Canada 100 2017 The annual report on the world’s most valuable Canadian brands February 2017

Foreword. Contents

steady downward spiral of poor communication, Foreword 2 wasted resources and a negative impact on the bottom line. Definitions 4 Methodology 6 Brand Finance bridges the gap between the marketing and financial worlds. Our teams have Analysis - Canada 100 8 experience across a wide range of disciplines from market research and visual identity to tax and Full Table (CADm) 12 accounting. We understand the importance of design, advertising and marketing, but we also Full Table (USDm) 14 believe that the ultimate and overriding purpose of Understand Your Brand’s Value 16 brands is to make money. That is why we connect brands to the bottom line. How We Can Help 18

By valuing brands, we provide a mutually intelligible Contact Details 19 language for marketers and finance teams. David Haigh, CEO, Brand Finance Marketers then have the ability to communicate the significance of what they do and boards can use What is the purpose of a strong brand; to attract the information to chart a course that maximises customers, to build loyalty, to motivate staff? All profits. true, but for a commercial brand at least, the first Without knowing the precise, financial value of an answer must always be ‘to make money’. asset, how can you know if you are maximising your returns? If you are intending to license a brand, how Huge investments are made in the design, launch can you know you are getting a fair price? If you are and ongoing promotion of brands. Given their intending to sell, how do you know what the right potential financial value, this makes sense. time is? How do you decide which brands to Unfortunately, most organisations fail to go beyond discontinue, whether to rebrand and how to arrange that, missing huge opportunities to effectively make your brand architecture? Brand Finance has use of what are often their most important assets. conducted thousands of brand and branded Monitoring of brand performance should be the business valuations to help answer these questions. next step, but is often sporadic. Where it does take place it frequently lacks financial rigour and is Brand Finance’s recently conducted share price heavily reliant on qualitative measures poorly study revealed the compelling link between strong understood by non-marketers. brands and stock market performance. It was found that investing in the most highly branded companies As a result, marketing teams struggle to would lead to a return almost double that of the communicate the value of their work and boards average for the S&P 500 as a whole. then underestimate the significance of their brands Acknowledging and managing a company’s to the business. Skeptical finance teams, intangible assets taps into the hidden value that lies unconvinced by what they perceive as marketing within it. The following report is a first step to mumbo jumbo may fail to agree necessary understanding more about brands, how to value investments. What marketing spend there is can them and how to use that information to benefit the end up poorly directed as marketers are left to business. The team and I look forward to continuing operate with insufficient financial guidance or the conversation with you. accountability. The end result can be a slow but

2. Brand Finance AustraliaGlobalAirlinesCanada 500 30100 100 30February February MarchFebruary 20162016 2017 2015 Brand Finance Canada 100 February 2017 3. Definitions

Effect of a Brand on Stakeholders Definitions E.g. + Enterprise Value – the value of the Unilever entire enterprise, made up of Directors Potential Middle ‘Branded‘Branded multiple branded businesses Customers Managers Enterprise’Enterprise’

Existing All Other ‘Branded‘Branded + Branded Business Value – the Customers Employees Business’ E.g. Business’ Persil value of a single branded business operating under the subject brand ‘Brand’ Contribution’ Influencers Production + Brand Contribution– The total e.g. Media Brand E.g. economic benefit derived by a Persil business from its brand ‘Brand Value’ Trade Sales Channels + Brand Value – the value of the Persil trade marks (and relating Strategic marketing IP and ‘goodwill’ Debt Allies & providers attached to it) within the branded Suppliers Investors business

Branded Business Value Brand Contribution Brand Value Brand Strength

A brand should be viewed in the context of the The brand values contained in our league tables In the very broadest sense, a brand is the focus Brand Strength is the part of our analysis most business in which it operates. For this reason are those of the potentially transferable brand for all the expectations and opinions held by directly and easily influenced by those Brand Finance always conducts a Branded asset only, but for marketers and managers customers, staff and other stakeholders about an responsible for marketing and brand Business Valuation as part of any brand valuation. alike. An assessment of overall brand organisation and its products and services. management. In order to determine the strength Where a company has a purely mono-branded contribution to a business provides powerful However, when looking at brands as business of a brand we have developed the Brand architecture, the business value is the same as insights to help optimise performance. assets that can be bought, sold and licensed, a Strength Index (BSI). We analyse marketing the overall company value or ‘enterprise value’. more technical definition is required. investment, brand equity (the goodwill Brand Contribution represents the overall uplift accumulated with customers, staff and other In the more usual situation where a company in shareholder value that the business derives Brand Finance helped to craft the internationally stakeholders) and finally the impact of those on owns multiple brands, business value refers to from owning the brand rather than operating a recognised standard on Brand Valuation, ISO business performance. the value of the assets and revenue stream of the generic brand. 10668. That defines a brand as “a marketing- business line attached to that brand specifically. related intangible asset including, but not limited Following this analysis, each brand is assigned We evaluate the full brand value chain in order to Brands affect a variety of stakeholders, not just to, names, terms, signs, symbols, logos and a BSI score out of 100, which is fed into the understand the links between marketing customers but also staff, strategic partners, designs, or a combination of these, intended to brand value calculation. Based on the score, investment, brand tracking data, stakeholder regulators, investors and more, having a identify goods, services or entities, or a each brand in the league table is assigned a behaviour and business value to maximise the significant impact on financial value beyond combination of these, creating distinctive images rating between AAA+ and D in a format similar returns business owners can obtain from their what can be bought or sold in a transaction. and associations in the minds of stakeholders, to a credit rating. AAA+ brands are exceptionally brands. thereby generating economic benefits/value”. strong and well managed while a failing brand would be assigned a D grade.

4. Brand Finance Canada 100 February 2017 Brand Finance Canada 100 February 2017 5. Methodology League Table Valuation Methodology Brand Finance Typical Project Approach Brand Finance calculates the values of the 2 Determine the royalty rate range for the respective brands in its league tables using the ‘Royalty brand sectors. This is done by reviewing comparable Relief approach’. This approach involves licensing agreements sourced from Brand Finance’s estimating the likely future sales that are extensive database of license agreements and other attributable to a brand and calculating a royalty online databases. Brand Equity Stakeholder Brand Inputs Performance rate that would be charged for the use of the 3 Calculate royalty rate. The brand strength score is Value Drivers Behaviour Contribution brand, i.e. what the owner would have to pay for applied to the royalty rate range to arrive at a royalty the use of the brand—assuming it were not rate. For example, if the royalty rate range in a brand’s already owned. sector is 1-5% and a brand has a brand strength score of 80 out of 100, then an appropriate royalty 1 2 3 4 The steps in this process are as follows: rate for the use of this brand in the given sector will Brand Audit Trial & Preference Acquisition & Valuation Modelling be 4.2%. Retention 1 Calculate brand strength on a scale of 0 to 100 based 4 Determine brand specific revenues estimating a on a number of attributes such as emotional proportion of parent company revenues attributable Audit the impact Run analytics to Link stakeholder Model the impact of behaviour on connection, financial performance and sustainability, to a specific brand. of brand understand how behaviour with core financial performance and among others. This score is known as the Brand key financial isolating the value of the brand 5 Determine forecast brand specific revenues using a management and perceptions link to Strength Index, and is calculated using brand data investment on behaviour value drivers contribution function of historic revenues, equity analyst forecasts from the BrandAsset® Valuator database, the world’s brand equity and economic growth rates. largest database of brands, which measures brand 6 Apply the royalty rate to the forecast revenues to equity, consideration and emotional imagery derive brand revenues. attributes to assess brand personality in a category 7 Brand revenues are discounted post tax to a net agnostic manner. present value which equals the brand value. Brand strength Brand Brand revenues Brand value index ‘Royalty rate’ How We Help to Maximise Value (BSI)

6. Build scale through licensing/franchising/partnerships Brand Strong brand investment 5. Build core business through market expansion

4. Build core business through product development Brand

equity Maximising a strong brand 3. Portfolio management/rebranding Group companies

2. Optimise brand positioning and strength Brand Weak brand performance Forecast revenues 1. Base-case brand and business valuation (using internal data), growth strategy Evaluate ongoing performance formulation, target-setting, scorecard and Brand strength BSI score applied to an Royalty rate applied to Post-tax brand tracker set-up expressed as a BSI appropriate sector forecast revenues to revenues are score out of 100. royalty rate range. derive brand values. discounted to a net Current brand and Target brand and present value (NPV) business value business value which equals the brand value.

6. Brand Finance Canada 100 February 2017 Brand Finance Canada 100 February 2017 7.

Analysis – Canada 100

Rank 2017: 1 2016: 1 Rank 2017: 6 2016: 9 BV 2016: $ 16,608m BV 2016: $ 10,077m 1 +26% 6 +43% BV 2015: $ 13,226m BV 2015: $ 7,071m Brand Rating: AA+ Brand Rating: AA+

Canada Rank 2017: 2 2016: 2 Rank 2017: 7 2016: 8 BV 2016: $ 16,484m BV 2016: $ 9,050m 2 +28% 7 +55% BV 2015: $ 12,861m BV 2015: $ 5,850m Brand Rating: AAA- Brand Rating: AAA-

Rank 2017: 3 2016: 3 Rank 2017: 8 2016: 6 BV 2016: $ 8,611m 3 BV 2016: $ 12,707m +3% 8 +38% 100 BV 2015: $ 6,258m BV 2015: $ 12,313m Brand Rating: AAA- Brand Rating: AAA-

Rank 2017: 4 2016: 4 Rank 2017: 9 2016: 7 BV 2016: $ 8,215m 4 BV 2016: $ 11,289m +15% 9 +32% BV 2015: $ 9,819m BV 2015: $ 6,245m Brand Rating: AAA- Brand Rating: AA+

Rank 2017: 5 2016: 5 Rank 2017: 10 2016:11 BV 2016: $ 10,204m BV 2016: $ 6,899m 5 +30% 10 +45% BV 2015: $ 7,839m BV 2015: $ 4,757m Brand Rating: AA+ Brand Rating: A+

promise to maintain the well-regarded status of items. Loblaws has responded well to inflationary Canada’s top 100 most valuable brands have a can expect to see its brand value continue on the the Canadian gem. pressures by lowering prices of their items, total of CAD239 billion. The Canadian banking upward trend in 2018. resulting in doubled profits. Loblaws’ growth is a sector is by far the largest sector by value, Unfortunately, the same praise cannot be given to product of its reactive and adaptive nature, which comprising 33% of the table with a total brand However, the future is less certain for the fast-food retailer Sobey’s. Although the brand saw its value Sobey’s seems to lack. If the latter develops a value of CAD79.4 billion. industry. Many brands have waned in value due to increase 4% this year to CAD2.5 billion, it dropped strategy similar to Loblaws’, it may just be what it growing health concerns of consumers. However, four ranks in the table to 25th place. The retailer’s needs to close the gap between the nation’s RBC is the nation’s most valuable brand, retaining Canada’s sixth most valuable brand, Tim Horton’s, stunted growth is in light of its lingering difficulties largest retailers. the top spot in the table after a 26% increase in has bucked the trend, with a 43% increase in with integrating -based Canada Safeway value to CAD16.6 billion. Following the acquisition brand value to CAD10.1 billion. The coffee chain chain into its core business three years after the Lululemon has suffered sluggish growth, growing of City National Bank – which is expected to offering may be considered run-of-the-mill to CAD5.8 billion purchase. Sobey’s has suffered a meagre 1% in value to CAD1.9 billion. Rising generate US$1 billion in pre-tax profit by 2020, the some, but its surge indicates that there is an from an inefficient supply chain, however, the inventory levels amidst decreasing interest in Canadian titan has expressed plans to expand under-exploited appetite for reasonably priced brand is hopeful that under Michael Medline’s athleisure has inevitably hurt the brand. It also further in the US. RBC’s largest deal to date rather than premium coffee. new leadership, it can recover. dented its reputation when it openly insulted marked a significant return to the US after it sold Beyoncé and her Ivy Park clothing line, accusing some struggling US operations in 2011. The brand’s merger with Burger King has led to a In contrast, Sobey’s direct rival, Loblaws, performs the celebrity of copying the brand’s trends. CAD5 billion increase in market capitalisation. The significantly better this year. Its value grew 18% to Lululemon has a cocktail of issues specific to the RBC’s CEO, Dave McKay, is confident that deal provides opportunities for improved CAD2.5 billion, overtaking Sobey’s in the ranking brand, but it indisputably reflects the industry as a President Trump’s pro-growth agenda will support distribution and cost saving. Tim Horton’s race. Loblaws operation expansion added 5000 whole. Athleisure may have run its course and the bank’s plans for growth south of the border in devotees may be concerned at the loss of a store employees and 15,000 construction jobs. Lululemon might just be the beginning of the end order to offset sluggish growth in its domestic Canadian icon to the American fast-food chain, The grocery industry has been hit with inflation of the fashion fad. market. Should Trump’s agenda succeed, RBC but the former’s strength and unique characteristics and consumers have been looking to cheaper 8. Brand Finance Canada 100 February 2017 Brand Finance Canada 100 February 2017 9.

Analysis – Canada 100

Brand Value Over Time Brand Value Change 2016-2017 (CADm) Brand Value Change 2016-2017 (%)

18 Four SeasonsFour Seasons CAD4092 CAD4092 Investors GroupInvestors Group 73% 73% Bank of Montreal TD Bank TD Bank CAD3623 CAD3623 Petro-CanadaPetro-Canada 63% 63% Royal Bank OfRoyal Canada Bank Of Canada CAD3382 CAD3382 Rogers Rogers 55% 55% 15 Rogers Rogers CAD3200 CAD3200 CNRL CNRL 50% 50% Scotiabank Tim Horton's Tim Horton's CAD3006 CAD3006 Enbridge Enbridge 49% 49% Bank of MontrealBank of Montreal CAD2365 CAD2365 Air Canada Air Canada 49% 49% 12 Telus CAD2354 CAD2354 Brookfield AssetBrookfield Management Asset Management 45% 45% Bell Brookfield AssetBrookfield Management Asset Management CAD2143 CAD2143 Shaw Shaw 44% 44% CIBC CIBC CAD1970 CAD1970 Tim Horton's Tim Horton's 43% 43% CNRL CAD1713 9 TD Bank CNRL CAD1713 Westjet AirlinesWestjet Airlines 40% 40% CAD-159 CAD-159Circle K Circle K -15% -15%Couche-Tard Couche-Tard CAD-164 CAD-164Canadian UtilitiesCanadian Utilities -16% -16%Imperial Oil Imperial Oil Royal Bank Of CanadaCAD-205 CAD-205Metro Metro -16% Manulife Manulife Brand ae n 6 -16% CAD-258 CAD-258Husky EnergyHusky Energy -17% -17%SNC-Lavalin SNC-Lavalin CAD-292 CAD-292Bombardier Bombardier -18% -18%Crescent PointCrescent Point CAD-295 Imperial Oil Cae 3 CAD-295 Imperial Oil -18% -18% Cae CAD-311 CAD-311Great-West LifecoGreat-West Lifeco -19% -19%Great-West LifecoGreat-West Lifeco CAD-505 CAD-505Manulife Manulife -28% -28%Canadian UtilitiesCanadian Utilities CAD-552 CAD-552Cenovus Cenovus -36% Cenovus 0 -36% Cenovus CAD-1371 Valeant 2011 2012 2013 2014 2015 2016 2017 CAD-1371 Valeant -41% -41%Valeant Valeant -571.428571357.1428571285.714286-571.4285712214.285714357.1428573142.8571431285.7142864071.4285712214.2857143142.8571434071.428571 -40 -24 -8 8-4024-2440-8568 722488401045612072 88 104 120 -1500.000000-1500.000000 2017

Colour Industry BV total (CADm) % Banks 79403 33 Insurance Telecoms 36996 15 Oil and Gas 25529 11 Banks Retail 25106 11 33% Mining Insurance 13483 6 Restaurants 10077 4 Logistics 8530 4 Insurance Food 7746 3 6% Hotels 4092 2 Telecoms Airlines 3688 2 Retail Others 24345 10.2 11% Telecoms Total 238994 100 15% Oil and Gas 11%

10. Brand Finance Canada 100 February 2017 Brand Finance Canada 100 February 2017 11. Brand Finance Canada 100 (CADm)

Top 100 most valuable Canadian brands 1 - 50. Top 100 most valuable Canadian brands 51 - 100.

Rank Rank Brand name Sector Brand % Brand Brand Brand Rank Rank Brand name Sector Brand % Brand Brand Brand 2017 2016 value (CADm) change value rating rating 2017 2016 value (AUDm) change value (AUDm) rating rating 2017 (AUDm) 2016 2017 2016 2017 2016 2017 2016 1 1 Royal Bank Of Canada Banks 16,608 26% 13,226 AA+ AA- 51 44 Potashcorp 2 2 TD Bank Banks 16,484 28% 12,861 AAA- AA 52 49 Viterra 3 3 Bell Telecoms 12,707 3% 12,313 AAA- AAA- 53 54 Canada Life 4 4 Scotiabank Banks 11,289 15% 9,819 AAA- AAA- 54 50 ONEX 5 5 Bank of Montreal Banks 10,204 30% 7,839 AA+ AA- 55 62 Westjet Airlines 6 9 Tim Horton's Restaurants 10,077 43% 7,071 AA+ AA+ 56 60 Cogeco 7 8 Rogers Telecoms 9,050 55% 5,850 AAA- AA 57 38 Cenovus 8 6 Telus Telecoms 8,611 38% 6,258 AAA- AA 58 Carling Black Label 9 7 CIBC Banks 8,215 32% 6,245 AA+ AA 59 Seven Generations Energy 10 11 Brookfield Asset Management Banks 6,899 45% 4,757 A+ A+ 60 Ivanhoe Cambridge 11 14 CNRL 61 56 Industrial Alliance 12 12 Canadian National Railway 62 Holland America Line 13 17 Enbridge 63 67 Jean Coutu 14 13 Desjardins 64 61 Videotron 15 Four Seasons 65 Investors Group 16 15 Circle K 66 66 D+H 17 10 McCain 67 68 Saputo 19 18 Suncor Energy 68 72 Hydro One 18 27 Shaw 69 69 Odysseyre 20 39 CGI 70 LoyaltyOne 21 29 Canadian Tire 71 73 Cineplex 22 34 Air Canada 72 Meg Energy 23 19 Manulife 73 63 SNC-Lavalin 24 24 Loblaws 74 64 Crescent Point 25 21 Sobey's 75 74 FGL Sports 26 20 Sun Life 76 70 CI Financial 27 22 National Bank of Canada 77 BRP 28 25 CP 78 77 Canadian Tire Gas+ 29 40 Intact Financial 79 Warehouse Clubs 30 28 Magna 80 75 31 30 Lululemon 81 79 Rona 32 53 Petro-Canada 82 59 Hudson's Bay 33 16 Valeant 83 81 34 23 Bombardier 84 83 ARC 35 35 Encana 85 Crum & Forster 36 26 Husky Energy 86 85 Leon's 37 33 Dollarama 87 84 Manitoba Telecom 38 43 88 Brookfield Infrastructure 39 41 Gildan 89 71 Canadian Utilities 40 48 TransCanada 90 99 Investors Group 41 32 Imperial Oil 91 76 Barrick Gold 42 37 92 78 Transcontinental 43 51 Open Text 93 86 Yellow Pages 44 52 Neilson 94 Vachon 45 55 Dairyland 95 92 Food Basics 46 58 BCE 96 80 Cae 47 36 Metro 97 98 Mark's Work Wearhouse 48 42 Great-West Lifeco 98 Super C 49 45 Agrium 99 93 Laurentian Bank 50 57 London Life Insurance 100 47 Couche-Tard

12. Brand Finance Canada 100 February 2017 Brand Finance Canada 100 February 2017 13. Brand Finance Canada 100 (USDm)

Top 100 most valuable Canadian brands 1 - 50. Top 100 most valuable Canadian brands 51 - 100.

Rank Rank Brand name Sector Brand % Brand Brand Brand Rank Rank Brand name Sector Brand % Brand Brand Brand 2017 2016 value (AUDm) change value rating rating 2017 2016 value (AUDm) change value (AUDm) rating rating 2017 (AUDm) 2016 2017 2016 2017 2016 2017 2016 1 1 Royal Bank Of Canada Banks 12,659 28% 9,880 AA+ AA- 51 44 Potashcorp 2 2 TD Bank Banks 12,565 31% 9,607 AAA- AA 52 49 Viterra 3 3 Bell Telecoms 9,686 5% 9,198 AAA- AAA- 53 54 Canada Life 4 4 Scotiabank Banks 8,605 17% 7,335 AAA- AAA- 54 50 ONEX 5 5 Bank of Montreal Banks 7,778 33% 5,856 AA+ AA- 55 62 Westjet Airlines 6 9 Tim Horton's Restaurants 7,681 45% 5,282 AA+ AA+ 56 60 Cogeco 7 8 Rogers Telecoms 6,898 58% 4,370 AAA- AA 57 38 Cenovus 8 6 Telus Telecoms 6,564 40% 4,674 AAA- AA 58 Carling Black Label 9 7 CIBC Banks 6,262 34% 4,665 AA+ AA 59 Seven Generations Energy 10 11 Brookfield Asset Management Banks 5,259 48% 3,553 A+ A+ 60 Ivanhoe Cambridge 11 14 CNRL 61 56 Industrial Alliance 12 12 Canadian National Railway 62 Holland America Line 13 17 Enbridge 63 67 Jean Coutu 14 13 Desjardins 64 61 Videotron 15 Four Seasons 65 Investors Group 16 15 Circle K 66 66 D+H 17 10 McCain 67 68 Saputo 19 18 Suncor Energy 68 72 Hydro One 18 27 Shaw 69 69 Odysseyre 20 39 CGI 70 LoyaltyOne 21 29 Canadian Tire 71 73 Cineplex 22 34 Air Canada 72 Meg Energy 23 19 Manulife 73 63 SNC-Lavalin 24 24 Loblaws 74 64 Crescent Point 25 21 Sobey's 75 74 FGL Sports 26 20 Sun Life 76 70 CI Financial 27 22 National Bank of Canada 77 BRP 28 25 CP 78 77 Canadian Tire Gas+ 29 40 Intact Financial 79 Warehouse Clubs 30 28 Magna 80 75 Finning 31 30 Lululemon 81 79 Rona 32 53 Petro-Canada 82 59 Hudson's Bay 33 16 Valeant 83 81 Teck Resources 34 23 Bombardier 84 83 ARC 35 35 Encana 85 Crum & Forster 36 26 Husky Energy 86 85 Leon's 37 33 Dollarama 87 84 Manitoba Telecom 38 43 Shoppers Drug Mart 88 Brookfield Infrastructure 39 41 Gildan 89 71 Canadian Utilities 40 48 TransCanada 90 99 Investors Group 41 32 Imperial Oil 91 76 Barrick Gold 42 37 Real Canadian Superstore 92 78 Transcontinental 43 51 Open Text 93 86 Yellow Pages 44 52 Neilson 94 Vachon 45 55 Dairyland 95 92 Food Basics 46 58 BCE 96 80 Cae 47 36 Metro 97 98 Mark's Work Wearhouse 48 42 Great-West Lifeco 98 Super C 49 45 Agrium 99 93 Laurentian Bank 50 57 London Life Insurance 100 47 Couche-Tard

14. Brand Finance Canada 100 February 2017 Brand Finance Canada 100 February 2017 15. Understand Your Brand’s Value

Drivers of Change Brand Strength Index 2016 An ideal balanced scorecard of fundamental brand related measures Brand Value Dashboard Three key areas impact Brand Value (EURm) Brand Valuation Assumptions Effective BSI Weighting Attributes 18 131 Underlying economic assumptions used in valuation 34 $707m $882m $10,216m 6.25% Product: R&D expenditure, Widely recognised factors deployed by Brand Capital expenditure Strong brand (EUR) (EUR) Marketers to create brand loyalty and Brand [XXX] Brand Value Brand Value (EUR) Brand value (EURm) Investment Enterprise Value AA+ Investment 25% 6.25% Place: Website Ranking 729 729 Inputs market share. We therefore benchmark 78/100 616 616 650 6.25% People: Number of Employees, €650m €729m €9,399m Employee Growth brands against relevant input measures by Brand 25% Equity X 6.25% Promotion: Marketing expenditure sector against each of these factors. % = Historic brand value performance (EURm) Peer Group Comparison (USDm) $650 Brand Performance Forecast revenues $6,265 2015 Brand Strength Business Performance External Changes 2016 5.00% Familiarity 800 729 Weak brand $ $3,031 7.50% Consideration How do stakeholders feel about the brand 650 $2,328 $1,913 $707 700 607 7.50% Preference vs. competitors? Brand Strength Business Outlook Economic Outlook Customer 35% 7.50% Satisfaction 600 [XXX] [XXX]’s brand strength has increased compared to last year. Brands drive higher revenues. An investor would therefore All future returns are subject to risk. If the risk of not 7.50% Recommendation/NPS • Brand equity accounts for 50% to reflect Revenue Long Term Growth Rate Tax Rate Discount Rate 500 pay more for a brand that makes more money. receiving the forecast returns is higher (increasing the Brand the importance of stakeholder As the brand continues its sustainability drive, [XXX] has discount rate), the brand’s market is not growing as quickly Equity 5.00% Employee Score Licensing payments for the use of a After the explicit forecasts, the brand Forecasted royalties are reduced by Earnings in the future are worth less 320 Staff 5% perceptions to behaviour 400 Brand Value by Product Segment been improving across all CSR scores. It now has the [XXX]’s revenue base and the 5 year forecast growth have as expected (lower long term growth rate) or the tax rate in brand are derived from revenue. will continue to grow. However, it is the tax rate to reflect the actual than consumption now. This rate is 275 highest CSR scores it has had in the last four years across fallen this year, resulting in a loss of $177m USD to total the brand’s regions of operation is higher, then the brand’s 300 Increases or decreases in forecasted unlikely that the company will sustain amount that would be received by therefore used to reduce future 213 Environment, Employees and Governance. brand value. value is reduced and vice versa. 50% 2.50% Credit Rating • Brand Equity is important to all 37% Financial 5% revenue increase or decrease the extraordinary returns into the future the brand owner after tax. earnings to their value today. Nutrition 2.50% Analyst Recommendation stakeholder groups with customers being 200 The premium approach is also leading to significant margin However, it is important to note that this has arisen as a final valuation. so forecast industry growth rates are advantages – positively affecting “performance”. result of the company divesting a number of divisions. the most important 100 Performance Materials 1.67% Environment Score applied. 58% External 5% 1.67% Community Score 0 Other Activities 4% 1.67% Governance Score 2011 2012 2013 2014 2015 2016 2016 2015 2016 2015 2016 2015 5 year Compound Annual Growth Rate Long Term Growth Rate Tax Rate Discount Rate Brand 5 Year Forecast 6.25% Revenue (CAGR) 78 76 2.6% 3.4% Discount Rate 9.1% 8.6% Brand Strength Index Strength Growth Quantitative market, market share and 7% Brand 6.25% % Margin financial measures resulting from the Long Term Growth 3.2% 2.6% 2015 2014 2015 2014 2015 2014 2015 2014 Base Year 8,205 9,570 Performance Outputs 25% 6.25% % Forecast Margin Revenue (EURm) strength of the brand. 6.25% % Forecast Revenue Growth Tax 28.9% 30.2% 25% 2.6% 3.4% -0.8% 3.2% 2.6% +0.6% 29% 30% -1.3% 9.1% 8.6% +0.5%

Determining the Royalty Rate Brand Performance Brand Investment In order to apply the Brand Strength Index, a hypothetical royalty rate range needs to be set Competitor Royalty Rates An ideal balanced scorecard of fundamental brand related measures Proven inputs that drive the Brand Equity and financial results Following the OECD guidelines, Brand Finance sets the hypothetical brand royalty rate ranges by reference to three tests: Competitor royalty rates will be different based on different strengths of the brand, having Brand Strength Index Brand Strength Index different operating segments and company-specific long term affordability • Comparable Agreements: A search of comparable licensing agreements for brands in each industry is conducted every year. The margin analyses Brand Investment Brand Performance are then compared against the royalty rates found in these agreements to analyse the importance of brand in the industry and set an appropriate 1.2% average industry royalty rate. 10.0 1.0% 10.0 9.3 • Industry Margins: An analysis of 25% to 40% of margins, generally accepted as rules of thumb for licensing rates for all intangible assets in a 8.9 8.9 8.0 7.7 company. These rates are adjusted to take into account the importance of brand in a given industry. 8.0 8.1 0.8% 0.8% 0.8% 0.8% 6.4 6.0 • Affordability: Thirdly, an analysis of the brand’s specific royalties is conducted. If the brand has been able to sustain extraordinary profits over an 0.7% 6.0 5.3 0.6% extended time it is likely that hypothetical brand owners would be willing to pay closer to the company’s margins than the industry average. In the 0.6% 0.6% 0.6% 5.0 4.0 case of Brand Finance’s League Table models, affordability will be based on the forecast EBIT. 4.0 [XXX]DSM Best in Class Competitor Average 0.5% DSM[XXX] Best in Class Competitor Average 2.0 • Average industry royalty rate ranges can be seen below 2.0 0.0 High 0.0 Effective Effective Weighting 6.25% 6.25% 6.25% 6.25% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Weighting 6.25% 6.25% 6.25% 6.25% DSM BASF Dow Du Pont Akzo Nobel Akzo Nobel Best in Best in Class [XXX] Du Pont Multiple Akzo Nobel Mid Class Akzo Nobel Dow Akzo Nobel Du Pont Product Place People Promotion [XXX] Revenue Margin % Forecast Revenue Growth % Forecast Margin % Low Relative quality of the brand’s investment in Relative quality of a brand’s distribution Relative quality of the human network Relative quality of the brand’s promotions. its products. The measure can include R&D network. It can include the quality of supporting the brand. This may include the Marketing investment, the quality of visual Akzo Nobel – Paints and spend and capital expenditure. logistical infrastructure available to the size of the support network, its likely future identity and the effectiveness of the [XXX] BASF Dow Du Pont Akzo Nobel - Corporate The brand’s ability to drive a The brand’s ability to drive a The brand’s ability to improve Coatings brand, the quality of its online presence, or growth or the investment in workforce brand’s social media is covered by this volume premium. Implied by price premium. Implied by business prospects across the number and quality of its retail outlets. training and human resources. measure. 78 78 80 80 82 82 current and future revenue. current and future margins. various KPIs

A Brand Value Report provides a complete + Internal understanding of brand Royalty Rates Trademark Audit breakdown of the assumptions, data + Brand value tracking sources and calculations used to arrive at + Competitor benchmarking Analysis of competitor royalty rates, industry Analysis of the current level of protection for the your brand’s value. + Historical brand value royalty rate ranges and margin analysis used to brands word marks and trademark iconography Each report includes expert recommendations determine brand specific royalty rate. highlighting areas where the marks are in need for growing brand value to drive business of protection. performance and offers a cost-effective way to Brand Strength Index + Transfer pricing gaining a better understanding of your position + Licensing/ franchising negotiation + Highlight unprotected marks against competitors. A breakdown of how the brand performed on + International licensing + Spot potential infringement various metrics of brand strength, benchmarked + Competitor benchmarking + Trademark registration strategy A full report includes the following sections against competitor brands in a balanced which can also be purchased individually. scorecard framework. For more information regarding our League Cost of Capital Table Reports, please contact: + Brand strength tracking Brand Valuation Summary + Brand strength analysis A breakdown of the cost of capital calculation, Alex Haigh + Management KPI’s including risk free rates, brand debt risk Director of League Tables, Brand Finance Overview of the brand valuation including + Competitor benchmarking premiums and the cost of equity through CAPM. executive summary, explanation of changes in [email protected] brand value and historic and peer group + Independent view of cost of capital for internal comparisons. valuations and project appraisal exercises +44 (0)20 7389 9400

16. Brand Finance Canada 100 February 2017 Brand Finance Canada 100 February 2017 17. How we can help Contact details

1. Valuation: What are my intangible assets 2. Analytics: How can I improve marketing worth? effectiveness? Contact us Our offices Valuations may be conducted for technical purposes Analytical services help to uncover drivers of demand For brand value report and to set a baseline against which potential strategic and insights. Identifying the factors which drive enquiries, please contact: brand scenarios can be evaluated. consumer behaviour allow an understanding N 2. IO AN of how brands create bottom-line impact. Alex Haigh T A A L Director of League Tables U Y L T Brand Finance A I V C • Branded Business Valuation • Trademark Valuation [email protected] . S • Market Research Analytics • Brand Audits 1 • Intangible Asset Valuation • Brand Contribution Brand & • Brand Scorecard Tracking • Return on Marketing Investment

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Y T . 4 owners of branded businesses get a better deal modelling will identify the best opportunities, [email protected] by leveraging the value of their intangibles. ensuring resources are allocated to those activities which have the most impact on brand and business value. For all other enquiries, please contact: • M&A Due Diligence • Franchising & Licensing • Brand Governance • Brand Architecture & Portfolio Management • Tax & Transfer Pricing • Expert Witness • Brand Transition • Brand Positioning & Extension [email protected] +44 (0)207 389 9400 For further information on Brand Finance®’s services and valuation experience, please contact your local representative: Country Contact Email address Australia Mark Crowe [email protected] Brazil Pedro Tavares [email protected] MARKETING FINANCE TAX LEGAL linkedin.com/company/ Canada Bill Ratcliffe [email protected] brand-finance China Minnie Fu [email protected]

We help marketers to connect We provide financiers and We help brand owners and We help clients to enforce and Caribbean Nigel Cooper [email protected] their brands to business auditors with an independent fiscal authorities to understand exploit their intellectual East Africa Jawad Jaffer [email protected] performance by evaluating the assessment on all forms of the implications of different property rights by providing France Victoire Ruault [email protected] return on investment (ROI) of brand and intangible asset tax, transfer pricing and brand independent expert advice in- facebook.com/brandfinance Germany Dr. Holger Mühlbauer h.mü[email protected] brand based decisions and valuations. ownership arrangements. and outside of the courtroom. Greece Ioannis Lionis [email protected] strategies. Holland Marc Cloosterman [email protected] India Ajimon Francis [email protected] + Branded Business Valuation + Branded Business Valuation + Branded Business Valuation + Branded Business Valuation twitter.com/brandfinance Indonesia Jimmy Halim [email protected] + Brand Contribution + Brand Contribution + Brand Contribution + Brand Contribution Italy Massimo Pizzo [email protected] + Trademark Valuation + Trademark Valuation + Trademark Valuation + Trademark Valuation Malaysia Samir Dixit [email protected] + Intangible Asset Valuation + Intangible Asset Valuation + Intangible Asset Valuation + Intangible Asset Valuation Disclaimer + Brand Audit + Brand Audit + Brand Audit + Brand Audit Mexico Laurence Newell [email protected] Brand Finance has produced this study LatAm (exc. Brazil) Laurence Newell [email protected] + Market Research Analytics + Market Research Analytics + Market Research Analytics + Tax & Transfer Pricing with an independent and unbiased + Brand Scorecard Tracking + Brand Scorecard Tracking + Franchising & Licensing + Expert Witness analysis. The values derived and Middle East Andrew Campbell [email protected] opinions produced in this study are Nigeria Babatunde Odumeru [email protected] + Return on Marketing + Return on Marketing + Tax & Transfer Pricing based only on publicly available Investment Investment + Expert Witness information and certain assumptions Portugal Pedro Tavares [email protected] + Brand Transition + Brand Transition that Brand Finance used where such Russia Alexander Eremenko [email protected] data was deficient or unclear . Brand + Brand Governance + Brand Governance Finance accepts no responsibility and Scandinavia Alexander Todoran [email protected] + Brand Architecture & + Brand Architecture & will not be liable in the event that the Singapore Samir Dixit [email protected] Portfolio Management Portfolio Management publicly available information relied upon is subsequently found to be South Africa Jeremy Sampson [email protected] + Brand Positioning & + Brand Positioning & inaccurate. Spain Lorena Jorge ramirez [email protected] Extension Extension Sri Lanka Ruchi Gunewardene [email protected] + Franchising & Licensing + Mergers, Acquisitions and The opinions and financial analysis expressed in the report are not to be Switzerland Victoire Ruault [email protected] Finance Raising Due construed as providing investment or Diligence business advice. Brand Finance does Turkey Muhterem Ilgüner [email protected] not intend the report to be relied upon UK Alex Haigh [email protected] + Franchising & Licensing for any reason and excludes all liability + Tax & Transfer Pricing to any body, government or USA Ken Runkel [email protected] + Expert Witness organisation. Vietnam Lai Tien Manh [email protected]

18. Brand Finance Canada 100 February 2017 Brand Finance Canada 100 February 2017 19. Contact us.

The World’s Leading Independent Branded Business Valuation and Strategy Consultancy T: +1 647 343 7266 E: [email protected] www.brandfinance.com

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