Estimates of market capitalization before an IPO

March 2008
Dragon Capital Highlights
f Dragon
Capital is Ukraine’s largest securities brokerage, investment banking, private equity and asset
management firm, offering a full range of services to institutional, corporate and private clients across the globe

f Established
E t bli h di 2000,
in 2000 the
th company exists
i t as an independent
i d d t partnership
t hi controlled
t ll d by
b management,
t with
ith a
minority stake held by Goldman Sachs

f Dragon Capital has more than 130 of the nation’s most talented investment and research professionals offering
in‐depth knowledge of all major sectors of the local economy and the international investment community

f Five‐time winner of the coveted Euromoney award for “Best Equity House in Ukraine” (2002, 2004‐07)

INVESTMENT BANKING
More than 50 completed ECM and M&A transactions, including 23 IPOs and private placements for Ukrainian
companies raising in excess of $1bn

BROKERAGE AND RESEARCH
Dragon Capital is the largest broker on the Ukrainian stock market, with approximately 30% market share over
the past three years and ranked as the #1 broker on the PFTS by volume over 1996‐2007

ASSET MANAGEMENT
More than $1bn under management in a diverse mix of products that includes the London AIM‐listed Dragon‐
Ukrainian Properties & Development plc, offshore investment funds, land acquisition vehicles and local mutual
and pension funds

PRINCIPAL INVESTMENTS
A lucrative portfolio of investments focused on DIY retail and real estate

2
Business Units Overview
Investment Banking Brokerage and Research Principal Investments Asset Management

IPOs Equity sales and trading Buy‐outs Property development fund

Private placements Debt sales and trading Growth equity financing Hedge fund
Sell/buy‐side acquisitions and  Research Start‐ups Pre‐IPO funds
mergers
Proprietary trading Mezzanine/ quasi‐equity   Land acquisition and holding 
Privatizations vehicles
Share buyouts
Share buyouts Real estate investments
Real estate investments
Business restructuring Mutual funds
Depositary receipts
Company valuation Pension fund
Share custody
Due diligence
Investor relations and client 
Bank debt financing
Bank debt financing support
Bond issuance

One of Eastern Europe’s leading investment firms The country’s leading global distribution platform
f Dragon Capital
D C i l hash b
become k
known as Ukraine’s
Uk i ’ leading
l di f Dragon Capitall offers
ff its clients
l unmatched
h d access to the
h
investment house by building a solid reputation for integrity, international investment community, with distribution in the
client focus, hard work and professionalism United States, Great Britain and Ukraine
f In 2002, Dragon Capital established a representative office in f An agreement with Auerbach, Grayson & Company of New York
the Czech Republic in order to expand its successful M&A g the onlyy Ukrainian investment bank with access
makes Dragon
advisory business to Central Europe and to promote investment to a wide range of U.S. institutional investors
opportunities in Ukraine to multinationals operating in the CEE
f The company’s growing international reputation means London,
f Influential local business magazine Komp@nion named Dragon New York and other financial circles look to Dragon as the
Capital to its list of “10 Companies That Inspire” for 2007 leader on Ukraine’s financial markets and as one of the most
dynamic and successful investment banks in the region

3
INVESTMENT BANKING

4
Across the Board Dominance
Ukraine’s top investment bank Transaction highlights (2007)

f Since start‐up Dragon has completed more than 50 deals,

including IPOs and private placements for major Ukrainian
companies in the fastest
fastest‐growing
growing sectors of the local economy:
banking, agriculture, real estate, manufacturing, media, food
processing, pharmaceuticals and more

f Dragon Capital has successfully raised equity and debt for some
g
of the highest profile names in major
p j sectors of the local
economy:
• #7‐ranked Nadra Bank
• #1‐ranked insurance company Oranta
• Top nationwide grocers Furshet and Velyka Kyshenya
• The nation
nation’ss top sugar producer,
producer UkrRos
• World‐renowned engine manufacturer Motor Sich
• Ukraine’s only public media holding, KP Media

f Two of Dragon’s biggest equity market deals to date include the

$208m IPO for Dragon
Dragon‐Ukrainian
Ukrainian Properties & Development and
its subsequent $100m secondary offering on the London AIM

f Dragon has also completed buy‐ and sell‐side M&A deals for a
variety of local and western clients, including Austrian Erste Bank,
Piraeus Bank of Greece and Ukrinbank (to Israel’s Bank Hapoalim)

f The firm has considerable experience in acquisitions of various

other enterprises ranging from blocking minority stakes and
privatizations to controlling stakes in public companies

5
ECM Market Leadership
The Ukrainian equity market Top ten equity deals on the Ukrainian market in 2007 (by deal size)
# Date Company Sector Deal1 Total ($m) Listing Market
f Ukrainian companies raised a record $1.8bn via IPOs and private
1 Jun‐07 Ferrexpo Metallurgy IPO 420 London SE
placements in 2007 – up from under $0.5bn in 2006. In all, 20
2 Nov‐07 Kernel Group Agriculture IPO 218 Warsaw SE
new companies entered the public market: in agriculture, real
3 J 07
Jun‐07 DUPD R lE t t
Real Estate IPO 208 L d AIM
London AIM
estate, insurance, machine‐building and pharmaceuticals
4 Dec‐07 Kyiv‐Donbas Real Estate IPO 130 London AIM
f Despite global liquidity tightening, international investors are 5 Nov‐07 Landkom Int’l. Agriculture IPO 111 London AIM
increasingly focused on Ukrainian corporates. New equity 6 May‐07 TMM Real Estate PP 105 Frankfurt SE
capital in 2007 gave rise to the largest investment banking deals 7 Nov‐07 DUPD Real Estate SPO 100 London AIM
in Ukraine’s history, including its largest real estate deal: the 8 May‐07
y IMB Group
p Bankingg PP 100 Vienna SE
$
$208m IPO for
f Dragon‐Ukrainian Properties & Development on 9 May‐07 Karavan Real Estate PP 55 Not listed
AIM in June (with a secondary offering of $100m in November) 10 Oct‐07 Darnytsia Pharmaceuticals PP 48 Frankfurt SE
f The 2008 deal pipeline looks to be even more impressive, with IPO: Initial Public Offering; SPO: Secondary Public Offering; PP: Private Placement
Deals by Dragon Capital highlighted in green
many more IPOs, SPOs and anticipated international listings for
Sources: News reports  and other publicly available sources
major domestic industrial groups SCM and Interpipe

Total deals in Ukraine over 2005‐08 (IPO/private placements) Total new equity capital raised in Ukraine (2005‐08)
25 Dragon Capital   1200 Dragon Capital
23
Concorde Capital
1000 JPMorgan/Deutsche Bank
g /
20
Concorde 
RenCap
Capital 800
15 14 ING Bank
HSBC
600
Others
10
Others
400
ING Bank 6
4 RenCap Deutsche 
5
2 JPMorgan Bank HSBC 200
1 1 1
0 0
2005 1Q06 
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08
Source: news reports and other publicly available sources Source: news reports and other publicly available sources

6
Strong Post-placement Support
Post‐IPO/private placement share price growth (as at 21 March 2008)

80%
75%

70%

59%
60%
55%

50%

41%
40%
36%
32% 33%

30%

20%
15%
13%

10%

0%
KP Media Laona VK Dev't Furshet Motor Sich Nadra LuAZ Rodovid IMB

Dragon Capital’s brokerage and research division offers proven support to sustain a high growth rate for share 
prices post‐IPO/private placement. This support provides excellent opportunities for attracting additional 
funds in the future and exit opportunities for shareholders

7
VALUATION METHODS

8
Valuation Methods
Based on DCF analysis Based on peer analysis Based on historical deals

9 DCF analysis is based on financial  9 Method based on a comparative  9 Based on actual M&A deal multiples

f
forecasts
t analysis of similar, publicly traded 
l i f i il bli l t d d
companies and is commonly used to  9 Allows for deals in different countries 
9 Major assumptions: sales growth,  reflect current market value  to be used for comparison purposes
cost of sales, profit margin, capital 
expenditures and working capital 9 Key multiples: Enterprise Value/Sales,  9 Often reflects the value of the 
Enterprise Value/EBITDA and P/E
Enterprise Value/EBITDA controlling stake
controlling stake
9 WACC change (discount factor) 

Advantages Advantages Advantages

9 Takes into account future growth
Takes into account future growth 9 Easy to implement and understand
Easy to implement and understand 9 Good for valuing controlling stakes
Good for valuing controlling stakes

9 Reflects the company’s fair value 9 Implies current market value

Disadvantages
Disadvantages
Disadvantages 9 Deals
Deals might have very specific terms 
might have very specific terms
9 Based on projections that might distort the valuation
9 It is difficult to find perfectly similar 
9 Sensitivity to the terminal growth  peer companies
rate calculations and WACC
9 Ignores company
Ignores company’ss specific strengths
specific strengths

9 To some extent disregards the 
company’s long‐term growth prospects

13
 Valuation Methods
DCF

Year 2006E 2007F 2008F 2009F 2010F

Earnings Before Interest and Taxes (EBIT) 4,770  9,283  16,589  28,517  45,431 
Tax on EBIT (680) (1,392) (2,488) (4,278) (6,815)
Depreciation 637  1,144  2,013  2,396  2,819 
(Increase) / Decrease in Net Working Capital (12,642) (11,047) (14,212) (17,400) (19,282)
Capital Expenditures (CAPEX) (5,375) (4,140) (4,550) (6,960) (6,275)
Free Cash Flow (13,291) (6,153) (2,649) 2,276  15,879 
Weighted Average Cost of Capital 14.1% 12.5% 12.3% 12.1% 12.2%
Present Value of Free Cash Flows to Firm
Present Value of Free Cash Flows to Firm (11 646)
(11,646) (4 859)
(4,859) (1 871)
(1,871) 1 440
1,440  8 935
8,935 

Present Value of Forecast Period Free Cash Flows (8,002)
FCF in 2010 ($ mil.) 15,879 
FCF Growth Rate Beyond 2010 (%) 3.0% 
Discount rate beyond 2010 (%) 12.2% 
Terminal Value in 2010 ($ mil.) 172,595 
PV of Terminal Value ($ mil.) 97,065 
Enterprise Value ($ mil.) 89,064 
Net Debt (2006 end; $ mil.) 27,467 
Equity Value ($ mil.) 61,596 
Current Shares Outstanding
Current Shares Outstanding 10 100
10,100 
Equity per Share 6,099 

Year 2006E 2007F 2008F 2009F 2010F

Risk Free Rate (1 year US T‐ bill rate) 5.5%  5.5%  5.5%  5.5%  5.5% 
Equity Premium 10.0%  9.5%  9.0%  8.5%  8.0% 
Cost of Equity
Cost of Equity 15 5%
15.5%  15 0%
15.0%  14 5%
14.5%  14 0%
14.0%  13 5%
13.5% 
Borrowing Rate 14.0%  13.5%  13.0%  12.5%  12.0% 
Corporate Tax Rate 3.8%  15.0%  15.0%  15.0%  15.0% 
After‐Tax Cost of Debt 13.5%  11.5%  11.1%  10.6%  10.2% 
Equity Weight 32.3%  29.7%  35.9%  44.4%  60.2% 
Debt Weight 67.7%  70.3%  64.1%  55.6%  39.8% 
WACC 14 1%
14.1%  12 5%
12.5%  12 3%
12.3%  12 1%
12.1%  12 2%
12.2% 

10
 Valuation Methods
Peer analysis

In order to determine possible value of the Company when EV/Sales  EV/Sales  EV/EBITDA  EV/EBITDA 
Company 2006 2007E 2006 2007E P/E 2007E P/E 2008F
trying to enter international capital markets, the Peers’ Trading
Multiples
p principle
p p can be used. It employs p y the followingg
methodology: Best Buy 0.53 0.48 7.54 6.86 16.51 14.57
Radioshack 0.70 0.78 10.19 7.11 19.01 16.31
I. A group of companies that operate in a similar line of Circuit City 0.14 0.13 6.26 5.34 98.25 26.14
business with that of the company is selected and evaluated. Conn's  0.64 0.59 6.70 1.54 13.56 12.36
II. One should determine the peers’ enterprise value (EV), Rex Stores 0.43 0.63 12.15 n/a 15.67 7.86
Averages (US)
Averages (US) 0 49
0.49 0 52
0.52 8 57
8.57 5 21
5.21 32 60
32.60 15 45
15.45
which
hi h is
i calculated
l l d as market k capitalization
i li i off the
h peer company,
plus indebtedness and minus any cash remaining in the company DSG 0.34 0.32 6.52 5.79 78.45 12.55
accounts. EV = MC + (short term debt + long‐term debt) – (cash Kesa 0.40 0.38 7.06 6.77 15.51 15.08
+ equivalents). The figure received reflects the entire value of Alba 0.37 0.40 n/a 11.76 ‐1.97 12.50
the company, without taking its financing structure into Expert 0.60 0.53 12.88 10.52 21.79 19.20
consideration
consideration. Averages (UK&EU)
Averages (UK&EU) 0.43 0.41 8.82 8.71 28.45 14.83
III. The next step is to obtain financial forecasts for the
company’s main lines of business activity looking several years Yamada Denki 0.80 0.67 17.36 12.50 30.34 21.96
Edion Corporation 0.33 0.28 14.09 n/a 18.36 15.32
ahead. Usually, mean values are taken into consideration,
Kojima 0.22 0.21 n/a 17.63 24.46 21.16
provided by the I/B/E/S (Institutional Brokers' Estimate System), BIC Camera 0.35 0.31 12.11 n/a 16.86 15.84
a system that tracks forecasts of the leading analysts covering K'SS Holdings Corp.
K Holdings Corp. 0.47 0.34 20.86 8.61 19.71 14.67
each company. Best Denki Company 0.37 0.33 24.00 n/a 36.27 31.49
IV. Based on the company’s market capitalization and Joshin Denki Company 0.25 0.24 10.25 n/a 15.88 14.07
estimated value, analysts work out valuation multipliers such as Nojima 0.06 n/a 3.97 n/a 13.99 n/a
EV/Sales, EV/EBITDA and others. Averages (Japan w/o 
Nojima) 0.40 0.34 16.44 12.91 23.13 19.22
V. The multiples, once obtained, are applied to the historical
and d estimated
ti t d financial
fi i l forecasts
f t off the
th operating
ti activity
ti it off the
th AVERAGES  0.44 0.42 11.28 8.94 28.06 16.50
company. As a result, the indicative value of the company is
obtained. Suppose the value of all peer companies is 10х EBITDA
2006. Then if the EBITDA of the company being valued equals
$20m, its EV at the moment is $200m. After subtracting the
company’ss bank loans,
company loans we can determine the company
company’ss fair
market value.

11
 Valuation Methods
Based on historical transactions

Type of  Country of  EV/Sales  EV/Sales  EV/EBITDA  EV/EBITDA 

Company Acquirer Investor Target Date 2006 2007E 2006 2007E P/E 2006 P/E 2007E

Electrodomesticos Kesa Electricals Strategic Spain Jul‐07 0.49 n/a 7.76 n/a n/a n/a
DBL Distributing Ingram Micro Strategic US Jun‐07 0.32 n/a n/a n/a n/a n/a
Kotsovolos DSG International Strategic Greece May‐07 0.85 0.76 n/a n/a n/a n/a
E
Expert ASA
t ASA A Wilh l
A Wilhelmsen AS
AS Fi
Financial
i l N
Norway M 07
May‐07 0 81
0.81 0 72
0.72 17 46
17.46 14 27
14.27 31 65
31.65 25 88
25.88
Denkodo K'S Holdings  Strategic Japan Dec‐06 0.29 n/a 12.68 n/a 25.98 n/a
Shinden Nojima Strategic Japan Oct‐06 0.21 n/a n/a n/a n/a n/a
F‐Group DSG International Strategic Denmark Sep‐06 0.23 n/a n/a n/a n/a n/a
F t it
Fotovista DSG I t
DSG International
ti l Strategic
St t i F
France A 06
Apr‐06 0 75
0.75 n/a
/ n/a
/ n/a
/ n/a
/ n/a
/
Markantalo (Elkjop) DSG International Strategic Finland Jan‐06 0.41 n/a n/a n/a n/a n/a

Averages 0.48 0.74 12.64 14.27 28.81 25.88

max 0.85 0.76 17.46 14.27 31.65 25.88
min 0.21 0.72 12.68 14.27 25.98 25.88

Target Valuation Multiples (Deals in Developed Markets)

Implied Enterprise Value 35.14 58.98 n/a n/a n/a n/a

Alternative 1 year forward 38.69 71.72 n/a 13.84 n/a n/a
Less: Net Debt (incl. minorities) 29.64 29.64 29.64 29.64 29.64 29.64
Implied Market Value of Equity 5.50 29.35 n/a n/a n/a n/a

12
IPOs vs. Private Placements
Not listed
Warsaw $471m
Only 17 “real” IPOs to date; $1,507m $742m
raised in total (31.5% of all Ukrainian The “quick
q and easy” y p private
deals to date) placement has been the prevalent
Vienna 
f Listings on LSE (incl. AIM) and (technical 
choice of Ukrainian companies in
Warsaw Stock Exchange with a listing of warrants) raising equity: 32 deals; $1,481m
wide investor base $1,068m in equity raised
LSE AIM
f Relatively high costs,
costs time and $2,043m
$2 043m f Technical listings on PFTS, or
regulatory requirements other stock exchanges (Vienna
f Ukrainian companies become and Frankfurt), often through
increasingly capable of raising DRs – do not sufficiently
LSE PFTS
equity through a full‐fledged IPO. $2,801m
qualify as a “true” IPO
$420m
Recent examples: f Private placements have given

ƒ DUPD ($208m; AIM)

a big boost to Ukrainian ECMs:
ƒ Establishing and educating
ƒ Kernel Group ($218m; Warsaw)
Frankfurt (technical  a strong investor base
ƒ Ferrexpo ($420m; LSE)
listing of DRs) ƒ Preparing local companies
$4 271m
$4,271m for going public
f Essentially every company
having conducted a private
placement makes a good
candidate for a full‐fledged IPO
within
ithi 2‐3
2 3 years (or
( sooner!) !)

Private placements have been a prevalent choice for ECM deals in Ukraine so far. We see a 
gradual switch to IPOs as companies and investors mature and learn more about each other
gradual switch to IPOs as companies and investors mature and learn more about each other

13
Thank you!
y

14