Preliminary results for the second quarter and six months ended 30 june 2001

PRELIMINARY RESULTS FOR THE SECOND QUARTER AND SIX MONTHS ENDED 30 JUNE 2001 Luxembourg, 8 August 2001 - Metro International S.A. ("Metro") (MTROA, MTROB), today announced its preliminary results for the six months ended 30 June 2001. · Year to date Group net sales up 42% on local currency basis - international editions up 115% and Sweden up 7% · Total daily readership up 116% to 8.5 million year on year and average number of daily readers per copy up to 2.53 · Year to date cost per copy down 5% and cost per reader down 23% · All editions launched more than 2 years ago now profitable and 7 editions launched before 2000 contributed EBITDA of US$ 4.0 million in the year to date · Stockholm operating margin maintained at 40% in the first half year · Three new editions launched in year to date · National advertising coverage in 5 out of 14 markets Consolidated income Q2 2001 Q2 2000* H1 2001 H1 2000* statement (US$ '000s) Net Sales 28,633 24,560 56,171 44,301 Gross income (loss) (853) 9,455 (5,810) (15,405) Earnings (loss) (17,969) (6,454) (37,329) (15,761) before depreciation and amortisation Operating income (19,297) (7,875) (39,943) (18,377) (loss) Income (loss) after (15,783) (10,096) (37,078) (21,532) financial items & before income tax Earnings (loss) per (0.22) (0.18) (0.51) (0.37) share Number of shares 76,088,489 66,375,156 76,088,489 66,375,156 outstanding * Restated to include allocation of franchise fees to operations OPERATING REVIEW Metro delivered net sales growth (on a local currency basis) of 31% in the second quarter and 42% in the first half of 2001, despite weakening global advertising markets. Year to date net sales for the international editions increased by 115% in the year to date (on a local currency basis), whilst sales in Sweden increased by 7% in the same period. International sales exceeded Swedish sales for the first time in the second quarter. Metro, the world's fastest growing newspaper, now has nearly 8.5 million daily readers and is the fifth most read newspaper globally. This represents an increase of 32% since the last survey in November 2000 and a 116% increase since the first survey in May 2000. The average daily circulation has increased by 113% since May 2000, with the result that the number of readers per copy has increased year on year by 5% and now stands at 2.5. The proportion of daily readers under the age of 30 and of female readers has remained at approximately 40% and 50% respectively. These results have been achieved despite the fact that the number of Metro editions and the average daily circulation have doubled since May 2000, and that the May 2001 survey figures include the Boston edition, which was only launched in May 2001. In addition to the improvement in the reach of Metro and the fact that demographic profile of the readers has remained similar to that of a TV broadcaster, the cost of achieving this reach and profile has fallen. The average cost per copy has decreased year on year in the first half of 2001 by 5%, in line with management's stated intention to reduce the total cost of production per copy by 10% this year, whilst the cost per reader has decreased by 23% in the year to date. This efficiency reflects the savings achieved through the renegotiation and consolidation of paper and printing agreements in eight operations to date and the ongoing exploitation of economies of scale achieved through initiatives such as Metro World News, the Group's internal news wire that aggregates content across Metro's 19 editions. The full effect of these savings is expected to impact on group earnings over the next 6 to 12 months and the focus on cost efficiency continues in all operations. The Swedish operations showed an increase of 7% in net sales in local currencies during the first half of 2001, but a decline of 1% in the second quarter as the Swedish advertising markets weakened further. The Swedish newspaper advertising market was down year on year by 1.3% in the first quarter, 9% in April and 18% in May, according to the official research from Institutet för reklam och mediestatistik (IRM). Metro was therefore able to significantly increase its market share. Similarly, in Holland, the overall print advertising market was down year on year by 4% in the first quarter and by 11% in the second quarter, according to the official research from Bureau Budget Control (BBC). Despite these weaker market conditions, the Dutch operation reported a sales growth of 30% in local currencies in the year to date and a 9% growth in the second quarter. Both the Prague and Budapest operations showed profits for the second quarter and the year to date, with the seven editions launched before 2000 reporting combined earnings before and after depreciation and amortization of US$2.1 million and US$1.1 million in the second quarter and US$4.0 million and US$1.9 million in the year to date respectively. All of the Metro editions launched more than two years ago are now profitable, and only US$5.6 million of the total year to date Group losses of US$39.9 were generated by the editions started before the end of the first half of 2000. Three new editions have been launched in the first half of 2001, compared to five editions during the same period last year. These included the first French language edition, in Montreal, and the first dual language (Spanish and Catalan) edition, in Barcelona. The business development team continues to evaluate a number of potential new markets. As Metro's footprint has spread, it has been possible to reduce the cost of licence hunting by using existing Metro operations to provide the platform for regional business development. The second US edition was launched in the second quarter in Boston, one of the major cities and largest media markets in the US. The newspaper is already the second largest in the Boston area. The new launches so far in 2001 have further demonstrated Metro's distribution mix. The Montreal edition is distributed in the municipal transport system as well as in the City center, whilst the Barcelona and Boston editions are distributed by hand and from racks in the City center. Following the increase in circulation of Metropol in Hungary to cover all of the major cities in Hungary, Metro now has access to the national advertising markets in five out of its fourteen markets. The new agreement for the distribution of Metro through the transportation system in Warsaw has also strengthened the newspaper's position in the largest media markets in the central European region. Metro Today, the joint venture with Torstar in Toronto, was launched after the end of the second quarter and is already the second largest newspaper in the Greater Toronto area. Not only does this arrangement make the combined entity the clear free newspaper market leader, but it also efficiently combines the strengths of the two partner organizations. Metro has further strengthened the senior operational management with the appointment of a new Managing Director for the Nordic operations and a new Managing Director with responsibility for global distribution. Metro continues to grow strongly and move its more mature operations into profit. The current weakness due to the downturn in the advertising markets has enabled Metro editions to increase their market shares, whilst the tight cost control across the Group ensures high levels of incremental profitability. Nordic Gallup Worldwide Readership: Readership: Circulation: Circulation: Readership May 2001 May 2000 May 2001 May 2000 Survey ('000s) 'Metro' Sweden 1,003 937 397 408 'Metro' Helsinki 160 184 109 102 Total 1,163 1,121 506 510 The latest Gallup survey has further reinforced Metro's position as the most read morning newspaper in Sweden. Excluding the first quarter sales for the Stockholm evening newspaper Everyday, net sales in Sweden increased by 7% in the first half of 2001. Metro is the most read morning newspaper in Sweden and all of the Swedish operations performed considerably better than the newspaper advertising market, which had already declined by 7% in the year to the end of May 2001, according to IRM. The operations therefore increased their market shares significantly. Earnings are impacted by the ongoing amortization of goodwill, relating to the buying out of minority shareholders, which amounted to US$ 0.8 million for the second quarter and US$ 1.7 million for the first half. Earnings before depreciation and amortization, excluding Everyday, amounted to US$9.2 million in the first half year and to US$3.9 million in the second quarter. The operating margin in the mature Stockholm operation was maintained at 40% in the year to date. The Gothenburg edition continued to show a quarterly profit, while the operating losses in Malmo were reduced significantly. Helsinki reported a 64% increase in net sales in the first half of 2001 on a local currency basis and a 12% increase in the second quarter. Metro is the largest free daily newspaper in Finland and reported a 9% reduction in operating losses in the second quarter. Rest of Europe Gallup Worldwide Readership: Readership: Circulation Circulation Readership Survey May 2001 May 2000 : : May 2000 (000's) May 2001 'Metro' Prague 249 320 180 200 'Metro' Hungary 895 491 338 220 'Metro' Netherlands 951 1,059 290 273 'Metropol' 427 215 280 117 Switzerland 'Metro' Italy 1,202 - 435 - 'Metropol' Warsaw 260 - 187 - 'Metrorama' Athens 162 - 108 - 'Metrodirecto' 397 - 175 - Barcelona Total 4,543 2,085 1,993 810 The Dutch operation reported sales increases of 30% and 9% in local currencies in the first half and second quarter respectively, despite the fact that the overall Dutch print advertising market was down by 10%. Net sales for the first half reached US$6.1 million whilst net sales for the second quarter were US$3.1 million. Costs in the operation increased due to the increase in circulation following an agreement for the distribution of Metro on the Connexion national bus network. Operating losses therefore increased in the second quarter to US$1.1 million. The investment in the new distribution contract will be balanced by the impact of sales increases cost reductions over the coming months. The operations in the rest of Europe (excluding the discontinued Newcastle operation) showed net sales increases in local currencies of 209% in the first half and 219% in the second quarter due to the launch of five new editions since the end of the second quarter 2000. The Prague and Hungary editions both reported profits for the second quarter and for the first half year. The Hungarian operation showed particularly strong sales development in the second quarter following the implementation of national distribution in April 2001, which made Metro the biggest newspaper in the country. Net sales for Metropol in Switzerland were up 180% in the first half, reflecting the fact that the paper went national in Switzerland in the second half of last year. The Milan and Rome editions continued their rapid rate of growth and benefited from an increasing proportion of national advertising sales in Italy. A year after launch, Metro already has more readers in Italy than in its most mature market, Sweden. The number of readers of Metro in Italy grew by 35% between November 2000 and May 2001. Athens is similarly showing positive early signs, with healthy sales development and strict cost control. The Warsaw edition will now be distributed within the City's public transportation network, following an agreement reached at the end of the second quarter. Sales development remains encouraging in the Polish market, which is the strongest of the Central European economies and has the largest advertising market in the region. Rest of the World Gallup Worldwide Readership Readership Circulation: Circulation: Readership Survey : : May 2000 May 2001 May 2000 (000's) May 2001 'Metro' Philadelphia 375 268 144 122 'Publimetro' 437 401 119 120 Santiago 'Metro' Toronto 458 - 141 - 'Publimetro' Buenos 790 - 270 - Aires 'Metro' Montreal 319 - 99 - 'Metro' Boston 368 - 160 - Total 2,747 669 933 242 Metro is now the second largest newspaper in Philadelphia and reported a 44% increase in net sales in the second quarter, despite the increasingly weak advertising markets in the US during the year to date. The results for the second quarter are the first real opportunity to compare the year on year development due to the delays caused to the full launch in the first quarter of 2000. Operating losses decreased 45% to US$2.8 million for the year to date. Both of Metro's Canadian operations are now joint ventures with leading North American publishing and printing companies, reflecting the foreign ownership regulations in Canada. The 'Metro Today' joint venture, which was launched in Toronto after the end of the second quarter, has a larger circulation than the previous Metro edition and is the second largest daily newspaper in the metropolitan area. Net sales for the rest of the world increased by 167% to US$1.9 million in the second quarter and by 237% to US$3.6 million in the first half of 2001. The sales increases in local currencies for the quarter and year to date were up 167% and 237% respectively. These figures reflected the launch of three new editions since the end of the first half of 2000. Operating losses increased in line with the expansion and reached US$7.1 million for the second quarter and US$11.8 million for the first half of the year. Whilst Santiago reported sales growth, on a local currency basis, of 45% and 20% for the year to date and quarter respectively, the economic conditions in Argentina negatively impacted on the Buenos Aires operation. Following the launch of the joint venture in Montreal in 2001, Metro was launched in Boston at the beginning of May 2001. Boston is the sixth largest metropolitan area in the US, has a population of 3.8 million and a US$1 billion annual newspaper advertising market. Metro is already the third largest newspaper in the area and had 2.3 readers per copy, according to the Gallup survey, which was conducted immediately after the launch. Headquarters It is not possible to make accurate comparisons with the first half of 2000 because Metro was still an operating subsidiary of Modern Times Group MTG AB and was not demerged and listed as a separate entity until August 2000. Headquarter costs for the second quarter and first half of 2001 were US$6.0 million and US$11.4 million respectively. Of this total, general and administration expenses, amounted to US$2.1 million in the second quarter and US$3.5 million in the first six months. Business development investments were US$2.3 million in the quarter and US$4.3 million for the year to date. Pre-launch and other start-up costs, relating to investments in operations which have not yet been launched, totaled US$1.5 million in the second quarter and US$3.5 million in the first half of 2001. FINANCIAL REVIEW The US dollar strengthened against the majority of Metro reporting currencies during the first half of 2001. Assuming that exchange rates had remained constant at the June 2000 levels, Group net sales would have been 10% higher at US$61.8 million for the year to date. The seven post-launch phase editions, which were started up before 2000, reported a combined net sales increase of 12% in local currencies. The same editions also contributed combined profits before and after depreciation and amortization of US$4.0 million and US$1.9 million respectively in the year to date and US$2.1 million and US$0.8 million in the second quarter. Both the Montreal and Toronto operations are now treated as equity participations in associated companies. As a result, net sales are not reported but share of earnings or losses are. This treatment has been applied to the Montreal operation since launch and will be applied to the Toronto operations in the third quarter and year to date 30 September 2001, due to the fact that approval was only received from the Canadian authorities after the end of the second quarter. Metro introduced a franchising arrangement in 2000, whereby Metro's Zurich international office charges a franchise fee to each operation for the coordination of global purchasing and marketing, the administration of Metro World News, and the development of Metro's loyalty clubs and internet publishing. The 2000 reported figures have therefore been restated in this report to include franchise fee allocations to the operations. Metro had liquid funds of US$13.5 million at 30 June 2001, including US$4.6 million drawn down from the Group's pre-existing credit facility. Metro retains its options in Millicom International Cellular SA, which had a surplus market value of US$26.1 million based on the mid-market closing price of Millicom shares on the NASDAQ national market on 30 June 2001. Long term debt totaled US$83.4 before adjusting for the exercise of the Millicom option and the conversion of the US$22.1 million MTG convertible debenture loan into equity. Adjusted for the exercise of the option and conversion of the debenture, long term debt would have been US$35.2 million and shareholders equity would have been reduced from US$(56.3) million to US$(8.1) million. OTHER INFORMATION Metro's results for the third quarter and nine months to 30 September 2001 will be released on 25 October 2001. Metro International S.A. publishes and distributes 19 editions of its free daily newspaper in 14 countries: Stockholm (Metro), Prague (Metro), Gothenburg (Metro), Hungary (Metro), the Netherlands (Metro), Helsinki (Metro), Malmö (Metro), Santiago (Publimetro), Philadelphia (Metro), Zurich (Metropol), Toronto (Metro Today), Rome (Metro), Buenos Aires (Publimetro), Milan (Metro), Warsaw (Metropol), Athens (Metrorama), Montreal (Metro), Barcelona (Metrodirecto) & Boston (Metro). Metro International S.A. 'A' and 'B' shares are listed on the NASDAQ National Market and on the Stockholmsbörsen O-List under the symbols MTROA and MTROB. For further details, please visit www.metro.lu, email info@metro.lu or contact: Pelle Törnberg - President & CEO +44 (0) 20 7408 0230 Matthew Hooper - Investor relations +44 (0) 20 7321 5010 Bert Willborg - Media relations +46 (0) 707 27 70 22 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/08/08/20010808BIT00490/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/08/08/20010808BIT00490/bit0001.pdf The full report