Introduction

GROUP MANAGEMENT REPORT
First half year, 2009

In a deepening economic crisis both in France and abroad, things have worsened for paid newspapers and magazines, which have been suffering from shrinking advertising and readership as well as from heightened competition from free publications over the past few years.

The advertising market is experiencing an unprecedented recession.
In France, magazines recorded a 19.4 % decline in advertising volume in H109 versus H108 and national dailies saw a 2.7 % shrink. Internet advertising revenue was up 8.1 % over the period, but the increase was 38.1 % over the same period in 2008 (Source TNS Media).
The crisis has also hit advertising expenditure in the United States, which dropped 15.4 % (Source: Nielsen).

The circulation and readership of most French magazines were significantly down as at June 30, 2009 (Sources: Audipresse / AEPM / Diffusion Contrôle (OJD)). Newsstand sales were particularly hit (- 8 % in H109 vs. H108) due to sagging newsstand performance in general and to lower average basket sales (Source: NMPP).

Pocket publications and series increased 16 % in volume on the French youth market in H109 as against H108.

The same trends apply to Europe, which proves the structural nature of the industry's crisis.  

Canada is experiencing the same advertising and circulation trends.


Stability of sales on a like-for-like foreign exchange and scope basis

First half consolidated sales amounted to 214.6 M€, up 2.5 % i.e. 5.2 M€ from H108.
 
On a like-for-like FX and scope basis, group sales dipped 1.57 M€, or 0.7 %

The sales of the group's French companies amounted to 178.97 M€, down 0.96 M€, or 0.5 %.
The sales of the group's foreign companies rose 20.9 % to 35.6 M€, from 29.43 M€ in H108. The growth is essentially ascribed to the acquisition of Weltbild's press publications on June 30, 2008.
On a like-for-like FX and scope basis, sales dropped 1.7 %, with the United States down 7.8 % and Europe stable.

Press circulation sales amounted to 137.86 M€, down 7.52 M€, or 5.2 % on a like-for-like FX and scope basis. The decline stems from a 6.43 M€ drop at Milan Presse, due to a lower number of publications supplied to newsstands, in compliance with the company's turnaround plan. 
Bayard's press sales were flat, owing to strong newsstand sales (namely special youth issues) in spite of a 1.5 % drop in subscription sales. 

The group's advertising revenue reached 18.9 M€, down 11 %, which shows some degree of resilience in the crisis, notably as far as Notre Temps was concerned.

Book sales amounted to 37 M€, i.e. 17 % of group sales, versus 14 % in H108.
There was a sharp increase: 6.98 M€, or 23.3 %, from H108, on the strength of the success of Eragon volume 3.