llustrator: Cecilia Lundgren Cecilia llustrator: I Metro International S.A. Annual Report 2010 Annual Report 2010 Table of contents This is Metro 3 Introduction 3 Our business 4 Our target audience 7 Financial summary 9 CEO statement 10 Operational Review 11 The Metro Share and shareholders 16 Corporate governance 17 The Company 17 Annual General Meeting 17 The 2010 Annual General Meeting 17 Nomination Committee 17 Board of Directors 17 The Board’s responsibility and work during 2010 19 Remuneration Committee 19 Audit Committee 20 Remuneration of the Board 20 Evaluation of the Board 20 Executive Management 21 External auditors 22 Internal control 22 Control environment 22 Risk assessment 22 Control activities 23 Information and communication 23 Monitoring 23 Directors’ report 24 Management responsibility statement 25 Independent auditors’ report 26 Financial statements 27 Consolidated statement of comprehensive income 27 Consolidated statement of financial position 28 Consolidated statement of changes in equity 29 Consolidated statement of cash flows 30 Notes 31 Contact details 58 For more information, please visit www.metro.lu Financial Calendar 2011 03 February 2011 Fourth Quarter Results 2010 15 April 2011 First Quarter Results 2011 26 May 2011 Annual General Meeting 18 July 2011 Second Quarter Results 2011 17 October 2011 Third Quarter Results 2011 2 IntrodUCTION Annual Report 2010 Investment Highlights Growing global advertising market Track record Market leader of emerging and strong brand markets expansion Attractive reader demo- Vehicle for graphics expansion into new media Continuing urbanization OUR MISSION OUR VISION We are the world’s largest newspaper, we We want to become the most successful inform and entertain in a smart and effec- media company and the first choice for tive way: on-line and off-line. urban people and global brands. OUR STRATEGY FOR GroWTH OUR FinanCIAL TarGETS Geographical expansion in Latin America, Positive group EBIT development year-on- Asia and Russia. Consolidation in mature year. 15 percent EBIT margin in existing markets. Further investments in online operations by 2012. Double digit Group products and development of other brand EBIT margin by 2012. extensions. 3 OUR BUsiness Annual Report 2010 WORLD AMERICAS EUROPE ASIA Countries 20 Countries 7 Countries 11 Countries 2 Editions 62 Editions 22 Editions 37 Editions 3 Cities 127 Cities 35 Cities 86 Cities 6 Circulation 8,000,000 Circulation 2,200,000 Circulation 4,800,000 Circulation 1,000,000 Readership 16,900,000 Readership 4,200,000 Readership 11,300,000 Readership 1,400,000 Metro’s revenue comes from advertising. Our clients range from global brand advertisers with creative multi-market advertising Free daily newspapers campaigns, to small local businesses. Advertisers spend their mon- ey with us because we have the most efficient vehicle to deliver their messages to the target audience. free daily newspaper titles are We compete with other communication channels including on- published in 53 countries line, TV, outdoor, sponsorships, mobile, other print titles – not only across the world for advertising budgets but also for media consumer’s time and attention. The Metro newspaper is consumed at a unique time for media consumption, the 20 minute morning commute; we call it “the Metro moment”. Metro has revolutionized the print media industry with its smart format, unique distribution and ability to attract a large, hard-to-reach young, active, urban audience. copies of free daily newspapers are distributed every day across the world Thereby Metro differs from paid for newspapers which typically have older readers. Paid for newspapers struggle with declining cir- culation. Free daily newspapers experience no difficulty in attract- ing young readers with the number of readers per copy going up. Today free daily newspapers are published in virtually every major metropolis around the world; their circulation has more than dou- of total worldwide daily bled in the past 5 years. One out of five newspapers published in increase in free daily newspaper circulation is free Europe are free, 35 million copies a day are published world-wide. newspaper circulation over the past 5 years The Metro moment is challenged by mobiles and tablets. To re- (2005–10) main the most relevant media for our readers, we are investing in the newspaper. A new design, unique original content, world leader interviews, global editions dedicated to special causes and daily newspaper partnerships, will take us from ”nice to read” to ”need to read”. copy is free in Europe We also invest in online and mobile products to extend the Metro moment throughout the day. We do this by building strong verti- cals in areas in which we already have a strong position in print, such as recruitment and travelling. In 2010 we celebrated the 15th anniversary of the free daily news- paper. The reason behind the success of free daily newspapers is the ability to constantly innovate and adapt to the needs of the 21st century consumer. We will stay loyal to our low-cost DNA and entrepreneurial spirit. of free daily newspaper of free daily newspaper This will enable us to continue to improve the financial perform- circulation in the world circulation in the world ance while also investing in existing and new markets, online and is provided by Metro is provided by Metro and offline. commercial partners Metro reaches most affluent readers in Europe of all medias. 4 OUR BUsiness Annual Report 2010 There are things only the world’s largest newspaper can do Exclusive interviews with film stars, celebrities, musicians; sitting down with heads of state and politicians; in-depth reporting; partnerships with global brands like CNN. Global campaigns: Green Met- ro, Happy Metro, Cool Metro, Kids Metro, and many more. Weekly sections: travel, fitness & wellbeing, style, eco-living and automotive segments, food. Metro World News Some things, only the world’s largest global newspaper can do. Metro World News operates along two lines: the collection and While other media owners are closing foreign and domestic bu- distribution ofportable locally generated content; and central pro- reaus, reducing staff, strengthening their reliance on wire and pool duction of original, exclusive content. This content is published in reporting, and generally tightening their belts, we do the opposite: all Metros, and reaches 37 million readers every week. investing in our product. Our strategy is to invest in increasing the What others charge for, we provide for free. Where others re- quality of our newspapers with exclusive content, revitalize our duce, we invest. Where others stagnate, we innovate. There really presentation and revolutionize our brand perception. are some things only Metro can do. Online Metro’s online properties make available new ways to interact with urban people on the move in metropolitan areas across the plan- et. Metro reaches over 10 million unique users in digital channels every month with content and services specifically tailored to them. We inform, entertain and engage people in conversation regard- less of means of access as they progress through their day. In 2010, the online team provided the most flexible and powerful catalogue of advertising solutions in our 15 year history – rich me- dia takeovers, sponsored custom solutions, integrated advertorials and cutting edge mobile advertising. Add the opportunity to com- bine with our print solutions and there is, quite simply, no match. 5 You’ll this. DOWNLOAD THE NEW METRO APP FOR YOUR BLACKBERRY, iPHONE AND iPAD. FREE from the Blackberry App World and the App Store. OUR BUsiness Annual Report 2010 There are things only the world’s largest newspaper can do Creative advertising The team delivers a unique centralized solution to interna- Ordinary newspapers simply sell space. At Metro, we take a tional advertisers needs. Hyundai, Aviva and Sex and the City proactive approach that offers advertisers much more, both in 2 are examples of global advertisers which the Global Sales terms of service and results. Our award-winning Global Sales team delivered big campaigns for in 2010. The latter one ran team can provide the expertise to deliver truly international in five markets: France, Italy, Spain, Russia and UK and resulted marketing. Working across each of the 20 Metro countries, in a 100% ad recall, 47% intention to purchase tickets, 48% the Global Sales team drives and coordinates international visits the campaign microsite and 70% enters the campaign campaigns. competition. Global events Metro Photo Challenge is one of the world’s largest global pho- to competitions. It offers tremendous exposure in publishing the winning images in Metro publications worldwide, reaching over 40 million urbanities in the world. The 2010 edition, which was the third globally, ran in 17 Metro territories. Nigel Barker, fashion photographer and judge on the show “America’s Next Top Model”, chaired the jury panel. The competition attracted 157,000 photo entries and 415,000 unique visitors to the of- ficial website with 7 million pageviews. Its truly international scale and uniqueness in reaching urban audiences have attract- ed sponsors such as Canon, Fuji, Nikon and Adobe. 6 OUR target AUDIENCE Annual Report 2010 Our target audience The Metropolitans Until quite recently, humans were still predominantly rural dwell- ers. At the beginning of the last century only 1 in 10 humans were living in cities. Today, 1 in 2 people on earth live in cities. As the urban lifestyle becomes the norm, a shared mindset is emerging and it has little to do with nationality. We call it the Metropolitan 70% lifestyle. have a laptop 43% The constant melding of cultures, ideas, races at every level in have a the modern city produces the common Metropolitan mindset: in- smart novative, creative, excited by new challenges. phone It is a matter of lifestyle: Metropolitans likes to be close to eve- rything they need. The Chinese supermarket, the arty cinema, the French café, the all-night pharmacy – all kinds of things you would not find in smaller towns because there is no market for it.