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Business Media China AG

Business Media China AG. Company Presentation Stuttgart, August 31, 2007 Klaus M. Hilligardt, CEO. 1. Disclaimer.

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Business Media China AG

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  1. Business Media China AG Company Presentation Stuttgart, August 31, 2007 Klaus M. Hilligardt, CEO 1

  2. Disclaimer This document contains forward-looking statements and forecasts based on assumptions and estimates made by Business Media China AG („BMC“) management. While we assume that the expectations of these forward-looking statements are realistic, we cannot guarantee that the expectations will prove to be correct. The assumptions may conceal risks and uncertainties which may lead to actual results significantly divergent from those made in the projective forecasts. The factors that can cause such a divergence include: changes in foreign exchange control or the economic and business environment, currency exchange rate fluctuations, the low market entry barriers for competitors, insufficient acceptance of new products or services and changes in corporate strategy. No update of the projected forecasts contained herein is planned, nor does BMC assume any obligation to do so. 2

  3. Agenda BMC at a Glance Summary major milestones and strategic outlook China – A growing advertising and exhibition market BMC‘s operations Travel Media Exhibitions, Conferences and Publishing Peer Analysis Summary and contact data

  4. BMC Vision & Strategy BMC’s vision is to provide “Total China Media Competence” to its customers by combining Exhibitions, Conferences, Publishing and Out-of-Home (OOH) advertising. It plans to deliver this by combining innovative ideas, high value media assets and strategic partnerships to become an effective channel of communication between the advertiser and the consumer. The company’s track record in Exhibitions and the high value portfolio of advertisement rights for railways stations and airports ensures a fast-growing predictable revenue and earnings stream for its stakeholders. 4

  5. BMC - An Attractive Platform 5

  6. BMC‘s Footprint Today • BMC CHINA Airport Advertising • AIRPORT ADVERTISING • BMC CHINA Advertising • RAILWAY ADVERTISING • BMC Baiwen Exhibitions • EXHIBITIONS • BMC-TBG • EXHIBITIONS & CONFERENCES • BMC Zhenwei Exhibitions • EXHIBITIONS • BMC Herong Exhibitions • EXHIBITIONS & CONFERENCES • BMC China • EXHIBITIONS & CONFERENCES BEIJING Dalian Tianjin Shijiazhuang Qingdao Shanghai Hangzhou Chengdu Chonqing Fuzhou Xiamen Shenzhen Guangzhou 6

  7. BMC AG Structure 7

  8. Management-Team Klaus M. Hilligardt Chief Executive Officer Li Yang Board Member General Manager BMC CHINA • In the media and exhibition business since 1982. • Owner and President MESAGO HOLDING GmbH. • Founder of Mesago Messe Frankfurt in Stuttgart and Tokyo. • Since 15 years active in China with large personal network -Guanxi. • Founder of Business Media China AG. • Graduate of the Elite University UIBE - University of International Business and Economics. • 7 years executive positions in media companies in China. • Large personal network – Guanxi – in China. Arend J.R. van Eeden Board Member Peter Sassmann Chief Financial Officer • In the media and exhibition business since 1992. • 30 years international experience: • Miller Freeman / United Business Media plc and EMAP plc. • 10 years international experience in the exhibition business. • Director Administrations BMC since 2005. • Vice President Subsidiary Management Messe Frankfurt von 1996 – 2004. • Director Controlling and Finance at a stock listed environmental service enterprise 1990-1995. 8

  9. BMC‘s Ad Space: Railway Stations 9

  10. BMC‘s Ad Space: Railway Stations 10

  11. BMC‘s Ad Space: Railway Stations 11

  12. BMC‘s Ad Space: Airports

  13. BMC‘s Ad Space: Airports

  14. Key figures

  15. Agenda BMC at a Glance Summary major milestones and strategic outlook China – A growing advertising and exhibition market BMC‘s operations Travel Media Exhibitions, Conferences and Publishing Peer Analysis Outlook

  16. Strategy • Exploring synergies between OOH advertising, exhibitions and conference businesses • Identification of opportunities in “railway station advertising” for a blue ocean strategy • Follow buy & build strategy using national and global reach • Investments in intangible assets that will be converted to tangible assets and provide returns (reap) for a long-time to come • BMC identifies market leaders in specific local or regional segment, acquires a controlling stake in it (buy), and then scales (build) it up using its national and global reach. 16

  17. Business Execution Cycle 17

  18. Strategic Milestones • Formed a 30 year joint venture with China Railway Media for an “All-China Roll-out” • Controls increasing number of important airports and is able to scale-up and roll-out successes in one airport to the various airports across China • BMC has developed a wide personal network in government, industry, media and academia • International experience of BMC attracts important companies • Getting international brands to advertise will increase the value of the airport advertising • Plans to form JVs with leading western exhibitions for China • Acquired license agreements and JVs with top Chinese, European and American publishing houses 18

  19. BMC’s Current Position • Revenues are growing fast • Investments in intangibles have been accomplished to a major extent • Variable costs are relatively low • Breakeven is expected within the next quarters • EBITDA is expected to turn positive and grow explosively over the next few years • ROE is expected to increase continuously and stabilize at a high level 19

  20. Ready for take off BMC's revenue trend over the years 110 100 90 80 70 (in EUR mn.) 60 50 40 30 20 10 0 2004 2005 2006 2007E 2008E 2009E 2010E Source: BMC Estimates

  21. EBITDA is turning positive 21

  22. Future Growth Strategy • To cover all major railway stations and important airports • To acquire top exhibitions in China • Acquire license for premium space only • Optimum use of advertising space at airports • Optimize management structure • Organic and inorganic growth • Consolidation in the East Coast of China • Enter newer markets 22

  23. Roadmap Summary 23

  24. Projections CNY/EUR 0.0979577 * These projections are based on existing asset and projects and are excluding the Beijing Olympics effect 2008 and the Shanghai EXPO effect 2010 24

  25. Agenda BMC at a Glance Summary, major milestones and strategic outlook China – A growing advertising and exhibition market BMC‘s operations Travel Media Exhibitions, Conferences, IT + Sourcing Peer Analysis Outlook

  26. China‘s Dynamic Economy • The Chinese economy is slated to be among the world’s top five largest economies • Economy is estimated to grow at over 9% per annum through the next decade • Huge manufacturing sector, called ‘Factory of the World’ • Rising income levels and increasing purchasing power of middle class • By 2020 the middle class will comprise 40% of the total population • China will consume approximately 29% of the world's total luxury goods in 2015 • Boom in the retail sector • Government modernizing rural & urban infrastructure, highways, railways, airports, roads, subways Advertising Media

  27. Ad spend % of GDP of China vs. World Ad spend growth of China vs. World 1.4 19.5 1.4 20 1.3 18 1.2 16 1.0 1 14 12 0.8 (in %) 0.8 (in %) 10 0.6 8 7.1 6 0.4 4.2 4.1 4 0.2 2 0 0 North America Europe Asia Pacific China China UK Hong Kong US Strong Ad Spend Growth • China’s urban population increased from 29.0% in 1995, to 40.5%, or 523 million people, in 2003 • Predicted to increase beyond 615 million by 2010 27

  28. Increasing Market Penetration Outdoor advertising as percentage of total ad Ad spend per Capita of China vs. World spend 236 18 240 16 16 15 200 14 12 12 12 11 160 (in %) 10 8 (in EUR) 8 7 120 6 6 5 4 4 3 3 80 2 40 0 UK USA World Japan China France Europe Germany Asia-Pacific Switzerland South Korea Latin America 5 0 China US, Hong Kong, UK (Source: Zenith Optimedia, Clear Media, Goldman Sachs Research estimates) • Massive urbanisation drives China’s ad expenditure where current figures show that over 70% of retail sales take place in urban areas with a growth rate of over 14% • Over 50% of China’s current advertising spend is targeted at the cities of Beijing, Shanghai, Guangzhou and Shenzen although currently, they only account for around 9% of the total China population. 28

  29. Why OOH-Advertising? (Source: China Media Advertising outlook 2006, Goldman Sachs) (Source: China Media Advertising Outlook 2006, Goldman Sachs) The Chinese government stringently controls television, newspaper and radio and the foreign magazines are not allowed to write on politics. The Internet media is also under government’s scanner but less strictly controlled. Relative to other media types, authorities are least interfering where outdoor media is concerned. 29

  30. 4500 4000 4000 3800 3600 3500 3300 3100 3000 2500 2100 (Number of exhibitions) 2000 1700 1500 1000 500 0 2000 2001 2002 2003 2004 2005 2006 Exhibition Growth in China Year 30 (Source: CCPIT)

  31. China Takes the Lead (Source: CCPIT) 31

  32. Agenda BMC at a Glance Summary, major milestones and strategic outlook China – A growing advertising and exhibition market BMC‘s operations Travel Media Exhibitions, Conferences, IT + Sourcing Peer Analysis Outlook

  33. Advertising Management MO Li Yan President WEN Denny Chief Executive Officer The “Grand Dame” in China’s Advertising Business • COO JCDecaux China • General Manager JHDecaux China • COO Media Nation Group • Vice President Top-Result Advertising • CEO Top-Result Bus Advertising • General Manager Shanghai Metro Advertising from 2000-2006 One of the most prominent figures in China’s Advertising Busienss • General Manager JCDecaux 2005-2006 • Vice General manager Media Nation Inc. 2003-2005 Rüdiger Wulf Director Advertising Media Zhang Jihong Chairman All-China Roll-Out Sorbonne Paris Graduate • STRÖR Group (leading Outdoor Company in Germany) 2000-2006 Director Sales & Marketing BlowUp Media GmbH • General Manager • China Railway Century Media Co., Ltd. Mr. Zhang is the highest official in Chinese Railway Advertising and responsible for the Railway Advertising Reform. 33

  34. Positioning Travel Media 34 (Source: SG Ventures Proprietary Research)

  35. Railway Station Advertising 35

  36. Railway Station Milestones 36

  37. Roadmap for Advertising 37

  38. Railway Station Advertising Targets 2007E 2008E * 2009E 2010E Mediaformats (units) 3,062 7,162 9,462 10,722 Mediaformats (sqm) 19,220 44,957 59,394 67,303 Price Increases 3% 10% 7.5% 7.5% Occupancy rate 37.5% 60.0% 72.5% 80.0% Average 35% Commission/Discount level 35% 35.0% 35.0% Turnover from AGENT ACTIVITIES 95 mCNY 80 mCNY 50 mCNY 30 mCNY Fee of 85% to License owner for Turnover from AGENT ACTIVITIES (Deduction from Turnover AGENT ACTIVITIES)- BMC receives about 15% Agent Commission GM MEDIA ONLY after -31% 6% 34% 47% License Costs GM Total (Media & Agent 4% activities) after License 10% 30% 44% Costs and Fees for License Owner * Without specific "Olympic Games Effect" ** Gross Profit without any overheads / DA 38

  39. Airport Advertising 39

  40. Milestones - Airport Advertising 40

  41. Roadmap - Airport Advertising 41

  42. Roadmap - Airport Advertising 2007 No of ADVERTISING SPACE Airports Units SQM Airports 9 728 11,060 2008 No of New Airports Airports Units SQM Beijing Capital International Airport - New International Terminal 3 1 400 6,077 Xiamen (Fuzhou / Xiamen [larger ones ], Wuyishan, Longyan (Smaller ones]) 4 1,000 15,192 Chongqing 1 200 3,038 Sub - Total 2008 1600 24308 Total End of 2008 2328 35368 2009 No of New Airports Airports Units SQM Hangzhou new Terminal 2 1 200 3,038 Xi'An new Terminal 1 200 3,038 Other Airports 2 300 4,558 Sub - Total 2009 700 10635 Total End of 2006 3028 46002 2010 No of New Airports Airports Units SQM Other Airports 2 300 4,558 Sub - Total 2010 300 4558 Total End of 2010 3328 50560 42

  43. Profit Targets - Travel Media Travel media profitability (airport & railway stations) 2007E 2008E * 2009E 2010E Ebit-Target 4% 13% 22% 30% Driving factors (improvement y-o-y) 2007E 2008E 2009E 2010E Sales 5% 7% 5% 5% Prices 2% 3% 3% 3% Cost reduction/operational improvement 3% 1% 1% 2% The rapidly increasing Profitability of the Travel Media Business is a result of increasing sales and prices as well as operational improvement. 43

  44. Exhibitions, Conferences, Publishing 44

  45. Exhibitions, Conferences, Publishing 45

  46. Milestones - Exhibitions 46

  47. Milestones - Exhibitions 47

  48. Roadmap - Exhibitions 48

  49. Profit Targets - Exhibitions Profitability from Exhibitions in Germany & China (Projection) 100 90 10 80 40 70 60 40 (in %) 50 25 40 30 20 50 35 10 0 Germany China COGS Operating Cost Profit BMC intends to beat the industry‘s profitability standards by mid-term 49

  50. Agenda BMC at a Glance Summary, major milestones and strategic outlook China – A growing advertising and exhibition market BMC‘s operations Travel Media Exhibitions, Conferences and Publishing Peer Group Analysis Summary

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