Davide Campari Milano SpA

Operating Model

"I gioielli di famiglia non si vendono; si regalano"

"Family heirlooms should not be sold; they should be gifted"

Countess Angiola Maria Barbizzoli, last heiress of the Campari family, 1976

Alberto Ghezzi
Instructions

Step Activity

1 Type in historical raw IS and BS

2 Reorganize historical IS and BS

3 Build historical CF

4 Compute historical metrics and choose drivers' values

5 Forecast sales

6 Forecast operational costs

7 Forecast D&A and fixed assets

8 Forecast working capital

9 Forecast other items

10 Forecast income taxes

11 Forecast equity

12 Forecast net debt

The model notices a circularity

13 Fill forecast outputs from totals in Calculations

14 Drag CF structure in forecast years

Color coding

Blue Hardcoded value

Black Calculation
Assumption / driver
Historical financial recall
Assumption / driver for the steady state
Sheet

AsReported

Restatements

Restatements

Assumptions

Sales_OPEX

Sales_OPEX

Investments

Investments

Others

Others

Financing

Financing
File > Options > Formulas: make sure
that "Workbook calculation" is set on
"Automatic" and that the option "Enable
Output iterative calculation" is ON.
Output
Original Financial Statements
Historicals

(EUR m) Driver Driver 2017 2018

Income statement

Net sales 1,753.4 1,711.7

Cost of goods sold (COGS) (741.1) (683.6)
Advertising and promotion (279.9) (289.2)
Selling, general & adminsitrative expenses (SGAs) (338.1) (358.2)
One-off items
Operating profit 394.3 380.7

Financial income 0.0 0.0

Financial expenses (64.8) (32.0)
One-off's finacial expenses 0.0 0.0
Income from associates 0.0 0.2
Put options costs (2.8) 2.3
Pre-tax profits 326.7 351.2

Taxes 29.7 (54.5)

Net profit 356.4 296.7

Balance sheet

Net tangible fixed assets 431.9 454.4

Biological assets 0.0 1.1
Property 120.9 122.8
Goodwill and trademarks 2,302.7 2,341.0
Intangible assets 32.8 42.9
Interests in associates 0.0 0.4
Deferred tax assets 43.1 38.4
Other non-current assets 46.5 23.9
Total non-current assets 2,977.9 3,024.9

Inventories 491.4 565.3

Current biological assets 0.4 0.8
Trade receivables 317.5 285.9
Financial receivables 9.3 29.2
Cash at cash equivalents 514.5 613.9
Receivables for income taxes 28.6 22.4
Other receivables 31.8 32.3
Total current assets 1,393.5 1,549.8

Non-current assets for sale 47.7 7.8

Total assets 4,419.1 4,582.5

Share capital 58.1 58.1

Reserves 1,884.5 2,104.7
Group's shareholders' equity 1,942.6 2,162.8
Minorty interests 0.0 0.0
Total shareholders' equity 1,942.6 2,162.8

Bonds 995.6 778.7

Other non-current financial payables 493.6 463.7
Staff severance fund 34.4 31.6
Risks fund 123.7 118.7
Deferred tax 364.0 368.2
Total non-current liabilities 2,011.3 1,760.9

Banks loan 13.8 4.5

Other financial payables 62.1 52.4
Trade payables 225.6 216.0
Payables for taxes 21.8 13.9
Other current liabilities 141.8 372.0
Total current liabilities 465.1 658.8

Liabilities held for sale 0.1 0.0

Total liabilities and equity 4,419.1 4,582.5

Information from the notes to financial statements

D&A included into OPEX

COGS (72.0) (53.7)
Advertisement (0.1) (0.1)
SGAs (15.5) (15.2)
Total D&A (87.5) (69.0)

Sales breakdown
Americas 783.6 744.7
Italy 388.0 356.1
Rest of Europe 460.4 482.5
Asia & Pacific 121.4 128.4
Check - -

Aperol 231.4 279.0

SKYY Vodka 166.6 145.5
Campari 177.1 174.6
Other Global Brands (Wild Turkey..) 345.4 356.0
Regional Brands (Cynar, GlenGrant..) 292.8 287.6
Local Brands (Ouzo, Crodino..) 215.7 208.8
Others 324.4 260.2
1,753.4 1,711.7
- -

Market information

Dividend related to the year 52.1 57.5

WA shares outstanding - Basic (m) 1,160.8 1,154.9
WA shares outstanding - Fully diluted (m) 1,180.0 1,179.9
Share price at year end 6.4 7.8
Market capitalization 7,440.7 9,054.4

Sales breakdown %

Aperol 13.2% 16.3%

SKYY Vodka 9.5% 8.5%
Campari 10.1% 10.2%
Other Global Brands (Wild Turkey..) 19.7% 20.8%
Regional Brands (Cynar, GlenGrant..) 16.7% 16.8%
Local Brands (Ouzo, Crodino..) 12.3% 12.2%
Others 18.5% 15.2%
Historicals Explicit forecast TV

2019 2020 2021 2022 2023 2024 2025 2026 Notes

1,842.5 1,772.0
(721.3) (746.1)
Type historical consolidated financial
(319.9) (309.8)
statements, IS and BS.
(415.0) (394.2)
Ignore historical cash flows. You will b
(90.1) new cash flow statement.
386.3 231.8

0.0 0.0
(31.8) (25.7)
0.0 0.0
(0.1) 2.8
0.0 0.0
354.4 208.9

(46.2) (22.7)
308.2 186.2

580.8 562.7
0.0 0.0
1.1 0.0
2,431.8 2,311.1
49.3 44.7
0.5 26.1
37.5 44.5
22.9 12.8
3,123.9 3,001.9

615.9 655.1
0.9 1.6
316.8 281.8
8.3 1.2
704.4 548.1
18.7 17.4
44.3 45.0
1,709.3 1,550.2

5.3 3.3

4,838.5 4,555.4

58.1 58.1
2,328.3 1,938.5
2,386.4 1,996.6
1.9 1.8
2,388.3 1,998.4

349.4 894.7
476.4 496.6
33.4 33.4
52.4 41.6
386.1 337.0
1,297.7 1,803.3

31.0 244.3
84.3 31.9
240.7 321.2
75.1 16.1
721.4 140.2
1,152.5 753.7

0.0 0.0

4,838.5 4,555.4

(40.2) (43.7)
(2.2) (2.6)
Add relevant details from notes (future d
(29.3) (31.6) schedule, sales breakdown, past dividen
(71.7) (77.9)
Campari's IFRS income statement u
function standard therefore all cos
to product sold, advertising and cor
821.5 773.9 1,772.0 43.7%
structure are separated. No evidenc
367.0 303.8 17.1% given on a by-nature division, which
525.5 563.5 31.8% necessary to get D&A and therefore
128.5 130.8 7.4% compute EBITDA.
- -
In the notes to the financial statem
below, details on the D&A compone
337.2 333.1
each cost item is given.
143.7 118.7
184.3 170.1
383.2 365.0
309.5 319.0
211.9 194.9
272.7 271.1
1,842.5 1,772.0
- -

57.3 62.9
1,144.3 1,133.8
1,169.9 1,156.3
8.7 9.3
9,989.7 10,589.7

18.3% 18.8%
7.8% 6.7%
10.0% 9.6%
20.8% 20.6%
16.8% 18.0%
11.5% 11.0%
14.8% 15.3%
orical consolidated financial
nts, IS and BS.
istorical cash flows. You will build a
h flow statement.
levant details from notes (future debt
ule, sales breakdown, past dividends..)

ari's IFRS income statement uses a by-

on standard therefore all costs related
oduct sold, advertising and corporate
ure are separated. No evidence is
on a by-nature division, which is
sary to get D&A and therefore later
ute EBITDA.

e notes to the financial statements, see

, details on the D&A component of
cost item is given.
Restated Financial Statements
Historicals

(EUR m) Driver 2017 2018

Income statement

Sales 1,753.4 1,711.7

Growth (2.4%)

Cost of goods sold (COGS) (669.2) (629.9)

Advertising and promotion (279.8) (289.1)
Selling, general & adminsitrative expenses (SGAs) (322.7) (343.0)
EBITDA 481.8 449.7
Margin 27.5% 26.3%

D&A (87.5) (69.0)

EBIT 394.3 380.7
Margin 22.5% 22.2%

Interest income 0.0 0.0

Interest expenses (67.6) (29.7)
Income from associates 0.0 0.2
Except. items 0.0 0.0
EBT 326.7 351.2

Income taxes 29.7 (54.5)

Net income 356.4 296.7
Margin 20.3% 17.3%

Dividend distribution 52.1 57.5

Retained portion 304.3 239.2

Balance sheet

Trade receivables 317.5 285.9

Trade payables (225.6) (216.0)
Inventory 491.4 565.3
Other current assets & liabilities (93.9) (302.0)
Deferred taxes (320.9) (329.8)
Long term provisions (123.7) (118.7)
Noncash working capital 44.8 (115.3)

Tangible assets 553.2 579.1

Goodwill and trademarks 2,335.5 2,383.9
Fixed assets 2,888.7 2,963.0

Core capital employed 2,933.5 2,847.7

Investments 0.0 0.4

Employee severance (34.4) (31.6)
Other non-operational assets 94.1 31.7
Surplus assets 59.7 0.5

Net capital employed 2,993.2 2,848.2

ST financial debt 62.1 52.4

Bank loans 13.8 4.5
Bonds and securities 1,489.2 1,242.4
Gross financial debt 1,565.1 1,299.3
Excess cash & equivalents (514.5) (613.9)
Net debt 1,050.6 685.4
Share capital 58.1 58.1
Retained earnings 1,884.5 2,104.7
Group equity 1,942.6 2,162.8
Minorities 0.0 0.0
Total equity 1,942.6 2,162.8

Total funds invested 2,993.2 2,848.2

Check 0.0 0.0

Cash flows

EBIT 394.3 380.7

(Operational taxes) (110.0) (106.2)
D&A 87.5 69.0
Gross cash flows 371.8 343.5

Change in noncash WC 160.1

CAPEX (143.3)
FCFO 360.3

Tax shields 51.7

Interest income 0.0
Interest expenses (29.7)
Income from associates 0.2
Except. items 0.0
Change in gross debt (265.8)
Change in surplus assets 59.2
FCFE 175.9

Dividends (57.5)
Other movements in group equity (19.0)
Change in minorities 0.0

Change in cash 99.4

Check (0.0)

Cash flows: calculations starting from net income

Net income 296.7

+ D&A 69.0
+ Interests 29.7
+ Exceptionals -
+ Associates (0.2)
- Tax shields (51.7)
Change in WC 160.1
CAPEX (143.3)
FCFO 360.3
Check -

Net income 296.7

+ D&A 69.0
Change in WC 160.1
CAPEX (143.3)
Change in gross debt (265.8)
Change in surplus assets 59.2
FCFE 175.9
Check -
Historicals Explicit forecast TV

2019 2020 2021 2022 2023 2024 2025 2026 Notes

1,842.5 1,772.0
7.6% (3.8%) Alberto:
Reorganize historical IS a
(681.1) (702.4)
according to the structur
(317.7) (307.2) intended to be used in th
(385.7) (362.6) forecasting phase.
458.0 399.8 Check that total funds in
24.9% 22.6% balance in the two sides
BS and that the reorgani
(71.7) (77.9) income is equal to the or
386.3 321.9
21.0% 18.2%

0.0 0.0
(31.8) (25.7)
(0.1) 2.8
0.0 (90.1)
354.4 208.9

(46.2) (22.7)
308.2 186.2
16.7% 10.5%

57.3 62.9
250.9 123.3

316.8 281.8
(240.7) (321.2)
615.9 655.1
(725.2) (92.7)
(348.6) (292.5)
(52.4) (41.6)
(434.2) 188.9

582.8 564.3
2,481.1 2,355.8
3,063.9 2,920.1

2,629.7 3,109.0

0.5 26.1
(33.4) (33.4)
28.2 16.1
(4.7) 8.8

2,625.0 3,117.8

84.3 31.9
31.0 244.3
825.8 1,391.3
941.1 1,667.5
(704.4) (548.1)
236.7 1,119.4
 58.1 58.1
2,328.3 1,938.5
2,386.4 1,996.6
1.9 1.8
2,388.3 1,998.4

2,625.0 3,117.8

(0.0) 0.0

386.3 321.9
(107.8) (89.8) Alberto:
71.7 77.9 Build cash flows.
350.2 310.0 Check that the cash value a
end in the BS matches the
318.9 (623.1) value in the previous year +
(172.6) 65.9 generated in the year (row
496.5 (247.2) "check").

61.6 67.1
0.0 0.0
(31.8) (25.7)
(0.1) 2.8
0.0 (90.1)
(358.2) 726.4
5.2 (13.5)
173.2 419.8

(57.3) (62.9)
(27.3) (513.1)
1.9 (0.1)

90.5 (156.3)
(0.0) 0.0

308.2 186.2
71.7 77.9
31.8 25.7
Alberto:
- 90.1 For the sole purpose of r
0.1 (2.8) best practices, the CF sta
(61.6) (67.1) built starting from net inc
318.9 (623.1) common in the US and in
(172.6) 65.9
Eventually the layouts m
496.5 (247.2) results.
- -

308.2 186.2
71.7 77.9
318.9 (623.1)
(172.6) 65.9
(358.2) 726.4
5.2 (13.5)
173.2 419.8
- -
Alberto:
Reorganize historical IS and BS
according to the structure
intended to be used in the
forecasting phase.
Check that total funds invested
balance in the two sides of the
BS and that the reorganized net
income is equal to the original.
Alberto:
Build cash flows.
Check that the cash value at year
end in the BS matches the end
value in the previous year + the CF
generated in the year (row called
"check").

Alberto:
For the sole purpose of reconciling different
best practices, the CF statement can be
built starting from net income as well (more
common in the US and in IFRS templates).

Eventually the layouts match to the same

results.
Assumptions Cockpit
Historicals

(EUR m) Driver 2017 2018

Sales forecast

Aperol 231.4 279.0

SKYY Vodka 166.6 145.5
Campari 177.1 174.6
Other Global Priority Brands (Wild Turkey..) 345.4 356.0
Regional Priority Brands (Cynar, GlenGrant..) 292.8 287.6
Local Priority Brands (Ouzo, Crodino..) 215.7 208.8
Others 324.4 260.2
Total sales 1,753.4 1,711.7

Bottle price (inc. VAT) Source: Tesco, Esselunga, Amazon

Aperol 10.0 11.0
SKYY Vodka 14.0 14.0
Campari 13.0 14.0

Global inflation forecast Source: IMF

Bottle price (exc. VAT)

Aperol 8.2 9.0
SKYY Vodka 11.5 11.5
Campari 10.7 11.5

Bottle volumes
Aperol 28.2 30.9
SKYY Vodka 14.5 12.7
Campari 16.6 15.2

Bottle volumes growth Source: Euromonitor International (Spirits and Alcholic Drinks)
Aperol 9.6%
SKYY Vodka (12.7%)
Campari (8.5%)

2) use average as a reference to quantify the driver

Brand growth
Other Global Priority Brands (Wild Turkey..) 2.0% 3.1%
Regional Priority Brands (Cynar, GlenGrant..) 3.0% (1.8%)
Local Priority Brands (Ouzo, Crodino..) (3.2%) (3.2%)
Others (5.2%) (19.8%)

Operating expenses forecast

COGS (669.2) (629.9)

Advertising and promotion (279.8) (289.1)

2) Use percentage average as a reference to

quantify the driver
As a percentage of sales
COGS 37.9% 38.2% 36.8%
Advertising and promotion 16.9% 16.0% 16.9%
Investment forecast

Total Fixed Assets 2,888.7 2,963.0

Total D&A (87.5) (69.0)
Tangible CAPEX (143.3)
CAPEX as a % of sales 8.9% 8.4%

Amortization rate (implied) 3.0%

Amortization rate (standard) 7.5%
Useful life (years) 13.3

Trade receivables 317.5 285.9

Trade payables (225.6) (216.0)
Inventory 491.4 565.3
Other current assets & liabilities (93.9) (302.0)

2) Average historicals and use it as a reference for the driver magnitude

Days receivables (Sales) 50.8 54.2 50.0
Days payables (COGS) 111.5 100.9 102.6
Days inventory (Sales) 119.9 102.3 120.5
Days for other current A&L (Sales) 19.1 19.5 64.4

Financing forecast

Total net income 356.4 296.7

Dividends 52.1 57.5
Payout ratio 21.6% 14.6% 19.4%

ST debt as a % of sales 1.8% 3.5% 3.1%

Gross financial debt 1,565.1 1,299.3

Interest expenses (67.6) (29.7)
Effective interest rate for debt 2.3% 2.1%

Bonds issuance and (maturity) schedule

Cash (overdraft) 514.5 613.9

Interest income (expense) on cash (overdraft) - -
Effective interest rate for cash / overdraft 0.0% 0.0%

Tax forecast

VAT 22.0%
Income tax 1 on EBT (IRES) 24.0%
Income tax 2 on EBIT (IRAP) 3.9%

Steady state assumptions

Terminal growth 3.1%

Terminal value and the steady state
Payout 100.0%
The model's explicit period lasts 5 years, which
ROI 9.80% Subsequent years will be embedded in the term
FCF 225.3180343 next to the last explicit period. This next year w
CAPEX 194.6994705 company with its current structure, no extra inv
assumptions are those that need to be specifica
 Terminal value and the steady state
The model's explicit period lasts 5 years, which
Subsequent years will be embedded in the term
next to the last explicit period. This next year w
company with its current structure, no extra inv
NOPAT assumptions are those that need to be specifica
327.4825708
Historicals Explicit forecast TV

2019 2020 2021 2022 2023 2024 2025 2026 Notes

337.2 333.1
143.7 118.7
184.3 170.1
383.2 365.0
309.5 319.0
211.9 194.9
272.7 271.1
1,842.5 1,772.0

11.0 11.0 Average global price per bott

brands which will be forecast
15.0 15.0
breakdown (Aperol, SKYY and
14.0 14.0

3.5% 3.2% 3.1% 3.1% 3.1%

9.0 9.0 Since store prices include val

(VAT), while income stateme
12.3 12.3
NOT, prices must be grossed
11.5 11.5 VAT. Price excl. VAT = Store

37.4 36.9
11.7 9.7 Volumes of bottle sold,
16.1 14.8 implied = Sales / unit price

20.8% (1.2%) 12.1% 8.1% 7.4% 6.3% 7.0%

(7.8%) (17.4%) 9.7% 5.0% 4.2% 3.5% 3.2% Forecast years: CHOOSE a leve
5.5% (7.7%) 12.1% 8.1% 7.4% 6.3% 7.0% sold
APEROL: due to strong mark
will increase in the short term
"Minor" brands and other sales are estimated with no P*Q breakdown. levels in the medium term
7.6% (4.8%) The historical growth rate of the brand category is computed and SKYY: due to the brand decl
7.6% 3.0% used as a reference to choose the forecast driver growth rate volumes is assumed
1.5% (8.0%) 1) Compute historical growth rate CAMPARI: historical average
4.8% (0.6%) Growth rate in bottles year t
-1

(681.1) (702.4)
(317.7) (307.2)

Cost of goods sold and advertisement are estimated with

the % on sales as a driver
1) Compute historical averages: COGS t / Sales t
37.0% 39.6%
17.2% 17.3%
 3,063.9 2,920.1
(71.7) (77.9)
(172.6) 65.9
Same as COGS, CAPEX is fore
9.4% (3.7%)

D&A forecast will require a me

me manually hardcoded (e.g. 1
depreciation rate) or implied in
316.8 281.8 CAPEX t. This latter approach c
(240.7) (321.2)
615.9 655.1
(725.2) (92.7)

Trade receivables: forecast with th

51.4 47.6 DSO as a driver.
105.7 136.8 Same approach for payables (
1) Compute historical DSO ratios
122.0 134.9 inventory) and other WC item
143.7 19.1 their own)

308.2 186.2
Dividends: payout ratio as an indi
57.3 62.9
Payout t = Dividends t / Net in
18.6% 33.8%

4.6% 1.8% Short term debt: % on sales a

driver (it makes sense as ST de
credit facilities, or recourse fac
941.1 1,667.5
Interest expenses will be forecast
(31.8) (25.7) on gross debt
2.8% 2.0% Interest rate on debt t = Inter
gross debt t;t-1

(50.0) (300.0) Bonds have clear maturities, a

report. Assume no new issuanc

704.4 548.1 Interest income will be forecast w

- -
Interest rate on cash t = Inte
t;t-1
0.0% 0.0%
"Overdraft" is cash when it go
the forecasts, never in historic
additional ST financing

Statutory VAT rate and income tax

the entity where all earnings event
Italian tax on income has two
on EBIT (IRAP). Both will be m

alue and the steady state

el's explicit period lasts 5 years, which will all be discounted individually for DCF and APV valuations.
nt years will be embedded in the terminal value, whose calculation requires to estimate FCFO/FCFE/TS for the year
he last explicit period. This next year will represent a standard, "steady-state" period that is sustainable by the
with its current structure, no extra investiment or extra financing (stable growth only).The green-background
ons are those that need to be specifically adjusted to the SS period in order to represent its steady-state regime.
alue and the steady state
el's explicit period lasts 5 years, which will all be discounted individually for DCF and APV valuations.
nt years will be embedded in the terminal value, whose calculation requires to estimate FCFO/FCFE/TS for the year
he last explicit period. This next year will represent a standard, "steady-state" period that is sustainable by the
with its current structure, no extra investiment or extra financing (stable growth only).The green-background
ons are those that need to be specifically adjusted to the SS period in order to represent its steady-state regime.
Average global price per bottle of the main
brands which will be forecast by a P*Q
breakdown (Aperol, SKYY and Campari)

Since store prices include value added tax

(VAT), while income statement revenues DO
NOT, prices must be grossed-down taking off
VAT. Price excl. VAT = Store price /(1+VAT)

Volumes of bottle sold,

implied = Sales / unit prices

Forecast years: CHOOSE a level of future growth in bottles

sold
APEROL: due to strong marketing campaing, growth
will increase in the short term, to then return to lower
levels in the medium term
SKYY: due to the brand decline, no growth in sales
volumes is assumed
CAMPARI: historical average used as a driver
Growth rate in bottles year t = (Volume t / volume t-1)
-1
Same as COGS, CAPEX is forecast as a % of sales

D&A forecast will require a measure of useful life. It can

me manually hardcoded (e.g. 10 years, so 1/10 = 10%
depreciation rate) or implied in historicals, as D&A t /
CAPEX t. This latter approach can give misleading results

Trade receivables: forecast with the indirect method, using

DSO as a driver.
Same approach for payables (DPO), inventory (days
inventory) and other WC items (with a sort of "days" of
their own)

Dividends: payout ratio as an indirect method driver

Payout t = Dividends t / Net income t

Short term debt: % on sales as an indirect method

driver (it makes sense as ST debt is usually revolving
credit facilities, or recourse factoring)
Interest expenses will be forecast with an implied interest rate
on gross debt
Interest rate on debt t = Interest expenses t / Average
gross debt t;t-1

Bonds have clear maturities, available in the annual

report. Assume no new issuance
Interest income will be forecast with an implied interest rate on cash
Interest rate on cash t = Interest income t / Average cash
t;t-1
"Overdraft" is cash when it goes negative (it can happen in
the forecasts, never in historicals). It represents an
additional ST financing

Statutory VAT rate and income tax rates in Italy (consolidating company and
the entity where all earnings eventually domicile).
Italian tax on income has two parts: 24% on EBT (IRES) and 3,9%
on EBIT (IRAP). Both will be modeled.
Campari
Financial Model

Calculations
 Sales and Operating Expenses Forecasts
Historicals

(EUR m) Driver Driver 2017 2018

Sales forecast

Aperol
SKYY Vodka
Campari
6) Recall growth drivers
for minor brands
Other Global Brands (Wild Turkey..) Growth 2.0%
Regional Brands (Cynar, GlenGrant..) Growth 3.0%
Local Brands (Ouzo, Crodino..) Growth (3.2%)
Others Growth (5.2%)
IS Output Total sales
Growth

Inflation

Bottle price (exc. VAT)

Aperol
SKYY Vodka
Campari

Bottle volumes growth

Aperol
SKYY Vodka
Campari

Bottle volumes
Aperol
SKYY Vodka
Campari

Operational forecasts

IS Output COGS % sales 37.9%

IS Output Advertising and promotion % sales 16.9%

IS Output SGAs
Historicals Explicit forecast TV

2019 2020 2021 2022 2023 2024 2025 2026 Notes

386.5 431.2 477.4 523.2 577.2

134.7 146.0 156.8 167.4 178.1 5) Broken down brands: sa
197.4 220.2 243.8 267.2 294.8

365.0 372.3 379.7 387.2 394.9 402.8

319.0 328.4 338.1 348.2 358.5 369.1 7) Forecast future sales by
194.9 188.6 182.5 176.6 170.9 165.3 *(1+growth rate t)
271.1 257.1 243.7 231.1 219.1 207.7
1,865.0 1,941.4 2,021.1 2,101.2 2,195.0 2,262.1
5.2% 4.1% 4.1% 4.0% 4.5% 3.1% 8) Steady state growth fo

3.5% 3.2% 3.1% 3.1% 3.1%

1) Recall inflation drivers

9.0 9.3 9.6 9.9 10.2 10.6

12.3 12.7 13.1 13.5 14.0 14.4
11.5 11.9 12.3 12.6 13.0 13.4 2) Forecast future unit prices: p
t)

12.1% 8.1% 7.4% 6.3% 7.0%

9.7% 5.0% 4.2% 3.5% 3.2% 3) Recall volumes growth f
12.1% 8.1% 7.4% 6.3% 7.0%

4) Forecast future volumes

36.9 41.4 44.8 48.1 51.1 54.7 volume t-1 *(1+growth ra
9.7 10.6 11.1 11.6 12.0 12.4
14.8 16.6 18.0 19.3 20.5 21.9

COGS and advertisement

(706.7) (735.6) (765.8) (796.2) (831.7) (857.2)
COGS t = sales t * (COGS
(314.4) (327.2) (340.7) (354.2) (370.0) (381.3)

(362.6) (375.3) (387.3) (399.3) (411.7) (424.4) (424.4) SGAs: fixed cost. Growing
above). SGA t = SGA t-1*
 5) Broken down brands: sales = unit price * volume

7) Forecast future sales by growth: sales t = sales t-1

*(1+growth rate t)

8) Steady state growth for total sales as a whole

1) Recall inflation drivers

Forecast future unit prices: price t = price t-1 *(1+inflation

3) Recall volumes growth forecast

4) Forecast future volumes by growth: volume t =

volume t-1 *(1+growth rate t)

COGS and advertisement forecast with the % of sales.

COGS t = sales t * (COGS % sales driver)

SGAs: fixed cost. Growing by inflation (used from

above). SGA t = SGA t-1*(1+inflation t)
 Investments Forecasts
Historicals

(EUR m) Driver Driver 2017 2018

Investment forecasts

BS Output Goodwill & trademarks

Evolution of tangible assets

BOP tangible assets
+ CAPEX
- D&A
BS Output = EOP tangible assets

Tangible CAPEX % sales 8.9%

Effective useful life (years) 13.3

Existing assets 2020 564.3 Recall each year's CAPEX as a

separate line
CAPEX Year 2021 2021 165.4
CAPEX Year 2022 2022 172.2
CAPEX Year 2023 2023 179.3
CAPEX Year 2024 2024 186.4
CAPEX Year 2025 2025 194.7
IS Output Total D&A

Working capital forecast

BS Output Trade receivables DSO 50.8

BS Output Trade payables DPO 111.5
BS Output Inventory DI 119.9
BS Output Other current assets & liabilities Days 19.1

VAT in Italy 22.0%

Terminal growth

BS Output Deferred taxes

BS Output Long term provisions
 Historicals Explicit forecast TV

2019 2020 2021 2022 2023 2024 2025 2026 Notes

Assumed constant
2,355.8 2,355.8 2,355.8 2,355.8 2,355.8 2,355.8 2,355.8

564.3 645.6 721.1 790.4 853.1 909.9 Control account for tangible a
165.4 172.2 179.3 186.4 194.7 200.7 CAPEX t - D&A t
BOP asset t = EOP asset t-
(84.1) (96.8) (109.9) (123.7) (137.9) (200.7)
564.3 645.6 721.1 790.4 853.1 909.9 909.9

(165.4) (172.2) (179.3) (186.4) (194.7) (200.7) 1) CAPEX t = sales t * (CA

APEX as a 3) D&A
(77.9) (77.9) (77.9) (77.9) (77.9)
3a) D&A for previously ex
(6.2) (12.4) (12.4) (12.4) (12.4) the model to keep deprec
- (6.5) (12.9) (12.9) (12.9) end of 2016 at the 2016 l
- - (6.7) (13.4) (13.4) tangible assets are zero.
- - - (7.0) (14.0) 3b) D&A for each year's n
depreciated for 10 years.
- - - - (7.3)
depreciation in the first pe
(84.1) (96.8) (109.9) (123.7) (137.9) (200.7)

See the last note on this s

316.6 329.6 343.1 356.7 372.6 384.0

(263.4) (274.2) (285.4) (296.7) (310.0) (319.5)
612.9 638.0 664.2 690.5 721.3 743.4 WC items: e.g. receivables.
Receivables t = (sales t*
(97.6) (101.6) (105.7) (109.9) (114.8) (118.3)
reversed DSO formula)

3.1%

(292.5) (292.5) (292.5) (292.5) (292.5) (292.5) (292.5) Assumed constant

(41.6) (41.6) (41.6) (41.6) (41.6) (41.6) (41.6)
Assumed constant

WC increase in the TV: bankers commonly set change in WC in the TV =0. This is an oversimplif
conseguences: any growth (even low, inflationary g) requires investments to be supported. In
WC (and CE as a whole) stays constant means that ROCE would increase perpetually each yea

Steady state D&A = steady state CAPEX (maintenance only).

The same TV reasoning seen for WC applies to FA as well: FA should at least grow as much a
the long term to be constant. However, CAPEX=D&A (and hence FA remaining constant) still m
CAPEX is stimated (with growth) choosing a lower level of D&A is meaningless for cash flows,
(with the only minor exception of the tax effect of deducting D&A in the P&L statement)
 Assumed constant

Control account for tangible assets: EOP t asset = BOP asset t +

CAPEX t - D&A t
BOP asset t = EOP asset t-1

1) CAPEX t = sales t * (CAPEX as % sales driver)

3) D&A
3a) D&A for previously existing assets: the formula tells
the model to keep depreciating tangible assets at the
end of 2016 at the 2016 level of D&A, stopping when
tangible assets are zero.
3b) D&A for each year's new CAPEX: each CAPEX is
depreciated for 10 years. Assume as a convention 1/2
depreciation in the first period.

See the last note on this sheet (WC terminal)

WC items: e.g. receivables.

Receivables t = (sales t*(1+VAT)*DSO driver)/365 (i.e.
reversed DSO formula)

Assumed constant

Assumed constant

e TV =0. This is an oversimplification with material valuation

vestments to be supported. Increasing sales and EBIT, while
increase perpetually each year.

hould at least grow as much as sales, in order for ROCE in

e FA remaining constant) still makes sense because once
s meaningless for cash flows, being a non cash expense
A in the P&L statement)
 Tax and Other Items Forecasts
Historicals

(EUR m) Driver Driver 2017 2018 2019

Other balance sheet items forecast

BS Output Employee severance

BS Output Investments
BS Output Other non-operational assets

IS Output Income from associates

IS Output Except. items

Income taxes

Output Recall Income before taxes

Output Recall EBIT

Income tax 1 on EBT (IRES) Tax rate 24.0%

Income tax 2 on EBIT (IRAP) Tax rate 3.9%
IS Output Income taxes
oricals Explicit forecast TV

2020 2021 2022 2023 2024 2025 2026 Notes

Assumed constant
(33.4) (33.4) (33.4) (33.4) (33.4) (33.4) (33.4)
Assumed constant
26.1 26.1 26.1 26.1 26.1 26.1 26.1
Assumed constant
16.1 16.1 16.1 16.1 16.1 16.1 16.1

Assumed zero
2.8 2.8 2.8 2.8 2.8 2.8
Assumed zero
0.0 0.0 0.0 0.0 0.0 0.0

349.1 359.5 370.9 384.5 403.3 370.9

384.5 394.5 405.3 415.5 430.9 398.6
EBT t * 24%
(83.8) (86.3) (89.0) (92.3) (96.8) (89.0)
(15.0) (15.4) (15.8) (16.2) (16.8) (15.5)
(98.8) (101.7) (104.8) (108.5) (113.6) (104.6) EBIT t * 3,9%
Assumed constant
Assumed constant
Assumed constant

Assumed zero
Assumed zero

EBT t * 24%

EBIT t * 3,9%
 Financing Forecasts
Historicals

(EUR m) Driver Driver 2017 2018

Equity forecast

Output Recall Total net income

IS Output Dividends Payout 21.6%
Terminal payout
Terminal ROE
Terminal growth

Evolution of retained earnings

BOP retained earnings
Linking Cell + Total net income
- Dividends
BS Output EOP retained earnings

BS Output Minorities
BS Output Share capital

Debt forecast

BS Output ST financial debt % sales 1.8%

BS Output Bank loans

BS Output Bonds and securities

Issuance (repayments)

IS Output Interest expense

Gross financial debt Int. rate 2.3%

Revolver forecast

Cash / bank overdraft evolution

BOP cash
Output Recall + change in cash
Linking Cell = EOP cash / overdraft

IS Output Interest inc. (exp.) on cash (overdraft) Int. rate 0.0%

Historicals Explicit forecast TV

2019 2020 2021 2022 2023 2024 2025 2026 Notes

Recall net income from

250.3 257.8 266.1 276.0 289.7 266.4
link, bw IS and BS
54.1 55.7 57.5 59.6 62.6 171.7 Forecast dividends with p
64.5%
8.6%
3.1% The terminal dividend payo
fundamental relationship:
payout). Solve for payout.

1,938.5 2,134.7 2,336.9 2,545.5 2,762.0 2,989.1

250.3 257.8 266.1 276.0 289.7 266.4
Control account for equity EO
(54.1) (55.7) (57.5) (59.6) (62.6) (171.7) net income t - dividends t
1,938.5 2,134.7 2,336.9 2,545.5 2,762.0 2,989.1 3,083.8 BOP reserves t = EOP rese

1.8 1.8 1.8 1.8 1.8 1.8 1.8

58.1 58.1 58.1 58.1 58.1 58.1 58.1
Indirect forecast: ST debt t =
Steady state: assumed co

33.6 34.9 36.4 37.8 39.5 40.7

Assumed constant
244.3 244.3 244.3 244.3 244.3 244.3 244.3

Control account: EOP t bond

1,391.3 1,391.3 1,341.3 1,341.3 1,041.3 1,041.3 1,041.3 (zero here) - repayments t
0.0 (50.0) 0.0 (300.0) 0.0 0.0 BOP t bonds = EOP t-1 bo

(38.3) (37.7) (37.2) (33.8) (30.4) (30.4)

1,667.5 1,669.2 1,620.5 1,622.0 1,323.4 1,325.1 1,326.3 Interest expense t = inter
debt t;t-1

548.1 619.1 673.9 790.4 621.1 764.6 Recall cash from Outpu
71.0 54.8 116.4 (169.3) 143.5 75.4 link, bw CF and BS
548.1 619.1 673.9 790.4 621.1 764.6 840.0

0.0 0.0 0.0 0.0 0.0 0.0

Interest income t = interest rate
If in the model cash gets n
formula picks the interest e
 Recall net income from Output: first fundamental
link, bw IS and BS

Forecast dividends with payout ratio, indirect method

The terminal dividend payout is implied into the

fundamental relationship: long term growth = ROE * (1-
payout). Solve for payout.

Control account for equity EOP t resereves = BOP reserves t +

net income t - dividends t
BOP reserves t = EOP reserves t-1

Indirect forecast: ST debt t = sales t * (% sales driver)

Steady state: assumed constant

Assumed constant

Control account: EOP t bonds = BOP t bonds + issuances t

(zero here) - repayments t
BOP t bonds = EOP t-1 bonds

Interest expense t = interest rate driver * average gross

debt t;t-1

Recall cash from Output: second fundamental

link, bw CF and BS

Interest income t = interest rate driver * average cash t;t-1

If in the model cash gets negative (overdraft), the
formula picks the interest expense rate instead
Campari
Financial Model

Output
Output Financial Statements
Historicals

(EUR m) 2017 2018

Income statement

Sales 1,753.4 1,711.7

Growth (2.4%)

Cost of goods sold (COGS) (669.2) (629.9)

Advertising and promotion (279.8) (289.1)
Operating leases (322.7) (343.0)
EBITDA 481.8 449.7
Margin 27.5% 26.3%

D&A (87.5) (69.0)

EBIT 394.3 380.7
Margin 22.5% 22.2%

Interest income 0.0 0.0

Interest expenses (67.6) (29.7)
Income from associates 0.0 0.2
Except. items 0.0 0.0
EBT 326.7 351.2

Income taxes 29.7 (54.5)

Net income 356.4 296.7
Margin 20.3% 17.3%

Dividend distribution 52.1 57.5

Retained portion 304.3 239.2

Balance sheet

Trade receivables 317.5 285.9

Trade payables (225.6) (216.0)
Inventory 491.4 565.3
Deferred taxes (93.9) (302.0)
Long term provisions (320.9) (329.8)
Other current assets & liabilities (123.7) (118.7)
Noncash working capital 44.8 (115.3)

Tangible assets 553.2 579.1

Goodwill and trademarks 2,335.5 2,383.9
Fixed assets 2,888.7 2,963.0

Core capital employed 2,933.5 2,847.7

Investments 0.0 0.4

Employee severance (34.4) (31.6)
Other non-operational assets 94.1 31.7
Surplus assets 59.7 0.5

Net capital employed 2,993.2 2,848.2

ST financial debt 62.1 52.4

Bank loans 13.8 4.5
Bonds and securities 1,489.2 1,242.4
Gross financial debt 1,565.1 1,299.3
Excess cash & equivalents (514.5) (613.9)
Net debt 1,050.6 685.4
Share capital 58.1 58.1
Retained earnings 1,884.5 2,104.7
Group equity 1,942.6 2,162.8
Minorities 0.0 0.0
Total equity 1,942.6 2,162.8

Total funds invested 2,993.2 2,848.2

Check 0.0 0.0

Cash flows

EBIT 394.3 380.7

(Operational taxes) (106.2)
D&A 69.0
Gross cash flows 343.5

Change in noncash WC 160.1

CAPEX (143.3)
FCFO 360.3

Tax shields 51.7

Interest income 0.0
Interest expenses (29.7)
Income from associates 0.2
Except. items 0.0
Change in surplus assets (265.8)
Change in gross debt 59.2
FCFE 175.9

Dividends (57.5)
Other movements in group equity (19.0)
Change in minorities 0.0

Change in cash 99.4

Check 0.0
Historicals Explicit forecast TV

2019 2020 2021 2022 2023 2024 2025 2026 Notes

Link all results into Outp

1,842.5 1,772.0 1,865.0 1,941.4 2,021.1 2,101.2 2,195.0 2,262.1
calculations in it
7.6% (3.8%) 5.2% 4.1% 4.1% 4.0% 4.5% 3.1%

(681.1) (702.4) (706.7) (735.6) (765.8) (796.2) (831.7) (857.2)

(317.7) (307.2) (314.4) (327.2) (340.7) (354.2) (370.0) (381.3)
(385.7) (362.6) (375.3) (387.3) (399.3) (411.7) (424.4) (424.4)
458.0 399.8 468.6 491.2 515.3 539.1 568.8 599.2
24.9% 22.6% 25.1% 25.3% 25.5% 25.7% 25.9% 26.5%

(71.7) (77.9) (84.1) (96.8) (109.9) (123.7) (137.9) (200.7)

386.3 321.9 384.5 394.5 405.3 415.5 430.9 398.6
21.0% 18.2% 20.6% 20.3% 20.1% 19.8% 19.6% 17.6%

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

(31.8) (25.7) (38.3) (37.7) (37.2) (33.8) (30.4) (30.4)
(0.1) 2.8 2.8 2.8 2.8 2.8 2.8 2.8
0.0 (90.1) 0.0 0.0 0.0 0.0 0.0 0.0
354.4 208.9 349.1 359.5 370.9 384.5 403.3 370.9

(46.2) (22.7) (98.8) (101.7) (104.8) (108.5) (113.6) (104.6)

308.2 186.2 250.3 257.8 266.1 276.0 289.7 266.4
16.7% 10.5% 13.4% 13.3% 13.2% 13.1% 13.2% 11.8%

57.3 62.9 54.1 55.7 57.5 59.6 62.6 171.7

250.9 123.3 196.2 202.2 208.6 216.4 227.1 94.7

316.8 281.8 316.6 329.6 343.1 356.7 372.6 384.0

(240.7) (321.2) (263.4) (274.2) (285.4) (296.7) (310.0) (319.5)
615.9 655.1 612.9 638.0 664.2 690.5 721.3 743.4
(725.2) (92.7) (292.5) (292.5) (292.5) (292.5) (292.5) (292.5)
(348.6) (292.5) (41.6) (41.6) (41.6) (41.6) (41.6) (41.6)
(52.4) (41.6) (97.6) (101.6) (105.7) (109.9) (114.8) (118.3)
(434.2) 188.9 234.4 257.7 282.0 306.5 335.1 355.5

582.8 564.3 645.6 721.1 790.4 853.1 909.9 909.9

2,481.1 2,355.8 2,355.8 2,355.8 2,355.8 2,355.8 2,355.8 2,355.8
3,063.9 2,920.1 3,001.4 3,076.9 3,146.2 3,208.9 3,265.7 3,265.7

2,629.7 3,109.0 3,235.9 3,334.6 3,428.2 3,515.4 3,600.7 3,621.2

0.5 26.1 26.1 26.1 26.1 26.1 26.1 26.1

(33.4) (33.4) (33.4) (33.4) (33.4) (33.4) (33.4) (33.4)
28.2 16.1 16.1 16.1 16.1 16.1 16.1 16.1
(4.7) 8.8 8.8 8.8 8.8 8.8 8.8 8.8

2,625.0 3,117.8 3,244.7 3,343.4 3,437.0 3,524.2 3,609.5 3,630.0

84.3 31.9 33.6 34.9 36.4 37.8 39.5 40.7

31.0 244.3 244.3 244.3 244.3 244.3 244.3 244.3
825.8 1,391.3 1,391.3 1,341.3 1,341.3 1,041.3 1,041.3 1,041.3
941.1 1,667.5 1,669.2 1,620.5 1,622.0 1,323.4 1,325.1 1,326.3
(704.4) (548.1) (619.1) (673.9) (790.4) (621.1) (764.6) (840.0) Cash links net cash flo
236.7 1,119.4 1,050.0 946.6 831.6 702.3 560.5 486.3
 58.1 58.1 58.1 58.1 58.1 58.1 58.1 58.1
2,328.3 1,938.5 2,134.7 2,336.9 2,545.5 2,762.0 2,989.1 3,083.8
Reserves link net incom
2,386.4 1,996.6 2,192.8 2,395.0 2,603.6 2,820.1 3,047.2 3,141.9
1.9 1.8 1.8 1.8 1.8 1.8 1.8 1.8
2,388.3 1,998.4 2,194.6 2,396.8 2,605.4 2,821.9 3,049.0 3,143.7

2,625.0 3,117.8 3,244.7 3,343.4 3,437.0 3,524.2 3,609.5 3,630.0

(0.0) 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Build CF statement from s

386.3 321.9 384.5 394.5 405.3 415.5 430.9 398.6

(107.8) (89.8) (107.3) (110.1) (113.1) (115.9) (120.2) (111.2)
71.7 77.9 84.1 96.8 109.9 123.7 137.9 200.7
350.2 310.0 361.4 381.2 402.2 423.2 448.6 488.0

318.9 (623.1) (45.5) (23.3) (24.3) (24.4) (28.6) (20.5)

(172.6) 65.9 (165.4) (172.2) (179.3) (186.4) (194.7) (200.7)
496.5 (247.2) 150.4 185.7 198.6 212.4 225.3 266.9

61.6 67.1 8.5 8.4 8.3 7.4 6.6 6.6

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
(31.8) (25.7) (38.3) (37.7) (37.2) (33.8) (30.4) (30.4)
(0.1) 2.8 2.8 2.8 2.8 2.8 2.8 2.8
0.0 (90.1) 0.0 0.0 0.0 0.0 0.0 0.0
(358.2) 726.4 1.7 (48.6) 1.4 (298.6) 1.7 1.2
5.2 (13.5) 0.0 0.0 0.0 0.0 0.0 0.0
173.2 419.8 125.1 110.5 173.9 (109.7) 206.0 247.1

(57.3) (62.9) (54.1) (55.7) (57.5) (59.6) (62.6) (171.7)

(27.3) (513.1) 0.0 0.0 0.0 0.0 (0.0) 0.0
1.9 (0.1) 0.0 0.0 0.0 0.0 0.0 0.0

90.5 (156.3) 71.0 54.8 116.4 (169.3) 143.5 75.4

(0.0) 0.0 0.0 0.0 0.0 0.0 0.0 0.0
 Link all results into Output - No
calculations in it

Cash links net cash flow into BS

Reserves link net income into BS

Build CF statement from scratch

Financial Analysis
Historicals

(EUR m) 2017 2018

Value creation and profitability analysis

Sales growth (2.4%)

EBITDA margin 27.5% 26.3%
EBIT margin 22.5% 22.2%
Net income margin 20.3% 17.3%

Investment analysis - CAPEX

CAPEX 143.3
D&A 69.0

Expanding or downsizing? Expanding

Is the company divesting? No

D&A as a % of CAPEX 48.2%

D&A as a % average tangible asset 12.2%

Investment analysis - WC

DSO 54.2 50.0

DPO 100.9 102.6
Days inventory 102.3 120.5

Clients are paying Sooner

Campari is paying suppliers Later
Products stay on stock Longer

Financing analysis

Leverage D/E 0.5x 0.3x

Leverage D/(D+E) 35.1% 24.1%

Debt coverage 2.2x 1.5x

Interest coverage 5.8x 12.8x

DSCR (12.2x)

Liquidity analysis

Current ratio 3.0x 2.4x

Acid test 1.9x 1.5x

Profitability analysis

ROCE 11.1%

ROCE decomposition
Effective operating tax rate 15.5%
EBIT margin 22.2%
Asset turnover 59.2%
ROCE 11.1%
Check -

ROE 14.5%
Effective interest rate (with average ND) 3.4%
Historicals Explicit forecast TV

2019 2020 2021 2022 2023 2024 2025 2026

7.6% (3.8%) 5.2% 4.1% 4.1% 4.0% 4.5% 3.1%

24.9% 22.6% 25.1% 25.3% 25.5% 25.7% 25.9% 26.5%
21.0% 18.2% 20.6% 20.3% 20.1% 19.8% 19.6% 17.6%
16.7% 10.5% 13.4% 13.3% 13.2% 13.1% 13.2% 11.8%

172.6 (65.9) 165.4 172.2 179.3 186.4 194.7 200.7

71.7 77.9 84.1 96.8 109.9 123.7 137.9 200.7

Expanding Downsizing Expanding Expanding Expanding Expanding Expanding Neither

No Yes No No No No No No

41.5% (118.2%) 50.8% 56.2% 61.3% 66.3% 70.9% 100.0%

12.3% 13.6% 13.9% 14.2% 14.5% 15.0% 15.6% 22.1%

51.4 47.6 50.8 50.8 50.8 50.8 50.8 50.8

105.7 136.8 111.5 111.5 111.5 111.5 111.5 111.5
122.0 134.9 119.9 119.9 119.9 119.9 119.9 119.9

Later Sooner Later Later Equally Equally Equally Equally

Later Later Sooner Equally Equally Equally Equally Equally
Longer Longer Less Equally Equally Equally Equally Equally

0.1x 0.6x 0.5x 0.4x 0.3x 0.2x 0.2x 0.2x

9.0% 35.9% 32.4% 28.3% 24.2% 19.9% 15.5% 13.4%

0.5x 2.8x 2.2x 1.9x 1.6x 1.3x 1.0x 0.8x

12.1x 12.5x 10.0x 10.5x 10.9x 12.3x 14.2x 13.1x

18.7x (6.3x) 3.9x 4.9x 5.3x 6.3x 7.4x 8.8x

1.5x 2.1x
0.9x 1.2x

12.3% 10.0% 8.7% 8.6% 8.6% 8.6% 8.7% 7.9%

13.0% 10.9% 28.3% 28.3% 28.3% 28.2% 28.2% 28.2%

21.0% 18.2% 20.6% 20.3% 20.1% 19.8% 19.6% 17.6%
67.3% 61.8% 58.8% 59.1% 59.8% 60.5% 61.7% 62.6%
12.3% 10.0% 8.7% 8.6% 8.6% 8.6% 8.7% 7.9%
- - - - - - - -

13.5% 8.5% 11.9% 11.2% 10.6% 10.2% 9.9% 8.6%

6.9% 3.8% 3.5% 3.8% 4.2% 4.4% 4.8% 5.8%
Campari
Financial Model

Valuation
Weighted Average Cost of Capital

(EUR m) Country Currency Market cap. Net debt Minorities Pensions

AB InBev NV Belgium EURm 142,040.0 102,854.8 9,562.9 2,631.1

Diageo Plc Britain GBPm 105,640.0 13,387.0 1,668.0 749.0
Heiniken NV Netherlands EURm 66,800.0 14,196.0 1,000.0 938.0
Pernod Ricard SA France EURm 54,540.0 8,480.0 243.0 605.0
Brown Forman Corp USA USDm 36,247.0 1,980.0 - 297.0
Carlsberg AB Denmark DKKm 27,210.0 22,157.0 4,054.0 2,934.0
Remy Cointreau SA France EURm 10,330.0 450.9 0.9 30.2
Average

Davide Campari Milano SpA Italy EURm 10,589.7 1,119.4 1.8 (8.8)

Cost of equity

D/E - Market equilibrium (industry) leverage 28.2%

Market cap (MV of equity) at the valuation date 10,589.7
Net debt at the valuation date (with MV of bonds) 1,146.7
D/E - Historical Campari leverage at the valuation date 10.8%
D/E - Target leverage 40.0%
Chosen leverage D/E: 10.8%

Risk Free Rate (10Y Italian Bonds BTP) 0.7%

Unlevered Beta (Industry average) 0.755
Tax Rate (applicable to tax shields) 24.0%
Re-Levered Beta 0.817
Market Risk Premium (Source: Fernandez) 6.2%
Levered cost of equity 5.7%

Unlevered cost of equity 5.4%

Cost of debt

Risk Free Rate (10Y Italian Bonds BTP) 0.7%

2020 interest coverage 12.5x
Spread on debt (Source: Damodaran's model) 1.6%
Cost of debt 2.3%

WACC

D/(D+E) 9.8%
E/(D+E) 90.2%
WACC 5.3%

WACC: leverage and spread

Spread on debt

0.1 (0.8%) 0.3% 1.3% 2.3%

20.0%
30.0%
40.0%
D/E

50.0%
60.0%
Preferred Raw beta Adj. levered Unlevered
shares EV Leverage (W/2Y) beta Tax rate beta

- 257,088.8 67.8% 1.280 1.1867 34.0% 0.820

- 121,444.0 12.5% 0.750 0.8333 19.0% 0.757
- 82,934.0 20.9% 0.770 0.8467 25.0% 0.732
- 63,868.0 15.5% 0.750 0.8333 33.3% 0.755
- 38,524.0 5.5% 0.969 0.9793 40.0% 0.948
- 56,355.0 70.9% 0.870 0.9133 22.0% 0.588
- 10,812.0 4.4% 0.560 0.7067 33.3% 0.687
28.2% 0.755

11,702.1 10.6% 0.558 0.7053 24.0% 0.653

Leverage choice >> Historical

BV bonds MV bonds Current trading price of Campari's

894.7 922.0 listed bonds * number of bonds

Leverage: you can choose among the historical leverage for Campari
recalculated at market values at the valuation date (using market value of
shares and bonds on the market); an industry/equilibrium leverage
(average of comparables' leverages) or a target leverage which is
reasonable for the evolution of the company (in this last case, the model as
well should have applied it in forecasts..)

Risk free rate is the Italian 10-years BTP return, as an average of yearly
returns every day of the 3 years prior to valuation date period. It is unusual
to choose such a large average interval for a risk free rate, but due to
aggressive expansionary monetary policies (at the valuation date i.e. end
of 2016), a 1Y average would give a very low rF rate, and therefore an
excessively low WACC.

bL and kEL at different leverages

D/E bU bL kEL

3.3%
20.0% 0.755 0.870 6.1%
30.0% 0.755 0.927 6.4%
40.0% 0.755 0.985 6.8%
50.0% 0.755 1.042 7.1%
60.0% 0.755 1.100 7.5%
A panel of alcoholic beve
For each of them, Bloomb
valuation date) and finan
to compute EV (i.e. debt,
pensions)
Also beta is provided (
data for 3 years). EV f
common bridge items
shares, pension assets
Each levered compara
tax rate. Their average
A panel of alcoholic beverages comparable companies is found.
For each of them, Bloomberg provides market cap (as of the
valuation date) and financial statements information necessary
to compute EV (i.e. debt, cash, preferred shares, minorities,
pensions)
Also beta is provided (assuming regressions with weekly
data for 3 years). EV for each comparable sums all
common bridge items (net debt, minorities, preferred
shares, pension assets/liabilities)
Each levered comparable beta is de-levered with its own
tax rate. Their average is the unlevered industry beta
DCF / APV Valuation
Historicals

(EUR m) 2017 2018

Assumptions

Perpetual growth 3.1%

WACC 5.3%
kEU 5.4%
kEL 5.7%
kD 2.3%
Tax shields - Theoretical tax rate 24.0%
Valuation date (= last fiscal year closing date) 31/12/2020

Year

DCF asset side (FCFO) 2017 2018

FCFO 360.3
Discount factor (WACC)
Present value of FCFO
Terminal value
PV of FCFO
PV of TV

Enterprise value

Adjusted present value 2017 2018

FCFO 360.3
Discount factor (kEU)
Present value of FCFO
Terminal value
PV of FCFO
PV of TV
Unlevered value

Net debt 1,050.6 685.4

Theoretical yearly tax shield 4.7

Discount factor (kD)

Present value of TS
Terminal value
PV of TS
PV of TV
Value of tax shields

Enterprise value

Accounting yealry tax shields 51.7

DCF equity side (FCFE) 2017 2018

FCFE 175.9
Discount factor (kEL)
Present value of FCFE
Terminal value
PV of FCFE
PV of TV

Equity value

Summary DCF asset APV

Enterprise value 9,819.4 9,489.4

(Net debt) (1,119.4) (1,119.4)
Surplus assets (inc. associates & pensions) 8.8 8.8
(Minorities) (1.8) (1.8)
Equity value 8,707.0 8,377.0
Number of shares (NOSH) (m) 1,156.3 1,156.3
Equity value per share (€) 7.5 7.2
Implied EV / EBITDA 2016A multiple 24.6x 23.7x

Sensitivity analysis

Lower bound 5,813.1 4,937.2

Upper bound 16,088.7 15,823.5
Average 9,418.5 8,936.4

In order for the following sensitivity tables to function properly, the grey-colored cells need to be hardcoded (raw numbers) and equal to t
corresponding input to subject to sensitivity

DCF asset side: equity value sensitivity: WACC and perpetual growth

Perpetual

8,707.0 2.1%
4.3%
4.8%
WACC

5.3%
5.8%
6.3%

DCF asset side: implied multiple sensitivity: WACC and perpetual growth

Perpetual

24.6 2.1%
4.3%
4.8%
WACC

5.3%
5.8%
6.3%

DCF equity side: equity value sensitivity: kEL and perpetual growth

Perpetual

7,410.2 2.1%
4.7%
5.2%
kEL
 kEL
5.7%
6.2%
6.7%

APV: equity value sensitivity: kEU and perpetual growth

Perpetual

8,377.0 2.1%
4.4%
4.9%

kEU
5.4%
5.9%
6.4%
Historicals Explicit forecast TV

2019 2020 2021 2022 2023 2024 2025 2026

0 1 2 3 4 5

2019 2020 2021 2022 2023 2024 2025 2026

496.5 (247.2) 150.4 185.7 198.6 212.4 225.3 266.9

0.949 0.901 0.855 0.812 0.771
The TV numerator is straig
142.8 167.3 169.9 172.5 173.7
i.e. the steady state year
11,667.7
826.1
8,993.3

9,819.4

2019 2020 2021 2022 2023 2024 2025 2026

496.5 (247.2) 150.4 185.7 198.6 212.4 225.3 266.9

0.949 0.901 0.855 0.812 0.771
142.7 167.3 169.9 172.4 173.6
11,633.7
826.0
8,964.3
9,790.2

236.7 1,119.4 1,050.0 946.6 831.6 702.3 560.5 486.3

2.5 3.7 5.9 5.4 4.8 4.2 3.4 2.9 The yearly tax shield for valua
tax shield in the model (see th
because:
0.978 0.956 0.935 0.914 0.894 - valuation TS assumes a s
5.8 5.2 4.5 3.8 3.1 of 24%, applicable in the c
(361.6) company country and that
interest payments. The "ac
22.4
computed with an effective
(323.2) (simplistic assumption but
(300.8) historical analysis)
- TS in valuation uses kD a
9,489.4 while accounting TS uses t
interests, computed with th
rates on debt and cash. Th
61.6 67.1 8.5 8.4 8.3 7.4 6.6 6.6 interest rate in the model c
Analysis! tab, "effective int
2019 2020 2021 2022 2023 2024 2025 2026 considerably higher than kD
The tax shields' terminal va
173.2 419.8 125.1 110.5 173.9 (109.7) 206.0 247.1 same growth in ND betwee
0.946 0.894 0.846 0.800 0.757 year and the steady state p
 Analysis! tab, "effective int
considerably higher than kD
The tax shields' terminal va
same growth in ND betwee
year and the steady state p
118.3 98.8 147.1 (87.7) 155.9
9,222.5
432.4
6,977.8

7,410.2

DCF eq.

DCFa and APV: EV from the m

8,522.6 down to EqV
(1,119.4) DCFe: the model gives EqV
8.8 its EV
(1.8)
7,410.2
1,156.3
6.4
21.3x

5,389.8
11,837.3
7,797.6

dcoded (raw numbers) and equal to the

Important note for data tables:

Checks test on the X and Y axis can b
(therefore not hardcoded), but
1) in the same sheet
Perpetual growth
2) they must be linked to a
2.6% 3.1% 3.6% 4.1% - directly feeding the model.
- a source "above" the drive
both the data table and the
-

Checks

Perpetual growth

2.6% 3.1% 3.6% 4.1% -

-
-

Checks

Perpetual growth

2.6% 3.1% 3.6% 4.1% -

-
-
 Checks

Perpetual growth

2.6% 3.1% 3.6% 4.1% -

-
-
The TV numerator is straight FCFO in 2022
i.e. the steady state year

The yearly tax shield for valuation differs from the

tax shield in the model (see the Output! sheet)
because:
- valuation TS assumes a statutory tax rate
of 24%, applicable in the controlling
company country and that allows to deduct
interest payments. The "accounting" TS is
computed with an effective tax rate
(simplistic assumption but appropriate for
historical analysis)
- TS in valuation uses kD as the interest rate,
while accounting TS uses the actual
interests, computed with the chosen interest
rates on debt and cash. The overall meddled
interest rate in the model can be seen in the
Analysis! tab, "effective interest rate", and is
considerably higher than kD.
The tax shields' terminal value assumes the
same growth in ND between the last explicit
year and the steady state period
Analysis! tab, "effective interest rate", and is
considerably higher than kD.
The tax shields' terminal value assumes the
same growth in ND between the last explicit
year and the steady state period

DCFa and APV: EV from the model, then bridge-

down to EqV
DCFe: the model gives EqV; bridge-up to get
its EV

Important note for data tables: the five values to

test on the X and Y axis can be linked to the model
(therefore not hardcoded), but:
1) in the same sheet
2) they must be linked to a cell that is not
directly feeding the model. Therefore create
a source "above" the driver and link to it
both the data table and the model itself
 EVA

(EUR m) Driver Driver

EVA Calculation
CAPEX
WACC
ROI
NOPAT
Assets In place
EVA From Asset in Place
EVA

TOTAL EVA € 9,312.1

 Historicals Explicit forecast

2017 2018 2019 2020 2021 2022 2023 2024

1 2 3 4

143.31 172.6 -65.9 165.42 172.20 179.27 186.38

5.3% 5.3% 5.3% 5.3% 5.3% 5.3% 5.3%
9.8% 10.7% 8.5% 9.7% 9.7% 9.7% 9.7%
289.332 293.588 244.644 292.2500292 299.7823086 308.0573955 315.7706639
4555.4
3688.11
224.6 218.7 213.3 207.6
 TV

2025 2026 Notes

5 6

194.70 200.65
5.3% 5.3%
9.7% 5.3% 13.12%
327.48257084 302.9061778

204.4 0
Market multiples valuation For each comparable 6 multiples are computed, EV/S
require 2016 forecast for each comparable (found on
A range of values is defined using mean and m
Actual multiples date 31/12/2020
A size discount is applied to multiples before va
Forward +1 multiples date 31/12/2021
Campari is (issued that usually constitute a prem
Size discount 20.0%

Sales Sales
(EUR m) Country Currency Market. cap. EV
Actual Forward

AB InBev NV Belgium EURm 142,040.0 257,088.8 46,881.0 50,839.4

Diageo Plc Britain GBPm 105,640.0 121,444.0 11,752.0 12,241.8
Heiniken NV Netherlands EURm 66,800.0 82,934.0 19,715.0 21,326.1
Pernod Ricard SA France EURm 54,540.0 63,868.0 8,448.0 8,654.7
Brown Forman Corp USA USDm 36,247.0 38,524.0 3,363.0 3,418.0
Carlsberg AB Denmark DKKm 27,210.0 56,355.0 58,541.0 63,553.6
Remy Cointreau SA France EURm 10,330.0 10,812.0 1,024.8 1,012.9
Average
Median
Size discount
Average
Median

Davide Campari SpA Italy EURm 10,589.7 11,702.1 1,772.0 1,865.0

EV / Sales EV / Sales EV / Sales

Method EV / Sales A
A F F

Multiple choice Average Median Average Median

Sales
Sales 2020 Sales 2020 2021 Sales 2021
Campari's corresponding metric Actual Actual Forward Forward
Campari's corresponding metric 1,772.0 1,772.0 1,865.0 1,865.0
Multiple 5.8x 6.0x 5.6x 5.9x
Enterprise value 10,237.7 10,717.2 10,460.4 11,010.1

(Net debt) (1,119.4) (1,119.4) (1,119.4) (1,119.4)

Surplus assets (inc. associates & pensions) 8.8 8.8 8.8 8.8
(Minorities) (1.8) (1.8) (1.8) (1.8)
Equity value 9,125.3 9,604.8 9,348.0 9,897.7

Net debt
(Surplus assets (inc. associates & pensions))
Minorities
Enterprise value

Implicit multiples - DCF asset side 5.5x 5.5x 5.3x 5.3x

Implicit multiples - DCF equity side 4.8x 4.8x 4.6x 4.6x
Implicit multiples - APV 5.4x 5.4x 5.1x 5.1x

Alternative to mean or median: regression fundamental multiple

Regression slope
Regression intercept
Fundamental multiple
R^2
6 multiples are computed, EV/Sales, EV/EBITDA, P/E, each for 2015 (actual) and 2016 (forward +1 year). Of course forward multiples will
for each comparable (found on the market by consensus, no need to build a model for each..)
defined using mean and median multiples.
pplied to multiples before valuing Campari in order to consider that most comparables are much bigger and more liquid than
that usually constitute a premium on the market).

EBITDA EBITDA Net income Net income EV / Sales EV / Sales EV / EBITDA EV / EBITDA P/E
Actual Forward Actual Forward Actual Forward Actual Forward Actual

17,314.0 18,571.6 3,500.3 5,988.6 5.5x 5.1x 14.8x 13.8x ns

2,976.0 4,115.3 2,268.1 2,644.9 10.3x 9.9x 40.8x 29.5x 46.6x
5,022.0 4,745.1 1,055.4 1,810.5 4.2x 3.9x 16.5x 17.5x 63.3x
2,575.0 2,604.9 1,176.7 1,478.2 7.6x 7.4x 24.8x 24.5x 46.3x
1,207.0 1,162.6 837.3 833.5 11.5x 11.3x 31.9x 33.1x 43.3x
13,701.0 14,895.8 6,030.0 6,464.9 1.0x 0.9x 4.1x 3.8x 4.5x
248.6 264.4 140.4 173.3 10.6x 10.7x 43.5x 40.9x 73.6x
7.2x 7.0x 25.2x 23.3x 46.3x
7.6x 7.4x 24.8x 24.5x 46.5x
20.0% 20.0% 20.0% 20.0% 20.0%
5.8x 5.6x 20.2x 18.6x 37.0x
6.0x 5.9x 19.8x 19.6x 37.2x

399.8 468.6 186.2 250.3 6.6x 6.3x 29.3x 25.0x 56.9x

EV / EV / EV / EBITDA EV / EBITDA
P/E A P/E A P/E F P/E F
EBITDA A EBITDA A F F

Average Median Average Median Average Median Average Median

EBITDA EBITDA EBITDA Net income

2020 Actual 2020 2021 EBITDA 2021 2020 Actual Net income Net income Net income
Actual Forward Forward 2020 Actual 2021 Forward 2021 Forward
399.8 399.8 468.6 468.6 186.2 186.2 250.3 250.3
20.2x 19.8x 18.6x 19.6x 37.0x 37.2x 28.0x 29.5x
8,064.3 7,933.0 8,738.8 9,192.3

(1,119.4) (1,119.4) (1,119.4) (1,119.4)

8.8 8.8 8.8 8.8
(1.8) (1.8) (1.8) (1.8)
6,951.9 6,820.6 7,626.4 8,079.9 6,891.8 6,921.2 7,001.2 7,387.8

1,119.4 1,119.4 1,119.4 1,119.4

(8.8) (8.8) (8.8) (8.8)
1.8 1.8 1.8 1.8
8,004.2 8,033.6 8,113.6 8,500.2

24.6x 24.6x 21.0x 21.0x 46.8x 46.8x 34.8x 34.8x

21.3x 21.3x 18.2x 18.2x 39.8x 39.8x 29.6x 29.6x
23.7x 23.7x 20.2x 20.2x 45.0x 45.0x 33.5x 33.5x

EV / Sales EV / Sales EV / EBITDA EV / EBITDA P/E

Actual Forward Actual Forward Actual

(0.000) (0.000) (0.002) (0.001) (0.010)

10.4 10.2 35.8 33.0 65.9
10.1x 9.9x 35.1x 32.3x 64.0x
74.2% 75.3% 62.3% 69.2% 85.0%
 P/E
Forward

23.7x
39.9x
36.9x
36.9x
43.5x
4.2x
59.6x
35.0x
36.9x
20.0%
28.0x
29.5x

42.3x

P/E
Forward

(0.006)
52.5
50.9x
83.6%
 For each target 2 multiples are compute
Deal multiples valuation A range of values is defined using m
A control premium neutralizes the m
M&A deals that include acquisition o
Actual multiples date 31/12/2020
Control premium in the liquor industry 18.0% Source: Mergerstat
Size discount - Not applied, given the diversified size of M&A targets

Announcement
Target Country Buyer Price Stake
date

15/10/2017 Pivovarna Lasko DD Slovenia Heineken NV 340.6 100.0%

19/08/2019 Myanmar Brewery Ltd Myanmar Kirin Holdings Ltd 553.9 100.0%
16/11/2018 Home Brew Mart Inc USA Constellation Brands Inc 1,021.3 80.0%
11/11/2018 MillerCoors LLC USA Coors Brewing Co. 12,019.1 100.0%
17/09/2017 SABMiller PLC UK AB InBev SA 116,285.6 100.0%
27/02/2019 The Old B. Distillery Ltd UK Tequila C La Rojena SA 703.7 100.0%
Average
Mediam
Average (minority)
Mediam (minority)

EV / Sales EV / Sales
Method
A A

Multiple choice Average Median

Sales 2020 Sales 2020

Campari's corresponding metric Actual Actual
Campari's corresponding metric 1,772.0 1,772.0
Multiple 4.6x 4.1x
Enterprise value 8,067.1 7,298.2
(Net debt) (1,119.4) (1,119.4)
Surplus assets (inc. associates & pensions) 8.8 8.8
(Minorities) (1.8) (1.8)
Equity value 6,954.7 6,185.8

Implicit multiples - DCF asset side 5.5x 5.5x

Implicit multiples - DCF equity side 4.8x 4.8x
Implicit multiples - APV 5.4x 5.4x
arget 2 multiples are computed, EV/Sales, EV/EBITDA for the deal year.
of values is defined using mean and median multiples.
premium neutralizes the majority acquisition factor embedded into
s that include acquisition of a control stake

($m figures)

EqV Net debt EV Sales EBITDA EV/Sales EV/EBITDA Debt

340.6 16.0 356.6 183.8 37.5 1.9x 9.5x 23.3

553.9 95.6 649.5 133.6 47.4 4.9x 13.7x 130.0
1,276.7 295.7 1,572.4 158.0 49.0 10.0x 32.1x 301.6
12,019.1 - 12,019.1 4,501.5 968.5 2.7x 12.4x -
116,285.6 29,819.6 146,105.2 19,637.8 7,208.0 7.4x 20.3x 30,054.3
703.7 113.4 817.1 na 112.7 na 7.3x 137.3
5.4x 15.9x
4.9x 13.1x
4.6x 13.5x
4.1x 11.1x

EV / EV /
EBITDA A EBITDA A

Average Median

EBITDA EBITDA
2020 Actual 2020 Actual
399.8 399.8
13.5x 11.1x
5,377.5 4,424.9
(1,119.4) (1,119.4)
8.8 8.8
(1.8) (1.8)
4,265.1 3,312.5

24.6x 24.6x
21.3x 21.3x
23.7x 23.7x
Cash

7.3
34.4
5.9
-
234.7
23.9
 Valuation ranges (for equity value) with all methods are summarized on a "footba
Valuation Summary Also Campari's market cap at the valuation date gives an additional valu
Make your reasoned and defendable choice of a final value range, by lo

5.396
Campari's market
Valuation Football Field cap. 01/03/2017

DCF asset 5,813.1

methods
Intrinsic

APV 4,937.2

DCF equity 5,389.8

EV / Sales A 9,604.8

EV / Sales F 9,897.7
Trading multiples

EV / EBITDA A 6,951.9 6,820.6

EV / EBITDA F 7,626.4

P/E A 6,921.2 6,891.8

P/E F 7,387.8 7,001.2

EV / Sales A 6,185.8 6,954.7

multiple
Deal

EV / EBITDA A 3,312.5 4,265.1

Campari
reasonable
4.800 5.100 value range

EV / EV / Sales EV / EV / EV / Sales EV / Sales

EBITDA A A P/E F P/E A EBITDA F EBITDA A F A DCF equity
4,265.1 6,954.7 7,001.2 6,891.8 8,079.9 6,820.6 9,348.0 9,125.3 11,837.3
3,312.5 6,185.8 7,387.8 6,921.2 7,626.4 6,951.9 9,897.7 9,604.8 5,389.8
952.6 768.9 (386.7) (29.3) 453.5 (131.3) (549.8) (479.6) 6,447.5
ds are summarized on a "football field".
date gives an additional value indicator.
of a final value range, by looking at results and outliers.

6
mpari's market
01/03/2017

9,604.8

9,897.7

6,820.6

6,921.2 6,891.8

7,387.8 7,001.2

.8 6,954.7

Campari
reasonable
value range

APV DCF asset

15,823.5 16,088.7
4,937.2 5,813.1
10,886.3 10,275.6
Campari
Financial Model

Advanced Topics
Merger Model
Historicals Forecast

(EUR m) 2019 2020 2021 2022 2023

Inputs Sources and uses

EBITDA synergies (% sales) 5.7% Buyer cash

M&A fees 1.0% Term loan
Offer premium 15.0% Buyer new shares
Share price 9.2 Sources
NOSH 1,133.8
Equity value 11,995.6
Assumed debt 1,119.4
EV 13,115.0

Diageo NOSH (m) 2,354.0 Interest on cash

Diageo share price 37.2 Term loan interest
- Capitalization Period
Offer price 37.2 Buyer tax rate
Shares to issue 356.1

Income statement Buyer (Diageo)

Sales 12,867.0 11,752.0 12,368.5 12,875.4 13,404.1

COGS (4,866.0) (4,654.0) (4,787.8) (4,984.0) (5,188.7)
SGA (2,042.0) (1,841.0) (1,950.2) (2,023.6) (2,110.1)
Synergies
EBITDA 5,959.0 5,257.0 5,630.5 5,867.8 6,105.3

D&A (311.0) (417.0) (367.5) (382.6) (398.3)

Fees amortization
EBIT 5,648.0 4,840.0 5,263.0 5,485.2 5,707.0

Interest income 232.0 192.0 192.0 192.0 192.0

Interest expenses (478.0) (525.0) (508.7) (508.7) (508.7)
Term loan interest
Exceptionals
EBT 5,402.0 4,507.0 4,946.3 5,168.5 5,390.3

Standalone taxes (765.0) (564.0) (939.8) (982.0) (1,024.2)

Tax effect of deal P&L changes
NI 4,637.0 3,943.0 4,006.5 4,186.5 4,366.2

WA shares outstanding - Basic (m) 2,418.0 2,346.0 2,346.0 2,346.0 2,346.0

WA shares outstanding - Fully diluted (m) 2,428.0 2,354.0 2,354.0 2,354.0 2,354.0
Earnings per share 1.9 1.7 1.7 1.778 1.855
Buyer EPS accretion (dilution)

Balance sheet Buyer (Diageo)

Noncash WC 2,620.0 3,179.0 1,945.0 1,484.0 1,484.0

Fixed assets 17,012.0 16,226.0 16,226.0 16,226.0 16,226.0
M&A fees
Stake (pre merger)
Deal goodwill
Surplus assets 2,147.0 2,497.0 2,497.0 2,497.0 2,497.0
Capital employed 21,779.0 21,902.0 20,668.0 20,207.0 20,207.0

Old debt 12,555.0 16,785.0 14,670.0 14,670.0 14,670.0

Term Loan M&A
(Cash) (932.0) (3,323.0) (2,442.0) (2,903.0) (2,903.0)
Net debt 11,623.0 13,462.0 12,228.0 11,767.0 11,767.0

Group equity 8,361.0 6,772.0 6,772.0 6,772.0 6,772.0

Minorities 1,795.0 1,668.0 1,668.0 1,668.0 1,668.0
Total equity 10,156.0 8,440.0 8,440.0 8,440.0 8,440.0

Sources 21,779.0 21,902.0 20,668.0 20,207.0 20,207.0

- - - - -

Cash flows Buyer (Diageo)

EBIT 4,840.0 5,263.0 5,485.2 5,707.0

Total taxes (564.0) (939.8) (982.0) (1,024.2)
+ D&A (Business) 417.0 367.5 382.6 398.3
+ Fees amortization - - - -
Change in noncash WC (559.0) 1,234.0 461.0 -
CAPEX 369.0 (367.5) (382.6) (398.3)
FCFO 4,503.0 5,557.2 4,964.2 4,682.9

Interest income 192.0 192.0 192.0 192.0

Interest expense (525.0) (508.7) (508.7) (508.7)
Term loan interests - - - -
Change in SA (350.0) - - -
Exceptionals - - - -
Term loan - - - -
Gross debt 4,230.0 (2,115.0) - -
FCFE 8,050.0 3,125.5 4,647.5 4,366.2

Issues / dividends (net of merger) (5,659.0) (4,006.5) (4,186.5) (4,366.2)

Net cash flow 2,391.0 (881.0) 461.0 -
BOP cash 932.0 3,323.0 2,442.0 2,903.0
EOP cash 3,323.0 2,442.0 2,903.0 2,903.0
Check - - - -

Deal calculations

Term loan
Principal
Interest

EOP capitalized fees

Amortization
ecast Historicals Forecast Historicals Foreca

2024 2019 2020 2021 2022 2023 2024 2019 2020 2021

- Price to seller 11,995.6

- Refinance target ND 1,119.4
13,246.2 Fees 131.2
13,246.2 Uses 13,246.2

1.0%

5.0
19.0%

Target (Campari) Combined

13,935.2 1,842.5 1,772.0 1,865.0 1,941.4 2,021.1 2,101.2 14,233.5

(5,394.3) (681.1) (702.4) (706.7) (735.6) (765.8) (796.2) (5,494.5)
(2,191.9) (703.4) (669.8) (689.7) (714.5) (740.0) (765.9) (2,639.9)
106.3
6,349.0 458.0 399.8 468.6 491.2 515.3 539.1 6,205.4

(414.0) (71.7) (77.9) (84.1) (96.8) (109.9) (123.7) (451.6)

(26.2)
5,934.9 386.3 321.9 384.5 394.5 405.3 415.5 5,727.6

192.0 - - - - - - 33.2
(508.7) (31.8) (25.7) (38.3) (37.7) (37.2) (33.8) (508.7)
-
(0.1) (87.3) 2.8 2.8 2.8 2.8 2.8
5,618.3 354.4 208.9 349.1 359.5 370.9 384.5 5,254.9

(1,067.5) (46.2) (22.7) (98.8) (101.7) (104.8) (108.5) (1,038.6)

7.7
4,550.8 308.2 186.2 250.3 257.8 266.1 276.0 4,224.0

2,346.0 1,144.3 1,156.3 1,156.3 1,156.3 1,156.3 1,156.3 2,702.1

2,354.0 1,169.9 1,156.3 1,156.3 1,156.3 1,156.3 1,156.3 2,710.1
1.933 0.3 0.2 0.2 0.2 0.2 0.2 1.559
(8.4%)

Target (Campari) Combined

1,484.0 (434.2) 188.9 234.4 257.7 282.0 306.5 3,367.9 2,179.4

16,226.0 3,063.9 2,920.1 3,001.4 3,076.9 3,146.2 3,208.9 19,146.1 19,227.4
131.2 104.9
- -
9,997.2 9,997.2
2,497.0 (4.7) 8.8 8.8 8.8 8.8 8.8 2,505.8 2,505.8
20,207.0 2,625.0 3,117.8 3,244.7 3,343.4 3,437.0 3,524.2 35,148.2 34,014.8

14,670.0 941.1 1,667.5 1,669.2 1,620.5 1,622.0 1,323.4 16,785.0 14,670.0

- -
(2,903.0) (704.4) (548.1) (619.1) (673.9) (790.4) (621.1) (3,323.0) (6,565.4)
11,767.0 236.7 1,119.4 1,050.0 946.6 831.6 702.3 13,462.0 8,104.6

6,772.0 2,386.4 1,996.6 2,192.8 2,395.0 2,603.6 2,820.1 20,018.2 24,242.2

1,668.0 1.9 1.8 1.8 1.8 1.8 1.8 1,668.0 1,668.0
8,440.0 2,388.3 1,998.4 2,194.6 2,396.8 2,605.4 2,821.9 21,686.2 25,910.2

20,207.0 2,625.0 3,117.8 3,244.7 3,343.4 3,437.0 3,524.2 35,148.2 34,014.8

- (0.0) - - - - - - - -

Target (Campari) Combined

5,934.9 321.9 384.5 394.5 405.3 415.5 5,727.6

(1,067.5) (22.7) (98.8) (101.7) (104.8) (108.5) (1,030.9)
414.0 77.9 84.1 96.8 109.9 123.7 451.6
- - - - - - 26.2
- (623.1) (45.5) (23.3) (24.3) (24.4) 1,188.5
(414.0) 65.9 (165.4) (172.2) (179.3) (186.4) (532.9)
4,867.5 (180.1) 158.9 194.0 206.9 219.9 5,830.1

192.0 - - - - - 33.2
(508.7) (25.7) (38.3) (37.7) (37.2) (33.8) (508.7)
- - - - - - -
- (13.5) - - - - -
- (87.3) 2.8 2.8 2.8 2.8 2.8
- - - - - - -
- 726.4 1.7 (48.6) 1.4 (298.6) (2,115.0)
4,550.8 419.8 125.1 110.5 173.9 (109.7) 3,242.4

(4,550.8) (576.1) (54.1) (55.7) (57.5) (59.6) (0.0)

- (156.3) 71.0 54.8 116.4 (169.3) 3,242.4
2,903.0 704.4 548.1 619.1 673.9 790.4 3,323.0
2,903.0 548.1 619.1 673.9 790.4 621.1 6,565.4
- 0.0 - - - - -

Combined

1.0

131.2 104.9
(26.2)
Column E Column F
 Forecast

2022 2023 2024

Combined

14,816.7 15,425.2 16,036.4

(5,719.6) (5,954.5) (6,190.4)
(2,738.1) (2,850.1) (2,957.8)
110.7 115.2 119.8
6,469.7 6,735.8 7,007.9

(479.3) (508.2) (537.7)

(26.2) - -
5,964.1 6,227.6 6,470.2

65.7 113.9 160.7

(508.7) (508.7) (508.7)
- - -
2.8 2.8 2.8
5,523.9 5,835.6 6,125.0

(1,083.7) (1,129.0) (1,176.0)

0.8 (14.1) (23.2)
4,441.0 4,692.5 4,925.9

2,702.1 2,702.1 2,702.1

2,710.1 2,710.1 2,710.1
1.639 1.732 1.818
(7.9%) (6.6%) (6.0%)
1. Equity 2. Debt
financing financing
Combined 2020 2020

1,741.7 1,766.0 1,790.5

19,302.9 19,372.2 19,434.9
78.7 - -
- - -
9,997.2 9,997.2 9,997.2
2,505.8 2,505.8 2,505.8
 33,626.3 33,641.2 33,728.4

14,670.0 14,670.0 14,670.0

- - - -
(11,394.9) (16,072.5) (20,911.2) (13,246.2) -
3,275.1 (1,402.5) (6,241.2)

28,683.2 33,375.7 38,301.5 13,246.2

1,668.0 1,668.0 1,668.0
30,351.2 35,043.7 39,969.5

33,626.3 33,641.2 33,728.4

- - - - -

Combined

5,964.1 6,227.6 6,470.2

(1,082.9) (1,143.1) (1,199.2)
479.3 508.2 537.7
26.2 - -
437.7 (24.3) (24.4)
(554.8) (577.5) (600.4)
5,269.7 4,990.8 5,183.9

65.7 113.9 160.7

(508.7) (508.7) (508.7)
- - -
- - -
2.8 2.8 2.8
- - -
- - -
4,829.5 4,598.9 4,838.7

(0.0) 78.7 -
4,829.5 4,677.6 4,838.7
6,565.4 11,394.9 16,072.5
11,394.9 16,072.5 20,911.2
- - -

Combined

2.0

78.7
(26.2)
 3. Refi 4. Buy 4. Merge 5. M&A
old debt stake the two fees
2020 2020 2020 2020

131.2
11,995.6 (11,995.6)
9,997.2
(1,667.5)

1,667.5 11,995.6 131.2

(1,996.6)
(1.8)

- - - -
Income statement Buyer (Diageo)

Sales 12,867.0 11,752.0 12,368.5

Growth 5.25%
COGS (4,866.0) (4,654.0) (4,787.8)
COGS % Sales 37.8% 39.6% 0.4
SGA (2,042.0) (1,841.0) (1,950.2)
SGA % Sales 0.2 0.2 0.2
Synergies
EBITDA 5,959.5 5,257.6 5,630.5

D&A (311.0) (417.0) (367.5)

D&A % COGS 0.1 0.1 0.1
Fees amortization
EBIT 5,648.6 4,840.6 5,263.0

Interest income 232.0 192.0 192.0

Interest expenses (478.0) (525.0) (508.7)
Interest rate -3.8% -3.1% -3.47%
Term loan interest
Exceptionals
EBT 5,402.6 4,507.6 4,946.3

Standalone taxes (765.0) (564.0) (939.8)

Tax Rate 0.2
Tax effect of deal P&L changes
NI 4,637.6 3,943.6 4,006.5

WA shares outstanding - Basic (m) 2,418.0 2,346.0 2,346.0

WA shares outstanding - Fully diluted (m) 2,428.0 2,354.0 2,354.0
Earnings per share 1.9 1.7 1.7
Buyer EPS accretion (dilution)

Balance sheet Buyer (Diageo)

Noncash WC 2,620.0 3,179.0 1,945.0

Fixed assets 17,012.0 16,226.0 16,226.0
M&A fees
Stake (pre merger)
Deal goodwill
Surplus assets 2,147.0 2,497.0 2,497.0
Capital employed 21,779.0 21,902.0 20,668.0

Old debt 12,555.0 16,785.0 14,670.0

Term Loan M&A
(Cash) (932.0) (3,323.0) (2,442.0)
Net debt 11,623.0 13,462.0 12,228.0

Group equity 8,361.0 6,772.0 6,772.0

Minorities 1,795.0 1,668.0 1,668.0
Total equity 10,156.0 8,440.0 8,440.0

Sources 21,779.0 21,902.0 20,668.0

- - -

Cash flows Buyer (Diageo)

EBIT 4,840.6 5,263.0

Total taxes (564.0) (939.8)
+ D&A (Business) 417.0 367.5
+ Fees amortization - -
Change in noncash WC (559.0) 1,234.0
CAPEX 369.0 (367.5)
FCFO 4,503.6 5,557.2

Interest income 192.0 192.0

Interest expense (525.0) (508.7)
Term loan interests - -
Change in SA (350.0) -
Exceptionals - -
Term loan - -
Gross debt 4,230.0 (2,115.0)
FCFE 8,050.6 3,125.5

Issues / dividends (net of merger) (5,659.6) (4,006.5)

Net cash flow 2,391.0 (881.0)
BOP cash 932.0 3,323.0
EOP cash 3,323.0 2,442.0
Check 0.0 -
ageo)

12,875.4 13,404.1 13,935.2

4.10% 4.11% 3.96%
(4,984.0) (5,188.7) (5,394.3)
0.4 0.4 0.4
(2,023.6) (2,110.1) (2,191.9)
0.2 0.2 0.2

5,867.8 6,105.3 6,349.0

(382.6) (398.3) (414.0)

0.1 0.1 0.1

5,485.2 5,707.0 5,934.9

192.0 192.0 192.0

(508.7) (508.7) (508.7)
-3.47% -3.47% -3.47%

5,168.5 5,390.3 5,618.3

(982.0) (1,024.2) (1,067.5)

0.2 0.2 0.2

4,186.5 4,366.2 4,550.8

2,346.0 2,346.0 2,346.0

2,354.0 2,354.0 2,354.0
1.8 1.9 1.9

Buyer (Diageo)

1,484.0 1,484.0 1,484.0

16,226.0 16,226.0 16,226.0

2,497.0 2,497.0 2,497.0

 20,207.0 20,207.0 20,207.0

14,670.0 14,670.0 14,670.0

(2,903.0) (2,903.0) (2,903.0)

11,767.0 11,767.0 11,767.0

6,772.0 6,772.0 6,772.0

1,668.0 1,668.0 1,668.0
8,440.0 8,440.0 8,440.0

20,207.0 20,207.0 20,207.0

- - -

Buyer (Diageo)

5,485.2 5,707.0 5,934.9

(982.0) (1,024.2) (1,067.5)
382.6 398.3 414.0
- - -
461.0 - -
(382.6) (398.3) (414.0)
4,964.2 4,682.9 4,867.5

192.0 192.0 192.0

(508.7) (508.7) (508.7)
- - -
- - -
- - -
- - -
- - -
4,647.5 4,366.2 4,550.8

(4,186.5) (4,366.2) (4,550.8)

461.0 - -
2,442.0 2,903.0 2,903.0
2,903.0 2,903.0 2,903.0
- - -