How did PubliGroupe perform · PubliGroupe — Annual Report 2012 Overview key figures PubliGroupe PubliGroupe, registered share Swiss Performance Index (SPI) Media Sales Search &

How didPubliGroupeperform in 2012?

Annual Report 2012

PubliGroupe — Annual Report 2012

Overview key figures PubliGroupe

PubliGroupe, registered share

Swiss Performance Index (SPI)

Media Sales Search & Find Digital & Marketing Services

Development of PubliGroupe share price compared with the SPI in % (base: 100, 1 January 2010) in CHF

2010 2011 2012 2013

180

170

160

150

140

130

120

110

10090

80

70

PubliGroupe, registered share Swiss Performance Index (SPI)

Key figures 2012

2012 2011Restated (1)

Billings(2) -13% 1’134.6 1’305.0

Net revenue -17% 285.1 343.1Share in result of associates -7% 27.4 29.4Operating result -93% 1.6 21.9Non-operating result - 66.1 20.7Result attributable to shareholders of PubliGroupe Ltd +81% 50.2 27.7Number of employees at the end of the period -22% 1’ 702 2’173

(1) Restatement due to the change to Swiss GAAP FER.(2) Billings represent the gross amounts billed to clients (including the value of ad space).

in millions of CHF


Key figures 2012

* Pro forma segment reporting

with proportional consolidation of local.ch and Zanox in millions of CHF

Search & Find Digital & Marketing Services

2012 2011 2012 2011

Billings(2) -1% 111.3 112.6 -7% 353.2 378.0

Net revenue -1% 110.5 111.6 -5% 291.6 306.1

Share in result of associates - - - - - -

Operating result -10% 21.7 24.2 -9% 12.9 14.2

Non-operating result - - - - 10.3 -

Result attributable to shareholders of

PubliGroupe Ltd -14% 16.6 19.4 +136% 15.8 6.7

Segment reporting in millions of CHF

Media Sales Search & Find Digital & Marketing Corporate & Others

2012 2011 2012 2011 2012 2011 2012 2011

Billings(2) -13% 895.4 1’030.9 +3% 145.3 140.9 -27% 89.8 123.3 -43% 11.4 19.8

Net revenue -14% 149.4 174.3 -3% 103.2 106.4 -47% 27.7 52.1 -41% 11.4 19.1

Share in result of associates - - - +2% 15.3 15.0 -9% 7.3 8.1 -25% 4.8 6.3

Operating result - -16.1 -5.1 -18% 22.4 27.2 -18% 6.1 7.4 +26% -11.7 -9.3

Non-operating result - 3.0 -0.5 - - - - 10.3 - +135% 53.7 22.9

Result attributable to shareholders of PubliGroupe Ltd +84% -13.5 -7.4 -14% 16.6 19.4 +136% 15.8 6.7 - 31.3 9.0

Number of employees at the end of the period -11% 1’066 1’196 - 512 512 -85% 59 387 -17% 65 78

(1) Restatement due to the change to Swiss GAAP FER and intersegment transfers.

(2) Billings represent the gross amounts billed to clients (including the value of ad space).

Key figures - Business segments

* Consolidation of local.ch and Zanox – pro forma figures:

In order to more clearly describe the business development and performance of the segments Search & Find (for local.ch) and Digital & Marketing Services (for Zanox), a pro forma segment presentation for the two segments has been added. The term "pro forma" refers to the presentation with proportional consolidation. The pro forma segment reporting is not part of the Swiss GAAP FER consolidated financial statements.

restated(1) restated(1) restated(1) restated(1)

pro forma* pro forma* pro forma* pro forma*

(2) Billings represent the gross amounts billed to clients (including the value of ad space).


Index

Group

Message from the Chairman 2Message from the CEO 5General Comments 7Strategy 11Business model 15

Business segments

Media Sales 18Search & Find 22Digital & Marketing Services 25

Code of Conduct and Human Resources

Code of Conduct 28Human Resources 29

Corporate Governance

Board of Directors 33General Management 35Information pursuant to the SIX Swiss Exchange directive 37

Financial Report

The financial report 2012 is available for download at www.publigroupe.com

http://www.publigroupe.com


1

GroupBusiness segmentsCode of Conduct and Human ResourcesCorporate Governance


2Group Message from the Chairman

Dear Shareholders

For 2012, PubliGroupe is able to announce a net result of CHF 50.2 million. This is a strong result at first glance – albeit one that cannot be attributed to operating excellence, as this performance is primarily due to the sale of four real estate build-ings in Lausanne and the sale of Namics.

On the operational level, only two out of three business segments provided good results: Digital & Marketing Services and Search & Find. Media Sales once again turned in a very unsatisfactory result in 2012. On a Group level, a modest operating result of CHF 1.6 million versus CHF 21.9 million in 2011 (restated to Swiss GAAP FER) was yielded.

In 2012, the traditional media and print market saw further declines in revenues, impacted by the weakened economic environment and the still looming debt crisis.

The marketing and advertising industry continues to head in a digital and screen-based direction and seek new adver-tising formats for smartphones, digital and interactive TV, just to name a few, increasingly shifting traditional advertis-ing budgets towards new dissemination channels.

In this environment, in 2012, the total billings of the Group dropped by 13% from CHF 1’305 million to CHF 1’134.6 million. The net revenue decreased by 17% from CHF 343.1 million to CHF 285.1 million.

Publicitas must get profitableAt Publicitas with its still heavy footprint in print sales (in particular in Switzerland), we were again unable to cope with these dramatic changes in the market. We did manage to cut costs at a significant rate, realising savings of over CHF 14 million compared to 2011, and we accelerated our optimisation plans announced in December 2011.

Yet in the end, these cost measures were not enough to avoid another year with a substantial operating loss of CHF 16.1 million. Downsizing costs accounted for CHF 6.1 million of this loss.

The Board of Directors has made it clear that Publicitas must return to operating success through a variety of defensive and offensive measures. By 2014, and even more so in 2015, Publicitas shall provide a positive operating result for the Group under the leadership of Alain D. Bandle who took over as the new CEO of Publicitas on 1 March 2013.

In 2013, further cost reductions that have already been implemented and new, mostly digital business should allow Pub-licitas to reach a break-even operating result in a still diminishing print market environment.

The operating leader in profitability in 2012 was once more Search & Find with local.ch. Zanox confirmed its leading market position in Europe.

Introduction of "one share - one vote" in 2014

Hans-Peter Rohner Chairman of PubliGroupe

Returning CHF 47 millionto shareholders


3

The organisational alignment of the three entities LTV Gelbe Seiten AG, Swisscom Directories AG et local.ch AG under one branding roof "local.ch" in 2010 contin-ues to show positive effects in terms of cost synergies and administrative effi-ciencies, higher levels of innovation, es-pecially in the field of mobile applications, better team spirit and lower IT costs.

local.ch is a successful company and we will continue to invest in this successful partnership with Swisscom.

The business segment Search & Find, which also contains local.fr, generated an operating result of CHF 22.4 million in 2012.

Zanox, the leading performance adver-tising network in Europe, was able to consolidate its dominant market position. When we acquired Zanox in 2007, it had sales of EUR 206 million while Tradedou-bler, the clear number one at that time, stood at EUR 286 million sales. In 2012, the situation has completely reversed. With EUR 461 million in sales, Zanox is now substantially larger than Tradedou-bler at EUR 269 million.

Together with our co-shareholder Axel Springer AG, we will continue to develop Zanox, seeking organic evolution, growth through acquisitions and geographic expansion under the new leadership of Thomas Joosten, who replaced Philipp Justus following his departure from the Group in February 2013.

Within the digitally dominated segment Digital & Marketing Services (DMS), PubliGroupe took key decisions that represent the new thinking that will be applied going forward: concentration on performance-oriented businesses and technology-based, scalable solutions for advertisers with the goal of optimising their marketing expenditures.

For this reason, we decided to sell Namics to its twenty-two partners. For many years, Namics was a subsidiary of PubliGroupe with solid, continual growth and has served as an important supplier of know-how for the entire group. As a highly consulting-oriented company with very limited options to scale up, however, a partnership basis with a corresponding ownership structure is better suited to the current business model of Namics.

On the other hand, we developed two activities in the field of programmatic buying and real-time advertising (RTA). We acquired 85% of Improve Digital, a leading European provider of sell-side platform (SSP) technology and services based in the Netherlands, and created a new company Spree7 in partnership with MediaMath, the leading demand-side platform (DSP) provider that caters to marketers’ media buying needs.

What is extremely interesting about these deals are the options they offer in terms of traditional media sales. Improve Digital, for instance, enables Publicitas to build a product and service offering allowing premium media owners to monetise a higher percentage of their online inventory in a safe and controlled manner.

The business segment DMS saw an operating result of CHF 6.1 million in 2012. On a pro forma level, including a proportional consolidation of Zanox, the operating result stood at CHF 12.9 million.

High-level digital expertise with new CEO of PubliGroupeFor a number of years, PubliGroupe and, in particular, the business segment Media Sales with Publicitas have been engaged in a process of transformation away from pure print marketing towards becoming a digital full-service provider. The nomination of Arndt C. Groth as the new CEO of the Group as of 1 Septem-ber 2012 will help further accelerate this development.

Arndt C. Groth is a proven expert in the area of online marketing who previously played a leading role in the European ex-pansion of one of the largest independ-ent global marketing networks. He is also an expert in the marketing business and is familiar with the print world from his own experience at the beginning of his impressive professional career.

The Board of Directors and I will support Arndt C. Groth with all available means in his future strivings to make PubliGroupe a leading marketer of digital media along-side traditional print marketing and to provide its customers with services along the entire marketing value chain – from branding and display up to search and performance marketing.

Group Message from the Chairman


4

CHF 47 million to be returned to shareholdersIn view of the overall positive result and the proceeds achieved from the sale of non-strategic assets, the Board of Di-rectors decided in December 2012 that PubliGroupe will return to shareholders CHF 45 million of funds generated by selling properties. This amount has now been brought to around CHF 47 million. To this end, the Group started a share buy-back programme in January 2013 of up to CHF 25 million.

For the balance, the Board of Direc-tors decided to pay out a dividend in the amount of CHF 10 per share (total amount of CHF 22 million), to be ap-proved by the shareholders at the 2013 AGM on 30 April in Lausanne.

At the end of 2012, the Group’s equity, attributable to shareholders of Publi-Groupe Ltd., amounted to CHF 195.6 million, or 37% of the total assets. Long-term bank debt was also reduced and came to CHF 40.3 million.

Immediate implementation of initial elements of the Minder initiativeThe PubliGroupe Board of Directors has decided to implement initial elements of the Minder initiative at the Annual General Meeting on 30 April 2013. These include the election of Christian Unger and the reelections of Pascal Böni (board member since 2007), Andreas Schönen-berger (2010) and Kjell Aamot (2010) for a year (compared to the previously existing term of three years). In addition, the Annual General Meeting will also vote on the fixed compensation of the Board of Directors and the management for 2013. The details on these agenda items are presented in detail in the invitation to the General Meeting. The remaining elements of the initiative will be intro-duced in 2014.

At the AGM 2012, we expressed our fundamental support of the "one share – one vote" proposal brought forward by our shareholder zCapital while explaining our view that the most opportune time for its introduction would be 2013 or 2014 at the latest after the successfully concluded transformation process of Media Sales.

The Board of Directors examined this issue on various occasions over the last twelve months and decided to schedule the introduction of "one share – one vote" for 2014.

At this Annual General Meeting in 2013, two very highly esteemed members of the Board will retire from their posts after nine years and ten years of service respectively.

Eliane Borter has been a most esteemed member since 2004, representing a long-time shareholder. With her deep under-standing of the business, her humanity and her sensitivity to personnel issues, she has contributed decisively to the de-velopment of PubliGroupe. Peter Brunner was elected in 2003 and has made important contributions to the Board with his international business acumen and financial competence.

Both colleagues also played an impor-tant role in the recent top management composition decisions at PubliGroupe.

On behalf of the shareholders, the Board of Directors and all staff, I would like to thank Eliane Borter and Peter Brunner very much indeed for their tremendous dedication and successful contributions and wish them well in every way for the future.

At the same time, I am happy to an-nounce that we will propose Christian Unger (45) to be elected to the Board of Directors. Christian Unger is a renowned media specialist and was Chief Executive Officer of Ringier Group from January 2009 until April 2012. Since March 2013, Christian Unger is Managing Director at Partners Group and responsible for Partners Group’s TMT practice. Christian Unger began his career at Bertelsmann Group where he held various internation-al management positions.

On behalf of the Board of Directors, I would like to take this opportunity to express my sincere thanks to the management and all employees for their dedication over the past year.

And to you, esteemed shareholders, I thank you for your trust in our company and join with the entire Board of Direc-tors in pledging that we will do everything in our power over the coming months to ensure that PubliGroupe fulfils the markets’ rightful expectations of us as a digitally competent services company.

Yours sincerely

Hans-Peter RohnerChairman of the Board

Group Message from the Chairman


5Group Message from the CEO

Dear Shareholders

"In a few hundred years, when the history of our time will be written from a long-term perspective, it is likely that the most important event historians will see is not technology, but the unprecedent-ed change in the human condition. For the first time, people have choices."

Peter F. Drucker, the American econo-mist and management guru of Austrian descent, was right in his prediction. Technological innovations are not the reason for the biggest changes im-pacting our industry; they are merely a means to an end. The greatest para-digm shift lies in the fact that today’s consumers can choose how, when and where they consume information and share it with others.

Consumers choose their media, the preferred channel and time of consump-tion and even increasingly exert a direct influence on the media’s content.

Strategic focus neededIt has been six months since I took over as CEO of PubliGroupe. An intense half year, which I have used to better under-stand the company and determine what needs to be done to achieve success across all segments. In particular, Media Sales and Publicitas need to get back onto the path of growth and profitability. Cutting costs in a shrinking market is not a viable long-term solution.

At the Investors’ Day in December 2012, we presented our strategy for

delivering on our ambition to be a key player in the media and marketing field in Switzerland and across Europe.

We detailed our anticipation that the print market will continue to decline while digital and mobile further gain in importance, reshaping the entire market landscape and affecting previous value chains between advertisers and pub-lishers.

At the same time, the automation of trading between the buy- and sell-side will rapidly grow in relevance and the move towards technology-oriented media buying and selling will continue, requiring market actors to attain the highest possible degree of automation while relying on the predictive power of big data.

Today’s highly scattered marketplace will see consolidation in which primarily only premium inventory will still rely on personal sales and a high degree of customisation. Large parts of publisher inventory and advertising space and therefore the majority of media buying and planning will be increasingly com-moditised.

In our strategy for the future, we made it clear that we are preparing PubliGroupe and its companies for exactly this type of market environment. New measures are being taken with immediate effect to be leaner and more flexible, innovative and entrepreneurial.

Offer a high-performance networkLooking ahead to the future, the guiding principle for PubliGroupe is to offer a high-performance regional, national and international network.

The media business will continue to be our primary DNA, but we will seek to accelerate the automation of processes, focusing on connecting supply and de-mand and increasingly offering self-ser-vice solutions and IT platforms for print ad processing and automated trading (DSP or SSP technology) as well as CRM tools, media buying and planning software and services.

I would like to thank you, dear share-holders, for the faith you have shown in our company. In particular, I would like to thank all our employees for the warm welcome I have received and the tre-mendous spirit I have had the privilege to discover.

I am greatly impressed by the willing-ness to move ahead and embrace change at PubliGroupe and most notably at Publicitas, our traditional Media Sales segment. That is the key to unlocking the potential I see within our Group, across all segments.

Yours sincerely

Arndt C. Groth CEO

Arndt C. Groth CEO of PubliGroupe

PreparingPubliGroupefor the future market environment


6

PubliGroupe

Search & Find Media Sales Digital & Marketing Services

"Transformation and growth in sales and services"

› Further develop mobile & digital offering

› Invest in transaction-oriented fields (ie online booking)

› Increase sales force efficiency and effectiveness

› Leaner group structure

› Management of non-strategic assets

› Redefine publisher relationships to obtain operational autonomy

› Accelerate growth initiatives and growing digital

› Further harmonizing processes + IT

› Capitalise on Zanox leadership in Europe

› Materialise on key trends – RTA, mobile, data

› Strengthening portfolio through M&A

Corporate & others

Strategic themes per segment

Group Message from the CEO


7Group General Comments

Good operating results for two out of three segments

Highlights

local.chAgain most important earnings contributor

PublicitasSubstantial lower cost base as basis for the future

ZanoxExpansion of market leadership

Key Figures

50.2 net result in millions of CHF

1'134.6billings in millions of CHF

The sale of a significant portion of the real estate portfolio and Namics allowed PubliGroupe to achieve a net profit for the Group of CHF 50.2 million for 2012 after CHF 27.7 million in 2011 (restated; 2011 figures were restated according to Swiss GAAP FER in order to be compa-rable with 2012).

On the business level, as in the previous year, Media Sales provided disappoint-ing results in 2012 facing a very difficult print market environment that experi-enced further sharp declines.

Search & Find and Digital & Marketing Services (DMS) provided solid results within expectations.

In 2012, PubliGroupe showed a small operating result of CHF 1.6 million ver-sus CHF 21.9 million in 2011 (restated).

In 2012, the total billings of the Group that represent the gross amounts billed to clients (including the value of ad space) dropped by 13% from CHF 1’305.0 million to CHF 1’134.6. The net revenue decreased by 17% from CHF 343.1 million to CHF 285.1 million.

At the end of 2012, the Group’s equity, attributable to shareholders of Publi-Groupe Ltd, amounted to CHF 195.6 million, or 37% of total assets. Long term bank debt was also reduced and, at the end of 2012, came to CHF 40.3 million

(versus CHF 50.0 million in 2011 restated).The net liquidity of the Group was CHF 174.2 million at the end of 2012.

PubliGroupe enjoys a solid financial situation and disposes of sufficient funds to finance future growth – even after the returns to shareholders as described under the section relating to the share buy-back programme.

The FTE count at the end of 2012 was 1’702 compared to 2’173 at the end of 2011. A large number of these 471 fewer FTEs are related to the sale of Namics and the downsizing of Media Sales, partially compensated with the creation of new jobs in the digital arena – especially at Publicitas.

Media Sales with negative result – significant downsizing costsFor 2012, Media Sales shows an oper-ating loss of CHF -16.1 million, despite a reduced cost base (total expenses) of CHF 14.1 million compared to 2011. Downsizing costs reached CHF 6.1 mil-lion in 2012 and CHF 3 million in 2011.

In 2012, the continued shift away from print to digital and other, i.e. electron-ic, markets persevered, rendering the optimisation measures implemented in the business year as insufficient to fully make up another loss of the net revenue of 14% from CHF 174.3 million to CHF 149.4 million in 2012.

Sale of non-strategic assets led to a Group net profit of CHF 50.2 million

2012 2011Restated (1)

Billings(2) -13% 1’134.6 1’305.0

Net revenue -17% 285.1 343.1Share in result of associates -7% 27.4 29.4Operating result -93% 1.6 21.9Non-operating result - 66.1 20.7Result attributable to shareholders of PubliGroupe Ltd +81% 50.2 27.7Number of employees at the end of the period -22% 1’ 702 2’173

(1) Restatement due to the change to Swiss GAAP FER.(2) Billings represent the gross amounts billed to clients (including the value of ad space).

PubliGroupein millions of CHF


8

As from 2012, the net revenue of Media Sales corresponds to the commissions actually earned and not to the total billings of ad space. Billings were down by 13% in 2012, from CHF 1’030.9 million to CHF 895.4 million for 2012.

The net revenue of international busi-ness, which represents around 24% of the total Media Sales business, saw a decline of 17% to CHF 36.5 million in 2012 (previous year: CHF 44.2 million). The downturn is due to the weakness in the advertising business, especially in the European and US markets, and to the sale of the business in Australia in 2011.

Break-even result anticipated for Media Sales in 2013In 2013, already implemented cost reduction measures and new, mostly digital business should allow Media Sales to reach a break-even operating result in a still-diminishing print market environment.

At the end of 2012, the headcount (FTE) in the business segment Media Sales was 1’066 (FTE) compared to 1’196 at the end of 2011.

Search & Find with good resultsThe business segment Search & Find, which includes LTV Gelbe Seiten AG and the French entities of local.fr that are fully consolidated and PubliGroupe’s share in the result of the two associates Swisscom Directories AG and local.ch AG again proved to be the most impor-tant earnings driver with an operating result of CHF 22.4 million versus CHF 27.2 million in 2011.

The net revenue of the segment was slightly smaller at CHF 103.2 million against CHF 106.4 million in the previ-ous year.

On a pro-forma basis (with proportional consolidation), more adequately de-scribing the joint-management and gov-ernance structure of the three units LTV Gelbe Seiten AG, Swisscom Directories AG and local.ch AG, the segment’s operating result decreased from CHF 24.2 million in 2011 to CHF 21.7 million in 2012. The pro-forma net revenue of the segment Search & Find decreased slightly by 1% to CHF 110.5 million.The decrease in operating performance is partially due to personnel and sales expenses in relation to three-year contracts.

Order intake for a three-year period shows a growth for the years to come. local.ch has been able to successfully manage the double migration process from print to online and from broad screen to mobile and smartphone.

In 2012, the local.ch app became one of the most popular applications downloaded via smartphones and tablets, with over 2.3 million downloads in Switzerland. Local.ch further became number one in terms of access by unique clients. In January 2013, the online service was called upon almost 4 million times as calculated by NET Metrix Audit.

At the end of 2012, the headcount (FTE) in the business segment Search & Find was 512 (FTE), the same as end 2011.

-30 -20 -10 0 10 20 30

201220111

-5.1

-16.1

27.2

22.4

7.4

6.1

-9.3

-11.7

-18%

-18%

26%

Media Sales

Search & Find

Digital & Marketing Services

Corporate and Others

0 50 100 150 200

201220111

174.3

149.4

106.4

103.2

52.1

27.7

19.1

11.4

-14%

-3%

-47%

-41%

Media Sales

Search & Find

Digital & Marketing Services

Corporate and Others

Net revenue by business segmentin millions of CHF

Operating result by business segmentin millions of CHF

Group General Comments

(1) Restatement due to the change to Swiss GAAP FER.

(1) Restatement due to the change to Swiss GAAP FER.


9

DMS with key associate Zanox performs within expectationsThe 2012 results of DMS were influ-enced by non-recurring factors. The segment’s net profit was CHF 15.8 million (CHF 6.7 million in 2011) as it benefited from the gain of CHF 10.3 million on the disposal of Namics.

At the operating level, the 2012 result was CHF 6.1 million compared with CHF 7.4 million in 2011. The drop in the operating result was due primarily to the sale of Namics, to lower results at Zanox and to start-up costs relating to Spree7.

Segment net revenue is down at CHF 27.7 million in 2012 compared with CHF 52.1 million in the prior year period. The contraction mainly stems from Namics which was only consolidated from Jan-uary to mid-June 2012. As with Media Sales, DMS revenue is reported accord-ing to the commissions actually earned and not the total billings of ad space.

Through the perspective of pro forma, including a proportional consolidation of Zanox, the segment’s operating result was CHF 12.9 million compared to CHF 14.2 million in 2011, a decline of 9%. On a pro forma basis, net revenue was CHF 291.6 million versus CHF 306.1 million in 2011, a decline of 5% driven by the sale of Namics.

In a more competitive European market – with an increasing number of compet-itors and offerings – Zanox was able to strengthen its leading position and con-tinue its expansion strategy in new mar-kets. In 2012, Zanox revenue reached EUR 461.4 million, an increase of EUR 21.4 million compared to the prior year. 2012 EBITDA of EUR 28.0 million was slightly down compared to the year before (EUR 28.3 million). Lower gross profit margins and higher development costs were largely compensated by efficiencies across the network.

In December 2012, PubliGroupe com-pleted the acquisition of 85% of Improve Digital, a leading European provider of sell-side platform (SSP) technology and services based in the Netherlands. With this acquisition, the Group takes an important step in its development in the digital industry.

At the end of 2012, the headcount (FTE) at the business segment DMS was 59 (FTE) compared to 387 at the end of 2011. A considerable proportion of the reduction stems from the sale of Nam-ics. 324 employees worked at Namics at the end of 2011.

Corporate and Others: good netresult thanks to the disposal ofnon-strategic assetsThe operating result for Corporate & Others is lower than in the previous year. The operating result dropped from CHF -9.3 million in 2011 (restated) to CHF -11.7 million in 2012. Share in result of associates was lower than in the pre-vious year at Freie Presse Holding and other print media associates.

Net result, on the other hand, reached CHF 31.3 million versus CHF 9 million in 2011 (restated) thanks to non-operating gains generated by the real estate sales. The prior year net result also benefited from a net gain of CHF 16.9 million from various disposals of non-strategic as-sets, in particular the sale of Emphasis Video Entertainment in Hong Kong.

Group General Comments

Group online revenue increases slightlyIncluding the CHF 556 million (not consolidated) revenue posted by Zanox Group and the non-consolidated online portion of revenue at local.ch, Publi-Groupe’s activities in the online services business achieved cumulative net reve-nue of CHF 661.8 million in 2012 versus CHF 653.0 million in 2011.

Corporate GovernanceAt the 2013 Annual General Meeting, Eliane Borter (68) and Peter Brunner (68) will step down as members of the Pub-liGroupe Board of Directors after nine and ten years of service respectively.

The Board will propose to elect Christian Unger (German, 45), a renowned media specialist who was Chief Executive Officer of Ringier Group from January 2009 until April 2012. Since March 2013, Christian Unger has been Manag-ing Director at Partners Group and with responsibility for Partners Group’s TMT (Technology, Media and Telecommuni-cations) practice. Christian Unger began his career at Bertelsmann Group where he held various international manage-ment positions.

It is planned that Christian Unger will also become a member of the Board of Publicitas, whose other members are: Chairman: Pascal Böni (Vice-Chairman PubliGroupe), Delegate: Arndt C. Groth (CEO PubliGroupe); Member: Andreas Schmidt (CFO PubliGroupe).

Following up on its commitment from a year ago, the Board of Directors re-examined the repeal of voting rights restrictions for shareholders with a participation of more than 5% of the share capital and decided to schedule the introduction of the principle of "one share – one vote" for 2014.


10Group General Comments

Immediate implementation of initial elements of the Minder initiativeThe PubliGroupe Board of Directors has decided to implement initial elements of the Minder initiative at the Annual Gen-eral Meeting on 30 April 2013. These include the election of Christian Unger and the reelections of Pascal Böni (board member since 2007), Andreas Schönenberger (2010) and Kjell Aamot (2010) for a term of office reduced to one year (compared to the previously existing term of three years). In addi-tion, the Annual General Assembly will also vote on the fixed compensation of the Board of Directors and the General Management for 2013. The details on these agenda items are presented in de-tail in the invitation to the Annual General Meeting. The remaining elements of the initiative will be introduced in 2014.

Return of CHF 47 million to share-holders; share buy-back pro-gramme succesfully completedIn December 2012, the Board of Direc-tors announced its intention to return to shareholders a major part of the net proceeds generated by the sale of non-strategic assets, primarily proper-ties. To this end, PubliGroupe started a share buy-back programme on 3 January 2013 of up to CHF 25 million that was successfully concluded on 22 March 2013. 167'211 shares were purchased on a second trading line on SIX Swiss Exchange for an aggregate buy-back volume of CHF 25 million, representing 6.67% of the share capital.

The Board of Directors will propose to the next Annual General Meeting on 30 April in Lausanne a dividend of CHF 10 per share, resulting in a dividend payment of CHF 22 million. The total return to shareholders will reach CHF 47 million, CHF 2 million above the originally announced amount.

Outlook 2013As announced at the Investors’ Day in December 2012, PubliGroupe antici-pates for 2013 a strong improvement at Publicitas, allowing it to reach a break-even result due to a substantially lower cost burden. As for the other segments, PubliGroupe expects operat-ing results at roughly the same level or slightly higher.

For 2015, the Group aims to reach an operating result of CHF 40-50 million and earnings per share (EPS) of CHF 12-17.


11Group Strategy

"The Mark"

Source: IAB; Google; Press

Digital display ecosystem and selected PubliGroupe companies

Data

Au

die

nc

e

Ad

vert

ise

r

AgencyAgencyTrading

Desk

Demand- Side

Platform

AdExchange

AdNetwork

Supply-Side

PlatformPublisher

PubliGroupe anticipates that the print market will continue to decline at the rate witnessed over the last years while digital and mobile gain in importance, reshaping the entire market landscape and affecting previous value chains between advertiser and publishers.

The automation of trading between the buy- and sell-side will rapidly grow in rel-evance and the move towards technol-ogy-oriented media buying and selling will continue, requiring market actors to attain the highest possible degree of automation while relying on the predic-tive power of big data.

Strategic premises1. Print market will continue to decline, relevance of digital will continue to increase

The print medium has declined in signifi-cance in recent years. At the same time, the advertising industry is heading in a digital direction with full force. The shift in advertising budgets toward digital dis-semination channels is disproportionate to the actual changes in media use.

Compared to print advertising, digital channels moreover offer lower prices and increased transparency. The rapidly rising penetration rates of direct sub-stitutes for print will cause the negative development of the print business to continue.

Today’s highly scattered marketplace will see consolidation in which primarily only premium inventory will still rely on personal sales and a high degree of customisation. Large parts of inventory and advertising space and therefore the majority of media buying and planning will be increasingly commoditised.

PubliGroupe and its companies are pre-paring for such a future. New measures are being taken with immediate effect to be leaner, more flexible, more innova-tive and entrepreneurial. The guiding principle for PubliGroupe is to offer a high-performance regional, national and international network.

Today digital forms of advertising already represent approximately 20% of all advertising expenditures. In Switzerland, the digital market including display, search, performance marketing etc. amounts to approximately CHF 800 million.

In European markets, the digital market share has increased steadily and will only continue to grow in the years ahead. The balance for 2011 indicates figures of EUR 100 billion and a level of 20%.

Five years ago, 50% of media were digital in nature. Soon this percentage will reach 80%. This additional shift will bring about further profound changes in media consumption.

The media business will continue to be an important part of the DNA, but the Group will seek to accelerate the automation of processes, focusing on connecting supply and demand and in-creasingly offering self-service solutions and IT platforms for print ad processing and automated trading (DSP or SSP technology) as well as CRM tools, media buying and planning software and services.

It is not only a matter of digital becom-ing more important, but also that digital business models will come to influence the processing and implementation of traditional media.

At the present time, the procedures for handling advertising orders are in many cases not yet fully digitalised. But in terms of the planning approach, solu-tions that have established themselves in the digital sector will gain in impor-tance for other media types, such as for newspapers and print in general.

The path from advertisers who wish to place advertising to media providers (traditional newspaper publishers as well as Facebook, online and mobile portals of all types) will also be increasingly influ-enced by technology-driven players.

Focusing on connecting supply and demand


12

2. Programmatic buying and RTA will change market

Real-time advertising (RTA) and so-called programmatic buying will gain in importance as a consequence of these trends. Programmatic buying or auto-mated trading provides the foundation while real-time advertising will be yet another, higher level of optimisation of media purchasing.

Programmatic buying involves the linking of supply and demand via a platform that works for all media types. At pres-ent, RTA – the execution in real-time – is only possible for selected digital formats and it is mainly used for digital display, mobile and video.

Strongly fragmentised media consumption

The development in all other media is the logical next step following from automation in the media sector.

Even the trading of TV and cinema spot volumes or space in the out-of-home segment is nothing other than a com-ponent of programmatic buying. The big difference and the next developmental stage with digital media is the automat-ed integration of target group data.

First and foremost, classic RTA allows publishers to reclaim a larger share of advertising expenditures for themselves. RTA should lead to a win/win situation: advertisers pay a lower effective target group CPM (cost per mille) thanks to reduced scattering losses and media platforms achieve higher revenues.

At the same time, the share of auto-mated trading will never reach 100%. Estimates suggest that the market will relatively quickly arrive at a level of 60% in the online segment.

Personalised sales for high CPM productsThere will always be a premium segment with high CPMs (cost per mille) that will not be traded automatically. For this, media companies will still need person-alised premium sales on an ongoing basis.

0

10

20

30

40

50

60

70

80

90

100

Ø 80 h

1920 1940 1960 1980 2000 20202013

Print

Analog TV

Internet

Digital TV

Analog Radio

Outdoor

Digital Radio

Mobile

Games

Cinema

Source: Microsoft

Group Strategy


13

3. Mobile becoming mainstream

The importance of "mobile" – the con-sumption of information on smartphones and tablets – has made dramatic gains.

Mobile is also growing in importance in the purchasing process. Studies have shown that users who see an ad will utilise their mobile device to search for the advertised products and services.

The industry, however, is still search-ing for the right advertising formats for mobile devices. At present, with the ex-ception of Google AdWords, there is no company that even comes close to the classic online display segment in terms of monetising mobile’s extensive reach.

Mobile use of media increasingly important

Personal sales still important

Share of RTA display sales increasing

Instead of sales skills, platform and technology skills are needed

Broadscreen RTA

SegmentedInventory

High demand

Commodity

Rest

Mid-Tail

Premium

SALES

13.5

13.0

12.5

12.0

11.5

11.0

10.5

10.0

9.5

0

20112010

32 %

53 %

+66 %

Mobile web users (DE)in % web users

Exemplary: User structure SpiegelUnique users in millions

Source: BitKOM; AGOF

First Half 2012Mid 2010 Mid 2012

"Spiegel Online"

"Spiegel Mobil"

13.5

13.0

12.5

12.0

11.5

11.0

10.5

10.0

9.5

0

20112010

32 %

53 %

+66 %





"Spiegel Online"

"Spiegel Mobil"

13.5

13.0

12.5

12.0

11.5

11.0

10.5

10.0

9.5

0

20112010

32 %

53 %

+66 %





"Spiegel Online"

"Spiegel Mobil"

Group Strategy


14

4. Big data rapidly gaining in relevance

According to a recent study by the Economist Intelligence Unit on the most important challenges facing marketing, the handling of data will be one of the key areas in attempts to reach consum-ers with greater efficiency.

Customer Relationship Management (CRM) will therefore become a central factor of differentiation. Those who collect and correctly analyse data will be a step ahead of the competition. This is nothing new per se, but the ever-greater volume of digital media channels and the growing percentage of online pur-chases now permit a clear evaluation via all channels.

To maintain the relationship with read-ers, for instance, publishers need to strengthen their "consumer intelligence" function. In the media industry’s current period of transformation, readers and users are confronted with a dynamic they can scarcely master. Each and

Data-based marketing campaigns increasingly important

every day, new formats, devices, plat-forms, payment models and technolo-gies are added to the market.

Switching costs are low or non-existent. Media usage is no longer linear and predictable, but complex and differenti-ated. For the advertising industry and its clients, having accurate information on relevant target groups, their consump-tion patterns and media use is absolute-ly essential.

With their strong brands and loyal readers, the publishers, and especially the newspapers, are well positioned to accompany target groups as they nav-igate through the various media and, in the process, to collect the above-cited information. Not only to orient their own products accordingly, but also to carry out the role of contact broker better than the advertising networks perform-ing this function today.

Publishers hold a precious commodity that will continue to give them a decisive competitive advantage in the media

world of the future: loyal readers who trust in their journalistic products – ac-cessible via print, online or mobile.

To make marketing even more success-ful, there needs to be better proof of the specific advertising power of media ad-vertising environments. In addition, there is a need for an enhanced planning tool that allows advertisers and their agen-cies to play through the individual media objectives of their campaigns across the entire advertising inventory.

The ultimate objective is to implement a tool that makes it possible to plan advertising space across all categories (print, online, mobile) and in the greatest possible number of combinations. A high-performance data management platform is thereby the key to being able to offer such a solution.

Serv

iceOrganisation

Product Managem

ent

Clie

nt

Service Insights

Product Insights Customer Insights

Response Measurement

Data

Source: SAS

Group Strategy


15Group Business model

How do I achieve an optimal return on marketing investment (ROI)?

With the addition of Marketing. More. Effective. to the logo, PubliGroupe emphasises its willingness to give clients answers to the following questions:

Should I incorporate social media into my marketing plan? If so, how and to what extent?

Which media do I need to use to reach my target group? Print, tele vision, radio, online or outdoor advertising? Below the line or sponsoring?

Am I aware of the value of my client contacts and which of these touch points will achieve the best sales?

How can I measure and guarantee client loyalty?

How can I get more attention with my limited media budget?

How high are our conversion rates? Are there differences between the various platforms and disciplines?

PubliGroupe is a leading Swiss-based provider of marketing and media sales services, enabling advertisers to effec-tively reach their audience by optimising the return of their marketing spending and allowing media owners to effectively monetise their reach.

PubliGroupe is organised into three client-oriented business segments: Me-dia Sales, Search & Find and Digital & Marketing Services (DMS) with one key participation per segment.

Publicitas constitutes the main opera-tional unit within Media Sales, local.ch represents the main business for Search & Find and Zanox is by far the biggest asset within DMS.

Each company is responsible for its own profits and long-term performance.

PubliGroupe is a group listed on the Swiss Exchange and focuses on man-aging its interests in a value-oriented manner for its shareholders, partners and employees.

Focus on return on capital employedWhen assessing value, the emphasis is placed not on sales, growth, operating profit and net profit, but on return on capital employed.

Alongside business management con-siderations, PubliGroupe highly values the adherence to the Code of Conduct

Making marketing more effective


16

that defines a framework of guidelines for management and supervision and applies to all PubliGroupe companies.

The most important elements of these guidelines and principles are: customer and service focus, entrepreneurship and intrapreneurship, and transparency and integrity.

PubliGroupe companies: partners in an increasingly digitalised worldPubliGroupe and its partner companies offer extensive services along the entire value chain in order to solve the highly complex challenges marketing manag-ers are faced with today with consulting and other service offerings.

The companies within the business segment Media Sales, that is Publicitas, Adnative, Publimedia and Instanz, are united in their common mission: to be the preferred partner for media providers and advertisers in their markets, selling advertising space using effective and efficient services and optimising media budgets using diverse channels.

The business segment Search & Find produces and distributes media geared to local markets, facilitating the search for persons, companies, products and services. The printed and interactive listings/directories are the foundation for the Search & Find platform local.ch, the leading Swiss marketplace where local supply and local demand meet up.

Within the segment Search & Find, there is a trend away from simply "being found" towards "active searching" and "matchmaking". Consumers today expect more from a search for persons, companies, products and services in lo-cal markets. As well as finding a suitable provider, they increasingly want to know about, for example, what a restaurant looks like from within, what is on the menu, what the specialities are and, ideally, would like to make a reservation at the same time.

The third segment, Digital & Marketing Services, brings together a portfolio of leading international marketing and technology service companies, such as Zanox, Europe’s leading network for performance advertising.

Also belonging to DMS since December 2012 is a company based in the Neth-erlands. Improve Digital provides real time advertising technology to owners of premium digital media wanting to build their own private ad ecosystem.

Improve Digital’s technology is tailored for the needs of European publishers by providing them with a proprietary software solution that allows publish-ing houses to automate and increase advertising space revenue. Today over 70 premium European publishers and media owners use Improve Digital’s sell-side platform (SSP) to manage their digital ad space inventory.

Improve Digital’s technology thereby secures connectivity to any third party vendor technology including real-time bidding (RTB) buyers such as Spree7, another PubliGroupe company run in partnership with US-based MediaMath. Spree7 offers state-of-the-art media buying services to advertisers and agen-cies based on the industry award-win-ning MediaMath technology. The unit launched its operations in April 2012.

Finally, through DMS PubliGroupe owns SVBmedia, the largest independent media agency in the Netherlands.

Group Business model


17



18Business segments Media Sales

Substantial cost savings realised; investments in digital products

Highlights

Alain D. BandlePubliGroupe appointed the Swiss Alain D. Bandle as the new head of the Media Sales segment.

"The Mark"Publicitas introduced a new service "The Mark". A market-place where pre mium media owners enable their inventory to be sold to real-time / automated buyers.

PublicitasThe global sales network has been expanded to Dubai, a key growth market in the Middle East.

Key Figures

-14.1realised cost reductionsin millions of CHF

149.4net revenue in millions of CHF

Media Sales

Media Sales produced a negative operating result of CHF -16.1 million against a loss of CHF -5.1 million in 2011 (restated), despite a reduced cost base of CHF 14.1 million compared to 2011.

There was another drop in billings from CHF 1’030.9 million in 2011 to CHF 895.4 million in 2012 and net reve-nue declined from CHF 174.3 million (restated) in 2011 to CHF 149.4 million in 2012. This drop in business volume could not be compensated by substan-tial cost reductions mostly related to the reduction of personnel.

The cost base (total expenses) reduced itself by CHF 14.1 million compared to 2011. Downsizing costs reached CHF 6.1 million in 2012 and were CHF 3 million in 2011.

A significant share of the loss is related to the business re-engineering across various entities of Publicitas. Among these measures were process and administration services optimisation that have been fully implemented.

Mobile workplaces have been imple-mented in Switzerland to save IT and infrastructure costs while maintaining local sales presence.

Improved sales efficiencyAt Publicitas, in 2012 sales efficiency was improved by bringing the national advertiser- and agency-oriented busi-ness under one leadership and bundling

the publisher representation business on the other hand.

Based on improved client segmentation, the sales approach has been optimised – for example by introducing new do-it-yourself planning and booking tools for private clients and/or small enterprises and focusing sales people on clients requiring higher value-added services.

Further advancement was made in the optimisation of the IT infrastructure. By 2014, Publicitas will be running its operations for all types of media, in Switzerland and abroad, on new, highly flexible software solutions that will act as the end-to-end digitalisation backbone. The underlying cloud technology rep-resents a key factor enabling reduction of deployment and operating costs, as well as speeding up implementation of business requirement changes.

Resilient Publicitas Swiss network, loss in the international networkPublicitas consists of different oper-ational activities in Switzerland and internationally. Among these is Publime-dia, offering its services to companies advertising both nationally and trans-regionally as well as to advertising and media agencies throughout Switzerland. Publimedia has made important invest-ments in its online marketing and media platform AdMarket. AdMarket consists of four online tools for the analysis, planning, booking and reporting of ad campaigns.

Media SalesThe companies within the business segment Media Sales are united in their common mission: to be the preferred partner for media owners and adver-tisers worldwide, selling media using effective advertising solutions. Through long-term relationships with media partners and advertisers, they guaran-tee a profound understanding of media brands and products while the unique network of branch offices around the world ensures close proximity to the advertising customer. With a strong focus on innovation and high-level entrepreneurial spirit, there is contin-ued investment in media competence, development of interactive and digital services, optimisation of technological processes, as well as the growth of selected markets.

Optimisation measures allow for leaner cost base

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Das Bildzeichen wird in drei Farben dargestellt - Rot, Grün und

Blau. Die drei Logovarianten werden nach dem Zufallsprinzip

über alle Mittel und Medien durchmischt angewandt und

haben keine kodierende Funktion.

Notez s’il vous plaît

La marque figurative est représentée en trois couleurs: rouge,

vert et bleu. Les trois variantes du logo sont utilisées tous moy-

ens et médias confondus et n’ont aucune fonction de code.

Please Note

The graphic trademark is depicted in three colours – red, green

and blue. The three logo variants are used entirely at random

on all instruments and media and have no coded function.

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Animiertes Logo

Die animierte Version des Logos können Sie hier herunterladen:

www.publicitas.ch > Home > Unternehmen > Die neue Marke

Logo animé

Vous pouvez télécharger la version animée du logo ici:

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Measures in the area of Media Sales

Higher share of digital turnover

Digital growth:

– Further investments in digital products and markets

– Development of new digital products

Leaner and more flexible cost structures

Optimisation measures:

– Leaner and more efficient organisation, better adapted to market requirements

– Expansion of existing print offerings in Switzerland, internationally and with central functions

1. STRENGTHEN the traditional print business

2. EXPAND digital revenues and explore new opportunities

Alain D. Bandle appointed new CEO of PublicitasOn 8 February 2013, PubliGroupe announced the appointment the Swiss Alain D. Bandle (60) as the new head of the Media Sales segment and CEO of Publicitas starting 1 March 2013. Alain D. Bandle has held top leadership positions and accumulated significant turnaround management experience at various international technology com-panies. He will succeed Beat Roeschlin (58), who after over three years as CEO

will focus on the further build-up and expansion in the out-of-home (OOH) market.

Arndt C. Groth, CEO of PubliGroupe: "With Alain D. Bandle, Publicitas is gain-ing a top manager who will vigorously push ahead with the transformation of Publicitas amidst a dramatically chang-ing media market and reinforce central IT and digitalisation projects with his wealth of experience and key leadership abilities. At the same time, Alain D. Ban-dle possesses the necessary know-how

to position the national and interna-tional network of Publicitas as a lean and effective marketing organisation. I thank Beat Roeschlin for the initiation of numerous significant growth initiatives in the digital field and for the implementa-tion of important optimisation measures over the last years and am pleased that he will continue to contribute to Public-itas in his former core area of expertise as one of the most qualified experts on the OOH market and that he will assist the new CEO with important matters."



The traditional Publicitas sales network in Switzerland has been struggling with sharp declines in the print sector for a number of years. However, thanks to positive business progress in local and regional markets and notable new clients won or previous clients re-seeking a commercial relationship with Publicitas, the network has produced a positive result, given the very difficult market environment.

In Europe, a substantial market decline and the downsizing of the international network led to a higher loss than in previous years. With activities in more than twenty countries, the internation-al network represents major media owners, still maintaining a solid client base. Nevertheless, the organisational structure had to be adapted to reflect the reduced market size in different countries in Europe and North America.

At the same time, the global sales network of Publicitas has been expand-ed to Dubai. The Middle East is one of the key growth markets into which brands are looking to extend their global messaging. As one of the world’s fastest growing travel destinations, with an ever expanding transport network, growing tourism and the re-emergence of the business sector, the Middle East is an increasingly important region for compa-nies looking to reach affluent, well-edu-cated and international consumers.

Substantial investments in digital to prepare futureInvestments in the Publicitas Digital business were intensified. The unit counts today around 40 FTEs, including the entity of Instanz. The digital unit of-fers advertising products to local, regional, national and international advertisers and services for publishers worldwide.

In the local market in Switzerland, Pub-licitas launched "Ad4Max GEO" in 2012, a media package built on top-tier digital platforms with a geo-local advertising footprint. For publishers in Switzerland and abroad "The Mark" has been introduced. "The Mark" is a marketplace where premium media owners enable their inventory to be sold to real-time/ automated buyers. Publicitas responds with this new service to the upcoming programmatic buying of advertising space and leverages its long-lasting relationships with media owners worldwide to create a unique marketplace where advertisers can buy premium digital in-ventory from publishers around the globe.

New cost reduction and growth measures at PublicitasIn 2012, the shift in favour of digital mar-kets saw further acceleration, requiring continuous adaption of the cost base to the market developments. For 2013, a reduced cost base has already been implemented to reach a break-even operating result in a still-diminishing print market environment.

Assuming continued revenue declines in the traditional print business – the management expects an 8% downturn in the Swiss print market in 2013, outweighing new business from digital revenues – Publicitas is intensifying its plans to further reduce today’s cost base and diversify and further accelerate its product portfolio.

To that end publisher relationships shall be defined such that they allow Publicitas to manage a sales and service organisation with full operational autonomy that can realise efficiencies on a constant basis. From a strategic point of view, Publicitas in Switzerland has to manage the shift from a mono-media operation to a multiple-media operation maximising advertisers’ share of wallet while benefiting from economies of scales.

Share of non-print products of 30 to 40% by 2015Accelerating the digital agenda and exploring new opportunities is another pillar on the journey to the future busi-ness model of Publicitas. The product portfolio is to be diversified with the goal of 30 to 40% non-print products by 2015, accelerating digital and mobile product offerings to address multiple advertising segments locally, regionally, nationally and internationally. Besides digital products, Publicitas continues to offer and expand its premium media portfolio along all channels such as newspapers, magazines, TV, out-of-home and cinema. In the Swiss market, the main focus is on print, online and cinema.

Important milestones were reached in 2012, such as the launch of real-time advertising solutions for publishers. Based on the SSP technology of Im-prove Digital, a company of PubliGroupe since 2012, these solutions enable publishers to sell their online inventory through a real-time enabled platform. This growth initiative will be further ac-celerated in 2013 in Switzerland as well as in our international markets. Further expansion is expected in TV and OOH in our international operations.

Another main cornerstone will be the international network of Publicitas, where the development of a compre-hensive media portfolio is accelerated, leveraging the diverse industry expertise in more than 20 countries.

At the end of December 2012, the headcount (FTE) in the business segment Media Sales was 1’066 (FTE) compared to 1’196 at the close of 2011.


21

In June 2012 the Federal Supreme Court upheld in a three-to-two vote the sanction of CHF 2.5 million imposed by the Competition Commission (Comco) in March 2007. Comco had imposed this fine due to abuse of a dominant market position even though a settlement agreement had been reached in 2005.

The investigation by the Competition Commission that formed the basis for this decision concerned the directives of Publicitas for the commissioning of professional agents. The amount of CHF 2.5 million has already been provisioned and accordingly, the payment of the sanction had no effect on the 2012

results. PubliGroupe acknowledged the final decision of the Swiss Federal Su-preme Court with regret and closed this chapter on an issue dating back to the years 1997-2001. With this decision, a ten-year period of uncertainty also came to an end.

Key figures Media Salesin millions of CHF

2012 2011 Restated (1)

Billings(2) -13% 895.4 1’030.9

Net revenue -14% 149.4 174.3

Share in result of associates - - -

Operating result - -16.1 -5.1

Non operating result - 3.0 -0.5

Result attributable to shareholders of PubliGroupe Ltd. +84% -13.5 -7.4

Number of employees at year-end -11% 1’066 1’196

(1) Restatement due to the change to Swiss GAAP FER and intersegment transfers.(2) Billings represent the gross amounts billed to clients (including the value of ad space).

Business segments Media Sales


22Business segments Search & Find

The business segment Search & Find contains LTV Gelbe Seiten AG and the French local.fr, both fully consolidat-ed, and the two associates Swisscom Directories AG and local.ch AG, which are consolidated according to the equity method. The operating result of Search & Find reached CHF 22.4 million versus CHF 27.2 in 2011. The net revenue of the segment was slightly smaller at CHF 103.2 million against CHF 106.4 million in the previous year.

On a pro forma basis (with proportional consolidation), more adequately de-scribing the joint-management and gov-ernance structure of the three units LTV Gelbe Seiten AG, Swisscom Directories AG and local.ch AG, the segment’s operating result decreased from CHF 24.2 million in 2011 to CHF 21.7 million in 2012. The pro forma net revenue of the segment Search & Find decreased slightly by 1% to CHF 110.5 million.

The decrease in operating performance is partially due to the increase of person-nel and sales expenses, impacted by the growth of the three years contract. Order intake for a three-year period shows a growth for the years to come as local.ch has been able to successful-ly manage the double migration process from print to online and from broad-screen to mobile and smartphone.

The 17% growth of online and mobile sales in Switzerland was able to offset to a considerable extent the persistent

decrease in advertising sales in classic printed media, which fell by 12% in the last 12 months.

Operational entity local.ch well positioned for the futureIn 2012, there was strong emphasis in local.ch on strengthening sales and developing an organisational set-up that can flexibly deal with an ever-chang-ing market environment in which new products are continually introduced for broadscreens and increasingly for mobile formats. Sales efforts have been ramped up to profit from a leading online market position in Switzerland. As a consequence, order intake for a three-year period shows a growth for the years to come.

Revenue in classic media still account-ed for 41% of local.ch consolidated revenue (versus 46% in 2011) and online business reached 34% in 2012 (29% in 2011). Paid listings and data business share remained stable around 25%.

In the coming years, overall revenue will be dominated by digital media. The new online products and a wider range of digital offerings are expected to com-pensate for declining sales with printed listing products in the future.

The increasing shift towards digital prod-ucts will continue. In the future, growth markets for more content-rich services, such as video and film, couponing and e-commerce, will feature even more

Search & FindSearch & Find produces and sells media facilitating the search for persons, com-panies, products and services focusing on local markets. The listings and direc-tories of local.ch (telephone directory, Internet and mobile) are the foundation of the Search & Find platform, the lead-ing marketplace in Switzerland where local supply and demand meet up. The platform is permanently supplemented by offers of additional services such as leisure information, classifieds etc. As of February 2011, the partner companies of Swisscom and PubliGroupe have adopted one common brand for all their products in the Search & Find field: local.ch.

Solid profit and strong growth in online and mobile


23

prominently in the Search & Find port-folio. Furthermore, business via mobile continues to gain in importance.

In 2012, the local.ch app became one of the most popular applications downloaded via smartphones and tablets, with over 2.2 million downloads in Switzerland. local.ch further became the Swiss leader in terms of access by unique clients. In January 2013, the online service was called upon almost 4 million times as calculated by NET Metrix Audit.

Leader in audience

Operational excellence Match-making data

Strong monetisation engine (Sales power & efficiency)

Key drivers for successful matchmaking

Matchmaking trend taking over from the simple search and findAs in 2011, local.ch moved ahead with its initiatives away from simply "being found" and towards "active searching" and "matchmaking". Consumers today expect more from a search for persons, companies, products and services in lo-cal markets. As well as finding a suitable provider, they increasingly want to know about, for example, what a restaurant looks like from within, what is on the menu, what the specialities are and, ideally, would like to make a reservation at the same time.

Consequently, in the first semester 2012, local.ch took over Localina AG, an important provider of a reservation system. By acquiring Localina, local.ch thus allows users when looking for a restaurant to simultaneously book a table online via the search platform.

Business segments Search & Find


24

home.ch secures its number 3 position in the Swiss online real estate marketHome.ch, a business unit of LTV, was able to show an impressive growth in traffic, with a year-on-year growth of over 60% in visits and 40% in unique visitors. After being two and a half years on the market, home.ch is ranked among the top 25 Swiss websites for traffic, according to Netmetrix.

Home.ch has been able to grow in traffic faster than the market, leaving behind players like immostreet and newhome, approaching the two market leaders homegate.ch and immoscout.ch.

With mobile as a key focus element, home.ch was able to more than double the share of mobile versus web traffic, from 12% in 2011 to almost 30% in 2012. The newly developed iPhone and iPad app is one of the highest rated real estate apps in Switzerland (with four out of five stars). Monetising this mobile app with local advertising will start in 2013.

In October 2012, home.ch won an award for Performance at "Le Meilleur du Web 2012" (Best of Swiss Web).

Home.ch is on its way to be break-even.

local.fr under new leadershipPubliGroupe runs a similar, but much smaller business in the east of France, Amitel SA, under the brand local.fr, which develops and markets tools facilitating the search for persons, companies, products and services in local markets.

The products are available in printed media, on the Internet and for mobile devices (including iPhone and iPad). The French activities of Search & Find are still very much under pressure as they are still heavily impacted by the decline of print activities that continue to repre-sent the essential part of the activities in this region.

Local.fr was loss-making in 2012 – at the same level as in 2011 – as down-sizing measures continue under the leadership of a new CEO who will need to quickly reposition the company to-wards digital revenues. In 2012, 22% of net revenue was achieved in the online market (versus 10% in 2011).

At the end of 2012, the headcount (FTE) in the business segment Search & Find was 512 (FTE), the same as the end of 2011.

Key figures Search & Find in millions of CHF

Pro forma*(with proportional consolidation of local.ch)

in millions of CHF

2012 2011 2012 2011 Restated (1) pro forma* pro forma*

Billings(2) +3% 145.3 140.9 -1% 111.3 112.6

Net revenue -3% 103.2 106.4 -1% 110.5 111.6

Share in result of associates +2% 15.3 15.0 - - -


Non operating result - - - - - -

Result attributable to shareholders of PubliGroupe Ltd. -14% 16.6 19.4 -14% 16.6 19.4

Number of employees at year-end - 512 512

(1) Restatement due to the change to Swiss GAAP FER and intersegment transfers.(2) Billings represent the gross amounts billed to clients (including the value of ad space).* Consolidation of local.ch – pro forma figures:In order to more clearly describe the business development and performance of the segment Search & Find (for local.ch), a pro forma segment presentation has been added. The term "pro forma" refers to the presentation with proportional consolidation. The pro forma segment reporting is not part of the Swiss GAAP FER consolidated financial statements.

Business segments Search & Find


25Business segments Digital & Marketing Services

Disposal of Namics leads to high net result

Highlights

ZanoxStrengthened its leading position and continued its expansion strategy for growth in new markets.

Spree7 Launch of Spree 7 GmbH, a partnership company with MediaMath, the leading demand-side platform technology provider.

Improve Digital PubliGroupe acquired 85% of leading supply-side provider

Digital & Marketing Services Key Figures

27.7net revenuein millions of CHF

6.1 operating resultin millions of CHF

DMS 2012 results were influenced by non-recurring factors. The segment’s net profit of CHF 15.8 million (CHF 6.7 million in 2011, restated) benefited in particular from the disposal of Namics with a book profit of CHF 10.3 million.

Namics, a digital technology advisory firm focusing on Switzerland and Ger-many, was sold to its partners in June 2012. Although Namics was well posi-tioned and successful in its field of busi-ness, its traditional fee based business model and focus did not complement PubliGroupe’s core digital advertisement activities in Europe. Namics was sold to its 22 partners who will continue servic-ing its clients professionally. PubliGroupe will continue its cooperation with Nam-ics as a client.

The 2012 operating result for DMS was CHF 6.1 million compared with CHF 7.4 million (restated) in 2011. This decline was primarily due to start-up costs to launch Spree7 activities in German-speaking markets. Additionally, Namics’ results were included for Janu-ary through mid-June 2012 only in 2012 but for all twelve months in 2011.

In 2012, segment net revenue of CHF 27.7 million declined significantly from the prior-year period (CHF 52.1 million). The contraction mainly stems from Namics, which was only consolidated from January through mid-June 2012 and a volume decline in SVBmedia. Starting in 2012, as with Media Sales,

DMS net revenue is reported according to the commissions actually earned and not the total billings of ad space.

With a pro forma view, (including aproportional consolidation of Zanox of47.5%), the operating result was CHF 12.9 million compared to CHF 14.2 million in 2011, a decline of 9%. On a pro forma basis, net revenue was CHF 291.6 million versus CHF 306.1 million in 2011, a decline of 5% driven by the sale of Namics.

Important steps taken for the futureIn 2012, DMS took further steps to establish PubliGroupe’s presence in the fast growing market segment of automated display advertising. On the demand side, DMS launched in April 2012 Spree7 GmbH, a Berlin-based company in partnership with Media-Math, the leading demand-side platform technology provider, to develop the German-speaking markets. Spree7 ad-vises brands and agencies on marketing solutions, taking advantage of the media buying optimisation and process effi-ciencies provided by the demand-side platform. PubliGroupe owns 80% of the new company with the remaining 20% held by MediaMath.

Digital & Marketing ServicesDigital & Marketing Services brings to-gether a portfolio of leading international marketing and technology service com-panies helping brand owners to spend marketing budgets more effectively, offering innovative professional servic-es and employing value adding digital tools or marketing information. Zanox is the leading performance advertising network in Europe.

Disposal of Namics led to high net result


26

In December 2012, PubliGroupe-DMS acquired an 85% interest in Improve Digital BV, a leading sell-side platform technology provider in Europe. The company is headquartered in Amster-dam and has offices in Munich, Paris, London and Madrid. Improve Digital helps owners of premium digital media to organise their own private ad market-place and to build, control and optimise their revenues from direct campaigns, ad networks, trading desks and any other third-party media buyer. As part of the transaction, PubliGroupe inject-ed cash in the company to accelerate technology development and the client acquisition in key markets.

PubliGroupe owns 47.5% of the Zanox Group in a joint-venture with Axel Springer AG. In 2010, the Zanox Group (100%) exceeded net revenue of CHF 500 million for the first time and became Europe’s leading performance advertising network by generating sales and leads for its advertising clients. The group grew by 20% in 2011 and in 2012 expanded business by 5% at constant exchange rates.

In a more competitive European market – with an increasing number of com-petitors and offerings – Zanox was able to strengthen its leading position and continue its expansion strategy in new markets. In 2012, Zanox net revenue reached EUR 461.4 million, an increase of EUR 21.4 million compared to the prior year. 2012 EBITDA of EUR 28.0

million was slightly down compared to last year (EUR 28.3 million). Lower gross profit margins and higher development costs were largely compensated by efficiencies across the network.

Due to the disposal of Namics, DMS reduced its headcount (excluding Zanox) from 387 in 2011 to 59 at the end of 2012.

Business segments Digital & Marketing Services

Key figures Digital & Marketing Servicesin millions of CHF

Pro forma*(with proportional consolidation of Zanox)

in millions of CHF

2012 2011 2012 2011 Restated (1) pro forma* pro forma*

Billings(2) -27% 89.8 123.3 -7% 353.2 378.0

Net revenue -47% 27.7 52.1 -5% 291.6 306.1

Share in result of associates -9% 7.3 8.1 - - -


Non operating result - 10.3 - - 10.3 -

Result attributable to shareholders of PubliGroupe Ltd. +136% 15.8 6.7 +136% 15.8 6.7

Number of employees at year-end -85% 59 387

(1) Restatement due to the change to Swiss GAAP FER and intersegment transfers.(2) Billings represent the gross amounts billed to clients (including the value of ad space).* Consolidation of Zanox – pro forma figures:In order to more clearly describe the business development and performance of the segment Digital & Marketing Services (for Zanox), a pro forma segment presentation has been added. The term "pro forma" refers to the presentation with proportional consolidation. The pro forma segment reporting is not part of the Swiss GAAP FER consolidated financial statements.


27



28Code of Conduct and Human Resources Code of Conduct

Code of ConductA common Code of Conduct defining uniform core values for all of the Group’s companies.

In January 2011, PubliGroupe introduced a Code of Conduct, valid Group-wide for all employees and companies in which the Group has majority participation. The Code details the Group’s central values and is divided into three sections:

Customer and service focus• We listen to our clients in order to offer tailor-made solutions• We keep our promises• We build long-term relationships based on co-operation and mutual benefit• We see analysing complaints as an effective way of improving our services

Entrepreneurship and intrapreneurship• We identify and seize opportunities in the market• We are proactive, independent and trustworthy• We learn from our mistakes• Our organisation encourages innovation and cuts down on bureaucracy

Transparency and integrity• Our commercial practices are governed by a "fair play" attitude• We readily keep all involved parties informed about our projects, decisions

and developments• Within the company, all employees know our commercial strategy and our results

PubliGroupe’s Code of Conduct also helps the Group to meet the corporate gov-ernance standards for the protection of shareholders (maintaining corporate value and avoiding financial losses) as required by the stock exchange.

WhistleblowingIn parallel with the introduction of the Code of Conduct, a whistleblowing system was set up on an externally provided platform. This platform allows anonymous and confidential correspondence with potential whistleblowers.

In 2012, two incidents were reported on the whistleblowing platform. For both cases, thorough investigations were carried out by means of interviews and internal audit.

In one of the cases, the responsible employee was reprimanded and the other case was not pursued.


29Code of Conduct and Human Resources Human Resources

At the end of 2012, PubliGroupe reported a headcount of 1’702 (FTE), which con-stitutes a reduction of 21.6% on the previous year’s count of 2’173.

The distribution among the various business segments shifted because of the departure of Namics from the Group. The average age remained more or less unchanged, but age and language structures were affected by the departure of Namics.

A difference can be observed in the ratio of employees to managers. The percent-age of managers slightly decreased from 16% to 14%.

The percentage of women in management decreased from 22% to 20%.

Facts and Figures

2012 2011

Allocation of staff by segment in %

Search & Find 30.1 24

Media Sales 62.6 54

Digital & Marketing Services 3.5 18

Corporate & Others 3.8 4

Gender in %

Men 50 53

Women 50 47

Structure by language in %

German 53 59

French 27 24

Italian 3 2

English (and others) 17 15

Geographical distribution in %

Switzerland 76 75

Europe 12 15

Americas 2 2

Asia/Pacific 10 8

Age structure in %

Under 30 years 26 26

30 to 39 years 29 31

40 to 49 years 26 24

Over 49 years 19 19

Average age years 39.5 38

Average duration of employment years 8.34 7.6

Fluctuation rate in %

Group level 30 33

Search & Find 30 22

Media Sales 30 35

Digital & Marketing Services na 30

Corporate & Others 8 4


30Code of Conduct and Human Resourcesa Human Resources

In 2012, all collaborators were invited to take part in the 4th PubliGroupe staff sur-vey. A total of 1'603 employees filled in the questionnaire, which represents a high return rate of 76.1%.

Key findings:• Job satisfaction reached 63 points on a scale from 0 to 100 points. In comparison

to the results of the previous survey (2010) this factor lost 3 points.

• Commitment (feeling of belonging to PubliGroupe) is composed of three elements: identification, tendency towards fluctuation and willingness to perform. These three dimensions were assessed as follows: willingness to perform 86 points (2010: 87 points), tendency towards fluctuation 74 points (2010: 77 points) and identification 70 points (2010: 74 points). This resulted in a good commitment level of 77 points, although this represents a decrease of 2 points compared to the survey carried out in 2010.

• The strongest influences on objective-oriented behaviour are work content, devel-opment opportunities, information, company strategy and management.

• The criteria with the most positive evaluation were work content, working climate and work demands. Development opportunities, company strategy and informa-tion were rated as the most critical factors.

Action plans will be determined within the different entities and executed during the coming months.

Staff survey 2012

100

100

80

80

60

60

40

40

20

20

0

0

20122010

66

80 80 76

56 5868

79 72 707763

77 77 74

52 5864

Job satisfaction

Work content Development opportunities

Work demands Company strategyWorking climate Information

Commitment

Lowest valuesHighest values

Objective-oriented behaviour

100

100

80

80

60

60

40

40

20

20

0

0

20122010

66

80 80 76

56 5868

79 72 707763

77 77 74

52 5864

Job satisfaction



Commitment



100

100

80

80

60

60

40

40

20

20

0

0

20122010

66

80 80 76

56 5868

79 72 707763

77 77 74

52 5864

Job satisfaction



Commitment




31

PubliGroupe first company listed on stock exchange to be awarded equal-salary labelFor the first time, a company listed on the stock exchange is taking a decisive step towards fair compensation by gaining equal-salary certification: PubliGroupe Ltd Headquarters.

Upon receiving the label, Arndt C. Groth, CEO of PubliGroupe Ltd, underlined that: "This certification should provide a constant reminder that we prioritise performance, creativity and innovation for all our employees."

While the wage gap between women and men is still around 18% at the national level, PubliGroupe Ltd Headquarters has established itself as a pioneer: it is the 11th company to receive the label, after Hotela, Retraites Populaires and ECA in canton Vaud.

With this certification, the company has demonstrated its adherence to the law. In addition, it provides a platform for communicating its salary practices both internally and externally. This improves employee motivation and the company’s attractive-ness for talent recruitment.

Code of Conduct and Human Resourcesa Human Resources


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Directorsince

Term ofoffice

AuditCommittee

Nominations andRemuneration Committee

Steering CommitteePublicitas-Media Sales

Hans-Peter Rohner Chairman 2009 2015 •Pascal Böni Vice-Chairman 2007 2013 •*K

Documents

How did PubliGroupe perform · PubliGroupe — Annual Report 2012 Overview key figures PubliGroupe PubliGroupe, registered share Swiss Performance Index (SPI) Media Sales Search &