Brand Finance League Tables Summary Results - 2014

March 2014

The world’s only published ranking of ISO compliant brand values

Prepared for Wendel Hofman

Brand value results 2014

2014 2013

Brand Value $5,316m $3,657m

Market Cap $18,498m $10,385m

BV / MC 29% 35%

Brand Rating AA AA

Global 500 Rank 243 323

45%

78%

Brand value 2014 date: 1st January 2014

Market Cap 2014 date: 18 October 2013 (Adjusted by branded revenue)

Product Segmentation (USDm)

Brand rating

Brand value / Market cap %

29%

Value date: 1st January 2014

BV changes due to:

Brand value

$5,316m 45%

AA 74

Global 500 Rank

243 323 2013 2014

Brand Value Dashboard

Brand value 2014 date: 1st January 2014

Market Cap 2014 date: 18 October 2013 (Adjusted by branded revenue)

65%

29%

6%

General Insurance

Investments

Other

18,498

5,316

Market Cap

Brand Value

3,657

5,316

2013 Brand Strength Business Performance

External changes

2014

Methodology & Sources

Brand valuation methodology – ‘Royalty Relief’ BV is a function of brand strength and financial performance. The strength of the brand determines the ‘royalty rate’ which is applied to forecast revenues to derive the brand value

Brand strength expressed as a BSI score out of 100

BSI score applied to an appropriate company-specific royalty rate, derived from a similar sector royalty rate range

Royalty rate applied to forecast revenues to derive brand revenues

Post-tax brand revenues are discounted to a net present value (NPV) which equals the brand value

Brand Support

Brand Equity

Business Performance

Stakeholder Opinion

X = $ Forecast revenues

Brand Strength

Index (BSI)

Brand

‘Royalty Rate’

Brand

revenues

Brand

value

%

Strong brand

Weak brand

X

Brand Support

Brand Equity

Business Performance

Stakeholder Opinion

X = $ Forecast revenues

Brand Strength

Index (BSI)

Brand

‘Royalty Rate’

Brand

revenues

Brand

value

%

Strong brand

Weak brand

X

Brand strength expressed as a BSI score out of 100

BSI score applied to an appropriate company-specific royalty rate, derived from a similar sector royalty rate range

Royalty rate applied to forecast revenues to derive brand revenues

Post-tax brand revenues are discounted to a net present value (NPV) which equals the brand value

The BSI is calculated by benchmarking the brand against competitors across a range of metrics and stakeholders

Brand Strength in the royalty relief calculation

What support is provided/

invested to build the brand?

How do consumers feel about

the brand vs. competitors?

How does the brand perform

on customer & financial

metrics?

How does the brand impact staff, financiers, investors and other external audiences?

The strength of the brand is determined by benchmarking it against competitor brands in a balanced scorecard framework. Brand Strength is measured using a range of measures to quantify the quality and size of the brand across different stakeholder groups.

This chart summarises the conceptual approach of measuring brand strength within a single index.

Our Brand Strength Index (‘BSI’), captures a range of measures across various stakeholders including:

• Consumers

• Staff

• Financial Audiences

• External Audiences

Consumer benchmarking, the biggest driver of brand strength (70% weighting), incorporates measures relating to brand support, brand equity and brand performance relative to competitor brands.

Determining strength of the brand amongst stakeholders

Measure Stakeholder

Bra

nd

Str

en

gth

In

dex

Brand

Support

Customer

(70%)

Brand

Equity

Brand

Performance

Stakeholder

opinion

Staff

(10%)

Financial

(10%)

External

(10%)

The BSI Incorporates a range of metrics to determine

overall brand strength relative to competitors

80 / 100

Measure Stakeholder Attribute Score Source

Bra

nd

Str

en

gth

In

dex

Brand

Support

Customer

(70%)

Brand protection 4.2 Novagraaf

Visual Identity 4.5 VI360

Marketing & ad spend 3 Public data

Online reputation 3.2 Meltwater

CEO Score 4.9 Brand Finance

Brand

Equity

Function 4.3 Various (BAV, Havas)

Emotion 3.7 Various (BAV, Havas)

Conduct 3.9 Various (BAV, Havas)

Loyalty 3.5 Various (BAV, Havas)

Brand

Performance

Revenue ($) 4.4 Bloomberg, annual reports

Forecasted Growth (%) 4.0 Bloomberg

Net Income ($) 4.6 Bloomberg, annual reports

Margin (%) 3.4 Bloomberg, annual reports

Web ranking 4.0 Alexa

Tier 1 Cap 4.0 The Banker

Tier 1 Cap % Change 2.8 The Banker

Assets rank 5.0 The Banker

Capital Assets Ratio 2.7 The Banker

Pre-Tax Profits % change 3.6 The Banker

Return on Capital 3.8 The Banker

Return on Assets (%) 3.3 The Banker

Stakeholder

opinion

Staff

(10%)

CEO Score 4.9 Brand Finance

Employee Score 4.3 CSRHUB

Number of Employees 5.0 Bloomberg, annual reports

Employee growth 2.9 Bloomberg, annual reports

Financial

(10%)

CEO Score 4.9 Brand Finance

Credit Rating 4.0 Bloomberg

Buy / Sell / Hold 4.6 Bloomberg

External

(10%)

CEO Score 4.9 Brand Finance

Environmental Score 3.9 Bloomberg

Social Score 4.3 Bloomberg

Governance Score 4.6 Bloomberg

Community - CSRHUB 4.0 CSRHUB

Governance - CSRHUB 4.1 CSRHUB

Environment - CSRHUB 4.0 CSRHUB

Example- Brand strength score:

Peer Average BNP Paribas score

Example Banking BSI

Partner About Contribution BSI score

VI management company helping brands to implement, monitor and control the visual elements of their identity

High level visual identity and management performance assessment benchmarked against industry best practice

Visual identity score

Leading international patent and trademark consultancy

Reviewed over 300 brands across Brand Finance’s Global, Banking and Telecoms league tables

Trademark protection score (input)

Global strategic consultancy specialising in brand and customer insights and analytics

Access to BrandAsset® Valuator database – the largest study of consumer and brand behaviour covering 50,000 brands in 50 countries

Functional, emotional, conduct and loyalty scores (brand equity)

Leading media business who analyse and track the connections brands have with human well-being

Access to Meaningful Brands index covering 700 brands, over 134,000 consumers and 23 countries

Emotional, conduct and loyalty scores (brand equity)

Leading online media monitoring software company

Access to Sentiment Index (online and social reputation tracking) data for the top Global, Banking and Telecoms brands

Sentiment Index score (input)

World’s largest CSR (corporate social responsibility) and sustainability ratings company

Access to CSR ratings and information database covering 8,500 brands

CSR score (outputs)

The leading provider of global company web metrics and analytics

Access to website rankings, unique visitor numbers and pageviews covering thousands of brands

Brand performance

Bloomberg is a major global provider of 24-hour financial news and information

Access to our consolidated financials, forecast financials, and key performance metrics which make up a key part of our BSI

Brand performance and Stakeholder opinion

ktMINE is an interactive intellectual property database that provides direct access to royalty rates, actual license agreements and detailed agreement summaries.

Database consists of more than 15,000 agreements. Royalty rate analysis

IntangibleSpring is an online database of license agreements with royalty rates used for valuation of intangible assets and transfer pricing analysis.

Database consists of more than 12,000 agreements. Royalty rate analysis

Brand Strength Index (BSI) Partners

Note: In case where brands in our league tables are not covered by any of the featured BSI partners,

Brand Finance has relied on other public data sources to corroborate the brand strength score

A range of sources to determine overall brand strength relative to competitors

Featured partners:

Brand Support

Brand Equity

Business Performance

Stakeholder Opinion

X = $ Forecast revenues

Brand Strength

Index (BSI)

Brand

‘Royalty Rate’

Brand

revenues

Brand

value

%

Strong brand

Weak brand

X

Brand strength expressed as a BSI score out of 100

BSI score applied to an appropriate company-specific royalty rate, derived from a similar sector royalty rate range

Royalty rate applied to forecast revenues to derive brand revenues

Post-tax brand revenues are discounted to a net present value (NPV) which equals the brand value

BSI score applied to an appropriate company-specific royalty rate, derived from a similar sector royalty rate range

Royalty rate analysis

Along with internal licensing databases, Brand Finance has partnered with 2 leading licensing database providers to set the royalty rate ranges used in the study

Royalty rate ranges

• ktMINE is an interactive intellectual property

database that provides direct access to royalty

rates, actual license agreements and detailed

agreement summaries.

• ktMINE’s database consists of more than 15,000

agreements.

• IntangibleSpring is an online database of license

agreements with royalty rates used for valuation of

intangible assets and transfer pricing analysis.

• IntangibleSpring’s database consists of more than

12,000 agreements.

1. Brand strength expressed as a score out of 100

75

5%

1%

4%

3. Set appropriate royalty rate

2. Score applied to sector royalty rate range

(e.g. 1-5%)

Illustrative

The brand strength (BSI) score is applied to the sector royalty rate range to determine an appropriate brand-specific royalty rate

Set the brand royalty rate

Global

Brand valuation methodology – ‘Royalty Relief’ BV is a function of brand strength and financial performance. The strength of the brand determines the ‘royalty rate’ which is applied to forecast revenues to derive the brand value

Brand strength expressed as a BSI score out of 100

BSI score applied to an appropriate company-specific royalty rate, derived from a similar sector royalty rate range

Royalty rate applied to forecast revenues to derive brand revenues

Post-tax brand revenues are discounted to a net present value (NPV) which equals the brand value

Brand Support

Brand Equity

Business Performance

Stakeholder Opinion

X = $ Forecast revenues

Brand Strength

Index (BSI)

Brand

‘Royalty Rate’

Brand

revenues

Brand

value

%

Strong brand

Weak brand

X

Brand Finance approach

• Businesses are made up of many different assets that

can be valued, one of which can be identified as brand.

• A branded business refers to all businesses operating

under the same brand, as the accompanying chart

illustrates.

• Our role is to help explain the impact that brands have on

the branded businesses they form part of.

• We care about increasing branded business value, not

just brand value.

• When looking at brand value, we first look at the value of

the branded business as a whole.

Brand

Value

Branded Business

Value

Enterprise Value

The Brand Finance approach Bridging the gap between marketing and finance

Brand – Trade marks (i.e. word mark,

logo and strap line registrations),

associated marketing IP (specifically

domain names, trade dress, advertising

copyrights, brand guidelines and

manuals) together with the goodwill

associated with those trade marks and

marketing IP

Enterprise – comprised of

one or many businesses or

assets

Branded Business –

businesses operating under

a particular trade mark

stakeholder effects business value drivers

customers • Greater sales volumes

• Price premiums Revenue & Costs

suppliers

• Lower prices

• Better terms

• Greater willingness to partner

Costs

staff • Lower recruitment costs

• Lower retention costs Costs

financiers

• Lower borrowing costs

• Better repayment conditions

• Higher price earnings ratio

WACC

regulator • More invitations to tender

• Greater propensity to award

Revenue &

Long term growth

media • Influencing the attitudes of direct

stakeholders n/a

public • Influencing the attitudes of direct

stakeholders n/a

ind

ire

ct

dir

ect

Volume

Growth

Gross

Margin

OpEx

CapEx

Curr

ent

Bra

nd &

Busin

ess V

alu

e

We explain how brands impact business value Bridging the gap between marketing and finance

Customer

Brand Perceptions affect

- Price

- Volume

- Repeat

- Share of wallet

- Cross sell

External

Audiences

Brand Perceptions affect

- Distribution terms

- Channel access

- Strategic alliances

- Deal completion

- Licensing

- CSR

Staff

Brand Perceptions affect

- Recruitment

- Retention

- Recommendation

- Morale

- Staff costs

Financial

Audiences

Brand Perceptions affect

- Interest spread

- Share price

- Debt/ Equity ratio

- Risk appetite

- Cost of borrowing

Potential

Customers

Existing

Customers

Influencers

e.g. Media

Trade

Channels

Strategic

Allies &

Suppliers Investors

Debt

providers

Sales

Production

All Other

Employees

Middle

Managers

Directors

brand

Different stakeholders have varying affects on business

value and brand can have an impact on all of them

David Haigh CEO

Brand Finance plc

d.haigh@brandfinance.com

+44 20 7389 9400

Brand Finance plc is the leading brand valuation and strategy firm, helping companies to manage their brands for improved business results. www.brandfinance.com