AVI LIMITED - Voluntary announcement

Voluntary announcement

AVI Limited
(Incorporated in South Africa)
(Registration number: 1944/017201/06)
ISIN Code: ZAE000049433
JSE Code: AVI
("AVI")


VOLUNTARY ANNOUNCEMENT

REVISION TO THE TERMS OF THE EXISTING COMMERCIAL RELATIONSHIP BETWEEN INDIGO BRANDS
PROPRIETARY LIMITED AND COTY INC.

AVI is pleased to advise shareholders that Indigo Brands Proprietary Limited (“Indigo”), a wholly
owned subsidiary of AVI Ltd., and Coty Inc. (“Coty”), a leading global beauty company, (collectively,
“the Parties”) have agreed on a Revision to the terms of their Existing Commercial Relationship (“the
Revision”).

In terms of the Revision, Indigo ceased to be the exclusive licensee of Coty in South Africa, effective
31 October 2013, and has now been appointed as the exclusive manufacturer, importer, distributor
and marketer of Coty’s value brand portfolio in South Africa and 13 other African countries
(“Territory”). As compensation for the Revision, Coty shall make a one-off pre-tax payment to Indigo
of R150,0 million.

The initial term of the transitional agreement in place between the Parties expires on 30 June 2014.
It is the intention of the Parties to conclude a final agreement for a period of no less than five years,
commencing on 01 July 2014.

The terms of the transitional agreement result in the same operating profit being earned by Indigo
as it would have earned had the original license agreement remained in place, and it is expected that
the final agreement will achieve a similar result.

Following the Revision, Indigo shall no longer report the revenue and profit associated with the sale
of Coty’s value brands in the Territory, but shall instead recognise revenue and profit in relation to
the services to be provided to Coty by Indigo. The impact on the individual lines disclosed in AVI’s
consolidated statement of comprehensive income is not expected to be significant.

The relationship between Indigo and Coty has been in place for over 13 years, having commenced on
25 June 2000 with the conclusion of an Exclusive Licence Agreement (“License”) between the Parties
in respect of Coty’s value brand portfolio in South Africa for an initial period of five years. The term
of this agreement has been extended by the Parties on several occasions since then, with the latest
extension scheduled to expire on 30 June 2014.

The core rationale for the Revision is:

    -   Coty’s desire to have direct control and ownership of its South African business;
    -   the desire of the Parties to meaningfully expand the presence and sales of Coty’s value
        brand portfolio in the Territory outside of South Africa in the short term; and
    -   the opportunity for the Parties to continue to extract material synergistic benefits from the
        sharing of AVI’s manufacturing and route to market infrastructure.


“We are pleased with the evolution of our partnership with Indigo,” said Renato Semerari, president,
Coty Beauty. “South Africa is an important emerging market with great potential for growth. Coty is
proud of the solid foundation we’ve built with Indigo as our partner. With this new agreement in
place, we look forward to many more successful years ahead.”

“AVI is pleased that its long term relationship with Coty has once again been extended. We are
confident that the revised commercial terms between the parties will result in robust growth and
innovation for the Coty brand portfolio both in South Africa and the broader African region,” said
AVI’s CEO, Simon Crutchley.

07 November 2013
Illovo, Johannesburg

Sponsor
The Standard Bank of South Africa Limited

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