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JCDecaux announces results for the first half 2002: Maintained profitability despite challenging advertising market

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  • Maintained EBITDA at €200.2 million (€ 199.6 million)
  • Net earnings group share increased 4.5% to €11.5 million (€ 11.0 million)
  • Net earnings group share, before goodwill and exceptional items, increased 8.4% to €44.1 million (€ 40.7 million)
  • Free cash flow up 164% to €31.7 million (–€ 49.1 million)
  • EBITDA for the full year expected to be slightly up on last year

18 September 2002 – JCDecaux SA (Euronext Paris: DEC) announced today its results for the six months ended 30 June 2002. The figures reflect a sound performance from the Group's two largest divisions, Street Furniture and Billboard, where both reported and organic revenues rose, but a continued lower contribution from the Transport division where airport advertising remained weak.

Revenues
Consolidated revenues increased by 3.3% to €779.9 million. On a like-for-like basis, excluding acquisitions, revenues decreased by 0.9%.

Street Furniture revenues increased by 5.0% to €417.2 million from €397.5 million in the same period last year. Excluding acquisitions, organic revenue growth was 3.9% in the period – a good performance in challenging advertising conditions and on top of the 8.3% organic growth achieved in the first half last year. Billboard revenues rose by 9.6% to €218.2 million in the first half of 2002, from €199.1 million in the first six months of 2001. Excluding acquisitions, Billboard revenues increased by 1.4% on an organic basis. The acquired Gewista subsidiaries made good contribution and the UK business comfortably outperformed its market.

Transport revenues decreased by 8.8% to €144.5 million in 2001 compared to €158.4 million in the same period last year. Excluding acquisitions, organic revenues decreased by 15.9%.

EBITDA
EBITDA (earnings before interest, tax, depreciation and amortization) at €200.2 million for the first half of 2002 was maintained, reflecting the solid performance of the street furniture business, recent improvement in the billboard market and the positive impact of the Company's cost-savings programme, initiated in the first half, which off-set the sharp decrease in EBITDA in Transport. The Group's EBITDA margin was 25.7% in the first half of 2002, compared to 26.4% in the prior period.

Street Furniture EBITDA increased by 3.4% to €171.8 million in the first half of 2002, compared to €166.1 million in the first six months of 2001. Representing 86% of the Group's total EBITDA, Street Furniture continued to generate robust EBITDA margins, at 41.2%, versus 41.8% in the first half last year.

Billboard EBITDA was €28.2 million in the first half of 2002, a 38.3% increase compared to the same prior period in 2001 (€ 20.4 million). EBITDA margin increased to 12.9% from 10.3%, driven by strong operational performances in the UK and Central Europe, a better pricing environment as this area of the outdoor market begins to recover, and the earlier benefits of the upgrades to the billboard estate.

In Transport, EBITDA decreased by 98.5% to €0.2 million (EBITDA margin of 0.1%) compared to €13.1 million in the same period last year. The Transport business continues to be impacted by depressed business conditions in the airport advertising market, particularly in the United States, in the aftermath of 11 September 2001.

Major new developments
During the first half, JCDecaux won and signed several new street furniture contracts. In Europe large contracts were renewed and won in the Spanish cities of Saragossa, Alicante and Mostoles and in the Scandinavian capitals of Copenhagen and Oslo; and in Asia, an important partnership was secured in Seoul.

A ground-breaking alliance with Unilever was announced in April. Utilising JCDecaux's outdoor networks, the five-year agreement covering 22 European countries is worth in excess of €100 million and covers Unilever's portfolio of brands.

In the second half the Company confirmed a major street furniture contract for the city of Chicago and won its first contract in Canada, in partnership with Viacom, for Vancouver's street furniture programme.

EBIT / Operating Income
Operating income decreased by 8.6% to €106.2 million compared to €116.1 million in the first half of 2001, reflecting an increase of €10.5 million in the depreciation charge during the period.

Net Income
Net earnings (Group share) increased by 4.5% to €11.5 million in the first half of 2002, compared to €11.0 million in the same period in 2001. Net earnings (Group share), before goodwill and exceptional items, increased by 8.4% to €44.1 million, compared to €40.7 million in the same period last year.

Capital expenditure, net of disposals, was €73.8 million in the first half of 2002, compared to €147.2 million in the same period last year. The reduction in capital expenditure follows the completion of the billboard upgrade programme in France and the UK, and rigorous project assessment given the current advertising environment.

Free cash flow was €31,7 million in the first half 2002 versus –€ 49,1 million in the first half 2001, an increase of 164%, primarily due to a decrease of €74 million in capital expenditures and an increase of €40 million in working capital due to seasonal changes in the level of receivables.

Net debt as at 30 June 2002 was €727.2 million, against €733.5 at 31 December 2001.

Commenting on the results, Jean-Charles Decaux, Chairman of the Executive Board and Co-Chief Executive Officer, said:

“While the advertising market as a whole has been challenging for the past two years, outdoor advertising continues to outperform based on a growing audience as people spend more time out of home and on the increasing fragmentation of other media. JCDecaux's results for the first half of 2002 reflect the strength of our Company's assets in its major Street Furniture and Billboard businesses, as well as our capacity to control costs and the earlier investments we have made in our estate. Transport advertising, and more specifically airport advertising, remains particularly difficult in the aftermath of 11 September 2001. During the period, JCDecaux has continued to demonstrate its competitive advantage, winning several new street furniture contracts, which will hold it in good stead for the future.

Commenting on the prospects for the year, Jean-Charles Decaux added: “While the Company is cautious on the advertising sector in 2002, it remains confident in its ability to outperform the advertising and outdoor advertising markets. As we've previously indicated, Group revenues in the second half of 2002 are expected to be broadly in line with the first and we now expect EBITDA in 2002 to be slightly up compared to last year. ”