debts will enable the compa n y to fund the acceleration of its M72 de velopment and, within this fram e work, seize approp r i a t e op p o r tunities for acquisitions, when the y present the m s e l ves . LAGARDERE MEDIA p.09 Generational Questions The market has recognized this, and responded with an increa s e Fondation Hachette in the LAGARDERE share price since the beginning of the yea r that is higher than both the "DJ Stoxx Media", the media sector SHAREHOLDERS' NOTEBOOK p.10 index, and the gen e r al Fren c h business index, the "CAC 40". P01 Lettre-GB-avril-2002 6/06/02 10:22 Page 2 H i g h l i g h t s 2001 Annual Results LAGARDERE MEDIA REPORTS OPERATING INCOME GROWTH OF 10.4 % (*) E Sales (in million ) CONSOLIDATED REVENUES The consolidated revenues for the year 2001 attained 13,295 M (c o mp a r ed to the pro- fo r ma 2000 sales of 11,875 M ), an increase of 12. 0 % . La ga rd è r e Media revenues rose 6.5% to 7,668 M . This increase comes fr om the solid perfor mance realized by the Distribution & Services and Book divisions. Sales of the "Auto m o b i l e " segment declined by 3.6%. Ho wever , Matra Aut omobile maintained its leadership in the Fren c h and Eu r opean markets for the high-end mini-van segment. The strong growt h in the High Tec h n o l o g y revenues comes from all the activities (with the ex ception of the Space Division) and especially the Airbus Division which includes the consolidation of 100% of the Airbus activities in 2001. CONSOLIDATED OPERATING INCOME GROWTH OF 8.4% (on a pro- fo r ma basis) E Operating Income (in million ) • L a ga rd e re Media operating income grew by 9.3% to 353 M . In th i s d i fficult global economic context, the significant increase in opera t i n g income re flects the successful implementation of L a ga rd è re Media' s o rganic grow th and pro fitability imp rovement plan launched in 2001. • As anticipated, the 2001 financial results wer e affec t ed by a signific a n t in c r ease in the Res e a r ch & Development spending, especially those linked to the A380 prog ram and to the final step of A340-500/-600 devel o p m e n t . At the same time, EADS’s operating income benefit ed from the 100 % consolidation of the Airbus activities in 2001 versus 80% in 2000. In total, the EADS contribution to the consolidated accounts was +104 M in operating income (compa r ed to +68 M in 2000 on a pro- fo r ma basis) and +470 M in net income (against -49 M in 2000 on a pro- fo r ma basis). • The Auto m o b i l e segment rep o r ted an operating income of + 66 M wh i c h is slightly below the 2000 fig u r e (+ 71 M ). This decrease results from the cost of launching the new model Avantime (d e l a yed until December 2001) as well as a reduction of the sales of the Es p a c e mi n i - v an in the later part of 2001. Despite these two unfavor able events, the prof itability of Matra Aut omobile remained strong as a result of a favor able mix of higher margin products as well as the growt h of diver s i f ication revenue including engineering. (*) Including the impact of the additional three months of activity for Lagardere Active Broadcast (December close instead of a September close historically), Lagardère Media’s operating income growth was 9.3%. NET INCOME E Net Income (in million ) Considering notably : • Non - re c u r ring events as the gain rec o r ded on the sale of the EADS “Exce s s Sh a r es” in January 2001 (+ 210 M befor e taxes), the provision for depre- ciation of the T-Online shares (- 157 M befor e taxes) rec o r ded in the fir s t half of 2001, the gain recognized by EADS fol l o wing the creation of Airbus SAS which amounts to a gain of +441 M for the Lagard è r e accounts, the imp a i r ment of various goodwill and other intangibles for - 42 M , as wel l as provisions for res t r ucturing for -99 M of which - 66 M is for the activi- ties of Media and Auto m o b i l e ; • Goodwill amortization increased from 61 M in 2000 (on a pro- fo r ma basis) to 121 M in 2001 essentially as a result of the full year impact of the amortization rel a t ed to the buyout of the Hache t t e Fil i p a c c hi Médias minority stoc kholders and EADS for the remaining porti o n . The CONSOLIDATED NET INCOME attained 616 M (compa r ed to 528 M in 2000 on a pro for ma basis). SOLID BALANCE SHEET The net bank debt at 2001 year end of 219 M is to be compa r ed with the Consolidated Net Wor th of 4,328 M . We remind you that the whole of the documents put at the disposal of the market on the occasion of the publication of 2001 Annual Results (press release and documents pres e n t ed during the analyst meeting on 21 march) can be co n s u l t ed on the LAGARDERE site at the fol l o wing address: ht t p : / / w w w. l a ga rd e re . c o m / u s / i n fo _ fi n a n c i e re s / d e t a i l _ a c t u . c f m ? i d n = 2 4 7 3 & i d t = 81 & n av = 0 P 02 Lettre-GB-avril-2002 6/06/02 10:22 Page 3 25 ans Magazine HACHETTE FILIPACCHI MEDIAS Version Femina in Korea Ana Rosa Sells Launch of Version Femina Like Hotcakes Version Femina, the first Euro p e a n Women's Wee k l y Magazine, is sold at n ewsstands as a supplement to 32 regional daily newspapers thr ough the wee ke n d . Wi t h a distribution of 3.6 million copies Hachette Next Media, (9.2 million devot ed readers), Ver s i o n a joint venture Femina is devot ed to glamour and created by Hachette Filipacchi Médias and Launched in October, pr actical issues and has borrowed the best the Korean group AR is based on a fea t u r es from two women's magaz i n e s , Next Media, launched concept invented in Version Femme and Femina Hebdo.