Letter to shareholders 2011

Letter to shareholders

February 29, 2012

Turnaround achieved. Reassuring annual result.

Fast and systematic strategy implementation.

Resumption of dividend payments.

In brief  Increase of sales revenue in Switzerland by 8.3% to CHF 280.6 million, increase of groupwide sales revenue by 2.5% to CHF 311.8 million (organic growth in local currencies +3.7%, currency translation effect –1.2%)  Improvement of EBITDA by 42.3% to CHF 73.0 million  Increase of EBITDA margin to 23.4% (PY 16.9%)  Net income at CHF 41.8 million (PY CHF –52.3 million)  Free cash flow at CHF 67.4 million (PY CHF 32.6 million)  Net cash position at CHF 62.5 million (PY net debt CHF 4.1 million) Group financial highlights

1 2

in CHF 1 000

2011

2010

Change

Sales revenue

311 795

304 280

2.5%

– Switzerland

280 581

259 035

8.3%

– International 1

31 214

45 153

– 30.9%

EBITDA

73 024

51 327

42.3%

– in % of sales revenue

23.4%

16,9%

Operating income (EBIT)

56 118

– 39 098

– in % of sales revenue

18.0%

– 12,8%

Income from continuing operations

42 981

– 52 720

– in % of sales revenue

13.8%

– 17.3%

Consolidated net income

42 981

– 52 720

– in % of sales revenue

13.8%

– 17.3%

Net income

41 787

– 52 306

– in % of sales revenue

13.4%

– 17.2%

Cash flow

63 948

44 876

42.5%

Free Cash flow

67 392

32 635

106.5%

Investments in property, plant, and equipment

9 163

5 368

70.7%

– advertising plant

6 380

2 836

125.0%

– other investments

2 783

2 532

9.9%

Income from continuing operations per share, in CHF

14.23

– 17.82

Net income per share, in CHF

14.23

– 17.82

Dividend per share, in CHF 2

7.00

Greece and other foreign countries 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

Affichage Holding SA Letter to shareholders February 29, 2012

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Dear shareholder: Business development Both in strategic and operational terms, our company made considerable progress in 2011, which gives us an optimistic perspective for the future. After a difficult phase with failed expansions to foreign markets and the associated negative financial results, the Board of Directors with its new Chairman as well as the new Management Board succeeded last year in swiftly implementing a genuine turnaround. Many legacy burdens abroad were cleared up, all companies in Switzerland generated reassuring results, and important contracts were renewed. The annual result ranks among the best in the company's history.

The year under review was characterized by two priorities. On the one hand, the issue was to execute the redefined corporate strategy with its focus on the Swiss home market and with a concurrent significant reduction of the foreign portfolio exposure. The other objective was to adjust the structures and processes of the companies in Switzerland with a view of creating an integrated, contemporary Out of Home media company. In this context, numerous projects were initiated to strengthen the company's competitiveness in an ever more complex and increasingly digitized market environment.

Consolidated sales revenues rose by 2.5% to CHF 311.8 million. Organic growth in local currencies amounted to 3.7%; currency effects accounted for –1.2%. Disciplined cost management, the elimination of unprofitable business activities abroad, and the positive trend in Switzerland pushed EBITDA up by 42.3% to CHF 73.0 million (PY CHF 51.3 million), which is equivalent to a groupwide EBITDA margin of 23.4% (PY 16.9%).

The strict implementation of the new corporate strategy, strong growth in Switzerland, disciplined cost management, non-recurring proceeds, and the elimination of impairments on intangible assets brought about a sizeable improvement of the result. After two years of losses (2010: CHF –52.3 million, 2009: CHF –59.3 million), net income for 2011 closed at CHF 41.8 million.

Swiss market The development of our activities in the Swiss market was consistently positive and further momentum was achieved with the supplementary revenues in connection with the national elections. All business activities and companies in Switzerland posted higher earnings and generated reassuring results. Sales revenue in financial 2011 advanced by 8.3% to CHF 280.6 million (PY CHF 259.0 million). EBITDA improved by 5.6% to CHF 71.8 million, which corresponds to an EBITDA margin of 25.6% (PY 26.3%).

Persuasive financial bids for concession partners, dependable, high-quality services, and an exemplary commitment to environmental protection and sustainability again made it possible for the company to outplay rivals and finalize contracts within the scope of public tenders and RFQs in a fair competitive spirit. Key partners (cities, communities, mass transit operators, tourism destinations, shopping centers, among others) continue to trust our companies, which for decades have proven their capabilities and reliability in the marketplace. The list of achievements includes contract renewals with the cities of Geneva and Schaffhausen, the intensification of the marketing partnership with the public transportation authorities in Lausanne, and many others. The highly successful introduction of digital ePanels at the RailCity stations in Basel, Bern, Geneva, Lausanne, Luzern, and Zürich was another important milestone.

Affichage Holding SA Letter to shareholders February 29, 2012

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The emphasis in our conceptual work last year was on the progressive digitization of our everyday life and the opportunities it opens up for the advertising industry as well as on planning approaches for an integrated sales organization with the involvement of all segment companies. Interdisciplinary project groups laid the foundations for a forward-looking, more flexible sales organization. This also included the creation of a Digital Competence Center and of a Digital Sales Unit within the Swiss market organization.

Within the scope of a brand strategy review and optimization program, it was resolved to merge and strengthen the traditional core brands APG (Eastern Switzerland) and SGA (Western Switzerland and Ticino). At the same time, all segment companies that to some extent operated under proprietary names were integrated in the new brand management concept. Since January 2012, our company has been operating under the unified APG|SGA umbrella brand, manifesting the new integrated product portfolio and sales structure.

Foreign strategy Announced in the spring of 2011, the strategic realignment focused on the Swiss home market and combined with a massive reduction of foreign-market exposure was then rapidly and persistently implemented. In April, the activities in Greece had already been sold, and subsequently, our heavily loss-generating sales organization was wound down. With further steps in the months that followed, concurrent negotiations in various other countries were successfully completed despite the obstacles arising from the adverse economic baseline conditions. In the meantime, all of our interests in Hungary, Bulgaria, Bosnia, and Italy have been sold, and we are withdrawing from these markets. In Romania, a settlement ended the protracted legal dispute with the minority shareholder and general manager: all his shares were acquired, ending a stalemate situation which until then had been a significant burden for the company. A market exit at some point in time is still the objective as regards Romania. We granted the former minority shareholder a call option on all shares, scheduled to expire on March 31, 2012.

Despite the challenging economic scenario and delays in conjunction with the modernization and upsizing of the advertising plant in the first quarter, the company in Serbia performed within the scope of our expectations and generated a respectable result. Its strong market leadership position, combined with an inventory of high-quality outdoor advertising products, constitutes a solid foundation for future activities in the Serbian market.

Organization CFO Dr. Ulrich von Bassewitz announced his resignation from the Group effective March 31, 2012. After a onemonth familiarization period, his designated successor Beat Hermann will assume this function as of April 1, 2012.

Christian Gotter joined our company on January 1, 2012. He has been appointed Head of Logistics effective February 15, 2012, replacing Walter Oeschger, who is retiring. The Board of Directors and the Executive Board wishes to thank both former members of the Management Board for their long years of service to APG and Affichage Holding.

Affichage Holding SA Letter to shareholders February 29, 2012

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Proposals to the General Meeting The Board of Directors proposes to the General Meeting the payment of an ordinary dividend of CHF 5 per share for financial 2011. At the same time, in view of the attainment of interim strategic and operational benchmarks and the positive annual result it entailed, the Board also suggests the payment of a special dividend of CHF 2 per share. This proposal addresses both the need for a further consolidation of shareholders' equity and the resumption of dividend payments.

As briefly outlined on the occasion of last year's General Meeting, the Board of Directors is of the opinion that our company, organized and operated according to modern corporate governance guidelines, should abandon the traditional transferability restrictions applied to registered shares. The registration and voting rights limitation to five percent of the share capital stipulated by this transferability provision is anachronistic. In the interest of all shareholders, the Board of Directors thus proposes to the General Meeting to delete the transferability restriction from the Articles of Incorporation. The introduction of the so-called "one share, one vote" principle reconciles par value with voting rights conferred to each share.

Within the framework of the realignment of the company and the core focus shift to the home market, a complementary objective is to adjust the brand asset management approach at the holding company level as well.

Associated primarily with expansions into foreign markets, the Affichage Holding SA brand has become obsolete.

The General Meeting is requested to approve APG|SGA AG as the new name effective July 1, 2012.

Outlook The diffuse macroeconomic baseline conditions and their likely impact on the advertising industry make it virtually impossible to forecast business developments for financial 2012 with any degree of certainty. Even though the year began with a so far positive trend in new orders, we expect booking behavior to be short-term and volatile as 2012 unfolds, with much depending on how the economic scenario develops. At the same time, we can reaffirm that the many measures put in place to strengthen our competitiveness justify an optimistic outlook for the near future.

We wish to thank all of our employees for their strong commitment. They handle their daily assignments competently, enthusiastically, and in one-on-one contact with market partners.

And to you, dear shareholders, we wish to express our sincere gratitude for your loyalty and support.

Jean-Franรงois Decaux Chairman of the Board

Dr. Daniel Hofer Chief Executive Officer

Affichage Holding SA Letter to shareholders February 29, 2012

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Condensed consolidated balance sheet

Assets Property, plant, and equipment Investments in associated companies

in CHF 1 000

31.12.2011

31.12.2010

78 751

87 907

345

333

5 372

2 043

Intangible assets

69 178

75 263

Deferred taxes

14 733

15 195

168 379

180 741

Other financial investments

Non-current assets Inventories

2 746

3 424

Trade accounts receivable

39 849

44 366

Other accounts receivable

15 457

11 692

6 845

8 210

Deferred expenses and accrued income Marketable securities

408

430

77 534

26 253

Current assets

142 839

94 375

Total

311 218

275 116

Cash and cash equivalents

Shareholders’ equity and liabilities Share capital Group reserves Net income Equity held by Affichage Holding SA shareholders Non-controlling interests

7 800

7 800

74 097

144 268

41 787

– 52 306

123 684

99 762

2 825

1 163

126 509

100 925

Provisions

56 425

29 628

Deferred taxes

10 160

7 588

28

15 732

Shareholders’ equity

Long-term financial liabilities Non-current liabilities

66 613

52 948

Trade accounts payable

21 589

18 336

Current accounts payable to banks

15 001

15 770

Taxes payable Other accounts payable Accrued liabilities and deferred income

1 937

3 036

23 444

28 753

56 125

55 348

Current liabilities

118 096

121 243

Liabilities

184 709

174 191

Total

311 218

275 116

Affichage Holding SA Letter to shareholders February 29, 2012

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Consolidated income statement

in CHF 1 000

2011

2010

Change

Advertising revenue

311 795

304 280

2.5%

Real estate revenue

2 453

2 298

6.7%

Operating revenue

314 248

306 578

2.5% – 1.6%

Fees and commissions

– 139 104

– 141 406

Personnel expenses

– 65 955

– 68 337

– 4.1%

Operating and administrative costs

– 42 556

– 45 508

– 8.0%

Other income

6 391

EBITDA Depreciation Amortization of intangible assets Impairment Operating income (EBIT) Financial income Financial expenses Income from associates Income before income tax Income tax Income from continuing operations

73 024

51 327

42.3%

– 11 341

– 14 266

– 20.5%

– 4 780

– 5 392

– 11.4%

– 785

– 70 767

– 98.9%

56 118

– 39 098

468

1 083

– 1 431

– 3 072

62

57

55 217

– 41 030

– 12 236

– 11 690

42 981

– 52 720

42 981

– 52 720

1 194

– 414

41 787

– 52 306

14.23

– 17.82

Income from discontinued operations, net of tax Consolidated net income – of which non-controlling interests – of which Affichage Holding SA shareholders (net income) Basic and diluted earnings per share, in CHF

Segment information in CHF m Switzerland Greece Other foreign countries Holding Restatement of consolidated income Total

Affichage Holding SA Letter to shareholders February 29, 2012

Advertising revenue

EBITDA

Net income

2011

280.5

71.8

47.9

2010

259.0

68.1

42.0

2011

1.9

4.2

4.2

2010

10.7

– 16.0

– 21.9

2011

29.3

4.7

– 4.8

2010

34.4

3.4

– 79.4 – 16.7

2011

3.2

– 7.2

2010

3.2

– 4.2

0.8

2011

– 3.1

– 0.5

11.1

2010

– 3.1

2011

311.8

73.0

41.8

6.2

2010

304.3

51.3

– 52.3

7

Consolidated statement of comprehensive income

in CHF 1 000

Gross

Income tax effect

Consolidated net income Unrealized gains/losses on available-for-sale securities Currency translation differences Actuarial gains/losses from defined-benefit plans Comprehensive income – of which non-controlling interests – of which Affichage Holding SA shareholders

Affichage Holding SA Letter to shareholders February 29, 2012

2011 Net

Gross

Income tax effect

42 981 – 25

1

2 599 – 28 239

7 060

2010 Net – 52 720

– 24

– 165

41

– 124

2 599

– 5 318

– 1 239

– 6 557

– 21 179

– 8 703

2 176

– 6 527

24 377

– 65 928

833

– 370

23 544

– 65 558

8

Consolidated statement of changes in equity

in CHF 1 000

Capital Share reserves capital Premiums

as at January 1, 2010

7 800

5 632

Share of Affichage Holding SA shareholders AvailableRefor-sale valuation Retained securities reserves earnings Total

Treasury shares

Translation differences

– 6 979

– 13 327

311

– 6 600

– 124

– 6 600

– 124

Comprehensive income

46 221

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

– 162

Noncontrolling interests

Total Shareholders‘ equity

125 590

165 248

1 926

167 174

– 58 834

– 65 558

– 370

– 65 928

– 52 306

– 52 306

– 414

– 52 720

– 6 528

– 13 252

44

–13 208

4

4

– 397

– 397

1 163

100 925 24 377

162

Changes in scope of consolidation Purchase of non-controlling interests Dividends Changes in treasury shares as at December 31, 2010

– 2 560 7 800

5 632

– 9 539

Comprehensive income

– 19 927

187

2 960

– 24

46 059

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

2 960

– 24

2 632

72

69 550

99 762

72

20 608

23 544

833

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

Distributions Changes in treasury shares as at December 31, 2011

332 7 800

5 632

– 9 207

Affichage Holding SA Letter to shareholders February 29, 2012

– 16 967

163

46 059

25

357

90 204

123 684

– 21 – 621

– 621

2 825

126 509

357

9

Condensed consolidated statement of cash flows

in CHF 1 000

2011

2010

Income from continuing operations

42 981

– 52 720

Depreciation, amortization and impairment

16 906

90 425

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 Change in inventories Change in accounts receivable Change in marketable securities Change in accounts payable Change in other deferred expenses, accrued income, accrued liabilities, and deferred income Net cash provided by operating activities Capital expenditures in non-current assets Sale of non-current assets Net cash used in investing activities Purchase and sale of treasury shares Change in current accounts payable to banks Change in long-term financial liabilities

– 24

– 124

7 586

6 787

– 3 439

565

– 62

– 57

63 948

44 876

622

– 37

4 400

31 985

22

124

1 014

– 25 891

2 727

4 631

72 733

55 688

– 10 840

– 24 297

5 499

1 244

– 5 341

– 23 053

358

143

– 15 769

– 30 232

– 10

4 782

Dividends to Affichage Holding SA shareholders Distributions to non-controlling interests

– 621

– 397

Net cash used in financing activities

– 16 042

– 25 704

– 69

– 1 579

51 281

5 352

Cash flows from discontinued operations Cash and cash equivalents of the discontinued operations as at December 31 Currency translation effect on cash and cash equivalents Change in cash and cash equivalents Cash and cash equivalents as at January 1

26 253

20 901

Cash and cash equivalents as at December 31

77 534

26 253

Affichage Holding SA Letter to shareholders February 29, 2012

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Comments on the financial situation

General While sales growth was reassuring in Switzerland, the Group remains confronted with adverse baseline conditions in its foreign markets. The reduction of foreign interests, resolved and systematically implemented as part of the strategy reorientation, as well as an upswing in the Swiss domestic market had a positive influence on income, the balance statement, and free cash flow.

Affichage Group Consolidated sales revenue rose by 2.5% to CHF 311.8 million (PY CHF 304.3 million). Organic growth in local currencies amounted to 3.7%; currency effects accounted for –1.2%. Real estate revenue rose by 6.7% to CHF 2.5 million. Five effects had a positive impact on the operating result: the redimensioned and largely rehabilitated foreign activities, non-recurring proceeds amounting to CHF 6.4 million (item Other income: collection of bank guarantees, sale of activities abroad, recovered write-downs), sales growth in Switzerland achieved without infrastructure expansions, and proportionally slightly lower concession fees (44.6% of sales revenue). EBITDA advanced by 42.3% to CHF 73.0 million (PY CHF 51.3 million), which is equivalent to a groupwide EBITDA margin of 23.4% (PY 16.9%).

Net income closed at CHF 41.8 million (PY CHF –52.3 million); apart from the operational recovery, this result also reflects the elimination of impairments on intangible assets. Net income for the period from January to September 2011 closed at CHF 27.7 million. Total income attributable to shareholders of Affichage Holding SA (comprehensive income) amounted to CHF 23.5 million (PY CHF –65.6 million).

Switzerland In the Swiss home market, sales revenue rose by 8.3% to CHF 280.6 million (PY CHF 259.0 million). All activities contributed to this vigorous growth. The gain in the first half of the year was 7.5%, accelerating to 8.8% in the second half, buoyed by the national parliamentary elections and new electronic products (ePanels in railway stations). EBITDA increased by 5.6% to CHF 71.8 million (PY CHF 68.1 million), resulting in an EBITDA margin of 25.6% (PY 26.3%). Overall, the company generated CHF 47.9 million in net income (PY CHF 42.0 million).

Affichage Holding SA Letter to shareholders February 29, 2012

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International: Greece and other foreign countries In compliance with reporting standard IFRS 8 (segment reporting), the International Division is subdivided into two segments: Greece and Other foreign countries. The total foreign contribution to consolidated sales revenue declined from 14.8% to 10%, closing at CHF 31.2 million (PY CHF 45.2 million). This represents a decrease of 30.9%, of which 8.4% is attributable to negative foreign-exchange effects. Overall, the International Division generated EBITDA of CHF 8.8 million (PY CHF –12.5 million).

Sales revenue in Greece fell by 81.8% to CHF 1.9 million (PY CHF 10.7 million), of which –2.2% was due to currency translation. To a large extent, EBITDA of CHF 4.2 million (PY CHF –16 million) reflects costs for the controlled exit, income from the sale of individual activities to a local partner, and an amount collected from a bank guarantee representing a receivable from the seller of the operations in Greece. Net income closed at CHF 4.2 million (PY CHF –21.9 million).

Sales revenue in Other foreign countries declined by 15.0% to CHF 29.3 million (PY CHF 34.4 million); currency effects account for –10.3%. Expressed in local currencies, sales revenue in the Serbian market stagnated, and a further decline of 13.5% was posted in the Romanian market. EBITDA closed at CHF 4.7 million (PY CHF 3.4 million), resulting in an EBITDA margin of 15.9% (PY 10.0%). Net income improved to CHF –4.8 million (PY CHF –79.4 million), which is attributable to the elimination of prior-year impairments. In compliance with IFRS 5, no separate report was compiled for the sale of activities in Bosnia, Bulgaria, South Tyrol, and Hungary: they were classified as non-essential. The segment report for Other foreign countries lists the sold activities with a revenue contribution of CHF 7.5 million, an EBITDA contribution of CHF 1.3 million, and net income amounting to CHF 0.6 million.

In late 2011, the Affichage Group acquired the 30% share minority in Affichage Romania Srl and granted the former minority shareholder a call option for the 100% acquisition of the Romanian group; the option expires at the end of March 2012.

Cash flow Cash flow closed at CHF 63.9 million (PY CHF 44.9 million). Cash flow from operations, i.e. cash-relevant income under consideration of changes in net current assets, closed at CHF 72.7 million (PY CHF 55.7 million). After investments in property, plant, and equipment, financial assets, and intangible assets amounting to CHF 10.8 million (PY CHF 23.1 million) as well as proceeds from the sale of property, plant, and equipment, and participating interests totaling CHF 5.5 million, free cash flow closed at CHF 67.4 million (PY CHF 32.6 million).

Affichage Holding SA Letter to shareholders February 29, 2012

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Balance sheet Total assets increased by 31.1% to CHF 311.2 million, mainly because of increased liquidity. Intangible assets amount to 22.2% of total assets (PY 27.4%) or 55.9% of shareholders' equity (PY 75.4%). Net current assets amount to 6.7% of sales revenue (PY 9.7%). The receivables portfolio decreased to CHF 39.8 million (PY CHF 44.4 million). The CHF 4.1 million net debt position from the prior year was transformed into a net cash position of CHF 62.5 million. Shareholders' equity amounts to CHF 123.7 million (PY CHF 99.8 million), which is equivalent to an equity ratio of 39.7% (PY 36.3%). Shareholders' equity was burdened by an IFRS-related actuarial loss from defined-benefit plans in the amount of CHF 21.2 million (PY CHF 6.6 million). This reflects slight losses on pension fund assets as well as historically low interest rates that resulted in a further reduction of the discount rate, which in turn increases expected future benefit obligations.

Affichage Holding SA Letter to shareholders February 29, 2012

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Agenda

Financial media and analysts conference February 29, 2012, ZĂźrich Publication of the annual report April 24, 2012 General Meeting May 23, 2012, Geneva Announcement of semi-annual results July 31, 2012

Contacts Dr. Daniel Hofer, Chief Executive Officer T +41 58 220 7166 Dr. Ulrich von Bassewitz, Chief Financial Officer T +41 58 220 7747 Affichage Holding SA 23, rue des Vollandes Case postale 6195 CH-1211 Genève 6 investors@affichage.com www.affichage.com

Affichage Holding SA Letter to shareholders February 29, 2012

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Credits The German version is legally binding.

Cover Z端rich HB: APG|SGA continues to drive digitization in Out of Home advertising in the Swiss market. ePanels with the standard 9:16 portrait format deliver brilliant images in full-HD resolution, empowering Out of Home advertising of unprecedented quality.

Concept and editorial office J端rg Sager, Luzern Photography Bruno Eberli, Horw Printing UD Print AG, Luzern