2017 the Annual Report on the World’S Most Valuable Australian Brands February 2017 Foreword Contents

Australia 100 2017 The annual report on the world’s most valuable Australian brands February 2017 Foreword Contents

Foreword 2

Definitions 4

Methodology 6

Analysis - Australia 100 8

Full Table (AUDm) 12

Full Table (USDm) 14

Understand Your Brand’s Value 16

How We Can Help 18

Contact Details 19 Mark Crowe, MD, Brand Finance David Haigh, CEO, Brand Finance Australia By valuing brands and understanding the drivers Most organisations miss huge opportunities to of value, the contribution of marketing can be effectively make use of their most important measured beyond conventional metrics such as assets. Where it does happen it often lacks market share, attracting customers and building financial rigour and is heavily reliant on poorly loyalty, to how investment drives business understood qualitative measures. As a result, performance along with maximising profits and marketing teams struggle to communicate the increasing shareholder value. value of their work, finance teams - unconvinced by marketing ‘mumbo jumbo’, may fail to agree By placing a financial value on such a powerful necessary investments, and marketing spend value creating asset, boards and management directed with insufficient financial guidance may are compelled to recognise the need to have an result in a downward spiral. effective brand investment strategy. Brand Finance believes that the ultimate purpose The Brand Finance Australia 100, which of brands is to make money. By valuing brands, accounts for more than $143 billion in brand we provide a mutually intelligible language for value, highlights the important role of brand and marketers and finance teams in order to how it contributes to the bottom line for maximise profits. Our recently conducted share organisations. price study revealed that investing in the most highly branded companies would lead to a return almost double that of the average for the S&P 500 as a whole. Acknowledging and managing a company’s intangible assets taps into the hidden value that lies within it. The following report is a first step to understanding brands and how to value them to benefit the business. The team and I look forward to continuing the conversation with you.

2. Brand Finance AustraliaGlobalAirlines 500 30 100 30February MarchFebruaryFebruary 20162016 20172015 Brand Finance Australia 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 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 tables are those of the potentially transferable for all the expectations and opinions held by directly and easily influenced by those Brand Finance always conducts a Branded brand asset only, but for marketers and customers, staff and other stakeholders about responsible for marketing and brand Business Valuation as part of any brand managers alike. An assessment of overall an organisation and its products and services. management. In order to determine the valuation. Where a company has a purely mono- brand contribution to a business provides However, when looking at brands as business strength of a brand we have developed the branded architecture, the business value is the powerful insights to help optimise performance. assets that can be bought, sold and licensed, a Brand Strength Index (BSI). We analyse same as the overall company value or more technical definition is required. marketing investment, brand equity (the ‘enterprise value’. Brand Contribution represents the overall uplift goodwill accumulated with customers, staff and in shareholder value that the business derives Brand Finance helped to craft the internationally other stakeholders) and finally the impact of In the more usual situation where a company from owning the brand rather than operating a recognised standard on Brand Valuation, ISO those on business performance. owns multiple brands, business value refers to generic brand. 10668. That defines a brand as “a marketing- the value of the assets and revenue stream of related intangible asset including, but not limited Following this analysis, each brand is assigned the business line attached to that brand 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 specifically. We evaluate the full brand value customers but also staff, strategic partners, designs, or a combination of these, intended to brand value calculation. Based on the score, chain in order to understand the links between regulators, investors and more, having a identify goods, services or entities, or a each brand in the league table is assigned a marketing investment, brand tracking data, significant impact on financial value beyond combination of these, creating distinctive rating between AAA+ and D in a format similar stakeholder behaviour and business value to what can be bought or sold in a transaction. images and associations in the minds of to a credit rating. AAA+ brands are maximise the returns business owners can stakeholders, thereby generating economic exceptionally strong and well managed while a obtain from their brands. benefits/value” failing brand would be assigned a D grade.

4. Brand Finance Australia 100 February 2017 Brand Finance Australia 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 brand sectors. This is done by reviewing ‘Royalty Relief approach’. This approach comparable licensing agreements sourced from involves estimating the likely future sales that are Brand Finance’s extensive database of license attributable to a brand and calculating a royalty agreements and other 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 already owned. brand’s sector is 1-5% and a brand has a brand The steps in this process are as follows: strength score of 80 out of 100, then an appropriate 1 2 3 4 royalty rate for the use of this brand in the given Brand Audit Trial & Preference Acquisition & Valuation Modelling 1 Calculate brand strength on a scale of 0 to 100 sector will be 4.2%. Retention based on a number of attributes such as emotional 4 Determine brand specific revenues estimating a connection, financial performance and sustainability, proportion of parent company revenues attributable Audit the impact Run analytics to Link stakeholder Model the impact of behaviour on 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 from the BrandAsset® Valuator database, the function of historic revenues, equity analyst brand equity world’s largest database of brands, which measures forecasts and economic growth rates. brand equity, consideration and emotional imagery 6 Apply the royalty rate to the forecast revenues to attributes to assess brand personality in a category derive brand revenues. agnostic manner. 7 Brand revenues are discounted post tax to a net 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 Current brand and Target brand and score out of 100. royalty rate range. derive brand values. discounted to a net business value business value present value (NPV) which equals the brand value. 6. Brand Finance Australia 100 February 2017 Brand Finance Australia 100 February 2017 7.

Analysis – Australia 100

Rank 2017: 1 2016: 1 Rank 2017: 6 2016: 8 BV 2017: $ 14,275m BV 2017: $ 7,936m 1 -2% 6 +21% BV 2016: $ 14,581m BV 2016: $ 6,572m Brand Rating: AAA- Brand Rating: AA+

Australia Rank 2017: 2 2016: 4 Rank 2017: 7 2016: 5 BV 2017: $ 10,706m BV 2017: $ 7,604m 2 +9% 7 -4% BV 2016: $ 9,786m BV 2016: $ 7,961m Brand Rating: AAA- Brand Rating: AA+

Rank 2017: 3 2016: 3 Rank 2017: 8 2016: 7 100 3 BV 2017: $ 10,597m +4% 8 BV 2017: $ 5,148m -28% BV 2016: $ 10,157m BV 2016: $ 7,183m Brand Rating: AA+ Brand Rating: AA

Rank 2017: 4 2016: 6 Rank 2017: 9 2016: 9 BV 2017: $ 4,325m 4 BV 2017: $ 8,443m +12% 9 -12% BV 2016: $ 7,558m BV 2016: $ 4,933m Brand Rating: AAA- Brand Rating: AA+

Rank 2017: 5 2016: 2 Rank 2017: 10 2016:11 BV 2017: $ 8,378m BV 2017: $ 3,253m 5 -21% 10 -18% BV 2016: $ 10,560m BV 2016: $ 3,955m Brand Rating: AA Brand Rating: AA-

The total value of the 100 most valuable Australia improved from 3.7% in 2016 to 4.2% this year. customer base, but financial results showed that The Australian sharemarket has risen and share brands is nearly $143 billion. This figure Customer brand equity fell slightly over the last the company’s mobile subscriber base fell by prices in the banking industry have climbed. highlights the importance of effectively managing year, with scores on individual metrics such as approximately 0.5% year-on-year. The brand’s Much of the Australian banking sector depends brand performance and growth, along with the Consideration, Satisfaction and already declining brand value will maintain its partially on Trump and his agenda; if the critical role of the brand as the key value-creating Recommendation falling marginally. Amongst the downward trend if the brand continues to president is successful in lifting US GDP growth, asset. world’s most valuable brands, Telstra ranks underperform as a result of its ambitious the Australian banks would thrive due to large 125th, and the 13th most valuable telecoms endeavors. exposure to positively impacted commodity Telstra has retained the top spot as Australia’s brand. prices. most valuable brand, valued at an impressive In contrast to the stagnant telecoms sector, the AUD14.3 billion despite a 2% decrease. Brand Optus, the only other telecoms brand in the top Australian banking sector has seen relatively Woolworths has slipped from second to fifth after Finance Australia’s Managing Director, Mark 10, recorded a 12% decline in value. Mark Crowe stronger performance this year; 50% of the top experiencing a 21% decrease in brand value. Crowe, comments, “It is testimony to Telstra’s continues, “Optus’ business performance 10 brands are banks. CBA, ANZ and nab have From 2009 to 2015, Woolworths was Australia’s brand strength that despite a decline of 18% in worsened over the course of last year, with Optus enjoyed healthy increases in brand value. Mark most valuable brand. Mark Crowe comments, enterprise value, Telstra’s brand value has only branded revenue falling.” Crowe comments, “A 9% increase in brand value “Falling profits and a significant decline in brand decreased slightly by 2%.” has helped CBA reclaim its position as Australia’s strength, along with strong competition, will Furthermore, the decision to spend an estimated most valuable banking brand.” CBA is also the continue to put pressure on Woolworths brand The telecoms giant’s business performance has AUD150 million over the next three years to nation’s most powerful brand with a brand value, unless an improvement in customer had a positive impact on brand value – its broadcast the English Premier League has not strength score of 84. metrics can be achieved.” reported revenue increased 2% while the yielded the results the brand had hoped for. The expected cumulative annual growth rate objective of the operation was to bolster

8. Brand Finance Australia 100 February 2017 Brand Finance Australia 100 February 2017 9.

Analysis – Australia 100

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

15000 15 Coles Coles AUD1363 AUD1363 Seek Seek 79% 79% CommonwealthCommonwealth Bank of Australia Bank of Australia AUD920 AUD920 Jb Hi-Fi Jb Hi-Fi 75% 75% Energy AustraliaEnergy Australia AUD887 AUD887 ComputershareComputershare 64% 64% nab nab AUD886 AUD886 Kmart Kmart 61% 61% 1200012 CHEP CHEP AUD874 AUD874 Bunnings Bunnings 56% 56% The Lott The Lott AUD709 AUD709 Sydney AirportSydney Airport 51% 51% ASB Bank ASB Bank AUD677 AUD677 Jetstar Jetstar 41% 41% AUD591 AUD591 90009 Jupiters Jupiters Amcor Amcor 40% 40% Bunnings Bunnings AUD524 AUD524 Challenger Challenger 37% 37% Seven Seven AUD508 AUD508 Lend Lease Lend Lease 36% 36% AUD-255. AUD-255. Big W Big W -20% -20%Oil Search Oil Search 6000 6 AUD-283 AUD-283 Santos Santos -21% -21%Woolworths Woolworths

Brand ae n AUD-307 AUD-307 Telstra Telstra -22% -22%Virgin AustraliaVirgin Australia AUD-331 AUD-331 Qantas Qantas -23% -23%Rio Tinto Rio Tinto AUD-358 AUD-358 Westpac Westpac WorleyparsonsWorleyparsons 30003 -25% -25% AUD-608 AUD-608 Optus Optus -26% -26%Big W Big W AUD-703 AUD-703 Macquarie Macquarie -27% -27%Santos Santos AUD-962 AUD-962 Rio Tinto Rio Tinto -28% -28%BHP BillitonBHP Billiton 0 AUD-2035 AUD-2035 BHP BillitonBHP Billiton -33% -33%Thiess Thiess 2017 2016 2015 2014 2013 2012 2011 AUD-2183 AUD-2183 Woolworths Woolworths -33% -33%Billabong Billabong -3000.000000-2285.714286-1571.428571-3000.000000-857.142857-2285.714286-142.857143-1571.428571571.428571-857.1428571285.714286-142.857143571.4285711285.714286 -40 -24 -8 -408 -2424 40-8 568 7224 8840 10456 12072 88 104 120

Conversely, Coles has climbed two places through a 21% increase in brand value. “Coles is 2017 now poised to pass Woolworths as Australia’s KEY most valuable retail brand,” said Mark Crowe. Colour Industry BV total (AUDm) % Computershare is one of the fastest growing Banks 45,346 31.8 Australian brands this year. The brand jumped a Retail 27,510 19.3 Insurance remarkable 18 places and saw its value increase Telecoms 19,837 13.9 Banks 64% to AUD1 billion. Its brand strength score has Mining 9,662 6.8 31.8% also grown an extraordinary 13 points, Insurance 7,565 5.3 upgrading the brand from an AA- to AAA- status. Mining Insurance Pro services 4,308 3.0 5.3% Airlines 4,034 2.8 The company completed the acquisition of Oil & Gas 3,811 2.7 Altavera Mortgage Services and Capital Markets Mining Others 2,074 14.5 Cooperative as part of their strategy to grow its 6.8% Telecoms Total 142,807 100 global mortgage services business. The Telecoms acquisitions significantly expand 13.9% Retail Computershare’s ability to support mortgage 19.3% lenders and investors and its brand value undoubtedly benefits from the expansion.

10. Brand Finance Australia 100 February 2017 Brand Finance Australia 100 February 2017 11. Brand Finance Brand Finance Australia 100 (AUDm) Australia 100 (AUDm)

Top 100 most valuable Australian brands 1 - 50. Top 100 most valuable Australian brands 50 - 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(AUDm) rating rating 2017 2016 value (AUDm) change value (AUDm) rating rating 2017 2016 2017 2016 2017 2016 2017 2016 1 1 Telstra Telecoms 14,275 -2% 14,581 AAA- AAA- 51 51 Lend Lease 2 4 Commonwealth Bank of Australia Banks 10,706 9% 9,786 AAA- AAA 52 47 Reece Australia 3 3 ANZ Banks 10,597 4% 10,157 AA+ AAA- 53 New Jupiters 4 6 nab Banks 8,443 12% 7,558 AAA- AAA- 54 55 iiNet 5 2 Woolworths Retail 8,378 -21% 10,560 AA AA+ 55 New Seven 6 8 Coles Retail 7,936 21% 6,572 AA+ AA+ 56 48 Asciano 7 5 Westpac Banks 7,604 -4% 7,961 AA+ AAA- 57 52 Myer 8 7 BHP Billiton Mining 5,148 -28% 7,183 AA AA+ 58 59 Bendigo Bank 9 9 Optus Telecoms 4,325 -12% 4,933 AA+ AA+ 59 56 Bank Of Queensland 10 11 Macquarie Banks 3,253 -18% 3,955 AA- AA 60 62 Bluescope Steel 11 10 Rio Tinto 61 54 David Jones 12 15 Suncorp 62 New Liquorland 13 12 Qantas 63 New Rea 14 13 QBE 64 53 TPG Telecom 15 14 St.George 65 New Cochlear 16 18 Devondale 66 New AAPT 17 16 Westfield 67 66 Stockland 19 17 Woodside 68 New Spotless Group H 18 20 Crown 69 63 Aurizon 20 27 Bunnings 70 61 Priceline 21 19 Origin 71 65 Incitec Pivot 22 36 Kmart 72 New IFCO 23 25 AGL 73 67 ASX 24 42 Jb Hi-Fi 74 64 Dulux 25 43 Computershare 75 58 Oil Search 26 21 Flight Centre 76 68 Officeworks 27 33 Holden 77 57 Billabong 28 24 Australia Post 78 New MAP 29 38 Amcor 79 71 South32 30 31 Harvey Norman 80 73 CGU 31 New Energy Australia 81 69 Pacific National 32 New CHEP 82 82 Sydney Airport 33 41 Leighton 83 77 Transurban 34 50 Seek 84 74 Swann 35 30 BT Financial Group 85 80 Challenger 36 29 Bankwest 86 60 Thiess 37 34 Target 87 70 NRMA 38 39 CSL 88 New Vocus 39 37 IGA 89 81 Patrick 40 23 Santos 90 New MYOB 41 32 AMP 91 New UBET 42 40 Medibank Pvt Ltd 92 72 Worleyparsons 43 28 Virgin Australia 93 83 UGL 44 26 Big W 94 78 Star City 45 44 Boral 95 88 Chandler Macleod 46 New The Lott 96 New Flexigroup Ltd 47 46 Colonial First State 97 85 Racv 48 New ASB Bank 98 New Perpetual 49 49 Jetstar 99 87 IOOF 50 35 Fortescue 100 90 Brambles

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

Top 100 most valuable Australian brands 1 - 50. Top 100 most valuable Australian brands 50 - 100.

Rank Rank Brand name Sector Brand % Brand Brand Brand Rank Rank Brand name Sector Brand % Brand Brand Brand 2017 2016 value (USDm) change value rating rating 2017 2016 value (USDm) change value (USDm) rating rating 2017 (USDm) 2016 2017 2016 2017 2016 2017 2016 1 1 Telstra Telecoms 10,943 2% 10, 70707 AAA- AAA- 51 51 Lend Lease 2 4 Commonwealth Bank of Australia Banks 8,207 14% 7,186 AAA- AAA 52 47 Reece Australia 3 3 ANZ Banks 8,124 9% 7,458 AA+ AAA- 53 New Jupiters 4 6 nab Banks 6,473 17% 5,550 AAA- AAA- 54 55 iiNet 5 2 Woolworths Retail 6,423 -17% 7,755 AA AA+ 55 New Seven 6 8 Coles Retail 6,084 26% 4,826 AA+ AA+ 56 48 Asciano 7 5 Westpac Banks 5,829 0% 5,846 AA+ AAA- 57 52 Myer 8 7 BHP Billiton Mining 3,947 -25% 5,275 AA AA+ 58 59 Bendigo Bank 9 9 Optus Telecoms 3,316 -8% 3,622 AA+ AA+ 59 56 Bank Of Queensland 10 11 Macquarie Banks 2,494 -14% 2,905 AA- AA 60 62 Bluescope Steel 11 10 Rio Tinto 61 54 David Jones 12 15 Suncorp 62 New Liquorland 13 12 Qantas 63 New Rea 14 13 QBE 64 53 TPG Telecom 15 14 St.George 65 New Cochlear 16 18 Devondale 66 New AAPT 17 16 Westfield 67 66 Stockland 19 17 Woodside 68 New Spotless Group H 18 20 Crown 69 63 Aurizon 20 27 Bunnings 70 61 Priceline 21 19 Origin 71 65 Incitec Pivot 22 36 Kmart 72 New IFCO 23 25 AGL 73 67 ASX 24 42 Jb Hi-Fi 74 64 Dulux 25 43 Computershare 75 58 Oil Search 26 21 Flight Centre 76 68 Officeworks 27 33 Holden 77 57 Billabong 28 24 Australia Post 78 New MAP 29 38 Amcor 79 71 South32 30 31 Harvey Norman 80 73 CGU 31 New Energy Australia 81 69 Pacific National 32 New CHEP 82 82 Sydney Airport 33 41 Leighton 83 77 Transurban 34 50 Seek 84 74 Swann 35 30 BT Financial Group 85 80 Challenger 36 29 Bankwest 86 60 Thiess 37 34 Target 87 70 NRMA 38 39 CSL 88 New Vocus 39 37 IGA 89 81 Patrick 40 23 Santos 90 New MYOB 41 32 AMP 91 New UBET 42 40 Medibank Pvt Ltd 92 72 Worleyparsons 43 28 Virgin Australia 93 83 UGL 44 26 Big W 94 78 Star City 45 44 Boral 95 88 Chandler Macleod 46 New The Lott 96 New Flexigroup Ltd 47 46 Colonial First State 97 85 Racv 48 New ASB Bank 98 New Perpetual 49 49 Jetstar 99 87 IOOF 50 35 Fortescue 100 90 Brambles

14. Brand Finance Australia 100 February 2017 Brand Finance Australia 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 Analysis of competitor royalty rates, industry Analysis of the current level of protection for the your brand’s value. Each report includes + Competitor benchmarking royalty rate ranges and margin analysis used to brands word marks and trademark iconography expert recommendations for growing brand + Historical brand value determine brand specific royalty rate. highlighting areas where the marks are in need value to drive business performance and offers a + Transfer pricing of protection. cost-effective way to gaining a better + Highlight unprotected marks understanding of your position against Brand Strength Index + Licensing/ franchising negotiation competitors. + Spot potential infringement A breakdown of how the brand performed on + International licensing + Trademark registration strategy A full report includes the following sections various metrics of brand strength, benchmarked + Competitor benchmarking which can also be purchased individually. against competitor brands in a balanced scorecard framework. Cost of Capital For more information regarding our League Table Reports, please contact: Brand Valuation Summary + Brand strength tracking A breakdown of the cost of capital calculation, + Brand strength analysis including risk free rates, brand debt risk Alex Haigh Overview of the brand valuation including Director of League Tables, Brand Finance executive summary, explanation of changes in + Management KPI’s premiums and the cost of equity through CAPM. brand value and historic and peer group + Competitor benchmarking + Independent view of cost of capital for internal [email protected] comparisons. valuations and project appraisal exercises +44 (0)20 7389 9400

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

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

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4 themetrics value into of their a single intangibles. insightful scorecard modellingopportunities, will identify the ensuring best opportunities, resources ensuringare [email protected] resources are allocated to those activities which have model to track performance and inform allocated to those activities which have the the most impact on brand and business value. strategic decisions. most impact on brand and business value. For all other enquiries, • M&A Due Diligence • Tax & Transfer Pricing • Brand Governance • Brand Architecture & Portfolio Mang • Franchising & Licensing • Expert Witness • Brand Transition • Brand Positioning & Extension please contact: [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 twitter.com/brandfinance Indonesia Jimmy Halim [email protected] + Branded Business Valuation + Brand Contribution + Brand Contribution + Brand Contribution Italy Massimo Pizzo [email protected] + Brand Contribution + Trademark Valuation + Trademark Valuation + Trademark Valuation Malaysia Samir Dixit [email protected] + Trademark Valuation + Intangible Asset Valuation + Intangible Asset Valuation + Intangible Asset Valuation Disclaimer + Intangible Asset Valuation + Brand Audit + Brand Audit + Brand Audit Mexico Laurence Newell [email protected] Brand Finance has produced this study LatAm (exc. Brazil) Laurence Newell [email protected] + Brand Audit + Market Research Analytics + Market Research Analytics + Tax & Transfer Pricing with an independent and unbiased + Market Research Analytics + 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] + Brand Scorecard Tracking + Return on Marketing + Tax & Transfer Pricing based only on publicly available + Return on Marketing Investment + Expert Witness information and certain assumptions Portugal Pedro Tavares [email protected] Investment + Brand Transition that Brand Finance used where such Russia Alexander Eremenko [email protected] data was deficient or unclear . Brand + Brand Transition + Brand Governance Finance accepts no responsibility and Scandinavia Alexander Todoran [email protected] + Brand Governance + Brand Architecture & will not be liable in the event that the Singapore Samir Dixit [email protected] + Brand Architecture & Portfolio Management publicly available information relied upon is subsequently found to be South Africa Jeremy Sampson [email protected] Portfolio Management + Brand Positioning & inaccurate. Spain Lorena Jorge Ramirez [email protected] + Brand Positioning & Extension Sri Lanka Ruchi Gunewardene [email protected] Extension + Mergers, Acquisitions and The opinions and financial analysis expressed in the report are not to be Switzerland Victoire Ruault [email protected] + Franchising & Licensing 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 Australia 100 February 2017 Brand Finance Australia 100 February 2017 19. Contact us.

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