DCF and valuation parameters Page 9 A Financial parameters The cosmetic sample is characterized by a smaller number of companies, which significantly impacts the variance of financial parameters • Natura’s (Brazil) long-term growth rate continues to be significantly higher than the average sample, driven by its geographical coverage. • WACC sample levels are balanced by the two extremes of Natura (Brazil geographical risk) and Shiseido s er (Japan). aluationt ame ar p DCF and v WACC and LTGR by company Companies are sorted in decreasing Market order based on the market capitalization Cosmetics 11.0% in euros observed as of 31 March 2015 companies capitalization WACC Gearing Beta LTGR Natura (one-month average). (in €m) 10.0% L'Occitane L’Oréal 93,163 7.9% 2.3% 0.71 2.0% 9.0% Estée Lauder 28,982 8.3% 0.9% 1.04 2.5% L'Oréal C Estée Lauder C 8.0% Beiersdorf 18,242 7.8% (4.4%) 0.77 2.3% A Coty W Beiersdorf Coty 7,444 8.0% 23.5% 0.99 1.8% 7.0% Shiseido 6,788 4.1% 9.3% 0.72 na 6.0% L’Occitane 3,628 9.1% (5.3%) 0.68 3.0% 5.0% Natura 3,237 10.0% 17.0% 0.87 6.0% Average 7.9% 6.2% 0.83 2.9% 4.0% Median 8.0% 2.3% 0.77 2.4% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% LTGR Maximum 10.0% 23.5% 1.04 6.0% Minimum 4.1% (5.3%) 0.68 1.8% Note: Bubble size reflects market capitalization. Dotted lines represents average values. Source: • WACC and LTGR: based on consensus of several broker reports for each company • Market capitalization and beta: EY elaboration based on S&P Capital IQ • Gearing: companies’ financial statements Notes: • Market capitalization is based on a one-month average as of 31 March 2015. • Gearing is defined as net financial debt/enterprise value. • Beta corresponds to levered beta measured on a weekly basis over a two-year period. The luxury and cosmetics financial factbook 2015