Couv Rapport GB_2010 18/05/11 16:20 Page1 2010 Annual report 2010 Annual report Document de Référence Shanghai TABLE OF CONTENTS COMPANY OVERVIEW 3 Financial highlights 4 The year 2010 6 The outdoor advertising industry 9 One business, three segments 18 Our advertisers 37 Sustainable development 39 Research and development 52 FINANCIAL STATEMENTS 54 Management discussion and analysis of group consolidated financial statements 55 Consolidated financial statements and notes 65 Management discussion and analysis of corporate financial statements 123 Corporate financial statements and notes 125 LEGAL INFORMATION 146 Corporate governance, internal control and risk management 147 Shareholders and trading information 174 Share capital 181 Other legal information 184 COMBINED ANNUAL MEETING OF SHAREHOLDERS, 11 MAY 2011 201 Agenda 202 Summary of proposed resolutions 203 Proposed resolutions 205 OTHER INFORMATION 221 Statutory auditors’ reports 222 Person responsible for the Annual Report and Persons responsible for the audit of the financial statements 230 Incorporation by reference In accordance with Article 28 of EU Regulation n°809/2004 dated 29 April 2004, the reader is referred to previous “Documents de référence” containing certain information: 1. Relating to fiscal year 2009: - The Management Discussion and Analysis and consolidated financial statements, including the statutory auditors’ report, set forth in the “Document de référence” filed on 16 April 2010 under number D 10-0283 (pages 57 to 124 and 224 to 225, respectively). - The corporate financial statements of JCDecaux SA, their analysis, including the statutory auditors’ report, set forth in the “Document de référence” filed on 16 April 2010 under number D. 10-0283 (pages 125 to 145 and 226 to 227, respectively). - The statutory auditors’ special report on regulated agreements with certain related parties, set forth in the “Document de référence” filed on 16 April 2010 under number D. 10-0283 (page 229). 2. Relating to fiscal year 2008: - The Management Discussion and Analysis and consolidated financial statements, including the statutory auditors’ report, set forth in the “Document de référence” filed on 10 April 2009 under number D.09-0229 (pages 51 to 117 and 213, respectively). - The corporate financial statements of JCDecaux SA, their analysis, including the statutory auditors’ report, set forth in the “Document de référence” filed on 10 April 2009 under number D.09-0229 (pages 118 to 141 and 214, respectively). - The statutory auditors’ special report on regulated agreements with certain related parties, set forth in the “Document de référence” filed on 10 April 2009 under number D.09-0229 (page 216). 1 2 COMPANY OVERVIEW Financial highlights 4 The year 2010 6 Our contracts 6 Partnerships, acquisitions and reorganisations 8 The outdoor advertising industry 9 Segments of the outdoor advertising industry 9 Outdoor advertising: an increasingly relevant communication channel 9 Competitive environment 15 One business, three segments 18 Our strategy 18 Street Furniture 19 Transport 26 Billboard 33 Our advertisers 37 Key advertisers 37 Characteristics of advertising contracts 38 JCDecaux OneWorld: serving our international advertisers 38 Sustainable development 39 Human resources 40 Relations with customers and suppliers 45 Relations with the community 46 Protecting the environmental policy 47 Carbon policy policypolicy 50 Research and development 52 3 FINANCIAL HIGHLIGHTS 2010 REVENUES BY REGION North America Rest of the world 8 % 4 % United Kingdom 12 % Europe (1) Asia-Pacific 33 % 18 % France 25 % (1) Excluding France and the United Kingdom REVENUES BY BUSINESS OPERATING MARGIN BY BUSINESS (in € million, segment’s share in %) (in € million, segment’s share in %) 2 350.0 555 2 168.6 550 1 918.8 Street Furniture 1 063.5 934.3 1 147.0 392 555 Street Furniture 397 298 376 49 % 49 % 49 % 72 % 76 % 68 % Transport 629.0 29 % 589.6 31 % 777.6 33 % 21 % Transport 82 15 % 56 115 476.1 394.9 425.4 14 % 22 % 20 % 18 % Billboard 71 13 % 38 64 11 % Billboard 10 % 2008 2009 2010 2008 2009 2010 In 2010, the Group’s revenue increased by 22.5% to Operating margin(1) increased by 41.7% to €555.4 million from €2,350.0 million. Excluding acquisitions and the impact of foreign €392.0 million in 2009. Operating margin as a percentage of exchange, organic revenue growth was 9.1%. Street Furniture consolidated revenue was 23.6%, up 320 basis points compared to revenues were €1,147.0 million, a increase of 22.8%. Excluding the prior period (2009: 20.4%), reflecting strong operating leverage acquisitions and the impact of foreign exchange, organic revenue in 2010. growth was 7.3%. Transport revenues grew by 31.9% to (1) Operating margin: Revenue less Direct operating expenses (excluding Maintenance €777.6 million. Excluding acquisitions and the impact of foreign spare parts) less SG&A expenses. exchange, organic revenue growth was 15.6%. Billboard revenues increased by 7.7% to €425.4 million. Excluding acquisitions and the impact of foreign exchange, organic revenue growth was 3.8%. 4 EBIT BY BUSINESS NET INCOME GROUP SHARE (in € million, segment’s share in %) (in € million) 173 279 236 194 82 % 108 62 % 123 Street Furniture 93 174 76 % 83 Transport 30 % 17 25 54 23 % 14 % Billboard 22 8 % -5 % 10 % -12 13 2008 2009 2010 2008 2009 2010 EBIT(1) increased by 127.2% to €279.0 million, down from €122.8 million in Net income Group share increased sevenfold to €173.3 million, compared to 2009. The Group’s EBIT margin was 11.9% of consolidated revenues €24.5 million in 2009. This growth reflects principally the increase of EBIT (2009: 6.4%). and the performance of equity affiliates. (1)EBIT: Earnings Before Interests and Taxes = Operating Margin less Depreciation, amortization and provisions, less Maintenance spare parts, less impairment charges, less other operating income and expenses. FREE CASH FLOW FINANCIAL NET DEBT /EQUITY RATIO (in € million) 327 35 % 32 % 165 148 17 % 2008 2009 2010 Free cash flow(1) amounted to €327.4 million in 2010, compared to €164.8 million in 2009, reflecting the rebound in net cash flow from operating 2008 2009 2010 activities, a tight control of working capital, and lower capital expenditure. In 31 December 2010 the net debt decreased by €311.2 million to €358.8 million compared to €670.0 million as of 31 December 2009. (1) Free Cash Flow: Net cash flow from operating activities less net capital investments (tangible and intangible assets). 2010 EMPLOYEE BREAKDOWN BY EXPERTISE EMPLOYEE BREAKDOWN BY REGION 9 937 9 943 9 370 Contractual relations Research & Development (1) 5 % 1 % Europe 2 826 3 401 3 295 Administration & Informatics 14 % France 3 740 3 596 3 504 Sales & Marketing Technical 22 % 58 % Asia-Pacific 1 633 1 621 1 695 United Kingdom 646 567 651 212 204 North America 225 Rest of the world 300 540 594 2008 2009 2010 (1) Excluding France and the United Kingdom FINANCIAL HIGHLIGHTS > 5 THE YEAR 2010 In 2010 we continued our strategy of organic and external growth and became the number one outdoor advertising company in the world. 2010 saw a rebound in advertising spending in all markets where the Group operates. In 2010, as in 2009, the tender activity remained limited, specifically in France. Nevertheless JCDecaux won important new and renewed contracts in developed markets, such as the contracts with Aéroports de Paris or British Airport Authority or the contract to provide advertising bus shelters for Montpellier’s tramway and bus network, a contract that we lost in 2000. We were also active in fast growing markets with the gain of the Singapore Changi airport, considered as the best airport in the world in terms of passenger service or the gain of the concession for the 26 airports in Saudi Arabia. We also deployed the concept of self-service bicycle outside of Europe with the launch of the systems in Brisbane, Australia, and Toyama, Japan. Finally in January 2010, JCDecaux acquired certain assets of Titan Outdoor UK Ltd in the United Kingdom, which significantly reinforced our Transport division. 1. OUR CONTRACTS Europe . In France, we won the following public tenders: . the street furniture contract with the city of Tours (136,500 inhabitants), the Joué-les-Tours suburb (36,500 inhabitants) and the Intercommunal Transport Union of the Touraine Urban Community (SITCAT) for a 15 year period. This advertising street furniture contract covers the installation and maintenance of 222 MUPI® (free-standing information panels) and 75 large-format (8m2) Senior® billboards for Tours and Joué-les-Tours, 5 advertising columns and 5 public toilets, including 4 offering universal access for Tours. JCDecaux will also install 100 shelters for Tours’ first tramway line and 207 bus shelters for the SITCAT. through JCDecaux Aiport, the advertising contract at Bordeaux Airport for an 8 year period. Handling a total of 3.3 million passengers in 2009, Bordeaux Airport is France’s fifth largest regional airport. Innovative digital and experiential advertising networks will be set up, that will further enhance advertisers’ ability to reach audiences and will make a significant contribution to our commitment to sustainable development. through JCDecaux Aiport, the renewal of its contract to operate indoor and outdoor advertising space in Lille-Lesquin Airport for an 8 year and a half period. Handling a total of 1.14 million passengers in 2009, Lille- Lesquin Airport is France’s tenth largest airport. the contract to provide advertising bus shelters for Montpellier’s tramway and bus network for a period of 19 years and 6 months. Held by Clear Channel Outdoor for the past 10 years, the contract was signed by the Montpellier Transport Authority (TAM) on behalf of the Montpellier urban Community (France’s 19th largest conurbation with a total of 412,000 inhabitants, Montpellier : France 8th largest city).