Ströer SE & Co. KGaA

Earnings Release • Sep 20, 2018

September 2018 | Ströer SE & Co. KGaA

INDEX Q2 2018 01 Overview 02 Challenges 03 Segment Update 04 Financial Update 05 Appendix 2

"The most customer-centric, multi-channel media company in/from Germany."

Milestones of Ströer's strategic Development

Out-of-Home Media
(Location Based Advertising)

Content Media (Digital Content & Marketing Services)

Direct Media (D2D, Phone etc.)

Robust & Sustainable Growth Drivers in all Key Segments

Out-of-Home Media (Location Based Advertising)	Content Media (Digital Content & Marketing Services)	Direct Media (D2D, Phone, Chat, Mail, CpO)
Key logics:
1. Slightly growing and robust portfolio market share with growing audience through urbanization and mobility	1. Meanwhile strong market position amongst German players and consolidation opportunities beyond 30%** market share	1. Growing clients' demand to manage & drive direct consumer contacts when GAFA is more and more controlling access channels
2. 54%* of revenues coming from local and regional business (vs. 46% national ad market)	2. 51%*** of revenues coming from direct client relationships and	2. Market fragmentation and lack of professionalization & scale is
3. Digitization is driving both inventory value, monetization potential and yield optimization	direct programmatic sources 3. Strong & highly profitable own assets in combination with 345**** of the top 700 German websites	offering strategic opportunities 3. Massive digitisation opportunities in combination with group synergies & 360° sales channels

Estimated Product Split in New Segment Structure for 2018

* Expected revenue split per segment w/o group consolidation and before IFRS changes 7

public media | #1 OOH provider | posters | train stations | transport | Street | Giant Posters | long-term advertising | 300,000 advertising spaces | street furniture | geomarketing | wide reach | high contact frequency

Out-of-Home : A leading position

online advertising | digital publishing | displays | video | public video | mobile | #1 quality marketer | #1 news portal | native advertising | programmatic advertising | data | influencer marketing | t-online.de | Ströer media brands | 53 million unique users*

Content Media: A strong Base Platform

dialogue marketing | telemarketing | market-oriented sales force | chat | non-voice | dialogue media platform | omni-channel solutions | customer dialogue |

Direct Marketing opens up new strategic Business Segment

Adjusted Earnings per Share Development since 2013

Note: Financials for 2013-2017 actuals, 2018 Guidance (before IFRS changes) *After minorities 14

Capture new Business Segments: Ströer's general Strategy

INDEX Q2 2018 01 Overview 02 Challenges 03 Segment Update 04 Financial Update 05 Appendix 16

We listen to our Customers: Their Challenges in the Age of GAFA

Consumer Access for Advertisers has changed dramatically

Traditional value-chain business model Linear and one way

Consumer Access for Advertisers has changed dramatically

Advertiser

Complementing integrated Brand-Performance-Sales Funnel

Data aggregation

INDEX Q2 2018 01 Overview 02 Challenges 03 Segment Update 04 Financial Update 05 Appendix 23

OoH Media: Sustainable Growth Performance in challenging Markets

• Sustainable growth in Germany supported by local and regional sales initiatives
• Op. EBITDA affected by further investments into organic growth opportunities and Turkey operations

Tech Blue Chips use OoH to extend Business into Real-world Space

Investing \$300 million in Regency Outdoor Advertising

Investing \$2.23 billion in Focus Media

Offering do-it-yourself services in digital out of home market

Out-of-Home Media – Success Cases Q2

Red Bull Eye-catching reach

AXE 'You're gold' Reaching GenZ

'Dieselfuchs' Local Hero Communication

Content Media: Strong organic Growth continues in Q2 2018

• Strong organic growth in both newly acquired and established content media assets, all product groups positively effected
• No material impact of General Data Protection Regulation adoption
• Op. EBITDA margin affect by unfavorable product mix and ramp up costs for watson.de, our new online portal for millennials

Content Media – Success Cases Q2

Watson

Mercedes New voice ad for Mercedes

Food retailer Drive to Store with Mobile

Direct Media: Profitable Growth backed by new Businesses

• Direct Media strongly above PY driven by acquired business in Dialog Marketing and strong organic growth
• First time consolidation of DV-COM and D+S 360 for a full quarter
• Segment's profitability target state of 17% Operational EBITDA margin confirmed

Direct Media – Success Cases Q2

Telekom industrial zones Hyperlocal direct marketing

IQOS Sales promotion and OoH

INDEX Q2 2018 01 Overview 02 Challenges 03 Segment Update 04 Financial Update 05 Appendix 31

Results 6M 2018

Results 6M 2018
m€		6M 2018	6M 2017 (pro forma)(1)	▲
	Reported	741.5	597.4	+24%
Revenues	Organic(2)	7.8%	7.6%	+0.2%pts
Operational EBITDA		242.2	216.7	+12%
EBIT (adjusted)(3)		107.4	91.8	+17%
EBIT (adjusted) margin		14.5%	15.4%	-0.9%pts
Net income	(adjusted)(3)	75.5	62.4	+21%
Operating cash flow		158.6	157.9	+0%
Capex		64.0	60.7	+5%
		30 Jun 2018	31 Dec 2017
	Net Debt(4) / Leverage Ratio(5)	611.5 / 1.8x	463.3 / 1.4x

Profit and Loss Statement Q2 2018

m€	Q2 2018	Q2 2017*	▲ %	Analysis
Revenues (reported)	404.9	316.2	+28%	Expansion driven by 8.7% organic growth and M&A
Operational EBITDA	132.3	122.1	+8%	Op. EBITDA above PY
Exceptional items	-5.9	-5.4	-9%
EBITDA	126.4	116.7	+8%
Depreciation & Amortization	-89.2	-80.0	-12%	Increased IFRS 16 items
EBIT	37.2	36.6	+1%
Financial result	-9.0	-9.0	+0%
Tax result	-4.4	-2.2	-99%
Net Income	23.7	25.4	-7%
Adjustment(1)	22.6	16.6	+36%
Net Income (adjusted)	46.3	41.9	+10%	Performance slightly ahead of Op. EBITDA growth

Free Cash Flow Perspective Q2 2018

m€	Q2 2018	Q2 2017*
Op. EBITDA	132.3	122.1
- Exceptional items	-5.9	-5.4
EBITDA	126.4	116.7
Interest	-8.9	-9.3
Tax	-38.3	-11.6
-/+ WC	+5.3	+5.2
- Others	-3.6	-2.0
Operating Cash Flow	80.9	98.9
Investments (before M&A)	-29.8	-29.7
Free Cash Flow (before M&A)	51.1	69.2
Lease liability repayments**	-33.8	-26.2
FCF w/o IFRS 16 (before M&A)	17.3	43.0

*Pro forma (retroactive application of IFRS 16 and elimination of prior IFRS 11 adjustment) **Part of cash flow from financing activities

Explanation of IFRS 16-Effects

• Leasing expenses no longer operational cash out in full
• Individual leasing instalments divided into an interest and a repayment portion
• Lease repayments no longer included in cash flow from operating activities, now reported in cash flow from financing activities
• Cash flow from investing activities remains unaffected by IFRS 16

Bank Leverage Ratio far below Target Level

• IFRS 16 leads to a paradigm shift in lease accounting but has no impact on our bank definition of the financial leverage of our lenders` banks
• From now on, use of leverage ratio definition based on our facility agreement as our solvency KPI ("Bank Leverage Ratio")
• Bank Leverage Ratio amounts to 1.8 as of 30st June 2018 and is far below target level of 2.5

*Net debt and Op. EBITDA (LTM) adjusted for IFRS 16 (no application of prior IFRS 11 adjustment)

Profit and Loss Statement Q2 2018 – As If (Before Application of IFRS 11 and IFRS 16)

Profit and Loss Statement Q2 2018 –
			As If
(Before Application of IFRS 11 and IFRS 16)
m€	Q2 2018*	Q2 2017	▲ %	Analysis Expansion driven by 8.7% organic growth and M&A
Revenues (reported)(1)	404.9	316.2	+28%
Adjustments (IFRS 11)	3.4	3.2	+5%
Revenues (Management View)	408.2	319.4	+28%
Operational EBITDA	86.9	80.3	+8%	Op. EBITDA above PY
Exceptional items	-6.5	-5.9	-10%
IFRS 11 adjustment	-1.4	-1.2	-18%
EBITDA	79.0	73.2	+8%
Depreciation & Amortization	-45.1	-40.8	-10%	Impairment BodyChange
EBIT	33.9	32.4	+5%
Financial result	-2.6	-2.1	-24%
Tax result	-5.7	-4.0	-43%
Net Income	25.6	26.3	-3%
Adjustment(2)	24.8	19.2	+29%

Free Cash Flow Perspective Q2 2018 – As If (Before Application of IFRS 11 and IFRS 16)

(Before Application of IFRS 11 and IFRS 16)
m€	Q2 2018*	Q2 2017
Op. EBITDA	86.9	80.3
Exceptional items IFRS 11 adjustment	-6.5 -1.4	-5.9 -1.2		will relieve 2019 and 2020
EBITDA	79.0	73.2
Interest	-2.4	-2.3
Tax	-38.3	-11.6
-/+ WC	+12.4	+15.5
Others	-3.6	-2.0
Operating Cash Flow	47.1	72.7
		-29.7
Investments (before M&A)	-29.8

Analysis

• High one-time tax payment in Q2 2018 due to procedural changes of Fiscal Tax Authorities, which lead to anticipation of prepayments; this will relieve 2019 and 2020
• Like in previous year strong Working Capital contribution to Operating Cash Flow
• Investments according to plan into internal growth opportunities

Guidance Statement 2018: Reconfirmed

For 2018 we expect total revenues of around 1.6 billion Euro and

an Operational EBITDA of around 375 Million Euro*

*w/o IFRS changes 38

Outlook for Q3: Next Quarterly Results on November 13

• 1. Similar to development of the last 22 quarters: solid business across the entire group with expected growth for 2018 in line with annual guidance 2. Overall challenging OoH Media business despite robust regional and local sales
• development
• 1. Content Media segment consistently on track regarding top line growth, market share development as well as consolidation and integration processes with successful launch of new assets 4. Direct Media on track and in line with expectations – significant group synergies,
• cost cutting opportunities post merger and investments in new technologies

INDEX Q2 2018 01 Overview 02 Challenges 03 Segment Update 04 Financial Update 05 Appendix 41

Financial Calendar 2018

IFRS 16: Implications at Ströer Group in Q2 2018

Impact of IFRS 16 on Ströer KPIs in Q2 2018

		IFRS 16: Implications at Ströer Group in Q2 2018 Impact of IFRS 16 on Ströer KPIs in Q2 2018	Comment
	Q2 2018	Impact
Revenues	404.9	No changes
Operational EBITDA	132.3	Increase by +46.8 m€ (elimination of operating lease expenses)	leasing contracts
D&A	-89.2	Increase by -44.2 m€
EBIT (adjusted)	63.7	Increase by +2.7 m€ (as operating lease expenses are replaced by depreciation and interest)	Income
Financial result	-9.0	Increase by -6.4 m€
Net Income (adjusted)	46.3	Decrease by -3.2 m€ (timing effect due to higher interest during first years, neutral over time)	of our lenders
Free Cash Flow (before M&A)	51.1	Increase by +33.8 m€ (reclassification of lease liability repayments in Financing Cash Flow)
Liabilities	1,896.1	Thereof 1.1 bn€ IFRS 16 lease obligations

Comment

• Scope at Ströer Group: >16,000 leasing contracts Main P&L effects: increase in EBITDA and EBIT, long-term neutral to Net Income
• Strongest effects in OoH Media
• Additional 1.1 bn€ liabilities have no impact on our leverage ratio definition of our lenders

IFRS 16: Financial Reporting

Consolidated Financial Statements

IFRS 16: Financial Reporting
	Consolidated Financial Statements				Comment
		Q2 2018		Q2 2017
	incl. IFRS changes	w/o IFRS changes	incl. IFRS changes	w/o IFRS changes
Quarterly Statement		*/	*/	
Presentation on Q2 2018 Statement				

Comment

• In our quarterly statement no adoption of IFRS 16 retrospectively for 2017 (so called modified retrospective approach) changes
• For better transparency, like-for-like comparison of our financials before and after IFRS changes depicted in this presentation

Disclaimer

This presentation contains "forward looking statements" regarding Ströer SE & Co. KGaA ("Ströer") or the Ströer Group, including opinions, estimates and projections regarding Ströer's or the Ströer Group's financial position, business strategy, plans and objectives of management and future operations.

Such forward looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Ströer or the Ströer Group to be materially different from future results, performance or achievements expressed or implied by such forward looking statements.

These forward looking statements speak only as of the date of this presentation release and are based on numerous assumptions which may or may not prove to be correct. No representation or warranty, express or implied, is made by Ströer with respect to the fairness, completeness, correctness, reasonableness or accuracy of any information and opinions contained herein.

The information in this presentation is subject to change without notice, it may be incomplete or condensed, and it may not contain all material information concerning Ströer or the Ströer Group. Ströer undertakes no obligation to publicly update or revise any forward looking statements or other information stated herein, whether as a result of new information, future events or otherwise.