Annual Report 2012 - APG|SGA

2012Switzerland ison the move.APG|SGA Annual Report

The financial year at aglance2012 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 atotal of CHF 10 per share.Key figuresSales revenuein CHFAPG|SGA share performance 2012in CHF317.6 millionOperating income (EBIT)in CHF76.4 million20019018017016015014013001.01.2012 01.04.2012 01.07.2012 01.10.2012 01.01.2013APG|SGA Group key figuresin 1000 CHF 2012 2011 Change 2012 2011 Changeadjusted for one adjusted for one adjusted for onetime effects 1 time effects 2 time effectsSales revenue 317 644 311 795 1.9% 317 644 311 795 1.9%–Switzerland 297 111 280 581 5.9% 297 111 280 581 5.9%–International 20 533 31 214 –34.2% 20 533 31 214 –34.2%EBITDA 113 028 73 024 54.8% 74 679 66 633 12.1%–in%ofsales revenue 35.6 23.4 23.5 21.4Operating income (EBIT) 76 405 56 118 36.2% 60 502 48 942 23.6%–in%ofsales revenue 24.1 18.0 19.0 15.7Consolidated net income 52 057 42 981 21.1% 44 691 36 657 21.9%–in%ofsales revenue 16.4 13.8 14.1 11.8Net income 50 079 41 787 19.8% 42 713 35 463 20.4%–in%ofsales revenue 15.8 13.4 13.4 11.4Cash flow 35 645 63 948 –44.3% 54 125 61 180 –11.5%Free cash flow 44 249 67 392 –34.3% 62 729 64 624 –2.9%Investments in property, plant,and equipment 5350 9163 –41.6% 5350 9163 –41.6%–advertising plant 3033 6380 –52.5% 3033 6380 –52.5%–other investments 2317 2783 –16.7% 2317 2783 –16.7%Net income per share, in CHF 17.03 14.23 19.7% 14.53 12.08 20.3%Dividend per share, in CHF 3 10.00 7.00 42.9%1One-time effects 2012: change in plan and contribution to pension fund as well as impairment, including proportionate taxes2One-time effects 2011: net profit from sales of foreign operations, collection of bank guarantee, as well as impairment, including proportionate taxes3Proposal to the General MeetingEBITDA: Earnings before interest, taxes, depreciation of property, plant, and equipment, and amortization of intangible assetsEBIT: Earnings before interest and taxes

The company at aglanceAPG|SGA Group corporate structureAPG|SGA SwitzerlandThe segment brands offer specific solutions:Within Switzerland, the APG|SGA brandcombines all digital and analog poster offersof Allgemeine Plakatgesellschaft AG.2.5 millionposters per year are handledby APG|SGA.90%of mountain railways use APG|SGAMountain as their advertiser.60m 2APG|SGA Holdings:APG|SGA has an equal stake together with Polymedia Holding AGin Impacta AG and Ecofer AG.is the size of the largest indoorHD display in Switzerland at ZurichCentral Station.APG|SGA InternationalAPG|SGA is active outside of Switzerland with companies in Serbia (AlmaQuattro) and Romania (Affichage Romania).4,200public transport vehicles haveadvertisements from APG|SGA Traffic.APG|SGA Locations160WinterthurBielBaselAarauWallisellenSt. GallenZürichAPG|SGA vehicles form one of the largesteco-friendly fleets in Switzerland.NeuchâtelBernLuzernKriensChur60,000LausanneMeyrinGenèveSionLuganoposter locations are documented inthe new app “PosterPlus” and maybe selected.

APG|SGA in briefAPG|SGA is Switzerland’s leading Out of Home advertisingcompany and specialist in the provision of digital and analogOut of Home solutions at busy locations. Together withour segment brands, Airport, Mega Poster, Mountain andTraffic, we meet every outdoor advertising need throughoutSwitzerland. Our brand stands for passion and integrity,partnership and sustainability. More than 750 staff are inregular contact with site and property owners, local authoritiesand the advertising industry in Switzerland and abroad,making sure that brands and institutions are presented tothe public in the most effective light.

ContentsConsolidated development3–5 Report of the Chairman and the CEO6–7 Financial Report8 Key figures9 Share developmentBusiness Development in Switzerland12 APG|SGA12–13 –Partner &Product Management14–15 –Advertising Market &Subsidiaries Switzerland16–17 –Marketing &Business Development18–19 –Logistics22–23 APG|SGA Airport24–25 APG|SGA Mega Poster28–29 APG|SGA Mountain32–33 APG|SGA Traffic34–35 Impacta AG, Ecofer AGInternational Business Development36–37 APG|SGA InternationalCorporate Governance38–39 Human Resources42–51 Corporate Governance52–55 Extract of the Financial Report56 ContactAPG|SGA Annual Report 2012

The Trend Points to Out of Home MediaSwitzerland is on the move. In the past ten years the Swiss population has clearlyincreased by more than 9%. And there has also been aconcomitant rise in the numberof 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 thesame period when it comes to railroad traffic alone show that there isnot only aconstantincrease in population, but in its mobility as well. The increasing flow of personsand traffic certainly represents achallenge to both the public transportation systemand the existing infrastructure inSwitzerland –but for APG|SGA they are, above all, anopportunity. APG|SGA accompanies more and more people on the way to work, whileshopping and into the weekend and is represented with its products at all of the focalpoints of this mobile society. This is reflected in the development of our day to daybusiness, as well as in other impressive figures and examples in this report.APG|SGA Annual Report 2012

Report of the Chairman and the CEO 3Strong operating performance basedon home market in Switzerland.Dear ShareholderGeneral business developmentStrong operating performance in Switzerland formed the basisfor once again very satisfying financial results. The ongoing strongdrive behind implementation of the various measures designedto strengthen the company’s market cultivation, acompellingportfolio of products and services and disciplined cost managementall contributed to the continued positive momentum onthe domestic market that also shaped the company’s financialstatements for 2012.In the international segment we succeeded at the beginning of2013 in selling our company in Montenegro and in withdrawingfrom this market. In Romania, the measures we took enabledareturn topositive operating income. With rigorous impairmenton all goodwill and apart of the agreements, the compay leadingthe market in Serbia was revalued.Moreover, there was apositive impact on the annual financialstatements due to the change in the pension fund from adefinedbenefit to adefined contribution plan along with the associatedinfluences of IFRS/IAS 19. The company is excellently preparedfor the future both with regard toits operating performanceand as aresult of its very solid financial situation.APG|SGA GroupGroup sales revenue rose by 1.9% to reach atotal of CHF 317.6million. Organic growth in the local currency amounted to 5.2%,whereby currency influences had a-0.7% negative effect onthis growth. Income from real estate in the amount of CHF 2.5million remained at the level of the previous year. Concessionsand commissions were similarly at the level of the previous yearand accounted for 44.6% of sales revenue. Thanks to strictcost management, the company’s operating and administrativeexpenses were reduced by 11.6%. EBITDA in the year underreview amounted to CHF 113.0 million, which corresponds to anEBITDA margin of 35.6%. If one-time effects are excluded, thenthere was a12.1% increase in EBITDA compared with theprevious year. The net income in the year under review amountedto CHF 50.1 million. If one-time effects are excluded, thenthis corresponds to an increase of 20.4%. However, currencylosses totaling CHF 1.9 million had anegative impact on theresults for 2012.Swiss marketIn the year under review, APG|SGA was able to look back onvery positive development on its home market. Fortunately, withincreases in sales in other segments, the company was able toAPG|SGA Annual Report 2012

4 Report of the Chairman and the CEOContinued rigorous adjustmentof foreign investments.completely compensate for the considerable additional salesobtained in election year 2011 (National Council and Council ofStates) and even significantly exceed last year’s sales. Taking thisinto consideration, but also in light of local development onthe overall advertising market 1 of -0.1%, this 5.9% increase insales provides proof of the compelling performance of our salesorganization. With respect to other media categories, Out ofHome media in general and our company in particular haveacquired new market shares based on acomparison betweenmedia. Another positive aspect to note is the fact that all of theAPG|SGA segment companies in Switzerland exceeded theirtargets both with regard tosales performance and their contributionto the company’s overall results. In the Switzerlandsegment, sales revenue increased by 5.9% to atotal of CHF297.0 million compared with the previous year, while EBITDAincreased to CHF 115.4 million. This corresponds to an increaseof 60.7% compared with the previous year. This strong increasewas also positively influenced by conversion of the pensionfund from adefined benefit to adefined contribution plan.Net income amounted to CHF 77.6 million in total.In the year under review, APG|SGA was once again able to acquireorextend numerous agreements with cities, municipalities,transportation companies, corporate partners and private partners.In open, transparent and professionally conducted bids andRFQs, the company’s range of products and services convincedcustomers both through attractive financial terms and conditionsand high quality, reliability and service orientation. Our corporatepolicy, which is aimed at long-term partnerships, and identificationwith our customers in our daily work, is also particularlyimportant for public authorities and transportation companies.At the same time, we attach great importance to all mattersinvolving sustainability and conscientious handling of resources.In this regard, our company is considered to be aleader in themedia industry. For example, APG|SGA invests substantialamounts in sustained reduction of carbon dioxide emissions,operates one of the largest environmentally friendly car fleets(natural gas/hybrid) in Switzerland and relies completely ongreen electricity.Other special items that are particularly noteworthy in thereport for 2012 include the award ofacontract in achallengingpublic bid for management of 1,255 poster spaces on publicpremises in the city of Zurich for an additional five years, as wellas further development of the partnership between APG|SGATraffic and PostAuto Schweiz AG –for which advertising spacesat transit stops are now marketed in addition to advertising inand on the respective vehicles. APG|SGA Mountain was able tosuccessfully conclude various agreements with mountain regionsand railways, including Zermatt Bergbahnen AG, BettmeralpBahnen AG, and Jungfraubahnen Management AG. WithStartower, APG|SGA launched anew illuminated advertisingcolumn that revolves on its own axis and which will be used atexclusive urban locations. Our Digital Competence Center andDigital Sales divisions are inclose contact with cities, transportationcompanies, shopping centers and other partners in orderto assess the possible uses for high-quality digital products.The ePanels that were already successfully employed in the largestations were also installed at Metro m2inLausanne in thespring. At the main train station in Zurich, the eBoard representsareplacement investment in the largest HD display in Switzerland(60 square meters). All in all, sales in the digital segmentmore than doubled since 2010.International marketsThe decision to withdraw the company from operating activitiesin Greece, Bosnia, Hungary, Bulgaria, and Italy, aswas communicatedtwo years ago within the scope of our revised strategy,was quickly implemented despite adverse economic conditions.In Montenegro, we succeeded in selling our majority interestto the former minority shareholder at the beginning of 2013 andthus withdrawing from this market.Our efforts to sell the companies in Romania could not be realizeddue to the continuing poor market conditions. However, wesucceeded in putting the respective operational units on amuchbetter footing last year. Weare pleased that apositive incomeresult at the operating level was again able to be achieved for2012 thanks to various measures we took, such as reintegratingthe logistics organization, optimization of the advertising inventoryand strengthening the sales organization.In Greece, where wenolonger have any operating activities,the remaining companies will undergo structured liquidation asplanned.In Serbia, comprehensive impairment for the entire goodwill aswell as apart of the value of the respective contracts wasrequired. The company in Serbia is well-positioned in operatingterms. It is the undisputed market leader and has long-termcontracts for marketing amodern portfolio of products and services.In spite of these strengths –which in principle make usoptimistic for the future –the company, asalready mentioned inthe semiannual report, was unable to escape the extraordinarilydifficult macroeconomic environment. The local economic situationis very challenging, and then too there isthe exceptionallyweak Serbian dinar. Despite comparatively good sales performance,which in the local currency nearly achieved the level ofthe previous year, intangible assets had to be adjusted down asareview of their value revealed overvaluation of the carryingamounts.APG|SGA Annual Report 2012

Report of the Chairman and the CEO 5Dividend/special dividendof CHF 10 per share altogether.With atotal of CHF 20.5 million, the entire share inGroup salesfrom companies abroad declined even further to 6.5%. Thisreduction amounts to 34.2%, of which 7.0% and 25.7% wereattributable to respective negative foreign exchange and acquisitioneffects. EBITDA amounted to atotal of CHF 4.0 million.Foreign net income put aburden on the consolidated financialstatement of CHF 26.2 million, with CHF 21.4 million beingattributable to tax-adjusted impairment losses and CHF 3.1 millionto foreign currency losses.Pension fundConversion from the previous defined benefit plan to adefinedcontribution plan was effected as of January 1, 2013 as planned.At the same time, all of the company’s administrative workand its asset management were completely reorganized and outsourcedto external service partners. As aresult, the costsrequired from the pension fund for beneficiaries significantlydeclined. At the same time, the pension fund’s risk profile wasoptimized. The result of switching the system had apositiveeffect on the company‘s net income for the year in the amountof CHF 38.3 million before taxes or CHF 28.8 million aftertaxes (in accordance with IFRS/IAS 19).BrandingAfter the company’s brand management in Switzerland wasstandardized at the beginning of the year and placed under anew umbrella brand, the previous Affichage Holding wasrenamed APG|SGA from the middle of the year. The new brandingconcept has met with very favorable reception in the marketand among the company’s staff.APG|SGA also endeavors to pursue adividend policy in thefuture that is both friendly to shareholders and which takes theneeds of the company into equal consideration, in particularupcoming, strategically important investments in the digitizationof advertising spaces. In principle, the target is apayout ratioof 60% of the net profit over amedium-term cycle.OutlookAPG|SGA is the undisputed market leader in Switzerland onboth the analog and digital Out of Home media market. Our newportfolio strategy with its uncompromising focus on the needsof customers has provided us with above-average sales growthin the last two years –independently of the overall economicclimate. The APG|SGA portfolio of products and services and theassociated added value are immensely attractive for the advertisingindustry, advertising clients and franchisers. Thus we havecreated optimum conditions for the successful future ofourcompany. Based on this, we are confident that the company willachieve strong performance in comparison to the market in2013. However, wewill refrain from specific guidance for 2013,because the current structural and macroeconomic challengesdo not allow for aforecast for the year with any degree ofcertainty.We would like to take this opportunity to thank our staff fortheir impressive commitment to the various divisions ofAPG|SGA.We would also like to thank you as shareholders for your loyaltyand support.From IFRS to Swiss GAAP FERFor the upcoming reporting year, the Board ofDirectors hasdecided to switch accounting standards from IFRS to SwissGAAP FER. In light of the increasing complexity of IFRS and itsfocus on international groups of companies, Swiss GAAP FERproves to be the standard that is better suited to our mediumsizedcompany, which focuses on Switzerland.DividendThe Board ofDirectors will propose to the General Meetingof Shareholders that adividend of CHF 7and aspecial dividend ofCHF 3bepaid (previous year: adividend of CHF 5plus aspecialdividend of CHF 2). This results in apayout of CHF 10 pershare for financial year 2012. With renewed payment of aspecialdividend, the company’s shareholders will profit directly fromsuccessful resolution of the problem areas abroad and be rewardedfor their support during this difficult phase.Jean-François DecauxChairman of the BoardDr. Daniel HoferChief Executive Officer1Media Focus, gross spendings,all media, January–December 2012APG|SGA Annual Report 2012

6 Financial ReportFinancial ReportAPG|SGA GroupIn the year under review APG|SGA was able to look back onvery positive development in its home market of Switzerland.Nevertheless, we continue to be faced with difficult macroeconomicconditions in our international markets. The decisiontaken two years ago to focus on the home market led to verypositive developments in terms of financial results.Beat HermannChief Financial Officer“Profitability wasimproved once againat ahigh level.”The company’s business performance was also influenced byexceptional items. The change in the pension fund from adefined benefit plan to adefined contribution plan in compliancewith reporting standard IFRS IFRS/IAS 19 had apositive influence,while the value adjustment on goodwill and contract rights inSerbia and Montenegro had anegative impact on the annualresult for 2012.Consolidated sales revenue rose by 1.9% to CHF 317.6 million(PY CHF 311.8 million). Organic growth in local currenciesamounted to 5.2%; currency effects accounted for -0.7%. Realestate revenue of CHF 2.5 million matched the level of the previousyear. Inrelation to sales revenue fees and commissionsamount to 44.6% and thus also match the level of the previousyear. Asaresult of strict cost management, operating and administrativecosts could be reduced by 11.6%. The change in thepension fund contribution plan had aone-time, positive effecton the result of CHF 28.8 million after taxes. Value adjustmentsof intangible assets in Serbia and Montenegro negatively affectedthe result after tax effects by CHF 21.3 million. EBITDA amountedto CHF 113.0 million in the year under review, which correspondsto an EBITDA margin of 35.6%. If exceptional items areexcluded, then EBITDA increases by 12.1% compared with theprevious year.Net income in the year under review amounted to CHF 50.1 million.If the exceptional items are excluded, then this correspondsto an increase of 20.4%. Currency exchange losses had anegativeeffect on the result for 2012 of CHF 1.9 million.SwitzerlandOn the Swiss home market sales revenue rose by 5.9% yearon-yearto atotal 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 71.8million), which corresponds to an EBITDA margin of 35.6%(PY 23.4%). The strong increase in EBITDA and the EBITDA marginwas also positively affected by the change in the pensionfund 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 7InternationalThe international contribution to consolidated sales continuedto decline and at CHF 20.5 million (PY without Greece CHF 29.3million) it amounted to 6.5%. This decrease amounts to 34.2%,of which 7.0% and 25.7% were attributable to negative foreignexchange and acquisition effects respectively. EBITDAamounted to atotal of CHF 4.0 million (PY without GreeceCHF 4.7 million). Thanks to process optimization and strict costmanagement the EBITDA margin in the International Divisionshowed strong growth and amounted to 19.4% (PY 15.9%). AtCHF 26.2 million, international net income had anegative effecton the consolidated financial statement, with CHF 21.4 millionattributable to value adjustments on intangible assets andCHF 3.1 million to foreign currency losses.Cash flowIn financial year 2012 acash flow of CHF 35.6 million wasgenerated (PY CHF 63.9 million). It should be noted that atotalof CHF 24.0 million was appropriated to the company pensionfund in the reporting period. The flow of funds from businessoperations amounted to CHF 45.0 million (PY CHF 72.7 million).After investments of CHF 5.4 million and proceeds from the saleof tangible assets and holdings in the amount of CHF 4.6 million,free cash flow before dividend payments amounted to CHF44.2 million (PY CHF 67.4 million).Balance sheetCompared with year-end 2011 the balance sheet total declinedby 7.7% to CHF 287.4 million, primarily due to the completeredemption of all bank loans and to the write-offs of intangibleassets abroad. Intangible assets currently amount to 14.6% oftotal assets (PY 22.2%). Accounts receivable from customersincreased to CHF 43.9 million (PY CHF 39.8 million). The netcash position as at the end of the year under review amountedto CHF 86.5 million. As at the balance sheet date the equitycapital belonging to the shareholders of APG|SGA SA amountedto CHF 103.5 million, which corresponds to an equity ratio of36.0% (PY 39.7%). The negative impact on equity was attributableto actuarial losses from defined benefit pension plans in theamount of CHF 51.9 million. The reason for this is the historicallylow interest rates, which have led to afurther reduction in thediscount interest rate and concomitantly to the anticipation ofhigher future obligations.Sales revenueCHF mEBITDACHF mEBITDA marginIn %ofsales revenueInvestmentsCHF mChange vs. PY in %10.85.4428.7340.0304.3311.8317.683.545.651.373.019.513.416.923.435.686.338.124.3113.010.9-20.7-10.52.51.93.2-45.412.542.354.8-6.7-31.326.138.552.1-17.9-55.8-36.3-55.4-50.52008 2009 2010 2011 2012 2008 2009 2010 2011 2012 2008 2009 2010 2011 20122008 2009 2010 2011 2012APG|SGA Annual Report 2012

8 Financial ReportKey figures5-year financial highlights of the APG|SGA Group2012 2011 2010 2009 2008Balance sheetBuildings and land CHF m 48.4 52.7 57.3 60.1 62.7Advertising plant CHF m 18.0 20.3 24.1 38.6 59.7Current assets CHF m 154.0 142.8 94.4 125.9 194.3Net current assets CHF m 25.8 21.0 29.5 30.9 56.6Net debt (+)/Net liquidity (-) CHF m -86.5 -62.9 4.1 34.5 35.5Net debt/EBITDA 0.08 0.76 0.43Gearing 4.0% 20.7% 15.2%Equity CHF m 107.1 126.5 100.9 167.2 233.3Total assets CHF m 287.4 311.2 275.1 395.1 567.2–Change versus PY -7.7% 13.1% -30.4% -30.3% -1.7%Income statementSales 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 89.9 122.4Fees and commissions CHF m 141.5 139.1 141.4 164.1 194.7in %SR 44.6% 44.6% 46.5% 48.3% 45.4%Personnel expenses CHF m 29.9 66.0 68.3 68.0 77.8in %SR 9.4% 21.2% 22.5% 20.0% 18.1%Depreciation of property, plant, and equipment CHF m 9.7 11.3 14.3 20.6 23.1in %SR 3.1% 3.6% 4.7% 6.1% 5.4%Amortization of intangible assets CHF m 4.4 4.8 5.4 7.6 7.7in %SR 1.4% 1.5% 1.8% 2.2% 1.8%EBITDA CHF m 113.0 73.0 51.3 45.6 83.5Operating income (EBIT) CHF m 76.4 56.1 -39.1 -65.2 52.7Income from continuing operations CHF m 52.1 43.0 -52.7 -41.4 32.9Net income CHF m 50.1 41.8 -52.3 -59.1 29.7Statement of cash flowsCash flow CHF m 35.6 63.9 44.9 35.9 56.9Free cash flow CHF m 44.2 67.4 32.6 18.4 -13.7Financial indicatorsEBITDA 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%InvestmentsAdvertising plant CHF m 3.0 6.4 2.8 10.8 21.9Other investments in property, plant, and equipment CHF m 2.3 2.8 2.5 2.5 6.4Intangible and financial assets CHF m 1.7 18.9 24.8 58.1Employees 652 661 705 782 825Explanation of financial terms see page 55APG|SGA Annual Report 2012

Financial Report 9Share development2012 2011 2010 2009 2008Data per shareOperating income (EBIT) CHF 25.98 19.11 -13.32 -21.87 17.96Cash flow CHF 12.12 21.78 15.29 12.03 19.37Income from continuing operations CHF 17.70 14.23 -17.96 -12.78 10.10Net income CHF 17.03 14.23 -17.82 -19.84 10.11Equity held by APG|SGA SA shareholders CHF 35.20 42.11 33.99 55.45 75.16Payout CHF 10.00 1 7.00 0.00 0.00 4.40Payout ratio 59.9% 49.2% 0.0% 0.0% 44.5%Share price dataMarket price high/low 2 CHF 200.4/130.6 175/121 151/93.8 149/96.5 257/127.5Year-end market price CHF 200.0 136.0 140.0 108.7 140.0Payout yield 3 5.0% 5.1% 0.0% 0.0% 3.1%Market capitalization 3 CHF m 600.0 408.0 420.0 326.1 420.0–versus shareholders’ equity 5.6 3.2 4.2 2.0 1.9–versus sales revenue 1.9 1.3 1.4 1.0 0.9P/E ratio 3, 4 11.7 9.6 – – 13.81Proposal to the General Meeting2Source: UBS AG3Based on market price as at December 314Including payout on treasury stockPrice trend since December 31, 2009200180160140120100806040IndexAPG|SGA registered shareSPI31.12.200931.12.201031.12.201131.12.2012Source: UBS AGAPG|SGA Annual Report 2012

90%of the Swiss population are outof the house and on the move onadaily basis. This explains theenormous reach achieved by ourOut of Home solutions withinan extremely short period of time.

12 Business Development in SwitzerlandAPG|SGASuccessful bids, contract extensions, new products,intensified digitizationBeat HolensteinHead of Partner &Product Management“Out of Home hasbecome even moreattractive throughthe combinationof new digital advertisingmedia andinnovative analogproducts.”Partner ManagementIn 2012, APG|SGA was able to win numerous bids and advertisements. The companywas awarded acontract for the greater part of the billboards on public premises on thebasis of its compelling bids in an open bidding procedure conducted by the city ofZurich. As of July 1, 2013, APG|SGA will be responsible for marketing and managing90% of all commercially exploitable, fixed spaces on public property (1,255 of 1,400spaces) in the largest Swiss city for another five years. However, inthe city of Bern,approximately 200 F200 urban format backlit panels will no longer be on offer as ofJanuary 1, 2013. To compensate for that, APG|SGA was able to improve its rangeof backlit panels through the integration of 25 Rollingstars (F200 with multiple use),with which APG|SGA –owing to its franchise agreement –maintains its top rankingin 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 dueto successful partnerships or within the scope of public calls for bids –including, amongothers, APG|SGA‘s exclusive, long-standing cooperation with St. Moritz, an Engadinvacation destination, and with the municipality of Kriens, asuburb of Lucerne.In the mass transit advertising segment, the intensified partnership between APG|SGATraffic and PostAuto Schweiz AG deserves attention, for which advertising spaces attransit stops are now marketed in addition to advertising in and on the respective vehicles.APG|SGA Mountain renegotiated and successfully concluded various agreementswith mountain regions and railways, including Zermatt Bergbahnen AG, BettmeralpBahnen AG (both Valais), and Jungfraubahnen Management AG (Bernese Highlands).Product ManagementWith Startower, APG|SGA launched anew poster advertising medium: abacklit advertisingcolumn that revolves on its own axis and makes it possible to develop new toplocations. In Zurich, we continued to develop our successful premium offer with“Premium Branding waiting zone Zurich.” It includes 50 urban format F200L panels athighly 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 cardrivers as amobility target group, it includes 1,300 guaranteed frontal view panelsalong heavily traveled streets.Digital Competence CenterDigitization has found its way into every segment at APG|SGA –itrepresents agrowingfield that will undergo intensive development. Various projects designed to implementnew digital advertising forms are either in progress or are approaching completion.After anew digital format was successfully launched with the ePanel in largeSwiss train stations in the summer of 2011, six ePanels were also installed at Metro m2in Lausanne in March 2012. Ajoint pilot project was also started with the city of Zurichin order to evaluate the possibilities of digital advertising forms in public. The DigitalCompetence Center is responsible for developing auniform group strategy.APG|SGA Annual Report 2012

Startower –anew APG|SGA poster distributor:The large portrait format (2 xF200L) offerseven more possibilities for creative Out of Homedesign.APG|SGA Annual Report 2012

14 Business Development in SwitzerlandAPG|SGASwiss outdoor advertising –diverse and efficientDaniel StrobelHead of Advertising Market &SubsidiariesSwitzerland“Out of Home Mediarepresents one ofthe most dynamicmedia categories.”Ulrich RitschardDirection of Digital Sales“Book today, advertisetomorrow:Digital Out of Homesets new standards.”Dynamic markets –dynamic market cultivationTogether with across the board consulting, APG|SGA offers its customers diverse productsand services in all linguistic regions. Outdoor advertising involves various formsof planning and implementation. It is fast and makes aquick impact, it is present inurban 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 –inclassic or digital, motion, 2D or 3D formats. If classic billboards used to be employedprimarily as supporting media in advertising, outdoor advertising today is increasinglyassuming the role of afundamental advertising medium. Never before have customersor creative and media agencies been in command of such awide range of offers thatare not only matched to meet their communication requirements, but capable of beingused with both accurate timing and pinpoint precision –atthe local, regional, andnational levels. Today the APG|SGA sales teams that make up the company’s office andfield staff for every region and segment brand have comprehensive knowledge of theentire offer. The road to “one-face-to-the-customer” was paved in numerous internaltraining steps and will be constantly pursued in the years to come. This process issupported through the adaptation of existing and/or the development of new toolsin sales and administration.Knowing and understanding customersThe 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 listenattentively to what acustomer says and then to put it into proper perspective is oneof our principal tasks. Divided into the four sales regions of West, Center, South andEast, consulting teams at APG|SGA and its segment brands assume responsibilityfor this task on location. And in the company’s key account management division, whichhas anew focus, trained specialists have the requisite experience and know-how toefficiently handle complex, cross-divisional national Out of Home campaigns. Withinquiries and orders from international customers, globalization of the markets has alsofound its way into our company. The daily task of our reinvigorated sales unit, KAMInternational, is to make its presence known among decision-makers who work foradvertising clients and agencies in European marketing and advertising headquarters,so that they too become familiarized with the opportunities and qualities of theSwiss Out of Home market on location.Digital SalesThe year 2012 was ayear of extraordinary growth for Digital Sales. The success ofthe ePanel, which was introduced in the summer of 2011, continued, and sales for theeBoard achieved anew all-time high. All in all, sales in the digital sector more thandoubled since 2010. Thanks to clearly structured processes, as well as ahigh degree ofautomation and standardized operations, this increase in volume could be masteredwith only aslight increase in personnel. At the main train station in Zurich, the eBoard,which was commissioned as apilot project in 2001, was replaced by an advertisingdisplay in HD quality. With its 60 square meters, it is the largest indoor HD display inSwitzerland.APG|SGA Annual Report 2012

APG|SGA turns streets and squares intovibrant communicative spaces –with completecoverage in all large Swiss cities. In addition,its numerous exclusive locations amplify salesin direct proximity to the respective sellingpoints in an ideal manner.The best of digital Out of Home:ePanel at Bern train station. Thanks to thesignificant increase in the number of passengersand attractive service offers, major trainstations have become preferred locationsfor digital outdoor advertising.APG|SGA Annual Report 2012

16 Business Development in SwitzerlandAPG|SGAIntroduction of new corporate brand,and new services and toolsMarkus EhrleHead of Marketing &Business Development“APG|SGA is theSwiss brand namefor integrated, digital,and analogOut of Home communication.”Branding, communication, and category marketingThe APG|SGA corporate brand has been uniting all the company’s divisions and servicesunder one brand name since January 19, 2012. Together with its supplementary segmentbrands (Airport, Mega Poster, Mountain, and Traffic), it is recognized as the leadingauthority for Out of Home Media in Switzerland. In the course of its rebranding, anewcorporate identity and various communications media (publications, videos, etc.) wererealized that constantly undergo improvement and further development. Since July 2,2012, the group was been operating under the name APG|SGA SA. The new brandmakes it possible to use auniform logo for the whole of Switzerland, with adesign thatexpresses openness, modernity, dynamics and increasing digitization, while representingfreshness and Swissness with its selection of colors.The successful summer advertising campaign “What is your wish?” brought the uniqueadvantages of the poster as amedium closer to advertising clients and the Swiss populationin 2012. The focus was placed on the shortcut application, which is exclusivelyavailable to APG|SGA customers and forms abridge between offline and online communicationand steers the user directly from the poster to amobile website via smartphone.Together with the umbrella organization AWS, Outdoor Advertising Switzerland,aclassic category campaign was also developed with the claim, “For Great Ideas. ThePoster.”, and was displayed at numerous APG|SGA poster sites. The strong focus on theattractiveness and creativity of outdoor advertising resulted in increasing numbers ofparticipants in the Poster of the Month competition, as well as arecord number of submissionsto the Swiss Poster Award 2012.Market and media researchThe fact that posters are highly appreciated and make agreat impression is provenmonth after month by the APG|SGA Poster Performance Index (PPI). In the year underreview, anonline survey was employed that makes it possible to study and evaluatethe impact of Out of Home advertising campaigns with even more precision. With“Out of Home Targeting”, we successfully introduced anew service in order to providefor more sophisticated campaign planning. This makes it possible to place accuratelytargeted messages along important distribution channels and centers of mobility.Web tools and e-communicationsThe newly launched smartphone app PosterPlus is atool that now makes it possibleto search and select APG|SGA poster sites on the go as well. The already very popularapp offers access to more than 60,000 poster sites in all of Switzerland along withmany other practical planning features. The internet tool Poster Direct and the APG|SGAwebsite have also been further enhanced –which also simplifies planning and bookingfor our customers.PricingThe changes and simplifications introduced in the year under review with regard tocorporate policy on offers, prices, terms and conditions (introduction of auniform price,early booking discount, adjustment of the increments for the graduated campaigndiscount (GCD), harmonization of the consultant’s commission, expansion of the company’sProfitline offers, etc.), all proved to be successful. Thus we have made onlyselective modifications along with ageneral price adjustment for poster year 2013.APG|SGA Annual Report 2012

Business Development in Switzerland 17PosterPlus –mobile access to morethan 60,000 APG|SGA poster sitesPoster advertisingagreeable/very agreeableShare in%ofpersons interviewed(based on 1,000 persons)Total817770201220051997Within the scope of variouscompetitions, APG|SGA promoteseffective, aesthetically pleasing,high quality posters.Photo: Youth Session 2012“Now we do the talking!”,winning poster in the Swiss PosterAward 2012 competition;client: SAJV Jugendsession, BernMen797670Women708378aussenwerbung-schweiz.chAge bracket 15–29Age bracket 30–44Age bracket 45–59797772838072817466FÜRGROSSES.DASPLAKAT.0 20 40 60 80Source: APG|SGA Poster Performance Index (PPI)AWS Category Campaign PosterShortcut –online with the posterdirectly via smartphoneAPG|SGA Annual Report 2012

18 Business Development in SwitzerlandAPG|SGAHigh-quality posting, customer satisfactionand improved environmental balance in line withsustainability requirementsChristian GotterHead of Logistics“Our company’s internallogistics operationsguaranteehigh-quality postingand customer satisfaction.”Posting in the city centerThe company’s internal logistics organization represents the central service provider forsales, acquisition and the segment companies. Atotal of 260 employees 1 at 14 APG|SGAlocations processed and displayed approximately 2.5 million posters in the company’score business in 2012, equivalent to one square meter in world format –approximately1% more than in election year 2011. And now there are also up to 20 billposters underwaywith their cameras in peak weeks every Thursday and Friday in order to takepictures of visuals in the largest cities and municipalities. Thus the sales division was ableto be provided with approximately 20,000 photographs for use in photo documentationsof diverse campaigns for customers by the end of December 2012. At the logisticscenter, weintroduced poster storage charges that make it possible for the customerto prolong the storage of posters that have been in storage for more than 12 monthsat our premises by making payments.Short turnaround times and expanded field of activityIn the year under review, various large campaigns were able to be processed withinavery short period of time and successfully posted. The goal continues to be to achieveeven faster turnaround times in the value chain and to thus secure competitive advantagesover our competitors. Numerous construction contracts were processed for acquisition.The largest projects included coordination and support for the transformationof 25 Cityplan units into Rollingstar units in the city of Bern and the dismantling of variousposter 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 newStartower. Once again we are carrying out cleaning of the digital advertising mediain the train stations for Impacta, and we have introduced anew quality system togetherwith the tarpaulin suppliers for APG|SGA Mountain and redesigned the packaging ofthe tarpaulins for posting in the mountains. And with APG|SGA Traffic, we have commenceddiscussions on process optimization and active order tracking.Quality, environmental awareness and sustainabilityActive cost management, quality and sustainability are atthe front and center of ouractivities. We aim to maintain and consolidate the high level of our satisfying financialratios. In doing so, ecological aspects have also played an important role in our managementdecisions for many years. We have achieved alot with our resolute approachand set standards in several areas, such as the procurement of eco-vehicles and thepurchase 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 August2012, the company’s environmental impact has been reduced by approximately 15%since 2007, with the company’s business operations making the most important proportionatecontribution of approximately 40%. The share ofelectricity in this overall reductionamounts to agood 25% and is attributable to environmentally conscious energy purchasesfor backlit advertising. With regard togreenhouse gas emissions, areduction incarbon dioxide in comparison to 2007 of approximately 570 tons was achieved (-14%).1100% full-time equivalent basisAPG|SGA Annual Report 2012

Business Development in Switzerland 19As of 2015, new passenger vehicles inSwitzerland will not be allowed to dischargemore than 130 grams of carbon dioxide perkilometer. Thanks to our ongoing procurementof eco-vehicles, we made these requirementsinto astandard several years ago. With morethan 160 vehicles, APG|SGA has one of thelargest fleets of environmentally vehicles inSwitzerland.APG|SGA Annual Report 2012

44 millionpassengers took to the air inSwitzerland in 2012. This numberdemonstrates the unbridledtravel enthusiasm and global interconnectednessof the Swiss –fullyin line with APG|SGA Airport.

22 Business Development in SwitzerlandAPG|SGA AirportSwiss airport advertisingon asuccessful courseEnhanced customer portfolioAPG|SGA Airport is once again able to present encouraging results. The key customersegments (the watch industry, financial sector and real estate sector) were strengthenedand further developed on asustainable basis. Moreover, promising new segmentswere added with the automobile and aviation industries. The annual targets were metwith regard toboth sales and profit.Pierre-Alain MettrauxDirection of APG|SGA Airport, Bercher SAPublicité Générale“The dynamics ofGeneva Airport boostour aim to offer ourcustomers innovativeadvertising solutionsof the highestquality.”Installation of new LED advertising spacesIn terms of sales, Geneva Airport has been the company’s most important, long-termpartner. Onthe basis of the existing franchise agreement, APG|SGA Airport furtherdeveloped and expanded on its offer in the year under review. Thus new LED advertisingspaces were installed in the visitor-accessible arrivals area in 2012. They are doublesidedsquares of 180 x180 cm in size and they fit excellently into the airport atmosphere.More and more advertising spaces from APG|SGA Airport are being individuallymatched to the surrounding area. The trend points clearly toward larger formats, alongwith areduction in the number of sites. Well-integrated into the building architecture,advertising media fulfill the mounting aesthetic requirements of our partners on theone 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 commercialvalue creation. Through the use of LED technology, the backlit displays that are inhighdemand on the market also score points from an ecological point of view becauseof their low energy consumption. We also achieved or exceeded our annual targets atLugano Airport.The fascination of the airportWith APG|SGA Airport, our customers reach affluent consumers in an environmentthat is infused with bustling dynamism. As gateways to the world, airports create advertisingcontacts with international business and travelers on vacation. Communicationin the point of sale area of an airport unfolds the greatest effect –either as abrandreminder or direct sales promotion. The material and functional framework of an airportmakes it possible for customers to stage brands among asophisticated public in amanner that is both effective and rich in contrast.Geneva AirportNumber of passengers per year in thousands14 00012 00010 0008000754660002001200220032004200520062007200820092010201120127620808885939411996310 90511 54211 32411 86513 11213 899Source: Geneva Airoport, www.gva.chAPG|SGA Annual Report 2012

Prestige advertising at the airport:Large formats of outstanding quality integratedinto the building architecture increase theexclusivity of the advertising media –and thustheir value creation.APG|SGA Annual Report 2012

24 Business Development in SwitzerlandAPG|SGA Mega PosterUnusual productions withastrong impactErnst FuhrerDirection of APG|SGA Mega Poster,Paron AG“The Mega Postersegment brandrealizes the mostspectacular ideastogether withits customers.”Convincing communication with large format imagesAPG|SGA Mega Poster, the country’s leading Out of Home media company in thesphere oftwo and three-dimensional large format image communication, significantlyincreased its sales again compared with the previous year and made asatisfactory profit.With sizes of up to 630 square meters, the company’s Mega Poster offer, with morethan 135 sites in all of Switzerland, cannot be overlooked in any respect. The variouscreative campaigns exhibit convincing quality with photo-realistic digital printingas well as professional mounting adapted to the individual site. In all the large cities ofSwitzerland, at central, highly frequented locations, Mega Posters generate severalthousand contact opportunities for each period of display. The specially compiled qualificationsystem for contact measurement underscores the competitiveness of MegaPoster as aniche product between and within media –which is why it is currently firmlyestablished in national and international media planning.Well-known customer portfolio –alot of potential for the futureIn the year under review, APG|SGA Mega Poster succeeded in realizing several orderswith well-known customers. From afive-meter high, climbing dairy cow and achocolatebar three meters in size to four-meter high cell phones and four original size Fiat 500models, various installations in large Swiss cities attracted for attention and providedplenty to talk about –not only among the population, but in the advertising industry aswell. The strong impact of these special projects resulted in awealth of inquiries fromboth customers and agencies. APG|SGA Mega Poster is the only supplier in all of Switzerlandcapable of realizing such projects under one roof in aprofessional and timelyfashion. Advertising customers, agencies, partners and authorities profit from this all-in-oneservice, which begins with adialog and consulting on the choice of alocation todesign input and official approval procedures, as well as production, mounting, lighting,maintenance, disassembly and finally disposal of the materials in an environmentallyfriendly manner.Swiss premiere inBernWith its newest project, the veiling of the Burgerspittel in Bern, the six-member teamat APG|SGA Mega Poster succeeded in producing amasterpiece. For the first time inthe history of the Swiss Out of Home market, abuilding in the most central of locationswas completely wrapped and photo-realistically displayed on the scaffold netting.Thus, at one of the most frequented locations, an attractive supporting program for fourcommercial Mega Poster advertising spaces was created from a2,400 square meteroptical illusion. The development of this product strives for market penetration amongcustomers in the luxury segment who until then had criticized the tendency of temporaryspaces for scaffolding to be unsightly. And when it came to business partnersand the authorities, this project provided proof that APG|SGA Mega Poster takes responsibilityfor the cityscape and makes an important contribution toward cleanliness andquality of life in the public sphere.APG|SGA Annual Report 2012

Business Development in Switzerland 25APG|SGA Mega Poster is the essence ofexceptional production. With the veiling ofBurgerspittel at the central train station in Bern,abuilding in the most central of locationswas completely wrapped and photo-realisticallydisplayed on the scaffold netting for the firsttime in the history of the Swiss Out of Homemarket –acontribution toward cleanlinessand quality of life in the public sphere and anattractive framework for commercial MegaPoster advertising spaces.APG|SGA Annual Report 2012

86%of the Swiss population enjoyspending their free time inthe Swiss mountains on aregularbasis. APG|SGA Mountain isalso represented at attractivelocations there.

28 Business Development in SwitzerlandAPG|SGA MountainTo success with innovationand creativityMarkus BienDirection of APG|SGA Mountain“Thanks to constantlyincreasing mobilityand dynamics, thecreative and unusualcampaigns of APG|SGAMountain gain maximumattention onthe mountainside.”Successful partnershipsAPG|SGA Mountain, specialist and market leader for outdoor advertising and mountainorientation systems, renegotiated and concluded numerous agreements with mountainregions and railways in the year under review. Thus Torrentbahnen Leukerbad in theCanton of Valais and Bettmeralp Bahnen AG continue to cooperate with APG|SGAMountain. Exclusive partnerships have been confirmed with companies such as ZermattBergbahnen AG, Jungfraubahnen Management AG, Corvatsch AG and LuftseilbahnCorviglia–Piz Nair AG in Engadin. Altogether nearly 90% of all Swiss mountain railwaysrely on our innovative strength and performance in advertising marketing. We also makecertain that guests on the mountain feel safe and right at home, and are able to findtheir bearings and obtain required information both rapidly and reliably. Thus we presentattractive opportunities for professional, efficient advertising communication on thepart of our customers.New advertising forms and expanded customer portfolioWith increasing mobility, supported by further development of traffic routes and localinfrastructure inthe various regions, outdoor advertising within the scope of Swissmountain tourism is becoming increasingly important. Throughout the entire year, thevarious destinations offer unique experiences and attract wealthy customers. Mountainadvertising receives alot of attention among both domestic and foreign guests andprovides high attraction value, as periodic field studies have shown. Through the developmentof new forms of advertising (digital formats in gondolas, the catering business,ticketing and tourist agencies, chairlift branding, cubes, coverings, etc.), new customerswere once again acquired and the segments of this industry cultivated in the yearunder review.Infosnow.ch: basis for the cross-media futureInfosnow.ch is aweb application for collecting and managing data displayed on mediasuch as panorama and information boards, websites and electronic terminals such assmartphones. This tool now makes it possible for APG|SGA Mountain to display all theoffers and information for amountain destination with asingle system: ski slopes,cross-country ski trails, sledging and hiking paths, parks, avalanche bulletins, weatherand much more. Infosnow.ch also supplies the data of approximately 50% of the destinationsthat Switzerland Tourism publishes in its winter sports reports. With the newestgeneration of systems, the usability of the tool has been improved and its range offeatures substantially expanded. The system also includes new modules, such as anevent calendar, newsletters and SnowTV. Wehave also been offering our partners readymadeweb solutions for them as aservice for the past two years.APG|SGA Annual Report 2012

Business Development in Switzerland 29Swiss cable cars transport atotal of around292 million people each year. About 811,000people can thus be reached with advertisingin alaid-back atmosphere onadaily basis.Source: Seilbahnen Schweiz, Fakten und Zahlenzur Schweizer Seilbahnbranche, 2012APG|SGA Annual Report 2012

5 millionSwiss people use public transporton adaily basis in Switzerland.Public transport is therefore ahottrend –the same goes for ourservices from APG|SGA Traffic.

32 Business Development in SwitzerlandAPG|SGA TrafficMass transit advertising marketcontinues to growDaniel FlückDirection of APG|SGA Traffic AG“As the market leader,we provide highlyeffective brand communicationin masstransit.”Established market positionThere isatrend toward mass transit advertising and it has gained in significance onthe altogether stagnant Swiss advertising market. In an environment that is sluggish onthe local, regional and national levels, APG|SGA Traffic was nevertheless able to increaseits sales and profit in 2012. Thanks to intensive, consistent market cultivation, andthanks to interesting new products and projects, the division was able to expand itsleadership even further in the sphere ofSwiss mass transit advertising. New additionsto the product portfolio included the new floor graphics, which were successfully usedfor BDWM 1 Transport AG. This eye-catching and entertaining form of advertising waswell-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 projectwith five completely painted trams, while contributing our network of business relationshipsand our experience.Efficient interface between mass transit companies, customers,agencies and advertising suppliersThe success of APG|SGA Traffic is attributable to the interaction of various elements:alocal presence, ablanket offer throughout Switzerland, diverse advertising formats,short-term offers on the inside of vehicles, along-term advertising presence on theexterior surfaces with coverage that continues to be extended through increasing mobility.Asthe 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, regionaland national advertising customers, advertising agencies, sign-painters and printers.Our many years of successful cooperation with our partners made it possible to simplifymany operations and optimize interfaces, which in turn increases the attractivenessof mass transit advertising in the long term. Both the large and the numerous smalleradvertising customers profit from this general contractor principle of comprehensiveservice and integrated solutions under one roof. The revenue generated through advertisingorders provided welcome supplementary income for the mass transit companieswith their passengers.Proven high advertising effectMass transit advertising reaches approximately 2.7 million passengers throughout thecountry, day after day. AtAPG|SGA Traffic, both large and small customers find theproducts that best fit their individual needs: from classic and digital formats, standardized,nationally available and popular hanging displays and longitudinal roof formats tofive square meter traffic boards and partial back to complete vehicle wraps. We takeadvantage of the increasing passenger frequencies and the positive image transferof mass transit. In Switzerland, mass transit networks are uniquely dense, not only inthe urban centers, but –thanks to rail and PostAuto services –also as connections tomore remote regions. Scientific surveys repeatedly confirm the high effectiveness of masstransit advertising: weekly reach ratings of over 50% in the overall population forinterior formats, over 80% for external formats, advertising impact in excess of 50%,and recall of individual visuals of up to 73%.1Bremgarten, Dietikon, Wohlen, MeisterschwandenAPG|SGA Annual Report 2012

APG|SGA Traffic customers benefit fromthe high exposure and popularity of mass transitadvertising and from the attractive price/performance ratio. The many urban and regionalmass transit authorities profit as well, in theform of the concession fees they receive.Passengers transportedby road-based mass transitTram, trolley and bus,per year in millions2011201020092008200720062005200014081374134913101251120511751112Source: BFS, Swiss Federal Statistical Office,www.bfs.admin.ch (December 2012)APG|SGA Annual Report 2012

34 Business Development in SwitzerlandImpacta AG, Ecofer AGAdvertising in train stations –attractive and covetedMarkus ScheideggerManaging Director of Impacta AGand Ecofer AG“Train stations inSwitzerland are theessence of urbanmobility.”The poster as an advertising medium –ontrack to successImpacta AG, the specialist for train station advertising, holds concessions for the SwissFederal Railways (SBB), BLS AG, Matterhorn Gotthard Bahn and additional key Swissprivate, tourist and mountain railways. The company’s offer covers all the classic posterformats, as well as the ePanel digital format, which was newly introduced in 2011. Thepremium product, placed at sites of exceptional quality, was well received by the marketand enjoyed above-average demand in 2012. ePanels are 82” LCD screens in portraitformat with dynamic advertising messages that fit in well with the vibrant bustle ofthe atmosphere atmajor SBB train stations and their shops. Enhanced by brilliant technology,the animated images and spots are extremely popular among the station usersand the messages make alasting impression.Customized investment advertisingMajor train stations are developing into highly frequented centers that merge shopping,services and travel. Domestic and foreign business travelers, tourists, commuters andpassersby enliven their halls, arcades and platforms on adaily basis. In this environment,Ecofer AG specializes in the marketing of mostly long-term advertising in the non-postersegment: high-quality luminous advertising, large-scale representations, 3D-designsand additional special forms of advertising. Mega Posters of up to 320 square metersas well as escalator advertisement (stair posters) are also successfully deployed in the sixlargest SBB train stations. Both are offered within four-week display periods and arethus excellently suited as acomplement to digital and classic poster campaigns. Ecofer’sconcession partners are the Swiss Federal Railways (SBB), BLS AG and other railroadcompanies –including the mountain railway and tourism sector.Continuous development with proven partnershipsThe frequency with which people use Swiss train stations is constantly increasing. Againstthis backdrop, Impacta AG developed and positioned train station posting as an independentmedium on the advertising market. The progressive structural adjustments oftrain stations to the needs of today’s modern, mobile society represent ahuge challengeand require continuous development of advertising spaces.Daily train station frequenciesStations Rail passengers 1Stations Rail passengers 1Zurich HB 2 382 760Bern 2 191 360Basel SBB 2 108 600Winterthur 2 95 230Lausanne 2 89 010Lucerne 2 81 160Zurich Oerlikon 76 470Zurich Stadelhofen 72 580Olten 71 400Geneva 2 62 200Biel/Bienne 46 530Zurich Hardbrücke 43 600St. Gallen 2 42 170Zurich Airport 41 900Aarau 38 300Zug 2 37 920Zurich Altstetten 36 090Baden 35 990Thun 32 570Wetzikon 25 4801Embarking and disembarking2RailCitySource: SBB, November 2011APG|SGA Annual Report 2012

Constantly increasingrail passenger frequenciesPassengers of SBB and licensedmass transit companies,in millions per yearTrain stations are hubs of emotions andexperiences, where companies and their brandsare offered ideal opportunities to reach theirtarget groups in ahighly effective and efficientmanner.201120102009200820072006200520001995303279461446431425403379364Source: Swiss Federal Statistical Office,www.bfs.admin.ch (December 2012)APG|SGA Annual Report 2012

36 International Business DevelopmentAPG|SGA InternationalContinued progress inadjusting foreign investmentsAt the end of the year 2010, the board ofdirectors and management decided to focuson business in Switzerland in the future and to wind up all the company’s foreigncommitments from which no sustained positive contributions to the company’s profitcould be expected in the medium term. After the companies in Greece, Bosnia andHerzegovina, Bulgaria, Hungary and Italy (South Tyrol) were sold in the previous year,the company in Montenegro was now also successfully sold.Thomas RainerDirection of International Markets“Adjustment offoreign investmentscontinued to berigorous.”MontenegroThe small country in southeastern Europe, with all of 625,000 inhabitants, exhibitedvery limited future potential for our company and failed to show any substantially profitableprospects over the medium term. In the preceding year, wesucceeded in extendingthe key agreement with the capital city of Podgorica by another five years –whichprovided us with amore solid basis when it came to searching for abuyer. Atthe beginningof 2013 the local company Montepano d.o.o. was sold to the past minorityshareholder and manager.RomaniaThe year 2012 was characterized by diverse challenges due to local market conditionsand 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 logisticswere 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 crisisand political turbulences. The implemented measures provided for apositive operatingresult in the year under review. Weare still pursuing all possible options in regard tofuture activities in Romania.GreeceAfter the operations in Greece that were deep in the red were terminated last year, theshell companies still in our possession are tobeput through an orderly liquidation.However, this will take some time. The legal proceedings, which we instituted againstthe former seller of these companies and other associated persons, are still in progress.SerbiaSerbia was also affected by the global economic crisis, which had agreat impact onEastern Europe in 2012. The country is in the midst of arecession, with a2.1% decreasein its gross domestic product with direct consequences for the advertising industry.Nevertheless the performance of our local company Alma Quattro can be regarded asgood 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 inthe year under review. Sales remained stable compared with the previous year, andcosts were able to be reduced as well. Despite this attractive performance, intangibleassets had to be adjusted down as areview of their value revealed overvaluation of thebook values.APG|SGA Annual Report 2012

International Business Development 37Alma Quattro, our business in Serbia,is exceptionally well-positioned as the clearleader on the Out of Home market in thecountry and has long-term agreements withthe most important cities.APG|SGA Annual Report 2012

38 Corporate GovernanceHuman ResourcesOptimization of HR toolsand processesMarcel SeilerHead of Human Resources“Competent, dynamicstaff provide forthe success of ourcustomers.”HR foundation is establishedLast year was once again the focus of sustained development of our HR processes.Many of the processes in recruiting, support, remuneration and promotion associatedwith modern HRwere firmly established and standardized. Payroll services have beenperformed internally since January 1, 2012, thus allowing for cost optimization andan increase in quality. The administrative and operational HR matters are now bundledin Zurich, based on auniform schedule of tasks using new, modern HRtools. The statedaim of providing as much optimal support for the line functions as possible and toprovide greater assistance to management and staff onlocation has been achievedthrough the development of human resources and reorientation in HR. Staff satisfactionshould also thus be increased. In this regard, acomprehensive survey was conductedat the end of 2012. The results will be communicated to our staff and the necessarymeasures formulated in the spring of 2013. Our newly conceived performance managementwill be implemented on the basis of tools by the spring of 2013.Changes in pension fund arrangements as of January 1, 2013The new retirement plan (defined contribution) within the scope of external pensionfund management (Avadis Vorsorge AG) was put into effect as scheduled as of January1,2013. The review of the past retirement arrangement revealed that the long-termfinancial feasibility of the mandated entitlement to benefits and the financial security ofthe pension fund in the current market environment would have been jeopardized inthe medium term and that it needed to be put under professional management. Theaim of the new concept is to strengthen the financial stability of the fund, whose newretirement plan continues to contain an attractive and competitive benefits package.In addition, the employee contributions were made more flexible.Attractive employerOur stated aim is to position APG|SGA on the job market as an even more attractiveemployer. This includes interesting jobs and opportunities for development. Throughtargeted advanced training with generous financial participation and on-the-jobmeasures, justice is done to the professional knowledge and management knowledgeof our staff asimportant competitive factors. The new apprentice concept includesswitching to the field of communications (up to now service/administration) and hasbeen realized with corresponding external courses. This should make it more attractivefor our apprentices. Atotal of 15 apprentices are trained and, wherever possible,they are then employed given agood performance review after they complete theirtraining.APG|SGA Annual Report 2012

Corporate Governance 39APG|SGA Total workforceAs of December 312012 2011Total 1 652 661By countrySwitzerland 537 543Serbia 57 59Romania 53 52Others 5 7By demographicsShare ofmen, in % 74 73Share ofwomen, in % 26 27Share offull-time positions (90–100%), in % 81 83Share ofpart-time positions (

40%of the time the Swiss are onthe move in their free time.APG|SGA thus encompasses allregions and points of interest –in the city, inthe countryside,and in the mountains.

42 Corporate GovernanceCorporate GovernanceOperational structure ofAPG|SGAAs of December 31, 2012Board ofDirectorsChief ExecutiveOfficerDr. Daniel HoferChief Financial OfficerBeat HermannHuman ResourcesMarcel SeilerInternational MarketsThomas RainerLogisticsChristian GotterPartner &ProductManagementBeat HolensteinAdvertising Market &Subsidiaries SwitzerlandDaniel StrobelMarketing &BusinessDevelopmentMarkus EhrleGroup structure and shareholdersIntroductionThe principles and rules that govern management and supervisionof the APG|SGA Group are set forth in the articles ofincorporation, the organizational regulations of the Board ofDirectors, and the regulations of the Executive Committees. TheBoard ofDirectors regularly reviews these documents and updatesthem in the event of new developments. The articles ofincorporation of APG|SGA SA can be viewed at www.apgsga.ch/articlesofincorporation. The information published here correspondsto the requirements of the Directive on InformationRelating to Corporate Governance by SIX Swiss Exchange.Participating interestsThe list of participating interests is provided in the FinancialReport on page 36.Cross-shareholdingsNo capital or voting cross-shareholdings exist between theAPG|SGA Group and other companies.Listed companyCompany name, headquarters: APG|SGA SA, GenevaMarket capitalization as of December 31, 2012: CHF 600 millionPlace listed: SIX Swiss ExchangeSecurity No.: 1910 702ISIN: CH0019107025Ticker: APGNAPG|SGA Annual Report 2012

Corporate Governance 43Significant shareholders 1SharesSharesas reported as ofas reported as ofDecember 31, 2012 in % December 31, 2011 in %JCDecaux SA, Neuilly-sur-Seine (F) 2 900 000 30.00 3,5 900 000 30.00 3,5Albert Frère, Gerpinnes (B), Compagnie Nationale àPortefeuille, Loverval (B) 758 888 25.30 4,5 758 888 25.30 4,5Béatrice and Paul-Henry Binz, Grisobi Holding SA, Bulle (CH) 201 104 6.70 5 200 956 6.70 5International Value Advisers LLC, New York (USA) 104 306 3.48 5,6 104 500 3.48 5,6APG|SGA SA, Geneva (CH) (shares) 55 740 1.73 5,7 62 561 2.09 5,7APG|SGA SA, Geneva (CH) (conditional purchase option) 147 000 4.90 3,7 147 000 4.90 3,713% or more shares, in the form of stocks or rights to purchase or sell stocks.The information is derived from announcements made by shareholders pursuantto Art. 20 BEHG as of December 31, 2012, subject to the availability of otherinformation.All published notifications can be found at http://www.six-exchange-regulation.com/publications/published_notifications/major_shareholders_en.html2JCDecaux SA, rue Soyer 17, 92200 Neuilly-sur-Seine (F), is controlled by JCDecauxHolding 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), andDanielle Decaux (Neuilly-sur-Seine/F)−JFD Investissements (Luxembourg/L), and JFD Participations (Luxembourg/L),companies under the direct control of Jean-François Decaux−Open 3Investimenti (Uccle/B), acompany under the direct control ofJean-Sébastien Decaux3On February 29, 2008, JCDecaux announced that it had granted astockpurchasing option to APG|SGA SA. The option is an entitlement to purchase upto 147,000 APG|SGA SA shares which represent up to 4.9% of the voting rightsof the company (see Annual Report, Corporate Governance: Clauses onchanges of control, pages 50−51).4For detailed information on the relationship between Albert Frère, CompagnieNationale àPortefeuille, and Pargesa Asset Management (Netherlands) N.V., see:http://www.apgsga.ch/media/filer_private/2012/09/04/pargesa_management_organigramme.pdf5Number of shares according to stock register as of December 31, 2012 and 20116Management mandates authorize International Value Advisers LLC to exercisethe voting rights of 13 different investors and five funds that hold APG|SGA SAshares. These five funds are: IVA Global Master Fund L.P., IVA Overseas MasterFund L.P., IVA International Fund, IVA Worldwide Fund, and IVA Global SICAV Fund.7Registered without voting rightsCapital structureOrdinary, authorized, and conditional capitalAs of December 31, 2012, the share capital of APG|SGA SAamounted to CHF 7,800,000, fully paid in and subdivided into3,000,000 registered shares with apar value of CHF 2.60per share. As of December 31, 2012, APG|SGA SA had neitherauthorized nor conditional capital.As of December 31, 2012, shareholders’ equity before minorityinterests amounted to CHF 103.5 million (PY CHF 123.7 million).Details on the changes in shareholders’ equity are providedin the respective annual reports: for the years 2012/2011 onpage 54 of the present report, for the years 2011/2010 on page58 of the 2011 report.Shares, participation, and bonus certificatesAPG|SGA SA shares are registered shares with apar value ofCHF 2.60 per share. Each individual share isequivalent to onevote. There are no differential dividend entitlements exceptthat no dividend is paid on treasury shares. There are no preferentialrights for individual shareholders.APG|SGA SA has issued neither participation nor bonuscertificates.Share registerEach share recorded in the share register shall entitle its ownerto one vote.Registration with voting rights may be denied for the followingreasons:−Ifthe purchaser, inspite of arequest by the company, failsto explicitly confirm that he/she has purchased or is holdingsuch registered shares in his/her own name and for his/herown account.−Ifregistration of the purchaser might prevent the companyfrom being able to provide the evidence required by Swisslegal provisions regarding the acquisition of real estateby persons residing abroad.Convertible bonds and optionsNo convertible bonds have been issued. Option plans foremployees or members of the Board donot exist.APG|SGA Annual Report 2012

44 Corporate GovernanceBoard ofDirectorsMembers, activities, and interestsThe Board ofDirectors of APG|SGA SA comprises five members.Name Membre since End of termJean-François DecauxJean-François Decaux, Chairman 2002 2014Paul-Henry Binz, Vice-Chairman 1993 2013Gilles Samyn 2008 2014Markus Scheidegger 2000 2015Robert Schmidli 2011 2014General SecretariatMélanie GigerPaul-Henry BinzThe Board members execute additional functions beyond theirresponsibility for APG|SGA SA and/or other companies of theGroup and have informed APG|SGA SA about such functions.These functions comprise activities within the frameworkof important associations, foundations, or institutions in Switzerlandand abroad, as well as official positions and politicalmandates.Gilles SamynJean-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, memberor chairman of the boards of various associated companies of theJCDecaux Group, Paris (France) at home and abroad. Memberof the European Advisory Board ofHarvard Business School.Markus ScheideggerPaul-Henry Binz (1941)Vice-Chairman, non-executive member.Swiss citizen, lic. oec. of the University of Lausanne (HautesEtudes Commerciales HEC), joined the family enterprise Grisoni-Zaugg SA in 1970 as general manager, since 1995 chairmanof the board ofGrisoni-Zaugg SA and Grisobi Holding SA, Bulle,member of Caisse interprofessionnelle AVS delaFédérationdes Entreprises Romandes, Geneva.Robert SchmidliAPG|SGA Annual Report 2012

Corporate Governance 45Gilles Samyn (1950)Non-executive member.Belgian citizen, distribution engineer of the Université Librede Bruxelles (Solvay Brussels School of Economics and Management),vice-president and managing director of CompagnieNationale àPortefeuille, Gerpinnes (Belgium), president and/ormember and respective member of the committees, boardsof directors or supervisory boards of various subsidiaries of CompagnieNationale àPortefeuille in Belgium and abroad, lecturerat the Solvay Brussels School of Economics and Management(ULB).Markus Scheidegger (1965)Non-executive member.Handles executive duties in the subsidiaries Impacta AG andEcofer AG.Swiss citizen, attorney-at-law, managing director of Impacta AGand of Ecofer AG, Bern, two associated companies of APG|SGA SA,delegate of the board ofdirectors of Interplakat AG, Bern,member of the board ofdirectors of Polymedia Holding AG, Bern,chairman of the board ofdirectors of Maxomedia AG, Bern,chairman of the board ofdirectors of Serigraphie Uldry AG, Hinterkappelen,member of the board ofdirectors of various SwissSMEs, member of the Legislative Council of BurgergemeindeBern.Robert Schmidli (1950)Non-executive member.Swiss citizen, certified corporate economist with further educationin sales, marketing, management and corporate leadership.Experienced expert in the Swiss media and advertising market.Successful senior management experience at Xerox, Bertelsmannand PubliGroupe AG. Member of the Family Advisory Boardof the Oschmann Group (Müller Medien, Nürnberg, Germany),member of the advisory board ofABTell Wertschöpfungs AG,Cham, member of the corporate advisory board ofDocu MediaGmbH, Rüschlikon, member of the board ofdirectors of search.chAG, and member of the board ofdirectors of Aerzteverlagmedinfo AG, Erlenbach.Elections and terms of officeAccording to the articles of incorporation, the Board ofDirectorscomprises three to five members, who must be appointedfrom among the shareholders and must own at least 100 shares.They are individually elected by the General Meeting of Shareholdersfor amaximum term of three years and may be re-electedwithout restrictions. Members who have reached age 71 are,as ageneral rule, required to resign on the date of the subsequentGeneral Meeting. Afurther continuation of the mandateis possible if it favours asatisfactory continuity of the accurateoperation of the Board ofDirectors.Internal organizational structureAccording to the law and the articles of incorporation, the Boardof Directors is the supreme management body of the Group.It has authority to decide on all matters which, according to thelaw and the articles of incorporation, are not in the competenceof the General Meeting, or which it has not delegated to otherbodies through regulations and decisions. By majority vote itdetermines the strategic, organizational, financial, and accountingguidelines to be followed by the APG|SGA Group. In theevent of atie vote, the Chairman does not have acasting vote.The Board ofDirectors elects the chairmen, vice-chairmen, andmembers of the committees for one-year terms.The Board ofDirectors meets as often as business requires butat least once per quarter. Each member of the Board ofDirectorsmay ask the Chairman to call ameeting. In financial 2012, theBoard ofDirectors held five ordinary meetings with the regularparticipation of Executive Board members. The average durationof individual meetings is one or half aday. Most meetings wereattended by all members of the Board ofDirectors.The Board ofDirectors has appointed two permanent committeesto assist it in its activities: the Audit Committee and theNomination and Remuneration Committee. Their tasks and competencesare defined in the regulations of the Board committeesand encompass primarily functions of assessment, consulting,and supervision. In some individual cases, delegated by theBoard ofDirectors, they also have decision-making powers. Thecommittees prepare the activities of the Board ofDirectors inthe domains assigned to them and directly inform the Board onall important matters.The following members of the Board ofDirectors are representedin the Audit Committee: Binz (chairperson) and Schmidli.The Committee has the following tasks:−tosupervise the independence and efficiency of externalaudits−toreview risk management in the areas of finance andoperations−toreview the organization and efficiency of internal audits,analyze the reports and forward them to the Board ofDirectors−todetermine the investment strategy and the real estate policy−toanalyze the consolidated intermediate and annual statementsand forward them to the Board ofDirectorsAPG|SGA Annual Report 2012

46 Corporate GovernanceIn the year under review, the Audit Committee held two ordinarymeetings (in February, November) with participation of theCEO and the CFO. At one meeting, the external auditors werepresent.The following members of the Board ofDirectors are representedin 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 planningIn the year under review, the Nomination and RemunerationCommittee held one meeting (in November), with participationof the CEO, the Head of Human Resources, and the CFO.In order to ensure continuous improvement in its work, theBoard ofDirectors conducts an annual self-evaluation procedure.Delimitation of the areas of responsibility betweenthe Board ofDirectors and the Executive BoardThe Board ofDirectors decides on all matters entrusted to it bylaw, the articles of incorporation, and the organization regulations.Implementing and complementing Article 716a of theSwiss Code of Obligations and Article 27 of the articles of incorporation,the following decisions in particular are the exclusiveresponsibility of the Board ofDirectors:−Determination of business policies and financial strategies−Approval of sales, cost, and investment budgets of theAPG|SGA Group−Establishment, acquisition, sale, liquidation, or merger ofsubsidiaries−Exercise of voting rights in the general meetings of the subsidiariesand drafting of the recommendations to privateindividuals who represent the company on the boards of directorsor in other bodies of subsidiaries−Conclusion of loan contracts (whether as lender or borrower),contracts of surety, orany other form of guaranty contracts –excluding concession contracts –which involve obligationsby the company toward third parties in excess of CHF 2million−Conclusion of contracts for non-budgeted items where theamount exceeds CHF 1millionThe Board ofDirectors has entrusted the Executive Board,under the direction of the CEO, with management of currentoperations. The Executive Board isresponsible for all matterswhich, according to law, the articles of incorporation, or the organizationregulations, are not in the competence of the Boardof Directors or any other body of the company.Information and control instruments vis-à-visthe Executive BoardIn addition to the tasks assigned to the Audit and the Nominationand Remuneration Committees, the Board ofDirectors isprovided at every meeting with the relevant information pertainingto management, revenue, and profit of each associatedcompany. The Board ofDirectors is informed orally and in writingabout the following financial data for each associated companyand for the corporation as aconsolidated whole:−quarterly, semiannual and annual statements (balance sheet,statement of income, cash flow)−annual budget figures, regular comparisons of actual withbudgeted figures, and projections−three-year medium-term planning−extraordinary occurrencesIn addition, the Chairman of the Board ofDirectors is in constantcontact with the CEO. Extraordinary occurrences must bereported immediately by the members of the Executive Board tothe CEO, who shall immediately inform the Chairman of theBoard ofDirectors. If required, the Chairman of the Board ofDirectors participates in the meetings of the Executive Board.With the consent of the Chairman, each member of the Board ofDirectors may request that management provide informationon the Group’s business performance, as well as access to recordsand documents. The Board ofDirectors assigns signatory powersto staff members. As arule signatory powers are collective(two signatures required).APG|SGA Annual Report 2012

Corporate Governance 47ManagementExecutive BoardsinceDaniel Hofer (1963), Swiss citizen, Dr. MBA/DBA Chief Executive Officer 2010Ulrich von Bassewitz (1961), Swiss/German citizen, Dr. oec. HSG Chief Financial Officer 2000 1Beat Hermann (1969), Swiss citizen Chief Financial Officer 2012 2Thomas Rainer (1971), Italian citizen, Dott. econ. az. International Markets 2010Daniel Strobel (1962), Swiss citizen Advertising Market &Subsidiaries Switzerland 2011Beat Holenstein (1968), Swiss citizen Partner &Product Management 2007Markus Ehrle (1965), Swiss citizen Marketing &Business Development 2011Walter Robert Oeschger (1949), Swiss citizen Logistics 2006 3Christian Gotter (1970), Swiss citizen Logistics 2012 4Marcel Seiler (1963), Swiss citizen Human Resources 20111Left as of March 31, 20122Entry as of March 1, 20123Left as of February 29, 20124Entry as of January 1, 2012On October 1, 2010, Daniel Hofer was appointed Chief ExecutiveOfficer of APG|SGA. From 2006 to 2010, he was amemberof the management board ofthe NZZ Media Group and directorof publications at NZZ AG. Previously, his career includedalong tenure with Publigroupe SA, where hemanaged severalbusiness units in Switzerland and then, as amember of the executiveboard and CEO from 2002 to 2005, headed up the InternationalDivision with numerous sales subsidiaries in Europe,Asia, and the USA. He is amember of the executive board ofSW Schweizer Werbung, member of the executive board ofFEPEInternational (Fédération de la Publicité Extérieure), and presidentof AWS Outdoor Advertising Switzerland. He holds amaster’sdegree in business administration (University of Rochester, NY)and adoctorate of business administration (UniSA, Adelaide).Ulrich von Bassewitz (left as of March 31, 2012) was active ininternational top management consulting and training, working–among others –for SMP Management Programm St. GallenAG Group and Bossard Consultants/Gemini Consulting before hejoined the APG|SGA Group. He holds adegree in business economicsfrom the University of St. Gallen (Dr. oec. HSG).Beat Hermann joined the company on March 1, 2012, andwas appointed CFO of APG|SGA effective April 1, 2012; in thisposition, he is responsible for finance, IT, and infrastructure.He began his career as an internal auditor and later controllerwith the Volcafe/ED&F Man Group in Switzerland in Latin America.As of 2000, he was director finance &administration with SonyMusic Entertainment in Switzerland. Within the Lindt &SprüngliGroup, he first worked as asenior corporate controller andfrom 2006 to 2011 served as the CFO of the Ghirardelli ChocolateCompany (Lindt &Sprüngli Group) in San Francisco (USA). Heis amember of the board ofdirectors of Alpropria HImmobilienAG, Bubikon. He holds adegree in business administration(lic. oec. publ.) from the University of Zürich.Thomas Rainer was head of International Business with Outof Home specialist Wall AG, Berlin (Germany) for nearly two yearsbefore hejoined the APG|SGA Group in 2010. Previously heworked for former Affichage Holding SA for six years as head ofEuroplakat International Werbegesellschaft m.b.H., Vienna(Austria), and was responsible for the Group’s foreign businessin Central Europe. Additionally, hewas Vice President of FEPEInternational, Federation of Outdoor Advertising, for severalyears. He holds adegree in business administration from LeopoldFranzens Universität (Mag. rer. soc. oec.), Innsbruck (Austria),and adoctoral degree from Università Cà Foscari (Dott. Econ. Az.),Venezia (Italy).APG|SGA Annual Report 2012

48 Corporate GovernanceThe Executive Board ofAPG|SGA, left to right:Markus Ehrle, Daniel Strobel, Beat Holenstein,Daniel Hofer, Christian Gotter, Marcel Seiler,Beat Hermann, Thomas RainerAPG|SGA Annual Report 2012

Corporate Governance 49Daniel Strobel came to APG|SGA from the NZZ Media Group,where hewas responsible for the Magazines &Specials department.He enjoyed along career with Publigroupe SA, wherehe held avariety of senior management positions. From 2002 to2008 he was CEO of Publimedia AG, which at the time wasthe national key account company of Publicitas with over 100employees. He holds diplomas in marketing communicationplanning, marketing planning, media management and communicationmanagement.Beat Holenstein was employed by Zürcher Kantonalbank inmarketing and organization functions before joining APG|SGA in1996. Within the company, heheld consecutive positions asan agency manager, implementation manager, and manager ofthe Zürich branch with national key account managementresponsibility. In2009, he was appointed Head of Marketing/Acquisition and Deputy General Manager of APG|SGA. As amember of the Executive Board since 2011, he has been incharge of Partner and Product Management. He is amember ofthe board ofAWS Outdoor Advertising Switzerland and holdsSwiss federal diplomas in organization, marketing planning, andsales management.Markus Ehrle has had along career at Publigroupe SA, includingpositions as account director, marketing director and deputyCEO of Publimedia AG; he was also amember of the boardof various subsidiaries (including web-based companies). Mostrecently he worked for the NZZ Media Group, where hewas incharge of the Advertising Market &Business Developmentdepartment. He has degrees in communication managementand marketing management, and is amember of the boardof the AWS Outdoor Advertising Switzerland associations andof IAA International Advertising Association, Swiss Chapter.His previous roles enabled Christian Gotter (entry as of January1,2012) to acquire broad specialist knowledge of logistics, supplychain management and distribution. His former employersinclude ABB Turbo Systems, ABX Logistics, Central Station andPlanzer Transport. From 2009 he worked at Tobler Haustechnikwhere, as Head of Logistics and Transport, he had managerialresponsibility for 200 members of staff. Christian Gotter has undergonecommercial training, is aqualified forwarding agent andhas completed the Certificate of Advanced Studies SME managementcourse at the University of St. Gallen.Marcel Seiler graduated in business economics before takingapostgraduate 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 avariety of managementfunctions in the human resources field, including eightyears with the Migros Group, nine with ABB and most recentlyaspell with SIX Group (financial sector). As of July 1, 2011,Marcel Seiler became the new Head of Human Resources forthe entire APG|SGA Group.Management contractsAPG|SGA SA and its associated companies have concluded nomanagement contracts with third parties.Walter Robert Oeschger (left as of February 29, 2012) joinedAPG|SGA in 1987 as operations manager. Before his function ashead of logistics, he served for seven years as implementationmanager and subsequently headed the Basel and Aarau branchoffices as branch office manager from 1995 to 2006. Aftercompleting atechnical apprenticeship and further education, heearned aHigher Business Management Diploma (HWD) and subsequentlyheld an executive position as head of manufacturingat 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 SwissFederal diplomas in sales management and logistics management.APG|SGA Annual Report 2012

50 Corporate GovernanceCompensations, participations, and loansScope and stipulation procedure ofcompensationsThe Nomination and Remuneration Committee submits proposalsto the Board ofDirectors for approval of the remunerationpolicy and compensation for the members of the Board ofDirectorson an annual basis. The members of the APG|SGA Boardof Directors receive afixed compensation.All staff except for APG|SGA Group management shall receivefixed wages along with avoluntary incentive bonus basedon performance.At the request of the Nomination and Remuneration Committeemanagement compensation is reviewed and determined by theBoard ofDirectors on an annual basis. The remuneration systemwas prepared by external experts. Remuneration consists ofabasic salary together with avariable component (short-termincentive), both of which are dependent on the operating profitand net income. Both the basic salary and the short-term incentiveare paid in cash. In addition to this, along-term incentiveprogram was prepared on the basis of abonus/penalty system.Based on the target values for operating profit and net income aswell as four qualitative targets, athird ofthe target bonus isdisbursed annually with athird ofthis amount disbursed in cashand two-thirds in blocked shares. Two-thirds of the target bonusis set aside and arespective third isinturn disbursed in the followingyears. If the specified targets are not achieved, then thesevalues are deducted accordingly from the reserves. APG|SGAshares are paid at the average rate that applies for the monthof December.The disclosure ofremunerations as well as of shares held bythe members of the Board ofDirectors and the members of theExecutive Board isprovided on pages 44–45 ofthe financialreport.Shareholders’ participation rightsVoting rightAt the General Meeting of APG|SGA SA, each individual shareentitles its owner to one vote. The voting right can be exercisedonly if the shareholder is registered in the share register andthus entitled to participate at the General Meeting. Shareholdersmay be represented at the General Meeting by third parties authorizedby written power of attorney. The shares are indivisibleand the company recognizes only one single representativeper share.Statutory quorumsThe following decisions require the votes of at least two thirdsof the represented shares and the absolute majority of thepar 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-cashcontributions or acquisitions in kind, and granting specialprivileges−limitation or elimination of subscription rights−relocation of the company domicile−dissolving the company without liquidationConvocation of the General Meeting of ShareholdersThe ordinary General Meeting of Shareholders shall take placeevery year within six months after the close of the financial year.Extraordinary General Meetings shall be convoked as often asnecessary, particularly in cases provided by statute. Shareholdersrepresenting apar value of at least 10% may demand theconvocation of an extraordinary General Meeting. Any suchdemand must be made no less than 50 days prior to the proposedmeeting date. The convocation of the General Meeting of Shareholdersby the Board ofDirectors shall be dispatched no lessthan 20 days in advance of the day of the meeting and shall listthe agenda and the motions of the Board ofDirectors and theshareholders.AgendaShareholders representing apar value of CHF 225,000 maydemand inclusion of an item in the agenda. Any such demandmust be made no less than 50 days prior to the proposedmeeting date.Registrations in the share registerNo registrations are performed between the time of dispatchingthe invitation to and the closing of aGeneral Meeting.Changes of control and defensive measuresDuty to make an offerThere are no statutory opting-out or opting-up clauses.Clauses on changes of controlShould achange of control at APG|SGA SA occur as aresultof atakeover offer not endorsed by the Board ofDirectors, PolymediaHolding AG, Bern (Polymedia), which currently holds50% of the share capital of Impacta AG and of Ecofer AG, wouldbe entitled to purchase from APG|SGA SA one additional percent(1%) of the share capital of these companies. In case of aAPG|SGA Annual Report 2012

Corporate Governance 51change of control over Polymedia, APG|SGA SA has an analogouspurchasing right. Markus Scheidegger is both amember ofthe board ofdirectors of Polymedia (which is owned by theScheidegger family) and amember of the Board ofDirectorsof APG|SGA SA.Gewista Werbegesellschaft mbH (Austria) (Gewista) andJCDecaux SA (France) (JCDecaux) on the one hand and APG|SGA SAon the other have terminated the joint venture contract governingtheir mutual relationship in conjunction with EuroplakatInternational Werbegesellschaft mbH (Austria) (EPI) in whosestock capital Gewista and APG|SGA SA participated with 50%each. The contract, agreed on October 26, 2007, grants bothparties mutual rights of pre-emption as well as change-ofcontrol-relatedpurchasing options in the participating intereststhat were split up within the scope of the dissolution of thejoint venture. Additionally, the contract grants JCDecaux SA preemptionrights and purchasing options in certain foreign subsidiariesof APG|SGA SA, whereby such options are conditionalon achange of control in APG|SGA SA.In this context, JCDecaux has agreed not to expand its currentparticipation in APG|SGA SA (30%). APG|SGA SA is entitled to amaximum purchasing option of 4.9% of its own share capitalin case JCDecaux should fail to comply with the obligations statedabove. The preferential price of the purchasing option is theaverage closing price of APG|SGA SA shares in the last 30 daysbefore exercise of the option.Special obligations under labor law no longer obtain in the eventof achange of control.AuditorsTerm of mandate and term of office of theauditor in chargeArthur Andersen/Ernst &Young has been the statutory auditorof APG|SGA SA and the group auditor of its Swiss associatedcompanies since 1999. Fredi Widmann, the auditor in charge, hasheld this position since 2009. The Audit Committee shall assurethat the auditor in charge is rotated after no more than sevenyears.Information instruments of the auditorsOn behalf of the Board ofDirectors, the Audit Committeeannually reviews the independence, qualification, performance,and fees of the auditors. It prepares aproposal for the Board ofDirectors for selection of the auditor, which is then submittedby the Board tothe General Meeting. The Board ofDirectorsannually reviews the scope of the external audit, the audit plans,and the respective procedures and discusses the audit resultswith the external auditors. In ajoint meeting at least once ayearthe auditor reports to the Audit Committee of the Board ofDirectors on the auditing work and its essential results. Aregularexchange of information takes place between the auditor andthe CFO.Information policyThe APG|SGA Group practices an open information policy towardthe financial market and the general public. The shareholdersreceive semiannual correspondence informing them about theGroup’s business performance.The annual report, the detailed Financial Report, the letters toshareholders, the stock price, and media releases are available atwww.apgsga.ch. Financial media and analysts conferences areheld at least once per year. The publication of share-price-relevantfacts is governed by the provisions governing the ad-hoc disclosurerequirements of SIX Swiss Exchange. Subscriptions to themedia 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, 2013Auditing fee and additional feesFor financial 2012, the auditing fee of Ernst &Young for servicesin conjunction with the auditing of the financial statementstotaled CHF 290,000. Ernst &Young charged an additionalCHF 73,000 for tax consulting.APG|SGA Annual Report 2012

52 Extract of the Financial ReportCondensed consolidatedbalance sheetAssets in CHF 1000 31.12.2012 31.12.2011Property, plant, and equipment 72 026 78 751Investments in associated companies 311 345Other financial investments 3165 5372Intangible assets 41 868 69 178Deferred taxes 16 030 14 733Non-current assets 133 400 168 379Inventories 2362 2746Trade accounts receivable 43 913 39 849Other accounts receivable 13 132 15 457Deferred expenses and accrued income 8109 6845Marketable securities 501 408Cash and cash equivalents 85 976 77 534Current assets 153 993 142 839Total 287 393 311 218Shareholders’ equity and liabilities in CHF 1000 31.12.2012 31.12.2011Share capital 7800 7800Group reserves 45 631 74 097Net income 50 079 41 787Equity held by APG|SGA SA shareholders 103 510 123 684Non-controlling interests 3543 2825Shareholders’ equity 107 053 126 509Provisions 61 335 56 425Deferred taxes 12 255 10 160Long-term financial liabilities 26 28Non-current liabilities 73 616 66 613Trade accounts payable 20 465 21 589Current accounts payable to banks 15 001Taxes payable 1138 1937Other accounts payable 30 102 23 444Accrued liabilities and deferred income 55 019 56 125Current liabilities 106 724 118 096Liabilities 180 340 184 709Total 287 393 311 218APG|SGA Annual Report 2012

Extract of the Financial Report 53Consolidated incomestatementin CHF 1000 2012 2011 ChangeAdvertising revenue 317 644 311 795 1.9%Real estate revenue 2456 2453 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%–ofwhich ordinary personnel expenses -68 205 -65 955 3.4%–ofwhich prior service income due to plan change 38 349Operating and administrative costs -37 630 -42 556 -11.6%Other income 1949 6391EBITDA 113 028 73 024 54.8%Depreciation -9 729 -11 341 -14.2%Amortization of intangible assets -4 447 -4 780 -7.0%Impairment -22 447 -785Operating income (EBIT) 76 405 56 118 36.2%Financial income 1722 468Financial expenses -2 192 -1 431Income from associates 26 62Income before income tax 75 961 55 217 37.6%Income tax -23 904 -12 236Consolidated net income 52 057 42 981 21.1%–ofwhich non-controlling interests 1978 1194 65.6%–ofwhich APG|SGA SA shareholders (net income) 50 079 41 787 19.8%Basic and diluted earnings per share, in CHF 17.03 14.23 19.7%Segmentinformationin CHF m Advertising revenue EBITDA Net incomeSwitzerland 2012 297.0 115.4 77.62011 280.5 71.8 47.9International 2012 20.5 4.0 -26.22011 31.2 8.9 -0.6Holding 2012 2.9 -6.4 -3.2Eliminations and non-allocated itemsof consolidated income2011 3.2 -7.2 -16.72012 -2.8 1.82011 -3.1 -0.5 11.1Total 2012 317.6 113.0 50.12011 311.8 73.0 41.8APG|SGA Annual Report 2012

54 Extract of the Financial ReportConsolidated statement ofcomprehensive incomeIncome 2012 Income 2011in CHF 1000 Gross tax effekt net Gross tax effekt netConsolidated net income 52 057 42 981Unrealized gains/losses on available-for-sale securities 111 -25 86 -25 1 -24Currency translation differences 995 995 2599 2599Actuarial gains/losses from defined benefit plans -68 023 16 171 -51 852 -28 239 7060 -21 179Comprehensive income 1286 24 377–ofwhich non-controlling interests 1969 833–ofwhich APG|SGA SA shareholders -683 23 544Consolidated statementof changes in equityShare ofAPG|SGA SA shareholdersTotalCapital Available- Non- SharereservesTreasury Translation for-sale Revaluation Retained controlling holders‘in CHF 1000 Share capital premiums shares differences securities reserves earnings Total interests equityas at January 1, 2011 7800 5632 -9 539 -19 927 187 46 059 69 550 99 762 1163 100 925Comprehensive income 2960 -24 20 608 23 544 833 24 377–ofwhich consolidated net income 41 787 41 787 1194 42 981–ofwhich other comprehensive income 2960 -24 -21 179 -18 243 -361 -18 604Changes in scope of consolidation 1471 1471Purchase of non-controlling interests 21 21 -21Distributions -621 -621Changes in treasury shares 332 25 357 357as at December 31, 2011 7800 5632 -9 207 -16 967 163 46 059 90 204 123 684 2825 126 509Comprehensive income 1004 86 -1 773 -683 1969 1286–ofwhich consolidated net income 50 079 50 079 1978 52 057–ofwhich other comprehensive income 1004 -51 852 -50 762 -9 -50 771Purchase of non-controlling interestsDistributions -20 589 -20 589 -1 251 -21 840Changes in treasury shares 1003 95 1098 1098as at December 31, 2012 7800 5632 -8 204 -15 963 249 46 059 67 937 103 510 3543 107 053APG|SGA Annual Report 2012

Extract of the Financial Report 55Condensed consolidatedstatement of cash flowsin CHF 1000 2012 2011Consolidated net income 52 057 42 981Depreciation and amortization, and impairment 37 281 16 906Unrealized gains/losses on securities 86 -24Change in provisions, taxes, and interest -51 823 7586Gain/loss from the sale of non-current assets -1 930 -3 439Income from associates -26 -62Cash flow 35 645 63 948Change in inventories 345 622Change in accounts receivable 601 4400Change in marketable securities -93 22Change in accounts payable 8900 1014Change in other deferred expenses, accrued income, accrued liabilities, and deferred -394 2727Net cash provided by operating activities 45 004 72 733Capital expenditures in non-current assets -5 366 -10 840Sale of non-current assets 4611 5499Net cash used in investing activities -755 -5 341Purchase and sale of treasury shares 1098 358Change in current accounts payable to banks -15 001 -15 769Change in long-term financial liabilities -2 -10Dividends to APG|SGA SA shareholders -20 589Distributions to non-controlling interests -1 251 -621Net cash used in financing activities -35 745 -16 042Currency translation effect on cash and cash equivalents -62 -69Change in cash and cash equivalents 8442 51 281Cash and cash equivalents as at January 1 77 534 26 253Cash and cash equivalents as at December 31 85 976 77 534Explanation of financial termsEBITDA Earnings before interest, taxes, depreciationof property, plant, and equipment, and amortizationof intangible assetsEBIT Earnings before interest and taxesFree cash flow Cash flow from operations minuscash flow from investmentsGearing Degree of debt, also called leverage:net debt in %ofequityNet current assets Trade accounts receivable plusinventories minus trade accounts payableNet debt Debt-serviced borrowed capital minusinterest-bearing current assets (cash and cashequivalents, marketable securities)Payout ratio Payout in %ofnet incomeP/E ratio Price/earnings ratio: Ratio of share priceto earnings per shareROE Return onequity: Net income in %ofaverageshareholders’ equityROIC Return oninvested capital: operating income in%ofaverage capital employed, without cash andcash equivalents, less interest-free liabilitiesThe detailed Financial Report has beenpublished in English. It is available free ofcharge or can be downloaded fromwww.apgsga.ch/reportAPG|SGA Annual Report 2012

56 ContactAPG|SGA SA23, rue des VollandesCase postale 6195CH-1211 Genève 6T+41 58 220 70 00F+41 58 220 70 97investors@apgsga.chwww.apgsga.chDigital and analog poster advertisingalong streets, on squares, in railwaystations, at points of sale, and points ofinterest:www.apgsga.chInternal and external advertising panelson public transport vehicles:www.apgsga.ch/trafficAirport advertising:www.apgsga.ch/airportFixed and temporary large poster panels:www.apgsga.ch/megaposterEngagementsAWS Outdoor Advertising SwitzerlandD/A/CH Exchange of Expertise CommitteeGermany/Austria/SwitzerlandFEPE Federation of Outdoor AdvertisingIFER International Federationof Railway Advertising CompaniesAdvertising and communication systemsin the mountains:www.apgsga.ch/mountainParticipating interestsRailway station poster advertising:www.impacta.chRailway station non-poster:www.ecofer.chInternationalSerbia:www.almaquattro.rsRomania:www.affichage.roAPG|SGA Annual Report 2012

SourcesPages 10–11, “90%”:Mobilität inder Schweiz, BFS 2012Pages 20–21, “44 million”:BFS, Bundesamt für Zivilluftfahrt,Linien- und Charterverkehr 2012Pages 26–27, “86%”:MACH Consumer 2012-2, WEMFPages 30–31, “5 million”:BFS, December 2012Pages 40–41, “40%”:Mikrozensus Mobilität und Verkehr,BFS 2012CreditsPublisher: APG|SGA SADesign: Wirz Corporate AG, ZurichLayout: Rolf Stocker, LucerneLithography and printing:UD Print AG, LucerneThis report is available inFrench,German, and English. The detailedFinancial Report isavailable inEnglish.Both documents are available freeof charge or can bedownloaded fromwww.apgsga.ch/report2013 ©APG|SGA SAAll rights reserved

Printed in SwitzerlandApril 2013