An Economic - Financial Study is a common diagnostic tool employed to determine a company's soundness by E-valuation

1. Strictly Private and Confidential
This document is an extract of the full report
www.e-valuation.us
ECONOMIC AND FINANCIAL ANALYSIS
[Company XYZ]
January 2011
New York - London – Miami - Madrid

2. Strictly Private and Confidential
www.e-valuation.us
INDEX
Page
1 RATIO ANALYSIS – Profitability X
2 RATIO ANALYSIS - Productivity X
3 RATIO ANALYSIS – Balance X
4 RATIO ANALYSIS – Balance (In days of sales) X
5 RATIO ANALYSIS – Solvency X
6 Appendix I. e-Valuation Company Presentation X
7 Appendix II. Financial Projections X
8 Appendix III. Data provided by Company XYZ X
9 Appendix IV. Glossary X
10 Appendix V. e-Valuation’s References X
11 Appendix VI. Contact Details X

3. Strictly Private and Confidential January 2011 Company XYZ – ECONOMIC AND FINANCIAL ANALYSIS
www.e-valuation.us 1. RATIO ANALYSIS – Profitability
PROFITABILITY 2005 2006 2007 2008
1. Return On Assets (ROA) 1.3% (1.6%) (2.2%) (3.6%)
2. Gross Economic Profitability 2.8% 3.1% (0.6%) (6.1%)
3. Return On Equity (ROE) 6.7% (12.2%) (19.7%) (17.0%)
4. Gross Financial Profitability 14.6% 23.6% (5.6%) (28.5%)
5. EBITDA Margin 4.0% 4.6% (0.9%) (12.7%)
6. Operating Margin over Debt 4.8% 4.3% (1.6%) (11.8%)
7. Net Margin 1.8% (2.4%) (3.3%) (7.5%)
8. EBITDA Margin over Debt 5.7% 5.0% (0.9%) (11.0%)
9. Financial Costs over EBITDA 31.8% 50.5% (416.0%) (48.3%)
10. Financial Costs over Sales 2.2% 2.9% 3.8% 5.4%
11. Financial Result / EBITDA 26.5% 4.5% (448.5%) (24.7%)
12. Financial Margin 1.1% 0.2% 4.3% 3.1%
13. Earnings Before Taxes / Equity 10.3% (11.6%) (26.3%) (23.5%)
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4. Strictly Private and Confidential January 2011 Company XYZ – ECONOMIC AND FINANCIAL ANALYSIS
www.e-valuation.us 1. RATIO ANALYSIS – Profitability
Return On Equity (ROE) EBITDA Margin
10 % 6% 4,6%
6,7 % 4,0%
4%
5%
2%
0% 0%
2005 2006 2007 2008 (2%) 2005 2006 2007 2008
(5%)
(0,9%)
(4%)
(10%)
(6%)
(15%) (12,2 %) (8%)
(10%)
(20%) (17,0 %)
(19,7 %) (12%)
(25%) (14%) (12,7%)
 Financial profitability is calculated as net income over equity and  EBITDA stands for Earnings Before Interest, Taxes, Depreciation
refers to the profitability of the funds invested by the and Amortization, and its margin is calculated dividing this
shareholders of the company. magnitude by total revenues. A high EBITDA margin is positive
given that it shows that operating expenses represent a small
 Company XYZ’s ROE has experienced a negative evolution. In part of total revenues.
2008 the ROE improves in relation to 2009 as a result of the the
capital increase (if there is more capital, each share has to bear a  Company XYZ´s EBITDA margin was very negative in 2008 which
lower amount of losses). indicates a need of restructuring the company’s operating
expenses in a more efficient way.
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5. Strictly Private and Confidential January 2011 Company XYZ – ECONOMIC AND FINANCIAL ANALYSIS
www.e-valuation.us 2. RATIO ANALYSIS - Productivity
PRODUCTIVITY 2005 2006 2007 2008
1. Productivity 114.3% 116.2% 93.9% 56.4%
2. Staff Costs’ Growth 26.9% 28.4% 7.4% 1.5%
3. Sales per Employee (€) 123,888 121,507 110,826 98,039
4. Personal Margin Contribution Margin 23.5% 24.5% 27.1% 31.1%
5. Average Staff Cost (€) 29,138 29,733 30,071 30,516
6. Value Added per Employee (€) 33,293 34,548 28,226 17,213
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6. Strictly Private and Confidential January 2011 Company XYZ – ECONOMIC AND FINANCIAL ANALYSIS
www.e-valuation.us 2. RATIO ANALYSIS - Productivity
Average Staff Cost (€) Value Added per Employee (€)
31,000 40,000
30,516 33,293 34,548
35,000 28,226
30,500 30,071
30,000
30,000 29,733 25,000
29,500 20,000 17,213
29,138
15,000
29,000
10,000
28,500 5,000
28,000 0,000
2005 2006 2007 2008 2005 2006 2007 2008
 Average staff cost indicates the average costs that the company has  Value-added per employee is calculated as the total value-added
to bear for each worker, including social charges, extra payments, generated by the Company divided by the total number of
etc. employees. It is a measure of labor productivity and it has to be
compared to the average staff cost. This ratio should always bee
greater than the average staff cost.
 Company XYZ’s average staff cost has experimented a very reduced
growth during the last years, which means that wages have
increased at the same pace as the Consumer Price Index.  Comparing both bar charts we can see that both in 2007 and in
2008 the average staff cost exceeded the value-added per
employee, resulting in a substantial deterioration of the profit and
loss account.
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7. Strictly Private and Confidential January 2011 Company XYZ – ECONOMIC AND FINANCIAL ANALYSIS
www.e-valuation.us 3. RATIO ANALYSIS - Balance
BALANCE 2005 2006 2007 2008
1. Working Capital (€ 000) 1,698 4,697 3,315 (1,494)
2. Working Capital Requirements (€ 000) 9,907 16,841 18,940 15,088
3. Net Debt (€ 000) 10,046 16,079 17,625 16,582
4. Balance Ratio 1.42 2.72 2.99 0.82
5. Cash / Total Assets 0.35% 1.49% 0.55% 2.87%
Note 1: In this section we do not analyze or make conclusions about working capital, as such financial metric is analyzed together with liquidity ratios.
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8. Strictly Private and Confidential January 2011 Company XYZ – ECONOMIC AND FINANCIAL ANALYSIS
www.e-valuation.us 3. RATIO ANALYSIS - Balance
Working Capital Requirements (€ 000) Net Debt (€ 000)
18,940
20,000 20,000 17,625
18,000 16,841 18,000 16,582
16,079
16,000 15,088 16,000
14,000 14,000
12,000 12,000 10,046
9,907
10,000 10,000
8,000 8,000
6,000 6,000
4,000 4,000
2,000 2,000
0,000 0,000
2005 2006 2007 2008 2005 2006 2007 2008
 Working capital needs are calculated by deducting the company’s  A Company’s net debt is metric that shows a company's
current liabilities excluding short term debt, from its total liquid overall debt situation by netting the value of a company's interest-
assets, excluding cash. Such financial metric puts in relation the bearing debts with its cash and other similar liquid assets.
amount that the company is financing to its clients and to other
 Company XYZ´s net debt has increased since 2005 more than 18%
short term debtors, and the amount of financing that the
per year, due to positive historical working capital needs and the
company is obtaining from its short term creditors. If such metric
deterioration of the profit and loss account.
is positive it indicates that in order to finance the company´s
debtors, it will need to turn to bank and/or to equity financing.
 Company XYZ has historically registered positive and substantial
working capital needs, which explains in a great part the pressure
exerted on equity and the increase in the amount of debt.
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9. Strictly Private and Confidential January 2011 Company XYZ – ECONOMIC AND FINANCIAL ANALYSIS
www.e-valuation.us Appendix I. e-Valora Company Presentation
 e-Valuation offers financial consulting services to the private as well as to the public sector, and is specialized in
company valuations. Among other services provided, we must highlight advisory services towards mergers and
acquisitions, the elaboration of economic and financial studies, business and viability plans, and financial and
business consulting services.
 Since its foundation in November of 2000 by a team of experts coming from international investment banks, e-
Valaluation has carried out more than 1,000 valuations of Spanish and foreign companies, from companies with less
than 1 million Euros of turnover to companies with more than 500 million Euros of turnover, from start-ups to
companies with more than 80 years of history, including services and industrial companies.
 At the end of 2008, e-Valuation increased its professional team with members that have a wide experience in
investment banking, coming from entities such as Bank of America or Rothschild, that have worked in projects
belonging to every economic sector.
 e-Valuation has got ISO 9001 Certification in Business Valuation Services, Corporate Finance Advisory Services and
Elaboration of Valuation Multiples.
 Its offices locations and contact details are the following :
 e-Valuation Financial Services North America  e-Valuation Financial Services Northern Europe
14 Wall Street, 20th Floor One Canada Square, 29th Floor, Canary Wharf
New York City, New York 10005 London E14 5DY
United States of America
United Kingdom
 e-Valuation Financial Services Central and South America  e-Valuation Financial Services Southern Europe
Brickell Avenue, 11th Floor c/ José Ortega y Gasset, 42
Miami, 33131 Madrid, Madrid 28006
United States of America Spain
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10. Strictly Private and Confidential January 2011 Company XYZ – ECONOMIC AND FINANCIAL ANALYSIS
www.e-valuation.us Appendix IV. Glossary
 Intangible Assets or Intangible Fixed Asset: Non-physical assets such as franchises, trademarks, patents, copyrights, goodwill,
shares, securities and contracts (as distinguished from physical assets) that grant rights and privileges.
 Tangible Assets or Tangible Fixed Asset: Physical assets (such as machinery, property, etc).
 Amortization: Accounting procedure that gradually reduces the cost of value of an asset, tangible or intangible, (e.g.
investments in research & development), through periodic charges to the profit and loss account in order to fix the costs during
its estimated useful life.
 Trading Comparable Companies: Those enterprises whose business value is obtained through methods that compare the
company to be valued to similar enterprises. It is calculated dividing the market value of the last ones by a financial magnitude
of the companies’ profit and loss account (such as net income, net sales, etc). When multiplying by the same enterprise’s
magnitude of the company to be valued, we will obtain its approximate value.
 EBITDA: EBITDA refers to operating profit before amortizations.
 EBIT: Earnings Before Interest and Taxes.
 Balance Sheet: Statement of a company’s financial position at a given point in time. Lists the assets of a company and how
they have been financed. Total assets is equivalent to liabilities plus shareholders’ equity.
 Cost of Supplies: Cost related to the production, supply, transport and storage of raw materials and the materials used in the
production process. In this section can also be included the cost of outsourcing services to provide the customer.
 Profit and Loss Account: Financial statement that shows the expenses and revenues generated during a period of time.
 Weighted Average Cost of Capital: Calculated as the cost of equity * (equity value / firm value) + cost of debt * (net debt /
firm value) * (1- corporate tax). It is a discount rate typically used to discount future free cash flows to the moment of
valuation.
 Discounted Cash Flows (DCF): Company’s valuation method based on the idea that the value of a company is related to what it
is able to generate in the future. It is calculated as the future cash flows of a company, discounted back to present value using
an appropriate discount rate.
 Net Debt: Total debt of the company minus any cash or liquid funds that the company has but does not require for its operating
activity.
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11. Strictly Private and Confidential January 2011 Company XYZ – ECONOMIC AND FINANCIAL ANALYSIS
www.e-valuation.us Appendix V. e-Valuation’s References
2008 - 2009
 Advertising  Ecological and Recycling  Logistics  Renewable Energies
 Automotive  Editorial  Media  Restaurant
 Aviation  Education and Training  Metallurgy  Retail
 Biotechnology  Electronics  Quality Consulting  Software and Data Security
 Brokerage and Financial Services  Engineering and Machinery  New Techonlogies  Sports
 Building Materials Manufacturer  Entertainment and Leisure  Other Building Specilialists  Steel
 Business Services  Forestry  Outsourcing Services  Technology
 Construction and Contracts  Healthcare  Production and Distribution  Telecommunicaciones
 Construction and Materials  Insurance  Public Administration  Textiles
 Construction Related Services  Internet  Rail  Transportation and Logistics
 Consulting, Audit and Advisory  Local TV  Recreation  Quemical Industry
NOTE: For confidentiality reasons clients´ name is not mentioned. 34

12. Estrictamente Privado y Confidencial JUNE 2010 Company XYZ – ECONOMIC AND FINANCIAL ANALYSIS
Appendix VI. Contact Details
www.evalora.com
e-Valora Financial Services North America e-Valora Financial Services Northern Europe
14 Wall Street, 20th Floor One Canada Square, 29th Floor, Canary Wharf
New York City, New York 10005 London E14 5DY
United States of America United Kingdom
e-Valora Financial Services Central and South America e-Valora Financial Services Southern Europe
111 Brickell Avenue, 11th Floor c/ José Ortega y Gasset, 42
Miami, 33131 Madrid, Madrid 28006
United States of America Spain
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