SevenVentures Dr. Hari Sven Krishnan, October 10, 2012 October 10, 2012 Page 1
Recap: Seven Ventures @ Capital Markets Day 2011 Our aspirations Scale-up of SevenVentures portfolio Our achievements Signed more than 20 new deals and grew total deal portfolio to >40 companies Strategic investments (>25% equity) in promising business models Completed seven strategic investments (Apomio, Covus, HolidayInsider, MeetOne, MyParfuem, Preis24, tropo) Become relevant revenue contributor to P7S1 Group P&L Revenue forecast of more than EUR 65m for FY 2012 (+55% vs. FY 2011) October 10, 2012 Page 2
SevenVentures driving growth of deal portfolio and evolution of business model Majority media investments Media investments 2010 2011 2012 Note: Selected deals only October 10, 2012 Page 3
SevenVentures to deliver impressive growth in 2012 Revenues [EURm] Actual 42 +55% Forecast 2015 >65 Impact on Group EBITDA [EURm] 38 ~60 Portfolio size [# companies*] 37 >40 2011 2012e *Portfolio at end of year October 10, 2012 Page 4
Increasing level of involvement allows SevenVentures to further grow ROI Strategic roadmap Return on media investments Start: 2010/11 2012/13 2013 Invest media Optimize marketing mix Run logistics Source goods Sell services Integrate IT platforms Find partners Aggregate content Media investments Digital commerce Lifestyle commerce Majority media investments Media investments Majority investments October 10, 2012 Page 5
We have identified seven target segments most responsive and adjacent to TV media Digital Commerce Lifestyle Commerce Market Places Travel & Events Sports & Outdoor Beauty & Perfumes Health Fashion & Accessories Home & Living Ecosystem online marketing agency creative agency October 10, 2012 Page 6
SevenVentures will generate revenue growth from four key components External revenues [in EURm] >65 1 2 3 4 2012 Media investments Digital Commerce Lifestyle Commerce Majority media investments Ecosystem 2015e October 10, 2012 Page 7
1 SevenVentures fuels growth of four customer types by opening TV for non-traditional clients Startups / VC / incubators PE-Media for Exit International imports Turnaround/distressed SMEs October 10, 2012 Page 8
1 SevenVentures with impressive track record: TV proves strong sustainable brand-building capabilities Zalando A success story Extensive media push created clear European market leader in online shoes / fashion 3x more sales in 2011 vs. 2010 and expected to reach ~EUR 1bn in 2012 95% brand awareness No organic search for shoes online Launch TV campaign Search for category and Zalando Decreasing category importance, search for Zalando only 30k shipments per day based on huge assortment with 150k products and 1,000 brands > 600k visitors each day 01/2006 07/2012 Zalando Schuhe online October 10, 2012 Page 9 Source: Zalando, Google Insights, Press releases
2 Digital market places show attractive EBITDA potential given high scalability and low risk Market places Focussed strategy Majority investments Strong TV impact High scalability Path-to-majority investments Attractive margins No warehouse risk Highly scalable business models Brand building for market places and price comparison platforms Higher media leverage vs. single deals through market places with multiple partners Covus as strategic partner with unique digital incubator capabilities Key success factor: Marketing reach October 10, 2012 Page 10
2 Covus Ventures is our nucleus for digital market places Fast time-to-market: Covus Ventures to build digital market places for SevenVentures as extended workbench' in Berlin Strong entrepreneurial team: Management team with successful track record (e.g., browsergames.de, freemium.com) 51% Access to critical know how: Established team with >12 years experience in SEO and performance marketing Attractive portfolio: Existing business models with immediate revenue scaling potential Flexible and lean structure: Build new businesses using existing Covus infrastructure (80-90% variable) Existing close relationship: Already strong cooperation with Covus in online games sector (browsergames.de) October 10, 2012 Page 11
2 Covus already has an attractive portfolio of digital market places SELECTION Portal for online games Existing partnership PC software utilities for tune-up and driver updates Direct client access from installation on client PC, software monetization through affiliate provision Operating Portal for rebate coupons Business model with established proof of concept () Concept phase October 10, 2012 Page 12
2 Set up of a leading travel cluster started Highly attractive EUR 13.2bn online travel market by 2015 P7S1 already with promising travel footprint Build up of a synergic cluster of travel assets started Acquired 90% equity stake in virtual tour operator tropo in 2012 October 10, 2012 Page 13 Source: Forrester 2010, Euromonitor, PWC 2011 *Distributors / packagers only (excl. original service provider data)
2 Build a synergistic cluster of multiple platforms for each segment example: Travel cluster Travel cluster Accommodation Packaged tours Car rental Special event Cruises & other Content sites M4R deals Vacation homes, hotels Virtual tour operator Price comparison Adventure / special events Online travel agency Weather content Meta search / OTA under evaluation under evaluation under evaluation Strong synergies across travel assets can be achieved October 10, 2012 Page 14
2 P7S1 entering the virtual tour operator business with acquisition of tropo Acquisition of 90% equity stake in July 2012 from Opodo Perfect starting point for P7S1 travel cluster strategy Unique and strong asset with experienced management Immediate access to special offers and distribution channel October 10, 2012 Page 15
2 Synergies can be achieved within four main categories Traffic synergies Bundling synergies TV media and wetter.com as central traffic provider Cross-selling of attractive packages and products Cost synergies CRM synergies Joint marketing and sales efforts for all platforms Build-up of a collective customer base October 10, 2012 Page 16
3 We are building a leading e-commerce cluster Growth opportunity into EUR 36.8bn e-commerce market by 2015 e-commerce strategy targeting 5 specific focus segments TV a key value driver through building brand and scale Closed initial 2 deals, further 15 targets shortlisted October 10, 2012 Page 17
3 We focus on economically attractive segments in e-commerce with strategic fit to P7S1 Economic attractiveness Market size High growth High profit margin Low online penetration Low consolidation level Strategic fit and feasibility Strong benefits from TV media Close fit with P7S1 audience Low risk business model Compatibility with SevenOne Media Fitting P7S1 capabilities October 10, 2012 Page 18
3 Our media investments focus on growth stage ventures Phase Seed Startup Growth Consolidate Target sales Launch Proof of concept Main investment focus Media growth investment TV media major success factor Investment risks October 10, 2012 Page 19
3 Our approach avoids typical e-commerce risks Typical issues Low margin business Inventory risk Frequent shifts in consumption patterns EBITDA-margin 2-3% Market average 5-10% Market leaders 10-15% Leaders w/o cust. acq. costs Online Customer Order Delivery Commerce platform Warehouse partner Sales Brand "A" Brand "B" Time Our approach: Bypass issues Focus on/create market leaders with unique margin returns by reduction of customer acquisition costs through ecosystem Partner with 'old economy leaders' or use virtual supply chain with stockless operations Develop clear market leader by cross-marketing power with well-known and sustainable brand (like zalando, amazon) October 10, 2012 Page 20
3 We continue to build the 'house of e-commerce' leveraging cross-marketing power Sports & Outdoor Beauty & Perfumes House of e-commerce Health Fashion Home & Living Current portfolio Personalized perfumes Pharma price comparison platform Cross-marketing power October 10, 2012 Page 21
3 Investments into complementary business models creates synergies across e-commerce cluster Traffic generator Price comparison Market places Participate in 3rd party sales e-commerce Directly sell products October 10, 2012 Page 22
3 Compelling e-commerce strategy Focus on 5 attractive segments TV media provides a substantial growth opportunity No standard investments with typical e-commerce risks Disciplined approach with specific investment hurdles Cluster strategy of complementary business models October 10, 2012 Page 23
4 SugarRay and Booming with full-service offering in their respective fields Creative agency specializing in audiovisual communication Full service portfolio: brand communication, broadcast design, new media, and on-air promotion Foundation in January 2012 Management: Malte Hildebrandt and Markan Karajica Recent spot example Digital marketing agency with focus on SEM/SEO Full service digital marketing offering: SEM, SEO, affiliate, social media, display, conversion optimizations, analytics, IT solutions Foundation in 2007, P7S1 acquired 100% in April 2012 Management: Andreas Schwabe and Markus Wolfbauer Client examples Social social October 10, 2012 Page 24
Capital Markets Day Lunch Break The presentations will continue at 2.30pm (CET) October 10, 2012 Page 25