Annual Report 2012

2012 Switzerland is on the move.

APG|SGA Annual Report

The financial year at a glance

2012 Milestones

– Strong operating performance based on home market in Switzerland.

– Continued rigorous adjustment of foreign investments.

– One time effects (pension fund, impairment) influence results.

– Very solid financial situation.

– Dividend/special dividend of a total of CHF 10 per share.

Key figures Sales revenue

APG|SGA share performance 2012

in CHF

in CHF

317.6 million

200 190 180 170

Operating income (EBIT)

160

in CHF

150

76.4 million

140 130 01.01.2012

01.04.2012

01.07.2012

01.10.2012

01.01.2013

APG|SGA Group key figures in 1000 CHF

Sales revenue – Switzerland – International EBITDA – in % of sales revenue Operating income (EBIT) – in % of sales revenue Consolidated net income – in % of sales revenue Net income – in % of sales revenue Cash flow Free cash flow Investments in property, plant, and equipment – advertising plant – other investments Net income per share, in CHF Dividend per share, in CHF3

2012

2011

Change

317 644 297 111 20 533 113 028 35.6 76 405 24.1 52 057 16.4 50 079 15.8 35 645 44 249

311 795 280 581 31 214 73 024 23.4 56 118 18.0 42 981 13.8 41 787 13.4 63 948 67 392

1.9% 5.9% –34.2% 54.8%

–44.3% –34.3%

5 350 3 033 2 317 17.03 10.00

9 163 6 380 2 783 14.23 7.00

–41.6% –52.5% –16.7% 19.7% 42.9%

36.2% 21.1% 19.8%

2012 2011 Change adjusted for one adjusted for one adjusted for one time effects2 time effects time effects1

317 644 297 111 20 533 74 679 23.5 60 502 19.0 44 691 14.1 42 713 13.4 54 125 62 729

311 795 280 581 31 214 66 633 21.4 48 942 15.7 36 657 11.8 35 463 11.4 61 180 64 624

–11.5% –2.9%

5 350 3 033 2 317 14.53

9 163 6 380 2 783 12.08

–41.6% –52.5% –16.7% 20.3%

One-time effects 2012: change in plan and contribution to pension fund as well as impairment, including proportionate taxes One-time effects 2011: net profit from sales of foreign operations, collection of bank guarantee, as well as impairment, including proportionate taxes Proposal to the General Meeting EBITDA: Earnings before interest, taxes, depreciation of property, plant, and equipment, and amortization of intangible assets EBIT: Earnings before interest and taxes

1

2

3

1.9% 5.9% –34.2% 12.1% 23.6% 21.9% 20.4%

The company at a glance

2.5 million

APG|SGA Group corporate structure APG|SGA Switzerland Within Switzerland, the APG|SGA brand combines all digital and analog poster offers of Allgemeine Plakatgesellschaft AG.

The segment brands offer specific solutions:

posters per year are handled

by APG|SGA.

90%

of mountain railways use APG|SGA Mountain as their advertiser.

60m

2

APG|SGA Holdings: APG|SGA has an equal stake together with Polymedia Holding AG in Impacta AG and Ecofer AG. APG|SGA International APG|SGA is active outside of Switzerland with companies in Serbia (Alma Quattro) and Romania (Affichage Romania).

Winterthur Aarau

Biel Neuchâtel

Wallisellen Zürich

Bern

Chur

Sion

60,000

poster locations are documented in the new app “PosterPlus” and may be selected.

Meyrin Genève

public transport vehicles have advertisements from APG|SGA Traffic.

APG|SGA vehicles form one of the largest eco-friendly fleets in Switzerland.

St. Gallen

Luzern Kriens

Lausanne

4,200 160

APG|SGA Locations

Basel

is the size of the largest indoor HD display in Switzerland at Zurich Central Station.

Lugano

APG|SGA in brief

APG|SGA is Switzerland’s leading Out of Home advertising company and specialist in the provision of digital and analog Out of Home solutions at busy locations. Together with our segment brands, Airport, Mega Poster, Mountain and Traffic, we meet every outdoor advertising need throughout Switzerland. Our brand stands for passion and integrity, partnership and sustainability. More than 750 staff are in regular contact with site and property owners, local authorities and the advertising industry in Switzerland and abroad, making sure that brands and institutions are presented to the public in the most effective light.

Contents

Consolidated development 3–5 6–7 8 9

Report of the Chairman and the CEO Financial Report Key figures Share development

Business Development in Switzerland 12 12–13 14–15 16–17 18–19 22–23 24–25 28–29 32–33 34–35

APG|SGA – Partner & Product Management – Advertising Market & Subsidiaries Switzerland – Marketing & Business Development – Logistics APG|SGA Airport APG|SGA Mega Poster APG|SGA Mountain APG|SGA Traffic Impacta AG, Ecofer AG

International Business Development 36–37

APG|SGA International

Corporate Governance 38–39 42–51 52–55 56

Human Resources Corporate Governance Extract of the Financial Report Contact

APG|SGA Annual Report 2012

The Trend Points to Out of Home Media Switzerland is on the move. In the past ten years the Swiss population has clearly increased by more than 9%. And there has also been a concomitant rise in the number of employed persons who commute daily between home and their place of work.

Rates of increase of approximately 50% in the number of persons transported in the same period when it comes to railroad traffic alone show that there is not only a constant increase in population, but in its mobility as well. The increasing flow of persons and traffic certainly represents a challenge to both the public transportation system and the existing infrastructure in Switzerland – but for APG|SGA they are, above all, an opportunity. APG|SGA accompanies more and more people on the way to work, while shopping and into the weekend and is represented with its products at all of the focal points of this mobile society. This is reflected in the development of our day to day business, as well as in other impressive figures and examples in this report.

APG|SGA Annual Report 2012

Report of the Chairman and the CEO 3

Strong operating performance based on home market in Switzerland.

Dear Shareholder General business development Strong operating performance in Switzerland formed the basis for once again very satisfying financial results. The ongoing strong drive behind implementation of the various measures designed to strengthen the company’s market cultivation, a compelling portfolio of products and services and disciplined cost management all contributed to the continued positive momentum on the domestic market that also shaped the company’s financial statements for 2012.

In the international segment we succeeded at the beginning of 2013 in selling our company in Montenegro and in withdrawing from this market. In Romania, the measures we took enabled a return to positive operating income. With rigorous impairment on all goodwill and a part of the agreements, the compay leading the market in Serbia was revalued.

Moreover, there was a positive impact on the annual financial statements due to the change in the pension fund from a defined benefit to a defined contribution plan along with the associated influences of IFRS/IAS 19. The company is excellently prepared for the future both with regard to its operating performance and as a result of its very solid financial situation.

APG|SGA Group Group sales revenue rose by 1.9% to reach a total of CHF 317.6 million. Organic growth in the local currency amounted to 5.2%, whereby currency influences had a -0.7% negative effect on this growth. Income from real estate in the amount of CHF 2.5 million remained at the level of the previous year. Concessions and commissions were similarly at the level of the previous year and accounted for 44.6% of sales revenue. Thanks to strict cost management, the company’s operating and administrative expenses were reduced by 11.6%. EBITDA in the year under review amounted to CHF 113.0 million, which corresponds to an EBITDA margin of 35.6%. If one-time effects are excluded, then there was a 12.1% increase in EBITDA compared with the previous year. The net income in the year under review amounted to CHF 50.1 million. If one-time effects are excluded, then this corresponds to an increase of 20.4%. However, currency losses totaling CHF 1.9 million had a negative impact on the results for 2012.

Swiss market In the year under review, APG|SGA was able to look back on very positive development on its home market. Fortunately, with increases in sales in other segments, the company was able to APG|SGA Annual Report 2012

4 Report of the Chairman and the CEO

Continued rigorous adjustment of foreign investments. completely compensate for the considerable additional sales obtained in election year 2011 (National Council and Council of States) and even significantly exceed last year’s sales. Taking this into consideration, but also in light of local development on the overall advertising market 1 of -0.1%, this 5.9% increase in sales provides proof of the compelling performance of our sales organization. With respect to other media categories, Out of Home media in general and our company in particular have acquired new market shares based on a comparison between media. Another positive aspect to note is the fact that all of the APG|SGA segment companies in Switzerland exceeded their targets both with regard to sales performance and their contribution to the company’s overall results. In the Switzerland segment, sales revenue increased by 5.9% to a total of CHF 297.0 million compared with the previous year, while EBITDA increased to CHF 115.4 million. This corresponds to an increase of 60.7% compared with the previous year. This strong increase was also positively influenced by conversion of the pension fund from a defined benefit to a defined contribution plan.

Net income amounted to CHF 77.6 million in total.

In the year under review, APG|SGA was once again able to acquire or extend numerous agreements with cities, municipalities, transportation companies, corporate partners and private partners. In open, transparent and professionally conducted bids and RFQs, the company’s range of products and services convinced customers both through attractive financial terms and conditions and high quality, reliability and service orientation. Our corporate policy, which is aimed at long-term partnerships, and identification with our customers in our daily work, is also particularly important for public authorities and transportation companies.

At the same time, we attach great importance to all matters involving sustainability and conscientious handling of resources.

In this regard, our company is considered to be a leader in the media industry. For example, APG|SGA invests substantial amounts in sustained reduction of carbon dioxide emissions, operates one of the largest environmentally friendly car fleets (natural gas/hybrid) in Switzerland and relies completely on green electricity.

Other special items that are particularly noteworthy in the report for 2012 include the award of a contract in a challenging public bid for management of 1,255 poster spaces on public premises in the city of Zurich for an additional five years, as well as further development of the partnership between APG|SGA Traffic and PostAuto Schweiz AG – for which advertising spaces at transit stops are now marketed in addition to advertising in and on the respective vehicles. APG|SGA Mountain was able to successfully conclude various agreements with mountain regions and railways, including Zermatt Bergbahnen AG, Bettmeralp Bahnen AG, and Jungfraubahnen Management AG. With APG|SGA Annual Report 2012

Startower, APG|SGA launched a new illuminated advertising column that revolves on its own axis and which will be used at exclusive urban locations. Our Digital Competence Center and Digital Sales divisions are in close contact with cities, transportation companies, shopping centers and other partners in order to assess the possible uses for high-quality digital products.

The ePanels that were already successfully employed in the large stations were also installed at Metro m2 in Lausanne in the spring. At the main train station in Zurich, the eBoard represents a replacement investment in the largest HD display in Switzerland (60 square meters). All in all, sales in the digital segment more than doubled since 2010.

International markets The decision to withdraw the company from operating activities in Greece, Bosnia, Hungary, Bulgaria, and Italy, as was communicated two years ago within the scope of our revised strategy, was quickly implemented despite adverse economic conditions.

In Montenegro, we succeeded in selling our majority interest to the former minority shareholder at the beginning of 2013 and thus withdrawing from this market.

Our efforts to sell the companies in Romania could not be realized due to the continuing poor market conditions. However, we succeeded in putting the respective operational units on a much better footing last year. We are pleased that a positive income result at the operating level was again able to be achieved for 2012 thanks to various measures we took, such as reintegrating the logistics organization, optimization of the advertising inventory and strengthening the sales organization.

In Greece, where we no longer have any operating activities, the remaining companies will undergo structured liquidation as planned.

In Serbia, comprehensive impairment for the entire goodwill as well as a part of the value of the respective contracts was required. The company in Serbia is well-positioned in operating terms. It is the undisputed market leader and has long-term contracts for marketing a modern portfolio of products and services. In spite of these strengths – which in principle make us optimistic for the future – the company, as already mentioned in the semiannual report, was unable to escape the extraordinarily difficult macroeconomic environment. The local economic situation is very challenging, and then too there is the exceptionally weak Serbian dinar. Despite comparatively good sales performance, which in the local currency nearly achieved the level of the previous year, intangible assets had to be adjusted down as a review of their value revealed overvaluation of the carrying amounts.

Report of the Chairman and the CEO 5

Dividend/special dividend of CHF 10 per share altogether.

With a total of CHF 20.5 million, the entire share in Group sales from companies abroad declined even further to 6.5%. This reduction amounts to 34.2%, of which 7.0% and 25.7% were attributable to respective negative foreign exchange and acquisition effects. EBITDA amounted to a total of CHF 4.0 million.

Foreign net income put a burden on the consolidated financial statement of CHF 26.2 million, with CHF 21.4 million being attributable to tax-adjusted impairment losses and CHF 3.1 million to foreign currency losses.

Pension fund Conversion from the previous defined benefit plan to a defined contribution plan was effected as of January 1, 2013 as planned.

At the same time, all of the company’s administrative work and its asset management were completely reorganized and outsourced to external service partners. As a result, the costs required from the pension fund for beneficiaries significantly declined. At the same time, the pension fund’s risk profile was optimized. The result of switching the system had a positive effect on the company‘s net income for the year in the amount of CHF 38.3 million before taxes or CHF 28.8 million after taxes (in accordance with IFRS/IAS 19).

Branding After the company’s brand management in Switzerland was standardized at the beginning of the year and placed under a new umbrella brand, the previous Affichage Holding was renamed APG|SGA from the middle of the year. The new branding concept has met with very favorable reception in the market and among the company’s staff.

APG|SGA also endeavors to pursue a dividend policy in the future that is both friendly to shareholders and which takes the needs of the company into equal consideration, in particular upcoming, strategically important investments in the digitization of advertising spaces. In principle, the target is a payout ratio of 60% of the net profit over a medium-term cycle.

Outlook APG|SGA is the undisputed market leader in Switzerland on both the analog and digital Out of Home media market. Our new portfolio strategy with its uncompromising focus on the needs of customers has provided us with above-average sales growth in the last two years – independently of the overall economic climate. The APG|SGA portfolio of products and services and the associated added value are immensely attractive for the advertising industry, advertising clients and franchisers. Thus we have created optimum conditions for the successful future of our company. Based on this, we are confident that the company will achieve strong performance in comparison to the market in 2013. However, we will refrain from specific guidance for 2013, because the current structural and macroeconomic challenges do not allow for a forecast for the year with any degree of certainty.

We would like to take this opportunity to thank our staff for their impressive commitment to the various divisions of APG|SGA. We would also like to thank you as shareholders for your loyalty and support.

From IFRS to Swiss GAAP FER For the upcoming reporting year, the Board of Directors has decided to switch accounting standards from IFRS to Swiss GAAP FER. In light of the increasing complexity of IFRS and its focus on international groups of companies, Swiss GAAP FER proves to be the standard that is better suited to our mediumsized company, which focuses on Switzerland.

Dividend The Board of Directors will propose to the General Meeting of Shareholders that a dividend of CHF 7 and a special dividend of CHF 3 be paid (previous year: a dividend of CHF 5 plus a special dividend of CHF 2). This results in a payout of CHF 10 per share for financial year 2012. With renewed payment of a special dividend, the company’s shareholders will profit directly from successful resolution of the problem areas abroad and be rewarded for their support during this difficult phase.

1

Jean-François Decaux Chairman of the Board

Dr. Daniel Hofer Chief Executive Officer

Media Focus, gross spendings, all media, January–December 2012

APG|SGA Annual Report 2012

6 Financial Report

Financial Report APG|SGA Group In the year under review APG|SGA was able to look back on very positive development in its home market of Switzerland.

Nevertheless, we continue to be faced with difficult macroeconomic conditions in our international markets. The decision taken two years ago to focus on the home market led to very positive developments in terms of financial results.

Beat Hermann Chief Financial Officer

“Profitability was improved once again at a high level.”

The company’s business performance was also influenced by exceptional items. The change in the pension fund from a defined benefit plan to a defined contribution plan in compliance with reporting standard IFRS IFRS/IAS 19 had a positive influence, while the value adjustment on goodwill and contract rights in Serbia and Montenegro had a negative impact on the annual result for 2012.

Consolidated sales revenue rose by 1.9% to CHF 317.6 million (PY CHF 311.8 million). Organic growth in local currencies amounted to 5.2%; currency effects accounted for -0.7%. Real estate revenue of CHF 2.5 million matched the level of the previous year. In relation to sales revenue fees and commissions amount to 44.6% and thus also match the level of the previous year. As a result of strict cost management, operating and administrative costs could be reduced by 11.6%. The change in the pension fund contribution plan had a one-time, positive effect on the result of CHF 28.8 million after taxes. Value adjustments of intangible assets in Serbia and Montenegro negatively affected the result after tax effects by CHF 21.3 million. EBITDA amounted to CHF 113.0 million in the year under review, which corresponds to an EBITDA margin of 35.6%. If exceptional items are excluded, then EBITDA increases by 12.1% compared with the previous year.

Net income in the year under review amounted to CHF 50.1 million. If the exceptional items are excluded, then this corresponds to an increase of 20.4%. Currency exchange losses had a negative effect on the result for 2012 of CHF 1.9 million.

Switzerland On the Swiss home market sales revenue rose by 5.9% yearon-year to a total of CHF 297.0 million (PY CHF 280.6 million).

All of the segment divisions contributed to this strong growth.

EBITDA increased by 60.7% to CHF 115.4 million (PY CHF 71.8 million), which corresponds to an EBITDA margin of 35.6% (PY 23.4%). The strong increase in EBITDA and the EBITDA margin was also positively affected by the change in the pension fund contribution plan. Overall net income of CHF 77.6 million (PY CHF 47.9 million) was generated in the Swiss segment.

APG|SGA Annual Report 2012

Financial Report 7

International The international contribution to consolidated sales continued to decline and at CHF 20.5 million (PY without Greece CHF 29.3 million) it amounted to 6.5%. This decrease amounts to 34.2%, of which 7.0% and 25.7% were attributable to negative foreign exchange and acquisition effects respectively. EBITDA amounted to a total of CHF 4.0 million (PY without Greece CHF 4.7 million). Thanks to process optimization and strict cost management the EBITDA margin in the International Division showed strong growth and amounted to 19.4% (PY 15.9%). At CHF 26.2 million, international net income had a negative effect on the consolidated financial statement, with CHF 21.4 million attributable to value adjustments on intangible assets and CHF 3.1 million to foreign currency losses.

Cash flow In financial year 2012 a cash flow of CHF 35.6 million was generated (PY CHF 63.9 million). It should be noted that a total of CHF 24.0 million was appropriated to the company pension fund in the reporting period. The flow of funds from business operations amounted to CHF 45.0 million (PY CHF 72.7 million).

After investments of CHF 5.4 million and proceeds from the sale of tangible assets and holdings in the amount of CHF 4.6 million, free cash flow before dividend payments amounted to CHF 44.2 million (PY CHF 67.4 million).

Balance sheet Compared with year-end 2011 the balance sheet total declined by 7.7% to CHF 287.4 million, primarily due to the complete redemption of all bank loans and to the write-offs of intangible assets abroad. Intangible assets currently amount to 14.6% of total assets (PY 22.2%). Accounts receivable from customers increased to CHF 43.9 million (PY CHF 39.8 million). The net cash position as at the end of the year under review amounted to CHF 86.5 million. As at the balance sheet date the equity capital belonging to the shareholders of APG|SGA SA amounted to CHF 103.5 million, which corresponds to an equity ratio of 36.0% (PY 39.7%). The negative impact on equity was attributable to actuarial losses from defined benefit pension plans in the amount of CHF 51.9 million. The reason for this is the historically low interest rates, which have led to a further reduction in the discount interest rate and concomitantly to the anticipation of higher future obligations.

Sales revenue

EBITDA

EBITDA margin

Investments

CHF m

CHF m

In % of sales revenue

CHF m

-50.5

-55.4

-36.3

-55.8

-17.9

52.1

38.5

26.1

-31.3

-6.7

54.8

86.3 35.6

2008

2009

2008

2009

2010

2011

2012

2008

2009

2010

2011

2012

2008

2009

2010

2011

5.4

10.8

24.3

38.1

23.4

16.9

13.4

19.5

2012

73.0

2011

51.3

317.6

2010

45.6

311.8

83.5 304.3

340.0

428.7

113.0

42.3

12.5

-45.4

3.2

1.9

2.5

-10.5

-20.7

10.9

Change vs. PY in %

2012

APG|SGA Annual Report 2012

8 Financial Report

Key figures 5-year financial highlights of the APG|SGA Group 2012

2011

2010

2009

2008

48.4

52.7

57.3

60.1

62.7

Balance sheet Buildings and land

CHF m

Advertising plant

CHF m

18.0

20.3

24.1

38.6

59.7

Current assets

CHF m

154.0

142.8

94.4

125.9

194.3

Net current assets

CHF m

25.8

21.0

29.5

30.9

56.6

Net debt (+)/Net liquidity (-)

CHF m

-86.5

-62.9

4.1

34.5

35.5

0.08

0.76

0.43

4.0%

20.7%

15.2%

Net debt/EBITDA Gearing Equity

CHF m

107.1

126.5

100.9

167.2

233.3

Total assets

CHF m

287.4

311.2

275.1

395.1

567.2

-7.7%

13.1%

-30.4%

-30.3%

-1.7%

– Change versus PY Income statement Sales revenue (SR)

CHF m

317.6

311.8

304.3

340.0

428.7

– Switzerland

CHF m

297.1

280.6

259.0

250.1

305.9

– International

CHF m

20.5

31.2

45.2

89.9

122.4

Fees and commissions

CHF m

141.5

139.1

141.4

164.1

194.7

in % SR

44.6%

44.6%

46.5%

48.3%

45.4%

Personnel expenses

CHF m

29.9

66.0

68.3

68.0

77.8

in % SR

9.4%

21.2%

22.5%

20.0%

18.1%

Depreciation of property, plant, and equipment

CHF m in % SR

Amortization of intangible assets

CHF m

9.7

11.3

14.3

20.6

23.1

3.1%

3.6%

4.7%

6.1%

5.4%

4.4

4.8

5.4

7.6

7.7

in % SR

1.4%

1.5%

1.8%

2.2%

1.8%

EBITDA

CHF m

113.0

73.0

51.3

45.6

83.5

Operating income (EBIT)

CHF m

76.4

56.1

-39.1

-65.2

52.7

Income from continuing operations

CHF m

52.1

43.0

-52.7

-41.4

32.9

Net income

CHF m

50.1

41.8

-52.3

-59.1

29.7

Statement of cash flows Cash flow

CHF m

35.6

63.9

44.9

35.9

56.9

Free cash flow

CHF m

44.2

67.4

32.6

18.4

-13.7

Financial indicators EBITDA margin

in % SR

35.6%

23.4%

16.9%

13.4%

19.5%

Operating income (EBIT margin)

in % SR

24.1%

18.0%

-12.8%

-19.2%

12.3%

Income from ongoing business activities

in % SR

16.4%

13.8%

-17.3%

-12.2%

7.7%

Net income

in % SR

15.8%

13.4%

-17.2%

-17.4%

6.9%

Cash flow

in % SR

11.2%

20.5%

14.7%

10.5%

13.3%

ROIC

179.7%

66.4%

-25.5%

-27.7%

17.8%

ROE

44.1%

37.4%

-39.5%

-30.7%

11.2% 21.9

Investments Advertising plant

CHF m

3.0

6.4

2.8

10.8

Other investments in property, plant, and equipment

CHF m

2.3

2.8

2.5

2.5

6.4

Intangible and financial assets

CHF m

1.7

18.9

24.8

58.1

661

705

782

825

Employees Explanation of financial terms see page 55

APG|SGA Annual Report 2012

652

Financial Report 9

Share development

2012

2011

2010

2009

2008

-13.32

-21.87

17.96

Data per share Operating income (EBIT)

CHF

25.98

19.11

Cash flow

CHF

12.12

21.78

15.29

12.03

19.37

Income from continuing operations

CHF

17.70

14.23

-17.96

-12.78

10.10

Net income

CHF

17.03

14.23

-17.82

-19.84

10.11

Equity held by APG|SGA SA shareholders

CHF

35.20

42.11

33.99

55.45

75.16

Payout

CHF

10.00 1

7.00

0.00

0.00

4.40

59.9%

49.2%

0.0%

0.0%

44.5%

Payout ratio Share price data Market price high/low 2

CHF

200.4/130.6

175/121

151/93.8

149/96.5

257/127.5

Year-end market price

CHF

200.0

136.0

140.0

108.7

140.0

5.0%

5.1%

0.0%

0.0%

3.1%

600.0

408.0

420.0

326.1

420.0

Payout yield 3 CHF m

Market capitalization3 – versus shareholders’ equity

5.6

3.2

4.2

2.0

1.9

– versus sales revenue

1.9

1.3

1.4

1.0

0.9

11.7

9.6

–

–

13.8

P/E ratio 3, 4 1 2 3 4

Proposal to the General Meeting Source: UBS AG Based on market price as at December 31 Including payout on treasury stock

Price trend since December 31, 2009 200 Index

APG|SGA registered share

180 160 140 120

SPI

100 80 60

31.12.2012

31.12.2011

31.12.2010

31.12.2009

40

Source: UBS AG

APG|SGA Annual Report 2012

90%

of the Swiss population are out of the house and on the move on a daily basis. This explains the enormous reach achieved by our Out of Home solutions within an extremely short period of time.

12 Business Development in Switzerland

APG|SGA

Successful bids, contract extensions, new products, intensified digitization

Beat Holenstein Head of Partner & Product Management

“Out of Home has become even more attractive through the combination of new digital advertising media and innovative analog products.”

Partner Management In 2012, APG|SGA was able to win numerous bids and advertisements. The company was awarded a contract for the greater part of the billboards on public premises on the basis of its compelling bids in an open bidding procedure conducted by the city of Zurich. As of July 1, 2013, APG|SGA will be responsible for marketing and managing 90% of all commercially exploitable, fixed spaces on public property (1,255 of 1,400 spaces) in the largest Swiss city for another five years. However, in the city of Bern, approximately 200 F200 urban format backlit panels will no longer be on offer as of January 1, 2013. To compensate for that, APG|SGA was able to improve its range of backlit panels through the integration of 25 Rollingstars (F200 with multiple use), with which APG|SGA – owing to its franchise agreement – maintains its top ranking in the capital of Switzerland as well. In Lucerne, we completed our new poster plan.

Numerous other municipal contracts were able to be renewed or confirmed either due to successful partnerships or within the scope of public calls for bids – including, among others, APG|SGA‘s exclusive, long-standing cooperation with St. Moritz, an Engadin vacation destination, and with the municipality of Kriens, a suburb of Lucerne.

In the mass transit advertising segment, the intensified partnership between APG|SGA Traffic and PostAuto Schweiz AG deserves attention, for which advertising spaces at transit stops are now marketed in addition to advertising in and on the respective vehicles. APG|SGA Mountain renegotiated and successfully concluded various agreements with mountain regions and railways, including Zermatt Bergbahnen AG, Bettmeralp Bahnen AG (both Valais), and Jungfraubahnen Management AG (Bernese Highlands).

Product Management With Startower, APG|SGA launched a new poster advertising medium: a backlit advertising column that revolves on its own axis and makes it possible to develop new top locations. In Zurich, we continued to develop our successful premium offer with “Premium Branding waiting zone Zurich.” It includes 50 urban format F200L panels at highly frequented bus and tram stops and attractive squares. APG|SGA‘s budget offer, APG|SGA Profitline, was expanded on with the APG|SGA Carline product. Aimed at car drivers as a mobility target group, it includes 1,300 guaranteed frontal view panels along heavily traveled streets.

Digital Competence Center Digitization has found its way into every segment at APG|SGA – it represents a growing field that will undergo intensive development. Various projects designed to implement new digital advertising forms are either in progress or are approaching completion. After a new digital format was successfully launched with the ePanel in large Swiss train stations in the summer of 2011, six ePanels were also installed at Metro m2 in Lausanne in March 2012. A joint pilot project was also started with the city of Zurich in order to evaluate the possibilities of digital advertising forms in public. The Digital Competence Center is responsible for developing a uniform group strategy.

APG|SGA Annual Report 2012

Startower – a new APG|SGA poster distributor: The large portrait format (2 x F200L) offers even more possibilities for creative Out of Home design.

APG|SGA Annual Report 2012

14 Business Development in Switzerland

APG|SGA

Swiss outdoor advertising – diverse and efficient

Daniel Strobel Head of Advertising Market & Subsidiaries Switzerland

“Out of Home Media represents one of the most dynamic media categories.”

Ulrich Ritschard Direction of Digital Sales

“Book today, advertise tomorrow: Digital Out of Home sets new standards.”

APG|SGA Annual Report 2012

Dynamic markets – dynamic market cultivation Together with across the board consulting, APG|SGA offers its customers diverse products and services in all linguistic regions. Outdoor advertising involves various forms of planning and implementation. It is fast and makes a quick impact, it is present in urban centers, at points of interest and points of sale, on the street, at the train station, at the airport, in the mountains, or it accompanies mass transit company vehicles – in classic or digital, motion, 2D or 3D formats. If classic billboards used to be employed primarily as supporting media in advertising, outdoor advertising today is increasingly assuming the role of a fundamental advertising medium. Never before have customers or creative and media agencies been in command of such a wide range of offers that are not only matched to meet their communication requirements, but capable of being used with both accurate timing and pinpoint precision – at the local, regional, and national levels. Today the APG|SGA sales teams that make up the company’s office and field staff for every region and segment brand have comprehensive knowledge of the entire offer. The road to “one-face-to-the-customer” was paved in numerous internal training steps and will be constantly pursued in the years to come. This process is supported through the adaptation of existing and/or the development of new tools in sales and administration.

Knowing and understanding customers The APG|SGA range of products and services is as diverse as our customers’ requirements. What is important is what each and every customer desires. The ability to listen attentively to what a customer says and then to put it into proper perspective is one of our principal tasks. Divided into the four sales regions of West, Center, South and East, consulting teams at APG|SGA and its segment brands assume responsibility for this task on location. And in the company’s key account management division, which has a new focus, trained specialists have the requisite experience and know-how to efficiently handle complex, cross-divisional national Out of Home campaigns. With inquiries and orders from international customers, globalization of the markets has also found its way into our company. The daily task of our reinvigorated sales unit, KAM International, is to make its presence known among decision-makers who work for advertising clients and agencies in European marketing and advertising headquarters, so that they too become familiarized with the opportunities and qualities of the Swiss Out of Home market on location.

Digital Sales The year 2012 was a year of extraordinary growth for Digital Sales. The success of the ePanel, which was introduced in the summer of 2011, continued, and sales for the eBoard achieved a new all-time high. All in all, sales in the digital sector more than doubled since 2010. Thanks to clearly structured processes, as well as a high degree of automation and standardized operations, this increase in volume could be mastered with only a slight increase in personnel. At the main train station in Zurich, the eBoard, which was commissioned as a pilot project in 2001, was replaced by an advertising display in HD quality. With its 60 square meters, it is the largest indoor HD display in Switzerland.

APG|SGA turns streets and squares into vibrant communicative spaces – with complete coverage in all large Swiss cities. In addition, its numerous exclusive locations amplify sales in direct proximity to the respective selling points in an ideal manner.

The best of digital Out of Home: ePanel at Bern train station. Thanks to the significant increase in the number of passengers and attractive service offers, major train stations have become preferred locations for digital outdoor advertising.

APG|SGA Annual Report 2012

16 Business Development in Switzerland

APG|SGA

Introduction of new corporate brand, and new services and tools

Markus Ehrle Head of Marketing & Business Development

“APG|SGA is the Swiss brand name for integrated, digital, and analog Out of Home communication.”

Branding, communication, and category marketing The APG|SGA corporate brand has been uniting all the company’s divisions and services under one brand name since January 19, 2012. Together with its supplementary segment brands (Airport, Mega Poster, Mountain, and Traffic), it is recognized as the leading authority for Out of Home Media in Switzerland. In the course of its rebranding, a new corporate identity and various communications media (publications, videos, etc.) were realized that constantly undergo improvement and further development. Since July 2, 2012, the group was been operating under the name APG|SGA SA. The new brand makes it possible to use a uniform logo for the whole of Switzerland, with a design that expresses openness, modernity, dynamics and increasing digitization, while representing freshness and Swissness with its selection of colors.

The successful summer advertising campaign “What is your wish?” brought the unique advantages of the poster as a medium closer to advertising clients and the Swiss population in 2012. The focus was placed on the shortcut application, which is exclusively available to APG|SGA customers and forms a bridge between offline and online communication and steers the user directly from the poster to a mobile website via smartphone. Together with the umbrella organization AWS, Outdoor Advertising Switzerland, a classic category campaign was also developed with the claim, “For Great Ideas. The Poster.”, and was displayed at numerous APG|SGA poster sites. The strong focus on the attractiveness and creativity of outdoor advertising resulted in increasing numbers of participants in the Poster of the Month competition, as well as a record number of submissions to the Swiss Poster Award 2012.

Market and media research The fact that posters are highly appreciated and make a great impression is proven month after month by the APG|SGA Poster Performance Index (PPI). In the year under review, an online survey was employed that makes it possible to study and evaluate the impact of Out of Home advertising campaigns with even more precision. With “Out of Home Targeting”, we successfully introduced a new service in order to provide for more sophisticated campaign planning. This makes it possible to place accurately targeted messages along important distribution channels and centers of mobility.

Web tools and e-communications The newly launched smartphone app PosterPlus is a tool that now makes it possible to search and select APG|SGA poster sites on the go as well. The already very popular app offers access to more than 60,000 poster sites in all of Switzerland along with many other practical planning features. The internet tool Poster Direct and the APG|SGA website have also been further enhanced – which also simplifies planning and booking for our customers.

Pricing The changes and simplifications introduced in the year under review with regard to corporate policy on offers, prices, terms and conditions (introduction of a uniform price, early booking discount, adjustment of the increments for the graduated campaign discount (GCD), harmonization of the consultant’s commission, expansion of the company’s Profitline offers, etc.), all proved to be successful. Thus we have made only selective modifications along with a general price adjustment for poster year 2013.

APG|SGA Annual Report 2012

Business Development in Switzerland 17

PosterPlus – mobile access to more than 60,000 APG|SGA poster sites

Poster advertising agreeable/very agreeable Share in % of persons interviewed (based on 1,000 persons)

Within the scope of various competitions, APG|SGA promotes effective, aesthetically pleasing, high quality posters.

Photo: Youth Session 2012 “Now we do the talking!”,

Total

70

81 77

winning poster in the Swiss Poster

2012 2005 1997

Award 2012 competition; client: SAJV Jugendsession, Bern

Men

70

79 76

Women 83 78

70

aussenwerbung-schweiz.ch

Age bracket 15–29 79 77 72 Age bracket 30–44

72

83 80

Age bracket 45–59

66 0

20

40

60

74

81

80

FÜR GROSSES.

DAS PLAKAT.

AWS Category Campaign Poster

Shortcut – online with the poster directly via smartphone

Source: APG|SGA Poster Performance Index (PPI)

APG|SGA Annual Report 2012

18 Business Development in Switzerland

APG|SGA

High-quality posting, customer satisfaction and improved environmental balance in line with sustainability requirements

Christian Gotter Head of Logistics

“Our company’s internal logistics operations guarantee high-quality posting and customer satisfaction.”

Posting in the city center The company’s internal logistics organization represents the central service provider for sales, acquisition and the segment companies. A total of 260 employees1 at 14 APG|SGA locations processed and displayed approximately 2.5 million posters in the company’s core business in 2012, equivalent to one square meter in world format – approximately 1% more than in election year 2011. And now there are also up to 20 billposters underway with their cameras in peak weeks every Thursday and Friday in order to take pictures of visuals in the largest cities and municipalities. Thus the sales division was able to be provided with approximately 20,000 photographs for use in photo documentations of diverse campaigns for customers by the end of December 2012. At the logistics center, we introduced poster storage charges that make it possible for the customer to prolong the storage of posters that have been in storage for more than 12 months at our premises by making payments.

Short turnaround times and expanded field of activity In the year under review, various large campaigns were able to be processed within a very short period of time and successfully posted. The goal continues to be to achieve even faster turnaround times in the value chain and to thus secure competitive advantages over our competitors. Numerous construction contracts were processed for acquisition. The largest projects included coordination and support for the transformation of 25 Cityplan units into Rollingstar units in the city of Bern and the dismantling of various poster sites due to the new municipal contract in Geneva. In Chur and Zurich, support and supervision was provided for the assembly and commissioning of the new Startower. Once again we are carrying out cleaning of the digital advertising media in the train stations for Impacta, and we have introduced a new quality system together with the tarpaulin suppliers for APG|SGA Mountain and redesigned the packaging of the tarpaulins for posting in the mountains. And with APG|SGA Traffic, we have commenced discussions on process optimization and active order tracking.

Quality, environmental awareness and sustainability Active cost management, quality and sustainability are at the front and center of our activities. We aim to maintain and consolidate the high level of our satisfying financial ratios. In doing so, ecological aspects have also played an important role in our management decisions for many years. We have achieved a lot with our resolute approach and set standards in several areas, such as the procurement of eco-vehicles and the purchase of green electricity. Our standards currently receive widespread attention.

Compared with previous years, APG|SGA reduced its environmental impact even further.

As shown by the five-year comparison published in the environmental report in August 2012, the company’s environmental impact has been reduced by approximately 15% since 2007, with the company’s business operations making the most important proportionate contribution of approximately 40%. The share of electricity in this overall reduction amounts to a good 25% and is attributable to environmentally conscious energy purchases for backlit advertising. With regard to greenhouse gas emissions, a reduction in carbon dioxide in comparison to 2007 of approximately 570 tons was achieved (-14%).

1

APG|SGA Annual Report 2012

100% full-time equivalent basis

Business Development in Switzerland 19

As of 2015, new passenger vehicles in Switzerland will not be allowed to discharge more than 130 grams of carbon dioxide per kilometer. Thanks to our ongoing procurement of eco-vehicles, we made these requirements into a standard several years ago. With more than 160 vehicles, APG|SGA has one of the largest fleets of environmentally vehicles in Switzerland.

APG|SGA Annual Report 2012

44

million

passengers took to the air in Switzerland in 2012. This number demonstrates the unbridled travel enthusiasm and global interconnectedness of the Swiss – fully in line with APG|SGA Airport.

22 Business Development in Switzerland

APG|SGA Airport

Swiss airport advertising on a successful course Enhanced customer portfolio APG|SGA Airport is once again able to present encouraging results. The key customer segments (the watch industry, financial sector and real estate sector) were strengthened and further developed on a sustainable basis. Moreover, promising new segments were added with the automobile and aviation industries. The annual targets were met with regard to both sales and profit.

Direction of APG|SGA Airport, Bercher SA Publicité Générale

“The dynamics of Geneva Airport boost our aim to offer our customers innovative advertising solutions of the highest quality.”

The fascination of the airport With APG|SGA Airport, our customers reach affluent consumers in an environment that is infused with bustling dynamism. As gateways to the world, airports create advertising contacts with international business and travelers on vacation. Communication in the point of sale area of an airport unfolds the greatest effect – either as a brand reminder or direct sales promotion. The material and functional framework of an airport makes it possible for customers to stage brands among a sophisticated public in a manner that is both effective and rich in contrast.

11 324 2009

13 112

11 542

10 905

9 411

2008

7 620 2002

8 593

7 546

8 000

2001

10 000

8 088

12 000

9 963

14 000

11 865

Geneva Airport Number of passengers per year in thousands

13 899

Pierre-Alain Mettraux

Installation of new LED advertising spaces In terms of sales, Geneva Airport has been the company’s most important, long-term partner. On the basis of the existing franchise agreement, APG|SGA Airport further developed and expanded on its offer in the year under review. Thus new LED advertising spaces were installed in the visitor-accessible arrivals area in 2012. They are doublesided squares of 180 x 180 cm in size and they fit excellently into the airport atmosphere. More and more advertising spaces from APG|SGA Airport are being individually matched to the surrounding area. The trend points clearly toward larger formats, along with a reduction in the number of sites. Well-integrated into the building architecture, advertising media fulfill the mounting aesthetic requirements of our partners on the one hand, and on the other hand they achieve the exclusivity desired by the market.

The result is both satisfied business partners and customers – and optimum commercial value creation. Through the use of LED technology, the backlit displays that are in high demand on the market also score points from an ecological point of view because of their low energy consumption. We also achieved or exceeded our annual targets at Lugano Airport.

Source: Geneva Airoport, www.gva.ch

APG|SGA Annual Report 2012

2012

2011

2010

2007

2006

2005

2004

2003

6 000

Prestige advertising at the airport: Large formats of outstanding quality integrated into the building architecture increase the exclusivity of the advertising media – and thus their value creation.

APG|SGA Annual Report 2012

24 Business Development in Switzerland

APG|SGA Mega Poster

Unusual productions with a strong impact

Ernst Fuhrer Direction of APG|SGA Mega Poster, Paron AG

“The Mega Poster segment brand realizes the most spectacular ideas together with its customers.”

Convincing communication with large format images APG|SGA Mega Poster, the country’s leading Out of Home media company in the sphere of two and three-dimensional large format image communication, significantly increased its sales again compared with the previous year and made a satisfactory profit.

With sizes of up to 630 square meters, the company’s Mega Poster offer, with more than 135 sites in all of Switzerland, cannot be overlooked in any respect. The various creative campaigns exhibit convincing quality with photo-realistic digital printing as well as professional mounting adapted to the individual site. In all the large cities of Switzerland, at central, highly frequented locations, Mega Posters generate several thousand contact opportunities for each period of display. The specially compiled qualification system for contact measurement underscores the competitiveness of Mega Poster as a niche product between and within media – which is why it is currently firmly established in national and international media planning.

Well-known customer portfolio – a lot of potential for the future In the year under review, APG|SGA Mega Poster succeeded in realizing several orders with well-known customers. From a five-meter high, climbing dairy cow and a chocolate bar three meters in size to four-meter high cell phones and four original size Fiat 500 models, various installations in large Swiss cities attracted for attention and provided plenty to talk about – not only among the population, but in the advertising industry as well. The strong impact of these special projects resulted in a wealth of inquiries from both customers and agencies. APG|SGA Mega Poster is the only supplier in all of Switzerland capable of realizing such projects under one roof in a professional and timely fashion. Advertising customers, agencies, partners and authorities profit from this all-in-one service, which begins with a dialog and consulting on the choice of a location to design input and official approval procedures, as well as production, mounting, lighting, maintenance, disassembly and finally disposal of the materials in an environmentally friendly manner.

Swiss premiere in Bern With its newest project, the veiling of the Burgerspittel in Bern, the six-member team at APG|SGA Mega Poster succeeded in producing a masterpiece. For the first time in the history of the Swiss Out of Home market, a building in the most central of locations was completely wrapped and photo-realistically displayed on the scaffold netting.

Thus, at one of the most frequented locations, an attractive supporting program for four commercial Mega Poster advertising spaces was created from a 2,400 square meter optical illusion. The development of this product strives for market penetration among customers in the luxury segment who until then had criticized the tendency of temporary spaces for scaffolding to be unsightly. And when it came to business partners and the authorities, this project provided proof that APG|SGA Mega Poster takes responsibility for the cityscape and makes an important contribution toward cleanliness and quality of life in the public sphere.

APG|SGA Annual Report 2012

Business Development in Switzerland 25

APG|SGA Mega Poster is the essence of

time in the history of the Swiss Out of Home

exceptional production. With the veiling of

market – a contribution toward cleanliness

Burgerspittel at the central train station in Bern,

and quality of life in the public sphere and an

a building in the most central of locations

attractive framework for commercial Mega

was completely wrapped and photo-realistically

Poster advertising spaces.

displayed on the scaffold netting for the first

APG|SGA Annual Report 2012

86%

of the Swiss population enjoy spending their free time in the Swiss mountains on a regular basis. APG|SGA Mountain is also represented at attractive locations there.

28 Business Development in Switzerland

APG|SGA Mountain

To success with innovation and creativity

Markus Bien Direction of APG|SGA Mountain

“Thanks to constantly increasing mobility and dynamics, the creative and unusual campaigns of APG|SGA Mountain gain maximum attention on the mountainside.”

Successful partnerships APG|SGA Mountain, specialist and market leader for outdoor advertising and mountain orientation systems, renegotiated and concluded numerous agreements with mountain regions and railways in the year under review. Thus Torrentbahnen Leukerbad in the Canton of Valais and Bettmeralp Bahnen AG continue to cooperate with APG|SGA Mountain. Exclusive partnerships have been confirmed with companies such as Zermatt Bergbahnen AG, Jungfraubahnen Management AG, Corvatsch AG and Luftseilbahn Corviglia–Piz Nair AG in Engadin. Altogether nearly 90% of all Swiss mountain railways rely on our innovative strength and performance in advertising marketing. We also make certain that guests on the mountain feel safe and right at home, and are able to find their bearings and obtain required information both rapidly and reliably. Thus we present attractive opportunities for professional, efficient advertising communication on the part of our customers.

New advertising forms and expanded customer portfolio With increasing mobility, supported by further development of traffic routes and local infrastructure in the various regions, outdoor advertising within the scope of Swiss mountain tourism is becoming increasingly important. Throughout the entire year, the various destinations offer unique experiences and attract wealthy customers. Mountain advertising receives a lot of attention among both domestic and foreign guests and provides high attraction value, as periodic field studies have shown. Through the development of new forms of advertising (digital formats in gondolas, the catering business, ticketing and tourist agencies, chairlift branding, cubes, coverings, etc.), new customers were once again acquired and the segments of this industry cultivated in the year under review.

Infosnow.ch: basis for the cross-media future Infosnow.ch is a web application for collecting and managing data displayed on media such as panorama and information boards, websites and electronic terminals such as smartphones. This tool now makes it possible for APG|SGA Mountain to display all the offers and information for a mountain destination with a single system: ski slopes, cross-country ski trails, sledging and hiking paths, parks, avalanche bulletins, weather and much more. Infosnow.ch also supplies the data of approximately 50% of the destinations that Switzerland Tourism publishes in its winter sports reports. With the newest generation of systems, the usability of the tool has been improved and its range of features substantially expanded. The system also includes new modules, such as an event calendar, newsletters and SnowTV. We have also been offering our partners readymade web solutions for them as a service for the past two years.

APG|SGA Annual Report 2012

Business Development in Switzerland 29

Swiss cable cars transport a total of around 292 million people each year. About 811,000 people can thus be reached with advertising in a laid-back atmosphere on a daily basis.

Source: Seilbahnen Schweiz, Fakten und Zahlen zur Schweizer Seilbahnbranche, 2012

APG|SGA Annual Report 2012

5 million

Swiss people use public transport on a daily basis in Switzerland.

Public transport is therefore a hot trend – the same goes for our services from APG|SGA Traffic.

32 Business Development in Switzerland

APG|SGA Traffic

Mass transit advertising market continues to grow

Daniel Flück Direction of APG|SGA Traffic AG

“As the market leader, we provide highly effective brand communication in mass transit.”

Established market position There is a trend toward mass transit advertising and it has gained in significance on the altogether stagnant Swiss advertising market. In an environment that is sluggish on the local, regional and national levels, APG|SGA Traffic was nevertheless able to increase its sales and profit in 2012. Thanks to intensive, consistent market cultivation, and thanks to interesting new products and projects, the division was able to expand its leadership even further in the sphere of Swiss mass transit advertising. New additions to the product portfolio included the new floor graphics, which were successfully used for BDWM1 Transport AG. This eye-catching and entertaining form of advertising was well-received by both the passengers and the personnel of the mass transit company.

At Verkehrsbetriebe Zürich VBZ, we were actively involved in shaping the pilot project with five completely painted trams, while contributing our network of business relationships and our experience.

Efficient interface between mass transit companies, customers, agencies and advertising suppliers The success of APG|SGA Traffic is attributable to the interaction of various elements: a local presence, a blanket offer throughout Switzerland, diverse advertising formats, short-term offers on the inside of vehicles, a long-term advertising presence on the exterior surfaces with coverage that continues to be extended through increasing mobility. As the partner of more than 90% of all urban and regional mass transit companies, PostAuto Schweiz and BLS (Bern rapid-transit railway), we market over 4,200 vehicles.

We form the interface between the different mass transit companies, local, regional and national advertising customers, advertising agencies, sign-painters and printers.

Our many years of successful cooperation with our partners made it possible to simplify many operations and optimize interfaces, which in turn increases the attractiveness of mass transit advertising in the long term. Both the large and the numerous smaller advertising customers profit from this general contractor principle of comprehensive service and integrated solutions under one roof. The revenue generated through advertising orders provided welcome supplementary income for the mass transit companies with their passengers.

Proven high advertising effect Mass transit advertising reaches approximately 2.7 million passengers throughout the country, day after day. At APG|SGA Traffic, both large and small customers find the products that best fit their individual needs: from classic and digital formats, standardized, nationally available and popular hanging displays and longitudinal roof formats to five square meter traffic boards and partial back to complete vehicle wraps. We take advantage of the increasing passenger frequencies and the positive image transfer of mass transit. In Switzerland, mass transit networks are uniquely dense, not only in the urban centers, but – thanks to rail and PostAuto services – also as connections to more remote regions. Scientific surveys repeatedly confirm the high effectiveness of mass transit advertising: weekly reach ratings of over 50% in the overall population for interior formats, over 80% for external formats, advertising impact in excess of 50%, and recall of individual visuals of up to 73%.

1

APG|SGA Annual Report 2012

Bremgarten, Dietikon, Wohlen, Meisterschwanden

APG|SGA Traffic customers benefit from the high exposure and popularity of mass transit advertising and from the attractive price/ performance ratio. The many urban and regional mass transit authorities profit as well, in the form of the concession fees they receive.

Passengers transported by road-based mass transit Tram, trolley and bus, per year in millions 2011

1 408

2010

1 374

2009

1 349

2008 2007 2006 2005 2000

1 310 1 251 1 205 1 175 1 112

Source: BFS, Swiss Federal Statistical Office, www.bfs.admin.ch (December 2012)

APG|SGA Annual Report 2012

34 Business Development in Switzerland

Impacta AG, Ecofer AG

Advertising in train stations – attractive and coveted

Markus Scheidegger Managing Director of Impacta AG

The poster as an advertising medium – on track to success Impacta AG, the specialist for train station advertising, holds concessions for the Swiss Federal Railways (SBB), BLS AG, Matterhorn Gotthard Bahn and additional key Swiss private, tourist and mountain railways. The company’s offer covers all the classic poster formats, as well as the ePanel digital format, which was newly introduced in 2011. The premium product, placed at sites of exceptional quality, was well received by the market and enjoyed above-average demand in 2012. ePanels are 82” LCD screens in portrait format with dynamic advertising messages that fit in well with the vibrant bustle of the atmosphere at major SBB train stations and their shops. Enhanced by brilliant technology, the animated images and spots are extremely popular among the station users and the messages make a lasting impression.

and Ecofer AG

“Train stations in Switzerland are the essence of urban mobility.”

Customized investment advertising Major train stations are developing into highly frequented centers that merge shopping, services and travel. Domestic and foreign business travelers, tourists, commuters and passersby enliven their halls, arcades and platforms on a daily basis. In this environment, Ecofer AG specializes in the marketing of mostly long-term advertising in the non-poster segment: high-quality luminous advertising, large-scale representations, 3D-designs and additional special forms of advertising. Mega Posters of up to 320 square meters as well as escalator advertisement (stair posters) are also successfully deployed in the six largest SBB train stations. Both are offered within four-week display periods and are thus excellently suited as a complement to digital and classic poster campaigns. Ecofer’s concession partners are the Swiss Federal Railways (SBB), BLS AG and other railroad companies – including the mountain railway and tourism sector.

Continuous development with proven partnerships The frequency with which people use Swiss train stations is constantly increasing. Against this backdrop, Impacta AG developed and positioned train station posting as an independent medium on the advertising market. The progressive structural adjustments of train stations to the needs of today’s modern, mobile society represent a huge challenge and require continuous development of advertising spaces.

Daily train station frequencies Stations

APG|SGA Annual Report 2012

Rail passengers1

Stations

Rail passengers1

Zurich HB2

382 760

St. Gallen2

42 170

Bern

2

191 360

Zurich Airport

41 900

Basel SBB2

108 600

Aarau

38 300

Winterthur2

95 230

Zug2

37 920

Lausanne2

89 010

Zurich Altstetten

36 090

Lucerne2

81 160

Baden

35 990

Zurich Oerlikon

76 470

Thun

32 570

Zurich Stadelhofen

72 580

Wetzikon

25 480

Olten

71 400

Geneva2

62 200

1

Biel/Bienne

46 530

2

Zurich Hardbrücke

43 600

Embarking and disembarking RailCity Source: SBB, November 2011

Constantly increasing rail passenger frequencies Passengers of SBB and licensed mass transit companies, in millions per year

Train stations are hubs of emotions and experiences, where companies and their brands are offered ideal opportunities to reach their target groups in a highly effective and efficient manner.

2011

461

2010

446

2009

431

2008

425

2007

403

2006

379

2005 2000 1995

364 303 279

Source: Swiss Federal Statistical Office, www.bfs.admin.ch (December 2012)

APG|SGA Annual Report 2012

36 International Business Development

APG|SGA International

Continued progress in adjusting foreign investments At the end of the year 2010, the board of directors and management decided to focus on business in Switzerland in the future and to wind up all the company’s foreign commitments from which no sustained positive contributions to the company’s profit could be expected in the medium term. After the companies in Greece, Bosnia and Herzegovina, Bulgaria, Hungary and Italy (South Tyrol) were sold in the previous year, the company in Montenegro was now also successfully sold.

Thomas Rainer Direction of International Markets

“Adjustment of foreign investments continued to be rigorous.”

Montenegro The small country in southeastern Europe, with all of 625,000 inhabitants, exhibited very limited future potential for our company and failed to show any substantially profitable prospects over the medium term. In the preceding year, we succeeded in extending the key agreement with the capital city of Podgorica by another five years – which provided us with a more solid basis when it came to searching for a buyer. At the beginning of 2013 the local company Montepano d.o.o. was sold to the past minority shareholder and manager.

Romania The year 2012 was characterized by diverse challenges due to local market conditions and the necessity to optimize the internal structures of the companies in Romania.

The entire management team was replaced by experienced international and local employees. Unprofitable agreements were terminated, the cost base reduced and all logistics were integrated into the company. The decline in sales of recent years was stopped, and sales revenue was even able to be slightly increased despite the economic crisis and political turbulences. The implemented measures provided for a positive operating result in the year under review. We are still pursuing all possible options in regard to future activities in Romania.

Greece After the operations in Greece that were deep in the red were terminated last year, the shell companies still in our possession are to be put through an orderly liquidation.

However, this will take some time. The legal proceedings, which we instituted against the former seller of these companies and other associated persons, are still in progress.

Serbia Serbia was also affected by the global economic crisis, which had a great impact on Eastern Europe in 2012. The country is in the midst of a recession, with a 2.1% decrease in its gross domestic product with direct consequences for the advertising industry.

Nevertheless the performance of our local company Alma Quattro can be regarded as good thanks to its excellent position as the clear leader on the Out of Home market, as well as solid, long-term agreements with the most important cities in the country in the year under review. Sales remained stable compared with the previous year, and costs were able to be reduced as well. Despite this attractive performance, intangible assets had to be adjusted down as a review of their value revealed overvaluation of the book values.

APG|SGA Annual Report 2012

International Business Development 37

Alma Quattro, our business in Serbia, is exceptionally well-positioned as the clear leader on the Out of Home market in the country and has long-term agreements with the most important cities.

APG|SGA Annual Report 2012

38 Corporate Governance

Human Resources

Optimization of HR tools and processes

Marcel Seiler Head of Human Resources

“Competent, dynamic staff provide for the success of our customers.�

HR foundation is established Last year was once again the focus of sustained development of our HR processes.

Many of the processes in recruiting, support, remuneration and promotion associated with modern HR were firmly established and standardized. Payroll services have been performed internally since January 1, 2012, thus allowing for cost optimization and an increase in quality. The administrative and operational HR matters are now bundled in Zurich, based on a uniform schedule of tasks using new, modern HR tools. The stated aim of providing as much optimal support for the line functions as possible and to provide greater assistance to management and staff on location has been achieved through the development of human resources and reorientation in HR. Staff satisfaction should also thus be increased. In this regard, a comprehensive survey was conducted at the end of 2012. The results will be communicated to our staff and the necessary measures formulated in the spring of 2013. Our newly conceived performance management will be implemented on the basis of tools by the spring of 2013.

Changes in pension fund arrangements as of January 1, 2013 The new retirement plan (defined contribution) within the scope of external pension fund management (Avadis Vorsorge AG) was put into effect as scheduled as of January 1, 2013. The review of the past retirement arrangement revealed that the long-term financial feasibility of the mandated entitlement to benefits and the financial security of the pension fund in the current market environment would have been jeopardized in the medium term and that it needed to be put under professional management. The aim of the new concept is to strengthen the financial stability of the fund, whose new retirement plan continues to contain an attractive and competitive benefits package.

In addition, the employee contributions were made more flexible.

Attractive employer Our stated aim is to position APG|SGA on the job market as an even more attractive employer. This includes interesting jobs and opportunities for development. Through targeted advanced training with generous financial participation and on-the-job measures, justice is done to the professional knowledge and management knowledge of our staff as important competitive factors. The new apprentice concept includes switching to the field of communications (up to now service/administration) and has been realized with corresponding external courses. This should make it more attractive for our apprentices. A total of 15 apprentices are trained and, wherever possible, they are then employed given a good performance review after they complete their training.

APG|SGA Annual Report 2012

Corporate Governance 39

APG|SGA Total workforce As of December 31 Total 1

2012

2011

652

661

By country Switzerland

537

543

Serbia

57

59

Romania

53

52

5

7

Share of men, in %

74

73

Share of women, in %

26

27

Share of full-time positions (90–100%), in %

81

83

Share of part-time positions (<90%), in %

19

17

Apprentices2

15

13

Others By demographics

1 2

Full-time 100% equivalent basis, percentages rounded, without apprentices Switzerland, APG|SGA: commercial 10, logistics 3, IT 2

APG|SGA Employees by country in %

APG|SGA Employees in Switzerland, by division in %

1 Other

4 Holding

8 Romania

8 Segment Companies1

9 Serbia

3 Digital Sales 5 Mountain 45 Logistics

82 Switzerland

11 Central Services

10 Acquisition 14 Sales 1

Not including Impacta, Ecofer

APG|SGA Annual Report 2012

40%

of the time the Swiss are on the move in their free time.

APG|SGA thus encompasses all regions and points of interest â&#x20AC;&#x201C; in the city, in the countryside, and in the mountains.

42 Corporate Governance

Corporate Governance

Operational structure of APG|SGA As of December 31, 2012

Board of Directors

Chief Executive Officer Dr. Daniel Hofer

Chief Financial Officer Beat Hermann

International Markets Thomas Rainer

Logistics Christian Gotter

Human Resources Marcel Seiler

Partner & Product Management Beat Holenstein

Group structure and shareholders Introduction The principles and rules that govern management and supervision of the APG|SGA Group are set forth in the articles of incorporation, the organizational regulations of the Board of Directors, and the regulations of the Executive Committees. The Board of Directors regularly reviews these documents and updates them in the event of new developments. The articles of incorporation of APG|SGA SA can be viewed at www.apgsga.ch/ articlesofincorporation. The information published here corresponds to the requirements of the Directive on Information Relating to Corporate Governance by SIX Swiss Exchange.

Listed company Company name, headquarters: APG|SGA SA, Geneva Market capitalization as of December 31, 2012: CHF 600 million Place listed: SIX Swiss Exchange Security No.: 1 910 702 ISIN: CH0019107025 Ticker: APGN

APG|SGA Annual Report 2012

Advertising Market & Subsidiaries Switzerland Daniel Strobel

Marketing & Business Development Markus Ehrle

Participating interests The list of participating interests is provided in the Financial Report on page 36.

Cross-shareholdings No capital or voting cross-shareholdings exist between the APG|SGA Group and other companies.

Corporate Governance 43

Significant shareholders 1 Shares as reported as of December 31, 2012

in %

Shares as reported as of December 31, 2011

in %

JCDecaux SA, Neuilly-sur-Seine (F)2

900 000

30.00 3,5

900 000

30.00 3,5

Albert Frère, Gerpinnes (B), Compagnie Nationale à Portefeuille, Loverval (B)

758 888

25.30 4,5

758 888

25.30 4,5

Béatrice and Paul-Henry Binz, Grisobi Holding SA, Bulle (CH)

201 104

6.70

5

200 956

6.70 5

International Value Advisers LLC, New York (USA)

104 306

3.48

5,6

104 500

3.48 5,6

55 740

1.73

5,7

62 561

2.09 5,7

147 000

4.90

3,7

147 000

4.90 3,7

APG|SGA SA, Geneva (CH) (shares) APG|SGA SA, Geneva (CH) (conditional purchase option) 1

2

3% or more shares, in the form of stocks or rights to purchase or sell stocks.

The information is derived from announcements made by shareholders pursuant to Art. 20 BEHG as of December 31, 2012, subject to the availability of other information.

All published notifications can be found at http://www.six-exchange-regulation. com/publications/published_notifications/major_shareholders_en.html JCDecaux SA, rue Soyer 17, 92200 Neuilly-sur-Seine (F), is controlled by JCDecaux Holding SA, rue Soyer 17, 92200 Neuilly-sur-Seine (F), whose shareholders are − Members of the Decaux family: Jean-Claude Decaux (Neuilly-sur-Seine/F), Jean-François Decaux (London/GB), Jean-Charles Decaux (Neuilly-sur-Seine/F), Jean-Sébastien Decaux (Bruxelles/B), Jean-Pierre Decaux (Paris/F), and Danielle Decaux (Neuilly-sur-Seine/F) − JFD Investissements (Luxembourg/L), and JFD Participations (Luxembourg/L), companies under the direct control of Jean-François Decaux − Open 3 Investimenti (Uccle/B), a company under the direct control of Jean-Sébastien Decaux

Capital structure Ordinary, authorized, and conditional capital As of December 31, 2012, the share capital of APG|SGA SA amounted to CHF 7,800,000, fully paid in and subdivided into 3,000,000 registered shares with a par value of CHF 2.60 per share. As of December 31, 2012, APG|SGA SA had neither authorized nor conditional capital.

As of December 31, 2012, shareholders’ equity before minority interests amounted to CHF 103.5 million (PY CHF 123.7 million).

Details on the changes in shareholders’ equity are provided in the respective annual reports: for the years 2012/2011 on page 54 of the present report, for the years 2011/2010 on page 58 of the 2011 report.

Shares, participation, and bonus certificates APG|SGA SA shares are registered shares with a par value of CHF 2.60 per share. Each individual share is equivalent to one vote. There are no differential dividend entitlements except that no dividend is paid on treasury shares. There are no preferential rights for individual shareholders.

3

4

5 6

7

On February 29, 2008, JCDecaux announced that it had granted a stock purchasing option to APG|SGA SA. The option is an entitlement to purchase up to 147,000 APG|SGA SA shares which represent up to 4.9% of the voting rights of the company (see Annual Report, Corporate Governance: Clauses on changes of control, pages 50−51).

For detailed information on the relationship between Albert Frère, Compagnie Nationale à Portefeuille, and Pargesa Asset Management (Netherlands) N.V., see: http://www.apgsga.ch/media/filer_private/2012/09/04/pargesa_management_ organigramme.pdf Number of shares according to stock register as of December 31, 2012 and 2011 Management mandates authorize International Value Advisers LLC to exercise the voting rights of 13 different investors and five funds that hold APG|SGA SA shares. These five funds are: IVA Global Master Fund L.P., IVA Overseas Master Fund L.P., IVA International Fund, IVA Worldwide Fund, and IVA Global SICAV Fund.

Registered without voting rights

APG|SGA SA has issued neither participation nor bonus certificates.

Share register Each share recorded in the share register shall entitle its owner to one vote.

Registration with voting rights may be denied for the following reasons: − If the purchaser, in spite of a request by the company, fails to explicitly confirm that he/she has purchased or is holding such registered shares in his/her own name and for his/her own account. − If registration of the purchaser might prevent the company from being able to provide the evidence required by Swiss legal provisions regarding the acquisition of real estate by persons residing abroad.

Convertible bonds and options No convertible bonds have been issued. Option plans for employees or members of the Board do not exist.

APG|SGA Annual Report 2012

44 Corporate Governance

Board of Directors Members, activities, and interests The Board of Directors of APG|SGA SA comprises five members.

Name

Jean-François Decaux

Membre since

End of term

Jean-François Decaux, Chairman

2002

2014

Paul-Henry Binz, Vice-Chairman

1993

2013

Gilles Samyn

2008

2014

Markus Scheidegger

2000

2015

Robert Schmidli

2011

2014

General Secretariat Mélanie Giger

Paul-Henry Binz

Gilles Samyn

Markus Scheidegger

Robert Schmidli

APG|SGA Annual Report 2012

The Board members execute additional functions beyond their responsibility for APG|SGA SA and/or other companies of the Group and have informed APG|SGA SA about such functions.

These functions comprise activities within the framework of important associations, foundations, or institutions in Switzerland and abroad, as well as official positions and political mandates.

Jean-François Decaux (1959) Chairman, non-executive member.

French citizen, graduate of the Institut Supérieur de Gestion, Paris (France). Chairman and co-CEO of JCDecaux SA, member or chairman of the boards of various associated companies of the JCDecaux Group, Paris (France) at home and abroad. Member of the European Advisory Board of Harvard Business School.

Paul-Henry Binz (1941) Vice-Chairman, non-executive member.

Swiss citizen, lic. oec. of the University of Lausanne (Hautes Etudes Commerciales HEC), joined the family enterprise GrisoniZaugg SA in 1970 as general manager, since 1995 chairman of the board of Grisoni-Zaugg SA and Grisobi Holding SA, Bulle, member of Caisse interprofessionnelle AVS de la Fédération des Entreprises Romandes, Geneva.

Corporate Governance 45

Gilles Samyn (1950) Non-executive member.

Belgian citizen, distribution engineer of the Université Libre de Bruxelles (Solvay Brussels School of Economics and Management), vice-president and managing director of Compagnie Nationale à Portefeuille, Gerpinnes (Belgium), president and/or member and respective member of the committees, boards of directors or supervisory boards of various subsidiaries of Compagnie Nationale à Portefeuille in Belgium and abroad, lecturer at the Solvay Brussels School of Economics and Management (ULB).

Markus Scheidegger (1965) Non-executive member.

Handles executive duties in the subsidiaries Impacta AG and Ecofer AG. Swiss citizen, attorney-at-law, managing director of Impacta AG and of Ecofer AG, Bern, two associated companies of APG|SGA SA, delegate of the board of directors of Interplakat AG, Bern, member of the board of directors of Polymedia Holding AG, Bern, chairman of the board of directors of Maxomedia AG, Bern, chairman of the board of directors of Serigraphie Uldry AG, Hinterkappelen, member of the board of directors of various Swiss SMEs, member of the Legislative Council of Burgergemeinde Bern.

Robert Schmidli (1950) Non-executive member.

Swiss citizen, certified corporate economist with further education in sales, marketing, management and corporate leadership.

Experienced expert in the Swiss media and advertising market.

Successful senior management experience at Xerox, Bertelsmann and PubliGroupe AG. Member of the Family Advisory Board of the Oschmann Group (Müller Medien, Nürnberg, Germany), member of the advisory board of ABTell Wertschöpfungs AG, Cham, member of the corporate advisory board of Docu Media GmbH, Rüschlikon, member of the board of directors of search.ch AG, and member of the board of directors of Aerzteverlag medinfo AG, Erlenbach.

Elections and terms of office According to the articles of incorporation, the Board of Directors comprises three to five members, who must be appointed from among the shareholders and must own at least 100 shares.

They are individually elected by the General Meeting of Shareholders for a maximum term of three years and may be re-elected without restrictions. Members who have reached age 71 are, as a general rule, required to resign on the date of the subsequent General Meeting. A further continuation of the mandate is possible if it favours a satisfactory continuity of the accurate operation of the Board of Directors.

Internal organizational structure According to the law and the articles of incorporation, the Board of Directors is the supreme management body of the Group.

It has authority to decide on all matters which, according to the law and the articles of incorporation, are not in the competence of the General Meeting, or which it has not delegated to other bodies through regulations and decisions. By majority vote it determines the strategic, organizational, financial, and accounting guidelines to be followed by the APG|SGA Group. In the event of a tie vote, the Chairman does not have a casting vote.

The Board of Directors elects the chairmen, vice-chairmen, and members of the committees for one-year terms.

The Board of Directors meets as often as business requires but at least once per quarter. Each member of the Board of Directors may ask the Chairman to call a meeting. In financial 2012, the Board of Directors held five ordinary meetings with the regular participation of Executive Board members. The average duration of individual meetings is one or half a day. Most meetings were attended by all members of the Board of Directors.

The Board of Directors has appointed two permanent committees to assist it in its activities: the Audit Committee and the Nomination and Remuneration Committee. Their tasks and competences are defined in the regulations of the Board committees and encompass primarily functions of assessment, consulting, and supervision. In some individual cases, delegated by the Board of Directors, they also have decision-making powers. The committees prepare the activities of the Board of Directors in the domains assigned to them and directly inform the Board on all important matters.

The following members of the Board of Directors are represented in the Audit Committee: Binz (chairperson) and Schmidli.

The Committee has the following tasks: − to supervise the independence and efficiency of external audits − to review risk management in the areas of finance and operations − to review the organization and efficiency of internal audits, analyze the reports and forward them to the Board of Directors − to determine the investment strategy and the real estate policy − to analyze the consolidated intermediate and annual statements and forward them to the Board of Directors

APG|SGA Annual Report 2012

46 Corporate Governance

In the year under review, the Audit Committee held two ordinary meetings (in February, November) with participation of the CEO and the CFO. At one meeting, the external auditors were present.

The following members of the Board of Directors are represented in the Nomination and Remuneration Committee: Schmidli (chairperson) and Binz. This committee reviews: − the remuneration policy − the selection criteria for the members of the Executive Board − their basic conditions of employment − the proposals regarding their remuneration and participation − management development and succession planning In the year under review, the Nomination and Remuneration Committee held one meeting (in November), with participation of the CEO, the Head of Human Resources, and the CFO. In order to ensure continuous improvement in its work, the Board of Directors conducts an annual self-evaluation procedure.

Delimitation of the areas of responsibility between the Board of Directors and the Executive Board The Board of Directors decides on all matters entrusted to it by law, the articles of incorporation, and the organization regulations. Implementing and complementing Article 716a of the Swiss Code of Obligations and Article 27 of the articles of incorporation, the following decisions in particular are the exclusive responsibility of the Board of Directors: − Determination of business policies and financial strategies − Approval of sales, cost, and investment budgets of the APG|SGA Group − Establishment, acquisition, sale, liquidation, or merger of subsidiaries − Exercise of voting rights in the general meetings of the subsidiaries and drafting of the recommendations to private individuals who represent the company on the boards of directors or in other bodies of subsidiaries − Conclusion of loan contracts (whether as lender or borrower), contracts of surety, or any other form of guaranty contracts – excluding concession contracts – which involve obligations by the company toward third parties in excess of CHF 2 million − Conclusion of contracts for non-budgeted items where the amount exceeds CHF 1 million

APG|SGA Annual Report 2012

The Board of Directors has entrusted the Executive Board, under the direction of the CEO, with management of current operations. The Executive Board is responsible for all matters which, according to law, the articles of incorporation, or the organization regulations, are not in the competence of the Board of Directors or any other body of the company.

Information and control instruments vis-à-vis the Executive Board In addition to the tasks assigned to the Audit and the Nomination and Remuneration Committees, the Board of Directors is provided at every meeting with the relevant information pertaining to management, revenue, and profit of each associated company. The Board of Directors is informed orally and in writing about the following financial data for each associated company and for the corporation as a consolidated whole: − quarterly, semiannual and annual statements (balance sheet, statement of income, cash flow) − annual budget figures, regular comparisons of actual with budgeted figures, and projections − three-year medium-term planning − extraordinary occurrences In addition, the Chairman of the Board of Directors is in constant contact with the CEO. Extraordinary occurrences must be reported immediately by the members of the Executive Board to the CEO, who shall immediately inform the Chairman of the Board of Directors. If required, the Chairman of the Board of Directors participates in the meetings of the Executive Board.

With the consent of the Chairman, each member of the Board of Directors may request that management provide information on the Group’s business performance, as well as access to records and documents. The Board of Directors assigns signatory powers to staff members. As a rule signatory powers are collective (two signatures required).

Corporate Governance 47

Management Executive Board

since

Daniel Hofer (1963), Swiss citizen, Dr. MBA/DBA

Chief Executive Officer

Ulrich von Bassewitz (1961), Swiss/German citizen, Dr. oec. HSG

Chief Financial Officer

2000 1

Beat Hermann (1969), Swiss citizen

Chief Financial Officer

2012 2

Thomas Rainer (1971), Italian citizen, Dott. econ. az.

International Markets

2010

Daniel Strobel (1962), Swiss citizen

Advertising Market & Subsidiaries Switzerland

2011

Beat Holenstein (1968), Swiss citizen

Partner & Product Management

2007

Markus Ehrle (1965), Swiss citizen

Marketing & Business Development

2011

Walter Robert Oeschger (1949), Swiss citizen

Logistics

2006 3

Christian Gotter (1970), Swiss citizen

Logistics

2012 4

Marcel Seiler (1963), Swiss citizen

Human Resources

2011

1 2 3 4

2010

Left as of March 31, 2012 Entry as of March 1, 2012 Left as of February 29, 2012 Entry as of January 1, 2012

On October 1, 2010, Daniel Hofer was appointed Chief Executive Officer of APG|SGA. From 2006 to 2010, he was a member of the management board of the NZZ Media Group and director of publications at NZZ AG. Previously, his career included a long tenure with Publigroupe SA, where he managed several business units in Switzerland and then, as a member of the executive board and CEO from 2002 to 2005, headed up the International Division with numerous sales subsidiaries in Europe, Asia, and the USA. He is a member of the executive board of SW Schweizer Werbung, member of the executive board of FEPE International (Fédération de la Publicité Extérieure), and president of AWS Outdoor Advertising Switzerland. He holds a master’s degree in business administration (University of Rochester, NY) and a doctorate of business administration (UniSA, Adelaide).

Ulrich von Bassewitz (left as of March 31, 2012) was active in international top management consulting and training, working – among others – for SMP Management Programm St. Gallen AG Group and Bossard Consultants/Gemini Consulting before he joined the APG|SGA Group. He holds a degree in business economics from the University of St. Gallen (Dr. oec. HSG).

Beat Hermann joined the company on March 1, 2012, and was appointed CFO of APG|SGA effective April 1, 2012; in this position, he is responsible for finance, IT, and infrastructure.

He began his career as an internal auditor and later controller with the Volcafe/ED&F Man Group in Switzerland in Latin America.

As of 2000, he was director finance & administration with Sony Music Entertainment in Switzerland. Within the Lindt & Sprüngli Group, he first worked as a senior corporate controller and from 2006 to 2011 served as the CFO of the Ghirardelli Chocolate Company (Lindt & Sprüngli Group) in San Francisco (USA). He is a member of the board of directors of Alpropria H Immobilien AG, Bubikon. He holds a degree in business administration (lic. oec. publ.) from the University of Zürich.

Thomas Rainer was head of International Business with Out of Home specialist Wall AG, Berlin (Germany) for nearly two years before he joined the APG|SGA Group in 2010. Previously he worked for former Affichage Holding SA for six years as head of Europlakat International Werbegesellschaft m.b.H., Vienna (Austria), and was responsible for the Group’s foreign business in Central Europe. Additionally, he was Vice President of FEPE International, Federation of Outdoor Advertising, for several years. He holds a degree in business administration from Leopold Franzens Universität (Mag. rer. soc. oec.), Innsbruck (Austria), and a doctoral degree from Università Cà Foscari (Dott. Econ. Az.), Venezia (Italy).

APG|SGA Annual Report 2012

48 Corporate Governance

The Executive Board of APG|SGA, left to right: Markus Ehrle, Daniel Strobel, Beat Holenstein, Daniel Hofer, Christian Gotter, Marcel Seiler, Beat Hermann, Thomas Rainer

APG|SGA Annual Report 2012

Corporate Governance 49

Daniel Strobel came to APG|SGA from the NZZ Media Group, where he was responsible for the Magazines & Specials department. He enjoyed a long career with Publigroupe SA, where he held a variety of senior management positions. From 2002 to 2008 he was CEO of Publimedia AG, which at the time was the national key account company of Publicitas with over 100 employees. He holds diplomas in marketing communication planning, marketing planning, media management and communication management.

Beat Holenstein was employed by Zürcher Kantonalbank in marketing and organization functions before joining APG|SGA in 1996. Within the company, he held consecutive positions as an agency manager, implementation manager, and manager of the Zürich branch with national key account management responsibility. In 2009, he was appointed Head of Marketing/ Acquisition and Deputy General Manager of APG|SGA. As a member of the Executive Board since 2011, he has been in charge of Partner and Product Management. He is a member of the board of AWS Outdoor Advertising Switzerland and holds Swiss federal diplomas in organization, marketing planning, and sales management.

Markus Ehrle has had a long career at Publigroupe SA, including positions as account director, marketing director and deputy CEO of Publimedia AG; he was also a member of the board of various subsidiaries (including web-based companies). Most recently he worked for the NZZ Media Group, where he was in charge of the Advertising Market & Business Development department. He has degrees in communication management and marketing management, and is a member of the board of the AWS Outdoor Advertising Switzerland associations and of IAA International Advertising Association, Swiss Chapter.

His previous roles enabled Christian Gotter (entry as of January 1, 2012) to acquire broad specialist knowledge of logistics, supply chain management and distribution. His former employers include ABB Turbo Systems, ABX Logistics, Central Station and Planzer Transport. From 2009 he worked at Tobler Haustechnik where, as Head of Logistics and Transport, he had managerial responsibility for 200 members of staff. Christian Gotter has undergone commercial training, is a qualified forwarding agent and has completed the Certificate of Advanced Studies SME management course at the University of St. Gallen.

Marcel Seiler graduated in business economics before taking a postgraduate master‘s degree in personnel management, as well as completing the VSKP (Swiss course for HRM executives) and an international Executive Programme at INSEAD (Fontainebleau/Singapore). He previously worked in a variety of management functions in the human resources field, including eight years with the Migros Group, nine with ABB and most recently a spell with SIX Group (financial sector). As of July 1, 2011, Marcel Seiler became the new Head of Human Resources for the entire APG|SGA Group.

Management contracts APG|SGA SA and its associated companies have concluded no management contracts with third parties.

Walter Robert Oeschger (left as of February 29, 2012) joined APG|SGA in 1987 as operations manager. Before his function as head of logistics, he served for seven years as implementation manager and subsequently headed the Basel and Aarau branch offices as branch office manager from 1995 to 2006. After completing a technical apprenticeship and further education, he earned a Higher Business Management Diploma (HWD) and subsequently held an executive position as head of manufacturing at Obrist AG, Magden, from 1977 to 1981. From 1981 to 1987, he served on the management committee of Chematec AG, Möhlin. He also completed in-service training, earning Swiss Federal diplomas in sales management and logistics management.

APG|SGA Annual Report 2012

50 Corporate Governance

Compensations, participations, and loans Scope and stipulation procedure of compensations The Nomination and Remuneration Committee submits proposals to the Board of Directors for approval of the remuneration policy and compensation for the members of the Board of Directors on an annual basis. The members of the APG|SGA Board of Directors receive a fixed compensation.

All staff except for APG|SGA Group management shall receive fixed wages along with a voluntary incentive bonus based on performance.

At the request of the Nomination and Remuneration Committee management compensation is reviewed and determined by the Board of Directors on an annual basis. The remuneration system was prepared by external experts. Remuneration consists of a basic salary together with a variable component (short-term incentive), both of which are dependent on the operating profit and net income. Both the basic salary and the short-term incentive are paid in cash. In addition to this, a long-term incentive program was prepared on the basis of a bonus/penalty system.

Based on the target values for operating profit and net income as well as four qualitative targets, a third of the target bonus is disbursed annually with a third of this amount disbursed in cash and two-thirds in blocked shares. Two-thirds of the target bonus is set aside and a respective third is in turn disbursed in the following years. If the specified targets are not achieved, then these values are deducted accordingly from the reserves. APG|SGA shares are paid at the average rate that applies for the month of December.

The disclosure of remunerations as well as of shares held by the members of the Board of Directors and the members of the Executive Board is provided on pages 44–45 of the financial report.

Statutory quorums The following decisions require the votes of at least two thirds of the represented shares and the absolute majority of the par value of the represented shares: − changing the company purpose − introduction of shares carrying voting rights − authorized or conditional capital increase − capital increase from shareholders’ equity, with non-cash contributions or acquisitions in kind, and granting special privileges − limitation or elimination of subscription rights − relocation of the company domicile − dissolving the company without liquidation Convocation of the General Meeting of Shareholders The ordinary General Meeting of Shareholders shall take place every year within six months after the close of the financial year.

Extraordinary General Meetings shall be convoked as often as necessary, particularly in cases provided by statute. Shareholders representing a par value of at least 10% may demand the convocation of an extraordinary General Meeting. Any such demand must be made no less than 50 days prior to the proposed meeting date. The convocation of the General Meeting of Shareholders by the Board of Directors shall be dispatched no less than 20 days in advance of the day of the meeting and shall list the agenda and the motions of the Board of Directors and the shareholders.

Agenda Shareholders representing a par value of CHF 225,000 may demand inclusion of an item in the agenda. Any such demand must be made no less than 50 days prior to the proposed meeting date.

Registrations in the share register No registrations are performed between the time of dispatching the invitation to and the closing of a General Meeting.

Shareholders’ participation rights Changes of control and defensive measures Voting right At the General Meeting of APG|SGA SA, each individual share entitles its owner to one vote. The voting right can be exercised only if the shareholder is registered in the share register and thus entitled to participate at the General Meeting. Shareholders may be represented at the General Meeting by third parties authorized by written power of attorney. The shares are indivisible and the company recognizes only one single representative per share.

APG|SGA Annual Report 2012

Duty to make an offer There are no statutory opting-out or opting-up clauses.

Clauses on changes of control Should a change of control at APG|SGA SA occur as a result of a takeover offer not endorsed by the Board of Directors, Polymedia Holding AG, Bern (Polymedia), which currently holds 50% of the share capital of Impacta AG and of Ecofer AG, would be entitled to purchase from APG|SGA SA one additional percent (1%) of the share capital of these companies. In case of a

Corporate Governance 51

change of control over Polymedia, APG|SGA SA has an analogous purchasing right. Markus Scheidegger is both a member of the board of directors of Polymedia (which is owned by the Scheidegger family) and a member of the Board of Directors of APG|SGA SA. Gewista Werbegesellschaft mbH (Austria) (Gewista) and JCDecaux SA (France) (JCDecaux) on the one hand and APG|SGA SA on the other have terminated the joint venture contract governing their mutual relationship in conjunction with Europlakat International Werbegesellschaft mbH (Austria) (EPI) in whose stock capital Gewista and APG|SGA SA participated with 50% each. The contract, agreed on October 26, 2007, grants both parties mutual rights of pre-emption as well as change-ofcontrol-related purchasing options in the participating interests that were split up within the scope of the dissolution of the joint venture. Additionally, the contract grants JCDecaux SA preemption rights and purchasing options in certain foreign subsidiaries of APG|SGA SA, whereby such options are conditional on a change of control in APG|SGA SA. In this context, JCDecaux has agreed not to expand its current participation in APG|SGA SA (30%). APG|SGA SA is entitled to a maximum purchasing option of 4.9% of its own share capital in case JCDecaux should fail to comply with the obligations stated above. The preferential price of the purchasing option is the average closing price of APG|SGA SA shares in the last 30 days before exercise of the option.

Special obligations under labor law no longer obtain in the event of a change of control.

Auditors Term of mandate and term of office of the auditor in charge Arthur Andersen/Ernst & Young has been the statutory auditor of APG|SGA SA and the group auditor of its Swiss associated companies since 1999. Fredi Widmann, the auditor in charge, has held this position since 2009. The Audit Committee shall assure that the auditor in charge is rotated after no more than seven years.

Information instruments of the auditors On behalf of the Board of Directors, the Audit Committee annually reviews the independence, qualification, performance, and fees of the auditors. It prepares a proposal for the Board of Directors for selection of the auditor, which is then submitted by the Board to the General Meeting. The Board of Directors annually reviews the scope of the external audit, the audit plans, and the respective procedures and discusses the audit results with the external auditors. In a joint meeting at least once a year the auditor reports to the Audit Committee of the Board of Directors on the auditing work and its essential results. A regular exchange of information takes place between the auditor and the CFO.

Information policy The APG|SGA Group practices an open information policy toward the financial market and the general public. The shareholders receive semiannual correspondence informing them about the Group’s business performance.

The annual report, the detailed Financial Report, the letters to shareholders, the stock price, and media releases are available at www.apgsga.ch. Financial media and analysts conferences are held at least once per year. The publication of share-price-relevant facts is governed by the provisions governing the ad-hoc disclosure requirements of SIX Swiss Exchange. Subscriptions to the media releases can be ordered at www.apgsga.ch/en/account/ register.

The most important dates − Closing date: December 31 − Announcement of annual results: February 28, 2013 − Financial media and analysts conference: February 28, 2013 − Publication of the annual report: April 23, 2013 − General Meeting: May 22, 2013 − Closing date for semiannual results: June 30 − Announcement of semiannual results: July 31, 2013

Auditing fee and additional fees For financial 2012, the auditing fee of Ernst & Young for services in conjunction with the auditing of the financial statements totaled CHF 290,000. Ernst & Young charged an additional CHF 73,000 for tax consulting.

APG|SGA Annual Report 2012

52 Extract of the Financial Report

Condensed consolidated balance sheet Assets

in CHF 1 000

Property, plant, and equipment Investments in associated companies Other financial investments

31.12.2012

31.12.2011

72 026

78 751

311

345

3 165

5 372

Intangible assets

41 868

69 178

Deferred taxes

16 030

14 733

133 400

168 379

Non-current assets Inventories

2 362

2 746

Trade accounts receivable

43 913

39 849

Other accounts receivable

13 132

15 457

8 109

6 845

Deferred expenses and accrued income Marketable securities

501

408

85 976

77 534

Current assets

153 993

142 839

Total

287 393

311 218

31.12.2012

31.12.2011

Cash and cash equivalents

Shareholdersâ&#x20AC;&#x2122; equity and liabilities Share capital Group reserves Net income Equity held by APG|SGA SA shareholders Non-controlling interests

in CHF 1 000

7 800

7 800

45 631

74 097

50 079

41 787

103 510

123 684

3 543

2 825

107 053

126 509

Provisions

61 335

56 425

Deferred taxes

12 255

10 160

Shareholdersâ&#x20AC;&#x2122; equity

Long-term financial liabilities

26

28

Non-current liabilities

73 616

66 613

Trade accounts payable

20 465

21 589

Current accounts payable to banks Taxes payable Other accounts payable Accrued liabilities and deferred income

15 001 1 138

1 937

30 102

23 444

55 019

56 125

Current liabilities

106 724

118 096

Liabilities

180 340

184 709

Total

287 393

311 218

APG|SGA Annual Report 2012

Extract of the Financial Report 53

Consolidated income statement in CHF 1 000

2012

2011

Change

Advertising revenue

317 644

311 795

1.9%

Real estate revenue

2 456

2 453

0.1%

Operating revenue

320 100

314 248

1.9%

Fees and commissions

-141 535

-139 104

1.7%

Personnel expenses

-29 856

-65 955

-54.7%

– of which ordinary personnel expenses

-68 205

-65 955

3.4%

-37 630

-42 556

-11.6%

1 949

6 391

113 028

73 024

54.8%

Depreciation

-9 729

-11 341

-14.2%

Amortization of intangible assets

-4 447

-4 780

-7.0%

-22 447

-785

76 405

56 118

– of which prior service income due to plan change

38 349

Operating and administrative costs Other income EBITDA

Impairment Operating income (EBIT) Financial income Financial expenses Income from associates

1 722

468

-2 192

-1 431

36.2%

26

62

75 961

55 217

-23 904

-12 236

52 057

42 981

21.1%

1 978

1 194

65.6%

50 079

41 787

19.8%

17.03

14.23

19.7%

Advertising revenue

EBITDA

Net income

2012

297.0

115.4

77.6

2011

280.5

71.8

47.9

2012

20.5

4.0

-26.2

2011

31.2

8.9

-0.6

2012

2.9

-6.4

-3.2

2011

3.2

-7.2

-16.7

2012

-2.8

Income before income tax Income 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

37.6%

Segment information in CHF m

Switzerland International Holding Eliminations and non-allocated items of consolidated income Total

1.8

2011

-3.1

-0.5

11.1

2012

317.6

113.0

50.1

2011

311.8

73.0

41.8

APG|SGA Annual Report 2012

54 Extract of the Financial Report

Consolidated statement of comprehensive income Gross

Income tax effekt

Unrealized gains/losses on available-for-sale securities

111

-25

Currency translation differences

995

in CHF 1 000

Consolidated net income

2012 net

Gross

Income tax effekt

86

-25

1

995

2 599

-51 852

-28 239

52 057

Actuarial gains/losses from defined benefit plans

-68 023

16 171

2011 net

42 981 -24 2 599 7 060

-21 179

Comprehensive income

1 286

– of which non-controlling interests

1 969

833

-683

23 544

– of which APG|SGA SA shareholders

Consolidated statement of changes in equity in CHF 1 000

Share of APG|SGA SA shareholders

Share capital

Capital reserves premiums

Treasury shares

Translation differences

7 800

5 632

-9 539

-19 927

187

2 960

-24

as at January 1, 2011

24 377

Comprehensive income

Availablefor-sale Revaluation securities reserves

46 059

– of which consolidated net income – of which other comprehensive income

2 960

-24

Retained earnings

Total

Noncontrolling interests

Shareholders‘ equity

100 925

69 550

99 762

1 163

20 608

23 544

833

24 377

41 787

41 787

1 194

42 981

-21 179

-18 243

-361

-18 604

1 471

1 471

Changes in scope of consolidation Purchase of non-controlling interests

21

21

25

357

90 204

123 684

Distributions Changes in treasury shares as at December 31, 2011

332 7 800

5 632

-9 207

Comprehensive income

-16 967

163

1 004

86

46 059

– of which consolidated net income – of which other comprehensive income

1 004

Total

-21 -621

-621

2 825

126 509

357

-1 773

-683

1 969

1 286

50 079

50 079

1 978

52 057

-51 852

-50 762

-9

-50 771

-20 589

-20 589

-1 251

-21 840

95

1 098

67 937

103 510

3 543

107 053

Purchase of non-controlling interests Distributions Changes in treasury shares as at December 31, 2012

APG|SGA Annual Report 2012

1 003 7 800

5 632

-8 204

-15 963

249

46 059

1 098

Extract of the Financial Report 55

Condensed consolidated statement of cash flows in CHF 1 000

2012

2011

Consolidated net income

52 057

42 981

Depreciation and amortization, and impairment

37 281

16 906

Unrealized gains/losses on securities Change in provisions, taxes, and interest Gain/loss from the sale of non-current assets Income from associates Cash flow

86

-24

-51 823

7 586

-1 930

-3 439

-26

-62

35 645

63 948

Change in inventories

345

622

Change in accounts receivable

601

4 400

Change in marketable securities

-93

22

Change in accounts payable

8 900

1 014

-394

2 727

Net cash provided by operating activities

45 004

72 733

Capital expenditures in non-current assets

-5 366

-10 840

Change in other deferred expenses, accrued income, accrued liabilities, and deferred

Sale of non-current assets Net cash used in investing activities Purchase and sale of treasury shares

4 611

5 499

-755

-5 341

1 098

358

-15 001

-15 769

Change in long-term financial liabilities

-2

-10

Dividends to APG|SGA SA shareholders

-20 589

Change in current accounts payable to banks

Distributions to non-controlling interests

-1 251

-621

Net cash used in financing activities

-35 745

-16 042

Currency translation effect on cash and cash equivalents

-62

-69

8 442

51 281

Cash and cash equivalents as at January 1

77 534

26 253

Cash and cash equivalents as at December 31

85 976

77 534

Change in cash and cash equivalents

Explanation of financial terms

Payout ratio Payout in % of net income

EBITDA Earnings before interest, taxes, depreciation of property, plant, and equipment, and amortization of intangible assets

P/E ratio Price/earnings ratio: Ratio of share price to earnings per share

EBIT Earnings before interest and taxes Free cash flow Cash flow from operations minus cash flow from investments Gearing Degree of debt, also called leverage: net debt in % of equity

ROE Return on equity: Net income in % of average shareholdersâ&#x20AC;&#x2122; equity

The detailed Financial Report has been published in English. It is available free of charge or can be downloaded from www.apgsga.ch/report

ROIC Return on invested capital: operating income in % of average capital employed, without cash and cash equivalents, less interest-free liabilities

Net current assets Trade accounts receivable plus inventories minus trade accounts payable Net debt Debt-serviced borrowed capital minus interest-bearing current assets (cash and cash equivalents, marketable securities)

APG|SGA Annual Report 2012

56 Contact

APG|SGA SA 23, rue des Vollandes Case postale 6195 CH -1211 Genève 6 T +41 58 220 70 00 F +41 58 220 70 97 investors@apgsga.ch www.apgsga.ch

Digital and analog poster advertising along streets, on squares, in railway stations, at points of sale, and points of interest: www.apgsga.ch Internal and external advertising panels on public transport vehicles: www.apgsga.ch/traffic Airport advertising: www.apgsga.ch/airport Fixed and temporary large poster panels: www.apgsga.ch/megaposter Advertising and communication systems in the mountains: www.apgsga.ch/mountain

Participating interests Railway station poster advertising: www.impacta.ch Railway station non-poster: www.ecofer.ch

International Serbia: www.almaquattro.rs Romania: www.affichage.ro

APG|SGA Annual Report 2012

Engagements AWS Outdoor Advertising Switzerland D/A/CH Exchange of Expertise Committee Germany/Austria/Switzerland FEPE Federation of Outdoor Advertising IFER International Federation of Railway Advertising Companies

Sources

Credits

Pages 10 –11, “90%”: Mobilität in der Schweiz, BFS 2012

Publisher: APG|SGA SA Design: Wirz Corporate AG, Zurich Layout: Rolf Stocker, Lucerne Lithography and printing: UD Print AG, Lucerne

Pages 20 –21, “44 million”: BFS, Bundesamt für Zivilluftfahrt, Linien- und Charterverkehr 2012 Pages 26 –27, “86%”: MACH Consumer 2012-2, WEMF Pages 30 –31, “5 million”: BFS, December 2012 Pages 40 –41, “40%”: Mikrozensus Mobilität und Verkehr, BFS 2012

This report is available in French, German, and English. The detailed Financial Report is available in English.

Both documents are available free of charge or can be downloaded from www.apgsga.ch/report 2013 © APG|SGA SA All rights reserved

Printed in Switzerland April 2013