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Hachette Distribution ServicesINVESTOR DAY

PARISFebruary 1, 2005

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AGENDA

HDS: world leader in press distribution and travel retail

A strong track record of growth

Growing and creating value in ECE

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HDS Mission Statement

Hachette Distribution Services (HDS) is a company dedicated to marketing media products and convenience services to its customers all over the world

Our mission is to facilitate access to the diversity ofideas and cultures

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Equal split between Retail and Distribution

2003 consolidated sales: €4,333m

Retail of Media &

Entertainment Products

22%

Travel Retail29%Press

Distribution49%

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68% of HDS sales are outside France

Travel Retail: nearly ¾ in France

France73%

America & ASPAC

7%Rest of Europe

20%

Rest of Europe

46%

America & ASPAC

7%

France47%

Rest of Europe

59%

America & ASPAC

41%

Distribution: mainly in Europe & America

Retail of Media & Entertainment Products: mainly in Europe

Geographical breakdown of HDS consolidated sales in 2003

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HDS: a world leader in Travel Retail

2003 Sales(€m)

0

500

1000

1500

2000

2500

3000

3500

4000

Com

pass

/SSP

Aut

ogri

ll

DFS

HD

S

Nua

nce

Duf

ry

Ald

easa

BA

A -

WD

F

Elio

r

Hei

nem

ann

Food & Beverage Travel Retail Specialty Travel RetailNews&Gift Travel Retail

Sources: annual reports, HDS estimates – only travel retail sales shown here

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Development of our Travel Retail activities in 2004 (I)

Relay: our world brand continued to growSuccessful rollout of our new store design100 new Relay stores in 2004

Paris Paris

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Development of our Travel Retail activities in 2004 (II)

In airports, Aelia continued to expandEffective response to collapse of Terminal EPenetration of the UK with Belfast and Luton airports

Belfast Airport Luton Airport(London)

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Development of our Travel Retail activities in 2004 (III)

Specialty retail formats in train stations and airportsOver 10 openings of Virgin and Payot Libraire points of sale in travel locationsNew concepts to meet the needs of customers and landlords (L’Occitane, Godiva, Dans Mon Panier Neuf, Bijoux Terner, Voyage Café… )

Paris Gare du Nord Paris Gare de Lyon

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Outlook for HDS Travel Retail

Travel retail will remain one of HDS’s main growth drivers

New country openings for Relay

New airports for Aelia

New store concepts in all platforms

Australia Canada Poland Singapore USA

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Retail of Media & Entertainment Products (I)

Over 1,060 press stores in city centers and shopping malls90 openings in 2004, first stores in RussiaInmedio now the leading brand in central Europe, present in 4 countries

Moscow Bucarest

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Retail of Media & Entertainment Products (II)

Virgin Megastore is back on track, and has successfully established its new commercial formula

With 54 megastores (Virgin, Le Furet du Nord and Payot Libraire), HDS operates a strong network in France and Switzerland

VirginMega.fr (a joint company between HDS and LAB) is the no.1 legal music downloading platform in France

Ahead of Apple’s iTune and FNAC’sfnacmusic.com

Virginmega.fr

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Outlook for Retail of Media & Entertainment Products

HDS now has a proven model for growth in press retail in central EuropeSelective openings in premium locationsDevelopment in new countries

Virgin Megastore will consolidate its positions

Virgin Metz

Le Furet du Nord Lille

Inmedio Savoya Park

Payot Sion

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National distributor:

Wholesaler X

Publisher CPublisher B

sales promotion, relationship with publishers, monitoring of wholesalers

reliable and cost-effective distribution of press, monitoring of retail network

Publisher A

Wholesaler Z

Press wholesalers:

Press distribution is about service to publishers and retailers

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Unique position in Press Distribution

HDS is by far the most international player in press distributionStrong network in order to share best practice and maintain operational excellenceProven ability to enter new markets and participate in privatizationsEver-expanding network of press-import specialists, offering better service to exporting publishers

Very strong position wherever presentIn press distribution, size mattersHDS has a proven ability to win and retain customers

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Objectives for Press Distribution

Maintain operational excellenceKeep costs low while innovating and developing new services

Grow market shareOutstanding service, aggressive commercial activity

Continue to diversify our wholesale companiesDistribute new products and services to retail networks

Penetrate new countries Seize opportunities in developing markets

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AGENDA

HDS: world leader in press distribution and travel retail

A strong track record of growth

Growing and creating value in ECE

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Weak market growth since 2000

Annual growth in HDS’s main markets, 2000-2003

(1) Market trend in France only

Europe North America Asia Drivers

Travel Retail +2% / +3% -1% / +1% -2% / 0% Air traffic, rail traffic

Media & Entertainment Products +1% / +2%(1) N/A N/A Books / music / video / games / magazines

Press Distribution 0% / +1% -1% / 0% N/A Press market

Source: Best’n Most, Eurocontrol, HDS Estimates

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HDS has a strong track record

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

5 000

2000 20030

10

20

30

40

50

60

70

80

90

100

2000 2003

€m Sales

Sales growth EBIT growth

3,294 4,333

€m EBIT

61 92

+ 14.7% CAGR+ 9.6% CAGR

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Acquisitions have played a major role

Half of HDS’s growth comes from acquisitions

Split of €1,039m sales increase (2000 – 2003)

Split of €491m sales from companies acquired since 2000

491

548

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Organicgrowth

Acquisitions

244

230

17

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Australia (40%)

Travel RetailFrance

Virgin Group

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Retail has grown faster than distribution

€4.3bn€3.3bn

Pressdistribution: + 5% p.a.

Retail:

+14% p.a.

Sales growth 2000-2003

30% 29%

15% 22%

55% 49%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2003Travel Retail Media & Entertainment Press Distribution

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Forecast growth in HDS’s markets

(1) Market trend in France only

Forecast annual market growth, 2004-2007

Europe North America Asia Drivers

Travel Retail

Media & Entertainment Products

Press Distribution

+2% / +3% +1% / +2% +2% / +3% Air traffic, rail traffic

0% / +1% (1) N/A N/A Books / music / video / games / magazines

0% / +1% 0% / +1% N/S Press market

Source: ACI, HDS estimates

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HDS will continue to grow

4 – 5% p.a.

4 – 5% p.a.

1 – 2% p.a.

20072003

HDS: organic growth forecastsOverall growth: 3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

PressDistribution

Media &EntertainmentProducts

Travel Retail

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Balanced profitability across all segments

Business contribution(*) as % of conso. sales 2003

N&G Travel Retail

Specialty & Duty Free

Newsstands

Media Entertainment Products

National Distribution

Wholesale2,9%

Travel Retail

Retail of Media & Entertainment Products

Press Distribution

2,9%

0,9%

(*): Business contribution: operating profit before head office costs

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AGENDA

HDS: world leader in press distribution and travel retail

A strong track record of growth

Growing and creating value in ECE

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Growing and creating value in ECE

By acquisition (Hungarian example)

Greenfield (Polish example, similar story in Czech Republic)

By building a portfolio of projects

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Acquisition

Lapker - Hungary

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Historical background

1994-1998: After extensive preparation, rapid privatization process of Magyar Posta’s fragmented press distribution sector (7 wholesalers and 1,300 kiosks) in 1997-1998

Successful bid by Lapker (85% HDS, 15% publishers)

1998-1999: Fierce competition for distribution to chains

1999:Creation of Kisker, Lapker’s retail company: new formats in travel retail and shopping malls

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The transformation plan: “Lapker 2001”

Operating costs cut by 30%-35%

Improved quality of service

More customer-focused approach

New services to:publishers

stores

Cultural changes based on initiative, efficiency, expertiseand team spirit

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Retail modernization: Achievements

Modernization of the retail networkRelay

Inmedio

Modern retail chain management methodsTraining

IT

NRI

etc

Secured press market share & profitability growth

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A major player in the press market

97% market share in distribution (single copy sales)

>30% market share in press retail110 Relay

120 Inmedio

950 kiosks

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Our store formats in Hungary

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Company profile: 2003

Sales = €300m

EBIT = €15m

EBIT/sales = 5.0%

EBIT/capital employed = 81%

Value creation = €10m

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Keys to success

Effective privatization preparation/negotiation

Delivering more than we promised

Strong management

Clear strategy

Efficient support from HDS

Self-belief

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GreenfieldHDS Polska - Poland

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Sustained growth

October 1997: CEO hired

November 18, 1998: First store opened

June 2001: 100 stores

July 2002: First profit … and profitable ever since

December 2004: 272 stores (3rd largest chain in the HDS Group) :

101 Relay163 Inmedio8 Voyage Café

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Company profile 2004

EBIT/ sales = 3.9%

EBIT/capital employed = 34%

Cash contributor, despite rapid expansion(1 store per week)

Main competitors: Ruch, Kolporter, Empik

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Building on success

Development of new conceptsVoyage and Inmedio café

Exporting Inmedio brandLeverage on mall developers

Leveraging management team (see Russia)

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Our store formats in Poland

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Keys to success

Entry at the right time (start of international investment in retail)

Right management

Optimum exchange of know-how between HDS and experienced local management team

Best of both worldsFocus on value creation and ROI vs. size

Store concept and locations

NRI

HR

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Our store formats in Czech Republic

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Building a portfolio of projectsOther ECE countries

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Historical background

Fall of the Berlin wall

Start-up in ECE through our German entity

Low-cost start-ups focused initially on international press

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Status today

All companies are profitable

Systematic review of markets: choosing the right timespeedmethod

for further development.

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Methodology

Business plan

Go/no-go

Pilot (when applicable)

Go/no-go

Monthly visit and follow-up

Strategic framework, market trends and resultsguide daily decisions

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3 categories

Decision taken/pilot launched in:RomaniaRussia

Thanks to success of operations, BP to be launched in:BulgariaSlovakiaSerbia

Other “top of the list” countries:Ukraine (political change)Croatia

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ECE - Key indicators for 2004

7.3

2,7963.3

10,05812,000

10,000

8,000

6,000

4,000

2,000

0

8

7

6

5

4

3

2

1

0Czech

RepublicHungary Slovak

RepublicBulgariaRussia Romania Serbia

AndMontenegro

Poland

GDP per capital (USD)

GDP growth (%)

Source: IMF

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MMP in RomaniaA new start in retail

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Background

HDS was already present in press distribution (mainly international)

New management hired to work on development strategyDecision to build a retail network, synergetic with our distribution activities

Creation of a chain of Inmedio & Relay stores in big citiesTarget for end 2007: 80 points of sale, including 20 Relays

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Key figures – retail project

BP:IRR = 31.2%NPV = €3.9m (total project)Minimum cash position = -€1mCumulative investment over 5 years = €2.9m

Pilot:Average annual sales > €160kProfitability >7%ROI >40%Even in the development period, company net profit at breakeven

Decision taken to roll out

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Our formats in Romania

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Russia

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HDS CIS

After extensive strategic analysis, decision to startgreenfield retail operations, under HDS Polska’ssupervision

Creation of a chain of POS, starting in Moscow

185 POS due to be opened by 2009: 95 Relays,90 Inmedio in shopping malls

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Key figures – HDS CIS retail project

BP:IRR = 20.3%NPV = $7.9m (total project)Minimum cash position = -$6.1mCumulative investment over 5 years = $7.0m2009 EBIT = $1.1m at 2.1% of sales

Pilot:First shop opened in December 2004

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Bulgaria, Slovakia, Serbia

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Bulgarpress, IPS & Global Press today … and tomorrow

Company StartNow:

Market ShareInt’l press

Domestic press plans Retail plans

1993 > 90%

> 90%

> 90%

Chains?

1991Segment well-establishedGreenfield not possible

2001Distribution to chainsNational distribution (9% M.S.)Development is ongoing

At least one BP in 2005

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New market opportunities

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Ukraine & Croatia - Key indicators

2003 Ukraine Croatia

GDP per capita($)

1,293 7,300

GDP growth 12.5% 3.7%

Inflation 8.2% <2.0%

Population 47.6m 4.4m

Why? Size, political change Development, tourism

Source: IMF World Economy Outlook Sept. 04 and local statistics

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HDS in ECE – Overall outlook

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Outlook for 2008 (existing projects only)

Number of countries* 8

Number of stores 2,000

Staff 1,300

Sales (€m, 100%) 520

EBIT (€m, 100%) 26

+ many new ideas …* Bulgaria, Hungary, Poland, Czech Republic, Romania, Russia, Serbia, Slovakia