Ströer SE & Co. KGaA — Earnings Release 2017

Feb 22, 2018

Preliminary Figures FY 2017

February 22, 2018 | Ströer SE & Co. KGaA

INDEX

Preliminary	Results	FY 2017
EURm		FY 2017	▲	Q4 2017	▲
	Reported(1)	1,331.0	+18%	421.5	+18%
Revenues	Organic(2)		+8.7%		+9.0%
Operational EBITDA		331.2	+17%	122.2	+16%
Operational EBITDA margin		24.6%	-0.3%pts	28.7%	-0.5%pts
EBIT (adjusted)(3)		226.2	+18%	93.1	+18%
Net income	(adjusted)(4)	183.6	+19%	76.5	+19%
Operating cash flow		252.4	+7%	124.9	+11%
					-27%
		106.2	+9%	19.0
Capex(5)		31 Dec	2017	31 Dec	2016

³

Our Targets 2017: Fully Delivered in a Challenging Market Context

Complementing Integrated Brand-Performance-Sales Funnel

Data aggregation

Customer Centricity Evolves Partnerships with Key Accounts

Out-of-Home Media Content Media Dialog Media

Exemplary Key Accounts

Robust & Sustainable Growth Drivers in all Key Segments

Out-of-Home Media (Location Based Advertising)	Content Media (Digital Content & Marketing Services)	Dialog Media (D2D, Phone, Chat, Mail, CpO)
Location Based Reach (Out-of-Home) Key logics:	Content Based Reach & Interaction (Online)
1. Slightly growing and robust portfolio market share with growing audience through urbanization and mobility 2. 54%* of revenues coming from	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
local and regional business (vs. 46% national ad market)	2. 51%*** of revenues coming from direct client relationships and direct programmatic sources	2. Market fragmentation and lack of professionalization & scale is offering strategic opportunities
3. Digitization is driving both inventory value, monetization potential and yield optimization	3. Strong & highly profitable own assets in combination with 345**** of the top 700 German websites	3. Massive digitisation opportunities in combination with group synergies & 360° sales channels

2017 Key Strategic Investment Initiatives The 500th Infoscreen display

Digitalization of Location Based Advertising

• 1
• The 200th Roadside screen
• The 4,000th Public Video screen

Hedging unique position in Digital Out-of-Home Ströer Dialog – Acquisition of Avedo and 5

• Acquisition of Neo and
• United Ambient Media

Development of strong local sales force

• The 500th local sales agent
• Doubling regional online sales revenues

Completing the marketing value chain 6

• Ranger

Data Partnership with Otto

• More than 25m strong data profiles 3
• Successful launch of new data and targeting products

Maximizing and monetizing value of e-commerce Business 7

Vitalsana

Leveraging reach in Content Based Online Inventory 4

• Sales Partnership with gofeminin
• and Bauer Verlag

Relaunching and uplifting t-Online

• Multi touchpoint reach of 47 million unique users 8
• New content hub in Berlin

Clear Strategic Focus: Investing in Our Core Capabilities

Q4 Highlights

Out-of-Home Media (Location Based Advertising)

Event area at Berlin main station with Public Video-Screen, retro-fridge & free beer

The branded refrigerator unexpectedly addresses people passing the PV screen and, depending on the situation, asks them to answer funny questions or do extraordinary work for a beer.

"Make Facebook your Facebook" entered the second round

On more than 1,800 city-light posters on the street, on the subway and train platforms and in shopping malls, users and non-users shared their thoughts with Facebook and questioned critical points.

Radeberger Facebook SEGMÜLLER

With a strong focus on public transport media to the TOP customer in regional sales

In addition to 50 fully wrapped trams, Mega-Lights, premium city-light posters and the digital roadside screens in Cologne were used for the large opening campaign of the furniture store.

Content Media (Digital Content & Marketing Services)

Three day homepage Roadblock

Objective: Highest reach through fixed placements.

Idea: Reach 83% of internet users through the Ströer digital product with the highest reach in three days.

Result: Highest attention within shortest time.

Volkswagen Jack Wolfskin Statista

Targeting based on Otto Group data

Addressing different sub-target groups with matching motifs, separated by gender. 10-week playout of a combining with Otto Group media interest targeting and behavioral targeting. Result: Uplifts of the target group match of up to 102% compared to AGOF distribution and above-average CTRs.

Country reports for 50 countries implemented, launch of the database eCommerceDB.com for the focus market e-commerce, company database with most important facts and figures on >5,000 companies, website relaunch that significantly improved reach effects (including SEO), expansion of sales to Asia & South America.

Dialog Media (D2D, Phone, Chat, Mail, CpO)

Start in fiberglass pre-marketing

Germany's telecommunications incumbent Deutsche Telekom massively starts investing in fiberglass fixnet were accompanied by local direct sales teams to achieve ambitious sales targets for a lucrative "build" decision.

Acquiring out of area customers and testing new product offerings

One of Europe's leading energy companies focusing on renewables, grid-operations and customer solutions relies on Ranger to achieve it's ambitious customer goals. Additionally Ranger provides market tested insights for numerous new product offerings.

Generating B2B customers with cable based multi-user contracts

multi-user contracts to medium-sized enterprises. The primary objective is to generate new business and to service existing customers, large housing associations and property developers.

eCommerce in the OTC Area Vitalsana – Successful Exit and Smart Yield Management of Inventory

Customer Growth Through

17

media (OoH, Public Video and Digital) the e-commerce business was significantly expanded and the customer base significantly

Outlook 2018: Ströer Dialog - A Strong Player in Direct Marketing

Synergies Across Business Segments Rapidly Improving

	Synergies Across Business Segments Rapidly Improving
1 Complementing marketing offering to clients by dialog Marketing Platform	Strong positive feedback from key clients and increasing demand in Q4 2017
2 Leveraging dialog Marketing Platform for own SMB business	Three tests: Avedo sells Regiohelden services, Ranger sells Out-of-Home offers, Avedo schedules SMB leads for local sales force
3 Maximizing own levers in cut-through-competition via larger trading volume with clients	Full service portfolio pilots with:
4 Group synergies on recruitment, training, data & process optimization	Staffing quality as key KPI: Recruiting funnel significantly enhanced

Strong Internal Synergies: Example Recruitment Funnel

Profit and Loss Statement Q4 2017*

Profit and Loss Statement Q4 2017*
EURm	Q4 2017	Q4 2016	▲ %	Analysis
Revenues (reported)(1)	421.5	357.6	+18%	Expansion driven by 9.0% organic growth and M&A
Adjustments (IFRS 11)	+4.3	+2.1	>+100%
Revenues (Management View)	425.8	359.7	+18%
Operational EBITDA	122.2	105.0	+16%	Performance better than guided (by around 5%)
Exceptional items	+0.4	-10.4	n/a	Positive and negative exceptional items are balancing
IFRS 11 adjustment	-1.5	-1.4	-13%
EBITDA	121.1	93.2	+30%
Depreciation & Amortization	-60.2	-56.0	-8%	Increase in D&A due to larger consolidation scope as well as Impairment in Turkey
EBIT	60.9	37.2	+64%
Financial result	-2.8	-2.5	-13%
Tax result	-10.5	-5.5	-93%
Net Income	47.5	29.2	+63%
Adjustment(2)	+29.0	+35.3	-18%
Net income (adjusted)	76.5	64.5	+19%	Performance better than guided (by 5 to 10%)
* Preliminary and unaudited

Profit and Loss Statement FY 2017*

Profit and Loss Statement FY 2017*
EURm	FY 2017	FY 2016	▲ %	Analysis
Revenues (reported)(1)	1,331.0	1,123.3	+18%	Expansion driven by 8.7% organic growth and M&A
Adjustments (IFRS 11)	+14.0	+11.9	+18%
Revenues (Management View)	1,345.1	1,135.1	+18%
Operational EBITDA	331.2	282.8	+17%	Outperformance of guidance
Exceptional items	-15.9	-26.8	+41%	Significantly below PY
IFRS 11 adjustment	-5.1	-4.4	-16%
EBITDA	310.2	251.6	+23%
Depreciation & Amortization	-183.5	-166.2	-10%	Larger consolidation scope and PPA depreciations
EBIT	126.7	85.3	+48%
Financial result	-8.9	-10.0	+11%	Lower financial result based on better financing conditions
Tax result	-18.8	-9.9	-90%
Net Income	99.0	65.5	+51%
Adjustment(2)	+84.7	+88.3	-4%
Net income (adjusted)	183.6	153.8	+19%	Outperformance of guidance
* Preliminary and unaudited (1) According to IFRS (2) Adjustment for exceptional items (+16.8 m€) including adjustments of financial result, amortization of acquired advertising concessions & impairment losses on intangible assets (+80.5 m€), tax adjustment (-12.7 m€)				23

Transition of Net Income to Net Income Adjusted

• Net income adjusted is central parameter of our dividend policy
• D&A of M&A related revaluations (PPA effect) on the same level as in 2016 154
• Impairments mainly linked to OOH Turkey
• Higher tax base of EBT adjusted leads to tax adjustment

2017: Break down of Exceptional Items

Details on Exceptional Items Analysis

• Exceptional items 2017 are reduced by 41% versus 2016
• Approximately 19 m€ exceptional expenses for integration and restructuring activities; thereof 5 m€ related to T-Online migration and restructuring 26.8
• M&A expenses of around 8 m€ comprise expansion into Dialog Media
• Divestment activities (Vitalsana and Stylefruits) lead to an exceptional income of 11 m€

Overview on Growth Rates FY 2017

Group Digital OoH Germany OoH International YTD Reported Growth +18.5% +37.9% +7.5% -15.8%	Overview on Growth Rates FY 2017
YTD Organic Growth  including organic +8.7% +11.6% +6.4% +2.5% growth of 12M M&A
YTD Organic Growth  w/o revenues +8.0% +10.6% +6.0% +5.2% of 12M M&A

Digital: Continuously Strong Profitable Growth in Q4 2017

• Strong digital growth, both organically as well as scope effects (especially new sub-segment Dialog Marketing)
• Increase in revenues and operational EBITDA in Q4 2017 was driven by all product groups
• Ongoing integration efforts around the segment (e.g. unifying digital sales houses and combining office spaces)

Digital Product Group Development FY 2017 (w/o dialog media)

OoH Germany: Sustainable Growth Performance in Q4 2017

• Outperformance of strong prior year revenue increase driven by both local/regional and national sales forces
• Growth supported by expansion of digital product portfolio and by acquisitions (e.g. UAM Media Group)
• Operational EBITDA margin in Q4 in line with previous year

OoH International: Reported Relevance is Diminishing for Group

disposal of non-profitable Istanbul contract in H2/2017

book value; remaining goodwill is negligible

New Segment Structure as of 1 January 2018

• Existing segmentation does not sufficiently reflect management steering
• Segment OoH International will be merged into OoH Germany segment due to lack of relevance and size -18 m€ -23 m€
• Digital segment demerges Dialog Media (including Transactional businesses) due to business heterogeneity and size Reconciliation -26 m€ -23 m€

* includes holding, consolidation and IFRS 11 adjustments 31

Free Cash Flow Perspective Q4 2017*

EURm	Q4 2017	Q4 2016
Op. EBITDA	122.2	105.0
- Exceptional items	+0.4	-10.4
- IFRS 11 adjustment	-1.5	-1.4
EBITDA	121.1	93.2
- Interest	-1.9	-2.4
- Tax	-1.7	-3.0
-/+ WC	+23.6	+20.1
- Others	-16.1	+4.3
Operating Cash Flow	124.9	112.2
Investments (before M&A)	-19.0	-26.1
	105.9	86.1

Analysis

• Around 70% of Free Cash Flow in 2017 was generated in Q4
• Strong operational cash generation in line with increased operational performance
• Like in Previous Year strong Working Capital contribution to Operating Cash Flow
• "Others": Negative value mainly due to sale of Vitalsana (cash recognition in M&A cash flow)

Free Cash Flow Perspective FY 2017*

EURm	FY 2017	FY 2016
Op. EBITDA	331.2	282.8
Exceptional items	-15.9	-26.8	financing conditions
IFRS 11 adjustment	-5.1	-4.4
EBITDA	310.2	251.6
Interest	-6.0	-7.2
Tax	-23.1	-11.2
-/+ WC	+2.5	+12.2	Vitalsana)
Others	-31.1	-9.0
Operating Cash Flow	252.4	236.3
Investments (before M&A)	-106.2	-97.8
Free Cash Flow (before M&A)	146.2	138.5

Analysis

Low interest payments based on better financing conditions Different from PY and 2015 negligible contributions from change of Working Capital Sustainable high investments in digitalization, software and other intangibles "Others": Effect mainly from Q4 (Sale of Vitalsana)

Guidance Achievement Year by Year

Guidance Achievement Year by Year
		2013			2014			2015			2016			2017
EUR m	Guidance	Actual		Guidance	Actual		Guidance	Actual		Guidance	Actual		Guidance	Actual
Organic growth	Low single digit	3.5%		>10%	11.4%		High single digit	9.8%		Mid to high single digit	7.2%		Mid to high single digit	8.7%	
Operational EBITDA	Moderate increase	118 (+10%)		~145	148		>200	208		>280	283		320-330	331	
Net Income Adj.	Moderate increase	36 (+51%)		>50	56		~100	107		>150	154		>175	184	
Free Cashflow*	Moderate increase	39		Slight increase	80 (+103%)		~100	116		~135	139		~145	146	
Return on Capital Employed (ROCE)	Moderate increase	10.3%		>10%	13.8%		Considerable increase	15.4% (+1.6% p.p.)		stable	16.9%		stable	17.6%	

Source: Company filings, broker research | * Free Cash Flow before M&A 34

Ströer to Apply IFRS 16 from 2018 Onwards Replaces the previous standard IAS 17 – Leases

IFRS 16 framework Comments

• Can come effective earliest 1st January 2018

Application at Ströer

• Advertising contracts with private and public lessors need to be classified as "leases" in the future
• Capitalisation of the "right of use" by recognizing present value of the future lease payments as intangible assets

• Recognition of the obligation to make future lease payments as financial liabilities

• Ströer applying IFRS 16 as early adopter (standard practice for German Media)

• Effects higher than originally anticipated (since also public contracts are affected as well as new contracts)
• Ströer using IFRS 16 application to eliminate previous IFRS 11 adjustments as well

IFRS 16: Expected Implications for Ströer Group

Expected major impacts on Ströer KPIs

		IFRS 16: Expected Implications for Ströer Group Expected major impacts on Ströer KPIs
EURm	FY 2017	Expected Impact
Revenues	1,345.1	No changes
Operational EBITDA	331.2	Increase by approx. +165 m€ (elimination of operating lease expenses)	leasing contracts
D&A (base)	-103.0	Increase by approx. -150 to -155 m€
EBIT (adjusted)	226.2	Increase by approx. +10 to 15 m€ (as operating lease expenses are replaced by depreciation and interest)	Income
Financial result	-9.0	Increase by approx. -25 to -30 m€
Net Income (adjusted)	183.6	Decrease by approx. -15 m€ (timing effect due to higher interest during first years, neutral over time)
Free Cash Flow (before M&A)	146.2	Increase by approx. +140 m€ (reclassification of lease liability repayments in Financing Cash Flow)
Net Debt	457.1	Increase by approx. +1.1 bn€ (capitalized operating lease assets/liabilities)
Source: Ströer estimations based on existing lease portfolio			36

Comments

• 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 segments

Source: Ströer estimations based on existing lease portfolio 36

Outlook for 2018: Q1 Results 2018 on May 15

• 1. Similar to development of the last twelve months: solid & robust business across the entire group with expected growth for 2018 in line with annual guidance 2. Robust development of OoH Media business fueled by both national sales
• and extended local salesforce activities
• 1. Content Media segment consistently on track regarding top line growth, market share development as well as consolidation and integration processes
• 1. Dialog Media with promising start beyond expectations, significant group synergies and all processes fully on track

Financial Calendar 2018

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, expressed or implied, is made by Ströer with respect to the fairness, completeness, correctness, reasonableness or accuracy of any information and opinions contained herein. not contain all material information concerning Ströer or the Ströer Group. Ströer undertakes no obligation to publicly

The information in this presentation is subject to change without notice, it may be incomplete or condensed, and it may update or revise any forward looking statements or other information stated herein, whether as a result of new information, future events or otherwise.