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