Italian Research New Coverage Milan, March 29, 2017

GIGLIO BUY SECTOR: Consumers Price (Eu): 3.69 Simone Pozzi +39-02-77115.432 e-mail: [email protected] Target Price (Eu): 5.20

An Ambitious Strategy to Integrate E-Commerce and Media

 Ambitious strategy to integrate e-commerce and media. Founded by Alessandro Giglio in GIGLIO - 12m Performance 2003 and listed on the AIM market since August 2015, Giglio Group aims to become a leading player in the fast-growing e-commerce market. The group, which was born as a pure media company, has entered the e-commerce market after completing two 4.0 3.8 important acquisitions in the last two years. Its aim is to provide brands with an integrated 3.6 3.4 offering that bundles e-commerce and media together. 3.2 3.0  Four profitable divisions… Giglio’s business model is based on four main divisions, each 2.8 being economically sustainable on a stand-alone basis. Evolve (acquisition due to be 2.6 2.4 closed in April) is an e-commerce service provider: it supports brands in developing their 2.2 2.0 online mono-brand stores following every step of the process from the creation of the 1.8 online platform to logistics, from order fulfilment to customer care. Giglio Fashion (acquired m-16 m-16 l-16 s-16 n-16 g-17

in 1Q16) deals with brands’ unsold inventory: it helps brands clear out their warehouses by GIGLIO GIGLIO Rel. to BCI Index (Reb.) selling their products on the many online off-season multi-brand and flash-sale stores

available globally. Giglio Media broadcasts several programmes related to Italian lifestyle (e.g. fashion, culture, design) on different TV and online platforms in China and distributes a thematic channel (Nautical Channel) to more than 100 TV platforms in 47 countries. These RATING: New Coverage contents are broadcast all over the world through the two teleports managed by M-Three TARGET PRICE (Eu): New Coverage Satcom (acquired in 2015). Change in EPS est: 2017E 2018E  …one integrated offering: ibox. In February, alongside the announcement of the

acquisition of Evolve, management presented a new integrated e-commerce offering under the ibox name. Giglio’s ibox offering should allow it to become a leading e- STOCK DATA commerce service provider, assisting brands in all areas from the design of the online Reuters code: GGTV.MI platform to logistics, from order fulfilment and customer care to clearing out unsold stock. Alongside the traditional e-commerce platform, Giglio wants to develop an innovative T- Bloomberg code: GGTV IM commerce platform: Giglio intends to offer brands the opportunity to produce thematic TV Performance 1m 3m 12m programmes showing branded products and to broadcast these programmes widely. Absolute -2.8% 26.8% 94.2% These branded programmes will be integrated with a second-screen technology: using a Relative -9.8% 20.3% 80.9% mobile device the viewer will be able to get access to an online store and purchase the 12 months H/L: 3.82/1.83 product shown on TV.  Coverage initiated with a BUY rating, target price set at Eu5.2. We assume revenues will SHAREHOLDER DATA grow at a double-digit rate over the next five years, in line with expectations for the e- No. of Ord. shares (mn): 16 commerce market to grow at a 15% CAGR. We appreciate the ambitious strategic plan Total No. of shares (mn): 16 identified by management, and at the same time acknowledge the high underlying Mkt Cap Ord (Eu mn): 59 execution risk, which is mainly related to the complexity of successfully managing the whole Total Mkt Cap (Eu mn): 59 e-commerce process; our estimates cautiously do not include any potential positive Mkt Float - ord (Eu mn): 20 impact on revenue and margins from the integrated ibox offering, including the innovative Mkt Float (in %): 33.0% T-commerce platform. Finally, the transition from the AIM to the MTA STAR segment of the Main shareholder: Italian Stock Exchange, scheduled this summer, should boost the stock’s liquidity. Our Eu5.2 Meridiana Holding 53.7% fair value is calculated as a weighted average of a DCF valuation (90%) and an SOP BALANCE SHEET DATA 2017 valuation based on a peer comparison (10%). Book value (Eu mn): 24 Key Figures 2015A 2016A 2017E 2018E 2019E BVPS (Eu): 1.52 P/BV: 2.4 Sales (Eu mn) 143583108122 Net Financial Position (Eu mn): -10 Ebitda (Eu mn) 5 8 9 11 13 Enterprise value (Eu mn): 69 Net profit (Eu mn) 12345 EPS - New (Eu) 0.053 0.153 0.221 0.258 0.298 EPS - Old (Eu)

DPS (Eu) 0.000 0.000 0.000 0.000 0.000 Please see important disclaimer on the last page of this report Ratios & Multiples 2015A 2016A 2017E 2018E 2019E P/E 69.3 24.2 16.7 14.3 12.4 Div. Yield 0.0% 0.0% 0.0% 0.0% 0.0% EV/Ebitda 13.08.86.95.85.0 ROCE 27.6% 17.1% 14.8% 19.2% 20.7%

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Intermonte SIM S.p.A. Milan 20122 (Italy) – Galleria de Cristoforis, 7/8 - phone: +39-02-77115.1 fax: +39-02-77115.300 New York - (USA) - Sales contacts: JPP Eurosecurities, 595 Madison Avenue, 10022 - phone: +1 (212) 521 6718

GIGLIO - KEY FIGURES 2015A 2016A 2017E 2018E 2019E Fiscal year end 31/12/2015 31/12/2016 31/12/2017 31/12/2018 31/12/2019

PROFIT & LOSS (Eu mn) Sales 143583108122 EBITDA 5 8 9 11 13 EBIT 23467 Financial income (charges) (0) (0) (0) (0) (0) Associates & Others 00000 Pre-tax profit (Loss) 12466 Taxes (0) (0) (1) (1) (2) Tax rate (%) -28.1% -14.3% -20.0% -25.0% -25.0% Minorities & discontinue activities (0) 0 0 0 0 Net profit 12345 Total extraordinary items 0 (1) (1) 0 0 Ebitda excl. extraordinary items 5 8 10 11 13 Ebit excl. extraordinary items 2 3 5 6 7 Net profit restated 12445 PER SHARE DATA (Eu) Total shares out (mn) - average fd 14 15 16 16 16 EPS stated fd 0.053 0.115 0.176 0.258 0.298 EPS restated fd 0.053 0.153 0.221 0.258 0.298 BVPS fd 0.974 1.362 1.516 1.814 2.146 Dividend per share (ord) 0.000 0.000 0.000 0.000 0.000 Dividend per share (sav) 0.000 0.000 0.000 0.000 0.000 Dividend pay out ratio (%) CASH FLOW (Eu mn) Gross cash flow 4 6 8 10 11 Change in NWC 0 (5) (1) (1) (1) Capital expenditure (5) (6) (7) (7) (7) Other cash items (0) 0 (1) 0 0 Free cash flow (FCF) (2) (4) 1 2 3 Acquisitions, divestments & others (3) (7) (4) 0 0 Dividend 00000 Equity financing/Buy-back 63400 Change in Net Financial Position 2 (8) 1 2 3 BALANCE SHEET (Eu mn) Total fixed assets 1420262728 Net working capital (1) 4 4 5 6 Long term liabilities (0) (0) (1) (1) (1) Net capital employed 13 24 30 32 33 Net financial position (2) (10) (10) (7) (4) Group equity 10 13 20 24 29 Minorities 20000 Net equity 13 20 24 29 34 ENTERPRISE VALUE (Eu mn) Average mkt cap - current 59 59 59 59 59 Adjustments (associate & minorities) 0 0 0 0 0 Net financial position (2) (10) (10) (7) (4) Enterprise value 6269696763 RATIOS(%) EBITDA margin* 34.4% 22.8% 12.1% 10.6% 10.4% EBIT margin* 12.9% 9.0% 6.0% 5.5% 5.5% Gearing - Debt/equity 24.1% 76.0% 47.7% 30.1% 14.0% Interest cover on EBIT 4.5 6.4 9.1 15.2 19.9 Debt/Ebitda 0.53 1.29 1.07 0.64 0.32 ROCE* 27.6% 17.1% 14.8% 19.2% 20.7% ROE* 10.9% 10.1% 12.7% 15.5% 15.1% EV/CE 9.6 3.8 2.6 2.2 2.0 EV/Sales 4.5 2.0 0.8 0.6 0.5 EV/Ebit 34.9 22.2 13.9 11.3 9.4 Free Cash Flow Yield -2.8% -7.4% 1.0% 3.9% 5.5% GROWTH RATES (%) Sales 151.8% 138.1% 30.6% 12.8% EBITDA* 67.1% 26.1% 14.6% 10.6% EBIT* 76.9% 58.5% 18.9% 13.8% Net profit 131.0% 66.1% 46.6% 15.7% EPS restated 187.1% 44.9% 16.4% 15.7%

* Excluding extraordinary items

Source: Intermonte SIM estimates

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INDEX

Executive Summary page 4

SWOT Analysis page 5

Group Profile page 6

Corporate History and Founder

IPO

Shareholders Structure

E-Commerce Activities & Reference Market page 8

Evolve

Giglio Fashion

Media Activities page 11

Giglio Media

M-Three Satcom

The e-Commerce 4.0: ibox page 12

Historical Results and Intermonte Estimates page 15

Historical Financial Performance

Intermonte Estimates

Valuation page 18

DCF Valuation

Peers Valuation

Executive Summary

Ambitious strategy to integrate e-commerce and media. Founded by Alessandro Giglio in 2003 and listed on the AIM market since August 2015, Giglio Group aims to become a leading player in the fast-growing e-commerce market. The group, which was born as a pure media company, has entered the e-commerce market after completing two important acquisitions in the last two years, Its aim is to provide brands with an integrated offering that bundles e- commerce and media together. Four profitable divisions… Giglio’s business model is based on four main divisions, each being economically sustainable on a stand-alone basis. Evolve (acquisition due to be closed in April) is an e-commerce service provider: it supports brands in developing their online mono-brand stores following every step of the process from the creation of the online platform to logistics, from order fulfilment to customer care. Giglio Fashion (acquired in 1Q16) deals with brands’ unsold inventory: it helps brands clear out their warehouses by selling their products on the many online off-season multi-brand and flash-sale stores available globally. Giglio Media broadcasts several programmes related to Italian lifestyle (e.g. fashion, culture, design) on different TV and online platforms in China and distributes a thematic channel (Nautical Channel) to more than 100 TV platforms in 47 countries. These contents are broadcast all over the world through the two teleports managed by M-Three Satcom (acquired in 2015). …one integrated offering: ibox. In February, alongside the announcement of the acquisition of Evolve, management presented a new integrated e-commerce offering under the ibox name. Giglio’s ibox offering should allow it to become a leading e-commerce service provider, assisting brands in all areas from the design of the online platform to logistics, from order fulfilment and customer care to clearing out unsold stock. Alongside the traditional e- commerce platform, Giglio wants to develop an innovative T-commerce platform: Giglio intends to offer brands the opportunity to produce thematic TV programmes showing branded products and to broadcast these programmes widely. These branded programmes will be integrated with a second-screen technology: using a mobile device the viewer will be able to get access to an online store and purchase the product shown on TV. Coverage initiated with a BUY rating, target price set at Eu5.2. We assume revenues will grow at a double-digit rate over the next five years, in line with expectations for the e-commerce market to grow at a 15% CAGR. We appreciate the ambitious strategic plan identified by management, and at the same time acknowledge the high underlying execution risk, which is mainly related to the complexity of successfully managing the whole e-commerce process; our estimates cautiously do not include any potential positive impact on revenue and margins from the integrated ibox offering, including the innovative T-commerce platform. Finally, the transition from the AIM to the MTA STAR segment of the Italian Stock Exchange, scheduled this summer, should boost the stock’s liquidity. Our Eu5.2 fair value is calculated as a weighted average of a DCF valuation (90%) and an SOP valuation based on a peer comparison (10%).

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SWOT Analysis

Strengths Exposure to the fast growing e-commerce market: through the Evolve acquisition (to be finalized in April), Giglio will complete the journey it started two years ago towards its objective of becoming a leading e-commerce service provider in the luxury/apparel/design segment. According to Bain & Company’s “Luxury Market Monitor”, at present the online channel still accounts for a small share of the global luxury market (around 7%). The online channel is expected to double its share over the next five years, becoming the fastest growing segment (CAGR of 15%). Looking at the key global sector players (e.g. YNAP, Zalando, Asos), consensus estimates point to double-digit top line growth over the next three years.

Exposure to the fast growing Chinese and Asiatic market: According to Bain & Company’s “Luxury Market Monitor”, the rising Chinese middle class will drive global luxury market growth over the next five years, with Chinese consumers growing their share of the overall market from 31% to 34%. Three years ago Giglio set-up a Chinese subsidiary, Giglio TV; through this firm the Group has consolidated important relationships with the local political and business community, and is currently offering its media content on several TV and online platforms. These media platforms have already become an important revenue stream for advertising collection and will be key for the launch of an innovative offering in the e-commerce area.

Profitability already achieved on a stand-alone basis: Giglio Group has completed several acquisitions in order to create an integrated media and e-commerce offering. If the integration of the different activities under the Group’s control does not materialize, the stand- alone divisions should in any case continue to be profitable on an individual basis, even in the absence of the potential synergies that should result from integration.

Weaknesses Evolve’s reliance on a small customer base: MaxMara (more than Eu1.3bn sales) is Evolve’s most important customer and we think it might represent at least 50% of revenues. The potential loss of this or other important customers would have a negative impact on Giglio’s top line growth and possibly also on its reputation.

Outsourcing of logistics/order fulfilment/customer care: Evolve uses several suppliers to manage the e-commerce process. The Group has less control of each single step of the process, leading to a higher risk of order failure and reputational risk.

High execution risk: By integrating its media assets with the recently acquired e-commerce activities, Giglio Group is pursuing an ambitious strategy; this process has just started and success is not a foregone conclusion. We would point out that our estimates do not as yet incorporate the positive effects of a successful integration process.

Opportunities Revenue synergies between Evolve and Giglio Fashion: Limited overlap between Evolve’s customers and Giglio Fashion’s customers could represent an opportunity to cross-sell services and increase revenues. ibox offering could improve revenue growth, marginality and customer retention: the ibox offering will provide brands with a traditional e-commerce platform, the chance to easily and efficiently clear out unsold inventory through the online off-season multi-brand channel and an innovative t-commerce platform integrated with Giglio Media channels. In management’s view, the broad and innovative ibox offering should drive faster growth, higher margins and greater customer retention compared to other e-commerce service providers.

First mover in T-commerce: Giglio Group is pursuing an ambitious strategy of integrating its media assets with its e-commerce activities. The T-commerce technology designed by Giglio Group could potentially drive higher levels of consumer traffic to online mono-brand stores and generate increased sales. Following finalization of the Evolve acquisition, Giglio will start to test and launch this technology for its current brands. There are still very few indications from major players about this potential development in the e-commerce market.

Threats Tendency for brands to bring e-commerce activities back in-house: At the outset, offering products through an online store is sufficiently complex that many brands rely on specialized players like Evolve (with some exceptions in the case of larger brands). As familiarity with e- commerce increases, brands may look to bring their e-commerce activities back in-house, and Giglio Group could face problems of customer retention as a result.

Competitive pressure from international and local players: A number of international players offer e-commerce services for apparel / luxury brands (e.g. Yoox Net-a-Porter group, Farfetch, Demandware), and these tend to focus on larger brands (e.g. , Armani, Valentino); at the same time, Evolve is in direct competition with several local players of a similar size to itself, (e.g. Triboo, Filoblu, Zerogray, The Level Group and Drop).

Group Profile Corporate History Founded by Alessandro Giglio in 2003 and listed on the Italian AIM market since 7 August 2015, Giglio Group operates in the e-commerce and media sectors. The group was set up as a pure media company. At present the Giglio Media business division offers two thematic FTA channels on the Italian digital terrestrial platform, sells a thematic channel to several pay-tv platforms globally and, through a subsidiary, distributes its media content in China and the wider APAC region. On 30th Sept 2015, Giglio Group finalised the purchase of M-Three Satcom, a company that owns and manages two proprietary teleports in Milan and Rome; the purpose of the acquisition was to provide Giglio Group with the necessary infrastructure to broadcast its content locally and globally. On 1st Feb 2016, Giglio Group announced the acquisition of 100% of MF Fashion, which was subsequently renamed Giglio Fashion. This company buys unsold inventory from brands and sells it on the numerous online off-season multi-brand and flash sale stores operating throughout the world. Giglio offered 1.0mn new shares to MF Fashion shareholders at Eu2.5ps for a total of Eu2.5mn, together with a Eu2.5mn cash payment. A Eu1.5mn earn-out could be paid by the end of 1Q18. Through the acquisition, Giglio consolidated a net cash position of Eu0.9mn. The deal implied an FY16 EV/EBITDA multiple of 5.2x. The purchase was part-financed by a Eu3.5mn mini-bond maturing in 2020 with an interest rate of 5.4% that Giglio issued on 10th March 2016. On 15th Feb 2017, Giglio Group announced the acquisition of 100% of e-commerce service provider Evolve, with closing expected by April. Evolve supports brands in developing their online mono-brand stores, overseeing every step of the process from the creation of the online platform to logistics, order fulfilment and customer care. Giglio will issue and offer 1.2mn new shares to current Evolve shareholders at Eu3.2ps for a total of Eu3.9mn. Giglio will also pay Eu1.5mn in cash at closing, while consolidating Evolve’s net cash position of the same amount. The terms of the deal imply an FY16 EV/EBITDA multiple of 2.8x. Also on 15th Feb 2017, at the time of the announcement of the Evolve acquisition, management presented Giglio Group’s new integrated e-commerce offering under the ibox name. Alessandro Giglio founder, chairman and CEO: Born Genoa, 30 July 1965. Bachelor’s Degree in Performing Arts and Multimedia Production from the National Academy of Dramatic Arts and Master’s Degree in Management from LUISS. Amongst the posts he has held during his career are National Vice-Chair, UNAT-AGIS (National Association of Theatrical Producers), and Technical Committee Member, Ministry of Tourism and Performing Arts. For the last 15 years he has been involved in planning and producing major events, theatre and television shows, as well as in entrepreneurship, which led him in 2003 to found Giglio Group. He is also a scheduling and programme strategy consultant for several television networks in expanding markets. Currently Arbiter on the Executive Board of the Radio and Television Industry Association (Confindustria Radio Televisione), as well as Chairman/CEO of Giglio Group.

Giglio Group – Share Price Performance since IPO

Source: Factset

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IPO Giglio’s listing took place on 7th August, 2015, on AIM Italia. The capital increase associated with the listing was for the issue of a maximum 3.5mn new shares (10.7mn shares pre-IPO). In the listing, 3.2mn new shares were subscribed (90.0% of the total potential subscription) at Eu1.9ps, for a total of Eu6.0mn. Giglio aims to enter the STAR index by the end of the summer, once the company has concluded the transition process. On 2nd March 2017 the Milan Chamber of Commerce recognized Giglio as an “innovative PMI”. This certification entails a fiscal benefit for retail and institutional investors investing their money in the company for at least 3 years. Retail investors benefit from a 30% detraction from personal taxation (max Eu1.0mn) while institutional investors benefit from a 30% deduction from taxable income (max Eu1.8mn).

Shareholders Meridiana Holding is the major Giglio Group shareholder with 58.14% of share capital. Alessandro Giglio owns 99% of Meridiana Holding. Buongiorno Spa owns 14.41% of Giglio Group share capital. Buongiorno Spa is in turn controlled by the Japanese company NTT Docomo, a global leader in mobile technologies and communications services. The remaining 27.45% is floating shares. The total shares number is 14.8mn. Giglio Group – Shareholders pre-Evolve deal

Source: Company data

In order to finalize the acquisition of Evolve, Giglio will issue and offer 1.222mn new shares to current Evolve shareholders; total outstanding shares will therefore increase to 16.0mn. Following this transaction Meridiana Holding will be diluted to 53.7%, while floating shares (including the 7.6% in the hands of Evolve shareholders) will reach 33.0%. Evolve shareholders will have to respect a 12-month lock-up agreement which will be cancelled once the transition from AIM to STAR is finalized. Giglio Group – Shareholders post-Evolve deal

Source: Company data

Giglio e-Commerce Activities & Reference Market Giglio recently acquired Giglio Fashion and Evolve, thus entering the fast-growing e-commerce market. Giglio is currently mostly exposed to the luxury / apparel segment of e-commerce. Before describing Giglio’s activities we would like to provide a very brief overview of e- commerce market prospects.

According to Bain & Company’s Luxury Market Monitor the global luxury market is expected to grow at a 2-3% CAGR, from roughly Eu250bn in 2016 to Eu285bn in 2020. The online channel still has a minor share of the total market at around 7%. Over the next five years this channel is expected to double its share, making it the fastest growing segment with a 15% CAGR.

Global Luxury Market – Breakdown by Channel

Source: Bain & Company Luxury Market Monitor The expanding Chinese middle class will drive growth, with Chinese consumers increasing their share of the overall market from 31% to 34%. Global Luxury Market – Breakdown by Consumer nationality

Source: Bain & Company Luxury Market Monitor

Factset consensus points to double-digit top line growth over the next three years for a variety of key players in the e-commerce market. E-Commerce global players– Factset Consensus estimates Luxury / Apparel Currency FY16 Rev FY19E Rev CAGR YNAP-IT Yoox Net a Porter Euro 1,871 3,057 17.8% ZAL-DE Zalando Euro 3,639 6,631 22.1% ASC-GB Asos British Pounds 1,445 2,812 24.9% SRP-FR Showroom Privè Euro 540 922 19.5% 3092-JP Start Today Japanese Yen 54,422 123,300 31.3% VIPS-US Vipshop Holdings U.S. Dollar 8,501 14,401 19.2%

General retailers Currency FY16 Rev FY19E Rev CAGR AMZN-US Amazon.com U.S. Dollar 136,990 238,874 20.4% OSTK-US Overstock.com U.S. Dollar 1,800 2,143 6.0% AO-GB Ao World British Pounds 599 972 17.5% BABA-US Alibaba U.S. Dollar 15,904 43,873 40.2% EPR-IT ePrice * Euro 194 285 21.2% *Intermonte FY16-18 Estimates Source: Factset

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Evolve – An e-Commerce Service Provider

On 15th February 2017, Giglio announced the acquisition of Evolve Service SA. This company, established in 2011 and incorporated in Switzerland, operates as an e-commerce service provider. Evolve supports brands in developing their online mono-brand stores, overseeing every step of the process from the creation of the online platform to logistics, order fulfilment and customer care.

Offering products through an online store is a complex proposition for brands. For this reason, most brands rely on skilled specialist players like Evolve (some larger brands are exceptions to this rule).

Evolve currently manages 25 online stores for several international brands including MaxMara, Alessi, Brics, Pinko, Moleskine, Golden Goose, Patrizia Pepe, Ermanno Scervino and Stefano Ricci.

Giglio Group – Examples of Online Mono-Brand stores created by Evolve

Source: Company websites, Stefano Ricci (http://boutique.stefanoricci.com/ita/en-gb) and MaxMara (https://it.maxmara.com/)

Services offered by Evolve are:  Design and creation of institutional and e-commerce websites  Digital content production: visual and written description of products  Multi-language and multi-platforms customer care services (outsourced)  Logistics and order fulfilment (outsourced): 170 warehouses all over the world, product personalization and customized packaging, shipping, returns management.  Web-marketing and data analytics

Evolve also specialises in the development of B2B platforms dedicated to brands’ wholesale channels. Brands use these platforms to sell their new collections to wholesale clients. Brands using this kind of platform include Patrizia Pepe, Golden Goose, Guess, Liu Jo.

Giglio Group – Evolve preliminary FY16 results

Eu mn 2015 2016 Online store sales 33 49 YoY Growth 48% Service Fees 10.8 on sales % 22% Costs (9.4) EBITDA 1.4 Ebitda Margin 13% Source: Company press release

As a service provider, Evolve is paid an average commission of 20% of total online store sales. Evolve does not carry any inventory risk and does not incur significant CAPEX. The company currently employs 20 people.

MaxMara (more than Eu1.3bn in sales) is Evolve’s largest customer, and we think it could represent at least 50% of Evolve’s revenues. Evolve’s other customers are small / medium-sized Italian brands (Eu50mn – Eu200mn in sales). These brands 1) do not have the capability to launch an online flagship store and manage all the related processes; 2) prefer the cheaper and quicker solution offered by a specialist player that also benefits from economies of scale.

As for the competitive environment in this segment of e-commerce, the most important company offering e-commerce services for apparel / luxury brands is the Yoox Net a Porter group, which focuses on larger brands (e.g. Moncler, Armani, Valentino). In 2016 YNAP revenues related to online flagship stores grew to Eu205mn (+23.7% YoY organic). There are several other local players that are similar in size to Evolve, which make up the company’s

direct competition. Some examples are Triboo (Eu52mn of revenues from e-commerce services), Filoblu, Zerogray, The Level Group and Drop.

Giglio Group announced the acquisition of 100% of Evolve on 15th Feb 2017, and closing is expected by April. Giglio will issue and offer 1.2mn new shares to current Evolve shareholders at Eu3.2ps for a total of Eu3.9mn. Giglio will also pay Eu1.5mn in cash at closing, while consolidating Evolve’s net cash position of the same amount. The terms of the deal imply an FY16 EV/EBITDA multiple of 2.8x.

Evolve founder Michael Scatigna will continue to direct Evolve’s activities as CEO of the subsidiary.

Giglio Fashion – B2B between brands and e-commerce platforms

On 1st February 2016, Giglio announced the acquisition of MF Fashion, which was subsequently renamed Giglio Fashion. This company, established in 2012, buys unsold inventory from brands and sells it on the many online off-season multi-brand and flash sale stores operating throughout the world. Online off-price retailers are well placed to generate future growth as they benefit from the industry's situation of oversupply and its difficulties in planning inventory. Brands already appreciate the online channel as an efficient de-stocking tool (online penetration is already about 16%) given the opportunity it provides to improve margins by reaching a huge number of potential buyers and selling at different price levels according to the demand encountered. The brands for which Giglio Fashion acts as an intermediary include: Versace, Moschino, Dsquared2, Love Moschino, Missoni, Just Cavalli, Twin-Set, Geox, Galliano Calzature, Baldinini, Pollini, Giorgio Armani, Blugirl, Dolce & Gabbana, Missoni Foulards, Tosca Blu, Stefanel, Manas, Collistar. Giglio Fashion has built a consolidated relationship with several flash sales platforms globally (e.g. Amazon Buy VIP, Vente Privé, Showroom Privé) and is rapidly expanding its activities. For instance, after recently opening a new American branch Giglio Fashion has signed new agreements with flash sales platforms like Gilt (Hudson’s Bay Company), Hautelook (Nordstrom Rack) and Last Call (Neiman Marcus). Giglio Fashion buys unsold stock from brands, granting them good margins and an easy way to clear their inventories. Giglio Fashion is then able to optimise online sales over the various e- commerce platforms, planning commercial campaigns over different time periods on different market places, and selecting the best platforms in order to extract the best possible conditions in terms of pricing, logistics and distribution costs. Giglio Group – Giglio Fashion preliminary FY16 results

Eu mn 2014 2015 2016 Revenues 9.6 11.8 22.4 YoY Growth 22% 90% Costs (8.5) (10.8) EBITDA 1.1 1.0 Ebitda Margin 11% 9% Source: Company press release

The company typically buys unsold stock at 20% of the retail price and is able to sell it for a slightly higher price. Costs mainly relate to logistics and distribution, which are outsourced in their entirety. The subsidiary does not have significant CAPEX, net capital employed consists mainly of inventory that shows rapid rotation throughout the year (4x). Giglio Fashion currently employs 7 people.

Giglio Group announced the acquisition of 100% of MF Fashion on 1st February 2016. Giglio offered 1.0mn new shares to MF Fashion shareholders at Eu2.5ps for a total of Eu2.5mn, together with a Eu2.5mn cash payment. A Eu1.5mn earn-out could be paid by the end of 1Q18. Through the acquisition Giglio consolidated a net cash position of Eu0.9mn. The deal implied an FY16 EV/EBITDA multiple of 5.2x. The purchase was part-financed by a Eu3.5mn minibond that Giglio issued on 10th March 2016, maturing in 2020 with an interest rate of 5.4%.

Giglio Fashion is led by its two founders Fabio Marchese (CEO) and Marco Ghiselli.

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Giglio Media Activities Giglio Media – Profitable Business to serve e-Commerce activities Since its foundation Giglio has been active as a media company. At present the Giglio Media business division offers two thematic Free To Air channels on the Italian digital terrestrial platform, sells a thematic channel to several pay-tv platforms globally and, through a subsidiary, distributes its media content in China and the broader APAC region. The media division is now part of a wider strategy, illustrated later in this report, involving e- commerce and t-commerce. The division is profitable in its own right, and absorbs the greatest share of the company’s CAPEX for the development of new media content that can be distributed globally. Italian FTA: Channel Acqua (LCN 65): Channel Acqua (LCN 65): thematic channel that during prime time offers entertainment related to boating and water sports. During daytime, the programming consists of teleshopping. Channel Playme (LCN 68): thematic channel that during prime time offers entertainment related to music and live music events. During daytime, the programming consists of teleshopping. Revenues generated by these two channels come from advertising and teleshopping fees and are worth some Eu2.5-3.0mn. The main costs come from advertising fees paid to sub- contractors, the lease of bandwidth and the amortisation of TV rights. Nautical Channel: This channel is entirely dedicated to boating and water sports, is distributed to more than 100 platforms (of which 80 pay-tv platforms with more than 20mn subscribers) in 47 countries (Italy and China excluded) and is broadcast in six different languages. In 2016, Giglio Group reached two important agreements in the USA with Sling TV and Klowd TV to distribute Nautical Channel on several OTT platforms (Google Play, ITunes, Roku and Amazon Prime included). Revenues mostly come from the variable fees paid by pay-tv platforms (related to the number of subscribers to the pay-tv bundle that includes Nautical Channel) and are worth some Eu3mn. Every year Nautical Channel produces or buys more than 300 hours of original content in different languages, spending about Eu3mn per year. Giglio TV (China and APAC): In 2014 Giglio Group established “Giglio TV Hong Kong Ltd”, in order to launch activities in China. In June 2014, Cassa Depositi e Prestiti subsidiary SIMEST injected Eu1.5mn into the company, bringing it to 49% of the share capital. Giglio pays 4% interest on the capital provided by SIMEST, which does not take any further profit from the company. The SIMEST stake in Giglio TV is linked to a put/call option agreement exercisable at nominal value as of 30th June 2018. Giglio TV distributes media content related to Italian lifestyle, luxury, fashion, design and tourism on several TV and online platforms in China, specifically:  Three channels on the China International Broadcasting Network, one of the main OTT platforms in China, offering Italian fiction series, documentaries on Italian culture, lifestyle and cuisine; fashion and high-fashion events, Italian opera;  A 30-minute weekly magazine called “Made in Italy”, broadcast on some FTA channels owned by CCTV, the government broadcasting company. The programme shows several aspects of Italian culture and lifestyle, such as cuisine, design and fashion;  Italian culture and lifestyle content, largely cuisine, design and fashion, on the two major Youtube-like online video platforms IQIYI and Youku Tudou;  On all the mobile phones served by China Mobile, China Unicom and China Telecom, as well as an online channel reserved to the Young Communist Party which has signed an agreement with Giglio TV. Giglio TV generates some Eu3.0mn of revenues, entirely from advertising collection. The main cost is the amortisation of TV rights. CAPEX to increase the library and for the dubbing of content is expected to reach some Eu3mn going forward.

M-Three Satcom – Broadcasting Technology

Giglio Group finalised the purchase of M-Three Satcom on 30th September 2015. M-Three Satcom provides technology for TV and Radio broadcasting. The company manages two proprietary teleports, in Milan and Rome, a fleet of outside broadcast units for production and transmission, and a fibre optics infrastructure able to reach points of access and media centres globally. This division provides Giglio Group with the necessary infrastructure in order to broadcast its content locally and globally (Nautical Channel and Giglio TV). M-Three is a profitable business with some Eu8mn of revenues generated by providing its services to major Italian and international broadcasters like RAI, , Discovery and Viacom, as well as smaller Italian media companies like Gruppo Espresso.

The e-Commerce 4.0: ibox On presentation of the Evolve acquisition, Giglio management announced the new, complete offering under the ibox name. Giglio Group is seeking to establish itself as a leading international e-commerce service provider through the integration of all its profitable businesses and the attendant synergies.

By creating a player capable of offering customers a range of services across the e-commerce value chain, Giglio Group has completed the process it set in motion two years ago. Brands will be provided with a traditional e-commerce platform, but also with the opportunity to increase online store traffic thanks to an innovative t-commerce platform integrated with Giglio Media channels and with specific exposure to the fast-growing Chinese market. Lastly, brands will be able to easily and efficiently clear out unsold inventory through the online off-season multi- brand channel. In management’s view, the broad and innovative ibox offering should drive faster growth, higher margins and greater customer retention compared to other e-commerce service providers. Limited overlap between Evolve’s customers and Giglio Fashion’s customers could also represent an opportunity to cross-sell services and increase revenues.

Giglio Group – The ibox process

Source: Company presentation

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Giglio Group – The ibox offering

Source: Company presentation Details of the services included in the overall ibox offering are shown below. Brands will be provided with the necessary capabilities and services to deal with the complexities of the e- commerce process. Digital Production:  Buying  Product description  Creation of SEO compliant contents  Creation of editorial contents  TV production for brand promotion  Translation in different languages  Photo and Video production  Post production

Customer Care (outsourced):  Multi-lingual (8) with global coverage (Europe, Asia, USA)  Customer support with mail, telephone and live chat  Trained and qualified personnel featuring low turnover

Creativity:  Design and creation of customized corporate and e-commerce websites  Responsive design, full screen, desktop and mobile

Logistics and order fulfilment (outsourced):  170 warehouses in Europe, US, Russia, and China (Shanghai free trade zone)  Standard and express shipping  Product personalization  Customized packaging  Returns management

Set-up of a multi-functional platform:  Order management system  Cash management system  Risk management system  Wholesale management system: o Integrated B2B platform in order to manage the sell-in to the wholesale channel o Brands will be able to easily display and sell their new collections to the store network through dedicated online stores  Web marketing services: o Search Engine Marketing o Search Engine Optimization o Affiliation Network o Display Campaigns o DEM Campaigns o Customer retention strategies o Social Network campaigns

 Advanced analytics tools o Connection between Google Analytics and data collected on the e-commerce platform o Personalized dashboards  Market place management system (in-season): o Structured service for the distribution to online multi-brand stores in order to optimize sales and margins, without losing control of pricing policies and brand perception o Shop in shop / drop-shipping o Europe multi-brand: Zalando, Asos, Mr Porter, Net a Porter, Yoox, Nelly, Fashion Days o US multi-brand: Amazon o Asia multi-brand: VIP  Market place management system (off-season): o Clearing out of unsold stock through online flash sales stores o Centralized acquisition and distribution through ibox logistic structures o Europe flash sales: Vente Privee, Amazon Buy Vip, Zalando Lounge and others o US flash sales: Overstock, Haute Look, Last Call, Amazon, Groupon and others o Asia flash sales: Amazon India, Vip Shop, Fashion and you, Jabong and others

Integrating e-Commerce and Media Giglio wants to develop an innovative T-commerce platform and integrate it with the traditional e-commerce one. In particular, Giglio Group intends to offer brands the chance to produce themed TV programmes showing branded products for broadcast within the Giglio Media offering. As previously mentioned, Giglio Media uses M-Three Satcom technology to broadcast life-style content in China through Giglio TV, and globally through Nautical Channel.

These branded TV programmes will be integrated with second screen technology, giving viewers the chance to see and buy the same product on a mobile device (phone or tablet), through which an online store can be accessed showing the details of the specific product. The user will then be redirected to the brand’s online store to complete purchasing. The T- commerce / second screen technology could therefore potentially drive more consumer traffic to the brand’s online mono-brand store, leading to higher sales.

Giglio Group has already developed second screen technology. Following finalization of the Evolve acquisition, Giglio will start to test and launch this technology for its current brands.

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Historical Results and Intermonte Estimates Historical Financial Performance Giglio Group historical performance has been positively impacted by the acquisition of M- Three Satcom (consolidated as of 30 Sept 2015) and the acquisition of Giglio Fashion (consolidated as of 31 March 2016). The company has not provided any divisional data. We estimate the full consolidation of M-Three Satcom as having added Eu0.5mn YoY to FY16 EBITDA, and the partial consolidation of Giglio Fashion as having added Eu2.2mn. Growth of advertising collection in China should also have made a positive contribution.

Giglio Group – Income statement (Eu mn) FY14A FY15A FY16A Revenues 11,5 13,8 34,7 Costs (8,2) (9,0) (26,8) EBITDA Adjusted 3,2 4,7 7,9 Margin % 28,2% 34,4% 22,8% Extra-items EBITDA IFRS 3,2 4,7 7,9 Margin % 28,2% 34,4% 22,8% D&A & GW (1,8) (3,0) (4,8) EBIT 1,4 1,8 3,1 Margin % 12,2% 12,9% 9,0% Financial Charges (0,3) (0,4) (0,5) Extra-items (0,7) Pretax-profit 1,1 1,4 2,0 Income tax 0,3 (0,4) (0,3) Tax rate % 28,1% -28,1% -14,3% Minority Interest (0,3) Discont act. Net Profit 1,4 0,7 1,7 Source: Company data

Giglio Group – Cash Flow Statement (Eu mn) FY14A FY15A FY16A

EBITDA adjusted 3,2 4,7 7,9 Financial Charges (0,4) (0,5) Cash Taxes (0,4) (0,3) Change in WC 0,4 (4,9) CAPEX (5,3) (6,0) Operating Cash Flow (0,9) (3,7) Non-recurring Cash Outs (0,5) Acquisitions (2,7) (6,5) Rights Issue 6,1 2,5 Disposals Dividends Others Change in NFP 2,0 (7,7) NFP at year beginning (4,5) (2,5) NFP at year end (4,5) (2,5) (10,2) Source: Company data

Giglio Group – Balance Sheet (Eu mn) FY14A FY15A FY16A Inventories 0,1 2,3 Receivables 1,3 8,3 19,9 Payables (1,7) (8,3) (18,8) Other current assets/liabilitie (0,2) (1,1) 0,5 NWC (0,6) (1,0) 3,9 Net Fixed Assets 4,8 8,2 7,2 Goodwill 0,1 0,1 4,5 Net Intangible assets (Other 2,7 5,9 8,6 Net Financial Investment Termination Indemnity Rese (0,1) (0,2) (0,3) Net Capital Employed 6,9 12,8 23,7 NFP (4,5) (2,5) (10,2) Group Equity 2,4 10,3 13,5 Minorities 1,5 1,7 Net Equity 1,0 8,6 13,5 Source: Company data

The net financial position has in turn been negatively impacted by the cash-outs for the above- mentioned acquisitions, by strong investments in the production and acquisition of new TV programmes, and by working capital absorption (related to Giglio Fashion). We remind that the long term debt includes the Eu3.5mn mini-bond 5.4% 2020 issued to acquire Giglio Fashion, the related Eu1.5mn earn-out that could be paid by the end of 1Q18 and the SIMEST Eu1.5mn participation in Giglio TV’s share capital. Giglio Group – Net financial position breakdown Short term debt -3.0 Long term debt -9.1 Total Financial Debt -12.1 Cash 1.8 Net financial position -10.2 Source: Company data

Intermonte Estimates

The company has not provided divisional P&L for FY16 (the following figures are from our own calculations). Our estimates are based on the following assumptions:  Full consolidation of Giglio Fashion in 2017, underlying organic growth rate at +15% in line with e-commerce market growth expectations.  Partial consolidation of Evolve from 31 March 2017, underlying organic growth rate at +15% in line with e-commerce market growth expectations.  Advertising collection from China to grow at 7.5% CAGR over the next five years  M-Three revenues flat going forward  Strong investments for the development of new media content to absorb most of the cash generation

Notably, our assumptions do not incorporate:  Any increase (or decrease) in the number of brands using Giglio Group’s e-commerce platforms  Any revenue synergy from the combination of the four different businesses, in particular from the potential higher growth and margins achievable thanks to the ibox offering and the innovative T-commerce / second screen platform.

Giglio Group – Revenue and EBITDA breakdown (Eu mn) FY16A FY17E FY18E FY19E FY20E FY21E Giglio Media 9.5 9.8 10.1 10.4 10.7 11.1 YoY % 2.9%3.1%3.2%3.3%3.5% M-Three Satcom 8.08.08.08.08.08.0 YoY % 0.0%0.0%0.0%0.0%0.0% Giglio Fashion 17.225.128.833.238.143.9 YoY % 46.0% 15.0% 15.0% 15.0% 15.0% Evolve 39.7 60.9 70.0 80.5 92.6 YoY % 53.3% 15.0% 15.0% 15.0% Revenues 34.7 82.5 107.8 121.6 137.4 155.5 YoY % 138.1% 30.6% 12.8% 13.0% 13.2%

Giglio Media 5.0 5.3 5.6 5.9 6.2 6.6 on sales % 52.6% 54.0% 55.3% 56.7% 58.1% 59.5% YoY % 5.5%5.7%5.8%5.8%5.9% M-Three Satcom 1.01.01.01.01.01.0 on sales % 13.0% 13.0% 13.0% 13.0% 13.0% 13.0% YoY % 0.0%0.0%0.0%0.0%0.0% Giglio Fashion 2.3 3.4 3.9 4.5 5.1 5.9 on sales % 13.4% 13.4% 13.4% 13.5% 13.5% 13.5% YoY % 46.1% 15.0% 15.9% 15.0% 15.0% Evolve 1.3 2.1 2.4 2.9 3.4 on sales % 3.3%3.4%3.5%3.6%3.7% YoY % 58.0% 18.4% 18.3% 18.2% Corporate Cost (0.4) (1.0) (1.1) (1.2) (1.3) (1.4) EBITDA Adjusted 7.9 10.0 11.4 12.7 14.0 15.6 on sales % 22.8% 12.1% 10.6% 10.4% 10.2% 10.0% YoY% 26.1% 14.6% 10.6% 10.8% 11.2% Source: Intermonte SIM Estimates

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Giglio Group – Income Statement (Eu mn) FY16A FY17E FY18E FY19E FY20E FY21E Revenues 34.7 82.5 107.8 121.6 137.4 155.5 Costs (26.8) (72.6) (96.3) (108.9) (123.3) (139.9) EBITDA Adjusted 7.9 10.0 11.4 12.7 14.0 15.6 Margin % 22.8% 12.1% 10.6% 10.4% 10.2% 10.0% Extra-items (1.0) EBITDA IFRS 7.9 9.0 11.4 12.7 14.0 15.6 Margin % 22.8% 10.9% 10.6% 10.4% 10.2% 10.0% D&A & GW (4.8) (5.0) (5.6) (6.0) (6.4) (6.8) EBIT 3.1 4.0 5.9 6.7 7.7 8.8 Margin % 9.0% 4.8% 5.5% 5.5% 5.6% 5.7% Financial Charges (0.5) (0.4) (0.4) (0.3) (0.3) (0.2) Extra-items (0.7) Pretax-profit 2.0 3.5 5.5 6.4 7.4 8.6 Income tax (0.3) (0.7) (1.4) (1.6) (2.1) (2.4) Tax rate % -14.3% -20.0% -25.0% -25.0% -28.0% -28.0% Minority Interest Discont act. Net Profit 1.7 2.8 4.1 4.8 5.3 6.2 Source: Intermonte SIM Estimates

Giglio Group – Cash Flow (Eu mn) FY16A FY17E FY18E FY19E FY20E FY21E

EBITDA adjusted 7.9 10.0 11.4 12.7 14.0 15.6 Financial Charges (0.5) (0.4) (0.4) (0.3) (0.3) (0.2) Cash Taxes (0.3) (0.7) (1.4) (1.6) (2.1) (2.4) Change in WC (4.9) (0.5) (0.7) (0.8) (0.9) (1.0) CAPEX (6.0) (6.7) (6.7) (6.7) (6.7) (6.7) Operating Cash Flow (3.7) 1.6 2.3 3.2 4.1 5.2 Non-recurring Cash Outs (1.0) Acquisitions (6.5) (3.9) Rights Issue 2.5 3.9 Disposals Dividends Others Change in NFP (7.7) 0.6 2.3 3.2 4.1 5.2 NFP at year beginning (2.5) (10.2) (9.6) (7.3) (4.1) (0.0) NFP at year end (10.2) (9.6) (7.3) (4.1) (0.0) 5.2 Source: Intermonte SIM Estimates

Giglio Group – Balance Sheet (Eu mn) FY16A FY17E FY18E FY19E FY20E FY21E Inventories 2.3 2.5 2.9 3.3 3.8 4.4 Receivables 19.921.925.228.933.338.3 Payables (18.8) (20.6) (23.6) (27.2) (31.2) (35.9) Other current assets/liabilitie 0.50.60.70.80.91.0 NWC 3.9 4.4 5.1 5.9 6.8 7.8 Net Fixed Assets 7.28.98.68.27.97.5 Goodwill 4.56.56.56.56.56.5 Net Intangible assets (Other 8.610.612.213.414.214.6 Net Financial Investment Termination Indemnity Rese (0.3) (0.6) (0.7) (0.8) (0.9) (1.0) Net Capital Employed 23.7 29.8 31.6 33.2 34.4 35.4 NFP (10.2) (9.6) (7.3) (4.1) (0.0) 5.2 Group Equity 13.5 20.2 24.3 29.1 34.4 40.6 Minorities Net Equity 13.5 20.2 24.3 29.1 34.4 40.6 Source: Intermonte SIM Estimates

Valuation We have valued Giglio using a weighted average of a discounted cash flow (DCF) model and a SOP method based on peer’s multiples comparison. The DCF model yields a fair price of Eu4.9 per share. Assumptions underlying our DCF: WACC of 8.0% (risk-free rate of 2.5%, risk premium of 5.5%, unleveraged beta of 1.1x, a normalized debt/equity of 20%) and a long-term growth rate of 3.0%. Giglio Group – DCF (Eu mn) FY17E FY18E FY19E FY20E FY21E TV EBITDA 10 11 13 14 16 16 EBIT 467899 taxes on EBIT (1) (1) (2) (2) (2) (3) Non recurring Cash-out (1) 0 0 0 0 NWC Change (1) (1) (1) (1) (1) Capex (7) (7) (7) (7) (7) (7) Capex/Revenues -8.1% -6.2% -5.5% -4.9% -4.3% Free cash flow 1 3 3 4 5 122 Disc. Free Cash Flow 1 2 3 3 4 77 Year 123456

Total Disc. FCF 13 Terminal value 77 Total EV (Eu mn) 89 NFP '16 (10) TOTAL Equity Value 79 # of shares (mn) 16.0 Fair Value Per share (Eu) 4.9

WACC 8.0% Terminal value 3.0% Source: Intermonte SIM Estimates

Giglio Group – DCF Sensitivity Wacc 4.92 7.0% 7.5% 8.0% 8.5% 9.0% 2.0% 5.1 4.6 4.1 3.7 3.3 2.5% 5.7 5.0 4.5 4.0 3.6 3.0% 6.5 5.6 4.9 4.4 3.9 3.5% 7.4 6.3 5.5 4.8 4.3

Term. Growth 4.0% 8.6 7.2 6.2 5.4 4.7

Source: Intermonte SIM Estimates

As for the SOP method we have separately considered the media activities (Giglio Media and M-Three Satcom), the e-commerce activities (Evolve and Giglio Fashion) and the corporate general costs. Peers panel for e-commerce activities includes: Amazon, Asos, Showroom Privè, Start Today, Triboo, Vipshop Holding, YNAP and Zalando. Peers panel for media activities includes: Mediaset, Atresmedia, Mediaset Espana, ITV, Prosieben, Sky. Our SOP yields a Eu8.2 fair value.

Giglio Group – SOP Valuation (Eu mn) FY17 EBIT* Peers SOP SOP per share (Eu) Media 1.8 11.5x 20.9 1.3 E-Commerce 4.5 28.5x 127.0 7.9 Corporate Cost (1.0) 7.0x (7.0) (0.4) Net Debt YE17 (9.6) (0.6) 5.3 131.3 8.2 * FY17 EBIT Adjusted Pro-forma figures Source: Intermonte SIM Estimates

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Our target price is calculated as a weighted average of the DCF valuation (90% weight) and of the SOP based on peers’ multiples(10% weight). The calculation yields a fair value of Eu5.2ps. At our target price, the company would be trading at EV/EBIT multiples of 18.5x and 15.2x based on 2017 and 2018 estimates respectively. Giglio Group – Fair Value Valuation Method FV Weight DCF Valuation 4.9 90% SOP Valuation 8.2 10%

Fair Valuation 5.2 100% Source: Intermonte SIM Estimates

GIGLIO Peer Group - Absolute Performances Stock Price Ccy Mkt cap 1M 3M 6M YTD 1Y 2Y GIGLIO 3.69 EUR 59 -2.8% 26.8% 92.7% 28.4% 94.2% 117.1% AMAZON 856.00 USD 408,458 1.3% 10.9% 3.3% 14.2% 47.6% 131.0% ASOS 60.39 GBP 5,038 11.2% 19.8% 27.2% 21.7% 96.6% 73.5% SHOWROOM PRIVE 22.86 EUR 782 5.4% 9.1% 17.7% 7.2% 36.8% --- START TODAY 2382.00 JPY 742,337 1.4% 17.3% 33.9% 18.0% 55.7% 134.3% TRIBOO 3.24 EUR 52 8.0% 25.6% 35.0% 19.6% 33.2% -20.7% VIPSHOP HOLDING 13.98 USD 7,095 7.5% 25.8% -6.5% 27.0% 15.3% -51.2% YOOX NAP 22.47 EUR 3,178 0.0% -16.4% -20.2% -16.6% -15.0% 6.6% ZALANDO 37.60 EUR 9,294 -0.4% 3.4% 3.4% 3.6% 32.1% 63.6% Mean performance 3.5% 13.6% 20.7% 13.7% 44.1% 56.8% Italy FTSE Mib 20,330.4 EUR 309,794 7.5% 5.7% 25.3% 5.7% 11.9% -11.5%

Source: FactSet

GIGLIO Peer Group - Multiple Comparison EV/Sales EV/Sales EV/Ebitda EV/Ebitda EV/Ebit EV/Ebit P/E P/E Div Yield Div Yield Stock Price Ccy Mkt cap 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 GIGLIO 3.69 EUR 59 0.8 0.6 6.9 5.8 13.9 11.3 16.7 14.3 0.0% 0.0% AMAZON 856.00 USD 408,458 2.3 1.8 19.5 14.4 66.7 38.3 121.2 69.4 0.0% 0.0% ASOS 60.39 GBP 5,038 3.4 2.6 53.2 38.5 78.4 60.9 97.7 78.3 0.0% 0.0% SHOWROOM PRIVE 22.86 EUR 782 1.0 0.8 16.4 11.5 20.1 13.6 40.3 27.2 0.0% 0.0% START TODAY 2382.00 JPY 742,337 9.9 7.8 27.6 22.0 29.1 23.0 40.7 33.4 0.9% 1.2% TRIBOO 3.24 EUR 52 1.0 0.9 5.1 4.6 7.7 6.9 14.5 13.6 4.1% 4.2% VIPSHOP HOLDING 13.98 USD 7,095 0.7 0.6 12.4 9.2 15.5 11.5 22.4 17.9 0.0% 0.0% YOOX NAP 22.47 EUR 3,178 1.4 1.2 16.3 11.7 28.7 19.7 40.9 28.9 0.0% 0.0% ZALANDO 37.60 EUR 9,294 1.8 1.5 25.0 18.6 32.0 23.6 51.4 39.4 0.0% 0.0% Median 1.6 1.3 18.0 13.1 28.9 21.4 40.8 31.1 0.0% 0.0% Source: Intermonte SIM estimates for covered companies, FactSet consensus estimates for peer group

DETAILS ON STOCKS RECOMMENDATION

Stock NAME GIGLIO

Current Recomm: BUY Previous Recomm: na

Current Target (Eu): 5.20 Previous Target (Eu): na

Current Price (Eu): 3.69 Previous Price (Eu): na

Date of report: 29/03/2017 Date of last report: na

20 DISCLAIMER (for more details go to DISCLAIMER)

IMPORTANT DISCLOSURES The reproduction of the information, recommendations and research produced by Intermonte SIM contained herein and of any its parts is strictly prohibited. None of the contents of this document may be shared with third parties without authorisation from Intermonte. This report is directed exclusively at market professional and other institutional investors (Institutions)and is not for distribution to person other than “Institution” (“Non-Institution”), who should not rely on this material. Moreover, any investment or service to which this report may relate will not be made available to Non-Institution. The information and data in this report have been obtained from sources which we believe to be reliable, although the accuracy of these cannot be guaranteed by the Intermonte. In the event that there be any doubt as to their reliability, this will be clearly indicated. The main purpose of the report is to offer up-to-date and accurate information in accordance with regulations in force covering “recommendations” and is not intended nor should it be construed as a solicitation to buy or sell securities. This disclaimer is constantly updated on Intermonte’s website www.intermonte.it under DISCLOSURES. Valuations and recommendations can be found in the text of the most recent research and/or reports on the companies in question. For a list of all recommendations made by Intermonte on any financial instrument or issuer in the last twelve months consult the PERFORMANCE web page.

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GUIDE TO FUNDAMENTAL RESEARCH The main methods used to evaluate financial instruments and set a target price for 12 months after the investment recommendation are as follows: . Discounted cash flow (DCF) model or similar methods such as a dividend discount model (DDM) . Comparison with market peers, using the most appropriate methods for the individual company analysed: among the main ratios used for industrial sectors are price/ earnings (P/E), EV/EBITDA, EV/EBIT, price /sales. . Return on capital and multiples of adjusted net book value are the main methods used for banking sector stocks, while for insurance sector stocks return on allocated capital and multiples on net book value and embedded portfolio value are used . For the utilities sector comparisons are made between expected returns and the return on the regulatory asset base (RAB) Some of the parameters used in evaluations, such as the risk-free rate and risk premium, are the same for all companies covered, and are updated to reflect market conditions. Currently a risk-free rate of 2.5% and a risk premium of 5.0% are being used. Frequency of research: quarterly. Reports on all companies listed on the S&PMIB40 Index, most of those on the MIDEX Index and the main small caps (regular coverage) are published at least once per quarter to comment on results and important newsflow. A draft copy of each report may be sent to the subject company for its information (without target price and/or recommendations), but unless expressly stated in the text of the report, no changes are made before it is published. Explanation of our ratings system: BUY: stock expected to outperform the market by over 25% over a 12 month period; OUTPERFORM: stock expected to outperform the market by between 10% and 25% over a 12 month period; NEUTRAL: stock performance expected at between +10% and – 10% compared to the market over a 12 month period ; UNDERPERFORM: stock expected to underperform the market by between –10% and -25% over a 12 month period; SELL: stock expected to underperform the market by over 25% over a 12 month period. Prices: The prices reported in the research refer to the price at the close of the previous day of trading

CURRENT INVESTMENT RESEARCH RATING DISTRIBUTIONS Intermonte SIM is authorised by CONSOB to provide investment services and is listed at n° 246 in the register of brokerage firms. As at 31 December 2016 Intermonte’s Research Department covered 150 companies. Intermonte’s distribution of stock ratings is as follows:

BUY: 14,63 % OUTPERFORM: 52,03 % NEUTRAL: 31,71 % UNDERPERFORM 01,63 % SELL: 00,00 %

The distribution of stock ratings for companies which have received corporate finance services from Intermonte in the last 12 months (44 in total) is as follows:

BUY: 26,09 % OUTPERFORM: 45,65 % NEUTRAL: 28,26 % UNDERPERFORM 00,00 % SELL: 00,00 %

CONFLICT OF INTEREST In order to disclose its possible conflicts of interest Intermonte SIM states that: o within the last year, Intermonte SIM managed or co-managed/is managing or is co-managing (see companies indicated in bold type) an Institutional Offering and/or managed or co-managed/is managing or is co-managing (see companies indicated in bold type) an offering with firm commitment underwriting of the securities of the following Companies: Aeroporto di Bologna, Banca Ifis, Banca Carige, Banca Sistema, La Doria, Tamburi Investment Partners, Tecnoinvestimenti o Intermonte SIM is Specialist and/or Corporate Broker and/or Sponsor and/or Broker in charge of the share buy back activity of the following Companies: Aedes, Aeroporto di Bologna, Alerion Clean Power, Ascopiave, Avio, B&C Speakers, Banca Ifis, Banca Sistema, Banzai, Be, BOMI, Carraro, Cattolica Assicurazioni, Clabo, Credito Valtellinese, Datalogic, DeA Capital, DigiTouch, EL.En, Emak, ERG, Ferrovie Nord Milano, Giglio Group, GO Internet, IGD, Il Sole 24 Ore, IWB, LU VE, Mondo TV, Openjobmetis, Prelios, QF Alpha Immobiliare, QF Beta Immobiliare, Reno de Medici, Reply, Retelit, Saes Getters, Servizi Italia, Sesa, SITI – B&T Group S.p.A., Snai, Tamburi Investment Partners, Tesmec, TBS Group, Tecnoinvestimenti, Ternienergia, TXT e-solutions, Vetrya, Vittoria Assicurazioni, Zephyro. o Intermonte SIM SpA, through its Websim Division, acts as an Retail Investor Research Provider on behalf of the following companies: , Aedes, Axelero, Banca Ifis, Banzai, Bomi, Cattolica Assicurazioni, Centrale del Latte, d'Amico, Dada, Digital Bros, Digital Magics, Digitouch, Electro Power System, Enertronica, Expert System, Falck Renewables, Fiera Milano, Frendy Energy, Fundstore, Gambero Rosso, Generali Assicurazioni, Go Internet, Italiaonline, Isagro, Italia Independent, IWB, La Doria, Leone Film Group, Lucisano Media Group, LVenture, MailUp, Masi Agricola, Mc-Link, Methorios, Mondo TV, MP7 Italia, Notorious, Pierrel, Piteco, PLT energia, Safe Bag, Sesa, TE Wind, Tecnoinvestimenti, TerniEnergia, TXT e- Solutions, VirgilioLab, Zephyro. o Intermonte SIM SpA has provided in the last 12 months / provides / may provide investment banking services to the following companies: Aedes, Alerion Clean Power, Autostrade per l’Italia ( Group), Bolzoni, Conafi, CNRC/Marco Polo Industrial Holding (on shares), Generali Assicurazioni, Hitachi (on Ansaldo STS shares), Italiaonline, Prelios, RCS, Saras, Sorgente SGR (on Nova Re shares). o Intermonte SIM SpA performes as a market maker for the following companies: Atlantia, , , , BCA Monte dei Paschi di Siena, BCA POP Emilia Romagna, BCA POP Milano, CNH Industrial, , , , Fiat Chrysler Automobiles NV, Generali, Indice FTMIB, , Intesa Sanpaolo Rsp, Leonardo-Finmeccanica, Luxottica Group, Mediaset, , Prysmian, , , Stmicroelectronics, Telecom Italia, Telecom Italia Risparmio, , Terna, Ubi Banca, , , Unipolsai. o Intermonte SIM SpA performes as a liquidity provider for the following companies: A2a, Ansaldo STS, Atlantia, Atsm, Autogrill, Azimut Holding, , , Banco Popolare, BCA Monte dei Paschi di Siena, BCA POP Emilia Romagna, BCA POP Milano, BCA POP Sondrio, , Campari, Cir-Comp. Ind. Riunite, Credito Emiliano, Danieli & c., Danieli & c. Risp. Nc, Diasorin, Enel, Eni, Exor, Generali, Hera, Intesa Sanpaolo, Intesa Sanpaolo Rsp, Iren, Italcementi, Italmobiliare, Italmobiliare RNC, Leonardo-Finmeccanica, Luxottica Group, Maire Tecnimont, Mediaset, Mediobanca, Parmalat, Prysmian, Recordati, S.i.a.s., Saipem, Salini Impregilo, Salvatore Ferragamo, Snam, Telecom Italia, Telecom Italia Risparmio, Terna, Tod’s, Ubi Banca, Unicredit, Unipol, Unipolsai, Yoox Net A Porter.

Intermonte SIM SpA holds net long or short positions in excess of 0.5% of the overall share capital in the following issuers:

Emittente % Long/Short ACOTEL GROUP 0,61 SHORT CHL 1,71 SHORT COGEME SET SPA 1,6 SHORT IKF 0,57 SHORT OLIDATA 0,88 SHORT PIERREL SPA 0,62 SHORT PREMUDA . 0,53 SHORT PRIMI SUI MOTORI S.P.A. 0,61 SHORT STEFANEL . 0,65 SHORT WASTE ITALIA 1,06 SHORT ZEPHYRO SPA 1,4 LONG

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