Ströer SE & Co. KGaA — Earnings Release 2015

Feb 23, 2016

Preliminary Figures FY 2015

23 February 2016 | Ströer SE

Agenda

01

Key Developments

• Key Financials
• Key Strategies

Udo Müller

02

Operational Highlights

• M&A Integration
• Five Development Areas

Christian Schmalzl

03

Financials

• Segment Perspective
• Financial Highlights
• Dr. Bernd Metzner

04

Summary

• Summary 2015
• Priorities for 2016

Udo Müller

Preliminary Results FY 2015

EURm		FY 2015	▲	Q4 2015 ▲
Revenues	(1) Reported	823.7	+14%	270.5	+28%
	(2) Organic		+10%		+13%
Operational EBITDA		207.5	+40%	85.7	+42%
Operational EBITDA margin		24.8%	+4.6%pts	31.3%	+3.3%pts
(3) EBIT (adjusted)		135.7	+38%	65.4	+42%
(adjusted) (4) Net income		106.2	+89%	53.2	+83%
Operating cash flow		190.3	+54%	103.6	+100%
(5) Capex		76.3	+69%	25.8	+33%
		31 Dec 2015		31 Dec 2014
Net Debt / Leverage Ratio		231.0/1.1x		275.4 / 1.9x

(1) According to IFRS 11

(2) Organic growth = excluding exchange rate effects and effects from the (de)consolidation and discontinuation of operations

3 (3) EBIT adjusted for exceptional items, amortization of acquired advertising concessions and impairment losses on intangible assets (Joint ventures are consolidated proportional)

(4) EBIT (adj.) net of the financial result adjusted for exceptional items and the normalized tax expense (32.5% tax rate in 2014 and 15,8% in 2015)

(5) Cash paid for investments in PPE and intangible assets

FY 2015: Segment Perspective – Strong growth in Core Segments

Well ahead of our Full-Year Targets

(Latest) Targets 2015	Actuals
High single digit organic growth	10% Organic Growth
Operational EBITDA slightly more than 200 EURm	208 EURm operational EBITDA
Net Income (adj) of up to 100 EURm	Net Income (adj) of 106 EURm
Free Cash Flow of up to 100 EURm	Free Cash Flow before M&A of 114 EURm
Leverage 1.5	Leverage 1.1

Finalisation of three year cost reduction program "Shape" more than 20 EURm savings yearly

Implementation of measures in 2013/2014 and 2015 with sustainable almost full effect in 2015

More than 20 EURm cost savings realised with impact on all earning levels annually

✓

Cut of group overhead costs/new group structure

Energy cost halved by investing program switching to LED lights

Reduction of maintenance and cleaning costs by customised cleaning cycles ✓

✓	Reduction of rents in prolongation/new tenders
✓	Others

Adjusted Earnings per Share almost tripled since 2013

Free Cash Flow more than tripled since 2013

Aspects

• Strong operational performance translates into strong earnings growth as well as free cash flow growth
• Free cash flow growth which expands stronger than net adjusted income
• Free Cash Flow: CAGR 2013-15: ~ 80%
• Net Income (adjusted): CAGR 2013 - 15: ~ 71 %
• Cash Flow is the central KPI of the Management Board

Financial Leverage 2013 to 2015: From 2.8 to 1.1

Transformation into a Digital Multi-Channel Media Company 2015 Strong M&A activities* in 2015 with a focus on our Five Key Growth Areas

OOH	Content	National	~430 EURm spent on material M&A
MaxiPoster Leading Autobahn Poster provider in GER	T-Online.de One of the leading online portals in DE	OMS Saleshouse of regional newspapers in GER	370 EURm
Local	Contentfleet Data-based publishing and content provider	InteractiveMedia Exclusive marketer of TOL and e.g. kicker
RegioHelden Provider of regional online adnetwork	Statista** Leading provider of online statistics	Ventures	60 EURm
OMNEA Online registry in apps, social, maps etc.		Conexus Leading provider data analytics education	TOL/IAM & STATISTA 6 transactions
			Around 85 % of material M&A transaction value relates to TOL/IAM & Statista

Broadened new Management Team according to Business Segments expansion

Board of Management Udo Müller CEO Christian Schmalzl COO Bernd Metzner CFO
OOH	Local markets	Content	National Sales	Ventures
Alexander Stotz	Alexander Stotz	Marc Schmitz	Robert Bosch	Board of Management
Expansion of Digital Public Advertising	Accelerating regional/ local business (+ 100 to 200 sales people p/a)	Integration & further build up of existing content portfolio	Strengthening of our market position	Watch out for opportunistic M&A-deals

Agenda

01

Key Developments

• Key Financials
• Key Strategies

Udo Müller

02

Operational Highlights

• M&A Integration
• Five Development Areas

Christian Schmalzl

03

Financials

• Segment Perspective
• Financial Highlights
• Dr. Bernd Metzner

04

Summary

• Summary 2015
• Priorities for 2016

Udo Müller

Focus on highest growing Ad Subsegments

Three Digital Product Segments with clear Growth Strategies & Levers

Display (Desktop & Mobile) 50% of revenue

• Further market consolidation (organically/un-organically)
• Massive mobile growth
• Tech stack for programmatic and data driven advertising
• Local sales: huge potential of small and mid-sized clients

Video (Multiscreen) 20% of revenue

• Strong structural growth of video products across all our platforms
• Unique multiscreen approach including integrated ad-serving
• Focussed video strategy for own content assets as well as strong growth of MCN TubeOne

Transaction & Subscription 30% of revenue

• Monetization of traffic of own assets via e-commerce models
• Rollout of subscription business with e.g. Statista
• Strong growth of digital marketing services for small and mid-sized clients (locally)

Five Strategic Development Sectors

1	2	3	4	5
Out-of-Home	Content	Local Sales	National Market	Ventures
digitalization of our infrastructure: LED, LCD, beacons, small cells	disruptive, tech and performance based digital business models	only nation-wide sales organization for local marketing & digital ad products	building the biggest, data-driven non-TV media sales house	M&A around disruptive, data driven and digital business models

Ströer outperformed the total ad market & OOH market

OOH 2 3 4 5

Media Market Breakdown

• Print market share (magazines and newspapers) is constantly declining
• Out of Home market share is continuously growing, in 2015 exceeds radio advertising spendings for the first time
• Online is still showing massive growth in advertising spendings

Source: Nielsen, ZAW, FAW,

Leveraging OoH Infrastructure via Smart Data and Small Cells

OoH Infrastructure becomes "Physical Web" Beacons

Rollout of 50k Beacons nationwide; 20k installed by beginning of Q2/2016

• Smart integration of owned and marketed apps (via responsive SDKs)
• Potential of 1.5 billion contacts per month
• Geo-based infrastructure for IoT applications and services

Small Cells (& WIFI)

• First test: installment of 64 small cells in Munich and Frankfurt for Vodafone
• Small cells increase strength and capacity of Vodafone LTE network
• Spectrum range of small cells is up to two kilometers around the advertising media; also due to be made available for public WIFI purposes

1

Strategic Integration and Development of t-online.de

1 Content 3 4 5

Quality Content and Commerce Backbone

• 3 Email-Provider with 8.5m unique active users. 90% of users check their account at least every three days

• 1 news portal, #1 real-estate/interior portal, #3 sports portal, #3 business portal, #3 entertainment/celebrity portal

• 4 search provider very close to Yahoo's position in Germany (using Google technology)

• 94% of top 50 online marketing spenders in Germany have advertised on TOL in 2015 to benefit from the 22m UUs*

Leveraging Public Video to boost Portal Traffic

Revenue & Product Mix today Leveraging Ströer Content Group & Sales Synergies

Diversification of Revenues beyond Advertising: Example GIGA

Statista – Developing strong Opportunities in the Big Data Sector

Scalable subscription business (e20 EURm revenues in 2016) Expansion of Ströer digital publishing to statistical content and infographics Category leader among market research companies Traffic of 3.9 million sessions/month Over 600k registered users Continuously expanding content, >250k statistics online, 350 new statistics per day Access to more than 18,000 resources Good Fit to current Ströer Portfolio 0 100 200 300 400 500 600 700 2009 2010 2011 2012 2013 2014 2015 In k Leading Statistics Portal worldwide Key Growth Driver: International Subscribers 3,0 4,0 5,0 January 2016: Traffic > 4 Million

Research & analysis service rounds up Ströer publishing (content creation/marketing/selling) portfolio in particular

1 3 4 5

Content

Existing media co-operations and client portfolio give way to extended publishing possibilities in website network

Broadening Local Digital Product Portfolio: RegioHelden and Omnea

Clear German Market Leader in both Display & Mobile (1/2)

Clear German Market Leader in both Display & Mobile (2/2)

Portfolio Quality

Tech & Data

17 Channels of websites with strongest and most consistent premium portfolio in the market (examples)

• Market share of roughly 17% of total German Display/Mobile/Video Market** allows full leverage of tech acquisitions
• Fully developed own tech stack to monetize own and 3rd party inventory out of one hand:
• Adserver, DMP, DSP, SSP in integrated ecosystem
• Continuously improving data depth and quality from sales house, own content assets as well as E-commerce and subscription business

1 for both mobile and display (>600 websites)

Connecting OoH & Digital: Public Video now available for Programmatic

First three Agencies Trading Desks connected to Adserver Multi-Screen Development

PUBLIC

• Existing integrated adserving/SSP-setup within online saleshouse for display, mobile and video
• Additionally, Public Video campaigns can be integrated and serviced fully automated via proprietary adserving solution
• The Public Video portfolio of Ströer holds 3,500 advertising faces with a reach of more than 30 Mio. Unique Users and about 4 Bn. Monthly contacts (90% of DOoH premium market volume)
• Rollout of Beacon infrastructure will allow even more detailed and specific audience numbers – in real time
• Globally unique proposition: #1 online portfolio and #1 (D)OoH portfolio out of one hand with multiscreen data and adserving solutions

Agenda

01

Key Developments

• Key Financials
• Key Strategies

Udo Müller

02

Operational Highlights

• M&A Integration
• Five Development Areas

Christian Schmalzl

03

Financials

• Segment Perspective
• Financial Highlights
• Dr. Bernd Metzner

04

Summary

• Summary 2015
• Priorities for 2016

Udo Müller

Ströer SE FY 2015 Preliminary Results

EURm	FY 2015	FY 2014	▲
(1) Revenues (reported)	823.7	721.1	+14%
Adjustments (IFRS 11)	14.0	12.5	+12%
Direct costs	-468.6	-439.8	-7%
SG&A	-175.9	-161.5	-9%
Other operating result	14.3	15.7	-9%
Operational EBITDA	207.5	148.1	+40%
Margin %	24.8	20.2	+4.6%pts
Depreciation & Amortisation	-112.0	-83.7	-34%
Exceptional items	-15.2	-9.9	-54%
(2) EBIT (adjusted)	135.7	98.5	+38%
(3) Net income (adjusted)	106.2	56.3	+89%

(1) According to IFRS

(2) EBIT adj. for exceptional items, amortization of acquired advertising concessions&impairment losses on intangible assets (Joint ventures are consolidated proportional)

(3) EBIT (adj.) net of the financial result adjusted for exceptional items and the normalized tax expense (32.5% tax rate in 2014 and 15.8% in 2015)

Reduction of Financing costs by more than 50 EURm since 2010

April 2015 - Latest refinancing				Tranche	Amount	Duration
				Loan	250	5 yrs
 Refinancing ("amend and extend")  Cost savings: (~40bps and 2 EURm per year)		April 2014	Revolver	250	5 yrs
			Tranche	Amount	Duration
 	Duration: 5 years Covenants: no change			New:	Loan	200 (+100 optional)	5 yrs
 Slim and efficient process			April 2015	Revolver	250	5 yrs
In EURm 70	65	60
60			51
50 40
30				24
20						18	12
10
0	2010	2011	2012	2013		2014	2015

Reported Organic Growth FY 2015

28

*Revenues correspond to management accounting pre IFRS11

Ströer Digital: Profitable Growth backed by Value Accretive Acquisitions

• Strong demand for Video Products as well as yield optimization
• In Q4 significant impact from acquisition of T-online / IAM assets above expectations (2 months November and December)

Our Digital Product Segmentation

Display (Desktop & Mobile) 50% of revenue

• Further market consolidation (organically/un-organically)
• Massive mobile growth
• Tech stack for programmatic and data driven advertising
• Local sales: huge potential of small and mid-sized clients

Video (Multiscreen) 20% of revenue

• Strong structural growth of video products across all our platforms
• Unique multiscreen approach including integrated ad-serving
• Focussed video strategy for own content assets as well as strong growth of MCN TubeOne

Transaction & Subscription 30% of revenue

• Monetization of traffic of own assets via e-commerce models
• Rollout of subscription business with e.g. Statista
• Strong growth of digital marketing services for small and mid-sized clients (locally)

Ströer OoH Germany: Steady and profitable Growth Path

• Revenue growth driven by regional sales initiatives and national sales performance
• Significant EBITDA-contributions from the cost efficiency program
• Margin improvement backed by profitable product mix

Organic Growth Rate Margin 2014 2015

Ströer OoH International: Slightly improved profitability in challenging markets

• Q4 revenues in Turkey affected by lack of market dynamics in challenging political macro environment
• blowUP business back on growth path in Q4
• Improved cost base leading to higher operational EBITDA y-o-y

Organic Growth Rate Margin 2014 2015

Well diversified product portfolio – with focus on premium products Renaming Product Group "Billboards" into "Large Formats"

New Product Reporting Structure starting Q1 2016

Free Cash Flow Perspective 2015

Free Cash Flow	2015 EURm	2014 EURm	Free Cash Flow up by around 50%
Op. EBITDA	207.5	148.1	 Strong operational cash generation in line with increased operational EBITDA
- Interest (paid)	-8.4	-14.4	 Further reduced interest payments after successful refinancing in 2014 and 2015
- Tax (paid)	-5.9	-8.4	 Positive tax effect
			 Higher exceptionals due to M&A especially TOL/IAM
-/+ WC	+21.4	+15.0	 Higher investments due to LED technology, public video, IT infrastructure and various other projects
- Others	-24.3	-16.8
Operating Cash Flow	190.3	123.4
Investments	-76.3	-45.2
Free Cash Flow (before M&A)	114.1	78.2

Financial Status and Outlook

Outlook 2016

• Free Cashflow before M&A around 125 EURm
• Refinancing at lower costs

Long term financial outlook

• Maintaining a solid financial profile is a key element of our growth strategy
• Dividend pay-out ratio: 25 50%
• Acquisition strategy: smaller/larger bolt-on investments

Agenda

01

Key Developments

• Key Financials
• Key Strategies

Udo Müller

02

Operational Highlights

• M&A Integration
• Five Development Areas

Christian Schmalzl

03

Financials

• Segment Perspective
• Financial Highlights
• Dr. Bernd Metzner

04

Summary

• Summary 2015
• Priorities for 2016

Udo Müller

Summary: Excellent Financial Year 2015

Total revenue growth by 14%

Operational EBITDA expanded by 40% to 207.5 EURm

Adjusted EPS doubled from 1.1 to 2.1

Leverage Ratio at 1.1 times operational EBITDA

FCF before M&A up 46 % to 114 EURm

Expansion of Digital Public Advertising

Integration & further built up of existing content portfolio

Accelerating regional/local business (+ 100 to 200 sales people p/a)

Watch out for opportunistic M&A-deals

Guidance Statement 2016: Confirmed

For 2016 we expect total revenue between 1.1 and 1.2 billion Euro, and an operational EBITDA of 270 to 280 Million Euro (with 50% coming from Digital)

For the first quarter of 2016 we expect organic growth for up to 10 %

iStock 40

NEXT CATALYSTS: DATES

Annual Report to be published 22nd March 2016

Capital Markets Day on 29th April 2016 (London)

Quarterly Report to be published on 12th May 2016