Interim report for the first half of 2000

METRO INTERNATIONAL SA INTERIM REPORT FOR THE FIRST HALF OF 2000 Metro International SA ("Metro") presents its accounts for the first half of 2000 today, August 14, 2000. * METRO IS THE FOUNDER OF THE METRO CONCEPT, ONE OF THE FASTEST GROWING MEDIA PRODUCTS GLOBALLY * METRO WILL BE SPUN OFF TO MTG SHAREHOLDERS ON AUGUST 15. * THE SHARE IS TRADED ON BOTH NASDAQ AND THE STOCKHOLMS BÖRSINFORMATION (SBI) LIST ON AUGUST 18. * SALES GROWTH WAS UP 67% FROM LAST YEAR. * THE METRO NEWSPAPERS THAT HAD ALREADY BEEN LAUNCHED CONTINUED TO SHOW SOLID SALES AND PROFIT INCREASES. * NEW EDITIONS OF THE NEWSPAPER WERE LAUNCHED IN TORONTO AND ROME. FINANCIAL SUMMARY (USD) CONSOLIDATED INCOME STATEMENT (USD 1999 1999 2000 million) Full- Jan 1- Jan 1- year June 30 June 30 Pro Pro forma forma Net sales 62.3 27.0 45.0 Gross income 38.7 13.5 -14.5 Operating income(/loss (EBIT) -10.7 -3.0 -17.4 Income after financial revenue and -14.4 -4.1 -17.4 expense OPERATIONS Organization The May 2000 shareholders' meeting of Modern Times Group MTG AB ("MTG") voted to spin off all Metro shares to its shareholders. The spin-off will be carried out on August 15. Metro will be traded as a separate company on Nasdaq (ticker symbol MTRO) and the Stockholms Börsinformation (SBI) list from August 18. Metro comprises all editions of the newspaper, both in and outside of the Nordic region. With one exception, the comparative figures in this report have been adjusted for the deconsolidation of Metro from MTG, which took effect at January 1, 2000. Parts of Metro Sweden's operations were transferred to Metro International by means of an "asset deal," in accordance with which sales of USD 8.0 million and income of USD 3.8 million for 2000 are reported by MTG. In addition, an adjustment has been made for IAS, the International Accounting Standard, employed by Metro, as opposed to the Swedish standard used by MTG. As a result, capitalized upstart costs activated through 1999 have been charged to shareholders' equity, and capitalization for 2000 has been charged to income. Metro's accounts are in USD. Organizational Structure Metro's operations consist of three phases: establishment- negotiations on distribution in new cities; implementation- the launch of new editions of the newspaper in cities where distribution issues have been resolved; and operational- the day-to-day running of the business. Metro's organization is structured along the lines of that model: the vice-presidents in charge of each area all report to the company's CEO. Business Model Metro's business model is based on three concepts. According to the journalistic concept, readers should be given a high-quality digest of the news. The distribution concept states that the newspaper should be made available at locations where large numbers of people come together at the same time. Finally, the organizational concept proceeds from very low fixed costs, subcontractors being responsible for the greater part of the newspaper's production. The end result of this model is that the various editions of Metro should be able to operate profitably within a short period of time and that the financial commitment should be limited. Proceeding from this model, the Metro concept is spreading rapidly around the world as the strong cash flow generated by the editions of the newspaper that have already been launched are used for expansion into new cities. This approach is also reflected in the company's income, the editions already launched reporting a profit while all launch costs are charged to income when they arise. This rapid expansion gives rise in turn to cost-saving opportunities and the ability to generate new business concepts for the Metro newspapers. Reporting by Segment To make for a consistent prospectus in connection with the spin-off of Metro, the business is being reported in three separate segments: Nordic, the rest of Europe, and the rest of the world. FINANCIAL EARNINGS Group Earnings for the First Half of 2000 Net sales increased 67% to USD 45 million. Operating income after depreciation and amortization was USD -14.5 million (-3). Net interest and other financial items totaled USD -2.8 million (-1.1), including exchange rate gains and losses from the translation of financial receivables and liabilities denominated in foreign currency. Income after financial items totaled USD -17.4 million (-4.1). Income after tax increased to USD -19.3 million (-5.5). Metro's total assets as of June 30, 2000 were USD 78.8 million (33.3). SUMMARY OF OPERATIONS Nordic Net sales, USD 31.9 million (24.0) Operating income after depreciation and amortization, USD 10.0 million (7.4) This segment includes the following cities: Launch Readers Stockholm February 573,000 1995 Gothenburg February 215,000 1998 Malmö September 149,000 1999 Helsinki September 184,000 1999 1,121,000 Sales for the segment grew very rapidly, 34%, in the first half of 2000. This growth stemmed from continued sales increases in Stockholm and Gothenburg, as well as new launches. Rest of Europe Net sales, USD 10.5 million (3) Operating income after depreciation and amortization, USD -9.6 million (- 2.3) The segment includes the following cities: Launch Readers Prague June 1997 320,000 Budapest September 491,000 1998 Holland June 1999 1,059,000 Newcastle January 41,000 2000 Zurich January 215.000 2000 2.126.000 In addition, the newspaper was launched in Rome after the end of the period. Prague and Budapest continue to show increasing sales and are now profitable on a monthly basis. Thanks to the large number of readers, growth in Holland is very rapid at the moment. Owing to stiff competition, the Newcastle and Zurich editions did not perform as well during the period. Rest of the World Net sales, USD 2.5 million (0) Operating income after depreciation and amortization, USD -6,3 million (0) This segment includes the following cities: Launch Readers Philadelphia January 2000 268,000 Santiago January 2000 401,000 669,000 The newspaper was also launched in Toronto after the end of the period. As the result of a lawsuit- which Metro won- full distribution was delayed in Philadelphia, initially holding back sales. Since full distribution has been in place, sales have grown more rapidly. Sales in Santiago have been satisfactory from the very start. Parent Company Net sales, USD 0 million (0) Operating income after depreciation and amortization, USD -8.6 million (- 8.1) The parent company carries out all the customary operations of a head office, both the planning for and launch of newspapers in new cities. FINANCIAL POSITION Equity/assets ratio The Group's equity/assets ratio (consolidated shareholders' equity and minority interests including the convertible debenture loan, divided by total assets) was negative. This figure does not include the underlying value of the shares in Millicom International Cellular SA, corresponding to the option to acquire shares in Millicom which is reported as a current asset, having a market value of USD 47.7 million at June 30, 2000. The acquisition value of these shares is USD 10 million. Taking into account the goodwill and deferred tax in publicly traded shares, the equity/assets ratio is 21%. Liquidity The Group's liquidity and financial credit balance totaled USD 29.1 million at the end of the report period. This figure does not include goodwill from the Millicom option. Net borrowings The Group's net borrowings (defined as interest-bearing liabilities, excluding the convertible debenture loan, less interest-bearing assets) totaled SEK 33.6 million (13.8) at the end of the period. Investment Investment totaled USD 2.3 million (2.9) for the period. Depreciation and amortization Group depreciation and amortization totaled USD 3.9 million (2.2). Earnings per share Earnings per share after full tax and full dilution, resulting from conversion of the debenture loan, was negative. OTHER INFORMATION Interim Report for January-September 2000 Metro's announcement of earnings for the first three quarters of 2000 will preliminarily be released on November 8, 2000. Stockholm, August 14, 2000 Pelle Törnberg President and CEO This interim report has not been subject to a review by the Company's auditors. For additional information, please contact: Pelle Törnberg, telephone +46 8 5620 0050 President and CEO, Metro International SA CONSOLIDATED INCOME STATEMENT 1999 1999 2000 (USD million) Full-year Jan 1- Jan 1- June 30 June 30 Pro forma Pro forma Net sales 62.3 27.0 45.0 Cost of goods and services -23.6 -13.5 -33.0 Gross income 38.7 13.5 12.0 Selling and administrative -46.9 -14.8 -24.7 expenses Goodwill amortization -2.5 -1.7 -1.8 Operating income(/loss (EBIT) -10.7 -3.0 -14.5 Net financial revenue and expense -3.7 -1.1 -2.8 Income after financial revenue -14.4 -4.1 -17.4 and expense Taxes -5.0 -1.9 -2.3 Minority interests 0.3 0.5 0.4 Net income for the period -19.1 -5.5 -19.3 REVIEW OF THE GROUP (USD million) 1999 1999 2000 Full-year Jan 1- Jan 1- June 30 June 30 Pro forma Pro forma Net sales by segment Nordic 52.3 24.0 24.0 Rest of Europe 10.0 3.0 10.5 Rest of world 0.0 0.0 2.5 Holding companies 0.0 0.0 0.0 62.3 27.0 37.0 Operating income/loss by segment Nordic 11.6 7.4 10.0 Rest of Europe -10.7 -2.3 -9.6 Rest of world -2.0 0.0 -6.3 Holding companies -9.6 -8.1 -8.6 -10.7 -3.0 -14.5 CONSOLIDATED BALANCE SHEET (USD 12-31-6-30-19996-30-2000 million) 1999 Pro forma Pro forma Fixed assets Intangible fixed assets 20.9 21.8 18.5 Tangible fixed assets 2.6 1.1 3.5 23.5 22.9 22.0 Current assets Current receivables 13.0 5.6 27.7 Cash, cash equivalents and short- 0.0 4.8 29.1 term investments 13.0 10.4 56.8 Total assets 36.5 33.3 78.8 Shareholders' equity -28.0 -9.1 -34.7 Minority interests in equity 0.0 0.0 -1.7 Convertible loan 23.5 Long-term liabilities 30.0 18.6 62.7 Current liabilities 34.5 23.8 29.0 Total shareholders' equity and 36.5 33.3 78.8 liabilities CONSOLIDATED STATEMENTS OF CASH FLOW 1999 1999 2000 (USD million) Full-year Jan 1 - Jan 1 - June 30 June 30 Pro forma Pro forma Net loss for the period -19,2 -5,5 -19.3 Adjustments to reconcile net loss to 4,2 1,8 3,4 net cash used in operations Changes in working capital -13,6 -3,4 -20,2 Net cash used in operations -28,5 -7,1 -36,1 Cash flow to invetsting activities -3,9 -2,9 -2,3 Cash flow from financing activities 32 14,4 71,2 Net change in cash and cash -0,4 4,4 32,8 equivalent ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/08/14/20000814BIT00640/bit0001.DOC http://www.bit.se/bitonline/2000/08/14/20000814BIT00640/bit0002.pdf