Ströer SE & Co. KGaA — Investor Presentation 2016

Aug 29, 2016

H1 2016 Presentation

11th August 2016 | Ströer SE & Co. KGaA

Agenda

01

Key Developments

• Key Financials H1 2016
• M&A Overview

Udo Müller

02

Operational Highlights

• Integration & Synergies
• Out of Home
• Content Group
• Local Sales
• National Sales
• Transaction Business

Christian Schmalzl

03

Financials

• P&L H1 2016
• Ströer Digital
• Details on Digital
• Ströer OoH Germany
• Ströer OoH International
• FCF
• Financial Status & Leverage

Bernd Metzner

04

Summary

• H1 2016
• Guidance Statement

Udo Müller

Ströer SE & Co. KGaA: H1 2016 Results

€MM		H1 2016	H1 2015	▲
Revenues	(1) Reported	502.3	363.4	+38%
	(2) Organic 8.7%		8.4%	+0.3%pts
Operational EBITDA		114.6	78.4	+46%
Operational EBITDA margin		22.5%	21.2%	+1.4%pts
(3) EBIT (adjusted)		75.9	45.0	+69%
(adjusted) (4) Net income		60.6	33.8	+79%
Operating Cash Flow		83.4	38.5	>2 times
(5) Capex		45.6	38.3	+19%
		30 June 2016	30 June	2015
(6) / Leverage Net Debt Ratio		363.9 / 1.5x		325.4/1.9x

(1) According to IFRS 11

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

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

(4) EBIT (adjusted) net of the financial result adjusted for exceptional items and the normalized tax expense (15.8% tax rate)

(5) Cash paid for investments in PPE and intangible assets (6) Net debt = financial liabilities less cash (excl. hedge liabilities)

Ströer Multi-Channel & Integrated Monetization Ecosystem

All M&A Activities follow Three Clear Principles

• 1. Every target or new asset has a robust standalone case.
• 2. Every acquired asset needs to perform better with Ströer than in a standalone case based on our group synergies.
• 3. Every asset also delivers synergies or scale effects back to our group.

M&A follow a consistent Strategy: Three Value Creation Approaches (1)

M&A follow a consistent Strategy: Three Value Creation Approaches (2)

Value Creation and concrete Results: T-Online

Value Creation and concrete Results: RegioHelden

Value Creation and concrete Results: Statista

Value Creation and concrete Results: Ströer Mediabrands

Balanced structure of

cash-contributing, EBITDA-focused more mature business models & fast growing, dynamic assets with sustainable perspective!

Our M&A Strategy pays off: Significant KPI Improvements

Agenda

01

Key Developments

• Key Financials H1 2016
• M&A Overview

Udo Müller

02

Operational Highlights

• Integration & Synergies
• Out of Home
• Content Group
• Local Sales
• National Sales
• Transaction Business

Christian Schmalzl

03

Financials

• P&L H1 2016
• Ströer Digital
• Details on Digital
• Ströer OoH Germany
• Ströer OoH International
• FCF
• Financial Status & Leverage

Bernd Metzner

04

Summary

• H1 2016
• Guidance Statement

Udo Müller

Ströer Multi-Channel & Integrated Monetization Ecosystem

Pushing Existing Public Video Network (Indoor!) to the next Level

Portfolio Development

Deutsche Bahn

First 100% Digital Underground Stations

Example Hamburg Jungfernstieg

Example Hamburg Königstrasse

Prolongation of strategic long-term contracts for public transportation system in top cities, e.g. Hamburg: >13 years (70 + 100 Screens) Munich: >15 years (150 + 90 Screens)

• Constant up-grading to more digital inventory e.g.
• Cologne: 87 + 31 Screens

• Stuttgart: 31 + 26 Screens

• Investment programme of DB ("Zukunft Bahn") allows great and smart opportunities to accelerate further digitization with limited funds

• Focus on the top suburban railway stations ("S-Bahnhöfe")
• Prototypes of fully digitized stations already visible in Hamburg (e.g. Jungfernstieg, Königsstrasse)

Next Steps Roadside Digitization – with excellent Market Feedback

• Successful beta-test in Wuppertal around right locations, Current Roadside Screen Network 4 Modules screen network coverage, content concept as well as marketing & sales strategy
• Consequent roll-out city-by-city and a clear bottom-up approach in line with revenue generation via local clients (SMBs: signage & campaigns)

First German Top 5 City: Cologne

• Installation of 28 screens in absolute top locations for high visibility and maximum daily reach
• Smart mixture of advertising and local content (i.e. news, sports, weather)
• Order book: 2.4m Euro after 6 months
• 133 clients from targeted segments, e.g. service providers, fitness studios, car dealers, estate agents, medical practices, catering & event

Ströer Multi-Channel & Integrated Monetization Ecosystem

Local Sales Development: Growth Case fully on Track!

Ströer Multi-Channel & Integrated Monetization Ecosystem

OoH Sales: Growing Sales Impact & New Bizz Initiatives

Access to historically weak OoH

sectors

Persistent & pro-active Handling of the Market Sector Initiative: Finance

• Over 1,000 offers generated in Q2 2016 by the teams (650 in 2015)
• Customized offers for events (e.g. EM 2016) enable to place 200 offers at clients and realize approx. 5m Euro additional revenue
• Combined OoH & Online approach pushes direct client meetings significantly
• Volume of offers first six months

Client meetings first six months

Client interactions with >60% of all clients including workshops to discuss customized solutions and best practice in the sector

Sector Initiative: FMCG, Food, Beverages

Focus on FMCG costumers leads to approx. 200 offerings with a total volume of over 43m Euro

Programmatic Infrastructure drives Efficiency and Yield Optimization

• Adserver based technology enables programmatic Public Video campaigns and drives yield optimization and efficiency
• First DSPs (Active Agent, Mediamath, AdForm) connected to collaborate with the big 5 agency networks from Q3 onwards

Leveraging Proprietary Adserver Tech for PV

Programmatic Public Video Implementation of first Campaign(s)

• Successful launch of first programmatic campaign in Germany in Q2
• Close cooperation and technical delivery with Vivaki to create a fully scalable case and prototype for all agency networks
• Campaign communicating the new claim "moovel my way"; targeting based on weather conditions and selected target group criteria

Digital: Market Leadership and Launch of new Products and Services

Roadblock Pilot: June 2016

• New products to offer reach and quality products for advertisers e.g. Homepage Roadblock, First Contact
• Automatized yield optimization drives monetization for publishers by approx. 15%
• New cooperations and acquisitions enable new services to offer full range monetization (e.g. TWIAGO)
• DMP strategy and roll out from ONE tech are central enabler for further growth

Integration: Operational Excellence and centralized Sales Activities

• ONE Platform enables transparency and is key for redefining workstreams and processes
• ONE Team: Integration of companies (e.g. adscale) and units enabling integrated teams for know how transfer/lean structure
• ONE KPI system: Synchronized KPIs for the group

• ONE Service Desk: Salesforce as central CRM System and KPI-Cockpit improves customer satisfaction

• Centralized and synchronized market activities (ONE face to the customer)

• Integrated sales services, marketing and research activities lead to cost reduction
• Strong publisher partnerships enable to extend 24 contracts and win 11 new publishers to round our channel portfolio.

Ströer Multi-Channel & Integrated Monetization Ecosystem

Segment "Digital": Overall Structure & Units (exemplary Entities)

Ströer Value Creation Model for Digital Content & Transaction

T-Online: Leveraging Ströer Performance Publishing Suite

Monetization & Revenue Diversification

Example: State of the Art real time Analytics Tools for T-Online Driving T-Online Stickiness

• Live tracking (clicks, bounce rates, page views etc.) on each page (desktop and mobile)
• Real time optimization of websites and elements incl. shopping modules
• Increase of user interaction rates and site stickiness beyond historic benchmarks
• Same & consistent tool for all assets: synergies and knowledge exchange

Central Ströer Video Unit tripling historic Video Content

T-Online: Smart Traffic Growth Hacking

T-Online: Leveraging Ströer Sales Organisation & Power

StayFriends becomes T-Online's Social Network

…

Deep two-way Integration

	Marc Mitschüler Kontakte Postfach Besucher Spiele		$\frac{157}{9}$ Gold
		leuigkeiten Profilseite Familie Nachrichten Fotobox Einstellungen

T-Online delivers content for StayFriends Newsfeed & gets backlinks from StayFriends

(Re-)Launch of T-Online Shop in second Half 2016

• Assortment range of over 2,000 items
• Important data source for collecting user data
• Important accelerator for own niche ecommerce brands like FIXXO and Lioncast
• Nucleus of e-commerce extensions for other portals

Ströer Multi-Channel & Integrated Monetization Ecosystem

Agenda

01

Key Developments

• Key Financials H1 2016
• M&A Overview

02

Operational Highlights

• Integration & Synergies
• Out of Home
• Content Group
• Local Sales
• National Sales
• Transaction Business

Christian Schmalzl

03

Financials

• P&L H1 2016
• Ströer Digital
• Details on Digital
• Ströer OoH Germany
• Ströer OoH International
• FCF
• Financial Status & Leverage

Bernd Metzner

04

Summary

• H1 2016
• Guidance Statement

Udo Müller

35

Udo Müller

Profit and Loss Statement 1-6 2016

EURm	1-6 2016	1-6 2015	▲ %	Analysis
(1) Revenues (reported)	502.3	363.4	+38%	Expansion driven by 8.7% organic growth and M&A
Adjustments (IFRS 11)	6.7	7.3	-8%
Revenues (Management View)	509.0	370.7	+37%
Operational EBITDA	114.6	78.4	+46%	On track to deliver > 280 EURm for the FY 2016
Exceptionals	-10.9	-6.2	-77%	Higher exceptionals from M&A and integrations
IFRS 11 adjustment	-2.0	-2.2	+8%
EBITDA	101.7	70.0	+45%
Depreciation & Amortisation	-65.0	-48.8	-33%	Increase in D&A base on larger consolidation scope
EBIT	36.7	21.3	+72%
Financial result	-5.1	-4.9	-3%	Further optimization of financing structure
Tax result	-3.9	1.8	n.d.
Net Income	27.7	18.2	+52%
Adjustment(2)	32.9	15.6	~ 2 times	Higher PPA-amoritisation and exceptionals
Net income (adjusted)	60.6	33.8	+79%	On track to deliver > 150 EURm for the FY 2016

(1) According to IFRS

(2) Adjustment for exceptional items including adjustments of the financial result (+11.9 EURm), amortization of acquired advertising concessions & impairment losses on intangible assets (+ 27.2 EURm), Tax Adjustment (-6.3 EURm)

Reported Organic Growth of 8.7 % in 1-6 2016

Ströer Digital: Strong Profitable Growth

• Strong digital growth, both organically especially video and transactions and driven by scope effects
• Op. EBITDA more than doubled in line with revenues; investments in growth business models
• Ongoing integration and restructuring activities as well as continued portfolio optimization

Details on Digital Segment Revenues: Product group development 1-6 2016

OoH Germany: Strong Overachievement

• Above market revenue increase based on sustainingly strong national and regional sales performance
• Improvement of operational EBITDA in line with strong underlying revenue growth
• Substantial investments in further expansion of local sales force

Ströer OoH International: Challenging Markets

• Q2 suffering from FX rate effects and PY comparables
• Soft OoH market dynamics in Poland and difficult overall economic environment in Turkey
• Improved cost base not sufficient to compensate revenue development

Free Cash Flow Perspective 1-6 2016

Free Cash Flow	H1 2016 EURm	H1 2015 EURm	Analysis
Op. EBITDA	114.6	78.4	 Strong operational cash generation in line with increased operational performance
- Interest (paid)	-3.4	-5.2
- Tax (paid)	2.1	-5.7	 Further reduced interest payments after successful refinancing in 2014 and 2015
-/+ WC	-7.6	-17.5	 Higher exceptionals due to M&A and Integration
- Others	-22.3	-11.5	efforts
Operating Cash Flow	83.4	38.5	 High investment level due to further digitalization in OoH, IT-infrastructure and various other projects
Investments	-45.6	-38.3
Free Cash Flow (before M&A)	37.8	0.2

Financial Status and Outlook

Financial Status & Outlook

• Leverage Ratio could be reduced vs PY from 1.9 to 1.5 due to strong Cash Flow
• 106 mEUR M&A cash out in H1 2016 affect Net Debt and Leverage Ratio
• Free Cashflow before M&A of more than 135 mEUR in 2016 expected

Long Term Financial Outlook

Maintaining a solid financial profile with a target leverage ratio of 2.0 – 2.5 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 H1 2016
• M&A Overview

02

Operational Highlights

• Integration & Synergies
• Out of Home
• Content Group
• Local Sales
• National Sales
• Transaction Business

Christian Schmalzl

03

Financials

• P&L H1 2016
• Ströer Digital
• Details on Digital
• Ströer OoH Germany
• Ströer OoH International
• FCF
• Financial Status & Leverage

Bernd Metzner

04

Summary

• H1 2016
• Guidance Statement

Udo Müller

44

Udo Müller

Summary: Excellent First Half 2016

Total revenue growth by 38% to 502.3 EURm

Operational EBITDA expanded by 46% to 114.6 EURm

Net Income (adjusted) almost doubled to 60.6 EURm

Operating Cash Flow more than doubled to 83.4 EURm

Leverage Ratio at 1.5 times operational EBITDA

Guidance Statement 2016: Confirmed

For 2016 we expect total revenue between 1.1 and 1.2 billion Euro and an operational EBITDA of more than 280 Million Euro

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