TOD S S.p.A. Share Capital: Euro 61,218, fully paid-up. Registered office: Sant Elpidio a Mare (Fermo), Via Filippo Della Valle no.

Transcription

1 TOD S S.p.A. Share Capital: Euro 61,218, fully paid-up Registered office: Sant Elpidio a Mare (Fermo), Via Filippo Della Valle no. 1 Tax Code and Fermo Register of Companies no.: INFORMATION DOCUMENT RELATING TO THE ACQUISITION BY TOD S S.P.A. SUBSIDIARIES OF THE ROGER VIVIER BRAND AND OF ROGER VIVIER PARIS SAS FROM THE RELATED PARTY GOUSSON - CONSULTADORIA E MARKETING S.R.L. AND TO THE RELATED CAPITAL INCREASE OF TOD S S.P.A. RESERVED FOR GOUSSON - CONSULTADORIA E MARKETING S.R.L. (This information document has been prepared pursuant to Section 7 of the Procedure on Related-Party Transactions of Tod s S.p.A., as approved by the Board of Directors on 11 November 2010, Article 5 of the Regulation adopted by Consob by resolution no of 12 March 2010, as amended and supplemented, as well as to Article 71 of the Regulation adopted by Consob by resolution no of 14 May 1999, as amended and supplemented) This information document was made available to the public at the registered office of Tod s S.p.A., in the company s website ( - Corporate governance ), as well as in the authorized storage system 1info ( on 29 November THIS DOCUMENT IS MERELY AN ENGLISH TRANSLATION OF THE INFORMATION DOCUMENT PREPARED BY TOD S AND PUBLISHED ON 29 NOVEMBER 2015, FOR THE MERE CONVENIENCE OF INTERNATIONAL READERS. THE INFORMATION DOCUMENT HAS BEEN PREPARED AND PUBLISHED IN ITALIAN LANGUAGE ONLY, WHICH IS THE ONLY OFFICIAL LANGUAGE OF THIS DOCUMENT. IN THE EVENT OF A CONFLICT BETWEEN THE ENGLISH TRANSLATION AND THE ORIGINAL ITALIAN VERSION, THE ITALIAN VERSION SHALL PREVAIL.

2 SELECTED UNAUDITED CONSOLIDATED PRO FORMA INFORMATION AND UNAUDITED PRO FORMA SHARE INDICATORS OF TOD S S.P.A. Consolidated income statement Six months ended June 30, 2015 Year ended December 31, 2014 Tod's Group Pro forma Tod's Group Tod's Group Pro forma Tod's Group (in thousands of Euros) Historical data adjustments Pro forma data Historical data adjustments Pro forma data Sales Revenues 515,310 3, , ,532 2, ,111 EBITDA 103,045 7, , ,548 9, ,420 EBIT 77,512 7,577 85, ,179 9, ,737 Financial charges (23,384) (2,565) (25,949) (27,202) (5,129) (32,331) Profit before tax 74,048 5,012 79, ,380 4, ,809 Minority interests (508) - (508) (353) - (353) Group net profit 50,379 3,304 53,683 97,114 2,816 99,930 Earnings per share (in Euro) - basic 1.65 (0.03) (0.15) diluted 1.65 (0.03) (0.15) 3.02 Consolidated statement of financial position At June 30, 2015 Tod's Group Pro forma Tod's Group (in thousands of Euros) Historical data adjustments Pro forma data Non-current assets 496, , ,398 Current assets 693,006 97, ,465 Total assets 1,189, ,551 1,700,863 Total equity attributable to the Group 812, ,599 1,025,666 Total equity attributable to minority interests 4,549-4,549 Total shareholders equity 816, ,599 1,030,215 Non-current liabilities 126, , ,506 Current liabilities 245,808 (666) 245,142 Total liabilities 372, , ,648 Total shareholders equity and liabilities 1,189, ,551 1,700,863 2

3 Consolidated cash flow statement Six months ended June 30, 2015 Year ended December 31, 2014 Tod's Group Pro forma Tod's Group Tod's Group Pro forma Tod's Group (in thousands of Euros) Historical data adjustments Pro forma data Historical data adjustments Pro forma data Cash flows generated from operating activities (a) 30,841 4,130 34,971 90,412 3,072 93,484 Cash flows used in investing activities (b) (28,830) (26) (28,856) (66,259) (294) (66,553) Cash flows generated used in financing activities (c) (13,859) - (13,859) (86,227) - (86,227) Effect of exchange differences on cash and cash equivalents (d) 3,697-3,697 9,935-9,935 Decrease / (Increase) in cash and cash equivalents (a+b+c+d) (8,151) 4,104 (4,047) (52,139) 2,778 (49,361) 3

4 TABLE OF CONTENTS DEFINITIONS... 6 INTRODUCTION... 9 CHAPTER 1 - WARNINGS Risks associated with potential conflicts of interest arising from the Transaction with a related party Risks or uncertainties arising from the Transaction that might significantly affect the Issuer s business Risks or uncertainties associated with the closing of the Transaction Risks associated with the financing of the Transaction Risks associated with dilution Risks associated with the preparation of pro forma data Risks associated with the Company's objectives.14 CHAPTER 2 - INFORMATION ON THE TRANSACTION Summary description of the features, procedures, terms and conditions of the Transaction Description of the Transferred Assets The Brand development The Brand the Licence Agreement The Investment Procedures, terms and conditions of the Transaction Criteria applied to pricing; indication of the possible existence of expert s reports prepared to support pricing Issue price of the shares involved in the Capital Increase and criteria for the related calculation Financing methods Reasons for and objectives of the Transaction Reasons for the Transaction with specific regard to the management objectives of the Issuer The plans prepared by the Issuer in relation to the Brand and the Investment Relations between the Issuer, RV Paris, Gousson and their controlling entities Related parties involved in the Transaction Significant relations between the Issuer, its subsidiaries and the company involved in the Transaction Significant relations and agreements between the Issuer, its subsidiaries, the executives and the members of the governing body of the Issuer and the entities from which the Transferred Assets have been acquired Impact of the Transaction on the fees due to the members of the governing bodies of Tod s and/or of its subsidiaries List of the members of the governing and control bodies, general managers and executives of Tod s involved in the Transaction

5 2.3.6 Description of the procedure for the approval of the Transaction Documents available to the public CHAPTER 3 - SIGNIFICANT EFFECTS OF THE TRANSACTION Significant effects of the Transaction on the key drivers that affect and characterise the business of Tod s, as well as on the type of business conducted by Tod s Implications of the Transaction on the strategic policies concerning the business and financial relations and the provision of centralised services between the Tod s Group companies Description of the effects of the Transaction in terms of financial position, performance and cash flows CHAPTER 4 - INCOME STATEMENT, STATEMENT OF FINANCIAL POSITION AND CASH FLOW STATEMENT RELATING TO THE INVESTMENT Income Statement, Statement of Financial Position and Cash Flow Statement relating to the acquired assets Income Statement, Statement of Financial Position and Cash Flow Statement relating to the acquired investment Income Statement and Statement of Financial Position at 31 December 2014 and Income Statement and Statement of Financial Position at 30 June 2015 and 30 June Net Financial Position CHAPTER 5 - UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF THE ISSUER 38 CHAPTER 6 - THE ISSUER AND THE GROUP S OUTLOOK General information on the Issuer s business performance from the reporting date of the last approved financial statements Information on reasonable forecasts of the results for the current financial year

6 DEFINITIONS The definitions used in this Information Document are listed below. Except as otherwise stated, these definitions shall have the meaning ascribed to them hereinbelow. Whenever required by the context, the singular of the definitions reported below includes plural and vice versa. Master Agreement Buyers Capital Increase Transferred Assets CoID or Committee Citigroup Italian Civil Code Board of Directors or Board CONSOB Licence Agreement Price Brand Price Investment Price Date of the Shareholders Meeting Closing Date means the contract, which was executed between Gousson, Partecipazioni Internazionali, RV France and Tod s on 22 November 2015, concerning, among other things, the terms and conditions regulating the transfer of the Transferred Assets and of Gousson s related irrevocable commitment to subscribe to the Capital Increase. means Partecipazioni Internazionali and RV France. means the capital increase reserved for Gousson, to be carried out on a conditional basis (inscindibile) and with the exclusion of the option right, pursuant to and for the purposes of Article 2441, paragraph 5, of the Italian Civil Code against payment of an amount, including share premiums, equal to Euro 207,500, means the Brand and the Investment. means the Issuer s Committee of Independent Directors. means Citigroup Global Markets Limited. means the Royal Decree no. 262 of 16 March 1942, as amended and supplemented. means the Issuer s Board of Directors. means Commissione Nazionale per le Società e la Borsa, the Italian Securities and Exchange Commission, with registered office in Rome, Via G.B. Martini no. 3. means the existing licence agreement that was entered into between Tod s and Gousson on 1 December means, collectively, the Brand Price and the Investment Price. means the consideration due for the acquisition of the Brand, equal to Euro 415,000,000.00, plus VAT, for Euro 91,300, means the consideration due for the acquisition of the Investment, equal to Euro 20,000,000.00, including a net positive financial position of RV Paris, amounting to at least Euro 2,500, as at the Closing Date. means the date on which the extraordinary shareholders meeting of Tod s will be held, on first call, to resolve the Capital Increase; according to the Master Agreement, this date may not fall after 31 January means the tenth Business Day after the date on which the extraordinary shareholders 6

7 meeting of Tod s resolves the Capital Increase, or such other date as shall be agreed in writing between the Parties. The deadline by which the Transaction must be completed is 31 March Execution Date Diego Della Valle & C. DI. VI. Finanziaria Information Document Issuer, Company or Tod s Closing Business Day Gousson Group or Tod s Group Compensation Brand means 22 November 2015, the date of execution of the Master Agreement. means Diego Della Valle & C. S.r.l., with registered office in Sant Elpidio a Mare (in the province of Fermo), Strada Sette Camini no. 116, which is owned by Diego Della Valle and which is invested in by Andrea Della Valle. means DI. VI. Finanziaria di Diego Della Valle & C. S.r.l., with registered office in Sant Elpidio a Mare (in the province of Fermo), Strada Sette Camini no. 116, which is owned by Diego Della Valle and which is invested in by Andrea Della Valle. means this information document. means Tod s S.p.A., with registered office in Sant Elpidio a Mare (in the province of Fermo), Via Filippo Della Valle no. 1, which is owned by Diego Della Valle pursuant to Article 93 of the TUF. means the closing of the Master Agreement, which includes, among other things: (i) the transfer to Partecipazioni Internazionali of the title to ownership of the Brand against payment of the Brand Price, (ii) the transfer to RV France of the Investment against payment of the Investment Price, (iii) the subscription and full payment by Gousson of the Capital Increase, and (iv) the payment of the Compensation. means each calendar day, except for Saturdays, Sundays and the days on which commercial banks are not generally open for business in Milan. means Gousson - Consultadoria e Marketing S.r.l., with registered office in Sant Elpidio a Mare (in the province of Fermo), Strada Sette Camini no. 116, which is wholly owned by da Diego Della Valle & C.. means, collectively, Tod s and its subsidiaries pursuant to Article 2359, paragraph 1, numbers 1) and 2), of the Italian Civil Code. means the compensation of Euro 25 million that Gousson shall pay Tod s on the Closing Date for the restrictions on the methods of distribution set out in the overall existing licence agreement, which are aimed at maintaining the prestige of the Brand. means: (a) the Roger Vivier brand name and any related registration and/or application for registration, (b) any other possible similar brand or any brand that is connected or that can be associated thereto, having the same extension and/or containing similar words or logos (including any transliteration) and being the property of Gousson, in all nations and/or territories where it has registered them or has filed an application for registration or where the brands are eligible for registration with the competent authorities or the rights to which have been acquired for an actual use of the same in accordance with the relevant applicable law, and (c) any further intellectual and industrial property right connected thereto, including domain names, drawings and ornamental models, images, photographs and/or any other material that is or that can become the property of Gousson. 7

8 MTA New Shares Transaction Investment Parties Partecipazioni Internazionali Issue Price Procedure Unaudited Forma Consolidated Financial Information Issuers Regulation Regulation on Related-Party Transactions Pro means Mercato Telematico Azionario, i.e. the Electronic Stock Market organised and operated by the Italian Stock Exchange. means the 2,484,138 Tod s shares to be issued in carrying out the Capital Increase, having the same entitlement as the Tod s ordinary shares outstanding as at the issue date. means the transaction consisting of: (i) the purchase and sale of the Brand, (ii) the purchase and sale of the Investment, and (iii) the Capital Increase. means the entire share capital of RV Paris. means Gousson, Partecipazioni Internazionali, RV France and Tod s. means Partecipazioni Internazionali S.r.l., with registered office in Sant Elpidio a Mare (in the province of Fermo), Via Filippo Della Valle no. 1, which is wholly owned by Tod s and is subject to management and coordination by the latter. means the issue price of the New Shares, equal to Euro per share, of which Euro 2.00 as par value and Euro as share premium. means the Procedure on related-party transactions of Tod s S.p.A. that was approved by the Company s Board of Directors on 11 November means the Tod s Group s unaudited pro forma consolidated statement of financial position at June 30, 2015 and the unaudited pro forma consolidated income and cash flow statements for the six months ended June 30, 2015 and for the year ended December 31, 2014 and the related explanatory notes means the regulation adopted by Consob by resolution no of 14 May 1999, as amended and supplemented. means the Regulation containing provisions governing related-party transactions that was adopted by Consob by resolution no of 12 March 2010, as amended and supplemented. RV France means Roger Vivier France Sas, with registered office in Rue du Faubourg Saint - Honoré, 29, 75008, Paris (France), which is wholly owned by Partecipazioni Internazionali. RV Paris Independent Auditors TUF UniCredit means Roger Vivier Paris Sas, with registered office in Rue du Faubourg Saint-Honoré, 29, 75008, Paris (France), which is wholly owned by Gousson. means PricewaterhouseCoopers S.p.A.. means Testo Unico della Finanza, i.e. the Consolidation Act on Finance laid down in Legislative Decree no. 58 of 24 February 1998, as amended and supplemented. means UniCredit S.p.A., with registered office at Via A. Specchi no. 16, Rome. 8

9 INTRODUCTION This information document (the Information Document ) has been prepared by the Board of Directors of Tod s S.p.A. ( Tod s, the Company or the Issuer ) in compliance with the provisions laid down under Section 7 of the Procedure on Related-Party Transactions of Tod s S.p.A., which was approved by the Board of Directors on 11 November 2010 (the Procedure ), as well as with Article 5, paragraph 1, of the Regulation adopted by Consob by resolution no of 12 March 2010, as amended and supplemented (the Regulation on Related-Party Transactions ) and with Article 71 of the Regulation adopted by Consob by resolution no of 14 May 1999, as amended and supplemented (the Issuers Regulation ). The Information Document has been prepared with reference to the transaction carried out with the aim of ensuring that the Company acquires permanent title to the Brand through its wholly-owned subsidiary Partecipazioni Internazionali S.r.l. ( Partecipazioni Internazionali ), which is subject to management and coordination by Tod s. The Brand will be transferred by Gousson - Consultadoria e Marketing S.r.l. ( Gousson ), which is indirectly owned by Diego Della Valle and which is invested in by Andrea Della Valle. Within the transaction, Roger Vivier France Sas ( RV France ), which is wholly owned by Partecipazioni Internazionali and then by Tod s, has also ensured the possible acquisition of the entire share capital of Roger Vivier Paris Sas (the Investment and RV Paris, respectively), a company that operates the Roger Vivier store located in Paris, Rue du Faubourg Saint-Honoré no. 29. RV Paris is wholly owned by Gousson. Therefore, the Transaction consists of the following functionally interlinked stages: (i) (ii) (iii) The acquisition of the Brand by Partecipazioni Internazionali from Gousson for a consideration of Euro 415,000,000.00, plus VAT of Euro 91,300, (the Brand Price ); The acquisition of the Investment by RV France from Gousson for a consideration of Euro 20,000,000.00, including a net positive financial position of RV Paris, amounting to at least Euro 2,500, (the Investment Price and, together with the Brand Price, the Price ) as at the Closing Date; The reinvestment in Tod s by Gousson of Euro 207,500, (equal to about 50% of the Brand Price) through the subscription to the Company s capital increase reserved for Gousson (the Capital Increase ). The Price shall be paid in a single tranche on the Closing Date. As required by the Master Agreement, Gousson shall pay Tod s the Compensation on the Closing Date. The funds required to pay the Price will be provided to Partecipazioni Internazionali by Tod s, which will capitalise the company for the same amount. In its turn, Partecipazioni Internazionali will provide RV France with the funds necessary to pay the Investment Price. Tod s will raise the necessary funds for the Transaction by resorting to existing credit lines and to available cash resources. The Transaction constitutes a related-party transaction for the reasons set out in Chapter 1 - Warnings. Within related-party transactions, the Transaction constitutes a transaction of greater importance, pursuant to Article 4, paragraph 1, letter a) of the Regulation on Related-Party Transactions and to Section 1 of the Procedure (see Chapter 3, Paragraph 3.3). Therefore, the measures provided for in current legislation shall apply, in relation to which the following should be noted: (i) The committee of independent directors ( CoID or the Committee ) has been involved by the Company s management in all stages of the Transaction, including the stages of information-gathering 9

10 and negotiations, also through the direct participation of the member appointed by the CoID in the meetings held between the Parties; (ii) The CoID has deemed it appropriate to make use of the right provided for in Article 7, paragraph 1, letter b), of the Regulation on Related-Party Transactions to be assisted by Citigroup Global Markets Limited ( Citigroup ), in its capacity as financial advisor, for the preparation of an opinion on the fairness of the Price in financial terms. A copy of this fairness opinion is attached hereto as Annex B (together with an Italian courtesy translation); (iii) the CoID has unanimously expressed itself in favour of the Transaction in that it is to the interest of the Company and is financially advantageous and that it is legally and substantively fair and, therefore, in favour of the completion of the same (see Annex A attached hereto). In addition to the above, the Board of Directors has deemed it appropriate to apply, with the aim of involving the widest possible shareholder base, a voluntary white-wash procedure to the Transaction. Therefore, it has decided that, regardless of the vote cast by the majority shareholder at the shareholders meeting, the Transaction may not be carried out in the event of the majority of voting non-related shareholders casting a vote against the Capital Increase at the shareholders meeting. The restriction referred to above shall apply provided that non-related shareholders attending the shareholders meeting represent at least 10% of the share capital. Finally, the Transaction constitutes a significant acquisition pursuant to Article 71 of the Issuers Regulation (see Chapter 3, Paragraph 3.3). This Information Document has been prepared in accordance with Article 5, paragraph 1, of the Regulation on Related-Party Transactions, as well as with Article 71 of the Issuers Regulation. The Company has made use of the right provided for in Article 5, paragraph 6, of the Regulation on Related-Party Transactions, to publish a single document containing both the information required by the Regulation on Related-Party Transactions, and that required by Article 71 of the Issuers Regulation. This Information Document, which was published on 29 November 2015, is available to the public at the Company s registered office located in Sant Elpidio a Mare (in the province of Fermo), Via Filippo Della Valle no. 1, in the section on Corporate Governance of the Company s website at as well as in the authorized storage system 1info at 10

11 CHAPTER 1 - WARNINGS 1.1 Risks associated with potential conflicts of interest arising from the Transaction with a related party The Transaction involves risks associated with potential conflicts of interest arising from the circumstance that Diego Della Valle indirectly owns: (a) Tod s, a company that, in its turn, owns Partecipazioni Internazionali and RV France, and (b) Gousson. More precisely, as at the date of this Information Document, Diego Della Valle: (i) (ii) owns Tod s, pursuant to Article 93 of the TUF -, holding 57.47% of the share capital through DI. VI. Finanziaria di Diego Della Valle & C. S.r.l. ( DI. VI. Finanziaria ), Diego Della Valle & C. S.r.l. ( Diego Della Valle & C. ) and directly-held shares; owns Gousson through Diego Della Valle & C., which holds the entire capital of Gousson. The chart below reports the related-party relationships that are illustrated above. Diego Della Valle 53,58% (1) 70% (2) DI.VI. Finanziaria 5,00% Diego Della Valle & C. 100% 54,37% 2,28% Gousson 0,82% Tod's 100% RV Paris 100% Partecipazioni Internazionali 100% RV France Note (1) Andrea Della Valle possiede il 41,42% del capitale (2) Il restante 30% del capitale è posseduto da Andrea Della Valle Furthermore, as at the date of this Information Document: 11

12 (a) (b) Diego Della Valle: (i) is the Chairman, CEO and a member of the Executive Committee of Tod s; (ii) is the Sole Director of DI. VI. Finanziaria and of Diego Della Valle & C.; Andrea Della Valle, who is the brother of Diego Della Valle: (i) directly holds 0.88% of the share capital of Tod s; (ii) holds investments in DI. VI. Finanziaria (41.42% of the capital) and in Diego Della Valle & C. (30% of the capital); (iii) is the Vice-Chairman, CEO and a member of the Executive Committee of Tod s. Diego Della Valle and Andrea Della Valle have not participated in the Board s operations through which the Transaction has been prepared and examined. As to the position of other members of the governing and control bodies, general managers and executives of Tod s, who are involved in the Transaction, reference should be made to Chapter 2, Paragraphs and Risks or uncertainties arising from the Transaction that might significantly affect the Issuer s business Risks or uncertainties associated with the closing of the Transaction The Closing is subject to the condition that some conditions precedent laid down to the exclusive benefit of Tod s and of the Buyers are to be fulfilled: (i) Gousson shall make available the valuation report prepared by its appointed independent expert, concerning the values of the Brand and of the Investment and confirming that said values are not lower than the Brand Price (net of VAT) and the Investment Price, respectively. This condition was satisfied when Professor Mario Massari issued the valuation report that is attached hereto as Annex D; (ii) the Independent Auditors shall issue the opinion referred to in Article 158 of the TUF, whereby they attest to the fairness of the Issue Price, by the 21 st day before the Date of the Shareholders Meeting, and (iii) the Capital Increase shall be approved by the extraordinary shareholders meeting of Tod s by 31 January 2016, and the majority of voting non-related shareholders will not cast a vote against it at the shareholders meeting. This restriction shall apply provided that the non-related shareholders attending the meeting represent at least 10% of the share capital (see Chapter 2, Paragraph 2.1.4). The non-fulfilment of even only one of the abovementioned conditions precedent would give rise to the unenforceability of the Master Agreement and, as a result, the Closing would not take place. The Master Agreement also provides for a right of withdrawal by Tod s and by the Buyers where events or circumstances occur, by the Closing Date, which would give rise to: (i) a change in the economic, financial and operational position of RV Paris or prejudicial events with reference to the Brand, capable of adversely affecting the Transferred Assets and, accordingly, the goods or assets comprising the same, the related conditions in terms of capital and/or financial requirements, the profit outlook or the capacity to duly fulfil its own obligations (as the case may be), or, (ii) an adverse impact on the Italian and international financial and/or capital markets, which are both capable of compromising the Transaction and its objectives. In the event that the Master Agreement is terminated or is not performed, Gousson will remain the holder of the Brand and of the Investment, the Capital Increase would not take place and Tod s should negotiate, within the agreed time limits, a new licence agreement to replace the agreement in force at the date of this Information Document, which will expire on 31 December Risks associated with the financing of the Transaction As a result of the payment of the Price, and taking account of the effects of the Capital Increase and of the Compensation, the Group s debt to the banking system will increase by about Euro 300 million (for an 12

13 analysis of the pro forma information, see Chapter 5 - Unaudited pro forma consolidated financial information of the Issuer). Taking account of the well-established capacity to generate cash, as well as of the maturity of borrowings, the Company believes that the debt level achieved as a result of the Transaction will have no impact on its development plans. In fact, the Company believes that it is within the physiological limits of a sound financial management, constituting a fully reasonable multiple of the generated EBITDA Risks associated with dilution The Capital Increase will have dilutive effects towards the Issuer s shareholders, other than Diego Della Valle, as a result of the exclusion of the option right pursuant to Article 2441, paragraph 5, of the Italian Civil Code. In fact, assuming that a shareholder owned, on a date before the Capital Increase, a 1% stake in the capital of the Issuer, corresponding to 306,094 shares, this shareholder would come to hold, after the completion of the Capital Increase, a 0.92% stake (with a dilution of about 7.51%), as it would hold 306,094 shares against a total of 33,093,539 outstanding shares. Following the subscription of the Capital Increase, the investment held by the majority shareholder Diego Della Valle will pass from 57.47% to 60.66% and, therefore, Diego Della Valle will continue to control the Issuer pursuant to Article 93 of the TUF (see Chapter 2, Paragraph 2.1.5). For a description of the effects of the Transaction on the Company s indicators per share, reference should be made to Chapter 5, under paragraph Pro forma indicators per share of Tod s Group Risks associated with the preparation of pro forma data Chapter 5 of the Information Document shows the Tod s Group s unaudited pro forma consolidated statement of financial position at June 30, 2015, unaudited pro forma consolidated income statements and unaudited pro forma consolidated cash flow statements for the six months ended June 30, 2015 and the year ended December 31, 2014, accompanied by the related explanatory notes (the Unaudited Pro Forma Consolidated Financial Information ). The Unaudited Pro Forma Consolidated Financial Information, which have been examined by the Independent Auditors that issued its report on 28 November 2015, have been prepared in order to show the main effects of the Transaction, - including, for these purposes, the Compensation - on the Tod s Group s financial position, results of operations and cash flows, as if it had virtually taken place on June 30, 2015 for the consolidated statement of financial position and on January 1, 2014 for consolidated income and cash flow statements purposes. Furthermore, it should be noted that the information reported in the Unaudited Pro Forma Consolidated Financial Information represents, as mentioned above, a simulation of the possible effects that might arise from the Transaction and is provided for illustrative purposes only. The Unaudited Pro Forma Consolidated Financial Information must be read in conjunction with the Tod s Group s condensed set of interim consolidated financial information at and for the six months ended June 30, 2015 and the consolidated financial statements of Tod s Group at and for the year ended December 31, 2014, which were approved by the Board of Directors on August 6, 2015 and March 12, 2015, respectively. As the Unaudited Pro Forma Consolidated Financial Information has been prepared to illustrate retrospectively the effects of transactions that will occur subsequently using generally accepted regulations and reasonable assumptions, there are limitations that are inherent to the nature of pro forma information. Therefore, it should be pointed out that: (i) as Unaudited Pro Forma Consolidated Financial Information is based on assumptions, had the Pro Forma Transactions taken place on the dates assumed above, the actual effects would not necessarily have been the same as those presented, (ii) proforma information does not take into consideration the changed outlook of the Issuer, as it has been prepared only to represent the effects that can be isolated and objectively measured in relation to the Transaction, without taking account potential 13

14 effects due to changes in management s policies and due to operational decisions resulting from the Transaction itself, (iii) pro forma information does not intend to provide a forecast of the future results of the Tod s Group, does not constitute a financial and economic outlook and, therefore, must not be used for this purpose. Furthermore, in consideration of the different purposes of the pro forma information as compared to the historical financial statements and the different methods of calculation of the effects of the Pro Forma Transactions on the unaudited pro forma consolidated statement of financial position, on the unaudited pro forma consolidated income statement and on the unaudited pro forma consolidated cash flow statement, these statements should be read and interpreted without comparisons between them Risks associated with the Company s objectives This Information Document contains some forecast statements on the objectives that the Company intends to achieve through the Transaction, concerning, in particular, the development strategies that may be pursued following the acquisition of ownership of the Brand (see Chapter 2, Paragraph 2.2). There is no guarantee that these forecasts may be maintained or confirmed. The Company and the Group s results, as well as the performance of the sector in which they operate, may differ from those assumed, because of known and unknown risks, uncertainties and other factors that cannot be foreseen at the moment. 14

15 CHAPTER 2 - INFORMATION ON THE TRANSACTION 2.1 Summary description of the features, procedures, terms and conditions of the Transaction On 22 November 2015, Gousson, Partecipazioni Internazionali, RV France and Tod s (the Parties ) executed a master agreement (the Master Agreement ) that regulates three main cases: (i) (ii) (iii) The purchase and sale of the Brand; The purchase and sale of the Investment; The Capital Increase. On the Closing Date, Partecipazioni Internazionali will pay Gousson an amount of Euro 415,000,000.00, plus VAT of Euro 91,300,000.00, as a consideration for the acquisition of the Brand. On the Closing Date, RV France will pay Gousson an amount of Euro 20,000,000.00, including a net positive financial position of RV Paris, amounting to at least Euro 2,500, as at the same date, as a consideration for the acquisition of the Investment. With reference to the Capital Increase, Gousson has irrevocably undertaken to subscribe to and pay in full the Capital Increase, as described in Chapter 2, Paragraph , on the Closing Date. Gousson shall pay Tod s the Compensation on the Closing Date. The Closing will be subject to the fulfilment of the conditions precedent described in Paragraph Description of the Transferred Assets The Brand development The Brand is a prestigious French brand, which is positioned at the top of the footwear and leather goods manufacturing sector. It was acquired by Gousson in 2000 and licenced to Tod s in The store located in Paris, at Rue du Faubourg Saint-Honoré, was the first single-brand store opened by Gousson for the Brand in The Brand achieved international standing in 2009, when Tod s boosted the expansion of its network of directly-operated stores and its distribution through a selected number of independent distributors. Sales have continued to increase at significantly high rates since then, as it can be inferred from the bar graph reported below. 15

16 113,7 126,9 74,5 15,0 21,7 36, Brand sales (Eur mln) Data taken from the consolidated financial statements of Tod s. As at the date of this Information Document, the Brand is present in the main world capitals for the luxury industry, with a total of 31 single-brand outlets operated by the Tod s Group and 4 single-brand outlets operated under franchise agreements, in addition to the Paris flagship store operated by RV Paris. In the 2014, 2013 and 2012 financial years, as well as in the first nine months of 2015, revenues generated from Roger Vivier-branded products recorded significant increases that were more considerable, in percentage terms, than those recorded by the products bearing the brand names owned by the Group, as it can be inferred from the table below. ( /mil.) FY 2014 % FY 2013 % FY 2012 % 2014 vs 2013 % change 2013 vs 2012 TOD'S (1.7) 1.5 HOGAN (2.2) (10.8) FAY (0.5) (22.7) ROGER VIVIER Other (9.1) 10.0 Total (0.2) 0.5 Data taken from the consolidated financial statements of Tod s. The table below provides the same data with reference to the first nine months of 2015 and of

17 ( /mil.) 9Ms of 2015 % 9Ms of 2014 % % change 2015 vs 2014 TOD'S HOGAN FAY (1.1) ROGER VIVIER Other Total Data taken from the Interim Reports on Operations of the Tod s Group at 30 September 2014 and The Brand the Licence Agreement The licence relationship between Tod s and Gousson existing at the date of this Information Document is regulated by an agreement that was executed on 1 December 2011 (the Licence Agreement ). The object of the agreement is the right to use the Roger Vivier and R.V. Belle Vivier brands for the production, promotion, distribution and sale of footwear, leather goods and accessories, on an exclusive basis, and of stationery items, jewellery and costume jewellery, eyewear and watches, on a non-exclusive basis. As a consideration for this use, Tod s is required to pay Gousson a royalty equal to 12% of net sales to customers, sales outlets and distributors and to bear promotion and advertising costs for an amount equal to at least 2% of net sales achieved in the previous financial year. The Licence Agreement has a term of five years from 1 January 2012 and, therefore, it will expire on 31 December Should Gousson intend to transfer the Brand to third parties, it will be entitled to withdraw from the agreement at any time. In this case, Tod s is granted a pre-emption right for the acquisition of the Brand. Tod s is also granted a pre-emption right in the event that, upon expiry of the agreement, Gousson intends to licence the Brand to third parties. The table below reports the royalties paid by Tod s to Gousson in the last three financial years according to the Licence Agreement Royalties (in /mil.) Data taken from the consolidated financial statements of Tod s The Investment RV Paris is the company incorporated under French law that has the sole purpose of operating the Roger Vivier flagship store located in Paris, Rue du Faubourg Saint-Honorè no Procedures, terms and conditions of the Transaction In signing the Master Agreement: 17

18 (i) (ii) (iii) As regards the purchase and sale of the Brand, Gousson has undertaken to assign and transfer to Partecipazioni Internazionali, which has undertaken to acquire, the full and exclusive ownership of the Brand. The Brand and any related rights shall be transferred free of any encumbrance; As regards the purchase and sale of the Investment, Gousson has undertaken to assign and transfer to RV France, which has undertaken to acquire, the full and exclusive ownership of the Investment, which shall be transferred free of any encumbrance; Gousson has irrevocably undertaken to subscribe to and pay the Capital Increase in full. The Brand Price and the Investment Price shall be paid on the Closing Date. Again on the Closing Date, Gousson shall subscribe to and pay the Capital Increase in full. The Master Agreement also provides: (i) (ii) (iii) (iv) (v) For the commitment by Gousson to manage the Brand and the Investment, in a correct and prudent manner and in accordance with law and the previous operational and business practice, in the period from the Execution Date to the Closing Date, so as to preserve the integrity and value of the Transferred Assets; For representations and warranties rendered by Gousson in relation to the Brand and the Investment, as well as for the related compensation obligations to the Buyers, in line with market practice for similar transactions. These compensation obligations may not exceed the Brand Price as regards the Brand and the Investment Price as regards the Investment; A right of withdrawal by Tod s and by the Buyers where events or circumstances occur, by the Closing Date, which would give rise to: (i) a change in the economic, financial and operational position of RV Paris or prejudicial events with reference to the Brand, capable of adversely affecting the Transferred Assets and, accordingly, the goods or assets comprising the same, the related conditions in terms of capital and/or financial requirements, the profit outlook or the capacity to duly fulfil its own obligations (as the case may be), or, (ii) an adverse impact on the Italian and international financial and/or capital markets, which are both capable of compromising the Transaction and its objectives; A non-competition commitment by Gousson for a period of two years; That, regardless of the effective date of the Transaction, the royalties relating to the Brand shall be paid by Tod s to Gousson only until 31 December 2015; (vi) The payment by Gousson to Tod s of the Compensation, the payment of which will be considered as having been made by the Parties in settlement of any reciprocal claims that have been or may be submitted and that are in any way related to the Licence Agreement. The Closing is subject to the condition that some conditions precedent laid down to the exclusive benefit of Tod s and of the Buyers are to be satisfied: (i) Gousson shall make available the valuation report prepared by its appointed independent expert, concerning the values of the Brand and of the Investment and confirming that said values are not lower than the Brand Price (net of VAT) and the Investment Price, respectively. This condition was satisfied when Professor Mario Massari issued the valuation report that is attached hereto as Annex D; (ii) the Independent Auditors shall issue the opinion referred to in Article 158 of the TUF, whereby they attest to the fairness of the Issue Price, by the 21 st day before the Date of the Shareholders Meeting, and (iii) the Capital Increase shall be approved by the extraordinary shareholders meeting of Tod s by 31 January 2016, and the majority of voting non-related shareholders will not cast a vote against it at the shareholders meeting. This restriction shall apply provided that the non-related shareholders attending the meeting represent at least 10% of the share capital. 18

19 2.1.5 Criteria applied to pricing; indication of the possible existence of expert s reports prepared to support pricing The Price has been agreed between the Parties at the end of a negotiation process that has led to the definition of the amounts stated in Paragraph 2.1. above. On 6 August 2015, the Board of Directors appointed UniCredit as financial advisor to assist it in the negotiations. UniCredit provided its support to define alternative scenarios and valuation guidelines that allowed the Company to identify possible ranges of value relating to the Brand and to the Investment. Within the Transaction, both the CoID and the Board of Directors have been assisted by independent experts. As already stated, the CoID appointed Citigroup, in the capacity as an independent financial advisor, to issue an opinion on the fairness of the consideration due for the Transaction from a financial point of view. Citigroup was selected at the end of a competitive procedure from among a total number of six candidates. The proposals were on par as regards their level of expertise, but the CoID unanimously considered Citigroup s proposal to be preferable in terms of independence, the statement made by Citigroup being fully compliant with the criteria set out by the CoID on the one hand, and on the other, with the requirements laid down in the current regulations governing related-party transactions. The task was assigned to Citigroup on 12 October With reference to the value of the Brand, of the Investment and of the New Shares, Citigroup has used measurement methods in line with national and international practice, based on the information available on 20 November 2015, i.e. on the date immediately before the date of preparation of the fairness opinion. The financial and valuation analysis carried out by Citigroup must be considered as a whole and an evaluation of this analysis is not entirely mathematical; on the contrary, the analysis carried out by Citigroup has required complex considerations and evaluations concerning the financial and operational features, as well as any other factors, which might have an impact on the purchase value, the trading price or on any other valuation of the companies and transaction under examination. For any in-depth review required on the activities carried out by Citigroup, as well as for a more detailed description of the valuation aspects and methods used and of the analysis carried out, reference should be made to the fairness opinion issued on 21 November 2015, the full text of which is attached hereto as Annex B (together with an Italian courtesy translation). For the purposes of its analysis, Citigroup has deemed that, within the scope of the current commercial agreements between Tod s and Gousson, the Brand value is substantially equivalent to the value of the cash flows generated by the Roger Vivier business that is currently managed by Tod s, on the assumption that the value of the Tod s assets comprising the Roger Vivier business is inextricably linked to the availability of the rights to use the Brand. With reference to the Brand, Citigroup has used, among other things, valuation methods based on the analysis of: (i) the discounted cash flows relating to the Roger Vivier business that is currently managed by Tod s, (ii) the market multiples of companies comparable to Roger Vivier, with reference to the multipliers of EV/revenues, EV/EBITDA and EV/EBIT. The application of the Discounted Cash Flow method referred to in point (i) above has led to the definition of a valuation range of the Roger Vivier business of between Euro 605,000, and Euro 728,000,000.00, while the application of the market multiples method referred to in point (ii) above has led to the definition of a valuation range of between Euro 416,000, and Euro 711,000, With reference to the Investment, Citigroup has used the valuation method based on the analysis of the discounted cash flows relating to RV Paris. The application of this method has led to the definition of a valuation range of between Euro 17,000, and Euro 20,000,

20 With reference to the New Shares, Citigroup has used, among other things, the valuation method based on the analysis of discounted cash flows and of trading prices. In addition to the method described above, Citigroup has also considered some additional methods, including: (i) an analysis of selected transactions, (ii) an analysis of companies selected in relation to Tod s and of the target prices for the trading of Tod s ordinary shares as published in papers on the stock prepared by financial analysts. Citigroup has also examined other potential effects of the Transaction, such as, for example, the net present value of the royalty costs that Tod s would save through the acquisition of the Brand and the related tax effect. The Board of Directors has been assisted by an independent expert for a valuation of the Brand and of the Investment. Professor Riccardo Perotta was appointed by Stefano Sincini under a mandate granted by the Board of Directors, having taken account of his professional and academic skills and of the absence - as confirmed by the expert at the time of his appointment of any economic, financial or capital relations, with: (i) Tod s, (ii) the persons who own the company, its subsidiaries or jointly-controlled entities, and (iii) the directors of these companies. The mandate was granted on 16 October 2015 and the report prepared by Professor Perotta, which was issued on 12 November 2015, is attached hereto as Annex C. The expert has used the Discounted Cash Flow Method as a valuation method of the Roger Vivier business, while, with reference to the Brand, he has used a method based on the analysis of: (i) the respective operating margin (EBITDA) contributions deriving from the ownership of the Brand with respect to the management of the same under the licence agreement, on the basis of market benchmarks of operators which own brands and of licensee operators which are active in the relevant sector, respectively, (ii) the discounted cash flows of brand scenarios of the with-or-without-type, (iii) the discounted royalty flows arising from the granting of the brand licence at an adequate royalty rate, (iv) the estimates provided by the main financial analysts who monitor the Tod s stock performance as to the Brand value. Furthermore, account has been taken of the tax benefit arising from the amortisation of the Brand (the so-called Tax Amortization Benefit). With reference to the Brand, the application of the methods described above has led to the definition of a range of valuation of between Euro 353,000, and Euro 413,000,000.00, if we do not consider the Tax Amortization Benefit (in the application of the income approach of differential margins) and to a range of between Euro 353,000, and Euro 482,000,000.00, if we consider the value of the Tax Amortization Benefit, an element that Professor Perotta describes as more and more recognised by recent practice and scholars opinions, as well. With reference to the Investment, the independent expert has used the valuation method based on the analysis of the discounted cash flows relating to RV Paris. The application of this method has led to a total estimated valuation of around Euro 17,600,000.00, to which must be added the net financial position. On 21 November 2015, Professor Perotta confirmed the fairness of the Brand Price and of the Investment Price for Tod s and the Buyers, as per the letter reported at the foot of the report attached hereto as Annex C. Finally, Gousson, on a voluntary basis, has asked Professor Mario Massari to prepare a valuation report complying with the requirements set out in Article 2343-ter, paragraph 2, letter b), of the Italian Civil Code. At the time of his appointment, the expert has confirmed that he meets the independence requirements set out in Article 2343-ter, paragraph 2, letter b), of the Italian Civil Code (i.e. the independence from the entity that transfers the asset, as well as from the company and the shareholders that exercise control, either individually or jointly, over said entity). Professor Massari s valuation report, which was issued on 28 November 2015, is attached hereto as Annex D on a voluntary basis. For the Brand valuation, Professor Massari has used the price premium and volume premium method based on expected results attributable to the presence of the Brand compared to unbranded products, based on 20

21 which the brand value is estimated through expected discounted cash flows. As a control method, Professor Massari has used the method based on discounted royalties, making reference to a royalty rate which has been also considered to be appropriate in the light of the specific profitability of the business referable to the Brand. With reference to the Investment, Professor Massari has used the expected discounted cash flow method relating to RV Paris over an indefinite period of time, also considering the tax savings referable to the losses accrued in previous financial years and the net financial position at 30 June The application of the methods described has led to the definition of the values of the Brand and of the Investment, equal to Euro 421,800, (including the so-called Tax Amortization Benefit) and Euro 22,500,000.00, respectively, at 31 October Issue price of the shares involved in the Capital Increase and criteria for the related calculation The Capital Increase consists of a capital increase, with the exclusion of the option right, pursuant to and for the purposes of Article 2441, paragraph 5, of the Italian Civil Code. The sixth paragraph of the same Article provides that, in these circumstances, the issue price of the shares must be calculated on an equity basis, also taking into account, for shares listed on regulated markets, the stock price performance in the last half-year. Assuming a minimum price of Euro per share, as determined on the basis of the accounting equity of Tod s at 30 June 2015, the Board of Directors has considered both the weighted average by volumes of official prices of the Tod s shares recorded in the six months before the Execution Date and the arithmetic mean. The data obtained in this manner are reported in the table below, which also provides information on the official price of the Tod s shares in the last trading day before the Execution Date and in different previous periods of time. Official price at 20 November 2015 Reference Average recorded 1 month before the Execution Date Average recorded 3 months before the Execution Date Average recorded 6 months before the Execution Date Euro Trading period Weighted average Arithmetic by volumes (Euro) mean (Euro) 21 October - 20 November August - 20 November May - 20 November In making its assessments as to the calculation of the Issue Price, the Board of Directors has also made use of the analysis carried out by the financial advisor UniCredit on the basis of the market benchmarks listed below: (i) the Tod s stock price performance in different periods of time in the six months before the Execution Date, and (ii) the target prices of the Tod s shares set out by the main financial analysts who monitored the stock in the period after the announcement of the results at 30 September Having taken account of the above, the Board of Directors has deemed it appropriate to submit a proposal to the shareholders meeting to set the issue price of the New Shares at Euro (the Issue Price ), corresponding to the highest value from among those obtained on the basis of the preceding observations (official price at 20 November 2015, average of trading deals in the periods considered by the table and equity per share). This price exceeds Euro 4.42 per share (+5.6%) compared to the official price of the Tod s shares in the last trading day before the Execution Date. The Issue Price is included in the price ranges determined by the independent financial advisor to the CoID, which, in preparing its valuations, has used the methods of discounted cash flow and analysis of stock prices (see the Citigroup s fairness opinion attached hereto as Annex B). 21

22 The Independent Auditors, too, shall give their opinion on the fairness of the Issue Price. The issue by the Independent Auditors of a fairness opinion on the Issue Price pursuant to Article 158 of the TUF is one of the conditions precedent of the effectiveness of the Master Agreement (see Paragraph 2.1.4). Following the subscription of the Capital Increase, the investment held by the majority shareholder Diego Della Valle will pass from 57.47% to 60.66%. Therefore, Diego Della Valle will continue to control the Issuer pursuant to Article 93 of the TUF Financing methods Tod s will raise the necessary funds for the acquisitions of the Brand and of the Investment by resorting to existing credit lines and to available cash resources. As to the existing credit lines, on 23 July 2014 Tod s entered into a loan agreement with Crédit Agricole Corporate and Investment Bank, Milan Branch and Mediobanca - Banca di Credito Finanziario S.p.A. for an overall maximum amount of Euro 400,000,000.00, having the following main features: (i) (ii) (iii) A term of seven years from the execution date of the loan agreement, with an amortisation schedule of twenty quarterly instalments of the same amount; Interest accruing from the actual payment of the sums, at a variable rate equal to 3-month Euribor increased by a margin of up to a maximum of 100 basis points per year. This margin may change over time according to the variations in the ratio between net financial debt and consolidated EBITDA of Tod s; A limit on the ratio of net financial debt to consolidated EBITDA of Tod s (the net financial debt may not exceed 3.5 times the EBITDA). The loan is not backed by real or personal securities. To cover risks arising from fluctuations in exchange rates, Tod s has entered into two hedging derivative contracts (Interest Rate Swaps - IRS), exchanging the variable rate set out in the agreement for a fixed rate of 0.748% payable on a quarterly basis. The remaining financial resources will be found by leveraging the short-term credit lines and available cash. The short-term debt will be covered by using the resources arising from the Capital Increase. For information on the unaudited pro forma statement of financial position, see Chapter 5 Unaudited pro forma consolidated financial information of the Issuer. 2.2 Reasons for and objectives of the Transaction The Master Agreement was executed after a phase in which the Issuer gathered information on the financial advantage and operational feasibility of the Transaction, at the end of which the Board of Directors concluded that the same, as structured, was of interest to the Company. In particular, the Transaction will allow the Company and the Group to attain the objectives set out in Paragraph below. The Company has also considered that the alternative case involving the renegotiation of the terms and conditions of the Licence Agreement, which is due to expire, would have entailed the risk of un upward adjustment to the royalty rate to be paid to Gousson, also considering the high margins (in terms of EBITDA) generated by the Brand. 22

23 As regards the Capital Increase, the Board of Directors believes that the exclusion of the option right in favour of Gousson meets a specific Company interest for the reasons listed below. The Transaction consists of a transaction that the Parties have negotiated, also based on an assumption, essential to Gousson, that it can reinvest a considerable amount of the Brand Price in Tod s shares. Therefore, the exclusion of the option right, which is necessary to allow Gousson to reinvest in Tod s, must be examined in the larger context of the Tod s interest in the Transaction. Having stated this, the Board of Directors believes that the proposed structure is the most suitable to attain the objectives of the Transaction. In fact: (i) (ii) A capital increase without exclusion of the option right would not have allowed Gousson to reinvest (either directly or indirectly) a significant amount of the Brand Price in Tod s shares; Different structures, such as for example a contribution in kind to Tod s, would not have allowed a rational allocation of the Brand and of the Investment within the Group and, in any case, they would have entailed a dilution of shareholders; (iii) Contributions to companies other than Tod s were not considered by Gousson which would have received unlisted securities - and, in any case, they would not have allowed Tod s to eliminate shared ownership of the Brand and the shared results directly generated from the same with a related party. Furthermore, the circumstance that the Board of Directors has deemed it appropriate to make the execution of the Capital Increase conditional on a favourable vote cast by the majority of non-related shareholders voting at the Shareholders Meeting thus sterilising the shares held by the majority shareholder, either directly or indirectly puts the minority shareholders into the position of being able to determine the outcome of the vote and, therefore, also to decide on the exclusion of the option right, provided that the nonrelated shareholders attending the shareholders meeting represent at least 10% of the share capital. As regards the Transaction structure, Partecipazioni Internazionali and RV France are the most suitable Group companies, in terms of efficiency of the organisational structure, for the acquisition of the single Transferred Assets. In fact, in 2013 Tod s started a plan to reorganise the corporate organisation chart which identifies Partecipazioni Internazionali as the sub-holding company controlling Roger Vivier-branded operations and RV France as the company appointed to distribute the products bearing the Brand in France, as well as to develop the image of the Brand, an image that, among other things, is closely connected to the Paris flagship store Reasons for the Transaction with specific regard to the management objectives of the Issuer Through the Transaction, Tod s intends to allow the Group to acquire permanent title to the Brand, thus eliminating the uncertainties arising from any licence agreement. From a financial point of view, the Capital Increase reduces the impact of the acquisition on the Group s financial position. Tod s believes that the acquisition of the Brand has a high strategic value to the Group. In fact, the Roger Vivier brand is positioned on the top of the luxury sector and, therefore, it is perfectly complementary to the other brands of the Group, with a range of products (footwear, leather goods and accessories) targeted at the most sophisticated customers. At the same time the acquisition will give Tod s full control over the Brand s long-term planning, so that it can improve the forecasted results and fully incorporate both its growth potential and its enhancement and value. Therefore, from a strategic and operational point of view, the Transaction is an important opportunity for the Group s growth and business development. By becoming the permanent owner of the Brand, the Group will be able to determine the strategies for its use and development in full independence and in the long-term, thus avoiding the uncertainties and potential 23

24 critical issues arising from its necessarily being available for periods at a time under licence and the risks attached to periodic renegotiations of the related contract. The Company also believes that a possible loss of the Brand would have an adverse effect both in terms of a fall in the Group s revenues and profit margins and the material squandering of the investments that the Company has made in order to manufacture and sell Roger Vivier-branded products and make them more well-known in the course of time. As to the Investment, in acquiring the entire capital of RV Paris, the Tod s Group will undertake the direct operation of the Roger Vivier store located in Paris, at Rue du Faubourg Saint-Honoré no. 29, which is currently operated by RV Paris under a lease agreement that will expire on 31 January The store is the historic Roger Vivier boutique and thus the flagship store of the Brand because of both its image and its power of evocation. Therefore, the Company considers that it is advisable for it to be operated directly by the entity which owns the Brand or by a company that is wholly owned by the latter The plans prepared by the Issuer in relation to the Brand and the Investment As already reported in the Paragraph above, in acquiring the ownership of the Brand, the Group may work out its strategies for the development of the Brand autonomously and, above all, with a long-term vision, thus being able to steer its investment decisions without having to meet any income or financial recoverability requirements (within time constraints) related to the term of the licence. The strategy that has been planned for the Brand seeks to combine the objectives of selective expansion (in terms of both geographical areas and products) and the maintenance of its exclusive position in the luxury sector, in which it is internationally acknowledged as one of the most prestigious brands of accessories and footwear in the most exclusive segment. The geographic expansion strategy aims to accelerate growth in the United States through a selected network of department stores, in South Korea through directly-operated or franchise stores and the duty free channel, in Japan and Europe through directly-operated or franchise stores and in the Middle East through franchise agreements. In the medium-term the Group also expects to enter the Latin American market. One of the directly-operated stores is the historic flagship store located in Paris, which will continue to play a major role in the communication strategies of the Brand, representing its distinctive features. As regards the products, footwear will continue to be a driver for growth, even if an increasing contribution is expected from leather goods and, although to a lesser extent, from accessories. 2.3 Relations between the Issuer, RV Paris, Gousson and their controlling entities Related parties involved in the Transaction As specified in Chapter 1 Warnings to which reference should be made, the Transaction constitutes a transaction with related parties of greater importance, as Tod s and Gousson are subject, among other things, to the indirect joint control of Diego Della Valle. The Transaction also constitutes a significant acquisition pursuant to Article 71 of the Issuers Regulation (see Chapter 3, Paragraph 3.3.) Significant relations between the Issuer, its subsidiaries and the company involved in the Transaction The relations between Tod s and Gousson are mainly regulated by the Licence Agreement. On the Closing Date this agreement will no longer be applicable. In any case, the Parties have provided that, regardless of the effective date of the Transaction, the royalties relating to the Brand shall be paid by Tod s to Gousson only until 31 December

25 As to the relations between RV Paris, Tod s and its subsidiaries, Tod s provides, under an agreement regulating the use of the Brand between RV Paris and Tod s, the products sold in the store located in Paris, at Rue du Faubourg Saint-Honoré no Significant relations and agreements between the Issuer, its subsidiaries, the executives and the members of the governing body of the Issuer and the entities from which the Transferred Assets have been acquired The relations between Diego Della Valle, Andrea Della Valle, Tod s, RV Paris and Gousson are described in Chapter 1 Warnings to which reference should be made. Diego Della Valle and Andrea Della Valle have declared to the statutory auditors and directors of Tod s that they are stakeholders who hold an interest in the Transaction and have deemed it appropriate not to participate in the Board s operations through which it has been prepared and examined. Emilio Macellari who is a director and a member of the executive committee of Tod s and the person appointed by the Board of Tod s to conduct negotiations with Gousson, together with Director Stefano Sincini, acting separately - is the agent with limited authority (procuratore speciale) of some companies owned by Diego Della Valle, including Diego Della Valle & C. (a company which holds the entire share capital of Gousson) and DI. VI. Finanziaria. He also holds a quota of Diego Della Valle & C., with a nominal value of Euro 10.00, equal to % of the capital, as well as % of DI. VI. Finanziaria. Emilio Macellari maintains professional advice relationships with Diego Della Valle & C. and with other companies owned by Diego Della Valle, on an ongoing basis. He also holds the position of Chairman of the board of directors of RV France. In the performance of the last assignment he has executed the Master Agreement for RV France. Emilio Macellari has declared to the statutory auditors and directors of Tod s that he is a stakeholder pursuant to Article 2391 of the Italian Civil Code. Emilio Macellari holds 5,000 Tod s shares. Emanuele Della Valle, who is a non-executive director of Tod s, is the son of Diego Della Valle. Emanuele Della Valle holds 5,000 Tod s shares. He has not participated in the issue by the Board of Directors of the resolution approving the Transaction Impact of the Transaction on the fees due to the members of the governing bodies of Tod s and/or of its subsidiaries No changes are expected to be made to the amounts of fees due to the members of the Board of Directors of the Issuer and/or of its subsidiaries as a result of the Transaction List of the members of the governing and control bodies, general managers and executives of Tod s involved in the Transaction Stefano Sincini, CEO of Tod s, has been appointed by the Board of Tod s to conduct negotiations with Gousson, together with director Emilio Macellari, acting separately. Rodolfo Ubaldi, Deputy General Manager of Tod s, is the sole director of Partecipazioni Internazionali and in this capacity he has executed the Master Agreement. Finally, reference should be made to the observations made in Paragraph above Description of the procedure for the approval of the Transaction With reference to the negotiation conducted between the Parties, the first meeting with the related party Gousson, assisted by its own financial and legal advisors, was held on 10 August Additional meetings were held on 3, 11 and 18 September, 6 and 21 October and 5 and 11 November All meetings were attended by a representative of the CoID and by the chairman of the Board of Statutory Auditors. Board of Directors activities 25

26 After the delegated bodies announced that the Licence Agreement would soon expire (on 31 December 2016) and that, therefore, it was advisable to start negotiations with Gousson regarding a possible renewal, on 13 May 2015 the Board of Directors stated that in negotiating with the licensor, it intended to give priority to the acquisition of permanent title to the Brand. For this purpose, the governing body authorized director Macellari to contact at least three banks in order to select an advisor to assist the Company s management in the negotiations. On 6 August 2015 the Board of Directors resolved, in consideration of the fact that the counterparty was a related party, the continuation of a specific information-gathering activity, which was preliminary to the possible completion of the Transaction and which was aimed, in particular, at giving further thought to whether the Transaction is advisable and of advantage to Tod s. By the same resolution, the Board of Directors: (i) appointed UniCredit as financial advisor to the Company, (ii) after having specified that any decision-making power as to the Transaction remained the exclusive competence of the Board, granted directors Emilio Macellari and Stefano Sincini, acting separately, a mandate to check, with the related party Gousson, whether the requirements were met for a possible acquisition, including through subsidiaries, of the Brand and of any other assets referable to the same and, in the case of a positive outcome of the abovementioned check, to analyse the terms and conditions of the possible transaction; (iii) recommended that the two appointed directors should maintain close coordination with the CoID, which is competent to give its opinion on the interest by Tod s in completing the Transaction, its financial advantage and the material correctness of the related terms and conditions, as well as with the Board of Statutory Auditors. The Board of Directors examined the progress of the negotiations at the meetings held on 1 October and 11 November The final review of the Transaction, which had been set at 15 November 2015, was then postponed to 22 November 2015 following the terrorist events that occurred in Paris on 13 November On 22 November 2015 the Board of Directors approved the Transaction by unanimous vote of those present at the meeting (directors Luigi Abete, Maurizio Boscarato, Luigi Cambri, Luca Cordero di Montezemolo, Sveva Dalmasso, Romina Guglielmetti, Emilio Macellari, Vincenzo Manes, Cinzia Oglio, Pierfrancesco Saviotti, Michele Scannavini and Stefano Sincini). Director Macellari stated once again that he was a stakeholder pursuant to Article 2391 of the Italian Civil Code (see Paragraph ). However, he deemed it appropriate to cast a vote in favour of the Transaction, agreeing on its strategic importance. Directors Andrea Della Valle, Diego Della Valle and Emanuele Della Valle did not take part in the Board s operations. On the same date, at the end of the Board s operations, the following meetings were also held: the general quotaholders meeting of Partecipazioni Internazionali and the board of directors meeting of RV France which approved the Transaction within the sphere of their responsibilities. Committee of Independent Directors activities The CoID has held a number of meetings, aimed at considering the information-gathering operations in order to assess the Company s interest in completing the Transaction, as well as its financial advantage and material correctness of the related terms and conditions (to this end, it met on 6 August, 7, 15 and 21 September, 1 and 29 October, 7 and 12 November 2015 and, finally, on 22 November 2015). On 21 September 2015, the CoID selected Citigroup as the independent financial advisor appointed to issue an opinion on the fairness of the Price in financial terms. On 12 November 2015, the CoID gave its unanimous favourable opinion to the effect that the Transaction is to the interest of the Company, is financially advantageous and that the related terms and conditions are legally and substantively fair, and, therefore, it was of the opinion that the Transaction should be completed. Having acknowledged the postponement of the Board of Directors meeting to 22 November 2015, which had been called in order to consider the Transaction, for the reasons set out above (i.e. the terrorist events that occurred in Paris on 13 November 2015), the CoID deemed it appropriate to ask Citigroup to update the fairness opinion issued on 12 November 2015, on which it had based its favourable opinion. Also in light of the new fairness opinion, which was issued on 21 November 2015 and which is attached hereto under Annex 26

27 B, on 22 November 2015 the CoID unanimously approved an addendum to the favourable opinion given on 12 November 2015, thus confirming the conclusions set out therein. A copy of the opinion dated 12 November 2015, together with the addendum dated 22 November 2015, is attached hereto as Annex A. 2.4 Documents available to the public This Information Document and related Annexes have been made available to the public at the Company s registered office located in Sant Elpidio a Mare (in the province of Fermo), Via Filippo Della Valle no. 1, in the section on Corporate Governance of the Company s website at as well as in the authorized storage system 1info at 27

28 CHAPTER 3 - SIGNIFICANT EFFECTS OF THE TRANSACTION 3.1 Significant effects of the Transaction on the key drivers that affect and characterise the business of Tod s, as well as on the type of business conducted by Tod s For the reasons reported in Chapter 2, Paragraph 2.2, the Transaction, and in particular the acquisition of the Brand, entails an important change in the strategic approach adopted by Tod s to its development. From an operational point of view, the performance of the Transaction will not affect the operations and business conducted by Tod s. With reference to the Brand, the Company will continue to carry out its activities, without any interruption, for the production, promotion, distribution and sale of the products bearing the Brand, which as at the date of this Information Document are regulated under the Licence Agreement. On the Closing Date this agreement will no longer be applicable as the Company intends to replace it by a new licence agreement whereby Partecipazioni Internazionali will grant Tod s the rights to use the Brand. 3.2 Implications of the Transaction on the strategic policies concerning the business and financial relations and the provision of centralised services between the Tod s Group companies The Transaction will not entail substantial changes in the strategic policies concerning the business and financial relations and the provision of centralised services between the Group companies, which will continue to carry out their respective activities in relation to the production, promotion, distribution and sale of Roger Vivier-branded products. 3.3 Description of the effects of the Transaction in terms of financial position, performance and cash flows The effects of the Transaction on the unaudited pro forma consolidated statement of financial position, unaudited pro forma consolidated income statements and unaudited pro forma consolidated cash flow statements (including the Compensation) are described in Chapter 5 below. With reference to the tax effects, the Brand Price (net of VAT) will represent the cost of the asset charged to Partecipazioni Internazionali for tax purposes and the Brand will be subject to tax amortization on the part of the buying company to an extent not exceeding one eighteenth of the cost pursuant to Article 103 of Presidential decree no. 917/1986. The Transaction constitutes a related-party transaction of greater importance pursuant to the Procedure and the Regulation on Related-Party Transactions as two indexes of the applicable relevance indexes exceed the threshold of 5%. Specifically: (i) (ii) Equivalent-value relevance ratio: the ratio between the value of the Transaction (Euro million, including VAT) and Euro 2,415.4 million (the stock exchange capitalisation of the Company at 30 June 2015) is equal to 22.0%; Asset relevance ratio: the ratio between: (i) the total assets involved in the Investment (Euro 12.1 million) and the Brand Price (Euro million, including VAT), and (ii) the Group s total assets at 30 June 2015, is equal to 44.0%. The Transaction also constitutes a significant acquisition pursuant to Article 71 of the Issuers Regulation as the asset relevance ratio exceeds 25.0%. 28

29 CHAPTER 4 - INCOME STATEMENT, STATEMENT OF FINANCIAL POSITION AND CASH FLOW STATEMENT RELATING TO THE INVESTMENT 4.1 Income Statement, Statement of Financial Position and Cash Flow Statement relating to the acquired assets The purpose of the Transaction is, among other things, the acquisition of the Investment, with reference to which the income statement, statement of financial position and cash flow statement are provided below. 4.2 Income Statement, Statement of Financial Position and Cash Flow Statement relating to the acquired investment The tables below report the statements of financial position and the reclassified income statements of RV Paris for the financial years ended 31 December 2013 and 2014 and for the first half-year of the 2015 and 2014 financial years, accompanied by summarised explanatory notes and prepared in accordance with the provisions laid down in the Code du Commerce, the Decret Comptable of 29 November 1983, as well as in the Règlements CRC governing the restatement of the 2005 Plan Comptable Général, as applicable on the reporting date. The income statement, statement of financial position and cash flow statement have been restated according to the classification adopted by the Group in the preparation of the consolidated financial statements Income Statement and Statement of Financial Position at 31 December 2014 and 2013 Statement of financial position [Space intentionally left blank] 29

30 (amounts in thousands of Euro) ASSETS Non-Current assets Intangible fixed assets Key money 2,940 2,940 Total Intangible fixed assets 2,940 2,940 Tangible fixed assets Equipment 5 8 Leasehold improvement Others Total Tangible fixed assets Other assets Others Total Other assets Total Non-Current assets 3,969 3,989 Current assets Inventories 2,276 1,902 Trade Receivables Tax Receivables 8 5 Others Cash and cash equivalents Total Current assets 3,447 2,876 Total assets 7,416 6,865 Equity Share Capital 6,700 6,700 Retained earnings (1,349) (1,958) Profit (Loss) for the period Total Equity 5,432 5,367 Non-current liabilities Provisions for risks Total Non-current liabilities Current liabilities Trade Payables 1,760 1,312 Tax Payables Others Total Current liabilities 1,966 1,480 Total Equity and liabilities 7,416 6,865 30

31 Asset with a finite life (key money): includes the amount (Euro 2,940 thousand) paid (Droit au bail, Lease Rights) by RV Paris to take over the lease agreements of the commercial premises located at Rue du Faubourg Saint-Honoré no. 29, where the business is conducted which involves the retail sale of Roger Vivier-branded products. Tangible fixed assets (Equipment, Leasehold Improvement, Others): include the net value of the investments made to set up the flagship store (mainly systems and furnishings) and the subsequent refurbishment operations. In the 2014 and 2013 financial years capital expenditure amounted to Euro 301 thousand and Euro 81 thousand, respectively. Other assets: include only the value of the guarantee deposit paid to secure the contractual obligations under the lease agreement of the store located at Rue du Faubourg Saint-Honoré no. 29. Inventories: are exclusively made up of period-end stock of Roger Vivier-branded products intended for sale, net of a provision for write-down equal to Euro 1,351 and Euro 404 thousand, respectively, in December 2014 and Cash and cash equivalents: are made up of cash and demand bank deposits. Share Capital: is divided into 6,700,000 shares, with a par value of Euro 1.00 each. Trade Payables: are mainly made up of payables to the Tod s Group companies for the supply of the Brand products sold by RV Paris. Income Statement [Space intentionally left blank] 31

32 (amounts in thousands of Euro) Sales revenues 8,514 8,107 Other income Total revenues and income 8,798 8,379 Change in inventories of work in process and finished goods Costs of raw materials, supplies and material for consumption (6,441) (5,780) Costs for services (764) (594) Costs of use of third party assets (1,028) (1,024) Personnel costs (369) (349) Other operating charges (174) (109) Total operating costs (8,403) (7,433) EBITDA Depreciation of tangible fixed assets (314) (298) Total amortisation, depreciation and write-downs (314) (298) Provisions - (18) EBIT Financial expenses - (5) Total financial income (expenses) - (5) Profit before taxes Income Taxes - - Profit (Loss) for the year Sales Revenues: include revenues from retail sales of Roger Vivier-branded products (footwear, bags, small leather goods and accessories) at the store located at Rue du Faubourg Saint-Honoré no. 29. Change in inventories of finished goods: this item includes the change in the stock of products sold by RV Paris, as well as the provision for write-down of finished goods set aside in the financial year. Costs of raw materials, supplies and material for consumption: mainly relate to the purchases relating to the supply of the Brand products acquired from the Group. This item also includes purchases linked to the core business of the store, such as costs incurred for promotional and advertising materials and materials for shop windows. Costs for services: this item mainly relates to costs for promotion and advertising services, which are normally incurred to organise promotion events at the flagship store operated by RV Paris (Euro 213 thousand and Euro 46 thousand in 2014 and 2013, respectively), credit card fees (Euro 106 thousand and Euro 105 thousand in 2014 and 2013, respectively), costs for temporary work services (Euro 126 thousand and Euro 125 thousand in 2014 and 2013, respectively), costs for maintenance works at the store (Euro 49 thousand and Euro 38 thousand in 2014 and 2013, respectively) and other operating costs for the store, such 32

33 as costs for insurance, cleaning, surveillance and warehousing (Euro 86 thousand and Euro 82 thousand in 2014 and 2013, respectively). Costs of use of third party assets: this item mainly includes the rentals relating to the lease agreement of the commercial premises located at Rue du Faubourg Saint-Honoré no. 29. Personnel costs: this item relates to the cost of wages and salaries paid to the sales force working at the store. Amortisation, depreciation and write-downs: in 2014 and 2013 this item only included depreciation of tangible fixed assets, as calculated according to the applicable allowances. Income Taxes: RV Paris has used receivables for past tax losses accrued in previous financial years. At 31 December 2014, the amount of receivables for residual deferred tax assets that may be used to offset future tax profits amounted to Euro 3,547 thousand; they have not been reported in the statement of financial position in accordance with the local GAAPs. The separate financial statements of RV Paris at 31 December 2013 and 2014 have not been audited by an accounting firm. These financial statements have been audited by the Commissaire au Compte (Statutory Auditor) appointed by the Shareholders Meeting, who gave an unqualified opinion in the reports issued on 2 June 2014 and 4 May 2015, respectively Income Statement and Statement of Financial Position at 30 June 2015 and 30 June 2014 Statement of financial position Space intentionally left blank] 33

34 (amounts in thousands of Euro) ASSETS Non-Current assets Intangible fixed assets Key Money 2,940 2,940 Total Intangible fixed assets 2,940 2,940 Tangible fixed assets Equipment 4 7 Leasehold improvement Others Total Tangible fixed assets Other assets Others Total Other assets Total Non-Current assets 3,949 4,012 Current assets Inventories 2,215 2,658 Trade Receivables Tax Receivables - - Others Cash and cash equivalents 2, Total Current assets 5,144 3,672 Total assets 9,093 7,684 Equity Share Capital 6,700 6,700 Retained earnings (1,252) (1,349) Profit (Loss) for the period 1, Total Equity 7,040 6,131 Non-Current liabilities Provisions for risks Total Non-Current liabilities Current liabilities Trade Payables 1,836 1,314 Tax Payables Others Total Current liabilities 2,035 1,535 Total Equity and liabilities 9,093 7,684 34

35 Asset with a finite life (key money): includes the amount (Euro 2,940 thousand) paid (Droit au bail, Lease Rights) by RV Paris to take over the lease agreements of the commercial premises located at Rue du Faubourg Saint-Honoré no. 29, where the business is conducted which involves the retail sale of Roger Vivier-branded products. Tangible fixed assets (Equipment, Leasehold Improvement, Others): include the net value of the investments made to set up the flagship store (mainly systems and furnishings) and the subsequent refurbishment operations. In the periods ended 30 June 2015 and 2014 capital expenditure amounted to Euro 22 thousand and Euro 177 thousand, respectively. Other assets: include only the value of the guarantee deposit paid to secure the contractual obligations under the lease agreement of the store located at Rue du Faubourg Saint-Honoré no. 29. Inventories: are exclusively made up of period-end stock of Roger Vivier-branded products intended for sale, net of a provision for write-down equal to Euro 391 thousand at 30 June No provision for writedown had been recognised at 30 June Cash and cash equivalents: are made up of cash and demand bank deposits. Share Capital: is divided into 6,700,000 shares, with a par value of Euro 1.00 each. Trade Payables: are mainly made up of payables to the Tod s Group companies for the supply of the Brand products sold by RV Paris. [Space intentionally left blank] 35

36 Income Statement (amounts in thousands of Euro) Sales revenues 6,029 4,538 Other income Total revenues and income 6,208 4,673 Change in inventories of work in process and finished goods (60) 755 Costs of raw materials, supplies and material for consumption (3,295) (3,327) Costs for services (369) (415) Costs of use of third party assets (518) (518) Personnel costs (243) (169) Other operating charges (88) (65) Total operating costs (4,573) (3,739) EBITDA 1, Depreciation of tangible fixed assets (43) (154) Total amortisation, depreciation and write-downs (43) (154) Provisions - - EBIT 1, Total financial income (expenses) - - Profit before taxes 1, Income Taxes - - Profit (loss) for the year 1, Sales Revenues: include revenues from retail sales of Roger Vivier-branded products (footwear, bags, small leather goods and accessories) at the store located at Rue du Faubourg Saint-Honoré no. 29. Change in inventories of finished goods: this item includes the change in the stock of products sold by RV Paris, as well as the provision for write-down of finished goods set aside in the period. Costs for raw materials, supplies and material for consumption: mainly relate to the purchases relating to the supply of the Brand products acquired from the Group. This item also includes purchases linked to the core business of the store, such as costs incurred for promotional and advertising materials and materials for shop windows. Costs for services: this item mainly relates to costs for promotion and advertising services, which are normally incurred to organise promotion events at the flagship store (Euro 28 thousand and Euro 118 thousand in the first half-year of 2015 and in the first half-year of 2014, respectively), credit card fees (Euro 74 thousand and Euro 55 thousand in the first half-year of 2015 and in the first half-year of 2014, respectively), costs for temporary work services (Euro 57 thousand and Euro 75 thousand in the first half-year of 2015 and in the first half-year of 2014, respectively), costs for maintenance works at the store (Euro 13 thousand and Euro 29 thousand in the first half-year of 2015 and in the first half-year of 2014, respectively) and other 36

37 operating costs for the store, such as costs for insurance, cleaning, surveillance and warehousing (Euro 50 thousand and Euro 44 thousand in the first half-year of 2015 and in the first half-year of 2014, respectively). Costs of use of third party assets: this item mainly includes the rentals relating to the lease agreement of the commercial premises located at Rue du Faubourg Saint-Honoré no. 29. Personnel costs: this item relates to the cost of wages and salaries paid to the sales force working at the store. Amortisation, depreciation and write-downs: this item only includes depreciation of tangible fixed assets, calculated according to the applicable allowances. Income Taxes: no income taxes were recognized in the income statement for the periods ended 30 June 2015 and 30 June 2014, as RV Paris benefits from receivables for deferred tax assets on past losses accrued in previous financial years Net Financial Position At 31 December 2014 and 2013 the net financial position of RV Paris amounted to Euro 957 thousand and Euro 795 thousand, respectively. At 30 June 2015 the net financial position amounted to Euro 2,553 thousand. 37

38 5. UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF THE ISSUER The following section includes the document Tod s Group unaudited pro forma consolidated statement of financial position at June 30, 2015 and unaudited pro forma consolidated income and cash flow statements for the six months ended June 30, 2015 and for the year ended December 31, 2014, approved by the Company s board of directors on November 22, 2015, which has been prepared to represent the main effects of the Pro Forma Transactions (as defined below) on the consolidated statement of financial position, income statements and cash flow statements of Tod s Group. The aforementioned document has been examined by PricewaterhouseCoopers SpA, which issued a report on November 28, 2015, attached to this Information Document sub E, relating to the reasonableness of the assumptions used by the board of directors of the Company, the correctness of the measurement criteria, the accounting principles applied and the correctness of the methodology applied in the preparation of the document. TOD S GROUP UNAUDITED FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT JUNE 30, 2015 AND UNAUDITED PRO FORMA CONSOLIDATED INCOME AND CASH FLOW STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND FOR THE YEAR ENDED DECEMBER 31, INTRODUCTION This document includes the unaudited pro forma consolidated statement of financial position at June 30, 2015and the unaudited pro forma consolidated income and cash flow statements for the six months ended June 30, 2015 and for the year ended December 31, 2014 of Tod s S.p.A. ( Tod s or the Company together with its subsidiaries Tod s Group ) and the related explanatory notes (the Unaudited Pro Forma Consolidated Financial Information ). The Unaudited Pro Forma Consolidated Financial Information has been prepared for inclusion in the information document being prepared in accordance with article 7 of the Procedure on Related Parties Transactions, article 5 of the Related Parties Regulation and article 71 of Issuer Regulation, to represent the pro forma effects of the acquisition from Gousson Consultadorio & Marketing S.r.l. ( Gousson ) of the brand Roger Vivier (the Brand ), the acquisition of the entire share capital of Roger Vivier Paris SAS ( Investment or RV Paris ) and the subsequent capital increase of Tod s, reserved to Gousson (the Transaction ). Furthermore, the Unaudited Pro Forma Consolidated Financial Information includes the effects of the economic compensation of Euro 25 million that Gousson will pay to Tod s in connection with previously applied restrictions connected with the distribution of products branded Roger Vivier as established in the original license agreement in order to maintain the prestige of the Brand (the Compensation, together with the Transaction, the Pro Forma Transactions ). The Unaudited Pro Forma Consolidated Financial Information has been prepared in order to simulate, using accounting principles that are consistent with those used in the preparation of the Tod s historical financial statements and compliant with the applicable legislation, the main effects of the Pro Forma Transactions on the consolidated statement of financial position, cash flows and result of operations of Tod s Group, as if the Pro Forma Transactions had occurred on June 30, 2015 for the consolidated statement of financial position purposes and on January 1, 2014 for the consolidated income and cash flow statement purposes. As mentioned above, the Unaudited Pro Forma Consolidated Financial Information represents a simulation, for illustrative purposes only, of the main potential impacts of the Pro Forma Transactions. In particular, as pro forma information is prepared to illustrate retrospectively the effects of transactions that will occur 38

39 subsequently using generally accepted regulations and reasonable assumptions, there are limitations that are inherent to the nature of pro forma information; hence, had the Pro Forma Transactions taken place on the dates assumed above, the actual effects would not necessarily have been the same as those presented in the Unaudited Pro Forma Consolidated Financial Information. Furthermore, in consideration of the different purposes of the pro forma information as compared to the historical financial statements and the different methods of calculation of the effects of the Pro Forma Transactions on the unaudited pro forma consolidated statement of financial position, on the unaudited pro forma consolidated income statement and on the unaudited pro forma consolidated cash flow statement, these statements should be read and interpreted without comparisons between them. Finally, it should be noted that the Unaudited Pro Forma Consolidated Financial Information does not attempt to predict or estimate the future results of the Tod s Group and should not be used for this purpose. The Unaudited Pro Forma Consolidated Financial Information should be read in conjunction with: the unaudited consolidated interim financial information of Tod s at and for the six months ended June 30, 2015 ( Unaudited Consolidated Interim Financial Information ), approved by the board of directors on August 6, 2015 and reviewed by PricewaterhouseCoopers SpA, which issued its review report on August 7, 2015; the consolidated financial statements of Tod s at and for the year ended December 31, 2014 ( Consolidated Financial Statements ), approved by the board of directors on March 12, 2015 and audited by PricewaterhouseCoopers SpA., which issued its audit report on March 31, The financial statements of RV Paris ( RV Paris Financial Statements ) at and for the year ended December 31, 2014 were approved by the sole Director, and audited by the Commissaire au Compte appointed by the shareholder meeting of RV Paris. The Commissaire au Compte issued an unqualified opinion on May 4, The RV Paris Financial Statements are available at the registered offices of RV Paris. The unaudited condensed interim financial information RV Paris at and for the six months ended June 30, 2015 ( RV Paris Unaudited Interim Financial Information ) was approved by the sole Director on November 3, 2015 and was not subject to any audit procedures. The RV Paris Unaudited Interim Financial Information is available at the registered offices of RV Paris. 2. UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION This section presents the unaudited pro forma consolidated statement of financial position at June 30, 2015 (the Unaudited Pro Forma Consolidated Statement of Financial Position ), the unaudited pro forma consolidated income statements for the six months ended June 30, 2015 and for the year ended December 31, 2014 (the Unaudited Pro Forma Consolidated Income Statements ), unaudited the pro forma consolidated cash flow statements for the six months ended June 30, 2015 and for the year ended December 31, 2014 (the Unaudited Pro Forma Consolidated Cash Flow Statements ) and the related explanatory notes. 2.1 Unadited pro forma consolidated statements of financial position The following table present the pro forma adjustments made to reflect the main effects of the Pro Forma Transactions on the Tod s Group unaudited consolidated statement of financial position at June 30,

40 Unaudited pro forma consolidated statement of financial position at June 30, 2015 Tod's Group Unaudited pro forma RV Paris Accounting of Pro Forma Transactions Pro forma adjustments Intercompany transactions Financing and capital increase Unaudited pro forma Tod's Group (in Euro thousands) Note A Note B Note C Note D Note E Total Non-current assets Intangible assets Assets with indefinite useful life 149, , ,466 Key money 15,941 2, ,881 Other assets with finite useful life 26, ,471 Total intangible assets 191,878 2, , ,818 Tangible fixed assets Buildings and land 107, ,546 Plant and machinery 12, ,509 Equipment 15, ,366 Leasehold improvements 46, ,019 Others 48, ,958 Total tangible fixed assets 230, ,398 Other assets Investment properties Equity investments Deferred tax assets 53,032 3,016 (7,893) (328) 48,175 Others 20, ,957 Total other assets 73,800 3,255 (7,893) 348 (328) 69,182 Total non - current assets 496,306 6, , (328) 910,398 Current assets Inventories 357,346 2,215 (1,042) - 358,519 Trade receivables 112, (1,552) - 111,308 Tax receivables 23,227-91, ,527 Derivative financial instruments Others 39, (1,400) 38,190 Cash and cash equivalents 159,434 2,553 (501,300) - 506, ,996 Total current assets 693,006 5,144 (410,000) (2,594) 504, ,465 Total assets 1,189,312 12,109 (2,893) (2,246) 504,581 1,700,863 Total Equity attributable to the Group 812,067 10,056 (2,893) (694) 207,130 1,025,666 Total Equity attributable to non - controlling interests 4, ,549 Total Equity 816,616 10,056 (2,893) (694) 207,130 1,030,215 Non - current liabilities Provisions for risks 4, ,570 Deferred tax liabilities 29, ,249 Employee benefits 12, ,687 Bank borrowings 63, , ,491 Others 16, ,509 Total non - current liabilities 126, , ,506 Current liabilities Trade payables 146,521 1,836 - (1,552) ,345 Tax payables 15, (498) 14,918 Derivative financial instruments 15, (1,191) 14,745 Others 45, ,670 Bank 22, ,464 Total current liabilities 245,808 2,035 - (1,552) (1,149) 245,142 Total Equity and liabilities 1,189,312 12,109 (2,893) (2,246) 504,581 1,700,863 40

41 2.2 Unaudited Pro forma consolidated income statements The following table presents the pro forma adjustments to reflect the main effects of the Pro Forma Transactions on the Tod s Group unaudited consolidated income statement for the six months ended June 30, 2015 and consolidated income statement for the year ended December 31, Unaudited pro forma consolidated income statement for the six months ended June 30, 2015 (in Euro thousands) Tod's Group Unaudited pro forma RV Paris Accounting of Pro Forma Transactions Pro forma adjustments Intercompany transactions Financing Unaudited pro forma Tod's Group Note A Note B Note C Note D Note E Total Sales revenues 515,310 6,029 - (2,484) - 518,855 Other income 4, ,138 Total revenues and income 520,269 6,208 - (2,484) - 523,993 Change in inventories of work in process and finished goods 30,987 (60) - (398) - 30,529 Cost of raw materials, supplies and materials for consumption (151,026) (3,295) - 2,459 - (151,862) Cost for services (125,545) (369) (125,889) Cost of use of third party assets (63,106) (518) 6, (57,241) Personnel costs (91,422) (243) (91,665) Other operating charges (17,112) (88) (17,200) Total operating costs (417,224) (4,573) 6,383 2,086 - (413,328) EBITDA 103,045 1,635 6,383 (398) - 110,665 Amortisation of intangible assets (4,271) (4,271) Amortisation of tangible assets (19,060) (43) (19,103) Other adjustments (204) (204) Total amortisation, depreciation and write-down (23,535) (43) (23,578) Provisions (1,998) (1,998) EBIT 77,512 1,592 6,383 (398) - 85,089 Financial income 19, ,920 Financial expenses (23,384) (2,565) (25,949) Total financial income (expenses) (3,464) (2,565) (6,029) Income (losses) from equity investments Profit before taxes 74,048 1,592 6,383 (398) (2,565) 79,060 Income taxes (24,177) (531) (2,015) (25,885) Profit / (loss) for the period 49,871 1,061 4,368 (265) (1,860) 53,175 Non - controlling interests (508) (508) Profit / (loss) of the Group 50,379 1,061 4,368 (265) (1,860) 53,683 Earnings per share basic (in Euro) Earnings per share diluted (in Euro)

42 Unaudited pro forma consolidated income statement for the year ended December 31, 2014 Tod's Group Unaudited pro forma RV Paris Accounting of Pro Forma Transactions Pro forma adjustments Intercompany transactions Financing Unaudited pro forma Tod's Group (in Euro thousands) Nota A Nota B Nota C Nota D Nota E Total Sales revenues 965,532 8,514 - (5,935) - 968,111 Other income 10, ,760 Total revenues and income 976,008 8,798 - (5,935) - 978,871 Change in inventories of work in process and finished goods 31, ,537 Cost of raw materials, supplies and materials for consumption (278,912) (6,441) - 5,885 - (279,468) Cost for services (231,436) (764) (232,150) Cost of use of third party assets (109,665) (1,028) 9, (101,436) Personnel costs (160,386) (369) (160,755) Other operating charges (34,005) (174) (34,179) Total operating costs (782,460) (8,403) 9,257 6,155 - (775,451) EBITDA 193, , ,420 Amortisation of intangible assets (8,792) (8,792) Amortisation of tangible assets (32,791) (314) (33,105) Other adjustments (2,339) (2,339) Total amortisation, depreciation and write-down (43,922) (314) (44,236) Provisions (1,447) (1,447) EBIT 148, , ,737 Financial income 23, ,403 Financial expenses (27,202) (5,129) (32,331) Total financial income (expenses) (3,799) (5,129) (8,928) Income (losses) from equity investments Profit before taxes 144, , (5,129) 148,809 Income taxes (47,619) (27) (2,922) (74) 1,410 (49,232) Profit / (loss) for the period 96, , (3,719) 99,577 Non - controlling interests (353) (353) Profit / (loss) of the Group 97, , (3,719) 99,930 Earnings per share basic (in Euro) Earnings per share diluted (in Euro) Unaudited Pro forma consolidated cash flow statements The following tables present the pro forma adjustments made to reflect the main effects of the Pro Forma Transactions on the Tod s Group unaudited consolidated cash flow statement for the six months ended June 30, 2015 and consolidated cash flow statement for the year ended December 31,

43 Unaudited pro forma consolidated cash flow statements for the six months ended June 30, 2015 Tod's Group Unaudited pro forma RV Paris Accounting of Pro Forma Transactions Pro forma adjustments Intercompany transactions Financing Unaudited pro forma Tod's Group (in Euro thousands) Nota A Nota B Nota C Nota D Nota E Total Profit / (loss) for the period 49,870 1,061 4,368 (265) (1,860) 53,174 Amortisation, depreciation, revaluation and write - downs 24, ,381 Change in reserve employee Change in deferred tax asset / liabilities (4,906) (4,906) Other non monetary expenses / (income) 3, ,334 Cash flow (a) 73,817 2,029 4,368 (265) (1,860) 78,089 Change in current assets and liabilities: Trade receivables (13,291) (120) (13,411) Other current assets (2,276) (50) (2,326) Inventories (31,709) (330) (31,774) Tax receivables 7, ,479 Trade payables (13,700) (13,624) Other current liabilities 4, ,238 Tax payables 6, ,300 Change in operating working capital (b) (42,976) (407) (43,118) Cash flow from operations (c) = (a) + (b) 30,841 1,622 4,368 - (1,860) 34,971 Net investments in intangible and tangible assets (26,647) (25) (26,672) Reduction (increase) of other non - current assets (2,183) (1) (2,184) Cash flow generated (used) in investing activities (d) (28,830) (26) (28,856) Dividends paid (61,319) (61,319) Other change in Equity Change in long term loans / other non - current liabilities 47, ,458 Cash flow generated (used) in financing (e) (13,859) (13,859) Translation differences (f) 3, ,697 Cash flow continuing operations (g) = (c) + (d) + (e) + (f) (8,151) 1,596 4,368 - (1,860) (4,047) Cash flow from assets held for sale (h) Cash flow generated (used) (i) = (g) + (h) (8,151) 1,596 4,368 - (1,860) (4,047) Net cash and cash equivalents at the beginning of the period 154, ,918 Net cash and cash equivalents at the end of the period 146,810 2,553 4,368 - (1,860) 151,871 Change in net cash and cash equivalents (8,151) 1,596 4,368 - (1,860) (4,047) 43

44 Unaudited pro forma consolidated cash flow statement for the year ended December 31, Tod's Group Unaudited pro forma RV Paris Accounting of Pro Forma Transactions Pro forma adjustments Intercompany transactions Financing Unaudited pro forma Tod's Group (in Euro thousands) Nota A Nota B Nota C Nota D Nota E Total Profit / (loss) for the period 96, , (3,719) 99,577 Amortisation, depreciation, revaluation and write - downs 41,910 1, ,593 Change in reserve employee Change in deferred tax asset / liabilities (287) (287) Other non monetary expenses / (income) 2, ,433 Cash flow (a) 141,051 1,764 6, (3,719) 145,577 Change in current assets and liabilities: Trade receivables (4,613) (35) (4,648) Other current assets (2,436) (2,433) Inventories (43,232) (1,725) - (146) - (45,103) Tax receivables (13,840) (34) (13,874) Trade payables 7, ,049 Other current liabilities 4,675 (17) ,658 Tax payables 1, ,258 Change in operating working capital (b) (50,639) (1,308) - (146) - (52,093) Cash flow from operations (c) = (a) + (b) 90, ,335 - (3,719) 93,484 Net investments in intangible and tangible assets (63,086) (294) (63,380) Reduction (increase) of other non - current assets (3,173) (3,173) Cash flow generated (used) in investing activities (d) (66,259) (294) (66,553) Dividends paid (82,902) (82,902) Change in long term loans / other non - current liabilities (3,325) (3,325) Cash flow generated (used) in financing (e) (86,227) (86,227) Translation differences (f) 9, ,935 Cash flow continuing operations (g) = (c) + (d) + (e) + (f) (52,139) 162 6,335 - (3,719) (49,361) Cash flow from assets held for sale (h) Cash flow generated (used) (i) = (g) + (h) (52,139) 162 6,335 - (3,719) (49,361) Net cash and cash equivalents at the beginning of the period 207, ,895 Net cash and cash equivalents at the end of the period 154, ,335 - (3,719) 158,534 Change in net cash and cash equivalents (52,139) 162 6,335 - (3,719) (49,361) 2.4 Notes to the unaudited pro forma consolidated financial information Basis of presentation and accounting principles The Unaudited Pro Forma Consolidated Financial Information was prepared in compliance with CONSOB Communication no. DEM/ of July 5, 2001, which regulates the methodology for preparing pro forma data. In particular, the Unaudited Pro Forma Consolidated Statement of Financial Position, the Unaudited Pro Forma Consolidated Income Statements and the Unaudited Pro Forma Consolidated Cash Flow Statements were prepared on the base of historical financial information of the Tod s Group derived from the Unaudited Consolidated Interim Financial Information and the Consolidated Financial Statements, adjusted to simulate the main effects of the Pro Forma Transactions. 44

45 The accounting standards used for the preparation of the Unaudited Pro Forma Consolidated Financial Information, unless otherwise specified, are consistent with those used in the preparation of the Unaudited Consolidated Interim Financial Information, which have been prepared in accordance with International Financial Reporting Standards that comprise all the International Accounting Standards, all the International Financial Reporting Standards and all the interpretations of the International Financial Reporting Interpretations Committee, previously known as the Standing Interpretations Committee, and adopted by the European Union ( IFRS ). Furthermore, certain assumptions, including market-based assumptions, used will be updated upon completion of the Pro Forma Transactions. In particular, a preliminary analysis of IFRS to French accounting standards (applied by RV Paris) differences and related accounting policies has been completed based on information available to date. However, following the consummation of the Pro Forma Transactions, management will conduct a final analysis. As a result of that analysis, management may identify differences that, when finalized could have an impact on this Unaudited Pro Forma Consolidated Financial Information Description of the transaction The transactions subject to pro forma adjustments are: the acquisition of the brand Roger Vivier for Euro million (excluding VAT of Euro 91.3 million); the acquisition of the entire share capital of RV Paris for Euro 20.0 million; the capital increase of Tod s, reserved to Gousson equal to the 50% of the brand value, to be effected through the issuance of 2,484,138 new shares, at the price of Euro for each ordinary share, and a total value of Euro million ( Capital Increase ); and the compensation of Euro 25.0 million for the restrictions relating to the distribution of branded goods derived from the license agreement, restrictions aimed at maintaining the prestige of the Brand. The amount paid for the acquisition of the Brand and Participation, equals to Euro million, including VAT, is financed using existing short term and medium-long term credit lines and available cash. The primary source of cash relates to the financing provided by Crédit Agricole Corporate Investment Bank and Mediobanca to Tod s ( Financing ) for a maximum amount of Euro million, which will be drawn for Euro million. The cash resources derived from the Capital Increase will be used to reimburse financing arrangements other than the Financing. At consummation of the Transaction, considering also the effect of the Compensation received from Gousson and the partial extinguishment of IRS derivative financial instruments with a negative fair value, entered into to hedge the variable interest rate of the Financing, the financial indebtedness of Tod s Group deriving from the Transaction amounts to Euro million, only relating to the Financing. The acquisition of the Investment has been accounted for as a business combination under common control using the predecessor basis (IFRS 3), i.e. accounting for both assets and liabilities of the acquired company at their book value, and therefore recognizing as deduction from equity the difference between the book value of the net assets acquired of RV Paris, of approximately Euro 10.0 million at June 30, 2015, and their acquisition value of Euro 20.0 million Description of the pro forma adjustments performed in the preparation of the unaudited pro forma consolidated financial information The following section briefly describes the pro forma adjustments performed in the preparation of the Unaudited Pro Forma Consolidated Financial Information. 45

46 UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION A) Unaudited consolidated statement of financial position of the Tod s Group This column includes the unaudited consolidated statement of financial position at June 30, 2015, derived from the Unaudited Consolidated Interim Financial Information. B) Unaudited pro forma statement of financial position of RV Paris This column includes the unaudited consolidated statement of financial position of RV Paris at June 30, 2015, derived from the RV Paris Unaudited Interim Financial Information, prepared in accordance with French accounting standards and not subject to any audit procedures, adjusted and reclassified in order to align the information to IFRS, as applied by Tod s Group. Unaudited pro forma statement of financial position of RV Paris as of 30 June, 2015 Pro forma Adjustments IFRS Unaudited RV IFRS Reclassificatio pro forma Paris Adjustments (in Euro thousands) n RV Paris B.1 B.2 B.3 Total B Non-current assets Intangible assets Key money 2, ,940 Total intangible assets 2, ,940 Tangible fixed assets Equipment Leasehold improvements Others Total tangible fixed assets Other assets Deferred tax assets - - 3,016 3,016 Others Total other assets 239-3,016 3,255 Total non - current assets 3,94 9-3,016 6,965 Current assets Inventories 2, ,215 Trade receivables Tax receivables 73 (73) - - Others Cash and cash equivalents 2,638 (85) - 2,553 Total current assets 5,217 (73) - 5,144 Total assets 9,166 (73) 3,016 12,109 Total Equity 7,04 0-3,016 10,056 Non - current liabilities Provisions for risks Total non - current liabilities Current liabilities Trade payables 1, ,836 Tax payables 175 (73) Others Total current liabilities 2,108 (73) - 2,035 Total Equity and liabilities 9,166 (73) 3,016 12,109 B.1) Unaudited statement of financial position of RV Paris This column includes the unaudited statement of financial position of RV Paris at June, , derived from the RV Paris Unaudited Interim Financial Information. B.2) IFRS Reclassifications 46

47 This column includes reclassifications made to the unaudited statement of financial position of RV Paris, to align the classification of assets and liabilities with disclosure of Tod s Group. In particular, the reclassifications are as follows: - Tax receivables of Euro 73 thousand, relating to VAT credits, are reclassified to Tax payables ; - Cash and cash equivalents of Euro 85 thousand are reclassified to Other current assets. B.3) IFRS Adjustments This column includes adjustments to align the unaudited statement of financial position of RV Paris at June 30, 2015 to IFRS as adopted by Tod s Group and particularly, the recognition of Euro 3,016 thousand relating to tax losses carried forward, classified as Deferred tax assets. C) Accounting of the Pro Forma Transactions This column presents the pro forma effects relating to the accounting of the Pro Forma Transactions. Particularly, the adjustment of Assets with indefinite useful life relates to the acquisition of the brand Roger Vivier of Euro 415,000 thousand, based on its acquisition value. The acquisition of RV Paris is accounted for as business combination under common control, based on the predecessor basis (IFRS 3), i.e. accounting for both assets and liabilities of the acquired company at their the book value, and therefore recognizing as deduction from equity the difference between the book value of the net assets acquired of approximately Euro 10,056 thousand at June 30, 2015 and the acquisition value of Euro 20,000 thousand. Purchase consideration and effects of the Pro Forma Transactions The purchase consideration of the brand Roger Vivier and of RV Paris amounts to Euro 526,300 thousand, including VAT of Euro 91,300 thousand. The pro forma cash and cash equivalents change due to the purchase consideration of the Transaction of Euro 526,300 thousand, net of the Compensation of Euro 25,000 thousand. The pro forma adjustments of total equity attributable to the Group amount to Euro 2,893 thousand and reflect: (i) the reduction of total equity attributable to the Group of Euro 20,000 thousand and (ii) the accounting of the Compensation equal to Euro 25,000 thousand, net of the related tax effect of Euro 7,893 thousand. D) Intercompany Transactions This column includes the effects resulting from the elimination of the intercompany balances at June 30, 2015 between Tod s Group companies and RV Paris. In particular, the adjustments relate to the elimination of intercompany trade receivables and payables of Euro 1,552 thousand, and the elimination of unrealized margins with third parties and other intercompany adjustments, relating to RV Paris s inventory, previously acquired by Tod s Group of Euro 1,042 thousand, before taxes of Euro 348 thousand. E) Financing and Capital Increase This column includes the effects of the Transaction, and particularly, the drawdown of the Financing of Euro 300,000 thousand and the Capital Increase through the issuance of 2,484,138 new shares (calculated on the weighted average per price volume of the last 6 months of Tod s ordinary shares at November 20, 2015 amounting to Euro 83.53), for a total of Euro 207,500 thousand, exclusively and irrevocably intended for the underwriting of Gousson, having sold the Brand and RV Paris to Tod s Group. 47

48 Furthermore, this column includes costs related to the Pro Forma Transactions, which Tod s Group has estimated to 540 thousand at November 22, In addition, this column includes the related tax effect of Euro 170 thousand, calculated on the tax rate applicable to Tod s Group (31.57%). Capital Increase The Capital Increase is related to the issuance of 2,484,138 new shares with a nominal value equal to Euro 2,00, issued at a price of Euro 83,53 each, for a total consideration of Euro 207,500 thousand. Financing The drawdown of the Financing, classified in Non-current financial liabilities, amounts to Euro 300,000 thousand and takes into consideration the purchase consideration of Transaction, net of the Compensation and the Capital Increase, and includes Euro 1,191 thousand, representing the partial extinguishment of IRS derivative financial instruments with a negative fair value, entered into to hedge the variable interest rate of the Financing, and the related release of deferred tax assets Euro 328 thousand, previously recognized. The drawdown of the Financing, presented net of transaction costs of Euro 1,400 thousand, amounts to Euro 298,600 thousand. UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENTS A) Consolidated income statements of Tod s Group This column includes Tod s Group unaudited consolidated income statement for the six months ended June 30, 2015, derived from the Unaudited Consolidated Interim Financial Information, and Tod s Group consolidated income statement for the year ended December 31, 2014, derived from the Consolidated Financial Statements. B) Unaudited pro forma consolidated income statements of RV Paris This column includes the unaudited pro forma income statements of RV Paris for the six months ended June 30, 2015 and for the year ended December 31, 2014, respectively derived from the RV Paris Unaudited Condensed Interim Financial Information, not subject to any audit procedures, and RV Paris Financial Statements, both prepared in accordance with French accounting standards, adjusted and reclassified in order to align the information to IFRS as applied by Tod s Group. Unaudited pro forma income statements of RV Paris for the six months ended June 30, 2015 Pro forma Adjustments IFRS IFRS Unaudited pro RV Paris (in Euro thousands) Reclassifications Adjustments forma RV Paris B.1 B.2 B.3 Total B Sales revenues 6,234 (205) - 6,029 Other income 1,351 (1,172) Total revenues and income 7,585 (1,377) - 6,208 Change in inventories of work in process and finished goods (1,411) 1,351 - (60) Cost of raw materials, supplies and materials for consumption (3.268) (27) - (3,295) Cost for services (967) (369) Cost of use of third party assets - (518) - (518) Personnel costs (249) 6 - (243) Other operating charges (55) (33) - (88) Total operating costs (5,950) 1,377 - (4,573) EBITDA 1, ,635 Amortisation of tangible assets (43) - - (43) Total amortisation, depreciation and write-down (43) - - (43) Provisions Profit before taxes 1, ,592 Income taxes - - (531) (531) Profit / (loss) for the period 1,592 - (531) 1,061 48

49 B.1) RV Paris unaudited income statement This column includes RV Paris s unaudited income statement for the six months ended June 30, 2015, derived from the RV Paris Unaudited Interim Financial Information. B.2) IFRS Reclassification This column includes reclassifications made to the income statements of RV Paris, to align the classification of income and expenses with disclosure of Tod s Group. In particular, the reclassifications are as follows: - Euro 179 thousand from Sales revenues to Other income ; - Euro 1,351 thousand from Other income to Change in inventories of work in process and finished goods ; - Euro 602 thousand from Cost for services to Cost of use of third party assets for Euro 518 thousand, to Other operating charges for Euro 31 thousand, to Cost of raw materials, supplies and materials for consumption for Euro 27 thousand and to Sales revenues for Euro 26 thousand; - Euro 4 thousand from Personnel costs to Cost for services ; - Euro 2 thousand from Personnel costs to Other operating charges. B.3) IFRS Adjustments This column includes the release of deferred tax assets relating to tax losses carried forwards of Euro 531 thousand. Unaudited pro forma income statement of RV Paris for the year ended December 31, 2014 Pro forma Adjustments IFRS IFRS Unaudited pro RV Paris (in Euro thousands) Reclassifications Adjustments forma RV Paris B.4 B.5 B.6 Total B Sales revenues 8,921 (407) - 8,514 Other income 405 (121) Total revenues and income 9,326 (528) - 8,798 Change in inventories of work in process and finished goods 1,320 (947) Cost of raw materials, supplies and materials for consumption (7,742) 1,301 - (6,441) Cost for services (2.015) 1,251 - (764) Cost of use of third party assets - (1,028) - (1,028) Personnel costs (395) 26 - (369) Other operating charges (99) (75) - (174) Total operating costs (8,931) (8,403) EBITDA Amortisation of tangible assets (314) - - (314) Total amortisation, depreciation and write-down (314) - - (314) Provisions Profit before taxes Income taxes - - (27) (27) Profit / (loss) for the period 81 - (27) 54 B.4) RV Paris income statement This column includes the income statement of RV Paris for the year ended December 31, 2014, derived from the RV Paris Financial Statements. B.5) IFRS Adjustments This column includes reclassifications made to the income statements of RV Paris, to align the classification of income and expenses with disclosure of Tod s Group. In particular, the reclassifications are as follows: - Euro 283 thousand from Sales revenues to Other income and Euro 10 thousand from Sales revenues to Cost of raw materials, supplies and materials for consumption ; 49

50 - Euro 404 thousand from Other revenues to Change in inventories of work in process and finished goods ; - Euro 1,351 thousand from Cost of raw materials, supplies and materials for consumption to Change in inventories of work in process and finished goods ; - Euro 1,257 thousand from Cost for services to Cost of use of third party assets for Euro 1,028 thousand, to Other operating charges for Euro 55 thousand, to Cost of raw materials, supplies and materials for consumption for Euro 60 thousand and to Sales revenues for Euro 114 thousand; - Euro 26 thousand from Personnel costs to Cost for services for Euro 6 thousand and to Other operating charges for Euro 20 thousand. B.6) IFRS Adjustments This column includes the release of deferred tax assets relating to tax losses carried forwards of Euro 27 thousand. C) Accounting of the Pro Forma Transactions This column presents the pro forma effects relating to the elimination of royalties, previously paid by Tod s Group for the brand Roger Vivier amounting to Euro 6,383 thousand for the six months ended June 30, 2015 and Euro 9,257 thousand for the year ended December 31, 2014, net of the related tax effect. D) Intercompany Transactions This column includes the effects resulting from the elimination of the intercompany transactions, including the elimination of unrealized inventory margin with third parties, net of the related tax effect. E) Financing This column includes the finance costs relating to the drawdown of the Financing of Euro 300,000 thousand in relation to the Transaction. The increase in finance expense of Euro 2,565 thousand for the six months ended June 30, 2015 and Euro 5,129 thousand for the year ended December 31, 2014, were calculated assuming an interest rate of 1.648% (Euribor fixed by the IRS to 0.748% and a spread of 0.900%) and the amortization of transactions costs relating to the Financing. UNAUDITED PRO FORMA CONSOLIDATED CASH FLOW STATEMENTS A) Consolidated cash flow statements of Tod s Group This column includes the Tod s Group unaudited consolidated cash flow statement for the six months ended June 30, 2015, derived from the Unaudited Consolidated Interim Financial Information, and the Tod s Group consolidated cash flow statement for the year ended December 31, 2014, derived from the Consolidated Financial Statements. B) Pro forma cash flow statements of RV Paris RV Paris does not prepare a cash flow statement. The pro forma cash flow statements of RV Paris for the six months ended June 30, 2015 and for the year ended December 31, 2014, were prepared on the base of available information in the RV Paris Financial Statements and RV Paris Interim Financial Information. These statements are not subject to any audit procedures and were prepared based on French accounting standards, adjusted and reclassified to align the information to IFRS as applied by Tod s Group. Unaudited pro forma consolidated cash flow statement for the six months ended June 30, 2015 of RV Paris 50

51 RV Paris Pro forma Adjustments IFRS Reclassifications IFRS Adjustments Unaudited pro forma RV Paris (in Euro thousands) B.1 B.2 B.3 Total B Profit / (loss) for the period 1,592 - (531) 1,061 Amortisation, depreciation, revaluation and write - downs Other non monetary expenses / (income) Cash flow (a) 2, ,029 Change in current assets and liabilities: Trade receivables (120) - - (120) Other current assets - (50) - (50) Inventories (330) - - (330) Tax receivables (36) 44-8 Trade payables Other current liabilities Tax payables 45 (44) - 1 Change in operating working capital (b) (357) (50) - (407) Cash flow from operations (c) = (a) + (b) 1,672 (50) - 1,622 Net investments in intangible and tangible assets (25) - - (25) Reduction (increase) of other non - current assets (1) - - (1) Cash flow generated (used) in investing activities (d) (26) - - (26) Cash flow generated (used) in financing (e) Cash flow generated (used) (i) = (g) + (h) 1,646 (50) - 1,596 Net cash and cash equivalents at the beginning of the period 992 (35) Net cash and cash equivalents at the end of the period 2,638 (85) - 2,553 Change in net cash and cash equivalents 1,646 (50) - 1,596 B.1) Unaudited cash flow statement RV Paris This column includes the RV Paris unaudited cash flow statement for the six months ended June 30, 2015, prepared on the base of available information in the RV Paris Unaudited Interim Financial Information, not subject to any audit procedures. B.2) IFRS Reclassifications This column includes the IFRS reclassifications relating to financial and tax receivables. B.3) IFRS Adjustments This column includes the release of deferred tax assets relating to tax losses carried forward. Unaudited pro forma consolidated cash flow statement for the year ended December 31, 2014 of RV Paris Space intentionally left blank] 51

52 RV Paris Pro forma Adjustments IFRS Reclassifications IFRS Adjustments Unaudited pro forma RV Paris (in Euro thousands) B.4 B.5 B.6 Total B Profit / (loss) for the period 81 - (27) 54 Amortisation, depreciation, revaluation and write - downs 1, ,683 Other non monetary expenses / (income) Cash flow (a) 1, ,764 Change in current assets and liabilities: Trade receivables (35) - - (35) Other current assets Inventories (1,725) - - (1,725) Tax receivables (10) (24) - (34) Trade payables Other current liabilities (17) - - (17) Tax payables Change in operating working capital (b) (1,311) 3 - (1,308) Cash flow from operations (c) = (a) + (b) Net investments in intangible and tangible assets (294) - - (294) Cash flow generated (used) in investing activities (d) (294) - - (294) Cash flow generated (used) in financing (e) Cash flow generated (used) (i) = (g) + (h) Net cash and cash equivalents at the beginning of the period 833 (38) Net cash and cash equivalents at the end of the period 992 (35) Change in net cash and cash equivalents B.4) Cash flow statement RV Paris This column includes the RV Paris cash flow statement for the year ended December 31, 2014, prepared on the base of available information in the RV Paris Financial Statements, not subject to any audit procedures. B.5) IFRS Reclassification This column includes the IFRS reclassifications relating to financial and tax receivables. B.6) IFRS Adjustments This column includes the release of deferred tax assets relating to tax losses carried forward. C) Accounting of the Pro Forma Transactions This column presents the lower cash outflow, attributable to royalties previously paid for brand Roger Vivier, net of the related tax effect. D) Intercompany transactions This column presents the intercompany elimination of the unrealized inventory margin with third parties, net of the related tax effect. E) Financing This column presents the effects, in terms of higher cash outflow, attributable to the drawdown of the Financing. 52

53 PRO FORMA INDICATORS PER SHARE OF TOD S GROUP The following table presents the main per share indicators at and for the six months ended 30 June, 2015 and for the year ended December 31, 2014 of Tod s Group, both for historical and pro forma information. (in Euro thousands, unless otherwise specified) Tod's Group At and for six months ended June 30, 2015 For the year ended Dec 31, 2014 Tod's Group Pro forma Tod's Pro forma unaudited pro adjustments (1) Group adjustments (1) forma Tod's Group unaudited pro forma Number of Tod's outstanding shares 30,609,401 2,484,138 33,093,539 30,609,401 2,484,138 33,093,539 Profit / (loss) of the Group 50,379 3,304 53,683 97,114 2,816 99,930 Tod's weighted average ordinary shares outstanding - basic 30,609,401 2,484,138 33,093,539 30,609,401 2,484,138 33,093,539 - diluted 30,609,401 2,484,138 33,093,539 30,609,401 2,484,138 33,093,539 Earnings per share (in Euro) - basic 1.65 (0.03) (0.15) diluted 1.65 (0.03) (0.15) 3.02 EBITDA per share (in Euro) - basic 3.37 (0.03) (0.17) diluted 3.37 (0.03) (0.17) 6.15 Equity per share (in Euro) - basic n.a. n.a. n.a. - diluted n.a. n.a. n.a. Increase / (Decrease) in liquidity per share in Euro - basic (0.27) 0.15 (0.12) (1.70) 0.21 (1.49) - diluted (0.27) 0.15 (0.12) (1.70) 0.21 Dividend per share in Euro 2.00 (0.15) (0.2) 2.50 (1) Tod s will issue 2,484,138 ordinary shares in connection with the Capital Increase of Euro 207,500 thousand. Earnings per share (in Euro) Earnings per share, calculated as the net profit of the group divided by the number of Tod's weighted average ordinary shares outstanding in the period, decreases by Euro 0.03 primarily due to the pro forma effect of the issuance of new ordinary shares of Tod s in connection with the Capital Increase. This effect is partly offset by the pro forma increase of the net profit of the group related to the elimination of royalties historically paid to Roger Vivier, net of the increase in pro forma financial expenses, as previously described. EBITDA per share (in Euro) EBIDTA per share, calculated as EBITDA divided by the number of Tod's weighted average ordinary shares outstanding in the period, decreases by Euro 0.03 primarily due to the pro forma effect of the issuance of new (1.49 ) 53

54 ordinary shares of Tod s in connection with the Capital Increase. This effect is partly offset by an increase in EBITDA related to the elimination of royalties historically paid to Roger Vivier. Equity per share (in Euro) Equity per share, calculated as Equity divided by the number of Tod's weighted average ordinary shares outstanding in the period, increases by Euro 4.46 primarily due to the pro forma impacts of the Capital Increase, partly offset by the pro forma increase in the average number of the Tod s ordinary shares. Increase / (Decrease) in liquidity per share (in Euro) The Increase / (Decrease) in liquidity per share, calculated as the variation in liquidity divided the number of Tod's weighted average ordinary shares outstanding in the period, increases by Euro 0.15, mainly due to the pro forma impact of the consolidation of liquidity generated by RV Paris in the period and the pro forma elimination of cash flows related to royalties historically paid to Roger Vivier. These effects are partly offset by the decrease in liquidity due to an increase in pro forma financial expenses related to the financing granted to Tod s by Crèdit Agricole Corporate Investment Bank, Milan office, and Mediobanca- Banca di Credito Finanziario S.p.A., and by the pro forma increase of Tod s ordinary shares. Dividend per share (in Euro) Dividend per share, calculated as Tod s declared dividends in the relevant period divided by the number of Tod's weighted average ordinary shares outstanding in the period, decreases by Euro 0.15, due to pro forma increase in the average number of Tod s ordinary as a result of the Capital Increase. 54

55 CHAPTER 6 - THE ISSUER AND THE GROUP S OUTLOOK 6.1 General information on the Issuer s business performance from the reporting date of the last approved financial statements In 2015 too, a feature of the global market of luxury goods was a continuing sales volatility, which caused conflicting international market performances, with trends that changed even sudden. In this situation, the Group reported a good performance, which recorded an increase of 6.2% in the first nine months of the financial year compared to the same period in the previous year. There were positive performances in all geographic areas, even at constant exchange rates, with the exception of the Greater China area, where it is still clear the domestic demand decline, due to the propensity to consumption of Chinese customers, who prefer, at this moment, to tend towards emotional shopping linked to tourism. In the first nine months of 2015, the Group generated sales totalling Euro million, while, for the same period of 2014 they were Euro million. Average exchange-rate effect was positive: indeed, maintaining exchange rates constant, sales revenues would have been Euro million. The turnover for the third quarter amounted to Euro million, with an increase of 3.1% compared to the third quarter of An excellent performance was recorded by all the brands, and in particular by Roger Vivier, which reported revenues of Euro million, with an increase of 20.1% (+8.9% at constant exchange rates) compared to the same period in the previous year, thus confirming the positive trend in the performance of the Brand at global level. In the first nine months EBITDA and EBIT amounted to Euro million and Euro million, respectively, equal to 20.3% and 15.6% of consolidated revenues. At constant exchange rates they would amount to Euro million and Euro million, respectively, accounting for 19.4% and 14.7% of sales. Confirmed the excellent profitability at a gross margin level, generated by the consolidated positioning of the Group brands in the most exclusive luxury segment, with a slight decrease compared to the first half-year, which was driven by a different mix of revenues in the last quarter of the period. Such profitability mitigated the impact on operating margin of the physiological growth registered by operating costs, as a consequence of the DOS network expansion strategy (the number of DOS increase during the period from October 2014 to September 2015 is 25). At 30 September 2015 the net financial position was positive for Euro 78.7 million (Euro million at 31 December 2014), including cash and cash equivalents of Euro million and liabilities of Euro 84.2 million, of which Euro 60.9 million for medium/long-term exposures. Gross of dividends distributed in the first nine months of 2015, the net financial position would amount to Euro million (+Euro 10 million compared to the value posted at the beginning of the year ). Financial liabilities include two new loan agreements signed by Tod s in the first half-year of 2015, for an amount of Euro 25.0 million each, which will be reimbursed paying 16 quarterly instalments and in one single payment at the end of the fourth year. The cash flows for the period were affected by the significant effect of the uses of working capital, due to a temporary increase in the exposure to customers and to the accumulated stock of the current autumn-winter collection at the directly-operated stores; generally, both these components will free up cash resources in the last quarter of the year. 55

56 In the first nine months of 2015 capital expenditure totalled Euro 38.3 million compared to Euro 49.5 in the period ended 30 September Capex used for the direct distribution network amounted to Euro 21.4 million (Euro 23.9 million at 30 September 2014), primarily used for both new DOS openings and for renovation activities of the existing stores. For more information on the performance of operations in the first nine months of 2015, reference should be made to the Interim Report on Operations at 30 September 2015, which is available in the section on Financial Data in the Company s website at Information on reasonable forecasts of the results for the current financial year In the first nine months of 2015, and in particular in the third quarter, the Group achieved good results, which are even more meaningful considering the weakness of some important markets for luxury goods. There is always more certainty about the goodness of the multi-brand Group s strategy, based on a portfolio of strong and distinct brands, with an offer of hand-made high quality products, recognizable and having all the elements of the Italian lifestyle. In consideration of the current market trend, it is believed that the Group may achieve positive results for the entire current financial year too, substantially in line with those posted in the previous year. On the other hand, taking account of the sector and of the markets in which the Group operates and of the underlying exogenous risks with respect to the Group (risks associated with consumer preferences, exchange risks and risks on receivables, demand fluctuations, competition), there is no guarantee that the Company and the Group s historical data and performance may be fully representative of future results and financial conditions. * * * * STATEMENT OF THE MANAGER CHARGED WITH PREPARING THE COMPANY S FINANCIAL REPORTS The undersigned Rodolfo Ubaldi, in his capacity as the Manager charged with preparing the financial reports of Tod s S.p.A., hereby declares, pursuant to Article 154-bis, paragraph 2, of Legislative Decree no. 58 of 24 February 1998, that the accounting information reported in this Information Document, other than pro forma information, is consistent with the documentary evidence, the corporate books and the accounting records. 56

57 ANNEX A OPINION OF THE COMMITTEE OF INDEPENDENT DIRECTORS AND RELATED ADDENDUM

58 (COURTESY TRANSLATION FOR THE CONVENIENCE OF INTERNATIONAL READERS. FOR THE OFFICIAL DOCUMENTS PLEASE REFER TO THE ITALIAN VERSION) To the members of the Board of Directors of TOD S S.p.A. Re: opinion rendered by the Committee of Independent Directors of TOD S S.p.A. pursuant to Article 8.1 of Consob Regulation no /2010 (as amended by resolution no /2010) and to the Procedure on Related-Party Transactions (RPT) adopted by TOD S. WHEREAS A. This opinion (the RPT Opinion ) is rendered to the Board of Directors of TOD S S.p.A. ( TOD S or the Company ) with reference to the related-party transaction of greater importance which is described below (the Transaction ) pursuant to Article 8, paragraph 1, letter c), of the Regulation bearing provisions governing related-party transactions (as adopted by Consob [Italian Securities and Exchange Commission] by resolution no of 12 March 2010, as amended by resolution no of 23 June 2010, the RPT Regulation ) and to Section 5 of the Procedure on Related-Party Transactions, which was approved by the Board of Directors of TOD S on 11 November 2010 (the RPT Procedure ); B. The Committee of Independent Directors (the CoID ) is composed of the following members: a. Vincenzo Manes (Chairman); b. Romina Guglielmetti; c. Pier Francesco Saviotti, who are all independent Directors of the Company; C. The Transaction constitutes a related-party transaction, as Gousson Consultadoria & Marketing S.r.l. ( GC ) is owned by Diego Della Valle & C. S.r.l., which is headed by Directors Diego and Andrea Della Valle and is owned by the former, who is the Chairman and Director of TOD S, as well as the majority shareholder pursuant to Article 93 of Legislative Decree no. 58/1998 (the TUF, Testo Unico della Finanza, Consolidation Act on Finance); D. The Transaction, as detailed below, consists of the acquisition by the TOD S Group from the related party GC of: 1

59 i) the Roger Vivier brand and others that are currently regulated by a licence agreement with the Company, which will expire on 31 December 2016 (the Brand ); ii) the entire share capital of Roger Vivier Paris SAS (the Shareholding ), a company incorporated under French law, with registered office in Paris (France), at 29 Rue du Faubourg Saint-Honoré, which holds the lease agreement relating to the Roger Vivier flagship store located in Paris, hereinafter collectively referred to as the Assets ; E. The Transaction provides for: (a) the cash payment of a consideration of: - Euro 415 million, plus VAT, for the Brand (the Brand Price ); - Euro 20 million for the Shareholding (the Shareholding Price ); and, then, a total consideration of Euro 435 million (the Consideration ); (b) the reinvestment in half the Brand Price (and, then, Euro million) on the part of GC through the subscription of new TOD S shares arising from a capital increase reserved for this purpose (the Reinvestment ). The steps in the Transaction are summarized below: i) The transfer of the Brand from GC to Partecipazioni Internazionali S.r.l. ( PI ), a wholly-owned subsidiary of TOD S, against the payment of the Brand Price. The funds necessary for the payment of the Brand Price will be provided to PI by TOD S, which will subscribe a capital increase in PI in an amount equal to the Consideration; ii) The transfer of the Shareholding from GC to Roger Vivier France SAS ( RV France, a wholly-owned subsidiary of PI) against the payment of the Shareholding Price. The funds necessary for the payment of the Shareholding Price will be provided to RV France by PI; iii) A capital increase in TOD S, excluding the option right reserved for GC for the purposes of the Reinvestment; F. The Transaction is of greater importance pursuant to Article 4 of the RPT Regulation and Section 1 of the RPT Procedure, as: a) the ratio between the Transaction countervalue and the Company s capitalisation as at 30 September 2015 exceeds the threshold of 5%; b) the ratio between i) the Shareholding s total 2

60 assets and the Brand Price and ii) the Group s total consolidated assets as at 30 September 2015 exceeds the threshold of 5%; i) that it held meetings: THE COMMITTEE OF INDEPENDENT DIRECTORS, HAVING ACKNOWLEDGED on 6 August 2015, to take over the Transaction, as well as to delegate powers, among other things (pursuant to Section 5 of the RPT Procedure), to Independent Director Romina Guglielmetti to participate in the meetings between the parties so as to provide the Committee with full, appropriate and timely information on the progress of the negotiations on the Transaction; on 7 and 15 September 2015, to start the selection of the independent financial advisor, exercising the right provided for in Article 7 of the RPT Regulation and Section 5 of the RPT Procedure. On these occasions some requirements for this position were also set out, which are described below: high professional standing; an adequate track record in similar transactions; a preferably international background; and the absence of relationships that might compromise independence. Of these, the following requirements were considered to be important: that there should be no relation, in economic, capital and financial terms, with (a) the companies involved in the Transaction; (b) their controlling entities; (c) the subsidiaries of TOD S; (d) the directors working for the companies referred to in letters (a), (b) and (c) above; on 21 September 2015, among other things, to select (from 6 candidates) the independent financial advisor appointed to issue a fairness opinion to the CoID on the consideration payable for the Transaction in the event of a positive outcome of the negotiations (the Fairness Opinion ). Finally, this task was entrusted to Citigroup (the Independent Advisor ); on 1 and 29 October, to provide updates on the activities and analyses conducted by the Independent Advisor in relation to the Transaction; on 7 November, to consider the state of the negotiations and to provide the latest information on the activities and analyses conducted in relation to the Transaction by the Independent Advisor and by Riccardo Perotta, an 3

61 Associate Professor from Bocconi University, who is the independent expert whom the Board of Directors of TOD S appointed to prepare a valuation report on the Brand and the activities related thereto (the Valuation Report ), and by the legal counsels involved in the Transaction (the law firms Bonelli Erede and Simmons & Simmons); on 12 November, to receive the Fairness Opinion and the Valuation Report, as well as to define the RPT Opinion, having regard to: a) the Company and the Group s interest in completing the Transaction; b) its advantage; and: c) the material fairness of the related terms and conditions; ii) it was involved by the management of TOD S in all the phases of the Transaction, including the information-gathering and negotiation stages, also through the direct participation of Director Guglielmetti in the meetings arranged for this purpose by the parties; iii) it received a full flow of information from the competent offices of TOD S and from its legal and financial advisors, as well as all required clarifications and additional information, including information regarding legal and financial due diligence operations; iv) it was assisted in the performance of its duties by the Independent Advisor; v) it examined the following documents, among others: the draft agreements regulating the Transaction exchanged from time to time between the parties; the explanatory notes on the Transaction prepared by the Company and made available to the Board of Directors; the draft disclosure document referred to in Article 5 of the RPT Regulation; the findings of the Independent Advisor s valuation, on the basis of the valuation methods described in detail in the documents which it delivered to the CoID and which were illustrated at the meetings held for this purpose; the draft directors report prepared pursuant to Article 2441, paragraph 6, of the Italian Civil Code and Article 72 of Consob Regulation no /1999, as amended, Annex 3A, Chart 2; the Fairness Opinion attesting to the fairness of the consideration, which was issued on 12 November 2015; 4

62 the Valuation Report; HAVING NOTED I. in relation to the Company s interest in completing the Transaction, that, from the information gathered, it is clear that the acquisition of the Brand is of great strategic importance to the TOD S Group, in that, owing to its position at the top of the footwear and leather goods manufacturing sector, the Transaction would enable the Group to complete its range of products, thus penetrating a market that is more difficult to enter with the brands that are already owned by the Group, and, accordingly, to improve its expected results. In fact, the gradual increase in the sales generated by Roger Vivier-branded products whose outstanding feature is an exclusiveness that has made them the main symbols of the style and success of the TOD S Group in the luxury market means that the Transaction represents an important opportunity for the growth and development of the Group s business. Furthermore, the final acquisition of ownership of the Brand would enable the TOD S Group to determine the strategies for its use in full independence, thus avoiding uncertainties and potential critical issues surrounding periodic negotiations on the licence agreement. It is reasonable to believe that the renewal of the licence, which is an alternative to the completion of the Transaction, would give rise to an actual risk of: (i) an upward adjustment to the share of royalties to be paid, also considering that the current proportion between the income generated by the licensor and that generated by the licensee is considerably different from the proportion between the values generally attributable to a brand and to a business unit; (ii) the provision for a guaranteed minimum of (a) sales and royalties, and/or (b) store openings (according to the store roll-out plan agreed as per contract), as well as the provision for (c) a guaranteed minimum of promotion and advertising activities. A possible loss of the Brand would have an immediate adverse effect on the investments that the Group has made in order to provide itself with the resources required for the development of its sales including the activities carried out in support of the present network of stores and its planned expansion. 5

63 As to the Shareholding, Roger Vivier Paris SAS holds, as mentioned, the lease agreement of the Roger Vivier store located in Paris (expiring on 31 January 2021), which is the historical Roger Vivier boutique and thus the flagship store of the Brand. Therefore, the Company believes that operating the store and the Brand directly would be a strategic move on the TOD S Group s part.. Therefore, the Committee believes that the Transaction is to the interest of the Company; II. in relation to the advantage of completing the Transaction, that: i) from the Fairness Opinion (to which reference should be made) it appears that Citigroup has adopted, among other things, the methods of: a) discounted cash flow ( DCF ) and analysis based on comparable listed companies in order to estimate the value of the Roger Vivier business; b) DCF for the Shareholding; c) DCF and analysis of historical and present TOD s stock prices with reference to the Reinvestment. The Independent Advisor has also considered: (i) an analysis of comparable transactions and listed companies for TOD S, as well as the target prices published by the research analysts for TOD S; (ii) any other potential impact of the Transaction, such as, for example, the net present value of the royalty costs that TOD S would save when acquiring the Brand and any related tax effect; ii) from the Valuation Report (to which reference should be made) it appears that Professor Perotta has adopted the DCF method both to estimate the value of the Roger Vivier business and to assess the value of the Brand in comparing alternative scenarios (with-or-without type), as well as to value the Shareholding. In estimating the value of the Brand, Professor Perotta also uses the differential margins and royalties methods, in addition to the DCF method of comparing alternative scenarios (with-or-without type); he has also taken into account, in applying the income approach (direct capitalisation), the differential margins and of the so-called tax amortization benefit ( TAB ). Therefore, given that the Consideration is supported by the conclusions drawn in the Fairness Opinion and the Valuation Report, the Committee believes that the requirements for deeming the Transaction of advantage to the Company are met; 6

64 III. in relation to the material fairness of the terms and conditions governing the Transaction, the Committee has paid particular attention to: (a) as to the acquisition of the Assets: (i) the valuation results achieved by the Independent Advisor, on the basis of the valuation methods described in detail in the documents which it delivered to the CoID and which were illustrated at the meetings held for this purpose, and the Fairness Opinion; (ii) the Valuation Report; (iii) the draft master agreement; (iv) the explanatory notes on the Transaction prepared by the Company and made available at the Board of Directors meetings; (b) as to the Reinvestment: (i) the valuation results achieved by the Independent Advisor, on the basis of the valuation methods described in detail in the documents which it delivered to the CoID and which were illustrated at the meetings held for this purpose, and the Fairness Opinion; (ii) the draft directors report prepared pursuant to Article 2441, paragraph 6, of the Italian Civil Code and Article 72 of the Issuers Regulation, Annex 3A, Chart 2. Given that: - the issue price of the TOD S shares serving the capital increase reserved for GC for the Reinvestment will have to comply with the requirements set out in Article 2441, paragraph 6, of the Italian Civil Code, i.e. it will have to be calculated on the basis of the equity of TOD S, taking account of the stock price performance in the last half-year; - the fairness of the issue price must be confirmed, pursuant to law, by a special report prepared by the independent auditors (the Independent Auditors Report ); - the effectiveness of the master agreement is subject to the condition precedent of the issue of the Independent Auditors Report, which must confirm the fairness of the issue price of the shares; from the abovementioned examination it appears that: 7

65 i) the documentation relating to the Transaction is accurate and the underlying process is characterised by a high degree of traceability; ii) the methods and formulas adopted by the experts involved in the Transaction in order to assess the Assets are exhaustive and complete; iii) the Reinvestment mechanism is consistent with the Transaction; iv) the process followed until now with reference to the Transaction and, in particular, for assessing the fairness of the Consideration and, in general, the fairness of the contract provisions, appears to be correct and compliant with the applicable regulations; HAVING ALSO CONSIDERED that the Independent Advisor and Professor Riccardo Perotta have attested to the fairness of the Consideration and that it has taken account of the documentation and opinions they have provided, HEREBY GIVES ITS UNANIMOUS FAVOURABLE OPINION to the effect that the Transaction is to the interest of the Company and is economically advantageous and that its terms and conditions are legally and substantively fair. The Committee is therefore of the opinion that the Transaction should be completed. Milan, 12 November 2015 The Committee of Independent Directors Vincenzo Manes Romina Guglielmetti Pier Francesco Saviotti 8

66 (COURTESY TRANSLATION FOR THE CONVENIENCE OF INTERNATIONAL READERS. FOR THE OFFICIAL DOCUMENTS PLEASE REFER TO THE ITALIAN VERSION) To the members of the Board of Directors of TOD S S.p.A. Re: addendum to the opinion rendered by the Committee of Independent Directors of TOD S S.p.A. pursuant to Article 8.1 of Consob Regulation no /2010 (as amended by resolution no /2010) and to the Procedure on Related-Party Transactions (RPT) adopted by TOD S. WHEREAS A. In view of the Board of Directors meeting due to take place on 15 November 2015, the Committee of Independent Directors (the CoID ) rendered its opinion (the Opinion ) to the Board of Directors of TOD S S.p.A. ( TOD S ) on 12 November 2015, with reference to the related-party transaction of greater importance described therein (the Transaction ) pursuant to Article 8, paragraph 1, letter c), of the Regulation bearing provisions governing related-party transactions (as adopted by Consob [Italian Securities and Exchange Commission] by resolution no of 12 March 2010, as amended by resolution no of 23 June 2010, the RPT Regulation ) and to Section 5 of the Procedure on Related- Party Transactions, which was approved by the Board of Directors of TOD S on 11 November 2010 (the RPT Procedure ); B. The abovementioned Board of Directors meeting was adjourned to 22 November 2015 following the tragic terrorist events that occurred in Paris on 13 November 2015; C. As a result of this adjournment, the CoID deemed it appropriate to ask Citigroup, the independent financial advisor appointed to issue a fairness opinion to the CoID on the consideration due for the Transaction (the Independent Advisor ), to update the fairness opinion issued on 12 November 2015; D. On 21 November the Independent Advisor issued to the CoID a fairness opinion updated at 20 November 2015, as well as in relation to the most recent performance of the TOD S Group s market and results at 30 September 2015, while the contents remained substantially unchanged with respect to the fairness opinion issued on 12 November 2015; 1

67 E. As of today s date, the CoID held a meeting to examine the fairness Opinion as updated and established that the amendments made on 20 November 2015 do not alter the conclusions on the fairness of the consideration agreed by the parties for the Transaction, which had already been expressed by the Independent Advisor on 12 November 2015; THE COMMITTEE OF INDEPENDENT DIRECTORS HAVING ACKNOWLEDGED that the conclusions reported in the Opinion have remained unchanged and, then, the requirements are met for deeming that the Transaction is: (a) to the interest of the Company; (b) advantageous; and (c) substantially fair, HEREBY UPDATES the Opinion rendered on 12 November 2015, by attaching hereto the fairness opinion dated 21 November, which replaces that issued by the Independent Advisor on 12 November Milan, 22 November 2015 The Committee of Independent Directors Vincenzo Manes Romina Guglielmetti Pier Francesco Saviotti 2

68 ANNEX B FAIRNESS OPINION ISSUED BY CITIGROUP GLOBAL MARKETS LTD AND RELATED COURTESY TRANSLATION

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78 IL PRESENTE DOCUMENTO COSTITUISCE UNA TRADUZIONE IN LINGUA ITALIANA DEL PARERE REDATTO DA CITIGROUP GLOBAL MARKETS LIMITED IN FAVORE DEL COMITATO DEGLI AMMINISTRATORI INDIPENDENTI DI TOD S S.P.A., LA CUI VERSIONE UFFICIALE E STATA REDATTA UNICAMENTE IN LINGUA INGLESE. LA TRADUZIONE IN ITALIANO DI SEGUITO RIPORTATA È STATA PREDISPOSTA A PURO TITOLO DI CORTESIA. IL TESTO UFFICIALE IN LINGUA INGLESE PREVARRA IN CASO DI EVENTUALE DIVERGENZA CON, O OMISSIONI NELLA, TRADUZIONE ITALIANA. 21 Novembre 2015 Comitato degli Amministratori Indipendenti di Tod s S.p.A. Tod s S.p.A. Via Filippo Della Valle, Sant Elpidio a Mare (Fermo) Italia All attenzione del Comitato degli Amministratori Indipendenti di Tod s S.p.A.: Avete richiesto il nostro parere in merito alla congruità (fairness), da un punto di vista finanziario, per Tod s S.p.A. ( Tod s ) del Corrispettivo dell Operazione (come definito di seguito) dovuto in base ai termini e alle condizioni indicate nell accordo quadro (l Accordo Quadro ) di cui è proposta la sottoscrizione tra Tod s, Partecipazioni Internazionali S.r.l. ( PI ), Roger Vivier France SAS ( RVF e, congiuntamente a PI, gli Acquirenti ), ciascuna delle quali interamente controllata da Tod s, e Gousson Consultadoria & Marketing S.r.l. ( Gousson ). Come più compiutamente indicato nell'accordo Quadro, l operazione proposta (l'"operazione") prevede che (i) PI acquisti da Gousson la piena proprietà del marchio Roger Vivier e di altri marchi correlati (il "Marchio Roger Vivier") per un ammontare pari a Euro , e RVF acquisti da Gousson l'intero capitale sociale di Roger Vivier Paris SAS ("Roger Vivier Paris" e, insieme con il Marchio Roger Vivier, gli "Asset Roger Vivier") per un ammontare pari a Euro , che congiuntamente rappresentano quindi un ammontare pari a Euro (il "Prezzo d'acquisto"); e, allo stesso tempo, (ii) Gousson utilizzi una parte del Prezzo d'acquisto per la sottoscrizione e la liberazione di azioni ordinarie Tod s di nuova emissione, per un controvalore complessivo di Euro ,14 (le Nuove Azioni Tod s ), che Tod s intende emettere in favore di Gousson attraverso un aumento di capitale con esclusione del diritto di opzione in favore degli attuali azionisti di Tod s. Le Nuove Azioni Tod s e la parte del Prezzo d'acquisto che non sarà utilizzata da Gousson per la sottoscrizione e la liberazione delle Nuove Azioni Tod s, pari a Euro ,86, sono congiuntamente indicate come il "Corrispettivo dell Operazione". I termini e le condizioni dell Operazione contenuti dall'accordo Quadro prevedono, tra l altro, che Gousson paghi a Tod s un importo di Euro (il Pagamento Gousson ) in relazione al contratto di licenza esistente tra Gousson e Tod s relativo al Marchio Roger Vivier, datato 1 dicembre 2011 (il "Contratto di Licenza"), il tutto come meglio descritto nell'accordo Quadro. Comprendiamo che il Pagamento Gousson sarà eseguito nel contesto del rapporto contrattuale pre-esistente tra Gousson e Tod s disciplinato dal Contratto di Licenza e che, quindi, non fa parte del Corrispettivo dell'operazione. Ai fini del nostro parere, abbiamo esaminato una bozza datata 21 novembre 2015 dell Accordo Quadro e il Contratto di Licenza e abbiamo discusso gli aspetti commerciali, operativi e le prospettive degli Asset Roger Vivier e di Tod s con alcuni dirigenti, amministratori e altri rappresentanti di Tod s, così come con i membri del Comitato degli Amministratori Indipendenti di Tod s (il CAI ). Abbiamo esaminato alcune informazioni pubbliche di natura finanziaria e commerciale sugli Asset Roger Vivier e su Tod s, così come alcune stime e proiezioni finanziarie e altre informazioni e dati relativi agli Asset Roger Vivier e a Tod s che ci sono stati forniti da o che abbiamo discusso con la dirigenza di Tod s, ivi inclusi i membri della dirigenza di Tod s responsabili per la Business Unit Roger Vivier (la Business Unit Roger Vivier ). Abbiamo esaminato le condizioni finanziarie dell'operazione così come delineate nell Accordo Quadro e relative, tra l altro: ai risultati economici storici e prospettici e altre informazioni operative relative agli Asset Roger Vivier e a Tod s; alla situazione finanziaria relativa agli Asset Roger Vivier e a Tod s. Abbiamo preso in considerazione, per quanto pubblicamente disponibili, i termini finanziari di alcune operazioni che abbiamo considerato rilevanti per la valutazione dell Operazione e abbiamo analizzato alcune informazioni finanziarie e di mercato e altre informazioni pubblicamente disponibili relative alle attività di altre società che abbiamo reputato rilevanti per valutare quelle relative agli Asset Roger Vivier e a Tod s. Abbiamo inoltre esaminato i prezzi delle azioni,

79 TRADUZIONE DI CORTESIA IN LINGUA ITALIANA attuali e storici, e i volumi di scambio delle azioni ordinarie di Tod s. In aggiunta a quanto citato sopra, abbiamo condotto altri tipi di valutazioni e analisi, e abbiamo considerato altre informazioni ed alcuni criteri finanziari, economici e di mercato che abbiamo ritenuto rilevanti per giungere al nostro parere. Il rilascio del nostro parere è stato autorizzato dal nostro comitato per le fairness opinion. Nel fornire il nostro parere, abbiamo assunto e fatto affidamento, senza effettuare verifiche indipendenti, sulla accuratezza e la completezza delle informazioni, finanziarie e di altra natura, e di altri dati pubblici disponibili o fornitici o comunque rivisti da o discussi con noi e sulla dichiarazione da parte della dirigenza di Tod s di non essere a conoscenza dell esistenza di informazioni rilevanti che siano state omesse o che non ci siano state comunicate. Per quanto riguarda le stime e proiezioni finanziarie e le altre informazioni e dati relativi agli Asset Roger Vivier e a Tod s che ci sono stati forniti o che sono stati rivisti o discussi con noi, ci è stato comunicato dalla dirigenza di Tod s che tali stime e proiezioni e altre informazioni e dati sono stati ragionevolmente preparati su basi che riflettono le migliori stime attualmente disponibili e i giudizi della dirigenza di Tod s in riferimento alla futura performance finanziaria degli Asset Roger Vivier e di Tod s. Abbiamo discusso quanto sopra con il CAI e il CAI ci ha confermato di non essere a conoscenza di alcuna informazione rilevante che sia stata omessa o che non ci sia stata comunicata. In aggiunta, abbiamo assunto, con il vostro consenso, che non vi siano passività rilevanti relative agli Asset Roger Vivier che non ci siano state comunicate e in relazione alle quali non siano state appostate congrue riserve o altro genere di poste di bilancio. Non abbiamo esaminato il valore degli Asset Roger Vivier per Gousson. Abbiamo assunto, con il vostro consenso, che durante il processo volto ad ottenere le necessarie approvazioni, consensi e autorizzazioni da parte delle autorità regolamentari o di parti terze per l Operazione, non sarà imposto alcun ritardo, limitazione, restrizione o condizione che possa avere un effetto negativo su Tod s, gli Acquirenti, gli Asset Roger Vivier o l Operazione. Segnaliamo che ci è stata fornita una bozza dell Accordo Quadro e, pertanto, ai fini del presente parere, abbiamo assunto, con il vostro consenso, che (i) i termini e le condizioni dell'operazione come riflessi nella versione definitiva dell'accordo Quadro non differiranno per alcun aspetto significativo da quelli previsti nella bozza di Accordo Quadro da noi esaminata; e (ii) nessuno dei termini e delle condizioni contenute in qualsiasi altro accordo e nessuna delle delibere e delle azioni societarie, inclusa la documentazione ad esse connessa in relazione a, o previste da, l'accordo Quadro definitivo inciderà sul Corrispettivo dell Operazione o ridurrà i benefici dell Operazione per Tod s o per gli Acquirenti o avrà un effetto negativo su Tod s, gli Acquirenti, gli Asset Roger Vivier o l'operazione. Abbiamo anche assunto, con il vostro consenso, che l esecuzione dell'operazione avverrà in tutti i suoi aspetti principali in conformità con i termini indicati nella bozza di Accordo Quadro da noi esaminata, senza alcuna rinuncia, modificazione o alterazione di alcun termine, condizione o accordo significativo. Non abbiamo fatto né ci sono state fornite valutazioni indipendenti o stime delle attività o passività (potenziali e non) degli Asset Roger Vivier o di Tod s, né abbiamo condotto alcuna ispezione fisica delle proprietà o dei beni degli Asset Roger Vivier o di Tod s. Non ci è stato chiesto di partecipare, e non abbiamo partecipato, alla negoziazione o alla strutturazione dell Operazione. Il nostro parere riguarda solo la congruità (fairness), alla data odierna e da un punto di vista finanziario, per Tod s del Corrispettivo dell Operazione e non riguarda alcun altro aspetto o effetto dell Operazione ivi compresa, a titolo esemplificativo e non esaustivo, qualsiasi aspetto legale, fiscale, regolamentare contabile, o inerente alla forma o alla struttura dell'operazione o di qualsiasi altro accordo, patto o intesa stipulato in relazione a, o previsto da, l Operazione o altrimenti. Non esprimiamo alcun parere su quale sarà il valore di mercato delle Nuove Azioni Tod s quando effettivamente emesse secondo quanto stabilito dall Accordo Quadro o il prezzo al quale le azioni ordinarie Tod s verranno negoziate in ogni momento. Non esprimiamo alcun giudizio su, e il nostro parere non riguarda né la sottostante decisione commerciale di Tod s (o di ciascuno degli Acquirenti) di procedere (o non procedere) all Operazione o a qualsiasi altra operazione, né il relativo merito dell Operazione rispetto ad altre strategie commerciali alternative che potrebbero esistere per Tod s (o per ciascuno degli Acquirenti), né l effetto di qualsiasi altra operazione che Tod s (o ciascuno degli Acquirenti) potrebbe intraprendere. Non esprimiamo alcun giudizio su, e il nostro parere non riguarda, la congruità (finanziaria o di altra natura) dell importo, della natura o di qualsiasi altro aspetto di eventuali compensi a favore di dirigenti, amministratori o dipendenti di qualsiasi parte all Operazione o di qualsiasi altra categoria di tali soggetti, in connessione al Corrispettivo dell Operazione. Il nostro giudizio si basa necessariamente su informazioni a nostra disposizione, e sulle condizioni e circostanze finanziarie, di mercato e di altro genere esistenti alla data odierna. 2

80 TRADUZIONE DI CORTESIA IN LINGUA ITALIANA Siamo consapevoli che il nostro parere circa la congruità (fairness), dal punto di vista finanziario, nei confronti di Tod s del Corrispettivo dell Operazione viene richiesto dal CAI ai sensi del Regolamento Consob n del 12 marzo 2010, come successivamente modificato, relativo alle operazioni societarie con parti correlate ( Regolamento OPC ). Un breve riassunto di alcune analisi e metodologie di valutazione utilizzate ai fini dell elaborazione del parere è allegato come Appendice A. Questa sintesi non deve essere considerata, né rappresenta o intende rappresentare, una descrizione esaustiva di tutte le analisi effettuate. Ai fini del presente parere Citigroup Global Markets Limited ha agito come consulente finanziario del CAI e riceverà da Tod s un compenso per i servizi connessi alla predisposizione di questo parere. Nel corso della nostra attività ordinaria, la sottoscritta e le proprie consociate potranno negoziare attivamente o detenere titoli di Tod s e delle sue affiliate in conto proprio o per conto dei propri clienti e, di conseguenza, potranno in qualsiasi momento detenere una posizione lunga o corta su tali titoli. Inoltre, la sottoscritta e le proprie consociate (tra cui Citigroup Inc. e le sue affiliate) potranno continuare ad intrattenere rapporti con Tod s, Gousson e le rispettive società affiliate. I nostri servizi di consulenza e il parere espresso nel presente documento sono forniti a beneficio del CAI di Tod s (in quanto tale) per la sua valutazione della prospettata Operazione e non potranno essere utilizzati da alcun soggetto diverso dal CAI o per alcun altro motivo. Il nostro parere non è destinato o inteso a beneficio di nessun soggetto diverso dal CAI, né alcuna persona o soggetto diverso dal CAI beneficia di alcun diritto in base al presente documento. Il nostro parere non è inteso come e non costituisce una raccomandazione circa alcuno degli argomenti collegati alla prospettata Operazione. Salvo quanto espressamente richiesto ai sensi del Regolamento OPC, il nostro parere non può essere citato, riportato o altrimenti reso pubblico, in tutto o in parte, né può essere fatto pubblicamente alcun riferimento a Citigroup Global Markets Limited, senza il nostro previo consenso scritto. Il presente parere e il suo contenuto è soggetto alla lettera d incarico tra Tod s e Citigroup Global Markets Limited datata 12 ottobre Sulla base di e fermo restando quanto sopra, sulla base della nostra esperienza di investment bankers, della nostra attività come sopra descritta e su altri fattori che abbiamo ritenuto rilevanti, siamo del parere che, alla data odierna, il Corrispettivo dell Operazione sia congruo (fair), da un punto di vista finanziario, per Tod s. Cordiali saluti, CITIGROUP GLOBAL MARKETS LIMITED 3

81 TRADUZIONE DI CORTESIA IN LINGUA ITALIANA Appendice A Nella presente appendice viene fornito un breve riassunto di alcune delle analisi e delle metodologie di valutazione utilizzate per elaborare la Fairness Opinion a cui questa appendice fa riferimento (la "Fairness Opinion"). I termini usati in maiuscolo ma non definiti in questa appendice hanno il significato che ad essi si è attribuito nella Fairness Opinion. Il presente riassunto deve essere letto e interpretato nella sua interezza unitamente al testo integrale della Fairness Opinion. Questo riassunto non deve essere considerato, né rappresenta, una descrizione esaustiva di tutte le analisi effettuate e di tutti i fattori considerati in relazione alla Fairness Opinion. Nel preparare la Fairness Opinion, abbiamo effettuato una serie di analisi finanziarie e comparative, comprese quelle descritte di seguito. La preparazione di un parere di congruità (fairness opinion) è un processo analitico complesso che richiede varie determinazioni in merito sia ai metodi di analisi finanziaria più adeguati e pertinenti sia all'applicazione degli stessi alle circostanze specifiche, e, di conseguenza, un parere di congruità (fairness opinion) non è facilmente sintetizzabile. Sebbene in questo caso abbiamo reputato che l analisi dei flussi di cassa scontati (discounted cash flows) che abbiamo condotto sulla Business Unit Roger Vivier e su Roger Vivier Paris e l analisi dei prezzi di borsa attuali e storici di Tod s siano più rilevanti per la Fairness Opinion rispetto alle altre analisi effettuate, le conclusioni della Fairness Opinion si basano sui risultati di tutte le analisi da noi effettuate e valutate nel loro insieme, e non abbiamo tratto, in modo isolato, conclusioni da o in relazione a un solo fattore o metodologia di analisi ai fini della predisposizione della Fairness Opinion stessa. Di conseguenza, riteniamo che le nostre analisi debbano essere considerate nel loro insieme e che selezionare una parte delle metodologie e dei fattori, senza considerarle nella loro interezza, potrebbe creare un quadro fuorviante o incompleto dei processi alla base delle nostre analisi e della Fairness Opinion. Ai fini della nostra analisi, tenendo anche conto del fatto che il Contratto di Licenza prevede un termine definito ed è soggetto ai rischi connessi alla rinegoziazione e al mancato rinnovo, abbiamo ritenuto, e ciò in conformità con l orientamento espresso dalla dirigenza di Tod s, che il valore del Marchio Roger Vivier, nel contesto delle attuali intese commerciali tra Tod s e Gousson, sia sostanzialmente equivalente al valore dei flussi di cassa generati dalla Business Unit Roger Vivier, sull assunto che il valore degli asset di Tod s inerenti alla Business Unit Roger Vivier siano inestricabilmente legati alla disponibilità dei diritti di utilizzo del Marchio Roger Vivier e che quindi ci si possa attendere che sostanzialmente tutto il valore generato dalla Business Unit Roger Vivier attraverso l utilizzo del Marchio Roger Vivier maturerebbe in favore di Gousson, in qualità di proprietario del Marchio Roger Vivier, nel caso in cui Tod s cessasse di avere la disponibilità del diritto di utilizzo del Marchio Roger Vivier. Nella preparazione della Fairness Opinion abbiamo eseguito, tra l altro, (i) un analisi dei flussi di cassa e un'analisi di società selezionate in relazione alla Business Unit Roger Vivier, (ii) un analisi dei flussi di cassa di Roger Vivier Paris, e (iii) un'analisi dei flussi di cassa e dei prezzi di borsa attuali e storici delle azioni ordinarie di Tod s. Abbiamo anche considerato alcune metodologie ulteriori, tra cui: (i) un analisi di operazioni selezionate; (ii) un'analisi di società selezionate in relazione a Tod s e dei prezzi di borsa obiettivo (target trading prices) per la negoziazione delle azioni ordinarie di Tod s così come pubblicati in ricerche sul titolo azionario da parte di analisti finanziari. Abbiamo anche esaminato altri potenziali effetti dell operazione, come ad esempio il valore attuale netto dei costi di royalties che Tod s risparmierebbe attraverso l acquisizione del Marchio Roger Vivier e il relativo impatto fiscale. Ai fini della Fairness Opinion, abbiamo preso in considerazione le tendenze del settore, le condizioni finanziarie, commerciali, economiche e di mercato ed altri elementi esistenti alla data della Fairness Opinion, molte delle quali non sono sotto il controllo di Tod s, degli Acquirenti o di Gousson. Nessuna società, attività o operazione, qui utilizzate a fini di comparabilità, è identica a Tod s, agli Asset Roger Vivier o all Operazione. Una valutazione di queste analisi non è del tutto matematica; al contrario, le nostre analisi hanno richiesto complesse considerazioni e valutazioni circa le caratteristiche finanziarie ed operative, così come circa altri fattori, che possono avere un impatto sul valore di acquisto, sul valore di borsa o su altre valutazioni delle società e delle operazioni da noi analizzate. 4

82 TRADUZIONE DI CORTESIA IN LINGUA ITALIANA Le stime contenute nelle nostre analisi e gli intervalli di valutazione derivanti da una qualsiasi metodologia specifica non sono necessariamente indicativi dei valori effettivi né in grado di anticipare risultati e valori futuri, che potrebbero essere significativamente più o meno favorevoli di quelli suggeriti dalle suddette analisi. Inoltre, le analisi relative al valore delle attività o dei titoli non pretendono di essere valutazioni o stime dei prezzi ai quali le attività o i titoli stessi possano essere effettivamente venduti o acquistati. Di conseguenza, le stime usate, e i risultati ottenuti tramite le nostre analisi sono intrinsecamente soggetti a notevole incertezza. Salvo quanto diversamente indicato e nella misura in cui basate su informazioni di mercato, le informazioni quantitative che seguono si basano su informazioni di mercato esistenti al 20 novembre Business Unit Roger Vivier - Analisi dei Flussi di Cassa Scontati (discounted cash flows) Abbiamo effettuato un analisi dei flussi di cassa scontati (discounted cash flows) della Business Unit Roger Vivier, analisi finalizzata a stimare il valore implicito di una società o attività attraverso il calcolo del valore attuale dei flussi di cassa futuri operativi (unlevered), al netto delle imposte, stimati dell impresa stessa durante il periodo di proiezione e il valore finale (terminal value) di quella società alla fine del medesimo periodo di proiezione. Abbiamo calcolato il valore attuale atteso dei flussi di cassa operativi (unlevered), al netto delle imposte, che si prevede la Business Unit Roger Vivier possa generare nel corso degli esercizi che terminano dal 31 dicembre 2016, fino al 31 dicembre Gli ammontari stimati per gli anni fino al 31 dicembre 2020 si basano su alcune informazioni finanziarie, stime e previsioni relative alla Business Unit Roger Vivier, che ci sono state fornite dalla dirigenza di Tod s, ivi inclusi i membri della dirigenza di Tod s responsabili per la Business Unit Roger Vivier. Per loro natura, tali stime e previsioni includono elementi soggettivi che potrebbero essere inesatti e sono soggetti a un sostanziale grado di incertezza. Sulla base del nostro parere professionale e della nostra esperienza, abbiamo inoltre calcolato il valore finale (terminal value) implicito stimato della Business Unit Roger Vivier sulla base dell enterprise value dato dai multipli degli utili stimati prima degli interessi, imposte, svalutazioni e ammortamenti (Earnings Before Interest, Taxes, Depreciation and Amortization o EBITDA ), compresi nell intervallo tra 9,0x e 11,0x, e abbiamo quindi attualizzato alla data del 31 dicembre 2015 i flussi di cassa operativi (unlevered) al netto delle imposte e la stima del valore finale (terminal value) implicito utilizzando tassi di sconto compresi nell intervallo tra 11,5% e 12,5% e che riflettono una stima del costo medio ponderato del capitale (weighted average cost of capital) della Business Unit Roger Vivier. Non essendoci aggiustamenti da applicare al firm value della Business Unit Roger Vivier, l'intervallo dell enterprise value derivante da quest analisi coincide con il suo equity value. I risultati di questa analisi hanno prodotto un intervallo di equity value tra 605 milioni e 728 milioni. - Analisi di società selezionate Abbiamo effettuato un'analisi di alcune società selezionate, analisi finalizzata a stimare il valore implicito di una società attraverso l'analisi della valutazione pubblica e dei multipli di trading di società quotate assimilabili. Abbiamo esaminato le informazioni finanziarie e relative all attività della Business Unit Roger Vivier e delle società quotate selezionate indicate di seguito (collettivamente, le "Società Selezionate"), che comprendono società operanti a livello globale nel settore del c.d. soft luxury. Nessuna società quotata è identica o direttamente comparabile con la Business Unit Roger Vivier, ma queste società sono state selezionate perché, tra l altro, presentano alcune caratteristiche di natura finanziaria, organizzativa o aziendale che, a giudizio di Citi, sono sufficientemente comparabili a quelle della Business Unit Roger Vivier, o 5

83 TRADUZIONE DI CORTESIA IN LINGUA ITALIANA comunque rilevanti a fini comparativi. Le Società Selezionate sono state divise in due sotto-gruppi (Tier 1 e Tier 2), in base alla loro comparabilità, a giudizio di Citi, alla Business Unit Roger Vivier. Le società del Tier 1 sono (in ordine alfabetico): Brunello Cucinelli, Hermes, Jimmy Choo, Moncler, Prada, Salvatore Ferragamo. Le società del Tier 2 sono (in ordine alfabetico): Burberry, Coach, Hugo Boss, Kering, LVMH, Michael Kors, Ralph Lauren, Tod s. Abbiamo esaminato, fra le altre informazioni, l enterprise value delle Società Selezionate, calcolato come l equity value (basato sul prezzo di chiusura di mercato delle Società Selezionate al 20 novembre 2015) più il debito, al netto della disponibilità di cassa e di altre disponibilità liquide, e di altri aggiustamenti, espresso come multiplo dell EBITDA stimato, come multiplo del risultato prima degli oneri finanziari e delle imposte (earnings before interest and taxes, EBIT ) stimato e come multiplo dei ricavi per l anno I multipli osservati dell enterprise value sull'ebitda stimato per l anno 2016 per le Società Selezionate variano da un minimo di 5,4x ad un massimo di 17,6x (con una mediana di 10,4x e una media di 10,7x). Il sottoinsieme Tier 1 delle Società Selezionate varia da un minimo di 9,7x ad un massimo di 17,6x (con una mediana di 11,4x e una media di 12,9x). I multipli osservati dell enterprise value sull EBIT stimato per l anno 2016 delle Società Selezionate variano da un minimo di 6,2x ad un massimo di 21,7x (con una mediana di 13,2x e una media di 13,6x). Il sottoinsieme Tier 1 delle Società Selezionate varia da un minimo di 13,2x ad un massimo di 21,7x (con una mediana di 15,6x e una media di 16,5x). I multipli osservati dell enterprise value sui ricavi stimati per l anno 2016 delle Società Selezionate variano da un minimo di 1,3x ad un massimo di 6,3x (con una mediana di 2,2x e una media di 2,5x). Il sottoinsieme Tier 1 delle Società Selezionate varia da un minimo di 1,9x ad un massimo di 6,3x (con una mediana di 2,6x e una media di 3,3x). Sulla base del nostro parere professionale e della nostra esperienza, e prendendo in considerazione i multipli delle Società Selezionate, abbiamo quindi applicato (i) un intervallo selezionato di multipli dell enterprise value sull EBITDA stimato per l anno 2016 compreso tra 10,4x e 11,4x, così come derivato dalle Società Selezionate, all EBITDA stimato per il 2016 della Business Unit Roger Vivier, (ii) un intervallo selezionato di multipli dell enterprise value sull EBIT stimato per l anno 2016 compreso tra 13,2x e 15,6x, così come derivato dalle Società Selezionate, all EBIT stimato per il 2016 della Business Unit Roger Vivier, e (iii) un intervallo selezionato di multipli dell enterprise value sui ricavi stimati per l anno 2016 compreso tra 2,2x e 2,6x, così come derivato dalle Società Selezionate, ai ricavi stimati per il 2016 della Business Unit Roger Vivier. I dati finanziari delle Società Selezionate sono basati su stime di analisti di equity research, documenti pubblici e altre informazioni. I dati finanziari della Business Unit Roger Vivier sono basati su alcune informazioni finanziarie e stime relative alla Business Unit Roger Vivier che ci sono state fornite dalla dirigenza di Tod s, compresi i membri della dirigenza di Tod s responsabili per la Business Unit Roger Vivier, come sopra descritto. Questa analisi ha indicato un equity value implicito approssimato della Business Unit Roger Vivier compreso fra 583 milioni e 640 milioni sulla base dell EBITDA stimato al 2016, e fra 602 milioni e 711 milioni sulla base dell EBIT stimato al 2016, e 416 milioni e 491 milioni sulla base dei ricavi stimati al Roger Vivier Paris - Analisi dei Flussi di Cassa Scontati (discounted cash flows) Abbiamo effettuato un analisi dei flussi di cassa scontati (discounted cash flows) di Roger Vivier Paris. Abbiamo calcolato il valore attuale dei flussi di cassa operativi (unlevered), al netto delle imposte, che è stimato vengano generati da Roger Vivier Paris per gli anni che terminano al 31 dicembre 2016, fino al 31 dicembre Gli ammontari stimati per gli anni chiusi fino al 31 dicembre 2020 si basano su alcune informazioni, stime e previsioni finanziarie su Roger Vivier Paris, che ci sono state fornite dalla dirigenza di Tod s, compresi i membri della dirigenza di Tod s responsabili per la Business Unit Roger Vivier. Per loro natura, tali stime e previsioni includono elementi soggettivi che potrebbero essere inesatti e sono soggetti a un sostanziale grado di incertezza. 6

84 TRADUZIONE DI CORTESIA IN LINGUA ITALIANA Sulla base del nostro parere professionale e della nostra esperienza, abbiamo inoltre calcolato il valore finale (terminal value) implicito stimato per Roger Vivier Paris sulla base di tassi di crescita perpetua (perpetuity growth rates) che sono compresi nell intervallo tra 3,7% e 4,7%, e quindi attualizzato (al 31 dicembre 2015) i flussi di cassa operativi (unlevered), al netto delle imposte e il valore finale (terminal value) implicito stimato utilizzando tassi di sconto che sono compresi nell intervallo tra 11,5% e 12,5%, che riflette una stima del costo medio ponderato del capitale (weighted average cost of capital) di Roger Vivier Paris. L enterprise value risultante da quest analisi è stato poi soggetto ad aggiustamenti sulla base delle disponibilità di cassa e altre disponibilità liquide di Roger Vivier Paris, della disponibilità di certe perdite operative nette e di alcuni altri elementi, sulla base delle informazioni forniteci dalla dirigenza di Tod s. Questa analisi ha indicato un equity value compreso fra 17 milioni e 20 milioni. Tod s - Analisi dei Flussi di Cassa Scontati (discounted cash flows) Abbiamo effettuato un analisi dei flussi di cassa scontati (discounted cash flows) di Tod s. Abbiamo calcolato il valore attuale dei flussi di cassa operativi (unlevered), al netto delle imposte, attesi da Tod s per gli anni chiusi al 31 dicembre 2016, fino al 31 dicembre Gli ammontari stimati per gli anni chiusi fino al 31 dicembre 2020 si basavano su alcune informazioni, stime e previsioni finanziarie su Tod s, basate su equity researches fornite dalla dirigenza di Tod s e pubblicate dopo l annuncio dei risultati di Tod s relativi ai sei mesi chiusi al 30 giugno 2015, e fino al 20 novembre 2015, così come su discussioni con la dirigenza di Tod s. Per loro natura, tali stime e previsioni includono elementi soggettivi che potrebbero essere inesatti e sono soggetti a un sostanziale grado di incertezza. Sulla base del nostro parere professionale e della nostra esperienza, abbiamo inoltre calcolato il valore finale (terminal value) implicito stimato di Tod s sulla base dei multipli dell enterprise value sull'ebitda stimato che sono compresi nell intervallo tra 9,0x e 11,0x, e quindi attualizzato (al 31 dicembre 2015) i flussi di cassa operativi (unlevered), al netto delle imposte e il valore finale (terminal value) implicito stimato utilizzando tassi di sconto che sono compresi nell intervallo tra il 9,25% e il 10,25%, che riflette una stima del costo medio ponderato del capitale (weighted average cost of capital) di Tod s. L enterprise value risultante da quest analisi è stato poi soggetto ad aggiustamenti sulla base dell'indebitamento netto di Tod s 2015, delle partecipazioni in società collegate, delle passività pensionistiche e di alcuni altri elementi, in base alle informazioni contenute nei bilanci pubblici di Tod s o nelle previsioni finanziarie sopra descritte. Questa analisi ha indicato un equity value compreso fra milioni e milioni. L equity value implicito per azione è stato calcolato dividendo tale equity value per il numero di azioni ordinarie Tod s emesse al 20 novembre Questa analisi ha indicato un equity value implicito per azione compreso tra 73,6 e 89,1. - Analisi dei Prezzi di Borsa Citi ha analizzato i prezzi di chiusura storici delle azioni ordinarie di Tod s nel corso dei dodici mesi immediatamente precedenti al 20 novembre 2015, identificati come il periodo anteriore all annuncio dell Operazione più pertinente ai fini del rilascio della nostra Fairness Opinion, tenendo conto del prezzo medio ponderato per i volumi scambiati (volume weighted average price) per azione ordinaria durante il periodo di uno, tre, sei e dodici mesi immediatamente precedenti al 20 novembre, Questa metodologia ha indicato un prezzo per azione ordinaria di Tod s compreso tra 78,1 e 83,5. 7

85 ANNEX C VALUATION REPORT PREPARED BY PROFESSOR RICCARDO PEROTTA IN RELATION TO THE ROGER VIVIER BRAND AND RELATED OPERATIONS AND LETTER DATED 21 NOVEMBER 2015

86 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University Via Conservatorio, Milan Telephone Telefax REPORT ON THE VALUATION OF THE Roger Vivier BRAND AND ASSOCIATED BUSINESS ACTIVITIES (Participation in the company Roger Vivier Paris S.a.s.) (COURTESY TRANSLATION FOR THE CONVENIENCE OF INTERNATIONAL READERS. FOR THE OFFICIAL DOCUMENTS PLEASE REFER TO THE ITALIAN VERSION)

87 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University CONTENTS 1. Foreword. Subject and purpose of this report. page 3 2. The documentation used. page 4 3. The Roger Vivier business and the plan page RV Paris sas and the plan page 6 4. Preliminary considerations with regard to approach page Brief description of the main valuation criteria generally used for the valuation of businesses and participations. page Brief description of the main valuation criteria generally used for the valuation of brands. page The choice of the criteria used for valuation of the Roger Vivier business, the brand and the French company RV Paris sas page Discounted Cash Flow. page Brand valuation: the margin differential approach page Brand valuation: the with/without comparative scenario approach page Brand valuation: the royalty rate method page Brand valuation: Tax Amortization Benefit (TAB) page The valuation of the Roger Vivier business page The valuation of the Roger Vivier brand page The margin differential model page Tax Amortization Benefit (TAB) page The with or without comparative scenario valuation page The royalty method page The independent analysts' estimates page Summary of the brand valuation results obtained page The valuation of the participation in RV Paris sas page Conclusions. page 27 2

88 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University 1. Foreword. Subject and purpose of this report. I, Riccardo Perotta, Associate Professor of Methods and Quantitative Accounting at Bocconi University, Milan, and a chartered accountant registered in Milan, was commissioned on 16 October 2015 by Tod s spa, with registered office at Sant'Elpidio a Mare (Fermo, Italy), via Filippo Della Valle, 1, VAT and corporate reg. no. FM (hereinafter Tod s or the Company) to draw up an estimate establishing the value of the Roger Vivier brand and associated business activities (in particular the participation in the French company Roger Vivier Paris s.a.s), currently the property of Gousson Consultadoria e Marketing s.r.l. (hereinafter Gousson). The valuation was requested in order to guide the Board of Directors in estimating the value to be assigned to these assets during a possible acquisition by Tod's (hereinafter also the "Company") or one of its controlled enterprises. The economic capital estimate is based on valuations and assumptions which I consider to be reasonably appropriate, also with reference to Italian and international practice, and was produced on the basis of the information received. The valuations were produced with the aid of forecast data provided by the Company and obtained from the Roger Vivier business plan drawn up by the Company and already submitted to the Board of Directors for its consideration. By their very nature, these data are inevitably volatile and uncertain, since they may be affected by possible changes in macro-economic parameters and events beyond the company's control, and are based on a set of hypothetical assumptions concerning future events and actions of the governing bodies, which may not necessarily occur. In the performance of the valuation and the relative calculations, I used all the documentation necessary for the writing of the report as produced and supplied by the Company, on the assumption that it is truthful and correct. I therefore do not accept any responsibility with regard to the reliability, completeness or accuracy of the information, documents and data which I received. The entire valuation process is based on the assumption that the company will continue trading, following the practice for the valuation of concerns in operation. Therefore no consideration is given to the eventuality that the business relating to the development of the Roger Vivier brand might be liquidated. 3

89 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University 2. The documentation used. This valuation report refers to the date of 30 September 2015 and was drawn up on the basis of the following documentation supplied by Tod s: trademark licensing agreement between Gousson and Tod s S.p.a. dated 1 January 2012; Roger Vivier actual situation ; Roger Vivier business plan for (including 2015 forecast); breakdown of royalties ; RV Paris Sas business plan for ; applications for information on Roger Vivier by the Independent Directors; minutes of meeting of the Independent Directors' Committee on 6 August 2015; minutes of meeting of the Independent Directors' Committee on 7 September 2015 with relative enclosure; minutes of meeting of the Independent Directors' Committee on 15 September 2015; minutes of meeting of the Independent Directors' Committee on 21 September 2015 with relative enclosure; draft minutes of meeting of the Independent Directors' Committee on 1 October 2015; report on the correct construction and population of the mode used to draw up the business plan for the Roger Vivier brand for , issued by RCS Consulting, dated 4 November 2015; minutes of Advisors' meetings on 10 August 2015, 3 September 2015, 11 September 2015 and 18 September 2015; studies by the following analysts: Deutsche Bank dated 5 March 2014 and 5 November 2015; HSBC dated 5 December 2014 and 4 November 2015; Mirabaud dated 25 February 2015; Morgan Stanley dated 29 April 2015; Raymond James dated 7 October 2015; RBC dated 11 February 2015; Main First dated 4 November 2015; Gousson financial statements as of 31 December 2014; Tod's financial statements as of 31 December 2014; 4

90 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University I was also able to meet with the Management of Tod s, in the persons of Stefano Sincini (CEO) and Emilio Macellari (CFO), representing Tod's management and Camilla Schiavone, General Manager of maison Roger Vivier. 3. The Roger Vivier business and the plan Roger Vivier is a prestige French brand at the luxury end of the manufacture and marketing of footwear and leather goods. It is named after Mr Roger Vivier, described by Christian Dior as the Fabergé of footwear and the creator of the first stiletto heel in the 50s. This brand was purchased by Gousson in 2000 and then licensed to Tod's in Since then, the Tod's group has relaunched the brand, appointing Bruno Frisoni as its creative director. Roger Vivier is a business which was founded and developed in the footwear industry, and created models of historic importance for the brand, but it has also successfully expanded into other sectors, with top models of bags and other types of accessories, such as glasses, fragrances and jewellery, becoming one of the world's most exclusive, sophisticated accessory houses. The brand's exclusive image is also reflected in its extremely select and selective distribution growth strategy. The first flagship store was opened in Paris, run by Gousson itself (through its French subsidiary RV Paris sas) and subsequently, until 2008, the brand was only distributed through four more directly operated stores in New York, London, Hong Kong and Milan. The international growth of Roger Vivier really took off in 2009, when the Tod's group decided to expand the network of directly run stores and start distribution through a select group of independent distributors. Since that year, sales have grown greatly, increasing from 15 million in 2009 to million in Roger Vivier is now present in all the main luxury capitals, with a total of 35 singlebrand stores run by the Tod's group, in addition to the Paris flagship store. The Roger Vivier business plan (including the 2015 forecast), submitted to the Tod's Board of Directors, takes the economic forecasts for 2015 as its starting point 5

91 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University and is based on a series of assumptions that reflect a strategy of constant growth throughout the following three years. In the period covered by the plan, with regard to the retail side the intention is to open new stores in the USA, Korea, Japan, Europe and the Middle East, generating significant growth in sales in all the retail sectors where Roger Vivier operates. Considerable growth is also planned for the wholesale side of the business during the three years covered by the plan. Significant growth is also envisaged in e-commerce during the next few years, with sales forecast to top the million Euro mark in The geographical area where the Company is expected to grow strongly is the APAC (Asia Pacific) area, Korea, Japan and the Middle East. The construction and population of the model used for the drafting of the business plan for the Roger Vivier brand were analysed by RSC Consulting, which on 4 November 2015 issued a report stating that the plan's structure and source data were correct and that the inputs received regarding the economic growth prospects for the brand for were correctly included RV Paris sas and the plan. Roger Vivier Paris sas is a French company which owns the lease on the Paris flagship store. The Paris Roger Vivier store is at Rue du Faubourg Saint-Honorè, 29 and is managed by the same French company. The lease will expire in A business plan has also been drawn up for RV Paris Sas, starting on the basis of the 2015 forecast and extending over the next three years. The plan envisages that the French company will sell the unsold goods left in stock at the end of each season to the producer, Tod's S.p.a. The intermediate results are forecast to grow for each year of the plan, thanks in part to the stable trend in both variable and fixed costs, for which no significant changes are expected during the years covered by the plan. Apart from the data in the economic business plan of RV Paris Sas, for an analysis of the French company's situation particular consideration should be given to its net financial position (NFP) of about 2.8 million as of 30 June 2015, and the fact that as of 31 December 2014 the company recorded previous tax losses of 10.6 million Euro, which 6

92 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University can be deducted from future taxes to generate a nominal tax saving estimated at about 3.5 million, considering a tax rate of 33.33%. 4. Preliminary methodological considerations. The fulfilment of my mandate involves both the valuation of economic factors combined in the form of a company or corporate division and the estimation of the value of Gousson's chief intangible asset, the Roger Vivier brand. The valuation of the company is necessary in order to establish the financial value of the Roger Vivier business, and of the French subsidiary RV Paris sas Brief description of the main valuation criteria generally used for the valuation of businesses and participations. Established principles and practice have developed a large number of valuation methods, reflecting the different purposes for which corporate valuations are produced and the varying characteristics of the businesses under consideration. In particular, with regard to the different business valuation criteria available, the generally accepted principle is that "the characteristics of the business to be valued have ( ) considerable influence on the choice of method. For example, highly specific methods are required for loss-making companies or those with poor returns. The same applies to fast-growing companies, in which the methods chosen for forecasting cash flows are crucial. Similarly: companies with highly cyclic businesses require suitable procedures to standardise historic results and forecasts; companies operating in sectors in decline cannot base their expectations on past figures alone» (L. Guatri, Trattato sulla valutazione delle aziende, Egea, 1998, page 434). Furthermore, both established principles and practices allow the combined use of several criteria, one as main method and the others for verification purposes. Specifically, valuation approaches can be subdivided into four categories: asset-based, cash flow, combined and market methods. The following are the fundamental, common-knowledge elements which underlie the various types of valuation approaches. 7

93 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University Focusing on the balance sheet data of the corporate entity being valued, assetbased methods involve analytical criteria based on the attribution of market or current values to all the company's asset and liability balance sheet items, allowing its value to be assessed as the difference between the adjusted asset and liability values. These criteria may be simple or complex depending on the types of assets and liabilities estimated: in the former case, the valuation covers all the asset and liability items in the financial statements, while in the latter it considers not only the financial statement asset and liability headings but also those intangibles which, although they make a sometimes significant contribution to establishing the company's value, do not feature in the financial statements. Financial criteria are based on a different set of assumptions. They view the company to be valuated not as a combination of separate items but as a single entity, and establish the company s value first and foremost in terms of its ability to generate future economic and financial results, setting its value by time-discounting the future benefits it is expected to deliver. These criteria may be earnings- or financial-based, depending on whether the future economic results to be achieved are earnings flows rather than actual cash flows. The factors to be taken as primary reference for the valuation are therefore the forecast future economic or financial results, to be estimated on the basis of a large number of factors, such as past earnings or financial flows, company growth forecasts, the future prospects for the market on which it operates and all other considerations deemed useful by the expert; another essential reference for the valuation is the time period taken as the basis for estimating the future economic or financial results, since the longer the time-frame for the forecasts the more uncertain they become. Once the sequence of future economic or financial results has been estimated, these forecast results are then time-discounted at a rate which reflects the financial value of the time and the investment risk. The combined application of the valuation principles of the asset-based and cashflow methods provides us with the combined methods, applied in practice above all in the asset-earning form. These criteria are particularly useful when the situation requires the use of approaches which consider both the current value of the company's assets (valued on a simple or complex basis) and the forecast future economic results. With 8

94 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University this approach, the economic value includes a component - the adjusted net worth value - obtained by applying one of the asset-based criteria described above, and another component which reflects future earnings expectations; specifically, in an asset-earnings combined method, the income component is obtained by time-discounting a series of differential results called "excess income", calculated by subtracting the earnings which could be obtained on average in the industry by investing an amount equal to the adjusted net worth of the company being valued from the normalised average estimated future earnings it is expected to generate. Another possible valuation criterion is that used by the "market" methods, which establish a company's value by deducing it directly from market data. Within this category, the two most widely used methods are the comparable companies and comparable transaction methods. The former is based on stock market quotations and calculates a company's value on the basis of the prices set on the risk capital markets, while the latter uses the prices negotiated in transactions involving similar companies (comparable transaction method). These techniques establish the company's value by applying to it the multiples of characteristic parameters obtained by examining a sample of comparable listed companies or transactions which have involved comparable businesses Brief description of the main valuation criteria generally used for the valuation of brands. Established corporate principles and practice have developed a number of methods for the valuation of brands, which must be assessed on each occasion in relation to the economic parameters which best express their quantitative aspects. Generally, brand valuation methods involve the identification and subsequent quantification of the economic variables which, combined, provide a significant assessment of the brand's contribution to the economic performance of the company as a whole. They mainly subdivide into valuation methods based on cost, income and market. The cost-based valuation method identifies the cost configuration considered most significant for the estimation of the brand's value. 9

95 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University The types of cost which can be used as the basis for the assessment are: - the historic cost, which includes all the costs incurred to acquire, create, launch and develop the brand; - the reproduction cost, meaning the cost which would be incurred today to create a new brand with the same characteristics as the one being valued, entirely from scratch, as an alternative to purchasing it. These criteria are used less often in practice for a number of reasons, such as the fact that they are unable to value the brand in a way consistent with its market strength and share, they do not consider the value of the future benefits expected from the use of the brand, and it is not always easy to assess the costs incurred over time. Income-based approaches, on the other hand, set out to calculate the brand's contribution to the company's overall profitability, by time-discounting the cash flow which can be directly or indirectly linked to the brand over a given period. Specifically, the following forms of income may be considered: - the income which can be correctly attributed to the product/goods bearing the brand; - the positive differential earnings generated by the branded product compared to a product with the same quality and function but without the brand. Last but not least, market-based valuation approaches time-discounting the flows of royalties which can be obtained from licenses to use the brand, in order to assess its value. Generally, when there are no specific contracts for use as references, these royalties are calculated as a percentage rate of the sales the brand's owner company expects to generate during the time-period considered. The royalty rate must therefore be set by comparison with equivalent cases reflecting usual practice in the industry of the company or its product. 5. The choice of the criteria used for valuation of the Roger Vivier business, the brand and the French company RV Paris sas. For the fulfilment of my mandate, I have adopted the Discounted Cash Flow (DCF) method for valuing the Roger Vivier business, for valuing the brand (in the with or 10

96 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University without version which compares scenarios), and for valuing the participation in the French company RV Paris sas. My valuation of the brand also makes use of the margin differential method and the royalties method, as well as the DCF method in the with or without form. The following is a brief outline of the estimation criteria used for the purposes of this valuation Discounted Cash Flow. The Discounted Cash Flow (DCF) method defines the company's value as the current value of the cash flows expected during the period for which they are specifically forecast and the company's residual value at the end of the period for which the cash flows are analytical estimated, less the net financial liabilities at the time of the estimate. This definition is expressed by the following equation: n W = CFt 1 * v t TV * v n D where: W = value of the company's share capital CF t = operating cash flow forecast for year t v t = time-discounting coefficient of year t TV = terminal value of the company at the end of the period of analytical calculation of the expected cash flows D = net financial liabilities With regard to the degree of analysis used when forecasting future cash flows, a distinction can be made between financial methods, based on an assumption of constant, or constant growth in cash flows, analytical methods, based on an analytical forecast of cash flows until the end of the company's expected lifetime, and combined methods, based on an analytical forecast of cash flows over a given number of financial years and a synthetic estimate of the terminal value, related to the last financial year 11

97 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University covered by the analytical projection. The combined method is generally used in professional practice. The coefficient used for time-discounting the cash flows (v t ) is obtained from the weighted average cost of capital (WACC) using the following formula: WACC D D C i d C D C i c where: D = amount of borrowing C = Id = amount of net equity cost of borrowing net of direct taxation, expressed by the formula: cost of borrowing x (1 - t) i c = cost of equity capital expressed by the formula: r f + ß (r m r f ) + r s where: r f = return on risk-free investments r m = coefficient expressing the general average stock market return ß = coefficient which measures the risk of the specific company r s = specific risk rate Liabilities (D): represents the company's net financial liabilities as of the date of reference of the valuation. Their amount is subtracted from the other addenda of the sum, which expresses the overall value of the company's assets, in order to establish the value of its economic capital, or "share value". If the company's net financial position as of the date of reference of the valuation is positive, it is added to the current value of the future cash flows. The terminal value (TV) is the value of the company at time n, i.e. at the end of the period of time-discounting of the analytical cash flows. This valuation is necessary since the time horizon for assessment of the analytical cash flows is inevitably limited: the value thus obtained is added to that of the time-discounted flows. The calculation of the terminal value is one of the most important aspects when valuing a company using the 12

98 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University DCF method, since it is generally the largest component of the value assigned. The following models can be used to determine the terminal value: - perpetual growth rate method; - economic profit technique; - exit multiples method. The model used to establish the terminal value here considers the capitalisation of the normalised operating cash flow discounted by the weighted average capital cost, less the estimated long-term growth rate: TV = CF n ( WACC g) 5.2. Brand valuation: the margin differential approach One method for valuing a brand is to establish the margin differentials enjoyed by operators which own brands compared to businesses without brands, meaning licensees, on the assumption that the difference in returns reflects the value-added deriving from the possession of a brand. Therefore, in order to establish the value of a given brand it is first of all necessary to identify a panel of players working in the industry in which the brand to be valuated is utilised and developed. Within this panel, it is then necessary to distinguish between businesses which own a brand and licensees using third-party brands, in order to establish the margins enjoyed by brand-owning companies and licensees. Once a significant sample of companies working on the same market has been selected, the next step is to identify the average percentage earnings of companies with and without brands, such as in terms of EBITDA for both categories of firms. After this, the average earnings for each of the two groups identified are then calculated so that they can be compared in order to calculate the premium derived from the ownership of a brand. The process of calculating the value-added derived from the brand can thus be summarised as follows: 13

99 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University Margin = Ebranded Eunbranded where: Ebranded is the average margin of companies which own their own brands ; Eunbranded is the average margin of licensee companies. If the margin indicator chosen is EBITDA, the procedure described will identify the proportion of the EBITDA derived from the brand to be valuated, which will then be used to calculate the expected cash-flows during the period considered, allowing the brand to be valued using a formula similar to the DCF: W brand = CFt * v n 1 t TV * v where: W brand = value of the brand CF t = operating cash flow for year t derived from the brand v t = time-discounting coefficient of year t TV = terminal value at the end of the period of analytical calculation of the expected cash flows n 5.3. Brand valuation: the with/without comparative scenario approach. The brand can also be valued using a different method. This is a synthetic and financial method, known as the differential" discounted cash flow (DCF) method. This method establishes the value of the brand on the basis of the ability of the company's business to generate wealth for shareholders in terms of the differential cash flows generated by products carrying the company's brand compared to a product with the same quality and function but bearing a brand licensed to the company by a thirdparty owner. The brand is thus valued using the DCF criterion with an incremental approach, i.e. by comparing the value of the company which owns its own brand with the value of a company which uses a brand under licence (by paying royalties ). The difference 14

100 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University between the two financial valuations will establish the brand's contribution to the company's fundamental value. The brand valuation procedure using incremental DCF expressed using the following formula: (Wm) can therefore be Wm = Wwith Wwithout where: Wwith is the value of the company, using the DCF method, with its own brand; Wwithout is the value of the company, using the DCF method, without its own brand and thus obliged to pay the relevant royalties Brand valuation: the royalty rate method Established principles and professional practice consider that brands can be valued using the royalty rate method. Royalties can be defined as returns on intangibles, which can be identified and thus separately sold, which a third party, regardless of any benefits arising from synergies, is prepared to pay the owner of the intangible asset in exchange for the right to use it. The method in question therefore discounts, over a period of time considered appropriate, the royalties the market would be prepared to pay the owner of the brand in exchange for a licence to use it. In order to establish these flows, it is first of all necessary to set a value on the royalties (Rn), by applying a given percentage to the sales which the brand-owner company reasonably expects to achieve within the period of time considered (n). The royalties are then calculated as follows: Rn = r x Sn where: r is the royalty rate, meaning the multiplication coefficient deduced from the market Sn is the turnover from sales of the products bearing the brand 15

101 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University It is often necessary, in order to establish a range of royalties to be used for this method, to refer to market values established in actual contracts, meaning brand licensing contracts signed in the same industry and for comparable brands. The royalty rate used is therefore based on market data on past licensing contracts, chosen by comparison with comparable cases reflecting usual practice in the industry of the company or its product. The royalties (Rn) thus decided can be used to calculate the financial flows to be used to establish the value of the brand. This method can be summarised using the following formula: Wm = where: Ft are the net flows relating to the royalties that the company expects to receive for a given period of time in exchange for licensing the brand; i is the time-discounting rate for the flows, calculated on the basis of the risk-return profile related to the investment considered; n is the number of years of planning taken into consideration; TV is the terminal value 5.5. Brand valuation: Tax Amortization Benefit (TAB) As well as the general brand valuation criteria discussed above, it is particularly important to focus on one component which may help to establish the brand' value, called the Tax Amortization Benefit (TAB). In professional applications, it is becoming increasingly common to adopt the model used in the Anglo-Saxon world and particularly in the US, and increase the value of specific intangibles by the tax benefit derived from the fact that the amortization allocations for intangible assets are tax-deductible for the purchasers. When it is possible for the potential purchaser to write the amortization of an intangible asset such as a brand off against tax, the tax deductibility of such amortizations may constitute a significant proportion of the market value of the asset concerned, thanks to the above-mentioned TAB. This benefit can be added to the value 16

102 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University assigned to the brand using cost-based valuation methods, if the costs used are considered net of the relative taxation. However, TAB cannot be added to the value assigned to the brand on the basis of market methods, since it is assumed that values allocated on the market may already include an estimate of this fiscal benefit. Therefore, with regard to the valuations made, the Tax Amortization Benefit was only applied to the income valuation based on margin differentials. In general, TAB is calculated as the percentage incidence on the brand's value (Wm) of the total tax-deductible amortizations available to its potential purchaser, timediscounted using the capital cost. 6. The valuation of the Roger Vivier business I first estimated the value of the Roger Vivier business as a whole, meaning assuming the reunification of the brand (currently owned by Gousson) and its management (in the hands of Tod s). This was done on the basis of the business plan, after deduction of the estimated costs of the royalties which Tod's would have to pay Gousson for use of the brand. In terms of method, the financial criterion known as the Discounted Cash Flow (DCF) was used. As described above, this establishes the value of a company on the basis of the financial flows it is capable of generating, both during the planning period (explicit forecasting period) and beyond (implicit forecasting period). Specifically, the financial flows calculated on the basis of the plan supplied by the Company were discounted at a rate which reflects the cost of capital, decided using the Capital Asset Pricing Model and estimated at 7.2%. The operating financial flows obtained from the business plan were considered. The discounting of the capital cost of the explicit flows calculated as above provides a total value for the flows of 94 million. The terminal value was established by capitalising the cash flow considered sustainable in the long-term at the cost of capital, and assuming a long-term sustainable growth rate (g) of 2%. The current level of the terminal value was thus calculated as 607 million. 17

103 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University On the basis of the DCF approach, I therefore obtained an overall valuation of the Roger Vivier business of 701 million. The valuations made using the DCF approach also took into consideration a sensitivity analysis performed with regard to possible variations in the cost of capital (within a range of ±0.5% of the capital cost taken as reference) and long-term growth rate (between 1.5% and 2.5%), thus obtaining a range of values between 595 million and 858 million. VALORE TOTALE DEL BUSINESS RV ( /mln) saggio di crescita (g) costo del 1,5% 2,0% 2,5% capitale 6,7% 711,6 777,1 858,1 7,0% 678,4 737,3 809,3 7,2% 648,2 701,3 765,8 7,5% 620,4 668,7 726,6 7,7% 594,9 638,9 691,3 7. The valuation of the Roger Vivier brand 7.1. The margin differential model The valuation of the Roger Vivier business as a whole was made in preparation for extrapolation of the value of the Roger Vivier brand, which was estimated with the aid of several different methodological approaches. The first model applied was the margin differential model, which identifies the value to be attributed to the brand by isolating the margin of the company's total profitability which can be assigned to this specific intangible asset. To do this, the business's overall earnings are allocated partly to the brand which the company owns and partly to the rest of the company (meaning the other main productive factors used in its business operations). Specifically, the margin differential from the Roger Vivier brand was identified with reference to the EBITDA of a panel of comparable companies, operating in the luxury goods sector, all owning strong brands, which was compared with the earnings of a panel of companies which do not own brands and which operate as licensee manufacturers of products in the same sector. This analysis identified a margin differential of between 12.2% of earnings (if referred to the entire panel of companies selected) and 13.9% of earnings (compared to a 18

104 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University smaller panel, of faster-growing companies, consistent with the rapid expansion of the Roger Vivier business during the last few years). MARGINALITA' DIFFERENZIALI - TOTAL PANEL EBITDA margin - operatori con brand/licenziatari LVMH 23,1% RICHEMONT 26,9% HERMES 35,1% KERING 18,1% PRADA 24,9% BURBERRY 22,0% FERRAGAMO 22,5% MONCLER 33,6% CUCINELLI 17,6% JIMMY CHOO 16,8% MEDIA OPERATORI CON BRAND 24,1% SWINGER 6,8% BRANDS INDUSTRY srl 9,6% FALC spa 11,4% INDUSTRIES spa 19,7% MEDIA LICENZIATARI 11,9% MARGINALITA' DIFFERENZIALE 12,2% MARGINALITA' DIFFERENZIALI - HIGH GROWTH PANEL EBITDA margin - operatori con brand/licenziatari HERMES 35,1% MONCLER 33,6% CUCINELLI 17,6% JIMMY CHOO 16,8% MEDIA OPERATORI CON BRAND (High Growth Panel) 25,8% SWINGER 6,8% BRANDS INDUSTRY srl 9,6% FALC spa 11,4% INDUSTRIES spa 19,7% MEDIA LICENZIATARI 11,9% MARGINALITA' DIFFERENZIALE 13,9% This made it possible to estimate the margin differential generated by ownership of the brand for each year of the plan and for the terminal value. This economic parameter was then adjusted for the estimated taxes and discounted as operating cash flow for the brand being valued, at the capital cost already calculated for the valuation of the business as a whole. The current value of the explicit flows was estimated at 49 million in the case of flows from the total panel and 56 million for the flows taken from the high growth panel. 19

105 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University The terminal value was established by capitalising the flow considered sustainable in the long-term at the cost of capital, and assuming a long-term sustainable growth rate (g) of 2%. The current value of the terminal value was thus calculated as 310 million in the case of flows from the total panel and 353 million for the flows taken from the high growth panel. On the basis of the method as described, I obtained a valuation of the Roger Vivier brand between 359 million and 409 million, depending on the margin differential used. The valuations made using the margin differential approach also took into consideration a sensitivity analysis performed with regard to possible variations in the cost of capital (within a range of ±0.5% of the capital cost taken as reference) and longterm growth rate (between 1.5% and 2.5%) Tax Amortization Benefit (TAB) I then decided to apply the Tax Amortization Benefit (TAB) to the values obtained using the margin differential method. The TAB is a value-added item taken into consideration as standard practice in the UK and the USA in transactions involving the transfer of an intangible asset, the purchase price of which can be amortized, with tax deduction of the relative allocations. In this situation, the purchaser enjoys an additional tax benefit arising from the reduction in the taxes to be paid during the amortization period. In this case, when estimating the TAB I started from the fact that in Italy, the amortization of brands can be written off against tax in constant instalments over 18 years, under art. 103 of Presidential Decree 917/1986 (also known as the Income Tax Consolidation Law). The current value of the tax benefits expected from the brand's deductibility was then estimated. In view of the level of capital cost used, these are calculated at a percentage of about 17% of the value (without TAB) of the brand. The addition of this tax benefit to the valuation of the Roger Vivier brand arrived at using the margin differential method provides an overall value of between 422 million and 482 million, depending on the panel of companies considered (total or high growth). 20

106 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University 7.2. The with or without comparative scenario valuation The value of the Roger Vivier brand was also estimated by making a comparative assessment of the "with or without" scenarios, taking the scenario already considered for the DCF valuation as a benchmark, in which the business is considered and valued as a whole and the brand is considered together with the rest of the company's activities for the development and sale of Roger Vivier brand products. In relation to this "with brand" scenario, the business was valued using the DCF criterion which, as explained above, provides an estimate of the company's worth of about 701 million. This value was then compared with the value - also obtained by applying the Discounted Cash Flow approach of the Roger Vivier business in the "without brand" scenario, i.e. envisaging that the company continues its business without ownership of the brand, but paying flows of royalties calculated in proportion to the forecast growth of its operations. Specifically, this scenario imputes a cost level for royalties of 12% of the earnings achieved for each year of the business plan to the plan. The royalty rate was set with reference to the percentage currently (until the next contract expiry date of 31 December 2016) applied by the licence contract under which Gousson grants Tod's the right to use the brand. Unlike the current contract rate, this royalty rate was applied to total earnings, mainly due to the fact that the value of the brand is separated from the entire business ("with" scenario) since the business is considered as a whole, the sell in between a brand owner and its licensee is disregarded in favour of the external sell out. Moreover, the level of royalties used (12%) appears to be consistent with the margin differential identified when using the relative method as described above, which was between 12.2% and 13.9%. The discounting of the capital cost of the explicit flows calculated as above provides a total value of 46 million. The terminal value was established by capitalising the cash flow considered sustainable in the long-term at the cost of capital, and assuming a longterm sustainable growth rate (g) of 2%. The current level of the terminal value was thus calculated as 348 million. On the basis of the DCF approach, I therefore obtained an overall valuation of the Roger Vivier business of 348 million. In short, on the basis of the method as described, I obtained a valuation of the Roger Vivier business of 701 million in the "with brand" scenario and 348 million in the 21

107 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University "without brand" scenario, thus establishing, by subtraction, a valuation of 353 million for the brand. The valuations for the two scenarios made using the DCF approach also took into consideration a sensitivity analysis performed with regard to possible variations in the cost of capital (within a range of ±0.5% of the capital cost taken as reference) and longterm growth rate (between 1.5% and 2.5%), thus obtaining a range of values between 300 million and 432 million. VALORE MARCHIO (differenza with-without) ( /mln) saggio di crescita (g) costo del 1,5% 2,0% 2,5% capitale 6,7% 358,6 391,5 432,2 7,0% 341,9 371,5 407,7 7,2% 326,7 353,4 385,8 7,5% 312,8 337,0 366,2 7,7% 300,0 322,1 348, The royalty method It should be borne in mind that the same values would have been reached not only directly, through the comparison between scenarios and the valuation of the business, but also directly using the royalties method, which estimates the value of a brand by time-discounting the flows of royalties generated by granting licences to use the intangible asset at an appropriate royalty rate. The royalty rate of 12% established above can be applied to the earnings forecast in the business plan to establish a flow of royalties which can be attributed to the brand; after the deduction of the relevant tax burden these can be time-discounted as operating flows at the capital cost. Therefore, the direct method also produces a brand valuation of 353 million The independent analysts' estimates. To conclude, reference was made to the valuations issued by independent financial analysts who have published estimates of the value of the Roger Vivier brand in recent documents, although they did not have access to a complete, analytical industrial data 22

108 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University set. The estimates examined value the brand at between a minimum of 300 million and 500 million, with an average of between 391 million and 434 million (and a mean point value of 413 million ), as follows: ANALISTA DATA Min Max MIRABAUD 25/02/ MORGAN STANLEY 29/04/ RAYMOND JAMES 07/10/ RBC CAPITAL MARKETS 11/02/ MAINFIRST 04/11/ HSBC 04/11/ DEUTSCHE BANK 05/11/ Media Mediana Summary of the brand valuation results obtained. To summarise, as the table below shows, the value of the Roger Vivier brand is estimated in a range between 353 million and 413 million (if the Tax Amortization Benefit is not considered when applying the margin differential criterion) and in a range between 353 million and 482 million if the value of this tax benefit is added - as increasingly recognised by the recent practice and established principles. VALORE DEL MARCHIO Roger Vivier /mln METODOLOGIA Valore Valore (senza TAB) (con TAB) Margini differenziali (total panel) 358,6 422,2 1 Margini differenziali (high growth) 409,1 481,7 2 DCF with/without 353,4 353,4 3 Royalties 4 Analisti 412,7 412,7 MEDIA 383,5 417,5 8. The valuation of the participation in RV Paris sas. My mandate also required me to value the 100% participation in the French company RV Paris s.a.s. which, wholly owned by Gousson, runs the Roger Vivier store in Paris. 23

109 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University Tod's provided me with the French company's business plan, which I took as a benchmark for the calculation of this subsidiary's economic capital. Specifically, in terms of method, the synthetic criterion known as the Discounted Cash Flow (DCF) was used. () This establishes the value of a company on the basis of the financial flows it is capable of generating, both during the planning period (explicit forecasting period) and beyond (implicit forecasting period). Specifically, the financial flows calculated on the basis of the plan supplied by the Company were discounted at a rate which reflects the cost of capital, decided using the Capital Asset Pricing Model and estimated at 7.2%, in line with the cost of capital used for the valuation of the brand and the business. The operating financial flows obtained from the French subsidiary's business plan were considered. The discounting of the capital cost of the explicit flows calculated as above provides a total value for the flows of 1.7 million. The terminal value was established by capitalising the cash flow considered sustainable in the long-term at the cost of capital, and assuming a long-term sustainable growth rate (g) of 2%. The current value of the terminal value was thus calculated as 13.3 million. On the basis of the DCF approach, I therefore obtained an overall valuation of the French company's business of 15 million. The valuations made using the DCF sensitivity analysis approach also took into consideration a performed with regard to possible variations in the cost of capital (within a range of ±0.5% of the capital cost taken as reference) and long-term growth rate (between 1.5% and 2.5%), thus obtaining a range of values between 13 million and 18 million. VALORE DEL BUSINESS DI RV PARIS SAS (*) ( /mln) saggio di crescita (g) costo del 1,5% 2,0% 2,5% capitale 6,7% 15,3 16,7 18,5 7,0% 14,5 15,8 17,4 7,2% 13,9 15,0 16,4 7,5% 13,3 14,3 15,6 7,7% 12,7 13,7 14,8 (*) non include la PFN e il valore delle perdite fiscali pregresse We need also to bear in mind that the French company has recorded past fiscal losses of 10.6 million, which will be reflected in a reduction of future taxable income on the 24

110 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University carry forward principle. Since the RV Paris business plan forecasts the generation of profits - and thus of taxable income against which these losses can be compensated - the economic value of the tax benefit of these losses was calculated on the basis of the estimated recouping period for the tax loss and the rate of taxation, assumed to be 33.3%. By this procedure, I obtained an overall valuation of the tax benefit of the French company's past losses of 2.5 million. The valuation of the French subsidiary must bear the company's financial position in mind, which must be added to the value of the business as calculated above, and the value of the tax losses carried forward. I do not have an up-to-date net financial position for the benchmark date for this valuation report (30 September 2015). The most recent figure available refers to the month of June 2015 and gives a positive net financial position of 2.8 million (including security deposits of about 0.2 million ). Therefore, in the event that Tod's decides to purchase the company, it will be necessary to establish the subsidiary's net financial position as of the date when the operation actually takes place. To conclude, the total value of the participation in the share capital of RV Paris s.a.s. is estimated at 17.6 million, not including the net financial position. VALORE RV PARIS SAS (*) ( /mln) saggio di crescita (g) costo del 1,5% 2,0% 2,5% capitale 6,7% 17,9 19,3 21,1 7,0% 17,1 18,4 20,0 7,2% 16,4 17,6 19,0 7,5% 15,8 16,8 18,1 7,7% 15,2 16,2 17,3 (*) non include la PFN 9. Conclusions. On the basis of the information, data and documents received and the methods used, I produced a valuation of the Roger Vivier brand which provides a figure in a range between 353 million and 413 million (if the Tax Amortization Benefit is not considered when applying the margin differential criterion) and in a range between

111 Riccardo Perotta Chartered Accountant Associate Professor at Bocconi University million and 482 million if the value of this tax benefit is added - as increasingly recognised by the recent practice and established principles. The value of the participation in the share capital of RV Paris s.a.s. is estimated at 17.6 million, in addition to the net financial position. Milan, 12 November 2015 Riccardo Perotta 26

112 (COURTESY TRANSLATION FOR THE CONVENIENCE OF INTERNATIONAL READERS. FOR THE OFFICIAL DOCUMENTS PLEASE REFER TO THE ITALIAN VERSION) Riccardo Perotta Associate Professor at Bocconi University Chartered accountant Via Conservatorio Milano - Italy Tel Fax VAT no Tax code PRT RCR 49D21 F205T studioperotta@studioperotta.com To the Board of Directors of Tod s SpA Milan, 21 November 2015 Subject: Report on the valuation of the Roger Vivier brand and related assets, 12 November 2015 Dear Sirs I refer to the above-mentioned report and to our discussions about your request for confirmation of the fair value for the sale by Gousson Consultadoria e Marketing srl of the Roger Vivier brand, and of the investment in Roger Vivier Paris sas, a company incorporated under French law, to Partecipazioni Internazionali Srl and Roger Vivier France sas, respectively, both being subsidiaries of Tod s SpA. Specifically, I was told that the following prices had been agreed: (1) 415,000, for the sale of the Roger Vivier brand (and the related intellectual property rights); (2) 20,000, for the sale of the shareholding in the French-law company Roger Vivier Paris sas, taking into account a positive net financial position of at least 2,500, on the closing date. In reference to the above, and taking into account the considerations made in the valuation of 12 November which you already have, I can now re-confirm, insofar as necessary, the adequacy for Tod s S.p.A. and the purchasing companies of the prices indicated in points (1) and (2). Riccardo Perotta (Signature)

113 ANNEX D VALUATION REPORT PREPARED BY PROFESSOR MARIO MASSARI IN RELATION TO THE ROGER VIVIER BRAND AND THE ROGER VIVIER SAS INVESTMENT, BY APPLYING THE CRITERIA SET OUT IN ARTICLE 2343-TER OF THE ITALIAN CIVIL CODE

114 PROF. MARIO MASSARI F U L L P R O F E S S O R A T L. B O C C O N I U N I V E R S I T Y I N M I L A N C H A R T E R E D A C C O U N T A N T Gousson Consultadoria e marketing S.r.l. Valuation report for the Roger Vivier brand and for the investment in Roger Vivier Paris s.a.s., performed in accordance with Art ter of the Italian Civil Code (COURTESY TRANSLATION FOR THE CONVENIENCE OF INTERNATIONAL READERS. FOR THE OFFICIAL DOCUMENTS PLEASE REFER TO THE ITALIAN VERSION) Milan, 28 November MILAN PIAZZA SANT ERASMO, 9 TEL MAIL: segreteria@studioprofessormassari.it

115 PROF. MARIO MASSARI CONTENTS Foreword Objective of the Valuation Documentation Examined The Roger Vivier Brand Relevant Valuation Standards Art ter of the Italian Civil Code Valuation Methods Applied The Process Applied in Valuing the Roger Vivier Brand Valuing the Brand with the Price Premium and Volume Premium Method Valuing the Brand with the Market Royalties Method Valuation of the Investment in Roger Vivier Paris s.a.s Conclusions

116 PROF. MARIO MASSARI Foreword Tod's S.p.A. ("Tod's") has developed, and manages, the well-known women s footwear brand Roger Vivier, as licensee. The brand is owned by the Della Valle family, through Gousson - Consultadoria e Marketing S.r.l. ("Gousson"). In view of the expiry of the licence agreement, Tod's and Gousson have begun a negotiation process in order to plan a transaction that would integrate the business unit responsible for the development and management of the Roger Vivier brand, with its ownership, which is expected to have a positive impact at corporate level. In the light of the under definition techniques that could be implemented to go through the transaction, Gousson requested a valuation of the brand, to be performed in accordance with Art ter, (IIb) of the Italian Civil Code. This is for greater transparency and safeguard of interests involved in the operation. 3

117 PROF. MARIO MASSARI 1. Objective of the Valuation 1.1. On 30 October 2015, Mr. Fabrizio Della Valle, as the sole director of Gousson, appointed me to perform the valuation of the Roger Vivier brand and of the related assets, in particular the investment in Roger Vivier Paris s.a.s. ("RV Paris") For the reasons disclosed in the Foreword, the wording of the mandate clarified that the valuation was to be performed in accordance with Art ter, (IIb) of the Italian Civil Code. As provided for in subparagraph 3 of the above article, "Anyone conferring assets or receivables in accordance with the first and second subparagraphs shall submit documents showing the value given to the contributions and, for the contributions referred to in the second subparagraph, the fulfilment of the conditions indicated therein". These conditions appear to be met when "the value attributed for the purposes of determining the share capital and any premium on the goods in kind or receivables transferred is equal to or less than: [...] The value results from a valuation based on a date no more than six months prior to the transfer, and conforming to the generally-recognised principles and criteria for the valuation of the assets in question, on condition that it is made by an independent expert [...] with adequate, proven professional ability". 4

118 PROF. MARIO MASSARI With reference to the expert s requirements, I can confirm that I am independent of the parties involved in the operation. My professional qualifications, are disclosed in the attached CV (Appendix 1) Valuation reference date. The reference date for this valuation is 31 October 2015 ("Reference Date"). The valuation has been performed in accordance with the data and information contained in paragraph 2 below. 5

119 PROF. MARIO MASSARI 2. Documentation Examined 2.1. The following documentation was examined in performing this valuation: - the Tod's group consolidated financial statements for the years ending 31 December 2013 and 2014; - the financial statements of Roger Vivier Paris s.a.s. for the years ending 31 December 2012, 2013 and 2014; - the Roger Vivier business plan as prepared by Tod's management, for the period and dated 10 August 2015; - the draft income statement forecasts for of RV Paris; - the interim statement of financial position of RV Paris as at 30 June 2015; - an analysis of the historical tax losses of RV Paris as at 31 December 2014; - the lease agreement for the store in Rue Faubourg Saint Honorè; - statistics and analysis regarding the positioning of the Roger Vivier brand, which can be deduced from the Tod's financial statements and from the material provided by Gousson; - the draft agreement between Tod's S.p.A., Partecipazioni Internazionali S.r.l. and Gousson; - the equity research prepared by Deutsche Bank (5 November 2015) and RBC Capital Markets (11 February 2015). 6

120 PROF. MARIO MASSARI 2.2. Other information and documents were also used to further investigate the issues covered by this report including: - specific researches of specialised databases were carried out; and - consultation of market studies and other information relating to the markets on which Roger Vivier is present Further information and clarification was obtained from the Management of Gousson and from their advisors It should be noted that the accounting data and projections used to elaborate the valuation methods used in this report have been analysed in terms of reasonableness and overall cohesion, but have not been subject to independent verifications Gousson has confirmed the completeness and accuracy of the records of the legal relations required by law, which govern the brand. 7

121 PROF. MARIO MASSARI 3. The Roger Vivier Brand 3.1. Roger Vivier, whose founder is world-famous for being the creator of the stiletto heel, is a prestigious, historic brand of luxury women s footwear, with a global reputation 3.2. Roger Vivier has a unique brand awareness among celebrities, opinion leaders and fashion icons. The exclusive nature of the brand is also testified by a global network of outstanding stores, which are fully integrated with the wholesale and e-boutique platform In recent years, Roger Vivier has seen significant rates of growth in its sales: from 2005 to 2014 the CAGR ("Compounded Average Growth Rate") of revenues was 47.5%. In 2014, sales grew by 11.6% compared to 2013, confirming the brand s great appeal among international customers, who see Roger Vivier as one of the most prestigious maisons in the high-end luxury segment. 8

122 PROF. MARIO MASSARI 4. Relevant Valuation Standards Art ter of the Italian Civil Code 4.1. In consideration of the specific content of this mandate, this paragraph summarises the issue of valuation of contributions in kind, as governed by articles 2343, 2343-ter and 2465 of the Italian Civil Code. The following considerations reflect the structure outlined in the Italian Valuation Principles ( PIV ) 1. First, it must be noted that contributions can be separated into two categories, depending on the type of beneficiary company: - contributions to a newly-incorporated transferee; - contributions to a company already in operation. In both cases, the purpose of valuing a contribution is to provide creditors and third parties with a guarantee that the capital of the transferee company actually exists; however, if the transferee company is already 1 OIV - Principi Italiani di Valutazione 2015 [Italian Valuation Principles 2015], Egea, Milan, 2015, page 195. The Italian Valuation Principles can also be found on the website. 9

123 PROF. MARIO MASSARI operational, the valuation also has to guarantee that there is a contractual balance between the value of the contribution and the value of the new shares issued to service it, in exactly the same way as with a merger From a logical point of view, the guarantee to the creditors and third parties is based on the fact that the valuation of the object of the contribution is no higher than the market value, which is represented by the presumable disposal value of the assets in an arm s-length (normal) transaction. In the case of contributions of companies or business units, the contribution value is usually represented by the lower of the underlying value and the market value of the assets transferred. The Italian Valuation Principles ( PIV ) state that a valuation expert can use more than one configuration of value, which takes into account the logic of the contribution within its broader context 2. As the arm s-length value is different from the underlying value, as it assumes the highest and best use of the business by the market operator and reflects discounts and premiums, while the underlying value assumes the perspective of the entity that owns the business, and does not necessarily express the 2 Italian Valuation Principles, cit., IV,

124 PROF. MARIO MASSARI highest and best use or consider discounts and premiums, the contribution value normally coincides with the lower of the underlying value and the market value (in other words the most likely recoverable value of the assets conferred). In effect, in Art ter (IIa), the legislation refers to the possibility of avoiding a valuation report when the contribution takes place at a value that is equal to or less than the fair value of the same assets as recorded on the previous year s accounts (if audited). In IFRS 13, the fair value for accounting purposes is defined as the exit price that essentially corresponds to the market value adopted by the International Valuation Standards (IVS) and by the PIV From a valuation point of view, it is also important to make a distinction between contributions that relate to a group (not organised) of assets, or a company or a business unit. The main difference between individual assets and companies (or business units) relates to the fact that it is only possible to associate goodwill to the latter. For a contribution of an organised group of assets, there is a need to make a distinction between contributions of businesses, and contributions of business units. The main difference in these cases relate to the fact that if it is a company being conferred, the valuation expert usually has historic information about the performance (income statement) of the business being conferred, while in the case of business units this information is often unavailable. Furthermore, in the case of conferring a business unit, it is often necessary to normalise the expected revenues of the perimeter being transferred, if the business unit is an operational segment of a pre-existing company, which has been modified: as to its 11

125 PROF. MARIO MASSARI financial aspect, by adding or removing some of the assets and liabilities when the contribution was being formed; or, as to its operational aspects by adding or removing products, markets, customers, know-how, staff etc In summary, the configuration of value when making a valuation for contribution purposes is represented by the normal market value of the assets, or their market value after verifying that this value expresses the normalised value, and in certain circumstances, by the underlying value. In the case of contributions made to a company that is already operational, the valuation expert can also use more than one value configuration, which takes into account the logic of the contribution transaction within the broader context of the acquisition The peculiarity of this valuation consists of the fact that its main object is an asset (the Roger Vivier brand), which has been developed and is managed by the licensee company, Tod's. Tod s has also provided the business plan of the business unit with which the brand is to be integrated. Furthermore, the value of the Roger Vivier business constitutes a significant element of the value of Tod's as expressed on the stock exchange The principles and peculiarities outlined above translate into the following criteria to be used to value the brand and the investment in RV Paris: 12

126 PROF. MARIO MASSARI - the market value configuration has been used. This decision, considering the margins and growth rates represented in the business plan for Roger Vivier prepared by the management of Tod's, is higher compared to the main competitors, and meets the guarantee requirements for valuations as set out in Art ter of the Italian Civil Code; - the parameters used to determine the discount rates are calculated on a sample of companies in the luxury goods segment; - multiple valuation methods have been applied, with the objective of reinforcing the credibility of the estimate; - on the basis of the information obtainable from the equity reports reviewed, there is a reasonable balance between the valuation of the Roger Vivier brand and its implied valuation in the stock exchange prices of the company that currently runs it. 13

127 PROF. MARIO MASSARI 5. Valuation Methods Applied 5.1. Trademarks (specifically, the brands, which have particular strengths compared to the competitors), are one of the main value drivers within the fashion industry. When valuing trademarks, as with any other intangible asset, a qualitative analysis must be performed first in order to evaluate the perceived positioning of the brand compared to other brands in the same market segment. This analysis was performed based on the material indicated in section 2 of this report. The basic assumption underlying this valuation is that the legal rights relating to the brand and its ownership have been verified. This verification was confirmed by Gousson Intangible assets may be valued using any of the three valuation approaches typically used to value any type of asset: the market approach, the income approach and the cost approach. In particular, "when selecting the most appropriate valuation method, the valuation expert should consider the characteristics of the intangible asset and in particular its reproducibility, the nature of the benefits it generates for the 14

128 PROF. MARIO MASSARI owner (current or potential) and for the user, and whether or not there is a target market" There are two frequently used valuation methods for calculating the market value of intangible assets related to marketing, and in particular the brands in the fashion and luxury goods sectors. These methods are described below: - the first is the price premium and volume premium, which is based on estimate of the differential results relating to the brand s presence (in terms of price or volumes); - the second is based on the discounting of the royalties of comparable brands. Considering the difficulties involved in identifying true comparables given the varied nature of brands and the limits of the available databases, the royalties rate may need to be adjusted for the specific characteristics of the brand being valued. On occasion, it may be appropriate to carry out a sanity test on the values 3 PIV - Principi Italiani di Valutazione 2015 [Italian Valuation Principles 2015], Egea, Milan, 2015, page

129 PROF. MARIO MASSARI obtained with the market royalties method, by applying thumb rules such as the 25% rule. In particular, using this principle, the percentage of royalties is compared to an indicator of the business s profitability (current or expected) related to the brand, for example gross margin or EBITDA margin (generally, gross of the allocation of corporate costs). The basic idea is very simple and based on economic rationality: in an efficient licencing market, the royalties rate, which may be interpreted as a profit-sharing mechanism through which the licensee recognises part of the margins generated from the use of the brand, should reflect the profitability in the relevant market segments. Intersector empirical studies have demonstrated the effective convergence of royalties rate at 25% of profitability, where profitability may be measured using different indicators (gross margin or EBITDA margin) International valuation principles and PIV clarify that when an intangible asset is amortisable for tax purposes, part of the asset s market value is represented by the related tax amortisation benefit (TAB). This value is 4 KPMG, Profitability and royalty rates across Industries: Some preliminary evidence,

130 PROF. MARIO MASSARI added to the value identified using the price premium and volume method (expressed net of the tax costs). The TAB should not, however, be added to the value identified through a market approach (for example, the royalties method), as it can be assumed that the prices (or the royalties rate negotiated) already incorporate the TAB, in full or on a pro rata basis depending on the contractual powers of the opposing parties. 17

131 PROF. MARIO MASSARI 6. The Process Applied in Valuing the Roger Vivier Brand 6.1. Value approach applied. The criteria as set out in Art ter Civil Code were applied in determining the brand s market value ( market value or fair value in accordance with IFRS). Considering the specifics of the asset acquisition, certain aspects were analysed from the perspective of the licensee company that developed and currently manages the brand (which considers the value in use of the brand from the perspective of Tod's). This is in consideration of the fact that the Tods business plan forms the basis of the information available for the valuation In particular, two adjustments were made to the Tod s business plan, as detailed below: - To identify the value of the Roger Vivier business that relates to the brand, by adjusting the results of the business plan on the basis of the income margin that could be earned, on average, by an unbranded footwear producer, or one with no strong brands (the brand-related price premium and volume premium method ); - To align the projections of the business plan to the average expected growth and profitability of a certain number of high-end brands that were deemed to be comparable. The purpose of this is to represent the market value by assuming the average growth and profitability expectations for the luxury goods sector. This was a prudent decision, 18

132 PROF. MARIO MASSARI justified by the fact that the profitability margins expected over the short to medium term for the niche market of footwear are currently particularly high The decision to use the brand-related price premium and volume premium method was justified by the characteristics of the transaction, which includes the full disposal of the brand. In such case, and considering the positioning of Roger Vivier, it is reasonable to assume that the brand itself represents the fundamental origin of the competitive advantage and therefore of the price premium and volume premium method on the basis of which the brand should be valued For the same reasons, the price premium and volume premium method is preferred over another method often used to value intangible assets the "Multi-Period Excess Earnings" method, which can offer particularly significant indications as to whether other assets contributory assets have a significant impact in the generation of profits The second brand valuation method is based on the discounting of market royalties. In particular, the royalties rate was identified as being in the higher band of the range of rates for operations in the luxury goods segment, also taking into account the characteristics of the proposed transaction, the implied tax benefits and the adjustment to the business plan, as elaborated by Tod s management, intended to bring the expected sales figures in line with the average market expectations for the luxury 19

133 PROF. MARIO MASSARI goods segment. These market realignment adjustments resulted in a significant reduction in the growth rate of the plan. 20

134 PROF. MARIO MASSARI 7. Valuing the Brand with the Price Premium and Volume Premium Method 7.1. Estimating the brand s market value requires the application of certain adjustments designed to adapt the basic information comprising the three-year business plan to the requirements of the valuation criteria as set out in Art ter Civil Code The first adjustment involves removing the costs related to the payment of royalties from the plan. The plan results are then adjusted according to the profitability margin (EBITDA margin) earned by a selected group of footwear producers, either unbranded or without strong brands. The EBITDA margin of the selected sample was 5.8%. This adjustment is the essence of the price premium and volume premium method. In fact, the net margins of the adjustment constitute the incremental results that can be attributed to the presence of the brand, by virtue of which the brand s value is obtained The second adjustment is intended to move from the investment value to the market value. For this purpose, the business plan was reassessed in accordance with the average profitability rates expected for the period, for a sample of companies classified in the luxury goods sector (App. 2). In this way, the business plan is, so to speak, aligned to the expected future results in the luxury goods segment of the fashion industry. Since, as already seen, these expectations are on average lower than those for the niche market of luxury footwear, this procedure results 21

135 PROF. MARIO MASSARI in a prudential estimate of the brand s market value, consistent with the criteria as set out in Art ter Civil Code Having adjusted the basic information appropriately, the price premium and volume premium method is then applied to the variant based on the discounted cash flow (DCF) method, working on the basis of the plan investments and average working capital absorption taken from Tod s consolidated accounts The value referring to the post-plan period (terminal value) is determined by assuming an indefinite life for the brand and a growth rate of 2.5% in nominal terms, which is considered consistent with the luxury sector The discount rate for future cash flows is determined by using the CAPM (Capital Asset Pricing Model), which is the method adopted by most international financial analysts, and the method recommended by PIV. Taking into account that the market value approach has been used, for reasons of consistency the rate has been calculated assuming an average financial structure (indebtedness of 6.6%) and the beta of a sample of companies in the luxury sector. Incidentally, the calculation process for the beta can also be recommended for estimating the opportunity cost of capital of a specific listed company such as Tod's, due to the need to neutralise the distortions from calculating individual beta values. In 22

136 PROF. MARIO MASSARI particular, the discount rate (WACC Weighted Average Cost of Capital) applied was 7.45% and was calculated using the following parameters: - risk free rate: 2.62%, equal to the average return over the past two years on 10-year Italian government bonds (source: Bank of Italy); - market risk premium: 5.4% (source: Pablo Fernandez ); - beta: 0.969, equal to the average beta value recorded by the selected group of companies in the luxury segment; - cost of debt: 2.5% (corresponding to 1.81% net of the tax shield); - tax rate: 27.5%; - D/D+E: 6.6%; - E/D+E: 93.4% Overall, the value of the brand at 31 October 2015, obtained using the price premium and volume premium method, is million. This includes the valuation of the tax benefits related to the amortisation of the price paid for the brand. 23

137 PROF. MARIO MASSARI (Euro millions) WACC Table 1. Summary valuation of the brand as of 31 October 2015 based on Plan s Value the price premium and volume premium method Terminal Value g=2.50% Gross TAB total value TAB Brand s Value 5.95% % % % % % % % % % % % % % % % % % % % % The TAB was calculated by discounting the tax benefits linked to the amortisation of the brand s value to the cost of debt capital, of 2.5% (The brand s value was calculated, for the sake of simplicity, on the value of the brand indicated in the 3rd to last column), considering a period of 18 years and a tax rate of 31.4%. 24

138 PROF. MARIO MASSARI 8. Valuing the Brand with the Market Royalties Method 8.1. For the reasons already mentioned in the methodology section of this report, the royalties method, which is frequently used in professional practice thanks to its simplicity and immediacy, was elaborated for the purposes of comparing and verifying the values obtained from the price premium and volume premium method There are several critical aspects in using this method. Firstly, the difficulty in selecting comparable transactions both in terms of the characteristics of the brand and because of the fact that this transaction relates to the whole of the core business linked to the Roger Vivier brand. Secondly, the conditions of the current licence agreement cannot provide any useful information as the two contracting parties are not independent To be consistent with the assumptions applied in the price premium and volume premium method: 25

139 PROF. MARIO MASSARI - A range of 14%-16% was used as a royalties rate. This interval is considered appropriate by independent sources for the luxury sector, in particular with reference to the footwear segment. Using the 25% rule as a sanity test, considering the high margins in the Roger Vivier business plan, the royalties rate would be between 9.2% and 20.2%, using the expected 2015 contribution margin or EBITDA margin 5 as a profitability measurement; - For the purposes of calculating the royalties, it was assumed that sales will be consistent with sales rate of a selected group of companies from the luxury segment; - A growth rate of 2.5% was assumed for the period beyond the business plan period; - The tax impact of the cash flows from the royalties has been removed, using a tax rate of 31.4%; - The same discount rate as applied in the price premium and volume premium method valuation was used (7.45%); - For the purposes of this valuation, the calculation of the tax amortisation benefit (TAB) was excluded. 5 Including royalties and allocation of corporate costs. 26

140 PROF. MARIO MASSARI This valuation, which serves to assess the adequacy of the price premium and volume premium method valuation, shows a value of the Roger Vivier brand that is consistent with the value calculated from the price premium and volume premium method valuation. 9. Valuation of the Investment in Roger Vivier Paris s.a.s In consideration of the available information, there are two possible scenarios for the valuation of this investment: - the first scenario assumes that the leasing agreement will not be renewed in This scenario equates, in essence, to a valuation of RV Paris with a view to future liquidation. However, considering the strategic position of the store in Rue Faubourg Saint Honore, which is an international flagship store, the liquidation scenario is considered to be unrealistic; - consequently, for the purposes of this valuation, the going-concern scenario was applied and it is assumed that the leasing agreement will be renewed (or there will be a new agreement, in an equally prestigious location) The value of RV Paris has therefore been determined by using discounted cash flows of the core business over an indeterminate period of time, also 27

141 PROF. MARIO MASSARI considering the value of the tax savings related to the losses in previous years, and considering the net financial position at 30 June Table 2. Summary of the valuation of the investment in RV Paris as of 31 October 2015 (l) Equity value is equivalent to enterprise value + cash (2) Surplus asset value as at 31/10/2015 is referred to discounted tax benefits derived from previous year tax losses The valuation of the business over an indefinite period of time results in the recovery of the margins originating from the difference between the sell-in prices and the retail prices on the sales flows for the store in Rue Faubourg Saint Honorè. This excludes the presence of double counting, as these sales are at sell-in prices in the Roger Vivier business plan as elaborated by the Management of Tod's. 28

142 PROF. MARIO MASSARI From this perspective, the going concern scenario is technically consistent with the brand valuation process. 10. Conclusions As requested by the sole director of Gousson, Mr. Fabrizio Della Valle, a valuation of the Roger Vivier brand and the related assets, in particular the investment in Roger Vivier Paris s.a.s. ("RV Paris") has been performed The value of the brand and of the investment in RV Paris at 31 October 2015, which for the reasons stated above was determined in accordance with the criteria set out in Art ter, (IIb) of the Italian Civil Code, is equivalent to million, and 22.5 million, respectively. Milan, 28 November 2015 Mario Massari 29

143 PROF. MARIO MASSARI Appendix 1. Professional Profile of the Valuation Expert As required by the Italian Valuation Principles 2015, the information necessary to evaluate the professional profile of the valuation expert has been provided below. In recent years, Professor Mario Massari has held, or continues to hold, the following positions: Full Professor in Corporate Finance at the Bocconi University in Milan. Formerly Full Professor in Corporate Finance at the Catholic University of the Sacred Heart, Milan. Director of the Department of Finance at Bocconi University, Milan ( ); Director of the Institute of Administration, Finance & Control at Bocconi University, Milan ( ). Chartered Accountant and Legal Accounts Auditor. Member of the Italian Valuation Association s Executive Committee. Member of the Simplification of the Italian Financial Market Commission set up by CONSOB [Italian Securities and Exchange Commission] in Member of the Executive Council of CReSV (Centro Ricerche su Sostenibilità e Valore) at Bocconi University. Listed on the register of court experts (Civil and Criminal Courts of Milan). Economic consultant for the Milan stock exchange, with regard to valuations. Author of numerous publications, books and scientific articles on accounting, administrative, financial and economic/corporate affairs. 30

144 PROF. MARIO MASSARI Chairman and speaker at a number of national and international conventions on business valuations. Joint founder, with Prof. Luigi Guatri, of the review 'La Valutazione delle Aziende". Board of Directors and Auditor of leading publicly-listed companies and private groups. 31

145 PROF. MARIO MASSARI Appendix 2. Group of Selected Companies in the Luxury Segment, and Listed on Regulated Markets Profitability indicators 32

146 PROF. MARIO MASSARI Appendix 2. Group of Selected Companies in the Luxury Segment and Listed on Regulated Markets - continued Beta and financial structure N of Timing of Beta Adj. Debt Entity observation observation unlevered Ratio (1) 1 Tod's SpA 104 weekly n.a. TOD IM Equity 2 Hermes International 104 weekly n.a. RMS FP Equity 3 Burberry Group PLC 104 weekly n.a. BRBY LN Equity 4 LVMH Moet Hennessy Louis Vuitton SE 104 weekly % MC FP Equity 5 Christian Dior SE 104 weekly % CDI FP Equity 6 Cie Financiere Richemont SA 104 weekly n.a. CFR VX Equity 7 Salvatore Ferragamo SpA 104 weekly % SFER IM Equity 8 Brunello Cucinelli SpA 104 weekly % BC IM Equity Average % (l) NFP/(NFP+Market Cap media+mi norities) 33

147 PROF. MARIO MASSARI Appendix 2. Group of Selected Companies in the Luxury Segment and Listed on Regulated Markets - continued Stock market capitalisation and enterprise value Source: Bloomberg (2/11/15) 34