The non-compliance with the authority procedure

Transcription

société anonyme with a capital of € 1,997,583.30
registered office: 20, rue du Sentier – 75002 Paris
Paris Trade & Companies Register under No. B 418 093 761
ANNUAL REPORT
In accordance with regulation n°98-01 / n°95-01, the Autorité des Marchés Financiers duly registered this annual report
on March 17th under Number D04-272.
The said report may be used in support of a financial operation only if supplemented by a transaction note approved by
the Autorité des Marchés Financiers.
CONTENTS
1
Chapter I – PERSONS IN CHARGE OF THIS ANNUAL REPORT, of the AUDITING OF
ACCOUNTS AND STATEMENTS
5
1.1 PERSON IN CHARGE OF THIS REPORT
5
1.2 STATEMENT OF THE PERSON IN CHARGE OF THIS REPORT
5
1.3 PERSONS IN CHARGE OF THE AUDITING OF ACCOUNTS
5
1.3.1 Statutory auditors
5
1.3.2 Alternate auditors
6
1.3.3 Statement of the statutory auditors
6
1.4 PERSON IN CHARGE OF THE INFORMATION
8
1.5 INFORMATION POLICY
8
Chapter II – GENERAL INFORMATION ABOUT THE COMPANY AND ITS CAPITAL 10
2.1 GENERAL INFORMATION ABOUT THE COMPANY
10
2.1.1 Corporate name and registered office
10
2.1.2 Legal form and applicable legislation
10
2.1.3 Date of creation and term of the company
10
2.1.4 Corporate purpose (article 3 of the articles of incorporation)
10
2.1.5 Trade and Companies register and APE Code
10
2.1.6 Consultation of Legal Documents concerning Hi-Media
10
2.1.7 Corporate Year (article 32 of the articles of incorporation)
11
2.1.8 Special clauses of the bylaws
11
2.2 GENERAL INFORMATION CONCERNING THE CAPITAL
13
2.2.1 Capital Stock
13
2.2.2 Modification of the capital and the voting rights attached to the shares
14
2.2.3 Acquisition of its own shares by the company
14
2.2.4 Capital authorized but not issued, capital increase commitment
14
2.2.5 Securities not representing capital
14
2.2.6 Other securities giving access to the capital
14
2.2.7 Individual or legal entities controlling the Company
19
2.2.8 Table of capital trends since the Company was established
20
2.2.9 Changes in the distribution of capital over the last three years
21
2.2.10 Pledges
22
2.3 DIVIDENDS
22
2.4 THE COMPANY'S SECURITIES MARKET
22
2.4.1 Market Place
22
2.4.2 Other trading markets
22
2.4.3 Trends in market capitalization
22
2.5 COMMITMENT TO RETAIN SECURITIES
23
2.6 MARKET MAKING AGREEMENTS
23
2.7 SHAREHOLDERS' AGREEMENT
23
Chapter III – INFORMATION ON HI-MEDIA'S ACTIVITY, RECENT EVOLUTION AND
FUTURE OUTLOOK
24
3.1 THE GROUP AND HI-MEDIA – INTRODUCTION TO THEIR ACTIVITIES
24
3.1.1 Company Background
24
3.1.2 Hi-media businesses
3.1.3 Hi-Media's market position
26
3.1.4 Functional Organization chart
27
3.1.5 Legal structure of the Group
28
3.1.6 Significant subsidiaries
28
3.1.8 Sales and operating results breakdown per activity sector and geographic areas
28
3.1.9 Group's customer base
29
3.1.10 Markets where Hi-Media intervenes
29
3.1.11 Hi-Media – sectors of activity
36
3.2 RISK FACTORS
61
3.2.1 Competitive environment
61
3.2.2 Correlation between the advertising market and the economic cycle
62
3.2.3 Risks related to the Internet economy
62
3.2.4 Risk that sites might decide to 'go it alone'
62
3.2.5 Fluctuation in rates
62
3.2.6 Trends in regulations currently in force
62
3.2.7 Failure of the companies AdTech, Edatis and Fivia
64
3.2.8 Risks related to systems
64
3.2.9 Dependence on key employees
64
64
3.2.10 Social and environmental risks
3.2.11 Compliance with IFRS standards
3.2.12 Liquidity risk
65
3.2.13 Market risks
65
3.2.14 Risk on shares
65
3.2.15 Dependence
65
3.2.16 Insurance risks
66
3.3 OFF-BALANCE SHEET LIABILITY
66
3.4 INVESTMENT POLICY
67
3.5 RECENT DEVELOPMENTS
67
3.6 FUTUR PROSPECTS
68
3.6.1 Operational development
68
3.6.2 Medium-term financial objectives
68
3.6.3 Sales forecasts
69
3.7 EXCEPTIONAL EVENTS AND DISPUTES
69
Chapter IV – HOLDINGS – FINANCIAL POSITION – RESULTS
78
4.1 MANAGEMENT REPORT
78
4.2 SPECIAL REPORT FROM THE BOARD OF DIRECTORS ON OPERTATIONS
CARRIED OUT IN ACCORDANCE WITH FRENCH STATUTORY REQUIREMENTS
(articles l225-177 to l 225-186 of the commercial code)
96
4.3 ANNUAL ACCOUNTS FOR THE COMPANY HI-MEDIA S.A.
97
4.4 CONSOLIDATED ACCOUNTS FOR HI-MEDIA GROUP
121
4.5 AUDIT FEES PAID BY THE GROUP TO THE REGISTERED AUDITORS AND
THEIR NETWORK MEMBERS
146
Chapter V – CORPORATE GOVERNANCE
144
5.1 BOARD OF DIRECTOR'S COMPOSITION
144
5.2BOARD OF DIRECTORS WORKING AND FUNCTION
146
5.2.1 Board of Directors Function
146
5.2.2 Board of Directors working
146
5.2.3 Board of Directors rule of procedure
5.2.4 Board of Directors evaluation
5.2 MANAGEMENT INTERESTS
5.2.1 Remuneration of managers
5.2.2 Stock options schemes and Start-up option schemes
5.2.3 Information on transactions concluded with members of administrative bodies
5.2.4 Loans and guarantees granted or made to administrative bodies
5.3 EMPLOYEE PROFIT SHARING
5.3.1 Profit-share and incentive agreements
5.3.2 Employee stock options
5.5 PRESIDENT'S INTERNAL CONTROL REPORT
5.6 STATUTORY AUDITORS' INTENAL AUDIT STATEMENT
6. INFORMATION POLICY
146
146
147
147
147
147
148
148
148
148
153
CHAPTER I – PERSONS IN CHARGE OF THIS ANNUAL REPORT, OF THE
AUDITING OF ACCOUNTS AND STATEMENTS
1.1 PERSON IN CHARGE OF THIS REPORT
Cyril Zimmermann, esq.
CEO and Chairman of the Board of Directors, Hi-Media.
1.2 STATEMENT OF THE PERSON IN CHARGE OF THIS REPORT
"To the best of my knowledge, the information stated in this report is a fair and reliable reflection of the
company. It includes all the information required by investors to form their own opinion about the assets,
activity, financial position, results and prospects of Hi-Media. There is no omission in this report that
could affect its goal."
The CEO of Hi-Media
Cyril Zimmermann
1.3 PERSONS IN CHARGE OF THE AUDITING OF ACCOUNTS
1.3.1 Statutory auditors
Européenne de Révision et d’Expertise Comptable (EREC) – Associés
9, avenue Bugeaud
75116 Paris
Date of first appointment:
Date of renewal:
Term:
Term expires:
July 22, 1998
April 16, 2004
Six years
The term expires at the end of the annual shareholders' meeting called to
approve the accounts of the year ending December 31, 2009.
KPMG Audit
Represented by Mr Frédéric Quélin
Immeuble KPMG
1, cours Valmy
92923 La Défense cedex
Term:
Term expires:
April 21, 2000
Six years
1.3.2 Alternate auditors
Fiduciaire de gestion et d’organisation (FIGESTOR)
55, boulevard Lannes
75016 Paris
Date of renewal:
Term:
Term expires:
July 22, 1998
April 16, 2004
Six Years
Bertrand Desbarrières
1, cours Valmy
92923 La Défense Cedex
Term:
Term expires:
April 21, 2000
Six years
1.3.3 Statement of the statutory auditors
As statutory auditors to the Hi-Media S.A. company and as per the 1st Title of the 2nd Book of the
regulations of the AMF, we have proceeded in accordance with professional standards as applicable in
France with the verification of the information concerning the financial situation and historic accounts
stated in this document relating to the financial year ended December 31, 2004.
This document was drawn up under the responsibility of the Chairman of the Board of Directors. It falls
upon us to issue an opinion concerning the reliable and accurate reflection of the information it contains
with regard to the financial situation and accounts of the company.
In accordance with professional standards applicable in France, our verifications included as assessment
of the reliability of the information concerning the financial situation and accounts, a verification of their
consistency against the accounts covered in previous report and in an analysis of other information
stipulated in the reference document in order to identify where applicable any significant inconsistencies
regarding the financial situation and accounts and to indicate any clearly erroneous information we
identified based on our general knowledge of the company, as acquired during our assignment. This
document does not contain any discrete forecast accounting and financial information resulting from
structured development process.
We audited the annual and consolidated accounts of the Hi-Media S.A. company for the financial year
ending December 31, 2002, as drawn up by the Board of Directors, according to the professional standards
applicable in France, which are certified without any reservation the following observations:
Without going back over what is formulated herein above, we would like to draw your attention about:
-
Note 2 of the appendix explain the uncertainty relating to the operating continuity suspended to
the 100% shares definitive contribution of the company Mobiquid. Considering that this
contribution was highly likely, the operating continuity principle was maintained to close the year-
end the Company for December 31, 2002. But without purchasing Mobiquid and as the prospects
concerning Hi-Media business stand, the management should complete the reorganization, since
2003, and/or assets disposal and/or new funding, to guarantee the Company's operating continuity.
We informed you that after the year-end closing, the contribution agreement was signed by the
parties on March 5, 2003 and that the "commissaire aux apports" reports no observation relating to
the total value of the contribution, on March 6, 2003.
-
In Note 3 of the appendix, there is the changing of the accounting procedures consequential upon
the first application of the CRC n° 2000-06 regulation concerning the liabilities of December 7,
2000 and their consequences on the result of the financial year and the capital equity at the
opening.
We audited the consolidated accounts of Hi-Media S.A. company for the financial year ending December
31, 2003 and 2004, as drawn up by the Board of Directors, according to the professional standards
applicable in France. They were certified without any reservation or observations.
On the basis of our due diligence, we have observations to offer regarding the true and faithful
representation of the information concerning the company's financial situation and accounts, as given in
this document.
Statutory Auditors
Paris La Défense and Paris, April 8, 2005
KPMG Audit
Department of KPMG S.A.
EREC Associés
Frédéric Quélin
Partner
Didier Lechevalier
Partner
Additional information:
This annual report includes:
1
2
The general report and the report on consolidated accounts made by the statutory auditors at
December 31, 2004. These reports include respectively at paragraphs 4.3 and 4.4, the explanation
of evaluates set in accordance with article L.225-235 paragraphs 1 and 2 of the French Code of
Commercial Law.
The statutory auditors’ statements drew up in accordance with the last paragraph of the Article
L.225-235 of the French commercial law. This statement concerns the statement of the CEO of
Hi-Media, describing the internal control procedures related to the accounting and financial
information setting up and processing.
1.4 PERSON IN CHARGE OF THE INFORMATION
Cyril Zimmermann
Chairman of the Board of Directors and CEO
[email protected]
Telephone: 01 55 80 20 20
1.5 INFORMATION POLICY
To inform its individual shareholders, the institutional investors and the financial analysts, Hi-Media uses
the following means:
1 Press releases and financial statements
2 Semi-annual reports
3 Annual Report
These documents are sent by e-mail, fax and mail to anyone who has so requested and also may be
consulted on www.hi-media.com website.
Information meetings intended for financial analysts occur twice a year when the annual et semiannual incomes are published.
The Company strives to answer any question asked by individual shareholders, institutional investors
and financial analysts.
Contact: [email protected]
The provisional financial communication timetable for 2005 has been drawn up as follows:
Friday 18 March 2005: Announcement of 2004 annual incomes – Financial Analysts Meeting
Friday 22 April 2005: Annual Shareholders Meeting
Wednesday 20 April 2005: Announcement of first-quarter turnover in 2005
Monday 25 July 2005: Announcement of second-quarter turnover in 2005
Wednesday 21 September 2005: Announcement of semi-annual incomes – Financial Analysts
Meeting
Wednesday 19 October 2005: Announcement of third-quarter turnover in 2005
Wednesday 25 January 2006: Announcement of fourth-quarter turnover in 2005
These provisional dates may be changed. Readers are requested to consult the company's website or
contact the company to find out about confirmed dates.
CHAPTER II – GENERAL INFORMATION ABOUT THE COMPANY AND ITS
CAPITAL
2.1 GENERAL INFORMATION ABOUT THE COMPANY
2.1.1 Corporate name and registered office
Corporate name: Hi-Media
Registered office: 20, rue du Sentier – 75002 Paris
2.1.2 Legal form and applicable legislation
French Société Anonyme with a Board of Directors subject to the provisions of the French Code of
Commercial Law and of the Decree n°67-236 dated March 23, 1967 regarding commercial companies.
Hi-Media is subject to French law.
2.1.3 Date of creation and term of the company
Hi-Media was formed on the 17th March 1998 as a limited liability company, initially named Hi-Media
Multimedia and registered in the Paris Trade and Companies Register under Number B 418 093 761 for a
period of 99 years, expiring the 17th March 2097.
Hi-Media Multimédia was converted to a société anonyme the 21st December 1998 and adopted the
corporate name of Hi-Media on the 10th March 2000.
2.1.4 Corporate purpose (article 3 of the articles of incorporation)
The purpose of Hi-Media is:
4 To design, implement, develop, produce, publish and market all advertising programs, media and
spaces, as well as to distribute them,
5 To provide all services relating to communication techniques using every medium (in particular
the media and audio-visual formats) and to advertising,
6 And generally, to undertake all commercial, industrial, financial and negotiable or fixed asset
operations relating directly or indirectly to the company purpose or to similar or closely related
aims.
2.1.5 Trade and Companies register and APE Code
Hi-Media is registered
B 418 093 761.
APE code: 744 B
in
the
Paris
Trade
and
Companies
Register
under
Number
2.1.6 Consultation of Legal Documents concerning Hi-Media
At the registered office of the company.
2.1.7 Corporate Year (article 32 of the articles of incorporation)
From January 1 to December 31 the same year.
2.1.8 Special clauses of the bylaws
2.1.8.1 Distribution of profits (article 34 of the articles of incorporation)
In the event that the company accounts for the financial year, as approved by the annual general meeting,
indicate the presence of a distributable profit, the annual general meeting shall decide to book the said
profit in one or more reserves, the allocation or use of which it shall regulate, or shall carry over the said
profit or distribute it in the form of dividends.
After noting the existence of reserves to which it has access, the annual general meeting may decide to
distribute the said reserves. In this case, the decision shall formally stipulate the reserves from which these
levies shall be taken. However, dividends shall be taken primarily from distributable profits from the
financial year.
The conditions for dividend payment shall be set by annual general meeting or, failing that, by the Board
of Directors.
Dividend payment shall occur no later than nine months after the closing of the financial year.
The annual general meeting, in considering the accounts for the financial year, shall be entitled to issue
each shareholder with an option between payment of the dividend or advance payments in cash or in
shares for all or part of the dividend to be distributed or of the advance payments on the dividend.
In the event that a balance sheet drawn up during or at the end of a financial year and certified as fair by
the statutory auditor(s) indicates that the company, from the closing of the previous financial year and
after due establishment of requisite amortizations and provisions and deduction where applicable of
previous losses as well as amounts to be reserved as per the law and these articles of incorporation and
taking account of the profits carried over, has recorded a profit, the Board of Directors may decide to
distribute advance payments on dividends prior to approval of the accounts for the financial year in
question. The Board of Directors may as well establish the amount and the date of distribution. The
amount of the said advance payments shall not exceed the amount of the profits decided in this subparagraph. In this case, the Board of Directors shall not use the option described in the sub-paragraph
herein above.
2.1.8.2 Shareholders' meetings (article 30 of the articles of incorporation)
Shareholders' meetings are called as per legal provisions in force.
Meetings are held at the registered office or in any other location stipulated in the convocation.
The Shareholders' meeting shall include all the shareholders, whatever the number of their shares,
provided they are fully paid up.
The right to attend meetings shall be subject to:
with regard to bearers of nominative shares, the registration of shares under the shareholder’s
name in the Company's books within at least five days prior to the date of the annual general meeting,
with regard to bearers of bearer shares, the registration of a certificate issued by intermediary
holding the account at least five days prior to the date of the annual general meeting, under the conditions
stipulates by article 136 of the decree dated the 23rd March 1967. Such certificate shall state that the
shares listed in the account are unavailable until the date of the annual general meeting.
In the event that the shareholder is unable to attend the meeting in person, he (or she) may apply one of
the three options herein under:
give a proxy to another shareholder or to his (or her) spouse
vote by mail
mail a proxy to the company without indicating any agent,
under the conditions laid down by law and regulations.
The annual general meetings are chaired by the Chairman of the Board or in his (or her) absence, by a
board member specially authorized for this purpose by the Board. In the absence of such decision, the
annual general meeting may elect its chairman.
2.1.8.3 Double voting right (article 30.2 of the articles of incorporation)
A double voting right shall be conferred on each entirely floating share for which nominative registration
has been certified in the name of the same shareholder at least two years from the 21st April 2000.
There is no registered share allotted free of charge. There is no provision in the articles in the event of the
cessation of this capacity and in the event of conversion in bearer form or transfer.
2.1.8.4 Threshold (article 13 of the articles of incorporation)
Any individual or legal entity, acting alone or in agreement with another, who comes to hold directly or
indirectly through one or more legal entities over which is under his (or her) control as per article 355-1 of
Law n° 66-537 dated 24 July 1966 (article L 233-3 of the French Code of Commercial Law), a two per
cent (2 %) fraction or any multiple of this percentage of the capital or voting rights, shall inform the
company of the total number of shares or voting rights he (or she) possessed by registered mail with
acknowledgement of receipt to be sent to the registered office within fifteen (15) days as from the
exceeding of the said threshold(s).
This disclosure requirement shall apply under the same conditions as those stipulated herein above as the
proportion of the fraction of the ground capital or the voting rights possessed falls below the said
threshold(s).
In the event of failure to comply with these provisions and at the request of one or more shareholders
owning at least 5 % of the capital or voting rights, the shares or voting rights certificates exceeding the
said threshold which should have been declared shall be stripped of voting rights for all shareholders'
meetings held for two (2) years following the date the notification is regularized.
2.1.8.5 Identifiable bearers’ securities (article 13.3 of the articles of incorporation)
At any time, for a consideration to be paid by itself, the Company may request the name or company name
where applicable, the address and the nationality of the bearers of shares with immediate or subsequent
voting rights in the annual general meetings as well as the quantity of shares or stocks held by each and, if
any, such restrictions obtaining on said stocks or shares, from the institution in charge of clearing shares,
under statutory and legal conditions applicable.
2.2 GENERAL INFORMATION CONCERNING THE CAPITAL
2.2.1 Capital Stock
Amount of capital:
2 010 234.80 €, fully paid up
Number of shares:
20 102 348 shares of the same class1
Face value:
0.1 €
Each share confers a right on a proportion of the capital it represents, of ownership of company assets, of a
share in profits and liquidations dividend.
The current distribution of capital voting rights of the company, on the basis of information held by the
company as of February 2005, is as follows:
Share holder
Category
David Bernard
Director
GroupeIndustriel
Marcel
Dassault
Hi-Media (treasury shares)
Own shares
Rivaud Innovation
Director
Spef e-Fund
Spef Venture
Director
Cyril Zimmermann
Shareholder officer
Total nominative shares
Public (nominative + holder)
TOTAL
Shares
Voting
rights
2 587
5 086 781
Capital
percentag
e
2 592
0.01
6 442 086
25.30
46 345
308 278
1 121 140
1
348 248
6 913 380
308 278
1 121 140
1
622 150
8 496 247
0.23
1.53
5.58
0.00
1.73
34.39
1.42
5.17
0.00
2.87
39.18
13 188 968
20 102 348
13 188 968
21 685 215
65.61
100.00
60.82
100.00
Voting
rights
percentage
0.01
29.71
There are no auto-control shares
7
8
The Dassault Développement company holds over 25% of the capital and of voting rights;
FCPR Spef e-Fund holds over 5% of the capital.
To the best of the company's knowledge, there are no other shareholder owing 5% or more of the capital
and voting rights, directly, indirectly or in agreement.
The members of the board hold nominal shares accounting for 3.26% of the capital and 4.29% of voting
rights of the company, which are broken down as follows:
Board Member
Cyril Zimmermann (Chairman)
David Bernard
Rivaud Innovation*
Dominique Bézier
TOTAL
Capital held in
percentage
1.73
0.01
1.53
0.00
3.27
Voting rights held in
percentage
2.87
0.01
1.42
0.00
4.30
The companies Dassault Multimédia and Spef Venture resigned from their position as directors on March
3 and 4 2005 respectively. On March 3, 2005, the Board of Directors, decided to co-opt Mr. Dominique
Bézier, Chief Financial Officer of the Company, as director as a replacement for the company Spef
Venture during the rest of its office, i.e. until the general meeting that will lay down the account of the
year ending December 31, 2008. This co-optation will be laid for ratification at the General Meeting on
April 22, 2005.
* On March 14, 2005, the Company received a letter of resignation of the company Rivaud Innovation
from its position as director. The Board of Directors of the Company has not apprised of it yet.
The Company has not conducted a TPI procedure, therefore the Company can not assess the number of
stockholders of its capital.
2.2.2 Modification of the capital and the voting rights attached to the shares
Any and all modifications to the Company capital or voting rights associated with the constitutive stock
shall be subject to the provisions of law, as the statutes do not stipulate any specific provision.
2.2.3 Acquisition of its own shares by the Company
2.2.3.1 Former program of share redemption
The Shareholders' Meeting of March 26, 2002 had authorized the company to trade its own shares. And
the Board of Directors, during its session of August 29, 2002, decided to implement the share redemption
program.
A registration statement was established after this decision and was covered by the Commission des
Opérations de Bourse dated of October, 2, 2002 (n°02-1069).
The program related to the said registration statement ended on September 26, 2003.
2.2.3.2 Effective program
There is no program currently in force.
2.2.4 Capital authorized but not issued, capital increase commitment
Not applicable
2.2.5 Securities not representing capital
Not applicable.
2.2.6 Other securities giving access to the capital
Bons de souscription de parts de créateur d'entreprise [start-up stock options]:
The extraordinary general meeting dated January 24, 2000 authorized the company Board of Directors to:
•
Issue start-up stock options [bons de souscription de parts de créateur d’entreprise (BCE)] for the
company, with the stipulation that the number of shares to be issued for the capital increase resulting
from the said warrants may not exceed 1,031,250;
•
Define the conditions under which the said warrants are awarded, the share subscription price and the
criteria to make parties eligible to the plan;
•
Designate the plan beneficiaries, set the amount of subscriptions, set the date from which shares may
be taken out and the maximum subscription deadlines.
The Board of Directors' meeting on February 14, 2000 stipulated the terms of allotting the BCE warrants
and decided the following:
•
The 1,031,250 shares resulting from the possible exercise of BCE warrants would be issued at the
value of twelve French francs and eighty centimes (FRF 12.80) per share; and that
•
BCE warrants beneficiaries could exercise the warrants after three (3) years with effect from the date
at which the BCE warrants would be issued and insofar as BCE beneficiaries were still company
employees.
The company general meeting of April 21, 2000 decided (i) to approve the terms of issue of 417,045 BCE
warrants decided upon by the company Board of Directors' meeting on February 14, 2000 and (ii) to
consider as completely used the authorization to issue BCE warrants given by the extraordinary general
meeting on January 24, 2000.
The extraordinary general meeting of April 21, 2000 decided to issue 134,482 BCE warrants, each warrant
conferring the right to apply for one Company share.
These 134,482 warrants will make it possible to subscribe to 134,482 shares each with a nominal value of
thirty cents of euros (€0.30) at the fixed price of €8.06 per share under the conditions stipulated in article
163 bis G of the French General Tax Code and the conditions defined herein under, i.e. amounting to a
total nominal capital increase of €40,344.60 with an issue premium of €1,043,580.32. Subscribed shares
shall be entirely circulating upon subscription either by payment in cash or clearance with specific
available and payable receivables.
Stock Options:
The extraordinary general meeting dated of June 30, 199 authorized the Board of Directors up to June 30,
2004 to offer employees determined by the Board of Directors specific options entitling them to become
beneficiaries of the program to subscribe to a maximum of 152.475 shares in the company with a nominal
value of €0.30 each. Upon authorization from the said meeting, the Board of Directors allotted 1,000 share
subscription options at its June 30, 1999 meeting offering the possibility of subscribing to 152,475
company shares at the price of €0.01 per share.
The stock options may be exercised once only with effect from January 2, 2001 until December 31, 2010,
provided that the beneficiary is an employee of the company or of a company in the company's group
when the options are exercised.
The Board of Directors decided on November 17, 1999 with approval from the beneficiaries to amend the
date of exercise of the share subscription options which after the deliberations of the Board of Directors
could be exercised at any time with effect from July 1, 2004 until June 30, 2009.
In addition, the Board decided that the shares resulting from the exercise of such options could be sold
five (5) years after the option allotment date, i.e. with effect from July 1, 2004.
The extraordinary general meeting of April, 21 2000 authorized the Board of Directors within the
framework of articles L 225-177 to L 225-185 of the French Code of Commercial Law (formerly articles
208-1 to 208-8-1 of French Law dated July 24, 1966 for trading companies) to issue once or several times
to staff member or executives of the company or companies or economic interest groups bound to the
company under conditions stipulated by article L 225-180 of the French Code of Commercial Law
(formerly 208-4 of French Law dated July 24, 1966) options resulting in a right to subscribe to or purchase
company shares, although the total number of options available on the date of authorization cannot exceed
480,088 shares each with nominal value of €0,30. It was agreed that the number of actions which could be
exercised by the share subscription options applicable and not yet raised cannot exceed one-third of total
company equity.
This authorization, issued for a period of five (5) years with effect from April 21, 2001, includes
subscription options for beneficiaries and a formal waiver by shareholders of their entitlement to
preferential subscription to shares which would be issued when subscription options are exercised and will
be implemented under the conditions and according to the terms stipulated by current statutes and
regulations as applicable on the date at which purchase or subscription options are made available.
The purchase or subscription price per share could be set by the Board of Directors on the date that the
option is allotted in relation to the sale price of a share on the closure of the regulated market on the date
preceding the date at which the Board of Directors decides to allot the options; however, the purchase or
subscription price per share may under no circumstances fall below ninety-five percent (95%) of the
average trading price for shares at the closing of the market in the twenty days of trading prior to the date
at which the Board of Directors decides to issue options.
It is agreed that when an option enables the beneficiary to purchase shares which have been purchased
beforehand by the company, the exercise price may not be lower than 80% of the average price paid by
the company for all the shares it has previously acquired without prejudice to the preceding clauses and in
compliance with legal provisions in force.
The said price may not be modified unless if during the period during which issued options can be
exercised the company completes financial operations or stock operations as permitted by law. In this
case, the Board of Directors shall under regulatory conditions adjust the number and price of shares
included in the options issued to take account of the effect of the said operation and may decided to
suspend option exercises where applicable.
The deadline to exercise these options has been set at ten (10) years with effect from the allotment date.
However, this deadline may be shortened by the Board of Directors for beneficiaries residing in specific
countries wherever such a measure is required to comply with local statutes.
The Board of Directors is authorized under the limits stipulated herein above to:
-
ensure that the number of stock options allotted by the Board of Directors is set such that the
number of stock options in circulation and not exercised does not exceed one-third of company
equity at any time;
-
draw up the terms of the share subscription or purchase option and to lay down the conditions
under which said options are allocated. The said conditions may include clauses to forbid
immediate sale of all or part of the said shares under the limits laid down by law;
-
set exercise period among others;
-
undertake directly or through a duly authorized representative all acts and formalities required to
make capital increases final which may be undertaken as per the authorization issued in this
resolution;
-
modify the articles of incorporation accordingly and in general to carry out such tasks as required.
As per the authorization of the Shareholders' meeting dated of April 21, 2000, the Board of Directors'
meeting on May 4, 2000 decided:
•
•
•
To grant 37,210 options, each opening the right to exercise a subscription option of one share at the
price of €8.06 per share;
That the options could be exercised from May 5, 2004 until May 4, 2010 provided that the beneficiary
is an employee of the company or of a subsidiary of the company;
The Board of Directors' meeting on June 27, 2000 modified the timetable to exercise options as
follows with the beneficiaries' approval:
Options may be exercised in sections according to the following timetable:
- one-third of the granted options, as of May 5, 2002,
Options may be exercised until May 4, 2010, after which options will be null and void.
session on September 14, 2000 decided:
•
•
price of €9.93 per share and on;
The following exercise timetable:
- one-third of the granted options, as of September 15, 2002,
- one-third of the granted options, as of September 15, 2003,
- one-third of the granted options, as of September 15, 2004.
Options may be exercised until September 14, 2010.
meeting on November 2, 2000 decided:
•
•
price of €8.20 per share; and on,
- one-third of the granted options, as of November 3, 2002,
- one-third of the granted options, as of November 3, 2003,
- one-third of the granted options, as of November 3, 2004.
Options may be exercised until November 2, 2010.
session on December 13, 2000 decided
•
•
- one-third of the granted options, as of December 14, 2002,
Options may be exercised until December 13, 2010.
session on October 23, 2001 decided:
•
•
- one-third of the granted options, as of October 23, 2003,
session on May 26, 2003 decided:
•
•
- the aggregate number of options when a period of 24 months as from May 26, 2003,
- and, at the latest, within 10 years of their grant, i.e. May 25, 2013 at the latest.
session on July 10, 2003 decided:
•
•
- the aggregate number of options when a period of 24 months as from May 26, 2003,
- and, at the latest, within 10 years of their grant, i.e. July 10, 2013 at the latest.
Meeting dates
Board of Directors'
meeting dates
Total number of
shares allocated
Number of shares
which can be
subscribed to
Number of shares
which can be
subscribed to by
company managers
Number of shares
which can be
subscribed to by the
ten first salaried
beneficiaries
Starting date to
exercise options
Expiry date
Subscription price
Exercise terms
Number of shares
subscribed to by the
31/03/03
Options canceled
during financial year
Remaining options
INFORMATION about BCE
Plan n°2
21/04/2000
Total
417 045
134 482
551 527
195 940
11 011
178 931
-
-
-
195 940
11 011
178 931
14/02/2003
14/02/2005
€ 1.95
21/10/2001
21/04/2005
€ 8.06
-
-
-
195 940
11 011
178 931
Plan n°1
24/01/2000
21/04/2000
14/02/2000
The total numbers of shares which can be subscribed equate the bonds allocated to the employees present
within the Company; employee capacity ending involves the lapse of options.
112 031 shares have been subscribed by the employees who are beneficiary of the BCE plan n°1 here
above.
INFORMATION about STOCK OPTIONS
Meeting dates
Board of
Directors' meeting
dates
Total number of
shares allocated
Number of shares
which can be
subscribed to
Number of shares
which can be
subscribed to by
company
managers
Number of shares
which can be
subscribed to by
the ten first
salaried
beneficiaries
Starting date to
exercise options
Expiry date
Subscription price
Exercise terms
Number of shares
subscribed to by
the 31/03/03
Options canceled
during financial
year
Remaining
options
Total
Plan n°1
30/06/99
30/06/99
17/11/99
Plan n°2
21/04/00
04/05/00
27/06/00
Plan n°3
21/04/00
Plan n°4
21/04/00
Plan n°5
21/04/00
Plan n°6
21/04/00
Plan n°7
25/04/03
Plan n°8
25/04/03
14/09/00
02/11/00
13/12/00
23/10/01
26/05/03
10/07/03
152 475
37 210
70 734
27 400
37 037
91 001
500 000
350 000
1 265 857
22 879
8 530
3 000
4 700
2 866
-
500 000
350 000
891 975
-
5 680
-
-
-
-
-
350 000
355 680
22 879
2 850
3 000
4 700
2 866
-
405 000
350 000
791 295
01/07/04
05/05/02
15/09/02
03/11/02
14/12/02
23/10/03
26/05/05
10/07/05
30/06/09
€ 0.01
04/05/10
€ 8.06
- 1/3 at
05/05/02
- 1/3 at
05/05/03
- 1/3 at
05/05/04
14/09/10
€ 9.93
- 1/3 at
15/09/02
- 1/3 at
15/09/03
- 1/3 at
15/09/04
02/11/10
€ 8.20
- 1/3 at
03/11/02
- 1/3 at
03/11/03
- 1/3 at
03/11/04
13/12/10
€ 5.31
- 1/3 at
14/12/02
- 1/3 at
14/12/03
- 1/3 at
14/12/04
23/10/11
€ 0.59
- 1/3 at
23/10/02
- 1/3 at
23/10/03
- 1/3 at
23/10/04
25/05/13
€ 0,33
10/07/13
€ 0,35
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22 879
8 530
3 000
4 700
2 866
-
500 000
350 000
-
891 975
14 484 shares have been subscribed by a beneficiary of the stock options plan n°1 here above.
Company capital currently comprises 19 975 833 shares. If all allocated warrants and options were exercised, i.e. an issue of 1 070 906 actions, a shareholder holding
1%
of
capital
prior
to
the
operation
would
hold
0.95%
afterwards,
i.e.
a
diminution
of
0.05%.
2.2.7 Individual or legal entities controlling the Company
No physical or legal person exercises control over the Company.
2.2.8 Table of capital trends since the Company was established
Date
Type of
operation
17/03/98
Incorporation
Capital increase
by issuing new
equity shares
Transformation
from SARL to
SA
Reduction of the
nominal value of
shares from FRF
100 to FRF 10
Capital increase
by issuing new
shares
Capital increase
by incorporation
of reserves from
the issue
premium account
Nominal division
Conversion of
capital into Euro1
Capital increase
by a 'public
savings offer'
Capital increase
by contribution
in kind2
Capital increase
by contribution
in kind3
Capital increase
by contribution
in kind
Capital decrease
due to losses
Capital increase
in cash6
Capital increase
in cash6
21/07/98
21/12/98
30/06/99
24/11/99
24/01/00
21/04/00
21/04/00
07/06/00
11/12/00
30/04/01
25/04/03
25/04/03
19/10/04
14/02/05
Number
of stock
issued
500
5 750
Capital
increase
Issue
premium
575 000
Nomin
al value
-
62 500
11 364
113 640
19 886 360
1 988 636 19 886 360
Capital
amount
Number of Curren
company /
cy
equity share
500 FRF
100
50 000
100
625 000
6 250 shares
FRF
100
625 000
6 250 shares
FRF
10
625 000
62 500
FRF
10
738 640
73 864
FRF
10
20 625 000
2 062 500
FRF
2
20 625 000
10 312 500
FRF
0.3
3 093 750
10 312 500
EUR
2 062 500
618 750
0.3
3 712 500
12 375 000
EUR
287 805
86 341.50
0.3
3 798
841.50
12 662 805
EUR
1 283 827 385 148.10 7 959 727.40
0.3
4 183
989.60
13 946 632
EUR
1 808
760.30
0.3
5 992
749.90
19 975 833
EUR
19 975 833
EUR
19 990 317
EUR
20 102 348
EUR
6 029 201
482 336.08
0.1
14 484
1 448.40
112 031
11 203.10
0.1
207 257.35
There was no capital reconstruction since February 14, 2005.
0.1
1 997
583.30
1 999
031.70
2 010
234.80
2.2.9 Changes in the distribution of capital over the last three years
On August, 2000, the company IPO announced that, since having been the beneficiary of all IPO
International's securities (the latter also holding shares in the company Hi-Media), it had indirectly broken
through the 5% and 10% upper threshold of Hi-Media's capital and voting rights. On December 21, 2000,
after Ixo International had been wound up and its shares transferred to Ixo, Ixo held 13.81% of Hi-Media's
capital and voting rights.
On April 3, 2001, the company Deutsche Asset Management Europe GmbH announced that it had gone
through the 5% capital threshold holding 5.74% of the capital and voting rights.
On April 27, 2001, following the transfer of a block of Hi-Media shares the Company Ixo announced that
it had broken through the 10% lower threshold of Hi-Media's capital and voting rights, holding 7.72% the
capital and voting rights.
On June 25, 2001, following the transfer of Hi-Media shares, the company Deutsche Asset Management
Europe GmbH announced that it had broken through the 5% lower threshold of Hi-Media's capital and
voting rights, and held 3.74% of the capital.
On August 13, 2001, following the share transfer and an increase in capital, Mr. Cyril Zimmermann
announced that he has gone through the 10% lower threshold of capital voting rights and held 8.94% of
the capital and voting rights.
On November 23, 2001, following the transfer of Hi-Media shares, the company Ixo announced that it had
gone through the 5% lower threshold of capital and voting rights and held 4.52% of the capital and voting
rights.
Cyril Zimmermann announced that he had gone through the 10% threshold of voting rights, holding
1,246,266 shares representing 2,419,753 righting votes, i.e. 8.94% of the capital and 12.65% of voting
rights, following the allotment of double voting rights on April, 21, 2002.
The company Ixo announced that it had broken through severally the 5% threshold of voting rights,
567,185 shares and 1,134,470 voting rights representing 4.07% of the capital and 5.93% of voting rights,
following the allotment of double voting rights.
On April 25, 2003, following the capital dilution related to Mobiquid securities contribution, Cyril
Zimmermann announced that he has gone through the 5% lower threshold of the capital holding 822,180
shares representing 1,644,360 voting rights, i.e. 4.12% of the capital and 6.65% of voting rights.
During the second half year 2003, Cyril Zimmermann has gone through the 5% lower of voting rights
holding 522,180 shares representing 1,044,360 voting rights.
On April 25, 2003, following the reserved increase in capital, related to Mobiquid securities contribution,
Spef e-Fund, mutual fund represented by the company Spef Venture, announced that it had gone through
the 5% threshold, holding 1,121,141 shares and voting rights representing 5.61% of the capital.
Frédéric Bruel had gone through the statutory 2% threshold, holding 549,582 shares and voting rights
representing 2.75% of the capital.
Anne Toledano had gone through the statutory 2% threshold, holding 527,933 shares, i.e. 2.64% of the
capital.
Innovacom IV had gone through the 5% threshold, holding 1,569,597 shares, i.e. 7.86% of the capital.
Dassault Développement had gone through the 10% threshold, holding 2,553,895 shares, i.e. 12.78% of
the capital.
On April 25, 2003, following the capital dilution related to the reserved increase in capital, Dassault
Multimédia had gone through the 5% lower threshold, holding 870,630 shares, i.e. 4.36% of the capital.
On April 25, 2003, following the capital dilution related reserved increase in capital, Le Groupe Industriel
Marcel Dassault, had gone through the 10% lower threshold, holding 1,881,305 shares, i.e. 9.42% of the
capital.
The company Innovacom Gestion declared on February 1st 2005 that it had gone through announced that it
had gone through the 5% capital threshold holding and voting rights.
The Groupe Industriel Marcel Dassault that had direct and indirect holding, through its subsidiaries
Dassault Développement and Dassault Multimédia carried out an internal distribution of Hi-Media's
shares, with the result that the Groupe Industriel Marcel Dassault has direct holding on its own, all the HiMedia’s shares previously held by the three companies, i.e. more than 25% of the capital and voting
rights.
The company SPGP declared on March 14, 2005 that it had reached the 5% capital threshold holding s.
To the best of the Company's knowledge, any other major changes in shareholder ship have occurred over
the last three years.
2.2.10 Pledges
To the best of the Company's knowledge, no nominative form share has been pledged.
2.3 DIVIDENDS
Since the Company was formed, no dividend has been paid out.
The Company does not plan any payment of dividends in the short term.
2.4 THE COMPANY'S SECURITIES MARKET
2.4.1 Market Place
Hi-Media shares have been listed on the Nouveau Marché of the Paris Stock Exchange since 7 June 2000.
2.4.2 Other trading markets
Hi-Media shares are not floaded on any other financial market, either in France or abroad.
2.4.3 Trends in market capitalization
Hi-Media shares : trading volume and Stock Market Price
Stock Market Price in €
Number of shares changing hands
High
Low
Weighted average
1 679 300
0.44
0.30
0.38
6 307 704
0.66
0.37
0.53
2 151 994
0.63
0.49
0.57
2 195 739
0.73
0.57
0.65
862 573
0.73
0.52
0.62
1 068 788
0.65
0.56
0.60
1 355 540
0.69
0.54
0.61
2 949 578
0.73
0.54
0.65
3 589 935
1.03
0.68
0.89
854 612
0.94
0.80
0.86
2 686 472
1.14
0.75
0.96
2 754 124
1.28
1.01
1.16
1 434 281
1.21
0.97
1.08
1 698 686
1.13
0.91
1.05
1 969 801
1.17
0.96
1.06
1 483 658
1.09
0.98
1.03
1 637 645
1.22
1.06
1.13
6 124 472
2.10
1.15
1.69
Month
Aug. 03
Sep. 03
Oct. 03
Nov. 03
Dec. 03
Jan. 04
Feb.04
March 04
Ap. 04
May 04
June 04
July 04
Aug. 04
Sep. 04
Oct. 04
Nov. 04
Dec. 04
Jan. 05
2500
2000
1500
1000
500
oc
t-0
4
av
r-0
4
ju
in
-0
4
oc
t-0
3
0
2.5 COMMITMENT TO RETAIN SECURITIES
None
2.6 MARKET MAKING AGREEMENTS
None
2.7 SHAREHOLDERS' AGREEMENT
There is no shareholders' agreement between the company's shareholders;
Quotation en euros
1,8
1,6
1,4
1,2
1
0,8
0,6
0,4
0,2
0
3000
oc
t-0
2
de
c02
fe
v03
av
r-0
3
ju
in
-0
3
Volume in thousand of shares
These schedule figures are given by Euronext.
2.8 EMPLOYEE SHARE OWNERSHIP
On April 17, 2000, the Company set up a corporate savings scheme for its employees. The Unit Trust is
available to all Hi-Media employees.
Furthermore, share subscription options and BCEs1 were allocated to the company's employees and
managing agents (cf. § 2.2.6).
CHAPTER III – INFORMATION ON HI-MEDIA'S ACTIVITY, RECENT EVOLUTION
AND FUTURE OUTLOOK
3.1 THE GROUP AND HI-MEDIA – INTRODUCTION TO THEIR ACTIVITIES
3.1.1 Company Background
Founded in January 1996 by Cyril Zimmermann and two other partners, Hi-Media quickly made a name
for itself over twelve months that followed as a major player on the French Internet market, offering
multi-media advertising management solutions. In March 1998, Cyril Zimmermann, by creating Hi-Media
Multimédia, made the strategic move to focus his company's efforts solely on Internet advertising
management. In February 2000, Hi-Media Multimedia changed its name to Hi-Media, after it was bought
out. The company was quick to expand its range of products, network and client database with developing
from 2000 a brokerage and direct marketing consulting activity, and then proposing audience
monetization services with its takeover of the Mobiquid company beginning 2003.
Since its formation, Hi-Media has increased its capital several times, with a view to financing its growth
ant strengthening strategic partnerships. In July 1998, Hi-Media increased its capital, the shares being
taken up by Infosources SA (one of the main French players on the Internet market) and by its founders.
In November 1999, a second increase in capital saw the Group Dassault become holders of Hi-Media
capital. Three Dassault companies were involved, viz: Groupe Industriel Marcel Dassault, Dassault
Multimedia and Dassault Développement.
In March 2000, Hi-Media consolidated its shareholder base, by including two new strategic shareholders:
J.P. Morgan International Capital Corporation and Azéo Ventures SAS, who’s, since, re-sold its
stockholding.
On June, 7, 2000, the Company's shares were listed for the first time for trading on the Nouveau Marché
of the Paris Stock Exchange.
In September 2000, Hi-Media signed an acquisition contract with the company Net-On IT Scandinavia.
This involved a 100 % take-up of capital of the Swedish company Net-On Advertising AB. The transfer of
Net-On Advertising AB's assets was approved by the Hi-Media Extraordinary General Meeting held on 11
December 2000.
In December 2000, Hi-Media acquired a 70.6% stake in the capital of the UK company, Purplepot Plc.
In December 2000, Hi-Media signed another acquisition contract, this time concerning the company
Advenda Media AG. The General Meeting held on April 30, 2001 endorsed the first part of operations
involving a 51% takeover of Advenda Media AG's shares. This latter company's name was changed to HiMedia Deutschland AG. On May 8, 2002, Hi-Media bought out the 49% remaining of the German
company for a total of € 275,000 that was paid in cash.
In July 2001, Hi-Media acquired a 19.9% stake in the capital of Ginko Systems, a software publishing
company dealing with advertising space management. After this acquisition, financed by a cash
contribution, Ginko Systems became known as Hi-Media Technologies. Hi-Media's technical teams were
transferred to this new company. In October 2002, Hi-Media sold its stake.
In December 2002, Hi-Media signed an acquisition contract on the company Mobiquid. This involved a
100% take up of capital of Mobiquid that is specialized in editing "audiotel" services and mobile
multimedia services centered on music. The General Meeting held on April 25, 2003 endorsed the 100%
shares contribution of Mobiquid. Since then, the Board of Directors of Hi-Media has two new directors
that are the company Rivaud Innovation and the mutual fund Spef e-Fund, represented by the company
Spef Venture.
In March 2003, Hi-Media created a company named Laroquette Musique & Media. Hi-Media holds 50%
of this company, the balance of the capital is held by two private individuals. This Company works also as
an advertising management company, specialized in music.
Mile-stones
1996: Formation of Hi-Media, a multimedia advertising management company (interactive media and
press);
1997: Launch of Hi-Media's first Internet offer;
1998: Establishment of Hi-Media Multimédia dedicated to the Internet;
Hi-Media Mutlimédia becomes a Société Anonyme;
2000: Hi-Media Multimédia changes its name to Hi-Media;
Listed for trading on the Nouveau Marché of the Paris Stock Exchange;
Creation of seven subsidiaries abroad;
Acquisition de Net-On Advertising AB and Purplepot Plc;
Launch of brokerage and direct marketing consulting activities
2001: Closure of three subsidiaries;
Acquisition of a 51% stake in the capital of Advenda Media AG;
Acquisition of a 19.9% stake in the capital of Ginko Systems, now known as Hi-Media
Technologies;
2002: Closure and moth-balling of four subsidiaries (Spain, Italy, Czech Republic and Slovakia);
Transfer of the participation in Hi-Media Technologies;
Marketing arrangement of adserving Helios technology of the company Adtech;
2003: Acquisition of Mobiquid;
Establishment of Laroquette Musique & Media;
Transfer of a part of the participation of the Portuguese subsidiary, Hi-Media Portugal Lda
(current stockholding: 49.9%);
Dissolution of the Canadian subsidiary, Publicité Internet Hi-Media Inc.
2004: Disposal of its stake in the capital of Laroquette Musique & Media;
Dissolutions of the subsidiaries Hi-Media UK and Hi-Media Technology Sweden;
Acquisition of 50% stake in the capital of Europermission Sl.
Corporate key figures
K€
Number
of
companies
Total workforce
31/12/1998
1
31/12/1999
1
31/12/2000
10
31/12/2001
14
9
18
121
111
Consolidated
Turnover
Operating results
Financial results
Unusual item
Corporate
income tax
Integrates net
income*
Equity capital
Indebtedness
31/12/2002 31/12/2003 31/12/2004
12
13
11
48
54
54
889
4 687
14 591
18 651
9 512
8 780
14 362
0
0
-1
0
- 354
- 33
- 15
0
- 2 991
363
- 19
0
- 8 210
462
- 6 577
3
- 3 416
49
- 1438
17
- 749
19
- 341
7
201
- 27
- 264
- 931
-1
- 402
- 2 647
- 14 328
- 4 824
- 1 078
842
93
27
2 741
93
20 245
137
4 611
212
- 332
169
421
192
835
111
*before goodwill amortization
In addition, the Company does not disclose the value creation.
3.1.2 Hi-Media businesses
Hi-Media offers to digital media publishers (Websites, Interactive TV programs, multimedia mobile
phones services, etc.) a comprehensive range of services that allow them to monetize their audience.
These services are:
9 Hi-Media Network: interactive advertising management company;
10 Hi-Media Direct: direct marketing media planning, e-mail, mail and SMS addresses leasing;
11 Mediapass: micro-payment technical platform and services.
3.1.2.1 The advertising management company: Hi-Media Network
Hi-Media represents 1.2 billion monthly ad impressions in France and 2 billion monthly ad impressions
over its French and Global network (December 2004, source: Hi-Media).
3.1.2.2 Direct Marketing consulting and addresses leasing: Hi-Media Direct
Hi-Media also has the most extensive range of products on the market within the field of interactive
marketing. It offers a full range of tools and direct marketing: direct marketing campaign designing
consulting, e-mail and mail address file leasing, implementation of Interactive TV campaigns in order to
create a prospects base.
Hi-Media Direct's income is mainly derived from direct mailing of targeted advertisements to qualified email addresses.
3.1.2.3 Micro-payment platform and services: Mediapass
Hi-media purchased the company Mobiquid in order to propose to media publishers all the market
solutions to generate incomes, besides advertising and direct marketing. Since the end of 2003 Hi-Media
offers a micro-payment and electronic payment platform with solutions using overcharged telephone
numbers (known as "audiotel"), overcharged SMS (SMS+), credit cards payments and payments with
France Telecom's WHA technology, and through electronic purses such as Paypal, Paynova or Firstgate.
The publishers who want to charge their content or their services can appeal to Hi-Media and integrate a
technical platform in a few minutes. This platform will allow them to charge their e-customers and to
collect the market returns.
The web surfers who will use these charging services through the platform Mediapass will pay their
purchases by credit card debit on their bank account or by debit made by their telephone operators from
their usual bill, or by their access provider on their internet consumption bill.
After keeping a part of the receipts for administrative expenses, the operators deliver the major part of the
income directly to the websites to or Hi-Media which shares them with the websites that are customers of
Mediapass. In any case, Hi-Media pays itself on a commission basis, on any transaction recorded on the
Media-Pass Platform.
3.1.3 Hi-Media's market position
Hi-Media is the single company in Europe to offer a full range of services that enable to monetize the
audience of free media: advertising, direct marketing, electronic payments and micro-payments. This
unique position allows Hi-Media to differ from many of its competitors since these ones work on only one
of the three main businesses of Hi-Media.
Advertising network
Hi-Media is now the largest advertising network on Internet in France with 51.5% of penetration rate
(Source: Nielsen/Net Ratings Panel domicile et travail January 2003) and the third in Europe with a network of
approximately 1000 sites (Source: Hi-Media and Le Journal du Net - December 2002 - « Les principales régies externes françaises »)
representing for the Group overall a monthly traffic of 2.2 billion ad impressions. Advertising network
activity is implemented in Sweden, Germany, Belgium, France and Portugal.
Direct marketing
Hi-Media is one of the most important players in direct sector. Hi-Media Direct offers more than 15
million e-mail addresses and/or mail addresses in brokerage. It also has more than 4 millions of mail
addresses in merchandising management. This activity has been developed mainly in France and in
Belgium. (Source Hi-Media)
E-payments and micro-payments
Through its Mediapss platform, Hi-Media has the most comprehensive and the most flexible offer in the
field of e-payments. The Company works with the most prestigious French Internet sites; the Company
delivers them its solutions in White Brand.
With its leader position, Hi-Media attracts the sites publishers who enjoy, as soon as they are integrated in
the network the following abilities:
• advertisement income brought by one of the most important European media sales house
• revenues from e-mail and mail addresses leasing
• the option to generate e-business by using the Mediapass platform.
3.1.4 Functional Organisation chart
Direction Générale
Régie publicitaire
Service Commercial
Service Marketing et Etude
Trafic management
Design
Marketing Direct
Micro-paiement
Service commercial
Service marketing
Service technique
Service commercial
Service marketing
Service technique
Direction Administrative et Financière
Contrôle de gestion
Comptabilité
Relance
Services généraux
Service juridique
3.1.5 Legal structure of the Group
Hi-Media
Hi-Media Belgium
Détenue à 100%
Hi-Media Scandinavia
Détenue à 100%
Hi-Media Portugal
Détenue à 49,9%
Hi-Media Deutschland
Détenue à 100%
Hi-Pi
Détenue à 100%
Europermission
Détenue à 50%
Mobiquid
Détenue à 100%
3.1.6 Significant subsidiaries
Hi-Media's significant subsidiaries carry on advertising activities.
For financial year 2004, these subsidiaries' key figures are the following:
Germany
Belgium
Sweden
Turnover
2 575
671
2041
Margin rate
48.1%
41.3%
31.1%
Operating results
156
-56
138
Net income
149
-59
135
Mobiquid
687
64%
-408
-556
21 These subsidiaries have no strategic economic assets.
3.1.7 Significant subsidiary recently acquired
None.
3.1.8 Sales' breakdown per main activity sector
Selling advertising space remains Hi-Media's most prevailing activity.
In 2004, it represents around 82% of all the operations. It can be space by cost-per-thousand selling,
affiliation agreements (click, customers mailing or prospects) or sponsoring or special operations with
new ad formats.
Selling for cost-per-thousand displays of the advertising is still prevailing especially in all countries except
Germany and Belgium where advertising space is more often sold on the basis of the number of clicks
generated on the advertising.
Direct marketing has been developed only in France and in Belgium. It represents around 13% of the
consolidated sales figure. The major part of this field's activity comes from opt-in e-mail addresses
leasing.
Micro-payment and mobile marketing, which are Mobiquid's businesses, represented around 5% of 2004
turnover.
Operating result and sales figures by business and geographical area breakdown as follows:
K€.
Advertising spaces selling
Direct Marketing
Micro-Payment
Total
Sales figures
Operating result
France
6 300
1 858
665
Abroad
5 441
77
22
France
323
(2)
(359)
Abroad
290
(49)
(2)
8 823
5 540
(38)
239
3.1.9 The Group's customer base
The first, the first five, the first ten customers represent respectively 6.8%, 18.2% and 25 % of the
consolidated sales figure.
The advertisers' average term of payment is 2 months and 21 days.
Among the ten most important customers concerning 2003 turnover, 5 of them advertised through HiMedia in 2004.
3.1.10 Hi-Media's working markets
3.1.10.1 On-line advertising markets
3.1.10.1.1 Size
Advertising market
After two years (2001 and 2002) of recession due to the burst of the technological bubble, a convalescent
year in 2003, 2004 witnesses the return to growth with a +6.9% increase during that year.(Source: ZenithOptimedia,
December 2004, raw data at current prices).
In 2004, the American advertising market, that is the first global advertising market (45% of global
advertising expenditures) has risen by 6% thanks to the economical growth recovering (investments
increasing, the fall in unemployment) and thanks to some circumstances such as the Olympic Games, the
presidential election, etc.
The effect of the American market strongly impacted Europe. The European market recorded a 5.4%
increase in 2004, for an amount of € 94.3 billion (Source: ZenithOptimedia, December 2003, raw data at current prices).
Advertising expenses restart in 2004 restart. The advertising market should continue to increase
during the next years with growth projection up to 5% in 2005 and 5.8% in 2006. (Source: ZenithOptimedia,
December 2004, raw data at current prices, global market).
Online advertising market
Online advertising market is definitively came out of economic crisis and continues to increase for the
second year in 2004.
Lately, online advertising defined its role in the global le mix marketing. Internet is from now on well
equipped with purchasing and measuring tools as other major media. Internet made its own space in this
competitive market.
After two years of recession, the American online advertising market continues to grow. After a 21.6%
increase in 2003, this market had a 30% increase in 2004 (Source: eMarketer, December 2003). Online advertising
market recorded a better growth than global advertising market (+6%) (Source: ZenithOptimedia, December2004, raw data at
current prices). Online advertising now represents 4.6% of multimedia aggregate, and is now more important
than billposting and professional outlet (Source : Adbarometer, December 2004).
American online advertising market should continue to grow at least the next three years. The studies
made by the institute eMarketer forecasts an annual growth made up by two figures until 2007, at least.
(Source: eMarketer, February 2005).
Trends in US online advertising expenditure 1998-2007
(in billion of $)
20
15,6
15
13,4
11,5
9,5
10
8,2
7,1
- 12%
4,6
5
7,3
+30%
6,0
+21,6%
- 11,5%
1,9
0
1998
1999
2000
2001
2002
2003
2004
2005e
2006e
2007e
Sources: IAB/PwC; eMarketer for data from 2004 to 2007
The European online advertising market follows the trend of the American market with a 30% growth in
2003, amounting to € 2.1 billion (Source: PwC/ Zenith Optimedia, January 2005). According to PwC, France has the most
important online advertising incomes, just after UK. Germany, Italy, Spain and Netherlands follow. This
growth rate should remain stable: the European online advertising market should record an average
annual growth of 10% during the next four years reaching more than 3.8 billion euros in 2008 (Source : PwC/ Zenith
Optimedia,January 2005).
Trends in online advertising expenditure within Europe, 1999-2008
(in millions of euros)
3 800
4000
3000
2700
+28%
+30%
2000
2100
1617
967
1000
1062
1186
0
2000
2001
2002
2003
2004
2005e
2008e
Source: Jupiter Research
The growth of the online advertising market can be explained by different factors. Among them, there is
the increase of audience ratings. There is also the greater trust from advertisers. These growth factors are
also the vehicles of its development for the future years.
3.1.10.1.2 Growth factors
Measuring tools development
The main media agencies are aware of Internet's efficiency, so they developed mediaplanning tools
combining Internet with traditional media.
These tools have many advantages. The main one is to position Internet as a media in its own right
including it in a media plan in the same capacity as the traditional media. With these tools, advertising
networks and media agencies offer more openness to advertisers.
This new credibility on Internet result in advertisers investing more and in new families arriving - volume
retailing, beauty care, food).
The Internet expansion in Europe
The European penetration rate grows constantly: in 2004, 39% of European households have access to
Internet in 2004, compared to 34% in 2003 (Source: European Commission, September 2004).
Henceforth, Europe has 100 million web users at home, i.e. a 12% increase in one year (Source: Nielsen/NetRatings
home panel, October 2004).
The broadband boom
During 2004 broadband Internet increased. Web users having broadband connections have increased by
+60% between November 2003 and October 2004, passing from 34.1 million to 54.5 million. From now
on more than the half of European web users has a broadband connection, compared to less than one third
in 2003(Source: Nielsen/NetRatings home panel, October2004).
The benefits of broadband are numerous.
It supports Internet using with a using time twice longer and more frequent, especially the use of ecommerce, music and video download, due to the speed of the connection.
Sound and animation in adverts followed broadband increase. In 2004, rich media* was adopted. This
format allows more attractive and more interactive creations, therefore, Internet helps the trademarks to
have a better reputation. Several surveys have been carried out to demonstrate this advertising format
efficiency. For instance, the survey carried out by Carat in August 2004 concluded that rich media is twice
as efficient as the standard format to remember advertising campaigns.
*rich media: refers to all the new technologies that can include multimedia contents (video, sound, animation), in advertising among others.
At the same time as advertising formats become more creative, broadband increase is accompanied by ecommerce development. Sales on line continued to grow in Europe during 2004, improved by 44% at the
end of the year (Source: Forrester Research, December 2004).
In France, one of the main European markets, results resulting from sales on line continue to improve.
After a 61% growth in 2002, 69% in 2003, e-commerce grew by 53% in 2004, that represents 3% of nonfood retail sales in France, and almost the half of direct sales (Source: FEVAD, January 2005).
3.1.10.1.3 Breakdown of demand
In 2003, online advertising market recovered, which is confirmed 2004.
In France, the third largest online advertising market in Europe, categories of advertisers using the
medium became extremely diverse and are characterized by:
- a distribution more united among sectors. Some marginal sectors in 2003, increased in 2004: advertising
investments are seventeen times higher in the "Pharmacy-Medicine" sector, seven times higher in the
"Domestic Appliances" sector, six times higher in the "Furnishing, interior designing" sector, four times
higher in the "Beauty Care" sector, and twice higher in the "Food" sector…
- a portfolio of advertisers that are more and more active: 1228 advertisers communicated on Internet in
2004, i.e. 177 more than in 2003. There is also a more loyal presence with a loyalty rate standing at 55%
in 2004 as opposed to 51% in 2003.
Despite this diversification and Internet being more and more attractive, some industries remain overinvestors. Like in 2003, the five main advertising industries in 2004 are Telecommunications (26.4% of
market share, Tourism (17.3), Services (banks, landing agencies, ...) (12.5%), Retailing (6.9%), Transport
with car manufacturers mainly (6.1%) and Computing (5.9%). (Source: IAB/TNS Media Intelligence, December 2004)
3.1.10.1.4 Breakdown of supply
The supply of online advertising market can be segmented into three main categories:
-
selling advertising space at cost-per-thousand displays of the advertising;
-
fee-charging tagging or "promotional links" based on the following principle: the advertiser
undertakes to pay its advertising display on a result page on a cost-by-click basis. These promotional
links are coupled with key words. They are displayed in the results of the important portals' search
engines and they are sold by auction on a cost-by-click basis. This commercial mode has increased
since the second half of 2002. Three companies share this online promotion new market: Espotting
Media, Google and Overture. Advertisers having a direct commercial goal are the most active on
contextual advertising, i.e. tourism sector, insurance-bank sector, telecom, car renting, or e-commerce
pure-players;
-
Implementing affiliation or remuneration agreements. Performance can be measured by the number of
clicks, of visits generated by the partners, of actual sales on a commercial site, of forms filled or by
other ways set forth in the contract.
The market is still dominated by the cost-per-thousand sale of advertising space, which – and should
continue to - represent in the medium term almost all of advertising revenue. However, the cost-perthousand sales revenue proportion is set to shrink in favor, tagging and affiliation. due to the of contextual
advertising market increasing.
3.1.10.1.5 Legal and statutory environment
Hi-Media's business activities are likely to be affected by the laws and regulations governing advertising
content (I), sale of advertising space (II) and protection of personal data (III).
Statutory rules and regulations governing advertising contents
Rules governing advertising content cover the following aspects:
False or misleading advertising;
Comparative advertising;
Advertising of certain products and services (e.g. financial services, tobacco, alcoholic beverages,
drugs);
Legislation governing use of French language within advertising;
Third-party rights (such as copyrights, actors' entertainers' and models' rights, image rights and
privacy rights);
Unfair competition/parasitism;
Legislation governing public order, human rights/dignity and public decency;
Slander and libel.
Act governing sale of advertising space (Sapin's law)
The sale of advertising space is governed by French Law, Article 93-122 of January 29, 1993, which
relates to the prevention of corruption and to full disclosure in matters affecting the economy and public
policy. This law allows the sale of advertising space by a middleman on behalf of an advertiser and is
applicable only indirectly to advertising sales companies, who are considered as space brokers. Under the
terms of this law, regulations in force for space brokers also apply to advertising sales companies where
relevant.
Broadly speaking, this law compels space brokers (media or advertising sales companies) to directly
inform the advertiser of the terms and conditions under which the space has been purchased. Furthermore,
the space broker must send any invoice directly to the advertiser, clearly stipulating any discount and
preferential tariff being given by the broker.
Act governing the protection of personal data
French law, Article 78-17 of January 6, 1978, governing information technology, storage of data and civil
liberties, stipulates any intention to collect, store and handle data by the use of information technology
must be officially made known to the CNIL (Commission National de l'Informatique et des Libertés) via a
prior declaration.
Furthermore, similar legislation is in place on a European level. The directive 95/46/CE promulgated on
October 24, 1995 by the European Parliament and Council, governs the protection of individuals with
respect to the handling of personal data and its distribution. The directive 2000/31/CE promulgated on
June 8, 2000, governs e-commerce.
In France, a bill for building confidence in digital economy (hereinafter referred to LEN) was submitted
and passed by the French Cabinet on January 15, 2003. This bill replaces the LSI (Loi sur la Société de
l'Information1) of Mr. Jospin's government. This law aims to ensure the adaptation of the rules in force to
the digital economy and to transpose the directive of June 8, 2000 concerning e-commerce.
The provisions of this bill are organized around three main targets:
- Define communication freedom conditions via digital networks;
- Define e-commerce rules in order to strengthen consumers’ protective mechanism;
- Improve security in digital economy.
On January 8, 2004, the members of the Assemblée Nationale passed the bill for building confidence in
digital economy at second reading. The original of the act must be examined now by the senators.
3.1.10.1.6 Market players
Although some advertisers choose to purchase their advertising space directly from online advertising
agencies, the market revolves mainly around three types of intermediaries who act between the advertiser
and the form of media used, viz. advertising agencies, advertising space brokers and advertising
management companies.
Advertising agencies
Advertisers call on advertising agencies to implement their communications strategy. Agencies are given a
free rein to create advertisements and to choose the way in which media campaigns are to be run (choice
of media: TV, radio, press, Internet, cinema). Since 1999, the trend has developed such an extent that most
agencies now have a multimedia department that designs and gives advice on purchasing Web advertising
space. Web agencies, whose line of business is exclusively within the Internet domain, have sprung up
alongside the hardcore of existing communications groups (Omnicom, WPP, Interpublic, Publicis, Aegis
Media, etc.).
Whether they have their origins in multimedia communications groups, or whether they are autonomous
newcomers, all agencies must, in order to carry out both advertising purchase activities and design
advertising campaigns, be separate legal entities with different account ledgers. This measure was
introduced for tax transparency reasons. The two companies may, however, belong to the same group.
This in effect means that since the passing of Sapin's law in 1993, advertisers using agencies have been
obliged to operate on two different budgets; one for designing and running advertising campaigns and
another earmarked for purchasing advertising space. This has largely contributes to the emergence of
space brokers.
The main agencies operating in today's European market are those that belong to the OMD group,
Interpublic, Publicis and Zénith Media.
Advertising space brokers
Advertising space brokers aim to manage their clients' advertising budgets with the maximum of
transparency and efficiency. They are in direct contact with their clients. As they deal with a large number
of budgets, they have significant purchasing power, which allows them to obtain better deals.
They are paid both for saving clients money at the end of purchasing negotiations, as well as for
advertising them on how to get the most out of their media plans. Advertising space brokers must
therefore have expert background knowledge in terms of what the various media forms can offer, whilst at
the same time remaining transparent in their recommendations made to advertisers.
The European advertising space broker market is dominated by 10 major players: Carat, Mediacom,
OMD, Mediaedge:cia, ZenithOptimédia, Mindshare, MPG, Initiative ww, Starcom MediaVest and
Universal McCann.
Advertising management companies
Advertising management companies are in charge of marketing media space under contract to advertisers,
advertising space brokers. Advertising space brokers favor relationships with management companies as
they can offer wider panoply of media. In effect, management companies act as 'one-stop shop',
simplifying the purchaser's task by sending him/her tailor-made information on various types of media
available. Furthermore, they can offer substantial deals to purchasers for larger tenders. The 1993 Law
demands that management companies publish their tariffs, terms and conditions. They must also mention
any transaction that might arise from within the framework of general terms and conditions. The purpose
of this is to ensure a level playing field for all operators on the market.
3.1.10.1.7 Competition
For both advertising management companies and Internet portals markets 2001, 2002 and 2003 were
streamlining years. 2004 strengthened the existing players.
Local players
They almost all disappeared with a few exceptions like Beweb in Belgium or Numeriland in France.
American players
All distanced themselves from the European market in order to focus on their home market.
- Flycast – Engage: In Europe, this company gave up its advertising management activities during
summer 2001 (Source: Engage - quarterly Report 14 December 2001). Technological solutions selling and edition were
also abandoned. The company focused on American market;
- 24/7 Media wound down its European subsidiary, also during summer 2001 (Source: Journal du Net – 16 August
2001 – "24/7 Media retreats to the North American market"); then, 24/7 came back on European market after its
consolidation with the European company Real Media that kept its office in Europe. Most of their activity
is focused on selling AdStream advertising space management and technological solutions.
- DoubleClick sold its European ad management operations to the German company Adlink in November
2001, in order to focus on selling their technological solutions within Europe (Source: Journal du Net – 14 November
2001 – "AdLink opens DoubleClick Media Europe’s client portfolio").
European players
Apart from Hi-Media, 3 European players remain:
- Adlink: at the end of 2001, this German company purchased the European section of the American
concern DoubleClick. In so doing, it consolidated its leader position. Following this acquisition, Adlink
considerably increased its business volume with €39.2 million in 2002.
In a more favorable advertising market, Adlink continues to grow with a turnover increasing by 21% in
2003 and by 7.4% during the first nine months 2004, with a volume of € 32.99 million(Source: press release -
Adlink dated November 8, 2004)
- Adpepper: this German ad management company restructured its line of business in 2001, in order to
lessen the damage caused by the contraction of its business volume: they closed down their American
subsidiary, acquired a CDM company (client relations management) in Denmark in November 2001.
(Source: Press release – AdPepper dated November 16, 2001). This reorganization continued in 2002, and the company
acquired a minority interest in a company that selling online advertising space management technological
solutions. In doing so Adpepper's sales turnover has begun to increase again, particularly with the
purchase of Click it, an Italian advertising management company in October 2003 (Source: Press release dated
October 16, 2003).
In 2004, Adpepper benefited from the market recovering, like its competitors. Adpepper's turnover for the
first three quarters was about € 15.1 millions (Source: Press release - Adpepper dated November 4, 2004).
- IP: the subsidiary of the RTL Group has developed its Internet activities outside the Group in countries
where it has sites: Germany, Benelux, France (Source: Press release - RTL Group dated October 16, 2000)
Integrated ad management companies
Several editors have chosen to integrate ad management into their range of services. Among them, the
main sites are as follows:
Name
Wanadoo..........................................
Yahoo ..............................................
Lycos ............................................…
AOL.............................................….
Tiscali ...................................………
Boursorama……………………….
Auféminin... ………………………..
Line of Business
Internet Service Provider and Portal
Search Engine, Portal
Portal, community
Internet Service Provider and portal
Free Internet Service Provider and portal
Vertical Portal about Finance
Vertical Portal about female issues
Source: quoted companies' websites
Affiliation networks
2001 witnessed the emergence of companies who aggregate small websites that cannot be considered as
media sites within a network on which they sell affiliation agreements. Pay back depends on the number
of clicks, prospects and of the number of clients that are ultimately acquired.
Their client base is mainly composed of e-commerce sites.
The key European players are:
- Value Click, an American company quoted on the Nasdaq Stock Market, with a market presence in
France, Germany, and UK (source: Value Click's web site);
- Advertising.com, an American company that followed the example of Value Click and implemented in
Europe (France, UK, Germany, Scandinavia and Spain). It was recently acquired by AOL (Source: Agefi website
- press release dated June 25, 2004).
- Trade Doubler, a Swedish company with a market covering 16 European countries (Source: Trade Doubler's
website).
- Cible Click, a French company that is affiliation program is a leader in France.
Companies specialized in contextual advertising
In 2003, a sales model of advertising space per performance rapidly emerged in the form of contextual
advertising. In 2004, it was the real take-off of this market built to the same model as advertising space
selling. It works nearly like affiliation networks. Players specialized in contextual advertising bring to the
advertisers an optimized targeting of their messages. They place these messages next to the search results
asked by the web surfers on web crawlers or directories on topics related to the said advertisers
businesses.
The American company Google speeded up its development following this advertising spaces selling
model. The company Overture, initially publisher of the web crawler Goto.com, grew importantly and was
purchased by Yahoo, one of its first costumers, in July 2003. (Source: Yahoo ! press release July14, 2003). Espotting,
the British company implemented in 9 European countries, established itself in United-States mid-2004,
after merging with the company FindWhat (Source: press release dated July 1st, 2004 on Espotting.fr website)
In Europe, these players are the leaders on a market that follows the trend of the American market, where
contextual advertising buying strongly increased in one year (+96.9) representing 40% of the advertising
market on Internet. (Source: IAB/PwC, September 2004).
For advertisers, the emergence of the contextual advertising market allowed to clarify the logic of on-line
advertising spaces buying:
• Firstly, buying media spaces to advertising management company in order to promote a brand and an
image as classical media;
• Secondly, buying promotional spaces to affiliation networks or to contextual advertising specialists to
stimulate on-line selling as direct marketing operations and trade marketing in volume retailing.
3.1.10.1.8 Hi-Media: its competitive edge
A powerful and diversified European network
Hi-Media offers a global network that is based on four main areas:
- Breadth in the ability to reach all types of audiences, and making this available to advertisers;
- Capitalization on the sites that have been Hi-Media's partners since several years;
- Expertise in the field of addressing and targeting (banners, e-mails, etc);
- Know-how in managing and measuring the reactions of Internet users to advertisements.
Thanks to the sheer size of its network, Hi-Media can offer a mass audience: Hi-Media network reaches
more than 51.5% of web users in France in January 2005 (source: Nielsen Netratings), i.e. 10 millions individuals.
Its European coverage rate allows Hi-Media to be the single European office for some advertisers.
Hi-Media can satisfy an advertiser who wishes to reach a large audience Hi-Media is able to satisfy an
advertiser. But thanks to all the different sites of its network, Hi-Media will meet more specific and
targeted demands. The larger the network is, with a multitude of different sites, the better Hi-Media is able
to respond to a whole range of different targeting requests from advertisers.
Furthermore, the Hi-Media network takes care of investments in technology and human resources for all
its affiliate sites, which, individually, they would not be able to afford on their own. Expertise developed
by Hi-Media over the years in terms of building up target audience and data bases allows advertisers to
optimize their return on investment, whether it be brand image or direct marketing campaigns.
Because of its diversity, the Hi-Media's advertising network offers its advertisers a 'one-stop shop' for all
their advertising needs. In so doing, it fulfils one of the most basic needs of online advertising, a market
where there is stiff competition.
3.1.10.2 Direct marketing market
3.1.10.2.1 Market Analysis
Online direct marketing market
In a favorable advertising background, e-mail marketing developed strongly and established itself as a
new channel of direct marketing and relational marketing.
In France, this new media's importance and efficiency resulted in the implementation of various
barometers producing reference documents for advertisers and media agencies, like any other media:
• "e-mailing barometer" created in 2003 by TNS Media Intelligence and the SNCD (Syndicat National
de la Communication Directe) which aims to supply the size and the weight of the recruitment emailing market (prospecting).
• « BeezMooVeille » of Ibase, launched in 2004, aims to quantify the operations of prospecting emailing.
• The quarterly barometer created Emailing Solution, launched end 2004, aims to supply quarterly
barometer evaluating the e-mailing campaigns performances industry by industry.
E-mail marketing market is strongly increasing.
In France, advertising investments by recruitment (prospecting) grew by 58% in 2004, amounting to €18.3
million
Trends of advertising expenditure in recruitment e-mailing in France
(in millions of euros) (Source: TNS Media Intelligence, 2004)
18,3
20
15
12,0
10
5
0
2003
2004
An increasing number of operations* and of advertisers, with 2 594 operations made by 586 unique
advertisers made also the e-mailing market more attractive (Source: BeezMooVeille, 2004). However, there was a
little drop during the third quarter due to the fact that summer holidays are scarcely propitious to
advertising investments.
*an "opération" is when an advertiser sends a prospecting e-mailing using all or part of a filefor one receipt date of one single message.
Quarterly Evolution of transactions in canvassing e-mailing and of advertisers moved into this market during 2004 in
France (Source: BeezMooVeille, 2004)
Nombre d'opérations
Nombre d'annonceurs
821
696
534
543
381
364
187
1er trimestre
2004
265
2ème trimestre 3ème trimestre 4ème trimestre
2004
2004
2004
3.1.10.2.2 Breakdown of demand
Observing e-mail marketing use shows that the advertisers who already use this technique empower their
practices and the industry that were non-users get more and more responsive.
Advertisers become aware of e-mailing power. This marketing tool has several parameters: it is a
promotion, recruitment, consumer loyalty and selling assistance tool.
Due to its youth, the e-mailing market is used by a lot of advertisers that continue to test it by investing
small amounts. Today the e-mailing market is still concentrated although most of advertiser sectors are
present.
In France, one of the main European advertising market, e-mailing convinced new advertisers since the
number of advertisers increased by 14% in 2004 (Source : TNS Media Intelligence 2004).
However, the investments remain limited for five advertisers families concentrate 76% of the investments
devotes to marketing e-mailing: services (24.5% of investments) thanks to bank organizations, telecoms
(19.3%), retailing (14%), tourist industry (10.9%) and entertainment (7.8%).
The 22 other advertisers families of this market share the remaining 24%. (Source: TNS Media Intelligence, 2004)
3.1.10.2.3 Breakdown of supply
E-mailing market falls into three players’ categories:
Brokers, who are not the owners but the broadcasters of the data base they sale. That is why they
have the opportunity of making many recommendations in the media planning. Among the main market
players, there are Address-Company and Come&Stay.
-
The data base owners like Beweb that publishes Milkado and Bananalotto.
Some companies are brokers and data base owners in the same time like Ibase, DataProfile,
Claritas Interactive with its permission marketing program: Astuclic, and Wanadoo Data with "Click &
Opt".
All these companies offer different marketing modes, they segment e-mail marketing market in two
categories of offers:
- companies based on lead marketing like Adplay, Beweb or Buongiorno Vitaminic.
The different ways to measure performance are the following: number of clicks, number of visits
generated by partners, sales on the e-commerce site, number of forms that are filled out or any other base
provided by the agreement.
- companies based on cost-per-thousand rented e-mail addresses marketing (CPM) like Hi-Media,
Wanadoo Data, Directinet or Consodata.
3.1.10.2.4 Legal and statutory environment
prior declaration.
• Improve security in digital economy.
3.1.10.2.5 Growth factors
Better defined regulations
Expected for a long time by all the French Internet players, the bill for building confidence in digital
economy (hereinafter referred to LCEN) was one of the decisive texts of this year 2004. Passed on June
21, 2004, this LCEN is in force since December 21, 2004. Prospecting with digital media is now
controlled by the law, the will allow to fight against spamming abuse and to reassure advertisers.
1) The Internet expansion in Europe
E-mail is the main reason to use Internet. It is the most popular activity on internet. The web surfers use email increasingly and they are more and more to have several e-mail addresses. The web users are more
and more used to e-mailing and most of them are satisfied of promotional e-mails they receive.
Growth prospects of this market are high-potential insofar as advertisers and service providers control
broadcasting and effective regulations.
To classify the competitors, advertisers approach can be adopted because they can turn to two types of
service providers:
Off-line brokers with an on-line division
Off-line database specialists developed their offer with on-line database advents. The main players are
Claritas, Consodata (Axciom group) and Ibase.
On-line database owners and brokers with an off-line division
When off-line appeared on on-line market, the on-line brokers quickly implemented an off-line division.
Among the major players on this market there are Wanadoo Data, Beweb and Hi-Media but also all
performance paying database owners (see 3.1.7.3). Other companies as soon as their creation, positioned
on both supports (off-line and on-line) with on-line predominating as Date-Profile.
A very few companies positioned on on-line direct marketing only, like Come&Stay. In short term, they
will all have off-line activities because the files commercially given by the publishers are more and more
often e-mail and mail files.
Unlike on-line advertising market involving lots of in-house sales force like Yahoo, MSN, Lycos and
Tiscali, there are few in-house sales force in on-line marketing. This market works mainly with addresses
brokerage system (e-mail and mail). In some case like very sharp targeting, the broker's offer can not meet
the client's demand (advertiser or media agency). In this case, the broker enquires another one, who he
pays on a commission basis, if the said broker proposes complementary files in order to offer an overall
package to its client.
During 2001-2002, there has been an important increase of competing companies on this market but it
stabilized these last two years. The companies mentioned in the previous chapter are Hi-Media's
competitors, and sometimes its partners in some cases of key-accounts addresses orders. A broker who
cannot provide all the requested addresses will turn to its competitor addresses brokerage and place the
appropriate order.
The direct marketing market is segmented into two categories: mail addresses traditional brokers and new
ones that are specialized in e-mail addresses brokerage.
- Mail addresses brokers companies generally involve limited staff with sales employees. They don't
deliver more than media planning consulting and files renting. They are commissioned or trade agreement
beneficiaries for the aforementioned services.
It can be independent warehousing companies created by the commercial division of the company like
Geronimo direct, or companies that have more marketing and commercial organizations like Mediaprysm,
Consodata's subsidiary, or Groupadress, Eurodirect marketing's subsidiary, Ibase etc. These companies
developed these last three years, online divisions that offer database brokerage services of e-mail
addresses. They offer these services delivery to the advertisers who have recourse to their services for mail
addresses media planning. These companies are main Hi-Media's competitors but also its partners because
they can ask Hi-Media to supply their clients with e-mail addresses files.
- E-mail addresses brokers developed in two times: in 2000 brokers and sites specialized in addresses
collecting (lotteries, shopping clubs …). Among them, some recently switched to addresses brokerage
from their own collection sites but also from other places (outer publishers …). These brokers are HiMedia's rivals towards the advertisers, (but less than the traditional brokers) and especially towards the
basic publishers looking for brokers to merchandise their addresses.
This sector began to be structured and gathered during the end of 2002 and the beginning of 2003, when
Beweb bought out Bananalotto lottery database, and when Directnet bought out Luckyvillage lottery
database. These two companies are databases publishers themselves, and they try to develop their offer.
3.1.10.2.8 Hi-Media: its competitive edge
Hi-Media has three different kinds of competitive edges on direct marketing market:
- Synergies with the advertising network line of business that allows Hi-Media to be upstream the digital
media publishers when the marketable databases are created. The cooperation between a publisher and an
advertising network make easier the contact and the negotiation of a new cooperation agreement
concerning database brokerage. Some blanket contracts provide both deliveries.
- European synergies in order to be more competitive in Europe thanks to the setting –up of the company
Europermission in partnership with I-Network, first-advertising management company and first e-mail
broker in Spain.
- An offer that combines on line and off line direct marketing. Products matching mail and e-mail
addresses can indeed increase the efficiency of an advertiser's direct marketing campaign. Moreover,
advertisers renting mail addresses are much more than advertisers using e-mail addresses, commercial
synergies are obvious between these two types of offers: make new advertisers including direct marketing
campaigns in their media planning.
However, competition is very stiff in this sector and the concentration of players should continue.
3.1.10.3 Micropayments and electronic payments
3.1.10.3.1 Market analysis
What is micropayment on Internet?
Micropayment market or electronic payment market where Hi-Media acts represents all possibilities and
technologies that are at the disposal of digital media in order to allow them to make their audience pay to
access to a service, a content or a tangible asset. The economic pattern of this activity remains on incomes
splitting logical: Hi-Media offers free micropayments technological solutions in exchange for a turnover
commission generated by websites selling content, or services through these solutions.
The recent development of websites economic pattern shows that they are closer of the economic pattern
of minitel services providers, who charge the access to their services by means of a telephone
overcharge. This development began four years ago when national dailies (Le Monde, les Echos, in
France) charged the access to some of their Internet contents (archives, files). This trend quickened in
2001 and 2002 with the fall following the slowdown of the online advertisement market that provided
most of the revenues of digital content publishers. In United States and in Europe, there is a charge to
access the electronic publishing of national dailies on a fee basis or by subscription.
Progressively there has been a fee to access some free services that were financed by commercial
revenues:
• Increasing the e-mail box capacities on webmails (like Caramail and Hotmail) ;
• Sending interactive postcards by e-mail;
• Acceding to live information;
• Acceding to personal advices (stock exchange, horoscope, etc.)
• Acceding to certain video broadcasting of TV channels.
In the beginning, not charging any content was a rule on internet, once the subscription to the access
provider was paid. When the first fee charging appeared the only technical options available were the
payment means that already existed for classic media: credit card and audiotel. Paying by credit card was
already used by e-commerce sites and paying by calling overtaxed phone number like (08 99 XX XX XX)
was used only by audio phones services. On Internet, both solutions had disadvantages:
• There was no economic model for small amounts payment with credit card;
• The behavioral breakdown between using internet and dialing a stationary phone number. In addition,
before ADSL, using internet with only one excluded telephoning.
Technology improvement in telephone and Internet industry enable to avoid these obstacles:
•
The ADSL increase in households and broad band Internet in work places made audiotel much more
interesting for users: easy to use, and charge is carried out directly on the telephone bill.
•
In addition, overtaxed phone call can be done from a mobile phone via SMS (Short Message Service)
sending. Authorized level of overtax for a "text" message allow to adapt the services prices to charge.
Mobile phone equipment increase and terminals improvement offered to the public contributed to
burst SMS traffic. And overtaxed SMS are more and more used. SMS using should continue to grow
with the launching in spring 2005 of overcharged SMS reception (Mobile Terminated) and no more at
their sending (Mobile Originated)
•
France Télécom recently launched a technological innovation in micropayment industry, an electronic
payment system on Internet by few clicks, called WHA. A web surfer who wants to buy an item or a
service on a site that uses WHA can do it in a few seconds with his computer only and will be charged
for his purchases on his access provider bill.
•
Finally some companies (Paypal, Firstgate, Paynova) implemented electronic payment systems that
require opening an account towards the technological provider. He will have to credit this account or
to make it communicate with his current account before shopping on internet sites that use this
technology as payment solution. This solution is less "universal" than the WHA that is based on
Internet subscription that is the smallest common denominator of all web surfers.
Market size
According to countries, the four kinds of micropayment solutions aforementioned more or less developed.
Payment by credit card developed widely in 2002-2003 with e-commerce increasing. It is the best solution
for big amounts purchasing. Most of the banks developed interface solutions between e-shops and credit
card transactions management consortium. Solutions implemented by the Crédit Mutuel, the CIC or the
Caisse d’Epargne are the most used in France. They promote the sale of products or services for unit
prices of few euros minimum, insofar any transaction involves the debiting of a fixed commission besides
the fluctuating rate commission.
Payment by credit card is the most common in e-commerce industry in France and in Europe. This
industry is growing fast with a level of business activity of € 24 million for the third quarter 2003 in
France with more than 4.6 million of credit card transactions on Internet during the same period (source
journaldunet, October 23, 2003). However, it is not really micro-payment since the mounts are quite high:
during third quarter 2003, according to the same source, the average amount of a transaction was €113.
The importance of audiotel is specific to France, with publishers who offer varied contents as opposed to
most of other European countries that use overtax phone numbers for erotic services. Phone calls on
overtaxed numbers are numerous in France and it tends to grow again lately, due to these solutions
demand related to Internet.
The WHA is also specific to France since it is developed by France Telecom and only marketed in France
to date. AOL has just developed a similar solution that should be accessible all over Europe. Major
European access providers will probably develop micropayment technologies close to WHA.
Moreover, ending 2003, France Telecom decided to raise the maximum transaction ceiling that was
formerly amounting to € 15. This decision, assorted to Tiscali and Club Internet (two major access
providers in France) decisions to use France Telecom technology and to offer it to their subscribers helped
to develop WHA use.
Payment by SMS is less implemented in France than in the rest of Europe. France is one of the last
countries that authorized SMS overtax. There has been SMS premium for more than 4 years in
Scandinavia, Belgium, Spain, whereas in France it has been implemented for 24 months only. In addition,
only SMS received by subscribers are overtaxed SMS that are authorized, whereas in other European
countries, authorized overtaxed SMS are the ones received or sent by subscribers. Paying both sending
and receiving allows developing game or news applications that are simpler to present and promote. It
enables also to set higher unit prices for services, asking the user to send and receive an overtaxed
message to access to a service. Overtaxing SMS should be allowed beginning spring 2005.
SMS French market increased rapidly in 2003 with around 10 billion of SMS sent, from January to
November (source: journaldunet, January 8, 2004) as opposed to 3.2 billion during all the year 2001. Only 1.2% out
of these 10 billion were overtaxed, i.e. more than 121 million of SMS, representing a 60 million euros
market in 2003 (source: Association SMS Plus, January 2004). In 2004, the turnover generated by overtaxed SMS
increased by 92%, amounting to € 135 million.
Finally, the payment way that consists in opening virtual accounts is the slowest to develop. It is due to
several reasons: opening an account related to a traditional bank account takes a lot of time and can be
sometimes difficult for the user who prefers to use directly is credit card if he doesn't dread leaving his
bank account details on Internet, unlike lots of web users.
Electronic wallets developed in the beginning of the Internet area was fully justified by the reluctance of
web users towards systems that asked them their credit card number. However, the lack of ergonomics of
these systems limited the possible development of these solutions as Klebox by Kleline, a BNP-Paribas
subsidiary. In addition, the company that offers this type of device has to be sufficiently well-known and
trusted by users so that they don't fear that their money will not be taken away.
No major player succeeded to establish itself as a European leader. The launch in Europe of Paypal,
subsidiary of Ebay, the American commercial giant could change this situation on the European market in
2004. Other companies like Firstgate or Paynova try to emerge on this segment.
In 2003, the ACSEL (e-commerce sites association) estimate that the micro-payment represented a market
of 1.5 billion euros in France. It is a market size significantly smaller than the e-commerce market in
France that amounted to € 5 billion during the same year. (ACSEL Press Release dated February 11, 2003 and
article in expansion.com February 4, 2004).This latter grew by 53% in 2004 and it is likely that
micropayments market did the same.
There are on one hand companies that have developed their own technologies, and on the other hand,
companies that use licenses of these technologies to retail their service like Hi-Media does with Mobiquid.
Companies owning a technology
As for technologies linked with fix phone and Internet connections, France Telecom has developed and
provides solutions such as audiotel (over taxed phone numbers) and WHA. This services are proposed by
one single division of France Telecom, called « branche Internet et grand Public » within the ”Trafics et
Kiosques Data" branch. France Telecom offers to any player of the market to use theses two solutions.
Then a web site publisher has to set the IT infrastructure necessary for the use of interactive voice servers
(audiotel) or WHA servers, or, to ask retailers of such technologies, as Mediapass, to provide them with
ready to use ASP services built with France Telecom licenses.
Mobile phone operators also offer any content publisher that respect their deontology rules the possibility
to use premium SMS to charge their content to final users. "SMS+" association acts on behalf of services
and content providers towards mobile phone operators in order to develop potential uses of premium
SMS. In the same way than for stationary phone access, some companies are specialized in facilitating the
access to 5 digits short codes dedicated to payment of web services and content. Theses facilitators have
developed a technical platforms linked with any mobile phone operators across Europe; they provide
access to short codes and manage inward and outward SMS generated by service publishers. Main players
are companies such as Netsize, Mobile365.
Following the same patters, main banks such as Caisse d'Epargne and Credit Mutuel offer payments
solutions by credit cards that retailers or facilitators can then use for their products and services. IT
companies propose platform directly linked with banks to cope with electronic payments so that ecommerce web sites don't have to establish themselves a complicated and secured process of exchange of
data with banks. Atos Origin offers for instance a fully integrated service and deal through their platform
with important flows of electronic transactions. Hence, Atos Origin and Caisse D’Epargne are said to
represent the majority of credit card transactions in France (source: journaldunet, Thursday October 23, 2003).
As for electronic wallet systems or virtual bank accounts, early players have tried to enter the market.
Some attempts were made by banks such as BNP Paribas with Klebox but it has not always been a
success. Later on, other Banks like Caisse d'Epargne launched new products which widespread more
easily today like the Checkeys, electronic check system created with chequeboutique.com.
Apart from banks, some companies have created new payments patterns indirectly linked to bank accounts
(virtual accounts) and try to make them become a standard. The number of users of such systems depends
indeed on the number of web sites which propose the said systems to final users, so that the latter don't
have to create a new virtual account on a new electronic payment system each time he changes of ecommerce web site or service provider. The German company Firstgate is quite successful on this
segment today in Germany and France. The Swedish company, Paynova, tries to follow the same way.
Overtaxed phone calls payment (stationary or mobile phones)
Hi-Media's competitors on this market are not technologies possessors (operators, interface solutions with
the bank account…) who sell their solutions directly or indirectly but don't position theirselves as
competitors of companies like Hi-Media.
But there are other companies that developed micro-payment platforms with several technical solutions
released by a third party and offer them to digital media publishers.
Some of these companies are in fact audiotel or SMS services providers who have technical platforms for
their own services and try to make them the most profitable by offering them to others.
Main competitors of this type are the following solutions:
• « Allopass » published by Frogg Planete and Eurovox. The latter has been audiotel and minitel
services specialist for more than 10 years. The website allopass.com proposes to publishers, micropayment solutions via audiotel, overtaxed SMS and credit card in France and Europe. It recorded
more than 1 million transactions per month (source www.allopass.com).
•
« Magikpass » published by 123 Multimédia French leader of mobile phone customization services
(logos, ringings, etc…). 123 Multimédia's turnover was above 90 million euros in 2002. These
services are available through audiotel and SMS. Enjoying a very high business volume with telecom
operators, Magikpass offers the most advantageous income splitting for publishers.
•
Rentabiliweb: the functionality and the payment means provided by this platform is close to
Mediapass ones. But it doesn't offer the capacity to use e-wallet like Paypal or Paynova. Rentabiliweb
provides also advertising management, Rentabilipub. So the economical model of both of these
companies is almost the same, except that Hi-Media provides more and more direct marketing
services.
Prosodie is another player on this market. It is bigger since it is a network operator and a telecom
infrastructures host. It does not really position on micro-payments market but on interactive applications
publishing and hosting, like internet, vocal servers etc. It publishes Météo Consult and Geny Courses
(horse races). Prosodie's turnover was more than € 165 million in 2003.
Payment by virtual wallet linked to the bank account
In addition to solutions perfected by banks, the most active company in Europe is Firstgate. Its product,
Click&Buy, is distributed in France by its subsidiary. Firstgate has been classified by le Geste, association
of e-contents publishers, as a reference solution for micro-payment. Therefore, Firstgate is really well
positioned in the newspapers and magazines that charge their readers to consult their e-publishing. This
position is all the more strong as, for instance, any web users that opened a Firstgate account in order to
access the Expansion's e-publishing, can buy without applying another time, the e-publishing of La
Tribune.fr that uses the same technology.
The company Paynova, is listed on the Swedish stock market, expended in this sector of business from the
Scandinavian market. It has opened a subsidiary in France during 2004, Paynova has signed agreement
with local commercial sites in order to convince web users to use its e-wallet.
There are few major players in this sector in Europe, but the situation will evolve. Paypal, Ebay's
subsidiary intends to extend its European development in the coming months, it will then become a
powerful competitor. Succeeding in distributing this kind of technology consists in increasing as quickly
as possible trading or content publishing sites that use the said technology in order to make the web users
to use this solution as an almost universal payment way on internet. The power and the size of its
customer base allow Ebay to have in every market segments a large part of its customers who will choose
its payment solution. Because it is simpler and faster, web users won't open several virtual accounts on
internet and will chose the solution that will allow them to make the most purchases. Ebay is one of the
main commercial sites, incensement to choose its solution will be strong.
3.1.10.3.4 Hi-Media's competitive edges
E-payment market is wide and micropayment market is a small part of it. It has specificities that allow to
players like Hi-Media to position favorably.
The amount of transactions is little so company unit margin are. That's why it is important to federate a
high volume of transactions to make the micropayment solutions implementation profitable. Federating
players of small and medium size is Hi-Media's role as advertising management company and e-broker.
Hi-Media has indeed an outlet for its micro-payment solutions that are all the websites it has relationships
with through its network. It can be also webmasters' networks that are not commercially interesting on an
individually level, but are interesting as networks.
Hi-Media's position on Internet is decisive to commercially develop its micro-payments solution across
Europe.
In addition, Hi-Media relies on Mobiquid's technical infrastructures that were developed for music
recognition services. Relationships with telephone operators have been established for several years and
implementing Mediapass could be done in good conditions and rapidly thanks to this experience.
Finally, Mediapass is the only platform in France to offer websites publishers all the payment solutions
available on the market, from overtaxed phone numbers to credit card payment electronic payment
solutions like WHA.
All these elements are key elements that allow Médiapass to develop quickly in terms of marketing as well
as technology. However, competition can emerge on these sectors as for Rentabiliweb that created an offer
combining advertising management and micro-payment solutions providing, after identifying the
complementarities between its two businesses.
3.1.11 Hi-Media – sectors of activity:
3.1.11.1 Products and services
With a view to diversifying its sources of revenue and to making itself a 'one-stop-shot' for online
advertising and communication practitioners, the range of services and products offered by Hi-Media fall
into two categories and two developing activities:
3.1.11.1.1 Sale of ad space on Internet
Selling advertising space has always been Hi-Media's more traditional line of business, and involves the
marketing of all types of advertising space: traditional banner campaigns, content sponsoring, advertising
campaigns and events. These are possible thanks to new formats developed by Hi-Media.
At the present time, the Internet has an annual traffic, in France, of more than 1 billion monthly ad
impressions (January 2005) and about 2 billion monthly ad impressions on an international level (January
2005) (Source: Hi-Media and le Journal du Net - December 2002 "The main French external advertising management companies).
For the moment, banner and button-banner management is still Hi-Media's main activity. Hi-Media
invoices on cost-per-thousand ad impressions basis (hereinafter known as the CPT), which is variable
depending on the sites in the network and the target selection criteria agreed upon with the advertiser. The
same advertiser may wish to launch his/her campaign on one or several sites within Hi-Media network, so
as to benefit as much as possible from the Internet user profiles managed by the network. As well as
selling ad space, Hi-Media sends advertisements to selected sites and to Internet users targeted by the
advertiser. In fact, whenever users log on to a site within the network, they automatically call up Hi-Media
advertising servers that send a dedicated advertisement to each user's computer. Whilst an ad campaign is
underway, Internet technology also makes it possible to animate, customize and alter banner
advertisements sent to Web users, based on the target selection criteria defined by the advertiser
The online advertisement mailing system is explained in the diagram below:
Système d'adressage des messages publicitaires - online advertising mailing system
Internaute - Internet user
Site en régie - Hi-Media's network site
Plateforme de distribution des messages publicitaires –Adserver
Click – click
impression
Impression
The process involves eight steps:
The web user logs on to Hi-Media network site;
The network site starts to send the page selected by the user;
The network site contacts the Hi-Media ad server, using a marker found on the requested page;
The adserver reads the cookies sent by Hi-Media, if there are any present in the user's computer;
The server queries the database to determine which type of advertisement should be displayed to
the user, on basis of the data recovered by the cookies;
The server selects another advertisement from the database, if the one selected by the database has
already been sent to the user several times before;
-
The server sends the advertisement via the Web user's browser;
Once the ad has been sent and displayed on the page, it is counted as such in a statistical file that
can be read by the advertiser as early as the following day.
Owing to the size and diversity of its network, Hi-Media reaches a huge amount of Internet users.
Therefore, it also offers affiliation programs.
The Hi-Media network
In the five countries where it has subsidiaries, Hi-Media network consists of approximately 200 sites,
representing more than 2 billion ad impressions (hereinafter referred by the acronym PVA per month
(January 2005).
The commercial offer breaks down in each country as following:
a)
firstly, non-specialized portal offer with big audience:
•
•
•
•
Laposte.net, Meetic.fr in France
Abacho.de, Edencity.de in Germany
Svd.se, Icq.com in Sweden
Oninet.pt, Mail.pt and hotmail.com in Portugal
b)
secondly, several offers of thematic matching in order to complete the non-specialized offer.
This enables Hi-Media to provide its client a large coverage of each domestic market and to offer them an
affinity targeting on several thematic that Hi-Media leads. In so doing, Hi-media can handle problematic
as power and affinity.
In France, Hi-Media can provide a 51.1% coverage of the French Web users (source: Nielsen NetRatings,
and offers a thematic package that breaks down as follows:
Home and
Work Panel, January 2003)
Power Pack:
Meetic.fr
Laposte.net
Noos
Neuf.fr
NC Numéricable:
Ifrance.com
first French meeting site
La Poste's portal and webmail
first French broadband provider's portal
LDCom Group's access provider
French cable service provider's portal
one of the ten leading French portals
Thanks to this matching product, the advertisers are present on powerful and well-known sites. Therefore,
they can communicate their advertising message to a large audience in order to be more exposed and
strengthen their brand image.
Hi-Media Teenagers
Jeuxvideo.com:
Kochonland.com
Novaplanet .com
Mk2.com
Planete-series.com
main French site about video games
first game simulating pigs farming
the website of Nova magazine, underground culture site.
news and services portal of Mk2 group
first website dedicated to American series
This pack that is leader for person under 35 years old, brings more than 2 million people together *
interested in services and news concerning teenagers issues.
*(Source: Nielsen NetRatings, home and workplace panel, December 2003)
Hi-Media Women
Targeting on women by Laposte.net
Decofinder.com
first interior design WebCrawler
Cuisine.Tv
the website of the TV channel Cuisine TV
Plantesetjardins.com
the gardening leader on internet
Tiboo.com
reference site concerning childhood matter
Bebe-nounou.com
ad site for nannies and baby-sitters
This offer that counts 812 000* women older than 25 years, is the most powerful feminine offer on the
market targeting women.
*(Source: Nielsen NetRatings, home and work panel, December 2004)
Hi-Media B to B
Societe.com:
Annu.com
Lemoniteur-expert.com
Lagazettedescommunes.com
Fonctio.com
Kalifeye.com
Lalettre.com
Toutsurlacom.com
Indexa.fr
Destocknet.com
Guideinformatique.com
Groupe CyberArchi
Groupe Bâtir Technologies
Télémaque Edition
financial and legal information on French companies site
electronic directory of France
construction workers portal
territorial public services website
directory of competitive examination to join civil service
website dedicated to freelance workers
nomad technologies guide
mobile technologies portal
free professional directory
referral site BtoB of finished products lots to destocking
information guide of DSI
package of architecture, town planning and development, construction and
decoration portals
package of sites specialized in real estate, town planning, construction and
taxation
websites range designed for companies like a site dedicated to french
companies corporate balance sheet, another dedicated to companies
recoveries …
This offer aims to allow advertisers to communicate to firms’ decision makers. With almost 2 million
unique visitors, Hi-Media BtoB is leader for firms’ decision makers in France (Source: Nielsen NetRatings, home
and workplace panel, December 2003)
Hi-Media Finance:
Boursier.com:
Firstinvest.com
Journaldesfinances.fr
stock market information and consulting site
stock market consulting site
it is this economic newspapers website
Thanks to this matching product, advertisers can communicate on all these prestigious brands' sites
specialized in finance. They can target top-tier executives and managers.
Targeted advertisers are banks or major brands that wish to make financial communication on internet as
well as communicate their advertising message to executives with high purchasing power (like car
manufacturers, for example).
Hi-Media cyber-buyers
Buycentral.fr:
2xmoinscher.com:
Edengo.com
Rue-montgallet.com
Ebookers.fr
Matbe.com
Aucland.fr:
Trokers.net:
price comparison
second-hand goods trade platform
second programmed of building customer loyalty on internet
price comparison for telephony, IT and audio-video items
one of the first European tour operator
hardware buying guide
second French auction site
barter site
Thanks to this matching product, the advertisers can get hold of web users who shop on Internet. The
targeted advertisers are thence e-traders who can also propose their offer on Internet.
Hi-Media Cyber-buyers is the 6th offer in France in commercial websites grading and reaches 23% of
French cyber-buyers with a 2 472 000 unique visitors potential (Source: Nielsen NetRatings, home and work panel,
January 2005)
Hi-Media Sport
Sporever.fr
Sport24.com
football365
FFF.com
Basketfrance.com
Lesiterugby.com
Sportifsonline.com
Psg.fr
Fcna.fr
Gp2005.com
Zidane.fr
editorial site about sports
editorial site about sports
leader site about football
French Football Federation's site
French Basketball Federation's site
French Rugby Federation's site
portal that leads to sites of top athletes
official website of the Paris Saint Germain
official website of the FC Nantes Atlantique
official website of the season 2005 of Formula 1
official website of Zidane
Sports’ marketing is a much targeted segment where the offer's completeness is very important in order to
convince the usual advertisers to appear on Internet. This matching product should induce them to invest a
part of their communications budget in online media. Hi-Media Sport is attractive because it is the French
sports sites leader (Source: Nielsen NetRatings, home and workplace panel, December 2003)
In addition, Hi-Media markets the audience of smaller sites which thematic do not allow them to be in the
above mentioned thematic matching. These sites are the Hi-Media's "network" offer. The campaigns have
a general turnover or, on the contrary, a much targeted turnover concerning a very precise topic.
3.1.12.1.2 Direct Marketing: Hi-Media Direct
Some Hi-Medias network's sites offer their users to subscribe to a mailing list that allows them to be
notified by e-mail about the site and its services. In addition, some agree to receive shopper information.
In that case, Hi-Media uses the opt-in addresses of the partners’ sites members and proposes the
advertisers to send customized advertisements to this targeted audience.
Today, Hi-Media has, in exclusive or preferential brokerage, the following potential:
- 15 billion opt-in e-mail addresses
- 14 billion mail addresses
- 2 billion mobile phone numbers that can be also used with SMS.
(Source: Hi-Media)
In the outline of its promotional and direct marketing offer, "Hi-Media Direct", Hi-Media also proposes
factual solutions like quiz games, promotional websites creations, sampling or design support tools for
database. The said solutions aim to develop a website activity, to set up prospects databases, and to build
web users loyalty.
Furthermore, Hi-Media Direct implements a European e-mailing plan, "Europermission" that counted
more than 6 million opt-in addresses collected in Europe.
Direct marketing business represented 13% of the annual consolidated turnover for 20034(as opposed to
9% in 2003, 7% in 2002 and 6% in 2001). Besides France, Hi-Media has developed Hi-Media Direct
business line in Belgium for three years and in its other subsidiaries since 2004 (Portugal, Sweden,
Germany).
3.1.11.1.3 Micro-payment services selling
All Hi-Media's range of micro-payments offers is available on mediapass.fr.
Webmasters of private or professional sites can apply on internet and download a contract that will allow
them to use payment and invoicing solutions set up by Mobiquid: audiotel, overtaxed SMS, credit card,
WHA or e-wallet.
For standard applications without transactions volume guarantee, Hi-Media proposes to webmasters a
transferring chart of recorded transactions. This chart can change according to costs initially negotiated by
Hi-media with its partners as well as the turnover of each site. As a rough guide, the chart of February
2005 was the following:
Country
User's price
Transfer HT
Paypal
2.00€ per code
1.00€
3.00€ per code
1.76€
CB
0.75€ per code
0.60€
France WHA
0.75€ per code
0.26€
Switzerland SMS+
2chf
0.39€
CB
1.80€ per code
0.50€
Paypal
1.80€ per code
0.90€
6.00€ per code
3.76€
15.00€ per code
10.03€
France
1.35 € per call + 0.34 € per minute
1.00€
0,56 € per call
0.21€
0,34 € per minute
0.16€
France SMS+
3€ per code
1.16€
2€ per code
0.70€
1,5 € per code
0.58€
0.70€ per code
0.21€
France WHA
15.00€ per code
8.00€
6.00€ per code
3.00€
3€ per code
1.50€
1.80€ per code
0.90€
0.55€ per code
0.21€
CB
15.00€ per code
10.79€
6.00€ per code
3.00€
3.00€ per code
1.50€
2.00€ par code
1.00€
Belgium
6.20€ per call
3.00€
2.48 € per call
1.00€
1.12 € per minute
0.65€
Belgium SMS+
4.00€ per code
0.82€
3.00€ per code
0.62€
2.00€ per code
0.41€
1,50€ per code
0.31€
1.00€ per code
0.21€
Canada
7 CAD $ per call
0.90€
Germany
1.24 € per minute
0.65€
England
1.5 £ per minute
0.76€
Switzerland
4.23 chF per minute
1.75€
2.5 chF per minute
0.85€
Spain
1.09 € per minute
0.35€
Italy
1.57 € per call
0.57€
France WHA
5.00€ per code
2.50€
Once Mediapass contract passed, the webmaster can use a code to insert on his web pages. This code will
call mediapass as soon as a websurfer will want to purchase a service or content on the webmaster's site.
Hi-media provides webmasters who use mediapass with an access code that allow them to consult the net
results generated by the transactions recorded by mediapass. They can then invoice Hi-Media that
collected funds from operators or companies providing payment solutions and transfer them their income
after taking its management commission. This commission represents the margin Hi-Media has on this
activity. In case of credit card payment, Hi-Media does not raise funds. These funds go directly to the sites
using Mediapass and Hi-Media take a commission for the technical management and the payments
security. This commission can depend on the number of transactions regardless of their amounts.
In 2003, this activity aggregated to other Mobiquid's income lines represented around 5% of the
consolidated turnover, Mobiquid's activity accounted only from May 2003.
3.1.11.2 Growth strategy
3.1.11.2.1 Advertising management
In 2001 Hi-Media has managed to climb to second place in the European market Hi-Media significantly
reduced its business volume with closing several subsidiaries that were not profitable and focus in on
increasing its margins. A slight drop was recorded at the end of the first half year 2003, and then this
activity grew again at the end 2003.
Hi-media's strategy consisting in maintain a network of exclusive leader sites that are powerful and
organized around structured clear thematic in order to benefit from the advertising market recover, paid
off. 2004 was a year of strong increase for advertising management.
Recovering growth, the company will work to extend its network with welcoming new sites in order to
increase the coverage rate Hi-Media offers to advertisers on each European market.
3.1.11.2.2 Direct marketing
In 2001, Hi-Media developed its direct marketing activity under the name of Hi-Media Direct, extending
its range of products and services throughout all countries where it has subsidiaries, including Belgium.
In France, Hi-Media Direct manages more than fifteen millions opt-in addressee throughout all sites
within the Hi-Media network. It also offers the largest range of products and services on French market.
The dynamism of companies like Ibase or Directinet in France and more generally the emergence of new
national players make this market extremely competitive.
However, Hi-Media's market position is sound due to its close relationship built up with advertisers. And
the company intends to emerge as leader in France and in Belgium, before earning market shares in
countries that are more hesitant about direct marketing advertising like Germany and Sweden. The
development of Hi-Media Direct in these countries was implemented in the beginning of 2004 and will
come into effect in 2005.
3.1.11.2.3 Micro-payment
The refocusing of Mobiquid's activity on micro-payment occurred during last quarter 2003. The sales
figures of 2004 are encouraging and show a strong potential of growth of this activity. The marketing
development will continue with signing new contracts with more websites using Mediapass. The more this
sector will develop and new technologies will appear, the more Hi-Media will enhance its offer with new
functionalities and services in order to take advantage of word of mouth among webmasters. That
happened recently with the integration of Paypal as a payment mean and it will probably happen with
Paynove in 2005.
From March 2004, Mediapass offer is available on the Belgian market in order to take advantage of the
agreements passed with the telecom operators of this market concerning transfers generated by overtaxed
phone calls and SMS. In 2005, Mediapass should be implemented on the German and the Swedish
markets. The first incomes generated by this implementation should be recorded in the second half of
2005, or even in 2006.
3.1.11.3 Hi-Media clients
Hi-Media clients fall into three categories: direct advertisers, advertising agencies and advertising space
brokers and sites publishers who use Mediapass. None of the advertisers represents more than 5%of the
consolidated turnover. The two main advertisers are Ebay and Cortal Consors representing individually
6.8% and 4.2% of the consolidated turnover.
Direct advertisers
For the financial year 2004, direct advertising accounted for 34% of Hi-Media's turnover in France. This
breakdown between direct advertisers and agencies is observed in every country.
Advertising agencies and advertising space brokers
In France, Hi-Media has relationships with all the main advertising agencies that offer Internet services
and that have a market presence in France, such as Havas Advertising, Grey, Groupe Omnicom and
Publicis. Each advertising agency has varying number of advertisers.
Between 2000 and 2001, there was an upward trend in the proportion of Hi-Media's sales generated from
space brokering. That was due to the fact that the online advertising market was increasing and partly
because of the Hi-Media network's size and impressive growth rate. During 2002 and 2003, their weight
stabilized and lightly spent curb.
For example, the five main agencies and advertising space brokers that used Hi-Media's products and
services in 2004 are: Carat Interactive, MPG Mediacontacts, Mediacom Paris,, Archie d’Alembert,
Universal Mc Cann. In 2004, they represented jointly 44.5% of the turnover in France (as opposed to 38%
in 2003), combined revenue from the top ten amounted to 54.6% (as opposed to 51.5% in 2003).
Websites publishers using Mediapass
Appointing customers for Mediapass progresses slowly since it has been launched in October 2003. No
customer is important enough to make this business line dependent.
3.1.11.4 Sales and marketing policy
3.1.11.4.1 Recruiting of new sites into the network
The decrease of media sales companies’ number on the European market combined with Hi-Media's
notoriety that has been effective on the market for 6 years and with the regular promotion of its new
ranges of services and products make many media supports wishing to work with Hi-Media. During 2004,
Hi-Media kept all its main clients in France and abroad, excepting Meetic.fr in France.
After 2001 and 2002 that were two years of instability of the portfolio of the ad management line of
business, due to taking in-house of the marketing function or to publishers who formed closer links, HiMedia was able to build a solid customer basis and to pass new contracts.
At present, the average length of network contracts is twelve months and most of them are exclusive.
In 2001 an in 2002, Hi-Media pruned back on the number of sites they used to have advertising
management relations with, in order to concentrate on more lucrative contracts. Now that this
rationalization process is complete, Hi-Media Network has 200 sites as opposed to 400 two years sooner.
While the advertising market recovered in 2004, Hi-Media implemented a policy more aggressive for
recruiting new sites and has now around 1000 sites in its customer’s portfolio. This expanding policy on a
buoyant market had a double positive effect:
- The number of web users reached by Hi-Media's advertising network has increased in every
country. In France, it passes from 44% to 51% between the beginning and the end of the year
2004.
- minimize the activity share hold by the major customers in order to avoid any economic
dependency as it happened in 2001 and 2002.
3.1.11.4.2 Recruiting of addresses database brokerage
Hi-Media's position as advertising network encouraged the brokerage of e-mail and mail addresses
database from the websites that were already working with Hi-Media.
With its own dynamism, Hi-Media Direct then developed trade relationships with files owners that were
distinct from the companies Hi-Media was working with as an advertising network. It is already the case
for Reed Elveiser, Cdiscount, Cortal, etc. The customers of both activities (advertising network and direct
marketing) are less and less related, even if synergies still exist in relationships with advertisers.
3.1.11.4.3 Customer sites recruitment for Mediapass
First, the marketing approach consisted in contacting publishers who were already Hi-media's like
societe.com or jeuxvideo.com. Then in contacting independent webmasters who were looking for
solutions like Mediapass. These prospects were contacted via systematic selling and thanks to inbound
calls following few marketing actions promoting Mediapass. These actions that were not expensive will be
repeated in 2004 to strengthen this activity. Mediapass has a base of 3000 prospect sites interested by
micro-payment and e-payment solutions.
3.1.11.4.3 Sales force organization
Hi-Media Network's 18-strong sales team looks after ad management services and sales of advertising
space, in 5 countries.
Hi-Media Direct's sales and development team is distinct from the ad management sales team in France.
In 2005, there will be 6 persons in this team.
There are 3 persons working for the micro payment division, and it should not change during 2005.
In these three divisions, sales representatives have three main tasks:
- Developing the company through recruitment and gaining customer loyalty;
- Monitoring relations with websites publishers or files owners;
- Reporting on canvassing operations, in order to build up a highly detailed database, and ensuring that
sales operations are being adequately monitored.
3.1.11.4.5 Pricing policy
Sale of advertising space
The rates charged by Hi-Media are expressed in raw data and are flexible depending on the type of
medium and targets selected.
Hi-Media offers rates on sliding scale, dependant on campaign volume, whether the campaign is linked to
several sites and the number of media used. Discounts are also given to new advertisers, to existing sites
loyal to the network and to professionals. On certain network sites, Hi-Media offers a graduated line of
services and products, dependant on the volume and whether it is possible to fine-tune the campaign by
selective targeting.
In accordance with practices of the industry, the rates displayed are subject to negotiation with advertisers,
with discounts varying according to the type of services rendered. Hi-Media offers a wide price range that
is adjustable depending on advertiser's targeting criteria.
Hi-Media Network offer sites are sold between € 15 and € 90 per cost per thousand ad impressions as per
used format and selected site.
Direct marketing
The price setting mechanism is exactly the same for direct marketing and ad space selling. Only raw data
rates are different.
Today, Hi-Media offers e-mail addresses in brokerage at € 0.25 excl. VAT per address.
Micro-payment
Because it is an income splitting of different products sales made by digital media publishers, Hi-Media
has no power on the price of the finished products, but it has an action on the amount transferred to the
publishers after deduction of management costs on the level of the amount granted to publishers after
management costs took by operators and banks.
Hi-Media's transfer levels are below average but change according to transactions volume brought by the
publisher.
Commission paid to Hi-Media
Hi-Media takes a 30 % to 50% commission on all advertising sales generated on behalf of the network
sites. Exceptionally, this commission may be reduced if the site contributes to Hi-Media's own sales.
The commission mechanism is exactly the same for direct marketing (with a slightly higher commission).
Concerning micro-payment, commission margins depends on payment ways that are available and of the
generated volume. In addition, in most cases, Hi-Media declares its commission amount on transactions as
part of the turnover.
With the competitors emerging, the commission rates can decrease. But Hi-Media keeps a mean to protect
its margin due to its capacity to negotiate global agreements applying advertising, direct marketing and
micro-payments.
3.1.11.5 Production resources and Technology
3.1.11.5.1 Software used
Advertising space management: Helios released by AdTech
Hi-Media uses Helios, an administration tool for sending advertising messages. This software enables the
user to define target audiences and manage campaign relationships. Helios is used mainly for producing
and measuring the outcome of advertising campaigns and investment return levels for advertisers, with
providing them access to campaign reports detailed by day, hour, country, access provider, etc.
After used the software AdServer 4 that was installed on its own broadcasting servers, Hi-Media decided
to uninstall it for economic reasons, and to use subcontractor services, the Ad Tech company in this case.
E-mail databases management
Hi-Media has developed in-house a tool for managing e-mail databases and addressing messages (Hi-mail
server). In 2003, Hi-Media decided to use subcontractor services for the same reasons that convinced the
company to change its advertising space management tool. The software that has been chosen is Deep
Blue Eyes released and by the Belgian company, Barnes and Richardson.
Since June 2004, Hi-Media changed technical services suppliers and works now with the company Edatis
that provides more performing and attractive services.
Sales Administration: Ad front
Hi-Media has been able to increase the productivity of its sales teams by a specially designed and
exclusively licensed management tool: the Adfront software. Developed by the company Fivia, this tool is
based on using a sales management intranet facility. This software enables the sales team to enter its
proposals to advertisers using an Internet interface. The data is fed into a database of all sales proposals
ever made and can be referred to, via protected access, from any member computer of the same intranet
family. Using the same too, proposals can then be turned into purchase orders that can be directly
forwarded to the client by e-mail or fax modem.
As the company's sales "memory", this system is a tool that assists in sales operations and in monitoring
day-to-day activities and can also be of use to Hi-Media client sites. It gives the in effect access to
information on earnings generated by their medium.
Since July 2004, an interface between Helios and Adfront has been developed to optimize marketing
management. This interface allows publishers to follow the turnover made on their sites in real time
(D+1). In addition, Hi-Media can directly link the marketing campaigns informed with AdFront to their
programming (with Helios) via an encoding. This system makes invoicing management much easier as it
is based on a diffusion method.
Use of this software began with a multiyear duration contract passed on October 15, 1999, and that is
renewable.
The chart below shows how the Adfront software works:
3.1.11.5.2 Technological breakthroughs
Hi-Media's main line of business keeps evolving, because it offers advertisers new advertising formats
developed by its subsidiary Hi-Pi, specialized in graphics, websites designing and advertising creations
such as:
"Billboard": this is a new Internet advertising technique that consists in displaying an advertisement
covering the entire Web user's screen while the page requested is being downloaded. Once the requested
page is downloaded, the advertisement disappears without prompting by the user.
"Transparent Flash": an image is surimposed onto the website's homepage and disappears again after a
few seconds. This image then reappears as a transparent banner at the top of the site's homepage.
"Scrolling banner": it is surimposed onto a page and comes at the same place on the screen whichever
movement the web user makes on this page.
"Audiovisual banner": this shows a video sequence as soon as the site is opened. By clicking onto the
sequence, a Rich Media video player appears, showing a spot advertisement. Internet users can then view
the film (adapted to the advertiser's graphic chart) within their own personalized space, with the possibility
of using the interactive functions provided: information, practical advice, contact forms, links, newsletter
subscriptions, taking part in competition.
"Rich Media e-mail": this format makes it possible to send multimedia mails. There are three ways in
which the e-mail can appear: with the video that is screened as soon as the e-mail is opened, in html
format with the first image of the video, or in rich text format with link pointing to the web page
containing video.
3.1.11.5.3 Computer systems
The Company has no computer system dedicated to its advertising management and direct marketing
activities as all technical provisions are outsourced.
Servers supporting office applications and the sales management tool are located on Hi-Media's premises
and are also protected by a firewall.
Since Mobiquid's acquisition, Hi-Media has a technical team and an important IT infrastructure managing
interactive vocal servers, internet servers and servers related to micro-payment via Mediapass. A computer
room air-conditioned and secured at Hi-Media's head office hosts this infrastructure that is linked to the
network by a fiber optic installed by Completel.
3.1.11.5.4 Research and Development
Adserving and e-mail addresses sending software have evolved, therefore, the software developed by HiMedia are outdated. That is why Hi-Server and Hi-Mail Server software (K€. 575), 100% depreciated at
December 31, 2003, because they could not begin operation, have been written off the financial year 2004.
The same is true of the Hi-Mailing software (K€. 75). It didn't not meet the performances anymore so it
has been also written off.
3.1.11.5.5 Capital expenditures
The capital expenditures the Company used to make were only made to purchase computer equipment for
production and development of a tool for advertising mailing. For the reasons explained herein above,
there is no capital investment project in medium-term excepting recurrent purchase of computer servers
which unit value should not exceed a few thousands euros as well as the progressive replacement of the
office technology.
3.1.11.5.6 Personnel
Hi-Media employs a total of 58 persons (March 2005), divided as follows:
3
4
5
6
7
8
9
France: 26
Moiquid: 5
Hi-Pi: 2
Germany: 11
Sweden: 6
Belgium: 5
Portugal: 3
Breakdown of workforce per activities and per CSP is as follows:
Nonexecutives
Executives
Total
Advertising
Network
19
Direct Marketing
Micro-payment
Total
2
3
24
29
48
3
5
2
5
34
58
3.1.11.6 Management
At the time the company was created, Hi-Media's management team formed a nucleus of skilled
advertising and Internet professionals that would allow it to become a leader in e-marketing and digital
media solutions. Over the recent months, Hi-Media has shown its ability to attract new talent, indication of
its success in terms of growth.
Cyril Zimmermann: Born in 1971, Cyril Zimmermann has been the president of Hi-Media since the
company was created. He is a graduate of the Ecole Supérieure de Commerce in Paris and the Institut
d’Etudes Politiques in Paris, and holds a degree in history.
Andreas Stietzel: Hi-Media Deutschland AG: After working in the banking sector, Andreas Stietzel
worked in a sales capacity for 7 years in the automobile sector. He firstly joined Abacho AG, before
becoming the Corporate Executive at his subsidiary Hi-Media Deutschland.
Michel Pigneret: Hi-Media Belgium SRL: After ten years spent in various sales functions, Michel
Pigneret has been the Managing Director of the Internet advertising company @d Net since it was formed
in 1997. He launched the Belgian Hi-Media subsidiary in June 2000.
Benedita Simas: Hi-Media Portugal Lda: An MBA graduate from the City University Business School,
London, Benedita Simas has held several responsibilities at various space broking agencies in London and
Portugal before becoming Director of Research and Development of Media Initiatives. She joined HiMedia during the summer of 2000 as Managing Director of Hi-Media Portugal.
Heli Brewitz: Hi-Media Scandinavia AB: Heli Brewitz joined Net-On IT Scandinavia in 1999 before it
was bought out by Hi-Media in 2000. Then she became Marketing Director of this subsidiary. She is
Managing Director since September 2002.
3.1.11.7 Hi-Media's organizational structure
As well as carrying out its function as an advertising management company, Hi-Media S.A. assumes
responsibility for the Group's management structure and for certain centralized functions. Hi-Media S.A.
is responsible for:
3 Defining the Group's strategy and the launch of new products;
4 Management control
5 Giving legal advice to its subsidiaries;
6 Managing the relationship and the agreement passed with the provider managing the
advertising spaces and its subsidiaries;
7 Relations with shareholders and market authorities.
During Financial year 2004, Hi-Media decided to invoice its subsidiaries for advertising spaces
management. This invoice amounts to K€ 396. It is detailed in Note 12 of the corporate financial
statement appendix.
3.2 RISK FACTORS
It is incumbent on the reader of this Document to carefully examine the risks listed below, before making
any decision regarding investment in Hi-Media projects. Any one of the following events has the potential
of jeopardizing the success of Hi-Media. In any such eventuality, the share price of Hi-Media could
decrease, thereby causing the loss of all or part of monies investment.
3.2.1 Competitive environment
In Europe, Hi-Media is facing intense competition in the online advertising market. Competition is still
strong considering the two German leaders: Adlink and Ad Pepper Media and with the American potential
emerging. In addition, major portals of each market have their own internal advertising management
departments that continue to take in most of advertising investments.
3.2.2 Correlation between the advertising market and the economic cycle
There is a strong correlation between the advertisement market and fluctuations in the economic cycle.
The recession occurred in1991-1993 in Europe, as well as the decline occurred in 1997-1998 in Asia both
resulted in a reduction in nominal advertising expenditures.
However, the outlook for the online advertising market over the next few years is one of steady growth,
after three difficult years from 2001 to 2003, 2004 was a very good year for advertising investments
encouraged by the improvement of macroeconomic performances. Forecasts for 2004 are still optimistic.
Furthermore, the Company believes that the online advertising market is following the principles of
structural market dynamics, driven primarily by the development of Internet and that its medium-term
growth would only be slightly affected by any decline in Europe's economic growth.
3.2.3 Risks related to the Internet economy
As an advertising management network, Hi-Media is both dependant on the growth and the economic
health of the sites within its network, and of the advertisers, some of whom are market players on the
Internet. Because Hi-Media is an intermediary, it might be affected by any change in the environment that
is currently benefiting players the new economy. After two year of crisis and the end of several players
born with Internet economy, Hi-Media's environment is healthier and there are numbers of companies that
are profitable.
The risks of Internet economy related to a temporary "over-financing" of non viable companies seem to
significantly come down.
3.2.4 Risk that sites might decide to 'go it alone'
There is a potential risk that sites generating high volumes of traffic (especially portals and main
community sites) might decide to 'do their own thing' and 'insource' functions traditionally looked after by
advertising management companies. This would inevitably make Hi-Media less attractive to advertisers.
When diversifying its businesses with direct marketing and micropayment Hi-Media aims to diminish this
risk.
3.2.5 Fluctuation in rates
The Company might be affected by a sustained drop in the rates charged by the profession, especially a
drop in the CPT (cost per thousand).
Such a drop occurred in 2001 and 2002. Since the beginning of 2003, prices tend to stabilize.
Excepting the unit cost variation of advertising spaces, e-mail or mail addresses, Hi-Media can be affected
by an intensification of competition that could reduce the average commission rate the Company takes in
its three business lines (advertising management, direct marketing, and electronic and micro payments).
Diversifying the offer and implementing new services and products aim to increase the difference between
Hi-Media and its competitors, and, henceforth, depressurizing the margins.
3.2.6 Trends in regulations currently in force
There is sometimes talk of banning cookies used to recognize Internet users via their Web browsers,
making it possible to target them according to their past web behavioral profile. Any such ban would
affect the ability of online advertisers to personalize advertising message.
On a European level, the European Union passed the directive 95/46/CE dated 24 October 1995 called
"Directive on the protection of individuals with regard to the processing of personal data and on the free
movement of such data ". Despite the fact that this directive is yet to be adapted to common law in certain
member States (especially France), it has been in direct effect since October 1998, and is likely to have the
following main consequences on the Company's operations:
This directive governs the collection, handling and use of data of a personal nature and guarantees each
individual concerned the right to know the identity of the person responsible for handling such data, as
well as the identity of any persons to whom such data might be sent. Furthermore, it ensures the right of
each individual to know the origin of such personal data, to gain access to them, to rectify any inexact
data, and if so wished, to have them deleted. All individuals have the right to object to their personal data
being used for the purposes of commercial prospecting. Companies located in member State countries of
the European Union or who use equipment in member State countries of the European Union for the
purpose of data transmission shall not be authorized to transfer such personal data to a third-party country,
if this third-country does not provide a level adequate protection.
Processing nominative (personal) data may also be subject to a prior authorization procedure, instead of
the simple declaration to the competent administrative bodies that is presently required, in cases where
processing data may infringe on individual liberties. By the same token, consent from individuals
concerned may be required, whereas current legislation in force stipulates that is sufficient (except in
specific cases) just to inform individuals.
Competent administrative authorities (such as the CNIL) may see their powers of investigation increase.
Furthermore, on 25 January1999, the European Union passed an "Action Plan to promote the more secure
use of the Internet in the battle against messages containing unlawful and harmful content currently being
sent over the world network ".
Among other things, this action plan provides an outline of various areas in need of legislation, especially
the protection of minors, filter tools and file systems. Any new law or regulation passed by a member
State of the European Union on the basis of this action plan might bring further responsibilities for the
Company and subsequently affect its operations.
In France, the former government bill concerning "information society" has been abandoned in favor of
new government's bill for building confidence in digital economy.
prior declaration.
- Improve security in digital economy.
The Company thinks that the prohibition of cookies is unlikely. In fact, a ban would penalize publishers,
many of whom depend on personalizing their content and services. It would also affect commercial sites
that personalize their products range according to Web users' behavioral profiles. Finally, many Web users
appear to be responsive to personalized advertising messages.
The operational difficulties resulting from any such ban could in part be offset by working with the
network sites to create an interface between their base of identified visitors who have come forward
voluntarily and the advertising campaign management tool.
The Company's business could also be hurt by the development and distribution of software that allows
Web users to by pass advertising messages when they log on.
3.2.7 Failure of the companies AdTech, Barnes Edatis and Fivia
Having had decided to subcontract all its technical needs to AdTech and to Edatis for its advertising
management and direct marketing activities, Hi-Media is now dependent on the continuity of service
delivery of these two companies.
AdTech is a German company created in 1998 and based in Frankfurt (www.adtech.de). Its business is
selling technical solutions to advertising management or direct marketing companies.
Edatis is a company based in Paris specialized in on-line marketing relations (www.edatis.fr).
To the Company best knowledge, there is no conflict of interest that would lead AdTech or Edatis to cease
cooperating with Hi-Media.
Fivia provides its advertising space sales and inventory organization and management technical solutions
to most online advertising French players.
Hi-media still takes the risk that these companies close down or reorient their business lines towards new
ones. However these companies have competitors that could provide Hi-Media with their own services.
Changing supplier would imply a temporary continuity in the technical management and organization
mode of direct marketing and advertising management lines of business.
3.2.8 Risks related to systems
Three risks must be taken into consideration:
− Μajor breakdown of all AdTech or Edatis' servers, or Mobiquid's servers used for micro
payments. This might be the result, for example, of a power surge or a lengthy cut-off the power
supply. In the case of a power surge, hardware may be destroyed;
− An attack on AdTech or Edatis production sites or Mobiquid's servers used for micropayments
by hackers. These companies have introduced high-level security systems, but it cannot vouch for
the total elimination of this risk;
− Deterioration of hardware at one of Edatis host sites or directly at AdTech or Hi-Media's.
3.2.9 Dependence on key employees
On a large extent, the success of the Company depends on lasting relationships with its key employees in
charge of technology, marketing and sales both in France and abroad.
To ensure its growth and assert itself as a leader in Europe, the Company must be able to attract, train,
retain and motivate new, highly qualified employees working within the specialized sector of Internet
advertising.
After a very important restructuring process implemented during 2001 and 2002, Hi-Media enjoys a very
low staff turnover rate. In order to maintain the continuity of its human resources, Hi-Media implemented
in 2003 a share option scheme to take into account the share's fall since June 2000.
3.2.10 Social and environmental risks
Since January 1, 2002, the statutory 35-hour working week has been in force within the company. During
financial year 2002, a company-wide agreement was signed with the employees. This agreement is
retroactive to January 1st, 2002.
Given Hi-Media's line of business, the Company does not pose any risks to the outside environment.
3.2.11 Compliance with IFRS standards
The compliance to IFRS standards is detailed in financial statement including the balance sheet at the
opening, January 1st 2004 as well as 2004 accounts reprocessed in order to comply with IFRS standards.
3.2.12 Liquidity risk
The only loans floated by the Group companies are a fixed rate loan and is made out in Euro.
K€
Loans
1
Original
amount
101
Fixed rate
Due date
Owing
remainder
in less than
one year
6.40%
Aug.2005
21
Owing
remainder
in more
than one
year
Remainder
payable
interests
-
1
The Coface granted returnable advances to one of the Group's subsidiary.
Business prospects for 2005 let the Group think that the cash position will remain positive during this year
therefore the liquidity risk is reduced.
There is no indebtedness relating to redemption features or covenant provision.
3.2.13 Market risks
3.2.13.1 Exchange risk
The full amount of the Group companies' turnover is billed in euros, except for the Swedish subsidiary's
one that is in Swedish crowns.
In addition, the Group's indebtedness and accounts receivable – except for the Swedish subsidiary– are
denominated in Euro, with the result that there is no exchange rate risk.
3.2.13.2 Interest rate risk
The Company did not raise any loan dependent on fluctuating rate.
The Company entered a factoring agreement dependent on the monthly average of the Euripi, 3 months
plus 0.8%.
3.2.14 Risk on shares
The security investments of the Group consist in mutual fund units and in bonds that involve no loss risk.
The risk related to self action is insignificant on looking at the low amount they represent.
3.2.15 Dependence
Hi-Media has a certain commercial dependence. It is dependent on the main advertisers and on their
brokers and it is dependent on media supports that are in an accountant way, Hi-Media's providers, but
that are, in a commercial way, its customers.
- The first advertiser represents 6.8% of the turnover, and the first 10 customers represented 25% of the
consolidated turnover in 2004. There is no trend today that augur that Hi-Media's dependence on an
advertiser can increase so much so Hi-Media's position would be weakened. However, it could occur in
the future if Hi-Media would canvass advertisers of a specific activity line like it did in 2000 and 2001
with e-brokers.
Brokers that work for several advertisers, like advertising space brokers, can impose an important
commercial strain upon Hi-Media. Every year, these brokers represent 70% of Hi-Media's turnover. HiMedia is therefore dependent on this kind of partners. But the said partners need partners like Hi-Media in
order to make group purchasing.
- The media supports Hi-Media works with none represent more than 10% of the consolidated turnover. It
happened with Boursorama and it did not challenged Hi-Media's business when this site left the network.
Nevertheless, Hi-Media could, in the future, have a commercial relationship with a media that could
represent a major part of the turnover. Thence, a kind of commercial dependence could occur. The
diversification of Hi-Media lines of business is designed to reduce that risk.
In addition, Hi-Media has a commercial relationship with Ad Tech, to which it subcontracts the
advertising banners loading technical management. As such, Ad Tech is one of the main providers of HiMedia. But there are several companies that provide that kind of services and that Hi-Media could work
with, in case of AdTech failure.
No other kind of customers or providers involves a dependence risk for Hi-Media.
3.2.16 Insurance risks
The Company has underwritten the following insurance policies. These are annual policies and there is a
tacit renewal of these contracts.
Policy
Professional Comprehensive
IT all risks
Public liability
Risks
- property damage
- theft
- premise occupant liability
- property damage
- transit risks
- financial losses
All coverage
Level of coverage
- 96 000 euros
- 34 000 euros
- 1 491 000 euros
- 763 000 euros
- 15 300 euros
- 230 000 euros
- 6 097 960 euros
There is a 100% provision for the estimate costs of risks and disputes, as soon as there is a probability of
realization of these costs.
3.3 OFF-BALANCE SHEET LIABILITY
The Group companies have no complex off balance sheet items and did not make any agreement with
liability clauses.
Furthermore, Hi-Media Deutschland granted K€ 42 of investment securities, in order to post its rents
payment and debt redemption.
The other companies of the Group did not grant any bond.
The following chart relates the off-balance sheet liabilities during 2003 and 2004:
K€
Unmatured assigned claims
Granted investment securities
Securities given
2004
2003
1954
42
-
1201
34
33
The Company has no granted fixed, tangible and capital assets.
Finally, end of career indemnities for the French companies of the Group amounted to 36 706 euros at
December 31, 2004.
Legal and accounting department of the carrier holding corporation centralize all the information
concerning the off-balance sheet liabilities of the Group.
3.4 INVESTMENT POLICY
There's no investment in hand. At this stage, the ITV for Mobile project doesn't involve any investment
except the salaries of the technical teams that are already in place at Hi-Media's.
3.5 RECENT DEVELOPMENTS
For the 2002 financial year, the Company substantially reduced its activity. The Company's turnover fall
to € 9.5 millions as opposed to € 18.7 millions in 2001, and € 8.8 millions in 2003. That rundown is due to
the stagnation and recession in the advertising market depending on the countries. It is also due to the
closure of subsidiaries and to the business lines' unification.
In 2004, the business greatly improved and can be compared to 2000. The consolidated turnover amounted
14.4 million euros in 2004, increasing by 63% compared to the previous financial year.
Furthermore, the margin structure of the Company strongly improved in 2002 and in 2003 and stood at
38.5% during first and second half-year 2004.
Margin rate
2001
15.8%
2002
33.2%
2003
43.0%
2004
39%
That resulted in a margin progression in absolute amount between 2001 and 2002. Whereas the turnover
decreased by 49%, the total margin in 2002 was of € 3.2 millions. It is 7% better compared to 2001, which
was Hi-Media's heaviest active year. That year the margin was of € 2.95 millions.
This improvement continues from 2002 to 2003 despite the 8% decrease of the consolidated turnover, as
the margin in 2003 was around € 3.8 million, i.e. 20% increasing.
With the business increasing in 2004, the consolidated margin amounted € 5.5 million in 2004.
Foreign subsidiaries account for 38.6 % of 2004 consolidated turnover. These subsidiaries have a wealthy
operating structure. Hi-Media Deutschland, Hi-Media Scandinavia and Hi-Media Portugal had an
operating income for the year, whereas Hi-Media Belgium recorded losses due to a difficult restructuring
that ended beginning 2005.
All in all, Hi-Media continued to enhance its earnings during 2004 and showed a consolidated operating
income amounting K€ 201.
Financial and exceptional results were negative amounting K€. 27 and K€. 264 respectively.
Considering a tax in come amounting to K€. 931 which allows the Company to show net consolidated
results that are positive, amounting to K€. 424.
Performance against objectives for the financial year 2004
In a press release dated March 17, 2004, Hi-Media announced that it planned to have a turnover between
12.5 and 13 million euros as well as a gross operating surplus between 0.1 and 0.3 million euros. These
forecasts were exceeded for the turnover as well as the gross operating surplus that amounted 0.6 million
euros.
In the same press release, Hi-Media announced that the ongoing result before tax should be negative with
a low forecast standing at – 0.2 million euros. In reality, it was positive, amounting to 0.17 million euros.
In a press release broadcasted on September 24, 2004, the Company announced that its operating result
should be balanced during the second half year. That was done, since the Company recorded an operating
income amounting 0.3 million euros, making the operating result an income amounting 0.2 million euros
for the whole year.
3.6 FUTURE PROSPECTS
3.6.1 Operational development
Advertising management network
The turnover concerning the online advertising network line of business should continue to increase in
2005 thanks to Hi-Media's peculiar dynamism and to the market environment that should remain favorable
this year.
During 2004, French business activities showed a strong dynamism that should continue in 2005.
In Sweden and Portugal, activity improvement noted in 2004 should be confirmed in 2005. In Germany
the growth return was felt only during the last half-year 2004 and should be confirmed in 2005. In
Belgium, business volume strongly decreased during the first nine months 2004. This is due to the
business repositioning that began to be successful during 2004 last quarter, and 2005 should witness a real
recovery.
Direct marketing
In 2004, direct marketing brokerage and consulting line of business greatly increased due to a more
diversified customer portfolio. This increase should continue during 2005 but more slowly. Improving the
margin of this line of business will be focused in France.
Micro payment
In 2004, the electronic payment and micro payment platform, Mediapass was developed in terms of
marketing. This platform was launched during last quarter 2003. This activity strongly improved this
financial year, represents an important potential for growth in France and abroad, where this activity is not
implemented yet.
3.6.2 Medium-term financial targets
The advertising market visibility is still reduced in 2004, due to the uncertain economical context (despite
the anticipated growth return) , the weak maturity of the European Internet market, and the fragility of
several players of this segment, that are among the ones who succeeded in dealing with the crisis occurred
in 2001 and 2002. However, the trend is much better in 2004 comparing to previous years.
Hi-Media has set itself the following financial targets:
•
•
•
A trade margin stabilization around 40% for all the year 2004.
A positive operating result before depreciation for all financial year 2004.
Positive net results in 2005.
3.6.3 Sales forecasts
2004 achievement against objectives for financial year 2005
Hi-Media's introduction prospectus related assessed objectives until the financial year 2001 only. The
Company announced by press releases dated on July 16, 2001 and November 8, 2001, that the turnover
could not reach the planned objectives due to the about-turn in the advertising market, especially on
Internet.
The initial objectives were of 38 millions euros in 2001, the effective Company's turnover were amounting
18.7 millions euros in 2001.
The on-line advertising market went through a serious and long crisis, and the visibility was not sufficient
to provide detailed forecasts for financial year 2002. Therefore, the Company announced in its 2001
annual report that it was not able to make provision for 2002 turnover. No turnover forecast was
communicated for financial year 2003.
For 2004, the Company forecasted to improve its turnover, valued it at €12.9 million. These
forecasts were exceeded.
2005 Objectives
The Company stresses the fact that there is not enough visibility concerning its lines of business and their
markets environment due to the few potential the latter developed.
In that case, the Company forecasts to have a consolidated turnover between 20 and 22 million euros in
2005, i.e. a growth between 38 and 52%. These forecasts could be updated during the financial year
depending on the visibility the Company has concerning its activity and the market environment.
These objectives have been defined depending on speculations about the e-advertising market growth in
France and in Europe as well as about the Company's costumers' portfolio.
3.7 EXCEPTIONAL EVENTS AND DISPUTES
On March 14, 2003, Hi-Media summoned the German company Abacho AG to the Market Court of Paris
due to the breach of its contractual obligations by Abacho, for claim for overpayment amounting 57
927.14 euros and to require the noting of the network contract termination dated 3 may 2001 between both
companies entitling the injured party to sue, Abacho.
In a counterclaim dated November 18, 2003, Abacho AG asked the court to the judicial termination of
advertising management contract against Hi-Media and to fine the Company contractual indemnities
relating to advertising management services, amounting to € 2,404,912.18.
According to the Company's analysis and its lawyer's opinion, Abacho AG chances to succeed are weak.
That's why the Company did not acknowledge provision related to this dispute in its accounts on
December 31, 2004.
3.8 INTANGIBLE ASSETS AND GOODWILL DEPRECIATION
The Company did not apply in advance the rules N°2002-10 of the CRC concerning the assets
depreciation.
However, the Company conducted analysis, following among others the future cash flow method,
implemented by the Company, converted to current value at 9% interest rate in order to check that the
depreciated value of fixed assets (including mainly intangible assets and goodwill) is at least equal to their
going value at the close. If it shouldn't be the case, a valuation allowance corresponding to the difference
between the going value of these assets and their depreciated value would be recorded in the books.
These analyses showed that there was no need to record such depreciation on December 31, 2004.
CHAPTER IV – HOLDINGS – FINANCIAL POSITION – RESULTS
4.1 MANAGEMENT REPORT
Ladies and Gentlemen,
We have called an Ordinary Shareholders' Meeting in accordance with legal requirements and our
Company's by laws in order to ask you to approve the year's operating accounts ended December 31,
2004.
We hereby declare that you have been delivered summonses as required by law on a regular basis, and all
documents pertaining to existing regulations have been made available to you within the schedules
prescribed by law.
Operation for the fiscal year 2004
1. Group sales and consolidated results for fiscal year 2004
For 2003, the Group realized a consolidated sales figure excluding tax of
€ 14.4 million as opposed to € 8.8 million for the previous year.
Advertising management represents 81.7 % of consolidated sales. Direct marketing is a business line
implemented in France and in Belgium only and represent 13.5 % of consolidated sales. Micropayment
activities represent 4.8% of consolidated sales and are mostly implemented in France.
The amount of profits made by foreign subsidiaries accounted for 39% of 2004 turnover.. Pre-tax profit in
corporate accounts amounts to € 8.4 million.
•
Consolidated results for 2004 amounts to K€ 424. This result can chiefly be broken down into
•
Operating income of K€ 201;
•
A negative financial result of K€ -19;
•
Exceptional losses of K€ -264 mainly made up of K€ -67 due to reorganizations,
unconsolidations amounting to K€ 37,a nonrecurring depreciation in an intangible asset
amounting to - 186 K€ and a loss in non current asset amounting - 38 K€; and to losses generated
by identified contracts amounting to K€ 80;
•
A tax income amounting to K€ 931;
•
And allocation for consolidation excess amounting to K€ -418.
2. Group subsidiaries’ Sales Figures, Operating Results, Net Income for fiscal year 2003
K€.
Subsidiary
Hi-Media Belgium
Hi-Media Portugal
Hi-Pi
Hi-Media Publicidad y Marketing
Hi-Media Italia
Hi-Media Poland
Mobiquid
Europermission*
Sales Figures
2 575
671
2 041
652
103
687
2
Operating Results
156
(56)
138
7
(67)
(408)
(2)
Net Income
149
(59)
135
8
(72)
(99)
390
(12)
(556)
(2)
3. Significant events of the period 2004
On March 30, 2004, Hi-Media transferred its equity investment (50%) in Laroquette Musique & Media.
The subsidiaries Hi-Media UK Plc. And Hi-Media Technology Sweden (HMTS) were dissolved on June
8, 2004 and March 14, 2004 respectively.
Finally, Hi-Media took an equity stake in the Spanish company Europermission Sl. On March 25, 20004
in order to develop its direct marketing business.
4. Significant events occurred since the end of the fiscal year
None.
INVESTMENTS
Investments in tangible fixed assets amounted to K€ 59 in 2004. They correspond mainly to computer
equipment.
Investments in intangible assets for the same period amounted to K€ 148. They correspond mainly to
renewing the license of the marketing management software, Adfront, and to funds dedicated to audiovisual
programs amounting to K€. 67 and to software made to following up the business, for an amount of K€. 47.
PROSPECTS
As concerned the advertising management on line, the turnover should be in steady progression in 2005,
due to the own dynamic of Hi-Media as well as the strong improvement of the market environment that
should remain favorable.
At the end of fiscal year 2004, the activities in France were very dynamic and it should continue in 2005.
In Sweden and in Portugal, the growth of the business 2004 seems to be confirmed in 2005.
In Germany, the market recovery has only been perceived during the second part of 2004 and should be
confirmed in 2005.
In Belgium, the business has very strongly decreased during the first nine months as it was planned. But
the repositioning of the business began to be profitable last quarter 2004 and should grow during 2005.
As concerns direct marketing, the activity remarkably increased diversifying customers portfolio. This
activity should get stronger in 2005 due to its development in Sweden and in Germany. But it will
probably increase less strongly than in 2004. Increasing margins of this business will be focused on in
France.
2004 has coped with the progressive discontinuation of the traditional publication operations of Mobiquid
and with the marketing development of the micro-payment platform, Mediapas, which had been launched
during the last quarter of 2003. This activity has grew steadily during all this financial year, and marks a
growth potential contributing to an increase of our turnover in France on one hand and also in our foreign
subsidiaries where this activity has not yet begun.
CESSION OF EQUITY
During last fiscal year, the Company proceeded to the following cession:
-
All its equity investment in Laroquette Musique & Media, i.e. 50% of the capital.
CREATION OF SUBSIDIARY
During the fiscal year ending December 31, 2004, the Company Hi-Media did not create any company..
INCREASE OF PARTICIPATION
On March 25, 2004, the Company bought an interest of 50% in the Spanish Company Europermission Sl.
which business is Direct Marketing.
BREAKDOWN OF CORPORATE CAPITAL
The Company's capital amounts to € 1 999 583.70 and is divided into 1.990 317 shares, all of them being
of the same category.
In accordance with the statutory provisions in French law (Article L 233-13 governing commercial law)
and taking into account the information received in applying Articles L 233-7 and L 233-12 of the said
law; we hereby state below the names of shareholders who hold more than a twentieth, a tenth, a fifth, a
third, a half or two-thirds of registered capital or voting rights:
•
•
The industrial group Marcel Dassault holds more than 5% of registered capital and more than
15% of voting rights;
Spef e-Fund, a mutual fund, holds more than 5% of registered capital and voting rights.
SHARES GIVING ACCESS TO CAPITAL
Details of shares giving access to capital are given in the corporate appendix (Note 4.8.2), as well as in the
appendix to the consolidated accounts (Note 5.9.1).
SHARES HELD BY EMPLOYEES
None
OWN SHARES HELD AT DECEMBER 31, 2004
The Company holds 46.345 own shares (see Note 4.3 and 4.6 of the corporate appendix).
INVESTMENT SECURITIES HELD AT DECEMBER 31, 2003
See Note 4.6 of the corporate appendix
TRENDS IN STOCK MARKET CAPITALIZATION
Month
Aug. 03
Sept. 03
Oct. 03
Nov. 03
Dec. 03
Jan. 04
Feb.04
March 04
Apr. 04
May 04
June 04
July 04
Aug. 04
Sept. 04
Oct. 04
Nov. 04
Dec. 04
Jan. 05
Trade volume and quotation of Hi-Media shares
Stock market value in €
Number of shares exchanged
High
Low
Weighted average
1 679 300
0.44
0.30
0.38
6 307 704
0.66
0.37
0.53
2 151 994
0.63
0.49
0.57
2 195 739
0.73
0.57
0.65
862 573
0.73
0.52
0.62
1 068 788
0.65
0.56
0.60
1 355 540
0.69
0.54
0.61
2 949 578
0.73
0.54
0.65
3 589 935
1.03
0.68
0.89
854 612
0.94
0.80
0.86
2 686 472
1.14
0.75
0.96
2 754 124
1.28
1.01
1.16
1 434 281
1.21
0.97
1.08
1 698 686
1.13
0.91
1.05
1 969 801
1.17
0.96
1.06
1 483 658
1.09
0.98
1.03
1 637 645
1.22
1.06
1.13
6 124 472
2.10
1.15
1.69
RESULTS – ALLOCATION
Corporate annual financial statements
Activities for the last financial year results in a loss of €K 2 762, which we suggest to carry forward in
full.
Furthermore, after allocating this benefit as deferred revenue, we suggest to appropriate carrying forward on
the item « bond premium ».
We should also like to remind you that no dividend has been issued to shareholders since the Company
was created.
Rules governing presentation of, and chosen evaluation methods used in, drawing up these financial
statements are in accordance with statutory provisions in force and identical to those adopted for the
accounts of previous years.
TABLE OF RESULTS
Pursuant to statutory requirements stipulated in French Law (Article 148 of the Act dated 23 March 1967),
we hereby enclose, as a supplement to this present report, a table showing the results of our Company for
each financial year since its inception.
EXTRAORDINARY EXPENSES AND OVERHEAD COSTS TO BE TAX REINSTATED
The Company did not incur any expenses covered by the provisions stipulated in Article 39-4 of French
law governing the general tax code during the period ended December 31, 2004.
R&D EXPENSES
The Company did not incur any R&D during the financial year 2004.
AGREEMENTS AIMED AT THE ARTICLE L 225-38 OF THE COMMERCIAL CODE
We hereby invite you to endorse the agreements concerning Article L 225-38 governing commercial law
that have been regularly authorized by your Board of Directors over the course of the previous fiscal year.
The statutory auditors have been informed of these agreements, the details of which they relate to you in
their special report.
AGREEMENTS AIMED AT THE ARTICLE L.225-39 OF THE COMMERCIAL CODE
The agreements listing concerning usual operations concluded on normal conditions was at your disposal
within the legal required time and communicated to you statutory auditors.
TRANSITION TO IFRS STANDARDS
The Company details in the appendix of this report, the financial statement of 2004 consolidated accounts
revised according to IFRS standards.
INFORMATION ON MANAGING AGENTS
Pursuant to statutory requirements stipulated in French law (Article L 225-102-1 of the Commercial
Code), we hereby give details of the total amount of remuneration and benefits in kind made to each
managing agent for the last fiscal year.
Cyril Zimmermann, CEO:
Gross annual salary: € 125 500
This figure includes all the payments and benefits received by the managing agents of any Group’s company
or of the Company.
Mr. Cyril Zimmermann was granted with the allotment of:
- 350.000 stock options on July 10, 2003, that can be exercised beginning on July 10, 2005 at
0.35 euros.
Stock options
allocated to every
company manager
and options
exercised by them
Cyril Zimmermann
Number of stock
options allotted
350.000
Price
Expiration date
Plan n°X
0,35 € 10 July 2013
Stock option Plan
n°8
All the stock options allocated to the Company manager aforementioned are exercisable from July 10, 2005.
The other members of the Board do not receive any payment. We hereby also list the mandates and offices
held
in
each
company
by
the
members
of
the
Board.
Member's Surname
and First Name or
Corporate Name
Permanent
representative's
Surname and
First Name
Cyril Zimmermann
-
David Bernard
Date of first
appointment
21/12/98
-
21/04/00
Dassault
Multimédia
18/11/99
Thierry
Braconnier
Rivaud Innovation
Venture
Céline
Beral
Merle-
Marion Aubry
25/04/03
25/04/03
Due date of
mandate
Main office held
within the
Company
General Meeting
approving the
accounts of the
financial year
ending December
31, 2003
Chief Executive
Officer
General Meeting
approving the
accounts of the
financial year
ending December
31, 2005
Chief Operating
Officer
General Meeting
approving the
accounts of the
financial year
ending December
31, 2004
General Meeting
approving the
accounts of the
financial year
ending December
31, 2008
General Meeting
approving the
accounts of the
financial year
ending December
31, 2008
-
-
-
Main office
held outside
the Company
-
Other mandate and office held in any other company
Director of
- Hi-Media Publicidad y Marketing ;
- Hi-Media Portugal ;
- Hi-Media Poland ;
- Hi-Media Scandinavia ;
and member of the supervisory board of Hi-Media
Deutschland AG;
Administrator of :
-Mobiquid;
-Laroquette Musique & Media;
-Hi-Pi;
-Hi-Media Belgium
- Hi-Media Italia
Director of
- Hi-Media Publicidad y Marketing ;
- Member of the supervisory board of Hi-Media Deutschland
AG;
- Directoire's member of the International Company André
Trigano;
- Administrator of the company Les Campéoles;
- Co-manager of the company Lac et Rivières;
- Manager of the company Capasun Sevron;
- Permanent representative of the Company Les Campéoles at
Arepos-Vacances CEHP Board of Directors.
Permanent representative of Dassault Multimedia at:
- Emme SA ;
Executive
-Keynectis SA.
Secretary
of
Administratot of :
Dassault
-Halys SAS
Multimédia
Member of the strategic comity of :
-Dassault Multimedia
Chief
Executive
Officer of
Rivaud
Innovation
-Director of Strempowernet;
-Chairman of la Compagnie de Larmor
-Member of the executive board of PUSHTVI
- Permanent Representative of Bolloré Investissement at
Bolloré Media’s Board of Directors
-Permanent Representative of Rivaud Innovation at Rivaud
Media Board of Directors
- Permanent Representativeof Rivaud Innovation at Siriatech
Board of Directors
-Permanent Representative of the Société Bordelaise at the
Société Industrielle Financière de l'Artois Board of Directors.
Chargée
d'affaires
-Director of e-mail vision
DIRECTORS POSITION
During the General Meeting of November 18, 1999, Dassault Multimédia was appointed as director for six
years, this mandate ending at the end of the General Meeting approving the accounts of the financial year
ending December 31, 2004.
The company Dassault Multimédia announced its intent to resign from its directorship at the end of the
Board Meeting of March 3, 2005.
Furthermore, the company Spef Venture announced its intent to resign from its directorship at the end of this
meeting.
The Company has not received the letter of resignation yet. The Board can not place these resignations on
record.
However, in order to anticipate the implication of these resolutions, the Chairman proposes the co-optation
of Mr. Dominique Bézier as director and asks the directors to ratify this co-optation during the next General
Assembly. This co-optation is required for all the remnant duration of Spef Venture’s mandate, i.e., until the
General Assembly approving the accounts of the financial year ending December 31, 2008.
Mr. Dominique Bézier has already informed the Company that he agrees to carry on this duty.
ATTENDANCE ALLOWANCE
Would you please approve the amount of attendance allowance. We suggest the price of 18 000 €.
RATIFICATION OF THE WITHDRAWAL FROM THE BOND PREMIUM ACCOUNT
In the context of the exercise of stock options allotted on June 30, 1999, the Board of Directors during the
meeting of September 20, 2004, decided to withdraw from the account “Bond Premium”, an amount of 2
059.11 €. This amount corresponds to the difference between the nominal value of the options and the
subscription price.
During the same meeting of September 20, 2004, the Board decided to submit these decisions for approval
during the next meeting.
In accordance with the article L 225-184 of the French Code governing commercial law, your Board of
Directors informs you in a special statement of the operations made in accordance with the articles from L
225-177 to L 225-186 concerning stock options.
Your Board of Directors advise you to adopt the resolutions submitted to your vote.
Paris,
March 3, 2005
THE BOARD OF DIRECTORS
RESULTS OF THE COMPANY OVER THE LAST FIVE YEARS
Financial year
Type of indications
2000
2001
2002
2003
2004
CAPITAL AT FINANCIAL YEAR END
Registered capital
Number of existing ordinary shares
Number of existing preference shares
Maximum number of future shares to be
created
By bond conversion
By exercising right of subscription
3 798 841
12 662 805
4 183 990
13 946 632
4 183 990
13 946 632
1 997 583
19 975 833
1 999 032
19 990 317
-
-
-
-
-
712 216**
622 747***
452 910****
1 070 906*****
995 954*****
13 928 962
11 082 342
4 805 473
4 167 212
8 394 148
(372 401)
-
(6 014 476)
-
(2 264 031)
15 000
(3,294,113)
3 750
(502 129)
3 750
-
-
-
-
-
(961 847)
-
(25 034 335)
-
(7 591 240)
-
(1 151 232)
-
2 762 052
-
(0.03)
(0.45)
(0.26)
(0.16)
(0.03)
(0.08)
-
(1.80)
-
(0.54)
-
(0.06)
-
0.14
-
37
1 536 103
49
1 831 645
31
1 204 658
20
862 591
23
1 139 195
637 414
796 347
468 267
362 803
498 232
OPERATIONS AND EARNINGS OF
FISCAL YEAR
Sales figure before tax
Income before tax, employees' participation
and allowances for amortization and
provisions
Taxes on earnings
Participation of employees
Income after tax, employees' participation
provisions
Dividends
EARNINGS PER SHARE
Income before tax and employees'
participation, but before amortization and
provisions
Income after tax, employees' participation
provisions
Dividend paid for each share
Personnel
Average number of employees on the
payroll for the fiscal year
Payroll amount for the fiscal year
Amount of money paid out in fringe benefits
for the fiscal year
* This figure represents the number of start-up stock options and stock warrants allotted at December 31, 2000.
** This figure represents the number of start-up stock options and warrants allotted at December 31, 2001 to employees who
still work within the Company. The employees who left the Company can not retain the benefit of these stock options and stock
warrants.
*** This figure represents the number of start-up stock options and warrants allotted at December 31, 2002 to employees who
still work within the Company. The employees who left the Company can not retain the benefit of these stock options and stock
warrants.
**** This figure represents the number of start-up stock options and warrants allotted on December 31, 2003 to employees who
still work with the Company. The employees who left the Company can not retain the benefit of these stock options and stock
warrants.
***** This figure represents the number of start-up stock options and warrants allotted on December 31, 2004 to employees
who still work with the Company. The employees who left the Company can not retain the benefit of these stock options and
stock warrants.
APPENDIX TO THE PARAGRAPH OF THE MANAGEMENT REPORT AS OF DECEMBER
31, 2004 RELATING TO IFRS IMPLEMENTATION
Note 1. General IFRS accounting principles applicable to Hi-Media Group
According to European regulation n°1606/2002 issued on July 19, 2002, consolidated financial statement
that will be published as for 2005 fiscal year, will be set in compliance with the international accounting
rules enacted by the IASB (International Accounting Standards Boards). The international accounting
standards include IFRS (International Financial Reporting Standards) and IAS (International Accounting
Standards), as well as their interpretation. Considering the obligation to present a set of account that can be
compared in the same accounting standard, the consolidated financial statements of 2005 and 2004 are
presented according to IFRS and require a preparation of an opening balance sheet established according to
IFRS 1 "First implementation of IFRS frame of reference".
The CESR (Committee of European Securities Regulators) recommendation issued December 30, 2003
concerning the preparation of transition towards IFRS, encourage companies to publish as soon as
possible the impact of changing the frame of reference. In order to satisfy this requirement, Hi-Media has
decided to present this impact on the balance-sheet as of January 1st and December 31, 2004 and on the
profit and loss account for fiscal year 2004 from estimates currently known by the Company and in
compliance with IAS/IFRS published on December 31, 2004, and as applicable as of December 31, 2005.
The balance-sheet on December 31, 2004 and the profit and loss account of fiscal year 2004 so
reprocessed according to IFRS will constitute the basis for comparison for IFRS 2005 fiscal year, under
the condition that no modification of these standards will intervene before the end of 2005. Hi-Media
keeps the option to modify some options and accounting methods used in the present document, when
publishing its final and definitive first accounts in compliance with IFRS.
Note 2 details on one hand the chosen principles for the opening balance-sheet according to IFRS as of
January 1st, 2004 and, on the other hand, differences with French previously used accounting principles
and their impact on the balance-sheet and the profit and loss accounts of 2004 fiscal year.
1.1 Use of estimates
Establishing financial statements according to IFRS implies to make estimates and hypothesis that can
impact the figures in these financial statements.
1.2 R&D expenses
According to IAS 38 "Intangible assets", research expenses are recorded as expenses and development
costs are compulsory immobilized if they satisfy conditions as described in 1.4.
In compliance with this standard, all R&D expenses different from the ones described in note 1.4 are
recorded as expenses for the financial year during which they are used.
1.3 Goodwill
Goodwill represents the difference between the acquisition price including attached indirect costs and the
group share in the assets and liabilities true value at the date of the investment.
A goodwill that is not amortized according to IFRS 3 are tested for their value as soon as appears an
indication of a loss of value and at least once a year. Details for these tests are described in note 1.6. In
case of acknowledged loss of value, the depreciation comes as a charge in the profit and loss account.
1.4 Intangible assets
Development expenses
According to IAS 38, development expenses, including software movies are compulsory immobilized as
intangible assets when the Company can prove:
- its will and its financial and technical capacity to sustain the project development to its end;
- its capacity to use and to resale intangible asset;
- the availability of proper technical and financial resources to finalize the development and
the sale process;
- it's highly probable that future economical benefits linked to the development costs will go
to the Company;
- and that the cost of this asset can be reliably assessed.
Other development costs are accounted as charges in the financial year during which they have been
acknowledged (see note 1.2).
These costs linearly amortized over the estimated usability period.
Other intangible assets
According to IAS 38, in order to comply with the definition of an intangible asset, each item should be
identifiable (distinct or derived from contractual or legal rights), and controlled by the Company and it
should be likely that future economical benefits linked to this item should go to the Company.
An intangible asset is recorded in the balance-sheet when its cost can be reliably assessed considering that
in this case, it is assumed that future economical benefits linked to this item should go to the Company.
1.5 Tangible assets
According to IAS 16, the gross value of tangible assets corresponds to their acquisition or production cost.
Only cars were reevaluated according to their market value as proposed in option of IFRS 1.
Maintenance and repairing costs are recorded as charges as soon as their acknowledged, excepting those
dedicated to a productivity increase or the extension of the utility period of a good.
Immobilizations financed through leasing contracts as defined in IAS 17, are accounted in assets for the
actualized value of future payments or for the market value if inferior. The attached debt is recorded as
financial liabilities. These immobilizations are amortized as follows.
1.6 Depreciation in fixed assets
According to IAS 36 "Depreciation in assets", the utility value of tangible and intangible as soon as
appears an indication of a loss of value at each fiscal year closing. This test is done at least once a year for
asset with indefinite duration, which is, in the case of Hi-Media limited to goodwill.
The utility value of these assets is set in reference to future actualizes net cash flows and to net result
multiples. When this value is inferior to the net value in the account, a loss is recorded in the operating
result.
1.7 Financial assets and liabilities
Financial assets include financial immobilizations, current assets made of operating credit, letter of credit
and securities, including derivative financial product and cash.
Financial liabilities include loans, other financing tools and bank deficit, derivative financial debt product
and operating debt.
Loans and debts
This item includes debts linked to undertaking, other loans and debts. Their balance-sheet value
corresponds to the remaining amount of the capital. They should be tested as for their payment value, as
soon as appears an indication that their true value could be inferior to their balance-sheet value and at least
for the financial year closing. The loss of value is recorded as a charge in the profit and loss account.
Cash flow
Liquidity includes current bank accounts, marketable securities.
The latter are evaluated at their true value depending on the market price at the closing date. The
difference between the acquisition value and the true value is accounted in the profit and loss accounts.
1.8 Provisions
According to IAS 37, a provision is recorded when the Company has an obligation towards a third party
and it is likely that it will result in a payment to the benefit of that third party with no equivalent
compensation to be expected. In the case of reorganizations, an obligation is said to be effective as soon as
the reorganization has been publicly announced with a detailed action plan or schedule.
1.9 Pensions provisions
In accordance with IAS 19, and concerning pensions with defined benefits, the Company commitments as
for pensions are evaluated by an independent actuary, following the retrospective method forecasted
benefit items. This final amount is then actualized.
These evaluations are to be done once a year.
1.10 Stock option plans
Stock option plans are granted to managers and some employees of the Company. According to IFRS 2,
the shares are evaluated on the date of granting. The Company use the Black & Scholes mathematic model
to evaluate these grants. Changes in the market conditions after the date of granting have no impact on this
initial evaluation.
According to IFRS 2, only the plans granted after November 7, 2002 and of which rights are not acquired
on January 1, 2005, are evaluated and accounted as personal costs and equity capital is credited with the
amount of stock-options. Plans prior to November 7, 2002 are not evaluated neither recorded in the profit
and loss account.
1.11 Own shares
All shares held by the Company are recorded at their acquisition cost and deducted from equity capital.
The benefit of the potential sales of own shares is directly recorded as an increase of the equity capital, so
that the potential capital gain or loss have no impact on the net result.
Note 2. Effects of the first implementation of IFRS as of January 1, 2004 and
December 31, 2004
This note details on one hand the principles accepted for the building of the opening balance-sheet
according to IFRS as of January 1, 2004, and on the other hand, the differences with the previously used
French accounting principles and their impact on the opening and closing balance-sheet and on the profit
and loss account 2004.
The 2004 IFRS accounts are established according to IFRS 1, in compliance with IFRS/IAS applicable as
of January 1, 2005, and as published on December 31, 2004.
2.1 Terms of first implementation of IFRS
The Group must retrospectively implement on all previously released accounts and on its opening
balance-sheet, the accounting principles that are applicable on the date of its first financial statement
according to IFRS. Therefore, the IFRS opening balance-sheet dated January 1, 2004 takes into account
following differences with the balance-sheet closed on December 31, 2003 and presented according to
regulation CRC 99-02:
- Assets and liabilities accounted according to the previous standards and that not fit with the
definition or accounting principles of IFRS should be written-off;
- Recording and evaluation according to IFRS of all assets and liabilities that not fit with the
definitions and accounting principles of these standards, including those that were not accounted
under the previous frame;
- Potential change on classification concerning some balance-sheet items according to IFRS.
The Company has decided not to reconsider the company acquisitions previously accounted in French
consolidated accounts as of January 1, 2004, according to IFRS 3.
Concerning all other standards, the accounting value of assets and liabilities as of January 1, 2004 has
been reconsidered retrospectively as if IFRS had always been implemented.
Impact of these changes is directly accounted in compensation for equity capital in the opening balancesheet.
2.2 Effects on the net position at January 1, 2004
In €
Total
Equity Capital CRC 99-02
Investment costs
Tangible assets
Long-term assets
Financial assets
Retirement
Stock options
Equity Capital IAS/IFRS
421 066
(15 804)
(740)
785
59
(29 806)
375 560
Of which
group's share
Of which
minority
group
421 066
(15 804)
(740)
785
59
(29 806)
375 560
Note
-
2.6.3
2.6.4
2.6.5
2.6.5
2.6.1
2.6.1
2.3 Effects on balance-sheet at January 1, 2004
ASSET
Net Value
Restatement
Note
At 01/01/2004
Consolidated goodwill
916 850
0
Investment costs
Software and licenses
trademark
Others
Total intangible assets
15 804
367 490
73 723
38 493
495 510
(15 804)
(15 804)
Fixtures, fittings & improvements
Furniture and office/computer equipment & others
Total Tangible Assets
16 607
216 626
233 233
77 279
77 279
51 724
128 041
Inventory
Clients and related accounts
Other receivables and accruals
Investments securities
Available capital
2 233 342
1 188 394
730 546
584 586
1 200 806
(39 165)
(127 197)
39 165
Total asset
6 434 185
1 263 125
Financial Assets
Net Value
At 01/01/2004
IFRS
916 850
2.6.3
2.6.4
2.6.5 et 2.6.7
2.6.6
2.6.6
2.6.7
2.6.6
367 490
73 723
38 493
479 706
16 607
293 905
310 512
179 765
3 434 148
1 149 229
603 349
623 751
7 697 310
LIABILITIES
01/01/2004
Capital
Premiums
Reserves, retained earnings & translation adjustments
Stock options reserves
Consolidated result (group share)
Others
Total share capital (group share)
Other shareholder's equity (conditioned advances)
Restatement
Note
01/01/2004
IFRS
1 997 583
27 566 873
(27 763 933)
(1 361 240)
(18 217)
421 066
135 000
(97 838)
52 332
(45 506)
-
Minority interests
(10 575)
-
(10 575)
Provisions for risks and contingencies
154 362
-
154 362
Loans and financial debts
Suppliers debts and related accounts
Fiscal and partnership debts
Other debts and accruals
Debts
192 269
3 972 938
947 442
621 683
5 734 332
78 019
29 806
1 200 806
1 308 631
Total liabilities
6 434 185
1 263 125
2.6.1
2.6.4
2.6.1
2.6.6
1 997 583
27 566 873
(27 861 771)
52 332
(1 361 240)
(18 217)
375 560
135 000
270 288
3 972 938
977 248
1 822 489
7 042 963
7 697 310
2.4 Effects on the balance-sheet at December 31, 2004
Consolidated balance-sheet - Asset
ASSET
Net Value
At 31/12/2004
French
accounting
principles
499 044
Investment costs
trademark
Others
Total intangible assets
Fixtures, fittings & improvements
Furniture and office/computer equipment & others
Total Tangible Assets
Restatement
Note
Net value
At 31/12/2004
IFRS
58 031
2.6.2
557 075
9 202
34 009
73 723
111 740
228 674
(9 202)
(9 202)
2.6.3
34 009
73 723
111 740
219 472
15 716
164 875
180 591
15 582
15 582
2.6.4
15 716
180 457
196 173
39 468
42 000
2.6.7
81 468
Inventory
Investments securities
Available capital
2 925 346
2 129 318
885 560
1 240 544
1 953 549
(51 817)
(41 022)
51 817
2.6.6
2.6.6
2.6.7
2.6.6
4 878 895
2 077 501
844 538
1 292 361
Total asset
8 128 545
2 018 938
Financial Assets
10 147 483
Consolidated Balance-Sheet - Liabilities
31/12/2004
LIABILITIES
31/12/2004
Capital
Premiums
Reserves, retained earnings & translation adjustments
Stock options reserves
Others
Restatement
Note
IFRS
1 999 032
27 564 814
(29 130 307)
423 968
(22 146)
835 361
135 000
(97 838)
142 044
(34 105)
10 101
-
-
-
-
97 757
-
97 757
Suppliers debts and related accounts
Fiscal and partnership debts
Debts
111 346
4 973 833
1 398 230
577 018
7 060 427
18 582
36 706
1 953 549
2 008 837
129 928
4 973 833
1 434 936
2 530 567
9 069 264
Total liabilities
8 128 545
2 018 938
Minority interests
2.6.1
2.6.1
2.6.6
1 999 032
27 564 814
(29 228 145)
142 044
389 863
(22 146)
845 462
135 000
10 147 483
2.5 Effects on the consolidated balance-sheet at December 31, 2004
Consolidated Income Statement
31/12/2004
French
standards
Turnover
Other operating income
Charges invoiced by Hi-Media
Materials
Salaries and wages
Other operating charges
Taxes, VAT and related payments
Allocation for amortization and provisions
Restatement
14 361 765
582 529
(8 829 746)
(2 195 503)
(3 147 534)
(102 792)
(89 882)
(377 984)
Note
40 381
61 032
(96 612)
2.6.1
(304 061)
(413 491) 2.6.2, 2.6.3, 2.6.4
Operating results
200 853
(712 751)
Investment expenses and income
(26 831)
(2 840)
Pre-tax profit of integrated companies
174 022
(715 591)
(263 680)
931 432
263 680
-
841 774
(451 911)
Extraordinary expenses and income
Income tax
Net profit of integrated companies
Profit contribution by companies accounted for by the
equity method
Provisions for amortization of goodwill
Net consolidated income
Minority interests
Net income (Group share)
31/12/2004
IFRS
14 361 765
622 910
(8 829 746)
(2 134 471)
(3 244 146)
(406 853)
(89 882)
(791 475)
(511 898)
2.6.5
(29 671)
(541 569)
2.6.8
931 432
389 863
(417 806)
417 806
2.6.2
-
423 968
(34 105)
389 863
-
-
-
423 968
(34 105)
389 863
2.6 Nature of IFRS restatement
2.6.1 Retirements and stocks options
In the IFRS opening balance-sheet at January 1 st 2004, the current retirement allowance at January 1st,
2004 are directly allocated as net position decrease for an amount of €. 29 806, in compensation of an
increase of partnership debt.
The calculation of these retirement commitments at December 31, 2004 represent supplementary expense
of € 6 900 over the financial year 2004.
Furthermore, the precise value of stock options plans subsequent to November 7, 2002 , amounting to
€.179 424 was allocated for €. 52 332 on the retained earnings at opening by the stock options reserves
credit, representing the portion of acquired rights at January 1st, 2004. The account statement of 2004
includes a supplementary expense of €. 89 712 representing the portion of the rights acquired over the
fiscal year 2004.
The consequence on fiscal and partnership debts amount to €. 29 806 at January 1 ,2004 ant to €. 36 706 at
December 31, 2004.
2.6.2 Goodwill
In the IFRS authorative literature, the 2004 account statement shall not anymore bear the expense
corresponding to depreciation cost and goodwill of the subsidiaries Hi-Media Deutschland and Mobiquid,
i.e. an amount of €. 417 806.
However, further to loss in value tests, the group decided to record an allotment for goodwill depreciation
concerning Mobiquid in the IFRS authoritative literature, for an amount €. 359 775.
2.6.3 Intangible assets
The net investment costs at January 1st, 2004 are not recognized in the IFRS asset statement and are
charged to opening equity capital for an amount of €. 15 804.
2004 investment costs increase recorded as fixed assets in the French authoritative literature were charged
to expenses in the IFRS authoritative literature. The depreciation costs of investment costs for financial
year 2004 were taken into account as expenses in IFRS accounts. The impact of these restatements
represents an amount of €. 6 602 on the 2004 results.
2.6.4 Tangible assets
In the IFRS opening balance-sheet at January 1st, 2004:
- finance leases that were previously considered to be simple lease contracts are immobilized with,
in compensation a debt of the same amount in liabilities. The fixed amount (€. 78 019)
corresponds to the current value of future rents;
- cars
were
evaluated
on
the
basis
of
their
second
hand
value
at
January 1st, 2004 ; the impact on equity capital is negative amounting € 740.
In the 2004 income statement, the finance leases have a negative impact amounting to
€ 3 000 corresponding to:
- fixed assets depreciation of €. 62 437 as " depreciation costs" ;
- expenses related to the loan for an amount of €. 2 974 ;
- revocation of rent of €. 62 411 to the credit of " consumed purchases".
2.6.5 Cash flow and long-term investments
The revaluation of the investment securities to their precise value has a positive effect on equity capital at
January 1st 2004, up to €. 844 and up to €. 134 on 2004 results (this amount corresponds to the difference
between the unrealized capital gain at December 31, 2004 and the unrealized capital gain calculated on
January 1st 2004).
2.6.6 Factoring
Considering the Company keeps the risk on debts transferred to the factor, these corresponding amounts
have been considered as assets in the opening balance-sheet for €. 1 200 806 and as of December 31, for
an amount of €. 1 953 549 as compensation of "other debts".
Furthermore, the reserve amount was capitalized as cash flow for an amount of €. 39 165 at January 1st
2004 and of €. 51 817 at December 31, 2004.
2.6.7 Balance-sheet reclassification
Pledged investment securities held by Hi-Media Deutschland were reclassified as long-term investments for
an amount of €. 127 256 at January 1st 2004 and of €. 42 000 at December 2004.
2.6.8 Reclassification of extraordinary charges and income as operating result
According to IAS 1, the extraordinary charges amounting to €. 304 061 and the extraordinary income
amounting to €. 40 381 were reclassified in the operating result at December 31, 2004.
4.2 SPECIAL REPORT FROM THE BOARD OF DIRECTORS ON OPERATIONS CARRIED
OUT IN ACCORDANCE WITH FRENCH STATUTORY REQUIREMENTS (ARTICLES L225177 TO L 225-186 OF THE COMMERCIAL CODE
Dear Shareholders,
In compliance with the statutory requirements of the Code governing French commercial law (Article L
225-184 of the Commercial Code), we hereby inform you of the operations carried out in accordance with
statutory requirements of Articles L 225-177 to L 225-186 of the said Code, relative to options for
purchasing and subscribing to shares.
We hereby indicate below the number of shares (purchase) and subscription options, together with their
expiration dates and price, which over the last fiscal year have been granted by the Company to each of
the managing agents by virtue of the mandates and functions that each carry out on behalf of the
Company.
None
Finally we hereby inform you of details regarding options granted and taken up during the fiscal year by
the Company to the ten employees who have no capacity as managing agents and were offered the highest
number of options and subsequently purchased the highest number of shares.
In 2004, no option was allotted
14 484 of the Company’s options were issued after the option exercise agreed on June 30, 1999.This
option exercise involves only one employee of the Company.
Paris
March 3, 2005
THE BOARD OF DIRECTORS
4.3 YEARLY ACCOUNTS FOR THE COMPANY HI-MEDIA S.A.
Auditors general report
Financial year ended December 31, 2004
In accordance with the mandate given to us by last Shareholders Meeting, we hereby submit our report for
the financial year ending December 31, 2004, in relation with:
• Our audit on the annual accounting records and financial statement of the company Hi-Media S.A.,
included in this report;
•
The justification of our appreciations;
• The specific financial inspections and information procedures which we used in accordance with
French Law.
The yearly financial statements were established by the Board of Directors. It is in our realm, based on
our audit, to express our view on these statements.
OPINION ON THE YEARLY FINANCIAL STATEMENTS
Our audit has been executed in accordance with the accepted professional standards; these standards
require applying the highest level of diligence, so that we may be reasonably assured that the financial
statements are free from material misstatements. An audit involves examining, on a sample basis, the
relevant elements that sustain the information contained in the financial statements. It also involves an
assessment of the accounting principles which were applied, the validity of the estimates made in working
out the financial statements as well as their overall presentation. We believe that the examination of the
records supplies some reasonable argumentation for our opinion hereunder.
We certify that the annual accounts are fair and sincere and that they give a faithful picture of the results
of the operations during the year and of the financial situation, assets and liabilities of your Company at
the end of the financial year, in accordance with the rules and principles of French according regulations.
JUSTIFICATION OF THE APPRECIATIONS
In accordance with the Commercial Code specifications – art. L. 225-235 – pertaining the justification of
the auditors' appreciations, we draw your attention on the following elements:
.
Note 3.3 of the appendix develops the principles and methods related to the procedure used by the
Company to estimate the utility value of the shares and current accounts of its actual subsidiaries.
Within the limits of our appreciations, we have checked the correctness of the methodology which
has been used and we did verify that it was correctly applied.
.
We have also scrutinized the procedure used by the Company, as it is described in note 7.5 of the
appendix, in estimating the risks due to its litigation with Abacho AG, a German company.
Taking into account the elements available to this day, our research did not produce any elements
able to have any sustainable doubt on the method which was used.
Our appreciations on these elements stay within the limits of the auditing policy used for an overall
scrutiny of the yearly accounts and have thus allowed us to express our opinion, without any reservation,
in the first part of the present report.
VERIFICATIONS AND SPECIFIC INFORMATIONS
With applying accepted French professional standards, we also carried out the specific inspections
required by law.
We have no observation as regards the sincerity and the conformity with the actual accounts of the
information given in the report of the Board of Directors as well as in documents submitted to the
shareholders on the financial situation and the yearly accounts.
In accordance to the French law, we made sure that all the information relating to the acquisition interest
and the leverage buyout and to the identity of the holders of capital are set out in the management
statement.
Paris and Paris La Défense, April 1st 2005
KPMG Audit
Division of KPMG S.A.
EREC Associés
Frédéric Quélin
Associate
Didier Lechevalier
Associate
Auditors' Special Report
In our capacity as Auditors of your company, we hereby submit you with our report on the agreement
regulated by Law.
AGREEMENTS AUTHORIZED DURING THE FINANCIAL YEAR
In application of Article L225-40 of the Code governing French commercial law, we have been advised of
certain agreements that have needed the prior authorization of your Board of Directors.
Whilst it is not within our mandate to investigate for the existence of other possible agreements, it is
however our obligation to inform you, on the basis of the data that we have been given, of the important
characteristics and terms of any agreements of which we have been advised. Furthermore, it is not
incumbent on us to pass judgment on the usefulness or validity of said agreements, but rather, in
accordance with the terms of Article 92 of the Government decree dated March 23, 1967, to provide
shareholders with sufficient information to enable them to formulate a clear picture of the imperative
context in which the Board has submitted said agreements for their (i.e. the shareholders') approval.
Our audit has been executed in accordance with the accepted professional standards; these standards
require applying the highest level of diligence, to control that the information we received is matching
with the information provided by the source document.
* Agreement signed with the company Hi-Media Italia Srl:
Director in charge:
Mr. Cyril Zimmermann
Nature and object of agreement:
In order to abandon the advances made by your company to financial advances Hi-Media Italia Srl, both
companies passed an agreement of current account droppage on July, 30 2004.
Terms:
According to this agreement, Hi-Media abandoned an amount of 428 404.29 euros to Hi-Media Italia Srl.
AGREEMENT MADE DURING THE FINANCIAL YEAR AND THAT HAD NO PRIOR
AUTHORIZATION
We hereby submit with our report all agreements referred to in Article L 225-42 of the code governing
French commercial Law.
In application of Article L 225-240 of the said Code, we inform you that these agreements did not have
needed the prior authorization of your Board of Directors.
It is within our mandate, on the basis of all information that we have been given, to acknowledge all
important characteristics and terms of these agreements that clarify the absence of prior authorization.
However, it is not incumbent on us to evaluate the usefulness or the validity of these agreements, but
rather, in accordance with the terms of Article 92 of the Government decree dated March, 23, 1967, to
provide shareholders with sufficient information to enable them to formulate a clear picture of the
imperative context in which the Board has submitted these agreements for the shareholders' approval.
* Agreements signed with Laroquette Musique et Média :
Director in charge:
Mr. Cyril Zimmermann.
1.
Agreement of current account reimbursement:
Nature and object of agreement:
Your Board of Directors of September 20, 2004 agreed the reimbursement of the current account agreed
on May 31, 2004 with the company Laroquette Musique et Média.
Terms:
This agreement stipulates the reimbursement of € 37 419.72 Euros during 6 years in monthly instalments
amounting to € 519.72. Interest charges are accrued by 4% rate.
In that capacity, your Company recorded a proceeds of 1.416,06 Euros.
2.
Domiciliation agreement
Nature and object of the agreement:
A domiciliation agreement was signed with the company Laroquette Musique et Média on May 12, 2003.
Terms:
This agreement was initially considered by your Company to be part of the normal agreements concluded
at market rates.
Considering the transfer of your partnership interest in this company on March 30, 2004 and du to the lack
of partnership capital interest since then, this agreement is in the scope of regulated agreements.
The domiciliation of Laroquette Musique et Média is free as long as this company employs less than five
persons.
The non-compliance with the authority procedure result from omission.
Statutory Auditors
KPMG AUDIT
Division of KPMG SA
EREC ASSOCIES
Frédéric QUELIN
Associate
Didier LECHEVALIER
Associate
ASSETS – HI-MEDIA S.A.
Réf
Gross Depreciation and
Provisions
Net in Euro at
31/12/04
Net in Euro at
31/12/03
Fixed assets
Intangible assets
Concession, patents, software
Goodwill
Intangible assets in use
Advances and payment on account
4.1
Tangible assets
Fixtures, fittings and other improvements
Other tangible assets
4.2
Financial assets
Equity interest
Investments in subsidiary undertakings
Deposits and Securities
Treasury shares
4.3
Total
1 136 117
-
1 019 668
-
88 219
28 401
-
116 449
-
3 300
193 138
325
185 121
2 563
29 792
2 975
8 017
16 534 832
2 254 325
26 426
22,510
13 671 485
2 051 126
363
3 510 245
1 948 539
22 783
22 510
2 863 347
203 199
26 426
22 147
20 170 648
16 928 088
5 653 052
3 242 560
Current assets
Receivables
Other receivable
Investment securities
Cash and liquid assets
4.4
4.5
4.6
4.6
1 897 554
3 821 837
637 546
166 657
546 644
2 864 885
-
2 224 223
989 681
792 560
202 010
1 350 910
956 952
637 546
166 657
Accruals and Deferrals
Pre-paid expenses
4.7
55 954
-
42 792
55 954
6 579 548
3 411 529
4 251 266
3 168 019
Total
Total assets
26 750 196
20 750 196
9 904 318
6 410 579
LIABILITIES – HI-MEDIA S.A.
Ref
Shareholders' equity
Total
4.9
4.9
Total
Debts
Loans and debts with financial institutions
Other financial borrowings and debts
Suppliers and related accounts
Payroll and income taxes
Debts on fixed assets
Other debts
4.10
4.10
4.11
Total
Accruals and deferred income (liabilities)
Deferred income
Total liabilities
Net in Euro at 31/12/03
1 999 032
30 503 495
(30 973 116)
51 267
2 762 052
1 997 583
30 505 554
(29 821 884)
50 511
(1 151 232)
4 342 730
1 580 532
66 253
4 000
54 054
4 000
70 253
58 054
3 746 273
957 114
9 108
778 840
2 947 275
582 638
1 101 250
5 491 335
4 631 163
-
140 830
9 904 318
6 410 579
4.8
Capital stock or individual capital
Issue, merger and contribution premiums
Retained Earnings
Reserves
Income (loss) for the year
Provisions for charges
Provisions for contingencies
Net in Euro at 31/12/04
4.12
INCOME STATEMENT – HI-MEDIA S.A.
Ref.
in Euro
31/12/04
(12 months)
bin Euro
31/12/03
(12 months)
Operating income
Sales invoiced to advertisers
5.1
Others
Net sales
Capitalized production costs
Allocations for provisions, depreciation and transfer
charges
Other income
TOTAL
Operating expenses
Charges invoiced by the media
Sub-total
Other purchases and external charges
5.2
Payroll
Fringe benefits
Depreciation and amortization of intangible fixed assets
Depreciation and amortization of tangible fixed assets
4.1
4.2
Provision for loss of value in current assets
Other expenses
TOTAL
OPERATING PROFIT / (LOSS)
Financial income
TOTAL
Financial expenses
Interest and related expenses
Estimated expenses
Other
TOTAL
FINANCIAL INCOME (LOSS)
Extraordinary income
5.3
Proceeds from sale of assets
Extraordinary operating profits
Reversals of provisions
TOTAL
7 906 954
487 194
8 394 148
47 039
180 204
3 845 671
321 541
4 167 212
137 725
205 535
8 826 926
293 100
4 598 037
5 418 765
5 418 765
1 105 358
83 672
1 139 195
498 232
41 836
9 577
78 939
11 513
2 968 322
439 839
4 518 201
4 518 201
2 613 612
2 613 612
988 776
40 028
862 591
362 803
97 502
41 397
65 216
59 212
2 517 525
(533 100)
2 611 064
2 611 064
61 417
1 638 959
428 404
2 128 780
2 389 421
35 816
321 652
2 479 076
2 836 544
(225 480)
178
496 735
496 913
2
183 144
183 146
532 517
15 655
12 199
560 371
(63 458)
3 750
2 762 052
0,14
259 513
267 410
45 125
572 048
(388 902)
3 750
(1 151 232)
(0,06)
Extraordinary charges
Book value of assets sold
Exceptional and extraordinary expenses
Depreciation and provisions
TOTAL
EXTRAORDINARY INCOME (LOSS)
Employees' profit-sharing account
Corporate income tax
INCOME (LOSS) FOR THE YEAR
Result per share
5.4
Notes: Hi-Media S.A.
STATEMENT OF ACCOUNT ENDING DECEMBER 31, 2002
Note 1 Preamble
Hi-Media S.A. ("Hi-Media" or "the Company") is an advertising management company and markets
advertising space to advertisers on the Internet ("the media"). It also offers direct marketing services. On
behalf of the media, it provides services for prospecting and canvassing of advertisers, recovery,
distribution and targeting of advertising on the Internet and, for so doing, is paid on a management
commission basis.
Note 2
Significant events of the period 2004
On March 30 2004, Hi-Media transferred all its equity shares in the capital of Laroquette Musique et
Media (50%).
On June 8, 2004 Hi-Media UK Plc. was dissolved as well as Hi-Media Technology Sweden (HTMS) on
March 14, 2004.
Finally, Hi-Media bought an interest of 50% in the Spanish company Europermission SI, on March 25,
2004August 21 2003, in order to develop its marketing direct line of business.
Note 3
Accounting principles and methods
The annual accounts are presented in accordance with generally accepted accounting practices in France
and take into account the CRC 99-03 ruling dated April 29, 1999 relative to the rewriting of the taxonomy
of accounts.
The Company has adopted the following principles and methods:
3.1
Intangible assets
• All software and licenses acquired by the Company are recorded on the balance sheet at their
acquisition value and are amortized over their estimated period of use (between 3 and 5 years).
• Any brand names or trademarks acquired by the Company are recorded on the balance sheet at their
acquisition value. They are not subject to amortization. They are only depreciated if the Company's
operating conditions render this a necessity.
3.2
Tangible assets
Tangible assets are shown at their cost of acquisition and are amortized based on their operational life as
follows:
• Fixtures and improvements
8 years straight-line depreciation
• Office and computer equipment
• Furniture
3.3
Long-term investments and subsidiaries' current accounts
The gross value of subsidiaries' shares represents either their cost of acquisition or the amount of called-up
capital at the time they were formed.
A provision for depreciation of shares and current accounts has been created on the balance sheet if their
utility value set at year-end closing has fallen lower than the price paid for them (book value).
The utility value of the subsidiaries in activity was determined according to their net balance, accrued,
when need be, by the net value of the acquisition differentials existing on these subsidiaries as well as
from some analyses based on the method of future cash flows.
Shares and current accounts of the subsidiaries that are being closed are 100% written down. An
additional provision for negative net position is recognized when the shares and current accounts
depreciation do not cover the negative net position of these subsidiaries.
3.4
Accounts receivable and related accounts
These accounts are evaluated at their nominal value and a special provision for depreciation is allowed if a
loss is likely to be incurred.
3.5
Investment securities appear on the balance sheet at their value when acquired. Whenever their inventory
value is less than their cost of acquisition, provision for depreciation is calculated by using the difference
between these two amounts. Unrealized gains at the year-end do not appear on the balance sheet.
3.6
Recording the turnover of bills invoiced to advertisers
The Company makes its profits from advertisers via contracts for selling advertising space, and to a lesser
extent, via affiliation contracts, leasing databases and from sponsorship contracts.
Sales contracts for advertising space:
Advertising space sales contracts allow clients to advertise on-line and to have their banner advertisements
distributed on one or several media within the Hi-Media network, over a defined period of time. The value
of these contracts is dependant on the number of consulted pages required by the advertiser.
For contracts completed by the year-end, sales figures to be shown on the income statement represent the
contract value or the value of the number of pages consulted, if this amount should be lower than the
contract.
For contracts that are ongoing at year-end, turnover recorded at the year-end represents either:
- the value of the number of pages actually consulted by the year-end, if this number of pages is less
than, or equal to, that stipulated in the contract;
- the pro rata temporis value of the number of pages consulted, if the number of consulted pages as
agreed in the contract amounts to more than the number allowed for in the contract.
Direct marketing contracts:
Direct marketing contracts cover services whereby advertisers can obtain the addresses of Internet users
that Hi-Media has selected and who have agreed to be listed for direct marketing operations. Furthermore,
Hi-Media also offers advertisers and sites global database management solutions. Sales figures are
recorded when messages are sent or when technical services have been provided.
Sponsorship and content syndication contracts:
Sponsorship contracts and content syndication contracts deliver a fixed rate of payment in exchange for
allowing advertisers to insert their logo or any other distinctive trademark on the Hi-Media network. For
accounting purposes, any such fees are recorded linearly for the duration of the service provided.
3.7
Recording in the income statement of expenses incurred for purchasing advertising
space
These charges, invoiced to Hi-Media by the media, are recorded as operating expenses. Hi-Media's
management commission is the difference between sales invoiced by Hi-Media to advertisers and the
amount invoiced to Hi-Media by the media for advertising space purchases.
3.8
Corporate income tax
Corporate income tax is recorded depending on the nature of the tax due. The income statement does not
take into account future effects of timing differences.
3.9
Pensions indemnities
At December 31, 2004, as retirement gratuities were not seen as a potential incurrence for the Company
(calculated on the basis of the collective bargaining agreement in force within the Company and
information relative to the personnel employed by the Company at the year-end), no provision for this has
been made in the accounts. These commitments are however presented as off-balance sheet (see note 7.4).
Note 4
4.1
Balance sheet
Intangible assets
The variations in gross assets can be analyzed as follows:
1er January 2004
Increases
Decreases
31 December 2004
€.
"Hi-Media" trade name
Goodwill
Immobilizations
1 062 394
73 723
1 136 117
48 638
28 401
732 593
-
378 439
73723
28 401
-
732 593
480 563
On December 31, 2004, the commercial management software Adfont (K€ 300) fold into the gross value
of software and licenses.
Adserving and e-mail brokerage technologies evolved a lot. The software developed by Hi-Media is
therefore obsolete. That is why Hi-Server and Hi-Mail Server (K€ 575), that were already 100%
depreciated on December 31, 2003 could not be produced and were written of 2004 fiscal year.
Variations in amortization and provisions for depreciation can be analyzed as follows:
€.
Goodwill
4.2
January
1 2004 Increases
c. 31 2003
____________
___________ Decreases
___________ De
____________
1 019 668
41 836
697 561
363 943
____________- ____________- ____________- ____________1 019 668
41 836
697 561
363 943
Tangible assets
Variations in gross values are to be analyzed as follows:
€.
Fixtures, fittings and improvements
Office and computer equipment
Furniture
January 1 2004
3 300
180 212
12 926
196 438
Increases
30 940
9,680
Decreases
39 570
39 570
Dec. 31 2004
3 300
171 582
12 926
187 808
Increases and decreases of fixtures, fittings and improvements are mainly due to the disposal of automated
office equipment and its replacement with new equipment.
Variations in amortization are to be analyzed as follows:
January 1 2004
Increases
Decreases
Dec. 31 2004
€.
Fixtures, fittings and improvements
Office and computer equipment
Furniture
4.3
324
413
-
737
173 159
8 221
39 570
141 810
11 963
943
-
12 906
185 446
9 577
39 570
155 453
Financial assets
Variations in gross values are analyzed as follows:
January 1 2004
Increases
Decreases
Dec. 31 2003
€.
Equity interests
Investments in subsidiary
undertakings
Guarantees and deposits
Own shares
16 534 832
83 530
500 485
16 117 877
2 254 325
26 426
22 510
-
96 281
3 643
-
2 158 044
22 783
22 510
83 530
600 409
18 321 214
18 838 093
-
The increase of equity interests is due to the recapitalization of Hi-Media Belgium for an amount of € 82
000 and to the purchase of 50% of the capital of Europermission for an amount of € 1 530..
Decreases are due to relinquishing of the equity stakes in Laroquette Musique & Media as well as the
dissolution of the British subsidiary, Hi-Media UK and of Hi-Media Technology Sweden.
The decrease of the investment in subsidiary undertaking is due to the partially repayment of this
investment by Hi-Media Scandinavia AB.
The own shares are related to the share redemption program approved by the general meeting of April 21,
2000 and implemented by the decision of the Board of Directors on August 14, 2001.
The own shares bought under this program (35 719 shares) were reposted from the item "investment
securities" to the item "financial assets" as there was no definite allocation for redempted shares.
The meeting's approval expired on October 21, 2001. A new stock redemption program was approved by
the general meeting on March 26, 2002 and implemented by decision of the Board, on August 29, 2002.
Under the terms of this program, app. 50% of redemption will be allocated to employees, app. 40% will be
allocated to purchase or transaction, and app. 10% will be allocated to the price regulation. No share was
redempted at December 31, 2002 under this new program.
Variations in depreciation are to analyzed as follows:
January 1 2004
Increases
Decreases
Dec. 31 2004
€.
Equity interests
Investments in subsidiary
undertakings
Guarantees and deposits
Own shares
13 671 485
1 581 194
2 645 047
12 607 632
2 051 126
363
-
1 841 621
363
209 505
-
15 722 974
1 581 194
4 487 031
12 817 137
Movements in this period represent provisions and reprises recorded at December 31, 2004, taking into
account the utility value of the equity interests and investments in undertaking at the year end closure (see
3.3 and note 11) and to dissolution of Hi-Media UK Plc. and Hi-Media Technology Sweden (HTMS) (see
note 2).
4.4
Trade accounts receivable
Trade accounts receivable are to be analyzed as follows:
€.
Dec. 31 2004
Dec. 31 2003
Clients
Invoices to be drawn up
2 614 654
91 150
1 894 965
2 589
Allowance for bad debts
2 705 804
(481 581)
1 897 554
(546 644)
2 224 223
1 350 910
All accounts receivable are redeemable in less than one year.
"Allowance for bad debts" includes for the most part debts that were deemed unlikely to be recoverable at
December 31, 2004
Within the framework of a factoring agreement, Hi-Media handed over certain credits (no longer
appearing as receivable) totaling a sum of K€ 1 954 on December 31, 2004 for which in the event of nonpayment, the Company is responsible. Among these credits redeemed, all were , on December 31 2004,
made to the factor, with the exception of an amount of K€ 57 which was not made to the factor and an
amount of K€. 102 retained as guarantee by the factor. Both those amounts, totaling K€ 159 are to be
found in "other receivables".
4.5
Other receivables
0ther receivables are to be analyzed as follows:
€.
December 31 2004 December 31 2003
Trade creditors – debit balance
Miscellaneous debtors
VAT
Dues from the factor, incl. Guarantee fund
Other receivables Total – gross value
Current accounts allowance
Other receivables Total – net value
93 462
2 676 924
564 765
158 776
161 900
3 028 728
469 236
161 973
3 493 927
(2 504 246)
3 821 837
(2 864 885)
989 681
956 952
Under the item "miscellaneous debtors", the current accounts of subsidiaries represent the vast majority of
this total (€ 2 599 511), details of which are listed in the subsidiaries and shares table (sees Note 11 and
12). These current accounts were depreciated by € 2 504 246 (see 3.3, 5.3, Note 11 and Note 12).
All accounts receivable are redeemable in less than one year.
4.6
Income from investments and cash assets
€.
December 31 2004 December 31 2003
Own shares
Other shares
Cash assets
630,973
17 560
202 040
630 973
6 573
166 657
994 570
804 203
Income from investments breaks down as follows:
Income from investments
FCP CCF SINOP DIGIT
4.7
Value at balance Net asset value at Realized gains
sheet
December 31,
non recognized
2004
775 000
775 338
338
775 000
775 338
338
Pre-paid expenses
The item "pre-paid expenses" stood at € 42 792 on December 31, 2004 and mainly represents the portion
of expenses invoiced for general expenses and marketing activities relating to the period subsequent to
December 31, 2004.
4.8
Shareholders' Equity
Shareholders' equity recorded the following changes during 2003:
€.
January 1
Capital
Share premiums
Reserves
Carried forward
Income (loss) for
the year
2004
Appropriation of
2002's income
Income or losses
For 2003
Increase of
capital
Others
December 31
2003
1 997 583
30 505 554
50 511
(29 821 884)
(1 151 232)
(1 151 232°)
1 151 232
2 762 052
1 449
-
(2 059)
756
-
1 999 032
30 503 495
51 267
(30 973 116)
1 580 532
-
2 762 052
1 449
(1 303)
4 342 730
2 762 052
Following stock option exercise occurred in 2004, the company carried out a capital increase. This option
exercise comes within the option plan agreed by the extraordinary General Meeting of June, 30 1999 and
implemented by the Board of Director of the same day. Considering various capital operations made since
that date, the subscription price which was initially of FRF 10 was adjusted at € 0.01. This price was less
than the current nominal of the Hi-Media’s share, (€ 0.10), the Board of Director, during the meeting of
September 20, 2004, decided to appropriate from the account "bond premium" the difference between the
nominal value and the subscription price ("Others"), i.e. an amount of € 0.09 per subscribed share. These
decision will be submitted to the General meeting agreement on April 22, 205.
4.8.1 Variations in capital stock
On December 31, 2004, the Company's capital stood at € 1 999 031,70 representing 19 990 317 shares,
each with a nominal value of € 0.1.
.
4.8.2 Scheme for issuing BCE1 shares and share subscription options
The Company has set up various stock option schemes for BCEs and other subscription options, the main
characteristics of which are detailed in the table below:
Summary table of stock with access to company capital (BCE share subscription
Total
options)
Meeting dates
24/01/2000
21/04/2000
21/04/2000
Board of Directors'
14/02/2000
Meeting Dates
Total number of
417 045
134 482
551 527
shares allocated
Number of shares
which can be
subscribed to*
112 031
11 011
123 042
Number of shares that
can be subscribed to
by executives
0
0
0
Number of managers
concerned
0
0
0
Number of employees
concerned
6
4
10
Starting date to
14/02/2003
21/10/2001
exercise options
Expiry date
14/02/2005
21/04/2005
Subscription price
EUR 1.95
EUR 8.06
* Options allocated to employees currently employed by the company; former employees are no longer eligible for
these bonds.
No BCE option was exercised in the 2004 financial year.
Assembly
Board of Directors'
meeting date
Total number of
shares allocated
Number of shares
which can be
subscribed to (1)
Number of shares
which can be
subscribed to by
executives
Number of
executives conc.
Number of
employees
concerned
Starting date to
exercise options
Expiration date
Subscription price
(2)
30/06/1999
30/06/1999
17/11/1999
152 475
Summary table of stock with access to company capital
(share subscription options)
21/04/2000 21/04/2000 21/04/2000 21/04/2000 21/04/2000 25/04/2003
04/05/2000 14/09/2000 02/11/2000 13/12/2000 23/10/2001 26/05/2003
27/06/2000
37 210
70 734
27 400
37 037
91 001
500 000
Total
25/04/2003
10/07/2003
350 000
1 265 857
3 816
8 530
3 000
4 700
2 866
0
500 000
350 000
872 912
0
5 680
0
3 000
0
0
90 000
350 000
448 680
0
1
0
1
0
0
3
1
6
2
1
1
2
1
0
9
0
16
01/07/2004
05/05/2002
15/09/2002
03/11/2002
14/12/2002
23/10/2003
26/05/2005
10/07/2005
30/06/2009
04/05/2010
14/09/2010
02/11/2010
13/12/2010
23/10/2011
25/05/2013
10/07/2013
EUR 0.01
EUR 8.06
EUR 9.93
EUR 8.20
EUR 5.31
EUR 0.59
EUR 0.33
EUR 0.35
(1) Options allocated to employees currently employed by the company; former employees are no longer eligible for these bonds.
(2) Option subscription price calculated on the date the opinions were allocated and corresponding to average weighted share price in the previous 20 days of
trading to which a 5% discount was applied.
During the fiscal year 2004, 14 484 shares were subscribed for a price of € 0.01.
Company capital currently comprises 19 990 317 shares. If all allocated bonds and options were exercised,
i.e. an issue of 995 954 shares, a shareholder holding 1% of capital prior to the operation would hold
0.95% afterwards, i.e. a decrease of 0.05%.
4.9
Provisions
€.
January 1 2004
Provisions for disputes
Other provisions for
contingencies
Total provisions for
contingencies
Provisions for
reorganization
Other provisions for charges
Total provisions for charges
Total
4.10
Allotment
Utilization
Writebacks
Dec. 31 2004
-
-
-
-
-
4 000
-
-
-
4 000
4 000
-
-
-
4 000
8 929
12 199
-
-
21 128
45 125
-
-
-
45 125
-
66 253
12 199
-
12 199
-
-
70 253
54 054
58 054
Loans and debts with financial institution
There is no loan or debt contracted with financial institution.
4.11
Debts with suppliers and other accounts payable
The item "debts with suppliers and other accounts payable" can be broken down as follows:
€.
December 31 2004
Accounts payable
Invoices to be received
December 31 2003
2 389 180
1 357 093
2 014 732
932 543
3 746 273
2 947 275
The item "accounts payable" is mainly comprised of invoices to Hi-Media from the media that had not
been paid by year-end.
All accounts payable date from less than one year.
4.12
Other debts
Other debts concerns mainly the current account of Mobiquid (K€ 652).
4.13 Deferred income
On December 31 2004, there is no deferred income.
Note 5
5.1
Income statement
Detailed Sales
2004
2003
Sale of advertising space
6 096
3 131
Direct marketing
1 811
714
487
322
8 394
4 167
Others
The item "Others" represents various service deliveries, mainly inside the group.
5.2
Other purchases and external charges
This item can be broken down as follows:
€
2004
2003
Marketing and communication
250 688
128 658
Services and fees - France
162 367
145 814
-
-
General operating costs
174 980
162 073
Rental and technical costs
411 957
466 137
Remuneration for factoring and credit insurance
105 366
87 094
1 105 358
988 776
Services and fees - International
Total other purchases and external charges
5.3
Investment income (loss)
5.3.1 Financial charges
€.
Interest charges
Provisions for shares and subsidiary current accounts and
debts linked to undertakings
Provisions for closing down subsidiaries and depreciation of
own shares
Others
2004
61 417
2003 S
35 816
1 638 959
-
321 652
-
428 404
2 479 076
2 128 780
2 836 544
Taking into account the utility value of shares and current accounts of subsidiaries at year-end as
described in Note 3.3, the provision recorded in the 2004 accounts totaling
€ 1 638 959 concerns undertaking shares amounting to € 1 581 194 and current accounts amounting to €
57 576.
Also included under financial charges € 31 794 are the factor's financing commission fees, calculated on
the basis of the amount trade debts that the factor is financing. Actual factoring fees are recorded under
the item "other purchases and external charges.
The item "Others" represents abandonment on current accounts concerning the Italian subsidiary.
5.3.2 Financial revenue
€.
Gain on disposal of investment not held on a long-term basis
Draw-down on provisions of shares and current accounts of
subsidiaries
Other draw-down
Others
2004
2003
5 423
4 408 337
16 897
2 290 163
365
104 076
145 719
158 285
4 518 201
2 611 064
Draw down on provisions concerns the shares of the subsidiaries for an amount of K€ 2 148, current
accounts for an amount of K€ 418 and debts linked to undertakings for an amount of K€ 1 842.
The item "Others" represents interest on debtor current accounts of the subsidiaries in Hi-Media S.A
accounts.
5.4
Profit on
capital
transaction
€.
Assets disposition
Losses generated
by identified
contracts
Provisions for
risks
Provisions for
charges
Reorganizations
Exceptional
depreciation
Others
Total
Profit on
manageme
nt
transaction
1
Provisions and
amortizations
reversal
Extraordin
ary capital
expenses
Exceptional
and
extraordinary
expenses
496 735 (532 517)
-
-
-
-
-
-
-
-
-
(15 082)
-
-
-
-
(573)
178
-
496 735
(532 517)
(15 655)
Estimated and
amortization
expenses
Total
(35 604
-
-
-
-
(12 19
(27 281)
(573)
(12 19
(63 458)
Assets disposition concerns the shares of the subsidiaries: Hi-Media UK, Hi-Media Technology Sweden
and Laroquette Musique et Media, as well as the software Hi-Mailing.
Note 6
Income tax
On December 31 2004, the Company has deficits that could be indefinitely carried forward of €. 18 123
280.
On December 31 2004, the Company had also long-term depreciations that could be carried forward over
a maximum term of è years amounting to € 12 448 795 and over a maximum term of _ years amounting
to € 313 688.
Note 7
7.1
Off-balance-sheet commitments
Long-term rental
The gross value of other fixed assets financed by long-term rental contracts together with the
corresponding rents may be broken down as follows on December 31 2004:
€.
Computing
equipment
Sum financed
Rents paid:
• for the period
• cumulated for previous years
Future rents:
• at less than a year
• at more than one year and less than five
years
Other
equipment
43 000
-
12 478
34 265
-
9 502
7 991
-
No new contracts were made in 2004.
7.2
Security deposits given to subsidiaries
At December 31, 2004, there is no longer security deposit given to subsidiaries..
7.3
Investment securities' pledge
At December 31, 2004, there is no more investment securities pledged.
7.4
Litigation
On March 14 2003, has compelled Abacho AG, a German company, attendance at the bar of the market
court in Paris due to he violation by the latter of its contractual obligations because of its indebtness of
€ 57 924,14 and in view to obtain the legal termination of an advertising agreement dated May 3, 2001
binding both companies, entitling Hi-Media to sue Abacho.
On November 18, 2003, Abacho submitted to the bar a counterclaim to legally annul the advertising
agreement against Hi-Media and to condemn it to pay conventional indemnities to an amount of
€ 2 404 912,18.
According to the Company and its lawyer, the risk of succeeding of Abacho AG requires is very low.
The Company has consequently not registered any provision concerning this litigation in its accounts on
December 31, 2004.
Note 8 Human Resources
The workforce stands at 23 people at December 31, 2004, as compared to 20 on December 31 2002
The average workforce during financial year 2004 was of 23 people, and split up as follows:
-Executives: 13 people
-Non executives: 7 people
Note 9
Executives
The executives' annual gross salary amounted to €125 500 over 2004.
No amount was allotted to management bodies during 2004. No advance was made.
The Company has no pension or related compensation liability.
Note 10 Events subsequent to December 31, 2004
None
Note 11 Table of subsidiaries and holdings
Corporate
name
Address
Capital
Hi-Media
Belgium
Hi-Media
Publicidad y
Marketing SL
Av Brugmannlaan
80 1190 Forest
C/ Rosario Pino
8 1º A
28020 Madrid
345 000
EUR
100 000
EUR
Hi-Media
Portugal Lda
Avenida Duque
d’Avila n°26 1049041 Lisboa
Hi-Media
Poland
Sp.z.o.o
Swieradiwska, 40
02-662 Warszawa
Hi-Media
Scandinavia
AB
Kungsgatan 12-14 S111 36 Stockholm
Hi-Media
Italia Srl
Hi-Media
Deutschland
AG
Via R. Franchetti 1
20124 Milano
Gerhard – Hoehme
Allee 1
41 466 Neuss
Hi-Pi
20, rue du Sentier 75
002 PARIS
Mobiquid
20, rue du Sentier 75
002 PARIS
Marquès de Riscal
Europermissio
11
n SL
Equity other
than capital
% directly
owned
Shares (EUR)
Turnover
Loans and advances
before tax for Results (full
agreed by the
year profit or
the last
Company and not paid
financial year loss)(EUR)
yet (EUR)
(EUR)
Gross
value
Net value
Gross
Value
Net value
Dividends
cashed by
the
Company
over the
year
Average rate
(EUR)
Date of
creation
or acquisition
Observations
(964 754)
EUR
100 %
344 990
108 486
-
-
671 392
(58 754)
-
-
09.03.00
(2 141 581)
EUR
99,99 %
99 990
-
2 192 616
-
-
(98 701)
-
-
13.06.00
100 000
EUR
(1 161 468)
EUR
49,9 %
49 900
49 900
-
-
651 654
7 520
-
-
31.10.00
391 000
PLN
(2 051 356)
PLN
100 %
100 370
-
311 630
-
-
(11 986)
-
4,5323
PLN
15.12.00
100 000
SEK
230 713
SEK(3)
100 %
2 950 000
-
2 158 044
1 948 539
2 041 003
134 661
-
9,122
SEK
11.12.00
98 000
EUR
(420 884)
EUR
100%
98 000
-
-
-
-
390 245
-
-
26.03.01
1 125 000
EUR
(1 032 571)
EUR
100%
10 092 500
2 863 127
-
-
2 574 818
148 981
-
-
30.04.01
7 500
EUR
(46 088)
100%
7 500
7 500
95 266
95 266
102 743
(71 825)
-
-
13.05.02
111 401
EUR
1 115 940
100%
2 291 096
479 702
-
-
687 481
(556 499)
-
-
25.04.03
3060 EUR
-
50%
1 530
1 530
2 240
(2 250)
16 534 831
3 510 245
6 731 331
(118 608)
2A Planta, Madrid
4 757 556
(1) Subsidiaries current accounts for € 2 599 512 (see 4.5) and credits collateral for participations amounting to € 2 158 044 (see 4.3)
(2) Subsidiary current accounts for € 95 266 and shareholding liabilities for € 1 948 539
(3) Sweden own shares include for an amount of 20 354 953 SEK (2 254 K€) the share linked to undertakings (see 4.3)
2 043 805
Note 12. Elements regarding affiliated undertakings and
shareholdings
Operating
revenue
Hi-Media Belgium
Hi-Media Publicidad y
Marketing
Hi-Media Italia
Hi-Pi
Hi-Media Poland
Hi-Media Portugal
AB
Mobiquid
Europermission
Financial
revenue
Clients
accounts
receivable
Financial
expenses
Suppliers'
debt
120 603
-
85 043
-
4 809
20 906
-
15 134
-
59 823
12 274
30 770
5 050
11 986
-
428 404
-
1 731
-
120
55
-
148 165
3 456
-
27 835
-
3 456
-
395 996
102 079
456 239
30 902
15 309
Subsidiary current accounts detailed:
Gross amount
Hi-Media Belgium
Hi-Media Publicidad y
Marketing
Hi-Media Italia
Hi-Pi
Hi-Media Poland
Hi-Media Portugal
Hi-Media Scandinavia AB
Mobiquid
Europermission
Depreciation
Net amount
2 192 616
2 192 616
-
95 266
311 630
-
311 630
-
95 266
-
2 599 512
2 504 246
95 266
On December 31 2004, the current account of Mobiquid shows a positive amount of € 651
Credits collateral to participations:
Gross amounts
Hi-Media Scandinavia AB
Depreciation
Net amount
2 158 044
209 505
1 948 539
2 158 044
209 505
1 948 539
4.4 CONSOLIDATED ACCOUNTS FOR HI-MEDIA GROUP
Auditors' report
On consolidated accounts
Year ending December 31, 2004
In accordance with the mandate given to us by your Shareholders' Meeting, we hereby present you with
our report with respect to the financial year ended December 31, 2004 concerning our audit on the annual
accounting records and financial statement of the company Hi-Media S.A., which are enclosed with this
report.
The annual financial statements were drawn up by your the Board of Directors. It's our responsibility, on
the basis of our audit, to express an opinion on these statements.
1
Opinion on the consolidated accounts
We have conducted our audit in accordance with accepted professional standards; these standards require
us to apply the highest level of diligence, so that we may be reasonably assured that the financial
statements are free from material misstatements. An audit involves examination, on a sample basis, of the
relevant elements that support the information contained in the financial statements. It also involves an
assessment of the accounting principles used, the significant estimates made in the preparation of the
financial statements and their overall presentation. We believe that our audit provides a reasonable basis
for our opinion hereafter.
We certify that the annual accounts are fair ad sincere and that they give a faithful picture of the results of
the operation during the year and of the financial situation, assets and liabilities of your Company at the
end of the financial year.
2
Justification of our appreciations
Applying the provisions of art. L.225-235 of the commercial code concerning the justification of our
appreciations, the validity of which is enforced for the first time with this fiscal year, we let you examine
the following elements:
•
¤ Note 4.15 of the appendix defines the accounting principles and methods concerning the option
taken by the Company in assessing the utility value of its acquisition differentials and its intangible
assets. Within the limits of our appreciations, we have checked the adequacy of the methodology
used and we checked its correct application.
•
¤ We have verified the approach taken by the Company, as described in note 8.5 of the appendix,
for assessing the risk related to the litigation with the German company, Abacho AG. Taking into
account the elements available to this day, we have not found any elements which could reverse
reasonable standard of care of this approach.
•
¤ Notes 4.5 and 7 of the appendix defines the accounting principles and methods used by the
Company for the fiscal year ending December 31 2004. We have checked the conformity of these
accounting methods as well as the information supplied in the notes of the appendix.
Our appreciations on these elements stay within the limits of our auditing methodology relative to the
consolidated accounts as a whole and have therefore allowed us to express our opinion without any
reservation in the first part of this report.
3
Specific verification
Moreover, we have also checked the information relating to the group provided in the management report.
We have no observation to make regarding their sincerity and concordance with the consolidated
accounts.
Paris La Défense and Paris, March 7, 2003
Auditors
KPMG Audit
EREC Associés
Frédéric Quélin
Didier Lechevalier
Associate
Associate
CONSOLIDATED ASSET BALANCE SHEET – HI-MEDIA
Ref
Gross
Depreciation and
provisions
Net in Euros
at 31/12/04
Net in Euros
at 31/12/03
Fixed assets
Intangible assets
Tangible assets
Financial assets
5.1
5.2
5.3
5.4
10 515 636
1 921 424
657 500
39 468
10 016 592
1 692 750
476 909
-
499 044
228 674
180 591
39 468
916 850
495 510
233 233
51 724
5.5
5.6 and 5.8
5.7
5.7
3 555 184
2 138 535
885 560
1 240 544
629 838
9 217
-
2 925 346
2 129 318
885 560
1 240 544
2 233 342
1 188 394
730 546
584 586
20 953 851
12 825 306
8 128 545
6 434 185
Current assets
Inventory
Total assets
LIABILITIES CONSOLIDATED BALANCE-SHEET – HI-MEDIA
Ref
Shareholders equity
(group share)
Net in Euros
at 31/12/04
Net in Euros
at 31/12/03
5.9
Capital stock
Premiums
Reserves, retained earnings and translation
adjustments
Others
1 999 032
27 564 814
(29 130 307)
1 997 583
27 566 873
(27 763 933)
423 968
(22 146)
835 361
135 000
(1 361 240)
(18 217)
421 066)
135 000-
Minority interests
5.9.2
-
(10 575)
5.11
97 757
154 362
5.10
5.12
5.13 and
5.14
111 346
4 973 833
1 975 248
192 269
3 972 938
1 569 125
TOTAL DEBTS
7 060 427
5 734 332
Total liabilities
8 128 545
6 434 185
Debts
CONSOLIDATED INCOME STATEMENT – HI-MEDIA
Ref.
Turnover
Materials
Salaries and wages
6.1
Operating income
6.6
Income tax
6.7
7
In Euros
31/12/04
In Euros
31/12/03
14 361 7654
582 529
(8 829 746)
(2 195 503)
(3 147 534)
(102 792)
(89 882)
(377 984)
8 780 014
671 169
(5 000 683)
(1 835 189)
(2 812 130)
(30 398)
(44 249)
(477 495)
(200 853)
(748 961)
(26 831)
18 805
(174 022)
(730 156)
(263 680)
931 432
(340 830)
(6 698)
(841 774)
(1 077 684)
Profit contribution by companies accounted
for by the equity method
-
-
(417 806)
(297 881)
(423 968)
(1 375 565)
-
(14 325)
423 968
0.02
0.02
(1 361 240)
(0.07)
(0.07)
Minority interests
Income per share
CONSOLIDATED CASH FLOW STATEMENT
In K€.
OPERATING ACTIVITIES
Net income
Reintegration of costs and deduction of earnings not
affecting the capital and not related to operations:
Charges to amortization and goodwill
Income brought into equivalence
Charges to amortization and provisions
Amortization and provisions write backs
Plus or minus disposal value
Variation of operating assets and liabilities:
Customers
Prepaid expenses
Other current assets
Supplier receivables
Tax and social liabilities
Other debts at less than one year
Unearned income
Accrued interest at less than one year
Operating cash flow: A
INVESTMENT OPERATIONS
Intangible acquisitions
Tangible acquisitions
Variation of deposits and guarantees paid over the
year
Consolidation
Unconsolidations
Disposals
Fixed asset supplier variation
Cash flow from investments: B
From 01/01/04
to 31/12/04
From 01/01/03
to 31/12/03
424
- 1 376
418
576
- 237
11
298
532
- 454
228
- 663
62
- 940
1 038
465
42
- 100
-
154
96
218
- 1 079
- 101
- 366
45
-
- 1 096
- 1 805
- 148
- 59
2
-5
- 54
177
- 16 (1)
3
14
1 078
- 13
4
-7
- 204
1 180
FINANCING
Capital increase (including premium)
New loans
Debts reimbursed
11
- 92
26
- 79
Cash flow from financing: C
- 82
- 53
Cash flow = A + B + C
810
- 678
Opening cash = D
Closing cash = A + B + C + D
1 315
2 126
1 993
1 315
Cash
Current bank borrowings
886
1 240
-
585
730
-
Net cash position at close
2 126
1 315
(1): Disposal price: 0
Outflow: K€ 16
Notes: Hi-Media S.A.
CONSOLIDATED ACCOUNTS DECEMBER 31, 2003
Note 1
Preamble
Hi-Media S.A. ("Hi-Media" or "the Group") is an advertising management company and markets
advertising space to advertisers on the Internet ("the media") . It also offers direct marketing services. On
behalf of the media, it provides services for prospecting and canvassing of advertisers, recovery,
distribution and targeting of advertising on the Internet and, for so doing, is paid on a management
commission basis.
Note 2
Significant events of the period 2004
On March 30, 2004, Hi-Media transferred its equity investment (50%) in Laroquette Musique & Media.
The subsidiaries Hi-Media UK Plc. And Hi-Media Technology Sweden (HMTS) were dissolved on June
8, 2004 and March 14, 2004 respectively.
Finally, Hi-Media took an equity stake in the Spanish company Europermission Sl. On March 25, 20004
in order to develop its direct marketing business.
Note 3
Scope of consolidation
Name
Address
% of direct and
indirect holding
at
December 31,
2003
% of direct
Date of
Date of yearand indirect
creation
end closing
holding at
or acquisition
December 31,
2002
Companies created
Av Brugmannlaan 80
1190 Forest
Hi-Media Belgium
Hi-Media
C/ Rosario Pino, 8 1º A
Publicidad y
28020 Madrid
Marketing SL
Hi-Media
Avenida Duque d’Avila
Portugal Lda
n°26 1049-041 Lisboa
Hi-Media Poland Sp.z. Swieradiwska, 40 – 02662 Warszawa
Hi-Pi
20, rue du Sentier –
75002 Paris
Laroquette Musique & 20, rue du Sentier –
75002 Paris
Media
Companies acquired
Hi-Media
Kungsgatan 12-14 – SScandinavia AB
111 36 Stockholm
Hi-Media UK
Bradford court, bradford
street – B12 ONS
Birmingham
Hi-Media
Gerhard – Hoehme –
Deutschland AG
Allee 1
41 466 Neuss
Mobiquid
20, rue du Sentier –
75002 Paris
Europermission Sl
Marquès de Riscal 11
2A Planta. Madrid
100 %
100 %
09.03.00
31.12
99.99 %
99.99%
13.06.00
31.12
49.9 %
100 %
31.10.00
31.12
100 %
100 %
15.12.00
31.12
100 %
100 %
13.05.02
31.12
50 %
-
18.05.03
31.12
100 %
100 %
05.09.00
31.12
70.6 %
70.6 %
22.12.00
31.12
100 %
51 %
30.04.01
31.12
100 %
100%
25.04.03
50 %
-
25.03.04
31.12
31.12
All subsidiaries are consolidated by overall integration excepted the portuguese subsidiary and the
company Europermission SI that are consolidated by proportional integration.. The Company controls
jointly this entity.
The British subsidiary was deconsolidated on June 8, 2004, after its dissolution.
The subsidiary, Laroquette Musique et Media was deconsolidated on March 30, 2004 after Hi-Media
transferred its equity investment.
Note 4
4.1
Accounting principles and methods
Accounting principle and methods
Consolidated accounts for the financial year ending December 31, 2004 are presented in accordance with
the CRC.99-02 ruling.
Considering the vision elements concerning Hi-Media's activities in France and abroad, and the low risk
concerning the dispute between Abacho AG and Hi-media ( Note 8.5 in the Appendix) the going-concern
assumption was maintained for the account closing on December 31, 2004.
4.2
Methods of consolidation
Companies that are 50% owned are consolidated by overall integration. Jointly owned companies are
consolidated by proportional integration. Significantly influenced companies are consolidated according to
the equity method.
The companies are consolidated from their effective takeover date.
4.3
Goodwill
Goodwill is the difference between the share acquisition price and the total evaluation of assets and
liabilities that can be identified at the date of acquisition. According to the provisions of article 215of
legislation 99-02, the overriding method is applied when the conditions set by the regulation are fulfilled.
Goodwill is amortized over a period which takes account of the characteristics of companies bought and
the business outlook.
4.4
Currency conversion for foreign companies
The accounts of foreign companies outside the euro zone are converted at the closing rate for the balance
sheet and at the average rate for the income statement.
4.5
Taxes on profit or loss
The taxes on profit or loss combine current tax expenses and deferred taxes on timing differences between
tax values and consolidated values.
When the short-term outlook of the companies of the group allows it, deferred tax debits or credits which
recovery is presumed, are recognized.
4.6
Intangible assets
• The software and licenses acquired by the Group are registered on the balance sheet for the acquisition
value and amortized over their estimated life, between 3 and 5 ans.
• Any brand names or trademarks acquired by the Company are recorded on the balance sheet at their
acquisition value. They are not subject to amortization. They are only depreciated if the Company's
operating conditions render this a necessity.
4.7
Fixed assets
Tangible assets are shown at their cost of acquisition and are amortized based on their operational life as
follows:
• Fixtures and improvements
• Office and computer equipment
3 years digressive and straight-line depreciation
• Furniture
4.8
Trade receivables
Receivables are taken at their face value and a provision for specific depreciation is made if a loss seems
likely.
4.9
Investment securities appear on statement at their acquisition value. When the inventory value is less than
the acquisition cost, a provision for depreciation is made for the shortfall. Latent capital gains at closing
are not entered on the profit and loss accounts.
4.10
Acknowledgement of the turnover billed to advertisers
The Group makes its turnover with agreements concerning the selling of advertising spaces and to some
extent with agreements of affiliation or files brokering and sponsoring agreements signed with advertisers
that are Hi-Media’s customer.
Contracts for sale of advertising space:
Contracts for sale of advertising space involve putting advertising banners online and distributing them on
one or more media available at Hi-Media, for a given period. The value of these contracts depends on the
number of viewed pages required by the advertiser.
For contracts completed at the closing date, the turnover entered on the income statement corresponds to
the value of the contract or the value of the number of pages viewed if this is less than that defined in the
contract.
For contracts in force at the closing date, the turnover recognized at the closing date corresponds:
-either to the value of the number of pages actually viewed at the closing date if this number is less
than or equal to that stipulated in the contract;
-or to the prorata temporis value of the number of pages viewed as provided by the contract if the number
of pages viewed is above that stipulated in the contract.
Direct marketing contracts:
Direct marketing contracts entail the selection, access and mailing of consenting web-users' addresses by
Hi-Media for direct marketing operations. Hi-Media also offers advertisers and sites the complete
management of their databases. Earnings are from the sending of messages or the rendering of the
technical service.
Sponsoring contracts:
Sponsoring contracts have fixed rates for the insertion of a logo or any other feature distinguishing
advertisers on the medium concerned, managed by Hi-Media. Rates run evenly throughout the duration of
the service.
Audiotel Contracts (Mobiquid)
The Audiotel sales corresponds to the remittances issued by the private telecommunications companies as
benefits des revenues generated via the phone numbers used for Mobiquid services distribution.
4.11
Presentation of space purchase costs in the income statement
The space purchase costs billed by the media to Hi-Media are featured in operating costs. The difference
between the turnover billed by Hi-Media to advertisers and the space purchase costs billed by the media to
Hi-Media represents the agents' commission earned by Hi-Media.
4.12
Pensions costs
In view of the negligible pensions commitments at December 31st, 2004, calculated on the basis of
international rules in force and information pertaining to the personnel in the company at close, no
provision has been made in the accounts. These commitments are however presented as off-balance sheet
liabilities. (See note 8).
4.13
Segmented information
Segmented information is given by territorial departmentalization and by business line concerning
turnover and operating results.
4.14
Earnings per share
Earnings per share are established by the ratio of consolidated net income pro rata with the Group sharing
and of the smoothed average number of outstanding stock during the financial year (Note n° 27 of the
OEC). Fully diluted earnings per share does not take cognizance of the BSPCE and the stocks options
allocated but not exercised when the earnings are a loss.
4.15
Going value of goodwill and intangible assets
The Company conducted analysis on the basis of updated future cash flow and result multiple, among
others, that were established by the Company in order to check that the going value of the intangible assets
(including mainly goodwill and intangible assets) is at least the equivalent of their going value at the
closing. If this shouldn’t be the case, a valuation allowance corresponding to the difference between the
going value and the net book value of these assets would be recognized .
Note 5
5.1
Statement
Goodwill
Changes to goodwill on the statement are as follows:
1st January
2004
€.
Gross goodwill
Depreciation
Net goodwill
Increases
Decreases
31 December
2003
10 848 444
(9 931 594)
(417 806)
(332 808)
332 808
10 515 636
(10 016 592)
916 850
(417 806)
-
499 044
The net goodwill of K€. 917 at 1st January 2004 corresponded to the acquisition of the second part of HiMedia Deutschland and the acquisition .of Mobiquid. Considering the business outlook of these
subsidiaries; held at 100%, it was decided to amortize this complementary goodwill over three years.
Decreases correspond to the dissolution of Hi-Media UK.
The K€. 499 net goodwill at December 31, 2004 is analyzed as follows:
December 31 2004 –
gross value
€.
Mobiquid
Goodwill
December 31 2004 depreciation
December 31 2004 –
net value
9 436 312
1 079 324
(9 416 968)
(599 624)
19 344
479 700
10 515 636
(10 016 592)
499 044
5.2 Intangible assets
Variations in gross values break down as follows:
€.
Investment
costs
Software
and licenses
"Hi-Media"
trademark
Immobilizati
ons
Others
1st Jan
2004
Translation Unconsoli Consolidations Increases
adjustments dations
Decreases
-
31st Dec
2004
42 995
-
-
-
1 379
44 374
2 325 858
-
-
-
48 638
73 723
-
-
-
-
-
73 723
70 288
-
-
-
95 744
1 992
-
95 744
72 280
2 512 864
-
-
-
147 753
(739 193) 1 635 303
(739 193) 1 921 424
Amortization variations are as follows:
€.
Investment costs
Software and
licenses
"Hi-Media"
trademark
Immobilizations
Others
1st January Translation Unconsolid Consolidati
Increases
2004
adjustments ations
ons
31st
December
2004
Decreases
27 191
-
-
-
7 981
-
1 160 029
-
-
-
712 704
-
347 087
-
411 612
34 722
-
-
-
24 489
-
1 637 125
-
(2 139)
728 121
275 301
(704 161)
35 172
(704 161) 1 601 294
56 284
1 692
750
By a contract dated February 24, 2000, the company bought the French trademark "Hi-Media" together
with the application for the Hi-Media community trademark.
Adserving and e-mail brokerage technologies evolved a lot. The software developed by Hi-Media is
therefore obsolete. That is why Hi-Server and Hi-Mail Server (K€ 575), that were already 100%
depreciated on December 31, 2003 could not be produced and were written off of 2004 fiscal year.
As well as the software Hi-Mailing (K€ 75), is no more efficient according to the current market, was
scrapped.
Customer base correspond to intangible assets dedicated to audiovisual programs amounting to K€. 67 and to
software made to following up the business, for an amount of K€. 28.
Services provided by Mobiquid do no longer use music recognition technologies. The associated software
held by Mobiquid was 100% depreciated during the fiscal year 2004. This complementary depreciation
(K€ 186) was recorded as an extraordinary charge.
The net value of software and licenses at December 31, 2003 breaks down as follows:
December 31, 2004 –
gross value
€.
License AdFront
(marketing
management software)
License for Mobiquid's
musical recognition
software
Mobiquid's
development costs
Others
December 31, 2004 goodwill
December 31, 2004 –
net value
300 000
(300 000)
-
740 000
(740 000)
-
226 260
(226 260)
-
369 043
(335 034)
34 009
1 635 303
(1 601 294)
34 009
Intangible assets geographically breakdown as follows:
€.
France
Foreign countries
Gross
1 695 902
225 522
Goodwill
(1 551 659)
(141 091)
Net
144 243
84 431
Total
1 921 424
(1 692 750)
228 674
5.3
Tangible assets
€.
Installations,
fixtures and
fittings
Furniture,
office and
computing
equipment
1st Jan
2004
Translation Unconsolidat Consolidat Increases Decreases
ions
adjustments
ions
31st Dec.
2004
25 085
-
-
-
2 923
(10 746)
17 262
657 674
225
-
-
56 010
(73 671)
640 238
682 759
225
-
-
58 933
(84 417)
657 500
Variations in amortization break down as follows:
1er Jan
2004
€.
Installations,
fixtures and
fittings
Furniture,
office and
computing
equipment
Translation Unconsolid Consolidat Increases Decreases
adjustment ations
ions
s
31st Dec 2004
3 814
(10 746)
1 546
8 478
-
-
441 048
-
-
-
93 785
(59 470)
475 363
449 526
-
-
-
97 599
(70 216)
476 909
The geographical breakdown of tangible assets is detailed as follows:
€.
France
Foreign subsidiaries
Gross
319 426
338 074
Amortization
(245 277)
(231 632)
Net
74 149
106 442
Total
657 500
(476 909)
180 591
5.4
Financial investments
€.
1st Jan
2004
Deposit and
guarantees
Others
41 449
10 275
-
-
-
13 223
-
(15 204)
(10 275)
39 468
-
51 724
-
-
-
13 223
(25 479)
39 468
Translation Unconsol Consolidations Increases Decreases
adjustments idations
31st Dec
2004
5.5
Trade receivables
Trade receivables break down as follows:
€.
Customers
Unbilled work
Provision for customer account depreciation
31 December 2004
31 December 2004
3 404 566
150 618
2 843 873
82 707
3 555 184
(629 838)
2 926 580
(693 238)
2 925 346
2 233 342
All trade receivables are at less than one year.
The depreciation provision corresponds mainly to receivables due for which there are collection risks at
December 31, 2004.
In the scope of a factoring contract concluded in 2001, Hi-Media S.A. have farmed out debts (which no
longer feature in customer account) representing a sum of K€ 1 954 at December 31, 2004 for which the
Company retains the risk in the event of non-payment by the customers. Amongst these debts, K€ 57 was
not submitted to the factor for financing at December 31, 2004 and K€ 102 was retained as guarantee by
the factor. These two sums, totaling K€ 150 are booked to "other receivables".
5.6
Other receivables
Other receivables break down as follows:
€.
31 December 2004
31 December 2003
27 707
263 848
640 582
158 776
937 357
(1 397)
177 344
92 472
621 726
161 973
(22 303)
Other receivables total gross value
Provision for depreciation
2 026 873
(9 127)
1 031 212
(16 040)
Other receivables total net value
2 017 656
1 015 172
Supplier debts and receivables
Miscellaneous debtors
VAT
Outsourced debt – of which guaranteed
Corporate Income Tax
Deferred Tax
Translation Adjustments
All other receivables are at less than one year, excepted deferred tax which is between one and five years..
5.7
Cash and investment securities
€.
31 December
2004
31 December
2003
Own shares
Other shares
Cash
868 000
17 560
1 240 544
723 973
6 573
584 586
Provision for depreciation
2 126 104
-
1 315 132
-
2 126 104
1 315 132
The market value of the investment securities and of the “other shares” stands at € 886 538, i.e. a n
unrealized capital gain of € 978 not recorded at December 31, 2004.
5.8
Prepaid costs
Prepaid costs stood at € 111 662 at December 31, 2004 and correspond mainly to the share of billed
marketing and general costs subsequent to December 31, 2004.
5.9
Equity capital
The equity capital (group share) saw the following changes over the year:
€.
Capital social
Premiums
Reserve
Other
reserves and
carry forward
Translation
adjustments
Income for
2002
At 31
December
2002
Capital
increases
4 183 990 1 808 760
27 157 008
409 865
50 511
(26 583 911)
Other
variations
Capital
decreases
(3 995 167)
-
-
3 995 167
113 04
Allocation of
2002
earnings and
2003
earnings
5 77
(5 234 515)
(110 001)
(5 234 515)
Capital
Increases
Other
variations
1 997 583
27 566 873
50 51
(2 05
(27 817 488)
(4 78
30
(3
14
-
At 31
December
2004
-
1 999 032
27 566 873
50 5
(1 361 240)
(29 183 517)
26
(1 361 240)
Income for
2004
1 361 240
(1 361 240)
(18 217
(332 089
Allocation of 2003
earnings and 2004
earnings
5 234 515
Income for
2003
Others (own
shares)
At 31 December
2003
2 218 625
(104 230)
(1 361 240))
(423 968)
(18 21
(3 92
421 06
(11 12
423 96
(22 14
14
423 968
835 3
Own shares corresponds to the stock redemption program approved by the ordinary and extraordinary
general meeting on April 21, 2000 and implemented after the Board of Director’s decision on August, 14,
2001. Own shares bought under this program (35 719 shares) were reposted, on December, 31, 2002, from
the item "investment securities" to the item "financial assets” in corporate accounts, as there was no
definite allocation for the redempted shares.
Therefore, in the consolidated accounts, own shares were charged to equity capital for their net amount at
the secondary distribution, i.e. €.22 146, in accordance with the accounting regulation in force.
The Board approval of redemption is fallen due the 21st October 2001. A new stock redemption program
was approved by the General Meeting on March 26, 2002 and implemented by decision of the Board of
Directors on August 29, 2002. According this new program, app. 50% of redemption will be allocated to
employees, app. 40% will be allocated to purchase or transaction, and app. 10% will be allocated to the
price regulation. No share was redempted under this new program.
5.9.1 Start-up option and stock option scheme
The Company has set up various start-up option and stock option schemes for which the main
characteristics are outlined in the table below:
Date of meeting
Summary table of shares giving access to capital
(Start-up stock options)
24/01/2000
21/04/2000
21/04/2000
14/02/2000
-
Date of Board
meeting
Number of shares
allocated
may be subject to
options *
may be subject to
management options
Total
-
417 045
134 482
551 527
112 031
11 011
123 042
0
0
0
Number of managers
concerned
0
0
0
Number of employees
concerned
10
6
4
Option take up date
14/02/2003
21/10/2001
Expiry date
14/02/2005
21/04/2005
Subscription price
EUR 1.95
EUR 8.06
* Options alloted to employees currently working for the company; amployees having left the company no longer
benefit from these options.
No start-up stock option was exercised in 2004.
Summary table of shares giving access to capital
(Start-up stock options)
21/04/2000 21/04/2000 21/04/2000 21/04/2000 21/04/2000
04/05/2000 14/09/2000 02/11/2000 13/12/2000 23/10/2001
27/06/2000
37 210
70 734
27 400
37 037
91 001
Total
Date of meeting
30/06/1999
25/04/2003 25/04/2003
Date of Board
30/06/1999
26/05/2003 10/07/2003
meeting
17/11/1999
Number of shares
152 475
500 000
350 000
1 265 857
allocated
Number of shares
3 816
8 530
3 000
4 700
2 866
0
500 000
350 000
872 912
that may be subject
to options (1)
Number of shares
that may be subject
to management
options
0
5 680
0
3 000
0
0
90 000
350 000
448 680
Number of
managers concerned
0
1
0
1
0
0
3
1
6
Number of
employees
2
1
1
2
1
0
9
0
16
concerned
Option take up date 01/07/2004 05/05/2002 15/09/2002 03/11/2002 14/12/2002 23/10/2003 26/05/2005 10/07/2005
Expiracy date
30/06/2009 04/05/2010 14/09/2010 02/11/2010 13/12/2010 23/10/2011 25/05/2013 10/07/2013
Subscription price
(2)
EUR 0.01
EUR 8.06
EUR 9.93
EUR 8.20
EUR 5.31
EUR 0.59
EUR 0.33
EUR 0.35
(1) Options allotted to employees currently working for the company; employees who left the company no longer benefit from these options.
(2) Option price calculated on the day of option allotment, corresponding to the average weighted stock exchange price over the last 20 sessions to which a 5%
discount.
During 2004, 14 484 options were subscribed at € 0.01.
The company capital is currently made up of 19 990 317 shares. If all the warrants and options were to be exercised, i.e. an issue of995 954 shares, a
shareholder owning 1% of the capital before the year, would own 0.95% of the capital after the year, i.e. a decrease of 0.05%.
5.9.2 Minority interests
Minority reserve rights changed as follows over the course of the financial years 2003 and 2004:
31 Dec. 2002
Allocation of
income 2001
Minority reserve
rights
-
-
Minority profit
rights
-
-
Minorities
-
-
€.
Unconsolidati
ons
Income in
2004
31 Dec. 2003
Allocation of
income 2003
Consolidation
-
3 750
(14 325)
10 575
-
-
-
(14 325)
(14 325)
14 325
-
-
-
3 750
(14 325)
(10 575)
-
10 575
-
-
3 750
Income in
2002
31 Dec. 2004
The movements regard the company Laroquette Musiqueet Media held at 50% until March 30, 2004, when Hi-Media transferred its capital stake in this
company.
5.10
Loans and miscellaneous borrowings
This item breaks down as follows:
€.
31 December 2004
31 December 2003
25 947
85 399
58 480
133 789
111 346
192 269
Positive bank balances
Loans and borrowings
Other debts deemed as loans
The item “Other debts deemed as loans” corresponds to refundable premium agreed by the Coface as a
capacity of a marketing insurance signed by Mobiquid in 2002.
The loans and borrowings schedule breaks down as follows at December 31, 2004:
€.
At less than
Between one
a year
and five
total
years
Loans and borrowings
5.11
25 947
-
25 947
Provisions
€.
1er January
2004
Consolidations
Provision
Utilisation
Writebacks
31 décembre
2004
Provisions for disputes
117 929
-
-
(42 648)
(26 156)
49 125
contingencies
36 433
-
-
-
-
36 433
contingencies
154 362
-
-
(42 648)
(26 156)
85 558
-
-
12 199
-
-
12 199
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12 199
-
-
12 199
154 362
-
12 199
(42 648)
(26 156)
97 757
Provisions for
reorganisation
Provisions for losses
generated by
identified contracts
charges
charges
Total
(1) The item "Provisions for dispute" corresponds mainly to disputes with publishers and
"Prud'homme" disputes.
5.12
Supplier debts
Supplier debts break down as follows:
€.
Suppliers
Outstanding invoices
31 December
31 December
2004
2003
3 052 533
1 921 300
2 738 130
1 234 808
4 973 833
3 972 938
Suppliers accounts mainly include invoicing of managed media still outstanding at year end closure.
All supplier debts are less than one year.
5.13
Other debts and prepaid expenses
Other debts and prepaid expenses break down as follows:
€.
Tax and social charge liabilities
Debts on fixed assets
Other debts, customer creditors and future credit
31
31
December
December
2004
2003
1 398 230
14 244
383 216
947 442
340 727
1 795 690
1 288 169
All suppliers debts are at less than one year.
5.14
Unearned income
Unearned income of € 179 558 at December 31, 2004 corresponds mainly to billing of deliveries that
have not been supplied yet.
Note 6
6.1
Income statement
Turnover
The detailed turnover of online advertising management is as follows:
K€.
2004
Sales of advertising spaces
Direct Marketing
Micropayments
France
6 300
1 858
665
Abroad
5 441
77
22
France
3 488
714
439
Abroad
4 069
70
-
8 823
5 540
4 641
4 139
Total
6.2
2003
Other operating income corresponds to write back on provisions for an amount of K€ 227 and to fixed
salaries as part of software development amounting to K€ 114.
6.3
Consumed purchases
This item can be analyzed thus:
€.
2004
Marketing and communication
Services and fees
General operating costs
Rental and technical costs
Others
Total
6.4
France
277 479
437 037
267 279
311 818
-
Abroad
62 151
328 651
191 304
223 561
96 223
France
145 803
411 745
277 548
510 814
-
Abroad
30 860
75 013
146 762
229 111
7 533
1 293 613
901 890
1 345 910
489 279
Amortization and operating provisions
Amortization
expense
Intangible
assets
Fixed assets
Provisions for
risks
Customer
accounts
depreciation
Total
2003
Provisions Depreciation Writeback on
of circulating provisions
assets expense
(193 442)
(97 513)
-
-
-
-
-
(290 955)
-
-
Write-back on Total
current assets
depreciation
-
- (193 442)
(97 513)
-
45 434
-
45 434
(87 029)
-
144 003
56 974
(87 029)
45 434
144 003 (188 547)
6.5
Operating result by geographic area
After distribution extra-accounting of pro rata holding fees of each subsidiary's turnover, the
operating result can be detailed as follows:
K€.
2004
France
Sale of advertising spaces
Direct marketing
Micropayment
323
(2)
(359)
Abroad
290
(49)
(2)
(38)
239
Total
6.6
Total
613
(51)
(361)
201
Income interest/expense
This corresponds mainly to the interests charges of the factor.
6.7
Profit on
capital
transactio
n
€.
Reorganizations
Exceptional
depreciations
UK et Laroquette
unconsolidations
Others
Total
Note 7
Profit on
manageme
nt
transaction
Provisions and
amortizations
writebacks
Extraordin
ary capital
expenses
Exceptional
Dotations aux
and
amortissements
extraordinary
et aux
expenses
provisions
-
585
-
(90 232)
-
-
-
-
178
3 099
3 277
1 701
2 286
34 819
36 430
(50 637)
(14 207)
(1
(91 541)
Total
(12
(186 115)
(198
(67 027)
(186 115)
36 608
(47 146)
(263 680)
Taxes
At December 31 2004, Hi-Media, Mobiquid, Hi-Pi and Laroquette had deficits of € 22 644 693 that
could be indefinitely carried forward. These deficits breakdown thus:
€.
Hi-Media S.A.
Mobiquid
Deficits amounts
16 587 572
7 913 334
Hi-Pi
86 848
Total
24 587 754
At December 31, 2004, the Company had also long-term depreciations that could be carried forward
over a maximum term of 7 years amounting to € 12 448 795 and over a maximum term of 8 years
amounting to € 313 688.
In Swedish, German and Belgian subsidiaries, fiscal deficits stood at €2 001 454, € 388 568 and € 394
933, respectively. In these three countries, deficits can be carried forward indefinitely.
For the fiscal year 2004, the Group recorded deferred tax amounting to €. 937 357 relating to deficits
that could be carried forward of the Company and its subsidiaries, which use is probable.
The tax expense of the fiscal year can be detailed as follows:
€.
Tax expense
Hi-Media S.A.
3 750
Mobiquid
2 175
Deferred tax activation
(937 357)
Total
(931 432)
Note 8
8.1
Off balance-sheet commitments
Long-term rental
The gross value of other capital assets financed by long-term rental contracts together with the
corresponding rents is as follows at December 31, 2004:
€.
Sum financed
Rent paid:
• from the period
• carried forward from previous years
Future rents:
• at less than one year
• at more than one year and less than five
years
Computing
equipment
75 227
Other
equipment
11 489
23 362
76 945
4 362
12 816
9 502
7 991
390
-
8.2
Deposits given to subsidiaries
At December 31, 2004, there is no more deposit given to subsidiaries.
8.3
Investment securities pledge
Hi-Media Deutschland pledged investment securities for K€ 42 in order to secure its rent payment and
a loan repayment.
8.4
Pensions indemnities
The amount of pension indemnity on December 31, 2004 amounts to €. 36 706 ; this amount is related
to French companies of the Group and was defined following the retrospective method forecasted
benefit items.
8.4
Disputes
On March 14, 2003, Hi-Media summoned the German company Abacho AG to the market court of
Paris due to the fact that the said company did not fulfill its contractual obligations, and claim of the
overpayment amounting to 57 927.14 euros and to have the termination of the advertising
management contract dated May 3, 2001, binding both companies, witnessed and this, entitling the
injured party to sue, Abacho.
In a counterclaim dated November 18, 2003, Abacho AG asked the court to the judicial termination of
advertising management contract against Hi-Media and to fine the Company contractual indemnities
relating to advertising management services, amounting to € 2,404,912.18.
According to the Company's analysis and its lawyer's opinion, Abacho AG chances to succeed are
weak.
The Company has consequently not registered any provision concerning this litigation in its accounts
on December 31, 2004.
Note 9
Workforce
The headcount stood at 54 employees at December 31, 2004 like December 31, 2003. 30 of these
employees work in France (of whom 2 work for Hi-Pi and 5 for Mobiquid) and 24 abroad.
Note 10 Executives
The executives' annual gross salary amounted to € 125 500 over 2004.
No amount was allotted to management bodies over the first half year 2004. No advance was made.
The Company has no pension or related compensation liability.
Note 11 Events subsequent to December 31, 2004
NONE
4.5 AUDIT FEES PAID BY THE GROUP TO THE REGISTERED AUDITORS AND THEIR
NETWORK MEMBERS
KPMG Network
Provisions related to
the audit
Auditing, certification,
inspection
of
consolidated
accounts
and corporate financial
statements
Incidental missions
Other provisions
EREC et Associés
Other auditors
Amount
%
Amount
%
Amount
%
67 800
73,4%
22 000
23.8%
2 540
2.8%
None
-
None
-
None
-
4.6 COMPLEMENTARY NOTE TO CHAPTER CHAPITRE IV OF 2004 ANNUAL REPORT
As required by the AMF and after the disappearance of the New Market and in accordance with the
future regulations applicable to every companies listed on Eurolist, Hi-Media set charts describing the
consolidated balance sheet, the consolidated income and cash-flow statements of these three last fiscal
years.
CONSOLIDATED ASSET BALANCE SHEET OF THE THREE LAST FISCAL YEARS
Gross
Depreciations
and provisions
Net in Euro
at 31/12/04
Net in Euro
at 31/12/03
Net in Euro
at 31/12/02
Fixed assets
Intangible assets
Tangible assets
Financial assets
10 515 636
1 921 424
657 500
39 468
10 016 592
1 692 750
476 909
-
499 044
228 674
180 591
39 468
916 850
495 510
233 233
51 724
135 406
273 312
351 489
197 438
3 555 184
2 138 535
885 560
1 240 544
629 838
9 217
-
2 925 346
2 129 318
885 560
1 240 544
2 233 342
1 188 394
730 546
584 586
2 225 460
1 271 047
761 327
1 264 155
20 953 851
12 825 306
8 128 545
6 434 185
6 479 634
Current assets
Inventory
Total assets
LIABILITIES CONSOLIDATED BALANCE-SHEET OF THE THREE LAST FISCAL
YEARS
Net in Euro
at 31/12/04
Net in Euro
at 31/12/03
1 999 032
27 564 814
(29 130 307)
1 997 583
4 183 990
27 566 873
27 157 008
(27 763 933) (26 420 355)
Net in Euro
at 31/12/02
Shareholders equity
(group share)
Capital stock
Premiums
Reserves, retained earnings and translation
adjustments
Others
423 968
(22 146)
835 361
135 000
(1 361 240)
(18 217)
421 066
135 000
(5 234 515)
(18 217)
(332 089)
-
-
(10 575)
-
97 757
154 362
308 219
TOTAL DEBTS
111 346
4 973 833
1 975 248
7 060 427
192 269
3 972 938
1 569 125
5 734 332
169 119
4 472 683
1 861 702
6 503 504
Total liabilities
8 128 545
6 434 185
6 479 634
Minority interests
Debts
CONSOLIDATED INCOME STATEMENT OF THE THREE LAST FISCAL YEARS
in Euro
31/12/04
in Euro
31/12/03
in Euro
31/12/02
14 361 765
582 529
(8 829 746)
(2 195 503)
(3 147 534)
(102 792)
(89 882)
(377 984)
8 780 014
671 169
(5 000 683)
(1 835 189)
(2 812 130)
(30 398)
(44 249)
(477 495)
9 511 520
643 688
(6 355 686)
(2 486 562)
(3 620 532)
(333 940)
(42 984)
(731 912)
Operating income
200 853
(748 961)
(3 416 408)
(26 831)
18 805
48 612
174 022
(730 156)
(3 367 796)
(263 680)
931 432
(340 830)
(6 698)
(1 438 316)
(17 481)
841 774
(1 077 684)
(4 823 593)
-
-
(119 100)
(417 806)
(297 881)
(291 822)
423 968
(1 375 565)
(5 234 515)
-
(14 325)
-
423 968
0,02
0,02
(1 361 240)
(0,07)
(0,07)
(5 234 515)
(0,38)
(0,38)
Turnover
Materials
Salaries and wages
Income tax
Profit contribution by companies accounted
for by the equity method
Minority interests
Income per share
Turnover
CONSOLIDATED CASH FLOW STATEMENT OF THE THREE LAST FISCAL YEARS
In K€.
From
01/01/04
to 31/12/04
From
01/01/03
to 31/12/03
From
01/01/02
to 31/12/02
424
- 1 376
- 5 235
418
576
- 237
11
298
532
- 454
228
292
119
1 592
- 1 322
64
- 663
62
- 940
1 038
465
42
- 100
-
154
96
218
- 1 079
- 101
- 366
45
-
737
151
1 607
- 1 916
- 613
- 442
- 185
-9
Operating cashflow: A
1 096
- 1 805
- 5 160
INVESTMENT OPERATIONS
Intangible acquisitions
Tangible acquisitions
Variation of deposits and guarantees paid over the year
Consolidation
Unconsolidation
Disposals
Fixed asset supplier variation
- 148
- 59
2
- 16 (1)
3
14
-5
- 54
177
1 078
- 13
4
-7
- 69
- 48
29
- 275
-4
16
- 50
Cashflow from investments: B
- 204
1 180
- 401
FINANCING
Capital increase (including premium)
New loans
Debts reimbursed
11
- 92
26
- 79
- 67
Cashflow from financing: C
- 82
- 53
- 67
Cashflow = A + B + C
810
- 67
- 5 628
Opening cash = D
Closing cash = A + B + C + D
1 315
2 126
1 993
1 315
7 621
1 993
Cash
Current bank borrowings
886
1 240
-
585
730
-
1 264
761
- 32
Net cash position at close
2 126
1 315
1 993
OPERATING ACTIVITIES
Net income
Reintegration of costs and deduction of earnings not affecting
the capital and not related to operations:
Charges to amortization and goodwill
Income brought into equivalence
Charges to amortization and provisions
Amortization and provisions write backs
Plus or minus disposal value
Variation of operating assets and liabilities:
Customers
Prepaid expenses
Other current assets
Supplier receivables
Tax and social liabilities
Other debts at less than one year
Unearned income
Accrued interest at less than one year
(1) : Disposal price: 0
Outflow: 16 K€
2004 accounts appear in paragraphs 4.3 and 4.4 of this report concerning fiscal year 2004.
2003 accounts appear in paragraphs 4.3 and 4.4 of the annual report concerning fiscal year 2003 registered
by the AMF on March 17, 2004 under number D04-272.
2002 accounts appear in paragraphs 4.3 and 4.4 of the annual report concerning fiscal year 2002 registered
y the COM on April 16, 2003 under number R03-051.
CHAPTER V – CORPORATE GOVERNANCE
5.1
BOARD OF DIRECTOR'S COMPOSITION
The company is administered by a Board of Directors made up of at least three and maximum sixty eight
members. Directors are nominated by the ordinary general meeting. This meeting may dismiss a director
at anytime.
A company's employee can be appointed as director only if its employment contract corresponds to an
active employment. No more than one third of directors in charge can be bound to the Company by a
contract.
Each director has to own at least one share according to legally-required designation.
Directors preside for a term of six years. This term expires after the ordinary general meeting that gave a
decision on the accounts of the past financial year and that was held during the year of expiration of term
of office. Any outgoing director is re-eligible.
If a director is appointed by the Board of Directors in replacement of another, he only holds tenure until
the end of his predecessor's term.
Chairman
The Board of Directors elects a chairman among its members. The latter deals with the general
management of the Company. The board sets the chairman's of office term that shall not exceed his (or
her) tenure of director. The Chairman represents the Board of Directors. He organizes and manages the
board's works and reports to the General Meeting.
During its meeting on the 26th June 2002, the Board decided to opt for holding of Chairman of the Board
of Directors and Chief Executive Officer offices.
The Chief Executive Officer is invested with the broadest possible powers to act in all circumstances on
behalf of the Company. He exercises his power within the limit of the Company's purpose and subject to
the powers expressly provided by the law to shareholders meetings and to Board of Directors.
The chairman of the Board of Directors is currently Mr. Cyril Zimmermann, born December 11, 1971, in
Annemasse (74). Mr. Cyril Zimmermann is also the Company's CEO.
The members of the board are:
Member's
Surname and First
Name or
Corporate Name
Cyril
Zimmermann
David Bernard
Dominique Bézier
Permanent
representative's
Surname and First
Name
-
-
Date of first
appointmen
t
21/12/98
21/04/00
03/03/05*
Due date of
mandate
Main office
held within
the Company
General Meeting
approving the
accounts of the
financial year
ending
December 31,
2003
Chief
Executive
Officer
General Meeting
approving the
accounts of the
financial year
ending
December 31,
2005
-
General Meeting
approving the
accounts of the
financial year
ending
December 31,
2008
Chief
Financial
Officer
Main office
held outside
the Company
-
Other mandate and office
held in any other company
Director of
- Hi-Media Publicidad y
Marketing ;
- Hi-Media Portugal ;
- Hi-Media Poland ;
- Hi-Media UK
- Hi-Media Scandinavia ;
and member of the
supervisory board of HiMedia Deutschland AG;
Administrator of :
-Mobiquid;
-Laroquette Musique &
Media;
-Hi-Pi;
-Hi-Media Belgium.
Director of
- Hi-Media Publicidad y
Marketing ;
- Hi-Media UK ;
- Member of the
supervisory board of HiMedia Deutschland AG;
- Directoire's member of
the International Company
André Trigano;
- Administrator of the
company Les Campéoles;
company Lac et Rivières;
company Capasun Sevron;
- Permanent representative
of the Company Les
Campéoles at AreposVacances CEHP Board of
Directors.
* Mr. Dominique Bézier was co-opted as director to replace Spef Venture, resigning, for the remaining
time of its mandate. This cooptation will be submitted to the agreement of the shareholders' meeting on
April 22, 2005.
Unaffiliated director
Within the framework of its takeover of Mobiquid, Hi-Media undertook to ask for the appointment of two
new directors chosen by Mobiquid's current shareholders. These new directors should be the companies
Rivaud Innovation and Spef e-Fund. The Company shall ensure that these new directors meet all the criteria
of independence. However Spef Venture announced its resignation to the Company by mail dated March 3,
2005 as well as Rivaud Innovation by mail dated March 14, 2005.
No director is elected by employees.
No proctor has been appointed.
5.2
BOARD OF DIRECTORS WORKING AND FUNCTION
5.2.1 Board of Directors Function
The Board of Directors settles the activity guidance of the Company and provides for the implementation.
Subject to the powers expressly provided to shareholders meeting and within the limit of the Company's
purpose, the Board deals with any issue concerning the good run of the Company. The Board rules the
Company's businesses by deliberations.
5.2.2 Board of Directors working
The Board of Directors convenes when it is in the interests of the company to do so, by notice of the
chairman.
A record of attendance is kept; minutes are established at every meeting.
The Board may only act validly if at least half of its members are present.
Decisions are passed by a majority of members present or represented. In the absence of majority, the
chairman of the session casts the deciding vote.
The Board of Directors carries out auditing and checking as it may deem expedient. Each director receives
all information he needs to carry out his mission. He can ask for any document that he considers useful.
5.2.3 Board of Directors rule of procedure
The Company has not made a rule of procedure that deals with the Board working.
5.2.4 Board of Directors evaluation
The Company has not taken action concerning the evaluation of the Board.
During financial year 2003, the Board of Directors met five times. All the members of the Board were
present or represented at four meetings. One member was not present at one meeting.
The Company did not pay any director's fee.
To date, the Company has not appointed any specific committee.
5.3 MANAGEMENT INTERESTS
5.3.1 Remuneration of managers
The total remunerations for 2004 for company managers and directors are as follows:
• Mr. Cyril Zimmermann, CEO: K€ 126;
This amount corresponds to the remuneration only. The CEO collects neither non cash benefit, nor director's
fee.
These remunerations include all cash and benefits paid to the Company managers or to the managers of the
Group's companies.
5.3.2 Stock options schemes and Start-up option schemes
See paragraph 2.2.6 above.
Mr. Cyril Zimmermann was allocated:
•
350,000 stock options on July 10, 2003, exercisable from July 10, 2005 at 0.35 euros, purchase
price
Stock options
allocated to every
company manager
and options
exercised by them
Cyril
Zimmermann
Number of Startup / Stock options
allocated
350,000
Stock options
Price
Due date
0.35 € July 10, 2013
Plan n°X
Stock options plan
n°8
All the stock options allocated to the latter are exercisable from July 10, 2005.
Plan n° X
Start-up and Stock Total number of allocated options Smoothed average
price
/ allocated or purchased shares
options allocated
to the first ten
employees that are
not Board
members and
options exercised
by them
139,900
167,920
1,95
Start-up options plan
(Plan BCE) n°1
2,502
11,011
8.06
Start-up options plan
(Plan BCE) ° 2
22,879
22,879
0.01
Stock options plan n°1
5,680
8,530
8.06
3,000
9.93
3,000
4,700
8.20
2,866
2,866
5.31
0.59
405,000
500,000
0.33
350,000
350,000
0.35
5.3.3 Information on transactions concluded with members of administrative bodies
None.
5.3.4 Loans and guarantees granted or made to administrative bodies
None.
5.4 EMPLOYEE PROFIT SHARING
5.4.1 Profit-share and incentive agreements
None.
5.4.2 Employee stock options
See paragraph 2.2.6 above.
5.5 CEO'S REPORT CONCERNING INTERNAL CONTROLING
Dear Shareholders,
In compliance with the statutory requirements of the Code governing French commercial law (Article L
225-37 of the Commercial Code), we hereby inform you of the preparations and the organization of your
Board of Directors works and of the internal control procedures implemented by the Company and of the
restrictions of the CEO powers.
PREPARATION AND ORGANISATION OF THE BOARD OF DIRECTORS WORKS
We advise you to consult chapter V of the 2003 Annual Report and especially the paragraph 5.2 the Board
of Directors working and functions.
RESTRICTIONS OF THE CEO POWERS
The CEO is also the Chairman of he Board of Directors, he acts within the limits of an annual budget
decided during a Board meeting. The Board meets on a regular basis during the year (4 to 5 times a year)
to check that the financing of appropriations for the financial year is conducted as planned and if not, asks
the CEO to explain the differences. The Board advises the CEO to adapt the budget according a situation.
The CEO informs the Board before the setting up of a subsidiary, before any equity participation or key
associate recruitment.
INTERNAL CONTROL PROCEDURES IMPLEMENTED BY THE COMPANY
1. Company's goals concerning internal control procedures
Internal control procedures implemented by the Company are designed to:
1 ensure that managing acts and employees behavior comply with the company's orientations given
by the social organs, by the rules and laws in force and by the internal rules of the Company;
2 check that financial and managing information given to the social organs are correctly
corroborating the Company businesses and situation
2. Description of the implemented procedures
a) Internal control procedures implemented for managing and financial issues
Turnover
A sales management tool (ad front) establishes the turnover in real time. The said tool is also used for
marketing offers and order forms. Therefore the marketing team can not make proposition or draw order
forms without this interface tracking it.
In advertising management and direct marketing brokerage, establishing the turnover requires that an
order form follows a proposition and that this order is signed by the costumer and recorded by Adfront.
When it is recorded, "traffic-managers" program the advertising or direct marketing campaign on the
distribution tool of advertising objects. This distribution tool communicates with the sales management
tool and give it in real time where the campaign delivery stands .
The turnover is definitely established when all the campaign has been delivered. The advertiser's order
form is then recorded in a file that is conveyed to the accounting department at the end of the month.
The accounting department checks that the order form complies with the campaign delivered by the
distribution tool and then, invoice the advertiser.
In Micro Payment, the Company has developed an interface that tracks the number of micro transactions
occurred on its customer sites with detailed information concerning every transaction amount and the
mean of payment used in order to calculate the turnover and the remittances in real time. However, this
tool gives Hi-Media and its costumers only one estimate at a time. The definite figures that are final for all
the parts are those supplied by the telephone operator (France Télécom 's report concerning audiotel calls,
mobile phone operators or intermediaries report concerning SMS+) or those supplied by banking bodies
(credit card transactions record).
These figures take in account the payment possible incidents and, when appropriate, it results in invoicing
adjustments between Hi-Media and its partners.
Whichever the concerned business is, the turnover establishing by the sales management tools define
automatically the margin level for Hi-Media and, therefore, the remittance level that must be carried out to
the partners. Because the different margin rates defined by contract with partners are informed by these
tools. Subsequently, the accountant checks the compliance between the charges recorded and the turnover
and the partners' invoices for their remittance (defined by the sales management tool).
Cost control
Each expense commitment implies an order form from the person who originated it. Ti be validated, this
order form must be co-signed by the department manager, and for an amount higher than € 7500co-signed
by the CEO or jointly by the Chief Financial Officer and the in-house counsel in charge.
The marketing teams' commissions are calculated on the current month turnover and are paid one month
later in case of adjustments needed.
The expense accounts are monthly checked and validated by the CEO.
Subsidiaries data return
The management control is centralized in Paris. The foreign subsidiaries turnover establishment is the
same from a country to another. In addition, the sales management tool Ad front as well as the advertising
campaign distribution tool is implemented in all the countries. Therefore the turnover of each country can
be consulted in real time as the French turnover is, by the same reporting interfaces.
Complete data integrating the turnover, costs and an account estimate of the simplified result, are monthly
are returned (20 days after the end of the month) from each subsidiary to the Group's Chief Financial
Officer in Paris. After analysis, the latter gives them to the Chief Operating Officer.
Inpayments-outpayments and cash management
A weekly report is done by the accountant and submitted to the Chief Financial Officer concerning the
inpayments that are done, the current inpayments, the follow-ups and the litigations for payment delay.
Suppliers' payments are done once per month and are doubly checked. The accountant brings the invoices
to the CEO for approval. And then hands to him the payments that have to be done.
At the same time, every beginning of the week, the accountant makes a bank reconciliation, that he
submits to the Chief Financial Operator for purposes of internal control and to optimize the cash
management.
Subsidiaries return monthly cash position statements to the central management audit, concurrent with
other financial data to the Chief Financial Officer.
Information transmission to the Board
Once a month, complete data concerning the activity and a monthly results estimate of each group's entity
are given to the Board members after the CFO and the CEO checking.
At semi annual and annual closings, financial information given to the shareholders (annual report and
financial statements) are checked again in by the CFO, the counsel in charge and the CEO at the same
time as the statutory auditors.
b) Other audit procedures
French activities audit
Twice a month the CEO meets each department manager in order to take stock of the situation, anticipate
or solve possible marketing litigations in order to avoid their impacting finances and to take stock of the
expenses commitment.
Subsidiaries audit
The Group's CEO has a monthly phone appointment with the subsidiaries and visits quarterly in order to
take stock of the situation with the local managers and to poll about the activity and to check the
information quality that were returned to the CFO.
Up to date, in view of the size and the number of employees of the Company, the internal control
procedures have never been assessed.
In the duty of writing this report, the CEO did not notice any serious failing or insufficiency.
Paris, March 3, 2005
THE CEO
5.6 STATUTORY AUDITORS' INTERNAL AUDIT STATEMENT
Statutory auditors' statement drew up in accordance with the last paragraph of the Article L.225235 of the Code governing French commercial law. This statement concerns the CEO of Hi-Media
S.A. report dated March 3, 2005, describing the internal control procedures related to the
accounting and financial information setting up and processing
Financial year ended December 31, 2004
Dear Shareholders,
As statutory auditors to the Hi-Media S.A. company and in compliance with French statutory
requirements (last paragraph of Article L225-235 of the Code governing French commercial laws), we
hereby present you our report concerning the report drew up by the CEO of your company with respect to
financial year ended December 31, 2004.
It is the Chairman's responsibility to report in his statement, the conditions of preparing and organizing the
Board's works and the internal control procedures implemented within the Company.
It is our responsibility to express our comments concerning the statements and information described in
the statement of the Chairman of the Board concerning the procedures of the internal control relating to
the accounting and financial information setting up and processing.
In accordance with our professional doctrine in force in France, we went into the goals and the general
organization of the internal control, as well as the procedures of the internal control relating to the
accounting and financial information setting up and processing, described in the statement of the chairman of
the Board: Therefore, we acquaint ourselves with:
•
the goals and the management of the internal control, as well as the procedures of the said control
relating to the accounting and financial information setting up and processing described in the
Chairman's report;
•
and all the work underlying the information given in this report.
On the basis of our works we do not have any observation to state concerning the given information
relating to of internal control procedures relating to the accounting and financial information setting up
and processing, described in the statement of the chairman of the Board, drew up in compliance with the
last paragraph of the Article L. 225-37 the Code governing the French commercial law..
Paris La Défense and Paris, April 1st, 2005
KPMG Audit
EREC Associés
Frédéric Quélin
Associé
Didier Lechevalier
Associé
6. INFORMATION POLICY
To inform its individual shareholders, the institutional investors and the financial analysts, Hi-Media uses
the following means:
Press releases and financial statements
Semi-annual reports
Annual Report
These documents are sent by e-mail, fax and mail to any person who has so requested and also may be
consulted on www.hi-media.com website.
Information meetings intended for financial analysts occur twice a year when the annual and semiannual incomes are published.
The Company strives to answer any question asked by individual shareholders, institutional investors
and financial analysts.
Contact: [email protected]
The provisional financial communication timetable for 2005 has been drawn up as follows:
Friday 18 March 2005: Announcement of annual results 2004 - Financial Analysts Meeting
Friday 22 April 2005: Annual General Meeting
Wednesday 20 April 2005: Announcement of first-quarter turnover in 2005
Monday 25 July 2005: Announcement of second-quarter turnover in 2005
Wednesday 21 September 2005: Announcement of 2005 semi-annual results
Wednesday 19 October 2005: Announcement of third-quarter turnover in 2005
Wednesday 25 January 2006: Announcement of fourth-quarter turnover in 2005
These provisional dates may be changed. Readers are requested to consult the company's website or
contact the company to find out about confirmed dates.
CONCORDANCE TABLE
INFORMATIONS
STATEMENTS OF THE PERSONS IN CHARGE
• Statement of the persons in charge of this annual report
• Statement of the legal auditors
• Information police
GENERAL INFORMATIONS
Capital
• Authorized capital non issued
• Potential Capital
• Chart of the capital evolution over 5 years
Equity market
• Chart of the evolution of the stock-market price and the trade
volume over 18 months
• Dividends
CAPITAL AND VOTING RIGHTS
• Current distribution of the capital and the voting rights
• Evolution of shareholding
• Shareholders alliance
GROUP'S ACTIVITY
• Group's organization
• Group's key figures
• Competitive markets and positioning of the competitive issuer
• Investment policy
GROUP'S RISKS ANALYSIS
• Risks factors
- Market risks
- Special risks linked to the activity
- Legal risks
- Industrial and environmental risks
• Risks insurances and coverage
HOLDINGS – FINANCIAL POSITION – RESULTS
• Consolidated accounts and appendix
• Off-balance sheet liabilities
• Audit fees paid to the statutory auditors and their network
members
• Corporate financial statements and appendix
CORPORATE GOVERNANCE
• Composition and functioning of administration, management
and audit organs
• Company managers
• Regulated agreements
RECENT DEVELOPMENTS AND PROSPECTS
• Recent developments
• Prospects
Pages
5
6
8
10
13
14
15
22
24
24
24
13
23
25
30
26
31
71
65
69
66
66
69
70
75
115
71
145
87
146
146
148
87
71
72

The non-compliance with the authority procedure

Transcription

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