Fila — M&A Activity 2016

Feb 4, 2016

Acquisition of Daler-Rowney

Disclaimer

This document has been prepared by F.I.L.A. – Fabbrica Italiana Lapis ed Affini S.p.A. ("FILA") exclusively for use in the presentation of the acquisition of Daler-Rowney Lukas Group.

Statements contained in this presentation, particularly regarding any possible or assumed future performance of the FILA Group, are or may be forward-looking statements based on FILA's current expectations and projections about future events.

Such forward-looking statements are subject to risks and uncertainties, the non-occurrence or occurrence of which could cause the actual results including the financial condition and profitability of FILA to differ materially from, or be more negative than, those expressed or implied by such forward-looking statements. Consequently, FILA and its management can give no assurance regarding the future accuracy of the estimates of future performance set forth in this document or the actual occurrence of the predicted developments.

The data and information contained in this document are subject to variations and integrations. Although FILA reserves the right to make such variations and integrations when it deems necessary or appropriate, FILA assumes no affirmative disclosure obligation to make such variations and integration, except to the extent required by law.

Any reference to past performance of the FILA Group shall not be taken as an indication of future performance.

This document does not constitute or form part of any offer or invitation to purchase or subscribe any shares and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.

By attending this presentation, you agree to be bound by the foregoing terms.

Transaction overview

• FILA has acquired the entire share capital comprising "ordinary shares" and "preference shares" of Renoir TopCo Ltd, the holding company of the Daler-Rowney Lukas Group ("Daler"), from funds under the management of Electra Partners LLP and from the management team of Daler
• The acquisition of the entire share capital of Renoir TopCo Ltd involves a total payment of Euro 80.8 million, of which
• Euro 2.6 million as payment for the "ordinary shares"
• Euro 12.7 million as payment for the "preference shares" and
• Euro 65.5 million for the redemption of the Loan Notes held by the sellers
• The transaction has been financed through a medium-term bank loan issued by Unicredit, Intesa Sanpaolo and Mediobanca for a total amount of Euro 130 million, which includes also a revolving facility to manage FILA's working capital needs
• The integration with the Daler-Rowney Lukas Group aims at achieving significant cost synergies through the optimization of the production structure, sales force and overhead costs – as well as revenue synergies – through the increase of Daler-Rowney products sales

Transaction strategic rationale

• Possibility to exploit the integration capabilities developed to become a market aggregator in a sector which is at the beginning of a consolidation phase
• FILA's product portfolio have unexploited market ends and the same distribution channels of the Art & Craft industry
• Great increase of the age of FILA's target customers for color products from current 2 to 10 years through the integration of Art & Craft companies
• Potential integration of brushes, canvases and paper in Maimeri's product portfolio
• Potential cost synergies originating from the optimization of the production structure and the streamlining of sales force and overheads functions
• • Substantial commercial and distribution synergies between the Art & Craft industry and the stationery school market. Same pull marketing approach as for current FILA product offering
• Mature technology and no technological changes envisaged in the Art & Craft industry are compatible with FILA's investment requirements
• The Art & Craft industry is primarily growing in the entry level segment, which is comparable, in terms of pricing and quality, to FILA's premium brands in the school stationery market

• FILA's strong know-how in the modern distribution model toward which the Art & Craft industry is moving

Daler at a glance

ICONIC BRITISH GROUP, ESTABLISHED IN 1783, WORLDWIDE LEADER IN THE ART & CRAFT

MANUFACTURER AND DISTRIBUTOR OF FINE ART & CRAFT MATERIALS

# 1 OR 2 BRAND RANKING IN ALL ITS CHOSEN MARKETS

ART & CRAFT MARKET ESTIMATED AT APPROX. USD 1.5 TO 4.5 BN RETAIL VALUE EX-FACTORY WORTH CA. USD 0.8 TO 2.3 BN

PRODUCTS SOLD IN OVER 100 COUNTRIES THROUGH MORE THAN 40 BRANDS

DIRECT PRESENCE IN UK, DOMINICAN REPUBLIC, GERMANY AND USA WITH 700 EMPLOYEES WORLDWIDE

ANNUAL REVENUES OF OVER GBP 60M

SIGNIFICANT SYNERGIES EXPECTED UNLOCKING NORMALIZED EBITDA MARGIN IN LINE / ABOVE CURRENT FILA'S MARGIN

Key milestones in Daler history

Product portfolio

Key brands

1. Includes Boards

Product segmentation targeting a wide spectrum of end users…

9

…and perfectly complementary to FILA's offering

Revenues breakdown¹

Art accessories and other products