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Acquisition of a majority stake
in PIN Group AG
Unique opportunity for growth
Analyst & Investor Conference Call
July 2, 2007
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Disclaimer
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Whilst all reasonable care has been taken to ensure that the information and facts stated herein are accurate and that the opinions and expectations contained herein are fair and reasonable no representation or warranty, express or implied, is given by or on behalf of the Company, any of its directors, or any other person as to the accuracy or completeness of the information or opinions contained in this document and no liability is accepted for any such information or opinions.
This document contains forward looking statements which involves risks and uncertainties. These forward looking statements speak only as of the date of this document and are based on numerous assumptions which may or may not prove to be correct. The actual performance and results of the business of the Company could differ materially from the performance and results discussed in this document.
The Company undertakes no obligation to publicly update or revise any forward looking statements or other information contained herein whether as a result of new information, future events or otherwise.
This document does not constitute or form any part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in the Company, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision in relation thereto.
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Agenda
1.
Overview of PIN Group AG
2.
Key Deal Terms and Impact on Axel Springer
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PIN is the 2nd largest mail services provider in Germany
Founded in 2005 by leading publishers and logistics expert
> 7,000 employees (as of April 2007)
More than 60 regional mail distributors, organized in 6 sales
regions
Fully licensed for all services, including mail < 50 g, enabling PIN
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Target Structure of PIN PIN Group AG in September 2007
Pre-Deal Shareholder Structure
AS AG 23,5% Holtzbrinck 23,5% Rosalia 23,5% WAZ 23,5% Madsack 5,9%
1
Transaction
AS AG 71,6% Holtzbrinck 5,6% Rosalia 11,2% WAZ 5,6% Madsack 5,9%2
After integration of West Mail and others by September 2007
AS AG 63,7% Holtzbrinck 5,0% Rosalia 10,0% WAZ 5,0% Madsack 5,3%
West Mail and others
11,0%
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Competitive strengths
Coverage
1.
Cost structure
2.
Scalability
3.
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Early mover with nationwide coverage
2007
Setup and acquisition of
regional mail services
3.
Nationwide integrated mail
business
2006
Setup of an nationwide
mail logistics infrastructure
2.
Supra-regional mail
business
2005
Contribution/setup of
regional mail services
1.
Regional mail business
PIN subsidiaries PIN subsidiaries Hubs PIN subsidiaries Hubs
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PIN has the second nationwide mail network with mainly own last
mile delivery
PIN structures
PIN Delivery Network
DPAG Delivery Network
Currently non-PIN structures DPAG structures
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Lean structures for the benefit of customers
Efficient cost structure
Flexible and lean cost structure aligned with current and future business
needs
Efficient use of sorting systems and fewer sorting centers
Lean shared services center and administration
Low capex requirements
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Highly scalable business
Letters
per deliverer
time
e.g. PIN
Stuttgart
e.g.
PIN Berlin
Bags full
Break even
Profitable
Reschedule
tours
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Analysts
1)expect market share of private competitors to increase
to 27% by 2012
Market share today
Market forecast
100% = ~€10bn (2007)
2) Deutsche Post Other competitors Forecast 2012: 27% market share for all competitors* 18.683 18.618 18.557 18.500 18.447 18.324 27% 23% 20% 17% 13% 10% 2007 2008 2009 2010 2011 2012 Mailings in million unitsMarket share competitors of DP AG
1) Market studies by Morgan Stanley (September 2006) and Mercer Consulting (April 2007) 2) Own calculations based on 2006 figures (Bundesnetzagentur).
90%
~6% ~4%
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Strong revenue growth prospects
Revenues per quarter
30
71
Q1 2006
Q1 2007
Revenues per year
168
~ 350
FY 2006
FY 2007e
+136% +108%
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Key drivers of growth
Integration of further regional mail distributors (increased own
coverage)
1.
Increased marketing of nationwide offer
2.
Quality improvement through control of the complete delivery
process
3.
Flexible offering: High-price track-and-trace as well as economy
letter
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Agenda
1.
Overview of PIN Group AG
2.
Key Deal Terms and Impact on Axel Springer
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Step 1: Increase of Axel Springer stake in PIN Group
from 23.5% to 71.6%
Purchase price of €510m for 48.1%, valuing PIN Group at €1.1bn
1)
Total Axel Springer investment
2)of app. €530m for 71.6%
Step 2: Agreed integration of West Mail and other regional
publishing houses
3)for the price of app. 11% PIN-shares
Financing through existing credit line
Closing expected for July 2007, subject to merger control clearance
Transaction overview
1)Including financial liabilities of PIN Group of €45m as of 31/03/07 2)Including acquisition cost for the initial stake
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PIN Group: significant revenue growth envisaged
PIN Group Revenue in €m
Key Financials
Accelerating growth: increasing revenue
mid-term by €1.5-2bn (15 to 20% market share).
Mail services to become new major business
segment
PIN Group: EBITDA break even in 2007, EBITA
break even in 2008
PIN Group long-term target EBITDA margin
of ~ 15%
EPS accretive by 2010, cash accretive by 2009
Low Capex requirements: ≤ €40m p.a.
No further financing needed
2006
2007e
2010e
2015e
1.5-2bn
~ 350m
168m
PIN Group EBITDA target margin
in 2015
1): ~ 15%
1) EBITA contribution to Axel Springer dependent on purchase price allocation effects
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After acquisitions efficient capital structure
~350
266
6/2007e
12/2007e
~1,500
3/2007
Zanox Ringier auFeminin PIN Polsat Other Dividend payment wallstreet:online AmiadoNet debt
1)in €m
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Agenda
1.
Overview of PIN Group AG
2.
Key Deal Terms and Impact on Axel Springer
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Investment rationale
Unique opportunity to capitalize on strong growth prospects for
No. 2 mail service provider
1.
Fast growing business, rapidly gaining market share
2.
96% coverage of German households with mainly PIN owned last
mile access
3.
Additional strong pillar for Axel Springer, leveraging proven
expertise in distribution into the mail services market
4.
Beneficiary of one of the last big German liberalisation processes
5.
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Appendix
Claudia Thomé
Head of Investor Relations
Phone: +49 (0)30 2591 77421
Mobile: +49 (0)160 90445035
Email:
Daniel Fard-Yazdani
Investor Relations Manager
Phone: +49 (0)30 2591 77425
Mobile: +49 (0)151 52844459
Email:
Axel Springer AG
Axel-Springer-Str. 65
10888 Berlin / Germany
Fax: +49 (0)30 2591 77422