CEWE Stiftung & Co. KGaA — Investor Presentation 2016

Aug 11, 2016

Results Q2 2016 CEWE Stiftung & Co. KGaA

Analyst Conference Call Oldenburg

August 11, 2016

This presentation contains forward-looking statements that are based on current assumptions and forecasts of the management of CEWE. Known and unknown risks, uncertainties and other factors could lead to material differences between the forward-looking statements given here and the actual development, in particular the results, financial situation and performance of our Company. The Company assumes no liability to update these forward-looking statements or to conform them to future events or developments.

All numbers are calculated as exactly as possible and rounded for the presentation. Due to this, rounding errors might occur.

Dr. Olaf Holzkämper CFO

Dr. Rolf Hollander CEO

Highlights Q2 2016		Q2 2015	Q2 2016	Comment
Photofinishing
Sales Volume Turnover EBIT EBIT w/o one-offs	in photo m. in EUR m.	437 72.6 -2.1 -2.1	442 81.1 -0.6 0.5	 At 1.1% higher than 2015, volume is better than expected  Added-value products drive the increase in turnover (+11.7%) and profitability  One-time items in Q2 2016: -0.9 EUR m. goodwill depreciation in UK and 0.2 EUR m. restructuring costs
Commercial Online-Print
Turnover EBIT	in EUR m.	18.4 -0.9	20.7 0.3	 Online printing turnover (+12.3%) on track to achieve 2016 target  EBIT turned profitable for first time in Q2 (after also positive Q1)
Retail
Turnover EBIT	in EUR m.	15.1 -0.2	14.5 0.0	 Focus on profitability successful  EBIT continues to improve
Other
Turnover EBIT	in EUR m.	0.0 -0.4	0.5 -0.6	 Segment Other covers administrative costs for company structure, supervisory board costs, IR costs, real estate, futalis
Group
Turnover EBIT EBIT w/o one-offs	in EUR m.	106.1 -3.6 -3.6	116.8 -0.9 0.2	 Photofinishing and commercial online printing increase turnover  EBIT w/o one-offs turned profitable in Q2
Free Cash Flow	in EUR m.	-6.7	-5.6	 Operative cash flow increase free cash flow
ROCE	%	16.6	20.3	 ROCE continues to rise
Equity ratio	%	55.1	57.2	 Solid equity ratio

► Also Q2 confirms the annual targets for 2016 Rounding differences may occur

Agenda

1. Results

- Photofinishing

• Commercial Online-Print
• Retail
• Group
• 1. Financial Report (P&L-Details, Balance Sheet, Cash Flow, Return On Capital)
• 1. Outlook
• 1. Q&A

CEWE PHOTOBOOK: TV summer campaign

• With authentic customer opinions
• Launched on 1 August 2016

► Multi-channel summer campaign starts with authentic customer opinions

Brand awareness CEWE PHOTOBOOK in Germany

► Steady increase in brand awareness and brand power

Source: GfK

Net Promoter Score CEWE PHOTO BOOK

Net Promoter Score Germany 2015

Source: NPS Rankings, defacto and Bamberg University, April 2013, and CEWE customers

Award

► CEWE distinguished with the 2016 Digital Champions Award for the most successful company transformation

Photos Q2

Photos H1

► Photos total exceed target due to digital photos

CEWE PHOTOBOOK

► CEWE PHOTO BOOK increases volume and clearly enhances photo value

Photos Total by Quarter

Saisonal distribution: CEWE 2012 to 2016

Total share of photos per quarter as a percentage

Value of Photos Q2

► Both, increase in total prints and in value per photo drive growth in photofinishing revenue

*turnover since 2013 adjusted Rounding differences may occur

Value of Photos H1

► Both, increase in total prints and in value per photo drive growth in photofinishing revenue

*turnover since 2013 adjusted Rounding differences may occur

Shares in Turnover by Quarter - Photofinishing

Seasonal distribution: CEWE 2012 to 2016

Share in turnover by quarter as a percentage

* Photofinishing turnover approx. on previous year´s level (2015: 415.0 Euro mill.)

Photofinishing Segment in Q2

• After a positive Q1 in 2016, Q2 sees turnover continuing to rise: +11.7%
• In addition to on-site printing (CEWE PHOTO KIOSK), the increase in turnover is based on the CEWE PHOTO BOOK and other CEWE brands (CEWE CALENDARS, CEWE CARDS and CEWE WALL ART)
• Photofinishing grows organically by 9.9%, without DeinDesign (EUR 1.3 million turnover in Q2).
• Growth in turnover and higher proportion of added-value products improve EBIT by EUR 1.5 million
• EBIT also contributes EUR 0.9 million in depreciation on goodwill in the UK (due to Brexit) and EUR 0.2 million in closure costs for the DeinDesign operation in Berlin
• EBIT before one-off effects thus improved by as much as EUR 2.6 million
• ► Added-value products drive up turnover in Q2 as well
• ► In spite of seasonal shift photofinishing better than in the same period of the previous year

EBIT before Restructuring by Quarter – Photofinishing

* 38.0-44.0 Euro mill. group EBIT-target less planned retail, online printing and from segment "Others"

EBIT 2012 – 2013: EBIT adjusted to other tax

Photofinishing Segment in H1

-7.8 -4.6 -2.9

-2.0% +0.4% of turnover

• Both Q1 and Q2 increase in turnover in comparison to the previous year: Total H1 2016 +12.5%
• Added value products drive increase: CEWE PHOTO BOOK, CEWE CALENDAR, CEWE CARDS, CEWE WALL PICTURES
• Photofinishing grows organically by +10.7%, without DeinDesign (EUR 2.7 million turnover in H1)
• EBIT improved by EUR 3.6 million
• EBIT before one-off effects improved by EUR 3.8 million:

One-off effects in 2016: + EUR 0.4 million in Smilebooks USA sales revenue, - EUR 0.9 million in depreciation on goodwill in the UK, - EUR 0.2 million in closure costs for the DeinDesign operation in Berlin

One-off effects in 2015: - EUR 0.4 million in restructuring costs for closing a customer service office in Dresden

► EBIT clearly improved

-5.7

Agenda

1. New Products and Results

• Photofinishing
• - Commercial Online-Print
• Retail
• Group
• 1. Financial Report (P&L-Details, Balance Sheet, Cash Flow, Return On Capital)
• 1. Outlook
• 1. Q&A

CEWE's Commercial Online-Print activities in Europe

► CEWE operates with webshops in 10 different countries

Commercial Online-Print Segment in Q2

• Q2 increase in turnover at 12.3% exceeds the total increase in turnover of around 10% planned for 2016 (growth thus increased, after 4.8% in Q2 2015 and 10.4% in the full year of 2015)
• Positive Q2 confirms the full-year target of "approximately around" EUR 86 million
• Q2 EBIT improved by EUR 1.2 million in comparison to the previous year and thus positive for the first time: + EUR 0.3 million
• Q2 clearly confirms the annual target set for a "positive" EBIT (including the effects from the Saxoprint purchase price allocation) Rounding differences may occur

► Commercial online printing continues to increase its turnover, Q2 EBIT positive for the first time (as in Q1 as well)

Commercial Online-Print Segment in H1

• H1 increase in turnover at 13.3% exceeds the total increase in turnover of around 10% planned for 2016
• Positive H1 confirms the full-year target of "approximately around" EUR 86 million
• H1 EBIT improved by EUR 3.0 million in comparison to the previous year and thus positive for the first time: + EUR 0.8 million
• H1 clearly confirms the annual target set for a "positive" EBIT (including the effects from the Saxoprint purchase price allocation)

► Commercial online printing continues to increase its turnover, H1 EBIT positive for the first time

Growth outlook CEWE Commercial Online-Print

Revenue in Euro millions

► Commercial Online-Print is a growth driver

Agenda

1. Results

• Photofinishing
• Commercial Online-Print

- Retail

• Group
• 1. Financial Report (P&L-Details, Balance Sheet, Cash Flow, Return On Capital)
• 1. Outlook
• 1. Q&A

Repositioning of Retailing in Poland

Photo-Hardware Photofinishing-Products

► Focus on photofinishing products in CEWE-retail shops

► Adjustments in hardware pricing to improve margins

Retail* Segment in Q2

in Euro millions

• Repositioning is taking effect; currencyadjusted turnover increases again slightly at +1.7%: EUR 15.3 million after EUR 15.1 million in the second quarter of 2015
• However, negative currency effects, particularly in Norway and Poland, see reported retail turnover decreasing by a total of 3.9% to EUR 14.5 million

Repositioning, particularly of business in Poland, pays off: CEWE RETAIL improves EBIT by EUR 0.2 million

* Only hardware, no photofinishing

Rounding differences may occur

► Repositioning of retailing successful, profits further improved

Retail* Segment in H1

in Euro millions

* Only hardware, no photofinishing

• Repositioning is taking effect and currency-adjusted turnover increases again slightly at +1.1%: EUR 27.3 million after EUR 28.5 million in the period up to mid-year 2015
• However, negative currency effects, particularly in Norway and Poland, see reported retail turnover decreasing by a total of 4.2% to EUR 28.8 million
• Repositioning, particularly of business in Poland, pays off: CEWE RETAIL improves EBIT by EUR 0.9 million
• CEWE RETAIL improves operatively before restructuring costs for the previous year (EUR 0.6 million) by EUR 0.3 million
• ► Repositioning of retailing successful, profits further improved

Agenda

1. Results

• Photofinishing
• Commercial Online-Print
• Retail

- Group

• 1. Financial Report (P&L-Details, Balance Sheet, Cash Flow, Return On Capital)
• 1. Outlook
• 1. Q&A

Turnover

EBIT Q2

EBIT Q2 after restructuring

in Euro millions

EBIT Q2 before restructuring

in Euro millions

EBIT H1

EBIT H1 after restructuring

in Euro millions

EBIT H1 before restructuring

in Euro millions

► Positive mid-year profit based on positive development in earnings by all the business segments

Page 32

Commercial Online-Print (COD)

Retail (RT) Other

Agenda

• 1. Results
• 2. Financial Report (P&L-Details, Balance Sheet, Cash Flow, Return On Capital)
• 1. Outlook
• 1. Q&A

Group P&L – Q2

millions of euros	Q2	% of	Q2	% of	Change*	Change*
	2015	revenues	2016	revenues	as %	m€
Revenues	106.1	100.0%	116.8	100.0%	+10.1	+10.7
Increase / decrease in finished and unfinished
goods	0.0	0.0%	0.1	0.0%	+18.2	+0.0
Other own work capitalised	0.2	0.2%	0.2	0.2%	-22.6	-0.1
Other operating income	3.2	3.0%	4.1	3.5%	+29.9	+1.0
Cost of materials	-34.9	-32.9%	-37.7	-32.3%	-8.1	-2.8
Gross profit	74.7	70.4%	83.5	71.5%	+11.7	+8.8
Personnel expenses	-33.3	-31.4%	-36.0	-30.8%	-8.1	-2.7
Other operating expenses	-36.5	-34.3%	-39.2	-33.5%	-7.4	-2.7
EBITDA	5.0	4.7%	8.4	7.2%	+67.6	+3.4
Amortisation of intangible assets,
depreciation of property, plant and equipment	-8.6	-8.1%	-9.2	-7.9%	-8.0	-0.7
EBIT	-3.6	-3.4%	-0.9	-0.7%	+75.5	+2.7
Financial income	0.0	0.0%	0.0	0.0%	+243	+0.0
Financial expenses	-0.1	-0.1%	-0.1	-0.1%	+7.4	+0.0
EBT	-3.7	-3.5%	-1.0	-0.8%	+73.8	+2.7
Income taxes	1.2	1.2%	0.3	0.3%	-74.9	-0.9
Earnings after taxes	-2.4	-2.3%	-0.7	-0.6%	+73.3	+1.8

of CEWE KGaA (consolidated income / Rounding differences may occur

Only the substantial, significant differences to the previous year are illustrated. Due to P&L in German language figures are shown with "," instead of "." as delimiter symbol.

Distribution of sales returns:

€ 81.1 m. PF (PY: € 72.6 m.) € 14.5 m. RT (PY: € 15.1 m.) € 20.7 m. COP (PY: € 18.4 m.) € 0.5 m. Other (PY: € 0.0 m.)

(+) Returns from re-charged disposal costs
(+) Yields from the disposal of fixed assets

(-) Raw materials, supplies and goods for photofinishing and commercial online printing (+) Merchandise

(-) Photofinishing (business driven) (-) DeinDesign and futalis acquisitions (+) Retailing

(-) Sales and R&D costs

(-) Costs for maintenance

(-) CEWE UK depreciation on goodwill

(-) CEWE UK depreciation on goodwill is not depreciation with an effect on taxes (normalised tax rate is around 33%)

Balance Sheet as of June 30

in Euro millions in Euro millions

► Equity ratio increases to a sound 57.2%

Management-Balance Sheet as of June 30

Capital Employed

2012 2013 2014 2015 2016 191.4 190.5 188.5 203.1 85.6% 84.5% 84.9% 85.1% 10.4% 9.7% 8.2% 8.8% 3.9% 5.8% 6.9% 6.1% 87.9% 4.8% 7.3% 2012 2013 2014 2015 2016 191.4 190.5 188.5 203.1 12.9% 14.1% 12.5% 9.5% 77.8% 78.1% 57.0% 54.1% 33.0% 28.8% 9.4% 12.6% 209.3 81.7% 4.2% 14.1% 209.3 Liquidity Net Working Capital Gross financial debt Non operational debt Longterm assets Equity

Capital Invested

in Euro millions

in Euro millions

► Increasing investment intensity increases capital employed

Capital Employed I

Capital Employed	I						(+) On-site finishing (+) EDP infrastructure (+) Buildings
millions of euros	Mar. 31, 2016	% of C E	June 30, 2016	% of C E	Change as %	Change m€	CEWE UK goodwill impairment
Property, plant and equipment Real estate held as financial	107.0	49.3 %	112.8	53.9 %	+5.4 %	+5.7	Depreciation > additions
investments	5.1	2.3 %	5.0	2.4 %	-1.2 %	-0.1
Goodwill	37.4	17.2 %	36.5	17.5 %	-2.3 %	-0.9	(+) HTGF (High-Tech Start-Up Fund):
Intangible assets	15.8	7.3 %	15.3	7.3 %	-3.2 %	-0.5	conversion of loan to participating interest
Financial assets	4.3	2.0 %	5.6	2.7 %	+29.9 %	+1.3
Non-current receivables from income tax refunds	0.5	0.2 %	0.5	0.3 %	+0.0 %	+0.0	(-) HTGF: conversion of loan to participating interest
Non-current financial assets	1.9	0.9 %	0.7	0.3 %	-65.0 %	-1.2
Non-current other receivables and assets	0.6	0.3 %	0.4	0.2 %	-35.4 %	-0.2	(-) Merchandise in business segment for retailing
Deferred tax assets	7.1	3.3 %	7.1	3.4 %	+0.2 %	+0.0
Non-current assets	179.8	82.8 %	184.0	87.9 %	+2.3 %	+4.2
Inventories	43.2	19.9 %	41.7	19.9 %	-3.5 %	-1.5	(+) Business-driven increase
+ Current trade receivables	39.2	18.1 %	40.4	19.3 %	+3.0 %	+1.2
Operating gross working capital	82.4	38.0 %	82.1	39.2 %	-0.4 %	-0.3	(+) Business-driven increase
- Current trade payables	49.0	22.6 %	52.2	24.9 %	+6.4 %	3.2
Operating net working capital	33.4	15.4 %	29.9	14.3 %	-10.5 %	-3.5

Only the substantial, significant differences to the previous year are illustrated. Due to capital employed structure in German language figures are shown with "," instead of "." as delimiter symbol.

(+) Digital/offset printing machines

(+) On-site finishing

Capital Employed II

Capital Employed	II
millions of euros	Mar. 31,	% of	June 30,	% of	Change	Change
	2016	C E	2016	C E	as %	m€
Assets held for sale	1.2	0.5 %	1.1	0.5 %	-1.9 %	-0.0
+ Current receivables from income tax refunds	3.2	1.5 %	4.8	2.3 %	+51.9 %	+1.6
+ Current financial assets	2.6	1.2 %	2.9	1.4 %	+11.4 %	+0.3
+ Other current receivables and assets	7.1	3.3 %	8.7	4.2 %	+22.7 %	+1.6
Other gross working capital	14.1	6.5 %	17.6	8.4 %	+25.1 %	+3.5
- Current tax liabilities	7.1	3.3 %	6.8	3.3 %	-3.4 %	-0.2
- Current other accruals	3.0	1.4 %	3.1	1.5 %	+2.5 %	+0.1
- Current financial liabilities	0.3	0.2 %	0.3	0.2 %	+0.0 %	+0.0
- Current other liabilities	27.6	12.7 %	27.2	13.0 %	-1.6 %	-0.4
Other current liabilities	38.0	17.5 %	37.4	17.9 %	-1.6 %	-0.6
Other net working capital	-24.0	-11.0 %	-19.8	-9.5 %	-17.3 %	+4.1
Operating net working capital	33.4	15.4 %	29.9	14.3 %	-10.5 %	-3.5
Other net working capital	-24.0	-11.0 %	-19.8	-9.5 %	-17.3 %	+4.1
Net working capital	9.4	4.3 %	10.1	4.8 %	+6.7 %	+0.6
Non-current assets	179.8	82.8 %	184.0	87.9 %	+2.3 %	+4.2
+ Net working capital	9.4	4.3 %	10.1	4.8 %	+6.7 %	+0.6
+ Cash and cash equivalents	27.8	12.8 %	15.3	7.3 %	-45.2 %	-12.6
Capital employed	217.0	100.0 %	209.3	100.0 %	-3.6 %	-7.8

(+) Capitalisation of advance tax payments (earnings-induced)

(+) Tax refunds

(-) Tax accruals used for 2015

(-) Value added tax and payroll tax

Only the substantial, significant differences to the previous year are illustrated.

Due to capital employed structure in German language figures are shown with "," instead of "." as delimiter symbol.

Capital Invested

Capital Invested
millions of euros	Mar. 31, 2016	% of C I	June 30, 2016	% of C I	Change as %	Change m€	(-) Dividend payment (-) Expenditure without affecting earnings
Equity	187.7	86.5 %	171.0	81.7 %	-8.9 %	-16.7	(actuarial losses)
Non-current accruals for pensions	23.4	10.8 %	26.5	12.7 %	+13.3 %	+3.1	(-) Acquisition of own company shares
Non-current deferred tax liabilities Non-current other accruals	2.3 0.2	1.1 % 0.1 %	2.1 0.2	1.0 % 0.1 %	-10.6 % -5.6 %	-0.2 -0.0	(+) Decrease in base interest rate
Non-current financial liabilities	0.0	0.0 %	0.2	0.1 %	+400 %	+0.2
Non-current other liabilities	0.6	0.3 %	0.6	0.3 %	+4.3 %	+0.0
Non-operating liabilities	26.5	12.2 %	29.6	14.1 %	+11.5 %	+3.1	(+) Seasonal-related debts
Non-current interest-bearing financial liabilities	1.5	0.7 %	1.3	0.6 %	-11.6 %	-0.2
+ Current interest-bearing financial liabilities	1.3	0.6 %	7.4	3.5 %	+452 %	+6.0
Gross financial liabilities	2.8	1.3 %	8.7	4.2 %	+208 %	+5.9
Capital invested	217.0	100.0 %	209.3	100.0 %	-3.6 %	-7.8

Only the substantial, significant differences to the previous year are illustrated. Due to capital invested structure in German language figures are shown with "," instead of "." as delimiter symbol.

Free Cash Flow Q2

• ► Operative result and working capital significantly increase operative cash flow
• ► Higher investment budget and bringing forward of investments increase outflow of funds from investment activities
• ► Free cash flow improves by 15.5%

Free Cash Flow Q2

millions of euros	Q2	Q2	Change	Change
	2015	2016	as %	m€
EBITDA	5.0	8.4	67.6%	3.4
+/- Non-cash factors	0.0	0.3	>-1.000%	0.4	(+) More inventory reduction in RT
+ Decrease in operating net working capital	2.4	3.0	24.5%	0.6	(+) Less inventory increase in PF
- Increase in other net working capital (excluding income tax items)	-0.9	-2.3	-153%	-1.4	(-) More increase in receivables PF
- Taxes paid	-1.3	-1.8	-36.6%	-0.5
+ Interest received	0.0	0.0	300%	0.0	(-) Value added tax receivables
= Other operating cash flows	-1.3	-1.8	-35.4%	-0.5
= Cash flow from operating activities	5.2	7.7	48.1%	2.5
- Outflows from investments in fixed assets	-10.1	-13.4	-32.7%	-3.3	(-) Advance income tax payments
- Outflows from purchases of consolidated interests / acquisitions	-0.5	0.0	-	0.5
- Outflows from investments in financial assets	-1.4	-0.1	91.9%	1.3	(-) Operative investments in
- Outflows from investments in non-current financial instruments	0.1	0.0	>1.000%	-0.1	preparation for the season
+ Inflows from the sale of property, plant and equipment and
intangible assets	0.1	0.2	44.1%	0.0	(+) Only minor investments
= Cash flow from investing activities	-11.9	-13.3	-12.4%	-1.5
= Free cash flow	-6.7	-5.7	15.3%	1.0

Only the substantial, significant differences to the previous year are illustrated. Due to capital invested structure in German language figures are shown with "," instead of "." as delimiter symbol.

Free Cash Flow H1

• ► Operative result and working capital reduction in inventory at the end of the year significantly increase operative cash flow
• ► In spite of operative investments in the previous year, elimination of purchase-price payments for company acquisitions reduce outflow of funds from investment activities
• ► Free cash flow becomes positive

ROCE as of June 30

► Development of earnings increases ROCE to a strong 20.3%, although average capital employed increased to EUR 216.5 million

* ROCE = EBIT / Capital Employed

Agenda

• 1. Results
• 1. Financial Report (P&L-Details, Balance Sheet, Cash Flow, Return On Capital)

3. Outlook

1. Q&A

Special tax effect raises 2016 after-tax earnings

Due to an unscheduled tax refund of more than 2 million euros, after-tax earnings for 2016, currently in a range of 25 to 29 million euros, will now be in a corridor of 27 to 31 million euros.

The target set for earnings per share increased correspondingly to 3.81 to 4.38 euros (previously 3.53 to 4.10 euros/share).

Reason: In 2008, the amount of tax payable was reduced when the German CEWE company declared that it would waive a claim due to be paid by the French CEWE company. When the tax assessment for 2008 was received, a tax liability in the same amount had to be entered in July 2010, since the financial authorities initially did not recognise this procedure.

CEWE challenged this tax assessment by way of legal remedy, and has now been awarded a tax refund including interest in the amount of more than two million euros. This refund will be realised in the third quarter of 2016, thus improving the tax result.

Outlook 2016

		2015	e2016	Change
Photos digital	billion photos	2.16	2.05 to 2.15	-5% to -1%
Photos analogue	billion photos	0.07	0.050 to 0.055	-29% to -22%
Photos total	billion photos	2.24	2.10 to 2.21	-6% to -1%
CEWE PHOTO BOOK	million books	6.0	6.10 to 6.15	+1% to +2%
Investments*	Euro millions	39.3	48
Revenue	Euro millions	554.2	555 to 575	-0% to +4%
EBIT	Euro millions	36.8	38 to 44	+3% to +20%
EBT	Euro millions	36.3	37 to 43	+2% to +18%
Earnings after tax	Euro millions	22.7	27 to 31 (old: 25 to 29)	+19% to +36% (old: +11% to +29%)
Earnings per share	Euro per share	3.24	3.81 to 4.38 (old: 3.53 to 4.10)	+18% to +35% (old: +9% to +27%)

* without acquisitions (companies or customer bases)

► Outlook 2016 confirmed

► Forecast for Earnings after tax and Earnings per share increased

NEW

NEW

EBIT Development

► Also Q2 confirms the annual targets for 2016

Agenda

• 1. Results
• 1. Financial Report (P&L-Details, Balance Sheet, Cash Flow, Return On Capital)
• 1. Outlook
• 4. Q&A

Q&A-Session Q2 2016 Analyst Conference Call August 11, 2016