APG|SGA : Letter to shareholders 2022-1 (6.0 MB)

Letter to Shareholders

www.apgsga.ch

At a glance - 1st half of 2022

Advertising revenue

CHF m

145.1	152.3	107.8	105.9	140.7
2018	2019	2020	2021	2022

EBIT

CHF m

28.6	24.4
			12.9
	-5.1	1.3
2018	2019	2021	2022
	2020

Cash flow from operating activities

CHF m

	12.5
4.4	4.8	-16.5	- 6.2

2018	2019	2020
		2021	2022

EBITDA

CHF m

35.3	29.7
				18.4
		-0.2	6.4
2018	2019	2020	2021	2022

Consolidated net income

CHF m

22.7	19.4
			10.2
	-5.1	1.0
2018	2019	2021	2022
	2020

Earnings per share

CHF m

7.59	6.46
	-1.69	0.34	3.39
2018	2019	2021	2022
	2020

APG|SGA SA Letter to shareholders July 29, 2022 3

Upturn in mobility leads to robust sales performance.

Timely implementation of strategic projects with a focus on digitalization, data and programmatics.

Significant increase in net profit and solid financial situation.

In brief

• Advertising revenue: CHF 140.7 million +32.9% (Switzerland +35.9%, International - 8.4%)
• EBITDA: CHF 18.4 million
• EBIT: CHF 12.9 million
• Consolidated net income: CHF 10.2 million
• Free cash flow: CHF - 6.6 million

Financial highlights

	1st half of	1st half of
in 1 000 CHF	2022	2021	Change
Advertising revenue	140 732	105 931	32.9%
- Switzerland	134 122	98 719	35.9%
- International	6 610	7 212	- 8.4%
Operating income	143 214	107 110	33.7%
EBITDA	18 409	6 376	188.8%
- in % of operating income	12.9%	6.0 %
EBIT	12 948	1 325	877.0%
- in % of operating income	9.0%	1.2 %
Consolidated net income	10 168	1 032	884.9%
- in % of operating income	7.1%	1.0 %
Cash flow from operating activities	- 6 225	-16 521	- 62.3%
Free cash flow1	- 6 638	-14 069	- 52.8%
Investments in property, plant, and equipment	1 919	3 330	- 42.4%
- advertising panel	1 273	1 543	-17.5%
- other investments	646	1 787	- 63.9%
Earnings per share, in CHF	3.39	0.34	897.1%

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

EBIT: Earnings before interest and taxes

1 Cash flow from operating activities (operating cash flow) CHFt - 6 225 (previous year: CHFt -16 521) less cash flow from investing activities CHFt - 413

(previous year: CHFt 2 452), (see page 9 Consolidated statement of cash flows)

4 APG|SGA SA Letter to shareholders July 29, 2022

Dear Shareholder

General business development

In the first half of 2022, we were able to report strong revenue performance, overall. The lifting of most COVID-19 measures led to a noticeable upturn in mobility behavior and, as a result, our advertising revenues, too. This positive development was expected but was then impacted by the events relating to the Russian war against Ukraine and its far-reaching consequences for the global economy. Despite the restraint shown by various advertising clients in this context and a marked short-term approach to the planning and execution of advertising campaigns, a considerable increase in revenues was achieved compared to the previous year.

In view of the ongoing challenging geopolitical and macroeconomic environment and the associated limited visibility, APG|SGA continued to consistently implement measures to further optimize non-revenue-related operating costs. Strategic projects focusing on digitalization, data and programmatics are simultaneously being implemented as planned.

APG|SGA Group

In the first half of 2022, the APG|SGA Group achieved advertising revenues totaling CHF 140.7 million, thus achieving revenue growth of 32.9%. Real estate revenue was CHF 1.0 million, 9.4% above the same period in the previous year. In total, other operating income came to CHF 1.5 million for the six months under review (previous year: 0.3 million). Gains from the sale of obsolete property, plant and equipment were recorded under other operating income. Overall, this resulted in operating income of CHF 143.2 million in the first half of 2022, representing an increase of 33.7%.

Fees and commissions represented 58.8% of operating income in the reporting period, slightly below the level of 60.7% for the same period in the previous year. Personnel expenses increased by 9.6% in the reporting period. This increase is due to the short-time working compensation in the equivalent period in the previous year, which had a positive impact on personnel expenses. Operating and administrative costs increased by 21.1% in the first half of 2022. This increase is attributable to the higher order volume, increased energy costs and additional costs in the area of digitalization and digital expansion of performance. The operating result increased significantly compared to the same period in the previous year, reaching CHF 18.4 million of EBITDA (previous year: CHF 6.4 million) and CHF 12.9 million of EBIT (previous year: CHF 1.3 million).

The consolidated net income for the first half of 2022 amounted to CHF 10.2 million (previous year: CHF 1.0 million).

Cash flow

In the first half of 2022, cash flow from operating activities of CHF -6.2 million was recorded (previous year: CHF -16.5 million). In comparison to the equivalent period in the previous year, this increase is due to the significant improvements in net income. Overall, net working capital are CHF 1.3 million lower compared to the same period in the previous year.

Cash flow from operating activities is subject to seasonal fluctuations and is always lower in the first half of the year than the second. After net cash used in investing activities of CHF 0.4 million was taken into account, this resulted in a free cash flow of CHF -6.6 million (previous year: CHF -14.1 million).

APG|SGA SA Letter to shareholders July 29, 2022 5

Balance sheet

In the first half of 2022, the balance sheet total decreased by CHF 40.4 million to CHF 175.2 million. While non-current assets decreased by only CHF 4.3 million, current assets decreased by CHF 36.1 million. As at June 30, 2022, cash and cash equivalents amounted to CHF 33.0 million. The reduction is primarily due to the dividend payout. Equity amounted to CHF 78.5 million, representing an equity ratio of 44.8%. Current liabilities fell by CHF 17.1 million. Trade accounts payable increased by CHF 9.5 million while accrued liabilities and deferred income fell by CHF 26.1 million.

Swiss market

For the first half of 2022, advertising revenues stood at CHF 134.1 million, 35.9% above the previous year.

While advertising investments from sectors such as retail, telecommunications and arts and cultural events developed positively in the first half of 2022, advertising spend from the automotive sector in particular is still at a below-average level due to ongoing supply bottlenecks.

Revenues generated by our digital advertising media developed positively. This is due, on the one hand, to the fact that APG|SGA is providing advertisers with a growing digital portfolio and, on the other hand, to the fact that clients and their agencies appreciate the ability to flexibly book and broadcast "Digital Out of Home" at short notice. Conversely, we recorded an ongoing drop in traffic in the field of transport advertising and the promotional space business compared to pre-pandemic levels, resulting in lower advertising revenues.

APG|SGA continues to invest consistently in digital expansion and in making its products even more flexible. In the first half of the year, new "ePanels" were installed in Aarau, Bern and Geneva Cornavin railway station, and 10 new "XXL eBoards" were also put into operation in cooperation with Zurich Airport. There are well over 1,000 digital outdoor advertising products at APG|SGA that can be booked more diversely than ever before and that, thanks to flexible and programmatic broadcasting options, enable both national and local advertisers to enjoy customized solutions.

Serbian market

The international operations of APG|SGA consist of its Serbian subsidiary Alma Quattro d.o.o., which contributed 4.7% to group revenues in the reporting period. Advertising revenues decreased by 2.8% in local currency (by 8.4% in CHF) terms in the first half of 2022, compared to the very strong performance seen during the same period in the previous year. Geopolitical uncertainties and issues with global supply chains also impacted sales in Serbia.

Alma Quattro has an impressive service portfolio that is constantly being expanded. With a strong market position and efficient local organization, Alma Quattro has made a positive contribution to the company's overall success.

Organization

At the APG|SGA AG General Meeting on April 28, 2022, all members standing for re-election were confirmed for a further year. Thus, the Board of Directors continues to comprise Dr. Daniel Hofer (Chairman), Xavier Le Clef (Vice-Chairman), Dr. Maya Bundt, Jolanda Grob, Stéphane Prigent and Markus Scheidegger. Jolanda Grob (Chair) and Markus Scheidegger were elected once again to the Board of Directors' Remuneration Committee.