Scout24 AG — Call Transcript 2016

Aug 11, 2016

www.scout24.com

Scout24 AG H1 (Q2) 2016 Results Conference Call

August 11, 2016

Disclaimer

This document has been issued by Scout24 AG (the "Company" and, together with its direct and indirect subsidiaries, the "Group") and does not constitute or form part of and should not be construed as any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company, nor shall any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision, nor does it constitute a recommendation regarding the securities of the Company or any present or future member of the Group.

All information contained herein has been carefully prepared. However, no reliance may be placed for any purposes whatsoever on the information contained in this document or on its completeness. No representation or warranty, express or implied, is given by or on behalf of the Company or any of its directors, officers or employees or any other person as to the accuracy or completeness of the information or opinions contained in this document and no liability whatsoever is accepted by the Company or any of its directors, officers or employees nor any other person for any loss howsoever arising, directly or indirectly, from any use of such information or opinions or otherwise arising in connection therewith.

The information contained in this presentation is subject to amendment, revision and updating. Certain statements, beliefs and opinions in this document are forward-looking, which reflect the Company's or, as appropriate, senior management's current expectations and projections about future events. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Statements contained in this document regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The Company does not undertake any obligation to update or revise any information contained in this presentation (including forward-looking statements), whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak only as of the date of this document.

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Key Operational Highlights

We Continue to Be the Most Relevant Marketplace for BOTH our Customers and Consumers

Sources: Management estimates, Autobiz June 2016, own traffic monitor Mobile traffic as a percentage of total traffic (visits)

Visits to core brand on constant high level

6 out of 10 engage through us on the go

Key Financial Highlights

Note: All figures in € millions.

1. Ordinary operating (oo)EBITDA represents EBITDA adjusted for non-operating and special effects, ordinary operating EBITDA margin of a segment is defined as ordinary operating EBITDA as a percentage of external segment revenues.

2. Cash contribution is defined as ooEBITDA less Capital expenditures, cash conversion as ooEBITDA / (ooEBITDA less Capital expenditures)

ImmobilienScout24

ImmobilienScout24

1. Management estimates, based on visits to the IS24 platform from mobile devices, mobile and all IS24 applications as measured by own traffic monitor.

2. Based on Unique Monthly Visitors ("UMV") for traffic and total time spent for engagement, comScore MMX June 2016 (desktop only for traffic and desktop and mobile for engagement), management estimates.

3. Share based on total time spent within Germany competitor set for online property classifieds which includes IS24, Immonet and Immowelt.

ImmobilienScout24

1. Given the Group's complex financial history, to facilitate year-on-year comparison and to better represent the business trends and situation of Scout24, additional, voluntary disclosure has been provided for the twelvemonth period ended December 31, 2014. These figures represent the sum of financials from the audited consolidated financial statements of Scout24 Holding GmbH for the short financial year from January 1, 2014 until March 31, 2014 and from the audited consolidated financial statements of Asa NewCo GmbH for the period of April 1, 2014 to December 31, 2014.

IS24 Wrap-Up

AutoScout24 Focus on Germany – Strengthening Market Positioning

1. Management estimates, based on internal data.

2. Autobiz, December 2015.

3. Management estimates, based on visits to the AS24 platform from mobile devices, mobile and all IS24 applications as measured by own traffic monitor.

4. Given the Group's complex financial history, to facilitate year-on-year comparison and to better represent the business trends and situation of Scout24, additional, voluntary disclosure has been provided for the twelvemonth period ended December 31, 2014. These figures represent the sum of financials from the audited consolidated financial statements of Scout24 Holding GmbH for the short financial year from January 1, 2014 until

AutoScout24 Focus on Italy & Benelux – Cementing our Leadership Positions

1. Management estimates, based on internal data.

2. Autobiz, June 2016, excluding Autotrader.

3. Management estimates, based on visits to the AS24 platform from mobile devices, mobile and all IS24 applications as measured by own traffic monitor.

4. Given the Group's complex financial history, to facilitate year-on-year comparison and to better represent the business trends and situation of Scout24, additional, voluntary disclosure has been provided for the twelvemonth period ended December 31, 2014. These figures represent the sum of financials from the audited consolidated financial statements of Scout24 Holding GmbH for the short financial year from January 1, 2014 until

AS24 Wrap-Up

What We Have Delivered What We Are Working On

Successfully implemented new sales approach Benelux and Italy

Rollout Marketing Power pricing model completed in Benelux and Italy

Creating tangible USPs/ differentiation points vs. our competition in Germany Execute on sales strategy to further cement leadership position

Further increase penetration of Marketing power products and monetize market leading position

Further leverage USPs to further narrow traffic and content gap vs. mobile.de

Group: Strong organic growth and sustainable profitability

xx% ooEBITDA margin

IS24: Platform for Continued Growth

Key highlights

Core Agent revenues

Revenue growth driven by solid ARPU increase offsetting decreasing core agent numbers

Other Agent revenues

Slight decrease in Professional PPA revenues due to impact of "Bestellerprinzip" offset by healthy growth in Austria marketplaces

Other revenues

• Increase reflecting healthy revenue growth in adjacent businesses combined with slight increase in private listing revenues fueled by "Bestellerprinzip"
• classmarkets adding €0.8 million of revenues (acquired in September 2015)

ooEBITDA

Cost growth disproportional to revenue growth resulting in margin uplift of 2.1pp

AS24: Delivering on Growth Potential

Key highlights

Core Dealer revenues

• Ongoing expansion of dealer base and ARPU in Germany due to success of new sales approach
• Balanced mix of dealer and ARPU growth in Italy / Benelux drives increasing monetization, AutoTrader.nl (acquired in February 2016) adding €2.7 million Core dealer revenues
• Accelerating revenue growth driven by roll-out of visibility products
• AutoTrader.nl adds a total of €2.9 million of revenues since February 2016

Other Dealer revenues

Increase driven by Easyautosale acquisition (consolidated since April 2015) adding net revenues of 0.9m

Other revenues

Adsales with solid growth throughout all key geographies

ooEBITDA

Margin development skewed by deviating cost seasonality in 2015

xx% ooEBITDA margin

Corporate

Key highlights

• Internal revenues relate to shared services and group functions as well as to the management fee charged by Corporate to IS24 and AS24
• Cost base impacted by set-up of Asa NewCo/AG structures as well as centralization of group functions as well as management and shared services positions into AG
• Corporate ooEBITDA includes reconciliation adjustments relating to management fee recharged to IS24 and AS24 below the ooEBITDA line, as follows:
• H1 2015: €(2.3)m

• H1 2016: €(5.0)m

• Ordinary operating (oo)EBITDA for Corporate represents EBITDA adjusted for non-operating and special effects and including reconciliation of management fee recharged to IS24 and AS24.

Below EBITDA Items

	(in €m)	H1 2015	H1 2016
	Ordinary operating EBITDA	95.5	109.4
	Non-operating items	(10.6)	(9.6)
	Reported EBITDA	84.8	99.7
	D&A	(7.0)	(7.7)
PPA Effect	D&A on PPA items	(24.6)	(24.7)
	EBIT	53.2	67.3
	Results Equity Method	21.3	(0.0)
	Finance Income	4.0	0.0
Interest	Finance Cost	(23.0)	(23.1)
	Earnings before Tax	55.5	44.3
Taxes	Taxes on Income	(15.6)	(14.9)
	Earnings after Tax	40.0	29.5
	Earnings per Share (in €)	0.40	0.28
	Adjusted Earnings1	46.8	53.7
	Earnings per Share adjusted (in €) 1	0.47	0.50

Comments

• include €2.2m non-cash accounting effect from share-based compensation (Management Equity Programmes), €1.2m performance based compensation stemming from a purchase price agreement, €2.0m of cost relating to acquisition of AutoTrader.nl and €4.0m personnel cost relating to the reorganisation
• H1 2015 including €3.5 million gain from derivative instruments, H1 2016 with €5.0 million expense (0% floor on EURIBOR, non-cash relevant)
• Amortization of capitalized financing fees of €5.0 million included in H1 2015 (including write-offs due to refinancing and prepayment), € 2.5 million in H1 2016
• Low-to-mid 30% effective tax rate expected for the Full Year 2016 (slightly higher than normalized rate of 31.5%)

• Cash tax for Full Year 2016 expected to be burdened by subsequent payment for 2015

• Unaudited. Excluding Non-recurring items and D&A on PPA items, calculated with normalized tax rate. Detailed reconciliation in appendix.

Capital structure

Current Debt (Nominal Value) Comments

(in €m)	Dec 2015	June 2016
Term Loan B	424	384
Term Loan C	357	357
Revolver (€45.6m committed)	0	0
Other loans (FlowFact, Stuffle)	1	1
Total Debt (Nominal Value)	782	742
Cash & Cash Equivalents	71	56
Net Nominal Value	712	685

• Scout24 is currently rated by Moody's (B1) and S&P (B+)
• Net primary IPO proceeds of €214m and excess cash flow of €40m were used to pay down debt resulting in annualized interest savings of ~€9.5m
• As business de-levers over time, margin ratchet will reduce interest expense further

Margin ratchet thresholds

Leverage (Net Debt/EBITDA)	Margin
>4.00x	4.25%
>3.50x	3.75%	
>2.75x	3.50%
<2.75x	3.25%

• Leverage test on a quarterly basis with new spread applicable 45 days post quarter end
• − Lower margin according to margin ratchet of +3.75% in place since mid of February 2016

Recap: Strong Free Cash Flow Generation

Revenue to Free Cash Flow Bridge (12M 2015)

1. Cash conversion is defined as (oo EBITDA less Capital Expenditure) / oo EBITDA .

Outlook Full Year 2016 Moving to high end of previously guided margin range

216 Group revenues expected to record a low double-digit percentage growth rate

• IS24 is expected to achieve a mid single percentage revenue growth rate
• AS24 is expected to grow revenues at a low twenties percentage rate

Reconciliation Adjusted Earnings¹

(in €m)	H1 2015	H1 2016
Earnings before Tax	55.5	44.3
Add back non-operating items	10.6	9.6
Add back D&A on PPA items	24.6	24.7
Add back extraordinary finance expense/ income	-	-
Deduct Profit from disposal of investments accounted for using the equity method	(22.1)	-
Adjusted Earnings before Tax	68.7	78.7
Adjusted Tax based on normalized Tax rate	(21.9)	(24.8)
Non-Controlling interest	(0.3)	(0.2)
Adjusted Earnings attributable to owners of the parent	46.8	53.7
1 Earnings per Share adjusted (in €)	0.5	0.5
Weighted average of shares (in million)	100.0	107.6

Based on relevant nominal tax rate as stated in Annual Report 2015 and Group interim report 2016. H1 2015: 31.44%; H1 2016: 31.5%.

Income Statement

(EUR '000)	01/01/15 - 06/30/15	01/01/16 - 06/30/16
Revenues	189.1	215.9
Own work capitalised	5.3	5.5
Other operating income	1.6	0.8
Total operating performance	196.0	222.1
Personnel expenses	(47.9)	(55.0)
Advertising expenses	(22.5)	(24.6)
IT expenses	(5.9)	(6.9)
Other operating expenses	(34.8)	(35.8)
EBITDA (Earnings before interest, tax, depreciation and amortisation)	84.8	99.7
Depreciation, amortisation and impairment losses	(31.7)	(32.4)
EBIT (Earnings before interest and tax)	53.2	67.3
Net financial result	2.4	(23.0)
Earnings before tax	55.5	44.3
Income taxes	(15.6)	(14.9)
Earnings after tax	40.0	29.5
Earnings per share (EUR)	0.40	0.28

Balance Sheet

Assets
(EUR millions)	12/31/2015	06/30/2016
Current assets	117.7	104.6
Cash and cash equivalents	70.6	56.4
Trade receivables	37.8	38.7
Financial assets	0.3	0.2
Income tax receivables	0.3	0.2
Other assets	8.6	9.1
Non-current assets	2,055.5	2,060.5
Goodwill	787.3	816.2
Trademarks	983.7	983.7
Other intangible assets	259.5	239.3
Property, plant and equipment	13.0	11.2
Investments accounted for using the equity method	1.6	1.6
Financial assets	0.8	0.5
Deferred tax assets	6.7	5.2
Other assets	2.9	2.7
Total assets	2,173.2	2,165.0

Balance Sheet

Equity and liabilities
(EUR millions)	12/31/2015	06/30/2016
Current liabilities	86.9	86.5
Trade payables	25.6	18.4
Financial liabilities	6.0	5.8
Other provisions	4.7	4.4
Income tax liabilities	15.3	27.7
Other liabilities	35.3	30.2
Non-current liabilities	1,165.0	1,125.5
Financial liabilities	767.9	735.2
Pensions and similar obligations	0.5	0.5
Other provisions	0.9	0.6
Income tax liabilities	0.0	0.0
Deferred tax liabilities	393.0	386.2
Other liabilities	2.7	3.0
Equity	921.3	953.0
Subscribed share capital	107.6	107.6
Capital reserve	424.1	426.3
Retained earnings	387.8	417.5
Other reserves	1.1	1.1
Equity attributable to shareholders of parent company	920.6	952.5
Non-controlling interests	0.7	0.5
Total assets	2,173.2	2,165.0

Cash Flow Statement

(in €m)	01/01/15 - 06/30/15	01/01/16 - 06/30/16
Earnings after tax	40.0	29.5
Depreciation, amortisation and impairment losses	31.7	32.4
Income tax expense/(income)	15.6	14.9
Financial expenses/(income)	18.9	23.0
Result from investments/ (disposals of) accounted for using the equity method	(21.3)	0.0
Result on disposal of intangible assets and property, plant and equipment	0.0	(0.0)
Other non-cash transactions	(11.9)	(11.7)
Income taxes paid	(1.3)	(7.6)
Cash flow from operating activities	71.7	80.5
Payments made to acquire subsidiaries	(5.6)	(29.5)
Proceeds from disposal of equity accounted investments	59.7	-
other cash flow from investing activities	(5.8)	(9.4)
Cash flow from investing activities	48.4	(38.8)
Drawing down of financial liabilities	400.0	-
Repayment of financial liabilities	(50.2)	(40.1)
Borrowing costs	(7.7)	-
Interest paid	(17.4)	(15.8)
Dividends paid	(421.6)	-
Cash flow from financing activities	(96.9)	(55.9)
Effect of foreign exchange rate changes on cash and cash equivalents	0.2	(0.0)
Change in cash and cash equivalents	23.4	(14.3)
Cash and cash equivalents at start of period	21.4	70.6
Cash and cash equivalents at end of period	44.8	56.4

IR Contact details and financial calendar

Investor Relations Contact

Financial Calendar (expected)

Wednesday	Nine Months and Q3 statement
9 November 2016

Britta Schmidt

Vice President Investor Relations & Treasury Tel : +49 89 444 56 3278 Fax : +49 89 444 56 193278 Email : ir@scout24.com

http://www.scout24.com/en/Investor-Relations.aspx

Full year report report.scout24.com/2015