BasicNet Release 4.2 ENG

The BasicNet Group operates in the sport and leisure apparel, footwear and accessories sector through the Kappa, Robe di Kappa, K-Way; Superga, AnziBesson, Lanzera and Jesus Jeans trademarks. The Group is headed by BasicNet – with its head office in Turin – a company quoted on the Italian Stock Exchange. The Group’s activity consists of enhancing the value of its trademarks and spreading the products associated with them through a global network of licensee companies. From this network comes the name BasicNet. The licensees network covers all the most important markets in the world.

HISTORY IN BRIEF

 The Basic Group was born in 1994 when Marco Boglione’s Football Sport Merchandise, established in 1983, gained numerous trademarks, among which Kappa, Robe di Kappa and Jesus Jeans, from the failure of Maglificio Calzificio Torinese founded in 1916. Boglione’s project consists of the creation of a new ideal economic subject, returning value to and commercialising owned trademarks. With the introduction of a new business model, there is therefore the transition from the traditional structure of a clothing company to a network business model, considered necessary to allow a strategy of internationalisation on the world market. In 1999 the Group’s holding company BasicNet is listed on Milan’s Italian Stock. In February 2004 K-Way and Superga became part of the group’s trademark portfolio, followed later by Anzi Besson in January 2010.

 THE STRONG POINTS

 The Group’s strong points coincide with the strategic choices taken and these refer to:

1. Trademark positioning

2. Business system

3. Web Integration.

 Trademark positioning

 The Basic Group’s trademarks are positioned in the casual clothing sector, a market undergoing strong growth since the end of the ‘60s and destined to develop progressively, bearing in mind the “liberalisation� of customs. The Group divides casual clothing into: male, unisex, female and kids. The male segment is attributed a “sporty for leisure� product connotation; unisex a “functionally sporty� product connotation and female a “fashion� product connotation. “Robe di Kappa� products cover the leisure casual segment; “Kappa�, “Anzi Besson� and “Lanzera� products cover the functional active sport segment; K-Way� addresses the functional and fashion segment; “Superga� covers all three segments, namely sport, functional and fashion.

 The Business System

 The BasicNet Group has planned its development on a “network� business model, identifying, in the licensee, the ideal partner for the diffusion, distribution and provisioning of its own products in the the world, choosing to face up to this, not as a product supplier in itself, but as a supplier of an integrated service offer, or better a BUSINESS OPPORTUNITY. Innovative, flexible and modular, the Business System has allowed the group to grow rapidly whilst maintaining a light and agile structure. A large company made up of many small companies linked together by a single data processing platform, completely integrated with the network through the internet, and studied for the real time sharing and maximum exploitation of information. Furthermore, the Business System has been conceived and structured so as to allow the development of both internal lines (new licensees or companies) and external lines (new trademark developments or purchases, new lines of business). The functioning of Business System is very simple. The head of the BasicNet Group takes care of the strategic work: 1. Product Research and Development; 2. Global Marketing; 3. Licensee Network Development and Co-Ordination; 4. Information Technology or the creation of new software to allow the on line management of every process in the offer chain. 5. Strategic Finance. The licensees, defined on a territorial basis or by specific market categories are entrusted with distributing the products to the retailers, the activity of local marketing, the territorial logistics and the financing of the working capital following the Group’s guidelines. An analogous model has been used with licensee companies (the sourcing centers), companies entrusted with managing the productive flow of BasicNet branded finished products that are distributed by the commercial licencing entreprises in the areas of their competence. Within the development of its own business system, the Group has also organised the system of direct sale to the public, at present managed by the Group-owned Italian licensee, BasicItalia. Within the retail project different insignias have been developed to cover the 3 primary levels of the retail market in which the Group is present in Italy through direct sale to the public. These are: - (1st Level) The 1st line: the monobrand shops are located in the historic centers, streets or shopping centers with specific franchising agreements; - (2nd Level) the Brand Outlet situated in the Outlet Villages - (3rd Level) Discount: "alloSpaccio" located in shopping malls or industrial areas converted to retail. All three formats have been developed with the objective of making them reproducible in different numbers and market conditions.

 Web Integration

The data processing platform is one of the principal strategic investments of the Group to which maximum attention has been dedicated, both in terms of human resources and centrality in the Business System’s development. This platform has been conceived and developed with a view towards complete integration with the web, interpreted by the Group as the ideal instrument for communication between the elements that make up the network. The Information Technology department therefore works on the design and implementation of a data gathering and transmission system to link the companies within the BasicNet network both among themselves and externally. With this in mind the business plan has been designed based on the so-called e-process, in other words, through dotcom divisions that each carry out a part of the productive process and propose it to the other divisions, exclusively using on-line transactions for exchange and negotiation.

 GROUP STRUCTURE

The BasicGroup is made up of Italian and overseas operative companies that are grouped together in three activity segments: - The Business System management segment - Owned licensees - Real estate management Business system management includes the BasicNet holding company, the companies owning the Group’s brands: BasicTrademark and Superga Trademark, both based in Luxembourg and operating through a branch in Italy from 2010 onwards, Anzi Besson Trademark srl and the sublicensee companies BasicProperties. In addition to the activity directly developed by BasicNet, already described, the activity of the other companies consists of granting the rights of intellectual ownership of the BasicNet Group to the different licensees, administering the contracts of it and managing the relative economic flows. The owned licensees are BasicItalia and its subsidiary. BasicItalia operates as licencee for the use and development of the BasicNet Group’s intellectual ownership rights and products through: the Kappa, Robe di Kappa and Jesus Jeans brands for Italy and K-Way and Superga for Europe. It’s the incubator and licensee on which the Group’s development projects are tested. The company is owner of important technical sporting and merchandising sponsorship contracts, also with international visibility, and manages operations to the benefit of both Group and Network. Through its subsidiaries RdKO s.r.l., Allo Spaccio s.r.l. and Basic Outlet s.r.l., BasicItalia also manages the group’s points of sale within the franchising project. Real estate management is in the hands of BasicVillage. It is the owner of the former Maglificio Calzificio Torinese factory. Conservatively rebuilt in 1998, it is the BasicNet Group’s headoffice.

OBJECTIVES AND AREAS OF EXPANSION

 The objective of the Group is to strengthen its own leadership at a worldwide level, increasing the value of its trademarks. The Group pursues the project of growth through: - The consolidation and the expansion of the owned trademarks in the countries in which they are already present, through the support provided by the growth of licensee activity allowed by the Group’s business system. - The expansion of the trademarks’ territorial coverage through the search for new qualified licensees, above all for the brands most recently acquired. - The Retail project allows the licensee to improve the penetration of their own market and to efficiently reach the final consumer with aim of achieving the projected growth. - Study new investment opportunities on new martkets.