Letter to shareholders
www.apgsga.ch
2 APG|SGA SA Letter to shareholders July 31, 2012
APG|SGA SA Letter to shareholders July 31, 2012 3
Strong growth dynamics in Switzerland. Positive development in earnings. One-time effects from 2011 influence half-year comparison.
In brief Sales revenue from continuing operations grew by 10.9% (in CHF); Sales revenue of the Swiss entities increased by 13.5% and decreased slightly in the foreign companies by 0.4% (local currency) Share of sales from foreign companies falls to 7.0% of Group sales Positive development in earnings (adjusted for one-time effects from the first half year of 20111): Increase in EBITDA by 23.6% to CHF 32.9 million Increase in EBIT by 39.0% to CHF 25.8 million Increase in net income by 25.1% to CHF 16.2 million Decline in free cash flow by 4.2% to CHF 12.0 million (adjusted for one-time effects from the first half year of 20111)
Group financial highlights in CHF 1 000
1st half of 2012 1st half of 2011
Change
1st half of 2011 adjusted for one time effects
Change (adjusted for one time effects)
Sales revenue
152 814
141 886
7.7%
141 886
7.7%
Switzerland
142 160
125 280
13.5%
125 280
13.5%
International
10 654
16 605
35.8%
16 605
35.8%
32 903
33 411
1.5%
26 614
23.6%
in % of sales revenue
21.5%
23.5%
Operating income (EBIT)
25 819
25 368
EBITDA
in % of sales revenue Consolidated net income in % of sales revenue Net income in % of sales revenue
16.9%
17.9%
17 288
20 002
11.3%
14.1%
16 235
19 773
18.8% 1.8%
18 571
13.6%
13 205
39.0%
13.1% 30.9%
9.3% 17.9%
12 976
25.1%
10.6%
13.9%
Cash flow
20 063
25 794
22.2%
20 948
Free cash flow
11 989
17 362
30.9%
12 516
4.2%
1 924
3 994
51.8%
3 994
51.8%
1 033
3 270
68.4%
3 270
68.4%
891
723
23.2%
723
23.2%
5.52
6.73
Investments in property, plant, and equipment advertising plant other investments Net income per share, in CHF
9.1% 4.2%
4.42
EBITDA: Earnings before interest, taxes, depreciation of property, plant, and equipment, and amortization of intangible assets EBIT: Earnings before interest and taxes
1
Deconsolidation of foreign entities and one time effects of CHF 6.8 million in the 1st half 2011 are affecting the comparability of the current half-year report.
4 APG|SGA SA Letter to shareholders July 31, 2012
Dear Shareholder: General business development Based on an exceptionally strong development of sales revenue in our home market Switzerland we can present solid positive results in the first half of 2012. These impressive growth-rates are based on adjusted results from one time effects from the first half of 2011 (sale of foreign business activities and the courtordered release of a bank guarantee from our Greek business). The positive development is adversely affected by difficult economic conditions in foreign markets as well as currency losses and IFRS-related pension provisions. APG|SGA Group During the first half of 2012, APG|SGA achieved sales revenue at Group level of a total of CHF 152.8 million, up 7.7% compared with the same period from the previous year (CHF 141.9 million). Organic growth in local currency amounted to 11.8%. Real estate revenue of CHF 1.2 million remained at the same level. Fees and commissions rose, accounting for 45.4% of sales revenue (previous year: 43.8%). Thanks to our strategic reorientation and our focus on our home market Switzerland, operating and administrative costs could be reduced significantly. EBITDA reached CHF 32.9 million in the first half year, corresponding to an EBITDA margin of 21.5%. When the one-time effects from the first half of 2011 are excluded, EBITDA shows year-onyear growth of 23.6%. Net income amounts to CHF 16.2 million, which corresponds to an increase of 25.1% when adjusted for onetime effects from the previous year s first half. Currency losses had a negative effect of CHF 1.9 million on the 2012 half-year results. Comprehensive income attributable to the APG|SGA shareholders totals CHF 10.8 million (first half of previous year: CHF 11.5 million). Cash flow Cash flow decreased by 22.2% to CHF 20.1 million (first half of previous year: CHF 25.8 million). Cash flow from operating activities amounted to CHF 13.7 million (first half of previous year: CHF 16.8 million). Free cash flow reached CHF 12.0 million (first half of previous year: CHF 17.4 million) before distribution of dividends and CHF 9.9 million afterward.
APG|SGA SA Letter to shareholders July 31, 2012 5
Balance sheet Compared with the end 2011, total assets are 5.8% lower at CHF 293.0 million, primarily as a result of the complete repayment of all bank loans. Intangible assets accounted for 22.5% of total assets (end 2011: 22.2%). Receivables rose to CHF 46.0 million and the net cash position declined from CHF 62.5 to 53.2 million, mainly due to dividend payments. Equity attributable to APG|SGA SA shareholders totaled CHF 114.5 million, which corresponds to an equity ratio of 39.1%. Equity was negatively impacted by actuarial losses of CHF 4.9 million from defined benefit pension plans. These losses result from a lower discount rate on future pension obligations as well as currency translation differences of CHF 0.5 million (first half of previous year: CHF 0.2 million). Swiss market All APG|SGA companies active in the Swiss market show very positive developments in sales. We could exceed our growth by a wide margin, comparing with the national advertising market and other media sectors. Sales revenue in Switzerland posted a 13.5% increase compared with the previous year s first half, reaching CHF 142.2 million (first half year of 2011: CHF 125.3 million). EBITDA increased to CHF 35.4 million (rate of increase 19.9%). Net income amounted to CHF 22.7 million (increasing vs. prior year 16.2%). During the reporting period, APG|SGA and its different companies succeeded in renewing important contracts with various concession partners in all segments. We lost a tender on a part of public property in Bern due to a higher level of financial compensation offered by a competitor. With new sites in Basel and Lucerne we could extend our successful Premium Branding product line. These exclusive displays at "hot spots" are in great demand, particularly by nation-wide customers. APG|SGA Profitline the product series that offers wide particularly cost-effective coverage was expanded to include the new APG|SGA Carline product. Carline offers the automobile industry specific packages with poster sites placed for exclusively frontal viewing by traffic along the main traffic routes. F4 City series for local and regional clients were introduced in St.Gallen und Winterthur, enabling customers to reach their target audiences inexpensively from the best locations. Continuing strong demand is seen in the area of public transportation - whether in train stations or in/on public transportation vehicles. In recent months spectacular 3D campaigns for KitKat, Fiat, Nokia, and Swissmilk that were realized in cooperation with APG|SGA Mega Poster, received wide attention.
6 APG|SGA SA Letter to shareholders July 31, 2012
International markets In the International Markets unit, APG|SGA is still active in Serbia, Montenegro and Romania. Both the economic conditions in these countries and the related situation in their advertising markets continue to be very demanding and exert a negative influence on the business activities of our local companies. Weak local currencies have led to currency losses. On the basis of a number of external factors, we recorded a weak first quarter in Serbia, but recent months have brought a slight recovery. Now that elections have been held, it remains to be seen how political conditions and the associated path toward EU membership, for which Serbia is striving will develop. As a market leader with a modern, highly convincing portfolio and an expert local sales organization, fundamentally we enjoy a good starting position. However, we cannot elude the region s basic macroeconomic conditions. The efforts to sell the Romanian entities have shown no success yet due to the difficult economic situation and therefore to the inadequate financial offers. The former CEO and minority shareholder chose not to exercise his call option, which was valid until March 30, 2012. Sales revenue of our foreign entities further declined at CHF 10.7 million and reached a share of 7% of our total Group sales revenue. The decrease amounted to 35.8%, of which 8.3% was negatively impacted by currency effects. EBITDA for this unit stands at CHF 1.5 million. Foreign net income of CHF 4.3 million adversely affected the consolidated financial statements; of this amount, CHF 3.0 million represents foreign currency losses. Pension fund After an extensive analysis of the pension fund situation conducted together with external experts, the Board of Trustees has decided to switch from a defined benefit plan to a defined contribution plan as of January 1, 2013. A consequence of this conversion for APG|SGA is that the net pension fund obligation according to IAS 19 is reduced by an amount of approximately CHF 18 to 22 million, which will have a positive influence on the income statement for the second half of 2012. At the same time, the Board of Directors of APG|SGA SA decided to make a one-time payment of CHF 24 million to the pension fund. In accordance with IAS 19, this contribution will have an effect on cash, but not on the income statement. Branding At the beginning of the year, brand management for all companies in Switzerland was unified and brought together under APG|SGA. As of the beginning of the second half of the year, the change of name from Affichage Holding SA to APG|SGA SA also took effect. The new stock exchange symbol is APGN.
APG|SGA SA Letter to shareholders July 31, 2012 7
Outlook The combination of the extensive analog and digital portfolio of APG|SGA in all areas of out-of-home media and the company s optimized sales and management structures offered a basis in the first half of 2012 for above-average sales increases in the company s home market of Switzerland. Ongoing uncertainty regarding economic prospects and the concomitant effect on the development of the advertising market continue to make it difficult to produce precise forecasts. This is especially true for foreign markets. In yearon-year comparisons for the Swiss market we must also consider that the second half of 2011 saw salesintensive elections for the National Council and the Council of States as well as a successful launch of the digital ePanels in train stations. Fundamentally we can adhere that the new strategy and the many optimizations in the structure, processes and service offers of APG|SGA have proven their worth outstandingly well. At this point, we would like to thank our employees for their impressive efforts and commitment in the different business areas of APG|SGA. And to you, dear shareholders, we wish to express our sincere gratitude for your loyalty and support.
Jean-Franรงois Decaux Chairman of the Board
Dr. Daniel Hofer Chief Executive Officer
8 APG|SGA SA Letter to shareholders July 31, 2012
Condensed consolidated balance sheet
Assets in CHF 1 000
Property, plant, and equipment Investments in associated companies
30.06.2012
31.12.2011
75 020
78 751
302
345
4 846
5 372
Intangible assets
65 981
69 178
Deferred taxes
16 046
14 733
162 195
168 379
Other financial investments
Non-current assets Inventories
2 619
2 746
Trade accounts receivable
45 960
39 849
Other accounts receivable
16 100
15 457
Deferred expenses and accrued income
12 595
6 845
391
408
Marketable securities Cash and cash equivalents
53 177
77 534
Current assets
130 842
142 839
Total
293 037
311 218
30.06.2012
31.12.2011
Shareholders equity and liabilities in CHF 1 000
Share capital Group reserves Net income Equity held by APG|SGA SA shareholders Non-controlling interests
7 800
7 800
90 427
74 097
16 235
41 787
114 462
123 684
2 614
2 825
117 076
126 509
62 686
56 425
9 976
10 160
Non-current liabilities
72 662
66 613
Trade accounts payable
12 062
21 589
1
15 001
Shareholders equity Provisions Deferred taxes Long-term financial liabilities
Current accounts payable to banks Taxes payable Other accounts payable Accrued liabilities and deferred income
28
1 294
1 937
29 778
23 444
60 164
56 125
Current liabilities
103 299
118 096
Liabilities
175 961
184 709
Total
293 037
311 218
APG|SGA SA Letter to shareholders July 31, 2012 9
Consolidated income statement
in CHF 1 000
1st half of 2012
1st half of 2011
Change
Advertising revenue
152 814
141 886
7.7%
Real estate revenue
1 226
1 216
0.8%
Operating revenue
154 040
143 102
7.6% 11.7%
Fees and commissions
69 372
62 091
Personnel expenses
32 793
32 155
2.0%
Operating and administrative costs
18 972
22 242
14.7%
32 903
33 411
1.5%
4 850
5 627
13.8%
2 234
2 416
7.6%
25 819
25 368
1.8%
Other income
6 797
EBITDA Depreciation Amortization of intangible assets Operating income (EBIT) Financial income Financial expenses Income from associates Income before income tax Income tax Income from continuing operations
121
125
2 231
486
17
26
23 726
25 033
6 438
5 031
17 288
20 002
17 288
20 002
5.2%
Income from discontinued operations, net of tax Consolidated net income of which non-controlling interests of which APG|SGA SA shareholders (net income) Basic and diluted earnings per share, in CHF
1 053
229
16 235
19 773
5.52
6.73
13.6% 17.9%
Segment information 1st half, in CHF m
Switzerland International Holding Eliminations and non-allocated items of consolidated income Total
Advertising revenue
EBITDA
Net income
2012
142.2
35.4
22.7
2011
125.3
29.5
19.6
2012
10.7
1.5
4.3
2011
16.6
6.5
2.5
2012
0.1
4.3
39.6
2011
0.1
3.9
5.9
2012
0.1
0.3
41.8
2011
0.1
1.3
8.2
2012
152.8
32.9
16.2
2011
141.9
33.4
19.8
10 APG|SGA SA Letter to shareholders July 31, 2012
Consolidated comprehensive income
in CHF 1 000
1st half
Gross
Income tax effect
22
9
Consolidated net income Unrealized gains/losses on available-for-sale securities Currency translation differences Actuarial gains/losses from defined benefit plans Comprehensive income of which non-controlling interests of which APG|SGA SA shareholders
2012 net
Gross
Income tax effect
13
11
2
9
546
115
276
161
4 937
10 683
2 671
8 012
17 288 546 6 583
1 646
11 792
2011 net
20 002
11 820
1 040
276
10 752
11 544
APG|SGA SA Letter to shareholders July 31, 2012 11
Consolidated statement of changes in equity
in CHF 1 000
as at January 1, 2011
Capital Share reserves capital premiums
7 800
5 632
Treasury shares
9 539
Comprehensive income
Share of APG|SGA SA shareholders Translation AvailableReNondifferfor-sale valuation Retained controlling ences securities reserves earnings Total interests
19 927
187
208
9
46 059
of which consolidated net income of which other comprehensive income
208
9
Purchase of non-controlling interests 332
Shareholders' equity
69 550
99 762
1 163
100 925
11 761
11 544
276
11 820
19 773
19 773
229
20 002
8 012
8 229
47
8 182
21
21
21
24
356
Distributions Changes in treasury shares
Total
621
621 356
as at June 30, 2011
7 800
5 632
9 207
20 135
178
46 059
81 356
111 683
797
112 480
as at January 1, 2012
7 800
5 632
9 207
16 967
163
46 059
90 204
123 684
2 825
126 509
533
13
11 298
10 752
1 040
11 792
16 235
16 235
1 053
17 288
4 937
5 483
13
5 496
20 589
20 589
1 251
21 840
47
615
80 960
114 462
2 614
117 076
Comprehensive income of which consolidated net income of which other comprehensive income
533
13
Purchase of non-controlling interests Distributions Changes in treasury shares as at June 30, 2012
568 7 800
5 632
8 639
17 500
150
46 059
615
12 APG|SGA SA Letter to shareholders July 31, 2012
Consolidated statement of cash flows
in CHF 1 000
Consolidated net income Depreciation and amortization Unrealized gains/losses on securities Change in provisions, taxes, and interest
1st half of 2012
1st half of 2011
17 288
20 002
7 084
8 043
13
9
4 279
1 912
Gain/loss from the sale of non-current assets Income from associates Cash flow Change in inventories Change in accounts receivable Change in marketable securities
4 128 17
26
20 063
25 794
80
281
2 029
1 562
17
8
Change in accounts payable
2 877
7 288
Change in other deferred expenses, accrued income, accrued liabilities, and deferred income
1 540
407
13 714
16 826
2 010
3 994
285
4 530
1 725
536
615
357
Change in current accounts payable to banks
15 000
14 570
Dividends to APG|SGA SA shareholders
20 589
Net cash provided by operating activities Capital expenditures in non-current assets Sale of non-current assets Net cash used in investing activities Purchase and sale of treasury shares
Distributions to non-controlling interests
1 251
621
Net cash used in financing activities
36 225
14 834
Currency translation effect on cash and cash equivalents
121
78
Change in cash and cash equivalents
24 357
2 450
Cash and cash equivalents as at January 1
77 534
26 253
Cash and cash equivalents as at June 30
53 177
28 703
APG|SGA SA Letter to shareholders July 31, 2012 13
Notes to the consolidated financial statements
Reporting principles of APG|SGA SA The condensed version of the unaudited consolidated semi-annual financial statement as at June 30, 2012, was prepared in compliance with International Accounting Standard (IAS) 34 Interim Financial Reporting. The accounting and valuation polices remain consistent with those applied for the 2011 Annual Report. Financial reporting requires the management to make assessments and assumptions that influence the disclosed assets, liabilities, contingent debt, and accounts receivable on the closing date as well as income and expenditure for the reporting period. The actual results may deviate from these estimates. Changes in the scope of consolidation There were no sales or purchases of subsidiaries in the first half of 2012. The four Serbian companies merged to form a single legal entity. Suit against corporate proxies withdrawn On June 25, 2012, we were informed that the suit filed by two shareholders in 2010 with the Tribunal de première instance (court of first instance) in Geneva against individual present and former corporate proxies of the company has been definitively withdrawn. Change in shareholders equity On May 23, 2012, the General Meeting passed a resolution to distribute a dividend of CHF 7.00 gross per share for the financial year 2011. The dividend was paid on all shares outstanding.
14 APG|SGA SA Letter to shareholders July 31, 2012
Agenda
Financial media and analysts conference February 28, 2013, Z端rich Publication of the annual report April 23, 2013 General Meeting May 22, 2013, Geneva Announcement of semi-annual results July 31, 2013
Contacts Dr. Daniel Hofer, Chief Executive Officer T +41 58 220 71 66 Beat Hermann, Chief Financial Officer T +41 58 220 77 47
This letter to shareholders is available in German, French and English. The German version is legally binding.
APG|SGA SA Letter to shareholders July 31, 2012 15
16 APG|SGA SA Letter to shareholders July 31, 2012
www.apgsga.ch APG|SGA SA 23, rue des Vollandes CH-1211 Genève 6 investors@apgsga.ch
Printed in Switzerland July 2012 All rights reserved
APG|SGA SA is Switzerland s leading Out of Home media company. Listed on the SIX Swiss Exchange in Zurich, APG|SGA covers all aspects of Out of Home advertising. APG|SGA stands for sustainability, integrity and transparency in communicating with its customers, the authorities and the advertising industry.