Results for the first half of 2006:
Sales figure up by a factor of 3: €32 million
Operating income up by a factor of 6: €2.5 million
Continuation of the market consolidation policy

Simplified Profit and Loss Account in IFRS

I - Strong business growth, increased gross margin

With a sales figure of €32 million versus €10.3 million the previous year, the growth of the group's business amounts to 209% for the first half-year, driven by the acquisitions (Allopass, Jeuxvideo.com and Actustar) and by a very strong organic growth.
This growth remains on a very high level (59%) and is indicative of increased market shares. Indeed, the service activities have increased remarkably:

• the advertising network and direct marketing respectively increased by 41% and 90% (57% and 138% with the acquisitions), in a European market for online marketing that showed estimated growth of 26% (source Jupiter Research).
• revenues of the micro-payments pole (Allopass + Mediapass) increased by 47% (pro forma) over one year.

The activities of the publishing pole (jeuxvideo.com, actustar.com, blogorama.fr) also increased very strongly, though its impact in the accounts is still quite moderate because of the late arrival of this line of earnings within the consolidation perimeter. Using pro forma data, the earnings of Hi Media Publishing would have increased by 69% to a figure of €1.7 million over the first half of the year.

Building on the successful integration of this new activity, Hi Media Publishing will continue to deploy its offer of sites. This offer already attracts an audience of more than 2.5 million people per month on the French market.
Other than the audience of 18-25 year-olds with jeuxvideo.com and blogorama.fr, one of the leading segments targeted by Hi Media Publishing is the women's press. With this in mind, during the summer Hi-Media acquired the site www.feminup.com, a new version of which will come out during the last quarter of 2006 (the transaction was carried out on the basis of a payment of €50,000 for 100% of the capital of the site's editing company and an earn out based on the site's audience). The original feature of feminup.com is the fact that a large part of the content will be produced by the Web surfers themselves, thanks to a publication platform inspired by collaborative encyclopaedias. In the women's press, the positioning of feminup.com will be complementary with that of Actustar.com, the leader in online "people" magazines, and the site's ambition is to become one of the leading generalist women's sites.

The business dynamism in the group's acquisition policy has led to a clear increase in the gross margin rate, which now stands at 33.2% for the first half-year (versus 31.8% in the 2005 pro forma). The gross margin rate of the advertising network stands at 36%, while the direct marketing margin rate remains at 39%; after the integration of Allopass, the micro-payments margin rate stands at 27%.

2. A virtuous growth model, improvement of the profitability rate

Under the combined effect of external growth (+ 56 people) and organic growth (16 new hires), the company's personnel has grown considerably, and now includes 154 people as of 30 June.
The other operating expenses have also increased significantly, in keeping with the change to the group's perimeter. In addition, certain non-recurring expenses related to the integration of acquired companies weighed on the accounts for the first half of the year.

However, the increased operating expenses were absorbed by the strong growth of the sales figure and by the improving gross margin rate. The operational profitability (before valuation of the stock options and free shares) therefore amounts to €2.5 million versus €0.4 million for the previous year.
During the second half of the year, a period during which the business is traditionally stronger, the operational profitability rate should continue to improve significantly.

However, the company has decided to use part of the margin generated over the course of the year to finance faster organic developments than had initially been anticipated:

• for the launch of a proprietary adserving technology based on Hi-Media’s already existing affiliation platform. This development forecasted to end during 2007 should provide significant scale economy.

• for this summer's launch of a project to set up the legal and technical framework for an electronic wallet system that should see the light of day by the end of 2007. To steer this project, Hi Media has turned to the former general manager of Klelline, a specialist in electronic payments, Mr Abdallah Hitti.

• internationally
• in China, where Hi Media sold its first advertising campaigns during the summer, though the operations will weigh on the accounts in the amount of €0.4 million
• in Spain, where Hi Media launched a commercial business this spring and will open an office by the end of the year

• for the development of new Internet sites for the publishing pole and for their expansion abroad:
• the blogs platform (www.blogorama.fr) has been launched in Belgium and Sweden, and will be launched in Germany, Portugal and Brazil in the coming months
•  two new thematic sites are being produced and will be launched at the start of 2007.

Giving these elements, the group's operational profitability should amount to approximately 10% over the 2006 fiscal year, versus 12 to 14% as initially indicated, while the operating income (before taking stock options and free shares into account) should reach €7 million.

III - Continuation of the consolidation policy: new accretive acquisition

In a constant effort to reconcile the improvement of its profitability and the market's consolidation, Hi Media has acquired the Swedish advertising network Medianet, one of the main actors on the Swedish market, a specialist in the sale of online advertising to local advertisers.

Medianet's customers include several Internet sites of the Schibsted group (Blocket.se, Aftonbladet.se) and it is one of the three leading Swedish advertising networks. With this acquisition, Hi Media will hold a significant position in the Swedish market, which should thereby allow it to efficiently deploy its other activities. Moreover, Hi Media will rely on the know-how of Medianet to develop its advertising network on the regional level in France. An initial project is scheduled for the Southeast region of France in the second half of 2006.

From a financial standpoint, this acquisition is very accretive for Hi Media' shareholders. In 2005, Medianet generated a sales figure of €3.6 million (certain campaigns sold to advertisers are only included in the sales figure in the amount of their contribution to the margin) and an operating income of €0.8 million, which should respectively increase to close to €4.5 million and €1 million in 2006. Medianet's integration into the Hi-Media consolidation perimeter will only occur in September, meaning that its impact in the Group's annual accounts will be limited.
Hi Media purchased 100% of the capital for €4.9 million paid in cash and an earn out of 3 times the operating income for the 2006 fiscal year and twice the 2007 operating income, payable in cash or securities at the choice of Hi-Media. The company estimates that the total price will be a multiple of between 10 and 11 times the operating income of the 2006 financial year.

This acquisition was financed by the Hi Media shareholders equity, as the company had available cash of €18.4 million on 30 June 2006. As Hi Media's activities generate cash flow, the company will continue to study acquisition dossiers in order to continue the consolidation of its market segments.
 
The company will publish its quarterly sales figure on 18 October 2006.