Preliminary results for the third quarter and nine months ended 30 september 2001

PRELIMINARY RESULTS FOR THE THIRD QUARTER AND NINE MONTHS ENDED 30 SEPTEMBER 2001 Luxembourg, 25 October 2001 - Metro International S.A. ("Metro") (MTROA, MTROB), today announced its preliminary results for the third quarter and nine months ended 30 September 2001. · World's fastest growing newspaper - year to date Group net sales up 36% on local currency basis · World's fifth most read newspaper with over 9 million readers · All 4 established operations launched before 1999 demonstrate resilience in weak advertising markets with 1% increase in net sales · New ventures launched in last three years delivered 131% net sales growth · Stockholm operating margin maintained at 37% · Successful completion of US$ 70 million private placement · Athens achieved first monthly profit in record time of 9 months Consolidated income Q3 2001* Q3 2000* Jan-Sep 2001* Jan-Sep statement 2000* (US$ '000s) Net Sales 21.5 17.9 77.7 62.3 Earnings before -22.8 -16.4 -60.1 -32.2 depreciation and amortization Operating income - 24.0 - 18.2 - 63.9 - 36.6 Income after -27.0 -18.3 -65.5 -43.2 financial items & before income tax Earnings per share -0.35 -0.28 -0.87 -0.65 Number of shares 109,383,131 66,375,156 109,383,131 66,375,156 outstanding * Metro had 14 operations at the end of Q3 2000 and 21 operations at the end of Q3 2001. OPERATING REVIEW Group net sales increased by 36% in the first nine months of 2001 in local currency terms. Despite the widespread discussion of a global advertising recession and the impact of the September 11 tragedy in the US, which occurred at the end of the third quarter, Metro editions have continued to significantly increase market shares in the weakest sales quarter of the year. This performance is based on the strong demographic profile of the readership and high number of readers per copy. Metro now has over 9 million readers worldwide and is the fifth most read newspaper in the world. The Group continues to demonstrate its differentiation from the traditional newspaper publishing industry with its rapid growth and attraction of a high proportion of young and female readers. Net sales for the international operations outside Sweden were up by 105% year on year in the first nine months in local currencies, and increased their share of Group net sales to 56% in the third quarter. Metro editions outperformed the overall weak development in each local advertising market, and consequently increased their share of advertising revenues. This out-performance was particularly demonstrated in Sweden. Advertising sales for the major Swedish 'daily morning newspapers' declined year on year by 20% in the third quarter and by 14% in the first nine months of the year, according to Research International - SIFO RM. In addition, the recruitment advertising market collapsed in Sweden in the third quarter. Metro Sweden's revenues increased by 4% in the first nine months of the year, in local currency terms. Metro has now renegotiated 12 of its print and paper contracts and will see the increased benefits of the resulting savings moving forward. This cost reduction is further compounded by falling paper prices in the US and Europe. The average cost per copy has decreased by 8% in the first nine months of the year, and by 12% in the third quarter, when compared with the same periods in 2000. This development is in line with the Group's stated objective of reducing the average cost per copy by 10% for the full year. Cost per copy is calculated on the basis of an average 24-page edition and includes all Group costs except headquarter expenses. Despite the launch of nine new editions since the end of the third quarter of 2000, operating income from the editions (excluding headquarter expenses) only declined year on year in the third quarter to US$ - 18.3 (US$ -16.9) million. After the end of the quarter, the Group successfully completed a private placement of new shares to Swedish and international institutional investors, at a time when few other companies were able to raise money in the capital markets. The private placement raised US$ 70 million in new funds, which are being used to invest in the continuing development of the Group's operations. Metro management has always stated its objective to move individual editions to annualized profitability in the third year of their existence, between months 25 and 36 after launch. In line with this management focus and at the request of investors, the operations have been classified in the Operating Review as either 'Established Operations', which are profitable, or 'New Ventures', which require further investment in order to reach break even. In line with the rapid geographical expansion of Metro and US GAAP and IAAS accounting standards, the geographical segmentation of the operations in this report have been amended. The operations are consequently now reported in 'Europe' and 'Rest of World' segments in the notes to the accounts. Sweden continues to be reported separately on the basis that it accounts for more than 10% of Group operating income. Established Operations The Stockholm, Gothenburg, Prague, and Hungary editions comprise the established operations, and reported combined net sales growth of 1% in the first nine months and a decline of 8% in the third quarter of 2001, in local currencies. Net sales were down by 10% to US$ 41.0 million in the first nine months, at reported exchange rates. 53% of Group net sales were generated by these established operations in the first nine months of 2001. The established operations generated earnings before depreciation and amortisation of US$ 10.9 million in the first nine months of 2001. Combined earnings after depreciation and amortization were up 4% in the first nine months, in local currencies. At reported exchange rates, combined earnings after depreciation and amortization were US$ 8.0 (US$ 8.8) million in the first nine months and US$ 0.7 (US$ 1.1) million in the third quarter of 2001. The Stockholm operating margin was maintained at 37% for the first nine months of 2001, despite the weaker advertising markets. This reflects the ongoing programme of reducing flexible costs and renegotiating the fixed cost base. New Ventures Metro's new ventures comprise the seventeen editions that have been started up in the last three years and in which the Group continues to invest, as well as the two discontinued businesses. Net sales for new ventures increased by 120% to US$ 36.7 million in the first nine months and by 102% to US$ 11.1 million in the third quarter, equivalent to 47% and 52% of Group revenues for the respective periods. The new ventures reported organic year on year net sales growth in local currencies in the first nine months and third quarter 2001 of 72% and 36% respectively, excluding editions launched since the end of the third quarter of 2000. Net sales in local currencies for total new ventures were up 131% in the year to date and 109% in the third quarter. Metro's joint ventures in Toronto and Montreal are treated as affiliate companies, with no contribution to Group net sales and a share of earnings, in line with the participation, consolidated to the Group. Results for the Toronto operation were fully consolidated up until 5 July 2001 when the merger with the local partner was approved. Earnings after depreciation and amortization for new ventures totaled US$ -54.2 million (US$ -36.1 million) in the first nine months, and US$ -19.0 million (US$ -18.0 million) in the third quarter. Organic earnings after depreciation and amortisation for new ventures, calculated by excluding the operations launched in the last year (since the end of the third quarter of 2000) improved by 48% in the third quarter to US$ - 9.4 million and by 16% to US$ - 31 million in the first nine months. The nine new ventures launched in the last year therefore accounted for 50% of new venture losses in the third quarter and 44% in the first nine months. Headquarters The Headquarters item relates to the general & administration expenses incurred by the headquarter operations and Metro World News, as well as investments relating to business development, cities under development (but not yet launched) and Group marketing. Headquarter costs totaled US$ 5.7 million in the third quarter and US$ 17.1 million in the first nine months of the year. FINANCIAL REVIEW The US dollar strengthened against most of Metro's reporting currencies during the first nine months of 2001. Group net sales would have been 9.2% higher at US$ 84.8 million on the basis of the exchange rates for the same period of 2000. At 30 September 2001, Metro had liquid funds of US$ 17.8 million. Long- term debt amounted to US$ 84.1 million on 30 September 2001. Adjusted for the exercise of the Millicom option and the conversion of the US$ 22.1 million convertible debenture loan from Modern Times Group MTG AB, long term debt would have totaled US$ 55.8 million and shareholders' equity would have been US$ -59.7 million. Metro received US$ 20 million in funding from one of its major shareholders, Industriförvaltings AB Kinnevik, during the third quarter. This sum was a pre-payment for shares to be issued in the subsequent private placement. The loan is included within short term liabilities at 30 September 2001, and was subsequently converted into new Metro shares in the private placement. After the close of the third quarter, the Group raised US$ 70 million of new funds via a private placement of 17,623,800 new A shares, at SEK 21 per share, and 15,670,842 new B shares, at SEK 24 per share. The outstanding issued share capital following the private placement was 55,823,671 A shares and 53,559,460 B shares. OTHER INFORMATION Metro's results for the fourth quarter and full year 2001 will be released in February 2002. For further information, please visit www.metro.lu, email info@metro.lu or contact: Pelle Törnberg, President & CEO tel: +44 (0) 20 7408 0230 Matthew Hooper, Investor & Press Relations tel: +44 (0) 20 7321 5010 Metro is the world's largest free newspaper, publishing and distributing 21 editions in 15 countries in 14 languages: 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 (Metro Directe), Boston (Metro), Madrid (Metro Directo) and Copenhagen (MetroXpress). 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. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/10/25/20011025BIT01640/bit0002.doc The full report http://www.waymaker.net/bitonline/2001/10/25/20011025BIT01640/bit0002.pdf The full report