Ontex Group NV — Capital/Financing Update 2017

Mar 29, 2017

Free translation —forinformation purposes only

ONTEXGROUPNV

Auditor's report on the capital increase with disapplication of the preferential subscription rights of the existing shareholders pursuantto Article596of the CompaniesCode

17 March 2017

Free translation —forinformation purposes only

AUDITOR'S REPORT ON THE CAPITAL INCREASE WITH DISAPPLICATION OF THE PREFERENTIAL SUBSCRIPTION RIGHTS OF THE EXISTINGSØHOLDERS PURSUANTTOARTICLE596OF THE COMPANIESCODE

1. Assignment

Theboardof directors of Ontex GroupNVassigned the company'sauditor,PwCBedrijfsrevisoren bcvba, represented byPeterOpsomer,toreport on the capital increase with disapplication of the preferential subscription rights of the existing shareholders,inaccordance with article596of the CompaniesCode.

Art. 596 of the CompaniesCodelays downinsuchcasesthat:

"Thegeneralmeetingcalledtodeliberateandresolve on the capital increase, the issuance of convertible bonds or the issuance of warrants may, under the rules of quorumandmajority requiredforan amendment of the articles of association of the companyand in the interest of the company, limit or1ft the preferential subscription right. The proposal thereto hastobe specifically mentioned in the notice calling themeeting. Theboardof directors justtfies its proposal in adetailed report, which speccally relatesto the issue priceandthe financial consequences of the transaction forthe shareholders. Areportisprepared by the statutoryauditoror, in hisabsence, by an external chartered auditorappointed in thesame manner,in which he attests that the financialandaccounting information containedin the report of theboardof directors is correctandadequateforthe purpose of informing thegeneralmeetingcalledtovote on the proposal. These reportsare filed with the clerk of the commercial courtinaccordance with Article75."

Wehavebased our work on the applicable audit standardsandguidanceasissued by of the Institute of Certified Auditors("InstituutderBedrijfsrevisoren/InstitutdesRéviseurs d'Entreprises").

Inimplementation of this assignment, we hereby reportinparticular on whether of the financialand accounting information containedinthe special report prepared by theBoardof Directors relatingto this transactioniscorrectandadequate.

2. Description of the transaction

Theboardof directors of latexGroupNV,acompany organised under the laws of Belgium, having its registered officeat KorteKeppestraat21, 9320Erembodegem(Aalst),andregistered with thelegal entitiesregisterof Gent, division Dendermonde under the number0550.880.915(the "Company"), proposesacapital increase by the issuance of upto7,486,110new ordinary shares of the Company within the framework of the authorized capitalandwith the disapplication of the preferential subscription right of the existing shareholders of the Company. The new ordinary shares will be issued ascompensationfor acontributionincash. The new ordinary shares will be paidup infullatthetime of their issuanceandwillhavethesamerightsandcharacteristicsas,andbe fully fungible with, the existing ordinary shares of the Company, including with respecttothe righttoreceive dividends. The Company will applyforthe admission of the new ordinary sharestotrading on the regulated market of Euronext Brussels.

Wenoteatthe outset that the preferential subscription rightisnotdisappliedinfavour of specific identifiedpersons,within the meaning of Article598of the Belgian CompanyCode.

Inaccordance with article596of the Companies'Code,theboardof directorsisresponsiblefor preparingaspecial report explaining the reasonsforthe disapplication of the preferential subscription right of existing shareholders of the Company; it details the issue priceandthe financial consequences of the capital increaseforthe existing shareholders.

The proceeds of the placement will be usedtorefinance thebusinessfurthertothe acquisition of the personalhygienebusinessof Hypermarcas. This acquisition was announced on23 December 2016 and was completed on7March2017. The Capital Increase will also enable the Companytoremain committedtoactively manage itsbalancesheet soas tomaintain an efficient, flexibleandresilient capital structuretosupportcontinued investmentinthebusiness.

The capital increase will be effected through an accelerated bookbuilt offering (the"ABB")to institutional investors. The ABB isexpectedtobe launched on or about22March2017.

The number of new ordinary shares issued will be equaltoor lower than7,486,110(i.e. one share less than10%of the current number of outstanding ordinary shares of the Company). The actual number of new ordinary shares will depend on theABB.The issue price will be determined througha bookbuilding process, but willnotbe less than10%below the closing price of the Company's ordinary share on Euronext Brussels on the trading day preceding the announcement of theABB.The successful completion of theABBconstitutesacondition precedenttothis capital increase.

Asof thedateof this report, the share capital of the Company amountstoEUR748,715,885.8 andis represented by74,861,108 ordinary shares withoutparvalue.

g. Adequacy of the accountingandfinancial information includedinthe special report prepared by theBoardof Directors

The capital increase will be effected through anABB,which resultsinthe fact that thefinalnumber of new ordinary shares issuedandthefinalissue pricearenotknownatthedateof the special report prepared by theboardof directorsandour report. Consequently, the analysis of the consequences of the capital increaseforthe position of the existing shareholders,asindicatedinthe below table,isbased on the hypothesis of (i)an issue price of EUR28.03,i.e. theminimumissue price if the closing share price on the trading day preceding the announcement of theABBwas thesameasthe closing price on the trading day preceding thedateof this report(EUR31.14less10% and(ii)amaximum number of new ordinary shares of 7,486,110,beingishare less than10%of the currently outstanding shares.

	Prior tothe capital increase		After the Capital increase
	Numerof shares	Market Capitalisation inCmillion	Numer ofshares		Market CapitalisationinC million
Existing shareholders	74,861,108	2,331 (1)	74,861,108	90.91%	2,331	91.74%
Ne" sharholders			7,486,110 (2)	9.09%	210 (3)	8.26%
Total	74,861,108	2.331	82347.218	100.00%	2 ,541	100.00%

• (i)Calculatedatthe closingrateof the trading day preceding thedateof this report,EUR31.14per share
• (2) Hypothetical maximum number of shares that will be issued
• (3) Calculatedatclosingrateof the trading preceding thedateof this report less the maximal discount of 1o%

•

Consequences of the capital increaseforthe participationinthe share capital,dividend andvoting rights: The above table demonstrates that, based on the assumptions used, the existing shareholders dilute from100%to90.91%,assumingnocurrent shareholders would subscribetothe newly issued ordinary shares

Consequencesinterms of financial dilution: Inadditiontothe dilutive impact described above, thereisalsoafinancial dilutionas aconsequence of the fact that the new shares could be issuedata priceupto10%lower than the market price on the day preceding the announcement of theABB. Assumingnocurrent shareholders would subscribetothe newly issued ordinary shares, the financial dilution would amounttoabout0.91%as,after the capital increase,allother things staying thesame, the theoretical share price would amounttoEUR30.86comparedto aEUR31.14before the capital increase.

4. Conclusion

On thebasisof the examination conducted, wearefinally of the view that the financialandaccounting datacontainedinthe special report prepared by theBoardof Directorsiscorrectandadequate.

We would finally recall that our assignmentdoesnotinclude issuingapronouncement regarding the justifiabilityandfairness of the transaction.

This report has been issuedinconnection with the requirement of article596of the CompaniesCode andisnotmeanttobe usedforany other purpose.

Gent, 17March2017

PwCBedrijfsrevisorenbcvba Representedby

PeterOpsomer Bedrijfsrevisor/ statutoryauditor

Appendix: Special report of theboardof directors pertainingtothe planned capital increase

ONTEX GROUP

Limited Liability Company (Naamloze Vennootschap) Korte Keppestraat 21 9320 Erembodegem (Aalst) VAT BE 0550.880.915 RPR Ghent, division Dendermonde

(the "Company")

SPECIAL REPORT OF THE BOARD OF DIRECTORS IN ACCORDANCE WITH ARTICLE 596 OF THE BELGIAN COMPANY CODE

1. PURPOSE OF THIS REPORT

This special report is prepared in accordance with Article 596 of the Belgian Company Code and has been adopted by the board of directors of the Company (the "Board of Directors") on March 17, 2017, in the context of a proposed capital increase by the issuance of up to 7,486,110 new ordinary shares of the Company, to be decided by the Board of Directors on that same date, within the framework of the authorized capital under the terms and subject to the conditions described in section 3 below (the "Capital Increase").

This special report describes the Capital Increase, sets forth the reasons for the disapplication of the preferential subscription right of existing shareholders of the Company, and details the issue price and the financial consequences of the Capital Increase for the existing shareholders, as required by Article 596 of the Belgian Company Code.

The Board of Directors notes at the outset that the preferential subscription right is not disapplied in favor of identified persons, within the meaning of Article 598 of the Belgian Company Code and that the New Shares (as defined below) will be placed with institutional investors to be identified as part of a bookbuilding process.

$2.$ CONTEXT

On March 7, 2017, the Company acquired, through one of its subsidiaries, Hygienic Disposables Brazil Participações Ltda, a Brazilian sociedade empresaria limitada, organized and existing under the laws of Brazil enrolled with the Brazilian Corporate Taxpayers' Registry of the Ministry of Finance (CNPJ) under no. 25.186.120/0001-56 ("Ontex Brazil"), 100% of the shares of Active Indústria de Cosméticos S.A. a Brazilian sociedade anônima, organized and existing under the laws of Brazil, enrolled with the Brazilian Corporate Taxpayers' Registry of the Ministry of Finance (CNPJ) under no. 22.010.816/0001-39 ("Active") and Falcon Distribuidora, Armazenamento e Transporte S.A., a Brazilian sociedade anônima, organized and existing under the laws of Brazil, enrolled with the Brazilian Corporate Taxpayers' Registry of the Ministry of Finance (CNPJ) under no. 23.191.831/0001-93 ("Falcon", and together with Active, the "Target Companies"). To that end, Ontex Brazil entered into a share purchase agreement for the shares of the Target Companies dated December 22, 2016 (the "Share Purchase Agreement"), for a total enterprise value of approximately one billion Brazilian Reais (R\$1,000,000,000) (the "Transaction"), subject to the terms and conditions described in the Share Purchase Agreement including post-closing adjustments.

The Transaction allowed the Companytoindirectly acquirealeading Brazilianbusinessthat isanexcellentfitforthe Company, consistent with its stated strategic objectivesforexternal growth.Inparticular, the Companyisconvinced both by the fundamentalsandpotential of Target Companies' operationsand businesspertainingtoinfant andadult diapers, feminine care productsandother relatedpersonalhygiene products including its solid positionina largemarket.

Inordertoconsummate the Transaction, the Company used available liquidity (cashand existing revolving credit facility)andobtaineda bridgedebt financing facilityforan amount of EUR125,000,000,pursuanttoan additional facility notice under itsseniorfacilities agreement originally datedNovember 10, 2014,asamendedandrestated fromtime to time.

TheBoardof Directors now proposes the Capital Increasetouse the proceeds of the placement of theNewSharestorefinance thebusinessfurthertothe Transaction. The Capital Increase will also enable the Companytoremain committedtoactively manage itsbalance sheet soas tomaintain an efficient, flexibleandresilient capital structuretosupportcontinued investmentinthebusiness.

3. DESCRIPTION OF THE CAPITAL INCREASE

(a) Decisiontoincrease the share capital

The Capital Increase will be effected within the framework of the Company's authorized capital. PursuanttoArticle7of the articles of association of the Company (the "Articles of Association"), theBoardof Directorsisauthorized(i)toincrease the Company's share capital,inone or severaltimes,uptoan aggregate amount (before issue premium) equalto50%of the registered share capitalasit stood after the closing of the initialpublicoffering of the Company, i.e. EUR680,650,828; and (ii)tolimitor disapply the preferential subscription right of the existing shareholders inthe interest of the Company, subjecttothe limitationsand inaccordance with the conditions providedforby the Belgian CompanyCode.

The Company's share capital will increase through the issuance of upto7,486,110 new ordinary shares of the Company (the"NewShares") (i.e. less than10%of the number of outstanding ordinary shares of the Company) against an issue pricetobe determined throughabookbuilding process but which maynotbe less than10% below the closing price of the Company's ordinary share on Euronext Brussels on the trading day preceding the announcement of theABB,under the condition precedent, andtothe extent, of the effective subscription of theNewShares. TheNewShares will be placed with institutional investors only, through an accelerated bookbuilt offering (the"ABB"),forwhich the order book will beheldby UBS Limitedand BNPParibas Fortis NV/SA (together the`Kookrunners").The ABB isexpectedto be launched on Wednesday March22, 2017.There will benopublicofferingin Belgium or elsewhere.

TheBoardof Directors will grant any two directors, acting jointly, with power of substitution, the powerto:

(i) decidetheeffective launchof theABB;and

(ii) determine,attheendof the bookbuilding process, the issue pricefortheNew Shares (including issue premium), taking into account theminimumissue priceasdescribed above.

TheBoardof Directors will grant any director, acting alone, with power of substitution, the powertorecordthe effective realization of the Capital Increasein accordance with Article589of the Belgian CompanyCode.

(b) Characteristics of theNewShares

TheNewShares will be paidup infullatthetimeof their issuanceandwillhavethe samerightsandcharacteristicsas,andbe fully fungible with, the existing ordinary shares of the Company, including with respecttothe righttoreceive dividends.

Upon subscription, thefinalissue pricepershare must be bookedascapitalforthe partcorrespondingtothe fractional value (fractiewaarde/ paircomptable) of each share. The remainder of the issue price must be booked onablocked "Issue Premium" account, which shall constitute, like the capital, the guaranteeforthird partiesandmay only be reduced or cancelled byadecision of thegeneralmeeting, in accordance with Article612of the CompanyCode.

The Company will applyforthe admission of theNewSharestotrading on the regulated market of Euronext Brussels.

(c) Accelerated bookbuilt offeringandrole of the Bookrunners

The Bookrunners will contact investorsand,following receipt of offerstherefrom, recommend the allocation of theNewShares. Thefinalallocation of theNewShares will be determined by the Company on thebasisof the Bookrunners' recommendation.Noinvestorshavereceivednorwill receive any commitment or undertaking from the Company or the Bookrunnersasregards allocation of theNew Shares.

NoProspectus (d)

• (i) Offering. Inaccordance with Article3, §2,subparagraph1,a),of the law of June16, 2006on thepublicoffering of financial instrumentsandthe admission of financial instrumentstotrading onaregulated market (the "Prospectus Law"), the offering of theNewSharestoqualified investorsis notapublicofferingandthereforedoesnotrequire the publication of a prospectus.
• (ii) Admissionto trading. In accordance with Article18, §2,a)of the Prospectus Law,noprospectusisrequiredforthe admissiontotrading of theNew Sharesas aresult of the Capital Increase, considering that theNewShares will represent,overaperiod of 12months, less than10%of the number of shares of thesameclass of the Company already admittedtotrading.

4. JUSTIFICATION OF THE DISAPPLICATION OF THE PREFERENTIAL SUBSCRIPTION RIGHT

TheBoardof Directors considers that anABBwith disapplication of the preferential subscription rightis moreappropriate than other alternatives suchas apublicofferingto existing shareholders, considering that:

• (a) it involvesashorter execution period, thereby reducing the risk associated with market volatilityandmarket liquidity;
• (b) itis asuitableapproachfortransactions with limited size,as isthecasehere, where institutional investorshavethe capacity quicklytoabsorb the Capital Increase, allowing theABBtobe carriedout inasingleday;
• (с) it allowsfor agreater flexibilitytoadapt the Capital Increasetomarket conditions;
• (d) the issue price can be maximized, with lower discounts than what would usually prevailincapital increases with preferential subscription right;
• (e) issue costsarereduced, since the costs of theABBarelimitedtothe placement processandtherefore represent lower operational,marketing andlegalcost, which leadstolower costsoverallthanacapital increase with preferential subscription right orapublicofferingtothe marketas awhole;and
• (f) it allowsfor agreater flexibilityinterms of allocation of theNewShares, so that they can be distributed optimally, whichin turnreduces speculativeandflowback risk.

Given the purpose of the Capital Increase(asdescribedinsection2above),andtaking into account the benefits of an accelerated bookbuilding process, the costs,timing andburden of a placement with preferential subscription right,andthe limited dilution resulting from the Capital Increase, theBoardof Directors considers that the Capital IncreaseviaanABB, which necessarily implies the disapplication of the preferential subscription right,isinthe Company's corporate interest.

5. DETERMINATION OF THE PRICEFORTHE NEW SHARES

The proposed placement with institutional investors implies the use of abookbuilding process, pursuanttowhich investors indicate their interestfor acertainvolumeof subscriptionsatdifferent price levels. This process allows the determination of the subscription priceatan equilibrium between the maximization of the amount of equityfor which each shareissubscribed on the one handandamaximization of the success of the placementandthe number of subscribed shares on the other hand.

Asmentionedinsection3(a)above, thefinalissue price shall be determinedattheendof the bookbuilding process, taking into account theminimumpriceasset out insection3(a)above, by any two directors (acting jointly), pursuanttothe powers granted by theBoardof Directors.

6. DESCRIPTION OF THE IMPACT OF THE CAPITAL INCREASE ON THE POSITION OF EXISTING SHAREHOLDERS

The price determination methodset out insection5 abovedoesnotallowfor aprecise апд finalcalculation of the financial consequences of the Capital Increase given that thefinal

issue priceisnotyet knownatthedateof this report.As aconsequence, the analysis of the impact of the Capital Increase on the position of existing shareholders,asset outbelow,is based on the hypothesis of an issue price of EUR28.03, i.e. theminimumissue price if the closing share price on the trading day preceding the announcement of theABBwas thesame asthe closing share price on the trading day preceding thedateof this report(EUR31.14less 10%).

(a) Consequencesinterms of participationinthe share capitalandvoting rights

If,inthe abovementioned hypothesis, the maximum number of sharesisissued, i.e. 7,486,110 NewShares, theNewShares will represent9.99%(rounded down) of the aggregate amount of the currently outstanding ordinary shares of the Company. Assuming thatnoneof the existing shareholders subscribefortheNewShares, the Capital Increase will therefore lead, based on the abovementioned assumptions,to a dilution of existing shareholders from100to90.91%(roundedup).

(b) Financial consequences

Taking into account the abovementioned hypothetical issue price(EUR28.03) and the maximum number of NewShares(7,486,110), andassuming thatnocurrent shareholder subscribesfortheNewShares, the financial dilution ("FD") of the existing shareholders, expressedinpercentage of the value of one share, would be 0.91%.

This percentageiscalculated based on the following formula:

$$
FD = \frac{(CP - IP)}{CP} * \frac{NS}{(OS + NS)} * 100
$$

where:

• CP isthe closing price of the share of the Company on Euronext Brussels on March16, 2017, i.e. EUR31.14;
• OS isthe number of outstanding shares of the Company before the Capital Increase, i.e. 74,861,108;
• NSisthe hypothetical number of NewShares issued pursuanttothe Capital Increase, i.e. 7,486,110;
• IP isthe hypothetical issue price of theNewShares, which,forthe purpose of the above,isassumedtobe equaltoEUR28.03.

The hypothetical issue price mentioned aboveisgivenforillustrative purposes only, andthefinalissue price will be determinedattheendof the bookbuilding process, taking into account theminimumprice determinedinaccordance with theboard resolutioninrelationtothe Capital Increase.

7. CONCLUSION

In light of the considerations mentioned above, the Board of Directors is of the opinion that the Capital Increase and the disapplication of the preferential subscription right of existing shareholders are in the corporate interest of the Company.

(Signature page to follow)

Brussels,March 17, 2017

On behalf of theboardof directors of Ontex GroupNV,

ArtipaBVBA,represented by itspermanent representative,ThierryNavarre Chief Operating Officer, special proxyholder