CEWE Stiftung & Co. KGaA — Investor Presentation 2020

Mar 26, 2020

Annual Press & Analysts' Conference

CEWE Stiftung & Co. KGaA

March 26, 2020

CEWE acts with clear priorities in Corona crisis

• • We focus on health and safety of our employees 1
• 2

3

• We secure production capabilities of our laboratories and printing plants
• We keep online and mobile sites up and communicate with our customers
• 4
• We ensure cost reductions and review investments

Means to tackle the Corona crises have been implemented

• With 13 production plants all over Europe, CEWE is able to digitally route customer orders to other production sites to produce and ship from there
• Shifts are separated from each other to limit a default risk
• In the administrative area functions were separated and relocated accordingly
• Sourcing of supply products and materials is ensured
• If possible, CEWE employees are currently working from home
• All meetings are carried out by video conference, there is a group-wide visitor and travel stop
• Emphasis on online ordering and mail home delivery where POS are closed
• Program to reduce costs and re-evaluate all investment projects kicked-off

With its long term strategic perspective CEWE seems well prepared

Crisis management	CEWE acted quickly, courageously and with clear priorities
Strong team	All 4,200 CEWE employees are committed to coping with the crisis
Solid financial foundation	Strong balance sheet (cash position and equity ratio)
Diversified portfolio	Photo products in the consumer business are more independent of current shutdowns than business print
Omnichannel provider	Even if shops are closed, most CEWE photo products can still be ordered online for all consumers, and delivery is also direct to your home
Stay-at-home effect	Customers can use the time at home to create photo products

2019 EBIT continues the trend of increasing earnings

in Euro millions

* 2018 updated EBIT without futalis acc. to IFRS 5

CEWE Group Targets 2019 achieved

Targets		PY 2018	Target 2019	Actual 2019
Photos	billion photos	2.23	2.22 to 2.26	2.40	✓
CEWE PHOTO BOOK	millions	6.18	6.24 to 6.31	6.62	✓
Investments*	Euro millions	49.6	around 55	39.3	✓
Revenue	Euro millions	649.9	675 to 710	714.9	✓
EBIT	Euro millions	55.7	51 to 58	57.8	✓
EBT	Euro millions	55.3	50.5 to 57.5	54.3	✓
Earnings after tax Adjusted earnings after tax**	Euro millions	36.3	35 to 39	31.8 36.8
Earnings per share Adjusted EPS**	Euro	5.06	4.74 to 5.40	4.41 5.11

Rounding differences might occur.

* Operative investments without potential investments in expanding the business volume, corporate acquisitions, additional customer-base acquisitions and IFRS 16 leasing additions

** Adjusted by Euro 5.0 million in restructuring costs at LASERLINE, which are not tax-reducing due to the also operationally negative LASERLINE result

Agenda

1. Corporate Development by Business Segments

• 1.1 Photofinishing
• 1.2 Retail
• 1.3 Commercial Online-Print
• 1.4 Other

2. Group Results 2019

• 3. Financial Details
• 4. Innovation
• 5. Outlook 2020

6. Q&A

1.1 Photofinishing

CEWE's omni-channel solution: Customer centric

Order at CEWE: Anytime & anyplace

• True self service for customers, simple for store staff to manage
• Integrated iOS- and Android card reader
• Easy, fast and intuitive

• New, attractive creative output products

• Easy, convenient in-browser option

• Includes 6 months free project storage
• Photo editing options
• Automatic layout function selecting multiple photos

• Personalisation available with text and clip-art

• Fully functional software with extensive editing features

• Ideal for larger photo books
• Save projects offline
• Include QR codes for Videos in photo books
• Full range of products available
• Pre-made templates
• Cover highlights

• Assistant available

• Intuitive, quick and easy

• In-app Photo editing
• Automatic layout function selecting multiple photos
• Options for personalisation with text and clip-art

60 millionth CEWE PHOTOBOOK

Thomas Lichtblau (BIPA), Lydia Reich and Ewald Hahn (CEWE)

• Bestselling photo book in Europe
• CEWE customer Lydia Reich ordered the 60 millionth CEWE PHOTOBOOK at trading partner BIPA in Austria
• Since 2005, the CEWE PHOTOBOOK has been a bestseller

CEWE PHOTOBOOK

with leather and linen cover

The new leather and linen covers provide for an outstanding visual and haptic experience. They are also an elegant way to protect your most cherished memories. You can customize your CEWE PHOTOBOOK by adding text and clip arts as special highlights on the front and back cover.

CEWE PHOTOBOOK Hardcover with highlights in rosé-gold

Highlights in rosé-gold are now available as new design elements. This allows for new markets and target groups to be opened up.

CEWE Photo Award 2019

PR-Clippings: CEWE Photo Award 2019

[…] Goodwin ist Jurorin des diesjährigen CEWE Photoawards: In den über 400.000 Teilnehmern sieht sie 400.000 Unterstützer ihrer Revolution: "Ich will, dass mich die Fotos umwerfen." […]

WhiteWall – The Company

Personalised wall art prints Customers create

wall art from their own photos

In-house production for WhiteWall and LUMAS

WhiteWall – A premium multichannel provider

Webshop with delivery in 46 countries

Own stores in Berlin, Dusseldorf, Hamburg & Munich Shop-in-Shop @ LUMAS

in Frankfurt, Cologne, New York, Paris, Zurich & Vienna

New strategic partnership in UK and Ireland

CEWE will take care of Boots Photo

SMARTPHONES ARE THE MOST IMPORTANT

PICTURE TAKING DEVICES

CEWE

IS WELL POSITIONED

CEWE PHOTOBOOK

Rounding differences may occur.

› CEWE PHOTOBOOK with significant growth – more than expected

Number of prints and turnover Photofinishing

Volume development exceeds expected Volume

• Rising share of value-added-products increases turnover per photo
• WhiteWall supports increase of turnover per photo

Rounding differences may occur.

Photofinishing-Turnover by Quarter

Seasonal distribution: CEWE 2015 to 2019 – Share in turnover by quarter as a million

Turnover in Photofinishing exceeds target

* planned group turnover w/o target turnover of segments retail, commercial online-print and other. Rounding differences may occur.

Business segment Photofinishing

in Euro millions

• Photofinishing grows in core business, with acquisitions also driving the increase in sales

• EBIT increases again

• Photofinishing grew by a strong 13.8% in 2019, the acquired wall art specialist WhiteWall was contributing to this growth

• 2019 started with another stronger first quarter, followed by a second quarter with the weather "more order-friendly" to result in renewed growth, contrary to the trend of seasonal shifting in previous years. The third and fourth quarters also maintained this development, with growth in core business and with acquisitions.
• Photofinishing EBIT grew by a strong 9.1 million euros in 2019
• 2019 special effects: -3.6 million euros
• − PPA effects from DeinDesign purchase price allocation: -0.4 million euros
• − PPA effects from Cheerz purchase price allocation: -1.9 million euros
• − PPA effects from WhiteWall purchase price allocation: -1.2 million euros
• Special effects in the previous year of 2018: -2.3 million euros
• − PPA effects from DeinDesign purchase price allocation: -0.4 million euros
• − PPA effects from Cheerz purchase price allocation: -1.8 million euros
• − Sale of former operation in Nuremberg: 1.2 million euros
• − photokina trade-show presentation one-off costs: -1.3 million euros

Operational Photofinishing EBIT margin* continues to increase

* without special items shown in segment reporting (mainly PPA-effects)

Photofinishing-EBIT by Quarter

Seasonal distribution: CEWE 2015 to 2019 – EBIT by quarter in Euro million

* 51.0-58.0 Euro mill. group EBIT-target less planned retail, online printing and from segment Others. Rounding differences may occur.

EBIT in Photofinishing exceeds target

1.2 Retail

CEWE´s retail business

• 147 retail stores
• EUR 43.7 million revenue (2019) with photo-hardware (cameras, lenses, …)
• Sales of photofinishing products in photofinishing segment

Retail segment contains hardware revenue only, photofinishing revenue is shown in photofinishing segment Own retail business provides an excellent window to the market

Business segment Retail*

in Euro millions

Hardware turnover reduced in line with strategy in 2019 as well

EBIT at the same positive level as in the previous year in spite of a decline in turnover

1.3 Commercial Online-Print

The CEWE online print brands

Business and advertising prints: flyers, business cards, stationery, packaging, promotional items, etc.

Business segment Commercial Online-Print

in Euro millions

COP turnover increased moderately in 2019

LASERLINE situation results in a significant decline in profits

• Commercial online printing increased by 1.6% in 2019. At the same time, weak LASERLINE sales, mainly as a result of price pressure, put a damper on growth.
• EBIT decreases significantly, mainly due to the LASERLINE situation (negative operative EBIT and restructuring costs of - 5.0 million euros)
• 2019 special effects: -5.6 million euros
• − PPA effects from Saxoprint purchase price allocation: -0.2 million euros
• − PPA effects from Laserline purchase price allocation: -0.3 million euros
• − LASERLINE restructuring provisions: -5.0 million euros
• Special effects in the previous year of 2018: -1.9 million euros
• − PPA effects from Saxoprint purchase price allocation: -0.6 million euros
• − PPA effects from Laserline purchase price allocation: -0.4 million euros
• − Laserline integration costs: -0.9 million euros

Rounding differences may occur.

1.4 Other

Business Segment Other

in Euro millions

Structural and corporate costs and profits arising from real estate property and the acquisition of stocks are shown in the "other" business segment.

▪ The 5.5 million euros in reported turnover is to be exclusively allocated to futalis (2018: 4.0 million euros)

EBIT

▪ EBIT above all improved by futalis

Rounding differences may occur.

Segment for other business raises turnover and improves earnings

Group Results 2019

Turnover in Euro millions

Photofinishing accounts for the rise in Group turnover

EBIT

* before one-off effects resulting from purchase price allocations (-1.2 million euros) and LASERLINE restructuring costs (-5.0 million euros)

Rounding differences may occur.

EBIT target corridor for 2019 clearly reaches its ceiling

Operative Group EBIT margin increases to 9.4%

Earnings after tax

in Euro millions

LASERLINE restructuring sees earnings after tax decline to 31.8 million euros; when adjusted for LASERLINE restructuring costs after-tax earnings rise to 36.8 million euros

Earnings per share in Euro

Rounding differences may occur.

Earnings per share fall short of the target corridor; within the target corridor when adjusted for LASERLINE restructuring costs

Dividend for the 2019 business year is to be increased to 2.00 euros Since analogue/digital transformation: eleventh consecutive dividend increase

3. Financial details

Consolidated profit and loss account

Figures in thousands of euros	2018	2019	∆ %	∆ m€	Turnover growth in the Photofinishing and Commercial
Revenues	649.3	714.9	10.1%	65.6	Online Printing business units clearly more than made up for
Increase / decrease in finished and unfinished goods	-0.1	0.2	-222%	0.3	the reduction in Retail turnover
Other own work capitalised	1.1	1.0	-4.9%	-0.1
Other operating income	25.0	22.1	-11.8%	-3.0	Decrease mainly due to the sale of the former Photofinishing
Cost of materials	-177.1	-185.5	4.7%	-8.4	production site in Nuremberg
Gross profit	498.2	552.7	10.9%	54.5
Personnel expenses	-175.8	-194.8	10.8%	-19.0	Increased in line with the volume of business growth
Other operating expenses	-226.9	-243.3	7.2%	-16.4
EBITDA	95.5	114.6	20.0%	19.1	Increase in personnel expenses driven by acquisition of
Amortisation/Depreciation	-39.9	-56.8	42.4%	-16.9	WhiteWall, by business growth, and the restructuring expenses
Earnings before interest, taxes (EBIT)	55.7	57.8	3.9%	2.2	for LASERLINE
Financial income	0.7	0.1	-89.3%	-0.6
Financial expenses	-1.1	-3.7	237.9%	-2.6	Increase due to acquisition of WhiteWall, higher mar
Financial result	-0.4	-3.6	798%	-3.2	keting and shipping costs but less rental payments
Earnings before taxes (EBT)	55.3	54.3	-1.8%	-1.0	due to first time adoption of IFRS 16 (Leasing)

Rounding differences may occur.

Increase of depreciation caused by first time adoption of IFRS 16 (Leasing) and extraordinary depreciations relating to the restructuring of LASERLINE

Increase of financial expenses caused by remeasurement of a call option due to the acquisition of Cheerz and first time adoption of IFRS 16 (Leasing)

Balance Sheet

New leasing standard and the acquisition of WhiteWall cause increase in the balance sheet total

Equity ratio strong at 47.6%, w/o IFRS 16 even at 53.6%

From Balance Sheet to Management Balance Sheet

46

Management-Balance Sheet

Non-current assets and gross financial debts increase due to IFRS 16 Net working capital negative due to again higher Christmas business

Capital Employed I

Figures in millions of euros	2018	2019	∆ %	∆ €
Property, plant and equipment	160.2	221.1	38.0%	60.9	Attributable to right-of-use assets under leases
Investment properties	17.6	17.2	-2.3%	-0.4	in line with IFRS 16 (mainly property)
Goodwill	59.7	77.8	30.2%	18.0
Intangible assets	28.5	39.0	36.9%	10.5	Increase related to acqusition of WhiteWall
Financial assets	6.9	5.6	-18.6%	-1.3
Non-current financial assets	1.3	1.5	17.1%	0.2	Increase related to acqusition of WhiteWall
Non-current other receivables and assets	0.3	0.7	156.5%	0.4
Deferred tax assets	12.3	14.2	15.6%	1.9
Non-current assets	286.7	377.0	31.5%	90.3
Inventories	49.0	48.4	-1.4%	-0.7
Current trade receivables	92.9	91.2	-1.9%	-1.7	Decrease of operating net working capital because
Operating gross working capital	141.9	139.5	-1.7%	-2.4	measurement just after seasonal peak of business
Current trade payables	112.7	113.6	0.8%	0.9
Operating net working capital	29.2	26.0	-11.2%	-3.3

Rounding differences might occur.

Capital Employed II

Figures in millions of euros	2018	2019	∆ %	∆ €
Assets held for sale	0.0	3.0	0.0%	3.0
Current receivables from income tax refunds	2.7	1.5	-43.7%	-1.2	Held-for sale assets of futalis
Current financial assets	3.4	5.3	58.2%	2.0
Other Current receivables and assets	9.5	8.6	-9.4%	-0.9	Receivables from payment service providers
Other gross working capital	15.5	18.4	18.3%	2.8
Current tax liabilities	8.2	7.5	-9.3%	-0.8	Restructuring accruals for LASERLINE were
Current other accruals	3.5	6.3	82.3%	2.9	established
Current financial liabilities	10.2	11.2	10.2%	1.0
Current other liabilities	45.4	51.6	13.6%	6.2	Business-related increase in value-added tax
Liabilities classified as held for sale	0.0	0.5	0.0%	0.5	liabilities as well as wage and salary liabilities
Other net working capital	-51.8	-58.8	13.5%	-7.0
Operating net working capital	29.2	26.0	-11.2%	-3.3
Other net working capital	-51.8	-58.8	13.5%	-7.0
Net working capital	-22.5	-32.8	45.6%	-10.3
Non-current assets	286.7	377.0	31.5%	90.3
Net working capital	-22.5	-32.8	45.6%	-10.3	Free Cash flow increases cash and cash
Cash and cash equivalents	28.1	32.3	15.0%	4.2	equivalents
Capital employed	292.3	376.5	28.8%	84.2

Rounding differences might occur.

Capital Invested

Figures in millions of euros	2018	2019	∆ %	∆ €
Equity	254.2	269.8	6.1%	15.6
Non-current accruals for pensions	29.2	35.5	21.9%	6.4	Lower discount rates lead to higher pension
Non-current deferred tax liabilities	2.9	3.5	18.9%	0.6	accruals
Non-current other accruals	0.0	0.5	0.0%	0.5
Non-current financial liabilities	1.6	1.9	20.2%	0.3
Non-current other liabilities	0.6	0.5	-28.2%	-0.2
Non-operating liabilities	34.3	41.9	22.1%	7.6
Non-current interest-bearing financial liabilities	1.1	1.1	-3.0%	0.0	New IFRS 16 treatment of lease contracts
Non-current liabilities from leasing	0.0	52.5	0.0%	52.5	increase lease liabilities
Current interest-bearing financial liabilities	2.7	0.8	-68.8%	-1.8
Current liabilities from leasing	0.0	10.6	0.0%	10.6	Due to IFRS 16 (leasing accounting) gross
Gross financial liabilities	3.8	65.0	1604.0%	61.2	financial liabilities have increased by 63.0 million
Capital invested	292.3	376.6	28.8%	84.3	euros

Rounding differences might occur.

Free cash flow

Rounding differences may occur.

• Increase in EBITDA raises cash flow from operative business
• Acquisitions almost double the cash flow from investment activities of earlier years
• Free cash flow reflects increase in cash flow from operations

ROCE

Average capital employed increases to 384.3 million euros through IFRS 16 and WhiteWall acquisition Positive development of earnings sees ROCE before IFRS 16 and restructuring increasing to 19.6%

* ROCE = EBIT / Capital Employed. Rounding differences may result ** Before IFRS 16 balance sheet extension and LASERLINE restructuring costs

4. Innovation

Why are smartphones driving the usage of AI in imaging?

Share of smartphone images in CEWE production

First time more than every second image in CEWE production Two out of three images printed at the CEWE PHOTOSTATION

Image taking devices in December 2019

iPhone8 and Samsung S9 highest growth rate YtD

First time two mobile phone providers are top of the list in Q4/2019

CEWE PHOTOSTATION at Glow – the Beauty Convention

Relevant images have to be accessed quickly Ease to transfer images wireless via corporation with smartphone vendors

https://www.cewemyphotos.com/open/n/sharedEvent/1 00d718685f340e390860612e7350561 Watch this video:

CEWE approaches

Event detection

• Intelligently clustered for actual and older events
• Based on heuristics, not on AI

Downscaling of images by messengers

Low resolution images provided by messengers, digital zoom and selfies (front cameras)

2019: Over 2 % of all images in production were down sampled by WhatsApp Upscaling important for all ordering channels

Downscaling of images by messengers

Low resolution images provided by messengers, digital zoom and selfies (front cameras)

2019: Over 2 % of all images in production were down sampled by WhatsApp Upscaling important for all ordering channels

Super resolution – Current results

Results of different vendors and our own implementation Generated structures vary with different trained networks and topologies

Super resolution – Current results

Results of different vendors and our own implementation

Generated structures vary with different trained networks and topologies

Curation: event detection plus AI

Intelligently clustered with aesthetic image, clustered and convenience marked Images fully labelled

Curation: event detection plus AI

Intelligently clustered with aesthetic image, clustered and convenience marked Images fully labelled

Curation: event detection plus AI

Intelligently clustered with aesthetic image, clustered and convenience marked Images fully labelled

CEWE Customer Charter: Digitisation with Responsability

1. Our technologies shall help you

2. You have the control and all degrees of freedom

3. We are open and transparent

4. We want to shape our future based on European values

Members of the advisory council: Ranga Yogeshwar (physicist and TV presenter), Prof. Dr. Susanne Boll (Uni Oldenburg) and Prof. Dr. Dr. h.c. mult. Wolfgang Wahlster (Dt. Forschungszentrum für Künstliche Intelligenz)

5. Outlook 2020

CEWE Group Targets 2020

Targets		PY 2019	Target 2020 w/o Corona	Impact of Corona
1 Photos	billion photos	2.40	2.4 to 2.5	expected negative
CEWE PHOTO BOOK	millions	6.62	6.7 to 6.9	expected negative
Investments 2	Euro millions	39.3	57	not clear
Revenue	Euro millions	714.9	725 to 755	expected negative
EBIT	Euro millions	57.8	58 to 64	expected negative
EBT 3	Euro millions	54.3	56.5 to 62.5	expected negative
4 Earnings after tax	Euro millions	31.8	38 to 43	expected negative
Earnings per share	Euro	4.41	5.34 to 5.90	expected negative

1 The number of photos is the sum of the images with which CEWE photo products were designed and refers to all images that are used in value Rounding differences might occur. -added products (e.g. CEWE PHOTOBOOK, CEWE CARDS, CEWE CALENDAR, CEWE WALL PICTURES and other photo gifts)

2 Operational investments without possible investments in expanding the business volume (such as company acquisitions or customer base acquisitions) and without IFRS 16 leasing additions

3 Without subsequent valuations of equity instruments

4 Based on the normalized group tax rate of the previous year

Taking into account the effects of the Corona crisis, the Executive Board believes the originally set goals (w/o Corona) cannot be achieved

6. Q&A-Session

CEWE Annual Press & Analysts' Conference 2020

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 differences might occur.